VersaPay Announces Q4 and Fiscal 2014 Results

TORONTO, April 15, 2015 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoicing, accounts receiv­able management and payment solutions, reported fourth quarter (Q4) financial results for the three and twelve-month period ended December 31, 2014.

"We continue to focus our attention on rolling out our ARC™ solution offering and we are very pleased with our progress in this regard," said Craig O'Neill, CEO of VersaPay. "We are confident ARC™ will become an industry leader in the business-to-business integrated payments space, providing businesses of all sizes with a cloud-based approach to managing accounts receivable with their customers. As a result, we expect ARC™ to become a larger percentage of our overall revenues compared to POS Merchant Services moving forward. In addition, we expect the recurring revenues from ARC™ will provide VersaPay with a more predictable cash flow stream and improved margins in the future."

Financial Highlights:

• Total revenue for Q4 2014 increased by 4% to $1.2 million, compared to $1.1 million in Q4 2013, and increased by 7% to $5.2 million in FY 2014, compared to $4.8 million in FY 2013. The year-over-year improvement was driven primarily by growth in the Company's transaction processing fees.
• POS Merchant Services revenue for FY 2014 increased by 5% to $4.7 million compared to $4.4 million in FY 2013.
• VersaPay Solutions revenue for FY 2014 increased by 28% to $0.5 million, compared to $0.4 million in FY 2013.
• Gross margin percentages for the three and twelve-month periods ended December 31, 2014 were 61.7% and 62.2%, respectively, compared to 67.8% and 66.6% in the 2013. 
• Cash operating expense (excluding non-cash operating items) increased 67% to $1.6 million in Q4 2014 from $1.0 million in Q4 2013. Cash operating expense for FY 2014 was $5.8 million compared to $4.0 million for FY 2013, representing an increase of 47%. The increase reflects the Company's strategy of building the VersaPay Solutions business.
• Adjusted EBITDA⁽¹⁾ of ($0.8) million in Q4 2014, compared to ($0.1) million in Q4 2013, and ($2.7) million for FY 2014, compared to ($0.7) million for FY 2013, in keeping with the Company's plans to invest in the VersaPay Solutions business.
• Total comprehensive loss for Q4 2014 was $(0.9) million compared to a loss of $(0.3) million for Q4 2013. Total comprehensive loss for FY 2014 was $(3.5) million compared to $(1.1) million for FY 2013, in keeping with the Company's plans to invest in the VersaPay Solutions business.
• As at December 31, 2014, the Company had cash on hand of $3.0 million compared to $1.2 million as at December 31, 2013.
  
  

(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, other income and expense, and other comprehensive income. Adjusted EBITDA is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS. Please refer to the Company's management's discussion and analysis for the year ended December 31, 2014 for further information on the Company's use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net earnings. 

2014 Operational Highlights:

• The Beer Store selected VersaPay Gateway to increase payment acceptance from its business customers.
• Teachers Life, a leading insurance provider for teachers throughout Ontario, went live on ARC™.
• Continued to attract new customers to the ARC™ product, including one major customer that will involve tens of thousands of connected parties when fully rolled out.
• Enhanced the Company's management team and board of directors, with the recruitment of senior executives in software engineering, product design and marketing and the appointment of Art Mesher, former CEO of Descartes Systems, as Chairman of the Board.
• Expanded the ARC™ development, sales and support teams.
• Significant new software features were added to ARC™, including improved supplier-buyer collaboration tools, management and presentation of industry-specific documents that support invoices and integrations to different accounting and Enterprise Resource Planning systems.
• Grew total credit card processing volume to $940 million for 2014 compared to $870 million in 2013, representing a record year.
• Opened a new corporate head office and software development center in Toronto to support the growth of ARC™.

Recent ARC™ Highlights:

• ARC™ platform metrics show growing use:
  • Suppliers in production: 7;
  • Counterparties signed up: 1,200;
  • Invoice Volume: 58,000;
  • Transaction Volume: $500,000.
• Nine additional suppliers are currently in the implementation stage or awaiting implementation of the ARC™ platform.
• The Company recently sponsored a Certified Professional Accountants conference and received a very positive response, identifying dozens of highly qualified leads.
• The Company is participating in two U.S. conferences this week in target industries: Media and Trucking/Logistics.

Change in the Accounting Presentation of POS Merchant Services Revenues:

For 2014, the Company voluntarily changed its accounting policy for the presentation and accounting for the POS Merchant Services' credit card processing revenue stream. The Company's previous accounting policy was to report this stream of revenue on a gross basis. Under the new accounting policy, this revenue stream is presented on a net basis. As the VersaPay Solutions business grows and, in particular, as ARC™ revenues become a material part of the Company's revenue mix, consistency across the two lines of business will become more important. Management believes the new accounting policy provides more relevant and no less reliable information to users in assessing the Company's historical performance and future prospects as it better aligns revenues with the actual flow of cash in its growing Solutions business.

The new accounting policy has been applied retrospectively. This change in accounting policy has no impact on the Company's reported gross profit, net loss, net loss per share, total comprehensive loss, or Adjusted EBITDA⁽¹⁾. Management believes that the change also better reflects the Company's margins and is more useful to users in assessing the Company's historical performance and future prospects.

Had the Company not voluntarily changed its revenue presentation, total revenues would have been $18.7 million in FY 2014 compared to $17.5 million in FY 2013, a 6.8% increase.

Conference Call:

The Company will hold its fourth quarter and year-end conference call on Thursday, April 16, 2015, at 10:00am EDT. A question and answer session will follow the corporate update.

CONFERENCE CALL DETAILS

Date: Thursday, April 16, 2015
Time: 10:00 AM Eastern Time

Participant Dial-in Numbers: 
Local – Toronto ([phone]
Toll Free - North America ([phone]
Conference ID: 71339095

Recording Playback Numbers:
Toronto ([phone]
Toll Free - North America ([phone]
Playback Passcode: 339095#

A live audio webcast and archive of the conference call will be available by visiting the Company's website at www.versapay.com/investors/investor-relations.  Please connect at least 15 minutes prior to the conference call to ensure time for any software download that may be needed to hear the webcast.

About VersaPay

VersaPay is a leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay's ARC™ software-as-a-service offering allows businesses to easily deliver customized electronic invoices to their customers, to accept credit card and EFT payments and automatically reconcile payments to their ERP and accounting software. VersaPay is headquartered in Toronto, Canada and also has operations in Montreal and New York.

More information about VersaPay can be found on the Company's website at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com.

Forward Looking and Other Cautionary Statements

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.

These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company's business, the Company's formative stage of development and the Company's financial position.

Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE VersaPay Corporation

David CW Chan, Chief Financial Officer, VersaPay Corporation, 647-258-9475, [email protected]; Babak Pedram, Investor Relations, Virtus Advisory Group Inc., 416-644-5081, [email protected]