VersaPay Reports Q3 2014 Results, Achieves Record Transaction Volumes

TORONTO, Nov. 28, 2014 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoicing, accounts receiv­able management and payment solutions, is pleased to report financial results for the third quarter of 2014. Revenue for Q3 2014 grew to $5.1 million from $4.8 million in Q3 2013. Revenue growth occurred across both of the Company's operating units, the VersaPay Solutions business and the POS Merchant Services business, as a result of accrued synergies.

Q3 2014 Highlights:

• Continued investment in VersaPay Solutions, including an expansion of the R&D, support and sales teams in the VersaPay Solutions business during Q3 2014
• Commenced a number of ARC™ customer projects, including a major pilot that will involve approximately 1,000 connected parties
• Solutions revenues grew by over 35%
• Teachers Life, a leading insurance provider for teachers throughout Ontario, went live on ARC™
• Grew total credit card processing volume to $253 million for Q3 2014 versus $237 million in Q3 2013, representing a record quarter
• Early repayment of all of the outstanding December 2010 secured subordinated promissory notes
• Art Mesher appointed chairman of VersaPay's board of directors, effective August 20, 2014

Subsequent to Q3 2014 Highlights:

• Experienced marketing executive, John McLeod joined VersaPay as Head of Marketing after 8 years with Desire2Learn Incorporated, a global software-as-a-service (SaaS)-based learning solutions provider. 

Q3 2014 Financial Summary¹

	Three months ended, Sept 30		Nine months ended, Sept 30
	2014	2013	2014	2013
Total Revenue	$5.1M	$4.8M	$14.3M	$13.3M
Cash Operating Expenses^2	$1.7M	$1.0M	$4.5M	$3.1M
Adjusted EBITDA ^3	$(0.8)M	$(0.1)M	$(1.9)M	$(0.5)M
Net Loss	$(1.1)M	$(0.2)M	$(2.6)M	$(0.8)M
	Sept 30, 2014
Cash	$4.0 M

Notes:

1. The unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2014 and the related Management's Discussion and Analysis for the period will be available on the Company's website at www.versapay.com and on SEDAR at www.sedar.com.
2. Cash operating expense is defined as operating expense excluding depreciation, amortization and share-based payments.
3. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, and other income and expense. See table A below.

"Q3 is a traditionally strong quarter for our POS Merchant Services business and this year has proven to be no exception", commented Craig O'Neill, VersaPay's CEO. "We are very pleased with the results achieved by our POS group, surpassing their record quarter in Q2 and renewing a number of major accounts. Further, we continue to make good progress in the VersaPay Solutions business as we implement our early customers and enhance the ARC™ platform based on valuable customer feedback. We are also delighted that Art Mesher has stepped into the role of Chairman and I look forward to leveraging his deep expertise in leading tech companies and his strong track record building shareholder value."

Q3 2014 Financial Review

Total revenues for Q3 2014 increased 6% to $5.1 million from $4.8 million in Q3 2013. Total revenues for the nine months ended September 30, 2014 increased 7% to $14.3 million from $13.3 million in the nine months ended September 30, 2013. The year-over-year improvement was driven primarily by growth in the Company's transaction processing fees.

Cash operating expense (excluding amortization and share-based payments) increased 64% to $1.7 million in Q3 2014 from $1.0 million in the same period in 2013. Cash operating expense for the nine months ended September 30, 2014 was $4.5 million compared to $3.1 million for the nine months ended September 30, 2013, representing an increase of 44%.

Adjusted EBITDA for Q3 2014 was $(0.8) million, compared to $(0.1) million in Q3 2013. Adjusted EBITDA for the nine months ended September 30, 2014 was $(1.9) million, compared to $(0.5) million for the nine months ended September 30, 2013. Loss from continuing operations for Q3 2014 was $(1.1) million compared to a loss from continuing operations of $(0.2) million for Q3 2013. Loss from continuing operations for the nine months ended September 30, 2013 was $(2.6) million compared to $(0.8) million for the same period in 2013.

Table A

	Three months ended Sept 30		Nine months ended Sept 30
	2014	2013	2014	2013
	$	$	$	$
Adjusted EBITDA ^1	(784,752)	(131,954)	(1,859,210)	(525,477)
Share based payments	(90,364)	(57,018)	(420,281)	(182,740)
Interest expense	(33,381)	(39,676)	(121,056)	(120,492)
Amortization	(39,116)	(19,357)	(77,167)	(90,948)
Other income (expense)	(137,078)	-	(137,078)	85,774
Net Loss	(1,084,691)	(248,005)	(2,614,792)	(833,883)

Notes:
1	Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, and other income and expense.

About VersaPay

VersaPay is a leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay's ARC™ and ARCPay™ software-as-a-service offerings allow 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 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.

Unaudited Condensed Interim Consolidated Statements of Financial Position

	September 30, 2014	December 31, 2013
	$	$
ASSETS
Current
Cash and cash equivalents	3,938,538	1,276,410
Funds held for merchants	7,236,736	4,063,599
Receivables	415,640	407,949
Prepaid expenses	113,849	33,441
	11,704,763	5,781,399
Non-current
Restricted cash	185,790	-
Property and equipment	620,567	194,999
Intangible assets	5,181	7,215
Total Assets	12,516,301	5,983,613
LIABILITIES
Current
Accounts payable and accrued liabilities	672,898	289,465
Funds due to merchants	7,236,736	4,063,599
Current portion of obligations under finance lease	7,496	24,367
	7,917,130	4,377,431
Non-current
Obligations under finance lease, net of current portion	-	2,953
Promissory note	-	698,927
Lease incentive allowance	204,529	-
Total Liabilities	8,121,659	5,079,311
EQUITY
Share capital	17,078,083	11,133,048
Reserve	1,440,795	1,608,613
Warrants	380,064	52,149
Deficit	(14,504,300)	(11,889,508)
Total Equity	4,394,642	904,302
Total Liabilities and Equity	12,516,301	5,983,613

Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

		Three months ended, Sept 30			Nine months ended, Sept 30
		2014	2013		2014	2013
		$	$		$	$
Revenue
	VersaPay Solutions	128,154	94,535		354,076	258,149
	POS Merchant Services	4,951,821	4,701,409		13,908,629	13,059,478
		5,079,975	4,795,944		14,262,705	13,317,627
Cost of Sales
	VersaPay Solutions	96,710	72,467		249,433	192,277
	POS Merchant Services	4,143,883	3,885,612		11,531,702	10,682,276
		4,240,593	3,958,079		11,781,135	10,874,553
Gross Profit		839,382	837,865		2,481,570	2,443,074
Expenses
	Depreciation and amortization	39,116	19,357		77,167	90,948
	General and office expenses	186,135	139,171		589,986	431,118
	Interest expense	33,381	39,676		121,056	120,492
	Marketing and promotion	96,812	49,704		289,874	174,222
	Professional and consulting fees	187,304	179,394		704,367	541,085
	Rent and occupancy	123,459	59,601		257,881	186,962
	Research and development	255,148	86,553		571,661	285,670
	Salaries and benefits	775,276	455,396		1,927,011	1,349,494
	Share based payments	90,364	57,018		420,281	182,740
Total Expenses		1,786,995	1,085,870		4,959,284	3,362,731
Other Income		-	-		-	85,774
Other Expenses
	Excess on settlement of promissory note	137,078	-		137,078	-
Net Loss and Comprehensive Loss for the Period		(1,084,691)	(248,005)		(2,614,792)	(833,883)
Loss per share, basic		$            (0.05)	$            (0.02)		$             (0.13)	$            (0.05)
Weighted average number of common shares		21,669,824	15,578,677		20,525,292	15,477,876
outstanding, basic

Unaudited Condensed Interim Consolidated Statements of Changes in Equity

	Share Capital	Reserve	Warrants	Deficit	Total Equity
	$	$	$	$	$
As at December 31, 2012	9,981,720	1,497,517	372,260	(10,778,860)	1,072,637
Net loss for the period	-	-	-	(833,883)	(833,883)
Shares Issued	-	-	-	-	-
Exercise of options	284,917	(148,984)	-	-	135,933
Exercise of warrants	29,250	17,137	(17,137)	-	29,250
Share based payments	-	182,740	-	-	182,740
At September 30, 2013	10,295,887	1,548,410	355,123	(11,612,743)	586,677
	Share Capital	Reserve	Warrants	Deficit	Total Equity
	$	$	$	$	$
At December 31, 2013 (note 3)	11,133,048	1,608,613	52,149	(11,889,508)	904,302
Net loss for the period	-	-	-	(2,614,792)	(2,614,792)
Shares Issued	3,974,951	87,335	360,503	-	4,422,789
Exercise of options	1,511,409	(501,634)	19,561	-	1,029,336
Exercise of warrants	284,875	-	(52,149)	-	232,726
Share based payments	173,800	246,481	-	-	420,281
At September 30, 2014	17,078,083	1,440,795	380,064	(14,504,300)	4,394,642

Unaudited Condensed Interim Consolidated Statements of Cash Flows

			Nine months ended September 30,
			2014	2013
			$	$
Cash Provided By (Used In) Operating Activities
	Net loss for the period		(2,614,792)	(833,883)
		Items not affecting cash:
		Depreciation of property and equipment	75,133	59,830
		Amortization of intangible assets	2,034	31,118
		Amortization of lease incentive allowance	(5,244)	-
		Interest accreted on promissory note	201,073	49,921
		Loss on disposal of equipment	-	15,795
		Share based payments	420,281	182,740
	Change in non-cash working capital items
		Receivables	(7,691)	(181)
		Prepaid expenses	(80,408)	(22,438)
		Accounts payable and accrued liabilities	383,433	(77,439)
			(1,626,181)	(594,537)
Cash Provided By (Used in) in Investing Activities
	Restricted cash		(185,790)	-
	Acquisition of property and equipment		(500,701)	(5,098)
	Proceeds on disposal of property and equipment		-	11,900
			(686,491)	6,802
Cash Provided by (Used In) Financing Activities
	Issuance of common shares, net of issuance costs		5,684,851	165,183
	Repayment of promissory note		(900,000)	-
	Finance lease payments		(19,824)	(32,228)
	Lease incentive allowance		209,773	-
			4,974,800	132,955
Increase (decrease) in cash and cash equivalents			2,662,128	(454,780)
Cash and cash equivalents, beginning  of period			1,276,410	1,461,388
Cash and cash equivalents, end of period			3,938,538	1,006,608
Cash and cash equivalents consist of the following:
			2014	2013
			$	$
Cash at bank and in hand			1,205,755	148,897
Demand deposits			2,732,783	857,711
			3,938,538	1,006,608

SOURCE: VersaPay Corporation

David CW Chan, CFO, VersaPay Corporation, [email protected], Telephone: [phone]