VersaPay Announces 2010 First Quarter Results
TORONTO, ON – May 28, 2010 – VersaPay Corporation (TSXV: VPY) (“VersaPay” or the “Company”), a provider of merchant credit, debit, gift and loyalty card payment processing solutions, today announced its financial and operational results for the three-month period ended March 31, 2010. All amounts are reported in Canadian dollars unless otherwise stated.
Q1 2010 Operational Highlights
- Increased total gross transaction value processed 83% to $132 million from $72 million in Q1 2009
- Monthly gross transaction value processed was $58 million for March 2010
- Listed on the TSX Venture Exchange
- Completed $3.5 million equity financing
- Signed partnership agreement with the Business Improvements Areas of British Columbia
- Subsequent to quarter end, entered into agreement to sell 75% ownership position in Positive Inc.
Q1 2010 Financial Summary1
| Q1 2010 | Q1 2009 | |
|---|---|---|
| Recurring revenue2 | $2.5M | $1.5M |
| Non-recurring revenue3 | $0.1M | $0.1M |
| TOTAL REVENUE | $2.6M | $1.6M |
| Expenses | $3.5M | $1.7M |
| Adjusted EBITDA4 | $(0.5)M | $(0.1)M |
| Net income | $(0.8)M | $(0.1)M |
| Net income per share | $(0.08) | $(0.26) |
| Cash and cash equivalents | $1.4M | $0.2M |
“The growth in our merchant customer base drove strong improvements in our Q1 top line results, in particular our recurring revenue, which was up 72% compared to last year,” said Bill McGill, Acting CEO of VersaPay. “In the quarter, we continued to successfully leverage our partnership with the Association of Canadian Travel Agencies, increasing our penetration of the travel industry with new customer wins. In addition, we further invested in the business, expanding our sales team, enhancing our technology and building partnerships to better enable us to execute on our long-term growth strategies.”
Mr. McGill continued: “We are confident in our ability to continue to expand our merchant customer base through our direct sales efforts and channel partnerships. We believe the depth and expertise of our team in combination with our competitively priced, customizable, end-to-end, onsite and online payment processing solutions, position us to successfully capitalize on the growth opportunities in front of us.”
Q1 2010 Financial Review
Total revenue for Q1 2010 was $2.6 million, which was a 67% increase from total revenue of $1.6 million in Q1 2009. The year-over-year improvement in VersaPay’s top line was driven primarily by growth in the Company’s transaction processing fees, which were $2.4 million, up from $1.4 million in Q1 2009 as a result of the Company’s success in continuing to expand its merchant customer base. Q1 2010 revenue from product sales and other (primarily comprised of point-of-sale device revenue) was $0.1 million, and revenue from VersaCard and VersaEFT fees was $0.04 million. This is compared to Q1 2009 revenue from product sales and other and revenue from VersaCard and VersaEFT fees of $0.1 million and $0.06 million, respectively.
Recurring revenue (defined as Transaction processing fees + VersaCard/EFT fees) for Q1 2010 was $2.5 million, or 94% of total revenue, compared to Q1 2009 recurring revenue of $1.5 million, or 92% of total revenue.
Total expenses for Q1 2010 were $3.5 million, compared to $1.7 million in Q1 2009. The year-over-year increase predominantly reflects the Company’s investment in the business to establish the necessary infrastructure in terms of sales staff, marketing, partnerships, technology and cross-Canada reach to support its long-term growth. In addition, the Company’s costs of service and costs of products sold increased compared to last year, as a result of growth in number of merchant customers VersaPay is serving.
Adjusted EBITDA for Q1 2010, was $(0.5) million, compared to $(0.1) million in Q1 2009, reflecting VersaPay’s increased investment in the business, which was partially offset by the Company’s revenue growth. Net income for Q1 2010 was $(0.8) million or $(0.08) per share, compared to $(0.1) million or $(0.26) per share.
As at March 31, 2010, VersaPay had cash and cash equivalents of $1.4 million, an increase from $0.2 million as at December 31, 2009. This primarily reflects the $2.8 million in net proceeds VersaPay generated from the equity financing the Company completed in Q1 2010, which was offset, in part, by cash used in operating activities for the quarter of $1.3 million and cash used in investing activities of $0.1 million.
1A complete set of financial statements and notes and MD&A for the three-month period ended March 31, 2010 will be available on the Company’s website at www.versapay.com and on SEDAR.
2 Defined as Transaction processing fees + VersaCard/EFT fees
3 Defined as Product sales (point-of-sale devices) and other
4 Adjusted EBITDA defined as Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-based compensation. See table A.
Table A
| Q1 2010 | Q1 2009 | |
|---|---|---|
| Adjusted EBITDA | $(524,654) | $(71,648) |
| Interest expense | $14,438 | $(13,251) |
| Amortization | $(25,739) | $(10,534) |
| Stock-based compensation | $(290,949) | - |
| Net Earnings | $(826,904) | $(95,433) |
About VersaPay
VersaPay’s (TSXV: VPY) proprietary technology enables businesses and consumers across Canada to accept and process credit, debit and gift card transactions. As a payment services and financial technology company serving over 3,000 Canadian businesses, VersaPay, in conjunction with its partners, provides the hardware, technology, infrastructure and support services that businesses of all types require to accept and process electronic payments from their consumers and clients.
While its core business is payment processing services, VersaPay also provides enhanced financial technology solutions such as VersaEFT – the Company’s proprietary Electronic Bill Presentment and Payment solution – which enables merchants and consumers to easily transact with one another.
The Company was recognized by PROFIT Magazine as Canada’s Top Emerging Growth Company and was ranked Number 1 in Canada on the 2009 HOT 50 List. VersaPay is headquartered in Vancouver, Canada and has operations in Toronto and Montreal. To learn more about VersaPay, visit http://www.versapay.com
Forward looking and other cautionary statements
This news release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company’s current expectations. When used in this news release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology, are intended to identify forward-looking statements and information. Such statements and information reflect the current view of the Company with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks relating 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 are made based on management’s beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward looking statements if these beliefs, estimates and opinions or other circumstances should change.
Investors are cautioned against attributing undue certainty to forward-looking statements. There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others, risks related to following: the Company’s financial position and the potential need for future financings, the ability of the Company to maintain its relationship with its strategic partner for payment processing, the efforts and abilities of the senior management team, the ability of the Company to attract and retain skilled management, competition in the payment processing industry, and the Company’s ability to respond to technological change and protect its intellectual property rights.
The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. There can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE SECURITIES LEGISLATION.
For additional information please contact:
Bill McGill, Acting CEO, VersaPay Corporation
1-647-258-9378
Kristen Dickson, Investor Relations, The Equicom Group
416-815-0700 ext. 273
Neither 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.
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