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VersaPay Announces 2011 Year End Results

(April 27, 2012)

TORONTO, ONTARIO -- (Marketwire) -- 04/27/12 -- VersaPay Corporation (TSX VENTURE:VPY) ("VersaPay" or the "Company"), a provider of merchant credit and debit card payment processing and e-mail money transfer (EMT) solutions, today announced its financial and operational results for the year ended December 31, 2011. All amounts are in Canadian dollars unless otherwise noted.

Fiscal 2011 Highlights

-- Grew year over year revenues by 19% and grew recurring revenue by 22% -- Improvement in Adjusted EBITDA(1) to $(0.4) million from $(1.4) million in 2011, as a result of Company's sales growth and cost-cutting initiatives -- Added numerous new clients, including Corus Radio and Flight Network -- Continued to invest in the VersaPay EMT product -- Subsequent to year-end, completed an equity financing for gross proceeds of $2.07 million

Q4 2011 Financial Summary(2)


---------------------------------------------------------------------------- Three months ending December 31 Year ended December 31 ------------------------------------------------ Q4 2011 Q4 2010 2011 2010 ---------------------------------------------------------------------------- Recurring Revenues(3) $3.7M $3.3M $14.9M $12.2M ---------------------------------------------------------------------------- Non-recurring revenue(4) $.02M $.09M $.2M $.5M ---------------------------------------------------------------------------- TOTAL Revenue $3.7M $3.4M $15.1M $12.7M ---------------------------------------------------------------------------- Cash Operating Expenses(5) $1.0M $0.9M $3.5M $4.6M ---------------------------------------------------------------------------- Adjusted EBITDA(1) $(0.2)M $(0.2)M $(0.4)M $(1.4)M ---------------------------------------------------------------------------- Loss from continuing operations $(0.4)M $(0.3)M $(0.9)M $(2.4)M ---------------------------------------------------------------------------- December 31, 2011 December 31, 2010 ---------------------------------------------------------------------------- Cash $0.6 M $1.1 M ----------------------------------------------------------------------------

"We are very pleased with our financial and business results for fiscal 2011. We were able to grow our recurring revenue base, improve our adjusted EBITDA results and win several important new client relationships," commented Bill McGill, CEO of VersaPay. "We have carried this momentum into the current fiscal year with the announcement of a number of new important partnerships, including Hockey Canada and Wave Accounting. We also improved our balance sheet through a $2 million equity offering, allowing us to expand our investment in sales and marketing, product development and customer care. Looking ahead, we believe we are well positioned to continue to grow and gain market share in the payment processing market."

Bill McGill added, "The fourth quarter is traditionally a slower quarter for our business, yet we were able to maintain year over year double-digit top-line growth. This was also the only quarter during fiscal 2011 where our adjusted EBITDA results did not improve year over year, however this was the result of a number of one- time expenses, without which we would have seen year over year improvement."

Q4 2011 Financial Review

Total revenue for Q4 2011 increased 11% to $3.7 million from $3.4 million in Q4 2010. Of this amount, recurring revenue for Q4 2011 increased 13% to $3.7 million from $3.3 million in Q4 2010. 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 15% to $1.0 million from $0.9 million in Q4 2011 from the same period 2010.

Adjusted EBITDA for Q4 2011 was $(0.2) million, and is consistent with Q4 2010 of $(0.2) million.

Loss from continuing operations for Q4 2011 was $(0.4) million. This compares to a loss from continuing operations of $(0.3) million for Q4 2010.

Annual Results

Total revenue for 2011 increased 19% to $15.1 million from $12.7 million in 2010. Of this amount, recurring revenue for 2011 increased 22% to $14.9 million from $12.2 million in 2010. 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) decreased 22% to $3.6 million from $4.6 million for 2011 versus 2010. The decrease in cash operating costs over 2010 primarily relates to 2010 having additional costs from the Company becoming publicly traded and the implementation of cost control measures in 2011.

Adjusted EBITDA for 2011 was $(0.4) million, compared to $(1.4) million in 2010.

Loss from continuing operations for 2011 was $(0.9) million, versus a loss of $(2.4) million from the prior year.

As at December 31, 2011 VersaPay had cash $0.6 million, compared to $1.1 million as at December 31, 2010.

(1) Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortization and Share-based payments. See table A.

(2) A complete set of financial statements and notes and MD&amp;A for the year ended December 31, 2011 will be available on the Company's website at www.versapay.com and on SEDAR.

(3) Defined as Transaction processing fees + VersaCard/EMT fees

(4) Defined as Product sales (point-of-sale devices) and other

(5) Defined as operating expense excluding amortization and share-based payments

Table A

---------------------------------------------------------------------------- Three months ending December 31 Year ended December 31 ---------------------------------------------------- Q4 2011 Q4 2010 2011 2010 ---------------------------------------------------------------------------- Adjusted EBITDA(1) (237,779) (166,951) (406,825) (1,405,988) ---------------------------------------------------------------------------- Stock-based compensation (42,193) (42,350) (193,612) (448,481) ---------------------------------------------------------------------------- Listing expense - - - (396,000) ---------------------------------------------------------------------------- Interest expense (38,366) (4,965) (150,385) 4,588 ---------------------------------------------------------------------------- Amortization (44,672) (42,181) (172,601) (141,998) ---------------------------------------------------------------------------- Loss from continuing operations (363,010) (256,447) (923,423) (2,387,879) ----------------------------------------------------------------------------

About VersaPay

VersaPay's financial 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 more than 2,500 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 VersaPay EMT - the Company's proprietary Electronic Bill Presentment and Payment solution - which enables merchants and consumers to easily transact with one another.

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.

---------------------------------------------------------------------------- December 31, December 31, January 1, 2011 2010 2010 $ $ $ ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 559,497 1,121,816 206,763 Funds held for merchants 443,005 474,177 365,518 Receivables 417,154 465,341 307,675 Prepaid expenses 28,685 18,686 17,133 Current assets of discontinued operations - - 29,133 ---------------------------------------------------------------------------- 1,448,341 2,080,020 926,222 Share issue costs - - 425,536 Equipment 397,530 360,837 318,735 Intangible assets 97,564 140,763 101,592 Non-current assets of discontinued operations - - 161,012 ---------------------------------------------------------------------------- 1,943,435 2,581,620 1,933,097 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES Current Accounts payable and accrued liabilities 535,741 440,784 1,259,384 Funds due to merchants 443,005 474,177 365,518 Deferred revenue Loan payable - - 225,000 Current portion of obligations under finance lease 53,026 46,257 36,819 Current liabilities of discontinued operations - - 76,728 ---------------------------------------------------------------------------- 1,031,772 961,218 1,963,449 Obligations under finance lease, net of current portion 52,872 90,628 97,546 Promissory note 576,569 534,741 - ---------------------------------------------------------------------------- 1,661,213 1,586,587 2,060,995 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- EQUITY Share capital 7,891,062 7,819,002 4,872,073 Shares subscriptions received - - 288,958 Contributed surplus 1,010,525 865,645 687,955 Warrants 690,291 696,619 - Deficit (9,309,656) (8,386,233) (5,984,453) ---------------------------------------------------------------------------- Equity attributed to owners of the parent 282,222 995,033 (135,467) Non-controlling interest in Positive Inc. - - 7,569 ---------------------------------------------------------------------------- Total equity 282,222 995,033 (127,898) ---------------------------------------------------------------------------- 1,943,435 2,581,620 1,933,097 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Year ended December 31 2011 2010 $ $ ---------------------------------------------------------------------------- Revenue Transaction processing fees 14,667,516 11,977,366 Product sales and other 233,040 490,001 VersaCard/EFT and EMT Fees 234,582 201,225 ---------------------------------------------------------------------------- 15,135,138 12,668,592 ---------------------------------------------------------------------------- Expenses Cost of services 10,437,263 8,282,957 Cost of products sold and other 1,499,722 1,485,193 VersaCard/EFT and EMT costs 133,721 75,547 Depreciation and amortization 172,601 141,998 Bank charges and interest 150,385 (4,588) Consulting fees 271,290 201,523 General and administrative 378,094 352,999 Listing expense - 396,000 Marketing and promotion 151,505 184,368 Professional fees 260,470 637,130 Rent and occupancy 290,897 281,928 Salaries and benefits 1,709,970 2,080,800 Share based payments 193,612 448,481 Telecom and wireless connection fees 288,788 380,469 Travel 120,243 111,666 ---------------------------------------------------------------------------- 16,058,561 15,056,471 ---------------------------------------------------------------------------- Loss from continuing operations (923,423) (2,387,879) Income from discontinued operations - 26,496 ---------------------------------------------------------------------------- Net loss and comprehensive loss for the year (923,423) (2,361,383) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Loss from continuing operations attributable to: Non-controlling interest - - Owners of the parent (923,423) (2,387,879) ---------------------------------------------------------------------------- Loss from continuing operations (923,423) (2,387,879) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Income from discontinued operations attributable to: Non-controlling interest - (1,667) Owners of the parent - 28,163 ---------------------------------------------------------------------------- Income from discontinued operations - 26,496 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net loss and comprehensive loss for the year attributable to: Non-controlling interest - (1,667) Owners of the parent (923,423) (2,359,716) ---------------------------------------------------------------------------- Net loss and comprehensive loss for the year (923,423) (2,361,383) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Loss per share Basic $ (0.07) $ (0.19) Diluted $ (0.07) $ (0.19) Weighted average number of common shares outstanding, basic and diluted 12,994,430 12,740,108 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Share Issued subscriptions Contributed Capital received Surplus Warrants ---------------------------------------------------------------------------- As at December 31, 2010 $ 7,819,002 $ - $ 865,645 $ 696,619 Net Loss for the year - - - - Exercise of options 72,060 - (55,060) - Share based payments - - 193,612 - Warrants expired - - 6,328 (6,328) ---------------------------------------------------------------------------- At December 31, 2011 $ 7,891,062 $ - $ 1,010,525 $ 690,291 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Non- controlling Deficit Interest Total Equity ---------------------------------------------------------------------------- As at December 31, 2010 $ (8,386,233) $ - $ 995,033 Net Loss for the year (923,423) - (923,423) Exercise of options - - 17,000 Share based payments - - 193,612 Warrants expired - - - ---------------------------------------------------------------------------- At December 31, 2011 $ (9,309,656) $ - $ 282,222 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Share Issued subscriptions Contributed Capital received Surplus Warrants ---------------------------------------------------------------------------- As at January 1, 2010 $ 4,872,073 $ 288,958 $ 687,955 $ - Net Loss for the year - - - - Exercise of options 564,070 - (463,330) - Listing expense 396,000 - - - Revaluation of warrants on amalgamation - - - 42,064 Shares issued in reverse takeover (173,426) - - - Fair value of options issued in reverse takeover (53,071) - 53,071 - Fair value of warrants issued in reverse takeover (15,040) - - 15,040 Redemption of shares upon sale of Positive Inc. (134,015) - - - Granted in relation to financing received (note 17) - - - 308,459 Warrants exercised 77,260 - - (23,418) Warrants expired - - 2,786 (2,786) Issued in private placement 2,642,411 (288,958) 136,682 - Value of warrants issued in private placement (357,260) - - 357,260 Share based payments - - 448,481 - ---------------------------------------------------------------------------- At December 31, 2010 $ 7,819,002 $ - $ 865,645 $ 696,619 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Non- controlling Deficit Interest Total Equity ---------------------------------------------------------------------------- As at January 1, 2010 $ (5,984,453) $ 7,569 $ (127,898) Net Loss for the year (2,359,716) (1,667) (2,361,383) Exercise of options - - 100,740 Listing expense - - 396,000 Revaluation of warrants on amalgamation (42,064) - - Shares issued in reverse takeover - - (173,426) Fair value of options issued in reverse takeover - - - Fair value of warrants issued in reverse takeover - - - Redemption of shares upon sale of Positive Inc. - (5,902) (139,917) Granted in relation to financing received (note 17) - - 308,459 Warrants exercised - - 53,842 Warrants expired - - - Issued in private placement - - 2,490,135 Value of warrants issued in private placement - - - Share based payments - - 448,481 ---------------------------------------------------------------------------- At December 31, 2010 $ (8,386,233) $ - $ 995,033 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Year ended December 31, 2011 2010 $ $ ---------------------------------------------------------------------------- Cash Provided By (Used In) Operating Activities Net loss for the year (923,423) (2,361,383) Items not affecting cash: Depreciation of equipment 115,833 115,241 Amortization of intangible assets 56,768 26,757 Interest accreted on promissory note 41,828 - Cancellation of JG Capital loan interest - 14,271 Share based payment 193,612 448,481 Listing expenses - 396,000 Change in non-cash working capital items Receivables 48,187 (157,666) Prepaid expenses (9,999) (1,553) Accounts payable and accrued liabiliies 94,957 (832,872) ---------------------------------------------------------------------------- Cash used in continuing operations (382,237) (2,352,724) Cash used in discontinued operations - (26,503) ---------------------------------------------------------------------------- (382,237) (2,379,227) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash (Used in) in Investing Activities Acquisition of equipment (124,704) (105,690) Intangible assets (13,569) (65,928) ---------------------------------------------------------------------------- Cash used in continuing operations (138,273) (171,618) Cash used in discontinued operations - - ---------------------------------------------------------------------------- (138,273) (171,618) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash Provided by (Used In) Financing Activities Issuance of common shares, net of issurance costs 17,000 2,671,831 Finance lease payments (58,809) (49,133) Promissory note - 843,200 ---------------------------------------------------------------------------- Cash used in continuing operations (41,809) 3,465,898 Cash used in discontinued operations - - ---------------------------------------------------------------------------- (41,809) 3,465,898 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (562,319) 915,053 Cash and cash equivalents, beginning of year 1,121,816 206,763 ---------------------------------------------------------------------------- Cash and cash equivalents, end of year 559,497 1,121,816 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

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.

Contacts:
VersaPay Corporation
Bill McGill
CEO
1-647-258-9378
bill.mcgill@versapay.com

Investor Relations
Hogan Mullally
1-204-479-2516
hogan@sectorspeak.com


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