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VersaPay Announces 2010 Second Quarter Results and Leadership Transition

^{Published on 2010-08-25 13:25:28 - Market Wire}
 

 Q2 2010 Highlights - Increased total gross quarterly transaction value processed 99% to $177 million from $89 million in Q2 2009(1) - Monthly gross transaction value processed was $65 million for June 2010 - Launched latest version of VersaPay EFT platform, the Company's proprietary Electronic Funds Transfer (EFT) platform Q2 2010 Financial Summary(2) ------------------------------------------------------------------------- Q2 2010 Q2 2009 H1 2010 H1 2009 ------------------------------------------------------------------------- Recurring revenue(3) $3.0M $1.8M $5.5M $3.2M ------------------------------------------------------------------------- Non-recurring revenue(4) $0.1M $0.2M $0.3M $0.3M ------------------------------------------------------------------------- Total Revenue $3.1M $1.9M $5.7M $3.5M ------------------------------------------------------------------------- Expenses $3.6M $2.1M $7.1M $3.8M ------------------------------------------------------------------------- Adjusted EBITDA(5) $(0.5)M $0.03M $(1.0)M $(0.06)M ------------------------------------------------------------------------- Income (loss) from continuing operations $(0.6)M $(0.2)M $(1.4)M $(0.3)M ------------------------------------------------------------------------- Cash and cash equivalents $0.9M $0.2M ------------------------------------------------------------------------- 

 1 Total quarterly gross transaction value processed represents the total volume of credit and debit card transactions processed by VersaPay's merchant customers 2 A complete set of financial statements and notes and MD&A for the three-month period ended June 30, 2010 will be available on the Company's website at [ www.versapay.com ] and on SEDAR. 3 Defined as Transaction processing fees + VersaCard/EFT fees 4 Defined as Product sales (point-of-sale devices) and other 5 Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-based compensation. See table A. 6 Total annualized volume added is the combined processing volume that all merchant relationships added over a specific period of time are expected to deliver over a 12-month period. This figure is calculated based on historical processing trends and estimates provided by the merchant during the application process. As such this figure is subject to significant variability and revision. Table A ------------------------------------------------------------------------- Q2 2010 Q2 2009 H1 2010 H1 2009 ------------------------------------------------------------------------- Adjusted EBITDA $(517,539) $32,816 $(1,027,755) $(62,714) ------------------------------------------------------------------------- Interest expense - - - - ------------------------------------------------------------------------- Amortization $(25,833) $(10,955) $(51,571) $(21,489) ------------------------------------------------------------------------- Stock-based compensation $(12,787) $(202,925) $(303,736) $(202,925) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Loss from continuing operations $(556,159) $(181,064) $(1,383,062) $(287,128) ------------------------------------------------------------------------- 

 Unaudited Consolidated Balance Sheets ------------------------------------- (Unaudited) (Audited) As at As at June 30 December 31 -------------------------- 2010 2009 $ $ -------------------------- ASSETS Current Cash and cash equivalents 883,546 206,763 Funds held for merchants 1,896,050 365,518 Receivables 461,213 307,675 Prepaid expenses 21,008 17,133 Current assets of discontinued operations - 29,133 -------------------------- 3,261,817 926,222 Share issue costs - 425,536 Equipment 361,296 318,735 Intangible assets 167,520 101,592 Non-current assets of discontinued operations - 161,012 -------------------------- 3,790,633 1,933,097 ------------------------------------------------------------------------- LIABILITIES Current Accounts payable and accrued liabilities 719,140 1,259,384 Funds due to merchants 1,896,050 365,518 Deferred revenue 7,270 9,688 JG Capital Loan - 225,000 Current portion of obligation under capital lease 37,160 36,819 Current liabilities of discontinued operations - 76,728 -------------------------- 2,659,620 1,973,137 Obligation under capital lease, net of current portion 78,054 97,546 -------------------------- 2,737,674 2,070,683 -------------------------- Non-controlling interest in Positive Inc. - 7,569 -------------------------- SHAREHOLDERS' EQUITY (DEFICIENCY) Share capital 7,064,649 4,872,073 Shares subscriptions received - 288,958 Contributed surplus 972,254 618,955 Warrants 388,160 Deficit -7,372,104 -5,925,141 -------------------------- 1,052,959 -145,155 -------------------------- 3,790,633 1,933,097 Unaudited Consolidated Statement of Loss, Comprehensive Loss and Deficit ------------------------------------------------------------------------ 3 months ended June 30 6 months ended June 30 2010 2009 2010 2009 $ $ $ $ -------------------------- ------------------------- Revenue Transaction processing fees 2,908,948 1,677,467 5,356,210 3,073,072 Product sales and other 110,065 164,975 255,442 291,004 VersaCard/EFT fees 52,319 74,389 97,172 129,879 -------------------------- ------------------------- 3,071,332 1,916,831 5,708,824 3,493,955 -------------------------- ------------------------- Expenses Cost of services 1,974,416 1,117,906 3,584,112 2,034,189 Cost of products sold and other 343,313 110,977 713,820 358,470 VersaCard/EFT costs 15,453 44,137 27,014 70,248 Amortization 25,833 10,955 51,571 21,489 Bad debts 10,516 1,650 11,694 1,652 Bank charges and interest 2,246 11,807 (12,192) 25,058 Consulting fees 55,045 139,887 147,129 280,399 General and administrative 79,096 50,522 176,124 75,409 Marketing and promotion 48,948 14,308 110,246 30,230 Professional fees 251,296 81,535 339,619 101,727 Rent and occupancy 72,159 49,156 139,653 99,758 Salaries and benefits 643,074 221,624 1,243,283 393,749 Stock based compensation 12,787 202,925 303,736 202,925 Telecom and wireless connection fees 71,990 18,055 194,167 47,801 Travel 21,319 22,451 61,910 37,979 -------------------------- ------------------------- 3,627,491 2,097,895 7,091,886 3,781,083 -------------------------- ------------------------- Loss from continuing operations (556,159) (181,064) (1,383,062) (287,128) Results from discontinued operations (32,221) 17,539 (23,504) (11,325) Loss on Sale of business - - - - Non-controlling interest 5,905 (4,397) 1,667 6,076 -------------------------- ------------------------- Net loss and comprehensive loss for the period (582,475) (167,922) (1,404,899) (292,377) Deficit, beginning of period (6,789,629) (4,708,347) (5,925,141) (4,583,892) Charges on share purchase warrant modification - - (42,064) - -------------------------- ------------------------- Deficit, end of period (7,372,104) (4,876,269) (7,372,104) (4,876,269) -------------------------- ------------------------- -------------------------- ------------------------- Loss per Share - basic and fully diluted $ (0.04) $ (0.03) $ (0.11) $ (0.03) Weighted average number of common shares outstanding 12,872,844 8,523,159 12,606,100 8,677,866 Unaudited Consolidated Statement of Cash Flow --------------------------------------------- 3 months ended June 30 6 months ended June 30 2010 2009 2010 2009 -------------------------- ------------------------- $ $ $ $ -------------------------- ------------------------- Cash Provided By (Used In) Operating Activities Net loss for the period (582,475) (167,922) (1,404,899) (292,377) Items not affecting cash: - amortization of equipment 25,833 28,626 51,571 39,160 - cancellation of JG Capital loan interest - - 14,271 - - stock based compensation 12,787 202,925 303,736 202,925 - non controlling interest (11,806) 4,397 (7,569) (6,076) - discontinued operations - (9,219) (10,212) (13,103) Change in non cash working capital items receivables (33,388) (366,368) (138,120) (132,894) inventory - (1,386) - (1,386) prepaid expenses (3,882) 3,554 (3,882) 163 accounts payable and accrued liabilities 86,512 (105,469) (540,241) 13,271 deferred revenue (1,209) 579 (2,418) 1,996 -------------------------- ------------------------- (507,628) (410,283) (1,737,763) (188,321) -------------------------- ------------------------- Cash Provided by (Used In) Financing Activities issuance of common shares, net of issuance costs 55,131 409,724 2,592,263 415,816 capital lease payments (5,928) (2,769) (17,658) (5,498) -------------------------- ------------------------- 49,203 406,955 2,574,605 410,318 -------------------------- ------------------------- Cash Provided by (Used in) Used in Investing Activities acquisition of equipment (32,370) (16,354) (94,132) (21,369) developed technology (31,168) - (65,928) - discontinued operations - 23,834 - 17,856 -------------------------- ------------------------- (63,538) 7,480 (160,060) (3,513) -------------------------- ------------------------- (Decrease) increase in cash and cash equivalents (521,963) 4,152 676,782 218,484 Cash and cash equivalents, beginning of period 1,405,508 553,141 206,763 338,809 -------------------------- ------------------------- Cash and cash equivalents, end of period 883,545 557,293 883,545 557,293 -------------------------- ------------------------- Supplementary Cash Flow Information: Interest paid - 4,119 - 8,471