CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS. (Unaudited)

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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TABLE OF CONTENTS

Three and Six Months Ended June 30, 2015 and 2014

Page

Condensed Interim Consolidated Financial Statements

Condensed Interim Consolidated Statements of Financial Position 1

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss 2

Condensed Interim Consolidated Statements of Changes in Equity 3

Condensed Interim Consolidated Statements of Cash Flows 4

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VERSAPAY CORPORATION

Unaudited Condensed Interim Consolidated Statements of Financial Position (Canadian dollars) As at June 30, As at December 31, 2015 2014 $ $ ASSETS Current

Cash and cash equivalents 5,158,469 2,996,714 Funds held for merchants (note 6) 8,331,727 6,666,347

Receivables 516,360 418,207

Prepaid expenses 171,300 88,789 Total Current Assets 14,177,856 10,170,057

Non-current

Restricted cash (note 7) 148,632 185,790 Property and equipment (note 8) 576,826 622,060 Intangible assets 3,147 4,503

Total Assets 14,906,461 10,982,410

LIABILITIES

Current

Accounts payable and accrued liabilities 631,553 544,909 Funds due to merchants (note 6) 8,331,727 6,666,347 Current portion of obligations under finance lease - 2,009 RSU obligation (note 11) 42,014 -Total Current Liabilities 9,005,294 7,213,265

Non-current

Lease incentive allowance (note 9) 188,796 199,285

Total Liabilities 9,194,090 7,412,550

EQUITY

Share capital (note 11) 20,987,606 17,078,083 Share based payment reserve 1,816,817 1,501,884 Warrants reserve (note 11) 778,714 380,064

Deficit (17,972,439) (15,445,889)

Other comprehensive income 101,673 55,718

Total Equity 5,712,371 3,569,860

Total Liabilities and Equity 14,906,461 10,982,410

Economic Dependence (note 5) Commitments (note 10)

Approved on behalf of the board:

Signed "Brian Kyle" Signed "Craig O'Neill"

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VERSAPAY CORPORATION

Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Canadian dollars)

See accompanying notes to the unaudited condensed interim consolidated financial statements.

2015 2014 2015 2014

(restated - note 3) (restated - note 3)

PROFIT AND LOSS $ $ $ $

Revenue

VersaPay Solutions 199,456 128,056 357,754 225,922 POS Merchant Services 1,207,638 1,282,916 2,291,908 2,399,907 Total Revenue 1,407,094 1,410,972 2,649,662 2,625,829 Cost of Sales

VersaPay Solutions 130,582 82,739 233,334 152,723 POS Merchant Services 463,191 451,865 857,749 830,919 Total Cost of Sales 593,773 534,604 1,091,083 983,642 Gross Profit 813,321 876,368 1,558,579 1,642,187 Expenses

General and Administrative 1,243,731 968,311 2,470,237 2,054,788 Research and Development 361,164 232,106 703,878 403,823 Sales and Marketing 548,646 337,472 956,650 626,001 Total Expenses 2,153,541 1,537,889 4,130,765 3,084,612 Loss before other income and expense (1,340,220) (661,521) (2,572,186) (1,442,425) Finance income (expense) (note 15) 16,870 (44,530) 12,005 (87,675) Foreign exchange gain (loss) from operation 28,778 - 33,631 -NET LOSS (1,294,572) (706,051) (2,526,550) (1,530,100)

OTHER COMPREHENSIVE INCOME

Exchange difference arising on translating

foreign operations 18,161 - 45,955 -Total Other Comprehensive Income 18,161 - 45,955

-TOTAL COMPREHENSIVE LOSS (1,276,411) (706,051) (2,480,595) (1,530,100) Loss per share, basic $ (0.05) $ (0.03) $ (0.11) $ (0.08) Weighted average number of common shares

outstanding, basic 24,082,838 20,932,875 23,062,759 19,943,541 Three months ended, June 30 Six months ended, June 30

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VERSAPAY CORPORATION

Unaudited Condensed Interim Consolidated Statements of Changes in Equity (Canadian dollars)

See accompanying notes to the unaudited condensed interim consolidated financial statements.

Share Capital Share Based Payments Reserve Warrants Reserve Deficit Other Comprehensive

Income (Loss) Total Equity

$ $ $ $ $ $

As at December 31, 2013

(restated - note 3) 11,133,048 1,608,613 52,149 (11,889,508) - 904,302 Net loss for the period - - - (1,530,100) - (1,530,100) Shares Issued (note 11) 3,974,951 87,335 360,503 - - 4,422,789

Exercise of options (note 11) 638,736 (205,400) 433,336

Exercise of warrants (note 3 and 11) 284,875 - (52,149) - - 232,726 Share based payments (note 11) 173,800 156,117 - - - 329,917

As at June 30, 2014 16,205,410 1,646,665 360,503 (13,419,608) - 4,792,970 Share Capital Share Based Payments Reserve Warrants Reserve Deficit Other Comprehensive

Income (Loss) Total Equity

$ $ $ $ $ $

As at December 31, 2014 17,078,083 1,501,884 380,064 (15,445,889) 55,718 3,569,860 Net loss for the period - - - (2,526,550) (2,526,550) Other comprehensive income for

the period - - - - 45,955 45,955 Shares Issued (note 11) 3,909,523 91,389 398,650 - - 4,399,562 Share based payments (note 11) - 223,544 - - - 223,544

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VERSAPAY CORPORATION

Unaudited Condensed Interim Consolidated Statements of Cash Flows (Canadian dollars)

See accompanying notes to the unaudited condensed interim consolidated financial statements.

2015 2014

$ $

Cash Provided by (Used in) Operating Activities

Net loss for the period (2,526,550) (1,530,100) Items not affecting cash:

Amortization of lease incentive allowance (10,489) -Depreciation of property and equipment and intangible asset 77,370 38,051 Interest accreted on promissory note - 41,326 Share based payments 223,545 329,917 Change in non-cash working capital items

Receivables (98,153) (183,522) Prepaid expenses (82,511) (116,411) Accounts payable and accrued liabilities 86,644 222,476 RSU obligation 42,014 -Cash Used in Operating Activities (2,288,130) (1,198,263) Cash Provided by (Used in) Investing Activities

Restricted cash 37,158 (185,790) Acquisition of property and equipment (30,781) (140,845) Cash Provided by (Used in) Investing Activities 6,377 (326,635) Cash Provided by (Used in) Financing Activities

Issuance of common shares, net of issuance costs 4,399,562 5,088,852 Finance lease payments (2,009) (14,407) Cash Provided by Financing Activities 4,397,553 5,074,445

Increase in Cash and Cash Equivalents 2,115,800 3,549,547

Cash and Cash Equivalents, Beginning of period 2,996,714 1,276,410 Exchange Gains on Cash and Cash Equivalents 45,955

-Cash and -Cash Equivalents, End of Period 5,158,469 4,825,957

Cash and cash equivalents consist of the following:

2015 2014

$ $

Cash at bank and in hand 999,885 1,008,091

Demand deposits 4,158,584 3,817,866

5,158,469

4,825,957 Six months ended June 30,

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

1. Nature of Business

VersaPay Corporation ("the Company") is incorporated under the laws of British Columbia, Canada, and its principal place of business is Suite 210, 214 King Street West, Toronto, Canada. The Company has operations in Canada and the United States. The Company is a financial technology company that provides cloud accounts receivable automation software and integrated payment solutions for businesses. Through its VersaPay Solutions segment ("Solutions"), the Company focuses on cloud based electronic invoice presentment with its ARC™ software ("ARC™") and develops value added payment technologies such as its PayPort™ and VersaPay Gateway™ (previously known as Electronic Money Transfer, or "EMT"). Through its Point of Sales Merchant Services segment ("POS"), the Company acts on behalf of financial institutions to provide merchants with the ability to process credit and debit card payments for card-not-present and card-present transactions, including internet businesses, mail-order/telephone-order merchants and retail point-of-sale merchants.

2. Basis of Presentation

The unaudited condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting. The accounting policies applied in these financial statements are consistent with those used in the Company's audited consolidated financial statements for the year ended December 31, 2014. There have been no changes from the accounting policies applied in the December 31, 2014 financial statements. The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the related amounts of assets and liabilities, revenues and expenses. In management's opinion, all adjustments considered necessary for fair presentation have been included in these financial statements. Interim results are not necessarily indicative of the results expected for the financial year. Annual results may differ from interim estimates. The significant judgments made by management applied in the preparation of these financial statements are consistent with those applied and disclosed in the Company's audited financial statements for the year ended December 31, 2014. For a description of the critical accounting estimates and assumptions, please refer to the Company's audited consolidated financial statements for the year ended December 31, 2014.

These unaudited condensed interim consolidated financial statements are presented in Canadian dollars. They include the accounts of the Company’s wholly-owned subsidiary, VersaPay Payment Technology Solutions, Inc. which was incorporated on May 17, 2012. All significant intercompany balances and transactions have been eliminated upon consolidation.

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

3. Voluntary Changes in Accounting Policies Revenue Presentation on POS Merchant Services

Effective January 1, 2014, the Company made a voluntary change in accounting policy related to the revenue presentation of credit card processing services for the POS Merchant Services business. 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.

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 accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, the change in accounting policy has been applied retrospectively. This change in accounting has no impact on the Company’s consolidated statement of financial position, reported gross profit, net loss, net loss per share or total comprehensive loss.

The following table summarizes the impact of this change:

Amount reported prior to accounting policy change Impact of accounting policy change Amount reported after new policy implemented Amount reported prior to accounting policy change Impact of accounting policy change Amount reported after new policy implemented $ $ $ $ $ $ Revenue

POS Merchant Services 4,719,863 (3,436,947) 1,282,916 8,956,807 (6,556,900) 2,399,907 Total Revenue 4,847,919 (3,436,947) 1,410,972 9,182,729 (6,556,900) 2,625,829 Cost of Sales

POS Merchant Services 3,888,812 (3,436,947) 451,865 7,387,819 (6,556,900) 830,919 Total Cost of Sales 3,971,551 (3,436,947) 534,604 7,540,542 (6,556,900) 983,642 Gross Profit 876,368 - 876,368 1,642,187 - 1,642,187 Net Loss (706,051) - (706,051) (1,530,100) - (1,530,100) Loss Per Share (0.03) - (0.03) (0.08) - (0.08)

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

3. Voluntary Changes in Accounting Policies (continued) Warrants Exercised

The Company made a voluntary change in accounting policy related to the allocation of exercised warrants. Previously, exercised warrants were recognized in reserve. The Company now chooses to recognize exercised warrants in share capital.

The Company believes the new accounting policy provides more relevant information as the allocation more clearly reflects the investment, face value of exercised warrants, into share capital. In accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, the change in accounting policy has been made retrospectively. The change in accounting policy only impacted 2013 and 2014 fiscal years as warrants have not been exercised in prior years.

The effect on the consolidated statement of financial position as at December 31, 2013 is an increase in share capital of $320,111. This accounting policy has no impact on comprehensive loss and cash flows and has no effect on earnings per share for the year ended December 31, 2013.

4. Significant Accounting Policies

The accounting policies applied by the Company in these condensed interim consolidated financial statements are the same as those applied by the Company in its consolidated financial statements as at and for the year ended December 31 2014.

5. Economic Dependence

For the three months ended June 30, 2015, the Company derived 73% of its POS merchant service revenue (three months ended June 30, 2014 - 80%) and for the six months ended June 30, 2015, the Company derived 76% of its POS merchant service revenue (six months ended June 30, 2014 - 81% ) through an arrangement with Chase Paymentech (“Chase”) pursuant to a written agreement that expires on September 30, 2016. Under the agreement, Chase pays the Company a percentage of the revenues it earns from the Company's POS merchants. The percentage paid to the Company is determined by the number of POS merchants added each quarter. Unless terminated, the agreement automatically renews for successive one year terms. Under the agreement signed with Chase, any material default of the conditions contained in the agreement by the Company could result in a termination of the processing agreement. As at June 30, 2015, the Company is in compliance with these conditions.

Amount reported prior to accounting

policy change Impact of accounting policy change

Amount reported after new policy implemented Share capital 10,812,937 320,111 11,133,048 Share based payment reserve 1,928,724 (320,111) 1,608,613 Loss per share (0.07) - (0.07)

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

6. Funds Held for Merchants

The Company holds funds in trust for customers using the VersaPay Solutions Gateway™ services. These services allows customers to pay and receive funds electronically. Customers using PayPort™ and ARC™ may also be using Gateway™ to make and receive payments. In providing the Gateway™ services, the Company temporarily holds its customers' funds while their funds are in transit. The amount of funds held for merchants typically vary with the volume of transactions being processed. The funds are held at a Schedule A bank. Because these are customer funds, there is an associated Funds Due to Merchants liability.

7. Restricted Cash

As at June 30, 2015, the Company has restricted cash of $148,632 (as at December 31, 2014 - $185,790). The restricted cash is held as collateral for a letter of credit for the new office space in Toronto, opened in July 2014. The letter of credit obligation is reduced to zero over a five year period from the inception of the Toronto lease.

8. Property and Equipment

9. Lease Incentive Allowance

On July 31, 2014, the Company received a lease incentive allowance of $209,773 related to leasehold improvements as an inducement to enter into a 10-year lease term for the Toronto office. This amount is amortized over the term of the lease. The accumulated amortization as at the period ended June 30, 2015 was $20,979 (as at June 30, 2014 - Nil) with a corresponding credit to rental expense.

Computer Equipment Office Furniture and Equipment Leasehold Improvements Total $ $ $ $ COST Balance as at December 31, 2014 647,060 322,674 209,773 1,179,507 Additions 25,593 5,188 - 30,781 Balance as at June 30, 2015 672,653 327,862 209,773 1,210,288 ACCUMULATED DEPRECIATION Balance as at December 31, 2014 (423,087) (113,383) (20,977) (557,447) Depreciation for the period (33,699) (21,339) (20,977) (76,015) Balance as at June 30, 2015 (456,786) (134,722) (41,954) (633,462) NET BOOK VALUE

As at December 31, 2014 223,973 209,291 188,796 622,060 As at June 30, 2015 215,867 193,140 167,819 576,826

$

Balance as at December 31, 2014 199,285

Amortization for the period (10,489)

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

10. Commitments

The Company has operating lease commitments for office premises payments for the current and next five years and thereafter in the following amounts:

11. Share Capital

On May 7, 2015 the Company closed a bought-deal private placement for gross proceeds of $4,840,002. A syndicate of underwriters led by Haywood Securities Inc. and including Cormark Securities Inc. completed the private placement offering of 3,457,144 units of the Company ("Units") at a price of $1.40 per Unit. Each Unit is comprised of one common share of the Company (each, a "Common Share") and one-half (1/2) of one Common Share purchase warrant (each whole Common Share purchase warrant, a "Warrant"). Each Warrant will be exercisable to acquire an additional Common Share (each, a "Warrant Share") at an exercise price of $2.00 per Warrant Share for a period of 24 months following May 7, 2015.

The Company is authorized to issue an unlimited number of common shares.

2015 2016 2017 2018 2019 and thereafter Total

$ $ $ $ $ $ $

165,230

227,788 247,942 264,633 280,518 1,216,618 2,402,729

Common shares $

Balance, December 31, 2014 and March 31, 2015 22,031,346 17,078,083

Issued for cash 3,457,144 3,909,523

Issued on exercise of options - -Fair value of exercised stock options - -Issued on exercise of warrants - -Fair value of exercised warrants -

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

11. Share Capital (continued) Options

The Company's Fixed Stock Option Plan ("the Plan") allows for 20% of the issued share capital as at the date that the Company's plan was approved by the TSX Venture Exchange to be reserved for issuance to employees, officers, directors, and consultants of the Company. The Board of Directors of the Company may terminate the Plan at any time provided that the termination does not alter the terms or conditions of any option or impair the right of any shareholder.

Share purchase options outstanding as at June 30, 2015 are as follows:

On May 27, 2015, 125,000 options were granted to the Company's board of directors. These options are exercisable at a price of $1.38 per share on or before May 27, 2020.

As part of the equity financing, the underwriters received 207,428 compensation options. Each compensation option is exercisable to acquire one unit at the issue price for a period of 24 months from closing of the offering. The following table summarizes information pertaining to the Company's share purchase options outstanding as at June 30, 2015:

Share Purchase Options outstanding

Number of options Exercise price ($) Share price upon exercise ($) Fair value at grant ($)

Balance, December 31, 2014 and March 31, 2015 2,921,690 1.13 N/A N/A Granted 432,428 1.40

Exercised - -Expired - -Forfeited -

-Balance, June 30, 2015 3,354,118 1.17 N/A N/A

Weighted Average Range of exercise prices Awards Outstanding Remaining contractual life (years) Average exercise price Number of options exercisable Average exercise price $0.66 - $0.74 12,500 0.15 $0.66 12,500 $0.66 $0.75 - $0.81 175,000 0.82 $0.78 175,000 $0.78 $0.92 - $0.99 187,500 1.27 $0.96 187,500 $0.96 $1.00 - $1.35 2,431,690 2.91 $1.15 1,176,691 $1.10 $1.36 - $1.40 332,428 3.00 $1.39 207,428 $1.40 $1.41 - $1.59 100,000 4.78 $1.41 - - $1.60 - $2.00 115,000 2.93 $1.60 76,667 $1.60 3,354,118 2.77 $1.17 1,835,786 $1.10 Options exercisable Options outstanding

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

11. Share Capital (continued)

Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in subjective input assumptions can materially affect the fair value estimate and therefore the existing models may not necessarily provide a reliable measure of the fair value of the Company’s share purchase options.

The exercise price of all share purchase options granted during the year is equal to or greater than the closing market price at the grant date. The fair value of stock options granted during the six months ended June 30, 2015 and 2014 was estimated using the Black-Scholes option-pricing model with the following assumptions:

Share based payment expenses totaling $113,780 was recognized during the three months ended June 30, 2015 (three months ended June 30, 2014 - $69,901) and $223,545 was recognized during the six months ended June 30, 2015 (six months ended June 30, 2014 - $329,917).

Restricted Share Units

Effective January 1, 2015, the Company introduced a Restricted Share Unit ("RSU") Plan. Granted RSU's under the plan entitles employees, management and directors to a cash payment equal to the fair market value of the Company's shares after the end of a performance period multiplied by the number of units that have vested. Granted RSU's vest over a three year period. The share's fair market value is based on a five-day average trading price. Each year, the Company recognizes a compensation expense in operating income for one third of each RSU granted. The compensation expense is equal to the fair market value of VersaPay's common shares at the Balance Sheet date. The compensation expense is prorated over the performance period reflecting changes in the fair market value of VersaPay's common share until the end of the performance period. Any subsequent changes in the fair market value of the share price are be recognized as a gain or loss in the statement of loss and comprehensive loss. A corresponding current liability is recognized for the accumulated RSU obligation.

2015 2014

Options granted 432,428 500,000

Strike price $1.40 $1.11

Risk free interest rate 0.50%-0.90% 1.10%-1.44%

Expected life (years) 2-4.61 2.59-4.59

Vesting period (years) 1-3 1-3

Expected volatility 52%-57% 50%-64%

Expected dividends Nil Nil

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

11. Share Capital (continued) Warrants

The continuity of share purchase warrants is as follows:

These warrants, if not exercised, will expire as follows:

As part of the $4,840,002 share issuance in May 2015, the fair value of 207,428 broker warrants granted was $91,389 and the fair value of 1,728,572 non-broker warrants granted was $493,530, less share issuance costs of $94,880 and was estimated using the Black-Scholes option-pricing model with the following assumptions:

Warrants Fair Value $

Exercise price $

Balance, December 31, 2014 and March 31, 2015 2,123,500 380,064 1.50

Granted 1,728,572 398,650 2.00 Exercised - -

-Balance, June 30, 2015 3,852,072 778,714 1.72

Expiry Date Total warrants outstanding

February 4, 2016 2,123,500 May 7, 2017 1,728,572 Balance, June 30, 2015 3,852,072 2015 2014 Warrants granted 1,728,572 2,375,190 Strike price $2.00 $1.50

Risk free interest rate 0.68% 0.96%

Expected life (years) 2 2

Vesting period (years) N/A N/A

Expected volatility 58% 52%

Expected dividends NIL NIL

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

12. Related Party Transactions

The following related party transactions were incurred:

Included in accounts payable and accrued liabilities as of June 30, 2015 is $101,059 (December 31, 2014 - $103,487) owing to related parties.

13. Capital Management

The capital structure of the Company consists of equity.

The Company manages its capital structure and makes adjustments to it based on the funds available to the Company. The Board of Directors does not currently establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to enhance and sustain future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size and stage of the Company, is reasonable. There were no changes in the Company’s approach to capital management during the year.

14. Segmented Information

The Company has two reportable operating segments: VersaPay Solutions and Point of Sale Merchant Services.

VersaPay Solutions

VersaPay Solutions develops business to business applications for small and medium enterprises. The segment focuses on accounts receivable automation software and integrated electronic payments technologies. Revenues include transaction processing and monthly fees earned from credit card processing and from the Company's PayPort™ and Gateway™ service. Revenues also include fees earned from its proprietary cloud-based electronic invoice presentment and payment product, ARC™

2015 2014 2015 2014

$ $ $ $

Senior management compensation 433,977 239,398 880,692 479,272 Shares issued to management - - - 173,800 Share based payments for key employees 58,053 57,576 117,354 108,314 Share based payments for directors 34,017 23,064 66,921 47,869 Professional fees paid to directors 46,420 27,500 46,420 35,500 Professional fees paid to a law firm in which a

director is a partner 75,301 58,809 108,662 193,583

647,768

406,347 1,220,050 1,038,338

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

14. Segmented Information (continued)

Point of Sale Merchant Services (POS)

The POS segment encompasses traditional credit card transaction processing services provided to merchants in Canada and the US. This segment is characterized by its recurring revenue stream and has been the primary business of the Company since its inception. The majority of the revenues stems from the reselling of services from Chase. The segment also includes the sales of physical and electronic point of sale terminals and related hardware.

Management evaluates performance and allocates resources based on the revenues and earnings before interest, depreciation, amortization, share based payment costs, impairments and other income ("Adjusted EBITDA"). The Adjusted EBITDA of each segment includes the revenues of each segment less those expenses that are directly related to those revenues. Operating overhead, shared costs and certain compensation costs are included in Corporate in the following table:

For the three and six months ended June 30, 2015 and 2014, substantially all of the Company's revenues and assets were in Canada.

Consolidated (in thousands) Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 VersaPay

Solutions POS Corporate

Consolidated totals VersaPay Solutions POS (restated) Corporate Consolidated totals Revenue $199 $1,208 - $1,407 $128 $1,283 - $1,411 Cost of sales 131 463 - 594 83 452 - 535 Gross profit 68 745 - 813 45 831 - 876 Total comprehensive income (loss) ($1,019) $512 ($769) ($1,276) ($605) $599 ($700) ($706) Adjusted EBITDA ($993) $512 ($678) ($1,159) ($602) $599 ($567) ($570)

Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 VersaPay

Solutions POS Corporate

Consolidated totals VersaPay Solutions POS (restated) Corporate Consolidated totals Revenue $358 $2,291 - $2,649 $226 $2,400 - $2,626 Cost of sales 233 858 - 1,091 153 831 - 984 Gross profit 125 1,433 - 1,558 73 1,569 - 1,642 Total comprehensive income (loss) ($2,017) $934 ($1,398) ($2,481) ($1,135) $1,094 ($1,489) ($1,530) Adjusted EBITDA ($1,968) $935 ($1,205) ($2,238) ($1,129) $1,094 ($1,039) ($1,074)

June 30, 2015 December 31, 2014

Property and equipment $355 $14 $208 $577 $401 $15 $206 $622 Intangible assets 3 - - 3 4 - - 4

358

14 208 580 405 15 206 626 Total Assets $8,979 $517 $5,410 $14,906 $7,336 $419 $3,227 $10,982

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

15. Finance income (expense)

Finance income (expense) is comprised of:

16. Expenses by nature

The following table shows how the Company reclassifies the expenses by function:

1. Salaries and benefits were allocated by function.

2015 2014 2015 2014

$ $ $ $

Interest income 17,950 2,261 14,166 4,180 Interest expense (1,080) (1,008) (2,161) (1,300) Accreted on the promissory note - (45,783) - (90,555)

16,870

(44,530) 12,005 (87,675)

Three months ended June 30, Six months ended June 30,

2015 2014 2015 2014

$ $ $ $

General and Administrative:

Depreciation and amortization 38,550 21,408 77,024 38,051 General and office expenses 259,732 205,088 487,162 403,851 Professional and consulting fees 350,992 280,202 575,915 517,064 Rent and occupancy 73,814 46,221 171,268 120,822 Salaries and benefits 1 406,863 345,491 935,323 645,083 Share based payments 113,780 69,901 223,545 329,917 Total general and administrative expenses 1,243,731 968,311 2,470,237 2,054,788

Research and Development:

Salaries and benefits 1 (research and

development combined) 361,164 232,106 703,878 403,823 Total research and development expenses 361,164 232,106 703,878 403,823

Sales and Marketing:

Marketing and promotion 181,750 96,800 317,614 193,061 Salaries and benefits 1 366,896 240,672 639,036 432,940 Total sales and marketing expenses 548,646 337,472 956,650 626,001

Total Expenses 2,153,541 1,537,889 4,130,765 3,084,612

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VERSAPAY CORPORATION

Notes to the Condensed Interim Consolidated Financial Statements

June 30, 2015 and 2014 (Unaudited) (Canadian dollars)

17. Subsequent event

On July 17, 2015, the Company announced a change to the Company's US strategy and staffing. Based on the Company's recent success with medium to large US suppliers, management has decided to focus its efforts on direct sales in the US marketplace. As the sales organization is managed from Toronto, the US office will close, and Todd Whiton, the President of VersaPay's US subsidiary, VersaPay Payment Technology Solutions Inc., will leave the Company. As a result, the Company is anticipating costs of approximately $280 thousand to close its operations in the US.

Figure

Updating...

References