INVESTOR PRESENTATION Sept 2015 Craig O Neill Chief Executive Officer
Forward Looking Statements 2 This presentation 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 presentation 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 forwardlooking 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.
Current State of A/R Management 3 Supplier Creates Invoice Invoice to buyer (Email/Manually) Buyer waits for internal approval before payment Supplier sends reminder email Buyer requests new invoice Inefficient Process Wasted Resources
Complicated and Costly 4 Difficulty tracking payments Confused customers Frustrated employees High bad debt expense Sudden increase in processing volume Leads to Organizational inefficiencies
5 Financial technology company delivering integrated cloud-based payment solutions for businesses
VersaPay 6 2006 Company Founded Strategic Partnerships #1 Rank in Profit Top 50 in 2009 2010 Initial Public Offering
What Versapay Delivers 7 POS Merchant Services Business Solutions Reseller of credit card terminals Track record of new account growth Recurring fees generated on transaction volumes Long term relationships with customers and technology partners Cash flow positive Stability SaaS-based electronic invoice and payment system Designed to streamline accounts receivable management Product is delivered to end users through direct sales and partnership arrangements Growth
Versapay Solutions Products 8 ARC - Supplier portal - Customer portal PayPort - UI for individuals / small businesses to make and receive payments Admin Console - Admin tools Future apps Gateway - Payment Processing Services - Payment Gateway Services - Application services (users, logging, etc) - Credential Vault - Notification Services - Payment API - Invoice API (future) - File import - Processor connectivity - AR connectors - AP connectors (future)
ARC: Accounts Receivable Cloud 9 COMPANY: Publish invoices and supporting documents Collaborate with customers Track and analyze customer behavior Auto reconcile and clear CUSTOMERS: One-click access Convenient and secure Collaborate with you Choice of payment options Faster Payments Happier Customers
ARC Advantage 10 Invoice and collect more efficiently Get paid electronically, get paid faster Reduce costs vs manual or on premise systems Satisfy customers desire to pay electronically Make credit cards a cash flow tool Eliminate security issues with customer data Get started quickly and easily Lower Days Sales Outstanding
The Opportunity (Selected Verticals)* 11 400,000 U.S. firms with $5M in revenue or more 88% Percent of U.S. firms rely on paper invoices $3.5B In annual recurring revenue $979M $272M $1.1B * Selected Vertical Industries: Media Transportation Wholesale / Distributors Manufacturing Professional Services $5-20M $20-100M $100-500M $500-1B $1.2B
Ecosystem & Competition 12 Small BUYER Large A/R Automation/Outsourcing BillTrust Transactis Kubra HighRadius Banks Email-based Invoicing Freshbooks Wave Intuit Sage Invoice2go A/P Automation/Outsourcing Oracle SAP Esker Corcentric Ariba Bottomline Technologies Banks Procure-To-Pay Cortex Esker Corcentric Ariba Large SUPPLIER Small 5M 1B Suppliers Serving Small-Mid Sized Buyers
ARC: Positioned to Grow Rapidly 13 A compelling value proposition A large untapped market with limited competition Our approach overcomes historical obstacles Partnerships with major industry players give us significant market reach Several trends are leading towards change Experience in the market has proven our story is compelling Addressable market is estimated to be at least 3.5B Very limited competition The solution, pricing and implementation approach takes away reasons to say no Heartland, TD, Visa, MasterCard, more on the way From a variety of credible sources
Growth Profile The Early Adopter Phase 14 We Are Here 2013 First 5 5 to 25 09/13-06/14 ARC Development Phase 07/14-04/15 Pilot Phase with early adopters 05/15-12/15 Graduate from early adopters 2016- Expand Sales and Partners to scale-up
Pilot Phase Completed 15 22 Suppliers signed 11 Suppliers live 6,000 Customers registered $~800K* Annual recurring revenue from current signed customers $5-7M Annual recurring revenue from current pipeline * Estimate when fully implemented Excellent Customer Feedback
Successful Pilot Phase 16 We have verified: A widespread need for ARC across B2B industries The business case is strong Buyers will sign-up Very little direct competition, but a variety of indirect competitors exist that are inferior alternatives Our pay-as-you-go model is a key success factor Disruptive new software category in the minds of customers
A Success Story 17 Municipal government pays 22 outstanding invoices dating back 6 months. A/P user calls in to say how much everyone loves this new system Buyer pays $68,000 of overdue invoices in response to ARC s automatic 30-day overdue reminder Buyer logs in, signs up and pays all outstanding invoices within 5 minutes of ARC sending invitation Buyer automatically opts-in for AutoPay within days of feature being introduced Agency buyer pays all outstanding invoices with one click using Pay All feature
Revenue Model 18 POS Merchant Services Business Solutions Sale of credit card terminals Monthly subscription fee Credit card transaction fee Credit card transaction fee >95% Recurring Revenue
Financial Overview
POS Volumes Continue to Grow 20 Credit Card $ Value (in thousands) Stable
Revenue: Growth Expected From Business Solutions 21 Revenue (in thousands)
Financial Summary 22 ($000 s) Q2 15 Q2 14 FY 14 FY 13 Revenue: $1,407 $1,410 $ 5,165 $ 4,819 Gross Profit 813 876 3,210 3,212 Gross Margin 58% 62% 62% 67% Adjusted EBITDA (1,159) (570) (2,717) (670) Net income (loss) (1,294) (706) (3,556) (1,110) EPS ($0.05) ($0.03) ($0.17) ($0.07)
Corporate Information Ticker (TSXV) Market Capitalization (08/31/15) 23 VPY $31.9M Stock Price (8/31/15) $1.25 Shares Outstanding (Basic) 25,500,990 Options 3,641,618 Fully Diluted Shares Outstanding 32,994,680 Year End Cash and cash equivalent (06/30/15) Head Office December 31st $5.2M Toronto
Management Team 24 Craig O Neill Chief Executive Officer and Director Craig O'Neill was appointed to the position of Chief Executive Officer at VersaPay Corporation in September 2013. He has also been a Director on the company s board since November 2013. He has more than 20 years of experience delivering enterprise software. Prior to joining VersaPay, Craig was the co-founder and CEO of Xeye, where he directed the company s growth of more than 40% per year and sale to Odyssey Financial Technologies, and ultimately to the Temenos Group, where he became SVP Strategy and Development. His background includes management of large development groups, designing and building foundational components of corporate system architectures and applications, overseeing enterprise CRM implementations and driving strategic business initiatives. Craig holds a B.Sc. from the University of Toronto in Computer Science and Mathematics. David C W Chan Chief Financial Officer and Corporate Secretary David has served as VersaPay s CFO and Corporate Secretary since 2011. He has over 24 years of experience working with high growth technology companies. Prior to VersaPay, David was an M&A and corporate finance professional and advised on over 30 transactions with a total value of over $1 billion. David has also been an investor and principal in several software start-ups. He is a Chartered Accountant, and previously worked with Ernst & Yong. David is also a CPA and CFA charterholder and has an MBA from the Schulich School of Business at York University. John McLeod Vice President, Marketing John McLeod joined VersaPay in October 2014 responsible for creating and delivering the company s brand and marketing strategy. John was formerly Vice President, Marketing at Desire2Learn, a global SaaS based learning solutions provider. During his tenure he was instrumental in its growth from 35 employees to a global enterprise of nearly 900 employees serving 13 million learners. John has been a key member of senior management teams driving growth in both start-up ventures and large technology companies including MetroNet Communications, AT&T Canada and Allstream. John holds a BBA from Wilfrid Laurier University, an MBA from the Ivey School of Business at Western University and a CMA designation. Geoff Coutts Vice President, Sales Geoff Coutts has over 25 years experience with such notable technology companies as Samsung, Verizon and Hewlett-Packard. In his role as VP Sales, Enterprise Business, at Samsung Canada he was responsible for managing the sales of mobility and IT related products and services to businesses. Prior to Samsung, Mr. Coutts was the VP & General Manager for Canada for Verizon Enterprise Solutions. He joined Verizon after a long career with Hewlett-Packard Canada, where he progressed from business unit manager to eventually become VP Sales, Enterprise Services. Mislav Majic Vice President, Sales Engineering Mislav Majic joined VersaPay in October 2011 and is responsible for leading the sales team to deliver on the company s solutions vision. He brings with him 15 years of experience building and leading software solutions business in the financial services technology sector. Prior to joining VersaPay Mislav was a partner at Facta Vera, a payment automation and cash management solution provider for enterprise level organizations. In that capacity, Mislav oversaw the vision, strategy and growth from start up onwards, ultimately serving hundreds of Fortune 1000 customers throughout North America. He has a Bachelor of Business Administration degree from Ryerson University.
Management Team 25 Garry Chan Vice President, Products Garry Chan joined VersaPay as Vice President, Products in January 2014. He has more than 20 years of experience as a technology entrepreneur and leader. Prior to VersaPay, Garry was founder of goodiest.com, a cloud-based technology start-up for small business and before that, Managing Partner at Procase Consulting Inc., a Toronto-based IT professional services company. Garry holds a B.Sc. from the University of Calgary, an MBA from the Rotman School of Management at University of Toronto, and a M.Sc. from Carnegie Mellon University. Frank Opat Vice President, Software Engineering Frank Opat joined VersaPay Corporation in February 2014 and leads the software engineering group. Over the past 15 years, he has brought enterprise scale software solutions to market globally, as a consultant, product architect, product manager, and entrepreneur. Prior to joining VersaPay, Frank held senior product leadership roles at Temenos through acquisitions of Odyssey Financial Technologies & Xeye. He co-founded and designed several products servicing the CRM & document management needs of the Canadian mortgage industry. Frank holds a Bachelor of Mathematics & Honours Computer Science from the University of Waterloo. Patrick MacDonald President, POS Group Patrick MacDonald joined VersaPay in January 2010 and leads the company s national POS sales and account management teams as well as the merchant sales support team. Patrick has 18 years of business development experience. Prior to joining VersaPay, he partnered and worked with one of Canada's leading ATM distributors, rapidly becoming the number one distributor across Canada. He served as the Director of National Sales for a national marketing company, where he was instrumental seeing it become one of Canada's largest marketing and fulfillment houses. Kevin Short Co-Founder and Chief Information Officer Kevin Short co-founded VersaPay Corporation in 2006 and serves as its Chief Information Officer. Prior to VersaPay Kevin developed the security architecture and oversaw the security design and implementation for the Vancouver 2010 Olympics for Bell Canada. Kevin has been involved in designing, securing and implementing banking infrastructure for Canada's leading financial institutions for more than 13 years. In his career, Kevin has served in a senior capacity for Sun Microsystems, Nortel Networks, TELUS, Shaw Communications, Bell Canada, Enbridge and TransCanada Pipelines.
Investment Highlights 26 First mover advantage Over 95% of revenue is recurring ARC pilot completed successfully Transition to high margin SaaS model Enormous market opportunity estimated at $3.5B Current pipeline of $5-7M of annual recurring revenue Stable, cash flow positive legacy business supporting ARC growth Fundamental synergies between our two businesses Well capitalized Huge upside potential with downside protection from legacy business
INVESTOR PRESENTATION Sept 2015 For more information contact: Craig O Neill, CEO craig.oneill@versapay.com Babak Pedram, Investor Relations bpedram@virtusadvisory.com 416-644-5081