INVESTOR PRESENTATION October 2015 Craig O Neill Chief Executive Officer David Chan Chief Financial Officer
Forward Looking Statements 2 This presenta,on contains forward- looking informa,on which may include, but is not limited to, statements with respect to the ac,vi,es, events or developments that the Company expects or an,cipates will or may occur in the future. Such forward- looking informa,on is oben, but not always, iden,fied by the use of words and phrases such as plans, expects, is expected, budget, scheduled, es,mates, forecasts, intends, an,cipates, or believes or varia,ons (including nega,ve varia,ons) of such words and phrases, or state that certain ac,ons, events or results may, could, would, might or will be taken, occur or be achieved. These forward- looking statements, and any assump,ons upon which they are based, are made in good faith and reflect our current judgment regarding the direc,on of our business. Management believes that these assump,ons are reasonable. Forward- looking informa,on involves known and unknown risks, uncertain,es 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 informa,on. Such factors include, among others, risks related to the specula,ve nature of the Company s business, the Company s forma,ve stage of development and the Company s financial posi,on. Forward- looking statements contained herein are made as of the date of this presenta,on and the Company disclaims any obliga,on to update any forward- looking statements, whether as a result of new informa,on, future events or results, except as may be required by applicable securi,es laws. There can be no assurance that forward- looking informa,on will prove to be accurate, as actual results and future events could differ materially from those an,cipated in such statements. Accordingly, readers should not place undue reliance on forward- looking informa,on.
Current State of A/R Management 3 Supplier Creates Invoice Sends invoice to buyer (Paper or Email) Buyer routes for internal approval Supplier sends reminder email Buyer requests new invoice Complicated and Costly
Complicated and Costly 4 Frustrated customers Wasted time High bad debt expense Organizational inefficiencies Late Payments Too much FRICTION in doing business together
5 Financial technology company delivering integrated cloud- based payment solu,ons for businesses
VersaPay 6 2006 Company Founded Strategic Partnerships #1 Rank in Profit Top 50 in 2009 2010 IniJal Public Offering
What Versapay Delivers 7 POS Merchant Services Business SoluJons Reseller of credit card terminals Track record of new account growth Recurring fees generated on transacjon volumes Long term relajonships with customers and technology partners Cash flow posijve 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 Stability 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 - Applica,on services (users, logging, etc) - Creden,al Vault - No,fica,on Services - Payment API - Invoice API (future) - File import - Processor connec,vity - 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 Sa,sfy 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)* 11 125,000 U.S. firms with $50M to $1B in revenue >$5B USD In annual recurring revenue 88% Percent of U.S. firms rely on paper invoices 1,120 1,582 * Selected Ver,cal Industries: Media Trucking / Logis,cs Commercial Realty / Property Managers Wholesale / Distributors Manufacturing Professional Services 3,845 50M- 100M 100M- 500M 500M- 1B
Ecosystem & Competition 12 Small BUYER Large A/R Automa*on/Outsourcing BillTrust TransacJs Kubra HighRadius Banks Email- based Invoicing Freshbooks Wave Intuit Sage Invoice2go A/P Automa*on/Outsourcing Oracle SAP Esker Corcentric Ariba Bobomline 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 proposi,on A large untapped market with limited compe,,on Our approach overcomes historical obstacles Experience in the market has proven our story is compelling Addressable market is es,mated to be at least 5B Limited compe,,on The solu,on, pricing and implementa,on approach takes away reasons to say no
ARC: Positioned to Grow Rapidly 14 A compelling value proposi,on A large untapped market with limited compe,,on Our approach overcomes historical obstacles Partnerships with major industry players give us significant market reach Several trends are leading towards change ü Experience in the market has proven our story is compelling ü Addressable market is es,mated to be at least 5B ü Very limited compe,,on ü The solu,on, pricing and implementa,on approach takes away reasons to say no ü Heartland, TD, Visa, MasterCard, more on the way ü From a variety of credible sources
Growth Profile The Early Adopter Phase 15 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
Early Adopter Phase Progress 16 24 Suppliers signed 12 Suppliers live 8,500 Customers registered $~900K * Annual recurring revenue from current signed customers $5-7M Annual recurring revenue from current pipeline * EsJmate when fully implemented Excellent Customer Feedback
Recent Highlights 17 $6,400,000 In paid invoices 24% Percent of invited end- customers registered 500,000 Invoices on the plakorm Three banks interested in reselling ARC ERP vendor agrees to use ARC and refer customers First unsolicited leads received RFP (from large US manufacturer) First 1M invoice/month opportunity
Customer Success Stories 18 Municipal government pays 22 outstanding invoices da,ng 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 automa,c 30- day overdue reminder Buyer logs in, signs up and pays all outstanding invoices within 5 minutes of ARC sending invita,on Buyer automa,cally 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 19 POS Merchant Services Business SoluJons Sale of credit card terminals Monthly subscripjon fee + + Credit card transacjon fee Credit card transacjon fee >95% Recurring Revenue
Financial Overview
POS Volumes Continue to Grow 21 $100,000 Credit Card $ Value (in thousands) $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 Stable Profitable 2013 2014 2015 $30,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Revenue: Growth Expected From Business Solutions 22 Revenue (in thousands)
Financial Summary 23 ($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 CapitalizaJon (09/28/15) Stock Price (10/9/15) Shares Outstanding (Basic) OpJons Fully Diluted Shares Outstanding Year End Cash and cash equivalent (06/30/15) Head Office 24 VPY $26.5M $1.04 25,500,990 3,641,618 32,994,680 December 31st $5.2M Toronto
Management Team 25 Craig O Neill Chief Execu,ve Officer and Director Craig O'Neill was appointed to the posi,on of Chief Execu,ve Officer at VersaPay Corpora,on 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 sobware. 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 ul,mately to the Temenos Group, where he became SVP Strategy and Development. His background includes management of large development groups, designing and building founda,onal components of corporate system architectures and applica,ons, overseeing enterprise CRM implementa,ons and driving strategic business ini,a,ves. Craig holds a B.Sc. from the University of Toronto in Computer Science and Mathema,cs. 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 transac,ons with a total value of over $1 billion. David has also been an investor and principal in several sobware 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, Marke,ng John McLeod joined VersaPay in October 2014 responsible for crea,ng and delivering the company s brand and marke,ng strategy. John was formerly Vice President, Marke,ng at Desire2Learn, a global SaaS based learning solu,ons 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 Communica,ons, 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 designa,on. Geoff Couss Vice President, Sales Geoff Couss has over 25 years experience with such notable technology companies as Samsung, Verizon and Hewles- 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. Couss was the VP & General Manager for Canada for Verizon Enterprise Solu,ons. He joined Verizon aber a long career with Hewles- 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 solu,ons vision. He brings with him 15 years of experience building and leading sobware solu,ons business in the financial services technology sector. Prior to joining VersaPay Mislav was a partner at Facta Vera, a payment automa,on and cash management solu,on provider for enterprise level organiza,ons. In that capacity, Mislav oversaw the vision, strategy and growth from start up onwards, ul,mately serving hundreds of Fortune 1000 customers throughout North America. He has a Bachelor of Business Administra,on degree from Ryerson University.
Management Team 26 Andrea Peaue Director, Client Services Andrea Peaue- McWaters joined the VersaPay team in February 2012. As the Director of Client Services, she is commised to making a difference in the lives of VersaPay s customers, and her coworkers! She leads the support and implementa,on teams as they strive to exceed the expecta,ons of our clients at every opportunity. Before joining VersaPay, Andrea worked at Book4Time, the first cloud based sobware in the health and wellness market. She was instrumental in the company s growth, building the Client Services department from the ground up while working with interna,onal luxury brand hotels and the world s most exclusive spas. With over 15 years of service experience, in various management roles, Andrea s focus is to bring customer service excellence to VersaPay. 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 Consul,ng 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, SoBware Engineering Frank Opat joined VersaPay Corpora,on in February 2014 and leads the sobware engineering group. Over the past 15 years, he has brought enterprise scale sobware solu,ons 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 acquisi,ons 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 Mathema,cs & 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 na,onal 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 Na,onal Sales for a na,onal marke,ng company, where he was instrumental seeing it become one of Canada's largest marke,ng and fulfillment houses. Kevin Short Co- Founder and Chief Informa,on Officer Kevin Short co- founded VersaPay Corpora,on in 2006 and serves as its Chief Informa,on Officer. Prior to VersaPay Kevin developed the security architecture and oversaw the security design and implementa,on for the Vancouver 2010 Olympics for Bell Canada. Kevin has been involved in designing, securing and implemen,ng banking infrastructure for Canada's leading financial ins,tu,ons for more than 13 years. In his career, Kevin has served in a senior capacity for Sun Microsystems, Nortel Networks, TELUS, Shaw Communica,ons, Bell Canada, Enbridge and TransCanada Pipelines.
Investment Highlights 27 First mover advantage Over 95% of revenue is recurring ARC pilot completed successfully Transi,on to high margin SaaS model Enormous market opportunity es,mated at $5B Current pipeline of $5-7M of annual recurring revenue Stable, cash flow posi,ve legacy business suppor,ng ARC growth Fundamental synergies between our two businesses Well capitalized Huge upside poten,al with downside protec,on from legacy business
INVESTOR PRESENTATION October 2015 For more information contact: Craig O Neill, CEO craig.oneill@versapay.com Babak Pedram, Investor Relations bpedram@virtusadvisory.com 416-644-5081