Investor Presentation November 2018 Disclaimer 2 Forward Looking - - PowerPoint PPT Presentation

Investor Presentation November 2018

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Disclaimer

Forward Looking Statements

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 forward-looking 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.

Non-GAAP Financial Measures

This presentation contains references to certain financial measures, including Adjusted Earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Monthly Recurring Revenue (“MRR”), and Annual Recurring Revenue (“ARR”) that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other entities. These non-IFRS measures should be viewed as a supplement to, and not a substitute for the Company's results of operations reported under IFRS. The term Adjusted EBITDA (“Adjusted EBITDA”) is a non-IFRS measure and refers to earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Adjusted EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses, share- based compensation (which includes share based payments, restricted share units, performance share units, and deferred share units), and unusual items such as discontinued operations. Management uses Adjusted EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors Adjusted EBITDA against budget and past results on a regular basis. Accordingly, Adjusted EBITDA is therefore unlikely to be comparable to similar measures presented by other issuers . The term Monthly Recurring Revenue (“MRR”) is a non-IFRS measure and includes revenues earned in a given month relating to monthly fixed subscription fee, monthly transaction fees, ARC Lite™ revenue, and PayPort™ revenue. MRR is a common metric used in Software as a Service (“SaaS”) companies and its definition is not guided by IFRS standards. Accordingly, MRR is unlikely to be comparable to similar measures presented by other issuers. The term Annualized Recurring Revenue (“ARR”) is a non-IFRS measure and refers to multiplying the MRR value defined above by 12 to represent management’s best estimate of forward looking 12 months of recurring revenues that the Company would earn based on the current Monthly Recurring Revenue.

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VersaPay

2006 2009 Ranked #1 in Profit Top 50 in IPO on Toronto Stock Exchange January 2010 2013/14 Two lines of business: Payments & Solutions

MERCHANT SERVICES

Strategic partnerships: Banks & CC Companies 2015 Ranked Top 20 Most Innovative Public Companies IDC company profile January 2016

OUR MISSION IS TO DRIVE A SEA CHANGE IN THE WAY COMPANIES MANAGE THEIR ACCOUNTS RECEIVABLE

2017 Merchant Services business sold to BluePay to focus

• n ARC™

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White label partnership launched Significant backing by global institutional investor Named TSXV Tech Company of the Year 2018

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Current State of A/R

SUPPLIER CUSTOMER

Supplier creates invoice Email

• r Mail

Customer requests new invoice

THE MESSY MIDDLE

§ Customers may lose their invoices § There may be disagreements

• n invoice amounts or terms

§ Customers may not call you when there is a problem § Time passes

HAS NOT CHANGED IN DECADES

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ARC: A/R Reinvented

5

DELIVER INVOICES COLLABORATE & COLLECT ACCEPT PAYMENT APPLY CASH

Publish invoices & supporting documentation online and deliver by email and mail Communicate with customers Track and manage customer commitments and follow-ups Offer customers breadth of electronic payment options PCI compliant manner Automatically match payment and remittance data and reconcile with incoming payments

1 2 3 4

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“The ROI for this project is a no-brainer” A Compelling Business Case

Customer satisfaction Days to get paid Actionable insights Collections Labor and other costs Cash application

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The Opportunity (Selected Verticals)*

165,000

U.S. firms with $50M to $1B in revenue

>$5B USD

MARKET SIZE

88%

Percent of U.S. firms rely on paper invoices

Selected Vertical Industries:

• Media
• Trucking / Logistics
• Commercial Realty / Property Managers
• Wholesale / Distributors
• Manufacturing
• Professional Services

* 1,582 3,845 1,120

50M-100M 100M-500M 500M-1B

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• A compelling value

proposition

• A large untapped market

with limited competition

• Our approach overcomes

historical obstacles

• Partners provide

tremendous market reach

• Experience in the market has

proven our story is compelling

• Addressable market is

estimated to be at least 5B

• Little competition
• The solution, pricing and

implementation approach take away reasons to say no

• Thousands of existing

customers ranging from small business to large corporations

ARC: Positioned to Grow Rapidly

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Go-To-Market Strategy

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Enterprise accounts Extensive client base of Enterprise, mid- market and small businesses Extensive client base of Enterprise and mid- market businesses ARC as distribution channel for financial services to customers of our customers

DIRECT FIs ERP ARC

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Direct and Channel Sales

Direct + Channel = ARR Growth

Direct + Channel = ARR Growth

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Recent Highlights

• 48 new clients including 10 enterprise clients won

so far this year (Nov 2018)

• $2.3M in new ARC ARR signed YTD (Q3 2018)
• ARC selected as enterprise standard for family of

large US distributors (Q2 2018)

• Two major accounting firms endorse ARC (Q2 2018)
• TSXV Canadian Tech Stock of the Year and Executive
• f the Year (Craig O’Neill) (Q1 2018)
• White label partnership with RBC (Q3 2017)

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Highest Adoption in the Industry

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All figures cumulative

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Consistent ARR Growth

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1,930 2,272 3,061 3,408 3,722 4,217 4,427 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18

Total ARR (000's)

Compound Quarterly Growth 15%

45%

1,151 1,283 1,441 1,629 1,803 1,913 1,895 $0 $500 $1,000 $1,500 $2,000 $2,500 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18

Payport ARR (000's)

C

• m

p

• u

n d Q u a r t e r l y G r

• w

t h 1 5 %

45%

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Top Line Momentum - ARC

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$2532K $1258K $584K $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

Quarterly Revenue ARR / ARR Backlog

ARR ARR Backlog ARC Quarterly Revenue

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Great Companies Are Using ARC

›

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Financial Overview

As of Q3 2018 Financial Statements

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Quarterly Revenues

Revenue (000s)*

17 * Excludes POS Merchant Services business sold in January 2017

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18

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Financial Summary

($000s) Q318 Q317 Q218 Q217

Revenue from continuing ops

$1,137 $781 $1,137 $631

Gross Profit from continuing ops

835 572 786 362

Gross Margin from continuing ops

73% 73% 69% 57%

Net earnings from discontinued ops

Nil Nil Nil Nil

Consolidated Adjusted EBITDA

(2,831) (1,941) (2,889) (1,741)

Total comprehensive (loss) earning

(2,953) (2,189) (3,688) (1,953)

EPS

($0.08) ($0.07) ($0.10) ($0.06)

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Corporate Information

Ticker (TSX Venture) VPY Market Capitalization $52M Stock Price $1.20 Shares Outstanding (Basic) 43,340,851 Fully Diluted Shares Outstanding 43,340,851 Year End December 31st Cash and cash equivalent * $6.0M Head Office Toronto

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All figures below as at Nov 27, 2018 except where noted: * As at Sep 30, 2018

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Investment Highlights

þ Market opportunity of over $5B þ First mover advantage þ Leading solution with a proven track record þ Strong customer references and growth in usage þ Signs of widespread “sea change” emerging þ Major channel partners expand market reach tenfold þ Well capitalized to pursue the growth opportunity

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Management Team

21 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.

Shouvik Roy – Chief Financial Officer

Shouvik Roy joined VersaPay in June 2018 as the company’s Chief Financial Officer. Shouvik has over 17 years of experience as a finance leader with extensive knowledge in financial reporting, financial planning & analysis, investor relations and regulatory compliance across multiple industries. He is responsible for the company’s finance and accounting function, investor relations, budgeting, strategy execution and helping the Executive team create customer, employee and shareholder value. Prior to joining VersaPay, Shouvik held senior finance positions at various global organizations, including Nike, Home Depot and most recently at FreshBooks, an established Canadian fintech company. Shouvik holds an Honours BBA from Wilfrid Laurier University, as well as the Charted Professional Accountant, Chartered Accountant designation.

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Board of Directors

22 Art Mesher – Chairman

Art Mesher is a pioneer in harnessing the integration of business communities and is considered one of the founders of SaaS networks and cloud computing. Mesher began building SaaS-based technology to automate freight processes in the 1980s and helped start and grow Vocam Systems, a logistics network software company which went public before being acquired by Pitney Bowes in 1990. Subsequently, Mesher was President of Advanced Logistics Research, where he helped leading companies such as AMR (Sabre), CSX and Caterpillar develop and deploy emerging technology-based supply-chain strategies. He also launched the Integrated Logistics Strategies Services practice at Gartner Group Inc., a leading technology research, and advisory firm, and built it into one of the premier advisors to major global

• corporations. Art is currently the Chancellor of CleanSL8.DNA and the Chairman of the Board of The Core Group. He also sits on the Board of Directors for QHR

Corporation, Nulogy, and Difference Capital Financial Inc. More recently, Art was the CEO and Chairman of the board of The Descartes Systems Group Inc., leading the creation of the first on-demand logistics network that provides application and communication capabilities. Appointed CEO in 2004, he spearheaded the company’s turnaround from large losses to awarding-winning accolades and financial performance. During his tenure, Descartes was awarded Best Canadian Corporation (from Canadian Business magazine) and Best Business Turnaround (International Business Awards) in 2006, along with winning one of Canada’s 10 Most Admired Corporate Cultures (from Waterstone Human Capital) in

• 2012. Most notably, Art was selected as the Council of Supply Chain Management Professional’s (CSCMP) 2008 Distinguished Service Award recipient.

Craig O’Neill – Director

Prior to joining VersaPay, Craig was the co-founder and CEO of Xeye and the driving force behind its flagship WealthManager product. In this role, Craig directed the company’s growth of over 40% per year and ultimate sale to Odyssey Financial Technologies. Subsequent to the sale of Xeye, Craig remained with Odyssey as President of Odyssey Financial Technologies, North America and SVP of Corporate Development. After the sale of Odyssey to the Temenos Group, Craig became SVP WealthManager Strategy and Development. Craig has a Bachelor of Science in Computer Science, Math, and Economics from the University of Toronto.

Brandon Nussey – Director

Brandon has almost 20 years of experience as a technology executive. From 2000 to 2007, he was in a series of roles with increased responsibility at The Descartes Systems Group ultimately being appointed as the CFO of the business in 2003. He helped lead a turnaround of the business that resulted in significant operational improvement and numerous industry awards. After serving as an Executive in Residence at Communitech helping early stage companies in all aspects of their business, Brandon joined as CFO and member of the Board of Directors for D2L Inc (formerly Desire2Learn), a SaaS based education technology provider where he held that role for 8 years. He led the company through hyper-growth and drove the company’s growth financing of $165 million from top tier investors. Currently Brandon is CFO at Lightspeed POS Inc. At Lightspeed he leads the company’s finance, legal, human resources, data and IT teams. Brandon is also Treasurer and Board member for the Loran Scholars Foundation, one of Canada’s most prestigious scholarship programs, and named one of the Financial Post’s Top Charities in Canada.

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Board of Directors

23 David Dobson – Director

• Mr. Dobson joined Digital River in February 2013 as the company’s Chief Executive Officer. Digital River currently operates as a private company, being acquired by

Siris Capital for US$850 million in 2015, representing a more than threefold increase in enterprise value. Prior to his current role, Mr. Dobson served as executive vice president and group executive at CA Technologies Inc. His team had responsibility for a US$4 billion P&L. Prior to joining CA Technologies, Mr. Dobson served as president of Pitney Bowes Management Services (PBMS), a $1 billion revenue division of Pitney Bowes Inc. Previously, Mr. Dobson was chief executive officer of Corel Corporation, a $300 million global provider of leading software titles, including CorelDraw, WordPerfect and WinZip. During his three years at Corel, the company grew - 8- revenue 20% year over year, completed three successful acquisitions, and increased profits by more than 30% each year. In 2006, he was instrumental in leading the company’s successful initial public offering. During Mr. Donson’s leadership at Corel, the company’s market value increased more than six times. Before joining Corel in 2005, David spent 19 years at IBM, where he held a number of senior management positions, including Corporate Vice President, Emerging Business Opportunities, and General Manager, IBM Printing Systems Division. He was a member of IBM’s Senior Leadership Team and is a member of the board of directors of John Wiley & Sons.

Mark Kohler – Director

• Mr. Kohler is currently Chairman and Chief Executive Officer of Exelerate Capital, a strategic advisory group specializing in corporate development and growth capital
• funding. Over his 30 year career, Mr.Kohler has held C-level positions at many leading North American organizations including, a Schedule I bank in Canada called

Jameson Bank where he was the Chief Financial Officer, Chief Risk Officer, and Corporate Secretary, and also at the Hostopia Division of Deluxe Corporation, a NYSE- listed corporation serving the banking industry where he was the Senior Vice President Corporate Development. From 2002 to 2007, Mr.Kohler was the Executive Vice President Chief Financial Officer and Corporate Secretary of AirIQ Inc. and a corporate director of that company during 2004 and 2005. He also held senior executive roles at Spectra Securities Software Inc. prior to its sale to Sanchez, and Personus Inc., prior to its sale to CGI. He currently serves as a corporate director at BeWhere Holdings Inc., a TSXV-listed company, and previously also served as Chairman of the board at Community Trust Company, a federally regulated financial institution. Mr. Kohler is a Chartered Professional Accountant and a Certified Corporate Director, having obtained his ICD.D designation from the Institute of Corporate Directors and Rotman School of Management at the University of Toronto. He obtained his Bachelor of Commerce (Honours) degree in 1987 from Queen’s University, where he was awarded the D.I. McLeod Scholarship and Edyth Whyte Prize for highest standing in Economics at the university.

Sheldon Pollack – Director

• Mr. Pollack is an entrepreneur and investor, having started his first venture at the age of 16. Mr. Pollack has played an active role in starting and funding a number of

successful technology ventures. He co-founded OnX Enterprise Solutions in 1983 with just $10,000 in start-up capital. Mr. Pollack took OnX public in April 2000 and subsequently re-privatized the company in April 2009. Today, OnX has revenues nearing $1 billion and offices throughout Canada, the United States and the United

• Kingdom. Mr. Pollack was an Ernst & Young, Entrepreneur of the Year finalist in 2000 and OnX was designated as one of Canada’s Best Managed companies in 2008,

2009 and 2010. Mr. Pollack currently serves as Vice-Chairman of OnX. In addition, Mr. Pollack serves as chairman of the board of Acuity Ads Holdings Inc., a TSXV- listed company. Mr. Pollack founded www.abilitygives.org, a charity focused on providing specialized equipment to children with special needs.