UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 12, 2015
JETPAY CORPORATION
(Exact Name of Registrant as Specified in
Charter)
Delaware |
001-35170 |
90-0632274 |
(State or Other Jurisdiction |
(Commission |
(IRS Employer |
of Incorporation) |
File Number) |
Identification No.) |
1175 Lancaster Avenue, Suite 200
Berwyn, PA 19312
(Address of Principal Executive Offices)
(Zip Code)
(484) 324-7980
(Registrant’s Telephone Number, Including
Area Code)
(Former Name or Former
Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))
Item 2.02 Results of Operation and Financial Condition
On November 12, 2015, JetPay Corporation (the “Company”)
issued a press release announcing its financial results for the third quarter and nine months ended September 30, 2015. A copy
of the press release is attached as Exhibit 99.1 and is incorporated by reference in its entirety.
The information in this report (including Exhibit 99.1)
is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section,
nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange
Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
|
Description |
|
|
|
99.1 |
|
Press Release issued by JetPay Corporation dated November 12, 2015. |
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: November 12, 2015
|
JETPAY CORPORATION |
|
|
|
|
By: |
/s/ Gregory M. Krzemien |
|
Name: |
Gregory M. Krzemien |
|
Title: |
Chief Financial Officer |
Exhibit 99.1
JetPay Corporation Announces Third Quarter
Financial Results with
33.3% Increase in Quarterly Revenues, Including a 51.3% Increase in the
Payment Processing Segment
Berwyn, PA – November 12, 2015 –
JetPay(R) Corporation (“JetPay” or the “Company”) (NASDAQ: “JTPY”) announced financial results
for the third quarter and nine months ended September 30, 2015.
Financial Highlights
| · | Revenues increased 33.3%, or $2.57 million,
to $10.31 million for the quarter ended September 30, 2015 from $7.74 million for the same period in 2014, and up 34.2% to $31.72
million for the nine months ended September 30, 2015 as compared to $23.63 million for the same period in 2014. |
| · | Revenues within our Payment Processing
Segment increased $2.40 million, or 51.3%, to $7.08 million in the third quarter of 2015 from the same period in 2014, and $7.65
million, or 54.7%, to $21.61 million in the first nine months of 2015 as compared to 2014. |
| · | Gross profit increased 33.8% to $3.85
million, or 37.4% of revenues, for the quarter ended September 30, 2015, up from $2.88 million for the same period in 2014, and
up 31.4% to $12.29 million, or 38.7% of revenues for the first nine months of 2015, up from $9.35 million for the same period in
the prior year. |
| · | Earnings before Interest, Taxes, Depreciation,
and Amortization (“EBITDA”) were $856,000 and $(111,000) for the third quarter of 2015 and 2014, respectively, and
$2.71 million and $180,000 for the nine months ended September 30, 2015 and 2014, respectively. EBITDA, adjusted for non-recurring
and non-cash items, (“adjusted EBITDA”) - (see Non-GAAP Financial Measures definition and reconciliation of operating
income to EBITDA and adjusted EBITDA below), was $1.01 million, or 9.8% of revenues, as compared to $383,000, or 5.0% of revenues,
for the same period in 2014. Adjusted EBITDA was $3.47 million, or 10.9% of revenues, for the nine months ended September 30, 2015,
as compared to $1.86 million, or 7.9% of revenues, for the same period in 2014. The increase in adjusted EBITDA in the third quarter
of 2015 and first nine months of 2015 vs. 2014 was directly related to the Company’s increased revenues, particularly in
the Payment Processing Segment. |
| · | Net loss before accretion of convertible
preferred stock was reduced from $(2.05) million for the quarter ended September 30, 2014 to $(384,000) in the third quarter of
2015, and from $(5.81) million for the nine months ended September 30, 2014 to $(999,000) in the same period in 2015. |
| · | The ratio of our total debt to total
capitalization, which consists of total debt of $16.93 million and convertible preferred stock and stockholders’ equity totaling
$53.84 million, was 23.9% at September 30, 2015, a slight increase from 23.1% at December 31, 2014. |
Recent News Highlight
| · | JetPay announced the addition of Thomas
Tesmer as Chief Operating Officer of JetPay Payment Services. Mr. Tesmer brings significant expertise in the Payments business,
both in merchant processing as well as consumer card issuing in the ATM environment. Over his distinguished 40 year history, he
has brought creativity and innovation to various start-up and leadership roles, including positions as technical architect and
director for the HONOR debit interchange switch in the early 1980s, founder and President of TransNet (now Chase Paymentech) in
the early 1990s, and executive vice president and architect of the Heartland Payment Systems payments processing platform in the
2000s. |
“With four consecutive quarters of double-digit revenue
growth, JetPay is well on its way to delivering the consistent revenue and EBITDA increases expected by our shareholders,”
stated Bipin C. Shah, Chairman and CEO of JetPay Corporation. “Although we still have work to do to ensure consistent growth
and can expect some peaks and valleys, we are pleased to see the favorable financial results our acquisition of ACI and ongoing
investments in sales and technology have delivered. Our focus continues to be on maintaining our strength in the Card-Not-Present
market and investing in technology to continue to deliver innovative products and services to the marketplace such as the recent
launch of new products like JetPay Unlimited Processing and our Affordable Care Act Services. Our continued investment in management
strength like the addition of Thomas Tesmer allows us to build a Company that can achieve extraordinary growth and returns for
our shareholders.”
Financial Results, Third Quarter 2015 Compared
to Third Quarter 2014
Revenues were $10.31 million for
the three months ended September 30, 2015, comparable to $7.74 million for the same period
in 2014, an increase of $2.57 million, or 33.3%. Revenues for our Payment Processing Segment increased $2.40 million, or 51.3%,
for the three months ended September 30, 2015 compared to the same period in 2014. The increase was partially related to JetPay
Strategic Partners, which was acquired in November 2014, contributing $2.08 million of revenues, an increase of $134,000, or 6.0%,
in our Third Party business and an increase of $212,000, or 11.3%, in direct merchant services revenues. Revenues for our Payroll
Segment increased $159,000, or 5.2%, for the three months ended September 30, 2015 as compared to the same period in 2014. This
increase was attributable to net growth in the volume of payroll and related payroll taxes processed and continued strong revenue
growth from our Human Resources (“HR”) and Affordable Care Act (“ACA”) services.
Operating loss for the three months
ended September 30, 2015 was $(34,000), compared to $(763,000) for the same period in 2014.
Operating loss is after subtracting depreciation and amortization expense of $891,000 and $654,000 for the three months ended September
30, 2015 and 2014, respectively. The decrease in the operating loss was attributable to an increase
in gross profit of $973,000, partially offset by a slight increase in selling, general, and administrative (“SG&A”)
expenses of $6,000. SG&A expenses in the third quarter of 2015 included professional fees for non-recurring matters of $92,000.
SG&A expenses in the third quarter of 2014 included professional fees and settlement costs for non-recurring matters of $402,000.
Operating loss was also affected by our significant investment in sales and technology personnel in 2014 as well as the first nine
months of 2015.
Net loss for the three months ended September 30, 2015 was $(384,000),
or a net loss applicable to common stockholders of $(1.70) million after accretion of convertible preferred stock of $1.32 million,
a loss per share applicable to common stockholders of $(0.12), compared to a net loss of approximately $(2.05) million, or a net
loss applicable to common stockholders of $(2.63) million after accretion of convertible preferred stock of $574,000, a loss per
share applicable to common stockholders of $(0.22) for the three months ended September 30, 2014. The decrease in net loss was
primarily related to the increase in revenues combined with the decrease in amortization of deferred financing costs, debt discounts
and conversion options of $882,000, and the decrease in interest expense of $201,000, both related to the redemption of the $10
million secured promissory notes on December 31, 2014.
Financial Results, First Nine Months of 2015 Compared
to First Nine Months of 2014
Revenues were $31.72 million for
the nine months ended September 30, 2015, comparable to $23.63 million for the same period
in 2014, an increase of $8.09 million, or 34.2%. Revenues for our Payment Processing Segment increased $7.65 million, or 54.7%,
for the nine months ended September 30, 2015 compared to the same period in 2014. The increase was partially related to the acquisition
of ACI in November 2014, contributing $5.41 million of revenues, an increase of $1.59 million, or 27.0%, in our Third Party business
and an increase of $815,000, or 12.9%, in direct merchant services revenues. Revenues for our Payroll Segment increased $409,000,
or 4.2%, for the nine months ended September 30, 2015 as compared to the same period in 2014. This increase was attributable to
net growth in the volume of payroll and related payroll taxes processed in addition to revenues generated from our new HR and ACA
services.
Operating income (loss) for the
nine months ended September 30, 2015 was $28,000, compared to $(1.79) million for the same
period in 2014. Operating income (loss) is after subtracting depreciation and amortization expense of $2.65 million and $1.98 million
for the nine months ended September 30, 2015 and 2014, respectively. The increase in the operating
income was attributable to an increase in gross profit of $2.93 million, partially offset by an increase in selling, general, and
administrative (“SG&A”) expenses of $399,000. SG&A expenses in the first nine months of 2015 included professional
fees and settlement costs for non-recurring matters of $549,000. SG&A expenses in the first nine months of 2014 included professional
fees and settlement costs for non-recurring matters of $1.18 million. Operating income (loss) was also affected by our significant
investment in sales and technology personnel in 2014 as well as the first three quarters of 2015.
Net loss for the nine months ended September 30, 2015 was $(999,000),
or a net loss applicable to common stockholders of $(4.78) million after accretion of convertible preferred stock of $3.78 million,
a loss per share applicable to common stockholders of $(0.34), compared to a net loss of approximately $(5.81) million, or a net
loss applicable to common stockholders of $(7.43) million after accretion of convertible preferred stock of $1.62 million, a loss
per share applicable to common stockholders of $(0.63) for the nine months ended September 30, 2014. The decrease in net loss was
primarily related to the increase in revenues combined with the decrease in amortization of deferred financing costs, debt discounts
and conversion options of $2.58 million, and the decrease in interest expense of $613,000, both related to the redemption of the
$10 million secured promissory notes on December 31, 2014.
Conference Call
JetPay will conduct a conference call on
Wednesday, November 18, 2015 at 9:00 AM EST (6:00 AM PST) to discuss these results and conduct a question and answer session. The
participant conference call number is (855) 793-3263 (International Dial-In (631) 485-4960, conference ID: 80422698. There will
also be access to a digital recording of the teleconference by calling (855) 859-2056 and entering the conference ID: 80422698.
This will be available approximately two hours following the teleconference until Wednesday, November 25, 2015.
About JetPay Corporation
JetPay Corporation, based in Berwyn, PA, is a leading provider
of vertically integrated solutions for businesses including card acceptance, processing, payroll, payroll tax filing and other
financial transactions. JetPay provides a one vendor solution for payment services, debit and credit card processing, ACH services,
and payroll and tax processing needs for businesses throughout the United States. The Company also offers low-cost payment choices
for the employees of these businesses to replace costly alternatives. The Company’s vertically aligned services provide customers
with convenience and increased revenues by lowering payments-related costs and by designing innovative, customized solutions for
internet, mobile, and cloud-based payments. Please visit www.jetpay.com for more information on what JetPay has to offer or call
866-4JetPay (866-453-8729).
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA
and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its
financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial
measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes,
depreciation, amortization of intangibles, and non-cash changes in the fair value of contingent consideration liability. The Company
defines adjusted EBITDA as EBITDA, as defined above, plus certain non-recurring items, including certain legal and professional
costs for non-repetitive matters, legal settlement costs, non-cash stock option costs, and non-cash losses on the disposal of fixed
assets. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and
adjusted EBITDA as indicators of the Company’s operating performance and ability to fund acquisitions, capital expenditures
and other investments and, in the absence of refinancing options, to repay debt obligations. Management believes EBITDA and adjusted
EBITDA are helpful to investors in evaluating the Company’s operating performance because non-cash costs and other items
that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental
non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute
for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect
a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial
measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA
and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled “EBITDA
and adjusted EBITDA Reconciliation.”
EBITDA and adjusted EBITDA Reconciliation
(000’s omitted) | |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Operating (loss) income | |
$ | (34 | ) | |
$ | (763 | ) | |
$ | 28 | | |
$ | (1,790 | ) |
Change in fair value of contingent consideration liability | |
| (1 | ) | |
| (2 | ) | |
| 36 | | |
| (10 | ) |
Amortization of intangibles | |
| 768 | | |
| 560 | | |
| 2,303 | | |
| 1,680 | |
Depreciation | |
| 123 | | |
| 94 | | |
| 347 | | |
| 300 | |
| |
| | | |
| | | |
| | | |
| | |
EBITDA | |
$ | 856 | | |
$ | (111 | ) | |
$ | 2,714 | | |
$ | 180 | |
| |
| | | |
| | | |
| | | |
| | |
Professional fees for non-repetitive matters | |
| 92 | | |
| 313 | | |
| 541 | | |
| 611 | |
Legal settlement costs | |
| - | | |
| 89 | | |
| 8 | | |
| 571 | |
Non-cash stock option costs | |
| 61 | | |
| 92 | | |
| 203 | | |
| 260 | |
Non-cash loss on disposal of fixed asset | |
| - | | |
| - | | |
| - | | |
| 237 | |
| |
| | | |
| | | |
| | | |
| | |
Adjusted EBITDA | |
$ | 1,009 | | |
$ | 383 | | |
$ | 3,466 | | |
$ | 1,859 | |
Forward-Looking Statements
This press release includes “forward-looking
statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act
of 1995. JetPay’s actual results may differ from its expectations, estimates and projections and consequently, you should
not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,”
“project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,”
“may,” “will,” “could,” “should,” “believes,” “predicts,”
“potential,” “continue,” and similar expressions are intended to identify such forward-looking statements.
These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially
from the expected results. Most of these factors are outside JetPay’s control and are difficult to predict. Factors that
may cause such differences include, but are not limited to, those described under the heading “Risk Factors” in the
Company’s Annual Report filed with the Securities and Exchange Commission (“SEC”) on Form 10-K for the fiscal
year ended December 31, 2014, the Company’s Quarterly Reports on Form 10-Q and the Company’s Current Reports on Form
8-K.
JetPay cautions that the foregoing list of factors
is not exclusive. Additional information concerning these and other risk factors is contained in JetPay’s most recent filings
with the Securities and Exchange Commission. All subsequent written and oral forward- looking statements concerning JetPay or other
matters and attributable to JetPay or any person acting on its behalf, are expressly qualified in their entirety by the cautionary
statements above. JetPay cautions readers not to place undue reliance upon any forward-looking statements, which speak only as
of the date made. JetPay does not undertake or accept any obligation or undertaking to release publicly any updates or revisions
to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances
on which any such statement is based.
Contacts
JetPay Corporation |
JetPay Corporation |
Peter B. Davidson |
Gregory M. Krzemien |
Vice Chairman and Corporate Secretary |
Chief Financial Officer |
(484) 324-7980 |
(484) 324-7980 |
Peter.Davidson@jetpaycorp.com |
gkrzemien@jetpaycorp.com |
###
JetPay Corporation
Condensed Consolidated Statements of
Operations
(In thousands, except share and per share
information)
(Unaudited)
| |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
| |
| | |
| |
| |
| | |
| | |
| | |
| |
Processing revenues | |
$ | 10,308 | | |
$ | 7,735 | | |
$ | 31,718 | | |
$ | 23,630 | |
Cost of processing revenues | |
| 6,456 | | |
| 4,856 | | |
| 19,432 | | |
| 14,277 | |
| |
| | | |
| | | |
| | | |
| | |
Gross profit | |
| 3,852 | | |
| 2,879 | | |
| 12,286 | | |
| 9,353 | |
| |
| | | |
| | | |
| | | |
| | |
Selling, general and administrative expenses | |
| 2,996 | | |
| 2,990 | | |
| 9,572 | | |
| 9,173 | |
Change in fair value of contingent consideration liability | |
| (1 | ) | |
| (2 | ) | |
| 36 | | |
| (10 | ) |
Amortization of intangibles | |
| 768 | | |
| 560 | | |
| 2,303 | | |
| 1,680 | |
Depreciation | |
| 123 | | |
| 94 | | |
| 347 | | |
| 300 | |
| |
| | | |
| | | |
| | | |
| | |
Operating (loss) income | |
| (34 | ) | |
| (763 | ) | |
| 28 | | |
| (1,790 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other expenses (income) | |
| | | |
| | | |
| | | |
| | |
Interest expenses | |
| 210 | | |
| 411 | | |
| 613 | | |
| 1,226 | |
Amortization of deferred financing costs, debt discounts and conversion options | |
| 98 | | |
| 980 | | |
| 274 | | |
| 2,855 | |
Change in fair value of derivative liability | |
| - | | |
| (150 | ) | |
| - | | |
| (210 | ) |
Other income | |
| - | | |
| (1 | ) | |
| (3 | ) | |
| (5 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| (342 | ) | |
| (2,003 | ) | |
| (856 | ) | |
| (5,656 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
| 42 | | |
| 51 | | |
| 143 | | |
| 155 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
| (384 | ) | |
| (2,054 | ) | |
| (999 | ) | |
| (5,811 | ) |
Accretion of convertible preferred stock | |
| (1,316 | ) | |
| (574 | ) | |
| (3,781 | ) | |
| (1,621 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss applicable to common stockholders | |
$ | (1,700 | ) | |
$ | (2,628 | ) | |
$ | (4,780 | ) | |
$ | (7,432 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted loss per share applicable to common stockholders | |
$ | (0.12 | ) | |
$ | (0.22 | ) | |
$ | (0.34 | ) | |
$ | (0.63 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted | |
| 13,892,990 | | |
| 11,863,823 | | |
| 13,875,041 | | |
| 11,750,122 | |
JetPay Corporation
Condensed Consolidated Balance Sheets
(In thousands)
| |
September 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
ASSETS | |
Unaudited | | |
Audited | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 5,482 | | |
$ | 5,359 | |
Restricted cash | |
| 227 | | |
| 1,386 | |
Accounts receivable, less allowance for doubtful accounts | |
| 1,909 | | |
| 2,634 | |
Settlement processing assets | |
| 12,659 | | |
| 18,893 | |
Prepaid expenses and other current assets | |
| 780 | | |
| 828 | |
Current assets before funds held for clients | |
| 21,057 | | |
| 29,100 | |
Funds held for clients | |
| 35,503 | | |
| 40,833 | |
Total current assets | |
| 56,560 | | |
| 69,933 | |
Property and equipment, net | |
| 1,528 | | |
| 1,226 | |
Goodwill | |
| 41,760 | | |
| 41,760 | |
Identifiable intangible assets, net | |
| 24,589 | | |
| 26,892 | |
Deferred financing costs, net | |
| 102 | | |
| 89 | |
Other assets | |
| 4,522 | | |
| 4,502 | |
Total assets | |
$ | 129,061 | | |
$ | 144,402 | |
| |
| | | |
| | |
LIABILITIES | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Current portion of long-term debt and capital lease obligations | |
$ | 3,203 | | |
$ | 1,571 | |
Accounts payable and accrued expenses | |
| 8,766 | | |
| 9,153 | |
Settlement processing liabilities | |
| 11,777 | | |
| 18,024 | |
Deferred revenue and other current liabilities | |
| 1,655 | | |
| 3,770 | |
Current liabilities before client fund obligations | |
| 25,401 | | |
| 32,518 | |
Client fund obligations | |
| 35,503 | | |
| 40,833 | |
Total current liabilities | |
| 60,904 | | |
| 73,351 | |
Long-term debt and capital lease obligations, net of current portion | |
| 13,725 | | |
| 14,795 | |
Deferred income taxes | |
| 284 | | |
| 284 | |
Other liabilities | |
| 304 | | |
| 1,411 | |
Total liabilities | |
| 75,217 | | |
| 89,841 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
| |
| | | |
| | |
Redeemable Convertible Preferred Stock | |
| 33,163 | | |
| 29,779 | |
| |
| | | |
| | |
Stockholders’ Equity | |
| 20,681 | | |
| 24,782 | |
Total Liabilities and Stockholders’ Equity | |
$ | 129,061 | | |
$ | 144,402 | |
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