VersaPay Completes Debt Financing

/NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

TORONTO, Dec. 22 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a provider of merchant credit, debit, gift and loyalty card payment processing and email money transfer solutions, today announced that it closed its previously announced agreement with a group of lenders, led by Curvature Hedge Strategies, for a five-year debt facility totaling $900,000. All amounts are in Canadian dollars unless otherwise stated.

The debt facility is composed of five-year promissory notes (the "Notes") bearing interest at 11% per annum calculated and payable quarterly. The holders of the Notes will be granted a general security interest over the assets of the Company, and the Notes will include call protection during the first three years of the five-year term. The proceeds of the financing will be used by VersaPay to enhance the Company's sales program and for general working capital purposes. VersaPay will also issue a total of 702,000 bonus warrants (the "Warrants") pro rata to the holders of the Notes.  Each Warrant will be exercisable for one common share of VersaPay at a price of $0.75 per share for a term of five years from the date of issue.

"This debt facility provides us with the financial resources to support our continued growth while also strengthening our balance sheet," said Bill McGill, CEO of VersaPay. "We are excited about the long-term opportunities for our product offerings in the Canadian payment processing market, and we appreciate the confidence these new investors have placed in management as we further execute on our strategy to expand our merchant customer base."

Curvature has agreed to purchase an aggregate of $500,000 worth of Notes, with the remaining $400,000 being purchased by a number of investors.  With respect to these latter investors, VersaPay has agreed to pay a finder's fee to Wolverton Securities Ltd. in the amount of $40,000, payable in cash.  Wolverton has also agreed to waive its previous right of first refusal on future financings with VersaPay for consideration of $15,000 plus HST.

"Curvature's investment in VersaPay demonstrates our confidence in the Company's ability to build a strong market presence as an independent commercial financial services alternative to the major Canadian banks," said James Hodgins, Chief Investment Officer of Curvature Hedge Strategies. "VersaPay has made significant strides in 2010, delivering revenue growth of more than 60% in the first nine months. We are excited about partnering with VersaPay going forward, as the Company works to drive further growth by continuing to roll out its recently launched Email Money Transfer product for business, and expanding into new market verticals."

About VersaPay
VersaPay's financial technology enables businesses and consumers across Canada to accept and process credit, debit and gift card transactions. As a payment services and financial technology company serving more than 2,500 Canadian businesses, VersaPay, in conjunction with its partners, provides the hardware, technology, infrastructure and support services that businesses of all types require to accept and process electronic payments from their consumers and clients.

While its core business is payment processing services, VersaPay also provides enhanced financial technology solutions such as VersaEFT - the Company's proprietary Electronic Bill Presentment and Payment solution - which enables merchants and consumers to easily transact with one another.

VersaPay is headquartered in Vancouver, Canada and has operations in Toronto and Montreal. To learn more about VersaPay, visit http://www.versapay.com. 

Forward Looking and Other Cautionary Statements
This news release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company's current expectations. When used in this news release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology, are intended to identify forward-looking statements and information. Such statements and information reflect the current view of the Company with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks relating 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 are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward looking statements if these beliefs, estimates and opinions or other circumstances should change.

Investors are cautioned against attributing undue certainty to forward-looking statements. There are a number of important factors that could cause the Company's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others, risks related to following: the Company's financial position and the potential need for future financings, the ability of the Company to maintain its relationship with its strategic partner for payment processing, the efforts and abilities of the senior management team, the ability of the Company to attract and retain skilled management, competition in the payment processing industry, and the Company's ability to respond to technological change and protect its intellectual property rights.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. There can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE SECURITIES LEGISLATION.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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