HDX enters into agreement to raise up to $15 million to complete acquisitions

/NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH US NEWS WIRE SERVICES/

TORONTO, Feb. 16 /CNW/ - Hosted Data Transaction Solutions Inc. ("HDX" or the "Company") is pleased to announce that it has engaged Paradigm Capital Inc., as lead agent, with a syndicate including agents Macquarie Capital Markets Canada Ltd. and Belweather Capital Partners Inc. to sell, on an agency basis, by way of private placement of subscription receipts ("Subscription Receipts") for gross proceeds of up to Cdn$15 million (the "Offering") with an overallotment option of up to 15% of the issue, exercisable by notice in writing to HDX within 30 days of the closing. The Company's Class A voting common shares are listed on the Toronto Stock Exchange (the "TSX") under the symbol "HDX".

This financing is being undertaken to increase the working capital position of the Company and satisfy the cash components of two recently announced letters of intent to acquire 100% of the shares in both Cash 'N Go Ltd. ("Cash N Go") of Edmonton, Alberta and Posera Inc. ("Posera") of Seattle, Washington. Upon completion of these acquisitions, HDX will have over 26,000 quick service and table service restaurants as customers for its point-of-sale solutions and will possess a robust payment switch platform that can be upgraded to provide debit and credit payments processing for these customers. This will enable HDX to truly serve as a full payments and POS solutions provider, with the opportunity to generate significant, incremental, profitable revenue.

Financing Details

Each Subscription Receipt will entitle the holder to acquire one HDX common share and one-half of one common share purchase warrant of HDX, without payment of additional consideration. Each whole HDX warrant will be exercisable for one HDX common share at a price to be determined for a period of two years after the closing date.

Approximately $9 million of the net proceeds will be used to fund the acquisition of Cash N Go and Posera and the balance will be used for working capital. The gross proceeds will be held in escrow and released to complete the acquisitions following the receipt of all required approvals and consents and the satisfaction of all conditions precedent other than payment of the proceeds for the acquisitions (the "Release Conditions"). Unless consent of the Subscription Receipt holders is obtained, in the event that the Release Conditions are not satisfied on or before that date which is 90 days following the closing date (the "Release Deadline"), holders of the Subscription Receipts shall be entitled to receive, in exchange for such holders' Subscription Receipts, an amount equal to the aggregate purchase price paid for their Subscription Receipts.

Completion of the Offering is subject to receipt of all necessary regulatory and other approvals, including TSX approval. Additionally, under Section 611 of the TSX Manual, the Company intends to obtain Shareholder Approval by way of written consent of shareholders holding in excess of 50% of the issued and outstanding shares of HDX, subject to TSX approval. It is anticipated that the offering will be priced in the context of the market and that the closing of the Offering will be priced in the context of the market and that the closings of the acquisitions will occur on or about April 15, 2010 and HDX will use its best efforts to qualify, by way of prospectus, the issue of Units upon the exercise or deemed exercise of the Subscription Receipts as soon as possible prior to the closing of the acquisitions.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "US Securities Act") or any state securities laws an may not be offered or sold within the United States of to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Cash N Go

As previously announced, Cash N Go is a private company that operates a network of approximately 1,200 ATMs throughout Canada, dispenses approximately $1 billion in cash annually, and had annual revenue for its fiscal year ending March 31, 2009 of approximately $13.8 million and had positive earnings before interest, taxes, depreciation and amortization ("EBITDA"). Cash N Go owns and operates their own payment switch, which processes approximately 8 million ATM transactions annually, and is a member of Interac(TM). Cash N Go does not currently provide debit and credit payments processing for merchants.

The acquisition of all the Cash 'N Go shares will be satisfied through a cash payment of $3,000,000, a $2,000,000 vendor take back and through the issuance of 12,403,101 common shares of HDX at a deemed price of $0.645 per share for total consideration of $13,000,000. All shares received by the vendors will have a hold period of 24 months.

Posera

As previously announced, Posera is a private Seattle based company that develops, deploys, and supports a restaurant point-of-sale software known as Maitre 'D which has been deployed in over 20,000 locations worldwide in eight different languages. Posera sells and services its clients directly, as well as through a network of approximately 140 value added reseller partners in 25 countries with approximately 1,100 representatives selling, supporting & installing its software. Posera had annual revenue for its fiscal year ending August 31, 2009 of approximately Cdn$8.1 million and had positive EBITDA. Posera's customers include Quick, O'briens, St-Hubert, Pita Pit, Popeye's, Dunkin' Donuts, Pizza Delight, Baton Rouge, Scores, Hooters, Casey's, Supermac's, HDOS, KFC, Extreme Pita, Pizza Hut, among many others.

HDX will purchase all of the issued and outstanding shares of Posera Inc. The acquisition of all the Posera Inc. shares will be satisfied through a cash payment of $6,000,000, a USD$960,000 vendor take back and through the issuance of 5,953,488 common shares of HDX at a deemed price of $0.645 per share for total consideration of $10,800,000. All shares received by the vendors will have a hold period of 24 months.

Closing of both the Posera and Cash N Go transactions is subject to execution of definitive agreements, completion of satisfactory due diligence and receipt of all requisite regulatory approvals and third party consents, including acceptance by the TSX.

HDX Post-Transaction

On a pro-forma basis, assuming HDX, Posera and Cash N Go had been merged already, based on each of their most recently completed fiscal year-ends, the combined entity would have revenue of approximately $31.3 million and EBITDA of $2.5 million.

The transactions cannot be completed until the required TSX approval is obtained. There can be no assurance that the transactions will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the materials to be prepared in connection with the transactions, any information released or received with respect to the transactions may not be accurate or complete and should not be relied upon. Trading in the securities of HDX should be considered highly speculative. The TSX has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Risks and Uncertainties

The Company is exposed to a variety of risks in the normal course of operations. In the Annual Information Form of the Company dated March 30, 2009, it provided a detailed review of the risks that could affect its financial condition, results of operation or business that could cause actual results to differ materially from those expressed in our forward-looking statements. In management's opinion, there has been no material change in the nature or magnitude of the risks faced by the Company.

Cautionary Note Regarding Forward-Looking Statements

This discussion includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts, but reflect HDX's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risks and Uncertainties" in the Annual Information Form filed on March 30, 2009 with the regulatory authorities. HDX assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless required by security regulation.

About HDX

HDX is a leading provider of point-of-sale software, services and hardware to the restaurant sector in North America. Through the deployment of its proprietary software and national customer service support network, HDX is committed to providing innovation, quality products and superior service to its restaurant customers. Additional information related to the Company can be found on SEDAR at www.sedar.com.

For further information: Paul Howell, President, CEO, Hosted Data Transaction Solutions Inc., Phone: [phone], extension 2263, Email: [email protected]