VersaPay Announces 2010 Third Quarter Results

Nov. 24, 2010 (Canada NewsWire Group) --

- Company achieved 62% year-over-year growth in recurring revenue -

TORONTO, Nov. 24 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a provider of merchant credit, debit, gift and loyalty card payment processing and electronic funds transfer solutions, today announced its financial and operational results for the three- and nine-month periods ended September 30, 2010. All amounts are in Canadian dollars unless otherwise noted.

Q3 2010 Highlights

• Increased total gross quarterly transaction value processed 154% to $208 million from $82 million in Q3 2009¹
• Ranked 8^th on the 11^th Annual Profit Hot 50 list after achieving annual revenue growth of 1,107% from 2007 to 2009
• Sequential  improvement in Adjusted EBITDA² to $(0.2) million from $(0.5) million in Q2 2010, as a result of Company's sales growth and cost-cutting initiatives
• Subsequent to the quarter, signed five-year contract renewal to provide Brewers Distributor Ltd. (BDL) with VersaPay EFT, the Company's proprietary Electronic Funds Transfer (EFT) platform

Q3 2010 Financial Summary³

"Our improved top line and Adjusted EBITDA results for the quarter reflect the continued expansion of our merchant customer base along with greater transaction processing activity from our existing customers," said Bill McGill, CEO of VersaPay. "In addition, our strengthened Adjusted EBITDA benefited from the cost controls we implemented in Q2, with our cash operating expenses decreasing 25% sequentially. During the quarter, we also gained further traction with our VersaPay EFT offering, signing a major contract renewal with BDL, our longest standing EFT client, subsequent to quarter end. Looking ahead, we will continue to work to grow our merchant customer base, and believe we are positioned to further improve our results in the coming periods."

Q3 2010 Financial Review

Total revenue for Q3 2010 increased 64% to $3.6 million from $2.2 million in Q3 2009. The year-over-year improvement was driven primarily by growth in the Company's transaction processing fees. Recurring revenue for Q3 2010 increased 60% to $3.4 million (96% of total revenue), compared to $2.1 million, (98% of total revenue) in Q3 2009.

Gross profit for Q3 2010 increased 35% to $0.7 million from $0.6 million in Q3 2009, reflecting VersaPay's improved top line results, which offset its increased investment to support its growing merchant customer base.

Cash operating expense (excluding amortization and stock-based compensation) decreased 24% to $1.0 million from $1.3 million in Q2 2010, reflecting the benefits of the cost control measures the Company implemented during Q2 2010. Cash operating expenses for Q3 2009 were $0.9 million. Total expenses for Q3 2010 were $1.1 million, compared to $1.3 million in Q2 2010 and $1.0 million in Q3 2009.

Adjusted EBITDA for Q3 2010 was $(0.2) million, compared to $(0.5) million in Q2 2010 and $(0.3) million in Q3 2009, reflecting the Company's revenue growth and the implementation of new cost control measures.

Loss from continuing operations for Q3 2010 was $(0.4) million. This is consistent with a loss from continuing operations of $(0.4) million for Q3 2009. For Q3 2010, reflecting a $(0.05) million non-cash gain for the reversal of expired options related to the Company's sale of its 75% interest in Positive in Q2 2010, net loss was $(0.3) million, or $(0.03) per share, compared to a net loss of $(0.4) million or $(0.05) per share in Q3 2009.

As at September 30, 2010, VersaPay had cash and cash equivalents of $0.7 million, compared to $0.2 million as at December 31, 2009.

¹     Total quarterly gross transaction value processed represents the total volume of credit and debit card transactions processed by VersaPay's merchant customers

²    Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-based compensation. See table A.

³    A complete set of financial statements and notes and MD&A for the three- and nine-month periods ended September 30, 2010 will be available on the Company's website at www.versapay.com and on SEDAR.

⁴   Defined as Transaction processing fees + VersaCard/EFT fees

⁵   Defined as Product sales (point-of-sale devices) and other

⁶   Defined as operating expense excluding amortization and stock-based compensation

Table A

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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