SYS-CON MEDIA Authors: Elizabeth White, Yeshim Deniz, Pat Romanski, Nikita Ivanov, Sean Houghton

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VersaPay Reports Q1 2014 Results

TORONTO, ONTARIO -- (Marketwired) -- 05/28/14 -- VersaPay Corporation (TSX VENTURE: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based payment solutions, is pleased to report financial results for the first quarter of 2014. Revenue for Q1 2014 grew to $4.3 million from $4.1 million in the previous year. Revenue growth occurred across both of the company's operating units, the POS Merchant Services business and the VersaPay Solutions business.

Q1 2014 Highlights:


--  Completed a $5 million bought-deal financing in order to further develop
    and market its Arc™ electronic invoice presentment and payment
    software and its ArcPay™ electronic payments service
--  WinPak Ltd.'s Winnipeg manufacturing division became a VersaPay
    Solutions customer, selecting the Arc™ platform to automate its
    accounts receivable processes
--  Grew total credit card processing volume to $220 million for Q1 2014
    versus $208 million in Q1 2013
--  Launched an Arc™ direct marketing campaign in Canada and the United
    States that is generating higher than expected levels of interest from
    VersaPay's target market.

Subsequent to Q1 2014 Highlights:


--  Heartland Payment Systems, the fifth largest payment processor in the
    United States completes integration with Arc™ and rolls out reseller
    program to its world class sales distribution network.

Q1 2014 Financial Summary(1)


----------------------------------------------------------------------------
                                                Three months ended, March 31
                                                ----------------------------
                                                          2014          2013
----------------------------------------------------------------------------
Total Revenue                                     $       4.3M  $       4.1M
----------------------------------------------------------------------------
Cash Operating Expenses(2)                        $       1.3M  $       1.0M
----------------------------------------------------------------------------
Adjusted EBITDA(3)                                $     (0.5)M  $     (0.3)M
----------------------------------------------------------------------------
Net Loss                                          $     (0.8)M  $     (0.3)M
----------------------------------------------------------------------------
                                                              March 31, 2014
----------------------------------------------------------------------------
Cash                                                            $      5.4 M
----------------------------------------------------------------------------
Notes:
1   The unaudited condensed interim consolidated financial statements for
    the three months ended March 31, 2014 and the related Management's
    Discussion and Analysis for the period will be available on the
    Company's website at www.versapay.com and on SEDAR at www.sedar.com.
2   Cash operating expense is defined as operating expense excluding
    depreciation, amortization and share-based payments.
3   Adjusted EBITDA is defined as earnings before interest, taxes,
    depreciation, amortization, share-based payments, and other income. See
    table A below.

"Q1 saw the realization of several key milestones for the company," commented Craig O'Neill, VersaPay's CEO. "In launching our go-to-market plan for Arc™, securing financing to fund our growth plans, significantly strengthening our R&D team, and implementing our first major Arc™ partnership with Heartland, we have made solid progress towards our objectives for the year. In addition, we are very pleased with the expanding sales pipeline we are witnessing in both businesses, Solutions and POS. We expect this trend to continue as we increase our sales and marketing investment and as our strategic partners, Heartland Payment Systems in the U.S. and TD Merchant Services in Canada, gain market traction."

Q1 2014 Financial Review

Total revenues for Q1 2014 increased 5% to $4.3 million from $4.1 million in Q1 2013. The year-over-year improvement was driven primarily by growth in the Company's transaction processing fees.

Cash operating expense (excluding amortization and share-based payments) increased 22% to $1.3 million from $1.1 million in Q1 2014 from the same period in 2013.

Adjusted EBITDA for Q1 2014 was $(0.5) million, compared to $(0.3) million in Q1 2013. Loss from continuing operations for Q1 2014 was $(0.8) million. This compares to a loss from continuing operations of $(0.3) million for Q1 2013.

Table A


----------------------------------------------------------------------------
                                               Three months ended, March 31
                                                        2014           2013
                                                           $              $
----------------------------------------------------------------------------
Adjusted EBITDA(1)                                  (504,246)      (251,622)
Share based payments                                (260,016)       (61,172)
Interest expense                                     (43,145)       (39,810)
Amortization                                         (16,643)       (36,615)
Other income                                               -         62,746
----------------------------------------------------------------------------
Net Loss                                            (824,050)      (326,473)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
1   Adjusted EBITDA is defined as earnings before interest, taxes,
    depreciation, amortization, share-based payments, and other income.

About VersaPay

VersaPay is a financial technology company that delivers payment solutions for businesses. Serving more than 2,500 customers, VersaPay, together with its partners, provides the hardware, technology, infrastructure and support services to enable businesses of all types to accept and process electronic payments. In addition, the Company's cloud-based invoice presentment and payment platform facilitates the efficient exchange of documents and payments between suppliers and customers. VersaPay is headquartered in Toronto, Canada and has operations in Montreal and New York.

More information about VersaPay can be found at 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.

Neither the 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.


----------------------------------------------------------------------------
                                                    March 31,  December 31,
                                                         2014          2013
                                                            $             $
----------------------------------------------------------------------------

ASSETS
Current
Cash and cash equivalents                           5,368,355     1,276,410
Funds held for merchants                            4,644,076     4,063,599
Receivables                                           450,692       407,949
Prepaid expenses                                       96,440        33,441
----------------------------------------------------------------------------
                                                   10,559,563     5,781,399
Non-current
Equipment                                             213,817       194,999
Intangible assets                                       6,537         7,215
----------------------------------------------------------------------------
Total Assets                                       10,779,917     5,983,613
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES
Current
Accounts payable and accrued liabilities              483,719       289,465
Funds due to merchants                              4,644,076     4,063,599
Current portion of obligations under finance
 lease                                                 19,889        24,367
----------------------------------------------------------------------------
                                                    5,147,684     4,377,431
Non-current
Obligations under finance lease, net of current
 portion                                                    -         2,953
Promissory note                                       718,949       698,927
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Liabilities                                   5,866,633     5,079,311
----------------------------------------------------------------------------
----------------------------------------------------------------------------

EQUITY
Share capital                                      15,504,300    10,812,937
Reserve                                             2,057,557     1,928,724
Warrants                                               64,985        52,149
Deficit                                           (12,713,558)  (11,889,508)
----------------------------------------------------------------------------
Total Equity                                        4,913,284       904,302
----------------------------------------------------------------------------
Total Liabilities and Equity                       10,779,917     5,983,613
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
                                                        Three months ended,
                                                                   March 31
                                                          2014         2013
                                                             $            $
----------------------------------------------------------------------------

Revenue
  VersaPay Solutions                                    97,866       71,049
  POS Merchant Services                              4,236,944    4,066,924
----------------------------------------------------------------------------
                                                     4,334,810    4,137,973
----------------------------------------------------------------------------

Cost of Sales
  VersaPay Solutions                                    69,984       57,359
  POS Merchant Services                              3,499,007    3,292,057
----------------------------------------------------------------------------
                                                     3,568,991    3,349,416
----------------------------------------------------------------------------
Gross Profit                                           765,819      788,557
----------------------------------------------------------------------------

Expenses
  Depreciation and amortization                         16,643       36,615
  General and office expenses                          198,761      145,257
  Interest expense                                      43,145       39,810
  Marketing and promotion                               96,262       45,137
  Professional and consulting fees                     221,332      211,472
  Rent and occupancy                                    74,601       75,112
  Research and development                             137,543      103,257
  Salaries and benefits                                541,566      459,944
  Share based payments                                 260,016       61,172
----------------------------------------------------------------------------
Total Expenses                                       1,589,869    1,177,776
----------------------------------------------------------------------------

Other Income                                                 -       62,746

----------------------------------------------------------------------------
Net Loss and Comprehensive Loss for the Period        (824,050)    (326,473)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


----------------------------------------------------------------------------

Loss per share, basic                              $     (0.04) $     (0.02)

Weighted average number of common shares
 outstanding, basic                                 18,943,216   15,367,770

----------------------------------------------------------------------------

----------------------------------------------------------------------------
                        Issued                                        Total
                       Capital    Reserve  Warrants      Deficit     Equity
                             $          $         $            $          $
----------------------------------------------------------------------------
As at December 31,
 2012                9,981,720  1,497,517   372,260  (10,778,860) 1,072,637
Net loss for the
 period                      -          -         -     (326,473)  (326,473)
Shares Issued                -          -         -            -          -
Exercise of options     15,063     (4,130)        -            -     10,933
Share based
 payments                    -     61,172         -            -     61,172
Warrants expired             -          -         -            -          -
----------------------------------------------------------------------------
At March 31, 2013    9,996,783  1,554,559   372,260  (11,105,333)   818,269
----------------------------------------------------------------------------
----------------------------------------------------------------------------


----------------------------------------------------------------------------
                        Issued                                        Total
                       Capital    Reserve  Warrants      Deficit     Equity
                             $          $         $            $          $
----------------------------------------------------------------------------
At December 31,
 2013               10,812,937  1,928,724    52,149  (11,889,508)   904,302
Net loss for the
 period                      -          -         -     (824,050)  (824,050)
Shares Issued        4,367,337          -    55,453            -  4,422,790
Exercise of options          -          -         -            -          -
Exercise of
 warrants              150,226     42,617   (42,617)           -    150,226
Share based
 payments              173,800     86,216         -            -    260,016
Warrants expired             -          -         -            -          -
----------------------------------------------------------------------------
At March 31, 2014   15,504,300  2,057,557    64,985  (12,713,558) 4,913,284
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
                                                         Three months ended
                                                                  March 31,
                                                          2014         2013
                                                             $            $
----------------------------------------------------------------------------

Cash Provided By (Used In) Operating Activities
  Net loss for the period                             (824,050)    (326,473)
    Items not affecting cash:
    Depreciation of equipment                           15,965       21,977
    Amortization of intangible assets                      678       14,638
    Interest accreted on promissory note                20,022       15,618
    Share based payments                               260,016       61,172

  Change in non-cash working capital items
    Receivables                                        (42,743)     (50,591)
    Prepaid expenses                                   (62,999)     (10,431)
    Accounts payable and accrued liabilities           194,254       29,012
----------------------------------------------------------------------------
                                                      (438,857)    (245,078)

Cash Provided By (Used in) in Investing Activities
  Acquisition of equipment                             (34,783)        (660)
----------------------------------------------------------------------------
                                                       (34,783)        (660)

Cash Provided by (Used In) Financing Activities
  Issuance of common shares, net of issuance costs   4,573,016       10,933
  Finance lease payments                                (7,431)     (11,718)
----------------------------------------------------------------------------
                                                     4,565,585         (785)

Increase (decrease) in cash and cash equivalents     4,091,945     (246,523)

Cash and cash equivalents, beginning of period       1,276,410    1,461,388

----------------------------------------------------------------------------
Cash and cash equivalents, end of period             5,368,355    1,214,865
----------------------------------------------------------------------------

Cash and cash equivalents consist of the following:


----------------------------------------------------------------------------
                                                          2014          2013
                                                             $             $
----------------------------------------------------------------------------
Cash at bank and in hand                             4,882,478       357,154
Demand deposits                                        485,877       857,711
----------------------------------------------------------------------------
                                                     5,368,355     1,214,865
----------------------------------------------------------------------------

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