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JG Capital Corp. Announces Executed Letter Agreement With VersaPay Corporation TORONTO, ONTARIO--(MARKET WIRE)--Oct 6, 2008 -- JG Capital Corp. (CDNX:JGC-P.V - News) (the "Corporation"), a Capital
Pool Company, announced today that it has entered into a
binding letter agreement (the "Letter Agreement") dated
as of September 22, 2008 concerning the amalgamation of
the Corporation with VersaPay Corporation ("VersaPay").
The Letter Agreement contemplates the amalgamation of the
Corporation and VersaPay (the "Proposed Transaction"), with
the shareholders of each entity receiving common shares
of the corporation formed as a result of such amalgamation
(the "Resulting Issuer"). The common shares of the Resulting
Issuer shall be allotted on the basis of agreed-upon valuations
of the Corporation and VersaPay, of $1,085,000 and $10,096,563,
respectively, prior to completion of the First Equity Financing
and the Second Equity Financing (as defined below). On completion
of the Proposed Transaction the securityholders of the Corporation
shall collectively receive 868,000 common shares in the
Resulting Issuer based on an exchange ratio of 0.14 shares
of the Resulting Issuer for each common share in the capital
of the Corporation. The securityholders of VersaPay shall
collectively receive 8,077,250 common shares in the Resulting
Issuer based on an exchange ratio of 1 share of the Resulting
Issuer for each common share in the capital of VersaPay.
Prior to or concurrent with the Proposed Transaction, equity
financing of up to $500,000 at a price of $1.10 per common
share is proposed by VersaPay by way of a prospectus exempt
private placement (the "First Equity Financing"). Concurrent
with the Proposed Transaction, and equity financing of up
to $1,950,000 at a price of $1.50 per common share is proposed
by VersaPay by way of a prospectus exempt private placement
or prospectus offering (the "Second Equity Financing").
The Corporation will also extend a loan (the "JG Capital
Loan") to VersaPay in the amount up-to $225,000, subject
to the prior approval of the TSX Venture Exchange (the "Exchange").
The proceeds from the First Equity Financing, the Second
Equity Financing and the JG Capital Loan will be used to
finance an expanded sales and marketing force for VersaPay
and for general working capital. Assuming completion of the First Equity Financing and the Second Equity Financing, it is anticipated that 9,831,795 common shares in VersaPay shall be issued and outstanding at the closing of the Proposed Transaction. Accordingly, immediately after the amalgamation of the Corporation and VersaPay, 10,699,795 common shares in the Resulting Issuer shall be issued and outstanding. Following the completion of the Proposed Transaction, the Resulting Issuer shall operate under the name VersaPay Corporation. It is intended that the Proposed Transaction, if completed, will constitute the "Qualifying Transaction" of the Corporation within the meaning of Exchange Policy 2.4 - Capital Pool Companies. In connection with the Proposed Transaction, the parties intend to negotiate and enter into definitive agreements, including a formal amalgamation agreement and related documentation (collectively, the "Definitive Agreements") as soon as possible. Completion of the Proposed Transaction is subject to a number of conditions, including, but not limited to, the negotiation and signing of the Definitive Agreements, completion of the First Equity Financing and the Second Equity Financing, provision of the JG Capital Loan to VersaPay, satisfactory completion of due diligence, board and other requisite approvals, including Exchange approval, the execution of employment agreements for all key personnel and the satisfaction of the minimum listing requirements of the Exchange. There can be no assurance that the Proposed Transaction will be completed. The Proposed Transaction will not constitute a Non Arm's Length Qualifying Transaction within the meaning of Exchange Policy 2.4 - Capital Pool Companies ("Policy 2.4"). However, as Jason Gurandiano is a director of both the Corporation and VersaPay, the parties have agreed to submit the Proposed Transaction for Majority of the Minority Approval (as defined in Policy 2.4). Jason Gurandiano has disclosed his interest in VersaPay to the other directors of the Corporation and abstained from voting with respect to the resolution of the directors of the Corporation approving the Proposed Transaction. VersaPay Corporation VersaPay is a private corporation incorporated under the laws of Canada with offices in Vancouver and Montreal. As one of Canada's fastest growing financial transaction processors, VersaPay enables merchants of all sizes across Canada the ability to accept credit and debit cards at their place of business. The Company also provides wired and wireless point of sale terminals, integrated payment solutions as well as e-commerce and ERP payment processing and settlement. VersaPay's unaudited revenues for the six-month period ending June 30, 2008 was $1,181,116, an increase of approximately 318% over the $282,197 recorded during the Company's first six months of operations during 2007 or the. Net loss was $635,573 for the six-months ending June 08. No one person directly or indirectly beneficially holds a controlling interest in or otherwise controls or directs VersaPay. As of August 1, 2008 VersaPay has 7,905,250 total issued and outstanding common shares and outstanding options to acquire an additional 1,590,000 common shares. Marc Cernovitch and Jason Gurandiano, both of whom are directors of the Corporation, own 50,000 (representing 0.6% of the outstanding common shares) and 250,000 (representing 3.1% of the outstanding common shares) common shares respectively in the capital stock of VersaPay Jason Gurandiano, by virtue of being a director of VersaPay, is considered an Insider of VersaPay as such term is defined pursuant to Exchange Policy 1.1 - Interpretation. Resulting Issuer Upon completion of the Proposed Transaction, the Resulting Issuer intends to have a board of directors comprised of Marc Cernovitch, Michael Gokturk, Jason Gurandiano, Adam Atlas and Jon DeVos. The Resulting Issuer expects that Marc Cernovitch, Michael Gokturk, Patrick MacDonald, Nick DeMare, Jason Gurandiano and Kevin Short will be, amongst others, Insiders of the Resulting Issuer. A description of each of their backgrounds and their proposed Insider positions with the Resulting Issuer is set forth below: Michael Gokturk Position: Chief Executive Officer Prior to co-founding VersaPay, Michael Gokturk worked with PI Financial Corp in Corporate Finance as well as Retail Investments. Michael Gokturk has acted as lead advisor to a number of start-up and emerging companies, each with diverse business models and management. He also successfully launched a multinational trade brokerage firm and a leading and innovative e-commerce retailer that became the model for its kind. Michael Gokturk volunteers his time by advising a number of start-up companies in British Columbia and is very active in the local community, proudly serving on the Board of Directors of the Children's Wish Foundation, amongst others. Patrick MacDonald Position: President Patrick MacDonald has significant experience in the merchant services industry as he comes from one of North America's largest white-label ATM company's sales and distribution arm in Quebec. Prior to the payments industry, Patrick MacDonald founded and operated one of Canada's most successful marketing companies who created sales and marketing strategies focused on the travel industry, trade associations and third-party vendor partnerships. Kevin Short Position: Chief Technology Officer Kevin has been involved in designing, securing and implementing banking infrastructure for Canada's leading financial institutions for over 13 years. Prior to co-founding VersaPay, Kevin Short was a Senior Security Architect at Bell Canada, working in the capacity of top advisor to Bell clients - Canada's leading financial institutions for banking systems and the principle security architect for the Vancouver 2010 Olympics. In his career Kevin has worked in a senior capacity for Sun Microsystems, Nortel Networks, TELUS, Enbridge, Bell and TransCanada amongst others. Marc Cernovitch Position: Member of Board of Directors Since March 2007, he has served as Chairman of Halo Resources Ltd., a junior resource company. From February 2005 to February 2007 he served as President and Chief Executive Officer of Halo Resources Ltd. and from September 2004 to February 2005 he served as its Vice-President, Corporate Development. From September 2002 to September 2004 he was a self-employed consultant in Montreal and New York. From March 2000 to August 2002, he served as Vice President, Investor Relations for Synergy Technologies Corporation, a manufacturer of synthetic hydrocarbon fuels. He was a consultant for Stone Canyon Resources Ltd. from June 1997 to June 1998. He started his career in the financial services sector in October 1996 with Georgia Pacific Securities Corporation where he acted as an investment advisor until May 1997. He also currently serves as an officer and director of other public reporting companies. Nick DeMare Position: Secretary Since May 1991, Nick DeMare has been the President of Chase Management Ltd., a private company which provides promotional, administrative, management and financial services to private and public companies engaged in mineral exploration and development, gold and silver production, oil and gas exploration and production and venture capital. He also currently serves as an officer and director of other public reporting companies. He holds a Bachelor of Commerce degree from the University of British Columbia and is a member in good standing of the Institute of Chartered Accountants of British Columbia. Jason Gurandiano Position: Member of Board of Directors One of the founding board members, Jason Gurandiano is a Director of a major Wall Street bank, where he heads the investment banking effort in the Financial Technology sector. Jason has a broad M&A and financing background in the financial services sector as well as other sectors. From September 2004 to March 2006 he was a Vice President at Citigroup Inc. and from March 2000 to July 2004 he was a Vice President at Credit Suisse First Boston, both investment banks. From June 1998 to February 2000 he was an Associate with TD Securities Inc., an investment dealer. In 1998, Mr. Gurandiano received a combined Master of Business Administration degree and a Juris Doctor degree from DePaul University. He also received a Bachelor of Arts degree from McGill University in 1995. As noted above, completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
Contact: Contacts:
JG Capital Corp.
Marc Cernovitch
President and CEO
(416) 368-7045
(416) 368-9805 (FAX)
Email: mcernovitch@rogers.com
VersaPay Corporation
Michael Gokturk
Chief Executive Officer
(604) 909-9850
(604) 678-3538 (FAX)
Source: JG Capital Corp.
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