VendTek Systems Inc.
TSX VENTURE : VSI

VendTek Systems Inc.

February 25, 2008 16:04 ET

VendTek Systems Announces Results for 2007

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 25, 2008) - VendTek Systems Inc. (TSX VENTURE:VSI) ("VendTek" or "The Company"), a leading of provider automated transaction systems software, is pleased to announce the Company's financial results for the year ended October 31, 2007. VendTek realized revenues of $90.823 million and earnings of $769 thousand ($0.02 per share) for the year.

Key highlights of VendTek's fiscal 2007 year-end results include:

- Revenues increased $32.805 million or 57% from 2006.

- Overall gross margins increased to 6.2% for 2007, compared to 6.1% for 2006.

- Earnings per share of $0.02 for the year ended October 31, 2007

- Increase in the number of terminals in Canada from 9,979 in 2006 to 12,474 in 2007.

- Increased international software license sales from United Arab Emirates.

Key highlights of VendTek's three months ended October 31, 2007 include:

- Revenues for the fourth quarter of 2007 were $28.996 million compared to $16.827 million for the same period in 2006. This represents an increase of $12.169 million or 72%.

- Eighth consecutive quarter of profitability

- Launch of electronic prepaid network into the United States and international expansion with a license agreement in Africa

"We are pleased with our financial results for the year, particularly, our revenue growth. Our business in Canada and the United Arab Emirates continues to grow as we continue to see a shift from traditional plastic card sales to electronic distribution. This is happening world-wide and we believe that we are well positioned to benefit from this change," said Doug Buchanan, President and Chief Executive Officer of VendTek Systems Inc.

"We believe our technology increases efficiencies in the supply chain for the distribution of prepaid products and services," says Buchanan. "We are committed to increasing our footprint for our e-Fresh™ automated transaction software. To do this, we continue invest in our technology platform, sales, marketing and business development. The benefit of these investments are long-term, but necessary for VendTek to remain a leader."

Nurez Khimji, VendTek's Chief Financial Officer, says sustained profitability and continued investment in market development have positioned VendTek for continued growth.

"We generated $1.8 million in cash flow from our operations in 2007 compared to $1.1 million in 2006. This 64% increase in cash flow reflects the strong financial results for the year. Our earnings, however, were affected by many non-cash expenses that are not tax deductible. These include stock option expenses of $739 thousand (compared to $291 thousand in 2006). We expect that our stock option expenses will decline significantly after the second quarter of 2008. This will improve our earnings," says Khimji.

Mr. Buchanan and Mr. Khimji will discuss the financial results on Tuesday, February, 26th, at 6:45am (PST). Access to the conference can be obtained by dialing 416-644-3420 or 1-800-732-0232.

Complete results for the year ended October 31, 2007 may be accessed via the Company's web site at www.vendteksys.com via the SEDAR web site at www.sedar.com or by e-mailing shaynes@vendteksys.com and having them sent directly to you.

About VendTek

VendTek develops and licenses automated transaction system software and supporting technologies that improve the efficiency of product delivery, reduce costs to clients and offer superior safety measures. VendTek's customers and its division, Now Prepay Corp. and its subsidiaries are using e-Fresh™ software to build electronic, prepaid services networks, which enable consumers to purchase prepaid services via POS and self-serve terminals connected to a central e-Fresh™ server. This system creates significant value through improved efficiencies compared to the traditional distribution paradigm. e-Fresh™ reduces shrinkage and inventory requirements while improving consumer access to prepaid services by completely eliminating physical cards and vouchers. For further information please visit the Company's websites www.vendteksys.com and www.nowprepay.com.

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company assumes no obligation to update any forward-looking information contained in this news release.



Financial Highlights

Consolidated Balance Sheets

October 31, 2007 and 2006

------------------------------------------------------------------------
2007 2006
------------------------------------------------------------------------
Current Assets
Cash $ 329,431 $ 763,664
Accounts receivable 3,357,431 1,985,832
Inventories 4,820,339 1,102,654
Prepaid expenses and deposits 27,401 14,467
Future income tax asset 91,948 170,500
------------------------------------------------------------------------
8,626,550 4,037,117

Equipment 932,063 328,170

Intangible Assets 805,753 19,689

Goodwill 522,349 -
------------------------------------------------------------------------
$ 10,886,715 $ 4,384,976
------------------------------------------------------------------------

Liabilities
Current Liabilities
Accounts payable and accrued
liabilities $ 5,983,508 $ 1,950,831
Income taxes payable 83,800 135,137
Current portion of capital lease
obligations 148,926 272,698
------------------------------------------------------------------------
6,216,234 2,358,666

Capital lease obligations 50,553 79,325
------------------------------------------------------------------------
6,266,787 2,437,991
------------------------------------------------------------------------

Shareholders' Equity
Share Capital 7,990,337 6,804,081
Contributed Surplus 1,156,204 438,545
Deficit (4,526,613) (5,295,641)
------------------------------------------------------------------------
4,619,928 1,946,985
------------------------------------------------------------------------
$ 10,886,715 $ 4,384,976
------------------------------------------------------------------------

Consolidated Statements of
Operations and Deficit

For the years ended October 31, 2007 and 2006

------------------------------------------------------------------------
2007 2006
------------------------------------------------------------------------

Revenues
Prepaid telecommunication $ 89,850,450 $ 57,600,072
Hardware and equipment 82,109 171,890
Software license and services 890,389 246,116
------------------------------------------------------------------------
90,822,948 58,018,078
------------------------------------------------------------------------

Cost of revenues
Prepaid telecommunication 85,140,337 54,451,829
Hardware and equipment 63,371 31,625
------------------------------------------------------------------------
85,203,708 54,483,454
------------------------------------------------------------------------

5,619,240 3,534,624
------------------------------------------------------------------------

Operating Expenses
General and administrative 3,183,671 1,806,132
Selling and marketing 484,185 422,790
Research and development 472,995 359,452
Amortization 373,952 175,158
Interest on capital lease obligations 157,238 55,521
------------------------------------------------------------------------
4,672,041 2,819,053

Earnings before income taxes 947,199 715,571
------------------------------------------------------------------------
Income tax expense (recovery)
Current 129,571 135,137
Future 48,600 (170,500)
------------------------------------------------------------------------
178,171 (35,363)
------------------------------------------------------------------------

Net earnings 769,028 750,934
------------------------------------------------------------------------
Basic and fully diluted net
earnings per share $ 0.02 $ 0.02
------------------------------------------------------------------------


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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