June 30, 2005 - VendTek Systems Inc.
(TSX-V: VSI) ("VendTek" or "The Company"),
a leading provider of software for prepaid service distribution,
announces revenues rose 88% to $15,886,000 for the six-month
period ending April 30, 2005 compared to $8,455,000 for
the same period in 2004.
The revenues are comprised of prepaid PIN revenue of $15,831,000
(Q2 2004 $8,207,000), license and engineering revenues
of $10,000 (Q2 2004 $43,000), and systems and parts sales
of $45,000 (Q2 2004 $205,000).
For the ninth successive quarter, revenues have continued
to grow. The increase is a result of the continued growth
of the Company's subsidiary Now Prepay Corp. As at April
30, 2005, there were 6,476 terminals deployed which reflects
a growth of 69% compared to 3,825 terminals active at
the same time last year. The ongoing installation of POS
terminal software clients across Canada for the sale of
prepaid telecommunications vouchers has provided growth
and a continually expanding customer base.
Paul Brock, President of VendTek, said, "We are pleased
with these financial results as VendTek continues to increase
revenues through an expanding customer base and product
offering. We recently announced the 7000th merchant location
in Canada and are planning for the growth to continue
indefinitely. Our efforts to expand both domestically
and internationally are ongoing. VendTek has successfully
developed software that adds value to our customer's businesses
enabling them to sell a variety of products and services
more effectively than the traditional methods. This is
an advantage which appeals to our customers and potential
customers world wide."
The consolidated gross profit for the first two quarters
of 2005 was $503,000 compared to $361,000 for the same
period in 2004, an increase of 39%. The high revenues
generated by Now Prepay accounted for the majority of
the consolidated gross profits.
Direct costs have increased 90% in the six month period
to $15,383,000 compared to $8,094,000 for the same period
in 2004. This is due to the increased number of terminals
selling product as well as the amount of product being
sold. Purchases of product for sale have increased by
$7,163,000 and commission payments to Independent Sales
Partners have increased by $164,000 in 2005 compared to
2004. However, these increased expenses are partially
offset by a $34,000 (32%) reduction in labour and subcontracting
costs.
General and administrative ("G&A") expenses
have remained virtually constant, decreasing by $5,000
or less than one percent, to $711,000 for the six months
compared to $716,000 for the same period 2004. Telecommunications,
amortization, banking charges and bad debt expenses rose
by $49,000 (62%) due to increased costs associated with
Now Prepay telecommunication lines as well as an increase
in amortization costs due to new terminal purchases. The
increases were offset by reductions in almost every other
category; accounting and legal fees decreased by $34,000
(41%), computer expenses decreased by $3,000 (25%), office
expenses decreased by $1,000 (12%), interest on long-term
debt decreased by $6,000 (18%), rent decreased by $24,000
(31%) and salary expenses were reduced by $8,000 (2%);
all due to decreased spending. Investor relations expenses
increased by $5,000 (46%) Travel and promotional expenses
were up $12,000 (188%) due to increased non-sales related
travel and automotive expenses as well as meals and other
marketing expenses.
Engineering expenses increased $18,000 (16%) to $61,000
for the period compared to $49,000 for the same period
in 2004. The increase is due to increased use of contract
engineering and salary increases to engineering staff.
Selling and marketing expenses decreased by $21,000 (52%)
to $41,000 for the six month period compared to $62,000
for the same 2004 period. The decrease is due to reduced
sales travel and the reduction of wage expenses. The reduction
of expenses was offset by a $6,000 (56%) increase in advertising
and trade show expenses.
Net loss for the six months ended April 30, 2005 was ($377,000)
or ($0.01) per share compared to ($527,000) or $(0.01)
per share for the same period of 2004. This decrease in
loss was due to higher systems revenues and increased
virtual telecommunication sales.
The complete statements are available at www.sedar.com.
For further information, please contact Samantha Haynes
at 604.805.4653 or 1-800-806-4958 or investment@vendteksys.com.
About VendTek and Now Prepay (
www.vendteksys.com / www.nowprepay.com)
VendTek Systems Inc. develops and licenses eFresh™
software and related technologies, which provides electronic
distribution of prepaid telecommunication and financial
services. VendTek is commercializing the eFresh™
software under license to create sustainable and recurring
revenues. VendTek's customers and its subsidiaries,
Now Prepay Corp. (in Canada) and VendTek Systems Technologies
(in China), are using eFresh™
software to build electronic, prepaid services networks
which enable consumers to purchase prepaid services
via POS and self-serve terminals connected to a central
eFresh™
server. This system creates significant value through
improved efficiencies compared to the traditional distribution
paradigm. eFresh™
reduces shrinkage and inventory requirements while improving
consumer access to prepaid services since it is completely
electronic and eliminates physical cards and vouchers.
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.
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The TSX Venture Exchange has
not reviewed and does not accept responsibility
for the adequacy or accuracy of this release.
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