VendTek Reports Financial Results for Second Quarter of 2004

The 6mo2004 revenues are comprised of prepaid PIN revenue of $8,131,000 (6mo2003 - $4,420,000), license and engineering revenues of $42,650 (6mo2003 - $213,000), and systems and parts sales of $205,000 (6mo2003 - $131,000). Consistent with the past four quarters, revenues have continued to grow as a result of ongoing expansion of the Now Prepay business in Canada. For the past four quarters, revenues have increased an average of 15% per quarter. The consolidated gross profit for the second quarter of 2004 was $361,000 compared to $281,000 for 6mo2003, an increase of 29%. The high revenues generated by Now Prepay accounted for the majority of the consolidated gross profits that remain indicative of the low margin virtual prepaid telecommunications industry in which Now Prepay conducts its business. Due to a reallocation of expenses general and administration (“G&A”) expenses increased by $270,000 (61%) to $716,000 in 6mo2004 compared to $445,000 in 6mo2003. And, salaries under G&A increased $197,000 (134%) with the appropriate re-allocation of Now Prepay management wage expenses from sales to G&A; travel and promotional expenses were up $4,000 (166%) due to increased travel and promotions; office and telecommunications expenses rose $48,000 (33%) due to increased costs associated with Now Prepay telecommunication lines and transaction costs as well as a rent increase; accounting and legal fees increased $11,000 (15%) due to increased legal expenses in the quarter; computer expenses increased by $11,000 (3,382%) due to the purchase of computers to act as demonstration and active servers in Asia, banking charges increased $4,000 (104%) due to increased electronics funds transfer charges related to the collection of Now Prepay revenues; investor relations costs decreased! by $6000 (-38%) due to reduced services. The reallocation of expenses to G&A caused engineering expenses to decrease $93,000 (-46%) to $110,000 in 6mo2004 compared to $203,000 in 6mo2003. The reduction is offset by an increased use of contract engineering, and additional engineering staff in VendTek Technologies Beijing. Selling and marketing expenses decreased $35,000 (-36%) to $62,000 in 6mo2004 compared to $97,000 in 6mo2003. The decrease is due to the reallocation of sales wage expense to G&A. The reduction is offset by an increase in business travel during 2004. Net loss for 6mo2004 increased by $62,000 (13%) to when compared with the 6mo2003 loss of . This reduction in earnings was due to lower licensing revenues in Q2 2004 compared to Q2 2003 and increased expenses in wages, telecommunication, office and computer expenses. The net loss per share in 6mo2004 remained at when compared to 6mo2003.