VendTek Systems Inc. Announces 2003 Year End Results

Revenues increased by $9,200,218 or 424% compared to $2,168,722 for the year ended October 31, 2002. The 12mo2003 year revenues are comprised of prepaid PIN revenue of $10,812,931compared to $808,847 for the year ended 2002, 12M2003 license and engineering revenues of $276,808, compared to $111,350 for the year ended 2002, and 12M2003 systems and parts sales of $158,632 compared to $1,248,525 for the year ended 2002. Consistent with first, second, and third quarter 2003 results, the substantial rise in revenues is attributed to the launch and growth of VendTeks wholly owned subsidiary Now Prepay Corp. The continued installation of Point-of-Sale (POS) terminals across Canada for the sale of virtual prepaid telecommunications vouchers provides meaningful revenues, which are augmented by the wholesale portion of Now Prepay’s prepaid cellular business. The Company’s increase in engineering and software license revenues is indicative of the successful transition of the Company from manufacturing to software engineering and licensing. General and administration (G&A) expenses for the year ended 2003 increased by $5,722 or 0.6% to $933,147 compared to $927,425 for the year ended 2002. Travel and promotion for the year ended 2003 decreased by $59,110 or 92% compared to the year ended 2002 as the Company corrected the allocation of appropriate travel expenses from G&A to Sales and Product Development. Office and rent increased $28,019 or 12% for the year ended 2003 as the new office in China was set-up and in Canada to accommodate the operational overhead growth of Now Prepay. Selling and Marketing expenses for the year ended 2003 increased by $99,657 or 47% to $310,619 compared to $210,962 for the year ended 2002. The increase was due to the Company correcting the allocation of appropriate expenses from G&A to Sales, and an increase in business travel to facilitate the sales of the Now Prepay business. Installation and support of e-Fresh software in foreign markets (USA, UAE, and China) contributed to the increase sales expenses. Product development expenses for the year ended 2003 decreased by $14,025 or 4% to $380,772 compared to $394,797 for the year ended 2002. The decrease is due to a reduction in VendTek engineering staff. Net loss for the year ended 2003 increased by $536,977 or 60% to $1,428,268 compared to $891,291 for the year ended 2002. The increase was due to a $404,000 or 70% write down of VendTek Industries’ manufacturing inventory in the fourth quarter of 2003. This was necessitated by the transition of the Company from the legacy business of manufacturing to its new focus as a software engineering and licensing company. Despite the impact of the inventory write down, the net loss per share improved by $0.01 to -$0.06 compared to -$0.07 for the year ended 2002.