VSI

TSX Venture Exchange: VSI VANCOUVER, Sept. 29, 2011 /CNW/ - VendTek Systems Inc. (the "Company"), a developer and licensor of software for the global prepaid and financial services markets, today reported its financial results for the third quarter ended July 31, 2011. Selected Third Quarter Operational Highlights -- Achieved a number of key milestones in Brazil including receiving certification from all four of the large mobile operators: Vivo, Claro, TIM and Oi. -- Signed an agreement with Banco Santander S.A. to offer bill payment in Brazil -- Announced a partnership with Usemyservices to issue 3V Visa and Ukash products -- Signed a partnership agreement with Roshan and M-Paisa, Afghanistan's first mobile money transfer service. Selected Financial Information for the Three Months ended July 31(st), 2011 -- Revenues for the three months ended July 31, 2011, increased $1.8 million to $28.4 million from $26.6 million for the three months ended April 30, 2011; -- Software license and service revenues decreased $18,000 to $385,000 for the third quarter of 2011 compared to $403,000 for the second quarter of 2011; -- Net loss of $1.4 million for third quarter and second quarter of 2011. Selected Financial Information for the Nine Months ended July 31(st), 2011 -- Revenues for the nine months ended July 31, 2011, decreased $10.6 million to $81.6 million from $92.2 million for the corresponding period in 2010; -- Prepaid revenues in the U.S. increased to $3.2 million in the first nine months of 2011 compared to $3.0 million in the same period of 2010, a 5.7% increase; -- Software license and service revenues increased $123,000 or 10.5% to $1.3 million for the first nine months in 2011 compared to $1.2 million for the same period in 2010; -- Net loss of $3.2 million for 2011, compared to $368,000 for 2010. "We continue to execute on promising new initiatives and to position the company for growth. We are confident that our investment in Brazil will create value for the company and ultimately serve as our platform to other Latin American markets. Internationally, we are working with our partners to expand our existing networks and to drive the number and types of transactions processed through those networks," said Doug Buchanan, President and Chief Executive Officer of VendTek. "Additionally, we are actively seeking distribution partners in new countries." "Our Adjusted EBITDA(1), not including the investment in Brazil and one-time tax accrual, was break even for the three months ended July 31(st), 2011. Our investment for our expansion into Brazil was about $580,000 for the quarter and $1.8 million year to date." VendTek's MD&A and complete statements are available at www.sedar.com and the Company's website www.vendteksystems.com. Conference Call VendTek management will host a conference call on Monday October 3, 2011 at 4:00 PM EDT (1:00 PM PDT) to discuss its financial results and operational highlights for the third quarter of fiscal 2011. To access the conference call by telephone, dial 1-647-427-7450 or 1-888-231-8191 and reference the company name, VendTek Systems Inc., or the conference code 15243648. A live audio webcast of the conference call will be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3582920. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. ______________________________ (1) Management defines Adjusted EBITDA as net income adjusted for interest, taxes, depreciation expenses and amortization expenses, foreign exchange differences, accretion expenses and stock based compensation expenses. Please refer to Non-GAAP measures in our MD&A for more information. VENDTEK  SYSTEMS  INC. Consolidated Balance Sheets (expressed in Canadian dollars) July 31, October 31, 2011 2010 (Unaudited) (Audited) Assets Current assets: Cash $ $ Restricted cash 3,108,709 4,832,659 Accounts 511,516 - receivable 4,468,506 4,132,963 Inventories 4,290,635 1,993,818 396,888 50,505 Deposits 329,537 90,581 Prepaid expenses 13,105,791 11,100,526 Equipment 505,832 554,768 Intangible 189,992 266,496 assets Goodwill 907,342 907,342 $ 14,708,957 $ 12,829,132 Liabilities and Shareholders' Equity Current liabilities: Accounts $ $ payable and accrued liabilities 10,698,619 9,764,295 Capital 3,895 7,587 lease 33,028 52,030 obligation Deferred revenue 10,735,542 9,823,912 Convertible 1,766,988 - debentures 12,502,530 9,823,912 Shareholders' equity: Share capital 9,956,405 9,053,612 Contributed 3,523,050 2,015,055 surplus (11,273,028) (8,063,447) Accumulated deficit 2,206,427 3,005,220 $ 14,708,957 $ 12,829,132 VENDTEK  SYSTEMS  INC. Consolidated Statements of Operations, Comprehensive Loss and Accumulated Deficit (expressed in Canadian dollars) (Unaudited) Three months ended July 31, Nine months ended July 31, 2011 2010 2011 2010 Revenues: Prepaid $ $ $ $ telecommunication 28,011,999 30,972,641 80,239,728 90,952,606 Hardware and 31,831 8,245 63,713 60,719 equipment 385,237 482,618 1,297,479 1,174,160 Software license and services 28,429,067 31,463,504 81,600,920 92,187,485 Cost of revenues: Prepaid telecommunication 27,067,043 29,850,153 77,457,233 87,589,104 Hardware and 24,054 - 28,473 4,246 equipment - - 81,856 - Software license and services 27,091,097 29,850,153 77,567,562 87,593,350 1,337,970 1,613,351 4,033,358 4,594,135 Operating expenses: General and administrative Selling and marketing Research and 1,455,505 1,233,479 3,908,993 3,220,892 development 687,238 197,743 2,012,348 675,560 Restatement costs 194,418 211,941 604,690 597,869 Accretion of - - - 189,867 convertible 126,741 - 225,452 - debentures 81,932 100,556 242,746 288,373 Amortization 197,048 1,286 233,389 3,616 Interest expense (518) 280 8,748 (5,442) Loss (Gain) on (14,527) (9,663) 6,573 (8,887) disposal of assets Foreign exchange loss (gain) 2,727,837 1,735,622 7,242,939 4,961,848 Net loss and (1,389,867) (122,271) (3,209,581) (367,713) comprehensive loss Deficit, beginning (9,883,161) (7,981,102) (8,063,447) (7,735,660) of period Deficit, end of $ (11,273,028) $ (8,103,373) $ (11,273,028) $ (8,103,373) period Basic and diluted $ (0.03) $ (0.00) $ (0.07) $ (0.01) loss per share Weighted average shares outstanding: Basic 49,192,909 46,088,051 48,352,122 46,003,787 Diluted 49,192,909 46,088,051 48,352,122 46,003,787 VENDTEK  SYSTEMS  INC. Consolidated Statement of Cash Flows (expressed in Canadian dollars) (Unaudited) Three months ended July 31, Nine months ended July 31, 2011 2010 2011 2010 Cash provided by (used in): Operations: Net loss for the period $ (1,389,867) $ (122,271) $ (3,209,581) $ (367,713) Items not involving cash: Amortization expense Accretion 81,932 100,556 242,746 288,373 expense 126,741 - 225,452 - Loss (gain) (518) 280 8,748 (5,442) on disposal 45,733 32,875 141,494 34,279 of assets Stock-based compensation (1,135,979) 11,440 (2,591,141) (50,503) Changes in non-cash operating 1,147,557 1,590,949 (2,302,377) 186,239 working capital items 11,578 1,602,389 (4,893,518) 135,736 Financing: Increase in restricted cash Proceeds on issue of convertible (148,396) - (511,516) - debentures Proceeds on - - 2,798,712 - issue of - - 935,690 - shares 30,714 80,000 76,428 144,800 Proceeds from (1,246) (785) (3,692) (12,869) options exercised Repayment of lease obligations (118,928) 79,215 3,295,622 131,931 Investments: Purchase of equipment Proceeds on (22,906) (32,046) (104,569) (129,982) disposition of - 1,027 - 20,405 assets (5,084) (36,386) (21,485) (41,252) Purchase of intangibles (27,990) (67,405) (126,054) (150,829) Increase (decrease) in (135,340) 1,614,199 (1,723,950) 116,838 cash Cash, beginning 3,244,049 1,178,797 4,832,659 2,676,158 of period Cash, end of $ 3,108,709 $ 2,792,996 $ 3,108,709 $ 2,792,996 period Supplemental information: Interest paid $ 66,945 $ 1,286 $ 67,846 $ 3,616 VendTek Systems Inc. CONTACT: For more information or to receive the complete statements pleasecontact Samantha White at 604-805-4653 or 1-800-806-4958or investment@vendteksystems.com.

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