VANCOUVER, B.C. March 31, 2003 (PRIMEZONE) -- VendTek Systems Inc. (TSX Venture Exchange:VSI) ("VendTek" or "The Company"), a leading provider of automated transaction technology, would like to update shareholders about their business interests and activities in China.
Since January 2002, VendTek has been developing a partnership with The UFO Group, ("UFO") based in Beijing, China. UFO is a privately held group of companies involved in a wide range of commercial ventures and with significant interests in mobile telecommunications. Through this relationship, VendTek has been able to leverage UFO's reputation and credibility in the Chinese market, as well as benefit from their infrastructure and knowledge of the local economy. In March 2002, VendTek and UFO announced a pilot launch of 5 VendTek's e-Fresh(tm) self-serve kiosks for the distribution of prepaid wireless airtime in Beijing, China. The VendTek kiosks retail China Mobile airtime at a variety of locations including a department store, a China Mobile wireless phone store and a university site. The kiosks are connected via public phone lines to an e-Fresh(tm) server also located in Beijing.
The success of the pilot project provided the catalyst to expand the system as well as increase the marketing efforts for e-Fresh products in China. In December 2002 and January 2003, VendTek introduced its e-Fresh(tm) PC client software and e-Fresh(tm) Wholesale client software for the Chinese market, and through UFO began the initial deployment of the software clients. This marked the expansion of the initial pilot to include the original self serve terminals plus wholesale PC terminal clients clients. VendTek is now in the process of completing the development of POS software clients for China to further expand its suite of terminal clients for the network.
As VendTek earns license revenues from all transactions processed by e-Fresh(tm) software, VendTek's goal is to expand its initial market penetration and maximize the volume of transactions through the system to create a recurring revenue stream in the world's largest cellular market. In January 2003 alone, the system delivered RMB 20,000,000 (approximately $5,000,000 Canadian) worth of prepaid cellular services, representing top line revenues to UFO as the system operator.
From its experience in the Beijing deployment, the Company is expecting volume to increase substantially in the Beijing market alone as the rollout progresses. To VendTek, the initial acceptance by users and the volumes that have been generated demonstrate the potential of the opportunity established by VendTek and UFO in the worlds largest cellular market.
According to a new report, "China's Wireless Market Continues to Grow" jointly produced by the Yankee Group and BDA China Ltd., China Mobile and China Unicom increased mobile subscriber accounts by a combined 31.35 million accounts in the first half of 2002. The key distinguishing characteristics of China's wireless market are its sheer size and its phenomenal growth rate over the past several years. With a penetration rate of just 13.03 percent, the market continues to grow at more than 4 million new subscribers per month.
"Our goal is to be one of the first electronic distribution networks in China allowing VendTek to participate in the huge prepaid market here," said Paul Brock President and CEO of VendTek. "We are already beginning to see our business in China produce revenues from our modest investment and are now refining and executing our plans for expanding the system."
As part of management's long-term strategy in China, VendTek began the incorporation of it's own wholly foreign owned enterprise ("WFOE") in China. The WFOE provides VendTek with increased credibility in the Chinese market and a more permanent presence allowing the Company to participate more directly in the value being generated by the e-Fresh( software being deployed. This strategic move also facilitated $1,000,000 of new capital raised last year from Chinese investors that included the principle owners of UFO.
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For more information, or to receive news and updates as they become available, please contact Samantha Haynes at 604.940.2239.
About UFO Group (www.groupufo.com) UFO Group is a technology and marketing group who operate the e-Fresh( System in Beijing, China and are expanding the distribution network and operating areas for the system into the most densely populated areas of China.
About VendTek and Now Prepay (www.vendteksys.com / www.nowprepay.com)
VendTek Systems Inc. develops, markets, and sells e-Fresh(tm), which is a suite of software applications use to electronically distribute prepaid telecommunication products and financial services. Commercialization of e-Fresh(tm) under license is VendTek's strategy to create sustainable and recurring revenues.
VendTek's customers and its subsidiaries, Now Prepay Corp. and VendTek Systems Technologies (Beijing), are using e-Fresh(tm) software to build electronic, prepaid services networks which enable consumers to purchase prepaid services via POS and self-serve terminals connected to a central server. This system creates significant value through improved efficiencies compared to the traditional distribution paradigm. e-Fresh(tm) 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.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.