VendingData Corporation Reports First Quarter 2007 Financial Results

LAS VEGAS, May 15 /PRNewswire-FirstCall/ -- VendingData(TM) Corporation today reported financial results for its first quarter ended March 31, 2007. Results for the quarter continued to demonstrate sequential improvement in both revenue and gross margins. The Company reported revenues of $3.4 million for first quarter 2007 as compared to $712,000 for the first quarter 2006 and $3.1 million for the forth quarter ending December 31, 2006. Overall, gaming product sales increased by approximately 66 percent over the fourth quarter 2006 due to an initial shipment of a portion of the Dolphin(TM) high frequency RFID casino chip order to Crown Macau, marking the second casino in Macau to utilize this new RFID and NanoTrace enabled casino chip manufactured by VendingData. First quarter revenues by gaming product line consisted of casino chip sales of $1.6 million, Deck Checker(TM) sales of $116,000, Deck Checker rentals of $21,000, shuffler sales of $66,000, shuffler rentals of $44,000, and ancillary gaming product sales of $144,000.

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During the quarter, revenues from Deck Checkers and shufflers were temporarily impacted as VendingData initiated the transition to a new distributor based model, while simultaneously introducing a new shuffler line which is currently being trialed in Las Vegas and being very well received by the customer due to superior quality and performance. In Asia, VendingData is completing its shift to its new distributor, Elixir Group Limited ("Elixir"), a Hong Kong company wholly-owned by Melco International Development Limited (Melco). Domestically, the company has re-evaluated its sales territories in anticipation of a hand-off of domestic sales responsibilities anticipated during the second quarter 2007.

The non-gaming portion of the company's business generated $1.4 million in revenues during the first quarter 2007. Dolphin is engaged in the business of producing high-precision plastic injection molded components and associated tooling for the medical and automotive industries. During the quarter, over 80 percent of non-gaming revenue was generated by the automotive line.

VendingData's total gross margin on revenue for the first quarter ended March 31, 2007 was $320,000, compared to the negative gross margin on revenue for prior year's first quarter and $306,000 reported during the fourth quarter 2006. Gaming product gross margin breakdown for the quarter ended March 31, 2007 was Deck Checker at 78 percent, the shuffler line at 79 percent, with the new Dolphin casino chips at 27 percent. As the Dolphin casino chip business matures, the company anticipates continued improvement in gross margin during the current fiscal year as sales and average sales prices increase accompanied by continuous improvements in our manufacturing process.

Selling, general and administrative expenses (SG&A) during the quarter increased $2.0 million or 91 percent over the prior year's first quarter to $4.2 million. Specifically, the components affecting SG&A were increases in non-cash expenses relating to both a $449,000 increase in share-based compensation, and an increase of $517,000 related to the expensing of warrants issued in connection with debt financing during 2006. The other expenses impacting the quarter were $446,000 attributable to the inclusion of Dolphin and a $453,000 increase due to implementation of a new accounting system and preparation for Sarbanes Oxley compliance. Compared to the fourth quarter of 2006, SG&A increased by 12 percent due to a non-cash expense of share-based compensation.

For the quarter ended March 31, 2007, research and development expenses were $263,000, or an 18 percent increase over the prior year's first quarter with a decrease of approximately 45 percent sequentially over the fourth quarter 2006, as the company scaled down costs associated with the development of the newly launched ChipWasher(TM) and ShufflePro(TM). Interest expenses during the quarter remained fairly consistent with the prior year's first quarter at $363,000. Subsequent to the close of the first quarter 2007, the company reduced its outstanding debt by $2.15 million during April 2007.

The Company reported a net loss applicable to common stockholders of $4.0 million or $(0.13) per share for the first quarter of 2007 compared to a net loss of $2.8 million or $(0.16) for the first quarter 2006 and a loss of $4.4 million or $(0.15) per share for the fourth quarter 2006.

Cash and equivalents as of March 31, 2007 were at $4.6 million. Trade accounts receivable increased $136,000 to $2.0 million at the end of first quarter 2007 compared to December 31, 2007. Inventories increased by approximately $119,000 to $3.5 million during the quarter. As a result of the sale of the discontinued secure drop product line and the private placement of company stock during the first quarter, the company's working capital has increased to $1,141,581 at March 31, 2007 compared to $(18,800) at December 31, 2006. Total liabilities decreased by $6.3 million during the quarter to $22.3 million due to a decrease in notes payable that was comprised of several convertible notes that converted to the Company's shares during the first week of January 2007 subsequent to shareholder approval in late December 2006. As of March 31, 2007, VendingData had approximately 35 million shares of common stock outstanding, with fully diluted share count totaling 58 million. As of May 3, 2007, executive officers and members of the VendingData Board of Directors beneficially owned approximately 10.8 million shares of common stock, or approximately 32% of the Company's outstanding shares.

"First quarter 2007 witnessed continued sequential revenue growth. Product issues of the past have been corrected as is evidenced by the achievement of gross margins of greater than 75 percent in the legacy gaming product lines. We will continue to work to improve our gross margin in the products that we acquired with Dolphin as well as completing the transition to our distributor based model. We are in the final stages of that process and expect to enter in to the contracting phase in the next two weeks," commented Mark Newburg, President and CEO of VendingData. "Our goal is to deliver profitable revenue growth during 2007. We have refined our 2007 operating plan to increase sales through the rollout of new shuffler products, sale of our high frequency RFID casino chip product to new casino openings in Macau, and improve our sales efforts domestically and internationally through distributorship arrangements with leading edge partners such as Elixir in Asia."

CONFERENCE CALL Conference Call Details: Date/Time: Wednesday, May 16, 2007 -- 10:30 a.m. (ET) Telephone Number: 888-396-2298 International Dial-In Number: 617-847-8708 Participant Pass code: 41600863 Internet Access: http://www.vendingdata.com/ or http://www.earnings.com/

It is recommended that participants phone-in at least 10 minutes before the call is scheduled to begin. A replay of the conference call in its entirety will be available approximately one hour after its completion by dialing 888-286-8010 (U.S.), 617-801-6888 (International) and entering the pass code 41489335, and on the Internet at http://www.earnings.com/.

About VendingData Corporation

VendingData Corporation is a Las Vegas-based developer, manufacturer and distributor of innovative products for the gaming industry. The company's products include the Deck Checker, RandomPlus and PokerOne(TM) shuffler lines, and the Dolphin casino chip product line, which include traditional and high-frequency (13.56 MHz) RFID gaming chips. VendingData's newest innovative products include ShufflePro, the ChipWasher and high-value gaming plaques. Visit the VendingData Web site at http://www.vendingdata.com/.

This release contains forward-looking statements. Such statements reflect and are subject to risks and uncertainties that could cause actual results to differ materially from expectations. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the Company's ability to acquire additional working capital as and when needed; the Company's ability to successfully integrate its recently acquired Dolphin assets and operations; the risks of integrating the Company's Asian operations with Elixir's as contemplated by the Company's recent alliance agreement with Elixir; the Company's receipt of the expected benefits of the Dolphin acquisition and Elixir alliance and related agreement and transactions; the success of the transition of our manufacturing and assembly to China, changes in the level of consumer or commercial acceptance of the Company's existing products and new products as introduced; competitive advances; acceleration and/or deceleration of various product development and roll out schedules; higher than expected manufacturing, service, selling, administrative, product development and/or roll out costs; current and/or unanticipated future litigation; regulatory and jurisdictional issues involving VendingData(TM) Corporation or its products specifically, and for the gaming industry in general; general and casino industry economic conditions; the financial health of the Company's casino and distributor customers both nationally and internationally; and the risks and factors described from time to time in the Company's reports filed with the Securities and Exchange Commission, including, but not limited to the company's Form 10-QSB for the quarter ended March 31, 2007, and the Company's Annual Report on form 10-KSB for the year ended December 31, 2006.

Contacts: Company Contact: or Investor Contact: Arnaldo Galassi Yvonne L. Zappulla CFO & VP Finance Managing Director VendingData(TM) Corporation Grannus Financial Advisors 702-733-7195 [e-mail]VENDINGDATA CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets March 31, December 31, 2007 2006 ASSETS (Unaudited) Current assets: Cash and cash equivalents $4,644,051 $333,888 Current portion of accounts receivable, trade, net of allowance for uncollectibles of $221,941 and $267,154 1,992,369 1,856,898 Due from affiliate 180,903 138,181 Other receivables 2,355 2,650,000 Inventories 3,526,021 3,407,361 Prepaid expenses and other current assets 81,893 46,494 10,427,592 8,432,822 Equipment rented to customers, net of accumulated depreciation of $58,803 and $67,673 50,654 94,777 Property and equipment, net of accumulated depreciation of $2,673,302 and $2,472,897 3,527,476 3,493,817 Intangible assets, net of accumulated amortization of $786,344 and $654,369 4,669,970 4,801,945 Goodwill 13,429,199 13,429,199 Accounts receivable, trade, net of current portion, less unamortized discount 246,830 358,841 Deferred issuance costs 3,491,410 4,053,974 Prepaid commission 6,010,148 -- Other assets 309,399 305,282 $42,162,678 $34,970,657 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Deferred revenues, current portion $668 $43,599 Short-term debt 534,614 676,600 Capital leases payable, current portion 443,995 440,719 Current portion of notes payable 1,300,000 1,799,494 Accounts payable 2,153,644 2,354,163 Accrued expenses 4,678,164 3,122,792 Customer deposits 174,925 14,257 9,286,010 8,451,624 Deferred revenues, net of current portion 72,882 43,199 Leases payable, net of current portion 166,972 269,272 Notes payable, net of current portion 12,749,935 19,793,524 22,275,799 28,557,619 Stockholders' equity: Preferred stock, $.001 par value, 10,000,000 shares authorized, no shares issued and outstanding -- -- Common stock, $.001 par value, 70,000,000 shares authorized, 34,296,007 shares and 30,015,099 shares issued 34,297 30,016 Treasury stock 448,053 common shares at cost (846,820) (846,820) Additional paid-in capital 116,077,221 100,836,022 Deferred expense (5,816,623) (8,183,683) Accumulated other comprehensive loss (3,153) -- Deficit (89,558,043) (85,422,497) 19,886,879 6,413,038 $42,162,678 $34,970,657 VENDINGDATA CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations and Deficit (Unaudited) Three Months Ended March 31, 2007 2006 Revenues: Sales $1,738,677 $577,207 Rental 64,563 111,064 Non-gaming revenue 1,430,877 -- Other 166,656 24,229 3,400,773 712,500 Operating expenses: Cost of sales 3,081,260 714,802 Selling, general and administrative 4,328,660 2,178,951 Research and development 262,758 222,138 7,672,878 3,115,891 Operating loss (4,272,105) (2,403,391) Other income (expense): Interest expense, including $40,492 to related parties in 2007 (363,442) (351,507) Other income 500,000 -- Net loss $(4,135,547) $(2,754,898) Basic and dilutive net loss per share $ (0.13) $(0.16) Weighted average shares outstanding 32,359,950 17,689,358
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