DataWave Systems Inc. Announces Fiscal Year 2000 Results.

Business Editors

VANCOUVER, British Columbia--(BUSINESS WIRE)--May 23, 2000

"DataWave(CDNX:DTV) (OTC BB:DWVSF)is pleased to announce that Net Earnings for the fiscal year ended March 31, 2000, after Unusual Items, were US$3.2 million or US$0.09 cents a share, compared with substantial losses in the previous year," reports Josh Emanuel, President and CEO.

Revenues generated from the resale of prepaid long distance time in the U.S. increased 30% for the three months ended March 31, 2000 compared with the same period last year. Revenues from sale of prepaid long distance phone cards through the DataWave Merchandisers ("DTMs") increased 20% for the quarter compared with the same period last year. The number of DTMs operated by the Company increased to more than 900 in March 2000 from 750 in March 1999. The Company now sells in approximately 2,000 locations in the U.S. (inclusive of DTM locations.)

Earnings before interest, taxes, depreciation and unusual items for the year ended March 31, 2000 were increased by approximately US$822,000 as a result of the Company successfully negotiating the reduction in minimum annual purchase commitments under a contract with a major supplier. This amount was included in the previous fiscal year. Unusual Items reflect gains and adjustments from the debt cancellation and restructuring completed during the fiscal year. The company cancelled its long term debt and liabilities leaving no encumbrances and no interest expense.

Expressed in thousands of         3 months ended    3 months ended
US Dollars                         Mar 31, 2000      Mar 31, 1999

Revenues                               $2,670            $1,907

Earnings (Loss) before interest,
 taxes, depreciation and unusual
 items                                   $151           $(1,568)

Net Earnings (Loss)                    $1,176           $(2,171)

Net Earnings (Loss) per Share           $0.03            $(0.08)

Net Earnings (Loss) per Share
 fully diluted                          $0.02            $(0.08)

Expressed in thousands of
US Dollars                            Year ended       Year ended
                                     Mar 31, 2000     Mar 31, 1999

Revenues                               $9,924           $10,546(a)

Earnings (Loss) before interest,
 taxes, depreciation and unusual
 items                                 $1,240           $(2,431)

Net Earnings (Loss)                    $3,210           $(8,029)

Net Earnings (Loss) per Share           $0.09            $(0.30)

Net Earnings (Loss) per Share
 fully diluted                          $0.05            $(0.30)

      (a) Revenues for the year ended March 31, 1999 were reduced to
        reflect changes in reporting of revenue from a major
        sub-contract. This change had no impact on the Company's
        financial position or operating loss as previously reported
        for the year.

"Revenues from the sale of prepaid long distance continue to show steady growth and we expect this trend to continue in the coming year. The Company is moving aggressively towards expansion into new markets and to develop new prepaid products. The recently announced joint venture with Lipman USA is the first result of this planned expansion. Other joint ventures, acquisition and development agreements are imminent and will be announced soon. A development plan for enhancement of the DataWave System is in place which, when complete, will provide a more flexible platform with reduced operating costs. In the short term, these activities require additional capital and development expenditures which may have an affect on earnings of the current fiscal year," reports Josh Emanuel.

About DataWave (http://www.datawave.ca)

DataWave designs, develops, produces, owns and manages a proprietary, intelligent, automated direct-merchandising network, known as the DataWave System, that the Company uses to distribute prepaid products. The DataWave System has proven to be successful, resulting in alliances with leading telecommunications companies and winning prestigious national accounts in the United States prepaid calling card market.

With this strong foundation, DataWave is now poised to capitalize on the flexibility of its system by augmenting its product range to meet the diversified and changing needs of the prepaid marketplace. This expansion will see the Company aligning itself with a number of strategic partners in the immediate future.

The DataWave System is currently comprised of DataWave Merchandisers (DTMs), which are free-standing intelligent machines capable of dispensing multiple prepaid products, and over-the-counter "swipe" units (OTCs) for point-of-sale prepaid retailing. Both of these are connected to the Company's proprietary communications gateway and database software through a wireless and/or land line wide area network. The first DTM was placed early in 1996 and the first OTC device later the same year.

DataWave Systems Inc. John Gunn General Manager, CFO 

This news release may include statements that constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements.

Note to Editors: "DataWave" together with design is a registered trademark of the Company.