Datawave Systems Inc. Reports Results For Second Quarter Fiscal 2001.

Business Editors

VANCOUVER, B.C.--(BUSINESS WIRE)--Nov. 8, 2000

DataWave Systems Inc. (OTCBB:DWVSF) (CDNX:DTV.) today reported its financial results for the second quarter, ending September 30, 2000, in fiscal 2001.

Revenues generated from the resale of prepaid long distance time in the U.S. increased 5% to $5,053,823 for the six months ended September 30, 2000 compared with $4,818,229 with the same period last year. Revenues from sale of prepaid long distance phone cards through the DataWave Merchandisers ("DTMs") increased 11% for the six months compared with the same period last year.

"A Net Loss (before unusual items) for the quarter of $243,614 compares with Net Income of $602,286 in the same period last year. The Net Loss is consistent with our aggressive development of new technology and in moving forward with new alliances and partnerships. Development costs for the quarter at $186,795 were $113,836 higher than in the same period last year and are running at 7% of revenues compared with 3% last year. We expect this trend will continue for the balance of the fiscal year," reports Josh Emanuel, President and CEO. "Test results from both the Lipman and Coinstar developments are very encouraging and there is a high level of interest in the marketplace in what we are doing," reports Bill Turner, Vice President, Business Development.

A development plan for enhancement of the DataWave System is in place which, when complete, will allow DataWave to offer prepaid services for other new product lines such as Prepaid Cash Cards, Prepaid Travel Cards, Prepaid Gift Cards, Prepaid Internet Payment Cards (the recent announcement of a joint project with Michigan National Bank provides for development of technology related to the marketing and distribution of a prepaid payment card) and Bus Passes.

Development expenses for the six months were $375,817 or 7% of revenues compared with $152,635 or 3% of revenues in the same period last year. The Company expenses development costs as they are incurred.

At September 30, 2000, the Company had working capital of $1,835,185 and cash and cash equivalents of $3,127,422 compared with a deficiency of $2,728,224 and cash of $1,303,582 at September 30 last year.

Expressed in        3 months    3 months     6 months    6 months
thousands of        ended       ended        ended       ended
US Dollars          Sept. 30,   Sept. 30,    Sept. 30,   Sept. 30,
                    2000        1999         2000        2000
---------------------------------------------------------------------
Revenues            $2,509      $2,505       $5,053      $4,818
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Earnings (loss)
 interest, taxes
  and depreciation
   (EBITDA)          $(101)       $863          $94        $953
---------------------------------------------------------------------
Loss (income)
 before unusual
  items              $(244)       $602        $(200)       $423
---------------------------------------------------------------------
Unusual items           -         $377           -       $1,287
---------------------------------------------------------------------
Net loss (income)    $(244)       $979        $(200)     $1,710
---------------------------------------------------------------------
Loss (income)
 per share         $(0.006)     $0.036      $(0.005)     $0.064
---------------------------------------------------------------------
Loss (income)
 per share
  fully diluted    $(0.004)     $0.021      $(0.003)     $0.037
---------------------------------------------------------------------
      Certain of the prior period's amounts have been reclassified to
conform to the current period's presentation for the financial
statements.

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

DataWave Systems designs, develops, produces, owns and manages a proprietary, intelligent, automated direct-merchandising network, comprised of free-standing intelligent machines (DTMs) and over the counter "swipe" units (OTCs) connected to the gateway and database software through a wireless and/or landline wide area network. This unique leading-edge technology provides for point-of-sale activation, cash/credit card acceptance, detailed reporting and 24/7 remote self-diagnostic troubleshooting, making it virtually maintenance-free. The proven success of the DataWave System has won many prestigious national accounts in the US prepaid calling card market.

Recently named 21st fastest growing technology company in Canada by Deloitte & Touche in its 2000 Canadian Technology Fast 50 Program, 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 market and in further developing strategic partnerships.

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.

The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.