Cash Systems, Inc. Announces First Quarter 2008 Financial Results

LAS VEGAS--(BUSINESS WIRE)--Cash Systems, Inc. (NASDAQ: CKNN), a provider of cash access solutions for the gaming industry, today announced first quarter 2008 financial results.

First quarter 2008 highlights include:

• A multi-year contract extension with Choctaw Nation of Oklahoma for its Choctaw Casinos and the addition of another Choctaw Casino location where Cash Systems will provide its casinopc for cash advance services, ecash checking and full service booth operation.
• A Letter of Intent to provide Cash Systems powercash product to American Gaming Group LLC's first casino project.
• powercash compatibility with the Bally Technologies, Inc.'s (NYSE: BYI) new iVIEW(TM) Display Manager (DM)(TM).
• A new multi-year contract to provide its full line of cash access services including all-in-1atm services, casinopc for cash advance services, and ecash checking at Gold River Casino.
• A new multi-year contract with The Wildwood Casino where Cash Systems will provide its full line of cash access services including all-in-1atm, casinopc for cash advance services, and ecash checking.

Subsequent to the end of the first quarter of 2008 the Company also announced:

• A new multi-year contract with Fantasy Springs Resort Casino, to provide casinopc for cash advance services, all-in-1atm services, ecash checking services for check guarantee and full service booth operation, in addition to powercash.

First Quarter Financial Results

Revenue for the first quarter was $27.1 million, an increase of 8%, compared to $25.2 million in the first quarter of 2007. The Company reported a loss from operations of ($864,031) in the first quarter of 2008 compared to loss from operations of ($268,021) in the prior year period. Net loss was ($4.6 million), or ($0.25) per diluted share, compared to net loss of ($1.4 million) or ($0.08) per diluted share, in the first quarter of 2007.

Michael Rumbolz, President and Chief Executive Officer of Cash Systems, Inc. stated, “We continue to see progress and positive customer feedback from our product offerings and we continue to make progress on powercash. We remain focused on providing outstanding service to our clients.”

Second Amended and Restated Notes and Warrants

On March 14, 2008, the Company entered into a Second Amendment and Exchange Agreement with respect to its outstanding senior secured convertible notes. The Second Amended and Restated Notes differ from the First Amended and Restated Notes in certain material respects, including, without limitation, (i) the aggregate principal amount was increased from $22.0 million to $24.2 million, (ii) the conversion price was reduced from $8.00 per share to $2.51 per share, (iii) the aggregate amount that the note holders may require the Company to redeem, and the aggregate amount that the Company may elect to redeem, on October 10, 2008 was increased from $8 million to $12.1 million, (iv) and the financial covenants based on Consolidated Total Debt to EBITDA were eliminated and the financial covenants based on Consolidated Revenue and Consolidated EBITDA were modified to apply starting with the quarter ending March 31, 2009. The Second Amended and Restated Warrants to purchase common stock differ from the First Amended and Restated Warrants in certain material respects, including, without limitation, the exercise price was reduced from $7.38 per share to $2.49 per share. As a result of the note holder’s failure to reduce the conversion price of the Second Amended and Restated Notes and the exercise price of the Second Amended and Restated Warrants to 120% of the arithmetic average of the weighted average price of the Company’s common stock for each day during the period commencing on March 18, 2008 and ending on April 15, 2008, the conversion price of the Second Amended and Restated Notes continues to be $2.51 per share and the exercise price of the Second Amended and Restated Warrants continues to be $2.49 per share.

Strategic Alternatives

The Company previously announced that its Board of Directors decided to explore strategic alternatives to maximize shareholder value. This process is ongoing. There can be no assurances that this process will result in any specific transaction. The Company does not intend to disclose developments regarding its exploration of strategic alternatives unless and until the Board of Directors approve a definitive transaction.

Earnings Conference Call

The Company will conduct a conference call to discuss its first quarter 2008 financial results on Monday, May 12, 2008 at 5:00 p.m. ET. A webcast of the call will be available by visiting the investor relations section of the company's website at http://www.cashsystemsinc.com/ir. The call can also be accessed live over the phone by dialing 888-208-1427 or for international callers by dialing 913-312-1398. A replay of the call will be available one hour after the call and can be accessed by dialing 888-203-1112 or 719-457-0820 for international callers; the pin number is 6643217. The replay will be available from May 12, 2008 through May 19, 2008.

About Cash Systems, Inc.

Cash Systems, Inc., located in Las Vegas, with additional offices in San Diego and Minneapolis, is a provider of cash-access and related services to the retail and gaming industries. Cash Systems' products include its proprietary cash advance systems, ATMs and check cashing solutions. Please visit http://www.cashsystemsinc.com for more information.

This press release may contain forward-looking statements, including the Company's beliefs about its business prospects and future results of operations. These statements involve risks and uncertainties. Among the important additional factors that could cause actual results to differ materially from those forward-looking statements are risks associated with the overall economic environment, the successful execution of the Company's plan of operation, changes in the Company's anticipated earnings, continuation of current contracts, gaming and other applicable regulations, and other factors detailed in the Company's filings with the Securities and Exchange Commission, including its most recent Forms 10K and 10Q. In addition, the factors underlying Company forecasts are dynamic and subject to change and therefore those forecasts speak only as of the date they are given. The Company does not undertake to update any forecasts that it may make available to the investing public.

CASH SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
		March 31,				December 31,
		2008				2007
		(Unaudited)				(Audited)
ASSETS
CURRENT ASSETS
Cash		$	13,408,127			$	16,617,643
Restricted cash			630,906				625,059
Current portion of prepaid commissions			428,908				394,096
Current portion of loans receivable			1,441,815				331,005
Settlements due from credit card processors			5,630,035				14,779,241
Settlements due from ATM processors			12,425,412				12,094,482
Other current assets			7,930,474				7,409,494
Total Current Assets			41,895,677				52,251,020
PROPERTY AND EQUIPMENT, NET			7,098,945				7,087,436
OTHER ASSETS
Goodwill			4,077,700				4,077,700
Intangible assets, net			4,024,359				4,289,024
Long-term prepaid commissions, net of current portion			456,847				385,876
Long-term loans receivable, net of current portion			191,855				265,504
Restricted cash			396,158				211,317
Other			93,655				308,061
Total Other Assets			9,240,574				9,537,482
TOTAL ASSETS		$	58,235,196			$	68,875,938
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Checks issued in excess of cash in bank		$	8,031,664			$	15,205,390
Short-term debt, net			12,100,000				12,100,000
Accounts payable - trade			1,922,469				1,754,781
Credit card cash advance fees payable			1,696,789				1,667,462
ATM commissions payable			2,556,061				2,028,940
Credit card chargebacks payable			620,452				326,563
Check cashing commissions payable			235,117				223,785
Deferred Revenues			459,526				-
Other accrued expenses			20,398,760				23,395,403
Total Current Liabilities			48,020,838				56,702,324
LONG-TERM LIABILITIES
Long-term debt, net			12,100,000				9,900,000
Total Liabilities			60,120,838				66,602,324
STOCKHOLDERS' EQUITY
Common stock, par value of $0.001, 50,000,000 shares authorized, 18,776,913 and 18,776,913 shares issued, 18,481,580 and 18,446,163 shares outstanding			18,483				18,447
Additional paid-in capital			30,022,124				29,535,292
Accumulated deficit			(31,926,249	)			(27,280,125	)
Total Stockholders' Equity			(1,885,642	)			2,273,614
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	58,235,196			$	68,875,938

CASH SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended
		March 31,
			2008				2007
Commissions on credit card cash advances, ATMs and check cashing services		$	27,066,228			$	25,156,145
Operating expenses
Commissions			15,400,617				14,196,324
Processing costs			4,325,779				4,305,903
Check cashing costs			2,073,227				923,502
Armored carrier services			302,253				277,360
Payroll, benefits and related taxes			3,189,093				2,822,429
Professional fees			530,371				398,885
Other general and administrative expenses			1,261,678				1,654,609
Depreciation and amortization			847,241				845,154
Total operating expenses			27,930,259				25,424,166
Loss from operations			(864,031	)			(268,021	)
Other income (expense)
Interest expense			(1,207,422	)			(1,169,180	)
Loss on extinguishment of debt			(2,615,480	)			-
Interest and other income			40,809				11,246
Total other income (expense)			(3,782,093	)			(1,157,934	)
Loss before income taxes			(4,646,124	)			(1,425,955	)
Provision for income taxes			-				-
Net Loss		$	(4,646,124	)		$	(1,425,955	)
Net Loss per common share:
Basic		$	(0.25	)		$	(0.08	)
Diluted		$	(0.25	)		$	(0.08	)
Weighted average common shares outstanding:
Basic			18,454,603				18,055,350
Diluted			18,454,603				18,055,350