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Versent Corporation



1999 Annual Report



Versent Corporation

Financial and Operating Highlights from Continuing Operations





|(Canadian $ except LQ Centre count data)    | Year ended
January 31, 1996 | 11 mos. ended
December  31, 1996 | Year ended
December 31,
1997 | Year ended
December 31,
1998 | Year ended
December 31,
1999
|------------------------------------------- | --------------------------- | -------------------------------- | ---------------------------- | ---------------------------- | ----------------------------
|                                            |                             |                                  |                              |                              |                             
|Operating results                           |                             |                                  |                              |                              |                             
|Revenues                                    | 14,905,460                  | 19,741,943                       | 36,747,859                   | 44,027,918                   | 46,678,805                  
|EBITDA                                      | 3,524,523                   | 5,442,921                        | 9,642,776                    | 9,836,569                    | 8,138,915                   
|Operating income (loss) before income taxes | 535,180                     | 1,597,310                        | 2,965,396                    | 866,605                      | (4,597,642)                 
|Net income (loss)                           | 223,733                     | 1,179,908                        | 1,968,120                    | 401,705                      | (5,400,397)                 
|                                            |                             |                                  |                              |                              |                             
|Financial position                          |                             |                                  |                              |                              |                             
|Total assets                                | 23,306,977                  | 32,330,366                       | 44,817,668                   | 56,518,882                   | 41,046,208                  
|Shareholders' equity                        | 12,352,901                  | 15,656,894                       | 34,478,035                   | 34,681,719                   | 13,682,547                  
|                                            |                             |                                  |                              |                              |                             
|Corporately owned LQ Centre count           |                             |                                  |                              |                              |                             
|Average open throughout the period          | 16.7                        | 24.7                             | 43.3                         | 55.0                         | 58.2                        
|Open at the end of the period               | 22.0                        | 34.0                             | 54.0                         | 58.0                         | 57.0                        
|                                            |                             |                                  |                              |                              |                             
|Per share information                       |                             |                                  |                              |                              |                             
|Cash flow per share - basic                 | $0.45                       | $0.67                            | $0.88                        | $0.75                        | $0.46                       
|Earnings (loss) per share - basic           | $0.04                       | $0.17                            | $0.23                        | $0.04                        | ($0.58)                     
|                                            |                             |                                  |                              |                              |                             































|Contents                                               | Page        
|------------------------------------------------------ | ------------
|Letter to Shareholders                                 | 1           
|Management's Discussion and Analysis                   | 2-3, 5, 7, 9
|Consolidated Balance Sheets                            | 4           
|Consolidated Statements of Loss                        | 6           
|Consolidated Statements of Retained Earnings (Deficit) | 6           
|Consolidated Statements of Cash Flows                  | 8           
|Notes to the Consolidated Financial Statements         | 10-19       
|Management's Responsibility for Financial Reporting    | 20          
|Auditors' Report                                       | 20          
|Corporate Information                                  | 21          





Letter to Shareholders

Although Versent Corporation's ("Versent") results in fiscal 1999 were disappointing, significant progress was made during the year in terms of establishing a strong foundation for future success.  Specifically the
sale of Starburst Coin Machines Inc. in May and the sale of Color Me Mine in December were two major steps towards re-focusing Versent on its core Laser Quest and Laser Cash businesses.  At the same time, Versent's Board directed management to divest of
its Chromacolour operations.  The sales of this subsidiary's assets were completed in March 2000.

Financial Results

Revenues from continuing operations increased 6% over 1998 to $46,678,805, but Versent recorded a loss from continuing operations of $5,400,397 versus earnings from continuing operations of $401,705 in the previous year.  Despite
the loss incurred by Versent, EBITDA from continuing operations at $8,138,915 was only 17% below that generated in the previous year.  Cash flow from continuing operations was $.46 per share (basic) versus $.075 in 1998.  The net loss for the year after
taking into account $13,063,849 in losses from discontinued operations was $18,464,246 or $1.99 per share (basic).

New Majority Ownership

On February 15, 2000 Buckingham Technology Acquisition Group, Inc. ("Buckingham") purchased 6,649,152 shares of Versent bringing its ownership to 8,497,152 shares representing 90.5% of the issued and outstanding shares.
Buckingham is owned 100% by Mr. Jerry Zucker of Charleston, South Carolina.

Debt Reduction

During 1999 Versent reduced its net bank debt by $15.5 million to $21.8 million.  This was a significant accomplishment and as of March 31, 2000 net bank debt has been reduced a further $2.3 million to $19.5 million.  We are
delighted with the progress we've made in improving Versent's balance sheet and as such, believe there is unutilized borrowing capacity available to help fuel the future growth of the Laser Quest and Laser Cash businesses.

Board Changes

In February 2000, Versent welcomed the following appointments to its Board of Directors: Michael J. Buckstein, CEO of Barrday Inc., Robert B. Johnston, Director of Investor Relations, Polymer Group Inc., Deborah Morrison,
Administrative Director, The Historica Foundation of Canada and Jeffrey Rosen, a public educator.  Management would like to take this opportunity to thank the retiring Directors: David S. Willmot, G. Alan Hutton, Michael L. Willmot and Roderick R. Senft
for their contributions during their years of service.

Looking Forward

With our new majority owner's commitment to profitably expand our core businesses, the divestiture of all non-core businesses, the strong early 2000 performance of our Laser Quest Centres, the growth of the Laser Cash business and
our improved debt coverage, Versent's future is brighter than it has been since the first quarter of 1998.  The Board and Management will be working diligently to ensure Versent delivers attractive returns to its shareholders.

F. Gregory Thompson	David A. Rosenkrantz

President and Chief Executive Officer	Chairman of the Board of Directors



Management's Discussion and Analysis of Financial Condition and Results of Operations

(Separate analyses of financial condition, results of operations and cash flows appear on pages 5, 7, and 9 respectively)



Overview

Versent Corporation ("Versent") operated in two continuing segments in 1999:

- Laser Quest® which included LQ Centre operations in North America, Versent corporate overheads, international licensing of the Laser Quest concept through Laser Quest International, and the Laser Quest support
functions provided by Threshold Electronics; and
- Laser Cash® private label (i.e. - non-financial institution) automated banking machine ("ABM") network developed by Threshold Electronics.

Versent discontinued operations in two other segments during the year:

- Coin-operated amusements which included Starburst Coin Machines route and distribution operations, games rooms at Waterloo and York universities, and satellite arcade operations; and
- Crafts which included Chromacolour paint and animation supplies and Color Me Mine ceramic studios.



Continuing Operations

Laser Quest



|Financial Highlights                                 |   | 1999        |   | 1998      
|---------------------------------------------------- | - | ----------- | - | ----------
|                                                     |   |             |   |           
|Revenues                                             | $ | 40,682,519  | $ | 42,826,716
|                                                     |   |             |   |           
|Expenses                                             |   |             |   |           
|Operating and cost of sales                          |   | 29,599,736  |   | 27,274,917
|Administrative                                       |   | 3,425,098   |   | 5,615,322 
|                                                     |   |             |   |           
|Earnings before interest and amortization ("EBITDA") |   | 7,657,685   |   | 9,936,477 
|                                                     |   |             |   |           
|Interest                                             |   | 2,661,901   |   | 1,582,878 
|Amortization                                         |   | 9,002,144   |   | 6,915,654 
|                                                     |   |             |   |           
|Income (Loss) from operations                        | $ | (4,006,360) | $ | 1,437,945 



Laser Quest revenues decreased $2,144,197 or 5% and EBITDA declined 23%.  Laser Quest operating profits (revenues less operating expenses and cost of sales) decreased $4,469,016 or 29% to $11,082,783 (1998 - $15,551,799).  The
operating margin declined to 27% (1998 - 36%) of revenue.  Administrative expenses were reduced by $2,190,224 or 39% mostly related to reduced Versent corporate overheads.



Increased weighted average corporate-wide debt and significant increases in interest rates and financing fees resulted in increased interest expense charged to Laser Quest.  Amortization increased $2,086,490 or 30%, which is largely
due to accelerated amortization resulting from the closing of two LQ Centres and the write down of certain deferred costs.  At December 31, 1999 there were 57 corporately owned LQ Centres in North America versus 58 as of December 31, 1998.  On a weighted
average basis 58.2 LQ Centres (1998 - 55.0) were open throughout the year.



Management anticipates a program of limited growth in 2000 and its principal focus will continue to be on maximizing the financial performance of the existing LQ Centres.



Laser Cash

The private label ABM segment operating under the "Laser Cash" brand has developed a network of approximately 400 ABMs, making it one of the largest private label ABM networks in Canada.  The Laser Cash segment began
operations in the spring of 1998, but it was not until later in that year that the business began emerging from its start-up phase, making 1999 its first full year of operation.  Laser Cash produced $5,996,286 (1998 - $1,201,202) or 13% (1998 - 3%) of
continuing operations revenue.  This segment exceeded expectations by posting positive EBITDA in 1999 of $481,230 (1998 - loss of $99,908).



At December 31, 1999 the private label ABM business accounted for $3,793,270 (1998 - $10,149,752) or 9% (1998 - 18%) of Versent's continuing assets.  The significant reduction in investment was achieved by re-financing the ABM cash float
 .



Discontinued Operations

Coin-operated amusements

On May 4, 1999 Versent sold all of the shares of Starburst Coin Machines Inc. ("Starburst") to a Starburst management group led by Starburst's founder and President.  While the sale resulted in a substantial loss on
Versent's investment in the business, the business had been profitable since it was acquired in 1996 on an operating basis.  The on-going capital requirements of Starburst at a time when Versent was seeking to reduce its debt prompted the decision to sell
the company.  Versent continues to utilize the services of Starburst in most of its LQ Centres.



Crafts

Versent's entry into the Crafts segment was not successful.  The acquisitions of Chromacolour and Color Me Mine in 1998 resulted in significant losses for Versent in 1998 and into 1999 thereby prompting Versent to sell the
businesses.  In early December 1999 Color Me Mine was sold and Chromacolour was subsequently sold in early 2000.  Both disposals resulted in significant investment losses in addition to the operating losses incurred during the time the businesses were
owned by Versent.









Versent Corporation

Consolidated Balance Sheets

As at December 31st

|                                                        |   | 1999         |   | 1998      
|------------------------------------------------------- | - | ------------ | - | ----------
|Assets                                                  |   |              |   |           
|Current                                                 |   |              |   |           
|Cash                                                    | $ | 1,308,904    | $ | 555,251   
|ABM cash float                                          |   | --           |   | 6,186,336 
|Accounts and other receivables                          |   | 1,071,364    |   | 712,482   
|Inventories	Inventories                                 |   | 1,585,134    |   | 1,813,803 
|Income taxes recoverable                                |   | 56,526       |   | 1,693,976 
|Prepaids and deposits                                   |   | 970,893      |   | 971,051   
|Current portion of note receivable (note 7)             |   | 580,000      |   | --        
|Current assets of discontinued operations (note 2)      |   | 1,343,367    |   | 8,503,454 
|Total current assets                                    |   | 6,916,188    |   | 20,436,353
|Other                                                   |   |              |   |           
|Capital assets (note 3)                                 |   | 26,296,460   |   | 33,431,279
|Deferred costs (note 4)                                 |   | 2,690,494    |   | 4,940,727 
|Laser Quest rights (note 5)                             |   | 4,757,268    |   | 5,280,458 
|Goodwill (note 6)                                       |   | 859,165      |   | 933,519   
|Note receivable (note 7)                                |   | 870,000      |   | --        
|Other assets of discontinued operations (note 2)        |   | --           |   | 13,227,055
|                                                        |   | 35,473,387   |   | 57,813,038
|Total Assets                                            | $ | 42,389,575   | $ | 78,249,391
|Liabilities & Shareholders' Equity                      |   |              |   |           
|Current Liabilities                                     |   |              |   |           
|Bank indebtedness (note 8)                              | $ | --           | $ | 2,837,289 
|Accounts payable and accrued liabilities                |   | 5,006,249    |   | 3,700,664 
|Current portion of term debt (note 8)                   |   | 23,055,678   |   | 9,350,000 
|Current liabilities of discontinued operations (note 2) |   | 645,101      |   | 2,029,719 
|Total current liabilities                               |   | 28,707,028   |   | 17,917,672
|Non-current Liabilities                                 |   |              |   |           
|Term debt (note 8)                                      |   | --           |   | 25,650,000
|Commitments (note 11)                                   |   |              |   |           
|Shareholders' Equity                                    |   |              |   |           
|Capital stock (note 10)                                 |   | 30,567,709   |   | 30,936,683
|Retained earnings (deficit)                             |   | (17,766,777) |   | 527,468   
|Deferred foreign currency exchange adjustment           |   | 881,615      |   | 3,217,568 
|Total Shareholders' Equity                              |   | 13,682,547   |   | 34,681,719
|Total Liabilities and Shareholders' Equity              | $ | 42,389,575   | $ | 78,249,391

On behalf of the Board:

F. Gregory Thompson	David A. Rosenkrantz

President and Chief Executive Officer	Chairman of the Board of Directors



(see accompanying notes starting on page 10)



Management's Analysis - Financial Condition

(See also "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 2-3)



Non-Cash Working Capital

The net non-cash working capital position of Versent's continuing operations at December 31, 1999 was ($742,332) versus $1,490,648 at the previous year-end.  The largest component of this decrease of $2,232,980 was the recovery of
$1,637,450 in income taxes paid in prior years.  Versent's continuing operations are not dependent on significant investments in working capital and as such the decline is not of concern to management.  Accounts payable and accrued liabilities were
unusually high at December 31, 1999;  this figure has subsequently been reduced to normal operating levels in line with the December 31, 1998 balance.

Net Investment in Discontinued Operations

In 1999 Versent decided to focus exclusively on the Laser Quest and Laser Cash businesses and took steps to divest all other businesses.  At December 31, 1998 Versent had $19,700,790 invested in Coin-op and Craft businesses.  At
December 31, 1999 all that remains of these discontinued operations is $698,266 which is made up of a receivable related to the sale of coin-operated amusements in Dubai and the estimated net realizable value of the remaining Craft assets owned by
Chromacolour.

Capital Assets and Deferred Costs

With only one LQ Centre opening in the year and two closings, Laser Cash's focus being more on the redeployment of assets than new expansion, and annual depreciation and amortization charges, the capital base of the continuing
businesses declined in 1999.  At December 31, 1999, $28,986,954 in net book value remained, down  $9,385,052 from the previous year-end balance of  $38,372,006.

Liquidity and Capital Resources

Net bank indebtedness at December 31, 1999 was $21,746,774 (1998 - $37,282,038).  This represented a net reduction of $15,535,264 or 42%.

Versent refinanced its Laser Cash ABM float requirements thus significantly reducing the required investment in that business.

Versent has a $1,450,000 note receivable in connection with the sale of Starburst Coin Machines.  The $580,000 first payment due on this note in May 2000 will be used to further retire debt. Proceeds from the sale of Chromacolour
subsequent to the year-end were also used to retire debt.

Shareholders' Equity

As of December 31, 1999 there were 9,268,343 shares issued and outstanding, unchanged from the previous year end.  An additional $108,000 was raised with the exercise of 120,000 options subsequent to year end, thus bringing the
current issued and outstanding number of shares to 9,388,343.  In connection with the subsequent February 15, 2000 takeover of Versent by Buckingham Technology Acquisition Group, Inc. all share options and warrants have been cancelled.

The deferred foreign currency exchange adjustment primarily reflects changes in exchange rates since the acquisition of the U.S. operations in 1994 and the subsequent changes in the net investment in the United States.  Due to
Versent's reduction in its net assets in the United States as cash flows were used to repay debt rather than reinvested coupled with the significant strengthening of the Canadian dollar in the year, the deferred foreign currency exchange adjustment
decreased significantly in 1999.



Versent Corporation

Consolidated Statements of Loss

For the years ended December 31st

|                                                                       |   | 1999         |   | 1998       
|---------------------------------------------------------------------- | - | ------------ | - | -----------
|                                                                       |   |              |   |            
|Revenues                                                               | $ | 46,678,805   | $ | 44,027,918 
|                                                                       |   |              |   |            
|Expenses                                                               |   |              |   |            
|Cost of sales                                                          |   | 898,483      |   | 832,166    
|Operating                                                              |   | 33,183,387   |   | 27,696,666 
|Administrative                                                         |   | 4,458,020    |   | 5,662,517  
|Income before interest and amortization                                |   | 8,138,915    |   | 9,836,569  
|                                                                       |   |              |   |            
|Interest (note 13a)                                                    |   | 3,079,342    |   | 1,692,754  
|Amortization (note 13b)                                                |   | 9,657,215    |   | 7,277,210  
|Operating income (loss) from continuing operations before income taxes |   | (4,597,642)  |   | 866,605    
|Income taxes (note 9)                                                  |   | 802,755      |   | 464,900    
|Net income (loss) from continuing operations                           |   | (5,400,397)  |   | 401,705    
|Net loss from discontinued operations (note 2)                         |   | (13,063,849) |   | (2,282,465)
|Net loss                                                               | $ | (18,464,246) | $ | (1,880,760)
|                                                                       |   |              |   |            
|Net earnings (loss) from continuing operations
per share - basic       |   | ($0.58)      |   | $0.04      
|Net loss per share - basic                                             |   | ($1.99)      |   | ($0.20)    





Versent Corporation

Consolidated Statements of Retained Earnings (Deficit)

For the years ended December 31st

|                                                                                                                  |   | 1999             |   | 1998                
|----------------------------------------------------------------------------------------------------------------- | - | ---------------- | - | --------------------
|                                                                                                                  |   |                  |   |                     
|Retained earnings, beginning of year
Gain (Loss) on purchase and cancellation of Common Shares (note 10f and 10g) | $ | 527,468

170,001 | $ | 2,973,951

(565,723)
|Net loss                                                                                                          |   | (18,464,246)     |   | (1,880,760)         
|Retained earnings (Deficit), end of year                                                                          | $ | (17,766,777)     | $ | 527,468             

























(see accompanying notes starting on page 10)



Management's Analysis - Results of Operations

(See also "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 2-3)



Operations

The two continuing business segments (Laser Quest and Laser Cash) recorded an operating contribution (revenue less cost of sales and operating expenses) of $12,596,935 or 27% of revenue (1998 - $15,499,086 or 35% of revenue).  The
decline was primarily due to increased costs and declining revenues in the Laser Quest segment.

Administrative expenses decreased 21% to $4,458,020 (1998 - $5,662,517) as Versent took steps to reduce overheads to bring them more in line with revenues.  As such, administrative expenses were reduced to under 10% (1998 - 13%) of
revenues.

Interest

Significantly higher interest rates and bank fees coupled with a higher average debt load resulted in an 82% increase in total interest expense charged to continuing operations of $3,079,342 (1998 - $1,692,754).

Amortization

Amortization grew to $9,657,215 (1998 - $7,277,210) due to the larger average investment in capital assets plus accelerated amortization resulting from the closing of two LQ Centres and the write down of certain other deferred
costs.  This figure is expected to decline considerably (approximating 1998 levels) in 2000 as a number of LQ Centres are at the stage where their equipment has been fully amortized.

Income (loss) before income taxes

The pre-tax loss from continuing operations was $4,597,642 (1998 - income of $866,605).  The current year's loss includes a $971,248 non-cash charge to earnings in connection with the closing of two LQ Centres.

Income taxes

In spite of the pre-tax loss, Versent recorded income tax expense of $802,755 (1998 - $464,900) due to the non-recognition of certain loss carryforwards for accounting purposes and the fact that in certain foreign jurisdictions
Versent's operations are taxable.

Net income (loss) from continuing operations

The net loss from continuing operations was $5,400,397 (1998 - income of $401,705).  The loss per share was $.58 (1998 - earnings of $.04).

Net loss from discontinued operations

The operating loss from discontinued operations (Coin-operated amusements and Crafts) was $1,824,725 (1998 - $2,282,465).  Losses on the sale of Starburst and Color Me Mine totalled $5,892,614 and a further charge of $1,950,000 was
taken to reflect the net realizable value of the Chromacolour business.

Net loss

The net loss increased to $18,464,246 (1998 - $1,880,760).  The loss per share was $1.99 (1998 - $.20).





Versent Corporation

Consolidated Statements of Cash Flows

For the years ended December 31st

|                                                         |   | 1999         |   | 1998                
|-------------------------------------------------------- | - | ------------ | - | --------------------
|Cash provided by (used in):                              |   |              |   |                     
|Operating activities:                                    |   |              |   |                     
|Net income (loss) from continuing operations             | $ | (5,400,397)  | $ | 401,705             
|Items not requiring cash:                                |   |              |   |                     
|Amortization (note 13b)                                  |   | 9,657,215    |   | 7,277,210           
|Decrease in deferred income taxes                        |   | --           |   | (591,033)           
|Cash flow from continuing operations                     |   | 4,256,818    |   | 7,087,882           
|Decrease (Increase) in non-cash working capital          |   | 2,421,717    |   | (1,392,269)         
|Net operating cash flow from continuing operations       |   | 6,678,535    |   | 5,695,613           
|Investing activities:                                    |   |              |   |                     
|Purchase of capital assets                               |   | (1,029,624)  |   | (4,200,416)         
|Deferred start-up costs                                  |   | (589,685)    |   | (1,264,970)         
|Acquisitions and divestitures (note 12)                  |   | 5,976,737    |   | (3,219,706)         
|Decrease (Increase) in ABM cash float                    |   | 6,186,336    |   | (6,186,336)         
|                                                         |   | 10,543,764   |   | (14,871,428)        
|Financing activities:                                    |   |              |   |                     
|Increase (Decrease) in bank indebtedness                 |   | (2,837,289)  |   | 2,802,686           
|Issuance of term debt                                    |   | --           |   | 38,000,000          
|Repayment of term debt                                   |   | (11,944,322) |   | (16,781,694)        
|Issuance of Common Shares (note 10b)                     |   | --           |   | 7,000               
|Cancellation of Capital Stock (note 10f)                 |   | (198,973)    |   | (1,770,422)         
|                                                         |   | (14,980,584) |   | 22,257,570          
|                                                         |   |              |   |                     
|Increase (Decrease) in cash from continuing operations   |   | 2,241,715    |   | 13,081,755          
|Increase (Decrease) in cash from discontinued operations |   | (1,488,062)  |   | (13,240,639)        
|Increase (Decrease) in cash                              |   | 753,653      |   | (158,884)	13,081,755
|Cash, beginning of year                                  |   | 555,251      |   | 714,135             
|Cash, end of year                                        | $ | 1,308,904    | $ | 555,251             
|                                                         |   |              |   |                     
|Cash flow from continuing operations per share
- basic   |   | $0.46        |   | $0.75               



|Supplementary information:                    |   |             |   |          
|--------------------------------------------- | - | ----------- | - | ---------
|Income taxes paid (recovered) during the year | $ | (1,008,085) | $ | 2,026,771
|Interest paid during the year                 | $ | 3,558,907   | $ | 2,344,010















(see accompanying notes starting on page 10)



Management's Analysis - Cash Flows

(See also "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 2-3)



Operating activities

Funds from continuing operations decreased to $4,256,818 (1998 - $7,087,882).  Still, cash flow from continuing operations per share (basic) was a healthy $0.46 (1998 - $0.75).

Versent realized $2,421,717 (1998 - ($1,392,269)) from non-cash working capital, primarily from the recovery of income taxes, resulting in $6,678,535 (1998 - $5,695,613) available for investing and financing activities.

Investing activities

Expansion of the Laser Quest concept was suspended in 1999 because of real estate market conditions, a lack of financing and the desire of management to focus on optimizing the performance of the existing LQ Centres.  Growth in the
Laser Cash business resulted more from redeploying existing machines to better locations, thus little capital was required.  As a result, only $1,619,309 was invested in capital assets and deferred start-up costs versus $5,465,386 in 1998.

Financing activities

Versent was able to retire all $2,837,289 of its current bank indebtedness in 1999, leaving the $3 million operating line unused as at December 31, 1999.  Versent also paid down $11,944,322 of term debt during the year.

Versent's term debt has been reduced to $20,937,934 as at March 31, 2000.  In connection with the Buckingham bid, Management sought and obtained an interim extension of the existing financing arrangement to September 5, 2000.  Although
Versent has positive cashflows from continuing operations, current financial projections indicate that existing cash resources together with cash flows from operations will not be sufficient to fully discharge the obligation by that date.  Management is
currently in discussion with Versent's principal lender to renegotiate the existing financial arrangement and at the same time is actively pursuing alternate financing from other potential lenders.  While it cannot be assured, Management believes they
will be successful in obtaining replacement financing.

Discontinued operations

The negative net cash flow related to discontinued operations was $1,488,062 (1998 - $13,240,639).  Proceeds from the sales of Starburst and Color Me Mine totalled $5,976,737 during the year while in the previous year, $3,219,706
was invested in the acquisitions of Chromacolour and Color Me Mine.



Versent Corporation

Notes to the Consolidated Financial Statements

December 31, 1999 and December 31, 1998



These consolidated financial statements include the accounts of Versent Corporation ("Versent") and its subsidiary companies.  Intercompany accounts and transactions have been eliminated on consolidation.

Significant accounting policies





Revenue is recognized when services are performed or goods have been delivered.



Inventories are valued at the lower of cost, determined on a first-in, first-out basis, and net realizable value.



Capital assets are recorded at cost. Amortization commences in the first full calendar month of operation of a Laser Quest Centre ("LQ Centre") or when the asset is first put into use and is provided on a straight-line
basis over the estimated useful lives of the assets at the following annual rates:



|Building                          | 4%                
|--------------------------------- | ------------------
|Leasehold improvements            | over term of lease
|LQ game equipment                 | 20%               
|Automated banking machines        | 20% - 33%         
|Furniture, fixtures and equipment | 20%               

1. Deferred costs
2. Laser Quest rights and goodwill
3. Translation of foreign currency
4. Fair value of financial instruments
5. ABM cash float
6. Income taxes
7. Use of estimates
8. Cash

Versent adopted new disclosure standards for the Statement of Cash Flows and restated the prior year's Statement of Changes in Financial Position to conform to the revised standard.



1.	Basis of presentation

These consolidated financial statements have been prepared on the basis that Versent will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

In connection with the Buckingham bid (note 16a), Management sought and obtained an interim extension of the existing financing arrangement to September 5, 2000.  Although Versent has positive cashflows from continuing
operations, current financial projections indicate that existing cash resources together with cash flows from operations will not be sufficient to fully discharge the obligation by that date.  Management is currently in discussion with Versent's principal
lender to renegotiate the existing financial arrangement and at the same time is actively pursuing alternate financing from other potential lenders.  While it cannot be assured, Management believes they will be successful in obtaining replacement financing.

Accordingly, Versent's continuation in the normal course could depend on whether it succeeds in renegotiating its financing with its existing lender, raising alternative financing from third parties, or receiving additional financial
support from its shareholders, none of which can be predicted with certainty at this time.  These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should
Versent be unable to achieve these objectives.



2.	Discontinued operations

In 1999 Versent decided to focus exclusively on the Laser Quest and Laser Cash businesses and took steps to divest of all other businesses, Coin-operated amusements (Starburst and other) and Crafts (Chromacolour and Color Me
Mine).  Comparative figures related to discontinued operations have been reclassified to conform with current year's presentation.  The following represents the financial statements of the discontinued operations:





|Investment in discontinued operations     | As at December 31st
|----------------------------------------- | -------------------
|                                          | 1999               
|Current Assets                            |                    
|Cash                                      | $         198,263  
|Accounts receivable                       | 698,810            
|Inventories                               | 435,933            
|Income taxes recoverable                  | 10,361             
|Prepaids and deposits                     | --                 
|Total Current Assets                      | 1,343,367          
|Other Assets                              |                    
|Capital assets                            | --                 
|Goodwill                                  | --                 
|Total Other Assets                        | --                 
|                                          |                    
|Current Liabilities                       | 645,101            
|                                          |                    
|Net investment in discontinued operations | $          698,266 

For the Coin-operated amusements segment, Versent adopted a formal plan to dispose on March 31, 1999 and for the Craft segment it was on June 30, 1999 with respect to the Color Me Mine business and on September 30, 1999
with respect to the Chromacolour business.







|Loss from discontinued operations                        | For the year ended December 31, 1999
|-------------------------------------------------------- | ------------------------------------
|                                                         | Coin-operated Amusements            
|Revenues                                                 | $   6,770,581                       
|                                                         |                                     
|Loss from discontinued operations before income taxes    | $     (255,537)                     
|Income taxes                                             | 4,639                               
|Operating loss from discontinued operations              | (260,176)                           
|Loss on disposal, net of income tax recovery of $184,898 | (5,181,957)                         
|Net loss from discontinued operations                    | $  (5,442,133)                      

Included in the loss on disposal is a write-down of goodwill in the amount of $2,543,082.





|Loss from discontinued operations                              | For the year ended December 31, 1998
|-------------------------------------------------------------- | ------------------------------------
|                                                               | Coin-operated Amusements            
|Revenues                                                       | $ 18,937,694                        
|                                                               |                                     
|Income (Loss) from discontinued operations before income taxes | $      343,393                      
|Income taxes                                                   | 148,815                             
|Net income (loss) from discontinued operations                 | $      194,578                      



3.	Capital assets

Capital assets from continuing operations consist of the following:



|                                  | As at December 31, 1999
|--------------------------------- | -----------------------
|                                  | Cost                   
|Land                              | $      101,218         
|Building                          | 498,062                
|Leasehold improvements            | 28,123,330             
|LQ game equipment                 | 6,420,503              
|Automated banking machines        | 4,469,759              
|Furniture, fixtures and equipment | 5,546,761              
|                                  | $  45,159,633          
|                                  |                        
|                                  | As at December 31, 1998
|                                  | Cost                   
|Land                              | $      101,218         
|Building                          | 498,062                
|Leasehold improvements            | 31,451,664             
|LQ game equipment                 | 8,072,385              
|Automated banking machines        | 3,952,224              
|Furniture, fixtures and equipment | 2,965,220              
|                                  | $  47,040,773          



4.	Deferred costs

Deferred start-up costs related to opening LQ Centres and the establishment of the Threshold manufacturing facility consist of the following:

As at December 31st



|                         |   | 1999      |   | 1998     
|------------------------ | - | --------- | - | ---------
|                         |   |           |   |          
|Deferred costs           | $ | 8,585,404 | $ | 8,736,178
|Accumulated amortization |   | 5,894,910 |   | 3,795,451
|Net book value           | $ | 2,690,494 | $ | 4,940,727



5.	Laser Quest rights

Versent owns the worldwide rights to the Laser Quest concept.  In North America Versent is developing the concept primarily through corporately owned LQ Centres.  In the rest of the world, excluding Europe, the concept is
developed under Master License arrangements which provide Versent with license fees, royalties and equipment mark-ups under varying terms in each territory.

As at December 31st



|                         |   | 1999      |   | 1998     
|------------------------ | - | --------- | - | ---------
|                         |   |           |   |          
|Laser Quest rights       | $ | 7,229,716 | $ | 7,291,727
|Accumulated amortization |   | 2,472,448 |   | 2,011,269
|Net book value           | $ | 4,757,268 | $ | 5,280,458



6.	Goodwill

Goodwill from continuing operations consists of the following:

As at December 31st



|                         |   | 1999      |   | 1998     
|------------------------ | - | --------- | - | ---------
|                         |   |           |   |          
|Goodwill                 | $ | 1,115,303 | $ | 1,115,303
|Accumulated amortization |   | 256,138   |   | 181,784  
|Net book value           | $ | 859,165   | $ | 933,519  



7.	Note receivable

The $1,450,000 note receivable relates to the sale of Starburst Coin Machines.  The note bears interest at 6% per annum and is to be repaid in three installments:  $580,000 on May 1, 2000, $435,000 on May 1, 2001 and $435,000
on May 1, 2002 (note 12a).





8.	Bank indebtedness and term debt

Bank indebtedness and term debt consist of the following:

As at December 31st



|                               |   | 1999       |   | 1998      
|------------------------------ | - | ---------- | - | ----------
|                               |   |            |   |           
|Bank indebtedness (note 8a)    | $ | --         | $ | 2,837,289 
|                               |   |            |   |           
|Term loan (note 8b)            | $ | 23,055,678 | $ | 35,000,000
|                               |   |           
|Less: current portion          |   | 23,055,678 |   | 9,350,000 
|                               |   |            |   |           
|Long-term portion of term debt | $ | --         | $ | 25,650,000

Versent's financing arrangements with a Canadian chartered bank (the "Bank") provided for credit facilities totaling $26,055,678 at December 31, 1999 structured as follows:

1. A $3,000,000 demand operating line of credit at prime plus 3.50% per annum.
2. A $23,055,678 term loan facility at prime plus 3.50% per annum with monthly principal repayments of $350,000.

Amounts drawn under these facilities are collateralized by a general assignment of book debts and a general security agreement on the assets of Versent and its subsidiaries.

At December 31, 1999 the Canadian prime rate was 6.50% (1998 - 6.75%).  The balance of the facilities are due on September 5, 2000.



9.	Income taxes

a)	A reconciliation of the basic income tax rate in Canada to the effective tax rate for Versent is as follows:

For the years ended December 31st



|                                                               | 1999    | 1998   
|-------------------------------------------------------------- | ------- | -------
|Expected income tax rate                                       | (45.0%) | 45.0%  
|Losses not tax-benefited                                       | 60.9%   | 11.0%  
|Non-deductible amortization of goodwill and Laser Quest rights | 5.4%    | 27.7%  
|Share issue costs                                              | (2.5%)  | (13.0%)
|Foreign income taxed at lower rates                            | (2.0%)  | (16.3%)
|Other                                                          | 0.7%    | (0.7%) 
|                                                               | 17.5%   | 53.7%  

b)	Versent has Canadian non-capital losses of approximately $6,000,000 and capital losses of approximately $2,450,000, the tax benefit of which have not been recognized in these consolidated financial statements.  These
losses are available to offset future taxable income and expire in the years 2004 to 2006.





10.	Capital stock

On February 19, 1998, the Shareholders of Versent approved a 1:5 Common Share consolidation and changed the name of Versent from Laser Quest Corporation to Versent Corporation.  These consolidated financial
statements reflect the consolidation on a retroactive basis.

1. Authorized share capital consists of an unlimited number of Common Shares.  In addition, Versent is authorized to issue an unlimited number of Special Shares, the attributes of which are determined with each series.
2. The share transactions relating to the period from December 31, 1997 to December 31, 1999 are summarized as follows:



|                                                                     | Common Shares
|-------------------------------------------------------------------- | -------------
|                                                                     | #            
|Balance, December 31, 1997                                           | 9,335,386    
|Common Shares Issued, March 31, 1998 (note 12c)                      | 299,417      
|Share options exercised (note 10c)                                   | 3,500        
|Shares cancelled through normal course issuer bid (note 10g)         | (369,960)    
|Balance, December 31, 1998                                           | 9,268,343    
|Share options cancelled through Share Appreciation Rights (note 10f) | --           
|Balance, December 31, 1999                                           | 9,268,343    

1. During the year ended December 31, 1999, 663,500 (1998 - 330,060) share options were granted to employees and key consultants.  Also during 1999, 227,590 (1998 - 41,400) share options previously granted were cancelled
and no share options  (1998 - 3,500) were exercised (1998 - $7,000 in proceeds).  See subsequent events note (note 16a).
2. At December 31, 1999, 904,970 share options were outstanding of which 564,110 were fully vested and the remainder were subject to vesting periods of up to four years.  The options were at prices ranging between $0.90 and $7.75 and
had expiry dates ranging from March 6, 2000 to November 1, 2004.  See subsequent events note (note 16a).
3. As at December 31, 1999, 65,000 warrants with exercise prices ranging between $3.85 and $7.75 expiring between December 20, 2000 and February 21, 2002 were outstanding.  During 1998, 214,300 warrants with an exercise price of $7.30
expired without being exercised. See subsequent events note (note 16a).
4. On January 11, 1999, Versent cancelled 284,247 share options which were to expire on February 22, 1999 utilizing Share Appreciation Rights whereby the option holders received $198,973, the net value of the share options, directly
from Versent.  The price of the repurchased shares was less than the weighted average book value resulting in a gain of $170,001 being credited to retained earnings.
5. On December 8, 1997, Versent received approval to conduct a normal course issuer bid under which up to 467,489 Common Shares could be purchased for cancellation.  During the period from December 8, 1997 to December 31, 1997, 14,300
Common Shares were purchased for cancellation. During the period from January 1, 1998 to December 7, 1998 369,960 shares were repurchased for cancellation. The aggregate consideration paid for the shares was $1,770,422 (1997 - $76,402). This normal course
issuer bid expired on December 7, 1998.  The weighted average price of the repurchased shares exceeded their book value resulting in a loss of $565,723 being charged to retained earnings.
6. 
7. Earnings and cash flow from operations per share are based on the weighted average number of Common Shares outstanding.  Fully diluted earnings per share is not presented as the effect of the calculation is anti-dilutive.
8. Under the terms of the banking arrangement, as long as amounts are owing to the Bank, Versent is restricted in declaring dividends and, at the Bank's option, any proceeds from share issues will first be used to retire indebtedness
to the Bank.



11.	Lease commitments

Versent and its subsidiaries have entered into agreements to lease properties for various periods up to 2007.  Certain of the leases provide for additional rent based on sales.  Future minimum annual rental payments for the
non-cancellable term of the leases in effect at December 31, 1999 are as follows for the years ending December 31st:



|2000       | $5,741,000 
|---------- | -----------
|2001       | 5,021,000  
|2002       | 3,990,000  
|2003       | 2,349,000  
|2004       | 1,732,000  
|           | 18,833,000 
|Thereafter | 1,655,000  
|Total      | $20,488,000



12.	Acquisitions and divestitures





Consideration

Cash	$	5,357,993

Note receivable (note 7)	1,450,000

6,807,993

Net investment	11,700,774

Net loss on disposal	$	(4,892,781)



Cash consideration	$	618,744

Net investment	1,618,577

Net loss on disposal	$	(999,833)



The acquisition was accounted for using the purchase method and the results of operations are included in Versent's results from discontinued operations from the date of acquisition.  This transaction involved the issue of 299,417
Common Shares of Versent.  The details of the consideration paid and its allocation to the assets acquired are as follows:



Net assets acquired at assigned value

Working capital	$	658,180

Capital assets		388,444

Goodwill	2,822,082

$	3,868,706

Consideration

Cash	$	2,072,206

Common Shares issued	1,796,500

$	3,868,706



Net assets acquired at assigned value

Working capital	$	941,905

Capital assets	205,595

Cash consideration	$	1,147,500



13.	Other information

1. Interest expense related to continuing operations consists of the following:
2. Amortization related to continuing operations consists of the following:

For the years ended December 31st



|                                    |   | 1999      |   | 1998     
|----------------------------------- | - | --------- | - | ---------
|                                    |   |           |   |          
|Capital assets                      | $ | 5,724,218 | $ | 5,290,304
|Deferred costs                      |   | 2,407,786 |   | 1,428,626
|Laser Quest rights                  |   | 479,609   |   | 483,927  
|Goodwill                            |   | 74,354    |   | 74,353   
|Write-down on closure of LQ Centres |   | 971,248   |   | --       
|                                    | $ | 9,657,215 | $ | 7,277,210





14.	Consolidated Statements of Cash Flows

The following investing and financing transactions have not been included in the consolidated statements of cash flows because they did not involve the use of cash:

1. Gain (loss) on purchase and cancellation of common shares - In 1999 Versent recorded a gain of $170,001 on the utilization of Share Appreciation Rights to cancel share options (note 10f).  In 1998 Versent recorded a loss of
$565,723 on the cancellation of common shares through a normal course issuer bid (note 10g).
2. Note receivable - In 1999 Versent received a note in the amount $1,450,000 as part of the consideration received in the sale of Starburst (note 12a).
3. Issuance of common shares - In 1998, Versent issued shares with a value of $1,796,500 in connection with the acquisition of Chromacolour (note 12c).



15.	Segmented information

Versent operates in two continuing industry segments.  The Laser Quest laser tag segment derives revenue from LQ Centre operations in North America and the licensing of the concept internationally. The Laser Cash private
label ABM segment derives revenue from the operation and sale of automated banking machines.





|Segment information:                                  | December 31, 1999
|----------------------------------------------------- | -----------------
|                                                      | Laser Quest      
|Revenues                                              | $ 40,682,519     
|Interest expense                                      | 2,661,901        
|Amortization                                          | 9,002,144        
|Segment assets                                        | 37,252,938       
|Segment capital asset expenditures and deferred costs | 833,252          



|Geographic information: | December 31, 1999
|----------------------- | -----------------
|                        | Revenues         
|Canada                  | $ 11,516,235     
|United States           | 34,802,061       
|Other foreign countries | 360,509          
|Total                   | $ 46,678,805     





|Segment information:                                  | December 31, 1998
|----------------------------------------------------- | -----------------
|                                                      | Laser Quest      
|Revenues                                              | $  42,826,716    
|Interest expense                                      | 1,582,878        
|Amortization                                          | 6,915,654        
|Segment profit (loss)                                 | 973,045          
|Segment assets                                        | 46,369,130       
|Segment capital asset expenditures and deferred costs | 1,513,162        







|Geographic information: | December 31, 1998
|----------------------- | -----------------
|                        | Revenues         
|Canada                  | $   6,880,391    
|United States           | 35,816,101       
|Other foreign countries | 1,331,426        
|Total                   | $ 44,027,918     



Revenues and other assets are attributed to countries based on location of Versent's operations.



16.	Subsequent events

1. On February 15, 2000 Buckingham Technology Acquisition Group, Inc. acquired 6,649,152 shares bringing its holdings to 8,497,152 or 90.5% of the issued and outstanding shares of Versent.  In connection with this transaction,
all share options and warrants previously issued were cancelled.
2. In two separate transactions in March 2000, Versent sold substantially all of the assets of its Chromacolour business to companies controlled jointly by Mr. David James, a Director of Versent, and his unrelated partners.  The net
proceeds, subject to adjustments, are expected to approximate the remaining book value of Versent's investment in Chromacolour.  The transaction is not expected to result in any loss on disposal as the carrying value of this business has been reflected at
net realizable value in these consolidated financial statements through a $1,950,000 write down of Versent's investment in discontinued operations.



Management's Responsibility for Financial Reporting



The preparation of the consolidated financial statements of Versent Corporation is the responsibility of management.  This responsibility includes the selection of appropriate accounting policies and the exercise of careful judgment in
establishing reasonable and accurate estimates in accordance with accounting principles generally accepted in Canada applied on a consistent basis and as appropriate in the circumstances.  Financial information shown elsewhere in this Annual Report is
consistent with that contained in the consolidated financial statements.



Management of Versent Corporation and its operating divisions has developed and maintains accounting systems and internal controls designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use and
that the financial records are reliable.



The Board of Directors approves these consolidated financial statements and carries out its responsibility in this regard principally through the Audit Committee of the Board, all members of which are outside directors.  The Audit
Committee reviews the results of audit examinations performed by the independent external auditors with respect to Versent's accounting principles, practices and systems of internal control.



The consolidated financial statements have been audited by Ernst & Young LLP, Chartered Accountants. Their report stating the scope of their audit and their opinion on the consolidated financial statements is presented below.

F. Gregory Thompson	Clinton L. Wolff

President and	Vice President, Finance

Chief Executive Officer	Secretary/Treasurer







Auditors' Report



To the Shareholders of Versent Corporation



We have audited the consolidated balance sheets of Versent Corporation as at December 31, 1999 and 1998 and the consolidated statements of loss, retained earnings (deficit) and cash flows for the years then ended.  These financial
statements are the responsibility of Versent's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with auditing standards generally accepted in Canada.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Versent Corporation as at December 31, 1999 and 1998 and the results of its operations and its cash flows for
the years then ended in accordance with accounting principles generally accepted in Canada.

Toronto, Canada

March 10, 2000	Chartered Accountants

[Except for note 16b which is at April 18, 2000]





Versent Corporation

Corporate Information



Directors

Michael J. BucksteinC

David H. James (President, Laser Quest International Corporation)

Robert B. JohnstonC

Deborah Morrison

Jeffrey Rosen

David A. RosenkrantzC (Chairman of the Board of Directors)

F. Gregory Thompson (President and Chief Executive Officer)



C



Other Senior Personnel

Versent Corporate:	Clinton L. Wolff (Vice President, Finance and Secretary/Treasurer)

Tracy Boyd(Vice President, Marketing)

Laser Quest:	Sue Millar(Vice President, LQ Operations)

Threshold Electronics:	Matthew McIver (President, Threshold Electronics Limited)



Versent Corporate Office	(Laser Quest and Threshold)

3269 American Drive, Mississauga, Ontario, Canada, L4V 1V4

Telephone:	(905) 678-7272		Fax:	(905) 678-9898

Transfer Agent		CIBC Mellon Trust Company, Toronto, Ontario

Listing of Capital Stock	Toronto Stock Exchange, Trading symbol "VTC"



Annual Meeting	Versent Corporation's Annual Meeting of Shareholders will be held on Wednesday, June 21, 2000 at 10:00 a.m. at 3269 American Drive, Mississauga, Ontario.

















































































































Versent Corporation

3269 American Drive, Mississauga, Ontario, Canada, L4V 1V4