Bank Plus Lawsuit

Bank Plus Corporation, the holding company for Fidelity Federal Bank, FSB, announced that the Los Angeles County Superior Court has denied a motion for class certification in the pending securities fraud action filed by the Howard Gunty Profit Sharing Plan and Robert E. Yelin stemming from Fidelity’s previously terminated credit card operations.

The Superior Court reconfirmed its earlier finding that the proposed class representative, the Gunty Plan, was a “professional plaintiff” and thus an inappropriate class representative. The Court found that plaintiffs’ counsel, Weiss & Yourman and Stull, Stull & Brody, controlled the litigation, which the Court characterized as “abusive,” through the use of a professional plaintiff who merely lent his name to the lawsuit with little or no knowledge of the case and who had been represented by one or both of these firms in approximately 20 other lawsuits.

Mark K. Mason, Chief Executive Officer of Bank Plus, said, “We are very pleased at this result. This decision is a victory against abuse of the legal process that costs the shareholders of corporate America so much in terms of capital and management attention.”

Barring a reversal on any appeal that the plaintiffs may elect to file, the Court’s ruling ends the class action element of the lawsuit. The Superior Court did, however, rule that the lawsuit could be amended to add LaSalle Financial Partners, L.P. as a named plaintiff for its individual claims only, but not as a class representative. LaSalle retained the Gunty Plan’s lawyers as well as Foley & Lardner in litigating this matter.

Mr. Mason added, “The allegations of improper conduct set forth in LaSalle’s proposed complaint are without merit, and we intend to vigorously contest them.”

Bank Plus Corporation is the holding company for Fidelity Federal Bank, FSB, which offers a broad range of consumer financial services, including demand and time deposits and mortgage loans. In addition, through its affiliate Gateway Investment Services, Inc., a NASD-registered broker/dealer, Fidelity provides customers of the Bank with investment products, including mutual funds, annuities and insurance. Fidelity operates through 29 full-service branches located in Los Angeles and Orange counties in Southern California.

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VAP Incentives

VISA’s new ‘VISA Authenticated Payment’ program will launch a number of commercial incentives worldwide following the blessing of VISA International’s board. The newly adopted commercial incentives provide protections and guarantees for participating e-merchants handling card-not-present transactions. VISA projects the program will reduce disputed transactions by at least 50%. Under the program, cardholders will be better protected while shopping online because issuers will be able to authenticate (via passwords, etc) their cardholders during the online payment transaction and notify the e-merchant in real time that the buyer is the actual cardholder. The Visa International Board has also approved a requirement that, effective January 1, 2002, Web merchants must offer a secure, encrypted environment to cardholders during their online purchase. Any e-merchant participating in ‘VISA Authenticated Payment’ satisfies this requirement. By April 1, 2003, VISA acquirers will be required to support 3-D Secure for their online merchants.

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Hudson Bay’s 3Q/01

Hudson’s Bay Company announced results for the three-month period ending July 31, 2001. The Company recorded an operating profit of $45.6 million in the second quarter (including $6.6 million due to an accounting change for transfer of receivables), compared to $54.8 million in the same period last year. The earnings per share (after deducting net dividends for the equity-subordinated debentures) were $0.15 per share versus $0.19 per share in the same period last year. Excluding the gain from the accounting change for transfer of receivables, the earnings per share are $0.10 for the second quarter.

Total Hudson’s Bay Company sales and revenue in the second quarter amounted to $1,702 million; a decrease of 0.8% over last year. Retail sales at the Bay decreased by 5.3% and increased by 1.9% at Zellers. Comparable store sales decreased by 7.1% at the Bay and increased 0.7% at Zellers. Zellers achieved its 14th consecutive quarter of year-over-year profit growth, contributing $35.6 million (including a $3.8 million gain due to the accounting change for transfer of receivables) in operating profit, an increase of $4.1 million compared to the second quarter of 2000. The Bay recorded an operating profit of $14.6 million (including a $2.8 million gain due to the accounting change for transfer of receivables) for the quarter, a decline of $14.0 million over the same period last year.

“The results for the second quarter are in line with what we expected and advised last month,” said George Heller, President and Chief Executive Officer, Hudson’s Bay Company. “It was a difficult quarter for the Bay due to the continued negative impact of additional retail selling space, highly competitive promotional activity, and weakness in apparel sales. Our credit card operations continue to deliver year over year growth and Zellers financial returns are again improved this quarter as a result of technology investments, process changes and merchandising strategies.”

For the first half of the year Hudson’s Bay Company achieved net earnings of $2.0 million (including a $3.8 million gain from an accounting change for transfer of receivables) compared to $10.3 million last year.

The Company expects the financial trends experienced in the first half of the fiscal year to continue through the third quarter. Until additional retail space introduced into the traditional department store segment in the third quarter last year is annualized, the Bay division will continue to retain approximately half of the significant sales increases realized in the first three quarters of the year 2000. As a result, the Company expects the Bay’s comparable store sales trend will improve in the fourth quarter. The Company expects operating profit for the fourth quarter, in part dependent on a stable economic environment, to be at or near last year’s levels (excluding the impact of the accounting change for transfer of receivables).

The Board has declared a quarterly dividend of $0.09 per share, payable October 31, 2001 to shareholders of record at the close of business on October 5, 2001.

Management’s Discussion and Analysis

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New Developments

At the beginning of Q2, HBC launched the HBC Rewards program replacing the Company’s three existing loyalty programs, in which plan members earn HBC Rewards points by shopping at any of the HBC family of stores: the Bay, Zellers, Home Outfitters and hbc.com. HBC Rewards encourages customer retention, loyalty and cross shopping at all stores within HBC. Membership in the program and use by customers has continued to grow through Q2, at a rate of 150,000 new members per month.

The Company and Imperial Oil announced a new program which allows Bay and Zellers credit cardholders to use their card as a method of payment at more than 2,300 Esso-branded service stations across Canada. By linking their Bay or Zellers credit card to their HBC Rewards card, cardholders will earn HBC Rewards points for every dollar spent at Esso.

During the quarter the company sold an additional $100 million of customer receivables under the securitization program.

As part of the expansion plans for Home Outfitters, the Company opened three new Home Outfitters stores during the quarter in Calgary, AB, Pointe- Claire, QC and Anjou, QC.

Consolidated Results

As described in Note 2 to the interim financial statements, there was an accounting change in Q2 to comply with new rules for securitized accounts receivable. Under the new rules the anticipated future profits pertaining to the credit card receivables sold each month under the securitization program are recorded at the time of sale. This will cause a significant, non-recurring increase to income for each of the next 7 to 9 months.

For Q2, the accounting change increased operating profit by $6.6 million: $2.8 million at the Bay and $3.8 million at Zellers.

After deducting net dividends for equity subordinated debentures, earnings per share in the second quarter were $0.15, a decrease of $0.04 over the 2000 Q2 earnings of $0.19. Net earnings in the quarter were $13.4 million, compared with $16.8 million in Q2 2000. EPS excluding the accounting change would have been $0.10.

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AmEx/JCB Expands

The global merchant services agreement between AmEx and JCB expanded this morning. Since the agreement was announced in June 2000, the markets in which AmEx will provide merchant-related services for JCB have been extended to include Mexico and India, in addition to Australia, New Zealand and Canada. The agreement calls for merchants on the American Express network in these five markets to be given the opportunity to begin accepting JCB cards, and for AmEx to become the merchant acquirer for JCB. Beginning July 31, 2001, American Express in Mexico enabled many travel and entertainment merchants, as well as high-volume retail merchants on its network to accept JCB Cards. The company also began acquisition, processing and servicing of new merchants on JCB’s behalf in Mexico. Over the next 12 months, AmEx will begin providing these same services for JCB in the other four markets. In addition, in the United States, AmEx has started working with JCB to provide technical access to American Express-owned merchant terminals.

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ATM Leasing

Triton and Popular Leasing U.S.A., the American leasing arm of Puerto Rico-based Banco Popular, have signed an agreement that will make affordable ATM lease financing products available to a wide range of businesses. The new program will include longer lease terms, lower down payments, and more aggressive credit scoring. Triton has also structured an arrangement with its distributors to co-provide limited financial recourse as well as re-marketing services to Popular Leasing in the event of lease defaults. The new program makes it possible for businesses with a wide range of credit ratings, including those that have been in operation for as little as six months, to obtain lease terms of 60 months, and in some cases, up to 66 months. Down payments consist of only the first and last month payments only.

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KEB EXITS CARD BIZ

Korea Exchange Bank has agreed to sell its controlling stake in its credit card operations to Citibank for 660 billion won or about US$516 million. KEB is unloading the unit to achieve overall bank profitability. It took more than four months to negoiate the deal with Citibank. South Korea’s credit card industry is dominated by Samsung, LG, Hyundai, and Kookmin Card. VISA and MasterCard logged more than US$127 billion in card volume last year in the country.

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Equitex Sub-Prime Marketing

Equitex, Inc. announced that its wholly owned subsidiary, Key Financial Systems, Inc. of Clearwater, Florida, has signed marketing alliances with nine new independent marketing organizations. Five of these organizations have already begun marketing on Key’s behalf while the remaining four are expected to begin within the next thirty days.

“One of the main growth strategies in our overall business plan is to increase our inbound telemarketing efforts through direct mail, direct solicitation, and print media,” stated Scott Lucas, President of Key. “These alliances give us the opportunity to reach new market segments and increase our capacity in as much as the alliances increase our ability to reach a larger number of consumers. In addition,” continued Mr. Lucas, “Key has begun a new direct mail campaign with an experienced credit card marketer that could potentially generate up to 1,000,000 leads per month for our market segment.”

The expanded marketing efforts include the use of direct mail, print media, Internet and email advertising to generate calls to inbound call centers. In addition, telemarketing centers selling various other products and services to customers in Key’s market segments will transfer interested and qualified credit card applicants directly to a Key inbound call center.

Equitex, Inc. is a holding company operating through its wholly owned subsidiaries Nova Financial Systems and Key Financial Systems of Clearwater, Florida. Nova and Key design and service credit card products for those who need to build or rebuild credit; marketed through direct mail, print media, telemarketing for financial institutions and the Internet through alliances with a number of popular Internet web sites.

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TIME-STAMP

ZeitControl cardsystems GmbH presents two new terminals for the and door attendance. These terminals are suitable for software and
system houses for the connection to existing software.

The TimeStamp is available in two new versions TimeStamps RFID for reading RFID-transponders and TimeStamp Chipcard. Both versions
can be used in the time registration and attendance. We recommend the contactless RFID version, because it works also in a dusty
environment.

These terminals from our own production are fitted out with an extremely versatile equipment like RS232/RS485 – interface, modem
connection, LED-display with 2×16 characters, keypad with 14 keys as well as 60 kBytes of memory.

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PrimeDomain & UltraCard

Upgrade International Corporation is pleased to announce that it has entered into strategic alliance agreements with PrimeDomain International and their affiliated companies.

The involvement of PrimeDomain International is aimed at providing the Upgrade group of companies with ample capital resources and commercial expertise in order to accelerate the commercialization of the group’s products and services. Through its subsidiary, PrimeStrategies, PrimeDomain International has been instrumental in establishing market presence for numerous companies internationally. PrimeOrigin has contributed significantly to its client company’s technology development and commercialization. PrimeCapital Partners’ principals have raised in excess of 1 billion dollars of equity capital for developing technology companies.

Mr. Daniel Bland, President and CEO of Upgrade International Corp. states, “At this critical juncture in the Company’s life cycle, having completed our research and development and poised for the execution of our product launch, we have been seeking a partner that shares our strategic vision for the mass market implementation of our business plan. We have been very impressed with the track record of PrimeDomain International and are very pleased to announce to our shareholders our association with this respected group of companies.”

Linda Chandler, managing partner and CEO, PrimeCapital Partners states, “Prime Capital Partners invests in companies that are able to prove their business model, establish a defensible technology, secure a pathway to revenues and profitability, and present a compelling case that they are entering into a phase of very explosive business growth. Upgrade International Corp. represents one of the best suited business opportunities that we have had the opportunity to work with to date.”

Upgrade International Corp. through its ownership interest in UltraCard Inc., Efornet Corp., and cQue Corporation is engaged in the development and commercialization of a patented ultra high capacity portable data storage technology. UltraCard’s patented method for using existing hard disk storage technology provides both highly durable media in a credit card format and an inexpensive read/write device that together will become the next generation in personal portable data storage for a broad range of existing and new markets. Management believes that the UltraCard technology will potentially provide numerous industrial users with a combination of high levels of security and a vastly greater amount of personal transportable data storage at the lowest cost in the industry. In addition the acquisition and development of existing SmartCard solution providers represents a strategic market strategy designed to accelerate the integration of the vastly superior technology inherent in the UltraCard into existing and newly developing markets. For more information on PrimeCapital Partners, see their web site at [www.primedomain.com][1].

On Behalf of the Board of Directors,

Daniel Bland President

[1]: http://www.primedomain.com

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AMEX/JCB AGREEMENT

Beginning this week, American Express
Cardmembers from around the world will be able to use their Cards at a
significantly expanded network of merchants across Japan, as a result of a
global agreement between American Express and JCB, Japan’s largest card issuer
and merchant acquirer.

Since the agreement was announced in June 2000, the markets in which
American Express will provide merchant-related services for JCB have been
expanded to include Mexico and India, in addition to Australia, New Zealand
and Canada. The agreement calls for merchants on the American Express network
in these five markets to be given the opportunity to begin accepting JCB
cards, and for American Express to become the merchant acquirer for JCB and to
assume responsibility for processing and servicing all new merchants.
Beginning July 31, 2001, American Express in Mexico enabled many travel
and entertainment merchants, as well as high-volume retail merchants on its
network to accept JCB Cards. The company also began acquisition, processing
and servicing of new merchants on JCB’s behalf in Mexico. Over the next 12
months, American Express will begin providing these same services for JCB in
the other four markets. In addition, in the United States, American Express
has started working with JCB to provide technical access to American
Express-owned merchant terminals.

“We are delighted with the progress of our strategic partnership with JCB.
This reciprocal relationship is truly a groundbreaking one between two highly
respected global brands. As a result, American Express Cardmembers from
around the world will be able to use their cards virtually everywhere in Japan
that they would like to,” said David House, Group President of American
Express Global Establishment Services, Travelers Cheque and Network Services.
Isao Nakanishi, President and CEO of JCB Co. Ltd., stated, “JCB values
this relationship with American Express both inside and outside Japan as the
launch of a truly innovative strategy in the global card market. As our
relationship progresses over the years, we believe that the benefits to our
JCB Cardmembers traveling abroad will increase correspondingly.”

JCB, which launched its card business in Japan in 1961 and began expanding
overseas in 1981, is an international brand and the largest card issuer and
merchant acquirer in Japan. Its merchant network spans 167 countries and
territories, and serves more than 38 million card holders worldwide. More
information about JCB can be found at http://www.jcbinternational.com/.
American Express is a diversified worldwide financial, travel and network
services company. Founded in 1850, it is a leader in charge and credit cards,
Travelers Cheques, travel, financial planning, investment products, insurance
and international banking. American Express has more than 54 million cards in
force worldwide and a presence in more than 200 countries and territories.
More information about American Express can be found at http://www.americanexpress.com/.

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AMEX CARDS

American Express is in discussions to issue cards in China by means of
partnerships with local banks, including Bank of China and the Industrial
and Commercial Bank of China. American Express has been working with Bank
of China and the Industrial and Commercial Bank of China to expand ATM
coverage. AmEx is also in talks with eight commercial banks to increase the
merchant acceptance throughout the country.

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Ad Agency Tanks

As online currency firms, beenz.com and flooz.com, folded this week, the overall Internet shake-out is spreading to online advertising services. Next Wednesday, OH-based AdOutlet, which handled credit card advertising for major issuers, will be closing its doors. The privately-held company, founded in 1998, had offices in Chicago, Columbus, Los Angeles, and San Francisco. At one time the firm employed more than 100 people. As of this week, only seven employees remain, according to company executives. Among major credit card ad clients was First USA. AdOutlet was known for its ‘Advertising Distribution System’ which creates target-specific searches that identify available inventory and generates tailor-made results for ad clients. Earlier this year, the firm created a new business unit, ADS Media Solutions, which focused on a private-branded exchange and an internal sales solution for the cable television advertising industry and television and radio station groups. The company also formerly operated under the ‘Ad Net Marketing’ trade name.

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