ChequeMARK Relocates

LML Payment Systems Inc. reports first quarter revenues were $2,145,545, an increase of $2,055,392 or 2,280% compared to revenues for the corresponding period for the previous year. Operating income was $403,196, an increase of $467,095 or 730% compared to an operating loss of ($63,899) for the corresponding period for the previous year. Sales and administrative expenses were $673,308, an increase of $478,237 or 245%, compared to $195,071 for the corresponding period for the previous year. The increase in revenues for the period was primarily attributable to the consolidated financial results of wholly-owned subsidiaries CF Data Corp. and Check Center, both of which were recently acquired by the Corporation.

There was a loss before interest, tax, depreciation and amortization (“EBITDA”) of ($52,204) or ($0.00) per share, compared to an EBITDA loss of ($267,445) or ($0.02) per share for the corresponding period for the previous year. Interest expenses were $82,048. Non-cash amortization expenses of $425,246 were primarily attributable to recent corporate acquisitions. There was a net loss of ($559,498) or ($0.04) per share compared to a net loss of ($433,149) or ($0.04) per share for the corresponding period for the previous year.

During the quarter, the Corporation retired $1,201,117 of long term debt. At the end of the quarter, the Corporation had working capital of $13,561,503 compared to a working capital deficiency of ($1,137,132) for the corresponding period for the previous year. The Corporation had cash and short term investments on hand of $14,393,577 at the end of the quarter.

The Corporation also announces subsidiary, ChequeMARK, Inc. has relocated its Jacksonville, Florida offices to Dallas, Texas where the Corporation presently maintains offices through subsidiaries CF Data Corp. and Check Technologies(TM) Inc.

Subsequent to the quarter end, the Corporation announced the acquisition of Phoenix EPS, Inc., a company that engineers and markets host-based software products that provide centralized gateway services for electronic payment authorization traffic between store registers and authorization networks. Phoenix EPS’ flagship product REPS (Retail Electronic Payment System) provides real-time transaction monitoring, authorization and selective routing of debit card, credit card, EBT and check verification transactions. Phoenix EPS plans to incorporate the Corporation’s check verification, Electronic Check Conversion (ECC), Electronic Check Re-presentment (RCK) and traditional check collection modules into the REPS IBM OS/390 platform. The Corporation is presently establishing a new primary data processing center in Phoenix, Arizona with plans to augment the existing processing facilities in Dallas, Texas to form a fully redundant secondary data center. “We plan on making significant investments in these facilities,” said President and CEO, Patrick H. Gaines.

“Overall, we are pleased with our progress. We believe these first quarter results indicate we are moving in the right direction. Phoenix EPS gives us strength and technical capabilities we never had before. Our challenge now is to combine these capabilities with our existing services. Successful integration, prudent capital investment, coupled with the advantages afforded by our expanding intellectual property estate, should position us well for electronic transaction processing, particularly electronic check transactions,” said Gaines.

LML Payment Systems is a financial payment processor specializing in providing end-to-end check processing solutions for national, regional and local retail merchants. The Corporation’s processing services include traditional check verification and collection along with electronic processing services including Electronic Check Re-presentment (whereby returned paper checks are represented for payment electronically) and Electronic Check Conversion (whereby paper checks are converted into electronic transactions right at the point of sale). The Corporation’s intellectual property estate will include a recently allowed patent application regarding internet checking transactions, in addition to U.S. Patent No. 5,484,988. U.S. Patent No. 5,484,988, describes a “Checkwriting point of sale system,” which, through a centralized database and authorization system, is capable of providing and administering various electronic payment services for customers and businesses.

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USTT in Hawaii

USA Technologies Inc., Thursday announced it was taking TransAct, its unique swipe card technology, offshore after signing a major dealer and distributor in Hawaii under its TransAct Authorized Reseller Program.

The latest company to become a TransAct Authorized Reseller is Video Vend of Honolulu. Video Vend is already installing TransAct in one of Hawaii’s premier hotel chains, Outrigger Hotels. Two other companies also recently became authorized resellers – Paterson Products of Sacramento, Calif., and Xerox Sales and Service of Bloomington, Ind. TransAct is now being sold and distributed in 48 states throughout America.

USA Technologies is a nationwide leader in credit card and cashless transaction technology. TransAct is a key component of USA Technologies’ flagship offering Business Express(R) and MBE Business Express, the world’s first 24-hour, credit card-activated business center. USA Technologies also has developed e-Port(TM), its next generation credit card payment terminal which offers the capability for public access e-commerce and interactive advertising. e-Port is currently undergoing pilot testing and is scheduled for distribution by the end of the year.

“These latest partnerships significantly expand our market reach and, for the first time, take our product and solutions offshore,” said Michael Lawlor, Senior Vice President of Sales & Marketing, USA Technologies. “A core strategic initiative is to build a nationwide, and ultimately a global distribution network beginning in 2001, not just for TransAct, but for all of our e-Business products and solutions including e-Port,” he said.

The TransAct Authorized Reseller Program was announced only three months ago and already seven major national office equipment dealers and distributors have signed on. Lawlor said many more were currently under negotiation and his company’s target was to sign five a month.

“More than 100 independent and national office products dealers and distributors have registered interest, and it is our intention to aggressively pursue these kinds of partnerships,” he said.

The TransAct technology is a cashless transaction-enabling terminal that allows customers to use office equipment quickly and simply with the swipe of a major credit card. Once the transaction is concluded, the customer receives a printed, itemized receipt. Offering TransAct through independent dealers and distributors means that industry leaders such as Xerox, Canon, Minolta and Konica will be able to incorporate the TransAct device into their own office equipment solutions worldwide.

“The new TransAct Authorized Reseller Program was a result of significant, positive feedback from the major office equipment manufacturers and distributors who wanted to use TransAct and incorporate it into their own products and solutions,” said Lawlor. “For manufacturers and distributors of office equipment it means the ability to locate and operate their equipment in public environments and high traffic areas such as hotels, convenience stores, travel & transportation facilities and other public buildings,” he said.

USA Technologies will provide the technology and integration expertise to allow manufacturers and distributors of office equipment and services to easily attach the TransAct device to any brand of product, whether a fax, copier or PC.

TransAct is presently being used across the United States and Canada, with more than 1,500 devices in place, primarily as a component of USA Technologies’ Business Express(R) and MBE Business Express.

About USA Technologies

With patented technology, new distribution partners and channels and a rapidly expanding product line, USA Technologies is a leader in providing credit card-activated business services for professionals and consumers needing to communicate or conduct business outside the home or workplace. Visit the USA Technologies home page at [www.usatech.com][1]

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

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Poor Customer Service

A new survey has found that 35% of credit card users have changed issuers due to poor service. More than 60% of consumers polled by Mobius Management Systems, said they had cancelled accounts with their banks, citing frustration due to poor customer service. Mobius also found that 36% had changed insurance providers, 40% had changed telephone companies, and 37% had changed Internet service providers for the same reasons. The firm found eight out of ten consumers prefer speaking with a live customer service representative instead of an automated system and they also prefer to speak with a customer service representative on weekends. More than 90% wanted to be transferred to another customer service representative no more than once.

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In The Black

American Bank Note Holographics, Inc. announced this week the repayment of all outstanding bank debt to Foothill Capital Corporation.

With the repayment of the Term Loan and Revolving Credit Facility to Foothill Capital Corporation, ABNH now has no bank debt.

As a result of the recent $9.3 million equity investment by Crane & Co. Inc., and after paying all of the outstanding debt to Foothill plus related fees, expenses and interest, ABNH now has a cash balance of approximately $7 million.

Kenneth Traub, President and CEO of ABNH commented, “We are proud to announce another major milestone. We now have the financial strength to invest in our future. We are focused on extending our leadership position, and developing new and better holographic design, security and authentication products to serve our customers.”

American Bank Note Holographics is the leader in the origination, production, and marketing of mass-produced holograms. The Company’s products are used for security applications, such as counterfeiting protection for transaction cards, identification cards and documents of value, authentication of consumer and industrial products and tamper resistance as well as for packaging and promotional applications.

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Smart Face

The U.S. Government is moving rapidly to adopt facial recognition technology in conjunction with smart cards. MA-based eTrue confirmed Wednesday that its ‘TrueFace’ solution will be used in the GSA’s $1.5 billion government-wide ‘Smart Access Common ID Program’. The technology is being provided through Logicon and SAFLINK Corp., both contractors under the GSA program. Through the contracts awarded, GSA’s ‘Smart Access Common ID Program’ will deliver common, interoperable, multi-application smart cards to be used as employee ID cards for all Federal agencies. Technology requirements include an electronically generated photograph for visual identification, a biometric reference template for use in logical and physical access control, and digital certificates for use in electronic transactions. TrueFace-enabled products and solutions have been deployed by a number of U.S. Federal government agencies, including the DOD, NSA, and the DOE. In addition, local U.S. law enforcement agencies and the governments of Israel, England, and South Africa, among others, use the technology.

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M2 Card Brand

New York City-based M2card, Inc. is adopting the M2 “mobile money” brand and identity for its payment card system. This fall, M2 will launch the ‘M2 VISA card’, a pre-funded card for teenagers. The company says its branding is meant to underscore the M2card’s anywhere/anytime capabilities and its flexible features which include funding from multiple sources, multi-level parent monitoring options, real-time account updates, wireless balance inquiries and person-to-person payments. The brand, logo and identity package was developed with Frankfurt Balkind, whose design clients include ESPN and About.com. The company says its branding emphasizes that teens can now be more mobile, responsible and independent.

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Vital Mag-Tek

Mag-Tek Inc., an internationally known card reader and MICR check reader manufacturer since 1972, announced that Vital Processing Services has selected Mag-Tek to integrate its five different card readers and MICR check readers with Vital’s POS-partner 2000 software.

POS-partner 2000 is a PC-based point-of-sale (POS) software product that enables retailers and direct marketers to accept and process many kinds of payment vehicles from multiple POS venues, and to capitalize on the information gathering as part of the process.

![][1] POS-partner 2000, in concert with Mag-Tek’s IntelliPIN, MICR Plus check reader and the card reader, facilitate the processing of card or check transactions at POS locations using a PC.

“We are very honored to be selected by Vital to work with their POS-partner 2000 software product lines,” said Mag-Tek President Tom McGeary. Barb Gregg, senior vice president of product marketing for Vital Processing Services, said: “Our goal is to make POS-partner 2000 easy to navigate at the merchant point of sale. Utilizing Mag-Tek card readers and MICR check readers is as simple as connecting the reader to the keyboard and the keyboard port on almost any PC, and a merchant is ready to swipe magnetic stripe cards.” Arizona-based Vital Processing Services(R) (Vital(R)) is a leader in technology-based commerce enabling services. Vital’s clients include acquirers and merchant service providers that offer electronic payment processing services to merchants, such as POS products, electronic authorization and data capture; VirtualNet(R) Internet- commerce services; clearing, settlement and exception processing; accounting, billing and reporting; operational fulfillment services; risk management; and customer service.

Vital is a merchant processing joint venture of Visa(R) USA and Total System Services Inc.(R) (TSYS) (NYSE:TSS). Mag-Tek () manufactures an ever-expanding line of magnetic stripe and smart card readers, encoders and MICR check readers for financial institutions, retailers and OEMs. Mag-Tek also offers comprehensive solutions for card issuance, customer-selected PINs and ATM/debit card activation.

Mag-Tek has headquarters in Carson, Calif., with sales offices throughout the United States, Europe and Asia, along with an international distribution network in more than 40 countries.

Mag-Tek technology is used in millions of financial and point-of-sale (POS) transactions utilizing debit cards, credit cards and checks; at banks and other financial businesses, retail checkouts, automated gas pumps, kiosks, pay phones and airplane seat phones throughout the world. For more information on Mag-Tek and Mag-Tek products, call 888/624-8350 or visit . For more information on Vital, visit its Web site at .

[1]: /graphic/vital/vital.jpg

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Priceless Latinos

MasterCard has taken its ‘Priceless’ advertising campaign to the U.S. Hispanic market. The first Spanish-language ‘Priceless’ television commercials are now airing on the Univision and Telemundo television networks. Combined, both networks reach up to 94% of the U.S. Hispanic market. MasterCard has also joined forces with the League of United Latin American Citizens to develop financial education materials and to conduct community workshops. MasterCard hired Vidal Partnership, a Hispanic-owned advertising firm based in New York City, to develop the ads for the U.S. Hispanic audience. The first two ads are titled “Fatherhood” and “Recipe”. To support its latest consumer education programs, MasterCard has also hired Arvizu Advertising and Promotions, a Hispanic-owned firm based in Phoenix, AZ to create materials for various segments of the Hispanic American community. The ‘Priceless’ campaign already airs throughout North and South America, Europe, South Africa, and Asia.

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New Card Bonds

CompuCredit Corporation announced Wednesday it will issue $659,340,660 of three-year credit card asset-backed securities. The securitization from the CompuCredit Credit Card Master Note Business Trust features two classes of Asset Backed Notes. The transaction, Series 2000-Six, includes $600,000,000 of Class A (Senior) floating rate asset backed notes and $59,340,660 of Class B (Subordinate) asset backed notes. The three-year Class A securities will be privately placed under Rule 144A and are priced at a spread of 22 basis points above the one-month London Interbank Offered Rate (“LIBOR”). The three-year Class B notes are subordinate in payment to the Class A Notes and will be retained by an affiliate of CompuCredit.

David Hanna, CEO of CompuCredit, said, “We are pleased that our first issuance was well received by the investor community, resulting in favorable pricing, an improved advance rate, and an upsized transaction of $600,000,000, versus our initial expectation of $300,000,000. We are also pleased that the Class A securities received a AAA-rating by Moody’s, Standard & Poor’s and Fitch. It is our expectation that we will be issuing in the asset-backed market three to four times per year.”

The transaction, CompuCredit’s first term asset-backed issuance, is expected to close the week after Labor Day. The offering was lead-managed by Banc of America Securities LLC and co-managed by Barclays Capital, Deutsche Banc Alex. Brown, First Union Securities, Inc. and SunTrust Equitable Securities Corporation.

CompuCredit Corporation is a credit card company that uses analytical techniques, including sophisticated computer models, to identify consumers who it believes are credit-worthy and are overlooked by more traditional consumer credit providers. CompuCredit markets unsecured Aspire(R) Visa(R) credit cards through direct mail, telemarketing and the Internet. In July 1999, CompuCredit launched its consumer web site, [www.aspirecard.com][1], through its Internet marketing services subsidiary AspireCard.com, Inc. Consumers can apply online and receive a credit decision within seconds. CompuCredit also markets credit life insurance, card registration, buying club memberships and travel services to its cardholders. Aspire Visa cards are issued by Columbus Bank and Trust Company under an agreement with CompuCredit. CompuCredit completed its initial public offering in April of 1999 and was included in the Russell 2000(R) Index in July 1999 and the NASDAQ FIN-100 Index in May 2000. Visit CompuCredit on the Internet at .

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

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Smart But Loyal

Salt Lake City-based Smart Chip Technologies and Amsterdam-based Cardis Enterprises International BV are joining up to explore ways of integrating their solutions for smart card payment and loyalty applications. Cardis’ ‘Ultimus Solution’ is a smart card based payment system that enables the extension of EMV credit and debit card products into micropayment. Both firms said that ‘Ultimus’, coupled with SCTN’s customer loyalty solution compliment each other in every way and since both are platform independent there is a lot of scope for both applications to co-reside in open e-commerce systems. Cardis has operations in The Netherlands, Israel and the UK.

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Baby Boomer Protection

San Francisco-based ThirdAge Media launched a credit card protection program for its baby boomer market. Through webloyalty.com, the free offer provides immediate fraud protection once the user joins the program and registers up to three credit cards. There is no restriction on the number of fraud-related Internet purchase claims one can make, as long as all claims are filed while being a member of the service. The maximum lifetime coverage per member is $1,000, and is in addition and subordinate to any coverage provided by the card issuer and other insurance carriers. The ThirdAge program covers VISA, MasterCard, American Express and Diners Club cards. ThirdAge Media is a media and direct marketing eNetwork for adults 45 years and older. Primary investors include Advance Internet, American Century, CBS, Hollinger International, MediaOne, Merrill Lynch and SOFTBANK.

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MBNA Stats

The largest credit card issuer in the U.S., ranked by number of accounts, is apparently MBNA. Based on the latest Prospectus for MBNA’s Master Trust of credit card-backed securities, the nation’s second largest issuer appears to have about 57 million total accounts and not the 30 million account figure estimated by industry tracking services such as CardData. At the end of the second quarter, MBNA had total outstanding balances of $76.1 billion, of which $61.1 billion were domestic originated VISA and MasterCard accounts. The Master Credit Card Trust holds $56.2 billion in outstandings representing 40.4 million accounts. MBNA also revealed that premium credit card accounts, including Gold, Platinum, Quantum accounts, make up 70% of MBNA’s total U.S. accounts and 79% of U.S. outstanding balances. Among the 40.4 million accounts in the Master Trust, 61.8% had no balance at mid-year. The average age of the accounts in the Trust is 51 months and the percentage of the aggregate total receivable balance to the aggregate credit limit was 11.95%.

MBNA MASTER TRUST STATS (6/30/00)
(as percentage of total accounts/total receivables)
BALANCE CREDIT LIMIT
Less than $5,000*: 26.8%-27.1% 19.5%-8.4%
$5,000-$10,000: 6.7%-34.2% 31.5%-28.6%
$10,000-$15,000: 2.1%-18.0% 22.2%-22.5%
$15,000-$20,000: 0.8%-9.3% 13.1%-15.1%
$20,000-$25,000: 0.3%-5.5% 9.6%-14.0%
Over $25,000: 0.2%-6.0% 4.2%-11.4%
* 1.3% of accounts had a credit balance and 61.8% had no balance; total
accounts of 40,412,657 and total receivables of $56,204,213,194.

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