Credit Store Posts $7 Million Loss

Credit Store, Inc. released unaudited results for the second quarter of its fiscal year 1998, which ended Nov. 30, 1997.

For the three months ending Nov. 30, 1997, Credit Store, Inc. reported revenues of $4.510 million, a 22 percent increase over the first quarter. Operating expenses were $5.456 million, and general and administrative expenses were $4.877 million, which together increased 25 percent over the first quarter. Net interest and other expenses for the quarter totaled $1.198 million. The net loss applicable to common stock for the second quarter was $7.121 million, equal to loss of $0.22 per common share, versus $5.415 million or $0.17 per share in the first quarter. The weighted average number of common shares outstanding remained unchanged for the period at 32,207,465.

In the second quarter, Credit Store, Inc. purchased $245 million in non-performing consumer debt portfolios versus $619 million in the previous quarter. The total gross principal of non-performing consumer debt acquired by the Company since its inception in Oct., 1996 is approximately $1.9 billion. The Company originated $25.230 million in new credit card receivables during the quarter versus $29.626 million the previous quarter. Credit card receivables balances before reserves increased 20 percent during the second quarter from $59.815 million to $71.933 million. As of Nov. 30, 1997, the Company had approximately 49,000 credit cards outstanding.

For the six months ended Nov. 30, 1997 (unaudited), Credit Store, Inc. reported revenues of $8.204 million, operating expenses of $9.909 million and general and administrative expenses of $8.711 million. Net interest and other expenses were $1.919 million. The net loss applicable to common stock for the period was $12.535 million, or $0.39 per share. For the six months period, the Company purchased $864 million in non-performing consumer debt portfolios and originated $55 million in new credit card accounts.

There are no comparative results for the previous fiscal year since operations commenced in October, 1996.

On Dec. 29, 1997, Credit Store, Inc. announced that a major institutional investor had committed to fund a $5 million private placement of new capital into the Company. The Company reports that this capital commitment has now been fully funded through the purchase of $2.5 million of common stock in January and $2.5 million of common stock in February. The proceeds will be used for general corporate purposes.

Credit Store, Inc. also announced implementation of workplace changes that improved operating efficiencies and will reduce cash expenses significantly. The changes included a 16 percent work force reduction put in place in January 1998, made possible by more effective procedures and continued investment in technology.

“We have now completed what we consider our start-up phase,” said Vice Chairman and CEO Martin Burke. “On entering the next phase, we undertook a complete operational review of the Company, with the goal of lowering our costs of originating new credit cards and of servicing our growing credit card portfolio. This review yielded significant results, allowing us to reduce our monthly operating costs without negatively affecting our origination capabilities.”

Credit Store Inc. is a nationwide financial services company that markets credit cards to consumers who previously had had an interruption in the repayment of their debts and may be excluded from the more traditional sources of consumer finance. The Company uses sophisticated methods to analyze, value and purchase portfolios of non-performing consumer debt from major institutional lenders at a substantial discount. The Company then uses its direct marketing expertise to contact and negotiate settlements with the consumer, most of the time placing the settlement on the new unsecured credit cards offered through The Credit Store. The Company offers an innovative and practical way for the consumer to rebuild their creditworthiness and gain access to an unsecured credit card.

Credit Store Inc.’s stock trades on the Electronic Bulletin Board under the symbol “PLCR”. The unaudited consolidated financial statements for the quarter and six months ending Nov. 30, 1997 are available from the Company upon request.

This press release contains forward-looking statements that involve uncertainties, including, but not limited to, risks and uncertainties related to financing, timing and management of growth, historic and future default and delinquency rates and losses, the market for and market value of the Company’s credit card receivables, the competitive environment and other risks. Future trends and results may differ materially from disclosures contained in this release.

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Biz Cards Pay

A Mellon Bank national study of corporate acceptance of purchasing card programs has found a satisfaction rate of  92%. Additional findings of the marketing research survey show that 47% of nearly 600 randomly selected large-corporate and government entities across the U.S. currently use a purchasing card program.  Another 16 percent of the entities surveyed intend to implement a program eventually. Previous industry studies indicate small purchases represent 80 percent of most companies’ purchase volumes, but only 20 percent of their purchase dollars.  However, the cost of operating traditional purchasing systems often ranges between $50 and $150 per purchase.

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U.S. Wireless TASQ Team

U.S. Wireless Data, Inc. announced that the company has engaged TASQ Technology, Inc. to facilitate the deployment and maintenance of U.S. Wireless Data’s TRANZ Enabler national roll out.

Specifically, TASQ will deploy the TRANZ Enablers to merchant locations nationwide and be responsible for maintenance of the installed units.

TASQ Technology is revolutionizing the out-sourcing of POS systems for the credit card industry. TASQ performs thousands of overnight deployments every single day with unsurpassed accuracy levels. In addition to deployments of POS Systems, TASQ sells, leases and rents VeriFone, Hypercom and other major manufacturers’ equipment and supplies.

Randy Simoneaux, Executive Vice President of TASQ Technology, Inc. expressed, “We anxiously anticipate the initiation of the USWDA project. The TRANZ Enabler is complimentary to a number of the products we presently represent and consistent with our philosophy to deliver cost-effective, technology-based product and service solutions to the credit card and EBT industries.”

Commenting on the decision to engage TASQ Technology, Evon Kelly, CEO of U.S. Wireless Data stated, “TASQ is considered the industry leader in POS equipment deployment and support. Being able to access such a tried and true resource in deploying our TRANZ Enablers during our national launch is essential to the execution of our business model.”

USWDA’s proprietary enabling technology, TRANZ(TM) Enabler, converts a merchant’s existing dial-up TRANZ VeriFone credit-card terminal into a high-speed wireless terminal. It provides merchants with a faster and more cost efficient way to transact business. The wireless transaction takes 3 to 5 seconds verses 11 to 20 seconds with a dial-up service.

Going wireless means the merchant no longer needs a dedicated or shared telephone line to carry transaction traffic, thereby eliminating delays, busy signals and the cost to install or pay for monthly telephone service.

U.S. Wireless Data, Inc. has developed, tested and is now delivering compelling new proprietary products, programs and standards to the transaction processing and credit card industry which utilize Cellular Digital Packet Data (“CDPD”) wireless networks.

USWDA delivers the fastest and most cost-effective transaction processing solution to retail merchants in the United States today — wired or wireless. USWDA will generate recurring revenue from every transaction processed by merchants who utilize the company’s CDPD wireless technology.

The company’s strategy will be to deploy its technology through marketing and partnership agreements with major cellular phone companies, regional and community banks, select ISO’s and its own sales force.

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Diebold – Certicom Team

Certicom Corp., a leading provider of cryptographic security technologies, today announced a licensing agreement with Diebold, Incorporated, a global leader in card-based transaction systems, security and service solutions. Certicom will provide Diebold with advanced data security technologies, based on Certicom’s Elliptic Curve Cryptography (ECC).

Certicom’s technology will secure Diebold’s entire product portfolio, for the financial, education, security and healthcare industries. In addition to protecting privacy through secure data storage and transmission, Certicom’s technology provides authentication and non-repudiation capabilities, guaranteeing user identity and supplying proof of transaction which are important to secure electronic commerce applications.

“The security and speed of Certicom’s technology in a range of development tools is critical for our diversified line of products where size and efficiency yields the competitive edge and nothing but the highest strength cryptography will suffice,” stated John Ziegler, strategic alliance director. “Certicom’s cryptographic expertise and leading ECC implementations made them the obvious choice as our technology partner.”

“Diebold is taking smart card systems into exciting new application areas,” said Rick Dalmazzi, executive vice president, sales and marketing for Certicom. “There are many emerging automated services Certicom will help Diebold secure. Together, our technologies provide more options, greater convenience and cost-savings for professionals and consumers in the broad range of industries Diebold serves.”

About Diebold, Incorporated

Diebold, Incorporated, (NYSEDBD) headquartered in Canton, Ohio, is a global leader in providing card-based transaction systems, security and service solutions to the financial, education and healthcare industries. Founded in 1859, the company develops, manufactures, sells and services automated teller machines, campus systems, smart card systems, electronic and physical security equipment, automated medication dispensing systems, integrated systems solutions, software and supplies.

About Certicom

Certicom is a leading provider of cryptographic technologies for computing and communications companies. Vendors of electronic commerce and digital communications products are integrating and deploying Certicom’s technology across a wide range of operating environments and devices to build the strongest, most efficient security into software, smart card and wireless applications. As information security architects, Certicom’s teams of cryptographers, engineers and developers provide comprehensive OEM solutions, from advanced cryptographic implementations to consulting for systems integration and development support. Certicom’s cryptographic research and product development is based in Toronto, Canada, with sales and marketing operations in San Mateo, CA. Certicom shares are traded on the Toronto Stock Exchange under the symbol “CIC”.

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AAA Cheque Deal

AAA and American Express extended their long-standing partnership yesterday by signing a new five-year travelers cheque agreement. AAA is the world’s largest seller of American Express ‘Travelers Cheques’, with sales of more than $2 billion in 1997.  The first AAA-American Express Travelers Cheque agreement was signed in 1983.  Under terms of Wednesday’s agreement AmEx  will provide no-fee ‘American Express Travelers Cheques’ and ‘Cheques For Two’, fee-free encashment of AmEx ‘Travelers Cheques’ for AAA members in all currencies at all American Express-owned or operated foreign exchange offices outside of North America and establishment of a ‘Travelers Cheque Advisory Group’.  In addition, AAA members will not pay a fee to convert ‘Travelers Cheques’ into other foreign denomination travelers cheques.

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Small Contactless Readers

Gemplus introduced Wednesday the ‘Micro680’, a contactless smart card reader that can be integrated into devices such as ticketing dispensers, bus ticket validators, handheld card readers, card reloading terminals, and vending machines.  Smaller in length and width than a credit card, the ‘Micro680’ reader enables system providers to integrate contactless smart card readers into devices that require contactless reader technology, such as teleticketing, toll collection, access control and electronic purse.  The ‘Micro680’ reader will be available in April and will be priced at less than $200 for volume purchases.

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Deluxe — Bital

Deluxe Electronic Payment Systems signed an international licensing agreement with Bital of Mexico Wednesday.  Under the terms of the five-year agreement, Bital will license Deluxe’s EFT software and credit card processing and management software.  Bital will use Deluxe EFT software to drive and monitor its network of 2,500 ATMs, which it will expand to more than 3,000 by year’s end.

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EDS and AT&T Universal Execs Join Equifax

Equifax announced Tuesday it was accelerating its global strategy by expanding its full line of transaction processing solutions, worldwide.  Leading this global effort are industry veterans, Gerald A. Hines and Thomas R. Malin.

Equifax named Thomas R. Malin senior vice president, global development for card and retail operations.  He is responsible for driving the Equifax Card and Retail Solutions’ full line of services into non-U.S. markets through appropriate joint ventures and alliances.  A 20-year veteran of the financial services industry, Malin joined Equifax from Electronic Data Systems where he was executive vice president and general manager of its card processing business.

Gerald A. Hines was named senior vice president in charge of card operations and technology.  Hines has more than 27 years in the industry and comes to Equifax from AT&T Universal Card Services where he was chief operating officer.

“Jerry Hines and Tom Malin will use their expertise and knowledge to lead our international as well as domestic growth,” said Lee Kennedy, Equifax executive vice president and group executive, “which will continue to be significant in the coming years.”

Equifax is a global leader in providing information, processing, consulting and software solutions that facilitate and enhance buyer-seller transactions worldwide.  The company serves businesses in the banking, finance, retail, credit card, telecommunications/utilities and health care administration industries.  Equifax is changing the shape of global commerce through growth and innovation, driven by technology and people.  It operates globally in 17 countries with sales in 40 countries.  Founded in 1899 in Atlanta, Equifax today has 10,000 employees around the world.  Revenues for the 12 months ended December 31, 1997, were $1.4 billion.  Visit the company’s Internet web site at .

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NBS Gets Mondex Approval

NBS Technologies Inc.has received confirmation from Mondex International that the Impressions Series was issued a Mondex Type Approval Certificate on February 3, 1998. Combined with the proprietary NBS application software, a straightforward, over-the-counter, one-step solution is now available for issuers to personalize chip cards electronically while simultaneously printing personal details onto the customer’s card.

With this latest Mondex Type Approval, NBS has a complete range of desktop hardware and software solutions for issuing Mondex cards.

NBS is exhibiting its range of Javelin printers at Smart Card ’98 from February 17 through to February 19 at Olympia 2 in London, England. The range includes sophisticated printers for producing colour photo ID cards as well as a version suited to personalizing cards with monochrome text only.

The Impressions Series(TM) (Javelin) card printer range was launched last year and has a number of unique design features not normally available at this entry level. These include a liquid crystal display and an efficient case design to allow easy access for ribbon changes and servicing. The UK’s J300 model produces single-sided cards, while the J400 model offers a flip-over double sided option.

Ken Kivenko, NBS President and CEO, commented, “Since its launch, the Impression Series(TM) (Javelin), has established a significant presence in the market place and the ability now to personalize all types of smart cards – including Mondex – will ensure continued growth. This series complements other NBS card personalization hardware, including the Advantage 2000(TM) embosser and the ImageMaster(TM) thermal printer, which have already obtained Mondex Type Approval Certificates and are in use by smart card users around the globe.”

For a full product demonstration, please visit NBS on stand B13 at Smart Card ’98 at Olympia 2, London, UK, between February 17 and February 19, 1998.

NBS Technologies Inc. is a multinational company that designs, manufactures and markets an integrated line of plastic card, card issuance, identification and point-of-sale products, services and software. Customers, who cover a wide range of market segments and applications, include financial institutions, retailers, government agencies, and healthcare organizations. The Company is a Toronto-based public company that sells to customers in over 85 countries through facilities located in Canada, the United States and the United Kingdom.

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BUYPASS Signs Hannaford Bros.

BUYPASS Corporation announced today that it has entered an agreement with Hannaford Bros. Co. (NYSE: HRD), a l4l-store multi-regional food retailer and wholesaler. BUYPASS will provide host-to-host debit and electronic benefits transfer (EBT) processing services for Hannaford Bros. Co.

“We are excited about developing a new relationship with BUYPASS Corporation,” said Jim Bongiorno, Retail Systems Manager at Hannaford Bros., Co. “We were a BUYPASS customer but left in 1992 because of difficulty gaining access to a major regional debit network in the Northeast, where we have a large concentration of stores. Since that time, the issue has been resolved, and we are looking forward to working with BUYPASS again. We chose BUYPASS for its customer focus and expertise in providing processing services to the supermarket industry,” said Bongiorno.

“We are very pleased to have Hannaford Bros. Co. back as one of our top customers,” said Scott Plumblee, senior vice president for supermarket/major retail at BUYPASS Corporation. “They have a great presence and reputation in the supermarket industry that dates back 115 years. We are proud that they have selected us,” said Plumblee.

Hannaford Bros. Co., headquartered in Portland, Maine, is a multi-regional food retailer and wholesaler founded in 1883 by the Hannaford brothers. Hannaford employs 22,000 people and includes 141 stores, 4 distribution centers, and 20 wholesale customers. A publicly traded company with $3.2 billion in annual sales, Hannaford’s markets include: Albany, New York; Bangor, Maine; Burlington, Vermont; Charlotte, North Carolina; Lowell, Massachusetts; Manchester, New Hampshire; Norfolk, Virginia; Portland, Maine; Raleigh, North Carolina; Richmond, Virginia; Virginia Beach, Virginia; and Wilmington, North Carolina. BUYPASS Corporation, headquartered in Atlanta, Georgia, is a major third-party POS processor and debit transaction acquirer with annual transaction volume of over 1 billion. BUYPASS provides processing for 50 of the top 200 grocery store chains in the United States. One out of every ten debit POS transactions performed in the United States is processed by BUYPASS. BUYPASS also has electronic benefits transfer (EBT) programs in 26 states and provides gateway access to over 50 credit, debit and EBTgateways.

Electronic Payment Services, Inc. (EPS), a privately held company headquartered in Wilmington, Delaware, is a leading electronic funds transfer (EFT) processor in the United States, with approximately 2.3 billion transactions annually. EPS is the holding company for BUYPASS Corporation and MONEY ACCESS SERVICE INC.

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Bankruptcy Reform Impact

Ernst & Young released a report yesterday showing one fourth of Chapter 7 bankruptcy filers have enough income to repay at least one-third of their debts, while 10% of filers could pay all their debts. EY researchers also found that, had the ‘Bankruptcy Reform Act of 1998’ been in place in 1993, about 14% of Chapter 7 filers would have been required to file a repayment plan under Chapter 13. EY projects Chapter 7 filers forced into Chapter 13 could repay 63% of their unsecured, non-priority debt. The EY analysis is based on a study of 1,273 bankruptcy petitions filed in Boston in 1993.

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