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E-phone To Focus On Electronic Payments

Loss In 1st Half Reflects High Costs of Phone Card Business

Auckland, December 15, 2000 – Electronic payments company E-phone today cited high costs and an intensely competitive environment as the reasons for exiting the loss-making prepaid telephone card business. It will now focus on servicing phone companies, utility clients and other corporates by wholesaling products based on its proprietary and exclusive payment technologies.

The company reported a loss of $3, 014,838 for the six months ended 30 September. The half-year result, the company’s first since it began trading as E-Phone, includes goodwill amortisation costs of $131,780.

E-Phone CEO Bob Barraket says the primary contributors to the loss were the significant advertising, marketing and promotional costs in building the brand, staffing expenses and telephony charges required to service the phone card business, which the company embarked upon in March and sold last month to competitor Net Tel Communications.

The half-year loss includes all costs and expenses for research and development, licensing and market development for its own proprietary PATLOC Internet terminal technologies and AirCA$H, for which it has successfully concluded an exclusive Asia-Pacific wide licensing agreement. This exciting development will be the mainstay of the company’s ongoing business. The AirCA$H system is currently in use nationally in the United States by leading retailers including the Wal-Mart chain.

“The New Zealand prepaid telephone card market became too heavily contested and too fragmented to justify our continuation,” he says. “While we had succeeded in growing our revenues and market share substantially since we commenced operations, doing so required considerable financial and management cost. It was the Board’s view that the company’s intellectual capital and funds would be better deployed on PATLOC and AirCA$H, where our costs are lower and the opportunities for growth internationally are greater.

“The E-Phone PATLOC Internet terminal software and the AirCA$H products have major and immediate applications in the Asian markets,” says Barraket. “A number of very promising new business contacts are in place, and field trials are tracking well. However, because phone card-related costs have continued into the second half, we do not envisage a return to full profitability during the current financial year.”

E-Phone continues to provide tailor made solutions for corporate and commercial clients based on PATLOC and AirCA$H technologies in accordance with the company’s core business objectives.

Subject to shareholders’ approval, E-Phone will soon change its name to EPH (electronic payment holdings) Global Ltd, more closely identifying the business direction of the company.

E-Phone’s AirCA$H products enable customers to initiate or recharge pre-pay cards at EFTPOS point of sale terminals. Customers key in the amount they wish to buy or credit to a new or existing card or account, paying either in cash or by debiting their bank account through EFTPOS. That value is recorded on to their pre-pay account and is available for immediate use.

E-Phone’s PATLOC terminal management system provides pre-paid access to Internet terminals in public environments internationally, managed from Network Operations Centres in Auckland and Sydney via proprietary access management software running multi-currency translation, PIN generation, service accounting, electronic payment handling and ‘impulse-buy’ micro-transaction processing.

Ends

About E-Phone
E-Phone commenced business in August 1998 to successfully develop and operate a networked and electronically managed system of public access computer terminals and to maximise the utilisation of these terminals by value added services.
E-Phone believes that significant synergies and competitive advantages are achieved with the establishment of a branded international network of Internet terminals. The network will provide the potential for high margin revenue generation, as well as incremental value added services such as transaction revenues. Alliances with Advantage and Cadmus Technology in the AirCA$H-on-EFTPOS market add another transaction revenue service to the E-Phone product set.

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