By the year 2000, two-thirds of American households will have a debit card. Debit cards are expected to rival cash and checks as a form of payment. With the debit card, you are using your own money, not the issuer's money.
CLCK is through it's partnership with FiScrip stands to make a killing off of the use of debit cards for things like food stamps.
But Columbia Capital also offers a full range of electronic document management, credit and debit card processing services to many banks who prefer to outsource this taxing paperwork. I took this from the 10KSB:
The Company has entered into multi-year agreements with most of its
customers. For the year ended December 31, 1997, BestBank of Colorado
("BestBank"), an unaffiliated third party which had a preexisting business
relationship with Messrs, Baetz and Gallant, accounted for 30%, Security State
Bank ("SSB"), a former affiliate of FICI, accounted for 27% and Pride Refining
Inc., an unaffiliated third party, accounted for 16%, of 1997 gross revenues.
The loss of any of these three customers could have a material adverse effect
upon the business of the Company. Agreements between the Company and its
customers provide that the Company will perform data processing in order to
provide to its customers computer programming and other services in connection
with the Company's programs with MasterCard International, Inc. ("MasterCard"), Visa U.S.A., Inc. ("VISA") and private label credit card operations. These agreements terminate at various times during the period from May, 1998 through July 31, 2005, but automatically renew for an unlimited number of successive years, unless notice of termination is given by either party no less then 180 days prior to a designated termination date.
During the year ended December 31, 1997, the Company's agreement with Clark Refining, Inc. ("Clark"), an unaffiliated third party, expired and has not been renewed. For the fiscal years ended December 31, 1996 and 1997 the revenue
derived by the Company from Clark was approximately $1,335,914 or 32% and $530,224 or 11%, respectively. Further, SSB has been acquired since the beginning of this fiscal year by a company that has its own data processing
operations. Management of the Company anticipates that the Company will retain SSB's credit card and certain other processing business. However, no assurance to this effect can be given, but management anticipates a loss of a portion of the business of SSB, which loss is estimated by management to amount to approximately $500,000 in annual revenue for fiscal year 1998. However, no assurance can be given to this effect. Furthermore, revenues from Pride
Refining, Inc. ("Pride"), were $715,500 for the twelve months ended December 31, 1997 as compared to $804,000 for the twelve months ended December 31, 1996. This represented a decrease of 11% during 1997. This revenue decrease was due to a decision of the management of Pride to take their computer processing activities in-house. This removal of processing business from the Company to Pride is being converted in stages and should be completed by the summer of 1999. Due to the expected increase in revenues from the Company's credit card operations and bank processing, the loss of the Pride revenue is not anticipated to have a material adverse effect on total revenue for fiscal year 1998. However, no assurance to this effect can be given. Item 6 - Management's Discussion and Analysis or Plan of Operations - Results of Operations for Years Ended December 31, 1997 and December 31, 1996."
Agreements with BestBank and Century Financial Group, Inc.. On October 1, 1997, the Company entered into a master agreement with BestBank (the "Master Agreement") for processing and services for its customers with which BestBank has entered in contractual agreements. BestBank is unaffiliated with the Company or its affiliates.
BestBank is a Colorado state-chartered bank and operates primarily as a provider of credit card and debit card programs. The primary contractor to BestBank for such programs is Century, an affiliate of Messrs. Baetz and Gallant, which handles such programs on a turn-key basis. BestBank oversees Century's operations to monitor Century's compliance with all federal and state
laws and regulations. As a small community bank, BestBank competes in the credit and debit card arena by targeting niche markets that have been overlooked by major institutions. Management of the Company believes that a majority of BestBank's income is derived from the Century-administered credit and debit card programs.
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Century offers turn-key solutions in the credit and debit card
industries for small banks wishing to enter this field. Century has developed
credit card programs for BestBank, Berthoud National Bank and First Premier
Bank. For most small banks, the cost of starting up a credit card program may be
prohibitive. The costs of development of such a program, the systems staffing
and marketing may take more capital than such small banks can prudently invest.
Century, can assume risks that would not be reasonable and prudent for a small
bank. Century provides the marketing (directly or through related and unrelated
third parties), customer service, credit underwriting dispute resolution,
collections (through its affiliate, Berwyn Holdings, Inc. ["Berwyn"]) and data
processing through the Company. In the event that the account becomes
delinquent, Century purchases the receivable from the bank at par.
Because the Master Agreement provides BestBank with fixed cost pricing
for services provided by the Company for credit and debit cards and merchant
processing, BestBank is able to market its programs and services to other
non-issuing entities. BestBank initiates new programs for card issuers while the
Company obtains the processing of these accounts through the marketing efforts
of BestBank. It is anticipated by management of the Company that as BestBank
adds new customers or new programs for existing customers, the Company will be
able to expand its own business operations. However, no assurance to this effect
can be given. As of February 28, 1998, the number of credit card accounts
serviced by the Company is 417,816, of which 397,504 are derived by the Company
pursuant to the Master Agreement with BestBank. BestBank has approximately
130,000 additional credit card accounts which are currently committed to a
competitor of the Company for processing. BestBank, has agreed, in principle, to
begin conversion of these accounts over to the Company as soon as practicable.
However, no assurance can be given that such accounts will be converted to the
Company. See "Description of Business-Sales and Marketing."
In October, 1997, Century entered into an agreement with BestBank to
service a new program for the introduction of debit cards, commencing on April
1, 1998. Berwyn is in the process of setting up the VISA debit card program for
BestBank for this new program. Through the Company's Master Agreement with
BestBank, the Company will process and service this debit card program. This
program will be marketed by Financial Management Services, Inc. ("FMS"), an
unaffiliated third party. The debit cards are to be introduced through the
national chain of check cashing retail outlets, Check Cashing Store, Inc.
("CCSI") owned by FMS. FMS is currently testing this program and expects to
market this program throughout the country over the next 12 months. The delivery
of the debit card product is expected to be completed by August, 1998 in over
3,500 stores in the United States. However, no assurance to this effect can be given.
Regards, Jeff
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