International Card Establishment Recaps Progress in 200610 February 2007
International Card Establishment, Inc. (I.C.E) (OTC Bulletin Board: ICRD) today announced the following corporate developments:
The year 2006 was a breakout year for I.C.E. After several years of installing the appropriate systems and controls, we also adopted a new approach to our credit card processing and gift and rewards businesses, which enabled us to attain profitability in the third quarter 2006. Moreover, we believe the fourth quarter of 2006 will be profitable as well.
The following explains how we achieved profitability in the third quarter of 2006 and how we expect to grow and prosper in the future.
High Quality Merchant Accounts
I.C.E. instituted a policy of acquiring high-quality merchant accounts based on stringent underwriting criteria. We have made a deliberate choice of quality over quantity in deciding which merchant accounts to target. Experience has demonstrated that a higher-quality merchant account -- defined as stable business with low loss ratios -- is ideal for a company our size. Our objective is to ensure that our entire portfolio of merchant accounts is profitable, even though our top-line growth may be diminished.
Cost cutting and Restructuring Program
We completed a comprehensive cost cutting and restructuring program that significantly reduced our overall cost structure. We closed unprofitable sales offices and consolidated corporate operations in our Camarillo, California facility resulting in measurable overhead reductions. We also streamlined operations resulting in a headcount reduction. Further, executive management agreed to reductions in salaries and will be chiefly compensated on a performance basis. This last measure was instituted to make certain that management's interests are closely aligned to the interests of the company's shareholders.
As a result, I.C.E. should be able to grow our business from current revenue levels -- in excess of $10,000,000 per year -- up to three times that level of business, or $30,000,000 in revenues, with minimal incremental cost.
Organic Growth and Gift and Rewards
Part of our "makeover" meant a return to basics: we will grow revenues organically and will forgo merchant account portfolio acquisitions for the present. While larger companies in our space may be able to afford the long payback periods associated with growth by acquisition, this is simply not a viable option for I.C.E. We are keenly aware that the commoditization of credit card processing business -- where a merchant will switch from one credit card processor to another for minimal cost savings -- makes merchant account portfolio acquisitions an even riskier proposition.
One distinct advantage that we hold in the battle against commoditization is our proprietary gift and rewards program. Neos Merchant Solutions, our gift and rewards subsidiary has spent several years developing and perfecting a state of the art gift and rewards platform that offers a proprietary smart card that empowers merchants to create loyalty with its customers by rewarding them for their patronage. While many of our competitors offer a standardized "Gift" card product, we have the ability to provide our merchants with much more.
Our proprietary platform includes not only gift, but also a robust suite of rewards/loyalty applications and a comprehensive database of customer information and transaction reporting. By marketing both our credit card processing and gift and rewards programs, we strive to make our merchant accounts a great deal "stickier". Merchants are much less likely to switch their credit card processing business to a perceived lower cost provider if it means losing a gift and rewards program that is up and running. Our objective is to reduce the commoditization threat and makes our merchant account portfolio inherently more valuable.
Sale of GlobalTech Leasing, Reduction of Debt
When we originally acquired GlobalTech Leasing in 2003 our business model was substantially different than it is today. Back then we were geared for a high volume, merchant portfolio acquisition strategy that would have provided a significant flow of new accounts to our leasing subsidiary. In business, like in life, sometimes things change. As we transitioned away from a high volume risk oriented approach to a more qualitative tack, we could no longer justify the costs and capital required to maintain our leasing subsidiary. In addition, we believed that in order to improve margins at GlobalTech Leasing a multi-million dollar credit facility would be required to permit GlobalTech Leasing to establish and maintain a lease portfolio. Due to these factors and our objective of a clear focus on our core processing businesses, this unit no longer fit into our revised business model, and we sold GlobalTech Leasing.
The sale of this unit for $2,500,000 materially reduced our indebtedness by approximately $2.2 million and provided about $300,000 in cash. In addition, we maintained "favored nation" status with GlobalTech Leasing, which enables us to offer preferential leasing rates for point-of-sale terminals that we offer our merchants.
Looking towards the future, we have begun an aggressive recruiting drive to enroll sales professionals to represent us nationwide. In this initiative, we again will emphasize quality over quantity. We have developed a comprehensive recruiting and training program for new agents, including a result oriented compensation plan. We launched an aggressive advertising campaign to attract new agents. The campaign focuses on career oriented internet websites and we are pleased with the initial response and quality of potential candidates received to date.
I.C.E. intends to expand its agent base with a renewed focus on further penetration of the large and growing gift and rewards market. Assuming continued success in attracting and retaining productive new agents, I.C.E. should be well positioned to generate substantially higher revenues and earnings in the 2007 calendar year.
About I.C.E.
http://www.cardnetone.com
I.C.E. is a rapidly growing provider of diversified products and services to the electronic transaction processing industry. I.C.E. establishes merchant accounts for businesses that enable them to accept credit cards, debit cards and other forms of electronic payments; supplies point-of-sale systems; facilitates processing; and markets a proprietary "Smart Card"-based system that enables merchants to offer store-branded gift and loyalty cards.
Forward-Looking Statements
This press release may contain forward-looking statements that are subject to risks and uncertainties. Important factors which could cause actual results to differ materially from those in the forward-looking statements, include but are not limited to: the company's short operating history which makes it difficult to predict its future results of operations; the company's initial history of operating losses with possible future losses which could impede its ability to address the risks and difficulties encountered by companies in new and rapidly evolving markets; the company's future operating results could fluctuate which may cause volatility or a decline in the price of the company's stock; the possibility that the company may not be able to price its services above the overall cost causing its financial results to suffer; and other factors detailed in this press release and in future company filings with the Securities and Exchange Commission, at such time as the company is required to report its results of operations under the Securities Exchange Act of 1934, as amended.
Contact:
H. Wain Swapp
Chief Financial Officer, I.C.E.
800-905-6367, ext. 532
email: wswapp@neosmerchant.com
or
Investor Relations Contact:
PAN Consultants, Ltd.
Philippe Niemetz, toll-free: 800-477-7570
212-344-6464 email: p.niemetz@panconsultants.com
Source: prnewswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
Related Articles
|
