JACKSONVILLE, Fla.,
March 18 /PRNewswire-FirstCall/ --
FNDS3000 Corp (OTC Bulletin Board: FDTC) (Frankfurt: "FT4," A0MWLG), a financial
transaction processing services company, currently introducing
prepaid card programs to the South African market, today announced
that Chief Executive Officer, John
Hancock, has released a letter to stockholders, in which he
reviews the strategic achievements and progress of the Company.
Dear Fellow FNDS3000 Corp Stockholders:
Thank you for your continuing support of FNDS3000 Corp. Today, I
would like to highlight a few of the Company achievements and brief
you on our current activities and growth opportunities as it
appears that 2010 will be a pivotal year for your Company. Over the
last year or so, our accomplishments, which included developing an
infrastructure, systems and new products did take time, but the
potential return of future rewards can be dramatically positive.
Our platform is solidly in place and will be the cornerstone of our
growth in 2010 and beyond.
CORPORATE HIGHLIGHTS
- In September 2008, we achieved
the distinction of being certified as a third party processing
company by MasterCard in South
Africa.
- In the first half of 2009, we established a corporate office in
South Africa and assembled our
infrastructure, through strategic staff additions, establishing
customer service operations and developing the local-market
required functionality of our system.
- In August 2009, we completed the
Pilot Test Phase, with the initial distribution of approximately
10,000 prepaid cards to corporate clients. During this phase, we
implemented further product enhancements, together with more
comprehensive customer service operations and advanced fraud
prevention protocols, all of which were essential in assuring that
the system was fit for purpose.
- In 2009, the Company implemented a mobile banking solution for
the South Africa/African
market.
- Our comprehensive test phases demonstrated stability and
validated the processes and systems that are required to handle the
higher volume of prepaid cards to be processed during the
Production Roll-Out. During these phases, we tested, developed and
enhanced our systems, processes, infrastructure and the operational
team. This process included extensive internal testing and
validation.
- Our sponsor bank was actively involved in the validation of our
procedures and our electronic funds transfer system was reviewed by
the staff of one of the top international auditing firms.
- In December 2009, we concluded
the Market Test Phase and commenced the Production Roll-Out of our
South African operations.
- These achievements did not raise any material problems which
would cause us to question our confidence in our business
model.
- Toward the end of the year, our distributors and corporate
clients encountered logistical and procedural delays in
distributing cards to cardholders. We found the process
significantly slower than expected. This impacted the speed and
rate of card activation. As a result, the Company refocused staff
on supporting and assisting distributors and corporate clients in
meeting this challenge.
CURRENT ACTIVITIES AND BUSINESS METRICS
CARDS DISTRIBUTED, ACTIVATION AND CORPORATE CLIENTS
The second quarter of fiscal 2010 began in December 2009 as we entered the full production
roll-out of our prepaid cards. As of January
2010, we have exceeded the level of 100,000 cards
distributed to corporate clients which was called for in a
financing covenant with our lead investor.
Our prepaid cards are distributed to corporate clients via the
distributor network. After the cards are delivered to distributors,
the next phase is that our distributors utilize internal processes
to support our corporate clients in rolling out cards to the
end-user cardholders. Distributors and corporate clients have
experienced delays in this final process. The onward transmission
to end-users has been a challenge. Approximately 10,000 cards have
been activated since inception and the activation speed and rate
has been much slower than anticipated. We are focusing our
corporate resources in supporting customers and distributors in
carrying out this task. We expect that the majority of distributed
cards will be activated over time.
Our customer base has steadily increased. In August 2009, we announced that we had executed
agreements with 11 corporate clients. As of today, our sponsor bank
has approved card programs for 39 corporate customers. We have
submitted another 15 corporate customer applications.
BREADTH OF CARD OFFERINGS
Our South African prepaid card programs initially envisioned a
payroll prepaid card program. Today, our offerings include, in
addition to payroll programs, micro-lending, debt rescheduling and
management programs, commission and gratuity cards. Our system is
capable of meeting the current mobile banking needs of our
customers and can be further developed to provide for anticipated
requirements. More recently, the Company has piloted card programs
with seven established micro lenders, for whom the opportunity to
lend small sums on a card rather than via cash provides significant
security and cost advantages.
In addition, we have commenced implementation of unbranded
"closed loop" cards into our product offerings. A closed loop card
is a non branded card that can be used only in pre-defined group of
stores or within communities which install their own acquiring
infrastructure. We see a significant opportunity in this segment
for a higher volume of cards. The sources of revenue and margins of
closed loop card programs are different in comparison to our
branded offerings. We are working with several South African
retailers to potentially roll-out closed loop card programs by
mid-2010.
CARD LOAD / SYSTEM PERFORMANCE
Since August 2009 through
February 28, 2010, our corporate
customers have loaded approximately 25
million rands (over US $3
million at current exchange rates) onto our prepaid
cards.
Our system has performed as expected through February 28, 2010 and the incidence of fraud is
well within expected limits.
REVENUE AND MARGINS
In the first fiscal quarter of 2010, we realized revenues of
$77,695. While a modest figure, this
is an important milestone in the development of our Company.
Revenue is only generated when cards are activated and hence,
the speed and rate of the activation of our prepaid cards is our
most critical corporate priority in the evolution of our business.
In addition to our corporate clients, our distributors have
experienced a significant learning curve in the support required
for the activation process. Our future revenue growth depends on
card activation and we have identified additional resources to
resolve this issue expeditiously. The Company refocused staff on
supporting and assisting distributors and corporate clients in
meeting this challenge.
During the first fiscal half of 2010, revenue generated per card
exceeded our earlier expectations of $5 per card per month. Costs were broadly in line
with expectation. Margins per card, being the difference between
revenue and cost, were not forecasted specifically. However, at
this early stage of customer card utilization, we believe margin
trends are encouraging. A definitive margin ratio will emerge from
the specific mix of actual future card profiles as more cards are
activated.
GROWTH OPPORTUNITIES
The marketplace for our prepaid card programs remains as
attractive today as it was at the inception of the Company. The
population of South Africa is
around 50 million people and it is reported to be growing
rapidly.
MARKET PROSPECT
The Company selected South
Africa as the initial location to build its business, and we
have seen no reason to change our view of the opportunity. The
ability to customize programs that utilize our cards' extensive
functionality, and the flexibility of our platform, is in our
opinion, a competitive strength and we currently are not aware of
significant competitors in the South African market with the same
functionalities and product offerings. Though at an early stage, we
are pleased with the customer reaction to the functions and
benefits of our card.
We continue to identify further opportunities, for example, we
have in process an additional 15 micro lending corporate
applications. Although there is no guarantee that these
opportunities will generate revenue, we view this as a particularly
attractive growth sector.
Management cannot be specific on its aspirations at this early
stage, but given the experiences so far, we see the South African
market as a center of excellence, with a sophisticated banking
system, which we feel provides a solid opportunity for growth. We
expect to add a significant number of cards for the remainder of
2010 and we will report as new milestones are achieved as the
volume of distributed and activated cards increases.
FINANCING
To date, the Company has raised approximately $11 million in capital in an extraordinary credit
environment. This investment has been used to establish a solid
corporate base while quickly building a presence in the South
African market.
While delays in testing have negatively affected our cash flow
in our early stages of development, the enhancements to our system
and offerings have undoubtedly strengthened our position. There is
a need to secure additional funds to cover operational expenses due
to delays in launching the production roll-out in the latter half
of 2009, as noted above, as we work towards positive cash flow.
Whatever financing proposals emerge, we will require to obtain
consent from Sherington Holdings, LLC. We cannot today provide any
guarantee that we will successfully close such financing or that
such financing, if closed, will be on reasonable terms.
SUMMARY
FNDS3000 Corp is now in production roll-out, the most exciting
phase of a company start up, and I feel privileged to lead the
Company at this time. A total investment of approximately
$11 million has financed the
identification and entry into an attractive market place. This has
included licensing and customization of a U.S. software platform,
extensive IT development, setting up a solid corporate center in
South Africa, recruitment of
experienced senior executives in relevant disciplines such as the
card industry, IT, fraud prevention, and customer service. We
have obtained the support of a bank, certification of one of the
top international card brands, regulatory approval and a network of
distributors who have delivered contracted customers.
We have a major challenge, and it is not to be underestimated.
The problem is one of logistics; that the extent of the effort
involved in moving the 100,000 plus cards purchased by our
corporate clients into the hands of their cardholders has been a
disappointment. Our clients bought the cards because they
have a need to transfer funds efficiently to individuals, and thus
we know they are motivated to overcome the problems. We are
working increasingly closely with them and providing additional
support. I have redirected corporate effort to complete this
roll out. Our currently contracted customers represent a
significant opportunity and I am confident that we can
provide the continuing support that will take on this challenge .
In the meantime, we will seek additional investment while we fully
execute these plans.
Sincerely,
John Hancock
Chief Executive Officer
FNDS3000 Corp
About FNDS3000 Corp: FNDS3000 Corp (OTC Bulletin Board:
FDTC) (Frankfurt: "FT4," A0MWLG)
is a financial transaction processing service company. Since its
inception, its focus has been on the development and implementation
of a variety of prepaid card programs outside the United States, including services to
individuals who lack access to conventional banking services.
FNDS3000 meets a vital need of companies that have financial
dealings with such individuals by offering prepaid cards that can
be tailored to the differing requirements of each customer.
FNDS3000 intends to provide these services in both developed and
underdeveloped nations through a proven U.S. processing platform
that has been designed for international and cross border
capability. Many of these FNDS3000 products carry worldwide brand
marks and can be used anywhere that accepts these brands. Programs
that can be supported include payroll, insurance, medical aid, gift
cards, prepaid cellular charges and small-scale international
transfers of funds.
Forward Looking Statements
Matters discussed in this press release contain forward looking
statements. Investors are cautioned that such forward looking
statements involve risk and uncertainties, which could
significantly impact the actual results, performance, or
achievements of the Company. Such risks and uncertainties include,
but are not limited to, the potential loss of our relationships
with each of the parties that sponsor our cards and banks that
manufacture, issue, and own the cards; the loss of our service
providers; security breaches of our electronic information; the
inability to raise sufficient capital to fund its operations; and
other risks as may be detailed from time to time in the Company's
periodic reports filed with the Securities and Exchange Commission.
The Company assumes no obligation to publicly update or revise its
forward looking statements even if experience or future events make
it clear that any of the projected results expressed or implied
herein will not be realized.
Contact:
Joe McGuire
Chief Financial Officer
FNDS3000 Corp
904-273-2702
jmcguire@fnds3000.com
www.FNDS3000.com
SOURCE FNDS3000 Corp