News

PayStar reports $1.2 million second-quarter loss

September 17, 2002

LODI, Calif. -- Dogged by a fraud lawsuit and declining revenue, kiosk and ATM services provider PayStar Corp. (OTCBB:PYST) recorded a net loss of $1.2 million on revenue of $484,594 for the second quarter of fiscal year 2002, ending June 30, according to a financial report filed on Sept. 17.

During the second quarter of fiscal year 2001, the company lost $159,204 on revenue of $5.3 million. For the six months ending June 30, PayStar has lost $2.7 million on revenue of $1.5 million, compared to an $871,017 loss on revenue of $8.4 million in the same period during 2001.

The company, which has been sued for fraud and breach of contract by 100 investors in its ATM and payphone businesses (See story: PayStar accused of fraud in lawsuit), trimmed its expenses from $2.2 million in the second quarter of 2002 to $1.4 million this past quarter.

But that was not enough to overcome the dramatic loss in revenue, which was blamed in part on the company's continuing shift from payphone and cashless ATM services to its Virtual Global Network. That unit includes Internet kiosks and prepaid ATM-debit card services.

The company's Sept. 17 filing with the Securities and Exchange Commission (SEC) reveals the depth of the company's financial problems. Current liabilities currently exceed current assets by $9.9 million. Company officials said four steps are being taken to reverse the company's fortunes: seeking additional funding, changing PayStar's business model, reducing expenses, and decreasing human resources.

But the company warned in the report that, "there can be no assurances that management's efforts to restore the company to profitable operations will be successful."