Cash Technologies Inc. managed a truly spectacular feat in 1999: It posted a negative return on equity of 8,160 percent.
L.A.'s worst performing public company in terms of ROE might well provide a cautionary tale for other companies looking to develop new technology and enter into Internet and e-commerce activities.
The five-year-old Los Angeles holding company provides coin-processing services and self-service coin-counting machines. It also leases non-bank ATM machines, processes banking, non-banking and Internet electronic commerce transactions and develops and markets transaction-processing software.
Cash Technologies has entered into a number of new partnerships recently, including a deal with RocketCash Corp., a Mountain View, Calif.-based company providing a service that allows users to make online purchases without credit cards.
Cash Technologies' software, still under development, will allow users to deposit cash and checks into its ATMs; those customers will then be able to log onto RocketCash's site to make e-commerce buys.
But Cash Technologies' rush into the e-commerce world is taking a toll on the company's bottom line. For the fiscal year ended May 31, 1999, the company reported a net loss of $5.7 million ($1.74 per diluted share), about double the net loss of $2.7 million ($1.60 per share) in fiscal 1998.
The 1999 loss was partially due to significant investments in developing new products, according to Chief Executive Bruce Korman. He added that the company's primary focus right now is developing and deploying EMMA (e-commerce message management architecture) technology, a software system that can interface with bank networks and non-bank networks, and the Internet. In the future, EMMA is expected to facilitate electronic bill payment, event ticketing and phone-card dispensing from the company's retail-based ATM machines.
Korman is optimistic about the products in development.
"If you visit an ATM, what can you get besides a $20 bill? It's been 30 years now, and they still do nothing more than give out $20 bills," he said. "Banks are typically a little slower to implement new technologies."
Cash Technologies currently has its machines in retail locations, like 7-Eleven markets, and plans to replace those machines with EMMA-outfitted ATMs beginning sometime next year.
The company's ongoing struggles have not been made any easier by the recent turbulence in the stock market, particularly in the tech sector, or by its switch this month from the Nasdaq to the American Stock Exchange. (Korman said the company made the jump because he was advised that Nasdaq would discontinue small-cap stocks.) Cash Technologies' stock dipped into single-digit territory on April 14, and last week continued its steady downward slide, closing at $7 on April 26, down from a high of $22.37 on Nasdaq on March 7.
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