LAS VEGAS, NV, June 25, 2007 - Esprit Financial Group Inc. (ESPRIT) (EFGO.PK ) www.espritfinancialgroup.com as previously announced, Esprit's management team visited China in conjunction with International Express Payment Corp. (IEXPay) This trip was focussed on developing business opportunities available for Esprit through IEXPay, and was part of the due diligence process for the acquisition, as disclosed May 16, 2007.
The China trip identified a number of excellent business opportunities that will be pursued aggressively. As a result of the due diligence process, Esprit had the opportunity to fully explore and understand the corporate structure of IEXPay and the nature of the relationship between the two related companies founded by the same two principals, Robert Xia and Peter He.
Esprit has decided not to move forward with the acquisition of IEXPay, and instead, acquire it's sister Company Check 21 China, Inc. The Due diligence process revealed that the business pursuits of Check 21 China are more in-line with Esprit's current business focus and short-term strategic needs.
Check 21 China 's focus is on rolling out 'Check 21' services to its client base of Chinese banks, which it shares with IEXPay. This is a service that can be rolled out immediately, and begin delivering revenue in a relatively short time-frame. To date, a total of approximately 30 banks have expressed interest in 'Check 21' services
The 'Check 21' program delivers a much improved capability for these banks to clear U.S. denominated checks. 'Check 21' service is particularly attractive for international financial transactions paid by U.S. denominated checks, and shorten the time required to clear these check from a typical 30-45 days to 3 business days. Esprit feels that Check 21 China represents an opportunity to deliver revenue in a significantly shorter time-frame, with a scalable business model that is directly variable as the Companies continue to expand the customer base of participating banks.
Most Chinese banks handle U.S. denominated checks, whether payroll checks for U.S. citizens working in China, or for export related payments to international destinations. Importantly, U.S. dollars are commonly designated for most international transactions, regardless of the actual importing country. The level of interest expressed by Chinese banks approached to date has been overwhelmingly positive. They greatly value the ability to shorten the time frame for clearing by such a substantial margin as can be delivered with Check 21 services.
Esprit's decision not to proceed with the acquisition of IEXPay, is related to the nature of the business model. While Esprit is convinced that the business model merits investment, it will require too large a commitment of capital and operational resources for the Company at this time. IEXpay is based on developing a 'closed loop' stored value debit card program. A closed loop system can service customers within a network of participating financial institutions and merchants, versus an 'open loop' approach which allows customers to utilize the stored value cards at any merchant, but requires a proprietary service network wherein customers can load the cards with funds. As a closed loop system, it is vital to develop a large network of Banking institutions achieve the critical mass required to service a large consumer base. While progress achieved to date by IEXPay is very impressive, with approximately 10,000 customers signed to date, a significantly larger network of participating banks will be required before the system reaches the 'critical mass' needed to become cash flow positive.
In follow-up meetings with the two sister companies since returning from China, Esprit and Check 21 China have finalized terms of the acquisition, and expect to close the transaction within a week. WebCheck will be acquired in a stock and cash transaction. The stock issued will be placed in an escrow account, and delivered in stages as the business achieves a number of business milestones. This will see the issued share capital rise from 6.1 billion to nearly 8 billion shares. It is important to note that because this investment is in restricted stock, there will be no immediate impact on the current public float of Esprit stock, and will allow the Esprit to to preserve liquid assets to commit to expanding the sales and marketing efforts as well as operational capabilities of the AEFM ( Advanced Electronic Funds Management) and other divisions of the Company. The total commitment of restricted stock is based on anticipated development costs that will be incurred as the new subsidiary scales up operations on its way to becoming cash flow positive.
Check 21 China and Esprit have already scheduled a follow-up meeting with the Bank of Beijing on July 15th, to begin implementing the pilot program that has been previously announced. It is anticipated that Esprit will begin seeing revenue from this endeavor early in the 3rd quarter.
Robert Xia will join the AEFM division of Esprit as a business consultant, responsible for Asian market business development.
Garr Winters, CEO of Esprit, commented; "We are delighted to move forward with Check 21 China. We had excellent rapport with Robert and his colleagues, and certainly saw the tremendous opportunities that had been developed by the team. This provides Esprit with an entry into the Chinese market in a manner that delivers cash flow and tangible business results practically right out of the gate".
Esprit Financial Group, Inc. is currently featured at http://www.audiostocks.com. Additionally, a recent CEO interview by Wallst.net. can be reviewed at www.wallst.net/audio/audio.asp?ticker=EFGO&id=3421.
About Esprit Financial Group Inc.
Esprit Financial Group Inc. is a public company engaged in a diversified number of online financial services. These include:
PayDay Loans: A pioneer in the payday loan industry, the Company licenses comprehensive software solutions to industry participants, under the Cash Now banner at www.cashnow.org .
Forex: The Company's Forex Trading division offers an innovative low-cost Forex trading service at www.cashnow.com targeted to active day-traders.
Advanced Electronic Funds Management: This division offers a number of class leading financial services that facilitate a variety of Internet based international electronic funds transfer and cash management solutions.
Structured Debt Resolution: This division will offer streamlined, cost effective alternative services to facilitate the negotiation of debt settlement online.
Safe Harbor Statement
Information in this press release may contain 'forward-looking statements.' Statements describing objectives or goals or the Company's future plans are also forward-looking statements and are subject to risks and uncertainties, including the financial performance of the Company and market valuations of its stock, which could cause actual results to differ materially from those anticipated. Forward-looking statements in this news release are made pursuant to the 'Safe Harbor' provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, risks relating to the ability to close transactions being contemplated, risks related to sales, continued acceptance of Esprit Financial Group's products, increased levels of competition, technological changes, dependence on intellectual property rights and other risks detailed from time to time in Esprit Financial Group's periodic reports filed with the regulatory authorities.
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