Certified Merchant Services, Ltd. and its affiliates (CMS or the Company), together with the individual defendants, have entered into a settlement agreement with the FTC. As part of the agreement, an undisclosed amount was agreed to and will be paid to the FTC over an extended period of time. Jon Frankel, founder and majority shareholder, stated, "Although there has been no finding of guilt, we decided that in the best interests of our merchants and our Company, we would resolve this matter through a settlement. Now we can focus on growing and expanding our business again. We are also pleased to announce that Mary Dees has agreed to continue to lead the Company as General Manager on an ongoing basis. Mary's reputation and leadership skills have been instrumental in assisting the Company through this time. We are confident that she will continue to play a major role in our future."
   CMS has been operating under a federal court-appointed receivership since mid-February 2002. However, on September 16, 2002, CMS, Jon and Craig Frankel and the FTC jointly asked the Court to remove Garrett Vogel and the remainder of the receivership team. The Court agreed and ordered Mary Dees, President of creditranz.com and President-elect of the Electronic Transactions Association (ETA), to replace Garrett Vogel as sole receiver. Ms. Dees originally joined the receivership team as a consultant in early February when the FTC action commenced. In conjunction with the Order, Jon and Craig Frankel have been involved in the business since September 16, 2002.
   Ms. Dees welcomes her new role as she transitions from receiver to General Manager. "I am excited about the opportunity to be responsible for and to direct the efforts of one of the most FTC-compliant companies in our industry," Ms. Dees stated. "We have all worked very hard over the past several months to meet all of our compliance requirements with the highest degree of ethics and integrity. I accepted he opportunity because I believe that I can make a difference. I believe the future is bright for CMS, and I believe that CMS represents what our industry should embrace in terms of ethics, compliance and business practices. It was rewarding to know in September that as a result of the Company's efforts, the FTC and the Court were comfortable allowing the Company's supervision to be decreased to just one person. We are now pleased to have the case settled and behind us. I am proud to be able to continue to make a positive contribution for our merchants, employees and independent sales representatives and to have assisted in resolving this matter." Ms. Dees is also pleased that CMS will continue under Federal Court supervision and protection. Judge Paul Brown, US District Court for the Eastern District of Texas has been the presiding Judge since the beginning of this case. Judge Brown issued the Order on November 25, 2002, clarifying CMS' protection by the Court and that Order continues in full force and effect.
   CMS anticipates that its revenues in 2002 will be within 5% of the revenues reported in 2001. More importantly, the Company's EBITDA has steadily improved each month since June when the Company completed many of its process revisions, including the complete retraining of its independent sales force. The Court issued an order on November 25 restraining other companies and sales people from disparaging CMS and attempting to take its assets including salespeople, merchants and confidential data using the FTC action as an excuse. Armed with this and a proven track record over the past several months, independent sales representatives who left the Company earlier in the year are returning to do business with CMS.
   Plans are currently in place to grow the business again, and several strategic partners who can assist in this process have already been identified and interviewed. Jon Frankel commented, "Now that we have resolved our issues with the FTC, we expect to see more people express interest in our business, including the opportunity to invest in our future. Finding the right strategic partner is a priority, and we look forward to partnering with someone who shares our intentions to expand this business." After a cloudy episode in the beginning this year, the future is looking bright for CMS.