UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended March 31, 1998
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-15245
ELECTRONIC CLEARING HOUSE, INC.
(Exact name of registrant as specified in its charter)
Nevada 93-0946274
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
28001 Dorothy Drive,
Agoura Hills, California 91301
(Address of principal executive offices)
Telephone Number (818) 706-8999
www.echo-inc.com
(Registrant's telephone number, including area code; web site address)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
As of April 22, 1998, there were 14,976,541 shares of the Registrant's
Common Stock outstanding.
ELECTRONIC CLEARING HOUSE, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheet 3
March 31, 1998 and September 30, 1997
Consolidated Statement of Operations 4
Three months and six months ended
March 31, 1998 and 1997
Consolidated Statement of Cash Flows 5
Six months ended March 31, 1998 and 1997
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
ELECTRONIC CLEARING HOUSE, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
ASSETS
<CAPTION>
March 31, September 30,
1998 1997
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . $ 693,000$ 772,000
Restricted cash. . . . . . . . . . . . . . . . 464,000 323,000
Accounts receivable less allowance of
$1,235,000 and $1,025,000 . . . . . . . . . .1,997,000 1,129,000
Inventory less allowance of
$106,000 and $70,000. . . . . . . . . . . . .1,198,000 749,000
Prepaid expenses and other assets. . . . . . . 29,000 23,000
Notes receivable from stockholders and
related parties less allowance of $148,000. . 87,000 51,000
.Total current assets . . . . . . . . . 4,468,000 3,047,000
Noncurrent assets:
Long term receivables. . . . . . . . . . . . . 321,000 373,000
Property and equipment, net .. . . . . . . . .1,577,000 1,570,000
Real estate held for investment, net . . . . . 252,000 252,000
Other assets, net. . . . . . . . . . . . . . . 826,000 842,000
. . . . . . . . . . . . . . . . . . . .$7,444,000 $6,084,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt . . . . . . . . .$ 128,000 $ 150,000
Accounts payable . . . . . . . . . . . . . . . 768,000 112,000
Accrued expenses . . . . . . . . . . . . . . . 982,000 731,000
.Total current liabilities. . . . . . .1,878,000 993,000
Long-term debt . . . . . . . . . . . . . . . . . 643,000 681,000
.Total liabilities. . . . . . . . . . . 2,521,000 1,674,000
Stockholders' equity:
Convertible preferred stock, $.01 par value,
5,000,000 shares authorized:
Series "H", 23,511 shares issued and outstanding:
Series "K", 325,000 and 375,000 shares
issued and outstanding . . . . . . . . . . . 3,000 4,000
Series "L", 168,000 and 172,000 shares
issued and outstanding . . . . . . . . . . . 2,000 2,000
Common stock, $.01 par value, 26,000,000
authorized:
14,976,541 and 14,600,541 shares issued;
14,970,300 and 14,594,300
shares outstanding. . . . . . . . . . . . . . 150,000 146,000
Additional paid-in capital . . . . . . . . . .14,062,000 13,865,000
Accumulated deficit. . . . . . . . . . . . . . (9,294,000) (9,607,000)
.Total stockholders' equity . . . . . . 4,923,000 4,410,000
. . . . . . . . . . . . . . . . . . . .$7,444,000 $6,084,000
See accompanying notes to consolidated financial statements.
</TABLE>
ELECTRONIC CLEARING HOUSE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Six Months
Ended March 31, Ended March 31,
1998 1997 1998 1997
(Unaudited) (Unaudited)
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Revenues:
Bankcard processing revenue. . . . . . .$2,638 $3,013 $5,290 $5,871
Bankcard transactions fees . . . . . . .1,566 1,050 3,012 2,070
Terminal sales and lease revenue . . . . 920 634 992 787
Check guarantee fees . . . . . . . . . . 15 20 33 46
Research and development . . . . . . . . 49 85 73 115
5,188 4,802 9,400 8,889
Costs and expenses:
Bankcard processing and
transactions expense. . . . . . . . . .3,201 3,048 6,180 5,931
Cost of terminals sold and leased . . . 567 446 688 599
Check guarantee . . . . . . . . . . . . 5 13 12 23
Customer service . . . . . . . . . . . . 91 100 189 204
Selling. . . . . . . . . . . . . . . . . 10 6 16 13
General and administrative . . . . . . . 958 826 1,785 1,551
Research and development . . . . . . . . 99 105 204 195
. . . . . . . . . 4,931 4,544 9,074 8,516
Income from operations . . . . . 257 258 326 373
Interest income. . . . . . . . . . . . . . 22 16 43 29
Interest expense . . . . . . . . . . . . . (27) (76) (54) (141)
Loss reserve for notes receivable. . . . . (11) (23)
Income before income taxes . . . 252 187 315 238
Provision for income taxes . . . . . . . . (1) (1) (2) (2)
Net income . . . . . . . . . . $ 251 $ 186 $ 313 $ 236
Earnings per share - Basic . . .$ .017 $ .015 $ .021 $ .019
Earnings per share - Diluted . .$ .012 $ .010 $ .015 $ .013
See accompanying notes to consolidated financial statements.
</TABLE>
ELECTRONIC CLEARING HOUSE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>. . . . . . . . . . . . . . . . .
Six Months
Ended March 31,
1998 1997
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . .313,000 236,000
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation . . . . . . . . . . . . . . . . . .116,000 93,000
Amortization . . . . . . . . . . . . . . . . . . 51,000 -
Provision for losses on accounts
and notes receivable. . . . . . . . . . . . . .210,000 212,000
Provision for obsolete inventory . . . . . . . . 36,000 12,000
Changes in assets and liabilities:
Restricted cash. . . . . . . . . . . . . . . . .(141,000) (52,000)
Accounts receivable. . . . . . . . . . . . . . .(1,026,000)(793,000)
Inventory . . . . . . . . . . . . . . . . . . .(485,000) (514,000)
Prepaid expenses and other current assets. . . . (6,000) 25,000
Other assets, net . . . . . . . . . . . . . . .(35,000) (128,000)
Accounts payable . . . . . . . . . . . . . . . .656,000 330,000
Accrued expenses . . . . . . . . . . . . . . . . 251,000 318,000
Net cash used in operating activities. . . . . . (60,000) (261,000)
Cash flows from investing activities:
Purchase of equipment. . . . . . . . . . . . . . (97,000) (69,000)
Net cash used in investing activities. . . . . . (97,000) (69,000)
Cash flows from financing activities:
Increase in notes receivable from stockholders
and related parties . . . . . . . . . . . . . .(36,000) -
Proceeds from issuance of notes payable. . . . . - 160,000
Repayment of notes payable . . . . . . . . . . .(86,000) (80,000)
Proceeds from issuance of preferred stock . . .200,000 -
Common stock warrants exercised. . . . . . . . . - 122,000
Proceeds from exercise of stock options. . . . . - 59,000
Net cash provided by financing activities. . . . 78,000 261,000
Net (decrease) in cash . . . . . . . . . . . . . . .(79,000) (69,000)
Cash and cash equivalents at beginning of period . . 772,000 172,000
Cash and cash equivalents at end of period . . . . .$ 693,000 $ 103,000
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
ELECTRONIC CLEARING HOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Basis of presentation:
The accompanying consolidated financial statements as of March 31, 1998,
and for the three and six month periods then ended, are unaudited and reflect
all adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the financial
position and the results of operations for the interim periods. The consolidated
financial statements herein should be read in conjunction with the consolidated
financial statements and notes thereto, together with management's discussion
and analysis of financial condition and results of operations, contained in the
Company's Annual Report to Stockholders incorporated by reference in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1997. The result of operations for the three and six months ended March 31,
1998 are not necessarily indicative of the likely results for the entire fiscal
year ending September 30, 1998.
NOTE 2 - Earnings per share:
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 - Earnings per Share (SFAS 128). SFAS
128 requires companies with complex capital structures that have publicly held
common stock or common stock equivalents to present both basic and diluted
earnings per share (EPS) on the face of the income statement. The presentation
of basic EPS replaces the presentation of primary EPS previously required by
Accounting Principles Board Opinion No. 15 (APB 15). Basic EPS is calculated as
income available to common shareholders divided by the weighted average number
of shares outstanding during the period. Diluted EPS (previously referred to as
fully diluted EPS) is calculated using the "if converted" method of convertible
securities and the treasury stock method for options and warrants as prescribed
by APB 15. The Company has adopted the provisions of this statement in the
quarter ended March 31, 1998. Adoption of this statement did not have a
material effect on earnings per share.
Earnings per share for the three month and six month periods ended March
31, 1998 and 1997 are calculated based on the following number of weighted
average shares:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic 14,976,541 12,623,556 14,883,838 12,192,290
Diluted 21,503,760 19,401,471 21,429,585 18,877,435
</TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
When used in the Management's Discussion and Analysis of Financial Condition
and Results of Operations or elsewhere in this document, the word "believes",
"anticipates", "contemplates", and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from those projected. Those risks and uncertainties include changes in laws
and regulations affecting the Company's primary lines of business. The
Company undertakes no obligation to publicly release the results of any
revisions to those forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Result of Operations
Three Months Ended March 31, 1998 and 1997
Revenues. Electronic Clearing House, Inc. recorded a net income of $251,000
for the second quarter of fiscal year 1998 as compared to a net income of
$186,000 in the same fiscal quarter last year, a 34.9% increase. Overall
revenue increased 8.0% over the same period in the prior year. The increase
reflected revenue growth of 3.5% in bankcard processing and transactions
revenue and a 45.1% increase in terminal sales and lease revenue over the same
period in the prior fiscal year.
The increase in processing and transaction revenue is not indicative of the
Company's actual growth rate but reflects the net effect of two primary
factors, increased security monitoring and the closing of seven major merchant
accounts. In 1997, ECHO developed the ECHODETECT program, a highly
sophisticated security monitoring system that has allowed ECHO to identify and
deal with a problem merchant much sooner than was possible in prior years.
This capability has resulted in several decisions to terminate or limit a
merchant's processing volume in order to maintain an appropriate risk/reward
relationship. In addition to the ECHODETECT system, over the past year, seven
large volume merchants, five of which were inter-related in terms of their
marketing activities, have chosen to cease operations. Together, this group
of seven merchants averaged over nine million dollars per month in processing
activity. Despite their departure, ECHO has replaced the lost volume through
its marketing and sales activities. Allowing for the departure of these seven
merchants, the increase in processing volume would have been 15% rather than
3.5%. In addition to these factors, the increase in bankcard processing
revenue and transaction revenue is also due to the modification in the
Company's pricing policy with reference to monthly fees and the increased
transaction revenue generated from dealers associated with a major equipment
rental customer. As of April 1998, the Company processed for over 8,000
active retail merchant accounts and approximately 9,000 equipment rental
dealers located across the country.
The Company's expanding merchant base and profitability is primarily
attributable to: (i) the direct response to the Company's Internet Home Page,
customer referral, and new sales offices for the Company, which account for
approximately 45% of the Company's merchant growth; (ii) the effective sales
efforts of several independent processing-related sales organizations that
presently account for about 50% of the Company's new merchant relationships;
(iii) the referral from the Company's two new primary banks; and (iv) the
growing number of installed equipment rental dealers. In addition to its own
sales efforts in the greater Los Angeles area, the Company has negotiated to
open direct sales offices in the following areas: Utah, Minnesota, Missouri,
Pennsylvania and New Jersey. Establishment of these offices were deemed
necessary to 1) effectively honor the new merchant commitments to ECHO's new
processing banks and 2) to initiate a national sales network to distribute
ECHO services and products. Compensation to the sales office is primarily
commission-based and little, if any, direct sales expense shall be realized as
a result. Additional offices are under consideration.
A new feature, the ECHOLINK service, has been added to the Company's Internet
suite of products and is in beta testing with approximately thirty merchants.
The ECHOLINK service allows a merchant to securely review all of his historic
processing data over the Internet. A capability of the ECHOLINK program that
appears to have significant value to the merchant is next-day knowledge of
chargeback activity. A chargeback is a reversal of a sales transaction
initiated by the cardholder through the card issuing bank. Normally, banks
advise merchants of chargebacks by mail and, since both Visa and MasterCard
allow a limited number of days for a merchant to refute a chargeback, next-day
access to such activity is a significant advantage to a merchant. The ECHOLINK
program also provides a merchant with a full and immediate history of all
debit and credit transactions for any credit card holder that submits a
chargeback. This allows the merchant to quickly determine if they have
already credited a particular customer and, if they have, reverse the
chargeback. The Company's ECHOLINK service thereby 1) eliminates a merchant's
need to spend excessive time investigating a chargeback and looking for source
documents; 2) stops inadvertent double credits from occurring; (3) reduces the
amount of mail and paperwork normally associated with chargebacks; and 4)
saves considerable time in responding to chargeback activity.
After the completion of the beta program, presently scheduled for May 30,
1998, the Company intends to charge a monthly access fee for its ECHOLINK
service and a small transaction fee for each transaction stored in the
ECHOLINK database. Access and retrieval by merchants of their specific data
will be unlimited. Based upon the growing functionality of the Company's
Internet suite of products with features such as the ECHOLINK service, the
Company anticipates additional growth in merchant volume when the ECHOLINK
service is officially released to all merchants.
The ECHONLINE system, one of the Company's Internet-related products, allows
fast credit card authorization and deposit using the Internet as the delivery
channel. The Company has offered direct, secure Internet credit card
authorization and settlement services since January 1997, and believes it was
one of the first processors to accept transactions over the Internet.
Approximately 40 credit card Internet Service Providers have certified to
process through the ECHONLINE system. The Company is presently designing
additional features for its Internet-related service that will further
distinguish the Company as a leader in secure Internet-based processing.
These services are anticipated to include fulfillment tracking, merchant/mall
hosting services, and membership-based access systems. The Company believes
these services, combined with its existing seven-day-a-week Customer Support
capability, positions it well to serve the growing Internet marketplace.
In February 1998, the Company announced its release of the ECHOTEL system, a
low-cost processing solution for small volume merchants and/or home-based
businesses who wish to accept credit cards. The ECHOTEL system allows a
common touchtone telephone to be used as an entry device, eliminating the
merchant's need to purchase higher cost point-of-sale processing equipment.
The ECHOTEL program is presently being marketed in four methods: 1) through
home business seminars; 2) in a telemarketing campaign; 3) as an in-box flyer
with several retail software products; and 4) through direct mail to
franchises and multi-level marketing organizations.
The market segment of home-based merchants has tens of thousands of members
and is one of the fastest growing market segments in today's merchant
marketplace. The Company intends to continue to market to this niche merchant
base and in so doing: 1) secure significant application fee income at the
initiation of each new ECHOTEL relationship; 2) establish a positive
relationship with thousands of small merchants that may, in a percentage of
cases, turn into future point-of-sale equipment sales and higher processing
revenues; 3) establish an annual renewal fee income (previously not a norm in
this industry); and 4) promote ECHO as a credit card processor who has
designed and enabled several cost-effective data entry methods for merchants
to utilize as they grow.
Revenue related to terminal sales is recognized when the equipment is shipped.
Terminal sales and lease revenue for the three months ended March 31, 1998
were $920,000 which represented a 45.1% increase over the same fiscal quarter
last year. The increase reflected the delivery of approximately 1,500 systems
to a national rental organization in the current fiscal quarter versus 700
systems in the same fiscal quarter last year. Another 1,600 systems are
scheduled to be delivered in the third quarter of fiscal 1998. The systems
are actively being installed in dealer locations by the national rental
organization and a majority of the new systems are expected to be operational
by June 1, 1998, when the high volume summer rental season arrives. The
Company has reviewed and, as necessary, upgraded its data center processing
systems to assure that the added transaction volume from the new systems can
be handled with confidence.
Research and development revenue decreased 42.3% for the current fiscal
quarter over the same fiscal quarter last year, reflecting less development
work done for customers. A current development project has been initiated at
the request of the United States Postal Service (USPS). The Company provided
software and hardware to the USPS for the development and deployment of
automated money order dispensing systems under a pilot program in Texas. The
pilot program was focused on providing automation to low volume USPS offices
and the pilot was extended in January 1998 for six months. At the time of the
extension, the USPS authorized the Company to design additional features in
the overall system and such enhancements are the primary basis of the current
development project. Recently, the USPS has requested the integration of the
terminal provided by the Company to operate with specific printers the USPS
uses in its higher volume locations. This request is an indication that its
terminal is under consideration, the Company believes, for a broader use in
the USPS environment in the higher volume offices but no assurance of such use
can be given at this time.
Check guarantee fees decreased by $5,000 for the current fiscal quarter when
compared with the same fiscal quarter last year. The reduction is the result
of the absence of active marketing or development of the Company's check
guarantee services. The Company has determined that it should continue its
check guarantee service and anticipates adding check verification and check
truncation on a national basis. Check verification is a service that, for a
small transaction fee, allows a merchant to interrogate a negative file of bad
check writers to see if a current check writer is in the file. No guarantee
is given and the merchant must make the decision themselves on taking a check
if the writer is found to be in the negative file. Check truncation includes
check verification and immediately converts a paper check into an electronic
settlement transaction at the merchant's location. Several national databases
of negative check writers are available to the Company and evaluation of these
sources is presently underway to determine which database would best meet the
Company's and merchants' needs.
Cost and Expenses. Bankcard processing expenses have generally remained
constant as a percentage of processing revenue. A majority of the Company's
bankcard processing expenses are fixed as a percentage of each transaction
amount, with the remaining costs being based on a fixed rate applied to the
transactions processed. Processing-related expenses, consisting of bankcard
processing expense, transaction expense and customer service expense,
increased 5.0% in the current fiscal quarter over the same fiscal period last
year. This was in direct relation to the 3.5% increase in processing and
transaction revenues.
Cost of terminals sold and leased increased 27.1% in the second quarter of
fiscal year 1998 as compared to the same fiscal quarter last year. This
relates directly to the 45.1% increase in terminal and lease sales for the
second fiscal quarter.
Research and development expense for the current fiscal quarter remained
relatively constant when compared with the same fiscal quarter last year.
This is reflective of the on-going investments made by the Company both in
programming personnel and specialized developmental equipment.
Check guarantee expense decreased $8,000 for the current fiscal quarter when
compared with the same fiscal quarter in the prior year. This is consistent
with the $5,000 decrease in check guarantee revenue.
Selling and general and administrative expenses increased 16.3% in the current
fiscal quarter as compared to the same fiscal quarter last year. This was
mainly attributable to the higher employee-related costs associated with the
8.0% overall revenue increase and the incremental increase in operating costs
to support the Company's infrastructure.
Six Months Ended March 31, 1998 and 1997
Revenues. Electronic Clearing House, Inc. recorded a net income of
$313,000 for the six months ended March 31, 1998 as compared to a net income
of $236,000 for the same period last fiscal year, an increase of 32.6%. This
is reflective of the 4.5% increase in processing and transaction revenue and
the 26.0% increase in terminal sales.
As a percentage of total revenue, processing and transaction revenue accounted
for 88.3% of the total revenue for the six month period ended March 31, 1998
as compared to 89.3% for the same period in the prior fiscal year. Terminal
sales accounted for 10.6% of the total revenue for the six months ended March
31, 1998 as compared to 8.9% for the same period in the prior fiscal year.
Research and development revenue decreased 36.5% for the six months ended
March 31, 1998 as compared with the same six month period last year. This was
primarily a result of less software engineering development work requested by
existing customers.
Check guarantee fees decreased $13,000, a 28.3% decrease for the six months
ended March 31, 1998 over the same period last year.
Overall, the Company's total revenue increased 5.7% for the six months ended
March 31, 1998 as compared to the same six month period last year.
Cost and Expenses. Processing-related expenses increased 4.2% for the six
months ended March 31, 1998 as compared to the same six month period last
year. This is consistent with the 4.5% increase in processing and transaction
revenue. Gross margin on bankcard processing remained constant at 25.6% for
the six months ended March 31, 1998 as compared to 25.3% for the same six
months ended March 31, 1997.
Cost of terminals sold and leased increased 14.9% for the six month period
ended March 31, 1998 as compared to the same six month period last year. This
was in direct relation to the 26.0% increase in terminal sales and lease
revenue. Gross margin improved from 23.9% for the six month period ended
March 31, 1997 to 30.6% for the six month period ended March 31, 1998.
Research and development expense increased 4.6% for the six month period ended
March 31, 1998 as compared to the same six month period last year. This
reflects the on-going strategic investments made by the Company in order to be
competitive in the electronic commerce industry.
Selling and general and administrative expenses increased 15.1% for the six
months ended March 31, 1998 over the same six months period last year. As a
percentage of total revenue, selling and general and administrative expenses
increased from 17.6% for the six months ended March 31, 1997 to 19.2% for the
six months ended March 31, 1998. This is mainly due to the higher employee-
related costs in order to support the growth of the Company, and the increase
in legal expenses in pursuing chargeback receivables from certain former
merchants.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had available cash of $693,000, restricted
cash of $464,000 in reserve with its primary processing banks and a working
capital of $2,590,000.
Accounts receivable, net of allowance for doubtful accounts, increased
$868,000 during the six month period ended March 31, 1998. This was primarily
due to the shipment of 1,500 systems to a major equipment rental customer at
the end of this current quarter and the increase in chargeback receivables
from two former merchants. The Company is currently pursuing recovery of
these chargeback receivables through legal means. Inventory costs increased
$449,000 which was attributable to the inventory build-up related to an
equipment order of approximately 1,600 systems which are scheduled to be
delivered during the third fiscal quarter of 1998.
At the present, the Company's cash flows from operations is sufficient to
support the current level of research and development costs and marketing
costs which would allow the Company to remain competitive in the electronic
commerce industry.
The Company's current ratio improved from 1.83 to 1 at March 31, 1997 to 2.38
to 1 at March 31, 1998. The Company's debt to equity ratio also improved from
.72 to 1 at March 31, 1997 to .51 to 1 at March 31, 1998.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELECTRONIC CLEARING HOUSE, INC.
(Registrant)
Date: April 28, 1998 By: \s\Alice Cheung
Alice Cheung, Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 693
<SECURITIES> 0
<RECEIVABLES> 3,232
<ALLOWANCES> 1,235
<INVENTORY> 1,198
<CURRENT-ASSETS> 4,468
<PP&E> 3,641
<DEPRECIATION> 2,064
<TOTAL-ASSETS> 7,444
<CURRENT-LIABILITIES> 1,878
<BONDS> 643
0
5
<COMMON> 150
<OTHER-SE> 4,768
<TOTAL-LIABILITY-AND-EQUITY> 7,444
<SALES> 992
<TOTAL-REVENUES> 9,400
<CGS> 688
<TOTAL-COSTS> 6,381
<OTHER-EXPENSES> 2,005
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 315
<INCOME-TAX> 2
<INCOME-CONTINUING> 313
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 313
<EPS-PRIMARY> .021
<EPS-DILUTED> .015
</TABLE>
