UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              ---------------------
                                    FORM 10-K
                              ---------------------


  X            Annual  Report  Pursuant to Section 13 OR 15(d) of the Securities
 ---           Exchange  Act  of  1934  for the fiscal year ended Sept. 30, 2001

               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                            (IRS Employer
 incorporation or organization)                          Identification  No.)

28001 DOROTHY DR., AGOURA HILLS, CALIFORNIA                   91301-2697
 (Address  of principal executive offices)                    (Zip Code)

              Registrant's telephone number, including area code:
                   (818) 706-8999, fax number: (818) 707-9354

          Securities registered pursuant to Section 12(b) of the Act:

                                                      Name of each exchange
      TITLE OF EACH CLASS                              ON WHICH REGISTERED
      -------------------                             ---------------------
             None                                              None

          Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value
                                (Title of class)

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
    ---        ---

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  Registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K. ___

The  aggregate  market  value  of the voting stock held by non-affiliates of the
Registrant,  based  upon  the closing sale price of the Common Stock on December
10,  2001  as  reported  on  the  NASDAQ  National  Market,  was  approximately
$15,347,862.  Shares  of  Common  Stock held by each officer and director and by
each  person  who  owns  5%  or  more  of the outstanding Common Stock have been
excluded  in  that  such  persons  may  be  deemed  to  be  affiliates.  This
determination  of affiliate status is not necessarily a conclusive determination
for  other  purposes.

As of   December 10, 2001, Registrant had outstanding 5,769,873 shares of Common
Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE
                                          None


<PAGE>
                         ELECTRONIC CLEARING HOUSE, INC.
                          2000 FORM 10-K ANNUAL REPORT
                          ----------------------------

                                TABLE OF CONTENTS
                                -----------------

PART I.                                                                 Page
-------                                                                 ----
Item 1.    Business. . . . . . . . . . . . . . . . . . . . . . . . . .     3
Item 2.    Properties. . . . . . . . . . . . . . . . . . . . . . . . .    14
Item 3.    Legal Proceedings . . . . . . . . . . . . . . . . . . . . .    14
Item 4.    Submission of Matters to a Vote of Security Holders . . . .    15

PART II
-------

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Security Matters. . . . . . . . . . . . . . . .    16
Item 6.    Selected Consolidated Financial Data. . . . . . . . . . . .    17
Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations . . . . . . . . . . . .    18
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.    25
Item 8.    Financial Statements and Supplemental Data. . . . . . . . .    25
Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosures. . . . . . . . . . . .    25

PART III
--------

Item 10.    Directors and Executive Officers of the Registrant . . . .    26
Item 11.    Executive Compensation . . . . . . . . . . . . . . . . . .    29
Item 12.    Security Ownership of Certain Beneficial Owners
            and Management . . . . . . . . . . . . . . . . . . . . . .    31
Item 13.    Certain Relationships and Related Transactions . . . . . .    33

PART IV
-------

Item 14.    Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K. . . . . . . . . . . . . . . . . . . .    34


                                        2
<PAGE>
                                     PART 1
ITEM 1.  BUSINESS

GENERAL

Electronic  Clearing  House, Inc., ("ECHO" or the "Company") derives its primary
income  from  being  an  electronic  payments and transaction processor for over
60,000  merchants  nationally.  In  support  of  its  processing  services, ECHO
maintains  the  status  of a third-party processor with both Visa and MasterCard
for  credit  card processing and a licensed collection agency in 48 states. ECHO
also operates the National Check Network ("NCN"), a negative database of over 15
million  check  writer  records  accumulated  and  maintained  through  ECHO's
association  with  over  260  collection  agencies.  ECHO  maintains  a terminal
management subsidiary and a leasing subsidiary to support the equipment needs of
its  base  of  merchants.

Electronic  Payment  Processing
ECHO  processes  electronic payments in the form of: Visa, MasterCard, Discover,
American Express, Carte Blanche, and Diners credit cards; Star/Honor, Interlink,
Maestro  and Pulse debit cards; checks that are processed using electronic check
conversion  equipment  at  a  merchant's  point  of  sale; paper checks that are
represented  for payment electronically; and paper and/or electronic checks that
are  guaranteed  by  ECHO.

Transaction  Processing
ECHO's  NCN  service  is  recognized  as  the  sixth  largest  provider of check
verification services in the nation. ECHO also processes inventory, credit card,
and/or  check transactions for over 15,000 U-Haul dealers, under a contract with
U-Haul  International,  to  track the utilization of U-Haul dealer inventory and
payment  activity.  ECHO's  U-Haul  system  calculates  dealer  compensation,
distributes  all rental information hourly to the point of final destination and
summarizes  all  dealer  activity  to  U-Haul  corporate  on  a  daily  basis.

Equipment  and  Leasing  Services
ECHO  provides  point-of-sale ("POS") software and hardware management services.
ECHO  also  operates  and provides a POS depot replacement and repair service to
its merchants on a national basis. If the merchant's software program in the POS
terminal malfunctions or fails, ECHO will coordinate a download of a new program
immediately  through  its 24/7/365 Customer Service facility.  If the merchant's
POS  equipment  fails, ECHO will send a loaner piece of equipment, via overnight
mail,  and  either  replace  or repair the faulty unit. If a merchant chooses to
lease  their  POS  equipment,  ECHO  also  provides  leasing terms that are very
attractive  in  comparison  to  the  market.

Connectivity  to  ECHO
ECHO  has  developed and maintains a variety of methods through which a merchant
may  gain  access  to  the  services  of  the  Company.  For the larger users, a
mainframe-to-mainframe connection can be established. For smaller users, several
options  are  possible:  a  PC  over  the  internet,  using various types of POS
terminals,  using  a  fax  machine  and  using either a cellular or a touch-tone
telephone  (see  "Point-of-Interaction").

The  Company  currently  operates  four  wholly-owned  active  subsidiaries,  to
coordinate  its  business  activities.

1) MERCHANTAMERICA ("MA") (The corporate name as of September 2001, was National
Credit  Card  Reserve  Corporation  and  plans  are  underway  to  change  it to
MERCHANTAMERICA.  For  clarity  purposes, the name MERCHANTAMERICA or MA will be
used).  MERCHANTAMERICA is ECHO's retail provider of processing services to both
the  merchant  and  bank markets. MERCHANTAMERICA operates the primary corporate
data  center  and  a  24/7/365  customer service center located in Agoura Hills,
California, relating to transaction processing services which include electronic
credit  card and debit card authorizations, electronic fund transfers, inventory
tracking, electronic deposits utilizing the Automated Clearing House ("ACH") for
merchants,  banks  and  other  customers.  Additionally, MA manages and develops
Internet  software  and  related  communication  networks  that  are involved in
providing  transaction processing services. MERCHANTAMERICA.COM is the Company's
financial  portal  that  allows  its  merchants  to receive detailed transaction
histories  online,  access  to  their  bank  account,  and  many other services,
including  setting  up  an online storefront with full e-commerce capability and
representation  in  the  MERCHANTAMERICA.COM  Directory.


                                        3
<PAGE>
2)  ECHO  PAYMENT SERVICES, INC. ("EPS") leases, rents and sells POS systems and
related  equipment  to  merchants  who  utilize  the  ECHO  network.

3)  COMPUTER  BASED  CONTROLS, INC. ("CBC") provides system management services,
including depot repair and/or replacement of various POS terminals, printers and
check  reading  equipment  to  merchants  who  utilize  the  ECHO  network.

4) XPRESSCHEX, INC. ("XCX") is the company resulting from the combination of two
check companies ECHO acquired in the past two years, Magic Software Development,
Inc.  (renamed XPRESSCHEX, Inc.) and Rocky Mountain Retail Systems, Inc. (RMRS).
XCX,  located  in  Albuquerque,  New Mexico, provides a secondary corporate data
center service to the primary one located in Agoura Hills, California, and it is
the  primary data center for processing check guarantee, check conversion, check
collection  and  National  Check  Network's  ("NCN")  verification transactions.

HISTORY  OF  THE  COMPANY

The  Company  was  incorporated  in  Nevada  in 1981 under the name Bio Recovery
Technology,  Inc.  In  January  1986, the Company changed its name to Electronic
Clearing  House, Inc. and acquired Electronic Financial Systems, Inc., which was
then  engaged in credit card processing. In 1986, ECHO developed the capability,
utilizing  the  Federal  Reserve  System's  Automated Clearing House ("ACH"), to
deposit  funds  into  any  U.S. bank of the merchant's choice.  This development
made  it possible for remote banks and processors to provide the same processing
services  previously  available  only  through  the  merchant's  local  bank.

In  1985,  the  Company  purchased CBC, a company that had expertise in computer
control  systems.  CBC  subsequently  developed  a  series  of  high performance
terminals  and  secure printers that have been used primarily in the money order
dispensing market by American Express, Comdata, U-Haul, the United States Postal
Service  and  innoVentry.

In  1995,  a  system  utilizing CBC's terminal, ECHO's data center, and customer
support  services  was  developed  and  deployed to 2,000 U-Haul dealers for the
real-time  credit  card  authorization  and  management  of rental equipment for
U-Haul International. The number of active dealers under the system grew to more
than  15,000  by  fiscal  year 2001 (see "U-Haul International"). With regard to
proprietary  issues,  three  patent  applications  involved  with  the Company's
printer  methodology  have  been  granted  (see  "Patents").

In  early  1996, the Company purchased Xynet, a business with specialties in the
Internet,  Windows NT programming and worldwide communications networks. Through
this  acquisition,  the  Company  was  able  to  expand  its scope of acceptable
transaction  input  devices  beyond  the  traditional  POS  systems  to  include
transactions  submitted  over  the Internet and over a common telephone. Through
the  expertise  of  the programming and management personnel resulting from this
acquisition,  the Company also expanded the tools it makes available to specific
industries  to  utilize  its  services.

In 1999, ECHO acquired Magic Software Development, Inc., located in Albuquerque,
New  Mexico,  a  check  processing  company.  Since 1986, the Company maintained
XPRESSCHEX  ("XCX"),  a  check  guarantee  service  that  only served California
merchants,  but, with the addition of Magic's check processing capabilities, the
services  provided  by XCX were expanded and are now being offered on a national
basis.  In fiscal 2000, Magic's corporate name was changed to XPRESSCHEX and all
XPRESSCHEX  activity  was moved to the new XCX entity. XCX provides and promotes
its check and electronic funds transfer ("EFT") services to other processors and
sales  organizations  in  addition  to  ECHO.

In November of 1999, the Company acquired Peak Collection Services, a collection
agency  in  Albuquerque,  New  Mexico,  and  incorporated Peak as the Collection
Division  into  the  XCX  operation  in  December  of  1999. Through filings and
individual  testing, the XCX Collection Division has completed registration as a
collection  agency  in  48  of  50  states  to  date. Having a fully integrated,
nationally  approved collection service adds considerable value to the XCX suite
of check services and allows XCX to operate as a central check clearing facility
for  NCN's  260 collection agencies without each agency having to authorize such
activity.


                                        4
<PAGE>
In  January  2000, the Company acquired RMRS located in Boulder, Colorado, which
provided  a  national check verification service utilizing a check database that
contained  over  12  million  check  writer  records.

In  December  2000,  the  Company  signed  an  agreement  with  Visa,  U.S.A. to
participate in a POS check processing pilot program as a "Third-Party, Acquiring
Processor".  Under  the  pilot,  any  one  of  over 14,000 Visa member banks who
choose  to  participate  ("Participating  Member")  can  offer  check conversion
(converting  a  paper  check to an electronic transaction at the point of sale),
check  conversion  with  check  verification  and/or check conversion with check
guarantee to their merchants and utilize Visa's dedicated communications network
and  banking  relationships to clear check activity using direct debits from the
check  writer's  account.

Under  the  terms of the agreement, checks from financial institutions that have
chosen  the  Company  as  their  third-party  processor  will  be  routed to the
Company's  ACH  processing  system  and the NCN database, which will provide the
critical  infrastructure  to  enable  electronic  conversion,  verification  and
guarantee  of  such  checks.  Starting  in  July  2001,  several major financial
institutions  that  have  chosen the Company as their third-party processor will
initiate  their participation in the pilot program for Visa's POS Check Service.

The  POS  Check  Service  represents  a  major  new initiative by Visa to enable
merchants  to  receive  direct  online  authorization for checks written against
consumer  demand  deposit  accounts,  similar to the authorizations provided for
credit  and debit card transactions.  A merchant will be able to convert a paper
check  automatically  to  an  electronic transaction and will have the option of
either  verifying  availability  of  funds or guaranteeing payment on the check.
Once  authorization  is  obtained,  the  customer is required to sign a separate
sales  receipt  authorizing  the  conversion  of  the  check  transaction  to an
electronic  transaction.  The merchant then voids the paper check and returns it
to  the  customer  along  with  his  or  her  signed  sales  receipt.

Visa's  processing system, VisaNet, currently processes transactions for about 5
million  U.S.  merchants and has access to 90% of the demand deposit accounts in
the  country.  In  the  case  of  checks  written  on  an account at a financial
institution  participating  in  the  POS  Check Service pilot, the check will be
authorized directly by that bank.  However, for financial institutions that have
chosen the Company as their third-party processor and where the check is written
on an account at a non-participating bank, the check will be verified against 48
million  known  checking  accounts  stored  in  the  Company's  NCN  database.

Visa  predicts  that participating banks will cover 40% of the checking accounts
in America by the third quarter of 2002 and 75% by the third quarter of 2003. It
has  long  been  the retailer's desire to verify a check against the actual bank
balance  and  the  Company  is  helping  make  this  a  reality.

In May 2001, the Company acquired the assets of NCN and started to combine NCN's
3 million check writer records with the 12 million records in the RMRS database.
The  combined  database  of  15  million  records will be referred to as the NCN
database  and  marketed  accordingly.

GENERAL  SUMMARY

In  management's  opinion,  the  Company's  core competency and profitability is
realized  by  providing  merchants  and banks (to offer to their merchants) with
electronic  connectivity to various financial services in the credit card, debit
card  and  check-related  markets.  The  Company  has  focused on developing the
highest  number  of methods of access to the Company, believing such flexibility
is key to meeting the specific needs of merchants in different stages of growth.
Due  to the technical capability of the Company, new avenues of transmission and
communication  have  been integrated with the transaction processing services to
generate  a  distinctive,  one-stop  provider  of  services  to  the  merchant
marketplace. The Company has additional expertise in designing both hardware and
software  systems  to  integrate  the  Company's financially-based services into
customers'  information  systems.  Such  services have been performed for and/or
sold to customers such as U-Haul International, American Express, and the United
States  Postal  Service.

The  Company  believes  that  merchants  will  increasingly  want  to have their
financial  information  aggregated  into  one  source  rather  than monitor many
providers.  The  Company believes the Internet offers the most logical, low-cost
method  of  reporting such integrated services in one location. In addition, the
Company  anticipates  that  almost  every  merchant  will  see  the  need  to be
represented  on  the  Internet  for  marketing  purposes alone and, for some, to
accommodate  direct purchase activity over the Internet, commonly referred to as
"e-commerce".  Based  upon  this  belief,  the  Company  developed  and released
MERCHANTAMERICA.COM  in  May  of  2001.


                                        5
<PAGE>
MERCHANTAMERICA.COM  is  the  combination  of  many  corporate  disciplines  and
desirable  merchant  features. It contains a national Merchant Directory of over
1.4  million merchants that is free to any merchant in the USA, whether they use
ECHO  or not to process activity.  It also provides any merchant in the USA with
the  ability  to  edit  and  enhance their directory listing. In addition to the
Merchant  Directory,  an ECHO merchant can access all his transactional history,
all  of  his  bank information, significant business and office-related services
and  even build an online store and accept payment in the form of credit card or
checks  with  a  minimum  of  time  invested.  While  the  Company believes that
MERCHANTAMERICA.COM  is  a  great  value  to  any merchant, it also provides the
Company  with  a  low-cost method of keeping its merchants informed and involved
with  the  Company.

CREDIT  CARD  PROCESSING  REVIEW

The  Company  is  a  registered  Independent  Service  Organization and Merchant
Service  Provider  with Visa and MasterCard, respectively. To engage in Visa and
MasterCard  processing,  a cooperative relationship is required with a bank that
provides  necessary sponsorship of Visa and MasterCard transactions. The Company
currently  has  two primary processing bank relationships (see "Banking Activity
and  Relationships").

For the year ended September 30, 2001, MA accounted for approximately 83% of the
Company's  revenues.  MA presently provides 24-hour daily credit card processing
capability,  "800"  number  access to customer service personnel and, as needed,
various  field  support  services.

MA  earns  a steady stream of transaction and processing fees while the multiple
computers  in  its  processing  center  communicate  continuously  with merchant
terminals,  and  the  databases  of  Visa, MasterCard, American Express, Diner's
Club,  Carte  Blanche  and  Discover.  Utilizing  one of the numerous methods of
access  to the Company, the merchants' systems dial the Company's host computers
and  receive  credit  card  authorizations  for  accounts,  which  have  been
electronically verified for credit validation and other security considerations.
Electronic  files  are  then  transmitted  daily  by MA to the major credit card
organizations  which  subsequently transfer funds from the card-issuing banks to
one  of MA's processing banks.  At MA's direction, funds are then electronically
moved  from  MA's processing banks and deposited into the bank of the merchant's
choice.  On  a  typical  day, MA will make deposits to over 600 banks across the
nation  on  behalf  of  its  merchant  base.

In  addition  to electronic authorizations and deposits into the merchant's bank
of choice, the Company's software programs capture transactions, retain data and
enable  merchants  to  review, reconcile and edit (i.e., "correct") transactions
from  their  business  location.  MA  has  been  successful in providing various
services  which include a terminal loaner program to minimize downtime, frequent
sales  reports  and  information  containing  reconciliations  of  a  merchant's
business  activity  and sophisticated security services utilizing the merchant's
terminal,  the Company's host computers and field activity.  MA utilizes several
advanced  telecommunications  capabilities  involving manageable network design,
robust  communications protocols, circuit troubleshooting, and packet switching,
in  order  to  provide  consistent  and  reliable  services  to  its  merchants.

MA's  compensation  for  credit  card processing is derived primarily from three
sources,  the  merchant's  discount rate, the merchant's transaction fee and set
monthly fees. The discount rate is expressed as a percentage of the amount being
processed.  Once  set,  this  percentage  is  deducted  from  the amount of each
transaction  submitted  by the merchant and the net amount is deposited into the
merchant's  bank  account.  Discount  rates  range  between  1.5%  and 3.3% and,
overall,  the  Company's  average  discount  rate  is  2.1%.  Depending upon the
discount  rate  charged and the cost of clearing interchange, from 75% to 90% of
the  discount  rate  revenue  is  paid  to  card-issuing banks, the card-issuing
organizations,  and  the  sponsoring  bank.

The  transaction fee is charged for each transaction processed and the Company's
average  transaction  revenue  is $0.17 per transaction. The Company maintains a
range  from $.15 up to $0.32 per transaction, depending on the merchant/customer
interface.  Both  Visa  and  MasterCard have instituted $.05 to $.10 transaction
fees  on  each  transaction  processed  that  diminishes the benefit the Company
historically  might  see from such charges. Due to lower costs of communications
and  negotiated  contracts,  the  Company's  direct costs have been lowered to a
range  between $.03 and $.05 per transaction, depending upon duration and method
of  transmission.


                                        6
<PAGE>
Over  the  past  several  years,  industry  consolidation has been occurring and
impressive  growth  in  recent  years  in  the credit card processing market has
occurred by firms through portfolio acquisitions. Such a strategy raises special
challenges  that  may  involve  supporting  and  integrating numerous processing
methodologies,  initiating  quality  customer support and field support services
and,  probably  most  difficult,  maintaining  merchant  relationships. Merchant
portfolios  can  be  purchased  but  the  merchants  are  under no obligation to
continue  to  utilize  the  services  of  the  new  owner.

The  Company's  data  center  reliability  and  the  costs  associated  with
communication  activities  of  MA  are  presently  favorable but no assurance or
guarantee  can be made that such conditions will continue. Conversely, both Visa
and  MasterCard  have  historically  increased  their  interchange  fees  and
transaction  fees  to  the point that building a profitable transaction business
solely  based  upon  credit  card  activity has become an increasingly difficult
task.  Fortunately,  the  Company  has  a  base  of  processing activity that is
profitable  and  the  Company  has  added  other forms of transaction processing
(checks) that are not affected by such changes. Material changes in these areas,
such  as  interchange  fees,  could reduce the profitability expected to be seen
from  MA  operations  in  the  future.


CHECK  PROCESSING  REVIEW

In 1987, the Company initiated its check guarantee services to merchants located
in  California  so  a merchant could accept a customer's check with impunity. To
support  merchants  in  other  states,  the  Company  has historically supported
alternative  check  verification  and guarantee services to operate concurrently
with the Company's credit card software in the merchant's terminal. In 1999, the
Company  acquired  Magic  Software Development, Inc. (renamed "XPRESSCHEX") that
provided  ACH  settlement  services  and  supported  a membership-based national
verification  service  for collection agencies. In November of 1999, the Company
acquired  Peak  Services, a collection agency, and integrated its operation into
the  XPRESSCHEX group location in Albuquerque, New Mexico.  In January 2000, the
Company  acquired Rocky Mountain Retail Systems, Inc. ("RMRS"), another provider
of  national  check  verification  services. RMRS also originated and maintained
National  Check  Information  Service  ("NCIS"), a database of bad-check writers
that  was  available to merchants and collection agencies across the nation on a
fee  per  transaction  basis.  In  May  2001, the Company acquired the assets of
National  Check  Network  ("NCN").  In  September 2001, the Company combined its
check services all into one corporate entity under the name of XPRESSCHEX, Inc.,
combined  the  negative  and  positive databases of NCN and NCIS, and decided to
promote  its  check verification services using only the NCN name in the future.

The  combination  of  the  Company's  check  services,  XPRESSCHEX's  ACH set of
services,  XPRESSCHEX's  collection  capabilities  and the verification services
through  the  NCN  database, constitute the basis of a fully integrated national
check service company. The merchant pays either a fixed fee for each transaction
or  a  fee  based on the amount of the check for each transaction. The following
services  are  either  being  offered or will be offered in the near term by the
Company.

Check  Verification
For this fee, the Company will search NCN, its proprietary database of bad-check
writers,  attempting  to match a specific piece of information (driver's license
number,  Magnetic  Ink  Character Recognition ["MICR"] number, etc.) provided by
the  merchant.  A  match  identifies  the  check  writer  as  an  individual (or
business) known to the provider to have current, delinquent check-related debts.
Upon  notification  of  this match (via a coded response from the provider), the
merchant  decides whether to accept (at his own risk) or decline the check.  The
provider  offers  no  guarantee  that  the  check  will  be honored by the check
writer's  bank  and makes no promise of reimbursement if the check is dishonored
by  the  bank.

Check  Guarantee
For  this  fee,  the  Company  will  search  NCN  for  the  piece of identifying
information  provided  by  the  merchant.  If  the  identifying  information  is
matched,  the Company issues a coded response instructing the merchant to refuse
to  accept  the  check.  If  the identifying information is not matched, a coded
response  advises  the  merchant that the Company has guaranteed payment on that
item.  If  that check is subsequently dishonored by the check writer's bank, the
merchant  is  reimbursed  by  the  Company.


                                        7
<PAGE>
Electronic  Check  Conversion  ("ECC")
The  most  recent  new check service to be announced nationally is called "check
conversion". The merchant slips a customer's check either through a check reader
that  reads  the MICR line on the check or a check imager that records the total
image  of  the face of the check and the merchant enters the amount of the check
into  the  system.  The  merchant then returns the check to the customer and the
electronic image, captured by the reader, allows the Company to settle the check
transaction  electronically.  This  new  system  is  finding quick acceptance by
customers  and  banks but slow acceptance by merchants generally. Customers like
it  because they get their check back immediately and still have their hard copy
of the transaction. Banks like it because no paper has to be handled by the bank
to  settle the transaction. Merchants are adopting it only if their check volume
justifies the capital investment in equipment, an investment of around $600. One
of the key advantages a merchant sees is that an electronic record is settled in
priority  to  paper-based transactions, which assures an electronic record first
access  to  limited  funds  in  a  customer's  account.

Accounts  Receivable  Check  Truncation  ("ARCT/Lockbox")
For  companies that receive large volumes of checks in the mail, such as utility
companies  and  ISP's,  a  need  exists to convert these checks to an electronic
settlement  process  to  speed  processing and lower costs.  In order to provide
such  services,  a  full  tracking methodology must exist to assure all rejected
items  are ultimately settled.  Utilizing the Internet, XPRESSCHEX has developed
a  fully  integrated  reporting  and  tracking  system  that  addresses  the
informational  needs  of companies who wish to automate check processing in this
manner.

RCK  (Check  Re-presentment)
XPRESSCHEX  is  presently  providing  a  service  to  merchants  that allows the
merchant  to  advise  its  bank  that  a  returned  check  should be sent to the
XPRESSCHEX data processing center in Albuquerque, New Mexico, rather than return
it to the merchant. Upon receipt, XPRESSCHEX converts the check to an electronic
ACH  transaction  for  resubmission through the ACH network and images the check
for  possible  collection  activity,  should  it become necessary. The full face
value  of the check is returned to the merchant upon collection and a collection
fee charged to the check writer, usually in the range of $15 to $25, is retained
by  XPRESSCHEX  as  payment  for  its  RCK  services.

XPRESSCHEXONLINEsm and XPRESSCHEXPLUSsm
A  check  can  be  presented  as  a  form  of  payment  over  the  Internet.
XPRESSCHEXONLINE  allows  any  e-commerce site to accept a check as payment. The
service  includes  full  reporting of all such activity. XPRESSCHEXPLUS allows a
batch of check data to be sent to XPRESSCHEX for processing and is commonly used
by  mail  order  or  phone  order  type  of  businesses.

The  direct  costs  of  providing  check  services varies based upon transaction
communication timeframes, data file size, banking fees for access to the ACH and
reserve  allocations  for  potential losses, etc. Gross margins in check-related
services  can  routinely exceed 50% over external costs. The Company is actively
promoting  these  services  to  its  national  base  of  merchants.

RISK  OF  PROCESSING  CREDIT  CARD  AND  CHECK  TRANSACTIONS

The  Company  assumes  the financial liability for any merchant-based fraudulent
use  of  credit  card  and/or  check  information.  To  address  this  potential
liability,  the  Company  has  developed and deployed the ECHODETECT system that
performs  electronic  surveillance  and  monitoring of fraudulent credit card or
check  use  by  merchant.  Despite  this effective tool, the Company could incur
losses  as  the  result of the unauthorized or fraudulent use of credit cards or
checks  by  unscrupulous  merchants,  which  could, depending on the size of the
losses,  have  a  materially adverse effect on the Company. The Company does not
maintain any insurance to protect it against any such losses and is not aware of
any  insurance  that  could  be acquired at a reasonable cost. Historically, the
Company  has  allocated  ten basis points (.001) of daily processing activity to
serve  as a reserve against any losses that it may sustain due to such activity.
The  Company  has  approximately  $253,000  and  $336,000  in  reserve  against
chargeback  receivables  for the fiscal years ended 2001 and 2000, respectively.
The  Company sustained chargeback losses of $272,000 and $528,000 for the fiscal
years  ended  2001  and  2000,  respectively.  Over  the  past 16 years that the
Company  has made automatic reserve contributions, no merchant loss has exceeded
the  reserve  during the period such losses were realized. Based upon this fact,
the Company believes this mechanism of allocating daily from processing revenues
to  a  reserve  to address these obligations when they arise will be adequate to
address  the  inherent  risks  associated  with  merchant  processing.


                                        8
<PAGE>
BANKING  ACTIVITIES  AND  RELATIONSHIPS

To  engage  in  Visa  and  MasterCard  processing, a cooperative relationship is
required  with a bank, which provides necessary sponsorship for the merchants to
process  Visa  and  MasterCard  transactions. From 1997 to 1999, the Company had
four  processing  bank  relationships:  Imperial  Bank, Los Angeles, California;
First Charter Bank, Beverly Hills, California; First Regional Bank, Los Angeles,
California;  and  The  Berkshire  Bank, New York, New York. In 1999, the Company
acquired  the  merchant portfolio previously processed through Imperial Bank and
moved  merchants  from  the sponsorship of Imperial Bank to First Regional Bank.
Multiple  bank  relationships  are  desirable  due to potential changes that can
occur in the banking market wherein one of the Company's banks might be acquired
and  the  new  owner  not  desire  to  continue the relationship for any reason.

In  October  2000, the Company terminated its processing relationship with First
Charter Bank. The Company also initiated legal proceedings to recover processing
fees  from  First  Charter  Bank that the Company believes have been erroneously
charged.

The  Company  filed  a  bank  application  with  the  FCC  in  January  2000 and
subsequently  withdrew  the  application  in  April  2001,  mainly  due  to  the
uncertainty  of the market condition and the Company's stock price.  The Company
has  no  plan  to  re-file  another  application  at  the  present  time.

U-HAUL  INTERNATIONAL

The U-Haul program began in 1995 after a year of development of special software
by  the  Company. The software operates on CBC's EB920 terminal, provides credit
card authorization, and keeps track of available inventory at the dealer's site.
The system also prepares the rental contract between the dealer and the customer
and  reports  the  activity  electronically  to  the  corporate  office, thereby
eliminating  the  need  for  a  U-Haul dealer to manually prepare weekly summary
reports  of  rental  activity. The system tracks all financial data and forwards
both rental and financial data daily to ECHO's data center. ECHO distributes the
rental  data  on an hourly basis around the nation to the points of destination.
This allows a receiving dealer to accept reservations for rental of the specific
equipment  prior  to  the  equipment's  actual  arrival.

Revenues  are  derived  from equipment sales to U-Haul and income resulting from
daily  transaction processing services provided to dealers and U-Haul Corporate.
U-Haul  transaction  activity constitutes a significant portion of the Company's
growing  profitability.  During  fiscal  year  2001,  the Company entered into a
revised  three-year  contract with U-Haul International, which covers processing
services, software development, data distribution, equipment purchases/warranty,
customer  support,  and  consulting.  The  contract  has  renewal provisions for
extending  the  term.  The  Company presently serves approximately 15,000 U-Haul
dealers.

INTERNET

The  Internet  continues  to be one of the most widely discussed technologies in
the  market  today.  Although  recent  newspaper  and  magazine  headlines  have
announced  the  "demise of the dot com," Internet-based merchants and electronic
stores  continue  to  constitute  a  significant  portion of the Company's loyal
customer  base,  and  continue  to  play  a strong role in our ongoing business.

The  Company  provides  three  primary  services based on Internet technologies,
ECHONLINE,  ECHONLINE  Batch  and  MERCHANTAMERICA.COM.  Using the Internet as a
transmission medium, the ECHONLINE service allows merchants to submit individual
credit card and electronic check transactions for processing in real time, while
the  ECHONLINE  Batch  service  allows  merchants  to submit these same types of
transactions  as  batch files. The Company markets a number of branded products,
all of which use one or the other of these services as the underlying mechanism.
MERCHANTAMERICA.COM  is the Company's direct reporting tool to its merchants and
also  provides  many additional services to the merchants that neither ECHONLINE
or  ECHONLINE  Batch  were  designed  to  provide.


                                        9
<PAGE>
During  the  fiscal  years  1997-2001, the Company's Internet transaction volume
increased  at  a  consistent  rate  of  approximately  400%  per year.  Numerous
developers  and  development  partners have contributed to this success.  In the
time  since  the initial beta release of ECHONLINE in 1996, dozens of interfaces
to  ECHONLINE and ECHONLINE Batch have been developed and have been installed on
a wide variety of operating system platforms.  Interfaces have been developed as
PHP  Classes,  Java Classes, Windows COM objects, Allaire Cold Fusion tags, Perl
scripts,  and Miva payment modules.  The Company has assembled the best of these
interfaces  on  the  www.openECHO.com  Web  site  and has made them available as
downloads  free  of  charge  to  developers.  Merchants  and developers who have
acquired this software have been able to process transactions with ECHO within a
day  of  acquisition.

Security
Despite  the  growing acceptance of Internet-based transactions, there are still
lingering  questions  among  consumers  regarding  the  actual  safety  of their
transactions.  The Company's Internet offerings are based on Secure Socket Layer
(SSL),  which  has  become a de-facto standard among the industry.  In addition,
the  Company  closely  monitors  and  accommodates,  where  possible, developing
programs,  such  as the Verified by Visa program, that provide additional levels
of  cardholder  security.

POINT-OF-INTERACTION

One  of  the Company's core beliefs is that the Company must accommodate as many
different "point-of-interaction" entry methods as possible in order to build the
credit card and check processing services business, while concentrating on those
methods  and  techniques that will provide the most leverage for the Company. To
these  ends,  the  Company  has  developed  the following programs and services:

Third-Party  Applications
Many  industries  (e.g.  restaurants,  hotels)  rely  on  third-party-developed
applications  running  on  PC-compatibles  and  other equipment to support their
point-of-interaction  needs.  To  support  these clients, the Company formalized
and  published  POS  interface specifications on its host computers, developed a
conformance  certification  service/process,  and  widely encouraged third-party
developers  to  use  this free certification service and associated materials to
build  the  Company's  point-of-interaction  interfaces  into  the  third-party
products.

XPRESSCHEXPLUS
The  XPRESSCHEXPLUS  system  is  an  electronic  process  whereby  a  mail
order/telephone  order-based  merchant  may  collect  checking account data from
numerous  customers  and submit the file to ECHO in order to electronically move
funds  from  the  customer's checking account into the merchant's account.  This
service eliminates the need for paper checks to be received and processed by the
merchant.

ECHOTEL(R)
Historically,  the Company has utilized a POS terminal located at the merchant's
place  of  business, the industry standard method of data entry. The purchase of
an electronic terminal is sometimes not economically feasible to a merchant with
low  monthly credit card volume or to a business that performs services at their
customer's  site  (e.g., appliance repair, etc.).  To address the needs of these
retail  business  segments  and  provide  access to electronic authorization and
deposit  services  without  the  obligation  to  purchase equipment, the Company
developed  and  deployed the ECHOTEL program permitting a merchant to submit POS
transactions  via  any  touch-tone  telephone. This service utilizes Interactive
Voice  Response  ("IVR")  to  prompt  such  merchants  through  the POS process,
providing  them  with  immediate  credit  card  authorizations.

ECHOTERM(R)
The  Company  maintains  compatibility with the most common POS terminals in the
nation built by VeriFone. It also maintains compatibility with its own series of
systems  sold  over the past years. As a group, these POS terminals are referred
to  as  the  ECHOTERM  program.

ECHOLINK(R)
In  1998,  the Company announced the ECHOLINK program, an Internet-based service
that allowed any merchant to review their processing activity in a secure manner
over  the Internet. This service was a precursor to MERCHANTAMERICA.COM that has
added  significant  features  to  the  ECHOLINK  service.  Based upon that fact,
ECHOLINK  will  not  be  a  continuing  product  offering  in  the  future.


                                       10
<PAGE>
ECHONET(R)
In  1999,  the Company announced ECHONET, an Internet browser-based service that
allows  a  merchant  to enter credit card data either manually or through a card
reader  and  receive  an immediate authorization from the Company. ECHONET meets
the needs of retail merchants who have Internet access and also call center type
of  businesses  that  desire  operators  to have immediate access to credit card
authorization  capability  while  on  the  phone  with  a  caller.

MERCHANTAMERICA.COM
The  Company  announced  the  release  of  MERCHANTAMERICA.COM  in  March  2001.
MERCHANTAMERICA.COM  combines  three common portals into one for ECHO merchants:

     1)   E-commerce  portal:  this allows the merchant to set up a store on the
          Internet  and  to  accept  credit  card  or check payment through that
          store.
     2)   Financial  portal:  this  provides detailed transaction history of all
          financial  activity  including  credit  card,  check  and  collection
          transactions.
     3)   Business  service  portal:  this provides online access to hundreds of
          key  business  relationships  (airlines, shipping services, hotel, car
          rentals,  etc.),  presented  in  a  simple,  easy-to-use  fashion.

Equipment  Design  and  Manufacture
Through the years, the Company has developed software that enables the Company's
host  computer  to  interface  with  the  largest  POS  manufacturer,  VeriFone
International,  who is estimated to have a 65% share of the POS terminal market.
The  acquisitions of the check services companies in 1999 and 2000 significantly
expanded  the  number  of terminal manufacturers that connect to the Company for
check-related  services.  The  Company  is  currently  developing  credit  card
processing  software  to  be  used on these new POS platforms so that all of the
Company's  services  can  be  accessed  by  merchants  who  own such systems. In
addition,  the  Company  is  reviewing Internet capable POS systems (TCP/IP) and
plans  to  adopt  a  standard  equipment  package  around  which it can design a
merchant  processing  service  that  is  fully  Internet-based.

Patents
The  Company  presently  has  three  patents  with  respect  to  certain  of its
proprietary  technology  in  operating printers and reading financial documents.
The  Company  has  obtained a patent on its method of electronically sensing the
serial  number  of  a  document.  This  method relies on the use of its patented
ECHOSYMBOLOGYTM  bar code.  The patent describes a unique method of illuminating
a  form from one side while resolving the bar code image from the opposite side.
No  additional  optical  components  are  required beyond the basic illumination
source  and  the  CCD  image  array.

The  Company  developed  and obtained a patent to a proprietary type of bar code
reading  technology,  designated  as  font  of  machine-readable  patterns.

The  Company  has  also  obtained  a financial document dispensing apparatus and
method  patent  for  particular  printing techniques and reporting presentations
used  in  the  preparation  and  tracking  of  financial documents.  This patent
provides  an  opportunity  for  promotion  of  its financial document dispensing
devices  as  the issuance of financial documents becomes more common in non-bank
environments.

The  Company  has  filed for a patent related to Internet-based check submission
and  subsequent  re-presentment methodologies but no assurance can be given that
such  patent  filing  will  be  granted.

There  can  be no assurance that, if challenged, these patents can be judicially
sustained.  In  the  absence  of  such  protection, competitors would be able to
duplicate  the  Company's  products.  Furthermore,  even  though the Company has
patents,  there  can  be  no  assurances that the Company's competitors will not
independently  develop  or patent technologies that are substantially equivalent
or  superior  to  the  Company's  technologies.

The  Company has expended considerable time and resources to develop information
systems  to  serve  its  merchant  base.  There  is  no  intellectual  property
protection  on  the computer equipment and database that comprise these systems.
Additionally,  although  the Company believes that its products and technologies
do  not  infringe upon the proprietary rights of any third parties, there can be
no  assurance that third parties will not assert infringement claims against the
Company.  Similarly,  infringement claims could be asserted against products and
technologies  which  the  Company  licenses, or has the rights to use from third
parties.  Any  such claims, if proven, could materially and adversely affect the
Company's  business  and  results  of  operations.


                                       11
<PAGE>
LEASING

The  Company sells and leases terminals and printers to retail merchants through
its  subsidiary,  ECHO  Payment  Services,  Inc.  ("EPS").  EPS  cultivates
relationships  with  independent  sales  organizations,  agent  banks, and trade
associations  and  has formed strategic alliances with other marketing groups to
increase  equipment  sales  and leases. Servicing and collection is performed by
the  Company.

REAL  ESTATE

The  Company  presently  owns  undeveloped  land  in  seven western states.  The
Company has held all of its land properties for over ten years and does not have
current  appraisals nor title insurance on its real estate holdings. Some of the
properties  are  held pursuant to quitclaim deeds.  The real estate holdings are
carried on the Company's books at the lower of cost or estimated fair value less
estimated  costs  to  sell.

MARKETING

Since  1997,  the  Company has slowed its reliance on a single Independent Sales
Organization  (ISO) that it had utilized for the prior five years to acquire new
merchant accounts. The Company has set up several referral programs with several
ISO's  and, over the past year, approximately 20% of new accounts were generated
by  the ISO referral program. The balance of the Company's new merchant accounts
were  generated  through  the Internet, the ECHOTEL program, the ECHONET program
and  direct  merchant  referrals  by  existing  merchants  to  the  Company.

The  acquisitions  of Magic Software Development, Inc. and Rocky Mountain Retail
Systems Inc., in 1999 and 2000, respectively, have broadened the number of sales
channels available to the Company. Additionally, cross-selling of check services
to  ECHO's  existing  base  of  merchants and U-Haul dealers is believed to be a
significant  opportunity  for  the  Company  to maximize earnings with a minimum
marketing  expense.

Management  believes the Company is unique in the number of methods of access it
allows,  the  combination  of  transaction  types  that it manages directly, its
ability  to integrate additional services, based upon customer needs, and in its
ability  to  support  each merchant through one vertically integrated source. In
most  competitive  instances,  such  services are performed by different parties
and,  as  a  consequence, merchants become frustrated trying to solve a problem,
not  knowing  which  party  to  call.  The  Company  believes  its commitment to
maintaining  a  common  Customer  Support group serving ECHO, XPRESSCHEX and NCN
merchants and members on a 24/7/365 basis will become a distinctive advantage to
merchants  in  choosing  ECHO  over  its  competitors.

The  Company's  marketing  strategy  is  as  follows:

     1)   To  maximize  its  cross-selling  activities  to  its existing base of
          merchants.  Including all its transaction processing subsidiaries, the
          Company  serves  over  60,000  merchants.

     2)   To  sell  its integrated suite of check, credit and debit card-related
          processing  services  to  small  banks.  The Company believes it has a
          combination  of  services  that  makes it a very attractive partner to
          small  banks  who  will  never  develop or have access to these set of
          services  from  a  single  provider.

     3)   To  enhance  and  market  MERCHANTAMERICA.COM.  The Company believes a
          centralized portal wherein all financial and informational data can be
          accessed  by merchants provides a marketing tool to its sales channels
          and  becomes  a  sales advantage that the Company's sales channels can
          use  to  generate  additional  merchant  referrals.

     4)   Visa  POS  Check  Service.  Since  signing  the agreement with Visa in
          December  2000,  the  Company  has  launched  several  Visa  POS Check
          Programs as a Third-Party Processing Agent. The launch of the Visa POS
          Check  Program  for Cincinnati, Ohio-based Provident Bank is scheduled
          for the first quarter of 2002. The Company is the dominant Third-Party
          Processing  Agent  for Visa POS Check services and the Company is only
          aware  of  BankServ  (San  Francisco,  CA) as the only other certified
          "Third-Party  Processor"  to  date.


                                       12
<PAGE>
          The  Company  was  certified  as an "Acquirer Processor" in January of
          2001  and  currently,  the  Company  is  aware  that  Vital Processing
          Services (based in Tempe, AZ) is the only other Acquirer Processor for
          the  Visa  POS  Check  program.  The  Company's significant advantages
          offered  to  banks  would  include  the value of the NCN database, the
          Company's flexible point-of-sale applications and its proven Web-based
          merchant  reporting  service.

          The  Company,  through  its association with First Regional Bank, will
          introduce  Visa  POS  Check  Service  as  a  direct product to new and
          existing  customers  in  2002.  This is expected to give the Company a
          significant  "first  to  market"  advantage  and  provide its existing
          customer  base  with  the  latest  technology  for  check  acceptance.

     5)   Private  Label  program.  The  Company's  Private Label ACH program is
          currently  available to several banks/acquirers and ISO's. The Private
          Label  ACH program allows a bank or ISO to private label the Company's
          electronic  check  conversion ("ECC") services and/or XPRESSCHEXONLINE
          and  XPRESSCHEXPLUS  products  under  their own brand name for selling
          either  alone  or part of a combination of services. The Private Label
          ACH  program  greatly  extends  the  Company's ACH Check product reach
          nationwide, powered by the bank's or the ISO's own marketing and sales
          initiatives  with  the  Company's  processing  strength  underneath.

Markets can change for numerous reasons, e.g., new technology, economic factors,
regulatory  requirements,  etc., many of which are not within the control of the
Company  so it can not be assured that the marketing efforts of the Company will
be  or  continue to be effective or that the Company will see or continue to see
an  increase  in  processing  volume  in  the  future.

COMPETITION

The  Company  enjoyed  the  distinction  of  being  listed  as the sixth largest
provider of check verification services in the USA in the June 2001 issue of The
Nilson  Report,  a  monthly  financial  subscription-based  newsletter. The five
providers  of  verification  services  in  higher  volume  than  ECHO were SCAN,
TeleCheck,  Equifax,  IPS  and  NDC  (Global  Payment Services). In management's
opinion,  the  provider  who  the  Company  most  parallels in terms of range of
processing  services  is  TeleCheck.

The  industries  in  which  the  Company operates are highly competitive and are
characterized by rapid technological change, rapid rates of product obsolescence
and  introductions  of  competitive  products  often at lower prices and/or with
greater functionality than those currently on the market.  The Company currently
is  not  a  major  player  in  the  industries  in  which  it  competes, and, in
management's opinion, the Company's share of the markets in which it competes is
relatively  small  in  comparison  to  most  of  its  competitors.  Many  of the
Company's  competitors  have  substantially  greater  financial  and  marketing
resources  than  the  Company.  As  a result, they may be better able to respond
more  quickly  to  new  or  emerging  technologies  and  changes  in  customer
requirements,  or  to devote greater resources to the development, promotion and
sale  of  their  products  and  services  than  is  the  Company.

Furthermore,  in  the  future,  the Company may encounter substantial additional
competition.  There  can be no assurance that the Company's current products and
services  will  not become obsolete, or that the Company will have the financial
resources,  technical  expertise,  marketing  capabilities  or manufacturing and
support  facilities  to  compete  successfully  in  the  future.

The  introduction  of  products  and services embodying new technologies and the
emergence  of  new industry standards can, in a relatively short period of time,
render  existing  products obsolete and unmarketable.  The Company believes that
its  success  will  depend upon its ability continuously to develop new products
and  services and to enhance its current products and to introduce them promptly
into  the market.  There can be no assurance that the Company will be successful
in  developing  and marketing new product enhancements, new products or services
that  respond  to technological change or evolving industry standards. There can
be  no  assurance  that  the Company will not experience difficulties that could
delay or prevent the success or development, introduction and marketing of these
products,  enhancements  and  services,  or  that  any  new  product,  product
enhancement  and  services  it  may  introduce  will  achieve market acceptance.
Failure to develop and introduce new products, product enhancements or services,
or  to  gain  customer  acceptance  of  such  products,  product enhancements or
services  in  a timely fashion could harm the Company's competitive position and
materially  adversely  affect  it.


                                       13
<PAGE>
EMPLOYEES

The  Company  employed  162  persons  at  September  30,  2001, none of whom are
represented  by  a  labor union.  The Company's headquarters are based in Agoura
Hills,  California,  with  offices in Westlake Village, California; Albuquerque,
New  Mexico;  Boulder,  Colorado;  and Kansas City, Kansas.  Management believes
that  its  employee  relations  are  good  at  the  present  time.

FORWARD  LOOKING  STATEMENTS

When  used  in the Business section (Item 1.) or elsewhere in this document, the
words  "believes",  "anticipates",  "expects",  "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  included  changes  in economic conditions locally and nationally,
and  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.


ITEM  2.      PROPERTIES

In  October  1994,  the  Company  purchased  the three-story, 13,500 square foot
building  in  Agoura  Hills, California it currently occupies for $880,000.  The
Company  currently  has  a  note  collateralized  by this building.  The current
monthly  debt  service  is  approximately  $7,000.  This  building  houses  the
Company's  headquarters  and  computer  facilities.

The  Company  leases  real  property  in  Agoura  Hills  and  Westlake  Village,
California; Albuquerque, New Mexico; Boulder, Colorado; and Kansas City, Kansas,
under various agreements, which expire at various times over the next two years.
The  total  lease  payments  are  approximately  $14,000  per  month.

The  Company  owns  several pieces of raw land for investment consisting of four
noncontiguous  parcels  in  Missouri  totaling  approximately  five  acres,  two
noncontiguous parcels in Texas totaling approximately forty-four acres, one acre
in  Castilla County, Colorado, one-third acre in Eureka County, Nevada, a single
lot in Arrowhead County, Washington, a single lot in Ventura County, California,
three  acres  in  Independence County, Arkansas, and 498 acres in San Bernardino
County,  California.  The  Company has entered into an agreement with a party to
represent  and  sell  its  properties.


ITEM  3.     LEGAL  PROCEEDINGS

The  Company  is  involved in various lawsuits arising in the ordinary course of
business.

On  May  8,  1998, the Company and Premiere Lifestyles International Corporation
executed  a  document  entitled  "Letter  of  Commitment" which contemplated the
possible  formation  of  a  joint venture between the parties.  On May 26, 2000,
Premiere  filed  a  complaint  against  the Company in the Superior Court of the
State  of  California, Los Angeles County alleging that the Letter of Commitment
was  a  binding  contract  creating  the  joint venture and that the Company had
breached  its  obligations  under  that contract, misappropriated trade secrets,
conducted  unfair  business practices and interfered with Premiere's contractual
and  business  relationship  with  other  businesses  and  as  a result Premiere
suffered $10,000,000 in lost revenues and profits.  Premiere is seeking monetary
damages  for  each  of  the  causes  of  action in its complaint, including lost
revenue  and  profits  of  $10,000,000.

On  March  13,  2001,  the Company filed an answer and a cross-complaint against
Premiere  and  individuals  Richard  G.  Stewart and Richard J. Stewart alleging
among  other things intentional and negligent misrepresentation, unfair business
practices,  breach  of fiduciary duty, breach of covenant of good faith and fair
dealing.  The  Company is seeking damages representing recovery of out of pocket
advances  to  Premiere  of  $30,000  and  the  value of software development and
consultation  requested  by  Premiere in excess of $250,000.  The matter went to
trial  in  October  of  2001  and  is  currently  under submission by the court.
Although  the  Company  believes that these claims are without merit there is no
assurance  that  the  ultimate  resolutions  of  these claims will not result in
material  liability  to  the  Company.


                                       14
<PAGE>
The  Company  is  also  involved  in  a collections lawsuit filed by the Company
against  First  Charter Bank ("FCB") for amounts owed to the Company. Based upon
current information, management, after consultation with legal counsel, believes
that  the  collections  suit  against FCB will also have no material effect upon
either  the  Company's  results  of  operations  or  its  financial  positions

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

Two  matters were submitted to a vote of Security Holders during the fiscal year
ended September 30, 2001 at the Annual Shareholders' Meeting held on February 2,
2001.  A  majority  of  shareholders' votes approved two issues: (1) election of
one  director;  and  (2)  ratification and approval of auditors.  One matter was
submitted  to  a vote of Security Holders during the fiscal year ended September
30,  2001  at  a  Special  Meeting of Stockholders held on September 7, 2001.  A
majority  of  shareholders'  votes  approved  the  adoption  and  approval of an
amendment  to the Amended and Restated Articles of Incorporation, which provides
for  a  one-for-four  (1:4)  reverse  stock  split of the issued and outstanding
shares  of  the  Company's  common  stock.




EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

                             Name                    Position
                ---------------------------  -------------------------

                  Joel M. Barry              Chairman of the Board,
                                             Chief Executive Officer

                  Alice L. Cheung            Chief Financial Officer,
                                             Treasurer

                  Lawrence M. Brown          Vice President, Chief
                                             Information Officer

                  Jesse Fong                 Vice President,
                                             Information Systems

                  David Griffin              Vice President,
                                             Check Services

                  Geoffrey Masaki            Vice President,
                                             Special Programs

                  Rick Slater                Vice President, Chief
                                             Technology Officer

                  Patricia M. Williams       Vice President, Corporate
                                             Program Management


                  Jack Wilson                Vice President, Credit
                                             Card Services

                  Donna L. Rehman            Corporate Secretary

                  R. Marshall Frost          Counsel


                                       15
<PAGE>
                                     PART II


ITEM  5.     MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED STOCKHOLDER
SECURITY  MATTERS

Since  January  17,  1986,  the Company has been trading on the over-the-counter
market  under  the name Electronic Clearing House, Inc.  On October 2, 1989, the
Company  was  accepted  for  listing  on  the National Association of Securities
Dealers  Automated  Quotation  System  ("NASDAQ") and trades under the symbol of
"ECHO".  The following table sets forth the range of high and low prices for the
Company's  Common  Stock  during  the  fiscal periods indicated.  The prices set
forth  below  represent  quotations  between  dealers  and do not include retail
markups,  markdowns  or  commissions  and may not represent actual transactions.
The  prices  below also reflect the effect of a one-for-four (1:4) reverse split
of  common  stock in September 2001. Moreover, due to the lack of an established
trading  market  for  the  Company's  common  stock, such quotations may bear no
relationship  to the fair market value of the Company's common stock and may not
indicate  prices  at  which  the  Company's  common  stock  would  trade  in  an
established  public  trading  market.

                    FISCAL YEAR ENDED
                      SEPTEMBER 30        High    Low

                          2001
                          ----
                      First Quarter      $ 6.25  $2.00
                      Second Quarter     $ 5.25  $2.19
                      Third Quarter      $ 4.12  $2.28
                      Fourth Quarter     $ 3.64  $1.24

                          2000
                          ----
                      First Quarter      $14.75  $4.00
                      Second Quarter     $27.00  $9.88
                      Third Quarter      $15.88  $7.25
                      Fourth Quarter     $ 9.50  $5.75

The  prices  set  forth above are not necessarily indicative of liquidity of the
trading  market.  Trading in the Company's common stock is limited and sporadic,
as  indicated  by the average monthly trading volume of 2,665,969 shares for the
period  from  October 2000 to September 2001.  On December 10, 2001, the closing
representative  price  per  share  of  the  Company's  common stock, as reported
through  Nasdaq  in  the  over-the-counter  market,  was  $2.66.

HOLDERS  OF  COMMON  STOCK

As  of September 30, 2001, there were approximately 880 record holders and 4,900
beneficial  holders  of  the  Company's  Common  Stock,  with  5,769,873  shares
outstanding.  The  number  of holders of record is based on the actual number of
holders  registered  on  the  books of the Company's transfer agent and does not
reflect  holders  of  shares  in  "street  name"  or  persons,  partnerships,
associations,  corporations  or  other  entities identified in security position
listings  maintained  by  depository  trust  companies.

DIVIDEND  POLICY

The  Company  has  not paid any dividends in the past and has no current plan to
pay  any dividends.  The Company intends to devote all funds to the operation of
its  businesses.


                                       16
<PAGE>
ITEM  6.     SELECTED  CONSOLIDATED  FINANCIAL  DATA

The  following  table  sets  forth certain selected consolidated financial data,
which  should  be read in conjunction with the Consolidated Financial Statements
and  Management's  Discussion and Analysis of Financial Condition and Results of
Operations included at items 7 and 8 below.  The following data, insofar as they
relate  to  each  of  the  five years ended September 30, have been derived from
annual  financial  statements,  including  the  consolidated  balance  sheet  at
September 30, 2001 and 2000 and the related consolidated statement of operations
and  of  cash  flows  for  the  three  years ended September 30, 2001, and notes
thereto  appearing  elsewhere  herein.

<TABLE>
<CAPTION>
                                                          Year Ended September 30
                                                        ---------------------------
                                                2001      2000     1999      1998      1997
                                              --------  --------  -------  --------  --------
<S>                                           <C>       <C>       <C>      <C>       <C>
                                           ( ----- AMOUNTS IN THOUSANDS, EXCEPT PER SHARE ----- )
STATEMENT OF OPERATIONS DATA:
-----------------------------
Revenues . . . . . . . . . . . . . . . . . .  $29,943   $28,340   $23,828  $21,063   $18,623
Costs and expenses . . . . . . . . . . . . .   29,380    28,324    22,636   19,852    18,103
                                              --------  --------  -------  --------  --------
Income from operations . . . . . . . . . . .      563        16     1,192    1,211       520
Interest income (expense), net . . . . . . .      106       196        95       14      (138)
Other income (expense), net. . . . . . . . .      350       312        -0      (35)      (50)
                                              --------  --------  -------  --------  --------
Income before income tax
 (provision) benefit . . . . . . . . . . . .    1,019       524     1,287    1,190       332
(Provision) benefit for income taxes . . . .     (585)     (233)    1,331      (36)       (4)
                                              --------  --------  -------  --------  --------

Net Income . . . . . . . . . . . . . . . . .  $   434   $   291   $ 2,618  $ 1,154   $   328
                                              ========  ========  =======  ========  ========


Net Income per share-basic . . . . . . . . .  $  0.07   $  0.06   $  0.58  $  0.31   $  0.10
Net Income per share-diluted . . . . . . . .  $  0.07   $  0.05   $  0.45  $  0.21   $  0.07

Weighted average number of common
 shares and equivalents outstanding-basic. .    5,797     5,257     4,536    3,744     3,334

Weighted average number of common
 shares and equivalents outstanding-diluted.    5,964     5,825     5,825    5,459     4,963

BALANCE SHEET DATA:
-------------------
Working capital. . . . . . . . . . . . . . .  $ 5,693   $ 6,029   $ 5,010  $ 3,611   $ 2,054
Current assets . . . . . . . . . . . . . . .    8,131     7,595     6,159    5,154     3,047
Total assets . . . . . . . . . . . . . . . .   18,921    17,013    12,932    8,025     6,084
Current liabilities. . . . . . . . . . . . .    2,438     1,566     1,149    1,543       993
Long-term debt, and payable to
 stockholders and related parties,
 less current portion. . . . . . . . . . . .      744       767       599      639       681
Total stockholders' equity . . . . . . . . .  $15,739   $14,680   $11,184  $ 5,843   $ 4,410
</TABLE>


                                       17
<PAGE>
ITEM  7.     MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS  OF  OPERATIONS

FORWARD-LOOKING STATEMENTS

The following discussion of the financial condition and results of operations of
Electronic  Clearing  House,  Inc.  ("ECHO"  or the "Company") should be read in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included elsewhere herein.  This discussion contains forward-looking statements,
including statements regarding the Company's strategy, financial performance and
revenue  sources,  which  involve risks and uncertainties.  The Company's actual
results  may  differ  materially from those anticipated in these forward-looking
statements  as a result of certain factors, including, but not limited to, those
set  forth  elsewhere  herein.

OVERVIEW

ECHO  provides credit card authorizations, debit card authorizations, electronic
deposit  services,  check  guarantee,  check  verification,  check  conversion,
accounts  receivable  check  truncation  (ARCT/Lockbox),  check  collection, RCK
(check  re-presentment),  inventory  tracking  services  and  various  Internet
services to retail and wholesale merchants and U-Haul dealers across the nation.
In  addition, the Company develops and sells and leases electronic terminals for
use  by  its  customers  and  other  processing  companies.

RESULT OF OPERATIONS

FISCAL YEARS 2001 AND 2000

NET INCOME. Electronic Clearing House, Inc. recorded income of $1,019,000 before
income  tax  provision  for  fiscal year 2001, as compared to $524,000 in fiscal
year 2000, an increase of 94.5%.  Net income after tax provision for fiscal year
2001  was  $434,000, as compared to $291,000 in net income for fiscal year 2000,
an  increase  of  49.1%. Earnings for both basic and diluted shares were $.07 in
fiscal year 2001, as compared to $.06 per basic share and $.05 per diluted share
for  fiscal  year  2000.

REVENUE.  Total  revenues  for fiscal year 2001 were $29,943,000, an increase of
5.7%  over  revenues  of  $28,340,000  for  fiscal  year  2000.

Revenues  derived  from the electronic processing of transactions are recognized
at  the  time  the  transactions  are  processed  by the merchant.  Bankcard and
transaction  processing  revenue increased 4.7%, from $23,902,000 in fiscal year
2000 to $25,017,000 for fiscal year 2001. This increase was primarily the result
of  a  4.0%  increase  in  bankcard processing volume year-over-year and a 14.3%
increase  in  U-Haul  transaction  processing  revenue due to additional dealers
being  added  over the prior year.  These increases were partially offset by the
reduction  in  processing  revenue from the innoVentry bankcard processing joint
venture,  which  was  terminated  in  September  2000.

The  Company  entered into an amended contract with U-Haul in September 2001 and
thereby extended the contract for another three-year term. The Company currently
serves  approximately  15,000  U-Haul  dealers  nationwide.

Check  related  revenues  increased  from  $1,979,000  for  fiscal  year 2000 to
$4,479,000  in  fiscal  2001,  a  126.3%  increase. This was attributable to the
additional  check  services being offered to the merchants in the current fiscal
year  and  the continued higher growth experienced in the check-related business
segment.  Management  believes  that the growth in check related activities will
continue  to  outpace  the  growth  in  the  bankcard  processing  activities.

The Company has fully integrated the check services, such as check verification,
check  conversion,  check  guarantee, check re-presentment, along with debit and
credit  card  transactions through a VeriFone terminal platform.  This is one of
the  first  terminal  applications  available  in the market today that includes
check  conversion  and  captures check images with a scanner.  The new terminals
and  their  applications  are  being  offered  to all existing merchants and all
U-Haul  dealers.  Management  believes  that  combining both the credit card and
check  services  onto  one  platform would reduce the merchant's churn rate. The
Company  is  also marketing these check services through various sales channels.
In  July  2001,  U-Haul awarded the Company a bid for the U-Haul Check Fee Saver
Program  for  its  independent  dealers  who participate in the U-Haul Preferred
Dealer Program.  U-Haul had previously awarded the Company a bid to offer credit
card  processing to its independent dealers.  At the present time, approximately
1,100  U-Haul dealers had chosen the Company to be their third-party credit card
processor.


                                       18
<PAGE>
Overall, total processing and transaction revenue increased from $25,677,000 for
fiscal  2000  to  $29,096,000  for  fiscal  2001,  an  increase  of  13.3%.

Revenue  related  to  terminal sales is recognized when the equipment is shipped
and  title  transferred  to  the  customer.  Terminal  sales  revenue for fiscal
2001was  $447,000,  which  represented  a  decrease  of  81.8%,  as  compared to
$2,459,000  for fiscal 2000. This decrease was attributable to the delivery of a
large  order  to  the  U-Haul dealers during fiscal year 2000. Comparatively, no
significant  equipment  was  sold  to  U-Haul  in  fiscal  year  2001.

Other  revenue increased from $204,000 in fiscal year 2000 to $400,000 in fiscal
2001,  an  increase  of  96.1%  due  to  more billable software development work
completed  during  the  current  year.

OTHER INCOME.  In June 2001, the Company sold a merchant list to a financial
institution for cash proceeds of $350,000.

COST  AND  EXPENSES.  Bankcard  processing  expenses  should  always reflect the
changes  in processing revenue.  A majority of the Company's bankcard processing
expenses  are  fixed  as  a  percentage  of  each  transaction  amount, with the
remaining  costs  based  on  a fixed rate applied to the transactions processed.
Processing-related  expenses,  consisting  of  bankcard  processing  expense and
transaction  expense,  increased  from  $18,128,000  for  fiscal  year  2000  to
$19,239,000  in the current fiscal year, an increase of 6.1%. This was in direct
relation  to  the  13.3% increase in processing and transaction revenues for the
current  fiscal  year.  Gross  margin  from  processing  and transaction revenue
improved  from $7,549,000 to $9,857,000, a 30.6% increase. The increase in gross
margin  was  attributable  to  the  increase  in  check  services revenue, which
normally  yield  a  higher  gross margin.  Additionally, the Company was able to
lower  its  communications  costs and chargeback losses during fiscal year 2001.

Cost  of terminals sold and leased decreased from $1,790,000 in fiscal year 2000
to  $419,000  in fiscal year 2001, a decrease of 76.6%.  This is attributable to
the  81.8%  decrease  in terminal sales revenue for the year. However, the gross
margin decreased from 27.2% in fiscal 2000 to 6.3% in fiscal 2001.  This was due
to  the  Company's  decision to lower small quantity equipment pricing in fiscal
2001.

Other  operating  costs  increased  from  $3,231,000  in  fiscal  year  2000  to
$3,538,000  in  fiscal  year  2001,  an  increase  of  9.5%.  This  increase was
reflective  of  the 13.3% increase in processing and transaction revenue and the
significant  operating  expenses  attributable to the development of the various
check  services  programs  as  discussed  herein.

Selling  and  general  and  administrative expenses increased from $4,816,000 in
fiscal  year  2000  to  $5,760,000  in  fiscal  year 2001, an increase of 19.6%.
Approximately  $600,000  of  this  increase  was  attributable  to the legal and
consulting  fees related to the ongoing litigation, which is continuing into the
first  fiscal quarter of 2002.  Additionally, the Company continues to invest in
higher  personnel  costs  required  to  support the growth and management of the
various  check  services  and  the  rollout  of MERCHANTAMERICA.COM, an Internet
website  designed  to  promote  the  products and services of the Company and to
enhance merchant reporting functions. As a percentage of total revenue, selling,
general  and  administrative  expenses  increased from 17.0% of total revenue in
fiscal  year  2000  to  19.2%  of  total  revenue  in  fiscal  year  2001.

Amortization  of goodwill expense remained relatively constant, from $359,000 in
fiscal  2000  to  $424,000  in  fiscal  2001.

INCOME  TAXES.  Income  tax  expense was $585,000 for fiscal year 2001, $233,000
for  fiscal  year  2000  and an income tax benefit of $1,331,000 for fiscal year
1999.  The  Company's effective tax rate was 57.4% for fiscal 2001 and 44.5% for
fiscal  2000.  See  Notes to Consolidate Financial Statements included elsewhere
herein for further explanation of the income tax expense and a reconciliation of
reported  income  taxes  to  the  amount  utilizing  the  statutory  rate.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  September  30,  2001,  the  Company  had  available  cash of $4,147,000,
restricted cash of $1,410,000 in reserve with its primary processing banks and a
working  capital  of  $5,693,000.

Accounts  receivable  net  of allowance for doubtful accounts decreased slightly
from  $1,911,000  at  September  30,  2000  to $1,864,000 at September 30, 2001.
Inventory level remained relatively constant from $594,000 at September 30, 2000
to  $573,000  at  September  30,  2001.


                                       19
<PAGE>
Net cash provided by operating activities increased from $788,000 in fiscal year
ended  2000  to  $2,349,000  for  the  current  fiscal  year.

For  the  year,  the  Company  used $1,404,000 for the purchase of equipment and
capitalized  software  costs.  In  addition, the Company used $368,000 as a down
payment  toward  the  purchase  of  certain  computer  software in its effort to
replace  its  legacy credit card processing systems.  This software license will
cost  approximately  $1,116,000  and the Company is currently evaluating several
leasing  options with different lessors. The Company expects this software to be
fully  installed  and  implemented  by  the  third  quarter  of  fiscal  2002.

In  May  2001, the Company used $169,000 for the acquisition of certain National
Check  Network  assets.  Total  net  cash  used  in  investing  activities  was
$1,681,000  for  the current fiscal year as compared to $332,000 for fiscal year
2000.

In  March  2001,  the  Company's  Board  of Directors authorized up to 1,000,000
shares  (pre-split)  of  the  Company's  common  stock to be repurchased in open
market  transactions  at  market  and  as  business  conditions  warrant through
September  2001.  The  stock  repurchase  program was extended in September 2001
through  December  15,  2001.  Accordingly,  the  Company  used $332,000 for the
repurchase of common stock during this fiscal year.  Overall, the total net cash
used  in  financing  activities was $462,000 as compared to $585,000 of net cash
provided  by  financing  activities  for  fiscal  year  2000.

At  the  present,  management  believes  that  the  Company's  cash  flows  from
operations  are sufficient to support the current level of development costs and
to  adequately support and become a primary "Third-Party Processor" for the Visa
POS  check  program.


FISCAL YEARS 2000 AND 1999

NET  INCOME.  Electronic Clearing House, Inc. recorded income of $524,000 before
income  tax  provision for fiscal year 2000, as compared to $1,287,000 in fiscal
year  1999, a decrease of 59.3%.  Net income after tax provision for fiscal year
2000  was $291,000, as compared to $2,618,000 in net income for fiscal year 1999
after  a  tax  benefit of $1,331,000. Earnings per both basic and diluted shares
were  $.01 in fiscal year 2000, as compared to $.14 per basic share and $.11 per
diluted  share  for  fiscal  year  1999.

REVENUE.  Total  revenues  for  fiscal  year  2000  were  $28,340,000,  an 18.9%
increase  over  revenues  of  $23,828,000  for  fiscal  year  1999.

Revenues  derived  from the electronic processing of transactions are recognized
at  the  time  the  transactions  are  processed  by the merchant.  Bankcard and
transaction  processing revenue increased 13.3%, from $21,089,000 in fiscal year
1999  to  $23,902,000  for  fiscal  year  2000.  This increase was primarily the
results  of a 16.3% increase in bankcard processing volume year-over-year. Check
related  revenues  increased from $308,000 for fiscal year 1999 to $1,979,000 in
fiscal  2000, a 542.5% increase. This was mainly attributable to the acquisition
of  RMRS,  which was completed in January 2000, and the inclusion of a full year
of  operations  for  XPRESSCHEX,  which  was  acquired  in  April  1999.  Total
processing and transaction revenue increased from $21,323,000 for fiscal 1999 to
$25,677,000  for  fiscal  2000,  an  increase  of  20.4%.

Transaction  revenues  generated  from  one  of  our  major  customers,  U-Haul
International, increased 12.5% from the prior year as a result of the additional
terminal  deployed  during  the  last  two  fiscal  years.

Revenue  related  to terminal sales is recognized when the equipment is shipped.
Terminal  sales  revenue  for  fiscal  2000 were $2,459,000, which represented a
16.8%  increase  over  $2,106,000  for  fiscal 1999. This increase reflected the
delivery  of  approximately  4,100  terminals  to the U-Haul dealers during this
fiscal  year  as  compared  to  2,500  terminals  delivered  in fiscal 1999. The
increase  was  partially offset by fewer terminals sold to the merchants through
various  sales  channels during fiscal 2000. The total U-Haul dealer base served
by  the  Company nationwide has now grown to approximately 15,000 as a result of
these  latest  terminal  deployments.  The  Company  believes  that  the  U-Haul
transaction  revenue  will  continue to increase as a result of these additional
units  deployed.

Other  revenue decreased from $399,000 in fiscal year 1999 to $204,000 in fiscal
2000, a 48.9% decrease due to fewer billable software development work completed
during  the  current  year.


                                       20
<PAGE>
XPRESSCHEX,  Inc.,  a  wholly-owned subsidiary of the Company, initiated its new
ACH  backbone service in May 2000.  With a benchmark throughput in excess of 5.6
million  transactions per day, a tenfold system processing improvement, this ACH
system  was designed with redundancy and scalability to allow multiple benchmark
levels  to  be  implemented and sustained simultaneously.  This backbone will be
used for check conversion (POP), check re-presentment (RCK), accounts receivable
truncated  check  (ARTC/lockbox), online check acceptance, and batch processing.
This  system  is  completely  configurable  by  merchant.  Some  of the features
include  automated sales commission tracing, multiple re-initiation of items and
service  fees,  fully  automated  funds  distribution  of all fees and payments,
integrated  fraud  protection,  and  automated  return  matching.

In  November  1999, the Company acquired Peak Services, a collection agency, and
successfully  integrated  its  operations  into the XPRESSCHEX group location in
Albuquerque,  New  Mexico.  XPRESSCHEX  also  has  initiated a full ACH standard
collection  service  with  Internet-based  reporting  and  check  imaging.  This
collection  service  has  grown from processing 500 checks a month to over 4,000
checks  in  the  first  few  months  of  operations.

In  September  1999,  the  Company  entered  into a five-year strategic alliance
agreement  with  innoVentry,  a  company  jointly  owned by Wells Fargo and Cash
America International, Inc., to provide credit card transactions in innoVentry's
casino  business.  In  August 2000, the two companies agreed to discontinue this
relationship  and  the  Company subsequently sold its interest to innoVentry for
$1,000,000.  As  a  result,  the  Company  recognized  $312,000  of  gain.

COST  AND  EXPENSES.  Bankcard  processing  expenses  should  always reflect the
changes  in 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 and transaction expense, increased from $14,778,000 for fiscal year 1999
to  $18,128,000  in  2000, a 22.7% increase.  This was in direct relation to the
20.4% increase in processing and transaction revenues for fiscal year 2000.  The
decrease in gross margin was attributable to the marketing efforts being made to
the  retail  sectors,  which  traditionally  carries  a lower risk and therefore
generates  a  smaller  gross  margin  to  the  processor.

Cost  of terminals sold and leased increased from $1,166,000 in fiscal year 1999
to  $1,790,000  in fiscal year 2000, an increase of 53.5%.  This is attributable
to  the  16.8%  increase  in  terminal  sales  and  lease  revenue for the year.
Additionally,  the  Company  reduced  the  terminal  price  for the 4,100 U-Haul
systems  sold  during  2000.

Other  operating  costs  increased  from  $2,424,000  in  fiscal  year  1999  to
$3,231,000  in fiscal year 2000, an increase of 33.3%.  This increase was mainly
attributable  to  the  XPRESSCHEX  and the RMRS acquisitions and the significant
integration  expenses  related  to  the  various  check  products  and services.

Selling  and  general  and  administrative expenses increased from $4,176,000 in
fiscal  year  1999 to $4,816,000 in fiscal year 2000, an increase of 15.3%. As a
percentage  of  total  revenue,  selling,  general  and  administrative expenses
decreased  slightly  from 17.5% of total revenue in fiscal year 1999 to 17.0% of
total  revenue  in  fiscal year 2000.  This decrease was partially offset by the
bank  organization  costs  incurred  during  fiscal  year  2000.

Amortization  of  goodwill  expense  increased  from  $92,000  in fiscal 1999 to
$359,000 in fiscal 2000 as a result of the XPRESSCHEX and the RMRS acquisitions.

Overall,  the  Company  invested  substantially and made significant progress in
enhancing and integrating a suite of new check services during fiscal year 2000.
The  Company  expanded  its sources of revenue from one transaction type, credit
card  processing,  to  five different types of transactions, i.e., credit cards,
debit  cards,  check  verifications,  ACH settlement and collections. Management
believes that the overall effect of this enhanced transaction capability will be
positive  on  both  revenues  and  earnings  in  the  future.

In  December  1999,  the Company filed an application to start an Internet-based
bank  with  the Office of the Controller of the Currency (OCC) and also filed an
application  with  the  Federal  Deposit Insurance Corporation (FDIC) in January
2000.  The  bank  would  provide  services  exclusively  to  merchants  and  is,
therefore,  being  considered  a  "special purpose" bank by both the OCC and the
FDIC.  The  Company  withdrew  this application in April 2001, mainly due to the
uncertainty  of  the  market  conditions  and  the  Company's  stock  price.


                                       21
<PAGE>
NEW  ACCOUNTING  PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations".
SFAS  141  requires  the purchase method of accounting for business combinations
initiated  after  June  30, 2001 and eliminates the pooling-of-interests method.
The  Company  does  not  believe  that  the  adoption  of  SFAS  141 will have a
significant  impact  on  its  financial  statements  and  the  results  of  its
operations.

In  July  2001,  the FASB issued Statement of Financial Accounting Standards No.
142  ("SFAS"),  "Goodwill  and  Other Intangible Assets", which is effective for
fiscal  years beginning after December 15, 2001.  SFAS 142 requires, among other
things,  the discontinuance of goodwill amortization.  In addition, the standard
includes  provisions  for  the  reclassification  of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing recognized
intangibles,  reclassification of certain intangibles out of previously reported
goodwill  and  the  identification  of reporting units for purposes of assessing
potential  future  impairments of goodwill.  SFAS 142 also requires companies to
complete  a  transitional  goodwill  impairment test six months from the date of
adoption.  The  Company is currently evaluating the impact SFAS 142 will have on
its  financial  statements  and  the  results  of  its  operations.

In  August 2001, FASB issued Statement of Financial Accounting Standards No. 144
("SFAS  144"), "Accounting for the Impairment or Disposal of Long-Lived Assets."
This  Statement  supersedes  FASB Statement No. 121, ("SFAS 121") Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of,
and the accounting and reporting provisions of APB Opinion No. 30, Reporting the
Results  of  Operations  -  Reporting  the Effects of Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual  and  Infrequently  Occurring Events and
Transactions, for the disposal of a segment of a business (as previously defined
in  that  Opinion).  This  statement  establishes  a single accounting model for
long-lived asset impairment, based on the framework established in SFAS 121, for
long-lived  assets  to  be  disposed  of  by  sale,  and  resolves  significant
implementation  issues related to SFAS 121.  The Company is currently evaluating
the  impact  that SFAS 144 will have on its financial statements and the results
of  its  operations.

RISK  FACTORS

The  Company  is  subject  to  a  number  of risks, which could affect operating
results  and  liquidity,  including,  among  others,  the  following:

DEPENDENCY  ON  BANK  RELATIONSHIPS.

The  Company currently relies on cooperative relationships with, and sponsorship
by,  banks  in  order  to  process  its  Visa,  MasterCard  and  other  bankcard
transactions.  The  Company's  banking  relationships are currently with smaller
banks  (with  assets of less than $500,000,000).  Even though smaller banks tend
to  be  more  unstable,  these  banks  find the programs more attractive and the
Company  believes  that it cannot obtain similar relationships with larger banks
at  this  time.   A  bank could at any time curtail or place restrictions on the
processing  volume.  A  bank  might  do  this  because  of its internal business
policies  or  due  to  other  adverse circumstances.  If a volume restriction is
placed  on  the  Company,  it  could  materially  adversely  affect the business
operations  by  restricting  the  Company's  ability  to  process  credit  card
transactions  and receive the related revenue.  The Company's relationships with
its customers and merchants would also be adversely affected by its inability to
process  these  transactions.  To  limit  this  problem,  the  Company currently
maintains relationships with two banks.  However, the Company cannot assure that
these  banks  will  not  restrict its processing volume or that the Company will
always  be  able  to maintain its present banking relationships or establish new
banking  relationships.  Even  if  new banking relationships are available, they
may  not  be  on  terms  acceptable  to  the  Company.  The Company's failure to
maintain  these  banking  relationships  and  sponsorships would have a material
adverse  effect  on  the  business  and  results  of  operations.

BUSINESS  RELATIONSHIP  WITH  U-HAUL  INTERNATIONAL.

The  business  relationship  with  U-Haul  is very important to the Company.  In
2001,  80%  of  the  equipment  manufactured  by the Company was sold to U-Haul.
U-Haul  accounted  for approximately 8% of ECHO's revenue in 2001 and 14% of the
revenue  in  2000.  There  can  be no assurance that the Company will be able to
maintain  the  business  relationship  with U-Haul, or that sales to U-Haul will
continue  at  the  same  levels  as  previous  years.  Any decrease could have a
material  adverse  effect  on  ECHO.


                                       22
<PAGE>
BANKCARD  FRAUD.

The Company significantly relies on the processing of bankcard transactions.  If
any  merchants  were  to  submit  or process unauthorized or fraudulent bankcard
transactions,  depending  on  the  dollar  amount,  ECHO could incur significant
losses which could have a material adverse effect on the business and results of
operations.  These  types  of  losses  are  handled  by  the sponsoring banks as
follows:

     -    First  Regional Bank - ECHO assumes and is compensated for bearing the
          risk  of  these  types  of  losses.
     -    The  Berkshire  Bank - ECHO assumes and is compensated for bearing the
          risk  of  these  types  of  losses.

The Company has implemented systems and software for the electronic surveillance
and  monitoring  of  fraudulent bankcard use.  The Company cannot guarantee that
these  systems  will  prevent  fraudulent  transactions from being submitted and
processed.  The Company does not have insurance to protect it from these losses,
but  the  Company  does  allocate  ten  basis  points (.001) of daily processing
activity as a reserve against these types of losses.  There is no assurance that
this  reserve  will be adequate to offset against any unauthorized or fraudulent
processing  losses  that  the  Company may incur.  Depending on the size of such
losses  the  Company's results of operations could be immediately and materially
adversely  affected.

DEPENDENCE  ON  KEY  EMPLOYEES.

ECHO's success has been and will continue to be dependent on the services of key
technical  and  managerial  personnel such as Joel M. Barry, our chairman of the
board  and  chief  executive  officer.  The  loss  of  Mr.  Barry  could  have a
materially adverse impact on the Company's business.   The Company believes that
its  success  also  depends  on  its  ability to continue to be able to attract,
retain  and  motivate  highly  skilled  technical  and  management employees and
consultants who are in great demand.  There can be no assurance that the Company
will be able to attract and retain such employees and its failure to do so could
adversely  affect  its  business.

RISK  OF  NOT  REMAINING  LISTED  ON  NASDAQ.

ECHO  is  currently  listed on the Nasdaq SmallCap market. There is no assurance
that  the  listing  of  the  Company's  common stock will, in the future, always
continue  to  satisfy  the  Nasdaq  listing  requirements.  If  the  Company was
delisted from Nasdaq, this would have a material adverse effect on the price and
the  liquidity  of  the  Company's  common  stock.

COMPETITION.

ECHO  is  in  the  business  of  processing  transactions  and  designing  and
implementing  integrated  systems  for its customers so that they can better use
ECHO's  services.  This  business  is highly competitive and is characterized by
rapid technological change, rapid rates of product obsolescence, and rapid rates
of new products introduction.  The Company's market share is relatively small as
compared  to  most  of  its  competitors  and  most  of  these  competitors have
substantially  more  financial  and marketing resources to run their businesses.
This enables the Company's competitors to better and more quickly respond to new
and  emerging  technologies,  changes  in  customers  needs,  and to devote more
resources  to  product  and services development and marketing.  The Company may
face  increased competition in the future and there is no assurance that current
or new competition will allow the Company to keep its customers.  If the Company
loses  customers,  its business operations may be materially adversely affected,
which  could  cause  it to cease its business or curtail its business to a point
where  the  Company  is  no  longer able to generate sufficient revenues to fund
operations.  There  is  no  assurance  that  the  Company's current products and
services  will  stay competitive with those of the Company's competitors or that
the  Company  will  be  able  to  introduce new products and services to compete
successfully  in  the  future.

RAPID  TECHNOLOGY  CHANGES.

The Company's business industry involves rapidly changing technology.  Recently,
the  Company has observed rapid changes in technology as evident by the Internet
and  Internet-related  services  and  applications, new and better software, and
faster computers and modems.  As technology changes, ECHO's customers desire and
expect  better  products  and  services.  The  Company's  success depends on its
ability  to improve its existing products and services and to develop and market
new  products  and  services.  The  costs  and  expenses associated with such an
effort  could  be  significant  to  the Company.  There is no assurance that the


                                       23
<PAGE>
Company  will be able to find the funds necessary to keep up with new technology
or  that  if  such funds are available that the Company can successfully improve
its  existing  products  and  services  or successfully develop new products and
services.  The  Company's  failure  to provide improved products and services to
its  customers  or any delay in providing such products and services could cause
it  to  lose  customers  to  its  competitors.  Loss  of  customers could have a
material  adverse  effect  on  ECHO.

DEPENDENCE  ON  TECHNOLOGY  AND  RELATED  PATENTS.

The  Company  currently  owns three patents that relate to unique aspects of its
products  or  services.  Even though the Company has these patents, there can be
no  assurance  the  Company's  competitors  will not be able to develop a better
product  or  a  better way of providing the Company's services to its current or
potential  new  customers.  The  Company's  patents  have not been tested in the
courts  so  the  Company is unable to determine if they will be sustained in the
Company's  favor.  If  ECHO's  patents  are  not  sustained  in  its  favor, the
Company's  competitors could determine its business methods and then develop and
market competing products and services.  Such an outcome could cause the Company
to  lose  customers,  which  could  materially  adversely  affect its results of
operations.  The  Company  has  expended  considerable  time  and  money  in the
development  of  ideas  and  seeking patent protection for them.  If the Company
seeks  additional  patents  in  the  future,  or  if  the Company is required to
prosecute  or  defend  its  patents,  the  expenses  associated  with  such
patent-related activities could be substantial and could have a material adverse
effect  on  the  results  of  operations.

CERTAIN  OF  THE  COMPANY'S  INTELLECTUAL  PROPERTY  IS  NOT  PROTECTED.

The  Company  has  expended  a  considerable amount of time and money to develop
information  systems  for  its  merchants.  The  Company  has  not  obtained any
intellectual  property  protection  or  other  protection  on  these information
systems.  The  Company  also  believes  that  these  information  systems do not
infringe  upon  the  rights of any third parties, however, there is no assurance
that  third parties will not bring infringement claims against the Company.  The
Company  also  has the right to use certain technology of others through various
license  agreements.  If  a  third  party claimed these licenses were infringing
their  technology,  the  Company  could  face additional infringement claims and
potential negative results.  The Company is aware that a third party has claimed
that  the Company's United States Postal Service money order distribution system
violates  their patents.  This third party has not taken any action with respect
to  their  claim  to date.  The Company believes that it is not infringing their
patents.  If  an  infringement  claim  is  brought  against  the Company and the
Company  loses,  it could be required to stop using that type of product, system
or  service  as  well as pay monetary damages to the person or entity making the
claim.  This  result could materially adversely affect results of operations and
manner  in  which the Company could do business.  If the Company was not able to
implement another method its business could fail.  If the Company is required to
continuously  defend infringement claims, the costs and expenses associated with
such  a  defense  could  be  very  expensive to the Company and could materially
adversely  affect  the  results  of  operations.

DELAY  IN  THE  COMPANY'S  GROWTH  STRATEGIES.

The  Company  continues to enter into transactions, which may assist the Company
in  its  efforts to stay competitive.  Some of the Company's newer subsidiaries,
such  as  XPRESSCHEX and Rocky Mountain Retail Systems, Inc., started to work on
additional  check products, so that the Company can deliver a more comprehensive
suite  of  services  to  its  customers.  Although the Company believes that its
investment  in these subsidiaries will ultimately increase earnings at this time
some  of  their  products  are  still  in  the development phase and there is no
assurance  as  to  when  the  new  products  will  show  profitability.

NEED  FOR  ADDITIONAL  FUNDS.

The Company uses funds generated from operations to finance its operations.  The
Company  currently  believes that the cash flow from operations is sufficient to
support  its  business activities, including research, development and marketing
costs.  Future  growth  will depend on the Company's ability to raise additional
funds, either through operations, bank borrowings, or equity or debt financings.
There is no assurance that the Company will be able to raise the funds necessary
to  finance  growth  or  continue  to  generate  the  funds necessary to finance
operations,  and  even  if  such  funds  are  available,  that the terms will be
acceptable.  The  inability  to  generate the necessary funds from operations or
from  third  parties  could  force  the  Company  to  cut back its operations by
limiting  research,  development  and  growth  opportunities, which could have a
material  adverse  effect  on  ECHO.


                                       24
<PAGE>
UNDERWRITER/MARKET  MAKER.

Trading  markets  for  ECHO's  common  stock  were  maintained  on Nasdaq by the
underwriter  who  took  the  Company  public  in  its initial public offering in
November  1990  and various other broker/dealers who are members of the National
Association  of  Securities  Dealers.  This  underwriter,  which  had  been  the
Company's  principal  market  maker, went out of business in June 1992.  None of
the  remaining market makers are under any legal obligation to maintain a market
in  the  Company's common stock and may discontinue such activities at any time.
If  these  other  market makers choose not to maintain a market in the Company's
common  stock, such a discontinuance could have a material adverse effect on the
price  and  liquidity  of  the  Company's  common  stock.

LACK OF INSURANCE PROTECTION FOR THE COMPANY'S PRODUCTS AND SERVICES.

The  Company  does  not  have  insurance  protection  against claims for product
liability  or  errors  and  omissions  for the products and services sold by the
Company.  If  claims  are  brought  by  the  Company's  customers or other third
parties,  the  Company  could  be  required  to  pay  the required claim or make
significant  expenditures to defend against such claims.   There is no assurance
that  the  Company will have the money to pay such claims if they arise.  If the
Company  does  have  the  money  to  pay the claims, such a payment could have a
material  adverse  effect  upon  on  the  Company.

RISK  OF  LOSSES  FROM  REAL  ESTATE  PURCHASES.

The  Company  currently  holds  several  real  estate properties.  The Company's
business activities no longer include the purchase or investment in real estate.
Sale of the Company's current real estate holdings could result in a loss to the
Company.  The  Company  has  provided a reserve account to reflect the estimated
market  value  less disposition cost of its properties, but any difference could
result  in  a  loss.  The  Company does not maintain title insurance on its real
estate  holdings  and  could  incur  substantial  losses  from  title  defects.
Depending  on  the size of any loss, such loss could have a materially adversely
affected  on  the  Company.

COST  OF  DEFENDING  LAWSUITS.

The  Company  is  involved in various lawsuits arising in the ordinary course of
business.  Although  the  Company  believes  that  the  claims  asserted in such
lawsuits are without merit, the cost to the Company for the fees and expenses to
defend  such  lawsuits  could  have  a  material adverse effect on the Company's
financial  condition, results of operations or cash flow.  In addition, although
the  Company has not experienced any material liability relating to these claims
to date, there can be no assurance that the Company will not at some time in the
future  experience  significant  liability  in connection with such claims  (see
Item  3.  "Legal  Proceedings.").


ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company  is currently not exposed to any significant financial market risks
from changes in foreign currency exchange rates or changes in interest rates and
do  not  use  derivative  financial  instruments. All of our revenue and capital
spending is transacted in U.S. dollars.  However, in the future, the Company may
enter  into  transactions  in  other  currencies.  An adverse change in exchange
rates  would  result  in  a  decline  in income before taxes, assuming that each
exchange  rate  would  change in the same direction relative to the U.S. dollar.
In  addition  to  the  direct effects of changes in exchange rates, such changes
typically  affect  the  volume  of  sales  or  foreign  currency  sales price as
competitors'  products  become  more  or  less  attractive.


ITEM  8.    FINANCIAL  STATEMENTS  AND  SUPPLEMENTAL  DATA

The  Financial  Statements  and  Supplementary  Data  are listed under "Item 14.
Exhibits,  Financial  Statement  Schedules  and  Reports  on  Form  8K".


ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURES

None


                                       25
<PAGE>
                                   PART  III


ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

The  officers  and  directors  of  the  Company  are:
<TABLE>
<CAPTION>
                                                                   Date first became
            Name                               Position           Officer or Director
-------------------------------------  -------------------------  -------------------
<S>                                    <C>                        <C>
  Joel M. Barry [1][3]                 Chairman of the Board,                    1986
                                       Chief Executive Officer

  Alice L. Cheung                      Chief Financial Officer,                  1996
                                       Treasurer

  Lawrence M. Brown                    Vice President, Chief                     1999
                                       Information Officer

  Jesse Fong                           Vice President,                           1994
                                       Information Systems

  David Griffin                        Vice President,                           1990
                                       Check Services

  Geoffrey Masaki                      Vice President,                           2000
                                       Special Programs

  Rick Slater                          Vice President, Chief                     1998
                                       Technology Officer

  Patricia M. Williams                 Vice President, Corporate                 1997
                                       Program Management

  Jack Wilson                          Vice President, Credit                    1994
                                       Card Services

  Donna L. Rehman                      Corporate Secretary                       1990

  R. Marshall Frost                    Counsel                                   1994

  Aristides W. Georgantas[1][2][3][4]  Director                                  1999

  Carl W. Schafer [1][2][3][4]         Director                                  1986

  Herbert L. Lucas [1][2][3][4]        Director                                  1991


<FN>
     [1]  Member, Finance Committee
     [2]  Member,  Audit  Committee
     [3]  Member,  Nominating  Committee
     [4]  Member,  Executive  Compensation  Committee
</TABLE>


                                       26
<PAGE>
JOEL  M.  BARRY, age 51, has been a Director of the Company since July 1986, and
Chairman  of the Board since December 1986.  Mr. Barry served as Chief Financial
Officer  from  May  1987 to June 1990, and Executive Vice President from October
1987  to  June  1990,  when  he  was  designated  Chief Executive Officer of the
Company.  Mr.  Barry  is  also a Director and Chief Executive Officer of the MA,
CBC,  EPS  and  XCX,  Inc.  wholly-owned subsidiaries.  From August 1981 to June
1991,  Mr. Barry was a lecturer and investment counselor for Dynamic Seminars, a
firm  he  founded in 1981, and Basics Financial Planning and Investments, a firm
he founded in 1983.  From 1972 to 1974, Mr. Barry owned and operated a recording
business  and  from  1975  to 1981 was employed as the Director of Marketing and
Sales  with  Financial  Dynamics,  a  financial planning firm located in Covina,
California.  Mr.  Barry  attended  Oklahoma  State University from 1969 to 1970,
majoring  in  Accounting  and Ozark Bible College from 1970 to 1972, majoring in
music.

ALICE  L.  CHEUNG,  age  44, has served as Treasurer and Chief Financial Officer
since  July  1996.  Ms.  Cheung  received  her  BS  degree  in  business
administration/accounting  from  California  State  University  in  Long  Beach,
California  and  became  a  Certified  Public  Accountant in May 1982.  Prior to
joining the Company, Ms. Cheung was the Treasurer and Chief Financial Officer of
American  Mobile Systems from February 1988 to January 1996, prior to its merger
with  Nextel Communications, Inc. Ms. Cheung is an active member of the American
Institute  of  Certified  Public  Accountants and Financial Executive Institute.

LAWRENCE  M.  BROWN,  age  50, joined the Company in 1997 and was appointed Vice
President  and Chief Information Officer in 1999.  Prior to joining the Company,
Mr.  Brown  was  founder and sole proprietor of Cypress Productivity Systems, an
educational  consultancy  focused  on software engineering processes and project
management  methodologies.  Mr.  Brown  served  Unisys  Corporation for eighteen
years  in  various  roles  in Professional Services, Engineering, and Marketing,
with  his  last position as Director of Software Engineering.  Mr. Brown holds a
BA  degree in English and a BS degree in physics from Rhodes College in Memphis,
Tennessee,  as  well  as an MDiv from Claremont School of Theology in Claremont,
California.

JESSE  FONG,  age  50, has served as Vice President of Information Systems since
September  1994.  Mr.  Fong  joined  the  Company  in  1984  and  has  served as
programmer,  Data  Processing  manager  and  MIS director.  He received a degree
major  in  M.E. and minor in Computer Science in 1972, received an International
Marketing certificate in 1975 and a Business Administration certificate in 1976.
Mr.  Fong  worked as Marketing manager, Sales manager and Trainer with the Xerox
Corporation  in  Taiwan  from  1974  to  1978.  After  that,  he  joined  Abbott
Laboratory  as  Country  manager for two years.  After immigrating to the United
States  in  1980, he worked as International Marketing manager in a trading firm
for  four  years.

DAVID GRIFFIN, age 53, has served as Vice President of Check Services since June
1990.  Previous  to  this  capacity, he was Vice President of Operations for the
Company  from  January  1986  until  September  1989,  at which time he became a
consultant  to the Company.  Mr. Griffin has served as Senior Vice President and
General  Manager  for  TeleCheck, Los Angeles and TeleCheck, San Diego, from May
1983  to  August  1985.  Prior to these appointments, he was Regional Manager of
TeleCheck  Services,  a  franchiser  of  check guarantee services, a division of
Tymshare  Corporation,  which  was  subsequently  acquired  by McDonnell Douglas
Corporation.  Mr. Griffin holds a business administration degree with a major in
accounting  from  the  University  of  Houston.

GEOFFREY  MASAKI, age 54, joined the Company in July 1997 and was appointed Vice
President  of Special Programs in December 2000.  He has also served the Company
as  Senior  Project  Leader,  Terminal  Software  Development and as Director of
Special  Programs,  managing web-based projects. Mr. Masaki received a BA degree
in  mathematics  from Occidental College in Los Angeles in 1968 and an MS degree
in  Computer  Science  from  the University of Maryland in 1975.  Mr. Masaki has
been  performing  technical and management duties in the computer industry since
1969,  most  recently  as Senior Systems Analyst at Software Dynamics, Inc. from
1992  to  1997.

RICK  SLATER,  age  41,  joined  the  Company  in  May 1995 as Vice President of
Computer  Based Controls, Inc. (CBC).  Mr. Slater was appointed President of CBC
in  December  1995, Vice President of ECHO in November 1998 and Chief Technology
Officer in October 1999.  Prior to joining the Company, Mr. Slater was President
of  Slater  Research,  which  provided  contract engineering services to various
institutions.  During  this  time,  Mr. Slater directly participated in the U.S.
Coast  Guard  COMSTA  upgrade project including site surveys, systems design and
system  upgrade  integration in a number of sites within the U.S.  While a group


                                       27
<PAGE>
leader  at  Aiken  Advanced Systems, Mr. Slater held a TS/SCI security clearance
and  developed  numerous military signal collection systems installed throughout
the  world.  Mr.  Slater  holds a BS degree in electrical engineering technology
from  Old  Dominion  University,  Norfolk,  Virginia.

PATRICIA  M.  WILLIAMS, age 36, joined the Company in September 1996, serving as
Director  of  Program  Management  and was appointed Vice President of Corporate
Program  Management in October 1997.  Prior to joining ECHO, Ms. Williams was an
Operations Manager for Bank of America Systems Engineering in San Francisco. Ms.
Williams  has also served as a Senior Program manager for the Los Angeles office
of LANSystems, Inc., a nationwide systems integrator as well as a Senior Project
Manager  and  Systems  Engineer  for  Bank of America Systems Engineering in Los
Angeles.  Ms. Williams holds a B.A. degree in communications from the University
of  California,  Los  Angeles.

JACK  WILSON, age 57, has served as Vice President of Credit Card Services since
June  1994  and  was Director of Bankcard Relations for the Company from October
1992 until May 1994.  Mr. Wilson served as Vice President for Truckee River Bank
from  August  1989  until  September  1992.  Previously,  he  was  Senior  Vice
President/Cashier  of  Sunrise  Bancorp and a Vice President of First Interstate
Bank.  Mr.  Wilson  holds  a  teaching  credential from the California Community
College  System  in  business  and  finance.

DONNA  L. REHMAN, age 52, joined the Company in 1988 and has served as Corporate
Secretary  since  1990.  For three years prior thereto, she was self-employed in
Woodland Hills, California in educational books and toys.  She attended Southern
Illinois  University  in  Carbondale  and  was  employed  as  an  administrative
assistant  in  Chicago  for  4  years  and  Los  Angeles  for  5  years.

R.  MARSHALL  FROST,  age 54, has served the Company in varying capacities since
1987  and  is  currently  In-House Counsel.  Mr. Frost received his BA degree in
business  administration  with  emphasis  in  accounting  from  California State
University at Fullerton, his AA degree in pre-med from Fullerton College, his JD
degree  from  Ventura  College of Law, and his MBA degree from the University of
Redlands.  Mr.  Frost  is an active member of the California Bar and a certified
broker  with  the  California  Department  of  Real  Estate.

ARISTIDES  W.  GEORGANTAS, age 57, has served as a Director since February 1999.
Mr.  Georgantas was Executive Vice President and Chief Operating Officer, Global
Asset  Management/Private  Banking,  and Chairman and Chief Executive Officer of
Chemical  Bank  New  Jersey,  NA.  He  had  also  served  as President and Chief
Operating  Officer  of Horizon Bancorp and subsidiaries and Princeton Bank.  His
affiliations  include Director of Blue Cross Blue Shield of New Jersey; Director
of  Glenmede  Trust  Company;  Director  of the Foundation for New Jersey Public
Broadcasting;  and Director of Mathematica Policy Research, Inc.  Mr. Georgantas
is  a  graduate  of  the University of Massachusetts and the Columbia University
Graduate  School  of  Business.

CARL  W.  SCHAFER, age 65, has been a Director since July 1986.  Mr. Schafer was
Financial  Vice  President  and Treasurer (Chief Financial Officer) of Princeton
University  from July 1976 to October 1987. From October 1987 to April 1990, Mr.
Schafer  was  a  Principal of Rockefeller & Co., Inc. of New York, an investment
management  firm.  He is a Director of The Atlantic Foundation and Harbor Branch
Institution  and became President of the Atlantic Foundation in April 1990.  Mr.
Schafer  also  holds  the  following  positions:  Director/Trustee  of the Paine
Webber and Guardian Families of Mutual Funds; Director of Roadway Express, Inc.,
a  trucking  company;  Director  of  Frontier  Oil  Corporation, an oil refiner;
Director  of  Nutraceutix,  Inc.,  a  bio  technology company; Director of Labor
Ready,  Inc., a provider of temporary labor; and Chairman of The Johnson Atelier
and School Of Sculpture.  He graduated from the University of Rochester in 1958,
and served with the U.S. Bureau of the Budget, successively, as Budget Examiner,
Legislative  Analyst,  Deputy  Director  and Director of Budget Preparation.  He
resides  in  Princeton,  New  Jersey.

HERBERT  L. LUCAS, age 75, has been a Director since 1991.  Mr. Lucas received a
BA degree in History in 1950 from Princeton University and an MBA degree in 1952
from  Harvard  University Graduate School of Business Administration.  He served
as  President from 1972 to 1981 of Carnation International in Los Angeles and as
a  member  of  the Board of Directors of the Carnation Company.  Since 1982, Mr.
Lucas has managed his family investment business.  He has served on the Board of
Directors  of  various  financial and business institutions including Wellington
Trust  Company,  Arctic  Alaska  Fisheries,  Inc.,  Nutraceutix,  and  Sunworld
International  Airways,  Inc.  Mr.  Lucas has served as a Trustee of The J. Paul
Getty  Trust,  the  Los  Angeles County Museum of Art, and Winrock International
Institute  for  Agricultural Research and Development.  He was formerly a member
of  the  Board  of  Trustees  of  Princeton  University.


                                       28
<PAGE>
All directors are to be elected to specific terms, from one year to three years,
by the stockholders and serve until the next annual meeting or until their terms
have  expired.  The annual meeting of stockholders was held on February 2, 2001,
and  the  election  of  directors  was  held  at  that  time.


ITEM  11.     EXECUTIVE  COMPENSATION

The  following  table  sets  forth the total compensation paid and stock options
offered  by  the  Company to its Chief Executive Officer and to each of its most
highly  compensated  executive officers, other than the Chief Executive Officer,
whose compensation exceeded $100,000 during the fiscal years ended September 30,
2001,  2000  and  1999.

<TABLE>
<CAPTION>
                                                              Annual        Long  Term
                                                          Compensation     Compensation
                                                      -------------------  -------------
                                                                             Securities
                          Capacities in                                      Underlying
Name                      Which Served       Year     Salary[1]    Bonus     Options[2]
-----------------------  ---------------  ----------  ----------  -------  -------------
<S>                      <C>              <C>         <C>         <C>      <C>

Joel M. Barry            Chairman/Chief         2001  $  203,000  $25,000         12,500
                         Executive Officer      2000     190,000  50,000          12,500
                                                1999     159,166  52,500          75,000


Alice L. Cheung          Chief Financial        2001  $  104,750   10,000          5,000
                         Officer/Treasurer      2000      99,500   14,250          2,500
                                                1999      94,416   12,000          5,000

Rick Slater              Vice President         2001  $  117,850    7,000          2,500
                                                2000     113,300   13,200          5,000
                                                1999     110,000   10,000          5,000

Lawrence Brown           Vice President         2001  $  103,750   10,000          7,500
                                                2000     100,000   12,750         10,000
                                                1999      88,600      -0-          5,000

Jack Wilson              Vice President         2001  $   91,250   10,000          7,500
                                                2000      83,750    9,600          5,000
                                                1999      75,791    7,500          5,000

Patricia M. Williams     Vice President         2001  $   96,500   10,000         10,000
                                                2000      84,500   12,000          5,000
                                                1999      72,083      -0-          5,000

_______________________
<FN>
[1]  The  Company  provides  Mr.  Barry  and  Mr. Wilson with an automobile. Mr.
     Barry,  Ms.  Cheung, Mr. Slater, Mr. Brown, Mr. Wilson and Ms. Williams are
     participants  of  a  Company  sponsored  401(K)  plan.  There  has  been no
     compensation  paid  other  than  that  indicated  in  the  above  table.
[2]  None  of  these  options  have  been  exercised  (see "Stock Option Plan").
</TABLE>


                                       29
<PAGE>
FISCAL  2001  OPTION  GRANTS  TABLE

The  following table sets forth the stock options granted to the Company's Chief
Executive  Officer  and  each  of  its  executive officers, other than the Chief
Executive  Officer,  whose  compensation  exceeded  $100,000 during fiscal 2001.
Under  applicable  Securities and Exchange Commission regulations, companies are
required  to  project  an  estimate  of appreciation of the underlying shares of
stock  during  the option term.  The Company has chosen to project this estimate
using  the  potential  realizable  value  at assumed annual rates of stock price
appreciation for the option term at assumed rates of appreciation of 5% and 10%.
However,  the  ultimate value will depend upon the market value of the Company's
stock  at  a  future date, which may or may not correspond to projections below.

<TABLE>
<CAPTION>
                                                                              Potential  Realization
                                                                                 Value at  Assumed
                                                                                 Annual  Rates  of
                                                                                    Stock  Price
                                  Percent  of                                    Appreciation  for
                                 Total Granted     Exercise                        Option  Term
                      Options   to Employees in     Price     Expiration  --------------------------------
Name                  Granted     Fiscal Year     per share      Date           5%              10%
--------------------  -------  -----------------  ----------  ----------  ---------------  ---------------
<S>                   <C>      <C>                <C>         <C>         <C>              <C>

Joel M. Barry          12,500             14.84%  $     2.84    12/20/10  $        9,750   $       21,625
Alice L. Cheung         5,000              5.93%  $     2.84    12/20/10  $        3,900   $        8,650
Rick Slater             2,500              2.97%  $     2.84    12/20/10  $        1,950   $        4,325
Lawrence M. Brown       7,500              8.90%  $     2.84    12/20/10  $        5,850   $       12,975
Jack Wilson             7,500              8.90%  $     2.84    12/20/10  $        5,850   $       12,975
Patricia M. Williams   10,000             11.87%  $     2.84    12/20/10  $        7,800   $       17,300
</TABLE>

The  following  table  sets  forth the number of unexercised options held by the
Company's Chief Executive Officer and each of its executive officers, other than
the  Chief Executive Officer, whose compensation exceeded $100,000 during fiscal
2001.  No  options  have  been  exercised.

AGGREGATED  OPTION/SAR  EXERCISES  AND  FISCAL-YEAR  OPTION/SAR  VALUE  TABLE

<TABLE>
<CAPTION>
                                                                Value of
                                                Number  of     unexercised
                          Shares               unexercised     in-the-money
                      acquired on    Value     options/SARS    Options/SARS
Name                  exercise #   realized $    FY-end #    at FY-end $[1]
--------------------  -----------  ----------  ------------  ---------------
<S>                   <C>          <C>         <C>           <C>
Joel M. Barry                 -0-  $      -0-       197,500  $        53,625
Alice L. Cheung               -0-  $      -0-        50,000  $           -0-
Rick Slater                   -0-  $      -0-        58,000  $         6,825
Lawrence M. Brown             -0-  $      -0-        32,500  $           -0-
Jack Wilson                 2,500  $    5,000        40,000  $         3,375
Patricia M. Williams          -0-  $      -0-        35,000  $           -0-

<FN>
[1]  Based  on the closing sales price of the Common Stock on September 30, 2001
     of  $2.15  per  share,  less  the  option  exercise  price.
</TABLE>


                                       30
<PAGE>
COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

No  interlocking relationship exists between the Company's Board of Directors or
Executive  Officers  Compensation  Committee  and  the  board  of  directors  or
compensation  committee  of  any  other  company.

DIRECTOR  COMPENSATION

Each  outside  director  received  $15,000  and  3,750 shares of Common Stock in
fiscal  2001;  $15,000  and  1,465  shares  of  Common Stock in fiscal 2000; and
$15,000  and  1,364  shares  of  Common  Stock  in  fiscal  1999.  Directors are
compensated  for  all  reasonable  expenses  and are not compensated for special
meetings  other  than  regular  meetings.

EMPLOYMENT  AGREEMENTS

None.

BONUS,  PROFIT-SHARING  AND  OTHER REMUNERATION PLANS AND PENSION AND RETIREMENT
PLANS

The  Company has established a bonus program to reward extraordinary performance
that exceeds pre-set goals established for executive officers and key personnel.
The  Company believes that such a bonus program provides the incentive to exceed
such  goals,  thereby  building  shareholder  value.

The  Company has a contributory 401(K) Retirement Pension Plan, which covers all
employees  who  are  qualified  under  the  plan  provisions.


STOCK  OPTION  PLAN

On  May  13,  1992,  the  Company's Board of Directors authorized adoption of an
Officers and Key Employees Incentive Stock Option Plan ("Plan"), ratified by the
shareholders  at  the  Annual Meeting held July 10, 1992.  The Plan provided for
the  issuance  of  up to 81,250 stock options, each to purchase one share of the
Common  Stock  for  $3.40 per share, subject to adjustment in the event of stock
splits,  combinations  of  shares,  stock  dividends  or  the  like.

On November 18, 1996, the Company's Board of Directors authorized an increase in
the  Plan  to 843,750 options and was ratified by the shareholders at the Annual
Meeting  held  in  February  1997.

On  February 4, 1999, the Company's Board of Directors authorized an increase in
the Plan to 1,343,750 options and was ratified by the shareholders at the Annual
Meeting  held  in  February  1999.

With  the  exception  of the foregoing, the Company has no stock option plans or
other  similar  or  related  plans  in  which  any  of its officers or directors
participate.


ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

As  of  November  15,  2001,  there were 5769,873 shares of the Company's Common
Stock  outstanding.  To  the  Company's  knowledge, no individual has beneficial
ownership  or control over 5% or more of the Company's outstanding Common Stock.

The  following  table  sets  forth  the  number  of shares of Common Stock owned
beneficially  by  the  Company's  officers and directors, individually, and as a
group,  as  of  November  15,  2001.


                                       31
<PAGE>
                                      Amount and           Percentage of
                                 Nature of Beneficial  Outstanding Stock[1]
Name and Address                      Ownership            At 11/15/01
-------------------------------  --------------------  ---------------------
  Joel M. Barry                            235,812[2]                  3.93%
  28001 Dorothy Drive
  Agoura Hills, CA  91301

  Lawrence M. Brown                         32,500[2]                  0.56%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Alice L. Cheung                           52,500[2]                  0.90%
  28001 Dorothy Drive
  Agoura Hills, CA  91301

  Jesse Fong                                16,278[2]                  0.28%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  R. Marshall Frost                          3,750[2]                  0.06%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Aristides W. Georgantas                       6,579                  0.11%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  David Griffin                             33,186[2]                  0.58%
  28001 Dorothy Drive
  Agoura Hills, CA  91301

  Herbert L. Lucas                       66,687[3][4]                  1.14%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Geoffrey Masaki                            9,475[2]                  0.16%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Donna L. Rehman                           12,500[2]                  0.21%
  28001 Dorothy Drive
  Agoura Hills, CA  91301

  Carl W. Schafer                           36,729[3]                  0.63%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Rick Slater                               58,500[2]                  1.00%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Patricia M. Williams                      35,000[2]                  0.60%
  28001 Dorothy Drive
  Agoura Hills, CA 91301


                                       32
<PAGE>
Jack Wilson                              43,575[2][5]                  0.74%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  All officers and directors
  as a group (14 persons)                     643,071                 10.16%


______________________________

[1]  Outstanding  Common  Shares  with  effect  given to conversion of preferred
     stock  and  options  described  in  footnotes  2  through  5.
[2]  Includes options according to the terms of the Incentive Stock Option Plan.
     See  "Item  11.  Executive  Compensation".
[3]  Includes  options  granted  to  outside  directors.
[4]  Includes  17,972  shares  indirectly owned by Mr. Lucas through a trust for
     his  wife.
[5]  Includes  530  shares  indirectly  owned  by  Mr.  Wilson through his wife.

ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

There were no related-party transactions.


                                       33
<PAGE>
                                     PART IV


ITEM  14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON  FORM 8K

(a)  The  following  documents  are  filed  as  part  of  this  report:

   (1)  Consolidated Financial Statements                                   Page
                                                                            ----

          Report  of  Independent  Accountants. . . . . . . . . . . . . . .  F-1

          Consolidated  Balance  Sheet  at September 30, 2001 and 2000. . .  F-2

          Consolidated Statement of Operations for each of the three years
          in the period ended September 30, 2001. . . . . . . . . . . . . .  F-3

          Consolidated Statement of Changes in Stockholders' Equity
          for each of the three years in the period ended September
          30, 2001. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  F-4

          Consolidated Statement of Cash Flows for each of the three years
          in  the  period  ended  September  30,  2001. . . . . . . . . . .  F-5

          Notes  to  Consolidated  Financial  Statements. . . . . . . . . .  F-6

     (2)  Financial  Statement  Schedules:

          Schedule  II - Valuation and Qualifying Accounts and Reserves . .  S-1


All  other schedules are omitted because they are not applicable or the required
information  is shown in the Consolidated Financial Statements or Notes thereto.

(b)  Reports  on  Form  8K  for  fourth  quarter  ending  September  30,  2001:




     Date  of  Filing     Item  Reported
     ----------------     --------------

July  18,  2001     On  July  16, 2001, the company received Nasdaq notification
                    that  the  Panel  determined  to continue the listing of the
                    Company's  securities on the Nasdaq SmallCap Market pursuant
                    to  various  exceptions. Additionally, the Board of Director
                    approved  a  one-for-four  (1:4)  stock  split,  subject  to
                    shareholder approval at a special meeting of shareholders to
                    be  held  on  September  7,  2001.

September 7, 2001   On September 7, 2001, the Company's shareholders approved
                    a  one-for-four  (1:4) reverse split of the Company's common
                    stock.  The reverse split will affect shareholders of record
                    at  the  close  of  business  on Monday, September 10, 2001.


                                       34
<PAGE>
(c)  Exhibits:

 Exhibit
 Number     Description  of  Document
-------     -------------------------

1.1          Form  of Underwriting Agreement between the Company and J.W. Gant &
             Associates,  Inc.  [3]
1.2          Form  of  Agreement  among  Underwriters.  [3]
1.3          Form  of  Selected  Dealer's  Agreement.  [3]
2.1          Copy  of  Merger  Agreement  and  Plan  of  Reorganization  between
             Electronic  Clearing  House,  Inc.,  ECHO Acquisition  Corporation,
             and  Magic Software Development, Inc.,  dated  April  20,  1999.[9]
2.2          Copy  of  Merger  Agreement  and  Plan  of  Reorganization  between
             Electronic  Clearing  House, Inc.,  ECHO  Acquisition  Corporation,
             and Rocky Mountain Retail Systems, Inc., dated January 4, 2000.[10]
3.1          Articles  of  Incorporation of Bio Recovery Technology, Inc., filed
             with the Nevada Secretary of State on December 11, 1981. [1]
3.2          Certificate  of  Amendment  to  Articles  of  Incorporation  of Bio
             Recovery  Technology,  Inc.,  filed  with the Nevada Secretary of
             State  on  September  1,  1983.  [1]
3.3          Certificate  of  Amendment  of  Articles  of  Incorporation  of Bio
             Recovery  Technology,  Inc.,  filed  with the Nevada Secretary of
             State  on  January  17,  1986.  [1]
3.4          By-Laws  of  Bio  Recovery  Technology,  Inc.  [1]
4.1          Proposed  Form of Purchase Option between the Company and J.W. Gant
             &  Associates,  Inc.  [3]
4.2          Specimen  Common  Stock  Certificate.  [3]
10.35        Copy  of  Merchant  Marketing  and  Processing Services Agreement
             between  Electronic Clearing House, Inc. and First Regional Bank,
             dated  June  24,  1997.  [8]
10.36        Copy  of  Merchant  Marketing  and  Processing Services Agreement
             between  Electronic  Clearing House, Inc. and The Berkshire Bank,
             dated  July  31,  1997.  [8]
10.41        Copy of Processing and Software Development and License Agreement
             between  Electronic  Clearing  House,  Inc.  and  National  Bank
             Drafting  Systems,  Inc.,  dated  October  22,  1999.[10]
10.42        Copy  of Addendum to Agreement between Electronic Clearing House,
             Inc.  and  U-Haul  International,  dated  January  1,  2000.[10]
10.44        Copy  of  Electronic  Check Services Agreement between Electronic
             Clearing  House,  Inc.  and National Bank Drafting Systems, Inc.,
             dated  May  17,  2000.[10]
10.46        Copy  of  Amended  and Restated Merchant Marketing and Processing
             Services  Agreement  between  Electronic Clearing House, Inc. and
             First  Regional  Bank,  dated  August  1,  2000.[10]
10.47        Copy of Addendum to  Amended  and  Restated  Merchant Marketing and
             Processing  Services Agreement between Electronic Clearing House,
             Inc.  and  First  Regional  Bank,  dated  August  1,  2000.[10]
10.48        Copy  of POS Check Third Party Servicer Agreement between Visa
             U.S.A.,  Inc. and Electronic Clearing House, Inc., dated December
             12,  2000.
10.49        Copy  of Asset Purchase Agreement between National Check Network,
             Inc.  and  Electronic  Clearing House, Inc., dated April 19, 2001
10.50        Copy of Addendum to  Agreement  between U-Haul International and
             Electronic  Clearing  House,  Inc.,  dated  October  1,  2001.
22.0         Subsidiaries  of  Registrant.  [2]

_________________________________

[1]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             the  fiscal year ended September 30, 1988 and incorporated herein
             by  reference.
[2]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             the  fiscal year ended September 30, 1989 and incorporated herein
             by  reference.
[3]          Filed  as  an  Exhibit  to  Registrant's Form S-1, Amendment No. 3,
             effective November 13, 1990 and incorporated herein by reference.
[4]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             fiscal  year  ended September 30, 1992 and incorporated herein by
             reference.
[5]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             fiscal  year  ended September 30, 1993 and incorporated herein by
             reference.
[6]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             fiscal  year  ended September 30, 1994 and incorporated herein by
             reference.


                                       35
<PAGE>
[7]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             fiscal  year  ended September 30, 1996 and incorporated herein by
             reference.
[8]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             fiscal  year  ended September 30, 1997 and incorporated herein by
             reference.
[9]          Filed  as an Exhibit to Registrant's Annual Report on Form 10-K for
             fiscal  year  ended September 30, 1999 and incorporated herein by
             reference.
[10]         Filed as an Exhibit to Registrant's Annual Report on Form 10-K for
             fiscal  year  ended September 30, 2000 and incorporated herein by
             reference.


                                       36
<PAGE>
                                   SIGNATURES


Pursuant  to  the requirements of Section 13 or 15(d) 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.


          By:  \s\  Joel  M.  Barry
               --------------------
                Joel  M.  Barry,  Chief  Executive
                Officer  and  Chairman


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has  been  signed  by  the  following persons in the capacities and on the dates
indicated.


            SIGNATURE                      TITLE                    DATE
            ---------                      -----                    ----




\s\  Joel  M.  Barry              Chairman  of  the  Board   ) December 21, 2001
-----------------------------     and Chief Executive Officer)
     Joel  M.  Barry                                         )
                                                             )
                                                             )
\s\  Carl  W.  Schafer            Director                   )
-----------------------------                                )
     Carl  W.  Schafer                                       )
                                                             )
                                                             )
                                                             )
\s\  Herbert  L.  Lucas,  Jr.     Director                   )
-----------------------------                                )
     Herbert  L.  Lucas,  Jr.                                )
                                                             )
                                                             )
                                                             )
\s\  Alice  L.  Cheung            Chief  Financial  Officer  )
----------------------            and  Treasurer             )
     Alice  L.  Cheung                                       )
                                                             )
                                                             )
                                                             )
\s\  Marjan  Hewson               Controller                 )
-----------------------------                                )
     Marjan  Hewson                                          )


                                       37
<PAGE>
                        REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors
and Stockholders of
Electronic Clearing House, Inc.:


In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 34 present fairly, in all material
respects, the financial position of Electronic Clearing House, Inc. and its
subsidiaries at September 30, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended September
30, 2001 in conformity with accounting principles generally accepted in the
United States of America.  In addition, in our opinion, the financial statement
schedules listed in the index appearing under Item 14(a)(2) on page 34 present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.  These financial
statements and financial statement schedules are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.  We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.



\S\ PRICEWATERHOUSECOOPERS LLP


Los Angeles
December 3, 2001


                                      F 1
<PAGE>
<TABLE>
<CAPTION>
                                    ELECTRONIC CLEARING HOUSE, INC.

                                      CONSOLIDATED BALANCE SHEETS
                                      ---------------------------
                                                                                   September  30,
                                                                                   --------------
                                                                                2001          2000
                                                                            ------------  ------------
<S>                                                                         <C>           <C>
                                     ASSETS
                                    --------
Current assets:
  Cash and cash equivalents                                                 $ 4,147,000   $ 3,941,000
  Restricted cash                                                             1,410,000     1,017,000
  Accounts receivable less allowance of $313,000 and $380,000                 1,864,000     1,911,000
  Inventory                                                                     573,000       594,000
  Prepaid expenses and other assets                                             137,000       132,000
                                                                            ------------  ------------
Total current assets                                                          8,131,000     7,595,000
Noncurrent assets:
  Long term receivables                                                          21,000        19,000
  Property and equipment, net                                                 3,754,000     2,949,000
  Real estate held for investment                                               252,000       252,000
  Deferred tax asset                                                            778,000     1,214,000
  Other assets, net                                                             800,000       411,000
  Goodwill, net                                                               5,185,000     4,573,000
                                                                            ------------  ------------

          Total assets                                                      $18,921,000   $17,013,000
                                                                            ============  ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities:
  Short-term borrowings and current portion of
   long-term debt                                                           $   240,000   $   177,000
  Accounts payable                                                              135,000       120,000
  Settlement payable to merchants                                               618,000       170,000
  Accrued expenses                                                            1,395,000     1,046,000
  Deferred income                                                                50,000        53,000
                                                                            ------------  ------------
          Total current liabilities                                           2,438,000     1,566,000
Long-term debt                                                                  744,000       767,000
                                                                            ------------  ------------
          Total liabilities                                                   3,182,000     2,333,000
                                                                            ------------  ------------
Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock, $.01 par value, 5,000,000 shares authorized
    Series "K", 25,000 and 25,000 shares issued and outstanding,                    -0-           -0-
  Common stock, $.01 par value, 36,000,000 shares authorized;
    5,809,121 and 5,472,009 shares issued; 5,769,873 and 5,432,734
    shares outstanding                                                           58,000        55,000
Additional paid-in capital                                                   21,260,000    20,638,000
Accumulated deficit                                                          (5,110,000)   (5,544,000)
Less treasury stock at cost, 39,248 and 39,275 common shares                   (469,000)     (469,000)
                                                                            ------------  ------------

          Total stockholders' equity                                         15,739,000    14,680,000
                                                                            ------------  ------------

          Total liabilities and stockholders' equity                        $18,921,000   $17,013,000
                                                                            ============  ============

          See accompanying notes to consolidated financial statements.
</TABLE>


                                      F 2
<PAGE>
<TABLE>
<CAPTION>
                               ELECTRONIC CLEARING HOUSE, INC.

                            CONSOLIDATED STATEMENTS OF OPERATIONS
                            -------------------------------------

                                                           Year  ended  September  30,
                                                           ---------------------------
                                                        2001          2000          1999
                                                    ------------  ------------  ------------
<S>                                                 <C>           <C>           <C>
REVENUES:
    Processing revenue                              $14,719,000   $14,917,000   $13,222,000
    Transaction revenue                              14,377,000    10,760,000     8,101,000
    Terminal sales                                      447,000     2,459,000     2,106,000
    Other revenue                                       400,000       204,000       399,000
                                                    ------------  ------------  ------------
                                                     29,943,000    28,340,000    23,828,000
                                                    ------------  ------------  ------------

COSTS AND EXPENSES:
    Processing and transaction expense               19,239,000    18,128,000    14,778,000
    Cost of terminals sold                              419,000     1,790,000     1,166,000
    Other operating costs                             3,538,000     3,231,000     2,424,000
    Selling, general and administrative expenses      5,760,000     4,816,000     4,176,000
    Amortization expense - goodwill                     424,000       359,000        92,000
                                                    ------------  ------------  ------------

                                                     29,380,000    28,324,000    22,636,000
                                                    ------------  ------------  ------------

Income from operations                                  563,000        16,000     1,192,000
Interest income                                         187,000       284,000       180,000
Interest expense                                        (81,000)      (88,000)      (85,000)
Gain on sale of asset                                   350,000       312,000           -0-
                                                    ------------  ------------  ------------

Income before (provision) benefit for income taxes    1,019,000       524,000     1,287,000

(Provision) benefit for income taxes                   (585,000)     (233,000)    1,331,000
                                                    ------------  ------------  ------------

NET INCOME                                          $   434,000   $   291,000   $ 2,618,000
                                                    ============  ============  ============

    Earnings per share - Basic                      $      0.07   $      0.06   $      0.58
                                                    ============  ============  ============

    Earnings per share - Diluted                    $      0.07   $      0.05   $      0.45
                                                    ============  ============  ============


    Shares used in computing basic
    earnings per share                                5,797,120     5,257,393     4,535,777
                                                    ============  ============  ============

    Shares used in computing diluted
    earnings per share                                5,963,808     5,825,097     5,824,871
                                                    ============  ============  ============

            See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>


                                      F 3
<PAGE>
<TABLE>
<CAPTION>
                                            ELECTRONIC CLEARING HOUSE, INC.


                              CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                              ----------------------------------------------------------

                                                  Stock                          Additional
                               -----------------------------------------------    Paid-in     Treasury   Accumulated
                                Treasury     Common    Preferred     Amount       Capital      Stock       Deficit        Total
                               ----------  ----------  ----------  -----------  -----------  ----------  ------------  -----------
<S>                            <C>         <C>         <C>         <C>          <C>          <C>         <C>           <C>


Balance at September 30, 1998      1,560   3,780,136     516,511   $   43,000   $14,253,000  $     -0-   $(8,453,000)  $ 5,843,000

Exercise of warrants                         162,500                    2,000       258,000                                260,000
Exercise of stock options                    226,250                    2,000       554,000                                556,000
Conversion of preferred to
common                                       545,555    (451,511)       1,000        (1,000)                                   -0-
Issuance of common stock to
  outside directors                            4,091                                 45,000                                 45,000
Issuance of common stock -
 acquisition                                  250,000                    2,000    1,998,000                              2,000,000
Purchase of treasury stock        19,918                                                      (138,000)                   (138,000)
Net income                                                                                                 2,618,000     2,618,000
                               ----------  ----------  ----------  -----------  -----------  ----------  ------------  -----------

Balance at September 30, 1999     21,478   4,968,532      65,000       50,000    17,107,000   (138,000)   (5,835,000)   11,184,000

Exercise of warrants                          87,500                    1,000       139,000                                140,000
Exercise of stock options                    116,583                    1,000       248,000                                249,000
Conversion of preferred to
 common                                       40,000     (40,000)                                                             -0-
Issuance of common stock to
 outside directors                             4,394                                 45,000                                45,000
Issuance of common stock -
acquisition                                  255,000                    3,000     3,099,000     3,102,000
Purchase of treasury stock        17,797                                                         (331,000)               (331,000)
Net income                                                                                                   291,000     291,000
                               ----------  ----------  ----------  -----------  -----------  ----------  ------------  -----------

Balance at September 30, 2000     39,275   5,472,009      25,000       55,000    20,638,000   (469,000)   (5,544,000)   14,680,000

Exercise of stock options                     15,000                                 47,000                                 47,000
Issuance of common stock to
  outside directors                           11,250                                 45,000                                 45,000
Issuance of common stock -
acquisition                                   21,166                                 85,000                                 85,000
Issuance of performance stock                375,000                    4,000       776,000                                780,000
Re-issuance of treasury stock        (27)                                                                                      -0-
Common stock repurchase                      (85,304)                  (1,000)     (331,000)                              (332,000)
Net income                                                                                                   434,000       434,000
                               ----------  ----------  ----------  -----------  -----------  ----------  ------------  -----------

Balance at September 30, 2001     39,248   5,809,121      25,000   $   58,000   $21,260,000  $(469,000)  $(5,110,000)  $15,739,000
                               ==========  ==========  ==========  ===========  ===========  ==========  ============  ===========


                               See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>


                                      F 4
<PAGE>
<TABLE>
<CAPTION>
                                        ELECTRONIC CLEARING HOUSE, INC.

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    -------------------------------------

                                                                            Year  ended  September  30,
                                                                            ---------------------------
                                                                        2001          2000          1999
                                                                    ------------  ------------  ------------
<S>                                                                 <C>           <C>           <C>

Cash flows from operating activities:
  Net income                                                        $   434,000       291,000     2,618,000
  Adjustments to reconcile net income to net cash
   provided by operating activities:
  Depreciation                                                          488,000       325,000       271,000
  Amortization of software                                              433,000       233,000       128,000
  Amortization of goodwill                                              414,000       352,000        89,000
  Provisions for losses on accounts and
    notes receivable                                                    326,000       586,000       443,000
  Provision (benefit) for deferred income taxes                         436,000       178,000    (1,392,000)
  Fair value of stock issued in
    connection with director's compensation                              45,000        45,000        45,000
  Gain on sale of asset                                                (350,000)     (312,000)          -0-
Changes in assets and liabilities, net of effects of acquisitions:
  Restricted cash                                                      (393,000)     (281,000)      (85,000)
  Accounts receivable                                                  (307,000)     (824,000)     (790,000)
  Inventory                                                              21,000       (14,000)      139,000
  Prepaid expenses and other current assets                              (5,000)      (27,000)      (45,000)
  Accounts payable                                                       15,000       (53,000)      (46,000)
  Settlement payable to merchants                                       448,000       170,000           -0-
  Accrued expenses                                                      349,000       128,000       (98,000)
  Deferred income                                                        (3,000)       (9,000)     (421,000)
  Other receivable                                                       (2,000)          -0-       (18,000)
                                                                    ------------  ------------  ------------
  Net cash provided by operating activities                           2,349,000       788,000       838,000
                                                                    ------------  ------------  ------------
Cash flows from investing activities:
  Other assets                                                         (458,000)     (139,000)      (83,000)
  Purchase of equipment and software                                 (1,404,000)   (1,246,000)   (1,062,000)
  Increase in notes receivable                                              -0-    (1,027,000)          -0-
  Repayment of notes receivable                                             -0-     1,000,000         5,000
  Proceeds from sale of asset                                           350,000     1,000,000           -0-
  Cash (used for) acquired through acquisition                         (169,000)       80,000           -0-
                                                                    ------------  ------------  ------------

  Net cash used in investing activities                              (1,681,000)     (332,000)   (1,140,000)
                                                                    ------------  ------------  ------------

Cash flows from financing activities:
  Proceeds from issuance of notes payable                                   -0-       400,000       540,000
  Repayment of notes payable                                           (130,000)     (156,000)     (590,000)
  Repayment of capitalized leases                                       (47,000)      (48,000)      (50,000)
  Proceeds from common stock warrants exercised                             -0-       140,000       260,000
  Proceeds from exercise of stock options                                47,000       249,000       556,000
  Repurchase of stock                                                  (332,000)          -0-           -0-
                                                                    ------------  ------------  ------------

  Net cash  (used in) provided by financing activities                 (462,000)      585,000       716,000
                                                                    ------------  ------------  ------------

Net increase in cash                                                    206,000     1,041,000       414,000
Cash and cash equivalents at beginning of period                      3,941,000     2,900,000     2,486,000
                                                                    ------------  ------------  ------------

Cash and cash equivalents at end of period                          $ 4,147,000   $ 3,941,000   $ 2,900,000
                                                                    ============  ============  ============

                    See accompanying notes to consolidated financial statements.
</TABLE>


                                      F 5
<PAGE>
                         ELECTRONIC CLEARING HOUSE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



NOTE  1  -  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------------------------------------------

Electronic  Clearing  House, Inc. (ECHO or the Company) is a Nevada corporation.
The  Company  provides  credit card authorizations, electronic deposit services,
check  guarantee,  check  verification,  check  conversion,  check  collection,
inventory  tracking  services  and  various  Internet  services  to  retail  and
wholesale  merchants,  and  U-Haul  dealers  across the nation. In addition, the
Company  develops  and  sells  electronic terminals for use by its customers and
other  processing  companies.  The  Company  has  four  active  wholly  owned
subsidiaries:  ECHO Payment Services, Inc. (formerly GCLC Corporation), Computer
Based  Controls,  Inc.,  MERCHANTAMERICA  (formerly NCCR), XPRESSCHEX, Inc. (the
combined  entity  of  Magic Software Development, Inc. and Rocky Mountain Retail
Systems,  Inc.).

The  following  comments  describe  the  more  significant  accounting policies.

Principles  of  Consolidation
-----------------------------

The  accompanying  consolidated financial statements include the accounts of the
Company  and  its  wholly  owned  subsidiaries.  All  significant  intercompany
transactions  and  accounts  have  been  eliminated.

Cash  and  Cash  Equivalents
----------------------------

Cash  and  cash  equivalents consist of unrestricted balances only.  The Company
considers all highly liquid investments with original maturities of three months
or  less  to  be  cash  equivalents.

Restricted  Cash
----------------

Under  the  terms  of  the  processing  agreements  with  the  Company's primary
processing  banks,  the  Company  maintains  several  cash accounts as a reserve
against  chargeback  losses.  As  processing fees are received by the processing
banks,  they are allocated per the processing agreement to the reserve accounts.

Accounts  Receivable  Chargeback
--------------------------------

Accounts receivable chargeback losses occur when a credit card holder presents a
valid  claim  against  one  of  the  Company's  merchants  and  the merchant has
insufficient  funds  or  is  no longer in business resulting in the charge being
absorbed by the Company.  The Company records a receivable for those chargebacks
for  which  the  merchant  is  liable  but  has  not  made payment. A reserve is
estimated  based  upon a historically-determined percentage of gross credit card
processing  volume  and  actual  losses  experienced.

Inventory
---------

Inventory is stated at the lower of cost or market, cost being determined on the
first-in,  first-out  method.  Inventory consists of terminals and printers held
for  sale  or  lease  and  related  component  parts.

Property  and  Equipment
------------------------

Property  and  equipment  are  stated at cost, less accumulated depreciation and
amortization.  Expenditures  for  additions  and  major  improvements  are
capitalized.  Repair  and  maintenance  costs  are  expensed  as incurred.  When
property  and  equipment  are retired or otherwise disposed of, the related cost
and  accumulated  depreciation  are  removed from the accounts.  Gains or losses
from  retirements and disposals are credited or charged to income.  Depreciation
and amortization are computed using the straight-line method over the shorter of
the  estimated  useful  lives  of  the respective assets or terms of the related
leases.  The useful lives and lease terms for depreciable assets are as follows:


                                      F 6
<PAGE>
Note  1:  (Continued)
-------

               Building                                39  years
               Computer  equipment  and  software     3-5  years
               Furniture,  fixtures  and  equipment     5  years
               Building  improvements                  10  years


Other  Assets
-------------

Other  Assets  consist  primarily  of  patents  and  deposits.  Costs related to
obtaining  a  patent  are capitalized and amortized over the life of the patent.

Software  Development  Costs
----------------------------

Under the provisions of Statement of Position 98-1, "Accounting for the Costs of
Computer  Software  Developed  or  Obtained  for  Internal  Use,"  the  Company
capitalizes  costs associated with software developed for internal use when both
the preliminary project stage is completed and management has authorized further
funding  for  the  completion of the project. Capitalized costs include only (1)
external  direct  costs  of  materials  and  services  consumed in developing or
obtaining  internal-use  software,  (2)  payroll  and  payroll-related costs for
employees  who  are  directly  associated  with  the  software  project, and (3)
interest  costs incurred, when material, while developing internal-use software.
Capitalization of such costs ceases no later than the point at which the project
is  substantially  complete  and  ready  for  its intended purpose.  Capitalized
software development costs are amortized using the straight-line method over the
lesser  of  three  years  or  estimated  useful  life.

Research  and  development  costs  and other computer software maintenance costs
related  to  software  development  are  expensed  as  incurred.

Goodwill
--------

Goodwill represents the excess of purchase price over net assets acquired in the
acquisition  of  XPRESSCHEX  and  Rocky  Mountain  Retail  Systems  and is being
amortized  on  a straight-line basis over estimated useful lives of 10 years and
15  years,  respectively.

Long-Lived  Assets
------------------

When  circumstance  indicates,  the  Company  reviews  its long-lived assets for
impairment  using  estimated undiscounted future cash flows associated with such
assets.  An  impairment  loss  would be determined as the difference between the
fair values and the carrying amounts of the assets.  Management believes no such
impairment  has  occurred  as  of  September  30,  2001  and  2000.

Revenues  and  Expenses
-----------------------

All  processing  and  transaction  revenues  are  recognized  at  the  time  the
transactions  are  processed by the merchant. Processing costs paid to banks are
included  in  costs  and  expenses.  Terminal sales are recorded when product is
shipped  and  title  transferred  to  the  customer.

The  Company  expensed  $272,000,  $528,000,  and  $433,000  for the years ended
September  30,  2001,  2000  and  1999,  respectively  for  bankcard  processing
chargeback  losses.  The  Company  provided  for  other uncollectible leases and
notes  receivable  balances  of  $7,100, $35,000 and $48,000 for the years ended
September  30,  2001,  2000  and  1999,  respectively.

The  Company  has  one  customer  that  accounted  for approximately $2,493,000,
$4,082,000,  and $2,898,000 of revenues for the years ended 2001, 2000 and 1999,
respectively.  The  revenues  for  this  customer  are  recorded  as part of the
bankcard  transaction  fees  and  terminal  sales  and  lease  segments.

In  June  2001, the Company sold all the ownership interest of a select group of
the  Company's  credit card processing merchants to a financial institution.  In
consideration  of  this sale, the Company received cash proceeds of $350,000 and
thereby  recognized  a  $350,000  gain  on  the  sale of an asset.  The sale was
non-recourse  and will not have any material impact on the future revenue stream
of  the  Company.


                                      F 7
<PAGE>
Note  1:  (Continued)
-------

Income  Taxes
-------------

The  Company accounts for income taxes in accordance with Statement of Financial
Accounting  Standards No. 109, "Accounting for Income Taxes" (FAS 109).  FAS 109
requires the recognition of deferred tax liabilities and assets for the expected
future  tax  consequences  of temporary differences between the carrying amounts
and  the  tax  bases  of  assets  and  liabilities.  A  valuation  allowance  is
established,  when  necessary,  to  reduce  deferred  tax  assets  to the amount
expected  to  be  realized.

Reverse  Stock  Split
---------------------

On  September  7,  2001,  the  Company's  board  of directors authorized and the
shareholders  approved  a  reverse  stock  split,  effective September 11, 2001,
whereby  every  four  shares  of  common  stock were converted into one share of
common  stock.  Unless  otherwise  indicated, all references in the consolidated
financial  statements  to  the  average  number of common shares and related per
share  amounts  have  been  restated  to  reflect  the  reverse  stock  split.

Net  Income  Per  Share
-----------------------

Net  income  per  share is based on the weighted average number of common shares
and dilutive common equivalent shares outstanding during the period.  The shares
issuable upon conversion of preferred stock and exercise of options and warrants
are  included  in the weighted average for the calculation of diluted net income
per  share except where it would be anti-dilutive.  For the basic net income per
common share, the convertible preferred stock is not considered to be equivalent
to  common  stock.

Stock-Based  Compensation
-------------------------

The  Company  has  elected  to account for its stock-based compensation plans in
accordance with APB Opinion No. 25 and to adopt only the disclosure requirements
of  FAS  123.  The  pro forma disclosure required by FAS 123 is included in Note
10.

Compensation  expense  is  recognized  in association with the issuance of stock
options  for  the  difference, if any, between the trading price of the stock at
the  time  of  issuance  and  the  price  to  be paid by an officer or director.
Compensation  expense  is  recorded  over  the  period  the  officer or director
performs  the  related  service.

Accounting  Estimates
---------------------

The  preparation  of  financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported amounts of assets and liabilities and the reported amounts
of  revenues  and  expenses  during  the reporting period.  Actual results could
differ  from  those  estimates.

Fair  Value  of  Financial  Instruments
---------------------------------------

The  amount  recorded  for  financial  instruments in the Company's consolidated
financial  statements  approximates  fair  value  as  defined  in  SFAS No. 107,
"Disclosures  about  Fair  Value  of  Financial  Instruments".


NOTE  2  -  STATEMENT  OF  CASH  FLOWS:
--------------------------------------

                              September  30
                              -------------
                       2001      2000       1999
                     -------    -------    -------
Cash  paid  for:
  Interest           $81,000    $88,000    $85,000
  Income  taxes       72,000     40,000     64,000


Significant  non-cash  transactions  for  fiscal  2001  are  as  follows:

     -    21,116  shares  of  common stock valued at $85,000 were issued for the
          purchase  of  certain  National  Check  Network,  Inc.  assets.


                                      F 8
<PAGE>
Note  2:  (Continued)
-------

     -    In  September  2001,  the  Company's  Board  of  Directors  approved a
          one-for-four  (1:4)  reverse  stock split. As stipulated in the Merger
          Agreement,  this event triggered the issuance of the remaining 375,000
          performance  shares  to the RMRS selling shareholders. The performance
          shares  were valued at $780,000, based on the market price on the date
          of  stock  issuance,  and  recorded  on  the  books  as goodwill to be
          amortized  over  fifteen  years.

     -    Capital  equipment  of  $216,000  was  acquired  under capital leases.

Significant  non-cash  transactions  for  fiscal  2000  are  as  follows:

     -    In  connection with two business acquisition transactions, the Company
          issued  255,000  shares  of  common  stock  with  a  market  value  of
          $3,102,000.

     -    The  Company  acquired  17,797  shares  of  its common stock valued at
          $331,000  for  repayment  of  a  note  receivable.

Significant  non-cash  transactions  for  fiscal  1999  are  as  follows:

     -    Capital  equipment  of  $43,000  was  acquired  under  capital leases.

     -    In  connection  with  a  business acquisition transaction, the Company
          issued  250,000  shares  of  common  stock  with  a market value of $2
          million.

     -    The  Company  acquired  19,918  shares  of  its common stock valued at
          $138,000  as  a  result  of  a  chargeback  receivable  settlement.


NOTE  3  -  INVENTORY
---------------------

The  components  of  inventory  are  as  follows:

                                     September  30
                                  ------------------
                                    2001      2000
                                  --------  --------

Raw materials                     $ 62,000  $ 98,000

Finished goods                     529,000   499,000
                                  --------  --------

                                   591,000   597,000

Less: Allowance for obsolescence    18,000     3,000
                                  --------  --------

                                  $573,000  $594,000
                                  ========  ========

NOTE  4  -  PROPERTY  AND  EQUIPMENT:
------------------------------------

Property  and  equipment  are  comprised  of  the  following:


                                      F 9
<PAGE>
Note 4: (Continued)
------

                                                       September  30
                                                       --------------
                                                      2001           2000
                                                  -------------  ------------

Land and building                                 $    880,000   $   880,000
Computer equipment and software                      5,541,000     3,802,000
Furniture, fixtures and equipment                      977,000     1,023,000
Building improvements                                  281,000       271,000
Tooling equipment                                      285,000       285,000
Auto                                                    16,000           -0-
                                                  -------------  ------------
Cost                                                 7,980,000     6,261,000
Less:  accumulated depreciation and amortization   ( 4,226,000)   (3,312,000)
                                                  -------------  ------------

Net book value                                    $  3,754,000   $ 2,949,000
                                                  =============  ============

Included  in  property  and equipment are assets under capital lease of $425,000
and  $209,000  at  September  30,  2001  and  2000,  with  related  accumulated
amortization  of  $165,000  and $119,000, respectively, and capitalized software
development  costs  of  $2,037,000  and  $1,120,000,  with  related  accumulated
amortization  of  $873,000  and  $485,000,  respectively.


NOTE  5  -  INCOME  TAXES
-------------------------

The  (provision)  benefit for income taxes consists of the following components:

                                                       September 30
                                                        ------------
                                                2001        2000        1999
                                             ----------  ----------  -----------

Current federal taxes                        $ (29,000)  $  (4,000)  $  (11,000)
Current state taxes                           (120,000)    (51,000)     (50,000)
Deferred taxes                                (436,000)   (178,000)   1,392,000
                                             ----------  ----------  -----------

  Total (provision) benefit for income taxes $(585,000)  $(233,000)  $1,331,000
                                             ==========  ==========  ===========

The  effective  tax rate varies from the U.S. Federal statutory tax rate for the
years  ended  September  30  principally  due  to  the  following:

                                      September  30
                                      -------------
                                  2001    2000      1999
                                 ------  -------  ---------


U.S. Federal statutory tax rate  34.00%   34.00%     34.00%
Add (deduct):
Non-deductible goodwill           14.3%    22.8%       0.7%
State and local taxes              8.3%     7.1%       6.3%
Valuation allowance                  0%  (19.3%)   (144.6%)
All other                          0.8%   (0.1%)       0.2%
                                 ------  -------  ---------

Effective tax rate               57.40%   44.53%  (103.42%)
                                 ======  =======  =========



During  the year ended September 30, 2000, the Company recognized the income tax
benefit  of a reserve established against the value of certain real estate owned
by  it.  In  addition,  during  the  year  ended September 30, 1999, the Company
released  its  previously  established  valuation allowance against deferred tax
assets,  as  a  result of a return to profitability and tax planning strategies.

Components of the deferred tax asset include:


                                      F 10
<PAGE>
Note 5: (Continued)
------

                                     September  30
                                     -------------
                                     2001       2000
                                   --------  ----------

Deferred tax assets:
  Bank organization cost           $    -0-  $   28,000
  Reserve for bad debts              25,000      16,000
  Inventory reserve                   8,000       1,000
  Reserve on real estate            109,000     109,000
  Inventory cost capitalized         54,000         -0-
  State tax expense                  41,000      18,000
  Net operating loss carryforward   390,000     894,000
  Business tax credit               113,000     113,000
  AMT credit                         38,000      35,000
                                   --------  ----------
Total deferred tax assets          $778,000  $1,214,000
                                   ========  ==========

The  Company  has  a federal net operating loss carryforward of $1,147,000 which
expires  in  2007  through  2011.

NOTE  6  -  BUSINESS  ACQUISITION
---------------------------------


On  January  4,  2000, the Company acquired RMRS.  The acquisition was accounted
for using the purchase method of accounting and, accordingly, the purchase price
was  allocated  to  the  assets purchased and the liabilities assumed based upon
their  estimated  fair  values  at  the  date  of  acquisition.

Pursuant  to  the Merger Agreement, the Company issued a total of 250,000 shares
of  common  stock  to  the  selling  shareholders  of  RMRS. As a result of this
transaction, the Company recorded approximately $2,973,000 in goodwill and other
acquisition  costs  which  are  being  amortized  over  fifteen  years.

In  September  2001,  the  Company's  Board of Directors approved a one-for-four
(1:4)  reverse  stock  split.  As stipulated in the Merger Agreement, this event
triggered  the  issuance of the remaining 375,000 performance shares to the RMRS
selling  shareholders.  The performance shares were valued at $780,000, based on
the  market  price  on  the date of stock issuance, and recorded on the books as
goodwill  to  be  amortized  over  fifteen  years.


NOTE  7  -  SHORT-TERM  BORROWINGS  AND  LONG-TERM  DEBT:
--------------------------------------------------------

Short-term  borrowings  and  long-term  debt  consist  of  the  following:

<TABLE>
<CAPTION>
                                                                   September 30
                                                                   -------------
                                                                  2001        2000
                                                               ----------  ----------
<S>                                                            <C>         <C>
Term loan collateralized by corporate headquarters building,
 due February 15, 2009, bearing interest at 7.87% per annum    $ 438,000   $ 480,000

Term loan, collateralized by equipment, due 2005, bearing
 interest at prime rate, 6.5% at September 30, 2001              266,000     346,000

Capital leases                                                   277,000     106,000

Notes payable, bearing interest at 9.5%                            3,000      12,000
                                                               ----------  ----------

                                                                 984,000     944,000
Less:  current portion                                          (240,000)   (177,000)
                                                               ----------  ----------

Total long-term debt                                           $ 744,000   $ 767,000
                                                               ==========  ==========
</TABLE>


                                      F 11
<PAGE>
Note  7:  (Continued)
-------

The weighted average interest rate on the prime rate term loan for the period it
was  outstanding  during  the  year  ended  September  30,  2001  was  8.19%

One  of  the  term  loans contains restrictive debt covenants consisting of debt
service  coverage  ratio  and  tangible  net  worth  requirements.

Future  maturities  of  debt  are  as  follows:

     Fiscal  year  ended  September  30
     ----------------------------------

                2002                         $240,000
                2003                          218,000
                2004                          211,000
                2005                           84,000
                2006                           63,000
                thereafter                    168,000
                                              -------
                                             $984,000
                                             ========

NOTE  8  -  ACCRUED  EXPENSES:
-----------------------------

                                                       September 30
                                                      ---------------
Accrued expenses are comprised of the following:     2001        2000
                                                  ----------  ----------

Accrued bankcard fees                             $  136,000  $  145,000
Accrued compensation and taxes                       240,000     187,000
Accrued communication costs                          289,000     117,000
Accrued professional fees                            362,000     166,000
Accrued commission                                   147,000     291,000
Other                                                221,000     140,000
                                                  ----------  ----------
                                                  $1,395,000  $1,046,000
                                                  ==========  ==========

NOTE  9  -  STOCKHOLDERS'  EQUITY:
---------------------------------

Preferred  Stock
----------------

During fiscal 1994, the Company issued 23,511 shares of Series H Preferred Stock
(Class  H Stock) to two noteholders in exchange for $329,000 of debt and accrued
interest.  Each  share  of  Class  H  Stock  has a stated value of $14.00 and is
convertible  into  five  (5)  shares  of  common  stock after adjustment for the
one-for-four  (1:4)  reverse  stock  split in September 2001.  Class H Stock has
priority  in  liquidation  over  the  Company's  common  stock  but is junior in
liquidation  to  all  previous  classes of preferred stock.  During fiscal 1999,
23,511  shares  of Class H Preferred Stock were converted into 117,555 shares of
common  stock.

During  fiscal  1996,  the  Company  issued 425,000 shares of Series K Preferred
Stock  (Class K Stock) for an aggregated price of $850,000.  Each share of Class
K  Stock has a stated value of $2.00 per share and is convertible into one share
of  common stock after adjustment for the one-for-four (1:4) reverse stock split
in September 2001.  Class K Stock has priority in liquidation over the Company's
common  stock  but is junior in liquidation to all previous classes of preferred
stock.  Between  fiscal  1997 through 1999, a total of 400,000 shares of Class K
Stock  were  converted  into 400,000 shares of the Company's common stock. As of
September  30,  2001, there are 25,000 shares of Class K Stock outstanding which
are  convertible  into  25,000  shares  of  common  stock.

During  fiscal  1997  and  1998, the Company issued a total of 212,000 shares of
Series  L Preferred Stock (Class L Stock), for an aggregate price of $1,060,000.
Class  L Stock has a stated value of $5.00 per share and is convertible into one
share  of common stock after adjustment for the one-for-four (1:4) reverse stock
split  in  September  2001.  Class  L Stock has priority in liquidation over the
Company's  common stock, but is junior in liquidation to all previous classes of
preferred stock.  Class L and Class K Preferred Stock have no dividend yield and
are non-cumulative.  Between fiscal 1998 through 2000, a total of 212,000 shares
of  Class  L  Stock  were  converted into 212,000 shares of common stock.  As of
September  30,  2000,  all  the  Class L Stock had been converted into shares of
common  stock.


                                      F 12
<PAGE>
Note  9:  (Continued)
-------


Stockholders'  Rights  Plan
---------------------------

The Company has a Stockholders' Rights Plan. All stockholders have one preferred
share purchase right ("Right") for each outstanding share of common stock of the
Company.  Each Right entitles the registered holder to purchase from the Company
one-hundredth  of  a  share of series A Junior Participating Preferred Stock, no
par  value  ("preferred  Stock")  of  the  Company  at  a price of $2.00 per one
one-hundredth of a share of Preferred Stock ("Purchase Price"), after adjustment
for  the  one-for-four  (1:4)  reverse  stock  split  in  September  2001.  The
description and terms of the Rights are set forth in a Rights Agreement dated as
of  September  30,  1996  ("Rights  Agreement").

The  Rights  will  separate  from  the Common Stock and a Distribution Date will
occur  upon  the  earlier  of  (i) 10 days following a public announcement that,
without  consent  of  the Board of Directors, a person or group of affiliated or
associated  persons  ("Acquired  Person")  have acquired beneficial ownership of
twenty-percent  (20%)  or  more  of  the  outstanding  Common  Stock, or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquired Person) following
the  commencement  of, or announcement of an intention to make a tender offer or
exchange  offer  the  consummation  of  which  would  result  in  the beneficial
ownership  by a person or group of twenty-percent (20%) of more such outstanding
Common  Stock.

In  the  event  that  any  person becomes the beneficial owner of twenty-percent
(20%)  or  more  of  the  Common  Stock of the Company, ten (10) days thereafter
("Flip-In  Event")  each  holder  of  a  Right will thereafter have the right to
receive,  upon exercise thereof at the then current Purchase Price of the Right,
Common  Stock  which  has  a  value of two times the Purchase Price of the Right
(such  right  being  called  the  "Flip-In Right").  In the event the Company is
acquired in a merger or other business combination transaction where the Company
is  not the surviving corporation or in the event that 50% or more of its assets
or  earning power is sold, proper provision shall be made so that each holder of
a  Right will thereafter have the right to receive, upon the exercise thereof at
the  then  current  Purchase  Price  of the Right, common stock of the acquiring
entity which has a value of two times the Purchase Price of the Right.  Upon the
occurrence  of  the Flip-In Event, any Rights that are or were at any time owned
by  an Acquiring Person shall become null and void insofar as they relate to the
Flip-In  Right.

The  Rights  are  not  exercisable until the Distribution Date.  The Rights will
expire  on  September  30, 2006 ("Final Expiration Date"), unless the Rights are
earlier  redeemed  or  exchanged by the Company, in each case, as description in
the  Rights  Agreement.

Earnings  Per  Share
--------------------

The following table sets forth the computation of basic and diluted earnings per
share:

                                                    September  30
                                                    -------------
                                            2001        2000        1999
                                         ----------  ----------  ----------

Net income:                              $  434,000  $  291,000  $2,618,000

Shares:
  Denominator for basic earnings per
   share - weighted-average shares
   outstanding                            5,797,120   5,257,393   4,535,777

Effect of dilutive securities:
  Employee stock options                    141,688     514,304     964,053
  Warrants                                      -0-      14,848     124,735
  Series H Convertible Preferred Stock          -0-         -0-      37,698
Series K Convertible Preferred Stock         25,000      25,000      91,507
  Series L Convertible Preferred Stock          -0-      13,552      71,101
                                         ----------  ----------  ----------

Dilutive potential common shares            166,688     567,704   1,289,094
                                         ----------  ----------  ----------


                                      F 13
<PAGE>
Note 9: (Continued)
-------


Denominator for diluted earnings per
  share - adjusted weighted-average
  shares and assumed conversions          5,963,808   5,825,097   5,824,871
                                         ==========  ==========  ==========

Basic earnings per share                 $     0.07  $     0.06  $     0.58
                                         ==========  ==========  ==========

Diluted earnings per share               $     0.07  $     0.05  $     0.45
                                         ==========  ==========  ==========

NOTE  10  -  COMMON  STOCK  OPTIONS:
-----------------------------------

The  Company has an Incentive Stock Option Plan (the "Plan"), which provides for
the issuance of up to 1,343,750 stock options, each to purchase one share of the
common  stock  at  a price not less than 100% of the market price at the date of
grant.

Stock  option  activity  during  2001,  2000,  and  1999  was  as  follows:

                                                     Exercise
                                      Options         Price
                                     ---------  -------------------

   Outstanding September 30, 1998     950,250   $ 1.60    -  $ 6.00

    Granted                           161,250     4.00    -    8.00
    Forfeited                         (55,667)    3.64    -    5.88
    Exercised                        (226,250)    2.00    -    3.40
                                     ---------
  Outstanding September 30, 1999      829,583   $ 1.60    -  $ 8.00

    Granted                           106,250     7.00    -   16.48
    Forfeited                         (32,917)    5.76    -   10.24
    Exercised                        (116,583)    1.60    -    4.48
                                     ---------
  Outstanding September 30, 2000      786,333   $ 1.60    -  $16.48

    Granted                            88,750     2.84    -    3.24
    Forfeited                        (165,416)    1.60    -    8.48
    Exercised                         (15,000)    2.00    -    3.40
                                     ---------
  Outstanding September 30, 2001      694,667   $ 1.60    -  $16.48
                                     =========


  Exercisable at September 30, 1999   594,500   $ 1.80    -  $ 5.76
                                     =========
  Exercisable at September 30, 2000   527,500   $ 1.84    -  $10.04
                                     =========
  Exercisable at September 30, 2001   437,000   $ 1.60    -  $16.48
                                     =========
  Options available for grant
    at September 30, 2000             512,750
                                     =========
  Options available for grant
    at September 30, 2001             461,500
                                     =========

All  officer  and key employee options are granted under the Company's incentive
stock  option  plan,  with  the exception of 87,500 shares of options granted to
three officers, vesting over a period of 3-5 years, which were not granted under
the  plan.  Options  granted  to  outside  directors  are  not  included  in the
incentive  stock  option  plan.  The  exercise price of both the incentive stock
options  and  directors'  options  shall be 100% of the fair market value on the
date  the  option is granted.  Options granted to outside directors are normally
vested  immediately.  Options  granted  to  officers  and employees are normally
vested  over  a  five-year period.  Options are exercisable for a period of five
years  from  date  of  vest.


                                      F 14
<PAGE>
Note  10:  (Continued)
--------


The  following  table  summarizes information about stock options outstanding at
September  30,  2001:

<TABLE>
<CAPTION>
                            Options  Outstanding               Options  Exercisable
                  ---------------------------------------  --------------------------
                                    Weighted
                                     Average     Weighted                   Weighted
                      Number       Remaining     Average       Number        Average
Range of          Outstanding at  Contractual   Exercise   Exercisable at   Exercise
Exercise Prices   Sept. 30, 2001      Life        Price    Sept. 30, 2001     Price
----------------  --------------  ------------  ---------  ---------------  ---------
<S>               <C>             <C>           <C>        <C>              <C>

1.60 - $2.00            254,000           2.9  $    1.89          253,000  $    1.85
2.84 - $4.24            249,000           4.4  $    3.58           90,000  $    3.87
4.84 - $7.00            121,000           4.9  $    6.10           78,000  $    5.90
8.00 - $16.48            71,000           8.3  $   10.09           16,000  $    9.83
                  --------------                           ---------------

                        695,000           4.3  $    4.07          437,000  $    3.28
                  ==============                           ===============
</TABLE>

The  weighted average fair value of the options granted under the plan in effect
at  September  30,  2001, during the fiscal years ended September 30, 2001, 2000
and  1999 were $1.89, $3.20, and $2.88, respectively.  Fair value was determined
using  the  Black Scholes options pricing formula. For options granted in fiscal
2001,  the  risk  free interest rate was approximately 5%, the expected life was
3-5  years,  the  expected  volatility  was approximately 80.0% and the expected
dividend  yield was 0%, all calculated on a weighted average basis.  For options
granted  in  fiscal  2000, the risk-free interest rate was approximately 6%, the
expected life was 3-5 years, the expected volatility was approximately 90.1% and
the  expected dividend yield was 0%, all calculated on a weighted average basis.
For  options  granted  in  fiscal  1999,  the  risk-free  interest  rate  was
approximately  5%,  the expected life was 3-5 years, the expected volatility was
approximately 88.4%, and the expected dividend yield was 0%, all calculated on a
weighted  average  basis.

On  a  pro forma basis under the provision of FAS 123, net income and net income
per  share  would  have  decreased  by  $321,000  and  $0.06  for the year ended
September 30, 2001, respectively; net income and net income per share would have
decreased  by  $245,000  and  $0.05  for  the  year  ended  September  30, 2000,
respectively;  and  net  income and net income per share would have decreased by
$207,000  and  $0.05  for  the  year  ended  September  30,  1999, respectively.

NOTE  11  -  COMMITMENTS  AND  CONTINGENCIES:
--------------------------------------------

Lease  Commitments
------------------

The  Company leases real property under agreements which expire at various times
over  the  next  three  years.  The Company's future minimum rental payments for
capital  and  operating  leases  at  September  30,  2001  are  as  follows:

Fiscal Year                                    Capital Leases   Operating Leases
------------                                   ---------------  ----------------

2002                                           $       130,000  $       162,000
2003                                                    98,000          128,000
2004                                                    81,000           20,000
                                               ---------------  ---------------


  Total minimum lease payments                 $       309,000  $       310,000
                                                                ===============



  Less: imputed interest of 8.6%                        32,000
                                               ---------------
  Present value of net
    minimum lease payment                      $       277,000
                                               ===============

Rent  expense  for  the  years  ended September 30, 2001, 2000, and 1999 totaled
$193,000,  $155,000,  and  $60,000,  respectively. Certain operating leases have
renewal options at the end of the lease term solely at the Company's discretion.


                                      F 15
<PAGE>
NOTE  12  -  LITIGATION
-----------------------

The Company is involved in various legal cases arising in the ordinary course of
business.  Based  upon  current information, management, after consultation with
legal  counsel,  believes the ultimate disposition thereof will have no material
effect  upon  either  the  Company's  results  of  operations  or  its financial
position.

The  Company  is  defending  a  lawsuit  filed  against the Company in which the
plaintiff  asserts  claims  for breach by the Company of its obligations under a
Letter  of  Commitment  and  interference  with  the plaintiff's contractual and
business  relationships.  Based  upon  current  information,  including  facts
produced  at  trial, management, after consultation with legal counsel, believes
that  the  plaintiff's  claims are without merit, however, there is no assurance
that  the  ultimate  resolutions  of  these  claims  will not result in material
liability  to  the  Company.


NOTE  13  -  SEGMENT  INFORMATION
---------------------------------

The  Company  has  adopted  FAS  No.  131,  "Disclosures  about  Segments  of an
Enterprise  and  Related  Information"  (FAS  131).  FAS 131 established revised
standards  for  public  companies  related  to  the  reporting  of financial and
descriptive  information about their operating segments in financial statements.

Certain  information  is  disclosed,  per  FAS  131, based on the way management
organizes  financial  information  for  making operating decisions and assessing
performance.

The  Company  currently  operates  in  three  business  segments:  Bankcard  and
Transaction  Processing, Terminal Sales and Leasing, and Check Related Products,
all  of  which  are  located  in  the  United  States.

The  Company's  reportable operating segments have been determined in accordance
with  the  Company's  internal management structure, which is organized based on
operating activities.  The accounting policies of the operating segments are the
same  as those described in the summary of significant accounting policies.  The
Company  evaluates  performance  based  upon  two  primary  factors,  one is the
segment's  operating income and the other is based on the segment's contribution
to  the  Company's  future  strategic  growth.

                                                     September 30
                                                     -------------
Business Segments                           2001          2000          1999
-----------------                       ------------  ------------  ------------

Revenues:
  Bankcard and Transaction Processing   $25,017,000   $23,902,000   $21,089,000
  Terminal Sales                            447,000     2,459,000     2,431,000
  Check Related Products                  4,479,000     1,979,000       308,000
                                        ------------  ------------  ------------
                                        $29,943,000   $28,340,000   $23,828,000
                                        ============  ============  ============

Operating Income:
  Bankcard and Transaction Processing   $ 1,181,000   $   831,000   $ 1,499,000
  Terminal Sales                           (431,000)      259,000       132,000
  Check Related Products                   (187,000)   (1,074,000)     (439,000)
                                        ------------  ------------  ------------
                                        $   563,000   $    16,000   $ 1,192,000
                                        ============  ============  ============

Depreciation and Amortization:
  Bankcard and Transaction Processing   $   532,000   $   419,000   $   302,000
  Terminal Sales                             39,000        53,000        88,000
  Check Related Products                    764,000       495,000        98,000
                                        ------------  ------------  ------------
                                        $ 1,335,000   $   967,000   $   488,000
                                        ============  ============  ============

Capital Expenditures:
  Bankcard and Transaction Processing   $   821,000   $   742,000   $   938,000
  Terminal Sales                              2,000        20,000        16,000
  Check Related Products                    859,000       613,000       187,000
                                        ------------  ------------  ------------
                                        $ 1,682,000   $ 1,375,000   $ 1,141,000
                                        ============  ============  ============


                                      F 16
<PAGE>
Note 13: (Continued)
--------------------

Total Assets:
  Bankcard and Transaction Processing   $10,111,000   $10,026,000   $ 9,300,000
  Terminal Sales                            876,000     1,038,000     1,381,000
  Check Related Products                  7,934,000     5,949,000     2,251,000
                                        ------------  ------------  ------------
                                        $18,921,000   $17,013,000   $12,932,000
                                        ============  ============  ============

NOTE  14  -  NEW  ACCOUNTING  PRONOUNCEMENTS
--------------------------------------------

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations".
SFAS  141  requires  the purchase method of accounting for business combinations
initiated  after  June  30, 2001 and eliminates the pooling-of-interests method.
The  Company  does  not  believe  that  the  adoption  of  SFAS  141 will have a
significant  impact  on  its  financial  statements  and  the  results  of  its
operations.

In  July  2001,  the FASB issued Statement of Financial Accounting Standards No.
142  ("SFAS"),  "Goodwill  and  Other Intangible Assets", which is effective for
fiscal  years beginning after December 15, 2001.  SFAS 142 requires, among other
things,  the discontinuance of goodwill amortization.  In addition, the standard
includes  provisions  for  the  reclassification  of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing recognized
intangibles,  reclassification of certain intangibles out of previously reported
goodwill  and  the  identification  of reporting units for purposes of assessing
potential  future  impairments of goodwill.  SFAS 142 also requires companies to
complete  a  transitional  goodwill  impairment test six months from the date of
adoption.  The  Company is currently evaluating the impact SFAS 142 will have on
its  financial  statements  and  the  results  of  its  operations.

In  August 2001, FASB issued Statement of Financial Accounting Standards No. 144
("SFAS  144"), "Accounting for the Impairment or Disposal of Long-Lived Assets."
This  Statement  supersedes  FASB Statement No. 121, ("SFAS 121") Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of,
and the accounting and reporting provisions of APB Opinion No. 30, Reporting the
Results  of  Operations  -  Reporting  the Effects of Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual  and  Infrequently  Occurring Events and
Transactions, for the disposal of a segment of a business (as previously defined
in  that  Opinion).  This  statement  establishes  a single accounting model for
long-lived asset impairment, based on the framework established in SFAS 121, for
long-lived  assets  to  be  disposed  of  by  sale,  and  resolves  significant
implementation  issues related to SFAS 121.  The Company is currently evaluating
the  impact  that SFAS 144 will have on its financial statements and the results
of  its  operations.

NOTE  15  -  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)
----------------------------------------------------

The  following  summarizes  the  unaudited  quarterly  financial  results of the
Company for the fiscal years ended September 30, 2001 and September 30, 2000 (in
thousands,  except  share  data):

                                    Year  Ended  September  30,  2001
                                    ----------------------------------
                                   First     Second    Third     Fourth
                                  Quarter   Quarter   Quarter    Quarter
                                  --------  --------  --------  ---------

  Net revenues                    $  6,979  $  7,380  $  7,758  $  7,826
  Gross profit                       2,266     2,788     2,644     2,587
  Income (loss) from operations         63       350       203       (53)
  Net income (loss)                     22       167       282       (37)
  Basic net income (loss) per
    common share                  $   0.00  $   0.03  $   0.05    ($0.01)
  Diluted net income (loss) per
    common share                  $   0.00  $   0.03  $   0.05    ($0.01)


                                      F 17
<PAGE>
Note 15: (Continued)
-------

                                    Year  Ended  September  30,  2000
                                    ----------------------------------
                                    First     Second     Third     Fourth
                                   Quarter    Quarter   Quarter   Quarter
                                  ---------  ---------  --------  --------

  Net revenues                    $  6,205   $  6,574   $  8,022  $  7,539
  Gross profit                       1,749      1,924      2,376     2,373
  Income (loss) from operations        (56)      (288)       299        61
  Net income (loss)                    (19)      (219)       321       208
  Basic net income (loss) per
    common share                  $   0.00     ($0.04)  $   0.06  $   0.04
  Diluted net income (loss) per
    common share                  $   0.00     ($0.04)  $   0.05  $   0.04


                                      F 18
<PAGE>
<TABLE>
<CAPTION>
          ELECTRONIC CLEARING HOUSE, INC. AND CONSOLIDATED SUBSIDIARIES

                            SCHEDULE VIII TO FORM 10K

            RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                                   REDUCTION IN                             REDUCTION IN
                                                    RESERVE AND                              RESERVE AND
                         BALANCE AT   CHARGED TO     ACCOUNTS     BALANCE AT   CHARGED TO     ACCOUNTS     BALANCE AT
DESCRIPTION              09/30/1998     EXPENSE     RECEIVABLE    09/30/1999     EXPENSE     RECEIVABLE    09/30/2000
-----------------------  -----------  -----------  -------------  -----------  -----------  -------------  -----------
<S>                      <C>          <C>          <C>            <C>          <C>          <C>            <C>
Allowance for
 trade receivables/
 chargeback receivables  $ 1,829,000  $   443,000  $   1,271,000  $ 1,001,000  $   557,000  $   1,178,000  $   380,000

Allowance for
 notes receivable        $   148,000  $         0  $           0  $   148,000  $    29,000  $           0  $   177,000

Allowance for
 obsolete inventories    $   202,000  $         0  $           0  $   202,000  $     3,000  $     202,000  $     3,000

Allowance for
 deferred tax asset      $ 1,713,000  $         0  $   1,713,000  $         0  $         0  $           0  $         0


                                      REDUCTION IN
                                       RESERVE AND
                         CHARGED TO     ACCOUNTS     BALANCE AT
DESCRIPTION                EXPENSE     RECEIVABLE    09/30/2001
-----------------------  -----------  -------------  -----------
<S>                      <C>          <C>            <C>
Allowance for
 trade receivables/
 chargeback receivables  $   544,000  $     611,000  $   313,000

Allowance for
 notes receivable        $         0  $     177,000  $         0

Allowance for
 obsolete inventories    $    29,000  $      32,000  $         0

Allowance for
 deferred tax asset      $         0  $           0  $         0
</TABLE>


                                      F 19
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