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,  2003

     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)

<TABLE>
<CAPTION>
<S>                                                              <C>
                           NEVADA                                           93-0946274
 (State or other jurisdiction of incorporation or organization)  (IRS Employer Identification No.)

730 PASEO CAMARILLO, CAMARILLO, CALIFORNIA                                    93010
 (Address of principal executive offices)                                   (Zip Code)

Registrant's telephone number, including area code:  (805) 419-8700, fax number: (805)  419-8689
</TABLE>

<TABLE>
<CAPTION>
           Securities registered pursuant to Section 12(b) of the Act:

                                         Name of each exchange
                    TITLE OF EACH CLASS   ON WHICH REGISTERED
                    -------------------  ---------------------
<S>                                      <C>
                    None                 None
</TABLE>

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $0.01 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.  ___

Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act).
Yes      No  X
    ---     ---

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 March 31,
2003  as  reported on the NASDAQ SmallCap Market, was approximately $13,644,810.
Shares  of  Common Stock held by each officer and director 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 22, 2003, Registrant had outstanding 6,325,012 shares of Common
Stock.

     DOCUMENTS  INCORPORATED  BY  REFERENCE  -  NONE


<PAGE>
<TABLE>
<CAPTION>
                         ELECTRONIC CLEARING HOUSE, INC.
                          2003 FORM 10-K ANNUAL REPORT
                          ----------------------------


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


PART I.                                                               Page
--------                                                              ----
<S>       <C>                                                         <C>
ITEM 1.   Business . . . . . . . . . . . . . . . . . . . . . . . . . .   3
ITEM 2.   Properties . . . . . . . . . . . . . . . . . . . . . . . . .  14
ITEM 3.   Legal Proceedings  . . . . . . . . . . . . . . . . . . . . .  15
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 .  31
ITEM 8.   Financial Statements and Supplemental Data . . . . . . . . .  31
ITEM 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosures . . . . . . . . . . . .  31
ITEM 9A.  Controls and Procedures  . . . . . . . . . . . . . . . . . .  31

PART III
--------

ITEM 10.  Directors and Executive Officers of the Registrant  . . . .   32
ITEM 11.  Executive Compensation  . . . . . . . . . . . . . . . . . .   35
ITEM 12.  Security Ownership of Certain Beneficial Owners
          and Management  . . . . . . . . . . . . . . . . . . . . . .   38
ITEM 13.  Certain Relationships and Related Transactions  . . . . . .   40
ITEM 14.  Principal Accounting Fees and Services  . . . . . . . . . .   40

PART IV
--------

ITEM 15.  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K . . . . . . . . . . . . . . . . . . . .   41
</TABLE>


                                        2
<PAGE>
                                     PART 1


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
            ---------------------------------------------------------

This  2003  Annual  Report  on  Form  10-K  contains statements which constitute
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  Those statements include statements regarding our intent, belief or
current expectations.  Examples of forward-looking statements include statements
regarding  our strategy, financial performance and revenue sources.  Prospective
investors  are  cautioned  that  any  such  forward-looking  statements  are not
guarantees  of  future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in the forward-looking
statements  as a result of various factors, including, but not limited to, those
set forth elsewhere in this Annual Report.  See "Item 7. Management's Discussion
and  Analysis  of Financial Condition and Results of Operations - Risk Factors."

ITEM 1.   BUSINESS

OVERVIEW

Electronic Clearing House, Inc. is an electronic payment processor that provides
for  the  payment  processing needs of merchants, banks and collection agencies.
We derive the majority of our revenues from two main business segments, bankcard
and  transaction  processing services ("bank card services"), whereby we provide
solutions  to  merchants and banks to allow them to accept credit and debit card
payments  from consumers, and check-related products ("check services"), whereby
we  provide  various services to merchants and banks to allow them to accept and
process  check  payments from consumers.  The principal services we offer within
these  two  segments  include, with respect to our bank card services, debit and
credit  card  processing, and U-Haul transaction processing, and with respect to
our  check  services,  check guarantee (where, if we approve a check transaction
and  a check is subsequently dishonored by the check writer's bank, the merchant
is  reimbursed by us), check verification (where, prior to approving a check, we
search  our negative and positive check writer database to determine whether the
check  writer  has  current,  delinquent  check-related debts), electronic check
conversion  (the  conversion  of  a paper check at the point of sale to a direct
bank  debit  which  is  processed  for  settlement  through  the Federal Reserve
System's  Automated  Clearing  House ("ACH") network.  The ACH is the electronic
banking  network  through  which  all electronic funds transfers are made in the
United  States),  check  re-presentment  (where  we  attempt to clear a check on
multiple  occasions  via  the  ACH  network  prior to returning the check to the
merchant  so as to increase the number of cleared check transactions), and check
collection  (where  we provide national scale collection services for a merchant
or  bank).  We  operate  our  services  under  the  following  brands:

     -    MerchantAmerica, our retail provider of payment processing services to
          both  the  merchant  and  bank  markets;
     -    National  Check  Network ("NCN"), our proprietary database of negative
          and  positive  check  writer  accounts  (i.e.,  accounts  that  show
          delinquent  history  in  the  form  of  non-sufficient funds and other
          negative  transactions),  for  back-end  check  verification,  check
          authorization  and  check  capture  services,  and  for  membership to
          collection  agencies;  and
     -    XPRESSCHEX,  Inc.  for  retail  check  verification, check conversion,
          Automated Clearing House services (which we describe in greater detail
          below),  check  collection  and  check  guarantee  services.

We  discuss  our  services  in  greater  detail  below.  Overall, our ability to
program and oversee the management of a merchant's point of sale system, provide
credit  card  and debit card processing, provide multiple check services for the
processing  of  checks,  provide  both  electronic  and  traditional  collection
services, and fully integrate all of these services into a single internet-based
reporting  capability  allows  us  to  provide  for  the majority of the payment
processing  needs  of  our  customers.

We  were  incorporated  in  Nevada  in December 1981.  Our executive offices are
located  at  730 Paseo Camarillo, Camarillo, California 93010, and our telephone
number  is  (805)  419-8700.  Our  common stock is traded on the NASDAQ SmallCap
Market  under  the  ticker  symbol  "ECHO."  Information  on  our  website,
www.echo-inc.com,  does  not  constitute  part  of  this  annual  report.


                                        3
<PAGE>
HISTORY  OF  THE  COMPANY

ECHO  has  been offering bankcard and check services for over 20 years.  We were
incorporated  in Nevada in 1981 under the name Bio Recovery Technology, Inc. and
changed  our  name  to Electronic Clearing House, Inc. with the acquisition of a
credit  card  processing  company, Electronic Financial Systems, Inc. in January
1986.  In  1986,  ECHO  developed  the capability, utilizing the Federal Reserve
System's  Automated  Clearing  House  ("ACH"),  a  network  which  serves  as  a
nationwide,  wholesale  electronic  payment  and  collection  system  by  way of
transferring  funds  between  banks  via  the Federal Reserve System, 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  1999,  ECHO  acquired  Magic  Software Development, Inc., a check processing
company  located  in  Albuquerque,  New  Mexico,  that  serviced  National Check
Network,  an  association  of  approximately  60  affiliated collection agencies
across  the nation. At the time, we provided a check guarantee service that only
served  California  merchants, but with the addition of Magic's check processing
capabilities, our check guarantee services have been offered on a national basis
since  1999.  In  fiscal  2000, Magic's corporate name was changed to XPRESSCHEX
and  all  XPRESSCHEX activity was moved to our XPRESSCHEX subsidiary. XPRESSCHEX
provides and promotes its check and Automated Clearing House ("ACH") services to
other  processors  and  sales  organizations  in  addition  to  ECHO.

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

In  January  2000, we acquired Rocky Mountain Retail Systems ("RMRS") located in
Boulder,  Colorado, which provided a national check verification service to over
200  collection  agencies  across  the  nation. RMRS maintained a national check
database  of  negative  and  positive  check  writer  records.

In  December  2000,  we signed an agreement with Visa U.S.A. to participate in a
point  of sale check processing pilot program as both an "Acquirer Processor" (a
role  that  accepts transactions from a merchant's point of sale terminal (i.e.,
the merchant's store) and reformats them for submission to the Visa network) and
as a "Third-Party Processor" (a role that approves or declines checks written on
accounts  of  banks  not  yet  participating  in  the  VISA Program and deposits
approved funds utilizing the Federal Reserve System's Automated Clearing House).
Under  the  program,  any one of over 14,000 Visa member banks can offer various
check  processing  services  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.  In July 2001, several major
financial institutions began participating in the pilot program. As of September
2003, eight of the thirteen financial institutions actively participating in the
program  were  using  ECHO's  services  as  a  Third-Party  Processor,  and  two
additional  participating  institutions  intend  to  use  ECHO's  services  as a
Third-Party  Processor  in  2004.

In  May  2001,  we  acquired  the  assets  of National Check Network ("NCN") and
combined the NCN negative check writer records with the RMRS database, resulting
in  a  combined database of over 100 million check writer records which identify
the  positive  and  negative  check writing activities occurring with individual
check writers (including information related to accepted checks, bounced checks,
and  the  frequency of delinquent transactions).   This database is ever-growing
with  additional  contributions  daily.

Also  in  May  2001,  ECHO  launched  MerchantAmerica.com, a web-based source of
financial  information  whereby  an  ECHO  merchant can access its transactional
history,  bank information, significant business and office-related services and
even  build  an  online  store and accept payment in the form of credit cards or
checks. The site also contains a national Merchant Directory of over 1.4 million
merchants  that  is  free  to  any  merchant in the U.S.A.  It also provides any
merchant  in  the  U.S.A.  with  the ability to edit and enhance their directory
listing.  While  we  believe  that  MerchantAmerica.com  is  a  valuable  and
cost-effective  resource  for  merchants,  it  also  provides us with a low-cost
method  of  keeping  our  merchants  informed  and  involved  with  us.


                                        4
<PAGE>
OUR  SERVICES

BANKCARD  AND  TRANSACTION  PROCESSING  SERVICES

Services
--------

With  our  bankcard  and  transaction  processing  services,  we provide payment
solutions  to  merchants and banks to allow them to accept credit and debit card
payments  from  consumers.  Our  bankcard  and  transaction  processing services
include  the  following:

Debit  and  Credit  Card  Payment  Processing
MerchantAmerica,  our retail provider of payment processing services to both the
merchant  and bank markets, currently provides 24-hour daily payment processing,
"800"  number access to customer service personnel and, as needed, various field
support  services.  Utilizing  one  of  several  methods  of  access  to us, the
merchants'  systems  dial  our  host computers and receive credit card and debit
card  authorizations, which have been electronically verified.  Electronic files
are  then  transmitted  daily  by  MerchantAmerica  to  the  major  credit  card
organizations or to the ACH, which subsequently transfer funds from the banks to
MerchantAmerica's  processing  bank, which then deposits the funds into the bank
of  the  merchant's  choice.  On  average, ECHO deposits funds to over 600 banks
across  the  nation  on  behalf  of  its  merchant  base  each  day.

Our software programs capture the transactions, retain data and enable merchants
to  review, reconcile and edit transactions.  MerchantAmerica's customer service
efforts  include  a terminal loaner program to minimize downtime, frequent sales
and  activity  reports,  and  sophisticated  security  services  utilizing  the
merchant's  terminal,  our  host  computers  and  assistance  in  the  field.
Additionally,  MerchantAmerica  utilizes  several  advanced  telecommunications
capabilities  to  provide  consistent  and  reliable  services to its merchants.

Other  Payment  Processing  Services
We  also  provide  various services related to our debit and credit card payment
processing,  including:

     -    Internet  Processing  -  ECHO  allows  merchants  to  process  payment
          transactions  online  with  security  services  that  protect  the
          cardholder, merchant and Internet Service Provider ("ISP") from fraud,
          immediate  processing  and  online  reporting;  and
     -    Batch  File  Processing  -  ECHO allows mail order, telephone order or
          direct  marketing  merchants,  to  process  and  transmit  hundreds of
          thousands of payments at a time by using Microsoft Excel(R), Access(R)
          or  any  other  program that can create a "flat file" of data. In this
          process,  the merchant can visit the ECHO Merchant Center, log on with
          its  PIN  and  merchant  number,  and  then  upload the file to ECHO's
          processing  center.  The  transactions are processed immediately, with
          reporting  available  almost  immediately  to  provide  data  on  each
          transaction.

Deriving  Revenues
------------------

Bankcard  and  transaction  processing  services provide for the majority of our
revenues.  For  the  year  ended  September  30,  2003, bankcard and transaction
processing  accounted  for  approximately  80%  of  our  revenues.  Bankcard and
transaction  processing  volume  rose 26.4% in fiscal 2003, from $760,501,000 in
fiscal  2002 to $961,248,000 in fiscal 2003, and revenue increased approximately
18.2%,  from  $27,456,000  in  fiscal  2002  to  $32,444,000  in  fiscal  2003.

In  a  typical  transaction,  ECHO receives a percentage-based fee on the dollar
amount  processed and a transaction fee on the number of transactions processed.
ECHO's  revenue for debit/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  and  is deducted from the amount of each transaction submitted by the
merchant,  while  the  net amount is deposited into the merchant's bank account.

Discount  rates  range  between  1.5% and 4.5%, and our average discount rate is
2.1%,  which is consistent with our rates for the year ended September 30, 2002.
Depending upon the discount rate and the cost of clearing interchange, about 75%
to  90%,  and  about  85%  on  average,  of the discount rate revenue is paid to
card-issuing  banks  and  organizations  and  the  sponsoring  bank.


                                        5
<PAGE>
A  transaction  fee is charged for each transaction processed and ECHO's average
transaction  fee  in fiscal 2003 was $0.19 per transaction, compared to $0.18 in
fiscal 2002. We charge our bankcard merchants a range from $0.15 up to $0.32 per
transaction, depending on the type of transaction and merchant. Larger customers
tend  to  pay  lower transaction fees given the volume of business they provide.
Both Visa and MasterCard have instituted $0.05 to $0.10 transaction fees on each
transaction processed that ECHO is required to pay.  However, due to lower costs
of communications and negotiated contracts, ECHO's communication costs have been
lowered  to  a  range  of between $0.01 and $0.02 per transaction. Therefore, on
average,  ECHO  pays  approximately  $0.012  per transaction, depending upon the
duration  and  method  of  transmission.

The  market  size  for  credit  card  processing  is  approximately 1.2 trillion
transactions  per  year,  and  this  number is growing annually. ECHO has a very
small  percentage of this market share, but we are one of the top 50 credit card
processors  according  to  The  Nilson  Report,  a  monthly  financial
subscription-based  newsletter.  Our  competitors include First Data Corporation
("FDC"),  the  biggest  credit card processor in the U.S., NPC, Global Payments,
and  Payment  Tech.  The  credit  card  processing  market  has  undergone rapid
consolidation,  which  has  raised  unique  challenges, including supporting and
integrating  numerous  processing  methodologies,  initiating  quality  customer
support  and  field  support  services  and  maintaining merchant relationships.
While merchant portfolios can be purchased by a processor or a credit card agent
bank,  merchants  are  generally  under no contractual obligation to utilize the
services  of  the  new  owner so many of the most active consolidators have been
experiencing  difficulty  in  maintaining  their  number  of  active  merchants.

In  an  effort to enhance the bankcard transaction processing business segment's
processing  infrastructure  and  control  processing  costs, we licensed several
payment  processing  systems  from  Oasis  Technologies  in  2002  and  a  full
integration  of  this  system  is  currently  projected for late 2004.  While we
believe  that  our  data  center  is  reliable  and  the  costs  to  operate the
MerchantAmerica  program are currently reasonable, no assurance can be made that
such  favorable  conditions  will  continue.

In order to engage in Visa and MasterCard processing, a cooperative relationship
is  required  with  a  bank  that sponsors the Visa and MasterCard transactions.
ECHO's  primary  processing bank relationship is with First Regional Bank of Los
Angeles,  California.  As  a  result  of  its relationship, ECHO is a registered
Independent  Sales  Organization  and  Merchant  Service  Provider with Visa and
MasterCard,  respectively,  which  allows  us  to  solicit and support merchants
utilizing  our  services.  We  have an agreement with First Regional Bank, which
continues  our  relationship  through  2005.  Pursuant  to  the  terms  of  the
agreement,  among  other  matters,  we market and sell merchant services and the
bank  provides  various  support  services  in  connection  with  individual
transactions,  in  exchange  for  our  payment  to the bank, on a monthly basis,
either  a  payment  of $0.02 per transaction, or 10 basis points of the bankcard
processing  volume,  depending  on  the  merchant.  The agreement does not allow
either  party  to  terminate  other than for cause (as defined in the agreement)
without  incurring  liability  for  breach  of  the  agreement.

CHECK-RELATED  PRODUCTS  (OR  "CHECK  SERVICES")

Overview
--------

ECHO  has  invested  significant  resources  and  management  focus in its check
services  business.  Check  services  revenue  increased  approximately 40.4% in
fiscal  2003,  from  $5,835,000  for  fiscal 2002 to $8,192,000 for fiscal 2003.
Revenues  from  check  conversion  and  check  re-presentment are all increasing
significantly.  Visa  officially  released  its POS Check Service as of December
2002 and several national banks have since approved the program to be offered to
their merchants.  Therefore, ECHO anticipates continued growth in check services
as  the marketing efforts of participating banks in the Visa Program become more
widely  implemented.  (See  also  the  discussion  of the Visa POS Check Service
Program  below.)

Services
--------

With  our  check services, we provide various services to merchants and banks to
allow  them  to  accept  and  process  check payments from consumers.  Our check
services  include  the  following:

Check  Verification
For a fee, we will search NCN, our proprietary database of negative and positive
check writer accounts, attempting to match a specific piece of information, such
as  a  driver's  license  number  or Magnetic Ink Character Recognition ("MICR")
number  (the  numeric  data  along  the  bottom  of  a  check),  provided  by  a


                                        6
<PAGE>
merchant.  A  match  identifies  the  check writer as having current, delinquent
check-related debts.  Upon notification of this match (via a coded response from
the  provider),  the  merchant  decides  whether to accept or decline the check.
Verification  reduces  the  risk  of  accepting  a  bad  check for the merchant,
however,  in  providing this program alone, we typically offer no guarantee that
the  check  will  be  honored  by the check writer's bank and make no promise of
reimbursement  if  the  check  is  dishonored  by  the  bank. Revenue from check
verification  is  derived from fees collected from the merchants when a check is
verified  against  our  positive  and  negative  check database. This revenue is
recognized  when  the  transaction  is  processed,  since  we  have  no  further
performance  obligations.

Check  Guarantee
With this service, if we approve a check transaction and a check is subsequently
dishonored  by  the check writer's bank, the merchant is reimbursed by us and we
acquire  rights  to  collect  the  delinquent  amount  from  the  check  writer.

The  principal risk of providing this service is the risk of ever collecting the
amount  we  guarantee from a delinquent check writer whose check transaction was
dishonored  by  his or her own bank.  If we are unable to collect the amount, we
lose  that  amount.  On  average,  we  usually  collect on 60% of the amounts we
guarantee  that  have  become delinquent.  Given the risks associated with check
guarantee,  especially  for  large  volume  merchants,  we  exercise strict risk
parameters  with  the  merchants to which this service is offered.  We typically
apply  several  risk  management  approaches  with  this  service, which include
searching  NCN's  database  against  the  data  provided  by  the  merchant, and
"scoring"  each  transaction  according to several factors such as velocity (the
number  of  times a check writer has been searched in a certain period of time),
prior  activity  (historic  negative  or  positive  transactions  with the check
writer),  check  writer's  presence in other databases (these national databases
are selectively searched based upon the size of the check and the prior activity
with  the  check  writer), size of the check, and historic bad check activity by
geographic  and/or  merchant specific locations. If our scoring system concludes
that the risk is too high, we issue a coded response instructing the merchant to
refuse to accept the check.  If our scoring system results in a positive result,
a  coded  response  advises the merchant that we have guaranteed payment on that
item.

Electronic  Check  Conversion  ("ECC")
Check  conversion  is the ability to convert a paper check to an electronic item
at  the  point of sale.  ECC is a relatively new system of check settlement that
is quickly gaining merchant acceptance.  Under the program, 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 us to settle the check transaction electronically. Customers like
this  new  system  because  they get their check back immediately and still have
their  hard  copy  of the transaction. Banks like ECC because no paper has to be
handled  by  the  bank to settle the transaction. While large national merchants
already have check-reading equipment, small merchants will adopt the system only
if  their  check  volume  justifies the capital investment in equipment, ranging
from  $150  to  $600  per  reader.

Check  Re-Presentment
The Federal Reserve System's Automated Clearing House ("ACH") provides the tools
to  electronically present, re-present and settle funds between banks. Our check
re-presentment  program  allows  a  merchant  to advise its bank that a returned
check  should  be  sent to the XPRESSCHEX data processing center in Albuquerque,
New  Mexico,  rather  than  returned  to  the merchant. Upon receipt, XPRESSCHEX
converts the check to an electronic ACH transaction for resubmission through the
ACH  network  and  marks  the  check for possible collection activity, should it
become  necessary.  One  feature  a  merchant  may  choose  is  to  time  the
re-presentment  so as to coincide with a check writer's typical payday to better
the  odds  of  collection.  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
services.

Internet  Check,  Batch  Check  and  Virtual  Terminal
A  check  can be presented as a form of payment over the Internet and we support
the  multiple  types of ACH entry classes.  XPRESSCHEX allows an e-commerce site
to  accept  a  check  as  payment,  allows  a  batch  of  check  data to be sent
electronically  for  processing  (this  is  commonly used by mail order or phone
order  businesses)  and allows both verification-only and ACH transactions to be
submitted  by  merchants  via  a  secure  logon and passcode connection over the
Internet.


                                        7
<PAGE>
Visa  POS  Check  Service  Program  ("Visa  Program")
-----------------------------------------------------

The  Visa  Program represents a major new initiative by Visa to enable merchants
to  receive  direct  online  authorization  for  checks written against consumer
checking  accounts,  similar to the authorizations provided for credit and debit
card  transactions.  The  Visa Program was offered as a pilot program by Visa to
its  member  banks  from  December  of  2000 to December of 2002 over which time
several  banks  electronically  connected  their  check  writer data to the Visa
network, making verification of the check writer's bank account balance possible
when checks drawn on these select banks were processed. In December of 2002, the
program  was  officially  released  out  of  pilot  and,  as  of  December 2003,
approximately  10%  of checking accounts in the USA are electronically connected
to  the  Visa  network  through the banks that are now participating in the Visa
Program.  This  number  is expected to increase to 20% or higher over the coming
year as more banks connect their check writer data with Visa.  ECHO has invested
significant  resources  and  management  focus  in  its check services business,
particularly  with respect to the Visa Program, and anticipates continued growth
in  check  services  as the marketing efforts of participating banks in the Visa
Program  become  more  widely  implemented.

As  described  above, "check conversion" is the ability to convert a paper check
to  an  electronic  item  at  the point of sale.  The Visa Program provides Visa
member  banks  with  a check conversion service that they can sell to their bank
merchants.  The  Visa  check  conversion  service  allows the merchant to get an
immediate  authorization  or decline on a check while the check writer is at the
checkout  counter.  If the check is approved, the service allows the merchant to
immediately  return  the paper check to the check writer since the funds will be
electronically  withdrawn from the check writer's account and deposited into the
merchant's  account.

Being  able  to  approve  or  decline  a check in real time at the point of sale
requires  some  method to verify the check writer has either an adequate balance
in  the  bank  to  cover the check or, if that is not possible, to verify if the
check  written  has  a  match in a negative check account database.  In order to
provide  this  check  service on 100% of the checks received by a merchant, Visa
needed  a solution to approve or decline (and for those approved, electronically
deposit)  the  checks  that processed through the program on a bank that had not
yet  connected  its check writer data to the Visa network.  We are currently one
of  two  companies that provide this service to Visa as a Third Party Processor.
When  a Visa member bank signs up to offer the Visa Program to its merchants, it
chooses a Third Party Processor from the certified providers and, to date, eight
of  the  thirteen  financial  institutions actively participating in the program
were  using  ECHO's  services  as  a  Third-Party Processor and are beginning to
actively  sell  check  services  to  their  merchants,  and  two  additional
participating  institutions  currently  in the program intend to actively market
this  program  to  their  merchants  and  use  ECHO's  services as a Third-Party
Processor  in  2004.

When Visa receives electronic check data from a merchant and the bank upon which
the  check is drawn has not connected its check writer data to the Visa network,
Visa  routes  that  check  to  the  Third Party Processor that was chosen by the
merchant's  bank  when  they  set  up  the  program.  The  Third Party Processor
authorizes  or  declines  a  check  based  upon  the  negative and positive data
contained  in  several  national  check  account databases that are commercially
available  and,  for  those  transactions  that  are  approved,  the Third Party
Processor  will electronically move the funds from the check writer's account to
either the merchant bank's master clearing account or directly to the merchant's
banking  account  (depending  on the bank's desired settlement method) utilizing
the  Automated  Clearing House (ACH), a funds settlement service offered through
the  Federal  Reserve  Bank.

In  addition to being a Third Party Processor, we are one of only five companies
that  are  currently  certified  as an Acquirer Processor with Visa, a role that
accepts  transactions  from  the  merchant's  point of sale terminal/systems and
reformats  them for submission to the Visa network. We were chosen by two of the
seventeen  banks  currently in the program to serve as their Acquirer Processor.
Most  banks  presently  in the Visa Program are large national or regional banks
and already had terminal management service providers that could act as Acquirer
Processor  for  the  Visa  Program.  In  the  future,  as smaller banks make the
decision  to enter the Visa Program, it is expected that many will have no prior
relationship  with a terminal management provider and therefore, may potentially
choose  us  as  their  Acquirer  Processor.


                                        8
<PAGE>
We  derive  transaction  revenue  in our role as a Third Party Processor and /or
Acquirer  Processor  by  negotiating a transaction fee with Visa and/or the bank
that  chose  us  as  its  Third Party Processor and/or Acquirer Processor.  This
transaction  fee  averages  $0.09  per  transaction.  The  party  that sells the
service  to  the  merchant  (usually the bank) enjoys the largest mark-up on the
product,  offering  the  service  in the range of $0.30 to $0.60 per check, with
external cost in the $0.12 to $0.20 range, depending on what the bank negotiates
with  Visa  and  any  Third  Party  providers.

We  entered into a sponsorship agreement with our primary credit card processing
bank,  First  Regional  Bank,  to enable us to sell the Visa Program directly to
merchants  with  an  obligation  to pay a small transaction fee per check to the
bank.  This  allows  the  bank  to  realize  added revenue, allows us to realize
higher revenues in a marked-up pricing model, and a portion of the mark-up to be
used  to compensate and motivate resellers of our products and services to offer
the  Visa  Program  to merchants in the marketplace.  The balance of the mark-up
after  paying the bank and the sales organization would be additional revenue to
us.  This  will  also  enable us to use our direct sales channels to provide the
Visa  Program  to  ECHO's  current  and  potential  merchant  base.

The  Visa  infrastructure requires ECHO to coordinate and integrate its services
with  several parties and systems. As part of the Visa Program, we have written,
tested  and  installed  special  merchant terminal software that meets specified
Visa Program requirements and certified our terminal and host response code with
Vital  Processing  Services, a major provider of terminal services to many major
banks.  ECHO  has  also  developed  special  add-on  services  and reporting for
specific  banks  or  select  merchants  that  desired to participate in the Visa
Program.  Additionally,  ECHO  has  designed  and  is  implementing several risk
management  tools  that  contribute to the significant reduction in net bad debt
seen  by  a  retailer, making the Visa Program a true competitive alternative to
guarantee  services.  As  of  September  30,  2003,  we have spent approximately
$2,500,000  to  integrate  our  check services with the requirements of the Visa
infrastructure  and to increase our technology infrastructure, and to design and
implement  our  risk  management  tools  in  connection  with  the  program.

Deriving  Revenues
------------------

For  the past three years, we have invested significant resources and management
focus  in  our  check  services  business  which  provides  various  services to
merchants  and  banks  to  allow  them to accept and process check payments from
consumers.  This  business  segment  comprised  approximately  20%  of our total
revenues  for  the  fiscal  year  ended  September  30,  2003.  As an individual
segment,  check-related revenue increased by 40.4% to $8,192,000 from $5,835,000
for  fiscal  2002.

ECHO's  revenue in check services can come from several sources.  Typically, the
merchant pays either a fixed fee for each transaction (verification, conversion,
etc.)  or  a fee based on the face amount of the check (check guarantee) or both
(check  guarantee).  In  the  Visa  model, ECHO can receive transaction fees for
providing  "third-party"  services  to  Visa banks, whereby ECHO assists them in
processing  checks  from  banks  not  participating  in  the  Visa  Program.  In
addition,  ECHO  may  serve  a Visa bank by being a collector of the transaction
data  for the merchant and submitting it to VisaNet, a process referred to as an
"Acquiring  Processor".  Finally,  ECHO can also participate in the mark-up that
is  charged  on  the  sales price to a merchant, although this is only earned by
ECHO  if its primary sales channels secured the relationship. Additional revenue
is  earned  if  the  merchant  utilizes  ECHO's  collection  services  and it is
primarily  derived from the collection fee associated with successful collection
of  an  item.  If  ECHO  refers  a  collection  item  to  an NCN member, a small
participation  in  the collection fee is returned to ECHO through agreement with
the NCN member. Finally, when ECHO provides a guarantee service to a merchant or
a bank, it earns a percentage of every check processed from the merchant or bank
and  ECHO's  earnings  related  thereto  are  directly  tied  to  its success in
collection  and  its  risk  management  capability.

The NCN database includes over 20 million negative check account records and 100
million  positive  records.  Over 260 affiliated collection agencies continually
contribute to the database to enrich its depth and value. Through its network of
NCN  members,  ECHO  can  offer  regional  collection  services  and  distribute
collection  items  to  one or more of a select group of NCN's member agencies to
maximize  a  merchant's  or  bank's ability to collect amounts on a local level.
NCN  provides  an  ongoing revenue stream for ECHO as collection agencies, major
national  merchants, banks, other transaction processors, and thousands of small
merchants  access  the NCN database daily to verify the status of a check writer
in  real time.  Check verification has been recognized as one of the lowest cost
and  most effective ways for retailers to lower the risks and losses experienced
in  accepting  checks as a form of payment. Our NCN database is one of only four
major  databases  in  the  nation


                                        9
<PAGE>
that  can  serve  this market need on a national scale, and we are currently the
fifth largest check verification processor in the United States according to the
July  2003  issue  of  The Nilson Report, a monthly financial subscription-based
newsletter.  In  addition to operating NCN, we provide a common platform where a
business  can  also  access other major negative check writer databases that are
currently  available  in  the  nation.

XPRESSCHEX revenues are growing due to the increased use of our check conversion
services,  which  include the capture (through digital imaging, or the retention
of  specified  personal information) of the necessary check data at the point of
sale  and  submission  of  the transaction electronically to the Federal Reserve
System's  Automated  Clearing  House  for  settlement of funds.  XPRESSCHEX also
maintains  an  active  collection  agency,  registered in 48 states, that serves
primarily as a referral agent to select NCN members that are collection agencies
and  are  located  in  various  regions  of  the  country.

OTHER  SERVICES

Overview
--------

ECHO  has  historically  generated  a  small  percentage of its revenue from its
terminal  business  whereby  ECHO  deploys  proprietary  software  and  terminal
hardware  in  a  comprehensive  system  for real-time credit card authorization,
capture  and  compilation  of  compensation  data,  and  in  some  cases, active
management  of  rental  equipment  information.  However,  we  are currently not
pursuing  the sale of our proprietary terminal system but rather focusing on our
core  bankcard  and  check  services  business segments, and with respect to our
U-Haul  relationship described below, we now receive lower transaction fees from
that  customer as a result of our revised agreement entered into in fiscal 2001.

U-Haul  Relationship
--------------------

The biggest buyer of our terminal systems in the past five years has been U-Haul
International,  which has acquired in excess of 15,000 systems and deployed them
to their dealers across the country. ECHO acts as the central clearing agent for
these  systems  and  intends  to continue to support the U-Haul deployed base of
terminals.

We  have  been working with U-Haul International since 1995, when ECHO developed
and  deployed  a  comprehensive  system for real-time credit card authorization,
capture  and  compilation  of compensation data, and active management of rental
equipment  information. The software, which operates on ECHO's proprietary EB920
terminal,  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, where it 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.

ECHO's  revenues  are derived from equipment sales to U-Haul, custom development
work,  and  income resulting from daily transaction processing services provided
to  dealers and U-Haul Corporate. While we have experienced a declining trend in
transaction  volume,  due  in  part  to  U-Haul's  development  of  a  web-based
processing  service,  we  have been able to cross-sell our credit card and check
services  into  the  terminal  base of more than 15,000 dealers for use in their
non-U-Haul  business  (rental  yard,  gas  station,  etc.).  In  fiscal 2001, we
entered  into  a  revised  three-year  contract with U-Haul International, which
covered  processing services, software development, data distribution, equipment
purchases/warranty,  customer  support  and  consulting, and which resulted in a
reduction  in  transaction  fees  that  we  now  receive  from  this  customer.

STRATEGY

Overview
--------

ECHO's  strategy  is to provide merchants, banks and industry-specific resellers
with  electronic  connectivity  to  various payment services in the credit card,
debit  card  and  check-related  markets.  Our  platform  of  services  is  very
flexible,  enabling  merchant  customization  and  scalability  to  meet  the
requirements of high transaction volumes, as well as access to the Visa Program.
ECHO's services enable merchants to maximize revenues by offering a wide variety
of  payment  options, reducing the costs associated with processing and handling
checks,


                                       10
<PAGE>
improving  collections and managing risk more effectively. Additionally, ECHO is
committed to customer service and a recent survey of customer satisfaction rates
showed  an improvement to 4.43 out of a possible 5.0, from approximately 4.15 in
a  similar  survey  taken  three  years  prior.

We  have  targeted  several  areas  as  significant  opportunities  for  growth,
including  focusing  on  middle  market  retail  accounts for check services and
developing a scalable infrastructure to support widespread implementation of the
Visa  Program.  We also seek to increase profitability of our principal merchant
services  by enhancing our back-end technology and identifying and targeting new
low-cost,  incremental  revenue  opportunities,  such as active promotion of our
payment  services  to  non-profit  organizations.

Promote  Check  Services  for  Middle  Market  Retail  Accounts
---------------------------------------------------------------

While  ECHO  focuses its credit card services to the middle market of retail and
non-face-to-face  merchants,  our check services business, through various sales
channels  like  direct  sales  and  sales  through authorized resellers, has the
ability to target the full scope of merchants in the marketplace, from the small
merchant that may only require check verification to the national retailers that
require  check  conversion  and  national  collection  services.

With  approximately  four  million  merchants in the U.S. and over 95% currently
accepting  credit  cards  as  payment,  ECHO estimates that approximately 60% of
merchants,  or about 2.3 million merchants, that accept credit cards also accept
checks as a form of payment.  Furthermore, of the group that accepts checks as a
form  of payment, we estimate that only 17% of them have an electronic method to
accept  checks  and  the  other  83%  accept a paper check and process it in the
traditional  manner  by  taking  the  check  to  the  bank.

ECHO's  estimated  market  potential  for  check  services  is:

-    Approximately  1.7  million merchants currently accept credit cards, but do
     not  currently  accept  checks  as  a  form  of  payment;
-    Approximately  1.9  million merchants currently accept paper checks and may
     consider  an  electronic  form  of  payment;
-    Approximately  400,000  merchants  currently  converting  paper  checks  to
     electronic  format  at  the point of sale may consider changing to a better
     service  and/or  lower-cost  provider.

While  we  have  the ability to approach all sizes of merchants, efforts will be
focused  on working with our sales channels, like direct sales and sales through
authorized  resellers,  to approach mid-size retail chains that can benefit most
from  automating  check processing and verification or participation in the Visa
Program.  These  mid-size  accounts  typically  offer higher margins than larger
accounts  and  provide a less competitive marketplace.  ECHO has recently signed
agreements  with  several middle market retailers and believes that the pipeline
for  prospective  customers  is  growing.

Promote Visa POS Check Service Program
--------------------------------------

The  Visa  Program represents a major new initiative by Visa to enable merchants
to  receive  direct  online  authorization  for  checks written against consumer
checking  accounts,  similar to the authorizations provided for credit and debit
card transactions.  Given ECHO's role in the early stages of the program and our
investment  of  significant resources and management focus in our check services
business  as  a  whole,  and  specifically  with respect to the Visa Program, we
anticipate  continued  growth  in  check  services  as  the marketing efforts of
participating  banks  in  the  Visa  Program  become  more  widely  implemented.

Overall,  as  the market gains acceptance of the Visa Program, our opportunities
to  market  our check collection services, our stand alone verification services
(not  currently  part  of the Visa Program) and any other check services that we
are  able  to  provide  will further solidify our relationships with the various
financial  institutions  that  have chosen us as their Acquirer Processor and/or
Third-Party  Processor  under  the  Visa  Program.  We  intend  to utilize these
opportunities  to  expand  our  check  services  business.

As  of  September  2003,  eight  of the thirteen financial institutions actively
participating  in  the  program  were  using  ECHO's  services  as a Third-Party
Processor  and are beginning to actively sell check services to their merchants,
and two additional participating institutions intend to use ECHO's services as a
Third-Party  Processor in 2004.  One of the current participating banks sold the
Visa Program to a national specialty-clothing retailer that became active in the
Visa  Program  in  June  2003 and now constitutes the largest single user of the
Visa  Program  to date.  This national merchant participates in the Visa program
by  submitting  the


                                       11
<PAGE>
MICR data in real time and then returning the paper check to the check writer at
the  point  of  sale.  All deposit and collection activity on approved checks is
derived  from  the  use  of  the  numeric  check data and, to date, we have been
successful  in  lowering  the retailer's return check percentage to, or below, a
competitive  level  with  rates  normally  charged  by  national check guarantee
services.  Significant  savings  to  the retailer are therefore derived (1) from
the  elimination  of  having to handle and process paper checks and (2) from the
net financial benefit seen from the bad check write-off percentage falling below
the  rates  charged  by  the  national  guarantee  services.

Altogether,  ECHO  has grown in its knowledge and capability of facilitating the
integration  and implementation of the Visa Program for new banks and developing
a  standardized,  but customizable platform of options based upon its experience
with  the  banks  participating  in  the  Visa  Program.  The  number of project
implementation  staff dedicated to the Visa Program has been increased to assist
current  and  future  banks  in making the fastest and easiest conversion to the
Visa  Program.  However, implementation of new banks, at least in the near term,
will  rely  on  the bank's ability to coordinate the integration of its internal
deposit  account  management  system  to  the  Visa  Program and this process is
outside  of  ECHO's  realm  of  responsibilities.

While  ECHO  believes  that  the  Visa  Program  has  the  potential to generate
significant  revenues for us in the future, the market potential of this service
is  still  unproven  and  its  success  is dependent on the continuing marketing
support  of  Visa  and  its  member  banks.

Promote Merchant Payment Processing for Regional and Community Banks
--------------------------------------------------------------------

ECHO  has  identified  an  under-served,  niche  market  of smaller regional and
community  banks  for  credit  card  and check payment programs. These banks are
characterized  by having an asset base in the $500 million range or less, and/or
equity  capital  in  the $10 to $50 million range.  ECHO has developed a service
that  allows smaller banks to offer credit card and check processing services on
a  private-label  basis  using  our  back-end  infrastructure  with little or no
technical  involvement  by  the  bank.  Much  of  the  reporting to the merchant
utilizes  the  Internet  as  a delivery channel, an environment in which we have
significant  experience  and  knowledge.  We  estimate that approximately 80% of
merchants  are  familiar  with  or  connected  to  the Internet, many from their
personal  residences.  Due  to  the high costs and the perceived high risk, most
small  banks  are  either  unable or unwilling to compete with national banks in
providing  online  transaction  processing and Internet-based reporting tools to
their merchants.  We have designed the program to be adopted by a bank at little
or  no  cost  while  it  allows  the  bank  to generate revenues and earnings in
competition  to  those  earned  by much larger banks that have had to make major
investments  in  the  technology.

This  merchant  payment  processing  service,  which  is  marketed  under  the
MerchantAmerica  name,  incorporates  all  of  ECHO's  web-based  features  and
functionalities  and our full set of services and payment options for the retail
channel.  We  believe  that  our  fully  integrated payment and reporting system
allows  smaller  banks  to  enjoy  competitive  equality  with much bigger banks
without  making  significant  investments  in  technology.  It  enables banks to
compete  feature  by feature with the offering of the major banks with no set-up
fee  or  annual  charge to participate.  We, in turn, benefit from the increased
processing and transaction revenues.  Additional benefits of the MerchantAmerica
program  to  regional  and  community  banks  include  the:

     -    Ability  for  banks  to  set  processing  fees  for  each  merchant;
     -    Assurance  that  the  bank  controls  the  merchant  relationship  and
          maintains  any  financial  asset  value  related  to  ownership;  and
     -    Reduction  of  fraud  risk.

In  addition  to  the  benefits  that the bank receives from the MerchantAmerica
program, the bank's merchants also receive numerous benefits, including a retail
merchant  account  for  credit cards, debit cards and checks; an online shopping
cart  and  check-out  payment  system;  sales  tracking  and  online transaction
history;  automatic  referral  to  collection  agencies;  and dedicated customer
service  available  24  hours  a  day,  seven  days  a  week.

The  program  was  launched  in August 2002 and at the end of fiscal 2003 had 15
participating  banks.  ECHO  estimates  that there are 10,000 community banks in
the  U.S.  and no one provider of services has over 10% of the market.  Based on
third-party research, we estimate that approximately 6,000 of these banks do not
directly offer bankcard services and the approximately 4,000 that are affiliated
with  a  service  may  be  responsive  to the MerchantAmerica value proposition.


                                       12
<PAGE>
SALES  AND  MARKETING

ECHO  sells  its merchant and check services through several marketing channels,
including  independent  sales  organizations  (i.e,  authorized resellers of our
products  and  services),  its  own  internal  sales  force  and direct merchant
referrals  by  existing  merchants.  We  also  offer Merchant Services through a
direct  online  sales  channel,  MerchantAmerica.  Approximately  20% of our new
accounts  have  historically  been generated through the authorized resellers of
our products and services.  In fiscal 2002, ECHO restructured its sales force by
hiring  more  sales  people  for  its Check Services National Sales Group, which
focuses  on  selling  to  major  accounts  and  mid-sized  retail  chains,  and
implementing  an incentive-based commission structure with the goal of targeting
specific  accounts  and shortening the sales cycle.  Due to the growing interest
in  the  Visa Program and being the Third Party Processor of a national clothing
retailer,  we  have  redirected  much  of  our  marketing and sales resources to
aggressively  promote  the  Visa  Program.

ECHO  offers  its  payment  services  through several sales channels, including:

     -    MerchantAmerica  -  Payment services offered directly to merchants and
          to  regional  and  community  banks to offer to their local merchants.
          MerchantAmerica combines the ECHO credit card services with a full set
          of  check  and  collection  services.
     -    Primary  Sales Channels - These channels, which include First Regional
          Bank  sponsored  Visa POS Check, direct merchant sales, Check Services
          National Sales, group sales and MerchantAmerica direct merchant sales,
          provide  the  highest  margin  opportunities.
     -    Secondary  Sales  Channels  -  Banks  in  the  Visa POS Check Program,
          authorized  resellers,  NCN  Collection  Agency  Members  and
          MerchantAmerica  Agent  Banks are part of the secondary sales channel.
          These  channels  offer lower margins due to the added participation in
          the  overall  revenue  such  channels  require. Currently ECHO has 138
          authorized resellers registered to sell ECHO's check products. NCN has
          over  260  member collection agencies that serve over 85,000 merchants
          and  many  agencies  are  acting  as  sales  agents  for  ECHO's check
          services.

Management  believes  that  we  are distinctive in the number of payment methods
that we allow, the combination of transaction types that we manage directly, our
ability  to  integrate  additional  services  and  our  ability  to support each
merchant  through  one  vertically  integrated  source.

Our  marketing  strategy  is  to  maximize  cross-selling  opportunities  to our
existing  base  of  retail merchants and financial institutions, including those
merchants and financial institutions in the Visa Program; sell integrated suites
of  check,  credit  and  debit  card processing services through small banks and
industry-specific resellers; enhance and market MerchantAmerica.com; and develop
the  private  label check service program that allows appropriate identification
between  the  customer  and  the  vendor.  ECHO  intends  to:

     -    Market  the  MerchantAmerica  service to regional and community banks,
          through direct sales to merchants and to Not-For-Profit organizations;
     -    Promote the Visa Program by working with Visa-referred banks to assist
          them  in  initiating  the  service  and also, selling the Visa service
          directly  to merchants through the sponsorship of ECHO's primary bank,
          First  Regional  Bank.
     -    Educate  national  merchants,  processors, banks and industry-specific
          resellers  on the benefits associated with our NCN services, including
          check  conversion,  verification,  ACH  payments,  collection  and our
          positive  and  negative  database  capability  and enlist their active
          sales  thereof.

COMPETITION

Bankcard  processing  and  check  processing  services  are  highly  competitive
industries  and  are characterized by consolidation, 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.  Credit card and debit card processors have similar direct costs and
therefore  their  products  are becoming somewhat of a commodity product where a
natural advantage accrues to the highest volume processors. To offset this fact,
we  have focused on marketing to niche markets where we can maintain the margins
we  deem necessary to operate profitably but no assurance can be given that this
strategy  will  be  successful  in  the  future.


                                       13
<PAGE>
There are a number of competitors in the check services industry, the largest of
which  are  TeleCheck (the leading provider of conversion and guarantee services
and  a  subsidiary  of  First  Data  Corporation),  SCAN/eFunds  (the  largest
verification  provider  in  the  nation),  Certegy  (a spin-off of Equifax), and
Global  Payments.  While all four have major national accounts, the last two are
now  actively  moving into the smaller merchant and middle market where ECHO has
historically  positioned  itself.  ECHO believes that it can effectively compete
due  to  its  ownership  of  the  NCN  database, its integrated set of check and
collection  services and the technological advantage of having certified as both
a  Third-Party  Processor and Acquirer Processor in the early stages of the Visa
Program.

ECHO is not currently a major player in the credit card processing market but we
do  believe  we  are  among  the  top  50  in  the nation.  We believe we hold a
significant competitive position in the check services market due largely to our
investment  to  date  in  the  Visa POS Check program and the integration of our
check  and  collection capabilities.  Despite this fact, many of our competitors
have  greater  financial and marketing resources than us.  As a result, they may
be  better  able  to  respond  more  quickly to new or emerging technologies and
changes  in  customer  requirements.  Competitors also may enjoy per transaction
cost  advantages due to their high processing volumes that may make it difficult
for  ECHO  to compete. In addition, major players in the check services industry
have  developed  sophisticated  risk  assessment  technology  that may provide a
competitive advantage in providing check guarantee services. We believe that our
success  will  depend  upon our ability to continuously develop new products and
services and to enhance our current products and to introduce them promptly into
the  market.

EMPLOYEES

As  of  September  30,  2003, we employed 209 individuals, 173 of whom were full
time  employees.

REPORTABLE  SEGMENTS
Refer to Note 14 "Reportable Segments" in the accompanying Notes to Consolidated
Financial Statements for reportable segment information.


ITEM 2.   PROPERTIES

In  October  1994,  we  purchased  a three-story, 13,500 square foot building in
Agoura  Hills,  California  for  $880,000.  We  currently  have  two  notes
collateralized  by  this building and the current monthly debt service for these
two  notes  is  approximately $19,000.  This building housed the majority of our
executive  staff,  day-to-day operational departments and computer facilities at
fiscal  year  end.

In  October  2003, we leased 21,500 square feet of a 40,000 square foot building
in  Camarillo,  California with an option to purchase the building in two years.
Subsequent  to  fiscal  year  end,  our  principal  executive  offices  and most
operational departments were moved to this Camarillo location, however, in light
of  anticipated  increases  in  holiday  volume and our desire to ensure that no
disruption  in  service  occurs for our merchants, the Customer Support and Data
Center  Operation  departments  remained  at  the Agoura Hills location and will
remain  there  until January 2004 when a final move of those departments will be
coordinated.  The  current lease payment for this facility is $23,700 per month.

We  have  put  our  Agoura  Hills  building on the market and, in November 2003,
signed  a  letter  of intent to sell the building.  We anticipate completing the
sale  of  this  property  in  the  third  quarter  of  fiscal  2004.

We  additionally  lease  real  property  in  Agoura  Hills and Westlake Village,
California; Albuquerque, New Mexico; Boulder, Colorado; and Lawrence, Kansas for
sales,  data center and other operations, under various agreements, which expire
at various times over the next year.  The total lease payments are approximately
$18,000  per  month.

We  own  several  pieces  of  raw  land  for  investment  purposes.


                                       14
<PAGE>
ITEM 3.   LEGAL PROCEEDINGS

We  are involved in various lawsuits arising in the ordinary course of business.
Based  upon  current  information,  management,  after  consultation  with legal
counsel,  believes  the  ultimate  disposition  of  these  lawsuits will have no
material  effect  upon  either  our results of operations or financial position.

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

No  matters were submitted to a vote of ECHO's shareholders in the quarter ended
September  30,  2003.


                                       15
<PAGE>
                                     PART II


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

Since  January  17,  1986,  we  have been trading on the over-the-counter market
under  the  name  Electronic  Clearing  House, Inc.  On October 2, 1989, we were
accepted for listing on the National Association of Securities Dealers Automated
Quotation  System  ("NASDAQ") and trade under the symbol of "ECHO" on the Nasdaq
SmallCap  Market.  The  following  table  sets  forth  the range of high and low
prices for our 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.
Moreover, due to the lack of an established trading market for our common stock,
such  quotations may bear no relationship to the fair market value of our common
stock  and  may  not indicate prices at which our common stock would trade in an
established  public  trading  market.

<TABLE>
<CAPTION>
             FISCAL YEAR ENDED SEPTEMBER 30  High    Low
             ------------------------------  -----  -----
<S>                                          <C>    <C>
                 2003
                 ----
             First Quarter                   $2.85  $1.09
             Second Quarter                  $2.75  $1.72
             Third Quarter                   $4.40  $2.47
             Fourth Quarter                  $9.59  $3.20

                 2002
                 ----
             First Quarter                   $2.92  $1.88
             Second Quarter                  $2.44  $2.00
             Third Quarter                   $2.10  $1.16
             Fourth Quarter                  $1.58  $1.08
</TABLE>


The  prices  set  forth above are not necessarily indicative of liquidity of the
trading  market.  Trading  in  our  common  stock  is  limited  and sporadic, as
indicated by the average monthly trading volume of 454,316 shares for the period
from  October  2002  to  September  2003.  On  December  22,  2003,  the closing
representative  price  per  share of our common stock, as reported on the Nasdaq
SmallCap  Market,  was  $9.75.

HOLDERS  OF  COMMON  STOCK

As  of  November 20, 2003, there were approximately 845 record holders and 3,741
beneficial  holders  of our common stock, with 6,319,863 shares outstanding. The
number  of holders of record is based on the actual number of holders registered
on  the  books  of  our 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

We  have  not paid any dividends in the past and have no current plan to pay any
dividends.  We  intend  to  devote all funds to the operation of our businesses.

EQUITY  COMPENSATION  PLAN  INFORMATION

The  Equity  Compensation  Plan Information identified in Item 11 of this Annual
Report  on  Form  10-K  is  incorporated  herein  by  this  reference.


                                       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 it
relates  to each of the five years ended September 30, has been derived from our
annual  financial  statements,  including  the  consolidated  balance  sheets at
September  30,  2003  and  2002,  and  the  related  consolidated  statements of
operations  and of cash flows for the three years ended September 30, 2003, 2002
and  2001,  and  notes  thereto  appearing  elsewhere  herein.

<TABLE>
<CAPTION>
                                                         Year Ended September 30
                                                       ----------------------------
                                               2003      2002      2001      2000     1999
                                             --------  --------  --------  --------  -------
                                          ( ----- AMOUNTS IN THOUSANDS, EXCEPT PER SHARE ----- )
<S>                                          <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
-----------------------------
Revenues . . . . . . . . . . . . . .         $40,636   $33,291   $29,943   $28,340   $23,828
Costs and expenses . . . . . . . . .          38,211    36,960    29,380    28,324    22,636
                                             --------  --------  --------  --------  -------
Income (loss) from operations  . . .           2,425    (3,669)      563        16     1,192
Interest income (expense), net . . .            (172)      (74)      106       196        95
Other income (expense), net  . . . .             -0-       -0-       350       312       -0-
                                             --------  --------  --------  --------  -------
Income (loss) before income tax
 (provision) benefit and cumulative
  effect of an accounting change . .           2,253    (3,743)    1,019       524     1,287
(Provision) benefit for income taxes            (925)    1,367      (585)     (233)    1,331
                                             --------  --------  --------  --------  -------
Income (loss) before cumulative
  effect of an accounting change . .           1,328    (2,376)      434       291     2,618
Cumulative effect of an accounting
  change to adopt SFAS 142 . . . . .          (4,707)      -0-       -0-       -0-       -0-
                                             --------  --------  --------  --------  -------

Net (loss) income  . . . . . . . . .         $(3,379)  $(2,376)  $   434   $   291   $ 2,618
                                             ========  ========  ========  ========  =======


(Loss) earnings per share-basic  . .         $ (0.58)  $ (0.41)  $  0.07   $  0.06   $  0.58
(Loss) earnings per share-diluted  .         $ (0.56)  $ (0.41)  $  0.07   $  0.05   $  0.45

Weighted average number of common
 shares and equivalents outstanding-basic      5,812     5,788     5,797     5,257     4,536

Weighted average number of common
 shares and equivalents outstanding-diluted    6,024     5,788     5,964     5,825     5,825

BALANCE SHEET DATA:
------------------
Working capital  . . . . . . . . . .         $ 3,201   $ 3,234   $ 5,821   $ 6,029   $ 5,010
Current assets . . . . . . . . . . .           9,646     5,728     8,259     7,595     6,159
Total assets . . . . . . . . . . . .          18,775    18,191    18,921    17,013    12,932
Current liabilities  . . . . . . . .           6,445     2,494     2,438     1,566     1,149
Long-term debt, and payable to
 stockholders and related parties,
 less current portion  . . . . . . .           1,961     2,159       744       767       599
Total stockholders' equity . . . . .         $10,369   $13,538   $15,739   $14,680   $11,184
</TABLE>


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

OVERVIEW
Electronic Clearing House, Inc. is an electronic payment processor that provides
for  the  payment  processing needs of merchants, banks and collection agencies.
We derive the majority of our revenues from two main business segments, bankcard
and  transaction  processing services ("bank card services"), whereby we provide
solutions  to  merchants and banks to allow them to accept credit and debit card
payments  from consumers, and check-related products ("check services"), whereby
we  provide  various services to merchants and banks to allow them to accept and
process  check  payments from consumers.  The principal services we offer within
these  two  segments  include, with respect to our bank card services, debit and
credit card processing, and with respect to our check services, check guarantee,
check verification, electronic check conversion, check re-presentment, and check
collection.

We  organize  our  service  offerings  under  the  following  brand  names:

     -    MerchantAmerica; ECHO's retail provider of payment processing services
          to  both  merchant  and  bank  markets;
     -    National Check Network ("NCN") for wholesale check verification, check
          authorization  and  capture  services,  and  for  referral  to  member
          collection  agencies;
     -    XPRESSCHEX,  Inc. for retail check verification, check conversion, ACH
          services,  check  collection  and  check  guarantee  services.


CRITICAL  ACCOUNTING  POLICIES  AND  ESTIMATES
Management's  discussion  and  analysis  of  financial  condition and results of
operations  is based upon our consolidated financial statements, which have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United States. The preparation of these financial statements requires management
to  make  estimates  and  judgments  that affect the reported amounts of assets,
liabilities,  revenues and expenses, and related disclosure of contingent assets
and  liabilities.  On  an  on-going  basis,  management evaluates its estimates,
including  those  related  to  revenue  recognition, deferred taxes, reserve for
doubtful  accounts,  goodwill  amortization,  capitalization  of software costs,
contingencies  and  litigation.  Management  bases  its  estimates on historical
experience  and  on various other assumptions that are believed to be reasonable
under  the  circumstances,  the  results  of  which  form  the  basis for making
judgments  about  the  carrying  values  of  assets and liabilities that are not
readily  apparent  from  other  sources.  Actual  results  may differ from these
estimates.

Management applies the following critical accounting policies in the preparation
of  our  consolidated  financial  statements:

-    REVENUE RECOGNITION POLICY. We earn revenue from services which include the
following:  debit  and  credit  card  processing,  check  guarantee,  check
verification,  check  conversion,  check  re-presentment,  check  collection and
inventory  tracking.  All of these services are performed pursuant to a contract
with  customers,  which  states  the  terms  and  fixed price for all contracted
services.  The  price  of  a  service  may  be  a fixed fee for each transaction
(verification,  conversion  and  check  guarantee)  and / or a percentage of the
transaction processed (check guarantee), depending on the service.  We generally
collect  our  fee  at  the  time  we  process  the  transaction and accordingly,
collectibility  is  assured.  Based  on  our  underwriting  criteria and ongoing
credit  monitoring  of  customers,  collectibility  on  service  transactions is
reasonably  assured.

Revenue  from  debit  and  credit  card  (collectively  called  bankcards)  and
transaction  processing  revenue  is  based  on  a percentage of the transaction
value,  commonly  referred  to  as  a  discount  fee  on a credit and debit card
transaction  processed  by  us.  In  addition,  there  is  a per transaction fee
associated  with each bankcard transaction which is charged to the merchant.  We
recognize  the  processing  and  transaction  revenue  when  the  services  are
performed.

Revenue from check guarantee is derived from a percentage of the gross amount of
the  check  and guarantees payment of the check to the merchant in the event the
check  is  not  honored by the check writer's bank.  Merchants typically present
customer  checks  for  processing  on a regular basis and, therefore, dishonored


                                       18
<PAGE>
checks  are  generally  identified  within a few days of the date the checks are
guaranteed  by  us.  We  recognize  revenue when the checks are processed at the
point  of  sale.   At the time the guarantee revenue is recognized, we provide a
reserve  for  estimated  guarantee  losses  based  upon  our  historical  loss
experience.  In  the event the check is dishonored, we have the right to collect
the  full  amount  of  the  check  from  the  check writer but have historically
recovered approximately 60% of the guaranteed checks.  We establish a receivable
from  the  delinquent  check writer for the full amount of the guaranteed check.
The  check  guarantee  service  also  earns revenue based on fees collected from
delinquent  check writers, which collection fee is recognized when collected, as
collectibility  is  not  reasonably  assured  until  that  point.

Revenue  from  check  verification  is  derived  from  fees  collected  from the
merchants  when  a  check  is  verified  against our positive and negative check
database.  This  revenue  is recognized when the transaction is processed, since
we  have  no  further  performance  obligations.

Revenue  from  check conversion is derived from fees collected from merchants to
convert  the  paper  check  received by merchants into an ACH transaction, which
allows  us  to  settle  the  transaction  electronically  for  the merchant.  We
recognize  the  revenue  related  to check conversion fees when the services are
performed.

Revenue from check re-presentment is derived from fees charged to check writers.
Check re-presentment is a service that allows merchants to collect a paper check
through  the  Automated  Clearing  House  ("ACH")  network  after  a  check  has
previously  been  presented  to  the bank for collection unsuccessfully at least
once.  The  fees  earned from the check writer are recognized when collected, as
collectibility  is  not  reasonably  assured  until  that  point.

Revenue from check collection is derived from collection activities performed on
behalf of a merchant on uncollected checks.  The merchants usually keep the face
amount  of  the  uncollected checks if the collection effort is successful.  Our
revenue  is derived from the collection fee collected from the check writer.  If
we refer the collection item to another collection agency, we will receive a fee
from  the collection agency upon its successful efforts.  Collection fee revenue
is  recognized when collected, as collectibility is not reasonably assured until
that  point.

Revenue  from inventory tracking is derived from transaction fees for processing
and  tracking  U-Haul's  daily  inventory activities. This revenue is recognized
when  the  transaction  is  processed,  since  we  have  no  further performance
obligations.

-    DEFERRED  TAXES.  Deferred  taxes  are  determined based on the differences
between  the  financial statement and tax basis of assets and liabilities, using
enacted  tax  rates in effect for the year in which the differences are expected
to  reverse.  Valuation  allowances  are  established  when  necessary to reduce
deferred  tax  assets  to  the amounts expected to be realized. In assessing the
need for a valuation allowance, management considers estimates of future taxable
income  and  ongoing  prudent  and  feasible  tax  planning  strategies.

-    CHARGEBACK  LOSSES.  Chargeback  losses  occur  when  a  credit card holder
presents  a  valid  claim  against  one  of  our  merchants and the merchant has
insufficient  funds  or  is  no longer in business resulting in the charge being
absorbed  by  us.  We  record  a  receivable for those chargebacks for which the
merchant  is  liable  but  has  not  made  payment.  We  record  a provision for
estimated  chargeback losses at the time bankcard transactions are processed.  A
reserve  is  estimated  based upon a historically-determined percentage of gross
credit  card  processing  volume  and  actual  losses  experienced.

-    RESEARCH  AND  DEVELOPMENT  EXPENSE.  Expenditures  for research activities
relating  to  product  development  and  improvement  are  charged to expense as
incurred.  Such  expenditures  amounted  to  $1,405,000  in fiscal year 2003 and
$1,719,000  in  fiscal  year  2002.

-    CUMULATIVE  EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.  Effective October 1,
2002,  we  adopted  Statement  of  Financial Accounting Standards No. 142 ("SFAS
142"),  "Goodwill and Other Intangible Assets".  SFAS 142 requires that goodwill
no  longer  be amortized, but instead be tested for impairment at least annually
using  a  fair value-based approach.  In the year of adoption, SFAS No. 142 also
requires us to perform an initial assessment of its reporting units to determine
whether  there  is  any  indication  that  the  goodwill  carrying  value may be
impaired.  This  transitional  assessment is made by comparing the fair value of
each  reporting  unit, as determined in accordance with the new standard, to its
book value.  To the extent the fair value of any reporting unit is less than its
book value, which would indicate that potential impairment of goodwill exists, a
second  transitional  test is required to determine the amount of impairment. In
2003,  we


                                       19
<PAGE>
determined  that  our  goodwill  was impaired under SFAS No. 142 and accordingly
took  a  charge  to  write  down  the  amount  of  that  impairment.

-    CAPITALIZATION  OF  SOFTWARE  COSTS.  The costs of purchased and internally
developed  software  used to provide services to customers or for the process of
internal  administration  are capitalized and amortized on a straight-line basis
over the lesser of three years or estimated useful life. Under the provisions of
Statement  of  Position  98-1,  "Accounting  for  the Costs of Computer Software
Developed  or Obtained for Internal Use," we capitalize software costs when both
the preliminary project stage is completed and management has authorized further
funding  for  the completion of the project. Capitalization of costs ceases when
the project is substantially complete and the software is ready for its intended
use.  Software  developed  or obtained for internal use is tested for impairment
whenever  events  or  changes in circumstance indicates that its carrying amount
may  not  be  recoverable.


RESULTS  OF  OPERATIONS

FISCAL  YEARS  2003  AND  2002
------------------------------

Financial highlights for fiscal 2003 as compared to fiscal 2002 were as follows:

--   Total  revenue  increased  22.1%  to  $40.6  million

--   Gross margin from processing and transaction revenue improved to 34.6% from
     30.8%

--   Operating  income  increased  to  $2.4  million from a loss of $3.7 million
     (which  included  $2.9  million  of  litigation  related  expenses).

--   Diluted  earnings  per  share before cumulative effect of accounting change
     were  $0.22  as compared to diluted loss per share before cumulative effect
     of  accounting  change  of  $0.41.

--   Bankcard  and  transaction  processing  revenue increased by 18.2% to $32.4
     million

--   Bankcard  processing  volume  increased  26.4%  to  $961  million

--   Check-related  revenue  increased  by  40.4%  to  $8.2  million

--   ACH  processing  volume  increased  403.8%  to  11.3  million  transactions


REVENUE.  Total  revenue  increased  22.1%  to $40,636,000 for fiscal 2003, from
$33,291,000  for  fiscal 2002. The increase can be primarily attributable to the
growth  in  the  processing  and  transaction  business.  Total  processing  and
transaction  revenue for fiscal 2003 increased 22.6%, from $32,889,000 in fiscal
2002  to  $40,313,000  in fiscal 2003. The increase was attributable to an 18.2%
increase  in bankcard and transaction processing revenue and a 40.2% increase in
check-related  revenue.

The bankcard and transaction processing revenue increase was mainly attributable
to  an  approximate  26.4% increase in bankcard processing volume as compared to
last  fiscal  year.  This increase was also affected by a rate adjustment to the
bankcard  merchant base during fiscal 2003 and the fact that we continue to grow
our  bankcard  processing  business  organically  through  our various sales and
marketing  programs.

The  check-related  processing  revenue  increase  was  attributable  to  a 9.8%
increase in check verification revenue and a 246.0% increase in electronic check
conversion  and  electronic  check  presentment revenue.  The high growth in the
check  conversion  revenue  was  due to the increasing market acceptance of this
product.  Additionally, it was attributable to the transactions generated by the
Visa  Program.

Terminal  sales  decreased by 50.8%, from $252,000 in fiscal 2002 to $124,000 in
fiscal 2003.  During fiscal 2003, U-Haul stopped sending its terminals to us for
repair.  We  have  gradually shut down our terminal deployment operations during
fiscal  2003.


                                       20
<PAGE>
COST  OF SALES. Bankcard processing expenses are directly related to the changes
in  processing revenue. A majority of our bankcard processing expenses are fixed
costs  and  reflected  as a percentage of the total face amount of each bankcard
transaction,  and  the  remaining costs are based on a fixed rate applied to the
number  of  transactions  processed.  Processing-related expenses, consisting of
bankcard  processing  expense  and  transaction  and  check  processing expense,
increased  15.9% for the year, from $22,747,000 in fiscal 2002 to $26,360,000 in
fiscal  2003.  The  increase  reflects  a  22.6%  increase  in  processing  and
transaction  revenues for the year. Gross margin from processing and transaction
services  improved  from  30.8%  in  fiscal  2002 to 34.6% in fiscal 2003.  This
improvement  in  gross  margin was mainly due to: 1) check-related revenue which
has  a  higher gross margin made up 20.2% of the total revenue in fiscal 2003 as
compared  to 17.5% of the total revenue in fiscal 2002; 2) a rate adjustment was
applied  to  a  broad  base  of  bankcard merchants during fiscal 2003 to offset
increases  in  direct  bankcard  processing  expenses;  3)  loss  on  chargeback
decreased substantially, from $261,000 in fiscal 2002 to $44,000 in fiscal 2003.

EXPENSE.  Other  operating  costs  such  as  personnel  costs,  telephone  and
depreciation  expenses  increased  11.5%,  from  $3,012,000  in  fiscal  2002 to
$3,358,000  in  fiscal  2003  primarily  due  to  the 22.1% increase in revenue.
Research and development expenses decreased 18.3% from $1,719,000 in fiscal 2002
to  $1,405,000  in fiscal 2003, as most of our development projects have entered
into  coding  and  testing phases. We need to continue to invest in research and
development  in  both  the  bankcard  processing  business  segment  and  the
check-related  products segment in order to remain competitive in this financial
services  market,  given  that  the technology in this industry changes rapidly.

Selling,  general  and administrative expenses increased 9.2% from $6,493,000 in
fiscal  2002  to  $7,088,000 in fiscal 2003. This increase was mainly due to the
addition  of management personnel to support our continuous growth, the increase
in  employee  benefits  costs  such  as  medical insurance, workers compensation
insurance  and  the  increase  in cost of living adjustments. As a percentage of
total revenue, selling, general and administrative expenses decreased from 19.5%
in  the  fiscal  2002  to  17.4%  in  fiscal  2003.

Amortization  of  goodwill  expense  was  eliminated  in  fiscal 2003 due to the
implementation  of  SFAS  No.  142.

INTEREST  EXPENSE.  Interest expense increased to $200,000 for fiscal 2003, from
$129,000  last year. The increase is due to the $1.3 million long-term note from
a  legal  settlement  in  fiscal  2002  and  increase in capitalized leases from
equipment  purchases.  Interest  income decreased from $55,000 in fiscal 2002 to
$28,000 in fiscal 2003 due to a decline in interest rates and lower average cash
balances.

EFFECTIVE  TAX  RATE.  The  income tax provision was $925,000 for fiscal 2003 as
compared  to  an  income  taxes  benefit  of  $1,367,000  for  fiscal 2002.  Our
effective  tax  benefit  rate was 36.5% for fiscal 2002 and a tax provision rate
was  37.7%  for  fiscal  2003.  See  Notes  to Consolidated 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.

NET  LOSS. Net loss for fiscal 2003 was $3,379,000, as compared to a net loss of
$2,376,000 for fiscal 2002. The higher net loss in fiscal 2003 was primarily due
to  the  $4.7  million goodwill write-off on our adoption of SFAS 142 in October
2002.  Income  from  operations  improved substantially this fiscal year, from a
$3,669,000  operating  loss in fiscal 2002 to $2,425,000 in operating income for
fiscal  2003.  The improvement in income from operations between fiscal 2002 and
fiscal  2003  comprise  the following: 1) a 22.1% increase in revenue; 2) a 3.8%
improvement  in  gross  margin;  3)  the  elimination  of  $489,000  in goodwill
amortization  expense;  and 4) a one-time $2.5 million legal settlement cost was
incurred  in  fiscal  2002.

SEGMENT RESULTS
Bankcard  and  Transaction  Processing.  For  the year ended September 30, 2003,
MerchantAmerica,  our  primary  generator  of  bankcard  process and transaction
revenue,  accounted  for  approximately  80% of our revenues, compared to 82% in
fiscal  2002.  Bankcard processing and transaction revenue increased 18.2%, from
$27,456,000  in  fiscal  2002  to  $32,444,000 in fiscal 2003. This increase was
mainly  attributable  to  an  approximate  26.4% increase in bankcard processing
volume  as  compared  to  last fiscal year. This increase was also affected by a
rate  adjustment  to  our bankcard merchant base during fiscal 2003 and the fact
that  we  continue  to grow our bankcard processing business organically through
our  various  sales  and  marketing  programs.


                                       21
<PAGE>
In  fiscal  2003,  the  bankcard  and  transaction  processing segment generated
operating income of $4,303,000, or 13.3% of the related revenues, as compared to
$1,996,000,  or  7.3%  of  the related revenues in fiscal 2002. This increase in
operating  income was reflective of the increase in revenue and the higher gross
margin  as a result of the rate adjustment to merchants and the lower chargeback
losses.

We  purchased  a fully integrated, multi-modular bankcard processing system from
Oasis  Technology  in  2001 for approximately $1.3 million. This Oasis system is
expected  to  reduce  a  key  component  of  our cost structure by eliminating a
third-party  processor,  a  savings  of approximately ten basis points for every
credit  card  dollar  processed.  The implementation of this system will give us
greater flexibility to price our credit card processing services, allowing us to
attract  and  retain  larger  merchants  as  well  as  the  small and mid-market
merchants  that  have  been  our target market.  This project was expected to be
completed  by the last quarter of 2003, however, due to vendor software delivery
delays,  management now anticipates that portions of the Oasis system will begin
productive  use  in  early  2004  and  be  fully  implemented  in  late  2004.

Check  Related  Products.  Check-related  revenues increased from $5,835,000 for
fiscal  2002  to  $8,192,000  for  fiscal  2003,  an  increase  of  40.4%. Check
verification  revenue  increased  9.8%  to  $3,097,000  for  fiscal  2003,  from
$2,821,000  for  fiscal 2002.  Check conversion and check re-presentment revenue
increased  246.0%  to $2,892,000 for fiscal 2003, from $836,000 for fiscal 2002.
Additionally, check collection revenue increased 5.1%, from $1,453,000 in fiscal
2002  to  $1,526,000  in  fiscal  2003.  The high growth in the check conversion
revenue  was  due  to  the  increasing  market  acceptance  of  this product and
attributable  to  the  transaction  revenue  generated  by  the  Visa  Program.

Check  services  revenue  made  up 20.2% of the total processing and transaction
revenues  for fiscal 2003 as compared to 17.5% in the prior year.  Check-related
operating  income was $591,000 for fiscal 2003, as compared to operating loss of
$872,000  in fiscal 2002. The increase in operating income was mainly due to the
40.4%  increase  in  check-related  revenues.

The  Visa  Program  is  continuing  to  expand  and  is  starting to gain market
acceptance. We are currently working with ten Visa member banks that have signed
up  to participate in this Visa Program.  One of the Visa acquiring banks, using
us  as the Third-Party Processor, rolled out this Program to a national retailer
in  June  2003.  This  one  merchant  has tripled the number of ACH transactions
generated  by  us  from  May  2003  to  June  2003. As a result of this merchant
deployment  and the anticipated growth, we had to increase the level of customer
support  staff  and also increased our overall network infrastructure to support
such  growth.  At  the present time, the Visa Program is beginning to generate a
significant  portion  of  our  total check-related revenue.  Management believes
that  the  Visa  Program  will provide us with numerous opportunities to develop
strategic  relationships  with  the  banks  who  have  chosen  us  to  be  their
third-party  processor  and  acquirer  processor  under  the Visa Program. These
relationships  could  play a major role in increasing our check services revenue
in  the  coming  years.


FISCAL  YEARS  2002  AND  2001
------------------------------

Financial highlights for fiscal 2002 as compared to fiscal 2001 were as follows:

--   Total  revenue  increased  11.2%  to  $33.3  million

--   Gross margin from processing and transaction revenue declined to 30.8% from
     33.9%

--   Operating  income  moved  into  negative  territory  to $(3.7) million from
     $563,000

--   Diluted loss per share of $(0.41) as compared to diluted earnings per share
     of  $0.07

--   Fiscal  2002  results  reflect  one-time  legal  settlement of $2.5 million

--   Bankcard  and  transaction  processing  revenue  rose 7.7% to $27.5 million

--   Check-related  revenue  increased  by  31.4%  to  $5.8  million


                                       22
<PAGE>
REVENUE.  Total  revenue  increased  11.2%  to $33,291,000 for fiscal 2002, from
$29,943,000  for fiscal 2001. The increase was primarily attributed to growth in
the  processing  and  transaction  business.  Total  processing  and transaction
revenue  for  fiscal  2002  increased  13.0%, from $29,096,000 in fiscal 2001 to
$32,889,000  in  fiscal  2002.  This increase was mainly attributable to a 13.2%
increase  in bankcard processing volume and 8.4% increase in bankcard processing
and  transaction  revenue  as  compared  to the prior year.  This was due to our
merchants'  organic  growth  and  the  success  in  our  marketing strategy.  In
addition,  check-related  revenue  increased 34.2% as our ACH services and check
presentment  services  started  to  gain  market  acceptance.

COST  OF SALES. Bankcard processing expenses are largely a reflection of changes
in  processing revenue. A majority of our 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 and check
processing  expense,  increased  18.2%  during  fiscal 2002, from $19,239,000 in
fiscal  2001  to  $22,747,000  in  fiscal  2002.  The increase reflected a 13.0%
increase  in  processing  and  transaction revenues for the year, as well as the
higher  costs  of  processing.  Gross  margin  from  processing  and transaction
services  decreased  from  33.9%  in  fiscal  2001 to 30.8% in fiscal 2002. This
decrease  in  gross  margin  was due to a combination of factors, including most
significantly,  higher personnel and infrastructure costs, as well as, increased
costs  paid  to  a third-party service provider, the departure of several higher
volume/high  margin credit card merchants, and a lower rate charged to U-Haul as
a  result  of  a  contract  negotiation.

While  bankcard  and  transaction processing revenue increased by 7.7% in fiscal
2002,  as  compared  to  fiscal  2001,  cost  of  sales  such as personnel costs
increased  from  $840,000  in  fiscal  2001  to $1,251,000 in fiscal 2002, a 49%
increase.  Additionally,  depreciation  and  amortization  expense  related  to
computer  software  and  hardware  increased  from  $598,000  in  fiscal 2001 to
$844,000  in fiscal 2002, a 41% increase. Over the past couple of years, we have
capitalized  $3,914,000  of  software  development costs and computer equipment,
which  are  being  amortized  over  its  useful  lives.  This  was  primarily
attributable  to  the  increase  in  depreciation  and  amortization  expense.

Cost  of terminals sold was $588,000 during fiscal 2002, as compared to $419,000
in  fiscal 2001. The cost of terminals continued to exceed the terminal sales as
a  result  of  a  $300,000  inventory  allowance provision for fiscal 2002. This
allowance  was related to the write-down of certain obsolete customized printers
and  other  slow-moving  inventory.

EXPENSE.  Other  operating  costs  such  as  personnel  costs,  telephone  and
depreciation  expenses  decreased  1.8%,  from  $2,468,000  in  fiscal  2001  to
$2,424,000  in  fiscal  2002  due  to  stringent cost controls instituted by us.
Research and development expenses increased 60.7% from $1,070,000 in fiscal 2001
to  $1,719,000  in  fiscal  2002  because we continued to invest in research and
development  related  to  our  various check service products.  Additionally, we
incurred  operational  expenses  related  to  the management of the Visa Program
without  any  offsetting  revenue  during  this  period.

Selling,  general and administrative expenses increased 12.7% from $5,760,000 in
fiscal  2001  to  $6,493,000 in fiscal 2002. This increase was mainly due to the
hiring  of  additional  sales  personnel  in  support of both merchant and check
services  and  additional  administrative staff to support our growth. In fiscal
2002, we hired a new COO/CIO. As a percentage of total revenue, selling, general
and  administrative  expenses  increased  slightly  from 19.2% in fiscal 2001 to
19.5%  in  fiscal  2002.

Amortization  of goodwill expense remained relatively constant, from $424,000 in
fiscal  2001  to  $489,000  in  fiscal  2002.

INTEREST  EXPENSE.  Interest expense increased to $129,000 for fiscal 2002, from
$81,000  in fiscal 2001. The increase was due to the $1.3 million long-term note
portion  of  the legal settlement expense related to a lawsuit settled in fiscal
2002, which carries an 8% interest rate.  Interest income declined from $187,000
in  fiscal 2001 to $55,000 in fiscal 2002 due to a decline in interest rates and
lower  average  cash  balances.

EFFECTIVE  TAX  RATE.  Benefit for income taxes of $1,367,000 in fiscal 2002 was
due  to  the  operating  loss incurred of $3,743,000.  Our effective tax benefit
rate  was  36.5%  for  fiscal  2002 and a tax provision rate of 57.4% for fiscal
2001.  See  Notes to Consolidated 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.


                                       23
<PAGE>
NET  INCOME  (LOSS). Net loss for fiscal 2002 was $2,376,000, as compared to net
income  of  $434,000  in  fiscal 2001. The decline was primarily due to the $2.5
million  legal settlement on a pre-tax basis. We made a one-time cash payment of
$1,200,000  to  the plaintiff in the lawsuit and executed a long-term promissory
note  collateralized by our Agoura Hills, California office building in favor of
that  plaintiff  for  an  additional  $1,300,000, payable over 15 years, with an
interest  rate of 8%.  Additionally, we incurred approximately $400,000 in legal
fees  defending the lawsuit in fiscal 2002. Not including the $2.5 million legal
settlement  and the legal fees paid, net loss would have been $535,000 in fiscal
2002.  In  addition,  operating  income  fell  in fiscal 2002 primarily due to a
$649,000  increase  in  research and development expense, a $300,000 increase in
provision  for  inventory  allowance  and  a $445,000 decrease in other revenue.

SEGMENT RESULTS
Bankcard and Transaction Processing. Bankcard processing and transaction revenue
increased  7.7%, from $25,503,000 in fiscal 2001 to $27,456,000 for fiscal 2002.
This  increase  was  mainly  attributable  to an approximately 13.2% increase in
bankcard  processing  volume  as  compared  to  2001  and  was the result of our
successful  marketing  programs, including the MerchantAmerica web offerings and
other  sales programs. The increase in bankcard processing revenue was partially
offset  by  a  decrease  in  revenue  as a result of a rate reduction offered to
U-Haul,  a  major  transaction processing customer, and the loss of several high
volume,  high  margin  merchants.

In  fiscal  2002,  the  bankcard  and  transaction  processing segment generated
operating  income  of $1,996,000, or 7.3% of associated revenues, as compared to
$3,183,000,  or  12.5%  of  revenues,  in  fiscal  2001.  The  59.5% decrease in
operating  income  is  attributable  to  a  $303,000  increase  in  research and
development  expense,  a $300,000 increase in inventory allowance and a $168,000
decrease  in  other  revenue.  Additionally,  gross  margin decreased due to the
departure  of  several  high  margin  merchants  combined  with  higher  overall
operating  costs.

We  implemented  a  rate  increase in October 2002 to our credit card processing
merchants,  which  was  expected  to  offset  the  higher operating costs and to
improve  the gross margin from credit card processing activities in fiscal 2003.

Check  Related  Products.  Check-related  revenues increased from $4,440,000 for
fiscal  2001  to  $5,835,000,  an  increase of 31.4%. This was attributable to a
16.6% increase in check verification revenue and a 205.9% increase in electronic
check  conversion  and  electronic  check  presentment  revenue.

Check  services  revenue  made  up 17.5% of the total processing and transaction
revenues  for fiscal 2002 as compared to 14.8% in the prior year.  Check-related
operating  loss  was  $872,000  in fiscal 2002, as compared to operating loss of
$234,000  in  fiscal 2001. The increase was due to the costs associated with the
development  of  the Visa Program and our other products, as well as an increase
in  staffing  to  support  current  and  anticipated  processing  volume.


LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  September  30,  2003,  we  had  available  cash  and cash equivalents of
$5,641,000,  restricted  cash of $977,000 in reserve with our primary processing
banks  and  working  capital  of  $3,201,000.

Accounts  receivable,  net  of  allowance  for  doubtful  accounts, increased to
$1,918,000  at  September  30,  2003  from $1,596,000 at the end of fiscal 2002.
This  increase  in  accounts  receivable was attributable to the higher billings
generated  at  the  end of the fiscal year due to increases in processing volume
and  the  number  of  customers  in  general,  which  drove  our revenue growth.
Allowance  for  doubtful  accounts, which reflects chargeback losses and dues to
Visa and MasterCard decreased to $91,000 at the end of fiscal 2003 from $431,000
at  September  30,  2002.  This  decrease  was  due to the write-off of accounts
receivable,  which  were  deemed  to  be  uncollectible.

Net  cash provided by operating activities for the year ended September 30, 2003
was  $6,682,000  as  compared  to  net  cash provided by operating activities of
$62,000  for  fiscal  2002.  The  increase in cash from operations was primarily
attributable  to the $6,094,000 increase in operating income between fiscal 2003
and  2002,  and  an  increase  in  net  settlement  payable  of $2,131,000 as of
September  30, 2003.  Settlement payable as of September 30, 2003 was $3,429,000
as  compared  to  $729,000  at  September  30,  2002.


                                       24
<PAGE>
Settlement  payable  results  from  timing differences in our settlement process
with merchants.  These timing differences account for the difference between the
time  that  funds are received in our bank accounts and the time that settlement
payments  are  made  to  merchants.  Therefore,  at  any  given time, settlement
payable may vary and ultimately depends on the volume of transactions processed.
The  increase  in settlement payable in fiscal 2003 is primarily attributable to
the  high  volume  of  transactions experienced from our check services.  As our
business  grows,  settlement  payable  will  likely  increase.

Net  cash  used  in  investing  activities was $3,271,000 for the fiscal 2003 as
compared  to  $1,835,000  for  fiscal  year  2002.  During  fiscal 2003, we used
$3,291,000 for purchases of equipment and capitalized software costs as compared
to  $1,754,000  for  fiscal 2002.  We anticipate the need to build a more robust
infrastructure in order to support the level of transaction growth in the coming
years.  Additionally,  we  are  in  the  process  of  strengthening our business
continuation  plan  and  disaster  recovery  sites,  all  of  which will require
substantial  capital  investments  in  fiscal  2004. We also need to continue to
invest  in  software  development  costs  in  fiscal 2004 to remain competitive.

Net  cash  used by financing activities was $179,000 for the current fiscal year
as  compared  to net cash provided by financing activities of $35,000 for fiscal
year  2002.  During fiscal 2003, we received $292,000 from the issuance of notes
payable to fund certain payments for the Oasis system.  We used $629,000 for the
repayment  of  capitalized  leases and notes payable.  We also received $158,000
from  the  exercise  of  employee  stock  options.

In  light  of  our  significant capital requirements anticipated in 2004, during
October  2003,  we  completed a $3 million private equity placement with several
institutional  investors.  This equity financing raised approximately $2,800,000
of  net  proceeds  to  us.  Additionally,  as  of November 2003, we negotiated a
$1,000,000  equipment  lease  line and a $3,000,000 credit line with Bank of the
West  for  working  capital  needs.

At  September,  2003,  we  had  the  following  cash  commitments:


<TABLE>
<CAPTION>
                              Payment Due By Period
                              ---------------------

Contractual                      Less than                             After
Obligations            Total       1 year    2-3 years   4-5 years    5 years
-------------------  ----------  ----------  ----------  ----------  ----------
<S>                  <C>         <C>         <C>         <C>         <C>
Long-term debt
 including interest  $2,846,000  $  563,000  $  531,000  $  455,000  $1,297,000
Capital lease
 Obligations            991,000     524,000     467,000         -0-         -0-
Operating leases      1,835,000     485,000     744,000     606,000         -0-
                     ----------  ----------  ----------  ----------  ----------
Total contractual
 cash obligations    $5,672,000  $1,572,000  $1,742,000  $1,061,000  $1,297,000
                     ==========  ==========  ==========  ==========  ==========
</TABLE>

Our  primary  source  of  liquidity  is  expected to be cash flow generated from
operations and cash and cash equivalents currently on hand.  Management believes
that  our  cash flow from operations together with cash on hand, our lease line,
our established line of credit with Bank of the West, and cash received from our
private  placement  financing will be sufficient to meet our working capital and
other  commitments.


                                       25
<PAGE>
RISK  FACTORS

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

RISKS  RELATED  TO  OUR  BUSINESS
---------------------------------

WE  RELY  ON  COOPERATIVE  RELATIONSHIPS  WITH,  AND  SPONSORSHIP BY, BANKS, THE
ABSENCE  OF  WHICH  MAY  AFFECT  OUR  OPERATIONS.

We  currently  rely on cooperative relationships with, and sponsorship by, banks
in  order  to  process our Visa, MasterCard and other bankcard transactions.  We
also  rely  on  several banks for access to the Automated Clearing House ("ACH")
for  submission  of  both  credit  card  and  check  settlements.  Our  banking
relationships  are  currently  with  smaller  banks  (with  assets  of less than
$500,000,000).  Even though smaller banks tend to be more susceptible to mergers
or  acquisitions and are therefore less stable, these banks find the programs we
offer more attractive and we believe we cannot obtain similar relationships with
larger  banks  at  this  time.   A  bank  could  at  any  time  curtail or place
restrictions  on our processing volume because of its internal business policies
or due to other adverse circumstances.  If a volume restriction is placed on us,
it  could materially adversely affect our business operations by restricting our
ability  to  process  credit  card transactions and receive the related revenue.
Our  relationships  with  our  customers  and  merchants would also be adversely
affected  by  our  inability  to  process  these  transactions.

We  currently  maintain  one  primary  bankcard  processing  and  sponsorship
relationship  with  First  Regional  Bank  in  Agoura  Hills,  California.  Our
agreement  with  First  Regional  Bank continues through 2005.  Additionally, we
have reached a tentative agreement with Woodforest Bank in Woodforest, Texas, to
sponsor  our  bankcard  activity.  Once finalized, we expect this agreement will
continue  through  2009.  We also maintain several banking relationships for ACH
processing.  While  we  believe  our  current  bank  relationships are sound, we
cannot  assure  that  these  banks  will  not restrict our increasing processing
volume  or  that  we  will  always  be  able  to maintain these relationships or
establish  new  banking  relationships.  Even  if  new banking relationships are
available,  they  may  not  be on terms acceptable to us.  With respect to First
Regional  Bank and Woodforest Bank, while we believe their respective ability to
terminate  our  respective  relationships  is  cost-prohibitive,  they  may
independently  determine  that  the cost of terminating their agreements is less
than  the  cost of continuing to perform in accordance with their terms, and may
therefore  determine  to  terminate  those agreements prior to their expiration.
Ultimately, our failure to maintain these banking relationships and sponsorships
may  have  a  material adverse effect on our business and results of operations.

MERCHANT  FRAUD  WITH RESPECT TO BANKCARD AND ACH TRANSACTIONS COULD CAUSE US TO
INCUR  SIGNIFICANT  LOSSES.

We  significantly  rely  on the processing revenue derived from bankcard and ACH
transactions.  If  any  merchants  were  to  submit  or  process unauthorized or
fraudulent  bankcard  or  ACH transactions, depending on the dollar amount, ECHO
could incur significant losses which could have a material adverse effect on our
business and results of operations.  ECHO assumes and compensates the sponsoring
bank  for  bearing  the  risk  of  these  types  of  transactions.

We  have  implemented  systems  and software for the electronic surveillance and
monitoring  of  fraudulent  bankcard  and ACH use.  As of September 30, 2003, we
maintained  a  dedicated  chargeback  reserve  of  $603,000  at our primary bank
specifically  earmarked for such activity.  Additionally, through our sponsoring
bank,  we had access to approximately $9.2 million in merchant deposits to cover
any  potential chargeback losses.  Despite a long history of managing such risk,
we cannot guarantee that these systems will prevent fraudulent transactions from
being  submitted  and  processed  or  that  the  funds set aside to address such
activity  will  be  adequate to cover all potential situations that might occur.
We do not have insurance to protect us from these losses.  There is no assurance
that  our chargeback reserve will be adequate to offset against any unauthorized
or  fraudulent  processing  losses  that we may incur.  Depending on the size of
such  losses,  our  results  of  operations  could be immediately and materially
adversely  affected.


                                       26
<PAGE>
FAILURE  TO  PARTICIPATE IN THE VISA POS CHECK SERVICE PROGRAM WOULD CAUSE US TO
SIGNIFICANTLY  SHIFT  OUR  OPERATING  AND  MARKETING  STRATEGY.

We  have  significantly  increased  our  infrastructure, personnel and marketing
strategy to focus on the potential growth of our check services through the Visa
POS  Check  Service  Program.  We  currently  provide  critical  back-end
infrastructure  for the service, including our NCN database for verification and
our  access  to  the Federal Reserve System's Automated Clearing House for funds
settlement, and for checks written on bank accounts with banks not participating
in  the  program.

Because  we  believe the market will continue to gain acceptance of the Visa POS
Check  Service  Program,  we  have  expended significant resources to market our
check  conversion  services  and  verification services to our merchant base, to
solidify  our  strategic  relationships  with the various financial institutions
that  have chosen us as their acquirer processor and third-party processor under
the  program,  and  to  sell  our  other check products such as electronic check
re-presentments  and  check  guarantee  to  the Visa member banks.  We have also
increased  our  personnel to handle the increased volume of transactions arising
directly  from  our  participation  in  the  program.

If  we  fail  to  adequately market our services through this relationship, this
could  materially affect our marketing strategy going forward.  Additionally, if
we fail to adequately grow our infrastructure to address increases in the volume
of transactions, cease providing services as a third-party processor or acquirer
processor  or  are  otherwise  removed or terminated from the VISA Program, this
would  require  us  to  dramatically  shift  our  current  operating  strategy.

THE BUSINESS IN WHICH WE COMPETE IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE
THAT  OUR CURRENT PRODUCTS AND SERVICES WILL STAY COMPETITIVE OR THAT WE WILL BE
ABLE  TO  INTRODUCE  NEW  PRODUCTS  AND  SERVICES  TO  COMPETE  SUCCESSFULLY.

We  are  in  the  business  of processing payment transactions and designing and
implementing  integrated  systems  for our customers so that they can better use
our 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.  Our market share is relatively small as compared to
most  of  our  competitors and most of these competitors have substantially more
financial and marketing resources to run their businesses.  While we believe our
small  size  provides  us  the  ability  to  move  quickly  in  some  areas, our
competitors'  greater  resources  enable them to investigate and embrace new and
emerging  technologies, quickly to respond to changes in customers needs, and to
devote more resources to product and services development and marketing.  We may
face  increased competition in the future and there is no assurance that current
or  new  competition will allow us to keep our customers.  If we lose customers,
our  business operations may be materially adversely affected, which could cause
us  to  cease  our  business  or curtail our business to a point where we are no
longer  able  to  generate  sufficient revenues to fund operations.  There is no
assurance  that  our  current  products  and services will stay competitive with
those  of  our competitors or that we will be able to introduce new products and
services  to  compete  successfully  in  the  future.

IF WE ARE UNABLE TO PROCESS SIGNIFICANTLY INCREASED VOLUME ACTIVITY, THIS COULD
AFFECT OUR OPERATIONS AND WE COULD LOSE OUR COMPETITIVE POSITION.

We  have  built  transaction  processing  systems  for check verification, check
conversion,  ACH  processing, and bank card processing activities. While current
estimates regarding increased volume are within the capabilities of each system,
it is possible that a significant increase in volume in one of the markets would
exceed  a  specific  system's  capabilities.  To  minimize  this  risk, ECHO has
redesigned and upgraded its check related processing systems and has purchased a
high  end  system  to  process  bankcard  activity.  This  system  is  not  yet
operational,  and  even  when  it becomes operational, no assurance can be given
that  it  would  be  able to handle a significant increase in volume or that the
operational  enhancements  and  improvements  will  be completed in such time to
avoid  such  a  situation.  In  the  event we are unable to process increases in
volume, this could significantly adversely affect our banking relationships, our
merchant  customers, and our overall competitive position, and could potentially
result  in  violations of service level agreements which would require us to pay
penalty  fees  to  the  other  parties  to  those  agreements.  Losses  of  such
relationships,  or  the  requirement  to  pay penalties, may severely impact our
results  of  operations  and  financial  condition.


                                       27
<PAGE>
WE  INCUR  FINANCIAL  RISK FROM OUR CHECK GUARANTEE SERVICE. The check guarantee
business  is  essentially  a risk management business.  Any limitation of a risk
management  system  could result in financial obligations being incurred by ECHO
relative  to  our  check  guarantee  activity.  While  ECHO  has  provided check
guarantee services for several years, there can be no assurance that our current
risk  management  systems  are  adequate  to  assure  against any financial loss
relating  to  check  guarantee.  ECHO  is  enhancing its current risk management
systems  and it is being conservative with reference to the type of merchants to
which  it  offers  guarantee  services  in  order  to  minimize this risk but no
assurance  can  be  given  that such measures will be adequate.  During the year
ended  September  30,  2003,  we  incurred  $206,000  in losses from uncollected
guaranteed  checks.

SECURITY  BREACHES  COULD  IMPACT  OUR  CONTINUED  OPERATIONS.

We  process  confidential  financial  information and maintain several levels of
security  to  protect  this  data.  Security  includes  hand  and  card-based
identification  systems at our data center locations that restrict access to the
specific  facilities,  various  employee  monitoring  and  access  restriction
policies,  and  various  firewall  and  network  management  methodologies  that
restrict  unauthorized  access  through  the  Internet. While these systems have
worked  effectively  in  the  past,  there  can  be  no assurance that they will
continue to operate without a security breach in the future.  Depending upon the
nature of the breach, the consequences of security breaches could be significant
and  dramatic  to  ECHO's  continued  operations.

THE  INDUSTRY  IN  WHICH WE OPERATE INVOLVES RAPIDLY CHANGING TECHNOLOGY AND OUR
FAILURE  TO  IMPROVE  OUR  PRODUCTS  AND  SERVICES  OR TO OFFER NEW PRODUCTS AND
SERVICES  COULD  CAUSE  US  TO  LOSE  CUSTOMERS.

Our  business  industry involves rapidly changing technology.  Recently, we have
observed  rapid  changes  in  technology  as  evidenced  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.  Our success depends on our ability to improve our
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 us.  There is no assurance that we will be able to find the funds
necessary  to  keep  up  with new technology or that if such funds are available
that  we  can  successfully  improve  our  existing  products  and  services  or
successfully develop new products and services.  Our failure to provide improved
products  and  services to our customers or any delay in providing such products
and  services  could  cause  us  to  lose customers to our competitors.  Loss of
customers  could  have  a  material  adverse  effect  on  ECHO.

OUR  INABILITY  TO  PROTECT  OR  DEFEND OUR TRADE SECRETS AND OTHER INTELLECTUAL
PROPERTY  COULD  HURT  OUR  BUSINESS.

We  have expended a considerable amount of time and money to develop information
systems for our merchants.  We regard these information systems as trade secrets
that  are  extremely important to our payment processing operations.  We rely on
trade  secret  protection  and  confidentiality  and/or  license agreements with
employees,  customers, partners and others to protect this intellectual property
and  have  not  otherwise taken steps to obtain additional intellectual property
protection  or  other  protection  on  these  information systems.  We cannot be
certain  that we have taken adequate steps to protect our intellectual property.
In  addition, our third-party confidentiality agreements can be breached and, if
they  are,  there  may  not be an adequate remedy available to us.  If our trade
secrets  become  known, we may lose our competitive position, including the loss
of  our  merchant  and  bank  customers.  Such  a loss could severely impact our
results  of  operations  and  financial  condition.

Additionally,  while  we  believe that the technology underlying our information
systems  does  not  infringe  upon  the rights of any third parties, there is no
assurance  that third parties will not bring infringement claims against us.  We
also  have  the  right  to  use the technology of others through various license
agreements.  If  a third party claimed our activities and/or these licenses were
infringing  their  technology,  while we may have some protection from our third
party  licensors,  we  could face additional infringement claims or otherwise be
obligated  to  stop  utilizing  intellectual property critical to our technology
infrastructure.  If  we are not able to implement other technology to substitute
the  intellectual  property underlying a claim, our business operations could be
severely  effected.  Additionally, infringement claims would require us to incur
significant defense costs and expenses and, to the extent we are unsuccessful in
defending  these  claims,  could  cause  us  to  pay


                                       28
<PAGE>
monetary  damages to the person or entity making the claim.  Continuously having
to  defend  such  claims  or  otherwise  making  monetary damages payments could
materially  adversely  affect  our  results  of  operations.

IF  WE  DO NOT CONTINUE TO INVEST IN RESEARCH AND DEVELOPMENT, WE COULD LOSE OUR
COMPETITIVE  POSITION.

Because  technology  in the payment processing industry evolves rapidly, we need
to  continue  to  invest  in  research  and  development  in  both  the bankcard
processing  business  segment and the check-related products segment in order to
remain  competitive.  Although research and development expenses decreased 18.3%
from $1,719,000 in fiscal 2002 to $1,405,000 in fiscal 2003, because of the fact
that  most  of  our  development  project costs were capitalized once we entered
into  coding  and  testing  phases,  we  continue to evaluate projects, which we
believe  will assist us in our efforts to stay competitive.  Although we believe
that  our  investment in these projects will ultimately increase earnings, there
is  no  assurance as to when or if these new products will show profitability or
if  we  will  ever  be  able  to  recover  the costs invested in these projects.
Additionally,  if we fail to commit adequate resources to grow our technology on
pace  with  market  growth,  we  could  quickly  lose  our competitive position,
including  the  loss  of  our  merchant  and  bank  customers.

FAILURE  TO OBTAIN ADDITIONAL FUNDS CAN IMPACT OUR OPERATIONS AND FUTURE GROWTH.

We use funds generated from operations, as well as funds obtained through credit
facilities  and  equity  financing,  to finance our operations.  In light of our
recent  financing  efforts,  and  as  a  result  of the cash flow generated from
operations,  we  believe  we  have  sufficient  cash  to  support  our  business
activities,  including  research,  development  and  marketing  costs.  However,
future  growth  may depend on our ability to continue to raise additional funds,
either through operations, bank borrowings, or equity or debt financings.  There
is no assurance that we will be able to continue 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 to us.  The inability to generate the necessary funds from operations
or  from  third parties in the future may require us to scale back our research,
development  and  growth opportunities, which could harm our overall operations.

WHILE WE MAINTAIN INSURANCE PROTECTION AGAINST CLAIMS RELATED TO OUR SERVICES,
THERE IS NO ASSURANCE THAT SUCH PROTECTION WILL BE ADEQUATE TO COVER POTENTIAL
CLAIMS AND OUR INABILITY TO OTHERWISE PAY SUCH CLAIMS COULD HARM OUR BUSINESS.

We  maintain  errors and omissions insurance for the services we provide.  While
we  believe  the  limit on our errors and omissions insurance policy is adequate
and consistent with industry practice, if claims are brought by our customers or
other  third  parties,  we  could  be required to pay the required claim or make
significant  expenditures  to  defend against such claims in amounts that exceed
our  current  insurance  coverage.  There  is no assurance that we will have the
money  to  pay  potential  plaintiffs  for  such claims if they arise beyond the
amounts  insured  by  us.  Making  these  payments could have a material adverse
effect  on  our  business.

INVOLVEMENT  IN  LITIGATION  COULD  HARM  OUR  BUSINESS.

We  are involved in various lawsuits arising in the ordinary course of business.
Although we believe that the claims asserted in such lawsuits are without merit,
the  cost  to  us for the fees and expenses to defend such lawsuits could have a
material  adverse  effect  on  our financial condition, results of operations or
cash flow.  In addition, there can be no assurance that we will not at some time
in  the  future experience significant liability in connection with such claims.
As  of September 30, 2003, we have spent approximately $50,000 in legal fees and
expenses  defending  these  claims.

Litigation  costs  and  expenses,  including  the  cost  to  settle  claims,
significantly affected our results of operations during the year ended September
30, 2002.  Net loss for fiscal 2002 was $2,376,000, as compared to net income of
$434,000  in fiscal 2001.  The decline was primarily due to a $2.5 million legal
settlement  paid  to  Premiere  Lifestyles  International  Corporation, Inc.  In
connection with the settlement, we made a one-time cash payment of $1,200,000 to
Premier  and  executed  a long-term promissory note collateralized by our Agoura
Hills,  California  office building in favor of that plaintiff for an additional
$1,300,000,  payable  over 15 years, with an interest rate of 8%.  Additionally,
we  incurred  approximately $1,000,000 in legal fees in connection with the suit
of  which  $400,000  were  incurred  in  fiscal  2002.


                                       29
<PAGE>
OUR  INABILITY  TO  RECOVER  FROM  NATURAL  DISASTERS  COULD  HARM OUR BUSINESS.

We currently maintain four data centers: one in Agoura Hills, California, one in
Camarillo,  California,  one  in  Albuquerque,  New  Mexico  and one in Boulder,
Colorado.  Should  a  natural  disaster  occur  in  any  of the locations, it is
possible  that ECHO would not be able to fully recover full functionality at one
of  its  data  centers.  To  minimize  this  risk, ECHO will centralize its data
processing  functionality in Camarillo in 2004 and will make Albuquerque a fully
redundant  site.  Prior  to  that  time, it is possible a natural disaster could
limit  or  completely disable a specific service offered by ECHO until such time
that  the  specific  location  could resume its functionality.  Our inability to
provide  such  service  could have a material adverse effect on our business and
results  of  operations.

INCREASES  IN  THE  COSTS  OF  TECHNICAL  COMPLIANCE  COULD  HARM  OUR BUSINESS.

The  services  which ECHO offers require significant technical compliance.  This
includes  compliance  to  both  Visa  and MasterCard regulations and association
rules,  NACHA  guidelines  and  regulations  with  regard to the Federal Reserve
System's  Automated Clearing House and check related issues, and various banking
requirements  and  regulations.  ECHO  has personnel dedicated to monitoring our
compliance  to  the  specific  industries  we  serve and, when possible, ECHO is
moving  the technical compliance responsibility to other parties, as is the case
with  the  recent  purchase of the Oasis Technologies bankcard processing system
wherein  the  vendor,  Oasis  Technologies,  assumes  much  of  the  compliance
obligations  regularly updated by Visa and MasterCard.  As the compliance issues
become  more defined in each industry, the costs associated with that compliance
may  present  a  risk  to  ECHO.  These costs could be in the form of additional
hardware,  software  or  technical  expertise  that  ECHO  must  acquire  and/or
maintain.  While  ECHO  currently  has  these  costs  under  control, we have no
control over those entities that set the compliance requirements so no assurance
can be given that ECHO will always be able to underwrite the costs of compliance
in each industry wherein we compete.

RISKS ASSOCIATED WITH OUR COMMON STOCK
--------------------------------------

IF  WE  NEED  TO  SELL  OR  ISSUE  ADDITIONAL  SHARES  OF COMMON STOCK OR ASSUME
ADDITIONAL  DEBT  TO FINANCE FUTURE GROWTH, OUR STOCKHOLDERS' OWNERSHIP COULD BE
DILUTED  OR  OUR  EARNINGS  COULD  BE  ADVERSELY  IMPACTED.

Our  business  strategy  may  include  expansion  through  internal  growth,  by
acquiring  complementary  businesses  or by establishing strategic relationships
with  targeted customers and suppliers.  In order to do so, or to fund our other
activities,  we  may  issue  additional  equity securities that could dilute our
stockholders'  stock  ownership.  We  may  also assume additional debt and incur
impairment  losses  related  to goodwill and other tangible assets if we acquire
another  company and this could negatively impact our results of operations.  As
of  the  date of this report, management has no plan to raise additional capital
through  the  sale of securities and believes that our cash flow from operations
together  with  cash on hand and our established line of credit with Bank of the
West  will  be  sufficient  to  meet  our working capital and other commitments.

WE HAVE ADOPTED A NUMBER OF ANTI-TAKEOVER MEASURES THAT MAY DEPRESS THE PRICE OF
OUR  COMMON  STOCK.

Our  rights agreement, our ability to issue additional shares of preferred stock
and  some  provisions  of our articles of incorporation and bylaws could make it
more  difficult for a third party to make an unsolicited takeover attempt of us.
These anti-takeover measures may depress the price of our common stock by making
it more difficult for third parties to acquire us by offering to purchase shares
of  our  stock  at  a  premium  to  its  market  price.

OUR  STOCK  PRICE  HAS  BEEN  VOLATILE.

Our  common  stock  is  quoted  on  the NASDAQ SmallCap Market, and there can be
substantial volatility in the market price of our common stock.  Over the course
of  the  quarter  ended September 30, 2003, the market price of our common stock
has  been  as  high as $9.59, which is the highest market price our common stock
has  had  over  the  course  of the year ended September 30, 2003, and as low as
$3.20.  Additionally,  over the course of the year ended September 30, 2003, the
market  price of our common stock has been as low as $1.09.  The market price of
our  common  stock  has  been,  and  is  likely  to  continue  to be, subject to
significant  fluctuations  due  to  a  variety  of  factors, including quarterly
variations  in  operating  results,  operating  results


                                       30
<PAGE>
which  vary  from the expectations of securities analysts and investors, changes
in  financial  estimates,  changes  in  market  valuations  of  competitors,
announcements by us or our competitors of a material nature, loss of one or more
customers,  additions  or  departures  of  key personnel, future sales of common
stock  and  stock  market  price  and volume fluctuations.  In addition, general
political  and  economic  conditions  such  as  a recession, or interest rate or
currency  rate  fluctuations may adversely affect the market price of our common
stock.

WE  HAVE  NOT PAID AND DO NOT CURRENTLY PLAN TO PAY DIVIDENDS, AND YOU MUST LOOK
TO  PRICE  APPRECIATION  ALONE  FOR  ANY  RETURN  ON  YOUR  INVESTMENT.

Some  investors  favor  companies  that  pay  dividends, particularly in general
downturns  in the stock market.  We have not declared or paid any cash dividends
on  our  common  stock.  We  currently  intend to retain any future earnings for
funding  growth, and we do not currently anticipate paying cash dividends on our
common  stock in the foreseeable future.  Because we may not pay dividends, your
return  on this investment likely depends on your selling our stock at a profit.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We  are  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, we 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 15.
Exhibits,  Financial  Statement  Schedules  and  Reports  on  Form  8K".

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

None.

ITEM 9A.  CONTROLS  AND  PROCEDURES

As  of  September  30, 2003, the end of the period covered by this report, under
the  supervision  and  with the participation of management, including our Chief
Executive  Officer  and  our  Chief  Financial  Officer,  we  have evaluated the
effectiveness  of  the  design  and  operation  of  our  disclosure controls and
procedures  pursuant  to  Exchange Act Rules 13a-15 and 15d-15.  Based upon that
evaluation,  our  Chief  Executive  Officer and our Chief Financial Officer have
concluded  that  our disclosure controls and procedures are effective in causing
material  information  to be recorded, processed, summarized and reported by our
management  on  a  timely basis and to ensure that the quality and timeliness of
our  public  disclosures  complies  with  its Securities and Exchange Commission
disclosure  obligations.  As  of  September  30,  2003,  there  have  been  no
significant  changes  in  our  internal  controls or in other factors that could
significantly  affect  internal  controls.


                                       31
<PAGE>
                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
The  officers  and  directors  of  ECHO  are:

                                                                        Date first became
          Name                                      Position           Officer or Director
          --------------------------------  -------------------------  -------------------
<S>                                         <C>                        <C>
          Joel M. Barry                     Chairman of the Board,             1986
                                            Chief Executive Officer,

          Alice L. Cheung                   Chief Financial Officer,           1996
                                            Treasurer

          Alex Seltzer                      Chief Operating Officer/           2002
                                            Chief Information Officer

          Jesse Fong                        Vice President                     1994

          David Griffin                     Vice President                     1990

          Sharat Shankar                    Vice President                     2003

          Rick Slater                       Vice President                     1998

          Patricia M. Williams              Vice President                     1997

          Jack Wilson                       Vice President                     1994

          Donna L. Rehman                   Corporate Secretary                1990

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

          Carl R. Terzian[1][2][3]          Director                           2002

          Herbert L. Lucas [1][2][3]        Director                           1991
<FN>
          _______________________________________
          [1]  Member,  Audit  Committee
          [2]  Member,  Nominating  Committee
          [3]  Member,  Executive  Compensation  Committee
</TABLE>

JOEL M. BARRY, age 53, has been a Director of ECHO 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 ECHO. Mr. Barry is
also  a  Director  and  Chief  Executive  Officer  of  the  MerchantAmerica  and
XPRESSCHEX,  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.


                                       32
<PAGE>
ALICE  L.  CHEUNG,  age  46, 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  ECHO,  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.

JESSE  FONG,  age  52, has served as Vice President of Information Systems since
September 1994.  Mr. Fong joined ECHO 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  55,  has served as Vice President of Check Guarantee since
October 2001. Previous to this capacity, he was Vice President of Check Services
for  ECHO  from  June 1990 to October 2001 and Vice President of Operations from
January 1986 until September 1989, at which time he became a consultant to ECHO.
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.

ALEX  SELTZER, age 51, joined ECHO in August 2002 as Chief Operating Officer and
Chief  Information  Officer.  Prior to joining ECHO, Mr. Seltzer was the CIO and
co-founder  of  Online Resources Corporation, an e-financial services outsourcer
providing  home  banking,  bill  payment,  and  integrated third-party financial
services  to small and medium-sized U.S. banks. Mr. Seltzer holds a BS degree in
Applied  Math  and  Computer Science from MIT in Cambridge, Massachusetts and an
MBA  from  Stanford  Graduate  School  of  Business  in  Stanford,  California.

SHARAT  SHANKAR,  age  33,  joined  ECHO  in June 2003 as Vice President of Risk
Management and Business Intelligence.  Prior to joining ECHO, Mr. Shankar worked
at  TeleCheck for approximately eight years where he held a variety of positions
leading  up  to  Vice  President  of  Risk  Management.  Prior to TeleCheck, Mr.
Shankar  held  positions  at  MetLife  as  well  as Hong Kong and Shanghai Bank,
Madras,  India.  Mr.  Shankar  holds  a  Bachelor of Commerce degree from Loyola
College,  India,  and  a  Master  of  Business  Administration degree from James
Madison  University,  Virginia.

RICK SLATER, age 43, joined ECHO 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  ECHO,  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.  Prior to this position, Mr.
Slater  served  as a group leader at Aiken Advanced Systems.  Mr. Slater holds a
BS  degree  in  electrical  engineering technology from Old Dominion University,
Norfolk,  Virginia.

PATRICIA M. WILLIAMS, age 38, joined ECHO in September 1996, serving as Director
of  Program  Management,  Ms. Williams was appointed Vice President of Corporate
Program  Management  in  October  1997  and  Vice President of Check Services in
October  2001.  In  June  of 2003, Ms. Williams was appointed to the position of
Vice  President  of Sales and Marketing. 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  59,  has served as Vice President of Merchant Services since
June  1994  and  was  Director  of Bankcard Relations for ECHO 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


                                       33
<PAGE>
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  54,  joined  ECHO  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.

ARISTIDES  W.  GEORGANTAS, age 59, has served as a Director since February 1999.
Mr.  Georgantas, prior to his retirement, was Executive Vice President and Chief
Operating  Officer  at  Chase  Manhattan  Bank's Global Asset Management/Private
Banking  Division.  He serves as a director of Horizon Blue Cross Blue Shield of
New  Jersey,  the Glenmede Trust Company, the Foundation for Public Broadcasting
in  New  Jersey,  and  Mathematica  Policy  Research,  Inc.  Mr. Georgantas is a
graduate of the University of Massachusetts and the Columbia University Graduate
School  of  Business.

HERBERT  L. LUCAS, age 77, 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.

CARL  R.  TERZIAN,  age  68, has served as a Director since December, 2002.  Mr.
Terzian  graduated magna cum laude from the University of Southern California in
1957.  Following  his USC education, Mr. Terzian served as an international good
will  ambassador  for  President  Eisenhower  and Secretary of State John Foster
Dulles;  director  of  public  and  church  relations  for the Lutheran Hospital
Society  of  Southern  California;  civic  affairs  consultant to the California
savings  and  loan  industry; and dean and professor of government and speech at
Woodbury  University. In 1965, Mr. Terzian joined Charles Luckman Associates, an
architectural  firm, to handle its public relations throughout the United States
and  worldwide and began his own public relations firm, Carl Terzian Associates,
in 1969. Mr. Terzian currently serves as a director on the board of Transamerica
Investors,  Inc.  and  Mercantile  National  Bank  along with various non-profit
boards,  commissions,  advisory  groups,  and  task  forces.

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 3, 2003,
and  the  election  of  directors  was  held  at  that  time.

CODE  OF  ETHICAL  CONDUCT

Our  Board of Directors recently adopted a Code of Ethical Conduct (the "Code of
Conduct"). We require all employees, directors and officers, including our Chief
Executive  Officer and Chief Financial Officer, to adhere to the Code of Conduct
in  addressing  legal  and  ethical issues encountered in conducting their work.
The Code of Conduct requires that these individuals avoid conflicts of interest,
comply with all laws and other legal requirements, conduct business in an honest
and  ethical  manner  and otherwise act with integrity and in our best interest.
The  Code  of  Conduct contains additional provisions that apply specifically to
our  Chief  Financial  Officer and other financial officers with respect to full
and  accurate  reporting.  The  Code  of  Conduct is available on our website at
www.echo-inc.com.

AUDIT  COMMITTEE  FINANCIAL  EXPERT

Our Board of Directors has determined that Aristides W. Georgantas, the Chairman
of  the  Audit  Committee  of  the  Board  of  Directors, is an "audit committee
financial  expert"  as defined in Item 401(h) of Regulation S-K.  Mr. Georgantas
is  "independent"  for  purposes  of  Rule 4200(a)(15) of the Nasdaq Marketplace
Rules.


                                       34
<PAGE>
IDENTIFICATION  OF  AUDIT  COMMITTEE

Our  Board  of  Directors  has a separately standing Audit Committee.  The Audit
Committee  currently  consists  of  Messrs.  Herbert L. Lucas, Jr., Aristides W.
Georgantas,  and  Carl  R.  Terzian.  Messrs.  Lucas, Georgantas and Terzian are
"independent  directors"  within the meaning of Rule 10A-3 promulgated under the
Securities  Exchange  Act of 1934, as amended, and the NASDAQ Marketplace Rules.
The Audit Committee's primary duties and responsibilities include appointment of
the independent auditors, evaluation of the performance and independence of such
auditors and review of the annual audited financial statements and the quarterly
financial  statements,  as  well  as  the  adequacy  of  our  internal controls.

SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE
Section  16(a)  of the Securities Exchange Act of 1934, as amended, requires our
directors  and  executive  officers and the holders of 10% or more of our Common
Stock  to  file  with  the Securities and Exchange Commission initial reports of
ownership  and  reports of changes in ownership of our equity securities.  Based
solely  on  our  review  of  the  copies of the forms received by us and written
representations  from certain reporting persons that they have complied with the
relevant  filing  requirements, we believe that, during the year ended September
30,  2003, all of our executive officers and directors complied with all Section
16(a) filing requirements.  To our knowledge, based upon our review of Schedules
13D and 13G filed with the Securities and Exchange Commission, no individual has
beneficial  ownership  or  control  over  10%  or more of our outstanding Common
Stock.

ITEM 11.     EXECUTIVE COMPENSATION

The  following  table  sets  forth the total compensation paid and stock options
offered  by  us  to  our  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, 2003,
2002  and  2001 (together with the Chief Executive Officer, the "Named Executive
Officers").


<TABLE>
<CAPTION>
SUMMARY  COMPENSATION  TABLE

                                                         Annual         Long  Term
                                                      Compensation     Compensation
                                                      ------------     ------------
                                                                        Securities
                        Capacities in                                   Underlying
Name                    Which Served      Year    Salary [1]   Bonus    Options [2]  Other [3]
--------------------  -----------------  -------  ----------  -------  ------------  ---------
<S>                   <C>                <C>      <C>         <C>      <C>           <C>

Joel M. Barry         Chairman/Chief        2003  $  223,125  $   -0-        40,000        -0-
                      Executive Officer     2002     209,000      -0-        50,000        -0-
                                            2001     203,000   25,500        12,500        -0-

Alex Seltzer          Chief Information     2003  $  148,295  $   -0-         5,000  $   2,250
                      Officer/Chief         2002      14,230      -0-        50,000        -0-
                      Operating Officer     2001         -0-      -0-           -0-        -0-

Alice L. Cheung       Chief Financial       2003  $  125,500  $15,000        15,000      4,175
                      Officer/Treasurer     2002     110,500   11,500         5,000      3,450
                                            2001     104,750   10,000         5,000      2,600

Rick Slater           Vice President        2003  $  121,600  $ 5,000         2,500      2,512
                                            2002     119,000    5,000         5,000      1,450
                                            2001     117,850    7,000         2,500        600

Jack Wilson           Vice President        2003  $  111,190  $15,000        15,000      2,998
                                            2002     103,750   16,500         5,000      2,250
                                            2001      91,250   10,000         7,500      2,600


                                       35
<PAGE>
Patricia M. Williams  Vice President        2003  $  111,190  $15,000        15,000        -0-
                                            2002     103,750   16,500        10,000      3,000
                                            2001      96,500   10,000        10,000      2,400

Jesse Fong            Vice President        2003  $   98,880  $ 4,000         2,500  $   2,526
                                            2002      94,000    5,000         5,000      2,540
                                            2001      93,400    4,000         2,500      2,396
<FN>
_______________________

[1]  We  provide  Mr. Barry and Mr. Wilson with an automobile. 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").
[3]  Represents our match of contributions to our 401(k) Plan. We contribute 25%
     of  each  employee's  contribution  to  the  401(k)  Plan.
</TABLE>


FISCAL  2003  OPTION  GRANTS  TABLE

The  following table sets forth the stock options granted to our Chief Executive
Officer  and  each  of  its  executive  officers, other than the Chief Executive
Officer,  whose  compensation  exceeded  $100,000  during  fiscal  2003.  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.  We have 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 our stock at a future
date,  which  may  or  may  not  correspond  to  projections  below.

<TABLE>
<CAPTION>
                                                                              Potential Realization
                                                                                Value at Assumed
                                                                                 Annual Rates of
                                     Percent of                                    Stock Price
                                   Total Granted     Exercise                   Appreciation for
                       Options    to Employees in     Price     Expiration        Option Term
                                                                            --------------------------
Name                  Granted[1]    Fiscal Year     per share      Date         5%            10%
--------------------  ----------  ----------------  ----------  ----------  -----------  -------------
<S>                   <C>         <C>               <C>         <C>         <C>          <C>
Joel M. Barry             40,000            16.80%  $     2.31    02/03/13  $   25,600   $     56,400
Alex Seltzer               5,000             2.10%  $     1.30    12/09/12  $    1,800   $      3,950
Alice L. Cheung           15,000             6.30%  $     1.30    12/09/12  $    5,400   $     11,850
Rick Slater                2,500             1.05%  $     1.30    12/09/12  $      900   $      1,975
Jack Wilson               15,000             6.30%  $     1.30    12/09/12  $    5,400   $     11,850
Patricia M. Williams      15,000             6.30%  $     1.30    12/09/12  $    5,400   $     11,850
Jesse Fong                 2,500             1.05%  $     1.30    12/09/12  $      900   $      1,975
<FN>
___________________

[1]  All  options  vest  in  five  equal annual installments beginning 12 months
     following  the  date  of  the  grant.
</TABLE>

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

The  following  table  sets  forth  information concerning the exercise of stock
options  during  the  fiscal  year ended September 30, 2003 by each of our Named
Executive  Officers and the number and value of unexercised options held by each
of  our Named Executive Officers as of the fiscal year ended September 30, 2003.


                                       36
<PAGE>
<TABLE>
<CAPTION>
                                                              Value of
                                               Number of     unexercised
                        Shares                unexercised   in-the-money
                      acquired on    Value    options/SARS  Options/SARS
Name                   exercise    realized    at FY-end    at FY-end[1]
--------------------  -----------  ---------  ------------  -------------
<S>                   <C>          <C>        <C>           <C>
Joel M. Barry              32,500  $  40,018       222,500  $     891,000
Alice L. Cheung             5,000  $     -0-        57,500  $     230,050
Jesse Fong                    -0-  $     -0-        21,500  $      69,240
Alex Seltzer                  -0-  $     -0-        55,000  $     316,200
Rick Slater                10,000  $  24,406        40,000  $     165,500
Jack Wilson                 7,500  $  39,450        45,000  $     195,250
Patricia M. Williams        4,000  $  17,020        55,000  $     204,860
<FN>
_____________________

[1]  Based  on the closing sales price of the Common Stock on September 30, 2003
     of  $7.04  per  share,  less  the  option  exercise  price.
</TABLE>

EQUITY  COMPENSATION  PLAN  INFORMATION

The following table sets forth information concerning our equity compensation
plans as of September 30, 2003.

<TABLE>
<CAPTION>
                                                                 (c) Number of securities
                        (a) Number of                             remaining available for
                      securities to be                             future issuance under
                         issued upon      (b) Weighted-average      equity compensation
                         exercise of        exercise price of      (excluding securities
Plan Category        outstanding options   outstanding options   reflected in column (a))
-------------------  -------------------  ---------------------  -------------------------
<S>                  <C>                  <C>                    <C>
Equity compensation
plans approved by
security holders[1]        808,875                 $3.39                  614,500
<FN>
_____________________

[1]  Plan represents the Officers and Key Employees Incentive Stock Option Plan,
     which  expired  in  May  2002,  and  our  2003 Incentive Stock Option Plan.
</TABLE>

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

No  interlocking relationship exists between our 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  $28,000  and  3,031 shares of Common Stock in
fiscal  2003;  $15,000  and  6,912  shares  of  Common Stock in fiscal 2002; and
$15,000  and  3,750  shares  of  Common  Stock  in  fiscal  2001.  Directors are
compensated  for  all  reasonable  expenses  and are not compensated for special
meetings  other  than  regular  meetings.

EMPLOYMENT  AGREEMENTS

None.


                                       37
<PAGE>
BONUS,  PROFIT-SHARING  AND  OTHER REMUNERATION PLANS AND PENSION AND RETIREMENT
PLANS

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

We  have  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, our Board of Directors authorized adoption of an Officers and
Key  Employees  Incentive  Stock  Option Plan (the "1992 Plan"), ratified by the
shareholders  at  the Annual Meeting held July 10, 1992.  The 1992 Plan provided
for  the  issuance  of  up to 81,250 shares of our Common Stock to be subject to
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, our Board of Directors authorized an increase in the 1992
Plan to 843,750 shares to be subject to stock options, which action was ratified
by  the  shareholders  at  the  Annual  Meeting  held  in  February  1997.

On  February  4, 1999, our Board of Directors authorized an increase in the 1992
Plan  to  1,343,750  shares  to  be  subject  to stock options, which action was
ratified  by  the  shareholders  at  the  Annual  Meeting held in February 1999.

On  May  13,  2002,  the  1992  Plan  expired.

On  July  25,  2002,  the  Board  of  Directors  authorized adoption of the 2003
Incentive  Stock Option Plan (the "2003 Plan"), subject to shareholder approval.
On  February 3, 2003, our shareholders approved adoption of the 2003 Plan at the
Annual  Meeting  of Shareholders.  The 2003 Plan provides for the issuance of up
to  900,000  shares  of our Common Stock to be subject to stock options, each to
purchase one share of the Common Stock as may be determined on the date of grant
by  our Executive Compensation Committee, but which is no event may be less than
100%  of  the  fair  market  value  of  our  Common  Stock on the date of grant.

With  the  exception  of  the  foregoing, we have no stock option plans or other
similar  or related plans in which any of our officers or directors participate.


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As  of  November  20,  2003,  there  were  6,319,863  shares of our Common Stock
outstanding.  Based  on  a Schedule 13D/A filed with the Securities and Exchange
Commission, the following individual has beneficial ownership or control over 5%
or  more  of  our  outstanding  Common  Stock:

<TABLE>
<CAPTION>
                             Amount and           Percentage of
                        Nature of Beneficial  Outstanding Stock[1]
Name and Address             Ownership             At 11/20/03
----------------------  --------------------  ---------------------
<S>                     <C>                   <C>

Melvin Laufer                 400,000                 6.82%
136 Beach 140th Street
Far Rockaway, NY 11694
</TABLE>


                                       38
<PAGE>
The  following  table  sets  forth  the  number  of shares of Common Stock owned
beneficially by our (i) directors, (ii) the Named Executive Officers (as defined
below),  and  (iii)  the  executive officers and directors as a group, as of the
record  date,  December  15,  2003.  Such  figures  are  based  upon information
furnished  by  the  persons  named.

<TABLE>
<CAPTION>
                                  Amount and           Percentage of
                             Nature of Beneficial  Outstanding Stock[1]
Name and Address                  Ownership             At 11/20/03
---------------------------  --------------------  ---------------------
<S>                          <C>                   <C>
Joel M. Barry                     290,619[2]                4.44%
730 Paseo Camarillo
Camarillo, CA 93010

Alice L. Cheung                    67,000[2]                1.05%
730 Paseo Camarillo
Camarillo, CA 93010

Jesse Fong                         22,778[2]                0.36%
730 Paseo Camarillo
Camarillo, CA 93010

Alex Seltzer                       62,900[2]                0.99%
730 Paseo Camarillo
Camarillo, CA 93010

Rick Slater                        40,500[2]                0.64%
730 Paseo Camarillo
Camarillo, CA 93010

Patricia M. Williams               55,675[2]                0.87%
730 Paseo Camarillo
Camarillo, CA 93010

Jack Wilson                        49,045[2][4]             0.77%
730 Paseo Camarillo
Camarillo, CA 93010

Aristides W. Georgantas            16,521                   0.26%
180 Springdale Road
Princeton, NJ  08540

Herbert L. Lucas, Jr.              27,408[3]                0.43%
12011 San Vicente Blvd.
Los Angeles, CA 90049

Carl R. Terzian                     3,031                   0.05%
12400 Wilshire Blvd.
Los Angeles, CA 90025

All officers and directors
as a group (13 persons) [5]       719,163                  10.43%
<FN>
______________________________


                                       39
<PAGE>
     [1]  Outstanding  Common  Shares  with  effect  given  to  individual
          shareholder's  exercise  of  stock  options  described  in footnotes 2
          through  4.
     [2]  Includes  stock options according to the terms of the Officers and Key
          Employees  Incentive  Stock  Option  Plan and the 2003 Incentive Stock
          Option  Plan,  which  for  the  following  number  of  shares  for the
          following  individuals  could  be  acquired within 60 days through the
          exercise  of  stock  options:  Joel  M.  Barry,  153,000 shares; Alice
          Cheung, 40,000 shares; Jesse Fong, 15,000 shares; Alex Seltzer, 11,000
          shares;  Rick Slater, 33,000 shares; Patricia Williams, 32,000 shares;
          and Jack Wilson, 26,000 shares. See "Item 11. Executive Compensation".
     [3]  Includes  17,972  shares indirectly owned by Mr. Lucas through a trust
          for  his  wife.
     [4]  Includes  530  shares indirectly owned by Mr. Wilson through his wife.
     [5]  Includes  shares  and  stock  options  according  to  the terms of the
          Officers  and  Key  Employees Incentive Stock Option Plan and the 2003
          Incentive  Stock Option Plan, which for the following number of shares
          for the following individuals could be acquired within 60 days through
          the  exercise  of  stock options: David Griffin, 18,000 shares; Sharat
          Shankar,  0  shares;  and  Donna  Rehman,  4,900  shares.
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no related-party transactions.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES.

AUDIT  FEES

PricewaterhouseCoopers,  LLP,  our  independent  accountants
("PricewaterhouseCoopers")  billed us an aggregate of approximately $113,000 and
$111,000  in fees for professional services rendered for the audit of our annual
financial statements for the fiscal years ended September 30, 2003 and September
30,  2002, respectively, and the reviews of the financial statements included in
our  Form  10-Q's  for  fiscal  2003  and  2002.

AUDIT-RELATED  FEES

PricewaterhoueCoopers  billed us an aggregate of approximately $7,000 and $3,000
in  fees  for  assurance and related services related to the audit of our annual
financial statements for the fiscal years ended September 30, 2003 and September
30,  2002, respectively, and the reviews of the financial statements included in
our  Form  10-Q's  for  fiscal  2003  and  2002.

TAX  FEES

PricewaterhouseCoopers  billed us an aggregate of approximately $0 and $3,000 in
fees  for  tax  compliance, tax advice, and tax planning services for the fiscal
years  ended  September  30,  2003  and  2002.

ALL  OTHER  FEES

PricewaterhouseCoopers  billed  us  an aggregate of approximately $0 and $42,000
for  all  other services performed in fiscal 2003 and 2002, respectively.  These
other  services  consisted  primarily  of  litigation  support  and  consulting
services.

Our  Audit  Committee is directly responsible for interviewing and retaining our
independent  accountant,  considering  the  accounting  firm's  independence and
effectiveness,  and  pre-approving the engagement fees and other compensation to
be  paid  to,  and  the services to be conducted by, the independent accountant.
The Audit Committee does not delegate these responsibilities. During each of the
fiscal  years  ended  September  30,  2002  and  2003,  respectively,  our Audit
Committee  pre-approved  100%  of  the  services  described  above.


                                       40
<PAGE>
                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K

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

<TABLE>
<CAPTION>
<S>       <C>                                                                 <C>
     (1)  Consolidated Financial Statements
                                                                              Page
                                                                              ----

          Report of Independent Auditors  . . . . . . . . . . . . . . . . .   F-1

          Consolidated Balance Sheets at September 30, 2003 and 2002  . . .   F-2

          Consolidated Statements of Operations for each of the three years
          in the period ended September 30, 2003  . . . . . . . . . . . . .   F-3

          Consolidated Statements of Changes in Stockholders' Equity
          for each of the three years in the period ended September 30, 2003  F-4

          Consolidated Statements of Cash Flows for each of the three years
          in the period ended September 30, 2003  . . . . . . . . . . . . .   F-5

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

     (2)  Financial Statement Schedule:

          Schedule II - Valuation and Qualifying Accounts and Reserves  . .   S-1
</TABLE>

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,  2003:

Current  Report  on Form 8-K dated August 4, 2003, filed with the Securities and
Exchange  Commission  on  August  7,  2003.

(c)  Exhibits:

<TABLE>
<CAPTION>
Exhibit
 Number  Description of Document
-------  -----------------------
<S>      <C>

 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.[5]
 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.[6]
 3.1     Articles of Incorporation of Bio Recovery Technology, Inc., filed with the Nevada Secretary of State
         on December 11, 1981. [1]
 3.4     By-Laws of Bio Recovery Technology, Inc. [1]
 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. [4]
10.36    Copy of Merchant Marketing and Processing Services Agreement between Electronic Clearing House,
         Inc. and The Berkshire Bank, dated July 31, 1997. [4]
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.[6]
10.42    Copy of Addendum to Agreement between Electronic Clearing House, Inc. and U-Haul International,
         dated January 1, 2000.[6]

                                       41
<PAGE>

10.44    Copy of Electronic Check Services Agreement between Electronic Clearing House, Inc. and National
         Bank Drafting Systems, Inc., dated May 17, 2000.[6]
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.[6]
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.[6]
10.48    Copy of POS Check Third Party Services Agreement between Visa U.S.A., Inc. and Electronic
         Clearing House, Inc., dated December 12, 2000.[7]
10.49    Copy of Asset Purchase Agreement between National Check Network, Inc. and Electronic Clearing
         House, Inc., dated April 19, 2001. [7]
10.50    Copy of Addendum to Agreement between U-Haul International and Electronic Clearing House, Inc.,
         dated October 1, 2001. [7]
10.51    Copy of First Amendment to the POS Check Third Party Servicer Agreement between Visa U.S.A.,
         Inc. and Electronic Clearing House, Inc. dated December 12, 2000. [8]
10.52    Copy of Second Amendment to the POS Check Third Party Servicer Agreement between Visa U.S.A.,
         and Electronic Clearing House, Inc. dated December 12, 2000. [8]
10.53    Copy of Third Amendment to the POS Check Third Party Servicer Agreement between Visa U.S.A.,
         and Electronic Clearing House, Inc. dated December 12, 2000. [8]
10.54    Form of Securities Purchase Agreement by and among the Registrant and the Purchasers identified
         therein. [9]
10.55    Form of Registration Rights Agreement by and among the Registrant and the Purchasers identified
         therein. [9]
10.56    Office Lease dated May 21, 2003, by and between the Registrant and the 1989 Sheehan Family
         Trust dated October 24, 1989, with respect to principal executive offices located at 730 Paseo
         Camarillo, Camarillo, California 93010.
21.0     Subsidiaries of Registrant. [2]
24.1     Power of Attorney [10]
31.1     Certificate of Joel M. Barry, Chief Executive Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
31.2     Certificate of Alice L. Cheung, Chief Financial Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
32.1     Certificate of Joel M. Barry, Chief Executive Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
32.2     Certificate of Alice L. Cheung, Chief Financial Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
_______________________

 [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, 1997 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, 1999 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, 2000 and incorporated herein by reference.
 [7]     Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year ended
         September 30, 2001 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, 2002 and incorporated herein by reference.
 [9]     Filed as an Exhibit to Registrant's Current Report on Form 8-K dated October 30, 2003 and
         incorporated herein by reference.
[10]     Included on signature page.
</TABLE>


                                       42
<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

                                POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Joel M. Barry
and  Alice  L.  Cheung,  and  each  of  them,  as  their  true  and  lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for  them and in their name, place and stead, in any and all capacities, to sign
any  or  all amendments to this Annual Report on Form 10-K and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities  and  Exchange  Commission,  granting unto said attorneys-in-fact and
agents,  and  each  of them, full power and authority to do and perform each and
every  act  and  thing  requisite  and  necessary  to  be  done in and about the
foregoing,  as  fully  to  all  intents  and purposes as he might or could do in
person,  hereby  ratifying  and  confirming  all that said attorneys-in-fact and
agents,  or either of them, or their substitutes, may lawfully do or cause to be
done  by  virtue  hereof.

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.

<TABLE>
<CAPTION>
           SIGNATURE                      TITLE                        DATE
-----------------------------  ---------------------------       -----------------
<S>                            <C>                          <C>  <C>

/s/  Joel M. Barry             Chairman of the Board          )  December 26, 2003
-----------------------------  and Chief Executive Officer    )
     Joel M. Barry                                            )
                                                              )
                                                              )
/s/  Aristides W. Georgantas   Director                       )
-----------------------------                                 )
     Aristides W. Georgantas                                  )
                                                              )
                                                              )
/s/  Herbert L. Lucas, Jr.     Director                       )
-----------------------------                                 )
     Herbert L. Lucas, Jr.                                    )
                                                              )
                                                              )
/s/  Carl R. Terzian           Director                       )
-----------------------------                                 )
     Carl R. Terzian                                          )
                                                              )
                                                              )
/s/  Alice L. Cheung           Chief Financial Officer        )
-----------------------------  and Treasurer                  )
     Alice L. Cheung                                          )
                                                              )
                                                              )
/s/ Marjan Hewson              Controller                     )
-----------------------------
    Marjan Hewson                                             )
</TABLE>


                                       43
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS




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  15(a)(1)  on  page  41  present  fairly, in all material
respects,  the  financial  position  of  Electronic Clearing House, Inc. and its
subsidiaries at September 30, 2003 and 2002, and the results of their operations
and  their  cash flows for each of the three years in the period ended September
30,  2003  in  conformity  with  accounting principles generally accepted in the
United  States of America.  In addition, in our opinion, the financial statement
schedule  listed  in the index appearing under Item 15(a)(2) on page 41 presents
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  schedule  are  the  responsibility of the
Company's  management;  our  responsibility  is  to  express an opinion on these
financial  statements  and financial statement schedule 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.

As discussed in Note 3 to the financial statements, effective October 1, 2002,
the Company adopted Financial Accounting Standards Board Statement No. 142
"Goodwill and Other Intangible Assets" and changed its method of accounting for
goodwill.



/S/ PRICEWATERHOUSECOOPERS LLP


Los Angeles
DECEMBER 5, 2003


                                       F1
<PAGE>
<TABLE>
<CAPTION>
                                  ELECTRONIC CLEARING HOUSE, INC.
                                    CONSOLIDATED BALANCE SHEETS
                                    ---------------------------


                                                                               September 30,
                                                                       ---------------------------
                                                                           2003           2002
                                                                       -------------  ------------
<S>                                                                    <C>            <C>

                                              ASSETS
                                              ------

Current assets:
  Cash and cash equivalents                                            $  5,641,000   $ 2,409,000
  Restricted cash                                                           977,000       906,000
  Settlement receivable                                                     717,000       148,000
  Accounts receivable less allowance of $91,000 and $431,000              1,918,000     1,596,000
  Prepaid expenses and other assets                                         307,000       403,000
  Deferred tax asset                                                         86,000       266,000
                                                                       -------------  ------------

Total current assets                                                      9,646,000     5,728,000

Noncurrent assets:
  Property and equipment, net                                             2,928,000     2,248,000
  Software, net                                                           4,445,000     2,853,000
  Deferred tax asset                                                      1,256,000     2,018,000
  Other assets less accumulated amortization of $305,000 and $259,000       500,000       637,000
  Goodwill, net                                                                 -0-     4,707,000
                                                                       -------------  ------------

        Total assets                                                   $ 18,775,000   $18,191,000
                                                                       =============  ============

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

Current liabilities:
  Short-term borrowings and current portion of
     long-term debt                                                    $    901,000   $   515,000
    Accounts payable                                                        779,000       201,000
    Settlement payable                                                    3,429,000       729,000
    Accrued expenses                                                      1,336,000       987,000
    Deferred income                                                             -0-        62,000
                                                                       -------------  ------------

        Total current liabilities                                         6,445,000     2,494,000

Long-term debt                                                            1,961,000     2,159,000
                                                                       -------------  ------------

        Total liabilities                                                 8,406,000     4,653,000
                                                                       -------------  ------------

Commitments and contingencies

Stockholders' equity:
  Common stock, $.01 par value, 36,000,000 shares authorized;
    5,920,174 and 5,835,331 shares issued; 5,881,906 and 5,796,062
    shares outstanding                                                       59,000        58,000
Additional paid-in capital                                               21,641,000    21,435,000
Accumulated deficit                                                     (10,865,000)   (7,486,000)
Less treasury stock at cost, 38,269 and 39,269 common shares               (466,000)     (469,000)
                                                                       -------------  ------------

        Total stockholders' equity                                       10,369,000    13,538,000
                                                                       -------------  ------------
        Total liabilities and stockholders' equity                     $ 18,775,000   $18,191,000
                                                                       =============  ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F2
<PAGE>
<TABLE>
<CAPTION>
                                     ELECTRONIC CLEARING HOUSE, INC.
                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                  -------------------------------------


                                                                         Year ended September 30,
                                                                         ------------------------
                                                                    2003          2002          2001
                                                                ------------  ------------  ------------
<S>                                                             <C>           <C>           <C>
REVENUES:
     Processing revenue                                         $21,151,000   $16,363,000   $14,719,000
     Transaction revenue                                         19,162,000    16,526,000    14,377,000
     Other revenue                                                  323,000       402,000       847,000
                                                                ------------  ------------  ------------
                                                                 40,636,000    33,291,000    29,943,000
                                                                ------------  ------------  ------------

COSTS AND EXPENSES:
     Processing and transaction expense                          26,360,000    22,747,000    19,239,000
     Other operating costs                                        3,358,000     3,012,000     2,887,000
     Research and development expense                             1,405,000     1,719,000     1,070,000
     Selling, general and administrative expenses                 7,088,000     6,493,000     5,760,000
     Amortization expense - goodwill                                    -0-       489,000       424,000
     Legal settlement                                                   -0-     2,500,000           -0-
                                                                ------------  ------------  ------------

                                                                 38,211,000    36,960,000    29,380,000
                                                                ------------  ------------  ------------

Income (loss) from operations                                     2,425,000    (3,669,000)      563,000
Interest income                                                      28,000        55,000       187,000
Interest expense                                                   (200,000)     (129,000)      (81,000)
Gain on sale of asset                                                   -0-           -0-       350,000
                                                                ------------  ------------  ------------

Income (loss) before (provision) benefit for income taxes
and cumulative effect of an accounting change                     2,253,000    (3,743,000)    1,019,000

(Provision) benefit for income taxes                               (925,000)    1,367,000      (585,000)
                                                                ------------  ------------  ------------

Income (loss) before cumulative effect of an accounting change    1,328,000    (2,376,000)      434,000
Cumulative effect of an accounting change to adopt SFAS 142      (4,707,000)          -0-           -0-
                                                                ------------  ------------  ------------

Net (loss) income                                               $(3,379,000)  $(2,376,000)  $   434,000
                                                                ============  ============  ============

Basic net (loss) earnings per share
     Before cumulative effect of accounting change              $      0.23   $     (0.41)  $      0.07
     Cumulative effect of accounting change                           (0.81)          -0-           -0-
                                                                ------------  ------------  ------------
     Basic net (loss) earnings per share                        $     (0.58)  $     (0.41)  $      0.07
                                                                ============  ============  ============

Diluted net (loss) earnings per share
     Before cumulative effect of accounting change              $      0.22   $     (0.41)  $      0.07
     Cumulative effect of accounting change                           (0.78)          -0-           -0-
                                                                ------------  ------------  ------------
     Diluted net (loss) earnings per share                      $     (0.56)  $     (0.41)  $      0.07
                                                                ============  ============  ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F3
<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
                                            ---------  ----------  ----------  -------  -----------  ---------  ------------
<S>                                         <C>        <C>         <C>         <C>      <C>          <C>        <C>


Balance at September 30, 2000                 39,275   5,471,983      25,000   55,000   20,638,000   (469,000)   (5,544,000)

Exercise of stock options                                 15,000                            47,000
Issuance of common stock to
 outside directors                                        11,250                            45,000
Issuance of common stock - acquisition                    21,166                            85,000
Issuance of performance stock                            375,000                4,000      776,000
Issuance of treasury stock                        (6)
Exchange of stock for note receivable                    (85,304)              (1,000)    (331,000)
Net income                                                                                                          434,000
                                            ---------  ----------  ----------  -------  -----------  ---------  ------------

Balance at September 30, 2001                 39,269   5,809,095      25,000   58,000   21,260,000   (469,000)   (5,110,000)

Exercise of stock options                                  5,500                            11,000
Issuance of common stock to
  outside directors                                       20,736                            45,000
Conversion of preferred to common                         25,000     (25,000)
Exchange of stock for note receivable                    (25,000)                          (54,000)
Tax benefit from exercise of stock options                                                 173,000
Net loss                                                                                                         (2,376,000)
                                            ---------  ----------  ----------  -------  -----------  ---------  ------------

Balance at September 30, 2002                 39,269   5,835,331         -0-   58,000   21,435,000   (469,000)   (7,486,000)

Exercise of stock options                                 75,750                1,000      157,000
Issuance of common stock to
  outside directors                                        9,093                            21,000
Issuance of stock for equipment purchase      (1,000)                                                   3,000
Expense related to stock option
  issuance                                                                                  28,000
Net loss                                                                                                         (3,379,000)
                                            ---------  ----------  ----------  -------  -----------  ---------  ------------

Balance at September 30, 2003                 38,269   5,920,174         -0-   59,000   21,641,000   (466,000)  (10,865,000)
                                            =========  ==========  ==========  =======  ===========  =========  ============



                                               Total
                                            -----------
<S>                                         <C>


Balance at September 30, 2000               14,680,000

Exercise of stock options                       47,000
Issuance of common stock to
 outside directors                              45,000
Issuance of common stock - acquisition          85,000
Issuance of performance stock                  780,000
Issuance of treasury stock                         -0-
Exchange of stock for note receivable         (332,000)
Net income                                     434,000
                                            -----------

Balance at September 30, 2001               15,739,000

Exercise of stock options                       11,000
Issuance of common stock to
  outside directors                             45,000
Conversion of preferred to common
Exchange of stock for note receivable          (54,000)
Tax benefit from exercise of stock options     173,000
Net loss                                    (2,376,000)
                                            -----------

Balance at September 30, 2002               13,538,000

Exercise of stock options                      158,000
Issuance of common stock to
  outside directors                             21,000
Issuance of stock for equipment purchase         3,000
Expense related to stock option
  issuance                                      28,000
Net loss                                    (3,379,000)
                                            -----------

Balance at September 30, 2003               10,369,000
                                            ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       F4
<PAGE>
<TABLE>
<CAPTION>
                                  ELECTRONIC CLEARING HOUSE, INC.
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                               -------------------------------------


                                                                  Year ended September 30,
                                                                  ------------------------
                                                              2003          2002          2001
                                                          ------------  ------------  ------------
<S>                                                       <C>           <C>           <C>
Cash flows from operating activities:
 Net (loss) income                                        $(3,379,000)  $(2,376,000)  $   434,000
 Adjustments to reconcile net (loss) income to net cash
  provided by operating activities:
 Depreciation                                                 512,000       480,000       384,000
 Amortization of software                                   1,081,000       697,000       537,000
 Amortization of goodwill                                         -0-       489,000       414,000
 Provisions for losses on accounts and notes receivable        67,000       302,000       326,000
 Provision for obsolete inventory                             110,000       300,000           -0-
 Write-down of real estate                                     55,000       100,000           -0-
 Fair value of stock issued in connection
  with director's compensation                                 21,000        45,000        45,000
 Deferred income taxes                                        942,000    (1,375,000)      436,000
 Stock option compensation                                     28,000           -0-           -0-
 Legal settlement                                                 -0-     1,300,000           -0-
 Gain (loss) on sale of asset                                  16,000           -0-      (350,000)
 Cumulative effect of an accounting change                  4,707,000           -0-           -0-
Changes in assets and liabilities:
 Restricted cash                                              (71,000)      504,000      (393,000)
 Accounts receivable                                         (389,000)     (226,000)     (307,000)
 Settlement receivable                                       (569,000)      (42,000)          -0-
 Accounts payable                                             578,000        66,000        15,000
 Settlement payable                                         2,700,000       111,000       448,000
 Accrued expenses                                             349,000      (376,000)      349,000
 Prepaid expenses                                             (76,000)       63,000        11,000
                                                          ------------  ------------  ------------
 Net cash provided by operating activities                  6,682,000        62,000     2,349,000
                                                          ------------  ------------  ------------
Cash flows from investing activities:
 Other assets                                                 (51,000)      (81,000)     (458,000)
 Purchase of equipment                                       (664,000)     (253,000)     (280,000)
 Purchased and capitalized software                        (2,627,000)   (1,501,000)   (1,124,000)
 Proceeds from sale of asset                                   71,000           -0-       350,000
 Cash used in acquisition                                         -0-           -0-      (169,000)
                                                          ------------  ------------  ------------

 Net cash used in investing activities                     (3,271,000)   (1,835,000)   (1,681,000)
                                                          ------------  ------------  ------------

Cash flows from financing activities:
 Proceeds from issuance of notes payable                      292,000           -0-           -0-
 Repayment of notes payable                                  (177,000)     (151,000)     (130,000)
 Repayment of capitalized leases                             (452,000)     (215,000)      (47,000)
 Proceeds from sales and leaseback of equipment                   -0-       390,000           -0-
 Proceeds from exercise of stock options                      158,000        11,000        47,000
 Repurchase of common stock                                       -0-           -0-      (332,000)
                                                          ------------  ------------  ------------

 Net cash (used in) provided by financing activities         (179,000)       35,000      (462,000)
                                                          ------------  ------------  ------------

Net increase (decrease) in cash                             3,232,000    (1,738,000)      206,000
Cash and cash equivalents at beginning of period            2,409,000     4,147,000     3,941,000
                                                          ------------  ------------  ------------

Cash and cash equivalents at end of period                $ 5,641,000   $ 2,409,000   $ 4,147,000
                                                          ============  ============  ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F5
<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  bank  card  authorizations, electronic deposit services,
check  guarantee,  check  verification,  check  conversion, and check collection
services.  In  addition,  the  Company sells electronic terminals for use by its
customers  and  other  processing  companies.

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.

Chargeback  Losses
------------------

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. The Company records a provision for estimated
chargeback  losses at the time bankcard transactions are processed. A reserve is
estimated  based  upon a historically-determined percentage of gross credit card
processing  volume  and  actual  losses  experienced.

Settlement  Receivable/Payable
------------------------------

Settlement  receivable/payable  results from timing differences in the Company's
settlement process with merchants. These timing differences are primarily due to
the  timing  between  the  funds  received  in  the  Company's bank accounts and
settlement  payments  made  to  the  merchants.

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:


                                       F6
<PAGE>
Note  1:  (Continued)
-------

<TABLE>
<CAPTION>
<S>                                          <C>
          Building                            39 years
          Computer equipment and software    3-5 years
          Furniture, fixtures and equipment    5 years
          Building improvements               10 years
</TABLE>

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

Other Assets consist primarily of deposits and intangible assets such as patents
and  trademarks.  Costs  related  to  obtaining  a  patent  and  trademark  are
capitalized  and  amortized over the estimated life of the patent and trademark.
Disclosures  regarding  intangible  assets  as  required  under SFAS No. 142 are
included  in  Note  6.

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. Software developed
or obtained for internal use is tested for impairment whenever events or changes
in  circumstance  indicates  that  its  carrying  amount may not be recoverable.
Capitalized  software  development  costs  are amortized using the straight-line
method  over  the  lesser  of  three  years  or  estimated  useful  life.

Costs  incurred to establish the technological feasibility of software and other
computer  software  maintenance  costs  are recorded as research and development
costs  and  are  charged  to  expense  when  incurred.

Goodwill
--------

Goodwill represents the excess of purchase price over net assets acquired in the
acquisition  of  XPRESSCHEX and Rocky Mountain Retail Systems. In July 2001, the
Financial Accounting Standards Board ("FASB") issued SFAS No. 142, "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.  The  Company  adopted  SFAS 142 in the first quarter of
fiscal  2003.  Based  upon  the evaluation findings, the Company determined that
its  goodwill  was  fully  impaired  and a non-cash charge equal to the goodwill
carrying  amount  of  $4.7  million  was  recognized during the first quarter of
fiscal  2003.  See  Note  3.

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

When  circumstances  warrant,  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,  2003.

Revenue  Recognition
--------------------

The  Company  earns revenue from services which include the following: debit and
credit  card  processing, check guarantee, check verification, check conversion,
check  re-presentment,  check  collection  and inventory tracking.  All of these
services  are  performed  pursuant to a contract with customers which states the
terms  and  fixed price for all contracted services.  The price of a service may
be  a  fixed  fee  for  each  transaction  (verification,  conversion  and check
guarantee)  and  or a percentage of the transaction processed (check guarantee),
depending  on the service.  At the time the guarantee revenue is recognized, the
Company  provides  a  reserve  for  estimated  guarantee  losses  based upon its
historical  loss  experience. The Company generally collects its fee at the time
it  processes  the transaction and accordingly, collectibility is assured. Based
on  the  Company's  underwriting  criteria  and  ongoing  credit  monitoring  of
customers,  collectibility  on  service  transactions  is  reasonably  assured.

Revenue  from  debit  and  credit  card  (collectively  called  "bankcards") and
transaction  processing  revenue  is  based  on  a percentage of the transaction
value,  commonly  referred  to  as  a  discount  fee  on a credit and debit card
transaction  processed  by the Company.  In addition, there is a per transaction
fee  associated with each bankcard transaction which is charged to the merchant.
The  Company recognizes the processing and transaction revenue when the services
are  performed.


                                       F7
<PAGE>
Note  1:  (Continued)
-------

Revenue from check guarantee is derived from a percentage of the gross amount of
the  check  and guarantees payment of the check to the merchant in the event the
check  is  not  honored by the check writer's bank.  Merchants typically present
customer  checks  for  processing  on a regular basis and, therefore, dishonored
checks  are  generally  identified  within a few days of the date the checks are
guaranteed  by  the  Company. The Company recognizes revenue when the checks are
processed at the point of sale.  In the event a check is dishonored, the Company
has  the right to collect the full amount of the check from the check writer but
has  historically  recovered  approximately  60%  of the guaranteed checks.  The
Company  establishes  a receivable from the delinquent check writer for the full
amount of the guaranteed check.  The Company establishes a reserve against these
receivable  based  on  historical  loss experience.  The check guarantee service
also  earns revenue based on fees collected from delinquent check writers, which
collection fee is recognized when collected, as collectibility is not reasonably
assured  until  that  point.

Revenue  from  check  verification  is  derived  from  fees  collected  from the
merchants  when  a check is verified against the Company's positive and negative
check  database.  This  revenue is recognized when the transaction is processed,
since  the  Company  has  no  further  performance  obligations.

Revenue  from  check conversion is derived from fees collected from merchants to
convert  the  paper  check  received by merchants into an ACH transaction, which
allows  the  Company  to settle the transaction electronically for the merchant.
The  Company  recognizes  the  revenue related to check conversion fees when the
services  are  performed.

Revenue from check re-presentment is derived from fees charged to check writers.
Check re-presentment is a service that allows merchants to collect a paper check
through  the  Automated  Clearing  House  ("ACH")  network  after  a  check  has
previously  been  presented  to  the bank for collection unsuccessfully at least
once.  The  fees  earned  from  check  writer  are recognized when collected, as
collectibility  is  not  reasonably  assured  until  that  point.

Revenue from check collection is derived from collection activities performed on
behalf of a merchant on uncollected checks.  The merchant usually keeps the face
amount  of  the  uncollected checks if the collection effort is successful.  The
Company's  revenue  is  derived from the collection fee collected from the check
writer.  If the Company refers the collection item to another collection agency,
the  Company  will  receive a fee from the collection agency upon its successful
efforts.  Collection fee revenue is recognized when collected, as collectibility
is  not  reasonably  assured  until  that  point.

Revenue  from inventory tracking is derived from transactions fee for processing
and  tracking  U-Haul's  daily  inventory activities. This revenue is recognized
when  the transaction is processed, since the Company has no further performance
obligations.

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.

Earnings  (loss)  Per  Share
----------------------------

Earnings  (loss)  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,  as  amended  by  SFAS  No.  148.

The  Company  measures  compensation  expense  for  its  employee  stock-based
compensation  under  APB  25.  The Company provides pro-forma disclosures of net
income  and  earnings per share as if a fair value method had been applied using
the Black Scholes option pricing model.  Therefore, pro forma compensation costs
for employee stock and stock option awards is measured as the excess, if any, of
the fair value of the common stock at the grant date over the amount an employee
must  pay to acquire the stock and is amortized over the related service periods
using  the  straight-line  method.


                                       F8
<PAGE>
Note  1:  (Continued)
-------

The  weighted  average fair value of the options granted during the fiscal years
ended  September  30,  2003,  2002  and  2001  were  $1.66,  $1.52,  and  $1.89,
respectively.  Fair value was determined using the Black Scholes options pricing
model.  For  options  granted  in  fiscal  2003, the risk free interest rate was
approximately  3%,  the expected life was 3-5 years, the expected volatility was
approximately 90.8%, and the expected dividend yield was 0%, all calculated on a
weighted  average  basis.  For  options  granted  in  fiscal 2002, the risk free
interest  rate  was  approximately  4%,  the  expected  life  was 3-5 years, the
expected volatility was approximately 90.6%, and the expected dividend yield was
0%,  all  calculated  on a weighted average basis. 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.

The  following  table  compares net income and earnings per share as reported to
the  pro  forma  amounts  that  would  be reported had compensation expense been
recognized  for  the  stock-compensation plans in accordance with the fair value
recognition  provisions  of SFAS No. 123, as amended by SFAS No. 148, Accounting
for  Stock-Based  Compensation:

<TABLE>
<CAPTION>
                                                                 September 30,
                                                      2003           2002          2001
                                                  -------------  -------------  -----------
<S>                                               <C>            <C>            <C>
Net (loss) income
          As reported                             $ (3,379,000)  $ (2,376,000)  $  434,000
          Total stock-based employee
          compensation expense determined
          under fair value-based method for
          all awards, net of related tax effects  $(   211,643)  $(   269,427)  $( 157,972)
                                                  -------------  -------------  -----------

Pro forma net (loss) income                       $ (3,590,643)  $ (2,645,427)  $  276,028
                                                  =============  =============  ===========

Basic (loss) earnings per share:
          As reported                             $      (0.58)  $      (0.41)  $     0.07
          Pro forma                               $      (0.62)  $      (0.46)  $     0.05

Diluted (loss) earnings per share:
          As reported                             $      (0.56)  $      (0.41)  $     0.07
          Pro forma                               $      (0.60)  $      (0.46)  $     0.05
</TABLE>

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  vesting  period.

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.  Significant estimates
include  allowance for chargeback losses and deferred tax assets. 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".


                                       F9
<PAGE>
NOTE  2  -  STATEMENT  OF  CASH  FLOWS:
--------------------------------------

<TABLE>
<CAPTION>
                                 September 30
                                 ------------
                           2003      2002     2001
                         --------  --------  -------
<S>                      <C>       <C>       <C>
Cash paid for:
  Interest               $200,000  $129,000  $81,000
  Income taxes              1,000   137,000   72,000
</TABLE>

Significant  non-cash  transactions  for  fiscal  2003  are  as  follows:

     -    Capital  equipment  of  $525,000  was  acquired  under capital leases.

Significant  non-cash  transactions  for  fiscal  2002  are  as  follows:

     -    A  refund  and  tax credit totaling $173,000 was recognized due to the
          filing of amended tax returns for cashless options exercised in fiscal
          years  1999  and  2000.

     -    A $1.3 million 15-year long-term promissory note was issued as part of
          the  Premiere  Lifestyles  International  Corporation  vs.  ECHO legal
          settlement.

     -    Capital  equipment  of  $663,000  was  acquired  under capital leases.

     -    A software license scheduled payment of $93,000 was paid directly by a
          leasing  company.

     -    The  Company  acquired 25,000 shares of ECHO's common stock, valued at
          $54,000  for  satisfaction  of  a  chargeback  receivable  owed to the
          Company.

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.

     -    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.


NOTE  3  -  CUMULATIVE  EFFECT  OF  CHANGE  IN  ACCOUNTING  PRINCIPLE:
----------------------------------------------------------------------

Effective October 1, 2002, the Company adopted Statement of Financial Accounting
Standards  No.  142  ("SFAS 142"), "Goodwill and Other Intangible Assets".  SFAS
142  requires  that  goodwill  no longer be amortized, but instead be tested for
impairment  at least annually using a fair value-based approach.  In the year of
adoption,  SFAS  No.  142  also  requires  the  Company  to  perform  an initial
assessment  of  its reporting units to determine whether there is any indication
that  the goodwill carrying value may be impaired.  This transitional assessment
is  made  by  comparing  the fair value of each reporting unit, as determined in
accordance  with  the  new  standard, to its book value.  To the extent the fair
value  of  any  reporting unit is less than its book value, which would indicate
that  potential  impairment  of  goodwill  exists, a second transitional test is
required  to  determine  the  amount  of  impairment.

The  Company has determined that it has two reporting units, which correspond to
its  two reportable business segments; the "Bankcard and Transaction Processing"
unit  and  the  "Check  Related  Products"  unit.  All of the Company's goodwill
relates  to  business  acquisition  transactions, which apply exclusively to the
Check  Related Products unit.  The Company completed the transitional impairment
testing  required  by SFAS 142 in the first quarter of fiscal 2003.  The Company
determined  the  estimated  fair value of its reporting units using a discounted
cash  flow technique and a market approach based upon the Company's total market
capitalization  as  of  October 1, 2002.  Based upon the valuation findings, the
Company  determined  that  its goodwill was fully impaired and a non-cash charge
equal  to  the  goodwill  carrying  amount of $4.7 million was recognized in the


                                      F10
<PAGE>
Note  3:  (Continued)
-------

Company's  consolidated  financial  statements.  As  prescribed by SFAS 142, the
Company  treated  this  non-cash  goodwill  impairment as a cumulative effect of
change  in  accounting principle.  No income tax benefit has been recognized for
this  charge  as  the  goodwill  is  not  deductible  for  income  tax purposes.

Had  the  provisions  of SFAS No. 142 been applied for the years ended September
30,  2002 and September 30, 2001, the Company's net income before the cumulative
effect  of  a  change  in  accounting principle, and net income (loss) per share
would  have  been  as  follows:

<TABLE>
<CAPTION>
                                                      For the Fiscal Years Ended
                                                    2003          2002        2001
                                                ------------  ------------  --------
<S>                                             <C>           <C>           <C>
Net (loss) income, as reported                  $(3,379,000)  $(2,376,000)  $434,000

Add:
 Goodwill amortization                                  -0-       489,000    414,000
                                                ------------  ------------  --------
 Adjusted net (loss) income                     $(3,379,000)  $(1,887,000)  $848,000
                                                ============  ============  ========

Basic (loss) earnings per share, as reported    $     (0.58)  $     (0.41)  $   0.07
Effect of SFAS No. 142                                 0.81          0.08       0.07
                                                ------------  ------------  --------

Adjusted basic earnings (loss) per share        $      0.23   $     (0.33)  $   0.14
                                                ============  ============  ========

Diluted (loss) earnings per share, as reported  $     (0.56)  $     (0.41)  $   0.07
Effect of SFAS No. 142                                  .78          0.08       0.07
                                                ------------  ------------  --------
Adjusted diluted earnings (loss) per share      $      0.22   $     (0.33)  $   0.14
                                                ============  ============  ========
</TABLE>

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

Property  and  equipment  are  comprised  of  the  following:

<TABLE>
<CAPTION>
                                                         September  30
                                                         -------------
                                                      2003           2002
                                                  -------------  ------------
<S>                                               <C>            <C>
Land and building                                 $    880,000   $   880,000
Computer equipment                                   3,973,000     3,036,000
Furniture, fixtures and equipment                    1,240,000       995,000
Building improvements                                  291,000       281,000
Tooling equipment                                      285,000       285,000
Auto                                                    16,000        16,000
                                                  -------------  ------------
Cost                                                 6,685,000     5,493,000
Less:  accumulated depreciation and amortization   ( 3,757,000)   (3,245,000)
                                                  -------------  ------------

Net book value                                    $  2,928,000   $ 2,248,000
                                                  =============  ============
</TABLE>

Included  in property and equipment are assets under capital lease of $1,098,000
and  $699,000  at  September  30,  2003  and  2002,  with  related  accumulated
depreciation  of  $236,000  and  $173,000, respectively.  Amortization of assets
recorded  under  capital  leases  is  included  with  depreciation  expense.


                                      F11
<PAGE>
NOTE  5  -  SOFTWARE  COST
--------------------------

The  following  table sets forth information regarding the costs associated with
software  purchased  and  developed  for  internal  use:

<TABLE>
<CAPTION>
                                      September  30
                                      -------------
                                    2003          2002
                                ------------  ------------
<S>                             <C>           <C>

Software cost                   $ 7,495,000   $ 4,868,000

Less: accumulated amortization   (3,050,000)   (2,015,000)
                                ------------  ------------

Net book value                  $ 4,445,000   $ 2,853,000
                                ============  ============
</TABLE>

Included  in  software  cost  are  assets  under  capital  lease of $399,000 and
$373,000 at September 30, 2003 and 2002, and related accumulated amortization of
$109,000  and  $51,000,  respectively.

NOTE  6  -  INTANGIBLE  ASSETS
------------------------------

Intangible  assets  consist  of  the  following  at  September  30,  2003:

<TABLE>
<CAPTION>
                                     Accumulated       Net
                            Cost    Amortization   Book Value
                          --------  -------------  -----------
<S>                       <C>       <C>            <C>
Patents                   $173,000  $      68,000  $   105,000
Trademarks                 276,000         59,000      217,000
Other                      256,000        178,000       78,000
                          --------  -------------  -----------

                          $705,000  $     305,000  $   400,000
                          ========  =============  ===========
</TABLE>

Intangible  assets  consist  of  the  following  at  September  30,  2002:

<TABLE>
<CAPTION>
                                     Accumulated       Net
                            Cost    Amortization   Book Value
                          --------  -------------  -----------
<S>                       <C>       <C>            <C>
Patents                   $173,000  $      58,000  $   115,000
Trademarks                 251,000         34,000      217,000
Other                      256,000        167,000       89,000
                          --------  -------------  -----------

                          $680,000  $     259,000  $   421,000
                          ========  =============  ===========
</TABLE>

Amortization expense for the years ended September 30, 2003 and 2002 was $46,000
and  $47,000  respectively.  Based  on  the  current amount of intangible assets
subject to amortization, the estimated amortization expense for each of the five
succeeding  years  is  as  follows:

<TABLE>
<CAPTION>
              Year Ending
              September 30:
              ------------
<S>                               <C>

                 2004             $116,000
                 2005               38,000
                 2006               38,000
                 2007               38,000
                 2008               38,000
</TABLE>


                                      F12
<PAGE>
NOTE  7  -  INCOME  TAXES
-------------------------

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

<TABLE>
<CAPTION>
                                                        September  30
                                                        -------------
                                                 2003        2002         2001
                                              ----------  -----------  ----------
<S>                                           <C>         <C>          <C>
Current federal taxes                         $     -0-   $      -0-   $ (29,000)
Current state taxes                              (5,000)      (5,000)   (120,000)
Deferred taxes                                 (920,000)   1,372,000    (436,000)
                                              ----------  -----------  ----------

  Total (provision) benefit for income taxes  $(925,000)  $1,367,000   $(585,000)
                                              ==========  ===========  ==========
</TABLE>

The  effective  tax  rate  varies  from  the  U.S.  Federal  statutory  tax rate
principally  due  to  the  following:

<TABLE>
<CAPTION>
                                                              September  30
                                                              -------------
                                                         2003      2002     2001
                                                       --------  --------  ------
<S>                                                    <C>       <C>       <C>
U.S. Federal statutory tax rate                        (34.00%)  (34.00%)  34.00%
Add (deduct):
Non-deductible goodwill                                  65.00%      4.3%   14.3%
State and local taxes                                      4.5%    (6.9%)    8.3%
All other                                                  2.2%      0.1%    0.8%
                                                       --------  --------  ------

Effective tax rate                                       37.70%  (36.50%)  57.40%
                                                       ========  ========  ======
</TABLE>

Components  of  the  deferred  tax  asset  include:

<TABLE>
<CAPTION>
                                                            September  30
                                                            -------------
                                                   2003         2002       2001
                                                -----------  ----------  --------
<S>                                             <C>          <C>         <C>
Deferred tax assets:
  Capitalized software                          $ (715,000)  $      -0-  $    -0-
  Reserve for bad debts                             35,000       34,000    25,000
  Inventory reserve                                    -0-      120,000     8,000
  Reserve on real estate                               -0-      160,000   109,000
  Inventory cost capitalized                        52,000       52,000    54,000
  State tax expense                                    -0-       39,000    41,000
  Installment note expense                         513,000      543,000       -0-
  Net operating loss carryforward                1,299,000    1,178,000   390,000
  Business tax credit                              113,000      113,000   113,000
  AMT credit                                        45,000       45,000    38,000
                                                -----------  ----------  --------
Total deferred tax assets                       $1,342,000   $2,284,000  $778,000
                                                ===========  ==========  ========
</TABLE>

The  Company  has a federal net operating loss carryforward of $3,560,000, which
expires in 2007 through 2022. The Company has not recorded a valuation allowance
against  deferred tax assets because it expects to have future taxable income to
recognize  these  assets.


                                      F13
<PAGE>
NOTE  8  -  SHORT-TERM  BORROWINGS  AND  LONG-TERM  DEBT:
--------------------------------------------------------

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

<TABLE>
<CAPTION>
                                                                           September 30
                                                                           ------------
                                                                        2003         2002
                                                                     -----------  -----------
<S>                                                                  <C>          <C>

Long-term promissory note collateralized by corporate headquarters
 building, due March 25, 2017, bearing interest at 8% per annum      $1,229,000   $1,277,000

Term loan collateralized by corporate headquarters building,
 due February 15, 2009, bearing interest at 7.87% per annum             343,000      392,000

Term loan, collateralized by equipment, due 2005, bearing
 interest at prime rate, 4.00% at September 30, 2003                    107,000      187,000

Term loan, collateralized by various assets of the Company,
  due June 19, 2006, bearing interest at prime rate plus 1%, 5.00%
  at September 30, 2003                                                 292,000          -0-

Capital leases                                                          891,000      818,000
                                                                     -----------  -----------

                                                                      2,862,000    2,674,000
Less:  current portion                                                 (901,000)    (515,000)
                                                                     -----------  -----------

                                                                     $ 1,961,00   $2,159,000
                                                                     ===========  ===========
</TABLE>

The  weighted  average interest rate on the prime rate term loans for the period
they  were  outstanding  during  the  year  ended  September  30, 2003 was 4.70%

One  of  the  term  loans contains restrictive debt covenants consisting of debt
service  coverage  ratio  and  tangible  net  worth  requirements.
The  Company  has  an  $800,000  credit line with a bank which was unused during
fiscal  year  2003.

During  November  2002,  the  Company  negotiated  a  $500,000 lease line with a
leasing  company  to  fund  certain  computer  equipment  needs. The Company has
financed  $428,000 of computer equipment through this lease line as of September
30,  2003. In January 2003, an $800,000 line of credit and a $700,000 lease line
for  Oasis  software installment payments were secured from First Regional Bank,
at  a  borrowing  rate of prime + 1%. The Company has drawn down $292,000 of the
Oasis  lease  line  as of September 30, 2003 and plans to complete the draw down
when  the various modules are delivered and accepted by the Company.  In October
2003, the Company secured a $3 million credit line for working capital needs and
a  $1  million  equipment  lease  line  with  Bank  of  the  West.

Future  maturities  of  debt  are  as  follows:

<TABLE>
<CAPTION>
     Fiscal year ended September 30
     ------------------------------
<S>                                  <C>

                2004                 $  901,000
                2005                    498,000
                2006                    237,000
                2007                    134,000
                2008                    146,000
                thereafter              946,000
                                     ----------
                                     $2,862,000
                                     ==========
</TABLE>


                                      F14
<PAGE>
NOTE  9  -  ACCRUED  EXPENSES:
-----------------------------

<TABLE>
<CAPTION>
                                                      September 30
                                                      ------------
Accrued expenses are comprised of the following:     2003       2002
                                                  ----------  --------
<S>                                               <C>         <C>
Accrued bankcard fees                             $  178,000  $200,000
Accrued compensation and payroll taxes               535,000   281,000
Accrued communication costs                          215,000   234,000
Accrued professional fees                            168,000   115,000
Accrued commission                                    88,000   111,000
Other                                                152,000    46,000
                                                  ----------  --------
                                                  $1,336,000  $987,000
                                                  ==========  ========
</TABLE>

NOTE  10  -  STOCKHOLDERS'  EQUITY:
----------------------------------

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"),  as  amended  January  2003.

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.

(Loss)  Earnings  Per  Share
----------------------------

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


                                      F15
<PAGE>
Note  10:  (Continued)
--------

<TABLE>
<CAPTION>
                                                                    September  30
                                                                    -------------
                                                          2003          2002         2001
                                                      ------------  ------------  ----------
<S>                                                   <C>           <C>           <C>
Numerator:
  Income (loss) before cumulative effect of
    an accounting change                              $ 1,328,000   $(2,376,000)  $  434,000
  Cumulative effect of an accounting change
    to adopt SFAS 142                                  (4,707,000)          -0-          -0-
                                                      ------------  ------------  ----------

        Net (loss) income:                            $(3,379,000)  $(2,376,000)  $  434,000
                                                      ============  ============  ==========

Denominator:
  Weighted average shares outstanding for basic
    (loss) earnings per share                           5,812,005     5,788,071    5,797,120
  Effect of dilutive stock options                        212,035           -0-      141,688
  Series K Convertible Preferred Stock                        -0-           -0-       25,000
                                                      ------------  ------------  ----------

        Adjusted weighted average shares outstanding
          for diluted (loss) earnings per share         6,024,040     5,788,071    5,963,808
                                                      ============  ============  ==========


Basic net (loss) earnings per share:
  Before cumulative effect of accounting change       $      0.23   $     (0.41)  $     0.07
  Cumulative effect of accounting change                    (0.81)          -0-          -0-
                                                      ------------  ------------  ----------
  Basic net (loss) earnings per share                 $     (0.58)  $     (0.41)  $     0.07
                                                      ============  ============  ==========

Diluted net (loss) earnings per share:
  Before cumulative effect of accounting change       $      0.22   $     (0.41)  $     0.07
  Cumulative effect of accounting change                    (0.78)          -0-          -0-
                                                      ------------  ------------  ----------
  Diluted net (loss) earnings per share               $     (0.56)  $     (0.41)  $     0.07
                                                      ============  ============  ==========
</TABLE>

For  the  years  ended September 30, 2003, 2002 and 2001, approximately 270,000,
597,584  and  337,500  shares,  respectively,  attributable  to  the exercise of
outstanding  options  were  excluded from the calculation of diluted EPS because
the  effect  was  antidilutive.

NOTE  11  -  COMMON  STOCK  OPTIONS:
-----------------------------------

The  Company  had  a  1992  Incentive Stock Option Plan (the "1992 Plan"), which
provided 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. In May 2002, the 1992 Plan expired.  The 2003 Incentive Stock
Option  Plan  was approved at the Annual Shareholders' Meeting in February 2003.
The  2003  Incentive  Stock Option Plan has similar provisions as the 1992 Plan.

Stock  option  activity  during  2003,  2002,  and  2001  was  as  follows:

<TABLE>
<CAPTION>
                                                  Exercise
                                     Options       Price
                                    --------   --------------
<S>                                 <C>        <C>
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
                                    =========


                                      F16
<PAGE>
Note 11: (Continued)
-------

  Granted                            197,000    1.29 -   2.17
  Forfeited                         (173,583)   1.60 -  10.24
  Exercised                           (5,500)   2.00
                                    ---------
Outstanding September 30, 2002       712,584   $1.29 - $16.48
                                    =========


  Granted                            238,000   $1.30 - $ 8.50
  Forfeited                          (65,959)  $2.00 - $ 5.88
  Exercised                          (75,750)  $2.00 - $ 4.84
                                    ---------
Outstanding September 30, 2003       808,875   $1.29 - $16.48
                                    =========

Exercisable at September 30, 2001    437,000   $1.60 - $16.48
                                    =========
Exercisable at September 30, 2002    318,000   $1.29 - $16.48
                                    =========
Exercisable at September 30, 2003    321,000   $1.29 - $16.48
                                    =========
Options available for grant
  at September 30, 2002              374,750
                                    =========
Options available for grant
  at September 30, 2003              614,500
                                    =========
</TABLE>

All  officer  and  key  employee options are granted under the 1992 Plan and the
2003  Plan.  The  exercise price of the incentive stock options shall be 100% of
the  fair  market  value  on  the date the option is granted. 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.

The  following  table  summarizes information about stock options outstanding at
September  30,  2003:

<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, 2003       Life          Price      Sept. 30, 2003       Price
----------------  --------------  --------------  ------------  --------------  ---------------
<S>               <C>             <C>             <C>           <C>             <C>
1.29 - $2.00            241,000             6.9  $       1.55          85,000  $          1.76
2.15 - $3.50            317,000             8.3  $       2.65          52,000  $          2.83
4.00 - $5.88            157,000             4.8  $       4.28         132,000  $          4.32
7.00 - $16.48            94,000             6.5  $       9.11          52,000  $          9.16
                  --------------                                --------------
                         809,000             7.0  $       3.39         321,000
                  ==============                                ==============
</TABLE>

NOTE  12  -  COMMITMENTS,  CONTINGENT  LIABILITIES,  AND  GUARANTEES:
---------------------------------------------------------------------

The  Company currently relies on cooperative relationships with, and sponsorship
by,  one  bank  in  order  to  process  its  Visa, MasterCard and other bankcard
transactions.  The  agreement  between  the  bank  and  the Company requires the
Company  to  assume and compensate the bank for bearing the risk of "chargeback"
losses.  Under  the  rules  of  Visa  and  MasterCard, when a merchant processor
acquires  card  transactions,  it  has  certain  contingent  liabilities for the
transactions  processed.  This  contingent  liability  arises  in the event of a
billing  dispute  between  the  merchant  and  a  cardholder  that is ultimately
resolved in the cardholder's favor.  In such a case, the disputed transaction is
charged  back  to  the merchant and the disputed amount is credited or otherwise
refunded  to  the  cardholder.  If  the Company is unable to collect this amount
from  the  merchant's  account,  and  if  the  merchant  refuses or is unable to
reimburse  the  Company  for the chargeback due to merchant fraud, insolvency or
other  reasons, the Company will bear the loss for the amount of the refund paid
to  the cardholders.  The Company is also exposed to financial risk in providing
Automated  Clearing House ("ACH") services to the merchants.  As the third-party
processor  for  multiple  originating  banks,  the  Company  is  liable  for any
fraudulent  activities committed by the merchants initiating the ACH activities.
The Company utilizes stringent underwriting guidelines combined with a number of
systems  and  procedures  to  manage  merchant  risk.  In  addition, the Company
requires  cash  deposits  by  certain merchants, which are held by the Company's
sponsoring  banks  to  minimize  the  risk  related  to  merchant  frauds  and
chargebacks.


                                      F17
<PAGE>
Note  12:  (Continued)
--------

A  cardholder,  through its issuing bank, generally has until the later of up to
four  months  after  the  date a transaction is processed or the delivery of the
product  or  service to present a chargeback to the Company's sponsoring bank as
the  merchant  processor.  Therefore,  management  believes  that  the  maximum
potential  exposure  for  the  chargebacks  would not exceed the total amount of
transactions  processed through Visa and MasterCard for the last four months and
other  unresolved  chargebacks  in the process of resolution.  For the last four
months through September 30, 2003, this potential exposure totaled approximately
$336 million.  At September 30, 2003, the Company, through its sponsoring banks,
had  approximately $85,000 of unresolved chargebacks that were in the process of
resolution.  At  September  30, 2003, the Company, through its sponsoring banks,
had  access  to  $9.2  million  in  merchant  deposits  to  cover  any potential
chargeback  losses.

For  the  fiscal  years  2003 and 2002, the Company processed approximately $961
million  (2003)  and  $760  million  (2002) of Visa and MasterCard transactions,
which  resulted  in  $9.3  million in gross chargeback activities for the fiscal
year  ended  2003 and $8.9 million for the fiscal year ended 2002. Substantially
all  of  these  chargebacks  were  recovered  from  the  merchants.

The  Company's  contingent  obligation with respect to chargebacks constitutes a
guarantee as defined in Financial Accounting Interpretation No. 45, "Guarantor's
Accounting  and  Disclosure  requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Others"  ("FIN  45").  FIN 45 requires that guarantees issued or
modified  subsequent  to December 231, 2002 be initially recorded as liabilities
in  the  Statement  of  Financial  Position  at fair value.  Since the Company's
agreement  with  its  sponsoring bank which establishes the guarantee obligation
was entered into prior to December 31, 2002 and has not been modified since that
date,  the measurement provisions of FIN 45 are not applicable to this guarantee
arrangement.

In  accordance  with  SFAS  No.  5,  "Accounting for Contingencies", the Company
records  a  reserve  for  chargeback  losses  based on its processing volume and
historical  trends  and  data.  As of September 30, 2003 and 2002, the allowance
for  chargeback  losses, which is classified as a component of the allowance for
uncollectible  accounts receivable, was $32,000 and $350,000, respectively.  The
expense  associated  with the chargeback allowance is included in processing and
transaction  expense in the accompanying consolidated statements of income.  The
Company  expensed  $44,000, $261,000, and $272,000 for the years ended September
30, 2003, 2002 and 2001, respectively for bankcard processing chargeback losses.

The  Company  has  a  small  check  guarantee business.  The Company charges the
merchant  a percentage of the face amount of the check and guarantees payment of
the  check  to  the  merchant in the event the check is not honored by the check
writer's  bank.  Merchants typically present customer checks for processing on a
regular  basis and, therefore, dishonored checks are generally identified within
a  few  days of the date the checks are guaranteed by the Company.  Accordingly,
management  believes  that  its best estimate of the Company's maximum potential
exposure  for dishonored checks at any given balance sheet date would not exceed
the  total  amount of checks guaranteed in the last 10 days prior to the balance
sheet  date.  As  of  September 30, 2003, the Company estimates that its maximum
potential  dishonored  check  exposure  was  approximately  $372,000.

For  the  fiscal years ended 2003 and 2002, the Company guaranteed approximately
$15,338,000  (2003)  and  $11,223,000        (2002)  of  merchant  checks, which
resulted  in  $468,000 (2003) and $791,000 (2002) of dishonored checks presented
to  the  Company  for  payments.  The  Company has the right to collect the full
amount  of  the  check  from  the  check writer.  Based on its actual collection
experience,  the  Company  collects approximately 50-60% of the total dishonored
checks.  The Company establishes a reserve for this activity based on historical
and  projected  loss experience.  As of September 30, 2003 and 2002, the reserve
for  check  guarantee  loss was $24,000 (2003) and $152,000 (2002).  The expense
associated  with  the  guarantee costs is included in processing and transaction
expense  in  the  accompanying  consolidated  statements  of  income.

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

The Company leases real property under agreements, which expire at various times
over  the  next  five  years.  The  Company's future minimum rental payments for
capital  and  operating  leases  at  September  30,  2003  are  as  follows:

<TABLE>
<CAPTION>
     Fiscal Year                         Capital Leases   Operating Leases
     -----------                         ----------------  -----------------
<S>                                     <C>               <C>
        2004                            $       524,000   $         485,000
        2005                                    343,000             425,000
        2006                                    124,000             319,000
        2007                                        -0-             297,000
        2008                                        -0-             309,000
                                        ----------------  -----------------

        Total minimum lease payments    $       991,000   $       1,835,000
                                                          =================


                                      F18
<PAGE>
Note 12: (Continued)

        Less: imputed interest of 8.7%         (100,000)
                                         ---------------
        Present value of net
          minimum lease payment          $      891,000
                                         ===============
</TABLE>

Rent  expense  for  the  years  ended September 30, 2003, 2002, and 2001 totaled
$299,000,  $212,000,  and  $193,000, respectively. Certain operating leases have
renewal options at the end of the lease term solely at the Company's discretion.
In  May  2003,  the  Company  leased  new  corporate  office space in Camarillo,
California.  The  lease  is  for  a  period  of  five years at a monthly rate of
$24,000.  The  lease  grants  us  a  right  of  first  refusal  with  respect to
additional  space  in the building that is not currently rented, and includes an
option  for  us  to  purchase  the property, at fair value, during the first two
years  of  the  lease.

NOTE  13  -  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.


NOTE  14  -  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  two  business  segments:  Bankcard  and
Transaction  Processing  and Check Related Products, all of which are located in
the United States. The Company also has certain corporate expenses which are not
allocated  to  the  two  business  segments.

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. Certain segment information for fiscal
year  2001 were reclassified as a result of the elimination of the terminal sale
business  segment  in  fiscal  2002.

<TABLE>
<CAPTION>
                                                     September  30
                                                     -------------
Business Segments                           2003          2002          2001
-----------------                       ------------  ------------  ------------
<S>                                     <C>           <C>           <C>
Revenues:
  Bankcard and Transaction Processing   $32,444,000   $27,456,000   $25,503,000
  Check Related Products                  8,192,000     5,835,000     4,440,000
                                        ------------  ------------  ------------
                                        $40,636,000   $33,291,000   $29,943,000
                                        ============  ============  ============

Operating Income (loss):
  Bankcard and Transaction Processing   $ 4,303,000   $ 1,996,000   $ 3,183,000
  Check Related Products                    591,000      (872,000)     (234,000)
  Other - Corporate Expenses             (2,469,000)   (2,293,000)   (2,386,000)
  Legal Settlement                              -0-    (2,500,000)          -0-
                                        ------------  ------------  ------------
                                        $ 2,425,000   $(3,669,000)  $   563,000
                                        ============  ============  ============


                                      F19
<PAGE>
Note 14: (Continued)
-------

Depreciation and Amortization:
  Bankcard and Transaction Processing   $   867,000   $   727,000   $   571,000
  Check Related Products                    727,000       938,000       764,000
                                        ------------  ------------  ------------
                                        $ 1,594,000   $ 1,665,000   $ 1,335,000
                                        ============  ============  ============

Capital Expenditures:
  Bankcard and Transaction Processing   $ 2,479,000   $ 1,474,000   $   823,000
  Check Related Products                  1,365,000       712,000       859,000
                                        ------------  ------------  ------------
                                        $ 3,844,000   $ 2,186,000   $ 1,682,000
                                        ============  ============  ============

Total Assets:
  Bankcard and Transaction Processing   $ 7,051,000   $ 5,399,000   $ 5,268,000
  Check Related Products                  6,794,000     7,710,000     7,934,000
  Other                                   4,930,000     5,082,000     5,719,000
                                        ------------  ------------  ------------
                                        $18,775,000   $18,191,000   $18,921,000
                                        ============  ============  ============
</TABLE>

NOTE  15  -  NEW  ACCOUNTING  PRONOUNCEMENTS
--------------------------------------------

In  May  2003,  the  FASB issued Statement of Financial Accounting Standards, or
SFAS,  No.  150,  "Accounting  for  Certain  Financial  Instruments  with
Characteristics of both Liabilities and Equity," which established standards for
how  a  company  classifies  and  measures  certain  financial  instruments with
characteristics  of  both  liabilities  and  equity.  SFAS  150 requires certain
financial  instruments  to  be  classified as liabilities, which were previously
classified  as  equity.  SFAS 150 is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective at the beginning
of  the  Company's fourth quarter.  The adoption of this statement will not have
an  impact  on  the  Company's results of operations, financial position or cash
flows.


NOTE  16  -  QUARTERLY  FINANCIAL  DATA  (Unaudited)
----------------------------------------------------

The  following summarizes the quarterly financial results of the Company for the
fiscal  years  ended  September  30,  2003 and September 30, 2002 (in thousands,
except  share  data):

<TABLE>
<CAPTION>
                                             Year  Ended  September  30,  2003
                                             ---------------------------------
                                           First     Second      Third     Fourth
                                          Quarter    Quarter    Quarter    Quarter
                                         ---------  ---------  ---------  ---------
<S>                                      <C>        <C>        <C>        <C>
   Net revenues                          $  9,301   $  9,767   $ 10,578   $ 10,990
   Gross profit                             2,973      3,360      3,467      4,153
   Profit from operations                     527        465        564        869
   Net (loss) income                       (4,473)       268        308        518
   (Loss) earnings per share - basic     $  (0.77)  $   0.05   $   0.05   $   0.09
   (Loss) earnings per share - diluted   $  (0.77)  $   0.05   $   0.05   $   0.08


                                             Year  Ended  September  30,  2003
                                             ---------------------------------
                                         First      Second     Third      Fourth
                                         Quarter    Quarter    Quarter    Quarter
                                         ---------  ---------  ---------  ---------

   Net revenues                          $  7,921   $  8,386   $  8,415   $  8,569
   Gross profit                             2,796      2,360      2,535      2,265
   (Loss) from operations                     (76)    (3,129)      (143)      (321)
   Net (loss)                                 (93)    (1,908)      (168)      (207)
   (Loss) per share - basic              $  (0.02)  $  (0.33)  $  (0.03)  $  (0.03)
   (Loss) per share - diluted            $  (0.02)  $  (0.33)  $  (0.03)  $  (0.03)
</TABLE>


                                      F20
<PAGE>
NOTE  17  -  SUBSEQUENT  EVENTS
-------------------------------

On October 30, 2003, the Company completed a private placement of 437,957 shares
of  common  stock  to  institutional  investors,  resulting in gross proceeds of
approximately  $3  million.  After commissions and expenses, the net proceeds to
the  Company will be approximately $2.8 million.  The Company intends to use the
proceeds  to  increase  the  capacity  of its payment processing infrastructure,
expedite  certain  development  efforts  and  other  working  capital needs.  In
connection  with  the  $3  million  private placement financing transaction, the
Company  entered  into  a  registration  rights  agreement  with  the investors.
Pursuant  to  the  registrant  rights  agreement,  the  company agreed to file a
registration  statement  on  Form S-3 registering the resale by the investors of
the  shares of common stock purchased by them in the transaction and to keep the
registration  statement  effective  until  the earlier of two years and the date
that  all  the  common  shares may be sold by the investors pursuant to Rule 144
promulgated  under  the  Securities  Act  of  1933.  This  registration  rights
agreement  also  provides  that  if the Company does not register for resale the
common  shares by January 28, 2004, which date may be extended to March 27, 2004
in  certain  circumstances,  then  upon such failure to register the shares, the
Company  must  pay  each  of  the  investors  a fee equal to 1% of the aggregate
purchase  price  paid  by each such investor pursuant to the Securities Purchase
Agreement  for  the  shares of common stock then held by each such investor, and
for  each  month  after such date that the common shares are not registered, the
Company  must  additionally  pay  each of the investors a fee equal to 1% of the
aggregate  purchase  price paid by each such investor pursuant to the securities
Purchase  Agreement  for  the  shares  of  common  stock  then held by each such
investor.  Pursuant  to  this  agreement,  the  company  filed  a  registration
statement with the Securities and Exchange Commission to register for resale the
shares  of  common  stock.

Additionally,  in  October 2003, the Company secured a $3 million line of credit
for  general working capital purposes and a $1 million equipment lease line with
Bank  of  the  West.

The  Company  has  put  its Agoura Hills building on the market and, in November
2003,  signed  a letter of intent to sell the building.  The Company anticipates
completing  the  sale  of  this  property  in  the third quarter of fiscal 2004.


                                      F21
<PAGE>
<TABLE>
<CAPTION>
                                ELECTRONIC CLEARING HOUSE, INC. AND CONSOLIDATED SUBSIDIARIES

                                                   SCHEDULE II TO FORM 10K

                                  RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


                                                  WRITE-OFF                              WRITE-OFF
                                                   AGAINST                                AGAINST      BALANCE
                       BALANCE AT   CHARGED TO    ACCOUNTS    BALANCE AT   CHARGED TO    ACCOUNTS        AT       CHARGED TO
DESCRIPTION            09/30/2000     EXPENSE    RECEIVABLE   09/30/2001     EXPENSE    RECEIVABLE   09/30/2002     EXPENSE
---------------------  -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                    <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>

Allowance for
 trade receivables/
 chargeback
 receivables           $   380,000  $   326,000  $   393,000  $   313,000  $   302,000  $   184,000  $   431,000  $    67,000

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

Allowance for
 obsolete inventories  $     3,000  $    15,000  $         0  $    18,000  $   300,000  $    18,000  $   300,000  $   110,000


                        WRITE-OFF
                         AGAINST
                        ACCOUNTS    BALANCE AT
DESCRIPTION            RECEIVABLE   09/30/2003
---------------------  -----------  -----------
<S>                    <C>          <C>

Allowance for
 trade receivables/
 chargeback
 receivables           $   407,000  $    91,000

Allowance for
 notes receivable      $         0  $         0

Allowance for
 obsolete inventories  $   410,000  $         0
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
Exhibit
 Number  Description of Document
-------  -----------------------
<S>      <C>
 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.[5]
 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.[6]
 3.1     Articles of Incorporation of Bio Recovery Technology, Inc., filed with the Nevada Secretary of State
         on December 11, 1981. [1]
 3.4     By-Laws of Bio Recovery Technology, Inc. [1]
 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. [4]
10.36    Copy of Merchant Marketing and Processing Services Agreement between Electronic Clearing House,
         Inc. and The Berkshire Bank, dated July 31, 1997. [4]
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.[6]
10.42    Copy of Addendum to Agreement between Electronic Clearing House, Inc. and U-Haul International,
         dated January 1, 2000.[6]
10.44    Copy of Electronic Check Services Agreement between Electronic Clearing House, Inc. and National
         Bank Drafting Systems, Inc., dated May 17, 2000.[6]
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.[6]
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.[6]
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.[7]
10.49    Copy of Asset Purchase Agreement between National Check Network, Inc. and Electronic Clearing
         House, Inc., dated April 19, 2001.[7]
10.50    Copy of Addendum to Agreement between U-Haul International and Electronic Clearing House, Inc.,
         dated October 1, 2001.[7]
10.51    Copy of First Amendment to the POS Check Third Party Servicer Agreement between Visa U.S.A.,
         Inc. and Electronic Clearing House, Inc. dated December 12, 2000. [8]
10.52    Copy of Second Amendment to the POS Check Third Party Servicer Agreement between Visa U.S.A.,
         and Electronic Clearing House, Inc. dated December 12, 2000. [8]
10.53    Copy of Third Amendment to the POS Check Third Party Servicer Agreement between Visa U.S.A.,
         and Electronic Clearing House, Inc. dated December 12, 2000. [8]
10.54    Form of Securities Purchase Agreement by and among the Registrant and the Purchasers identified
         therein. [9]
10.55    Form of Registration Rights Agreement by and among the Registrant and the Purchasers identified
         therein. [9]
10.56    Office Lease dated May 21, 2003, by and between the Registrant and the 1989 Sheehan Family
         Trust dated October 24, 1989, with respect to principal executive offices located at 730 Paseo
         Camarillo, Camarillo, California 93010.
21.0     Subsidiaries of Registrant. [2]
24.1     Power of Attorney [10]
31.1     Certificate of Joel M. Barry, Chief Executive Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
31.2     Certificate of Alice L. Cheung, Chief Financial Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.


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32.1     Certificate of Joel M. Barry, Chief Executive Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
32.2     Certificate of Alice L. Cheung, Chief Financial Officer of Electronic Clearing House, Inc. pursuant to
         Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
________________________

 [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, 1997 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, 1999 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, 2000 and incorporated herein by reference.
 [7]     Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year ended
         September 30, 2001 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, 2002 and incorporated herein by reference.
 [9]     Filed as an Exhibit to Registrant's Current Report on Form 8-K dated October 30, 2003 and
         incorporated herein by reference.
[10]     Included on signature page.
</TABLE>


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