##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-19657
 TRM
CORPORATION
  Oregon
    
    93-0809419(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 
  
   þ o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ  o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATUREArticles of Amendment to the Restated Articles of Incorporation of TRM CorporationWarrant to LC Capital Master Fund, Ltd.Warrant to Cadence Special Holdings II, LLCLease dated January 9, 2008, between 1101 Associates, LP and TRM Corporation (for registrant's executive offices)ATM Vault Cash Purchase AgreementAmendment No. 1 to Securities Purchase AgreementSecured Promissory Note issued to LC Capital Master Fund, Ltd. for $11,000,000Secured Promissory Note issued to LC Capital master Fund, Ltd. for $9,900,000Secured Promissory Note issued to Cadence Special Holdings II, LLC for $1,100,000Certification of Chief Executive Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Certification of Chief Financial Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Certification of Chief Executive Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350Certification of Chief Financial Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 TRM Corporation
Consolidated Balance Sheets
(Unaudited)
(In thousands)
 December 31,
    
    
    June 30,2007
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    3,859
    
    
    $
    5,162Restricted cash
    
    
    3,073
    
    
    
    2,883Accounts receivable, net
    
    
    2,611
    
    
    
    4,588Leases receivable, net
    
    
    
    
    
    
    163Inventories
    
    
    50
    
    
    
    350Prepaid expenses and other
    
    
    369
    
    
    
    445Deferred financing costs
    
    
    172
    
    
    
    2,128Restricted cash  TRM Inventory Funding Trust
    
    
    61,805
    
    
    
    69,107Total current assets
    
    
    71,939
    
    
    
    84,826Property and equipment, net
    
    
    4,222
    
    
    
    3,808Non-current leases receivable, net
    
    
    
    
    
    
    806Intangible assets, net
    
    
    585
    
    
    
    2,812Goodwill
    
    
    16,748
    
    
    
    31,128Deferred financing costs, long term
    
    
    
    
    
    
    3,831Other assets
    
    
    795
    
    
    
    729Total assets
    
    $
    94,289
    
    
    $
    127,940Liabilities, Minority Interest and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    6,099
    
    
    $
    8,399Income taxes payable
    
    
    36
    
    
    
    25Accrued and other expenses
    
    
    7,637
    
    
    
    6,178Term loans
    
    
    2,051
    
    
    
    4,116TRM Inventory Funding Trust note payable
    
    
    58,505
    
    
    
    67,020Total current liabilities
    
    
    74,328
    
    
    
    85,738Long term liabilities:Term loans and other debt
    
    
    5,301
    
    
    
    21,036Deferred tax liability, net
    
    
    
    
    
    
    917Total liabilities
    
    
    79,629
    
    
    
    107,691Minority interest
    
    
    1,500
    
    
    
    1,500Shareholders equity:Common stock, no par value 
50,000 shares authorized; 21,486 shares issued and outstanding;
(17,213 at December 31, 2007)
    
    
    136,181
    
    
    
    145,912Additional paid-in capital
    
    
    63
    
    
    
    63Accumulated deficit
    
    
    (123,084
    )
    
    
    (127,226
    )Total shareholders equity
    
    
    13,160
    
    
    
    18,749Total liabilities, minority interest and shareholders equity
    
    $
    94,289
    
    
    $
    127,940
  2




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##### Table of Contents



TRM Corporation
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Sales
    
    $
    23,546
    
    
    $
    23,872
    
    
    $
    46,445
    
    
    $
    41,937Less discounts
    
    
    14,749
    
    
    
    14,896
    
    
    
    29,017
    
    
    
    25,523Net sales
    
    
    8,797
    
    
    
    8,976
    
    
    
    17,428
    
    
    
    16,414Cost of sales:Cost of vault cash
    
    
    1,345
    
    
    
    916
    
    
    
    2,790
    
    
    
    1,899Other
    
    
    4,684
    
    
    
    4,244
    
    
    
    9,126
    
    
    
    7,960Gross profit
    
    
    2,768
    
    
    
    3,816
    
    
    
    5,512
    
    
    
    6,555Selling, general and administrative expense (including
non-cash stock compensation of $204 in 2007 and $1,619 in
2008)
    
    
    4,324
    
    
    
    4,960
    
    
    
    9,625
    
    
    
    7,873Restructuring charges (Note 14)
    
    
    
    
    
    
    
    
    
    
    963
    
    
    
    Equipment write-offs
    
    
    15
    
    
    
    15
    
    
    
    18
    
    
    
    11Operating loss
    
    
    (1,571
    )
    
    
    (1,159
    )
    
    
    (5,094
    )
    
    
    (1,329
    )Interest expense and amortization of debt issuance costs
    
    
    125
    
    
    
    1,101
    
    
    
    160
    
    
    
    1,415Loss on early extinguishment of debt
    
    
    24
    
    
    
    1,456
    
    
    
    4,059
    
    
    
    1,456Other expense (income), net
    
    
    213
    
    
    
    (9
    )
    
    
    351
    
    
    
    (58
    )Loss from
continuing operations before benefit from income taxes
    
    
    (1,933
    )
    
    
    (3,707
    )
    
    
    (9,664
    )
    
    
    (4,142
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from continuing operations
    
    
    (1,933
    )
    
    
    (3,707
    )
    
    
    (9,664
    )
    
    
    (4,142
    )Discontinued operations:Income (loss) from operations, including gains on sales
    
    
    (280
    )
    
    
    
    
    
    
    5,220
    
    
    
    Provision (benefit) for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) from discontinued operations
    
    
    (280
    )
    
    
    
    
    
    
    5,220
    
    
    
    Net loss
    
    $
    (2,213
    )
    
    $
    (3,707
    )
    
    $
    (4,444
    )
    
    $
    (4,142
    )Weighted average common shares outstanding
    
    
    17,168
    
    
    
    20,090
    
    
    
    17,153
    
    
    
    18,652Basic and diluted income (loss) per share:Continuing operations
    
    $
    (.11
    )
    
    $
    (.18
    )
    
    $
    (.56
    )
    
    $
    (.22
    )Discontinued operations
    
    
    (.02
    )
    
    
    
    
    
    
    .30
    
    
    
    Net loss
    
    $
    (.13
    )
    
    $
    (.18
    )
    
    $
    (.26
    )
    
    $
    (.22
    )
  3




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TRM Corporation
Consolidated Statement of Shareholders Equity
(Unaudited)
(In thousands)
 AdditionalCommon stock
    
    
    paid-in
    
    
    AccumulatedShares
    
    
    Amounts
    
    
    capital
    
    
    deficit
    
    
    TotalBalances, December 31, 2007
    
    
    17,213
    
    
    $
    136,181
    
    
    $
    63
    
    
    $
    (123,084
    )
    
    $
    13,160Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,142
    )
    
    
    (4,142
    )Issuance of common stock
    
    
    3,550
    
    
    
    995
    
    
    
    
    
    
    
    
    
    
    
    995Stock option expense
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    46Restricted stock expense
    
    
    723
    
    
    
    1,573
    
    
    
    
    
    
    
    
    
    
    
    1,573Issuance of warrants in connection with new debt
    
    
    
    
    
    
    7,117
    
    
    
    
    
    
    
    
    
    
    
    7,117Balances, June 30, 2008
    
    
    21,486
    
    
    $
    145,912
    
    
    $
    63
    
    
    $
    (127,226
    )
    
    $
    18,749
  4




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TRM Corporation
Consolidated Statements of Cash Flows
Six months ended June 30, 2007 and 2008
(Unaudited)
(In thousands)
 2007
    
    
    2008Operating activities:Net loss
    
    $
    (4,444
    )
    
    $
    (4,142
    )Adjustments to reconcile net loss to net cash used in operating activities:Impairment charges and asset write-downs
    
    
    2,701
    
    
    
    Depreciation and amortization
    
    
    1,941
    
    
    
    1,463Non-cash stock compensation
    
    
    204
    
    
    
    1,619Loss on disposal of equipment
    
    
    146
    
    
    
    11Provision for doubtful accounts
    
    
    
    
    
    
    135Loss on early extinguishment of debt
    
    
    4,059
    
    
    
    1,374Gain on sale of discontinued operations
    
    
    (6,960
    )
    
    
    Cumulative foreign currency translation adjustments recognized in income
    
    
    (2,622
    )
    
    
    Changes in items affecting operations, net of effects of business dispositions:Restricted cash
    
    
    (4,384
    )
    
    
    190Accounts receivable
    
    
    (604
    )
    
    
    (2,113
    )Leases
receivable
    
    
    
    
    
    
    897Inventories
    
    
    (172
    )
    
    
    299Prepaid expenses and other
    
    
    1,091
    
    
    
    (76
    )Accounts payable
    
    
    786
    
    
    
    2,300Income taxes payable
    
    
    
    
    
    
    (11
    )Accrued expenses and settlement agreement
    
    
    (833
    )
    
    
    (4,163
    )Cash used in operating activities
    
    
    (9,091
    )
    
    
    (2,217
    )Investing activities:Proceeds from sale of equipment
    
    
    22
    
    
    
    101Capital expenditures
    
    
    (41
    )
    
    
    (264
    )Proceeds from sale of discontinued operations
    
    
    103,671
    
    
    
    Acquisition of intangible and other assets
    
    
    (294
    )
    
    
    (171
    )Acquisition of business, net of cash acquired
    
    
    
    
    
    
    (4,308
    )Cash provided by (used in) investing activities
    
    
    103,358
    
    
    
    (4,642
    )Financing activities:Borrowings on notes payable
    
    
    1,206
    
    
    
    12,210Repayment of notes payable
    
    
    (98,641
    )
    
    
    (4,430
    )Debt financing costs
    
    
    
    
    
    
    (831
    )Principal payments on capital lease obligations
    
    
    (26
    )
    
    
    Decrease (increase) in restricted cash  TRM Inventory Funding Trust
    
    
    1,825
    
    
    
    (7,303
    )Proceeds (repayments) of TRM Inventory Funding Trust note, net
    
    
    (2,409
    )
    
    
    8,516Proceeds from exercise of stock options
    
    
    25
    
    
    
    Other capital additions
    
    
    53
    
    
    
    Cash provided by (used in) financing activities
    
    
    (97,967
    )
    
    
    8,162Effect of exchange rate changes
    
    
    (1,221
    )
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    (4,921
    )
    
    
    1,303Beginning cash and cash equivalents, including $3,302 classified as assets held
for sale at December 31, 2006
    
    
    8,086
    
    
    
    3,859Ending cash and cash equivalents
    
    $
    3,165
    
    
    $
    5,162Supplemental cash flow information:Non-cash transaction Issuance of warrants in connection with new debt
    
    $
    
    
    
    
    7,117Payments:Cash paid for interest
    
    $
    1,089
    
    
    $
    354Cash paid for income taxes
    
    $
    13
    
    
    $
    11Supplemental non-cash financing and investing activities disclosure:Note payable issued in the acquisition of Access To Money
    
    $
    
    
    
    $
    9,754Value of shares issued in the acquisition of Access To Money
    
    $
    
    
    
    $
    996
  5




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TRM Corporation
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 1. Interim Financial Data
  2. Financial Statement Reclassifications
  3. Net Loss Per Share
  4. Leases Receivables
  6




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5. Inventories
 December 31,
    
    
    June 30,2007
    
    
    2008(in thousands)Parts
    
    $
    9
    
    
    $
    44ATMs held for resale
    
    
    41
    
    
    
    306$
    50
    
    
    $
    350
 6. Equipment
 December 31,
    
    
    June 30,2007
    
    
    2008(in thousands)ATMs
    
    $
    7,764
    
    
    $
    7,373Computer equipment
    
    
    5,200
    
    
    
    5,250Furniture and fixtures
    
    
    1,150
    
    
    
    1,119Vehicles
    
    
    
    
    
    
    5014,114
    
    
    
    13,839Accumulated depreciation
    
    
    (9,892
    )
    
    
    (9,984
    )$
    4,222
    
    
    $
    3,808
 7. Acquisition of LJR Consulting Corp.
  7




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(in thousands)Cash
    
    $
    1,048Accounts receivable
    
    
    937Inventory
    
    
    135Equipment
    
    
    132Lease receivable, net
    
    
    1,077Other assets
    
    
    587Intangible assets:Customer contracts
    
    
    1,200Distributor agreements
    
    
    225Non-contractual customer base
    
    
    250Non compete agreements
    
    
    175Trademarks
    
    
    500Goodwill
    
    
    14,380Total assets acquired
    
    
    20,646Accounts payable
    
    $
    137Notes payable
    
    
    989Accrued liabilities
    
    
    2,035Other liabilities
    
    
    1,016Deferred tax
liability
    
    
    917Subtotal liabilities
    
    
    5,094Total
    
    $
    15,552
  8. Notes Payable and Other Debt:
 December 31,
    
    
    June 30,2007
    
    
    2008(in thousands)Term Loan B
    
    $
    2,051
    
    
    $
    Lampe Loan Facility
    
    
    
    
    
    
    11,000Note payable to former Access To Money owner
    
    
    
    
    
    
    9,755Notemachine
    
    
    5,301
    
    
    
    2,597Other Debt
    
    
    
    
    
    
    1,800TRM Inventory Funding Trust note payable
    
    
    58,505
    
    
    
    67,020$
    65,857
    
    
    $
    92,172
 New Lampe Loan Facility
  8




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Original Lampe Loan
  9




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##### Table of Contents



Notemachine Settlement Agreement
  Other Debt
  TRM Inventory Funding Trust Note Payable
  10




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##### Table of Contents



9. Shareholders Equity
 Stock-based Compensation
  2007
    
    
    2008Option grants
    
    $
    (9
    )
    
    $
    46Restricted shares
    
    
    213
    
    
    
    1,573Total stock-based compensation expense
    
    $
    204
    
    
    $
    1,619
  Number of
    
    Weighted averageshares
    
    exercise priceOutstanding January 1, 2008
    
    
    276,625
    
    
    $
    4.62Options granted
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (7,500
    )
    
    
    9.75Outstanding June 30, 2008
    
    
    269,125
    
    
    
    4.47
   11




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Common Stock Warrants
     10. Provision for Income Taxes
  11. Geographic Information
  12. Discontinued Operations and Sales of Businesses
  12




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Canada photocopy
    
    $
    577
    
    
    $
    
    
    
    $
    1,102
    
    
    $
    United Kingdom photocopy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    United States photocopy
    
    
    
    
    
    
    
    
    
    
    1,368
    
    
    
    Canada ATM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    United Kingdom ATM
    
    
    
    
    
    
    
    
    
    
    1,653
    
    
    
    Germany ATM
    
    
    
    
    
    
    
    
    
    
    130
    
    
    
    $
    577
    
    
    $
    
    
    
    $
    4,253
    
    
    $
    
  Three months ended June 30,2007
    
    
    2008Gain on
    
    
    
    
    
    
    
    
    
    
    Gain onOperations
    
    
    sale
    
    
    Total
    
    
    Operations
    
    
    sale
    
    
    TotalCanada photocopy
    
    $
    (59
    )
    
    $
    29
    
    
    $
    (30
    )
    
    $
    
    
    
    $
    
    
    
    $
    United
Kingdom photocopy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    United States photocopy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canada ATM
    
    
    
    
    
    
    (189
    )
    
    
    (189
    )
    
    
    
    
    
    
    
    
    
    
    United Kingdom ATM
    
    
    
    
    
    
    (61
    )
    
    
    (61
    )
    
    
    
    
    
    
    
    
    
    
    Germany ATM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (59
    )
    
    $
    (221
    )
    
    $
    (280
    )
    
    $
    
    
    
    $
    
    
    
    $
    
 Six months ended June 30,2007
    
    
    2008Gain on
    
    
    
    
    
    
    
    
    
    
    Gain onOperations
    
    
    sale
    
    
    Total
    
    
    Operations
    
    
    sale
    
    
    TotalCanada photocopy
    
    $
    (2,975
    )
    
    $
    29
    
    
    $
    (2,946
    )
    
    $
    
    
    
    $
    
    
    
    $
    United
Kingdom photocopy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    United States photocopy
    
    
    398
    
    
    
    833
    
    
    
    1,231
    
    
    
    
    
    
    
    
    
    
    
    Canada ATM
    
    
    (113
    )
    
    
    2,361
    
    
    
    2,248
    
    
    
    
    
    
    
    
    
    
    
    United Kingdom ATM
    
    
    (1,617
    )
    
    
    6,359
    
    
    
    4,742
    
    
    
    
    
    
    
    
    
    
    
    Germany ATM
    
    
    (55
    )
    
    
    
    
    
    
    (55
    )
    
    
    
    
    
    
    
    
    
    
    $
    (4,362
    )
    
    $
    9,582
    
    
    $
    5,220
    
    
    $
    
    
    
    $
    
    
    
    $
    
   13




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13. Commitments and Contingent Liabilities
    14. Corporate Restructuring
  15. Subsequent Event
  16. New Accounting Standards
    14




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  15




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Overview
  16




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##### Table of Contents



Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 ATM Results of Operations  Continuing Operations2007
    
    
    2008Amount
    
    
    %
    
    
    Amount
    
    
    %(in thousands, except operating and percentage data)Transaction-based sales
    
    $
    21,520
    
    
    
    100.0
    %
    
    $
    21,613
    
    
    
    100.0
    %Less discounts
    
    
    14,749
    
    
    
    68.5
    
    
    
    14,896
    
    
    
    68.9Net transaction-based sales
    
    
    6,771
    
    
    
    31.5
    %
    
    
    6,717
    
    
    
    31.1
    %Service and other sales
    
    
    1,192
    
    
    
    
    
    
    
    1,347Sales of ATM equipment
    
    
    834
    
    
    
    
    
    
    
    747Branch build out
    
    
    
    
    
    
    
    
    
    
    165Net sales
    
    
    8,797
    
    
    
    
    
    
    
    8,976Cost of sales:Cost of vault cash
    
    
    1,345
    
    
    
    
    
    
    
    916Other
    
    
    4,684
    
    
    
    
    
    
    
    4,244Gross profit
    
    $
    2,768
    
    
    
    
    
    
    $
    3,816Operating data:Average number of transacting ATMs
    
    
    10,473
    
    
    
    
    
    
    
    11,823Withdrawal transactions
    
    
    9,136,135
    
    
    
    
    
    
    
    9,238,611Average withdrawals per ATM per month
    
    
    291
    
    
    
    
    
    
    
    260Average transaction-based sales per withdrawal transaction
    
    $
    2.36
    
    
    
    
    
    
    $
    2.34Average discount per withdrawal transaction
    
    $
    1.62
    
    
    
    
    
    
    $
    1.61Net transaction-based sales per withdrawal transaction
    
    $
    .74
    
    
    
    
    
    
    $
    .73
  Sales
    17




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##### Table of Contents



Sales Discounts
  Cost of Sales
     Selling, General and Administrative Expense
  18




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Interest Expense, Amortization of Debt Issuance Costs, Loss on Early Extinguishment of Debt
  Provision for Income Taxes
  Discontinued Operations
  19




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##### Table of Contents



Net Loss
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 ATM Results of Operations  Continuing Operations2007
    
    
    2008Amount
    
    
    %
    
    
    Amount
    
    
    %(in thousands, except operating and percentage data)Transaction-based sales
    
    $
    42,896
    
    
    
    100.0
    %
    
    $
    38,036
    
    
    
    100.0
    %Less discounts
    
    
    29,017
    
    
    
    67.6
    
    
    
    25,523
    
    
    
    67.1Net transaction-based sales
    
    
    13,879
    
    
    
    32.4
    %
    
    
    12,513
    
    
    
    32.9
    %Service and other sales
    
    
    2,370
    
    
    
    
    
    
    
    2,530Sales of ATM equipment
    
    
    1,179
    
    
    
    
    
    
    
    1,206Branch build out sales
    
    
    
    
    
    
    
    
    
    
    165Net sales
    
    
    17,428
    
    
    
    
    
    
    
    16,414Cost of sales:Cost of vault cash
    
    
    2,790
    
    
    
    
    
    
    
    1,899Other
    
    
    9,126
    
    
    
    
    
    
    
    7,959Gross profit
    
    $
    5,512
    
    
    
    
    
    
    $
    6,556Operating data:Average number of transacting ATMs
    
    
    10,641
    
    
    
    
    
    
    
    9,970Withdrawal transactions
    
    
    18,209,397
    
    
    
    
    
    
    
    15,985,438Average
withdrawals per ATM per month
    
    
    285
    
    
    
    
    
    
    
    267Average
transaction-based sales per withdrawal transaction
    
    $
    2.35
    
    
    
    
    
    
    $
    2.38Average discount per withdrawal transaction
    
    $
    1.59
    
    
    
    
    
    
    $
    1.60Net transaction-based sales per withdrawal transaction
    
    $
    .76
    
    
    
    
    
    
    $
    .78
 Sales
    20




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##### Table of Contents




    
    A 6.3% decrease in the average number of transacting ATMs primarily the result of
attrition of contracts acquired from eFunds Corporation in November 2004.
    
    A 6.3% decrease in average withdrawal transactions per ATM per month.
  
    
    A 1.2% increase in average transaction-based sales per withdrawal transaction.
    
    An increase in service and other sales, sales of ATM equipment, and branch build out
sales.
    
    The addition of Access To Moneys ATMs and transaction volume.
 Sales Discounts
  Cost of Sales
    21




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##### Table of Contents



Selling, General and Administrative Expense
  
    
    Depreciation expense decreased by $259,000 due to the writedown of impaired assets
in 2007.
    
    Labor costs (excluding non-cash stock compensation expense) decreased by $507,000 or
14.9%. In connection with the sales of businesses in 2007 we substantially reduced our
selling, general and administrative staff, by 63 employees during 2007. As of June 30,
2008, we have 62 employees as a result of the acquisition of Access To Money.
  Interest Expense, Amortization of Debt Issuance Costs, Loss on Early Extinguishment of Debt
  Provision for Income Taxes
  22




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##### Table of Contents



Discontinued Operations
  Net Loss
  Liquidity and Capital Resources
 Lampe Loan Facility
   23




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##### Table of Contents



Lampe Loan Facility
    
    $
    11,000Note payable to former Access To Money owner
    
    
    9,755Notemachine settlement agreement
    
    
    2,597Other debt
    
    
    1,800TRM Inventory Funding Trust note payable
    
    
    67,020$
    92,172
     24




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##### Table of Contents



Note Payable to Former Access To Money Owner
  Notemachine Settlement Agreement
  TRM Inventory Funding Trust Note Facility
 General.
 Cost of the facility.
 
    
    Interest on the loaned funds. The loans bear interest at an interest rate equal to
1.35% (1.75% prior to May 2007) plus the interest rate borne by the commercial paper
that was issued to raise the funds for the loans. Interest for the quarter ended June
30, 2008 was $761,000.
    
    Return for equity investors. Autobahn and GSS Holdings, Inc., as equity investors
in the Trust, receive a return on the value of their investments, which were $1,485,000
and $15,000, respectively, as of June 30, 2008. Autobahns annual return is equal to
1.35% plus the interest rate borne by the commercial paper that is outstanding. GSS
Holdings annual return is equal to 25.0%.
 25




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##### Table of Contents




    
    Fees. Autobahn receives a commitment fee and TRM ATM, as servicer, and the
collateral agent each receive administrative fees in connection with the facility.
Autobahns fees for the quarter ended June 30, 2008 were $29,000.
  Termination.
 Off-balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  New Accounting Standards
  26




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
    Foreign Currency Risk
  27




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
    
 PART II  OTHER INFORMATION
 
 ITEM 5. OTHER INFORMATION
  28




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##### Table of Contents



ITEM 6. EXHIBITS
 (a) Exhibits
 3.1
    
    (a)
    
    Articles of Amendment to the Restated Articles of
Incorporation of TRM Corporation.
 (b)
    
    Amendments to the Restated Articles of
Incorporation (incorporated herein by reference to Exhibit 3.1(a) of Form
10-K for the fiscal year ended June 30, 1998).(c)
    
    Restated Articles of Incorporation (incorporated
herein by reference to Exhibit 3.1(b) of Form 10-K for the fiscal year
ended June 30, 1998).
 3.2
    
    Restated Bylaws (incorporated herein by reference to Exhibit 3.2
of Form 10-K for the fiscal year ended June 30, 1998).4.1
    
    Specimen Stock Certificate (incorporated herein by reference to
Exhibit 4.1 of Form S-3/A filed on August 25, 2004 [No. 333-116748]).4.2
    
    Articles V, VI and VII of the Restated Articles of Incorporation,
as amended (See Exhibit 3.1).4.3
    
    Articles I, II, V, VII and X of the Restated Bylaws (See Exhibit
3.2).4.4
    
    Amended and Restated Warrant to GSO Credit Opportunities Fund
(Helios), L.P., dated April 18, 2008 (incorporated by reference
to Exhibit 4.5 of Form 10-Q for the quarter ended March 31,
2008).4.5
    
    Amended and Restated Warrant to GSO Special Situations
Overseas Benefit Plan Fund Ltd., dated April 18, 2008 (incorporated by reference
to Exhibit 4.6 of Form 10-Q for the quarter ended March 31,
2008).4.6
    
    Amended and Restated Warrant to GSO Special Situations Fund Ltd., dated April 18, 2008 (incorporated by reference
to Exhibit 4.7 of Form 10-Q for the quarter ended March 31,
2008).4.7
    
    Amended and Restated Warrant to GSO Domestic Capital Funding
Partners LP., dated April 18, 2008 (incorporated by reference
to Exhibit 4.8 of Form 10-Q for the quarter ended March 31,
2008).4.8
    
    Warrant to LC Master Fund, Ltd. dated February 8, 2008 (incorporated herein by reference
to Exhibit 4.8 of Form 10-K for the fiscal year ended December 31, 2007)4.9
    
    Warrant to LC Master Fund, Ltd., dated April 18, 2008 (incorporated herein
by reference to Exhibit 4.9 of Form 10-Q for the quarter ended March 31, 2008).4.10
    
    Warrant to LC Capital Master Fund, Ltd. dated April 18,
2008.4.11
    
    Warrant to Cadence Special Holdings II, LLC dated April 18,
2008.10.1
    
    Lease dated January 9, 2008, between 1101 Associates, LP and TRM
Corporation (for registrants executive offices).
 29




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##### Table of Contents



10.2
    
    ATM Vault Cash Purchase Agreement effective June 26, 2008 by and
among Genpass Technologies, LLC doing business as Elan Financial Services, TRM
Inventory Funding Trust, TRM ATM Corporation, and DZ Bank AG, Deutsche
Zentral-Genossenschaftsbank Frankfurt am Main.
 10.3
    
    (a)
    
    Cash Provisioning Agreement by and among Genpass Technologies LLC
doing business as Elan Financial Services, TRM ATM Corporation, TRM ATM
Corporation, and Pendum, Inc., dated August 28, 2007
(incorporated herein by reference to Exhibit 10.1 of Form 8-K
filed on August 14, 2008).
 (b)
    
    Amendment No. 1 to Cash Provisioning Agreement by
and among Genpass Technologies LLC doing business as Elan Financial
Services, TRM ATM Corporation, TRM ATM Corporation, and Pendum, Inc.,
dated May 8, 2008 (incorporated herein by reference to Exhibit 10.2 of Form 8-K
filed on August 14, 2008).
 10.4
    
    Amendment No. 1 to Securities Purchase Agreement dated July 21, 2008,
by and among TRM Corporation, Lampe Conway & Co., LLC and LC Capital Master Fund,
Ltd.10.5
    
    Secured Promissory Note issued to LC Capital Master Fund,
Ltd. for $11,000,000.10.6
    
    Secured Promissory Note issued to LC Capital Master Fund,
Ltd. for $9,900,000.10.7
    
    Secured Promissory Note issued to Cadence Special Holdings
II, LLC for $1,100,000.31.1
    
    Certification of Chief Executive Officer of TRM Corporation pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer of TRM Corporation pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer of TRM Corporation pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Chief Financial Officer of TRM Corporation pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
 30




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SIGNATURE
  TRM CORPORATIONDate: August 14, 2008
    By:
    /s/ Michael J. DolanMichael J. DolanChief Financial Officer 31