Credit Store Announces Completion of Its First Securitization and the Conversion of $10 Million Subordinated Debt Into Equity.

SIOUX FALLS, S.D.--(BUSINESS WIRE)--Oct. 19, 1998--

Financial Results to be Issued Within the Coming Weeks

The Credit Store, Inc. (EBB:PLCR) announced that on Oct. 14, 1998, it completed its first securitization of credit card receivables. The transaction involved the sale of approximately $6.2 million of seasoned, fully performing credit card receivables to a wholly-owned qualified special-purpose corporation, TSC Funding I, Inc. This transaction was funded by the special-purpose corporation in part through a $4 million, 39 month term loan from a Midwest financial institution. The Company has agreed to service the credit cards for TCS Funding I, Inc.

Martin J. Burke, Chairman and Chief Executive Officer, commented: "This securitization is a milestone for us and for the industry we are helping to create. It opens up an important source of capital for the Company."

The Company also announced that, to improve its balance sheet, $10 million of currently outstanding subordinated debt has been converted into 10,000 shares of a newly-issued Series E of convertible preferred stock, in a dollar-for-dollar exchange. The Series E Preferred Stock carries no voting rights and can be converted into common shares of the Company at any time, and from time to time, prior to August 31, 2001, at a ratio of 285 common shares per share of Series E Preferred. The Company, at its option, may redeem all or part of the Series E Preferred Stock at par plus accrued dividends. The newly-issued Series E Preferred Stock is to pay a dividend of eight percent per annum, payable on Dec. 31 annually, and prorated from the date of issuance for 1998. The subordinated debt being retired carried an annual interest rate of twelve percent. The transaction was completed August 31, 1998.

Separately, the Company said that it expects to release its financial results for the fiscal year 1998, which ended May 31,1998, within the next several weeks. "The release of our financial statements is later than we had hoped," commented Burke. "However, we made an important decision for the Company's future by moving from a small regional accounting firm to a nationally recognized firm with a strong background in financial services and in our specific industry niche. Unfortunately, the new engagement did not take place until mid-July and the field work for the audit would typically have begun 60 days earlier."

"In addition," continued Burke, "after careful consideration, we have decided to adopt a new accounting method related to the recognition of portfolio acquisition costs which required a restatement of these revenues and costs back to our inception date in October, 1996. This adjustment is in keeping with the more conservative trends we are seeing in the business. The combination of a new firm and the change in accounting methods has caused us to require more time to complete the fiscal year audit."

Under the newly adopted method, the Company will not recognize revenue from a newly acquired portfolio of non-performing debt until it has fully recovered the acquisition price of that portfolio through collections and through monthly payments from credit cards originated from the portfolio. The accounting change will cause the Company to report significantly lower revenues than would have been reported using the prior accounting method. The Company said that it will restate FY 1997 results to reflect this new accounting method. The Company emphasized that the accounting change has no impact on its cash flow. The accounting change only impacts the timing of revenue recognition and portfolio acquisition costs.

The Credit Store, Inc. is a nationwide financial services company engaged in the acquisition and collection of non-performing consumer receivables and the origination and servicing of credit cards. The Company acquires portfolios of non-performing consumer debt at substantial discounts, and then uses its direct marketing expertise to contact and negotiate settlements with consumers, most of the time placing settlement on new unsecured credit cards offered through an unaffiliated bank.

This press release contains forward-looking statements that involves uncertainties, including, but not limited to, risks, uncertainties and timing related to financing, conversions and securitizations, future business costs and savings, the competitive environment and other risks. Future trends and results may differ materially from disclosures contained in this release.