American Bank Note Holographics Reports On HoloMag Difficulties

On March 14, 2006, Visa informed the Company, as well as its member financial institutions and card manufacturers, that it is discontinuing the use of the current version of HoloMag based on what Visa describes as an infrequently occurring technical problem at the point of sale that results from a combination of factors including low humidity environments at the point of sale, point of sale equipment with a relatively low tolerance to electrostatic discharge ("ESD") and higher electrostatic conductivity of cards with HoloMag compared to conventional magnetic stripes.

Kenneth H. Traub, President and CEO of ABNH, commented, "The significant achievements of 2005 were unfortunately overshadowed by Visa's recent decision to discontinue the use of the current version of our HoloMag product. The launch of HoloMag was a major undertaking for our Company as we created secure, custom products for the leading payment card brands and implemented and supported this program with over 100 card manufacturers worldwide. HoloMag was responsible for approximately $8.4 million of our $11.0 million of sales growth in 2005. While Visa was the largest user of HoloMag in 2005 we continue to supply HoloMag to other major payment brands. Visa card issuers will again be using the traditional Dove holograms that we and one other company supply. We are also developing a second generation HoloMag product that addresses the ESD issue and remain committed to supporting the needs of the payment card industry."