Looks like it might be a very profitable play.

All my cash is tied up at the moment. But

it looks interesting.

shad

"December 17, 2003

Dear SCTN Shareholders:

This letter is to update you on the Company's progress since my May letter,
and to inform you of key developments shaping our future. After the
Company's major downsizing and cost cutting measures over the last year and
a half, the few of us that remained, specifically Bernard "Mac" McHale,
Elaine Beavon, Debra Feraco and myself, have worked long and hard with
limited resources and no paychecks, yet we have turned SCTN around from a
fragile development stage company to a focused, lean, aggressive firm, ready
to launch our patent-protected loyalty system on schedule by year end. We
expect to earn significant revenues next year for the first time in Company
history.

As most of you know, I resumed the position of Chief Executive Officer at
the Board's request upon the completion of Hiram Willis' contract last
August. Although the Board or Shareholders have given me the CEO position
three times previously, until now I insisted that it be temporary, as my
technical expertise as Chief Product Architect was required full-time until
the completion of our next generation loyalty products, which we believe
will be the foundation of SCTN's future recurring, sustainable revenues.

Regulatory Filings

We have completed the 2001 and 2002 financial statements and are nearing
completion of the audit of our 2002 statements. The 2003 quarterly
reports on Form 10-QSB have been prepared and submitted for final pre-filing
review. With audit delays following an original audit completion date
promised in June, combined with significant new regulatory requirements
imposed by the Sarbanes-Oxley Act of 2002, additional time and expense have
resulted in filing delays for which we deeply apologize. We expect that we
will be able to announce shortly that the SEC filings have been submitted.

Administrative Cleanup

In the extensive administrative cleanup process that began in mid 2002, the
Company has achieved significant progress on several fronts. We have taken
steps to protect the patents and software products from numerous creditors,
and we have settled or eliminated many of these old debts. We have moved to
protect critical trademarks and assets, and re-instated the corporate good
standing that had expired. We have completed the filing of overdue state
payroll returns for several states, as well as IRS payroll tax reports and
corporate tax filings, dating back to the year 2000. We are continuing to
work with the IRS to settle back tax liabilities, and we have a small number
of notes, options, and contracts that are still being resolved.

Status of Funding

We have rebuilt the company in a much more "lean and mean" style. Instead
of building an organization of hundreds of employees to develop, market, and
implement our systems around the globe, we are pursuing servicing agreements
and alliances to have expert companies perform these functions on an
as-needed basis. We have managed to sustain our forward progress through the
implementation of a very strict fiscal discipline and cost containment
policy, in addition to establishing mutually beneficial relationships and
service agreements with expert partners. All compensation to employees,
contractors, and alliance partners is based on positive performance and
achievement of tangible results. These policies have kept us operational to
this point, and will continue into the foreseeable future, resulting in
reduced venture capital requirements and far less potential dilution from
the issuance of common stock.

Product Development, Implementation and Support

We are preparing to launch our highly anticipated, patent-protected next
generation loyalty system software by year-end and will be ready to start a
live pilot within another 90 days. The loyalty system will be initially
offered in both Global Platform and MULTOS versions for maximum
interoperability with other Europay, MasterCard, and Visa (EMV)-compliant
applications. Of the $2,500,000 in software development resources committed
by the Airos Group, we have used approximately $1,200,000 and will reach
around $1,500,000 by product release. The remainder will be used to support
the product rollout, and to add Release 2 features, while starting recurring
revenues from Release 1.

While the market for smart card loyalty is in its infancy, we feel our
"gateway" patents and innovative end-to-end loyalty system will play a key
role in creating that market. The challenges for this industry include EMV
deadlines facing payment card issuers, the uncertainties of new
technologies, as well as the complexity of implementing them with multiple
merchant terminal vendors, card manufacturers, card management systems,
payment processors, and multiple application software vendors involved.
There are new business models to be developed by the various components of
this market, telecommunications and security issues to be resolved, all of
which need to be integrated into the stream of commerce, and done so without
disrupting the day-to-day business of our clients and their customers. This
will be no small task for all involved, but we believe that we are uniquely
positioned to play a key role.

SCTN will begin to earn usage-based revenues once we have completed software
installation for the initial beta client, initial loyalty program
implementation, program manager training, interface development to client
legacy systems, and integration of the new procedures into the client's
business process.

Implementation and Integration Services

We are pursuing outsourcing agreements with large, multi-national technical
organizations to supply the technical resources to support the installation,
implementation, and integration of our products around the globe. Instead
of requiring funding for a massive expansion of personnel, we will simply
sub-contract the work to their resources, and thereby create another SCTN
revenue stream.

Hosting Services

We will offer hosting of Loyalty CentralTM and LoyaltyCentral.comTM at
either the client's data center, or by SCTN at a large, outsourced data
center. The latter arrangement will provide large clients massive capacity,
continuous availability of processing services, and the highest level of
security and fault tolerance, all without a massive SCTN capital investment.

Sales, Marketing, and Business Development

We have contracted a conglomerate that includes companies offering Rewards
Programs, Rewards Fulfillment, Electronic Commerce, Customer Relationship
Management, and many other services, including a world-class sales
organization that will license SCTN products and patents and attempt to
expand distribution channels worldwide. As our commission-only arrangement
is based on minimum performance levels, the sales team is busy scheduling
demonstrations of the loyalty system's capabilities to many excited
prospective clients. MasterCard's technical due diligence on our products
may be resumed soon. Smart card association ACT Canada is now assisting us
in finding clients within their membership ranks. We are in licensing
discussions with numerous major Banks and Retailers, a leading Gaming
Company, major Transit and Telecommunications Companies, major Smart Chip
and POS Industry leaders, and several CRM and Loyalty-Consulting firms. IBM
has indicated that, based on the settlement of old liabilities, they still
have interest in revisiting potential joint marketing agreements.

Patent Licensing and Defense

Until the recent TranStar patent licensing contract, we have been largely
unsuccessful in obtaining revenue from licensing the patents without the
corresponding loyalty software products, and have not yet contracted a legal
firm to represent us on a contingency basis in cases of potential patent
infringement. However, with anticipated licensing revenues beginning upon
imminent product completion, we expect significant progress in both patent
licensing and legal representation.

Accounting and Financial Services

In addition to the agreement with CPA firm Marks & Devine for general
accounting services, we have engaged an Outside Financial Expert as required
by the Sarbanes-Oxley Act, to oversee the preparation of regulatory filings
and the establishment of new internal financial controls.

Conclusion

Simply put, we are back in the game and stronger than ever. New investment
capital can now be used to fuel growth through accelerating sustainable,
profitable revenues by (1) increasing our capacity to support multiple large
loyalty system implementations, (2) funding patent defense and expansion,
and (3) achieving liquidity through Nasdaq Bulletin Board trading status,
based upon the progress in cleaning up old liabilities and reduction of
operational expenses. Immediate, short-term investment capital will
dramatically expedite these results and build shareholder value.

We believe that our new "lean and mean" partnering strategy, coupled with
our strict financial policy, the pending delivery of our new products, the
continuing reduction of our old liabilities, and the completion of our SEC
filings to start getting us off the Pink Sheets and onto OTC: BB will all
help bring in the money we need to achieve our goals. We understand that all
investors would like to see more tangible results in the immediate future,
and our Management Team, though small in number, is large in their work
ethic, ability, motivation, drive and focus. It is the firm belief of the
team that the desired results will be visible shortly.

Thank you for your continued support. Please "Log into My SCTN" from the www.sctn.com home page to update your contact information, send us comments,
and access expanding investor content.

All of us at SCTN wish you and your families a very happy and healthy
Holiday Season. Best regards and hopes for a much brighter future,

David J. Simon
Chairman and CEO
SCHIMATIC Cash Transactions Network,com, Inc.
Dba Smart Chip Technologies"

Canada Approves Smart Chip Technologies' Patent On Loyalty
November 05, 2003 10:08:00 AM ET

Smart Chip Technologies (OTC:SCTN) is pleased to announce that the Canadian Intellectual Property Office has approved its Patent Application 2182596, "Method and System for Allocating and Redeeming Incentive Credits between a Portable Device and a Base Device," which is an expanded version of the patents owned in the United States, Mexico, Australia, and Japan.

"Smart Chip Technologies' broad, technology-independent Canadian patent is based upon its U.S. patent with 36 claims for business processes and systems for allocating and redeeming incentive credits," explained Stoel Rives' Intellectual Property Attorney John R. Thompson. "Claims are enforceable whether a party is involved in a project practicing one or all claims."

The patents are key to SCTN's end-to-end loyalty program management solution that is engineered for EMV (Europay, MasterCard, Visa), Global Platform, and MULTOS compliance for integration with credit and debit payments. Backward compatible with magnetic-stripe programs and forward compatible with mobile commerce platforms, SCTN's flexible loyalty system provides a seamless migration path for banks that must maintain popular cardholder rewards schemes during the upgrade to secure, EMV-compliant smart payment cards. The loyalty system can also be integrated with CRM systems and add value to multi-application transit, gaming, entertainment, access, retail, and campus cards.

About Stoel Rives

Stoel Rives LLP is a business law firm providing counseling and litigation services throughout the western United States. The firm's 375 attorneys provide client-focused services to a wide range of clients from nine offices in five western states. Stoel Rives is regarded as a regional leader in energy, natural resources, environment, litigation, corporate, and intellectual property law. (www.stoel.com)

About Smart Chip Technologies (SCTN)

Smart Chip Technologies' patent-protected, end-to-end Loyalty Program Management system offers powerful, personalized, one-to-one marketing tools to identify and engage the best customers. Protected by "gateway" patents in the U.S., Mexico, Australia, Japan, and Canada, SCTN's innovative EMV (Europay/MasterCard/Visa) compliant Loyalty System provides a seamless migration path from magnetic stripe cards to the next generation of mobile commerce devices, enabling click-and-mortar, real-time rewards programs running on smart cards, laptops, PDAs such as Palm(TM) PALM or Windows MSFT devices, TV set top boxes, or mobile phones, establishing business continuity across physical, mobile, and virtual streams of commerce. (www.sctn.com)

For further information about Smart Chip Technologies, please call 702.837.3594 or write to Sales@sctn.com or Investors@sctn.com.

Any statements contained in this press release that do not describe historical facts may constitute forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties.

Contact Information: Smart Chip Technologies Elaine Beavon, 702-837-3594 ebeavon@sctn.com

© 2003 BusinessWire

Smart Chip Technologies Licenses Patent to Smart Card Innovator TranStar Systems
November 18, 2003 06:02:00 AM ET

Smart Chip Technologies (OTC:SCTN) is pleased to announce that TranStar Systems has licensed the SCTN business process patent, "Method and System for Allocating and Redeeming Incentive Credits between a Portable Device and a Base Device," with 36 claims relevant to its own smart card loyalty system. TranStar has smart chip-based stored value, gift, and loyalty card systems installed in retailers and restaurants including Little Caesars and Subway, and was recently featured in the American Banker Online article "For Eateries, a side order of (Silicon) Chips."(http://216.131.121.27/abarticle.pdf) SCTN will receive initial and usage-based royalties per the licensing agreement.

"As early adopters of advanced card technologies and the SCTN patent, TranStar customers will continue to enjoy the benefits of real-time loyalty in the only licensed U.S. implementation of consumer incentives stored on a smart chip," stated SCTN Area Vice President Geoff Thomas. "This establishes a strong competitive lead for TranStar in the emerging global market."

"We are excited about leveraging the strength of SCTN's patent to expand our market share into Mexico, Canada, and beyond," explained Mike Radlovic, TranStar CEO and featured speaker at the Cartes and IT Security 2003 international smart card conference held in Paris, France November 18-20. (http://www.cartes.com)

Little Caesars New York City and Washington D.C. franchisee and TranStar customer Paul Hoffman added, "Smart Chip Technologies is a welcomed addition to our Coca-Cola (NYSE-KO) sponsored smart card rollout. The smart stored value and loyalty cards represent a more cost effective way to process transactions and boost my repeat business as patrons return more frequently to earn and redeem their bonus credits."

Jerome Svigals, internationally recognized authority on Smart Cards, banking technology, and TranStar Director confirmed that smart card-based loyalty is a significant market driver in his Lafferty Publications book "Smart Cards 2010": "Payment transactions using loyalty-incentivized, smart chip devices will grow at an annual rate of 75% over the next five years, to over $1.4 trillion. The revenues from loyalty transaction processing, including servicing and licensing, will exceed $8 billion by 2010, growing from a current nominal base." Mr. Svigals has since revised his 2010 projection to $2 trillion in smart payment transactions and $12 billion in smart loyalty transactions.

About TranStar Systems, Inc.

The TranStar team represents several decades of business acumen and technical expertise. Their diverse backgrounds and experiences have enabled us to create innovative multiple application Smart Card solutions for lodging, retail, union, government, educational, healthcare and Internet market organizations among others. TranStar team members have experience in credit, debit, loyalty, data tracking and access programs, including those that transition from traditional magnetic stripe cards. (www.transtarsystems.com)

About Smart Chip Technologies (SCTN)

Smart Chip Technologies' "gateway" patents, owned in the U.S., Mexico, Australia, Japan, and Canada, cover the business process of storing consumer incentives on a smart chip or device. The patent-protected turnkey loyalty system, co-developed with the Airos Group(www.airosgroup.com) and IBM (NYSE-IBM), enables click-and-mortar, real-time rewards programs running on smart cards, laptops, PDAs such as Palm(TM) (Nasdaq-PALM) or Windows(TM) (Nasdaq-MSFT) devices, TV set top boxes, or mobile phones, establishing business continuity across physical, mobile, and virtual streams of commerce. (www.sctn.com)

For further information about TranStar Systems, please call 800-905-9945 or write to Info@transtarsystems.com.

For further information about Smart Chip Technologies, please call 702-837-3594 or write to Sales@sctn.com or Investors@sctn.com.

Any statements contained in this press release that do not describe historical facts may constitute forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties.

Contact Information: Smart Chip Technologies Elaine K. Beavon, 702-837-3594, ext. 705 ebeavon@sctn.com

© 2003 BusinessWire