Under the agreement, shareholders of privately held Network 1 Financial will receive CyberCash shares representing 50% of the equity of the merged company on a fully diluted basis. The transaction is subject to customary closing conditions, including shareholder approvals, and is expected to be completed in the first quarter of 2001.

The new company will retain the CyberCash name and offer both Internet and physical world merchants a complete electronic payment solution which will combine CyberCash's Internet gateway solutions, with Network 1's merchant accounting infrastructure. The combined company will also seek to capitalise on growth in B2B markets.

After the close, CyberCash's board of directors will comprise seven members, including president and CEO of Network 1, William Wade as president and CEO of the combined company. Cybercash founder and chairman William Melton will serve as chairman of the combined entity. James Condon, CyberCash president and CEO is the most prominent casualty of the shake-up. Daniel Lynch, a CyberCash founder and board member, will serve as interim CEO until the transaction is completed.

CyberCash and Network 1 systems currently process more than $3 billion in annual transactions, from a combined total of 50,000 merchants. Upon completion of the merger, the companies expect to report annualised revenue of more than £100 million in the first 12 months, and to become cash flow positive in the third quarter of 2001.

New CEO Wade comments: "Our new company's highly scalable business model is based on capturing a percentage of total transaction value by leveraging Network 1's acquiring capabilities, allowing the new CyberCash to participate in the success of both e-commerce and traditional sales channels going forward."