The subsidiaries of Euronet Services Inc., all of which are, directly or indire c t l y, wholly owned are:  The Company generated an operating loss of $35.4 million and negative cash flows from operations of $16.4 million for the year ended December 31, 2000, primarily due to the significant costs associated with its investment in delivery, support, re s e a rch and development in its s o f t w a re subsidiary which was acquired in December 1998. Based on the Company’s current business plan and financial projections, the Company expects to reduce operating losses and net cash used in operating activities in 2001. In the Network Services Segment, the Company anticipates that increased transaction levels in its ATM network will result in additional revenues without a corresponding incre a s e in expenses. In addition, the Company expects to further expand its ATM outsourcing services and offer new value-added services, which will p rovide continued revenue growth without significantly increasing direct operating expenses or capital investments. In the Software Solutions Segment, the Company expects reduced operating expenses and improved operating perf o rmance due to a cost re s t ructuring pro g r a m i n t roduced in the first quarter of 2001. The Company believes that the credit facility (see note 13), certain asset sales and cash and cash equivalents at December 31, 2000 will provide the Company with sufficient cash re s o u rces until it achieves positive cash flow.  Based on the above, management is confident that the Company will be able to continue as a going concern. Accord i n g l y, these consolidated financial statements have been pre p a red on a going concern basis which contemplates the continuation and expansion of trading activities as well as the realization of assets and liquidation of liabilities in the ord i n a ry course of business.  All significant intercompany balances and transactions have been eliminated.  The financial statements of foreign subsidiaries where the local currency is the functional currency are translated to U.S. dollars using (i) exchange rates in effect at period end for assets and liabilities, and (ii) average exchange rates during the period for results of operations. Adjustments resulting from translation of such financial statements are reflected in accumulated other comprehensive income as aseparate component of consolidated stockholders’ equity. The financial statements of foreign subsidiaries where the functional currency is the U.S. dollar are re m e a s u red using historical exchangerates for nonmonetary items while current exchange rates are used for monetary items. Foreign exchange gains and losses arising from the re m e a s u rement are re p o rted in the consolidated statement of operations and comprehensive loss.  (d) Investment securities  The Company has classified its investment securities as held-to-maturity or available-for-sale. Held-to-maturity securities are those securities in which the Company has the ability and intent to hold the security to maturity. All securities not included in held-to-maturity  a re classified as available-for sale.  (c) Cash equivalents  For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.  (b) Foreign currencies  F o reign currency transactions are re c o rded at the exchange rate prevailing on the date of the transactions. Assets and liabilitiesdenominated in foreign currencies are re m e a s u red at rates of exchange on the balance sheet date. Resulting gains and losses on f o reign currency transactions are included in the consolidated statement of operations and comprehensive loss. (a) Basis of presentation  The accompanying consolidated financial statements have been pre p a red in accordance with generally accepted accounting principles in the United States of America.  - EFT Services Holding B.V., incorporated in the Netherlands  - Euronet Banktechnikai Szolgaltato Kft. (“Bank Tech”), incorporated in Hungary  - Euronet Adminisztracios Szolgaltato Kft. (“Administrative Services”) (formerly SatComNet), incorporated in Hungary  - Bankomat 24/Euronet Sp. z o.o. (“Bankomat”), incorporated in Poland  - EFT-Usluge d o.o., incorporated in Croatia  - Euronet Services GmbH, incorporated in Germany  - EFT Services France SAS, incorporated in France  - Euronet Services spol. s.r.o., incorporated in the Czech Republic  - Euronet Services SRL, incorporated in Romania  - Euronet Services (UK) Limited, incorporated in the United Kingdom  - Euronet USA Inc. (formerly Arkansas Systems, Inc.) (“Euronet USA”) incorporated in Arkansas, United States of America  - EFT Network Services LLC (“Dash”), incorporated in Arkansas, United States of America  - Euronet Holding N.V., incorporated in the Netherlands Antilles (in liquidation) - Euronet Eft Services Hellas, incorporated in Greece  ( 2 ) Financial Position and Basis of Preparation ( 3 ) S u m m a ry of Significant Accounting Policies and Practices 2 9