The pioneering Internet payments provider Cybercash Inc. is hanging tough despite a rising chorus of doubters questioning its ongoing negative cash flow.

Cybercash, which led the to way into Internet payments in 1994 and has traded publicly since 1996, has never turned a profit. Now four of the five analysts who track it have slapped it with "hold" ratings and are wondering aloud whether the company can reach a state of long-term viability and profitability.

The company is not having any of it. Despite the "constant screaming about Cybercash running out of money," it does not have a problem raising capital, said James J. Condon, president and chief executive officer of the Reston, Va., company.

"We have a fair amount of cash on hand, and frankly, though we do not think we need it, we clearly can and always have had the capability of getting money when we need it," he said.

At the end of the first quarter Cybercash had $13 million of cash on its books. In addition, it has a wealthy guardian watching over it.

The company's founder, William Melton, who in the early 1980s also formed the point of sale terminal giant Verifone Inc., put another $5.5 million into the company by purchasing one million shares of newly issued stock, according to a June 28 filing with the Securities and Exchange Commission.

"Bill is a big believer in putting his money where his mouth is," Mr. Condon said. "He thinks this company and this management team has the right approach."

Cybercash, which expects to report earnings this month, had revenues of $6 million in the first quarter, up 31% from the comparable period last year. Its net loss from operations was $5.2 million in the first quarter, compared to $5 million for the year-earlier period. Its stock closed Friday at $6.1875, up $1.4375 for the week and down from its 52-week high of $16 on March 14.

Cybercash's ability to continually increase revenue and consistently meet or exceed Wall Street's revenue and earnings estimates will quiet the negative din, Mr. Condon said.

"We get operationally better every quarter," he said. "For the last six quarters in a row we have burned less cash than we did in the prior quarter, which is also key to getting to cash flow break-even."

The analysts who "have done their homework believe we will be cash flow break-even by the middle of next year, and we find no reason at all to disagree with that," Mr. Condon said.

But one analyst who requested anonymity said Cybercash faces stiff competition from companies like Cybersource, Signio, Trintech Clear Commerce, and others that are designing potentially better settlement systems.

Though Cybercash has the brand name recognition and transaction volumes, its claim to fame as an Internet payments "gateway" service is now "commoditized," and as such it does not have "long-term growth prospects," this analyst said.

Mr. Condon contended that unlike most Internet companies, Cybercash has a "world class" infrastructure that cost $35 million and took two years to build. "We are a real company with real customers and with a real infrastructure."

Mr. Condon holds more than 500,000 options in Cybercash. His compensation, as well as that of every member of his management team, is based primarily on stock options.

Because Cybercash does not reprice stock options to a lower price when the stock falls in value, there is "real incentive for the people in this company to work to get the share price as high as possible," Mr. Condon said.

On a positive note, Cybercash does not appear to have any problem selling its products and services. The company just signed its 25,000th merchant to its CashRegister service. In the past five months 5,000 merchants have signed on.

"People forget just how broad Cybercash's distribution channels are," Mr. Condon said. "If you use Microsoft, IBM, Lotus, or Oracle, their first recommendation is Cybercash."

CashRegister, which accounts for about 50% of Cybercash's business, processes credit card transactions originated on the Internet. The service processes nearly 10 million transactions a month and is growing more than 300% a year, the company said.

Sales of Cybercash's WebAuthorize software, which lets merchants host their own e-commerce sites, contributes 15% of the company's total revenue. The remaining business comes from its IC Verify hardware and software, which authorizes credit card, ATM/debit card, corporate, and purchasing card transactions. The company merged with IC Verify in April 1998.

Paul Merenbloom of Prudential Securities is the one analyst who is bullish on the firm. He has placed a "strong buy" on Cybercash and a $25 price target.

"While the company's cash-burn rate of $5 to $6 million is a substantial figure, we note that Cybercash, as one of the early Internet debutantes, has the experience and relationships to keep the coffers adequately supplied," Mr. Merenbloom said in a recent research report.

Cybercash's business is maturing, and the firm appears to be "well positioned as a growth company or for acquisition," he said.

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