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For More Information Contact: TEK
DIGITEL CORPORATION
SHAREHOLDER CONFERENCE CALL SUMMARY March
20, 2000 The
conference call, hosted by President, Rocco DiCarlo, consisted of two
parts. The first part addressed the primary concerns of investors with
regards to TEK’s 10SB filing status. The second section updated
investors on the fundamentals and ongoing operations of the company. 1.
What is the probability of being dropped from the OTC BB to a less
regulated service like the National Quotation Bureau’s “Pink
Sheets”? The
probability is very high, given the caseload the SEC is facing, as well as
the work that remains to be done in order to file our Form 10-SB.We think
the conservative course is to assume that we will miss our April 19th
deadline and, therefore, TEK will be ineligible to continue to be quoted
on the OTC BB after that date. 2.
When would TEK be dropped from the OTC BB and what would be the
warning signs? The
Eligibility Rule compliance process is overseen by the both the NASD and
the SEC. The procedure is as follows: approximately 30 days prior to our
eligibility determination date of April 19th, (which is the
last trade date in which TEK’s stock will be permitted to be quoted on
the OTC BB), the OTC BB will review us to determine whether we have fully
complied with the NASD’s Eligibility Rule (which means that we must have
filed our Form 10-SB with the SEC and it has cleared all SEC comments.)If
the NASD has no information that we are compliant, it will append our
trading symbol with a fifth character “E”; and, for roughly 30 days
(until our eligibility determination date) we will continue to be quoted
on the OTC BB, while our migration to the Pink Sheets is in progress. At
the end of the 30-day period, at the close of business on April 19th,
TEK’s trading symbol will be dropped from the OTC BB. 3.
On the Pink Sheets, how will investors get quotes or make trades? We
are just now approaching the point where we can make application to the
Pink Sheets for a trading symbol. Once we have the symbol, we will send
investors by mail, fax and e-mail a notice of the new symbol, as well as
suggested Internet sites where you can receive Pink Sheets quotes.
Mainstream choices like Yahoo and AOL do not currently offer Pink Sheets
quotes; however, Pink Sheets quotations can be obtained from Quicken.com
and CNBC.com. We will do our best to find additional choices for you.
Also, our 1-888-393-4979 number will continue to be accessible for quotes;
and, we are considering updating the message on the 1-888 line at the
close of each day with TEK’s quotation. 4.
What is your estimate of how long it will take the SEC to review
and clear your Form 10-SB, i.e., how long could TEK be on the Pink Sheets? This
is very difficult to predict; but, we know that all other issuers of
securities who are attempting to comply with the Eligibility Rule, as well
as issuers who were not quoted on the OTC BB prior to January 4, 1999,
must also file registration statements and become SEC-reporting companies
in order to be eligible for quotation on the OTC BB. Thus, the number of
Form 10 filings being submitted to the SEC is staggering. As a result, the
SEC recommends that a company expect a minimum 60-day review period.
Therefore, you can expect that, from the time we submit the Form 10-SB,
the SEC will need at least 60 days to review and comment upon our filing.
Thereafter, it is likely that it will take an approximate 30-60 days to
respond satisfactorily to the SEC’s comments and, thereby, become an
SEC-reporting company and again be eligible to be quoted on the OTC BB. 5.
What is your internal schedule for filing your 10-SB? We
don’t know at this time when we will submit our 10-SB registration
statement to the SEC. We need audited financials for year end 1998 and for
year end 1999, as well as an auditors’ review of events subsequent to
1999, in order to complete the Form 10-SB.We continue to work diligently
on the audit process. We have developed an internal deadline; however, we
are not comfortable announcing it as every stage of the process can
introduce new questions making our internal deadline too subject to
change. 6.
What issues are delaying your filing and why did the audit process
not flag this potential delay much earlier in the process? This
is a very difficult question and there is no clear single answer. One
answer that is not uncommon to development stage companies, is that TEK,
as a start-up company focused on developing and commercializing its
technology. Our technology has been well received by the market, as
evidenced in trade show activity, product reviews and early customer
acceptance. The ideal corporate infra-structure would have been to have as
much internal accounting expertise as we had engineering expertise; but,
we were small and undercapitalized until the fourth quarter of 1999 when
our commercial acceptance accelerated and we were able to attract new
investment capital. This new capital gave us the ability to move forward
and to hire an experienced Controller, Richard James, who now supervises
the process. Therefore, we believe we are appropriately addressing the
problems; but, it has been an uphill learning experience and management
curve. 7.
When did you retain your auditors and lawyers? We
retained our auditors in 1998 to conduct an audit of the 6 months ended
June 1998 (which they did in conjunction with our inception ) and we
further retained them to conduct our 1998 annual audit. We retained our
lawyers in November 1999 to assist in this process. 8.
Why have you never had a CFO and are you searching for one? As
we stated earlier, our focus has been building a viable commercial product
and our lack of resources inclined us toward this priority. However, we
are now aware of the time and costs associated with not having enough
financial management depth and our appointment of Richard James as
Controller is an attempt to address the situation. 9.
What market maker support can you expect on the Pink Sheets? Many
market makers on NASDAQ or on the OTC BB do not conduct market-making
activities on the Pink Sheets. For example, well known NASDAQ and OTC BB
market makers like Herzog do not make Pink Sheet markets. The other
problem in trying to predict market maker support in advance is that
market makers are prohibited from giving company management a commitment
in advance. We continue to contact market makers, some of whom indicate
their desire to make a market in TEK on the Pink Sheets; but, we are
unable to guarantee their involvement at this time. We
are happy to answer additional questions with regard to our progress to
become a reporting company. Please call or e-mail your questions to our
Investor Relations Department and we will post responses to them on our
web site at www.tekdigitel.com. Now
that we've addressed our most common shareholder concerns
regarding the 10SB filing,
it's time to turn our focus to what's ahead for TEK in terms of sales
activity and product development. One thing we've tried to stress is that
shareholders are right when they refer to the 10SB filing as an
"accounting headache", but we won't allow it to impair our
ability to continue to showcase our technology and make sales. For
those of you new to TEK, our sales strategy has always been a 3-pronged
approach. First of all, we see our product as being an ideal candidate for
OEM or private labeling sales. TEK has targeted Internet Telephony
Service Providers who want to offer telephone services using their
own branding. Companies like ePhone can sell our product under their own
label to their own distribution network. Currently, we have 3 OEM
contracts, two of which have been announced - ACS
Compro and ePhone and a third where the customer has not given approval
for an announcement because of competitive reasons. In addition to these
three, we have entered a pilot/ beta test with one of the largest ISDN
access equipment vendors. This test has been underway for about 30 days
and will continue to run for an additional 3-4 weeks. If successful, TEK
would benefit by gaining access to the ISDN company's sales force, which
is close to 500 strong. Our
second prong is to make licensing sales and so far, we've negotiated
licensing agreements with Franklin Telecom, Centrepoint Technologies and
LOOP Telecom. The Franklin agreement is in progress with Franklin
advertising our unit as "the Breeze" and currently
filling orders. Centrepoint technologies have announced the Concero
Talkswitch series. The IP version of this product offers an integrated
VOIP gateway provided by TEK DigiTel. This product has already had raving
reviews and won awards. We expect volume shipment over the next 2-3
months. The
third strategy is to sell TEK products through Value added resellers
or through the Pronto brand. Pronto began out of a desire to market
Internet Telephony services in a manner similar to the model of what Excite/
@home did with the cable industry. In other words, Excite/@home was
able to sell a complete portfolio of ISP services to the cable
operators. The cable operators fundamentally became a simple delivery
channel. TEK would like to be able to sell their Pronto package (which
includes a complete portfolio of voice services) to Internet Service
Providers (ISP's). When we demonstrated the Pronto package at COMDEX last
November, we had one Pronto customer. We now have roughly 10, including
providers in North America, South America, Europe, the Caribbean,
Mexico and Asia. Logtech, an Asian Partner, has rigorously pursuing the
sales and field trials in Hong Kong, Taiwan, Thailand, Philippine's, China
and Japan Our
first Pronto customer, CentreCom, is not only a Pronto Reseller but
is also providing Telephony services to many of the other Pronto
customers. Part of the reason for our participation at the CT Expo
trade show March 6 - 9, with CentreCom, was to strengthen our partnership
with CentreCom and to understand their own progress. CentreCom plans
to invest heavily into marketing CentreCom services including Pronto. A
lot of shareholders have expressed interest in what we're doing with
wireless partners, especially after we made our announcement December 5 of
our agreement with WaveRider. In addition to that co-marketing
agreement we have with WaveRider, we have just started a wireless local
loop project in Asia with 40 iGate units being deployed in the test. This
is a fairly large-scale test, as most of our pilots involve from 2 -
10 units. The wireless local loop provider expects that, if the field
test is successful, 5000 units will be installed this year. In
terms of our manufacturing output, we expect roughly 1000 units to be
rolled out in mid-April by CR International, a Maryland manufacturer and
our Asian manufacturer, LOOP Telecom, expects to roll out another 1000
units in early May. Finally,
we referred in a previous conference call to our plans to re-engineer our
iGate platform to develop a cost-reduced version. Development is on track
and we expect this version to be ready for production in June or July. I hope that gives you an idea of what we're working on and enables you to see that, despite our 10SB concerns, we've been aggressively pursuing sales opportunities and we've found the market to be responsive. We'll continue to make ourselves visible with trade show appearances - included Communications Solutions in Washington, Supercomm in Atlanta, and ISPCON. - and we will continue to stay in touch via press releases and distributions through our e-mail list. Thank you for all your support so far.
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