GERMANTOWN, MD - February 25, 2000 TEK DigiTel Corporation (OTC Bulletin Board: TEKI - news) today announced that it continues to proceed with the documentation required to file its registration statement with the Securities and Exchange Commission (SEC), in order to register TEK's securities under Section 12(g) of the Securities Exchange Act of 1934, and to thereby comply with the Eligibility Rule for Over-the-Counter Electronic Bulletin Board (OTC BB) companies to become fully SEC-registered and reporting. TEK, headquartered in Germantown, Maryland, is the developer and manufacturer of a line of network access devices designed to deliver a variety of telephony services to Internet users. In keeping with SEC guidelines, in February of 1999, TEK retained a regional accounting firm with offices in Bethesda, Maryland, to perform the audit for the fiscal year ended December 31, 1998, and recently retained the firm to complete the 1999 audit. Both audits must be included in the registration statement. In November of 1999, TEK engaged special counsel concentrating in securities law to represent TEK in its SEC filing. Both auditors and lawyers continue to work with TEK as they resolve any remaining accounting and corporate issues.
TEK DigiTel Corporation was formed when ATC Group
L.L.C. merged into ATC Group, Inc., the wholly owned Maryland subsidiary of
Diversified Technologies, Inc., on July 6, 1998. At the time of the merger, all
assets, liabilities and operations of ATC Group L.L.C. became part of ATC Group,
Inc., and Diversified Technologies changed its name to TEK DigiTel Corporation.
Like many start-up companies, TEK's focus has been on development and
commercialization of its current product line, leaving few resources to devote
to record management. TEK is now expending considerable management time and
resources to assist the auditors with their task; however, despite this effort,
TEK wants to alert shareholders that it is unlikely that the auditors will be
able to complete their audits within the time frame necessary to file TEK's
registration statement and thus qualify as SEC-registered in order to maintain
its OTC BB quotation. Although TEK anticipates filing the registration statement
in March or early April, for TEK to continuously remain on the OTC BB, the SEC
must have reviewed and cleared TEK's registration statement prior to the OTC BB
deadline of April 19, 2000. The likely consequences of missing this deadline are
outlined below:
-- TEK will become temporarily ineligible for quotation on the OTC BB.
However, TEK will immediately apply for quotation on the National
Quotation Bureau's "Pink Sheets", a less noticeable marketplace.
-- Prior to the transition to the Pink Sheets, an "E" modifier will be
appended to TEK's trading symbol "TEKI" on the OTC BB, indicating that
TEK has failed to meet its deadline.
-- On the OTC BB, TEK has 14 market makers and will actively pursue
engagements with these market makers to continue to work with it in
maintaining an orderly market on the Pink Sheets. It should be pointed
out that, with 14 active market makers, TEK should be able to
satisfactorily manage this temporary transition.
-- During the time TEK is trading on the Pink Sheets, TEK will continue
its registration process in order to receive SEC clearance for its
registration statement as soon as possible. TEK will also give
shareholders details as to how to obtain updated quotes.
TEK's management will do its utmost to keep investors apprised of this situation as it develops. Enghe Chimood, TEK's Chief Executive Officer, said, ``We want investors to know that our management team is 100% committed to resolving these short-term issues. Becoming an SEC-registered company is a time-consuming and costly exercise for us, but we are undertaking this exercise because it is critical to our long-term success.'' To facilitate the registration process and subsequent SEC reporting, TEK recently hired a comptroller who is a Certified Public Accountant in Maryland with over 10 years of experience. TEK's management wants to stress that the SEC registration process has not negatively impacted the fundamentals of TEK's business. In fact, product development is proceeding on track, and sales activity has been robust, with new pilot customers as well as repeat orders from current customers. TEK has also moved into an expanded facility in Germantown and is taking steps to expand to the Asia/Pacific Rim market. TEK is also preparing for upcoming trade shows this quarter, with more details to follow in subsequent announcements.
TEK's Investor Relations Team will be completely accessible at 888-393-4979 (or at 416-777-0001 for callers outside the U.S. and Canada) to answer any ongoing questions. TEK will also hold a special shareholders' meeting via teleconference call in the near future to address these and other issues.
This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. Such factors include the possibility of other issues arising that may affect the company's ability to register its securities with the SEC, changing economic and competitive conditions, and other risks and uncertainties.