Tuesday April 27, 6:59 pm Eastern Time
Company Press Release
Carnegie International Resolves Questions with SEC, Files Form 10-KSB
Revenues Up 68% in Fiscal 1998
Letter of Intent Signed to Acquire Internet's MailGong Creator
BALTIMORE--(BUSINESS WIRE)--April 27, 1999-- Carnegie International Corporation (OTC BB:CAGI - news) today said it has resolved all questions with the Securities and Exchange Commission and filed Form 10-KSB, and that it intends to acquire another much sought after Internet services company.
'Another Year of Double Digit Performance Improvements'
Lowell Farkas, Carnegie's president and CEO, said 1998 ''was another year of double-digit performance improvements in all key financial areas, with momentum and growth continuing and accelerating in 1999. The first four months of the year have been very exciting,'' he said, ''highlighted by the completion of the acquisition of Paramount International Telecommunications and its selection by BCT.TELUS (TSE:BTS - news) to partner in delivering new value added-services expected to add $60 million to Paramount's revenue stream over the next three to four years. Now we have announced our intent to purchase INSI, with its immediately-marketable software that enhances the service offering for any ISP, adding another profitable company and dimension to Carnegie's growing array of value-added communication services.''
MailGong from Israeli High-Tech Leader
Carnegie also said it has signed a Letter of Intent to acquire Internet Notification Solutions, Inc. (INSI), a Delaware corporation and its wholly-owned subsidiary NetGong, the creator of MailGong(tm), considered the Internet's most advanced mail notification software. On completion of the acquisition, Carnegie would have one of the most popular Internet applications that meets users' needs while reducing capacity problems for Internet Service Providers (ISPs).
INSI was founded by S.H.F. Computers, an Israeli high-tech pioneer and leader, which has developed sophisticated communications software for major multinational IT corporations including Motorola (NYSE:MOT - news), 3Com (NASDAQ:COMS - news), and Bay Networks (part of Northern Telecom, NYSE:NT) for more than 20 years. The MailGong's unique patent-pending technology notifies a PC user when an event, such as the arrival of e-mail occurs, even if the PC is off-line. Notification is provided without telecommunication fee to the user and reduces the workload on ISP's systems or a business's Intranet. MailGong also can automatically forward notification to other PCs, phones, fax machines, pagers and similar devices, and is marketed on a revenue-share basis through ISPs as well as directly to large corporate systems users.
''We are pleased with the potential acquisition of INSI by Carnegie,'' said Jack L. Rivkin, senior vice president, Investments, with the Travelers Investment Group, a subsidiary of Citigroup, Inc. (NYSE:C - news). ''Through its business model, Carnegie can fully exploit the significant technologies developed by Gidi Lefeber and his team in Israel.'' Travelers Insurance companies were an early investor in INSI.
Carnegie Files Form 10-KSB
Having resolved all questions raised by the SEC in late March, Carnegie has filed its annual report on Form 10-KSB, including restated financial statements for 1997. The overall effects of the changes for that year were to increase Carnegie's assets and net worth by approximately $11 million in goodwill and software costs attributable to certain 1997 acquisitions, and, as a consequence, increase the non-cash charges to income by $227,643 for that year. Carnegie President and CEO Farkas said he was pleased to finally resolve the accounting questions with adjustments to non-cash charges having ''no effect on the company's operations, revenues or cash flow.''
For the fiscal year ended December 31, 1998, Carnegie will report net income increased by 88 per cent to $2,660,927, or $.06 per share fully diluted, compared to $1,415,788, or $.06 per share fully diluted for restated 1997 income. Net income for the two fiscal years included additional non-cash charges relating to the 1997 acquisitions of $961,878 for 1998 and $227,643 for 1997. Without such additional non-cash charges, Carnegie said net income would have been $3,622,805 for 1998, or $.08 per share fully diluted, and $1,579,835, or $.06 per share fully diluted, for 1997. Carnegie also reported that revenues reached $11,657,223 for 1998, as compared with $6,945,810 for 1997, an increase of 68 per cent. The company's unrestricted year-end cash balances were up 248 per cent to $789,068.
Paramount to Serve 26,000 Canadian Pay Phones
Updating an announcement made April 16, Carnegie said its Paramount International subsidiary is partnering with BCT.TELUS in deploying value-added telephony services, and will be processing U.S.-bound phone calls from 26,000 pay phones in Canada. David Moody, Paramount's chairman, said the service is an integral part of its expanded relationship with BCT.TELUS and by itself should add $36 million (of the projected $60 million-plus total) in revenue to Paramount over the next three years. BCT.TELUS are 26 per cent owned by U.S.-based GTE Corporation (NYSE:GTE - news).
MAVIS Contributes $3 Million-plus in Revenue
B. Chris Schwartz, Carnegie's new COO, said another major highlight of 1998 was the successful launch of MAVIS(tm), Carnegie's voice-driven automated attendant/voice mail system, with ''MAVIS momentum carrying over into the new year.'' He said that to date MAVIS has contributed more than $3 million to Carnegie's revenues.
''By all measures,'' Schwartz said, ''Carnegie's 1998 results were impressive. What made the results all the more remarkable,'' he said, ''was that three acquisitions were finalized too late in the year to provide substantial financial impact, and that the acquisition of Paramount International was not completed well into the first quarter of 1999. Our portfolio companies and pending acquisitions have business plans showing revenues growing to an annual level of $285 million in the year 2001,'' said Schwartz, ''and it is Carnegie's intent to continue to make acquisitions in our chosen fields which will further enhance our overall growth, revenues and profits.''
Carnegie International Corporation (OTC BB:CAGI - news) is an Internet support and computer telephony holding company with specialization in telecommunications products, services and distribution, and in E-Commerce and EDI. Its MAVIS (Multi-Language Automated Voice Independent System) is a breakthrough in speech recognition-driven automated attendant/ voice mail systems, using proprietary IVR (interactive voice response) software to recognize/respond to callers. Along with Paramount, Carnegie subsidiaries include: RomNet Support Services, Inc., an Internet, e-business and technical support services company, Profit Through Telecommunications (Europe) Ltd. (PTT), a telecommunications software company providing business solutions utilizing proprietary speech recognition, touch tone and bar code responses to send and/or receive information; ACC Telecom, a leading reseller of equipment and business telephone systems from Comdial (NASDAQ:CMDL - news), SONY® (NYSE:SNE - news), and Sprint® (NYSE:FON - news), and Voice Quest, Inc., a developer and provider of speech recognition and voice mail technologies and products.
This release may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the Company's Security and Exchange Commission filings.
MailGong is a trademark of Internet Notification Solutions, Inc. MAVIS is a trademark of Carnegie International Corporation. Other trademarks are properties of their respective owners.
Carnegie International Corporation, Baltimore
Lowell Farkas, 410/785-7400
The Kaminer Group, White Plains, N.Y.
David A. Kaminer, 914/684-1934