Fidelity Holdings Reports Year-End Results
13 April 2000
Fidelity Holdings Reports Year-End Results; Revenues Increase 111%/Gross Profit Increases 124%
KEW GARDENS, N.Y.--April 12, 2000--Investments in Technology Division Grow, Producing 1999 Net Loss
of $3.5 Million, ($.17) per Share
Fidelity Holdings, Inc. today reported record revenues, gross profits and a net loss for the fiscal year ended December 31, 1999.
For the year ended December 31, 1999, revenues increased 111% to $210,814,104 compared to $99,667,822 for the year ended December 31, 1998. Gross profit was $33,208,101 in 1999 compared with gross profit of $14,839,352 in 1998. The Company generated a net loss of $(3,540,366), $(0.17) per share, in 1999 compared with net income of $528,140, $.03 per share, for the year ended December 31, 1998.
"The year 1999 was one of significant investment, growth and expansion for Fidelity Holdings," stated Doron Cohen, President and CEO of Fidelity. "While continuing to grow our Automotive Division's revenues and profits, we have incurred the large expenses necessary to position our Technology Division to proceed with its business plan. Among our achievements to date were the attainment of Competitive Local Exchange Carrier ("CLEC") licenses for IG2, Inc. in 60 of our 62 planned markets encompassing 30 states, and Interexchange agreements with the Regional Bell Operating Companies ("RBOC") in nearly all of the areas in which we expect to offer service. Our strategic relationships with Paradyne and Bell Atlantic are significant achievements for our dedicated staff. With the acquisition of Internet Connections as part of the CarsTV.com transaction, we have begun the build-out of our beta test sites in New York and Virginia, the first step in what we expect will be a successful launch of the IG2(R) Network. During 1999, we announced our initiative to become an Open Video Systems operator, which will enable the proposed IG2(R) Network to transmit video on-demand and distance learning, as well as video conferencing; we contracted for build-out of a custom SONET ring for IG2 by Bell Atlantic, which creates a backup system for the completed Network; and the signing of a DSL agreement with Bell Atlantic, which will enable the completed Network's potential footprint to further expand. In addition, we recently filed a provisional patent for the Network Active Intelligence Control System (NAICS), a system we expect will enable IG2 to securely deliver high quality value-added services to the planned Network. These achievements, each a building block on which the IG2(R) Network, once operational, will stand firmly, are important because we believe that the proper foundation will ensure a solid result. We are in concert with our business plan, and we are moving towards implementation of the IG2(R) Network. A recent key development is our addition of a leader for Computer Business Sciences/IG2, by selecting Dennis Roth, as its Chairman and CEO. His expertise and background at the highest levels of AT&T will, we expect, prove invaluable to the roll-out of the planned IG2(R) Network."
Bruce Bendell, Chairman of Fidelity and President of its Major Auto Group subsidiary, added: "On the automotive side of the Company, our revenues and profitability for 1999 have been exceptionally strong, and we have continued to set new monthly records for used vehicle sales. Our Major World branding has gained market acceptance and we have become a significant factor in the New York Metropolitan area retail automotive marketplace. Our aggressive growth strategy is continuing, both internally and through acquisition. We have completed several automobile dealership acquisitions in 1999, and have several others nearing completion. We expect that in the coming year we will expand our franchise base to include Cadillac, Toyota, Oldsmobile, Pontiac, Nissan, Mazda and Hyundai and through our aggressive marketing and advertising increase our sales volume and profitability."
"We salute the dedication, entrepreneurial spirit and hard work of our Automotive and Technology teams over the past years. It is with this same passion, strategic planning and commitment that we enter 2000," Mr. Cohen concluded.
Richard L. Feinstein, Chief Financial Officer, added, "It is clear that our investment into the development of our IG2(R) Network had an impact on the bottom line results in 1999. We believe, however, that we have taken the necessary and prudent steps to support our vision for the future of telephony communications. The impressive growth of our Automotive Division validates our concept of becoming the premier automotive dealership group in our region and we are well on our way to another successful year."
Fidelity Holdings is a diversified holding company that utilizes information and technology to target industries experiencing consolidation and/or deregulation. The Company operates two divisions -- Technology and Automotive. The Technology Division operates primarily through Computer Business Sciences, its IG2, Inc. subsidiary, its Info Systems, Inc. subsidiary and its CarsTV.com, Inc. subsidiary. The Automotive Division operates through Major Automotive Group, a leading consolidator of automotive dealerships in the New York Metropolitan Area.
The IG2(R) Network is designed to provide a bundled package to residential and small business customers of high-speed Internet access, local and long distance telephone service, television programming, television quality video conferencing and e-Commerce capabilities, all through existing telephone wires already installed in the customer's home. Contributing to the IG2 platform are a series of consumer electronic manufacturers, software developers and companies seeking additional exposure utilizing e-Commerce.
For additional information, visit our websites at www.fdhg.com, www.ig2.com, www.majorautomotive.com, www.majorworld.com, www.carstv.com and www.internetconnections.com.
The information contained in this press release, including any "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 contained herein, should be reviewed in conjunction with the Company's Annual Report on Form 10-KSB and other publicly available information regarding the Company, copies of which are available from the Company upon request. Such publicly available information sets forth many risks and uncertainties related to the Company's business and such statements, including risks and uncertainties related to that are unpredictable and outside of the influence and/or control of the Company.
FIDELITY HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
Years Ended December 31,
1999 1998
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Revenues
Sales $ 210,814,104 $ 99,667,822
Cost of sales 177,606,003 84,828,470
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Gross Profit 33,208,101 14,839,352
Operating expenses 34,218,923 12,953,857
Interest expense and minority interest 1,988,419 843,355
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Income (loss) before tax expense and
and extraordinary item (2,999,241) 1,042,140
Provision (credit) for income tax (192,000) 514,000
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Income before extraordinary item (2,807,241) 528,140
Extraordinary item - loss on debt
extinguishment (733,125)
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Net income (loss) $ (3,540,366) $ 528,140
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Per common share
Basic
Income before extraordinary item $ (0.13) $ 0.03
Extraordinary item (0.04) --
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Net income $ (0.17) $ 0.03
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Diluted
Income before extraordinary item $ (0.13) $ 0.03
Extraordinary item (0.04) --
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Net income $ (0.17) $ 0.03
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Average number of shares used in
computation
Basic 21,054,183 16,507,786
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Diluted 21,054,183 20,207,034
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