Mytec Technologies Reports Third Quarter Results From Ongoing Biometrics Operations.

Business Editors

TORONTO--(BUSINESS WIRE)--Nov. 16, 2000

Mytec Technologies Inc. (TSE:MYT.), a leading provider of biometric security technologies, today reported financial results for the three and nine months ended September 30, 2000.

After including a $21.7 million gain on the sale of its non-core Counterforce alarm monitoring business, Mytec generated net earnings of $20.8 million (79.9 cents per share basic, 76.2 cents fully diluted) in the third quarter of 2000, versus a net loss of $858,977 (3.5 cents loss per share) in the third quarter of 1999.

For the first nine months of 2000, net earnings - including the gain from the Counterforce sale - were $18.9 million (74.8 cents per share basic, 71.3 cents fully diluted) compared to a net loss of $2.6 million (10.8 cents loss per share) in the nine months of 1999.

Biometrics revenue from ongoing operations ("ongoing operations" exclude Counterforce, which was divested 18 days into the third quarter) for the third quarter of 2000 was $28,326 versus $49,006 in the corresponding three months of 1999. Biometrics revenue from ongoing operations for the first nine months of 2000 was $66,788 versus $70,082.

"These sales results are not at all indicative of the Company's future performance potential, they merely reflect very early stage commercialization of our Bioscrypt family of products," said Pierre Donaldson, President & CEO. "We expect to see a ramp up in volumes over the course of the next year, and in fact, we already have $150,000 in deferred biometric revenue on the books that will be recognized in the fourth quarter.

Expenses from ongoing operations in the third quarter showed decreases in cost of goods sold ($10,263 versus $50,954 in the same period of 1999), as well as selling, general and administrative expenses ($794,304 compared to $804,899 a year ago).

"We have chosen to deploy capital wisely to catalyze the market, enhance our sales and marketing infrastructure and advance our technologies," said Donaldson. "This can be seen in the fact that we increased our investment in R&D in both the quarter and first nine months of the year while also adding substantial depth to our team."

Research and development expenses in the quarter were $292,220 versus $111,684 in the third quarter of 1999. For the first nine months of 2000, R&D expenses increased to $1.0 million from $362,390 in the first nine months of 1999.

Loss from continuing operations in the third quarter was $954,367 (3.7 cents loss per share) versus a loss from continuing operations of $1.2 million (4.9 cents loss per share) in the corresponding quarter of 1999. For the first nine months of 2000, loss from continuing operations was $3.3 million (13 cents loss per share) versus $3.2 million (13.1 cents loss per share) in the same period of 1999.

Commentary and Outlook

"Mytec has made very substantial operational progress since becoming a pure biometrics play less than five months ago," said Donaldson. "This progress can be measured both in terms of internal and external momentum. Externally, we recently secured our first international biometrics agreement - with Loqware Technologies AB of Gothenburg, Sweden - and we also announced our commitment to developing biometrics products that are compatible with Intel's security software called CDSA. Loqware just introduced their bundled Bioscrypt products (at Comdex in Las Vegas), while Intel recently demonstrated their CDSA software with our biometrics module in Europe. We expect our technological alignment with Intel and strategic partnership with Loqware will have a very positive impact on Mytec going forward.

"Internally, we continue to add to management capability. Subsequent to quarter end, we appointed a very experienced business executive as Managing Director - Asia Pacific to build business alliances in that high growth region. And during the third quarter, we hired two other highly capable executives to spearhead Mytec's market development overall, and particularly in the wireless area."

Donaldson said the company has "considerable cash and resources to fully pursue our strategies and to deliver exponential growth as a pure biometrics company over the next few years."

About Mytec

Mytec Technologies Inc. specializes in the development and licensing of biometric technologies - software and standalone hardware - to Original Equipment Manufacturers and other customers requiring state-of-the-art user authentication. Providing unparalleled authentication that goes well beyond traditional identity methods such as passwords or entry cards, Mytec's technologies - embodied in the Bioscrypt family of products - have the potential to enable secure wireless, network and physical applications. Using Bioscrypt technology, users' credentials are protected using a fingerprint, or other biometric.

Conference Call

For a live audio broadcast of the third quarter conference call hosted by Pierre Donaldson, President & CEO and Shamit Khosla, Chief Financial Officer, please go to the website www.investorlook.com/ipo at 10:00 am on Friday November 17th, 2000. A recorded version will be archived there for the next sixty days.

Mytec Technologies Inc., the Mytec logo, Bioscrypt and Touchstone are trademarks or registered trademarks of Mytec Technologies Inc. Forward-looking statements in this news release are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties.