Working Capital Position

RNS Number:2992A
EuroTelecom Communications Inc
12 March 2001

               EuroTelecom Communications, Inc. (the "Company")

                    Statement re. Working Capital position


The Board has noted the extensive recent press comment on the Company. The
purpose of this announcement is to clarify certain issues for shareholders. At
the time of flotation in April 2000 sufficient working capital (#15.2M) was
raised for the purpose of the strategy as laid down in the Prospectus.
Subsequent to the float, the number of enquiries received by the Company,
particularly on "application linking" was much higher than anticipated raising
the directors expectations with regard to the number of projects likely to be
won in that year. As a direct consequence, the directors authorised higher
levels of expenditure on the infrastructure than was originally intended. This
infrastructure was centred on strong technical, operational and services
support. In the event, these enquiries did not convert into firm contracts
within the timescales envisaged. One major reason for the delay in securing
these contracts was due to the Company's major flagship contract at the
Printworks, Manchester, not opening to the public until November 9th 2000. A
delay of four months in the construction stopped the Company demonstrating its
first major "application linking" success.


The Company also invested heavily in marketing particularly in Government
networking, MOD, retail and leisure, sporting and entertainment and
multi-tenanted sites. This marketing brought about a significant number of
major projects that were being actively pursued.


The Company made investments in Q.ton Ltd, Chunlan Ltd, Anson HVAC Ltd, TimTec
International Ltd, Wardell, Celtic Airways and Defining Moments. All these
investments created either immediate contracts, near term contracts, routes to
market or products that had major opportunities for the Company. A significant
investment was made in the Company's ASP EuroTelecom Connect, which did not
create the anticipated revenues.


The working capital position was compounded by the fact that there was a
substantial debt due to the Company which was disputed long after the
acceptance of the goods and services. No settlement could be reached in time
to prevent administration.


Administrators of Eurotelecom Corporation Limited (the principal operating
company) have recently concluded the sale of Chunlan Ltd the air conditioning
and architectural joinery business comprising TimTec International Ltd and
Anson HVAC Ltd to management. The sale was made to Mr Paul Armitage, Managing
Director of Chunlan. Mr Armitage holds 10,000 shares of Common Stock of $0.01
each in the Company.


The Board intends to make further announcements as appropriate.




12 March 2001

Eurotelecom 'a' (LSE:ETMA)
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