TeleCommunication Systems Sells Two of Its Three Enterprise Business Units
26 January 2007
TeleCommunication Systems, Inc. (TCS) (Nasdaq: TSYS), a global leader in mission-critical wireless communication technology, announced today that it has sold two of its three Enterprise Division units to strategic buyers in exchange for restricted stock in the acquiring companies and earn-out arrangements. The Enterprise Division business units were acquired by TCS from Aether Systems in early 2004 and have been classified as discontinued operations in TCS' 2006 quarterly financial reports. TCS has been granted certain registration rights with respect to the shares of restricted stock.
The Mobile Finance unit, including the unit's US and European operations, has been sold to Stockgroup Information Systems, Inc. (OTC Bulletin Board: SWEB) (TSX-V: SWB), a leading financial media company based in Vancouver, British Columbia, Canada. This transaction is expected to close by the end of the month.
Assets of the Mobile Office unit doing business as mobeo(R) have been acquired by MobilePro Corp. (OTC Bulletin Board: MOBL), a broadband telecommunications services company based in Bethesda, Maryland. This transaction closed earlier this month.
Both subscriber-based business units had been transitioning from services based on data-only and pager based networks, and had generated operating losses for TCS during 2005 and 2006 as the books of customer subscriptions for updated offerings were rebuilt. While TCS is exiting the Enterprise wireless data space, its election to take equity positions in the acquiring companies reflects its expectation that each operation presents opportunities for future growth and profitability. Consideration received by TCS includes 1.5 million shares of SWEB and 9 million shares of MOBL.
The remaining TCS Enterprise business unit is the Mobile Asset Management Division, which delivers proprietary proof-of-delivery and asset tracking technology for logistics management customers using wireless hand-held devices. Preliminary results for this unit indicate that total yearly revenues grew from $6.5 million in 2005 to $10 million in 2006, and that the unit was breakeven to profitable in the fourth quarter of 2006. Arrangements for sale of this unit are progressing and TCS expects the sale to be completed during the current quarter.
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This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements are based upon TCS's current expectations and assumptions that are subject to a number of risks and uncertainties that would cause actual results to differ materially from those anticipated. The words, "believe," "expect," "intend," "anticipate," and variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Statements in this announcement that are forward- looking include, but are not limited to statements (i) regarding TCS' expectation that the operations of Stockgroup Information Systems, Inc. and Mobilepro Corp. presents opportunities for future growth and profitability and (ii) that TCS expects to complete the sale of the Mobile Asset Management Division during the current quarter.
Additional risks and uncertainties are described in the company's filings with the Securities and Exchange Commission (SEC). These include without limitation risks and uncertainties relating to the company's financial results and the ability of the company to (i) reach and sustain profitability when anticipated, (ii) continue to rely on its customers and other third parties to provide additional products and services that create a demand for its products and services, (iii) conduct its business in foreign countries, (iv) adapt and integrate new technologies into its products, (v) expand its business offerings in the new wireless data industry, (vi) develop software and provide services without any errors or defects, (vii) protect its intellectual property rights, and (viii) implement its sales and marketing strategy.. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update or revise the information in this press release, whether as a result of new information, future events or circumstances, or otherwise.
Source: prnewswire
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