Cell-Loc Location Technologies Inc., a Calgary wireless firm that nearly went belly up earlier this year, has been effectively taken over by a group of dissident shareholders.
The Calgary-based company now plans to “aggressively expand” worldwide in selling a wireless product designed to help investigators find stolen vehicles.
However, a Canadian analyst notes Cell-Loc has some competition.
The new board of directors, elected June 30, announced earlier this month the departure of the firm’s chief executive officer, Sheldon Reid.
Keith Bohn, the firm’s new interim chief executive officer, said this week the company is currently working on a business plan and will likely issue a press release within the next week.
Bohn also sits on the new board of directors. He would not say whether Reid resigned or was dismissed.
Cell-Loc was founded in 1995. At that time, it was working on Cellocate using technology licensed from Wi-LAN Inc., which at that time owned 15 per cent of Cell-Loc. During those early days, Cell-Loc had planned to offer technology that would provide locations of cellular phones to emergency 911 operators but later changed its focus to asset tracking.
Its flagship technology is Cellocate Beacon, which locates wireless transmitters by measuing the difference in the time it takes for signals to travel between different beacons. When two beacons are used, it can draw a hyperbola upon which the device must lie. When using three beacons it can draw pinpoint the location of the device at the intersection of two hyperbolae.
“The challenge for Cell-Loc and other companies in this area is there are a number of competing technologies in that area but the dominant technology has been GPS,” said Jayanth Angl, lead analyst at London, Ont.-based InfoTech Research group, referring to the Global Positioning System satellite service. “Alternatives to GPS exist because GPS leverages the satellite system that doesn’t produce accurate results indoors.”
The company has been in the red for a while. It lost $2.7 million in 2009 and $1.2 million during the first three months of this year. Cell-Loc lost $6.8 million in 2008.
In March, it laid off six employees in Calgary and issued a press release stating it is “unlikely” it could “continue as a going concern” unless it could negotiate new agreements to repay lenders. Two years ago it raised $987,000 in a private placement to company insiders.
Until May, Cell-Loc owned X3 Telecomunicacoes e Equipamentos Ltda., based in Sao Paolo, Brazil, whose service helps recover stolen vehicles. Cell-Loc has transferred control of X3 to Bravia Capital.
Cell-Loc was founded by Hatim Zaghloul and Michel Fattouche, who also co-founded WiLAN. Fattouche is a professor at the University of Calgary and was ousted in 2008.
But Fattouche is on the new board of directors, and the dissident shareholder group announced it plans to bring him back on board.
The dissident shareholder group, known as Save Cell-Loc, is led by Dick Tchairdjian, a Canadian life insurance executive.
Before the board of directors meeting in June, Save Cell-Loc made nine proposals, including bringing back Fattouche, hiring a new CEO and acquiring X3 back from Bravia.
Other proposals include negotiating with debt holders, hiring tech staff laid off last year, and selling more shares to raise money.
Bohn said Tuesday no new staff had been hired.
In addition, the new directors plan to negotiate a joint venture between Samsung and Cell-Loc whereby Samsung would build components based on Cell-Loc’s technology and pay Cell-Loc royalties for the use of its patents.
In 2008 Cell-Loc signed an agreement with Samsung to develop components for wireless beacons but in March the firms announced they were “unable to deliver on any material milestones” in the project. The idea was for Samsung to manufacture products by licensing Cell-Loc technology.
Bohn said the new Cell-Loc managers have not approached Samsung yet but may approach other Korean firms who could build products based on Cell-Loc’s technology and pay Cell-Loc for the use of its patents.
He added the firm has “obtained interest” from companies in North America who could develop wireless products using Cell-Loc’s patents.
“We look for them to pay for the development of that product as we are basically an (intellectual property) company and we would design the product for them.
The Save Cell-Loc shareholder committee also said in a press release they plan to “aggressively expand” its technology used to recover stolen vehicles.
“Recovery of stolen vehicles using wireless location technology is Cell-Loc’s strongest core competency, a differentiating factor and the key to Cell-Loc’s success going forward,” the group stated in a proposal before June. “To date, third-party tests have demonstrated that relative to GPS based, or other competitive RF-based technologies, Cell Loc’s unique and proprietary RF technology has been the only technology to successfully stand up to vehicle thieves trying to compromise the communication link by using jamming devices to disrupt the RF transmissions.”
It also plans to develop telemetry for applications such as checking vending machines and reading gas and water meters.
