Cell-Loc Location Technologies Inc. (TSX: XCT) of Calgary is laying off six employees and issued some dire warnings in a corporate update Friday.
If debt holders do not forbear on the terms of loans that were due Dec. 31 and the company is not able to raise additional money, “it is unlikely that the Corporation will be able to continue as a going concern,” Cell-Loc stated in a news release.
In June, 2008 Cell-Loc announced it raised $987,000 through a “private placement” to company insiders, which it had to pay back by Dec. 31, 2009.
It last reported financial results Nov. 26, when it announced a loss of $405,000 for the nine months ending Sept 30. In 2008, the company had $3.9 million in sales but reported a net loss of $6.8 million.
Founded in 1995 by Hatim Zaghloul and Michel Fattouche as a vendor selling technologies that enable wireless carriers to implement emergency 911 locating systems, Cell-Loc now specializes in wireless fleet tracking and other location-based services. Its CEO for the past eight years has been Sheldon Reid. Fattouche is currently an electrical engineering professor at the University of Calgary.
Its product is Cellocate Beacon. The technology it currently uses, is dubbed hyperbolic multilateration, meaning that it measures the difference between the time it takes signals to travel from a device to different beacons. If two different beacons are used, it can draw a hyperbola on which the device must lie. If a third beacon is used, it can then draw another hyperbola and locate the device using the intersection of the hyperbolas.
Two years ago, Cell-Loc announced an agreement with Samsung Electro-Mechanics Co., Ltd. of South Korea, in which Samsung would fund the development of a chip designed to reduce the cost of making beacons. But on Friday Cell-Loc stated the companies “have been unable to deliver on ay material milestones under their joint development project.”
But the layoffs in Canada mean Cell-Loc’s ability to improve its technology is “materially hampered” and it is having trouble selling more services in Brazil, where it operates X3 Telecomunicacoes e Equipamentos Ltda.
“CLTE intents to explore all reasonable alternatives to monetize some or all of its operating assets,” the company state in a press release. It also stated, without naming names, that “certain officers” of the company agreed to loan money to the firm while others agreed to defer their salaries until Cell-Loc’s finances improved. Those who loaned money “have agreed to temporarily forbear under their existing loans and salary deferrals.”
The loans were actually convertible debentures, meaning the lenders had the option to buy shares for 75 cents each. The most recent share price was four cents, and they have been trading below 15 cents for most of the past year.