AirIQ Inc. has acquired more than 25,000 subscribers from its three primary vertical markets: rental vehicle, commercial transport, and field service. The service revenue backlog relating to this subscriber base at June 26, 2002, was approximately $21.5 million. The company also announced a reduction of 25 employees, or 28 percent of its total workforce, as a result of: - Management's decision to focus on acquiring larger accounts. - The maturity of its service delivery technology. - The completion of certain internal business automation projects. The staff reductions are effective immediately and will reduce annual operating expenses (including wages and other associated costs) by approximately $2.8 million. One-time charges related to the staff reductions total approximately $350,000, and will be booked in the third quarter. With previously announced reductions in operating expenses, the company has now reduced annual operating expenses by approximately $4.8 million. The company has further reduced cash requirements by changing to an equipment sales model. Typically, AirIQ secures client contracts for a 36- to 60-month term. Until now, AirIQ offered a bundled service model, which included the vehicle equipment and corresponding wireless airtime for a single monthly fee. To date, the company has used its cash resources to fund approximately $7.2 million in vehicle equipment and will further need to fund approximately $2.5 million in vehicle equipment related to existing contracts. The company has now implemented this equipment sales model and will no longer finance vehicle equipment from its own cash resources.
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