AirIQ Inc., a telematics company, announced the signing of an agreement to acquire the business of, LLC, based in Irvine, Calif. The acquisition will be conducted through the company's wholly owned subsidiary AirIQ U.S., Inc. in an asset purchase transaction. With more than 80,000 active subscribers, Aircept has built a subscriber growth engine for clients requiring a core telematics service set. Aircept sold more than 15,000 new subscriber units in the first quarter of 2004. The asset purchase transaction is currently valued at approximately $23,769,000, using the previous five-day average closing price per AirIQ share, or 33 cents. The purchase price is to be paid in the form of approximately $6,750,000 in cash and 16,800,000 newly issued common shares of AirIQ at closing, a portion of which will be held in escrow, with two additional cash payments of approximately $5,737,500, each upon the satisfaction of certain earn-out conditions. These conditions may be satisfied upon the acquired business reaching 120,000 and 150,000 subscriber levels respectively, and achieving related revenue and gross profit targets that effectively result in revenue increases of approximately 71 percent and 114 percent respectively over Aircept's current monthly service revenue. The AirIQ shares used in the transaction will be subject to contractual hold periods and released 50 percent one year after closing, 25 percent 18 months after closing, and the balance in two years. Closing of the transaction is conditional upon customary closing conditions including completion of due diligence. Additionally, closing is conditional on delivery by Aircept of three-year audited financial statements and satisfactory agreements by AirIQ with its current lenders. In connection with this transaction, AirIQ has provided Aircept with a deposit, which is held in escrow and returnable to AirIQ in certain limited circumstances including the non-delivery of Aircept's audited financial statements. AirIQ USA intends to hire all 43 California-based Aircept team members. Working with the Toronto, Canada-based AirIQ team of 62, the combined operations will expand AirIQ's North American presence, noting that Aircept has been successfully growing revenues from Mexico, in addition to the United States.

Originally posted on Fleet Financials