Cell-Loc Location Technologies Inc.

Cell-Loc Location Technologies Inc.

May 31, 2006 13:51 ET

Cell-Loc Location Technologies Announces Completion of its Sao Paulo Network

CALGARY, ALBERTA--(CCNMatthews - May 31, 2006) - Sheldon Reid, President & CEO, Cell-Loc Location Technologies Inc. (TSX VENTURE:LTI) ("Cell-Loc" or the "Company") is pleased to announce that its 74% owned Brazilian subsidiary, X3 Telecomunicacoes e Equipamentos Ltda. ("X3"), has successfully completed the deployment of its wireless location network technology throughout the city of Sao Paulo, Brazil, the world's fifth largest city. In accordance with the Company's agreement with Itau Seguros S.A. ("Itau Seguros"), the insurance subsidiary of Investimentos Itau S.A. (NYSE : ITU), the Sao Paulo network has met all accuracy and reliability specifications, and passed a technical audit conducted by an independent third party. The parties had entered into a preliminary agreement dated November 22, 2004. During the period from the date of the preliminary agreement until now, the Company has been designing and constructing the network, and performing required development activities in order to successfully meet the conditions established in the preliminary agreement with a capital cost of approximately $5.4 million to date.

As a result of meeting all of the conditions precedent in its preliminary agreement, X3 has signed a new five year contract with Itau Seguros on May 29, 2006 which provides for guaranteed minimum revenue of $4.6 million per year during the first two years, exclusively for the Company's stolen car application. Pursuant to this agreement, the Company's network is responsible for providing real time location of stolen vehicles, and, if required, remote immobilization by shutting off the fuel supply. The network is now entering its commercial stage, with devices being installed in vehicles commencing in early June.

The new agreement with Itau Seguros specifies that an initial predefined number of the insurer's vehicles will be equipped with Cell-Loc's wireless device (the "Beacon"). Itau Seguros will pay a specified annual fee for each beacon installed, with payment for a year made in advance in the month following installation. After installation of the guaranteed minimum number of Beacons, the insurer and the Company will jointly work to equip substantially all of Itau Seguros' insured fleet within Sao Paulo. The annual guaranteed minimum payment is subject to the Company's capacity to install the guaranteed minimum quantity.

A Brazilian manufacturer has been contracted to produce the Beacons for the network at a cost of approximately $45 per unit. The Company has worked closely with the manufacturer in establishing the manufacturing process. Production Beacons received by X3 have been tested for compliance with performance requirements specified in the agreement with Itau Seguros. Payments under the contract are subject to beacon and network performance criteria as established in the agreement. The Company is confident that it will continue to meet these specifications as evidenced by the successful completion of the independent technical audit.

Marcelo Blay, Vice President Operations for Itau Seguros states "we are a technology driven company that continuously looks globally for cost effective solutions for managing and assessing our business risk of underwriting insurance premiums. Cell-Loc's ability to provide real time location at a competitive pricing point gives Itau Seguros the ability to offer this service to a substantial portion of our insured fleet and is evidence that new technologies will continue to change the way insurance companies evaluate various types of insurance coverage."

Sheldon Reid, President & CEO of Cell-Loc said, "we are extremely pleased to have delivered on our commitment to deploy a world-class network in a world-class city. This agreement highlights the advances that Cell-Loc has made to commercialize the intellectual property ("IP") that it has developed during the past several years."

The Company believes that the successful deployment of its wireless technology in a city such as Sao Paulo positions Cell-Loc as an emerging leader in the wireless location market.

- With Sao Paulo's urban density, congestion and challenging topography the Company's wireless network has successfully demonstrated its ability to overcome radio frequency interference and multipathing in any urban environment.

- The Company's wireless technology provides real time location without requiring line of sight, making it the optimal wireless location technology for urban areas.

- The contract with Itau Seguros generates significant revenue in the stolen vehicle market. The Company expects strong demand from the aftermarket in addition to Itau Seguros' commitment due to the high customer awareness for security issues in Sao Paulo. The existing network can also be used for numerous other vertical markets including, but not limited to, fleet tracking, asset tracking and the added feature of moving small packets of data on demand.

- The wireless network operates independently and does not require other networks, cellular or otherwise, for its operation. This creates the optimal value chain for the Company's wireless location technology.

- The hardware and deployment costs of the Company's network are relatively inexpensive. The network is passive (does not transmit) and consequently does not, for most countries, require regulatory approvals.

- The cost of the Beacon (the installed device) is believed to be the least expensive relative to all other location technologies. In addition, the Beacon operates in an unlicensed band at 2.4 GHz and has zero associated transmission costs. The device is also available in a portable model coming with its own power source (with battery life of up to two years) and therefore can be attached to any physical asset. Together these attributes create a ubiquitous location solution and offer the opportunity for deep market penetration for any application of location in any country.

- The Company invented, designed and commercialized its algorithm driven location technology, consequently it has exclusive control over its IP. It has also identified significant additional opportunities to enhance its technology, including substantially lowering manufacturing costs, the Beacon device and the wireless network.

- Because the Company's IP relies on the algorithms it developed over the past seven years to generate real time location and less on the hardware, the Company has determined that it can protect its IP through extensive encryption algorithms.

About Cell-Loc Location Technologies Inc.

Cell-Loc Location Technologies Inc. (www.cell-loc.com) is the developer of a family of network-based wireless location products that enable location-based services. Located in Calgary, Alberta, Cell-Loc currently develops, markets and supports its patented wireless location technology in North and South America and Asia, with a view to expanding globally. Cell-Loc is listed on the TSX Venture Exchange under the trading symbol: "LTI."

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Safe Harbour for Forward Looking Statements: This news release contains certain information that may constitute forward-looking statements under applicable securities laws. Statements made in this news release are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Actual results achieved may vary from the results anticipated or implied herein and variations may be material. There is no representation by the Company that actual results achieved will be the same in whole or in part as those implied in any forward looking statements.

TSX Venture Exchange has neither approved nor disapproved of the contents of this news release.

Contact Information

  • Cell-Loc Location Technologies Inc.
    Sheldon Reid
    President and CEO
    (403) 569-5777
    Cell-Loc Location Technologies Inc.
    Dave Guebert
    Vice President, Finance and CFO
    (403) 569-5796