AirIQ Inc.
TSX : IQ

AirIQ Inc.

April 05, 2006 10:57 ET

AirIQ Announces the Expected Closing of Financings, Amendment and Extension of its Bank Financing and Hearing Date for Dispute With a Supplier

TORONTO, ONTARIO--(CCNMatthews - April 5, 2006) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

AirIQ Inc. ("AirIQ") (TSX:IQ), a leader in global wireless security, announces that it expects to close its previously announced bought deal private placement of special warrants at a price of $0.20 per special warrant for gross proceeds of $5,309,091 later today. Each special warrant is exercisable for no additional consideration into one common share of AirIQ. The placement will be made through Paradigm Capital Inc.

AirIQ has agreed to file a preliminary short form prospectus and will use its best efforts to obtain a receipt for a final short form prospectus as soon as possible to qualify the issuance of the common shares issuable upon exercise of the special warrants.

AirIQ will use the proceeds of this financing to satisfy its publicly disclosed earn-out payment obligation in respect of its previously completed acquisition of the Aircept business.

Term Loan

In addition, AirIQ announced today that it expects to close its previously announced five-year $4,000,000 term loan from Lenbrook Corp. and Quadrature Investments Inc. The term loan will bear interest at 12% per annum. Under the terms of the loan, interest only is payable quarterly for the first two years, and quarterly blended payments of principal plus interest are payable for the subsequent 12 quarters. As part of the term loan financing, AirIQ will issue warrants to purchase an aggregate of 5,000,000 common shares at an exercise price of $0.24 per share to the term loan lenders. The warrants will be exercisable for a term of three years.

Credit Facility

The proceeds of the term loan will be used to repay a portion of AirIQ's credit facility. The credit facility will be amended to, among other things, reduce the commitment under the facility to $3.0 million and to extend the final due date for the repayment of the credit facility to March 31, 2007.

Supplier Dispute

AirIQ also announced today that a hearing date of April 28, 2006 has been set for a proceeding in Ventura County Superior Court in Ventura, California with CalAmp, Corp., one of AirIQ's component suppliers for its GPS tracking devices. AirIQ has been withholding payment from CalAmp with respect to product provided during the fourth quarter of 2005 pending resolution by CalAmp of product quality issues. CalAmp had, on April 4, 2006, sought a writ of attachment and a protective order on an ex-parte basis. The court refused to grant CalAmp a writ of attachment but did grant a limited protective order generally prohibiting transfers of CalAmp's product currently in AirIQ's California inventory provided that CalAmp posts a US$10,000 bond. AirIQ does not believe that this limited protective order will have any significant impact on its business operations. CalAmp's complaint with the court also alleged, among other things, damages in the amount of approximately US$1.1 million for components already delivered to AirIQ and approximately US$2.0 million for components which CalAmp alleges AirIQ had agreed to purchase prior to AirIQ's identification of performance and other issues. AirIQ has already recorded in its 2005 year end accounts payable the amount of US$1.1 million for components already delivered. The dispute with CalAmp will not have an impact on AirIQ's customers and is not expected to have a material impact on AirIQ. The dispute will be defended vigorously by AirIQ.

No U.S. Offering

The securities offered by AirIQ have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About AirIQ

AirIQ trades on the Toronto Stock Exchange under the symbol IQ. A leader in global wireless security, AirIQ is headquartered in Pickering, near Toronto, Canada, with offices in Lake Forest and San Diego, California, U.S.A. The Company operates as a wireless Internet applications service provider specializing in Telematics. Telematics is the name given to information and control messages sent wirelessly to and from vehicles and vessels. AirIQ's services are offered to four primary markets: Commercial Fleets; Consumer; Vehicle Finance; and Marine Fleets. AirIQ gives vehicle and vessel owners the abilities to manage and protect their mobile assets. AirIQ's services include: vehicle locating, boundary notification, automated inventory, maintenance reminders, security alerts, vehicle disabling, unauthorized movement alerts and many more features. For additional information on AirIQ, its products and services, please visit the Company's website at www.airiq.com.

Forward-looking Statements

This News Release contains forward-looking information based on management's best estimates and the current operating environment. These forward-looking statements are related to, but not limited to, AirIQ's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains words such as "anticipate", "believe", "expect", "plan" or similar words suggesting future outcomes. Such forward-looking statements are as of the date which such statement is made and are subject to a number of known and unknown risks, uncertainties and other factors which could cause actual results or events to differ materially from future results expressed, anticipated or implied by such forward-looking statements. Such factors include, but are not limited to, changes in market and competition, technological and competitive developments and potential downturns in economic conditions generally. Therefore, actual outcomes and results may differ materially from those expressed in such forward-looking statements. Other than as may be required by law, AirIQ disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of such information, future events or otherwise.

Contact Information