Teletouch Communications, Inc. (AMEX:TLL) today announced that due
to continued difficulty in preparing its current and historical
consolidated financial statements related to completing the audit
of its recent acquisition of Progressive Concepts, Inc. (�PCI�), it
is unable to file its Quarterly Report on Form 10-Q for the first
fiscal period of 2007 ended August 31, 2006, which was originally
due to be filed by October 23, 2006. Further, due to these same
difficulties, the Company will be unable to file an Amended Current
Report on Form 8-K/A reflecting the pro forma and historical
effects of the PCI acquisition and subsequent disposition of its
paging business assets by the October 27, 2006, required filing
date. At this time, Teletouch is unable to provide a reliable
estimate of its revised 10-Q and 8-K/A filing dates. However, the
Company will provide updates regarding the filing dates as more
reliable information becomes available. As previously announced,
Teletouch acquired PCI on August 11, 2006. The Company�s management
estimates that its consolidated revenues for the three months ended
August�31, 2006 were approximately $13.6 million, comprised of
approximately $1.3 million in revenue from Teletouch�s two-way
radio business and approximately $12.3 million in revenue from the
newly acquired operations of PCI. Certain cellular service revenues
related to PCI�s distribution agreement with Cingular are reported
net of the costs paid to Cingular to purchase and provide these
cellular services to PCI�s approximately 90,000 subscriber
customers. PCI generated gross cellular billings for the quarter of
approximately $21.7 million, which were reduced on a net revenue
reporting basis by $9.4 million paid or payable to Cingular,
resulting in reportable net revenues of approximately $12.3
million. PCI reports revenue in accordance with Emerging Issues
Task Force Issue 99-19, Reporting Revenue Gross as a Principal
versus Net as an Agent, (�EITF 99-19�), i.e., the net of the gross
billing of Cingular cellular services that PCI provides to its
customers and the related cost paid or payable to Cingular for
these services. Under EITF 99-19, PCI is deemed to be an agent in
its agreement with Cingular, as defined in EITF 99-19, under which
PCI receives a fixed percentage of the customer billings as
compensation for its acquisition, fulfillment, billing and ongoing
customer support obligations. Net loss for the quarter is estimated
to be between $2.4 and $3.0 million, or between $0.05 and $0.07 per
share based upon 48.7�million weighted average shares outstanding
for the three month period. During the quarter, and included in the
net loss discussed above, the Company estimates that the income
from its discontinued paging operations was approximately $0.5
million. Teletouch completed the sale of its legacy paging
operations on August 14, 2006. The Company cautions shareholders
and potential investors in the Company�s securities that BDO
Seidman, LLP, the Company�s Independent Public Accountants, have
not audited or reviewed these amounts and that such financial
information is subject to further analysis and independent review.
The Company disclaims any responsibility for them. These results
are preliminary and are subject to change, possibly material in
nature, following completion of the audit for the period ended
May�31, 2006 and review for the period ended August�31, 2006. The
cause of the filing delay is due to Teletouch�s recent acquisition
of PCI and the related accounting and audit issues related to PCI,
its new wholly-owned subsidiary. As previously reported, on August
11, 2006, Teletouch acquired all of the issued and outstanding
equity securities of PCI, through the contribution of 100% of the
issued and outstanding equity securities of PCI to Teletouch by TLL
Partners, LLC, a Delaware limited liability company and the holder
of approximately 80% of Teletouch�s outstanding common stock,
without the issuance of any monetary or stock consideration by
Teletouch. For a complete description of the transaction, see the
Company�s Current Report on Form 8-K filed with the Securities and
Exchange Commission on August 17, 2006. Prior to completion of the
acquisition, Teletouch determined that the PCI transaction would be
accounted for in a manner similar to a pooling-of-interest
transaction for all periods presented, and that the assets,
liabilities and operating results of PCI would be consolidated with
those of Teletouch for financial reporting purposes for all periods
presented in financial reports issued after the acquisition. The
Company intended to report such consolidated results in its August
31, 2006 Quarterly Report to be filed within the statutorily
prescribed timeframe in October 2006. Teletouch engaged its
auditors, BDO Seidman LLP (�BDO�), to complete a PCI audit for the
calendar 2005 and most recent stub-year fiscal period, and engaged
PCI�s previous parent company�s auditors, Forth Worth-based Whitley
Penn LLP, to audit PCI for the 2003 and 2004 calendar years.
Subsequent to BDO�s commencement of its work on PCI�s 2005 calendar
year audit, it became clear that a greater than originally
estimated amount of time and effort would be required to complete
the PCI audit, as described in more detail below. Accounting
Consolidation with Prior Parent. The financial statements of PCI
were historically audited only as part of a consolidated group
audit of Progressive Concepts Communications, Inc. (�PCCI�), its
prior parent. Teletouch has had significant difficulty in
segregating various business and related accounting events from the
current and prior period PCCI consolidated financials, including
related subsidiary transactions, discontinued (sold) operations and
other accounting matters. Given the significant number of these
business transactions conducted by PCI in 2005, the ability to
create separate current and prior period financial reports for
PCI�s operations on a stand-alone basis has caused substantial
unanticipated delays. Calendar Year Inconsistencies with Teletouch
Fiscal Year. Prior to the acquisition, PCI was a privately held
company with financial statements based on a calendar year which
were historically included in the audited consolidated financial
statements of PCCI. The most recent PCCI audit that had been
completed was as of December 31, 2004. The calendar year conversion
of certain PCI reporting periods to the Teletouch May 31st fiscal
year-end, and related fiscal quarter reporting periods has caused a
number of unanticipated delays. Also as a result of the foregoing
challenges and as noted above, the Company will not be able to
complete a timely filing of certain pro forma and historic
financial statements reflecting the effects of the PCI acquisition
and recent disposition of its paging business assets. Teletouch
intended to file its Amended Current Report on Form 8-K/A
containing such presentations within the required timeframe before
the end of October. American Stock Exchange Non-Compliance
Notification The Company also reported that on October 24, 2006,
after market close, the American Stock Exchange (�AMEX�) Listing
Qualifications staff notified the Company that as a result of its
inability to file its Quarterly Report on Form 10-Q for the period
ended August 31, 2006, the Company was no longer in compliance with
Sections 134 and 1101 of the AMEX Company Guide requiring currency
in public reporting of the AMEX listed issuers. The AMEX staff
invited the Company to submit a plan of compliance addressing the
continued listing deficiency by no later than October 31, 2006. If
the Company is not in compliance with the continued listing
standards by November 30, 2006 or does not make progress consistent
with the Plan during the plan period, the AMEX staff will initiate
delisting proceedings as appropriate. The Company plans to make a
timely submission to the AMEX staff in which it will outline the
timeframe within which the Company intends to cure the listing
deficiency and to regain its compliance with the AMEX continued
listing requirements. In the event the AMEX staff accepts the
Company�s plan for compliance, the Company�s stock will continue
trading on the AMEX for the duration of the compliance period.
Otherwise, the AMEX staff has indicated that it will initiate
delisting proceedings. There is no assurance that the AMEX staff
will accept the Company�s plan of compliance or that, even if such
plan is accepted, the Company will be able to implement the plan
within the prescribed timeframe. The Company may appeal a staff
determination to initiate such proceedings and seek a hearing
before an AMEX panel. The time and place of such a hearing will be
determined by the Panel. If the Panel does not grant the relief
sought by the Company, its securities could be delisted from the
exchange. In the event that the Company�s securities are delisted
from AMEX, the Company will seek to cause them be quoted
Over-The-Counter in the Pink Sheets, which provides electronic
quotation information. Within five days of the AMEX listing
deficiency notification, the Company�s stock trading symbol will
become subject to an additional indicator �.BC.LF� to denote its
noncompliance. While the trading symbol itself will remain
unchanged, the symbol will bear this additional indicator until the
Company regains its compliance with the AMEX continued listing
requirements. About Teletouch Communications For over 40 years,
Teletouch has offered a comprehensive suite of telecommunications
products and services, including cellular, two-way radio
communications, GPS-telemetry and wireless messaging services
throughout the United States. Teletouch�s wholly-owned subsidiary,
Progressive Concepts, Inc., is a leading U.S. provider of wireless
cellular voice, data, and entertainment products and branded
wireless services to individuals, businesses, and government
agencies. PCI provides these products and services through its
chain of retail stores (under the �Hawk Electronics� brand),
Hawk-branded agents, a direct sales force in Texas and Arkansas,
and through the Internet (www.hawkelectronics.com). PCI also
operates a significant national wholesale distribution business
serving smaller cellular and automotive retailers, car dealers and
cellular service providers throughout the country. Teletouch's
common stock is traded on the American Stock Exchange under stock
symbol: TLL. Additional information about Teletouch can be found
at: www.teletouch.com. All statements in this news release that are
not based on historical fact are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995 and the provisions of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended (which Sections were adopted as part of the
Private Securities Litigation Reform Act of 1995). While management
has based any forward-looking statements contained herein on its
current expectations, the information on which such expectations
were based may change. These forward-looking statements rely on a
number of assumptions concerning future events and are subject to a
number of risks, uncertainties, and other factors, many of which
are outside of our control, that could cause actual results to
materially differ from such statements. Such risks, uncertainties,
and other factors include, but are not necessarily limited to,
those set forth under the caption "Additional Factors That May
Affect Our Business" in the Company's most recent Form 10-K and
10-Q filings, and amendments thereto. In addition, we operate in a
highly competitive and rapidly changing environment, and new risks
may arise. Accordingly, investors should not place any reliance on
forward-looking statements as a prediction of actual results. We
disclaim any intention to, and undertake no obligation to, update
or revise any forward-looking statement. Teletouch Communications,
Inc. (AMEX:TLL) today announced that due to continued difficulty in
preparing its current and historical consolidated financial
statements related to completing the audit of its recent
acquisition of Progressive Concepts, Inc. ("PCI"), it is unable to
file its Quarterly Report on Form 10-Q for the first fiscal period
of 2007 ended August 31, 2006, which was originally due to be filed
by October 23, 2006. Further, due to these same difficulties, the
Company will be unable to file an Amended Current Report on Form
8-K/A reflecting the pro forma and historical effects of the PCI
acquisition and subsequent disposition of its paging business
assets by the October 27, 2006, required filing date. At this time,
Teletouch is unable to provide a reliable estimate of its revised
10-Q and 8-K/A filing dates. However, the Company will provide
updates regarding the filing dates as more reliable information
becomes available. As previously announced, Teletouch acquired PCI
on August 11, 2006. The Company's management estimates that its
consolidated revenues for the three months ended August 31, 2006
were approximately $13.6 million, comprised of approximately $1.3
million in revenue from Teletouch's two-way radio business and
approximately $12.3 million in revenue from the newly acquired
operations of PCI. Certain cellular service revenues related to
PCI's distribution agreement with Cingular are reported net of the
costs paid to Cingular to purchase and provide these cellular
services to PCI's approximately 90,000 subscriber customers. PCI
generated gross cellular billings for the quarter of approximately
$21.7 million, which were reduced on a net revenue reporting basis
by $9.4 million paid or payable to Cingular, resulting in
reportable net revenues of approximately $12.3 million. PCI reports
revenue in accordance with Emerging Issues Task Force Issue 99-19,
Reporting Revenue Gross as a Principal versus Net as an Agent,
("EITF 99-19"), i.e., the net of the gross billing of Cingular
cellular services that PCI provides to its customers and the
related cost paid or payable to Cingular for these services. Under
EITF 99-19, PCI is deemed to be an agent in its agreement with
Cingular, as defined in EITF 99-19, under which PCI receives a
fixed percentage of the customer billings as compensation for its
acquisition, fulfillment, billing and ongoing customer support
obligations. Net loss for the quarter is estimated to be between
$2.4 and $3.0 million, or between $0.05 and $0.07 per share based
upon 48.7 million weighted average shares outstanding for the three
month period. During the quarter, and included in the net loss
discussed above, the Company estimates that the income from its
discontinued paging operations was approximately $0.5 million.
Teletouch completed the sale of its legacy paging operations on
August 14, 2006. The Company cautions shareholders and potential
investors in the Company's securities that BDO Seidman, LLP, the
Company's Independent Public Accountants, have not audited or
reviewed these amounts and that such financial information is
subject to further analysis and independent review. The Company
disclaims any responsibility for them. These results are
preliminary and are subject to change, possibly material in nature,
following completion of the audit for the period ended May 31, 2006
and review for the period ended August 31, 2006. The cause of the
filing delay is due to Teletouch's recent acquisition of PCI and
the related accounting and audit issues related to PCI, its new
wholly-owned subsidiary. As previously reported, on August 11,
2006, Teletouch acquired all of the issued and outstanding equity
securities of PCI, through the contribution of 100% of the issued
and outstanding equity securities of PCI to Teletouch by TLL
Partners, LLC, a Delaware limited liability company and the holder
of approximately 80% of Teletouch's outstanding common stock,
without the issuance of any monetary or stock consideration by
Teletouch. For a complete description of the transaction, see the
Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on August 17, 2006. Prior to completion of the
acquisition, Teletouch determined that the PCI transaction would be
accounted for in a manner similar to a pooling-of-interest
transaction for all periods presented, and that the assets,
liabilities and operating results of PCI would be consolidated with
those of Teletouch for financial reporting purposes for all periods
presented in financial reports issued after the acquisition. The
Company intended to report such consolidated results in its August
31, 2006 Quarterly Report to be filed within the statutorily
prescribed timeframe in October 2006. Teletouch engaged its
auditors, BDO Seidman LLP ("BDO"), to complete a PCI audit for the
calendar 2005 and most recent stub-year fiscal period, and engaged
PCI's previous parent company's auditors, Forth Worth-based Whitley
Penn LLP, to audit PCI for the 2003 and 2004 calendar years.
Subsequent to BDO's commencement of its work on PCI's 2005 calendar
year audit, it became clear that a greater than originally
estimated amount of time and effort would be required to complete
the PCI audit, as described in more detail below. Accounting
Consolidation with Prior Parent. The financial statements of PCI
were historically audited only as part of a consolidated group
audit of Progressive Concepts Communications, Inc. ("PCCI"), its
prior parent. Teletouch has had significant difficulty in
segregating various business and related accounting events from the
current and prior period PCCI consolidated financials, including
related subsidiary transactions, discontinued (sold) operations and
other accounting matters. Given the significant number of these
business transactions conducted by PCI in 2005, the ability to
create separate current and prior period financial reports for
PCI's operations on a stand-alone basis has caused substantial
unanticipated delays. Calendar Year Inconsistencies with Teletouch
Fiscal Year. Prior to the acquisition, PCI was a privately held
company with financial statements based on a calendar year which
were historically included in the audited consolidated financial
statements of PCCI. The most recent PCCI audit that had been
completed was as of December 31, 2004. The calendar year conversion
of certain PCI reporting periods to the Teletouch May 31st fiscal
year-end, and related fiscal quarter reporting periods has caused a
number of unanticipated delays. Also as a result of the foregoing
challenges and as noted above, the Company will not be able to
complete a timely filing of certain pro forma and historic
financial statements reflecting the effects of the PCI acquisition
and recent disposition of its paging business assets. Teletouch
intended to file its Amended Current Report on Form 8-K/A
containing such presentations within the required timeframe before
the end of October. American Stock Exchange Non-Compliance
Notification The Company also reported that on October 24, 2006,
after market close, the American Stock Exchange ("AMEX") Listing
Qualifications staff notified the Company that as a result of its
inability to file its Quarterly Report on Form 10-Q for the period
ended August 31, 2006, the Company was no longer in compliance with
Sections 134 and 1101 of the AMEX Company Guide requiring currency
in public reporting of the AMEX listed issuers. The AMEX staff
invited the Company to submit a plan of compliance addressing the
continued listing deficiency by no later than October 31, 2006. If
the Company is not in compliance with the continued listing
standards by November 30, 2006 or does not make progress consistent
with the Plan during the plan period, the AMEX staff will initiate
delisting proceedings as appropriate. The Company plans to make a
timely submission to the AMEX staff in which it will outline the
timeframe within which the Company intends to cure the listing
deficiency and to regain its compliance with the AMEX continued
listing requirements. In the event the AMEX staff accepts the
Company's plan for compliance, the Company's stock will continue
trading on the AMEX for the duration of the compliance period.
Otherwise, the AMEX staff has indicated that it will initiate
delisting proceedings. There is no assurance that the AMEX staff
will accept the Company's plan of compliance or that, even if such
plan is accepted, the Company will be able to implement the plan
within the prescribed timeframe. The Company may appeal a staff
determination to initiate such proceedings and seek a hearing
before an AMEX panel. The time and place of such a hearing will be
determined by the Panel. If the Panel does not grant the relief
sought by the Company, its securities could be delisted from the
exchange. In the event that the Company's securities are delisted
from AMEX, the Company will seek to cause them be quoted
Over-The-Counter in the Pink Sheets, which provides electronic
quotation information. Within five days of the AMEX listing
deficiency notification, the Company's stock trading symbol will
become subject to an additional indicator ".BC.LF" to denote its
noncompliance. While the trading symbol itself will remain
unchanged, the symbol will bear this additional indicator until the
Company regains its compliance with the AMEX continued listing
requirements. About Teletouch Communications For over 40 years,
Teletouch has offered a comprehensive suite of telecommunications
products and services, including cellular, two-way radio
communications, GPS-telemetry and wireless messaging services
throughout the United States. Teletouch's wholly-owned subsidiary,
Progressive Concepts, Inc., is a leading U.S. provider of wireless
cellular voice, data, and entertainment products and branded
wireless services to individuals, businesses, and government
agencies. PCI provides these products and services through its
chain of retail stores (under the "Hawk Electronics" brand),
Hawk-branded agents, a direct sales force in Texas and Arkansas,
and through the Internet (www.hawkelectronics.com). PCI also
operates a significant national wholesale distribution business
serving smaller cellular and automotive retailers, car dealers and
cellular service providers throughout the country. Teletouch's
common stock is traded on the American Stock Exchange under stock
symbol: TLL. Additional information about Teletouch can be found
at: www.teletouch.com. All statements in this news release that are
not based on historical fact are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995 and the provisions of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended (which Sections were adopted as part of the
Private Securities Litigation Reform Act of 1995). While management
has based any forward-looking statements contained herein on its
current expectations, the information on which such expectations
were based may change. These forward-looking statements rely on a
number of assumptions concerning future events and are subject to a
number of risks, uncertainties, and other factors, many of which
are outside of our control, that could cause actual results to
materially differ from such statements. Such risks, uncertainties,
and other factors include, but are not necessarily limited to,
those set forth under the caption "Additional Factors That May
Affect Our Business" in the Company's most recent Form 10-K and
10-Q filings, and amendments thereto. In addition, we operate in a
highly competitive and rapidly changing environment, and new risks
may arise. Accordingly, investors should not place any reliance on
forward-looking statements as a prediction of actual results. We
disclaim any intention to, and undertake no obligation to, update
or revise any forward-looking statement.
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