Communications firm takes big jump in Asia.

For the first 14 years of its existence, TechnoConcepts, Inc. has not produced revenues, focusing its efforts on research and development of its true software radio technology. However, with the firm's recent licensing deal with the China Electronics Corporation and its acquisition of San Jose-based Asante Technologies, Inc., the company expects the dynamics of its business to dramatically change.

TechnoConcepts' pact with CEC marks the Thousand Oaks-based company's first licensing deal ever.

CEC is a $5 billion conglomerate under direct supervision of the central government of China, with 16 wholly-funded subsidiaries, 30 share-holding companies, two overseas operations and six publicly owned companies.

The license enables CEC to incorporate TechnoConcept's patented technology for use in the development of commercial and governmental wireless applications. The licensing agreement calls for TechnoConcepts to receive a technology access fee, payable as project milestones are achieved, as well as a future royalty stream based on the production of products which incorporate the technology.

True software radio, the technology in question, is a type of software enabling competing wireless standards to understand each other.

Eventually, TechnoConcepts envisions that this technology could allow police and fire departments to communicate immediately in case of an emergency, allow cell phone users seamless roaming anywhere in the world and allow military forces from different countries to understand each others' radio signals, regardless of the type of device that they are using.

"We expect the CEC contract to be significant," TechnoConcepts' Chief Executive Officer Antonio Turgeon said. "I anticipate securing more licensing deals and we are pursuing them. Right now, CEC is working to prioritize the applications they are interested in using the technology for."

Preparedness 

The development of the technology raises interesting questions about the quality of emergency preparedness in the post 9/11 world.

Roger Fernandez, the director of legislative affairs for Los Angeles City Information Technology Agency, claims that while all Los Angeles city police, firemen and paramedics are able to communicate in the case of emergencies, the communication devices only work for city employees. If the emergency involved another city or county, radio communication would prove difficult.

"Such a technology would hypothetically be extremely useful. Right now, we have ways to communicate among our fire and police departments, but that's only citywide. If there were a major problem requiring communication with outside agencies, we would need a system to communicate with them," Fernandez said.

The deal with CEC reflects TechnoConcepts' desire to go after the ever-growing Asian economy, before even trying to tap into the United States marketplace. Turgeon touts South Korea as having the most sophisticated wireless networks in the world, and sees great potential in China, India and Korea as well. He maintains that the company's goal is to partner with organizations that have a pre-existing presence in Asia to get its technology integrated. Once it is hypothetically deployed in Asia, the company would expand its focus to the United States. However, they see more commercial potential on the Asian continent, whereas its niche in the U.S. would be more reserved for governmental use, for the time being.

Into wireless

With its purchase of Asante, a designer of networking devices, TechnoConcepts hopes to gain a foothold in the wireless communications space. Under the terms of the agreement, TechnoConcepts will pay $5 million in restricted stock for Asante. An additional $3 million of restricted stock will be issued if earnings goals over the next two years are achieved. TechnoConcepts will operate Asante as a wholly owned subsidiary. The purchase of the company will allow TechnoConcepts to more than double in size, going from 20 to 58 employees.

"Today, wired-to-wireless bridges utilize separate technologies for the interfaces, which makes management systems much more complex. Using true software radio technology can simplify this approach," Turgeon said. "Asante will be able to assist us in implementing this approach and we will assist them in developing their distribution channels through affiliations we have developed. We believe we can achieve $10 million in revenue in 2005."

In the grand scheme of things, TechnoConcepts remains a fledgling company with a technology that wields a good deal of potential. Allen Nogee, a principle analyst for In-Stat, a Scottsdale, Ariz., based research company, views TechnoConcepts' technology as being potentially quite lucrative. However, he cautions that such innovation has long been one of the unachieved goals of the communications industry.

"With cellular technology and most wireless technologies changing so fast, the radio and cell phone companies are looking for a way to do this," Nogee said. "It's been the holy grail for many years and it hasn't been done yet. If you are a wireless carrier and want to differentiate yourselves from the competition, a technology like TechnoConcepts' would allow you to add features to the handset that are normally very hard to do."

TechnoConcepts Inc.

Year Founded: 1991

Location: Thousand Oaks 

Employees: 58 (upon completion of acquisition of Asante Technologies)

Expected Revenues in 2005:$10 million

Stock Price: $4.67 (as of the close of markets on March 9)

Brief History: Founded by Ronald M. Hickling and Lap Wai Chow, the company was privately held until the end of 2003, when it merged with an existing public company, Technology Consulting Partners. Since the merger it has been a publicly traded company on Over The Counter Bulletin Board.