Tut Systems Acquires ActiveTelco for Upward of $4 Mil in Stock and Debt

PLEASANTON, CA-Tut Systems Inc., a locally-based provider of high-speed Internet access to the hotel and apartment industries, is acquiring privately-held ActiveTelco Inc. of Fremont, CA in a deal valued at more than $4 million. ActiveTelco is a year-old provider of IP telephony and messaging solutions that allow telecommunications service providers to integrate and deliver web-based applications such as unified messaging, long distance service, voicemail and fax delivery, call forwarding, call conferencing and callback services.

Under the terms of the agreement with ActiveTelco, Tut is issuing to ActiveTelco shareholders a combination of common stock and options with an expected aggregate value of approximately $2.9 million. In addition, Pleasanton-based Tut Systems has agreed to pay off convertible notes in the amount of $650,000 plus accrued interest, and to assume the liabilities of approximately $500,000.

In various partnerships with service providers, Tut Systems has deployed its solutions in commercial and residential properties of the country’s largest real estate investment trusts, and in the flagship properties of major hotel chain worldwide. For the nine months ended on Sept. 30, Tut Systems’ revenues totaled $66.1 million, up from $17.2 million. Net loss applicable to Common fell 23 percent to $6 million. Results reflect increased sales of Expresso MDU products, partially offset by amortization.