StarTrak Systems Acquires MicroLogic

Alanco Technologies last week announced that its StarTrak Systems subsidiary, a provider of transport refrigeration tracking, monitoring, and control systems, has entered the emerging market for wireless tracking and monitoring services to the construction equipment industry through the acquisition of the assets of MicroLogic Inc., located in Lowell, Mass.

MicroLogic is most notable for its technical development of the LoJack Stolen Vehicle Recovery System and the engineering of the LifeLine Personal Emergency Response System. More recently, MicroLogic began offering wireless solutions to address a number of operational and asset management challenges in the construction industry, entering into the emerging market for wireless tracking and monitoring of construction equipment assets, such as towable generators, excavators, bulldozers, backhoes, rock drills and cranes. The company currently provides data services to about 25 customers, tracking and monitoring over 1,000 construction equipment assets, principally in the Eastern United States.

The MicroLogic business model, similar to StarTrak’s, is driven by recurring revenue. An initial sale and installation of a transponder unit on an asset is followed by a monthly recurring subscription payment plan for monitoring data services. The customer value proposition related to MicroLogic’s data services includes increased revenues for equipment rental companies through maximized asset utilization, and decreased operating costs through improved maintenance and fuel savings. Although current market penetration for monitoring construction equipment is minimal, the potential addressable U.S. market is estimated to exceed 1 million assets, which would translate to initial hardware sales of about $750 million and annual data service revenues in the range of $300 million.

“The MicroLogic acquisition presented a unique opportunity to greatly expand StarTrak’s long-term market potential for a nominal all-stock investment,” said Robert Kauffman, Alanco chairman and CEO. “The transaction is expected to be immediately cash positive based on existing MicroLogic annual service revenues of about $400,000. The MicroLogic business is highly complementary to StarTrak’s refrigeration transport monitoring technology and operations, and will be integrated within the existing organization with the addition of only MicroLogic’s present sales manager and a systems engineer. Current MicroLogic data services will be moved to StarTrak’s lower cost, more robust network, which should improve service reliability and overall performance. We are confident that StarTrak can significantly improve upon the current MicroLogic product offering, and greatly accelerate penetration of this early stage market opportunity.”

Alanco Technologies, headquartered in Scottsdale, Ariz., is a growing provider of wireless tracking and asset management solutions through its StarTrak Systems and Alanco/TSI PRISM subsidiaries.