U.S. Wireless Files for Bankruptcy, Announces Asset Sales

U.S. Wireless Data Inc., a 13-year-old payment gateway specializing in wireless and vending-machine transactions, has announced it has filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The New York-based company also announced it is selling “substantially all” of its assets. It has reached an agreement with NBS under which the latter company will buy U.S. Wireless's point-of-sale gateway business, called “Synapse,” for $2.85 million in cash plus a processing credit of up to $2.15 million for U.S. Wireless's vending business. The vending business, meanwhile, is being sold under a separate agreement to SANI Operating Co. LLC for $1.6 million and the assumption of liabilities. The sale includes the processing credit from NBS. Other companies may bid on the U.S. Wireless businesses under a process supervised by the bankruptcy court. U.S. Wireless says it expects to close the sales by May 21, and the company will remain in operation until then. It says it has arranged with Sani for debtor-in-possession financing to fund operations until the deals close. The company's bankruptcy petition was filed with the U.S. bankruptcy court for the Southern District of New York. In a statement released last month, U.S. Wireless announced it was seeking a buyer for its Synapse POS business, which accounts for most of the company's revenue, and that it needed to secure financing to stay in business. It said it would concentrate on its vending-machine business, where it had made agreements with PepsiCo Inc. and Pepsi-Cola North America for wireless payment processing. It said Pepsi bottlers and licensees had already deployed more than 600 wireless units in various markets around the country. In the end, however, the company said it could not generate sufficient revenue to stay in business. “We were simply unable to increase our revenues sufficiently to bring the company to profitability or to secure additional financing to maintain our viability,” said Dean M. Leavitt, chief executive, in a statement released Friday. Leavitt joined the company in 1999, moving the headquarters from California to New York City. U.S. Wireless reported a net loss of $2.85 million for the second half of 2003 on $2.6 million in revenue. The company had narrowed its loss by 45% from the year-ago period and had hiked its revenues by 52%. It reported 34,100 “active sites” for its gateway services, up from 15,400 at the end of 2002. It processed 2.72 million transactions in the final quarter of the year, an increase of 55% over the same period the year before.