AirIQ Announces 2005 Fourth Quarter and Year End Results

Exceeds 200,000 active subscribers with annual revenue increase over 80%.

AirIQ Annual Report 2005: www.airiq.com/airiqnewweb2/uploads/documents/AirIQ_2005_Annual_Report.pdf

Toronto, Ontario – March 28, 2006 – AirIQ Inc. (TSX: IQ), a leader in global wireless security, today announced its results for the fourth quarter and year ended December 31, 2005.

Highlights:
• Annual revenue increased by 84 per cent year over year to $40.0 million
• Gross profit increased by 69 per cent year over year to $14.8 million
• Ratio of expenses to revenue for 2005 improved to 56.5 per cent, compared to 72.7 per cent in 2004
• Reached an active subscriber base of 201,634
• Launched GSM (Global System for Mobile Communications) services creating a strong platform for international expansion
• Entered into Agreements with major GSM network carriers in the United States and Mexico
• Expanded presence in the consumer market through private label agreements with LoJack Corporation and with Directed Electronics’ four leading brands: Viper®, Python®, Clifford® and Automate®
• Recently announced private placement and financing arrangements to facilitate payment obligations

“AirIQ grew steadily in 2005 and our financial performance moved us closer to the important inflexion point where we turn from a Company using cash to one that produces cash,” said Donald Simmonds, President and CEO of AirIQ. “Last year we integrated the two businesses acquired in 2004 and launched our services on the GSM platform. Although we were confronted with several unforeseen challenges during the year, we expect a very strong first quarter of unit shipments which will demonstrate that the challenges are behind us now.”

With strength in all market sectors, AirIQ expects to deliver approximately 30,000 units in the first quarter of 2006, a record for the company.

“In the past year we surpassed 200,000 subscribers, a significant milestone and ensured our technical platform continues to deliver a competitive advantage,” Mr. Simmonds continued. “Despite network issues in Mexico, unexpected customer churn and the effects of the stronger Canadian dollar, we increased our revenue and gross profit while improving our expense to revenue ratio. Along with these important trends, we are encouraged that business and consumer understanding of the benefits of wireless security for mobile assets is accelerating our momentum.”

“As we announced last week, we have entered into a bought deal private placement and term loan and the Company will use these funds to satisfy its upcoming earn-out obligation,” stated Mark Kohler, CFO of AirIQ. “Along with annualized expense reductions of $2.0 million in January that should take effect fully in the second quarter, the leveraging effect of our recurring revenues should create a marked improvement in cash generation in the first and second quarters of 2006.”

“With the Company’s decision to begin transitioning its new services to a digital-based (GSM) technology platform in the fourth quarter of 2005, management determined that to be conservative a non-cash provision related to analogue network based inventory should be taken amounting to approximately $2,085,000,” continued Mr. Kohler. “The benefits of the new digital solution are greater efficiency in costs per transaction, improvements in hardware costs (once volume procurement initiatives are established), and the ability to grow our business internationally. We began shipping GSM units to Mexico based customers in the fourth quarter.”

As a recurring revenue business, the key measures of AirIQ’s progress relate to various trajectories, or trends. The Company’s strategy is to aggressively acquire new subscribers and service revenues from a relatively fixed and scalable infrastructure.

Overview
The accompanying condensed consolidated statements of loss and deficit are presented for the years and quarters ended December 31, 2005 and December 31, 2004, comparatively, and include the operating results of AirIQ Inc. and its subsidiaries. The accompanying condensed consolidated balance sheets do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. The Company’s audited consolidated financial statements as at and for the year ended December 31, 2005, including notes thereto, the accompanying Management’s Discussion and Analysis, and the Company’s 2005 Annual Report, will be filed with the Canadian securities regulatory authorities today; and will be available on the Company’s website (www.airiq.com) and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website (www.sedar.com).

Unless otherwise noted herein, all references to dollar amounts are in Canadian dollars.

Subscriber Base
Shipments of hardware units to customers totaled 20,952 in the fourth quarter of 2005. During the fourth quarter, the Company decided to permanently discontinue service to an Aircept customer with approximately 7,500 remaining units and discontinued approximately 3,000 units in Mexico from its service, in each case, due to lack of payment on overdue accounts. These actions were taken after repeated attempts to resolve the overdue accounts. This unusual churn resulted in lower than expected net active subscriber additions in the quarter. The Company does not expect churn levels experienced in the fourth quarter to continue in 2006.

Revenue Increased
Revenues for the year ended December 31, 2005, increased 83.9 per cent to $40.0 million from $21.8 million in 2004. The increase in revenues resulted from subscriber additions and the integration of the Aircept and Boatracs businesses acquired in 2004. For the three months ended December 31, 2005, revenues increased by 10.1 per cent to $10.0 million from $9.0 million for same period last year and decreased by approximately $300,000 from the previous three months ended September 30, 2005, largely due to the strengthening Canadian-U.S. dollar exchange rate and competitive pricing of hardware units.

Gross Profit Improved
Gross profit for the year ended December 31, 2005, was $14.8 million, an increase of 69.3 per cent compared to gross profit of $8.7 million for 2004. Excluding the write-down of inventory due to technology change, gross profit for the year was $16.9 million. For the three months ended December 31, 2005, gross profit was $4.2 million (before inventory write-down), a decrease of approximately $185,000 from the previous three months ended September 30, 2005. Gross profit as a percentage of revenue for the fourth quarter of 2005 was 42.1 per cent (before inventory write-down), compared to 42.6 per cent for the three months ended September 30, 2005.

Expenses
Expenses for the year ended December 31, 2005, totaled $22.6 million, compared to $15.8 million for 2004. The increase is primarily due to a full year’s operational costs generated by the integrated Aircept and Boatracs businesses. In the fourth quarter of 2005, expenses were $6.9 million or 68.9 per cent of revenue, compared to $5.8 million or 64.6 per cent of revenue in the same period last year, reflecting an increase in bad debt provisions and professional fees related to legal activities regarding a potential acquisition and a new financing that did not have sufficient merit to proceed.

The Company announced in January 2006, that it has made a workforce reduction of approximately 13% which is planned to reduce operating expenses by approximately $2 million on an annualized basis.

Net Loss per Share
The net loss for the year ended December 31, 2005, was $13.1 million, or $0.11 per share, compared with a net loss of $11.3 million or $0.13 per share for 2004. For the three months ended, December 31, 2005, net loss was $5.7 million or $0.05 per share, compared to a net loss of $3.8 million or $0.03 per share for the same period last year.

Liquidity and Capital Resources
As at December 31, 2005, the Company had cash and cash equivalents of approximately $1.4 million and negative adjusted working capital of approximately $7.9 million. Amounts owing under the bank financing and the earn-out commitment are included in the calculation of working capital. The working capital position will be improved through the closing of the recently announced financings.

On March 24, 2006, the Company announced that it had entered into a commitment agreement with Paradigm Capital pursuant to which Paradigm Capital agreed to purchase on a bought deal private placement basis 26,545,455 special warrants for gross proceeds of $5,309,091. The proceeds of this financing are to be used to satisfy the earn-out commitment. In addition, on the same day the Company announced that it had entered into an agreement in principle for a $4 million five year term loan with certain existing shareholders. The proceeds of this financing are to be used to reduce the amount outstanding on the bank financing. Both financings are expected to close on or about April 4, 2006.

The Company expects the bank financing will be amended contemporaneously with the closings of the financings, and will include an extension of the due date of the remaining credit facility.

Consolidated Financial Statements: www.airiq.com/airiqnewweb2/uploads/documents/AirIQ_2005_AR_Financials.pdf

Conference Call and Webcast
AirIQ will hold a conference call on Tuesday, March 28, 2006, at 10:00 a.m. ET. To access the call please dial 416-644-3417 or 1-800-814-4941. A replay of the conference call will be available at noon the same day until midnight April 4, 2006. To access the replay, dial 416-640-1917 or 1-877- 289-8525 followed by the passcode 21181912#. The call will also be webcast live on the Company’s website at www.airiq.com.

The Company’s Annual Report, including complete financial statements and Management’s Discussion and Analysis will be available for the call at www.airiq.com and later the same day at www.sedar.com.

AirIQ will hold its Annual General Meeting of Shareholders on Tuesday, May 9, 2006, at 10:00 a.m. (Eastern Standard Time) at The Toronto Stock Exchange Conference Centre, The Exchange Tower, 130 King Street West, Toronto, Ontario, Canada M5X 1J2.

About AirIQ
AirIQ trades on the Toronto Stock Exchange under the symbol IQ. A leader in global wireless security, AirIQ is headquartered in Pickering, near Toronto, Canada, with offices in Lake Forest and San Diego, California, U.S.A. The Company operates as a wireless Internet applications service provider specializing in Telematics. Telematics is the name given to information and control messages sent wirelessly to and from vehicles and vessels. AirIQ’s services are offered to four primary markets: Commercial Fleets; Consumer; Vehicle Finance; and Marine Fleets. AirIQ gives vehicle and vessel owners the abilities to manage and protect their mobile assets. AirIQ’s services include: vehicle locating, boundary notification, automated inventory, maintenance reminders, security alerts, vehicle disabling, unauthorized movement alerts and many more features. For additional information on AirIQ, its products and services, please visit the Company’s website at www.airiq.com.

Forward-looking Statements
This News Release contains forward-looking information based on management’s best estimates and the current operating environment. These forward-looking statements are related to, but not limited to, AirIQ’s operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains words such as “anticipate”, “believe”, “expect”, “plan” or similar words suggesting future outcomes. Such forward-looking statements are as of the date which such statement is made and are subject to a number of known and unknown risks, uncertainties and other factors which could cause actual results or events to differ materially from future results expressed, anticipated or implied by such forward-looking statements. Such factors include, but are not limited to, changes in market and competition, technological and competitive developments and potential downturns in economic conditions generally. Therefore, actual outcomes and results may differ materially from those expressed in such forward-looking statements. Other than as may be required by law, AirIQ disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of such information, future events or otherwise.

Contact Information

Mary Catherine Telemaque

Manager, Corporate Communications

AirIQ Inc.

Contact via E-mail