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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): NOVEMBER 26, 1997
CELLULAR TECHNICAL SERVICES COMPANY, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-19437 11-2962080
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
2401 FOURTH AVENUE
SEATTLE, WASHINGTON 98121
(Address of Principal Executive Offices) (Zip Code)
(206) 443-6400
(Registrant's telephone number, including area code)
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This Current Report on Form 8-K is filed by Cellular Technical
Services Company, Inc., a Delaware corporation (the "Company"), in connection
with the matters described herein.
ITEM 5. OTHER EVENTS
(i) On December 22, 1997, the Company settled a lawsuit brought in July
1996 against the Company by Reon International Corp. and Reon Corp. in
the Superior Court of King County, Washington. Pursuant to the
settlement, the lawsuit was dismissed by the court with prejudice
without any admission of liability or wrongdoing by any party.
(ii) In June and August 1997, the Company issued press releases in response
to statements published by third parties about the Company's patent
rights. These statements related to a re-examination proceeding
conducted by the United States Patent and Trademark Office ("USPTO")
with respect to a patent owned by AirTouch Communications, Inc. and
licensed on a non-exclusive basis to the Company (the "AirTouch
patent"). In this re-examination proceeding, the USPTO had
determined, on a preliminary basis, that a question of patentability
existed as to the AirTouch patent in light of a previously-filed
patent owned by Barry J. Magrill (the "Magrill patent"), either by
itself or in combination with other previously-filed patents. In
November 1997, the USPTO announced its final ruling in this
re-examination and terminated the proceeding. In its final ruling,
the USPTO confirmed the patentability of all claims contained in the
AirTouch patent, and consequently removed the Magrill patent and other
previously-filed patents as prior art references to the AirTouch
patent. The USPTO's formal Reexamination Certificate evidencing this
ruling is expected to be published by the USPTO in February 1998.
(iii) On January 13, 1998, Communications Information Services, Inc., which
purports to have exclusive rights to grant sublicenses under the
Magrill patent, brought a lawsuit against the Company and AirTouch
Communications, Inc. for alleged patent infringement in the United
States District Court for the Northern District of Georgia at Atlanta.
The complaint alleges that the Company's cellular telephone fraud
prevention technology infringes the Magrill patent, and seeks damages
in unspecified amounts. Although an unfavorable resolution of the
suit could materially affect the Company's financial position, the
Company believes this lawsuit is without merit and is vigorously
defending against it.
(iv) In January 1998, the Company began implementation of a strategic plan
that includes, among other initiatives, streamlining its operations to
better balance expenses and revenues, and directing additional
development efforts and resources toward new products that can
generate new sources of revenue. As part of the strategic plan, a
restructuring was initiated which reduced the Company's staff levels
by approximately 20 percent and consolidated the Company's hardware
assembly and integration operations. In addition, the Company has
made several changes to enhance its management team, including the
hiring of a new Vice President of Marketing, and the promotion of an
employee to Vice President Support and Services.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 19, 1998
CELLULAR TECHNICAL SERVICES, COMPANY, INC.
By: /s/ Michael E. McConnell
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Michael E. McConnell
Chief Financial Officer