Teletouch Communications Delays in Filing Its Consolidated Quarterly Report on Form 10-Q and Amended Current Report on Form 8-K/

  
    
  
  
    
      Teletouch Communications, Inc. (AMEX:TLL) today announced that due to 
      continued difficulty in preparing its current and historical 
      consolidated financial statements related to completing the audit of its 
      recent acquisition of Progressive Concepts, Inc. (“PCI”), 
      it is unable to file its Quarterly Report on Form 10-Q for the first 
      fiscal period of 2007 ended August 31, 2006, which was originally due to 
      be filed by October 23, 2006. Further, due to these same difficulties, 
      the Company will be unable to file an Amended Current Report on Form 
      8-K/A reflecting the pro forma and historical effects of the PCI 
      acquisition and subsequent disposition of its paging business assets by 
      the October 27, 2006, required filing date. At this time, Teletouch is 
      unable to provide a reliable estimate of its revised 10-Q and 8-K/A 
      filing dates. However, the Company will provide updates regarding the 
      filing dates as more reliable information becomes available.
    
    
      As previously announced, Teletouch acquired PCI on August 11, 2006. The 
      Company’s management estimates that its 
      consolidated revenues for the three months ended August 31, 2006 were 
      approximately $13.6 million, comprised of approximately $1.3 million in 
      revenue from Teletouch’s two-way radio 
      business and approximately $12.3 million in revenue from the newly 
      acquired operations of PCI. Certain cellular service revenues related to 
      PCI’s distribution agreement with Cingular are 
      reported net of the costs paid to Cingular to purchase and provide these 
      cellular services to PCI’s approximately 
      90,000 subscriber customers. PCI generated gross cellular billings for 
      the quarter of approximately $21.7 million, which were reduced on a net 
      revenue reporting basis by $9.4 million paid or payable to Cingular, 
      resulting in reportable net revenues of approximately $12.3 million. PCI 
      reports revenue in accordance with Emerging Issues Task Force Issue 
      99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, 
      (“EITF 99-19”), 
      i.e., the net of the gross billing of Cingular cellular services that 
      PCI provides to its customers and the related cost paid or payable to 
      Cingular for these services. Under EITF 99-19, PCI is deemed to be an 
      agent in its agreement with Cingular, as defined in EITF 99-19, under 
      which PCI receives a fixed percentage of the customer billings as 
      compensation for its acquisition, fulfillment, billing and ongoing 
      customer support obligations. Net loss for the quarter is estimated to 
      be between $2.4 and $3.0 million, or between $0.05 and $0.07 per share 
      based upon 48.7 million weighted average shares outstanding for the 
      three month period. During the quarter, and included in the net loss 
      discussed above, the Company estimates that the income from its 
      discontinued paging operations was approximately $0.5 million. Teletouch 
      completed the sale of its legacy paging operations on August 14, 2006. The 
      Company cautions shareholders and potential investors in the Company’s 
      securities that BDO Seidman, LLP, the Company’s 
      Independent Public Accountants, have not audited or reviewed these 
      amounts and that such financial information is subject to further 
      analysis and independent review. The Company disclaims any 
      responsibility for them. These results are preliminary and are subject 
      to change, possibly material in nature, following completion of the 
      audit for the period ended May 31, 2006 and review for the period ended 
      August 31, 2006.
    
    
      The cause of the filing delay is due to Teletouch’s 
      recent acquisition of PCI and the related accounting and audit issues 
      related to PCI, its new wholly-owned subsidiary. As previously reported, 
      on August 11, 2006, Teletouch acquired all of the issued and outstanding 
      equity securities of PCI, through the contribution of 100% of the issued 
      and outstanding equity securities of PCI to Teletouch by TLL Partners, 
      LLC, a Delaware limited liability company and the holder of 
      approximately 80% of Teletouch’s outstanding 
      common stock, without the issuance of any monetary or stock 
      consideration by Teletouch. For a complete description of the 
      transaction, see the Company’s Current Report 
      on Form 8-K filed with the Securities and Exchange Commission on August 
      17, 2006.
    
    
      Prior to completion of the acquisition, Teletouch determined that the 
      PCI transaction would be accounted for in a manner similar to a 
      pooling-of-interest transaction for all periods presented, and that the 
      assets, liabilities and operating results of PCI would be consolidated 
      with those of Teletouch for financial reporting purposes for all periods 
      presented in financial reports issued after the acquisition. The Company 
      intended to report such consolidated results in its August 31, 2006 
      Quarterly Report to be filed within the statutorily prescribed timeframe 
      in October 2006. Teletouch engaged its auditors, BDO Seidman LLP (“BDO”), 
      to complete a PCI audit for the calendar 2005 and most recent stub-year 
      fiscal period, and engaged PCI’s previous 
      parent company’s auditors, Forth Worth-based 
      Whitley Penn LLP, to audit PCI for the 2003 and 2004 calendar years. 
      Subsequent to BDO’s commencement of its work 
      on PCI’s 2005 calendar year audit, it became 
      clear that a greater than originally estimated amount of time and effort 
      would be required to complete the PCI audit, as described in more detail 
      below.
    
    
      Accounting Consolidation with Prior Parent. The financial 
      statements of PCI were historically audited only as part of a 
      consolidated group audit of Progressive Concepts Communications, Inc. (“PCCI”), 
      its prior parent. Teletouch has had significant difficulty in 
      segregating various business and related accounting events from the 
      current and prior period PCCI consolidated financials, including related 
      subsidiary transactions, discontinued (sold) operations and other 
      accounting matters. Given the significant number of these business 
      transactions conducted by PCI in 2005, the ability to create separate 
      current and prior period financial reports for PCI’s 
      operations on a stand-alone basis has caused substantial unanticipated 
      delays.
    
    
      Calendar Year Inconsistencies with Teletouch Fiscal Year. Prior 
      to the acquisition, PCI was a privately held company with financial 
      statements based on a calendar year which were historically included in 
      the audited consolidated financial statements of PCCI. The most recent 
      PCCI audit that had been completed was as of December 31, 2004. The 
      calendar year conversion of certain PCI reporting periods to the 
      Teletouch May 31st fiscal year-end, and related 
      fiscal quarter reporting periods has caused a number of unanticipated 
      delays.
    
    
      Also as a result of the foregoing challenges and as noted above, the 
      Company will not be able to complete a timely filing of certain pro 
      forma and historic financial statements reflecting the effects of the 
      PCI acquisition and recent disposition of its paging business assets. 
      Teletouch intended to file its Amended Current Report on Form 8-K/A 
      containing such presentations within the required timeframe before the 
      end of October.
    
    
      American Stock Exchange Non-Compliance Notification
    
    
      The Company also reported that on October 24, 2006, after market close, 
      the American Stock Exchange (“AMEX”) 
      Listing Qualifications staff notified the Company that as a result of 
      its inability to file its Quarterly Report on Form 10-Q for the period 
      ended August 31, 2006, the Company was no longer in compliance with 
      Sections 134 and 1101 of the AMEX Company Guide requiring currency in 
      public reporting of the AMEX listed issuers.
    
    
      The AMEX staff invited the Company to submit a plan of compliance 
      addressing the continued listing deficiency by no later than October 31, 
      2006. If the Company is not in compliance with the continued listing 
      standards by November 30, 2006 or does not make progress consistent with 
      the Plan during the plan period, the AMEX staff will initiate delisting 
      proceedings as appropriate. The Company plans to make a timely 
      submission to the AMEX staff in which it will outline the timeframe 
      within which the Company intends to cure the listing deficiency and to 
      regain its compliance with the AMEX continued listing requirements. In 
      the event the AMEX staff accepts the Company’s 
      plan for compliance, the Company’s stock will 
      continue trading on the AMEX for the duration of the compliance period. 
      Otherwise, the AMEX staff has indicated that it will initiate delisting 
      proceedings. There is no assurance that the AMEX staff will accept the 
      Company’s plan of compliance or that, even if 
      such plan is accepted, the Company will be able to implement the plan 
      within the prescribed timeframe.
    
    
      The Company may appeal a staff determination to initiate such 
      proceedings and seek a hearing before an AMEX panel. The time and place 
      of such a hearing will be determined by the Panel. If the Panel does not 
      grant the relief sought by the Company, its securities could be delisted 
      from the exchange. In the event that the Company’s 
      securities are delisted from AMEX, the Company will seek to cause them 
      be quoted Over-The-Counter in the Pink Sheets, which provides electronic 
      quotation information.
    
    
      Within five days of the AMEX listing deficiency notification, the Company’s 
      stock trading symbol will become subject to an additional indicator “.BC.LF” 
      to denote its noncompliance. While the trading symbol itself will remain 
      unchanged, the symbol will bear this additional indicator until the 
      Company regains its compliance with the AMEX continued listing 
      requirements.
    
    
      About Teletouch Communications
    
    
      For over 40 years, Teletouch has offered a comprehensive suite of 
      telecommunications products and services, including cellular, two-way 
      radio communications, GPS-telemetry and wireless messaging services 
      throughout the United States. Teletouch’s 
      wholly-owned subsidiary, Progressive Concepts, Inc., is a leading U.S. 
      provider of wireless cellular voice, data, and entertainment products 
      and branded wireless services to individuals, businesses, and government 
      agencies. PCI provides these products and services through its chain of 
      retail stores (under the “Hawk Electronics” 
      brand), Hawk-branded agents, a direct sales force in Texas and Arkansas, 
      and through the Internet (www.hawkelectronics.com). 
      PCI also operates a significant national wholesale distribution business 
      serving smaller cellular and automotive retailers, car dealers and 
      cellular service providers throughout the country. Teletouch's common 
      stock is traded on the American Stock Exchange under stock symbol: TLL. 
      Additional information about Teletouch can be found at: www.teletouch.com.
    
    
      All statements in this news release that are not based on historical 
      fact are "forward-looking statements" within the meaning of the Private 
      Securities Litigation Reform Act of 1995 and the provisions of Section 
      27A of the Securities Act of 1933, as amended, and Section 21E of the 
      Securities Exchange Act of 1934, as amended (which Sections were adopted 
      as part of the Private Securities Litigation Reform Act of 1995). While 
      management has based any forward-looking statements contained herein on 
      its current expectations, the information on which such expectations 
      were based may change. These forward-looking statements rely on a number 
      of assumptions concerning future events and are subject to a number of 
      risks, uncertainties, and other factors, many of which are outside of 
      our control, that could cause actual results to materially differ from 
      such statements. Such risks, uncertainties, and other factors include, 
      but are not necessarily limited to, those set forth under the caption 
      "Additional Factors That May Affect Our Business" in the Company's most 
      recent Form 10-K and 10-Q filings, and amendments thereto. In addition, 
      we operate in a highly competitive and rapidly changing environment, and 
      new risks may arise. Accordingly, investors should not place any 
      reliance on forward-looking statements as a prediction of actual 
      results. We disclaim any intention to, and undertake no obligation to, 
      update or revise any forward-looking statement.
    
  
Teletouch Communications, Inc. (AMEX:TLL) today announced that due
to continued difficulty in preparing its current and historical
consolidated financial statements related to completing the audit of
its recent acquisition of Progressive Concepts, Inc. ("PCI"), it is
unable to file its Quarterly Report on Form 10-Q for the first fiscal
period of 2007 ended August 31, 2006, which was originally due to be
filed by October 23, 2006. Further, due to these same difficulties,
the Company will be unable to file an Amended Current Report on Form
8-K/A reflecting the pro forma and historical effects of the PCI
acquisition and subsequent disposition of its paging business assets
by the October 27, 2006, required filing date. At this time, Teletouch
is unable to provide a reliable estimate of its revised 10-Q and 8-K/A
filing dates. However, the Company will provide updates regarding the
filing dates as more reliable information becomes available.

   As previously announced, Teletouch acquired PCI on August 11,
2006. The Company's management estimates that its consolidated
revenues for the three months ended August 31, 2006 were approximately
$13.6 million, comprised of approximately $1.3 million in revenue from
Teletouch's two-way radio business and approximately $12.3 million in
revenue from the newly acquired operations of PCI. Certain cellular
service revenues related to PCI's distribution agreement with Cingular
are reported net of the costs paid to Cingular to purchase and provide
these cellular services to PCI's approximately 90,000 subscriber
customers. PCI generated gross cellular billings for the quarter of
approximately $21.7 million, which were reduced on a net revenue
reporting basis by $9.4 million paid or payable to Cingular, resulting
in reportable net revenues of approximately $12.3 million. PCI reports
revenue in accordance with Emerging Issues Task Force Issue 99-19,
Reporting Revenue Gross as a Principal versus Net as an Agent, ("EITF
99-19"), i.e., the net of the gross billing of Cingular cellular
services that PCI provides to its customers and the related cost paid
or payable to Cingular for these services. Under EITF 99-19, PCI is
deemed to be an agent in its agreement with Cingular, as defined in
EITF 99-19, under which PCI receives a fixed percentage of the
customer billings as compensation for its acquisition, fulfillment,
billing and ongoing customer support obligations. Net loss for the
quarter is estimated to be between $2.4 and $3.0 million, or between
$0.05 and $0.07 per share based upon 48.7 million weighted average
shares outstanding for the three month period. During the quarter, and
included in the net loss discussed above, the Company estimates that
the income from its discontinued paging operations was approximately
$0.5 million. Teletouch completed the sale of its legacy paging
operations on August 14, 2006. The Company cautions shareholders and
potential investors in the Company's securities that BDO Seidman, LLP,
the Company's Independent Public Accountants, have not audited or
reviewed these amounts and that such financial information is subject
to further analysis and independent review. The Company disclaims any
responsibility for them. These results are preliminary and are subject
to change, possibly material in nature, following completion of the
audit for the period ended May 31, 2006 and review for the period
ended August 31, 2006.

   The cause of the filing delay is due to Teletouch's recent
acquisition of PCI and the related accounting and audit issues related
to PCI, its new wholly-owned subsidiary. As previously reported, on
August 11, 2006, Teletouch acquired all of the issued and outstanding
equity securities of PCI, through the contribution of 100% of the
issued and outstanding equity securities of PCI to Teletouch by TLL
Partners, LLC, a Delaware limited liability company and the holder of
approximately 80% of Teletouch's outstanding common stock, without the
issuance of any monetary or stock consideration by Teletouch. For a
complete description of the transaction, see the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on August 17, 2006.

   Prior to completion of the acquisition, Teletouch determined that
the PCI transaction would be accounted for in a manner similar to a
pooling-of-interest transaction for all periods presented, and that
the assets, liabilities and operating results of PCI would be
consolidated with those of Teletouch for financial reporting purposes
for all periods presented in financial reports issued after the
acquisition. The Company intended to report such consolidated results
in its August 31, 2006 Quarterly Report to be filed within the
statutorily prescribed timeframe in October 2006. Teletouch engaged
its auditors, BDO Seidman LLP ("BDO"), to complete a PCI audit for the
calendar 2005 and most recent stub-year fiscal period, and engaged
PCI's previous parent company's auditors, Forth Worth-based Whitley
Penn LLP, to audit PCI for the 2003 and 2004 calendar years.
Subsequent to BDO's commencement of its work on PCI's 2005 calendar
year audit, it became clear that a greater than originally estimated
amount of time and effort would be required to complete the PCI audit,
as described in more detail below.

   Accounting Consolidation with Prior Parent. The financial
statements of PCI were historically audited only as part of a
consolidated group audit of Progressive Concepts Communications, Inc.
("PCCI"), its prior parent. Teletouch has had significant difficulty
in segregating various business and related accounting events from the
current and prior period PCCI consolidated financials, including
related subsidiary transactions, discontinued (sold) operations and
other accounting matters. Given the significant number of these
business transactions conducted by PCI in 2005, the ability to create
separate current and prior period financial reports for PCI's
operations on a stand-alone basis has caused substantial unanticipated
delays.

   Calendar Year Inconsistencies with Teletouch Fiscal Year. Prior to
the acquisition, PCI was a privately held company with financial
statements based on a calendar year which were historically included
in the audited consolidated financial statements of PCCI. The most
recent PCCI audit that had been completed was as of December 31, 2004.
The calendar year conversion of certain PCI reporting periods to the
Teletouch May 31st fiscal year-end, and related fiscal quarter
reporting periods has caused a number of unanticipated delays.

   Also as a result of the foregoing challenges and as noted above,
the Company will not be able to complete a timely filing of certain
pro forma and historic financial statements reflecting the effects of
the PCI acquisition and recent disposition of its paging business
assets. Teletouch intended to file its Amended Current Report on Form
8-K/A containing such presentations within the required timeframe
before the end of October.

   American Stock Exchange Non-Compliance Notification

   The Company also reported that on October 24, 2006, after market
close, the American Stock Exchange ("AMEX") Listing Qualifications
staff notified the Company that as a result of its inability to file
its Quarterly Report on Form 10-Q for the period ended August 31,
2006, the Company was no longer in compliance with Sections 134 and
1101 of the AMEX Company Guide requiring currency in public reporting
of the AMEX listed issuers.

   The AMEX staff invited the Company to submit a plan of compliance
addressing the continued listing deficiency by no later than October
31, 2006. If the Company is not in compliance with the continued
listing standards by November 30, 2006 or does not make progress
consistent with the Plan during the plan period, the AMEX staff will
initiate delisting proceedings as appropriate. The Company plans to
make a timely submission to the AMEX staff in which it will outline
the timeframe within which the Company intends to cure the listing
deficiency and to regain its compliance with the AMEX continued
listing requirements. In the event the AMEX staff accepts the
Company's plan for compliance, the Company's stock will continue
trading on the AMEX for the duration of the compliance period.
Otherwise, the AMEX staff has indicated that it will initiate
delisting proceedings. There is no assurance that the AMEX staff will
accept the Company's plan of compliance or that, even if such plan is
accepted, the Company will be able to implement the plan within the
prescribed timeframe.

   The Company may appeal a staff determination to initiate such
proceedings and seek a hearing before an AMEX panel. The time and
place of such a hearing will be determined by the Panel. If the Panel
does not grant the relief sought by the Company, its securities could
be delisted from the exchange. In the event that the Company's
securities are delisted from AMEX, the Company will seek to cause them
be quoted Over-The-Counter in the Pink Sheets, which provides
electronic quotation information.

   Within five days of the AMEX listing deficiency notification, the
Company's stock trading symbol will become subject to an additional
indicator ".BC.LF" to denote its noncompliance. While the trading
symbol itself will remain unchanged, the symbol will bear this
additional indicator until the Company regains its compliance with the
AMEX continued listing requirements.

   About Teletouch Communications

   For over 40 years, Teletouch has offered a comprehensive suite of
telecommunications products and services, including cellular, two-way
radio communications, GPS-telemetry and wireless messaging services
throughout the United States. Teletouch's wholly-owned subsidiary,
Progressive Concepts, Inc., is a leading U.S. provider of wireless
cellular voice, data, and entertainment products and branded wireless
services to individuals, businesses, and government agencies. PCI
provides these products and services through its chain of retail
stores (under the "Hawk Electronics" brand), Hawk-branded agents, a
direct sales force in Texas and Arkansas, and through the Internet
(www.hawkelectronics.com). PCI also operates a significant national
wholesale distribution business serving smaller cellular and
automotive retailers, car dealers and cellular service providers
throughout the country. Teletouch's common stock is traded on the
American Stock Exchange under stock symbol: TLL. Additional
information about Teletouch can be found at: www.teletouch.com.

   All statements in this news release that are not based on
historical fact are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 and the
provisions of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended
(which Sections were adopted as part of the Private Securities
Litigation Reform Act of 1995). While management has based any
forward-looking statements contained herein on its current
expectations, the information on which such expectations were based
may change. These forward-looking statements rely on a number of
assumptions concerning future events and are subject to a number of
risks, uncertainties, and other factors, many of which are outside of
our control, that could cause actual results to materially differ from
such statements. Such risks, uncertainties, and other factors include,
but are not necessarily limited to, those set forth under the caption
"Additional Factors That May Affect Our Business" in the Company's
most recent Form 10-K and 10-Q filings, and amendments thereto. In
addition, we operate in a highly competitive and rapidly changing
environment, and new risks may arise. Accordingly, investors should
not place any reliance on forward-looking statements as a prediction
of actual results. We disclaim any intention to, and undertake no
obligation to, update or revise any forward-looking statement.