Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

March 31, 2010 16:05 ET

Tranzeo Wireless Reports Fourth Quarter and 2009 Year End Results

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - March 31, 2010) - Tranzeo Wireless Technologies Inc. (TSX:TZT), a leading producer of high-speed wireless broadband communication systems, today announced its financial results for the fourth quarter 2009.

Financial Highlights:

- Revenue was $11.6 million for 2009 from $19.4 million for 2008. Revenue for the 2009 fourth quarter was $1.6 million compared with $3.2 million the previous year. The decrease in sales was primarily due to reduced demand for our Wi-Fi product line from the North American market which we attribute to the global economic downturn. Our WiMAX product line opportunity is gaining strength which is reflected in our current backlog position.

- Tranzeo's current backlog position of all sales purchase orders for 2010 is US$32.7 million.

- Gross profit for 2009 declined to $3.2 million from $4.5 million for 2008 which was the result of a decrease in sales.

- In the fourth quarter of 2009, management determined that a full valuation allowance against the carrying value of the deferred development costs and future income tax asset was appropriate given the assets no longer met Canadian GAAP criteria as the company recorded two consecutive fiscal losses. The valuation allowance included the impairment of deferred development costs at $9.3 million, investment tax credits expensed at $0.9 million and a future income tax expense of $0.7 million. The amortization of the deferred development costs over the next five years will be fully eliminated due to the valuation allowance recorded in 2009. Regarding the future income tax asset, the tax shield is still available to be applied against future taxable income.

- EBITDA was a loss of $1.8 million for 2009, compared to a loss of $0.3 million for 2008.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. We use words such as "anticipate", "plan", "expect", "believe", "intend" and similar expressions to identify forward-looking statements that relate to our business, management, operating results and financial condition. These statements are not historical facts, but reflect our current realistic expectations regarding future results or events. In particular, purchase orders are not binding purchase agreements and as such are subject to counter-party risk. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risk Factors" and other sections of our Annual Information Form and MD&A, and in other filings which may be found on SEDAR at www.sedar.com.

About Tranzeo

At the forefront of the growing fixed wireless industry, Tranzeo Wireless Technologies Inc. (TSX:TZT) designs, builds and distributes a full range of high-bandwidth wireless data network products, including WiMax products. Our innovative approach and in-house expertise ensures our products are reliable, affordable, offer state-of-the-art features, and are easy to install, operate and deploy. We are continually adding products and features to provide our customers with the latest available innovations and end-to-end fixed wireless solutions, through a growing global network of distributors. For more information about our company and our products, visit www.tranzeo.com.

TRANZEO WIRELESS TECHNOLOGIES INC.

CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED DECEMBER 31, 2009

(Unaudited)

(IN CANADIAN DOLLARS)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

CONSOLIDATED STATEMENTS OF CASH FLOWS



TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Statement of Cash Flows

December 31, December 31,
2009 2008
--------------------------
Assets
Current assets:
Cash $ 1,837,832 $ -
Accounts receivable 3,383,960 3,289,007
Prepaid expenses 331,805 768,822
Inventory 4,581,481 6,786,039
--------------------------
10,135,078 10,843,868
Property and equipment 10,912,869 11,482,421
Deferred development costs - 5,945,883
Future income tax asset - 2,533,191
$ 21,047,947 $ 30,805,363
--------------------------
--------------------------

Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ - $ 3,116,276
Accounts payable and accrued liabilities 3,941,790 4,835,195
Due to related party 251,318 -
Current portion of equipment loan 18,879 84,960
Current portion of capital lease obligation 579,644 998,169
Short term debt 100,000 2,000,000
--------------------------
4,891,631 11,034,600
Equipment loan 47,201 -
Capital lease obligation 24,456 644,858
--------------------------
4,963,288 11,679,458

Shareholders' equity:
Share capital 28,407,690 17,525,344
Contributed surplus 2,104,729 1,015,298
Retained earnings (deficit) (14,427,760) 585,263
--------------------------
16,084,659 19,125,905
--------------------------
$ 21,047,947 $ 30,805,363
--------------------------
--------------------------


TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Statements of Operations, Comprehensive Loss and Deficit
(Unaudited)

Three Months Ended Twelve Months Ended
December 31 December 31
2009 2008 2009 2008
------------------------------------------------------
Sales $ 1,673,318 $ 3,233,280 $ 11,628,234 $ 19,412,379
Cost of goods sold 1,513,352 4,086,738 8,462,926 14,863,890
------------ ------------ ------------ ------------
Gross profit 159,966 (853,458) 3,165,308 4,548,489
------------ ------------ ------------ ------------

Expenses
Sales and marketing 598,091 361,567 1,693,875 1,998,920
Research and
development -
amortization of
deferred costs 359,605 160,000 1,313,727 398,550
General and
administrative 774,979 743,409 2,841,390 2,723,425
Share based
compensation 223,728 629,842 393,027 79,948
Amortization 315,612 79,948 1,264,950 1,279,356
------------ ------------ ------------ ------------
2,272,015 1,974,767 7,506,969 6,480,199
------------ ------------ ------------ ------------

Loss from operations (2,112,049) (2,828,225) (4,341,661) (1,931,710)

Other expenses
Interest expense 133,831 204,492 615,836 624,246
Foreign exchange loss 17,146 14,266 28,890 33,143
Investment tax
credits written off 858,855 - 858,855 -
Impairment of deferred
development costs 9,262,990 - 9,262,990 -
------------ ------------ ------------ ------------
10,272,822 218,758 10,766,571 657,389
------------ ------------ ------------ ------------

Loss before income
taxes (12,384,871) (3,046,983) (15,108,232) (2,589,099)

Future income taxes
(recovery) 671,010 (934,615) (95,209) (790,382)
------------ ------------ ------------ ------------

Net loss (13,055,881) (2,112,368) (15,013,023) (1,798,717)

Retained Earnings
(deficit), beginning
of period (1,371,879) 2,697,631 585,263 2,383,979
------------ ------------ ------------ ------------

Retained Earnings
(deficit), end of
period (14,427,760) $ 585,263 (14,427,760) 585,263
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Loss per share for
the period
Basic and diluted $ (0.34) $ (0.08) $ (0.47) $ (0.07)
------------ ------------ ------------ ------------

Weighted average
number of shares
- basic 31,724,897 26,336,753 31,724,897 26,297,563


TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Statement of Cash Flows

Three Months Ended Twelve Months Ended
December 31 December 31
2009 2008 2009 2008
------------------------------------------------------
Cash flows from
operating
activities:
Loss for the period $(13,055,881) $ (2,112,367) $(15,013,023) $ (1,798,717)
Adjustments to
reconcile net
earnings to net
cash from
operating
activities:
Amortization 315,612 629,842 1,264,950 1,279,356
Amortization of
deferred
development costs 359,605 160,000 1,313,727 398,550
Interest on
capital leases 22,003 53,558 125,986 238,829
Future income
taxes (recovery) 671,008 (934,615) (95,209) (790,382)
Investment tax
credit write off 858,855 - 858,855 -
Impairment of
deferred
development costs 9,262,990 - 9,262,990 -
Stock based
compensation 223,728 79,948 393,027 79,948
------------ ------------ ------------ ------------
(1,342,080) (2,123,634) (1,888,697) (592,416)

Changes in working
capital assets
and liabilities:
Prepaid expenses 256,736 (35,971) 437,017 (208,149)
Accounts receivable 428,601 1,175,406 (94,953) (461,576)
Accounts payable
and accrued
liabilities (2,049,531) (2,554,743) (3,248,016) (1,524,360)
Inventories 2,045,050 4,700,030 4,518,711 4,142,279
------------ ------------ ------------ ------------
Net cash flows
from (used) in
operating
activities (661,224) 1,161,088 (275,938) 1,355,778
------------ ------------ ------------ ------------

Cash flows from
investing activities
Additions to property,
plant and equipment (271,473) (221,812) (444,072) (1,374,259)
Deferred development
expenses (821,433) (1,143,375) (2,924,863) (4,141,553)
------------ ------------ ------------ ------------
Net cash flows used
in investing
activities (1,092,906) (1,365,187) (3,368,935) (5,515,812)
------------ ------------ ------------ ------------

Cash flows from
financing activities:
Bank indebtedness (2,923,847) 454,503 (3,116,276) 3,116,276
Repayment of capital
lease obligation (255,614) (273,204) (1,164,912) (1,236,893)
Proceeds from
(repayment of)
equipment loan (4,720) (4,720) (18,880) 84,960
Proceeds from
(repayment of)
short term debt (123,421) - (1,900,000) 2,000,000
Proceeds from
related party
loan 251,318 - 251,318 -
Issuance of common
shares, net 6,648,246 - 11,431,455 27,520
------------ ------------ ------------ ------------
Net cash flows from
financing activities 3,591,962 204,099 5,482,705 3,991,863
------------ ------------ ------------ ------------

Net increase
(decrease) in cash 1,837,832 - 1,837,832 (168,171)

Cash, beginning
of period - - - 168,171
------------ ------------ ------------ ------------

Cash, end of period 1,837,832 - 1,837,832 -
------------ ------------ ------------ ------------

Supplementary cash
information
Cash paid for
interest $ 134,729 $ 204,492 $ 616,165 $ 626,697
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash paid for
income taxes $ - $ - $ - $ -
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------


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