Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

March 27, 2008 16:01 ET

Growth Continues for Tranzeo Wireless in 2007

Tranzeo year to date fourth quarter results show revenue up 1.2%, gross profit up 11% and gross margin % up 13% to 39% of sales

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - March 27, 2008) - Increased revenues continues for B.C.'s Tranzeo Wireless Technologies Inc. (TSX:TZT), a leading producer of high-speed wireless broadband communication systems, according to results for the fourth quarter ended December 31, 2007.

Financial Highlights for the twelve months

- Revenue increased 1.2% to 18.4 million, year over year

- Gross profit improved 11% year over year to $7.1 million

- Earnings before tax decreased 32% to $1.5 million, year over year

- Net income decreased 38% to $0.95 million, year over year

"We significantly improved our gross profit position," said Jim Tocher, President and CEO of Tranzeo. "We expanded and improved the operations of the company in 2007 to support the 2008 growth in our new WiMAX product initiative and core business growth."

Revenues Increased For The Fiscal Year

Revenue for the fiscal year of 2007 increased by 1.2% to $18.4 million from $18.1 million for the same period in 2006. Revenue for the fourth quarter of 2007 decreased to $3.7 million from $4.3 million for the same period in 2006, representing a 15% decrease. Tranzeo attributes the fourth quarter decrease to a weaker sales position in the United States market which has regained a strong position in the first quarter of 2008 with guidance showing a record revenue level.

Gross Profit Stronger For The Fiscal Year

Gross profit increased to $7.1 million for the fiscal year of 2007 from $6.4 million for the same period in 2006, representing an 11% increase. Gross margins were 39% for the fiscal year of 2007, compared to 35% for the same period in 2006. Gross profit decreased to $1.3 million for the fourth quarter of 2007 from $1.5 million for the same period in 2006, representing a 14% decrease. Gross margins were 35% for the fourth quarter of 2007 and 2006. The increase in annual gross margins is attributable to lower manufacturing costs, achieved by bringing additional manufacturing processes in house away from third party supplier manufacturing.

Earnings Decreased For The Fiscal Year

Earnings after tax for the fiscal year of 2007 decreased by 39% to $0.95 million from $1.55 million for the same period in 2006. As a percentage of revenue earnings after tax for the fiscal year of 2007 represented 5.2% compared to 8.5% for the same period in 2006. Earnings after tax for the fourth quarter of 2007 decreased to $0.01 million from $0.25 million for the same period in 2006. As a percentage of revenue after tax earnings represented 0.2% in the fourth quarter of 2007 compared to 5.8% for the same period in 2006. The decrease in fiscal earnings was attributable to expanded operations of the company.

EBITDA for the fiscal year of 2007 decreased by 16% to $2.4 million from $2.8 million for the same period in 2006. EBITDA represented 13% in the fiscal year of 2007, compared to 16% in the same period in 2006. EBITDA for the fourth quarter of 2007 decreased to $0.3 million from EBITDA of $0.6 million for the same period in 2006. As a percentage of revenue, EBITDA represented 8.2% in the fourth quarter of 2007 and 14.0% in the same period in 2006.

Financial Guidance

The following financial guidance for the first quarter of 2008 reflects our current business indicators and expectations.

Our revenue expectations for the first quarter of 2008 reflect good revenue visibility.

For the first quarter of 2008, we expect our gross margin percentage to be above the fourth quarter of 2007. We expect our operating expenses to increase relative to the fourth quarter of 2007.

Inherent in this guidance are risk factors that are described in detail in our regulatory filings. Our actual results could differ materially from those presented below. All figures are approximations based on management's current beliefs and assumptions.



Q1 2008 Guidance

Revenue $ 5.7 million
Earnings from operations $0.6 million
Net earnings $0.3 million
Diluted earnings per share $0.01


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 expectations regarding future results or events. 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 prospectus 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 yet 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 Balance Sheet

Dec. 31, 2007 Dec. 31, 2006
-----------------------------
Assets
Current assets:
Cash and cash equivalent $ 168,171 $ 389,249
Accounts receivable 2,827,431 1,472,965
Current portion of future income taxes 559,786 412,729
Prepaid expenses 560,673 268,454
Inventories 7,438,122 4,208,724
------------ ------------
11,554,183 6,752,121

Property, plant, and equipment 11,343,886 5,824,907
Deferred development costs 2,842,016 236,041
Future income taxes 218,540 -
------------ ------------
$ 25,958,625 $ 12,813,069
------------ ------------
------------ ------------

Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 2,869,359 $ 2,253,781
Current portion of capital lease obligation 532,784 513,843
Current portion of equipment loan 370,349 -
------------ ------------
3,772,492 2,767,624

Future income taxes - 5,201
Capital lease obligation 653,450 971,668
Equipment Loan 809,530 -
------------ ------------
5,235,472 3,744,493
------------ ------------

Shareholders' equity:
Share capital 17,497,824 7,343,319
Contributed surplus 841,350 292,566
Retained earnings 2,383,979 1,432,691
------------ ------------
20,723,153 9,068,576
------------ ------------
$ 25,958,625 $ 12,813,069
------------ ------------
------------ ------------


TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Statements of Operations and Deficit

Three Months Ended Year Ended
December 31 (unaudited) December 31
2007 2006 2007 2006
-------------------------------------------------

Sales $3,701,925 $4,344,288 $18,363,866 $18,148,189
Cost of goods sold 2,386,935 2,820,385 11,287,298 11,789,340
---------- ---------- ----------- -----------
Gross Profit 1,314,990 1,523,903 7,076,568 6,358,849
---------- ---------- ----------- -----------

Expenses
Sales and marketing 502,892 331,534 1,701,676 1,247,837
Research and
development 58,750 8,422 725,636 195,552
General and
administrative 497,064 567,824 2,301,493 2,080,007
Amortization 189,359 120,081 648,518 437,871
---------- ---------- ----------- -----------
1,248,065 1,027,861 5,377,323 3,961,267
---------- ---------- ----------- -----------

Earnings from
operations 66,925 496,042 1,699,245 2,397,582

Other expenses (income)
Interest Income (3,985) (1,145) (75,799) (1,737)
Interest on long term
debt 34,564 27,686 149,252 96,670
Foreign exchange loss 12,259 7,876 88,504 29,206
---------- ---------- ----------- -----------
42,838 34,417 161,957 124,139
---------- ---------- ----------- -----------

Earnings before income
taxes 24,087 461,625 1,537,288 2,273,443

Income taxes 16,066 208,099 586,000 723,346
---------- ---------- ----------- -----------

Net earnings 8,021 253,526 951,288 1,550,097

Retained Earnings
(deficit), beginning
of period 2,375,958 1,179,165 1,432,691 (117,406)
---------- ---------- ----------- -----------

Retained earnings, end
of period $2,383,979 $1,432,691 $ 2,383,979 $ 1,432,691
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------

Earnings per share for
the period
Basic $ 0.00 $ .01 $ .04 $ .07
Diluted $ 0.00 $ .01 $ .04 $ .06
---------- ---------- ----------- -----------

Weighted average number
of shares - basic 26,282,970 21,927,485 25,735,429 21,927,485


TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Statements of Cash Flows

Three Months Ended Year Ended
December 31 (unaudited) December 31
2007 2006 2007 2006
-------------------------------------------------

Cash flows from
operating activities:
Net income for the
period $ 8,021 $ 253,526 $ 951,288 $ 1,550,097
Adjustments to
reconcile net loss to
net cash from
operating activities:
Amortization 189,359 120,081 648,518 437,871
Amortization of
deferred developments
costs 58,750 - 102,250 -
Interest on capital
leases 34,564 27,686 149,252 96,670
Interest on equipment
loans 10,591 - 10,591 -
Future income taxes (306,282) (210,960) (370,798) (38,777)
Stock based compensation 26,626 158,277 185,153 158,277
---------- ---------- ----------- -----------
21,629 348,610 1,676,254 2,204,138

Changes in working capital
assets and liabilities:
Prepaid expenses (89,786) 15,474 (292,219) 1,833
Accounts receivable 353,458 187,942 (1,354,466) (648,207)
Accounts payable and
accrued liabilities 1,087,112 77,789 615,578 373,703
Inventories (1,403,858) (201,518) (3,229,398) 9,677
---------- ---------- ----------- -----------
Net cash flows used
in operating
activities (31,445) 428,297 (2,584,251) 1,941,144
---------- ---------- ----------- -----------

Cash flows from
investing activities
Additions to property,
plant and equipment (646,184) (498,676) (3,962,467) (2,024,303)
Deferred development
expenses (1,212,145) (236,041) (2,501,589) (236,041)
---------- ---------- ----------- -----------
Net cash flows from
investing activities (1,858,329) (734,717) (6,464,056) (2,260,344)
---------- ---------- ----------- -----------

Cash flows from
financing activities:
Capital lease
obligation (171,587) (107,447) (653,559) (453,490)
Equipment Loan 1,169,288 - 1,169,288 -
Issuance of common
shares net 6,000 - 8,311,500 -
---------- ---------- ----------- -----------
Net cash flows from
financing activities 1,003,701 (107,447) 8,827,229 (453,490)
---------- ---------- ----------- -----------

Net increase (decrease)
in cash (886,073) (413,867) (221,078) (772,690)

Cash, beginning of
period 1,054,244 803,116 389,249 1,161,939
---------- ---------- ----------- -----------

Cash, end of period $ 168,171 $ 389,249 $ 168,171 $ 389,249
---------- ---------- ----------- -----------

Supplementary cash
information
Cash paid for
interest $ 45,155 $ 27,686 $ 159,843 $ 96,670
Cash paid for income
taxes - - - -


Contact Information