Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

November 14, 2006 09:01 ET

Growth Continues for Tranzeo Wireless in Q3

Tranzeo year to date third quarter results show revenue up 35%, net income up 126% and earnings before taxes up 216%

PITT MEADOWS, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2006) - The pattern of escalating 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 third quarter ended September 30, 2006.

Financial Highlights for the nine months

- Revenue increased 35% to 13.8 million, year over year

- Net income increased 126% to $1.3 million, year over year

- Earnings before tax increased 216% to $1.8 million, year over year

- Gross profit improved 56% year over year to $4.8 million

"We have continued the trend of significantly improving our sales volume, customer base, gross profit and net earnings from the previous year," said Jim Tocher, President and CEO of Tranzeo. "The results of this quarter again substantiate that the wireless market place recognizes Tranzeo as the premier provider of high quality, reliable cost-effective wireless solutions."

Revenues Increased

Revenue for the third quarter of 2006 increased to $4.5 million from $4.0 million from the same period in 2005, representing a 13% increase. Revenue for the first nine months of 2006 increased by 35% to $13.8 million from $10.2 million for the same period in 2005.

Tranzeo attributes the increase to ongoing growth in demand for its wireless products, competitive pricing and accelerating expansion of its dealer and distributor base.

"In the third quarter of 2006 we experienced our largest sales volume to date from our international market. The demand from our current dealer and distributor base is continually growing," Tocher said. "We currently have thirteen distributors versus seven distributors one year ago. Adding distributors in North America and internationally is one of our key strategies in reaching our global growth objectives."

Gross Profit Improved

Gross profit increased to $1.6 million from $1.2 million for the third quarter of 2006, representing a 37% increase from the same period in 2005. Gross margins were 36.4 % for the third quarter of 2006, compared to 30.0% for the same period in 2005. Gross profit for the first nine months of 2006 increased by 56% to $4.8 million from $3.1 million for the same period in 2005. The continual increase in gross margins is attributable to lower manufacturing costs, achieved by bringing additional manufacturing processes in house away from third party supplier manufacturing. Larger component purchases - fuelled by increased sales - have brought further cost savings. Management expects further cost saving improvements will be achieved.

Net Earnings Stronger

Earnings, now in a Fully Taxed position, for the third quarter of 2006 increased to $0.41 million from a non taxed $0.28 million for the same period in 2005. As a percentage of revenue, net earnings represented 9% in the third quarter of 2006, compared to 7% in the third quarter of 2005. Net earnings for the first nine months of 2006 increased by 126% to $1.3 million from $0.57 million for the same period in 2005.

EBITDA for the third quarter of 2006 increased to $0.76 million from EBITDA of $0.37 million for the same period in 2005, representing a 105% increase. As a percentage of revenue, EBITDA represented 17% in the third quarter of 2006, compared to 9% in the first quarter of 2005. EBITDA for the nine months of 2006 increase by 148% to $2.2 million from $0.89 million for the same period in 2005.

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. 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.
Interim Consolidated Balance Sheet

Sept 30, 2006
(Unaudited) Dec. 31, 2005
Assets
Current assets:
Cash and cash equivalents $ 803,116 $ 1,161,939
Accounts receivable 1,660,907 824,758
Prepaid expenses 283,928 270,287
Inventories 4,007,206 4,218,401
------------ -----------
6,755,157 6,475,385

Property plant, and equipment 4,775,513 2,396,144
------------ -----------
$ 11,530,670 $ 8,871,529
------------ -----------
------------ -----------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued
liabilities $ 2,175,992 $ 1,880,078
Income Taxes Payable 172,183 -
Current portion of capital
lease obligation 299,468 -
------------ -----------
2,647,643 1,880,078
Capital lease obligation 595,005 -
------------ -----------
3,242,648 1,880,078
------------ -----------
Shareholders' equity:
Share Capital 6,974,568 6,974,568
Contributed Surplus 134,289 134,289
Retained Earnings (Deficit) 1,179,165 (117,406)
------------ -----------
8,288,022 6,991,451
------------ -----------
$ 11,530,670 $ 8,871,529
------------ -----------

------------ -----------
------------ -----------


TRANZEO WIRELESS TECHNOLOGIES INC.
Interim Consolidated Statements of Operations and Deficit
(Unaudited)

Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
--------------------------------------------------
Sales $ 4,523,692 $ 4,003,580 $13,803,901 $ 10,234,759
Cost of goods sold 2,877,051 2,801,877 8,968,955 7,141,566
------------ ----------- ----------- ------------
Gross Profit 1,646,641 1,201,703 4,834,946 3,093,193
------------ ----------- ----------- ------------

Expenses
Sales and marketing 250,899 278,616 916,303 820,270
Research and development 37,456 188,185 187,129 492,245
General and
administrative 593,408 362,237 1,512,183 886,623
Amortization 101,152 61,111 317,790 166,546
------------ ----------- ----------- ------------
982,915 890,149 2,933,405 2,365,684
------------ ----------- ----------- ------------

Earnings from operations 663,726 311,555 1,901,541 727,509

Other expenses
Interest on long term debt 28,130 2,936 68,392 83,043
Interest accreted on
convertible debentures - 290 - 10,978
Foreign exchange loss 10,237 31,767 21,330 60,504
------------ ----------- ----------- ------------
38,367 34,993 89,722 154,525
------------ ----------- ----------- ------------

Earnings before
income taxes 625,359 276,561 1,811,819 572,984

Income taxes (Note 5) 213,364 - 515,247 -

Net earnings 411,995 276,561 1,296,572 572,984
Retained Earnings
(deficit),
beginning of period 767,170 (757,222) (117,407) (1,053,645)
------------ ----------- ----------- ------------

Retained earnings
(deficit),
end of period $ 1,179,165 $ (480,661) $ 1,179,165 $ (480,661)
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------

Earnings per share for
the period (Note 6)
Basic $ .02 $ .01 $ .06 $ 0.04
Diluted $ .02 $ .01 $ .05 $ 0.04
------------ ----------- ----------- ------------

Weighted average number
of shares - basic 21,927,485 18,935,548 21,927,485 14,643,412


TRANZEO WIRELESS TECHNOLOGIES INC.
Interim Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
--------------------------------------------------

Cash flows from
operating activities:
Net income for
the period $ 411,995 $ 276,561 $ 1,296,572 $ 572,984
Adjustments to
reconcile net loss to
net cash from operating
activities:
Amortization 101,153 61,111 317,790 166,546
Accreted interest on
convertible debentures - 290 - 10,978
------------ ----------- ----------- ------------
513,148 337,962 1,614,362 750,508

Changes in working
capital assets and
liabilities:
Prepaid expenses (38,923) 92,567 (13,644) (183,588)
Accounts receivable 408,224 (192,690) (836,149) (310,215)
Accounts payable and
accrued liabilities (214,385) 1,113,465 295,916 1,707,728
Income taxes payable 7,350 - 172,183 -
Inventories (44,479) (1,049,387) 211,195 1,981,696
------------ ----------- ----------- ------------
Net cash flows used
in operating activities 630,935 301,917 1,443,863 (17,263)
------------ ----------- ----------- ------------

Cash flows from investing
activities
Additions to property,
plant and equipment (371,606) (460,705) (2,697,159) (880,782)
------------ ----------- ----------- ------------

Cash flows from
financing
activities:
Capital lease
obligation (58,426) - 894,473 -
Net Proceeds on
issuance of
convertible debentures - (1,595,415) - (1,595,415)
Issuance of common
shares net - 1657,915 - 2,567,215
------------ ----------- ----------- ------------
Net cash flows from
financing activities (58,426) 62,500 894,473 971,800
------------ ----------- ----------- ------------

Net increase
(decrease)
in cash 200,903 (96,288) (358,823) 73,755
Cash (deficiency),
beginning of period 602,213 143,458 1,161,939 (26,585)
------------ ----------- ----------- ------------
Cash, end of period $ 803,116 $ 47,170 $ 803,116 $ 47,170
------------ ----------- ----------- ------------

Supplementary cash
information Cash paid
for interest $ 28,130 $ 2,936 68,392 $ 83,043





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