Tranzcom China Security Networks Inc.
TSX VENTURE : TSN

Tranzcom China Security Networks Inc.

June 01, 2005 13:50 ET

Tranzcom Annouces 2005 First Quarter Results: Revenue Increases Over 850% and Achieves Profitablity

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 1, 2005) - Tranzcom China Security Networks Inc. (TSX VENTURE:TSN) - All amounts are in Canadian Dollars.

Tranzcom China Security Networks Inc. ("Tranzcom" or the "Company") is pleased to announce that the overall results for the first quarter of 2005 were significantly improved from the same period of last year. The Company generated $2,442,572 in sales revenues and realized net income for the period of $168,705 or $0.01 per share for the quarter ending March 31, 2005.

Total revenue for the quarter increased to $2,442,572 from $254,734 reported in the first quarter of 2004, representing an 859% increase. This increase resulted from a 14-fold increase in equipment and installation sales and 16% increase in monitoring revenue, even though the Chinese currency (RMB) declined 8% against the Canadian dollar. Total revenue in the first quarter of this year was higher than that of the fiscal year of 2004.

The Company turned its 2004 first quarter operating loss of $220,622 to an operating profit of $23,934. The Company realized a one-time $244,239 gain on settlement of debt, resulting in net income for the period of $168,705 in the first quarter of 2005, which represents a dramatic improvement over the $196,759 loss in the first quarter of 2004. Operating expenses were up by 21% from $278,131 in the first quarter of 2004 to $337,225 in the first quarter of 2005 due to acquisition of the Beijing Tranzcom Technology Co., Ltd. ("BTT").

The Company attributes the dramatic improvement in the financial results to the successful acquisition and integration of BTT in late 2004, cost reduction efforts companywide, and the growing Chinese security industry. BTT represents the predominant revenue share in the first quarter, as their expertise and proprietary video networking systems are in very high demand. Demand for traditional security systems continues to be favourable as the Chinese middle class is becoming more affluent and security conscious, yielding stable long-term recurring alarm monitoring revenues in addition to security systems sales.

Tranzcom CEO, Dr. Ken Cai comments "Turning the corner to profitability marks the beginning of a new era for Tranzcom. We have successfully adapted the western security business model and made it work in Beijing. This is the confirmation we needed to begin our rapid expansion of Tranzcom's services and brand throughout China."

About Tranzcom

Tranzcom China Security Networks Inc. is a Vancouver based Canadian company, trading on the TSX Venture Exchange under the symbol TSN. Tranzcom is a leading Security Network Service Provider in China, and operating a state of the art security dispatch centre in Beijing. Tranzcom's subsidiaries, Beijing Tranzcom Technology Co. and Beijing Huaxun Datacom Co. Ltd. design and manufacture security products and provide Integrated Security Service Solutions throughout China.

ON BEHALF OF THE BOARD

Ken Z. Cai, Chairman

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this News Release.

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