Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

November 14, 2005 09:00 ET

Tranzeo Announces Third Quarter Results, Rapid Growth Continues Year Over Year: Revenue 108% Increase; Net Income 192% Increase

MAPLE RIDGE, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2005) - Tranzeo Wireless Technologies Inc. (TSX:TZT) a leader in designing, manufacturing, and distributing high-speed wireless broadband communication systems, reports results for the third quarter ended September 30, 2005.

Financial Highlights for the quarter

- Revenue increased 108% to 4.0 million year over year

- Net income increased 192% to $0.28 million year over year -($0.3 million loss in 2004)

- Net income increased 49% from Q2 2005

- Gross profit improved 211% year over year to $1.2 million

"We have once again continued the trend of significantly improving our sales volume, customer base, gross profit and net earnings from the previous quarter," says Jim Tocher, President and CEO of Tranzeo. "The results of this quarter 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 2005 increased to $4.0 million from $1.92 million from the same period in 2004, representing a 108% increase. Revenue for the period was 13% higher than the previous three months ended June 30, 2005. Revenue for the first nine months of 2005 increased by 105% to $10.23 million from $4.99 million for the same period in 2004. The increase is the result of the ongoing growth in demand for our wireless products, our competitive pricing and our accelerating expansion of our dealer and distributor base.

"In the third quarter of 2005 we experienced our best ever new customer wins and the demand from our current distributor base is continually growing," says Jim Tocher, President and CEO of Tranzeo. "Adding distribution is one of our key strategies in reaching our objectives and the results in this quarter have clearly demonstrated that."

Gross Profit Improved

Gross profit increased to $1.2 million for the third quarter of 2005 from $0.4 million in the same year ago period, representing a 211% increase. Gross margins were 30% for the third quarter of 2005, compared to 22% for the same year ago period. The increase in gross margins was attributable to cost savings realized in the sourcing of components for our wireless data network products that resulted in lower manufacturing costs. Cost savings have also been realized as a result of increased component purchases as our sales have increased. Management expects further cost saving improvements will be achieved.

Net Earnings Stronger

The net earnings increased to $0.28 million for the third quarter of 2005 from a net loss of $0.30 million for the same period in 2004. As a percentage of revenue, net earnings (loss) represented 7% in the third quarter of 2005, compared to (16%) in the third quarter of 2004. Net earnings for the period were 49% higher than the previous three months ended June 30 2005. The net earnings increased to $0.57 million for the first nine months of 2005 from a net loss of $0.42 million for the first nine months of 2004. As a percentage of revenue, net earnings (loss) represented 6% in the first nine months of 2005, compared to (8%) in the same period in of 2004.

"We anticipate a positive trend in net earnings driven by increasing sales volume and successful cost containment initiatives," says Doug Howes, Chief Financial Officer of Tranzeo.

EBITDA

EBITDA increased to $0.37 million for the third quarter of 2005 from a loss of $0.2 million for the same period in 2004. As a percentage of revenue, EBITDA represented 9% in the third quarter of 2005, compared to (10%) in the third quarter of 2004. EBITDA increased to $0.89 million for the first nine months of 2005 from a loss of $0.25 million for the first nine months of 2004. As a percentage of revenue, net earnings (loss) represented 9% in the first nine months of 2005, compared to (5%) in the same period in of 2004.

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:

Tranzeo Wireless Technologies Inc. (TSX:TZT) has emerged as an industry leader in designing, manufacturing and distributing high-speed wireless broadband communication systems globally. Our continued commitment to design excellence and years of experience provide our clients with industry-specific wireless Point-to-Point and Point to multi-Point solutions. We offer technically advanced wireless Broadband communication equipment available in the 2.4 GHz and 5.8 GHz Wireless spectrums and employ direct sequence spread spectrum (DSSS) technology for robust connectivity and long-range performance. Simplicity of use, ease of implementation and cost-effectiveness are the benefits of our solutions. Installation is quick and easy. Network Managers can easily connect office buildings, campuses and remote sites. The Wireless network is operational in a fraction of the time it takes to cable and install traditional wired networks and can be remotely monitored and configured from anywhere in the world. For more information on our wireless solutions, go to www.tranzeo.com.



TRANZEO WIRELESS TECHNOLOGIES INC.
Consolidated statements of operations and deficit
(Unaudited)

Three months ended Nine months ended
September 30 September 30
2005 2004 2005 2004
--------------------------------------------------
--------------------------------------------------
Sales $ 4,003,580 $ 1,923,448 $10,234,759 $ 4,985,288
Cost of goods
sold 2,801,877 1,536,752 7,141,566 3,886,476
----------- ----------- ----------- -----------
Gross Profit 1,201,703 386,696 3,093,193 1,098,812
----------- ----------- ----------- -----------

Expenses
Sales and
marketing 278,616 215,617 820,270 525,790
Research and
development 188,185 151,744 492,245 284,510
General and
administrative 362,237 218,813 886,623 533,635
Amortization 61,111 48,368 166,546 75,374
----------- ----------- ----------- -----------
890,149 634,542 2,365,684 1,419,309
----------- ----------- ----------- -----------

Earnings (loss)
from operations 311,555 (247,846) 727,509 (320,497)

Interest on long
term debt 2,936 36,448 83,043 81,865
Interest accreted
on convertible
debentures 290 5,507 10,978 12,784
Foreign exchange
loss 31,767 10,263 60,504 6,582
----------- ----------- ----------- -----------
34,993 52,218 154,525 101,231
----------- ----------- ----------- -----------

Net earnings (loss) 276,561 (300,064) 572,984 (421,728)

Deficit, beginning
of period (757,222) (859,257) (1,053,645) (737,593)
----------- ----------- ----------- -----------
Deficit, end
of period $ (480,661) $(1,159,321) $ (480,661) $(1,159,321)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings(loss)
per share for
the period
Basic $ 0.01 $ (0.03) $ 0.04 $ (0.04)
Diluted $ 0.01 - $ 0.04 -
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average
number of shares 18,935,548 11,913,700 14,643,412 10,913,700


TRANZEO WIRELESS TECHNOLOGIES INC.
Consolidated Balance Sheet
(Unaudited)

Sep. 30, 2005 Dec. 31, 2004
(Unaudited) (Audited)
Assets
Current assets:
Cash $ 47,170 $ -
Accounts receivable 577,770 267,555
Prepaid expenses 241,579 57,991
Inventories 3,062,609 1,080,913
------------- -------------
3,929,128 1,406,459

Fixed Assets 1,486,156 771,920
------------- -------------
$ 5,415,284 $ 2,178,379
------------- -------------
------------- -------------

Liabilities and Shareholders' Equity
Current Liabilities:
Bank indebtedness $ - $ 26,585
Accounts payable and accrued
liabilities 2,446,980 704,436
Customer deposits 45,008 79,824
Current portion of convertible
debentures 20,000 550,000
------------- -------------
2,511,988 1,360,845
Convertible Debentures - 1,038,236
------------- -------------
2,511,988 2,399,081
------------- -------------
Shareholders' equity:
Share Capital 3,383,281 778,340
Equity Component of Convertible
Debenture 676 54,603
Deficit (480,661) (1,053,645)
------------- -------------
2,903,296 (220,702)
------------- -------------
$ 5,415,284 $ 2,178,379
------------- -------------
------------- -------------


TRANZEO WIRELESS TECHNOLOGIES INC.
Consolidated statements of cash flow
(Unaudited)

Three months ended Nine months ended
September 30 September 30
------------------------ ------------------------
2005 2004 2005 2004
------------------------ ------------------------
Cash flows
from operating
activities:
Net income (loss)
for the period $ 276,561 $ (300,064) $ 572,984 $ (421,728)
Adjustments to
reconcile net
loss to net cash
from operating
activities:
Amortization 61,111 48,368 166,546 75,374
Accreted interest
on convertible
debentures 290 5,507 10,978 12,784

Changes in working
capital assets
and liabilities
Prepaid expenses 92,567 89,663 (183,588) (61,960)
Accounts
receivable (192,690) (43,712) (310,215) (75,421)
Accounts payable
and accrued
liabilities 1,077,539 103,148 1,742,544 239,628
Inventories (1,049,387) (156,439) (1,981,696) (575,919)
Customer
deposits 35,926 37,785 (34,816) 58,743

------------------------ ------------------------
(17,263) (748,499)
Net cash flows
used in
operating
activities 301,917 (215,744)

Cash flows from
investing activities
Additions to
property, plant
and equipment (460,705) (203,464) (880,782) (572,988)

Cash flows
from financing
activities:
Advances from
(payments to)
related parties - 32,852 - (76,044)
Net proceeds on
issuance of
convertible
debentures (1,595,415) 344,250 (1,595,415) 1,031,315
Net proceeds on
sale of common
shares 1,657,915 - 2,567,215 503,000

------------------------ ------------------------
Net cash
provided by
financing
activities 62,500 377,102 971,800 1,458,271
Net increase
(decrease)
in cash (96,288) (42,106) 73,755 136,784
Cash (deficiency),
beginning of
period 143,458 179,869 (26,585) 979

Cash, end of
period $ 47,170 $ 137,763 $ 47,170 $ 137,763
------------------------ ------------------------
------------------------ ------------------------

Supplementary
cash information
Cash paid for
interest $ 2,936 $ 36,448 $ 83,043 $ 81,865


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