Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

May 16, 2011 18:11 ET

Tranzeo Provides First Quarter 2011 Results

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - May 16, 2011) - Tranzeo Wireless Technologies, Inc. (TSX:TZT), a leading producer of high-speed wireless broadband communication systems, today announced its financial results for the first quarter 2011.

Financial Results:

  • Revenue was $2.4 million compared with $3.4 million year over year.

  • Gross profit was $0.8 million compared with $0.9 million with % margins improving to 35% compared to 26% a year ago.

  • EBITDA (excluding stock based compensation) was a loss of $1.1 million for 2011, compared to a loss of $0.8 million for 2010. The increase in the loss was primarily due to the combining of operations of Aperto and Tranzeo.

  • Total orders for the quarter were $5M.

Q1 revenue was lower than expected primarily due to the longer sales cycle and qualification requirements associated with our international telecommunications customers. The total orders for the quarter were $5M with most of this beginning to ship at the end of Q1 and continuing into Q2.

Tranzeo has completed extensive qualifications with two tier 1 nationwide service providers in India and in Q2 we are now shipping in volume.

Tranzeo and Aperto are seeing strong sales in Spain for Q2 as a result of expansion of existing broadband services.

Management believes that we will be EBITDA positive in Q2.

"We have gone through a significant transition with our focus on larger telecommunications customers and in Q2 we are seeing the results as our volumes are increasing," said Jim Tocher, President and CEO of Tranzeo Wireless.

Tranzeo and the Tranzeo logo are registered trademarks of Tranzeo Wireless Technologies Inc.

About Tranzeo Wireless Technologies Inc:

Tranzeo Wireless Technologies Inc. (TSX:TZT) leads the wireless broadband industry as a premier manufacturer of high-performance wireless network equipment that allows communities and businesses to communicate without boundaries. Tranzeo's full spectrum of point-to-point and point-to-multipoint radios, WiMAX equipment, and mesh network solutions are designed for wireless internet service providers, governments, campuses, military, carriers, enterprise customers, and systems integrators around the globe. Headquartered in British Columbia, Canada, Tranzeo also has offices in San Diego, California, San Jose, California, and Indonesia. Visit www.tranzeo.com or phone 1.866.872.6936 for more information.

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" in our Annual Information Form and Management's Discussion and Analysis which may be found on SEDAR at www.sedar.com.

TRANZEO WIRELESS TECHNOLOGIES INC.
Consolidated Balance Sheets
31-Mar-1131-Dec-10
Assets
Current assets:
Cash$215,311$72,066
Accounts receivable1,301,5791,000,754
Prepaid expenses353,689388,936
Inventory4,276,7334,754,634
6,147,3126,216,390
Property and equipment9,537,0939,812,338
$15,684,405$16,028,728
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities$7,687,612$7,768,160
Due to related party937,8451,179,214
Current portion of equipment loan--
Current portion of capital lease obligation32,43951,310
Short term debt514,500764,500
9,172,3969,763,184
Equipment Loan--
Capital lease obligation76,22984,972
9,248,6259,848,156
Shareholders' equity:
Share capital32,002,69531,779,583
Shares issuable1,428,3641,699,787
Reserves5,079,4462,937,089
Deficit(32,074,725)(30,235,887)
6,435,7806,180,572
$15,684,405$16,028,728
TRANZEO WIRELESS TECHNOLOGIES INC.
Consolidated Statements of Operations and Deficit
(Unaudited)
Three Months Ended March 31,
20112010
Sales$2,390,609$3,361,569
Cost of goods sold1,561,5852,477,678
Gross profit829,024883,891
Expenses
Sales and marketing513,867380,447
Research and development609,876502,919
General and administrative882,042774,145
Share based compensation339,060717,149
Amortization278,775320,580
2,623,6202,695,240
Net loss before other items(1,794,596)(1,811,349)
Other expenses
Interest expense106,47338,034
Foreign exchange loss (gain)(62,231)65,057
44,242103,091
Net loss(1,838,838)(1,914,440)
Deficit, beginning of period(30,235,887)(14,427,760)
Deficit, end of period$(32,074,725)$(16,342,200)
Loss per share for the period
Basic$(0.04)$(0.04)
Diluted$(0.04)$(0.04)
Weighted average number of shares outstanding for the year - basic50,717,65846,521,779
TRANZEO WIRELESS TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
20112010
Cash flows from operating activities:
Net loss for the quarter$(1,838,838)$(1,914,440)
Adjustments to reconcile net income to net cash from operating activities:
Amortization278,775320,580
Stock based compensation339,060717,149
(1,221,003)(876,711)
Changes in working capital assets and liabilities
Prepaid expenses35,247(352,938)
Accounts receivable(300,826)(545,145)
Accounts payable and accrued liabilities(80,548)(459,892)
Inventories477,901401,785
Net cash flows used in operating activities(1,089,229)(1,832,901)
Cash flows from investing activities:
Additions to property, plant, and equipment(3,530)(80,272)
Net cash flows used in investing activities(3,530)(80,272)
Cash flows from financing activities:
Repayment of capital lease obligation(27,615)(199,380)
Repayment of equipment loan-(4,720)
Proceeds from (repayment of) short term debt(250,000)164,500
Repayment of related party loan(241,368)(140,821)
Issuance of common shares, net1,754,986529,693
Net cash flows from financing activities1,236,003349,272
Net increase (decrease) in cash143,244(1,563,901)
Cash, beginning of period72,0671,837,832
Cash, end of period$215,311$273,931

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