Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

November 14, 2011 16:00 ET

Tranzeo Provides Third Quarter 2011 Results

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - Nov. 14, 2011) - Tranzeo Wireless Technologies, Inc. (TSX:TZT), a leading producer of high-speed wireless broadband communication systems, today announced its financial results for the third quarter 2011.

Financial Results:

  • Revenue was $2.7 million compared with $2.1 million year over year.
  • Gross profit was $0.8 million compared with $0.6 million with % margins at 30% compared to 28% a year ago.
  • Aperto Network Inc. USA operations have been discontinued. All future product shipments and technical support will come from Tranzeo Canada. All non USA operation will remain the same.
  • The resulting change of the discontinuation of the Aperto Subsidiary is the removal of Aperto Inc. net liabilities in the amount of $2.0 million from the consolidated balance sheet and a gain of $2.0 million in the Statement of Earnings as an one time adjustment.
  • EBITDA (excluding stock based compensation) was positive at $0.5 million compared to a loss of $2.2 million for 2010. The decrease in the loss was primarily due to the reduction of operating expenses in the Aperto USA subsidiary and the gain realized on the subsidiary been discontinued.
  • Shipment to India continue to ramp in Q3 and we expect this to continue in Q4 and in to 2012.

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 http://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.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED SEPTEMBER 30, 2011

(Unaudited)

(IN CANADIAN DOLLARS)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Consolidated Balance Sheets
September 30, 2011
(Unaudited) December 31, 2010
Assets
Current assets:
Cash $ 40,150 $ 72,066
Accounts receivable 1,734,808 1,000,754
Prepaid expenses 296,572 388,936
Inventory 3,911,606 4,754,634
5,983,136 6,216,390
Property and equipment 8,995,734 9,812,338
Deferred development costs 600,000 -
$ 15,578,870 $ 16,028,728
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,344,341 $ 7,768,160
Due to related party 984,027 1,179,214
Current portion of capital lease obligation 31,886 51,310
Short term debt 1,178,500 764,500
8,538,754 9,763,184
Convertible debentures 1,216,000 -
Capital lease obligation 51,342 84,972
9,806,096 9,848,156
Shareholders' equity:
Share capital 34,345,385 31,779,583
Shares issuable - 1,699,787
Reserve 5,359,088 2,937,089
Retained deficit (33,931,699) (30,235,887)
5,772,774 6,180,572
$ 15,578,870 $ 16,028,728
Consolidated Statements of Operations and Deficit
(Unaudited)
September 30 September 30
2011 2010 2011 2010
Sales $ 2,674,989 2,135,231 $ 7,132,558 9,949,185
Cost of goods sold 1,862,600 1,538,273 4,865,542 7,574,020
Gross Profit 812,389 596,958 2,267,016 2,375,165
Expenses
Sales and marketing 592,199 861,712 1,648,363 2,075,532
Research and development 547,969 792,891 1,700,825 2,191,656
General and administrative 965,104 1,176,770 2,736,667 3,033,196
Share based compensation 139,821 226,723 618,702 1,093,176
Amortization 273,257 326,217 828,808 975,106
2,518,350 3,384,313 7,533,365 9,368,666
Loss from operations (1,705,961) (2,787,355) (5,266,349) (6,993,501)
Gain on discontinuation of subsidiary (2,049,403) - (2,056,062) -
Acquisition costs - - - 514,623
Impairment - - - 190,501
Interest expense 87,923 85,347 253,525 175,524
Foreign exchange loss (gain) 262,867 (68,433) 232,001 80,354
(1,698,613) 16,914 (1,570,537) 961,002
Net loss (7,348) (2,804,269) (3,695,812) (7,954,503)
Deficit, beginning of period (33,924,351) (19,577,994) (30,235,887) (14,427,760)
Deficit, end of period (33,931,699) (22,382,263) (33,931,699) (22,382,263)
Consolidated Statement Of Changes In Equity
Share Shares
Capital Issuable Reserve Deficit Total
Balance at
January 1, 2010 28,407,690 2,104,729 (14,427,760) 16,084,659
Shares issued 4,076,761 4,076,761
Shares to be issued for Aperto Acq. 14,691,862 14,691,862
Stock Based Compensation-Options 866,453 866,453
Net Loss (5,150,234) (5,150,234)
Balance at
September 30, 2010 32,484,451 14,691,862 2,971,182 (19,577,994) 30,569,501
Balance at
January 1, 2011 31,779,583 1,699,787 2,937,089 (30,235,887) 6,180,572
Issuance of common shares 4,369,099 4,369,099
Reduction of shares to be Issued (1,699,787) (1,699,787)
Stock Based Compensation-Options 618,702 618,702
Stock Based Compensation-Warrants (1,803,297) 1,803,297 -
Net Loss (3,695,812) (3,695,812)
Balance at
September 30, 2011 34,345,385 - 5,359,088 (33,931,699) 5,772,774
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2011 2010 2011 2010
Cash flows from operating activities:
Net loss for the period (7,348) (2,804,268) (3,695,812) (7,954,502)
Adjustments to reconcile net earnings to net cash from operating activities:
Amortization 273,257 326,217 828,808 975,073
Impairment - - - 821,501
Interest on capital lease - 58,738 - 58,738
Stock based compensation 139,821 226,723 618,702 1,093,176
405,730 (2,192,590) (2,248,302) (5,006,014)
Changes in working capital assets and liabilities:
Prepaid expenses 48,825 (215,087) 92,363 (542,256)
Accounts receivable (424,621) 1,846,005 (734,695) 2,159,173
Accounts payable and accrued liabilities (2,462,594) (65,618) (1,423,179) 670,322
Inventories 463,989 269,414 843,029 644,959
Net cash flows used in operating activities (1,968,671) (357,876) (3,470,784) (2,073,817)
Cash flows from investing activities
Additions to property, plant and equipment (6,624) 46,903 (12,203) (585,226)
Deferred Development Cost (600,000) - (600,000) -
Technology rights - - - 250,063
Sales of Technology Asset - - - -
Net cash flows used in investing activities (606,624) 46,903 (612,203) (335,163)
Cash flows from financing activities:
Proceeds from (repayment of) short term note payable 518,000 500,000 414,000 664,500
Proceeds from related parties (36,361) 240,000 (195,186) 240,000
Repayment of capital leases obligations (9,079) (301,835) (53,056) (539,231)
Repayment of equipment loan - (56,640) - (66,080)
Repayment of related party loan - (27,897) - (177,897)
Issuance of convertible debentures 1,216,000 1,216,000 -
Issuance of common shares 914,326 15,750 2,669,312 1,101,929
Net cash flows from financing activities 2,602,886 369,378 4,051,070 1,223,221
Net decrease in cash 27,591 58,406 (31,917) (1,685,886)
Cash, beginning of period 12,559 93,540 72,067 1,837,832
Cash, end of period 40,150 151,946 40,150 151,946

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