Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

April 08, 2009 22:29 ET

Tranzeo Wireless Reports Q4 and 2008 Year End Results

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - April 8, 2009) - Tranzeo Wireless Technologies Inc. (TSX:TZT), a leading producer of high-speed wireless broadband communication systems, today announced its financial results for the fourth quarter and the year ended December 31, 2008.

Financial Highlights:

- Revenue increased to $19.4 million for 2008 from 18.4 million for 2007, representing an increase of 5.7%

- Gross profit declined to $4.5 million for 2008 from $7.1 million for 2007, in part representing charges of $1.8 million against inventory in Q4 coupled with lower margins on our new WiMAX products

- Sales declined to $3.2 million for Q4 of 2008 from $3.7 million for Q4 of 2007 as we experienced reduced demand from the United States market which we attribute to the economic downturn. Sales of our WiMAX products however continued to increase in Q4 over Q3.

- We reported a net loss of $1.8 million for 2008 compared to net earnings of $1.0 million for 2007. Significant items in Q4, including charges against inventory and the acceleration of the amortization of certain capitalized assets, contributed to this net loss.

- EBITDA was a loss of $0.3 million, or $0.01 per share, for 2008, compared to a gain of $2.4 million, or $0.09 per share for 2007

Operational Highlights:

- We introduced our initial WiMAX products to the market in Q2 of 2008. Sales of our new WiMAX products increased in each subsequent quarter of 2008

- We implemented costs savings measures in Q4 of 2008 in order to preserve capital as we started to see the impact of the economic downturn. We anticipate that we will see the full impact of these costs savings measures in 2009

- We continued our shift to international markets as sales to the United States and Canada declined to 80% in 2008 from 85% in 2007

- We entered into a joint development agreement with PT. Teknologi Riset Global in December 2008 for the collaboration on the development of WiMAX products for the Indonesian market

- We gained approval from the Federal Communications Commission in the United States for a family of WiMAX products that operate within the 3.65GHz to 3.70GHZ frequency spectrum, thus enabling us to target this lightly regulated frequency spectrum

- We strengthened our board of directors in 2008 by adding Christoph Lingenthal, Martin Harriman and Patrick Smith, all of whom have significant background in the wireless industry

"We were able to achieve revenue growth in a year of economic downturn," said Jim Tocher, President and Chief Executive Officer of Tranzeo Wireless. "We believe that we have undertaken important strategic initiatives in 2008 that will enable us to focus our business on the growth areas in the wireless networks market in 2009 and beyond. These initiatives resulted in the introduction of our initial WiMAX products in Q2 and the growth of sales of our WiMAX products in each quarter. The recent FCC approval of our WiMAX products for the 3.65GHz to 3.70GHZ frequency spectrum also opens a further market opportunity for us in 2009. However, our Q4 sales indicate that we are being impacted by the economic downturn. In response, we have implemented costs savings measures, including reductions to staff and streamlining of sales and marketing operations. We realized initial costs savings in Q4 as a result of these initiatives and we believe we will continue to see the results of these cost savings measures in 2009."

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 Annual Information Form and MD&A and in other filings 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, including WiMax 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.

CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED DECEMBER 31 2008

(IN CANADIAN DOLLARS)



TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Balance Sheet

Dec. 31, 2008 Dec. 31, 2007
-------------------------------
-------------------------------

Assets
Current assets:
Cash and cash equivalent $ - $ 168,171
Accounts receivable 3,289,007 2,827,431
Current portion of future income taxes - 559,786
Prepaid expenses 768,822 560,673
Inventories 6,786,039 7,438,122
------------ ------------
10,843,868 11,554,183

Property, plant, and equipment 11,482,421 11,343,886
Deferred development costs 5,945,883 2,842,016
Future income taxes 2,533,191 218,540
------------ ------------
$ 30,805,363 $ 25,958,625
------------ ------------
------------ ------------

Liabilities and Shareholders' Equity
Current Liabilities:
Bank Indebtedness $ 3,116,276 $ -
Accounts payable and accrued liabilities 4,835,195 2,869,359
Equipment Loan 84,960 -
Current portion of capital lease obligation 998,169 903,133
Short Term Debt 2,000,000 -
------------ ------------
11,034,600 3,772,492
Capital lease 644,858 1,462,980
------------ ------------
11,679,458 5,235,472
------------ ------------

Shareholders' equity:
Share capital 17,525,344 17,497,824
Contributed surplus 1,015,298 841,350
Retained earnings 585,263 2,383,979
------------ ------------
19,125,905 20,723,153
------------ ------------
$ 30,805,363 $ 25,958,625
------------ ------------
------------ ------------



TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Statements of Operations and Deficit

Three Months Ended Year Ended
December 31 (unaudited) December 31
2008 2007 2008 2007
--------------------------------------------------

Sales $3,233,280 $3,701,925 $19,412,379 $18,363,866
Cost of goods sold 4,086,738 2,386,935 14,863,890 11,287,298
----------- ----------- ----------- -----------
Gross Profit (853,458) 1,314,990 4,548,489 7,076,568
----------- ----------- ----------- -----------


Expenses
Sales and marketing 361,567 502,892 1,998,920 1,670,050
Research and development 160,000 57,428 398,550 668,967
General and
administrative 743,409 470,438 2,723,424 2,203,705
Amortization 629,842 189,359 1,279,356 648,518
Stock Based Compensation 79,948 27,948 79,948 186,083
----------- ----------- ----------- -----------
1,974,767 1,248,065 6,480,198 5,377,323
----------- ----------- ----------- -----------

Earnings (loss) from
operations (2,828,225) 66,925 (1,931,709) 1,699,245

Other expenses (Income)
Interest Income - (3,985) - (75,799)
Interest expense 204,492 34,564 624,246 149,252
Foreign exchange loss 14,266 12,259 33,143 88,504
----------- ----------- ----------- -----------
218,758 42,838 657,389 161,957
----------- ----------- ----------- -----------

Earnings (loss) before
income taxes (3,046,983) 24,087 (2,589,098) 1,537,288

Income taxes (934,615) 16,066 (790,382) 586,000
----------- ----------- ----------- -----------

Net earnings (loss) (2,112,368) 8,021 (1,798,716) 951,288

Retained Earnings,
beginning of period 2,697,631 2,375,958 2,383,979 1,432,691
----------- ----------- ----------- -----------

Retained Earnings,
end of period $585,263 $2,383,979 $585,263 $2,383,979
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Earnings (loss) per share
for the period
Basic $(0.08) $0.00 $(0.07) $0.04
Diluted $(0.08) $0.00 $(0.07) $0.04
----------- ----------- ----------- -----------

Weighted average number
of shares - basic 26,336,753 26,282,970 26,297,563 25,735,429



TRANZEO WIRELESS TECHNOLOGIES INC.

Consolidated Statements of Cash Flows

Three Months Ended Year Ended
December 31 (unaudited) December 31
2008 2007 2008 2007
--------------------------------------------------

Cash flows from operating
activities:
Net income for
the period $(2,112,367) $8,021 $(1,798,717) $951,288
Adjustments to reconcile
net loss to net
cash from operating
activities:
Amortization 629,842 189,359 1,279,356 648,518
Amortization of
deferred
developments costs 160,000 58,750 398,550 102,250
Interest on capital
leases 53,558 45,155 238,829 159,773
Future income taxes (934,615) 16,066 (790,382) 586,000
Stock based
compensation 79,948 26,626 79,948 186,083
----------- ----------- ----------- -----------
(2,123,634) 343,977 (592,416) 2,633,912

Changes in working capital
assets and liabilities:
Prepaid expenses (35,971) (89,786) (208,149) (292,219)
Accounts receivable 1,175,406 353,458 (461,576) (1,354,466)
Accounts payable and
accrued liabilities (2,554,743) (1,080,355) (1,524,360) (2,284,946)
Inventories 4,700,030 763,609 4,142,279 (1,061,931)
----------- ----------- ----------- -----------
Net cash flows from (used)
in operating activities 1,161,088 290,903 1,355,778 (2,359,650)
----------- ----------- ----------- -----------

Cash flows from investing
activities
Additions to property,
plant and equipment (221,812) (696,605) (1,374,259) (3,962,467)
Deferred development
expenses (1,143,375) (1,484,072) (4,141,553) (2,501,589)
----------- ----------- ----------- -----------
Net cash used in investing
activities (1,365,187) (2,180,677) (5,515,812) (6,464,056)
----------- ----------- ----------- -----------

Cash flows from financing
activities:
Bank Indebtedness 454,503 - 3,116,276 -
Repayment of Capital
Lease obligation (273,204) (207,180) (1,236,893) (689,082)
Repayment of Equipment
Loan (4,720) - (9,440) -
Short Term Debt - - 2,000,000 -
Proceeds from Sales
and Leaseback - 1,204,881 - 1,204,881
Proceeds from
Equipment Loan - - 94,400 -
Issuance of common
shares, net 27,520 6,000 27,520 8,087,759
----------- ----------- ----------- -----------
Net cash flows from
financing activities 204,099 1,003,701 3,991,863 8,603,558
----------- ----------- ----------- -----------

Net increase (decrease)
in cash - (886,073) (168,171) (221,078)

Cash, beginning of period - 1,054,244 168,171 389,249
----------- ----------- ----------- -----------

Cash, end of period $ - $ 168,171 $ - $168,171
----------- ----------- ----------- -----------

Supplementary cash
information
Cash paid for interest $626,697 $45,155 $204,492 $159,843
Cash paid for income
taxes - - - -


Contact Information