Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

August 13, 2009 16:01 ET

Tranzeo Wireless Reports Second Quarter 2009 Results

Q2 bookings reach a record $6.6M

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - Aug. 13, 2009) - Tranzeo Wireless Technologies Inc. (TSX:TZT), a leading producer of high-speed wireless broadband communication systems, today announced its financial results for the second quarter 2009.

Financial Highlights:

- Revenue was $3.3 million compared with $6.0 million year over year and compared with $3.2 million in the prior quarter. The decrease in sales year over year was primarily due to reduced demand from the United States market which we attribute to the economic downturn.

- Bookings reached a record $6.6M in the second quarter. Orders received late in the quarter will be fulfilled in the third quarter with a backlog of $3.3M going into the third quarter.

- Gross profit declined to $1.0 million from $1.9 million for 2008 which was the result of a decrease in sales, coupled with lower margins on our new WiMAX products.

- We reported a net loss of $0.6 million compared to net earnings of $0.1 million for 2008.

- EBITDA was a loss of $0.1 million, or $0.00 per share, for 2009, compared to a gain of $0.6 million, or $0.02 per share for 2008.

- The Company issued 7,076,000 Units at a price of $0.40 per Unit for total gross proceeds of $2,830,400.

- The bridge loan of $2.0 million was repaid from the proceeds of the equity offering.

Operational Highlights:

- Orders in the first two quarters of 2009 exceed 2008 orders for Aperto-branded WiMAX subscriber units.

- WiMAX product developed in partnership with PT. Teknologi Riset Global (TRG), has received Indonesian government approval based on product performance and meeting the 30% local content requirement. TRG/Tranzeo equipment is the only equipment to date that has been approved for deployment in Indonesia.

- Successfully replicated WiMAX subscriber unit production in Batam Indonesia with first production delivery in July.

- We have successfully executed on all of our cost reductions.

- Management expects to return to profitability in the third quarter.

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.

Interim Consolidated Balance Sheet

June 30, 2009
(Unaudited) Dec. 31, 2008
------------------------------

Assets
Current assets:
Accounts receivable $ 3,440,313 $ 3,289,007
Prepaid expenses 696,695 768,822
Inventories 5,157,852 6,786,039
------------- -------------
9,294,860 10,843,868

Property, plant, and equipment 10,963,839 11,482,421
Deferred development costs 6,894,170 5,945,883
Future income taxes 3,096,292 2,533,191
------------- -------------
$ 30,249,161 $ 30,805,363
------------- -------------
------------- -------------

Liabilities and Shareholders' Equity
Current Liabilities:
Bank Indebtedness $ 3,488,906 $ 3,116,276
Accounts payable and accrued liabilities 5,275,138 4,835,195
Equipment Loan 75,520 84,960
Current portion of capital lease obligation 858,085 998,169
Short Term Note Payable - 2,000,000
------------- -------------
9,697,649 11,034,600
Capital lease obligation and equipment loan 225,735 644,858
------------- -------------
9,923,384 11,679,458
------------- -------------

Shareholders' equity:
Share capital 19,922,457 17,525,344
Contributed surplus 1,055,524 1,015,298
Retained earnings (deficit) (652,204) 585,263
------------- -------------
20,325,777 19,125,905
------------- -------------
$ 30,249,161 $ 30,805,363
------------- -------------
------------- -------------


TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Operations and Retained Earnings
(Unaudited)

Three Months Ended Six Months Ended
June 30 June 30
2009 2008 2009 2008
------------------------------------------------------

Sales $ 3,332,533 $ 6,003,857 $ 6,500,410 $ 11,764,806
Cost of goods sold 2,340,027 4,107,891 4,522,272 7,794,326
------------ ------------ ------------ ------------
Gross Profit 992,506 1,895,966 1,978,138 3,970,480
------------ ------------ ------------ ------------

Expenses
Sales and marketing 352,520 595,200 688,711 1,136,276
Research and
development -
amortization of
deferred costs 321,504 83,350 594,504 142,200
General and
administrative 693,593 695,434 1,383,984 1,350,515
Share based
compensation 14,728 - 40,226 -
Amortization 314,676 209,993 632,772 418,619
------------ ------------ ------------ ------------
1,697,021 1,583,977 3,340,197 3,047,610
------------------------------------------------------

Earnings (loss)
from operations (704,515) 311,989 (1,362,059) 922,870

Other expenses
(income)
Interest Expense 184,660 166,928 389,960 256,288
Foreign exchange
loss (gain) (3,477) (15,922) (1,451) (4,188)
------------------------------------------------------
181,183 151,006 388,509 252,100
------------ ------------ ------------ ------------

Earnings (loss)
before income taxes (885,698) 160,983 (1,750,568) 670,770

Income taxes
(recovery) (261,290) 50,709 (513,101) 211,292
------------ ------------ ------------ ------------

Net earnings (loss) (624,408) 110,274 (1,237,467) 459,478

Retained Earnings
(deficit),
beginning of period (27,796) 2,733,183 585,263 2,383,979
------------ ------------ ------------ ------------

Retained Earnings
(deficit),
end of period $ (652,204) $ 2,843,457 $ (652,204) $ 2,843,457
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Earnings (loss)
per share for
the period
Basic $ (0.02) $ 0.00 $ (0.02) $ 0.02
Diluted $ (0.02) $ 0.00 $ (0.02) $ 0.02
------------ ------------ ------------ ------------

Weighted average
number of shares-
basic 27,454,035 26,284,405 30,213,794 26,284,405


TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended Six Months Ended
June 30 June 30
2009 2008 2009 2008
------------------------------------------------------
Cash flows from
operating
activities:
Net income (loss)
for the period $ (624,408) $ 110,274 $ (1,237,467) $ 459,478
Adjustments to
reconcile net
earnings to net
cash from operating
activities:
Amortization 314,676 209,993 632,772 418,619
Amortization of
deferred
development costs 321,504 83,350 594,504 142,200
Interest on
capital leases 34,195 59,971 75,868 125,143
Future income
taxes (recovery) (261,290) 50,709 (513,101) 211,292
Stock based
compensation 14,728 - 40,226 -
------------ ------------ ------------ ------------
(200,595) 514,297 (407,198) 1,356,732
Changes in working
capital assets and
liabilities:
Prepaid expenses 65,109 (19,740) 72,127 (102,580)
Accounts receivable (224,561) (416,753) (151,306) (2,444,759)
Accounts payable
and accrued
liabilities (2,160,936) (2,863,311) (2,943,950) (1,245,490)
Inventories 3,087,097 2,569,809 5,012,080 1,567,706
------------ ------------ ------------ ------------
Net cash flows
used in operating
activities 566,114 (215,698) 1,581,753 (868,391)
------------ ------------ ------------ ------------
Cash flows from
investing activities
Additions to
property, plant
and equipment (84,871) (481,441) (114,190) (776,343)
Deferred
development
expenses (786,459) (1,048,871) (1,592,791) (2,004,782)
------------ ------------ ------------ ------------
Net cash flows
used in investing
activities (871,330) (1,530,312) (1,706,981) (2,781,125)
------------ ------------ ------------ ------------
Cash flows from
financing activities:
Bank indebtedness 240,729 (9,125) 372,630 2,044,145
Proceeds from
short term note
payable - 2,000,000 - 2,000,000
Repayment of short
term note payable (2,000,000) - (2,000,000) -
Repayment of
capital leases
obligations (327,906) (339,265) (635,075) (657,200)
Proceeds from
equipment loan - 94,400 - 94,400
Repayment of
equipment loan (4,720) - (9,440) -
Issuance of
common shares 2,397,113 - 2,397,113 -
------------ ------------ ------------ ------------
Net cash flows
from financing
activities 305,216 1,746,010 125,228 3,481,345
------------ ------------ ------------ ------------

Net increase
(decrease) in cash - - - (168,171)

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

Supplementary cash
information
Cash paid for
interest $ 184,660 $ 166,928 $ 389,960 $ 256,288


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