Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

November 14, 2008 16:00 ET

Tranzeo Wireless Reports Third Quarter 2008 Results

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - Nov. 14, 2008) - Tranzeo Wireless Technologies Inc. (TSX:TZT), a leading producer of high-speed wireless broadband and WiMAX communication systems, reports results for the third quarter ended September 30, 2008.

Financial Highlights for the Quarter

- Revenue was $4.4 million compared with $4.6 million year over year.

- Gross profit was $1.4 million compared with $1.8 million year over year.

- Gross margin was 32% compared with 39% year over year.

- Net Loss was $0.14 million compared with net earnings of $0.2 million year over year.

- EBITDA was $0.28 million compared with $0.52 million year over year.

"In Q3/08 management began a process of right-sizing the company's operations to restore Tranzeo to be cash flow positive and profitable before fiscal year-end in order to gear up for dynamic expansion through WiMAX in the coming year. Tranzeo has made a significant and bold commitment to expand its proven Wi-Fi product portfolio with the addition of a robust WiMAX product line. This strategy has been based on management's belief that there is a tremendous business case for WiMAX infrastructure worldwide, particularly for the provider that develops a cost-competitive customer-premise technology that is also compatible with the leading base station technologies. WiMAX deployments are just beginning to reach critical mass around the world and by basing our solution on a chipset with proven capability to be deployed for existing fixed requirements, as well as evolving mobile and next generation standards, Tranzeo is future proofing our investments," said Jim Tocher, president and CEO of Tranzeo.

Revenues

Revenue for the third quarter of 2008 was $4.4 million compared with $4.6 million for the same period in 2007 and $6.0 million in the second quarter of 2008. WiMAX product sales accounted for $1.4 million compared with $0.8 million in the second quarter of 2008.

Gross Profit

Gross profit was $1.4 million compared with $1.8 million for the same period in 2007 and $1.9 million in the second quarter of 2008. Gross margins were 32% compared with 39% for the same period in 2007 and 32% in the second quarter of 2008.

Earnings

Net loss was $0.14 million from net earnings of $ 0.20 million for the same period in 2007 and net earnings of $0.1 million for the second quarter of 2008.

EBITDA was $0.28 million compared to $0.52 million for the same period in 2007 and $0.62 million for the second quarter of 2008.

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) 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 optimum cost effectiveness, premium quality and responsive support have attracted a growing and devoted worldwide following of more than 2,465 dealers and15 distributors. 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 and Shannon, Ireland. Visit www.tranzeo.com or phone 1.866.872.6936 for more information.



TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Balance Sheet

--------------------------------------------------------------------------
Sept 30, 2008 Dec. 31, 2007
(Unaudited)
-------------------------------

Assets
Current assets:
Cash and cash equivalents $ - $ 168,171
Accounts receivable 4,692,760 2,827,431
Current portion of future income taxes 1,030,553 559,786
Prepaid expenses 732,851 560,673
Inventories 7,995,873 7,438,122
------------ ------------
14,452,037 11,554,183

Property plant, and equipment 11,781,857 11,343,886
Deferred development costs 5,080,644 2,842,016
Future income taxes 218,540 218,540
------------ ------------
$ 31,533,078 $ 25,958,625
------------ ------------
------------ ------------

Liabilities and Shareholders' Equity
Current Liabilities:
Bank Indebtedness $ 2,661,773 $ -
Accounts payable and accrued
liabilities 3,899,742 2,869,359
Short Term Note Payable 2,000,000 -
Current portion of capital lease
obligation and equipment loan 1,009,756 903,133
------------ ------------
9,571,271 3,772,492
Capital lease obligation and
equipment loan 831,003 1,462,980
------------ ------------
10,402,274 5,235,472
------------ ------------

Shareholders' equity:
Share Capital 17,497,824 17,497,824
Contributed Surplus 935,350 841,350
Retained Earnings 2,697,630 2,383,979
------------ ------------
21,130,804 20,723,153
------------ ------------
$ 31,533,078 $ 25,958,625
------------ ------------
------------ ------------


TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Operations and Deficit
(Unaudited)


Three Months Ended Nine Months Ended
September 30 September 30
2008 2007 2008 2007
--------------------------------------------------

Sales $4,414,293 $4,601,415 $16,179,099 $14,661,941
Cost of goods sold 2,982,826 2,800,785 10,777,152 8,900,363
---------- ---------- ----------- -----------
Gross Profit 1,431,467 1,800,630 5,401,947 5,761,578
---------- ---------- ----------- -----------

Expenses
Sales and marketing 501,077 446,554 1,635,353 1,198,784
Research and
development 96,350 147,506 238,550 666,886
General and
administrative 629,500 624,550 1,982,015 1,804,430
Amortization 230,895 177,217 649,514 459,159
---------- ---------- ----------- -----------
1,457,822 1,395,827 4,505,432 4,129,259
---------- ---------- ----------- -----------

Earnings (Loss)
from operations (26,355) 404,803 896,515 1,632,319

Other expenses
(income)
Interest Income - (12,774) - (71,814)
Interest Expense 163,466 34,832 419,754 114,688
Foreign exchange
loss 23,065 57,564 18,877 76,245
---------- ---------- ----------- -----------
186,531 79,622 438,631 119,119
---------- ---------- ----------- -----------

Earnings (Loss)
before income taxes (212,886) 325,181 457,884 1,513,200

Income taxes (67,059) 124,080 144,233 569,934
---------- ---------- ----------- -----------

Net earnings (Loss) (145,827) 201,101 313,651 943,266

Retained earnings,
beginning of period 2,843,457 2,174,857 2,383,979 1,432,692
---------- ---------- ----------- -----------

Retained earnings,
end of period $2,697,630 $2,375,958 $2,697,630 $2,375,958
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------

Earnings (loss) per
share for the period
Basic $ (.01) $ .01 $ .01 $ .04
Diluted $ - $ .01 $ .01 $ .04

Weighted average
number of shares
- basic 26,284,405 26,278,405 26,284,405 25,550,908


TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended Nine Months Ended
September 30 September 30
2008 2007 2008 2007
--------------------------------------------------

Cash flows from
operating activities:
Net income (loss) for
the period $ (145,827) $ 201,101 $ 313,651 $ 943,266
Adjustments to
reconcile net loss
to net cash from
operating activities:
Amortization 230,895 177,217 649,514 459,159
Amortization of
deferred developments
costs 96,350 23,850 238,550 43,500
Interest on capital
leases 60,128 34,832 185,271 114,688
Future income taxes
- current (67,059) 124,080 144,233 569,934
Stock based compensation - 38,497 - 159,457
---------- ---------- ----------- -----------
174,487 599,577 1,531,219 2,290,004

Changes in working
capital assets and
liabilities:
Prepaid expenses (69,598) 15,965 (172,178) (202,433)
Accounts receivable 379,430 (388,651) (2,480,329) (2,118,633)
Accounts payable
and accrued
liabilities (243,377) (804,919) 1,030,384 (471,533)
Inventories 393,793 (486,437) (557,749) (1,825,540)
---------- ---------- ----------- -----------
Net cash flows used
in operating
activities 634,735 (1,064,465) (648,653) (2,328,135)
---------- ---------- ----------- -----------

Cash flows from
investing activities
Additions to property,
plant and equipment (147,481) (734,589) (923,824) (3,316,283)
Deferred development
expenses (793,396) (664,539) (2,383,180) (1,290,374)
---------- ---------- ----------- -----------
Net cash flows used
in investing activities (940,877) (1,399,128) (3,307,004) (4,606,657)
---------- ---------- ----------- -----------

Cash flows from
financing activities:
Repayment of capital
leases obligations
and equipment loan (311,486) (163,936) (968,687) (481,972)
Proceeds from short
term note payable - - 2,000,000 -
Proceeds from
equipment loan - - 94,400 -
Issuance of common
shares net - - - 8,081,759
---------- ---------- ----------- -----------
Net cash flows used
in financing activities (311,486) (163,936) 1,125,713 7,599,787
---------- ---------- ----------- -----------

Net increase (decrease)
in cash (617,628) (2,627,529) (2,829,944) 664,995

Cash (Bank Indebtedness),
beginning of period (2,044,145) 3,681,773 168,171 389,249
---------- ---------- ----------- -----------

Cash (Bank Indebtedness),
end of period (2,661,773) 1,054,244 (2,661,773) 1,054,244
---------- ---------- ----------- -----------

Supplementary cash
information
Cash paid for interest $ 163,466 $ 34,832 $ 419,754 $ 114,688


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