Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

May 07, 2008 14:29 ET

Tranzeo Wireless Shows Record Sales in First Quarter of 2008

Revenue rises 21%, gross profit up 11%, earnings from operations up 4%, earnings after tax up 2% and EBITDA up 23%.

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - May 7, 2008) - Tranzeo Wireless Technologies Inc. (TSX:TZT), a leading producer of high-speed wireless broadband and WiMAX communication systems, reports positive results for the first quarter ended March 31, 2008.

Financial Highlights for the Quarter

- Revenue increased 21% to $5.8 million year over year

- Gross profit improved 11% to $2.1 million year over year

- Earnings from operations increased 4% to $0.61 million, year over year

- Earnings after tax increased 2% to $0.349 million year over year

- EBITDA increased 23% to $0.87 million year over year

"Our core Wi-Fi business showed strong sales volume based on strengthened business relationships with our key distributors, the growing markets they serve, and Tranzeo's increased recognition as a premium brand. With the additional ramp up of new WiMax product sales in Q2, we are confident our strategy will continue to build strength in the broadband market place," said Jim Tocher, President and CEO of Tranzeo.

Revenues Increased

Revenue for the first quarter of 2008 increased to $5.8 million from $4.8 million for the same period in 2007, representing a 21% increase.

Gross Profit Improved

Gross profit increased to $2.1 million for the first quarter of 2008 from $1.9 million for the same period in 2007, representing an 11% increase. Gross margins were 36% for the first quarter of 2008, compared to 39% for the same period in 2007.

Earnings Stronger

Earnings from operations for the first quarter of 2008 increased by 4% to $0.61 million from $0.59 million for the same period in 2007. Earnings after tax for the first quarter of 2008 increased to $0.349 million from $0.341 million for the same period in 2007. As a percentage of revenue, earnings from operations represented 11% in the first quarter of 2008, compared to 12% in the first quarter of 2007. As a percentage of revenue, earnings after tax for the first quarter of 2008 represented 6% compared to 7% in the first quarter of 2007.

EBITDA for the first quarter of 2008 increased to $0.87 million from EBITDA of $0.7 million for the same period in 2007, representing a 23% increase. As a percentage of revenue, EBITDA represented 15% in the first quarter of 2008 and in the first quarter of 2007.

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 and 20 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

March 31, December 31,
2008 2007
(Unaudited)
----------------------------
----------------------------

Assets
Current assets:
Cash and cash equivalent $ - $ 168,171
Accounts receivable 4,855,437 2,827,431
Current portion of future income taxes 643,513 559,786
Prepaid expenses 564,203 560,673
Inventories 8,440,225 7,438,122
------------- -------------
14,503,378 11,554,183

Property, plant, and equipment 11,593,823 11,343,886
Deferred development costs 3,621,077 2,842,016
Future income taxes 218,540 218,540
------------- -------------
$ 29,936,818 $ 25,958,625
------------- -------------
------------- -------------

Liabilities and Shareholders' Equity
Current Liabilities:
Bank Indebtedness $ 2,053,270 $ -
Accounts payable and accrued liabilities 4,487,180 2,869,359
Current portion of capital lease obligation 1,006,688 903,133
------------- -------------
7,547,138 3,772,492
Capital lease obligation 1,270,323 1,462,980
------------- -------------
8,817,461 5,235,472
------------- -------------

Shareholders' equity:
Share capital 17,497,824 17,497,824
Contributed surplus 888,350 841,350
Retained earnings 2,733,183 2,383,979
------------- -------------
21,119,357 20,723,153
------------- -------------
$ 29,936,818 $ 25,958,625
------------- -------------
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TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Operations and Deficit
(Unaudited)

Three Months Ended March 31,
2008 2007
----------------------------
----------------------------

Sales $ 5,760,949 $ 4,752,117
Cost of goods sold 3,686,435 2,882,961
------------- -------------
Gross profit 2,074,514 1,869,156
------------- -------------

Expenses
Sales and marketing 541,076 344,543
Research and development 58,850 245,691
General and administrative 655,081 557,802
Amortization 208,626 133,908
------------- -------------
1,463,633 1,281,944
------------- -------------

Earnings before other items 610,881 587,212
------------- -------------

Other (income) expenses
Interest income - (20,588)
Interest Expense 89,360 41,300
Foreign exchange loss 11,734 15,528
------------- -------------
101,094 36,240
------------- -------------

Net earnings before income taxes 509,787 550,972

Income tax expense 160,583 209,828
------------- -------------

Net earnings 349,204 341,144

Retained earnings, beginning of year 2,383,979 1,432,691

------------- -------------
Retained earnings, end of year $ 2,733,183 $ 1,773,835
------------- -------------
------------- -------------

------------- -------------
Earnings per share for the period
Basic $ 0.01 $ 0.01
------------- -------------
------------- -------------
Diluted $ 0.01 $ 0.01
------------- -------------
------------- -------------

------------- -------------
Weighted average number of shares
outstanding for the year 26,284,405 24,087,375
------------- -------------
------------- -------------


TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended March 31,
2008 2007
----------------------------
----------------------------

Cash flows from operating activities:
Net income for the period $ 349,204 $ 341,144
------------- -------------

Adjustments to reconcile net income to net
cash from operating activities:
Amortization 208,626 133,908
Amortization of Deferred development costs 58,850 -
Interest on capital leases 65,172 41,300
Future income taxes - current 160,583 209,828
Stock based compensation - 64,638
------------- -------------
842,435 790,818

Changes in working capital assets and
liabilities
Prepaid expenses (82,840) (124,522)
Accounts receivable (2,193,006) (754,588)
Accounts payable and accrued liabilities 1,617,822 (540,161)
Inventories (1,002,101) (324,207)
------------- -------------
Net cash flows used in operating activities (817,690) (952,660)
------------- -------------

Cash flows from investing activities:
Additions to property, plant, and equipment (294,902) (1,181,649)
Deferred development expenses (790,914) (247,910)
------------- -------------

Net cash flows used in investing activities (1,085,816) (1,429,559)
------------- -------------

Cash flows from financing activities:
Repayment of capital lease obligations (317,935) (153,310)
Issuance of common shares, net - 7,388,430
------------- -------------

Net cash flows from financing activities (317,935) 7,235,120
------------- -------------

Net increase (decrease) in cash (2,221,441) 4,852,901

Cash and cash equivalents, beginning of
period 168,171 389,249
------------- -------------

Cash and cash equivalents, (Bank
indebtedness), end of period $ (2,053,270) $ 5,242,150
------------- -------------
------------- -------------

CASH PAID FOR
Interest $ 89,360 $ 41,300
------------- -------------
------------- -------------
Income taxes $ - $ -
------------- -------------
------------- -------------

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