Tranzeo Wireless Technologies Inc.
TSX : TZT

Tranzeo Wireless Technologies Inc.

August 13, 2008 15:45 ET

Tranzeo Wireless Shows Record Sales in Second Quarter of 2008

Tranzeo's second quarter results show revenue up 13% over Q2 2007, 4% over Q1 2008 and year to date 17% over 2007

PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - Aug. 13, 2008) - Tranzeo Wireless Technologies Inc. (TSX:TZT), a leading producer of high-speed wireless broadband and WiMAX communication systems, reports positive results for the second quarter ended June 30, 2008.

Financial Highlights for the Quarter

- Revenue increased 13% to $6.0 million year over year

- Gross profit decreased 9% to $1.9 million year over year

- Earnings after tax decreased 73% to $0.11 million year over year

- EBITDA decreased 21% to $0.62 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 start of our 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 second quarter of 2008 increased to $6.0 million from $5.3 million for the same period in 2007, representing a 13% increase. Revenue for the period was 4% higher than the previous three months ended March 31, 2008.

Gross Profit Decreased

Gross profit decreased to $1.9 million for the second quarter of 2008 from $2.1 million for the same period in 2007, representing a 9% decrease. Gross margins were 32% for the second quarter of 2008, compared to 39% for the same period in 2007. The decrease in gross margins is the result of shifting the majority of our direct sales towards our distribution sales channel, allowing us to focus our marketing efforts in growing our Wimax business.

Earnings Decreased

Earnings after tax for the second quarter of 2008 decreased to $0.11 million from $ 0.40 million for the same period in 2007. As a percentage of revenue, earnings after tax for the second quarter of 2008 represented 2% compared to 8% in the second quarter of 2007.

EBITDA for the second quarter of 2008 decreased to $0.62 million from EBITDA of $0.79 million for the same period in 2007, representing a 21% increase. As a percentage of revenue, EBITDA represented 10% in the second quarter of 2008 and 15% in the second quarter of 2007.

Financial Guidance

The following financial guidance for the third quarter of 2008 reflects our current business indicators and expectations.

Our revenue expectations for the third quarter of 2008 reflect good revenue visibility.

Inherent in this guidance are risk factors that are described in detail in our regulatory filings. Our actual results could differ materially from those presented below. All figures are approximations based on management's current beliefs and assumptions.



Q3 2008 Guidance

Revenue $8.0 million
Net earnings $0.4 million
EBITDA $1.1 million


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

June 30, 2008
(Unaudited) Dec. 31, 2007
------------------------------
Assets
Current assets:
Cash and cash equivalent $ - $ 168,171
Accounts receivable 5,272,190 2,827,431
Current portion of future income taxes 763,494 559,786
Prepaid expenses 663,253 560,673
Inventories 8,389,666 7,438,122
------------- ---------------
15,088,603 11,554,183

Property, plant, and equipment 11,865,271 11,343,886
Deferred development costs 4,383,598 2,842,016
Future income taxes 218,540 218,540
------------- ---------------
$ 31,556,012 $ 25,958,625
------------- ---------------
------------- ---------------

Liabilities and Shareholders' Equity
Current Liabilities:
Bank Indebtedness $ 2,044,145 $ -
Accounts payable and accrued liabilities 4,143,119 2,869,359
Short Term Note Payable 2,000,000 -
Current portion of capital
lease obligation and equipment loan 1,009,396 903,133
------------- ---------------
9,196,660 3,772,492
Capital lease obligation and
equipment loan 1,082,721 1,462,980
------------- ---------------
10,279,381 5,235,472
------------- ---------------

Shareholders' equity:
Share capital 17,497,824 17,497,824
Contributed surplus 935,350 841,350
Retained earnings 2,843,457 2,383,979
------------- ---------------
21,276,631 20,723,153
------------- ---------------
$ 31,556,012 $ 25,958,625
------------- ---------------
------------- ---------------


TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Operations and Retained Earnings
(Unaudited)

Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
------------------------------------------------------

Sales $ 6,003,857 $ 5,308,409 $ 11,764,806 $ 10,060,526
Cost of goods sold 4,107,891 3,216,617 7,794,326 6,099,578
------------ ------------ ------------ ------------
Gross Profit 1,895,966 2,091,792 3,970,480 3,960,948
------------ ------------ ------------ ------------

Expenses
Sales and marketing 595,200 407,687 1,136,276 752,230
Research and
development 83,350 273,689 142,200 519,380
General and
administrative 695,434 622,077 1,350,515 1,179,879
Amortization 209,993 148,034 418,619 281,942
------------ ------------ ------------ ------------
1,583,977 1,451,487 3,047,610 2,733,431
------------ ------------ ------------ ------------

Earnings from
operations 311,989 640,305 922,870 1,227,517

Other expenses
(income)
Interest Income - (38,452) - (59,040)
Interest Expense 166,928 38,556 256,288 79,856
Foreign exchange
loss (gain) (15,922) 3,153 (4,188) 18,681
------------ ------------ ------------ ------------
151,006 3,257 252,100 39,497
------------ ------------ ------------ ------------

Earnings before
income taxes 160,983 637,048 670,770 1,188,020

Income taxes 50,709 236,026 211,292 445,854
------------ ------------ ------------ ------------

Net earnings 110,274 401,022 459,478 742,166

Retained Earnings,
beginning of period 2,733,183 1,773,835 2,383,979 1,432,691
------------ ------------ ------------ ------------

Retained Earnings,
end of period $ 2,843,457 $ 2,174,857 $ 2,843,457 $ 2,174,857
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Earnings per share
for the period
Basic $ 0.00 $ 0.02 $ 0.02 $ 0.03
Diluted $ 0.00 $ 0.01 $ 0.02 $ 0.03
------------ ------------ ------------ ------------

Weighted average
number of shares
- basic 26,284,405 26,263,038 26,284,405 25,181,131


TRANZEO WIRELESS TECHNOLOGIES INC.

Interim Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
------------------------------------------------------
Cash flows from
operating
activities:
Net income for
the period $ 110,273 $ 401,022 $ 459,478 $ 742,166
Adjustments to
reconcile net
earnings to net
cash from
operating
activities:
Amortization 209,993 148,034 418,619 281,942
Amortization
of deferred
development costs 83,350 19,650 142,200 19,650
Interest on
capital leases 59,971 38,556 125,143 79,856
Future income
taxes - current 50,709 162,469 211,292 301,883
Stock based
compensation - 55,000 - 119,638
------------ ------------ ------------ ------------
514,297 824,731 1,356,732 1,545,135
Changes in working
capital assets and
liabilities:
Prepaid expenses (19,740) (93,876) (102,580) (218,398)
Accounts receivable (666,753) (909,277) (2,859,759) (1,593,451)
Accounts payable and
accrued liabilities (344,061) 873,546 1,273,761 333,385
Inventories 50,559 (1,014,897) (951,542) (1,339,103)
Net cash flows
used in operating
activities (465,698) (319,773) (1,283,388) (1,272,432)
------------ ------------ ------------ ------------

Cash flows from
investing activities
Additions to
property, plant
and equipment (481,441) (1,400,045) (776,343) (2,581,694)
Deferred development
expenses (798,870) (376,603) (1,589,784) (624,513)
------------ ------------ ------------ ------------
Net cash flows
used in investing
activities (1,280,311) (1,776,648) (2,366,127) (3,206,207)

Cash flows from
financing
activities:
Repayment of
capital leases
obligations (339,266) (164,726) (657,201) (318,036)
Proceeds from
short term
note payable 2,000,000 - 2,000,000 -
Proceeds from
equipment loan 94,400 - 94,400 -
Issuance of
common shares - 700,770 - 8,089,199

------------ ------------ ------------ ------------
Net cash flows
from financing
activities 1,755,134 536,044 1,437,199 7,771,163
------------ ------------ ------------ ------------

Net increase
(decrease) in cash 9,125 (1,560,377) (2,212,316) 3,292,524

Cash (Bank
Indebtedness),
beginning of period (2,053,270) 5,242,150 168,171 389,249
------------ ------------ ------------ ------------

Cash (Bank
Indebtedness),
end of period (2,044,145) $ 3,681,773 (2,044,145) $ 3,681,773
------------ ------------ ------------ ------------

Supplementary
cash information
Cash paid for
interest $ 166,665 $ 38,556 $ 256,025 $ 79,856


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