PITT MEADOWS, BRITISH COLUMBIA--(Marketwire - Aug. 16, 2010) - 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 2010.
Acquisition of Aperto Networks:
-- Tranzeo acquired Aperto Networks on April 16, 2010 which now positions
Tranzeo to provide a complete WiMAX solution for major
telecommunications providers.
Financial Highlights:
-- Revenue was $5.1 million compared with $3.3 million year over year.
-- Gross profit was $1.5 million compared with $1.0 million year over year
-- EBITDA (excluding stock based compensation) was a loss of $1.9 million
for 2010, compared to a loss of $0.1 million for 2009. The increase in
the loss was the result of merging the operations of Aperto with
Tranzeo, one time acquisition costs of $0.4 million and expensing all
research and development costs in 2010 versus capitalizing those costs
as deferred costs in 2009. The amount capitalized in 2009 was $0.8
million.
-- The maximum potential earn out position for the acquisition of Aperto
was required to be recorded under Canadian GAAP. The maximum potential
shares are 9. 1 million and are valued at $1.618 resulting in an earn
out value of $14.7 million. This value, along with the net liability
position of Aperto, which included debt that was converted to equity
subsequent to the acquisition , resulted in technology rights that was
recorded as an asset at $19.6 million. This is being amortized straight
line over five years.
Tranzeo and the Tranzeo logo are registered trademarks of Tranzeo Wireless Technologies Inc.
About Tranzeo Wireless Technologies Inc:
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 12 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 Jose and San Diego, California and Shannon, Ireland. Visit http://www.tranzeo.com or phone 1.866.872.6936.
Forward-Looking Statements
Certain statements in this Press Release, including the expectations of revenue for Q2 and for the 2010 fiscal year provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop such estimates include:
-- Tranzeo's expectations regarding the timing and amount of existing and
future purchase orders;
-- Tranzeo's expectations regarding integration of Aperto and Aperto's line
of products;
-- Tranzeo's ability to provide integrated complete WiMAX solutions for
major telecommunications providers; and
-- Tranzeo's manufacturing capacity to fulfill demand for increased product
orders.
Readers are cautioned not to place undue reliance on such statements.
These statements are provided to enable external stakeholders to understand Tranzeo's expectations as of the date of this release and may not be appropriate for other purposes.
Actual results, performance, achievements or developments of Tranzeo may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors that may cause the actual results, performance, achievements or developments of Tranzeo to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in the public documents filed by Tranzeo with Canadian securities regulatory authorities, which are available atwww.sedar.com, and include the following:
-- Tranzeo's growth is contingent upon its ability to fulfill existing
purchase orders and secure future purchase orders for WiMAX and WiFi
products;
-- Tranzeo may encounter unforeseen difficulties in integrating the
business of Aperto, which could result in increased costs and lower than
expected revenues;
-- Tranzeo's growth is dependent upon the development and growth of the
market for WiMAX products;
-- The continued effects of the global economic downturn could impede
global demand for WiMAX products and the growth of Tranzeo's business;
-- Tranzeo's is still dependent on existing WiFi business;
-- Tranzeo's success depends on its ability to develop new products and
enhance existing products;
-- Tranzeo's quarterly and annual revenues and operating results are
difficult to predict and can fluctuate substantially;
-- Tranzeo's ability to grow is contingent upon it having adequate capital,
either from existing operations or from future financings; and
-- There is no assurance that Tranzeo will be able to secure additional
debt or equity financing to expand its operations.
Tranzeo assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law.
Consolidated Balance Sheets
June 30, 2010 December 31,
(Unaudited) 2009
-------------------------------
Assets
Current assets:
Cash $ 93,540 $ 1,837,832
Accounts receivable 3,070,792 3,383,960
Prepaid expenses 658,974 331,805
Inventory 6,053,144 4,581,481
-------------------------------
9,876,450 10,135,078
Property and equipment 10,896,142 10,912,869
Technology rights 18,799,705 -
-------------------------------
$ 39,572,297 $ 21,047,947
-------------------------------
-------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 8,213,635 $ 3,941,790
Due to related party 101,318 251,318
Current portion of equipment loan 18,879 18,879
Current portion of capital lease
obligation 280,717 579,644
Short term debt 264,500 100,000
-------------------------------
8,879,049 4,891,631
Equipment loan 37,761 47,201
Capital lease obligation 85,986 24,456
-------------------------------
9,002,796 4,963,288
Shareholders' equity:
Share capital 32,484,451 28,407,690
Shares issuable 14,691,862 -
Contributed surplus 2,971,182 2,104,729
Retained deficit (19,577,994) (14,427,760)
-------------------------------
30,569,501 16,084,659
-------------------------------
$ 39,572,297 $ 21,047,947
-------------------------------
-------------------------------
Consolidated Statements of Operations and Deficit
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2010 2009 2010 2009
----------------------------------------------------------
Sales $ 5,083,385 $ 3,332,533 $ 8,444,954 $ 6,500,410
Cost of goods
sold 3,558,069 2,340,027 6,035,747 4,522,272
------------- ------------- ------------- -------------
Gross Profit 1,525,316 992,506 2,409,207 1,978,138
------------- ------------- ------------- -------------
Expenses
Sales and
marketing 833,373 352,520 1,210,330 688,711
Research and
development 895,845 321,504 1,398,765 594,504
General and
administrative 1,194,593 693,593 1,972,227 1,383,984
Share based
compensation 149,304 14,728 866,453 40,226
Amortization of
technology
rights 821,501 - 821,501 -
Amortization 328,309 314,676 648,889 632,772
------------- ------------- ------------- -------------
4,222,925 1,697,021 6,918,165 3,340,197
------------- ------------- ------------- -------------
Loss from
operations (2,697,609) (704,515) (4,508,958) (1,362,059)
Other expenses
(income)
Acquisition
costs 402,309 - 402,309 -
Interest expense 52,145 184,660 90,038 389,960
Foreign exchange
loss (gain) 83,730 (3,477) 148,929 (1,451)
------------- ------------- ------------- -------------
538,184 181,183 641,276 388,509
------------- ------------- ------------- -------------
Loss before
income taxes (3,235,793) (885,698) (5,150,234) (1,750,568)
Future income
taxes (recovery) - (261,290) - (513,101)
------------- ------------- ------------- -------------
Net loss (3,235,793) (624,408) (5,150,234) (1,237,467)
Retained earnings
(deficit),
beginning of
period (16,342,201) (27,796) (14,427,760) 585,263
------------- ------------- ------------- -------------
Retained deficit,
end of period $ (19,577,994) $ (652,204) $ (19,577,994) $ (652,204)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Loss per share
for the period
Basic $ (0.07) $ (0.02) $ (0.11) $ (0.02)
Diluted $ (0.06) $ (0.02) $ (0.10) $ (0.02)
------------- ------------- ------------- -------------
Weighted average
number of shares
- basic 48,656,806 27,454,035 48,395,799 30,213,794
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2010 2009 2010 2009
--------------------------------------------------------
Cash flows from
operating
activities:
Net loss for the
period $ (3,235,793) $ (624,408) $ (5,150,234) $ (1,237,467)
Adjustments to
reconcile net
earnings to net cash
from operating
activities:
Amortization 328,309 314,676 648,889 632,772
Amortization of
deferred development
costs - 321,504 - 594,504
Amortization of
technology rights 821,501 - 821,501 -
Interest on
capital leases 12,799 34,195 22,996 75,868
Future income
taxes (recovery) - (261,290) - (563,101)
Stock based
compensation 149,304 14,728 866,453 40,226
------------- ------------ -------------- --------------
(1,923,880) (200,595) (2,790,395) (407,198)
Changes in working
capital assets and
liabilities:
Prepaid
expenses 25,769 65,109 (327,169) 72,127
Accounts
receivable 858,312 (224,561) 313,168 (151,306)
Accounts
payable and accrued
liabilities 3,713,843 (2,160,936) 1,693,643 (2,943,950)
Inventories (864,735) 3,087,098 1,106,538 5,012,080
------------- ------------ -------------- --------------
Net cash flows
from (used in)
operating activities 1,809,309 566,114 (4,215) 1,581,753
------------- ------------ -------------- --------------
Cash flows from
investing activities
Additions to
property, plant and
equipment (462,467) (84,871) (542,739) (114,190)
Technology
rights (19,621,206) - (19,621,206) -
Deferred
development expenses - (786,459) - (1,592,791)
------------- ------------ -------------- --------------
Net cash flows
used in investing
activities (20,083,673) (871,330) (20,163,945) (1,706,981)
------------- ------------ -------------- --------------
Cash flows from
financing
activities:
Bank
indebtedness - 240,729 - 372,630
Proceeds from
short term note
payable - - 164,500 -
Repayment of
short term note
payable - (2,000,000) - (2,000,000)
Repayment of
capital leases
obligations (140,238) (327,906) (349,815) (635,075)
Repayment of
equipment loan (4,720) (4,720) (9,440) (9,440)
Repayment of
related party loan - - (150,000) -
Shares issuable 14,691,862 14,691,862
Issuance of
common shares 3,547,069 2,397,113 4,076,761 2,397,113
------------- ------------ -------------- --------------
Net cash flows
from financing
activities 18,093,973 305,216 18,423,868 125,228
------------- ------------ -------------- --------------
Net increase
(decrease) in cash (180,391) - (1,744,292) -
Cash, beginning of
period 273,931 - 1,837,832 -
------------- ------------ -------------- --------------
Cash, end of
period 93,540 - 93,540 -
------------- ------------ -------------- --------------
For more information, please contact Tranzeo Wireless Technologies Inc.
Matthew Johansen
Manager Investor Relations
(604) 460-6002
mjohansen@tranzeo.com
www.tranzeo.com
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