Global Traffic Network

This press release contains statements that constitute forward-looking statements. These statements reflect our current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading “Risk Factors” and elsewhere in our annual report 10-K that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward-looking statements. These statements can be recognized by the use of words such as “may,” “will,” “intend,” “ should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “ predict,” “potential,” “plan,” “is designed to,” “target” or the negative of these terms, and similar expressions. We do not undertake to revise any forward-looking statements to reflect future events or circumstances.

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

Global Traffic Network, Inc. defines Adjusted Operating Income (Loss) as net operating income (loss) adjusted to exclude depreciation and amortization expense. The Company uses Adjusted Operating Income (Loss), among other things, to evaluate its operating performance. The Company believes the presentation of this measure is relevant and useful for investors because it improves their ability to understand the Company’s operating performance and makes it easier to compare the Company’s results with other companies that have different financing and capital structures or tax rates. In addition, the Company believes this measure is among the measures used by investors, analysts and peers in the media industry for purposes of evaluation and comparing its operating performance to other companies. Adjusted Operating Income (Loss) is not a measure of performance calculated in accordance with generally accepted accounting principles (“GAAP”) and it should not be considered in isolation of, or as a substitute for, net operating income (loss) as an indicator of operating performance. Because Adjusted Operating Income (Loss) excludes certain financial information compared with net operating income (loss), the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are excluded. Adjusted Operating Income (Loss) may not be comparable to measures of adjusted operating income, earnings before interest, taxes, depreciation and amortization (EBITDA), operating cash flow or similarly titled measures employed by other companies. In addition, this measure is not necessarily a measure of the Company’s ability to fund its cash needs. The following presents the reconciliation of net operating income (loss) to Adjusted Operating Income (Loss) for the three months ended September 30, 2007 and 2006.

   Three Months 
Ended 
 
   September 30, 
2007 
    September 30, 
2006 
 
   (Unaudited)   (Unaudited)  
        
Net operating income (loss)    $  252   $  (855  )  
Add back:       
Depreciation and amortization expense    $  331   $  185     
Adjusted Operating Income (Loss)    $  583   $  (670  )  
Global Traffic Network, Inc. 

Income Statement Detail (Unaudited) 

Three months ended September 30, 2007 and 2006 
 
                     
      2007     2007     2007     2007     2007  
      Australia     Canada     UK     Corporate     Total  
Revenues     $ 9,912        $ 1,069        $ -        $ -        $ 10,981     
Operating expenses                                
Traffic     3,480        1,557        203        -        5,240     
News     1,594        -        -        -        1,594     
TV     180        -        -        -        180     
Selling, G&A     1,908        585        79        -        2,572     
Corporate overhead     382        -        -        274        656     
Non-cash compensation     -        -        -        156        156     
Depreciation/amortization     187        144        -        -        331     
                                 
Operating income (loss)     2,181        (1,217  )     (282  )     (430  )     252     
                                 
Interest expense     25        -        -        -        25     
Other (income)     (58  )     (12  )     (1  )     (297  )     (368  )  
                                 
Net income (loss) before taxes     2,214        (1,205  )     (281  )     (133  )     595     
Income tax expense     673        -        -        11        684     
Net income (loss)     $ 1,541        $ (1,205  )     $ (281  )     $ (144  )     $ (89  )  
                  
      2006     2006     2006     2006     2006  
      Australia     Canada*     UK**     Corporate     Total  
Revenues     $ 5,514        $ 594        $ -        $ -        $ 6,108     
Operating expenses                                
Traffic     2,458        1,133        -        -        3,591     
News     1,071        -        -        -        1,071     
TV     58        -        -        -        58     
Selling, G&A     1,118        386        -        -        1,504     
Corporate overhead     446        49        -        -        495     
Non-cash compensation     -        -        -        59        59     
Depreciation/amortization     150        35        -        -        185     
                                 
Operating income (loss)     213        (1,009  )     -        (59  )     (855  )  
                                 
Interest expense     40        38        -        -        78     
Other (income)     (6  )     1        -        (169  )     (174  )  
                                 
Net income (loss) before taxes     179        (1,048  )     -        110        (759  )  
Income tax expense     56        -        -        -        56     
Net income (loss)     $ 123        $ (1,048  )     $ -        $ 110        $ (815  )  


* Canadian Traffic Network ULC was formed July 5, 2005.

** Global Traffic Network (UK) Limited was formed October 19, 2006

GLOBAL TRAFFIC NETWORK, INC. 

CONSOLIDATED BALANCE SHEETS 

(In thousands) 
 
          
 
  September 30, 
  June 30, 
 
  2007 
  2007 
 
  (Unaudited)   (Unaudited)  
ASSETS: 
     
Current Assets:      
Cash and cash equivalents   $  38,202   $  7,278  
Accounts receivable net of allowance for doubtful accounts of $158 and $93 at September 30 and June 30, 2007 

  
   9,150    8,482  
Prepaids and other current assets    448    462  
Deferred tax assets      260      173  
Total current assets    48,060    16,395  
Property and equipment, net    7,606    6,568  
Intangibles    358    354  
Deferred offering costs 
   —    258  
Deferred tax assets    123    139  
Other assets      164      126  
Total assets   $  56,311   $  23,840  
LIABILITIES AND SHAREHOLDERS’ EQUITY:     
Current Liabilities:      
Accounts payable and accrued expenses   $  6,947   $  6,032  
Deferred revenue    391    25  
Income taxes payable    1,846    1,121  
Current portion of long term debt      656      668  
Total current liabilities    9,840    7,846  
Long term debt, less current portion    732    822  
Other liabilities      363      339  
Total liabilities    10,935    9,007  
Shareholders’ Equity      
Common stock, $.001 par value; 100,000,000 shares authorized; 18,045,000 shares issued and outstanding as of September 30, 2007 and 12,870,000 shares issued and outstanding as of June 30, 2007    18    13  
Preferred stock, $.001 par value; 10,000,000 authorized; 0 issued and outstanding as of September 30 and June 30, 2007    —    —  
Additional paid in capital    48,396    18,527  
Accumulated other comprehensive income    1,956    1,198  
Accumulated deficit      (4,994)      (4,905)  
Total shareholders’ equity      45,376      14,833  
Total liabilities and shareholders’ equity   $  56,311   $  23,840  
GLOBAL TRAFFIC NETWORK, INC. 

CONSOLIDATED STATEMENTS OF INCOME 

(In thousands except share and per share amounts) 
 
                 
         
  Three Months Ended   
  September 30   
  2007    2006   
  (Unaudited)    (Unaudited)   
           
Revenues    $  10,981     $  6,108   
       
Operating expenses (exclusive of depreciation and amortization shown separately below)     7,014      4,720   
Selling, general and administrative expenses     3,384      2,058   
Depreciation and amortization expense       331        185   
       
Net operating income (loss)     252      (855  )  
Interest expense     25      78   
Other (income) (including interest income of $357 and $174 for the three months ended September 30, 2007 and 2006)       (368  )       (174  )  
       
Net income (loss) before income taxes     595      (759  )  
Income tax expense       684        56   
       
Net loss    $  (89  )    $  (815  )  
       
Loss per common share:          
Basic & diluted    $  (0.01  )    $  (0.06  )  
           
         
Weighted average common shares outstanding:          
Basic & diluted     16,357,500      12,870,000