Ascalade Reports 2006 Fourth Quarter and Annual Results - Higher Gross Margins and Return to Profitability Achieved



    Ascalade will hold a conference call and webcast to discuss 2006 fourth
    quarter and annual financial results and operational updates on Monday,
    March 5, 2007 at 8:30 am Pacific Time (11:30 am Eastern Time).

    To participate, please dial 604-677-8677, 416-644-3414, or toll-free
    1-800-732-1073 approximately five minutes before the conference call.
    The live and archived webcast will be available on Ascalade's website at
    www.ascalade.com and can be found by following the link in the investors
    menu.

    RICHMOND, BC, March 5 /CNW/ - Ascalade Communications Inc. ("Ascalade" or
"the company") (TSX: ACG) today released financial results for the three
months and year ended December 31, 2006. All results are reported in US
dollars and are prepared in accordance with Canadian generally accepted
accounting principles.
    For the three months ended December 31, 2006, Ascalade recorded revenue
of $27.2 million. This is consistent with the preceding two quarters, but
lower than the same period in 2005, when the company generated record revenues
of $35.3 million. The year-over-year decline in revenue is related to the
company's cordless phone segment, which has been negatively impacted by
intense competition and deep price-cutting across the industry. Gross profit
margin for the fourth quarter increased significantly, to 15.4% from 12.7% in
2005, while net earnings decreased to $63,000 ($0.00 per share basic and
diluted) down from $1.1 million ($0.05 per share basic and diluted) during the
same period in 2005.
    For the year ended December 31, 2006, Ascalade recorded revenue of
$106.5 million. This represents a 5% decrease from the $111.8 million reported
in 2005. As in the fourth quarter, the decline was related to the company's
cordless phone sales, which fell by 31% to $68.1 million from $99.0 million in
2005. Gross profit rose to $15.3 million in 2006, from $14.9 million in 2005,
while gross margins increased to 14.4% from 13.3%. The enhanced margins,
together with a significantly reduced debt load, translated to a stronger
bottom line, with Ascalade reporting net earnings of $153,000, or $0.01 per
share basic and diluted, compared to a net loss of $611,000, or $0.05 per
share basic and diluted in 2005.

    2006 Highlights

    
    During the 12 months ended December 31, 2006, Ascalade:

    -   Improved gross margins to 14.4% from 13.3% in 2005;

    -   Recorded gross profit of $15.3 million, up from $14.9 million in
        2005;

    -   Generated net earnings of $153,000 or $0.01 per share basic and
        diluted, compared to a net loss of $611,000 or $0.05 per share basic
        and diluted in 2005;

    -   Completed the launch of its new VoIP product segment and grew VoIP
        revenues to more than $23.4 million in the first full year of sales;

    -   Launched four new VoIP product lines;

    -   Attracted six major customers to carry its VoIP products;

    -   Expanded the availability of its VoIP products into the United
        States, through its branded customers. Ascalade's VoIP products are
        now distributed through a wide range of major retailers, including
        Radio Shack, Target, Best Buy and Wal-Mart, as well as through on-
        line channels like Dell and Amazon.com under a number of leading
        brand names;

    -   Grew US sales by 201% to more than $18.6 million;

    -   Diversified and rebalanced its product mix, reducing the proportional
        contribution of its lower-margin cordless phone segment from 89% in
        2005 to 64% in 2006;

    -   Secured land and commenced construction on a new manufacturing
        facility in China; and

    -   Strengthened a number of its internal systems and processes to better
        position the company for future growth.
    

    Ascalade's financial position remains strong. Through the efficient
management of its working capital, the company generated cash from operating
activities of $15.6 million during 2006. Ascalade completed the year with
$19.1 million of cash and cash equivalents, available credit facilities of
$14.4 million, a current asset to current liability ratio of greater than 2 to
1, and an equity book value of $66.5 million.
    "Although we did not achieve significant profitability in 2006, the year
was a positive one," said Edmund Ho, President, CEO and founder of Ascalade.
"We launched new products, won new customers, and penetrated new geographic
markets, reducing our risk through enhanced product and market
diversification."
    "2006 was also an important year operationally. Like many manufacturers
operating within the Pearl River Delta in Guangdong province, Ascalade's
labour, power and utility costs have increased significantly over the past
year. As a result, we are now in the process of constructing a new factory in
Qingyuan, China. When completed, the new facility is expected to provide us
with reduced power and labour costs, and increased flexibility and capacity to
target larger customers over the long-term."


    
    Financial Highlights
    (Expressed in thousands of United States Dollars, except shares, per
     share amounts and percentages)

    (Unaudited)

    -------------------------------------------------------------------------
                         Three months ended   %          Year ended      %
                            December 31,                December 31,
                           2006      2005   Change     2006      2005  Change
    -------------------------------------------------------------------------
    Revenues          $  27,231 $  35,271   (23%) $ 106,499 $ 111,797    (5%)

    Gross margin      $   4,207 $   4,480    (6%) $  15,291 $  14,902     3%
    Gross margin %        15.4%     12.7%    22%      14.4%     13.3%     8%

    Net earnings
     (loss)           $      63 $   1,095   (94%) $     153 $    (611)  125%
    Net earnings
     (loss) per share
     - basic and
     diluted          $    0.00 $    0.05  (100%) $    0.01 $   (0.05)  120%

    Net cash provided
     by operating
     activities       $   6,741 $   6,061    11%  $  15,633 $   6,751   132%

    Weighted average
     number of shares
     outstanding
     (in 000's)
      - basic            20,217    20,187            20,209    13,344
      - diluted          20,217    20,187            20,227    13,344
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Results from Operations

    Fourth Quarter Results

    For the three months ended December 31, 2006, Ascalade generated total
revenues of $27.2 million. This was down from the fourth quarter of 2005, when
the company generated record revenues of $35.3 million. The reduction was
mainly due to a steep decline in sales of the company's DECT cordless phones,
partially offset by growing demand for Ascalade's VoIP products, conference
phones and baby monitors.
    Fourth quarter revenues from Ascalade's VoIP product line totaled
$6.0 million, down sequentially from $7.6 million in the third quarter of
2006. Sales were slightly lower than anticipated, in part because the
company's new Skype-embedded VoIP products didn't begin shipping until late in
the quarter, effectively missing the Christmas season.
    Gross profit for the fourth quarter was $4.2 million, a decrease of
$273,000 over the same period of 2005. Gross profit margin was up, to 15.4%
from 12.7% in 2005, and 13.9% in the previous quarter. The sequential margin
improvement over the third quarter was a result of a number of one-time
recoveries in warranty accruals and other liabilities. The margin improvement
over the same period last year resulted from an enhanced product mix, which
included strong margins from VoIP products, and a reduction in warranty and
other accruals. These benefits were partially offset by higher per-unit
manufacturing costs, which were related to rising labour and power costs, and
lower-than-optimal utilization of the company's factory. During the fourth
quarter, the company's factory operated at approximately 70% of full capacity
as compared to full capacity in the same period of 2005.
    Operating expenses of $4.2 million were up by $688,000 over the fourth
quarter of 2005. On a sequential basis, operating expenses increased slightly
over the $3.9 million recorded during the second and third quarters of 2006.
The increases were mostly recorded within general and administrative expenses,
and were related primarily to costs associated with being a public company.
    Net earnings totaled $63,000, or $0.00 per share basic and diluted,
compared to $1.1 million, or $0.05 per share basic and diluted, in the fourth
quarter of 2005.

    2006 Annual Results

    For the year ended December 31, 2006, Ascalade generated revenues of
$106.5 million. This was down by 5% from the $111.8 million in revenue
recorded in 2005. The decrease in annual revenue was mainly related to a
decline in the company's cordless phone sales, as discussed above.
    Strong gains in all three of the company's other product segments helped
to partially offset the decline in cordless phone sales. During 2006,
Ascalade's VoIP products, which were first introduced during the third quarter
of 2005, generated revenue of $23.4 million. This was up by 662% from 2005,
when VoIP revenues totaled $3.1 million. Ascalade's baby monitors also
recorded strong year-over-year gains, rising by 24% to $10.0 million from
$8.0 million in 2005. Sales of the company's wireless enterprise conference
phones grew by 197%, to $5.0 million from $1.7 million in 2005.
    On a geographic basis, Ascalade recorded a 22% year-over-year decline in
European sales. This was primarily due to a significant drop in cordless phone
sales in this market. In contrast, North American sales grew by 201% during
2006, reflecting increased market penetration of the company's VoIP and
conference phones, and the recent introduction of its baby monitors. Annual
sales to Asia were up by 18%, reflecting Ascalade's strong relationship with
its largest customer. "Other" sales grew by 48% as Ascalade entered new
geographical markets with its largest customer and another new customer.
    Revenues from Ascalade's VoIP product line totaled $23.4 million in 2006.
This was up from $3.1 million for 2005, when the company first introduced its
initial VoIP product, the Companion(TM) Solo. Launched during the third
quarter of 2005, this phone connects directly to the user's PC, and combines
the familiar features of a cordless phone with the cost-saving benefits of
VoIP calls.
    During 2006, Ascalade continued to build on the success of the
Companion(TM) Solo series, with the addition of four new VoIP product lines.
These include;

    
    -   the Companion(TM) Combo series (Skype and MSN versions) which were
        launched during the second quarter of 2006. These phones offer
        similar features to the Companion(TM) Solo, plus the added
        convenience of making regular telephone calls via a traditional phone
        line, as well as VoIP calls via PC-based applications including Skype
        or MSN;

    -   the Companion(TM) Simple series, which was launched during the third
        quarter to target the entry-level segment of Skype users; and

    -   Ascalade's innovative Skype Certified(TM) cordless, "PC-free" VoIP
        phones, which began shipping late in the fourth quarter.
    

    By offering a broad range of VoIP products, together with reliable,
high-quality manufacturing capabilities, Ascalade has successfully attracted a
number of new branded distributors. During 2006, the company shipped its VoIP
products to six major international brands.
    Ascalade's revenues continue to be supported by the positive working
relationship it has developed with its largest customer, a leading global
electronics company. During 2006, sales to this customer grew, accounting for
approximately $57.5 million, or 54% of annual sales. This is up from 2005,
when sales to this customer accounted for $38.5 million, or 34%, of annual
revenues.
    Gross profit for the year ended December 31, 2006 was $15.3 million, up
from $14.9 million in 2005, and gross margins were 14.4%, compared with 13.3%
in 2005. The improvement in gross margins is largely related to an enhanced
product mix, which saw gains in the proportional contribution of the company's
higher-margin VoIP products, conference phones and baby monitors. These
benefits were partially offset by pricing pressures on cordless phones, higher
per-unit manufacturing costs related to rising labour and power costs, and
lower-than-optimal operating levels. During 2006, the company's factory
operated at approximately 70% of full capacity.
    Construction of Ascalade's new manufacturing facility in Qingyuan, China
is proceeding on schedule and on budget. As at December 31, 2006, Ascalade had
incurred approximately $5.0 million in construction costs and $1.0 million in
deposits for land use rights.
    During 2006, Ascalade's sales, marketing and distribution expense
increased by $372,000 to $2.8 million, up from $2.5 million in 2005. The
increase is related to the expansion of the company's North American sales
team, changes to its European sales team and provisions made for certain
doubtful accounts.
    Research, design and development expenses totaled $1.2 million, compared
to $2.1 million in 2005. In addition, Ascalade capitalized $6.4 million in
design and development costs, bringing its total investment in research and
development to $7.6 million for fiscal 2006. This is up from $6.6 million in
2005 and reflects Ascalade's ongoing commitment to the development of its VoIP
and other product lines. The overall increase in the proportion of costs
capitalized reflects Ascalade's focus on product development for near-term
product releases.
    General and administrative expenses totaled $6.8 million, compared to
$5.2 million in 2005. The $1.6 million increase was mostly related to the
addition of new employees across all operating regions, as well as costs
associated with being a public company.
    Interest income was $621,000, compared to an interest expense of
$1.6 million in 2005. During 2006, Ascalade maintained a net positive cash
position for the entire year. The 2005 interest expense was mostly related to
higher outstanding loan balances which were either converted or redeemed
during the third quarter of 2005.
    Net earnings were $153,000, or $0.01 per share basic and diluted,
compared to a net loss of $611,000, or $0.05 per share basic and diluted, for
2005.
    Ascalade's financial position remains strong with $19.1 million of cash
and cash equivalents, available credit facilities of $14.4 million, a current
asset to current liability ratio of greater than 2 to 1, and an equity book
value of $66.5 million.

    Outlook and Growth Strategy

    During 2007, Ascalade intends to continue building on the past year's
successes - attracting a number of leading international branded distributors,
deepening its existing customer relationships, offering a broad range of
well-designed, innovative products, and providing reliable, high-quality
manufacturing capabilities.
    Enhancing operational efficiencies will also be a priority. During 2006,
Ascalade operated its factory at approximately 70% of full capacity. Going
forward, the company plans to increase its production volumes by partnering
with new customers to produce a more diverse range of consumer products.
Management believes this will lead to improved economies of scale, and lower
per-unit manufacturing costs for all product segments, resulting in increased
profitability.
    Ascalade also expects its competitiveness to improve following the fall
2007 transition to its new manufacturing facility. Located in Qingyuan, within
Guangdong Province in Southern China, approximately two hours drive from Hong
Kong, the new facility is expected to significantly increase the company's
competitiveness in two ways. First, it will immediately boost our production
capacity by approximately 30% to 40%, while providing land for future
expansion. This will enable Ascalade to keep pace with expected growing demand
for its products, while creating other strategic opportunities to build
revenue and increase throughput. By significantly increasing its production
volumes, beyond what is possible at the existing factory, Ascalade believes it
can generate additional economies of scale, further lowering its per-unit
manufacturing costs. The company also expects its direct manufacturing costs
to decline, as the factory's new location provides increased access to a
large, more competitively priced labour market and a newer, more reliable
power and utility grid. Currently, Ascalade remains on target to transition
from its existing facility to the new facility during the fall of 2007.

    
    Ascalade's strategic emphasis for 2007 will be on:

    -   Completing and relocating to its new manufacturing facility, on time
        and on budget;

    -   Improving its operating results by increasing its revenue, adding
        more value-added products and improving factory efficiency and
        utilization;

    -   Expanding its management team, particularly in the sales and
        marketing area;

    -   Expanding its relationship with its large multinational partners;

    -   Continuing to leverage its existing expertise to develop innovative
        new products for new and emerging technology markets, including
        multimedia;

    -   Expanding its sales channels for maximum efficiency and distribution
        capabilities; and

    -   Efficiently managing working capital.
    

    As 2007 begins, Ascalade has already signed multiple new product
development agreements with its largest customer. The strategic agreements
involve three of Ascalade's four product lines and include the ongoing
development, branding and distribution of its VoIP phones, as well as the
development of a new line of intelligent baby monitors.
    Ascalade will continue to focus on developing innovative, user-friendly
VoIP products during the coming year. With its proven wireless handset design
and development expertise, cost-effective, high-volume manufacturing
capabilities, strong relationships with technology partners (including Skype
and MSN), and well-developed customer base, the company is well-positioned to
capitalize on the rapidly expanding VoIP market. Looking ahead, management
believes that the product development opportunities associated with the
increasing adoption of VoIP are compelling, especially as new multimedia
technologies continue to converge. In 2007, Ascalade will begin investing in
its first steps toward designing and producing video-capable personal
electronic devices, with the launch of MP4 products expected during the first
half of the year.
    The outlook for 2007 is positive. Ascalade anticipates demand for its
VoIP and baby monitor products will continue to grow, and expects to achieve
ongoing progress in the development of its customer base and product
portfolio. In addition, with one of Ascalade's significant competitors
reorganizing, Ascalade sees further opportunity to increase market share in
the cordless segment by leveraging both the added capacity of the new factory
and the release of its new cordless products. The first quarter is a
seasonally slower period for the company, due to a three-week production
shutdown related to Chinese New Year and a post-holiday decline in consumer
demand. In addition, as many of its new product releases are planned for the
spring, Ascalade's margins are expected to continue to be impacted by the
under utilization of its factory. Revenues and profitability are expected to
build through the second half of the year as new products are released and as
the company begins to realize operational efficiencies through improved
factory utilization and the increased competitiveness provided by transition
to the new factory this fall.
    Achieving these results is not certain and involves known and unknown
risks that may cause actual results to differ materially from these expected
results. These risks and uncertainties include, among other things, risks
related to: loss of customers, dependence on key customers, uncertainty of
revenues from DECT, VoIP, and other technology, limited ability to forecast
future revenues, failure to develop new products or to enhance existing
products, competition, mergers and strategic transactions by competitors,
strategic relationships, management of growth, the continued availability of
existing bank operating facilities, availability of funding to pursue and grow
business, recruitment and retention of management and qualified personnel,
suppliers and availability of supplies, availability and costs of labour,
power constraints, completing the construction and the transition of current
operations to a new factory, insufficient production capacity to satisfy
customer demand and those other risk factors discussed under "Risk Factors" in
the 2006 Management's Discussion and Analysis dated on March 1, 2007, which is
available at www.sedar.com. There can be no assurance that our expectations
will prove to be correct.


    
    Ascalade Communications Inc.
    Consolidated Balance Sheets
    (Expressed in thousands of United States Dollars)
    (Unaudited)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                            December 31,
                                                        2006            2005
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash and cash equivalents                   $   19,051      $   17,417
      Accounts receivable                             21,871          25,659
      Inventory                                       15,162          15,132
      Prepaid expenses                                   809             933
    -------------------------------------------------------------------------
                                                      56,893          59,141

    Property and equipment                            19,078          14,977
    Future income taxes                                1,456           1,456
    Other assets                                       1,222             602
    Other intangible assets                            6,560           4,612
    Goodwill                                           7,497           7,497
    -------------------------------------------------------------------------
                                                  $   92,706      $   88,285
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities    $   25,087      $   20,094
      Deferred revenue                                   376               -
      Current portion of obligations under
       capital lease                                     161             327
      Due to related parties                             122             922
    -------------------------------------------------------------------------
                                                      25,746          21,343

    Future income taxes                                  456             500
    Obligations under capital lease, net of
     current portion                                      40             196
    -------------------------------------------------------------------------
                                                         496             696
    -------------------------------------------------------------------------
                                                      26,242          22,039
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                   62,890          62,671
      Warrants                                           609             679
      Contributed surplus and other equity                28             112
      Retained earnings                                2,937           2,784
    -------------------------------------------------------------------------
                                                      66,464          66,246
    -------------------------------------------------------------------------
                                                  $   92,706      $   88,285
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Ascalade Communications Inc.
    Consolidated Statements of Operations and Retained Earnings
    (Expressed in thousands of United States Dollars, except share and per
     share amounts)
    (Unaudited)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      Three months ended       Year ended
                                           December 31,        December 31,
                                          2006      2005      2006      2005
    -------------------------------------------------------------------------
    Revenues                         $  27,231 $  35,271 $ 106,499 $ 111,797

    Cost of sales (including
     depreciation of $666 and $579
     for the three months ended
     December 31, 2006 and 2005,
     respectively and $2,522 and
     $1,983 for the years ended
     December 31, 2006 and 2005
     respectively)                      23,024    30,791    91,208    96,895
    -------------------------------------------------------------------------
                                         4,207     4,480    15,291    14,902
    Expenses
      Sales, marketing and
       distribution                        685       527     2,826     2,454
      Research, design and product
       development                         218       442     1,152     2,070
      General and administrative         2,137     1,192     6,794     5,187
      Depreciation and amortization      1,114     1,305     4,895     4,921
    -------------------------------------------------------------------------
                                         4,154     3,466    15,667    14,632
    -------------------------------------------------------------------------
    Earnings (loss) before other
     expenses and income taxes              53     1,014      (376)      270

    Other expenses (income)
      Interest expense (income)           (147)     (124)     (621)    1,623
      Foreign exchange loss (gain)          95       185        87       (20)
    -------------------------------------------------------------------------
                                           (52)       61      (534)    1,603
    Earnings (loss) before income
     taxes                                 105       953       158    (1,333)

    Incomes Taxes
      Current                             (159)      240        49       240
      Future                               201      (382)      (44)     (962)
    -------------------------------------------------------------------------
                                            42      (142)        5      (722)
    Net earnings (loss)              $      63 $   1,095 $     153 $    (611)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Retained earnings, beginning
     of period                           2,874     1,689     2,784     3,395
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                       $   2,937 $   2,784 $   2,937 $   2,784
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss) per share
      - basic and diluted            $    0.00 $    0.05 $    0.01 $   (0.05)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of
     shares outstanding (in 000's)
      - basic                           20,217    20,187    20,209    13,344
      - diluted                         20,217    20,187    20,227    13,344
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Ascalade Communications Inc.
    Consolidated Statements of Cash Flows
    (Expressed in thousands of United States Dollars)
    (Unaudited)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      Three months ended       Year ended
                                           December 31,        December 31,
                                          2006      2005      2006      2005
    -------------------------------------------------------------------------
    Cash flow from operating activities
      Net earnings (loss)            $      63 $   1,095 $     153 $    (611)
      Items not involving cash:
        Accretion of non-cash
         interest                            -       (80)        -       492
        Amortization of financing
         costs                               -         -         -       290
        Stock-based compensation           105        21       359       112
        Amortization                     1,043     1,193     4,428     4,549
        Depreciation                       737       691     2,989     2,355
        Future income taxes                201      (382)      (44)     (962)
        Foreign exchange gain                -       180         -       (84)
      Changes in operating assets
       and liabilities                   4,592     3,343     7,748       610
    -------------------------------------------------------------------------
    Net cash provided by
     operating activities                6,741     6,061    15,633     6,751
    -------------------------------------------------------------------------
    Cash flow to investing activities
      Addition to design and
       product development costs        (1,404)   (1,610)   (6,186)   (4,153)
      Additions to property and
       equipment                        (2,126)   (1,182)   (6,480)   (4,835)
      Deposit for land use rights            -      (355)     (620)     (355)
    -------------------------------------------------------------------------
    Net cash used in investing
     activities                         (3,530)   (3,147)  (13,286)   (9,343)
    -------------------------------------------------------------------------
    Cash flow from financing
     activities
      Proceeds from issuance of
       convertible debentures                -         -         -       814
      Repayment of capital lease
       obligations                        (147)      254      (419)   (1,475)
      Repayment to related parties           -         -         -      (414)
      Issuance of common shares,
       net of share issue costs              -         -       148    29,684
      Repayment of credit facilities         -    (3,681)        -   (13,257)
      Settlement of RSU Plan
       obligation                            -         -      (442)        -
    -------------------------------------------------------------------------
    Net cash provided by (used in)
     financing activities                 (147)   (3,427)     (713)   15,352
    -------------------------------------------------------------------------
    Increase (decrease) in cash
     and cash equivalents                3,064      (513)    1,634    12,760
    Cash and cash equivalents,
     beginning of period                15,987    18,393    17,417     4,657
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   $  19,051 $  17,880 $  19,051 $  17,417
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    About Ascalade:

    Ascalade Communications Inc. is an innovative product company that
designs, develops and manufactures digital wireless and communication
products. We deliver world-class products by offering our partners and
customers complete vertical integration, from leading-edge product design and
development to final production. Our products include digital cordless phones,
Voice over Internet Protocol ("VoIP") phones, digital wireless baby monitors
and digital wireless conference phones. These products are distributed under
more than 80 regional brands in over 35 countries, and are available through
leading retail stores like Radio Shack, Target, Best Buy and Wal-Mart, as well
as through on-line channels like Dell and Amazon.com. The company has design,
manufacturing and distribution locations in Richmond, British Columbia (head
office), Dongguan (China), Hong Kong and London (England).

    Forward Looking Statements:

    The discussion and analysis in this press release contains
forward-looking statements that involve risks and uncertainties. When used in
this discussion and analysis, the words "will", "plan", "expect", "believe",
and similar expressions generally identify forward-looking statements. These
statements are not historical facts, but reflect management's current
expectations. 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 expectation, including matters discussed more fully
under "Risk Factors" in the 2006 Management's Discussion and Analysis dated on
March 1, 2007, which is available at www.sedar.com. These risks and
uncertainties include, among other things, risks related to: currency
fluctuations, loss of customers, dependence on key customers, downturns in
consumer and enterprise markets, economic downturn in key geographic markets,
uncertainty of revenues from DECT, VoIP, and other technology, limited ability
to forecast future revenues, political risk, failure to develop new products
or to enhance existing products, short product life cycles and rapid
technological change, long sales and implementation cycles, future operating
expenses, seasonal fluctuations, competition, mergers and strategic
transactions by competitors, product margin and life, reduction of production
costs, strategic relationships, product defects, product liability claims,
intellectual property, defense of intellectual property claims, third-party
technology licensing, software licensing, strategic acquisitions, management
of growth, the continued availability of existing bank operating facilities,
availability of funding to pursue and grow business, dependence on key
personnel, recruitment and retention of management and qualified personnel,
transfer pricing, industry standards, relationship with principal shareholder,
suppliers and availability of supplies, availability and costs of labour,
power constraints, environmental laws, completing the construction and the
transition of current operations to a new factory and insufficient production
capacity to satisfy customer demand. There can be no assurance that
management's expectations will prove to be correct. Consequently, all
forward-looking statements made are qualified by these cautionary statements
and other cautionary statements and factors contained herein. Ascalade
disclaims any intention or obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.





For further information:

For further information: Troy Bullock, Chief Financial Officer, Ascalade
Communications Inc., Phone: (604) 204-2900, Email: troy.bullock@ascalade.com

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ASCALADE COMMUNICATIONS INC.

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