Ascalade Reports 2007 Third Quarter Financial Results



    Ascalade will hold a conference call and webcast to discuss 2007 third
    quarter financial results and operational updates on Monday, November 12,
    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
    1-800-733-7571 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, Nov. 12 /CNW/ - Ascalade Communications Inc. ("Ascalade" or
"the company") (TSX: ACG) today released financial results for the three and
nine months ended September 30, 2007. All results are reported in US dollars
and prepared in accordance with Canadian generally accepted accounting
principles.
    During the three months ended September 30, 2007, Ascalade generated
revenue of $30.3 million. This represents an increase of $2.1 million, or 7%,
over the $28.2 million the company recognized during the same period last
year. The year-over-year increase was mainly related to Ascalade's new
multimedia product line, which generated revenue of $6.4 million. In addition,
sales of Ascalade's digital wireless baby monitors grew significantly, rising
by 76% from $2.8 million to $4.9 million during the quarter. These gains were
partially offset by revenue declines in both the cordless phone and VoIP
product lines. The company's cordless phone revenue continued to be negatively
impacted by the price-sensitive nature of its high-volume products in this
market, while its VoIP revenue mirrored the slowly developing instant
messaging sub-market, to which its current products are positioned.
    During the three months ended September 30, 2007, gross margins for
Ascalade's VoIP phones, baby monitors and conference phones remained strong
and consistent with previous quarters. Despite this, the company's gross
margin for the period was 6.1%, down from the 13.9% recorded for the same
quarter last year. The decline was related to three issues; an inventory
write-down of $750,000 due to obsolete and excess raw materials, fluctuations
in the company's product mix, and low profit margins on its cordless phone and
multimedia lines which, together, represented 69% of its total sales. Overall
gross margins continued to be negatively impacted by a number of factors,
including intense competition, higher material costs, rising manufacturing
costs and a high proportionate sales volume of Ascalade's older, lower-margin
cordless phone designs. In addition, the company's new multimedia products did
not generate strong margins due to additional costs incurred in managing
component supply issues and competitive pricing pressures.
    Net loss for the quarter ended September 30, 2007 totaled $2.9 million
($0.15 per share basic and diluted), compared to net earnings of $237,000
($0.01 per share basic and diluted) for the same period last year.
    During the nine months ended September 30, 2007, Ascalade generated
revenue of $71.0 million. This is down by 10% over the same period last year,
when the company recorded revenue of $79.3 million. The year-over-year decline
is primarily related to decreases in the cordless phone and VoIP product
lines, which saw sales fall by 18% and 32% respectively. Gross profit margin
for the period was 7.3%, compared to 14.0% during the same period in 2006,
with intense price competition, rising supply chain costs and a high
proportion of low margin product sales contributing to the decline. Net loss
for the period totaled $7.4 million ($0.36 per share basic and diluted),
compared to net income of $90,000 (0.00 per share basic and diluted) during
the same period last year.
    As at September 30, 2007, the company held approximately $13.0 million in
cash and cash equivalents. Ascalade does not hold any investments in asset
backed commercial paper. The company also had available, at September 30,
2007, additional credit facilities totaling $12.4 million, accounts receivable
factoring arrangements for a certain customer and access to a factory loan
facility. As at September 30, 2007, $4.5 million had been advanced under the
factory loan. The Company's liquidity is in a large part dependent upon these
credit facilities and the continued availability of accounts receivable
factoring arrangements, all of which are subject to periodic renewal.
    As at September 30, 2007, Ascalade had a current asset to current
liability ratio of 1.35 to 1, and net book value of $59.2 million.

    Third Quarter Highlights
    ------------------------
    During the three months ended September 30, 2007, Ascalade:

    
    -   Completed construction of its new manufacturing facility in Qingyuan,
        within the Guangdong Province in southern China. The facility was
        completed on time and within budget. The company is now transitioning
        its manufacturing operations to the new facility, which will leave
        Ascalade well-positioned to pursue new opportunities to partner with
        both existing and potential customers;

    -   Recorded solid year-over-year quarterly revenue growth. Third quarter
        sales of $30.3 million were also up on a consecutive basis, from
        $21.4 million for the second quarter of 2007;

    -   Successfully launched its new IAD DECT module product line to support
        manufacturers of home gateway equipment. This product line, which
        enables wireless handset capability in gateway terminals, is
        receiving interest from several networking equipment OEM's;

    -   Commenced volume shipments of its multimedia manufacturing business.
        The launch of the new products represents a strategic initiative to
        diversify and grow the company's revenues, improve its factory
        utilization and extend its technology expertise into video;

    -   Relocated its European office to a new facility in Hertfordshire,
        United Kingdom. This move enables Ascalade to better manage sales and
        develop strategic partnerships with its customers in the important
        European market segment.

    Financial highlights

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

    -------------------------------------------------------------------------
                      Three months ended           Nine months ended
                          September 30,       %       September 30,       %
                         2007      2006   Change     2007      2006   Change
    -------------------------------------------------------------------------
    Revenues         $ 30,323  $ 28,218      7%  $ 71,461  $ 79,268    (10%)
    Gross margin     $  1,839  $  3,910    (53%) $  5,215  $ 11,084    (53%)
    Gross margin %       6.1%     13.9%    (56%)     7.3%     14.0%    (48%)

    Net earnings
     (loss)          $ (2,953) $    237 (1,346%) $ (7,375) $     90  8,294%
    Net earnings
     (loss) per share
     - basic and
     diluted         $  (0.15) $   0.01 (1,600%) $  (0.36) $   0.00

    Net cash provided
     by (used in)
     operating
     activities      $ (4,051) $    693    685%  $  5,709  $  8,892    (36%)

    Weighted average
     number of shares
     outstanding
     (in 000's)
     - basic           20,217    20,216            20,217    20,206
     - diluted         20,217    20,216            20,217    20,230
    -------------------------------------------------------------------------
    

    "We are very pleased that we have fully completed the construction of the
new factory on time and on budget but continue to be disappointed in our
profit performance," said Edmund Ho, CEO of Ascalade. "While we are pleased
with the growth of our baby monitor and multimedia business, and see an
opportunity for our new IAD DECT module to take us into new and exciting
markets, we continue to be very focused on improving our overall operating
performance and business mix. As a result, we have started to implement an
improvement program, led by Greg Allen, that we believe will drive performance
improvement over the coming quarters."

    Results from Operations

    Third Quarter Results

    During the third quarter of 2007, Ascalade generated revenue of
$30.3 million, up from $28.2 million for the same quarter last year. The gain
was mainly due to volume shipments from its new multimedia products, which
generated $6.4 million. The multimedia products had the potential to deliver
even stronger revenues, however, continued labour and supply chain delays
related to LCD's and chipsets hampered the company's ability to meet the
demand. Strong baby monitor sales also contributed to the quarterly revenue
growth, rising by 76% due to heightened demand in Europe, North America and
South America, and volume shipments of its newest designs. These gains were
partially offset by weakness in the instant messaging market, which negatively
affected all four of Ascalade's VoIP categories (Companion(TM) Solo, Combo,
Simple and Embedded). As a result, revenues from the VoIP segment fell to
$3.8 million from $7.6 million in 2006. Revenue from the company's cordless
phone products totaled $14.4 million. This was down by 16% from $17.1 million
in 2006, due to on-going competitive pricing pressures on Ascalade's
high-volume products. Conference phone sales remained consistent at $787,000,
compared to $777,000 last year.
    Gross profit for the third quarter totaled $1.8 million, a decrease of
$2.1 million over the same period last year. Gross profit margin also declined
significantly to 6.1% from 13.9%. The decrease was related to several factors,
including an inventory write-down of $750,000 due to excess and obsolete raw
materials on cordless and VoIP phones, changes in Ascalade's product mix, and
low profit margins on its cordless phone and multimedia lines. Profitability
on these two lines, which represented 69% of Ascalade's total sales, was
impacted by intense competition, rising supply chain costs, and a high sales
proportion of the company's less competitive cordless phones. In addition, the
first generation multimedia products did not generate strong margins due to
additional costs incurred in managing component supply issues and competitive
pricing pressures. Margins on the company's baby monitors, VoIP products and
conference phones remained relatively strong and consistent with previous
quarters.
    Sales, marketing and distribution expenses totaled $948,000 during the
third quarter of 2007, compared to $707,000 during the same period in 2006.
The rise was related to several factors, including higher distribution costs
associated with higher revenues, exceptional expedite air-freight costs due to
delays in supply chain and manufacturing constraints, and increased investment
in Ascalade's European account management team.
    Research, design and development expenses totaled $647,000 for the three
months ended September 30, 2007, compared with $291,000 for the same period in
2006. Ascalade also capitalized $1.3 million in design and development costs,
bringing its total investment in research and development to $2.0 million for
the third quarter. This is consistent with the $1.8 million recorded for the
second quarter of 2007, but down slightly from the $2.0 million investment
made during the same period last year. The year-over-year increase in expense
was mainly due to a higher proportion of research, design and development
costs being expensed as they were related to research and development projects
that did not meet the company's criteria for capitalization.
    General and administrative expenses totaled $1.9 million during the three
months ended September 30, 2007, compared to $1.6 million during the same
period in 2006. The increase was primarily related to costs associated with
the retention and strengthening of Ascalade's management team, an increase in
Canadian dollar denominated costs related to the strengthening of the Canadian
dollar, legal fees related to the defense of a current legal claim and other
public company costs. As a percentage of revenue, general and administrative
costs were 6.2% for the three months ended September 30, 2007, compared to
5.8% in 2006.
    Depreciation and amortization expense, not included in cost of sales, was
$1.3 million for the three months ended September 30, 2007, which is slightly
higher than the $1.2 million recorded during the same period last year.
    Interest income was $25,000, compared to the $180,000 earned during the
third quarter of 2006. The decrease was related to lower cash balances
throughout the period, as Ascalade used cash to fund the construction of its
new factory in China.
    Third quarter foreign exchange gain was $71,000, compared to $39,000
recorded during the same period last year. The exchange gain resulted
primarily from Canadian dollar denominated balances of future tax assets.
    Income tax expense for the quarter was $69,000, compared to $42,000 for
the same period of 2006 as a result of current taxes in foreign jurisdictions.
The Company has not recorded the benefit of expected net operating losses.
    Net loss totaled $2.9 million, or $0.15 per share basic and diluted,
compared to net earnings of $237,000, or $0.01 per share basic and diluted,
for the three months ended September 30, 2007.

    Year to Date Results

    During the nine months ended September 30, 2007, Ascalade generated
revenue of $71 million. This is down by 10% from the $79 million generated for
the same period last year. The decrease was primarily related to intense
market competition within the company's VoIP and cordless phone product lines,
which put pressure on unit sales and selling prices. Conference phone revenues
were also down, falling to $2.3 million from $3.7 million, despite relatively
strong third quarter sales. Baby monitor sales rose from $7.5 million to
$9.7 million on a year-over-year basis, with strong demand in Europe and the
launch of new designs driving the growth. During the third quarter of 2007,
the company also commenced volume shipments of its new multimedia products,
which will initially include personal electronic devices such as MP3 players
and video-capable media such as MP4 players. This new line represents a
strategic initiative to grow and diversify the company's revenue and product
portfolio, improve factory efficiencies and extend Ascalade's technological
expertise into video.
    Gross profit for the nine months ended September 30, 2007 was
$5.2 million, a decrease of $5.9 million over the same period in 2006.
Nine-month gross margins also fell, from 14.0% to 7.3%. As in previous
quarters, the decline is mainly related to a high sales proportion of
lower-margin products. Profitability has also been impacted by increased wages
at Ascalade's Dongguan, China factory, intense competition within the cordless
phone segment, less than optimal factory utilization, warranty cost recoveries
and inventory write-downs.
    Due to excess and obsolete raw materials relating to cordless phone and
VoIP products, Ascalade was forced to write-down certain inventory items by
approximately $1.5 million during the first nine months of 2007. Offsetting
some of these declines is a reduction in its warranty accrual recorded during
the first half of the year.
    During the nine months ended September 30, 2007, sales, marketing and
distribution expense increased slightly to $2.3 million, from $2.1 million for
the same period last year. This reflects higher distribution costs, as well as
increased investment in its European account management team. As a percentage
of revenue, these costs represented 3.2% for the nine months ended
September 30, 2007, compared to 2.7% in 2006.
    Research, design and development expenses totaled $1.1 million in the
first nine months of 2007, compared to $934,000 during the same period in
2006. In addition, Ascalade capitalized $4.4 million in development costs,
compared to $4.8 million during the first nine months of 2006. Together, the
expensed costs and capitalized costs totaled $5.5 million, down slightly from
$5.7 million in 2006. The decrease is mostly due to relocating development
cost activities to lower cost jurisdictions, partially offset by higher costs
related to the rise in costs denominated in Canadian dollars.
    General and administrative expenses totaled $5.2 million for the nine
months ended September 30, 2007, compared to $4.7 million in 2006. The
increase primarily resulted from costs associated with the retention and
strengthening of Ascalade's management team, an increase in Canadian dollar
denominated costs due to the strengthening of the Canadian dollar, and other
public company costs such as legal fees related to the defense of a legal
claim. As a percentage of revenue, nine-month general and administrative costs
were 7.2% and 5.9% for 2007 and 2006, respectively.
    Depreciation and amortization expense, not included in cost of sales, was
$4.7 million during the nine months ended September 30, 2007, which is higher
than the $3.8 million incurred in the same period of 2006. This increase
reflects a $635,000 write-down on certain deferred development costs and
additional amortization from a larger capitalized cost base in 2007.
    Year-to-date interest income was $305,000, compared to $474,000 in 2006.
The reduction in interest income earned is due to a lower cash position for
2007 compared to 2006.
    Ascalade recognized a foreign currency gain of $122,000 during the nine
months ended September 30, 2007, compared to a gain of $8,000 for the same
period of 2006. The gain resulted primarily from Canadian dollar denominated
balances of future tax assets.
    Year-to-date income tax recovery was $234,000, compared to a recovery of
$37,000 in 2006. The tax recovery resulted from recognition of the future
income tax benefits associated with currently incurred tax losses in
Ascalade's foreign operations.
    Net loss for the period totaled $7.4 million, or $0.36 per share, basic
and diluted, compared to a net income of $90,000, or $0.00 per share basic and
diluted, for the same period of 2006.
    As there were no derivative contracts outstanding as at September 30,
2007, the accumulated other comprehensive income was nil.

    Outlook

    As reported previously, Mr. Greg Allen, who was named President this past
June, is currently leading a comprehensive operational and strategic review of
Ascalade's business. The review is assessing every aspect of the company and
expected to take several quarters to complete. To help with this process,
Ascalade has retained the services of a management consultancy that
specializes in the assessment, analysis and strategic development of mid-sized
enterprises.
    Mr. Allen has already identified several key changes needed in the
business and has started several initiatives to drive improvement. Over the
coming quarters, Mr. Allen will work to clarify Ascalade's operational
strategy and business plan. Market updates will continue to be provided during
the coming quarters as Ascalade works to reposition its business and deliver
on its improvement goals.
    "We have started a comprehensive change program designed to deliver a
turnaround in Ascalade's operating performance," said Greg Allen, President of
Ascalade. "We are focused on five initial areas for change and are
implementing actions to ensure we deliver improvement going forward. I am
confident that over time we can build on our core capabilities in design,
product commercialization and technology innovation to implement the changes
needed to improve our performance."

    
    The initiatives for change are:

    1. Improve operating margins
    2. Improve cost and productivity levels
    3. Improve marketing and customer relationships
    4. Enhance working capital efficiency and asset effectiveness
    5. Improve and diversify company capability

    The actions in support of the initiatives include:

    1. Improve operating margins:

    -   Announced 'End of Life' on unprofitable 2005 and 2006 cordless phones
        designs;
    -   Targeting selected product lines for price improvement;
    -   Renegotiating customer contracts that are not providing positive
        contribution; and
    -   Exiting unprofitable, non strategic business relationships

    2. Improve cost and productivity levels:

    -   Organizational review and cost reduction program commenced; and
    -   Operational review and systems improvement program commenced

    3. Improve marketing and customer relationships:

    -   Marketing VoIP products and services at VON and Hong Kong Electronics
        Fair; and
    -   Actively targeting new customers in the home communications market
        sector to support sales of Ascalade's new IAD DECT module product
        line

    4. Enhance working capital efficiency and asset effectiveness

    -   Reviewing opportunity, no new actions to report

    5. Improve and diversify company capability:

    -   Strategic management consultant firm hired to support strategic audit
        and strategy development;
    -   Search firm engaged to recruit Head of Sales & Account management;
        and
    -   Strengthening Product Management and Business Development teams with
        recent new hires in Vancouver and Europe
    

    Ascalade's management team is also taking a close look at its customer
base and market segments to understand and execute on the most beneficial
opportunities. "I have recently visited all our major accounts around the
world and was encouraged to hear messages of support for our products and
services, in particular the value our customers place in our design and
product commercialization process," said Allen. "I believe that we can better
leverage our customer relationships, increase the value we provide to our
partners, and maximize future profitable growth opportunities."
    Achieving these results is not certain and involves known and unknown
risks that may cause actual results to differ materially from these
expectations. These risks and uncertainties include, among other things, risks
related to the fact that Ascalade's operating results could be harmed if
customer and consumers are reluctant to adopt its products and the fact that
changes in its business could have an adverse affect on its capitalized
development costs. Other risk factors are discussed under the "Forward Looking
Statements" section of this news release.
    There can be no assurance that Ascalade's expectations will prove to be
correct.



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

    -------------------------------------------------------------------------
                                                  September 30,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------
    Assets
    Current Assets:
      Cash and cash equivalents                       $ 12,998      $ 19,051
      Accounts receivable                               17,622        21,871
      Inventory                                         21,272        15,162
      Prepaid expenses                                   1,627           809
    -------------------------------------------------------------------------
                                                        53,519        56,893

    Property and equipment                              28,950        19,078
    Future income taxes                                  1,697         1,456
    Other assets                                         1,273         1,222
    Other intangible assets                              6,692         6,560
    Goodwill                                             7,497         7,497
    -------------------------------------------------------------------------
                                                      $ 99,628      $ 92,706
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Bank loan                                       $  4,500      $      -
      Accounts payable and accrued liabilities          34,523        25,087
      Deferred revenue                                     294           376
      Current portion of obligations under capital
       lease                                               374           161
      Due to related parties                                38           122
    -------------------------------------------------------------------------
                                                        39,729        25,746

    Future income taxes                                      -           456
    Obligations under capital lease, net of current
     portion                                               681            40
    -------------------------------------------------------------------------
                                                        40,410        26,242
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                     62,890        62,890
      Warrants                                             609           609
      Contributed surplus and other equity                 157            28
      Retained earnings / (deficit) and accumulated
       other comprehensive income                       (4,438)        2,937
    -------------------------------------------------------------------------
                                                        59,218        66,464
    -------------------------------------------------------------------------
                                                      $ 99,628      $ 92,706
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                   September 30,             September 30,
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues                 $ 30,323     $ 28,218     $ 71,461     $ 79,268
    Cost of sales (including
     depreciation of $770 and
     $646 for the three months
     ended September 30, 2007
     and 2006, respectively
     and $2,207 and $1,856
     for the nine months
     ended September 30,
     2007 and 2006
     respectively)             28,484       24,308       66,246       68,184
    -------------------------------------------------------------------------
                                1,839        3,910        5,215       11,084
    Expenses:
      Sales, marketing and
       distribution               948          707        2,284        2,141
      Research, design and
       product development        647          291        1,143          934
      General and
       administrative           1,882        1,632        5,157        4,657
      Depreciation,
       amortization and
       impairment               1,342        1,220        4,667        3,781
    -------------------------------------------------------------------------
                                4,819        3,850       13,251       11,513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) before
     other expenses and
     income taxes              (2,980)          60       (8,036)        (429)

    Other income:
      Interest income             (25)        (180)        (305)        (474)
      Foreign exchange gain       (71)         (39)        (122)          (8)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  (96)        (219)        (427)        (482)
    -------------------------------------------------------------------------
    Earnings (loss) before
     income taxes              (2,884)         279       (7,609)          53
    Incomes taxes:
      Current                      69           54          222          208
      Future                        -          (12)        (456)        (245)
    -------------------------------------------------------------------------
                                   69           42         (234)         (37)
    -------------------------------------------------------------------------
    Net earnings (loss)      $ (2,953)    $    237     $ (7,375)    $     90
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Other comprehensive loss       (6)           -            -            -
    -------------------------------------------------------------------------
    Comprehensive loss       $ (2,959)    $    237     $ (7,375)    $     90
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings and
     accumulated other
     comprehensive income,
     beginning of period       (1,479)       2,637        2,937        2,784
    -------------------------------------------------------------------------
    Retained earnings /
     (deficit) and
     accumulated other
     comprehensive income,
     end of period           $ (4,438)    $  2,874     $ (4,438)    $  2,874
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss)
     per share - basic
     and diluted             $  (0.15)    $   0.01     $  (0.36)    $   0.00

    Weighted average number
     of shares outstanding
     (in 000's) (Note 2)
     - basic                   20,217       20,216       20,217       20,206
     - diluted                 20,217       20,216       20,217       20,230
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                   September 30,             September 30,
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Cash flow from operating
     activities:
      Net earnings (loss)    $ (2,953)    $    237     $ (7,375)    $     90
      Items not involving
       cash:
        Stock-based
         compensation             130          109          390          254
        Amortization            1,162        1,074        3,618        3,385
        Impairment of
         development costs
         (Note 6)                   -            -          635            -
        Depreciation              950          792        2,621        2,252
        Future income taxes         -          (12)        (456)        (245)
        Foreign exchange gain    (104)           -         (241)           -
      Changes in operating
       assets and liabilities  (3,236)      (1,507)       6,517        3,156
    -------------------------------------------------------------------------
    Net cash provided by (used
     in) operating activities  (4,051)         693        5,709        8,892
    -------------------------------------------------------------------------

    Cash flow from investing
     activities:
      Addition to design and
       product development
       costs                   (1,314)      (1,737)      (4,385)      (4,782)
      Net additions to
       property and equipment  (3,060)      (2,885)     (11,445)      (4,354)
      Deposit for land use
       rights                       -          (76)         (51)        (620)
    -------------------------------------------------------------------------
    Net cash used in
     investing activities      (4,374)      (4,698)     (15,881)      (9,756)
    -------------------------------------------------------------------------
    Cash flow from financing
     activities:
      Bank loan                 4,500            -        4,500            -
      Repayment of capital
       lease                      (44)         (80)        (120)        (272)
      Issuance of common
       shares, net of share
       issue costs                  -            7            -          148
      Settlement of RSU plan
       obligation                   -            -         (261)        (442)
    -------------------------------------------------------------------------
    Net cash provided by (used
     in) financing activities   4,456          (73)       4,119         (566)
    -------------------------------------------------------------------------
    Increase in cash and
     cash equivalents          (3,969)      (4,078)      (6,053)      (1,430)
    Cash and cash equivalents,
     beginning of period       16,967       20,065       19,051       17,417
    -------------------------------------------------------------------------

    Cash and cash equivalents,
     end of period           $ 12,998     $ 15,987     $ 12,998     $ 15,987
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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,
digital wireless conference phones, and multimedia products. These products
are distributed under leading brands and have been 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 is vertically
integrated, with design, manufacturing and distribution locations in Richmond,
British Columbia (head office), Dongguan (China), Qingyuan (China), Hong Kong
and Hertfordshire, (United Kingdom).

    Forward Looking Statements:

    The discussion and analysis in this news 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 our 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
expectations, including the matters discussed under "Risk Factors" and other
sections of the MD&A included in Ascalade's 2006 Annual Report, which has been
filed and is available on SEDAR (www.sedar.com). These risks and uncertainties
include, among other things, risks related to: currency fluctuations, loss of
customers, dependence on key customers and suppliers, 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, recoverability of deferred development costs and
other intangible assets, 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 and factoring
facilities, availability of funding to pursue and grow business, effectively
managing working capital, 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, labour relations, 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 our
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

Organization Profile

ASCALADE COMMUNICATIONS INC.

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