Axia Releases Results for 1Q2008



    
    -   Revenues of $14.5 million for 1Q2008 compared to $11.0 million in the
        same period for fiscal 2007.
    -   Net income of $2.4 million ($0.04 per share) for 1Q2008 versus
        $4.9 million ($0.09 per share) for the prior year, which included a
        $1.7 million non-cash tax recovery.
    -   Gross profit for the quarter ended September 30, 2007 increased
        44 percent to $7.2 million from $5.0 million for the same quarter
        last year.
    -   Announced Covage was awarded interests in a 22-year network DSP.
    

    CALGARY, Nov. 6 /CNW/ - Axia NetMedia Corporation ("Axia" or the
"Corporation") today announced the results for its first quarter ended
September 30, 2007.

    1Q2008 Highlights

    Axia began deploying self-healing optical ring technology on the Alberta
SuperNet, improving network reliability that is already best in class to
levels normally only available to special critical customer locations in
metropolitan markets. Art Price, Chairman and CEO said, "I believe that this
approach enables new mission critical enterprise application services to be
used by the many enterprise customers with activities that involve operations
outside metropolitan Alberta. Alberta continues to be a showcase on the power
of Real Broadband(TM) and Next Generation Network technology when it is made
available to every community."
    Geoff Thompson, Axia's President remarked, "The Alberta marketplace is
now beginning to understand the value proposition that the Alberta SuperNet
represents. We are organized to respond to meet both our existing customers'
evolving needs and attract new customers. In terms of our financial results,
the gross profit from our North American segment increased 20 percent compared
to the same period in fiscal 2007. Our gross profit margin for this segment
remained consistent with the fourth quarter of fiscal 2007 at 48 percent.
    "Our business in France continues to evolve and we expect that it will be
late in calendar year 2008 before results based on market penetration will
provide meaningful indications of successful market penetration," said Mr.
Thompson. During the first quarter of fiscal 2008, the Corporation announced
the département of Hérault had awarded Covage, a French company jointly owned
by Axia and VINCI Networks, interests in a 22-year network Délégations de
Service Public ("DSP"). Covage's existing interests and additional interests
being acquired through its agreements with VINCI will result in Covage owning
interests in 13 private companies contracted to operate public networks. The
Corporation expects that all material transfers of DSP interests into Covage
will be completed by the end of this calendar year.
    The Corporation continues to participate in the public competitive bid
processes being conducted by the governments of Western Australia and
Singapore. These are expected to draw to a conclusion in the first half of
calendar 2008. In the other jurisdictions, Axia continues to have confidential
preliminary discussions.
    "Through fiscal 2008 Axia will continue to pursue international
opportunities with the attendant business development expenses," said Art
Price, Chairman and CEO. "However, we believe that the risk reward profile of
these opportunities is attractive to our shareholders."

    1Q2008 Consolidated Financial Information

    Consolidated revenues for the quarter ended September 30, 2007 increased
$3.5 million to $14.5 million from $10.9 million for the quarter ended
September 30, 2006. As compared to the fourth quarter of fiscal 2007,
consolidated revenues increased $1.0 million from $13.5 million.
    Consolidated gross profit for the quarter ended September 30, 2007
increased 44 percent to $7.2 million from $5.0 million for the same quarter
last year. As compared to the fourth quarter of fiscal 2007, gross profit
increased $0.9 million from $6.3 million. The Corporation's gross profit
percentage over this period has remained relatively consistent with a small
increase this quarter due to the higher margins earned in Europe from its
Other Services revenues.
    For the quarter ended September 30, 2007, total expenses were
$3.4 million as compared to $1.8 million for the same quarter last year and
$3.7 million for the fourth quarter of fiscal 2007. The Corporation's
marketing costs remained consistent with previous reporting periods. Business
development expenses of $1.7 million for the current quarter were in line with
the $1.8 million reported for the fourth quarter of fiscal 2007. These
expenses were up significantly from the $0.5 million reported during the first
quarter of 2007 and represent the increased level of bid and proposal
activities being pursued by Axia which began during the later half of fiscal
2007.
    During fiscal 2006 and 2007, Axia recognized the benefit of future income
tax assets, which positively affected net income during those periods. At the
end of the third quarter of fiscal 2007, all of the future income tax benefits
relating to temporary tax differences had been recognized and the Corporation
began reporting income tax expense at that time. During the fourth quarter of
fiscal 2007, Axia recognized a non-cash draw-down of these future income tax
assets in the amount of $1.4 million, which was recorded as income tax
expense. For the current quarter, the consolidated accrual for current taxes
payable totalled $1.7 million and the future income tax benefit totalled
$0.3 million.
    Net income for the first quarter of fiscal 2008 was $2.5 million
($0.04 per common share on a fully diluted basis) as compared to $4.9 million
($0.09 per common share on a fully diluted basis) for the same quarter last
year and $1.4 million ($0.02 per common share on a fully diluted basis) for
the fourth quarter of fiscal 2007.
    As at September 30, 2007, the Corporation's working capital was
$40.7 million as compared to $43.1 million at June 30, 2007. As at
September 30, 2007, Axia had 63.4 million common shares issued and
outstanding.

    FY2008 Outlook

    In fiscal 2008 Axia's management will remain focused on its three
strategic priorities: growing bandwidth commitments on the Alberta SuperNet to
increase its gross profit contribution; developing and marketing other
services for deployment in Alberta and France; and winning and developing new
Open Access Networks in France and other jurisdictions.

    About Axia

    The unaudited Consolidated Financial Statements for the quarter ended
September 30, 2007 and related Management's Discussion & Analysis have been
reviewed and approved by the Corporation's Audit Committee and Board of
Directors. These reports have been filed on SEDAR at www.sedar.com and are
also posted at www.axia.com.
    Axia provides Real Broadband(TM) IP services and solutions through
planning, designing and operating Open Access Next Generation Networks. Axia
trades on the Toronto Stock Exchange under the symbol "AXX". For more
information, visit its website at www.axia.com.

    Conference Call Scheduled

    Axia will host a conference call for the investment community to discuss
its fiscal First Quarter 2008 results on Wednesday, November 7, 2007 at 3 p.m.
(Eastern) and 1 p.m. (Mountain). Axia Chairman and CEO Art Price, President
Geoff Thompson and Chief Financial Officer Peter McKeown will participate.
    To participate in the conference call, please dial (416) 644-3430 in
Toronto and internationally. If you are connecting from other parts of Canada,
dial 1-866-249-5221. Please call ten minutes prior to the start of the call.
    A live webcast (listen only mode) of the conference call will be
available at:
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2087360
    A replay of the conference call will be available at (416) 640-1917 or
1-877-289-8525, passcode 21252896 followed by the number sign from 5 p.m. (ET)
Wednesday, November 7, 2007 to midnight (ET) Wednesday, November 14, 2007, or
through the webcast archives at http://www.newswire.ca.

    Forward-looking Statements: Except for historical information, this news
release may contain forward looking statements, including, without limitation,
statements containing the words "should", "believe", "anticipate", "may",
"plan", "will", "continue", "intend", "expect", "estimate" and other similar
expressions which constitute "forward-looking information" within the meaning
of applicable Canadian securities laws, which reflect Axia's current
expectations and assumptions, and are subject to a number of risks and
uncertainties that could cause actual results to differ materially from those
anticipated. These forward-looking statements involve risks and uncertainties
including, but not limited to, changes in customer markets, changes in demand
for Axia's services, inability of Axia to deliver services in a timely and
cost-efficient manner, technological change, general economic conditions and
other risks detailed from time-to-time in Axia's ongoing filings with the
Canadian securities regulatory authorities which filings can be found at
www.sedar.com. Given these risks and uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements. Axia undertakes no
obligation to publicly update or revise any forward-looking statements either
as a result of new information, future events or otherwise.


    
    CONSOLIDATED BALANCE SHEETS

    (unaudited)
    ($000s)                               September 30, 2007   June 30, 2007
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash                                        $   11,002      $   10,862
      Short-term investments                          33,835          41,309
      Accounts receivable                             12,480           7,623
      Prepaid expenses                                 1,694           1,527
    -------------------------------------------------------------------------
                                                      59,011          61,321

    Technology and product
     development costs                                   384             528
    Property and equipment                            13,799          12,666
    Goodwill                                           4,201           4,201
    Advances to joint venture                         15,456          12,932
    Other assets                                       2,285             719
    Future income tax asset                            5,063           4,753
    -------------------------------------------------------------------------
                                                  $  100,199      $   97,120
    -------------------------------------------------------------------------

    Liabilities and Shareholders'
     Equity
    Current liabilities:
      Accounts payable and accrued
       liabilities                                $   14,852      $   16,486
      Income taxes payable                             1,672             193
      Current portion of deferred
       revenue                                         1,397           1,197
      Current portion of cost of
       excess space                                       80              80
      Current portion of lease
       obligation                                        273             270
    -------------------------------------------------------------------------
                                                      18,274          18,226

    Deferred revenue                                   1,528             825
    Cost of excess space                                 170             187
    Lease obligation                                     291             360
    -------------------------------------------------------------------------
                                                      20,263          19,598
    -------------------------------------------------------------------------

    Shareholders' equity:
    Share capital                                     47,869          47,740
    Contributed surplus                                  822             702
    Retained earnings                                 33,358          30,885
    Accumulated other comprehensive
     income                                           (2,113)         (1,805)
    -------------------------------------------------------------------------
                                                      79,936          77,522
    -------------------------------------------------------------------------
                                                  $  100,199      $   97,120
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS & RETAINED EARNINGS

    For the three months ended September 30, 2007
    and 2006 (unaudited)

    ($000s except per share data)                       2007            2006
    -------------------------------------------------------------------------
    Revenue                                       $   14,456      $   10,934
    Cost of products and services
     sold                                              7,216           5,979
    -------------------------------------------------------------------------
    Gross profit                                       7,240           4,955
    Expenses
      Marketing                                          272             267
      Administration                                     818             588
      Business development                             1,703             509
      Stock-based compensation                           164              28
      Interest and financing
       charges (income)                                 (389)           (392)
      Depreciation and amortization                      865             758
    -------------------------------------------------------------------------
                                                       3,433           1,758
    -------------------------------------------------------------------------
    Income before income tax                           3,807           3,197
      Current income tax                              (1,662)              -
      Future income tax reduction                        328           1,700
    -------------------------------------------------------------------------
                                                      (1,334)          1,700
    -------------------------------------------------------------------------
    Net income                                         2,473           4,897
    Retained earnings, beginning
     of period                                        30,885          14,896
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                                    $   33,358      $   19,793
    -------------------------------------------------------------------------

    Net income per share
      Basic                                       $     0.04      $     0.09
      Diluted                                     $     0.04      $     0.09
    -------------------------------------------------------------------------

    Weighted average shares
     outstanding (000s)
      Basic                                           63,399          54,551
      Diluted                                         63,404          56,659
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the three months ended September 30, 2007
    and 2006 (unaudited)

    ($000s)                                             2007            2006
    -------------------------------------------------------------------------
    Cash provided by (used in):
    Operating activities:
      Net income                                  $    2,473      $    4,897
      Items not involving cash:
        Depreciation and amortization                    865             758
        Future income tax (reduction)                   (310)         (1,700)
        Cost of excess space                             (17)            (34)
        Stock-based compensation                         164              28
    -------------------------------------------------------------------------
                                                       3,175           3,949
      Changes in non-cash working
       capital items:
        Accounts receivable                           (4,857)         (1,331)
        Prepaid expenses                                (167)           (906)
        Other assets                                  (1,566)            217
        Accounts payable and accrued
         liabilities                                  (1,634)             84
        Income taxes payable                           1,479               -
        Deferred revenue                                 903             127
    -------------------------------------------------------------------------
                                                      (2,667)          2,140
    Financing activities:
      Decrease in restricted cash                          -             158
      Issue of common shares                              85              32
      Repayment of lease obligation                      (66)            (62)
    -------------------------------------------------------------------------
                                                          19             128
    -------------------------------------------------------------------------
    Investing activities:
      Short-term investments                           7,474         (12,294)
      Advance to joint venture                        (2,524)              -
      Purchase of property and equipment              (1,854)           (236)
      Technology and product
       development costs                                   -            (374)
    -------------------------------------------------------------------------
                                                       3,096         (12,904)
    -------------------------------------------------------------------------
    Effect of currency translation on
     cash balances                                      (308)              -
    -------------------------------------------------------------------------
    Change in cash                                       140         (10,636)
    Cash, beginning of period                         10,862          16,006
    -------------------------------------------------------------------------
    Cash, end of period                           $   11,002      $    5,370
    -------------------------------------------------------------------------
    

    %SEDAR: 00002394E




For further information:

For further information: please visit Axia's website at www.axia.com, or
contact: Art Price, CEO, (403) 538-4001; Geoff Thompson, President, (403)
538-4030; Peter McKeown, CFO, (403) 538-4052; Dawn Tinling, VP, Investor
Relations and Communications, (403) 538-4074

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