Mitec Telecom reports fiscal 2010 Q2 results

MONTREAL, Dec. 8 /CNW Telbec/ - Mitec Telecom Inc. ("Mitec") (TSX: MTM), a leading designer and manufacturer of mobile wireless, fixed wireless, broadcast and satellite components, today announced its results for the second quarter of fiscal 2010, the three-month period ended October 31, 2009.

Revenue was $7.2 million for the quarter and the Corporation recorded a net loss of $1.8. million, or $0.01 per share. This compares to sales of $10.6 million and a net loss of $1.2 million or $0.01 per share in the second quarter of fiscal 2009. Revenue increased by 7 % over the previous quarter, while the net loss improved by over 10 %.

EBITDA from operating activities (earnings before interest, income taxes, depreciation and amortization) was negative $1.4 million compared to negative $172,000 during the second quarter of fiscal 2009. EBITDA increased by almost 12 % over the previous quarter.

"We are seeing signs that the global demand for wireless infrastructure components is generating opportunities as customers are asking for speed, capacity, bandwidth and reliability for their wireless devices. We have positioned ourselves to benefit from this demand and continue to work with both network providers and operators to deliver this connectivity", said Dan Piergentili, Mitec's President and CEO.

"We are also very pleased with the growth of our military based business which is being led by the Keragis high power amplifier line. These products deliver enhanced communication capacity demanded by military applications and while the qualification process is lengthy, once the sales cycle begins, it generates predictable revenue at favourable gross margins", said Piergentili.

Mitec completed a private placement in late October to replace its existing convertible debt which had come due in mid-October. Mitec's Management and its Board of Directors continue to monitor and initiate cost containment measures.

About Mitec Telecom Inc.

Mitec is a leading designer and provider of radio frequency (RF) products for the telecommunications and satellite communications industries, as well as a variety of other sectors. Mitec sells its products worldwide to network providers for incorporation into high-performing wireless networks used in voice and data/internet communications. Headquartered in Montreal, Canada, Mitec also operates facilities in California and China. Mitec is listed on the Toronto Stock Exchange under the symbol MTM. On-line information about Mitec is available at www.mitectelecom.com.

Certain statements in this release, including statements regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for Mitec's products, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in Mitec's public filings with the appropriate securities regulatory authorities.

    
    MITEC TELECOM INC.
    INTERIM CONSOLIDATED BALANCE SHEETS
    (In thousands of Canadian dollars)                    As at        As at
                                                     October 31,    April 30,
                                                           2009         2009
                                                              $            $
    -------------------------------------------------------------------------
                                                      Unaudited      Audited
    ASSETS
    Current
    Cash and cash equivalents                             2,277        4,485
    Short-term investments                                  181          181
    Trade receivables                                     6,147        5,592
    Other receivables                                       579          126
    Income tax recoverable                                  551          323
    Inventories                                           6,121        8,088
    Prepaid expenses and other                              669          629
    -------------------------------------------------------------------------
    Total current assets                                 16,525       19,424
    Property, plant and equipment                         4,982        5,493
    Intangible assets                                     2,860        3,263
    Goodwill                                              1,991        1,991
    Investments                                              25           25
    Future income tax                                       202          125
    -------------------------------------------------------------------------
                                                         26,585       30,321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities              5,349        5,449
    Current portion of long-term debt                         -        1,215
    -------------------------------------------------------------------------
    Total current liabilities                             5,349        6,664

    Long-term debt                                          955            -
    -------------------------------------------------------------------------
                                                          6,304        6,664
    -------------------------------------------------------------------------

    Shareholders' equity
    Common shares                                       132,142      132,142
    Warrants                                              1,151        1,925
    Equity component of convertible debentures              758           14
    Contributed surplus                                  10,747        9,836
    Deficit                                            (123,886)    (119,980)
    Accumulated other comprehensive loss                   (631)        (280)
    -------------------------------------------------------------------------
    Total shareholders' equity                           20,281       23,657
    -------------------------------------------------------------------------
                                                         26,585       30,321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
    (In thousands of Canadian dollars, except per share data and number of
    shares)
    Unaudited
                        For the three months ended  For the six months ended
                                        October 31,               October 31,
                                 2009         2008         2009         2008
                                    $            $            $            $
    -------------------------------------------------------------------------
    Sales                       7,198       10,568       13,905       25,499
    Cost of sales               6,381        8,202       12,053       19,967
    -------------------------------------------------------------------------
    Gross profit                  817        2,366        1,852        5,532
    -------------------------------------------------------------------------

    Expenses
    Research and
     development                  678        1,136        1,742        2,149
    Selling and
     administrative             1,647        1,714        2,857        3,248
    Amortization of
     intangible assets            154          273          374          578
    Financial expenses            222          196          376          375
    Foreign exchange               (8)        (342)         403         (450)
    Impairment of
     property, plant and
     equipment                    (50)         351          (25)         351
    Stock-based
     compensation                  50          247          109          449
    -------------------------------------------------------------------------
                                2,693        3,575        5,836        6,700
    -------------------------------------------------------------------------

    Loss before income
     taxes                     (1,876)      (1,209)      (3,984)      (1,168)
    Income tax recovery           (39)         (14)         (78)         (28)
    -------------------------------------------------------------------------
    Net loss for the
     period                    (1,837)      (1,195)      (3,906)      (1,140)
    -------------------------------------------------------------------------

    Unrealized gain (loss)
     on translating
     financial statements
     of self-sustaining
     foreign operations            (7)         233         (351)         255
    -------------------------------------------------------------------------
    Comprehensive loss for
     the period                (1,844)        (962)      (4,257)        (885)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss
     per common share           (0.01)       (0.01)       (0.02)       (0.01)
    -------------------------------------------------------------------------
    Weighted average
     number of
     outstanding common
     shares               220,666,776  220,666,776  220,666,776  220,651,370
    -------------------------------------------------------------------------



    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
    (In thousands of Canadian dollars, except for number of shares)
    Unaudited

                                                                      Equity
                                                                   component
                                                                          of
                                                                 convertible
                           Common shares            Warrants      debentures
    -------------------------------------------------------------------------

                       No. (000s)         $  No. (000s)         $          $
    -------------------------------------------------------------------------
    Balance,
     April 30, 2008      220,312    132,097     38,016      1,931         46
    Issued under
     conversion of
     convertible
     debentures              354         61          -          -        (10)
    Expired warrants           -          -       (187)        (6)         -
    Stock-based
     compensation              -          -          -          -          -
    Other comprehensive
     gain the period           -          -          -          -          -
    Net loss for the
     period                    -          -          -          -          -
    -------------------------------------------------------------------------
    Balance,
     October 31, 2008    220,666    132,158     37,829      1,925         36
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Balance,
     April 30, 2009      220,666    132,142     37,829      1,925         14
    Issued upon
     conversion of
     convertible
     debentures                -          -          -          -        (14)
    Issued under a
     convertible
     debentures
     financing                 -          -          -          -        758
    Expired warrants           -          -    (14,226)      (774)         -
    Stock-based
     compensation              -          -          -          -          -
    Other comprehensive
     loss the period           -          -          -          -          -
    Net loss for the
     period                    -          -          -          -          -
    -------------------------------------------------------------------------
    Balance,
     October 31, 2009    220,666    132,142     23,603      1,151        758
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                           Accumu-
                                                            lated
                                                            other
                                     Contri-               compre-     Share-
                                      buted               hensive    holders'
                                    surplus    Deficit       loss     equity
    -------------------------------------------------------------------------

                                          $          $          $          $
    -------------------------------------------------------------------------
    Balance,
     April 30, 2008                   9,223   (115,372)      (894)    27,031
    Issued under
     conversion of
     convertible
     debentures                          14          -          -         65
    Expired warrants                      6          -          -          -
    Stock-based
     compensation                       449          -          -        449
    Other comprehensive
     gain the period                      -          -        255        255
    Net loss for the
     period                               -     (1,140)         -     (1,140)
    -------------------------------------------------------------------------
    Balance,
     October 31, 2008                 9,692   (116,512)      (639)    26,660
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Balance,
     April 30, 2009                   9,836   (119,980)      (280)    23,657
    Issued upon
     conversion of
     convertible
     debentures                          28          -          -         14
    Issued under a
     convertible
     debentures
     financing                            -          -          -        758
    Expired warrants                    774          -          -          -
    Stock-based
     compensation                       109          -          -        109
    Other comprehensive
     loss the period                      -          -       (351)      (351)
    Net loss for the
     period                               -     (3,906)         -     (3,906)
    -------------------------------------------------------------------------
    Balance,
     October 31, 2009                10,747   (123,886)      (631)    20,281
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands of Canadian dollars)
    Unaudited

                        For the three months ended  For the six months ended
                                        October 31,               October 31,
                                 2009         2008         2009         2008
                                    $            $            $            $
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net loss for the
     period                    (1,837)      (1,195)      (3,906)      (1,140)
    Add items not
     affecting cash
      Amortization of
       property, plant
       and equipment,
       intangible assets
       and deferred
       charges                    420          619          889        1,373
      Impairment of
       property, plant
       and equipment              (50)         351          (25)         351
      Stock-based
       compensation                50          247          109          449
      Accretion expense           105          118          215          246
      Income tax recovery         (39)         (14)         (78)         (28)
    -------------------------------------------------------------------------
                               (1,351)         126       (2,796)       1,251
    Changes in non-cash
     working capital
     balances related to
     operating activities         (85)       2,113          591         (306)
    -------------------------------------------------------------------------
    Cash flows provided
     (used) in operating
     activities                (1,436)       2,239       (2,205)         945
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Additions to property,
     plant and equipment
     and intangible assets        (73)        (152)        (290)        (301)
    Purchase of short-term
     investments                 (181)           -         (181)         (79)
    Sale of short-term
     investments                  181            -          181           77
    -------------------------------------------------------------------------
    Cash flows used in
     investing activities         (73)        (152)        (290)        (303)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Convertible debentures
     issued                     1,702            -        1,702            -
    Repayment of long-term
     debt                      (1,400)        (156)      (1,400)        (250)
    -------------------------------------------------------------------------
    Cash flows used by
     financing activities        (302)        (156)        (302)        (250)
    -------------------------------------------------------------------------

    Loss on foreign cash
     and cash equivalents
     held                          (6)           -          (15)           -
    -------------------------------------------------------------------------

    Net increase
     (decrease) in cash
     and cash equivalents
     for the period            (1,067)       1,931       (2,208)         392

    Cash and cash
     equivalents,
     beginning of the
     period                     3,344        3,245        4,485        4,784
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     the period                 2,277        5,176        2,277        5,176
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00002350EF

SOURCE Mitec Telecom Inc.

For further information: For further information: Mr. Jeffrey Mandel, Executive Chairman and Director, Investor and Corporate Relations, (514) 694-9000, jeffrey.mandel@mitectelecom.com; Source: Mitec Telecom Inc.

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