MITEC TELECOM REPORTS IMPROVED RESULTS FOR Q2 FISCAL 2011

MONTREAL, Dec. 14 /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 2011, the three-month period ended October 31, 2010.

Revenue was $7.0 million for the quarter and Mitec recorded a net loss of $711,000, or $nil per share. These improved results compare to sales of $7.2 million and a net loss of $1.8 million or $0.01 per share in the second quarter of fiscal 2010. It is notable that although second quarter revenues remained at the same levels, net income improved by over 2.5 times in fiscal 2011 compared with fiscal 2010.

EBITDA from operating activities (earnings before interest, income taxes, depreciation and amortization), improved to negative $319,000 during the period, compared with negative $1.4 million during the second quarter of fiscal 2010, more than a fourfold improvement.

"The results generated for this quarter are clear evidence that Mitec's product lines are now generating the sustainable profit margins that we have been working towards since they were launched", said Dan Piergentili, Mitec's President and CEO. Consolidated gross margin improved to 26 percent during the quarter - an improvement of 120 percent for the period - compared with 11 percent in the same quarter in fiscal 2010.

"Mitec's Satcom gross margins were 36 percent for this quarter as a result of the success we have generated through our recently launched product lines and our ability to differentiate them in the marketplace. Having reached these levels is a significant event for Mitec and we expect to make up for the shortfall in legacy revenue we experienced from the traction we continue to gain from our VSAT MTX product line as well as our military division, Keragis, which delivered 42 percent gross margins this quarter", Piergentili commented.

Mitec's Telecom revenue improved by almost 75 percent during the quarter, to $3.5 million compared with $2 million in the same quarter in fiscal 2010.

"Even through gross margins, at 15 percent, were much higher than in previous quarters, we continue to explore ways to ensure that Mitec can streamline its operations and increase these margins even further", said Piergentili.

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.

Due to confidentiality provisions, Mitec is generally not able to disclose the names of its major customers or the financial data related to sales transactions. 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, 2010  April 30, 2010
    -------------------------------------------------------------------------
                                                          $               $
                                                  Unaudited         Audited
    ASSETS
    Current
    Cash                                                908           1,886
    Short-term investments                              182             181
    Trade receivables                                 6,946           5,732
    Other receivables                                   151             288
    Income tax recoverable                               38             380
    Inventories                                       6,007           5,447
    Prepaid expenses and other assets                   320             493
    -------------------------------------------------------------------------
    Total current assets                             14,552          14,407

    Property, plant and equipment                     4,345           4,510
    Intangible assets                                 1,590           1,762
    Investments                                          25              25
    -------------------------------------------------------------------------
                                                     20,512          20,704
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Credit facility                                   1,229             733
    Accounts payable and accrued liabilities          6,561           6,061
    Current portion of the long-term debt             1,882               -
    -------------------------------------------------------------------------
    Total current liabilities                         9,672           6,794

    Long-term debt                                        -           1,157
    -------------------------------------------------------------------------
    Total liabilities                                 9,672           7,951
    -------------------------------------------------------------------------

    Shareholders' equity
    Common shares                                   132,142         132,142
    Warrants                                              -           1,152
    Equity component of convertible debentures          788             768
    Contributed surplus                              12,018          10,802
    Deficit                                        (133,480)       (131,427)
    Accumulated other comprehensive loss               (628)           (684)
    -------------------------------------------------------------------------
    Total shareholders' equity                       10,840          12,753
    -------------------------------------------------------------------------
                                                     20,512          20,704
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
    (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,
                                2010         2009         2010         2009
    -------------------------------------------------------------------------
                                   $            $            $            $
    Sales                      7,024        7,198       12,795       13,905
    Cost of sales              5,229        6,381       10,191       12,053
    -------------------------------------------------------------------------
    Gross profit               1,795          817        2,604        1,852
    -------------------------------------------------------------------------

    Expenses
    Research and
     development                 720          683        1,434        1,751
    Selling and
     administrative            1,543        1,796        2,894        3,222
    Financial expenses           209          222          397          376
    Foreign exchange
     (gain) loss                   3           (8)        (131)         403
    Gain on disposal and
     impairment of
     property, plan and
     equipment                     -          (50)          (1)         (25)
    Stock-based
     compensation                 31           50           64          109
    -------------------------------------------------------------------------
                               2,506        2,693        4,657        5,836
    -------------------------------------------------------------------------

    Loss before income
     taxes                      (711)      (1,876)      (2,053)      (3,984)
    Income tax recovery            -          (39)           -          (78)
    -------------------------------------------------------------------------
    Net loss for the
     period                     (711)      (1,837)      (2,053)      (3,906)
    -------------------------------------------------------------------------

    Net change in the
     unrealized gain
     (loss) on
     translating
     financial
     statements of
     self-sustaining
     foreign operations           30           (7)          58         (351)
    -------------------------------------------------------------------------
    Comprehensive loss
     for the period             (681)      (1,844)      (1,995)      (4,257)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     loss per outstanding
     common share              (0.00)       (0.01)       (0.01)       (0.02)
    -------------------------------------------------------------------------
    Weighted average
     number of
     outstanding
     common shares       220,666,756  220,666,756  220,666,756  220,666,756
    -------------------------------------------------------------------------


    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.(000)           $      No.(000)           $            $
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Balance,
     April 30,
     2010       220,666      132,142       23,603        1,152          768
    Issued
     under a
     convertible
     debenture
     financing        -            -            -            -           20
    Expired
     warrants         -            -      (23,603)      (1,152)           -
    Stock-based
     compensation     -            -            -            -            -
    Other compre-
     hensive gain
     for the
     period           -            -            -            -            -
    Net loss for
     the period       -            -            -            -            -
    -------------------------------------------------------------------------
    Balance,
     October 31,
     2010       220,666      132,142            -            -          788
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                   Accumulated
                                                         other
                                                        compre-       Share-
                         Contributed                   hensive      holders'
                             surplus      Deficit         loss       equity
    -------------------------------------------------------------------------
                                   $            $            $            $
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Balance,
     April 30,
     2010                     10,802     (131,427)        (684)      12,753
    Issued
     under a
     convertible
     debenture
     financing                     -            -            -           20
    Expired
     warrants                  1,152            -            -            -
    Stock-based
     compensation                 64            -            -           64
    Other compre-
     hensive gain
     for the
     period                        -            -           56           56
    Net loss for
     the period                    -       (2,053)           -       (2,053)
    -------------------------------------------------------------------------
    Balance,
     October 31,
     2010                     12,018     (133,480)        (628)      10,840
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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,
                                2010         2009         2010         2009
    -------------------------------------------------------------------------
                                   $            $            $            $
    OPERATING ACTIVITIES
    Net loss for the period     (711)      (1,837)      (2,053)      (3,906)
    Items not affecting cash
      Amortization               338          420          616          889
      Gain on disposal and
       impairment of property,
       plant and equipment         -          (50)          (1)         (25)
      Stock-based compensation    31           50           64          109
      Accretion expense          124          105          245          215
      Income tax recovery          -          (39)           -          (78)
    -------------------------------------------------------------------------
                                (218)      (1,351)      (1,129)      (2,796)
    Changes in non-cash
     working capital balances
     related to operating
     activities               (1,128)         (85)        (549)         591
    -------------------------------------------------------------------------
    Cash flows used in
     operating activities     (1,346)      (1,436)      (1,678)      (2,205)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Additions to property,
     plant and equipment         (22)         (73)        (326)        (290)
    Proceeds on disposal
     of property, plant
     and equipment                 -            -           37            -
    Additions to intangible
     assets                        -            -           (8)           -
    Purchases of short-term
     investments                (182)        (181)        (363)        (181)
    Sales of short-term
     investments                 181          181          362          181
    -------------------------------------------------------------------------
    Cash flows used in
     investing activities        (23)         (73)        (298)        (290)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Secured debentures issued    500            -          500            -
    Credit facility            1,129            -          496            -
    Convertible debentures
     issued                        -        1,702            -        1,702
    Repayment of credit
     facility                      -       (1,400)           -       (1,400)
    -------------------------------------------------------------------------
    Cash flows used by
     financing activities      1,629          302          996          302
    -------------------------------------------------------------------------

    Gain (loss) on foreign
     cash held                     7           (6)           2          (15)
    -------------------------------------------------------------------------

    Net increase (decrease)
     in cash for the period      267       (1,067)        (978)      (2,208)

    Cash, beginning of the
     period                      641        3,344        1,886        4,485
    -------------------------------------------------------------------------
    Cash, end of the period      908        2,277          908        2,277
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE Mitec Telecom Inc.

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

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