Mitec Telecom reports second quarter results



    
    - Sales reached $8.0 million, even after unprecedented rise of the
      Canadian dollar
    - Net loss reduced by $2.0 million from $4.3 million to $2.3 million
    - Traction in new product lines continues
    

    MONTREAL, Dec. 14 /CNW Telbec/ - Mitec Telecom (TSX: MTM) today reported
its results for the second quarter of fiscal 2008, the three-month period
ended October 31, 2007.
    Sales reached $8.0 million compared with $8.8 million reported in the
second quarter of fiscal 2007. Gross profit for the quarter was $1.7 million,
compared with $1.8 million during the same period last year and operating
expenses were $2.7 million versus $3.9 million reported in the same period
last year.
    The net loss for the second quarter was $2.3 million, or $0.01 per share,
compared with a net loss of $4.3 million, or $0.04 per share, in the second
quarter of fiscal 2007. Of this loss, $800,000 is attributable to depreciation
of the U.S. dollar compared with a foreign exchange effect of $100,000 during
the second quarter of fiscal 2007.
    "I am extremely pleased with Mitec's ongoing strategic focus on building
revenue, managing costs and maintaining healthy profit margins" said Dan
Piergentili, Mitec's President and CEO. "It is worth noting, that on a
U.S. dollar basis our second quarter revenue grew in comparison with revenue
during the same period last year. In addition, shipments of products reached
their highest levels since my arrival in October 2006, and we continued to
maintain a significant backlog in both our Montreal and China facilities."
    The U.S. dollar depreciated at an unprecedented rate, during Mitec's
fiscal second quarter. Because this is the currency in which its sales are
principally denominated, the company's results were negatively affected, as
was the case with many Canadian manufacturers. "Mitec is continuously
adjusting its business strategy to enable profitable operation in a variety of
foreign exchange environments," commented Bruno Dumais, Mitec's Chief
Financial Officer.

    New Products Introduced

    "I am very excited about the three new product lines introduced this
quarter. They include distributed antenna systems as well as Keragis' next
generation amplifier solutions and the growing wireless line of sight radio
market. All are showing promise and achieving significant traction," commented
Dan Piergentili.
    "Mitec has now been transformed into a dynamic technology company focused
on developing new key accounts and launching new technologies to meet current
and future market demand," concluded Mr. Piergentili.

    About Mitec Telecom

    Mitec Telecom 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. The Company 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, the Company also operates a facility in China and in
California. Mitec Telecom Inc. is listed on the Toronto Stock Exchange under
the symbol MTM. On-line information about Mitec is available at
www.mitectelecom.com.

    Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of the Company. These statements are based on suppositions
and uncertainties as well as on management's best possible evaluation of
future events. Such factors may include, without excluding other
considerations, fluctuations in quarterly results, evolution in customer
demand for the Company's products and services, the impact of price pressures
exerted by competitors, and general market trends or economic changes. As a
result, readers are advised that actual results may differ from expected
results.


    
    MITEC TELECOM INC.
    INTERIM CONSOLIDATED BALANCE SHEETS
    (In thousands of Canadian dollars)
    Unaudited                                          As at           As at
                                            October 31, 2007  April 30, 2007
                                                           $               $
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                          4,252           6,286
    Short-term investments                                77              75
    Trade receivables                                  7,162           5,064
    Other receivables                                    764             889
    Income tax recoverable                               693           1,112
    Inventories                                        7,611           7,672
    Prepaid expenses and other                           793             757
    -------------------------------------------------------------------------
    Total current assets                              21,352          21,855
    -------------------------------------------------------------------------

    Property, plant and equipment                      6,505           7,106
    Intangible assets                                  9,303           2,365
    Investments                                        1,001             750
    Deferred charges                                     703           1,086
    -------------------------------------------------------------------------
                                                      38,864          33,162
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities           8,384           6,647
    Current portion of long-term debt                    416             416
    -------------------------------------------------------------------------
    Total current liabilities                          8,800           7,063
    -------------------------------------------------------------------------

    Long-term debt                                       173             380
    Convertible debentures                             1,523               -
    -------------------------------------------------------------------------
                                                      10,496           7,443
    -------------------------------------------------------------------------
    Shareholders' equity
    Common shares                                    130,945         125,631
    Warrants                                           2,063           1,311
    Equity component of convertible debentures            70               -
    Contributed surplus                                8,828           8,645
    Deficit                                         (112,270)       (108,951)
    Accumulated other comprehensive income            (1,268)           (917)
    -------------------------------------------------------------------------
    Total shareholders' equity                        28,368          25,719
    -------------------------------------------------------------------------
                                                      38,864          33,162
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME
    AND DEFICIT
    (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,
                                 2007         2006         2007         2006
                                    $            $            $            $
    -------------------------------------------------------------------------
    Sales                       7,978        8,838       15,581       17,514
    Cost of sales               6,281        7,058       11,821       15,546
    -------------------------------------------------------------------------
    Gross profit                1,697        1,780        3,760        1,968
    -------------------------------------------------------------------------

    Expenses
    Research and development    1,129        1,793        2,136        3,815
    Selling and
     administrative             1,603        2,078        3,089        4,101
    Amortization of
     intangible assets            283          398          510          895
    Financial expenses             96           55          127          190
    Foreign exchange              768           77        1,013          110
    Interest income                (3)          (9)          (6)         (60)
    Stock-based compensation      162          368          210          432
    Restructuring and
     other expenses                 -        1,342            -        1,342
    -------------------------------------------------------------------------
                                4,038        6,102        7,079       10,825
    -------------------------------------------------------------------------

    Loss from continuing
     operations before
     income taxes              (2,341)      (4,322)      (3,319)      (8,857)
    Income tax expenses
     (recovery)                     -          (67)           -         (181)
    -------------------------------------------------------------------------
    Loss from continuing
     operations                (2,341)      (4,255)      (3,319)      (8,676)
    Loss from discontinued
     operations                     -            -            -           (8)
    -------------------------------------------------------------------------
    Net loss for the period    (2,341)      (4,255)      (3,319)      (8,684)

    Unrealized gain (loss)
     on translating
     financial statements
     of self-sustaining
     foreign operations          (284)           4         (351)          64
    -------------------------------------------------------------------------
    Comprehensive loss
     for the period            (2,625)      (4,251)      (3,670)      (8,620)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Deficit, beginning
     of the period           (109,929)    (100,109)    (108,951)     (95,680)
    Net loss for the period    (2,341)      (4,255)      (3,319)      (8,684)
    -------------------------------------------------------------------------
    Deficit, end of the
     period                  (112,270)    (104,364)    (112,270)    (104,364)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss
     per common share from
     continuing operations      (0.01)       (0.04)       (0.02)       (0.10)
    Basic and diluted loss
     per common share from
     discontinued operations    (0.00)       (0.00)       (0.00)       (0.00)
    Basic and diluted loss
     per common share           (0.01)       (0.04)       (0.02)       (0.10)
    -------------------------------------------------------------------------
    Weighted average number
     of outstanding
     common shares        191,963,423   95,683,469  190,181,668   86,044,366
    -------------------------------------------------------------------------


    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,
                                 2007         2006         2007         2006
                                    $            $            $            $
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Loss from continuing
     operations                (2,341)      (4,255)      (3,319)      (8,676)

    Add items not affecting
     cash
      Amortization of
       property, plant and
       equipment, intangible
       assets and deferred
       charges                    823        1,017        1,594        2,129
      Loss on disposal of
       property, plant and
       equipment                    3            -           36            2
      Stock-based compensation    162          368          210          432
    -------------------------------------------------------------------------
                               (1,353)      (2,870)      (1,479)      (6,113)
    Changes in non-cash
     working capital balances
     related to continuing
     operations                 1,839          (75)         208        1,706
    -------------------------------------------------------------------------
    Cash flows provided
     (used) in operating
     activities                   486       (2,945)      (1,271)      (4,407)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Additions to property,
     plant and equipment         (182)         (99)        (214)        (206)
    Additions to intangible
     assets                    (7,449)           -       (7,449)           -
    Proceeds on disposal
     of property, plant
     and equipment                  -            4           14            4
    Purchase of short-term
     investment                   (77)           -         (152)        (597)
    Sale of short-term
     investments                   75          597          150       10,686
    Purchase of investment       (251)           -         (251)           -
    -------------------------------------------------------------------------
    Cash flows provided
     (used) in investing
     activities                (7,884)         502       (7,902)       9,887
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increase in bank
     indebtedness                   -            -            -          349
    Repayment of bank
     indebtedness                   -            -            -       (6,365)
    Repayment of long-term
     debt                        (125)        (179)        (252)        (356)
    Issuance of convertible
     debentures, net of
     issuance costs             2,345            -        2,345            -
    Issuance of common shares
     and warrants               5,287        7,451        5,287        7,451
    -------------------------------------------------------------------------
    Cash flows provided by
     financing activities       7,507        7,272        7,380        1,079
    -------------------------------------------------------------------------

    Effect of exchange rate
     fluctuations changes on
     cash and cash equivalents   (200)          34         (241)         260
    -------------------------------------------------------------------------

    Net increase (decrease)
     in cash and cash
     equivalents from
     continuing operations        (91)       4,863       (2,034)       6,819
    Cash provided by (used in)
     discontinued activities        -            -            -          (36)
    -------------------------------------------------------------------------
    Net cash (decrease) in
     cash and cash equivalents    (91)       4,863       (2,034)       6,783
    Cash and cash equivalents,
     beginning of the period    4,343        3,388        6,286        1,468
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of the period          4,252        8,251        4,252        8,251
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    
    %SEDAR: 00002350EF




For further information:

For further information: Daniel Piergentili, President et Chief
Executive Officer, Mitec Telecom, (514) 694-9000; Bruno Dumais, Vice-President
et Chief Financial Officer, Mitec Telecom, (514) 694-9000

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Mitec Telecom Inc.

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