Mitec Telecom reports third quarter 2010 results

MONTREAL, March 4 /CNW Telbec/ - Mitec Telecom (TSX: MTM), a leading designer and manufacturer of mobile wireless, fixed wireless, broadcast and satellite components today announced its results for the third quarter of fiscal 2010, the three month period ended January 31, 2010.

Revenue for the quarter was $5.2 million compared with $7.9 million for the third quarter of fiscal 2009. For the third quarter of fiscal 2010, the loss from operations was $2.3 million or $0.01 per share, compared with a loss of $361,000, or nil per share in the third quarter of fiscal 2009. Mitec's loss before interest, taxes, depreciation and amortization, on an adjusted basis ("Adjusted EBITDA") was $1.6 million compared with a loss of $608,000 in the same period in fiscal 2009. Gross profit for the quarter was approximately 17%, compared with 24% for the same period in fiscal 2009.

Corporate performance this quarter was affected by a variety of factors, including delays in booking anticipated revenues for the quarter as a result of the postponement in infrastructure spending. Over this quarter and the previous quarter, Mitec continued to invest in R&D initiatives for new product lines which have now resulted in the launch of a new series of fixed wireless and very small aperture technology ("VSAT") products utilized for wireless backhaul.

"Our new product lines, including our coverage solutions products and our fixed wireless products, have begun to generate expected results. In addition, our newly designed and launched VSAT MTX Block Upconverter line, which was a significant R&D and marketing project during the last 2 years, has gained significant traction in its market. It is one of the realities of our business that our revenues tend to fluctuate depending on the stages of various transactions in our pipeline. We are looking forward to improved results in the current quarter as some of these transactions have now closed," commented Daniel Piergentili, Mitec's President and CEO.

Mitec is also working with its Mergers and Acquisitions Committee to assess various opportunities with the objectives of increasing its presence in the wireless market and achieving long-term profitability.

Mitec also reports that it has arranged a receivables financing facility in the amount of $2.5 million - which can be increased up to $5 million at Mitec's option and under certain terms and conditions - from a Canadian financial institution specializing in servicing the needs of small and medium sized businesses entering growth phases. The facility, which is subject to standard conditions, including final approval from the lender's credit committee, due diligence and completion of final documentation, will be used to support Mitec's working capital requirements and growth opportunities.

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)
    Unaudited
                                                          As at        As at
                                                        January        April
                                                       31, 2010     30, 2009
    -------------------------------------------------------------------------
                                                              $            $
                                                      Unaudited      Audited
    ASSETS
    Current
    Cash and cash equivalents                             2,036        4,485
    Short-term investments                                  181          181
    Trade receivables                                     4,849        5,592
    Other receivables                                       259          126
    Income tax recoverable                                  494          323
    Inventories                                           5,542        8,088
    Prepaid expenses and other                              656          629
    -------------------------------------------------------------------------
    Total current assets                                 14,017       19,424
    -------------------------------------------------------------------------

    Property, plant and equipment                         4,759        5,493
    Intangible assets                                     2,670        3,263
    Goodwill                                              1,991        1,991
    Investments                                              25           25
    Future income tax                                       241          125
    -------------------------------------------------------------------------
                                                         23,703       30,321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities              4,689        5,449
    Current portion of long-term debt                         -        1,215
    -------------------------------------------------------------------------
    Total current liabilities                             4,689        6,664
    -------------------------------------------------------------------------

    Long-term debt                                        1,041            -
    -------------------------------------------------------------------------
                                                          5,730        6,664
    -------------------------------------------------------------------------

    Shareholders' equity
    Common shares                                       132,142      132,142
    Warrants                                              1,151        1,925
    Equity component of convertible debentures              747           14
    Contributed surplus                                  10,787        9,836
    Deficit                                            (126,191)    (119,980)
    Accumulated other comprehensive loss                   (663)        (280)
    -------------------------------------------------------------------------
    Total shareholders' equity                           17,973       23,657
    -------------------------------------------------------------------------
                                                         23,703       30,321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE INCOME
    (In thousands of Canadian dollars, except per share data and number of
     shares)
    Unaudited
                                               For                       For
                            the three months ended     the nine months ended
                                        January 31,               January 31,
                                 2010         2009         2010         2009
    -------------------------------------------------------------------------
                                    $            $            $            $
    Sales                       5,161        7,922       19,066       33,421
    Cost of sales               4,299        6,025       16,353       25,992
    -------------------------------------------------------------------------
    Gross profit                  862        1,897        2,713        7,429
    -------------------------------------------------------------------------

    Expenses
    Research and
     development                1,027        1,039        2,769        3,188
    Selling and
     administrative             1,499        1,430        4,336        4,678
    Amortization of
     intangible assets            199          211          595          789
    Financial expenses            161          301          535          675
    Foreign exchange              279         (786)         682       (1,236)
    (Gain) loss on
     disposal of property,
     plant and equipment            -           39          (25)          39
    Impairment of property,
     plant and equipment            -            -            -          351
    Stock-based compensation       41          113          149          562
    -------------------------------------------------------------------------
                                3,206        2,347        9,041        9,046
    -------------------------------------------------------------------------

    Loss before income taxes   (2,344)        (450)      (6,328)      (1,617)
    Income tax recovery           (39)         (89)        (117)        (117)
    -------------------------------------------------------------------------
    Net loss for the period    (2,305)        (361)      (6,211)      (1,500)
    -------------------------------------------------------------------------

    Unrealized gain (loss)
     on translating financial
     statements of self-
     sustaining foreign
     operations                   (32)        1,167        (383)       1,189
    -------------------------------------------------------------------------
    Comprehensive gain (loss)
     for the period            (2,337)         806       (6,594)        (311)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss
     per common share           (0.01)       (0.00)       (0.03)       (0.01)
    -------------------------------------------------------------------------
    Weighted average
     number of
     outstanding
     common shares        220,666,756  220,666,756  220,666,756  220,656,485
    -------------------------------------------------------------------------


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

                                                                      Equity
                                                                   component
                                                                   of conver-
                                                                    tible de-
                                 Common shares            Warrants  bentures
    -------------------------------------------------------------------------
                              Number         $    Number         $         $
                                (000)               (000)
    Balance,
    April 30, 2008           220,312   132,097    38,016     1,931        46
    Issued upon conversion
     of convertible
     debentures                  354        25         -         -         -
    Impact of deferred
     expenses on
     convertible
     debentures                    -         -         -         -       (23)
    Expired warrants               -         -      (187)       (6)        -
    Stock-based
     compensation                  -         -         -         -         -
    Other comprehensive
     gain the period               -         -         -         -         -
    Net loss for the period        -         -         -         -         -
    -------------------------------------------------------------------------
    Balance,
    January 31, 2009         220,666   132,122    37,829     1,925        23
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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          -         -         -         -       747
    Expired warrants               -         -   (14,226)     (774)        -
    Stock-based
     compensation                  -         -         -         -         -
    Other comprehensive
     loss the period               -         -         -         -         -
    Net loss for the period        -         -         -         -         -
    -------------------------------------------------------------------------
    Balance,
    January 31, 2010         220,666   132,142    23,603     1,151       747
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                              Accu-
                                                           mulated
                                                             other
                                        Contri-             compre-    Share-
                                         buted             hensive   holders'
                                       surplus   Deficit      loss    equity
    -------------------------------------------------------------------------
                                             $         $         $         $
    Balance,
    April 30, 2008                       9,223  (115,372)     (894)   27,031
    Issued upon conversion
     of convertible
     debentures                              -         -         -        25
    Impact of deferred
     expenses on
     convertible
     debentures                              -         -         -       (23)
    Expired warrants                         6         -         -         -
    Stock-based
     compensation                          562         -         -       562
    Other comprehensive
     gain the period                         -         -     1,189     1,189
    Net loss for the period                  -    (1,500)        -    (1,500)
    -------------------------------------------------------------------------
    Balance,
    January 31, 2009                     9,791  (116,872)      295    27,284
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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                    -         -         -       747
    Expired warrants                       774         -         -         -
    Stock-based
     compensation                          149         -         -       149
    Other comprehensive
     loss the period                         -         -      (383)     (383)
    Net loss for the period                  -    (6,211)        -    (6,211)
    -------------------------------------------------------------------------
    Balance,
    January 31, 2010                    10,787  (126,191)     (663)   17,973
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands of Canadian dollars)
    Unaudited
                                               For                       For
                            the three months ended     the nine months ended
                                        January 31,               January 31,
                                 2010         2009         2010         2009
    -------------------------------------------------------------------------
                                    $            $            $            $
    OPERATING ACTIVITIES
    Net loss for the
     period                    (2,305)        (361)      (6,211)      (1,500)
    Add items not
     affecting cash
      Amortization of
       property, plant
       and equipment,
       intangible assets
       and deferred
       charges                    420          476        1,309        1,849
      (Gain) loss on
       disposal of
       property, plant
       and equipment                -           39          (25)          39
      Impairment of
       property, plant
       and equipment                -            -            -          351
      Stock-based
       compensation                41          113          149          562
      Accretion expense            93          287          308          532
      Income tax recovery         (39)         (89)        (117)        (117)
    -------------------------------------------------------------------------
                               (1,790)         465       (4,587)       1,716

    Changes in non-cash
     working capital
     balances related
     to operating
     activities                 1,606       (1,520)       2,198       (1,811)
    -------------------------------------------------------------------------
    Cash flows used in
     operating activities        (184)      (1,055)      (2,389)         (95)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Additions to property,
     plant and equipment          (35)         (48)        (361)        (349)
    Additions to
     intangible assets            (10)           -          (12)           -
    Proceeds on disposal
     of property, plant
     and equipment                 10           13           45           13
    Purchase of short-
     term investments               -         (100)        (181)        (179)
    Sale of short-term
     investments                    -            -          181           77
    -------------------------------------------------------------------------
    Cash flows used in
     investing activities         (35)        (135)        (328)        (438)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Convertible
     debentures issued            (24)           -        1,679            -
    Repayment of long-
     term debt                      -         (125)      (1,400)        (390)
    -------------------------------------------------------------------------
    Cash flows provided
     (used) by financing
     activities                   (24)        (125)         279         (390)
    -------------------------------------------------------------------------

    Gain (loss) on foreign cash
     and cash equivalents
     held                           2            -          (11)           -

    Net increase (decrease)
     in cash and cash
     equivalents for the
     period                      (241)      (1,315)      (2,449)        (923)

    Cash and cash
     equivalents, beginning
     of the period              2,277        5,176        4,485        4,784
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     the period                 2,036        3,861        2,036        3,861
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%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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Mitec Telecom Inc.

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