Redline Reports Continued WiMAX Revenue Growth in Q3 2007



    /NOT FOR DISTRIBUTION IN THE UNITED STATES/
    All figures in U.S. Dollars unless specified

    Company records 85% year-on-year growth of its WiMAX and broadband
    wireless sales

    TORONTO, Nov. 13 /CNW/ - Redline Communications Group Inc. ("RCG") (TSX
and AIM: RDL), a leading provider of WiMAX and wireless broadband solutions,
today announced results for Redline Communications, Inc. ("RCI"), for the
three- and nine- month periods ended September 30, 2007.
    As a result of Redline's corporate reorganization, RCG became the parent
company of the AIM-listed RCI. The reorganization was completed immediately
prior to the listing of RCG on the Toronto Stock Exchange and the AIM market
of the London Stock Exchange plc on October 25, 2007.

    
    Financial Highlights

    -   Revenue of $13.7 million in Q3 2007, an increase of 85% over Q3 2006
        revenue of $7.4 million
    -   WiMAX Forum Certified(TM) RedMAX(TM) product revenue of $7.8 million
        or 57% of total revenue for the quarter, an increase of 310% over
        Q3 2006 RedMAX revenue of $1.9 million
    -   Gross margin of 37% or $5.1 million, compared to 29% or $2.1 million
        for the same period last year, an increase of approximately 139% in
        gross margin dollars year over year

    Operational Highlights

    -   Successfully completed public offering on the Toronto Stock Exchange
        on October 25, 2007, raising $30 million (CDN) from treasury
    -   Increased to 44 commercial, revenue-generating WiMAX networks from
        38 at the end of Q2 2007 and 18 at the end of Q3 2006
    -   Recognized among the Best of WiMAX World award recipients for
        technology leadership for Redline Management Suite software
    -   Completed several live public demonstrations of our RedMAX 4C at
        major industry events including Gitex in Dubai, WiMAX World in
        Chicago, as well as the recent WiMAX PlugFest and WiMAX Showcase in
        Taipei
    -   Generated repeat orders from 17 existing RedMAX customers in Q3 to
        support WiMAX network expansions
    -   Ranked among the fastest growing companies in the Deloitte Canadian
        Technology Fast 50, Deloitte North American Technology Fast 500 and
        the inaugural Deloitte Wireless Fast 50 awards program
    -   Expanded the Redline Ecosystem Verification ('REV') program to
        include interoperability testing with Siemens WiMAX devices as well
        as with Wichorus on its ASN gateway development activities
    

    "We have made solid progress in Q3, including strong revenue growth,
gross margin improvement and the successful offering on the Toronto Stock
Exchange. With the proceeds accelerating the development and launch of our
Mobile WiMAX platform coupled with excellent new business momentum, we believe
we are on track with our guidance for 2007," said Majed Sifri, President and
Chief Executive Officer.
    "We are also maintaining momentum with our customers, increasing to more
than 130 paid trials and deployments of our RedMAX products, with 44 of our
carrier customers now delivering revenue generating services and placing
additional orders expanding their RedMAX systems," added Sifri. "This is
significant in that it has increased the pool of customers from which we
generate consistent recurring revenues."

    Financial Review

    In the third quarter of 2007, Redline's revenue reached $13.7 million, an
increase of 85% from $7.4 million in Q3 2006 and in line with Q2 2007 revenue
of $14.1 million. The majority of the revenue growth came from Redline's WiMAX
product line, RedMAX(TM), which now accounts for 57% of total revenue versus
26% in Q3 2006.
    Gross margins improved to 37%, compared to 33% in Q2 2007 and 29% in Q3
2006, due to the significant growth in revenue and improved operational and
manufacturing efficiencies. Higher revenues also led to a decrease in the net
loss which was $3.8 million in Q3 2007 versus $5.0 million in Q3 2006.

    Chief Executive Officer Review

    Redline is maintaining a leading position in the rapidly growing WiMAX
marketplace. The Company is focused on building a profitable business that
delivers wireless broadband products that enable carriers and individuals to
meet their communications requirements. Redline continues to increase its
presence in key emerging markets, including the Middle East and Latin America
and today counts among its customers more than 20 of the world's top 100
telecommunications service providers.
    During the third quarter of 2007, Redline made significant progress in
the following key areas:

    
        Converting RedMAX trials into commercial deployments:

        Building on strong WiMAX returns on investment, there are now
        44 carriers generating revenue from their RedMAX deployments,
        compared with 38 at the end of Q2 2007, and 18 at the end of Q3 2006.
        Many of these carriers are now also beginning to aggressively expand
        their networks to potentially target more subscribers, resulting in
        consistent recurring revenue from our growing customer base.

        Scaling resources to support the increased number of deployments of
        its WiMAX and broadband wireless solutions:

        Redline has increased the number of global reseller and deployment
        partners to 140 from 100 in December 2006. Redline's deployment
        partners now include several global systems integrators with
        established track records of planning, installing and managing
        carrier networks

        Continued focus on emerging markets:

        Redline has maintained its presence in high-growth international
        markets. In Q3, Redline added new RedMAX deployments and expansions
        in each of its regional markets, including major new networks as well
        as network expansions in Paraguay, Brazil, Egypt, Lebanon, and Gabon.

        Maintaining technology leadership:

        Redline is among the leaders in the development of Mobile WiMAX
        products, as recently demonstrated by its successful participation at
        the recent WiMAX Forum Plugfest in Taiwan. The company expects to be
        among the first to complete WiMAX Forum Certification for the
        802.16e-2005 profile for Mobile WiMAX.
    

    Successful dual listing on TSX

    Redline successfully completed a public offering on the Toronto Stock
Exchange raising CDN$30 million from treasury. The issue was oversubscribed
and attracted strong demand from both North American and European
institutions. Redline will use the proceeds of the offer towards its
geographical expansion and maintaining a leading position within the WiMAX
arena.

    Outlook

    Redline remains well positioned for continued growth on two key fronts.
New customers have begun aggressively rolling out commercially-operating
RedMAX networks, whilst our existing customer base continues to upgrade their
networks to meet consumer demands for WiMAX services. The Company expects to
begin early deployments of its RedMAX 4C family of Mobile WiMAX products this
year, which will enable Redline to serve more carriers in more global markets.
Due to this positive momentum, the Company believes it remains on track to
meet revenue guidance of between $31 million and $33 million for the second
half of 2007 and attain revenue growth in excess of 50% during 2008.

    Investor Conference Call

    Redline's Q3 2007 conference call will be held on Tuesday, November 13 at
8:30 am EST (1:30 pm GMT). Participants can join the conference call by
dialing: 416-644-3428, 1-800-591-7539 (Canada) or 00 800 2288 3501 (U.K.). To
access the live webcast of the Redline conference call, visit the 'Investors'
section of Redline's website www.redlinecommunications.com or www.newswire.ca
(Windows MediaPlayer(R) required). The conference call will be archived for
replay by telephone until November 20, 2007 at 416-640-1917 or 1-877-289-8525
(code 21252817 followed by the number sign) and by webcast for one year at
www.redlinecommunications.com.


    
    REDLINE COMMUNICATIONS, INC.
    Interim Consolidated Balance Sheets
    (Expressed in U.S. dollars)

    -------------------------------------------------------------------------
                                                  September 30,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------
                                                    (Unaudited)
    Assets

    Current assets:
      Cash                                        $  4,689,552  $ 17,985,391
      Restricted cash                                    8,033         8,033
      Accounts receivable                           18,107,269    12,359,585
      Other receivables                                553,465       468,028
      Inventories                                    9,700,669     9,087,367
      Prepaid expenses                                 626,937       352,358
      -----------------------------------------------------------------------
                                                    33,685,925    40,260,762

    Property, plant and equipment                    1,398,332     1,166,377

    Other assets                                       105,083       105,842

    -------------------------------------------------------------------------
                                                  $ 35,189,340  $ 41,532,981
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities    $  8,776,308  $  9,221,150
      Deferred revenue                               3,072,704     2,362,612
      Current portion of capital lease obligations     245,673       215,639
      Current portion of loan payable                1,724,382     1,244,528
      -----------------------------------------------------------------------
                                                    13,819,067    13,043,929

    Loan payable                                     1,943,078     3,255,472

    Capital lease obligations                           93,438       151,653

    Shareholders' equity:
      Share capital                                100,331,156    97,746,833
      Share purchase loan                             (413,408)     (413,408)
      Contributed surplus                            4,566,317     3,395,260
      Deficit                                      (85,461,776)  (75,958,226)
      Accumulated other comprehensive income           311,468       311,468
    -------------------------------------------------------------------------
                                                    19,333,757    25,081,927

    -------------------------------------------------------------------------
                                                  $ 35,189,340  $ 41,532,981
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    REDLINE COMMUNICATIONS, INC.
    Interim Consolidated Statements of Operations and Deficit
    (Expressed in U.S. dollars)

    -------------------------------------------------------------------------
                              Three months ended           Nine months ended
                                 September 30,               September 30,
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
                                  (Unaudited)                 (Unaudited)

    Revenue:
      Product         $ 12,615,596  $  6,700,759  $ 36,644,374 $  21,861,475
      Maintenance        1,046,205       681,458     2,783,379     1,892,802
      -----------------------------------------------------------------------
                        13,661,801     7,382,217    39,427,753    23,754,277

    Cost of revenue(1)   8,554,735     5,242,842    25,058,980    15,394,673
    -------------------------------------------------------------------------

    Gross margin         5,107,066     2,139,375    14,368,773     8,359,604

    Expenses:
      Research and
       development(1)    2,471,877     2,503,425     6,996,051     6,840,924
      Finance and
       administration(1) 2,036,762       981,415     4,417,378     3,163,299
      Sales and
       marketing(1)      3,740,085     3,307,304    11,007,764     9,888,293
      -----------------------------------------------------------------------
                         8,248,724     6,792,144    22,421,193    19,892,516
    -------------------------------------------------------------------------

    Loss before the
     undernoted         (3,141,658)   (4,652,769)   (8,052,420)  (11,532,912)

    Other expenses
     (income):
      Interest and
       other               101,001           (13)      216,401       (23,590)
      Foreign exchange
       loss (gain)         121,540        (2,989)      293,786        86,357
      Amortization of
       property, plant
       and equipment       392,779       304,069       883,277       729,384
      -----------------------------------------------------------------------
                           615,320       301,067     1,393,464       792,151
    -------------------------------------------------------------------------

    Loss before
     income taxes       (3,756,978)   (4,953,836)   (9,445,884)  (12,325,063)

    Income taxes             6,784        18,482        57,666        74,138
    -------------------------------------------------------------------------

    Loss for the period (3,763,762)   (4,972,318)   (9,503,550)  (12,399,201)

    Deficit, beginning
     of period         (81,698,014)  (68,210,812)  (75,958,226)  (60,783,929)

    -------------------------------------------------------------------------
    Deficit, end of
     period           $(85,461,776) $(73,183,130) $(85,461,776) $(73,183,130)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share:
      Basic and
       diluted        $      (0.09) $      (2.96) $      (0.22) $     (10.13)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of common
     shares used in
     basic and diluted
     loss per share     43,295,760     1,681,500    43,169,740     1,224,357

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Includes
        stock-based
        compensation
        expense as
        follows:

    Cost of revenue   $     31,548  $     46,556  $     94,674  $    187,836
    Expenses:
      Research and
       development         117,838        86,341       334,501       348,356
      Finance and
       administration       90,083        34,358       268,639       593,776
      Sales and
       marketing           176,984       130,990       473,243       528,491

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Non-GAAP financial measures

    This press release contains non-GAAP financial measures, including net
income and earnings per share for the first half of fiscal 2007 excluding the
impact of stock compensation charges. Redline management believes that these
non-GAAP financial measures, when considered together with the GAAP financial
measures, provide information that is useful to investors in understanding
period-over-period operating results separate and apart from items that may,
or could, have a disproportionate impact on results in any particular period.
Management also believes that these non-GAAP financial measures enhance the
ability of investors to analyze Redline business trends and to better
understand the company's performance. In addition, Redline may utilize
non-GAAP financial measures as a guide in its forecasting, budgeting, and
long-term planning process and to measure operating performance for some
management compensation purposes. Any analysis of non-GAAP financial measures
should be used only in conjunction with results presented in accordance with
GAAP.

    
                                      Three months ended September 30, 2007
                                      GAAP         Adjustment      Non GAAP
                                                   (unaudited)

    Revenue
      Product                       12,615,596                    12,615,596
      Maintenance                    1,046,205                     1,046,205
                                   ------------                  ------------
                                    13,661,801                    13,661,801
    Cost of revenue                  8,554,735    (31,548)  (a)    8,523,187
    Gross Margin                     5,107,066     31,548          5,138,614
    Expenses
      Research and development       2,471,877   (117,838)  (a)    2,354,039
      Finance and administration     2,036,762    (90,083)  (a)    1,946,679
      Sales and marketing            3,740,085   (176,984)  (a)    3,563,101
                                   ------------------------------------------
                                     8,248,724   (384,905)         7,863,819
    Loss before undernoted          (3,141,658)   416,453         (2,725,205)
    Other expenses (income)
      Interest and other               101,001                       101,001
      Foreign exchange loss (gain)     121,540                       121,540
      Amortization of property,
       plant and equipment             392,779                       392,779
                                   ------------                  ------------
                                       615,320                       615,320
    Loss before income taxes        (3,756,978)   416,453         (3,340,525)
    Income taxes                         6,784                         6,784
                                   ------------------------------------------
    Loss for the period             (3,763,762)   416,453         (3,347,309)
    Basic and diluted loss per
     share                               (0.09)                        (0.08)
    Weighted average number of
     common shares                  43,295,760                    43,295,760


                                      Three months ended September 30, 2006
                                      GAAP         Adjustment      Non GAAP
                                                   (unaudited)

    Revenue
      Product                        6,700,759                     6,700,759
      Maintenance                      681,458                       681,458
                                   ------------                  ------------
                                     7,382,217                     7,382,217
    Cost of revenue                  5,242,842    (46,556)  (a)    5,196,286
    Gross Margin                     2,139,375     46,556          2,185,931
    Expenses
      Research and development       2,503,425    (86,341)  (a)    2,417,084
      Finance and administration       981,415    (34,358)  (a)      947,057
      Sales and marketing            3,307,304   (130,990)  (a)    3,176,314
                                   ------------------------------------------
                                     6,792,144   (251,689)         6,540,455
    Loss before undernoted          (4,652,769)   298,245         (4,354,524)
    Other expenses (income)
      Interest and other                   (13)                          (13)
      Foreign exchange loss (gain)      (2,989)                       (2,989)
      Amortization of property,
       plant and equipment             304,069                       304,069
                                   ------------                  ------------
                                       301,067                       301,067
    Loss before income taxes        (4,953,836)   298,245         (4,655,591)
    Income taxes                        18,482                        18,482
                                   ------------------------------------------
    Loss for the period             (4,972,318)   298,245         (4,674,073)
    Basic and diluted loss per
     share                               (2.96)                        (2.78)
    Weighted average number of
     common shares                   1,681,500                     1,681,500

    (a) The effect of stock
        based compensation



    REDLINE COMMUNICATIONS, INC.
    Interim Consolidated Statements of Cash Flows
    (Expressed in U.S. dollars)

    -------------------------------------------------------------------------
                              Three months ended           Nine months ended
                                 September 30,               September 30,
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
                                  (Unaudited)                 (Unaudited)

    Cash provided by
     (used in):

    Operating
     activities:
      Loss for the
       period         $ (3,763,762) $ (4,972,318) $ (9,503,550) $(12,399,201)
      Items not
       affecting cash:
        Amortization
         of property,
         plant and
         equipment         392,779       304,069       883,277       729,384
        Stock-based
         compensation
         expense           416,453       298,245     1,171,057     1,658,459
      Change in non-cash
       operating working
       capital             727,954      (360,981)   (6,454,993)   (2,521,225)
      -----------------------------------------------------------------------
                        (2,226,576)   (4,730,985)  (13,904,209)  (12,532,583)

    Financing
     activities:
      Issuance of share
       capital, net of
       issuance costs       38,225       306,070     2,584,323     6,536,899
      Loan payable        (399,872)            -      (832,539)            -
      Principal payment
       of capital lease
       obligations         (50,695)      (44,326)     (216,233)     (116,011)
      -----------------------------------------------------------------------
                          (412,342)      261,744     1,535,551     6,420,888
    Investing
     activities:
      Purchase of
       property, plant
       and equipment      (375,568)     (287,659)     (927,181)     (789,002)
      Decrease in
       restricted cash           -             -             -        85,601
      -----------------------------------------------------------------------
                          (375,568)     (287,659)     (927,181)     (703,401)
    -------------------------------------------------------------------------

    Decrease in cash    (3,014,486)   (4,756,900)  (13,295,839)   (6,815,096)

    Cash, beginning
     of period           7,704,038     5,437,800    17,985,391     7,495,996

    -------------------------------------------------------------------------
    Cash, end of
     period           $  4,689,552  $    680,900  $  4,689,552  $    680,900
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash
     flow information:
      Interest paid   $    131,032  $     12,655  $    376,803  $     38,052

    Supplemental
     disclosures
     relating to
     non-cash financing
     and investing
     activities:
      Purchase of
       property, plant
       and equipment
       under capital
       leases               42,258             -       188,051        25,995

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Forward-Looking Statements

    Certain statements in this release constitute forward-looking statements
or forward-looking information within the meaning of applicable securities
laws and are made pursuant to the "safe harbour" provisions of such laws.
Statements related to potential benefits of, and demand for, Redline's
products including statements with respect to the features and benefits that
may be achieved through the use of Redline's products and the relative
position of these products vis-à-vis competitive offerings in the industry are
forward-looking statements which are subject to certain assumptions, risks and
uncertainties. These risks and uncertainties include such factors as rapid
technological changes, long uncertain sales cycles, demand for our products,
the introduction of competing technologies, meeting industry standards,
regulatory risk, dependence on key partners and resellers and other similar
factors that may cause the actual results, performance or achievements of
Redline to differ materially from the results, performance, achievements or
developments expressed or implied by such forward-looking statements. Readers
are cautioned not to place undue reliance on such statements. Redline assumes
no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.

    About Redline Communications

    Redline Communications is the leading provider of standards-based
wireless broadband solutions. Redline's RedMAX(TM) WiMAX Forum Certified(TM)
systems and award-winning RedCONNEX(TM) family of broadband wireless
infrastructure products enable service providers and other network operators
to cost-effectively deliver high-bandwidth services including voice, video and
data communications. Redline is committed to maintaining its wireless industry
leadership with the continued development of WiMAX and other advanced wireless
broadband products. With more than 75,000 installations in 80 countries, and a
global network of over 140 partners, Redline's experience and expertise helps
service providers, enterprises and government organizations roll out the
services and applications that drive their business forward. For more
information, visit www.redlinecommunications.com.

    NOTE: All registered and unregistered trademarks mentioned in this
    release are the property of their respective owners.





For further information:

For further information: Redline Communications: Tom Hearne, Chief
Financial Officer; Carolyn Anderson, Communications Director,
canderson@redlinecommunications.com, Tel: (905) 479-8344; Canaccord Adams:
Chris Bowman, Tel: +44 (0)20 7050 6500; Equicom Group: Craig Armitage, Vanessa
Beresford, carmitage@equicomgroup.com, vberesford@equicomgroup.com, (416)
815-0700; Buchanan Communications: Jeremy Garcia, James Strong,
jeremyg@buchanan.uk.com, jamess@buchanan.uk.com, Tel: +44 (0)20 7466 5000


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890