RuggedCom reports 59% revenue growth with continued strong margins and profitability for Q1 fiscal 2009



    
    /NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
    THE U.S./

    (All dollar amounts are in US dollars)

    Highlights from the Quarter:
      -  59% increase in Revenue year over year
      -  49% increase in Purchase Orders year over year
      -  79% increase in Gross Margin year over year
      -  951% increase in Net Income year over year
      -  Added 93 new customers, up 21% year over year
    

    WOODBRIDGE, ON, Aug. 7 /CNW/ - RuggedCom Inc. ("RuggedCom") (TSX:RCM), a
leading provider of rugged communications networking solutions designed for
mission-critical applications in harsh environments, today announced its
financial results for the first quarter of fiscal 2009, ended June 30, 2008.
    "More than one year since the successful completion of our initial public
offering, the Company continues to deliver record revenues, solid gross
margins and terrific bottom line performance," said Marzio Pozzuoli, President
and Chief Executive Officer.

    First Quarter Results

    Total revenue for the quarter was $12.8 million, representing the
Company's 16th consecutive record quarter. Revenue increased 59% from the
comparable quarter of a year ago. Revenue growth was primarily driven by
increased sales in the electric power market, which comprised 66% of the
Company's total revenue, and which grew 70% over the same quarter last year.
    Customer purchase orders totaled $12.9 million for the quarter,
representing an increase of 49% over the same quarter last year.
    Gross margin for the quarter was $7.9 million, an increase of 79% over
the comparable period last year. On a percentage basis, first quarter gross
margin was 61.7%, a significant increase of 7.1 percentage points over a gross
margin of 54.6% for the same period last year. The increase was due to ongoing
efforts to reduce product unit costs in combination with favourable product
and customer mix.
    First quarter net income was $1.7 million, representing the Company's
13th consecutive quarter of profitability. This represents a significant
increase over net income of $0.2 million in the first quarter last year. The
increase was mainly due to a combination of revenue growth in addition to the
significant increase in gross margin percentage. In addition, the Company
recorded $0.4 million of interest income for the quarter compared to
$0.1 million of interest expense in the same quarter last year. The Company
also recorded a provision for income taxes of $1.0 million with an effective
tax rate of 36.9%. This compares to $0.2 million income tax expense in the
same period last year.
    First quarter earnings per basic share were $0.15 compared to $0.03 for
the same quarter last year while earnings per diluted share were $0.14
compared to $0.02 for the same quarter last year.
    The Company added 93 new customers in the quarter, an increase of 21%
over the same quarter last year.

    
    Conference Call and Webcast
    ---------------------------
    

    Management will host a conference call at 8:30 a.m. (ET) on Friday,
August 8, 2008. Listeners may attend the conference call by dialing
416-644-3429 or 1-800-587-1893. The live audio webcast can be accessed at
RuggedCom's web site at www.RuggedCom.com. The webcast will also be archived
on the site. A taped rebroadcast will be available to listeners following the
call until 11:59 PM (ET) on August 15, 2008. To access the rebroadcast, please
call 416-640-1917 or 1-877-289-8525 and enter passcode 21278221 followed by
the number sign.

    
    About RuggedCom Inc.
    --------------------
    

    RuggedCom is a leading provider of rugged communications networking
solutions designed for mission-critical applications in harsh environments.
RuggedCom's technology solutions include Ethernet switches, network routers,
wireless devices, serial servers, media converters, software and professional
services. RuggedCom's products are designed for use in harsh environments such
as those found in electrical power substations and "Smart Grids", intelligent
transportation systems, industrial process control and military applications.
For further information, please visit www.RuggedCom.com.
    The unaudited consolidated interim financial statements and management's
discussion and analysis of the results of operations and financial condition
for the three month periods ended June 30, 2007 and June 30, 2008 can be found
under the Company's profile at www.sedar.com. They can also be found in the
Investor Relations section of the Company's website at www.RuggedCom.com.


    
                               RuggedCom Inc.
                  CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                       1st Quarter ended June 30, 2008



                               RuggedCom Inc.
                         CONSOLIDATED BALANCE SHEETS
                   (in thousands of United States dollars)

                                                         June 30,   March 31,
                                                            2008        2008
                                                      (unaudited)   (audited)
                                                               $           $
                                                               -           -
    Assets
    Current
    Cash and cash equivalents  (note 4)                    8,637       8,037
    Short term investments (note 4)                       34,422      34,194
    Accounts receivable (note 5)                           6,972       6,602
    Prepaid expenses and other                             2,908       2,188
    Inventories (note 6)                                   4,339       3,446
    Income taxes recoverable                                   -         166
    Future income taxes                                      593         579
                                                     ------------------------

                                                          57,871      55,212
    Future income taxes                                      731         737
    Property and equipment                                 2,231       2,022
    Other assets                                             285         239
                                                     ------------------------

                                                          61,118      58,210
                                                     ------------------------
                                                     ------------------------
    Liabilities
    Current
    Accounts payable and accrued liabilities               4,711       4,196
    Current portion of warranty liability                    659         569
    Income taxes payable                                      76           -
    Current portion of obligations under
     capital lease                                           254         269
                                                     ------------------------

                                                           5,700       5,034
    Warranty                                                 522         504
    Obligations under capital lease                          162         213
    Leasehold inducements                                     31          39
                                                     ------------------------

                                                           6,415       5,790
                                                     ------------------------
    Shareholders' Equity
    Capital stock (note 7)                                46,487      46,384
    Contributed surplus (note 8)                             810       1,344

    Accumulated other comprehensive income (note 9)        2,349       2,018
    Retained earnings                                      5,057       3,334
                                                     ------------------------
                                                           7,406       5,352
                                                     ------------------------

                                                          54,703      53,080
                                                     ------------------------

                                                          61,118      58,870
                                                     ------------------------
                                                     ------------------------

    Contingent liabilities (note 10)
    See accompanying notes to consolidated financial statements.



                               RuggedCom Inc.
     CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT)
     (in thousands of United States dollars except per share information)
                                 (unaudited)

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007
                                                               $           $
                                                               -           -

    Revenue                                               12,751       8,031
    Cost of goods sold                                     4,883       3,643
                                                     ------------------------

    Gross margin                                           7,868       4,388
                                                     ------------------------
    Operating expenses
    Research and development - net of investment
     tax credits of $95 (2007 -$69)                        1,111         702
    Sales and marketing                                    2,564       1,741
    General and administrative                             1,651       1,237
    Amortization                                             259         197
                                                     ------------------------

                                                           5,585       3,877
                                                     ------------------------

    Operating income                                       2,283         511
    Interest income (expense)                                446        (111)
                                                     ------------------------

    Income before income taxes                             2,729         400
                                                     ------------------------

    Income taxes (note 15)
    Current                                                1,005         251
    Future                                                     1         (15)
                                                     ------------------------

                                                           1,006         236
                                                     ------------------------

    Net income for the period                              1,723         164
                                                     ------------------------

    Retained earning (deficit) - Beginning of period       3,334      (1,530)
                                                     ------------------------

    Retained earnings (deficit) - End of period            5,057      (1,366)
                                                     ------------------------
                                                     ------------------------
    Net earnings per share (note 11)
    Basic                                            $      0.15  $     0.03
    Diluted                                          $      0.14  $     0.02

    Basic weighted average number of common
     shares outstanding                               11,719,623   5,926,776
    Diluted weighted average number of common
     shares outstanding                               12,280,710   7,215,243

    See accompanying notes to consolidated financial statements.



                               RuggedCom Inc.
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   (in thousands of United States dollars)
                                 (unaudited)

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007
                                                               $           $
                                                               -           -

    Net income for the period                              1,723         164
    Foreign currency translation gain                        331         569
                                                     ------------------------
    Comprehensive income                                   2,054         733
                                                     ------------------------
                                                     ------------------------



                               RuggedCom Inc.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                   (in thousands of United States dollars)
                                 (unaudited)

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007
                                                               $           $
                                                               -           -

    Cash provided by (used in)
    Operating activities
    Net income for the period                              1,723         164
    Non-cash items
      Amortization of property and equipment                 244         155
      Amortization of other assets                            15          42
      Gain on disposal of property and equipment               -           5
      Future income taxes                                      1         (15)
      Accretion and cumulative dividends on
       preferred shares                                        -         148
      Stock based compensation                               172         100
      Warranty                                               102          69
      Leasehold inducements                                   (8)          1
      Net change in non-cash working capital
       (note 14)                                          (1,183)       (326)
                                                     ------------------------

                                                           1,066         343
                                                     ------------------------
    Investing activities
    Additions to property and equipment                     (441)       (122)
    Additions to other assets                                (59)        (16)
                                                     ------------------------

                                                            (500)       (138)
                                                     ------------------------
    Financing activities
    Repayment of obligations under capital lease             (70)        (56)
    Issuance of common shares                                 57      34,314
    Share issuance costs                                       -      (2,420)
                                                     ------------------------

                                                             (13)     31,838
                                                     ------------------------

    Effect of exchange rates on cash                          47         466
                                                     ------------------------

    Increase in cash and cash equivalents during
     the period                                              600      32,509
    Cash and cash equivalents - Beginning of period        8,037       3,316
                                                     ------------------------

    Cash and cash equivalents - End of period
     (note 14b)                                            8,637      35,825
                                                     ------------------------
                                                     ------------------------



                               RuggedCom Inc.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (In thousands of United States dollars except for "Number of
                       Shares" and "Per share amounts")
                                 (unaudited)

    1.  THE COMPANY

    RuggedCom Inc. (the Company) was incorporated under the provisions of the
    Business Corporations Act (Ontario) on February 22, 2001. The Company
    designs and manufactures industrial strength network hardware.

    2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The accompanying unaudited interim consolidated financial statements have
    been prepared in accordance with Canadian generally accepted accounting
    principles for interim financial statements and, accordingly, certain
    disclosures normally included in annual consolidated financial statements
    prepared in accordance with Canadian generally accepted accounting
    principles are not provided. These consolidated financial statements have
    been prepared following accounting principles consistent with those used
    in the annual audited consolidated financial statements and should be
    read in conjunction with the annual audited consolidated financial
    statements of the Company for the year ended March 31, 2008, except as
    disclosed in note 3. The results of the operations for the interim period
    are not necessarily indicative of the results of operations for any other
    interim period or a full fiscal period.

    New accounting pronouncements

    The Canadian Institute of Chartered Accountants ("CICA") has issued
    Section 3064, Goodwill and Intangible Assets to replace Section 3062,
    Goodwill and Intangible Assets and section 3450 Research and Development
    Costs. It establishes standards for the recognition, measurement, and
    disclosure of Goodwill and Intangible Assets to converge with
    international financial reporting. This standard is effective for fiscal
    years beginning on or after October 1, 2008 and will be adopted by the
    Company effective April 1, 2009. The Company is in the process of
    evaluating the impact of the adoption of this standard on its financial
    statements.

    International Financial Reporting Standards

    In February 2008, The Canadian Accounting Standards Board confirmed that
    International Financial Reporting Standards will replace Canada's current
    generally accepted accounting principles for publicly accountable
    profit-oriented enterprises effective January 1, 2011. The Company is
    presently considering the effect these standards will have on its
    financial statements.

    3.  ADOPTION OF NEW ACCOUNTING STANDARDS

    Inventories

    Effective April 1, 2008, the Company has adopted the new recommendations
    from the Canadian Institute of Chartered Accountants ("CICA") Handbook
    Section 3031, Inventories. The new standard clarifies the definition of
    "cost" to include all costs of purchase, costs of conversion and other
    costs incurred in bringing the inventories to their present location and
    condition. As a result, companies are required to systematically allocate
    fixed and variable production overheads that are incurred in converting
    materials into finished goods. The allocation of fixed production
    overheads is based on normal production capacity of the production
    facilities. In addition, the standard requires companies to assess the
    recoverability of inventory costs in comparison to net realizable value.
    Declines in replacement cost below carrying values for raw material
    inventories do not require write downs if the finished goods in which
    they will be incorporated are expected to be sold at or above cost. The
    adoption of this standard did not result in a change from the Company's
    existing policy.

    Capital Disclosures

    Effective April 1, 2008, the Company has adopted CICA Handbook Section
    1535, Capital Disclosures. This new guidance establishes standards for
    disclosing information about an entity's capital and how it is managed.
    This section requires the disclosure of an entity's objectives, policies
    and processes for managing capital and information regarding an entity's
    compliance or non-compliance with any capital requirements. This standard
    affects disclosure only. Refer to note 16, "Capital Disclosures".

    Financial Instruments

    Effective April 1, 2008, the Company has adopted CICA Handbook Sections
    3862, Financial Instruments: Disclosure, and 3863, Financial Instruments:
    Presentation. These new standards establish additional presentation and
    disclosure requirements including the significance of financial
    instruments to the Company's position and performance, discussion
    regarding the nature and extent of risks surrounding the Company's
    financial instruments. This standard affects disclosure only. Refer to
    note 17, "Financial Instruments".

    4.  REVOLVING DEMAND FACILITY

    The Company has a $1,000 Canadian dollar revolving demand facility with a
    major Canadian financial institution. Funds drawn against the facility
    bear interest at prime rate. The bank has a first ranking on $1,000
    Canadian of term deposits and bank balances. As at June 30, 2008, there
    was no balance drawn against the facility.

    5.  ACCOUNTS RECEIVABLE

                                                         June 30,   March 31,
                                                            2008        2008
                                                               $           $
                                                               -           -

    Trade receivable                                       7,008       6,659
    Allowance for doubtful accounts                          (36)        (57)
                                                     ------------------------
                                                           6,972       6,602
                                                     ------------------------
                                                     ------------------------

    6.  INVENTORIES

                                                         June 30,   March 31,
                                                            2008        2008
                                                               $           $
                                                     ------------------------
    Raw materials                                          3,819       3,371
    Finished goods                                           520          75
                                                     ------------------------
                                                           4,339       3,446
                                                     ------------------------
                                                     ------------------------

    Included in cost of sales is $74 (2007 - $68) recognized as an expense in
    the period as a provision for the write-down of any losses of
    inventories.

    7.  CAPITAL STOCK

    Authorized
      Unlimited number of Class A Shares
      Unlimited number of common shares

    Issued                                               June 30,   March 31,
                                                            2008        2008
                                                               $           $
                                                               -           -
    11,738,380 (March 31, 2008 - 11,717,268)
     common shares                                        46,487      46,384


                                                          Number      Amount
                                                       of shares           $
                                                       ---------           -

    Balance, March 31, 2008                           11,717,268      46,384
    Issued for options exercised (a)                      21,112         103
                                                     ------------------------
    Balance, June 30, 2008                            11,738,380      46,487
                                                     ------------------------
                                                     ------------------------

    (a) Common shares issued for options vested and exercised in the period
        were 21,112 at a weighted average share price of $2.74 ($2.76
        Canadian).

    8.  CONTRIBUTED SURPLUS

    The following table presents the reconciliation of contributed surplus:

                                                            2008        2007
                                                               $           $
                                                               -           -
    Balance, March 31                                        684       1,344
      Stock based compensation expense                       172         100
      Conversion of preferred shares                           -        (798)
      Stock options exercised                                (46)       (113)
                                                     ------------------------
    Balance, June 30                                         810         533
                                                     ------------------------
                                                     ------------------------

    9.  ACCUMULATED OTHER COMPREHENSIVE INCOME

    The following table presents the reconciliation of accumulated other
    comprehensive income:

                                                            2008        2007
                                                               $           $
                                                               -           -
    Balance, March 31                                      2,018         (54)
    Unrealized foreign currency gain for the period          331         569
                                                     ------------------------
    Balance, June 30                                       2,349         515
                                                     ------------------------
                                                     ------------------------

    10. CONTINGENT LIABILITIES

    The Company has been named in several lawsuits. In management's view,
    these claims are without merit and should not have a material adverse
    effect on the financial position of the Company. Although no assurances
    can be made as to the ultimate outcome, no provision has been made for a
    loss in these consolidated financial statements. Losses, if any, will be
    recorded in the consolidated statement of earnings and retained earnings
    (deficit), and comprehensive income in the year such losses are
    determinable.

    11. EARNINGS PER COMMON SHARE

    The following is a reconciliation of basic and diluted earnings per
    common share:

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007

    Net income and dilutive net income attributable
     to common shareholders                                1,723         164
                                                     ------------------------

    Common shares outstanding - beginning of period   11,717,268   5,345,717
    Weighted average number of common shares issued
     in the period                                         2,355     581,059
                                                     ------------------------
    Weighted average number of common shares          11,719,623   5,926,776
    Effect of dilutive securities and stock options
     and warrants                                        561,087   1,288,467
                                                     ------------------------
    Weighted average diluted common shares
     outstanding - end of period                      12,280,710   7,215,243
                                                     ------------------------
                                                     ------------------------

    In the prior period the Class A Shares were not considered in calculating
    the dilutive earnings per share because they had an anti-dilutive effect.

    12. SEGMENTED INFORMATION

    The Company manages its operations and determines its sales segments on a
    geographic and industry basis.

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007
    Sales by region                                            $           $
                                                               -           -

    North America                                          6,614       3,478
    Latin America                                            595         602
    Asia Pacific                                           2,113       1,051
    Europe, Middle East and Africa                         3,429       2,900
                                                     ------------------------
    Total                                                 12,751       8,031
                                                     ------------------------
                                                     ------------------------


                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007
    Sales by industry                                          $           $
                                                               -           -

    Electric Power (Utilities)                             8,434       4,971
    Transportation Systems                                 2,230       1,325
    Industrial Processes                                   1,367         992
    Military                                                 680         621
    Other                                                     40         122
                                                     ------------------------
    Total                                                 12,751       8,031
                                                     ------------------------
                                                     ------------------------


    The following table details our sales allocated by region among countries
    exceeding 10%:

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007

    Canada                                                11.80%       7.70%
    United States of America                              40.00%      35.60%

    All material assets are held in Canada.

    13. ECONOMIC DEPENDENCY AND CONCENTRATION OF CREDIT RISK

    In the three month period ended June 30, 2008, the Company had sales to
    two customers which accounted for 21% of total sales (2007 - 26%). These
    two customers represent 19% (2007 - 35%) of the accounts receivable.

    14. SUPPLEMENTAL CASH FLOW INFORMATION

    (a) Net change in non-cash working capital

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007
                                                               $           $
                                                               -           -

    Accounts receivable                                     (330)       (197)
    Prepaid expenses and other                              (712)         63
    Inventories                                             (878)       (498)
    Accounts payable and accrued liabilities                 492       1,077
    Income taxes payable                                     245        (771)
                                                     ------------------------
                                                          (1,183)       (326)
                                                     ------------------------
                                                     ------------------------

    (b) Cash and cash equivalents

                                                         June 30,    June 30,
                                                            2008        2007
                                                               $           $
                                                               -           -

    Cash                                                   3,340       1,505
    Cash equivalents                                       5,297      34,320
                                                     ------------------------
                                                           8,637      35,825
                                                     ------------------------
                                                     ------------------------

    (c) Supplemental disclosures

    Interest paid                                    $        16 $        22
    Income taxes paid                                $       653 $       951

    15. INCOME TAXES

                                                         3 month     3 month
                                                          period      period
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2008        2007
                                                               $           $
                                                               -           -

    Income before income taxes                             2,729         400
                                                     ------------------------

    Tax at statutory rate (34.5% (2007 - 35.5%))             941         143
    Manufacturing and processing deduction                   (69)          -
    Permanent differences                                     63          95
    Effect of rate changes                                    67           -
    Other                                                      4          (2)
                                                     ------------------------
                                                           1,006         236
                                                     ------------------------
                                                     ------------------------

    16. CAPITAL DISCLOSURES

    In the management of capital, the Company includes shareholders' equity,
    excluding accumulated other comprehensive income. The Company manages its
    capital to ensure that financial flexibility is present to increase
    shareholder value through organic growth and selective acquisitions, as
    well as to allow the Company to respond to changes in economic or
    marketplace conditions. At this time the Company is not utilizing its
    debt facility as part of its capital management program nor has it paid
    dividends to its shareholders. The Company is not subject to any
    externally imposed capital requirements. There were no changes in the
    Company's approach to capital management during the period.

    17. FINANCIAL INSTRUMENTS

    Under Canadian generally accepted accounting principles, financial
    instruments are classified into one of the following categories: held for
    trading, held-to-maturity, available-for-sale, loans and receivables and
    other financial liabilities. The following table summarizes information
    regarding the carrying values of the Company's financial instruments.

    Classification                                       June 30,   March 31,
                                                            2008        2008
                                                               $           $
                                                               -           -
    Held to maturity(1)                                   39,719      40,690
    Loans and receivables(2)                               6,972       6,602
    Other financial liabilities(3)                         4,711       4,196

    (1) Includes cash equivalents and short term investments
    (2) Includes accounts receivable
    (3) Includes accounts payable and accrued liabilities

    Fair value
    ----------

    The carrying value of cash equivalents, short term investments, accounts
    receivable and accounts payable approximates their fair values due to the
    immediate or short-term maturity of these financial instruments.

    Interest rate risk
    ------------------

    The Company is exposed to interest rate risk arising from fluctuations in
    interest rates on its cash equivalents and short-term investments. The
    Company is also exposed to interest rate fluctuations with respect to the
    use of its bank revolving credit facility which bears interest at
    floating rates. Management does not believe the impact from the interest
    rate risk would be significant. Recognized interest income for the
    Company's cash equivalents and short-term investments for the three month
    period ended June 30, 2008 was $461 (2007 - $60).

    Credit risk
    -----------

    Financial instruments that subject the Company to concentrations of
    credit risk principally consist of cash equivalents, short-term
    investments and accounts receivable.

    The Company minimizes the credit risk of cash equivalents and short-term
    investments by depositing with only reputable financial institutions and
    investing only in securities that meet minimum credit ratings as
    stipulated by the Company's investment policy.

    Credit risk associated with accounts receivable is minimized by the
    Company's program of credit evaluations of customers with limits on the
    amount of credit extended. Credit risk is further minimized through the
    large diversified customer base, which is engaged in various industry
    segments and geographical regions as outlined in note 12. These specific
    industry segments and geographical regions may be affected by economic
    factors, which may impact accounts receivable. Management does not
    believe that any single industry segment or geographical region
    represents significant credit risk. Provisions against losses from bad
    debts are estimated according to credit risk, historical trends and other
    information. Credit risk concentration is disclosed in note 13. Credit
    terms with customers normally range between 30 to 90 days. As at June 30,
    2008, $765 was over 90 days and of this amount, $36 was allowed for and
    $676 was collected during the month after the period end. None of the
    amounts outstanding have been challenged by the customers and the Company
    continues to conduct business with them. Accordingly, management has no
    reason to believe that this balance is not fully collectible in the
    future.

    Currency risk
    -------------

    The Company enters into transactions in multiple currencies and is
    subject to gains and losses due to fluctuations between those currencies.
    A substantial portion of the Company's revenue is earned in US dollars,
    but a substantial portion of its operating expenses are incurred in
    Canadian dollars. Fluctuations in the exchange rate between the US dollar
    and other currencies, such as the Canadian dollar, may have a material
    adverse effect on the Company's business, financial condition and
    operating results. The Company intends to continue to expand operations
    internationally so it may be subject to additional gains and losses
    against additional currencies. The Company does not currently have a
    foreign exchange hedging program in place.

    If the Canadian dollar had depreciated 5 percent against the United
    States dollar at June 30, 2008, with all other variables held constant,
    the impact of the foreign currency change on our United States
    denominated financial instruments would lead to an additional after tax
    net income of $91 for the three months ended June 30, 2008. If the
    Canadian dollar had appreciated 5 percent against the United States
    dollar at June 30, 2008, with all other variables held constant, the
    impact of the foreign currency change on our United States denominated
    financial instruments would lead to a decrease of after tax net income of
    $91 for the three months ended June 30, 2008. For the three month period
    ended June 30, 2008, general and administrative expenses included a
    foreign exchange loss of $191 (2007 - $57).

    Liquidity risk
    --------------

    Liquidity risk is the risk that the Company will not be able to meet its
    financial obligations as they fall due. The Company currently settles its
    financial obligations out of cash and cash equivalents. The ability to do
    this relies on the Company collecting its accounts receivables in a
    timely manner and by maintaining sufficient cash and cash equivalents in
    excess of anticipated needs.
    





For further information:

For further information: Roy Dalton, Chief Financial Officer, RuggedCom
Inc., Tel: (905) 856-5288, Email: Investor@RuggedCom.com

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