Ascalade Reports 2007 Second Quarter Financial Results



    Ascalade will hold a conference call and webcast to discuss 2007 second
    quarter financial results and operational updates on
    Friday, August 10, 2007 at 8:30 am Pacific Time (11:30 am Eastern Time).

    To participate, please dial 604-677-8677, 416-644-3414, or toll-free
    1-800-733-7560 approximately five minutes before the conference call.
    The live and archived webcast will be available on Ascalade's website at
    www.ascalade.com and can be found by following the link in the investors
    menu.

    RICHMOND, BC, Aug. 10 /CNW/ - Ascalade Communications Inc. ("Ascalade" or
"the company") (TSX: ACG) today released financial results for the three and
six months ended June 30, 2007. All results are reported in US dollars and are
prepared in accordance with Canadian generally accepted accounting principles.
    During the three months ended June 30, 2007, Ascalade generated revenue
of $21.4 million. This represents a decrease of 25% from 2006, when the
company generated record second quarter revenues of $28.4 million. The
year-over-year decline in quarterly revenue was mainly related to our VoIP
phone segment, which fell by 56%, falling from $8.7 million during the second
quarter of 2006 to $3.8 million this year. The drop was related to softness in
the instant messaging market, which slowed the sales uptake of Ascalade's VoIP
products.
    Gross profit margin for the quarter was 4.5%, down significantly from the
15.4% recorded in the same period last year. The decline was related to three
issues; an inventory write-down of $800,000 due to certain excess raw
materials that were on hand, fluctuations in the company's product mix, and
low profit margins on its cordless phone lines. During the quarter, Ascalade's
cordless phone products represented 71% of its total sales, compared to 53%
during the same period last year. Profitability on these products was low,
with intense competition, rising costs at the company's manufacturing facility
in Dongguan, China, and high proportionate volumes of its less-competitive
phones pushing margins to approximately 2%. These factors, together with a
non-cash charge of $635,000 related to the write-down of certain deferred
development costs, led to a net quarterly loss of $3.3 million ($0.16 per
share basic and diluted), compared to net earnings of $576,000 ($0.03 per
share basic and diluted) for the same period last year.
    During the six months ended June 30, 2007, Ascalade generated revenue of
$41.1 million, down by 19% from $51.1 million for the same period last year.
The decline was mainly related to intense market competition within the
cordless phone segment, which squeezed Ascalade's sales volumes and selling
prices. Gross profit margin also fell, from 14.1% during the first half of
2006 to 8.2% this year. As in the second quarter, the decrease was primarily
due to an inventory write-down of $800,000 and a higher proportionate sales
contribution of lower-margin cordless phones. Net loss for the period totaled
$4.4 million ($0.22 per share basic and diluted), and included a non-cash
charge of $635,000 relating to the write-down of certain deferred development
costs. During the first half of 2006, Ascalade recorded a net loss of $147,000
($0.01 per share basic and diluted).

    Second Quarter Highlights
    -------------------------
    During the three months ended June 30, 2007, Ascalade:

    
    -   Strengthened the senior management team with the appointment of Mr.
        Greg Allen as President. Mr. Allen will oversee every aspect of
        Ascalade's business operations, including sales, marketing, account
        management, manufacturing and product development.

    -   Continued to make progress in the construction of its new
        manufacturing facility in Qingyuan, within the Guangdong Province in
        southern China. The company remains on track to transition from its
        existing factory to the new facility during the fall of 2007.

    -   Commenced shipments of its new 2007 DECT cordless phone line, which
        offers advanced features and leading-edge industrial design.

    -   Expanded its relationship with a major European customer, configuring
        the Companion Simple(TM) VoIP phone to work with this service
        provider's exclusive Internet communication application.

    -   Progressed with the development and production of video-capable
        personal electronic devices, with initial volumes shipped.

    -   Recorded strong consecutive quarterly sales growth from its DECT
        cordless phones, with second quarter sales up by 28% over the first
        three months of the year.

    Financial highlights

    -------------------------------------------------------------------------
                      Three months ended           Six months ended
                            June 30,         %          June 30,         %
                         2007      2006   Change     2007      2006   Change
    -------------------------------------------------------------------------
    Revenues          $21,364   $28,375    (25%)  $41,138   $51,050     (19%)

    Gross margin      $   951   $ 4,368    (78%)  $ 3,376   $ 7,174     (53%)
    Gross margin %        4.5%     15.4%   (71%)      8.2%     14.1%    (42%)

    Net earnings
     (loss)           $(3,311)  $   576   (675%)  $(4,422)  $  (147) (2,908%)
    Net earnings
     (loss)
      per share
       - basic
       and diluted    $ (0.16)  $  0.03   (633%)  $ (0.22)  $ (0.01) (2,100%)

    Net cash provided
     by (used in)
     operating
     activities      $  3,853   $ 3,103     24%   $ 8,546   $ 8,199       4%

    Weighted average
     number of shares
     outstanding
     (in 000's)
      - basic          20,217    20,215            20,217    20,201
      - diluted        20,217    20,240            20,217    20,201
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    "Our second quarter financial results were very disappointing, with sales
of our VoIP products much lower than anticipated," said Dr. Edmund Ho,
Chairman, CEO and Founder of Ascalade. "Clearly our execution has not been
successful. Despite this, we continue to believe the VoIP market holds
significant opportunities. Within the instant messaging segment, our customers
are refining their marketing efforts to better target what they believe is a
large available consumer base. We are also beginning to see new markets open
up. For example, we recently began shipping our Companion(TM) Simple VoIP
handset to one of our major European customers for use with its exclusive new
Internet communication application."
    "More broadly, we are continuing to evaluate a number of strategic
opportunities," Dr. Ho continued. "With our proven design and engineering
expertise, top-tier working partnerships, strong balance sheet, and new
manufacturing facility due to come on line this fall, Ascalade is in prime
position to capitalize on a range of growth opportunities. To ensure we take
full advantage of these, Greg Allen, our new President, is leading a
comprehensive operational and strategic review of Ascalade's business. Once
complete, Greg will be responsible for implementing a clearly defined,
long-range business plan that will, ultimately, help us to maximize our
near-term potential and position us for long-term success."
    Mr. Allen's strategic review is expected to assess every aspect of
Ascalade's business including sales, marketing, customer relationships,
competition, investments and technology. In addition, Mr. Allen, who has
worked extensively with large-scale, multinational manufacturing companies,
will conduct a complete operational analysis to establish Ascalade's cost,
efficiency and profitability profile. Feedback from the company's customers
and partners is expected to play a key role in this process.
    "Performing a comprehensive review of the business will enable me to
truly understand where the company's strengths, challenges and opportunities
lie," said Mr. Allen. "That way, I can first clarify Ascalade's strategic
direction, and second, develop and execute a business plan that delivers on
our goals."
    "While I've only been with the company a short time," he continued, "I've
identified several areas of growth potential. The North American and Asian
markets, for example, are under-developed. I'm also impressed with the
company's blue chip customer base and intend to ensure we work more closely
with our existing customers to realize additional sales opportunities. I
believe that, over time, growth in both these areas will help Ascalade to
achieve two key goals - improved factory utilization and increased
profitability."

    Results from Operations

    Second Quarter Results

    Three of Ascalade's four product categories recorded revenue declines in
the second quarter of 2007, with the most significant change occurring within
the VoIP product category. The sales decrease was related to the instant
messaging sub-sector of that market, which was weaker than expected. Sales of
the company's conference phones fell from $1.5 million to $311,000 on a
year-over-year basis, as the product's single customer held sufficient
inventories during the quarter. Digital wireless baby monitor revenue also
dropped, from $3.2 million to $2.2 million. The sales decrease was related to
weakness in the US market, which offset strong demand in Europe. Revenue from
Ascalade's cordless phone products remained stable at $15.1 million, despite
ongoing competitive pressures on pricing and a higher-than-normal proportion
of older products in the company's product mix. Finally, a delay in product
readiness, together with challenges around the procurement of LCD's prevented
Ascalade from shipping significant volumes of its new multimedia personal
electronic products, as planned. Management is working hard to resolve these
issues however, we anticipate some further challenges over the coming months.
    Geographically, all sales regions showed declines in revenue contribution
during the period, with North America experiencing the most significant
decline (56%) and Europe the least (8%). Ascalade's North American revenues
are driven predominately by sales of VoIP and conference phones, both of which
were down sharply. The company's European sales, which are principally driven
by DECT cordless phone sales, were aided by steady sales in this segment.
    Gross profit totaled $951,000 for the second quarter of 2007, a decrease
of $3.4 million over the same period last year. Gross profit margin also
declined significantly, to 4.5% from 15.4%. This was related to several
factors, including a higher proportion of lower-margin cordless phone models
within the company's product mix (71% compared to 53% during Q2 2006), intense
competition within the cordless phone segment, higher manufacturing costs, and
less than optimal factory utilization. These factors pushed Ascalade's
cordless phone margins down sharply to approximately 2%, with many high-volume
versions selling at levels barely covering fixed overhead costs. In addition,
Ascalade was forced to write-down certain inventory items by approximately
$800,000, due to the low margins being achieved on certain products.
    The gross margins recorded across the company's other product lines
remained consistent with previous quarters.
    Sales, marketing and distribution expenses totaled $677,000 during the
second quarter of 2007, compared to $706,000 in Q2 2006. The decrease was due
to lower distribution costs associated with Ascalade's revenue decline.
    Research, design and development expenses totaled $266,000 for the three
months ended June 30, 2007, compared with $362,000 for the same period in
2006. In addition, Ascalade capitalized $1.5 million in design and development
costs, bringing its total investment in research and development to
$1.8 million for the second quarter. This is consistent with the same period
last year and includes an increase in Canadian dollar denominated costs, as
the Canadian dollar strengthened in the second quarter of 2007.
    Second quarter general and administrative expenses totaled $1.7 million,
compared to $1.6 million in 2006. The increase primarily resulted from costs
associated with the retention and strengthening of Ascalade's management team,
as well as an increase in Canadian dollar denominated costs, related to the
strengthening of the Canadian dollar during the period.
    As a percentage of revenue, general and administrative costs were 8.1%
for the three months ended June 30, 2007, compared to 5.5% in 2006, reflecting
lower quarterly sales.
    Depreciation and amortization expense, not included in cost of sales, was
$1.9 million for the second quarter, compared to $1.2 million recorded during
the same period last year. The increase reflects a $635,000 write-down on
certain deferred development costs.
    Interest income was $117,000, compared to the $126,000 earned during the
second quarter of 2006.
    Second quarter foreign exchange gain was $95,000, compared to a loss of
$4,000 for the three months ended June 30, 2006. This exchange gain resulted
primarily from Canadian dollar denominated balances of future tax assets.
    Income tax recovery was $139,000 for the three months ended June 30,
2007, compared to an expense of $35,000 during the same period last year. The
tax recovery resulted from recognition of the future income tax benefits
associated with currently incurred tax losses in Ascalade's foreign
operations.
    Net loss totaled $3.3 million, or $0.16 per share basic and diluted,
compared to net earnings of $576,000, or $0.03 per share basic and diluted,
for the three months ended June 30, 2006.

    Year to Date Results

    During the six months ended June 30, 2007, Ascalade's revenues decreased
by 19% to $41.1 million, down from $51.1 million in the first half of 2006.
The decrease in first-half revenue was primarily related to intense market
competition within the cordless phone segment, which put pressure on unit
sales and selling prices. While the company's cordless phone revenues
recovered in the second quarter, it was not enough to offset the sharp
declines recorded during the first quarter. Sales of Ascalade's VoIP products
also decreased, as a result of weakness in the instant messaging market, and
the company's conference phone sales, which are affected by the ordering
patterns of a single customer, were down as well. Baby monitor sales increased
slightly, with strong demand in Europe helping to offset weakness in North
American markets.
    Gross profit for the six months ended June 30, 2007 was $3.4 million, a
decrease of $3.8 million over the same period in 2006. Year-to-date gross
margins were 8.2%, compared to 14.1% in 2006. As in the second quarter, the
decline reflects a higher proportion of lower-margin cordless phone product
models (71% during the first half of 2007 compared to 53% in 2006), higher
manufacturing costs driven by increased wages at the company's factory in
Dongguan, China, intense competition within the cordless phone segment, less
than optimal factory utilization, warranty cost recoveries and inventory
write-downs.
    As a result of the low margins being achieved on certain products,
Ascalade was forced to write-down certain inventory items by approximately
$800,000. Offsetting these declines were the effects of a reduction in the
company's warranty accrual. In accordance with its accounting policy, Ascalade
estimates warranty costs based on historical experience and expectation of
future return rates and unit warranty costs. As certain of its products
recorded lower-than-previously-estimated warranty activity, the company
reduced its estimated warranty provision during the first quarter.
    First-half sales, marketing and distribution expense declined slightly to
$1.3 million, from $1.4 million in 2006, reflecting the lower sales for the
period. As a percentage of revenue, these costs represented 3.2% for the six
months ended June 30, 2007, compared to 2.8% in 2006.
    Research, design and development expenses totaled $496,000 in the first
six months of 2007, compared to $644,000 in 2006. An additional $3.1 million
in development costs were capitalized, which is consistent with the
$3.2 million capitalized in the first half of 2006. The combination of
expensed costs and capitalized costs totaled $3.6 million for the first half
of 2007, down slightly from $3.8 million in 2006. The change includes an
increase in Canadian dollar denominated costs, as the Canadian dollar
strengthened during the second quarter of 2007.
    General and administrative expenses totaled $3.3 million for the six
months ended June 30, 2007, compared to $3.0 million in 2006. As with the
second quarter, this increase resulted from costs associated with the
retention and strengthening of Ascalade's management team and an increase in
Canadian dollar denominated costs. As a percentage of revenue, general and
administrative costs were 8.0% and 5.9% in the first half of 2007 and 2006,
respectively.
    Depreciation and amortization expense, not included in cost of sales,
were $3.3 million during the six months ended June 30, 2007, which is higher
than the $2.6 million incurred in the first half of 2006. This increase
reflects a $635,000 write-down of certain deferred development costs.
    Year-to-date interest income was $280,000, compare to $293,000 in 2006.
The reduction in interest income earned is due to a slightly lower cash
position for 2007 compared to 2006.
    Ascalade recognized a foreign currency gain of $51,000 during the six
months ended June 30, 2007, compared to a loss of $31,000 in the same period
of 2006. The increase resulted primarily from Canadian dollar denominated
balances of future tax assets.
    Year-to-date income tax recovery was $303,000, compared to a recovery of
$79,000 in 2006. The tax recovery resulted from recognition of the future
income tax benefits associated with currently incurred tax losses in
Ascalade's foreign operations.
    Net loss for the first half of this year totaled $4.4 million, or $0.22
per share, basic and diluted, compared to a net loss of $147,000, or $0.01 per
share basic and diluted, in 2006.
    Other comprehensive income as at June 30, 2007 totaled approximately
$6,000, reflecting the estimated fair value of the outstanding derivative
contracts entered into during the second quarter of 2007.

    Outlook

    Moving forward, Ascalade is working hard on all fronts to improve its
financial performance. Shipments of the company's more competitive 2007
cordless phone line and its new multimedia players are expected to contribute
modestly to our sales in the second half, however, gross margins will continue
to be challenged. In the VoIP phone and baby monitor categories, Ascalade
continues to enhance its product lines, strengthen its customer relationships,
and seek new sales channels and geographic markets. In addition, construction
at the company's new manufacturing facility in Qingyuan, China, is progressing
well. Completion of the factory is expected to heighten our ability to partner
with large-scale OEM's.
    At the same time, the company's newly strengthened senior management team
is now conducting a comprehensive operational and strategic review of the
business. This process will take several months to complete and its positive
impact on Ascalade's financial performance may not be felt for some quarters
to come, as virtually every aspect of the company will come under scrutiny.
"With our proven product development and manufacturing processes, excellent
customer portfolio, strong balance sheet and new manufacturing facility coming
on line later this year, Ascalade's foundations are strong," said Mr. Allen.
"I'm confident we can build on these strengths as we introduce new ways to
grow the company's revenues, improve our business processes and enhance our
bottom line. We expect to announce some key change initiatives during the
coming months as we work to reposition the company and deliver on our goals."
    Achieving these results is not certain and involves known and unknown
risks that may cause actual results to differ materially from these
expectations. These risks and uncertainties include, among other things, risks
related to the fact that our operating results could be harmed if customer and
consumers are reluctant to adopt our products and the fact that changes in our
business could have an adverse affect on our capitalized development costs.
Other risk factors are discussed under the "Forward Looking Statements"
section of this news release.
    There can be no assurance that our expectations will prove to be correct.


    
    Ascalade Communications Inc.
    Consolidated Balance Sheets
    (Expressed in thousands of United States Dollars)
    (Unaudited)

    -------------------------------------------------------------------------
                                                        June 30, December 31,
                                                           2007         2006
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash and cash equivalents                        $ 16,967     $ 19,051
      Accounts receivable                                12,456       21,871
      Inventory                                          14,838       15,162
      Prepaid expenses                                    1,257          809
    -------------------------------------------------------------------------
                                                         45,518       56,893

    Property and equipment                               25,872       19,078
    Future income taxes                                   1,593        1,456
    Other assets                                          1,279        1,222
    Other intangible assets                               6,540        6,560
    Goodwill                                              7,497        7,497
    -------------------------------------------------------------------------
                                                       $ 88,299     $ 92,706
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities         $ 25,810     $ 25,087
      Deferred revenue                                      138          376
      Current portion of obligations under
       capital lease                                        123          161
      Due to related parties                                 99          122
    -------------------------------------------------------------------------
                                                         26,170       25,746

    Future income taxes                                       -          456
    Obligations under capital lease, net of
     current portion                                         82           40
    -------------------------------------------------------------------------
                                                             82          496
    -------------------------------------------------------------------------
                                                         26,252       26,242
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                      62,890       62,890
      Warrants                                              609          609
      Contributed surplus and other equity                   27           28
      Retained earnings / (deficit) and accumulated
       other comprehensive income                        (1,479)       2,937
    -------------------------------------------------------------------------
                                                         62,047       66,464
    -------------------------------------------------------------------------
                                                       $ 88,299     $ 92,706
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Ascalade Communications Inc.
    Consolidated Statements of Operations, Comprehensive Income (Loss) and
     Retained Earnings (Deficit)
    (Expressed in thousands of United States Dollars, except share and per
     share amounts)
    (Unaudited)

    -------------------------------------------------------------------------
                                Three months ended        Six months ended
                                     June 30,                  June 30,
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues                 $ 21,364     $ 28,375     $ 41,138     $ 51,050

    Cost of sales (including
     depreciation of $734 and
     $614 for the three
     months ended June 30,
     2007 and 2006,
     respectively and $1,437
     and $1,212 for the six
     months ended June 30,
     2007 and 2006,
     respectively)             20,413       24,007       37,762       43,876
    -------------------------------------------------------------------------
                                  951        4,368        3,376        7,174
    Expenses:
      Sales, marketing
       and distribution           677          706        1,336        1,435
      Research, design and
       product development        266          362          496          644
      General and
       administrative           1,733        1,567        3,275        3,024
      Depreciation,
       amortization and
       impairment               1,937        1,244        3,325        2,559
    -------------------------------------------------------------------------
                                4,613        3,879        8,432        7,662
    -------------------------------------------------------------------------
    Earnings (loss) before
     other expenses and
     income taxes              (3,662)         489       (5,056)        (488)

    Other expenses
     (income):
      Interest income            (117)        (126)        (280)        (293)
      Foreign exchange
       loss/(gain)                (95)           4          (51)          31
    -------------------------------------------------------------------------
                                 (212)        (122)        (331)        (262)
    -------------------------------------------------------------------------
    Earnings (loss)
     before income taxes       (3,450)         611       (4,725)        (226)

    Incomes Taxes:
      Current                      98          154          153          154
      Future                     (237)        (119)        (456)        (233)
    -------------------------------------------------------------------------
                                 (139)          35         (303)         (79)
    -------------------------------------------------------------------------

    Net earnings (loss)      $ (3,311)    $    576     $ (4,422)    $   (147)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Other Comprehensive
     Income                         6            -            6            -
    -------------------------------------------------------------------------
    Comprehensive loss       $ (3,305)    $    576     $ (4,416)    $   (147)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Retained earnings and
     accumulated other
     comprehensive income,
     beginning of period        1,826        2,061        2,937        2,784
    -------------------------------------------------------------------------
    Retained earnings/
     (deficit) and
     accumulated other
     comprehensive income,
     end of period           $ (1,479)    $  2,637     $ (1,479)    $  2,637
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss)
     per share
      - basic and diluted    $  (0.16)    $   0.03     $  (0.22)    $  (0.01)

    Weighted average number
     of shares outstanding
     (in 000's)
      - basic                  20,217       20,215       20,217       20,201
      - diluted                20,217       20,240       20,217       20,201
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Ascalade Communications Inc.
    Consolidated Statements of Cash Flows
    (Expressed in thousands of United States Dollars)
    (Unaudited)

    -------------------------------------------------------------------------
                                Three months ended        Six months ended
                                     June 30,                  June 30,
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Cash flow from operating
     activities:
      Net earnings (loss)    $ (3,311)    $    576     $ (4,422)    $   (147)
      Items not involving
       cash:
        Stock-based
         compensation             141           91          260          145
        Amortization            1,183        1,127        2,456        2,311
        Impairment of
         development costs        635            -          635            -
        Depreciation              853          731        1,671        1,460
        Foreign exchange         (137)           -         (137)           -
        Future income taxes      (237)        (119)        (456)        (233)
      Changes in operating
       assets and liabilities   4,726          697        8,539        4,663
    -------------------------------------------------------------------------
    Net cash provided by
     operating activities       3,853        3,103        8,546        8,199
    -------------------------------------------------------------------------
    Cash flow used in
     investing activities:
      Addition to design and
       product development
       costs                   (1,528)      (1,527)      (3,071)      (3,045)
      Net additions to
       equipment               (3,823)        (683)      (7,171)      (1,370)
      Deposit for land
       use rights                   -         (170)         (51)        (643)
    -------------------------------------------------------------------------
    Net cash used in
     investing activities      (5,351)      (2,380)     (10,293)      (5,058)
    -------------------------------------------------------------------------
    Cash flow from financing
     activities:
      Repayment of capital
       lease obligations          (40)         (94)         (76)        (192)
      Issuance of common
       shares, net of share
       issue costs                  -          109            -          141
      Settlement of RSU plan
       obligation                (161)        (442)        (261)        (442)
    -------------------------------------------------------------------------
    Net cash used in
     financing activities        (201)        (427)        (337)        (493)
    -------------------------------------------------------------------------
    Increase/(decrease) in
     cash and cash
     equivalents               (1,699)         296       (2,084)       2,648

    Cash and cash
     equivalents, beginning
     of period                 18,666       19,769       19,051       17,417
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period           $ 16,967     $ 20,065     $ 16,967     $ 20,065
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    About Ascalade:

    Ascalade Communications Inc. is an innovative product company that
designs, develops and manufactures digital wireless and communication
products. We deliver world-class products by offering our partners and
customers complete vertical integration, from leading-edge product design and
development to final production. Our products include digital cordless phones,
Voice over Internet Protocol ("VoIP") phones, digital wireless baby monitors
and digital wireless conference phones. These products are distributed under
leading brands and have been available through leading retail stores like
Radio Shack, Target, Best Buy and Wal-Mart, as well as through on-line
channels like Dell and Amazon.com. The company is vertically integrated, with
design, manufacturing and distribution locations in Richmond, British Columbia
(head office), Dongguan (China), Hong Kong and London (England).

    Forward Looking Statements:

    The discussion and analysis in this news release contains forward-looking
statements that involve risks and uncertainties. When used in this discussion
and analysis the words "will", "plan", "expect", "believe", and similar
expressions generally identify forward-looking statements. These statements
are not historical facts, but reflect our current expectations. These
forward-looking statements are subject to a number of risks and uncertainties
that could cause actual results or events to differ materially from current
expectations, including the matters discussed under "Risk Factors" and other
sections of the MD&A included in Ascalade's 2006 Annual Report, which has been
filed and is available on SEDAR (www.sedar.com). These risks and uncertainties
include, among other things, risks related to: currency fluctuations, loss of
customers, dependence on key customers, downturns in consumer and enterprise
markets, economic downturn in key geographic markets, uncertainty of revenues
from DECT, VoIP, and other technology, limited ability to forecast future
revenues, political risk, failure to develop new products or to enhance
existing products, short product life cycles and rapid technological change,
long sales and implementation cycles, future operating expenses, seasonal
fluctuations, competition, mergers and strategic transactions by competitors,
product margin and life, reduction of production costs, strategic
relationships, product defects, product liability claims, intellectual
property, defense of intellectual property claims, third-party technology
licensing, software licensing, strategic acquisitions, management of growth,
the continued availability of existing bank operating facilities, availability
of funding to pursue and grow business, dependence on key personnel,
recruitment and retention of management and qualified personnel, transfer
pricing, industry standards, relationship with principal shareholder,
suppliers and availability of supplies, availability and costs of labour,
power constraints, environmental laws, completing the construction and the
transition of current operations to a new factory and insufficient production
capacity to satisfy customer demand. There can be no assurance that our
expectations will prove to be correct. Consequently, all forward-looking
statements made are qualified by these cautionary statements and other
cautionary statements and factors contained herein. Ascalade disclaims any
intention or obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.





For further information:

For further information: Troy Bullock, Chief Financial Officer, Ascalade
Communications Inc., Phone: (604) 204-2900, Email: troy.bullock@ascalade.com

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ASCALADE COMMUNICATIONS INC.

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