Redline Reports Fourth Quarter and Full Year 2007 Results


    All figures in US Dollars unless specified

    - Company achieves 47% year on year revenue growth; increases WiMAX
    revenues by 85% -

    TORONTO, Feb. 28 /CNW/ - Redline Communications Group Inc. ("Redline" or
"the Company"), (TSX/AIM: RDL), a leading provider of WiMAX and wireless
broadband solutions today announced its financial results for the fourth
quarter and year ended December 31, 2007.

    Financial Highlights:

    -   2007 revenue increased to $52.2 million, a 47% increase over 2006
    -   Q4 2007 revenue was $12.8 million, resulting in 2H revenue of
        $26.5 million and the Company's 11th consecutive six-month period of
        revenue growth
    -   WiMAX Forum Certified(TM) RedMAX revenue of $29.2 million or 56% of
        total revenue in 2007, an increase of 85% over RedMAX revenues of
        $15.8 million in 2006
    -   $28.7 million in cash at year end compared to $18.0 million at close
        of 2006

    Operational Highlights:

    -   Successful listing on the Toronto Stock Exchange, raising
        CDN $27 million (net)
    -   30 RedMAX customers placed multiple or quarterly recurring equipment
        orders in 2007
    -   49 RedMAX customers with live commercial, revenue-generating WiMAX
        Forum Certified(TM) product deployments, compared to 28 at the end of
    -   More than 150 paid trials and deployments of WiMAX Forum
        Certified(TM) RedMAX at year end, compared to 100 at the end of 2006
    -   Launched RedMAX 4C(TM) family of Mobile WiMAX products
    -   Formed new Broadband Wireless Infrastructure (BWI) business unit to
        increase product offerings under the RedCONNEX and RedACCESS brands
    -   Continued growth of Redline's emerging market footprint, with
        deployments in 85+ countries
    -   Introduced Redline Ecosystem Verification ('REV') program which
        augments WiMAX Forum testing and confirms interoperability of RedMAX,
        RedMAX 4C and BWI products with other telecommunications equipment,
        applications and tools

    "We achieved strong growth in 2007 in terms of revenue, acquisition of
new top-tier carrier customers in key markets, and expansion of both our WiMAX
and broadband wireless infrastructure product lines," said Majed Sifri,
President and Chief Executive Officer. "With our strategic focus on working
with carriers in emerging markets to establish and expand RedMAX networks, we
realized a 47% year on year revenue increase and an 85% increase in our WiMAX
revenues. Concurrently, we have accelerated the development of our RedMAX 4C
Mobile WiMAX platform and demonstrated our industry leadership with the
introduction of our REV program for interoperability."
    "In 2007, we increased the number of paid trials and deployments of our
WiMAX products to more than 150. Our roster of 49 carrier customers operating
commercial revenue-generating RedMAX networks now includes properties owned by
major telecommunications companies such as TIM, Zain Group (formerly MTC
Vodafone), MTN and Cable & Wireless, each of which is planning to expand their
WiMAX deployments to additional properties in 2008."

    Financial Review

    In 2007, Redline's revenue reached $52.2 million, an increase of 47% from
$35.5 million in 2006. The majority of the revenue growth for the year came
from Redline's WiMAX Forum Certified RedMAX product line, which accounted for
56% of total revenue in 2007, versus 44% in 2006.
    Redline's revenue was $12.8 million in Q4 2007, with $6.6 million
generated by the Company's RedMAX business. Fourth-quarter revenue was
partially affected by slower-than-expected rollouts of certain new product
lines, which affected the Company's ability to reach the required volume
production to fulfill customer orders during the quarter. These issues have
since been resolved, and the Company expects to complete the orders over 2008.
In addition, revenue was affected by orders that were received but not shipped
due to customer delays in finalizing financing arrangements.
    Gross margin for 2007 was 34.4%, and was affected by the decline in the
Q4 2007 gross margin to 28.0%. The decline in margin in Q4 was due to one-time
write downs of peripherals and the amortization of fixed costs over lower than
expected revenues for the quarter. Gross margin was 37.0% and 40.5% for 2006
and Q4 2006 respectively. Net loss for 2007 was $15.7 million or $1.39 per

    Chief Executive Officer Review

    In 2007, Redline continued to make significant progress in the following
key areas:

    Converting RedMAX trials into commercial deployments:

    Redline has increased the number of trials and deployments to more than
150 in 2007, compared to 100 at the end of 2006. Of these, 49 carriers have
converted to commercial revenue-generating RedMAX deployments, compared with
28 at the end of 2006. More than 30 of these WiMAX network operators have
placed multiple or quarterly recurring equipment orders to expand their
network and subscriber base.

    Increasing resources to support customer deployments of RedMAX and
    broadband wireless solutions:

    Redline has increased the number of global reseller and deployment
partners to 170 at the end of 2007 compared to 100 in 2006. Redline's
deployment partners include global systems integrators, as well as a growing
roster of companies with expertise in planning and installing wireless
networks in key regional and vertical markets including oil and gas,
transportation, public safety and military.

    Continued focus on emerging markets:

    Redline has increased its presence in key high-growth International
markets. Redline has built a strong customer base in both Latin America and
the Middle East, with the Americas region now generating 44% of overall
revenues, driven by major RedMAX network deployments in Paraguay and Brazil.
Approximately 35% of Redline's revenues are generated in the Middle East.
Redline also continues to expand to new markets in Europe, Africa and the Asia
Pacific region, working with operators in more than 85 countries.

    Maintaining technology leadership:

    Redline maintained its technology leadership in both its WiMAX and BWI
business units. Advances in its RedMAX product family include:

    -   Proven high-capacity RedMAX AN-100U micro base station, which
        currently supports 512 users per base station radio
    -   High-powered AN-100UX macro base station that offers increased
    -   Award-winning Redline Management Suite, with a carrier-class
        provisioning server, enabling customer premise equipment to be
        installed by the end-user, and eliminating the need for professional
    -   FCC (Federal Communications Commission) approval for 3.65 GHz RedMAX
        products for the United States.

    Redline's Mobile WiMAX leadership was demonstrated in six live public
product demonstrations at major industry events and WiMAX Forum PlugFests, and
is among the first products submitted for the WiMAX Forum's certification
program for Mobile WiMAX. Redline's RedMAX 4C chassis base station and indoor
subscriber units have also been shipped to selected customers for initial
    In addition, Redline expanded its families of Broadband Wireless
Infrastructure products with the launch of the RedCONNEX and RedACCESS AN-80i
products for the 5.4 GHz license-exempt frequency bands.


    Redline expects to continue to increase the number and size of its
customers' WiMAX deployments. In addition, the Company plans to accelerate the
development and market introduction of its RedMAX 4C Mobile WiMAX products to
position the Company for continued long-term growth. In 2008, Redline expects
revenue growth of 40% year-over-year and to achieve profitability in the
fourth quarter.

    Investor Conference Call

    Redline's Q4 and FY 2007 conference call is on Thursday, February 28,
2008 at 8:30 am EST (1:30 pm GMT). Conference call dial in numbers are
416-644-3425 or 1-800-591-7539 (Canada) or 00-800-2288-3501 (UK). The live
webcast of the conference call and a copy of this news release and financial
statements, is available on the 'Investors' section of Redline's website or at

                                                   December 31,  December 31,
                                                          2007          2006

    Current assets:
      Cash                                        $ 28,713,405  $ 17,985,391
      Restricted cash                                    8,033         8,033
      Accounts receivable                           17,423,119    12,359,585
      Other receivables                                360,855       468,028
      Inventories                                    9,028,620     9,087,367
      Prepaid expenses                                 576,741       352,358
                                                    56,110,773    40,260,762

    Property, plant and equipment                    1,339,721     1,166,377

    Other assets                                        94,054       105,842

                                                  $ 57,544,548  $ 41,532,981

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities    $  9,657,119  $  9,221,150
      Deferred revenue                               2,706,656     2,362,612
      Current portion of capital lease obligations     229,322       215,639
      Current portion of loan payable                1,776,633     1,244,528
                                                    14,369,730    13,043,929

    Loan payable                                     1,375,424     3,255,472

    Capital lease obligations                           60,462       151,653

    Shareholders' equity:
      Share capital                                133,134,202   100,728,685
      Deficit                                      (91,706,738)  (75,958,226)
      Accumulated other comprehensive income           311,468       311,468
                                                    41,738,932    25,081,927

                                                  $ 57,544,548  $ 41,532,981

                              Three months ended              Year ended
                                 December 31,                December 31,
                              2007          2006          2007          2006
                                  (Unaudited)                 (Unaudited)

      Product         $ 11,762,381  $ 11,043,928  $ 48,406,755  $ 32,905,403
      Maintenance        1,057,646       681,101     3,841,025     2,580,903
                        12,820,027    11,732,029    52,247,780    35,486,306

    Cost of revenue(1)   9,226,968     6,976,725    34,285,949    22,371,398

    Gross margin         3,593,059     4,755,304    17,961,831    13,114,908

      Research and
       development(1)    3,115,371     2,285,979    10,114,802     9,126,903
      Finance and
       administration(1) 1,544,450     1,017,656     5,961,839     4,180,955
      Sales and
       marketing(1)      3,945,932     3,443,947    14,953,682    13,332,240
                         8,605,753     6,747,582    31,030,323    26,640,098

    Loss before the
     undernoted         (5,012,694)   (1,992,278)  (13,068,492)  (13,525,190)

    Other expenses       1,232,268       704,672     2,622,353     1,496,823

    Loss before
     income taxes       (6,244,962)   (2,696,950)  (15,690,845)  (15,022,013)

    Income taxes                 -        78,146        57,667       152,284

    Loss for the
     period             (6,244,962)   (2,775,096)  (15,748,512)  (15,174,297)

    Deficit, beginning
     of period         (85,461,776)  (73,183,130)  (75,958,226)  (60,783,929)

    Deficit, end
     of period        $(91,706,738) $(75,958,226) $(91,706,738) $(75,958,226)

    Loss per share:
      Basic and
       diluted        $      (0.48) $      (0.90) $      (1.39) $     (16.02)


    Weighted average
     number of common
     shares used in
     basic and diluted
     loss per share     12,979,033     3,079,315    11,343,577       947,326


     expense as

    Cost of revenue   $      9,674  $    (52,051) $    104,348  $    135,785
      Research and
       development          53,547       205,963       388,048       554,319
      Finance and
       administration       29,561       272,011       298,200       865,787
      Sales and
       marketing           131,409        29,096       604,652       557,587

                              Three months ended              Year ended
                                 December 31,                December 31,
                              2007          2006          2007          2006
                                  (Unaudited)                 (Unaudited)

    Cash provided by (used in):

      Loss for the
       period         $ (6,244,962) $ (2,775,096) $(15,748,512) $(15,174,297)
      Items not
       affecting cash:
        Amortization of
         property, plant
         and equipment     516,896       423,198     1,396,795     1,152,582
         expense           224,191       455,019     1,395,248     2,113,478
        Accretion of
         interest          125,732             -       125,732             -
         exchange gain    (953,851)            -      (953,851)            -
      Change in
       working capital   1,994,217    (5,945,760)   (4,330,196)   (8,466,983)
                        (4,337,777)   (7,842,638)  (18,114,784)  (20,375,220)


      Issuance of
       share capital,
       net of issuance
       costs            28,198,898    20,908,182    30,652,641    27,445,081
      Share purchase
       loan                 47,628             -        47,628             -
      Loan payable        (331,135)    4,500,000    (1,163,675)    4,500,000
      Principal payment
       of capital lease
       obligations         (49,327)     (124,833)     (265,559)     (180,896)
                        27,866,064    25,533,015    29,271,035    31,764,185

    Investing activities:
      Purchase of
       property, plant
       and equipment      (458,285)     (385,886)   (1,382,088)     (985,171)

      Decrease in
       restricted cash           -             -             -        85,601
                          (458,285)     (385,886)   (1,382,088)     (899,570)

    Foreign exchange
     gain on cash held
     in foreign currency   953,851             -       953,851             -

    Increase in cash    24,023,853    17,304,490    10,728,014    10,489,395

    Cash, beginning
     of period           4,689,552       680,901    17,985,391     7,495,996

    Cash, end of
     period           $ 28,713,405  $ 17,985,391  $ 28,713,405  $ 17,985,996

    Supplemental cash
     flow information:
      Interest paid   $    363,579  $     12,655  $    494,611  $    145,512
      Income taxes
       paid                 57,667        25,649        57,667        25,649

     relating to
     financing and
      Purchase of
       property, plant
       and equipment
       under capital
       leases                    -       193,717       188,051       219,712
      Warrants             310,000             -       310,000             -

    Forward-Looking Statements

    Certain statements in this press release may contain words such as
"could", "expects", "may", "anticipates", "believes", "intends", "estimates",
"targets", "envisions", "seeks" and other similar language and are considered
forward-looking statements or information under applicable securities
legislation. These statements are based on Redline's current expectations,
estimates, forecasts and projections about the operating environment,
economies and markets in which Redline operates. These statements are subject
to important assumptions, risks and uncertainties, which are difficult to
predict and the actual outcome may be materially different. Redline has made
various assumptions in the preparation of its financial outlook in this press
release, including the following company specific assumptions: An ability to
ramp sales in new WiMAX product lines and in a private label product line in
its RedCONNEX business; the continued network and deployment expansion by its
largest customers, especially in the Middle East and the Americas; the
continued ability to have more WiMAX customers convert to commercial networks,
and the ability to add new WiMAX customers, using both its 802.16-2004 and
802.16-2005 solutions; improvement in Redline's product costs due to favorable
supplier pricing, offset by higher costs associated with initial customer
deployments in emerging markets; increased employee costs relative to expected
cost of living adjustments and employee bonuses; and the effective execution
of Redline's strategy, including the execution of Redline's supply chain
strategy. Redline has also made certain macroeconomic and general industry
assumptions in the preparation of its financial guidance including: a modest
decrease in the growth rate of the gross domestic product of global economies
which is lower than the growth rate in 2007; global service provider capital
expenditures in 2008 reflecting mid to high single digit growth as compared to
high single digit growth in 2007; global growth rate to remain stable with
investments in next generation products and services to offset declines in
purchases of legacy equipment; and a moderate impact as a result of expected
industry consolidation among service providers in various geographic regions,
particularly in emerging markets; and the impact of the rise in the Canadian
dollar in 2007 and 2008 compared to the US dollar and other world currencies.
The above assumptions, although considered reasonable by Redline at the date
of this press release, may prove to be inaccurate and consequently Redline's
actual results could differ materially from its expectations set out in this
press release.
    Further, actual results or events could differ materially from those
contemplated in forward-looking statements as a result of the following (i)
risks and uncertainties relating to Redline's business including: significant
competition, competitive pricing practice, cautious capital spending by
customers, industry consolidation, rapidly changing technologies, evolving
industry standards, frequent new product introductions and short product life
cycles, and other trends and industry characteristics affecting the
telecommunications industry; any material, adverse affects on Redline's
performance if its expectations regarding market demand for particular
products prove to be wrong; any negative developments associated with
Redline's suppliers and contract manufacturing agreements including our
reliance on certain suppliers for key components; potential penalties, damages
or cancelled customer contracts from failure to meet delivery and installation
deadlines and any defects or errors in Redline's current or planned products;
fluctuations in foreign currency exchange rates; potential higher operational
and financial risks associated with Redline's efforts to expand
internationally; a failure to protect Redline's intellectual property rights,
or any adverse judgments or settlements arising out of disputes regarding
intellectual property; changes in regulation of the wireless industry or other
aspects of the industry; any failure to successfully operate or integrate
strategic acquisitions, or failure to consummate or succeed with strategic
alliances; Redline's potential inability to attract or retain the personnel
necessary to achieve its business objectives or to maintain an effective risk
management strategy; (ii) risks and uncertainties relating to Redline's
liquidity, financing arrangements and capital including: any inability of
Redline to manage cash flow fluctuations to fund working capital requirements
or achieve its business objectives in a timely manner or obtain additional
sources of funding; or any negative impact on Redline's ability to make future
acquisitions, raise capital, issue debt and retain employees arising from
stock price volatility and any declines in the market price of Redline's
publicly traded securities. For additional information with respect to certain
of these and other factors, see Redline's final prospectus (at page 83 under
the heading "Risk Factor") which is available on Redline's website at or through Unless otherwise
required by applicable securities laws, Redline disclaims any intention or
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 fixed and mobile standards-based wireless broadband solutions.
Redline's RedMAX(TM) WiMAX Forum Certified(TM) system, RedMAX 4C Mobile
WiMAX(TM) products, and its award-winning broadband wireless infrastructure
family of products - RedCONNEX(TM) and RedACCESS(TM) - 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 10,000 installations in 85 countries, and a global network of
over 170 partners, Redline's experience and expertise helps service providers,
enterprises and government organizations roll out wireless broadband networks
to support advanced communications.

    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, Carolyn
Anderson,,, Tel: (905) 479-8344; Equicom Group, Craig
Armitage, Vanessa Beresford,,, Tel: (416) 815-0700; Canaccord Adams, Chris
Bowman, Tel: +44 (0)20 7050 6500

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