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Redline Comms Inc. (REDL)

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Thursday 08 March, 2007

Redline Comms Inc.

Final Results

Redline Communications Inc.
08 March 2007

Immediate Release                                                  8 March 2007

                   NOT FOR DISTRIBUTION IN THE UNITED STATES

                          Redline Communications Inc.
                          ('Redline' or 'the Company')

         Redline Reports Strong Second Half and Full Year 2006 Results
 Company demonstrates significant year on year growth with WiMAX and broadband
                                 wireless sales

TORONTO, ON - March 8, 2007 - Redline Communications, Inc. (AIM: REDL), a
leading provider of WiMAX and wireless broadband solutions today announced
strong revenue and financial results for the second half and year ended December
31, 2006.

All figures in U.S. Dollars unless specified

Financial Highlights:

  • Full year revenue increased to $35.5 million, a 52% increase over 2005
    revenues, which exceeded market expectations
  • 2H revenue increased 17% to $19.1 million compared to $16.4 million in 1H
    2006; 9th consecutive six month period of revenue growth
  • Net loss for the year of $15.2 million ($4.00 per share) compared to a
    loss of $15.6 million ($17.71 per share) for 2005 (weighted average number
    of common shares for the period increased to 3,789,304 from 881,500)
  • WiMAX Forum Certified(TM) RedMAX product revenue of $15 million or 42% of
    total revenue; RedMAX gross margins met 2006 target
  • $18.0 million in cash at year end compared to $7.5 million at close of
    2005

Operational Highlights

  • Successful $24.8 million (£12.68 million) placing and admission to the
    AIM market of the London Stock Exchange ('AIM') on December 6, 2006, and an
    over-allotment exercise of $2.4 million in January 2007

  • Multiple RedMAX customers with total orders of more than $1M; 28 RedMAX
    customers with live commercial, revenue-generating WiMAX Forum CertifiedTM
    deployments

  • Recognized revenue from more than 100 trials and deployments of WiMAX
    Forum Certified(TM) RedMAX at year end

  • Strengthened broadband wireless infrastructure product family with the
    introduction of the high-performance AN-80i backhaul product

  • Continued WiMAX product development leadership with initial testing of
    nomadic and mobile versions of the technology standard

  • 'First to market' leadership as the first company to achieve WiMAX
    Forum Certification(TM) for a complete WiMAX system

  • Continued growth of Redline's emerging market footprint, with
    deployments in 50+ countries

Majed Sifri, President and Chief Executive Officer of Redline:

'2006 was a pivotal year for Redline.  Not only did we successfully complete
our listing on AIM but led the industry with the world's first WiMAX Forum
Certification, our RedMAX system, which in turn generated well over 100 WiMAX
customers throughout the world. We also expanded our RedCONNEX family, with the
introduction of our AN-80i product line, a more powerful and broader range of
licensed exempt products.

Our focus on bringing WiMAX connectivity to emerging markets continues at pace
and has helped us to capture a significant share of today's WiMAX market.  We
have proven that Redline delivers a successful business model for carriers in
these regions and our continued investment in sales and marketing coupled with
our commitment to R&D will ensure we remain one of the leading providers in this
market place.'

Tom Hearne, Chief Financial Officer, Redline Communications Inc.

'We are very pleased with our record 2006 results, having achieved our revenue
target and grown our RedMAX sales to more than 42% of total revenue. With the
success of our IPO and continued momentum in sales of WiMAX and broadband
wireless infrastructure products, we believe we are well positioned to meet our
growing targets in 2007.'

Chief Executive Officer Review

With the announcement of the Company's first annual results following a
successful listing on AIM in December we are extremely pleased to report that
Redline has succeeded in maintaining its track record of strong year on year
growth achieving 52% year over year growth and a four year CAGR of 114%.

Redline has positioned itself as a leader in the WiMAX market, which has
experienced accelerated growth throughout 2006 and into 2007. Telecommunications
carriers worldwide have made the strategic decision to adopt WiMAX technology to
rollout their fixed, nomadic and mobile communications networks. With Redline's
global sales and marketing efforts, we have established a solid footprint in the
market with more than 100 trials and deployments in less than 11 months after
the launch of our first WiMAX Forum Certified products. To maintain its market
leadership, Redline will continue to invest in the development of WiMAX and
broadband wireless infrastructure solutions.  We believe our product suite
supports a number of advanced communications services that carriers and other
service providers must offer to be successful in the highly competitive
telecommunications market.

As evidenced at recent industry events, WiMAX is now firmly established as an
alternative solution for operators that want to expand their networks and
service offering to generate additional revenue. Global telecommunications
equipment manufacturers, including 3G technology providers, have recognized that
WiMAX has emerged as a truly disruptive and competitive technology, and is
delivering a global, affordable and advanced alternative for delivering fixed
and mobile broadband services.

Outlook

Redline is now recognized in the WiMAX marketplace as a leading technology
provider and is well positioned for continued growth as more operators choose to
roll out WiMAX networks.  The Company is focused on scaling its resources to
support the ongoing development and deployment of its WiMAX and broadband
wireless solutions. In 2007, Redline will focus on facilitating the rapid
expansion of our established customers' RedMAX networks, and will generate
additional carrier wins by demonstrating the technology and business benefits of
our products. We believe Redline is well positioned to meet analyst expectations
for revenues of between $25 million and $27 million for the first six months of
2007.

Majed Sifri

Investor Conference Call

Redline's FY2006 conference call will be held on Thursday, March 8 at 2pm GMT
(9am EST). Qualified investors and members of the financial community are
invited to participate in the conference call by dialing (toll free):

UK:                   0808 109 1498
US:                   1866 793 4279
Canada:               1866 270 8076

For details on accessing the live webcast, visit the Investor section on
Redline's website www.citycomments.co.uk. An archive of the on-line broadcast
will be available following the call.

For further details

Redline Communications                                     Tel: + 1 905 479 8344
Tom Hearne, Chief Financial Officer
Carolyn Anderson, Communications Director
[email protected]

Buchanan Communications                                 Tel: +44 (0)20 7466 5000
Jeremy Garcia / James Strong / Bobby Morse
[email protected]

Canaccord Adams                                         Tel: +44 (0)20 7050 6500
Chris Bowman


                                                     REDLINE COMMUNICATIONS, INC.
                                                      CONSOLIDATED BALANCE SHEETS
                                                      (Expressed in U.S. dollars)



                                                                                Year Ended December 31,
                                                                    --------------------------------------------------
                                                                              2005                    2006
                                                                    --------------------------------------------------
                                                                                                 (unaudited)
   Assets
   Current assets:
     Cash and cash equivalents ....................                     $   7,495,996           $  17,985,391
     Restricted cash ..............................                            93,634                   8,033
     Accounts receivable ..........................                         5,176,862              12,359,585
     Other receivables ............................                           242,023                 468,028
     Inventories ..................................                         2,695,307               9,087,367
     Prepaid expenses..............................                           438,346                 352,358
                                                                    --------------------------------------------------
                                                                           16,142,168              40,260,762
   Property, plant and equipment . ................                         1,114,076               1,166,377
   Other assets ...................................                           107,538                 105,842
                                                                    --------------------------------------------------
   Total assets  ..................................                     $  17,363,782           $  41,532,981
                                                                    ==================================================
     Liabilities and Shareholders' Equity
   Current liabilities:
     Accounts payable and accrued                                                                                     
       liabilities ................................                     $   4,759,085           $   9,221,150
     Deferred revenue .............................                         1,578,556               2,362,612
     Current portion of capital lease                                                                     
       obligations ................................                           152,658                 215,639
     Current portion of loan payable ..............                                 -               1,244,528
                                                                    --------------------------------------------------
                                                                            6,490,299              13,043,929
   Loan payable....................................                                 -               3,255,472
   Capital lease obligations  .....................                           175,818                 151,653
   Shareholders' equity :
     Share capital  ...............................                        70,818,008              97,746,833
     Share purchase loan  .........................                          (929,664)               (413,408)
     Contributed surplus ..........................                         1,281,782               3,395,260
     Deficit ......................................                       (60,783,929)            (75,958,226)
     Cumulative translation adjustment ............                           311,468                 311,468
                                                                    --------------------------------------------------
                                                                           10,697,665              25,081,927
                                                                    --------------------------------------------------
     Total liabilities and shareholders'                                                                              
     equity .......................................                     $  17,363,782              41,532,981
                                                                    ==================================================




                                                     REDLINE COMMUNICATIONS, INC.
                                           CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                                                      (Expressed in U.S. dollars)




                                                Years ended December 31,          Six months ended December 31,
                                           -------------------------------------------------------------------------
                                                   2005              2006            2005              2006
                                           -------------------------------------------------------------------------
                                                       (Unaudited)                         (Unaudited)
   Revenue:
     Product  ...........................      $  21,551,491     $ 32,905,403     $  10,815,532     $  17,744,688
     Maintenance ........................          1,869,726        2,580,903         1,070,024         1,369,558
                                           -------------------------------------------------------------------------
                                                  23,421,217       35,486,306        11,885,556        19,114,246
   Cost of revenue(1)....................         15,378,632       22,371,398         7,994,881        12,227,243
                                           -------------------------------------------------------------------------
   Gross margin .........................          8,042,585       13,114,908         3,890,675         6,887,003
   Expenses:                                                                   
     Research and development (1) .......          7,403,351        9,126,903         4,033,590         4,802,192
     Finance and administration (1) .....          3,542,312        4,180,955         2,142,712         2,005,455
     Sales and marketing (1) ............         11,202,807       13,332,240         5,808,070         6,770,366
                                           -------------------------------------------------------------------------
                                                  22,148,470       26,640,098        11,984,372        13,578,013
                                           -------------------------------------------------------------------------
   Loss before the undernoted ...........        (14,105,885)     (13,525,190)       (8,093,697)       (6,691,010)
   Other expenses (income):
     Interest and other .................            523,232           67,632           508,942            91,209
     Foreign exchange loss (gain) .......            (54,819)         276,609           (94,842)          141,301
     Amortization of property, plant and                                                                            
        equipment .......................          1,033,617        1,152,582           659,857           727,266
                                           -------------------------------------------------------------------------
                                                   1,502,030        1,496,823         1,073,957           959,776
                                           -------------------------------------------------------------------------
   Loss before income taxes..............        (15,607,915)     (15,022,013)       (9,167,654)       (7,650,786)
   Income taxes  ........................              5,147          152,284             3,402            96,628
                                           -------------------------------------------------------------------------
   Loss for the period...................        (15,613,062)     (15,174,297)       (9,171,056)       (7,747,414)
   Deficit, beginning of period .........        (45,170,867)     (60,783,929)      (51,612,873)      (68,210,812)
                                           -------------------------------------------------------------------------
   Deficit, end of period ...............      $ (60,783,929)     (75,958,226)      (60,783,929)      (75,958,226)
                                           =========================================================================
   Basic and diluted loss per share......      $      (17.71) $         (4.00)           (10.40)            (1.16)
   Weighted average number of common                                                                                
     shares used in basic and diluted loss                                                                          
     per share  .........................            881,500        3,789,304           881,500         6,697,108
                                           =========================================================================
   (1)Includes stock-based compensation
     expense as follows:
     Cost of revenue ....................      $     127,739     $    135,785     $      63,873     $      (5,495)
     Expenses:
        Research and development.........            236,891          554,319           118,446           292,304
        Finance and administration.......             94,265          865,787            47,132           306,369
        Sales and marketing .............            359,380          557,587           179,687           160,086


                                                     REDLINE COMMUNICATIONS, INC.
                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (Expressed in U.S. dollars)



Cash provided by (used in):
Operating activities:                                                 Years ended December 31,
                                                          -------------------------------------------------
                                                                    2005                    2006
                                                          -------------------------------------------------
                                                                            (unaudited)
     Loss for the year...............................           $ (15,613,062)          $ (15,174,297)
     Items not affecting cash:
        Amortization of property, plant and                                                                
          equipment .................................               1,033,617               1,152,582
        Stock-based compensation expense ..                           818,275               2,113,478
        Unrealized foreign exchange loss                                                                   
          (gain) ....................................                 405,000                       -
     Change in non-cash operating working                                                                  
        capital  ....................................                 746,400              (8,466,983)
                                                          -------------------------------------------------
                                                                  (12,609,770)            (20,375,220)
   Financing activities:
     Issuance of share capital, net of issuance                                                            
        costs .......................................              14,893,940              27,445,081
        Loan payable ................................                                       4,500,000
     Principal payment of capital lease                                                                    
        obligations .................................                 (87,214)               (180,896)
                                                                                   
                                                          -------------------------------------------------
                                                                   14,806,726              31,764,185
   Investing activities:
     Purchase of property, plant and                                                                       
        equipment ...................................                (759,299)               (985,171)
     Decrease in restricted cash ..........                           736,366                  85,601
                                                          -------------------------------------------------
                                                                      (22,933)               (899,570)
                                                          -------------------------------------------------
   Increase in cash and cash                                                                               
     equivalents ....................................               2,174,023              10,489,395
   Cash and cash equivalents, beginning of                                                                 
     year ...........................................               5,321,973               7,495,996
                                                          -------------------------------------------------
   Cash and cash equivalents, end of year ...........           $   7,495,996           $  17,985,391
                                                          =================================================
   Supplemental cash flow information:
     Interest paid ..................................           $     171,089           $     145,512
   Supplemental disclosures relating to                                                                    
     non-cash financing and investing                                                                      
     activities:
      Purchase of property, plant and                                                                      
        equipment under capital leases...............                 273,938                 219,712
                                                          =================================================




Non-GAAP financial measures

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


                                        Year ended Dec 31, 2006                 Six months ended December 31, 2006
                               ------------------------------------------- ---------------------------------------------
                                   GAAP        Adjustment     Non-GAAP          GAAP        Adjustment      Non-GAAP
 Revenue:                                     (Unaudited)                                   (Unaudited)
 Product Revenue .............   32,905,403                   32,905,403       17,744,688                    17,744,688
 Maintenance .................    2,580,903                    2,580,903        1,369,558                     1,369,558
                               -------------- ------------- -------------- --------------- -------------- --------------
                                 35,486,306             -     35,486,306       19,114,246              -     19,114,246
 Cost of revenue .............   22,371,398      (135,785)    22,235,613       12,227,243          5,495     12,232,738
                               -------------- ------------- -------------- --------------- -------------- --------------
 Gross margin ................   13,114,908       135,785     13,250,693        6,887,003        (5,495)      6,881,508
 Expenses:
 Research and development.....    9,126,903      (554,319)     8,572,584        4,802,192      (292,304)      4,509,888
 Finance and administration...    4,180,955      (865,787)     3,315,168        2,005,455      (306,369)      1,699,086
                                                                                                                        
 Sales and marketing .........   13,332,240      (557,587)    12,774,653        6,770,366      (160,086)      6,610,280
                               -------------- ------------- -------------- --------------- -------------- --------------
                                 26,640,098    (1,977,693)    24,662,405       13,578,013      (758,759)     12,819,254
 Loss before undernoted ......  (13,525,190)    2,113,478    (11,411,712)      (6,691,010)       753,264     (5,937,746)
 Interest and other ..........       67,632                       67,632           91,209                        91,209
 Foreign exchange loss                                                                                                  
  (gain) .....................      276,609                      276,609          141,301                       141,301
 Amortization of property,                                                                                              
     plant and equipment .....    1,152,582                    1,152,582          727,266                       727,266
                               -------------- ------------- -------------- --------------- -------------- --------------
                                  1,496,823             -      1,496,823          959,776              -        959,776
                               -------------- ------------- -------------- --------------- -------------- --------------
 Loss before income             (15,022,013)    2,113,478    (12,908,535)      (7,650,786)       753,264     (6,897,522)
   taxes .....................
 Income taxes ................      152,284                      152,284           96,628                        96,628
                               -------------- ------------- -------------- --------------- -------------- --------------
 Loss for the period .........  (15,174,297)    2,113,478    (13,060,819)      (7,747,414)       753,264     (6,994,150)
 Deficit, beginning of                                                                                                  
   year ......................  (60,783,929)                 (60,783,929)     (68,210,812)                  (68,210,812)
                               -------------- ------------- -------------- --------------- -------------- --------------
 Deficit, end of period ......  (75,958,226)    2,113,478    (73,844,748)     (75,958,226)       753,264    (75,204,962)
 Basic and diluted loss per 
  share ......................        (4.00)                       (3.45)           (1.16)                        (1.04)
Weighted average number of                                                                                              
common shares                     3,789,304                    3,789,304        6,697,108                     6,697,108
                               -------------- ------------- -------------- --------------- -------------- --------------
Background

Redline Communications, Inc. designs, manufactures, and sells broadband wireless
products that connect individuals and businesses together. Redline's products
are used by broadband service providers, network operators and their subscribers
as well as enterprises worldwide to establish fast, reliable wireless
communications networks for Internet infrastructure and private network
applications.

Redline offers two main product lines: RedMAX family of WiMAX products -
currently the Company's primary focus, and proprietary broadband wireless
infrastructure products used by enterprises and communications service providers
to establish high-bandwidth links. Both Redline's WiMAX and proprietary
broadband wireless infrastructure products provide high capacity,
high-bandwidth, and Non Line of Sight ('NLOS') connections with demonstrated
performance, reliability and security.

With more than 35,000 installations in 75 countries, and a global network of
over 100 partners, Redline's experience and expertise helps service providers,
enterprises and government organizations roll out the services and applications
that drive their business forward.

Company history

Redline was founded in 1999 with the aim of becoming a leader in developing and
marketing products for the broadband wireless communications industry. At that
time, carriers and other large operators were beginning to examine the use of
wireless solutions to deliver broadband services. The Company's products mix,
which are WiMAX Forum Certified, have been trialed with and/or deployed for
fixed and nomadic broadband applications by more than 100 carriers, other
service providers and enterprises in over 40 countries. In addition, the Company
continues to develop WiMAX technologies to expand its portfolio of products to
include devices that will enable the delivery of portable or mobile broadband
wireless access services in a range of environments.

Product summary

Redline designs, manufactures, and sells broadband wireless products that
connect individuals and businesses together. The Company's products are used by
broadband service providers, network operators and their subscribers as well as
enterprises worldwide to establish fast, reliable wireless communications
networks for Internet infrastructure and private network applications. Redline
offers two main product lines with primary focus is its RedMAX branded portfolio
of WiMAX products. The Company also offers proprietary broadband wireless
infrastructure products used by enterprises and communications service providers
to establish high-bandwidth links. Both of the Company's WiMAX and proprietary
broadband wireless infrastructure products provide high capacity,
high-bandwidth, and NLOS connections with demonstrated performance, reliability
and security.

The market opportunity

Redline addresses certain principal markets, including emerging broadband
markets that are served by carriers that do not have sufficient infrastructure
to support the delivery of broadband services and in developed broadband markets
as an extension or alternative to existing broadband wireline infrastructures.

Redline is also focused on current and future WiMAX solutions that will address
a need in mature broadband markets and bring mobile broadband wireless services
based on the WiMAX standards to consumers as soon as 2008.

Broadband wireless technologies are becoming a reliable and cost-effective
complement or alternative to wireline networks for the provision of data, voice
and video services. Currently, there close to 2.5 million broadband wireless
access subscribers worldwide with predictions that there will be an accumulated
87 million subscribers by the end of 2012, of which 67 million will be WiMAX
subscribers.

(Source Maravedis: 'Worldwide Market Analysis and Trends 2006-2012', September
2006)

Financial Review

Redline has generated significant year-on-year revenue growth from its product
and services offerings. Over the last five years, the Company has generated a
majority of its annual revenues from its broadband wireless product lines,
including its RedMAX branded portfolio of WiMAX products and its wireless
backhaul products. These products are sold through distributors and resellers
throughout the world.

The Company's first mover advantage and commitment to customer service has
caused revenue to grow in the last four fiscal years from $1.7 million in the
2002 fiscal year to $23.4 million in the 2005 fiscal year to $35.5 million in
the 2006 fiscal year.

Redline's Products

Redmax - WiMAX Forum Certified Products

Redline's RedMAX(TM) system is the world's first WiMAX Forum Certified(TM)
solution to deliver the elements operators need to enable the profitable
delivery of revenue-generating fixed and nomadic wireless broadband services.
Redline's WiMAX-based RedMAX family of products is delivering the benefits of
its third-generation OFDM technology and its core products to a larger customer
base, including operators with last-mile access requirements for SOHO and
residential customers.

The RedMAX family of products includes the AN-100U WiMAX Forum Certified sector
controller, which was designed for easy and cost-effective deployment, and
facilitates the rapid provisioning of fixed and nomadic broadband wireless
services. Its low latency is designed to ensure reliable delivery of
time-sensitive services, including voice traffic, VoIP, video and prioritized
data traffic. Up to six RedMAX sector controllers can be deployed to form a
network base station, each supporting hundreds of simultaneous subscribers per
sector, or thousands per base station.

Redline's WiMAX products also include the RedMAX Indoor and Outdoor Subscriber
Units. The outdoor RedMAX SU-O subscriber unit is designed for NLOS or LOS
connections and includes an integrated antenna for easy installation. The RedMAX
SU-I is an indoor modem with an integrated antenna that offers plug and play
capability for easy installation by the end-user. The RedMAX SU-I features an
LED signal-strength indicator that makes it easy for end-users to determine the
best positioning and signal strength for their subscriber unit. The user-install
feature eliminates the need for expensive professional installations by the
carrier, presenting a more attractive business model for rolling out services to
individual and residential users.

RedMAX Management Suite (RMS): The Company's RedMAX Management Suite enables
carriers to easily deploy, control, monitor and upgrade their Company components
network-wide through an intuitive, user-friendly GUI. The Company's RMS acts as
an element management gateway between the Company network equipment and the
operator's existing core network, enabling integrated services, alarm
management, performance management and billing systems. The RedMAX Management
Suite offers flexible and adaptive architecture to enable carriers to easily
integrate WiMAX into their network and benefit from the delivery of advanced
broadband wireless services.

RedCONNEX Proprietary Broadband Wireless Infrastructure Products

RedCONNEX AN-50e: The AN-50e is the Company's high speed wireless ethernet
bridge configured for point-to-point operation, with point to multipoint
operation capabilities in the 5.4 and 5.8 GHz license-exempt bands.
Accommodating both backhaul and access functions, the AN-50e system is the
industry's first true high performance, high capacity, multi-services OFDM
platform. The AN-50e system delivers an over the air rate of up to 72 Mbps, link
distances of up to 50 miles (80 kilometres) and robust NLOS capabilities.

RedCONNEX AN-30e: The AN-30e is a carrier-grade backhaul solution for mobility
and enterprise network operators in the 5.4 and 5.8 GHz license-exempt bands.
The AN-30e delivers high-throughput, reliable links exceeding 80 km (50 mi) in
clear LOS conditions. The system is the ideal platform for migration to VoIP -
capable of supporting up to eight T1/E1 circuits and mixed TDM/IP traffic
applications. The AN-30e is a cost-effective alternative to leasing circuits and
installing new wired services.

RedCONNEX AN-80i: The AN-80i broadband wireless system is a high capacity, NLOS,
low-cost backhaul and bridging solution. Operating in the license-exempt 5.4 and
5.8 GHz frequency bands, the AN-80i is ideal for point-to-point links, of up to
80 km (50 miles) in clear LOS conditions, as well as robust NLOS connections.
The AN-80i supports advanced applications including transparent LAN, VoIP and
high-quality video.

Redline's Sales and Distribution

The Company has implemented a global distribution and channel sales strategy.
The Company has established a direct sales organization that is supported by a
network of more than 100 Redline certified partners, value added distributors
and OEM partners. These channels have enabled the Company to scale its global
sales and support resources to reach more customers worldwide than it would have
been able to independently. The Company's sales teams operate in four
international regions: Americas, Europe and Africa, Middle East and Asia
Pacific, each with a designated managing director that oversees a team of
regional sales directors. The sales directors manage the Company's relationships
with its regional distributors, channel partners and systems integrators, and
are responsible for demand creation, identifying and generating new customer
opportunities.

The Company also has a team of sales engineers that can deliver a high level of
support to customers through each stage of the Company's product deployments. In
addition, the Company has increased its sales force in key emerging markets
including Asia Pacific, Africa, the Middle East, Latin America and Eastern
Europe, which are the markets the Directors expect to be the primary adopters of
WiMAX technologies. The Company has formed strategic relationships with vendors
in the WiMAX ecosystem for the ongoing development and sales of its RedMAX and
other broadband wireless products. The Company's products are also distributed
through a number of broadband wireless OEMs, including Selex Communications
Ltd., Fastcomm (Fast Communications Systems (PTY) Ltd.), Nateks Networks, Datang
Telecom Technology and Industry Company, SIAE Microelettronica S.p.A., Alvarion
Ltd. and Airspan Networks Inc. These companies purchase, re-brand and sell the
Company's wireless backhaul and access products as part of their wireless
offerings.

Forward-Looking Statements

This document includes statements that are, or may be deemed to be, 
'forward-looking statements'. These forward-looking statements can be identified
by the use of forward-looking terminology, including the terms 'believes', 
'estimates', 'plans', 'projects', 'anticipates', 'expects', 'intends', 'may', 
'will', or 'should' or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include matters that
are not historical facts. They appear in a number of places throughout this
document and include statements regarding the Directors' current intentions,
beliefs or expectations concerning, among other things, the Company's results of
operations, financial condition, liquidity, prospects, growth, strategies and
the broadband industry.

By their nature, forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Actual results and developments
could differ materially from those expressed or implied by the forward-looking
statements. Please see the factors discussed in Part II of this document in this
regard, in particular those relating to the legal and regulatory risks
associated with the BWA market.

Forward-looking statements may and often do differ materially from actual
results. Any forward-looking statements in this document are based on certain
factors and assumptions, including the Directors' current view with respect to
future events and are subject to risks relating to future events and other
risks, uncertainties and assumptions relating to the Company's operations,
results of operations, growth strategy and liquidity. While the Directors
consider these assumptions to be reasonable based on information currently
available, they may prove to be incorrect. Prospective investors should
specifically consider the factors identified in this document that could cause
actual results to differ before making an investment decision. Save as required
by law or by the AIM Rules, the Company undertakes no obligation publicly to
release the results of any revisions to any forward-looking statements in this
document that may occur due to any change in the Directors' expectations or to
reflect events or circumstances after the date of this document.

About Redline Communications
Redline Communications is the leading provider of standards-based wireless
broadband solutions. Redline's RedMAX(TM) WiMAX Forum Certified(TM) systems and
award-winning RedCONNEX(TM) family of broadband wireless infrastructure products
enable service providers and other network operators to cost-effectively deliver
high-bandwidth services including voice, video and data communications. Redline
is committed to maintaining its wireless industry leadership with the continued
development of WiMAX and other advanced wireless broadband products. With more
than 35,000 installations in 75 countries, and a global network of over 100
partners, Redline's experience and expertise helps service providers,
enterprises and government organizations roll out the services and applications
that drive their business forward. For more information, visit
www.redlinecommunications.com.

                                     - 30 -

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