• Revenue was $9.5 million, compared to $14.1 million in Q2 2007 and $13.8 million sequentially
• WiMAX Forum Certified RedMAX revenue of $4.4 million or 46% of total product revenue
• Broadband wireless infrastructure (BWI) revenue was $5.1 million or 54% of total product revenue
• Gross margin was 37%, compared to 33% for Q2 2007
• Net loss of $5.3 million, or $0.25 per share, based on 21,048,635 fully diluted shares, compared to net loss of $2.8 million, or $0.26 per share, for the same period in 2007
• Net cash at quarter end was $15.5 million versus $20.8 million at the end of Q1 2008

Operational Highlights:

• 166 paid trials and deployments of WiMAX Forum Certified RedMAX systems, compared to 160 at the end of Q1
• 63 commercial WiMAX networks compared with 58 at the end of Q1
• Shipped latest version of RedMAX 4C base station to major carrier in the Middle East
• RedMAX 4C granted Best of WiMAX World EMEA "Industry Choice" and Frost and Sullivan Innovation Awards

The second quarter financial results were affected both by market and operational issues, including a softening in the demand for 802.16d WiMAX products as a result of recent industry announcements, customers delaying network expansions due to complications in integrating the Redline Management Suite (RMS), and changes in the Company's senior sales management.

"Redline has worked quickly to address the operational issues we experienced late in the second quarter," said Majed Sifri, President and CEO, Redline Communications Inc. "We have appointed new managing directors for Europe and Africa, and are adding seasoned sales representatives to strengthen our sales teams in other territories. In addition, we expect to replace our Vice President of Worldwide Sales this quarter. The technical issues with the integration of the RMS have been resolved and we are working closely with our customers to continue with network expansion plans."

"We are confident that we will execute on our plan to expand WiMAX deployments among our key WiMAX customers and to accelerate the development and delivery of our RedMAX 4C Mobile WiMAX products this year," added Sifri. "We have also been successful in increasing our customer base in the Asia-Pacific region, including the addition of Sify Technologies Limited, an emerging telecommunications company in India that is rolling out our RedMAX products in five major cities. Our international growth has also been bolstered by continued uptake and the recent FCC certification of our complete family of 3.65 GHz products in the United States. To ensure continued growth in WiMAX, we are also looking at strategic options to leverage the value of our Broadband Wireless Infrastructure business unit."

Financial Review

In the second quarter of 2008, Redline's revenue was $9.5 million, compared to $14.1 million in the second quarter of 2007 and $13.8 million in the first quarter of 2008. The Company's WiMAX Forum Certified(TM) products accounted for $4.4 million, or 46% of product revenue, and BWI generated revenues of $5.1 million. In 2008, the Company expects that its WiMAX and BWI businesses will make equal contributions to revenues for the year, with some quarter-by-quarter variations.

Gross margin for the three months ended June 30, 2008 was 37%, or $3.5 million, compared to 33%, or $4.7 million, for the same period last year. Operating expenses were $8.6 million in Q2 2008 compared to $6.8 million in Q2 2007 and $9.4 million in Q1 2008. Net loss for the second quarter of 2008 was $5.3 million, or $0.25 per share, compared to $2.8 million, or $0.26 per share, for the second quarter of 2007 and $4.2 million, or $0.20 per share, in Q1 2008. As at June 30, 2008, the Company had $15.5 million of cash, cash equivalents and restricted cash, compared with $20.8 million as at March 31, 2008. The decrease in cash during the quarter reflects an operating loss of $5.1 million.

Chief Executive Officer Review

In the second quarter of 2008, Redline continued to deliver on its key strategic initiatives:

• Accelerating Mobile WiMAX Delivery - Redline continues to accelerate development and delivery of its RedMAX 4C Mobile WiMAX products and expects to be included in the next phase of WiMAX Forum Certification. The Company's Mobile WiMAX offerings now includes a variety of base stations and customer premise equipment that offer the flexibility to deploy networks in a range of markets, providing ubiquitous enterprise and personal broadband access.
• Expanding RedMAX trials and commercial deployments - Redline has increased the number of trials and deployments to 166, compared to 150 at the end of 2007, including several trials of its RedMAX 4C products. There are now 63 carriers that have converted to commercial revenue-generating RedMAX deployments, compared with 49 at the end of 2007.
• Expanding Redline's global reach - Redline has over 170 global reseller and deployment partners for its RedMAX and BWI products, including global systems integrators and other companies with expertise in planning and installing wireless networks for markets including oil and gas, transportation, public safety and the military. The Company has also developed alliances with partners that will assist with the sales and deployment of its RedMAX 4C Mobile WiMAX products.
• Broadening customer base - Redline is focused on delivering solutions for key high-growth international markets. While the Company continues to derive a significant portion of its revenue from the Americas and Middle East, it has seen recent rapid growth in the Asia Pacific market, with that region now generating 11% of total revenues. The Company is also broadening to new types of operators, including mobile carriers that are trialing or deploying its WiMAX products.
• Maintaining technology leadership - Redline has maintained its technology leadership in both its WiMAX and BWI business units. The RedMAX product family continues to offer the highest capacity in the market, highest scalability and open architecture, which translates into an easy to deploy network with a rapid return on investment for its customers. Under the Redline Ecosystem Verification (REV) program, Redline has completed interoperability testing with Tranzeo Wireless Technologies' (TSX:TZT) Canadian WiMAX vendor. In addition, Redline continues to accelerate development and delivery of its RedMAX 4C Mobile WiMAX products and expects to be included in the next phase of WiMAX Forum Certification.

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Keywords: wireless broadband solutions, communications group inc, network expansions, redline communications inc, fcc certification, asia pacific region, infrastructure business, wireless infrastructure, redmax, broadband wireless, majed, network expansion, WiMAX