/C O R R E C T I O N from Source -- Redknee Solutions Inc./

In the news release, Redknee Solutions Reports First Quarter Fiscal 2017 Results, issued 10-May-2017 by Redknee Solutions Inc. over CNW, we are advised by the company that the headline should read "Redknee Solutions Reports Second Quarter Fiscal 2017 Results" rather than "Redknee Solutions Reports First Quarter Fiscal 2017 Results" as originally issued inadvertently. The complete, corrected release follows:

Redknee Solutions Reports Second Quarter Fiscal 2017 Results

TORONTO, May 10, 2017 /CNW/ - Redknee Solutions Inc.  (TSX: RKN) a leading provider of real-time monetization and subscriber management software, reported results for its fiscal second quarter ended March 31, 2017. (All figures are in U.S. dollars unless otherwise stated.)

Fiscal Q2 2017 Financial Highlights
(Comparisons made between fiscal Q2FY2017 and fiscal Q2FY2016 results, unless otherwise noted)

• Revenue was $34.4 million compared to $39.8 million;
• Gross profit was $20.2 million (59% of total revenue) compared to $21.4 million (54% of total revenue);
• Recurring revenue was 66% of revenue, compared to 63%;
• Net loss was $15.3 million, or $0.14 loss per share, compared to a net loss of $35.6 million, or $0.33 loss per share;
• Total cash of $46.8 million and cash used in operations was $12.1 million; and,
• Order backlog of $161.4 million at March 31, 2017.

Fiscal Q2 2017 Operational Highlights

• Redknee announced in late January that the Private Placement received shareholder approval. Following shareholder approval, the Company completed a private placement with Wave Systems Corp. (the "Investor"), an affiliate of ESW Capital, LLC ("ESW Capital"), of 800,000 Series A Preferred Shares of the Company and a common share purchase warrant to the Investor for gross proceeds of US$83.2 million (the "Transaction"). Following completion of the Transaction, the Company used a portion of the net proceeds from the Transaction to fully repay all loans and borrowings.
  
  
• Redknee announced changes to the Board of Directors and Leadership Team. The Board of Directors now comprises of Demetrios Anaipakos, Scott Brighton, Keith Graham, Chris Helling, Christy Jones, Andrew Price and Farhan Thawar. Changes to the Leadership team include the appointment of Danielle Royston as Chief Executive Officer and Leela Kaza as Managing Director, Global Strategic Accounts.
  
  
• Redknee announced changes to its long-term growth and strategic plan, by announcing that it would focus on the telecommunications market and create two major operating units.
  
  
• The Strategic Global Account operating unit will focus on communication service providers (CSP's) for whom the Company provides significant, mission critical software and services solutions.
• The Packaged and Cloud Solutions operating unit will focus on pre-integrated telecom software solutions, delivered on premise and from the cloud.
  
  
• Redknee announced its immediate business priority is customer success with the company's long-term goal of 100% success. The company also announced its intention to raise $60 million to restructure the company and invest an additional $100 million in R&D over a three year period from 2017 to 2019. The company also plans to invest in staffing strategic account teams expecting to hire 200 people.
  
  
• Telekom Sprske and Redknee sign a multi-million dollar upgrade to the latest version of Redknee Unified and a contract expansion including the deployment of Redknee's geo-redundancy system to improve the quality and reliability of services.
  
  
• WOM Chile and Redknee sign a multi-million dollar transformation deal to deliver the full Redknee Unified stack to enable WOM to launch new service offerings, improve operational efficiency and create greater business value.
  
  
• A Tier 1 CSP in APAC signs a multi-million dollar upgrade to the latest version of Redknee Unified. The upgrade will add additional capacity and new capabilities including VoLTE.

Restructuring Commentary

As part of its continuing initiative to restore the Company to growth and profitability, Redknee intends to complete a financing transaction of approximately $60 million. The proceeds will be used to fund a restructuring of the business. Redknee expects that this restructuring will generate annualized savings of $50 to $60 million over the next 18 to 24 months. The Company intends to reinvest the cost savings into Customer Success and to execute on its $100 million product revitalization plan. Redknee's independent directors have engaged independent advisors to assist in their consideration of financing options to fund this restructuring.

Redknee has begun its restructuring activities and announces the departure of CTO, Dr. Ralf Guckert. As the Company continues implementing further restructuring activities, it anticipates additional executive departures.

Management Commentary

"Achieving 100% Customer Success remains our number one priority," said Danielle Royston, CEO, Redknee. "Historically, we have not focused on our customers, and as a result, our revenue and products suffered. Our new strategy re-aligns our organization to focus solely on delivering Customer Success to communications service providers. We plan to invest $100 million in our R&D group to build market leading products with the goal of being regarded as having the best talent in the industry. I am excited to report that our new direction is resonating well with our customers, and while a majority are reporting that they are currently unsuccessful, they all believe we now have the focus to bring them to success."

Ms. Royston added: "Operationally, it will take a lot of work to turn Redknee around. Once our financing is secured for the restructuring, we will move swiftly to make the changes we need to position Redknee for financial and customer success. We will leverage that success to make the necessary investments in the business and I continue to be optimistic about Redknee's future."

Fiscal Q2 2017 Financial Results

Revenue was $34.4 million compared to $39.8 million in the same year-ago quarter. Recurring revenue was 66% of total revenue, compared to 63% in the same year-ago quarter.

Order backlog decreased by 8% to $161.4 million compared to $175.5 million in fiscal 2016.

Gross margin was $20.2 million, or 59% of total revenue, compared to $21.4 million, or 54% of total revenue, in the same year-ago quarter.

Net loss was $15.3 million, or $0.14 loss per basic and diluted share, compared to a net loss of $35.6 million or $0.33 loss per basic and diluted share, in the same year-ago quarter. Net loss last year included $24.5 million of restructuring costs.

Total cash at March 31, 2017 was $46.8 million. Cash used in operations was $12.1 million (included $4.5 million of restructuring payments).

Please refer to the section regarding Forward-Looking Statements below which form an integral part of this release. These results, along with the annual audited consolidated financial statements and the Company's MD&A, are available on the Company's website at www.redknee.com and on SEDAR at www.sedar.com.

Conference Call

The Company will host a conference call tomorrow (May 11, 2017) to discuss these results. CEO Danielle Royston and CFO David Charron will host the presentation starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation.

Date: Thursday, May 11, 2017, 2017
Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Dial-In Number: 1 [phone]
International: 1 [phone]
Conference ID#: 10173989

The presentation will be webcast live and available for replay via either the Investors section of Redknee's website (www.redknee.com) or http://bit.ly/2oIqJ7I

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

If you have any difficulty connecting with the conference call, please contact NATIONAL | Equicom at 1 [phone].

A replay of the call will be available until 12:00 midnight (EST) Thursday, May 18, 2017.

Toll-Free Replay Number: 1 [phone]
International Replay Number: 1 [phone]
Replay PIN: 10173989

About Redknee Solutions Inc.

Redknee monetizes today's digital world. We provide a complete portfolio of mission-critical monetization and subscriber management solutions and services that allow communications service providers, utility companies, auto makers and enterprise businesses of all types to charge for things in new and innovative ways. Redknee's real-time billing, charging, policy and customer care offerings provide the agility and scalability to drive a unique user experience, increase profitability and support any new product or business model. Available on premise, cloud-based, or as a Software-as-a-Service, Redknee's low-risk, flexible solutions power more than 250 businesses across the globe.  Established in 1999, Redknee Solutions Inc. (TSX: RKN) is the parent of the wholly-owned operating subsidiary Redknee Inc. and its various subsidiaries. References to Redknee refer to the combined operations of those entities. For more information about Redknee and its solutions, please go to www.redknee.com.

Non-IFRS Measures

"Recurring revenue," which is not a financial measure calculated and presented in accordance with IFRS, and should not be considered in isolation or as a substitute to revenue. Recurring revenue includes revenue from support and maintenance agreements, long term service agreements, and term-based product licenses and software subscription.

"Order backlog" relates to contractual commitments as at period end, pending to be delivered and will be recognized as revenue in future periods. Order backlog is not a financial measure calculated and presented in accordance with IFRS and should not be considered in isolation or as a substitute to revenue.

Other companies (including competitors) may define recurring revenue, and order backlog differently. The Company presents recurring revenue and order backlog because management believes these to be important supplemental measures of performance that are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in Redknee's industry. Management uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Redknee nor is it intended to be predictive of potential future results.

Forward-Looking Statements 

Certain statements in this document may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements use such words as "may," "will," "expect," "continue," "believe," "plan," "intend," "would," "could," "should," "anticipate" and other similar terminology. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements include statements respecting order backlog contributing to increased revenue visibility for the Fiscal 2017; the impact of the challenging macro environment on the Company's revenue; our restructuring initiatives and ongoing cost management efforts are expected to result in significantly improved profitability next year; and financial guidance for Fiscal 2017; as well as statements regarding Redknee's future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to, assumptions respecting : (i) the conversion of sales pipeline into orders and orders into revenue based on the extent and timing of historical conversion; (ii)  the anticipated mix of the sale of products and services of the Company and associated margin being consistent with that realized in the past; (iii) the ability of Redknee to bring new products and services to market and to increase sales; (iv) the strength of the Company's product development pipeline; (v) the estimated size and growth prospects of the markets Redknee seeks to address; (vi) the Company's competitive position in those markets and its ability to take advantage of future opportunities in those markets; (vii) the benefits of the Company's products and services to be realized by its customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services; (ix) the Company's financial condition and capital requirements; * the stability of general economic and market conditions; (xi) currency exchange rates and interest rates; (xii) capital markets continuing to provide the Company with access to capital. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: the failure of demand for Redknee's products to develop as anticipated, the failure to obtain customer orders or meet customer requirements, the inability of Redknee's products to perform as expected, the inability of Redknee to achieve anticipated cost savings in the time frames and to the extent anticipated, unanticipated negative impacts on customer service or product development as a result of costs savings implemented, a material adverse change in the affairs of Redknee, and the factors discussed under the "Risk Factors" section of Redknee's most recently filed AIF which is available on SEDAR at www.sedar.com and on Redknee's web-site at www.redknee.com. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Redknee does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

Redknee Solutions Inc.
Condensed Consolidated Interim Statements of Financial Position
(Expressed in U.S. dollars)
(Unaudited)
		March 31		September 30
		2017		2016
Assets
Current assets:
	Cash and cash equivalents	$	43,267,950	$	37,080,510
	Trade accounts and other receivables	29,216,869		43,209,046
	Unbilled revenue	25,804,568		27,290,500
	Prepaid expenses	1,801,210		2,999,539
	Income taxes receivable	3,535,744		2,662,163
	Other assets	69,232		268,929
	Inventories	1,145,714		710,591
	Total current assets	104,841,287		114,221,278
Restricted cash		3,526,534		4,582,293
Property and equipment		4,741,312		6,262,965
Deferred income taxes		1,984,575		1,984,479
Investment tax credits		350,484		355,914
Other assets		1,304,448		1,656,971
Intangible assets		30,582,894		35,721,065
Goodwill		32,271,078		32,271,078
Total assets		$	179,602,612	$	197,056,043
Liabilities and Shareholders' Equity
Current liabilities:
	Trade payables	$	7,449,126	$	14,212,869
	Accrued liabilities	15,812,131		23,405,832
	Provisions	16,032,590		21,981,367
	Income taxes payable	597,250		724,412
	Deferred revenue	14,378,614		18,915,596
	Loans and borrowings	–		50,445,790
	Total current liabilities	54,269,711		129,685,866
Deferred revenue		518,171		639,688
Other liabilities		1,492,739		2,264,482
Pension and other long-term employment benefit plans		20,344,912		20,387,584
Provisions		977,159		6,683,256
Preferred shares		54,875,462		–
Warrant		31,290,048		–
Deferred income taxes		376,194		687,947
Total liabilities		164,144,396		160,348,823
Shareholders' equity:
	Share capital	172,638,075		172,436,385
	Treasury stock	(141,917)		(141,917)
	Contributed surplus	9,979,599		9,812,545
	Deficit	(155,571,791)		(133,954,043)
	Accumulated other comprehensive loss	(11,445,750)		(11,445,750)
	Total shareholders' equity	15,458,216		36,707,220
Total liabilities and shareholders' equity		$	179,602,612	$	197,056,043

Redknee Solutions Inc.
Condensed Consolidated Interim Statements of Comprehensive Loss
(Expressed in U.S. dollars, except per share and share amounts)
(Unaudited)
		Three months ended				Six months ended
		March 31,				March 31,
		2017		2016		2017		2016
Revenue:
	Software, services and other	$	13,464,121	$	17,105,453	$	27,468,225	$	42,223,687
	Support and subscription	20,900,514		22,687,039		44,106,616		47,684,616
		34,364,635		39,792,492		71,574,841		89,908,303
Cost of revenue		14,199,295		18,353,594		30,330,824		38,751,510
Gross profit		20,165,340		21,438,898		41,244,017		51,156,793
Operating expenses:
	Sales and marketing	5,421,303		7,816,722		10,456,440		16,217,996
	General and administrative	7,726,710		8,629,408		15,448,655		15,917,679
	Research and development	9,337,205		12,553,717		18,487,518		25,308,788
	Restructuring costs	3,875,173		24,541,909		4,080,474		24,820,455
	Acquisition and related costs	–		116,774		–		950,478
		26,360,391		53,658,530		48,473,087		83,215,396
Loss from operations		(6,195,051)		(32,219,632)		(7,229,070)		(32,058,603)
Foreign exchange gain (loss)		(1,078,585)		28,232		(665,869)		(464,776)
Other (expense) income		1,749,072		–		(1,450,928)		–
Finance income		45,278		17,730		230,205		23,104
Finance costs		(8,693,398)		(1,759,403)		(9,381,845)		(2,807,934)
Loss before income taxes		(14,172,684)		(33,933,073)		(18,497,507)		(35,308,209)
Income taxes (recovery):
	Current	1,379,996		1,618,062		3,398,646		3,999,351
	Deferred	(289,375)		73,005		(278,405)		621,573
		1,090,621		1,691,067		3,120,241		4,620,924
Loss for the period		$	(15,263,305)	$	(35,624,140)	$	(21,617,748)	$	(39,929,133)
Other comprehensive loss:
	Pension actuarial adjustment	–		–		–		(77,702)
Total comprehensive loss		$	(15,263,305)	$	(35,624,140)	$	(21,617,748)	$	(40,006,835)
Loss per subordinate voting share:
	Basic	$	(0.14)	$	(0.33)	$	(0.20)	$	(0.37)
	Diluted	(0.14)		(0.33)		(0.20)		(0.37)
Weighted average number of subordinate voting shares:
	Basic	108,338,825		108,304,632		108,297,726		108,715,589
	Diluted	108,338,825		108,304,632		108,297,726		108,715,589

Redknee Solutions Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
			Three months ended				Six months ended
			March 31,				March 31,
			2017		2016		2017		2016
Cash provided by (used in):
Operating activities:
	Loss for the period		$	(15,263,305)	$	(35,624,140)	$	(21,617,748)	$	(39,929,133)
	Adjustments for:
		Depreciation of property and equipment	802,290		1,185,400		1,581,754		2,188,427
		Amortization of intangible assets	2,173,365		2,447,730		4,434,541		4,735,596
		Finance income	(45,278)		(17,730)		(230,205)		(23,104)
		Finance costs	8,693,398		1,759,403		9,381,845		2,807,934
		Pension	826,729		1,180,647		(42,672)		1,377,199
		Income tax expense	1,090,621		1,691,067		3,120,241		4,620,924
		Unrealized foreign exchange loss (gain)	209,596		(26,456)		1,396,611		1,076,691
		Share-based compensation	(682,951)		1,507,036		(738,927)		1,756,645
		Change in provisions	(2,781,453)		21,948,779		(11,654,874)		19,116,612
		Change in non-cash operating working capital	(5,391,204)		5,548,409		(530,052)		4,828,780
			(10,368,192)		1,600,145		(14,899,486)		2,556,571
		Interest paid	(62,413)		(113,449)		(166,502)		(434,217)
		Interest received	26,391		11,766		212,197		23,451
		Income taxes paid	(1,669,346)		(1,748,954)		(4,243,774)		(4,205,611)
			(12,073,560)		(250,492)		(19,097,565)		(2,059,806)
Financing activities:
		Proceeds from exercise of stock options	201,690		200,560		201,690		238,060
		Purchase of treasury stock	–		(1,450,484)		–		(2,556,966)
		Interest paid on loans and borrowings	(1,245,961)		(958,953)		(2,330,904)		(1,788,593)
		Repayment of loans and borrowings	(52,000,000)		(450,000)		(52,750,000)		(900,000)
		Transaction costs of loans and borrowings	–		–		–		(90,496)
		Issue of preferred shares and warrant, net of transaction costs	79,861,542		–		79,861,542		–
			26,817,271		(2,658,877)		24,982,328		(5,097,995)
Investing activities:
		Purchase of property and equipment	(18,809)		(1,114,500)		(309,154)		(1,621,920)
		Purchase of intangible assets	–		(13,776)		–		(25,035)
		Decrease in restricted cash	195,642		616,114		1,055,759		778,022
		Settlement accrual and contingent consideration paid	–		(1,072,596)		–		(7,712,395)
			176,833		(1,584,758)		746,605		(8,581,328)
Effect of foreign exchange rate changes on cash and cash equivalents			291,287		377,357		(443,928)		(199,600)
Increase (decrease) in cash and cash equivalents			15,211,831		(4,116,770)		6,187,440		(15,938,729)
Cash and cash equivalents, beginning of period			28,056,119		43,225,618		37,080,510		55,047,577
Cash and cash equivalents, end of period			$	43,267,950	$	39,108,848	$	43,267,950	$	39,108,848

SOURCE Redknee Solutions Inc.

Investor Relations: Conrad Seguin, NATIONAL | Equicom, T: 416-586-1951, [email protected]