Redline Communications Reports Financial Results for First and Second
Quarters of 2010

- Company reports two consecutive profitable quarters -

TORONTO, Sept. 7 /CNW/ - Following the announcement of its restatement and financial results on September 3, 2010, Redline Communications Group Inc. ("Redline" or the "Company") (TSX: RDL), a leading global provider of broadband wireless systems for business, today announced its interim financial results for the three-month period ended March 31, and the three and six month periods ended June 30, 2010.

"Upon completion of our restatement and approval of our audited 2009 statements late last week, we were able to complete our interim statements for 2010 and we are pleased to finally be able to release our results," stated Eric Melka, Acting CEO of Redline. "With a new management team in place, we have streamlined our operations to reduce our cost base, expanded our product portfolio, and aggressively targeted new business in markets that offer the greatest opportunity. We have delivered strong results in 2010, reporting profitable quarters for the first time in the Company's history, demonstrating our commitment to cost containment. We will continue to shape the Company to meet our goal of sustainable profitable growth."

Financial Results Summary:

    
    (US$000 other than per share data - all numbers unaudited)
    -------------------------------------------------------------------------
                      Three month        Three month           Six month
                      period ended       period ended         period ended
    -------------------------------------------------------------------------

                   June 30,  June 30, March 31, March 31,  June 30,  June 30,
                      2010    2009(1)     2010    2009(1)     2010    2009(1)
    -------------------------------------------------------------------------
    Revenue         13,094     9,162    11,422     8,678    24,515    17,839
    -------------------------------------------------------------------------
    Gross Margin     7,320     4,202     7,746     4,754    15,067     8,955
    -------------------------------------------------------------------------
    Operating
     Expenses        6,137     7,131     6,825     6,800    12,962    13,930
    -------------------------------------------------------------------------
    Net Income/
     (Loss)          1,487    (3,060)      725    (2,224)    2,212    (5,287)
    -------------------------------------------------------------------------
    Income/(Loss)
     per share       $0.07    $(0.15)    $0.03    $(0.11)    $0.10    $(0.25)
    -------------------------------------------------------------------------
    Cash and
     equivalents     5,510     4,071     4,560     5,687     5,510     4,071
    -------------------------------------------------------------------------

    -------------------------------
    (1) Restated. For a general description of the Company's restatements for
        the periods ended March 31, 2009 and June 30, 2009, see, "Restatement
        of previously issued consolidated financial statements" in note 2 of
        the unaudited consolidated financial statements of the Company for
        the periods ended March 31, 2010 and June 30, 2010, respectively.
        which are available on SEDAR at www.sedar.com. The impact of the
        restatement for the periods ended March 31, 2009 and June 30, 2009 is
        also outlined in the Results of Operations section of Redline's
        Management Discussion and Analysis for the year ended December 31,
        2009, which is also available on SEDAR. All financial comparisons
        referred to above are to these amended and restated results for 2009
        periods and not to the originally prepared financial statements for
        such periods.
    

2010 Financial Review:

For the first six months of 2010, revenue was $24.5 million, an increase of $6.7 million, or 37%, compared with $17.8 million (re-stated) for the same period in 2009. This large increase reflects the general improvements in the Company's sales in the first half of the year as well as the impact of the timing of the amortization of RedMAX revenues.

Gross margin was 61.5% or $15.1 million, compared to 49.7% or $9.0 million for the same period in 2009 (re-stated). Improved margins are the result of reductions in the bill of materials (BOM) and supply chain costs, as well as the timing of the amortization of RedMAX revenue, and changes in the mix of products sold.

Total operating expenses were $13.0 million down from $13.9M during the same period in 2009 (re-stated), and include $600,000 of restructuring costs. Expenses reflect management's ongoing commitment to making the Company operate more efficiently.

For the first six months of 2010, the Company reported net income of $2.2 million or $0.10 per share which included a one-time charge of $600,000 for restructuring costs or $0.10 per share compared to a loss of $5.3 million or $0.25 per share in the first half of 2009.

The Company's cash position has improved to $5.5 million as at June 30 2010 from $4.8 million as at December 31 2009.

For a more detailed discussion of Redline's first and second quarter results and management's outlook, please see the corresponding Management's Discussion and Analysis, available on SEDAR at www.sedar.com.

2010 Highlights:

    
    -   A new experienced management team consisting of a new CFO, SVP
        Operations, VP Marketing and VP Sales were engaged during H1 2010.
    -   Headcount was reduced by 65, including 35 staff from the Company's
        R&D facilities in Romania following the successful completion of a
        new product development project for a large utility customer.
    -   Redline's AN-80i flagship product became the first product of its
        kind to be awarded a Level 2 Federal Information Processing Standards
        Publications 140-2 certification (FIPS 140-2). This certification
        facilitates sales to the US Department of Defense.
    -   The Company launched its new RDL 2000, a high throughput, low
        latency, extended range, simple to install and operate point-to-point
        MIMO device.
    -   Upgraded its RedMAX product, to offer improvements in the automatic
        provisioning of subscriber radios as well as the networking devices
        installed behind those radios, adding enhanced security, diagnostics,
        remote management, and improved operational and statistical
        information.
    -   Selected Customer Wins include:
        -  Awarded contracts to provide its high-capacity, high-speed, long-
           range broadband wireless systems for video surveillance projects
           in 40 different Municipal Governments in Mexico.
        -  Chosen to power state-of-the-art wireless video surveillance
           projects for Turkish National Police
        -  Selected as the broadband wireless solutions provider for the
           "Digital Rio" program in the state of Rio de Janeiro, Brazil to
           establish high-bandwidth connections between schools.
        -  Announced the completion of a multi-million dollar contract to
           supply radios to RADIOCOM S.A in Romania to bring broadband
           services to government offices, schools and businesses.
    

About Redline Communications

Redline Communications (www.rdlcom.com) manufactures powerful and versatile wireless broadband systems used to cost-effectively deploy distributed applications and services. Municipalities use Redline products to quickly and easily deploy or extend their video surveillance networks; oil and gas companies to monitor how their oil wells are operating; service providers and enterprises to bring business grade access to buildings, and the Military to create secure networks in any location. For over 7 years, Redline has been delivering reliable wireless solutions with the strong combination of high capacity, speed, range and reliability. Redline products are marketed and supported locally through an exclusive network of value added resellers in the Americas; the Middle East, and Africa.

NOTE: All registered and unregistered trademarks mentioned in this release are the property of their respective owners.

Forward-Looking Statements

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Certain statements in this release, including the estimate of future revenues, sales, provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. In some cases, forward-looking statements can be identified by terms such as "could", "expect", "may", "will", "anticipate", "believe", "intend", "estimate", "plan", "potential", "project" or other expressions concerning matters that are not historical facts. Readers are cautioned not to place undue reliance upon any such forward-looking statements.

Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of Redline to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements, by their nature, are based on certain assumptions regarding expected growth, management's current plans, estimates, projections, beliefs, opinions and business prospects and opportunities (collectively, the "Assumptions"). While the Company considers these Assumptions to be reasonable, based on the information currently available, they may prove to be incorrect.

Many risks, uncertainties and other factors could cause the actual results of Redline to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include but are not limited to the following: significant competition, competitive pricing practices, cautious capital spending by customers, industry consolidations, rapidly changing technologies, evolving industry standards, frequent new product introductions, 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 the Company's 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; and Redline's potential inability to attract or retain the personnel necessary to achieve its business objectives or to maintain an effective risk management strategy (collectively, the "Risks"). For additional information on these Risks, see Redline's most recently filed Annual Information Form ("AIF") and Annual MD&A, which are available on SEDAR at www.sedar.com and on the Company's website at www.redlinecommunications.com. Redline assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law. All forward looking statements contained in this release are expressly qualified in their entirety by this cautionary statement.

%SEDAR: 00025950E

For further information: Contact: Redline Communications, Lynda Partner, [email protected], [phone] x2224