Company Records First Ever Annual Net Profit of $3.63 Million VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Oct 25, 2007 -- PEER 1 Network Enterprises, Inc. (CDNX:PIX.V - News), a leading provider of IT infrastructure, today released the company's financial results for the fiscal year ended June 30, 2007, recording the company's first year of four profitable quarters. All figures are in US dollars. "Fiscal year 2007 was a transformational year for PEER 1," said Fabio M. Banducci, PEER 1's president and chief executive officer. "We have successfully completed the turnaround of the acquisition of Interland's dedicated server assets, reported record financial results and significantly strengthened our balance sheet. We are now very well positioned to extend our leadership position further by focusing on delivering premium, value added solutions to our growing base of over 9,000 customers worldwide and by enabling them to focus on the possibilities of the Internet, not the problems." Financial highlights from the year include the following: - PEER 1's revenue increased 22.45% to $74.36 million for the year ended June 30, 2007, compared to $60.73 million for the year ended June 30, 2006; - Gross profit increased 28.08% to $28.77 million for the year ended June 30, 2007, compared to $22.46 million for the year ended June 30, 2006; - Operating income increased 88.90% to $7.61 million for the year ended June 30, 2007, compared to $4.03 million for the year ended June 30, 2006; - Net profit was $3.63 million for the year ended June 30, 2007, compared to a net loss of $3.19 million for the year ended June 30, 2006. - Normalized EBITDA for the year ended June 30, 2007 was $19.9 million, a 55.5% increase over normalized EBITDA of $12.8 million for the year ended June 30, 2006. Corporate highlights from fiscal 2007: - Effective May 29, 2007, PEER 1 closed a $40 million amended and restated loan agreement with Fortress Credit Opportunities I LP that provides for a $20 million term loan and a $20 million line of credit available to fund growth capital and acquisitions. - During the year, the company completed a 12,000 square foot data center move and expansion of its available facilities in San Antonio, TX. In addition, the company completed an expansion of both its Vancouver and Toronto data center facilities. - On February 1, 2007, PEER 1 announced that its data center expansions gave the company the capacity to add approximately 65% more dedicated servers to its then current base of over 16,000 dedicated servers and approximately 40% more co-location cabinet equivalents to its then current base of over 1,100 cabinet equivalents. This capacity will enable PEER 1 to significantly grow its customer base with modest incremental capital expenditures relative to building a new data center. - PEER 1 was recognized as the ninth fastest-growing company in Canada and second in British Columbia in the 19th annual PROFIT 100 ranking of Canada's Fastest-Growing Companies by PROFIT Magazine. This is PEER 1's second consecutive year in the top ten of the PROFIT 100 list. In 2006 the company ranked fourth in Canada and came in as the number one fastest growing company in British Columbia. - During the year, the company, in partnership with industry leaders, introduced a number of quality products and services that leverage and complement PEER 1's current infrastructure. - In April 2007, PEER 1 completed the installation of IBM Tivoli Storage Manager software, and is offering its managed dedicated hosting customers world-class enterprise data backup services. - In April 2007, PEER 1 announced its partnership with ControlScan, a market leader in e-commerce security and marketing services. This partnership allows PEER 1 to offer its dedicated hosting customers an affordable solution for scanning their servers for the latest vulnerabilities. It also satisfies the rigorous payment card industry (PCI) compliance scan requirements. - In May 2007, in accordance with the pre-existing terms of the Preferred Shares Series A, the holders of the 7,000 Preferred Shares Series A converted all 7,000 shares and cumulative unpaid dividends into 34,869,628 Common Shares of the company. SUMMARY OF FOURTH QUARTER RESULTS Revenue for the fourth quarter of fiscal year 2007 was $19.9 million compared to $17.1 million in the same quarter of fiscal year 2006. Normalized EBITDA for the fourth quarter was $5.6 million compared to $3.1 million for the quarter ended June 30, 2006. During the quarter, PEER 1 recorded two one-time charges: a $1.2 million intangible asset impairment charge and a $0.91 million provision for sales and use taxes. SUBSEQUENT EVENTS The following corporate developments occurred subsequent to June 30, 2007: Network upgrade On September 4, 2007, PEER 1 and Juniper Networks, Inc., the leader in high-performance networking, announced that PEER 1 expanded its managed firewall service offerings with the addition of Juniper Networks Secure Services Gateways (SSGs). Fully managed by PEER 1 experts, the Juniper Networks SSG platforms will provide best-in-class protection, superior capacity and Gigabit Ethernet interfaces, enabling PEER 1 to offer cost-effective, high-capacity security solutions that scale to meet the demands of the largest enterprises. In addition, the company committed to a $4.5 million capital expenditure program to upgrade its network backbone utilizing the latest Cisco and Juniper switches and routers. New executive roles On September 10, 2007, the company announced several changes of roles for members of PEER 1's executive management team. Lance Tracey, co-founder and chief executive officer, announced that he was stepping down from his role as CEO to assume his new role as executive chairman of PEER 1's board of directors. Fabio M. Banducci was then appointed the company's new CEO in addition to his existing role as president of PEER 1. Gary Sherlock, PEER 1's chief financial officer, was promoted to the role of executive vice president in addition to his CFO responsibilities. Data backup optimization On September 25, 2007, PEER 1 announced that it deployed EMC Storage Area Network (SAN) platforms across all of its managed dedicated hosting data center operations in Atlanta, Miami, and Fremont, California (Silicon Valley). The EMC platform provides state-of-the-art technology to optimize PEER 1's data backup solution, providing managed dedicated hosting customers with faster and more reliable backup and data recovery.