expected second quarter net loss to June 30 of $4,865,000, compared to profit of $199,000 for the second quarter last year.

It brings the six month net loss to $6,851,000, compared to a profit for the same reporting period a year ago of $501,000.

Second quarter costs were impacted by $1.8 million in engineering and development expenses and $1.25 million for marketing and demonstration units related to the development of the CS4 and introductions of the SONETLYNX and Mosaic products.

Chairman Herman Frietsch and president Peter Leighton said in a joint statement: "The company is continuing to progress through strategic objectives on its development track to material expansion of revenues and operating results.

"Revenues, margins and profitability to date are not indicative of the company's expected future performance.'' Intelect is an international communications technology company that develops, manufactures and markets multimedia transport and switching systems for telecommunications and networking applications.

Operations include the design, production and installation of voice and data switching and fibre optic digital communications systems for application in air traffic control, air defence and business communication.

The statement noted that second quarter activities produced major accomplishments in all areas. More than $8 million of new firm proposals and bids have been developed during the late second quarter and early third quarter for products taken to market in the second quarter.

Company-wide proposals and bids outstanding for all products currently aggregate in excess of $90 million.

The CS4, a commercial application of the S4 technology, has a planned fourth quarter prototype release. The S4 installation at the North Atlantic Oceanic Air Transport Control Centre in Iceland commenced operation and will function as a world class reference sale and demonstration facility for international marketing and sales campaign.