Radiant Communications Corp.
TSX VENTURE : RCN

Radiant Communications Corp.

November 15, 2007 18:23 ET

Radiant Communications Announces Record Revenue, Profits and Operating Cash Flow for the Third Quarter

11.0% quarterly revenue growth with record earnings and cash flow

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 15, 2007) - Radiant Communications Corp. ("Radiant") (TSX VENTURE:RCN), Canada's leading supplier of broadband solutions for business, today announced its financial results for the third quarter and nine months ended September 30, 2007.

HIGHLIGHTS:

- Record quarterly revenue of $5.5 million increased by 11.0% compared to the third quarter of 2006.

- Year-to-date revenue of $16.0 million increased 11.3% over the comparable period in 2006.

- Quarterly gross margin was 51.6% and 50.0% for the nine month period.

- In the first nine months of 2007 Radiant recorded EBITDA of $1.2 million which is a 51% increase over the prior year (see EBITDA section for reconciliation to GAAP).

- Quarterly cash flow from operations and working capital changes was $775,122.

- Radiant ended the period with cash and short-term investments of $3.0 million compared with ending cash and short-term investments of $2.7 million as at December 31, 2006.

- With over 85% of recurring revenue denominated in Canadian currency, Radiant is well protected from the recent appreciation of the Canadian dollar.

- During the third quarter Radiant continued to upgrade its backbone and private networking capability and formally announced its TriplePlay VPN in October.

- In Q3 Radiant finalized the initial version of AlwaysThere™ hosted Exchange® which was announced as a new product in October.

- Radiant negotiated a wholesale services agreement for the supply of broadband connectivity to the Canadian locations of one of the world's largest telecommunication services providers.

"Our third quarter results are evidence that we are delivering growth, and strong financial results while investing in new product development," said David Buffett, President and CEO of Radiant. "The Radiant team has brought several new customers online and developed and launched new services while maintaining industry leading margins. Our focus on Always-on Service is reflected in consistent quarter over quarter improvements based on independent third party customer surveys. EBITDA has grown by more than 50% year over year, and achieving a positive bottom line for the quarter is a strong indicator that Radiant has reached a scalable critical mass where revenue growth drives cash flow and profits. We recently announced the availability of both TriplePlay VPN™ and AlwaysThere™ Hosted Exchange®. These products have been developed in-house and have been funded by operating cash flows. We believe there is a large market opportunity and strong demand for these solutions in our existing customer base and in adjacent vertical markets that are currently underserved."

AlwaysThere hosted Exchange is a new email solution recently announced by Radiant using new technologies -- grid computing, virtualization from VMware, and highly scalable storage area networks -- to design the optimal platform for hosting Microsoft Exchange®. By running a separate virtual instance of Exchange for each client in secure data centres, the client has all the flexibility and control of running Exchange on his own equipment, but without worrying about business continuity, redundant servers, and backups. Radiant's AlwaysThere hosting is the most cost effective, reliable and secure way for companies with 10-500 e-mail users to enjoy the enterprise messaging and collaboration benefits of Exchange. Radiant architected this solution specifically to address the needs of SME's for business continuity and e-mail archiving.

Additional details on the third quarter results, including the Unaudited Financial Statements and Management Discussion and Analysis, will be made available at www.sedar.com under Radiant Communications Corp.

Radiant will hold a conference call to discuss its results for the quarter ended September 30, 2007 on November 16, 2007, at 10:00 a.m. PST (1:00 p.m. EST). Access to the call may be obtained by calling the operator at 1-866-400-3310 (Toll Free North America), or 1-416-850-9144 (International) 10 minutes prior to the scheduled start time. A playback of the conference call will be available for 7 days after the call at 1-866-245-6755 (Toll Free North America) or 1-416-915-1035 (International). The pass-code for the playback is 884495. The audio web cast will be archived for replay on Radiant's web site at www.radiant.net.

Non-GAAP Measures

The Company reports EBITDA because it is a key measure used by management to evaluate the Company's performance. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and other non-cash expenses. EBITDA is not a recognized measure under Canadian GAAP, and accordingly investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with Canadian GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA differs from other issuers and, accordingly, EBITDA may not be comparable to similar measures presented by other issuers. Please see the schedule below that sets out the Company's EBITDA calculations.

EBITDA

Earnings before Interest, Taxes, Depreciation and Ammortization, is calculated as follows



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($000s) Q3 2007 Q3 2006
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Operating Income $ 355 $ 144
Amortization 184 204
Stock-based compensation expense 41 26
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EBITDA $ 580 $ 374
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Nine months Nine months
ended ended
($000s) September 30, September 30,
2007 2006
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Operating Income $ 468 $ 131
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Amortization 639 629
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Stock-based compensation expense 44 91
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EBITDA $ 1,151 $ 761
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ABOUT RADIANT COMMUNICATIONS

Radiant Communications Corp. (www.radiant.net) provides businesses with a comprehensive range of IP-based data communications services including the largest on-net DSL footprint across Canada, T1 and E10/E100 fibre broadband, MPLS, IPSec, and SSL private networking. From its data centres in Toronto and Vancouver, Radiant also delivers network-based Microsoft Exchange®, email archiving, digital voice, credit/debit payment processing, and disaster recovery services via VMware-powered grid computing facilities directly connected into customers' private networks.

In operation since 1996, the company currently serves over 14,000 business locations in Canada and the United States from its offices in Vancouver, Toronto, Montreal, Calgary, and Edmonton.

TriplePlay VPN and AlwaysThere are registered trademarks of Radiant Communications Corp. Microsoft, Microsoft Exchange, are registered trademarks of Microsoft Corporation. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

This press release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of Radiant, which involve risks and uncertainties. These risks and uncertainties may cause Radiant's actual results to differ materially from those contemplated by the forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures, the growth rate of the Internet and telecommunications concerns, constantly changing technology and market acceptance of Radiant's products and services. Investors are also directed to consider the other risks and uncertainties discussed in Radiant's required financial statements and filings. All other companies and products listed herein may be trademarks or registered trademarks of their respective holders.



BALANCE SHEET
(Expressed in Canadian dollars)
(Unaudited)

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September 30, December 31,
2007 2006
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Assets
Current assets
Cash and cash equivalents $ 2,435,772 $ 2,162,009
Restricted short-term investments 533,000 533,000
Trade accounts receivable, net of
allowance for doubtful accounts of
$100,785 (2006 - $81,677) 1,885,814 1,879,905
Inventories 374,714 430,505
Prepaid expenses and deposits 366,734 217,885
Deferred costs 565,251 498,093
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6,161,285 5,721,397

Property and equipment 1,419,624 1,211,135
Goodwill 1,574,228 1,574,228
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$ 9,155,137 $ 8,506,760
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 2,084,738 $ 2,299,745
Customer deposits 165,046 167,146
Deferred revenue 3,284,270 3,082,588
Current portion of deferred lease
inducements 39,442 73,973
Current portion of obligations under
capital leases 254,771 505,978
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5,828,267 6,129,430

Deferred lease inducements 7,341 28,290
Obligations under capital leases 192,708 388,050
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6,028,316 6,545,770
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Shareholders' equity
Share capital 3,601,872 2,713,435
Contributed surplus 3,790,147 3,742,335
Deficit (4,265,198) (4,494,780)
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3,126,821 1,960,990
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$ 9,155,137 $ 8,506,760
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STATEMENT OF OPERATIONS AND DEFICIT
(Expressed in Canadian dollars)
(Unaudited)

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Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
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Revenue $ 5,475,260 $ 4,930,938 $ 15,963,343 $14,348,032
Cost of sales 2,650,656 2,439,065 7,979,827 6,980,847
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Gross profit 2,824,604 2,491,873 7,983,516 7,367,185
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Expenses
Sales and marketing 530,955 505,646 1,597,358 1,819,079
General and
administrative 1,754,903 1,637,597 5,278,921 4,788,610
Amortization 183,888 204,159 639,069 629,144
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2,469,746 2,347,402 7,515,348 7,236,833
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Operating income 354,858 144,471 468,168 130,352

Interest expense 31,843 58,646 100,095 187,424
Non-cash interest
expense on warrants - 2,352 3,676 7,056
Other (income)
expenses 91,265 (26,090) 134,815 (25,009)
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Income (loss)
before
discontinued
operations 231,750 109,563 229,582 (39,119)

Income (loss) from
discontinued
operations - 104,855 - (22,168)
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Income (loss) for
the period 231,750 214,418 229,582 (61,287)

Deficit, beginning
of period (4,496,948) (4,785,413) (4,494,780) (4,509,708)
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Deficit, end of
period $(4,229,198) $(4,570,995) $(4,265,198) $(4,570,995)
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Basic and diluted
earnings (loss)
per share before
discontinued $ 0.02 $ 0.01 $ 0.02 $ (0.00)
operations

Basic and diluted
earnings (loss)
per share $ 0.02 $ 0.02 $ 0.02 $ (0.01)

Weighted average
common shares,
used in computing
basic and diluted
earnings (loss)
per share 10,925,658 9,825,658 10,889,394 9,825,658

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STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)

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Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
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Cash flows from
operating activities:
Income (loss) for the
period $ 231,750 $ 214,418 $ 229,582 $ (61,287)
Items not involving
cash:
Amortization 183,888 204,159 639,069 629,144
Stock-based
compensation 41,174 25,427 44,136 91,065
Non-cash interest
expense on
warrants - 2,352 3,676 7,056
Amortization of
deferred lease
inducements (18,493) (18,494) (55,480) (57,854)
Loss on disposal of
discontinued
operations - (174,883) - (56,304)
Foreign exchange
(gain)loss 68,104 (1,026) 127,173 12,189
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506,423 251,953 988,156 564,009
Change in non-cash
working capital:
Trade accounts
receivable 75,607 76,033 (5,909) 700,187
Inventories 137,530 20,610 55,791 (134,871)
Prepaid expenses and
deposits (96,857) 2,485 (148,849) (48,370)
Deferred costs 4,649 (53,440) (67,158) (71,540)
Accounts payable and
accrued liabilities 60,497 (220,261) (215,007) (518,099)
Customer deposits (449) (450) (2,100) (25,744)
Deferred revenue 87,722 (30,066) 201,682 14,567
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775,122 46,864 806,606 480,139

Cash flows from
investing activities:
Purchase of property
and equipment (275,173) (29,116) (847,558) (130,373)
Proceeds of disposal of
discontinued
operations - - - 80,000
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(275,173) (29,116) (847,558) (50,373)

Cash flows from
financing activities:
Proceeds from issuance
of common shares - - 888,437 -
Payments under capital
leases (83,665) (108,707) (446,549) (337,219)
Repayment of long-term
debt - - - (47,557)
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(83,665) (108,707) 441,888 (384,776)

Foreign exchange gain
(loss) on cash held
in foreign currency (68,104) 1,026 (127,173) (12,189)
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Increase (decrease) in
cash and cash
equivalents 348,180 (89,933) 273,763 32,801

Cash and cash
equivalents,
beginning of
period 2,087,592 1,921,500 2,162,009 1,798,766
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Cash and cash
equivalents,
end of period $ 2,435,772 $ 1,831,567 $ 2,435,772 $ 1,831,567
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The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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