Radiant Communications Corp.
TSX VENTURE : RCN

Radiant Communications Corp.

November 20, 2008 18:50 ET

Radiant Communications Announces Third Quarter 2008 Results

Success In New Products and Services Supports Revenue Growth and Cash Flow

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 20, 2008) - Radiant Communications Corp. ("Radiant") (TSX VENTURE:RCN), Canada's leading supplier of Broadband Solutions for Business™, today announced its financial results for its 2008 third quarter ended September 30, 2008.

HIGHLIGHTS:

- Third quarter 2008 revenue of $6.3 million increased by 4.8% over Q2, 2008 and 14.5% over Q3 of 2007.

- Revenue of $17.9 million for the first nine months of 2008 increased by 12.2% compared to revenue of $16.0 million for the first nine months of 2007.

- The Company recorded EBITDA of $163,168 in the third quarter and $428,718 year-to-date while funding enhancements to AlwaysThere hosted Solutions and installing many new customer sites.

- The Company ended the quarter with cash and short-term investments of $2.2 million and generated positive cash flow from operations in the quarter.

- During the third quarter the company provisioned over 1,000 new connectivity locations of which the majority are high value MPLS connections.

- On September 2, 2008 Radiant announced the signing of the largest service contract in Radiant's coporate history. This significant long term customer win with a major North American customer is a 5 year contract for managed services for over 3,000 locations.

- The roll out of new virtual services on Radiant's grid computing facility continued to generate revenue and funnel growth with over 2,200 seats of AlwaysThere hosted Exchange provisioned by the end of Q3. The Company also received and provisioned orders for many new virtual servers hosted on the AlwaysThere grid platform.

- Significant new connectivity services for Sony Canada and ADT Security were provisioned in the third quarter.

- New customer contracts signed in the third quarter with Hallmark Cards Canada and Edward Jones Canada.

- Radiant has completed the roll-out of its MPLS network, built out a second redundant virtual grid in Toronto, installed new real-time network monitoring systems and significantly upgraded its business continuity and disaster recovery capabilities, all while holding capital expenditures under $1.0 million year-to-date.

"I'm extremely pleased with our progress with both new and existing customers," said David Buffett, President and CEO of Radiant. "The third quarter represented a significant period in Radiant's transition to an established competitor in the Software as a Service, (SaaS) market and also brought us our largest customer order ever."

"In September we signed a 5 year managed services agreement with one of North America's premiere consumer services organizations. The contract, to provide managed connectivity services to over 3,000 locations, is valued in excess of $20 million. We began the roll out in the first quarter of this year and as of today we have provisioned over 1,000 locations for this valued customer. Winning this business is a significant market endorsement of our investments in our enhanced private network, our superior customer care model and our reputation as the most reliable and responsive provider of broadband solutions for business."

"Our new AlwaysThere hosted Exchange offering also continues to provide robust growth opportunities. The customer with over 1,600 seats we referred to in our last quarterly report has not only increased the number of seats but has also ordered significant new connectivity services to support their enterprise. More importantly, the customer is very pleased with both the economics of our model and the service and support they are receiving."

"Growth and rapid expansion in the recurring revenue model stress many facets of the organization and require up front investments in systems,Installation capabilities and customer premise equipment. We are pleased with the foundation we have established for future growth and profitability but at the same time we are cognizant of the short term impact on margin, working capital and profits. We are confident in our ability to prudently manage our growth so that we are not negatively impacted by the current North American economic conditions. We have a sound and well established base of diverse customers that we are extremely proud and confident to partner with. Our success in winning new large contracts over the past six months combined with the high growth opportunity we see in our AlwaysThere product portfolio leaves us very well positioned for the coming year," concluded Mr. Buffett.

Additional details on the third quater 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 third quarter ended September 30, 2008 on November 21, at 9:00 a.m. PST (12:00 p.m. EST). Access to the call may be obtained by calling the operator at 1-866-782-8903 (Toll Free North America), or 647-426-1845 (International) 10 minutes prior to the scheduled start time. 7 days after the call at 1-866-245-6755 (Toll Free North America) or 416-915-1035 (International). The passcode for the playback is 692467. 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 Amortization is calculated as follows:



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($000s) Q3 2008 Q3 2007
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Operating Income (Loss) $ (158) $ 355
Amortization 245 184
Stock-based compensation expense 76 41
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EBITDA $ 163 $ 580
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($000s) Nine months Nine months
ended ended
September 30, September 30,
2008 2007
--------------------------------------------------------------------------
Operating Income (loss) $ (469) $ 468
Amortization 716 639
Stock-based compensation expense 182 44
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EBITDA $ 429 $ 1,151
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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 into customers' private networks.

In operation since 1996, the company currently serves over 16,000 business locations in Canada and the United States from its offices in Vancouver, Toronto, Montreal, Calgary, and Edmonton.

Broadband Solutions for Business and AlwaysThere are registered trademarks of Radiant Communications Corp. 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.



RADIANT COMMUNICATIONS CORP.
BALANCE SHEET
(Expressed in Canadian dollars)
(Unaudited)

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September 30, December 31,
2008 2007
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Assets
Current assets
Cash and cash equivalents $ 1,688,902 $ 2,534,271
Restricted short-term investments 533,000 533,000
Trade accounts receivable 2,379,618 2,342,465
Inventories 788,923 412,972
Prepaid expenses and deposits 422,259 262,741
Deferred costs 1,053,299 535,302
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6,866,001 6,620,751

Property and equipment 1,634,207 1,401,203
Goodwill 1,574,228 1,574,228
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$ 10,074,436 $ 9,596,182
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 2,609,585 $ 2,189,748
Customer deposits 162,103 164,896
Deferred revenue 3,932,783 3,418,737
Current portion of deferred
lease inducements 4,911 16,421
Current portion of obligations under
capital leases 137,239 242,945
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6,846,621 6,032,747

Deferred lease inducements 23,780 11,868
Obligations under capital leases 31,567 133,293
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6,901,968 6,177,908
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Shareholders' equity
Share capital 3,601,872 3,601,872
Contributed surplus 4,078,918 3,896,618
Deficit (4,508,322) (4,080,216)
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3,172,468 3,418,274
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$ 10,074,436 $ 9,596,182
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RADIANT COMMUNICATIONS CORP.
STATEMENT OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
(Expressed in Canadian dollars)
(Unaudited)

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Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
--------------------------------------------------------------------------

Revenue $ 6,267,542 $ 5,475,260 $ 17,918,891 $ 15,963,343
Cost of sales 3,457,226 2,650,656 9,726,490 7,979,827
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Gross profit 2,810,316 2,824,604 8,192,401 7,983,516
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Expenses
Sales and
marketing 617,583 530,955 1,775,699 1,597,358
General and
administrative 2,105,746 1,754,903 6,170,288 5,278,921
Amortization 244,604 183,888 715,308 639,069
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2,967,933 2,469,746 8,661,295 7,515,348
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Operating
income (loss) (157,617) 354,858 (468,894) 468,168

Interest expense 20,399 31,843 78,854 100,095
Non-cash interest
expense on warrants - - - 3,676
Other (income)
expenses (53,951) 91,265 (119,642) 134,815
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Income (loss) and
comprehensive
income (loss)
for the period (124,065) 231,750 (428,106) 229,582

Deficit, beginning
of period (4,384,257) (4,496,948) (4,080,216) (4,494,780)
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Deficit, end
of period $ (4,508,322) $ (4,265,198) $ (4,508,322) $ (4,265,198)
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Basic and diluted
income (loss)
per share $ (0.01) $ 0.02 $ (0.04) $ 0.02

Weighted average
common shares,
used in computing
basic and diluted
income (loss)
per share 10,925,658 10,925,658 10,925,658 10,889,394
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RADIANT COMMUNICATIONS CORP.
STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)

--------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
--------------------------------------------------------------------------

Cash flows from
operating activities:
Income (loss) for
the period $ (124,065) $ 231,750 $ (428,106) $ 229,582
Items not
involving cash:
Amortization 244,604 183,888 715,308 639,069
Stock-based
compensation 76,181 41,174 182,300 44,136
Non-cash interest
expense on
warrants - - - 3,676
Amortization of
deferred lease
inducements 5,456 (18,493) 402 (55,480)
Foreign exchange
(gain) loss (33,645) 68,104 (53,502) 127,173
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168,531 506,423 416,402 988,156
Change in non-cash
working capital:
Trade accounts
receivable 20,986 75,607 (37,153) (5,909)
Inventories (332,881) 137,530 (375,951) 55,791
Prepaid expenses
and deposits (94,881) (96,857) (159,518) (148,849)
Deferred costs (80,922) 4,649 (517,997) (67,158)
Accounts payable
and accrued
liabilities 568,014 60,497 419,837 (215,007)
Customer deposits (963) (449) (2,793) (2,100)
Deferred revenue 77,827 87,722 514,046 201,682
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325,711 775,122 256,873 806,606

Cash flows from
investing activities:
Purchase of property
and equipment (476,469) (275,173) (948,312) (847,558)
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(476,469) (275,173) (948,312) (847,558)

Cash flows from
financing activities:
Proceeds from
issuance of
common shares - - - 888,437
Payments under
capital leases (68,729) (83,665) (207,432) (446,549)
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(68,729) (83,665) (207,432) 441,888

Foreign exchange gain
(loss) on cash held
in foreign currency 33,645 (68,104) 53,502 (127,173)
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Increase (decrease)
in cash and cash
equivalents (185,842) 348,180 (845,369) 273,763

Cash and cash
equivalents,
beginning of
period 1,874,744 2,087,592 2,534,271 2,162,009
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Cash and cash
equivalents,
end of period $ 1,688,902 $ 2,435,772 $ 1,688,902 $ 2,435,772
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