Radiant Communications Corp.
TSX VENTURE : RCN

Radiant Communications Corp.

August 09, 2006 17:00 ET

Radiant Communications Announces 11% Revenue Growth with Positive Cash Flow and EBITDA for the Second Quarter of 2006

Operations Generate 11% Revenue Growth with Third Consecutive Quarter of Positive EBITDA

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 9, 2006) - Radiant Communications Corp. ("Radiant") (TSX VENTURE:RCN), Canada's leading supplier of Internet-based data communications and Internet services to the business market, today announced its financial results for the second quarter ended June 30, 2006.

- Revenue of $4.74 million increased by 11% compared to the second quarter of 2005.

- Operating expenses decreased by 9% compared to Q2-2005.

- The Company recorded its third consecutive quarter of positive EBITDA.

- Cash Flow from operations was positive $140,041 in the second quarter and positive $420,060 for the 6 months ended June 30, 2006.

- Net Loss for the quarter was $74,948 compared to a net loss of $1.1 million in the second quarter of 2005.

"Having joined Radiant midway through the second quarter I've been privileged to participate in another remarkable quarter of progress," said David Buffett, President and CEO of Radiant. "As a recurring revenue business with industry leading margins Radiant is extremely well positioned to profit from ongoing revenue growth operating on an established and cost effective backbone. The management team and I have recently spent a great deal of time with our customers and partners. I see my role over the next 6 months as managing the introduction of new value add services and products to ratchet the revenue from our existing base and add new customers from adjacent vertical markets."

Significant highlights in the Second Quarter included:

- Announced the appointment of David Buffett as President and CEO.

- Added many new key multi-location customers including La Vie En Rose, Danier Leather, 7-11, IBM Canada and Brown Shoes.

- Continued the roll out of existing high value customers including Wal-Mart and Black's Photo.

- Continued to generate gross margins above 50% by selling best in class products and services to the SME market.

- Improved EBITDA by over $500,000 compared to Q2-2005 and established three consecutive quarters of positive EBITDA.

- Continued to generate positive cash flow from operations.

- Completed the disposition of the Professional Services Business.

Additional details on both the financial year and second quarter results, including the Audited 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 June 30, 2006 on Thursday, August 10, 2006, at 1:30 p.m. PDT (4:30 p.m. EDT). Access to the call may be obtained by calling the operator at 1-866-400-2280 (Toll Free North America), or 1-416-850-9143 (International) 10 minutes prior to the scheduled start time. A playback version of the call will be available for 7 days after the call at 1-800-374-8789 (Toll Free North America) or 402-220-0893 (International). The passcode for the playback is 4201045. The audio web cast will be archived for replay on Radiant's web site at www.radiant.net.

Non-GAAP Measures

The Company reports Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), which is an approximate measure of operating results based on selected financial data from the Company's statement of operations. Non-GAAP measures may not be identical to similarly titled measures reported by other companies.

EBITDA specifically does not include restructuring costs, stock-based compensation expense, or results from discontinued operations. EBITDA is not a measure that is governed or defined by generally accepted accounting principles. Readers are cautioned that EBITDA as calculated by the Company may not be comparable to similarly titled amounts reported by other companies. The disclosure of EBITDA is intended to add to and not replace the discussion of financial results or cash flows from operations. Please refer to the "EBITDA" section for a reconciliation of EBITDA.

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortization, is calculated as follows:



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($000s) Q2 2006 Q2 2005
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Operating loss $ (77) $ (608)
Amortization 208 227
Stock-based compensation expense 34 40
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EBITDA $ 165 $ (341)
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ABOUT RADIANT COMMUNICATIONS

Radiant Communications Corp. (www.radiant.net) provides a total, integrated solution for businesses requiring national IP data communications services including, broadband and managed network services, Internet access and web hosting.

The Company offers a complete range of coast-to-coast broadband services including DSL, T1, Fibre, and Cable. Radiant also provides specialized IP services for the Canadian retail industry, namely, RetailCONNECT™ IP network services and TurboSwitch IP payment gateway services. Radiant has offices in Toronto, Montreal, Calgary, Edmonton and Vancouver.

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 the company'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 Sheets
(Unaudited)
(Expressed in Canadian dollars)
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June 30, December 31,
2006 2005
(Unaudited)
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Assets
Current assets
Cash and cash equivalents $ 1,921,500 $ 1,798,766
Short-term investments 533,000 533,000
Trade accounts receivable,
net of allowance for
doubtful accounts of
$127,460 (2005 - $115,242) 1,860,168 2,484,322
Inventories 489,886 324,227
Prepaid expenses and deposits 219,732 168,877
Deferred costs 379,748 361,648
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5,404,034 5,670,840

Capital assets 1,132,947 1,350,603
Capital assets related to
discontinued operations - 43,643
Goodwill 1,574,228 1,574,228
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$ 8,111,209 $ 8,639,314
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Liabilities and Shareholders'
Equity

Current liabilities
Accounts payable and accrued
liabilities $ 2,146,911 $ 2,244,054
Customer deposits 168,196 193,490
Deferred revenue 3,029,388 2,984,755
Current portion of deferred
lease inducements 73,973 90,275
Current portion of long-term debt - 47,557
Current portion of obligations
under capital leases 493,409 448,837
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5,911,877 6,008,968

Deferred lease inducements 65,276 122,082
Obligations under capital leases 521,055 689,901

Shareholders' equity
Share capital 2,713,435 2,713,435
Contributed surplus 3,684,978 3,614,636
Deficit (4,785,412) (4,509,708)
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1,613,001 1,818,363
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$ 8,111,209 $ 8,639,314
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RADIANT COMMUNICATIONS CORP.
Statements of Operations and Deficit
(Unaudited)
(Expressed in Canadian dollars)

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Six months ended Three months ended
June 30, June 30,
------------------------- ------------------------
2006 2005 2006 2005
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue $ 9,417,094 $ 8,417,423 $ 4,744,357 $ 4,262,019
Cost of sales 4,541,782 4,175,944 2,308,065 2,074,628
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Gross profit 4,875,312 4,241,479 2,436,292 2,187,391

Expenses
Sales and marketing 1,365,410 2,055,638 766,154 1,023,921
General and
administrative 3,099,036 3,063,147 1,539,219 1,544,514
Amortization 424,985 452,762 207,914 227,167
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4,889,431 5,571,547 2,513,287 2,795,602
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Operating loss (14,119) (1,330,068) (76,995) (608,211)

Interest expense 128,778 550,876 64,260 271,672
Amortization of
warrant-based
deferred financing
costs - 382,737 - 191,369
Accretion of deemed
discount on convertible
debentures - 186,639 - 102,103
Non-cash interest
expense on warrants 4,704 4,704 2,352 2,352
Other (income) expense 1,080 (34,201) 30,140 (30,182)
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Loss before
discontinued
operations (148,681) (2,420,823) (173,747) (1,145,525)

Income (loss) from
discontinued
operations (127,023) 55,420 98,799 57,553
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Loss for the period (275,704) (2,365,403) (74,948) (1,087,972)

Deficit, beginning
of period (4,509,708) (32,341,156) (4,710,464) (33,618,587)
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Deficit,
end of period $(4,785,412)$(34,706,559)$(4,785,412)$(34,706,559)
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Basic and diluted
loss per share
before
discontinued
operations $ (0.02)$ (0.51)$ (0.02)$ (0.24)

Basic and diluted
loss per share $ (0.03)$ (0.50)$ (0.01)$ (0.23)

Weighted average
common shares,
used in computing
loss per share
basic and diluted 9,825,658 4,705,902 9,825,658 4,709,954
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RADIANT COMMUNICATIONS CORP.
Statements of Cash Flows
(Unaudited)
(Expressed in Canadian dollars)

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Six months ended Three months ended
June 30, June 30,
------------------------- ------------------------
2006 2005 2006 2005
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Cash provided by
(used in):

Operations
Loss for the
period $ (275,704)$ (2,365,403)$ (74,948)$ (1,087,972)
Items not
involving cash:
Amortization 424,985 463,741 207,914 232,644
Amortization of
warrant-based
deferred
financing costs - 382,737 - 191,369
Accretion of
deemed discount
on convertible
debentures - 186,639 - 102,103
Cash-based bonus
accrual on
long-term debt - 94,736 - 47,368
Stock based
compensation 65,638 66,937 33,590 40,375
Non-cash interest
expense on
warrants 4,704 4,704 2,352 2,352
Amortization
of deferred
lease inducement (39,361) (34,655) (18,493) (22,982)
Loss on disposal
of discontinued
operations 118,579 - 1,953 -
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298,841 (1,200,564) 152,368 (494,743)
Change in non-cash
operating working
capital
Trade accounts
receivable 624,154 36,849 (72,969) 101,552
Inventories (155,481) (80,964) (112,838) 8,031
Prepaid expenses
and deposits (50,855) 939 (77,661) (27,252)
Deferred costs (18,100) 144,055 (17,570) 81,954
Accounts payable
and accrued
liabilities (297,838) (715,781) 248,220 509,306
Customer deposits (25,294) (1,050) (24,544) (600)
Deferred revenue 44,633 171,631 45,035 86,465
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420,060 (1,644,885) 140,041 264,713
Investments
Purchase of
short-term
investments - (33,000) - (33,000)
Purchase of
capital assets (101,257) (80,661) (51,572) (69,798)
Proceeds of
disposal of
discontinued
operations 80,000 - - -
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(21,257) (113,661) (51,572) (102,798)
Financing
Proceeds from
issuance of
convertible
debentures - 2,750,000 - -
Deferred financing
costs - (42,640) - -
Proceeds from
exercise of
employee
stock options - 13,500 - -
Payments under
capital leases (228,512) (139,601) (124,063) (66,384)
Proceeds from
sale-leaseback - - - -
Repayment of
long-term debt (47,557) (47,378) (22,222) (22,872)
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(276,069) 2,533,881 (146,285) (89,256)
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Increase (decrease)
in cash and
cash equivalents 122,734 775,335 (57,816) 72,659

Cash and cash
equivalents,
beginning
of period 1,798,766 359,967 1,979,316 1,062,643
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Cash and cash
equivalents,
end of period $ 1,921,500 $ 1,135,302 $ 1,921,500 $ 1,135,302
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