Radiant Communications Corp.
TSX VENTURE : RCX

Radiant Communications Corp.

August 04, 2005 08:55 ET

Radiant Communications Announces Financial Results for Second Quarter of 2005; Company Reports 32% Increase in Connectivity Revenue and 11% Increase in Total Revenue Over Prior Year

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 4, 2005) - Radiant Communications Corp. ("Radiant") (TSX VENTURE:RCX), 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 of fiscal 2005 ended June 30, 2005. Revenue for the quarter was $5.1 million, an increase of 11% over the second quarter of 2004 and 7% over the first quarter of 2005. Connectivity revenue was up 32% over the same period of 2004 and up 8% from the preceding quarter. Professional services revenue was down 10% over the second quarter of 2004, but up 41% from the first quarter of 2005 as several large projects reached completion in the period. The Company's average gross margin was 47.5% for the quarter, well within the target range for the Company's product mix and consistent with 47.1% in the second quarter of 2004 and 46.6% in the immediately preceding quarter. The net loss for the quarter was $1.1 million, which includes $0.8 million of interest and amortization expense and the Company ended the quarter with $1.7 million of cash and short-term investments.

"More and more businesses are moving to IP-based services for their everyday operational requirements," said Jim Grey, President and CEO for Radiant Communications. "Radiant is proving to be the connectivity provider of choice for national, multi-location accounts. Our high-quality, Canada-wide footprint, superior customer response systems and business dedicated product portfolio is a compelling differentiator that has allowed us to maintain a 30% annual growth rate in our core recurring revenue business. With total revenue growing at 7% quarter over quarter and operating costs flat, I believe we've demonstrated that our business model is on target."

Second quarter highlights include:

- Year-to-date record revenue of $9.9 million and record quarterly revenue of $5.1 million,

- Increased cash and short term deposits to $1.7 million as at the end of the second quarter,

- Achieved another record quarter for total value of new recurring revenue orders signed,

- Signed several new, multi-location customers including Loblaws, Westfair Foods, RentCash and Sony Canada,

- Continued to add new locations for existing customers such as Wal-Mart, A&W, The Forzani Group, Dynamite stores, Schenker and Glentel,

- Sold over 200 additional new locations through our business partner channels,

- Held operating costs to a 1% quarter over quarter increase and a 1% decrease from the second quarter of 2004,

- Added two new independent Board members, Brian Nixon and Sam Ketcham

Additional details on second quarter results, including the Management Discussion and Analysis, are available at www.sedar.com under Radiant Communications Corp.

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, web hosting, web development and marketing services.

The Company offers a complete range of coast-to-coast broadband services including DSL, T1, Fibre, and Cable. Radiant has 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,
2005 2004
(Unaudited)
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Assets
Current assets
Cash and cash equivalents $ 1,135,302 $ 359,967
Short-term investments 608,000 575,000
Trade accounts receivable, net of
allowance for doubtful accounts of
$111,006 (2004 - $75,779) 2,101,192 2,138,041
Inventories 394,700 313,736
Prepaid expenses and deposits 196,408 197,347
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4,435,602 3,584,091

Capital assets 1,415,168 1,518,442
Deferred financing costs 498,110 872,889
Goodwill 1,574,228 1,574,228
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$ 7,923,108 $ 7,549,650
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Liabilities and Shareholders' Deficiency
Current liabilities
Accounts payable and accrued liabilities $ 2,474,564 $ 3,160,644
Customer deposits 194,690 195,740
Deferred revenue 2,268,320 1,952,634
Current portion of deferred lease
inducements 88,903 71,763
Current portion of long-term debt 3,293,407 3,198,670
Current portion of obligations under
capital leases 333,373 264,953
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8,653,257 8,844,404

Deferred lease inducement 167,562 219,357
Long-term debt 1,715,063 49,420
Obligations under capital leases 628,254 622,470


Shareholders' deficiency
Share capital 28,573,306 28,559,806
Contributed surplus 2,892,225 1,595,349
Deficit (34,706,559) (32,341,156)
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(3,241,028) (2,186,001)
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$ 7,923,108 $ 7,549,650
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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,
-------------------------- --------------------------
2005 2004 2005 2004
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue $ 9,850,609 $ 8,535,421 $ 5,100,239 $ 4,546,350
Cost of sales 5,215,985 4,353,761 2,678,628 2,407,360
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Gross profit 4,634,624 4,181,660 2,421,611 2,138,990

Expenses
Sales and
marketing 2,168,469 1,940,309 1,085,346 1,105,694
General and
adminis-
trative 3,277,062 3,220,620 1,654,279 1,642,214
Amortization 463,741 549,689 232,645 234,983
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5,909,272 5,710,618 2,972,270 2,982,891
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Operating loss 1,274,648 1,528,958 550,659 843,901

Interest
expense 550,876 289,341 271,672 158,004
Amortization
of warrant-
based
deferred
financing
costs 382,737 63,789 191,369 63,789
Accretion of
deemed
discount on
convertible
debentures 186,639 - 102,103 -
Non-cash
interest
expense
on warrants 4,704 1,029 2,351 1,029
Other (income)
expense (34,201) (73,602) (30,182) (23,712)
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Loss for the
period 2,365,403 1,809,515 1,087,972 1,043,011

Deficit,
beginning of
period 32,341,156 28,966,300 33,618,587 29,732,804
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Deficit, end
of period $ 34,706,559 $ 30,775,815 $ 34,706,559 $ 30,775,815
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Basic and
diluted loss
per share $ (0.08) $ (0.06) $ (0.04) $ (0.04)

Weighted
average
common
shares, used
in computing
loss per
share basic
and diluted 28,235,415 28,209,724 28,259,724 28,209,724

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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,
-------------------------- --------------------------
2005 2004 2005 2004
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Cash provided
by (used in):

Operations
Loss for the
period $ (2,365,403) $ (1,809,515) $ (1,087,972) $ (1,043,011)
Items not
involving
cash:
Amortization 463,741 549,689 232,645 234,983
Amortization
of warrant-
based
deferred
financing
costs 382,737 63,789 191,369 63,789
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 66,937 33,043 40,375 21,874
Unrealized
foreign
exchange
(gain) loss - (2,611) - (9,135)
Non-cash
interest
expense on
warrants 4,704 1,029 2,351 1,029
Amortization
of deferred
lease
inducement (34,655) (17,159) (22,982) (10,104)
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(1,200,564) (1,181,735) (494,743) (740,575)
Change in
non-cash
operating
working
capital
Trade
accounts
receivable 36,849 (203,859) 101,552 (327,848)
Inventories (80,964) (216,949) 8,031 (135,832)
Prepaid
expenses
and
deposits 939 (101,929) (27,252) (112,347)
Accounts
payable and
accrued
liabilities (715,781) 235,751 509,306 786,323
Customer
deposits (1,050) 24,725 (600) 17,928
Deferred
revenue 315,686 65,726 168,419 (12,990)
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(1,644,885) (1,378,270) 264,713 (525,341)
Investments
(Purchase)
sale of
short-term
investments (33,000) 1,675,000 (33,000) 900,000
Purchase of
capital
assets (80,661) (319,318) (69,798) (36,367)
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(113,661) 1,355,682 (102,798) 863,633
Financing
Proceeds from
issuance of
convertible
debentures 2,750,000 - - -
Deferred
financing
costs (42,640) (23,626) (23,626)
Proceeds from
exercise of
employee
stock
options 13,500 - - -
Payments
under
capital
leases (139,601) (188,309) (66,384) (76,503)
Proceeds from
sale-
leaseback - 203,970 - 203,970
Repayment of
long-term
debt (47,378) (47,771) (22,872) (23,979)
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2,533,881 (55,736) (89,256) 79,862
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Increase
(decrease) in
cash and cash
equivalents 775,335 (78,324) 72,659 418,154

Cash and cash
equivalents,
beginning of
period 359,967 693,744 1,062,643 197,266
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Cash and cash
equivalents,
end of
period $ 1,135,302 $ 615,420 $ 1,135,302 $ 615,420
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