Radiant Communications Corp.
TSX VENTURE : RCX

Radiant Communications Corp.

November 02, 2005 08:55 ET

Radiant Communications Announces Financial Results for Third Quarter of 2005; Company Reports 27% Increase in Connectivity Revenue and 11% Increase in Total Revenue Over Prior Year

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 2, 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 third quarter of fiscal 2005 ended September 30, 2005. Revenue for the quarter was $5.2 million, an increase of 11% over the third quarter of 2004.

Recurring connectivity revenue for the quarter was up 27% over the same period of 2004 and year-to-date recurring connectivity revenue was up 30% over 2004. The Company's average gross margin was on target at 47.2% for the quarter and consistent with 47.5% for the second quarter of 2005 and 47.8% for the third quarter of 2004. The net loss for the quarter was $2.2 million, which included $1.7 million of interest expense, amortization and discount accretion related to the outstanding debt of the Company and the conversion, repayment and exchange of this debt during the quarter. The Company ended the quarter with $3.4 million in cash and short-term investments, positive working capital and no significant debt other than capital leases.

"Radiant underwent some very significant changes in the third quarter," said Chris Worthy, Chairman and acting President and CEO for Radiant Communications. "In addition to continuing to grow the core connectivity revenue base by over 25%, the Company retired all of its outstanding debentures and added almost $2 million in cash to the balance sheet. With positive working capital and significant reductions in the use of cash, Radiant is well positioned to leverage sales and customer acquisitions into financial success. Following the end of the quarter, Jim Grey announced he was stepping down as President and CEO. The Board thanks Jim for his many contributions and has instituted a search for a successor to guide Radiant to new levels of growth and financial performance."

Third quarter highlights include:

- Achieved record year-to-date revenue of $15.0 million and record quarterly revenue of $5.2 million,

- Announced and closed a non-brokered $7.9 million equity financing,

- Increased cash and short term deposits to $3.4 million and reduced debt by $6.0 million,

- The EBITDA loss of $37,000 was significantly improved over the Q2-2005 EBITDA loss of $278,000,

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

- Announced the 10,000th managed DSL connection for business,

- Continued to add new locations for existing customers including Wal-Mart, RentCash, West 49, Lululemon Athletica, and Loblaws, and

- Reduced Sales, Marketing and Administration costs for the quarter by 8% versus the second quarter.

Additional details on third 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 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)

-----------------------------------------------------------------------
September 30, December 31,
2005 2004
(Unaudited)
-----------------------------------------------------------------------

Assets
Current assets
Cash and cash equivalents $ 2,785,157 $ 359,967
Short-term investments 608,000 575,000
Trade accounts receivable, net of
allowance for doubtful accounts of
$125,184 (2004 - $75,779) 2,167,020 2,138,041
Inventories 385,773 313,736
Prepaid expenses and deposits 217,428 197,347
----------------------------------------------------------------------
6,163,378 3,584,091

Capital assets 1,395,262 1,518,442
Deferred financing costs - 872,889
Goodwill 1,574,228 1,574,228
-----------------------------------------------------------------------

$ 9,132,868 $ 7,549,650
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 2,705,119 $ 3,160,644
Customer deposits 194,240 195,740
Deferred revenue 2,473,659 1,952,634
Current portion of deferred lease
inducements 89,589 71,763
Current portion of long-term debt 72,674 3,198,670
Current portion of obligations under
capital leases 382,084 264,953
----------------------------------------------------------------------
5,917,365 8,844,404

Deferred lease inducement 144,822 219,357
Long-term debt - 49,420
Obligations under capital leases 641,988 622,470

Shareholders' equity (deficiency)
Share capital 35,712,621 28,559,806
Contributed surplus 3,578,693 1,595,349
Deficit (36,862,621) (32,341,156)
----------------------------------------------------------------------
2,428,693 (2,186,001)
-----------------------------------------------------------------------

$ 9,132,868 $ 7,549,650
-----------------------------------------------------------------------
-----------------------------------------------------------------------


RADIANT COMMUNICATIONS CORP.
Statements of Operations and Deficit
(Unaudited)
(Expressed in Canadian dollars)

-----------------------------------------------------------------------
Nine months ended Three months ended
September 30, September 30,
---------------------------- ----------------------------
2005 2004 2005 2004
-----------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue $ 15,032,818 $ 13,202,270 $ 5,182,209 $ 4,666,848
Cost of sales 7,950,910 6,787,832 2,734,925 2,434,070
-----------------------------------------------------------------------

Gross profit 7,081,908 6,414,438 2,447,284 2,232,778

Expenses
Sales and
marketing 3,105,476 2,863,683 937,007 923,373
General and
administrative 4,857,071 4,722,744 1,580,009 1,502,123
Amortization 759,640 797,333 295,899 247,646
-----------------------------------------------------------------------
8,722,187 8,383,760 2,812,915 2,673,142
-----------------------------------------------------------------------

Operating loss 1,640,279 1,969,322 365,631 440,364

Interest
expense 920,685 502,103 369,807 212,762
Amortization
of warrant-
based deferred
financing costs 765,474 255,158 382,737 191,368
Accretion of
deemed discount
on convertible
debentures 1,225,236 - 1,038,597 -
Non-cash interest
expense on
warrants 7,053 3,382 2,351 2,354
Other (income)
expense (37,262) (88,308) (3,061) (14,706)
-----------------------------------------------------------------------

Loss for the
period 4,521,465 2,641,657 2,156,062 832,142

Deficit,
beginning of
period 32,341,156 28,966,300 34,706,559 30,775,815
-----------------------------------------------------------------------

Deficit, end
of period $ 36,862,621 $ 31,607,957 $ 36,862,621 $ 31,607,957
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Basic and
diluted loss
per share $ (0.16) $ (0.09) $ (0.07) $ (0.03)

Weighted
average
common shares,
used in
computing
loss per
share basic
and diluted 28,580,096 28,209,724 29,260,632 28,209,724

-----------------------------------------------------------------------
-----------------------------------------------------------------------


RADIANT COMMUNICATIONS CORP.
Statements of Cash Flows
(Unaudited)
(Expressed in Canadian dollars)

-----------------------------------------------------------------------
Nine months ended Three months ended
September 30, September 30,
---------------------------- ----------------------------
2005 2004 2005 2004
-----------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash provided
by (used in):
Operations
Loss for the
period $ (4,521,465) $ (2,641,657) $ (2,156,062) $ (832,142)
Items not
involving cash
Amortization 759,640 797,333 295,899 247,646
Amortization
of warrant-
based
deferred
financing
costs 765,474 255,158 382,737 191,368
Accretion of
deemed
discount on
convertible
debentures 1,225,236 - 1,038,597 -
Cash-based
bonus accrual
on long-term
debt 189,474 142,104 94,738 47,368
Early repayment
amount on
senior secured
debentures 46,154 - 46,154 -
Stock based
compensation 100,019 54,256 33,082 21,213
Unrealized
foreign
exchange
(gain) loss - 2,443 - 5,054
Non-cash
interest
expense on
warrants 7,053 3,382 2,351 2,354
Amortization
of deferred
lease
inducement (56,709) (17,267) (22,054) (108)
----------------------------------------------------------------------
(1,485,124) (1,404,248) (284,558) (317,247)
Change in non-
cash operating
working capital
Trade accounts
receivable (28,979) (211,753) (65,828) (7,894)
Inventories (72,037) (345,791) 8,927 (128,842)
Prepaid
expenses and
deposits (20,081) (101,530) (21,020) 399
Accounts
payable and
accrued
liabilities (601,084) (46,279) 114,695 (187,296)
Customer
deposits (1,500) 35,843 (450) 11,118
Deferred
revenue 521,025 195,652 205,339 129,926
----------------------------------------------------------------------
(1,687,780) (1,878,106) (42,895) (499,836)
Investments
(Purchase)
sale of
short-term
investments (33,000) 2,075,000 - 400,000
Purchase of
capital
assets (126,467) (406,834) (45,806) (87,516)
----------------------------------------------------------------------
(159,467) 1,668,166 (45,806) 312,484
Financing
Proceeds from
issuance of
convertible
debentures 2,750,000 - - -
Deferred
financing costs (42,640) (23,626) - -
Proceeds from
issuance of
common shares 3,256,498 - 3,256,498 -
Share issuance
costs (35,010) - (35,010) -
Proceeds from
exercise of
employee stock
options 13,500 - - -
Repayment of
long-term
debt (1,452,508) (71,906) (1,405,130) (24,135)
Payments under
capital leases (217,403) (283,681) (77,802) (95,372)
Proceeds from
sale-leaseback - 203,970 - -
----------------------------------------------------------------------
4,272,437 (175,243) 1,738,556 (119,507)
-----------------------------------------------------------------------

Increase
(decrease) in
cash and cash
equivalents 2,425,190 (385,183) 1,649,855 (306,859)
Cash and cash
equivalents,
beginning of
period 359,967 693,744 1,135,302 615,420
-----------------------------------------------------------------------

Cash and cash
equivalents,
end of
period $ 2,785,157 $ 308,561 $ 2,785,157 $ 308,561



The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information