Radiant Communications Corp.
TSX VENTURE : RCN

Radiant Communications Corp.

November 07, 2006 17:27 ET

Radiant Communications Announces First Profitable Quarter

Company records fourth consecutive quarter of positive EBITDA, positive cash flow from operations and net income in excess of $200,000 with 11% year over year growth

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 7, 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 third quarter ended September 30, 2006.

- Net income of $214,418 compared to a net loss of $2.2 million in the third quarter of 2005.

- Revenue of $4.9 million increased by 11% compared to the third quarter of 2005.

- Operating expenses decreased by 12% compared to Q3-2005.

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

- Cash Flow from operations was positive for the third consecutive quarter.

"I am extremely pleased with our third quarter results," said David Buffett, President and CEO of Radiant. "Positive net income for the quarter clearly demonstrates the success of our efforts over the past year. With a secure and growing base of recurring revenue, Radiant's aggressive business strategy will continue to provide an attractive investment opportunity. The profitability of Radiant's core business will allow us to expand the solutions we offer our existing customers and expand into adjacent high growth markets by offering new services and solutions which we anticipate introducing in early 2007."

Significant highlights in the Third Quarter included:

- Added new key multi-location customers including Collega, Sprint Canada and HDS Retail.

- Continued the roll out and expansion of existing high value customers including La Vie En Rose, 7-11, Wal-Mart, Club Monaco and Brown Shoes.

- Announced the availability of new, high capacity T-1 and Ethernet based connectivity products from MTS Allstream Inc.

- Announced the launch of a national, managed, virtual private network for Black's Photo Corp.

- Continued to generate industry leading gross margins above 50% by selling best in class products and services to the SME (Small and Medium Enterprise) market.

- Improved EBITDA by over $400,000 compared to Q3-2005 and established four consecutive quarters of positive EBITDA.

- Generated net income of $214,418 in the third quarter compared to a loss of $2.18 million in Q3 2005.

Additional details on both the financial year and first 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 September 30, 2006 on Wednesday, November 8, 2006, at 1:00 p.m. PST (4:00 p.m. EST). 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 1-866-245-6755 (Toll Free North America) or 416-915-1035 (International). The passcode for the playback is 141635. 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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Q3 2006 Q3 2005
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Operating income (loss) $ 144 $ (393)
Amortization 204 290
Stock-based compensation expense 26 33
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EBITDA $ 374 $ (70)
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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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September 30, December 31,
2006 2005
(Unaudited)
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Assets
Current assets
Cash and cash equivalents $ 1,831,567 $ 1,798,766
Short-term investments 533,000 533,000
Trade accounts receivable, net of
allowance for doubtful accounts
of $147,319 (2005 - $115,242) 1,784,135 2,484,322
Inventories 469,276 324,227
Prepaid expenses and deposits 206,101 168,877
Deferred costs 433,188 361,648
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5,257,267 5,670,840

Capital assets "CP" 1,067,649 1,350,603
Capital assets related to
discontinued operations - 43,643
Goodwill 1,574,228 1,574,228
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$ 7,899,144 $ 8,639,314
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued
liabilities $ 1,740,621 $ 2,244,054
Customer deposits 167,746 193,490
Deferred revenue 2,999,322 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 562,359 448,837
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5,544,021 6,008,968

Deferred lease inducements 46,783 122,082
Obligations under capital leases 453,143 689,901

Shareholders' equity
Share capital 2,713,435 2,713,435
Contributed surplus 3,712,757 3,614,636
Deficit (4,570,995) (4,509,708)
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1,855,197 1,818,363
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$ 7,899,144 $ 8,639,314
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RADIANT COMMUNICATIONS CORP.
Statements of Operations and Deficit
(Unaudited)
(Expressed in Canadian dollars)

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Nine months ended Three months ended
September 30, September 30,
------------------------- -------------------------
2006 2005 2006 2005
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue $ 14,348,032 $ 12,850,963 $ 4,930,938 $ 4,433,540
Cost of sales 6,980,847 6,328,169 2,439,065 2,152,225
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Gross profit 7,367,185 6,522,794 2,491,873 2,281,315

Expenses
Sales and marketing 1,900,596 2,953,238 535,186 897,600
General and
administrative 4,707,093 4,549,744 1,608,057 1,486,597
Amortization 629,144 743,018 204,159 290,256
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7,236,833 8,246,000 2,347,402 2,674,453
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Operating income (loss) 130,352 (1,723,206) 144,471 (393,138)

Interest expense 187,424 920,685 58,646 369,807
Amortization of
warrant-based deferred
financing costs - 765,474 - 382,737
Accretion of deemed
discount on convertible
debentures - 1,225,236 - 1,038,597
Non-cash interest expense
on warrants 7,056 7,053 2,352 2,351
Other income (25,009) (37,262) (26,090) (3,061)
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Income (loss) before
discontinued operations (39,119) (4,604,392) 109,563 (2,183,569)

Income (loss) from
discontinued operations (22,168) 82,927 104,855 27,507
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Income (loss) for
the period (61,287) (4,521,465) 214,418 (2,156,062)

Deficit,
beginning of period (4,509,708) (32,341,156) (4,785,413) (34,706,559)
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Deficit,
end of period $ (4,570,995)$(36,862,621)$ (4,570,995)$(36,862,621)
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Basic and diluted
income (loss) per
share before
discontinued
operations $ (0.00)$ (0.97)$ 0.01 $ (0.45)

Basic and diluted
income (loss)
per share $ (0.01)$ (0.95)$ 0.02 $ (0.44)

Weighted average
common shares,
used in computing
loss per share
basic and diluted 9,825,658 4,763,484 9,825,658 4,876,770
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RADIANT COMMUNICATIONS CORP.
Statements of Cash Flows
(Unaudited)
(Expressed in Canadian dollars)

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Nine months ended Three months ended
September 30, September 30,
------------------------- -------------------------
2006 2005 2006 2005
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Cash provided by (used in):

Operations
Income (loss)
for the period $ (61,287)$ (4,521,465)$ 214,418 $ (2,156,062)
Items not involving
cash
Amortization 629,144 759,640 204,159 295,899
Amortization of
warrant-based
deferred financing
costs - 765,474 - 382,737
Accretion of deemed
discount on
convertible debentures - 1,225,236 - 1,038,597
Cash-based bonus
accrual on
long-term debt - 189,474 - 94,738
Early repayment
amount on senior
secured debentures - 46,154 - 46,154
Stock based compensation 91,065 100,019 25,427 33,082
Non-cash interest
expense on warrants 7,056 7,053 2,352 2,351
Amortization of
deferred lease
inducement (57,854) (56,709) (18,494) (22,054)
Non-cash gain on
disposal of
discontinued
operations (56,304) - (174,883) -
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551,820 (1,485,124) 252,979 (284,558)

Change in non-cash
operating working
capital
Trade accounts
receivable 700,187 (28,979) 76,033 (65,828)
Inventories (134,871) (72,037) 20,610 8,927
Prepaid expenses
and deposits (48,370) (20,081) 2,485 (21,020)
Deferred costs (71,540) 210,472 (53,440) 66,416
Accounts payable
and accrued
liabilities (518,099) (601,084) (220,261) 114,695
Customer deposits (25,744) (1,500) (450) (450)
Deferred revenue 14,567 310,553 (30,066) 138,923
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467,950 (1,687,780) 47,890 (42,895)

Investments
(Purchase) sale of
short-term investments - (33,000) - -
Purchase of capital
assets (130,373) (126,467) (29,116) (45,806)
Proceeds of disposal
of discontinued
operations 80,000 - - -
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(50,373) (159,467) (29,116) (45,806)

Financing
Proceeds from issuance
of convertible
debentures - 2,750,000 - -
Deferred financing costs - (42,640) - -
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 - -
Payments under
capital leases (337,219) (217,403) (108,707) (77,802)
Repayment of
long-term debt (47,557) (1,452,508) - (1,405,130)
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(384,776) 4,272,437 (108,707) 1,738,556
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Increase (decrease)
in cash and cash
equivalents 32,801 2,425,190 (89,933) 1,649,855

Cash and cash
equivalents,
beginning of period 1,798,766 359,967 1,921,500 1,135,302
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Cash and cash
equivalents,
end of period $ 1,831,567 $ 2,785,157 $ 1,831,567 $ 2,785,157
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