Radiant Communications Corp.
TSX VENTURE : RCN

Radiant Communications Corp.

March 15, 2007 09:16 ET

Radiant Communications Announces First Profitable Year With $1.1 Million EBITDA

Company records fifth consecutive quarter of positive EBITDA, nineteenth consecutive quarter of revenue growth and first profitable year in Company history

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 15, 2007) - 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 fourth quarter and year ended December 31, 2006.

HIGHLIGHTS:

- Revenue of $19.3 million for the year increased by 9.6% compared to revenue of $17.6 million for 2005.

- Revenue in Q4 of 2006 was $4.9 million, the Company's nineteenth consecutive quarter of revenue growth.

- Gross margin was 51.7% for the year and 52.6% in the fourth quarter.

- Operating expenses decreased by 12.7% in 2006 compared to 2005 as the Company successfully continued to grow revenue with a significant reduction in operating costs.

- In the fourth quarter of 2006 the Company recorded EBITDA of $296,904 and EBITDA for the year was $1.1 million (see EBITDA section for reconciliation to GAAP).

- Positive net income in 2006 of $14,928 was a significant improvement compared to the net loss of $5.2 million in 2005.

- The Company ended the current year with cash and short-term investments of $2.7 million compared with ending cash and short-term investments of $2.3 million as at December 31, 2005. On January 10, 2007, Radiant closed a non-brokered private placement of 1.1 million common shares for net cash proceeds of $880,000.

- During 2006, Radiant announced several new products and services to meet the growing security and managed service needs of new and existing clients.

- We added many new key multi-location customers in 2006 including Club Monaco, La Vie en Rose, 7-Eleven, Dollarama, and HDS Retail.

- Radiant continued the roll out of existing high value customers during the year including Wal-Mart, Burger King, Glentel, Blacks Photo, MoneyMart, Rentcash, Lululemon, and London Drugs.

"I am very proud of our progress in 2006," said David Buffett, President and CEO of Radiant. "In the space of 12 months we grew revenue, improved margins, generated $1.2 million of positive cash flow from operations and pushed the operation past break-even net income into profitability after losing over $5 million in the previous year. I believe this is a significant step forward in delivering value to our shareholders. As an organization we are committed to building on this success throughout 2007. With the addition of our digital voice offerings and the roll out of our secure private IP network on track for the first half of this year I see a tremendous opportunity for Radiant to continue to be the best in class network services provider to the small and medium enterprise market."

The Company had previously awarded stock options to Mr. Buffett conditional on annual performance criteria. The performance criteria for 2006 were successfully achieved and Mr. Buffett has been granted 100,000 stock options at a price of $1.00 per share. These options have a term of 5 years and a 3 year vesting period.

Additional details on both the financial year and fourth 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 December 31, 2006 on March 15, 2007, at 10:00 a.m. PDT (1:00 p.m. EDT). Access to the call may be obtained by calling the operator at 1-866-400-3310 (Toll Free North America), or 1-416-850-9144 (International) 10 minutes prior to the scheduled start time. 7 days after the call at 1-866-245-6755 (Toll Free North America) or 1-416-915-1035 (International). The passcode for the playback is 468398. 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:



-----------------------------------------------------
($000s) 2006 2005
-----------------------------------------------------
Operating Income (Loss) $ 192 $ (2,279)
Amortization 837 957
Restructuring costs - 485
Stock-based compensation expense 118 131
-----------------------------------------------------
EBITDA $ 1,147 $ (706)
-----------------------------------------------------

-----------------------------------------------------
($000s) Q4 2006 Q4 2005
-----------------------------------------------------
Operating Income (Loss) $ 61 $ (556)
Amortization 208 214
Restructuring costs - 485
Stock-based compensation expense 27 33
-----------------------------------------------------
EBITDA $ 297 $ 176
-----------------------------------------------------


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
(Expressed in Canadian dollars)
-------------------------------------------------------------------------
December 31, December 31,
2006 2005
-------------------------------------------------------------------------

Assets
Current assets
Cash and cash equivalents $ 2,162,009 $ 1,798,766
Restricted short-term investments 533,000 533,000
Trade accounts receivable, net of
allowance for doubtful
accounts of $81,677 (2005 - $115,242) 1,879,905 2,484,322
Inventories 430,505 324,227
Prepaid expenses and deposits 217,885 168,877
Deferred costs 498,093 361,648
------------------------------------------------------------------------
5,721,397 5,670,840

Capital assets 1,211,135 1,350,603
Capital assets related to discontinued
operations - 43,643
Goodwill 1,574,228 1,574,228
-------------------------------------------------------------------------
$ 8,506,760 $ 8,639,314
-------------------------------------------------------------------------
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 2,299,745 $ 2,244,054
Customer deposits 167,146 193,490
Deferred revenue 3,082,588 2,984,755
Current portion of long-term debt - 47,557
Current portion of deferred lease inducements 73,973 90,275
Current portion of obligations under capital
leases 505,978 448,837
------------------------------------------------------------------------
6,129,430 6,008,968

Deferred lease inducements 28,290 122,082
Obligations under capital leases 388,050 689,901

Shareholders' equity
Share capital 2,713,435 2,713,435
Contributed surplus 3,742,335 3,614,636
Deficit (4,494,780) (4,509,708)
------------------------------------------------------------------------
1,960,990 1,818,363
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$ 8,506,760 $ 8,639,314
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RADIANT COMMUNICATIONS CORP.
Statements of Operations and Deficit
(Expressed in Canadian dollars)
--------------------------------------------------------------------------
Year ended Three months ended
December 31, December 31,
-------------------------- ------------------------
2006 2005 2006 2005
--------------------------------------------------------------------------
(Unaudited) (Unaudited)

Revenue $ 19,283,902 $ 17,590,542 $ 4,935,870 $ 4,739,579
Cost of sales 9,320,456 8,670,986 2,339,608 2,342,817
--------------------------------------------------------------------------

Gross profit 9,963,446 8,919,556 2,596,262 2,396,762

Expenses
Sales and marketing 2,488,722 3,779,615 588,126 826,377
General and
administrative 6,445,551 5,976,993 1,738,458 1,427,249
Amortization 837,386 956,735 208,242 213,717
Restructuring costs - 484,931 - 484,931
--------------------------------------------------------------------------
9,771,659 11,198,274 2,534,826 2,952,274
--------------------------------------------------------------------------

Operating income
(loss) 191,787 (2,278,718) 61,436 (555,512)

Interest expense 246,438 1,013,773 51,958 86,035
Accretion of deemed
discount on
convertible
debentures - 1,225,236 - -
Amortization of
warrant-based
deferred
financing costs - 765,474 - -
Other (income)
expense (91,747) (3,901) (66,737) 33,361
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Income (loss) before
discontinued
operations 37,096 (5,279,300) 76,215 (674,908)

Income (loss) from
discontinued
operations (22,168) 110,748 - 27,821
--------------------------------------------------------------------------

Net income (loss) 14,928 (5,168,552) 76,215 (647,087)

Deficit, beginning
of period (4,509,708) (32,341,156) (4,570,995) (36,862,621)

Reduction in stated
capital and deficit - 33,000,000 - 33,000,000
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Deficit, end of
period $ (4,494,780) $ (4,509,708) $(4,494,780)$ (4,509,708)
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Basic and diluted
earnings (loss) per
share before
discontinued
operations $ 0.00 $ (0.87) $ 0.01 $ (0.07)

Basic and diluted
earnings (loss)
per share $ 0.00 $ (0.86) $ 0.01 $ (0.07)

Weighted average
common shares,
used in computing
loss per share
basic and diluted 9,825,658 6,039,430 9,825,658 9,825,658
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RADIANT COMMUNICATIONS CORP.
Statements of Cash Flows
(Expressed in Canadian dollars)
--------------------------------------------------------------------------
Year ended Three months ended
December 31, December 31,
-------------------------- ------------------------
2006 2005 2006 2005
--------------------------------------------------------------------------
(Unaudited) (Unaudited)
Cash provided by
(used in):

Operations:
Net income (loss) for
the period $ 14,928 $ (5,168,552) $ 76,215 $ (647,087)
Items not involving
cash:
Amortization 837,386 956,735 208,242 213,717
Accretion of deemed
discount
on convertible
debentures - 1,225,236 - -
Amortiztion on
discontinued
operations - 22,002 - 5,380
Cash-based bonus
accrued
on long-term debt - 189,474 - -
Early repayment
amount on senior
secured debentures - 46,154 - -
Amortization of
warrant-based
deferred financing
costs - 765,474 - -
Stock based
compensation 118,290 133,610 27,226 33,592
Non-cash interest
expense on warrants 9,407 9,407 2,351 2,351
Amortization of
deferred lease
inducement (73,346) (78,763) (18,492) (22,054)
Non-cash portion of
discontinued
Operations (65,952) - (10,095) -
-------------------------------------------------------------------------
837,713 (1,899,223) 285,447 (414,101)

Change in non-cash
operating working
capital:
Trade accounts
receivable 579,417 (346,281) (120,770) (317,302)
Inventories (96,100) (10,491) 38,771 61,546
Prepaid expenses and
deposits (54,581) 21,427 (6,211) 41,508
Deferred costs (136,445) 149,718) (64,905) (60,754)
Accounts payable and
accrued liabilities (28,248) (913,549) 483,197 (312,463)
Customer deposits (26,344) (2,250) (600) (750)
Deferred revenue 97,833 520,755 83,266 210,202
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1,173,245 (2,479,894) 698,195 (792,114)
Investments:
Purchase of capital
assets (381,129) (133,051) (243,656) (6,584)
Proceeds on disposal
of discontinued
operations 80,000 - - -
Purchase of short-
term investments - (33,000) - -
Sale of short-term
investments - 75,000 - 75,000
-------------------------------------------------------------------------
(301,129) (91,051) (243,656) 68,416
Financing:
Repayment of
long-term debt (47,557) (1,477,625) - (25,117)
Payments under
capital leases (461,361) (308,614) (124,097) (91,211)
Proceeds from
issuance of
convertible
debentures - 2,750,000 - -
Deferred financing
costs - (48,525) - (5,885)
Proceeds from issuance
of common shares - 3,256,498 - -
Share issuance costs - (175,490) - -
Proceeds for exercise
of employee stock
options - 13,500 - -
Share issuance costs - - - (140,480)
-------------------------------------------------------------------------
(508,873) 4,009,744 (124,097) (262,693)
--------------------------------------------------------------------------

Increase (decrease) in
cash and
cash equivalents 363,243 1,438,799 330,442 (986,391)

Cash and cash
equivalents,
beginning of period 1,798,766 359,967 1,831,567 2,785,157
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Cash and cash
equivalents,
end of period $ 2,162,009 $ 1,798,766 $ 2,162,009 $ 1,798,766
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