Radiant Communications Corp.
TSX VENTURE : RCN

Radiant Communications Corp.

May 15, 2008 08:00 ET

Radiant Communications Announces First Quarter 2008 Results

Company records positive EBITDA combined with investments in new products and customer growth

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 15, 2008) - Radiant Communications Corp. ("Radiant") (TSX VENTURE:RCN), Canada's leading supplier of Broadband Solutions for Business™, today announced its financial results for its 2008 first quarter ended March 31, 2008.

HIGHLIGHTS:

- Revenue of $5.7 million for the quarter increased by 11.2% compared to revenue of $5.1 million for the first quarter of 2007.

- Gross margin was $2.6 million or 46.2% for the quarter.

- The Company recorded EBITDA of $123,721 in the quarter while investing in new products and significant new customers.

- The loss for the quarter was $157,077 or $0.01 per share.

- The Company ended the quarter with cash and short-term investments of $3.3 million which is an increase of 8% over the ending 2007 balance.

- During the quarter Radiant provisioned over 380 new North American locations for a significant new customer. Although the associated implementation costs had a negative impact on Q1 gross margin and earnings, the company anticipates a significant benefit in future periods due to increased business from this customer.

- During the first quarter Radiant signed up five customers representing more than $1 million in new revenue for our recently announced AlwaysThere™ Hosted Exchange solution. Again, while the associated start-up costs affected Q1 earnings, Radiant will realize the benefit of these recurring revenue streams for years to come.

- Radiant's new strategy of layering on value-added services was validated in two ways:

-- a new multi-location customer purchased not just broadband connectivity, but all our new services (TriplePlay VPN™, AlwaysThere Hosted Exchange, and Digital Voice), increasing the value of the contract by 3x;

-- second, existing customers also contracted for these value-added services, tripling their recurring revenue contribution to Radiant in some cases.

- Radiant continued the roll out of high value customers during the quarter including Dollarama, HDS Retail, First Ontario Credit Union, Burger King, MoneyMart, 7-Eleven, lululemon athletica and Liquor Stores of Alberta.

"In the first quarter of 2008, Radiant was presented with two significant opportunities, which were major challenges for our operations, and I'm pleased to announce that our team rose to those challenges and exceeded customer expectations," said David Buffett, President and CEO of Radiant. "Our first challenge was to gain traction with our new AlwaysThere™ Hosted Exchange solution that we announced late in 2007. Our sales team responded and secured multi-year contracts with 5 customers totalling over 1400 seats in the first quarter. This represents approximately $1 million of new revenue under contract. Our operations team has already provisioned several of these new customers. We are seeing interest from both existing and new customers ranging from small 10 person operations up to large, multi-location customers with several hundred seats. The second significant opportunity and challenge arose from our recently announced Triple Play VPN solution based on MPLS. We have secured several new customers through this technology. One of these required Radiant to install over 380 MPLS sites across North America in under 14 weeks. Again the team rose to the challenge and despite the logistics and costs associated with provisioning a secure network in a compressed time schedule; we were very successful and made significant progress with a very large national account."

"In the recurring revenue business model," explained Mr. Buffett, "There is often an upfront cost associated with unusual, large or expedited implementations. We experienced all three of these challenges in the first quarter and as a result of higher cost set-ups, line provisioning and regional carrier costs and installations, our cost of sales and operating costs were higher than our normal run-rate. Radiant will realize the monthly recurring revenues going forward and we considered this to be a sound strategic investment. In addition to revenues for these 380 sites we have demonstrated our ability to deliver to a new major account and have the opportunity to secure additional significant new revenues with this customer. We expect our recurring business to benefit from these efforts for the remainder of the year and future periods."

Additional details on the first quarter results, including the unaudited 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 March 31, 2008 on May 15, at 1:30 p.m. PDT (4:30 p.m. EDT). Access to the call may be obtained by calling the operator at 1-866-400-3310 (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 416-915-1035 (International). The passcode for the playback is 911805. 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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($000s) Q1 2008 Q1 2007
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Operating income (loss) $ (160) $ 62
Amortization 241 230
Stock-based compensation expense (recovery) 43 (21)
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EBITDA $ 124 $ 271
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ABOUT RADIANT COMMUNICATIONS

Radiant Communications Corp. (www.radiant.net) provides businesses with a comprehensive range of IP-based data communications services including the largest on-net DSL footprint across Canada, T1 and E10/E100 fibre broadband, MPLS, IPSec, and SSL private networking. From its data centres in Toronto and Vancouver, Radiant also delivers network-based Microsoft Exchange®, email archiving, digital voice, credit/debit payment processing, and disaster recovery services via VMware-powered grid computing facilities directly into customers' private networks.

In operation since 1996, the company currently serves over 13,000 business locations in Canada and the United States from its offices in Vancouver, Toronto, Montreal, Calgary, and Edmonton.

Broadband Solutions for Business and AlwaysThere are registered trademarks of Radiant Communications Corp. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

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 Radiant'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 SHEET
(Expressed in Canadian dollars)
(Unaudited)

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March 31, December 31,
2008 2007
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Assets
Current assets
Cash and cash equivalents $ 2,788,970 $ 2,534,271
Restricted short-term investments 533,000 533,000
Trade accounts receivable 2,267,800 2,342,465
Inventories 408,757 412,972
Prepaid expenses and deposits 290,009 262,741
Deferred costs 947,032 535,302
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7,235,568 6,620,751

Property and equipment 1,563,739 1,401,203
Goodwill 1,574,228 1,574,228
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$ 10,373,535 $ 9,596,182
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 2,930,806 $ 2,189,748
Customer deposits 164,031 164,896
Deferred revenue 3,653,854 3,418,737
Current portion of deferred lease
inducements 4,911 16,421
Current portion of obligations under
capital leases 230,744 242,945
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6,984,346 6,032,747

Deferred lease inducements 10,640 11,868
Obligations under capital leases 74,076 133,293
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7,069,062 6,177,908
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Shareholders' equity
Share capital 3,601,872 3,601,872
Contributed surplus 3,939,894 3,896,618
Deficit (4,237,293) (4,080,216)
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3,304,473 3,418,274
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$ 10,373,535 $ 9,596,182
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RADIANT COMMUNICATIONS CORP.
STATEMENT OF OPERATIONS, COMPREHENSIVE INCOME AND DEFICIT
(Expressed in Canadian dollars)
(Unaudited)

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Three months ended March 31,
2008 2007
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Revenue $ 5,669,833 $ 5,100,146
Cost of sales 3,051,953 2,552,938
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Gross profit 2,617,880 2,547,208
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Expenses
Sales and marketing 525,282 536,023
General and administrative 2,012,153 1,719,297
Amortization 240,935 230,221
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2,778,370 2,485,541
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Operating income (loss) (160,490) 61,667

Interest expense 38,663 39,232
Non-cash interest expense on warrants - 3,676
Other (income) expense (42,076) (4,356)
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Income (loss) and comprehensive income
(loss) for the period (157,077) 23,115

Deficit, beginning of period (4,080,216) (4,494,780)
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Deficit, end of period $ (4,237,293) $ (4,471,665)
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Basic and diluted earnings (loss) per share $ (0.01) $ 0.00

Weighted average common shares, used in
computing basic and diluted earnings
(loss) per share 10,925,658 10,794,136
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RADIANT COMMUNICATIONS CORP.
STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)

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Three months ended March 31,
2008 2007
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Cash flows from operating activities:
Income for the period $ (157,077) $ 23,115
Items not involving cash
Amortization 240,935 230,221
Stock-based compensation (recovery) 43,276 (21,237)
Non-cash interest expense on warrants - 3,676
Amortization of deferred lease inducement (12,738) (17,675)
Foreign exchange (gain) loss (16,299) 6,784
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98,097 224,884

Change in non-cash working capital
Trade accounts receivable 74,665 (95,141)
Inventories 4,215 (17,338)
Prepaid expenses and deposits (27,268) (66,205)
Deferred costs (411,730) (36,470)
Accounts payable and accrued liabilities 741,058 (94,343)
Customer deposits (865) (150)
Deferred revenue 235,117 13,533
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713,289 (71,230)

Cash flows from investing activities:
Purchase of property and equipment (403,471) (450,560)
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Cash flows from financing activities:
Proceeds from issuance of common shares - 888,437
Payments under capital leases (71,418) (167,758)
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(71,418) 720,679

Foreign exchange gain (loss) on cash
held in foreign currency 16,299 (6,784)
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Increase in cash and cash equivalents 254,699 192,105

Cash and cash equivalents, beginning
of period 2,534,271 2,162,009
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Cash and cash equivalents, end of period $ 2,788,970 $ 2,354,114
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The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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