Radiant Communications Corp.
TSX VENTURE : RCN

Radiant Communications Corp.

August 23, 2007 09:20 ET

Radiant Communications Announces Record Revenue, EBITDA and Operating Cash Flow for the Second Quarter

New Customers Generate 13.5% Revenue Growth With Strong Backlog of New Orders

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 23, 2007) - Radiant Communications Corp. ("Radiant") (TSX VENTURE:RCN), Canada's leading supplier of broadband solutions for business, today announced its financial results for the second quarter and six months ended June 30, 2007.

HIGHLIGHTS:

- Record revenue of $5.4 million for the quarter increased by 13.5% compared to the second quarter of 2006.

- Revenue of $10.5 million year-to-date 2007 is up 11.5% over year-to-date 2006.

- Gross margin was 48.5% for the quarter and 49.2% for the six month period.

- In the first half of 2007 Radiant recorded EBITDA of $571,453 (see EBITDA section for reconciliation to GAAP).

- Radiant generated $256,849 of positive cash flow from operations in the quarter.

- Radiant ended the period with cash and short-term investments of $2.6 million compared with ending cash and short-term investments of $2.7 million as at December 31, 2006.

- During the second quarter Radiant continued to upgrade its backbone and private networking capability in response to customer demand for secure VPNs and business quality digital voice.

- In Q2 Radiant entered orders for more than 1000 new locations for new and existing customers such as 7-Eleven, Payless Shoes, First Ontario Credit Union, VANCO, Vanguard, HDS Retail and Dollarama.

- Radiant signed its first commercial digital voice customers and experienced significant growth in the VoIP prospect funnel.

"We are very pleased with the second quarter results," said David Buffett, President and CEO of Radiant. "In addition to the significant growth in revenue and operating cash flow we are seeing many of our existing customers expand their relationship with Radiant by purchasing upgraded services. Multi-location businesses are facing an increasing IT burden with respect to the requirements for security of communications and data processing. During the 2nd quarter we completed the deployment of our MPLS, (Multi-Protocol Label Switching), based private network and we are now beta testing with key customers. The funnel of qualified prospects for our Digital Voice solution continued to grow. We fully expect that as we roll out these new services and products we will continue to attract new business from our existing base and new customers seeking higher quality solutions and customer care."

"On a much more somber note I am deeply saddened by the recent death of our former Chairman Chris Worthy," said Mr. Buffett. "Chris provided strong leadership and guidance to Radiant during his tenure. He leaves a lasting legacy with our solid business foundation and his passing is a personal loss to all the employees and friends at Radiant who knew him. All of us at Radiant extend our sympathies and condolences to his family and friends."

The Board of Directors approved the financial statements and related materials at a meeting on August 22. At this meeting Mr. Don Calder was elected as Chairman of the Board and 180,000 stock options were granted to Directors at a price of $1.00. "I am deeply saddened by the passing of Chris Worthy as both a friend and business associate," said Mr. Calder. "I look forward to working with my fellow Board members and continuing the efforts initiated by Chris."

Additional details on the second 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 June 30, 2007 on August 23, 2007, 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. A playback of the conference call will be available for 7 days after the call at 1-866-245-6755 (Toll Free North America) or 1-416-915-1035 (International). The pass-code for the playback is 831083. 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) Q2 2007 Q2 2006
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Operating Income (loss) $ 52 $ (77)
Amortization 225 208
Stock-based compensation expense 24 34
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EBITDA $ 301 $ 165
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($000s) Six months Six months
ended June 30, ended June 30,
2007 2006
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Operating Income (loss) $ 113 $ (14)
Amortization 455 425
Stock-based compensation expense 3 66
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EBITDA $ 571 $ 477
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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, RetailCONNECTS 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 SHEET
(Expressed in Canadian dollars)
(Unaudited)

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June 30, December 31,
2007 2006
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Assets
Current assets
Cash and cash equivalents $ 2,087,592 $ 2,162,009
Restricted short-term investments 533,000 533,000
Trade accounts receivable, net of
allowance for doubtful accounts of
$101,544 (2006 - $81,677) 1,961,421 1,879,905
Inventories 512,244 430,505
Prepaid expenses and deposits 269,877 217,885
Deferred costs 569,900 498,093
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5,934,034 5,721,397

Property and equipment 1,328,339 1,211,135
Goodwill 1,574,228 1,574,228
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$ 8,836,601 $ 8,506,760
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 2,024,241 $ 2,299,745
Customer deposits 165,495 167,146
Deferred revenue 3,196,548 3,082,588
Current portion of deferred
lease inducements 50,952 73,973
Current portion of obligations under
capital leases 276,642 505,978
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5,713,878 6,129,430

Deferred lease inducements 14,324 28,290
Obligations under capital leases 254,502 388,050
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5,982,704 6,545,770
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Shareholders' equity
Share capital 3,601,872 2,713,435
Contributed surplus 3,748,973 3,742,335
Deficit (4,496,948) (4,494,780)
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2,853,897 1,960,990
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$ 8,836,601 $ 8,506,760
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RADIANT COMMUNICATIONS CORP.
STATEMENT OF OPERATIONS AND DEFICIT
(Expressed in Canadian dollars)
(Unaudited)

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Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
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Revenue $ 5,387,937 $ 4,744,357 $ 10,488,083 $ 9,417,094
Cost of sales 2,776,233 2,308,065 5,329,171 4,541,782
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Gross profit 2,611,704 2,436,292 5,158,912 4,875,312
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Expenses
Sales and marketing 564,995 766,154 1,137,502 1,365,410
General and
administrative 1,770,106 1,539,219 3,452,919 3,099,036
Amortization 224,960 207,914 455,181 424,985
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2,560,061 2,513,287 5,045,602 4,889,431
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Operating income (loss) 51,643 (76,995) 113,310 (14,119)

Interest expense 29,020 64,260 68,252 128,778
Non-cash interest expense
on warrants - 2,352 3,676 4,704
Other expenses 47,906 30,140 43,550 1,080
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Loss before discontinued
operations (25,283) (173,747) (2,168) (148,681)

Income (loss) from
discontinued operations - 98,779 - (127,023)
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Loss for the period (25,283) (74,948) (2,168) (275,704)

Deficit, beginning of
period (4,471,665) (4,710,464) (4,494,780) (4,509,708)
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Deficit, end of period $ (4,496,948) $(4,785,412) $(4,496,948) $(4,785,412)
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Basic and diluted
earnings (loss) per
share before
discontinued
operations $ (0.00) $ (0.02) $ (0.00) $ (0.02)

Basic and diluted
earnings (loss) per
share $ (0.00) $ (0.01) $ (0.00) $ (0.03)

Weighted average
common shares, used
in computing basic
and diluted earnings
(loss) per share 10,925,658 9,825,658 10,870,962 9,825,658

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RADIANT COMMUNICATIONS CORP.
STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)
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Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
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Cash flows from
operating activities:
Loss for the period $ (25,283) $ (74,948) $ (2,168) $ (275,704)
Items not involving
cash:
Amortization 224,960 207,914 455,181 424,985
Stock-based
compensation 24,199 33,590 2,962 65,638
Non-cash interest
expense on warrants - 2,352 3,676 4,704
Amortization of
deferred lease
inducement (19,312) (18,493) (36,987) (39,361)
Loss on disposal of
discontinued
operations - 1,953 - 118,579
Foreign exchange
(gain) loss 52,285 17,875 58,617 17,875
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256,849 170,243 481,281 316,716
Change in non-cash
working capital:
Trade accounts
receivable 13,625 (72,969) (81,516) 624,154
Inventories (64,401) (112,838) (81,739) (155,481)
Prepaid expenses and
deposits 14,213 (77,661) (51,992) (50,855)
Deferred costs (35,337) (17,570) (71,807) (18,100)
Accounts payable and
accrued liabilities (181,161) 248,220 (275,504) (297,838)
Customer deposits (1,501) (24,544) (1,651) (25,294)
Deferred revenue 100,427 45,035 113,960 44,633
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102,714 157,916 31,032 437,935

Cash flows from
investing activities:
Purchase of property
and equipment (121,825) (51,572) (572,385) (101,257)
Proceeds of disposal
of discontinued
operations - - - 80,000
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(121,825) (51,572) (572,385) (21,257)

Cash flows from
financing activities:
Proceeds from
issuance of common
shares - - 888,437 -
Payments under
capital leases (195,126) (124,063) (362,884) (228,512)
Repayment of long-
term debt - (22,222) - (47,557)
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(195,126) (146,285) 525,553 (276,069)

Foreign exchange gain
(loss) on cash held in
foreign currency (52,285) (17,875) (58,617) (17,875)
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Increase (decrease) in
cash and cash
equivalents (266,522) (57,816) (74,417) 122,734

Cash and cash
equivalents, beginning
of period 2,354,114 1,979,316 2,162,009 1,798,766
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Cash and cash
equivalents, end
of period $ 2,087,592 $ 1,921,500 $ 2,087,592 $ 1,921,500
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