Redline Communications Announces Financial Results for the Three and Six Months Ended June 30, 2011
Redline Communications Group Inc. (TSX: RDL) ("Redline" or the "Company"), a leading provider of specialized broadband wireless systems, today announced continued positive operating income for the three and six months ended June 30, 2011.
- (1888PressRelease) August 16, 2011 - Financial highlights for the three and six months ended June 30, 2011 include:
* Revenues were stable or higher at $12.7 million for the quarter and $26.2 million for the six months ended June 30, 2011, as compared to $13.1 million and $25.3 million for the same periods in 2010.
* Gross margin increased to 59.6% for the quarter and to 60.7% for the six months ended June 30, 2011 as compared to 50.9% and 56.4% for the same periods in 2010.
* A private placement of $8.3 million Cdn of senior secured convertible debentures was completed in June 2011.
* Income before other expenses was $890 thousand for the quarter and $2.1 million for the six months ended June 30, 2011. After factoring in other expenses including the non-cash fair market value loss on the debentures, net income was $60 thousand for the quarter and $1.2 million for the six months ended June 30, 2011.
* Operating expenses were lower at $6.7 million for the quarter and $13.5 million for the six months ended June 30, 2011, as compared to $7.0 million and $13.7 million during the same periods in 2010.
* Cash, investments, and restricted investments increased to $7.1 million from $6.1 million at the end of December 2010.
Despite the turmoil in the Middle East, revenues for the second quarter of 2011 were stable at $12.7 million, a decrease of 2.7% from $13.1 million reported in the second quarter of 2010. Revenue for the second quarter of 2011 was negatively impacted by approximately $1.9 million as a result of the deferral of a large customer contract in the Middle East.
In June 2011 the Company announced the completion of a private placement of senior secured convertible debentures with aggregate gross proceeds of $8.3 million Cdn.
Also in June 2011 the Company announced that it had reached an agreement in principle to settle the proposed class action lawsuit, commenced in Ontario in September 2010, against the Company, certain of its current and former directors and officers, and its former auditors.
Income before other expenses was $890 thousand for the quarter. Other expenses included a non-cash fair market value adjustment on the debentures of $580 thousand. The adjustment relates to the difference in fair market value from June 10, 2011, the date the debentures were issued, and June 30, 2011. The share price on June 10, 2011 was $0.45 Cdn., and on June 30, 2011 was $0.51 Cdn. Other expenses also included finance costs of $110 thousand and foreign exchange losses of $140 thousand. Net income for the quarter after other expenses was $60 thousand.
"We have successfully executed our turnaround plan and delivered consistent and significant improvements in the Company`s net income throughout fiscal 2010 and into the first two quarters of fiscal 2011," said Eric Melka, Redline CEO. "Looking forward, as we combine our strong gross margin, disciplined cost controls and vertically-focused sales efforts around larger opportunities, we feel that Redline is poised for a very bright future."
All amounts reported in this press release are in US dollars unless otherwise stated. For further details on the June 30, 2011 results, see the condensed consolidated interim statement of financial position, condensed consolidated interim statement of comprehensive income (loss), condensed consolidated interim statement of changes in equity and condensed consolidated interim statement of cash flows reproduced at the end of this press release. The selected financial information included in this release is qualified in its entirety by, and should be read together with the Condensed Consolidated Interim Financial Statements of the Company for the three and six months ended June 30, 2011, and the Company's Management Discussion and Analysis for the three and six months ended June 30, 2011 ("Q2 and H1 2011 MD&A"), copies of which are available on SEDAR at www.sedar.com.
About Redline Communications
Redline Communications (www.rdlcom.com), founded in 1999, is a publicly-traded company on the Toronto Stock Exchange that manufactures powerful and versatile wireless broadband systems used to cost‐effectively deploy distributed applications and services and to power 4G networks. Service Providers use Redline products to power their 4G networks; municipalities to quickly and easily deploy or extend their video surveillance networks; oil and gas companies to monitor and control their oil fields and operations; enterprises to bring business-grade access to buildings; and the Military to create secure networks in any location. For over 10 years Redline has combined power, versatility and reliability to deliver exceptional wireless solutions to thousands of customers in over 100 countries. Redline products are marketed and supported through an exclusive network of value-added resellers around the world.
NOTES:
All registered and unregistered trademarks mentioned in this release are the property of their respective owners.
Forward Looking Statements
Certain statements in this release may constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. In some cases, forward-looking statements can be identified by terms such as "could", "expect", "may", "will", "anticipate", "believe", "intend", "estimate", "plan", "potential", "project" or other expressions concerning matters that are not historical facts. Readers are cautioned not to place undue reliance upon any such forward-looking statements.
Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of Redline to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements, by their nature, are based on certain assumptions regarding expected growth, management's current plans, estimates, projections, beliefs, opinions and business prospects and opportunities (collectively, the "Assumptions"). While the Company considers these Assumptions to be reasonable, based on the information currently available, they may prove to be incorrect.
Many risks, uncertainties and other factors could cause the actual results of Redline to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include but are not limited to the following: significant competition, competitive pricing practices, cautious capital spending by customers, industry consolidations, rapidly changing technologies, evolving industry standards, frequent new product introductions, short product life cycles and other trends and industry characteristics affecting the telecommunications industry; any material, adverse affects on Redline's performance if its expectations regarding market demand for particular products prove to be wrong; any negative developments associated with Redline's suppliers and contract manufacturing agreements including the Company's reliance on certain suppliers for key components; potential penalties, damages or cancelled customer contracts from failure to meet delivery and installation deadlines and any defects or errors in Redline's current or planned products; fluctuations in foreign currency exchange rates; potential higher operational and financial risks associated with Redline's efforts to expand internationally; a failure to protect Redline's intellectual property rights, or any adverse judgments or settlements arising out of disputes regarding intellectual property; changes in regulation of the wireless industry or other aspects of the industry; any failure to successfully operate or integrate strategic acquisitions, or failure to consummate or succeed with strategic alliances; and Redline's potential inability to attract or retain the personnel necessary to achieve its business objectives or to maintain an effective risk management strategy (collectively, the "Risks"). For additional information on these Risks, see Redline's most recently filed Annual Information Form ("AIF") and Annual MD&A, which are available on SEDAR at www.sedar.com and on the Company's website at www.redlinecommunications.com. Redline assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law. All forward looking statements contained in this release are expressly qualified in their entirety by this cautionary statement.
REDLINE COMMUNICATIONS GROUP INC.
Condensed Consolidated Interim Statement of Financial Position
(Unaudited, expressed in U.S. dollars)
For further information:
Redline Communications
George Kypreos
gkypreos ( @ ) rdlcom dot com
Tel: +1-905-479-8344
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