Information  X 
Enter a valid email address

Redline Comms Inc. (REDL)

  Print      Mail a friend

Wednesday 29 August, 2007

Redline Comms Inc.

Interim Results

Redline Communications Inc.
29 August 2007


Immediate Release                                                 29 August 2007




                   NOT FOR DISTRIBUTION IN THE UNITED STATES


                          Redline Communications, Inc.

                          ('Redline' or 'the Company')


                 Redline Reports Record First Half 2007 Results


 Company demonstrates significant year on year growth with WiMAX and broadband
                                 wireless sales


TORONTO, ON - August 29, 2007 - Redline Communications, Inc. (AIM: REDL), a
leading provider of WiMAX and wireless broadband solutions today announced
record revenue and financial results for the first half and year ended June 30,
2007.

All figures in U.S. Dollars unless specified


Financial Highlights:

   •Revenue increased to $25.8 million, in line with guidance and a 57%
    increase over the same period in 2006
   •Increase of 35% over 2H06 revenues of $19.1M; 10th consecutive six month
    period of revenue growth
   •Record WiMAX Forum CertifiedTM RedMAXTM product revenue of $15.3 million
    or 59% of total revenue; increase of over 70% compared to 2H 2006 and 125%
    over 1H 2006


Operational Highlights

   •Launch of RedMAX 4CTM Mobile WiMAX products at industry events
   •Recognized revenue from more than 125 paid RedMAX trials and deployments
    in 65 countries, of which 38 are commercial, revenue-generating WiMAX Forum
    CertifiedTM networks
   •Increased to 7 RedMAX customers with total orders of more than $1M

• Shipped more than 50,000 RedMAX and RedCONNEX systems

• Continued growth of Redline's emerging market footprint, with
deployments in 80+ countries

• Furthered industry leadership with highest-capacity WiMAX Forum
CertifiedTM TDD-based networks in the world, supporting more than 256 users per
sector and thousands of users per base station

• Launch of Redline Ecosystem Verification ('REV') program that augments
WiMAX Forum testing and confirms interoperability of RedMAX and RedCONNEX with
other telecommunications equipment, applications and tools


'With more than $15M in RedMAX revenue for the first half of 2007, Redline is on
track to more than double our WiMAX revenues over our 2006 RedMAX sales,' said
Majed Sifri, President and Chief Executive Officer, Redline Communications Inc.
'We have achieved our targets through the rapid expansion of our customers'
WiMAX networks and the successful conversion of many of our customers' trial
systems into commercial, revenue-generating RedMAX networks.'


'We are confident that Redline will continue to achieve its revenue and product
development targets. Redline is furthering its leadership with the recent launch
of our RedMAX 4C Mobile WiMAX products, and the unsurpassed performance and
interoperability of our RedMAX family. We are well positioned to be among the
first in the world to complete WiMAX Forum Certification Wave 2 for mobile WiMAX
products, with plans to implement several field trials this year,' continued
Sifri.


In the period under review we achieved record revenues of $25.8 million, an
increase of 57% over the same period in 2006 and 35% over the previous fiscal
half year. Gross margins were 35% compared to 36% in 2H 2006, affected by
product transitions within the company's non-WiMAX backhaul product category.
The Company's GAAP loss per common share was ($0.13) for the period compared
with a loss per share of ($1.15) in 2H 2006.


Chief Executive Officer Review

Redline continues its leadership in the WiMAX market. We have maintained our
strong presence in high-growth International markets with new RedMAX network
deployments by carriers in the Middle East, European and African regions,
representing 36% and 10% of revenues respectively.


In addition, we have accelerated the rate of RedMAX deployments in Latin
America, Eastern Europe and Asia-Pacific markets, bringing the Americas and
Asia-Pacific regions to 42% and 12% of global revenues. Our growth in the Latin
American and Asia Pacific regions has been spurred by customers that have each
invested more than $1M in their RedMAX networks to date.


We have increased the number of RedMAX trials and deployments by more than 25%
compared to the end of 2006, with many trials converted to full network
deployments. In addition, the number of commercial, revenue-generating RedMAX
networks has increased significantly from 28 at the end of December, 2006 to 38
today, with customers now achieving positive business results from their RedMAX
network.


Redline's continued success with RedMAX is due in part to the unsurpassed
performance of our products. Our base stations are now supporting more
subscribers than any other WiMAX Forum Certified systems based on TDD (time
division duplexing) available today. In addition, our Redline Management Suite,
which enables carriers to easily manage and expand their networks, has proven to
be a key differentiator for Redline, particularly among Tier 1 and Tier 2
operators that are planning large scale RedMAX networks.


The introduction of our Redline Ecosystem Verification ('REV') program is yet
another example of Redline's commitment to delivering the products and services
that carriers need to succeed in WiMAX. The REV program augments the WiMAX
Forum's existing testing programs, and has attracted several large WiMAX
equipment vendors including Siemens, as well as numerous applications providers,
operating systems vendors, and core systems providers from throughout the
telecommunications industry.


Finally, Redline is well positioned to build its WiMAX market position and
revenues with the introduction of our RedMAX 4CTM family of Mobile WiMAX
products. We are now working with several Tier 1 and greenfield operators on
early plans for Mobile WiMAX rollouts, and are preparing to participate in the
WiMAX Forum Certification Wave 2 for 802.16e Mobile WiMAX systems.


Outlook

Redline is positioned for continued growth as more operators choose to roll out
WiMAX networks. The Company is focused on the development of its next generation
of Mobile WiMAX products and the continued enhancement of its RedMAX products.
We believe Redline is well positioned to meet our revenue guidance of between
$31 million and $33 million for the second half of 2007. We expect to achieve
growth of 55% to 65% in FY2008, with our fixed and mobile WiMAX product sales
representing a significant portion of revenues for that year.

Majed Sifri

Investor Conference Call

Redline's 1H2007 conference call will be held on Wednesday, August 29 at 2pm GMT
(9am EST). Qualified investors and members of the financial community are
invited to participate in the conference call by dialing (toll free):



UK Access Number +44 (0) 20 8609 1435

UK Toll Free Number 0808 109 1498

US Toll Free Number 1866 793 4279

Canada Toll Free Number 1 866 270 8076



PIN: 931948#


To access the live webcast of the Redline conference call, visit the 'Investors'
section of Redline's website www.redlinecommunications.com or
www.citycomments.co.uk/redlinecommunications.htm. An archive of the on-line
broadcast will be available following the call.


For Further details:

Redline Communications                  Buchanan Communications
Tom Hearne, Chief Financial Officer     Jeremy Garcia / James Strong / Bobby
                                        Morse
Carolyn Anderson, Communications        [email protected]
Director
[email protected]     Tel: +44 (0)20 7466 5000
Tel: + 1 905 479 8344                   Canaccord Adams
                                        Chris Bowman
                                        Tel: +44 (0)20 7050 6500


 REDLINE COMMUNICATIONS, INC.

Interim Consolidated Balance Sheets (Expressed in U.S. dollars)
------------------------------                    -------------      -----------
                                               June 30,         December 31,
                                                         2007             2006
------------------------------                    -------------      -----------
Assets                                            (Unaudited)
Current assets:
Cash and cash equivalents                          $7,704,038      $17,985,391
Restricted cash                                         8,033            8,033
Accounts receivable                                17,880,530       12,359,585
Other receivables                                     324,391          468,028
Inventories                                        10,352,980        9,087,367
Prepaid expenses                                      583,455          352,358
------------------------------                    -------------      -----------
                                                   36,853,427       40,260,762
Property, plant and equipment                       1,373,286        1,166,377
Other assets                                          105,350          105,842
------------------------------                    -------------      -----------
                                                  $38,332,063      $41,532,981
------------------------------                    -------------      -----------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities           $8,330,934       $9,221,150
Deferred revenue                                    2,943,407        2,362,612
Current portion of capital lease obligations          238,463          215,639
Current portion of loan payable                     1,673,669        1,244,528
------------------------------                    -------------      -----------
                                                   13,186,473       13,043,929
Loan payable                                        2,393,664        3,255,472
Capital lease obligations                             109,084          151,653
Shareholders' equity:
Share capital                                     100,292,931       97,746,833
Share purchase loan                                  (413,408)        (413,408)
Contributed surplus                                 4,149,865        3,395,260
Deficit                                           (81,698,014)     (75,958,226)
Accumulated other comprehensive income                311,468          311,468
------------------------------                    -------------      -----------
                                                   22,642,842       25,081,927
------------------------------                    -------------      -----------
                                                  $38,332,063      $41,532,981
------------------------------                    -------------      -----------
------------------------------                    -------------      -----------



                          REDLINE COMMUNICATIONS, INC.

           Interim Consolidated Statements of Operations and Deficit



(Expressed in U.S. dollars)
------------------------------                 ------------          -----------
                                        Six months ended     Six months ended
                                            June 30,2007         June 30, 2006
------------------------------                 ------------          -----------
                                              (Unaudited)          (Unaudited)
Revenue:
Product                                       $24,028,778          $15,160,715
Maintenance                                     1,737,174            1,211,345
------------------------------                 ------------          -----------
                                               25,765,952           16,372,060
Cost of revenue (1)                            16,709,053           10,144,155
------------------------------                 ------------          -----------
Gross margin                                    9,056,899            6,227,905
Expenses:
Research and development(1)                     4,853,640            4,324,711
Finance and administration (1)                  2,488,600            2,175,500
Sales and marketing(1)                          7,649,348            6,561,874
------------------------------                 ------------          -----------
                                               14,991,588           13,062,085
------------------------------                 ------------          -----------
Loss before
the undernoted                                 (5,934,689)          (6,834,180)
Other expenses (income):
Interest and other                                115,400              (23,577)
Foreign exchange loss (gain)                     (851,681)             135,308
Amortization of property,
plant and equipment                               490,498              425,316
------------------------------                 ------------          -----------
                                                 (245,783)             537,047
------------------------------                 ------------          -----------
Loss before
income taxes                                   (5,688,906)          (7,371,227)
Income taxes                                       50,882               55,656
------------------------------                 ------------          -----------
Loss for the period                            (5,739,788)          (7,426,883)
Deficit, beginning of period                  (75,958,226)         (60,783,929)
------------------------------                 ------------          -----------
Deficit, end of period                       $(81,698,014)        $(68,210,812)
------------------------------                 ------------          -----------
Loss per share:
Basic and diluted                                  $(0.13)              $(7.48)
------------------------------                 ------------          -----------
Weighted average number
of common shares used in basic 
and diluted loss per share                     43,105,686              991,997  
------------------------------                 ------------          -----------
(1)Includes stock-based compensation
expense as follows:
Cost of revenue                                   $63,126             $141,280
Expenses:
Research and development                          216,663              262,015
Finance and administration                        178,557              559,418
Sales and marketing                               296,259              397,501






REDLINE COMMUNICATIONS, INC.

Interim Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)
                                                   Six months ended June 30
                                                           2007           2006
                                                    (unaudited)    (unaudited)
Cash provided by (used in):

Operating activities:
Loss for the period                                 $(5,739,788)   $(7,426,883)
Items not affecting cash:
Amortization of property, plant and equipment           490,498        425,316
Stock-based compensation expense                        754,605      1,360,214
Change in non-cash operating working capital         (7,182,947)    (2,160,242)
                                                     ------------   ------------
                                                    (11,677,632)    (7,801,595)

Financing activities:
Issuance of share capital, net of issuance costs      2,546,098      6,230,829
Loan payable                                           (432,667)             -
Principal payment of capital lease obligations         (165,538)       (71,687)
                                                     ------------   ------------
                                                      1,947,893      6,159,142

Investing activities:
Purchase of property, plant and equipment              (551,614)      (501,344)
Decrease in restricted cash                                   -         85,601
                                                     ------------   ------------
                                                       (551,614)      (415,743)

Decrease in cash and cash equivalents               (10,281,353)    (2,058,196)
Cash and cash equivalents, beginning of period       17,993,424      7,495,996
                                                     ------------   ------------
Cash and cash equivalents, end of period             $7,712,071     $5,437,800

Supplemental cash flow information:
Interest paid                                          $245,771        $24,397
Supplemental disclosures relating to non-cash
financing and investing activities:
Purchase of property, plant and equipment under
capital leases                                          145,793         25,995






Non-GAAP financial measures

This press release contains non-GAAP financial measures, including net income
and earnings per share for the first half of fiscal 2007 excluding the impact of
stock compensation charges. Redline management believes that these non-GAAP
financial measures, when considered together with the GAAP financial measures,
provide information that is useful to investors in understanding
period-over-period operating results separate and apart from items that may, or
could, have a disproportionate impact on results in any particular period.
Management also believes that these non-GAAP financial measures enhance the
ability of investors to analyze Redline business trends and to better understand
the company's performance. In addition, Redline may utilize non-GAAP financial
measures as a guide in its forecasting, budgeting, and long-term planning
process and to measure operating performance for some management compensation
purposes. Any analysis of non-GAAP financial measures should be used only in
conjunction with results presented in accordance with GAAP.

                            Six months ended June 30, 2007                Six months ended June 30, 2006

                            GAAP            Adjustment     Non GAAP       GAAP           Adjustment     Non GAAP
                                             (unaudited)                                  (unaudited)
Revenue:
Product                       $24,028,778                   $24,028,778    $15,160,715                   $15,160,715
Maintenance                     1,737,174                     1,737,174      1,211,345                     1,211,345
                                  ---------                     ---------      ---------                     ---------
                               25,765,952                    25,765,952     16,372,060                    16,372,060

Cost of revenue                16,709,053   (63,126)(a)      16,645,927     10,144,155   (141,280)(a)     10,002,875

Gross Margin                    9,056,899         63,126      9,120,025      6,227,905        141,280      6,369,185

Expenses
Research and development        4,853,640   (216,663)(a)      4,636,977      4,324,711   (262,015)(a)      4,062,696
Finance and administration      2,488,600   (178,557)(a)      2,310,043      2,175,500   (559,418)(a)      1,616,082
Sales and marketing             7,649,348   (296,259)(a)      7,353,089      6,561,874   (397,501)(a)      6,164,373
                                  --------- --------            ---------      --------- --------            ---------
                               14,991,588       (691,479)    14,300,109     13,062,085     (1,218,934)    11,843,151

Loss before the undernoted     (5,934,689)       754,605     (5,180,084)    (6,834,180)     1,360,214     (5,473,966)

Other expenses (income):
Interest and other                115,400                       115,400        (23,577)                      (23,577)
Foreign
exchange loss (gain)             (851,681)                     (851,681)       135,308                       135,308
Amortization of property,
plant and equipment               490,498                       490,498        425,316                       425,316
                                  ---------                     ---------      --------- --------            ---------
                                 (245,783)                     (245,783)       537,047                       537,047

Loss before income taxes       (5,688,906)       754,605     (4,934,301)    (7,371,227)     1,360,214     (6,011,013)

Income taxes                       50,882                        50,882         55,656                        55,656
                                  ---------       --------      ---------      ---------       --------      ---------

Loss for the period           $(5,739,788)      $754,605    $(4,985,183)   $(7,426,883)    $1,360,214    $(6,066,669)

Basic and diluted loss
per share                          $(0.13)                       $(0.12)        $(7.48)                       $(6.11)

Weighted average number
of common shares used in
basic and diluted loss
per share                      43,105,686                    43,105,686        991,997                       991,997

(a) The effect of stock based compensation


Forward-Looking Statements


This document includes statements that are, or may be deemed to be,
'forward-looking statements'. These forward-looking statements can be identified
by the use of forward-looking terminology, including the terms 'believes',
'estimates', 'plans', 'projects', 'anticipates', 'expects', 'intends', 'may',
'will', or 'should' or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include matters that
are not historical facts. They appear in a number of places throughout this
document and include statements regarding the Directors' current intentions,
beliefs or expectations concerning, among other things, the Company's results of
operations, financial condition, liquidity, prospects, growth, strategies and
the broadband industry.

By their nature, forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Actual results and developments
could differ materially from those expressed or implied by the forward-looking
statements. Please see the factors discussed in Part II of this document in this
regard, in particular those relating to the legal and regulatory risks
associated with the BWA market.

Forward-looking statements may and often do differ materially from actual
results. Any forward-looking statements in this document are based on certain
factors and assumptions, including the Directors' current view with respect to
future events and are subject to risks relating to future events and other
risks, uncertainties and assumptions relating to the Company's operations,
results of operations, growth strategy and liquidity. While the Directors
consider these assumptions to be reasonable based on information currently
available, they may prove to be incorrect. Prospective investors should
specifically consider the factors identified in this document that could cause
actual results to differ before making an investment decision. Save as required
by law or by the AIM Rules, the Company undertakes no obligation publicly to
release the results of any revisions to any forward-looking statements in this
document that may occur due to any change in the Directors' expectations or to
reflect events or circumstances after the date of this document.

About Redline Communications
Redline Communications is the leading provider of standards-based wireless
broadband solutions. Redline's RedMAXTM WiMAX Forum CertifiedTM systems and
award-winning RedCONNEXTM family of broadband wireless infrastructure products
enable service providers and other network operators to cost-effectively deliver
high-bandwidth services including voice, video and data communications. Redline
is committed to maintaining its wireless industry leadership with the continued
development of WiMAX and other advanced wireless broadband products. With more
than 35,000 installations in 75 countries, and a global network of over 100
partners, Redline's experience and expertise helps service providers,
enterprises and government organizations roll out the services and applications
that drive their business forward. For more information, visit
www.redlinecommunications.com.


                                     - 30 -


NOTE: All registered and unregistered trademarks mentioned in this release are
the property of their respective owners.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                              

a d v e r t i s e m e n t