TORONTO, April 1 /CNW/ - As previously announced on March 15, 2010, Redline Communications Group Inc. (the "Company") did not file, by the deadline of March 31, 2010, its audited financial statements for the fiscal year ended December 31, 2009, related management's discussion and analysis, annual information form and CEO and CFO certificates.
The Special Committee of the Board of Directors of the Company, with the assistance of Grant Thornton, has been conducting a review into the Company's revenue recognition practices. As a result of the work completed to date, the Company now believes that its revenue and cost of sales for some of the periods since it has been a public company has been overstated and/or allocated to incorrect periods, and that as a result investors are cautioned that they should not be relying on the Company's historical financial statements. The Special Committee has developed a work plan pursuant to which Grant Thornton will work with the Company's management and external auditors in order to seek to quantify the impact of any revenue recognition issues. It is expected that Grant Thornton will report back to the Special Committee as quickly as possible so that the Company can finalize its financial statements for the year ended December 31, 2009. As part of this process, it is expected that the Company's financial statements for some prior years will also be restated.
The Company has applied to the Ontario Securities Commission (the "OSC") and Autorite des marches financiers (the "AMF") for a temporary management cease trade order (a "MCTO") under National Policy 12-203 which, if granted, will prohibit trading in securities of the Company by certain insiders of the Company. An MCTO would not generally affect the ability of persons who have not been directors, officers or insiders of the Company to trade securities of the Company. The granting of a MCTO is at the discretion of the OSC and the AMF and there is no assurance that such an order will granted.
If the OSC and the AMF decide not to grant a MCTO, the Canadian Securities Administrators may decide to grant a general cease trade order which would prohibit any person from trading in securities of the Company in Canada.
If the MCTO is granted, the Company intends to satisfy the provisions of the Alternate Information Guidelines as set out in the National Policy 12-203 for as long as the Company remains in default, including the issuance of bi-weekly default status reports, each of which will be issued in the form of a press release.
About Redline Communications
Redline Communications (www.redlinecommunications.com) is a leading provider of advanced wireless broadband products with more than 150,000 installations in 130 countries, and a global network of over 150 partners. Redline's experience and expertise helps service providers, enterprises and government organizations roll out wireless broadband networks to cost-effectively deliver high-bandwidth services, including video, voice and data communications. Redline award-winning infrastructure products include The AN80i and RDL 2000, which support its continued commitment to maintaining its wireless industry leadership with the development advanced products.
Forward Looking Statements
Certain statements in this release constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws and are made pursuant to the "safe harbour" provisions of such laws. Statements related to the Special Committee's planned internal review into Redline's revenue recognition accounting policies and the adequacy of Redline's internal controls, and the potential for a restatement of Redline's historical financial statements as a result of such investigation are forward-looking statements which are subject to certain assumptions, risks and uncertainties. These risks and uncertainties include such factors as the Special Committee's ability to conclude its review in a timely manner, the results of the internal review and Redline's ability to restate its historical financial statements in a timely manner if such a restatement is required and other similar factors that may cause the actual results or performance of Redline to differ materially from the results or performance expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Unless otherwise required by applicable securities laws, Redline assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE Redline Communications Group Inc.
For further information: For further information: Craig Armitage, Equicom, Tel: (416) 815-0700