Company Reports Financial Results for Three Months ended March 31, 2011

TORONTO, May 31, 2011 /CNW/ - Redline Communications Group Inc. (TSX: RDL) ("Redline" or the "Company"), a leading provider of specialized broadband wireless systems, today announced continued revenue growth and profits in its financial results for the three months ended March 31, 2011.

Financial highlights for the three months ended March 31, 2011 include:

  • Revenue of $13.5 million, as compared to $12.2 million during the same period last year, representing a 10% increase.
  • Gross margin of 61.8% compared to 62.2% for the same period during 2010
  • Net Income of $1.1 million, as compared to $0.6 million during the same period last year, representing a 97% increase.
  • Operating expenses of $6.8 million, as compared to $6.7 million during the same period last year, representing a 1% increase.
  • Earnings per share of $0.05, as compared to earnings per share of $0.03 for the same period last year.
  • Cash and restricted investments of $2.6 million, as compared to $6.1 million at the end of December 2010, a decrease of $3.5 million.

"We're pleased to see that our turnaround efforts continue to deliver positive earnings," said Eric Melka, CEO of Redline.  "We will continue focus on our execution plan and work diligently to optimize our products for our key markets."

Other significant milestones during the quarter included:

  • In January 2011, the Company announced that it had formalized a partnership agreement with long-time partner PromonLogicalis, Latin America's leading independent IT and communications services integrator. Partnering with PromonLogicalis allows Redline to increase its market presence over the entire region. In turn, the partnership allows PromonLogicalis to meet its customers growing demand for wireless solutions with Redline's suite of products.
  • Also in January, the Company continued its restructuring plan by confirming key management appointments including Eric Melka, formerly Acting CEO as permanent CEO for the company.  In addition, Amir Rosenzweig, formerly Acting SVP Sales for the Company, was appointed as SVP Business Development.
  • In March 2011, the Company announced that it had signed a strategic partnership agreement with Waseela, a leading systems integrator specializing in broadband wireless technologies for telecom operators, service providers and large enterprises. As part of the partnership agreement, Waseela will present itself as Redline's preferred system integrator in the Middle East.
  • Also in the quarter, the Company announced that, following the revocation of the previously issued cease trade orders by the Ontario Securities Commission and other applicable securities commission, its common shares resumed trading on the Toronto Stock Exchange.  Lifting of the various cease trade orders provides the Company a broader range of options as the Company begins to explore different financing opportunities.
  • Finally, subsequent to the quarter end and in a press release dated April 20th 2011, the Company announced its proposal to complete a private placement of an aggregate of $8,300,000 Cdn principal amount of senior secured convertible debentures. The net proceeds from the Private Placement will be used to strengthen the Corporation's financial position and provide the working capital required to fund the Corporation's on-going operations.

All amounts reported in this press release are in US dollars unless otherwise stated.  For further details on the March 31, 2011 results, see the condensed consolidated interim statement of financial position, condensed consolidated interim statement of comprehensive income, 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 quarter ended March 31, 2011 and the Company's Management Discussion and Analysis for the quarter ended March 31, 2011 ("Q1 2011 MD&A"), copies of which are available on SEDAR at

About Redline Communications

Redline Communications (, 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  how  their  oil  wells  are  operating; and  enterprises  to bring business-grade  access  to  buildings,  and the  military  to  create  secure  networks in  any location.  For  over  10  years Redline  has  been  delivering  reliable wireless  solutions to thousands of customers in over 100 countries, with  the  strong combination  of  high  capacity,  speed,  range and  reliability.  Redline products are marketed and supported through an exclusive network of value added resellers in the Americas, the Middle East and Africa.



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 and on the Company's website at 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.

Condensed Consolidated Interim Statement of Financial Position
(Unaudited, expressed in U.S. dollars)

  March 31, 2011 December 31, 2010 January 1, 2010
Current assets:      
  Cash $ 2,419,999 $ 6,023,070 $ 4,758,719
  Restricted short-term investments 100,000 92,440 92,266
  Trade receivables 7,368,692 6,714,090 4,860,646
  Other receivables 437,374 604,725 78,445
  Inventories 5,013,868 4,752,656 9,275,410
  Deferred cost of revenue 13,266,184 12,722,036 9,995,981
  Prepaid expenses 2,235,356 2,134,360 682,645
  30,841,473 33,043,377 29,744,112
Non-current assets:      
  Restricted investments 92,440
  Deferred cost of revenue 3,188,845 6,093,214 14,200,887
  Property, plant and equipment 696,569 691,936 919,121
  Intangible assets 95,610 75,860 257,116
  Other assets 103,198 99,733 87,288
  4,176,662 6,960,743 15,464,412
Total Assets $ 35,018,135 $ 40,004,120 $ 45,208,524
Current liabilities      
  Trade and other payables $ 9,283,437 $ 10,024,992 $ 7,738,887
  Deferred revenue 25,300,237 25,581,597 22,304,330
  Current portion of obligations under finance leases 25,852
  Current portion of borrowings 6,321,956 6,161,251 4,806,054
  40,905,630 41,767,840 34,875,123
Non-current liabilities      
  Deferred revenue 5,962,802 11,472,039 25,438,931
  Borrowings 73,916
  Obligations under finance leases 15,397
  5,962,802 11,472,039 25,528,244
Total Liabilities 46,868,432 53,239,879 60,403,367
Share capital 128,532,124 128,532,124 128,532,124
Share purchase loan (365,780) (365,780) (365,780)
Warrant 310,000 310,000 310,000
Contributed surplus 6,645,062 6,387,487 6,286,044
Deficit (146,971,703) (148,099,590) (149,957,231)
  (11,850,297) (13,235,759) (15,194,843)
Total liabilities and equity $ 35,018,135 $ 40,004,120 $ 45,208,524

Condensed Consolidated Interim Statement of Comprehensive Income
(Unaudited, expressed in U.S. dollars)

  Three months ended March 31
  2011 2010
Revenue $ 13,460,517 $ 12,209,636
Cost of revenue 5,145,478 4,610,477
Gross profit 8,315,039 7,599,159
  Research and development 1,482,695 2,272,685
  Finance and administration 2,420,126 1,208,775
  Sales and marketing 2,164,954 2,317,408
  Operations and customer support 728,077 921,681
  6,795,852 6,720,549
Income before the undernoted 1,519,187 878,610
Other expenses (income)    
  Finance costs 105,400 84,098
  Gain on disposal of assets (1,519)
  Foreign exchange loss 287,419 223,679
  391,300 307,777
Profit before income taxes 1,127,887 570,833
Income tax (recovery) expense (574)
Net profit and comprehensive income $ 1,127,887 $ 571,407
Earnings per share    
  Basic $ 0.05 $ 0.03
  Diluted $ 0.05 $ 0.03

Condensed Consolidated Interim Statement of Changes in Equity
(Unaudited, expressed in U.S. dollars)

    Share capital Share purchase loan Warrant Contributed surplus Deficit Total
Balance at January 1, 2010   $ 128,532,124 $ (365,780) $ 310,000 $ 6,286,044 $ (149,957,231) $ (15,194,843)
  Net profit   571,407 571,407
  Share-based payments   71,861 71,861
Balance at March 31, 2010   $ 128,532,124 $ (365,780) $ 310,000 $ 6,357,905 $ (149,385,824) $ (14,551,575)
Balance at December 31, 2010   $ 128,532,124 $ (365,780) $ 310,000 $ 6,387,487 $ (148,099,590) $ (13,235,759)
  Net profit   1,127,887 1,127,887
  Share-based payments   257,575 257,575
Balance at March 31, 2011   $ 128,532,124 $ (365,780) $ 310,000 $ 6,645,062 $ (146,971,703) $ (11,850,297)

Condensed Consolidated Interim Statement of Cash Flows
(Unaudited, expressed in U.S. dollars)

  Three months ended March 31
  2011 2010
Cash flows from operating activities:    
  Net profit $ 1,127,887 $ 571,407
  Items not affecting cash:    
  Depreciation and amortization of non-current assets 121,644 130,221
  Recognition of share based payments 257,575 71,861
  Accrued interest on borrowings 60,669 54,618
  Finance costs 3,770 4,915
  Foreign exchange loss (gain) on cash held in foreign currency 173 (14,001)
  Foreign exchange loss on borrowings 158,862 168,988
  Change in non-cash operating assets and liabilities (5,024,855) (2,035,182)
Cash used in operating activities (3,294,275) (1,047,173)
Cash flows from investing activities:    
  Payment for property, plant and equipment (146,030) (29,823)
  Increase in restricted short-term investments (100,000) (61)
Cash used in investing activities (246,030) (29,884)
Cash flows from financing activities:    
  Finance costs (3,770) (4,915)
  Proceeds of borrowings 935,846
  Repayment of borrowings (58,823) (54,966)
  Principal payment of obligations under finance leases (12,104)
Cash (used)/from financing activities (62,593) 863,861
Foreign exchange gain (loss) on cash held in foreign currency (173) 14,001
Decrease in cash (3,603,071) (199,195)
Cash, beginning of the period 6,023,070 4,758,719
Cash, end of period $ 2,419,999 $ 4,559,524



SOURCE Redline Communications Group Inc.

For further information:

 Redline Communications
George Kypreos
Tel: +1-905-479-8344


Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .


Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.


Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.