REDLINE COMMUNICATIONS GROUP INC. REPORTS PROFITABLE RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010, RESTATED AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008.

TORONTO, Jan. 14 /CNW/ - Redline Communications Group Inc. (TSX: RDL), a leading provider of specialized broadband wireless systems, today announced its financial results for the three and nine months ended September 30, 2010, as well as restated audited consolidated financial statements as at and for the years ended December 31, 2009 and 2008.

Financial highlights for the third quarter of 2010 include (all amounts reported in this press release are in US $ unless otherwise stated):

  • Revenue of $13.5 million and $38.7 million is an increase of forty-seven and forty-two percent respectively over the same three and nine month periods in the previous year

  • Gross margin of 58% is an increase of eleven percent over same three-month period in previous year

  • Operating expenses declined by $0.7 million which is a nine percent decrease in the third quarter compared to the same quarter in 2009

  • Net Income of $1.1 million during the quarter

  • Positive operating cash flow from continuing operations of $1.3 million during the quarter, and improved cash balance of $6.8 million from $5.5 million in the previous quarter

  • Approximately $2.7 million of non-cash adjustments relating to further restatement corrections relating to prior periods resulted in year-to-date income of $0.5 million (see attached table)

Operational highlights include:

  • Redline received full Federal Communications Commission (FCC) approval to operate its 3.65 GHz RedMAX™ WiMAX base station products across the entire 50 MHz spectrum

  • New Board of Directors appointed, includes four new independent directors

Three and Nine Months Ended September 30, 2010

As described below, the Company has restated its audited consolidated financial statements as at and for the years ended December 31, 2009 and 2008, and the unaudited consolidated results for each of the quarters in the years ended December 31, 2009 and 2008.  As a result, all comparisons described herein refer to the restated balances for such periods.

Redline's third quarter revenues were $13.5 million, up 47% from the $9.2 million reported during the same period in the previous year.  Gross margin for the quarter was 57.5%, up from 46.3% in the same quarter in 2009. This increase reflects improvements in bill-of-material costs and decreased logistics costs

Sales to Telecom Service Providers in the USA and state governments in Mexico were especially strong. The Company reported revenues from both the WiMAX™ and RDL product lines. Approximately 25% of total WiMAX™ revenue was attributed to one large project in Europe, and another approximately 14% of total revenue was for another project where all milestones/deliverables were completed. 

Redline's third quarter operating expenses were $6.4 million, down 9% from the $7.1 million reported during the same period in 2009.  This expense total in 2010 includes approximately $0.8 million of non-recurring costs relative to the restatements and approximately $.4 million of restructuring costs.  $0.2 million of costs during the period were attributed to foreign exchange, compared to only $0.05 million during the same period last year.

The Company reported a profit for the third quarter of 2010 of $1.1 million or $0.05 per share compared to a loss of $2.9 million or $0.14 per share in the same period the previous year.  During the quarter, the Company generated positive operating cash flow from continuing operations of $1.3 million and ended the quarter with a total cash position of $6.8 million.

Redline's revenue for the nine months ended September 30, 2010 was $38.7 million, up 42% from the $27.3 million reported during the same period of 2009.  Product gross margin for the nine months in 2010 was 54.8%, six percentage point greater than the 48.3%) in the prior year. 

Net income for the nine months ended September 30, 2010 was $0.5 million or $0.02 per share which is an improvement over the loss of $8.4 million or $0.40 per share in the same period the previous year.

"Generating profitable growth in the third quarter of 2010 has given us further indication the transformation of Redline is taking hold" said Eric Melka, CEO of Redline.  "While we are pleased with results of the many operational changes we have made over the past nine months, we are not happy with the amount of time it has taken to complete our financial audit and restatements. We expect a more timely and accurate reporting of our financials in the future and we have taken additional steps to ensure this is the case."

For further details on the September 30, 2010 results, see the consolidated balance sheet, consolidated statement of operations and deficit and consolidated statement of cash flows reproduced at the end of this press release.

Restatement of Audited Consolidated Financial Statements as at and for the years ended December 31, 2009 and 2008

During the preparation of the September 30, 2010 interim consolidated financial statements (the "Q3 2010 Financial Statements"), subsequent to the initial restatement as previously disclosed, the Company determined there were errors related to the calculation of certain of the restatement amounts. The restatement adjustments to deferred revenue did not appropriately calculate the impact of historic foreign exchange translation and inadvertently reversed deferred revenue that had previously been recognized. The calculation of the adjustments for the deferred cost of revenue did not include all related costs and, in certain cases, the amount of the restatement was incorrectly calculated. In addition, certain revenue transactions were identified where the pricing was not considered to be fixed or determinable at the time of the initial sale. Certain accounts receivable for which the Company had previously recorded an allowance for doubtful accounts or issued a credit note were misstated as a result of the restatement adjustments. Accordingly, the Company has restated its consolidated financial statements as at December 31, 2009 and 2008 and for each of the years then ended. The restatement also includes certain adjustments that were previously considered immaterial to adjust. The impact of correcting these errors is detailed in note 2 to the audited consolidated financial statements of the Company as at and for the years ended December 31, 2009 and December 31, 2008 (the "2009/2008 Audited Financial Statements"), as outlined in the tables below.

Impact of Restatements on 2009 Statement of Operations and Deficit

The following table presents the impact of the restatement adjustments on the Company's previously issued consolidated statement of operations and deficit for the year ended December 31, 2009:

             
    As previously
reported
  Adjustments   As restated
             
Revenue  38,989,596 (976,003) 38,013,593
Cost of revenue    19,695,933   (58,432)   19,637,501
             
Gross margin     19,293,663   (917,571)   18,376,092
             
Finance and administration expense     4,074,274   249,075   4,323,349
Loss before the undernoted     (9,131,154)   (1,166,646)   (10,297,800)
Foreign exchange loss     345,687   (83,030)   262,657
Loss before income taxes   (9,780,812)   (1,083,616)   (10,864,428) 
Loss for the year and comprehensive loss     (9,807,537)   (1,083,616)   (10,891,153)
Deficit, beginning of year     (139,697,029)   938,127   (138,758,902)
Deficit, end of year    (149,504,566)   (145,489)   (149,650,055)
             
Loss per share:            
  Basic and diluted  (0.47) (0.05) (0.52)

Impact of Restatements on 2009 Balance Sheet

The following table presents the impact of the restatement adjustments on the Company's previously issued consolidated balance sheet as of December 31, 2009:

             
    As previously
reported
  Adjustments   As restated
             
Accounts receivable  5,640,551 (779,905) 4,860,646
Inventories    8,787,868   487,542   9,275,410
Deferred cost of revenue - current    9,502,626   493,355   9,995,981
Deferred cost of revenue    13,542,336   658,551   14,200,887
Total assets     44,348,981   859,543   45,208,524
Accounts payable and accrued liabilities     7,170,447   (66,919)   7,103,528
Deferred revenue - current    21,484,448   819,882   22,304,330
Deferred revenue    25,214,862   224,069   25,438,931
Contributed surplus    6,274,759   28,000   6,302,759
Deficit    (149,504,566)   (145,489)   (149,650,055)
Total liabilities and shareholders' deficiency     44,348,981   859,543   45,208,524

Impact of Restatements on 2008 Statement of Operations and Deficit

The following table presents the impact of the first and second restatement adjustments on the Company's previously issued consolidated statement of operations and deficit for the year ended December 31, 2008:

                 
    As previously 
reported
  First Restatement   Second Restatement   As restated
                 
Revenue:                
  Product  40,899,196 (3,480,142) (2,676,848) 34,742,206
  Maintenance    2,628,324   (2,628,324)   -   -
    43,527,520   (6,108,466)   (2,676,848)   34,742,206
                 
Cost of revenue    28,825,033   (7,836,123)   350,402   21,339,312
                 
Gross margin    14,702,487   1,727,657   (3,027,250)   13,402,894
Expenses:                
  Research and development    13,166,476   313,000   -   13,479,476
  Finance and administration    6,630,614   (2,040,545)   366,434   4,956,503
  Sales and marketing    16,586,579   -   -   16,586,579
  Operations and customer support    -   4,724,942   -   4,724,942
  Amortization of property, plant and equipment    1,307,733   -   -   1,307,733
  Restructuring costs    935,984   -   -   935,984
    38,627,386   2,997,397   366,434   41,991,217
                 
Loss before the undernoted    (23,924,899)   (1,269,740)   (3,393,684)   (28,588,323)
                 
Other expenses (income):                
  Interest and other, net of interest income    121,788   -   -   121,788
  Gain on disposal of assets    (76,585)   -   -   (76,585)
  Foreign exchange loss    767,112   -   117,975   885,087
    812,315   -   117,975   930,290
                 
Loss before income taxes    (24,737,214)   (1,269,740)   (3,511,659)   (29,518,613)
                 
Income taxes    32,943   -   -   32,943
                 
Loss for the year and comprehensive loss    (24,770,157)   (1,269,740)   (3,511,659)   (29,551,556)
                 
Deficit, beginning of year    (91,706,738)   -   -   (91,706,738)
                 
Effect of restatement    -   (22,180,920)   4,449,786   (17,731,134)
                 
Effect of change in accounting policy    230,526   -   -   230,526
                 
Deficit, end of year  (116,246,369) (23,450,660) 938,127 (138,758,902)
                 
Loss per share:                
Basic and diluted  (1.18) (0.06) (0.18) (1.42)

Impact of Restatements on 2008 Balance Sheet

The following table presents the impact of the first and second restatement adjustments and certain reclassification adjustments on the Company's previously issued consolidated balance sheet as of December 31, 2008:

    As previously
reported
  Adjustments   Adjustments   As restated
                   
Assets                
                   
Current assets:                
  Cash  $ 4,355,254 $ - $ - $ 4,355,254
  Accounts receivable    11,627,388   (6,249,832)   (549,293)   4,828,263
  Other receivables    230,563   -   -   230,563
  Inventories    12,896,286   3,081,051   763,534   16,740,871
  Deferred cost of revenue    -   6,742,346   512,666   7,255,012
  Prepaid expenses    457,437   -   -   457,437
    29,566,928   3,573,565   726,907   33,867,400
                   
Deferred cost of revenue    -   15,267,005   1,174,088   16,441,093
Property, plant and equipment    1,787,689   -   -   1,787,689
Other assets    194,002   -   -   194,002
  $ 31,548,619 $ 18,840,570 $ 1,900,995 $ 52,290,184
                   
Liabilities and Shareholders' Equity (Deficiency)                
                   
Current liabilities:                
  Accounts payable and accrued liabilities  $ 9,905,615 $ (35,854) $ (257,020) $ 9,612,741
  Deferred revenue    1,267,498   14,291,596   (1,302,944)   14,256,150
  Current portion of capital lease obligations    50,898   -   -   50,898
  Current portion of loans payable    1,675,741   -   -   1,675,741
    12,899,752   14,255,742   (1,559,964)   25,595,530
                   
Deferred revenue    -   28,445,088   2,522,832   30,967,920
Loans payable    250,313   -   -   250,313
Capital lease obligations    27,600   -   -   27,600
                   
Shareholders' equity (deficiency):                
  Share capital    128,444,175   -   -   128,444,175
  Share purchase loan    (365,780)   -   -   (365,780)
  Warrant    310,000   -   -   310,000
  Contributed surplus    5,917,460   (409,600)   -   5,507,860
  Deficit    (116,246,369)   (23,450,660)   938,127   (138,758,902)
  Accumulated other comprehensive income    311,468   -   -   311,468
    18,370,954   (23,860,260)   938,127   (4,551,179)
  $ 31,548,619 $ 18,840,570 $ 1,900,995 $ 52,290,184

Out-of-Period Adjustments to Periods Ended March 31 and June 30, 2010

As indicated above, during the preparation of the Q3 2010 Financial Statements, the Company determined that there were errors related to the calculation of certain of the restatement amounts relating to the years ended December 31, 2009 and 2008. Certain of these errors impacted 2010 as well.  The total impact of all out of period adjustments was an increase to opening deficit at July 1, 2010 of $2,752,625.  These adjustments are also reflected in the consolidated balance sheet at September 30, 2010, and are discussed in the Management's Discussion and Analysis (MD&A) for the three and nine month periods ended September 30, 2010, available on SEDAR at www.sedar.com.

The following table outlines the impact of the changes for the three and six month periods ended March 31, and June 30, 2010.


 

 

Three months ended March 31, 2010
 
 

Three months ended June 30, 2010

  Six months ended June 30, 2010

 

 

 

 

 
 
 

 

 

 
 
 
 

 

 

 

As previously
reported

Adjustments

As restated

 
As previously
reported

Adjustments

As restated

  As previously
reported

Adjustments

As restated

 

 

 

 

 
 
 

 

 

 
 
 
 

 

Consolidated Statement of Operations and Deficit

 

 

 

 
 
 

 

 

 

   
 

 

 

 

 

 

 
 
 

 

 

 

   
 

 

Revenue

$

11,421,543

704,516

12,126,059

$
13,093,842

10,436

13,104,278

$ 24,515,384
714,952

25,230,336

Cost of revenue

 

3,675,368

1,319,756

4,995,124
 
 

5,773,348

897,046

6,670,394
   
9,448,716

2,216,802

11,665,518

Gross margin

 

7,746,175

(615,240)

7,130,935
 
 

7,320,494

(886,610)

6,433,884

  15,066,668
(1,501,850)

13,564,818

 

 

 

 

 
 
 

 

 

 

   
 

 

Sales and marketing expense

 

2,343,713

68,426

2,412,139
 
 

2,388,112

31,312

2,419,424

  4,731,825
99,738

4,831,563

 

 

 

 

 
 
 

 

 

 
 
 
 

 

Finance & admin expense

 

1,149,193

29,920

1,179,113
 
 

1,005,728

874,978

1,880,706

  2,154,921
904,898

3,059,819

 

 

 

 

 
 
 

 

 

 
 
 
 

 

Operations and customer support expense

 

679,391

-

679,391
 
 

588,860

23,833

612,693

  1,268,251
23,833

1,292,084

 

 

 

 

 
 
 

 

 

 
 
 
 

 

Income (loss) before the undernoted

 

921,515

(713,586)

207,929
 
 

1,183,075

(1,816,733)

(633,658)

  2,104,589
(2,530,319)

(425,729)

 

 

 

 

 
 
 

 

 

 
 
 
 

 

Income (loss) before income taxes

 

725,054

(791,570)

(66,518)
 
 

1,487,156

(1,961,056)

(473,900)
 
2,212,209
(2,752,625)

(540,416)

 

 

 

 

 

 
 

 

 

   
 

 

Income (loss) for the period

 

725,628

(791,570)

(65,944)
 
 

1,486,262

(1,961,056)

(474,794)

  2,211,889
(2,752,625)

(540,736)

 

 

 

 

 

 
 
 

 

 

   
 

 

Deficit, beginning of period

 

(149,504,566)

(145,491)

(149,650,055)
 
 

(148,778,939)

(937,060)

(149,715,999)

  (149,504,566)
(145,491)

(149,650,055)

 

 

 

 

 

 
 

 

 

 
 
 
 

Deficit, end of period

$

(148,778,939)

(937,060)

(149,715,999)

$
(147,292,677)

(2,898,116)

(150,190,793)

$ (147,292,677)
(2,898,116)

(150,190,793)

 

 

 

 

 

 
 

 

 

   
 

 

Loss per share:

 

 

 

 
 
 

 

 

 

   
 

 

Basic and diluted
$

0.03

(0.03)

-

$
0.07

(0.09)

(0.02)

$ 0.10
(0.12)

(0.02)

 

 

 

 

 

 

 
 

 

   
 

 

 

 

 

 

 

 

 
 

 
 
 
 

 

Consolidated Balance Sheet

 

As at March 31, 2010

 

 

 

      As at June 30, 2010

 

 

 

 

 

 

 
 

 

   
 

 

 

 

As previously
reported

Adjustments

As restated

 

 
 

 

  As previously
reported

Adjustments

As restated

 

 

 

 

 

 

 
 
 

 

 
   
 

 

Accounts receivable

 

8,206,933

(171,360)

8,035,573

 
 
 

 

 

  8,802,158
(875,512)

7,926,646

Inventories

 

7,837,143

140,964

7,978,107

 

 
 

 
 
6,647,435
38,343

6,685,778

Deferred cost of revenue

 

23,243,800

422,911

23,666,711

 
 
 

 

 

  22,714,139
(275,989)

22,438,150

Accounts payable and accrued liabilities

 

7,659,797

256,283

7,916,080

 

 
 

 

  9,423,669
522,619

9,946,288

Deferred revenue

 

46,125,865

977,897

47,103,762

 

 
 

 
 
44,170,017
1,138,286

45,308,303

Deficit

 

(148,778,939)

(937,060)

(149,715,999)

 
 
 

 

 

  (147,292,677)
(2,898,116)

(150,190,793)

The Company has restated and will re-file the 2009/2008 Audited Financial Statements simultaneously with the filing of the Q3 2010 Financial Statements.  The selected financial information included in this release is qualified in its entirety by, and should be read together with the 2009/2008 Audited Financial Statements, the refiled amended 2009 MD&A, the Q3 2010 Financial Statements and the MD&A for the three and nine month periods ended September 30, 2010. As a result of the restatements, the previously filed consolidated financial statements of the Company and associated discussions should no longer be relied upon.


REDLINE COMMUNICATIONS GROUP INC.

 

 

 

 
Consolidated Balance Sheets
 

(expressed in U.S. dollars)




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    September 30, 2010   December 31, 2009

  (unaudited and unreviewed)   (Restated)

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents
$

6,797,876

$

4,758,719

Restricted short-term investments
 

92,327

 

92,266

Accounts receivable
 

6,562,679

 

4,860,646

Other receivables
 

360,328

 

78,445

Inventories
 

4,971,023

 

9,275,410

Deferred cost of revenue
 

12,020,257

 

9,995,981

Prepaid expenses
 

2,404,818

 

682,645

 

 

33,209,308

 

29,744,112

 

 

 

 

 

Deferred cost of revenue
 

8,634,761

 

14,200,887

Property, plant and equipment
 

810,408

 

1,176,237

 

 

 

 

 

Other assets

 

96,605

 

87,288

 

 

 

 

 

 

$

42,751,082

$

45,208,524

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities
$

10,021,917

$

7,103,528

Deferred revenue
 

24,267,244

 

22,304,330

Current portion of capital lease obligations
 

-

 

25,852

Current portion of loans payable (note 5)
 

5,908,630

 

4,806,054

 

 

40,197,791

 

34,239,764

 

 

 

 

 

Deferred revenue

 

16,370,256

 

25,438,931

Loans payable

 

-

 

73,916

Capital lease obligations

 

-

 

15,397

 

 

 

 

 

Shareholders' deficiency:

 

 

 

 

Share capital (note 4)
 

128,532,124

 

128,532,124

Share purchase loan
 

(365,780)

 

(365,780)

Warrant
 

310,000

 

310,000

Contributed surplus
 

6,533,165

 

6,302,759

Deficit
 

(149,137,942)

 

(149,650,055)

Accumulated other comprehensive income
 

311,468

 

311,468

 

 

(13,816,965)

 

(14,559,484)

Going concern and financing (note 3)

 

 

 

 

Commitments and contingencies (note 8)

 

 

 

 

 

$

42,751,082

$

45,208,524






REDLINE COMMUNICATIONS GROUP INC.
               
Consolidated Statement of Operations and Deficit    





(expressed in U.S. dollars)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three mos. ended Sept. 30,

 

Nine mos. ended Sept. 30,

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

(restated)

 

 

 

(restated)

 

 

(unaudited and unreviewed)

 

(unaudited and unreviewed)

 

 

 

 

 

 

 

 

 

Product revenue

$

13,479,734

$

9,190,314

$

38,710,071

$

27,280,588

 

 

 

 

 

 

 

 

 

Cost of revenue

 

5,731,509

 

4,927,173

 

17,515,285

 

14,107,294

 

 

 

 

 

 

 

 

 

Gross Margin

 

7,748,225

 

4,263,141

 

21,194,786

 

13,173,294

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Research and development (1)
 

1,391,490

 

2,273,655

 

5,386,481

 

7,010,326

Finance and administration (1)
 

1,658,806

 

945,325

 

4,718,625

 

3,011,967

Sales and marketing (1)
 

2,205,731

 

2,710,111

 

7,037,294

 

7,995,196

Operations and customer support (1)
 

628,609

 

867,366

 

1,920,693

 

2,401,117

Amortization of property, plant and equipment
 

130,951

 

261,786

 

391,756

 

736,894

Restructuring costs (note 9)
 

386,000

 

-

 

937,286

 

-

 

 

6,401,587

 

7,058,243

 

20,392,135

 

21,155,500

 

 

 

 

 

 

 

 

 

Income (loss) before the undernoted

 

1,346,638

 

(2,795,102)

 

802,651

 

(7,982,206)

 

 

 

 

 

 

 

 

 

Other expenses/(income):

 

 

 

 

 

 

 

 

Interest and other
 

49,264

 

70,083

 

158,426

 

260,981

Gain on disposal of assets
 

(2,206)

 

-

 

(2,206)

 

-

Foreign exchange
 

245,064

 

46,803

 

132,330

 

122,064

 

 

292,122

 

116,886

 

288,550

 

383,045

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

1,054,516

 

(2,911,988)

 

514,101

 

(8,365,251)

 

 

 

 

 

 

 

 

 

Income taxes

 

1,666

 

(1,498)

 

1,986

 

8,102

 

 

 

 

 

 

 

 

 

Income (loss) and comprehensive income (loss)

 

1,052,850

 

(2,910,490)

 

512,115

 

(8,373,353)

 

 

 

 

 

 

 

 

 

Deficit, beginning of the period

 

(147,292,677)

 

(146,664,541)

 

(149,650,057)

 

(138,758,904)

 

 

 

 

 

 

 

 

 

Adjustments to opening retained earnings (note 2)

 

(2,898,115)

 

2,442,774

 

-

 

-

 

 

 

 

 

 

 

 

 

Deficit, end of period

$

(149,137,942)

$

(147,132,257)

$

(149,137,942)

$

(147,132,257)

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic and diluted

$

0.05

$

(0.14)

$

0.02

$

(0.40)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares used in basic and diluted loss per share

 

21,102,202

 

21,093,357

 

21,102,202

 

20,962,714

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation expense as follows:

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Research and development
 

(21,698)

 

32,078

 

96,574

 

172,580

Finance and administration
 

(37,872)

 

20,277

 

19,255

 

130,401

Sales and marketing
 

8,245

 

66,041

 

107,906

 

237,318

Operations and customer support
 

1,142

 

5,432

 

6,671

 

30,407

Total

$

(50,183)

$

123,828

$

230,406

$

570,706






REDLINE COMMUNICATIONS GROUP INC.

             
Consolidated Statements of Cash Flows                
(expressed in U.S. dollars)                

 

 

 

 

 

 

 

 

 
 
Three mos. ended Sept. 30,   Nine mos. ended Sept. 30,


2010   2009
2010   2009

 

 

 

 

(restated)

 

 

 

(restated)

 

 

(unaudited and unreviewed)

 

(unaudited and unreviewed)

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) for the period:

$

1,052,850

$

(2,910,490)

$

512,115

$

(8,373,353)

Items not affecting cash:

 

 

 

 

 

 

 

 

Amortization of property, plant and equipment
 

130,951

 

261,785

 

391,756

 

736,894

Stock-based compensation expense
 

(50,183)

 

123,828

 

230,406

 

570,706

Accretion of debt
 

-

 

26,324

 

-

 

78,972

Accrued Interest on loan payable
 

48,797

 

-

 

159,758

 

-

Foreign exchange gain on cash held in foreign currency
 

(11,047)

 

-

 

(2,427)

 

-

Foreign exchange loss (gain) on loans payable
 

197,723

 

(219,763)

 

91,858

 

(226,003)

Change in non-cash operating assets and liabilities (note 7)
 

(30,752)

 

2,501,833

 

(56,544)

 

6,022,225

 

 

1,338,339

 

(216,483)

 

1,326,922

 

(1,190,559)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Issuance of share capital, net of issuance costs
 

-

 

14,592

 

-

 

59,549

Proceeds of loan payable
 

2,267

 

1,761,851

 

940,353

 

3,618,307

Repayment of loan payable
 

(55,267)

 

(678,981)

 

(163,309)

 

(1,668,408)

Principal payment of capital lease obligations
 

(18,989)

 

(8,227)

 

(41,249)

 

(37,098)

 

 

(71,989)

 

1,089,235

 

735,795

 

1,972,350

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchase or sale of capital assets
 

10,605

 

(116,375)

 

(25,926)

 

(314,685)

Increase in restricted short-term investments
 

-

 

(366)

 

(61)

 

(1,245)

 

 

10,605

 

(116,741)

 

(25,987)

 

(315,930)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain on cash held in foreign currency

 

11,047

 

219,763

 

2,427

 

226,003

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

1,288,002

 

975,774

 

2,039,157

 

691,864

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

5,509,874

 

4,071,344

 

4,758,719

 

4,355,254

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

$

6,797,876

$

5,047,118

$

6,797,876

$

5,047,118

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Interest paid
$

2,417

$

40,734

$

10,832

$

192,762

Income taxes paid
 

1,666

 

(1,498)

 

1,986

 

8,102

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.    Municipalities use Redline  products  to  quickly  and  easily deploy  or  extend  their  video  surveillance networks;  oil  and gas  companies  to monitor  how  their  oil  wells  are  operating; service  providers  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.

NOTE: 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.


SOURCE Redline Communications Group Inc.

For further information:

Redline Communications
Bruce MacInnis
bmacinnis@rdlcom.com
Tel: +1-905-479-8344


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