/C O R R E C T I O N from Source -- Redline Communications Group Inc./

In the news release, Redline Communications Reports 2020 Fourth Quarter and Year End Results, issued 24-Mar-2021 by Redline Communications Group Inc. over CNW, we are advised by the company that the Consolidated Statement of Cashflows, located at the bottom of the press release, showed the same values for both the three months ended December 31, 2019 and the year ended December 31, 2019. The values for the year ended December 31, 2019 have been corrected to show the annual results. Set out below is the corrected press release in its entirety.

Redline Communications Reports 2020 Fourth Quarter and Year End Results

TORONTO, March 24, 2021 /CNW/ - Redline Communications (www.rdlcom.com) Group Inc. (TSX: RDL), the creator of powerful wide-area wireless networks for mission-critical applications in challenging locations, today announced operating results (in US dollars unless otherwise noted) for the fourth quarter and year ended December 31, 2020.

Revenue for the fourth quarter ended December 31, 2020 ("Q4 2020") was $4.7 million, down 7% from Q4 2019, while revenue for the year ended December 31, 2020 was $18.5 million, down 22% from the same period in 2019. The decline for both timeframes were primarily the result of business impacts associated with COVID-19 such as, but not limited to, access to customer sites, delays in customer purchasing decisions and longer supplier lead times.  

Order Bookings for Q4 2020 and the year ended December 31, 2020 were $5.5 million and $22.6 million respectively, down 13% and 6% respectively compared to the previous periods. Order Backlog for the year and quarter ended December 31, 2020 was $11.8 million, up 38% over the same period in 2019.

"We are excited about the sales of our LTE solution in Q4 to multiple clients in mining and remote learning applications, capitalizing on demand enabled by the increased spectrum availability from the CBRS band in the USA. We maintained our critical investments in our product development for our target market in mission critical and reliable solutions." stated Stephen Sorocky, Redline's CEO. "In spite of the continuing pandemic impacts on our markets, we succeeded in improving the cash balance at the end of Q4 and we delivered significant progress in our target to reduce inventory levels."

Key financial highlights for the three months ended December 31, 2020 ("Q4 2020") include:

	Q4 2020	Q4 2019	Increase (decrease)	% Change
Revenue	$4.7 M	$5.0 M	($0.3 M)	(7%)
Gross profit margin %	52%	59%	(7%)
Operating expenses	$4.3 M	$4.1 M	$0.2 M	5%
Net loss	$1.6 M	$1.3 M	($0.3 M)	(25%)
Adjusted EBITDA loss^1	$1.6 M	$0.9 M	($0.7 M)	(78%)
CEWS benefit	$0.1 M	Nil	$0.1 M
Bookings^1	$5.5 M	$6.3 M	$0.8 M	(13%)
	December 31, 2020	September 30, 2020	Increase (decrease)	% Change
Cash	$5.3 M	$5.1 M	$0.2 M	4%
Inventory	$5.5 M	$6.5 M	($1.0 M)	(16%)
Order Backlog^1	$11.8 M	$11.0 M	$0.7 M	7%

Key financial highlights for the twelve months ended December 31, 2020 include:

	2020-12 YTD	2019-12 YTD	Increase (decrease)	% Change
Revenue	$18.5 M	$23.7 M	($5.1 M)	(22%)
Gross profit margin %	56%	55%	1%
Operating expenses	$15.6 M	$16.6 M	($1.0 M)	(6%)
Net loss	$3.9 M	$3.7 M	($0.2 M)	(4%)
Adjusted EBITDA loss^1	$4.1 M	$2.3 M	($1.7 M)	(74%)
CEWS benefit	$1.2 M	Nil	$1.2 M
Bookings^1	$22.6 M	$23.9 M	($1.4 M)	(6%)
	December 31, 2020	December 31, 2019	Increase (decrease)	% Change
Cash, net of borrowing	$5.3 M	$5.8 M	($0.5 M)	(8%)
Inventory	$5.5 M	$7.7 M	($2.2 M)	(29%)
Order Backlog	$11.8 M	$8.5 M	$3.2 M	38%

¹ See Definitions of non-GAAP measures below

Financial and Business Review

 Gross profit margin for Q4 2020 was 52%, down 7 percentage points from Q4 2019. Gross Profit margin for the 2020 year was 56%, up one percentage point over 2019.

Overall operating expenses for Q4 2020 were $4.3 million, up 5% over Q4 2019. For the year ended December 31, 2020, overall operating expenses were $15.6 million, down 6% from the same period in 2019. The decrease year over year was primarily the result of decreased costs associated in sales, marketing and travel, as COVID-19 has prompted the suspension of nearly all business travel and the cancelation of in-person marketing events from March 2020 onward.

In the quarter, the Company continued to participate in the Canada Emergency Wage Subsidy ("CEWS") program recognizing a benefit of $0.1 million in the quarter and $1.2 million for all of 2020 and is recorded within other income.

Net loss for Q4 2020 was $1.6 million, an increase of $0.3 million over Q4 2019, while the net loss for the year ended December 31, 2020 was $3.9 million, an increase of $0.2 million over 2019.  Adjusted EBITDA loss for Q4 2020 was $1.6 million, as compared to $0.9 million in Q4, 2019. Adjusted EBITDA loss for the year ended December 31, 2020 was $4.1 million, an increase of $1.7M over the $2.3 million Adjusted EBITDA loss in 2019.

Cash Balance, net of borrowings,  at the end of 2020 was $5.3 million, a decrease of $0.5 million over the same period in 2019.

Conference Call and Webcast – March 25, 2021 at 10:00 a.m. ET

A conference call and webcast to discuss the results has been scheduled for Thursday March 25, 2021 at 10:00 a.m. Eastern Time. To participate, please dial 1-647-427-7450 approximately 10 minutes before the conference call and provide passcode 4329029. A recording of the call will be available through April 1, 2021 on Redline's website or by dialing 1-416-849-0833 and entering the same passcode.

About Redline Communications

Redline Communications (TSX:RDL) designs and manufactures powerful wide-area wireless networks for mission-critical applications in challenging locations. Redline networks are used by oil & gas companies onshore and offshore, mining companies on surface and underground operations, by municipalities to remotely monitor infrastructure, and by specialized telecom service providers to deliver premium services. Hundreds of businesses worldwide rely on Redline to engineer, plan and deliver ruggedized, secure and reliable networks for their IoT, voice, data, and video communications needs in locations that include the deserts of the Middle East, the rainforests of South America, and the frozen Alaskan slopes. For more information visit www.rdlcom.com.

NOTES:

1

To better assess the health and growth of the Redline's business, the Company reports certain non-IFRS metrics, including "Bookings", "Order Backlog","Adjusted EBITDA" and "Adjusted EBITDA Margin". Further information including definitions of these measures and a reconciliation to their closest IFRS measure, if applicable, can be found in the Company's Management Discussion and Analysis for the three and twelve months ended December 31, 2020 ("Q4 2020 MD&A"), copies of which are available on SEDAR at www.sedar.com. Further details on the three and twelve months ended December 31, 2020 can be found in the condensed consolidated audited statement of financial position, statement of comprehensive loss, statement of changes in equity and 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 audited financial statements of the Company for the three and twelve months ended December 31, 2020 and the Q4 2020 MD&A.

Adjusted EBITDA (Loss)
(Expressed in thousands of U.S. dollars)
The table below reconciles Adjusted EBITDA (loss) to net profit (loss):
		Three months ended December 31,				Year ended December 31,
		(unaudited)				(audited)
(in thousands)		2020		2019		2020		2019
Revenue		$	4,683	$	5,014	$	18,515	$	23,659
Net profit (loss)		(1,648)		(1,324)		(3,900)		(3,745)
Add back:
	Share based payments	41		42		183		322
	Depreciation and amortization	268		252		1,068		900
	Covid-19 related Canada     Emergency Wage Subsidy	(123)		-		(1,163)		-
	Finance (income) expense	8		(1)		24		(44)
	(Gain) loss on fair market value     of financial instruments	(185)		(49)		(336)		(59)
	Foreign exchange (gain) loss	47		29		(4)		123
	Income tax expense	19		167		77		179
	Total	75		440		(150)		1,421
Adjusted EBITDA (loss)		$	(1,573)	$	(884)	$	(4,050)	$	(2,324)
Adjusted EBITDA margin		-34%		-18%		-22%		-10%

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 effects 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.rdlcom.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.
Consolidated  Statements of Financial Position
(Expressed in U.S. dollars)
			Note	December 31, 2020		December 31, 2019
ASSETS
Current assets:
	Cash			$          5,334,486		$          6,507,606
	Trade receivables		3	4,237,183		7,089,043
	Other receivables			180,881		260,216
	Inventories		4	5,492,931		7,707,578
	Deferred cost of revenue		11	498		6,910
	Prepaid expenses and other deposits			431,559		285,519
				15,677,538		21,856,872
Non-current assets:
	Property, plant and equipment		5	901,234		999,435
	Intangible assets		6	1,148,050		1,373,526
	Right of use assets		7	565,213		798,080
	Other assets			65,223		76,284
				2,679,720		3,247,325
Total Assets				$        18,357,258		$        25,104,197
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Trade and other payables		10	$          3,944,374		$          6,035,496
	Income tax payable			29,459		12,398
	Deferred revenue		11	2,057,944		1,966,282
	Lease liabilities		12	250,068		277,945
	Borrowings		13	-		716,832
				6,281,845		9,008,953
Non-current liabilities:
	Deferred revenue		11	364,391		429,414
	Lease liabilities		12	554,396		788,572
				918,787		1,217,986
Total Liabilities				7,200,632		10,226,939
SHAREHOLDERS' EQUITY
Share capital			8	172,929,341		172,929,341
Contributed surplus				9,704,769		9,525,694
Deficit				(171,477,484)		(167,577,777)
				11,156,626		14,877,258
Total Liabilities and Equity				$        18,357,258		$        25,104,197

REDLINE COMMUNICATIONS GROUP INC.
Consolidated Statements of Comprehensive Income (Loss)
(Expressed in U.S. dollars)
			Note		Three months ended December 31,						Year ended December 31,
					2020			2019			2020			2019
Revenue			15		$	4,682,586		$	5,014,264		$	18,515,390		$	23,658,998
Cost of revenue					2,261,793			2,077,014			8,170,951			10,620,987
Gross profit					2,420,794			2,937,250			10,344,439			13,038,011
Expenses:
	Research and development				1,357,115			1,032,259			4,473,962			3,408,307
	General and administrative				1,296,248			1,380,234			4,895,446			5,146,714
	Sales and marketing				1,373,832			1,453,002			5,332,922			7,016,231
	Operations and customer support				276,158			250,081			944,006			1,013,123
					4,303,353			4,115,576			15,646,336			16,584,375
Loss before undernoted items					(1,882,560)			(1,178,326)			(5,301,897)			(3,546,364)
Other (income) expenses:
	Covid-19 related Canada Emergency Wage Subsidy		2		(122,664)			-			(1,163,382)			-
	Finance (income) expense		16		7,790			(949)			23,970			(44,144)
	Gain on fair market value of financial instruments				(184,939)			(49,118)			(336,107)			(59,031)
	Foreign exchange (gain) loss				47,023			29,390			(4,147)			122,918
					(252,790)			(20,677)			(1,479,666)			19,743
Loss before income taxes					(1,629,770)			(1,157,649)			(3,822,231)			(3,566,107)
Income tax expense					18,832			166,707			77,476			178,731
Net loss and total comprehensive loss					$	(1,648,602)		$	(1,324,356)		$	(3,899,707)		$	(3,744,838)
Loss per share
	Basic		8		$	(0.10)		$	(0.08)		$	(0.23)		$	(0.22)
	Basic and diluted		9		$	(0.10)		$	(0.08)		$	(0.23)		$	(0.22)

REDLINE COMMUNICATIONS GROUP INC.
Consolidated Statements of Changes in Equity
(Expressed in U.S. dollars)
			Share capital	Contributed surplus	Deficit	Total
Balance at January 1, 2019			$    172,929,341	$        9,292,321	$  (163,832,939)	$      18,388,723
	Net loss		-	-	(3,744,838)	(3,744,838)
	Stock option expense		-	233,373	-	233,373
Balance at December 31, 2019			$    172,929,341	$        9,525,694	$  (167,577,777)	$      14,877,258
Balance at January 1, 2020			$    172,929,341	$        9,525,694	$  (167,577,777)	$      14,877,258
	Net loss		-	-	(3,899,707)	(3,899,707)
	Stock option expense		-	179,075	-	179,075
Balance at December 31, 2020			$    172,929,341	$        9,704,769	$  (171,477,484)	$      11,156,626

REDLINE COMMUNICATIONS GROUP INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
				Three months ended December 31,					Year ended December 31,
			Note	2020		2019			2020		2019
Cash flows from (used in) operating activities:
	Net loss			$	(1,648,602)	$	(1,324,356)		$	(3,899,707)	$		(3,744,838)
	Adjustments to reconcile net loss to net cash from operating activities:
		Finance (income) expense		7,790		(949)			23,969		(44,144)
		Depreciation and Amortization		267,981		252,453			1,068,676		900,194
		Stock option expense		41,449		44,601			179,075		233,373
		Foreign exchange (gain) loss on cash held in foreign currency		(12,166)		(19,119)			27,119		(48,919)
		Foreign exchange (gain) loss on borrowings and lease liabilities		35,387		34,171			(15,069)		109,584
		Loss on disposal of assets				17,706			5,668		15,905
				(1,308,161)		(995,493)			(2,610,269)		(2,578,845)
	Change in non-cash operating assets and liabilities:
		(Increase) decrease in deferred cost of revenue		556		1,439			6,412		(6,910)
		Decrease in deferred revenue		358,713		644,346			26,639		769,009
		Change in other non-cash operating assets and liabilities	17	1,231,462		(410,540)			2,936,808		588,974
Cash generated by (used in) operating activities				282,570		(760,248)			359,590		(1,227,772)
Cash flows used in investing activities:
	Acquisition of property, plant and equipment		5	(38,332)		(436,807)			(277,628)		(549,559)
	Proceeds on sale of property, plant and equipment			-		14,800			-		40,612
	Acquisition of intangible assets		6	-		(460,000)			(240,173)		(474,100)
Cash used in investing activities				(38,332)		(882,007)			(517,801)		(983,047)
Cash flows used in financing activities:
	Interest income			3,184		19,963			25,439		129,839
	Interest expense			(10,974)		(11,853)			(44,722)		(52,894)
	Repayment of borrowings			-		-			(701,491)		(735,505)
	Repayment of lease liabilities			(48,486)		(62,976)			(267,016)		(297,779)
Cash used in financing activities				(56,276)		(54,866)			(987,790)		(956,339)
Foreign exchange gain (loss) on cash held in foreign currency				12,166		19,119			(27,119)		48,919
Decrease in cash				200,128		(1,678,002)			(1,173,120)		(3,118,239)
Cash, beginning of the period				5,134,358		8,185,608			6,507,606		9,625,845
Cash, end of the period				$	5,334,486	$	6,507,606		$	5,334,486	$		6,507,606

SOURCE Redline Communications Group Inc.

Redline Contact(s): Stephen Sorocky, Chief Executive Officer, [phone], [email protected]; Philip Jones, Chief Financial Officer, [phone], [email protected]

Related Links

http://www.redlinecommunications.com