Additional Capital will drive accelerated sales and product development
TORONTO – November 22, 2021 – Redline Communications Group Inc. (“Redline Communications”) (TSX: RDL), a leading provider of mission-critical data infrastructure for remote and harsh environments, announces today it has entered into a new credit agreement (the “Credit Agreement”) with EdgePoint Wealth Management (“EdgePoint”) and two existing investors. The Company intends to use the proceeds to further drive new product development as well as to expand the sales and marketing efforts to drive increased revenues.
Terms of the CDN$7,000,000 term loan facility include: 10% interest rate, serviced with interest-only payments for the entire three-year term (only the first year interest is guaranteed), and the issuance of 3,500,000 common share purchase warrants (the “Warrants”). Each Warrant will be exercisable for one common share of the Company for a period of three years from the date hereof, at exercise prices of: (i) CDN$0.65 per common share with respect to one-third of the Warrants; (ii) CDN$0.75 per common share with respect to one-third of the Warrants, and (iii) CDN$0.85 per common share with respect to one-third of the Warrants. One insider of the Company is being issued 670,500 Warrants (so as to maintain its pro rata ownership percentage) and the issuance of Warrants to such insider will not materially affect control of the Company.
Redline Communications CEO, Richard Yoon, commented, “We are grateful for the support we have received from EdgePoint and certain existing investors. The proceeds from this facility will enable Redline to accelerate sales and drive product innovation. As we noted in our Q3 2021 earnings release last week, we are hitting some notable milestones in our financial performance including a gross margin of 66%, the second highest in the Company’s history and a backlog of orders of $12.5 million which is the highest it has been in six years.”
Commented Lee Matheson, partner at EdgePoint Investment Group, ”Redline appears to us to be at a critical stage in its development as market acceptance of its solutions is clearly building. The proceeds from this facility should ensure that Redline has the ability to fully capitalize on the opportunity in front of it. EdgePoint has a long history of providing long-term, stable capital to high-growth, high potential
companies and we are happy to now include Redline in this portfolio.”
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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, Distribution Utilities for last mile broadband, 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. For more information, visit www.rdlcom.com.
About EdgePoint Wealth Management Inc.
EdgePoint Wealth Management Inc. is an independent investment management firm based in Toronto. Owned and operated by investors, it specializes in equity and fixed-income investing. EdgePoint’s long- term investment approach enables partnerships with quality companies to find creative and flexible financing solutions. Find out more at www.edgepointwealth.com.
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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.