RDM Corporation (TSX: RC), a leading developer of specialized software and hardware products for electronic payment processing, today reported its financial results for the three months ended December 31, 2005.

Q1 Highlights

- Total revenues increased to $5.0 million, up 15% from $4.3 million

of revenues recorded in Q1 of fiscal 2005.

- The Digital Imaging segment, considered by RDM to be its platform

for long-term growth, generated $3.3 million of revenues, an

increase of 36% from a year earlier.

- Gross profit increased 14% to $2.0 million, and as a percentage of

revenues was unchanged from the previous year at 39%.

- Net loss was $10,000 or $0.00 per share in the first quarter of

fiscal 2006, compared to a net loss of $199,000 or $0.01 per share

a year earlier. The $10,000 loss in Q1 included $175,000 in

non-cash operating expenses such as depreciation and amortization,

and stock-based compensation.

- The Company's ITMS(R) service continues to gain momentum, with

average transaction volumes for the quarter totaling 550,000 items

per week.

- Several additional U.S. Banks were added to RDM's existing ITMS

customer base. These Banks and Financial Institutions use ITMS as

their remote cheque deposit solution for their corporate

customers.

"I am very encouraged by the first quarter performance of our Digital Imaging segment, resulting from both strong scanner sales and record ITMS transaction volumes," said Douglas Newman, President and CEO of RDM Corporation. "The remote deposit capture market got off to a slower start than we expected over the past couple of years, but we are seeing strong signs of accelerating growth in 2006, and we have proactive strategies in place to ensure RDM takes full advantage of this activity. I believe our solid start to fiscal 2006 positions us well to achieve our objectives, which include reaching volumes of two million ITMS transactions per week by year-end. Over the long term we are targeting overall revenue growth to average double digits per annum."

Digital Imaging

The Digital Imaging segment, comprised of both electronic cheque scanner sales and the ITMS service, represented 64.9% of RDM's Q1 2006 revenues. Revenues for the segment were $3.3 million, an increase of $853,000 or 36% over the previous year. Digital Imaging posted an operating loss of $677,000 for the quarter, compared to a loss of $983,000 in Q1 fiscal 2005.

Management continues to view Digital Imaging as RDM's platform for long-term growth, and accordingly has focused company resources on initiatives to accelerate growth in the segment. Subsequent to the quarter-end, RDM announced that Unisys will be reselling certain RDM scanners. Management expects scanner sales may fluctuate quarter to quarter, but will grow significantly over the long term.

Strategies to accelerate ITMS growth include working more closely with RDM's existing bank distributors on their product roll-out and sales process, adding new bank and non-bank distributors, maintaining product leadership through key new releases in 2006, and continuing to implement the Company's customer-service oriented program of operational excellence.

Electronic Payments Solutions

The Electronic Payments Solutions segment, which encompasses custom development projects for government and financial institution customers, generated $1.3 million in revenue in Q1 2006, an increase of $260,000 or 24% over the previous year. The segment contributed $658,000 to operating profits in the quarter.

With a significant portion of this segment's revenues generated from ITMS implementations, management believes that Electronic Payments Solutions and Digital Imaging results should be viewed in tandem when evaluating overall Company performance. The combined operating results from the two segments improved to a loss of $19,000 in Q1 2006, compared to a loss of $425,000 a year earlier.

Quality Assurance

The Quality Assurance segment, comprised of quality control products sold to commercial cheque printers and processors, generated $435,000 of revenue in the first quarter, representing a decrease of 51% from a year earlier. The decrease is due primarily to higher than average revenues in the first quarter of 2005. Management continues to expect revenues for the segment to average approximately $500,000 per quarter. Quality Assurance contributed $57,000 to Q1 2006 operating profits.

Balance Sheet

At December 31, 2005, RDM had working capital of $10.7 million, including $4.4 million of cash and equivalents, as compared to $10.5 million of working capital and $5.5 million of cash and equivalents at September 30, 2005. The Company remains free of long-term debt, and was not drawing on its $1.0 million operating credit facility at December 31, 2005.

Notice of Conference Call Webcast

RDM will be hosting a conference call to discuss the Company's first quarter financial results on February 10, 2006 at 8:30 a.m. ET. Dial-in numbers are: 1-866-250-4892 or 416-644-3428, reference number 21175433 followed by the number sign. A live audio webcast of the call will be available at www.rdmcorp.com. Webcast attendees are welcome to listen to the conference in real-time or at their convenience.

About RDM Corporation

RDM Corporation is headquartered in Waterloo, Ontario and trades on the Toronto Stock Exchange under the symbol RC. RDM is a leading developer of specialized software and hardware products for electronic payment processing. RDM has pioneered electronic cheque conversion systems and web-based image and transaction management services for banks, retailers, payment processors and government agencies. RDM's newest offering is its innovative and proprietary Image & Transaction Management System (ITMS) whereby transaction information can be remotely captured and processed electronically from distributed locations, freeing up significant customer float time and significantly reducing costs associated with returned cheques. RDM holds an approximate 18% interest (13% on a fully diluted basis) in Xign Corporation, a California based provider of collaborative software for the financial supply chain. For further information, visit RDM's website at www.rdmcorp.com.

RDM CORPORATION

Consolidated Balance Sheets

(Amounts In Canadian Dollars, In Thousands, Except Share

and Per Share Amounts)

December 31 September 30

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2005 2005

---- ----

(Unaudited) (Audited)

------------ ------------

Assets:

Current assets:

Cash and cash equivalents $ 4,405 $ 5,466

Accounts receivable 5,101 3,396

Inventories 3,897 3,971

Other 119 168

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Total current assets 13,522 13,001

Long-term investment 6,379 6,379

Capital assets 2,221 2,304

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Total assets $ 22,122 $ 21,684

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Liabilities and shareholders' equity:

Current liabilities:

Accounts payable and accrued liabilities $ 2,064 $ 1,972

Deferred revenue 805 529

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Total current liabilities 2,869 2,501

Shareholders' equity:

Share capital 26,154 26,135

Contributed surplus 625 575

Deficit (7,422) (7,412)

Share purchase loans (104) (115)

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Total shareholders' equity 19,253 19,183

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Total liabilities and shareholders' equity $ 22,122 $ 21,684

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RDM CORPORATION

Consolidated Statements of Operations and Deficit

(Amounts in Canadian Dollars, In Thousands, Except Share

and Per Share Amounts)

Three Months Ended

------------------

December 31

-----------

2005 2004

---- ----

(Unaudited) (Unaudited)

------------ ------------

Revenue $ 5,010 $ 4,344

Cost of revenue 3,052 2,621

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Gross profit $ 1,958 $ 1,723

Operating expenses:

Sales and marketing 621 570

Research and development 832 878

General and administration 340 228

Depreciation and amortization 154 149

Stock-based compensation 50 80

Interest and other (29) 17

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$ 1,968 $ 1,922

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Loss from operations (10) (199)

Income taxes - -

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Net loss $ (10) (199)

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Deficit, beginning of period $ (7,412) $ (8,169)

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Deficit, end of period $ (7,422) $ (8,368)

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Loss per share - basic $ - $ (0.01)

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Loss per share - diluted $ - $ (0.01)

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RDM CORPORATION

Consolidated Statements of Cash Flows

(Amounts in Canadian Dollars, In Thousands, Except Share

and Per Share Amounts)

Three Months Ended

------------------

December 31

-----------

2005 2004

---- ----

(Unaudited) (Unaudited)

------------ ------------

Cash provided by (used in):

Operations:

Net loss $ (10) $ (199)

Items not involving cash:

Depreciation and amortization 154 149

Change in non-cash operating working

capital (1,214) (921)

Stock-based compensation 50 80

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$ (1,020) $ (891)

Financing:

Issuance of share capital, net of issue costs 19 1,375

Repayment of share purchase loans 11 1

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$ 30 $ 1,376

Investing:

Purchase of capital assets $ (71) $ (184)

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Increase (decrease) in cash (1,061) 301

Cash and cash equivalents, beginning of period 5,466 4,009

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Cash and cash equivalents, end of period $ 4,405 $ 4,310

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For further information: please contact: David Mason or Jeff Codispodi, Investor Relations, The Equicom Group Inc., (416) 815-0700 ext. 237 or 261 phone, (416) 815-0080 fax, dmason@equicomgroup.com; Douglas Newman, President & Chief Executive Officer, RDM Corporation, (519) 746-8483 ext. 340 phone, (519) 746-3317 fax, dnewman@rdmcorp.com; To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on Tools for Investors.

Source: newswire