MISSISSAUGA, ON, April 14 /CNW/ -
- Same location sales in our PROSHRED(R) franchise system for the period
of October 1, 2008 to December 31, 2008 were $2,182,756 USD, an
increase of 59.2% from the same period in 2007(1).
- Same location sales in our PROSHRED(R) franchise system for the period
of January 1, 2008 to December 31, 2008 were $8,374,608 USD, an
increase of 89.7% from the same period in 2007(1).
- Awarded additional franchise territories in Long Island, New York and
Washington, DC to existing franchisees in 2008, increasing the number
of territories serviced from 57.9 to 66.7.
- Redishred Capital Corp.'s royalty and fee revenue for the fiscal year
ended December 31, 2008 was $597,865 CDN. Royalty and fee revenues are
generated by franchises of the PROSHRED(R) franchise system and are
originally denominated in US dollars.
For the three months ended, December 31, 2008 December 31, 2007
Operating income (loss)
amortization and interest) $ (668,455) $ (20,753)
Net income (loss) $ (897,251) $ (20,753)
Income (loss) per share $ (0.03) $ (0.00)
Weighted average number of
common shares 22,884,616 10,000,000
For the year ended, December 31, 2008 December 31, 2007
Operating Income (loss)
amortization and interest) $ (852,967) $ (156,398)
Net Income (loss) $ (1,495,618) $ (137,615)
Income (loss) per Share $ (0.07) $ (0.03)
Weighted average number of
common shares 20,201,791 4,478,083
(1) Same location system sales are revenues generated from the franchise
system. Redishred Capital Corp. derives its royalty and service fee
revenues based on a percentage of system sales. Redishred Capital
Corp. has only included in its financial statements royalty and
service fee revenue from March 17, 2008 in accordance with GAAP. The
system sales results and their prior year comparisons include data
from prior to March 17, 2008 (derived from predecessor companies),
and are a Non-GAAP measure.
In addition to operating the Proshred franchising business, the Company's
plan is to grow its business through the acquisition and operation of
independent document destruction businesses that generate stable and recurring
cash flow through a scheduled client base, continuous paper recycling, and
concurrent unscheduled shredding service. Given the current economic
circumstances that did not exist at the time of the purchase of Professional
Shredding Corporation, management's previously stated goals relating to
acquisitions and financing, and financial forecasts which it may have made
based upon those acquisition assumptions are postponed given the uncertainty
related to securing financing.
Management continues to monitor the capital markets and will capitalize on
acquisition opportunities when equity and credit markets improve.
Simultaneously, management will continue its franchising efforts in order to
grow the location footprint in the United States, system sales and royalty and
fee revenue. The Company will continue to work with its franchisees to assist
them in improving their revenues and their operations, with the view to
enhancing their profitability. The Company will also rationalize overheads in
order to minimize cash outflows during this period.
Management's Comments on the Industry
The North American document shredding market continues to remain strong
despite the current economic malaise in the United States economy. Market
growth and demand is being driven by:
- increasing awareness for recycling paper products
- corporate initiatives to outsource "non-core" business services
- tighter regulatory requirements and the related increasing enforcement
of regulations (via fines and penalties)
Given these strong fundamentals, the company is optimistic about its
short, intermediate and long term development plans.
During the 4th quarter of 2008, franchisees in the PROSHRED(R) system did
see a decline in the value of their recycled revenue as a result of reduced
paper prices, in particular sorted office pack ("SOP"). SOP prices in the
early part of 2008 were as high as $180 per ton, dropping to lower than $100
per ton in the 4th quarter of 2008. The decline in SOP prices was offset by
continued growth in regularly scheduled business when compared to the same
period in 2007.
Management's Comments on the Year
During 2008, the Company's management team continued to develop its
franchise system by awarding new territories and by focusing on growing system
sales in existing franchise locations. Management also continued to seek
financing as part of its longer term acquisition plans.
Redishred Capital Corp. outlined a number of goals and objectives for the
2008 fiscal year including: acquiring three to six corporate locations,
awarding two new franchise locations and increasing year over year same store
sales by 46.1%. The company was successful in achieving two of its goals,
increasing same store sales by 89.7% and awarding 2 new franchise locations.
Unfortunately, the Company, as a result of the weakened capital markets,
Redishred was unsuccessful in its efforts to raise funds in order to acquire
the targeted corporate locations.
On March 17, 2008, the Company purchased Professional Shredding
Corporation for $5.4 million. During the fourth quarter of 2008, Redishred
Capital Corp. performed its annual asset impairment test, and determined that
$300,368 of goodwill associated with the purchase of Professional Shredding
Corporation was to be written down; all other assets purchased were not deemed
Given the current volatility in the capital markets, and the current
recession in the United States, the Company has set new goals for 2009 as
- Grow total system sales from existing franchisees by at least 11%
- Establish between 4 to 6 new franchise locations
- Reduce selling, general and administrative costs by at least 10% versus
The company during 2008 was also pleased to announce that the Long Island,
NY territories and the Washington, DC territories were awarded to existing
franchisees. According to John Prittie, CEO of Redishred Capital Corp., "these
regions are very important as we move to complete our footprint across the
North East United States". Mr. Prittie also noted that, "it is extremely
satisfying that our current franchisees continue to invest in the PROSHRED(R)
system. This is an obvious testament to not only the growth in the industry,
but to the opportunity to become a strong player in their respective markets".
The company continues to work with the International Franchise Association and
business brokers to further identify talented and successful franchisee
"There is a strong opportunity to grow our business organically as the
industry continues to grow despite the poor economy, and it is very exciting
to see that in 2008 our same store system sales grew at an outstanding 59% in
the 4th quarter compared to 2007 and by almost 90% on the entire year", noted
Mr. Prittie. "The Q4 system sales results have exceeded our expectations. This
demonstrates that there is an increasing awareness and demand to destroy
confidential information and recycle shredded material."
Mr. Prittie indicated that "the Company will continue to recruit and award
franchises in new markets and will also look to reduce overheads to compensate
for the lack of new corporate locations." Mr. Prittie noted that the Company
will monitor the capital markets with the view to accessing acquisition
financing at a later date. "We believe that the consolidation strategy will
continue to be viable over the medium to long term and the current economic
situation will create new and more attractive buying opportunities".
Redishred's December 31, 2008 Financial Statements, Notes and Management's
Discussion and Analysis can be found at www.sedar.com and www.redishred.com.
Redishred Capital Corp. is the owner of the PROSHRED(R) trademarks and
intellectual property in the United States. PROSHRED(R) shreds and recycles
confidential documents and proprietary materials for tens-of-thousands of
customers in the United States in all industry sectors. PROSHRED(R) is a
pioneer in the mobile document destruction and recycling industry and is the
only company with both ISO 9001:2000 and NAID certifications. The company
utilizes state-of-the-art equipment and operates its business with trained,
certified and bonded customer service professionals. It is PROSHRED(R)'s
vision is to be the 'system of choice' and provide shredding and recycling
services on a global basis.
Annual Meeting of Shareholders
The Company will be holding its Annual Meeting of Shareholders at the
Delta Meadowvale, 6750 Mississauga Road, Mississauga, Ontario L5N 2L3, on
Thursday, May 14, 2009, at 2 p.m. (E.S.T.).
Note: The TSX Venture Exchange has neither approved nor disapproved of
the information contained herein.
This news release contains forward looking statements that reflect the
current expectations of management of Redishred and Redishred's future
results, performance, achievements, prospects and opportunities. Wherever
possible, words such as "may", "will", "estimate", "believe", "expect",
"intend" and similar expressions have been used to identify these forward
looking statements. These statements reflect current beliefs and are based on
information currently available to management of Redishred. Forward looking
statements necessarily involve known and unknown risks and uncertainties. A
number of factors, including those discussed in the 2008 management
information circular and the filing statement dated February 29, 2008 under
"Risk Factors", could cause actual results, performance, achievements,
prospects or opportunities to differ materially from the results discussed or
implied in the forward looking statements. These factors should be considered
carefully and a reader should not place undue reliance on the forward looking
statements. There can be no assurance that the expectations of management of
Redishred will prove to be correct.
In particular, certain statements in this document discuss Redishred's
anticipated outlook of future events. These statements include, but are not
(i) anticipated acquisition activity, which has been and may continue
to be impacted by the current global credit crisis, as well as by
the Company's limited cash resources with which to identify and
evaluate the acquisitions,
(ii) the Company's ability to execute its acquisition strategy which has
been negatively impacted by the Company's efforts to obtain
adequate financing which may continue and which may also be
impacted by the availability of acquisition targets on suitable
(iii) franchise development targets, which may be impacted by the
economic situation in the United States and foreign exchange
(iv) anticipated growth in system sales and royalty revenue which may be
impacted by industry growth levels, the demand for recycled paper
products, changes in local and federal regulations the economic
situation in the United States and foreign exchange fluctuations,
(v) commodity paper prices which will vary with market conditions, and
(vi) the Company's expectations for reduced overhead which may be
impacted by economic conditions facing our franchisees.
Readers are cautioned that such forward looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from these statements. Redishred can give no assurance that actual
results will be consistent with these forward-looking statements.
For further information:
For further information: Jeffrey Hasham, CA, Chief Financial Officer,
Redishred Capital Corp. (TSX.V - KUT), (416) 849-3469, Fax: (905) 812-9448,