MISSISSAUGA, ON, Aug. 10 /CNW/ -- MISSISSAUGA, ON, Aug. 10 /CNW/ -
Financial Highlights: - System sales(1) from our PROSHRED(R) system
for the second quarter of 2010 were $3.2 million USD - setting a
new record for system sales achieved in any one quarter. For the
first half of 2010, system sales were $6.3 million USD, which
represents a 42% increase over the first half of 2009. - Scheduled
(recurring) system sales in the second quarter grew by 15% over the
same period in 2009. - On April 30, 2010, Redishred acquired its
first corporate location in Syracuse, New York and on June 30,
2010, Redishred acquired its second corporate location in Albany,
New York. - The Syracuse location generated $100,685CDN in revenue
and $15,787CDN in net income for the two months ended June 30,
2010. - Redishred's royalty and fee revenue for the second quarter
of 2010 was $235,000CDN (2009 - $200,000CDN). Royalty and fee
revenues are generated by franchises of the PROSHRED(R) franchise
system and are originally denominated in US dollars. - Following
the end of the second quarter of 2010, on July 26, 2010, Redishred
awarded the San Diego, CA franchise. Operations are expected to
commence in the third quarter of 2010. (1) System sales are
revenues generated from the franchise system and from corporately
operated locations. Redishred Capital Corp. derives its royalty and
service fee revenues based on a percentage of system sales. For the
three months ended, June 30, 2010 June 30, 2009 (in CDN)
--------------- --------------- Franchising: Royalty and service
fee revenues $ 235,092 $ 200,175 Corporate operations: Service and
recycling revenue $ 100,685 - Income from corporate location $
15,787 - Operating income (loss) (Before depreciation, amortization
and interest) $ (157,498) $ (522,471) Net income (loss) $ (300,831)
$ (751,641) Income (loss) per share $ (0.01) $ (0.03) Weighted
average number of common shares 28,884,658 22,884,614 Management's
Comments on the Industry The North American shredding industry
continues to grow, as there is increasing awareness with respect to
the following demand drivers: - regulatory requirements and
enforcement continue to be increased with respect to document
destruction, including the federally enacted Health Information
Technology for Economic and Clinical Health Act; - consumers and
businesses have heightened awareness of their responsibility
towards safeguarding the environment; - corporate initiatives to
outsource "non-core" business services, and - increasing need to
destroy and recycle other media such as hard- drives. Additionally,
prices for recycled paper have continued to show upward momentum as
a result of increased demand from overseas markets, resulting in
stronger recycling system sales. Given these strong fundamentals,
the company continues to be optimistic about its short,
intermediate and long-term development plans. Management's Comments
on the Second Quarter System Sales - System sales in all three
major categories continued to grow during the second quarter of
2010. - Scheduled system sales, which are recurring in nature, were
up 15% over the second quarter of 2009. - Unscheduled system sales,
which is revenue generated from customers with one time
requirements or having less frequent shredding requirements, grew
by 17% over the second quarter of 2009. - Recycling system sales,
which is revenue generated from selling the shredded paper to
recycling facilities, grew by 259% over the second quarter of 2009.
In addition the number of tons of paper recycled by the PROSHRED(R)
system was up 24% over the second quarter of 2009. These solid
results are driven by Redishred's sales and marketing programs that
are aimed at educating clients on the legislative requirements to
destroy confidential information using a secure on-site solution.
Additionally, a larger number of clients are requiring their
facilities to recycle all products, including office paper and, by
using our service, clients are assured that documents are securely
destroyed and the materials are recycled. Franchise Development -
Redishred had strong franchise recruitment activities take place in
the second quarter of 2010, which garnered a new franchisee and a
resale of an existing franchise in July of 2010. Tom Hosea, our
Denver, CO franchisee of six years, sold his PROSHRED(R) franchise
to, Tom and Darcy Nash. Tom and Darcy completed their new
franchisee training program in Toronto and Syracuse in June, and
closed their purchase of the franchise on July 1, 2010. Tom and
Darcy Nash had the following comments on joining the PROSHRED(R)
system, "we felt that with the heightened awareness of identity
theft and security concerns driving demand, coupled with the fact
that we are first time business owners, the Proshred franchise
system made a lot of sense for us. We also feel that there is a
good opportunity to grow the business in the Denver market." On
July 26, 2010, Todd Hoover and Bill and Desiree Chiles were awarded
the San Diego, CA PROSHRED(R) franchise. This franchise marks the
18th location in the PROSHRED(R) system. Redishred's President John
Prittie commented, "We are very pleased to award our first new
franchise for 2010 and our second on the west coast in the last 12
months. We are looking to establish a strong presence on the west
coast of the United States and have targeted Los Angeles, San
Francisco, San Jose, Portland and Seattle for future expansion".
Mr. Prittie further noted, "The new franchise will service San
Diego and Imperial counties and augment our existing presence in
Southern California. Our new franchisees are well known in the
Southern California business community and have many connections
within the commercial real estate and finance industries." Todd
Hoover and Bill and Desiree Chiles, the new San Diego franchises,
noted that "we decided to get involved with Proshred because we
think the business model is relevant in today's world of identity
theft. We feel there is solid demand for a "best in class" service
and we believe the Proshred model represents this and will be well
received by our San Diego customers. Proshred is attractive because
it has a solid infrastructure and support system in addition to a
successful base of existing locations. We look forward to
duplicating the Proshred model in San Diego and growing a
sustainable business." Acquisitions and Corporate Operations - On
April 30, 2010, Redishred completed the acquisition of the
PROSHRED(R) Syracuse business from its existing franchisee for a
purchase price of $317,000. On June 30, 2010, Redishred completed
the acquisition of the PROSHRED(R) Albany business from its
existing franchisee for a purchase price of $398,000, not including
contingent consideration. The results for the first two months from
the corporate location are as follows: two months ended June 30,
2010 % of revenue (in USD) Revenue: Shredding service $ 76,820 79%
Recycling 20,900 21% --------------- Total revenue 97,720 100%
--------------- Corporate store operating costs 59,766 61%
Depreciation 13,858 14% Interest expense 8,946 9% ---------------
Total corporate store costs 82,570 84% --------------- Corporate
store income (loss) 15,150 16% --------------- ---------------
Community and Social Commitment - Our locations under the
PROSHRED(R) banner conducted eighty six community shredding events
in the first half of 2010. These events provide an opportunity for
our clients, clients' employees, local businesses and local
residents to ensure their personal and confidential materials are
securely destroyed. In addition to helping to reduce identity
theft, several of these events allow for donations to various
not-for-profit organizations. 100% of the shredded material is
recycled, as our continued goal is to foster the use of fewer trees
in the production of all paper products. Future community shredding
event locations can be found at our website, www.proshred.com.
During the first half of 2010, the PROSHRED(R) system, through its
recycling program, saved 149,000 trees. Robert Crozier, the
Company's CEO, had the following comments on the second quarter
results, "We had a very busy second quarter, setting new system
sales records, acquiring two shredding businesses, and seeing the
fruits of our franchise recruitment efforts in July. All of these
positive results confirm that this industry remains strong and our
PROSHRED(R) brand and systems are meeting the needs of our
customers. We are certainly looking forward to an even better
second half of 2010, with the goal of conducting additional
accretive acquisitions in new markets, continuing to award new
franchises in new markets, and continuing to build on our system
sales growth" Financial Statements Redishred's June 30, 2010
Financial Statements, Notes and Management's Discussion and
Analysis will be available at www.sedar.com and www.redishred.com.
Services 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 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 has the ISO
9001 certification. In addition to the ISO certification, most of
our locations are NAID certified. It is PROSHRED(R)'s vision is to
be the 'system of choice' and provide shredding and recycling
services on a global basis. Note: Neither TSX Venture Exchange nor
its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release. 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 2009 management
discussion and analysis 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 limited to: (i) franchise development or the
awarding of franchises (including the recognition of franchise fee
revenue), which is subject to the identification and recruitment of
candidates with the financial capacity and managerial capability to
own and operate a Proshred franchise; (ii) the development of
further west coast locations may not be attained due to negative
local economic circumstances that may limit the number of qualified
franchisee candidates; (iii) the commencement of a new franchise
operation may be delayed by the inability of the franchisee to
comply with the franchise agreement terms and conditions post
execution; (iv) acquisition activity, which is subject to the
identification of appropriate assets that are accretive to the
Company's cash flows and agreement of suitable terms; (v)
anticipated system sales and royalty revenue which may be impacted
by industry growth levels which to date have been driven by
favourable legislation and favourable media coverage on the impacts
of identity theft; (vi) commodity paper prices and the demand for
this commodity which will vary with market conditions in the United
States and international, and (vii) results for the second half of
2010, maybe impacted by industry growth levels, the price of
recycled paper and the performance of the overall economy. 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. Redishred Capital Corp. (TSX.V - KUT):
Jeffrey Hasham, CA, Chief Financial Officer, Phone: (416) 849-3469,
Fax: (905) 812-9448, Jeffrey.hasham@redishred.com,
www.redishred.com; Robert Crozier, Chief Executive Officer, Phone:
(902) 429-2437, Fax: (905) 812-9448, Robert.crozier@redishred.com,
www.redishred.com
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