RG Global Corporate Update: Projecting Profitability, Seeking to Sell Energy Drink to Focus on Water Treatment Technologies
September 04 2008ANAHEIM, Calif., Sept. 4 /PRNewswire-FirstCall/ -- RG Global management announced today that it is modifying its business structure to facilitate growth and increase profitability from its patented coal bed methane water treatment technology. The company is projecting to turn the corner to profitability in the fiscal fourth quarter ending March 31, 2009. The company also announced that it wants to sell its interest in the OC Energy(TM) beverage line in order to focus its resources on solidifying and growing its Catalyx Fluid Solutions (CFS) water treatment business.
Transition to licensing/royalties model
RG Global generates the majority of its revenue from its CFS water treatment business -- primarily from its plant in Wyoming that treats produced water from coal bed methane (CBM) wells. RG Global is rapidly transitioning from a build/own/operate (B/O/O) business model for its water treatment plants, to having the customer or a third party own the water treatment plants and pay RG Global licensing fees and royalties for the use of its patented water treatment technologies.
"By licensing our technology for CBM water treatment, rather than owning or operating the plants, RG Global will be able to make its technology available for more plants in a shorter time span without having to raise the capital and incur stock dilution to build/own/operate the plants," said Grant King, RG Global CEO.
Projecting profitability
King stated, "We make the greatest margin on the licensing of our water treatment technology. By reducing overhead related to the ownership of the plant, we expect to turn the corner to profitability for our water treatment business for the quarter ending March 31, 2009."
With the transition to the licensing and royalties model, RG Global's revenue per barrel will be less than under the B/O/O model, but the company anticipates that expenses will greatly decrease and profit margins on the revenues will increase significantly.
RG Global's first plant commenced production in late April 2008 and the technology is working well. However extreme rainfall in May, June and July raised groundwater and regen pond levels to the point where production had to slow or cease to prevent overflowing the pond, resulting in substantially decreased revenue for the period. Prices quadrupled for sulfuric acid used in CBM water treatment, due to dramatically increased demand related to ethanol production, and also caused hiccups in the acid supply chain, slowing plant production in June, July and August. RG Global's planned transition to a licensing/royalties model and other steps it has taken are expected to remedy this situation and eliminate the impact the commodity pricing has on its operations.
RG Global has received funding from several large shareholders in exchange for equity to tide the company over until it reaches profitability.
"We believe raising funds from 'friendly hands' gives us far more control and much more favorable terms than we would get from VCs or investment bankers," King stated. "We are very excited about the prospect of turning the corner to profitability in the near future and ending our dependence on outside funding."
Seeking to sell OC Energy
"Our OC Energy beverage line does not fit within our core business of water treatment and purification technologies, so we are looking to sell our 76% shareholding in it or its assets," said King. "The beverage business is vastly different from water treatment and requires an entirely different set of resources. While OC Energy's signature formula, packaging, branding and television tie-ins give it great potential for success, we believe that others with greater financial resources and a focus on beverage marketing will be better able to fully exploit its potential in the energy drink sector and bring it to profitability."
He concluded, "By focusing all our resources on water treatment technologies, we believe potential customers and the investment community will more easily understand our business and more readily embrace our business model and product offering. We believe our new water treatment business model and our projected improved financials will make RG Global very appealing to the investment community."
About RG Global
RG Global Lifestyles, Inc. develops and markets innovative technologies for water purification and wastewater treatment. Major energy production companies have selected RG's proven CFS technology to economically treat coal bed methane wastewater, making production of this plentiful, clean-burning gas more economically feasible and environmentally friendly. RG manufactures OC Energy(TM) brand energy drinks that boast a proprietary energy pack, natural vitamins and low sugar levels to intensify alertness without the typical crash. RG's Aquair(TM) atmospheric water generators produce purified water from air -- the ideal solution for military troops, disaster and drought-stricken areas and situations where drinkable water isn't easily accessible.
Safe Harbor Statement
The statements contained herein that are not historical are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, risks associated with water generation products, risks associated with dependence on third parties, and other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission. All forward-looking statements attributable to the Company, or persons acting for the Company, are expressly qualified in their entirety by these cautionary statements.
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