Avid small- and micro-cap stock investors can spend hours and hours culling through thousands of companies, a daunting task to find the gem amongst the rubble. One resource our team at AllPennyStocks.com uses is our news feeds to go quickly through headlines and see who looks interesting at first blush and then we dial it in some to a, say, 30,000-foot view of what a
company has to offer.
Thursday’s news by RDX Technologies Corp. (OTCQX:RGDEF) (TSX-Venture:RDX) was certainly eye-catching. The Scottsdale, Arizona-based water treatment and energy company disclosed a $19.92-million contract for the purchase and operation of RDX franchise locations in Ohio, southern Michigan and northern Kentucky.
RDX Technologies, which changed its name from Ridgeline Energy Services last August, manufactures waste treatment systems, including a no-pump interceptor/grease trap system and Sans Tanker fluid transportation systems for water contaminants. Further, the company produces RDX methy-esters from waste grease that can be used in stationary industrial equipment, such as boilers and generators. Ridgeline Energy (USA) remains a subsidiary of the company.
Per the newly-executed agreement, Pontas Energy of Cincinnati, Ohio will open and be operating 16 RDX franchises in the Midwest by March 31, 2015. According to the company, Pontas team members have been involved with the development of the locations and RDX training for about seven months. Pontas has already committed to real estate locations for the franchises, but the details were withheld for release as the locations are permitted and operating. Franchise paperwork is expected to be filed with the State of Ohio by September 5.
"Pontus brings substantial restaurant and food service business experience to the RDX franchise opportunity as well as the right mindset and attitude necessary for a startup operation," said Dennis Danzik, chief executive of RDX Technologies, in a statement Thursday.
The franchise agreement looks like it should immediately broaden the RDX footprint. Brian Donnellan, President of Pontus commented, "Pontus now has a platform to offer disruptive interceptor and waste water treatment and a path to profit from energy sales - a unique
business combination in two high growth opportunities." Donnellan added that since they started a pre-sale period in June, they have received more than 225 commitments from customers.
There’s an adage in the start-p business that goes along the lines of "if you’re not losing money, you’re not trying to grow fast enough." Now, whether that is completely true or not is a matter for debate, but shareholders will likely be watching for RDX to start stemming some losses as revenue keeps growing. For the fiscal year ended March 31, 2014, RDX posted a jump in revenue from $16.4 million in fiscal 2013 to $33.7 million last year. Adjusted EBITDA swung from a loss of $4.34 million to a positive $553,449. On the bright side, it was the company’s first positive adjusted EBITDA. On the downside, net loss from continuing operations expanded from $12.6 million in fiscal 2013 to a net loss of $14.13 million.
RDX recently added some extra cash to its coffers by selling excess real estate holdings in Santa Fe Springs, California for gross proceeds of $12.4 million.
There’s a lot of moving parts and further due diligence is encouraged, but with a market cap of only $45.2 million, RDX Technologies looks worthy of zooming in from the 30,000-foot view to something a little closer. U.S.-listed shares closed ahead by 1.1% on Friday at 28.3 cents, after a hike of more than 23% the day before.
