september 2003 – annual presentation to the shareholders · 2014. 5. 23. · september 2003 –...

September 2003 – Annual Presentation to the Shareholders1


Lee Emerson – President & CEO


Welcome & Introductions

Lee Emerson:

WELCOME to RIFCO's 1st Annual General Meeting as a Public Company. We appreciate your attendance here today.

Specifically to current RIFCO shareholders, we appreciate your support as we work towards building a national finance firm.

To all guests, welcome as well. Thank you for your interest.

I would like to introduce the Director’s and RIFCO’s Senior Management who are in attendance today:

My name is Lee Emerson; I am RIFCO’s President & CEO.Lance Kadatz – Vice President, CFO, DirectorBill Graham – Vice President, COO, DirectorAbsent – Jim Zakowsky, Vice President CMO, DirectorBill Crawford, DirectorBruce Philips, Director

I now appoint Bill Graham as Chairman for the rest of the meeting.


Formal Business


Business MeetingBill Graham:

Thank you Lee. The meeting will proceed as follows:

First, the formal, business portion of the Annual General Meeting will be held. In order to make the best use of our time, certain shareholders have been asked to move the resolutions that we will consider and which are set out in the Notice of Meeting. This will allow more time for any questions and comments.

Next, Mr. Emerson will offer the President’s Message.

A PowerPoint Presentation will review the Annual Report and providing detail on the company’s progress over the last year.

Finally, the floor will be opened to questions.

On to the business.

(Official Business Conducted)

Mr. Lee Emerson, will now offer the Message from the President.


Message from the President


Presidents Message

Lee Emerson:

Thank you Bill.

Much of the success we've achieved to date can be directly attributed to TEAM RIFCO, without whom we would not have been be able to develop and maintain good relations with our Network of Repairers and Customers.

TEAM RIFCO…is the group that is working on your behalf to create and build value into the shares you have purchased.

Please bear with me as I briefly mention each one and thank them in their absence. They’re at work today responding to a typical busy Friday.

Alison Rigney …the "Voice of RIFCO"…usually the very first voice they hear when phoning in,

Kyla Kadatz …a gifted young lady with poise, confidence, and ability beyond her youth,


Presidents Message

Lee Emerson:

Doria Verhoeven …who simply walked in the door one day, like an Iron lady, and basically demanded a job,

Anne Staal …who toils daily behind the scenes – counting the beans effectively,

Janet Church …our Senior Credit Analyst…senior because of her experience, efficiency, and effectiveness. Our low default & write-off rate is largely due to her good credit decisions,

Laurie Dean …who loves collections and problem solving with people. Highly effective in rounding up our strays & teaching them obedience, or…"to the pound" they go. Laurie also is becoming the "Voice of RIFCO"…more like the voice of doom for those who choose to become delinquent,

Robert Skaggs …Who was with a national oil company – CASTROL. I kept seeing his brochures & signs everywhere I went. He was well known & respected by the Repairers, so… we stole him.

What a group…What a Team! Thank you.


Overview

Lee Emerson:

Each of you will have received a copy of our First Annual Report…which you may or may not have reviewed so we'll review it in order to elaborate upon the joys, challenges, and achievements of our first full year in business.

As Bill mentioned, we will also have a Q&A session in a few minutes for anyone who has a particular item that they would liked covered.



“BUILDING A COMPANY”


BuildingLee Emerson:

The ‘theme’ of the Annual Report, as you will have noted, is BUILDING…building a concept into reality…building a Company…a Team, with a substantial presence in the marketplace. Each of those topics will be visited in more detail, but I wanted to offer to you, the owners of RIFCO a more general understanding of what the year has been like.

Although it may be mixing metaphors…

There have been many successes, but the road to that success, over the past year, has been a bit like the ice cream – Rocky Road.

It has not been smoothly paved and we've encountered some potholes and bumps along the way.But…no "bridges out", and no major detours.

It has been a year of discovery, change, and improvement.

It has been a year of significant external events, condensed to a series of initials and exotic names:

SARS BSE – Mad Cow WORLDCOMIRAQ Monkey PoxWest Nile ENRON


Building

Lee Emerson:

Each of these events have "touched us" somewhat, and collectively they have created a sense of awareness that events beyond your control must be met and conquered.

In spite of what sometimes seems to be the 4 Horsemen of the Apocalypse, along with a posse of outlaws, riding the range – our journey down the road to success continues.

As you'll note, on the cover of our Annual Report, there is a defining statement for YOUR Company. I think that it is important to refer to this MISSION STATEMENT right at the beginning because it condenses our reason for being.

RIFCO’S GOAL ISTO BECOME THE PRIMARY PROVIDER

OF SPECIALTY FINANCE PLANS FOR THE AUTOMOTIVE AFTERMARKET.

For TEAM RIFCO it is a constant daily reminder of the objective we intend to accomplish.



“GETTING STARTED”


Getting Started

Lee Emerson:

I want to talk about the progress we've accomplished in this last year. We have completed our first full year of operations.

The longest journey in the world, it is said, starts with a single step.

When we started, there were 2 employees, two desks. Only Bill & I…mumbling & fumbling around. Me out knocking on doors like the AVON Lady…Bill processing the results.

The first loan (we call them ‘deals’) took us almost 3 weeks to perfect & finalize. Since then, we have reduced that time factor to a turnaround of 1 hour or less, 95% of the time.


Getting Started

Lee Emerson:

To date, we have:

Processed over 2,500 credit applications,Funded over $3.5 Million in loans, and Have over $2.5 Million in loans outstanding.

From 1 deal…1 Repairer…2 Employees to:

Over 1,300 loans grantedOver 800 Valued Repairers12 Employees

And…when we look ahead to our future, we realize that in many ways we are still in the GETTING STARTED phase – there are over 25,000 Repair Facilities in Canada that are candidates for our Payment Plan.”


“GETTING BETTER”



Getting Better

Starting the journey is merely a first step…improving the journey is next.

Lance will cover this topic in more detail, but as an example, here is one of the improvements accomplished.

As you may know, our loan documents are signed by our customers at over 800 locations spread across four provinces. Initially, we used pre-printed, 4 part Loan Agreements that had to be filled in by the Repairers, based on numbers calculated by us & faxed to them. Uh Oh! Our Valued Repairers, as we've discovered, are mechanical minded geniuses, but…they are NOT paper pushers! They hate paperwork.

Using technology as a tool, we designed a process to not only calculate the numbers, but also to prepare the Loan Agreement, so…now - the complete loan document is faxed out, and they merely have the Customer sign it & fax it back.

Quick. Simple. Effective.

Eventually, e-commerce and internet technology will take us beyond this, but for now – it works! And… it works well.

Lee Emerson:


“GETTING BIGGER”



Getting Bigger

Lee Emerson:

Growth is also a critical component in our continuing success. Prudent…meticulous…planned growth. Aggressive, but cautious. The journey is shorter, and the pace quickens when more shoulders carry the load. We started out with a 2 horse team…the reins were easy to control. We have now graduated to a 12-horse team – not fast, flashy thoroughbreds but…Clydesdale's…workhorses. Harnessed and Purposeful.

As an interesting note:

It took us 12 months to lend out our first $Million, andThen only 3 months to lend the second $Million,We anticipate that in the near future, lending a $Million per month will be a regular occurrence,Thereafter…obviously, we'll be aiming for $1 Million per week, and then $1 Million per day.

Impossible??...not really. Difficult…definitely, but NOT impossible. He who attempts the impossible has little competition!


Getting Bigger

Lee Emerson:

For comparison, or perspective – Household Finance Corporation does over $300 Million per year with just ONE account…the Brick Warehouse. I am sure that Bill Comrie, the founder of ‘The Brick’, never expected that sales would exceed $300 Million, let alone just financed sales. The Brick now does almost $1 Billion per year in total sales, with over 30% of it financed.

Remember that 12 horse team, Think Budweiser, not Seabiscuit. RIFCO is a solid, dependable, consistent, and powerful team – pulling for profit.

We started here in Red Deer…Central Alberta. Expanded to Edmonton & Calgary. Then Grand Prairie in the North and Medicine Hat & Lethbridge in the South. That growth now also includes Rocky Mountain House, in the West, and Stettler…Lloydminister in the East.

Alberta is 2.5 times the size of Iraq and there remains considerable room for additional market penetration. We still only have 560 Repairers in Alberta, out of a total of 3,000. There remains plenty of room to grow at home.


Getting Bigger

Lee Emerson:

In British Columbia, we are just getting started with 233 out of over 4,000 Repairers. RIFCO has recently begun operation in Manitoba, with only a few repairers to date.

Ultimately….. Wherever you go …. There will be RIFCO.

In addition, you may have heard that as of September 2, we are pleased to announce the RIFCO's geographic expansion into the largest and most lucrative Market in Canada has commenced –ONTARIO. You may have noticed the absence of one of our Senior Managers – Jim Zakowsky, Vice President of Marketing, isn't here. Because…he's in Ontario, along with Robert Skaggs – enrolling Repairers.

Getting bigger is not just geographic growth, but also product expansion. We started with Repair financing. Our Customers…the Repairers, asked for Vehicle Purchase Financing. Now…we are treading carefully and cautiously into the shallow end of the Vehicle Purchase Financing pool.3.5 Million pre-owned vehicles were sold in Canada last year – 85% of them financed.A multi-billion dollar market where a 1% market penetration = …about $1 Billion Dollars.


Getting Bigger

Lee Emerson:

Product expansion also includes EQUIPMENT LEASING.

With over 800 Repairers already in our Network, and a further 1,000 anticipated over the next year or so, RIFCO will have built one of the largest groups of "common need" businesses in Canada.

All of them use their equipment every day…it wears our or becomes technologically obsolete.They need new stuff…RIFCO will be there to provide the "glue" to stick them together with new equipment for more efficiency, more effectiveness, and more profits.

So to sum up…1…2…3

Getting Started,Getting Better,Getting Bigger.”


“GETTING FAMOUS”



Getting Famous

Lee Emerson:

“1, 2, and 3 are each important, but does anyone know about RIFCO? RIFCO may still remain a bit of a secret, but yes, we are getting the word out. If no one knows about our worthwhile journey, how can we bring them along with us? Unless you pay for it, publicity or ‘PR’ is often difficult to get. It is hard to get noticed with any business unless you have a unique and beneficial product or service.

RIFCO is fortunate on both of those counts – Money, may not seem like a unique product, but the delivery method we've devised is highly unique – NO other finance firm in the country has a PAYMENT PLAN product like RIFCO's and the service we provide is beyond comparison.

Those factors have resulted in national & regional automotive trade publications writing stories about this unique product & service…about this unique Company called RIFCO.

Alberta Service & Repair Association NewsletterCollision Quarterly MagazineSaskatchewan Association of Automotive RepairersBody Shop MagazineBritish Columbia Automotive Repair AssociationGEARS Magazine (for Transmission Installers)


Getting Famous

Lee Emerson:

RIFCO promotes itself as a knowledgeable, informed, and experienced specialty lender to the Industry.We have been, and will continue to be, accepted and respected as part of their Industry – a critical component in our future success.

RIFCO is still too new…too young, to be on the radar screen of mainstream Business Magazines & Publications. But, one of our goals is to achieve sufficient growth to qualify for inclusion in Alberta Venture Magazines list of Alberta’s 30 Fastest Growing Companies and Profit Magazines Top 100. Next year is the first year we are eligible for consideration for those lists.

We have started to garner some attention of various newspapers. In the past two weeks unpaid articles about RIFCO have appeared in the:

Red Deer Advocate The Ottawa SunThe Edmonton Journal The National PostThe Toronto Star The Vancouver Sun.

In addition RIFCO has recently been featured on two southern Ontario radio stations with Jim Zakowsky being the “Voice of RIFCO” to thousands of listeners.


“GETTING (Staying) ON

TRACK”



Getting (Staying) On Track

Lee Emerson:

The right road on the journey to success has a number of wrong turns.

RIFCO has been asked, “How are you creating shareholder value?’, and ‘What is your plan for investor relations?”

We know that you, the shareholders, expect share value appreciation. The management of RIFCO has made a choice.

We have decided at this time to NOT spend thousands per month on stock promotion in Finance Publications or Newspapers. We have not hired a $10,000 per month investor relations firm to field questions from current or prospective shareholders. It is nothing personal against investor relations. We welcome all questions and comments from current or prospective owners. We are never to busy to share our vision or our plans. At every opportunity we will (and do) shout from the rooftops about RIFCO. But, we don’t drive Cadillacs. We don’t sit behind solid mahogany desks. We just feel that RIFCO’s resources, your money, should be devoted to building growth and building profits.


Getting (Staying) On Track

Lee Emerson:

BUILDING is the theme of our Annual Report and Lance will elaborate on our philosophy regarding building shareholder value.

We are building a company of integrity, openness, and transparency, one that you can be proud of. Our goal is building a solid, viable, and profitable company.

For those who happen to be the “day trader type” and are looking for a monthly, weekly, or even daily profit from stock speculation, I have a suggestion, SELL! I mean it. You are in the wrong meeting.RIFCO is not a “quick hit” … it’s a solid step by step growth stock.


“GETTING RICHER”



Getting Richer

Lee Emerson:

For the rest of you, my suggestion is to BUY! BUY NOW. The opportunity for growth of the Company and growth in share value is just beginning. The Principals of RIFCO…the Senior Managers…AND some of our Employees are Shareholders also. We have our LIFE invested in RIFCO. Our "hearts & minds" along with our efforts and money are fully invested in RIFCO.

“Sometimes the journey is best known from the voice in the back seat asking "Are we there yet?".

It is not going to be quick, but it is going to occur. Steady…sustainable, profitable growth. RIFCO is a good lender, and we're a good Collector – as you'll note from our Accounts Receivable…Write-offs are within projections…Delinquencies & Defaults are manageable. The amounts will grow as RIFCO does, but the percentages will remain within the boundaries established as acceptable. THINK…just for a moment, Count the numbers & do your own math.

There are 20,000 Repairers in Canada – over 100,000 in the USA.There are 17 Million vehicles in Canada – over 200 Million in the USA.

All of them – an average age of 8 years old…a time of major repair requirement, or…in spite of 0 % financing on new ones, a time of replacement with a newer model used one (85% of which require financing).


Getting Richer

Lee Emerson:

Each Repairer has an average of 3.2 employees. Each Repairer does and average 8-10 repair jobs per day. Thousands of Repairers…Hundreds of Thousands of Employees…Millions of motorists. And…only ONE RIFCO. A knowledgeable, informed, and experienced Specialty Lender to a 100 year old industry. If that doesn't add up to a BUY opportunity, I don't know what does.

We thank you for your support to date, and we ask for your continued support. Money to lend…not spend. Our business is money, and our increasing success will require more money.

We do not, at this time have a share offering planned, but rather a debt offering. If you wish to participate, contact Lance to discuss the particulars. We are mindful of the effects of share dilution, and if anyone should have an opportunity for greater involvement, it will be you first.

“Thank you for listening. Thank you for being here, and thank you for being part of our magnificent obsession.”

Bill Graham:

I will now turn the meeting over to Lance Kadatz for the RIFCO Annual Report Business Report.


Annual Report Business Address

Lance Kadatz:

Thank You Lee for your passionate Vision and Leadership of the RIFCO Team and the great overview of how & what RIFCO is evolving into. I will be focusing on many of the business aspects of RIFCO.

But first things first. Behind any good company is a team of highly skilled professionals and RIFCO is no exception. In the last year, we have tested the boundaries of our knowledge in going from a private company to a public one operating in 4 provinces. Our company is still so young, we only did our first loan in March of 2002 and a year later we are public trading with a tremendous future ahead of us. This could not have occurred without the following people:

Joan Moody-President of Alberta Compliance Services• Sherri Van Ham her associate

Richard Finlay- Securities Lawyer for McLeod & Co.• Bill Walker- Not present

Al Collins- Accountant/Auditor Collins Barrow• Assistants- Mark Jones & Colleen Sharpe

Rick Hansum- Royal Bank Manager Business Markets• Fred Gardner- Royal Bank Sr. Acct Manager


RIFCO’S PROFESSIONAL SUPPORT TEAM

• Alberta Compliance Services– Joan Moody – President– Sherri Van Ham

• McLeod & Company LLP– Bill Walker– Richard Finley

• Collins Barrow Chartered Accountants & Consultants– Al Collins– Mark Jones– Colleen Sharpe


Annual Report Business Address

Lance Kadatz:

This Team behind the RIFCO Team has been outstanding! I would highly recommend every one of these people to any firm considering the public markets.

In my presentation I will be referring to the same headings that were used in the annual report.Since I’m the numbers guy you would assume that I’m the part of the program that will put you to sleep. I will do my best to move quickly and cover the major points so that we can get to the question & answer part of the program before you nod off.


Building RIFCO Inc.


Building the Company

•Completed Qualifying transaction between Vista Investments Inc. & Repair Industry Finance Corporation - Resulted in RIFCO Inc.

•Successful placed $1 Million Convertible Debenture

•Secured $1.25M Senior Debt Line

•(Increased to $3.5 Million Yesterday!)


Building the Company

Lance Kadatz:

I often get asked the question, “So what actually happened with Vista & going public, and how did it work?” I always struggled with how to best describe what we have gone through in laymen’s terms.Vista Investments Inc purchased Repair Industry Finance Corporation by exchanging shares. The terms of the share exchange were agreed upon in Aug 2002 and voted on by Vista shareholders on Feb 24, 2003 and were unanimously approved. The share exchange was completed on March 31, 2003 and Vista Investments name was then changed to RIFCO INC. The Sr. management of Repair Industry Finance Corporation retained control of RIFCO INC. Repair Industry Finance Corporation remains the operating company & is a wholly owned subsidiary of RIFCO INC. The new board is made up of the four founders of RIFCO and two of the prior board members of Vista Investments. In the end Repair Industry Finance Corporation obtained a cost effective public listing and about $350,000 in new share capital. Vista shareholders completed their Qualifying Transaction and now can participate in RIFCO’s future. This type of transaction is known as a Reverse Take Over.

In the last year we have successfully raised over $1 million in share capital, $1 million in a convertible debenture, and $500,000 in private debentures notes and obtained a $1.25 million dollar credit line from a major Canadian Chartered Bank. Just this week that credit line was increased to $3.5 million. This new capital along with staged in private debt notes that yield investors over 12.6% annually will more than handle our growth projections well past our next year end.


Building the NetworkValued Repairers

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Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03

Fiscal 2003-2004

Fiscal 2002-2003

Fiscal 2001-2002


Building the Network

Lance Kadatz:

As Lee stated we currently have over 800 points of sale and we add on average 50 new locations per month. We started in Alberta, then BC, then Manitoba and just last week we started in Ont. We do not see this enrollment rate reducing anytime soon with over 25,000 Repair Facilities in Canada. Our arrival in Ontario is truly a milestone for RIFCO because with it comes the creditability that we are a national company not just a western Canadian company. Due to the populous, the volume benefits are obvious and the media coverage we received has provided both business benefits as well as investor awareness which have increased our stocks activity. We are continuing to seek & add a select number of used car dealers in Alberta to partner with to provide our vehicle purchase program.

One of the challenges we face and probably our greatest hurdle is that independent repair shop owners are not traditionally sales oriented. If you have noticed over the last 15 years almost all types of businesses have in some manner been converted to sales focused operations. That has not occurred in the independent repair business. So part of our role is to teach them how they can increase their sales by just offering financing with every quote. We have provided them with quality point of sale materials, on site training from our regional managers and a process that could not have less paper work. It is just that easy.


Building the Network


Building Customer Relationships

Fiscal 2002-2003

•Continued to target average ‘Mid-Market’ borrowers with average credit worthiness

•1,400 applications processed

•707 loans granted in fiscal 2003

•Loan repayments received electronically

•Over 92% of payments initially cleared bank

•“NSF” payments dealt with by internal ‘Collections’


Building Customer RelationshipsLance Kadatz:

We are continuing to be successful in targeting the average “mid-market” client with average credit worthiness. Many of you may say to yourself, how good can this be I’d never use it; the interest rate is too high. The fact is that you are likely not our client because you are in the top 30% of the population that don’t need us. The 20% at the bottom have credit that is too poor to qualify. That leaves us the 50% in the middle that does not have $2,500 in cash or room on a credit card to cover a major repair. They do however pay their bills in an acceptable fashion. This is our customer! There must be a lot of them because we have received 1,400 applications at year end and over 2,500 to date of which 1,300 resulted in loans being granted. Our customer is the same one who finances furniture at the Brick or a projection TV from Future Shop.

We are now getting regular repeat customers who no longer fear the dreaded car repair thanks to RIFCO. We also receive thanks from the person who is rebuilding his credit because we report monthly to the credit bureau which is unusual for most mid market lenders. Of our portfolio, normally 92% is current & 8.0% is in a delinquent status which is slightly below our expected 10.0%. Our customer relationship with the 92% is great but to the 8.0% we are a royal pain in the ass. We have small payments and we call a lot. When a loan is in arrears it’s dealt with swiftly and they receive a letter & phone reminder within the first week. We maintain all collections in house & consider it to be one of our core strengths. As you know all of our loans are secured by the vehicle and non payment will eventually result in seizure and sale. This whole process from delinquency to vehicle liquidation is usually completed before an account is 120 days in arrears.


Building the Portfolio•Over $1.8 Million in loans granted

•Portfolio increased to $1.47 Million

•628 active loans

•First 1,000 applications received in 12 months

•Next 1,000 applications in 5 months

•Delinquency rate averaged 8%

•All loans are secured by vehicle assets


Building the PortfolioLance Kadatz:

To date we have lent over $3.5 million in repair loans that average $2,000 & vehicle purchase loans that average $7,500. Our outstanding loans, over a thousand in number, stand at over $2.5 million up from $1.47 million at year end. So far almost a million has already been repaid. We don’t think this is too bad for a company that did their first loan 18 months ago with one repairer enrolled. Of course we would have liked to have lent it faster but we need to be patient to make sure we only make loans that are collectable.

As you can see the rate at which we receive applications is increasing with the rate of repairer enrollment & this will continue to occur. Our approval rate is about 75% but our closure rate is about 58%. The difference being loans where the customer paid by some other means, did not get the work done or could not meet the loan conditions. For example if a down payment was required.


Building the Team•Started with 2 employees, November 1, 2001

•Currently 12 Full-Time Employees

Lance Kadatz:

As Lee already mentioned our staff is a cornerstone for the success of RIFCO and we would not have achieved as much as we have this last year without them. To our staff I also say Thank You. For those of you who have built companies, you know that rapid growth requires strong staff and is challenging to handle. You push the boundaries of capacity then add support & do it again & again. Our staff has risen to the growth challenge & is a key part of our dream for success.


Building Operational Improvement

•Loan Processing Capabilities Increased

•Streamlined processes in origination, document generation, credit analysis, and collections

•Costing improvements in point of sale materials



Lance Kadatz:

One of the challenges of RIFCO’s business model is processing large numbers of applications, managing large numbers of loans, and processing many, many individual payments. RIFCO maintains, as a core competency, the ability to develop, improve, and scale operational systems. Significant resources continue to be committed to improve RIFCO’s operations. Our commitment in this area has already yielded positive results. These results include:

We increased the company’s capacity to process new loan applications.In March 2002, RIFCO processed thirty eight credit applications. In March 2003, we processed two hundred and twenty two.

We streamlined and improved our processes.To our Valued Repairers, this has meant a reduction in paperwork at every stage of the loan process.In addition, credit decisions continue to be made quickly. Typically, a credit decision is communicated in less than 60 minutes. RIFCO systemized many document generation and verification processes.

This change translates into labour unit cost reductions and into reduced data integrity errors.



Lance Kadatz:

We reduced RIFCO’s cost for point of sale materials from over ninety-five dollars per location to under forty dollars. These cost savings are a result of material design changes and volume based price reductions.

At RIFCO, we see this commitment, not as an option, but as an ongoing necessity. There is an ongoing challenge in efficiently processing and administering these small loans.

We welcome the challenge, and continue to explore technology, systems, and partnerships in order to meet it. These challenges that we conquer are the same ones that will keep the competition from targeting our niche market.


Building Profitability•Profitability is our goal!

•Revenue grew by 3,619% to $408,460

•Revenue for quarter ending June 2003 was $234,869 or 57.5% of previous YEAR’S revenue

•The foundation (costly) has been laid with profitability to follow

•Ongoing challenges include controlling costs, managing growth, and chasing profitability

•July 2003 was RIFCO’s FIRST PROFITABLE MONTH!


Building Profitability

Lance Kadatz:

One thing about the finance business is you do not open your doors & lend all your money in one month & collect your interest in the next month. The more we lend the better we look & the better the spread is we get on our lending capital. Our business requires balance between granting loans and maintaining credit standards. Balance between the cost of growth and the capital to support the growth. Balance between creating a greater deficit to achieve faster growth and being slightly more conservative & reaching breakeven & profitability earlier.

We hope to be striking just the right balance to prove to all shareholders that our business model works and we can make money at this early stage. Our hopes are that future growth will just further enhance the company’s profitability and your shareholder value.

You can be assured that profitability is our goal. While our first quarter ending June 30th, 2003 showed a loss, July was RIFCO’s first profitable month. We feel we are very close to consistent monthly profitability. This is great news! Far too many young public companies languish in years of losses. We have laid the costly foundation which is paid for, so now we can move on to profitability.


Building Profitability

Lance Kadatz:

We pledge to remain diligent in controlling costs, managing our growth and reducing our cost of funds. We must be cautious to not out grow our resources at our company’s current development stage. We can not run before we walk. We know we still have lots to prove to our lenders, our debt partners and shareholders.

We are excited about our top line revenue numbers as you can see we had a 3,619% increase in revenue. I quite like the way that number rolls off the tongue. But seriously, the revenue in our first quarter is $235,000 or 57.5% of all of the previous year’s revenue and we expect revenue to top 1.4 million this year. This would be a nice 250% increase in revenue.


Building Shareholder ValueSix part Philosophy regarding shareholder value:

•Transparency

•Earnings Growth

•Dilution (avoidance)

•Investment

•Humility

•Share Price


Building Shareholder Value

Lance Kadatz:

We went to great lengths to develop our principles for creating shareholder value and it resulted in a six part philosophy which we believe provides for the best interest of every shareholder of RIFCO, large or small. These words are in the annual report, but are worth repeating.

Transparency – Shareholders have the right to clearly understand the financial position of the company, its progress to date, and the strategic plan for the future. To these ends, RIFCO will strive for plain language, common sense, and appropriate detail in shareholder communications. RIFCO believes there can be no governance without transparency. I urge anyone who has a question or does not understand something they read in any of our reports please call to get an explanation. Management wants to be open & approachable by all our shareholders.

Earnings Growth – Shareholders expect long term, sustainable growth. To these ends, RIFCO will plan or operate on reasonable business planning timeframes and will not make decisions that sacrifice the long term health of the company in order to meet short term expectations. RIFCO will demonstrate the validity of its business model as operations are scaled up. We will not put the overall viability of RIFCO at risk by taking big gambles, that if they don’t work out could sink us.



Lance Kadatz:

Dilution – Shareholders expect that additional shares of the company be issued only as needed to appropriately finance the growth of the company. To this end, RIFCO will not indiscriminately offer shares below reasonable price levels. It is intended that senior and subordinated debt will be obtained unless an equity offering is in the best interest of current shareholders. We believe that a combination of senior debt & subordinated debt is currently the best way to finance the growth of the company. This will provide the best value to shareholders on an earnings per share basis. We will not give your company away by issuing shares that are under valued. We are currently not expecting to do a public share offering for at least a year, unless it is deemed in the company’s best interest. Which would mean a greatly increased share price

Investment – Shareholders expect their capital to be invested wisely and for RIFCO’s management to work hard to create a sound and profitable business for their benefit. To this end, RIFCO will expand at a rate where credit quality is preserved, margins are maintained, and expenses are managed. RIFCO is committed to “lend it…don’t spend it”. We believe that debt is only to be lent. We feel that if we consistently lend what we borrow we will maintain about a 19-20% interest rate spread on our money. We feel it is counter productive to borrow money to cover overhead expenses which should be covered by common share equity & earnings. By handling our money this way you don’t get tricked into thinking you are richer than you are. A lot of money passes through our hands but you have to know how much of it sticks.



Lance Kadatz:

Humility – Shareholders expect performance and consistency. To this end, RIFCO will implement its business model with knowledge that economic situations change, and business cycles are not static. In short, RIFCO operates knowing there will be “ups and downs”. We are going to have times when for one reason or another sales may be down or flat line for a quarter. We commit to communicate what’s going well & what we are struggling with.

Share Price - Shareholders expect reasonable share price appreciation in the value of the company’s stock. To this end, RIFCO will continue to seek appropriate opportunities to share our company’s exciting story with the investment community. However, RIFCO is committed to the most important investor relations tool…profitability. Up until our Annual Report… RIFCO was a secret to most investors. That is beginning to change with the media coverage we are getting national. We now have a growing number of investors in Ontario. The result, stronger demand for our shares. Just this week we had bids for more shares than were listed for sale. I remember Economics 101, the Rule of Supply & Demand which always seems to hold true.


Building the Future•Increased Geographic Markets,

•Grow Vehicle Purchase Program,

•New Product Launches,

•Equipment Leasing For Repairers,

•Commercial Vehicle Repair Financing,

•Increased Per Site Originations,


Building the Future

Lance Kadatz:

In building for the future one of the ways we know we are making progress is when we here “I see your signs everywhere!” and we here that a lot. We are going to continue to expand geographically all across Canada increasing the size of our network. We will also systematically grow our vehicle purchase program. Then we are going to leverage that network with increased products & services like equipment leasing for the repairers business needs. Commercial vehicle repair which is currently in the testing phase. All new product launches are gradual & thoroughly tested.

We are going to teach our repairers how to do 6 deals a year not 2 like some are now. When you do the math on increased volume per site the results are staggering. This is the potential we have and the cost of developing the network to 800 sites is already behind us.

We are going to continue streamlining processes to ensure effective delivery & administrative functions. This will include RIFCO RAPIDPAY so repairers get paid electronically within 24 hours of faxing us loan documents. Currently they are mailed a cheque.

We will not deviate from our credit & collection standards which has been a high point for our lenders & investors to date.


Building the Future•Continue Administrative Streamlining,

•Introduce RIFCO RAPIDPAY,

•Maintain Credit & Collection Standards,

•Secure An Additional $2.5 Million In Funding,

•Double The Size Of The Enrolled Network To Over 1,200,

•Double Annual Originations To Over $4 Million,


Building the Future

Lance Kadatz:

We are pleased to report that our bank line was just increased to $3.5 Million from $1.25 million and with the staged in private debt offering I previously mentioned will more than cover all of the growth needs up to this time next year. We plan to acquire an additional $2 million under this program taken at $150,000 per month up to Oct 2004. These loan notes pay interest at 1.0% per month and we currently have a waiting list. If anyone is interested in this program you can see me after the meeting.

We expect to double our enrolled network by our next year end. The funds raised will be used to fund twice as many loans as we did last year which we expect to be over $4 million. We will more than double our Loan portfolio to over 4 million from 1.4 million.

We will continue to work to reduce our borrowing costs and work toward achieving consistent profitability each month, which is the basis for a meaningful stock price.


Building the Future•Double Total Loan Receivables To Over $4 Million,

•Decrease Average Cost Of Borrowed Funds,

•Achieve Profitability On A Monthly Basis,

•See Meaningful Growth In The Stock Price.


The Numbers


The Numbers

Lance Kadatz:

I have been speaking far too long already so I think what I would like to do with the discussion on the actual numbers is draw your attention to a couple of things & deal with any specifics you might have in the question period.

1. These statements are audited and management has confidence in their accuracy.

2. Top line revenues are increasing & this will continue as we lend more money. We earned 148,000 last year in interest & we are now currently earning close to 60,000 per month!

3. Professional fees were high due to going public but far below the cost of an IPO.

4. A Provision for Loss is not a bad debt. We allow for 5.0% of our portfolio to be deemed un-collectible. This is a reserve we set aside so there are no surprises. If you want to see what is actually bad debt you can look under Note #6 for write offs. Our provision last year was $78,000 and our actual write offs were $9,000.


The Numbers

Lance Kadatz:

5. We have built up a $214,000 future tax benefit so when we start declaring profits we don’t have to send Mr. Chrétien any tax money right away.

6. No new options were issued only replacement options for the ones management had in Repair Industry Finance Corporation and these are priced at 0.65 cents. So management also has a desire to increase the stock price.

That’s it for the numbers. I think the most important thing to remember is that RIFCO is a simple business…. We lend money and we collect money and earn a health margin in between while serving a niche market in which we have little competition. If we do these 2 things well you the shareholder will be very happy with the results.

With that I will turn the meeting back over to Bill Graham.


Questions from the Audience

Asked and answered by management.

Thank You

Bill Graham:

In closing, we again THANK YOU for your participation as Shareholders and we commit ourselves as TEAM RIFCO to "building value" in your investment.

september 2003 – annual presentation to the shareholders · 2014. 5. 23. · september 2003 –...

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