PayChest Inc. (Arizona) (PINKSHEETS: PYCT).
During 2008, PayChest Inc. underwent significant corporate
changes. The Company had focused on new technology implementation
and was previously focused on commercializing a micropayments money
transfer technology. In April 2008, a private investment group
based in Hong Kong acquired control of the company by way of
acquiring all the preferred shares in the company in a private
transaction. The transition to the new control group began as the
previous negative issues surrounding the company were completely
resolved. Those issues include a previous SEC investigation and a
full DTC (Depository Trust Company) stock audit. The company is not
involved with previous management or any of their affiliates in any
way. The company is also not involved with companies previously
spun out as dividends.
PayChest Inc. was chosen as the investment vehicle by the
investment group for several reasons. First, the investment group
inherits a large and very loyal shareholder base. The company has
over 6500 shareholders and growing. Approximately 5000 shareholders
hold 1 million shares or less. Studies have shown it can cost
anywhere from $300 to $500 and more using market awareness programs
to acquire a shareholder. This costly shareholder infrastructure
was already in place. Secondly, the shares of the company trade
publicly and are at historic lows. This allows for substantial
upside in the company's share price in the future. The shares
presently trade in the US micro-cap market (Pink Sheets) that is
traditionally known for large trading volumes. The liquidity in the
micro-cap market makes it much easier to obtain financing from
investor groups going forward. In addition, there are substantial
tax losses that can be carried forward sheltering future income and
thus creating a tax savings. Lastly, the company had essentially a
clean balance sheet that consisted of a small liability under
$60,000 for previous work completed for the company.
By way of the new control group, PayChest Inc. acquired the
contracts to exclusively manufacture "Flushaway," the world's first
commercially patented and patent pending brand of flushable women's
hygiene products consisting of flushable pads and liners. The
"Flushaway" brand of pads and liners are specifically designed to
compete directly with Procter & Gamble, Johnson and Johnson and
Kimberly-Clark, the three largest companies selling in this
marketplace. None of these companies have a flushable alternative
at this time. PayChest Inc. has also acquired the exclusive rights
to sell the "Flushaway" products in areas not already under
contract by Consolidated Ecoprogress Technology Inc. of Vancouver,
Canada. Consolidated Ecoprogress Technology Inc. had spent
approximately 10 years developing, researching, testing and
marketing the "Flushaway" concept. Research has consistently shown
that many consumers will switch to a flushable alternative if the
price point is similar to their present brands.
"Flushaway" falls under the FMCG (fast moving consumer goods)
category of products. Products such as "Flushaway" are essential to
everyday modern life. Products such as "Flushaway" are not
discretionary and are less affected by market downturns.
Women will not stop using pads and liners even in times of a
recession.
Previous versions of the "Flushaway" pads and liners have been
sold in K-Mart, Wal-Mart, Walgreens, in the US; Boots, Sainsbury
and Waitrose in the UK, and numerous other retailers worldwide.
Sales were limited for several reasons. Due to large capital
expenditures necessary to advance the core business model,
advertising was generally limited to the local level. A small
feature was included in Cosmopolitan Magazine in South Africa. A
couple of key issues needed addressing for the company's long term
sales success. First, the "Flushaway" products had a much higher
price point than competing non flushable products. Secondly,
production costs were too high for the long term viability of the
"Flushaway" product.
Production of the "Flushaway" product first originated in the
UK. Production subsequently shifted to Canada and lastly to China.
In each successive move, product quality improved and production
costs fell. Yet, production costs needed to fall further to create
healthy margins necessary for the long term success of the product.
In March 2007, Consolidated Ecoprogress made a decision to stop
production and make the necessary changes before the supply chain
for the product grew too large. During 2008, both PayChest and
Consolidated Ecoprogress jointly addressed those key
components.
The strategy for funding the "Flushaway" business model has been
relatively unaffected by the recent world economic slowdown. The
company has continued to be funded solely by private sources. The
funds advanced to date have paid for such items as legal,
accounting, corporate compliance, investor relations, research and
product testing among others. It is anticipated that this type of
funding will remain in place as alternate sources of financing are
being finalized. Repayment of these advances would be by way of
proceeds of future private placements, sales revenue, licensing of
sub territories, the future issuance of shares, or senior long term
debt financing. Some of the funding instruments include letters of
credit, accounts receivable financing, purchase order financing and
a currency hedge program as most costs and sales are in US dollars.
These financial instruments have taken much longer than anticipated
to complete and will be finalized shortly as the company heads
toward initial production. Moving forward, private placements may
be considered as the share price improves but not at the current
price levels. During the 4th quarter of 2008, much of the
groundwork was laid for these financial instruments as PayChest and
Consolidated Ecoprogress have worked jointly towards this end. The
$5,000,000 note payable to Consolidated Ecoprogress is classified
as long term payable, to be paid over a 4 year period. It is
anticipated that the repayment will be out of cash flow in the 4
year period and from the sales of sub-licences for territories. No
payments have been made to date as payments will begin in the
latter half of 2009 and will scale upward in 2010 and 2011.
During 2008, many shareholders have contacted the company since
the "Flushaway" contracts were acquired. The Company addressed the
shareholders' most pressing concern to inform them there were no
plans to execute a reverse split in the foreseeable future, as per
previous public news releases. As of February 4, 2009, the Company
currently has in excess of 6500 shareholders with 19.85 billion
shares outstanding and 25 billion shares authorized. It is possible
that the company may issue shares in 2009 to further the business
plan but not at these price levels. The company also has no
intention in the foreseeable future of raising the authorized
capital above the current level of 25 billion shares. The company
has been contemplating a buyback at the current historic lows but
no decision has been made at this time. Given the extremely
competitive marketplace for women's hygiene products and our
company's leading edge technology, the company may not issue as
much news as expected by some shareholders. While it may be
unacceptable to some, the company wishes to protect its competitive
advantages and intellectual property and thereby protect
shareholders' interest.
While the money transfer business remains under the same
corporate umbrella the focus of the company moving forward will be
the new "Flushaway" brand of products. Both business units will
require capital moving forward to complete their business models. A
strain on capital would be too great and dilutive for one company
to bear. Separating these business units by way of a stock dividend
aims to serve several purposes. First, shareholders of PayChest
Inc. will receive shares in a new publicly traded company while
continuing to hold onto their PayChest Inc. shares. That gives
shareholders significant upside in two public entities. Each
company will have separate management and a separate stock symbol.
The new public entity can raise its own capital to further that
business model without diluting or affecting the present PayChest
Inc. shareholders. Those assets presently sit in a subsidiary,
PayChest (Oregon). Due to changes in securities law, the company
has had to change the way the dividend was to be spun out as a free
trading dividend. The dividend process has taken far longer than
anticipated and steps are being made to expedite the process. This
remains a priority for the Company. The new control group is
awaiting some final documentation necessary to complete the
dividend process. As part of the dividend process, there will be a
name change and symbol change. A new company name has already been
secured and will be available when the dividend process is
complete. This is being done to better reflect the new direction of
the company.
As previously stated in a news release, the company has outlined
a new president ready to step in upon the conclusion of the
dividend process. After completion, the only corporate website will
be www.flushaway.com. Enhancements will be made to the
www.flushaway.com website in anticipation of production. The
company will continue to employ the same legal, accounting,
transfer agent services and other corporate infrastructure services
to aid in a smooth transition of control. Lawson Pillay will step
aside from "Flushaway" at that time.
Investors are encouraged to call toll-free or e-mail the company
to be included on the company's e-mail list so that they receive
copies of public news releases promptly. The company is expecting
to provide a series of news releases in the coming weeks outlining
new developments. News releases will continue to be made available
by Marketwire and can be found on various sites including Yahoo!
Finance and Google Finance.
About PayChest (Arizona)
PayChest, a global marketing company and developer of technology
solutions and its strategic partner companies, market and
distribute select products and services worldwide, which provide an
increased public awareness to conserve and preserve the world's
limited resources.
About the dividend PayChest (Oregon)
PayChest and its strategic partner companies are developing
integrated commerce processing solutions utilizing cutting edge
technologies to deliver in store, online and mobile solutions
globally. These include turnkey point of sale solutions, gift and
loyalty portal systems, ACH electronic systems, online and mobile
payment platforms and rewards-based platforms to integrate into an
existing business system.
Safe Harbor Statement
The foregoing press release contains forward-looking statements.
For this purpose any statements contained in this press release
that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, words
such as "may," "will," "expect," "believe," "anticipate,"
"estimate," "continue," "can" or comparable terminology are
intended to identify forward-looking statements. These statements
by their nature involve substantial risks and uncertainties and
actual results may differ materially depending on a variety of
factors.
Contact: PayChest Inc. Investor Relations 1-877-525-5170
ir@paychest.com
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