EDMONTON, Alberta, August 28, 2015 – BioNeutra Global Corporation (CSE: BGA) (“BioNeutra” or the “Company“) is pleased to announce today its interim financial results for the three-month period ended June 30, 2015 (the “Second Quarter”). BioNeutra is a functional and health food ingredient manufacturer that uses its patented process to produce isomalto-oligosaccharide (“IMO”) which is sold under its trademark VitaFiber™.
Second Quarter Highlights
• BioNeutra’s revenues for the Second Quarter and the six-month period ended June 30, 2015 were $4,254,712 and $9,599,861 on gross margins of 42% and 50%, respectively. The Company’s revenues during these periods were driven by strong sales of VitaFiber™ to food and beverage manufacturers targeting functional and health food markets and growing retail sales.
• Strong VitaFiber™ sales in the six-month period ended June 30, 2015 pushed the Company’s Adjusted EBITDA to $2,291,317 as compared with $1,644,486 for the four-month period ended June 30, 2014.
• BioNeutra’s strong Adjusted EBITDA has had a very positive effect on the operational strength of its balance sheet. At June 30, 2015, the Company had a cash balance of $4,186,822 and working capital of $6,991,546. The Company’s cash balance and working capital have increased substantially year-over-year, from a cash balance of $1,190,600 and working capital of $2,903,747 at June 30, 2014.
• On April 23, 2015, BioNeutra, through its wholly-owned subsidiary BioNeutra North America Inc., entered into an agreement to purchase a mixed-use manufacturing and office building in Edmonton, Alberta, Canada. BioNeutra completed this purchase on August 21, 2015 and will now develop a commercial production line in this facility to produce functional food and beverage ingredients and products featuring IMO using the Company’s patented IMO production processes. This IMO production line will be the first of its kind in North America and will make BioNeutra the exclusive North American producer of IMO products that feature Health Canada and European EFSA approval and FDA GRAS certification. This facility will also house BioNeutra’s corporate head office and global training centre which will greatly expand its in-house research and development capabilities.
• On May 28, 2015, BioNeutra agreed to a private placement with a key strategic partner of 2,500,000 common shares at a price of $0.40 per common share for gross proceeds of $1,000,000. This private placement closed on July 15, 2015 and the Company intends to use the proceeds from this private placement for general working capital.
• On June 15, 2015, BioNeutra retained CHF Investor Relations (“CHF”), a highly-regarded Canadian investor relations firm with offices in Toronto and Calgary to assist the Company with investor relations and market making activities.
Second Quarter Financial Results
Three Months Ended June 30, 2015 Sales Revenue: $4,254,712
Three Months Ended June 30, 2014 Sales Revenue: $4,467,060
Six Months Ended June 30, 2015 Sales Revenue:$9,599,861
Four Months Ended June 30, 2014 Sales Revenue:$5,623,899
Total sales were $4,254,712 for the Second Quarter and $9,599,861 for the six-month period ended June 30, 2015, as compared with $4,467,060 for the three-month period ended June 30, 2014 and $5,623,899 for the four-month period ended June 30, 2014.
The Company’s average monthly sales for the six-month period ended June 30, 2015 of $1,599,977 represent a 14% increase over average monthly sales for the four-month period ended June 30, 2014 of $1,405,975.
The Company’s strong sales are a result of continually increasing VitaFiber™ sales to major functional food and beverage manufacturers who in turn continue to experience significant growth in their own sales. In addition, the Company is growing its VitaFiber™ retail customer base, both online through Amazon.com and in an expanding network of bricks-and-mortar retailers across the world.
The Company posted a gross profit of $1,774,137 for the Second Quarter and $4,810,620 for the six-month period ended June 30, 2015 on gross margins of 42% and 50%, respectively. This compares with gross profits and gross margins of $2,139,218 and 48% for the three-month period ended June 30, 2014 and $2,717,553 and 48% for the four-month period ended June 30, 2014.
Three Months Ended June 30, 2015 Net Income: $(96,835)
Three Months Ended June 30, 2014 Net Income: $1,785,824
Six Months Ended June 30, 2015 Net Income: $105,346
Four Months Ended June 30, 2014 Net Income: $3,719,842
The Company recorded a net loss of $96,835 in the Second Quarter and a net income of $105,136 for the six-month period ended June 30, 2015. This compares with a net income of $1,785,824 for the three-month period ended June 30, 2014 and $3,719,842 for the four-month period ended June 30, 2014.
The Company’s level of net income in the most recent reporting periods is a result of having incurred several significant non-cash expenses, including:
• a $744,896 non-cash share-based compensation expense; • a $686,834 non-cash deferred income tax expense; and • a $349,818 one-time non-cash sales and marketing expense to related parties.
In addition, in the Second Quarter the Company recorded a one-time professional fee expense of $591,632 related to the favorable resolution and settlement of legal matters with a third party concerning the Company’s intellectual property.
The effect of these non-cash expenses is reflected in the Company’s positive Adjusted EBITDA which totals $2,291,317 for the six-month period ended June 30, 2015 as compared with $1,644,486 for the four months ended June 30, 2014.
Financial Condition & Liquidity
The Company’s Adjusted EBITDA has had a positive effect on the operational strength of its balance sheet. As at June 30, 2015, the Company increased its cash balance to $4,186,822 and its working capital to $6,991,546, representing significant increases over the cash balance of $2,084,687 and working capital of $3,976,934 at December 31, 2014.
The Company also has access to a $500,000 credit facility to assist with working capital needs, if necessary, but this credit facility has not been drawn on as of the date of this press release.
Income Tax Recovery
Deferred income tax assets were recognized from the amalgamation of the Company’s subsidiaries which provided loss carryforwards that the Company may use to offset taxable income in the future. As at June 30, 2015, the Company had Canadian tax losses with a tax benefit of $828,808.
Change in Year End and Comparison Period
Effective October 29, 2014, the Company completed the acquisition of BioNeutra North America Inc. and BioNeutra International Limited. The acquisition of BioNeutra North America Inc. was considered a reverse acquisition for accounting purposes, with BioNeutra North America Inc. identified as the acquirer. BioNeutra North America Inc.’s year-end was February 28, and as such the required comparison periods for the purpose of the Second Quarter interim condensed consolidated financial statements and the Management’s Discussion and Analysis (“MD&A”) are the three-month and four-month periods ended June 30, 2014.