EDMONTON, Alberta, November 27, 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 September 30, 2015 (the “Third Quarter”). BioNeutra is a functional and health food and beverage ingredient manufacturer that uses its patented process to produce isomalto-oligosaccharide (“IMO”) which is sold under its trademark VitaFiber™.
Third Quarter Highlights
• BioNeutra’s revenues for the Third Quarter and the nine-month period ended September 30, 2015 were $2,501,537 and $12,101,398 on gross margins of 49% 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.
• BioNeutra’s Adjusted EBITDA remains strong at $2,128,249 for the nine-month period ended September 30, 2015 as compared with $1,967,618 for the seven-month period ended September 30, 2014.
• BioNeutra’s Adjusted EBITDA has had a positive effect on the operational strength of its balance sheet. At September 30, 2015, the Company had a cash balance of $2,061,420 and working capital of $6,916,525. The Company’s cash balance and working capital have increased year-over-year, from a cash balance of $1,984,876 and working capital of $3,393,542 at September 30, 2014.
• In August, 2015 BioNeutra completed the purchase of land and a mixed-use building in Edmonton, Alberta, Canada (the “Edmonton Property”). The Company has since begun to develop a commercial IMO production line in this facility, which will make BioNeutra the exclusive North American producer of IMO products that feature Health Canada and European EFSA approval and FDA GRAS certification. The Edmonton Property will also house BioNeutra’s corporate head office and global training centre and will significantly expand its in-house research and development capabilities.
• On July 15, 2015, BioNeutra closed 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. The proceeds from this private placement are being used for general working capital.
• From a shareholder relations perspective, BioNeutra is also excited about its alliance with CHF Investor Relations, a respected Toronto-based investor relations firm. CHF is assisting the Company with its investor relations and market making activities, and the Company is confident that their partnership will encourage and support financing for future endeavors by the Company.
Third Quarter Financial Results
Revenue
Three Months Ended September 30, 2015 Sales Revenue: $2,501,537
Three Months Ended September 30, 2014 Sales Revenue: $3,404,759
Nine Months Ended September 30, 2015 Sales Revenue: $12,101,398
Seven Months Ended September 30, 2014 Sales Revenue: $9,028,658
Total sales were $2,501,537 for the Third Quarter and $12,101,398 for the nine-month period ended September 30, 2015, as compared with $3,404,759 for the three-month period ended September 30, 2014 and $9.028,658 for the seven-month period ended September 30, 2014.
The Company’s average monthly sales for the nine-month period ended September 30, 2015 of $1,344,600 represent a 4% increase over average monthly sales for the seven-month period ended September 30, 2014 of $1,289,808 and is generally reflective of the Company’s positive growth.
The drop in sales in the Third Quarter is attributable to the loss of one client. However, direct aggressive company representative marketing and sales has moved to overcome this brief downturn and increase sales for the fourth quarter of 2015. Specifically, the Company is working to secure long-term contractual sales with clients to avoid variability associated with spot purchases. The Company anticipates finalizing distribution agreements in Q4 2015 to solidify strategic partners and capture revenues from its EFSA approval for the European Union and surrounding countries.
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.
Gross Profit
The Company posted a gross profit of $1,229,027 for the Third Quarter and $6,039,647 for the nine-month period ended September 30, 2015 on gross margins of 49% and 50%, respectively. This compares with gross profits and gross margins of $1,516,723 and 45% for the three-month period ended September 30, 2014 and $4,234,276 and 47% for the seven-month period ended September 30, 2014.
Net Income
Three Months Ended September 30, 2015 Net Income: ($63,516)
Three Months Ended September 30, 2014 Net Income: $228,912
Nine Months Ended September 30, 2015 Net Income: $41,830
Seven Months Ended September 30, 2014 Net Income: $3,948,754
The Company recorded a net loss of $63,516 for the Third Quarter and a net income of $41,830 for the nine-month period ended September 30, 2015. This compares with a net income of $228,912 for the three-month period ended September 30, 2014 and $3,948,754 for the seven-month period ended September 30, 2014.
The Company’s level of net income in the nine-month period ended September 30, 2015 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, 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 Adjusted EBITDA which totals $2,128,249 for the nine-month period ended September 30, 2015 as compared with $1,967,618 for the seven months ended September 30, 2014.
Financial Condition & Liquidity
BioNeutra’s Adjusted EBITDA has had a positive effect on the operational strength of its balance sheet. As at September 30, 2015, the Company had a cash balance of $2,061,420 and working capital of $6,916,525. The Company’s cash balance and working capital have increased year-over-year, from a cash balance of $1,984,876 and working capital of $3,393,542 at September 30, 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 September 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 Third Quarter interim condensed consolidated financial statements and the Management’s Discussion and Analysis (“MD&A”) are the three-month and seven-month periods ended September 30, 2014.