BioNeutra Global Corporation Announces Financial Results for Year Ended December 31, 2015 EDMONTON, ALBERTA–(Marketwired – April 26, 2016) – BioNeutra Global Corporation (“BioNeutra” or the “Company”) (TSX VENTURE:BGA) is pleased to announce today its financial results for the year ended December 31, 2015 (the “Year End”). BioNeutra is a functional and health food and beverage ingredient manufacturer that uses its patented processes to produce isomalto-oligosaccharide (“IMO”) which is sold under its trademark VitaFiber™.
Year End Highlights Sales for the fourth quarter and twelve-month period ended December 31, 2015 were respectively $3,943,127 and $16,044,525 on gross margins of 26% and 44%. The Company continues to focus on marketing and selling its VitaFiber™ products to food and beverage manufacturers, targeting functional and health food markets and growing retail sales for personal uses.
The Company’s Adjusted EBITDA remains strong at $2,990,231 for the twelve-month period ended December 31, 2015 as compared with $2,558,746 for the ten-month period ended December 31, 2014.
The Company’s strong Adjusted EBITDA has had a very positive effect on the operational strength of its balance sheet. As at December 31, 2015, the Company had a cash balance of $1,625,412 and working capital of $6,759,777. This represents a significant increase over the working capital of $3,976,934 as at December 31, 2014.
On August 21, 2015, BioNeutra North America Inc., a wholly owned subsidiary of the Corporation, completed the purchase of a mixed-use manufacturing and office building in Edmonton, Alberta, Canada and intends to 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 represents the first of its kind in North America, and consequently BioNeutra will be the exclusive North American producer of IMO products featuring Health Canada and European EFSA approval and FDA GRAS certification. This facility also houses BioNeutra’s corporate head office and global training centre, and will greatly expand its in-house research and development capabilities.
Year End Financial Results Revenue
Total sales for the three-month period ended December 31, 2015 were $3,943,127 and $16,044,525 for the Year End, as compared with $4,031,678 for the three-month period ended December 31, 2014 and $13,060,336 for the ten-month period ended December 31, 2014.
The Company’s strong sales are the result of continually increasing sales to major functional food and beverage manufacturers who in turn continue to experience significant growth in their own sales. In addition, the Company’s customer base continues to grow as mainstream functional and health food and beverage manufacturers and pharmaceutical companies create new products incorporating VitaFiber™.
Gross Profit
The Company posted a gross profit of $1,008,993 for the three-month period ended December 31, 2015 and $7,048,640 for the Year End on gross margins of 26% and 44% respectively. This compares with gross profits and gross margins of $1,441,621 and 36% for the three-month period ended December 31, 2014 and $5,891,181 and 45% for the ten-month period ended December 31, 2014.
The Company’s lower gross margin for the three-month period ended December 31, 2015 were attributed to: (1) U.S. currency exchange differences between estimated rates used during the year and the year end rate used for costs of goods sold valuation; and (2) volume discounts offered to large customers.
Net Income
The Company recorded a net income of $137,667 for the three-month period ended December 31, 2015 and a net income of $179,497 for the Year End, as compared with a net income of $309,916 for the three-month period ended December 31, 2014 and a net income of $4,258,670 for the ten-month period ended December 31, 2014.
The Company’s level of net income for the Year End is a result of several significant non-cash expenses including:
a $744,896 non-cash share-based compensation expense; a $733,861 non-cash deferred income tax expense; and a $349,818 one-time non-cash sales and marketing expense payable to certain related parties.
In addition, the Company recorded a one-time professional fee expense in the amount of $616,903 related to the favorable resolution and settlement of legal matters with a third party concerning the Company’s intellectual property.
The Company’s strong Adjusted EBITDA has had a positive effect on the operational strength of its balance sheet. As at December 31, 2015, the Company increased its working capital to $6,759,777, representing significant increases over the working capital of $3,976,934 at December 31, 2014.
Financial Condition & Liquidity
At December 31, 2015, the Company had a working capital of $6,759,777. This represents a significant increase over the working capital of $3,976,934 at December 31, 2014. Cash generated in operating activities during the twelve-month period ended December 31, 2015 was $481,504, as compared to cash of $1,174,456 generated for the ten-month period ended December 31, 2014.
The Company has a credit facility of $500,000 to assist with working capital needs that is due on demand, bears interest at prime plus 1.75% per annum and is secured by a general security agreement on all of the assets of the Company. As at December 31, 2015, the Company had not drawn on this credit facility.
As at December 31, 2015, the Company had very healthy working capital and management is confident that the increasing consumer demand for functional and health food product ingredients such as VitaFiber™ will not only result in recurring sales, but will continue to increase revenues and profitability for the Company. The Company is committed to having VitaFiber™ included in the development of new and healthy functional food products that the market and consumers are demanding from food manufacturers.
The increase in inventories to $6,270,570 at December 31, 2015, as compared to $2,529,428 at December 31, 2014, is the result of an investment by the Company to support the planned sales growth of VitaFiber™ in all of the Company’s targeted geographical markets. Because the sales of VitaFiber™ occur on a global basis, the Company has stockpiled additional inventory in three additional warehouses to provide greater efficiency in both time and cost with respect to the delivery cycle of the product to satisfy customer requirements.
On August 21, 2015, BioNeutra North America Inc. completed the purchase of a mixed-use manufacturing and office building in Edmonton. The Company has moved its corporate head office and research and development operations into this property, and has commenced construction of an IMO production line. Management does not expect the cash or debt financing of this purchase to have material effects on the liquidity or cash flow of the Company.
Additionally, on July 15, 2015, the Company 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 of this private placement were for general working capital purposes.
Income Tax Recovery
During the three-month period ended December 31, 2015, the Company generated significant taxable income through its operations. However, as at December 31, 2015, the Company had Canadian tax losses with a tax benefit of $877,562. The Company recognizes the benefit of tax losses only to the extent of anticipated future taxable income that can be reduced by the tax losses.
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 audited consolidated financial statements are the twelve-month and ten-month periods ended December 31.
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