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SNF.V - Sunora Foods Inc. (SNF)

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Sunora Foods Inc. Due Diligence Report

Symbol: SNF.V
Price: $0.12
Common Shares: 42,254,332
Insider Holdings: 31 million

December 2015 Presentation:

Most Recent Financial Results (Ending September 30th 2015)

Cash: $2,752,139
Accounts Receivable: $1,163,447
Inventory: $486,377
Prepaid Expenses: $4,501
Deferred Tax: $150,062
Total Assets: $4,556,526

Accounts Payable: $819,939
Income Tax: $120,165
Total Liabilities: $940,104

Quarterly Earnings Summary:
2014 Total - $189,073
2015 Q1 - $189,073
2015 Q2 - $110,940
2015 Q3 - $198,771

Revenue After 9 Months
Sales - $8,452,570
Gross Margin - $945,250
Total Costs - $211,985
Income Before Tax - $733,265
Net Income - $549,949 or $0.013c EPS

MD&A Highlights

Sunora is a Calgary-based trader and supplier of canola, soybean, corn, olive and other food oils. Currently, the Company is a relatively modestly-sized player participating in an international business populated by some of the largest companies in the world. It has successfully maintained a niche position that has been achieved by building strong relationships with its suppliers and customers through a history of reliable and responsive service. While the Company regularly cooperates with many of these companies, it also occasionally competes with companies that have far greater resources.

Sunora had sales in line with expectations for the nine month period ended September 30, 2015. Sales were negatively impacted by a decline in oil related commodity prices of over thirty percent and bulk oil sales declined in the third quarter.

The $549,949 of net income and comprehensive income in the nine months ended September 30, 2015 was due to better gross margins attributable to a continuing higher percentage of packaged oil sales versus bulk oil sales. Profitability also benefitted from the positive impact of the foreign exchange gains.

The foreign exchange gain or loss arises primarily as a result of inventory purchases and sales, to the extent that they are denominated in US currency.

Sunora's cash balances increased $967,992 in the nine months ended September 30, 2015. This increase since December 31, 2014 resulted primarily from higher income for the nine month period, the reduction of inventory, and a decrease in accounts receivable affect slightly by a decrease in accounts payable and accrued liabilities during that period. Sunora’s cash balance increased during the nine months ended September 30, 2015 primarily due to an increase in net income, a decrease in inventory and decrease in receivables offset partly by decrease accounts payable and accrued liabilities during that period

Sunora maintains strong relationships with a number of strategically located customers internationally and in North America. These relationships continue to drive demand for food oil products from Canada, with Sunora well positioned to meet existing and additional demand. Management has focused on increasing visibility in emerging markets, with a specific focus on international economies including Asia, and has met this increased demand with Canadian manufactured food oil products. Sunora operations can be impacted by geopolitical situations that may restrict delivery, but this has not significantly hindered operations to date. As the middle class in these emerging economies demands higher quality and healthier foods, Sunora is well positioned to meet additional demand.

The financial position of the Company is strong relative to its financial requirements and commitments. Management has maintained a conservative approach to day-to-day operations, monitoring the timing of its inventory turnover closely to ensure it can meet its obligations to suppliers within their credit facilities. Collections from customers are stringently managed such that substantially all receivables at September 30, 2015 were less than 60 days old. Sunora's Current Ratio (Current Assets divided by Current Liabilities) target as set by management is 2.0:1. Including its cash balance of $2,752,138 at September 30, 2015, Sunora's Current Ratio at September 30, 2015 was 4.7:1. The Company has continued to have a strong working capital position. Additionally, the Company has neither debt nor any financial obligations other than to fund its operations.

Sunora Foods Inc. Two year sales History

Originally this was a capital pool (Thoroughbred Capital Inc, symbol TBC.P), until a deal was struck April 10th 2013 to acquire Sunora Foods Inc for 30 million shares at a price of $0.167c per share($5 million)

First financials after the merger were released April 30th 2014, below are all the quarters broken down

Year end: August 31st, 2013
Cash: $836,292
Total Assets: $3,000,464
Total Liabilities: $1,014,299
Revenue: $15,498,660
Net Income/Loss: $79,418 - $0.0019c

Quarter Ended: December 31st, 2013
Cash: $ 1,646,563
Total Assets: $ 3,848,337
Total Liabilities: $ 1,016,838
Revenue: $ 4,794,330
Net Income/Loss: -$1,074,649 – ($1.25 million cost for listing expense and transaction cost)

Quarter Ended: March 31st, 2014
Cash: $ 1,757,907
Total Assets: $ 3,739,165
Total Liabilities: $ 920,557
Revenue: $ 2,959,727
Net Income/Loss: -$58,792 – due to some oil pricing and shipping issues(see MD&A)

Quarter Ended: June 30th, 2014
Cash: $ 1,685,719
Total Assets: $ 3,610,622
Total Liabilities: $ 670,434
Revenue: $ 2,836,903
Net Income/Loss: $ 121,580 - $0.003c

Quarter Ended: September 30th, 2014
Cash: $ 2,358,141
Total Assets: $ 4,442,591
Total Liabilities: $ 1,362,255
Revenue: $ 3,496,856
Net Income/Loss: $ 140,148 - $0.0033c

Quarter Ended: December 31st, 2014

Cash: $ 1,784,147
Total Assets: $ 4,139,409
Total Liabilities: $ 1,072,936
Revenue: $ 3,941,719
Net Income/Loss: $ -13,696 – flat due to added G&A marketing cost into other countries (see MD&A)

Quarter Ended: March 31st, 2015
Cash: $ 2,375.580
Total Assets: $ 4,494,917
Total Liabilities: $ 1,188,206
Revenue: $ 2,743,967
Net Income/Loss: $ 240,238 - $0.0053c

Quarter Ended: June 30th 2015
Cash: $ 2,504,091
Total Assets: $ 4,168,457
Total Liabilities: $ 750,806
Revenue: $ 3,233,996
Net Income/Loss: $ 110,940 - $0.0023

Quarter Ended: September 30th, 2015
Cash: $ 2,752,139
Total Assets: $ 4,556,526
Total Liabilities: $ 940,104
Revenue: $ 2,451,477
Net Income/Loss: $ 198,771 - $0.0047c

As you can clearly see from the financials, SNF has more than tripled its cash position over the last couple years, increased assets by 50%, decreased liabilities, and started to establish itself in news markets in Asia. Several news releases were announced in 2015 with regards to an expansion plan and we will likely see the benefits of this in 2016.
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SNF News: Sunora Foods Registration of Food Oil Products in Indonesia 06/25/2014 08:59:54 AM
SNF News: Sunora Foods Registration of Food Oil Products in Indonesia 06/25/2014 08:59:54 AM
SNF News: Sunora Foods Quarter 1 Financial Results and Market Radio Interview 06/03/2014 09:21:55 AM
SNF News: Sunora Foods Marketing Agreement for Pacific Northwest 05/28/2014 08:29:52 AM
SNF News: Sunora Foods Year End Financials 04/30/2014 04:09:06 PM
#22 AG Note: Sept. 28, 2017 JonnyRBuck12 10/02/17 07:26:00 PM
#21   Robin Speziale, author of Market Masters, which is JonnyRBuck12 09/04/17 12:10:58 PM
#20   Sunora Foods Q2 Results(Ending June 30th2017) JonnyRBuck12 08/30/17 11:16:55 AM
#19   Sunora Foods earns $82,525 in Q2 2017 JonnyRBuck12 08/29/17 11:28:13 AM
#18   Less than 10 business days left to go JonnyRBuck12 08/21/17 12:26:06 AM
#17   2 to 3 weeks to go until financial JonnyRBuck12 08/10/17 10:01:05 AM
#16   Sunora Foods estimates Q2 2017 sales of $3.26-million JonnyRBuck12 07/06/17 12:02:40 PM
#15 JonnyRBuck12 06/05/17 10:36:43 PM
#14   Sunora Foods May 2017 Export Catalogue (Alberta Government) JonnyRBuck12 06/05/17 12:30:20 PM
#13   Sunora Foods Q1 Results. Financials + MD&A Highlights JonnyRBuck12 05/31/17 11:32:16 AM
#12   New company presentation: JonnyRBuck12 05/31/17 11:04:04 AM
#11   Sunora Foods earns $66,560 in Q1 2017 JonnyRBuck12 05/30/17 11:25:09 AM
#10   News article: Canola exports to China hit record JonnyRBuck12 05/18/17 11:58:18 AM
#9   Organic Canola Oil approval from QAI based in JonnyRBuck12 05/18/17 11:30:29 AM
#8   Canola Oil Demand To Rise In China(Article) - JonnyRBuck12 05/08/17 02:01:32 PM
#7   Spring presentation has some more possible leads to JonnyRBuck12 05/02/17 11:14:44 PM
#6   Sunora Foods Inc. (SNF.V) Audited Year End Results JonnyRBuck12 04/30/17 07:30:16 PM
#5   Sunora Foods earns $282,794 in 2016 JonnyRBuck12 04/30/17 03:32:04 PM
#4   Saw this article today and did a little JonnyRBuck12 04/15/17 06:03:10 PM
#3   Edible oils in India article, easy market that JonnyRBuck12 04/12/17 03:16:32 PM
#2   Sunora Foods estimates Q4 2016 sales of $3.44-million JonnyRBuck12 03/27/17 11:05:34 AM
#1   SNF Q3 Results Summary: JonnyRBuck12 03/27/17 11:04:52 AM