Sunora Foods Q2 Results(Ending June 30th2017)
All Information Below Can Be Found At www.sedar.com
Price: $0.175
Common Shares: 42,254,332
Retail Shares Available: 12,254,332
Insider/Institutional Holdings: 71% total, as per information circular. CEO holds 52%
Website: www.sunora.com
Balance Sheet For Q2
ASSETS
Cash: $3,356,010
Accounts Receivable: $1,090,006
Accrued Interest: $2,527
Inventory: $343,899
Prepaid Expenses: $9,647
Goods Tax Recoverable: $22,259
Income Tax Recoverable: $125,727
Deferred Tax Asset: $159,545
Total Assets: $5,119,620
LIABILITIES
Accounts Payable: $1,181,778
Customer Deposits: $68,743
Total Liabilities: $1,250,521
Q2 Sales
Revenue: $3,164,688
Gross Margin: $253,684
Income From Operations: $82,525
Claim Settlement: -$434,684 – One time expense
Income Tax Recovery: $108,984
Net Loss For Quarter: -$243,175
Year – Sales – Profit/(Loss) – Additional Information
2017(Q1/Q2) - $6,644,917 – ($176,616) – Increased sales Y/O/Y, loss from settlement
2016 - $12,254,101 - $282,794 - Currency loss of $34,000 or else net income was stable
2015 - $10,815,959 - $502,182 - Net income of $200,000 affected by currency exchange
2014 - $13,235,038 - $189,073 - Added listing expenses incurred from merger with capital pool
MD&A Highlights
The legal settlement arises from a statement of claim filed against the Corporation in 2015 by one of its vendors, who alleged that Sunora wilfully did not accept deliveries of soybean oil pursuant to a contractual arrangement. The vendor claimed USD $506,798 in damages relating to losses allegedly suffered. Sunora denied responsibility for such a claim. However, on the recommendation of legal counsel, management settled the claim for CDN $390,000 to be paid by August 31, 2017. The claim settlement comprises a full provision for the claim including already incurred and expected legal fees.
Earnings (loss) per share - basic and diluted for the six months ended June 30, 2017 were $(0.0004) from $0.002 for the same period last year as a direct result of the claim settlement. Without the claim, earnings per share – basic and diluted for the six months to June 30, 2017 would have been significantly better than the same period of the prior year.
Sunora had 20% higher sales for the six-month period ended June 30, 2017 than the comparative sixmonth period. Sales were positively impacted by stronger results in the United States and continued positive momentum overseas.
The loss and comprehensive loss for the six months ended June 30, 2017 was primarily the result of the settlement of a trading dispute. The income from operations before the claim was $163,369 compared to $104,024 for the same period of 2016. Although sales were 20% higher, gross margin declined from 8.1% to 7.3% in this six-month period. Gross margin percentage declined because of a higher proportion of bulk oil sales.
Outlook
Sunora maintains good relationships with customers in North America and overseas. 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 the economies in Asia, with a view to meet this increased demand for Canadian manufactured food oil products. Sunora’s operations are impacted by geopolitical situations that may hold up deliveries as was experienced in recent quarters. As the middle class in these emerging economies demands higher quality and healthier foods, Sunora is well positioned to meet additional demand.
Management is actively identifying and analyzing operations that might increase gross margins for the Company. Prospective businesses considered include packagers and suppliers in the food oil industry. With each operation identified, a detailed review and analysis is undertaken by management. Specific focus is currently on packagers with operations in Canada that are looking for a strategic partner to expand international operations.
Management is also actively considering possible new products that may benefit from its contacts in domestic and international markets. With the continuing positive momentum in the United States economy and new customers being added in Asia, Sunora is well placed for the future.
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