NIA.V Q1 2015 Results (Ending August 31st 2015)
Price: $0.04
Common Shares: 19,966,032
Insider Holdings: 64% as stated in the MD&A
Financials
ASSETS
Cash: $963,021
Accounts Receivable: $191,010
Interest Receivable: $7,922
Prepaid Expenses: $31,858
Inventory: $177,409
Property & Equipment: $4,175
Unallocated Purchase Price: $990,344
Total Assets: $2,365,730
LIABILITIES
Trade Payables: $193,590
Loan: $35,000
Total Liabilities: 228,590
Sales figures below. Revenue from Q1 was significantly higher than the first two quarters of NIA.V having Blu-Dot, and the loss was more than 50% less. This means that sales are increasing, costs are decreasing, and the company will inevitably break into a profit position in the near future. Keep in mind that many one time costs occurred last year.
(Chart at bottom of Page 3 in MD&A)
Quarter Date Revenue Net Profit(Loss)
Q1 Aug.31, 2015 $159,299 ($89,415)
Q4 May.31, 2015 $64,900 ($232,589)
Q3 Feb.28, 2015 $103,467 ($299,958)
Q2 Nov.30, 2014 $8,088 ($27K)( prior to acquiring Blu-Dot)
MD&A Highlights
The Blu-Dot business now has listings with six Canadian regional distributors that focus on sales of the BluDot product line to independent grocery and nutritional/health food stores in various regions of Canada. As well, Blu-Dot currently has developed direct relationships and listings with Loblaw’s, Longo’s and Sobeys in 3 selected Canadian market segments.
The Corporation’s net loss increased in 2015 as a result of the startup nature of the Blu-Dot acquisition. Sales of $159,299 in the quarter increased from Sales of $64,900 in the previous quarter primarily from existing customer relationships, benefiting from marketing programs and from the summer seasonally warmer weather in Canada. Although gross margins were negatively affected by some of the operating changes in the quarter, they are expected to improve longer term. Sales and marketing costs of $45,913 were reduced from $99,090 in the previous quarter. Operating costs of $50,113 were reduced from the previous quarter ($143,101) with lower legals and salaries in the August 2015 quarter. Public corporation costs are within expectations and include such items as transfer agent fees, listing fees, audit fees and legal fees. These expenses combined with inventory and accounts receivable increases, created most of the decrease in cash in the period.
Based on its overall strategic plan, NVC expects to expand its overall business by; the successful organic growth of each of its underlying brands and product lines as well as; acquiring (or investing in) additional brands and product lines, all within the healthy better for you beverage and foods consumer packaged goods sector. As such, as a significant component of its overall corporate strategy, NVC has established a strategic plan and process with the objective of identifying, soliciting, evaluating and closing additional future acquisitions that meet NVC’S objectives and criteria. The Blu-Dot acquisition was the first acquisition as part of this long term plan. NVC is currently and will continue to develop a pipeline of potential suitable acquisition/investment targets. The goal is to be in a position to move forward with the next acquisition within the next 12 to 18 months based on a number of criteria and milestones.
Blu-Dot has also entered a contractual relationship with KeHE Distributors, a large national specialty food and beverage distributor in the US market. Via KeHE, Bu-Dot is now selling to HEB and United Stores.
Blu-Dot’s revenue growth strategy for the next three years is focused on:
i) gaining ever increasing sales velocity from each existing distributor and customer relationships via “same store” revenue increases from each store that the Blu-Dot product is sold in.
ii) attracting new listings with additional new distributors and direct customers in Canada.
iii) attracting new listings with additional new distributors and direct customers in the USA with a primary focus on the northeast US markets. Blu-Dot expects its revenues to grow through the 2015 calendar year resulting from increasing revenues from existing relationships and new listings in both Canada and the USA from new distributors and new direct customers. The Blu-Dot business will monitor its performance in growing revenues in each of the three methods indicated above.
The Corporation issued 7,162,500 common shares from treasury based to acquire all of the issued and outstanding common shares of Blu-Dot (“Blu-Dot Shares”). The shares were valued at of $716,250, being $0.10 per share. The Blu-Dot shareholders have an opportunity to receive up to 2,363,460 additional common shares, based on the achievement of specific revenue and gross profit targets for the Blu-Dot business by December 31, 2015. At this time, the Company believes that these revenue and gross profit goals are not attainable. However, a complete accounting for this contingent consideration will not be completed until after December 31, 2015, when 2 the failure of reaching these targets is confirmed. Following completion of the Transaction the pre-transaction holders of the Corporation’s common shares hold approximately 64% of the outstanding shares of the resulting issuer and the holders of Blu-Dot Shares hold approximately 36% of the outstanding shares of the resulting issuer.
Blu-Dot in the latter half of 2014 readied for entry into the US market. The longer term US market potential is much more significant in size than the Canadian market and will also have the benefit of: a) less seasonality in the regions with milder/warmer winter seasons and b) enhanced gross profit margins from the positive impact of the US and Canadian dollar exchange rate differential. The Blu-Dot business has successfully initiated and achieved its first listing with one US based direct customer, The Vitamin Shoppe (a specialty national health food retailer) where the initial stocking order was sold and shipped prior to the acquisition by NVC. Ongoing re-orders from this customer are expected in future quarters. |
