SYEV: I hope you're still holding some of those $0.13 shares, they reported another penny and a half for Q3:
Three month period ended November 30, 2015 compared to the corresponding period in 2014
Sales. The increase in sales to $3.2 million during the three months ended November 30, 2015 from $1.3 million during the three months ended November 30, 2014 an increase of 152% and is primarily due to one customer that has developed a private label pitcher and bottle, and significantly increased its distribution line, with sales increasing from $45,000 during the three months ended November 30, 2014 to $1,363,000 during the three months ended November 30, 2015. The launch of our pH2O product line, which increases the alkalinity of municipal water to between 8.0-9.5 pH, also increased sales during the current period. During the three months ended November 30, 2015, sales of the pH2O line were $248,000, compared to none during the comparable prior period. Additionally, during the third quarter ended November 30, 2014, we hired a National Sales Manager to assume some of the sales and larger customer relationship roles, and to develop sales programs with our smaller customers to increase their sales and broaden our customer base. We anticipate maintaining current sales levels during the balance of this fiscal year, and in the subsequent fiscal year as we continue our distribution of the pH2O product line and continue to strengthen relationships with existing customers.
Cost of sales and gross profit percentage. As a percentage of sales, the gross profit margin during the three months ended November 30, 2015 increased from 44% to 48% as compared to the comparable period of the previous year. The most significant improvement in gross margins at the product level was directly related to the launch of our aforementioned pH2O product line. We are selling this product with strict minimum order quantities that allow us to achieve greater profit margins, averaging 69% during the three months ended November 30, 2015. Additionally, our National Sales Manager (a position created and filled during to the three months ended November 30, 2014), introduced a Minimum Advertised Pricing policy during the three months ended May 31, 2015 that has allowed us to increase our margins with customers who market our products online, as well as increased sales prices on our own website store. The product mix and timing of significant sales is always a significant factor in the resulting profit margins reported. The Company expects the gross margin percentages to remain at approximately 50% in the foreseeable future.
Selling, general and administrative expenses. These expenses increased by $143,888, or 28%, during the period ended November 30, 2015 compared to the same period in the prior year. This increase was largely a result of hiring an inventory control manager, administrative office manager and sales manager for the Mexico region during the current period, stock grants to employees and related parties made during the current period with no comparable grant during the prior period, and leasing additional warehouse space on a month-to-month basis as we increase raw materials carried in preparation for shipping delays during Chinese New Year. We anticipate selling, general and administrative expenses to remain comparable to the current quarter moving forward throughout the remainder of the current and subsequent fiscal year.
The Archette case was settled on March 4, 2015 and there were no further legal expenses related to the case incurred during the three months ended November 30, 2015. The Garcia case was settled on November 16, 2015 and there will be no further legal expenses related to the case incurred going forward. We anticipate our legal expenses to be substantially reduced in future periods.
Depreciation and amortization expense. Depreciation and amortization expense was relatively flat from period to period, but the slight increase is due to additional tooling, and a Company vehicle being purchased during the period ended November 30, 2015.
Income tax expense (benefit). The Company recorded income tax expense of approximately $193,000 due to the pretax income of approximately $564,000 during the three month period ended November 30, 2015, compared to a benefit of approximately $158,000 due to the pretax loss of approximately $441,000 during the three month period ended November 30, 2014.
Net income (loss). Net income for the three month period ended November 30, 2015 was $370,962, up 231% compared to net loss of $283,038 for the three month period ended November 30, 2014. This was primarily due to an increase of approximately $2.0 million in sales during the three month period ended November 30, 2015. Additionally, the improved margins and legal expenses discussed above contributed to the net income during the three months ended November 30, 2015. We remain focused on the primary factors affecting our bottom line and expect the Company's profitability to continue during fiscal 2016 and future fiscal years..............................
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