Item 1. Business
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock.
As used in this annual report, the terms we, us, our and our company, mean PureSnax International, Inc.
Our Current Business
By exploiting the trademarks acquired through the License Agreement (the Exclusive License) we intend to manufacture, distribute, sell and market various products within the health foods and snacks industry.
PureSnax International is a wellness brand focused on bringing healthy snacks and foods to consumers. PSI offers a wide assortment of sugar free, peanut free, Kosher, low fat, low sodium and Non GMO certified products. With the tough new nutritional standards being rolled out through schools in the United States, we are poised to capitalize on these regulations by offering good for you, functional foods and snacks that meet these new regulatory standards. Product categories include Popcorn, candied popcorn, marshmallow squares (made without Gelatin), protein bars, mints, gum and various condiments as well as offering Wow its Not Sugar! Xylitol, an all-natural sweetener.
Through the Licensing Agreement we will distribute delicious tasting, very healthy snack foods meeting the highest of standards and compliance for the US consumers with plans to evolve into an international audience. With a socially responsible mandate supported by education and driven by integrity and sincerity, PSI will provide people with healthier snack and food choices by utilizing wholesome, natural, high quality ingredients that promote healthier lifestyles. We have chosen to specialize in the development, sourcing, branding and distribution of high quality, healthy food and snack products. It is our vision to brand PureSnax International as one of the trusted names in the healthy food and snack industry.
With major illnesses such as diabetes, obesity, cancer, and heart disease on the rise, people are looking for ways to minimize the risks in developing these diseases. People are starting to read and understand labels looking for healthier choices. We believe that the demand for healthier products is driving a fundamental change in the food and snack markets. This demand will provide enormous opportunities for PureSnax International to position itself in the healthy food and snack industry.
Our goal is to utilize open public forums, education, integrity and honesty to earn the publics trust and become that trusted brand that provides healthy food and snack products to the growing percentage of the population wanting to make healthier life choices. In other words, what we put on our labels, we mean. We believe in having a position in the marketplace where the market will be rather than where the market is.
We intend to become pioneers in a dynamic and growing segment of the industry where future demand will be and it means addressing the new public awareness of healthier food and snack products. The snack products developed must not only meet healthy product guidelines but also taste good. This is a very unique niche and one that hasnt been completely tapped into for its greatest potential. PPM150 Nutritional Guidelines that came into effect in Ontario, Canada, was one of the first nutritional standards to be implemented for vending and school products. Similar guidelines in many other provinces and states across Canada and the United States have since been implemented. They call for vending and school products that are low in fat (80% with 3 grams of fat and under or 20% with 5 grams of fat and under) as well as low in sodium and sugar, which is not the primary ingredient. Candy, Chocolate, Soda, junk food such as potato chips and confectionary have been banned. Our recipe for Marshmallow Squares are sugar-free, Gluten-free, contains very little salt, Gelatin Free, kosher, nut free and taste great! Speaking to the need for education, many consumers are not aware that Gelatin is derived from animal bones and parts yet have been eating Gelatin through Jell-O and Marshmallows for years. Knowing that there are healthy products required for this channel and that the trend will be towards healthier products, we have developed and are constantly continuing to work on other recipes for healthier products that meet the highest standards of quality.
Government Regulation
Our business operations are subject to several international and domestic laws including labor and employment laws, laws governing advertising and promotions, privacy laws, safety regulations, import/export restrictions, consumer protection regulations that govern product standards and labeling, and several other regulations. We believe that we are currently in material compliance with all such applicable laws.
We believe that the current products portfolio and any potential products will fall under the U.S. Food and Drug Administration (FDA) regulatory umbrella. The FDA is charged with protecting consumers against impure, unsafe, and fraudulently labeled products. FDA, through its Center for Food Safety and Applied Nutrition (CFSAN), regulates foods other than the meat, poultry, and egg products regulated by FSIS. FDA is also responsible for the safety of drugs, medical devices, biologics, animal feed and drugs, cosmetics, and radiation emitting devices
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s applicable, the Licensee shall comply with all regulatory and other agencies, including governmental and private, as applicable, in the marketing, distribution, and/or selling of the Products. Licensor shall provide any approvals, as applicable, to Licensee, that would be beneficial in the efforts of the Licensee.
We are currently not aware of any new legislation or regulation that may or may not apply to current and future products within the brand portfolio. However, in a constantly evolving global business environment we will rely on its management teams experience and advise from legal counsel.
Our e-commerce website and online content are subject to government regulation of the Internet in many areas, including user privacy, telecommunications, data protection, and commerce. The application of these laws and regulations to our business is often unclear and sometimes may conflict. It may take years to determine whether and how existing laws such as those governing intellectual property, privacy, advertising, etc. apply to the Internet. Nonetheless, laws and regulations directly applicable to Internet communications, commerce and advertising are becoming more prevalent. Due to the increasing popularity and use of the Internet, it is possible that laws and regulations may be adopted covering issues such as user privacy, content, quality of products and much more. Further, the growth and development of the market for e-commerce may prompt calls for more stringent consumer protection laws, which may impose additional burdens on companies conducting business online. Compliance with these regulations may involve significant costs or require changes in business practices that result in reduced revenue. Noncompliance could result in penalties being imposed on us or orders that we stop the alleged noncompliant activity. We believe that we are currently in material compliance with all such applicable laws.
Products and Services
We intend to sell all product categories manufactured by Pure Snax Company, Inc. with an initial focus on the following.
Wow its not sugar! - Xylitol
100% All Natural Xylitol Sweetener. Xylitol is a natural pentitol sugar alcohol. It does not contain the glucose based carbohydrate sweetener found in sucrose, corn sugars, fructose, etc. More correctly, Xylitol is classified as a polyalcohol, which can be converted into a natural sugar. Due to the basic chemistry of Xylitol one perceives a pleasant and fresh sensation rather than the traditional burn of sugar. Xylan is the raw material source of Xylitol, which is found in some tree bark and in the hulls of several nuts and grains. Many fruits and vegetables are another source of Xylan making it a natural sweetener that works well with the body.
Wow Mints
Freshen your mouth with a burst of peppermint or watermelon! Four pieces of our mints and you're on your way to great oral health. Contains approximately 75 pieces per container.
Wow Rice Delites
Rice Delites are a delicious healthy snack, which is also considered to be a functional food due to the ingredients that are contained in Rice Delites. Take them to school, take them to work, take them anywhere you would like a nutritious and healthy snack. Available in original vanilla and strawberry flavours.
Wow Naturally Flavoured Coated Popcorn
Almost everyone loves popcorn! Popcorn on its own is healthy. According to the Mayo Clinic just 3 cups of Popcorn will provide you with 3.5 grams of fiber. The toppings on Popcorn are what make it unhealthy.
People were first introduced to Junk Food over 100 years ago with the introduction of a leading brand taking the first credit which combined molasses and peanuts with Popcorn. By carefully preserving taste and the candied shell coating around the popcorn, the crunch and taste of our delicious flavours will have you longing for another bite of this nutritious and functional food snack. Available in Cherry (Chomping Cherry) and Blueberry (Blueberry Burst).
Jams sweetened with Xylitol
We take fresh juicy fruits and add just the right amount of fresh ingredients for one of the healthiest jams you will ever taste. Sweetened with Xylitol, you will never know the difference from preserves sweetened with regular sugar. One taste and this will be a family favourite. Available in Blueberry, Raspberry, Peach, Apricot, Mountain Berry and Strawberry.
Ketchup and Sauces sweetened with Xylitol
Our ketchup is the best tasting low carb and healthiest ketchup you have ever tasted. It is made with a great tasting healthy natural sweetener called Xylitol and organic tomato paste. Our unique barbeque sauces add a hearty flavour to red meats, chicken and fish. Unlike most barbeque sauces that are filled with corn syrups and sugars, our Hickory Maple and our Honey Mustard Barbeque sauces are sugar-free and gluten-free.
Consumer Direct Segment
This will be carried out primarily via online Internet marketing that will include a combination of Websites (an e-commerce site: www.puresnax.com, numerous targeted landing page sites, and squeeze page sites), email campaigns, banner advertising, affiliate programs, search engine optimization, blogs, forums, newsletters / e-zines, resource information areas, pay per click campaigns, and follow up / thank you message add-on sales offers. We will also explore several additional marketing venues such as direct mail, catalogue sales, consumer expos (home shows, health shows, food shows, fitness, anti-aging, etc.), print media / advertorials, infomercials (TV and radio), and at various festivals, product placements, talk shows, etc.
Our target markets include the general public, obese/weight conscious persons, diabetics and those with insulin resistance, kids (especially those who are overweight/obese, diabetic, insulin resistant, challenged by tooth decay, and all kids with health-conscious parents), health and/or fitness conscious people, the elderly, especially those with weight and/or blood sugar problems.
Market Overview
There is a convergence of factors that make the Health Snack food industry one of the best investments over the coming decades.
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Aging of the Baby Boomers population
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Major advances in nutrition-related health research and understanding
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A dramatic rise in the incidence of obesity (overweight), and a better understanding of the associated health risks and ramifications
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Dramatically rising health care costs
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A growing realisation of the limitations of modern - high-tech medical approaches when dealing with chronic, unhealthy, Life-Style Induced diseases
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The general populations willingness to spend more on quality foods & nutrients that provide functional health benefits
Worldwide
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Our Co-Packers currently ship worldwide under various Private Label Programs. Our plan is to work in concert with our co-packers with the introduction of our product lines into those Private Label programs and expand upon their existing distribution channel.
Size of Market Crispy Marshmallow Squares
According to a UK article, Rice Krispie square market is a £39 million brand eaten by 3.5 million UK households. In Canada it is a $70 million market, represented by Kelloggs for $48 million, $10 million in Private Label, $5 million for Vachon and Saputo and $2 million for Little Debbie and regional players. The US market is approximately $1 Billion.
Wholesale Segment
The Companys objective is to build an ongoing revenue stream through the distribution of our brands and Private Label programs. Our strategy is to generate strong profit growth in mass retail including the drug store channels as well as vending, school, health food, boutique and mass markets.
Core Services Segment
The Core Services segment provides product design, distribution, marketing, e-commerce and other overhead resources to the Wholesale and Consumer Direct segments.
Design and Product Development
Mr. Gosselin is our principal designer and leads the vision of the Company. Products are currently in conceptualization phase, and the company intends to begin research and development at a later date. The development of our products from concept through manufacturing is engineered to be healthy also provide a great taste profile.
Sources and Availability of Raw Materials
We outsource all of our production and fulfillment in order to maintain managements focus on new product and market development. However, our commitment to the quality and consistency of our products is reflected in the selection of all aspects of production. All of our products are processed by manufacturers with which we have long standing relationships. To our knowledge, each follows the strictest Good Manufacturing Practices (GMPs) and quality controls to ensure purity in all of our products. We use facilities that meet or exceed our standards and we source some of our raw materials directly from a variety of sources.
Quality Control
Our quality control program ensures that products meet our high quality standards. Random inspections of our products occur when our products are received in our distribution center. We believe that our quality control policy is integral in maintaining the quality, consistency and reputation of our products.
Distribution
We intend to expand globally through new and established distribution channels including wholesale, retail, e-commerce, and licensing agreements to further expand global brand exposure and new opportunities to increase sales revenue.
Marketing
This will be carried out via a combination of conventional and innovative approaches ranging from trade show attendance and exhibition to aggressive online affiliate marketing to extensive networking, with follow up direct contact via our sales and marketing team.
Our target markets for Business to Business include health care providers (including massage therapists, personal trainers, dieticians, aestheticians), physicians (including MD/DOs, DCs, DDSs, OMD/Acupuncturists), restaurants, school (also sports teams and religious groups) fundraising programs, hotels, casinos, cruise ships, health food and nutritional stores, specialty retailers who carry related products, beauty salons, Spas (day and medical), health clubs, nursing homes, and Internet sites that sell related products.
PureSnax International has traditionally leveraged its relationships in the industry to develop in store promotional displays strategically located in retail stores to raise awareness about the availability of our products as well as perform on-site demos to educate the public on the benefits of eating healthier snack options.
Our marketing consists of a variety of channels including: national and international print advertising, strategic outdoor advertising, in-store advertising, digital advertising, guerilla marketing, involvement in the community and social media. This mix of media and channels is designed to support the brand's growth across diverse consumer groups and markets.
Business Strategy
The strategy is to gain adoption in markets and venues where traditionally unhealthy food and snack companies are unable to access. Through education and awareness via participation in diabetes events, health trade shows, food shows, sweet and snacks shows, and specialized hospitals we are gaining acceptance and enlightening many people to the fact that healthy eating and snacking exists, without having to sacrifice taste.
We anticipate that a majority of our resources will be positioned towards marketing and promotions up to the first year of roll out into the United States and after that time, the fruits of our efforts will convert into profitable sales. The process is to work in concert with strategic distributors, wholesalers and retailers along with essential store visits and demo programs to initiate purchase orders. In the example of Wow its not Sugar! Xylitol, once you try it and discover it has no after taste along with it being a functional food, the conversion is relatively easy even with a premium price.
We have also identified strategic acquisitions in the area of manufacturing and product development, which could compliment our product line to supplement and support our plans for explosive revenue.
Over the next five years, we anticipate that our growth strategy will focus on the following five key areas:
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Increase Global Wholesale Sales
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A delegation of our group went overseas to explore this market for our products. We visited; England, Scotland, Northern Ireland, Republic of Ireland and Spain and found overwhelming support for our products and specifically WOW! Rice Delites. This represented even an expanded opportunity based on the Current Exchange rates between the U.S. Dollar against the Sterling Pound and the Euro. There is a greater opportunity to achieve larger profits. Another delegation traveled to South Korea and South America to conduct additional market research. Once again, support for our products was overwhelming. PureSnax International, Inc., has recognized that the lowest hanging fruit is mass retail with a under the radar approach. Strong new nutritional regulations in U.S. schools, has provided Pure Snax International with a unique opportunity.
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Invest in Online Development and E-commerce Activity
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We currently offer a globally accessible transactional website, www.puresnax.com, which allows anyone with Internet access to purchase our products online. We are currently working with a website developer to make key operational advances to our website such as development of user-friendly operations and layout improvements. Further, we intend to present a greater number of products on our website and expand into further marketing techniques such as affiliate marketing and advertisement opportunities.
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Vending Machines and Schools
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PureSnax International is able to compete with the bigger snack companies by participating in markets they have difficulty to quickly access. They have a limited number of products that are able to meet the healthy guidelines established in the United States. According to kidsfoodtrends.com, there are some interesting trends that point to the enormous opportunities for marketers of Healthy Snack Foods:
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Health is a top-of-mind parental concern and is even gaining consciousness among kids
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Consumers of parenting age are trying to eat healthier and this has a trickle down effect to their kids
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Parents will increasingly opt for natural and fresh food variants for their kids
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Parents are increasingly scrutinizing product packaging to check for health information
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Kids confectionery, ice cream and savoury snacks consumption exceeds the population average
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U.S. children consumed notably more confectionery per capita than the population average in 2005
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Diversify and Expand our Product Portfolio
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We will continue to expand and strengthen our current product portfolio while exploring opportunities to diversify into new product categories within the health foods and snacks segment. We believe that diversification engages new consumer interest and enables the brand to benefit from a proactive and developing brand image while stimulating revenue from increased buyer interest and awareness of the brand. Furthermore, we anticipate that expansion of our product line will enable wholesale activity to flourish as well as increase online sales.
Our team will rely on industry specialists with varied skills and backgrounds who engage in overlapping roles and responsibilities for different segments of our business. In the next five years, we aim to increase the number of direct in-house employees to five people. Further, we intend to allocate a specific area(s) of our business strategy to a specific employee or employees and will focus on developing that employees skills in that area of responsibility. Such areas of responsibility will include sales, website and social media, design and production, marketing, public relations, administration, finance and product development. The expansion of our team will allow for focused development of all areas of our business.
Intellectual Property
The trademark Wow its not sugar! has been approved in Canada and submitted in the United States. Final approval in the United States is pending issuance of the trademark in Canada. Additionally, the company intends to file additional trademark applications as may be deemed necessary for the expansion of our business. Generally, our trademarks remain valid and enforceable so long as we continue to use the marks in commerce and the required registration renewals are filed. We consider our trademarks to be valuable assets in the marketing of our products and seek to protect them from infringement worldwide.
Employees
We currently have no employees.
Competition
The major players in the snack food industry continue to manufacture and develop products that are not remotely healthy and contain sugar or artificial sweeteners as well as being high in fat. We are pioneers in the snack industry and intend to strengthen our position through integrity and creating a high barrier to entry in terms of product design. PureSnax International will continue to expand and build product lines through different brands and private label agreements as well as continue to develop proprietary products. We do not have patents on our proprietary technology (our recipes, nor our processes) and we choose to protect this methodology by using trade secrets so that they are not easily discovered.
However, there can be no assurance that even if we do these things we will be able to compete effectively with the other companies in our industry.
Our competitive strength will depend on our ability to:
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anticipate and respond to changing consumer demands in a timely manner;
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maintain and increase favorable brand recognition;
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develop and produce high quality products that appeal to consumers;
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appropriately price our products;
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maintain the high quality of our products;
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ensure product availability;
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expand our product portfolio;
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add members to our team who possess the skills, know-how and desire to help us succeed;
Reports to Security Holders
We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commissions website at http://www.sec.gov. The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commissions Public Reference Room at 100 F Street N.E. Washington D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-732-0330. The Securities and Exchange Commission also maintains an Internet site that contains reports, proxy and formation statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission, at http://www.sec.gov.
Employees
As of June 30, 2016, we did not have any full-time or part-time employees. Our two directors and officers work as part-time consultants and devote approximately 20 hours per week to our business. We also retain consultants for the design and construction of our planned website. In the next 12 months, we intend to retain marketing and advertising consultants on a commissioned basis to assist with growing the membership of our planned website. If our financial position permits, as the business needs dictates, we may enlist certain individuals on a full or part-time salaried basis to assist with marketing, advertising, administration and data management for our business. The functions of our website will be primarily automated, and we intend to structure our operations to function with as few full-time employees as possible by outsourcing most job functions. We do not expect our staffing requirements to exceed 24 people within the first three years of operations.