Leading Brands, Inc. (NASDAQ:LBIX), announces
results for its second quarter of fiscal 2017, which ended August
31, 2017. All financial amounts are denominated in Canadian
dollars, with all financial figures rounded to the nearest $000.
The Company’s net loss from continuing operations for Q2 was
$710,000 (or $0.25 per share) versus a net loss of $949,000 (or
$0.33 per share) in Q2 of the prior year. Gross revenue for
continuing operations for Q2 2017 was $510,000, versus $568,000 in
the comparable period of last year.
Discounts, rebates and slotting fees were $156,000 in Q2 2017, a
decrease of $27,000 compared to the same period of the prior year.
Selling, General and Administrative Expenses (“SG&A”) were
$713,000 in Q2 of fiscal 2017, versus $818,000 in Q2 of the
previous year.
Gross profit margin for the quarter was 0.7%, up from (9.1%) in
the same quarter last year.
On September 18, 2017 the Company announced that it had entered
into a Definitive Arrangement Agreement with Liquid Media Group,
Inc. (“Liquid”) of Vancouver, Canada whereby LBIX will acquire 100%
of Liquid pursuant to a plan of arrangement. Existing LBIX
shareholders are anticipated to hold 22.637% and Liquid
Shareholders are anticipated to hold 77.363% of the
post-transaction entity. For these purposes, existing LBIX shares
were valued at $1.50 US.
Liquid is aggregating mature production service studios and
creating a vertically integrated studio system for producing film,
television and gaming content from inspiration to distribution.
Liquid is headquartered in Vancouver, Canada where it is
establishing its studio footprint and production hub. Liquid also
has satellite offices in both New York and Los Angeles.
Liquid is led by its Chairman, Joshua Jackson, currently a star
of the Showtime series The Affair. Krysanne Katsoolis is Liquid’s
CEO, Charles Brezer, Liquid’s CSO and Daniel Cruz is Liquid’s CFO.
More detailed information on Liquid and its management team may be
found at the company’s website: www.LiquidMediaGroup.co.
The Company anticipates that the transaction will close within
90 days of September 18, subject to all necessary approvals,
including shareholder approval. At that time, the existing LBIX
board, with the exception of Tom Gaglardi, will resign and be
replaced by Messrs. Jackson, Brezer and Cruz and Ms. Katsoolis.
Those individuals will continue their current roles as officers of
LBIX.
Company Chairman & CEO Ralph McRae said: “We are pleased to
have reached an agreement with Liquid and its management. In
addition to their impressive content, experience and connections
the principals have proven a vision to aggregate the key components
necessary to produce World-class entertainment product. We look
forward to working with them to see this transaction through to a
successful conclusion as soon as practicable.”
Liquid Chairman Joshua Jackson said: “Vancouver has long been an
industry hub, with world class talent and production services at
every level. We are excited to be able to harness all of that
ability to produce world class content.”
Liquid CEO Krysanne Katsoolis added: “The demand for content is
unprecedented and the opportunity to change the landscape in the
media business is exciting. We sincerely wish to thank Ralph McRae
and the Board of Leading Brands for their confidence in
Liquid.”
To clear the way for this transaction the Company recently
disposed of its legacy beverage assets. Financial terms were not
disclosed.
Non-GAAP Net Income (Loss) before SBC is determined as
follows:
|
|
|
|
|
|
|
|
|
|
|
Q2
2017 |
|
Q2
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(710,000 |
) |
$ |
(949,000 |
) |
$ |
(1,488,000 |
) |
$ |
(1,499,000 |
) |
Add Back SBC |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Net income (loss)
before SBC |
$ |
(710,000 |
) |
$ |
(949,000 |
) |
$ |
(1,488,000 |
) |
$ |
(1,499,000 |
) |
|
Non-GAAP Net Income (Loss) per share before SBC is
determined as follows:
|
|
|
|
|
|
|
|
|
|
|
Q2
2017 |
|
Q2
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(0.25 |
) |
$ |
(0.33 |
) |
$ |
(0.53 |
) |
$ |
(0.52 |
) |
Add Back SBC |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Net income (loss)
before SBC |
$ |
(0.25 |
) |
$ |
(0.33 |
) |
$ |
(0.53 |
) |
$ |
(0.52 |
) |
|
Pro-forma results for EBITDAS, as defined below, are
determined as follows:
|
|
|
|
|
|
|
|
|
|
|
Q2
2017 |
|
Q2
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(710,000 |
) |
$ |
(949,000 |
) |
$ |
(1,488,000 |
) |
$ |
(1,499,000 |
) |
Add Back: |
|
|
|
|
|
|
|
|
Interest, net |
|
(7,000 |
) |
|
- |
|
|
(17,000 |
) |
|
- |
|
Depreciation and
amortization |
|
32,000 |
|
|
58,000 |
|
|
63,000 |
|
|
113,000 |
|
Non-cash stock based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Non-cash income tax
expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Total Add Backs |
|
25,000 |
|
|
58,000 |
|
|
46,000 |
|
|
113,000 |
|
EBITDAS |
$ |
(685,000 |
) |
$ |
(891,000 |
) |
$ |
(1,442,000 |
) |
$ |
(1,386,000 |
) |
|
EBITDAS per share reconciles to earnings per share as
follows:
|
|
|
|
|
|
|
|
|
|
|
Q2
2017 |
|
Q2
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(0.25 |
) |
$ |
(0.33 |
) |
$ |
(0.53 |
) |
$ |
(0.52 |
) |
Add Back: |
|
|
|
|
|
|
|
|
Interest, net |
|
- |
|
|
- |
|
|
(0.01 |
) |
|
- |
|
Depreciation and
amortization |
|
0.01 |
|
|
0.02 |
|
|
0.02 |
|
|
0.04 |
|
Non-cash stock based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Non-cash income tax
expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Total Add Backs |
|
0.01 |
|
|
0.02 |
|
|
0.01 |
|
|
0.04 |
|
EBITDAS |
$ |
(0.24 |
) |
$ |
(0.31 |
) |
$ |
(0.52 |
) |
$ |
(0.48 |
) |
|
As at August 31, 2017 the Company had 2,802,412 outstanding
common shares.
About Leading Brands, Inc.Leading Brands, Inc.
(NASDAQ:LBIX) and its subsidiaries are involved in the development,
marketing, and distribution of the Company’s branded beverage
products.
Non-GAAP MeasuresAny non-GAAP financial measures referenced in
this release do not have any standardized meaning prescribed by
GAAP and are therefore unlikely to be comparable to similar
measures presented by other issuers.
EBITDAS is a non-GAAP financial measure. EBITDAS is
defined as net income (loss) before income taxes, interest expense,
depreciation and amortization and stock-based compensation.
EBITDAS should not be construed as a substitute for net income (as
determined in accordance with GAAP) for the purpose of analyzing
operating performance, as EBITDAS is not defined by GAAP.
However, the Company regards EBITDAS as a complement to net income
and income before taxes.
Forward Looking StatementsCertain information contained in this
press release includes forward-looking statements. Words such
as “believe”, “expect,” “will,” or comparable terms, are intended
to identify forward-looking statements concerning the Company’s
expectations, beliefs, intentions, plans, objectives, future events
or performance and other developments. All forward-looking
statements included in this press release are based on information
available to the Company on the date hereof. Such statements
speak only as of the date hereof. Important factors that
could cause actual results to differ materially from the Company’s
estimations and projections are disclosed in the Company’s
securities filings and include, but are not limited to, the
following: general economic conditions, weather conditions,
changing beverage consumption trends, pricing, availability of raw
materials, economic uncertainties (including currency exchange
rates), government regulation, managing and maintaining growth, the
effect of adverse publicity, litigation, competition and other risk
factors described from time to time in securities reports filed by
Leading Brands, Inc. For all such forward-looking statements, we
claim the safe harbor for forward looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995.
©2017 Leading Brands, Inc.
(table follows)
|
LEADING BRANDS, INC. |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME
(LOSS) |
(UNAUDITED) |
(EXPRESSED
IN CANADIAN DOLLARS) |
|
|
|
Three months ended |
|
|
Six months ended |
|
|
August 31, 2017 |
|
August 31, 2016 |
|
|
August 31, 2017 |
|
August 31, 2016 |
|
|
|
|
|
|
|
|
|
|
Gross Revenue |
$ |
509,901 |
|
$ |
568,118 |
|
|
$ |
949,145 |
|
$ |
994,671 |
|
Less: Discount, rebates
and slotting fees |
|
(156,441 |
) |
|
(182,746 |
) |
|
|
(250,052 |
) |
|
(330,330 |
) |
Net
Revenue |
|
353,460 |
|
|
385,372 |
|
|
|
699,093 |
|
|
664,341 |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
350,835 |
|
|
420,251 |
|
|
|
704,967 |
|
|
742,811 |
|
Operations, selling,
general & administration expenses |
|
713,281 |
|
|
818,319 |
|
|
|
1,461,689 |
|
|
1,600,953 |
|
Depreciation of
property, plant and equipment |
|
31,735 |
|
|
57,516 |
|
|
|
63,351 |
|
|
113,454 |
|
Interest, net |
|
(7,166 |
) |
|
- |
|
|
|
(16,543 |
) |
|
- |
|
Change in fair value of
derivative liability |
|
(25,661 |
) |
|
38,715 |
|
|
|
(27,868 |
) |
|
12,673 |
|
Gain on disposal of
assets |
|
- |
|
|
- |
|
|
|
1,065 |
|
|
(306,774 |
) |
|
|
1,063,024 |
|
|
1,334,801 |
|
|
|
2,186,661 |
|
|
2,163,118 |
|
Net income (loss)
before taxes from continuing operations |
|
(709,564 |
) |
|
(949,429 |
) |
|
|
(1,487,568 |
) |
|
(1,498,777 |
) |
Income tax expense |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
Net income
(loss) from continuing
operations |
|
(709,564 |
) |
|
(949,429 |
) |
|
|
(1,487,568 |
) |
|
(1,498,777 |
) |
Net income
(loss) from discontinued
operations |
$ |
(22,162 |
) |
$ |
801,505 |
|
|
$ |
(76,936 |
) |
$ |
1,645,728 |
|
Net income (loss) |
$ |
(731,726 |
) |
$ |
(147,924 |
) |
|
$ |
(1,564,504 |
) |
$ |
146,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per common share |
|
|
|
|
|
|
|
|
Continuing
operations |
$ |
(0.25 |
) |
$ |
(0.33 |
) |
$ |
(0.53 |
) |
$ |
(0.52 |
) |
Discontinued
operations |
|
(0.01 |
) |
|
0.28 |
|
|
(0.03 |
) |
|
0.57 |
|
Net basic earnings
(loss) per commonshare |
$ |
(0.26 |
) |
$ |
(0.05 |
) |
$ |
(0.56 |
) |
$ |
0.05 |
|
Diluted
earnings (loss) per common
share |
|
|
|
|
|
|
|
|
Continuing
operations |
$ |
(0.25 |
) |
$ |
(0.33 |
) |
$ |
(0.53 |
) |
$ |
(0.52 |
) |
Discontinued
operations |
|
(0.01 |
) |
|
0.28 |
|
|
(0.03 |
) |
|
0.57 |
|
Net
diluted earnings (loss) per common share |
$ |
(0.26 |
) |
$ |
(0.05 |
) |
$ |
(0.56 |
) |
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
2,802,412 |
|
|
2,817,471 |
|
|
2,802,412 |
|
|
2,838,584 |
|
Diluted |
|
2,802,412 |
|
|
2,817,471 |
|
|
2,802,412 |
|
|
2,838,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:
Leading Brands, Inc.
Tel: (604) 685-5200
Email: info@LBIX.com
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