GLG Life Tech Corporation Announces Third Quarter 2014 Financial Results


VANCOUVER, British Columbia, Nov. 14, 2014 (GLOBE NEWSWIRE) -- GLG Life Tech Corporation (TSX:GLG) ("GLG" or the "Company"), a vertically-integrated leader in the agricultural and commercial development of high-quality stevia and other natural sweeteners, announces financial results for the nine months ended September 30, 2014. The complete set of interim financial statements and management discussion and analysis are available on SEDAR and on the Company's website at www.glglifetech.com.

FINANCIAL HIGHLIGHTS AND CORPORATE DEVELOPMENTS

GLG Continues to Execute Its Revenue Growth Strategy

For the nine months ended September 30, 2014, GLG achieved revenue growth of 5% compared to the same period last year, resulting in $12.5 million in year-to-date revenue. Significantly, our international sales (sales outside of China) for the third quarter comprised 54% of third-quarter revenue, whereas international sales had comprised just 25% of 2013 third-quarter revenue. We continue to generate increased revenue numbers through our focus on a strategy of establishing relationships with international customers that have a need for ongoing deliveries of higher-purity stevia extracts, leading to recurring, higher-value revenues. While we continue to also sell a range of lower-purity stevia extracts to other China-based stevia providers and Asian customers, our international focus has markedly increased the contribution to sales and revenue growth. International sales have contributed 51% of year-to-date 2014 revenues, compared with a 29% contribution in the nine months of 2013.

GLG Prepares to Deliver on Key Luo Han Guo Contract

On July 23, 2014, GLG announced an agreement to supply a global leader in the food industry with Luo Han Guo (aka Chinese monk fruit) extract, thereby formally marking GLG's entry into the Luo Han Guo market. GLG expects to start shipping product against the contract starting in the fourth quarter of 2014. Upon full delivery under the contract, expected to complete early- to mid-2015, GLG estimates this contract alone will have added revenue equivalent to nearly 65% of all of 2013 revenues.

These first shipments will be the capstone of an extraordinary effort by GLG to turn, within the space of one year, its Luo Han Guo vision into a reality. In that short space of time, GLG has leveraged its experience with stevia agronomics to build out a comprehensive vertically integrated supply chain for Luo Han Guo, including its own Luo Han Guo growing region in Guilin province, China. And building on its leading technological expertise in the stevia extraction and refinement arena, GLG successfully converted one of its stevia production lines into a full-scale Luo Han Guo production line, using advanced processing and purification technologies. Furthermore, GLG understands that the capacity of its production line – up to 120 metric tonnes per year – gives it more processing capacity than any other Luo Han Guo producer in the world.

GLG's Naturals+ Product Sales Under Way

Since expanding our product portfolio beyond stevia (and now, Luo Han Guo) with the GLG Naturals+ line of complementary natural ingredients, we have been working on several agreements for the supply of these Naturals+ products, some of which are expected to have a significant effect on future revenues. Our Naturals+ product line is premised on sourcing high-quality natural and functional food ingredients from China at attractive prices through a unique certification program designed to address the concerns of international food and beverage companies. Our deep familiarity with international food safety standards and supply chain management has helped us establish strong relationships with a network of Chinese suppliers managed under our eight-step supplier review program, which gives our customers the assurances they require to source these important ingredients through GLG.

After shipping our first Naturals+ order this past quarter, we look forward to securing agreements for the further supply of Naturals+ ingredients as the year progresses. This product line represents not only an additional source of potentially significant revenues, but the complementary nature of the Naturals+ products with our core sweetener products is expected to open up new opportunities in the stevia and Luo Han Guo spaces, and vice-versa.

GLG Leads the Industry in GRAS Certifications

In the third quarter, we announced two additional filings of Generally Recognized as Safe ("GRAS") notifications to the United States Food and Drug Administration ("FDA"), and receipt of one Letter of No Objection from the FDA for an earlier notification. In the third quarter alone, we filed GRAS notifications for both our high-purity Rebaudioside C and high-purity Rebaudioside D stevia extract products, and our receipt of the FDA's Letter of No Objection completed the GRAS process for our Rebaudioside M stevia extract products. We know of no other company that can claim GRAS status for all three of these "exotic" steviol glycosides.

The notifications and letter each represents many months of work to develop the product and all required documentation under the FDA-administered GRAS process to demonstrate that each extract meets the FDA's criteria for safety. Each study included in-depth consultation with GRAS Associates, LLC, who convened an independent panel of scientists to spearhead the safety assessments.

GLG has the largest number of stevia products certified under the GRAS process including high-purity Rebaudioside A and other Rebaudioside A products, high-purity stevioside, high-purity Rebaudioside C, high-purity Rebaudioside D, and high-purity Rebaudioside M, as well as Luo Han Guo extracts of various purities. These many submissions and certifications demonstrate our commitment to ensuring that our full complement of naturally sourced sweetener products is compliant with the FDA GRAS program.

Additional Third Quarter Financial Highlights

Our gross margin for the nine months ended September 30, 2014, improved significantly over the comparable period in 2013, increasing 12 percentage points to negative 18%. Our gross margin for the three-month period ended September 30, 2014, was negative 55% compared to a negative 32% for the three months ended September 30, 2013, or a reduction of 23 percentage points from the previous year. While the gross margins in both the three- and nine-month periods were negatively affected by capacity charges resulting from idle facilities, the gross margin for the three-month period was further impacted by higher production costs during that period.

Our loss per share in the third quarter 2014, improved by 45% to a loss per share of 20 cents compared to the third quarter 2013 (loss of 37 cents per share).

Our loss per share for the nine months ended September 30, 2014, improved by 41% to a loss per share of 44 cents compared to the first nine months in 2013 (loss of 74 cents per share).

Highlights of Non-GAAP Financial Measures

For the three months ended September 30, 2014, the gross margin before the effect of capacity charges was negative 32%, compared to negative 16% for the comparable period in 2013. However, for the nine months ended September 30, 2014, gross margin before the effect of capacity charges was just slightly negative at negative 4%, compared to negative 16% for the comparable period in 2013.

FINANCIAL AND OPERATIONAL RESULTS

As noted above, the complete set of interim financial statements and management discussion and analysis are available on SEDAR and on the Company's website at www.glglifetech.com.

Results from Operations

The following results from operations have been derived from and should be read in conjunction with the Company's annual consolidated financial statements for 2013 and the condensed interim consolidated financial statements for the nine-month period ended September 30, 2014.

         
In thousands Canadian $, except 3 Months Ended September 30 % Change 9 Months Ended September 30  % Change
per share amounts 2014 2013   2014 2013  
Revenue $3,775 $5,196 (27%) $12,447 $11,884 5%
Cost of Sales  $5,854 $6,858 (15%) $14,705 $15,448 (5%)
 % of Revenue 155% 132% 23% 118% 130% (12%)
Gross Profit (Loss) ($2,078) ($1,662) 25% ($2,258) ($3,564) (37%)
 % of Revenue (55%) (32%) (23%) (18%) (30%) 12%
Expenses  $2,268 $1,842 23% $6,553 $7,112 (8%)
 % of Revenue 60% 35% 25% 53% 60% (7%)
Loss from Operations  ($4,346) ($3,503) 24% ($8,811) ($10,677) (17%)
 % of Revenue (115%) (67%) (48%) (71%) (90%) 19%
Other Income (Expenses) ($2,445) ($10,834) (77%) ($5,728) ($13,669) (58%)
 % of Revenue (65%) (209%) 144% (46%) (115%) 69%
Net (Loss) before Income Taxes  ($6,791) ($14,338) (53%) ($14,539) ($24,346) (40%)
 % of Revenue (180%) (276%) 96% (117%) (205%) 88%
Net (Loss) ($6,792) ($12,480) (46%) ($14,573) ($22,999) (37%)
 % of Revenue (180%) (240%) (25%) (117%) (194%) (40%)
Net (Loss) from continuing operations ($6,792) ($14,338) (53%) ($14,573) ($24,347) (40%)
 % of Revenue (180%) (276%) 96% (117%) (205%) 88%
Net gain (loss) from discontinued operations  $0 $1,857 (100%) $0 $1,348 (100%)
 % of Revenue 0% 0% 0% 0% 0% 0%
Loss per share (LPS, Basic & Diluted) ($0.20) ($0.37) (45%) ($0.44) ($0.70) (38%)
Loss per share from continuing operations (LPS, Basic & Diluted) ($0.20) ($0.43) (53%) ($0.44) ($0.74) (41%)
Loss per share from discontinued operations (LPS, Basic & Diluted) $0.00 $0.06 (100%) $0.00 $0.04 (100%)
Other Comprehensive Income (Loss) from continuing operations $2,129 ($1,824) (217%) $283 $2,721 (90%)
 % of Revenue 56% (35%) 92% 2% 23% (21%)
Other Comprehensive Income (Loss) from discontinued operations $0 $6 (100%) $0 $68 (100%)
 % of Revenue 0% 0% (%) 0% 1% (1%)
Total Comprehensive Income (Loss) ($4,663) ($14,299) (67%) ($14,289) ($20,210) (29%)
 % of Revenue (124%) (275%) 152% (115%) (170%) 55%

Revenue

Revenue for the three months ended September 30, 2014, was $3.8 million, a decrease of 27% compared to $5.2 million in revenue for the same period last year. 

This 27% decrease in sales comparing the third quarter in 2014 to the third quarter in 2013 was due to a 55% decrease in sales of products in China compared to the prior year. International sales in the third quarter of 2014 increased by 59% compared to the prior period, reflecting the Company's continuing strategy of moving away from sales of lower-purity stevia extract sales to other China-based stevia providers, instead pursuing international customers that generate monthly recurring revenues from higher-purity stevia extracts. International sales have contributed 54% of the third quarter 2014 sales compared to only 25% for the comparable period in 2013.

Revenue for the nine months ended September 30, 2014, was $12.5 million, an increase of 5% compared to $11.9 million in revenue for the same period last year. 

This 5% increase in sales comparing the first nine months in 2014 to the first nine months in 2013 was driven by higher volumes of products sold internationally compared to the prior year. The main revenue increase came from international sales for the nine month period in 2014 compared to the prior period, reflecting the Company's continuing strategy of moving away from sales of lower-purity stevia extract sales to other China-based stevia providers, instead pursuing international customers that generate monthly recurring revenues from higher-purity stevia extracts. International sales were up 89% for the nine months ended September 30, 2014. International sales have contributed 51% of year to date 2014 revenues compared to only 29% for the comparable period in 2013. China revenues for the nine months ended in 2014 were down 29% from the comparable period.

Cost of Sales

For the three months ended September 30, 2014, the cost of sales was $5.9 million compared to $6.9 million in cost of sales for the same period last year (a $1.0 million or 15% decrease). Cost of sales as a percentage of revenues was 155% compared to 132% in the prior period, an increase of 22 percentage points. The cost of sales as a percentage of revenue was higher for the three months period ended September 30, 2014, compared to prior year due to the impact of (1) higher production costs and (2) higher capacity charges. Capacity charges charged to the cost of goods sold ordinarily would flow to inventory and is the largest factor on reported gross margin. Only two of GLG's manufacturing facilities were operating during the quarter and capacity charges of $0.9 million were charged to cost of sales (representing 15% of cost of sales) compared to $0.8 million charged to cost of sales in 2013 (representing 12% of cost of sales). 

Cost of sales for the nine months ended September 30, 2014, was $14.7 million compared to $15.4 million for the same period last year or a decrease of 5%.   Cost of sales as a percentage of revenues was 118% compared to 130% in the prior period, a decrease of 12 percentage points. The cost of sales as a percentage of revenue was lower for the nine months period ended September 30, 2014, compared to prior year due to the impact of (1) lower material costs and (2) lower capacity charges. Capacity charges charged to the cost of goods sold ordinarily would flow to inventory and the largest factor on reported gross margin. Only two of GLG's manufacturing facilities were operating during the nine months ended September 30, 2014, and capacity charges of $1.7 million were charged to cost of sales (representing 12% of cost of sales) compared to $1.7 million charged to cost of sales in 2013 (representing 11% of cost of sales).

Gross Profit (Loss)

Gross loss for the three months ended September 30, 2014, was $2.1 million, an increase of $0.4 million over $1.7 million in gross loss for the comparable period in 2013. The gross profit margin for the three-month period ended September 30, 2014, was negative 55% compared to a negative 32% for the three months ended September 30, 2013, or a reduction of 23 percentage points from the previous year. The gross margin for the three-month period ended September 30, 2014, was impacted by (1) higher production costs and (2) capacity and other fixed charges to the cost of goods sold. These capacity charges ordinarily would flow to inventory; however, only two of GLG's manufacturing facilities were operating during the quarter and capacity charges of approximately $0.9 million were incurred (compared to $0.8 million in 2013).

Gross loss for the nine months ended September 30, 2014, was $2.3 million, a decrease of 37% over $3.6 million in gross loss for the comparable period in 2013.  The gross profit margin for the nine-month period ended September 30, 2014, was negative 18% compared to negative 30% for the nine months ended September 30, 2013, or an improvement of 12 percentage points from the previous year. The gross margin for the nine-month period ended September 30, 2014, was impacted by (1) general price increases for stevia extracts for most of the Company's customers (international and China), (2) generally lower material costs incurred during the nine months and (3) capacity and other fixed charges to the cost of goods sold for the nine-month period ended September 30, 2014. As noted above, these capacity charges ordinarily would flow to inventory, but instead, capacity charges of approximately $1.7 million were incurred (compared to $1.7 million in 2013).

Selling, General, and Administration Expenses

Selling, General and Administration ("SG&A") expenses include sales, marketing, general, and administration costs ("G&A"), stock-based compensation, and depreciation and amortization expenses on G&A fixed assets. A breakdown of SG&A expenses into these components is presented below:

         
In thousands Canadian $ 3 Months Ended September 30 % Change 9 Months Ended September 30 % Change
  2014 2013   2014 2013  
G&A Exp $1,833 $1,394 31% $4,954 $5,869 (16%)
Stock Based Compensation Exp $374 $236 59% $1,272 $777 64%
Amortization Exp $60 $212 (71%) $328 $466 (30%)
Total  $2,268 $1,842 23% $6,553 $7,112 (8%)

G&A expenses for the three months ended September 30, 2014, was $1.8 million compared to $1.4 million in the same period in 2013 or a $0.4 million increase year-over-year. The majority of the increase was due to an increase in salary and office-related expenses of $0.2 million related to higher sales activities and $0.1 million research and development expenses related to the Company's GRAS program.

G&A for the nine months ended September 30, 2014, was $5.0 million compared to $5.9 million in the same period in 2013 or a $0.9 million decrease year-over-year. G&A increases were seen in consulting fees, salaries and wages ($0.2 million), business taxes ($0.1 million), research and development ($0.2 million) and rent ($0.1 million); offsetting these increases was a $1.5M decrease in impairment charges related to accounts receivable.

Net Loss Attributable to the Company

         
In thousands Canadian $ 3 Months Ended September 30 % Change 9 Months Ended September 30 % Change
  2014 2013   2014 2013  
Net Loss ($6,792) ($12,480) (46%) ($14,573) ($22,999) (37%)
% of revenue (180%) (276%) 96% (117%) (205%) 88%

For the three months ended September 30, 2014, the Company had a net loss attributable to the Company of $6.8 million, a decrease of $5.7 million or a 45% improvement over the comparable period in 2013 ($12.5 million loss). The decrease in net loss was driven by (1) a decrease in other expenses of $8.4 million, and (2) a decrease in loss from discontinued operations of $1.9 million. These decreases were offset by (3) a decrease in gross profit of $0.4 million and (4) an increase in G&A expenses of $0.4 million. 

For the nine months ended September 30, 2014, the Company had a net loss attributable to the Company of $14.6 million, a decrease of $8.4 million over the comparable period in 2013 ($23.0 million loss). The decrease in net loss was driven by: (1) an increase in gross profit of $1.3 million, (2) a decrease in SG&A expenses of $0.9 million and (3) a decrease in other expenses of $7.9 million. These gains were offset by the reduction in a decrease in loss from discontinued operations of $1.3 million.

NON-GAAP Financial Measures

Gross Profit (Loss) before capacity charges

This non-GAAP financial measure shows the gross profit (loss) before the impact of idle capacity charges are reflected on the gross profit margin. GLG had only 50% of its production facilities in operation in the first nine months of 2014 and idle capacity charges have a material impact on the gross profit (loss) line in the financial statements. 

Gross Profit (Loss) before capacity charges for the three months ended September 30, 2014, was negative $1.2 million or negative 32% of third quarter revenues, compared to negative $0.8 million or negative 16% of third quarter revenues for the same period in 2013. Gross Profit (Loss) before capacity charges declined from the comparable period due to higher production costs.

Gross Margin before capacity charges for the nine months ended September 30, 2014, was negative $0.5 million or negative 4% of nine month revenues, compared to negative $1.9 million or negative 16% of nine month revenues for the same period in 2013. Gross Profit (Loss) before capacity charges improved from the comparable period due to the sourcing of lower-cost stevia extract materials used during the nine months period ended September 30, 2014, higher production volumes for the nine months ended September 30, 2014, compared to the prior year and higher pricing implemented during nine months ended September 30, 2014.

Earnings before Interest Taxes and Depreciation ("EBITDA") and EBITDA Margin

Consolidated EBITDA

EBITDA for the quarter ended September 30, 2014, was negative $3.0 million or negative 78% of revenues, compared to negative $1.0 million or negative 19% of revenues for the same period in 2013. EBITDA declined by 59 percentage points for the three-month period ended September 30, 2014, driven by higher production costs in the third quarter.

EBITDA for the nine months ended September 30, 2014, was negative $4.9 million or negative 39% of revenues compared to negative $6.0 million or negative 51% of revenues for the nine months ended September 30, 2013. EBITDA improved by 12 percentage points for the nine-month period ended September 30, 2014, driven by overall lower-cost stevia extract materials used in the nine months ended September 30, 2014 as well as production cost improvements experienced during the period as production volumes improved compared to the previous year and due to the general price increases implemented during the second quarter of 2014 for the majority of its customers (International and China).

         
In thousands Canadian $ 3 Months Ended September 30 % Change 9 months Ended September 30 % Change
  2014 2013   2014 2013  
Loss Before Income Taxes and Non-Controlling Interests ($6,792) ($12,480) -46% ($14,573) ($22,999) (37%)
Add:            
Provision for prepaids   354  --  --  354  --  0%
Proision for inventory write-off   (43)  8,614 (100%)  (1,060)  8,614 (112%)
Provision for receivables  ($297)  --  0% ($297) $0 0%
Net Interest Expense  $1,701 $1,684 1% $5,434 $5,259 3%
Depreciation and Amortization  $1,084 $507 114% $3,440 $2,703 27%
Foreign Exchange Loss (Gain)  $663 $373 78% $583 ($367) (259%)
Non-Cash Share Compensation  $374 $295 27% $1,272 $777 64%
EBITDA  ($2,956) ($1,008) 193% ($4,848) ($6,013) (19%)
EBITDA as a % of revenue  (78%) (19%) 304% (39%) (51%) (23%)

Liquidity and Capital Resources

     
In thousands Canadian $ 30-Sep-14 31-Dec-13
Cash and Cash Equivalents  $3,248 $5,133
Working Capital  ($52,192) ($29,445)
Total Assets  $81,704 $87,796
Total Liabilities  $108,089 $101,164
Loan Payable (<1 year)  $52,122 $40,663
Loan Payable (>1 year)  $12,519 $23,010
Total Equity ($26,385) ($13,367)

The Company continues to progress with the following measures to manage cash flow of the Company: paying down short-term loans, reducing accounts payable and negotiating with creditors for extended payment terms, working closely with the banks to manage their loans, and reducing operating expenditures including general and administrative expenses and production-related expenses. During the nine months ended September 30, 2014, total loans payable increased from $63.6 million as of December 31, 2013, to $64.6 million or an increase of $1.0 million. The largest impact on the increase in the Company's negative working capital is the change in classification of $10.5 million longer term debt as of December 31, 2013 to short term debt as of September 30, 2014. The Company is currently also exploring the possible sale of certain non-operating facilities as another possibility to address the negative working capital situation.  

Cash Flows:  Three months ended September 30, 2014 and 2013

Cash generated from operating activities was $2.3 million in the three-month period ended September 30, 2014, compared to $1.4 million generated by operating activities in the same period of 2013. Cash generated by operating activities increased by $0.9 million year-over-year. (1) Cash generated from operations prior to changes in non-cash working capital is $0.2 million lower than the same period last year, and (2) cash generated from non-cash working capital was $2.8 million higher in the current period compared to the same period in 2013. (3) Lastly cash from discontinued operations in 2013 generated an additional $1.8 million in cash compared to $nil in the current period.  The $2.8 million higher cash generated from non-cash working capital in the three months ended September 30, 2014, compared to the comparative 2013 period, was due to changes in the increase in the use of accounts payable, advances to related parties and interest payable of $4.3 million, (2) the decrease in cash use for prepaid expenses of $0.1 million; and these were offset by (3) the decrease in cash generated from accounts receivable of $1.4 million and (4) the decrease in cash generated by inventory of $0.2 million.

Cash used by investing activities was $0.7 million during the third quarter of 2014 related to required plant modifications for its facility to process Luo Han Guo extract, compared to cash used by investing activities of $nil million in the same period in 2013.  

Cash generated from financing activities was $0.2 million in the third quarter of 2014 compared to cash used in financing of $1.8 million in the same period in 2013. The increase of cash from financing of $2.0 million was primarily driven by the net decrease in repayments of short term loans of $1.0 million which was offset by an increase in financing from related party loans of $1.0 million.

Cash Flows:  Nine months ended September 30, 2014 and 2013

Cash generated from operating activities was $0.5 million in the nine-month period ended September 30, 2014, compared to $2.3 million generated by operating activities in the same period of 2013. Cash generated from operating activities decreased by $1.8 million year-over-year. (1) Cash used in operations prior to changes in non-cash working capital is $0.1 million higher than the prior period, and (2) cash generated from non-cash working capital was $nil million change in the current period compared to the same period in 2013. (3) Lastly cash from discontinued operations in 2013 generated an additional $1.8 million in cash.   The $nil million change cash generated from non-cash working capital in the nine months ended September 30, 2014, compared to the comparable 2013 period, was due to changes in (1) the increase in the use of accounts payable, advances to related parties and interest payable of $9.3 million, (2) the increase in cash use for prepaid expenses of $0.7 million and (3) the decrease in cash from taxes recoverable of $0.2 million; these were offset by (4) the decrease in cash generated from accounts receivable of $6.2 million, (5) the decrease in cash generated by inventory of $3.5 million.

Cash used by investing activities was $0.8 million during the first nine months of 2014 related to required plant modifications for its facility to process Luo Han Guo extract, compared to cash used by investing activities of $0.1 million in the same period in 2013.  

Cash used in financing activities was $0.6 million in the nine months ended September 30, 2014, compared to cash used in financing activities of $0.9 million in the same period in 2013.The decrease of cash used in financing of $0.3 million was primarily driven by the net decrease in repayments of short term loans of $3.1 million which was offset by an increase in financing from related party loans of $2.8 million.

Capital Structure

Outstanding Share Data as at the date of this MD&A:

   
Common Shares Issued   37,758,336
Reserved For Issuance   
Warrants   1,154,494
Stock Options   2,711,755
Total Reserved For Issuance   3,866,249
Fully Diluted Shares   41,624,585

MARKET OUTLOOK

The overall stevia harvest for 2014 has been in full swing, and GLG notes that this year's harvest appears to be markedly different from last year's. Leaf prices have gone up significantly – in some cases doubled over last year's prices. The leaf in general has been of average quality, and farmers have also increased impurities in leaf batches to inflate prices. Some of GLG's competitors have been paying these higher prices.   

In response to these market conditions, GLG has been very selective in its leaf purchasing in order to obtain higher quality leaf with fewer impurities. Our focus has been on buying back leaf originating from our H3 seed and H4 seedlings from farmers. We waited until we could buy back that leaf, in a managed fashion, from those same farmers. 

This year's leaf market appears to be virtually the inverse of market conditions in 2012 to 2013. Rather than a glut of leaf supply, prices depressed 30% to 50%, and a buyer's market, now the opposite is true. Leaf supply is limited, leaf prices are up, it is now a supplier's market, and end product pricing is up some 30% to 50%. The market is driven by leaf prices, and is now driven by too much demand chasing limited supply. This has come about in part because end customers have preferred to purchase extract and refined products on the spot market rather than enter longer-term supply agreements.  Without more definitive end customer commitments, producers were wary of overplanting and the result is the more restrictive leaf market we see today. 

To better manage and moderate these conditions, with the dangers of playing in the spot market now apparent to stevia extract buyers, GLG plans to work closely with its customers for the upcoming planting year, with the goal of establishing contractual commitments for product delivery. GLG is also working closely with farmers to arrange more definitive planting commitments. These contracts and commitments should form the basis for planting greater amounts of GLG's patented high Reb-A H3 and H4 leaf. In this way, GLG aims to expand, in a controlled fashion, the presence of its superior leaf and thereby give its customers a better alternative. 

Indeed, GLG is in an excellent position to expand the supply of high quality stevia leaf in China, due to its large stock of H3 seed available for 2015.  Seed technology is highly scalable and lower cost than the traditional seedling approach; it is 80% less expensive for farmers to use seed instead of buying seedlings.  GLG's H3 seed and H4 seedlings grow plants that are 40% to 50% larger than the stevia plants typically available in China.  These more abundant plants and lower farming costs, when combined with more definite customer commitments to undergird increased planting, should be a real win-win-win for GLG, its customers, and its farmers.

Regarding Luo Han Guo, as noted above, GLG expects to start shipping purified Luo Han Guo extract under the contract in the fourth quarter of 2014. Moreover, GLG sees strong customer demand generally for Luo Han Guo products. It has already been successful in expanding the agricultural market for Luo Han Guo, and with the benefit of having the largest production capacity in the industry, GLG believes it is well positioned to further establish itself as a significant player in the Luo Han Guo market. In doing so, GLG will have successfully diversified its revenue base across two zero-calorie natural sweeteners.

GLG continues to see strong and growing customer demand for natural sweetener products worldwide, including stevia and Luo Han Guo. Health organizations and governments continue their press to reduce sugar intake, as studies regularly report health concerns linked to that sugar intake levels.  As new studies are released and new snack and soda taxes implemented, food and beverage companies continue to look for ways to reduce ways to reduce sugar intake, which bodes well for both stevia and Luo Han Guo markets. These zero-calorie sweetener products, with their natural and healthy profile, remain prime contenders to displace sugar and grow their respective market shares.

About GLG Life Tech Corporation

GLG Life Tech Corporation is a global leader in the supply of high-purity stevia extracts, an all-natural zero-calorie sweetener used in food and beverages. GLG's vertically integrated operations cover each step in the stevia supply chain including Non-GMO stevia seed breeding, natural propagation, stevia leaf growth and harvest, proprietary extraction and refining, marketing and distribution of the finished product. GLG has similarly positioned itself, through parallel vertically integrated luo han guo operations, to be a leader in the supply of high-purity luo han guo extracts. Additionally, to further meet the varied needs of the food and beverage industry, GLG has launched its Naturals+ product line, enabling it to supply a host of complementary ingredients reliably sourced through its R8 supplier network in China. For further information, please visit www.glglifetech.com.

Forward-looking statements: This press release contains certain information that may constitute "forward-looking statements" and "forward looking information" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Such forward-looking statements include, without limitation, statements evaluating the market, statements regarding the potential demand for stevia and other products and general economic conditions and discussions of future-oriented costs and expenditures. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

While the Company has based these forward-looking statements on its current expectations about future events, the statements are not guarantees of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors include amongst others the effects of general economic conditions, consumer demand for our products and new orders from our customers and distributors, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgments in the course of preparing forward-looking statements. Specific reference is made to the risks set forth under the heading "Risk Factors" in the Company's Annual Information Form for the financial year ended December 31, 2013. In light of these factors, the forward-looking events discussed in this press release might not occur.

Further, although the Company has attempted to identify factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

As there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements, readers should not place undue reliance on forward-looking statements.



            

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