Tickers: PINX:NSPDF, XTSX:NSP
Tags: #Biotechnology, #MedicinalMarijuana
VANCOUVER, British Columbia - TheNewswire - June 16, 2020 -- Naturally Splendid Enterprises Ltd. ("Naturally Splendid") (TSXV:NSP) (OTC:NSPDF) (Frankfurt:50N) announces its audited financial results for the year ended December 31, 2019. All amounts are in Canadian dollars and are prepared in accordance with International Financial Reporting Standards.
Naturally Splendid recorded a net loss and comprehensive loss for the year of $7,030,070 during the year ended December 31, 2019, compared to a loss of $1,611,361 during the year ended December 31, 2018. The increase in net loss and comprehensive loss was attributed to increase in operating costs such as facility expansion, new production employees and investor relations programs. The Company's change year over year is significantly higher from 2018 as there was the sale of POS BPC Manufacturing Corp. which provided for a gain on sale of $5,071,223 in 2018. There was an increase in Gross Profit Margins of $398,676 comparatively, offset by an increase in selling and distribution costs of $1,086,661 and an decrease in administrative expenses of $843,284 which was related to the Company's adoption of IFRS 16 for operating leases to be capitalized and the reduction in accounting and cannabis permits. In addition, the Company performed annual impairment tests on certain intangible assets and property and equipment which lead to further loss of $2,051,438 in 2019. The Company revaluated contingent consideration payable of $965,000. The increases in sales, gross margins and expenses are mainly due to the addition of the contract manufacturing clients in 2019.
Naturally Splendid recorded sales of $3,037,512 during the year ended December 31, 2019, compared to $2,073,776 in for the year ended December 31, 2018. During the year ended December 31, 2019, the Company's sales increased by approximately $964,000 from the comparative period. The Company continued to expand its private label bars and bites business by approximately $912,000 and other branded products decreased by approximately $21,000. Branded hemp products decreased by approximately $588,000 as the Company focused more on its new Natera Sport products which expanded by approximately $661,000.
Cost of Sales during the year ended December 31, 2019 was $2,114,712 compared to $1,549,652 in 2018. The Company significantly changed its sales mix when compared to 2018 with a reduction of export bulk seed sales, which, sold at a lower gross margin percentage, thus the year ended December 31, 2019 provided better margins due to the minimal volume of bulk seed sales. The Company is now focused on its higher margin products and new commercial opportunities. The addition of NHSP did not materially impact the cost of sales for the year ended December 31, 2019.
Gross profits for the year ended December 31, 2019 was $922,800 (30.4% of sales) compared to $524,124 (25.3%) for the year ended December 31, 2018.
Statements of Loss Data
Cost of Sales
Other Income (Loss)
Deferred Income Tax
CEO Mr. J. Craig Goodwin states, "2019 saw the Company solidify itself as a premium food manufacturing facility even though presented with a number of challenges that we persevered through including changing management at the senior level. The Company made the decision to bring previous management back into senior roles. In particular I resumed the role as CEO and Company co-founder and Bryan Carson increased his role, adding the position of CFO to his duties as Vice President of Operations.
Under this new management, the decision was made to focus on revenue generating divisions and to suspend or eliminate operations that were not generating significant revenue or had the opportunity to do same in the near term.
Naturally Splendid has always been a company whose mission is to provide health and wellness products to the public. Focus will be directed to the plant-based nutrition market which has been outpacing more traditional retail channels and it is this market that we have strategically positioned the Company for. In this regards the Company suspended all cannabis extraction and cannabis edible opportunities to direct our focus on the rapidly growing plant-based diet market, through our Safe Quality Food Level 2 food manufacturing facility.
Significant investment was made in the SQF2 food manufacturing facility including upgrading the facility, adding more production capacity, while also investing in expanding our Quality Control and R&D Departments. Facility upgrades took place throughout the last quarter which limited production capacity during construction. We are confident the short-term challenges of a temporary compromised production capacity, as well as the additional investment in personnel, will reap benefits moving forward.
Our Safe Quality Food Level 2 (SQF2) certified food manufacturing facility continues to be the cornerstone to entering the increasingly popular plant-based food market. Naturally Splendid, through our 100% owned Prosnack Natural Foods Division (Prosnack), produces a variety of nutritional bars and bites, the vast majority which are plant-based.
Prosnack generates revenue through two diverse yet complimentary revenue streams. Contract manufacturing represents 57 % of revenue, while the remaining 43% can be attributed to Company Brands such as Natera(TM) Sport, Elevate Me(TM) and Woods Wild Bar(TM).
Our Company brands continue to grow, with successful product launches that include the Natera Sport KEY-TO-LIFE keto friendly bar, that has been sold in over 2,000 retail locations. The Company has also gained recognition in the sports nutrition and supplement market with the launch of the Natera Sport Bites, as well as the launch of the Company's plant-based sports supplement, Natera Sport ProCurc 30.
In regards to contract manufacturing, the company has secured significant clients in both the food service and retail sectors and continues to attract much attention from perspective clients. Due to non-disclosure agreements, several of our existing contract manufacturing clients, as well as clients with products in development, cannot be disclosed.
In closing, the Company believes plant-based foods and supplements have never been in higher demand and we expect this trend to accelerate and we will be in the best position to capitalize on this opportunity with the investments we've made.
NSE operates a Safe Quality Food Level 2 certified food manufacturing facility just outside Vancouver, BC in Canada. We have established numerous healthy, functional foods under recognized brands such as Natera Sport(TM), Natera Hemp Foods, CHII (TM), Elevate Me(TM) and Woods Wild Bar. The Company has a myriad of new products and line extensions under development that are approaching launch. NSE has also developed proprietary technologies for the extraction of high demand, healthy omega 3 and 6 oils from hemp. (NSE sales revenues for the first half 2019 exceeded FY2018). NSE is the current "go-to" manufacturer for healthy, functional food products and ingredients focusing on plant-based ingredients. The Company provides contract manufacturing services for many global healthy food companies, private labelling a wide variety of nutritional food products destined for global healthy food markets.
On Behalf of the Board of Directors
Mr. J. Craig Goodwin
Naturally Splendid Enterprises Ltd.
(NSP - TSX Venture; NSPDF - OTCQB; 50N Frankfurt)
#108-19100 Airport Way
Pitt Meadows, BC, V3Y 0E2
Office: (604) 465-0548
Fax: (604) 465-1128
Information set forth in this news release contains forward-looking statements that are based on assumptions as of the date of this news release. These statements reflect management's current estimates, beliefs, intentions and expectations. They are not guarantees of future performance. Naturally Splendid cautions that all forward looking statements are inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond Naturally Splendid's control including, Naturally Splendid's ability to compete with large food and beverage companies; sales of any potential products developed will be profitable; sales of shelled hemp seed will continue at existing rates or increase; the ability to complete the sales of all bulk hemp seed purchase orders; and the risk that any of the potential applications may not receive all required regulatory or legal approval. Accordingly, actual and future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. Except as required under applicable securities legislation, Naturally Splendid undertakes no obligation to publicly update or revise forward-looking information.
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