Naturally Splendid Enterprises Ltd. (“Naturally Splendid”) (FRANKFURT:50N) (TSXV:NSP) (OTC:NSPDF) is pleased to announce its financial results for the third quarter ended September 30th , 2017. All amounts are in Canadian dollars and are prepared in accordance with International Financial Reporting Standards.
Naturally Splendid recorded sales of $315,702 and $1,384,651 during the three and nine months ended September 30, 2017, compared to $1,235,740 and $6,333,620 in 2016. This revenue decrease was due to significantly lower sales of bulk hemp seed to South Korea. Retail sales were steady and online sales were higher. Operations at the POS BPC facility were intermittent, though higher than in early 2016 as there were no sales from BPC in the first quarter of 2016. In 2016, the Company initiated sales of bulk product to South Korea. Korean at a strong pace, peaking in Q2 and reducing during the second half of 2016 due to limitations at the Company’s contract processor and market factors. During 2017, the international bulk sales market has been highly price competitive and margins continue to shrink. The Company wrote down its inventory value by $498,965 in 2017 to reflect the lower international prices on bulk hemp seeds and other factors.
Cost of Sales during the three and nine months ended September 30, 2017 was $280,547 and $1,078,851 respectively, compared to $969,160 and $4,390,304 in 2016. The Company significantly changed its sales mix in 2017 with a reduction of over $5 million of export bulk seed sales, which, since the second quarter of 2016, have been generally sold at a lower gross margin percentage. Profit margins on bulk sales continued to trend lower in 2017 due to an increasingly competitive market. Gross profits during the three and nine months ended September 30, 2017 was $35,155 (11.1% of sales) and $305,800 (22.1%) compared to $266,580 (21.6%) and $1,943,316 (30.7%) in 2016 when the Company was able to realize some unusually high margins on its bulk export sales. In 2017, the Company is focused on its higher margin products and new commercial opportunities, both domestically and in new international markets.
|Three months ended||Nine months ended|
|Sept. 30, 2017||Sept. 30, 2016||Sept. 30, 2017||Sept. 30, 2016|
|Loss from operations||(1,386,494)||(713,655)||(3,426,363)||(331,446)|
|Basic and diluted loss per share||(0.02)||(0.01)||(0.04)||(0.01)|
Naturally Splendid CEO Dave Eto states, ” While this quarter is below our sales expectations, we have focussed most of our energies on growing sales in existing and new markets. Highlights include;”
- – Formalizing and securing the working relationship with a large Australian distributor to introduce the NATERA(R) brand in Q4 with a variety of standardized and novel products to 27 million people.- Presenting the NATERA(R) brand to large Canadian retail and distribution accounts through the extensive contacts of Alan Maddox.
– Finalizing the PROsnack acquisition and integrate both NSE and PROsnack to leverage resources and bring cost savings to the company.
– Introduce hemp protein isolate to the food and beverage sectors which is a sustainable and nutritionally dense plant-based protein that will compete with soy, whey and pea proteins.
Third Quarter Overview
- – Japan – as per the November 6, 2017 news release, NSE is anticipating final approval for four CBD capsule products from the Japanese government. We will expedite shipping upon approval notice. NSE has begun developing the next set of products for this market working with the Ambarii technology as disclosed in previous news releases.- Germany – a German based distributor, Soletek GmbH (“Soletek”) to distribute the 100% owned NATERA(R) hemp and superfood retail line to the German Marketplace. An initial purchase order has been shipped to Soletek and is selling on Amazon to domestic customers.
– Australia – in the final stages of securing a container of NATERA(R) branded hemp seed and protein to this market. As of November 12, 2017, Australia will accept the importation of hemp products and NATERA hopes to be part of this first wave of new products to market. In anticipation of Australia’s new importation regulations, NSE strategically shipped a container of NATERA(R) branded products valued at approximately, $140,000 CDN to Australia on November 10th, 2017. Our goal is obtaining recurring shipments with our new distributor alliance. Sales will begin to reflect in Q4 2017.
– NATERA(R) domestic – we have increased to over 55 Overwaitea Food Group stores in BC, up from 37 last quarter. This along with Urban Fare, Donald’s Markets and IGA stores is a focus to building NATERA(R) brand presence in local communities and this list continues to grow each week.
– Alan Maddox has connected with national distributors and retailers working towards securing product listings for NATERA(R), CHII(TM) and PawsitiveFX(TM) brands to compliment his existing Elevate Me(TM) brand sales. It is anticipated NSE will have new accounts in Q1 2018.
- – Sales continue to be consistent and steady with existing partners as they grow their business in the retail market.
- – Initiated process to purchase 100% of PROsnack, a Vancouver-based, innovative, natural food company. The privately-owned company, with products found in over 1,000 major retailers across Canada, focuses on the development and production of nutritious products for the meal replacement market, has accumulated sales of approximately $8 million over the past four years. Plans to relocate the facility to realize cost savings has begun and incremental sales will be reflected in Q4.
- – Protein isolate – with the granting of a provisional patent for a >80% hemp protein, NSE is preparing meetings with major ingredient suppliers who would seek to use hemp isolate as an ingredient to replace soy, whey or pea protein sources in their products.- Craig Goodwin, President of NSE and Bryan Carson the Executive VP of Innovation have been invited to attend the Canadian Ingredient Mission to the US Midwest with the Government of Alberta in Minneapolis and Chicago from Dec 11th- Dec 14th , 2017. Attendees at this event will include representatives from companies such as Cargill, General Mills and many others.
Naturally Splendid’s unaudited condensed financial statements and management’s discussion and analysis have been filed on Naturally Splendid’s profile on the SEDAR website.
About Naturally Splendid Enterprises Ltd.
Naturally Splendid is a biotechnology and consumer products company that is developing, producing, commercializing, and licensing an entirely new generation of plant-derived, bioactive ingredients, nutrient dense foods, and related products. Naturally Splendid is building an expanding portfolio of patents (issued and pending) and proprietary intellectual property focused on the commercial uses of industrial hemp and non-psychoactive cannabinoid compounds in a broad spectrum of applications.
Naturally Splendid currently has four innovative divisions:
- (1)BIOTECHNOLOGY – Focused on three major platforms:
- (1)Proprietary HempOmega(TM) encapsulation
- (2)Extraction and formulation with Cannabidiol (CBD)
- (3)Hemp and plant-based proteins.
- – POS-BPC Facility – a 12,000-square-foot production facility leased and operated by POS BPC Manufacturing Inc., a company jointly owned by NSE (51%) and POS Holdings (49%), offers commercial-scale custom processing solutions for functional foods and natural health.
(2) CONSUMER PRODUCTS –
- – NATERA(R) – brand of retail hemp and superfood products distributed throughout North America, Asia and Europe.
- – Prosnack Natural Foods Inc. (Elevate Me(TM)) – lifestyle brand of healthy meal replacement products distributed throughout North America.
- – Chi Hemp Industries Incorporated (CHII) – e-commerce platform for natural and organic hemp products.
- – PawsitiveFX(R) – topical pet care products.
- – NATERA(R)CBD – retail hemp-based cannabinoid nutraceutical and cosmeceutical products distributed in Asia.
- – NATERA(R)Skincare -brand of retail hemp based cosmeceutical products.
(3) NATERA(R) Ingredients – bulk ingredients including HempOmega(TM).
(4) Co-Packaging/Toll-Processing – packaging for house-brands (NATERA(R) and CHII) and third-party partners.
For more information e-mail email@example.com or call Investor Relations at 604-673-9573
On Behalf of the Board of Directors
Mr. Dave Eto
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 complete the acquisition of Prosnack, complete all or any of the proposed private placement financing, 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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