Goodwin adds, "The delay in receiving all the required manufacturing equipment in a timely fashion has resulted in slower than anticipated uptake with larger sales opportunities and has necessitated this pivot in our strategies. This delay has created the necessity and opportunity to amend the current manufacturing strategy".
While presented with challenges regarding the manufacturing build-out, we have developed plans with our Australian partners, Flexitarian Foods to maintain inventory levels while the process of the evaluation and implementation of alternative manufacturing strategies is initiated.
The Company's immediate focuswill be to continue sales activities of PlanteinTM Plant-Based Foods while reducing overhead. Our focus will now be entirely on leveraging the 10-year exclusive manufacturing and distribution agreement with Flexitarian Foods including locating and securing alternative manufacturing facilities, most likely in the province of Ontario. All other divisions and/or lines are being permanently discontinued.
National Distributor Network Remains Intact
The Company continues to work with and build relationships and sales through our extensive network including some of the largest food distributors in Canada such as CANEXFoods, Sysco
Canada, Gordon Food Services(GFS) and Greenbridge Foodservice.
While the Company has ended its relationship with a previous food broker, it has retained the services of Mr. Steven Ley, a 35-year food industry veteran with a network of existing clients across Canada. Mr. Ley will work closely with senior management in both NaturallySplendid and Flexitarian Foods growing sales of PlanteinTM in Canada.
Although sales uptake has fallen short of expectations, responses from the trade shows have been extremely positive. The Company has opened several new retail accounts recently and is building on those positives.
Overhead Reduction
In the immediate short term, the Company has embarked on an aggressive cost-reducing mandate. This includes reducing hours for most all staff members, temporary layoffs, and the elimination of certain positions.
As reported in a previous news release on November 18, 2022, Mr. Ragogna has stepped down as CFO, and Company co-founder Bryan Carson has assumed the role of CFO in an interim capacity. Additionally, the Company has come to an agreement with the current Director of Sales, who will be resigning effective November 30, 2022.
Senior staff, including CEO Mr. Craig Goodwin, Interim CFO Mr. Bryan Carson and Senior Consultant Mr. George Ragogna, have agreed to accrue wages during this past reporting period and have continued to do so during this resetting phase. Previously, on multiple occasions, senior management has accrued wages that have been invested into common shares of Naturally Splendid by participating in private placements.
Additionally, the Company is in discussions with current landlords to significantly reduce our footprint in Pitt Meadows, BC. The Company plans to reduce the square footage from 25,386 square feet, down to 8,164 square feet. The reduced footprint will realize a reduction of 68% of rent overhead once completed.
This combination of staff reduction, accruing of all or parts of salaries, and reduction of manufacturing facilities results in a significant reduction in operating overhead. The combination of restructured positions and remuneration, as well as reduced leased premises, is expected to reduce overhead by 45%.
Remaining LeasedPremises - Pitt Meadows, BC
As stated earlier, the Company has developed plans with Australian partners, Flexitarian Foods, to maintain inventory levels while beginning the process of the evaluation and implementation of alternative manufacturing strategies.
This includes utilizing the remaining leased premises in Pitt Meadows, which will be repurposed as a packaging and distribution facility. Inventory received from our Australian partners, Flexitarian Foods, will be packaged at the facility in Pitt Meadows for both the food service and retail sectors.
Upon establishing a manufacturing facility in Ontario, it is anticipated that the Pitt Meadows location will remain a packaging and distribution facility. Operations in both the Toronto and Vancouver regions will provide the Company with operations in two of Canada's largest markets and optimizes operational efficiencies.
Relocating Manufacturing
The new manufacturing strategies include securing a suitable facility in Ontario to manufacture plant-based entrees. Relocating manufacturing to Ontario provides many benefits, including closer proximately to Canada's largest population and consumer base, direct access to many of Canada's largest food companies and distributor head offices, and significantly reduces transportation costs which are increasingly becoming a major challenge due in part to drastically increasing fuel surcharges charged by transport companies.
The search for a new premise has been initiated, and it is anticipated that a facility previously utilized for food manufacturing will be identified and secured. Equipment already purchased will be shipped to the new facility once located.
Reduction of Divisions and Product Lines
As previously announced, the Company reported reviewing all divisions and operations within the organization. Upon completion of this review, the Company has made several decisions.
Prosnack Natural Foods will no longer manufacture bars and bites. The bar manufacturing business, including Elevate MeTM, NATERA,Woods WildTM, as well as contract manufacturing previously suspended, has now been permanently halted. The Company will investigate opportunities to sell the brands manufactured in this division. Equipment that was specific to manufacturing bars and bites will be liquidated.
The Company anticipates sellingwholly owned divisions, CHII Naturally Pure Hemp as well as Pawsitive FX. As the Company focused on PlanteinTM opportunities, resources for the seentities were reduced, resulting in lower sales. Brands and inventories will be liquidated with these two divisions.
Goodwin concludes, "The plant-based food category is going through a transitional period, with many companies being affected and we have not escaped this transition unscathed. However, consumers are increasingly turning to plant-based foods because of their concerns about their personal health and in some cases, for concerns about the planet. As the plant-based market matures, consumers are demanding higher quality products, most notably beginning with taste. And in that department, we are confident we have top of class products with our PlanteinTM line".
Financial Results
Naturally Splendid recorded a net loss and comprehensive loss of $2,218,019 for the nine months ended September 30, 2022, compared to a net loss of $2,486,566 during the nine months ended September 30, 2021. Gross profit margins increased by 5.6% of sales in the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021. During the nine- month period ending September 30, 2022, selling and distribution expenses decreased by approximately $33,000, largely due to facility costs.
Administrative expenses decreased in 2022 compared to 2021 by $123,525. The decrease was primarily due to a decrease in management and consulting fees and bank charges and interest.
Naturally Splendid recorded sales of $249,519 during the nine months ended September 30, 2022, compared to $619,653 for the nine months ended September 30, 2021. During the nine months ended September 30, 2022, the Company's sales decreased by approximately $370,000 from the comparative period.The Company reduced sales due to its private-label bars and bites, branded hemp and its Natera Sport products being suspended. This is in line with the Company shifting its focus on the new PlanteinTM plant-based entrees for contract manufacturing, private label and branded products
The Cost of Sales during the nine months ended September 30, 2022, was $203,135 compared to $539,187 in 2021. The Company's sales were from its new line of plant-based entrees which maintain a higher gross margin. The Company continues to focus on its higher-margin products and new commercial opportunities with its plant-based entrees.
| | Three months ended Sept30, 2022 | | | Three months ended Sept30, 2021 | | | Nine months ended Sept30, 2022 | | | Nine months ended Sept30, 2021 | |
| | $ | | | $ | | | $ | | | $ | |
Statements of Loss Data | | | | | | | | | | | | | | | | |
Revenue | | | 92,205 | | | | 149,614 | | | | 249,519 | | | | 619,653 | |
Cost of sales | | | (66,949 | ) | | | (144,375 | ) | | | (203,135 | ) | | | (539,187 | ) |
Gross Profit | | | 25,256 | | | | 5,239 | | | | 46,384 | | | | 80,466 | |
Selling and distribution expenses | | | (144,691 | ) | | | (160,991 | ) | | | (556,700 | ) | | | (589,659 | ) |
Administrative expenses | | | (540,727 | ) | | | (576,803 | ) | | | (1,856,963 | ) | | | (1,980,488 | ) |
Other Items | | | 156,509 | | | | (3,023 | ) | | | 149,188 | | | | 3,115 | |
Net income (loss) | | | (503,653 | ) | | | (735,578 | ) | | | (2,218,091 | ) | | | (2,486,566 | ) |
Basic and Diluted Earnings (Loss) | | | | | | | | | | | | | | | | |
Per Share | | | (0.02 | ) | | | (0.05 | ) | | | (0.10 | ) | | | (0.17 | ) |
| | | | | | | | | | | | | | | | |
About Naturally Splendid Enterprises Ltd.
Naturally Splendid is a plant-based food manufacturing and technology company that produces and distributes nutritious and delicious plant-based commodity products.
Founded in 2010, the Company operates a certified food manufacturing facility located just outside Vancouver, BC in Canada, focusing on producing an extensive range of plant-based entrees.
Naturally Splendid has an exclusive 10-year manufacturing and distribution agreement for Canada with a division of Australia's largest plant-based food manufacturer, Flexitarian Foods Pty. Ltd.
In addition to producing the Company's own branded products, Naturally Splendid provides contract manufacturing services and private labelling for a variety of nutritional plant-based food products destined for multiple distribution channels.
The Company has established healthy, functional foods under brands such as Natera Sport, Natera Hemp Foods, CHIIâ„¢, Elevate Meâ„¢ and Woods Wild Barâ„¢. The Company launched Planteinâ„¢ Plant-Based Foods, a line of delicious plant-based meat alternatives for the rapidly growing plant-based market segment.
Naturally Splendid has reached an agreement with Biologic to terminate the agreement with Plasm Pharmaceutical and is negotiating a compensation package for work done to date pursuing a potential treatment for Covid with the target drug Cavaltinib.
NSE has also developed proprietary technologies for the extraction of healthy omega 3 and 6 oils, as well as a protein concentrate from hemp.
For more information e-mail info@naturallysplendid.com or call Investor Relations at 604-570-0902 (ext. 101)
On Behalf of the Board of Directors
Mr. J. Craig Goodwin
CEO, Director
Contact Information
Naturally Splendid Enterprises Ltd.
(NSP - TSX Venture;NSPDF - OTCQB; 50N - Frankfurt)
#108-19100 Airport Way
Pitt Meadows, BC, V3Y 0E2
Office: (604) 570-0902
Fax: (604) 465-1128
E-mail : info@naturallysplendid.com
Website: www.naturallysplendid.com
Forward-Looking Statements
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.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE: Naturally Splendid Enterprises Ltd.
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