Vancouver, British Columbia, August 29, 2022 – Naturally Splendid Enterprises Ltd. (“Naturally Splendid”, “NSE” or “the Company”) (FRANKFURT:50N) (TSX-V:NSP) (OTC:NSPDF) announces its unaudited financial results for the six months ended June 30, 2022. All amounts are in Canadian dollars and are prepared in accordance with International Financial Reporting Standards.
Naturally Splendid CFO Mr. George Ragogna stated, “We are continuing to implement our plan focused on our plant-based opportunities, most notably PlanteinTM Plant-Based Foods. With most Covid restrictions now removed, we have been able to meet clients face to face at several trade shows after a multi-year hiatus, to promote the launch of our PlanteinTM retail line while developing national distribution and sales relationships. Responses from the trade shows have been overwhelmingly positive, resulting in multiple new accounts as well as building the foundation for many new business opportunities. The plant-based market is maturing, and consumers are demanding higher quality products, most notably beginning with taste. Feedback from these recent tradeshows has confirmed we have amongst the best tasting plant-based products available in the Canadian market, and demand for our PlanteinTM line continues to gain traction.”
Strategic Focus on Manufacturing Plantein Plant-Based Foods
After careful consideration and discussions, the Naturally Splendid Enterprises management team, with support from the Board of Directors, has made a number of strategic decisions with the objective to prioritize the exclusive Canadian manufacturing and distribution opportunity of PlanteinTM Plant-Based Foods with Flexitarian Foods Pty. Ltd.
Since Naturally Splendid has partnered with Flexitarian Foods in an exclusive 10-year year manufacturing and distribution agreement for PlanteinTM for the Canadian market. The Company has also negotiated exclusive rights to the Plantein trademark for the same period. These exclusive agreements also have a 10-year renewal clause.
Outlook of the Plant-Based Market Opportunity
Today the retail market for plant-based foods is worth USD $10.9 billion with an expected Compound Annual Growth Rate (CAGR) of 12.2% (2022-2032). Furthermore, The National Research of Canada estimates that the protein demand will double to 943.5 million metric tons in 2054, and the opportunity for plant-based food is significant.
There are several reasons for the growing popularity of plant-based foods. The environmental sustainability of plant-based foods is a key factor as animal agriculture is a major contributor to greenhouse gas emissions, water consumption and deforestation. The UN reports that drought frequency and duration have increased by nearly a third globally since 2000. Plant-based foods require far less land and water than animal agriculture, generating fewer emissions.
Health concerns are another major factor driving the growth of the plant-based sector. Consumers are increasingly aware of the link between a plant-based diet and the reduction of chronic diseases such as heart disease, diabetes, and cancer.
Animal farming is also a key consideration for many people, as the factory farming of animals has come under increased scrutiny in recent years. Factory farming accounts for 37% of methane (CH4) emissions, which has more than 20 times the global warming potential of CO2. Plant-based agriculture uses an estimated 10% of the water required for animal farming and is far less damaging to the environment, driving even more environmentally concerned consumers to pursue a plant-based diet.
As the market for plant-based foods continues to grow, there is a tremendous opportunity for companies to provide products that meet consumer demand. Those that can supply healthy, sustainable, and delicious plant-based foods will be well-positioned to succeed in the coming years.
Strategic Decisions Existing Operations
While focusing our resources on the PlanteinTM opportunity, all divisions, products and projects were reviewed thoroughly. The decisions on moving forward range from altering existing programs to suspending or eliminating certain projects and/or activities.
These strategic decisions include:
Prosnack Natural Foods
Bar manufacturing business including Elevate MeTM, NATERA, Woods WildTM, and contract manufacturing, are suspended while the facility undergoes expansion for the manufacturing of PlanteinTM plant-based products. Further plans are being developed and may include liquidating bars and bites assets or pursuing joint ventures or other business arrangements to manufacture and distribute bars and bites.
Prosnack Natural Foods will only focus on manufacturing PlanteinTM plant-based products under the Plantein brand, as well as for Private Label and Contract Manufacturing clients.
The Company has identified three (3) separate yet complimentary revenue streams generated from plant-based manufacturing:
PlanteinTM Brand – the Company will seek to list PlanteinTM branded products in both retail and foodservice outlets.
Private Label – the Company has access to over thirty (30) plant-based entrees created by Flexitarian Foods that will create significant private label opportunities.
Contract Manufacturing – In certain circumstances, Prosnack will manufacture for strategically selected contract manufacturing clients, producing their plant-based products in our facility.
The majority of the manufacturing equipment has been ordered, and various equipment has already arrived at our Pitt Meadows facility. We are experiencing delays in receiving certain manufacturing equipment due to supply challenges and ongoing logistics from Covid. During this time, the Company will continue to receive our plant-based inventories from Flexitarian Foods while we continue to work on completing our manufacturing lines at our own facility.
The Company will continue to progress with its Safe Quality Food (SQF) certification program, which will be completed upon the final commissioning of the new manufacturing lines. Although the facility was previously certified SQF2, the new plant-based production lines require an updated SQF plan to be developed and implemented.
We have also already sourced many of the ingredients required for manufacturing from Canadian suppliers. These ingredients have been evaluated with the oversight of Flexitarian Foods to confirm we are producing a product that replicates the flavour and texture profiles of the original recipes.
Sourcing ingredients locally is not only environmentally more sustainable but there are also significant savings associated with securing Canadian suppliers that directly contribute to bottom-line figures. The Company will see an almost immediate return by way of reducing production costs and improved inventory control, resulting in an anticipated increase in margins.
Naturally Splendid will no longer defend the NATERA brand name since we have secured the PlanteinTM trademark for Canada for our main priority, plant-based entrees. The Company is permitted to use the NATERA brand for certain bars and bites but will no longer seek the registered trademark.
Naturally Splendid has reached an agreement with Biologic to terminate the contract with Plasm Pharmaceutical and are negotiating a compensation package for all work done thus far for pursuing a potential treatment for Covid with the target drug Cavaltinib.
CHII Naturally Pure Hemp
Operations remain as is focusing on online sales and bulk exports of hemp.
For the time being operations remain as is focusing on online sales of pet topicals. A further review will look to potentially sell this brand or consider other partnership-type scenarios.
Q2 2022 Financial Results
Naturally Splendid recorded a net loss and comprehensive loss of $1,316,236 for the six months ended June 30, 2022, compared to a net loss of $1,403,685 during the six months ended June 30, 2021. Gross profit margins decreased by 2.6% of sales in the six months ended June 30, 2021, compared to the six months ended June 30, 2021. The Company’s sales decreased by approximately $312,000 from the comparative period. During the six-month period ending June 30, 2022, selling and distribution expenses decreased by approximately $16,500, largely due to facility costs.
Administrative expenses for the six months ended June 30, 2022, decreased in 2022 compared to 2021 by $87,500. The decrease was primarily due to management & consulting fees, bank charges and legal fees.
Naturally Splendid recorded sales of $157,314 during the six months ended June 30, 2022, compared to $470,039 for the six months ended June 30, 2021. During the six months ended June 30, 2022, the Company’s sales decreased by approximately $313,000 from the comparative period. The Company had decreased sales in its private-label bars and bites business by approximately $85,000. Branded hemp products decreased by approximately $170,200 and its Natera Sport products decreased by approximately $73,000. Sales in new Plant-based products decreased by approximately $4,300.
The Cost of Sales during the six months ended June 30, 2022, was $136,186 compared to $394,812 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.
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 launched PlanteinTM, a line of delicious plant-based meat alternatives for the rapidly growing plant-based market segment.
Naturally Splendid maintains a relationship Plasm Pharmaceutical, a company that has been approved for conducting a phase 2 clinical trial approved by Health Canada for the treatment of COVID-19.
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 [email protected] or call Investor Relations at 604-570-0902 x 103
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) 570-0902
E-mail : [email protected]
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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