Mr. J. Craig Goodwin reports

NATURALLY SPLENDID REPORTS SECOND QUARTER RESULTS FOR 2020

Naturally Splendid Enterprises Ltd. has released its unaudited financial results for the six months ended June 30, 2020. All amounts are prepared in accordance with international financial reporting standards.

Naturally Splendid recorded sales of $1,025,636 during the six months ended June 30, 2020, compared with $1,723,541 for the six months ended June 30, 2019. The company's sales decreased by approximately $698,000 over the same period last year.

Revenues decreased significantly over the same period last year, and gross profit margins are approximately 11 per cent of sales. Selling and distribution costs of $913,082 increased due to the increase in facility costs and inventory writedowns. Administrative expenses decreased to $1,751,915.

Naturally Splendid recorded a net loss from continuing operations of $2,428,944 for the six months ended June 30, 2020, compared with a net loss from continuing operations of $1,581,077 during the six months ended June 30, 2019. The decrease in net loss was mainly due to decreased production and sales due to the COVID-19 pandemic and increased facility costs and corporate promotion.

Gross profits decreased by approximately 19.9 per cent for the six months ended June 30, 2020, at $112,562 (11.0 per cent of sales) compared with $531,496 (30.8 per cent) for the six months ended June 30, 2019. Cost of sales during the six months ended June 30, 2020, was $913,074 compared with $1,192,045 in the six months ended June 30, 2019.

The company's manufacturing facility in Pitt Meadows, which focuses on developing and manufacturing plant-based nutritional bars and bites, recently passed its annual safe quality food Level 2 (SQF2) annual audit. SQF2 certification is required by many major retailers. Additionally, the SQF2 is a designation that many contract manufacturing clients require, which differentiates this facility from many other facilities that have not attained the same level of certification.

The certifications attained and additional manufacturing equipment commissioned at Naturally Splendid's Pitt Meadows facility allow the company to focus on higher-margin product opportunities.

                                          STATEMENTS OF (LOSS) DATA 

                                                    For the three months ended          For the six months ended
                                                               June 30,                           June 30, 
                                                         2020             2019             2020             2019

Revenue                                              $305,381         $950,738       $1,025,636       $1,723,541
Cost of sales                                         319,448          668,776          913,074        1,192,045
Gross profit                                          (14,067)         281,962          112,562          531,496
Selling and distribution expenses                    (308,661)        (438,175)        (913,082)        (714,117)
Administrative expenses                              (902,487)      (1,354,768)      (1,751,915)      (2,440,384)
Other income (loss) and taxes                         117,032        1,033,869          123,491        1,041,928
Discontinued operations                                     -                -                -                -
Net income (loss)                                  (1,108,183)        (477,112)      (2,428,944)      (1,581,077)
                                                 ------------     ------------     ------------     ------------
Basic and diluted earnings (loss) per share             (0.01)           (0.00)           (0.02)           (0.01)
                                                 ------------     ------------     ------------     ------------

The company has entered into a letter of intent with Biologic Pharmamedical Research to form a joint venture for the purpose of further developing and pursuing phase 2 clinical studies, utilizing one of Biologic's patented technologies as a candidate for a potential COVID-19 treatment. The company has been issued a no objection letter to begin a phase 2 clinical trial and awaits further direction from Health Canada.

Naturally Splendid will own 16 per cent of the joint venture, as well as be granted a 10-per-cent royalty on gross sales of all products and applications arising from the clinical study. Biologic will own 82 per cent of the joint venture with 2 per cent assigned to key personnel within Biologic at its discretion.

Naturally Splendid chief executive officer Craig Goodwin stated: "Operating during these difficult times has not been without its challenges. Having said that, I am extremely pleased with the continued effort of our staff to operate under these trying times. Although not running at the same level of production as pre-COVID, we continue to service our existing contract manufacturing clients and anticipate adding new clients to our roster over the remainder of the year. We all are adjusting to the reality of the environment we are conducting business in, and that includes our existing clients, as well as new opportunities we are pursuing. The company continues to position itself as a premium food manufacturer of plant-based products. We remain committed to pursuing opportunities in the plant-based consumer markets through our existing product lines, as well as looking to add to our roster of plant-based products in this fast-growing consumer category."

Mr. Goodwin continued: "In addition to pursuing the more traditional consumer markets for plant-based nutrition, the company is looking forward to beginning our phase 2 clinical trial for a COVID-19 treatment utilizing Cavaltinib. We remain optimistic that this drug will provide a treatment option for those afflicted with COVID-19."

Naturally Splendid's financial statements can be viewed at SEDAR.

We seek Safe Harbor.