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Isodiol International Inc (2)
Symbol ISOL
Shares Issued 58,180,538
Close 2019-08-16 C$ 0.40
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Isodiol talks revenue, omits 2019 P&L from NR

2019-08-16 19:12 ET - News Release

Mr. Marcos Agramont reports


Isodiol International Inc. has filed its audited consolidated financial statements and MD&A (management's discussion and analysis) for the year ended March 31, 2019.

Highlights of fiscal year 2019 include:

  • Total revenues of $22,248,171, an increase of 16.26 per cent over the prior year, and which figure does not include revenues from divested companies Azure, Kure or BSPG, as had previously been included in the consolidated statement of loss for the fiscal 2019 first quarter, second quarter and third quarter periods;
  • Gross profits of $7,378,194, realizing gross margins of 33.16 per cent;
  • Total fourth quarter revenue of $9,089,401, a historic number for the company. The company is especially pleased with this number, as this figure does not include the activities of the recently divested assets of Azure, Kure or BSPG;
  • Total operating expenses decreased by $3,283,658.

Breakdown of significant other expenses:

  • Loss on the sale of business of $35-million is primarily non-cash and is attributable to the divestitures of Azure, Kure and BSPG:
    • The primary reason for divesting Kure was to prevent significant shareholder dilution. Given the current share price, the company believed that future acquisition payments of $35-million (U.S.) could not be justified given the risks associated with uncertainty surrounding the pending U.S. Food and Drug Administration (FDA) regulations on the vape industry.
    • The sale of BSPG was due to the significant financial requirements needed for expansion. The company sold BSPG for a sale price of $14-million (U.S.), of which $9.75-million (U.S.) has been received to date, with $4.5-million (U.S.) of such amount paid to complete the final obligation toward the original acquisition and the remainder used for general working capital. The divestment terms included an offtake right in favour of the company, giving the company access to the API (active pharmaceutical ingredients) required for Purodiol, Isodiolex and Isoderm in the Brazil pharma market.
    • The company moved away from manufacturing and is now focusing on high-margin consumer goods; with that, the company divested Azure for sale price of $1-million (U.S.).
  • Asset impairment of $38,877,626 can be broken down into two primary categories:
    • Terminations and divestitures: A total of $14.6-million (U.S.) of the balance relates to the carrying values associated with the divestiture of certain operations, investments and acquisition deposits that: do not directly benefit from a focus on sale of finished goods; were not in line with the company's core business; did not contribute to the company's bottom line; and represented significant future outflows of cash before any return on investment could be realized.
    • Impairment of goodwill and intangible assets: A total of $24.3-million of the balance specifically relates to the IFRS (international financial reporting standards) requirement to assess the company's goodwill for impairment annually and intangible assets for indicators of impairment. Impairment of goodwill was determined through a comparison of the capitalized cash flows with the carrying amounts of these assets. Because the company's U.S.-based cash generating units were operating at a loss, this inherently resulted in the requirement to impair goodwill and the related intangible assets as they were in excess of the measured recoverable amount. Although these assets have now been expensed, the company considers them to continue to add value to its bottom line and will continue to use them to drive revenues and build its operations.

"We have just realized our most profitable quarter to date and have reduced our operating expenses considerably, which will be seen in the first quarter of fiscal 2020," said the chief executive officer of Isodiol, Marcos Agramont. "The majority of losses experienced in fiscal 2019 are a byproduct of our shift in our focus towards higher-margin consumer products versus raw ingredient supply, prevention of massive shareholder dilution and protecting our future cash flows through divestitures."

Mr. Agramont went on, "Over the last several months we have sharpened our focus significantly, cut costs, curbed shareholder dilution and we believe the company is in a strong position heading into fiscal 2020 and beyond."

About Isodiol International Inc.

Isodiol is focused on the nutritional health benefits that are derived from hemp, and is a product development, sales, marketing and distribution company of hemp-based consumer packaged goods (CPG) and solutions. Isodiol has commercialized a 99-plus-per-cent-pure, naturally isolated cannabidiol (CBD), including microencapsulations, and nanotechnology for quality consumable and topical skin care products. Isodiol's growth strategy includes the development of over-the-counter and pharmaceutical drugs and continued international expansion into Latin America, Asia and Europe.

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