. Key highlights of third quarter of 2020 fiscal year
Total expenses for the three months ended were $520,274 as compared to $1,158,648 for the same period in the prior year, a decrease of $597,327.
The Company reported total revenue of $231,248, as compared to $699,991 in the prior year, a decrease of $468,743. This was due to COVID-19 related closures of its Corporate Stores and reduced royalties for its franchised Sangsters stores.
Began manufacturing Hand Sanitizer in Ontario and at its Penticton facility in June.
In Canada, Eastwest is experiencing a strong order book of 2 months out for its Nutraceutical Manufacturing and has added a second shift to accommodate the demand. The COVID epidemic has brought a renewed light to wellness and the company is experiencing a strong influx of new clients through its B2B relationships
In the US, Eastwest is continuing to pursue B2B relationships for its expansion. CBD isolate and bulk oils are readily available at reasonable cost in Kentucky. The Company will direct future working capital to investing in CBD nutraceutical product development and sale. The Company is also pursuing the export of crude CBD and CBD products from the US to international markets.
Subsequent to quarter end highlights
Subsequent to April 30, 2020, the Company entered commitments to issue 6,007,270 common shares at a price of $0.05 per share to settle debt valued at $300,364. This represents a settlement of significant portion owing by the Company in respect of various services rendered, including but not limited to consulting, accounting and legal, and for settlement of loans and/or advances provided to the Company
Subsequent to April 30, 2020, the Company secured a private placement for $99,636 cash, received additional government wage subsidies, settled debt of $300,636 by issuing shares of the Company to creditors, and negotiated reductions of accounts payable of $24,968.
Had the private placement and the debt settlement above been undertaken prior to April 30, 2020, current assets would have increased from $946,548 to $1,046,184, current liabilities would have decreased from $1,300,068 to $999,704, and current ratio would have increased from 0.73:1 to 1.05:1.
PENTICTON, BC / ACCESSWIRE / June 30, 2020 / EastWest Bioscience (the "Company" or "EastWest") (TSXV:EAST) today reported its financial results for the third quarter fiscal 2020 ended April 30, 2020.
"We have successfully pivoted our wellness business through these uncertain times by continuing to reduce our operating costs, reducing debt while at the same time minimizing dilution," said Rodney Gelineau, CEO and co-founder of Eastwest Bioscience Inc. "In addition, we are experiencing solid growth in nutraceutical manufacturing and will continue to add additional revenue streams, particularly in the USA, focusing on manufacturing and the sale of CBD consumer products."
Throughout and subsequent to the quarter, EastWest is rigorously negotiating with various vendors and creditors which resulted in more than $325,000 gain on settlement of debt. EastWest also continues to drive value through its assets and infrastructure both in Canada and the US.
COVID-19 Update - Impact and Opportunity
COVID-19 On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. In response to the pandemic, governments and regulatory bodies around the world swiftly introduced various restrictions to limit the spread of the pandemic which include travel restrictions, social distancing, closures of nonessential businesses, self-isolation, and quarantine. The pandemic and the various restrictions in place to limit its spread caused unprecedented disruptions to individuals, businesses, and to the global economy overall. EastWest is feeling the impact of the pandemic to its operations. As the pandemic unfolds, many of our Sangster's franchisees are reducing their hours of operations. Some were forced to close due to local laws and some experience close to zero-foot traffic as consumers are avoiding malls and retail locations. This in turn negatively impacts our royalty revenue from the franchisees and forces the Company to restructure its staffing and reallocate its resources to adapt to the new realities.
However, EastWest recognizes that the COVID-19 pandemic has shifted consumer behavior in two fundamental ways: Globally, consumers are purchasing more online and that there is a significant increased demand for vitamins and supplements products. As a wellness company, EastWest is well positioned to take advantage of these shifts in consumer behavior. The Company's supplement manufacturing division, Orchard Vale Naturals has enjoyed an increased demand for its supplement manufacturing services while Sangster's online sales have been strong.
EastWest will need to work with its Sangster's stores to adjust to changes in the economy and bring additional products that have been the trademark of Sangsters to help its franchisees compete in the new world. EastWest has been working to develop new and release products, expand online sales, develop CBD products and expand market presence in the US, ramp up manufacturing for new clients and new products, manufacture and distribute hand sanitizer solution to meet current market demand, and create word-of-mouth about the Company's suite of product offerings.
COVID-19 Loans & Grants
The Canadian government's response to minimize the economic impact of the pandemic has been immediate and significant. To support businesses impacted by COVID-19, the Canadian government provides several programs which include and not limited to wage subsidy/work sharing programs, interest free loans, and loan guarantees. Furthermore, assistance programs are also available at the provincial government level and many vendors and suppliers are providing COVID-19 related financial reliefs. The Company is taking full advantage of these loans and grants and are passing this information to our franchisees to assist them during these hard times.
About EastWest Bioscience Group
EastWest Bioscience is a vertically integrated wellness company with the infrastructure to become a global giant in the Hemp & CBD consumer health market. Since it was founded in 2016, EastWest continues to grow as a high-quality producer, manufacturer and distributor of multiple lines of premium health and hemp products. EastWest currently has more than 200+ NPN's in its stable of products.
EastWest's Hemp consumer product lines are divided into four distinct brands: 1) Natural Advancement - natural biopharmaceutical health supplements; 2) Earth's Menu - all-natural hemp superfoods; 3) Natural Pet Science - pet food and pet supplements; and 4) ChanvreHemp - all-natural health and beauty products.
In Canada, EastWest has a 34,000 Sq. Ft, Health Canada-licensed, GMP (Good Manufacturing Practices) - certified manufacturing facility and produces premium nutraceutical brands, offering natural products for a preventive care lifestyle.
In the USA, EastWest USA has a Joint Venture with Azema Sciences, securing for EastWest first rights on Azema's output of bulk CBD and finished CBD products manufactured, and which are ready for sale in the USA and globally. EastWest Science USA ("EastWest USA"), EastWest's US operating division, will be the preferred distributor for Azema's finished goods. These finished products will include CBD creams, tinctures and salves which are products not currently in EastWest's catalogue. Additionally, EastWest will have first right of refusal to all potential opportunities relating to Azema's Kentucky based CBD processing facility. EastWest currently has TSX Approval for sale of its consumer products in 21 US States.
ON BEHALF OF THE BOARD OF DIRECTORS
EASTWEST BIOSCIENCE GROUP