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Vegalab Announces Quarterly Revenue of $4.1 Million, Up 2,370% Year Over Year

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PALM BEACH, Fla., Sept. 04, 2018 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE - Vegalab, Inc. ("the Company"), (OTCQB:VEGL) today announced revenue for the second quarter of fiscal year 2018, ended June 30, 2018. The Company posted quarterly revenue of $4.1 million. These results compare to revenue of $166 thousand in the second quarter of fiscal 2017, a 2,370% year over year increase. The Company filed Form 10-Q with the United States Securities Exchange Commission on August 30, 2018. 

David Selakovic, CEO of Vegalab, Inc., stated: "We are excited to report continued year over year growth, having increased our six months total revenues to $11.4 Million, a 2,940% increase over the first six months of last year. We attribute our continued growth to the addition of talented sales and marketing personnel, new marketing partnerships, and, most importantly, repeat sales demand due to high overall customer satisfaction. Members of the agricultural community are increasingly coming to recognize the comprehensive benefits of using Vegalab's extensive, all-natural products on their farms, orchards, and vineyards.  Stewardship of the Earth's ecosystems will always be our focus at Vegalab, as we develop sustainable products that nourish rather than deplete the Earth's resources. As we continue to grow, we will seek additional product registrations in key agricultural markets within the United States, Canada and Mexico, as we also pursue partnerships in targeted growth markets within Central and South America."

Results of Operations
During the three months ended June 30, 2018, the Company recognized total revenues of $4,166,321 compared to $166,682 for the three months ended June 30, 2017. Revenue from the sale of Vegalab products was $2,632,478 compared to $166,682 for the three months ended June 30, 2017, sales increased during the three months ended June 30, 2018 compared to 2017 mainly due to increased marketing and the acquisition of TAG in February 2018. Revenue from packing business was $2,632,478. Cost of goods sold were $4,456,814 for the three months ended June 30, 2018, compared to $120,979 for the three months ended June 30, 2017. During the three months ended June 30, 2018 the Company had a negative gross profit margin from its packing business. The negative gross margin was due to higher than expected costs for the purchase of produce and reduced processing as the growing season comes to an end.

During the six months ended June 30, 2018, the Company recognized total revenues of $11,454,950 compared to $375,498 for the six months ended June 30, 2017. Revenue from the sale of Vegalab products was $5,361,619 compared to $375,498 for the six months ended June 30, 2017. Sales increased during the six months ended June 30, 2018 compared to 2017 mainly due to increased marketing and the acquisition of TAG in February 2018. Revenue from produce processed was $6,093,311. Cost of goods sold was $10,152,915 for the six months ended June 30, 2018, compared to $310,430 for the six months ended June 30, 2017. During the six months ended June 30, 2018. The Company experienced lower than expected gross profit margin from the packing business. The negative gross margin was due to higher than expected costs for the purchase of produce and reduced processing as the growing season comes to an end.

On October 18, 2017, the Company purchased substantially all the assets of a produce packaging business conducted under the name M&G Packing, Inc. During the three months ended June 30, 2018 the Company generated $1,533,843 from processing revenue. As this business was acquired in October 2017, there was no corresponding revenue in the second quarter of 2017. Cost of goods for our produce packaging business was $1,841,494 for the three months ended June 30, 2018. There was no corresponding cost of goods sold for our produce packaging business in the second quarter of 2017 for the reason stated above.

During the six months of 2018 the Company generated $6,093,331 from processing revenue in our produce packing business. There was no corresponding revenue in the six months of 2017 for the reason stated above. Cost of goods sold for our produce packaging business was $6,192,430 for the six months ended June 30, 2018. There was no corresponding cost of goods sold for our produce packaging business in the six months of 2017 for the reason stated above.

Total operating expenses for the three months ended June 30, 2018, were $717,470 compared to $298,148 for the three months ended June 30, 2017. Expenses increased significantly as the Company hired additional staff, consultants and professionals due to its purchase of M&G Packing, Inc. and TAG compared to the three months ended June 30, 2017. For the three months ended June 30, 2018, we had a loss from operations of $1,007,963 compared to a loss of $252,445 for the three months ended June 30, 2017.

Total operating expenses for the six months ended June 30, 2018, were $2,359,402 compared to $557,383 for the six months ended June 30, 2017. Expenses increased significantly for the reasons stated above compared to the six months ended June 30, 2017. For the six months ended June 30, 2018, we had a loss from operations of $1,057,367 compared to a loss of $492,315 for the six months ended June 30, 2017.

After the provision for interest and income taxes, net loss for the three months ended June 30, 2018, was $1,018,350 or $(0.04) per share, and the net loss for the three months ended June 30, 2017 was $253,844 or $(0.01) per share.

After the provision for interest and income taxes, net loss for the six months ended June 30, 2018, was $1,075,119 or $(0.05) per share, and the net loss for the six months ended June 30, 2017 was $513,064 or $(0.02) per share.

About Vegalab, Inc.
Vegalab, Inc. is the exclusive distributor in North and South America of a line of all-natural, biologically derived pesticides, fertilizers, and specialty agricultural products. Vegalab's pesticides are highly effective against targeted organisms, non-toxic to beneficial organisms, and safe for the environment. Vegalab products support a healthy soil biome and are cost competitive with synthetic chemicals that do just the opposite. The Company operates in two segments of the food industry. The Agronomy Business involves the manufacture and distribution of all-natural crop protection, crop health, and soil enhancement products: and The Packing Business is the operation of a citrus packing facility.

Safe Harbor for Forward-looking Statements
This news release may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. While these statements are made to convey to the public the Company's progress, business opportunities, and growth prospects, they are based on management's current beliefs and assumptions as to future events. However, since the Company's operations and business prospects are always subject to risk and uncertainties, the forward-looking events and circumstances discussed in this news release might not occur, and actual results could differ materially from those described, anticipated, or implied. For a more complete discussion of such risks and uncertainties, please refer to the Company's filings with the Securities and Exchange Commission.

Contact:
Sean Leous
Media Relations
Vegalab Inc.
636 US Highway 1, suite 110
North Palm Beach, FL 33408, US
T + 800 208 1680 Ext. 714
http://vegalab.us

TABLES TO FOLLOW

                                   
Vegalab, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
      June 30,     December 31,    
      2018     2017    
  ASSETS                  
  Current Assets                  
  Cash and cash equivalents   $ 222,170     $ 342,534    
  Accounts receivable, net     964,005       1,674,583    
  Inventory     3,659,107       1,595,148    
  Prepaid expenses     286,909       339,389    
  Total Current Assets     5,132,191       3,951,654    
  Fixed assets, net     1,110,243       821,322    
  Intangible assets, net     2,963,751       -    
  Goodwill     1,151,407       -    
  Deposits     16,682       14,500    
  Total assets   $ 10,374,274     $ 4,787,476    
                     
  LIABILITIES AND STOCKHOLDERS' EQUITY          
                     
  Current Liabilities                  
  Accounts payable – trade   $ 1,628,225     $ 409,239    
  Accounts payable – related party     2,496,157       714,841    
  Accounts payable - growers     214,353       860,694    
  Vehicle loan - current portion     2,904       2,904    
  Capital lease obligation - current portion     3,409       3,409    
  Total Current Liabilities     4,345,048       1,991,087    
                     
  Vehicle Loan     2,501       3,958    
  Capital lease obligation - long term     16,760       18,235    
  Note payable     350,000       425,000    
  Total Liabilities     4,714,309       2,438,280    
                     
  Commitments                   
                     
  Stockholders' Equity                  
  Preferred stock – $0.001 par value, 10,000,000 shares authorized, none issued and outstanding     -       -    
  Common stock – $0.001 par value, 50,000,000 shares authorized, 23,787,897 and 23,162,897 shares issued and outstanding, respectively     23,787       23,163    
  Additional paid-in capital     9,176,752       4,791,488    
  Accumulated deficit     (3,540,574 )     (2,465,455 )  
                     
  Total Stockholders' Equity     5,659,965       2,349,196    
                     
  Total Liabilities and Stockholders' Equity   $ 10,374,274     $ 4,787,476    
     
  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 
     
   
   
  Vegalab, Inc. 
Condensed Statements of Operations
(Unaudited)
 
      For the Three Months Ended     For the Six Months Ended  
      June 30,     June 30,  
      2018     2017     2018     2017  
  Revenues:                                
  Produce processing revenue   $ 1,533,843     $ -     $ 6,093,331     $ -  
  Fertilizer sales     2,632,478       166,682       5,361,619       375,498  
                                   
  Total Revenue     4,166,321       166,682       11,454,950       375,498  
                                   
  Cost of Goods Sold:                                
  Cost of processing     1,841,494       -       6,192,430       -  
  Cost of goods sold     2,615,320       120,979       3,960,485       310,430  
                                   
  Total Cost of Goods Sold     4,456,814       120,979       10,152,915       310,430  
                                   
  Gross Profit (Loss)     (290,493 )     45,703       1,302,035       65,068  
                                   
  Operating expenses                                
  General and administrative expenses     717,470       298,148       2,359,402       557,383  
                                   
  Total operating expenses     717,470       298,148       2,359,402       557,383  
                                   
  Loss from operations     (1,007,963 )     (252,445 )     (1,057,367 )     (492,315 )
                                   
  Other expense                                
  Interest expense     (10,387 )     (1,399 )     (17,752 )     (3,713 )
                                   
  Loss before provision for income taxes     (1,018,350 )     (253,844 )     (1,075,119 )     (496,028 )
                                   
  Provision for income taxes     -       -       -       17,036  
                                   
  Net Loss   $ (1,018,350 )   $ (253,844 )   $ (1,075,119 )   $ (478,992 )
  Loss per weighted-average share of common stock outstanding, computed on net loss - basic and fully diluted   $ (0.04 )   $ (0.01 )   $ (0.05 )   $ (0.02 )
                                   
  Weighted-average number of common shares outstanding - basic and fully diluted     23,787,897       20,652,218       23,567,343       20,419,046  
     
  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 
     
   
   
  Vegalab, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
      For the Six Months Ended    
  June 30,  
      2018     2017    
  Cash flows from operating activities                  
  Net loss for the period   $ (1,075,119 )   $ (478,992 )  
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities                  
  Depreciation expense     86,469       866    
  Loss on disposition of fixed assets     14,637       -    
  Amortization expense     176,248       -    
  Stock option expense     54,891       -    
  (Increase) Decrease in                  
  Accounts receivable     836,023       (65,755 )  
  Inventory     (2,063,410 )     (12,502 )  
  Prepaid expenses     53,297       (2,030 )  
  Changes in working capital:                  
  Increase (Decrease) in                  
  Accounts payable     997,306       (4,668 )  
  Accounts payable – related party     1,783,338       244,488    
  Accounts payable - growers     (646,344 )     -    
  Accrued income taxes     -       (17,036 )  
  Net cash provided by /(used in) operating activities     217,336       (335,629 )  
                     
  Cash flows from investing activities                  
  Cash acquired from acquisition of business     22,994       -    
  Purchase of fixed assets     (354,762 )     (10,395 )  
  Deposits on lease     (3,000 )     -    
  Net cash used in investing activities     (334,768 )     (10,395 )  
                     
  Cash flows from financing activities                  
  Cash paid on notes payable to controlling stockholder, net     -       (172,307 )  
  Payment for capital leases     (1,457 )     -    
  Payment of notes payable     (1,475 )          
  Proceeds from sale of common stock     -       644,600    
  Net cash (used in) provided by financing activities     (2,932 )     472,293    
         .            
  (Decrease) increase in cash     (120,364 )     126,269    
                     
  Cash at beginning of period     342,534       151    
                     
  Cash at end of period   $ 222,170     $ 126,420    
                     
  Supplemental disclosure of interest and income taxes paid                  
  Interest paid for the period   $ 17,752     $ 1,675    
  Income taxes paid for the period   $       $ -    
  Non-cash investing and financing activities                  
  Issuance of note payable for property, plant and equipment   $ -     $ 8,761    
  Common stock and warrants issued for acquisition of business   $ 4,256,000     $ -    
  Common stock issued for conversion of note payable   $ 75,000     $ -    
     
  The accompanying notes are an integral part of these unaudited consolidated condensed financial statements. 

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