Vegalab, Inc. ("the Company"), (OTCQB:VEGL) today reported results for the quarter ended March 31, 2018.
Vegalab operates in two segments of the food industry; the Agronomy Business and the Packing Business. The Agronomy Business involves the manufacture and distribution of all-natural crop protection, crop health, and soil enhancement products. The Packing Business operates a citrus packing facility. Because growers who use our crop protection and plant health products are potential users of our citrus packing services, and vice versa, management believes that these two business units are complementary and will create synergistic growth for both business units.
In February of 2018, the Company acquired The Agronomy Group, LLC, a California limited liability company (“TAG”), a producer and distributor of environmentally friendly agrochemicals. TAG had been our top U.S. sales organization, so the acquisition significantly expanded the Company’s internal marketing capabilities. Furthermore, the TAG product line complemented the existing Vegalab product line, and thus increased the number of products that we have available to offer our customers.
Mr. Selakovic, CEO of Vegalab, Inc., stated: “The acquisition of The Agronomy Group, LLC, was a strategic business decision that expanded the Company’s offerings and footprint in the United States. Additionally, due to Company improvements and better streamlining of operations, revenue from the sale of Vegalab products increased 1206 percent compared to the three months ended March 31, 2017. We will continue to build out our business and expand our footprint in key regions. Management continues to seek strategic partners who will help increase our market share in North and South America.” He concluded, “Demand for our natural and organic products that help restore the earth’s damaged soil continues to grow, and we look forward to serving the stewards of better agriculture.”
Results of Operations
During the three months ended March 31, 2018, the Company recognized total revenues of $7,288,629 compared to $208,816 for the three months ended March 31, 2017. Revenue from the sale of Vegalab products was $2,729,141 compared to $208,816 for the three months ended March 31, 2017.
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 first quarter of 2018 the Company generated $4,559,488 from processing revenue. As this business was acquired in October 2017, there was no corresponding revenue in the first quarter of 2017.
Cost of goods sold for the agrochemicals business were $1,345,165 for the three months year ended March 31, 2018, compared to $189,451 for the three months ended March 31, 2017.
Cost of goods for our produce packaging business was $4,350,936 for the three months ended March 31, 2018. There was no corresponding cost of goods for our produce packaging business in the first quarter of 2017 for the reason stated above.
Total operating expenses for the three months ended March 31, 2018, were $1,641,932 compared to $189,451 for the three months ended March 31, 2017. For the three months ended March 31, 2018, loss from operations was $49,404 compared to $239,870 for the three months ended March 31, 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 March 31, 2017.
After the provision for interest and income taxes, net loss for the three months ended March 31, 2018, was $56,769 or $(0.00) per share, and the net loss for the three months ended March 31, 2017 was $225,148 or $(0.01) 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 and the Packing Business. 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.