4 June 2018

VEGALAB ANNOUNCES 2017 FINANCIAL RESULTS

Vegalab, Inc. ("the Company"), (OTCQB:VEGL) today announced its 2017 Financial Results. 

Vegalab Inc. holds the exclusive North and South America distribution rights to a suite of Earth friendly products that includes biological pesticides, natural fertilizers, and specialty biological products marketed under the “Vegalab” brand (“The Agronomy Business”).  Sales in 2017 slowed during the first three quarters due to a combination of adverse weather in California, and the Company’s customers using products left over from 2016 purchases. In the fourth quarter, however, the Company began selling its products through two of the twenty-five largest agricultural retailers in the United States, one of which agreed to a $13 million minimum purchase requirement for 2018 in its distribution agreement.

Management strategically grew the Company in October of 2017, with the acquisition of substantially all of the assets related to a produce packing business located in Tulare County, California (the "Packing Business").  The acquisition added tangible assets to the Company’s balance sheet of 11 acres of real property and 30,000 sq. ft. of buildings located in the heart of the California citrus growing region. The purchase included all equipment, inventory, customers, suppliers, contract rights, and intangible property of the prior owner/operators. In addition, this thirteen-year-old business, with annual revenues of $8.6 Million in 2016, produced immediate synergies and new opportunities. Recognizing the potential to dramatically increase capacity, the company invested $350,000 in equipment to increase pack line efficiency and cold storage space, changes that could increase production by 200%. Should demand warrant, by simply adding another shift the Company could potentially triple the revenue of the Packing Business and dramatically increase its profits.

The acquisition of the Packing Business is a part of the Company’s long-term plan to grow its business both organically and through strategic, geographically complimentary, acquisitions. Not only did the acquisition add immediate cash flow and incremental revenues to the Company, with several customers of the Packing Business already using Vegalab's all natural products to maximize yields and increase the number of premium quality fruits produced in their citrus groves, the acquisition provides synergistic growth opportunities for both the Company’s Packing Business and the Company’s Agronomy Business.

David Selakovic, CEO of Vegalab, Inc., stated; “In the next few weeks, we will announce our First Quarter Earnings for Fiscal Year 2018.  We look forward to sharing the successful business trajectory of Vegalab Inc., as we expand the Company’s offerings and operations while pursuing new markets and business opportunities in North and South America.” 

Results of Operations

During the year ended December 31, 2017, the Company recognized total revenues of $2,491,391 compared to $2,115,421 for the year ended December 31, 2016, including sales of $361,083 from the sale of Vegalab products compared to $2,115,421 for the year ended December 31, 2016. Product sales in 2017 slowed until the fourth quarter, due to a combination of adverse weather in California and our customers using products carried over from purchases in mid to late 2016. On October 18, 2017, the Company purchased substantially all the assets of a produce packaging business conducted under the name M&G Packing, Inc. From October 18, 2017 through December 31, 2017 the Company generated revenues of $2,130,308 from processing revenue.

Cost of goods sold were $2,057,619 for the year ended December 31, 2017, Compared to $1,617,366 for the year ended December 31, 2016. Cost of goods sold for our Vegalab products decreased due to reduced sales of Vegalab products. Cost of goods of $1,774,279 on our produce packaging business was under M&G Packing, Inc. from October 18, 2017 through December 31, 2017. During the year ended December 31, 2017 expenses increased significantly as the Company hired additional staff, consultants and professionals due to its purchase of M&G Packing, Inc. During the year ended December 31, 2017 the Company recorded an expense of $180,181 as an impairment of assets acquired in its purchase of M&G Packaging, Inc.

Total operating expenses for the year ended December 31, 2017, were $2,116,404 compared to $593,334 for the year ended December 31, 2016. For the year ended December 31, 2017, loss from operations was $1,682,632 compared to 95,279 for the year ended December 31, 2016.

After the provision for income taxes, net loss for the year ended December 31, 2017, was $1,673,779 or $0.08 per share, and the net loss for the year ended December 31, 2016 was $116,361 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.