UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~ 30March 31, ~~2017~~2018

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 0-53248

VEGALAB, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada		68-0635204
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.

636 U.S. Highway 1, Ste. 110, North Palm Beach, FL		33408
Address of Principal Executive Offices		Zip Code

(800) 208-1680

Registrant’s Telephone Number, Including Area Code

HPC Acquisitions, Inc. Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

~~Former~~Indicate ~~Name,~~by ~~Former~~check mark ~~Address~~whether ~~and~~the ~~Former~~registrant ~~Fiscal~~(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act ~~Year~~of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), ifand (2) ~~Changed~~has ~~Since~~been ~~Last~~subject ~~Report~~to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x
Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of of each of the issuer’s classes of common stock, as of the latest practicable date. At ~~November~~March 1631, ~~2017,~~2018 2123,~~439~~787,~~560~~ 897 shares of common stock, par value $0.001.

Vegalab, Inc. ~~(formerly HPC Acqusitions, Inc.)~~

Form 10-Q for the Quarter Ended ~~September~~March 3031, ~~2017~~2018

Table of Contents

	Page
Part I - Financial Information
Item 1 - Financial Statements	3
Item 1 - Financial Statements (Unaudited)	3
Item 2 - Management's Discussion and Analysis of Financial Condition and Plan of Operations	1215
Item 3 - Quantitative and Qualitative Disclosures about Market Risk	1416
Item 4 - Controls and Procedures	1416
Part II - Other Information
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	1417
Item 6 - Exhibits	1417
Signatures	1518

Vegalab, Inc. ~~(formerly HPC Acqusitions, Inc.)~~

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
	March 31,			December 31,
	2017			2016
	2018			2017
ASSETS
Current Assets
Cash and cash equivalents	$	~~130~~647,~~125~~022		$	~~151~~342,534
Accounts receivable		714,828			671,279
Accounts receivable, net		1,834,279			1,619,274
Inventory		1,~~471~~527,~~668~~934			1,~~889~~650,~~423~~457
Security deposit		1,809			-
Prepaid expenses		301,664			339,389
Prepaid expenses		13,949			20,540
Total Current Assets		4,310,899			3,951,654
Total Current Assets		2,332,379			2,581,393
Fixed assets, net		1,023,464			821,322
Property, plant and equipment, net of accumulated depreciation		21,138			-
Intangible assets, net		3,751,934			-
Security deposits		14,500			14,500
Goodwill		457,407			-
Total assets	$	2,368,017		$	2,595,893
Deposits		-			14,500
Total assets	$	9,543,704		$	4,787,476
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable – trade	$	~~111~~987,~~404~~746		$	67409,~~563~~239
Accounts payable – related party		1796,~~501,704~~236			1714,~~727,857~~841
Accrued income taxes		-			17,036
Accrued amounts owed to growers		730,997			860,694
Accrued interest payable - related party		4,395			2,474
Vehicle loan - current portion		2,904			2,904
Current portion of long term loan payable		2,890			-
Capital lease obligation - current portion		3,409			3,409
Notes payable – related party		1,318			175,000
Total Current Liabilities		2,521,292			1,991,087
Total Current Liabilities		1,621,711			1,989,930
Vehicle Loan		3,457			3,958
Loan payable - Long Term		4,689			-
Capital lease obligations - long term		18,235			18,235
Total Liabilities		1,626,400			1,989,930
Notes payable		350,000			425,000
Total Liabilities		2,892,984			2,438,280
Commitments and Contingencies
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, 21,056,225 and 20,140,000 shares issued and outstanding, respectively		21,056			20,140
Common stock – $0.001 par value, 50,000,000 shares authorized, 23,787,897 and 23,162,897 shares issued and outstanding, respectively		23,788			23,163
Additional paid-in capital		29,~~201~~149,~~183~~156			14,~~377~~791,~~499~~488
Accumulated deficit		(12,~~480~~522,~~622~~224	)		(~~791~~2,~~676~~465,455	)
Total Stockholders’ Equity		~~741~~6,~~617~~650,720			~~605~~2,~~963~~349,196
Total Liabilities and Stockholders’ Equity	$	29,~~368~~543,~~017~~704		$	24,~~595~~787,~~893~~476

The accompanying notes are an integral part of these unaudited financial statements.

Vegalab, Inc. ~~(formerly HPC Acqusitions, Inc.)~~

Condensed Consolidated Statements of Operations

For the Three ~~and Nine~~ Months Ended ~~September 30~~March 31, 2018 ~~2017~~ and ~~2016~~2017

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	For the Three Months Ended March 31,
	September 30,						September 30,
	2018			2017
	2017			2016			2017			2016
Revenues:
Revenues	$	180,454		$	154,574		$	555,952		$	1,587,649
Processing revenue	$	4,559,488		$	-
Cost of goods sold		167,322			104,355			477,752			1,156,534
Product sales		2,729,141			208,816
Gross profit		13,132			50,219			78,200			431,115
Total Revenue		7,288,629			208,816
Operating expenses
Cost of Goods Sold:
General and administrative expenses		222,978			86,589			780,361			257,108
Cost of processing		4,350,936			-
Total operating expenses		222,978			86,589			780,361			257,108
Cost of Goods Sold		1,345,165			189,451
Income (loss) from operations		(209,846	)		(36,370	)		(702,161	)		174,007
Total Cost of Sales		5,696,101			189,451
Other expense
Gross Profit		1,592,528			19,365
Interest expense		(108	)		(710	)		(3,821	)		(1,911	)
Operating expenses
Income (loss) before provision for income taxes		(209,954	)		(37,080	)		(705,982	)		172,096
General and administrative expenses		1,641,932			259,235
Provision (benefit) for income taxes		-			-			(17,036	)		64,800
Total operating expenses		1,641,932			259,235
Net income (loss)	$	(209,954	)	$	(37,080	)	$	(688,946	)	$	107,296
Income (loss) from operations		(49,404	)		(239,870	)
Net income (loss) per common share - basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.03	)	$	0.01
Other income (expense)
Weighted-average common shares outstanding - basic and diluted		20,876,513			20,000,000			20,573,211			16,863,077
Interest expense		(7,365	)		(2,314	)
Loss before provision for income taxes		(56,769	)		(242,184	)
Provision for income taxes		-			17,036
Net loss	$	(56,769	)	$	(225,148	)
Loss per weighted-average shares of common stock outstanding, computed on net loss - basic and fully diluted	$	(0.00	)	$	(0.01	)
Weighted-average number of common shares outstanding - basic and fully diluted		23,567,343			20,183,284

The accompanying notes are an integral part of these unaudited financial statements.

Vegalab, Inc. ~~(formerly HPC Acqusitions, Inc.)~~

Condensed Consolidated Statements of Cash Flows

For the ~~Nine~~Three Months Ended ~~September~~March 3031, 2018 ~~2017~~ and ~~2016~~2017

(Unaudited)

	For the Nine Months Ended
	For the Three Months Ended March 31,
	September 30,
	2018			2017
	2017			2016
Cash flows from operating activities
Net income (loss) for the period	$	(~~688~~56,~~946~~769	)	$	~~107~~(225,~~296~~148	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation expense		138,~~824~~060			-
(Increase) decrease in
Loss on disposition of fixed assets		14,502			-
Accounts receivable		(43,549	)		(169,511	)
Amortization expense		82,066			-
Inventory		417,755			(2,331,898	)
Stock option expense		27,295			-
Prepaid expenses		6,591			(16,375	)
(Increase) Decrease in
Increase (decrease) in
Accounts receivable		(34,250	)		(60,908	)
Accounts payable – trade		43,841			17,445
Inventory		67,764			(75,323	)
Accounts payable – related parties		(226,153	)		1,838,414
Prepaid expenses		52,225			(6,267	)
Accrued income taxes		(17,036	)		64,800
Increase (Decrease) in
Accrued interest payable to controlling stockholder		1,921			(32,169	)
Accounts payable		(503,777	)		37,879
Net cash used in operating activities		(503,752	)		(521,998	)
Accounts payable – related party		83,322			184,757
Amounts owed to growers		730,997			-
Accrued income taxes		-			(17,036	)
Accrued interest payable to controlling stockholder		-			1,675
Net cash provided by operating activities		501,435			(160,371	)
Cash flows from investing activities
Lease deposit		(1,809	)		-
Cash acquired from acquisition of business		22,994			-
Purchase of property, plant and equipment		(14,201	)		-
Purchase of fixed assets		(219,440	)		-
Net cash used in investing activities		(16196,~~010~~446	)		-
Cash flows from financing activities
Principal payments on notes payable		(1,182	)		-
Cash paid on notes payable to controlling stockholder, net		-			(31,244	)
Repayments on notes payable to controlling stockholder, net		(173,682	)		(209,652	)
Payment for capital leases		(501	)		-
Proceeds from sale of common stock		~~824,600~~-			~~703~~230,~~100~~600
Net cash provided by financing activities		649,736			493,448
Net cash used in financing activities		(501	)		199,356
		.
Increase (decrease) in cash		129,974			(28,550	)
Increase (decrease) in Cash		304,488			38,985
Cash at beginning of period		~~151~~342,534			~~78,278~~151
Cash at end of period	$	~~130~~647,~~125~~022		$	4939,~~728~~136
Supplemental disclosure of interest and income taxes paid
Interest paid for the period	$	~~882~~443		$	341,~~288~~675
Income taxes paid for the period	$	-		$	-
Non-cash financing transaction
Non-cash investing and financing activities
Issuance of note payable for property, plant and equipment	$	8,761		$	-
Common equity 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 financial statements.

Vegalab, Inc. (formerly HPC ~~Acqusitions~~Acquisitions, Inc.)

Notes to ~~Financial~~Condensed Consolidated Financial Statements

~~September~~March 3031, ~~2017~~2018

(Unaudited)

Note A - Organization and Description of Business

Vegalab Inc. (formerly HPC ~~Acqusitions~~Acquisitions, Inc.) (the “Company”) was initially formed under the laws of the State of Minnesota as Herky Packing Co. on July 17, 1968. The Company initially produced and marketed meat snack foods, principally beef jerky, smoked dried beef and snack sausages, through food brokers, distributors and wagon jobbers. Despite a 1970 restructuring, including the relocation to an approximate 12,500 square foot production facility, the Company’s efforts were unsuccessful and all operations were terminated by the end of 1970. On April 10, 1972, the Company changed its corporate name to H. P. C. Incorporated. In connection with this name change, the Company acquired Ed Stein’s Tire Center, Inc., a Minneapolis, Minnesota-based distributor of Gates tires. This acquisition was unsuccessful and reversed in 1973.

On August 7, 2006, the Company changed its state of incorporation from Minnesota to Nevada by means of a merger with and into HPC Acquisitions, Inc., a Nevada corporation formed on June 12, 2006 solely for the purpose of effecting the reincorporation. The Articles of Incorporation and Bylaws of the Nevada ~~corporation~~Corporation are the Articles of Incorporation and Bylaws of the surviving corporation. Such Articles of Incorporation modified the Company’s capital structure to allow for the issuance of up to 50,000,000 shares of $0.001 par value common stock and up to 10,000,000 shares of $0.001 par value preferred stock.

On March 8, 2016, the Company sold 12,011,000 shares of its common stock to David Selakovic for a total cash purchase price of $303,100. This transaction effected a change in management and control of the Company. Mr. Selakovic assigned to the Company certain assets consisting of the exclusive right to distribute in the Western Hemisphere natural agrochemicals developed by ECOWIN Co., Ltd., a Korean company, certain state permits for the sale of ECOWIN agrochemicals, and the trademark “Vegalab” (the “DS Assets”). Our new plan of operation is to commence the business of selling ECOWIN products under the brand name “Vegalab” and the business of selling citrus products under the brand name “M&G”.

The Company is currently in the business of selling the ECOWIN products under the “Vegalab” name in the United States of America. The Company’s current sole source of supply of ECOWIN products is through Vegalab S. A., a Swiss company solely owned by David Selakovic, the Company’s controlling shareholder and sole officer and director.

On October 18, 2017, the Company purchased substantially all the assets of a produce packaging business conducted under the name M&G Packing, Inc. located in Tulare County, California. The acquisition consisted of purchasing the real property and building used in the business from M & G Farms, Inc., a California corporation, and all of the equipment, inventory, customers, suppliers, contract rights, and intangible property from M&G Packing, Inc., a California corporation.

On November 6, 2017, the Company amended its Articles of Incorporation to change its name to Vegalab, Inc.

Note B - Preparation of Financial Statements

The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles and has a fiscal year-end of December 31.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements filed with the U. S. Securities and Exchange Commission on its Annual Report on Form 10-K for the year ended December 31, 2016.

In the opinion of management, the accompanying interim financial statements, prepared in accordance with the U.S. Securities and Exchange Commission’s instructions for Form 10-Q, should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form10-K for the year ended December 31, 2016, and are unaudited and contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows of the Company for the respective interim periods presented. The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending December 31, 2017.

In the opinion of management, the accompanying interim financial statements, prepared in accordance with the U.S. Securities and Exchange Commission’s instructions for Form 10-Q, should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form10-K for the year ended December 31, 2017, and are unaudited and contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows of the Company for the respective interim periods presented. The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending December 31, 2017.

Note C - Going Concern Uncertainty

The Company’s principal business plan is to distribute, in the Western Hemisphere, certain natural agrochemicals developed by ECOWIN Co., Ltd., a Korean company, under ~~the~~ the brand name “Vegalab”. The Company also operates a produce packaging business. However, there is no assurance that the Company will be able to successfully penetrate its targeted ~~market~~ markets or implement its business plan.

The Company's continued existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely basis. The Company faces considerable risk in its business plan. If insufficient operating capital is available during the next twelve months, the Company will be forced to rely on existing cash in the bank and additional funds loaned by management and/or significant stockholders.

The Company’s former majority stockholder previously provided the necessary working capital to maintain the corporate status of the Company. It is the current intent of management and significant stockholders to provide sufficient working capital, if necessary, to support and preserve the integrity of the corporate entity. However, no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist. There is no legal obligation for either management or significant stockholders to provide additional future funding.

The Company anticipates offering future sales of equity securities. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company.

The Company’s certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock and 50,000,000 shares of common stock. The Company’s ability to issue preferred stock may limit the Company’s ability to obtain debt or equity financing as well as impede potential takeover of the Company, which takeover may be in the best interest of stockholders. The Company’s ability to issue these authorized but unissued securities may also negatively impact our ability to raise additional capital through the sale of our debt or equity securities.

In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market.

While the Company is of the opinion that good faith estimates of the Company’s ability to secure additional capital in the future to reach its goals have been made, there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps. These factors raise substantial doubt about the Company’s ability to continue to operate as a going concern for the twelve months following the issuance date of these consolidated financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note D - Summary of Significant Accounting Policies

1. ~~Cash~~Principle ~~and~~of ~~Cash Equivalents~~consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Vegalab, Inc. and its wholly owned subsidiaries, M&G Packaging Inc, and The Agronomy Group LLC. All intercompany accounts have been eliminated in the consolidation.

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2018 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2018.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

Concentrations of Credit Risk

Sales to ~~one~~three ~~customer~~customers comprised 84 46% ~~of the Company's total revenues for the nine months ended September 30~~, ~~2017. The customer accounted for 94~~31% ofand ~~accounts receivable as of September 30, 2017. Sales to two customers comprised 28~~22% of the Company's ~~total~~product sales revenues for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2018. ~~The~~the ~~two~~one ~~customers~~ customer accounted for 9492% of accounts receivable as of ~~December~~March 31, ~~2016~~2018. The Company believes that, in the event that its primary customers are unable or unwilling to continue to purchase the Company’s good, there are a number of alternative customers at comparable prices.

7Sales to three customers comprised 29%, 12% and 12% of the Company's processing revenues for the three months ended March 31, 2018. Four customers accounted of 68% or 20%, 19%, 18% and 11% of accounts receivable as of March 31, 2018. Sales to two customers comprised 60% and 28% of the Company’s total revenues for the Three months ended March 31, 2017. Two customers accounted for 78% and 8% of accounts receivable, respectively, as of December 31, 2017. The Company believes that, in the event that its primary customers are unable or unwilling to continue to purchase the Company’s goods, there are a number of alternative customers at comparable prices.

Accounts Receivable

In the normal course of business, the Company extends unsecured credit to virtually all of its customers which are located throughout the United States. Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its opinion of amounts which will eventually become uncollectible. In the event of complete non-performance, the maximum exposure to the Company is the recorded amount of trade accounts receivable shown on the balance sheet at the date of non-performance. March 31, 2018 and December 31, 2017, the Company recorded allowances of $9,154 and $2,915, respectively, for doubtful accounts from certain sales that occurred but not assessed to be collectible.

Inventory

Inventory consists of finished goods related to the sale of certain natural agrochemicals developed by ECOWIN Co., Ltd., a Korean company, under the brand name “Vegalab”. Inventory is valued at the lower of cost or market using the ~~first-in,~~average ~~first-out~~cost method. A change in income is taken when factors that would result in a need for a reduction in the valuation, such as excess or obsolete inventory, are noted. At ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~ 2017, there was no reserve for excess or obsolete inventory. M&G Farms from time to time holds customer’s inventory on a consignment basis until it is sold. As of March 31, 2018 there was no consignment inventory held by the Company.

Property, plant and equipment

Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation is calculated by using the straight-line method over the estimated useful lives of the assets, excluding lands, which is five years for all categories and ten years for buildings.

Automobile, computer equipment, and leasehold improvements consisted of the following:

	September 30, 2017
	March 31, 2018			December 31, 2017
Automobile	$	14,261		$	14,261
Equipment		8,701
Land		141,000			142,475
Total		22,962
Building		199,338			374,338
Accumulated depreciation		(1,824	)
Machinery and equipment		749,468			490,791
Balance	$	21,138
Total		1,104,067			1,021,865
Impairment recognized upon acquisition		-			(179,452	)
Impairment recognized subsequent to acquisition		-			(729	)
Accumulated depreciation		(80,603	)		(20,362	)
Balance at the end of period	$	1,023,464		$	821,322

Depreciation expense for the three ~~and~~ ~~nine~~ months ended ~~September~~March 3031, 2018 and 2017 was $~~958~~38,060 and $10,~~824,~~ respectively.

6. ~~Revenue~~Note ~~Recognition~~Payable

On October 18, 2017, the Company purchased substantially all the assets of a produce packaging business conducted under the name M&G Packing, Inc. located in Tulare County, California. The total purchase price for the business plus closing costs was $854,452, which was paid $429,452 in cash and $425,000 in the form of a promissory note secured by the real property that bears interest at the rate of 6.0% per annum with interest only payable monthly and all principal and interest due 18 months from the close of escrow on October 24, 2017. On January 26, 2018, the Company issued 25,000 shares of common stock to M&G Farms, Inc., which was credited as a payment of $75,000 of principal and interest on the promissory note from the Company to M&G Farms from the Company to M&G Farms.

Revenue Recognition

Revenue is recognized when the earnings process is completed, the risks and rewards of ownership have transferred to the customer, which is generally the same day as delivery or shipment of the product, the price to the buyer is fixed or determinable, and collection is reasonably assured. All sales are recorded when the goods are shipped.

The Company ships all product and fruit on an FOB-Plant, “as-is” basis. Accordingly, revenue is recognized by the Company at the point at which an order is shipped at a fixed price, collection is reasonably assured and the Company has no remaining performance obligations related to the sale. The Company sells all products and fruit with “no right of return” by the purchaser for any factor other than defects in the products~~’ development~~.

78. Income (Loss) per Share

Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.

Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.

AsFor ofthe ~~September~~three 30months ended March 31, ~~2017~~2018 and ~~2016~~ 2017, the Company’s potentially ~~had~~dilutive noshares, which include outstanding common stock ~~warrants,~~ options orthat ~~convertible~~have ~~securities~~not ~~which~~been ~~could~~included bein ~~considered~~the ascomputation ~~dilutive~~of ~~for~~diluted ~~purposes~~net ~~of the~~ loss per share ~~calculation~~as the result would have been anti-dilutive.

~~8. Recent Accounting Pronouncements~~9

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management to assess the company’s ability to continue as a going concern. Disclosures are required if there is substantial doubt as to the company’s continuation as a going concern within one year after the issue date of financial statements. The standard provides guidance for making the assessment, including consideration of management’s plans which may alleviate doubt regarding the company’s ability to continue as a going concern. ASU 2014-15 is effective for years ending after December 15, 2016. The Company adopted this standard for the year ending December 31, 2016.

	March 31, 2018		December 31, 2017
Options		448,000		448,000
Warrants		1,600,000
Total		2,048,000		448,000

Amortization and Impairment of Long-Lived Assets

Amortization and impairment of long-lived assets are non-cash expenses relating primarily to non-compete agreements and trademarks website acquisitions. The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10, "Accounting for the Impairment or Disposal of Long-Lived Assets". This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Non-compete provisions are amortized over five years and trademark and other intangibles are amortized over 10 years. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

10.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this standard as of December 31, 2016. The adoption of this standard had no effect on our results of operation, cash flows, other than presentation, or financial condition.

In April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In April 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments” ASU 2016 - provides guidance regarding the classification of certain items within the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, with early adoption permitted. The Company does not believe this ASU will have an impact on our results of operation, cash flows, other than presentation, or financial condition.

On November 17, 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”, a consensus of the FASB’s Emerging Issues Task Force (the “Task Force”). The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU No. 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017. The Company does not believe this ASU will have an impact on our results of operation, cash flows, other than presentation, or financial condition.

The Company does not expect the adoption of other recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

Note E - Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.

Interest rate risk is the risk that the Company’s earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any.

Financial risk is the risk that the Company’s earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to financial risk, if any.

Note F - Related Party Transactions

The Company’s current sole source of supply of ECOWIN products is through Vegalab S. A., a Swiss company solely owned by David Selakovic, the Company’s controlling shareholder. All products are sold to the Company at VSA's cost for the products from the manufacturer. During the nine months ended September 30, 2017, the Company incurred $384,200 for product purchases for resale from Vegalab S. A.

As of September 30, 2017 and December 31, 2016, the Company had outstanding accounts payable – related party of $1,501,704 and $1,727,857, respectively, for purchases of inventory.

During the nine months ended September 30, 2017, the Company received a credit from Vegalab S.A. of $198,510 as reimbursement for marketing costs, promotion samples, and advertising expenses incurred by the Company. This amount was recorded as a reduction of general and administrative expenses.

Note G - Note Payable to Investor

On August 24, 2016, the Company’s new controlling stockholder, David Selakovic, agreed to loan the Company up to $300,000 at a rate of 4% per annum. As of December 31, 2016, Mr. Selakovic loaned the Company a total of $175,000, due on 60 days demand. During the nine months ended September 30, 2017, the Company repaid $173,682. The Company recorded accrued interest of $4,395 and $2,474 as of September 30, 2017 and December 31, 2016, respectively, related to this note payable.

Note H - Common Stock Transactions

During the nine months ended September 30, 2017, the Company sold a total of 916,225 shares of common stock to third parties for total cash proceeds of $824,600.

~~Note~~The ICompany –does ~~Commitment~~not ~~and~~expect ~~Contingencies~~the adoption of other recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

OnNote ~~July~~E ~~20,~~– ~~2016,~~Acquisition ~~the Company entered into a lease agreement for warehouses located at 2542 Business Parkway Suite 1 and 2, Minden, Nevada. The facility is 24,276 square feet with a lease term~~ of 36 months at a current cost of $14,554 per month. The Company was also required to make a security deposit of $14,500. During the nine months ended September 30, 2017, the Company incurred rent expense of $143,555.Business

~~Future~~On ~~minimum~~December ~~obligations~~29, 2017, Vegalab exercised an option to purchase The Agronomy Group LLC, a California limited liability company (“TAG”). On January 22, 2018, Vegalab and TAG entered into a Member Units Purchase Agreement under which Vegalab agreed to purchase all of the member units in TAG from its two members for a total of 600,000 shares of the common stock of Vegalab, and warrants to purchase 1,600,000 shares of the common stock of Vegalab at an exercise price of $1.20 per share exercisable over a term of five years. The acquisition was closed February 20, 2018, effective February 1, 2018. The Company recognized the assets acquired and liabilities assumed from TAG at their fair value on the ~~lease~~acquisition date, and the excess in purchase price over these values it was allocated to intangible assets and goodwill. The estimated fair values of assets acquired and liabilities assumed, were determined based on management’s best estimates. Preliminary estimated fair values are: subject to measurement period adjustments which represent updates made to the preliminary purchase price allocation based on revisions to valuation estimates in the interim period subsequent to the acquisition and initial accounting date up until the purchase price allocation is finalized which cannot be any later than one year from the acquisition date. The Company engaged a third-party valuation specialist to assist in the valuation and is in the process of completing its assessment of the fair value of assets acquired and liabilities assumed. Thus the preliminary measurement of the assets acquired and liabilities assumed are subject to change, which could be significant. The Company will finalize the amounts recognized no later than one year from the acquisition date.

2017	$	41,876
2018		167,504
2019		125,628
	$	335,009

The following table shows the preliminary purchase price, estimated acquisition-date fair values of the assets acquired and liabilities assumed and calculation of goodwill for TAG utilizing the information at acquisition date. All numbers are in 000s except shares and warrants.

Note K – Subsequent Events

Assets acquired:
Current assets	$	152
Property and equipment		35
Customer, workforce, trademarks and related relationships		3,834
Goodwill		457
Total assets acquired		4,478
Total liabilities assumed		(222	)

Net assets acquired	$	4,256
Consideration paid:
Issuance of 600,000 shares of common stock	$	2,580
Issuance of 1,600,000 warrants		1,676

Total	$	4,256

~~Subsequent~~The toCompany ~~September~~is ~~30,~~amortizing ~~2017,~~ the ~~Company~~intangible ~~sold~~assets ~~383,335~~over ~~shares~~their useful lives of ~~its~~5-10 ~~common~~years. ~~stock~~During ~~for~~the ~~total~~three ~~cash~~months ~~proceeds~~ended March 31, 2018, the Company recorded amortization expense of $~~345~~82,~~000~~066.

OnNote ~~October~~F ~~18,~~– 2017, the Company purchased substantially all the assets of a produce packaging business conducted under the name M&G Packing, Inc. located in Tulare County, California. The acquisition consisted of purchasing the real property and building used in the business from M & G Farms, Inc., a California corporation, and all of the equipment, inventory, customers, suppliers, contract rights, and intangible property from M&G Packing, Inc., a California corporation.Segments

~~The~~We ~~total~~had ~~purchase~~two ~~price~~operating ~~for~~segments, ~~the~~one that ~~business~~sells ~~plus~~the ~~closing~~ECOWIN ~~costs~~products isunder ~~$854,452,~~the ~~which~~“Vegalab” ~~was~~brand ~~paid~~name ~~$429,452~~and ina ~~cash~~produce ~~and~~packaging ~~$425,000~~business inconducted under the ~~form of~~name aM&G ~~promissory~~Packing, ~~note~~Inc. ~~secured~~located byin ~~the~~Tulare ~~real~~County, ~~property~~California that ~~bears~~was ~~interest~~acquired atin the ~~rate~~4th quarter of 62017.0% ~~per~~Prior ~~annum~~to ~~with interest only~~the ~~payable~~acquisition, ~~monthly and all principal and interest due 18 months from~~ the ~~close~~Company’s ofonly ~~escrow~~business onsegment ~~October~~was ~~24, 2017~~Vegalab.

On November 6, 2017, the Company filed an amendment to its Articles of Incorporation with the Secretary of Nevada to change its name to "Vegalab, Inc." and approved the Company's 2017 Equity Incentive Plan and the reservation of 2,000,000 shares of common stock for the issuance thereunder. The name change and the 2017 Equity Incentive Plan were previously approved by its majority shareholders via a special meeting held on November 6, 2017.

For the three months ended March 31, 2018:

					Segment		Segment
Business Segment	Sales		Depreciation		Gross Profit		Assets
Produce packaging business	$	4,559,488	$	33,098	$	208,552	$	2,546,801
ECOWIN product sales	$	2,729,141	$	4,962	$	1,383,976	$	6,996,903
Total	$	7,288,629	$	38,060	$	1,592,528	$	9,543,704

Note G - Related Party Transactions

The Company’s current sole source of supply of ECOWIN products is through Vegalab S. A., a Swiss company solely owned by David Selakovic, the Company’s controlling shareholder. All products are sold to the Company at VSA's cost for the products from the manufacturer. During the three months ended March 31, 2018 and 2017, the Company incurred $879,006 and $244,000 for product purchases for resale from Vegalab S. A.

As of March 31, 2018 and December 31, 2017, the Company had outstanding accounts payable – related party of $719,272 and $712,947, respectively, for purchases of inventory.

Note H - Note Payable to Investor

On August 24, 2016, the Company’s controlling stockholder, David Selakovic, agreed to loan the Company up to $300,000 at a rate of 4% per annum. As of December 31, 2016, Mr. Selakovic loaned the Company a total of $175,000, due on 60 days demand. During the year ended December 31, 2017, the Company repaid $177,474 including accrued interest of $2,474. The Company recorded accrued interest of $1,894 and $1,894 as of March 31, 2018 and December 31, 2017, respectively, related to this note.

Note I - Common Stock Transactions

On January 26, 2018, the Company issued 25,000 shares of common stock to M&G Farms, Inc., which was credited as a payment of $75,000 of principal and interest on the promissory note from the Company to M&G Farms from the Company to M&G Farms in the principal amount of $425,000 dated October 9, 2017.

Note J – Stock Options and Warrants

	Number of Options/Warrants		Weighted Average Exercise Price

Balance at December 31, 2017		448,000	$	1.45
Granted		1,600,000		1.20
Exercised		—		—
Expired		—		—
Balance at March 31, 2018		2,048,000	$	1.25
Options Exercisable at March 31, 2018		1,999,250	$	1.25

The Company's stock price was higher than the weighted average exercise price at March 31, 2018; therefore the intrinsic value of the options and warrants was approximately $3,369,000.

On February 28, 2017, the Company granted options to purchase 30,000 shares of its common stock to consultants at an exercise price of $1.23 per share. The options vested over 10 months. The options expire on February 25, 2022. The options were valued using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, annual volatility of 508%, risk free interest rate of 2.09%, and an expected life of 5 years. The intrinsic value of the option was approximately $50,000 as of March 31, 2018.

On November 20, 2017, the Company granted options to purchase 78,000 shares of its common stock to consultants at an exercise price of $1.425 per share. The options vest over 12 months. The options expire on November 20, 2022. The options were valued using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, annual volatility of 490%, risk free interest rate of 2.09%, and an expected life of 5 years. The intrinsic value of the option was approximately $115,000 as of March 31, 2018.

On November 20, 2017, the Company granted options to purchase 100,000 shares of its common stock to an employee at an exercise price of $1.425 per share. The options vested immediately. The options expire on November 20, 2022. The options were valued using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, annual volatility of 490%, risk free interest rate of 2.09%, and an expected life of 5 years. The intrinsic value of the option was approximately $147,000 as of March 31, 2018.

On November 20, 2017, the Company granted options to purchase 100,000 shares of its common stock to its President who is also a Director at an exercise price of $1.425 per share. The options vested immediately. The options expire on November 20, 2022. The options were valued using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, annual volatility of 490%, risk free interest rate of 2.09%, and an expected life of 5 years. The intrinsic value of the option was approximately $147,000 as of March 31, 2018.

On December 11, 2017, the Company granted options to purchase 140,000 shares of its common stock to consultants at an exercise price of $1.40 per share. The options vested immediately. The options expire on December 12, 2022. The options were valued using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, annual volatility of 495%, risk free interest rate of 2.16%, and an expected life of 5 years. The intrinsic value of the option was approximately $189,000 as of March 31, 2018.

On December 29, 2017, Vegalab exercised an option to purchase The Agronomy Group LLC, a California limited liability company (“TAG”). On January 22, 2018, Vegalab and TAG entered into a Member Units Purchase Agreement under which Vegalab agreed to purchase all of the member units in TAG from its two members for a total of 600,000 shares of the common stock of Vegalab, and warrants to purchase 1,600,000 shares of the common stock of Vegalab at an exercise price of $1.20 per share exercisable over a term of five years. The acquisition was closed February 20, 2018, effective February 1, 2018. The options vested immediately. The options expire on March 1, 2023. The options were valued using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, annual volatility of 245%, risk free interest rate of 2.53%, and an expected life of 5 years. The total value of the warrant was approximately $1,676,000 at the February 1, 2018. As of March 31, 2018, the intrinsic value of the warrant was approximately $2,720,000.

During the three months ended March 31, 2018, we incurred stock option expense of $27,293.

Note K – Commitment and Contingencies

On October 20, 2017, the Company entered into a lease agreement for a forklift with a lease term of 57 months at a current cost of $380 per month. Per the agreement, no payment was due in the first 4 months of the lease term. The Company recorded the lease as a capital lease and used its incremental borrowing rate of 1.90% for purposes of discounting lease payments.

The future minimum lease payments required under the capital lease and the present value of the net minimum lease payments as of March 31, 2018 are as follows:

2018	$	3,044
2019		4,555
2020		4,555
2021		4,555
2022 & Thereafter		5,315
Total future minimum lease payments	$	22,024
Less: amount representing interest		(380	)
Present value of net minimum lease and obligations		21,644

On July 20, 2016, the Company entered into a lease agreement for warehouses located at 2542 Business Parkway Suite 1 and 2, Minden, Nevada. The facility is 24,276 square feet with a lease term of 36 months at a current cost of $13,959 per month. The Company was also required to make a security deposit of $14,500. During the three months ended March 31, 2018, the Company incurred rent expense of $50,501.

On February 13, 2018, the Company entered into a lease agreement for office space located at 764 P Street Suite 014,015,016 and 017, Fresno California. The office is 2,850 square feet with a lease term of 12 months commencing on March 1, 2018 at a current cost of $3,000 per month. The Company was also required to make a security deposit of $3,000. During the three months ended March 31, 2018, the Company incurred rent expense of $3,250.

At March 31, 2018, future minimum obligations on leases are:

2018	$	152,628
2019		131,628
2020		-
2021		-
2022 & Thereafter		-
Total	$	284,256

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Caution Regarding Forward-Looking Information

The following discussion and analysis of ~~financial~~ financial condition and results of operations should be read in conjunction with the audited December 31, ~~2016~~2017 Consolidated Financial ~~Statements~~ Statements and notes thereto, along with Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~included~~ included in our ~~2016~~2017 Annual Report on Form 10-K, filed separately with the Securities and Exchange Commission.

This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, which address activities, actions, goals, prospects, or new developments that we expect or anticipate will or may occur in the future, including such things as expansion and growth of our operations and other such matters are forward-looking statements. Any one or a combination of factors could materially affect our operations and financial condition. These factors include competitive pressures, success or failure of marketing programs, changes in pricing and availability of products offered to customers, legal and regulatory initiatives affecting our products, and conditions in the capital markets. Forward-looking statements made by us are based on knowledge of our business and the environment in which we operate as of the date of this report. Because of the factors discussed in our ~~2016~~2017 Annual Report on Form 10-K and factors disclosed in subsequent reports filed with the Securities and Exchange Commission, actual results may differ from those in the forward-looking statements.

General

Vegalab, Inc., formerly HPC Acquisitions, Inc. (the “Company”, “we”, “our”, or “us”) is the exclusive North and South America distributor of Vegalab products supplied by Vegalab SA, Switzerland (“VSA”). ~~Vegalab~~The ~~products~~Company ~~consist~~operates ofin ~~biological~~two segments of ~~pesticides,~~the ~~fertilizers,~~food ~~and~~industry; ~~specialty~~the ~~biological~~Agronomy ~~agents~~Business ~~that~~and ~~are~~the ~~highly~~Packing ~~effective~~Business. ~~against~~The ~~targeted~~Agronomy ~~organisms,~~Business ~~non-toxic~~involves tothe ~~beneficial~~manufacture and distribution ~~organisms~~of all natural crop protection, ~~and~~crop ~~safe~~health, ~~for~~and ~~the~~soil ~~environment~~enhancement products. The ~~Company~~Packing ~~holds~~Business ~~registrations~~operates ~~for~~a ~~its~~citrus packing facility. Because growers who use our crop protection and plant health products inare apotential ~~number~~users of USour ~~states,~~citrus ~~Costa~~packing ~~Rica~~services, and ~~Panama~~vice versa, ~~and~~management isbelieves ~~pursuing~~that ~~additional~~these ~~registrations~~two ~~domestically~~business units are complementary and inwill ~~Canada,~~create ~~Mexico,~~synergistic ~~and~~growth ~~Central/~~for ~~South~~both ~~America~~business units.

Vegalab products consist of biological pesticides, fertilizers, and specialty biological agents that are highly effective against targeted organisms, non-toxic to beneficial organisms, and safe for the environment. The Company holds registrations for its products in a number of US states, Costa Rica, and Panama, and is pursuing additional registrations domestically and in Canada, Mexico, and Central/ South America.

Recent Development

OnIn ~~October~~February ~~18,~~of ~~2017~~2018, wethe ~~purchased~~Company ~~substantially~~acquired ~~all~~The ~~the~~Agronomy ~~assets~~Group, ofLLC, a ~~produce~~California ~~packaging~~limited ~~business~~liability ~~conducted~~company ~~under the name M&G Packing, Inc.~~ (~~the~~ “~~Business~~TAG”), ~~located in~~a ~~Tulare~~producer ~~County,~~and ~~California.~~distributor ~~The~~of ~~acquisition~~environmentally friendly ~~consisted~~agrochemicals. ofTAG ~~purchasing~~had ~~the~~been ~~real~~our ~~property~~top ~~and~~U.S. ~~building~~sales ~~used~~organization, inso the ~~Business~~acquisition ~~from M~~significantly &expanded Gthe ~~Farms,~~Company’s internal ~~Inc~~marketing capabilities. Furthermore, athe ~~California~~TAG ~~corporation,~~product ~~and~~line ~~all~~complemented of the ~~equipment,~~existing ~~inventory,~~Vegalab ~~customers,~~product ~~suppliers~~line, ~~contract~~and ~~rights,~~thus ~~and~~increased ~~intangible~~the ~~property~~number ~~from~~of ~~M&G~~products ~~Packing,~~that ~~Inc.,~~we ahave ~~California~~available ~~corporation~~to offer our customers. The ~~total~~ purchase price for ~~the~~TAG ~~business plus closing costs is $854,452, which~~ was paid ~~$429,452~~by inthe ~~cash~~delivery ~~and~~of ~~$425~~600,000 shares inof ~~the~~common ~~form~~stock of Vegalab, and a ~~promissory~~warrant ~~note~~to ~~secured~~purchase by1,600,000 ~~the~~shares ~~real~~of ~~property~~common ~~that bears~~stock ~~interest~~of Vegalab at ~~the~~an ~~rate~~exercise price of 6$1.0%20 per ~~annum~~share ~~with~~exercisable ~~interest~~over ~~only~~a ~~payable~~term ~~monthly and all principal and interest due 18 months from the close~~ of ~~escrow~~five ~~on October 24, 2017~~years.

Results of Operations

~~Revenues~~During ~~for~~ the three months ended ~~September 30~~March 31, ~~2017~~2018, ~~were~~the Company recognized total revenues of $~~180~~7,~~454~~288,629 compared to $~~154~~208,~~574~~816 for the three months ended ~~September~~March 3031, ~~2016~~2017. ~~Cost~~Revenue offrom ~~goods sold were $167,322 for~~ the ~~three-month~~sale ~~period~~of ~~ended~~Vegalab ~~September~~products ~~30,~~was ~~2017~~$2,729,141 compared to $~~104~~208,~~355 for the same period in 2016. Revenues increased by 16.7%~~816 for the three~~-month~~ ~~period~~months inended ~~2017~~March ~~compared to 2016~~31, ~~but~~2017. ~~cost~~Cost of goods sold ~~increased~~were ~~60.3% for the period in 2017 compared to 2016~~$1,345,165 ~~which resulted in a decrease in gross profit~~ for the three months ended ~~September~~March 3031, ~~2017~~2018, ~~to $13,132,~~ compared to $50189,~~219~~ 451 for the ~~same~~three ~~period~~months inended ~~2016~~March 31, 2017.

1215

~~The~~On ~~Company~~October ~~began~~18, ~~its~~2017, ~~distribution~~the ~~business~~Company purchased insubstantially all the ~~second~~assets ~~calendar quarter~~ of ~~2016. Customer prospects with~~ a ~~strong~~produce ~~commitment~~packaging tobusiness ~~eco-friendly~~conducted ~~agriculture~~under ~~that had shown an interest in~~ the ~~Company’s~~name ~~products~~M&G ~~placed~~Packing, ~~large~~Inc. ~~orders~~During in the ~~second~~first quarter of ~~2016~~2018 ~~to establish inventory, which led to a large sales volume and revenues for~~ the ~~nine-month~~Company ~~period~~generated ~~ended September 30, 2016, of~~ $14,~~587~~559,~~649~~488 ~~compared~~from toprocessing ~~revenues~~revenue. ~~for the~~As ~~same~~this ~~period~~business ~~in 2017 of $555,592. It~~ was ~~not~~acquired ~~expected that the initial inventory purchases by distributors~~ in ~~2016~~October ~~would recur in~~ 2017, ~~and~~there ~~that~~was ~~purchases~~no corresponding revenue in ~~2017~~the ~~would~~first bequarter toof ~~replenish inventory~~2017. Cost of goods ~~sold~~ for ~~the~~our ~~nine~~produce ~~month-periods~~packaging ~~ended~~business ~~September 30,~~was ~~2017 and 2016, were~~ $~~477~~4,~~752 and $1~~350,~~156,534,~~936 ~~respectively.~~for Asthe athree ~~result~~months ofended March ~~the~~31, ~~large~~2018. ~~sales~~There ~~volume~~was inno ~~2016~~corresponding ~~that~~cost ~~did~~of ~~not~~goods ~~recur, gross~~for ~~profit~~our ~~decreased~~produce topackaging ~~$78,200~~business ~~for~~in the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30,~~ 2017, ~~compared to $431,115~~ for the reason ~~same~~stated ~~period in 2016~~above.

Total operating expenses for the three~~-month~~ months ~~period~~ ended ~~September~~March 3031, ~~2017~~2018, were $~~222~~1,~~978~~641,932 compared to $86189,~~589~~451 for the three~~-month~~ ~~period~~months ended ~~September~~March 3031, ~~2016~~ 2017. ~~Total~~Expenses ~~operating~~increased significantly ~~expenses~~as ~~for~~ the ~~nine-month~~Company ~~period~~hired ~~ended~~additional ~~September 30~~staff, ~~2017,~~consultants ~~were~~and ~~$780,361~~professionals ~~compared~~due to ~~$257~~its purchase of M&G Packing,~~108~~ ~~for~~Inc. and TAG compared to the ~~nine-month~~ ~~period~~three months ended ~~September~~March 3031, ~~2016~~2017. ~~The~~For ~~increase~~the ~~was~~three ~~due~~months toended ~~additional~~March ~~professional~~31, ~~fees~~2018, ~~consulting~~we ~~expenses~~had ~~and~~a loss from operations ~~rent~~of ~~incurred~~$49,404 compared to $239,870 for the three ~~and nine~~ months ended ~~September~~March 3031, 2017.

~~For~~After the ~~three-month~~provision ~~period~~for ~~ended~~interest ~~September~~and income 30taxes, ~~2017,~~net loss ~~from~~for ~~operations~~the ~~was~~three ~~$209,846~~months ~~compared~~ended toMarch a31, ~~loss~~2018, ~~from~~was ~~operations~~$56,769 ofor $36(0.00) per share,~~370~~ ~~for~~and the ~~same~~net ~~period~~loss infor ~~2016. For~~ the ~~nine-month~~ ~~period~~three months ended ~~September~~March 3031, 2017, ~~loss from operations~~ was $~~702~~225,~~161~~148 ~~compared~~or ~~to income from operations in the amount of~~ $~~174,007~~(0.01) ~~for~~per ~~the same period in 2016~~share.

After interest and provision (benefit) for income taxes, net loss for the three-month and nine-month periods ended September 30, 2017, were $209,954 and $688,946, respectively. Net loss for the three-month period ended September 30, 2017, was $37,080, and net income for the nine-month period ended September 30, 2016, was $107,296.

Net loss per common share on a fully diluted basis for the three-month and nine-month periods ended September 30, 2017, were $0.01 and $0.03, respectively. Net loss per common share on a fully diluted basis for the three-month ended September 30, 2016, was nil, and net income per common share on a fully diluted basis for the nine-month periods ended September 30, 2016, was $0.01.

Liquidity and Capital Resources

At ~~September~~March 3031, ~~2017~~2018, and December 31, ~~2016~~2017, the Company had a working capital surplus of approximately $~~710~~1,~~668~~789,607 and $~~591~~1,~~463~~960,567, respectively.

AtWe believe our current funding is sufficient to meet our needs described above over the ~~present~~next ~~time~~9 to 12 months. Nevertheless, our ~~sole~~goal ~~source~~is ofto ~~supply~~begin and then increase product sales isas ~~VSA~~quickly as we can within the constraints of our managerial and financial resources. AtIf ~~September~~sales ~~30,~~opportunities ~~2017~~exceed our expectations, we will need additional debt or equity financing to seize these opportunities and there is no assurance financing will be available or available at terms we ~~held~~would ~~inventory~~find acceptable. If we are unable to raise additional capital at a ~~cost~~level ofadequate $1to support our sales opportunities,~~471~~ we would need to curtail marketing efforts,~~668,~~ which would adversely affect growth and ~~outstanding~~results ~~accounts~~of ~~payable~~operations and tocould ~~VSA~~prevent us from succeeding in ~~the~~implementing ~~amount of~~our ~~$1,501,704~~new operating business. ~~Our~~These ~~payment~~factors ~~terms~~raise onsubstantial doubt about the Company’s ~~account~~ability ~~payable~~to ~~are~~continue ~~“payable~~to ~~upon~~operate ~~sale~~as toa ~~consumer”~~going concern for the 12 months following the issuance date of these consolidated financial statements.

Between December 31, 2016 and September 30, 2017, the Company sold 916,225 shares of its common stock to nine subscribers for cash of $824,600.

We believe our current funding is sufficient to meet our needs described above over the next 9 to 12 months. Nevertheless, our goal is to increase product sales as quickly as we can within the constraints of our managerial and financial resources. If sales opportunities exceed our expectations, we will need additional debt or equity financing to seize these opportunities and there is no assurance financing will be available or available at terms we would find acceptable. If we are unable to raise additional capital at a level adequate to support our sales opportunities, we would need to curtail marketing efforts, which would adversely affect growth and results of operations and could prevent us from succeeding in implementing our new operating business. These factors raise substantial doubt about the Company’s ability to continue to operate as a going concern for the 12 months following the issuance date of these financial statements.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note D to our unaudited financial statements appearing elsewhere in this report.

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

Not required of a smaller reporting company.

Item 4 - Controls and Procedures

Our management, under the supervision and ~~with~~ with the participation of our Chief Executive and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 promulgated under the Exchange Act as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our Certifying Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Certifying Officer concluded that as of such date, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the time periods specified by the SEC due to certain weaknesses in our internal control over financial reporting described in Item 9A of our Annual Report on Form 10-K for the year ended ~~December~~March 31, ~~2016~~2017, which we view as an integral part of our disclosure controls and procedures.

There have been no changes in our internal control over financial reporting during the quarterly period ended September 30, 2017, which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.16

There have been no changes in our internal control over financial reporting during the quarterly period ended March 31, 2018, which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 2 –- Unregistered Sales of Equity Securities and Use of Proceeds

On orJanuary ~~about March 17~~26, ~~2017~~2018, the Company ~~commenced a~~issued ~~limited offering of up to 3~~25,~~333,334~~000 shares of ~~restricted~~ common stock atto aM&G ~~price~~Farms, ~~of $0~~Inc.90, ~~per~~which ~~share.~~was ~~The~~credited ~~common~~as ~~stock~~a ~~offered has~~payment ~~not been registered under the Securities Act~~ of ~~1933~~$75,000 asof ~~amended~~principal ~~(the “Securities Act”),~~ and ~~may~~interest ~~not~~on ~~be offered or sold in~~ the ~~United~~promissory ~~Stated~~note ~~absent registration or an applicable exemption~~ from ~~registration under~~ the ~~Securities~~Company ~~Act.~~to ~~The~~M&G ~~shares are~~Farms ~~offered and sold in reliance on the exemption~~ from ~~registration set forth in Section 4(a)(2) of~~ the ~~Securities~~Company ~~Act and Rule 506(b) of Regulation D adopted thereunder. Shares will only be sold~~ to ~~persons~~M&G ~~the~~Farms ~~Company reasonably believes are “accredited investors” as that term is defined~~ in ~~Rule 501 of Regulation D. During~~ the ~~quarter~~principal ~~ended~~amount ~~September~~of 30$425,000 ~~2017,~~dated ~~200,001~~October ~~shares of the Company’s common stock were sold to two accredited investors at a total purchase price of $180~~9,~~000~~ 2017.

On December 29, 2017, the Vegalab exercised an option to purchase The Agronomy Group LLC, a California limited liability company (“TAG”). On January 22, 2018, Vegalab and TAG entered into a Member Units Purchase Agreement under which Vegalab agreed to purchase all of the member units in TAG from its two members for a total of 600,000 shares of the common stock of Vegalab, and warrants to purchase 1,600,000 shares of the common stock of Vegalab at an exercise price of $1.20 per share exercisable over a term of five years. The acquisition was closed February 20, 2018, effective February 1, 2018.

The shares of common stock, options, warrants, and common stock underlying the options and warrants are issued in reliance on the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 6 - Exhibits

31.1		Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
Exhibit No.
32.1		Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
10.1	Member Units Purchase Agreement dated January 22, 2018 (1)
101		Interactive data files pursuant to Rule 405 of Regulation S-T.
10.2	Common Stock Purchase Warrant issued to Jeffry Hill (1)
10.3	Common Stock Purchase Warrant issued to Ryan Sweeney(1)
10.4	Employment Agreement between Vegalab, Inc., and Jeffry Hill (1)
10.5	Employment Agreement between Vegalab, Inc., and Ryan Sweeney (1)
31.1	Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
101	Interactive data files pursuant to Rule 405 of Regulation S-T.

14(1) These exhibits are incorporated herein by this reference form the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 2, 2018.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Vegalab, Inc.
Dated: November 17, 2017	By:	/s/ David D. Selakovic
Dated: July 13, 2018	By:	/s/ David D. Selakovic
		David D. Selakovic, Chief Executive Officer and
		David D. Selakovic, Chief Executive Officer and Chief Financial Officer
		Chief Financial Officer

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