Core One Labs Inc. (CLABF)

[Sam Dan]

This report is VERY encouraging

"Lifestyle Delivery Systems Inc. Annual Corporate Update The mission of Lifestyle Delivery Systems Inc. (the Company) from its inception has been to provide its customers with the highest quality cannabis products at affordable prices. In order to accomplish this mission, the Company must control its cannabis genetics, biomass supply chain, manufacturing, and delivery methods. The 2018 year began with new emergency regulations from Californias BCC (Bureau of Cannabis Control), DPH (Department of Public Health) and DFA (Department of Food and Agriculture) (collectively, Cannabis Regulations) and an abundance of contaminated cannabis material. Some published articles estimated that over ninety percent of the available cannabis material was contaminated with pesticides. We spent hundreds of thousands of dollars on testing biomass from various growers and separating the growers into those capable of growing without pesticides and those who could not. But even the growers capable of non-pesticide operations would not pass the contamination testing from time to time because of pesticides used on neighboring farms, so testing continues as a pre-purchase necessity. Once we had identified our preferred growers and were scheduling transportation for cannabis material from the farms to our Adelanto facility we were confronted with a new set of Cannabis Regulations and transportation requirements, which resulted in majority of then current transporters to fall out of compliance with these regulations. At the time the new regulations were enacted we were already holding our Distribution/Transportation permit from the City of Adelanto, and had submitted our request for the State License but had not received it yet. The transportation of all goods in the State of California requires more than just a State of California Cannabis Transportation License. Department of Motor Vehicles, Department of Transportation, and the Highway Patrol have additional requirements that all transportation vehicles must abide by and we could find very few transportation operators with the necessary bonds, insurance, permits and licenses. We waited for our State License and during that time met all the additional requirements to operate legally on California highways. We received our State License on September 5, 2018. The new challenge came when proposed version of the States Permanent Cannabis Regulations turned all of our packaging for CannaStripsTM into non-compliant packaging. We chose not to order new packaging at that time as we still had five hundred thousand non-compliant packages ready to go, and we didnt want to add to that number, so we decided to wait (good thing we did). As a temporary solution, we ordered stickers to cover the old non-compliant packaging and went to work applying 20,000 Rveur stickers and 50,000 CannaStripsTM stickers by hand. In October 2018 another version of the States Permanent Cannabis Regulations was released, but we remained with our original decision to forgo ordering new packaging for our products until the final version was released, meanwhile resorting to change the stickers on previously re-stickered packages. In the meantime, we began extracting oils and creating distillate for other manufacturers. We became proficient in distillation with finished product selling for approximately ten to twelve thousand per liter. In November we were able to distill and sell one million dollars of distillate which was a significant number starting from zero in September. Then came our latest and possibly most formidable challenge. The illegal market had grown in 2018 causing the legal market to shrink by almost one billion dollars annually. The price of distillate had fallen from $10,000 - $12,000 per liter to $7,000 per liter and in some cases even less. This price adjustment was not something we could have anticipated, but it was a fact that non-taxed material was in the market at a substantial discount to legal cannabis products. The solution was received in December in the form of our State Cultivation and Nursery Licenses. These licenses allow us to grow our own material for CannaStripsTM and Rveur while preserving our margins and remaining legal, compliant and profitable. We anticipate that the complete transition will require approximately four months. Another welcome surprise arrived in January 2019, when the State of California issued the Final Text of the Cannabis Regulations. True to our earlier decision, we began updating all of our packaging artwork and expect to have our Final Text-compliant packaging for CannaStripsTM and Rveur up and running in February 2019. Our challenges have been many, but our accomplishments have been many more. Operational Foundation Accomplished 1. Patent Pending Delivery System CannaStripsTM . Truly sublingual delivery like no other. 2. Core Isogenics State of California Nursery License Isogenic nursery building the future cannabis ingredients for safe and consistent results in every product we produce. 3. Cultivation with State-of-the-Art Facility State of California Cultivation License This facility can produce enough cannabis to create two million dollars of CannaStripsTM each and every month. 4. Distribution Transportation State of California Distribution Transportation License The Company controls all of its necessary transportation and distribution requirements. Additional 2018 Accomplishments Received State Licenses: Volatile and Non-Volatile Extraction Nursery Cultivation Distribution & Transportation Completed Construction: Extraction Laboratory Formulation/Manufacturing Facility Nursery Distribution/Transportation Facility Completed Employee Training: County Weights and Measures Bio Track and METRC Product Tracking OSHA Operational Safety Practices PRIVA Cultivation Nursery Software Laboratory Distillation State Tax Calculations Fourth Quarter 2018 On December 1, 2018, we executed a distribution services agreement with Rise Logistics LLC, an operating entity of DionyMed Brands Inc. (CSE:DYME), for distribution of our products into the California cannabis market. As of December 10, 2018, CannaStripsTM became available at one of Sacramentos busiest collectives, All About Wellness, the first dispensary to carry the Companys brand of CannaStripsTM products. During our fourth quarter of 2018, our sales of extracts exceeded One Million Dollars per month. 2019 We believe that the accomplishments of 2018 have uniquely positioned the Company to capitalize on the California cannabis market. We will control our ingredients in ways that no current brands are capable of and produce products at a level of quality and consistency that will elevate our products in the marketplace. We can manufacture these products in commercial volumes that will allow our products to not only be best in class but affordable to every customer, while yielding significant margins for the Company. We will be producing and delivering CannaStripsTM and Rveur products throughout California. 2019 will be the year that we realize the potential of the fully integrated LDS model controlling the supply chain from seed to sale. The Company truly appreciates the patience and loyalty of its shareholders throughout the hurdles we had to face in 2018. We will continue to meet the challenges imposed by the Cannabis Regulations and develop solutions in this emerging cannabis sector. Sincerely, Brad Eckenweiler CEO/LD
Read more at https://stockhouse.com/companies/bullboard/c.lds/lifestyle-delivery-systems-inc?postid=29464896#ZQDyRD50uqarlTQP.99";