Life sciences company eSense-Lab Ltd is pleased to report its preliminary financial results for the year ending 31 December 2018, along with the attached Appendix 4E.
2018 preliminary financial results and Appendix 4E
Investment highlights:
- Achieved a major R&D breakthrough consisting of the development of an e-liquid formulation that provides the aroma of various cannabis strains
- Demonstrated robust antioxidant and anti-inflammatory activities for eSense’s medical cannabis terpene blends
- Received a cannabis permit from the Israeli Ministry of Health
- Completed an oversubscribed AUD$3.15 million capital raising
- Sent a new shipment of product being sent to UK-based group E-Quits
- Post FY18 signed a multi-year distribution agreement to supply E-juice to US-based vaping market company VaporSpec
Life sciences company eSense-Lab Ltd (“eSense” or the “Company”) (ASX: ESE) is pleased to report its preliminary financial results for the year ending 31 December 2018, along with the attached Appendix 4E.
Company mission and listing
eSense was established with the purpose of “reverse engineering” rare or high-value plants and reconstructing the terpene profile of those plants, using alternate natural sources, in a more cost- effective and sustainable way.
Terpenes are naturally occurring compounds which account for the flavour and fragrance of plants. eSense’s technology creates a reconstructed terpene profile replicates the flavour, fragrance and other desired characteristics of the targeted plant to a similarity of 99.9%.
eSense’s initial focus has been on the cannabis plant, however, future high-value target plants include ginseng, saffron and other medicinal plants and spices.
In early 2017, eSense was the first Israeli Incorporated Company to list on the Australian Securities Exchange following a successful oversubscribed IPO capital raising. Since the publication of the maiden financial results in March 2018, the Company has made significant progress with regards to both its commercialisation activities and research and development.
Significant R&D progress achieved
In June, eSense announced that it had achieved a major R&D achievement consisting of the development of an e-liquid formulation that provides the aroma of various cannabis strains.
Later that month, eSense announced progress with other R&D activity that demonstrated robust antioxidant and anti-inflammatory activities for its medical cannabis terpene blends. Further to this, was also able to show signs of cellular growth arrest, suggesting that terpenes may be able to assist in a range of medical conditions including the fight against cancer.
At the end of June, eSense received a cannabis permit from the Israeli Ministry of Health. This permit allows the Company to perform R&D on cannabis strains available in Israel and to further perfect its terpene formulations.
Capital raising and commercialisation activities
In October, eSense announced the successful completion of a AUD$3.15 million a capital raising. The capital raising followed growing interest from investors and was oversubscribed. The Company has been putting that capital to good work, implementing a new expanded commercialisation strategy and continuing to build its entry into significant markets and expanded product offerings with our terpenes.
The Company’s efforts culminated in a new shipment of product being sent to UK-based group E- Quits at the end of 2018 following a successful trial period.
E-liquids are used for vaporising (or “vaping” as it is more commonly known) and are a safer and healthier alternative to smoking. E-Quits purchased our product to serve this growing vaping market.
Commenting on this the Chairman, Piers Lewis said: “I am pleased to report that E-Quits has made a significant investment in marketing eSense’s product with satisfactory results and positive responses from customers. We may explore expanding that partnership with E-Quits and the possibility of additional agreements throughout the UK and Europe.”
Detailed below is a general update on various other memorandums of understanding (“MOU’s”) and agreements previously announced:
• Allor Vaporizers LLC (Registered in Florida, USA) - As noted in the Company’s ASX release on 7 February 2018, the Company agreed to extend the term of its agreement with Allor until the end of September 2018. To date, Allor has ordered and paid for US$85,000 worth of products. It was contractually bound to purchase the remaining US$385,000 worth of products from the Company by September 2018.
As noted in the Company’s ASX release dated 15 October 2018, the Company considers that Allor has not met its commitments as per the agreement, and the Company was seeking to renegotiate the terms of the agreement.
The Board of the Company is considering its position and will update the market in due course once it has determined what course of action to pursue in relation to this agreement.
• Advanced Technology Management Pte Ltd (incorporated in Singapore) - Under this agreement, ATM agreed to purchase a minimum quantity of between US$540,000 and US$600,000 of the Company’s products in the first 12 month period of the agreement. As previously advised to the market, ATM notified the Company in January 2018 that it had received all necessary approvals for the marketing, sale and distribution of the Company’s products in Singapore.
Earlier this month, the Company was advised by the CEO of ATM that Ministry of Health in Singapore has authorised the import of eSense terpenes into Singapore. The testing process of the 35 terpenes by the Ministry has taken over six months. eSense is hoping to send samples to Singapore in the next few weeks.
The next step is to send samples, which should occur in the next few weeks.
• IC Access (incorporated in the UAE) - Under this agreement, the Company agreed to produce terpene profiles and to modify its line of products to suit the unique needs of the UAE market. In addition, the agreement provides for the potential future development of additional joint ventures between the parties for specific applications. The binding agreement was for a period of 3 years, with a commitment by IC Access to purchase Terpene Strains from the Company totalling AUD$1,100,000 with a minimum commitment in the first year (commencing before 30 September 2018) of A$366,000.
As noted in the Company’s ASX releases dated 15 and 31 October 2018, the Company considers that IC Access has not met its commitments as per the agreement, and the Company was seeking to renegotiate the terms of the agreement.
In late January, the Company received correspondence from IC Access indicating that IC Access had been acquired by another company which means that the agreement is no longer valid. eSense does not accept that a change of control of IC Access gives IC Access the ability to avoid its obligations under the agreement. The Board of the Company is considering its position, including whether to take legal action to enforce its rights against IC Access under the agreement (noting that successfully pursuing a UAE registered company in the courts is likely to be challenging and costly). The Company will provide a further update in due course once the Board has determined what course of action to pursue in relation to this agreement.
• Young Henry’s Brewing Company Pty Ltd - The Company signed a non-binding MOU with Australian brewer, Young Henry’s Brewing Company Pty Ltd, to collaborate on the development of a terpene infused line of beer.
While the MOU has not been terminated, collaboration work under the MOU has not progressed.
• Healthy Chocolate Florida, LLC (Registered in Florida, USA) - The Company signed a non-binding MOU with Healthy Chocolate to collaborate on the development of a terpene infused line of chocolates.
While the MOU has not been terminated, collaboration work under the MOU has not progressed since the Company’s last update to the market on 7 February 2018.
• Wild Rogue Extracts, LLC (Registered in Oregon, USA) - The Company signed a non- binding MOU with Wild Rogue to collaborate on the development of a new line of cannabidiol (CBD) based products.
While the MOU has not been terminated, collaboration work under the MOU has not progressed since the Company’s last update to the market on 7 February 2018.
FY 2019 off to a strong start
The momentum eSense gathered at the end of 2018 carried over into 2019 with the signing of a multi-year distribution agreement to supply E-juice to VaporSpec, Under the agreement, VaporSepc will distribute our products throughout North America, purchasing up to 5 million bottles of eSense products by the third year of the partnership.
VaporSpec is a major player in the US vaping market and may also open the door to further opportunities in the region. In addition, eSense is performing testing programs with companies in other markets, including the development of different products that will allow us to enter the food additive and supplements segments.
For the remainder of 2019 and beyond, the Company will continue to build on its strong R&D foundations and accelerate its commercialisation efforts.
Corporate changes
During the 2018 financial year, there were a number of board and corporate changes, including the appointment of Piers Lewis as the new Chairman.
Commenting on this the Chairman, Piers Lewis said: “I would like to thank the Board of Directors, staff, contractors, Shareholders and stakeholders for their support during this exciting time for the Company. We look forward to further updating you on our progress and creating value for you, our shareholders.”
At 31 December 2018, the Company had Cash and cash equivalents on hand of USD 1.983 million. In January 2019, a further AUD 331,000 was received as part of the placement announced in October 2018.
For further information, please contact:
Company Secretary Media & Investor Enquiries Corporate Advisor Ian Pamensky Julia Maguire EverBlu Capital +61 414 864 746 +61 419 815 386 +61 2 8249 0000 ian@cfo2grow.com.au julia@thecapitalnetwork.com.au info@everblucapital.com
About eSense-Lab
eSense-Lab Ltd (ASX: ESE) is a life sciences company specialising in the commercialisation of the phytochemical profiling of plants. The Company combines genetics, mRNA, protein expression and phytochemical profiles to generate a comprehensive model of rare or high value plants. eSense–Lab can then use this model to ‘reverse engineer’ a terpene profile, which is a naturally occurring formulation of different individual terpenes which together account for many of the plant’s health and medical benefits, whilst also exactly replicating the flavour, fragrance and other desired characteristics of the targeted plant, at a more sustainable and cheaper cost
To learn more about eSense-Lab, visit www.esense-lab.com
Link to PDF Preliminary Final Report for Year Ended December 31, 2018. https://www.asx.com.au/asxpdf/
