"Dear Fellow Shareholders,
Before discussing our financial and operational outlook and the impact of this week's passage of marijuana legalization across eight states, I will first update the goals we set in our June 7, 2016 Shareholder Letter.
MyDx: Meeting 2016 Goals
In that Letter, we outlined three key goals:
New Product Launches. We are now accepting orders for our new OrganaDxTM and AquaDxTM Single Use Sensors - both of which launched and began limited shipping last month in response to the water crises across the nation.
AquaDxTM tests water for various toxins and heavy metals. The recent Flint, Michigan, Alabama and Tampa, Florida water crises have demonstrated that consumers in many cases must rely on themselves to ensure the safety of their water supply. Exemplifying our commitment to be a good corporate citizen, we have shipped some of our early, AquaDx sensor inventory to those area residents affected and their local media at no cost. Analysts forecast the global addressable market for water testing and analysis instruments to be approximately $2.9 billion, and projected to grow at a compound annual growth rate of 5.2% to reach $3.5 billion by 2019.
OrganaDxTM tests fruits and vegetables, as well as cannabis (including popular vape oils and edibles) for pesticides and heavy metals. While cannabis distribution is highly regulated, its safety is not. This should be a major concern to both the industry and the end consumer since pesticides are typically found in much higher concentrations in cannabis than other crops. However, with this week's passage of new cannabis initiatives, we expect the demand for cannabis testing, hence the need for OrganaDx, will increase dramatically.
AeroDxTM is entering beta testing shortly in advance of its entry into commercialization in early 2017. Based on the industry's overwhelming acceptance of our latest sensors, we believe AeroDx will prove to be yet another successful MyDx product line that will immediately contribute to both top and bottom line.
Market Penetration. The market's adoption of our CannaDx product is a testament to the proprietary technology and innovative approach to testing and tracking we have taken at MyDx. CannaDx continues to capture market share with growers, at legal marijuana dispensaries and hydroponic equipment shops internationally, as well as direct consumers of cannabis products through our online shop and our growing global distribution network.
Earnings Growth. CannaDx, as a standalone business, is generating earnings and nearly $1 million in revenues since commercialization in Q315. As we have been projecting since the first half of 2016, we expect to become cash flow positive in the current, fourth quarter. Additionally, I will take this opportunity to provide our shareholders with guidance that we expect revenues for our 2016 fiscal year, ending December 31, will increase by at least 100% year-over-year.
Passage of Cannabis Initiatives to Expand MyDx Market Size
On November 8, 2016, America sent two clear messages to the world. Donald Trump
will be our new President, and marijuana is here to stay. Cannabis is now legal for adults 21 and over in eight states and the District of Columbia. More than half of all states, 28 in total after Tuesday, allow cannabis for medicinal use. Along with a proliferation of consumers and dispensaries, this will drive an increasing number of home growers as well as far more biopharmaceutical R&D investment into cannabis leading to important new medical breakthroughs.
Ultimately, the cannabis industry will evolve to a level of maturation comparable with the regulated beer and wine markets. Cannabis will become a commodity, so product differentiation will have to come in the form of superior marketing and branding, as well as word-of-mouth adoption of products that can actually deliver a desired feeling or ailment relief, and are free from pesticides.
MyDx offers consumers the first and only handheld chemical analyzer that tests the safety and chemical profile of cannabis samples, associates them with a feeling and ailment relief, and helps people find a safe strain that works for them. We are very well positioned to support and capitalize on this movement as our products and markets evolve.
CannaDx Data to Drive Entry into Biopharmaceutical Industry
Major pharmaceutical companies such as Novartis, Pfizer and Roche need to discover, develop and formulate new drugs that must undergo stringent FDA clinical trials which cost on average nearly $300 million. Our CannaDx application, which is HIPAA compliant, collects users' test data which then can be used to guide cannabis-based drug discovery. MyDx has accumulated over 30,000 unique data points that can significantly accelerate any pharmaceutical company seeking to discover new cannabis-based drugs. We believe this asset alone has more potential than all of our other product lines combined.
While not unusual for a young public company's stock, the past few weeks have been quite a roller coaster. I, as one of the Company's largest shareholders, and everyone else working for you here at MyDx, feel your concern and are all the more grateful for your support. Although we might continue to experience some additional pressure from outstanding convertible debentures, I am confident the worst of that turbulence is now behind us and this negative pressure will be offset by a number of positive developments that we have been diligently pursuing over the past year.
These latest developments, when announced, coupled with our stronger financial position will support our outlook for substantially increasing revenue and earnings in 2017 and beyond.
Daniel R. Yazbeck
Chairman and Chief Executive Officer
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Original Press Release