BEND, Ore., Aug. 15, 2018 /PRNewswire/ -- EVIO Inc. ("EVIO" or the "Company"), (OTCQB: EVIO), a leading provider of cannabis testing and scientific research for the regulated cannabis industry in North America, is pleased to provide a corporate update to shareholders.
As you have probably seen from the flurry of press releases over the last few months, the EVIO team has been hard at work expanding our footprint. With the reporting of our current quarter results we believe that now is an ideal time to provide you with an update on EVIO's recent developments and milestones.
First and foremost, we must not forget, we are pioneering a new industry and as the cannabis industry continues to mature each day. As federal, state, provincial and local jurisdictions are continuing to examine the effectiveness of current cannabis legislation and revisit initial legislative frameworks, one thing remains consistent – the increased awareness by legislators, health officials, cultivators, and consumers of the critical importance of consumer safety through independent product testing and quality assurance.
Recent reports by New Frontier Data estimates that the legal cannabis market is expected to grow at a compounded annual growth rate ("CAGR") of 16% by 2025, and EVIO is well-positioned to capture a significant portion of the economic opportunities in North America.
Below are some key updates.
Six months after broadly legalizing recreational use, California continues to enhance regulations and is phasing in heightened cannabis testing regulations mandating that all cannabis products sold by licensed retailers be tested by a third-party testing facility by July 1, 2018. In anticipation of the July 1st deadline, EVIO positioned itself to capitalize on this tremendous market opportunity. One element of our previous plan that has changed because of new state regulations not allowing for sub-contracting or intra-lab transfers, is that we must operate multiple stand-alone laboratory facilities instead of a traditional hub and spoke model. As such we will be focused on deploying four full analytical labs this year instead of the two hub labs and six cannabis collection labs. Management still feels confident we will be able to secure a significant market share utilizing this approach as well as it will make it more difficult for those smaller operators who planned to outsource higher priced tests such as pesticides and metal detection. To support this effort and related influx in demand, EVIO pursued aggressive expansion throughout the state in targeting key cannabis hot zones through acquisitions and new facility leases. Furthermore, to prepare for even increased regulatory environment commencing January 1, 2019, and subsequent permanent licensing, EVIO has already achieved ISO 17025 Accreditation which is a prerequisite for this license.
- EVIO Labs Berkeley
- January 2018: Acquired C3 Labs, LLC in Berkeley, California a fully licensed testing and research facility. Consolidated Yuba City operations into Berkeley.
- June 2018: Completed outfitting the laboratory with the latest Shimadzu analytical testing equipment and attained ISO 17025 accreditation, the world's highest recognized quality standard for calibration and testing laboratories.
- EVIO Labs Humboldt
- April 2018: Acquired Leaf Detective, LLC, the first licensed cannabis testing facility in Humboldt County, Calif., giving EVIO a foothold within the biggest cannabis-producing region in the U.S.
- EVIO Labs Los Angeles (Target Opening Fall 2018)
- May 2018: Secured a lease for EVIO's third California facility in the Mission Junction District of Los Angeles.
- Facility is current undergoing tenant improvements and pending local licensing.
- EVIO Labs Palm Desert (Target Opening Fall 2018)
- July 2018: Secured lease for EVIO's fourth California facility.
- Facility is currently in planning phase and pending local licensing.
The regulatory environment in Massachusetts has changed during 2018. With the anticipated roll-out of recreational cannabis, a new Massachusetts Cannabis Commission was formed, requiring additional licensing and regulatory requirements. Furthermore, the state has mandated ISO accreditation for all laboratory operators. As such EVIO Labs Massachusetts scaled back to focus on obtaining ISO 17025 accreditation which was attained July 30, 2018. EVIO Labs MA was only one of three facilities to submit its application to become a fully licensed recreational testing facility.
On July 5, 2018, EVIO closed an asset purchase agreement with MRX Labs, LLC, an Oregon-based, award-winning testing lab, and formed a strategic alliance with MRX Xtractors, leveraging the two leading companies' respective strengths, to develop and expand growth in existing and new markets. As part of the acquisition, upon regulatory approval EVIO Labs Portland will relocate to the former MRX Labs location, and the new lab will operate as EVIO Labs Portland. This move will provide EVIO additional operational capacity, an extensive client database that extends across the state, and a means to generate efficiency by consolidating some operations at our new 7,500sqft facility. The Oregon market has seen a substantial pullback in recent months as the state has experienced an oversupply of cannabis products. Several of our clients have been affected by the resulting decreased demand, and prices, and increased regulatory scrutiny. EVIO was adversely affected as producers and manufacturers across the state had a substantial inventory of tested product, which resulted in a marked slowdown in testing business during the past quarter. We anticipate that the Oregon market will consolidate and stabilize in 2019.
On June 19th, Canada passed Bill C-45, otherwise known as the Cannabis Act, making Canada the second country in the world and the first G7 nation to implement legislation to permit a nationwide adult use marijuana market. While the government initially slated implementation by July 2018, provinces and territories are responsible for drafting their own rules for sales and project a transition to the new framework in September 2018.
In May, EVIO acquired 50% of Keystone Labs Inc., a privately-held, independent contract-testing laboratory specializing in quality testing for regulated industries located in Edmonton, Alberta. With the Canadian cannabis industry projected to reach C$8.7 billion in size over the coming years, this acquisition will expand EVIO's footprint into the Canadian market as well as provide the Company with additional resources to its management team and geographic diversification. Keystone has recently doubled its laboratory footprint in support of the additional cannabis testing requirements. The laboratory is currently completing tenant improvements to make way for the new equipment to be delivered in the fourth quarter.
Effective August 1, 2018, the state of Colorado implemented mandated pesticide testing for both medical and retail marijuana flower and trim. In June 2018, in reparation of this event, PhytaTech CO, an EVIO licensee and independent laboratory, was awarded Certification for Pesticide Analysis in the State of Colorado. Concurrently, PhytaTech invested in the SCIEX QTRAP 6500+ LC-MS/MS system with multi-component IonDrive™ Technology, offering the high sensitivity, reliability, and confidence required to produce data as objective evidence for the efficacy and safety of cannabis products.
PhytaTech was also awarded five gold Emerald Test Badges for its performance in the Spring 2018 Emerald Test for proficiency. The tests included: Residual Solvents; Microbial 1 & 2 – Qualitative Salmonella and shiga-toxin expressing E. coli (STEC); and Pesticide Screening.
EVIO Labs Florida, and EVIO licensee, was issued seven gold Emerald Test Badges for the following proficiency tests: Potency in Solution, Residual Solvents, Terpenes, Microbial 2, Aspergillus Mold, Pesticide Screening, and Mycotoxins.
Emerald Test recognition demonstrates the lab's proficiency and commitment to a higher standard of excellence in Cannabis Testing. The Emerald Test Badge results provide a measure of assurance and reliability to the industry, and particularly to those who depend on testing lab's results for safety, health, and product performance.
Launch of EVIO Biosciences:
While the company has been long-committed to maximizing our technical know-how, in May, we expanded into the research of cannabis-based medicines with the launch of EVIO Biosciences. Led by the Chief Scientific Officer of EVIO Labs, Dr. Anthony Smith, the new division will focus its efforts on developing new testing technologies, and exploring medical therapies of cannabis, including developing new formulations and researching more effective ways to deliver cannabis into the body.
Nine Months ending June 30, 2018 Financial Summary
- Nine months revenue was $2,313,514 in 2018 versus $2,278,397, an increase of 1.5%.
- Gross profit for the nine months ending June 30 was ($50,588) in 2018 versus $420,054 in 2018, a decrease of 112.0%.
- Operating expenses for the nine months ending June 30 were $5,289,778 in 2018 versus $1,592,800 in 2017, an increase of 232.1%.
- Net loss for the six months ending March 31 was ($6,136,280) in 2018 compared to ($1,856,315) in 2017, an increase of 230.6%.
Fiscal Third Quarter ending June 30, 2018 Financial Summary
- Third quarter revenue was $634,338 in 2018 versus $777,218 in 2017, a decrease of 18.4%.
- Third quarter gross margin was $(195,113) in 2018 in 2018 versus 122,954 in 2017, a decrease of 258.7%.
- Third quarter operating expenses were $2,115,253 in 2018 versus $622,526 in 2017, an increase of 239.8%.
- Third quarter net loss was ($3,457,093) in 2018 versus ($570,454) in 2017, an increase of 506.0%.
- Cash as June 30, 2018 has increased to $1,254,443 compared to $121,013 at December 31, 2017.
The complete quarterly filing can be found on our website:
EVIO SEC Filings
William Waldrop, EVIO's CEO, commented, "EVIO's third fiscal quarter of 2018 ending June 30th showed a 1.5% increase year-over-year in revenue as demand for our cannabis testing. The company forecasts expanded revenue growth going into the fourth quarter as we commence recognizing revenues from the MRX acquisition and California testing marketplace. Operating expenses included many one-time expenses including: acquisition, ISO 17025 accreditation and deployment costs for Canada, California and Massachusetts. The company is in a tremendous growth phase at the current time and as such operating expenses will remain higher than normal in the coming quarters as EVIO continues expand its footprint to remain as an industry front-runner to capture market share in the analytical testing industry."
EVIO Board of Directors
Our goal to build the largest and most-trusted cannabis testing company in North America would be unobtainable without the diverse expertise and perspectives each member of our team brings to the mission. This year we were proud to welcome Felipe Campusano to EVIO's board of directors as an independent director.
With the news of Canada's legalization of recreational cannabis and our acquisition of Keystone Labs, Felipe, who hails from Canada, will provide unique insights and drive profitability in this rapid growth environment.
About EVIO Inc.
EVIO Inc. is a leading provider of cannabis testing and scientific research for the regulated cannabis industry. The Company's EVIO Labs division operates coast-to-coast providing state-mandated ancillary services to ensure the safety and quality of the nation's cannabis supply. The Company's EVIO Biosciences Division is dedicated to the scientific, medical, and psychosocial exploration of clinical cannabis, cannabinoids, and the endocannabinoid system.
For more information, visit www.eviolabs.com.
Safe Harbor Statement
Any statements in this press release that are not statements of historical fact maybe considered to be forward-looking statements. Statements may contain certain forward-looking statements pertaining to future anticipated or projected plans, performance and developments, as well as other statements relating to future operations and results. Words such as "may," "will," "expect," "believe," "anticipate," "estimate," "intends," "goal," "objective," "seek," "attempt," or variations of these or similar words, identify forward-looking statements. These forward-looking statements by their nature are estimates of future results only and involve substantial risks and uncertainties, including but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, our ability to complete our product testing and launch our product commercially, the acceptance of our product in the marketplace, the uncertainty of the laws and regulations relating to cannabis, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed from time to time in our reports filed with the Securities and Exchange Commission, available at www.sec.gov or www.eviolabs.com.
Director of Marketing
SOURCE EVIO Inc.