HENDERSON, Nev.--(BUSINESS WIRE)--EVIO Inc. (the “Company” or “EVIO”) (OTCQB:EVIO) provides an update on fiscal 2018-2019 financial statements and outstanding quarterly results, highlights and clarifies on current operations, and provides guidance on future growth.
In February 2019, the Company transitioned to a new auditor, BF Borgers CPA PC, in order to assist and facilitate expedited issuance of the Company’s outstanding financial reports. The Auditor is a US-based accounting firm with extensive experience working with US-based Cannabis and CBD-focused companies trading on the OTC markets. The 10k for the fiscal year 2018 was filed in August, 2019 and the Company is now working with the auditor to complete the remaining quarterly reports. The Company has been required to complete external audits on all acquired entities as well as the accounting of each of those acquired companies. These mandatory audits have added significant time delays to the issuance of our financial results. Working with BF Borgers over the last 6 months, the Company has made great progress towards getting financial reports up to current status. Updates will be provided on progress as they come available.
2018 Fund Raising
The Company began raising funds in 2018 for the purpose of executing specific growth objectives. EVIO successfully raised a portion of the funds required. Due to the market sentiment gauged in late 2018 the Company made the decision not to proceed with the second tranche of the raise. To compensate for a change in market trends, EVIO has altered focus from aggressive market expansion to increasing overall profitability through revenue retention and optimizations of current operations. Initiatives the Company has already undertaken to increase profitability include: restructuring lab development, growth, and operations; increasing and expanding the capabilities and accreditations of existing labs; and shifting Company focus to initiatives that provide immediate profitability. Management believes that focusing on profitability and maximizing the efficiency and capabilities in existing revenue generating labs is the optimal strategy to growing the company in the current market conditions will provide the greatest return of value to shareholders.
From an operational standpoint, the Company has achieved numerous key milestones across all labs since the last company update. EVIO now serves the entire state of Oregon from two licensed facilities, EVIO Portland and EVIO Medford. The Company consolidated four lab locations into one new company-owned building in Tigard, Oregon. The consolidation resulted in material reductions to overhead expenses by eliminating the leasing expenses of three facilities while maintaining the ability to serve the entire state. In addition, the Company recently expanded its ORELAP accreditation at EVIO Medford to include residual solvent testing. This will greatly increase throughput and improve the Company’s customer service capabilities in Southern Oregon. The Company also completed the ISO 17025 audit assessments and can now support Oregon’s rapidly growing hemp industry. EVIO Portland is awaiting approval from ORELAP to obtain accreditation for pesticide testing. Currently, the Company tests all pesticides in Medford, but with this new capability in the Portland lab, operations will be greatly improved. As a result the Company will increase its capacity to service a greater number of customers in a more efficient manner.
EVIO’s California operations have seen a number of strategic initiatives take place. EVIO Labs Berkeley has been granted its provisional license pursuant to an extensive audit of the lab’s testing methods. The Berkeley lab is one of only twenty-seven licensed laboratories in California that collectively serve more than one thousand licensed distributors across the state. Consistent with the Company’s focus on increasing profitability, the Company has increased sales efforts in the state by converting the Company’s Humboldt facility into a field sales office. All testing of the area has been consolidated into the Berkeley lab. In other areas of the state the Company continues to make headway in an uncertain market. The market conditions for cannabis compliance testing have changed, with growth remaining relatively flat. Testing demand has been an average of 1,000 tests per week per Bureau of Cannabis Control. Although volume is anticipated to increase with the required implementation and monitoring of the seed to sale tracking system, legislative progress towards this is slow. EVIO has been granted a Conditional Use Permit to operate a lab in Palm Desert, California and is assessing market conditions prior to proceeding with lab build-out.
In Canada, the Company’s subsidiary, Keystone Labs, recently completed installation and acceptance of heavy metal testing capability and is now in a position to be able to perform all Health Canada mandated tests required for cannabis. The increase in capabilities at Keystone Labs strategically coincides with the new wave of products entering Canada’s market following the much anticipated legalization of cannabis edibles, concentrates, and topicals on October 17th, 2019. The demand for testing to ensure these new consumer packaged goods and products meet quality and safety measures will be a positive catalyst for our revenues and profitability.
The company completed buildout of the new EVIO Labs Massachusetts location in Framingham, and received its Occupancy Permit in June, 2019. The company has since been performing re-accreditation activities in preparation for final state licensing procedures. We are in the final stages of licensing, and expect to be one of only four operating labs in the state once we resume operations.
In terms of the future, the Company has launched a comprehensive hemp/CBD marketing campaign and has set up a new website www.hemptesting.com to automate orders. The new website, which since its launch has received orders from around the world, and associated operational improvements have allowed the company to greatly expand reach and presence in the global cannabis market. Revenue from hemp and CBD products is anticipated to quickly overtake cannabis testing revenues. The new website and marketing campaign capitalize on this and align with the Company’s new focus on maximizing profitability, as well as demonstrate the Company’s ability to quickly adapt to changing market trends. EVIO Inc. remains focused on achieving optimal growth and leverage opportunities as they come available. There has been a recent focus in the news on the safety of vape pens and the contribution to severe lung disease due to vitamin E acetate. EVIO has received many inquiries regarding concerns to this matter from all over the U.S. The Company is actively evaluating the issue and expects to work with its regulatory agencies to help address testing needs. This is another new opportunity for expanding our capabilities within our existing labs to address a real market need. The Company will provide further guidance on future developments as they come available.
“The last 12 months have been a transitional time for EVIO Labs as we adjust to the changing market conditions,” said William Waldrop, CEO of EVIO Inc. “With the passing of the 2018 Farm Bill, there has been a dynamic shift within the industry to produce more Hemp-derived CBD products along with states developing new legislation to test CBD products at the same levels as cannabis. Our new hemptesting.com website is helping educate the industry as well as providing a platform for consistent ISO accredited testing to support this new burgeoning industry.”
About EVIO Inc.
EVIO Labs is the leading provider of cannabis, hemp and CBD testing. EVIO labs maintains eight licensed and accredited cannabis, CBD and hemp full-service testing laboratory operations, and provide clients with quality analytical, R&D, and consulting services to product the best, compliant products. EVIO provides assurance to consumers that the potency on the label is what is in the package – and the product is free of harmful contaminants.