In light of recent world events, EVIO continues to strive towards operating successfully in this new economy. Fortunately, the actions management took last year reducing operating costs, helped the company survive during the difficult months when revenues were impacted by the COVID19 virus. EVIO realized a 12.3% increase during the first quarter ending December 31, 2019 and an 18% increase during second quarter ending March 31, 2020. As a result of COVID19, the Company recognized a 45% reduction in revenue during the third quarter ending June 30, 2020. The company is starting to see revenues recover moving into the fourth quarter, however, we do not anticipate full recovery until the next fiscal year. Even with such a significant reduction in revenues during the third quarter, the company was able to maintain operations as a result of a $369K reduction in the cost of revenue. More notably, careful management during this crisis led to a significant reduction in operating expenses from $1.566M for the quarter ending June 30, 2019 to $165K for the quarter ending June 30, 2020.
As part of our continuing efforts to effectuate a successful growth strategy, EVIO Inc. and Steep Hill Inc. have formed a joint venture combining our Berkeley, CA locations. Steep Hill’s Berkeley Lab, which began operations in 2007, is among the world’s first and most respected cannabis labs. Both labs are relocating to a new location that is in the final phases of licensing. The combined lab will exemplify the best of EVIO and Steep Hill’s operational and customer expertise. The location will have complete redundancy of all testing services, increasing the service level that we are able to provide to our customers. The lab will operate under the Steep Hill Brand.
In conjunction with our focus on streamlining operations, EVIO has determined it is in the best interest of our shareholders and partners to sell the remaining financial interest in our Massachusetts lab. EVIO previously agreed to take on a minority partner in 2019, but due to the current limited potential of the Massachusetts market, and on-going delays with the Massachusetts Cannabis Control Commission, it has been determined that selling the remaining ownership would be in the best step toward protecting the on-going financial viability of EVIO Labs. Upon final approval of the MA CCC, it is proposed this lab will operate under the Steep Hill brand as well.
EVIO continues to serve the Oregon marketplace at both its Tigard and Medford locations. Both of the lab locations were spared during the recent fires, unfortunately some of our customers’ operations are impacted, and we wish them a speedy recovery. Oregon started to show both an increase in cannabis testing during COVID shutdowns, but now is starting to see recovery in the hemp markets in recent months.
In Canada, the Company’s subsidiary, Keystone Labs, successfully procured a government grant similar to the Paycheck Protection Program which helped it survive during the pandemic. Keystone is seeing its revenues slowly return to pre-pandemic levels. Concurrently, Keystone is in the final phase of expanding its testing offerings to include testing to the European standards which would allow them to test for Cannabis exported to Germany and help meet the growing market demand.
Since launching nationally targeted CBD and Hemp product marketing initiatives on the heels of the 2018 Farm Bill approval, the launch of our website www.hemptesting.com, and the explosion of the availability of CBD products, the Company has driven new revenue growth by testing hemp flower and a myriad of hemp and CBD manufactured products from around the US. The Company has created the Hemp and CBD Safety Panel test, focused on providing manufacturers and distributors a comprehensive suite of tests that gives clients the utmost confidence in the purity and potency of their products. The company anticipates both hemp and CBD trends to continue, further expanding EVIO’s market position.
About EVIO Inc.
EVIO Labs is the leading provider of cannabis, hemp, and CBD testing. EVIO maintains licensed and accredited cannabis, CBD, and hemp full-service testing laboratory operations, and provides clients with quality analytical, R&D, and consulting services to produce the best, compliant products. EVIO provides quality assurance to consumers that the potency listed on the label matches what is in the package, and that the product is free of harmful contaminants.
For more information, visit www.eviolabs.com.
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