Eve & Co Incorporated (TSXV: EVE) released its second quarter financials for the period ended June 30, 2019 after the bell last night, posting a gross profit of $175,576 on revenues of $454,701. The firms quarterly revenues were a significant reduction from the first quarter of the year.
While total revenue for the six month period is currently sitting at $2.17 million, the firm posted a quarter over quarter decrease of 73.37% in revenues, without providing much explanation as to the reason for the decrease. At the end of last quarter, inventories were sitting at $1.14 million, providing investors with a sense of oncoming increasing revenues. Instead, inventory levels built to $5.38 million, without sufficient sales occurring.
Further compounding the issue of declining revenues for Eve & Co, is the cost per gram that the firm received on its product. On a per gram basis, revenue declined 21.47%, dropping from $2.98 last quarter to $2.34 in the current quarter. The firm sold 181.3 kilograms of cannabis and cannabis trim during the three month period, down from 622.8 kilograms in the prior period.
Perhaps a large portion of the reasoning behind Eve & Co’s declining sales, is that the issuer is largely reliant on a single customer at this point in time. Of the $454,701 in revenues during the second quarter, $424,579 or 93.37% of revenues came from a single undisclosed customer. During the six month period, the same customer accounted for 93.12% of all sales. Thus, Eve & Co’s current revenues are significantly reliant on the success of a third party. While the issuer is working towards obtaining additional distribution channels and clientele, it is unclear what demand this will provide.
Total expense for the period came in at $1.44 million, which are notably lower than many sector comparables. The largest expense within was professional fees, which accounted for $0.39 million, with stock based compensation trailing closely at $0.33 million. The firm posted a net income of $0.36 million for the quarter, thanks to an unrealized fair value adjustment on biological assets to the tune of $1.83 million.
Eve & Co’s shares closed yesterdays session on the Venture Exchange at $0.37, unchanged from the day before.
Information for this briefing was found via Sedar and Eve & Co Incorporated. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.