Gaithersburg, MD, June 22, 2020 (GLOBE NEWSWIRE) -- Verus International, Inc. (“Verus” or the “Company”) (VRUS) reported record results for its second fiscal quarter ended April 30, 2020. In conjunction with this release, the Company is also providing additional details on its business outlook for the second half of fiscal year 2020.
For fiscal Q2 2020, management is noting the following items of importance:
- Revenue set an all-time 2nd quarter record, reaching $4.6 million, an increase of 58% over the $2.9 million reported in Q2 2019.
- Due to pandemic-related port and store closures, a portion of expected Q2 2020 revenue shifted into Q3 2020.
- Gross profit margin improved to 15.8%, 46 basis points higher than the 15.4% reported in Q2 2019.
- Operating expenses of $7.7 million were $7.0 million higher than the $0.7 million reported in Q2 2019, as a result of a $6.3 million increase in stock-based compensation and higher expenses across all other categories to support the record quarterly revenue. The significant increase in stock-based compensation expense was due to an amendment to the CEO’s employment agreement whereby the ability to receive quarterly and annual warrants to purchase shares of the Company’s common stock until such time as he owned 20% of the Company’s then issued and outstanding common stock was replaced with a one-time grant of warrants to purchase shares of the Company’s common stock. This amendment generated a one-time stock-based compensation expense of $6.5 million. On a proforma basis, excluding this one-time expense, operating expenses for Q2 2020 were $1.2 million, compared to $0.7 million in Q2 2019.
- Operating loss of $7.0 million was $6.8 million higher than the $0.2 million loss reported in Q2 2019, as a result of non-cash expenses that more than offset the gross profit increase. On a proforma basis, Q2 2020 generated an operating loss of $0.4 million, after excluding non-cash expenses (stock-based compensation, intangible assets amortization, and depreciation).
- Net loss was $7.3 million for Q2 2020 compared to net income of $2.2 million for Q2 2019. On a proforma basis, Q2 2020 generated a net loss of $0.5 million, excluding non-cash expenses (stock-based compensation, intangible assets amortization, convertible notes payable related items, and depreciation).
- Stockholders’ equity achieved a new record at $0.5 million, which is significantly higher than the stockholders’ deficit of $0.9 million reported at fiscal year end October 31, 2019.
“Our quarter looked fairly normal until April, when we suddenly faced trade route and store closures in every product line and geography where we operate,” explained Verus CEO Anshu Bhatnagar. “Because we source almost all of our product internationally, port closures and transportation disruptions have a big impact on our business. Fortunately, these were all temporary situations, so our business has quickly returned to normal. We were pleased to still manage a 58% growth rate during our most difficult logistical quarter ever.”
On a forward basis, the Company is providing the following update and guidance:
- With shipment schedules resuming, Verus is projecting a return to triple-digit revenue growth for the remainder of calendar 2020;
- The Verus Cares division received its first shipment of masks in the U.S. and has begun to ship samples to prospective customers;
- The Big League Foods (“BLF”) division recently received its first reorder for candy products from a regional chain (Big 5 Sporting Goods);
- Based on active discussions, the BLF division expects to sign additional grocery store and regional chain customers over the next few quarters;
- Verus is projecting that the upcoming quarter, (Q3/2020) will be another record quarter for revenue.
“This quarter was frustrating, because we had the orders to generate triple digit growth results, but we simply couldn’t get shipments to market during April,” said CEO Bhatnagar. “The good news is that our supply lines have returned to normal and U.S. retailers have reopened. Major league sports are still an unknown in terms of their schedules and start dates, but we have plenty of sales momentum to keep the BLF division busy this summer. Our Verus Cares division has been much more of a project than we expected, with unanticipated supply issues creating significant initial delays in our ability to pursue business. So, that division remains the wild card in our revenue mix. We now have adequate gown and mask supply in place and are reassessing the sales strategy to stimulate better results. Our expectations for triple-digit growth are based on our legacy business, so we have great confidence in our growth rates through the remainder of the year. Coming out of this pandemic, we intend to keep it simple for a while – concentrating on our core business units and areas with the fastest growth.”
Financial Results and Corporate Update Conference Call
Verus management will host a conference call for analysts and investors on Wednesday, June 24, 2020 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss the Company’s financial results and provide a corporate update.
To listen to the live conference call, parties should connect approximately 15 minutes prior to the start of the call as follows:
- Dial-in number: (877) 269-7756
Please note there is no access code required to join the call.
A live and archived webcast of the conference call will be accessible on the "Investor Relations" section of the Company's website at www.verusfoods.com. To access the live webcast, please log in 15 minutes prior to the start of the call to download and install any necessary audio software.
About Verus International
Verus is a global, emerging multi-line consumer packaged goods (CPG) company developing branded product lines in the U.S. and the Middle East; and medical protective supplies on a global basis. The Company trades on the OTC market (VRUS). Investors can find real-time quotes and market information for the Company on www.otcmarkets.com. Additional information is also available at the Company’s website, www.verusfoods.com, and via the official Twitter feed @Verus_Foods and the Big League Foods subsidiary Twitter feed @BigLeagueFoods.
Safe Harbor Statement
This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions that are intended to identify forward-looking statements. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements are reasonable, we can give no assurance that these plans, objectives, expectations or intentions will be achieved. Forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results could differ materially from those in the forward-looking statements and the trading price for our common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the Company’s filings with the U.S. Securities and Exchange Commission. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
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