The financials showed increasing revenues (see below) quarter after quarter even during this pandemic. They had started selling on Walmart during the pandemic.
VERUS INTERNATIONAL REPORTS RECORD SECOND QUARTER RESULTS
BY GlobeNewswire
— 5:05 PM ET 06/22/2020
Gaithersburg, MD, June 22, 2020 (GLOBE NEWSWIRE) -- Verus International, Inc. ( VRUS
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) (“Verus” or the “Company”) 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 ( VRUS
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) 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 ( VRUS
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) 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 ( VRUS
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) 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.”
