Gaithersburg, MD, July 12, 2021 (GLOBE NEWSWIRE)
At the mid-point of 2021, CEO Andy Dhruv is pleased to provide the following update:
“Those of you who have spoken with me know that I am frank and to the point, so today’s update will feature that tone. When I took over Verus just four and a half months ago, I came to a company that seemed to have a cloud over its head that would not go away. As Verus experienced closures by its key customers, suppliers, and transportation lines during long stretches of 2020 due to the pandemic, I arrived here with no illusions about the difficult decisions that would be necessary in the early stages of this turnaround.”
“I had a very well-defined road map to return this company to health and to regain a significant amount of shareholder value. That plan included stabilizing the debt, rationalizing current costs and future commitments by rightsizing the operations, and adding new high margin product lines, with a fourth stage to include some pre-arranged M&A. I have largely completed the first three of these action items as I enter month five of my plan.”
“Turnarounds are hard work and I have been successful in reducing and pushing out some of our debt obligations far enough to give us some breathing room, but the job isn’t over yet. I started this process with a well-established distribution network and expertise in high-margin CBD products already in hand, so I had visibility on the kind of growth trajectory I could achieve by leveraging those two key categories.”
“What I did not anticipate, just two months into my tenure, was the filing of shake down lawsuits, which have been accompanied by a drumbeat of more than 50 negative press releases in the last two months. Those of you who know how this game is played understand these short-seller-style tactics, but it is nonetheless disconcerting to investors and partners to be subjected to this kind of unrelenting attack. The sad irony for Verus is that these copycat lawsuits have hurt existing shareholders significantly by delaying our pre-arranged M&A track into the future.”
“While the company fights these lawsuits, this scenario forced me to take a different fork in the road, the one that led to a much longer and harder journey where I must organically grow our way back to health. I begrudgingly committed to that path months ago, starting with some new product lines and with some trade show help selling from our distributor’s booths to create demand. I typically leave every trade show with significant orders in hand, so these shows are the lifeblood of our growth. We are very excited to be attending the upcoming Champs show in Las Vegas, Nevada at the end of this month, where we will have our products displayed with one of our major distributors. If history stays true to form, we expect to have an even larger backlog following this event, which is our current conundrum, as we have far more orders than we can currently produce due to working capital constraints.”
“The Company is at a pivotal point in our turnaround where obtaining working capital is essential, in order to convert our growing demand into a cycle of quick turnaround orders that can rebuild our balance sheet and fund future growth. Our backlog is almost exclusively for products with payment terms of two weeks or less and margins at least two to three times higher than our traditional food business, so the path to improved financials is now visible. In our most recent quarter, our gross margin reached 23%, 1,100 basis points higher than the 12% generated as recently as Q4 2020.”
“I can’t undo the past at Verus nor can I guarantee ultimate success in this turnaround, but I can assure every shareholder that I would not have taken on this task if I didn’t believe I could create a viable, profitable business. I appreciate the help and concessions I have received from vendors, distributors and even creditors during this turnaround period, which has given us a second chance. I invite any interested investor or potential partner to visit us at Champs Booth #4119 in Las Vegas, Nevada (July 27th through July 30th) to learn more about our new product lines and strategy.”
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