Gaithersburg, MD, April 29, 2021 (GLOBE NEWSWIRE) -- Verus International, Inc. (“Verus” or the “Company”) (OTC Pink: VRUS), an international food, CBD and hemp-based products company, today released a corporate update letter from its CEO Andy Dhruv.
Valued Shareholders,
I have spent my first two months as CEO of Verus International behind the scenes, working to understand the issues and opportunities, and tackling some of the tasks required to move us forward in 2021. Now that much of that heavy lifting is complete, I thought this would be a good time to introduce myself and provide you with a better understanding of the direction I will be taking the Company in the future.
First off, I think you should know a bit about my history and how my experience will shape our strategy. My story is a pretty familiar one to many of our wholesale customers, who like me, were newcomers to this country who learned about business from the ground up. I came to the U.S. in 2001 and worked in family-owned gas stations during those early years – 16 hours a day, 7 days a week. With that kind of schedule, every year is like two, so you gain experience quickly. I eventually moved to Orlando, Florida and transitioned into the wholesale consumer products business as a sales person.
That was a great training ground for how to sell into the very markets where I still operate today. In 2007, I partnered with British expats to set up a wholesale company from scratch, giving me start-up experience and paving the way for my own future start-ups. A year later, I began buying gas stations and by 2014 had six stations. I moved even deeper into the distribution business during that time, when I created Accent Marketing, which grew from just 50 customer locations to more than 20,000 in multiple states by 2017. I entered the CBD business in 2018 and was instrumental in helping to launch the Elephant Brand of CBD products, along with our new Waffles brand.
I am sharing this history with you today, because my strategy at Verus will be rooted in my approach to selling -- which begins with identifying timely, high profit-margin products that generate above-average inventory turns. When your business journey encompasses the entire path from a $200/month clerk to an owner-operator and then a distributor, you tend to know every nook and cranny of your customers’ operations and what it takes to gain your spot on that precious shelf or counter.
So, what have we been doing and what are we going to do to turn Verus around as a public company?
First, I would like to address the proposed class action lawsuit against the Company, which surfaced on Friday, April 23rd. We consider these claims to be meritless and intend to vigorously defend our Company against the allegations set forth in this complaint. In the meantime, we will be moving forward with our turnaround plans and strategy.
All turnarounds start in the same place -- and that is with cost rationalization. In recent months, we let go of business units that had high ongoing and future capital expenses, downsized our corporate footprint, and combed through every line item we could rationalize so that profitability became more than just a distant concept. To put this in perspective, getting out from under pending professional sports licensing payments and long-term lease obligations alone will save us over $700,000 in recurring annual expense – commitments that had to be paid whether we sold a single product. These steps were necessary to restart our growth, but just as importantly, they removed some potentially deal-killing commitments from our financials that were unattractive to new M&A candidates. You saw the first results of our cost-rationalization efforts in our last quarterly report and we will carry that theme into the following quarter and beyond.
Now, we are ready to get back to growth, which is the next phase of our turnaround. I won’t sugarcoat the task, as this will be a process of adding revenue while managing a lean operation and whittling away at our debt. To accomplish this, we first simplified the business into two segments – international sales of basic foods and U.S. consumer products. We also adopted a very practical strategy for what kind of products we want to sell. We are looking for five characteristics in our product lines – royalty-free company-owned branding, higher profit-margins than our traditional food SKUs, better payment terms to reduce our capital needs, newness in the marketplace, and above-average inventory turns. CBD and hemp-based products fit this model well, but we have other consumer products in mind that will also check these boxes.
We are just getting started with the Waffles line and plan to have our own booth at future industry trade shows. So far, the reaction and feedback has been excellent, so we believe this will provide us a runway for much wider distribution. Our profit-margins on our new products are typically at least 3-times greater than our traditional profit-margins, so it takes less revenue to be profitable. Given the recent history of the Company, it may seem impossible to hear that word “profitable” used this early in our turnaround plan, but I am laser-focused on making it a priority. Over the last several years, Verus spent millions of dollars developing products that generated little to no revenue, so today’s Verus is going to operate quite differently. Simply put – I am stressing the goal that we should make a healthy profit on every shipment that leaves our warehouse.
I know many of you are wondering about the M&A that we were pursuing prior to our reverse stock-split. We felt that it was important to streamline the Company before moving in that direction, out of fairness to both our existing shareholders and any potential new partners. Given our valuation, that has proven to be the right decision. Our goal is to only enter into M&A that enhances shareholder value, so that is the starting point as we reengage on these partnership opportunities. We are prioritizing next steps and will be able to provide better guidance within our next update, but suffice it to say that we are pursuing whatever brings the best value – which as of today, looks like a combination of organic growth and M&A.
As your new CEO, I am putting in long hours on your behalf during this turnround phase and am genuinely optimistic. I have an exhaustive list of things to accomplish, but my two most important near-term goals are to reach profitability and to return to growth. The next four to six weeks will be an important time for Verus, because we will obtain a better understanding of the potential of our Waffles line and we will be back at the table considering M&A. I look forward to providing more frequent updates as we implement these growth initiatives.
Sincerely,
Andy Dhruv
Chief Executive Officer
About Verus International
Verus is an emerging multi-line consumer packaged goods (CPG) company developing branded product lines in the U.S. and on a global basis. The Company trades on the OTC market (OTC Pink: 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 Pachyderm Labs subsidiary Twitter feed @PachydermLabs.
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.
Contacts
Investor Contact:
MKR Group Inc.
Todd Kehrli or Mark Forney
vrus@mkr-group.com