UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
|
☒ |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2020
OR
|
☐ |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission File Number: 001-38238
Venus Concept Inc.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware |
06-1681204 |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
|
235 Yorkland Blvd., Suite 900 Toronto, Ontario M2J 4Y8 (877) 848-8430 (Address including zip code, and telephone number including area code, of registrant’s principal executive offices) |
|
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
|
Common Stock, $0.0001 par value per share |
|
VERO |
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The Nasdaq Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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Accelerated filer |
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☐ |
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|||
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Non-accelerated filer |
|
☒ |
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Smaller reporting company |
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☒ |
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Emerging growth company |
|
☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 10, 2020, the registrant had 40,332,553 shares of common stock, $0.0001 par value per share, outstanding.
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Page |
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Part I. |
2 |
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Item 1. |
2 |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
29 |
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Item 3. |
50 |
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Item 4. |
50 |
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PART II. |
52 |
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Item 1. |
52 |
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Item 1A. |
54 |
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Item 2. |
60 |
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Item 3. |
60 |
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Item 4. |
60 |
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Item 5. |
60 |
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Item 6. |
61 |
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62 |
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i
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VENUS CONCEPT INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except for shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
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June 30, 2020 |
|
|
December 31, 2019 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
14,033 |
|
|
$ |
15,666 |
|
|
Restricted cash |
|
|
83 |
|
|
|
83 |
|
|
Accounts receivable, net of allowance of $14,277 and $10,494 as of June 30, 2020, and December 31, 2019 |
|
|
57,539 |
|
|
|
58,977 |
|
|
Inventories |
|
|
19,030 |
|
|
|
18,844 |
|
|
Deferred expenses |
|
|
10 |
|
|
|
59 |
|
|
Prepaid expenses |
|
|
2,422 |
|
|
|
2,523 |
|
|
Advances to suppliers |
|
|
2,769 |
|
|
|
450 |
|
|
Other current assets |
|
|
4,217 |
|
|
|
3,101 |
|
|
Total current assets |
|
|
100,103 |
|
|
|
99,703 |
|
|
LONG-TERM ASSETS: |
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
|
24,343 |
|
|
|
35,656 |
|
|
Deferred tax assets |
|
|
1,265 |
|
|
|
622 |
|
|
Severance pay funds |
|
|
638 |
|
|
|
710 |
|
|
Property and equipment, net |
|
|
3,971 |
|
|
|
4,648 |
|
|
Intangible assets |
|
|
20,602 |
|
|
|
22,338 |
|
|
Goodwill |
|
|
— |
|
|
|
27,450 |
|
|
Total long-term assets |
|
|
50,819 |
|
|
|
91,424 |
|
|
TOTAL ASSETS |
|
$ |
150,922 |
|
|
$ |
191,127 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
Line of credit |
|
$ |
3,861 |
|
|
$ |
7,789 |
|
|
Trade payables |
|
|
9,139 |
|
|
|
9,401 |
|
|
Accrued expenses and other current liabilities |
|
|
15,967 |
|
|
|
21,120 |
|
|
Taxes payable |
|
|
2,579 |
|
|
|
2,172 |
|
|
Unearned interest income |
|
|
2,937 |
|
|
|
3,942 |
|
|
Warranty accrual |
|
|
1,160 |
|
|
|
1,254 |
|
|
Deferred revenues |
|
|
1,915 |
|
|
|
2,495 |
|
|
Total current liabilities |
|
|
37,558 |
|
|
|
48,173 |
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
65,364 |
|
|
|
61,229 |
|
|
Government assistance loans |
|
|
4,110 |
|
|
|
— |
|
|
Accrued severance pay |
|
|
858 |
|
|
|
827 |
|
|
Deferred tax liabilities |
|
|
423 |
|
|
|
1,017 |
|
|
Unearned interest income |
|
|
1,246 |
|
|
|
1,681 |
|
|
Warranty accrual |
|
|
499 |
|
|
|
723 |
|
|
Other long-term liabilities |
|
|
530 |
|
|
|
799 |
|
|
Total long-term liabilities |
|
|
73,030 |
|
|
|
66,276 |
|
|
TOTAL LIABILITIES |
|
|
110,588 |
|
|
|
114,449 |
|
|
Commitments and Contingencies (Note 8) |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY (Note 1): |
|
|
|
|
|
|
|
|
|
Common Stock, $0.0001 par value: 300,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 39,830,122 and 28,686,116 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively |
|
|
25 |
|
|
|
24 |
|
|
Additional paid-in capital (Note 2) |
|
|
174,622 |
|
|
|
149,840 |
|
|
Accumulated deficit |
|
|
(135,464 |
) |
|
|
(75,686 |
) |
|
TOTAL STOCKHOLDERS’ EQUITY |
|
|
39,183 |
|
|
|
74,178 |
|
|
Non-controlling interests |
|
|
1,151 |
|
|
|
2,500 |
|
|
|
|
|
40,334 |
|
|
|
76,678 |
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
150,922 |
|
|
$ |
191,127 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except for per share data)
|
|
|
Three Months Ended June 30 |
|
|
Six Months Ended June 30 |
|
||||||||||
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2020 |
|
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2019 |
|
|
2020 |
|
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2019 |
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||||
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Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases |
|
$ |
7,465 |
|
|
$ |
16,643 |
|
|
$ |
14,278 |
|
|
$ |
32,385 |
|
|
Products and services |
|
|
9,531 |
|
|
|
11,175 |
|
|
|
17,226 |
|
|
|
20,013 |
|
|
|
|
|
16,996 |
|
|
|
27,818 |
|
|
|
31,504 |
|
|
|
52,398 |
|
|
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases |
|
|
1,541 |
|
|
|
3,283 |
|
|
|
2,993 |
|
|
|
6,762 |
|
|
Products and services |
|
|
3,558 |
|
|
|
4,461 |
|
|
|
7,334 |
|
|
|
7,497 |
|
|
|
|
|
5,099 |
|
|
|
7,744 |
|
|
|
10,327 |
|
|
|
14,259 |
|
|
Gross profit |
|
|
11,897 |
|
|
|
20,074 |
|
|
|
21,177 |
|
|
|
38,139 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
4,545 |
|
|
|
10,250 |
|
|
|
13,156 |
|
|
|
19,782 |
|
|
General and administrative |
|
|
14,975 |
|
|
|
11,853 |
|
|
|
29,151 |
|
|
|
20,192 |
|
|
Research and development |
|
|
1,570 |
|
|
|
1,920 |
|
|
|
4,194 |
|
|
|
3,981 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
27,450 |
|
|
|
— |
|
|
Total operating expenses |
|
|
21,090 |
|
|
|
24,023 |
|
|
|
73,951 |
|
|
|
43,955 |
|
|
Loss from operations |
|
|
(9,193 |
) |
|
|
(3,949 |
) |
|
|
(52,774 |
) |
|
|
(5,816 |
) |
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss (income) |
|
|
(1,166 |
) |
|
|
(684 |
) |
|
|
3,113 |
|
|
|
13 |
|
|
Finance expenses |
|
|
2,371 |
|
|
|
2,152 |
|
|
|
4,625 |
|
|
|
3,807 |
|
|
Loss before income taxes |
|
|
(10,398 |
) |
|
|
(5,417 |
) |
|
|
(60,512 |
) |
|
|
(9,636 |
) |
|
Income tax (benefit) expense |
|
|
(633 |
) |
|
|
61 |
|
|
|
(44 |
) |
|
|
947 |
|
|
Net loss |
|
|
(9,765 |
) |
|
|
(5,478 |
) |
|
|
(60,468 |
) |
|
|
(10,583 |
) |
|
Deemed dividend (Note 13) |
|
|
(3,564 |
) |
|
|
- |
|
|
|
(3,564 |
) |
|
|
- |
|
|
Loss attributable to stockholders of the Company |
|
|
(13,152 |
) |
|
|
(5,910 |
) |
|
|
(63,342 |
) |
|
|
(11,183 |
) |
|
(Loss) income attributable to non-controlling interest |
|
|
(177 |
) |
|
|
432 |
|
|
|
(690 |
) |
|
|
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.39 |
) |
|
$ |
(1.24 |
) |
|
$ |
(2.01 |
) |
|
$ |
(2.34 |
) |
|
Diluted |
|
$ |
(0.39 |
) |
|
$ |
(1.24 |
) |
|
$ |
(2.01 |
) |
|
$ |
(2.34 |
) |
|
Weighted-average number of shares used in per share calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
33,315 |
|
|
|
4,776 |
|
|
|
31,564 |
|
|
|
4,776 |
|
|
Diluted |
|
|
33,315 |
|
|
|
4,776 |
|
|
|
31,564 |
|
|
|
4,776 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
(in thousands)
|
|
|
Three Months Ended June 30 |
|
|
Six Months Ended June 30 |
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Net loss and comprehensive loss |
|
$ |
(9,765 |
) |
|
$ |
(5,478 |
) |
|
$ |
(60,468 |
) |
|
$ |
(10,583 |
) |
|
Deemed dividend |
|
|
(3,564 |
) |
|
|
- |
|
|
|
(3,564 |
) |
|
|
- |
|
|
Loss attributable to stockholders of the Company |
|
|
(13,152 |
) |
|
|
(5,910 |
) |
|
|
(63,342 |
) |
|
|
(11,183 |
) |
|
Comprehensive (loss) income attributable to non-controlling interest |
|
|
(177 |
) |
|
|
432 |
|
|
|
(690 |
) |
|
|
600 |
|
|
Comprehensive loss |
|
$ |
(13,329 |
) |
|
$ |
(5,478 |
) |
|
$ |
(64,032 |
) |
|
$ |
(10,583 |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except for shares)
|
|
|
Preferred Stock Series A |
|
|
Common Stock |
|
|
Additional Paid- |
|
|
Accumulated |
|
|
Non- controlling |
|
|
Total Stockholders’ |
|
||||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
in-Capital |
|
|
Deficit |
|
|
Interest |
|
|
Equity |
|
||||||||
|
Balance — January 1, 2020 |
|
|
— |
|
|
$ |
- |
|
|
|
28,686,116 |
|
|
$ |
24 |
|
|
$ |
149,840 |
|
|
$ |
(75,686 |
) |
|
$ |
2,500 |
|
|
$ |
76,678 |
|
|
Issuance of common stock |
|
|
— |
|
|
|
— |
|
|
|
1,208,169 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
2020 Private Placement shares, net of costs |
|
|
660,000 |
|
|
|
— |
|
|
|
2,300,000 |
|
|
|
— |
|
|
|
12,115 |
|
|
|
— |
|
|
|
— |
|
|
|
12,115 |
|
|
2020 Private Placement Warrants, net of costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,621 |
|
|
|
— |
|
|
|
— |
|
|
|
4,621 |
|
|
Beneficial conversion feature |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,564 |
|
|
|
— |
|
|
|
— |
|
|
|
3,564 |
|
|
Dividends from subsidiaries |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(218 |
) |
|
|
(218 |
) |
|
Net loss - the Company |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(50,190 |
) |
|
|
— |
|
|
|
(50,190 |
) |
|
Net loss - non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(513 |
) |
|
|
(513 |
) |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
517 |
|
|
|
— |
|
|
|
— |
|
|
|
517 |
|
|
Balance — March 31, 2020 |
|
|
660,000 |
|
|
$ |
- |
|
|
|
32,194,285 |
|
|
$ |
24 |
|
|
$ |
170,657 |
|
|
$ |
(125,876 |
) |
|
$ |
1,769 |
|
|
$ |
46,574 |
|
|
Issuance of common stock |
|
|
— |
|
|
|
— |
|
|
|
1,013,060 |
|
|
|
— |
|
|
|
3,393 |
|
|
|
— |
|
|
|
— |
|
|
|
3,393 |
|
|
Conversion of Preferred Stock Series A |
|
|
(660,000 |
) |
|
|
— |
|
|
|
6,600,000 |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Beneficial conversion feature |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,564 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,564 |
) |
|
Deemed dividend |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,564 |
|
|
|
— |
|
|
|
— |
|
|
|
3,564 |
|
|
Disposal of subsidiary |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(441 |
) |
|
|
(441 |
) |
|
Net loss - the Company |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,588 |
) |
|
|
— |
|
|
|
(9,588 |
) |
|
Net loss - non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(177 |
) |
|
|
(177 |
) |
|
Options exercised |
|
|
— |
|
|
|
— |
|
|
|
22,777 |
|
|
|
— |
|
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
34 |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
539 |
|
|
|
— |
|
|
|
— |
|
|
|
539 |
|
|
Balance — June 30, 2020 |
|
|
— |
|
|
$ |
- |
|
|
|
39,830,122 |
|
|
$ |
25 |
|
|
$ |
174,622 |
|
|
$ |
(135,464 |
) |
|
$ |
1,151 |
|
|
$ |
40,334 |
|
|
|
|
Series A |
|
|
Series B |
|
|
Series C |
|
|
Series C-1 |
|
|
Series D |
|
|
Common Stock |
|
|
Additional Paid- |
|
|
Accumulated |
|
|
Non- controlling |
|
|
Total Stockholders’ |
|
||||||||||||||
|
|
|
Preferred Shares |
|
|
Preferred Shares |
|
|
Preferred Shares |
|
|
Preferred Shares |
|
|
Preferred Shares |
|
|
Shares |
|
|
Amount |
|
|
in-Capital |
|
|
Deficit |
|
|
Interest |
|
|
Equity |
|
|||||||||||
|
Balance — January 1, 2019 (as restated, Note 2) |
|
|
1,264,565 |
|
|
|
2,632,109 |
|
|
|
4,615,567 |
|
|
|
56,983 |
|
|
|
647,189 |
|
|
|
4,772,956 |
|
|
$ |
5 |
|
|
$ |
67,495 |
|
|
$ |
(35,067 |
) |
|
$ |
4,022 |
|
|
$ |
36,455 |
|
|
Net loss - the Company |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,273 |
) |
|
|
— |
|
|
|
(5,273 |
) |
|
Net income - non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
168 |
|
|
|
168 |
|
|
Options exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,506 |
|
|
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
375 |
|
|
|
— |
|
|
|
— |
|
|
|
375 |
|
|
Balance — March 31, 2019 (as restated, Note 2) |
|
|
1,264,565 |
|
|
|
2,632,109 |
|
|
|
4,615,567 |
|
|
|
56,983 |
|
|
|
647,189 |
|
|
|
4,776,462 |
|
|
$ |
5 |
|
|
$ |
67,877 |
|
|
$ |
(40,340 |
) |
|
$ |
4,190 |
|
|
$ |
31,732 |
|
|
Net loss - the Company |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,910 |
) |
|
|
— |
|
|
|
(5,910 |
) |
|
Net income - non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
432 |
|
|
|
432 |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,044 |
|
|
|
— |
|
|
|
— |
|
|
|
1,044 |
|
|
Balance — June 30, 2019 (as restated, Note 2) |
|
|
1,264,565 |
|
|
|
2,632,109 |
|
|
|
4,615,567 |
|
|
|
56,983 |
|
|
|
647,189 |
|
|
|
4,776,462 |
|
|
$ |
5 |
|
|
$ |
68,921 |
|
|
$ |
(46,250 |
) |
|
$ |
4,622 |
|
|
$ |
27,298 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
|
|
|
Six Months Ended June 30 |
|
|||||
|
|
|
2020 |
|
|
2019 |
|||