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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, 2021

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
Identification No.)

 

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

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

VERO

 

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.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

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 11, 2021 the registrant had 54,146,435 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 


 

 

Table of Contents

 

 

 

Page

Part I.

Financial Information

2

Item 1.

Condensed Consolidated Financial Statements (unaudited)

2

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations

3

 

Condensed Consolidated Statements of Comprehensive Loss

4

 

Condensed Consolidated Statements of Stockholders’ Equity

5

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to the Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

45

Item 4.

Controls and Procedures

45

PART II.

Other Information

46

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 3.

Defaults Upon Senior Securities

47

Item 4.

Mine Safety Disclosures

47

Item 5.

Other Information

47

Item 6.

Exhibits

48

Signatures

49

 

 

i


 

 

PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

VENUS CONCEPT INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except for shares and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,059

 

 

$

34,297

 

Restricted cash

 

 

83

 

 

 

83

 

Accounts receivable, net of allowance of $12,295 and $18,490 as of June 30, 2021, and December 31, 2020

 

 

50,078

 

 

 

52,764

 

Inventories

 

 

19,767

 

 

 

17,759

 

Prepaid expenses

 

 

2,350

 

 

 

2,240

 

Advances to suppliers

 

 

3,359

 

 

 

2,587

 

Other current assets

 

 

4,635

 

 

 

5,674

 

Total current assets

 

 

103,331

 

 

 

115,404

 

LONG-TERM ASSETS:

 

 

 

 

 

 

 

 

Long-term receivables

 

 

21,950

 

 

 

21,148

 

Deferred tax assets

 

 

1,196

 

 

 

884

 

Severance pay funds

 

 

715

 

 

 

685

 

Property and equipment, net

 

 

2,937

 

 

 

3,539

 

Intangible assets

 

 

17,144

 

 

 

18,865

 

Total long-term assets

 

 

43,942

 

 

 

45,121

 

TOTAL ASSETS

 

$

147,273

 

 

$

160,525

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Trade payables

 

$

5,684

 

 

$

6,322

 

Accrued expenses and other current liabilities

 

 

17,096

 

 

 

20,253

 

Taxes payable

 

 

1,851

 

 

 

1,132

 

Unearned interest income

 

 

2,464

 

 

 

1,950

 

Warranty accrual

 

 

1,314

 

 

 

1,106

 

Deferred revenues

 

 

901

 

 

 

1,752

 

Current portion of government assistance loans

 

 

1,280

 

 

 

 

Total current liabilities

 

 

30,590

 

 

 

32,515

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

Long-term debt

 

 

76,396

 

 

 

75,491

 

Government assistance loans

 

 

 

 

 

4,110

 

Taxes payable

 

 

478

 

 

 

478

 

Accrued severance pay

 

 

819

 

 

 

755

 

Deferred tax liabilities

 

 

308

 

 

 

811

 

Unearned interest income

 

 

1,176

 

 

 

1,778

 

Warranty accrual

 

 

467

 

 

 

533

 

Other long-term liabilities

 

 

192

 

 

 

293

 

Total long-term liabilities

 

 

79,836

 

 

 

84,249

 

TOTAL LIABILITIES

 

 

110,426

 

 

 

116,764

 

Commitments and Contingencies (Note 8)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (Note 1):

 

 

 

 

 

 

 

 

Common Stock, $0.0001 par value: 300,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 54,141,822 and 53,551,126 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

 

26

 

 

 

26

 

Additional paid-in capital (Note 1)

 

 

203,877

 

 

 

201,598

 

Accumulated deficit

 

 

(166,274

)

 

 

(157,392

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

37,629

 

 

 

44,232

 

Non-controlling interests

 

 

(782

)

 

 

(471

)

 

 

 

36,847

 

 

 

43,761

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

147,273

 

 

$

160,525

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


 

VENUS CONCEPT INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except for per share data)

 

 

 

Three Months

Ended June 30

 

 

Six Months

Ended June 30

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

$

12,787

 

 

$

7,465

 

 

$

21,324

 

 

$

14,278

 

Products and services

 

 

13,041

 

 

 

9,531

 

 

 

27,101

 

 

 

17,226

 

 

 

 

25,828

 

 

 

16,996

 

 

 

48,425

 

 

 

31,504

 

Cost of goods sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

 

2,736

 

 

 

1,541

 

 

 

4,506

 

 

 

2,993

 

Products and services

 

 

4,375

 

 

 

3,558

 

 

 

9,968

 

 

 

7,334

 

 

 

 

7,111

 

 

 

5,099

 

 

 

14,474

 

 

 

10,327

 

Gross profit

 

 

18,717

 

 

 

11,897

 

 

 

33,951

 

 

 

21,177

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

10,114

 

 

 

4,545

 

 

 

17,968

 

 

 

13,156

 

General and administrative

 

 

7,828

 

 

 

14,590

 

 

 

19,993

 

 

 

28,766

 

Research and development

 

 

2,024

 

 

 

1,570

 

 

 

4,075

 

 

 

4,194

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

27,450

 

Gain on forgiveness of government assistance loans

 

 

(2,775

)

 

 

 

 

 

(2,775

)

 

 

 

Total operating expenses

 

 

17,191

 

 

 

20,705

 

 

 

39,261

 

 

 

73,566

 

Loss from operations

 

 

1,526

 

 

 

(8,808

)

 

 

(5,310

)

 

 

(52,389

)

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange loss (gain)

 

 

130

 

 

 

(1,166

)

 

 

844

 

 

 

3,113

 

Finance expenses

 

 

1,161

 

 

 

2,371

 

 

 

3,046

 

 

 

4,625

 

Loss on disposal of subsidiaries

 

 

-

 

 

 

385

 

 

 

-

 

 

 

385

 

Income (loss) before income taxes

 

 

235

 

 

 

(10,398

)

 

 

(9,200

)

 

 

(60,512

)

Income tax benefit

 

 

(7

)

 

 

(633

)

 

 

(7

)

 

 

(44

)

Net income (loss)

 

 

242

 

 

 

(9,765

)

 

 

(9,193

)

 

 

(60,468

)

Deemed dividend

 

 

-

 

 

 

(3,564

)

 

 

-

 

 

 

(3,564

)

Income (loss) attributable to stockholders of the Company

 

 

377

 

 

 

(13,152

)

 

 

(8,882

)

 

 

(63,342

)

Loss attributable to non-controlling interest

 

 

(135

)

 

 

(177

)

 

 

(311

)

 

 

(690

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

(0.39

)

 

$

(0.16

)

 

$

(2.01

)

Diluted

 

$

0.01

 

 

$

(0.39

)

 

$

(0.16

)

 

$

(2.01

)

Weighted-average number of shares used in per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,088

 

 

 

33,315

 

 

 

53,917

 

 

 

31,564

 

Diluted

 

 

54,237

 

 

 

33,315

 

 

 

53,917

 

 

 

31,564

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


 

VENUS CONCEPT INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(in thousands)

 

 

 

Three Months

Ended June 30

 

 

Six Months

Ended June 30

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss)

 

$

242

 

 

$

(9,765

)

 

$

(9,193

)

 

$

(60,468

)

Deemed dividend

 

 

-

 

 

 

3,564

 

 

 

-

 

 

 

3,564

 

Income (loss) attributable to stockholders of the Company

 

 

377

 

 

 

(13,152

)

 

 

(8,882

)

 

 

(63,342

)

Loss attributable to non-controlling interest

 

 

(135

)

 

 

(177

)

 

 

(311

)

 

 

(690

)

Comprehensive income (loss)

 

$

242

 

 

$

(9,765

)

 

$

(9,193

)

 

$

(60,468

)

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

VENUS CONCEPT INC.

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, 2021

 

 

 

 

$

-

 

 

 

53,551,126

 

 

$

26

 

 

$

201,598

 

 

$

(157,392

)

 

$

(471

)

 

$

43,761

 

December 2020 Public Offering warrants exercise

 

 

 

 

 

 

 

 

361,200

 

 

 

 

 

 

903

 

 

 

 

 

 

 

 

 

903

 

Options exercised

 

 

 

 

 

 

 

 

157,304

 

 

 

 

 

 

212

 

 

 

 

 

 

 

 

 

212

 

Net loss - the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,259

)

 

 

 

 

 

(9,259

)

Net loss - non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(176

)

 

 

(176

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

508

 

 

 

 

 

 

 

 

 

508

 

Balance — March 31, 2021

 

 

 

 

$

-

 

 

 

54,069,630

 

 

$

26

 

 

$

203,221

 

 

$

(166,651

)

 

$

(647

)

 

$

35,949

 

Options exercised

 

 

 

 

 

 

 

 

72,192

 

 

 

 

 

 

98

 

 

 

 

 

 

 

 

 

98

 

Net income - the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

377

 

 

 

 

 

 

377

 

Net loss - non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(135

)

 

 

(135

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

558

 

 

 

 

 

 

 

 

 

558

 

Balance — June 30, 2021

 

 

 

 

$

-

 

 

 

54,141,822

 

 

$

26

 

 

$

203,877

 

 

$

(166,274

)

 

$

(782

)

 

$

36,847

 

 

 

 

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