Filing identity and reporting period
Important issuer mismatch: The supplied filing is AMERI Holdings, Inc.’s Form 10-Q for the quarter ended June 30, 2019, not an Enveric Biosciences filing. The summary below reflects the filing text provided.
AMERI provides SAP cloud, digital and enterprise consulting services, primarily to North American customers, and reports as one operating segment. Financial statements are unaudited.
Financial performance
| Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 | Six months ended June 30, 2019 | Six months ended June 30, 2018 |
|---|---|---|---|---|
| Revenue | $11.02 million | $11.08 million | $21.70 million | $22.14 million |
| Gross profit | $2.38 million | $2.39 million | $4.52 million | $4.73 million |
| Gross margin | 22% | 22% | 22% | 21% |
| Operating loss | $1.48 million | $1.08 million | $2.77 million | $2.45 million |
| Net loss attributable to the company | $1.26 million | $1.26 million | $3.12 million | $2.83 million |
| Net loss attributable to common stockholders | $1.36 million | $1.36 million | $3.33 million | $3.49 million |
| Basic and diluted loss per share | $(0.03) | $(0.07) | $(0.07) | $(0.19) |
- Six-month operating cash outflow was $1.47 million, versus $0.28 million in the prior-year period. Investing activities used $0.23 million; financing activities provided $1.93 million. Cash increased by $0.23 million to $1.60 million, primarily due to $2.12 million received from warrant exercises.
- At June 30, cash was $1.60 million and accounts receivable was $8.54 million. Current liabilities were $14.37 million; management reported negative working capital of $3.4 million.
- Debt included a $4.02 million balance under the North Mill Capital credit facility and $1.00 million of convertible notes. The notes bear 8% interest and mature in March 2020; $0.25 million of principal was repaid during the first half. The filing also reports $2.50 million of cash consideration payable related to an acquisition.
- Total assets were $29.48 million, total liabilities $18.62 million, and stockholders’ equity $10.86 million. Goodwill was $13.73 million and the warrant liability was $4.25 million.
Changes versus prior period and notable items
- Revenue declined 1% year over year in the quarter and 2% for the first half. Management attributed the first-half decline mainly to not pursuing certain low-margin professional services work.
- Quarterly SG&A rose to $3.30 million from $2.52 million; first-half SG&A rose to $6.17 million from $5.40 million. Management attributed the increases to sales initiatives, including recruiting a new sales team. Operating losses consequently widened.
- First-half depreciation and amortization fell to $1.12 million from $1.63 million. The company reported no goodwill impairment in the periods shown, but disclosed $8.2 million of goodwill impairment and $0.9 million of intangible-asset impairment in 2018.
- Quarterly results included a $0.39 million gain from the change in fair value of warrant liabilities; the first-half period included a $0.06 million loss from that remeasurement. These non-cash valuation changes affect reported earnings.
- Common shares outstanding increased from 42.33 million at December 31, 2018 to 52.42 million at June 30, 2019, including shares issued upon warrant exercise and for acquisition earn-outs.
- Five customers accounted for 49% of quarterly revenue and 46% of first-half revenue, compared with 40% and 39%, respectively, in the prior-year periods. The filing identifies customer concentration as a business exposure.
Outlook, liquidity, risks and contingencies
- Management described recurring losses and stated that the conditions raise substantial doubt about the company’s ability to continue as a going concern. Continuation depends on obtaining additional equity or debt financing, improving operating efficiency and generating more revenue; the filing gives no assurance that additional capital, if obtained, will be sufficient.
- Management stated a target gross-margin range of 20%–25% for future periods, dependent on the mix of project and professional-services revenue, and cautioned that the target may not be achieved. No specific revenue or earnings guidance is provided.
- The North Mill facility has a two-year initial term, a minimum interest rate of 7.25%, fees, and first-priority liens on borrower assets; the parent also guaranteed the obligations and pledged its assets. The facility contains restrictive covenants and default remedies. The filing reports a $4.0 million balance at quarter-end.
- Revenue depends on customer contracts, and the company cites risks involving additional capital, client diversification, staffing costs, acquisitions and integration, and expense control. Management also says it is exploring strategic alternatives and may pursue further financing or acquisitions.
- Management concluded disclosure controls and internal control over financial reporting were not effective at June 30, 2019, primarily because acquired subsidiaries had not been fully integrated into common control procedures.
- A dispute with a former Ameri Arizona member was settled, with the company paying $200,000 in installments through May 2019. The filing says no other pending legal proceeding was material to the business or financial condition.
Most important facts for investors to verify
- Confirm the issuer and filing: the provided document identifies AMERI Holdings, Inc., not Enveric Biosciences.
- Assess the going-concern warning against the $1.60 million cash balance, negative $3.4 million working capital, continuing cash burn and stated need for additional financing.
- Verify the terms, collateral, covenants and maturity profile of the $4.02 million credit-facility balance, $1.00 million convertible notes and $2.50 million acquisition consideration payable.
- Review dilution and potential warrant effects: shares outstanding rose materially, and the $4.25 million warrant liability is subject to fair-value remeasurement.
- Check customer concentration and the sustainability of margins and sales initiatives, including whether management’s 20%–25% gross-margin target is being achieved.
- Reconcile apparent inconsistencies in the filing text, including the cash balance rendered as “$1,601.140” in one balance-sheet line, varying preferred-share counts, and references to the former Sterling facility in the convertible-note discussion despite disclosure that it was repaid and terminated.