SAN DIEGO--(BUSINESS WIRE)--PURE Bioscience, Inc. (OTCQB: PURE), creator of the patented non-toxic silver dihydrogen citrate (SDC) antimicrobial, today reported financial results for the fiscal year ended July 31, 2018.
Summary of Results – Year End Operations
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Revenues for the fiscal year ended July 31, 2018 decreased 3% to
$1,774,000, compared with revenues of $1,831,000 in the prior fiscal
year. The decrease of $57,000 was entirely attributable to reduced
sales within our existing legacy, non-food safety customer base.
- Core food safety revenues for fiscal 2018 increased 23% as compared with food safety revenues in fiscal 2017. Fiscal Q4 food safety revenues increased 165% and we anticipate that in fiscal Q1 ’19 triple digit revenue growth year-over-year will continue.
- Net loss for fiscal 2018 was $7.4 million, as compared with $6.3 million for fiscal 2017. Net loss, excluding inducement expense, derivative expense, and share-based compensation, for fiscal 2018 was $4.7 million, as compared with $4.9 million for fiscal 2017.
- Net loss per share was ($0.11) as compared with ($0.10) for fiscal 2017.
- Gross margin was 60% for fiscal 2018 as compared with 61% for the same period in fiscal 2017. The decrease was primarily attributable to the sale of higher margin formulations and packaging configurations of our products during fiscal 2017 as compared with the current year.
Update – Fiscal Q4 to Present
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Financings:
- In July, we raised $500,000 in the form of a promissory note from Tom Lee, a member of our Board of Directors and our largest shareholder.
- In August, we closed on an approximately $1.5 million private placement with existing shareholders. The funds raised included cancelled indebtedness of approximately $504,000 held by Lee.
- Proceeds of both financings were used for general working capital purposes.
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Striving towards our previously stated goal to achieve cash flow
breakeven in late calendar Q1 2019, in August, we continued to
implement meaningful restructuring and cost reduction measures while
pursuing immediate revenue generating opportunities, including:
- Board and management salaries and fees have been reduced, in some cases by 50%,
- Material reductions were made in outside advisor and service costs, and
- Sales and marketing expenses not directly related to new customer acquisitions and revenue growth were eliminated.
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BOD and Strengthened Management:
- In July, we named attorney and entrepreneur Ivan Chen to our Board of Directors, filling the vacancy left by the retirement of Director William Otis.
- In October, we promoted seven-year PURE veteran Tom Myers to Chief Operating Officer to oversee operations, and our go-to-market strategy and team.
Hank R. Lambert, CEO, said “We are pleased to have closed the fiscal fourth quarter with strong momentum – and quarterly food safety revenues putting us on a $2 million annualized run rate. We are also very encouraged that fiscal Q1 is off to a strong start. Our quarterly core food safety revenue growth has grown to triple digits, which reflects our strategic focus and the game changing nature of our SDC-based solutions.”
Lambert continued, “We are seeing expanding use by Taylor Farms of PURE Control (our direct food contact antimicrobial solution), accelerating progress in gaining adoption of our truck sanitizing solution among food transport companies, and accelerating expansion of PURE Hard Surface use in processing plants and restaurant chains.
“We have squarely addressed expenses and taken a series of meaningful steps to significantly reduce our overhead. This combination of revenue momentum and expense control lead me to reaffirm my expectation that, based upon our projections of customer adoption and rollout, we can achieve a cash flow breakeven annual revenue run rate of approximately $6 million by the end of calendar Q1 2019,” concluded Lambert.
2018 Fiscal Year-End Financial Results Conference Call
The Participant Dial-In Number for the conference call is 1-631-891-4304. Participants should dial in to the call at least five minutes before 1:30pm PDT (4:30pm ET) on Thursday, October 25, 2018. The call can also be accessed “live” online at http://public.viavid.com/index.php?id=131359.
A replay of the recorded call will be available for 90 days on the Company’s website (http://www.purebio.com/investors/events-presentations/). You can also listen to a replay of the call by dialing 1-844-512-2921 (international participants dial 1-412-317-6671) starting October 25, 2018, at 7:30pm ET through November 1, 2018 at 11:59 pm ET. Please use PIN Number 10005505.
About PURE Bioscience, Inc.
PURE Bioscience, Inc. is focused on developing and commercializing our proprietary antimicrobial products primarily in the food safety arena -- providing solutions to the health and environmental challenges of pathogen and hygienic control. Our technology platform is based on patented stabilized ionic silver, and our initial products contain silver dihydrogen citrate, or SDC. SDC is a broad-spectrum, non-toxic antimicrobial agent, which offers 24-hour residual protection and formulates well with other compounds. As a platform technology, SDC is distinguished from existing products in the marketplace because of its superior efficacy, reduced toxicity and it mitigates bacterial resistance. PURE is headquartered in El Cajon, California (San Diego metropolitan area). Additional information on PURE is available at www.purebio.com.
Forward-looking Statements
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Statements in this press release concerning the company’s expectations, plans, business outlook or future performance, and any other statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are “forward-looking statements.” Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the Company’s failure to implement or otherwise achieve the benefits of its proposed business initiatives and plans; acceptance of the Company's current and future products and services in the marketplace, including the Company’s ability to convert successful evaluations and tests for PURE Control into customer orders and customers continuing to place product orders as expected and to expand their use of the Company’s products; the Company’s ability to raise the funding required to support its continued operations and the implementation of its business plan; the ability of the Company to develop effective new products and receive required regulatory approvals for such products, including the required data and regulatory approvals required to use its SDC-based technology as a direct food contact processing aid in raw meat processing and to expand its use in OLR poultry processing; competitive factors, including customer acceptance of the Company’s SDC-based products that are typically more expensive than existing treatment chemicals; dependence upon third-party vendors, including to manufacture its products; and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission (the SEC), including its Form 10-K for the fiscal year ended July 31, 2018 and Form 10-Q for the third fiscal quarter ended April 30, 2018. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
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PURE Bioscience, Inc. Consolidated Balance Sheets |
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| July 31, 2018 | July 31, 2017 | |||||||
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Assets |
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| Current assets | ||||||||
| Cash and cash equivalents | $ | 851,000 | $ | 1,640,000 | ||||
| Accounts receivable | 275,000 | 297,000 | ||||||
| Inventories, net | 197,000 | 273,000 | ||||||
| Restricted cash | 75,000 | 75,000 | ||||||
| Prepaid expenses | 58,000 | 174,000 | ||||||
| Total current assets | 1,456,000 | 2,459,000 | ||||||
| Property, plant and equipment, net | 461,000 | 548,000 | ||||||
| Patents, net | 658,000 | 822,000 | ||||||
| Total assets | $ | 2,575,000 | $ | 3,829,000 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 608,000 | $ | 426,000 | ||||
| Promissory note payable | 503,000 | — | ||||||
| Accrued liabilities | 170,000 | 249,000 | ||||||
| Derivative liabilities | — | 1,853,000 | ||||||
| Total current liabilities | 1,281,000 | 2,528,000 | ||||||
| Deferred rent | 13,000 | 11,000 | ||||||
| Total liabilities | 1,294,000 | 2,539,000 | ||||||
| Commitments and contingencies (See Note 4) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $0.01 par value: 5,000,000 shares authorized, no shares issued and outstanding | — | — | ||||||
| Common stock, $0.01 par value: 100,000,000 shares authorized, 68,248,158 shares issued and outstanding at July 31, 2018, and 63,093,153 shares issued and outstanding at July 31, 2017 | 683,000 | 631,000 | ||||||
| Additional paid-in capital | 117,522,000 | 110,141,000 | ||||||
| Accumulated deficit | (116,924,000 | ) | (109,482,000 | ) | ||||
| Total stockholders’ equity | 1,281,000 | 1,290,000 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,575,000 | $ | 3,829,000 | ||||
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PURE Bioscience, Inc. Consolidated Statements of Operations |
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| Year ended | ||||||||
| July 31, | ||||||||
| 2018 | 2017 | |||||||
| Net product sales | $ | 1,774,000 | $ | 1,831,000 | ||||
| Operating costs and expenses | ||||||||
| Cost of goods sold | 763,000 | 760,000 | ||||||
| Selling, general and administrative | 5,235,000 | 5,230,000 | ||||||
| Research and development | 459,000 | 779,000 | ||||||
| Share-based compensation | 2,359,000 | 1,070,000 | ||||||
| Total operating costs and expenses | 8,816,000 | 7,839,000 | ||||||
| Loss from operations | (7,042,000 | ) | (6,008,000 | ) | ||||
| Other income (expense) | ||||||||
| Inducement to exercise warrants | (876,000 | ) | — | |||||
| Change in derivative liabilities | 459,000 | (277,000 | ) | |||||
| Interest expense, net | (8,000 | ) | (5,000 | ) | ||||
| Other income, net | 25,000 | 27,000 | ||||||
| Total other expense | (400,000 | ) | (255,000 | ) | ||||
| Net loss | $ | (7,442,000 | ) | $ | (6,263,000 | ) | ||
| Basic and diluted net loss per share | $ | (0.11 | ) | $ | (0.10 | ) | ||
| Shares used in computing basic and diluted net loss per share | 67,279,124 | 63,492,406 | ||||||
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PURE Bioscience, Inc. Consolidated Statements of Stockholders’ Equity |
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| Common Stock |
Additional |
Accumulated |
Total Stockholders’ |
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| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance July 31, 2016 | 64,823,917 | $ | 649,000 | $ | 107,593,000 | $ | (103,219,000 | ) | $ | 5,023,000 | ||||||||||
| Issuance of common stock in private placements, net | 1,572,941 | 16,000 | 1,033,000 | — | 1,049,000 | |||||||||||||||
| Share-based compensation expense - stock options | — | — | 968,000 | — | 968,000 | |||||||||||||||
| Share-based compensation expense - restricted stock units | — | — | 102,000 | — | 102,000 | |||||||||||||||
| Warrant liability removed due to warrant exercise | — | — | 226,000 | — | 226,000 | |||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | 150,000 | 1,000 | (1,000 | ) | — | — | ||||||||||||||
| Issuance of common stock upon exercise of warrants | 346,295 | 3,000 | 182,000 | — | 185,000 | |||||||||||||||
| Restricted stock unit cancellation | (3,800,000 | ) | (38,000 | ) | 38,000 | — | — | |||||||||||||
| Net loss | — | — | — | (6,263,000 | ) | (6,263,000 | ) | |||||||||||||
| Balance July 31, 2017 | 63,093,153 | $ | 631,000 | $ | 110,141,000 | $ | (109,482,000 | ) | $ | 1,290,000 | ||||||||||
| Share-based compensation expense - stock options | — | — | 1,525,000 | — | 1,525,000 | |||||||||||||||
| Share-based compensation expense - restricted stock units | — | — | 834,000 | — | 834,000 | |||||||||||||||
| Warrant liability removed due to warrant exercise | — | — | 1,394,000 | — | 1,394,000 | |||||||||||||||
| Issuance of common stock upon exercise of warrants | 4,914,505 | 49,000 | 2,583,000 | — | 2,632,000 | |||||||||||||||
| Stock issued for services | 240,500 | 3,000 | 169,000 | 172,000 | ||||||||||||||||
| Inducement to exercise warrants | — | — | 876,000 | — | 876,000 | |||||||||||||||
| Net loss | — | — | — | (7,442,000 | ) | (7,442,000 | ) | |||||||||||||
| Balance July 31, 2018 | 68,248,158 | $ | 683,000 | $ | 117,522,000 | $ | (116,924,000 | ) | $ | 1,281,000 | ||||||||||
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PURE Bioscience, Inc. Consolidated Statements of Cash Flows |
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| Year ended | ||||||||
| July 31, | ||||||||
| 2018 | 2017 | |||||||
| Operating activities | ||||||||
| Net loss | $ | (7,442,000 | ) | $ | (6,263,000 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share-based compensation | 2,359,000 | 1,070,000 | ||||||
| Amortization of stock issued for services | 122,000 | 144,000 | ||||||
| Stock issued for services | 121,000 | — | ||||||
| Depreciation and amortization | 285,000 | 276,000 | ||||||
| Inventory write-off | 58,000 | 50,000 | ||||||
| Gain on inventory recovery | (19,000 | ) | — | |||||
| Change in fair value of derivative liabilities | (459,000 | ) | 277,000 | |||||
| Inducement to exercise warrants | 876,000 | — | ||||||
| Interest expense on promissory note | 3,000 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 22,000 | (34,000 | ) | |||||
| Inventories | 37,000 | 27,000 | ||||||
| Prepaid expenses | 45,000 | (58,000 | ) | |||||
| Accounts payable and accrued liabilities | 103,000 | (59,000 | ) | |||||
| Deferred rent | 2,000 | 8,000 | ||||||
| Net cash used in operating activities | (3,887,000 | ) | (4,562,000 | ) | ||||
| Investing activities | ||||||||
| Investment in patents | (15,000 | ) | (20,000 | ) | ||||
| Purchases of property, plant and equipment | (19,000 | ) | (206,000 | ) | ||||
| Net cash used in investing activities | (34,000 | ) | (226,000 | ) | ||||
| Financing activities | ||||||||
| Net proceeds from the exercise of warrants | 2,632,000 | 185,000 | ||||||
| Net proceeds from promissory note financing | 500,000 | — | ||||||
| Net proceeds from the sale of common stock | — | 1,049,000 | ||||||
| Net cash provided by financing activities | 3,132,000 | 1,234,000 | ||||||
| Net decrease in cash and cash equivalents | (789,000 | ) | (3,554,000 | ) | ||||
| Cash and cash equivalents at beginning of year | 1,640,000 | 5,194,000 | ||||||
| Cash and cash equivalents at end of year | $ | 851,000 | $ | 1,640,000 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for taxes | $ | 3,000 | $ | 7,000 | ||||
| Noncash Investing and Financing activities | ||||||||
| Warrant liability removed due to settlements | $ | 1,394,000 | $ | 226,000 | ||||
| Common stock issued for prepaid services | $ | 51,000 | — | |||||
| Restricted stock unit cancelation | $ | — | $ | 38,000 | ||||