Fuse Medical, Inc. Announces First Quarter 2021 Financial Results

RICHARDSON, Texas--(BUSINESS WIRE)--Fuse Medical, Inc. (OTCPINK: FZMD) (“Fuse” or the “Company”) an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace, announced that it has filed its quarterly report on Form 10-Q for the quarter ended March 31, 2021 with the Securities and Exchange Commission (“SEC”) on Wednesday, May 12, 2021.

First Quarter 2021 Financial Highlights

• Net revenues for the quarter ended March 31, 2021 was $4.4 million, compared to $4.6 million for the quarter ended March 31 2020.

• For the quarter ended March 31, 2021, gross profit was $2.6 million, or 58% of revenues, compared to $2.7 million, or 57% of revenues, for the quarter ended March 31, 2020.

• Selling, general, administrative, and other expenses (“SG&A”) for the quarter ended March 31, 2021 declined by approximately $1 million or 42% to $1.4 million compared to $2.4 million for the quarter ended March 31, 2020.

• Commissions expense for the quarter ended March 31, 2021 increased to $1.6 million from $1.4 million for the quarter ended March 31, 2020, an increase of approximately $200,000 of approximately 12%.

• For the quarter ended March 31, 2021, net loss was $453,323 compared to $1,283,999 for the quarter ended March 31, 2020, reflecting a reduction in our net loss of $830,676 or approximately 65%.

Christopher C. Reeg, Chief Executive Officer of Fuse, commented “As we continue to navigate the COVID-19 pandemic, our first quarter of 2021 still felt the impact of elective surgery restrictions in several of our key markets. Despite this setback in January, coupled with the severe Texas Winter Storm in February that crippled Dallas and most of Texas, our Teams remained committed to our customers, and our elective case volumes are now trending above pre-pandemic levels. In light of these challenges, we have been successful in launching multiple new product lines, with several more launches scheduled throughout 2021. Q1 2021 also marked the beginning of our international expansion, with our first sales into the Australian marketplace."

“We remain committed to growing our portfolio of innovative orthopedic and spinal devices, expanding our distribution footprint, and look forward to continuing this momentum throughout 2021 and beyond,” Mr. Reeg added.

First Quarter 2021 Highlights:

Highlights of Fuse’s first quarter 2021 include the following:

• In January 2021, we entered into a marketing agreement with CarePICS Telehealth Platform to increase our wound care position.

• In January 2021, we entered into an exclusive agreement with Orthovestments, LLC for the manufacturing and commercialization of the novel Orbitum™ Staple System, which increases our manufactured product portfolio. Initial Alpha launch of the Orbitum™ Staple System is slated for June 2021, with full commercial launch beginning early in Q3 2021.

• In February 2021, we launched our Fuse ACP Anterior Cervical Plating System, expanding our offerings in our Spine division.

• In March 2021, we fulfilled our first international sales order to a new Distributor partner in Australia, better positioning us to expand our business and sell our products globally.

• We were successful in adding 7 new distributors during the three months ended March 31, 2021.

• On May 4, 2021, we executed the Seventh Amendment to our Amended and Restated Business Lona Agreement with Amegy Bank, renewing our credit facility until November 4, 2021.

About Fuse Medical, Inc.

Fuse is an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace. We provide a comprehensive portfolio of products in the orthopedic total joints, sports medicine, trauma, foot and ankle space, as well as, degenerative and deformity spine, osteobiologics, wound care, and regenerative medicine products. For more information about the Company, or if you’re interested in becoming a distributor of any Fuse’s products, please contact us at [e-mail] or visit: www.fusemedical.com.

Forward Looking Statements

Certain statements in this press release, constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend,” or similar expressions or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based only on information available to the Company as of the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the Company’s filings with the Securities and Exchange Commission; the failure of the Company to close the transaction; and integration issues with the consolidated company. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events, or otherwise, except as required by law.

FUSE MEDICAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in dollars, except share data)
	March 31, 2021			December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,417,793		$	1,187,458
Accounts receivable, net of allowance of $618,771 and $787,766, respectively		3,487,710			4,427,896
Inventories, net of allowance of $3,315,541 and $3,077,728, respectively		7,594,969			6,981,413
Prepaid expenses and other current assets		94,536			24,203
Total current assets		12,595,008			12,620,970
Property and equipment, net		13,630			17,791
Long term accounts receivable, net of allowance of $2,707,228 and $2,615,834, respectively		1,750,478			1,669,510
Intangible assets, net		1,125,447			1,138,080
Goodwill		1,972,886			1,972,886
Total assets	$	17,457,449		$	17,419,237
Liabilities and Stockholders' Equity (Accumulated Deficit)
Current liabilities:
Accounts payable	$	3,325,107		$	3,236,592
Accrued expenses		2,696,806			2,584,734
Convertible notes payable - related parties		150,000			150,000
Payroll Protection Program Loan		361,400			361,400
Economic Injury Disaster Loan - short term portion		3,004			2,241
Senior secured revolving credit facility		1,088,352			913,352
Total current liabilities		7,624,669			7,248,319
Notes payable - related parties		200,000			200,000
Economic Injury Disaster Loan - long term portion		146,996			147,759
Earn-out liability		11,936,000			11,936,000
Total liabilities		19,907,665			19,532,078
Commitments and contingencies		-			-
Stockholders' equity (accumulated deficit):
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.01 par value; 100,000,000 shares authorized, 73,124,458 shares issued and outstanding as of March 31, 2021 and December 31, 2020		731,245			731,245
Additional paid-in capital		1,300,170			1,184,222
Accumulated deficit		(4,481,631	)		(4,028,308	)
Total stockholders' deficit		(2,450,216	)		(2,112,841	)
Total liabilities and stockholders' equity (accumulated deficit)	$	17,457,449		$	17,419,237

FUSE MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in dollars, except share data)
	For the Three Months Ended March 31,
	2021			2020
Net revenues	$	4,440,759		$	4,636,503
Cost of revenues		1,853,865			1,982,896
Gross profit		2,586,894			2,653,607
Operating expenses:
Selling, general, administrative and other		1,435,310			2,480,771
Commissions		1,564,753			1,391,117
Depreciation and amortization		16,794			29,983
Total operating expenses		3,016,857			3,901,871
Operating loss		(429,963	)		(1,248,264	)
Other expense:
Interest expense		19,000			31,001
Total other expense		19,000			31,001
Operating loss before tax		(448,963	)		(1,279,265	)
Income tax expense		4,360			4,734
Net loss	$	(453,323	)	$	(1,283,999	)
Net loss per common share - basic and diluted	$	(0.01	)	$	(0.02	)
Weighted average number of Common Stock outstanding - basic and diluted		70,221,566			70,221,566

FUSE MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	For the Three Months Ended March 31,
	2021			2020
Cash flows from operating activities
Net loss	$	(453,323	)	$	(1,283,999	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		16,794			29,983
Share-based compensation		115,948			162,656
Provision for bad debts and discounts		-			417,219
Provision for long term accounts receivable		91,394			198,124
Provision for slow moving inventory		237,813			81,190
Changes in operating assets and liabilities:
Accounts receivable		940,186			1,639,955
Inventories		(851,369	)		(27,267	)
Prepaid expenses and other current assets		(70,333	)		(77,520	)
Long term accounts receivable		(172,362	)		(495,310	)
Accounts payable		88,515			(181,162	)
Accrued expenses		112,072			(539,973	)
Net cash provided by (used in) operating activities		55,335			(76,104	)
Cash flows from investing activities
Purchase of property and equipment		-			(20,757	)
Net cash (used in) investing activities		-			(20,757	)
Cash flows from financing activities
Net payments/proceeds on senior secured revolving credit facility		175,000			(249,181	)
Net cash provided by (used in) financing activities		175,000			(249,181	)
Net increase (decrease) in cash		230,335			(346,042	)
Cash and cash equivalents - beginning of period		1,187,458			1,099,310
Cash and cash equivalents - end of period	$	1,417,793		$	753,268
Supplemental disclosure of cash flow information:
Cash paid for interest	$	10,000		$	21,788