Fuse Medical, Inc. Announces Second 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 June 30, 2021 with the Securities and Exchange Commission (“SEC”) on Thursday, August 12, 2021.

Second Quarter 2021 Financial Highlights

• Net revenues for the quarter ended June 30, 2021 were $5.7 million, compared to $4.0 million for the quarter ended June 30 2020 which was an increase of approximately 41%.

• For the quarter ended June 30, 2021, gross profit was $3.4 million, or 61% of revenues, compared to $2.2 million, or 55% of revenues, for the quarter ended June 30, 2020 which was an increase of 56%.

• Selling, general, administrative, and other expenses (“SG&A”) for the quarter ended June 30, 2021 was approximately $2.0 million compared to $1.1 million for the quarter ended June 30, 2020.

• Commissions expense for the quarter ended June 30, 2021 increased to $1.8 million from $1.4 million for the quarter ended June 30, 2020, an increase of approximately $414,133.

• For the quarter ended June 30, 2021, net loss was $85,481 compared to $423,431 for the quarter ended June 30, 2020, reflecting a reduction in our net loss of $337,950 or approximately 80%.

Christopher C. Reeg, Chief Executive Officer of Fuse Medical, commented “We are pleased with our second quarter performance, as highlighted by a 41% increase in revenue, and a 56% increase in gross profit over the prior-year period. Our implementation and achievement of strategic initiatives, which includes increasing our portfolio of manufactured products, continued research and development of unique intellectual property for commercialization, investing in our sales team, and expansion of our national distribution footprint are reflected in our second quarter results.”

“Our growth for the remainder of 2021 is focused on new product launches in the biologics, orthopedics, and spine marketplace. With the alpha launch and successful first surgical implantation of the Orbitum™ Compression Staple System in the second quarter, we expect this disruptive technology for the extremity market will drive growth in the near term, while increasing our visibility as an emerging manufacturer of relevant medical devices.”

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 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)
	June 30, 2021			December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash	$	1,356,876		$	1,187,458
Accounts receivable, net of allowance of $941,283 and $787,766, respectively		3,051,935			4,427,896
Inventories, net of allowance of $2,644,223 and $3,077,728, respectively		8,312,711			6,981,413
Prepaid expenses and other current assets		61,098			24,203
Total current assets		12,782,620			12,620,970
Property and equipment, net		10,799			17,791
Long term accounts receivable, net of allowance of $3,275,276 and $2,615,834, respectively		2,129,026			1,669,510
Intangible assets, net		1,112,814			1,138,080
Goodwill		1,972,886			1,972,886
Total assets	$	18,008,145		$	17,419,237
Liabilities and Stockholders' Equity (Accumulated Deficit)
Current liabilities:
Accounts payable	$	4,304,891		$	3,236,592
Accrued expenses		2,819,523			2,584,734
Convertible notes payable - related parties		150,000			150,000
Paycheck Protection Program Loan		-			361,400
Economic Injury Disaster Loan - short term portion		4,459			2,241
Senior secured revolving credit facility		913,352			913,352
Total current liabilities		8,192,225			7,248,319
Notes payable - related parties		200,000			200,000
Economic Injury Disaster Loan - long term portion		145,541			147,759
Earn-out liability		11,936,000			11,936,000
Total liabilities		20,473,766			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 June 30, 2021 and December 31, 2020.		731,245			731,245
Additional paid-in capital		1,370,245			1,184,222
Accumulated deficit		(4,567,111	)		(4,028,308	)
Total stockholders' equity (accumulated deficit)		(2,465,621	)		(2,112,841	)
Total liabilities and stockholders' equity (accumulated deficit)	$	18,008,145		$	17,419,237

 

FUSE MEDICAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in dollars, except share data)
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Net revenues	$	5,665,015		$	4,010,666		$	10,105,774		$	8,647,169
Cost of revenues		2,219,608			1,796,663			4,073,473			3,779,559
Gross profit		3,445,407			2,214,003			6,032,301			4,867,610
Operating expenses:
Selling, general, administrative and other		2,021,576			1,161,476			3,456,887			3,642,247
Commissions		1,834,372			1,420,239			3,399,125			2,811,356
Depreciation and amortization		15,465			30,752			32,258			60,735
Total operating expenses		3,871,413			2,612,467			6,888,270			6,514,338
Operating loss		(426,006	)		(398,464	)		(855,969	)		(1,646,728	)
Other (income) expense:
Interest expense		16,048			24,021			35,048			55,022
Gain on Payroll Protection Loan extinguishment		(361,400	)		-			(361,400	)		-
Total other (income) expense		(345,352	)		24,021			(326,352	)		55,022
Net loss before tax		(80,654	)		(422,485	)		(529,617	)		(1,701,750	)
Income tax benefit		4,826			946			9,186			5,680
Net loss	$	(85,480	)	$	(423,431	)	$	(538,803	)	$	(1,707,430	)
Net loss per common share - basic	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Weighted average number of common shares outstanding - basic		70,221,566			70,221,566			70,221,566			70,221,566

 

FUSE MEDICAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	For the Six Months Ended June 30,
	2021			2020
Cash flows from operating activities
Net loss	$	(538,803	)	$	(1,707,430	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		32,258			60,735
Stock based compensation		186,023			327,098
Provision for bad debts and discounts		153,517			186,359
Provision for long term accounts receivable		659,442			604,194
Provision for slow moving inventory		(433,505	)		(621,604	)
Gain on Payroll Protection Program Loan extinguishment		(361,400	)		-
Changes in operating assets and liabilities:
Accounts receivable		1,222,444			2,076,373
Inventories		(897,793	)		1,425,600
Prepaid expenses and other current assets		(36,895	)		(47,902	)
Long term accounts receivable		(1,118,958	)		(1,510,486	)
Accounts payable		1,068,299			(513,268	)
Accrued expenses		234,789			(238,198	)
Net cash provided by operating activities		169,418			41,471
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
Payments on senior secured revolving credit facility, net		-			(664,149	)
Proceeds from Paycheck Protection Program		-			361,400
Proceeds from Economic Injury Disaster Loan		-			150,000
Proceeds from related party promissory notes		-			200,000
Net cash provided by (used in) financing activities		-			47,251
Net increase (decrease) in cash		169,418			67,965
Cash and cash equivalents - beginning of period		1,187,458			1,099,310
Cash and cash equivalents - end of period	$	1,356,876		$	1,167,275
Supplemental disclosure of cash flow information:
Cash paid for interest	$	21,235		$	40,018