PURE Bioscience Reports Fiscal 2019 Second Quarter and Six-Month Financial Results

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PURE Bioscience, Inc. (OTCQB: PURE), creator of the patented non-toxic silver dihydrogen citrate (SDC) antimicrobial, today reported financial results for the fiscal second quarter and six-month period ended January 31, 2019.

Q2: Summary of Results of Operations

  • Revenues for the fiscal second quarter ended January 31, 2019 decreased 4% to $394,000, compared with revenues of $411,000 in the prior year fiscal second quarter. The decrease was entirely due to fluctuations within our existing legacy customer base.
    • However, core food safety revenues for the fiscal second quarter ended 2019 increased 52% as compared with food safety revenues in the fiscal second quarter ended 2018.
  • Net loss for the fiscal second quarter in 2019 was ($1.3 million), as compared with a loss of ($2 million) for fiscal second quarter in 2018. Net loss, excluding share-based compensation, for the second fiscal quarter in 2019 was ($839,000), as compared with a loss of ($1.3 million) for the second quarter in 2018.
  • Net loss per share was ($0.02) in 2019 as compared with ($0.03) for the fiscal second quarter ended 2018.
  • Gross margin was 59% during the second quarter of fiscal 2019 as compared with 61% during the same period in fiscal 2018. The decrease in gross margin percentage was primarily attributable to the sale of lower margin formulations and packaging configurations of our products during the quarter ended January 31, 2019, as compared with the prior period.

Six Months: Summary of Results of Operations

  • Revenues for the six-months ended January 31, 2019 increased 12% to $984,000 compared with prior year six-month revenues of $875,000.
    • Core food safety revenues for the six months ended 2018 increased 68% as compared with food safety revenues in the six months ended 2018. The increase in both total and food safety revenues was due to growing customer adoption.
  • Net loss for the six months ended January 31, 2019, was ($3.9 million) compared with ($4.4 million) for the six-month period in 2018. Net loss, excluding derivative income, inducement expense and share-based compensation, for the six months ended January 31, 2019 was ($1.7 million), as compared with ($2.6 million) for the six-month period in 2018.
  • Net loss per share was ($0.05) in 2019 as compared with ($0.07) for the six months ended fiscal 2018.
  • Gross margin was 63% during the first six months of fiscal 2019 as compared with 65% during the same six-month period in fiscal 2018. The decrease in gross margin percentage was primarily attributable to the sale of higher margin formulations and packaging configurations of our products during the six months ended January 31, 2018 as compared with the current period.

Hank R. Lambert, CEO, said, The timing of our anticipated profitability remains directly tied to customer forecasts and implementation plans. Based upon the revised roll-out plan of our key produce customer “ along with that of our leading food transportation customer “ we continue to expect that in calendar Q2 we can achieve a cash flow breakeven revenue run rate.

Im pleased to note that customer interest is growing for both our PURE Control and PURE Hard Surface food safety solutions, especially among produce processors and food transportation companies. We are proud of the inroads we are making as we continue our mission to protect people and protect company brands by providing superior, leading edge food safety solutions to prevent foodborne illness, concluded Lambert.

2019 Fiscal Second Quarter 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 PT (4:30pm ET) on March 6, 2019. The call can also be accessed live online at http://public.viavid.com/index.php?id=133106.

A replay of the recorded call will be available for 90 days on the Companys 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 March 6, 2019, at 7:30pm ET through March 13, 2019 at 11:59pm ET. Please use PIN Number 10006162.

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 companys 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 Companys 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 Companys 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 Companys products; the Companys 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 Companys 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 second fiscal quarter ended January 31, 2019. 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.

PURE Bioscience, Inc.
Condensed Consolidated Balance Sheets
 
  January 31, 2019   July 31, 2018
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 335,000 $ 851,000
Accounts receivable 129,000 275,000
Inventories, net 205,000 197,000
Restricted cash 75,000 75,000
Prepaid expenses   49,000     58,000  
Total current assets 793,000 1,456,000
Property, plant and equipment, net 416,000 461,000
Patents, net   568,000     658,000  
Total assets $ 1,777,000   $ 2,575,000  
Liabilities and stockholders equity
Current liabilities
Accounts payable $ 525,000 $ 608,000
Accrued liabilities 125,000 170,000
Promissory note payable       503,000  
Total current liabilities 650,000 1,281,000
Deferred rent   10,000     13,000  
Total liabilities   660,000     1,294,000  
Commitments and contingencies
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, 71,713,372 shares issued and outstanding at January 31, 2019, and 68,248,158 shares issued and outstanding at July 31, 2018 717,000 683,000
Additional paid-in capital 121,186,000 117,522,000
Accumulated deficit   (120,786,000 )   (116,924,000 )
Total stockholders equity   1,117,000     1,281,000  
Total liabilities and stockholders equity $ 1,777,000   $ 2,575,000  
 
PURE Bioscience, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 
  Six Months Ended  

Three Months Ended

January 31, January 31,
  2019       2018     2019       2018  
Net product sales $ 984,000 $ 875,000 $ 394,000 $ 411,000
Operating costs and expenses
Cost of goods sold 363,000 307,000 160,000 161,000
Selling, general and administrative 2,111,000 2,863,000 1,002,000 1,418,000
Research and development 164,000 264,000 67,000 120,000
Share-based compensation   2,201,000     1,396,000     457,000     740,000  
Total operating costs and expenses   4,839,000     4,830,000     1,686,000     2,439,000  
Loss from operations   (3,855,000 )   (3,955,000 )   (1,292,000 )   (2,028,000 )
Other income (expense)
Inducement to exercise warrants (876,000 )
Change in derivative liabilities 459,000
Interest expense, net (4,000 ) (2,000 ) (1,000 ) (1,000 )
Other income (expense), net   (3,000 )   8,000     (3,000 )   2,000  
Total other income (expense)   (7,000 )   (411,000 )   (4,000 )   1,000  
Net loss $ (3,862,000 ) $ (4,366,000 ) $ (1,296,000 ) $ (2,027,000 )
Basic and diluted net loss per share $ (0.05 ) $ (0.07 ) $ (0.02 ) $ (0.03 )
Shares used in computing basic and diluted net loss per share   71,312,898     66,482,607     71,623,494     68,000,810  
 
PURE Bioscience, Inc.
Condensed Consolidated Statements of Stockholders Equity
(Unaudited)
 
  Common Stock  

Additional

Paid-In

  Accumulated  

Total

Stockholders

Shares   Amount Capital Deficit Equity
Balance July 31, 2018 68,248,158 $ 683,000 $ 117,522,000   $ (116,924,000 ) $ 1,281,000  
Issuance of common stock in private placements, net 3,333,964 33,000 1,464,000 1,497,000
Share-based compensation expense – stock options 1,247,000 1,247,000
Share-based compensation expense – restricted stock units 954,000 954,000
Issuance of common stock for vested and delivered restricted stock units 131,250 1,000 (1,000 )
Net loss         (3,862,000 )   (3,862,000 )
Balance January 31, 2019 (Unaudited) 71,713,372 $ 717,000 $ 121,186,000   $ (120,786,000 ) $ 1,117,000  
 
PURE Bioscience, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
  Six Months Ended
January 31,
  2019       2018  
Operating activities
Net loss $ (3,862,000 ) $ (4,366,000 )
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation 2,201,000 1,396,000
Amortization of stock issued for services 25,000 142,000
Depreciation and amortization 143,000 81,000
Interest expense on promissory note 1,000
Change in fair value of derivative liability (459,000 )
Inducement to exercise warrants 876,000
Inventory write-off 26,000
Changes in operating assets and liabilities:
Accounts receivable 146,000 151,000
Inventories (8,000 ) (20,000 )
Prepaid expenses (16,000 ) 41,000
Accounts payable and accrued liabilities (128,000 ) 7,000
Deferred rent   (3,000 )   6,000  
Net cash used in operating activities   (1,501,000 )   (2,119,000 )
Investing activities
Investment in patents (4,000 )
Purchases of property, plant and equipment   (8,000 )   (20,000 )
Net cash used in investing activities   (8,000 )   (24,000 )
Financing activities
Net proceeds from the sale of common stock 993,000
Net proceeds from the exercise of warrants       2,632,000  
Net cash provided by financing activities   993,000     2,632,000  
Net (decrease) increase in cash, cash equivalents, and restricted cash (516,000 ) 489,000
Cash, cash equivalents, and restricted cash at beginning of period   926,000     1,715,000  
Cash, cash equivalents, and restricted cash at end of period $ 410,000   $ 2,204,000  
 
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents $ 335,000 $ 2,129,000
Restricted cash $ 75,000   $ 75,000  
Total cash, cash equivalents and restricted cash $ 410,000   $ 2,204,000  
 
Supplemental disclosure of non-cash financing activities
Warrant liabilities removed due to settlements $   $ 1,394,000  
Common stock issued for prepaid services $   $ 51,000  
Conversion of promissory note and accrued interest from a related party to common stock $ 504,000   $  

Hank Lambert, CEO
PURE Bioscience, Inc.
619-596-8600 ext.103 [email protected]

Terri MacInnis, VP of IR
Bibicoff + MacInnis, Inc.
818-379-8500
[email protected]