SOURCE: PURE Bioscience, Inc.

PURE Bioscience, Inc.

March 13, 2014 16:02 ET

PURE Bioscience Reports Fiscal Second Quarter 2014 Financial Results

Food Safety Revenue Traction for Second Half of Calendar 2014 Led by Food Processors and QSR Commercial Market Test Rollout

SAN DIEGO, CA--(Marketwired - Mar 13, 2014) - PURE Bioscience, Inc. (OTCQB: PURE), creator of the patented silver dihydrogen citrate (SDC) antimicrobial, today reported financial results for the second fiscal quarter ended January 31, 2014.

Q2 and Six-Month Milestones

The Company reported that during the first six months of fiscal year 2014, the new management team built significant momentum on its refocused business strategy to commercialize its SDC-based technology as a food safety solution:

  • Received initial orders from its first three national food processors customers with customer rollout plans in development.
    • In fiscal Q3 received order from fourth multi-national food processor.
  • Completed final in-store testing with a national brand QSR (quick service restaurant), confirming multiple outstanding prior testing results, where SDC-based products have continually been demonstrated to provide superior efficacy.
    • Expanded commercial market test within several US regions planned in April 2014.
    • Phased system-wide U.S. national rollout under review and development.
  • Initiated a new development project for the application of SDC as a direct food contact processing aid for produce, poultry and meats;
    • Estimated potential addressable U.S. market opportunity for this new application exceeds $1 billion.
    • Filing for required regulatory authorization from the USDA and FDA is expected in calendar Q2 2014.
  • Executed a distribution agreement with Brenntag Specialties, Inc., an industry and market leading company, to continue to distribute SDC-based antimicrobial SILVÉRION® 2400 as an active ingredient or preservative for use in personal care products.
  • Reduced its non-core operating activities by out-sourcing its manufacturing operations through a strategic collaboration agreement.
    • Comprehensive manufacturing transfer completed by March 2014.
    • Reduce future facilities costs over 50%.
  • Materially strengthened the balance sheet through new capital that allowed for the elimination of long-term debt and reduction of liabilities.
    • Early pay-off of a $1.125 million promissory note.

Summary of Results of Operations

Revenues for the second fiscal quarter of 2014 were $41,000, compared with revenues of $263,000 for the second fiscal quarter of 2013. Total operating costs and expenses, excluding share-based compensation, other share-based expenses, and restructuring costs, for the second fiscal quarter of 2014 and 2013, were $1.6 million, and $1.8 million, respectively. The net loss for the second fiscal quarter of 2014 was $(2.5) million, or $(0.10) per share, compared with a net loss of $(1.8) million, or $(0.17) per share, in the second fiscal quarter of 2013.

Revenues for the six months ended January 31, 2014 were $156,000, compared with revenues of $373,000 for the six months ended January 31, 2013. Total operating costs and expenses, excluding share-based compensation, other share-based expense, and restructuring costs, were $2.7 million, and $3.6 million, respectively, a reduction of 25%. The net loss for the six months ended January 31, 2014 was $(6.3) million, or $(0.28) per share, compared with a net loss of $(4.0) million, or $(0.40) per share, in the six months ended January 31, 2013. The adjusted net loss for the six months ended January 31 2014, as adjusted for significant items, was $(2.6) million compared with prior year adjusted net loss of $(3.6) million, a decrease of approximately a $1 million, or 28%.

Balance Sheet Strengthens

As of January 31, 2014, the Company reported $236,000 in cash and cash equivalents. On a pro forma basis, the adjusted cash position as of January 31, 2014 would be $1.5 million, reflecting the additional $1.3 million in proceeds from the sale of 1.35 million shares of common stock raised through private equity placements, as reported on March 13, 2014.

During the fiscal second quarter of 2014, the Company extinguished early a promissory note of $1.125 million in principal and other accrued costs for approximately $500,000, resulting in a gain on extinguishment of debt of $727,000. As a consequence, as of January 31, 2014, the Company has no long-term debt.

The Company reported that total stockholders' equity increased $1.9 million to $890,000 as of January 31, 2014 as compared with July 31, 2013 total stockholders' deficit of $(991,000).

As the Company continues to execute its new business strategy, it intends to:

  • Accelerate penetration of restaurant chains and food processors with SDC-based products.
  • Complete the out-sourcing of its manufacturing operations, thus increasing capacity and reducing its non-core operating activities, and license the SDC-technology platform to non-food markets.
  • Secure additional capital.

The Company will need to combine generating additional revenues and capital, through private or public offerings of securities, in order to have sufficient capital to fund its operations over the next twelve months.

Calendar 2014 Company Goals

  • Increase financial strength to accelerate strategy execution.
  • Secure customer adoption in food safety with 2+ national QSR chains and 5+ national food processors;
    a. Fiscal 4Q 2014 (July 31 2014) annual revenue run rate $3-$5M.
    b.Fiscal 4Q 2015 (July 31 2015): positive EBITDA.
  • Complete outsourcing of operations and supply chain;
    a. Provide incremental cost savings and increase production scale.
  • Secure FDA and USDA authorization for use of SDC as a direct food contact/processing aid;
    a. Initiate commercialization by calendar 4Q 2014.
  • License PURE distribution and SDC applications to non-core markets.
  • Upgrade PURE listing to a national stock exchange.

Food Safety Solutions Provider

PURE announced that its near-term business focus is to drive customer adoption of its products in the food industry. Its proprietary SDC-based products uniquely address food safety issues across the supply chain and help to prevent or mitigate food contamination and the potential for food-borne illness. The Company's target customers are foodservice operators, food processors and food manufacturers.

"We are proud of our team's focused and determined efforts to restructure and transition our operations, clean up the balance sheet and execute our new strategic plan," stated Peter C. Wulff, Chief Financial Officer and Chief Operating Officer. "We believe that our current financial and operating structure provides a clear runway to deliver meaningful results during the remainder of calendar 2014."

Hank R. Lambert, Chief Executive Officer, said, "Our team's dedication and focus on driving customer education, product testing and evaluation has resulted in access to a growing customer pipeline with significant future revenue potential. We are confident that we have an unassailable, competitively superior technology, focused on the right industry (food safety) where there is a large, growing and urgent need."

Q2 Results Conference Call

The Company will host an investor conference call on Thursday, March 13th, 2014 at 1:30pm PT (4:30pm ET).

The Participant Dial-In Number for the conference call is 1-412-902-6720. Participants should dial in to the call at least five minutes before 1:30pm PT (4:30pm ET) on March 13th, 2014. The call can also be accessed "live" online at http://public.viavid.com/index.php?id=108128.

A replay of the webcast will be available on the Company's website (http://www.purebio.com/about/investor_relations). Also, a replay of the conference call will be available by dialing 1-877-870-5176 (international participants dial 1-858-384-5517) starting March 13th, 2014, at 7:30pm Eastern Time through April 12th, 2014 at 11:59 pm Eastern Time. Please use PIN Number 91213.

About PURE Bioscience, Inc.

PURE Bioscience, Inc. is focused on developing and commercializing its proprietary antimicrobial products that provide solutions to the health and environmental challenges of pathogen and hygienic control within the food industry. The Company's technology platform is based on patented stabilized ionic silver, and its initial products contain silver dihydrogen citrate, or SDC. SDC is a broad-spectrum, non-toxic antimicrobial agent, which offers 24-hour residual protection. As a platform technology, SDC is distinguished from existing products in the marketplace by its superior efficacy, reduced toxicity and the inability of bacteria to form a resistance to it. 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. Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the Company's cash position and liquidity requirements, 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, the ability of the Company to develop effective new products and receive regulatory approvals of such products, competitive factors, 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, including our annual report on Form 10-K filed October 24, 2013. 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 Statements of Operations  
(Unaudited)  
   
    Six months ended     Three months ended  
    January 31,     January 31,  
    2014     2013     2014     2013  
Net product sales   $ 156,000     $ 373,000     $ 41,000     $ 263,000  
Operating costs and expenses                                
  Cost of goods sold     56,000       88,000       20,000       57,000  
  Selling, general and administrative     2,168,000       2,763,000       1,243,000       1,427,000  
  Research and development     502,000       694,000       289,000       347,000  
  Share-based compensation     1,421,000       430,000       1,332,000       242,000  
  Other share-based expenses     308,000       -       308,000       -  
  Restructuring costs     2,754,000       -       70,000       -  
Total operating costs and expenses     7,209,000       3,975,000       3,262,000       2,073,000  
Loss from operations     (7,053,000 )     (3,602,000 )     (3,221,000 )     (1,810,000 )
Other income (expense)                                
  Change in derivative liability     (59,000 )     240,000       (1,000 )     12,000  
  Interest expense, net     (5,000 )     (589,000 )     (2,000 )     (1,000 )
  Gain on extinguishment of debt     727,000       -       727,000       -  
  Other income (expense), net     64,000       (27,000 )     15,000       (25,000 )
Total other income (expense)     727,000       (376,000 )     739,000       (14,000 )
Net loss   $ (6,326,000 )   $ (3,978,000 )   $ (2,482,000 )   $ (1,824,000 )
Basic and diluted net loss per share   $ (0.28 )   $ (0.40 )   $ (0.10 )   $ (0.17 )
Shares used in computing basicand diluted net loss per share    
22,842,753
     
9,853,575
     
24,997,773
     
10,986,170
 
                                 
                                 
   
   
Pure Bioscience, Inc.  
Condensed Consolidated Balance Sheets  
   
    January 31,     July 31,  
    2014     2013  
    (Unaudited)        
Assets                
Current assets                
  Cash and cash equivalents   $ 236,000     $ 32,000  
  Accounts receivable, net     9,000       18,000  
  Inventories, net     429,000       365,000  
  Prepaid expenses     221,000       71,000  
  Total current assets     895,000       486,000  
                 
Property, plant and equipment, net     115,000       146,000  
Patents, net     1,403,000       1,430,000  
Total assets   $ 2,413,000     $ 2,062,000  
Liabilities and stockholders' equity (deficit)                
Current liabilities                
  Accounts payable   $ 629,000     $ 1,134,000  
  Restructuring liability     676,000       -  
  Note payable, current     -       368,000  
  Accrued liabilities     154,000       600,000  
  Derivative liability     54,000       51,000  
  Total current liabilities     1,513,000       2,153,000  
Note payable, less current portion     -       887,000  
Deferred rent     10,000       13,000  
Total liabilities     1,523,000       3,053,000  
Commitments and contingencies                
Stockholders' equity (deficit)                
  Preferred stock, $0.01 par value: 5,000,000 shares authorized, no shares issued    
-
     
-
 
  Common stock, $0.01 par value: 100,000,000 shares authorized, 25,808,128 shares issued and outstanding at January 31, 2014, and 12,569,503 shares issued and outstanding at July 31, 2013    


259,000
     


126,000
 
  Additional paid-in capital     77,128,000       69,054,000  
  Accumulated deficit     (76,497,000 )     (70,171,000 )
Total stockholders' equity (deficit)     890,000       (991,000 )
Total liabilities and stockholders' equity (deficit)   $ 2,413,000     $ 2,062,000  
                 
                 
   
   
Pure Bioscience, Inc.  
Reconciliation of Non-GAAP Financial Measures  
(Unaudited)  
   
    Six months ended     Three months ended  
    January 31,     January 31,  
    2014     2013     2014     2013  
                           
Net loss, as reported   $ (6,326,000 )   (3,978,000 )   (2,482,000 )   (1,824,000 )
                           
Add back significant items:                          
  Share-based compensation     1,421,000     430,000     1,332,000     242,000  
  Other share-based expenses     308,000     -     308,000     -  
  Restructuring costs     2,754,000     -     70,000     -  
  Gain on extinguishment of debt     (727,000 )   -     (727,000 )   -  
Net loss, as adjusted for significant items     (2,570,000 )   (3,548,000 )   (1,499,000 )   (1,582,000 )
                           
                           

Contact Information

  • Contacts:
    Tom Hemingway
    Redwood Investment Group
    714-978-4425
    Email Contact

    Terri MacInnis
    Director of IR
    Bibicoff + MacInnis, Inc.
    818-379-8500
    Email Contact

    Company Contact:
    Peter C. Wulff
    CFO & COO
    PURE Bioscience, Inc.
    619-596-8600 ext.111
    Email Contact