PURE Bioscience Reports Fiscal 2019 Third Quarter and Nine-Month Financial Results

PURE Bioscience, Inc. (OTCQB: PURE), creator of the patented non-toxic silver dihydrogen citrate (SDC) antimicrobial, today reported financial results for the fiscal third quarter and nine-month period ended April 30, 2019.

Q3: Summary of Results of Operations

• Revenues for the fiscal third quarter ended April 30, 2019 decreased 20% to $312,000, compared with revenues of $390,000 in the prior year fiscal third quarter. The decrease was due to a change in timing of a legacy customer’s orders and somewhat lower food safety sales.
• Net loss for the fiscal third quarter in 2019 was ($1.9 million), as compared with a loss of ($1.7 million) for fiscal third quarter in 2018. Net loss, excluding inducement expense, for the third fiscal quarter in 2019 was ($913,000), as compared with a loss of ($1.7 million) for the third quarter in 2018.
• Net loss per share was ($0.03) in 2019 as compared with ($0.02) for the fiscal third quarter ended 2018.
• Gross margin was 63% during the third quarter of fiscal 2019 as compared with 57% during the same period in fiscal 2018. The increase in gross margin percentage was primarily attributable to the sale of higher margin formulations and packaging configurations of our products during the quarter ended April 30, 2019, as compared with the prior period.

Nine Months: Summary of Results of Operations

• Revenues for the nine-months ended April 30, 2019 increased 2% to $1,296,000 compared with prior year nine-month revenues of $1,265,000.
  • Core food safety revenues for the nine months ended 2019 increased 31% as compared with food safety revenues in the nine months ended 2018. The increase in both total and food safety revenues was due to growing customer adoption.
• Net loss for the nine months ended April 30, 2019, was ($5.7 million) compared with ($6.1 million) for the nine-month period in 2018. Net loss, excluding derivative income, inducement expense and share-based compensation, for the nine months ended April 30, 2019 was ($2.4 million), as compared with ($3.7 million) for the nine-month period in 2018.
• Net loss per share was ($0.08) in 2019 as compared with ($0.09) for the nine months ended fiscal 2018.
• Gross margin remained relatively unchanged at 63% for the nine months ended April 30, 2019 and 2018, respectively.

Hank R. Lambert, CEO, said, “FQ3 results were negatively impacted by customer implementation delays. I’m pleased to note that the beginning of FQ4 is off to a strong start. We look forward to expanding use of PURE Control (our direct food contact antimicrobial solution) by the leading produce processor – and accelerating progress in adoption of our truck sanitizing solution among two of the top five food transport companies.

“We are making meaningful inroads on 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 Third 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 PDT (4:30pm ET) on June 13, 2019. The call can also be accessed “live” online at http://public.viavid.com/index.php?id=134416.

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 June 13, 2019, at 7:30pm ET through June 20, 2019 at 11:59 pm ET. Please use PIN Number 10006753.

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 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
		April 30, 2019				July 31, 2018
		(Unaudited)
Assets
Current assets
Cash and cash equivalents		$	340,000			$	851,000
Accounts receivable			134,000				275,000
Inventories, net			195,000				197,000
Restricted cash			75,000				75,000
Prepaid expenses			28,000				58,000
Total current assets			772,000				1,456,000
Property, plant and equipment, net			388,000				461,000
Patents, net			550,000				658,000
Total assets		$	1,710,000			$	2,575,000
Liabilities and stockholders’ equity
Current liabilities
Accounts payable		$	386,000			$	608,000
Accrued liabilities			137,000				170,000
Promissory note payable			—				503,000
Total current liabilities			523,000				1,281,000
Deferred rent			7,000				13,000
Total liabilities			530,000				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, 74,113,371 shares issued and outstanding at April 30, 2019, and 68,248,158 shares issued and outstanding at July 31, 2018			741,000				683,000
Additional paid-in capital			123,098,000				117,522,000
Accumulated deficit			(122,659,000	)			(116,924,000	)
Total stockholders’ equity			1,180,000				1,281,000
Total liabilities and stockholders’ equity		$	1,710,000			$	2,575,000

PURE Bioscience, Inc. Condensed Consolidated Statements of Operations (Unaudited)
		Nine Months Ended								Three Months Ended
		April 30,								April 30,
		2019				2018				2019				2018
Net product sales		$	1,296,000			$	1,265,000			$	312,000			$	390,000
Operating costs and expenses
Cost of goods sold			480,000				473,000				117,000				166,000
Selling, general and administrative			2,997,000				4,102,000				886,000				1,239,000
Research and development			249,000				381,000				85,000				117,000
Share-based compensation			2,337,000				1,975,000				136,000				579,000
Total operating costs and expenses			6,063,000				6,931,000				1,224,000				2,101,000
Loss from operations			(4,767,000	)			(5,666,000	)			(912,000	)			(1,711,000	)
Other income (expense)
Inducement to exercise warrants			(960,000	)			(876,000	)			(960,000	)			—
Change in derivative liabilities			—				459,000				—				—
Interest expense, net			(5,000	)			(3,000	)			(1,000	)			(1,000	)
Other income (expense), net			(3,000	)			28,000				—				20,000
Total other income (expense)			(968,000	)			(392,000	)			(961,000	)			19,000
Net loss		$	(5,735,000	)		$	(6,058,000	)		$	(1,873,000	)		$	(1,692,000	)
Basic and diluted net loss per share		$	(0.08	)		$	(0.09	)		$	(0.03	)		$	(0.02	)
Shares used in computing basic and diluted net loss per share			72,058,840				66,996,085				73,601,012				68,057,658

PURE Bioscience, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
		Nine Months Ended April 30, 2019																				Nine Months Ended April 30, 2018
		Common Stock								Additional Paid-In				Accumulated				Total Stockholders’				Common Stock								Additional Paid-In				Accumulated				Total Stockholders’
		Shares				Amount				Capital				Deficit				Equity				Shares				Amount				Capital				Deficit				Equity
Balances at beginning of period			68,248,158			$	683,000			$	117,522,000			$	(116,924,000	)		$	1,281,000				63,093,153			$	631,000			$	110,141,000			$	(109,482,000	)		$	1,290,000
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			—				—				1,330,000				—				1,330,000				—				—				1,280,000				—				1,280,000
Share-based compensation expense - restricted stock units			—				—				1,007,000				—				1,007,000				—				—				696,000				—				696,000
Stock issued for services			—				—				—				—				—				50,000				1,000				50,000				—				51,000
Warrant liability removed due to warrant exercise and cancellation			—				—				—				—				—				—				—				1,394,000				—				1,394,000
Issuance of common stock for vested restricted stock units			131,250				1,000				(1,000	)			—				—				18,750				—				—				—				—
Issuance of common stock upon the exercise of warrants			2,399,999				24,000				816,000				—				840,000				4,914,505				49,000				2,584,000				—				2,633,000
Warrant inducement											960,000				—				960,000				—				—				876,000				—				876,000
Net loss			—				—				—				(5,735,000	)			(5,735,000	)			—				—				—				(6,058,000	)			(6,058,000	)
Balances at end of period (Unaudited)			74,113,371			$	741,000			$	123,098,000			$	(122,659,000	)		$	1,180,000				68,076,408			$	681,000			$	117,021,000			$	(115,540,000	)		$	2,162,000

						Three Months Ended April 30, 2019																				Three Months Ended April 30, 2018
						Common Stock								Additional Paid-In				Accumulated				Total Stockholders’				Common Stock								Additional Paid-In				Accumulated				Total Stockholders’
						Shares				Amount				Capital				Deficit				Equity				Shares				Amount				Capital				Deficit				Equity
Balances at beginning of period (Unaudited)							71,713,372			$	717,000			$	121,186,000			$	(120,786,000	)		$	1,117,000				68,057,658			$	681,000			$	116,441,000			$	(113,848,000	)		$	3,274,000
Share-based compensation expense - stock options							—				—				83,000				—				83,000				—				—				429,000				—				429,000
Share-based compensation expense - restricted stock units							—				—				53,000				—				53,000				—				—				151,000				—				151,000
Stock issued for services							—				—				—				—				—				18,750				—				—				—				—
Issuance of common stock upon the exercise of warrants							2,399,999				24,000				816,000				—				840,000				—				—				—				—				—
Warrant inducement															960,000				—				960,000				—				—				—				—				—
Net loss							—				—				—				(1,873,000	)			(1,873,000	)			—				—				—				(1,692,000	)			(1,692,000	)
Balances at end of period (Unaudited)							74,113,371			$	741,000			$	123,098,000			$	(122,659,000	)		$	1,180,000				68,076,408			$	681,000			$	117,021,000			$	(115,540,000	)		$	2,162,000

PURE Bioscience, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)
		Nine Months Ended
		April 30,
		2019				2018
Operating activities
Net loss		$	(5,735,000	)		$	(6,058,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation			2,337,000				1,975,000
Amortization of stock issued for services			31,000				115,000
Depreciation and amortization			191,000				213,000
Interest expense on promissory note			1,000				—
Change in fair value of derivative liability			—				(459,000	)
Inducement to exercise warrants			960,000				876,000
Gain on inventory recovery			—				(19,000	)
Changes in operating assets and liabilities:
Accounts receivable			141,000				105,000
Inventories			2,000				17,000
Prepaid expenses			(1,000	)			60,000
Accounts payable and accrued liabilities			(255,000	)			(52,000	)
Deferred rent			(6,000	)			4,000
Net cash used in operating activities			(2,334,000	)			(3,223,000	)
Investing activities
Investment in patents			(4,000	)			(12,000	)
Purchases of property, plant and equipment			(6,000	)			(19,000	)
Net cash used in investing activities			(10,000	)			(31,000	)
Financing activities
Net proceeds from the sale of common stock			993,000				—
Net proceeds from the exercise of warrants			840,000				2,632,000
Net cash provided by financing activities			1,833,000				2,632,000
Net decrease in cash, cash equivalents, and restricted cash			(511,000	)			(622,000	)
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		$	415,000			$	1,093,000
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents		$	340,000			$	1,018,000
Restricted cash		$	75,000			$	75,000
Total cash, cash equivalents and restricted cash		$	415,000			$	1,093,000
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			$	—

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