PURE Bioscience Reports Improved 2017 Fiscal Second Quarter and Six-Month Financial Results

SAN DIEGO--()--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 periods ended January 31, 2017.

“The momentum in our improving food safety revenues and sales traction is evident in our results and is further supported by a number of post fiscal Q2 events.”

Q2: Summary of Results of Operations

  • Revenues for the fiscal second quarter ended January 31, 2017 increased 154% to $447,000, compared with revenues of $176,000 in the prior year fiscal second quarter ended 2016.
    • Core food safety revenues for the second quarter increased 149% as compared with food safety revenues in the fiscal second quarter ended 2016.
  • Net loss, excluding non-cash derivative income, for the fiscal second quarter 2017 was $1.4 million, as compared with $2.3 million for fiscal second quarter in 2016.
  • Net loss per share was ($0.01) as compared with ($0.19) for the fiscal second quarter ended 2017 and 2016.
  • Gross margin was 70% during the second quarter of fiscal 2017 as compared with 73% during the same period in fiscal 2016.

Six Months: Summary of Results of Operations

  • Revenues for the fiscal first six months ended January 31, 2017 increased 170% to $978,000 compared with prior year six-month revenues of $362,000.
    • Core food safety revenues for the six months increased 463% as compared with food safety revenues in the six months ended 2016.
  • Net loss for the six months, excluding non-cash derivative income, was $3 million compared with $4.1 million for the six month period in 2016.
  • Net loss per share was ($0.04) as compared with ($0.27) for the six months ended fiscal 2017 and 2016.
  • As expected, gross margin declined to 59% during the first six months of fiscal 2017 as compared with 72% during the same six-month period in fiscal 2016.
    • The decrease in gross margin percentage was primarily attributable to the sale of lower margin formulations and packaging configurations of our products during the six months ended January 31, 2017 as compared with the prior period.

Hank R. Lambert, CEO, said that, “The momentum in our improving food safety revenues and sales traction is evident in our results and is further supported by a number of post fiscal Q2 events.

“This calendar quarter, another national restaurant chain will begin testing PURE® Hard Surface disinfectant. We continue to experience heightened interest from new customers who are contacting us as a result of Chipotle Mexican Grill’s chain wide adoption (in late calendar ’16) of PURE Hard Surface disinfectant as a food safety solution to eliminate and prevent Norovirus and other viruses and bacteria. Also, with the addition of a number of new national manufacturers and processors using PURE Hard Surface for environmental and equipment surface disinfection, we are on track to more than double our customer base in this segment.

“Now that a leading produce supplier has completed its validation and optimization testing of PURE Control® in its pilot plant and moved into a production plant, we look forward to receiving our first order for FDA approved PURE Control, a direct food contact processing aid to be applied directly onto fresh produce (a new $300+ million US market segment).

“With the anticipated calendar Q2 USDA approval for the use of PURE Control as a poultry processing aid to significantly reduce Salmonella contamination, we can begin sales into the $350+ million US poultry processing aids market.”

Lambert continued, “Our mission is to protect people and protect company brands by providing superior, leading edge food safety solutions to prevent foodborne illness. We have the team in place and the financial runway to execute on our business plan and achieve our goals. We continue to look forward to calendar 2017 as our breakout year.”

2017 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 1:30 p.m. PST (4:30 p.m. EST) on March 2, 2017. The call can also be accessed “live” online at http://public.viavid.com/index.php?id=122970.

A replay of the webcast will be available on the Company’s website (http://www.purebio.com/about/investor_relations). A replay of the conference call will be available by dialing 1-844-512-2921 (international participants dial 1-412-317-6671) starting March 2, 2017, at 7:30 p.m. EST through March 9, 2016 at 11:59 p.m. EST. Please use PIN Number 10002473.

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. 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 into customer orders and customers continuing to place product orders as expected and to expand their use of the Company’s products; 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; 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, 2016, its Form 10-Q for the first quarter ended October 31, 2016 and second quarter ended January 31, 2017. 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
      Six Months Ended       Three Months Ended
January 31, January 31,
2017       2016 2017       2016
Net product sales $ 978,000 $ 362,000 $ 447,000 $ 176,000
Operating costs and expenses
Cost of goods sold 399,000 102,000 134,000 48,000
Selling, general and administrative 2,670,000 2,472,000 1,333,000 1,386,000
Research and development 462,000 474,000 214,000 238,000
Share-based compensation   448,000     1,435,000     170,000     763,000  
Total operating costs and expenses   3,979,000     4,483,000     1,851,000     2,435,000  
Loss from operations   (3,001,000 )   (4,121,000 )   (1,404,000 )   (2,259,000 )
Other income (expense)
Fair value of derivative liabilities in excess of proceeds - (1,867,000 ) - (859,000 )
Change in derivative liability 300,000 (7,747,000 ) 459,000 (7,790,000 )
Interest expense, net (3,000 ) (5,000 ) (2,000 ) (3,000 )
Other income (expense), net   25,000     18,000     11,000     9,000  
Total other income (expense)   322,000     (9,601,000 )   468,000     (8,643,000 )
Net loss $ (2,679,000 ) $ (13,722,000 ) $ (936,000 ) $ (10,902,000 )
Basic and diluted net loss per share $ (0.04 ) $ (0.27 ) $ (0.01 ) $ (0.19 )

Shares used in computing basic and diluted net loss per share

  64,220,473     50,848,785     63,617,030     58,678,242  


PURE Bioscience, Inc.
Condensed Consolidated Balance Sheets
      January 31,       July 31,
2017 2016
Current assets
Cash and cash equivalents $ 3,893,000 $ 5,194,000
Accounts receivable, net 142,000 263,000
Inventories, net 340,000 350,000
Restricted cash 75,000 75,000
Prepaid expenses   189,000     260,000  
Total current assets 4,639,000 6,142,000
Property, plant and equipment, net 568,000 440,000
Patents, net   901,000     980,000  
Total assets $ 6,108,000   $ 7,562,000  
Liabilities and stockholders' equity (deficit)
Current liabilities
Accounts payable $ 424,000 $ 479,000
Restructuring liability 29,000 39,000
Accrued liabilities 245,000 216,000
Derivative liability   1,494,000     1,802,000  
Total current liabilities 2,192,000 2,536,000
Deferred rent   13,000     3,000  
Total liabilities   2,205,000     2,539,000  
Commitments and contingencies
Stockholders' equity
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

62,601,037 shares issued and outstanding at January 31, 2017, and 64,823,917 shares issued and outstanding at July 31, 2016

627,000 649,000
Additional paid-in capital 109,174,000 107,593,000
Accumulated deficit   (105,898,000 )   (103,219,000 )
Total stockholders' equity (deficit)   3,903,000     5,023,000  
Total liabilities and stockholders' equity (deficit) $ 6,108,000   $ 7,562,000  
PURE Bioscience, Inc.
Condensed Consolidated Statements of Cash Flows
      January 31,
2017       2016
Operating activities
Net loss $ (2,679,000 ) $ (13,722,000 )

Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation 448,000 1,435,000
Amortization of stock issued for services 72,000 106,000
Fair value of derivative liabilities in excess of proceeds - 1,867,000
Depreciation and amortization 134,000 103,000
Change in fair value of derivative liabilities (300,000 ) 7,747,000
Changes in operating assets and liabilities:
Accounts receivable 121,000 83,000
Inventories 10,000 (30,000 )
Prepaid expenses (2,000 ) (7,000 )
Accounts payable and accrued liabilities (36,000 ) (33,000 )
Deferred rent   10,000     (2,000 )
Net cash used in operating activities   (2,222,000 )   (2,453,000 )
Investing activities
Investment in patents (10,000 ) (8,000 )
Purchases of property, plant and equipment   (173,000 )   (154,000 )
Net cash used in investing activities   (183,000 )   (162,000 )
Financing activities
Net proceeds from the sale of common stock   1,104,000     8,000,000  
Net cash provided by financing activities   1,104,000     8,000,000  
Net decrease and increase in cash and cash equivalents (1,301,000 ) 5,385,000
Cash and cash equivalents at beginning of period   5,194,000     1,321,000  
Cash and cash equivalents at end of period $ 3,893,000   $ 6,706,000  

Supplemental disclosure of cash flow information


Cash paid for taxes $ 2,000   $ 2,000  
Warrant liability removed due to settlements $ 8,000   $ -  
Restricted stock unit cancelation $ 38,000   $ -  


PURE Bioscience, Inc.
Hank Lambert, CEO
619-596-8600 ext.103
Bibicoff + MacInnis, Inc.
Terri MacInnis, VP of IR
Redwood Investment Group
Tom Hemingway

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