BioStem Technologies Reports Third Quarter 2022 Operating and Financial Results
15 Nov 2022
Financial StatementExecutive Change
BioStem Technologies Reports Third Quarter 2022 Operating and Financial Results
Company to Host a Conference Call and Webcast on November 15, 2022, at 4:30 pm EDT
POMPANO BEACH, FLORIDA., Nov. 15, 2022 (GLOBE NEWSWIRE) -- BioStem Technologies Inc. (OTC: BSEM), a leading regenerative medicine company focused on the development, manufacture, and commercialization of placental derived biologics, today reported financial results for the quarter ended September 30, 2022.
Jason Matuszewski, Chief Executive Officer of BioStem Technologies Inc. said, “Over the third quarter, we have continued to build on the strengths of our growth strategy. This includes the accelerated transition to a highly experienced direct sales force and expanding VENDAJE® coverage with the addition of three Medicare Administrative Contractors (“MAC”) territories which covers approximately 50% of the U.S. We’ve also taken key steps to build out our leadership and corporate governance with the appointment of a Chief Financial Officer and the expansion of our Board of Directors. We will be forming an independent audit committee in the upcoming year to continue our focus on good corporate governance. Through the execution on the fundamentals of our growth strategy, and strong leadership, we have achieved net revenue of $1.1 million, a 74% gross margin for the quarter and are well positioned to see continued growth for the foreseeable future”.
Business Updates and Recent Highlights:
Launch direct sales into three new MAC territories: With the addition of three new direct sales representatives, we have gained product adoption and reimbursement into First Coast Service Options, Novitas and Noridian, which together cover approximately 50% of the U.S.
Strengthening of Leadership and Corporate Governance: Michael Fortunato, CPA, was appointed as Chief Financial Officer and Brandon Poe was appointed to the Board of Directors and Chair of the Audit Committee.
Development of Sales and Marketing: The Company is continuing to invest in our sales and marketing efforts. This includes investments in hiring, sales training programs, supportive infrastructure for sales and marketing teams, and the continued transition from an indirect sales force to a direct sales force.
Published Research: The Company announced the publication of a guidance paper that examined the growth factor standardization method to quantify the elution of growth factors and cytokines in BioStem’s dehydrated amniotic membrane (VENDAJE®) and dehydrated amnion/chorion (VENDAJE AC®) placental derived allografts as a function of surface (cm2). Titled “Standardized reporting of amnion and amnion/chorion allograft data for wound care,” the publication was included in Volume 5, Issue 5 of Health Science Reports.
Three-months Ending September 30, 2022 – Financial Results Summary
Net revenue of $1.145 million for quarter ended September 30, 2022, down 13%, compared to net revenue of $1.313 million for the quarter ended September 30, 2021.
Gross profit for the quarter ended September 30, 2022, was $0.842 million, or 74% of revenue, compared to $0.773 million, or 59% of net revenue, for the quarter ended September 30, 2021, an increase of $0.069 million, or 15%.
Net loss of ($1.742) million for the quarter ended September 30, 2022, compared to a net loss of ($0.622) million for the quarter ended September 30, 2021, a decrease in net loss of ($1.120) million and (180%) under the quarter ended September 30, 2021.
Adjusted EBITDA loss of ($0.557) million, or (49%) of net revenue, for the quarter ended September 30, 2022, compared to Adjusted EBITDA of $0.810 million, or 62% of net revenue, for the quarter ended September 30, 2021, a decline of ($1.367) million or (169%). See the GAAP to Adjusted EBITDA reconciliation below.
Quarter and Year-to Date ending September 30, 2022 – Results:
The following table represents net revenue, gross margin, operating expenses, and other income (loss) for the three and Nine-months ended September 30, 2022, and September 30, 2021, respectively:
Three months ended September 30, Nine months ended September 30, 2022 2021 $ Change % Change 2022 2021 $ Change % Change Net revenue $1,145,755 $1,313,103 $(167,348) -13% $6,082,116 $3,121,787 $2,960,329 95%Gross profit $842,740 $773,703 $69,037 9% $5,071,703 $1,937,615 $3,134,088 162%Gross profit % 74% 59% 15% 83% 62% 21% Operating expenses $2,476,527 $1,617,837 $858,690 53% $7,030,765 $3,009,203 $4,021,562 134%Other expense, net $(131,543) $(134,329) $2,786 2% $(233,330) $(121,528) $(111,802) 92%
Statement of Operations Highlights –Year to Date September 30,2022:
Net revenue for the Nine-months ended September 30, 2022, was $6.082 million, compared to $3.122 million for the quarter ended September 30, 2021, an increase of $2.960 million, or 95%. The increase in sales was driven primarily by the expansion of our distribution network resulting in increased sales of our Vendaje product. Since CMS granted a Q-Code in October 2021, we’ve seen additional market acceptance and additional sales volume.
Gross profit for the Nine-months ended September 30, 2022, was $5.072 million, or 83% of revenue, compared to $1.938 million, or 62% of net revenue, for the quarter ended September 30, 2021, an increase of $3.134 million, or 162%. The increase in gross profit resulted primarily from increased sales volume of our Vendaje products as well as a shift in product mix to our higher gross margin products.
Operating expenses for the Nine-months ended September 30, 2022, were $7.031 million, compared to $3.009 million for the Nine-months ended September 30, 2021, an increase of $4.022 million or 134%. Increase in operating expenses is primarily driven by additional headcount, additional marketing expense, investments in a direct sales force, and increases in share-based compensation related to the conversion of debt and accrued salaries at a discount to the fair value of equity on the date of conversion.
Total other expense, net, for the Nine-months ended September 30, 2022, was ($0.233) million, compared to ($0.122) million for the Nine-months ended September 30, 2021, an increase in expense of $0.111 million or 2%. The Nine months ended September 30, 2021, contains the benefit of the one-time PPP loan forgiveness of $0.438 million.
Net loss for the Nine-months ended September 30, 2022, was ($2.320) million, or ($0.21) per share, compared to of ($0.971) million, or ($0.11) per share, for the Nine-months ended September 30, 2021, an increase to net loss of ($1.349) million, or ($0.10) per share.
Statement of Cashflows and Balance Sheet Highlights:
Cashflows provided by operations was $0.762 million for the Nine-months ended September 30, 2022, compared to cashflows provided by operations of ($0.131) million for the Nine-months ended September 30, 2021. Increase is cash provided by operations is due to management’s continued discipline over operating expenses as well as to an increase in product sales. In addition, management continues to effectively use equity to settle outstanding liabilities.
The Company maintained cash on hand as of September 30, 2022, $1.041 million compared to $0.340 million as of September 30, 2021.
The Company continues to strengthen its balance sheet. The Company converted $0.429 million of liabilities to common stock during the Nine-months ended September 30, 2022.
BIOSTEM TECHNOLOGIES INC. CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31, 2022 2021 Current Assets Cash $1,041,453 $340,333 Accounts receivable 216,855 300,137 Inventory, net 519,817 260,048 Prepaid expenses and other assets 154,872 38,083 Total current assets 1,932,997 938,601 Property, plant and equipment, net 1,338,704 1,245,363 Right-of-use asset, net 22,220 32,868 Intangible assets, net 358,109 210,048 Goodwill 244,635 244,635 Total assets 3,896,665 2,671,515 Current Liabilities Accounts payable and accrued expenses $361,593 $647,258 Salaries payable - 1,167,418 Accrued interest 1,404,865 1,301,670 Short-term finance lease 9,238 33,421 Notes payable-current 3,000,000 3,000,000 Other convertible notes payable 473,350 - Other current liabilities 228,103 397,884 Total current liabilities 5,477,149 6,547,651 Long Term Liabilities Long-term finance lease 13,639 - Related party notes payable 300,000 507,861 Notes payable-long-term 1,049,810 1,289,905 Other long-term liabilities 69,136 120,207 Total long term liabilities 1,432,585 1,917,973 Total liabilities 6,909,734 8,465,624 Comittments and contigencies (Note 14) Stockholders' Deficit Series A-1 convertible preferred stock, $0.001 par value authorized, 300 shares; issued and
outstanding, 300 shares as of September 30, 2022 and December 31, 2021. - - Series B-1 convertible preferred stock, $0.001 par value Authorized, 500,000 shares; issued
and outstanding 5 shares as of September 30, 2022 and December 31, 2021. - - Common stock, $0.001 par value Authorized, 975,000,000 shares; issued and outstanding
12,124,169 shares and 9,744,180 shares as of September 30, 2022 and December 31, 2021. 12,087 9,744 Additional paid-in capital 29,121,237 24,022,487 Treasury stock (43,346) (43,346) Accumulated deficit (32,278,187) (29,948,285) Noncontrolling interest 175,140 165,291 Total Stockholders' deficit (3,013,069) (5,794,109)Total liabilities and stockholders' deficit $3,896,665 $2,671,515
BIOSTEM TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three-months ended, Three-months ended, Nine-months ended, Nine-months ended, September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Net Revenue $1,145,755 $1,313,103 $6,082,116 $3,121,787 Cost of goods sold 303,015 539,400 1,010,413 1,184,172 Gross profit 842,740 773,703 5,071,703 1,937,615 Operating Expenses: Compensation expense 1,782,715 1,245,995 5,539,342 2,119,556 Professional fees 276,815 130,677 623,844 341,647 General and administrative expenses 355,019 178,815 681,984 334,146 Depreciation and amortization expense 61,978 62,350 185,595 213,854 Total operating expenses 2,476,527 1,617,837 7,030,765 3,009,203 Loss from operations (1,633,787) (844,134) (1,959,062) (1,071,588)Other Income (Expense): Gain on sale of subsidiary - 32,035 - 33,925 Interest expense (110,569) (135,537) (358,203) (401,407)Gain on forgiveness of loans - 295,500 - 437,952 Other income, net 2,809 30,553 (2,888) 29,762 Total other income (expense), net (107,760) 222,551 (361,091) 100,232 Net loss from operations before income taxes (1,741,547) (621,583) (2,320,155) (971,356)Income taxes - - Net loss (1,741,547) (621,583) (2,320,155) (971,356)Less: Net (loss) income attributable to noncontrolling interest (90,566) 41,078 9,849 36,015 Net loss attributable to BioStem Technologies, Inc. $(1,650,981) $(662,661) $(2,330,004) $(1,007,371) Basic and diluted net loss per share attributable to common stockholders of BioStem Technologies, Inc. $(0.14) $(0.07) $(0.21) $(0.11) Basic and diluted weighted average common shares outstanding 11,985,331 9,194,939 11,123,017 9,253,082
NON-GAAP FINANCIALS MEASURES
Our management uses financial measures that are not in accordance with generally accepted accounting principles in the United States, or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.
The following is a reconciliation of GAAP net income (loss) to non-GAAP EBITDA and non-GAAP Adjusted EBITDA for each of the periods presented:
Three months ended September 30, Nine months ended September 30, 2022 2021 $ Change % Change 2022 2021 $ Change % Change Net income (loss) $(1,741,547) $(621,583) $(1,119,964) -180% $(2,320,155) $(971,356) $(1,348,799) 139%Interest expense 110,569 135,537 (24,968) 18% 358,203 401,407 (43,204) -11%Depreciation and amortization 61,978 62,350 (372) -1% 185,595 213,854 (28,259) -13%EBITDA $(1,569,000) $(423,696) $(1,145,304) -270% $(1,776,357) $(356,095) $(1,420,262) 399%Share-based compensation 1,011,680 764,202 247,478 3,494,194 764,202 2,729,992 Gain on extinguishment of PPP loan - 469,394 (469,394) - 469,394 (469,394) -100%Adjusted EBITDA $(557,320) $809,900 $(1,367,220) 169% $1,717,837 $877,501 $840,336 96%
Conference Call Details
Date: Tuesday, November 15, 2022
Time: 4:30 pm EDT
Webcast Link: https://events.q4inc.com/attendee/534919982
Conference ID: 4373739
Participant Toll-Free Dial-In Number: 1 (888) 880-2204
Participant Toll Dial-In Number: 1 (646) 960-0414
In order to submit questions, participants must have Internet connectivity, as questions will only be addressed via the webcast. The conference call line will be in listen-only mode.
About BioStem Technologies, Inc. (OTC PINK: BSEM): BioStem Technologies is a leading innovator focused on harnessing the natural properties of perinatal tissue in the development, manufacture, and commercialization of allografts for regenerative therapies. The Company is focused on manufacturing products that change lives, leveraging its proprietary BioRetain® processing method. BioRetain® has been developed by applying the latest research in regenerative medicine, focused on maintaining growth factors and preserving tissue structure. BioStem Technologies' quality management system and standard operating procedures have been reviewed and accredited by the American Association of Tissue Banks ("AATB"). These systems and procedures are established per current Good Tissue Practices ("cGTP") and current Good Manufacturing Processes ("cGMP"). Our portfolio of quality brands includes VENDAJETM, VENDAJETM AC, and VENDAJETM OPTIC. Each BioStem Technologies placental allograft is processed at the Company's FDA registered and AATB accredited site in Pompano Beach, Florida.
Forward-Looking Statements: Except for statements of historical fact, this release also contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified using words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements with respect to the operations of the Company, strategies, prospects and other aspects of the business of the Company are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. These factors include, but are not limited to: (1) the impact of any changes to the reimbursement levels for the Company’s products; (2) the Company faces significant and continuing competition, which could adversely affect its business, results of operations and financial condition; (3) rapid technological change could cause the Company’s products to become obsolete and if the Company does not enhance its product offerings through its research and development efforts, it may be unable to effectively compete; (4) to be commercially successful, the Company must convince physicians that its products are safe and effective alternatives to existing treatments and that its products should be used in their procedures; (5) the Company’s ability to raise funds to expand its business; (6) the Company has incurred significant losses since inception and may incur losses in the future; (7) changes in applicable laws or regulations; (8) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (9) the Company’s ability to maintain production of its products in sufficient quantities to meet demand; and (10) the COVID-19 pandemic and its impact, if any, on the Company’s fiscal condition and results of operations; You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the Company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
Phone: 954-380-8342
Website: http://www.biostemtechnologies.com
Email: info@biostemtech.com
Twitter: @BSEM_Tech
Investor Relations:
Russo Partners, LLC
Nic Johnson and Maxim Jacobs, CFA
12 West 27th Street, 4th Floor
New York, NY 10001
T: 646-942-5591
Nic.Johnson@russopartnersllc.com
Maxim.Jacobs@russopartnersllc.com
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