BSEM - BioStem Technologies Reports Third Quarter 2023 Operating and Financial Results
POMPANO BEACH, Fla., Nov. 13, 2023 (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, 2023.
Jason Matuszewski, Chief Executive Officer of BioStem Technologies Inc. said, “2023 has been a remarkable year of growth and milestones for our organization, we are excited to share our latest achievements, innovations, and strategic partnerships that continue to drive our mission of advancing the development, manufacture, and commercialization of cutting-edge placental-derived allografts for advanced wound care. In this earnings call, we will delve into the recent significant milestones that have shaped our journey, including securing a CMS Q code for VENDAJE AC®, a successful capital raise, the initiation of a crucial clinical trial for diabetic foot ulcers, and game-changing partnerships with NovaBay Pharmaceuticals and Venture Medical. These accomplishments reflect our dedication to transforming the field of regenerative medicine and improving the lives of patients worldwide.”
Operational Highlights
- In November 2023, BioStem was awarded a Q code for VENDAJE AC® by the Centers for Medicare and Medicaid Services (CMS). The Healthcare Common Procedure Coding System (HCPCS) code will be effective January 1st, 2024, and will ensure broader access to the company’s Vendaje® product.
- Also in November, the Company closed an oversubscribed private placement for gross proceeds of $2 million.
- In October 2023, BioStem announced the opening of the first site for its clinical trial, evaluating its Vendaje® tissue allograft in the treatment of diabetic foot ulcers (DFU). The Company received Investigational Review Board (IRB) for the landmark study in September 2023.
- In September 2023, the Company entered an agreement with leading US wound market solutions provider, Venture Medical, LLC., for the nationwide release of its innovative product, AmnioWrap2™. Venture Medical will act as BioStem’s commercial partner as it works to bring its product portfolio to healthcare providers and patients around the country.
- Also in September, BioStem entered a commercialization agreement with NovaBay Pharmaceuticals for its Amniotic Tissue Allograft, which is intended for use as a protective covering during the repair of ocular surfaces. NovaBay intends to commercialize the prescription-only product as Avenova Allograft to leverage its Avenova eye care brand and encourage use with other Avenova products. Medically necessary procedures with the Avenova Allograft will be reimbursed through Medicare.
- In September 2023, the Company was successfully listed on key government contract vehicles, on the Department of Defense’s Distribution and Pricing Agreement (DAPA), the Department of Veterans Affairs Federal Supply Schedule (FSS), and the Defense Logistics Agency’s ECAT system. This listing was made possible by BioStem’s Service-Disabled Veteran-Owned Small Business (SDVOSB) exclusive partner, Lovell Government Services.
Three-months Ending September 30, 2023 – Financial Results Summary
- Net revenue of $3.599 million for the quarter ended September 30, 2023, up 214%, compared to net revenue of $1.146 million for the quarter ended September 30, 2022.
- Gross profit for the quarter ended September 30, 2023, was $3.292 million, or 91% of revenue, compared to $0.908 million or 79% of net revenue, for the quarter ended September 30, 2022, an increase of $2.384 million, or 12%.
- Net income of $0.367 million for the quarter ended September 30, 2023, compared to a net loss of ($0.883) million for the quarter ended September 30, 2022, an increase of $1.250 million and 142%.
- Adjusted EBITDA income of $1.861 million, or 52% of net revenue, for the quarter ended September 30, 2023, compared to Adjusted EBITDA loss of ($0.558) million, or (49%) of net revenue, for the quarter ended September 30, 2022, an increase of $2.419 million or 433%. See the reconciliation of GAAP net income (loss) to non-GAAP EBITDA and non-GAAP Adjusted EBITDA for each of the periods presented within the Non-GAAP Financial Measures section below.
Quarter and Year-to Date ending September 30, 2023 – Results:
The following table represents net revenue, gross margin, operating expenses, and other income (loss) for the three and nine months ended September 30, 2023, and September 30, 2022, respectively:
| Three months ended September 30, |
| Nine months ended September 30, |
| 2023 |
| 2022 |
| $ Change |
| % Change |
| 2023 |
| 2022 |
| $ Change |
| Net revenue |
| $ |
| 3,599,068 |
| $ |
| 1,145,755 |
| $ |
| 2,453,313 |
| 214 |
| % |
| $ |
| 5,243,570 |
| $ |
| 6,082,116 |
| $ |
| (838,546 |
| ) |
| Gross profit |
| $ |
| 3,291,831 |
| $ |
| 907,766 |
| $ |
| 2,384,065 |
| 263 |
| % |
| $ |
| 4,629,079 |
| $ |
| 5,325,378 |
| $ |
| (696,299 |
| ) |
| Gross profit % |
| 91 |
| % |
| 79 |
| % |
| 12 |
| % |
| 88 |
| % |
| 88 |
| % |
| Operating expenses |
| $ |
| 2,761,899 |
| $ |
| 1,682,749 |
| $ |
| 1,079,150 |
| 64 |
| % |
| $ |
| 9,581,565 |
| $ |
| 6,362,117 |
| $ |
| 3,219,448 |
| Other expense, net |
| $ |
| (162,613 |
| ) |
| $ |
| (112,812 |
| ) |
| $ |
| (49,801 |
| ) |
| -44 |
| % |
| $ |
| (788,955 |
| ) |
| $ |
| (2,424,330 |
| ) |
| $ |
| 1,635,375 |
Statement of Operations Highlights –Year to Date September 30,2023:
Net revenue for the nine months ended September 30, 2023, was $5.24 million, compared to $6.082 million for the nine months ended September 30, 2022, a decrease of ($0.839) million, or (14%). The decrease in sales was driven primarily by a shift in business development strategy in the first and second quarters of 2023 away from direct sales to private offices of the Company’s Vendaje product to a strategic distributor of its recently announced AmnioWrap2 product. This strategic partnership began in the third quarter of 2023.
Gross profit for the nine months ended September 30, 2023, was $4.629 million, or 88% of revenue, compared to $5.325 million, or 88% of net revenue, for the nine months ended September 30, 2022, a decrease of ($0.696) million, or (13%). Despite the decrease in sales, gross profit remained consistent year over year due to continued movement in the Company’s product sales mix shift from higher cost flowable products into membrane products.
Operating expenses for the nine months ended September 30, 2023, were $9.582 million, compared to $6.362 million for the nine months ended September 30, 2022, an increase of $3.219 million or 51%. The increase in operating expenses is primarily driven by a $2.525 million increase in share-based compensation offset by a reduction in spending on other operating expenses, in particular, sales and marketing.
Total other expense, net, for the nine months ended September 30, 2023, was ($0.789) million, compared to ($2.450) million for the nine months ended September 30, 2022, a decrease in expense of $1.661 million or 67%. The nine months ended September 30, 2022, contained a one-time charge of $2.083 million on a debt restructuring.
Net loss for the nine months ended September 30, 2023, was ($5.0) million, or ($0.43) per share, compared to a net loss of ($3.461) million, or ($0.32) per share, for the nine months ended September 30, 2022, an increase to net loss of ($2.167) million, or ($0.10) per share.
Statement of Cashflows and Balance Sheet Highlights:
Cashflows (used in) operations was ($2.088) million for the nine-months ended September 30, 2023, compared to cashflows provided by operations of $0.746 million for the nine months ended September 30, 2022. The decrease in cash provided by operations is due to an increase in net loss, an increase in accounts receivable in Q3 to a customer with extended terms offset by other non-cash, GAAP charges included in net loss such as debt restructuring charges and share-based compensation.
Cashflows used in investing activities were ($0.210) million for the nine months ended September 30, 2023, compared to cashflows used in investing activities of ($0.400) for the nine months ended September 30, 2022.
Cashflows provided by financing activities were $1.636 million and $0.354 million for the nine months ended September 30, 2023, and 2022, respectively. The increase in cashflows from financing activities was due to the issuance of common stock for cash of $0.444 million and net new borrowings on debt of $1.191 million.
The Company maintained cash on hand as of September 30, 2023, of $0.110 million compared to $1.042 million as of September 30, 2022.
The Company continues to strengthen its balance sheet. The Company converted $0.378 million of liabilities to common stock during the nine months ended September 30, 2023.
Also, as disclosed in the footnotes to the financial statements, the Company completed its private placement in October 2023. An additional $2.0 million cashflows from this financing activity will be reflected in the fourth quarter financial statements. In October 2023, the Company converted $473,350 of the Company’s convertible debt into 676,215 shares of common stock.
| BIOSTEM TECHNOLOGIES, INC |
| CONSOLIDATED BALANCE SHEETS |
| (Unaudited) |
| September 30, |
| December 31, |
| 2023 |
| 2022 |
| Current Assets |
| Cash |
| $ |
| 109,864 |
| $ |
| 772,136 |
| Accounts receivable, net |
| 2,912,865 |
| 37,206 |
| Inventory, net |
| 495,004 |
| 395,228 |
| Prepaid expenses and other assets |
| 280,079 |
| 281,930 |
| Total current assets |
| 3,797,812 |
| 1,486,500 |
| Fixed Assets |
| Property, plant and equipment, net |
| 1,379,488 |
| 1,352,894 |
| Right-of-use asset, net |
| 13,250 |
| 19,832 |
| Intangible assets, net |
| 378,470 |
| 362,571 |
| Goodwill |
| 244,635 |
| 244,635 |
| Total assets |
| 5,813,655 |
| 3,466,432 |
| Current Liabilities |
| Accounts payable and accrued expenses |
| $ |
| 1,178,029 |
| $ |
| 570,115 |
| Salaries payable |
| 68,750 |
| 0.0 |
| Accrued interest |
| 1,697,279 |
| 1,478,421 |
| Short-term finance lease |
| 8,988 |
| 9,238 |
| Notes payable-current |
| 3,831,095 |
| 3,018,679 |
| Related party convertible notes payable |
| 300,000 |
| 300,000 |
| Other convertible notes payable |
| 473,350 |
| 723,350 |
| Other current liabilities |
| 349,250 |
| 228,303 |
| Total current liabilities |
| 7,906,741 |
| 6,328,106 |
| Long Term Liabilities |
| Long-term finance lease |
| 5,138 |
| 11,305 |
| Related party notes payable |
| 0.0 |
| 0.0 |
| Notes payable-long-term |
| 1,405,346 |
| 1,026,462 |
| Other long-term liabilities |
| 22,275 |
| 50,512 |
| Total long term liabilities |
| 1,432,759 |
| 1,088,279 |
| Total liabilities |
| 9,339,500 |
| 7,416,385 |
| Commitments and contingencies (Note 14) |
| 0.3 |
| 0.0 |
| Stockholders' Deficit |
| Series A-1 convertible preferred stock, $0.001 par value authorized, 300 shares; issued and outstanding, 300 shares as of September 30, 2023 and December 31, 2022. |
| 0.3 |
| 0.3 |
| Series B-1 convertible preferred stock, $0.001 par value Authorized, 500,000 shares; issued and outstanding 5 shares as of September 30, 2023 and December 31, 2022. |
| - |
| - |
| Common stock, $0.001 par value Authorized, 975,000,000 shares; issued and outstanding 13,100,140 shares and 13,583,112 shares as of September 30, 2023 and December 31, 2022. |
| 13,582 |
| 12,161 |
| Additional paid-in capital |
| 39,386,493 |
| 33,095,921 |
| Treasury stock |
| (43,346 |
| ) |
| (43,346 |
| ) |
| Accumulated deficit |
| (42,882,574 |
| ) |
| (37,141,133 |
| ) |
| Noncontrolling interest |
| - |
| 126,444 |
| Total stockholders' deficit |
| (3,525,845 |
| ) |
| (3,949,953 |
| ) |
| Total liabilities and stockholders' deficit |
| $ |
| 5,813,655 |
| $ |
| 3,466,432 |
| BIOSTEM TECHNOLOGIES, INC |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Unaudited) |
| Three-months ended, |
| Nine-months ended, |
| September 30, 2023 |
| September 30, 2022 |
| September 30, 2023 |
| September 30, 2022 |
| Net Revenue |
| $ |
| 3,599,068 |
| $ |
| 1,145,755 |
| $ |
| 5,243,570 |
| $ |
| 6,082,116 |
| Cost of goods sold |
| 307,237 |
| 237,989 |
| 614,491 |
| 756,737 |
| Gross profit |
| 3,291,831 |
| 907,766 |
| 4,629,079 |
| 5,325,379 |
| Operating Expenses: |
| Professional fees |
| 192,580 |
| 276,815 |
| 642,259 |
| 623,844 |
| General and administrative expenses |
| 2,513,274 |
| 1,343,956 |
| 8,764,898 |
| 5,552,678 |
| Depreciation and amortization expense |
| 56,045 |
| 61,978 |
| 174,408 |
| 185,595 |
| Total operating expenses |
| 2,761,899 |
| 1,682,749 |
| 9,581,565 |
| 6,362,117 |
| Income (loss) from operations |
| 529,932 |
| (774,983 |
| ) |
| (4,952,486 |
| ) |
| (1,036,738 |
| ) |
| Other Income (Expense): |
| Loss on extinguishment of debt |
| - |
| - |
| - |
| (2,083,197 |
| ) |
| Interest expense |
| (162,613 |
| ) |
| (110,569 |
| ) |
| (412,370 |
| ) |
| (358,203 |
| ) |
| Other income (expense), net |
| (489 |
| ) |
| (2,243 |
| ) |
| (376,585 |
| ) |
| 17,070 |
| Total other income (expense), net |
| (162,613 |
| ) |
| (112,812 |
| ) |
| (788,955 |
| ) |
| (2,424,330 |
| ) |
| Net income (loss) from operations before income taxes |
| 367,319 |
| (887,795 |
| ) |
| (5,741,441 |
| ) |
| (3,461,068 |
| ) |
| Income taxes |
| - |
| - |
| - |
| - |
| Net income (loss) |
| 367,319 |
| (887,795 |
| ) |
| (5,741,441 |
| ) |
| (3,461,068 |
| ) |
| Less: Net (loss) income attributable to noncontrolling interest |
| - |
| (90,567 |
| ) |
| - |
| 9,849 |
| Net income (loss) attributable to BioStem Technologies, Inc. |
| $ |
| 367,319 |
| $ |
| (797,228 |
| ) |
| $ |
| (5,741,441 |
| ) |
| $ |
| (3,470,917 |
| ) |
| Basic and diluted net income (loss) per share attributable to common stockholders of BioStem Technologies, Inc. |
| $ |
| 0.03 |
| $ |
| (0.07 |
| ) |
| $ |
| (0.43 |
| ) |
| $ |
| (0.32 |
| ) |
| Basic and diluted weighted average common shares outstanding |
| 13,493,387 |
| 11,685,291 |
| 13,209,159 |
| 10,731,773 |
NON-GAAP FINANCIALS MEASURES
BioStem Technologies 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. The Company’s management uses Adjusted EBITDA to evaluate operating performance and trends and make planning decisions. The Company’s 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, the Company believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating its operating results, enhancing the overall understanding of past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by BioStem’s 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, |
| 2023 |
| 2022 |
| $ Change |
| % Change |
| 2023 |
| 2022 |
| $ Change |
| % Change |
| Net income (loss) |
| $ |
| 367,319 |
| $ |
| (887,795 |
| ) |
| $ |
| 1,255,114 |
| 141 |
| % |
| $ |
| (5,741,441 |
| ) |
| $ |
| (3,486,685 |
| ) |
| $ |
| (2,254,756 |
| ) |
| 65 |
| % |
| Interest expense |
| 162,613 |
| 110,569 |
| 52,044 |
| 47 |
| % |
| 412,370 |
| 358,203 |
| 54,167 |
| 15 |
| % |
| Depreciation and amortization |
| 56,045 |
| 61,978 |
| (5,933 |
| ) |
| -10 |
| % |
| 174,408 |
| 185,595 |
| (11,187 |
| ) |
| -6 |
| % |
| EBITDA |
| $ |
| 585,977 |
| $ |
| (715,248 |
| ) |
| $ |
| 1,301,225 |
| 182 |
| % |
| $ |
| (5,154,663 |
| ) |
| $ |
| (2,942,887 |
| ) |
| $ |
| (2,211,776 |
| ) |
| 75 |
| % |
| Share-based compensation |
| 1,274,739 |
| 157,106 |
| 1,117,633 |
| 5,080,362 |
| 2,555,573 |
| 2,524,790 |
| Loss on debt restructuring |
| - |
| - |
| - |
| - |
| 2,083,197 |
| (2,083,197 |
| ) |
| -100 |
| % |
| Adjusted EBITDA |
| $ |
| 1,860,716 |
| $ |
| (558,142 |
| ) |
| $ |
| 2,418,858 |
| 433 |
| % |
| $ |
| (74,301 |
| ) |
| $ |
| 1,695,883 |
| $ |
| (1,770,184 |
| ) |
| -104 |
| % |
Conference Call Details
Date: Tuesday, November 14, 2023
Time: 10:30 am EDT
Webcast Link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=h6fk2xLz
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: 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 AmnioWrap2™, VENDAJE®, VENDAJE AC®, and VENDAJE OPTIC®. Each BioStem Technologies placental allograft is processed at the Company's FDA registered and AATB accredited site in Pompano Beach, Florida. For more information visit biostemtechnologies.com and follow us on Twitter and Linkedin.
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.
BioStem Technologies, Inc.
Phone: 954-380-8342
Website: http://www.biostemtechnologies.com
Email: info@biostemtech.com
Twitter: @BSEM_Tech
Facebook: BioStem Technologies
Investor Relations:
PCG Advisory
Jeff Ramson
950 Third Avenue, Suite 2700
New York, NY 10022
T: 646-863-6341
jramson@pcgadvisory.com