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HomeBreaking NewsBioStem Technologies Reports Third Quarter 2023 Operating and Financial Results

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, AmnioWrap2â„¢. 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 AmnioWrap2â„¢, 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


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