Edited Transcript of PURE earnings conference call or presentation 13-Jun-19 8:30pm GMT

Thank you, Terri. As we reported earlier today in our Q3 fiscal 2019 operating results, and as previously discussed on prior conference calls, we continue to focus on building our commercialization efforts for our patented SDC technology as a food safety solution, while simultaneously managing our resources as effectively as possible.

Along with our current revenue projections and upon the conclusion of our February 2019 $840,000 financing and our subsequent $285,000 financing, we now have the estimated funding in place to support our operations into our fourth fiscal quarter 2019, accelerate the commercialization of SDC-based PURE Control as an FDA-approved direct food contact processing aid for fresh produce, accelerate the commercialization of PURE Hard Surface for the sanitization of food transport trucks and further accelerate the development of PURE Hard Surface as a food contact surface disinfectant for both the food processor and restaurant chain market.

I'll now discuss our Q3 fiscal 2019 operating results. Net product sales for the third fiscal quarter ended April 30, 2019 were $312,000, a decrease of 20% compared to net product sales of $390,000 for the third fiscal quarter ended April 30, 2018. The decrease was due to a decline in food safety sales due to delays in customer implementation and fluctuations within our existing legacy customer base.

Total operating costs and expenses, excluding cost of goods sold and share-based compensation, for the third fiscal quarter ended April 30, 2019 and 2018 were $1.2 million and $1.4 million, respectively. Net loss, excluding share-based compensation and inducement expense, for the third fiscal quarter in 2019 was $913,000 as compared with a loss of $947,000, for the third quarter in 2018.

Net product sales for the 9 months ended April 30, 2019 were $1,296,000, an increase of 2% compared to net product sales of $1,265,000 for the 9 months ended April 30, 2018. Core food safety revenues increased by 31% as compared with food safety revenues during the 9 months ended 2018.

Total operating costs and expenses, excluding cost of goods sold and share-based compensation, for the 9 months ended April 30, 2019 and 2018, were $3.2 million and $4.5 million, respectively.

Net loss, excluding derivative income, inducement expense and share-based compensation, for the 9 months ended April 30, 2019 was $2 million as compared with $3.2 million for the 9 months period in 2018.

We ended the quarter with a cash and restricted cash position of $415,000. Cash received from financing activities during the 9 months ended April 30, 2019 was $1.8 million, offset by cash used in operating and investing activities of $2.3 million.

Our Board of Directors continues to actively evaluate our future financing needs and assesses the various types and opportunities available to us to meet those needs and to allow us to achieve our cash flow revenue breakeven target.

We recently disclosed that we raised $285,000 of net proceeds under a private placement and intend to raise additional working capital to fund the company.

This concludes my financial review. I will now turn the call over to Hank Lambert, CEO for business strategy update. Hank?

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Henry R. Lambert, PURE Bioscience, Inc. - CEO, Secretary & Director [4]

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Thanks, Mark. Good afternoon, everyone. We certainly appreciate you joining us for today's discussion. As Mark mentioned, our core food safety revenues were somewhat lower for the third quarter, however, for the 9-month period showed strong growth at plus 31%. Quarterly food safety revenues were impacted by the timing of orders and unanticipated delays in key customer adoption and rollout of our SDC solutions.

The good news is that since the end of the quarter, a number of these customers have accelerated adoption and installation of solutions. As a result, we anticipate that our current quarter fiscal Q4, ending in July, will show stronger food safety revenues, continuing to validate our nontoxic SDC-based antimicrobial food safety solutions.

Highlighting first our produce processing initiatives, PURE Bioscience is finalizing a PURE Control supply agreement with SmartWash Solutions. We continue to work closely with SmartWash Solutions and the largest fresh produce processor in the world on both application of and marketing the treated final products to end users as well as other produce processors.

SmartWash Solutions is working closely with the USDA to obtain third-party verification of the PURE application and efficacy for use to ensure produce safety in the U.S. There are currently 3 facilities equipped to apply the application at adoption by customers and 4 additional facilities planned for future rollout with USDA verification.

It has been conclusively determined that PURE Control used in the produce industry enhances food safety by eliminating pathogens causing foodborne illness, including the leading causes Salmonella, E. coli and Listeria.

Currently, shredded romaine and iceberg lettuce are treated with PURE Control for the customers who adopt this added processing step.

In addition to this direct work with our lead processor, other major processors are accelerating adoption of PURE Control for treating produce. Tom will give you a current update on this shortly.

In Q1, we had 8 produce processors conducting or evaluating their own in-house validation and optimization testing. In Q2, that number was 10 and in Q3, that number grew to 12 processors. Awareness of the incremental efficacy our solution provides to produce processors is growing, and we will build on that when SmartWash executives, along with Tom Myers discuss the results of their extensive testing of SDC at the International Association of Food Protection in mid-July.

The produce industry is clearly committed to the expanding use of our SDC solutions. They also use PURE Hard Surface extensively for successful environmental disinfection within their processing plants. Tom will elaborate on this as well as new applications that are in development.

Continuing our discussion of PURE Hard Surface equipment and environmental use, in the most recent quarter, we added national branded customers and continue to add plants and expanded applications with existing customers, averaging more than 1 per week.

PURE Hard Surface used environmentally and on equipment is now in over 110 national food manufacturers and processors in a wide range of industry segments, including produce, bakeries, pet food, cheese and dairy, and meats.

Our food transportation solution is continuing to gain momentum and -- with acceleration in the last month and Tom will also give you the latest on that.

In our egg hatcheries initiative for PURE Hard Surface for disinfection, we continue our testing with 2 of the top 5 poultry producers. Our objective is to optimize the pathogen-free environment, reducing cross-contamination risk for egg laying, hatching and growing birds, lowering the very high chick mortality rates and ensuring cleaner birds entering processing.

We anticipate the testing will be completed sometime before the end of this calendar year. At that time, we'll have enough information to be able to comment on potential and market metrics.

To sum up then, based on the growing momentum that we have in produce processing, food transport sanitization and PURE Hard Surface use in processing plants and restaurant chains, we are increasingly confident that the revenues needed to drive us to cash flow breakeven and beyond are achievable and imminent.

I'd like to turn our call over now to Tom Myers, Chief Operating Officer, for his up-to-the minute remarks from the front lines. Tom?

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Thomas Richard Myers, PURE Bioscience, Inc. - COO [5]

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Thank you, Hank. Good afternoon, everyone. I'm pleased to have this opportunity to join today's call and share with you my-boots-on-the-ground perspective and the status of our sales, marketing and execution progress for both PURE Control and PURE Hard Surface disinfectant.

We continue to work closely with produce industry leaders in both application of and marketing the treated final products to end users and to other fresh produce suppliers.