UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF
1934
Date of report (Date of earliest event
reported): November
15,
2010
|
Bacterin International Holdings,
Inc.
|
|
(Exact Name of Registrant as
Specified in Its Charter)
|
|
Delaware
|
|
(State or Other Jurisdiction of
Incorporation)
|
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333-158426
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20-5313323
|
|
(Commission File
Number)
|
(IRS Employer Identification
No.)
|
|
600 Cruiser
Lane
Belgrade,
Montana
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59714
|
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(Address of Principal Executive
Offices)
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(Zip
Code)
|
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(406)
388-0480
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(Registrant’s Telephone Number, Including Area
Code)
|
|
(Former Name or Former Address, if
Changed Since Last
Report)
|
Check the appropriate box below if
the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see
General Instruction A.2.
below):
¨ Written communications pursuant to Rule
425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
ITEM 2.02.
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RESULTS
OF OPERATIONS AND FINANCIAL
CONDITION
|
We are furnishing this Item 2.02 in
connection with the disclosure of information, in the form of the textual
information from a press release on November 15, 2010 entitled “Bacterin
International Holdings, Inc. Reports Third Quarter 2010 Financial Results” and
filed as Exhibit 99.1 hereto.
The information in this Item 2.02
(including Exhibit 99.1 hereto) is being furnished pursuant to Item 2.02 and
shall not be deemed to be “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section.
We do not have, and expressly disclaim,
any obligation to release publicly any updates or any changes in our
expectations or any change in events, conditions, or circumstances on which any
forward-looking statement is based.
The text included with this report is
available on our website located at www.bacterin.com,
although we reserve the right to discontinue that availability at any
time.
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ITEM
9.01.
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FINANCIAL
STATEMENTS AND EXHIBITS
|
| (d) | Exhibits. | |
|
|
99.1
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Press
Release dated November 15, 2010, entitled “Bacterin International
Holdings, Inc. Reports Third Quarter 2010 Financial
Results.”
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SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: November
15,
2010
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BACTERIN
INTERNATIONAL HOLDINGS, INC.
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||
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By:
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/s/ Guy S.
Cook
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||
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Name:
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Guy S.
Cook
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||
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Title:
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President and Chief Executive
Officer
|
||
Bacterin
International Holdings, Inc. Reports Third Quarter 2010
Financial
Results
Bacterin
delivers over 200% year-over-year and 31% quarter-over-quarter third quarter
revenue growth
BELGRADE,
MT, November 15, 2010 – Bacterin International Holdings, Inc. (“Bacterin” or the
“Company”) (OTCBB: BIHI), a developer of anti-infective coatings for medical
applications and revolutionary bone graft material, today reported financial
results for its third quarter ended September 30, 2010. On July 1,
2010, as a result of the reverse merger transaction reported in the Company’s
Form 8-K dated June 30, 2010, Bacterin began trading as a public entity under
the symbol BIHI.OB. During the third quarter, the Company completed a
second and final closing on a private placement funding totaling $9.3 million,
materially increased its direct and indirect biologics sales force, launched
marketing and sales initiative into the 6,000 medical facilities covered under
the Broadlane® (a general purchasing organization) agreement, and received FDA
approval to market its second coatings device (an antimicrobial needleless IV
connector). Subsequent to third quarter end, Bacterin announced
within its biologics division the launch of its third scaffold addressing dermal
repair and within the company’s coatings division a $237,000 grant was awarded
from the Federal Government for its antimicrobial orthopedic surgical fixation
devices.
Bacterin
reported third quarter 2010 revenues of $4.2 million, a 203 percent increase
from the prior year’s third quarter revenues of $1.4 million and a 31 percent
increase compared to revenues of $3.2 million in the second quarter of
2010. The Company’s revenue growth acceleration reflected the impact
of the implementation of a direct sales force effort, which commenced in July
2009. As of September 30, 2010, the Company’s sales force totaled 35
biologics sales representatives, which has grown from 21 as of June 30,
2010. During October 2010, Bacterin further increased its sales
force and achieved its 2010 goal of hiring 52 sales
representatives. The Company anticipates continued revenue growth
acceleration as both its expanding direct and indirect sales efforts impact the
market.
The
Company reported a net loss of $(9.0) million or $(0.26) per basic share for the
third quarter of 2010, which included a non cash warrant derivative liability
charge of $6.7 million due to the strong appreciation in the stock price to
$7.45 during the quarter. This compares to $(1.9) million or $(0.09) per basic
share for the third quarter 2009 and a net loss of $(2.0) million or $(0.07) per
basic share for the second quarter 2010. During the final month of
third quarter 2010, Bacterin achieved EBITDA breakeven. The Company
expects to be EBITDA profitable for the fourth quarter of 2010 going
forward.
For the
three months ended September 30, 2010, Bacterin’s gross profit on revenue
totaled $3.5 million, yielding a gross margin of 83 percent, compared to 30
percent for the three months ended September 30, 2009 and 84 percent for the
second quarter of 2010. The material year over year gross margin
increase was due to a one time inventory adjustment of approximately $669,000
which resulted in an increase in cost of tissue sales recorded in the third
quarter of 2009. Given the company’s current mix of business,
Bacterin expects gross margins over 80 percent for the foreseeable
future.
Operating
expenses during the third quarter of 2010 totaled $5.6 million, an increase of
approximately $3.4 million (159%) over the third quarter of 2009 and an increase
of approximately $1.6 million (41%) over the second quarter of
2010. A significant portion of the expense increase, approximately
$2.0 million year-over-year and $636,000 quarter-over-quarter, was attributed to
costs associated with the implementation of a direct sales
force. General and administrative costs also increased approximately
$672,000 year-over-year and $200,000 quarter-over-quarter due to an increase in
salaries and wages and legal, professional fees and insurance expense associated
with being a public company. In addition, stock options/restricted
stock compensation expense which consists of non-cash expense associated with
granting stock options to employees and restricted stock to consultants
increased during the third quarter by $808,000 over the prior year third quarter
and by $769,000 as compared to the second quarter 2010, due largely to
restricted stock awards to consultants during the third quarter
2010. While Bacterin anticipates a continued increase in operating
expenses going forward, the Company believes it will be able to leverage its
corporate expenses and deliver increased profitability as revenues continue to
rise.
The
Company generated interest expense in the third quarter of $160,000 compared to
$136,000 in the third quarter of 2009 and $782,000 in the second quarter of
2010. The shift in quarterly interest expense is attributed to the
creation and subsequent conversion of short term convertible debt
instruments.
For the
nine months ended September 30, 2010, Bacterin reported revenues of $10.1
million, a 95 percent increase compared to the same period in
2009. The increase of $4.9 million was largely the result of
transitioning the sales model in the second half of 2009 from a distributorship
model with a limited direct sales force to a direct sales force model. Net loss totaled $(12.7)
million or $(0.42) per basic share, which included approximately $1.1 million in
nonrecurring costs associated with the reverse merger and concurrent capital
raise as well as $6.8 million of a non cash warrant derivative liability charge
due to the strong rise in the company’s stock price since becoming a public
traded entity on July 1, 2010. This net loss is compared to $(2.5)
million or $(0.10) per basic share for the same period in 2009.
At
September 30, 2010, the Company reported cash and equivalents balance of
$572,000, accounts receivable of $2.6 million and an inventory balance of $7.0
million. At September 30, 2010 the Company had
convertible notes payable of approximately $400,000, a decrease of $1.45 million
from the prior second quarter 2010. As of September 30, 2010,
Bacterin had approximately 35.9 million shares of common stock outstanding and
fully diluted shares of 48.4 million (inclusive of all options, warrants and
convertible debt).
“After
multiple years of product development and testing, we began preparing the
business to capitalize on our core markets, as well as the active marketing of
our product in 2009. In particular, we diversified our supply of donor
tissue, expanded our production capabilities, developed the infrastructure of
what we believe will grow into a formidable sales force, refined the message to
our market and started gathering proof points on how to scale our revenue in
these markets. During 2010, these efforts have produced sequential
increasing record revenue quarters and sustainable gross margins above 80
percent with prospects of future revenue growth acceleration and profitability
as we exit this current calendar year. We anticipate further growth
opportunities during 2011 as we begin to market and sell our new dermal scaffold
and announce progress on our products that address subchondral bone
repair,” commented Guy Cook, the Company’s President and CEO.
Conference
Call Details:
|
Date/Time:
|
Monday, November 15, 2010—10:00
a.m. (ET)
|
|
Telephone
Number:
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888-713-4217 |
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International Dial-In
Number:
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617-213-4869 |
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Participant Pass
code:
|
65563395 |
|
Internet
Access:
|
www.bacterin.com or www.earnings.com |
It is
recommended that participants phone-in at least 10 minutes before the call is
scheduled to begin. Participants may pre-register for the call at -https://cossprereg.btci.com/prereg/key.process?key=P4A4WLKLH
Pre-registrants
will be issued a pin number to use when dialing into the live call which will
provide quick access to the conference by bypassing the operator upon
connection. A replay of the conference call in its entirety will be available
approximately one hour after its completion by dialing 888-286-8010 (U.S.),
617-801-6888 (International) and entering the pass code 21194807 and on the
Internet at www.earnings.com.
Investor
Contact:
Yvonne L.
Zappulla
Managing
Director
Grannus
Financial Advisors, Inc.
212-681-4108
Yvonne@GrannusFinancial.com
or
John
Gandolfo
Chief
Financial Officer
Bacterin
International Holdings, Inc.
406-388-0480
Jgandolfo@bacterin.com
About
Bacterin International Holdings, Inc.
Bacterin
International Holdings, Inc. (“the “Company” or “Bacterin”) develops,
manufactures and markets biologics products to domestic and international
markets. Bacterin’s proprietary methods optimize the growth factors
in human allografts to create the ideal stem cell scaffold and promote bone and
other tissue growth. These products are used in a variety of
applications including enhancing fusion in spine surgery, relief of back pain
with a facet joint stabilization, promotion of bone growth in foot and ankle
surgery, promotion of skull healing following neurosurgery and cartilage
regeneration in knee and other joint surgeries.
Bacterin’s
Medical Device division develops anti-microbial coatings based upon proprietary
coating technologies. Bacterin develops, employs, and licenses bioactive
coatings for various medical device applications. Bacterin’s
strategic coating initiatives include antimicrobial coatings designed to inhibit
biofilm formation and microbial contamination on medical devices drug delivery,
local (as opposed to systemic) pain management, and anti-thrombotic factors for
medical device applications. Headquartered in Belgrade, Montana,
Bacterin operates a 32,000 square foot., state-of-the-art, fully compliant and
FDA registered facility, equipped with five "Class 100" clean
rooms. For further information please visit
www.bacterin.com
This
news release contains certain disclosures that may be deemed forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 that are subject to significant risks and uncertainties. Forward-looking
statements include statements that are predictive in nature, that depend upon or
refer to future events or conditions, or that include words such as "continue,"
"efforts," "expects," "anticipates," "intends," "plans," "believes,"
"estimates," "projects," "forecasts," "strategy," "will," "goal," "target,"
"prospects," "potential," "optimistic," "confident," "likely," "probable" or
similar expressions or the negative thereof. These forward-looking statements
are based on current expectations or beliefs and include, but are not limited
to, statements about the Company’s earnings release and its expectations based
on the results of third quarter of 2010, including reductions in expenses and
increases in revenues due to among other things, the anticipated growth of its
sales force. Statements of historical fact also may be deemed to be
forward-looking statements. We caution that these statements by their nature
involve risks and uncertainties, and actual results may differ materially
depending on a variety of important factors, including, among others: the
Company's ability to meet its obligations under existing and anticipated
contractual obligations; the Company's ability to develop, market, sell and
distribute desirable applications, products and services and to protect its
intellectual property; the ability and willingness of third-party manufacturers
to timely and cost-effectively fulfill orders from the Company; the ability of
the Company's customers to pay and the timeliness of such payments, particularly
during recessionary periods; the Company's ability to obtain financing as and
when needed; changes in consumer demands and preferences; the Company's ability
to attract and retain management and employees with appropriate skills and
expertise; the impact of changes in market, legal and regulatory conditions and
in the applicable business environment, including actions of competitors; and
other factors. The Company undertakes no obligation to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events,
except as required by law.
*** Financial Statements
Follow ***
BACTERIN
INTERNATIONAL HOLDINGS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
September
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
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(unaudited)
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|||||||
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ASSETS
|
||||||||
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Current
Assets:
|
||||||||
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Cash
and cash equivalents
|
$ | 571,844 | $ | 54,155 | ||||
|
Accounts
receivable, net of allowance of $122,949 and $81,803,
respectively
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2,560,692 | 1,314,418 | ||||||
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Notes
receivable - trade
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518,905 | 270,565 | ||||||
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Inventories,
net
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6,971,792 | 5,000,713 | ||||||
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Prepaid
and other current assets
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221,567 | 30,000 | ||||||
| 10,844,800 | 6,669,851 | |||||||
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Property
& equipment, net
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3,117,439 | 3,248,096 | ||||||
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Intangible
assets, net
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541,417 | 554,268 | ||||||
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Notes
receivable – related party
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82,255 | - | ||||||
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Other
assets
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15,585 | 13,675 | ||||||
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Total
Assets
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$ | 14,601,496 | $ | 10,485,890 | ||||
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LIABILITIES
& STOCKHOLDERS' EQUITY
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
1,749,938 | 1,403,950 | ||||||
|
Accrued
liabilities
|
1,052,972 | 463,630 | ||||||
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Other
current liabilities
|
315,000 | - | ||||||
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Warrant
derivative liability
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7,429,968 | 75,231 | ||||||
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Notes
payable
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956,978 | 1,126,693 | ||||||
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Notes
payable to stockholders
|
162,397 | 183,461 | ||||||
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Current
portion of capital lease obligations
|
35,780 | 85,071 | ||||||
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Convertible
notes payable, net of debt discount
as
of June 30, 2010 and $890,000 net of debt discount of $69,214
as
of
December 31, 2009)
|
393,834 | 820,787 | ||||||
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Current
portion of long-term debt
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1,097,525 | 1,202,574 | ||||||
|
Long-term
Liabilities:
|
||||||||
|
Capital
lease obligation, less current portion
|
- | 27,074 | ||||||
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Long-term
debt, less current portion
|
292,800 | 412,545 | ||||||
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Total
Liabilities
|
13,487,192 | 5,801,016 | ||||||
|
Stockholders'
Equity
|
||||||||
|
Preferred
stock, $.0001 par value; 15,000,000 shares authorized;
No
shares issued and outstanding
|
- | |||||||
|
Common
stock, $0.000001 par value; 135,000,000 shares authorized;
35,903,864
|
||||||||
|
Issued
shares and 35,900,160 outstanding shares on September 30, 2010 and
28,211,562
|
||||||||
|
Issued
shares and 28,152,665 outstanding shares on December 31,
2009
|
36 | 28 | ||||||
|
Additional
paid-in capital
|
31,538,987 | 22,238,747 | ||||||
|
Treasury
stock, 58,897 shares on December 31, 2009 and 3,704 shares on September
30, 2010
|
(212,036 | ) | (76,566 | ) | ||||
|
Retained
deficit
|
(30,212,683 | ) | (17,477,335 | ) | ||||
|
Total
Stockholders’ Equity
|
1,114,304 | 4,684,874 | ||||||
| $ | 14,601,496 | $ | 10,485,890 | |||||
BACTERIN
INTERNATIONAL HOLDINGS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three
|
Nine
|
|||||||||||||||
|
Months
Ended September 30,
|
Months
Ended September 30,
|
|||||||||||||||
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2010
|
2009
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2010
|
2009
|
|||||||||||||
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Revenue
|
||||||||||||||||
|
Tissue
sales
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$ | 4,045,347 | $ | 1,356,842 | $ | 9,936,095 | $ | 4,995,682 | ||||||||
|
Royalties
and other
|
146,639 | 25,975 | 193,424 | 207,554 | ||||||||||||
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Total
Revenue
|
4,191,986 | 1,382,817 | 10,129,519 | 5,203,236 | ||||||||||||
|
|
||||||||||||||||
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Cost
of tissue sales
|
711,173 | 973,436 | 1,832,967 | 1,631,555 | ||||||||||||
|
Gross
Profit
|
3,480,813 | 409,381 | 8,296,552 | 3,571,681 | ||||||||||||
|
|
||||||||||||||||
|
Operating
Expenses
|
||||||||||||||||
|
General
and administrative
|
2,141,028 | 1,468,936 | 5,741,315 | 3,705,892 | ||||||||||||
|
Sales
and marketing
|
2,320,446 | 366,827 | 5,465,431 | 1,120,996 | ||||||||||||
|
Depreciation
|
152,994 | 166,964 | 457,156 | 495,218 | ||||||||||||
|
Stock
Options/Restricted stock
Compensation
expense
|
951,442 | 143,121 | 1,227,871 | 446,960 | ||||||||||||
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Total
Operating Expenses
|
5,565,910 | 2,145,848 | 12,891,773 | 5,769,066 | ||||||||||||
|
Loss
from Operations
|
(2,085,097 | ) | (1,736,467 | ) | (4,595,221 | ) | (2,197,385 | ) | ||||||||
|
Other
Income (Expense)
|
||||||||||||||||
|
Interest
income (expense)
|
(160,289 | ) | (135,715 | ) | (680,418 | ) | (337,303 | ) | ||||||||
|
Change
in warrant derivative liability
|
(6,731,857 | ) | - | (6,826,533 | ) | - | ||||||||||
|
Other
income/expense
|
(65,984 | ) | - | (633,176 | ) | 11,298 | ||||||||||
|
Total
Other Income (Expense)
|
(6,958,130 | ) | (135,715 | ) | (8,140,127 | ) | (326,005 | ) | ||||||||
|
Net Loss Before Benefit(Provision)
for
Income
Taxes
|
(9,043,227 | ) | (1,872,182 | ) | (12,735,348 | ) | (2,523,390 | ) | ||||||||
|
Benefit
(Provision) for Income Taxes
|
||||||||||||||||
|
Current
|
- | - | - | - | ||||||||||||
|
Deferred
|
- | - | - | - | ||||||||||||
|
Net
Loss
|
$ | (9,043,227 | ) | $ | (1,872,182 | ) | $ | (12,735,348 | ) | $ | (2,523,390 | ) | ||||
|
Net
loss per share:
|
||||||||||||||||
|
Basic
|
$ | (0.26 | ) | $ | (0.09 | ) | $ | (0.42 | ) | $ | (0.10 | ) | ||||
|
Shares
used in the computation:
|
||||||||||||||||
|
Basic
|
35,398,628 | 21,868,980 | 30,658,229 | 26,247,360 | ||||||||||||