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 7, 2013
Bacterin International Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 001-34951 | 20-5313323 |
| (Commission File Number) | (IRS Employer Identification No.) |
| 600 Cruiser Lane | 59714 |
| Belgrade, Montana | |
| (Address of Principal Executive Offices) | (Zip Code) |
(406) 388-0480
(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. | 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 7, 2013 entitled “Bacterin Announces Third Quarter 2013 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, however the contents of our website are not incorporated by reference herein.
This Form 8-K contains forward-looking statements that are subject to various assumptions, risks and uncertainties. These forward-looking statements may include financial projections, revenue and earnings guidance and other statements or assumptions regarding our expectations and beliefs. The Company believes that its expectations, as expressed in these statements are based on reasonable assumptions regarding the risks and uncertainties inherent in achieving those expectations. These statements are not, however, guarantees of performance and actual results may differ materially. Risks and uncertainties which may cause actual results to be different than expressed or implied in our forward-looking statements include, but are not limited to, the risk factors described under the heading “Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company expressly disclaims any current intention to update any forward-looking statements as a result of new information or future events or developments.
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS |
| (d) | Exhibits. |
| 99.1 | Press Release dated November 7, 2013 entitled “Bacterin Announces Third Quarter 2013 Results” |
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.
| Dated: November 7, 2013 | BACTERIN INTERNATIONAL HOLDINGS, INC. | |
| By: | /s/ Daniel Goldberger | |
| Name: | Daniel Goldberger | |
| Title: | CEO | |
EXHIBIT INDEX
|
99.1
|
Press Release of Bacterin International Holdings, Inc. dated November 7, 2013 entitled “Bacterin Announces Third Quarter 2013 Results” |
Bacterin Announces
Third Quarter 2013 Results
Total revenue, excluding stocking orders, increased 12.9% over the prior year period
BELGRADE, Mont.—(BUSINESS WIRE)— NOVEMBER 7, 2013, 2013— Bacterin International Holdings, Inc. (NYSE MKT: BONE), a leader in the development of revolutionary bone graft material and coatings for medical applications, today reported its financial results for the third quarter ended September 30, 2013. The Company reported revenues of approximately $7.9 million and a net loss for the third quarter of approximately $4.4 million, or ($0.08) per common share, compared to a net loss of approximately $2.5 million, or ($0.06) per common share, reported during the same period in 2012.
Revenue
Third quarter revenue was approximately $7.9 million, down approximately 10.7% compared to approximately $8.9 million for the same period during 2012. Total revenues, excluding stocking orders, have increased 12.9% year over year to $7.9 million from $7.0 million reported in the third quarter of 2012. The lower total revenues for the period compared to the prior year reflect management’s decision to move away from low margin stocking orders. The Company’s Biologics revenues from core accounts, which includes allograft products sold to hospital accounts, increased 13.7% over the prior year.
Gross Profit
For the third quarter of 2013, gross profit was approximately $4.6 million, compared to $6.3 million in the third quarter of 2012. Gross margin for the period was 58%, which compares to a gross margin of 71% reported for the same period last year. The lower gross margin was primarily due to lower average selling prices resulting from changes in product mix and payer mix and the expensing of certain discarded products associated with an improved manufacturing process. Excluding these discarded products, gross margin was approximately 61.4%.
“While our results for the period are disappointing, our management team is fully committed to profitable revenue growth,” said Dan Goldberger, President and CEO of Bacterin International. “Our sales function is focused on clients within the Biologics business and I take some comfort from the growth that we generated in that business during the period. Since my arrival in August, I have been visiting key accounts and surgeons in the field confirm that our products are best-in-class and competitive. This is a foundation from which we can build a great company. In addition, we are taking a hard look at Cost of Goods and Operating Expense to ensure the Company’s entire operations are as efficient as possible as we enter 2014”
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Sales and Marketing Expenses
Sales and marketing expenses for the third quarter increased to $4.1 million as compared to $3.4 million for the same period during 2012. As a percentage of revenues, selling and marketing expenses increased to 51%, which compares to 38% reported for the third quarter of 2012. The increase was due to a shift towards distributor sales at higher commission rates, rather than direct sales representatives, and an incentive program to promote the sales of slower moving inventory items.
General and Administrative Expenses
In the third quarter, general and administrative expenses increased to $2.8 million for the period as compared to $2.4 million reported for the same period last year. The Company increased its allowance for doubtful accounts on a prior year stocking order due to the continuing uncertainty of collectability. Excluding this one time reserve of $642,000, G&A expenses declined from $2.4 million in the third quarter of 2012 to $2.1 million in third quarter of 2013 reflecting the previously announced cost reduction measures the Company implemented in March and April of this year. As a percentage of revenues, general and administrative expenses were 35% during the period as compared to 27% for the same period last year.
EBITDA
The Company defines earnings before interest, taxes, depreciation and amortization (“EBITDA”) as net income/loss from operations before depreciation, amortization and non-cash stock-based compensation. EBITDA for the third quarter of 2013 was a loss of $1.8 million, compared to a gain of $820,000 reported for the third quarter of 2012. Excluding the increase in the accounts receivable reserve referred to above, the Company’s EBITDA loss was approximately $1.1 million in the third quarter of 2013. See "GAAP to non-GAAP Reconciliation" below for further information on this non-GAAP measure.
Financial Liquidity
Cash and cash equivalents and net accounts receivable, were $8.1 million on September 30, 2013, compared to $12.1 million on December 31, 2012.
Conference Call Details
The company will hold a conference hosted by Dan Goldberger, Chief Executive Officer, and John Gandolfo, Chief Financial Officer, to discuss its financial results at 10:00 a.m. ET, on Friday, November 8, 2013. Please refer to the information below for conference call dial-in information and webcast registration.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the Cockrell Group at 1-877-889-1972.
| Conference Dial-in: | 877-269-7756 |
| International Dial-in: | 201-689-7817 |
| Conference Name: | Bacterin’s Third Quarter and Nine Month 2013 Results Call |
| Webcast Registration: | Click Here |
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Following the live call, a replay will be available on the Company's website, www.bacterin.com, under “Investor Info".
About the Presentation of EBITDA
EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The company defines EBITDA as net income/(loss) from operations before depreciation, amortization and non-cash stock-based compensation. Other companies (including competitors) may define EBITDA differently. The company presents EBITDA because management believes it to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management also uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Bacterin nor is it intended to be predictive of potential future results. Investors should not consider EBITDA in isolation or as a substitute for analysis of the company's results as reported under GAAP.
About Bacterin International Holdings
Bacterin International Holdings, Inc. (NYSE MKT: BONE) develops, manufactures and markets biologics products to domestic and international markets. Bacterin's proprietary methods optimize the growth factors in human allografts to promote bone growth, subchondral repair and dermal growth. These products are used in a variety of applications including enhancing fusion in spine surgery, relief of back pain, promotion of bone growth in foot and ankle surgery, promotion of cranial healing following neurosurgery and subchondral repair in knee and other joint surgeries.
Bacterin's Medical Device division develops and licenses coatings for various medical device applications. For further information, please visit www.bacterin.com.
Important Cautions Regarding Forward-looking Statements
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. 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 existing and anticipated contractual obligations, including financial covenant and other obligations contained in the Company’s secured lending facility; the Company’s ability to manage cash flow and achieve profitability; the Company's ability to develop, market, sell and distribute desirable applications, products and services and to protect its intellectual property; the ability of the Company's sales force to achieve expected results; the ability of the Company's customers to pay and the timeliness of such payments; 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 Company’s ability to successfully conclude government investigations; the impact of changes in market, legal and regulatory conditions and in the applicable business environment, including actions of competitors; and other factors. Additional risk factors are listed in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk 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.
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Investor Contact:
COCKRELL GROUP
Rich Cockrell
877-889-1972
investorrelations@thecockrellgroup.com
cockrellgroup.com
| Page 4 |
BACTERIN INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
| September 30, | As of | |||||||
| 2013 | December 31, | |||||||
| (Unaudited) | 2012 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 3,437,549 | $ | 4,926,066 | ||||
| Trade accounts receivable, net of allowance for doubtful accounts of $1,297,335 and $1,576,955, respectively | 4,633,067 | 7,154,065 | ||||||
| Inventories, net | 13,228,383 | 13,141,421 | ||||||
| Prepaid and other current assets | 486,685 | 353,271 | ||||||
| Total current assets | 21,785,684 | 25,574,823 | ||||||
| Non-current inventories | 1,238,225 | 1,238,225 | ||||||
| Property and equipment, net | 5,320,992 | 5,234,867 | ||||||
| Intangible assets, net | 563,524 | 592,378 | ||||||
| Goodwill | 728,618 | 728,618 | ||||||
| Other assets | 1,401,854 | 1,126,643 | ||||||
| Total Assets | $ | 31,038,897 | $ | 34,495,554 | ||||
| LIABILITIES & STOCKHOLDERS' (DEFICIT) EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 3,225,377 | $ | 3,997,789 | ||||
| Accounts payable - related party | 555,361 | 418,922 | ||||||
| Accrued liabilities | 1,814,472 | 2,400,090 | ||||||
| Warrant derivative liability | 2,223,332 | 984,356 | ||||||
| Current portion of capital lease obligations | 165,844 | 149,729 | ||||||
| Current portion of royalty liability | 820,500 | 698,408 | ||||||
| Current portion of long-term debt | 47,018 | 45,135 | ||||||
| Total current liabilities | 8,851,904 | 8,694,429 | ||||||
| Long-term Liabilities: | ||||||||
| Capital lease obligation, less current portion | 119,543 | 245,703 | ||||||
| Long term royalty liability, less current portion | 6,639,435 | 6,839,935 | ||||||
| Long-term debt, less current portion | 16,064,064 | 14,483,102 | ||||||
| Total Liabilities | 31,674,946 | 30,263,169 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Equity | ||||||||
| Preferred stock, $.000001 par value; 5,000,000 shares authorized; no shares issued and | ||||||||
| outstanding | - | - | ||||||
| Common stock, $.000001 par value; 95,000,000 shares authorized; 51,781,044 shares issued and outstanding as of September 30, 2013 and 42,877,770 shares issued and outstanding as of December 31, 2012 | 52 | 43 | ||||||
| Additional paid-in capital | 55,558,330 | 51,897,890 | ||||||
| Accumulated deficit | (56,194,431 | ) | (47,665,548 | ) | ||||
| Total Stockholders’ (Deficit) Equity | (636,049 | ) | 4,232,385 | |||||
| Total Liabilities & Stockholders’ (Deficit) Equity | $ | 31,038,897 | $ | 34,495,554 | ||||
| Page 5 |
BACTERIN INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenue | ||||||||||||||||
| Tissue sales | $ | 7,710,256 | $ | 8,643,299 | $ | 24,430,158 | $ | 24,427,853 | ||||||||
| Royalties and other | 219,727 | 236,466 | 385,480 | 430,185 | ||||||||||||
| Total Revenue | 7,929,983 | 8,879,765 | 24,815,638 | 24,858,038 | ||||||||||||
| Cost of tissue and medical devices sales | 3,318,327 | 2,600,452 | 10,011,687 | 6,788,606 | ||||||||||||
| Gross Profit | 4,611,656 | 6,279,313 | 14,803,951 | 18,069,432 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | 2,764,328 | 2,439,229 | 7,877,697 | 7,349,852 | ||||||||||||
| Sales and marketing | 4,053,679 | 3,352,394 | 12,057,389 | 11,333,946 | ||||||||||||
| Depreciation and amortization | 97,923 | 88,112 | 304,771 | 302,392 | ||||||||||||
| Non-cash consulting expense | 43,153 | 186,867 | 11,924 | 491,051 | ||||||||||||
| Total Operating Expenses | 6,959,083 | 6,066,602 | 20,251,781 | 19,477,241 | ||||||||||||
| (Loss) Income from Operations | (2,347,427 | ) | 212,711 | (5,447,830 | ) | (1,407,809 | ) | |||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense | (1,197,370 | ) | (867,894 | ) | (3,436,006 | ) | (1,276,946 | ) | ||||||||
| Change in warrant derivative liability | (849,288 | ) | (125,972 | ) | 246,337 | 1,393,155 | ||||||||||
| Other income (expense) | 17,551 | (1,738,202 | ) | 108,616 | (1,544,035 | ) | ||||||||||
| Total Other Expense | (2,029,107 | ) | (2,732,068 | ) | (3,081,053 | ) | (1,427,826 | ) | ||||||||
| Net Loss Before (Provision) Benefit for Income Taxes | (4,376,534 | ) | (2,519,357 | ) | (8,528,883 | ) | (2,835,635 | ) | ||||||||
| (Provision) Benefit for Income Taxes | ||||||||||||||||
| Current | - | - | - | - | ||||||||||||
| Deferred | - | - | - | - | ||||||||||||
| Net Loss | $ | (4,376,534 | ) | $ | (2,519,357 | ) | $ | (8,528,883 | ) | $ | (2,835,635 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.18 | ) | $ | (0.07 | ) | ||||
| Dilutive | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.18 | ) | $ | (0.07 | ) | ||||
| Shares used in the computation: | ||||||||||||||||
| Basic | 51,616,319 | 42,796,244 | 46,611,358 | 42,341,796 | ||||||||||||
| Dilutive | 51,616,319 | 42,796,244 | 46,611,358 | 42,341,796 | ||||||||||||
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BACTERIN INTERNATIONAL HOLDINGS, INC.
RECONCILIATION OF EARNINGS BEFORE, INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION (EBITDA)
(Unaudited)
| Three Months | Three Months | Nine months | Nine months | |||||||||||||
| 30-Sep-13 | 30-Sep-12 | 30-Sep-13 | 30-Sep-12 | |||||||||||||
| EBITDA | ||||||||||||||||
| Net Loss from ops | (2,347,427 | ) | 212,711 | (5,447,830 | ) | (1,407,809 | ) | |||||||||
| Depreciation | 97,923 | 88,112 | 304,771 | 302,392 | ||||||||||||
| Allocated depreciation | 94,000 | 94,486 | 282,000 | 283,458 | ||||||||||||
| Stock based compensation | 323,025 | 237,978 | 591,134 | 623,565 | ||||||||||||
| Non-cash consulting expense | 43,153 | 186,867 | 11,924 | 491,051 | ||||||||||||
| (1,789,326 | ) | 820,154 | (4,258,001 | ) | 292,657 | |||||||||||
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BACTERIN INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine months ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Operating activities: | ||||||||
| Net income (loss) | $ | (8,528,883 | ) | $ | (2,835,635 | ) | ||
| Noncash adjustments: | ||||||||
| Depreciation and amortization | 586,771 | 577,145 | ||||||
| Amortization of debt discount | 917,153 | 228,505 | ||||||
| Write-off of debt discount | - | 139,228 | ||||||
| Non-cash consulting expense/stock option expense | 603,058 | 1,114,846 | ||||||
| Warrants issued for services | - | 342,485 | ||||||
| Non-cash interest | (78,408 | ) | 50,659 | |||||
| Provision for losses on accounts receivable and inventory | 1,197,669 | 136,637 | ||||||
| (Gain) loss on disposal of assets | (500 | ) | 7,902 | |||||
| Change in derivative warrant liability | (246,337 | ) | (1,393,155 | ) | ||||
| Reduction of contingent liability | (91,740 | ) | (358,426 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 970,971 | (237,841 | ) | |||||
| Inventories | 265,396 | (5,092,496 | ) | |||||
| Prepaid and other assets | 291,375 | (957,628 | ) | |||||
| Accounts payable | (635,973 | ) | 1,316,973 | |||||
| Accrued liabilities | (428,751 | ) | (848,488 | ) | ||||
| Net cash used in operating activities | (5,178,199 | ) | (7,809,289 | ) | ||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (633,393 | ) | (1,216,723 | ) | ||||
| Intangible asset additions | (10,149 | ) | - | |||||
| Net cash used in investing activities | (643,542 | ) | (1,216,723 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from the issuance of long-term debt | - | 22,741,719 | ||||||
| Payments on long-term debt | (34,308 | ) | (9,773,075 | ) | ||||
| Payments on capital leases | (110,045 | ) | (21,085 | ) | ||||
| Net proceeds from issuance of stock | 4,450,002 | 3,899,996 | ||||||
| Proceeds from exercise of options | 27,575 | 43,334 | ||||||
| Net cash provided by financing activities | 4,333,224 | 16,890,889 | ||||||
| Net change in cash and cash equivalents | (1,488,517 | ) | 7,864,877 | |||||
| Cash and cash equivalents at beginning of period | 4,926,066 | 751,111 | ||||||
| Cash and cash equivalents at end of period | $ | 3,437,549 | $ | 8,615,988 | ||||
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