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PURE Bioscience Reports Fiscal Third Quarter 2014 Financial Results

Early SDC Food Safety Revenue Led By QSR Commercial Market Test Rollout

SAN DIEGO, CA -- (Marketwired) -- 06/10/14 -- PURE Bioscience, Inc. (OTCQB: PURE), creator of the patented silver dihydrogen citrate (SDC) antimicrobial, today reported financial results for the second fiscal quarter ended April 30, 2014.

Fiscal Q3 Milestones
The Company reported that during the third fiscal quarter 2014, the new management team generated significant momentum in advancing its business strategy to commercialize its SDC-based technology as a food safety solution:

  • Extended commercial market test launch of PURE® Hard Surface Disinfectant to over 650 stores with a national brand QSR (quick service restaurant);
    • Positive customer field feedback on both SDC product performance and ease of use
    • Phased U.S. national rollout under development for expected system-wide launch
  • Rollout plans in development for wider plant adoption from five national food processors who placed commercial pilot orders;
    • Expanding SDC usage with enhanced hygiene and operating protocols
  • Reported outstanding initial test results for the application of SDC as a direct food contact processing aid for raw poultry;
    • Test results achieved undetectable levels of salmonella in raw poultry
      • Enhanced safety profile provides benefit to both plant environment and staff
    • Estimated potential addressable U.S. market opportunity for this new application exceeds $1 billion for poultry, produce and meats
    • Filing for required regulatory authorization from the FDA and USDA is expected later this month for poultry and Q3 2014 for produce and meats
    • Expected approval for U.S. commercial use by end of calendar 2014 for poultry

Summary of Results of Operations
Revenues for the third fiscal quarter of 2014 were $261,000, compared with revenues of $258,000 for the third fiscal quarter of 2013. Total operating costs and expenses, excluding share-based compensation, other share-based expenses, and restructuring costs, for the third fiscal quarter of 2014 and 2013, were $1.7 million, and $1.7 million, respectively. The net loss for the third fiscal quarter of 2014 was $(2.1) million, or $(0.07) per share, compared with a net loss of $(1.5) million, or $(0.14) per share, in the third fiscal quarter of 2013.

Revenues for the nine months ended April 30, 2014 were $417,000, compared with revenues of $631,000 for the nine months ended April 30, 2013. Total operating costs and expenses, excluding share-based compensation, other share-based expense, and restructuring costs, were $4.4 million, and $5.2 million, respectively, a reduction of 15%. The net loss for the nine months ended April 30, 2014 was $(8.4) million, or $(0.34) per share, compared with a net loss of $(5.5) million, or $(0.53) per share, in the nine months ended April 30, 2013. The adjusted net loss for the nine months ended April 30, 2014, as adjusted for significant items, was $(3.8) million compared with prior year adjusted net loss of $(4.9) million, a decrease of approximately a $1.1 million, or 22%.

As the Company continues to execute its new business strategy, it intends to:

  • Accelerate market penetration and revenue adoption of restaurant chains and food processors with SDC-based products
  • Leverage out-sourcing of its manufacturing operations
  • Out-license the SDC-technology platform to non-food markets
  • Secure additional capital to execute its business plan

Calendar 2014 Goals

  • Increase financial strength to accelerate strategy execution.
  • Secure customer adoption in food safety with 2+ national QSR chains and 5+ national food processors;
    a. Fiscal 4Q 2014 (July 31 2014): annual revenue run rate $3-$5M
    b. Fiscal 4Q 2015 (July 31 2015): positive EBITDA
  • Leverage outsourcing of operations and supply chain;
    a. Provide incremental cost savings and increase production scale
  • Secure FDA and USDA authorization for use of SDC as a direct food contact/processing aid;
    a. Initiate commercialization as a processing aid for poultry by end of calendar 2014
  • License PURE distribution and SDC applications to non-core markets.

Food Safety Solutions Provider
PURE's near-term business focus is to drive customer adoption of its products in the food industry. Its proprietary SDC-based products uniquely address food safety issues across the supply chain and help to prevent or mitigate food contamination and the potential for food-borne illness. The Company's target customers are foodservice operators, food processors and food manufacturers.

"This quarter operating results are in line with our expectations of completing the manufacturing technology transfer and initiating out-sourced production and distribution to our QSR market test and other customers," stated Peter C. Wulff, Chief Financial Officer and Chief Operating Officer. "We believe we are well positioned with our new operating structure to meet expected market demand."

Hank R. Lambert, Chief Executive Officer, said, "The recent progress we have made in extending the usage of PURE Hard Surface in QSRs and food processors, combined with compelling results generated by our testing of SDC as a processing aid for poultry, provide strong validation for our unique antimicrobial technology and give us great optimism for building revenue momentum in the coming months. We are increasingly confident that SDC will prove to be one of the most important advances in food safety in recent history."

Q3 Results Conference Call
The Company will host an investor conference call on Tuesday, June 10th, 2014 at 1:30pm PDT (4:30pm EDT).

The Participant Dial-In Number for the conference call is 1-412-902-6720. Participants should dial in to the call at least five minutes before 1:30pm PDT (4:30pm EDT) on June 10th, 2014. The call can also be accessed "live" or via replay online on the Company's website (http://www.purebio.com/about/investor_relations). The replay of the webcast will be available by dialing 1-877-870-5176 (international participants dial 1-858-384-5517) starting June 10th, 2014, at 7:30pm EDT through June 24th, 2014 at 11:59 pm EDT. Please use PIN Number 90610.

About PURE Bioscience, Inc.
PURE Bioscience, Inc. is focused on developing and commercializing its proprietary antimicrobial products that provide solutions to the health and environmental challenges of pathogen and hygienic control within the food industry. The Company's technology platform is based on patented stabilized ionic silver, and its initial products contain silver dihydrogen citrate, or SDC. SDC is a broad-spectrum, non-toxic antimicrobial agent, which offers 24-hour residual protection. As a platform technology, SDC is distinguished from existing products in the marketplace by its superior efficacy, reduced toxicity and the inability of bacteria to form a resistance to it. PURE is headquartered in El Cajon, California (San Diego metropolitan area). Additional information on PURE is available at www.purebio.com.

Forward-looking Statements
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the Company's cash position and liquidity requirements, the Company's failure to implement or otherwise achieve the benefits of its proposed business initiatives and plans, acceptance of the Company's current and future products and services in the marketplace, the ability of the Company to develop effective new products and receive regulatory approvals of such products, competitive factors, dependence upon third-party vendors, including to manufacture its products, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission, including our annual report on Form 10-K filed October 24, 2013. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

                        Pure Bioscience, Inc.
           Condensed Consolidated Statements of Operations

                             Nine months ended        Three months ended
                                 April 30,                 April 30,
                         ------------------------  ------------------------
                             2014         2013         2014         2013
                         -----------  -----------  -----------  -----------

Net product sales        $   417,000  $   631,000  $   261,000  $   258,000

Operating costs and
  Cost of goods sold         145,000      155,000       89,000       67,000
  Selling, general and
   administrative          3,506,000    4,093,000    1,338,000    1,332,000
  Research and
   development               750,000      979,000      248,000      283,000
   compensation            2,191,000      583,000      770,000      153,000
  Other share-based
   expenses                  308,000            -            -            -
  Restructuring costs      2,754,000            -            -            -
                         -----------  -----------  -----------  -----------
Total operating costs
 and expenses              9,654,000    5,810,000    2,445,000    1,835,000
                         -----------  -----------  -----------  -----------

Loss from operations      (9,237,000)  (5,179,000)  (2,184,000)  (1,577,000)

Other income (expense)
  Change in derivative
   liability                 (56,000)     270,000        3,000       30,000
  Interest expense, net       (7,000)    (591,000)      (2,000)      (2,000)
  Gain on extinguishment
   of debt                   727,000            -            -            -
  Other income
   (expense), net            198,000      (12,000)     134,000       15,000
                         -----------  -----------  -----------  -----------
Total other income
 (expense)                   862,000     (333,000)     135,000       43,000
                         -----------  -----------  -----------  -----------

Net loss                 $(8,375,000) $(5,512,000) $(2,049,000) $(1,534,000)
                         ===========  ===========  ===========  ===========

Basic and diluted net
 loss per share          $     (0.34) $     (0.53) $     (0.07) $     (0.14)
                         ===========  ===========  ===========  ===========

Shares used in computing
 basic and diluted net
 loss per share           24,479,959   10,310,721   27,864,746   11,255,833
                         ===========  ===========  ===========  ===========

                           Pure Bioscience, Inc.
                   Condensed Consolidated Balance Sheets

                                                 April 30,       July 31,
                                                    2014           2013
                                               -------------  -------------
Current assets
  Cash and cash equivalents                    $     416,000  $      32,000
  Accounts receivable, net                            34,000         18,000
  Inventories, net                                   387,000        365,000
  Prepaid expenses                                   194,000         71,000
                                               -------------  -------------
  Total current assets                             1,031,000        486,000

Property, plant and equipment, net                    42,000        146,000
Patents, net                                       1,378,000      1,430,000
                                               -------------  -------------

Total assets                                   $   2,451,000  $   2,062,000
                                               =============  =============

Liabilities and stockholders' equity (deficit)
Current liabilities
  Accounts payable                             $     529,000  $   1,134,000
  Restructuring liability                            512,000              -
  Note payable, current                                    -        368,000
  Accrued liabilities                                105,000        600,000
  Derivative liability                                10,000         51,000
                                               -------------  -------------
  Total current liabilities                        1,156,000      2,153,000

Note payable, less current portion                         -        887,000
Deferred rent                                              -         13,000
                                               -------------  -------------
Total liabilities                                  1,156,000      3,053,000
                                               -------------  -------------

Commitments and contingencies

Stockholders' equity (deficit)
  Preferred stock, $0.01 par value: 5,000,000
   shares authorized, no shares issued                     -              -
  Common stock, $0.01 par value: 100,000,000
   shares authorized, 28,555,500 shares issued
   and outstanding at April 30, 2014, and
   12,569,503 shares issued and outstanding at
   July 31, 2013                                     286,000        126,000
  Additional paid-in capital                      79,555,000     69,054,000
  Accumulated deficit                            (78,546,000)   (70,171,000)
                                               -------------  -------------
Total stockholders' equity (deficit)               1,295,000       (991,000)
                                               -------------  -------------

Total liabilities and stockholders' equity
 (deficit)                                     $   2,451,000  $   2,062,000
                                               =============  =============

                           Pure Bioscience, Inc.
               Reconciliation of Non-GAAP Financial Measures

                             Nine months ended        Three months ended
                                 April 30,                 April 30,
                         ------------------------  ------------------------
                             2014         2013         2014         2013
                         -----------  -----------  -----------  -----------

Net loss, as reported    $(8,375,000) $(5,512,000) $(2,049,000) $(1,534,000)

Add back significant
   compensation            2,191,000      583,000      770,000      153,000
  Other share-based
   expenses                  308,000            -            -            -
  Restructuring costs      2,754,000            -            -            -
  Gain on extinguishment
   of debt                  (727,000)                        -            -
                         -----------  -----------  -----------  -----------
Net loss, as adjusted
 for significant items   $(3,849,000) $(4,929,000) $(1,279,000) $(1,381,000)
                         -----------  -----------  -----------  -----------

Tom Hemingway
Redwood Investment Group
Email Contact

Terri MacInnis
VP of IR
Bibicoff + MacInnis, Inc.
Email Contact

Company Contact:
Peter C. Wulff
PURE Bioscience, Inc.
619-596-8600 ext.111
Email Contact

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