Molekule Reports Second Quarter 2023 Financial Results
Second Quarter 2023 Financial and Operational Highlights
(Unless otherwise stated, comparisons are made between Q2 2023 and Q2 2022 results)
- Revenues were
$13.2 million, an increase of 58% as compared to the first quarter of 2023.
- Gross profit was
$4.5 million, or $5.7 millionon an adjusted basis to exclude $1.2 millionof costs resulting from a step up in inventory value related to purchase accounting. Gross profit margin giving effect to the adjustment was 43%.
- Operating loss was
$11.7 million, or $8.7 millionon an adjusted basis to exclude $3.0 millionof one-time costs associated primarily with acquisitions.
- Net loss from operations was
$25.0 million, or $0.76per share, including the impacts of the one-time costs referred to above.
- Filter sales of
$9.5 millionincreased approximately 63% as compared to the first quarter of 2023 reflecting a strong and increasing base of recurring revenues.
- Announced statistically significant results from an approximately year-long research study which indicated that Molekule’s Air Pro purifier may reduce hospital length of stay by approximately two days in COVID-19 patients.
- Completed a
$10 millionprivate placement in May 2023with a single institutional investor. Additionally, the Company reached an agreement with its principal lender, to defer approximately $6.1 millionof principal payments through Q1 2025.
- Entered into a second one-year agreement with Veterans Integrated Services Network (“VISN 23”), to provide
Veterans Affairs(“VA”) center employees and veterans with real-time, IAQ monitoring and control systems across three VAservice centers. The agreement includes an option for up to five years and provides further opportunity for the Company to demonstrate the strength and versatility of its technology to the VHA network, which has 18 VISNs and over 1,200 facilities.
- Introduced new Alexa skill commands, including turning devices on or off, changing fan speeds or modes, and status checks for filters and indoor air quality. The commands allow consumers to have increased control over their air purification devices and are available on any Alexa-enabled device via the Alexa app.
- Achieved the most successful Amazon Prime Day in Company history with a 264% increase in purifier sales year over year reflecting our increasing profile within our category at Amazon.
- Launched Molekule 360, a first-of-its-kind Indoor Air Quality (“IAQ”) management solution. The new platform was created to allow enterprise-wide deployment for monitoring and control of thousands of Internet of Things (“IoT”) enabled devices from a single location, across multiple facilities and cities.
- Study published in Nature(1) demonstrated that portable air purifiers utilizing photoelectrochemical oxidation (“PECO”) filtration, reduce the allergic airway responses to aerosolized cat dander in an animal model. The study was completed to assess the ability of PECO technology to provide relief from allergy responses compared to traditional HEPA-based filtration alone. Molekule devices are the only air purifiers to use patented PECO technology to destroy pollutants.
- Devadoss, D., Surbaugh, K., Manevski, M., Wickramaratne, C., Chaput, D., Chung, A., de Leon, F., Chand, H. S., & Dhau, J. S. (2023). Indoor-air purification by photoelectrochemical oxidation mitigates allergic airway responses to aerosolized cat dander in a murine model. Scientific Reports, 13(1), 1-14. https://doi.org/10.1038/s41598-023-38155-0
Financial Results for Three Months and Six Months Ended
Revenues for the three months ended
For the three months ended
The change in fair value of the warrant liability was a non-cash loss of approximately
Net loss was approximately
Transaction Update and Full Year Outlook
Merger Agreement with Aura
As previously disclosed, on
Notwithstanding the termination of the Merger Agreement, we intend to continue discussions with Aura regarding mutually beneficial future sales, marketing and technology collaboration and intend to continue discussions regarding the parties’ current arrangements in connection with, and certain disagreements under, the Technology Collaboration Agreement and Co-Distribution Agreement entered into contemporaneously with the Merger Agreement.
Notwithstanding the successful launch of Molekule 360 hub, integration of software and device technologies and growth in organic revenues through sales of consumables and through important retail partnerships, the Company is exploring opportunities to reduce its cost base. Backlog and orders for our new indoor air quality solutions from enterprise and commercial customers have fallen below expectations for the second half of the year resulting in efforts to defer or eliminate excess costs while the Company continues to build a market and demand for its indoor air quality services and platform.
The Company is providing revenue guidance for the second half of 2023 of
Balance Sheet and Liquidity
Total current assets were approximately
Based on the current liquidity position of the Company and delays in orders from the B2B business, the Company's Board of Directors and management are continuing to explore various capital raising opportunities, including but not limited to a rights offering or private placement of securities, or other means of financing during the third quarter of 2023. Some or all of the net proceeds from any capital raise would be used to manage and help alleviate costs associated with developing our products and services, conducting research and development and funding operations.
In addition, the Company will continue to consider other ways to maximize shareholder value, including but not limited to cost-cutting measures to maximize available resources, as well as a potential restructuring or reorganization of the Company. The Company believes that any savings generated from such cost-reduction or restructuring activities which are ultimately adopted, along with any projected capital raise, would enable the Company to continue operations while the Company continues to seek new sources of financing to stabilize its finances and operations.
There can be no assurances, however, that the Company will be able to secure any such additional capital in the third quarter of 2023 or in the future, on acceptable terms and conditions, or at all, or that any cost-cutting measures and/or potential restructuring or reorganization of the Company will be sufficient to continue operations.
Financial results and analyses are available on the Company’s investor relations website: https://investors.molekule.com.
References to “Molekule” herein include
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon current beliefs and expectations of our management and are subject to known and unknown risks and uncertainties. Words or expressions such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,” “will,” “projects,” “could,” “should,” “would,” “seek,” “forecast,” or other similar expressions help identify forward-looking statements. Factors that could cause actual events to differ include, but are not limited to:
- general economic conditions in the markets where we operate;
- the impact of the COVID-19 pandemic and related prophylactic measures;
- expected timing of regulatory approvals and product launches;
- non-performance of third-party vendors and contractors;
- risks related to our ability to successfully sell our products and the market reception to and performance of our products, including our new Molekule 360 indoor air quality management solutions;
- the possibility that our products do not ultimately perform in line with our testing or that prior test results may not be replicated in future studies;
- our compliance with, and changes to, applicable laws and regulations;
- our limited operating history;
- our ability to manage growth;
- our ability to obtain additional financing when and if needed;
- our ability to expand product offerings;
- our ability to compete with others in our industry;
- our ability to protect our intellectual property;
- the ability of certain stockholders to determine the outcome of matters that require stockholder approval;
- our ability to retain the listing of our common stock on Nasdaq;
- our ability to defend against legal proceedings;
- success in retaining or recruiting, or changes required in, our officers, key employees or directors;
- the ability to successfully integrate
- the incurrence of unexpected costs, liabilities or delays relating to our merger with
- the risk that goodwill or identifiable intangible assets (including such items recorded with respect to our merger with
Molekule, Inc.) could become impaired; and our ability to successfully consummate acquisitions; and
- other economic, business, competitive, and regulatory factors affecting the businesses of the Company generally, including but not limited to those set forth in Molekule’s filings with the
SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Molekule’s latest annual report on Form 10-K, as amended, and other SECfilings.
Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. Although we believe that the expectations reflected in the forward-looking statements are reasonable based on information currently available, we cannot assure you that the expectations will prove to have been correct. Accordingly, you should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of the date of this release. We assume no obligation to revise or update any of the forward-looking statements to reflect events or circumstances after the date of this release or to reflect new information or the occurrence of unanticipated events.
Investor Relations Contacts
Chief Financial Officer, Molekule
|MOLEKULE GROUP, INC. AND SUBSIDIARIES
|Other current assets||34,074,855||2,722,296|
|Total current assets||39,344,231||24,784,953|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Total liabilities and stockholders' equity||$||125,440,012||$||29,158,886|
|MOLEKULE GROUP, INC. AND SUBSIDIARIES
Statements of Operations
|Three Months Ended|
|Cost of sales||8,763,888||36,126|
|Selling, general and administrative||15,005,356||4,105,066|
|Research and development||1,174,846||579,061|
|Total operating expenses||16,180,202||4,684,127|
|Loss from operations||(11,701,131||)||(4,649,335||)|
|Change in fair value of warrant liability||(12,050,500||)||(650,000||)|
|Total other expense||(1,310,767||)||—|
|Loss before income tax benefit||(25,062,398||)||(5,299,335||)|
|Income tax benefit||93,156||(127,058||)|
|Net loss per share:|
|Basic and diluted||$||(0.76||)||$||(0.37||)|
|Weighted-average common shares outstanding:|
|Basic and diluted||33,017,565||13,894,119|
|MOLEKULE GROUP, INC. AND SUBSIDIARIES
Statements of Cash Flows
|Three Months Ended
|Net cash flows used in operating activities||(11,285,744||)||(2,485,229||)|
|Net cash flows used in investing activities||(762,927||)||(125,990||)|
|Net cash flows provided by financing activities||9,546,208||14,000,551|
|Net increase in cash||(2,502,463||)||11,389,332|
|Cash, beginning of period||8,401,581||17,774,097|
|Cash, end of period||$||5,899,118||$||29,163,429|
Source: Molekule Group, Inc.