Guardion Health Sciences, Inc. (“Guardion” or the “Company”) (NASDAQ: GHSI), ), a specialty health sciences company that develops medical foods and medical devices in the ocular health space and nutraceutical products that the Company believes provide supportive health benefits to consumers, reported financial results for the three months and six months ended June 30, 2020.

Fiscal 2020 Financial Highlights (Unaudited) (all dollar amounts rounded to the nearest ‘000)

Three Months Ended June 30, 2020

  • Total revenue was $1,191,000 for the three months ended June 30, 2020, as compared to total revenue of $261,000 for the three months ended June 30, 2019, an increase of 356%, due to shipment of a large nutraceutical initial test order to Malaysian distributor
  • Completed shipment and cash collection of $890,000 for nutraceutical initial test order to Malaysian distributor
  • Medical foods sales up 26% year over year
  • Medical devices sales were down 75% year over year, primarily as a result of medical facility closures due to COVID-19 “Stay at Home” orders
  • Review and rationalization of product lines, resulting in the decision to wind-down the Trans-Cranial Doppler business unit at June 30, 2020
  • Net loss for the three months ended June 30, 2020 was ($707,000) or ($0.01) per share, as compared to a net loss of ($3,048,000) or ($0.14) per share for the three months ended June 30, 2019
  • Warrant exercises netted $999,000 in cash during the three months ended June 30, 2020
  • Ending cash balance at June 30, 2020 was $11,600,000
  • Recently published research shows an absorption rate three to four times higher, and thus similarly increased bioavailability, of Lumega-Z ® versus AREDS2 gel caps

Six Months Ended June 30, 2020

  • Total revenue was $1,437,000 for the six months ended June 30, 2020, as compared to total revenue of $504,000 for the six months ended June 30, 2019, an increase of 185%, due to shipment of a large nutraceutical initial test order to Malaysian distributor
  • Medical foods sales were up 33% year over year
  • Medical devices sales were down 57% as a result of medical facility closures due to COVID-19 “Stay at Home” orders
  • Net loss for the six months ended June 30, 2020 was ($3,054,000) or ($0.04) per share, as compared to a net loss of ($4,437,000) or ($0.21) per share for the six months ended June 30, 2019
  • Warrant exercises netted $4,549,000 in cash during the six months ended June 30, 2020      

Management Commentary

Robert N. Weingarten, Guardion’s recently appointed Chairman of the Board of Directors, commented, “The last few months have seen major changes in the executive leadership of Guardion Health Sciences, Inc., changes that the board believes are necessary to focus the Company on effective deployment of its capital and maximization of shareholder value.  These ongoing changes, some of which will take some time to develop and implement, include new research studies, development and roll-out of an e-commerce platform, enhanced trade promotion, and other programs and strategies that the Company expects will generate value over the long term, are being made to pave the way for a better and brighter future for Guardion and its shareholders.” 

Mr. Weingarten added, “The Board of Directors is working closely with Dr. David Evans, Ph.D., MBA, Guardion’s Chief Science Officer and Interim President and Interim Chief Executive Officer, and with Andrew Schmidt, who was recently appointed as Chief Financial Officer of the Company, to finalize plans to take advantage of the market and commercialization opportunities for the Company’s proprietary products and technologies.  The Company is focusing on expanding its product lines with unique formulas under a comprehensive branding strategy that is expected, over time, to result in a sustainable improvement in the operating performance of our business units.” 

Dr. David Evans, Ph.D., MBA, Guardion’s Chief Science Officer and Interim President and Interim Chief Executive Officer, commented, “I am encouraged by our strong second quarter revenues and the market opportunities that such sales in Asia indicate.  We are engaged in a wide-ranging series of discussions with existing and potential new distributors to identify additional business opportunities, both domestically and internationally.  The new leadership team and I are focused on implementing initiatives across our core product lines to continue this positive momentum through the rest of the year and beyond, particularly in light of signs that many doctors’ offices are reopening and patients are beginning to return for eye health care.”

Dr. Evans concluded, “From a scientific perspective, we are pleased with the newly published peer-review research demonstrating the superiority of our medical foods over the competition, as well as the commencement of new research studies to collect and publish data showing the excellent efficacy of our medical food products, which we believe will further validate the technology-based health benefits of our products.”

Andrew Schmidt, Guardion’s newly-appointed Chief Financial Officer, commented, “My financial team and I are focused on supporting the Company’s efforts to improve revenue growth and operational performance in the near-term.  I am looking forward to working with Dr. Evans and the rest of the Guardion management team to expand the distribution of our proprietary products and technologies through different channels, including by building an on-line commercial presence, as well as expanding international distribution.”       

Three Months Ended June 30, 2020 Financial Results

Total revenue for the second quarter of fiscal 2020 increased 356% to $1,191,000, as compared to $261,000 for the second fiscal quarter of 2019.  This increase was due to a large initial test order of a nutraceutical product placed by a Malaysian distributor and increased sales of medical food product lines, partially offset by a decrease in medical device sales which were affected by the impact of COVID-19 closures. 

Operating expenses for the second quarter of fiscal 2020 of $1,255,000 were significantly lower than operating expenses for the second quarter of fiscal 2019 of $2,976,000, primarily due to a one-time gain of $1,402,000 related to a reversal of stock-based compensation as a result of the resignation of the Company’s former President and Chief Executive Officer in June 2020.

Operating loss for the second quarter of fiscal 2020 was ($708,000), a decrease of $2,104,000 from the operating loss of ($2,812,000) for the second quarter of fiscal 2019.  Net loss for the second quarter of fiscal 2020 was ($707,000), or ($0.01) per share, as compared with a net loss of ($3,048,000), or ($0.14) per share, for the second quarter of fiscal 2019.

Six Months Ended June 30, 2020 Financial Results

Total revenue for the six months ended June 30, 2020 increased 185% to $1,437,000, as compared to $504,000 for the six months ended 2019.  This increase was due to a large initial test order of a nutraceutical product placed by a Malaysian distributor and increased sales of medical food product lines, partially offset by a decrease in medical device sales which were affected by the impact of COVID-19 closures.

Operating expense for the six months ended June 30, 2020 of $3,727,000 was lower than operating expense for the for the six months ended June 30, 2019 of $4,310,000, primarily due to a reduction of $965,000 in stock compensation expense, related to a reversal of stock-based compensation as a result of the resignation of the Company’s former President and Chief Executive Officer in June 2020.

Operating loss the six months ended June 30, 2020 was ($3,044,000), a decrease of $953,000 from the operating loss of ($3,997,000) for the six months ended June 30, 2019. Net loss for the six months ended June 30, 2020 was ($3,054,000), or ($0.04) per share, as compared with a net loss of ($4,437,000), or ($0.21) per share, for the six months ended June 30, 2019.

Earnings Conference Call

Guardion will conduct a conference call and webcast today at 4:30 p.m. Eastern Time (1:30pm Pacific Time) to discuss its fiscal 2020 second quarter results.  To access the live call, dial 800-353-6461 (United States and Canada) or +1 334-323-0501 (International) and give the participant passcode 7353998.  In addition, a live and archived webcast of the conference call will be accessible on the Investor Relations section of the Company’s website at www.guardionhealth.com.  In addition, a phone replay will be available approximately two hours following the end of the call and will remain available for one week.  To access the call replay dial-in information, please click here.

About Guardion Health Sciences, Inc.

Guardion is a specialty health sciences company that develops (i) medical foods and medical devices for the ocular health marketplace, and (ii) nutraceutical products that the Company believes provide supportive health benefits to consumers.  Information and risk factors with respect to Guardion and its business, including its ability to successfully develop and commercialize its proprietary products and technologies, may be obtained in the Company’s filings with the SEC at www.sec.gov.

About VectorVision®

VectorVision® specializes in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and ETDRS acuity vision testing.  Its patented standardization system provides the practitioner or researcher the ability to delineate very small changes in visual capability, either as compared to the population or from visit to visit.  VectorVision’s® patented technology is considered the standard of care for clinical trials. VectorVision® is a wholly owned subsidiary of Guardion.

About NutriGuard™

NutriGuard™ formulates high-quality nutraceuticals which are designed to supplement consumers’ diets.  NutriGuard uses industry standards to establish the safety and efficacy of the products it develops and markets, maintains that commitment through prudent manufacturing and quality assurance programs, and only uses manufacturers who comply with FDA current Good Manufacturing Practices (cGMP) requirements.  Guardion plans to increase NutriGuard’s existing customer base and build on its product platform by making NutriGuard products available to patients directly and through recommendations by their physicians.

Forward-Looking Statement Disclaimer

With the exception of the historical information contained in this news release, the matters described herein may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing.  These statements involve unknown risks and uncertainties that may individually or materially impact the matters discussed herein for a variety of reasons that are outside the control of the Company, including, but not limited to, the Company’s ability to raise sufficient financing to implement its business plan, the impact of the COVID-19 pandemic on the Company’s business, operations and the economy in general, and the Company’s ability to successfully develop and commercialize its proprietary products and technologies. Readers are cautioned not to place undue reliance on these forward- looking statements, as actual results could differ materially from those described in the forward-looking statements contained herein.  Readers are urged to read the risk factors set forth in the Company’s filings with the SEC, which are available at the SEC’s website (www.sec.gov).  The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations MKR Investor Relations, Inc. Todd Kehrli ghsi@mkr-group.com

                 
                 
Guardion Health Sciences, Inc.  
Condensed Consolidated Balance Sheets  
                 
    June 30,     December 31,  
    2020     2019  
    (Unaudited)        
Assets                
                 
Current assets                
Cash   $ 11,603,459     $ 11,115,502  
Accounts receivable     34,180       78,337  
Inventories     1,235,052       310,941  
Prepaid expenses     274,140       362,938  
Equipment held for sale     24,500       -  
                 
Total current assets     13,171,331       11,867,718  
                 
Deposits     11,751       11,751  
Property and equipment, net     304,534       374,638  
Right of use asset, net     496,387       572,714  
Intangible assets     50,000       50,000  
                 
Total assets   $ 14,034,003     $ 12,876,821  
                 
Liabilities and Stockholders’ Equity                
                 
Current liabilities                
Accounts payable   $ 332,787     $ 70,291  
Accrued expenses     162,461       175,052  
Due to former officer     311,458       -  
Derivative warrant liability     19,411       13,323  
Lease liability – current     157,119       151,568  
Total current liabilities     983,236       410,234  
                 
Lease liability – long term     355,127       434,747  
                 
Total liabilities     1,338,363       844,981  
                 
Commitments and contingencies                
                 
Stockholders’ Equity                
                 
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding     -       -  
Common stock, $0.001 par value; 250,000,000 shares authorized; 88,309,962 and 74,982,562 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively     88,310       74,983  
Additional paid-in capital     61,173,074       57,468,528  
Accumulated deficit     (48,565,744 )     (45,511,671 )
                 
Total stockholders’ equity     12,695,640       12,031,840  
                 
Total liabilities and stockholders’ equity   $ 14,034,003     $ 12,876,821  
                 
                                 
Guardion Health Sciences, Inc.  
Condensed Consolidated Statements of Operations  
                                 
    Three Months Ended     Six Months Ended  
June 30, June 30,
    2020     2019     2020     2019  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Revenue                                
Medical foods and nutraceuticals   $ 1,152,894     $ 104,448     $ 1,304,028     $ 204,382  
Medical devices     35,315       150,222       126,505       292,826  
Other     2,700       6,300       6,100       6,300  
Total revenue     1,190,909       260,970       1,436,633       503,508  
                                 
Cost of goods sold                                
Medical foods and nutraceuticals     628,205       40,681       695,291       78,953  
Medical devices     15,278       53,816       55,920       109,036  
Other     1,096       2,559       2,477       2,559  
Total cost of goods sold     644,579       97,056       753,688       190,548  
                                 
Gross profit     546,330       163,914       682,945       312,960  
                                 
Operating expenses                                
Research and development     44,581       77,688       75,769       106,716  
Sales and marketing     519,067       409,409       1,007,913       764,028  
General and administrative     1,712,183       2,489,011       3,228,698       3,439,633  
Costs related to resignation of former officer (including the reversal of previously recognized stock compensation expense of $1,401,582 and $965,295 during the three and six months ended June 30, 2020, respectively)     (1,052,223 )     -       (615,936 )     -  
Impairment loss on equipment held for sale     30,948       -       30,948       -  
                                 
Total operating expenses     1,254,556       2,976,108       3,727,392       4,310,377  
                                 
Loss from operations     (708,226 )     (2,812,194 )     (3,044,447 )     (3,997,417 )
                                 
Other (income) expense:                                
Interest expense     1,790       234,065       3,538       251,637  
Finance cost upon issuance of warrants     -       229,921       -       415,955  
Change in fair value of derivative warrants     (2,856 )     (227,832 )     6,088       (227,832 )
                                 
Total other (income) expense     (1,066 )     236,154       9,626       439,760  
                                 
Net loss   $ (707,160 )   $ (3,048,348 )   $ (3,054,073 )   $ (4,437,177 )
                                 
Net loss per common share – basic and diluted   $ (0.01 )   $ (0.14 )   $ (0.04 )   $ (0.21 )
Weighted average common shares outstanding – basic and diluted     86,567,215       22,537,943       82,598,791       21,628,758  
                                 
                                 
                                 
                                 
Guardion Health Sciences, Inc.  
Unaudited Segment Reporting Details  
                                 
    For the Three Months Ended June 30, 2020  
    Corporate     Medical Foods and Nutraceuticals     Medical Devices     Total  
                         
Revenue   $ 2,700     $ 1,152,894     $ 35,315     $ 1,190,909  
                                 
Cost of goods sold     1,096       628,205       15,278       644,579  
                                 
Gross profit     1,604       524,689       20,037       546,330  
                                 
Operating expenses     88,428       1,072,508       93,620       1,254,556  
                                 
Loss from operations   $ (86,824 )   $ (547,819 )   $ (73,583 )   $ (708,226 )
                                 
                                 
    For the Three Months Ended June 30, 2019  
    Corporate     Medical Foods and Nutraceuticals     Medical Devices     Total  
                         
Revenue   $ 6,300     $ 104,448     $ 150,222     $ 260,970  
                                 
Cost of goods sold     2,559       40,681       53,816       97,056  
                                 
Gross profit     3,741       63,767       96,406       163,914  
                                 
Operating expenses     72,021       2,643,725       260,362       2,976,108  
                                 
Loss from operations   $ (68,280 )   $ (2,579,958 )   $ (163,956 )   $ (2,812,194 )
                                 
                                 
    For the Six Months Ended June 30, 2020  
    Corporate     Medical Foods and Nutraceuticals     Medical Devices     Total  
                         
Revenue   $ 6,100     $ 1,304,028     $ 126,505     $ 1,436,633  
                                 
Cost of goods sold     2,477       695,291       55,920       753,688  
                                 
Gross profit     3,623       608,737       70,585       682,945  
                                 
Operating expenses     172,911       3,344,411       210,070       3,727,392  
                                 
Loss from operations   $ (169,288 )   $ (2,735,674 )   $ (139,485 )   $ (3,044,447 )
                                 
                                 
    For the Six Months Ended June 30, 2019  
    Corporate     Medical Foods and Nutraceuticals     Medical Devices     Total  
                         
Revenue   $ 6,300     $ 204,382     $ 292,826     $ 503,508  
                                 
Cost of goods sold     2,559       78,953       109,036       190,548  
                                 
Gross profit     3,741       125,429       183,790       312,960  
                                 
Operating expenses     120,783       3,719,338       470,256       4,310,377  
                                 
Loss from operations   $ (117,042 )   $ (3,593,909 )   $ (286,466 )   $ (3,997,417 )
                                 
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