Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): August 15, 2023 (August 14, 2023)

FUSE MEDICAL, INC.

(Exact name of Registrant as Specified in Its Charter)

Delaware

000-10093

59-1224913

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

1565 North Central Expressway

Suite 220 Richardson, Texas

75080

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (469) 862-3030

Not Applicable

(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 Instructions 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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		FZMD		OTCPink

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

The information in Item 2.02 of this report (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly provided by specific reference in such a filing.

On August 15, 2023, Fuse Medical, Inc. (the “Company”) issued a press release reporting the financial results of the Company for the second quarter ending June 30, 2023. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
99.1*		Press Release, dated August 15, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

SIGNATURES

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 thereunto duly authorized.

	Fuse Medical, Inc.

Date: August 15, 2023	By:	/s/ Lawrence Yellin
		Lawrence Yellin
		Chief Financial Officer and Director

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

Fuse Medical, Inc.

Attention: Lawrence Yellin, CFO

1565 North Central Expressway, Suite 220

Richardson, Texas 75080

Office (469) 862-3030

Facsimile (469) 862-3035

info@Fusemedical.com

FUSE MEDICAL, INC. ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

August 15, 2023

RICHARDSON, TX, [DATE] /Businesswire/ --On August 14, 2023, Fuse Medical, Inc. (OTCPINK: FZMD) (“Fuse” or the “Company”) an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace, filed its quarterly report on Form 10-Q for the quarter ended June 30, 2023 with the Securities and Exchange Commission (“SEC”).

Second Quarter 2023 Financial Highlights

●

Net revenues for the quarter ended June 30, 2023 were $5.0 million, compared to $4.7 million for the quarter ended June 30, 2022 which was an increase of approximately 7%.

●

For the quarter ended June 30, 2023, gross profit was $3.5 million, or 69% of revenues, compared to $2.6 million, or 57% of revenues, for the quarter ended June 30, 2022, which was an increase of 31%.

●

Selling, general, administrative, and other expenses (“SG&A”) for the quarter ended June 30, 2023 was approximately $1.6 million compared to $1.4 million for the quarter ended June 30, 2022.

●

Commissions expense for the quarter ended June 30, 2023 decreased to $1.4 million from $1.5 million for the quarter ended June 30, 2022, a decrease of approximately $14,702.

●

For the quarter ended June 30, 2023, net income was $307,588 compared to a loss of $322,936 for the quarter ended June 30, 2022, reflecting an increase in net income of $630,524.

●

For the quarter ended June 30, 2023, EBITDA was $401,574 compared to an EBITDA loss of $246,834 for the quarter ended June 30, 2022, reflecting an increase in EBITDA income of $648,408.

Christopher C. Reeg, Chief Executive Officer of Fuse Medical, commented, “We are pleased with our second quarter performance, as highlighted by a 7% increase in revenue, a 31% increase in gross profit, and a $648,408 increase in EBITDA over the prior-year period. Our implementation and achievement of strategic initiatives, which includes increasing our portfolio of Fuse branded and manufactured products, is reflected in our second quarter results.”

FOR IMMEDIATE RELEASE

Mr. Reeg further added, “Our growth for the remainder of 2023, and into 2024 is focused on continued design and development of unique medical devices for commercialization, new product launches in the orthopedics and spine marketplace, and expansion of our national distribution footprint. We expect the execution of these strategic initiatives to drive growth in the near term, while increasing our visibility as an emerging manufacturer of relevant medical devices.”

About Fuse Medical, Inc.

Fuse is an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace. We provide a comprehensive portfolio of products in the orthopedic total joints, sports medicine, trauma, foot and ankle space, as well as, degenerative and deformity spine, osteobiologics, wound care, and regenerative products. For more information about the Company, or if you’re interested in becoming a distributor of any Fuse’s products, please contact us at info@fusemedical.com or visit: www.fusemedical.com.

Forward Looking Statements

Certain statements in this press release, constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend,” or similar expressions or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based only on information available to the Company as of the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the Company’s filings with the Securities and Exchange Commission; the failure of the Company to close the transaction; and integration issues with the consolidated company. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events, or otherwise, except as required by law.

Note Regarding Use of Non-GAAP Financial Measurements:

The financial data contained in this press release includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission ("SEC"), including "EBITDA". The Company is presenting EBITDA because it believes that it provides useful information to investors about Fuse, its business and its financial condition. The Company defines EBITDA as net income or loss from continuing operations before the effects of interest expense, taxes, depreciation and amortization. The Company believes EBITDA is useful to investors because it is one of the measures used by the Company's Board of Directors and management to evaluate its business, including in internal management reporting, budgeting and forecasting processes, in comparing operating results across the business, as an internal profitability measure, as a component in evaluating the ability and the desirability of making capital expenditures and significant acquisitions, and as an element in determining executive compensation.

However, EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States of America ("GAAP"), and the items excluded from EBITDA are significant components in understanding and assessing financial performance. Therefore, EBITDA should not be considered a substitute for net income (loss) or cash flows from operating, investing, or financing activities. Because EBITDA is calculated before recurring cash charges including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business. There are a number of material limitations to the use of EBITDA as an analytical tool, including the following:

●

EBITDA does not reflect the Company's interest expense;

●

EBITDA does not reflect the Company's tax expense or the cash requirements to pay its taxes; and

●

Although depreciation and amortization are non-cash expenses in the period recorded, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect the cash requirements for such replacement.

The Company compensates for these limitations by relying primarily on its GAAP financial measures and by using EBITDA only as supplemental information. The Company believes that consideration of EBITDA, together with a careful review of its GAAP financial measures, is the most informed method of analyzing Fuse Medical, Inc.

The Company reconciles EBITDA to net income, and that reconciliation is set forth below. Because EBITDA is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Revenues and expenses are measured in accordance with the policies and procedures described in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

FOR IMMEDIATE RELEASE

FUSE MEDICAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in dollars, except share data)

	June 30,			December 31,
	2023			2022
	(Unaudited)
Assets
Current assets:
Cash	$	253,378		$	147,854
Accounts receivable, net of allowance of $200,798 and $290,500, respectively		3,433,900			3,996,860
Inventories, net of allowance of $1,521,421 and $1,778,173, respectively		9,026,923			9,494,506
Prepaid expenses and other current assets		104,363			126,022
Total current assets		12,818,564			13,765,242
Property and equipment, net		-			709
Long term accounts receivable, net of allowance of $5,172,858 and $4,330,883, respectively		3,401,297			2,832,764
Intangible assets, net		1,125,549			1,190,980
Goodwill		1,972,886			1,972,886
Total assets	$	19,318,296		$	19,762,581
Liabilities and Stockholders' Equity (Accumulated Deficit)
Current liabilities:
Accounts payable	$	4,238,209		$	5,700,236
Accrued expenses		5,605,104			4,540,366
Notes payable - related parties		350,000			150,000
Senior secured revolving credit facility		1,870,912			1,997,135
Total current liabilities		12,064,225			12,387,737
Notes payable - related parties		-			200,000
Earn-out liability		7,485,698			7,485,698
Total liabilities		19,549,923			20,073,435
Commitments and contingencies		-			-
Stockholders' equity (accumulated deficit)
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.01 par value; 100,000,000 shares authorized, 73,895,794 shares issued and outstanding as of June 30, 2023 and December 31, 2022		738,958			738,958
Additional paid-in capital		1,468,274			1,468,274
Accumulated deficit		(2,438,859	)		(2,518,086	)
Total stockholders' equity (accumulated deficit)		(231,627	)		(310,854	)
Total liabilities and stockholders' equity (accumulated deficit)	$	19,318,296		$	19,762,581

FOR IMMEDIATE RELEASE

FUSE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in dollars, except share data)

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2023		2022 Revised			2023		2022 Revised
Net revenues	$	4,997,212	$	4,668,290		$	8,981,667	$	9,222,628
Cost of revenues		1,528,321		2,028,497			2,696,723		3,771,806
Gross profit		3,468,891		2,639,793			6,284,944		5,450,822
Operating expenses:
Selling, general, administrative and other		1,618,160		1,422,768			3,324,487		3,132,309
Commissions		1,449,157		1,463,859			2,691,034		2,969,530
Depreciation and amortization		32,715		34,404			66,140		68,806
Total operating expenses		3,100,032		2,921,031			6,081,661		6,170,645
Operating (loss) profit		368,859		(281,238	)		203,283		(719,823	)
Other (income) expense:
Interest expense		54,024		36,527			111,217		69,485
Total other (income) expense		54,024		36,527			111,217		69,485
Net income (loss) before income tax		314,835		(317,765	)		92,066		(789,308	)
Income tax expense		7,247		5,171			12,839		10,027
Net income (loss)	$	307,588	$	(322,936	)	$	79,227	$	(799,335	)
Net income (loss) per common share - basic and diluted	$	0.00	$	(0.00	)	$	0.00	$	(0.01	)
Weighted average number of common shares outstanding - basic		70,321,566		70,321,566			70,321,566		70,321,566
Weighted average number of common shares outstanding - diluted		75,976,582		70,321,566			75,976,582		70,321,566

Supplemental Non-GAAP Disclosure
EBITDA
(unaudited)
	Three Months Ended June 30,					For the Six Months Ended June 30,
	2023		2022 Revised			2023		2022 Revised

Net income (loss)	$	307,588	$	(322,936	)	$	79,227	$	(799,335	)
Add (Deduct):
Income tax expense (benefit)		7,247		5,171			12,839		10,027
Interest expense		54,024		36,527			111,217		69,485
Depreciation and amortization		32,715		14,493			66,140		68,806
EBITDA	$	401,574	$	(266,745	)	$	269,423	$	(651,017	)

FOR IMMEDIATE RELEASE

FUSE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the Six Months Ended June 30,
	2023			2022 Revised
Cash flows from operating activities
Net income (loss)	$	79,227		$	(799,335	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		66,140			68,806
Stock based compensation		-			16,946
Provision for bad debts and discounts		(89,703	)		(102,595	)
Provision for long term accounts receivable		841,975			402,200
Provision for slow moving inventory		(256,752	)		(94,595	)
Changes in operating assets and liabilities:
Accounts receivable		652,663			666,843
Inventories		724,335			(526,213	)
Prepaid expenses and other current assets		21,659			(89,410	)
Long term accounts receivable		(1,410,508	)		(670,332	)
Accounts payable		(1,462,027	)		320,071
Accrued expenses		1,064,738			1,055,519
Net cash provided by operating activities		231,747			247,905

Cash flows from investing activities
Purchase of property and equipment		-			-
Net cash (used in) investing activities		-			-

Cash flows from financing activities
Net payments on senior secured revolving credit facility		(126,223	)		(197,099	)
Net cash (used in) financing activities		(126,223	)		(197,099	)

Net increase (decrease) in cash		105,524			50,806
Cash and cash equivalents - beginning of period		147,854			553,190
Cash and cash equivalents - end of period	$	253,378		$	603,996
Supplemental disclosure of cash flow information:
Cash paid for interest	$	92,833		$	50,796

Document And Entity Information	Aug. 14, 2023
Document Information [Line Items]
Entity, Registrant Name	FUSE MEDICAL, INC.
Document, Type	8-K
Document, Period End Date	Aug. 14, 2023
Entity, Incorporation, State or Country Code	DE
Entity, File Number	000-10093
Entity, Tax Identification Number	59-1224913
Entity, Address, Address Line One	1565 North Central Expressway
Entity, Address, Address Line Two	Suite 220
Entity, Address, City or Town	Richardson
Entity, Address, State or Province	TX
Entity, Address, Postal Zip Code	75080
City Area Code	469
Local Phone Number	862-3030
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	FZMD
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000319016