10-Q - PURE - Equibles

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR

THE QUARTERLY PERIOD ENDED APRIL 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

Commission

File Number 001-14468

PUREBioscience, Inc.

(Exactname of registrant as specified in its charter)

Delaware	33-0530289
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
9669 Hermosa Avenue<br><br> <br>Rancho Cucamonga, California	91730
---	---
(Address of principal executive offices)	(Zip Code)

Registrant’stelephone number, including area code: (619) 596-8600

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large<br> accelerated filer	☐	Accelerated<br> filer	☐
Non-accelerated<br> filer	☐	Smaller<br> reporting company	☒
Emerging<br> 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As

of June 14, 2022, there were 88,023,141 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

PURE

Bioscience, Inc.

Form

10-Q

for

the Quarterly Period Ended April 30, 2022

Table

of Contents

		Page
PART I	FINANCIAL INFORMATION
Item<br> 1.	Condensed Financial Statements	3
Item<br> 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item<br> 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item<br> 4.	Controls and Procedures	25
PART II	OTHER INFORMATION
Item<br> 1.	Legal Proceedings	26
Item<br> 1A.	Risk Factors	26
Item<br> 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item<br> 3.	Defaults Upon Senior Securities	27
Item<br> 4.	Mine Safety Disclosures	27
Item<br> 5.	Other Information	27
Item<br> 6.	Exhibits	28
	Signatures	29

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Part

I - Financial Information

Item1. Financial Statements

PURE

Bioscience, Inc.

Condensed

Consolidated Balance Sheets

			July 31, 2021

Assets
Current assets
Cash and cash equivalents	511,000		$	2,390,000
Accounts receivable	198,000			368,000
Inventories, net	301,000			332,000
Restricted cash	75,000			75,000
Prepaid expenses	25,000			32,000
Total current assets	1,110,000			3,197,000
Property, plant and equipment, net	697,000			740,000
Patents, net	311,000			366,000
Total assets	2,118,000		$	4,303,000
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	416,000		$	593,000
Accrued liabilities	134,000			138,000
Loan payable	—			239,000
Total current liabilities	550,000			970,000
Commitments and contingencies	-
Stockholders’ equity
Preferred stock, 0.01 par value: 5,000,000 shares authorized, no shares issued and outstanding	—			—
Common stock, 0.01 par value: 150,000,000 shares authorized, 88,023,141 shares<br> issued and outstanding at April 30, 2022, and 87,223,141 shares issued and outstanding at July 31, 2021	881,000			873,000
Additional paid-in capital	128,738,000			128,253,000
Accumulated deficit	(128,051,000	)		(125,793,000	)
Total stockholders’ equity	1,568,000			3,333,000
Total liabilities and stockholders’ equity	2,118,000		$	4,303,000

All values are in US Dollars.

See

accompanying notes.

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PURE

Bioscience, Inc.

Condensed

Consolidated Statements of Operations

(Unaudited)

	Nine Months Ended						Three months Ended
	April 30,						April 30,
	2022			2021			2022			2021
Net product sales	$	1,409,000		$	2,841,000		$	497,000		$	556,000
Royalty revenue		32,000			227,000			27,000			5,000
Total revenue		1,441,000			3,068,000			524,000			561,000
Cost of goods sold		553,000			1,250,000			199,000			246,000
Gross profit		888,000			1,818,000			325,000			315,000
Operating costs and expenses
Selling, general and administrative		3,127,000			3,136,000			977,000			1,036,000
Research and development		255,000			265,000			107,000			89,000
Total operating costs and expenses		3,382,000			3,401,000			1,084,000			1,125,000
Loss from operations		(2,494,000	)		(1,583,000	)		(759,000	)		(810,000	)
Other income (expense)
Interest expense, net		(3,000	)		(3,000	)		(1,000	)		(1,000	)
Gain on extinguishment of indebtedness, net		239,000			—			—			—
Total other income (expense)		236,000			(3,000	)		(1,000	)		(1,000	)
Net loss	$	(2,258,000	)	$	(1,586,000	)	$	(760,000	)	$	(811,000	)
Basic and diluted net loss per share	$	(0.03	)	$	(0.02	)	$	(0.01	)	$	(0.01	)
Shares used in computing basic and diluted net loss per share		87,741,639			87,157,857			87,925,388			87,223,141

See

accompanying notes.

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PURE

Bioscience, Inc.

Condensed

Consolidated Statement of Stockholders’ Equity

(Unaudited)

	Nine<br> Months Ended April 30, 2022													Nine<br> Months Ended April 30, 2021
	Common<br> Stock				Additional<br><br> Paid-In			Accumulated			Total<br><br> Stockholders’			Common<br> Stock				Additional<br><br> Paid-In			Accumulated			Total<br><br> Stockholders’
	Shares		Amount		Capital			Deficit			Equity			Shares		Amount		Capital			Deficit			Equity
Balances<br> at beginning of period		87,223,141	$	873,000	$	128,253,000		$	(125,793,000	)	$	3,333,000			87,072,951	$	871,000	$	127,414,000		$	(123,474,000	)	$	4,811,000
Share-based<br> compensation expense - stock options		—		—		431,000			—			431,000			—		—		621,000			—			621,000
Share-based<br> compensation expense - restricted stock units		—		—		62,000			—			62,000			—		—		62,000			—			62,000
Issuance<br> of common stock upon the exercise of stock options		—		—		—			—			—			150,190		2,000		(2,000	)		—			—
Issuance<br> of common stock for vested restricted stock units		800,000		8,000		(8,000	)		—			—			—		—		—			—			—
Net<br> loss		—		—		—			(2,258,000	)		(2,258,000	)		—		—		—			(1,586,000	)		(1,586,000	)
Balances<br> at end of period (Unaudited)		88,023,141	$	881,000	$	128,738,000		$	(128,051,000	)	$	1,568,000			87,223,141	$	873,000	$	128,095,000		$	(125,060,000	)	$	3,908,000
	Three<br> Months Ended April 30, 2022													Three<br> Months Ended April 30, 2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Common<br> Stock				Additional<br><br> Paid-In			Accumulated			Total<br><br> Stockholders’			Common<br> Stock				Additional<br><br> Paid-In		Accumulated			Total<br><br> Stockholders’
	Shares		Amount		Capital			Deficit			Equity			Shares		Amount		Capital		Deficit			Equity
Balances<br> at beginning of period (Unaudited)		87,873,141	$	879,000	$	128,617,000		$	(127,291,000	)	$	2,205,000			87,223,141	$	873,000	$	127,882,000	$	(124,249,000	)	$	4,506,000
Share-based<br> compensation expense - stock options		—		—		103,000			—			103,000			—		—		193,000		—			193,000
Share-based<br> compensation expense - restricted stock units		—		—		20,000			—			20,000			—		—		20,000		—			20,000
Issuance<br> of common stock for vested restricted stock units		150,000		2,000		(2,000	)		—			—			-		-		-		—			—
Net<br> loss		—		—		—			(760,000	)		(760,000	)		—		—		—		(811,000	)		(811,000	)
Balances<br> at end of period (Unaudited)		88,023,141	$	881,000	$	128,738,000		$	(128,051,000	)	$	1,568,000			87,223,141	$	873,000	$	128,095,000	$	(125,060,000	)	$	3,908,000

See

accompanying notes.

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PURE

Bioscience, Inc.

Condensed

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	April 30,
	2022			2021
Operating activities
Net loss	$	(2,258,000	)	$	(1,586,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation		493,000			683,000
Depreciation and amortization		162,000			133,000
Gain on extinguishment of indebtedness		(239,000	)
Changes in operating assets and liabilities:
Accounts receivable		170,000			868,000
Inventories		31,000			(21,000	)
Prepaid expenses		7,000			(19,000	)
Accounts payable and accrued liabilities		(181,000	)		(813,000	)
Net cash used in operating activities		(1,815,000	)		(755,000	)
Investing activities
Purchases of property, plant and equipment		(64,000	)		(504,000	)
Net cash used in investing activities		(64,000	)		(504,000	)
Financing activities
Net proceeds from payroll protection program loan		—			239,000
Net cash provided by financing activities		—			239,000
Net decrease in cash, cash equivalents, and restricted cash		(1,879,000	)		(1,020,000	)
Cash, cash equivalents, and restricted cash at beginning of period		2,465,000			3,914,000
Cash, cash equivalents, and restricted cash at end of period	$	586,000		$	2,894,000
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	511,000		$	2,819,000
Restricted cash	$	75,000		$	75,000
Total cash, cash equivalents and restricted cash	$	586,000		$	2,894,000

See

accompanying notes.

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PURE

Bioscience, Inc.

Notes

to Condensed Consolidated Financial Statements

(Unaudited)

For

the three and nine months ended April 30, 2022 and 2021

1.Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of PURE Bioscience, Inc. and its wholly owned subsidiary, ETI H2O Inc., a Nevada corporation. ETI H2O, Inc. currently has no business operations and no material assets or liabilities and there have been no significant transactions related to ETI H2O, Inc. during the periods presented in the condensed consolidated financial statements. All inter-company balances and transactions have been eliminated. All references to “PURE,” “we,” “our,” “us” and the “Company” refer to PURE Bioscience, Inc. and our wholly owned subsidiary.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information pursuant to the instructions to Form 10-Q and Article 10/Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter ended April 30, 2022 are not necessarily indicative of the results that may be expected for other quarters or the year ending July 31, 2022. The July 31, 2021 balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP and included in our Annual Report on Form 10-K. For more complete information, these unaudited financial statements and the notes thereto should be read in conjunction with the audited financial statements for the year ended July 31, 2021 included in our Annual Report on Form 10-K covering such period filed with the Securities and Exchange Commission, or SEC, on October 28, 2021.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

2.Liquidity and Going Concern

We

have a history of recurring losses, and as of April 30, 2022 we have incurred a cumulative net loss of $128,051,000. During the nine months ended April 30, 2022, we recorded a net loss of $2,258,000 on recorded net revenue of $1,441,000. In addition, during the nine months ended April 30, 2022 we used $1,879,000 in operating and investing activities resulting in a cash balance of $511,000 as of April 30, 2022. Our history of recurring operating losses, and negative cash flows from operating activities give rise to substantial doubt regarding our ability to continue as a going concern. The Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended July 31, 2021, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from our possible inability to continue as a going concern.

Our future capital requirements depend on numerous forward-looking factors. These factors may include, but are not limited to, the following: the acceptance of, and demand for, our products; our success and the success of our partners in selling our products; our success and the success of our partners in obtaining regulatory approvals to sell our products; the costs of further developing our existing products and technologies; the extent to which we invest in new product and technology development; and the costs associated with the continued operation, and any future growth, of our business. The outcome of these and other forward-looking factors will substantially affect our liquidity and capital resources.

Until we can continually generate positive cash flow from operations, we will need to continue to fund our operations with the proceeds of offerings of our equity and debt securities. However, we cannot ensure that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or to our stockholders. If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business.

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3.Significant Accounting Policies

RevenueRecognition

We account for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“Topic 606”). Under Topic 606, revenue is recognized at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer. This principle is applied using the following 5-step process:

1.	Identify<br> the contract with the customer
2.	Identify<br> the performance obligations in the contract
3.	Determine<br> the transaction price
4.	Allocate<br> the transaction price to the performance obligations in the contract
5.	Recognize<br> revenue when (or as) each performance obligation is satisfied

Under Topic 606, we recognize revenue when we satisfy a performance obligation by transferring control of the promised goods or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Our technology platform is based on patented stabilized ionic silver, and our initial products contain silver dihydrogen citrate, or SDC. SDC is a broad-spectrum, non-toxic antimicrobial agent, which offers 24-hour residual protection and formulates well with other compounds. We sell various configurations and dilutions of SDC direct to customers and through distributors. We currently offer PURE^®^ Hard Surface as a food contact surface sanitizer and disinfectant to restaurant chains, food processors and food transportation companies. We also offer PURE Control^®^ as a direct food contact processing aid.

Contract terms for unit price, quantity, shipping and payment are governed by sales agreements and purchase orders which we consider to be a customer’s contract in all cases. The unit price is considered the observable stand-alone selling price for the arrangements. Any promotional or sales discounts are applied evenly to the units sold for purposes of calculating standalone selling price.

Product sales generally consist of a single performance obligation that we satisfy at a point in time. We recognize product revenue when the following events have occurred: (a) we have transferred physical possession of the products, (b) we have a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products.

Our direct customer and distributor sales are invoiced based on received purchase orders. Our payment terms on invoiced direct customer and distributor sales range between 30 and 90 days after we satisfy our performance obligation. The majority of our customers are on 30 day payment terms. We currently offer no right of return on invoiced sales and maintain no allowance for sales returns.

Shipping and handling are treated as activities to fulfill promises to customers and any amounts billed to a customer, if applicable, represent revenues earned for the goods provided. Costs related to such shipping and handling billings are classified as cost of sales.

We do not have significant categories of revenue that may impact how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

A summary of our revenue by product type for the nine months ended April 30, 2022 and 2021 is as follows:

Summary of Revenue by Product

	April 30,
	2022		2021
PURE Hard Surface	$	1,158,000	$	2,815,000
SILVÉRION		251,000		26,000
Total	$	1,409,000	$	2,841,000

A summary of our revenue by product type for the three months ended April 30, 2022 and 2021 is as follows:

	April 30,
	2022		2021
PURE Hard Surface	$	352,000	$	556,000
SILVÉRION		145,000		—
Total	$	497,000	$	556,000

VariableConsideration

We record revenue from customers in an amount that reflects the transaction price we expect to be entitled to after transferring control of those goods or services. From time to time, we offer sales promotions on our products such as discounts. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur.

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Useof Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements, and the disclosures made in the accompanying notes to the consolidated financial statements. Actual results could differ materially from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term tangible and intangible assets, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services.

NetLoss Per Share

Basic

net loss per common share is computed as net loss divided by the weighted average number of common shares outstanding for the period. Our diluted net loss per common share is the same as our basic net loss per common share because we incurred a net loss during each period presented, and the potentially dilutive securities from the assumed exercise of all outstanding stock options, restricted stock units, and warrants would have an anti-dilutive effect. As of April 30, 2022 and 2021, stock options, warrants and shares issuable under restricted stock unit awards of 7,391,625 and 10,358,765, respectively, have been excluded from the computation of diluted shares outstanding.

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

	April 30,
	2022		2021
Common stock options		6,179,125		8,018,500
Restricted stock units		1,212,500		2,012,500
Warrants		—		327,765
Total		7,391,625		10,358,765

Inventory

Inventories are stated at the lower of cost or net realizable value, and net of a valuation allowance for potential excess or obsolete material. Cost is determined using the average cost method. Depreciation related to manufacturing is systematically allocated to inventory produced, and expensed through cost of goods sold at the time inventory is sold.

Inventories consist of the following:

Schedule of Inventories

	April 30,<br> <br>2022		July 31,<br> <br>2021
Raw materials	$	17,000	$	17,000
Finished goods		284,000		315,000
Inventories	$	301,000	$	332,000

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Share-BasedCompensation

We periodically issue stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. We account for such grants issued and vesting to employees based on ASC 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period.

We estimate the fair value of share-based payment awards at the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option. Share-based compensation expense is based on awards ultimately expected to vest, and therefore is reduced by expected forfeitures.

Impairmentof Long-Lived Assets

In accordance with GAAP, if indicators of impairment exist, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, we measure the amount of such impairment by comparing the carrying value of the asset to the fair value of the asset and we record the impairment as a reduction in the carrying value of the related asset and a charge to operating results. Estimating the undiscounted future cash flows associated with long-lived assets requires judgment, and assumptions could differ materially from actual results. During the three and nine months ended April 30, 2022 and 2021, no impairment of long-lived assets was indicated or recorded.

Concentrations

Grossproduct sales. For the three months ended April 30, 2022, three individual customers accounted for 29%, 14% and 11% of our net product sales, respectively. For the nine months ended April 30, 2022, three customers accounted for 14%, 12% and 10% of our net product sales, respectively. For the three months ended April 30, 2021, three individual customers accounted for 25%, 12% and 11% of our net product sales. For the nine months ended April 30, 2021, two customers accounted for 18% and 10% of our net product sales, respectively.

Accountsreceivable. As of April 30, 2022, we had accounts receivable from four customers that comprised of 15%, 14%, 12 and 11% of total accounts receivable, respectively. As of April 30, 2021, we had accounts receivable from three customers that comprised 22%, 15% and 13% of total accounts receivable, respectively.

*Purchases.*For the three months ended April 30, 2022, two vendors accounted for 26% and 12% of our purchases, respectively. For the nine months ended April 30, 2022, one vendor accounted for 21% of our purchases. For the three months ended April 30, 2021, two vendors accounted for 23% and 12% of our purchases, respectively. For the nine months ended April 30, 2021, one vendor accounted for 35% of our purchases.

Accountspayable. As of April 30, 2022, our largest vendor accounted for 25% of the total accounts payable. As of April 30, 2021, our largest three vendors accounted for 36%, 17% and 14% of the total trade accounts payable, respectively.

Segments

We operate in one segment for the manufacture and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, our chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements

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4.Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivable. The standard will replace today’s “incurred loss” approach with an “expected loss” model , under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As small business filer, the standard will be effective for us for interim and annual reporting periods beginning after December 15, 2022. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective January 1, 2024, for the Company. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements, but currently does not believe ASU 2020-06 will have a significant impact on the Company’s accounting.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures.

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Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures.

5.Debt

Receiptof CARES funding

In April 2021, we were funded $239,000 under the Payroll Protection Program (“PPP”) through California Bank and Trust. The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The CARES Act was established in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act is eligible to be forgiven provided that (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. The amount of loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels. Principal and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will be deferred for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan.

During

the nine months ended April 30, 2022, we applied and received loan forgiveness under the provisions of the CARES Act for the entire $239,000 loan. This amount was recorded as a gain on extinguishment of indebtedness on the Condensed Consolidated Statement of Operations during the nine months ended April 30, 2022.

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6.Stockholders’ Equity

RestrictedStock Units

The Company issues restricted stock unit awards (“RSUs”) to key management and as compensation for services to consultants and others. The RSUs typically vest over a two-year period and carry a ten-year term. Each RSU represents the right to receive one share of common stock, issuable at the time the RSU subsequently settles, as set forth in the Restricted Stock Unit Agreement. The Company determines that fair value of those awards at the date of grant, and amortizes those awards as an expense over the vesting period of the award. The shares earned under the grant are usually issued when the award settles at the end of the term.

On

October 4, 2018, the Board of Directors appointed Tom Myers as the Company’s Chief Operating Officer. In connection with Mr. Myers appointment, the Board agreed to grant him 500,000 RSUs upon the achievement by the Company of profitability for a fiscal quarter, after which such RSUs shall vest annually over the following three years. In May 2020, the 500,000 RSUs were formally granted to Mr. Myers due to the Company’s profitable April 30, 2020 fiscal quarter. During the nine months ended April 30, 2022 there were no Restricted Stock Units granted.

As

of July 31, 2021, the Company had granted 2,012,500 RSU’s of which 1,679,167 had vested. As of July 31, 2021, 333,333 RSU’s with a fair value of $144,000, remained unvested. None of the shares vested under the RSUs had been issued as of July 31, 2021.

During the nine months ended April 30, 2022 and 2021, the Company recognized $

62,000

of compensation cost relating to RSU’s previously granted to Mr. Tom Myers, the Company’s Chief Operating Officer, which are being amortized over their three year vesting term. As of April 30, 2022, there was $82,000 of unrecognized non-cash compensation cost related to the remaining 333,333 RSUs we expect to vest, which will be recognized over a weighted average period of 1.0 year.

During

the nine months ended April 30, 2022, 800,000 RSUs were issued and delivered. Of the 1,212,500 RSUs outstanding as of April 30, 2022, 879,167 RSUs are vested and issuable. These RSUs are issued upon settlement date which is defined as “for each Vested Unit, the earliest of (i) the ten-year anniversary of the Grant Date; (ii) sixty days after the date the Grantee’s Service ceases for any reason and such cessation constitutes a “separation from service” within the meaning of Section 409A of the Code; (iii) the date of Grantee’s death or (iv) the date of a Change in Control that constitutes a “change in control event” within the meaning of Section 409A of the Code”.

A summary of our restricted stock unit activity and related data is as follows:

Schedule of Restricted Stock Activity


Outstanding at July 31, 2021	2,012,500		1,679,167
Granted	—		—
Issued	(800,000	)	(800,000	)
Forfeited	—		—
Outstanding at April 30, 2022	1,212,500		879,167

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StockOption Plans

2007Equity Incentive Plan

In February 2016, we amended and restated our 2007 Equity Incentive Plan, the (“2007 Plan”), to, among other changes, increase the number of shares of common stock issuable under the 2007 Plan by 4,000,000 shares and extend the term of the 2007 Plan until February 4, 2026. The 2007 Plan provides for the grant of incentive and non-qualified stock options, as well as other share-based payment awards, to our employees, directors, consultants and advisors. These awards have up to a 10-year contractual life and are subject to various vesting periods, as determined by the Compensation Committee of the Board of Directors. As of April 30, 2022, there were approximately 1,552,000 shares available for issuance under the 2007 Plan.

2017Equity Incentive Plan

In

January 2021, we amended and restated our 2017 Equity Incentive Plan, the (“2017 Plan”), to, among other changes, increase the number of shares of common stock issuable under the 2017 Plan by 5,000,000 shares and extend the term of the 2007 Plan until January 2031. The 2017 Plan provides for the grant of incentive and non-qualified stock options, as well as other share-based payment awards, to our employees, directors, consultants and advisors. These awards have up to a 10-year contractual life and are subject to various vesting periods, as determined by the Compensation Committee of the Board of Directors. As of April 30, 2022, there were approximately 3,755,000 shares available for issuance under the 2017 Plan.

During the nine months ended April 30, 2022, we authorized the issuance of 170,000 stock options to new employees. The options have a fair value of $36,000 as determined by the Black Scholes option pricing model, vest between one and three years and carry a ten year term. During the nine months ended April 30, 2021, we authorized the issuance of 60,000 stock options to a consultant with a fair value of $48,000 as determined by the Black Scholes option pricing model. The options vest quarterly over one year and carry a five year term. There were no stock option grants during the three months ended April 30, 2022 and 2021.

A summary of our stock option activity is as follows:

Schedule of Stock Option Activity

			Weighted-<br> Average<br> Exercise <br>Price		Aggregate<br> Intrinsic<br> Value
Outstanding at July 31, 2021	8,644,125		$	0.76	$	124,000
Granted	170,000		$	0.29		2,000
Exercised	—		$	—		—
Expired	(2,635,000	)	$	1.05		—
Outstanding at April 30, 2022	6,179,125		$	0.62	$	—

The

weighted-average remaining contractual term of options outstanding at April 30, 2022 was 6.64 years.

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At

April 30, 2022, options to purchase 5,466,625 shares of common stock were exercisable. These options had a weighted-average exercise price of $0.64 and a weighted average remaining contractual term of 6.31 years. The total unrecognized compensation cost related to unvested stock option grants as of April 30, 2022 was approximately $150,000 and the weighted average period over which these grants are expected to vest is 0.83 years.

For

the nine months ended April 30, 2022 share-based compensation expense for stock options that vested during the period was $431,000. For the nine months ended April 30, 2021 share-based compensation expense for stock options that vested during the period was $621,000.

We use the Black-Scholes valuation model to calculate the fair value of stock options. Stock-based compensation expense is recognized over the vesting period using the straight-line method. The fair value of stock options was estimated at the grant date using the following weighted average assumptions:

Schedule of Fair Value Assumptions


Volatility	88.35.	%	104.93.	%
Risk-free<br> interest rate	1.17	%	0.18	%
Dividend<br> yield	0.0	%	0.0	%
Expected<br> life	5.59<br> years		2.81<br> years

Volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. Volatility is derived from the historical daily change in the market price of our common stock, as we believe that historical volatility is the best indicator of future volatility.

The risk-free interest rates used in the Black-Scholes calculations are based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve.

We have never paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. Accordingly, we have assumed no dividend yield for purposes of estimating the fair value of our share-based compensation.

The expected life of options was estimated using the average between the contractual term and the vesting term of the options.

7.Related Party Transactions

As

of April 30, 2022 and April 30, 2021, accounts payable include $136,000 and $63,600 in board fees due to officers and directors, respectively.

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8.Commitments and Contingencies

COVID-19

The COVID-19 pandemic has led to severe disruptions in general economic activities, as businesses and federal, state, and local governments take increasingly broad actions to mitigate this public health crisis. While we have experienced some delays related to final third-party validation of certain of our products and product rollouts by customers using PURE Control, we have not experienced a material disruption to our business. In addition, we previously benefited from increased demand from our customers for our PURE Hard Surface product due to a focus on surface disinfecting in response to attempting to prevent COVID-19 transmission. We subsequently experienced an abatement in such demand and cannot assure you that demand will stabilize. Additionally, we are beginning to experience supply chain issues with our various plastic packaging configurations and citric acid. Further, on a go-forward basis, we cannot guarantee the overall economic conditions will not affect our business, as these conditions may significantly negatively impact all aspects of our business. Our business is dependent on the continued health and productivity of our employees, including our sales staff and corporate management team.

Additionally, our liquidity could be negatively impacted if these conditions continue for a significant period of time and we may be required to pursue additional sources of financing to obtain working capital, maintain appropriate inventory levels, and meet our financial obligations. Currently, capital and credit markets have been disrupted by the crisis and our ability to obtain any required financing is not guaranteed and largely dependent upon evolving market conditions and other factors. Depending on the continued impact of the crisis, further actions may be required to improve our cash position and capital structure.

The extent to which the COVID-19 pandemic ultimately impacts our business, sales, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions resume and, more specifically, the effect it has on our customers and suppliers. Even after the COVID-19 pandemic has subsided, we may experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future.

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Item2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Allreferences in this Item 2 and elsewhere in this Quarterly Report to “PURE,” “we”, “our,” “us”and the “Company” refer to PURE Bioscience, Inc., a Delaware corporation, and our wholly owned subsidiary, ETI H2O, Inc.,a Nevada corporation. ETI H2O, Inc. currently has no business operations and no material assets or liabilities and there have been nosignificant transactions related to ETI H2O, Inc. during the periods presented in the condensed consolidated financial statements containedelsewhere in this Quarterly Report.

Thediscussion in this section contains forward-looking statements. These statements relate to future events or our future financial performance.We have attempted to identify forward-looking statements by terminology such as “anticipate,” “believe,” “can,”“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”“potential,” “predict,” “should,” “would” or “will” or the negative of theseterms or other comparable terminology, but their absence does not mean that a statement is not forward-looking. These statements areonly predictions and involve known and unknown risks, uncertainties and other factors, which could cause our actual results to differfrom those projected in any forward-looking statements we make. Several risks and uncertainties we face are discussed in more detailunder “Risk Factors” in Part II, Item 1A of this Quarterly Report or in the discussion and analysis below. You should, however,understand that it is not possible to predict or identify all risks and uncertainties and you should not consider the risks and uncertaintiesidentified by us to be a complete set of all potential risks or uncertainties that could materially affect us. You should not place unduereliance on the forward-looking statements we make herein because some or all of them may turn out to be wrong. We undertake no obligationto update any of the forward-looking statements contained herein to reflect future events and developments, except as required by law.The following discussion should be read in conjunction with the condensed consolidated financial statements and the notes to those financialstatements included elsewhere in this Quarterly Report on Form 10-Q.

Overview

We are focused on developing and commercializing proprietary antimicrobial products that provide safe and cost-effective solutions to the health and environmental challenges of pathogen and hygienic control. Our technology platform is based on patented stabilized ionic silver, and our initial products contain silver dihydrogen citrate, or SDC. SDC is a broad-spectrum, non-toxic antimicrobial agent, which offers 24-hour residual protection and formulates well with other compounds. As a platform technology, we believe SDC is distinguished from existing products in the marketplace because of its superior efficacy, reduced toxicity, non-causticity and the inability of bacteria to form a resistance to it.

We believe there is a significant market opportunity for our safe, non-toxic, non-caustic and effective SDC-based solutions. We currently offer PURE^®^ Hard Surface as a food contact surface sanitizer and disinfectant to restaurant chains, food processors and food transportation companies. We also offer PURE Control^®^ as a direct food contact processing aid. In addition to our direct sales efforts with PURE Hard Surface and PURE Control, we market and sell our SDC-based products indirectly through third-party distributors supporting various industries.

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BusinessStrategy

Our goal is to become a sustainable company by commercializing the SDC-based products we have developed with our proprietary technology platform. We are focused on delivering leading antimicrobial products that address food safety risks across the food industry supply chain. Key aspects of our business strategy include:

●	Expanding<br> sales and distribution for our products into the food industry with a focus on a dual track of food safety market opportunities:
●	Hard Surface Disinfectant - commercializing our current EPA registered PURE Hard Surface disinfectant and sanitizer for use in<br> foodservice operations, food manufacturing and food transportation.
---	---
●	Direct Food Contact - commercializing FDA approved PURE Control as a direct food contact processing aid for fresh produce; commercializing<br> FDA approved PURE Control as a food processing and intervention aid for food processors treating raw poultry in pre and post on-line<br> reprocessing.
●	Continuing<br> to grow and establish new strategic alliances to maximize the commercial potential of our technology platform;
---	---
●	Continuing<br> to partner with third parties who are seeking, or intend to seek, approvals to market SDC-based products in markets outside the U.S.
●	Developing<br> additional proprietary products and applications; and
●	Protecting<br> and enhancing our intellectual property.

In addition to our current products addressing food safety, we intend to leverage our technology platform through licensing and distribution collaborations in order to develop new products and enter into new markets that could potentially generate multiple sources of revenue.

FinancialOverview

This financial overview provides a general description of our revenue and expenses.

NetProduct Sales

We contract manufacture and sell SDC-based products for end use, and as a raw material for manufacturing use. We recognize revenue when we satisfy a performance obligation by transferring control of the promised goods or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Any amounts received prior to satisfying revenue recognition criteria are recorded as deferred revenue. See “Critical Accounting Policies and Estimates – Revenue Recognition”.

Costof Goods Sold

Cost of goods sold for product sales includes direct and indirect costs to manufacture products, including materials consumed, manufacturing overhead, shipping costs, salaries, benefits, reserved inventory, and related expenses of operations. Depreciation related to manufacturing is systematically allocated to inventory produced, and expensed through cost of goods sold at the time inventory is sold.

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Selling,General and Administrative

Selling, general and administrative expense consists primarily of salaries and other related costs for personnel in business development, sales, finance, accounting, information technology, and executive functions. Other selling, general and administrative costs include product marketing, advertising, and trade show costs, as well as public relations and investor relations, facility costs, and legal, accounting and other professional fees.

Researchand Development

Our research and development activities are focused on leveraging our technology platform to develop additional proprietary products and applications. Research and development expense consists primarily of personnel and related costs, product registration expenses, and third-party testing. We expense research and development costs as incurred.

OtherIncome (Expense)

We record interest income, interest expense, the change in derivative liabilities, as well as other non-operating transactions, as other income (expense) in our consolidated statements of operations.

COVID-19

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Resultsof Operations

Fluctuationsin Operating Results

Our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future. We anticipate that our results of operations will be affected for the foreseeable future by several factors that may contribute to these periodic fluctuations, including fluctuations in the buying patterns of our current or potential customers for which we have no visibility, the mix of product sales including a change in the percentage of higher or lower margin formulations and packaging configurations of our products, the cost of product sales including component costs, our inability for any reason to be able to meet demand, the achievement and timing of research and development and regulatory milestones, unforeseen changes in expenses, including non-cash expenses such as the fair value of equity awards granted and the fair value change of derivative liabilities, the calculation of which includes several variable assumptions, and unforeseen manufacturing or supply issues, among other issues. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a reliable indication of our future performance. As of the date of this filing, we are not aware of any trends in these factors or events or conditions that we believe are reasonably likely to impact our results of operations in the future.

Comparisonof the Three Months Ended April 30, 2022 and 2021

NetProduct Sales

Net product sales were $497,000 and $556,000 for the three months ended April 30, 2022 and 2021, respectively. The decrease of $59,000 was attributable to decreased sales across our distribution network servicing the food processing, transportation and janitorial industry. Our top three customers accounted for $269,000 of net product sales for the three months ended April 30, 2022.

For the three months ended April 30, 2022, three individual customers accounted for 29%, 14% and 11% of our net product sales, respectively. No other individual customer accounted for 10% or more of our net product sales. All of our net product sales were U.S. based sales.

For the three months ended April 30, 2021, three individual customers accounted for 25%, 12% and 11% of our net product sales, respectively. No other individual customer accounted for 10% or more of our net product sales. All of our net product sales were U.S. based sales.

During the three months ended April 30, 2022 and 2021, we recognized $27,000 and $5,000 in royalties from a nonexclusive third-party distributor, respectively.

Costof Goods Sold

Cost of goods sold was $199,000 and $246,000 for the three months ended April 30, 2022 and 2021, respectively. The decrease of $47,000 was primarily attributable to decreased product sales.

Gross margin as a percentage of net product sales, or gross margin percentage, was 60% and 56% for the three months ended April 30, 2022 and 2021, respectively. The increase in gross margin percentage was primarily attributable to the sale of higher margin formulations and packaging configurations of our products during the quarter ended April 30, 2022 as compared with the prior period.

Selling,General and Administrative Expense

Selling, general and administrative expense was $977,000 and $1,036,000 for the three months ended April 30, 2022 and 2021, respectively. The decrease of $59,000 was primarily attributable to decreased personnel costs and facilities expenses. These decreases were partially offset by increased marketing, travel and professional service expense.

Share-based compensation expense, included in selling, general and administrative expense, was $123,000 and $213,000 for the three months ended April 30, 2022 and 2021, respectively. The decrease of $90,000 is primarily due to the prior year vesting of stock options and restricted stock units granted to employees, directors and consultants supporting our selling, general and administrative functions.

Researchand Development Expense

Research and development expense, primarily consisting of third-party fees and personnel costs, was $107,000 and $89,000 for the three months ended April 30, 2022 and 2021, respectively. The increase of $18,000 was due to increased personnel costs.

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Comparisonof the Nine Months Ended April 30, 2022 and 2021

NetProduct Sales

Net product sales were $1,409,000 and $2,841,000 for the nine months ended April 30, 2022 and 2021, respectively. During the prior year the Company experienced a significant increase in sales due to the onset of the COVID-19 pandemic. There was no such increase during the current period. As a result, our comparable nine month product revenue decreased by $1,432,000. The decrease was attributable to decreased sales across our distribution network servicing the food processing, transportation and janitorial industry. Our top five customers accounted for $739,000 of net product sales for the nine months ended April 30, 2022.

For the nine months ended April 30, 2022, three individual customers accounted for 14%, 12% and 10% of our net product sales, respectively. No other individual customer accounted for 10% or more of our net product sales. All of our net product sales were U.S. based sales.

For the nine months ended April 30, 2021, two individual customers accounted for 18% and 10% of our net product sales, respectively. No other individual customer accounted for 10% or more of our net product sales. All of our net product sales were U.S. based sales.

During the nine months ended April 30, 2022 and 2021, we recognized $32,000 and $227,000 in royalties from a nonexclusive third-party distributor, respectively.

Costof Goods Sold

Cost of goods sold was $553,000 and $1,250,000 for the nine months ended April 30, 2022 and 2021, respectively. The decrease of $697,000 was primarily attributable to decreased product sales.

Gross margin as a percentage of net product sales, or gross margin percentage, was 61% and 56% for the nine months ended April 30, 2022 and 2021, respectively. The increase in gross margin percentage was primarily attributable to the sale of higher margin formulations and packaging configurations of our products during the nine months ended April 30, 2022, as compared with the prior period.

Selling,General and Administrative Expense

Selling, general and administrative expense was $3,127,000 and $3,136,000 for the nine months ended April 30, 2022 and 2021, respectively. The decrease of $9,000 was primarily attributable to decreased personnel costs and legal fees. These decreases were partially offset by increased professional service costs, travel and marketing expense and board fees.

Share-based compensation expense, included in selling, general and administrative expense, was $493,000 and $683,000 for the nine months ended April 30, 2022 and 2021, respectively. The decrease of $190,000 is primarily due to the prior year vesting of stock options and restricted stock units granted to employees, directors and consultants supporting our selling, general and administrative functions.

Researchand Development Expense

Research and development expense was $255,000 and $265,000 for the nine months ended April 30, 2022 and 2021, respectively. The decrease of $10,000 was due to a reduction in third-party fees.

OtherIncome (Expense)

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Liquidityand Capital Resources

As of April 30, 2022, we had $511,000 in cash and cash equivalents compared with $2,390,000 in cash and cash equivalents as of July 31, 2021. The net decrease in cash and cash equivalents was primarily attributable to the use of cash to fund our operations and investments in property, plant and equipment. Additionally, as of April 30, 2022, we had $550,000 of current liabilities, including $416,000 in accounts payable, compared with $970,000 of current liabilities, including $593,000 in accounts payable as of July 31, 2021. The net decrease in current liabilities was primarily due to trade payables due to our contract manufacture and the forgiveness of the PPP Loan discussed above.

We have a history of recurring losses, and as of April 30, 2022 we have incurred a cumulative net loss of $128,051,000. During the nine months ended April 30, 2022, we recorded a net loss of $2,258,000 on recorded net revenue of $1,441,000. In addition, during the nine months ended April 30, 2022 we used $1,879,000 in operating and investing activities resulting in a cash balance of $511,000 as of April 30, 2022. Our history of recurring operating losses, and negative cash flows from operating activities give rise to substantial doubt regarding our ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from our possible inability to continue as a going concern.

Until we can continually generate positive cash flow from operations, we will need to continue to fund our operations with the proceeds of offerings of our equity and debt securities. However, we cannot assure you that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or to our stockholders. If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business.

CriticalAccounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

In addition, the condensed consolidated financial statements included in this Quarterly Report have been prepared and presented on a basis assuming we will continue as a going concern. Until we can generate significant cash from operations, we expect to continue to fund our operations with the proceeds of offerings of our equity and debt securities. However, we cannot assure you that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or to our stockholders. If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business. Further, any contracts or license arrangements we enter into to raise funds may require us to relinquish our rights to our products or technology, and we cannot assure you that we will be able to enter into any such contracts or license arrangements on acceptable terms, or at all. Having insufficient funds may require us to delay or scale back our marketing, distribution and other commercialization activities or cease our operations altogether. Our financial statements do not include any adjustment relating to recoverability or classification of recorded assets and classification of recorded liabilities.

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We believe the following accounting policies and estimates are critical to aid you in understanding and evaluating our reported financial results.

RevenueRecognition

We recognize revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“Topic 606”). Under Topic 606, revenue is recognized at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer. This principle is applied using the following 5-step process:

1.	Identify<br> the contract with the customer
2.	Identify<br> the performance obligations in the contract
3.	Determine<br> the transaction price
4.	Allocate<br> the transaction price to the performance obligations in the contract
5.	Recognize<br> revenue when (or as) each performance obligation is satisfied

We do not have significant categories of revenue that may impact how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

We do not allow for returns, except for damaged products when the damage occurred pre-fulfillment. Damaged product returns have historically been insignificant. Because of this, the stand-alone nature of our products, and our assessment of performance obligations and transaction pricing for our sales contracts, we do not currently maintain a contract asset or liability balance for obligations. We assess our contracts and the reasonableness of our conclusions on a quarterly basis.

The Company’s licensing contracts typically provide for royalties based on the licensee’s sales of various configurations of PURE Hard Surface. The Company records its royalty revenue in the month in which the licensee sold our products to end users. Payments are generally received in the subsequent month.

VariableConsideration

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Share-BasedCompensation

We grant equity-based awards under share-based compensation plans or stand-alone contracts. We estimate the fair value of share-based payment awards using the Black-Scholes option valuation model. This fair value is then amortized over the requisite service periods of the awards. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option. Share-based compensation expense is based on awards ultimately expected to vest, and therefore is reduced by expected forfeitures. Changes in assumptions used under the Black-Scholes option valuation model could materially affect our net loss and net loss per share.

Impairmentof Long-Lived Assets

RecentAccounting Pronouncements

See Note 4 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

OffBalance Sheet Arrangements

We do not have any off balance sheet arrangements.

Item3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, or the Exchange Act, and as provided in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

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Item4. Controls and Procedures

Evaluationof Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission, or SEC, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As required by Rule 13a-15(b) under the Exchange Act, our management conducted an evaluation, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on the foregoing evaluation, our Principal Executive Officer and Principal Financial Officer concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective.

Changesin Internal Control Over Financial Reporting

In connection with the evaluation required by Exchange Act Rule 13a-15(d), our management, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial Officer, concluded that there were no changes in our internal controls over financial reporting during the nine months ended April 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART

II – Other Information

Item1. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of our business. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and any adverse result in these or other matters may arise from time to time that could harm our business. We are not currently aware of any such legal proceedings or claims to which we or our wholly owned subsidiary is a party or of which any of our property is subject that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.

Item1A. Risk Factors

Inevaluating us and our common stock, we urge you to carefully consider the risks and other information in this Quarterly Report on Form10-Q, including the risk factor included below, as well as the risk factors disclosed in Item 1A. to Part I of our Annual Report on Form10-K for the fiscal year ended July 31, 2021, which we filed with the SEC on October 28, 2021 (the “Form 10-K”). Other thanthe risk factor included below, the risks and uncertainties described in “Item 1A — Risk Factors” of our Form 10-Khave not materially changed. Any of the risks discussed in this Quarterly Report on Form 10-Q, including the risk factor included below,or any of the risks disclosed in “Item 1A — Risk Factors” of our Form 10-K, as well as additional risks and uncertaintiesnot currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financialcondition or prospects.

RisksRelated to Our Business and Industry

Asa result of our historical lack of financial liquidity, we do not currently have sufficient working capital to fund our planned operationsand may not be able to continue as a going concern.

We have a history of recurring losses, and as of April 30, 2022 we have incurred a cumulative net loss of $128,051,000. During the nine months ended April 30, 2022, we recorded a net loss of $2,258,000 on recorded net revenue of $1,441,000. In addition, during the nine months ended April 30, 2022 we used $1,879,000 in operating and investing activities resulting in a cash balance of $511,000 as of April 30, 2022. As a result, our existing cash resources are not sufficient to meet our anticipated needs over the next twelve months from the date hereof, and we will need to raise additional capital to continue our operations and to implement our business plan, which capital may not be available on acceptable terms or at all.

Our capital requirements will depend on many factors, including, among others:

●	the<br> market acceptance of, and demand for, our products;
●	the<br> timing and costs of executing our sales and marketing strategies;
●	our<br> ability to successfully complete the in-plant validation trials requested by potential customers and our ability to convert these<br> trials into customer orders for our products;
●	the<br> costs and time required to obtain the necessary regulatory approvals for our products, including the required USDA approvals:
●	the<br> extent to which we invest in new testing and product development, including in-plant optimization trials;
●	the<br> extent to which our customers continue to place product orders as expected and expand their existing use of our products;
●	the<br> cost and time to satisfy unique customer requirements regarding validation trials or to support the value proposition and benefits<br> of our products;
●	the<br> timing of vendor payments and the collection of receivables, among other factors affecting our working capital;
●	our<br> ability to control the timing and amount of our operating expenses, including the costs to attract and retain personnel with the<br> skills required to implement our business plan; and
●	the<br> costs to file, prosecute and defend our intellectual property rights.

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The above factors, along with our history and near term forecast of incurring net losses and negative operating cash flows, raise substantial doubt about our ability to continue as a going concern. If we do not obtain additional capital from external sources, we will not have sufficient working capital to fund our planned operations or be able to continue as a going concern. We cannot assure you that additional financing will be available when needed or that, if available, we can obtain financing on terms favorable to us or to our stockholders. If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business. Further, any contracts or license arrangements we enter into to raise funds may require us to relinquish our rights to our products or technology, and we cannot assure you that we will be able to enter into any such contracts or license arrangements on acceptable terms, or at all. Having insufficient funds may require us to delay or scale back our marketing, distribution and other commercialization activities or cease our operations altogether.

Thecurrently evolving situation related to the COVID-19 pandemic could adversely affect our business, financial condition and results ofoperations.

The extent to which the COVID-19 pandemic ultimately impacts our business, sales, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions resume and, more specifically, the effect it has on our customers and suppliers. Even after the COVID-19 pandemic has subsided, we may experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future.

Item2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item3. Defaults Upon Senior Securities

None.

Item4. Mine Safety Disclosures

Not Applicable.

Item5. Other Information

None.

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Item6. Exhibits

The following Exhibits are filed as part of this report pursuant to Item 601 of Regulation S-K:

3.1	Certificate of Incorporation of PURE Bioscience, Inc. (incorporated by reference to Exhibit 3.1 of the Annual Report on Form 10-K filed with the SEC on October 29, 2012)
3.1.1	Certificate of Amendment to Certificate of Incorporation of PURE Bioscience, Inc. (incorporated by reference to Exhibit 3.1.1 of the Annual Report on Form 10-K filed with the SEC on October 29, 2012)
3.1.2	Certificate of Amendment to Certificate of Incorporation of PURE Bioscience, Inc. (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the SEC on May 19, 2021).
3.2	Bylaws of PURE Bioscience, Inc. (incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K, filed with the SEC on October 29, 2012)
3.2.1	Amendment to the Bylaws of PURE Bioscience, Inc. (incorporated by reference to Exhibit 3.2.1 to the Annual Report on Form 10-K, filed with the SEC on October 29, 2012)
31.1<br> *	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2<br> *	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1<br> *	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2<br> *	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101<br> *	The<br> following materials from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2022, formatted<br> in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at April 30, 2022 and July 31,<br> 2021; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended April 30, 2022 and 2021; (iii) Condensed<br> Consolidated Statements of Stockholders’ equity for the three and nine months ended April 30, 2022 and 2021 ;(iv) Condensed<br> Consolidated Statements of Cash Flows for the nine months ended April 30, 2022 and 2021; and (v) Notes to Condensed Consolidated<br> Financial Statements.
104*	Cover<br> Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*	Filed<br> herewith.
---	---

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Signatures

Pursuant to the requirement 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.

	PURE BIOSCIENCE, INC.
Date:<br> June 14, 2022	By:	/s/ TOM Y. LEE
		Tom<br> Y. Lee, Chief Executive Officer<br><br> <br>(Principal<br> Executive Officer)
Date:<br> June 14, 2022	By:	/s/ MARK S. ELLIOTT
		Mark<br> S. Elliott, Vice President, Finance
		(Principal<br> Financial and Accounting Officer)

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Exhibit31.1

CERTIFICATIONOF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEYACT OF 2002

I, Tom Y. Lee, Chief Executive Officer of PURE Bioscience, Inc., certify that:

1.	I<br> have reviewed this report on Form 10-Q of PURE Bioscience, Inc.;
2.	Based<br> on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary<br> to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the<br> period covered by this report;
3.	Based<br> on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material<br> respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in<br> this report;
4.	The<br> registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures<br> (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange<br> Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br> to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others<br> within those entities, particularly during the period in which this report is being prepared;
	b)	Designed<br> such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our<br> supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements<br> for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about<br> the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;<br> and
	d)	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br> most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,<br> or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The<br> registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over<br> financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or<br> persons performing the equivalent functions):
	(a)	All<br> significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are<br> reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;<br> and
	(b)	Any<br> fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br> internal control over financial reporting.
Date:<br> June 14, 2022	By:	/s/ Tom Y. Lee
---	---	---
		Tom<br> Y. Lee
		Chief Executive Officer
		(Principal<br> Executive Officer)

Exhibit31.2

CERTIFICATIONOF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER PURSUANT TO

SECTION302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark S. Elliott, Vice President, Finance and Principal Financial and Accounting Officer of PURE Bioscience, Inc., certify that:

1.	I<br> have reviewed this report on Form 10-Q of PURE Bioscience, Inc.;
2.	Based<br> on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary<br> to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the<br> period covered by this report;
3.	Based<br> on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material<br> respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in<br> this report;
4.	The<br> registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures<br> (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange<br> Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br> to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others<br> within those entities, particularly during the period in which this report is being prepared;
	b)	Designed<br> such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our<br> supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements<br> for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about<br> the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;<br> and
	d)	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br> most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,<br> or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The<br> registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over<br> financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or<br> persons performing the equivalent functions):
	(a)	All<br> significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are<br> reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;<br> and
	(b)	Any<br> fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br> internal control over financial reporting.
Date:<br> June 14, 2022	By:	/s/ MARK S. ELLIOTT
---	---	---
		Mark<br> S. Elliott
		Vice President, Finance
		(Principal<br> Financial and Accounting Officer)

Exhibit32.1

CERTIFICATION

PURSUANTTO 18 U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Pure Bioscience, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i)	the<br> accompanying report on Form 10-Q of the Company for the period ended April 30, 2022, to which this Certificate is attached (the “Report”)<br> fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
(ii)	the<br> information contained in the Report fairly presents, in all material respects, the financial condition and results of operations<br> of the Company.
Date:<br> June 14, 2022	By:	/s/ Tom Y. Lee
---	---	---
		Tom<br> Y. Lee
		Chief<br> Executive Officer
		(Principal<br> Executive Officer)

A signed original of this written statement required by Section 906 has been provided to Pure Bioscience, Inc. and will be retained by Pure Bioscience, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Pure Bioscience, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

Exhibit32.2

CERTIFICATION

PURSUANTTO 18 U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

(i)	the<br> accompanying report on Form 10-Q of the Company for the period ended April 30, 2022, to which this Certificate is attached (the “Report”)<br> fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
(ii)	the<br> information contained in the Report fairly presents, in all material respects, the financial condition and results of operations<br> of the Company.
Date:<br> June 14, 2022	By:	/s/ Mark S. Elliott
---	---	---
		Mark<br> S. Elliott
		Vice<br> President, Finance
		(Principal<br> Financial and Accounting Officer)