UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q/A

(AMENDMENT NO. 1)

(Mark One)

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

For the quarterly period ended September 30, 2022

OR

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

For the transition period from ______________ to ______________

Commission File Number: 001-40128

biote Corp.

(Exact Name of Registrant as Specified in its Charter)

Delaware	85-1791125
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1875 W. Walnut Hill Ln #100 Irving, TX	75038
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (844) 604-1246

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	BTMD	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Class A common stock for $11.50 per share	BTMDW	The Nasdaq Stock Market LLC

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
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. ☐

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 November 11, 2022, the registrant had 9,992,217 shares of Class A common stock, $0.0001 par value per share, outstanding and 58,565,824 shares of Class V voting stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
	Cautionary Note Regarding Forward Looking Statements	ii
	Summary of Risk Factors	iii
PART I.	FINANCIAL INFORMATION	vi
Item 1.	Financial Statements (Unaudited)	vi
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	3
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II.	OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits	80
Signatures		81

i

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q/A contains forward-looking statements. These forward-looking statements relate to expectations for future financial performance, business strategies, or expectations for the Company’s business. These forward-looking statements include, but are not limited to, statements regarding the Company’s or its management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The forward-looking statements are contained principally in the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Quarterly Report on Form 10-Q/A. In some cases, you can identify forward-looking statements by terms such as “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “hope,” “anticipate,” “believe,” “seek,” “target,” “continue,” “could,” “might,” “ongoing,” “potential,” “predict,” “would” or similar expressions.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q/A, and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•the success of our dietary supplements to attain significant market acceptance among clinics, practitioners and their patients;

•our customers’ reliance on certain third parties to support the manufacturing of bio-identical hormones for prescribers;

•our and our customers’ sensitive to regulatory, economic, environmental and competitive conditions in certain geographic regions;

•our ability to increase the use by practitioners and clinics of the Biote Method at the rate that we anticipate or at all;

•our ability to grow our business;

•the significant competition we face in our industry;

•our limited operating history;

•our ability to protect our intellectual property;

•the unpredictability of the effects of the COVID-19 pandemic;

•the heavy regulatory oversight in our industry;

•changes in applicable laws or regulations;

•the inability to profitably expand in existing markets and into new markets;

•the possibility that we may be adversely impacted by other economic, business and/or competitive factors;

•future exchange and interest rates;

•the restatement of our financial statements for the quarters ended June 30, 2022 and September 30, 2022 and our ability to establish and maintain effective internal controls over financial reporting, including our ability to remediate the existing material weakness in our internal controls; and

•other risks and uncertainties indicated in this Quarterly Report on Form 10-Q/A, including those under “Risk Factors” herein, and other filings the Company has made, or will make, with the Securities and Exchange Commission (the “SEC”).
 

ii

SUMMARY OF RISK FACTORS

The following is a summary of the risk factors our business faces. The list below is not exhaustive, and investors should read this “Risk Factors” section in full. Some of the risks we face include:

Summary of Risks Related to Our Industry and Business

•Our success will depend upon whether the Biote Method and our Biote-branded dietary supplements attain significant market acceptance among clinics, practitioners and their patients;

•Outsourcing facilities that produce bioidentical hormone pellets that we offer training on in the Biote Method and failure by those parties to adequately perform their obligations could harm our business;

•We and Biote-certified practitioners and Biote-partnered clinics are reliant on AnazaoHealth Corporation, Right Value Drug Stores, LLC. and F.H. Investments, Inc. to support the manufacturing of bio-identical hormones for prescribers;

•Biote-certified practitioners and Biote-partnered clinics are concentrated in certain geographic regions, which makes us sensitive to regulatory, economic, environmental and competitive conditions in those regions;

•The frequency of use by practitioners and clinics of the Biote Method may not increase at the rate that we anticipate or at all;

•Adoption of the Biote Method depends upon appropriate practitioner training, and inadequate training may lead to negative patient outcomes and adversely affect our business;

•The continuing development of our training depends upon our maintaining strong working relationships with Biote-certified practitioners and other medical personnel;

•We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our results of operations in the near term;

•We face significant competition, and if we are unable to compete effectively, we may not be able to achieve or maintain expected levels of market penetration and market share, which could have a material adverse effect on our business, financial condition and results of operations; and

•We have a limited history operating a practice-building business for practitioners in the hormone optimization space, which may make it difficult for an investor to evaluate the success of our business to date and to assess our future viability.

Summary of Risks Related to Intellectual Property

•If we are unable to obtain and maintain patent protection for any products or methods we develop, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to our Biote-branded dietary supplements, and our ability to successfully commercialize any products we may develop may be adversely affected. If we are not able to maintain freedom to operate for our products from third-party intellectual property rights, our ability to commercialize products may be limited unless we secure a license to such rights;

•We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to sell and market the Biote Method and our Biote-branded dietary supplements;

•If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed;

•We may be subject to claims that we or our employees, consultants or contractors have wrongfully used, disclosed or otherwise misappropriated the intellectual property of a third-party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors or claims asserting an ownership interest in intellectual property we regard as our own;

•We may be subject to claims challenging our intellectual property; and

•If our trademarks and trade names are not adequately protected, then we may not be able to build brand recognition in our markets and our business may be adversely affected.

Summary of Risks Related to Regulation

•We market dietary supplements and convenience kits, which are regulated by the U.S. Food and Drug Administration (the “FDA”), and are subject to certain requirements under the Federal Food, Drug, and Cosmetic Act (the “FDCA”) and the

iii

laws enforced by the Federal Trade Commission (the “FTC”). Our failure to meet those requirements could cause us to cease certain of our business activities and may involve the payment of financial penalties;

•We have developed and marketed a method and training program where the practitioner may prescribe a compounded bioidentical hormone. Compounded drugs are regulated by the FDA and are subject to certain requirements under the FDCA. Failure of compounding entities to meet those requirements could cause us to cease certain of our business activities and may involve the payment of financial penalties;

•Compounded preparations and the pharmacy compounding industry are subject to regulatory scrutiny, which may impair our growth and sales;

•If a compounded drug formulation provided through a compounding pharmacy or an outsourcing facility leads to patient injury or death or results in a product recall, we may be exposed to significant liabilities and reputational harm; and

•If the FDA takes regulatory action to implement any of the National Academies of Sciences, Engineering, and Medicine (the “NASEM”) recommendations for compounded bioidentical hormones, this may have a substantial effect on the ability of the outsourcing facilities to compound the hormone pellets utilized by Biote-certified practitioners, which would have a substantially negative impact on Biote’s revenue and business operations.

•If we are unable to maintain our listing on the Nasdaq Stock Market LLC (“Nasdaq”), it could become more difficult to sell our Class A common stock and Public Warrants in the public market.

Summary of Risks Related to Ownership of Our Securities

•Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act, and a material weakness resulted in the restatement of previously issued financial statements, and failure to achieve and maintain an effective system of disclosure controls and internal control over financial reporting could impair our ability to produce timely and accurate financial statements or comply with applicable regulations;

•Because there are no current plans to pay cash dividends on our Class A common stock for the foreseeable future, you may not receive any return on investment unless you sell our Class A common stock for a price greater than that which you paid for it;

•We may require additional capital to support business growth, and if capital is not available to us or is available only by diluting existing stockholders, our business, operating results and financial condition may suffer;

•Anti-takeover provisions contained in the second amended and restated certificate of incorporation (the “Charter”) and amended and restated bylaws (the “Bylaws”), as well as provisions of Delaware law, could impair a takeover attempt;

•Future sales, or the perception of future sales, by the Company or its stockholders in the public market, the issuance of rights to purchase the Company’s Class A common stock, including pursuant to the 2022 Equity Incentive Plan (the “Incentive Plan”) and the 2022 Employee Stock Purchase Plan (the “ESPP”), and future exercises of registration rights could result in the additional dilution of the percentage ownership of the Company’s stockholders and cause the market price for the Company’s Class A common stock to decline;

•Securities of companies formed through a special purpose acquisition company (“SPAC”) business combinations such as ours may experience a material decline in price relative to the share price of the SPAC prior to the business combination; and

•We may be subject to periodic claims and litigation, including the Donovitz Litigation, that could result in unexpected expenses and could ultimately be resolved against us.

iv

Explanatory Note

biote Corp. (together with its consolidated subsidiaries, as the context requires, the “Company,” “we,” “us,” or “our”) is filing this Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 (as amended, the “Quarterly Report on Form 10-Q/A”) to amend and restate the unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2022, previously included in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on November 14, 2022 (the “Original Form 10-Q”). This Quarterly Report on Form 10-Q/A also amends certain other Items in the Original Form 10-Q, as listed in “Items Amended in this Quarterly Report on Form 10-Q/A” below. On March 24, 2023, the Company filed a Current Report on Form 8-K disclosing that the financial statements included in the Original Form 10-Q should not be relied upon.

Background of Restatement

On March 24, 2023, the audit committee of the board of directors (the “Audit Committee”) of the Company, based on the recommendation of, and after consultation with, the Company’s management, and as discussed with Deloitte & Touche LLP, the Company’s independent registered public accounting firm, concluded that the Company’s previously issued unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2022 and as of and for the three and nine months ended September 30, 2022 (the “Affected Financials”), each as previously filed with the SEC within the respective quarterly report on Form 10-Q, should no longer be relied upon and should be restated.

The Company’s management identified an error in the calculation of its earnout valuation in the Affected Financials, resulting in an overstatement of its earnout liability and its gain (loss) from change in fair value of earnout liability. In addition, the Company determined that it should attribute changes in fair value of its warrant and earnout liabilities to its operating subsidiary, BioTE Holdings, LLC (“Holdings”), whereas in the Affected Financials these changes had been attributed to biote Corp. The Company determined that attributing these changes in fair value to Holdings more appropriately reflects the economics of the net income allocation to equity interests in the Company’s condensed consolidated financial statements in accordance with Accounting Standards Codification 810, Consolidation, given the Company’s “Up-C” structure.

The Company is restating the unaudited condensed consolidated financial statements and related information for the quarter ended September 30, 2022 in this Quarterly Report on Form 10-Q/A, and has restated the unaudited condensed consolidated financial statements and related information for the quarter ended June 30, 2022 in a separate amendment to the Quarterly Report on Form 10-Q for such period.

Internal Control Considerations

As a result of this restatement, the Company’s management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2022. Management has concluded that the Company’s disclosure controls and procedures were not effective at September 30, 2022 due to a previously identified material weakness in internal control over financial reporting. Specifically, there was a lack of effective review controls over the accounting for certain complex and non-routine accounting issues, particularly related to revenue recognition, financial instruments, and equity. See additional discussion included in Part I, Item 4. “Controls and Procedures” of this Quarterly Report on Form 10-Q/A.

Items Amended in this Quarterly Report on Form 10-Q/A

For the convenience of the reader, this Quarterly Report on Form 10-Q/A presents the Original Form 10-Q, amended and restated in its entirety, with modifications as necessary to reflect the effects of the restatement. No attempt has been made in this Quarterly Report on Form 10-Q/A to update other disclosures presented in the Original Form 10-Q, except as required to reflect the effects of the restatement. The following items have been amended to reflect the restatement:

•Cautionary Note Regarding Forward-Looking Statements

•Summary Risk Factors

•Part I, Item 1. “Financial Statements”

•Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

•Part I, Item 4. “Controls and Procedures”

•Part II, Item 1A. “Risk Factors”

•Part II, Item 6. “Exhibits”

In addition, this Quarterly Report on Form 10-Q/A updates the Signatures page. In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) , the Company is also including with this Quarterly Report on Form 10-Q/A new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2022 from the Company’s Chief Executive Officer (as principal executive officer) and Chief Financial Officer (as principal financial officer) dated as of the filing date

v

of this Quarterly Report on Form 10-Q/A (included in Part II, Item 6. “Exhibits” and attached as Exhibits 31.1, 31.2, 32.1 and 32.2). Except as described above, this Quarterly Report on Form 10-Q/A is presented as of the date of the Original Form 10-Q and does not substantively amend, update or change any other items or disclosures contained in the Original Form 10-Q, and accordingly, does not reflect or purport to reflect any information or events occurring subsequent to November 14, 2022, the original filing date of the Original Form 10-Q, or modify or update those disclosures affected by subsequent events, except to the extent they are otherwise required to be included and discussed herein. Among other things, forward-looking statements made in the Original Form 10-Q have not been revised to reflect events, results or developments that occurred or facts that became known to the Company after the date of the Original Form 10-Q, other than the restatement.

Accordingly, this Quarterly Report on Form 10-Q/A should be read in conjunction with the Company’s filings made with the SEC subsequent to the filing of the Original Form 10-Q, including any amendments to those filings.

The restatement is more fully described in Note 21 of the notes to the unaudited condensed consolidated financial statements included herein.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

vi

biote Corp.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts) (Unaudited)

	September 30,			December 31,
	2022			2021
	(As restated, see Note 21)
Assets
Current assets:
Cash	$	77,461		$	26,766
Accounts receivable, net		7,635			5,231
Inventory, net		10,181			9,615
Other current assets		5,534			5,473
Total current assets		100,811			47,085
Property and equipment, net		1,776			2,335
Capitalized software, net		5,118			4,554
Operating lease right-of-use assets		181			356
Deferred tax asset		1,692			—
Total assets	$	109,578		$	54,330
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	8,245		$	4,349
Accrued expenses		5,719			6,011
Term loan, current		6,250			5,000
Deferred revenue, current		1,989			1,705
Operating lease liabilities, current		190			248
Total current liabilities		22,393			17,313
Term loan, net of current portion		113,451			31,963
Deferred revenue, net of current portion		862			802
Operating lease liabilities, net of current portion		—			127
Warrant liability		4,679			—
Earnout liability		39,040			—
Total liabilities		180,425			50,205
Commitments and contingencies (See Note 18)
Stockholders’ Equity (Deficit)
Class A, AA, AAA, and AAAA units, no par value, unlimited units authorized; no and 1,013,197 units issued, no and 982,800 units outstanding as of September 30, 2022 and December 31, 2021, respectively		—			—
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued or outstanding		—			—
Class A common stock, $0.0001 par value, 600,000,000 shares authorized; 9,926,658 and no shares issued, 8,339,158 and no shares outstanding as of September 30, 2022 and December 31, 2021, respectively		1			—
Class B common stock, $0.0001 par value, 8,000,000 shares authorized; no shares issued or outstanding as of September 30, 2022 and December 31, 2021		—			—
Class V voting stock, $0.0001 par value, 100,000,000 shares authorized; 58,565,824 and no shares issued, 48,565,824 and no shares outstanding as of September 30, 2022 and December 31, 2021, respectively		5			—
Additional paid-in capital		—			—
Retained earnings (Accumulated deficit)		(48,119	)		4,165
Accumulated other comprehensive loss		(6	)		(40	)
biote Corp.’s stockholders’ equity (deficit)		(48,119	)		4,125
Noncontrolling interest		(22,728	)		—
Total stockholders’ equity (deficit)		(70,847	)		4,125
Total liabilities and stockholders’ equity (deficit)	$	109,578		$	54,330

1

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

biote Corp.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except share and per share amounts) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(As restated, see Note 21)						(As restated, see Note 21)
Revenue
Product revenue	$	41,574		$	35,119		$	119,121		$	100,619
Service revenue		396			448			1,351			1,241
Total revenue		41,970			35,567			120,472			101,860
Cost of revenue (excluding depreciation and amortization included in selling, general and administrative, below)
Cost of products		12,750			11,600			37,391			33,496
Cost of services		587			690			1,760			1,795
Cost of revenue		13,337			12,290			39,151			35,291
Commissions		209			566			788			1,607
Marketing		997			1,417			3,352			3,225
Selling, general and administrative		19,612			12,311			145,206			33,101
Income (loss) from operations		7,815			8,983			(68,025	)		28,636
Other income (expense), net:
Interest expense		(1,756	)		(384	)		(2,909	)		(1,301	)
Gain from change in fair value of warrant liability		1,153			—			4,552			—
Gain (loss) from change in fair value of earnout liability		(6,840	)		—			54,840			—
Loss from extinguishment of debt		—			—			(445	)		—
Other income		356			5			454			13
Total other income (expense), net		(7,087	)		(379	)		56,492			(1,288	)
Income (loss) before provision for income taxes		728			8,604			(11,533	)		27,348
Income tax expense (benefit)		234			67			(48	)		209
Net income (loss)		494			8,537			(11,485	)		27,139
Less: Net income (loss) attributable to noncontrolling interest		479						(8,894	)
Net income (loss) attributable to biote Corp. stockholders		15						(2,591	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(1	)		10			—			(14	)
Other comprehensive income (loss)		(1	)		10			—			(14	)
Comprehensive income (loss)	$	493		$	8,547		$	(11,485	)	$	27,125
Net income (loss) per common share
Basic	$	0.00					$	(0.34	)
Diluted	$	0.00					$	(0.34	)
Weighted average common shares outstanding
Basic		7,605,031						7,596,379
Diluted		7,605,031						7,596,379

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

biote Corp.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts) (Unaudited)

																					Total
															Retained			Accumulated			Stockholders’					Total
													Additional		Earnings /			Other			Equity (Deficit)			Non		Stockholders’
	Members’ Equity				Class A Common Stock				Class V Voting Stock				Paid-in		(Accumulated			Comprehensive			Attributable to			controlling		Equity
	Units		Amount		Shares		Amount		Shares		Amount		Capital		Deficit)			Income (Loss)			biote Corp.			Interest		(Deficit)
Balance at December 31, 2020		982,800	$	—		—	$	—		—	$	—	$	—	$	(17,052	)	$	(23	)	$	(17,075	)	$	—	$	(17,075	)
Distributions		—		—		—		—		—		—		—		(2,342	)		—			(2,342	)		—		(2,342	)
Net income		—		—		—		—		—		—		—		8,841			—			8,841			—		8,841
Other comprehensive loss		—		—		—		—		—		—		—		—			(9	)		(9	)		—		(9	)
Balance at March 31, 2021		982,800		—		—		—		—		—		—		(10,553	)		(32	)		(10,585	)		—		(10,585	)
&