APPLIED DNA SCIENCES INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
BNBX$0.16-56.8%Stored close · as of Jul 13, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001410578-24-000733
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001410578-24-001226
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 138 previous paragraphs and 137 current paragraphs.
90 unchanged; 36 reworded; 7 added; 4 removed; 8 previous and 4 current paragraphs rearranged.
Tables are not compared: 54 previous and 53 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Gross profit for the three-month period ended June 30, 2024, decreased by $1,024,086 or 81% from $1,269,318 for the three-month period ended June 30, 2023 to $245,232. The gross profit percentage was 31% and 44% for the three-month periods ended June 30,
Current report
Selling, general and administrative expenses for the three-month period ended June 30, 2024 decreased by $613,410 or 19% to $2,678,894 as compared to $3,292,304 for the three-month period ended June 30, 2023. The decrease is primarily attributable to a decrease in stock based compensation expense of approximately $310,000 for the annual option grant to the non-employee members of our board of directors and officer restricted stock unit grants becoming fully vested in January and March 2024, respectively. Additional decreases related to a decrease in consulting expense of $191,000. The decrease in consulting expense was from the closure of our APDN Europe subsidiary, as well as a decrease in consulting expense from our MDX Testing services segment. There was also a decrease in insurance expense of approximately $52,000 due to a decrease in our director and officer insurance premiums, as well as approximately a $34,000 decrease in provision for bad debts.
Current report
Research and development expenses increased to $913,031 for the three-month period ended June 30, 2024 from $836,123 for the three-month period ended June 30, 2023, an increase of $76,908 or 9%. This increase is primarily due to an increase of approximately $135,000 for the development of an enzyme for use in our Therapeutic DNA Production Services segment, as well as approximately $70,000 for consultants being utilized to further develop the technology acquired from the Spindle acquisition. These increases were offset by a decrease in depreciation expense costs associated with laboratory equipment becoming fully depreciated period over period of approximately $163,000.
Current report
Unrealized gain (loss) on change in fair value of warrants classified as a liability
Current report
Other (expense) income, net
Current report
expense of approximately $204,000 for consultants being utilized to further develop the technology acquired from the Spindle acquisition.
Current report
Other (expense) income, net
Removed paragraphs (4)
Previous report
Selling, general and administrative expenses for the three-month period ended March 31, 2024 decreased by $522,507 or 15% to $3,000,208 as compared to $3,522,715 for the three-month period ended March 31, 2023. The decrease is primarily attributable to a decrease in payroll for bonuses paid to officers of $746,000 during the three-month period ended March 31, 2023, as well as a decrease in stock-based compensation expense of approximately $88,000. These decreases were offset by increases of $217,000 for the reversal of capitalized offering costs related to the ATM transaction that was terminated during the three-month period ended March 31, 2024 and an increase of approximately $162,000 in professional fees.
Previous report
Other income (expense), net
Previous report
Loss on issuance of warrants
Previous report
Other income (expense), net
Reworded paragraphs (36)
Previous wording
Our Linea DNA platform is our core enabling technology, and enables the rapid, efficient, and large-scale cell-free manufacture of high-fidelity DNA sequences for use in the manufacturing of a broad range of nucleic acid-based therapeutics. The Linea DNA platform
Current wording
Our Linea DNA platform is our core enabling technology, and enables the rapid, efficient, and large-scale cell-free manufacture of high-fidelity DNA sequences for use in the manufacturing of a broad range of nucleic acid-based therapeutics. The Linea DNA platform enzymatically produces a linear form of DNA we call “LineaDNA” that is an alternative to plasmid-based DNA manufacturing technologies that have supplied the DNA used in biotherapeutics for the past 40 years.
Previous wording
As of the first quarter of calendar year 2024, there were 4,002 gene, cell and RNA therapies in development from preclinical through pre-registration stages, almost all of which use DNA in their manufacturing process. (Source: ASGCT Gene, Cell & RNA Therapy Landscape: Q1 2024 Quarterly Report). Due to what we believe are the Linea DNA platform’s numerous advantages over legacy nucleic acid-based therapeutic manufacturing platforms, we believe this large number of therapies under development represents a substantial market opportunity for the Linea DNA platform to supplant legacy manufacturing methods in the manufacture of nucleic acid-based therapies.
Current wording
As of the first quarter of calendar year 2024, there were 4,047 gene, cell and RNA therapies in development from preclinical through pre-registration stages, almost all of which use DNA in their manufacturing process. (Source: ASGCT Gene, Cell & RNA Therapy Landscape: Q2 2024 Quarterly Report). Due to what we believe are the Linea DNA platform’s numerous advantages over legacy nucleic acid-based therapeutic manufacturing platforms, we believe this large number of therapies under development represents a substantial market opportunity for the Linea DNA platform to supplant legacy manufacturing methods in the manufacture of nucleic acid-based therapies.
Previous wording
The number of mRNA therapies under development is growing at a rapid rate, thanks in part to the success of the mRNA COVID-19 vaccines. mRNA therapeutics are produced via a process calledin vitro transcription (“IVT”) that requires DNA as a starting material. As of the 1st quarter of calendar 2024, there were approximately 450 mRNA therapies under development, with the large majority of these therapies (67%) in the preclinical stage (Source: ASGCT Gene, Cell & RNA Therapy Landscape: Q1 2024 Quarterly Report). The Company believes that the mRNA market is in a nascent stage that represents a large growth opportunity for the Company via the production and supply of DNA critical starting materials and RNAP to produce mRNA therapies.
Current wording
The number of mRNA therapies under development is growing at a rapid rate, thanks in part to the success of the mRNA COVID-19 vaccines. mRNA therapeutics are produced via a process calledin vitro transcription (“IVT”) that requires DNA as a starting material. As of the 1st quarter of calendar 2024, there were over 450 mRNA therapies under development, with the majority of these therapies (66%) in the preclinical stage (Source: ASGCT Gene, Cell & RNA Therapy Landscape: Q1 2024 Quarterly Report). The Company believes that the mRNA market is in a nascent stage that represents a large growth opportunity for the Company via the production and supply of DNA critical starting materials and RNAP to produce mRNA therapies.
Previous wording
According to the Company’s internal modeling, the ability to sell both Linea DNA IVT templates and Linea RNAP under the Linea IVT platform potentially increases the Company’s mRNA-related TAM by approximately 3-5x as compared to selling Linea DNA IVT templates alone, while also providing a more competitive offering to the mRNA manufacturing market. Currently, Linea RNAP is produced for the Company under an ISO 13485 quality system by a third-party CDMO located in the United States. The Company is currently undertaking manufacturing process development work with its Linea RNAP manufacturer to increase production scale of the enzyme.
Current wording
According to the Company’s internal modeling, the ability to sell both Linea DNA IVT templates and Linea RNAP under the Linea IVT platform potentially increases the Company’s mRNA-related TAM by approximately 3-5x as compared to selling Linea DNA IVT templates alone, while also providing a more competitive offering to the mRNA manufacturing market. Currently, Linea RNAP is produced for the Company under an ISO 13485 quality system by Alphazyme, LLC a third-party CDMO located in the United States. The Company recently completed manufacturing process development work on its Linea RNAP to increase production scale of the enzyme and reduce unit costs.
Previous wording
We currently manufacture Linea DNA pursuant to Good Laboratory Practices (“GLP”), and we are creating a fit for purpose manufacturing facility within our current Stony Brook, NY laboratory space capable of producing Linea DNA IVT templates under Good Manufacturing Practices (“GMP”) suitable for use as a critical starting material for clinical and commercial mRNA therapeutics, with a planned completion date in the third quarter of calendar year 2024 (“GMP Site 1”). We also plan to offer additional capacity for Linea DNA IVT templates as well as capacity for Linea DNA materials manufactured under GMP suitable for use as, or incorporation into, a biologic, drug substance and/or drug product, with availability expected during the second half of calendar year 2025, dependent upon the availability of future funding (“GMP Site 2”). GMP is a quality standard used globally and by the U.S. Food and Drug Administration (“FDA”) to ensure pharmaceutical quality. Drug substances are the pharmaceutically active components of drug products.
Current wording
We are currently manufacturing Linea DNA pursuant to Good Laboratory Practices (“GLP”) and, are creating a fit for purpose manufacturing facility within our current Stony Brook, NY laboratory space capable of producing Linea DNA IVT templates under Good Manufacturing Practices (“GMP”) suitable for use as a critical starting material for clinical and commercial mRNA therapeutics, with a planned completion date in the third quarter of calendar year 2024 (“GMP Site 1”). We also plan to offer additional capacity for Linea DNA IVT templates as well as capacity for Linea DNA materials manufactured under GMP suitable for use as, or incorporation into, a biologic, drug substance and/or drug product, with availability expected during the second half of calendar year 2025, dependent upon the availability of future funding (“GMP Site 2”). GMP is a quality standard used globally and by the U.S. Food and Drug Administration (“FDA”) to ensure pharmaceutical quality. Drug substances are the pharmaceutically active components of drug products.
Previous wording
Through ADCL, we leverage our expertise in DNA and RNA detection via PCR to provide and develop clinical molecular diagnostics and genetic (collectively “MDx”) Testing Services. ADCL is a NYSDOH clinical laboratory improvement amendments (CLIA)-certified laboratory which is currently permitted for virology. Permitting for genetics (molecular) is currently pending with the NYSDOH. In providing MDx Testing Services, ADCL employs its own or third-party molecular diagnostic tests.
Current wording
Through Applied DNA Clinical Labs, LLC (“ADCL”), we leverage our expertise in DNA and RNA detection via PCR to provide and develop clinical molecular diagnostics and genetic (collectively “MDx”) Testing Services. ADCL is a New York State Department of Health (“NYSDOH”) clinical laboratory improvement amendments (CLIA)-certified laboratory which is currently permitted for virology and genetics (molecular). In providing MDx Testing Services, ADCL employs its own or third-party molecular diagnostic tests.
Previous wording
We have successfully validated internally our pharmacogenomics testing services (the “PGx Testing Services”). Our PGx Testing Services will utilize a 120-target PGx panel test to evaluate the unique genotype of a specific patient to help guide the patient’s healthcare provider in making individual drug therapy decisions. Our PGx Testing Services are designed to interrogate DNA targets on over 33 genes and provide genotyping information relevant to certain cardiac, mental health, oncology, and pain management drug therapies. Our PGx Testing Services cannot commence until we receive approval from the NYSDOH.
Current wording
We have successfully validated internally our pharmacogenomics testing services (the “PGx Testing Services”). Our PGx Testing Services utilizes a 120-target PGx panel test to evaluate the unique genotype of a specific patient to help guide the patient’s healthcare provider in making individual drug therapy decisions. Our PGx Testing Services are designed to interrogate DNA targets on over 33 genes and provide genotyping information relevant to certain cardiac, mental health, oncology, and pain management drug therapies.
Previous wording
On March 22, 2023, we submitted our validation package to the NYSDOH for our PGx Testing Services. On September 21, 2023, we received a first set of comments from NYSDOH requesting additional data and clarifications. A response was submitted to NYSDOH on November 17, 2023. On December 26, 2023, we received a second set of comments from NYSDOH requesting additional data and clarifications to which a response was submitted on February 23, 2024. A third set of comments was received from NYSDOH on March 29, 2024. A response must be filed by May 28, 2024. Currently, the timing of any approval by NYSDOH for our PGx Testing Services is unclear. Recently published studies show that population-scale PGx enabled medication management can significantly reduce overall population healthcare costs, reduce adverse drug events, and increase overall population wellbeing. These benefits can result in significant cost savings to large entities and self-insured employers, the latter accounting for approximately 65% of all U.S. employers in 2022. If and when approved by the NYSDOH, we plan to leverage our PGx Testing Services to provide PGx testing services to large entities, self-insured employers and healthcare providers.
Current wording
On June 12, 2024 we received full approval from NYSDOH for our PGx Testing Services. Recently published studies show that population-scale PGx enabled medication management can significantly reduce overall population healthcare costs, reduce adverse drug events, and increase overall population wellbeing. These benefits can result in significant cost savings to large entities and self-insured
Previous wording
Under the final rule, several types of tests will be eligible for some degree of continued enforcement discretion, including LDTs approved by NYSDOH. FDA notes, however, that it retains discretion to pursue enforcement action for violations of the FDCA at any time and intends to do so when appropriate. FDA further explains that it may update any of the enforcement discretion policies set forth in the final rule as circumstances warrant or if the circumstances that inform those policies change, consistent with FDA’s good guidance practices. Based on our current analysis of the FDA final rule, and assuming the final rule goes into effect without modification, we believe that ADCL’s current and future NYSDOH approved LDTs, which includes our under development PGx Testing Services, will be exempt from FDA premarket review requirements but will remain subject to the requirements of Phases 1 through 3.
Current wording
Under the final rule, several types of tests will be eligible for some degree of continued enforcement discretion, including LDTs approved by NYSDOH. FDA notes, however, that it retains discretion to pursue enforcement action for violations of the Federal Drug and Cosmetics Act at any time and intends to do so when appropriate. FDA further explains that it may update any of the enforcement discretion policies set forth in the final rule as circumstances warrant or if the circumstances that inform those policies change, consistent with FDA’s good guidance practices. Based on our current analysis of the FDA final rule, and assuming the final rule goes into effect without modification, we believe that ADCL’s current and future NYSDOH approved LDTs, which includes our under development
Previous wording
Historically, a substantial portion of our revenues has been generated from our safeCircle COVID-19 testing solutions, for which testing demand has significantly dropped. While we continue to support several safeCircle customers, we are currently observing a marked decrease in market demand for COVID-19 testing, resulting in significantly reduced revenues. We expect future demand for COVID-19 testing to continue to be reduced. We expect future growth in revenues to be derived from our Therapeutic DNA Production Services and our MDx Testing Services, as the latter transitions to a focus on genetic testing. To a lesser extent, we expect to grow revenues our DNA Tagging and Security Products and Services offerings as we work with companies and governments to secure supply chains for various types of products and product labeling throughout the world with a focus on cotton provenance. We have continued to incur expenses in expanding our business to meet current and anticipated future demand. We have limited sources of liquidity. We will continue to update our business strategy and monitor the use of our resources regarding our various business markets. In addition, we expect that based on available opportunities and our beliefs regarding future opportunities, we will continue to modify and refine our business strategy.
Current wording
Historically, a substantial portion of our revenues has been generated from our safeCircle COVID-19 testing solutions, for which testing demand has significantly dropped. While we continue to support several safeCircle customers, we are currently observing a marked decrease in market demand for COVID-19 testing, resulting in significantly reduced revenues. We expect future demand for COVID-19 testing to continue to be reduced. We expect future growth in revenues to be derived from our Therapeutic DNA Production Services and our MDx Testing Services, as the latter transitions to a focus on genetic testing. To a lesser extent, we expect to grow revenues from our DNA Tagging and Security Products and Services offerings as we work with companies and governments to secure supply chains for various types of products and product labeling throughout the world with a focus on cotton provenance. We have continued to incur expenses in expanding our business to meet current and anticipated future demand. We have limited sources of liquidity. We will continue to update our business strategy and monitor the use of our resources regarding our various business markets. In addition, we expect that based on available opportunities and our beliefs regarding future opportunities, we will continue to modify and refine our business strategy.
Previous wording
For the three-month periods ended March 31, 2024 and 2023, we generated $393,125 and $297,454 in revenues from product sales, respectively. Product revenue increased by $95,671 or 32% for the three-month period ended March 31, 2024 as compared to the three-month period ended March 31, 2023. The increase in product revenues was primarily related to an increase of approximately $56,000 within our Therapeutic DNA Production Services segment for an increase in shipments for our large scale DNA production. The increase also related to an increase within our DNA Tagging and Security Products and Services segment due to increases of approximately $33,000 in revenues from a nutraceuticals customer, as well as approximately $28,000 from a textiles tagging customer, offset by a decrease of approximately $35,000 from consumer asset marking.
Current wording
For the three-month periods ended June 30, 2024 and 2023, we generated $246,644 and $316,950 in revenues from product sales, respectively. Product revenue decreased by $70,306 or 22% for the three-month period ended June 30, 2024 as compared to the three-month period ended June 30, 2023. The decrease in product revenues was primarily related to a decrease of approximately $60,000 within our DNA Tagging and Security Products and Services segment including a decrease in shipments for consumer asset marking of approximately $43,000 as well as decreased revenues from a nutraceutical customer totaling approximately $12,000. The decrease also related to a decrease within our Therapeutic DNA Production Services segment due to a slight decrease of approximately $12,000 in revenues for our large-scale DNA production.
Previous wording
For the three-month periods ended March 31, 2024 and 2023 we generated $205,486 and $169,058 in revenues from sales of services, respectively. The increase in service revenues of $36,428 or 22% for the three-month period ended March 31, 2024, as compared to the same period in the prior fiscal year is attributable to increases of $107,000 for isotopic testing for textiles within our DNA Tagging and Security Products and Services segment offset by a decrease of approximately $70,000 for research and development projects in our Therapeutic DNA Production Services segment, respectively.
Current wording
For the three month periods ended June 30, 2024 and 2023 we generated $226,145 and $425,694 in revenues from sales of services, respectively. The decrease in service revenues of $199,549 or 47% for the three-month period ended June 30, 2024, as compared to the same period in the prior fiscal year is attributable to decreases of $117,000 for research and development projects in our Therapeutic DNA Production Services segment and $73,000 for isotopic testing for textiles within our DNA Tagging and Security Products and Services segment, respectively.
Previous wording
For the three-month periods ended March 31, 2024 and 2023, we generated $331,020 and $3,941,102 in revenues from our clinical laboratory testing services, respectively. The decrease in service revenues of $3,610,082 or 92% for the three-month period ended March 31, 2024 as compared to the same period in the prior fiscal year is attributable to a decrease from COVID surveillance testing. The three-month period ended March 31, 2023 included testing revenues under our contract with CUNY, which terminated during June 2023.
Current wording
For the three-month periods ended June 30, 2024 and 2023, we generated $324,730 and $2,174,697 in revenues from our clinical laboratory testing services, respectively. The decrease in service revenues of $1,849,967 or 85% for the three month period ended June 30, 2024 as compared to the same period in the prior fiscal year is attributable to a decrease from COVID surveillance testing. The three-month period ended June 30, 2023 included testing revenues under our contract with the City University of New York (“CUNY”), which terminated during June 2023.
Previous wording
Gross profit for the three-month period ended March 31, 2024, decreased by $1,511,784 or 84% from $1,807,435 for the three-month period ended March 31, 2023 to $295,651. The gross profit percentage was 32% and 41% for the three-month periods ended March 31, 2024 and 2023, respectively. The decrease in gross profit percentage was primarily the result of a decline in gross profit percentage for our MDx Testing Services segment specifically related to significantly decreased testing volumes year over year.
Current wording
2024 and 2023, respectively. The decrease in gross profit percentage was primarily the result of a decline in gross profit percentage for our MDx Testing Services segment specifically related to significantly decreased testing volumes year over year, as well as MDx Testing Services comprising a smaller percentage of our total revenue for the three-month period ended June 30, 2024 compared to the same period in the prior fiscal year.
Previous wording
Interest income for the three-month period ended March 31, 2024 was $15,352 as compared to $3,639 in the three-month period ended March 31, 2023.
Current wording
Interest income for the three-month period ended June 30, 2024 was $36,295 as compared to $26,783 in the three-month period ended June 30, 2023.
Previous wording
Unrealized gain on change in fair value of warrants classified as a liability for the three-month period ended March 31, 2024 was $1,765,000 and $3,250,900 for the three-month periods ended March 31, 2024 and 2023, respectively. The primary driver of the change is the decrease in our stock price, as well as the issuance of new warrants as part of the February 2024 registered direct offering.
Current wording
Unrealized gain (loss) on change in fair value of warrants classified as a liability was a gain of $5,160,000 and loss of $278,400 for the three-month periods ended June 30, 2024 and 2023, respectively. The primary driver of the change is the decrease in our stock price.
Previous wording
Other income (expense) for the three-month periods ended March 31, 2024 and 2023, was expense of $4,581 and $661, respectively.
Current wording
Other (expense) income, net for the three-month periods ended June 30, 2024 and 2023, was expense of $101 and $3,469, respectively.
Previous wording
Loss from operations increased $913,727, or 34% to $3,617,751 for the three-month period ended March 31, 2024 compared to $2,704,024 for the three-month period ended March 31, 2023 due to the factors noted above.
Current wording
Loss from operations increased $487,584, or 17% to $3,346,693 for the three-month period ended June 30, 2024 compared to $2,859,109 for the three-month period ended June 30, 2023 due to the factors noted above.
Previous wording
Comparison of Results of Operations for the Six-Month Periods Ended March 31, 2024 and 2023
Current wording
Comparison of Results of Operations for the Nine-month Periods Ended June 30, 2024 and 2023
Previous wording
For the six-month periods ended March 31, 2024 and 2023, we generated $700,442 and $813,850 in revenues from product sales, respectively. Product revenue decreased by $113,408 or 14% for the six-month period ended March 31, 2024 as compared to the six-month period ended March 31, 2023. The decrease in product revenues was primarily within our Therapeutic DNA Production Services segment for a decrease in shipments for our large scale DNA production of approximately $71,000, as well as a net decrease of approximately $42,000 within our DNA Tagging and Security Products and Services segment due decreased revenue from a consumer asset marking customer of approximately $58,000, and a decrease of approximately $64,000 due to a decrease in shipments of taggant to a textiles customer. These decreases were offset by an increase from a nutraceutical customer of approximately $61,000 during the six-month period ended March 31, 2024.
Current wording
For the nine-month periods ended June 30, 2024 and 2023, we generated $947,086 and $1,130,800 in revenues from product sales, respectively. Product revenue decreased by $183,714 or 16% for the nine-month period ended June 30, 2024 as compared to the nine-month period ended June 30, 2023. The decrease in product revenues was primarily due to a decrease of approximately $119,000 within our DNA Tagging and Security Products and Services segment due to decreased revenue from our consumer asset marking and textile customers of approximately $103,000 and $65,000, respectively. These decreases were offset by an increase in shipments to a
Previous wording
For the six month periods ended March 31, 2024 and 2023 we generated $452,633 and $401,119 in revenues from sales of services, respectively. The increase in service revenues of $51,514 or 13% for the six-month period ended March 31, 2024, as compared to the same period in the prior fiscal year is attributable to increases of approximately $205,000 for isotopic testing for textiles within our DNA Tagging and Security Products and Services segment offset primarily by a decrease of approximately $115,000 related to research and development projects within our Therapeutic DNA Production Services segment.
Current wording
For the nine-month periods ended June 30, 2024 and 2023 we generated $678,777 and $826,813 in revenues from sales of services, respectively. The decrease in service revenues of $148,036 or 18% for the nine-month period ended June 30, 2024, as compared to the same period in the prior fiscal year is attributable to a decrease of approximately $231,000 related to research and development projects within our Therapeutic DNA Production Services segment, offset by an increase of approximately $132,000 for isotopic testing for textiles within our DNA Tagging and Security Products and Services segment.
Previous wording
For the six month periods ended March 31, 2024 and 2023, we generated $667,720 and $8,455,397 in revenues from our clinical laboratory testing services, respectively. The decrease in service revenues of $7,787,677 or 92% for the six month period ended March 31, 2024 as compared to the same period in the prior fiscal year is attributable to a decrease from COVID testing services. The six-month period ended March 31, 2023 included testing revenues under our contract with CUNY, which terminated during June 2023.
Current wording
For the nine month periods ended June 30, 2024 and 2023, we generated $992,450 and $10,630,094 in revenues from our clinical laboratory testing services, respectively. The decrease in service revenues of $9,637,644 or 91% for the nine-month period ended June 30, 2024 as compared to the same period in the prior fiscal year is attributable to a decrease from COVID-19 testing services. The nine-months ended June 30, 2023 included testing revenues under our contract with CUNY, which terminated during June 2023.
Previous wording
Gross profit for the six month period ended March 31, 2024, decreased by $3,658,370 or 87% from $4,185,118 for the six -month period ended March 31, 2023 to $526,748. The gross profit percentage was 29% and 43% for the six -month periods ended March 31, 2024 and 2023, respectively. The decrease in gross profit percentage was primarily the result of a decline in gross profit percentage for our MDx Testing Services segment specifically related to significantly decreased testing volumes year over year.
Current wording
Gross profit for the nine-month period ended June 30, 2024, decreased by $4,682,456 or 86% from $5,454,436 for the nine-month period ended June 30, 2023 to $771,980. The gross profit percentage was 29% and 43% for the nine-month periods ended June 30, 2024 and 2023, respectively. The decrease in gross profit percentage was primarily the result of a decline in gross profit percentage for our MDx Testing Services segment specifically related to significantly decreased testing volumes year over year.
Previous wording
Selling, general and administrative expenses for the six -month period ended March 31, 2024 decreased by $63,515 or 1% to $6,084,557 as compared to $6,148,072 for the six -month period ended March 31, 2023. The decrease is primarily attributable to a decrease in payroll for bonuses paid to officers of approximately $746,000 during the first half of fiscal 2023, offset by an increase in stock-based compensation expense of approximately $159,000 primarily relating to the timing of the annual grants of options to non-employee board of directors and restricted stock units issued to officers. Additional increases relate to the prior six-month period having a credit balance in bad debt expense of approximately $290,000, from a customer balance that was fully reserved during a prior period and was subsequently collected during the six-month period ended March 31, 2023, as well as $217,000 for the reversal of capitalized offering costs related to the ATM transaction that was terminated during the six-month period ended March 31, 2024.
Current wording
Selling, general and administrative expenses for the nine-month period ended June 30, 2024 decreased by $677,284 or 7% to $8,763,450 as compared to $9,440,734 for the nine-month period ended June 30, 2023. The decrease is primarily attributable to a decrease in payroll for bonuses paid to officers of approximately $746,000 during fiscal 2023,as well as a decrease in stock based compensation of approximately $151,000 primarily relating to the timing of the annual grants of options to non-employee members of the board of directors and restricted stock units issued to officers. These decreases were offset by increases relating to the prior nine-month period having a credit balance in bad debt expense of approximately $256,000, from a customer balance that was fully reserved during a prior period and was subsequently collected during the nine-month period ended June 30, 2023,
Previous wording
Research and development expenses decreased to $1,849,009 for the six -month period ended March 31, 2024 from $1,960,048 for the six -month period ended March 31, 2023, a decrease of $111,039 or 6%. This decrease is primarily due to decreased depreciation expense with laboratory equipment becoming fully depreciated year over year.
Current wording
Research and development expenses decreased to $2,762,040 for the nine-month period ended June 30, 2024 from $2,796,171 for the nine-month period ended June 30, 2023, a decrease of $34,131 or 1%. This decrease is primarily due to decreased depreciation expense with laboratory equipment becoming fully depreciated year over year of approximately $369,000, offset by an increase in consulting
Previous wording
Interest income for the six -month period ended March 31, 2024, represented income of $48,676 as compared to an income of $7,325 in the six -month period ended March 31, 2023.
Current wording
Interest income for the nine -month period ended June 30, 2024 was $84,972 as compared to $34,108 in the nine -month period ended June 30, 2023.
Previous wording
Transaction cost allocated to the registered direct offering for the six-month period ended March 31, 2024 was $633,198. These transaction costs represent the closing costs from the February 2024 financing transaction. These costs were expensed as it would have resulted in negative additional paid in capital.
Current wording
Transaction cost allocated to warrant liabilities for the nine-month period ended June 30, 2024 was $633,198. These transaction costs represent the closing costs from the February 2024 financing transaction. These costs were expensed as it would have resulted in negative additional paid in capital.
Previous wording
Unrealized gain on change in fair value of Common Warrants for the six -month period ended March 31, 2024 and 2023 was $4,404,000 and $613,100, respectively, and relates to the change in fair value of the warrants that are classified as a liability. The primary driver of the change is the decrease in our stock price, as well as the issuance of new warrants as part of the February 2024 registered direct offering.
Current wording
Unrealized gain on change in fair value of warrants classified as a liability for the nine -month period ended June 30, 2024 and 2023 was $9,564,000 and $334,700, respectively, and relates to the change in fair value of the warrants that are classified as a liability. The primary driver of the change is the decrease in our stock price, as well as the issuance of new warrants as part of the February 2024 registered direct offering.
Previous wording
Unrealized loss on change in fair value of warrants classified as a liability-warrant modifications of $394,000 for the three-month period ended March 31, 2024 represents the change in fair value for the modifications made to certain warrants as a result of the February 2024 financing.
Current wording
Unrealized loss on change in fair value of warrants classified as a liability-warrant modifications of $394,000 for the nine-month period ended June 30, 2024 represents the change in fair value for the modifications made to certain warrants as a result of the February 2024 financing.
Previous wording
The loss on issuance of warrants of $1,633,767 for the three-month period ended March 31, 2024 relates to the February 2024 financing transaction and is the result of the fair value of the warrants being greater than the cash received from the financing.
Current wording
The loss on issuance of warrants of $1,633,767 for the nine-month period ended June 30, 2024 relates to the February 2024 financing transaction and is the result of the fair value of the warrants being greater than the cash received from the financing.
Previous wording
Other income (expense), net for the six -month periods ended March 31, 2024 and 2023, was expense of $8,957 and income of $9,507, respectively.
Current wording
Other (expense) income, net for the nine -month periods ended June 30, 2024 and 2023, was expense of $9,060 and income of $6,396, respectively.
Previous wording
Loss from operations increased $3,483,816 or 89% to $7,406,818 for the six-month period ended March 31, 2024 compared to $3,923,002 for the six-month period ended March 31, 2023 due to the factors noted above.
Current wording
Loss from operations increased $3,971,041 or 59% to $10,753,510 for the nine-month period ended June 30, 2024 compared to $6,782,469 for the nine-month period ended June 30, 2023 due to the factors noted above.
Previous wording
Our liquidity needs consist of our working capital requirements and research and development expenditure funding. As of March 31, 2024, we had working capital of $1,741,681. For the six-month period ended March 31, 2024, we used cash in operating activities of $6,967,672 consisting primarily of our loss of $5,624,064 net with non-cash adjustments of $485,277 in depreciation and amortization charges, $4,404,000 in unrealized gain on change in fair value of warrants classified as a liability, $394,000 in unrealized loss on change in fair value of warrants classified as liability-warrant modification, $633,198 in registered direct offering costs, $1,633,767 on loss on issuance of warrants, and $511,709 in stock-based compensation expense. Additionally, we had a net increase in operating assets of $240,309 and a net decrease in operating liabilities of $357,250. At March 31, 2024, we had cash and cash equivalents of $3,149,640.
Current wording
Our liquidity needs consist of our working capital requirements and research and development expenditure funding. As of June 30, 2024, we had working capital of $8,816,648. For the nine-month period ended June 30, 2024, we used cash in operating activities of $10,462,332 consisting primarily of our loss of $3,774,563 net with non-cash adjustments of $619,440 in depreciation and amortization charges, $9,564,000 in unrealized gain on change in fair value of warrants classified as a liability, $394,000 in unrealized loss on change in fair value of warrants classified as liability-warrant modification, $633,198 in registered direct offering costs, $1,633,767 on loss on issuance of warrants, and $542,045 in stock-based compensation expense. Additionally, we had a net increase in operating assets of $425,398 and a net decrease in operating liabilities of $520,821. At June 30, 2024, we had cash and cash equivalents of $10,442,131.
Previous wording
We have recurring net losses. We incurred a net loss of $5,624,064 and generated negative operating cash flow of $6,967,672 for the six-month period ended March 31, 2024. These factors raise substantial doubt about our ability to continue as a going concern for one year from the issuance of these financial statements. The ability of the Company to continue as a going concern is dependent on our ability to further implement our business plan, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Current wording
We have recurring net losses. We incurred a net loss of $3,774,563 and generated negative operating cash flow of $10,462,332 for the nine-month period ended June 30, 2024. These factors raise substantial doubt about our ability to continue as a going concern for one year from the issuance of these financial statements. The ability of the Company to continue as a going concern is dependent on our
Previous wording
As discussed in Note E, on February 2, 2024, we closed on a registered direct public offering and received net proceeds from the Offering, after deducting placement agent fees and other estimated offering expenses payable by us, of approximately $2.8 million.
Current wording
As discussed in Note E, on May 29, 2024, we closed on a public offering and received net proceeds, after deducting placement agent fees and other estimated offering expenses payable by us, of approximately $10.5 million.
Previous wording
The Company evaluates its warrants issued the “Warrants) in accordance with ASC 480 “Distinguishing Liabilities from Equity” and ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” and concluded that due to the terms of certain of its warrant agreements, the instruments do not qualify for equity treatment. As such, the Warrants were recorded as a liability on the condensed consolidated balance sheet and measured at fair value at inception and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the condensed consolidated statement of operations in the period of change.
Current wording
The Company evaluates its warrants issued the “Warrants) in accordance with ASC 480 “Distinguishing Liabilities from Equity” and ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” and concluded that due to the terms of certain of its warrant agreements, the instruments do not qualify for equity treatment. As such, the Common Warrants, Series A Warrants and Private Common Warrants were recorded as a liability on the condensed consolidated balance sheet and measured at fair value at inception and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the condensed consolidated statement of operations in the period of change.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
employers, the latter accounting for approximately 65% of all U.S. employers in 2022.We plan to leverage our PGx Testing Services to provide PGx testing services to large entities, self-insured employers and healthcare providers, as well as concierge healthcare providers.
Current report — wording carried from elsewhere
PGx Testing Services, will be exempt from FDA premarket review requirements but will remain subject to the requirements of Phases 1 through 3.
Current report — wording carried from elsewhere
nutraceutical customer of approximately $49,000. The remainder of the decrease in product revenue was within our Therapeutic DNA Production Services segment related to a decrease in shipments for our large scale DNA production of approximately $83,000.
Current report — wording carried from elsewhere
ability to further implement our business plan, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
enzymatically produces a linear form of DNA we call “LineaDNA” that is an alternative to plasmid-based DNA manufacturing technologies that have supplied the DNA used in biotherapeutics for the past 40 years.
Previous report — wording carried elsewhere
Research and development expenses decreased to $913,194 for the three-month period ended March 31, 2024 from $988,744 for the three-month period ended March 31, 2023, a decrease of $75,550 or 8%. This decrease is primarily due to decreased depreciation expense costs associated with laboratory equipment becoming fully depreciated period over period.
Previous report — wording carried elsewhere
Registered direct offering costs for the three-month period ended March 31, 2024 was $633,198. These transaction costs represent the closing costs from the February 2024 financing transaction. These costs were expensed as it would have resulted in negative additional paid in capital.
Previous report — wording carried elsewhere
Transaction costs allocated to warrant liabilities
Previous report — wording carried elsewhere
Unrealized gain on change in fair value of warrants classified as a liability
Previous report — wording carried elsewhere
Unrealized loss on change in fair value of warrants classified as a liability-warrant modifications
Previous report — wording carried elsewhere
Unrealized loss on change in fair value of warrants classified as a liability-warrant modifications of $394,000 for the six-month period ended March 31, 2024 represents the change in fair value for the modifications made to certain warrants as a result of the February 2024 financing.
Previous report — wording carried elsewhere
The loss on issuance of warrants of $1,633,767 for the six-month period ended March 31, 2024 relates to the February 2024 financing transaction and is the result of the fair value of the warrants being greater than the cash received from the financing.