Company To Hold Conference Call and Webcast
Today, Thursday, February 7, 2019 at 4:30 PM EST.
Applied DNA Sciences, Inc. (NASDAQ: APDN) (“Applied DNA” or the
"Company"), announced financial results for the fiscal 2019 first
quarter ended December 31, 2018.
“Our performance for the quarter reflects a consistent
year-over-year foundation to our cotton business and continued
execution under our multi-year contracts with the U.S. Department
of Defense, as well as further progress made on our joint
development agreements with partners in cannabis and
pharmaceuticals,” said Dr. James A. Hayward, president and chief
executive officer of Applied DNA. “During the quarter we saw the
first CertainT®-certifiable synthetics home textiles products
committed by retailers, a bellwether milestone for other
manufacturers of CertainT synthetics in our pipeline. We also moved
to refine our go-to-market and partnering strategy to drive tighter
focus on select verticals and geographies.
“In our LineaRx subsidiary, we continued the development of
linear DNA for nucleic acid-based therapies that have already shown
promising early results in the field of adoptive T-cell therapy and
nucleic-acid-based vaccine, and continued sponsored R&D on
behalf of contract research customers. LineaRx customers are
increasing in number and diversity and we are starting to see
greater than typical dollar-value opportunities enter the
pipeline,” continued Dr. Hayward. “In addition to its therapeutics
work, subsequent to the close of the quarter, the Company received
a purchase order in excess of $500,000 for linear DNA in
diagnostics to be delivered over the next 12-18 months. We continue
to make strong technical progress on our proprietary non-viral,
plasmid-free CAR-T platform, with early promising results in the
high-throughput transfection of human T-cells with linear DNA.”
“Subsequent to the close of the quarter, we announced two
non-binding MOUs to enter the Asian supply chain market in Taiwan:
with Sun Chemical Supply Co. Ltd (“Sun Chemical”) that offers us
geographic and domain knowledge in selling and supporting textile
manufacturers in China and other Asian countries; and with Tex-Ray
Industrial Co., Ltd (“Tex-Ray”), a world-leading innovator and
supply chain integrator in performance fibers and fabrics that
gives us entrée to supply chains spanning three continents and
serving global brands. To help shape the go-to-market strategy and
business development efforts and to accelerate our sales cycle, we
appointed Stephen Birkhold to our Strategic Advisory Board, who
brings a long and stellar history in brand management to hone our
strategy in this market.
Concluded Dr. Hayward, “In our cannabis and pharmaceutical
businesses, we are progressing towards commercialization by putting
in place the necessary operational and marketing infrastructure to
enable our partners TheraCann and Colorcon to fully engage our
respective, joint customer bases. In particular, our TheraCann
partnership is positioning us at the forefront of a burgeoning
industry, which we believe needs a safe and secure way to manage
the legal cannabis supply chain. Our taggant technology is an
integral component of TheraCann’s ETCH Biotrace seed-to-sale
solution, and we believe we are well positioned to international
markets.”
Fiscal First Quarter 2019 Financial Results:
- Revenues increased 37% for the first
quarter of fiscal 2019 to $884 thousand, compared with $648
thousand reported in the first quarter of fiscal 2018, and
decreased 26% from the $1.2 million reported in the fourth fiscal
quarter ended September 30, 2018. The year-over-year increase in
revenues was due primarily to an increase in service revenues of
$265 thousand. The increase in service revenue as compared to the
same period in the prior fiscal year was the result of increases in
our pharmaceuticals and nutraceutical market for pre-commercial
pilots as well as an increase for our cannabis systems development
and go-to-market initiative. The quarter-over-quarter decrease in
revenues reflects a change in revenue recognition accounting
standard for cotton DNA actually shipped at quantities roughly
equal to last year, as detailed below.
- Effective October 1, 2018, the Company
was required to adopt Accounting Standards Update (ASU; the
“Update”) No. 2014-09, Revenue from Contracts with Customers
(Topic 606), utilizing the modified retrospective method. Had the
Company not adopted the Update, the Company would have recognized
additional revenue of approximately $391,000 during the first
quarter of fiscal 2019. This amount was primarily comprised of the
recognition of $383,000 under a $1.15 million cotton order shipped
in June 2018. The total cumulative impact of the Update that was
recorded to opening retained earnings in fiscal 2019 was
approximately $495,000. See Cumulative Effect Adjustment and the
Impact on Current Period Financial Statements of Adopting Topic 606
attached.
- Total operating expenses increased to
$3.9 million for the first fiscal quarter of 2019, compared with
$3.5 million in the prior fiscal year’s first quarter. This
increase is primarily attributable to an increase in stock-based
compensation expense.
- Net loss for the quarter ended December
31, 2018 was $3.2 million, or $0.11 per share, compared with a net
loss of $3.2 million, or $0.12 per share, for the quarter ended
December 31, 2017 and a net loss of $3.5 million, or $0.12 per
share for the quarter ended September 30, 2018.
- Excluding non-cash expenses, Adjusted
EBITDA was negative $2.6 million for the quarter ended December 31,
2018 and $2.8 million for the same quarter in the prior fiscal
year.
Select Recent Operational Highlights:
- In early February 2019, Applied DNA
received a purchase order to ship over $500,000 of diagnostic DNA
amplicon in partial shipments over the next 12-18 months.
- On February 6, 2019, the Company
announced that cannabis partner TheraCann International and Israeli
Cannabis (“iCAN”) had in November 2018 signed a bilateral agreement
that enabled iCAN to market TheraCann’s ETCH Biotrace solution that
is based, in part, on Applied DNA’s CertainT® platform. This
bilateral agreement potentially catalyzes the use of Applied DNA’s
technology in exported Israeli cannabis.
- On January 29, 2019, Applied DNA
appointed Stephen Birkhold to its Strategic Advisory Board.
Birkhold, a 30-year veteran of the fashion industry, will lead the
development of a new sales, marketing and go-to-market strategy for
the Company’s technology platform in the fashion and luxury apparel
and accessory markets. Birkhold is the former CEO of several of the
world’s most prominent apparel brands, including Bebe Stores,
Lacoste, Diesel and Earl Jeans, along with achieving a 10-year
tenure at VF Corporation working with Lee Jeans and Nautica
Jeans.
- On January 28, 2019, the Company
announced the signing of a non-binding MOU with Taiwan-based
Tex-Ray, a pioneer in performance fabric and smart clothing for
modern active lifestyles. If a definitive agreement is entered
into, Tex-Ray would facilitate the introduction of Applied DNA’s
CertainT® authentication platform to its established supply chains
in service of large global brands.
- On January 24, 2019, Applied DNA
announced the signing of an MOU with Taiwan-based Sun Chemical. If
a definitive agreement is entered into, Sun would serve as a
reseller of the Company’s CertainT authentication platform to
textile manufacturers in Asia. Taiwan is today the world’s largest
functional fabric production base accounting for approximately 50%
of the global output value of performance fabrics.1
- On December 26, 2018, the Company
closed on a $2.75 million public offering of common stock and
warrants. Subsequent to end of the first fiscal quarter, Maxim
Group exercised its overallotment option that resulted in
additional gross proceeds of approximately $250 thousand to Applied
DNA.
- On December 10, 2018, Applied DNA
signed a joint development agreement with Everledger to develop and
market a CertainT-enhanced, blockchain-based platform for
provenance verification. The two companies believe this joint
solution platform to be at the forefront of linking immutable
digital transactions with synthetic molecular authentication to
tightly track movement and chain of custody
of forensically-identified goods across complex
ecosystems.
- On October 4, 2018, the Company
announced the appointment of Wayne Buchen as Vice President of
Strategic Sales to lead the Company’s global textile Strategic
Sales efforts. With over 20 years of sales, sourcing and operations
experience with established international brands, Mr. Buchen leads
the development and execution of sales strategies to expand Applied
DNA’s presence across global textile markets.
- On September 18, 2018, Applied DNA
announced the formation of LineaRx, whose purpose is to
commercialize Applied DNA’s extensive experience in the design,
manufacture and chemical modification of DNA by large scale
polymerase chain reaction in the field of biotherapeutics,
specifically gene and cellular therapies as well as vaccines.
Management subsequently held an analyst day via webinar to address
the potentially critical role the LineaRx platform can have in the
future of gene therapy, vaccines and adoptive cell therapies.
1 https://www.textiletoday.com.bd/taiwan-showcases-strength-functional-fabric-manufacturing/
Fiscal First Quarter 2019 Conference Call Information
The Company will hold a conference call and webcast to discuss
its fiscal first quarter-end 2019 results on Thursday, February 7,
2019 at 4:30 PM ET. To participate on the conference call, please
follow the instructions below. While every attempt will be made to
answer investors’ questions on the Q&A portion of the call, due
to the large number of expected participants, not all questions may
be answered.
To Participate:
- Participant Toll
Free:1-844-887-9402
- Participant Toll: 1-412-317-6798
- Please ask to be joined to the Applied
DNA Sciences call
Live webcast:
https://services.choruscall.com/links/apdn190207.html
Replay (available 1 hour following the conclusion of the live
call through February 9, 2018):
- Participant Toll Free:
1-877-344-7529
- Participant Toll: 1-412-317-0088
- Participant Passcode: 10127851
- Webcast replay: https://services.choruscall.com/links/apdn190207.html
For those investors unable to attend the live call, a copy of
the presentation is expected to be posted by end of business on
February 8, 2019 and available under the ‘Events and Presentations’
section of the company’s Investor Relations web site:
http://adnas.com/adnas_home/investors/.
Information about Non-GAAP Financial Measures
As used herein, “GAAP” refers to accounting principles generally
accepted in the United States of America. To supplement our
condensed consolidated financial statements prepared and presented
in accordance with GAAP, this earnings release includes Adjusted
EBITDA, which is a non-GAAP financial measure as defined in Rule
101 of Regulation G promulgated by the Securities and Exchange
Commission. Generally, a non-GAAP financial measure is a numerical
measure of a company’s historical or future performance, financial
position, or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
GAAP. The presentation of this non-GAAP financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information presented in accordance
with GAAP. We use this non-GAAP financial measure for internal
financial and operational decision making purposes and as a means
to evaluate period-to-period comparisons of the performance and
results of operations of our core business. Our management believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding the performance of our business
by excluding non-cash expenses that may not be indicative of our
recurring operating results. We believe this non-GAAP financial
measure is useful to investors as they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making.
“EBITDA”- is defined as earnings (loss) before interest expense,
income tax expense and depreciation and amortization expense.
“Adjusted EBITDA”- is defined as EBITDA adjusted to exclude (i)
stock-based compensation and (ii) other non-cash expenses.
About Applied DNA Sciences
Applied DNA is a provider of molecular technologies that enable
supply chain security, anti-counterfeiting and anti-theft
technology, product genotyping and DNA mass production for
diagnostics and pre-clinical nucleic acid-based therapeutic drug
candidates.
Applied DNA makes life real and safe by providing innovative,
molecular-based technology solutions and services that can help
protect products, brands, entire supply chains, and intellectual
property of companies, governments and consumers from theft,
counterfeiting, fraud and diversion.
Visit adnas.com for more information. Follow us
on Twitter and LinkedIn. Join our mailing
list.
Common stock listed on NASDAQ under the symbol APDN, and
warrants are listed under the symbol APDNW.
Forward-Looking Statements
The statements made by Applied DNA in this press release may be
“forward-looking” in nature within the meaning of the Private
Securities Litigation Act of 1995. Forward-looking statements
describe Applied DNA’s future plans, projections, strategies and
expectations, and are based on assumptions and involve a number of
risks and uncertainties, many of which are beyond the control of
Applied DNA. Actual results could differ materially from those
projected due to its history of net losses, limited financial
resources, limited market acceptance and various other factors
detailed from time to time in Applied DNA’s SEC reports and
filings, including our Annual Report on Form 10-K filed on December
18, 2018 and our subsequent quarterly report on Form 10-Q filed on
February 7, 2019, and other reports we file with the SEC, which are
available at www.sec.gov. Applied DNA undertakes no obligation
to update publicly any forward-looking statements to reflect new
information, events or circumstances after the date hereof to
reflect the occurrence of unanticipated events, unless otherwise
required by law.
Financial Tables Follow
APPLIED DNA SCIENCES, INC. CONSOLIDATED BALANCE
SHEETS
December 31,2018
September 30,2018
ASSETS (unaudited) Current assets: Cash and cash equivalents $
3,137,844 $ 1,659,564 Accounts receivable, net 614,764 1,485,938
Inventories 225,289 221,369 Prepaid expenses and other current
assets 622,157 635,174 Total current assets
4,600,054 4,002,045 Property and equipment, net 369,130
419,774 Other assets: Deposits 62,362 62,325 Goodwill
285,386 285,386 Intangible assets, net 831,845 864,203
Total Assets $ 6,148,777 $ 5,633,733
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable and accrued liabilities $ 1,357,712 $ 965,167
Deferred revenue 1,375,496 1,856,693
Total current liabilities 2,733,208 2,821,860
Long-term accrued liabilities 508,426 470,739 Secured convertible
notes payable 2,141,122 1,586,631
Total liabilities 5,382,756 4,879,230 Commitments and
contingencies Stockholders’ Equity Preferred stock, par
value $0.001 per share; 10,000,000 shares authorized; -0- shares
issued and outstanding as of December 31, 2018 and September 30,
2018 - - Series A Preferred stock, par value $0.001 per share;
10,000,000 shares authorized; -0- issued and outstanding as of
December 31, 2018 and September 30, 2018 - -
Series B Preferred stock, par value $0.001
per share; 10,000,000 shares authorized; -0- issued and outstanding
as of December 31, 2018 and September 30, 2018
- -
Common stock, par value $0.001 per share;
500,000,000 shares authorized; 35,612,057 and 30,112,057 shares
issued and outstanding as of December 31, 2018 and September 30,
2018, respectively
35,612 30,112 Additional paid in capital 251,837,589 249,090,474
Accumulated deficit (251,107,180 ) (248,366,083 )
Total stockholders’ equity 766,021 754,503
Total Liabilities and Stockholders’ Equity $ 6,148,777 $
5,633,733
APPLIED DNA SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended December 31,
Three Months EndedSeptember 30,
2018 2017
2018 Revenues: Product
revenues $321,875 $ 350,133 $ 597,394 Service revenues 562,447
297,544 597,971 Total revenues
884,322 647,677 1,195,365 Cost
of revenues 153,485 331,440 250,659
Operating expenses: Selling, general and administrative
3,082,380 2,593,154 3,568,961 Research and development 709,564
740,067 716,693 Depreciation and amortization 135,052
157,648 124,452 Total operating
expenses 3,926,996 3,490,869 4,410,106
LOSS FROM OPERATIONS (3,196,159 ) (3,174,632 )
(3,465,400 ) Other income (expense): Interest (expense) income, net
(31,611 ) - - Other (expense) income, net (6,550 ) (9,080 )
(9,882 ) Loss before provision for income taxes (3,234,320 )
(3,183,712 ) (3,475,282 ) Provision for income taxes -
- - NET LOSS
$
(3,234,320 ) $
(3,183,712 ) $
3,475,282 Net loss per share-basic and diluted
$ (0.11 ) $
(0.12 ) $ (0.12
) Weighted average shares outstanding- Basic and
diluted
30,470,753
26,674,340 30,112,057
APPLIED DNA SCIENCES, INC.
CALCULATION AND RECONCILIATION OF ADJUSTED EBITDA
(unaudited) Three Months Ended December 31,
2018 2017 Net Loss $ (3,234,320 ) $ (3,183,712 )
Interest expense (income), net 31,611 - Depreciation
and amortization 135,052 157,648 Stock based compensation expense
490,244 231,113 Bad debt expense (8,633 ) -
Total non-cash items 648,274 388,761
Consolidated Adjusted EBITDA (loss) $ (2,586,046 ) $ (2,794,951 )
APPLIED DNA SCIENCES, INC. CUMULATIVE
EFFECT ADJUSTMENT AND THE IMPACT ON CURRENT PERIOD FINANCIAL
STATEMENTS OF ADOPTING TOPIC 606 (unaudited)
Three months ended December 31, 2018 (unaudited) prior
U.S. GAAP Topic 606 impact
as reported Statement of Operations Revenues
Product $ 704,972 $ (383,097
)
$ 321,875 Service 570,075 (7,628
)
562,447 Total revenues 1,275,047
(390,725
)
884,322 Cost of revenues 156,818 (3,333
)
153,485 Loss from operations (2,808,767 ) (387,392 ) (3,196,159 )
Assets Prepaids and other current assets $ 625,490 $ (3,333
)
$ 622,157
Liabilities and stockholder's equity
Deferred Revenue $ 1,484,964 $ (109,468
)
$ 1,375,496 Accumulated Deficit (251,001,046
)
(106,134
)
(251,107,180
)
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version on businesswire.com: https://www.businesswire.com/news/home/20190207005779/en/
Investor: Sanjay M. Hurry, 212-838-3777, LHA Investor
Relations, shurry@lhai.comMedia: Susan Forman, Dian
Griesel Int’l., 212-825-3210, sforman@dgicomm.comWeb:
www.adnas.comTwitter: @APDN
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