Company to Hold Conference Call and Webcast
Today, Thursday, May 9, 2019 at 4:30 PM EST.
Applied DNA Sciences, Inc. (NASDAQ: APDN) (“Applied DNA” or the
"Company"), announced consolidated financial results for the fiscal
2019 second quarter ended March 31, 2019.
“We successfully closed on a definitive agreement with TheraCann
that contained the largest payment transaction in company history.
This new revenue stream beachhead from legal cannabis sits beside
the considerable progress we have made in driving adoption of our
DNA technology platform and its commercialization across global
textile industries,” stated Dr. James A. Hayward, president and CEO
of Applied DNA. “Our exclusive cannabis licensing and cooperation
agreement with TheraCann secures $5 million in up-front payments by
August 15, 2019 (of which $1 million has already been received) and
includes annual minimum commitments that scale over time to $20
million in order to maintain the exclusive license. Powered by our
CertainT® platform, TheraCann’s ETCH biotrace™ system can offer the
global legal cannabis and hemp industries what we believe is an
unparalleled ability to ensure true authentication and provenance
verification.”
“Growing worldwide demand for legalized cannabis is driving the
creation of global supply chains that need to be secured and
validated from inception through consumption. TheraCann’s market
position, together with our proven molecular tags and application
and authentication systems, is yielding a pipeline of opportunities
that spans interest from numerous countries wanting to protect
their licensed cannabis supply chain to commercial trials for
international export opportunities.”
Continued Dr. Hayward, “Within our textile practice, our
initiatives to further penetrate the very large synthetic fiber
market are beginning to bear fruit. Initial volumes of goods tagged
under our CertainT licensing platform are now appearing at retail
via Amazon.com and on the store shelves of a big box retailer in
North America. We are also executing on our strategy to engage key
participants along multiple points in the global textile value
chain to more broadly drive adoption of our platform. To that end,
we are today involved in active pilot projects with fiber
manufacturers that cumulatively represent approximately 50% of the
annual global market for viscose. In cotton, after the close of the
quarter, we announced our entry into the Egyptian cotton market to
demonstrate the same level of authenticity and accountability to
manufacturers of luxury Egyptian cotton products as we have to the
U.S. cotton industry.
“Cannabis, textiles and our wholly-owned subsidiary, LineaRx are
expected to drive our top-line performance for the balance of
fiscal 2019 while we also progress nascent opportunities in other
industries, including pharmaceuticals, ” concluded Dr. Hayward. “We
believe market trends are becoming tailwinds for us: sustainability
in manufacturing is becoming increasingly relevant to today’s
consumer, and manufacturers are seeking to elevate brands and
products by establishing the transparency and truth that consumers
desire. Our DNA technology platform can be the basis for the trust
that both sides seek.”
Fiscal Second Quarter 2019 Financial Results:
- Revenues decreased 25% for the second
quarter of fiscal 2019 to $778 thousand, compared with $1.0 million
reported in the second quarter of fiscal 2018, and decreased 12%
from the $884 thousand reported in the first fiscal quarter ended
December 31, 2018. The year-over-year decrease in revenues was due
primarily to a decrease in product revenues of $315 thousand from
our biopharmaceutical and consumer asset marking verticals. The
quarter-over-quarter decrease in revenues reflects the fulfillment
of a cotton order during the first quarter of fiscal 2019.
- 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 $440 thousand and $830 thousand
during the second quarter and first six months of fiscal 2019,
respectively. These amounts were primarily comprised of the
recognition of $383 thousand and $766 thousand during the three and
six months periods ended March 31, 2019, respectively, under a
$1.15 million cotton order shipped in June 2018, with extended
payment terms. The total cumulative impact of the Update that was
recorded to opening retained earnings in fiscal 2019 was
approximately $494 thousand. See Cumulative Effect Adjustment and
the Impact on Current Period Financial Statements of Adopting Topic
606 attached.
- Total operating expenses increased to
$3.3 million for the second fiscal quarter of 2019, compared with
$2.8 million in the prior fiscal year’s second quarter. This
increase is primarily attributable to an increase in stock-based
compensation expense.
- Net loss for the quarter ended March
31, 2019 was $2.7 million, or $0.08 per share, compared with a net
loss of $2.1 million, or $0.07 per share, for the quarter ended
March 31, 2018 and a net loss of $3.2 million, or $0.11 per share
for the quarter ended December 31, 2018.
- Excluding non-cash expenses, Adjusted
EBITDA was negative $2.3 million for the quarters ended March 31,
2019 and 2018. See below for information regarding non-GAAP
measures.
Six-Month Financial Highlights:
- Revenues for the first six months of
fiscal 2019 totaled $1.66 million, a decrease of 2% from $1.69
million from the same period in the prior fiscal year. The
decrease in revenues was due to a decrease in product revenue of
$343 thousand, or 41%, offset by an increase in service revenues of
$315 thousand, or 37%.
- Operating expenses for the six months
ended March 31, 2019 increased by $902 thousand or 14% for the same
period last fiscal year. The increase is primarily attributable to
an increase in stock-based compensation, offset to a lesser extent
by decreases in R&D and depreciation and amortization
expenses.
- Net loss for the six months ended March
31, 2019 was $5.9 million or $0.16 per share, compared with a net
loss of $5.3 million or $0.18 per share for the six months ended
March 31, 2018.
- Excluding non-cash expenses and
interest, Adjusted EBITDA for the six months ended March 31, 2019
was a negative $4.9 million as compared to a negative $5.1 million
for the same period in the prior fiscal year. See below for
information regarding non-GAAP measures.
Select Recent Operational Highlights:
- On May 7th, the Company and American
& Effird (“A&E”)announced that A&E will be previewing
its new line of advanced molecular-tagged identification threads,
branded “integrity”, later this month. A&E will publicly
display this latest breakthrough at the upcoming Texprocess show in
Frankfurt Germany.
- On April 29, 2019, Applied DNA’s
wholly-owned subsidiary, LineaRx announced that it has improved
expression levels and survival rates of linear DNA constructs
delivered to human T cells without viruses or plasmids. In
collaboration with Avectas, a cell engineering technology
business enabling the manufacture of cell therapies, LineaRx has
achieved a greater than four-fold increase in cell survival, and a
more than 50% increase in linear gene expression of a model
amplicon. Results were presented by Avectas two weeks ago at
the Cell & Gene Meeting on the Mediterranean, attended by
more than 50 companies.
- On April 22, 2019, the Company and GHCL
announced the launch of “REKOOP” on Amazon.com. REKOOP is verified
by the Company’s CertainT platform. The “REKOOP” range of bedding
products is meant for the ecologically conscious consumer who is
making purchase decisions to support the environment and is
supportive of initiatives that help reduce the carbon
footprint.
- On April 11, 2019, Applied DNA
announced the signing of a non-binding MOU with Netherlands-based
Stahl. Under the terms of the MOU, the parties will continue the
evaluation of molecular tagging of process chemicals and coatings
utilizing Stahl’s product offerings as a point of entry into supply
chains for the Company’s molecular tags. Stahl will provide
technical expertise to the company relating to the process
chemicals used in leather manufacturing.
- On April 8, 2019, the Company’
announced that its wholly owned subsidiary, LineaRx, achieved what
it believes to be a biotech industry first with Anti-CD19
expression in human CAR T cells via proprietary non-viral,
plasmid-free platform.
- On April 2, 2019, Loftex, a leading
manufacturer of high-quality towels, announced that the first
retail introduction of their bath towels including recycled PET
(rPET) source-verified by Applied DNA’s CertainT® platform are
now available at US retail this month. Loftex introduced the
eco-friendly towel, partially comprised of rPET materials as part
of their commitment to sustainability both in their factory and in
their products.
- On March 29, 2019, the Company signed
an exclusive cannabis licensing and cooperation agreement with
Theracann International. As part of the agreement, Applied DNA is
to receive staged payments totaling $5 million by August 15, 2019.
The Company announced that the first payment of $1 million was
received during April 2019. The agreement also calls for annual
payment minimums that scale from $7 million in year three to $20
million in year fifteen to maintain license exclusivity.
- On March 1, 2019, Applied DNA announced
that its wholly owned subsidiary, LineaRx and Takis/Evvivax are
progressing linear DNA for use as a cancer vaccine. LineaRx shipped
TK7 and ConTRT amplicons to Takis/Evvivax in early March as part of
the companies’ Joint Development Agreement entered into during
September 2018.
Fiscal Second Quarter 2019 Conference Call
Information
The Company will hold a conference call and webcast to discuss
its fiscal second quarter-end 2019 results on Thursday, May 9, 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/apdn190509.html
Replay (available 1 hour following the conclusion of the live
call through May 16, 2019):
- Participant Toll Free:
1-877-344-7529
- Participant Toll: 1-412-317-0088
- Participant Passcode: 10130964
- Webcast replay:
https://services.choruscall.com/links/apdn190509.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 May
10, 2019 and available under the ‘Events and Presentations’ section
of the company’s Investor Relations web site:
https://adnas.com/molecular-based-security/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 therapeutics.
We make 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, the uncertainties inherent in
research and development, future clinical data and analysis,
including whether any of Applied DNA’s product candidates will
advance further in the preclinical research or clinical trial
process, including receiving clearance from the U.S. Food and Drug
Administration or equivalent foreign regulatory agencies to conduct
clinical trials and whether and when, if at all, they will receive
final approval from the U.S. FDA or equivalent foreign regulatory
agencies, shifting enforcement priorities of US federal laws
relating to cannabis, ability to maintain its NASDAQ listing 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, as amended, and our subsequent
quarterly reports on Form 10-Q filed on February 7, 2019 and May 9,
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
March 31,2019
September 30,2018
ASSETS (unaudited) Current assets: Cash and cash equivalents $
1,541,141 $ 1,659,564 Accounts receivable, net 316,204 1,485,938
Inventories 314,675 221,369 Prepaid expenses and other current
assets 591,069 635,174 Total current assets
2,763,089 4,002,045 Property and equipment, net 315,751
419,774 Other assets: Deposits 62,371 62,325 Goodwill
285,386 285,386 Intangible assets, net 799,487 864,203
Total Assets $ 4,226,084 $ 5,633,733
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable and accrued liabilities $ 1,014,291 $ 965,167
Deferred revenue 1,205,469 1,856,693
Total current liabilities 2,219,760 2,821,860
Long-term accrued liabilities 546,114 470,739 Secured convertible
notes payable 2,194,568 1,586,631
Total liabilities 4,960,442 4,879,230 Commitments and
contingencies Stockholders’ (Deficit) Equity Preferred
stock, par value $0.001 per share; 10,000,000 shares authorized;
-0- shares issued and outstanding as of March 31, 2019 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 March 31, 2019 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 March 31, 2019 and September 30,
2018 - - Common stock, par value $0.001 per share;
500,000,000 shares authorized; 37,735,157 and 30,112,057 shares
issued and outstanding as of March 31, 2019 and September 30, 2018,
respectively 37,735 30,112 Additional paid in capital 253,021,844
249,090,474 Accumulated deficit (253,793,937 )
(248,366,083 ) Total stockholders’ (deficit) equity
(734,358 ) 754,503 Total Liabilities and
Stockholders’ (Deficit) Equity $ 4,226,084 $ 5,633,733
APPLIED DNA SCIENCES, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) Three
Months Ended March 31, Six Months Ended March 31,
2019 2018 2019 2018 Revenues: Product
revenues $ 171,261 $ 486,341 $ 493,137 $ 836,474 Service revenues
607,207 557,605 1,169,654
855,149 Total revenues 778,468
1,043,946 1,662,791 1,691,623
Cost of revenues 133,141 372,153
286,626 703,593 Operating
expenses: Selling, general and administrative 2,528,914 1,996,604
5,611,295 4,589,759 Research and development 651,377 669,813
1,360,941 1,409,880 Depreciation and amortization 97,673
145,280 232,724 302,928
Total operating expenses 3,277,964
2,811,697 7,204,960 6,302,567
LOSS FROM OPERATIONS (2,632,637 ) (2,139,904 )
(5,828,795 ) (5,314,537 ) Other income (expense): Interest
(expense) income, net (37,417 ) - (69,028 ) - Other expense (16,703
) (6,305 ) (23,254 ) (15,385 ) Loss
before provision for income taxes (2,686,757 ) (2,146,209 )
(5,921,077 ) (5,329,922 ) Provision for income taxes
— — — — NET
LOSS
$
(2,686,757
) $ (2,146,209 ) $ (5,921,077 ) $ (5,329,922 ) Net loss per
share-basic and diluted $ (0.08 ) $ (0.07 ) $ (0.16 ) $ (0.18 )
Weighted average shares outstanding- Basic and diluted
33,399,597 30,112,057 36,384,939
28,879,804
APPLIED DNA
SCIENCES, INC. CALCULATION AND RECONCILIATION OF ADJUSTED
EBITDA (unaudited) Three Months Ended
March 31, Six Months Ended March 31, 2019 2018
2019 2018 Net Loss $ (2,686,757 ) $
(2,146,209 ) $ (5,921,077 ) $ (5,329,922 ) Interest expense
(income), net 37,417 - 69,028 - Depreciation and amortization
97,673 145,280 232,724 302,928 Stock based compensation expense
(income) 267,094 (285,045 ) 757,338 (53,932 ) Bad debt expense
- 17,117 (8,633 )
17,117 Total non-cash items 402,184
(122,648 ) 1,050,457
266,113 Consolidated Adjusted EBITDA (loss) $
(2,284,573 ) $ (2,268,857 ) $ (4,870,620 ) $
(5,063,809 )
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 $ 554,357 $ (383,096
)
$ 171,261 Service 663,816 (56,609
)
607,207 Total revenues $ 1,218,173 $ (439,705
)
$ 778,468 Cost of revenues $ 136,474 $ (3,333
)
$ 133,141 Loss from operations $ (2,196,265 ) $ (436,372 ) $
(2,632,637 )
Six months ended December 31, 2018
(unaudited) prior U.S. GAAP Topic 606 impact
as reported Statement of Operations Revenues Product
$ 1,259,329 $ (766,192 ) $ 493,137 Service 1,233,891 (64,237
) 1,169,654
Total revenues $ 2,493,220 (830,429 ) $ 1,662,791
Cost of revenues $ 293,293 $ (6,667 ) $ 286,626 Loss from
operations $ (5,005,032 ) $ (823,763 ) $ (5,828,795 )
Assets Prepaid and other current assets $ 597,736 $ (6,667 )
$ 591,069
Liabilities and stockholder’s equity
Deferred Revenue $ 875,232 $ 330,237 $ 1,205,469 Accumulated
Deficit $ (253,463,700 ) $ (330,237 ) $ (253,793,937 )
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version on businesswire.com: https://www.businesswire.com/news/home/20190509005624/en/
Investor contact: Sanjay M. Hurry, 212-838-3777, LHA
Investor Relations, shurry@lhai.comMedia contact:
Susan Forman, Dian Griesel Int’l., 212-825-3210,
sforman@dgicomm.comWeb: www.adnas.comTwitter:
@APDN
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