Applied DNA Sciences(APDN) - 2025 Q2 - Quarterly Report

Financial Performance - Total revenues for the three months ended March 31, 2025, were $983,374, a 5.0% increase from $929,631 in the same period of 2024[12] - Product revenues increased to $548,638 for the three months ended March 31, 2025, compared to $393,125 in the prior year, representing a 39.6% growth[12] - Gross profit for the six months ended March 31, 2025, was $1,054,954, up from $526,748 in the same period of 2024, indicating a 100.4% increase[12] - Total revenues for the six months ended March 31, 2025, were $2,179,991, representing an increase of 19.7% compared to $1,820,795 for the same period in 2024[32] - The company reported a net loss of $6,004,833 for the six months ended March 31, 2025, compared to a net loss of $5,624,064 for the same period in 2024, indicating an increase in losses of approximately 6.7%[14] - The consolidated loss before provision for income taxes for the three-month period ended March 31, 2025, was $3,336,120, compared to $4,493,783 in 2024, showing a decrease of approximately 25.8%[94] Assets and Liabilities - Total current assets rose to $8,430,411 as of March 31, 2025, compared to $8,047,670 as of September 30, 2024, reflecting a 4.8% increase[11] - Total liabilities decreased to $2,811,455 as of March 31, 2025, down from $3,820,955 as of September 30, 2024, a reduction of 26.4%[11] - Total equity increased to $10,224,208 as of March 31, 2025, from $8,968,085 as of September 30, 2024, representing a 14.0% increase[11] - Cash and cash equivalents increased to $6,823,260 as of March 31, 2025, from $6,431,095 as of September 30, 2024, a growth of 6.1%[11] Operational Changes - The company completed a workforce reduction of approximately 20% in January 2025, resulting in a reduction of about 13% in annual payroll costs[15] - The company announced its exit from the DNA Tagging and Security Products and Services segment on February 13, 2025, and plans to continue servicing certain existing contracts[47] - The company is currently engaged in a strategic review of its MDx Testing Services business segment[110] Revenue Recognition - The Company recognizes revenue based on contracts with customers, satisfying performance obligations either at a point in time or over time[170] - PCR-produced linear DNA product revenues are recognized upon transferring control of goods to customers, with invoicing occurring upon shipment and collection terms averaging 30 to 60 days[172] - Revenue for authentication services is recognized when the authentication report is released to the customer[174] - Clinical laboratory testing service revenues, including COVID-19 testing, are recognized when testing results are released, with fixed monthly fee revenues recognized over time[175] - Research and development service revenues are recorded using the over-time revenue recognition model, primarily measured by the cost-to-cost method[176] Market and Growth Strategy - The company is focusing its growth strategy on the development and commercialization of Therapeutic DNA Production Services, including expanding its contract development and manufacturing operation (CDMO)[109] - The LineaDNA platform enables rapid, efficient, and large-scale production of high-fidelity DNA sequences, with production times measured in hours compared to days or weeks for traditional methods[115] - As of Q1 2025, there are 4,418 gene, cell, and RNA therapies in development, representing a substantial market opportunity for the LineaDNA platform[116] - The mRNA therapy market is growing rapidly, with over 450 mRNA therapies under development, 65% of which are in the preclinical stage[119] Stock and Compliance - A reverse stock split of one-for-fifty was executed on March 14, 2025, adjusting the number of shares and exercise prices of outstanding options and warrants accordingly[60][61] - The Company received a notification from Nasdaq on November 12, 2024, regarding non-compliance with the minimum bid price requirement of $1.00 per share, with a compliance deadline of May 12, 2025[76] - On April 7, 2025, the Company regained compliance with Nasdaq's minimum bid price requirement, with the closing bid price being at or above $1.00 from March 14, 2025, to April 4, 2025[77] Internal Controls and Reporting - A material weakness in internal control over financial reporting was identified, specifically related to fair value calculations for warrants, but does not require restatement of prior financial statements[184] - The Company is committed to remediating the identified material weakness by implementing controls to ensure accuracy in fair value calculations[185] - The Company has elected scaled disclosure requirements available to smaller reporting companies, which affects the information provided regarding market risk[181]