
PART I - FINANCIAL INFORMATION Item 1 - Condensed Consolidated Financial Statements (unaudited) Q2 2021 unaudited financials show total assets at $17.2M, liabilities at $1.6M, and nine-month revenues at $6.0M, with a $9.8M net loss Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2021 | September 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $12,173,443 | $7,786,743 | +$4,386,700 | | Total current assets | $13,696,320 | $9,077,725 | +$4,618,595 | | Total Assets | $17,189,729 | $11,341,179 | +$5,848,550 | | Liabilities & Equity | | | | | Total current liabilities | $1,574,560 | $4,265,878 | -$2,691,318 | | Total liabilities | $1,606,027 | $5,631,673 | -$4,025,646 | | Total equity | $15,583,702 | $5,709,506 | +$9,874,196 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues | $1,700,320 | $431,516 | +294% | | Loss from operations | ($3,367,488) | ($3,188,794) | +5.6% | | Net loss | ($3,446,715) | ($3,290,112) | +4.8% | | Net loss per share | ($0.46) | ($0.72) | N/A | | Metric | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | YoY Change | | Total revenues | $5,988,003 | $1,617,508 | +270% | | Loss from operations | ($8,656,580) | ($8,482,420) | +2.1% | | Net loss | ($9,770,855) | ($8,903,758) | +9.7% | | Net loss per share | ($1.45) | ($2.54) | N/A | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Nine Months Ended June 30 (Unaudited) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($8,675,878) | ($8,159,954) | | Net cash used in investing activities | ($1,642,277) | ($56,182) | | Net cash provided by financing activities | $14,704,855 | $18,582,116 | | Net increase in cash | $4,386,700 | $10,365,980 | - Financing activities in the nine months ended June 30, 2021, were primarily driven by $13.8 million in net proceeds from the sale of common stock and $2.6 million from the exercise of warrants, offset by a $1.7 million repayment of convertible notes14 Notes to Condensed Consolidated Financial Statements Notes detail expanded COVID-19 diagnostics, PPP loan forgiveness, a $13.8M stock offering, and a $35M CUNY testing contract - The company's business is segmented into Biotherapeutic Contract Research, COVID-19 Diagnostic and Surveillance Testing, a Clinical Testing Laboratory, iCTC Technology for cancer research, and Non-Biologic Tagging for supply chain security171833 - The company's Linea™ COVID-19 Assay Kit received Emergency Use Authorization (EUA) from the FDA in May 2020, with subsequent amendments expanding its use for serial screening of asymptomatic individuals1725 - As of June 30, 2021, the company had an accumulated deficit of $279.6 million but believes its cash of $12.2 million is sufficient to fund operations for the next twelve months, supported by a recent $13.8 million stock offering and $2.6 million from warrant exercises394041 Disaggregation of Revenue (Nine Months Ended June 30) | Revenue Source | 2021 | 2020 | | :--- | :--- | :--- | | Clinical laboratory testing services | $3,154,263 | $0 | | Diagnostic kits | $1,587,300 | $0 | | Research and development services | $586,285 | $996,597 | | Asset marking | $386,160 | $303,261 | | Equipment lease services | $150,048 | $0 | | Supply chain | $123,947 | $35,678 | | Large scale DNA production | $0 | $281,972 | | Total | $5,988,003 | $1,617,508 | - The company's PPP loan of approximately $847,000 was fully forgiven in February 2021, resulting in a gain on extinguishment of debt of $839,9458283 - In October 2020, the company repaid $1.7 million of secured convertible notes, resulting in a loss on extinguishment of debt of $1,774,662 for the nine-month period8490 - Subsequent to the quarter end, on August 3, 2021, the company's subsidiary ADCL was awarded a 12-month COVID-19 testing contract by the City University of New York (CUNY) with a maximum value not to exceed $35.0 million111 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 294% Q3 revenue growth to COVID-19 testing, confirming sufficient cash for 12 months operations Results of Operations Q3 revenues surged 294% to $1.7M from COVID-19 products/services; nine-month net loss widened to $9.8M Revenue Comparison (Three Months Ended June 30) | Revenue Type | 2021 | 2020 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Product revenues | $639,637 | $56,911 | +$582,726 | +1024% | | Service revenues | $1,060,683 | $374,605 | +$686,078 | +183% | | Total revenues | $1,700,320 | $431,516 | +$1,268,804 | +294% | - The increase in Q3 product revenue was primarily due to a ~$538,000 increase in sales of the LineaTM COVID-19 Assay Kit152154 - The increase in service revenue was driven by ~$827,000 from COVID-19 Surveillance Testing152154 Revenue Comparison (Nine Months Ended June 30) | Revenue Type | 2021 | 2020 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Product revenues | $2,154,844 | $492,582 | +$1,662,262 | +337% | | Service revenues | $3,833,159 | $1,124,926 | +$2,708,233 | +241% | | Total revenues | $5,988,003 | $1,617,508 | +$4,370,495 | +270% | - For the nine-month period, SG&A expenses increased by 42% to $10.3 million, primarily due to a $708,000 increase in stock-based compensation and a $1.4 million increase in payroll related to staffing the ADCL clinical lab and officer bonuses165 - The nine-month results include a $1,774,662 loss on the extinguishment of convertible notes and an $839,945 gain from the forgiveness of the company's PPP loan170171 Liquidity and Capital Resources As of June 30, 2021, the company held $12.2M cash and $12.1M working capital, with financing activities providing $14.7M - The company had $12.2 million in cash and cash equivalents and $12.1 million in working capital as of June 30, 2021173174 - In January 2021, the company raised approximately $13.8 million in net proceeds from a registered direct public offering175 - An additional $2.6 million was raised from warrant exercises during the nine-month period175 - Management estimates that the company has sufficient cash and cash equivalents to fund operations for the next twelve months from the filing date of this report176 Item 3 - Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk180 Item 4 - Controls and Procedures CEO and CFO concluded disclosure controls were effective as of June 30, 2021, with no material changes to internal controls - Management, including the CEO and CFO, concluded that as of June 30, 2021, the company's disclosure controls and procedures were effective180 - No changes in internal control over financial reporting occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls181 PART II - OTHER INFORMATION Item 1 – Legal Proceedings The company reported no legal proceedings for the period - There were no legal proceedings to report181 Item 1A – Risk Factors The company reported no new risk factors for the period - There were no new risk factors to report181 Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities for the period - There were no unregistered sales of equity securities to report181 Item 3 – Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities to report181 Item 4 – Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable181 Item 5 – Other Information The company reported no other information - There was no other information to report181 Item 6 – Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO - This section contains a list of all exhibits filed with the report, including Sarbanes-Oxley certifications and XBRL data files183