Applied DNA Sciences, Inc.

Good day and welcome to the Applied DNA Science, Inc. Fiscal Third Quarter 2023 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Sanjay Hari, Head of Investor Relations. Please go ahead.

Thank you, Betsy. Good afternoon, everyone, and welcome to ApplyDNA's conference call to discuss our third quarter fiscal 2023 financial results. You can access the press release that was issued after market closed today. as well as a slide presentation accompanying this call on the investor relations section of our corporate website. Speaking on the call today are Dr. James Hayward, our chairman, president, and CEO, Seth Jansen, our chief financial officer, and Clay Chirok, our chief legal officer and head of business development. Judy Murrah, our chief operating officer, will also be available to answer questions on the Q&A portion of the call. Before we begin, please note that some of the information you will hear today during our discussion may consist of forward-looking statements. I refer you to slide two of the presentation and our form 10Q filed a short while ago for important risk factors that could cause the company's actual performance and results to differ materially from those expressed or implied in any forward-looking statements. We undertake no obligation to update or revise any forward-looking statements or other information provided on this call as a result of new information or future results or development. Now it's my pleasure to introduce our first speaker on today's call, Beth Jansen. Please go ahead, Beth.

Thank you, Sanjay. Good afternoon, everyone. Thank you for joining us on our fiscal third quarter investor call. I will start this afternoon with an overview of our results for the quarter ended June 30th, 2023. I will then turn the call over to Dr. James Hayward, our President and CEO who will update you on our ongoing business initiatives. We will then open the line for questions from our analysts and institutional investors. To preface our performance in the fiscal third quarter, our results reflect a weaker environment for COVID-19 testing demand following the federal declaration in early May that COVID-19 no longer constitutes a public health emergency. Following the declaration, and as noted in our fiscal second quarter call, the City University of New York, our largest diagnostic testing program customer, opted not to renew their contract for our testing services. The wind down of the CUNY program began in May at the end of the academic term and was concluded by mid-June. With this as a backdrop, total revenue for the quarter ended June 30, 2023, was $2.9 million, compared to $4.3 million for the same period last year. Offsetting the decline was a year-over-year increase from our therapeutic DNA production segment of approximately $296,000, related to a final delivery under our largest contract for linear DNA to date. Growth profit was $1.3 million, or 44%, compared to $1 million, or 24%, in the prior fiscal year period. The improvement in growth profit margin was primarily driven by improved margins at applied DNA clinical labs due to improved expense management associated with the CUNY contract and a higher percentage of the segment's revenues attributable to higher margin COVID-19 surveillance testing. The operating costs of our molecular diagnostics testing services segment are currently being absorbed by surveillance testing contracts. Total operating expenses increased approximately 6% to $4.1 million from $3.9 million in the prior fiscal year period. The year-over-year increase in total operating expenses primarily reflects an increase in SG&A related to the implementation of quality system automation and an allowance for doubtful accounts to reserve for an account balance that was deemed uncollectible. With the unrealized gain on the change in payer value of the warrants classified as a liability included in our net loss line, we now highlight operating loss as best representing the company's operations. Operating loss for fiscal Q3 was flat at 2.9 million compared to the prior fiscal period. Excluding non-cash expenses, Consolidated adjusted EBITDA for fiscal Q3 was negative 2.1 million compared to negative 2.3 million in the fiscal year-ago period. This improvement resulted primarily from our improved gross profit during the third fiscal quarter. Now turning to our balance sheet, cash and cash equivalents excluding restricted cash totaled 10.8 million on June 30th compared to $12.3 million at March 31st. As of June 30th, our accounts receivable stood at $683,000. We have since collected the majority of this AR. Year to date, our average monthly cash burn is $495,000 compared to $620,000 in the prior comparable period. This improvement is due primarily to increased cash receipts under our CUNY contract, as well as lower costs to support the CUNY contract. Average monthly cash burned year-to-date does not include our restricted cash of $750,000. Updating our cash burn projections post-CUNY contract conclusion, we anticipate a monthly burn of about $1 million per month beginning in the current quarter and moving forward. This projection is contingent on order flow for linear DNA for IVT templates, the launch of our pharma genomics business, and DNA tagging for textiles, the latter as we approach the start of the contingencies in the U.S. It is also contingent on CapEx necessary to establish a linear DNA production capacity suitable for clinical use and to support our ongoing platform development. Based on our recurring losses from operations and continued cash outflows from operating activities included in our just filed Form 10Q is a disclosure of a substantial doubt of a going concern. Our ability to alleviate the going concerns is dependent on our ability to implement our business plan further and generate revenues or raise capital. Our cash position on July 31st was approximately $9.6 million. This concludes my prepared remarks. Thank you for joining us today. I will now turn the call over to Jim for his comments.