Applied DNA Sciences, Inc.

Good day and welcome to the Applied DNA Fiscal Third Quarter 2024 Investor Conference Call. All participants will be in 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 2. 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, Cindy. Good afternoon, everyone, and welcome to ApplyDNA's conference call to discuss our third quarter fiscal 2024 financial results. You can access the press release that was issued after market close today, as well as the slide presentation accompanying this call on the investor relations section of our corporate website or via the webcast today. Speaking on the call are Dr. James Hayward, our chairman, president, and CEO, Beth Jansen, our chief financial officer, and Clay Serac, our Chief Legal Officer and Head of Business Development. Judy Mara, our Chief Operating Officer, will also be available to answer questions on the Q&A portion of this call. Before we get started, I would like to take this opportunity to remind you that our remarks today may include forward-looking statements. I refer you to slide two of the presentation and our Form 10-Q 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 developments. 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. And thank you for joining us on our third quarter fiscal 2024 investor call. I will start this afternoon with an overview of our results for the quarter ended June 30th, 2024. I will then turn the call over to Dr. James Hayward and Clay Chirac, who will update you on our ongoing business initiatives. We will then open the line for questions from our analysts and institutional investors. Prefacing my review of our financial results for the quarter, our year-over-year comparisons reflect the June 2023 quarter, which included revenues and costs associated with our COVID surveillance testing for CUNY. That contract concluded in June 2023. Beginning with our statement of operations, Total revenues for the third quarter of fiscal 24, which ended on June 30th, were approximately $798,000, or a decline of $2.1 million compared to $2.9 million for the same period in the prior fiscal year. The majority of the year-over-year decline in total revenues was from a decrease in our clinical laboratory service revenues of $1.85 million, which relates to the aforementioned COVID surveillance testing contract for CUNY, which is included in our June 2023 financial results. Approximately $70,000 of the decrease in total revenue is attributable to lower product revenues and specifically to decreases in shipments for consumer asset markings and from a nutraceutical customer, both within our DNA tagging and security products and services segment. Service revenues decreased by approximately 200,000 year over year. This decrease is attributable to a decrease in R&D projects in our therapeutic DNA production services segment as well as to isotopic testing within our DNA tagging and security products and services segment. Gross profit was 245,000 or 31% as compared to 1.3 million or 44% in the prior fiscal year period. The decrease in gross profit was primarily due to a decline in gross profit for our MDX Testing Services segment, specifically related to significantly decreased COVID-19 testing volumes year over year. Total operating expenses decreased by approximately $500,000 to $3.6 million compared to $4.1 million in the prior fiscal year period. The decrease in total operating expenses reflects lower SG&A, which is attributable to a reduction in stock-based compensation expense related to the annual option grant to non-employee members of our Board and RSUs to officers, as well as the elimination of certain consultants, which together totaled approximately $500,000. The decrease in SG&A was offset by an increase in R&D of approximately 77,000 to 913,000 from 836,000 in the year-ago period. This increase relates to the development of a commercial quantity of our linear RNA polymerase used by our linear IVT platform. and for consultants to further optimize the RNA polymerase acquired from the spindle acquisition. Our operating loss for the third quarter was $3.3 million compared to $2.9 million in the prior fiscal period. Turning to slide five, excluding non-cash expenses, adjusted EBITDA decreased by $1.1 million to negative 3.2 million compared to a negative 2.1 million in the prior fiscal year period. Now turning to our balance sheet on slide six, cash and cash equivalents totaled 10.4 million on June 30th compared to 7.2 million on September 30th, 2023. The June 30th cash and cash equivalents figure includes the net proceeds of $10.5 million from a public offering that closed on May 28. As of June 30, accounts receivable stood at $531,000, the majority of which was collected after the quarter ended. Our average monthly cash burn is $1.2 million fiscal year to date compared to $500,000 in the prior year. Our average monthly cash burn for the third quarter of fiscal 2024 was $1.3 million. The increase in our cash burn during the third quarter of fiscal 2024 reflects a catch-up on payments made after the financing and the payment of professional fees related to our two finances conducted during the fiscal year. I also note that our just filed Form 10-Q maintains a disclosure from our prior Form 10-Q of a substantial doubt of a going concern. Our ability to alleviate the going concern is dependent on our ability to further implement our business plan and generate revenues or raise capital. On July 31st, 2024, our cash and cash equivalents were approximately 8.9 million. Turning to the offering, we issued 9.23 million common shares and pre-funded warrants to purchase common shares. Series A warrants to purchase 9.23 million common shares at an exercise price of $1.99. with a five-year term from the shareholder approval date. We also issued Series B warrants to purchase 9.23 million common shares at an exercise price of $1.99 with a one-year term from the shareholder approval date. The Series B warrants also allow for an alternative cashless exercise option in which the warrant owner receives three shares of common stock at a $0 exercise price. The exercisability of both the Series A and B warrants are subject to shareholder approval. Subject to shareholder approval, the exercise of the Series A warrants could result in additional gross proceeds of approximately $18.4 million to the company. Subject to the same approval by stockholders, the exercise of the Series B warrants could result in additional gross proceeds of approximately $18.4 million. Or under the alternative cashless exercise provision, holders of the Series B warrants would receive three shares of common stock for every Series B warrant exercise with no gross proceeds to the company. If all of the Series A warrants are exercised And if the Series B warrants are exercised pursuant to the cashless exercise option described above, we would have 47.2 million shares of common stock outstanding. On August 2nd, in accordance with the terms of the public offering, we conducted a special meeting of shareholders to seek to obtain stockholder approval for the Series warrants just discussed. The special meeting was adjourned due to a lack of quorum. In accordance with the terms of the public offering, we are obligated to call a subsequent stockholder meeting within 90 days from August 2nd to seek to obtain approval of the exercisability of the series warrant. As such, the warrant stockholder approval proposal is now included in the proxy for our annual meeting of stockholders, which is scheduled for September 30th. A preliminary copy of our proxy was filed with the SEC on Monday and is viewable on the EDGAR website and our IR website. The annual meeting proxy also includes a proposal to grant the Board the authority to implement a reverse stock split to meet the minimum bid price requirement under the NASDAQ capital market listing rules. On July 12th, we received notice from the listing qualification department of NASDAQ, notifying us that we are not in compliance with the minimum bid price requirements set forth by NASDAQ for continued listing on the NASDAQ capital market. The notification letter does not impact our listing on the NASDAQ capital market at this time. We have 180 calendar days or until January 8th of 2025 to regain compliance with the minimum bid price requirement. In order to regain compliance, our bid price must close at or above $1 per share for a minimum of 10 consecutive business days. If we do not regain compliance, with this NASDAQ listing rule by January 8, we may be eligible for an additional 180 calendar day compliance period, assuming that we are in compliance with all of the other NASDAQ listing requirements. We believe that the 180 day period in which we have to cure the deficiency overlaps multiple biotherapeutic commercialization points that in our view, are value creating. In a moment, you will hear Jim and Clay deliver commentary on anticipated commercial progress that we believe will drive total revenues to an inflection point starting in the first half of fiscal 25. We consider it prudent to seek the discretion to implement a reverse stock split to maintain Applied DNA's NASDAQ listing Should the stock market not recognize the execution of our biotherapeutic-driven value creation story by the conclusion of the 180-day cure period? This concludes my prepared remarks. Thank you for joining us today. I will now turn the call over to Jim for his comments. Jim?