Applied DNA Sciences, Inc. (OTCBB: APDN), (Twitter: @APDN), a
provider of DNA-based anti-counterfeiting technology and product
authentication solutions, announced its financial results for the
third fiscal quarter ending June 30, 2013.
Highlights
- Today we report revenues of approximately $645,000, which
represent the highest quarterly revenues in our history.
- Increase in sales primarily generated by increase in SigNature
DNA-marking contracts
- Signed 8 contracts in connection with military electronics
effort, more in development
- Strengthening of management team
Events Subsequent to the End of the
Quarter:
- Nearly 500,000 electronic components now marked in military
electronics supply chain
- Further positive results in extensive trial of DNANet
anti-theft product in London
- 72% growth in staff and threefold expansion of plant position
company for high-volume delivery
- Progress in Small Business Innovation Research (SBIR) project
with Missile Defense Agency
Financial Results
For the three months ended June 30, 2013, APDN generated
$644,842 in revenues from operations, an increase of $116,268, or
22%, from revenue of $528,574 for the three months ended June 30,
2012. Revenues for the three months ended June 30, 2013 were
principally from the sales of authentication services. The increase
in sales for the three months ended June 30, 2013 compared to the
three months ended June 30, 2012 was primarily caused by the
increase in DNA-marking contracts with commercial electronics
manufacturers and represents the company's highest quarterly
revenues to date.
"This quarter, APDN signed eight contracts related to Federal
Supply Class (FSC) 5962, doubling the cumulative contracts that had
been signed by the previous quarter," stated Dr. James A. Hayward,
President and CEO of Applied DNA Sciences. "We anticipate that this
trend will continue, judging from the increasing number of
inquiries and companies in various stages of negotiation. Our other
product markets continue to contribute to our revenues."
Selling, general and administrative (SG&A) expenses
increased from $1,752,501for the three months ended June 30, 2012
to $3,240,815 for the three months ended June 30, 2013. The
increase of $1,488,314, or 84.9%, is primarily attributable to
higher professional fees specifically for legal and consulting and
increased salary due to the increased headcount. The increase is
also due to expenses incurred for the relocation of our corporate
office during the three months ended June 30, 2013. Included in
SG&A for the three months ended June 30, 2013 is approximately
$956,000 of non-cash charges, including $886,000 for stock based
compensation expense primarily related to the vesting and
modification of employee stock options and $70,000 of bad debt
expense.
"SG&A expenses will stabilize going forward," Dr. Hayward
continued. "We have completed the move into our new facility, our
management team is strong and experienced and we are positioned to
deliver against high demand while continuing necessary product
development without additional major expenditures."
Research and development expenses increased from $99,958 for the
three months ended June 30, 2012 to $184,981 for the three months
ended June 30, 2013. The increase of $85,023 or 85.1% is
attributable to additional research and development to extend our
patent portfolio and to capitalize on emerging market requests.
Net loss for the three months ended June 30, 2013 increased to
$2,135,612 from a net loss of $1,429,645 for the three months ended
June 30, 2012 which is primarily attributable to factors described
above.
Military Electronics
Dr. Hayward commenting further on the effort in military
electronics, pointed out that "the companies signed or in stages of
negotiation include manufacturers, authorized distributors, and
prime contractors. We believe the company, along with the Defense
Logistics Agency, is building a platform on which both private and
public sectors can leverage and take immediate, practical steps
against counterfeits. The electronics industry is vast and varied,
but our product is simple, doable, and tested."
The company also reported favorably on its high profile in the
area of new government regulations requiring defense suppliers to
build anti-counterfeiting systems. APDN team members have presented
at scores of conferences, led a major industry workshop this
quarter, and delivered formal comments at hearings in Washington
D.C. and in written form, all as thought leaders on
anti-counterfeiting in electronics. Coverage of the company in
trade and mass media has been extensive.
Company officials also pointed out that, nearing the milestone
of a half-million SigNature DNA-marked electronic components in
circulation, the company is in a position to capitalize by offering
a broader set of authentication programs in the supply chains
impacted. We expect that channel selling will bring new customers
and increase sales.
Distribution Network
In the last quarter we have expanded our Distribution network to
increase sales of our off-the-shelf products such as the Sentry DNA
spray system. This action has shown additional sales revenue at
minimal operational costs. We now have distributors in Sweden,
Italy, Australia, New Zealand, North America, Greece and the Middle
East, with plans for further expansion.
Missile Defense Agency SBIR Contract
Company officials judge our progress against the specific tasks of
our contract with the Missile Defense Agency (MDA) to be ahead of
schedule. For example, execution against the company's technology
roadmap has led to increases in scale needed to penetrate industry
sectors from independent distributors, to authorized distributors,
to component manufacturers and prime contractors. The company
expects corresponding increments in scale for printing and marking
methodologies to be relevant to multiple industries and federal
agencies.
London DNANet® deployment
APDN is engaged with the London Metropolitan Police Service
(MPS), deploying its DNANet product against home burglaries in two
of the city's high-crime areas, Southwark and Lambeth. Results have
been very favorable, including in districts adjacent to the target
neighborhoods, showing that crime has not been merely displaced,
but deterred.
Patent portfolio
APDN continues to build its patent portfolio, an essential asset
for our shareholders, critical in a biotech company, and the basis
of competitive edge. APDN regards our patent strategy as a
fundamental component of our value creation. Two patent
applications were filed in the quarter and four granted.
Management team
APDN continued to expand and solidify its management team in the
quarter, adding talent in information technology and human
resources.
APDN currently has 44 full-time employees and 4 part-time
employees, including 3 in management, 34 in operations, 9 in sales
and marketing, 1 in human resources, and 1 in investor
relations.
Dr. Hayward commented: "We have a diverse, well educated and
experienced workforce. We are poised to take the company to the
next level through expansion to new stakeholders in our core
markets, as well as tailoring our proven solutions for emerging
markets. We continue to grow our management team aiming for
world-class expertise. The enhanced team will support a market
launch in the Fall of 2013 of an Authentication Channel Program
that will accelerate momentum in electronics marking with SigNature
DNA. In parallel, new marking and reading technologies will broaden
accessibility to product security information in emerging markets
such as pharmaceutical track-and-trace, print media and
textiles."
Form 10-Q Availability
The quarterly report on Form 10-Q, which includes Applied DNA
Sciences consolidated financial statements, is available for
viewing and downloading, free of charge, through the Investor
Relations section of APDN's Web site at www.adnas.com, or through
the SEC's electronic data system at www.sec.gov.
About Applied DNA Sciences
APDN is a provider of botanical-DNA based security and
authentication solutions that can help protect products, brands and
intellectual property of companies, governments and consumers from
theft, counterfeiting, fraud and diversion. SigNature® DNA and
smartDNA, our principal anti-counterfeiting and product
authentication solutions that essentially cannot be copied, provide
a forensic chain of evidence and can be used to prosecute
perpetrators.
The statements made by APDN may be forward-looking in nature.
Forward-looking statements describe APDN'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 APDN. Actual results could
differ materially from those projected due to our short operating
history, limited financial resources, limited market acceptance,
market competition and various other factors detailed from time to
time in APDN's SEC reports and filings, including our Annual Report
on Form 10-K, filed on December 20, 2012 and our subsequent
quarterly reports on Form 10-Q. APDN 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.
MEDIA CONTACT: Mitchell Miller 646-543-3373 fax: 631-240-8818
INVESTOR CONTACT: Debbie Bailey 631-444-8090 fax: 631-240-8817 FCMN
Contact: Email Contact Web site: http://www.adnas.com Twitter:
@APDN, @APDNInvestor.
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