Full Press Release Details
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
AND RESULTS OF OPERATIONS
You should read the following discussion and analysis
of our financial condition and results of operations together with our financial statements and the related notes to those statements
included in Exhibit 99.2 to this Form 6-K. This discussion and analysis contain forward-looking statements based upon current beliefs,
plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions,
such as statements regarding our intentions, plans, objectives, expectations, forecasts and projections. Our actual results and the timing
of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors,
including those set forth under the section titled "Risk Factors" and elsewhere in our Annual Report for the Year ended
December 31, 2022 on Form 20-F, filed with the Securities and Exchange Commission on April 7, 2023. You should carefully read the "Risk
Factors" to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking
Organization and Overview of Operations
We develop in-vitro diagnostic ("IVD")
tests for clinical diagnostics in the area of human genetics, focusing in the areas of personalized medicine. We additionally operate
a clinical diagnostic laboratory. We develop and distribute our IVD kits to third party laboratories, who in turn provide diagnostic analysis
for their patients. The majority of our revenues in 2022 comes from the sale of our IVD kits under the brand name ColoAlert .
In addition, we conduct research and development
in order to increase and diversify our product portfolio. Currently, we are managing two government funded research and development projects,
which provide us non-refundable grant income that covers a percentage of the individual project related costs. Our PancAlert product candidate
research is partially funded with government programming and Company funds.
On November 9, 2021, we completed our initial
public offering whereby we sold 2,300,000 ordinary shares for gross proceeds of $11,500,000. On January 28, 2022 we completed a follow-on
public offering whereby we sold 1,725,000 ordinary shares for gross proceeds of $25,875,000.
Results of Operations
Comparison of the Three Months Ended
March 31, 2022 and 2021
The following table provides certain selected
financial information for the periods presented:
| Three Months Ended March 31, | ||||||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||||
| Revenue | $ | 250,104 | $ | 100,565 | $ | 149,536 | 149 | % | ||||||||
| Cost of revenue | $ | 111,163 | $ | 54,136 | $ | 57,027 | 105 | % | ||||||||
| Gross profit | $ | 138,941 | $ | 46,429 | $ | 92,512 | 199 | % | ||||||||
| Gross Margin | 56 | % | 46 | % | ||||||||||||
| Research and Development | $ | 2,625,072 | $ | 563,572 | $ | 2,061,500 | 366 | % | ||||||||
| Sales and Marketing | $ | 2,410,935 | $ | 921,630 | $ | 1,489,305 | 162 | % | ||||||||
| General and Administrative | $ | 1,590,490 | $ | 4,192,785 | $ | (2,602,295 | ) | (62 | )% | |||||||
| Total operating expenses | $ | 6,626,497 | $ | 5,677,987 | $ | 926,362 | 17 | % | ||||||||
| Loss from operations | $ | (6,465,408 | ) | $ | (5,631,558 | ) | $ | (855,998 | ) | (15 | )% | |||||
| Other expense | $ | 73,360 | $ | 32,178 | $ | 41,182 | 128 | % | ||||||||
| Net loss | $ | (6,560,916 | ) | $ | (5,663,736 | ) | $ | (897,180 | ) | (16 | )% | |||||
| Total Comprehensive Loss | $ | (6,621,488 | ) | $ | (5,627,297 | ) | $ | (994,191 | ) | (18 | )% | |||||
| Basic and dilutive loss per common share | $ | (0.45 | ) | $ | (0.42 | ) | $ | (0.03 | ) | (7 | )% | |||||
| Weighted average number of common shares outstanding - basic and diluted | 14,688,361 | 13,348,349 |
Revenue for the three months ended March
31, 2023 was $250,104 as compared to $100,565 for the three months ended March 31, 2022, an increase of 149%. This increase
was primarily attributable to ColoAlert sales, which increased 152% for the three-month ended March 31, 2023, compared to the three months
ended March 23, 2022. Our ColoAlert revenue in both three-month periods were primarily in Germany. We intend to continue our efforts to
grow the market for ColoAlert, both in Germany and extending to other countries in Europe and the rest of world.
Our revenue by product and service category is
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| ColoAlert | $ | 250,077 | $ | 99,051 | ||||
| Other revenue | 27 | 1,514 | ||||||
| Total Revenue | $ | 250,104 | $ | 100,565 |
Cost of Revenue for the three months ended
March 31, 2023 was $111,163 as compared to $54,136 for the three months ended March 31, 2033, a 105% increase. This increase was
the result of increased ColoAlert sales volume.
Gross profit increased to $138,941 in the three
months ended March 31, 2023 compared to $46,429, for the three months ended March 31, 2022. This gross profit increase, resulting
in an improvement of gross margin from 46% to 56%, was attributable to improved profits resulting from lowered unit cost of goods sold
with increased volumes.
Research and Development Expenses
Research and development expenses for the three months
ended March 31, 2023 were $2,625,072 compared to $563,572 for the three months ended March 31, 2022, an increase of $2,061,500. This
increase was driven by increases in labor costs and office and lab lease expenses to support our increased staffing. Labor costs (salary
and consulting costs) increased by $1,987,903 for the three months ended March 31, 2023, compared to the same period in 2022, representing
substantially all of the year over year increase. Our increases in research and development expenses are the result of our continued development
of our ColoAlert product and research related to our PancAlert product candidate and the funding of our feasibility studies in the U.S.
Sales and Marketing Expenses
Sales and marketing expenses for the three months
ended March 31, 2023, were $2,410,935 compared to $921,630 for the three months ended March 31, 2022, an increase of $1,489,305.
This increase was the result of an increase in marketing and advertising expenses of approximately $741,904 and an increase of $772,632
related to labor costs (salary and consulting) to support the sale of our ColoAlert product.
General and Administrative Expenses
General and administrative expenses for the three months
ended March 31, 2023 were $1,590,490 compared to $4,192,785 for the three months ended March 31, 2022, an decrease of $2,602,295.
The decreased expenses were primarily the result of a decrease of $1,944,284 of non-cash stock option expense, and decreased costs from
service providers of $312,921, related to legal, banking, and accounting fees primarily related to our capital raising efforts in the
first three months of 2022.
Other expense, net for the three months ended
March 31, 2023 was $73,360 compared to $32,178 for the three months ended March 31, 2022, resulting in increased other expenses (net)
of $41,182. This increase was primarily the result of other income from a government grant program under which we earned $36,288 in the
three months ended March 31, 2022; this program ended during 2022.
Liquidity and Capital Resources
Our principal liquidity requirements are for working
capital and operating losses. We fund our liquidity requirements primarily through cash on hand, cash flows from operations, and equity
financing. As of March 31, 2023, we had $10,858,202 of cash and cash equivalents, with $17,141,775 as of December 31, 2022.
The following table summarizes our cash flows
from operating, investing and financing activities:
| Three Months Ended March 31, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Cash used in operating activities | $ | (5,659,391 | ) | $ | (2,758,108 | ) | $ | (2,901,281 | ) | |||
| Cash used in investing activities | $ | (1,400,930 | ) | $ | (75,860 | ) | $ | (1,325,070 | ) | |||
| Cash provided by financing activities | $ | 773,484 | $ | 24,110,487 | $ | (23,337,003 | ) |
Cash Flow from Operating Activities
For the three months ended March 31, 2023,
cash flows used in operating activities was $5,659,391 compared to $2,758,108 used during the three months ended March 31, 2022.
The increase in cash flows used in operating activities of $2,901,283 was primarily the result of our operating loss for the three months
ended March 31, 2023, net of non-cash stock-based compensation, depreciation and amortization, and timing differences for the settlement
of assets and liabilities.
Cash Flows from Investing Activities
During the three months ended March 31, 2023,
we used $1,400,930 in investing activities compared to $75,860 used during the year ended six months ended three months ended
March 31, 2022. The increase in cash flows used in investing activities of $1,325,070 was the result of capital expenditures related to
the expansion of our office and lab space, and the payment of $500,000 for the first installment related to the purchase of our ColoAlert
intellectual property in February of 2023.
Cash Flows from Financing Activities
During the three months ended March 31, 2023,
we had cash flow provided by financing activities of $773,484 compared to cash flow provided by financing activities of $24,110,487 for
the three months ended March 31, 2022, a decrease of $23,337,003. This decrease was the result of our sale of 1,725,000 ordinary
shares on January 28, 2022, for net proceeds of $23,865,890.
Working Capital Discussion
has recurring losses, accumulated deficit totaling $49,593,210 and negative cash flows used in operating activities of $5,659,391 as
of and for the three months ended March 31, 2023. The Company also had $10,858,202 of cash on hand on March 31, 2023, and working capital,
excluding liabilities to be settled with ordinary shares, of $7,679,572. These conditions raise substantial doubt as to the Company's
ability to continue as a going concern for a period of one year from the issuance of these financial statements. If the Company is unable
to obtain funding, the Company could be forced to further delay, reduce or eliminate its research and development, regulatory, and commercial
efforts which could adversely affect its future business prospects and its ability to continue as a going concern.
The Company plans to fund its cash flow and working
capital needs through current cash on hand and future debt and/or equity financings which it may obtain through one or more public or
private equity offerings, debt financings, government or other third-party funding, strategic alliances or collaboration agreements. In
December 2022 the Company entered into a $50,000,000 Controlled Equity Offering (see Note 12); the Company raised $1.3 million of cash