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. Our flagship product is
a colorectal cancer screening product sold under the brand name ColoAlert . We develop and distribute our IVD kits to third-party
laboratories, who in turn provide diagnostic analysis for their patients. Additionally, we operate a clinical diagnostic laboratory for
testing patient samples. Substantially all of our revenues in 2023 and 2022 were generated from the sale of our ColoAlert kits and the
analytics and delivery of results from testing patient samples.
In addition, we conduct research and development
in order to increase and diversify our product portfolio. During 2022 and 2023, we are managing two government funded research and development
projects, which provide us non-refundable grant income that covers a portion 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
June 30, 2023 and 2022
The following table provides certain selected
financial information for the periods presented:
| Three Months Ended June 30, | ||||||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||||
| Revenue | $ | 248,945 | $ | 139,240 | $ | 109,705 | 79 | % | ||||||||
| Cost of revenue | $ | 100,147 | $ | 58,427 | $ | 41,720 | 71 | % | ||||||||
| Gross profit | $ | 148,798 | $ | 80,813 | $ | 67,985 | 84 | % | ||||||||
| Gross margin | 60 | % | 58 | % | ||||||||||||
| Research and development | $ | 3,478,595 | $ | 229,916 | $ | 3,248,679 | 1,413 | % | ||||||||
| Sales and marketing | $ | 1,799,569 | $ | 1,866,384 | $ | (66,815 | ) | (4 | )% | |||||||
| General and administrative | $ | 2,796,724 | $ | 4,932,422 | $ | (2,135,698 | ) | (43 | )% | |||||||
| Total operating expenses | $ | 8,074,888 | $ | 7,028,722 | $ | 1,046,166 | 15 | % | ||||||||
| Loss from operations | $ | (7,926,090 | ) | $ | (6,947,909 | ) | $ | (978,181 | ) | (14 | )% | |||||
| Other income (expense) | $ | (325,637 | ) | $ | 9,198 | $ | (334,835 | ) | (3,640 | )% | ||||||
| Net loss | $ | (8,251,727 | ) | $ | (6,938,711 | ) | $ | (1,313,016 | ) | (19 | )% | |||||
| Total comprehensive loss | $ | (8,341,751 | ) | $ | (6,892,507 | ) | $ | (1,449,244 | ) | (21 | )% | |||||
| Basic and dilutive loss per common share | $ | (0.56 | ) | $ | (0.48 | ) | $ | (0.08 | ) | (17 | )% | |||||
| Weighted average number of common shares outstanding - basic and diluted | 14,915,905 | 14,286,157 |
Revenue for the three months ended June 30,
2023 was $248,945 as compared to $139,240 for the three months ended June 30, 2022, an increase of 79%. This increase was attributable
to ColoAlert sales, 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.
Cost of Revenue for the three months ended
June 30, 2023 was $100,147 as compared to $58,427 for the three months ended June 30, 2022, a 71% increase. This increase was the
result of increased ColoAlert sales volume.
Gross profit increased to $148,798 in the three
months ended June 30, 2023 compared to $80,813, for the three months ended June 30, 2022. This gross profit increase, resulting in
an improvement of gross margin from 58% to 60%, was attributable to improved profits resulting from lowered unit cost of goods sold with
attributable to economies of scale from increased volumes.
Research and Development Expenses
Research and development expenses for the three months
ended June 30, 2023, were $3,478,595 compared to $229,916 for the three months ended June 30, 2022, an increase of $3,248,679. This
increase was driven by the cost of our ColoFuture and eAArlyDetect feasibility studies in the U.S. and in Europe. During the three months
ended June 30, 2023, clinical study expenses increased $1,831,286 from the comparable period in 2022. Additionally, our increased staffing
resulted in higher labor costs, which increased by $668,020 for the three months ended June 30, 2023, compared to the same period in 2022.
Increased labor expenses are the result of our continued development of our ColoAlert product and research related to our PancAlert product
candidate. As a result of our increased lab capacity and overhead, our lab expenses increased by $495,050 for the three months ended June
20, 2023 compared to the comparable period of 2022.
Sales and Marketing Expenses
Sales and marketing expenses for the three months
ended June 30, 2023, were $1,799,569 compared to $1,866,384 for the three months ended June 30, 2022, a decrease of $66,815. This
net decrease was the result of an increase in labor costs (salary and consulting) to support the sale of our ColoAlert product of $709,191
and a decrease in advertising expenses of $812,238 in the three months ended June 30, 2023 compared to the comparable period in 2022.
General and Administrative Expenses
General and administrative expenses for the three months
ended June 30, 2023 were $2,796,724 compared to $4,932,422 for the three months ended June 30, 2022, a decrease of $2,135,698. The
decreased expenses were primarily the result of a decrease of $1,266,730 of non-cash stock option expense, and decreased salary and consulting
costs of $854,651, related to legal, banking, and accounting fees primarily related to our capital raising efforts in the first half of
Other expense, net for the three months ended
June 30, 2023 was $325,637 compared to income of $9,198 for the three months ended June 30, 2022, resulting in increased other expenses
(net) of $334,835. This increase was primarily the result of commitment fees and expenses related to our June 28, 2023 financing of $280,000.
Comparison of the Six Months Ended
June 30, 2023 and 2022
The following table provides certain selected
financial information for the periods presented:
| Six Months Ended June 30, | ||||||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||||
| Revenue | $ | 499,049 | $ | 239,805 | $ | 259,244 | 108 | % | ||||||||
| Cost of revenue | $ | 211,310 | $ | 112,563 | $ | 98,747 | 88 | % | ||||||||
| Gross profit | $ | 287,739 | $ | 127,242 | $ | 160,497 | 126 | % | ||||||||
| Gross margin | 58 | % | 53 | % | ||||||||||||
| Research and development | $ | 5,736,373 | $ | 793,488 | $ | 4,942,885 | 623 | % | ||||||||
| Sales and marketing | $ | 4,085,661 | $ | 2,788,014 | $ | 1,297,647 | 47 | % | ||||||||
| General and administrative | $ | 4,879,351 | $ | 9,125,207 | $ | (4,245,856 | ) | (47 | )% | |||||||
| Total operating expenses | $ | 14,701,385 | $ | 12,706,709 | $ | 1,994,676 | 16 | % | ||||||||
| Loss from operations | $ | (14,413,646 | ) | $ | (12,579,467 | ) | $ | (1,834,179 | ) | (15 | )% | |||||
| Other expense | $ | (398,997 | ) | $ | (22,980 | ) | $ | (376,017 | ) | (1,636 | )% | |||||
| Net loss | $ | (14,812,643 | ) | $ | (12,602,447 | ) | $ | (2,210,196 | ) | (18 | )% | |||||
| Total comprehensive loss | $ | (14,963,239 | ) | $ | (12,519,804 | ) | $ | (2,443,435 | ) | (20 | )% | |||||
| Basic and dilutive loss per common share | $ | (1.01 | ) | $ | (0.91 | ) | $ | (0.09 | ) | (10 | )% | |||||
| Weighted average number of common shares outstanding - basic and diluted | 14,803,243 | 13,821,914 |
Revenue for the six months ended June 30,
2023 was $499,049 as compared to $239,805 for the six months ended June 30, 2022, an increase of 108%. This increase was primarily
attributable to ColoAlert sales, which 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.
Cost of Revenue for the six months ended June
30, 2023 was $211,310 as compared to $112,563 for the six months ended June 30, 2022, an 88% increase. This increase was the result of
increased ColoAlert sales volume.
Gross profit increased to $287,739 in the six
months ended June 30, 2023 compared to $127,242, for the six months ended June 30, 2022. This gross profit increase, resulting in an improvement
of gross margin from 53% to 58%, was attributable to improved profits resulting from lowered unit cost of goods sold attributable to economies
of scale with increased volumes.
Research and Development Expenses
Research and development expenses for the six
months ended June 30, 2023 were $5,736,373 compared to $793,488 for the six months ended June 30, 2022, an increase of $4,942,885. This
increase was driven by the cost of our ColoFuture and eAArly Detect feasibility studies in the U.S. and in Europe. During the six months
ended June 30, 2023, clinical study expenses increased $2,648,449 from the comparable period in 2022. Additionally, our increased staffing
resulted in higher labor costs, which increased by $1,471,466 for the six months ended June 30, 2023, compared to the same period in 2022.
Increased labor expenses are the result of our continued development of our ColoAlert product and research related to our PancAlert product
candidate. As a result of our increased lab capacity and overhead, our lab expenses increased by $463,078 for the six months ended June
30, 2023 compared to the comparable period of 2022.
Sales and Marketing Expenses
Sales and marketing expenses for the six months
ended June 30, 2023, were $4,085,661 compared to $2,788,014 for the six months ended June 30, 2022, an increase of $1,297,647. This increase
was related to labor costs (salary and consulting) to support the sale of our ColoAlert product, which increased by $1,356,980 for the
six months ended June 30, 2023 compared to the comparable period of 2022.
General and Administrative Expenses
General and administrative expenses for the six
months ended June 30, 2023 were $4,879,351 compared to $9,125,207 for the six months ended June 30, 2022, a decrease of $4,245,856.
The decreased expenses were primarily the result of a decrease of $3,225,777 of non-cash stock option expense, and decreased salary and
consulting costs of $1,068,694, related to legal, banking, and accounting fees primarily related to our capital raising efforts in the
Other expense, net for the six months ended June