On December 9, 2021 Applied DNA Sciences, Inc. (NASDAQ: APDN) (the "Company"), a leader in Polymerase Chain Reaction (PCR)-based DNA manufacturing and nucleic acid-based technologies, reported consolidated financial results for the full fiscal year and quarter ended September 30, 2021 (Press release, Applied DNA Sciences, DEC 9, 2021, View Source [SID1234596653]).

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"We are pleased to report a fourth consecutive quarter of year-over-year revenue growth in the fourth quarter and record revenues for the fiscal year, both of which are the result of our decision to enter the COVID-19 testing and assay manufacturing markets and leverage our expertise in PCR refined in our Industrial DNA and LinearDNA businesses," said Dr. James A. Hayward, president and CEO of Applied DNA. "COVID-19-related revenues in the fiscal year were driven by the establishment of ADCL, our clinical laboratory subsidiary, to meet the need for population-scale COVID-19 testing, as well as from sales of our Linea 1.0 COVID-19 Assay Kit and testing consumables. Momentum in COVID-19 testing client acquisition, especially in the second half of the fiscal year, supported our continued investment in ADCL that is now largely complete. We recorded strong year-over-year quarterly revenue comparisons that nevertheless fell short of a key client’s projections due to the combination of increased vaccination rates and vaccine mandates. Average weekly testing levels remain in flux but are on an uptrend: new clients are onboarding in FQ1; the key client’s testing needs have increased since Thanksgiving to include the random testing of vaccinated individuals.

"We were also pleased to see the re-emergence of demand for Industrial DNA from the textile industry and repeat and new orders for LinearDNA in the second half of the fiscal year," continued Dr. Hayward. "The pandemic has impacted demand trends; nevertheless, we believe our textiles practice has gained the attention of global apparel and footwear brands seeking to reprioritize their post-pandemic supply chains towards sustainability, brand protection, and traceability. At LineaRx, vaccine development against COVID-19 has put a large spotlight on nucleic acid therapies, so much so that plasmid manufacturers are projecting long lead times with growing capital and labor costs that are incenting developers to seek an alternative to plasmid DNA-based manufacture. With both factors playing to LinearDNA’s strengths, we believe a window is opening for a disruptive force in the market for therapeutic DNA and particularly as we believe we will generate compelling data from our clinical veterinary trials."

Concluded Dr. Hayward, "In fiscal 2022, the emergence of a new SARS-CoV-2 variant of concern, the unpredictable trajectory of the virus’ mutations, asymmetric vaccine distribution, and potentially waning effectiveness of vaccines, we believe, keep testing on the front lines of the global battle against the virus. Our COVID-19 diagnostic development plan and go-to-market strategy are aligned with our capacity to conduct population-scale testing to meet the evolving demands of current and prospective customers. We are progressing a dual-COVID-19/influenza test and an at-home sample collection system, advancing our Linea SARS-CoV-2 Mutation Panel EUA request, and recently submitted our Linea 2.0 COVID-19 Assay Kit, a new N and E gene-based test for COVID-19 that we believe is well suited to serve our future testing needs as new variants continue to emerge, to the New York State Department of Health for its review as a laboratory developed test. In the non-COVID-19 arena, we are leveraging our deep scientific bench to explore new areas of cutting edge molecular testing that will further leverage our investment in ADCL.

"We are also prepared to capitalize on opportunities cultivated in fiscal 2021 in Industrial DNA and the therapeutic application of LinearDNA. In fiscal 2022 our textiles practice is focused on commercial-scale trials and certain scale-up programs. With LinearDNA, we believe our roadmap to an initial cGMP production capacity is ideally timed given the biotech industry’s increasing investments in cell and gene therapies and nucleic acid vaccines and through valuable third-party validation of the benefits of LinearDNA. We intend to continue to pursue the use of LinearDNA for veterinary therapeutics. In addition, we are closing in on a potentially first-in-human clinical trial opportunity with one of our international customers.""

Fiscal Fourth Quarter 2021 Financial Highlights:

Revenues increased 868% for the fourth quarter of fiscal 2021 to $3.0 million, compared with $314 thousand reported in the same period of the prior fiscal year and increased 79% from $1.7 million for the third quarter of fiscal 2021. The increase in revenues year-over-year was due primarily to an increase in clinical laboratory service revenues of $1.6 million and an increase of $1.0 million in product revenues. Clinical laboratory service revenues represent the revenue from our safeCircle COVID-19 testing and is now presented as a separate revenue line item on the statement of operations. The increase in product revenue was mainly attributable to an increase in sales of DNA concentrate of approximately $810 thousand to protect a textile supply chain.
Total operating expenses increased to $5.6 million for the fourth fiscal quarter of 2021, compared with $4.2 million in the prior fiscal year’s fourth fiscal quarter The year-over-year increase is primarily attributable to an impairment charge of $822 thousand for the write-off of goodwill and the remaining net book value of intangible assets. To a lesser extent the increase was attributable to an accrued bonus, which was subsequently paid by the issuance of stock options, as well as an increase in depreciation and amortization expense of $218 thousand.
Net loss applicable to common stockholders for the quarter ended September 30, 2021, was $4.5 million, or $0.60 per share, compared with a net loss of $4.1 million, or $0.82 per share, for the quarter ended September 30, 2020.
Excluding non-cash expenses, Adjusted EBITDA was negative $3.3 million and a negative $3.8 million for the quarters ended September 30, 2021, and 2020, respectively. See below for information regarding non-GAAP measures.
Cash and cash equivalents stood at $6.6 million on September 30, 2021, compared to $7.8 million as of September 30, 2020.
Fiscal Year 2021 Financial Highlights:

Revenues increased 367% for the fiscal year ended September 30, 2021, to $9.0 million, compared with $1.9 million reported in the prior fiscal year. The increase in revenues year over year was due primarily to an increase in clinical laboratory service revenues of approximately $4.7 million and an increase of $2.7 million in product revenues. The increase in clinical laboratory service revenue was from revenues derived from safeCircle. The increase in product revenue was mainly attributable to an increase in sales of our Linea 1.0 assay. Further increases include approximately $810 thousand in Textiles related to the shipment of DNA concentrate to protect a textile supply chain.
Total operating expenses increased to $18.0 million for fiscal 2021, compared with $13.6 million in the prior fiscal year. The increase is primarily related to an increase in stock-based compensation expense of $667 thousand relating to officer and employee stock option grants that vested immediately and an increase in payroll of approximately $1.1 million. The increase also relates to increases in research and development expenses of $444 thousand and depreciation and amortization of $559 thousand.
Net loss applicable to common stockholders for the fiscal year ended September 30, 2021, was $14.3 million, or $2.07 per share, compared with a net loss of $13.0 million, or $3.32 per share, for fiscal 2020.
Excluding non-cash expenses, Adjusted EBITDA was negative $10.0 million for the fiscal year ended September 30, 2021, compared to negative $11.6 million for the prior fiscal year. See below for information regarding non-GAAP measures.
Fourth Quarter and Full Year Fiscal 2021 Conference Call Information
The Company will hold a conference call and webcast to discuss its fourth quarter and fiscal full year 2021 financial results on Thursday, December 9, 2021, at 4:30 PM ET. To participate on the conference call, please follow the instructions below. While every attempt will be made to answer investors’ questions on the Q&A portion of the call, not all questions may be answered.

Telephonic replay (available 1 hour following the conclusion of the live call through December 19, 2021):

Participant Toll Free: 1-877-344-7529
Participant Toll: 1-412-317-0088
Participant Passcode: 10161912
The webcast and accompanying PowerPoint presentation will be archived on the ‘Company Events’ sub-page of the Company’s Investor Relations website

Information about Non-GAAP Financial Measures
As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America. To supplement our condensed consolidated financial statements prepared and presented in accordance with GAAP, this earnings release includes Adjusted EBITDA, which is a non-GAAP financial measure as defined in Rule 101 of Regulation G promulgated by the Securities and Exchange Commission. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information presented in accordance with GAAP. We use this non-GAAP financial measure for internal financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons of the performance and results of operations of our core business. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our business by excluding non-cash expenses that may not be indicative of our recurring operating results. We believe this non-GAAP financial measure is useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

"EBITDA"- is defined as earnings (loss) before interest expense, income tax expense and depreciation and amortization expense.

"Adjusted EBITDA"- is defined as EBITDA adjusted to exclude (i) stock-based compensation and (ii) other non-cash expenses.