Intelligent Bio Solutions Inc. — Form 10-Q Summary
Reporting period: The filing covers the three and nine months ended March 31, 2024, although the request metadata identifies “2023 Q3.” The company is a medical technology business focused on non-invasive testing, including commercially available fingerprint-sweat drug screening products and a development-stage saliva glucose biosensor platform. The Intelligent Fingerprinting Products segment generated 100% of reported revenue.
Key Financial Metrics
| Metric | Three months ended March 31, 2024 | Three months ended March 31, 2023 | Nine months ended March 31, 2024 | Nine months ended March 31, 2023 |
|---|---|---|---|---|
| Revenue | $823,800 | $457,058 | $2,383,957 | $813,737 |
| Gross profit | $178,489 | $33,049 | $610,068 | $277,093 |
| Gross margin | 21.7% | 7.2% | 25.6% | 34.1% |
| Loss attributable to INBS | $(2,977,667) | $(6,343,906) | $(7,372,512) | $(7,972,799) |
| Loss per share, basic and diluted | $(1.43) | $(68.67) | $(6.64) | $(104.04) |
| Net cash used in operating activities | Not separately provided for the quarter | Not separately provided for the quarter | $(6,627,555) | $(6,793,040) |
Revenue consisted of cartridge sales of $448,868, reader sales of $227,361, and other sales of $147,571 in the quarter. Nine-month revenue consisted of cartridge sales of $1,159,876, reader sales of $752,052, and other sales of $472,029.
At March 31, 2024, cash and cash equivalents were $9,397,523, total current assets were $11,520,591, total current liabilities were $5,706,307, and working capital was $5,814,284. Total assets were $17,038,953, total liabilities were $6,041,181, and shareholders’ equity was $10,997,772.
Total notes payable were $518,939, comprising $368,513 current and $150,426 non-current. Operating lease liabilities totaled $414,539. The company had no material purchase commitments and reported no off-balance-sheet arrangements.
Cash increased by $7,860,279 during the nine months, ending at $9,397,523. Financing activities provided $14,555,243, principally from equity and warrant transactions, while operating activities used $6,627,555 and investing activities used $54,118.
Material Changes Versus the Prior Comparable Period
- Quarterly revenue increased 80.2% to $823,800; nine-month revenue increased 192.9% to $2,383,957. Management attributed the growth to the IFP acquisition, customer expansion, and entry into new markets.
- Quarterly gross profit increased $145,440, and gross margin improved to 21.7%. Nine-month gross profit increased $332,975, but nine-month gross margin declined to 25.6% from 34.1%, reflecting higher direct costs associated with market expansion and customer acquisition.
- Quarterly loss attributable to INBS decreased by $3.37 million, primarily because the prior-year quarter included a $4.10 million goodwill impairment charge. No goodwill impairment was recorded in the current quarter.
- Quarterly SG&A increased to $2,425,830 from $1,898,754, driven by consultants, marketing, investor relations, capital raising, legal and compliance costs. Nine-month SG&A increased to $6,587,934 from $5,594,461.
- Development and regulatory approval expenses increased to $471,313 for the quarter and $923,712 for the nine-month period, reflecting in-house research and development and external research-partner activity.
- Government support income declined to $83,842 for the quarter and $346,917 for the nine-month period, primarily due to the timing of qualifying research and development expenditures.
- The company completed a 1-for-12 reverse stock split effective January 26, 2024. All historical share and per-share amounts were retrospectively adjusted.
- Shares issued and outstanding increased from 194,200 at June 30, 2023 to 2,913,799 at March 31, 2024, while 6,841,930 warrants were outstanding at quarter-end, creating substantial potential dilution.
Guidance, Outlook, Risks and Unusual Items
- Management stated that the company remains on track for a planned U.S. product launch in 2025, subject to completion of the FDA 510(k) process and related clinical studies. A clinical study agreement with Cliantha Research includes $494,197 of milestone payments, of which $343,742 remained payable at March 31, 2024.
- The company expects operating losses and negative operating cash flow for the foreseeable future. Management disclosed substantial doubt about the company’s ability to continue as a going concern because March 31 cash may be insufficient to fund the current operating plan for at least the next twelve months. Additional financing may be required.
- In October 2023, February 2024, and March 2024, the company raised approximately $3.79 million, $1.58 million, and $9.1 million of net proceeds, respectively. The March 2024 private placement included common stock and warrants and is expected to fund working capital and general corporate purposes.
- The Australian government manufacturing grant has a total potential value of up to $4.7 million. Only four of eight milestones had been completed at quarter-end. After quarter-end, the completion date was extended to March 28, 2025, while the project budget was reduced by $1.65 million. Failure to meet milestones could require repayment of grant proceeds.
- Disclosure controls and procedures were deemed ineffective due to material weaknesses in the control environment, documentation and evidence of control performance, and limited accounting and supervisory resources. Management is implementing a remediation plan involving additional personnel, outside consultants, and enhanced review procedures.
- Nasdaq previously raised bid-price and stockholders’ equity compliance matters. The reverse split restored the bid price above $1.00 at the time, and Nasdaq confirmed compliance with the stockholders’ equity requirement for the December 31, 2023 period; continued compliance is not assured.
- The company’s SGT and COV2 technology licensor, Life Science Biosensor Diagnostics, entered liquidation proceedings. The company believes related intellectual property may revert to the University of Newcastle and is evaluating future licensing arrangements.
- No material legal proceedings were reported. Foreign currency translation generated a $144,026 comprehensive loss for the quarter and an $86,909 loss for the nine-month period.
Investor Verification Items
- Verify the company’s going-concern disclosures, projected cash burn, financing needs, and access to additional capital.
- Assess the dilution and contractual terms associated with the 6.84 million outstanding warrants and the March 2024 securities offering.
- Monitor FDA 510(k) clinical-study progress, the $343,742 remaining Cliantha commitment, and the feasibility of the planned 2025 U.S. launch.
- Confirm progress toward the remaining Australian government grant milestones and the potential repayment exposure.
- Review remediation of the material weaknesses in internal control over financial reporting.
- Evaluate Nasdaq bid-price and stockholders’ equity compliance on an ongoing basis.
- Clarify the effect of LSBD’s liquidation on the company’s SGT and COV2 license rights.
- Reconcile revenue growth with gross-margin trends, customer concentration, inventory obsolescence provisions, and continued operating losses.