EVOLUTIONARY GENOMICS, INC. The following discussion and analysis should be read in conjunction with the Audited Financial Statements and related notes included elsewhere in this 10-K. The following discussion includes certain forward-looking statements. For a discussion of important factors which could cause actual results to differ materially from the results referred to in the forward-looking statements, see "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements".
Recent Highlights of
· During 2019, we identified our FusR1 gene in bananas for disease resistance and
filed a patent application.
· During 2020, WCIC completed a project for the Company to transform soybean
plants using our EG261 and EG19 genes and to develop resulting plants through
generation T2 seeds.
· During 2020, we entered into the DCA with Dole and a Research Agreement with
WCIC for the development of the FusR1 gene and banana plants that are resistant
to Panama Disease.
· During 2021 and 2022, we were successful at the
transforming banana plants with our FusR1 gene and now have transformed plants
growing in their greenhouses.
· During 2021, we discovered our SigX gene in banana plants that may provide
resistance to Black Sigatoka disease in bananas and filed patents on the gene.
· During 2022, our initial testing at the
plants with our FusR1 gene exhibited some resistance to Fusarium Fungus.
Additional testing and replication are needed to confirm these initial tests
prior to any commercialization. 15
Consolidated Results of Operations:
Year Ended December 31,
2022 2021
Percent of Percent of
Amount Revenue Amount Revenue
Revenue $ - N/A $ - N/A
Operating expenses
Research and development 417,450 N/A 1,234,215 N/A
Salaries and benefits 343,208 N/A 369,920 N/A
General and administrative 1,253,644 N/A 1,273,808 N/A
Total operating expenses 2,014,302 N/A 2,877,943 N/A
Operating loss (2,014,302 ) N/A (2,877,943 ) N/A
Other income 79,335 N/A 83,999 N/A
Income taxes - N/A - N/A
Net loss ($ 1,934,967 ) N/A ($ 2,793,944 ) N/A
Preferred stock dividend (313,293 ) N/A (285,568 ) N/A
Net loss attributable to common
stockholders ($ 2,248,260 ) N/A ($ 3,079,512 ) N/A
Operating Expenses
Operating expenses decreased$863,641 , or 30.0%, to$2,014,302 for the year endedDecember 31, 2022 from$2,877,943 for the year endedDecember 31, 2021 . Operating expenses consist of research and development expense, salaries and benefits and general and administrative expense. Changes in these items are
described below. Research and Development
Research and development decreased$816,765 , or 66.2%, to$417,450 for the year endedDecember 31, 2022 from$1,234,215 for the year endedDecember 31, 2021 . The decrease was primarily due to decreased costs incurred on our research agreement withUW for the development of our FusR1 banana gene, decreased patent costs, decreased lab supplies expense and decreased depreciation. The cost of the research agreement withUW is expensed as incurred in accordance with our DCA which included 90% of the contract amount paid prior toDecember 31, 2021 . These costs are funded by notes payable provided by Dole, the details of which are described in Note 7 of our consolidated financial statements. Salaries and Benefits
Salaries and benefits decreased
General and Administrative General and administrative expenses decreased$20,164 , or 1.6%, to$1,253,644 for the year endedDecember 31, 2022 from$1,273,808 for the year endedDecember 31, 2021 . The decrease was primarily due to decreased insurance costs. General and administrative expense also includes$1,006,751 amortization of acquired research in progress for the years endedDecember 31, 2022 and 2021. The expected amortization for the year endingDecember 31, 2023 is$1,006,751 and will decline thereafter as described in Note 5 of our consolidated financial statements. Other Income
Total other income decreased
16 Income Taxes
Income tax benefit was
Net Loss Net loss decreased$858,977 , or 30.7%, to$1,934,967 for the year endedDecember 31, 2022 from$2,793,944 for the year endedDecember 31, 2021 . The decrease was primarily due to decreased costs for our banana project, decreased costs for patents, lab supplies, depreciation and insurance partially offset by stock
compensation costs. Financial Condition
The Company's working capital increased$283,738 to$520,673 as ofDecember 31, 2022 from$236,935 as ofDecember 31, 2021 primarily due to proceeds from the issuance of common and preferred stock partially offset by the net loss from operations.
Liquidity and Capital Resources
The Company has historically financed operations through cash flows from operations and equity transactions. Net cash used in operating activities was$640,947 for the year endedDecember 31, 2022 compared to$1,583,138 for the year endedDecember 31, 2021 . The$942,191 , or 59.5%, decrease was primarily due to the decreased net operating loss. Net cash provided from financing activities was$550,000 of proceeds from the issuance of common stock and$454,004 from the issuance of preferred stock compared to$1,447,916 in proceeds from notes payable from Dole and$133,395 in proceeds from the PPP loan and the EIDL in the year endedDecember 31, 2021 . As ofDecember 31, 2022 , the Company had$577,066 in operating cash and expects that operating cash flow net of contractual reimbursements and notes payable funding from Dole for the year endingDecember 31, 2023 will be approximately$546,000 . Management believes that there may not be enough cash to pay our expenses for one year beyond the date of this report. Marketing of additional genes may lead to additional revenue and we have some flexibility to reduce operating costs but we may require additional capital. These factors create substantial doubt as to our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may result if the Company is unable to continue as a going concern.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have a material current effect, or that are reasonably likely to have a material future effect, on its financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources. Contractual Obligations
The Company leases its operating facility on a month-to-month basis, with
monthly rental installments of
Critical Accounting Policies
For a review of our critical accounting policies, please refer to our audited financial statements.
17
© Edgar Online, source
