You should read the following discussion of our financial condition and results
of operations in conjunction with our unaudited condensed consolidated financial
statements for the period ended
Overview
This overview and outlook provide a high-level discussion of our operating results and significant known trends that affect our business. We believe that an understanding of these trends is important to understanding our financial results for the periods being reported herein as well as our future financial performance. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this report.
AboutSeqLL
We are an early commercial-stage life sciences instrumentation and research services company engaged in the development of scientific assets and novel intellectual property across multiple "omics" fields. We leverage our expertise with True Single Molecule Sequencing (tSMS) technology enabling researchers and clinicians to contribute major advancements to scientific research and development.
Our customers are primarily the early adopters of genomics technology and tSMS in academic research, biomarker discovery, and molecular diagnostic product development.
Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto within the Condensed Consolidated Financial Statements section of this report, and trends discussed in "Risk Factors" in Item 1-A of Part II of this report.
We incurred net losses of
Results of operations may be adversely affected by various factors that could
cause economic uncertainty and volatility in the financial markets, many of
which are beyond our control. Our business could be impacted by, among other
things, downturns in the financial markets or in economic conditions, inflation,
increases in interest rates, the ongoing effects of the COVID-19 pandemic,
including resurgences and the emergence of new variants, and geopolitical
instability, such as the military conflict in the
Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our consolidated financial statements and the notes thereto within the Consolidated Financial Statements section of this report, and trends discussed in "Risk Factors" in Item 1-A of Part II of this report.
14 Results of Operations
Comparison of the Three-Month Periods Ended
The following table summarizes our results of operations for the three-month
periods ended
Three months ended March 31, 2023 2022 Revenue Sales $ - $ - Grant revenue - 47,482 Total revenue - 47,482 Cost of sales - - Gross profit - 47,482 Operating expenses Research and development 776,720 334,670 General and administrative 981,107 584,872 Total operating expenses 1,757,827 919,542 Operating loss (1,757,827 ) (872,060 ) Other (income) and expenses Investment income (56,267 ) - Unrealized gain on marketable securities - (54,508 ) Realized loss on marketable securities - 106,324 Other income - (2,728 ) Interest expense 16,806 16,806 Net loss (1,718,366 ) (937,954 ) Other comprehensive income Unrealized gain on marketable debt securities 17,569 - Less: reclassification adjustment for net gains included in net loss (22,081 ) - Net change (4,512 ) - Total comprehensive loss$ (1,722,878 ) $ (937,954 ) Net loss per share - basic and diluted$ (0.13 ) $ (0.08 ) Weighted average common shares - basic and diluted 12,886,379 11,886,379 Revenues
Our revenues during the three-month period ended
Gross Profit
Gross profit for the three-month period ended
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Research and Development Expenses
Research and development expenses increased by
General and Administrative Expenses
General and administrative expenses increased by
Interest and Other Income/Loss
We recognized
We recognized
We recognized interest expense of
Net Loss
Overall, the net loss increased by
Liquidity and Capital Resources
The accompanying condensed consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Even though we
experienced negative cash flows from operations of
As of
Since inception, we have funded our operations primarily through equity and debt
financings, as well as from modest sales of products and research services. As
of
On
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We believe the net proceeds from our February of 2023 common stock issuance,
will enable us to fund our operations for at least one year from the date this
Quarterly Report on Form 10-Q is filed with the
Our future capital requirements will depend on many factors, including:
? our ability to successfully and further develop our technologies and create innovative products in our markets, including the costs associated with the development of our tSMS platform across multiple market segments, for which we have budgeted approximately$1.5 million in 2023 in support of our collaborative efforts in detection tools for heart disease and cancer, and chromatin mapping in genome biology, ? scientific progress in research and development of our collaborative programs, including the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights, as well as the costs associated with any product or technology that we may in-license or acquire; and ? the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; including the need to enter into other collaborations to enhance or complement our product and service offerings.
We plan to continue seeking additional financing sources from time to time to meet our working capital requirements, make continued investment in research and development and make capital expenditures needed for us to maintain and expand our business. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, or if we expend capital on projects that are not successful, our ability to continue to support our business growth and to respond to business challenges could be significantly limited. In addition, if we raise additional funds through further issuances of equity or debt securities, our existing stockholders could experience significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
Cash Flows
The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented.
Three Months Ended March 31, 2023 2022 Cash proceeds provided by (used in): Operating activities$ (1,122,036 ) $ (1,030,424 ) Investing activities 2,486,112 5,874,613 Financing activities 1,499,250 -
Net increase in cash and cash equivalents
Net cash used in operating activities
Net cash used in operating activities was approximately
We anticipate our research and development efforts and on-going general and administrative costs will generate negative cash flows from operating activities for the foreseeable future.
Net cash used in investing activities
Net cash provided by investing activities was approximately
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Net cash provided by financing activities
Net cash provided by financing activities was
Recent Accounting Pronouncements
In
We do not believe that any other recently issued but not yet effective accounting pronouncements will have a material effect on the accompanying consolidated financial statements.
Critical Accounting Policies and Estimates
The Company prepares its financial statements and accompanying notes in
conformity with accounting principles generally accepted in
Other than those noted within Note 2 to our unaudited condensed consolidated
financial statements, there have been no significant changes to the Company's
critical accounting policies and estimates during the three-month period ended
JOBS Act
Section 107 of the Jumpstart Our Business Startups Act of 2012 (the "JOBS ACT") provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
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For as long as we remain an emerging growth company under the recently enacted JOBS Act, we will, among other things:
? be permitted to have only two years of audited financial statements and only two years of related selected financial data and management's discussion and analysis of financial condition and results of operations disclosure; ? be entitled to rely on an exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act; ? be entitled to reduced disclosure obligations about executive compensation arrangements in our periodic reports, registration statements and proxy statements; and ? be exempt from the requirements to seek non-binding advisory votes on executive compensation or golden parachute arrangements.
We currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an "emerging growth company." Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected.
Likewise, so long as we qualify as an emerging growth company, we may elect not
to provide certain information, including certain financial information and
certain information regarding compensation of our executive officers, that we
would otherwise have been required to provide in filings we make with the
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