BNB Plus Corp. (BNBX) Q4 2019 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Applied DNA Sciences Fourth Quarter and Fiscal Year Ended 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Clay Shorrock, General Counsel. Please go ahead.

Thank you, operator. And good afternoon, everyone. And thank you for joining us for our fiscal fourth quarter and full 2019 fiscal year results conference call. A copy of the company's earnings press release and accompanying PowerPoint presentation to this call are available for download under the Events and Presentations section to the Investor page of Applied DNA websites. With me on the today's call are Dr. James Hayward, Chairman, President and CEO; and Beth Jantzen, Chief Financial Officer. As a reminder, please note that some of the information you will hear today during our discussion may consist of forward-looking statements, including, without limitation, those regarding gross margins, operating expenses, other income and expense, stock-based compensation expense, taxes, earnings per share and future products. Actual results or trends could differ materially. For more information, please refer to the risk factors discussed in Applied DNA Sciences Form 10-K filed a short while ago. Applied DNA Sciences assumes no obligation to update any forward-looking statements. Now it is my pleasure to introduce the first speaker on today's call, Beth Jantzen.

Thank you, Clay. Good afternoon, everyone and thank you for joining us today. I will review our consolidated financial results for our 2019 fiscal fourth quarter, and then Dr. Hayward will summarize the company's achievements in the year and outline key initiatives for the company in fiscal 2020. Clay will then rejoin us to provide you with commentary on our IP portfolio. Jim will then conclude the call with some final remarks before opening the call to your questions. Starting with the statement of operations, total revenues for the period increased 40% to approximately $1.7 million from approximately $1.2 million in the fourth quarter of fiscal 2018 and decreased 19% compared to $2.1 million for the third quarter of fiscal 2019. Product revenues increased 109% to $1.3 million from $597,000 in the prior year, and increased 218% or approximately $858,000 from $393,000 in the third quarter of 2019. This year-over-year and quarter-over-quarter increases in product revenues were primarily attributable to an increase in revenues from shipment of DNA concentrate to protect the cotton supply chain. Fourth quarter service revenues decreased 29% to $423,000 from $598,000 for the same period in fiscal 2018, and decreased 75% from $1.7 million on a sequential basis. The sequential decrease in service revenue was primarily due to the recognition in the third quarter of fiscal '19 of $1 million of revenue under our now terminated cannabis licensing agreement. Cost of revenue as a percentage of product revenue in our fiscal fourth quarter of 2019 improved to 26% as compared to 42% for the year ago period and 69% on a sequential basis. The year-over-year and quarter-over-quarter decrease is due to product sales mix as Q4 product sales were primarily comprised of textile sales that are at a higher margin. Total operating expenses decreased 27% to $3.2 million in the fourth fiscal quarter of 2019 compared with $4.4 million for the same period in the prior fiscal year and was flat on a sequential basis. The decrease on a year-over-year basis is due to reduced payroll expenses of $231,000 as a result of a realignment of the sales force and reductions in overall headcount. The decrease was also related to a decrease in stock based compensation expense of $954,000. These decreases were partially offset by increases in legal and professional fees and R&D expenses. Our net loss for the fourth quarter of fiscal 2019 narrowed by 65% on a year-over-year basis to $1.2 million from $3.5 million, and by 17%, from $1.5 million for the fiscal third quarter of 2019. The improvement reflects both higher revenues and lower expenses. As a reminder, we implemented a 1-for-40 reverse stock split on November 1, 2019. As a result, all share and per share information contemplates the retroactive effect for the reverse stock split. Weighted average shares outstanding for the fourth quarter of fiscal 2019 and fiscal 2018 are 1,062,896 [ph], and 752,802,000 [ph] respectively. Net loss per share for the fourth quarter of 2019 improved to $1.44 compared to a net loss per share of $4.62 per share for the same period in fiscal '18 for a 69% improvement, and a net loss per share of $1.60 to the third quarter of fiscal '19 for a 10% improvement. Excluding non-cash expenses, adjusted EBITDA decreased to a negative $1.6 million for the quarter ended September 30, 2019 as compared to a negative $2.2 million for the quarter ended September 30, 2018 and increased from a negative $1.2 million for the quarter ended June 30, 2019. Now turning to our balance sheet. Cash and cash equivalents totaled approximately $559,000 at September 30, 2019. Subsequent to the quarter ended, we received approximately $12 million in gross proceeds through a follow on offering of stock and warrants. Under the public offering, we sold 2.285 million shares of common stock. Each share of common stock was sold together with one warrant to purchase one share of common stock at a combined offering price to the public of $5.25 per share and the accompanying warrant. On the liability side at September 30, we had 629,000 of deferred revenue. This deferred revenue balance is comprised primarily of milestones and/or phased payments under certain of our research and development pre-commercial projects that are being recognized to revenue over time on a cost-to-cost basis. Total debt comprised of our secured convertible notes was $1.5 million at quarter end. During the quarter, we converted an additional $2.2 million in notes to equity as part of our plan to regain compliance with the NASDAQ's listing requirements. This conversion was offset by additional convertible notes issued during July 2019, totaling $1.5 million. I will speak more on our compliance plan in a moment. Our average monthly cash burn rate for fiscal 2019 was $465,000 compared to 601,000 for fiscal '18, an improvement of 23%. The decrease in monthly burn rate for fiscal '19 is due to higher cash receipts and lower operating expenses, as well as the timing of certain payments. Including the net proceeds from our secondary offering, our cash position at November 30 was approximately $9.6 million. Before I turn the call over to Jim for his remarks, for the benefit of our shareholders, I would briefly like to recap the aggressive strategy we put in place to regain compliance with the NASDAQ's requirements for the continued listing of our common stock. As you are undoubtedly aware, our efforts proved fruitful, and we regained compliance with NASDAQ on November 25 for continued listing on the exchange. By way of background, we received formal notification for our non-compliance in January. Our two deficiencies were stockholders equity of $2.5 million at a minimum and $1 minimum bid price. Following the expiry of the first 180-day grace period afforded us under NASDAQ rules, we submitted a detailed compliance plan to the NASDAQ listing review panel on September 19. In that meeting, we had detailed that we had; first, converted $2.2 million of outstanding convertible notes into equity at $0.54 per share. That was at the time well above the market price of our stock. Management and insiders represented 72% of this amount. Second, we completed a private placement for $418,000 here as well, management and insiders represented 52% of the funds raised. And third, we filed an S1 registration statement to conduct an equity offering to raise new funds and enable us to meet the minimum stockholders' equity requirement. We were granted an extension by the panel until December 31, 2019. With all of our plans laid out, we moved into the execution phase of our plan. Reverse stock split approved by stockholders went into effect on November 1st. And after 10 trading days, with a minimum bid price above $1, we had cured the minimum bid price requirements. On November 12th, we closed in upsized $12 million offerings that cured the minimum stockholders equity requirements. And we announced that we have regained compliance on November 25th. That concludes my prepared remarks. Thank you for joining us today. And I would now like to turn it over to Jim for his comments.

Well, thank you Beth, and good afternoon everyone. Now Beth has just provided you with a review of our aggressive strategy that successfully regained compliance with NASDAQ's listing requirements. My personal gratitude and kudos go to Beth and her department and to our general counsel Clay Shorrock for flawless execution. In my prior quarterly report to you, I stated that we faced a number of challenges, including cash flow, NASDAQ and substantial doubt as the going concerns. Four months later, all of our financial, operational and sales metrics are trending in the right direction. Perhaps for the first time in our history, we have adequate cash on hand and a disciplined living strategic plan that we will measure ourselves against each quarter with management and our Board of Directors. We have made great progress. And within this last year we built scalable production tagging processes that over 20 major textile manufacturing sites across the globe, yielding integrated supply chains supported by our CertainT platform. And have now begun selling these CertainT tag materials and our processes to the brand owners and to the retailers. We further evolved our tagging methods and initial marketing with our partner Colorcon for proof pharmaceuticals, presented at industry conferences, and we increased our dialogue with FDA. We completed commercial shipments to a dietary supplements company, which represents our first steps into this large market. On December 4th, we cancelled our contract with TheraCann freeing us to go directly to the consumer -- to the customer. On December 11th, when announced the pilot study where we will tag our first cannabis products. And we have effectively recast Applied DNA's balance sheet. We are pleased that with the filing of our form 10-K for fiscal 2019 just after market closed today, our auditors have removed their opinions of Applied DNA having substantial doubt as a going concern. Now for the benefit of new shareholders, linear DNA is our heartbeat. We are experts at designing and assembling linear DNA and producing it at scale. We believe our position is unique. We have historically focused our efforts on the application of our linear DNA taggings and platform CertainT on supply chain security through the use of molecular tags to ensure authenticity and performance. Our expertise in linear DNA is also applicable to the bio therapeutic space. Here we believe that our linear DNA platform is a disruptive technology that threatens the monopoly of plasmid DNA for use in drug development. Our PCR based linear DNA manufacturing capabilities hold significant advantages over plasmids, including mitigating the potential transfer of bacterial genes and drug resistant genes to patients receiving gene therapies and bacterial toxins and a host of other drawbacks that come along with plasmids. With these descriptions as a backdrop in fiscal 2019, we focused on business building and growing the awareness and adoption of our linear DNA platforms. At the same time, we undertook actions to reduce our cost structure to ensure long term stability and value creation. As part of our successful cost savings, I have voluntarily lowered my own salary by more than 60% until the company is cash flow positive. Now during fiscal 2019, we initiated a strategic review of our business segments to prioritize our pipeline of opportunities across those segments that offer the fastest time to revenue. Having rationalized our resources, we are better prepared to realize the opportunities ahead of us. The end result is that total operating expenses declined over the course of the fiscal year by approximately 5% and by 20% fourth quarter over fourth quarter, even as total revenues increased 38% year-over-year. But we cannot save our way to growth. The recent acquisition of the assets and intellectual property Vitatex and their remarkable scientists give us a third compelling branch to the linear story that we believe lends itself to the diagnostics, prognostics and therapeutics of invasive circulating tumor cells. In other words metastatic cells in the blood. Within just three months of acquisition, we signed an agreement with Time Technologies for the supply of our Vita-Assay, iCTC capture assay and the associated services for iCTC detection in their pivotal stage pancreatic cancer clinical trial. But in addition, our protocols for obtaining and studying iCTCs in colorectal cancer have been approved by an institutional review board. Powered by this recently acquired portfolio in fiscal 2020, the company plans to pursue the further commercialization of iCTC capture and identification technology in several types of cancers, including breast and ovarian and colorectal. The value to isolating metastatic cells from blood is that they can be qualified and quantified and their number correlated with the health of the patient. This can be especially important in patients with advanced disease, who are sometimes reluctant to undergo another solid tumor biopsy. Our method includes the so called liquid biopsies and they are much easier and can be just as revealing as a solid tissue biopsy. In future calls, we will have more to say about our uniquely functionally isolated iCTCs and how they can lead the development of new cancer therapies using linear DNA. Now we are optimistic about the cannabis vertical being a revenue driver for our business with interest from various segments of the market. While we're disappointed in the outcome of our prior licensing agreements, the market opportunity is clear and we are moving aggressively to capture it. We announced excellent news on that front only yesterday, we have our first pilot with a processor in Maine named Old Port Oil company to tag their CBD oil. The pilot will commence in January. They will use our CertainT portal with SigNature tags and signify mobile readers to ensure their brand and IP protection and to prove the origin of their products proudly produced in Maine. Upon successful completion of the pilot project Old Portal Oil expects to ramp up commercial production in January and will tag 100% of its an overall product over the course of 2020. Now the cannabis market is in need of our solution. And we are continuing to develop our short and long term lead and opportunity pipeline. We will launch a demand creation campaign throughout 2020 to continue to drive awareness and lead generation. Now we also announced this week that Applied DNA and Reliance Industries signed and MOU to incorporate our CertainT platform into recycled PTT fibers filaments and fabrics. Reliance is India's largest private company, with revenues of nearly $100 billion. Our strategic collaboration will enable the creation of apparel from their acclaimed recycled PTT fabrics, and will allow the entry of CertainT into consumer and industrial applications in global markets. Our recent surveys indicate that across all industries, 62% of executives consider that sustainability is critical to their business. Yet the potential to forensically verify their products were actually sustainably produced can only be proven we believe, by our technology. It is one of our strongest value propositions and the reason for our agreements with Reliance and many others, such as Loftex and GHCL, from whom we are earning royalties for the CertainT secured product now sold in Costco and Walmart. Now, what is often overlooked when assessing Applied DNA is the deep moat we have established around our platforms and their capabilities by virtue of approximately 130 issued or pending patents to Applied DNA. There is significant value to this portfolio that we believe becomes increasingly valuable as we expand our footprint in our business segments and especially as we raise the profile of linear DNA in the bio therapeutic development space. Now here now to speak more on the value of our IP portfolio is Clay Shorrock. Our IP and General Counsel, Clay.

Thank you, Jim. And hello everyone. Jim asked me to speak with you this quarter to offer the company's perspective on the value of one of its greatest assets its intellectual property. About 10 years ago, the company recognized that one of its prime objectives must be to implement and commercialize the large scale PCR based manufacturer of linear DNA. At the time, PCR was merely a research tool used to create small quantities of DNA. Over this period, the company invested more of its available fund -- invested much of its available funds into the development of large scale PCR based linear DNA manufacturing. In September of 2015 the company acquired the asset and intellectual property of Vandalia Research supercharging, the development of its manufacturing platforms. Today, these large scale PCR based manufacturing platforms for linear DNA from the very core of the company and enable all aspects of this business, whether its DNA taggings and cotton's, synthetics textiles or cannabis or the manufacturer of linear DNA constructs were cutting edge biotherapeutics development. It's all based on linear DNA. The company holds numerous worldwide patents on its large scale PCR based linear DNA manufacturing platforms that it believes confers self-protection on its core assets. It addition to these patents, the company has over 10 years as a mass knowhow and trade secrets relating to its large scale PCR base in DNA manufacturing and subsequent downstream processing. It's a complex and nuance process, which is taking years of careful development to master. There's no off the shelf solution for large scale PCR based DNA manufacturing. This decade of a mass knowhow and trade secrets coupled with the company's patents on its manufacturing platform covers a strong market advantage to the coming and creates what we believe is essential barrier to entry for any would be competitors. The company believes its proprietary devices and methods for large scale PCR based DNA manufacturing are the best in breed and will continue to serve it well into the future. Now powered by this manufacturing platforms, the company has established a robust worldwide patent estate consisting of 84 issued patents and 51 pending patent applications. The newest area of the company's intellectual property state are the biotherapeutic applications of its PCR produced linear DNA, where the company has made several pioneering discoveries. These discoveries in the areas of adoptive cell therapy, modeled after manufacturing, RNA manufacturing, anti-cancer vaccines, and personalized nucleic acid base therapies have been captured in numerous patent applications filed in the US and internationally. These patent applications we believe are extremely viable and have the potential to confer market exclusivity for PCR produced linear DNA and several biased therapeutic applications. Now, just as importantly, the company is also a first mover in the use of commercially available linear DNA for biotherapeutics. This confers Applied DNA was known as the first mover advantage, which we believe will allow the company to establish itself as a standard for PCR produced linear DNA in the biotherapeutic industry. Its first mover status when coupled with a company's issued and pending patents further increases the barrier to entry for any would be competitor, and we believe will allow the company to become well ingrained in several biotherapeutics company pipelines. For fiscal 2020, the company plans to pursue licensing opportunities in the biotherapeutics market, which historically have been quite lucrative. Another growing area from an IP perspective is in vitro diagnostics, but the company recently established an exclusive worldwide license to a large patent portfolio covering its invasive, circulating tumor cell capture and identification technology. Finally, the largest area of the company's time estate relates to its DNA tagging, provenance and DNA authentication technologies, which include its SigNature and CertainT taggings, as well as fiber typing. Also included in this category are the company's pending patent applications for DNA tagging of pharmaceuticals and the DNA tagging of legal cannabis. In textiles, the company has recently received a notice of allowance on a novel system and method of DNA tagging and authenticating cellulosic products such as rayons and it continues to pursue pending patent applications relating to the DNA tagging of synthetic fibers. The company believes its intellectual property portfolio confers an important market advantage with substantial barriers to entry to enable a durable leadership position in the market the company serves. Now, Jim back to you.

Thank you Clay that foundation on our IP really helps us to put the value of the company and perspective. And having sharpened our business focus in fiscal 2019 we've set our sights on generating top line growth from our CertainT and biotherapeutic and diagnostic platforms as we begin to convert business building activities, we conducted in fiscal 2019 into pre-commercial and commercial revenues in fiscal 2020 and from higher revenues from PCR produced linear DNA products and services. We recently added depth to our board with the appointment of Scott Anchin, whose business background lends itself to helping us maintain tight cost controls and an eye towards rapidly growing the topline. We have our healthiest balance sheet in years, and are focused on developing a sustainable growth trajectory. For fiscal 2020, we believe we have the financial resources and allied and synchronized team and fresh business perspective to support a sustainable growth trajectory. We have our healthiest cash balance in years to support our growth initiatives in the coming year. On most of the last several years our fiscal first quarter has been our lowest with revenue building throughout the year and we expect the same pattern in fiscal 2020. This concludes our prepared remarks. And operator, you can now open the call to questions. Thank you.

We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Jason McCarthy with Maxim Group. Please go ahead.

Hi all. Just a couple of questions. I’m going to start with the iCTC platform, and Jim can you talk a little bit about how that platform could potentially emerge as a companion diagnostic? Is it something -- is that the way we should be thinking about it? And the other part to that question is when you look at the diagnostics space, and we're seeing the emergence of CTCs as important for not just diagnostics but also prognostics and patient monitoring. There are not a lot of groups out there that are combining, circulating tumor DNA with the CTCs, the cell part of it. So I'm thinking about groups like Gordon [ph] Health Foundation Medicine that are heavily reliant only on deep sequencing that may be considering and circulating tumor cell platform and is that where you think about your iCTC platform heading?

Okay. Both great questions, Jason. It's a pleasure to talk about them. So as you know, our iCTC platform distinguishes itself on the basis of functionality, and that functionality is duplicating the metastasis behavior of cells in vivo, where they extravasate from the tumor into a vessel or into a lymph vessel and then travel along and then intravasate to create a new secondary and more powerful tumor. We capture ourselves by virtue of that functional assay and that makes us distinct. We believe no one else has the right to do that, it is the basis of our IP. We believe that this could make a perfect companion diagnostic for a variety of cancer therapeutics, and it is one of the -- we have a longitudinal strategy that will take us to the marketplace in multiple steps, and one of those strategies is as a companion diagnostic. But we believe, there are several other approaches that will begin to portray as we develop partners for getting them to the marketplace. Now, we're a strong believer in analyzing the genome and transcriptome of single cells isolated from invasive CTCs, and that that can provide very valuable information both about the tumor and about the biology itself of when does a heterogeneous tumor let loose with metastatic cells. We will make comparisons between our iCTC platform and cell free DNA in order to point out what we believe will be the advantage because our cells are isolated living and functional. And so, we believe when interrogated for the transcriptome, we can get much more information from them. We also believe when I said longitudinally that long term, we will be able to interrogate more than just the CTCs, but also the lymphocytes that travel along with those CTCs engaged by an antigen at the surface of the tumor. It will allow us to rapidly using linear DNA design therapies that can be personalized patient by patient.

Great, thank you, and then one question on the LineaRx platform. You had presented in the past that there are 14 relatively undisclosed groups across all the verticals where it is RNA, it’s CAR-T, there's gene therapy, that are exploring the potential use of linear DNA for their platforms. How many new partnerships or collaborations would you expect over 2020? I am particularly interested on the CAR-T side. As you mentioned earlier, all the reasons why there could be problems with the current methods that they're using, and CAR-T as opposed to all of, most of the second half of 2018 and most of this year has been relatively quiet since the Kite and Juno were acquired, but it's been extremely active coming out of ASH just this weekend. I'm wondering how you're positioning the linear DNA at that whole platform advancing, bringing in new partners, are there more CAR-T groups coming in, et cetera. So can you just opine on that program for us?

Sure. The linear platform has a special advantage in CAR-T therapies. And those are therapies, of course, that are complicated by virtue of cytokine syndrome, which occurs in a large percentage of the patients can even cause death, but it's certainly unpleasant if you've ever seen one happen. It's very dramatic. And linear DNA, since it's not derived from bacteria or plasmids has much less risk, we believe in that context. And we believe that that epiphany is occurring to some of those players you listen to at ASH. Because they're coming to us to utilize our methods, not just of linear DNA, but our methods of enhancing gene expression, our methods of controlling epizomal residents of the gene without integration to have a valuation of how our platform might impact the delivery of their particular construct. They put a lot of work into their constructs. They believe that they'll work well for the patients and whatever clinical hematologic cancer they're trying to treat, but they realize that linear DNA could open a host of advantages.

Thank you. And again, congratulations on the progress.

Great, thank you so much.

The next question is from Anthony Vendetti also from Maxim Group. Please go ahead.

Hey, Jim. I just wanted to follow up on the CBD opportunity. We couldn't agree more as you know, we published a large industry report in September. And with all the differing state regulations that are out there, this seems a natural fit for your DNA tagging business. Can you talk about what went wrong with TheraCann? It seems like it was a funding issue on TheraCann’s standpoint, nothing to do obviously with the product that you have. And then talk about the agreement you subsequently signed this week with Old Port Oil and then what the opportunity is now going forward in that space?

Okay, wonderful. Thank you very much, Anthony. Well, first of all, let me tackle the TheraCann issue. That was simply a financial one. TheraCann did not have the wherewithal to meet our payments. We gave them extended opportunities, and deadlines were renewed and put further out and they still could not reach them. And we need to gain access to the marketplace. So, we had no choice but to move on. And we wish them luck as well. The issue with CBD is a really interesting; one, because very often consumers are confused about the distinctions between marijuana and hemp. And CBD of course, is legal within states when derived from hemp. What people don't realize is both hemp and marijuana are members of the same genus and species, cannabis sativa. And it is crime according to the federal government to support the transport of marijuana derived products across state borders. And CBD can be derived, can [indiscernible] from both hemp where it's especially logical because the THC content is so low. There's no risk of psychoactive components being there at high concentration. But it's indistinguishable, that CBD from the CBD derived from marijuana. So if you are law enforcement, stopping a trucker who's just crossed the state border, and it might be for an innocent product like CBD and seltzer water, how on earth do you determine if that CBD is criminally transported or in compliance? You can't, because there's no chemical way of discriminating to understand its derivation. Well, we provide that opportunity by tagging hemp during the CBD extractions for purification process. We can forensically proof that that CBD had its origins, both in what state and from hemp. So we think that that could make a huge difference in the long-term to the facility of doing trade on CBD, and keeping it safe. And it was that aspect that Old Portal Oil appreciated from the get go. They had their own epiphany, realized that this could open doors for them, help create their brand, ensure that they can market their brand as protected in terms of its supply chain and take it to the consumer using a sub brand that we license called CertainT.

Okay, that's very helpful Jim. Thank you.

[Operator instructions] The next question is from Craig Pierce with Morgan Stanley. Please go ahead.

I imagined Jim that more than one person on this call were anxiously awaiting December 12th. So it's good to finally get through lots of blackout times, including the extra months of the fourth quarter. I had a few more 10,000 foot view questions. One of them is on a revenue comparison basis. How does last fiscal year's revenue compare with the top revenue year of Applied or is it the top revenue year of Applied?

I believe it's the second highest year we've had. We had a year back with 2015 where we were just a little over $9 million. It was the first year we were commercial in the cotton industry.

Okay, and a whole bunch of your tagging were bought up as I remember? And that they over purchased and that made a slump the following year. If I remember correctly. And this you don't have any of those kinds of hiccups here. Okay. Second is $465,000 was that a month or a quarter burn rate?

Monthly.

Monthly, okay. So at that you've got 20 months of burn with $9.6 million, assuming that expenses stayed the same and revenue stayed the same. Just $465,000 divided into $9.6 million.

Yeah.

Okay, so assumptions that I trust will be totally blown out of the water.

From your mouth [indiscernible].

You love that one Jim, you love that one. On the TheraCann fall out, I wanted to ask if that had two components in terms of the results through the effects of it. One, obviously delayed the progress of having money is put in your coffers. They had promised $4 million more, I think by the end of the fiscal year ‘19. And so obviously delayed getting into that market. However I want to ask is yes or no. Does that and then add to that the with you eliminating that exclusive arrangement with TheraCann and now going to where you can do on an individual relationship with different companies, does that ultimately offer Applied a greater revenue potential than previously?

Well the answer to the last part of your question is absolutely, of course. We had a revenue sharing agreement. Now the weight caused us much pain. But as it did for TheraCann, no doubt. And so the circumstances really we tried very hard to make work, but in the long-term it really was not possible. And I think we're now in a great position to increase our visibility across that industry and to begin our dialogue with much bigger players. As I said in my remarks that is an industry that desperately needs the abilities that we have already fully commercialized in other industries.

And I believe my last one is times pass, I mean as we've talked through the years cotton has been the big lump in the pipeline in terms of feast or famine. And the whole focus was to spread broader deeper into other verticals. At this point in time, looking at all of your revenue sources, could you give us an approximate percentage of the quarterly revenue that you think is pretty -- you expect to be pretty consistent quarter-in quarter-out?

From textiles, you mean, or from cotton or from every category?

Everything, every category.

Yeah. So we're looking forward to growth. We don't yet provide guidance. So I am not in a position to say what growth. But we have spent two years in reconstructing our sales team and our textile sales team is extraordinarily professional there in Asia right now. And we have completed a large number of trials across -- and these are pre-commercial trials at commercial scale across a wide variety of ingredient types. And now we are in a position to be able to provide that collection of material types that are used by fashion houses and brands and retailers. In a large way we can integrate everything we have been tagging. So we will refer to it as an integrated supply chain. And we're already beginning to see those relationships solidify and having broader relationships. And as was referred to in our text, we are beginning to accumulate value in our sub brand CertainT, like the Intel Inside to the point where brand owners and retailers do value and are willing to pay us a royalty on that basis. And of course, that royalty goes straight to the bottom line, it comes with no cost to us. And it can be a significant multiple of our revenue for DNA tagging. So we're looking forward to that. We've made great progress in the areas that are regulated like cannabis, leading to nutritional supplements, leading to food byproducts and to pharmaceutical products as well. So, a larger portion of our interest is becoming regulated. And that's also true for our diagnostics. So our iCTC assays will also require compliance at a higher level. So we're benefiting from the consolidated regulatory growth in our skill set.

Final thought comment, and that is that unlike the boys at Maxim, who really got all of the details nailed down and that's strictly Maxim a compliment to your work, your studies. You were originally a much smaller focused company, Jim. And you've expanded and just gone off on shoots that four or five years ago you were not even aware existed. And, now they're just in and of themselves major revenue, potential themes. It's getting really hard to digest. And if and as you have further announcements of this contractor was signed or this was done. If one were able to shortly afterwards, go to your website, and have basically pitch book for lack of a better word of not numbers, of course. Because, you're not going to do numbers understand that. But just a pitch book on exactly getting into the details of what area this is you're developing, an explanation of it? The people can be spoon fed. Because it's -- you're becoming a mini conglomerate, in a manner of speaking in terms of all of the different things you're doing and helping junkie public understand it would definitely contribute to more interested in my humble opinion.

No, I don't disagree with you at all, Craig. I think that's precisely what we need to do. We do need to have a fair amount of caution and discipline in the areas we pursue. It's one of the reasons we have asked Scott Anchin to come on board and to offer us his help. And in terms of educating our investors. We seem to have 2 different types of investors right now. The investor who's attracted to our commercial applications. An investor who's attracted to our biotech, biotherapeutic applications as well. The challenge for us as we tried also in this evening's presentation is to make both investors realize that we're talking about the same platform. It's linear DNA that services both sides. So it's not the dalliance it might have seen before. We're working on a core platform and with discipline. We are staying on that platform. It's just that, as you might expect, DNA has great utility in many industries. And so are sticking to our knitting. And that is the science of manufacturing linear DNA and developing its applications.

Thank you.

You're welcome. Thank you, Craig.

This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Hayward for any closing remarks.

Well, I'd like to thank everyone for tuning into our call. We're always welcome happy to accept any questions in the ensuing few days. And we're very grateful for your support and interest. Thank you. Have a good evening.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.