UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____
Commission
File Number
(Exact name of Registrant as specified in its Charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ NO ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO
As of May 9, 2025, there were shares of the registrant’s Common Stock issued and outstanding.
Table of Contents
| Page | |||
| PART I. | FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements (unaudited) | ||
| Condensed Consolidated Balance Sheets | 3 | ||
| Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) | 4 | ||
| Condensed Consolidated Statements of Changes in Shareholders’ Equity | 5 | ||
| Condensed Consolidated Statements of Cash Flows | 6 | ||
| Notes to Condensed Consolidated Financial Statements | 7 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 23 | |
| Item 4. | Controls and Procedures | 23 | |
| PART II. | OTHER INFORMATION | 25 | |
| Item 1. | Legal Proceedings | 25 | |
| Item 1A. | Risk Factors | 25 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 26 | |
| Item 3. | Defaults Upon Senior Securities | 26 | |
| Item 4. | Mine Safety Disclosures | 26 | |
| Item 5. | Other Information | 26 | |
| Item 6. | Exhibits | 27 | |
| Signatures | 28 | ||
| 2 |
PART I. FINANCIAL INFORMATION
Intelligent Bio Solutions Inc.
Condensed Consolidated Balance Sheets
| As of | As of | |||||||
| March 31, 2025 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Research and development tax incentive receivable | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangibles, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of deferred grant income | ||||||||
| Current employee benefit liabilities | ||||||||
| Current portion of notes payable | ||||||||
| Total current liabilities | ||||||||
| Employee benefit liabilities, less current portion | ||||||||
| Operating lease liabilities, less current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Shareholders’ equity | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding as of March 31, 2025 and June 30, 2024, respectively | ||||||||
| Treasury stock, at cost, shares as of March 31, 2025 and June 30, 2024, respectively | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total consolidated Intelligent Bio Solutions Inc. equity | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
Intelligent Bio Solutions Inc.
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)
| Three months ended March 31, | Nine months ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue (exclusive of amortization shown separately below) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Other income | ||||||||||||||||
| Government support income | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Development and regulatory approval expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense), net | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Realized foreign exchange loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Fair value gain on revaluation of financial instrument | ||||||||||||||||
| Interest income | ||||||||||||||||
| Total other income, net | ( | ) | ||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to Intelligent Bio Solutions Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income (loss), net of tax | ||||||||||||||||
| Foreign currency translation gain (loss) | ( | ) | ( | ) | ||||||||||||
| Total other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to Intelligent Bio Solutions Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per share, basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
Intelligent Bio Solutions Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
| Convertible preferred stock | Common stock | Treasury stock | Additional paid-in |
Accumulated | Other comprehensive |
Non- controlling |
Total shareholders’ |
|||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | income (loss) | interest | equity | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||
| Issuance of common stock upon cashless exercise of warrants | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Stock awards issued to employees | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock to vendors | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Issuance of restricted stock to vendors | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Issuance of restricted stock to vendors | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon cashless exercise of warrants | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Convertible preferred stock | Common stock | Treasury stock | Additional paid-in | Accumulated | Other comprehensive | Non- controlling | Total shareholders’ | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | income (loss) | interest | equity | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of common stock, Series E Preferred Stock and warrants, net of issuance costs | - | |||||||||||||||||||||||||||||||||||||||||||
| Conversion of convertible preferred shares into common stock | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||||||||||
| Conversion of holdback Series C Preferred Stock into common stock | - | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon cashless exercise Series F warrants | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Reverse stock split rounding adjustment | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon cash exercise of Series E warrants | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock to vendors | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon cashless exercise of Series F warrants | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, Series I, H1 and H2 warrants, net of issuance costs | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
Intelligent Bio Solutions Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right-of-use assets | ||||||||
| Provision for inventory obsolescence | ||||||||
| Share-based compensation | ||||||||
| Non-cash refund of research and development (R&D) expenditure claims | ( | ) | ( | ) | ||||
| Fair value gain on revaluation of holdback Series C Preferred Stock | ( | ) | ||||||
| Non-cash other operating activities | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Grant receivable / deferred grant income | ( | ) | ||||||
| Research and development tax incentive receivable | ||||||||
| Other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Long-term employee benefit liabilities | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from Investing Activities | ||||||||
| Amount invested on construction in progress | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from Financing Activities | ||||||||
| Proceeds from issuance of common stock and warrants, net of issuance costs | ||||||||
| Proceeds from exercise of warrants, net of issuance costs | ||||||||
| Proceeds from private placement, net of issuance costs | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange rates on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Equity issuance costs in accounts payable and accrued expenses | $ | $ | ||||||
| Conversion of preferred shares into common shares | $ | $ | ||||||
| Conversion of holdback Series C Preferred Stock into common stock | $ | $ | ||||||
| Issuance of common stock upon cashless exercise of Series F warrants | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
Intelligent Bio Solutions Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
Intelligent Bio Solutions Inc. and its wholly owned Delaware subsidiary, GBS Operations Inc., were each formed on December 5, 2016, under the laws of the state of Delaware. The Company’s Australian subsidiary, Intelligent Bio Solutions (APAC) Pty Ltd, was formed on August 4, 2016, under the laws of New South Wales, Australia and was renamed to Intelligent Bio Solutions (APAC) Pty Ltd on January 6, 2023. On October 4, 2022, INBS acquired Intelligent Fingerprinting Limited (“IFP”), a company registered in England and Wales. The Company’s headquarters are in New York, New York. Unless context requires or indicates otherwise, the terms “we,” “us,” “our,” “Company,” or “INBS” refer to Intelligent Bio Solutions Inc. together with its consolidated subsidiaries.
Intelligent Bio Solutions Inc. is a medical technology company focused on developing and delivering intelligent, rapid, non-invasive testing and screening solutions. The Company operates globally with the objective of providing innovative and accessible solutions that improve the quality of life.
NOTE 2. LIQUIDITY AND GOING CONCERN
At
the Market (ATM) Offering - On September 18, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”)
with Ladenburg Thalmann & Co. Inc. (“Ladenburg”). Pursuant to the terms of the ATM Agreement, the Company may sell from
time to time through Ladenburg, as sales agent and/or principal, shares of the Company’s common stock, with an aggregate sales
price of up to $3.0
million. On March 11, 2025, the Company filed a prospectus
supplement (the “2025 ATM Supplement”) to the ATM Prospectus (defined below) in connection with the offer, sale, and issuance
of additional shares. During the period between September 18, 2024, through to March 31, 2025, the Company raised approximately $
February
Offering - On February 20, 2025, the Company entered into an underwriting agreement with Ladenburg, as representative (the “February
Representative”) for the underwriters named in Schedule 1 thereto (collectively, the “February Underwriters”) relating
to an underwritten public offering of shares of the Company’s common stock. The
public offering price for each share was $per share and the February Underwriters agreed
to purchase shares (the “February Offering”).
The Company granted the February Underwriters a 45-day option to purchase an additional shares of common stock at the public offering
price of $
per share, less the underwriting discounts and
commissions. On February 20, 2025, the February Representative fully exercised the over-allotment option to purchase an additional shares of common stock. All of the shares were
sold by the Company. The February Offering closed on February 21, 2025. As a result of the over-allotment option being exercised in full,
the Company raised approximately $ (net of underwriting discounts and commissions of approximately $
The
Company incurred net losses of $
The Company anticipates operating losses for the foreseeable future. The Company does not expect to generate positive cash flows from operating activities and may continue to incur operating losses until it sufficiently delivers on its objectives which include completion of the regulatory approval process in the United States of America (US) and other markets where such approval may be required, expansion of its revenue base into target markets, and the continued development of its products. The ability to achieve these objectives is subject to inherent risks and no assurance can be provided that these objectives will be fully achieved within the next 12 months.
The
Company has evaluated whether there are conditions and events, considered in the aggregate, that raise a substantial doubt about its
ability to continue as going concern within one year after the date of release of these unaudited condensed consolidated financial statements.
Management believes there is a material risk that the Company’s cash and cash equivalents as of March 31, 2025, of approximately
$
Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern unless it can successfully meet the stated objectives and/or raise additional capital.
The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities should the Company be unable to continue as a going concern.
| 7 |
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP” or “GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our unaudited condensed consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods, in the opinion of the Company’s management, have been included. Operating results for the three and nine months ended March 31, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2025. The accompanying unaudited condensed consolidated financial statements and related footnote disclosures should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the fiscal year ended June 30, 2024, which was filed with the SEC on September 18, 2024 (the “2024 Form 10-K”).
There have been no material changes to our significant accounting policies disclosed in Note 3 - Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Principles of consolidation
These unaudited condensed consolidated financial statements include the accounts of the Company, all wholly owned and majority-owned subsidiaries in which the Company has a controlling voting interest and, when applicable, variable interest entities in which the Company has a controlling financial interest or is the primary beneficiary. Investments in affiliates where the Company does not exert a controlling financial interest are not consolidated.
All significant inter-company transactions and balances have been eliminated upon consolidation.
Foreign currency translation
Assets and liabilities of foreign subsidiaries are translated from local (functional) currency to reporting currency (U.S. dollar) at the spot rate on the consolidated balance sheet date; income and expenses are translated at the average rate of exchange prevailing during the applicable period. Adjustments resulting from translating local currency financial statements into U.S. dollars are reflected in accumulated other comprehensive loss in total shareholders’ equity.
The
functional currency of INBS is the United States dollar. The fluctuations in foreign currency exchange rates resulted in a
translation gain of $
Use of estimates
The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management in connection with the preparation of the accompanying unaudited condensed consolidated financial statements include the fair value measurement of and the useful lives of long-lived assets, inventory valuations, the allocation of transaction price among various performance obligations, stock-based compensation, the allowance for credit losses and valuation allowance on deferred tax assets. Actual results could differ from those estimates and any such differences may be material to the unaudited condensed consolidated financial statements. To the extent that there are material differences between these estimates and actual results, the Company’s unaudited condensed consolidated financial statements will be affected.
Accounts Receivable and Allowances for Credit Losses
The
Company records a provision for credit losses, when appropriate, based on historical experience, current conditions and reasonable supportable
forecasts. The Company estimates credit losses over the remaining expected life of an asset by, among other things, primarily using historical
experience and current economic conditions that could affect the collectability of the balances in the future. Account balances are charged
off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs
may be in excess of the Company’s estimated allowance. The Company has recorded allowance for credit losses of $ and $
| 8 |
Revenue recognition
Revenue from the IFPG segment, see Note 4, relates to the sale of readers, cartridges and other sales, which represents accessories, and is summarized as follows:
| Three Months ended March 31, | Nine Months ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales of goods - cartridges | $ | $ | $ | $ | ||||||||||||
| Sales of goods - readers | ||||||||||||||||
| Other sales | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
Government support income
Government support income on the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss) is summarized as follows:
| Three Months ended March 31, | Nine Months ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Grant income | $ | $ | $ | $ | ||||||||||||
| R&D tax refund | ||||||||||||||||
| Total government support income | $ | $ | $ | $ | ||||||||||||
Recent Accounting Pronouncements
As the Company is an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.
Adopted:
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU -08 requires that an acquirer recognizes, and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognized contract assets acquired, and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The ASU was effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The ASU is to be applied prospectively to business combinations occurring on or after the effective date of the amendment. The Company has adopted ASU 2021-08. Adoption of ASU 2021-08 did not impact our financial position, results of operations or cash flows.
Pending adoption:
In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, and included within each reported measure of segment profit or loss. All disclosure requirements under ASU 2023-07 are required for public entities with a single reportable segment. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis, with early adoption permitted. The Company has completed its initial assessment of the impact of this new guidance and does not expect it to have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires greater disaggregation of information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions. The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The ASU should be applied on a prospective basis although retrospective application is permitted. We are currently evaluating the impact of this standard on our disclosures.
In November of 2024, the Financial Accounting Standards Board (“FASB”) issued accounting guidance which requires that an entity disclose, in the notes to financial statements, additional information about specific expense categories. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact of this guidance on the Company’s disclosures.
| 9 |
NOTE 4. SEGMENT INFORMATION
Accounting Standard Codification (ASC) 280, Segment Reporting, establishes standards for the manner in which companies report financial information about operating segments, products, services, geographic areas and major customers.
Our Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer.
We conduct our business through two operating segments:
| 1) | Commercially available Intelligent Fingerprinting Products (IFPG or IFPG segment) | |
| 2) | Development Stage Biosensor Platform Technology (BPT segment) |
The Company has determined it operates in
The IFPG segment accounted for 100% of the Company’s revenue during the three and nine months ended March 31, 2025 and 2024.
The following tables set forth the Company’s revenue, government support income, net loss and long-lived assets and inventories by operating and reportable segments.
A) Revenue, government support income and net loss
| Three Months Ended March 31, 2025 | ||||||||||||
| IFPG | BPT | Total | ||||||||||
| Revenue | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Government Support Income | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Government Support Income | $ | $ | $ | |||||||||
| Total Revenue and Government Support Income | $ | $ | $ | |||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Three Months Ended March 31, 2024 | ||||||||||||
| IFPG | BPT | Total | ||||||||||
| Revenue | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Government Support Income | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Government Support Income | $ | $ | $ | |||||||||
| Total Revenue and Government Support Income | $ | $ | $ | |||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Nine Months Ended March 31, 2025 | ||||||||||||
| IFPG | BPT | Total | ||||||||||
| Revenue | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Government Support Income | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Government Support Income | $ | $ | $ | |||||||||
| Total Revenue and Government Support Income | $ | $ | $ | |||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| 10 |
| Nine Months Ended March 31, 2024 | ||||||||||||
| IFPG | BPT | Total | ||||||||||
| Revenue | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Government Support Income | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Government Support Income | $ | $ | $ | |||||||||
| Total Revenue and Government Support Income | $ | $ | $ | |||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
B) Long-lived assets and inventories, net
| As of March 31, 2025 | ||||||||||||
| IFPG | BPT | Total | ||||||||||
| Long-lived assets, net | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Long-Lived Assets | $ | $ | $ | |||||||||
| Inventories, net | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Inventories | $ | $ | $ | |||||||||
| Total Long-Lived Assets and Inventories, net | $ | $ | $ | |||||||||
| As of June 30, 2024 | ||||||||||||
| IFPG | BPT | Total | ||||||||||
| Long-lived assets, net | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Long-Lived Assets | $ | $ | $ | |||||||||
| Inventories, net | ||||||||||||
| United Kingdom | $ | $ | $ | |||||||||
| Australia | ||||||||||||
| Total Inventories | $ | $ | $ | |||||||||
| Total Long-Lived Assets and Inventories, net | $ | $ | $ | |||||||||
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NOTE 5. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consist of the following:
| March 31, 2025 | June 30, 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ||||||
| Accounts receivable, net | $ | $ | ||||||
NOTE 6. INVENTORIES, NET
Inventories, net consist of the following:
| March 31, 2025 | June 30, 2024 | |||||||
| Raw material & work-in-progress | $ | $ | ||||||
| Finished goods | ||||||||
| Inventories, net | $ | $ | ||||||
NOTE 7. INTANGIBLE ASSETS, NET
Intangible assets, net consist of the following as of March 31, 2025:
Weighted average useful lives (years) | Acquisition cost | Effect of foreign currency | Accumulated amortization | Carrying value | ||||||||||||||||
| Technology | $ | $ | $ | $ | ||||||||||||||||
| Customer relationships | ||||||||||||||||||||
| Trade names and trademarks | ||||||||||||||||||||
| Total intangible assets | $ | $ | $ | $ | ||||||||||||||||
Intangible assets, net consist of the following as of June 30, 2024:
| Weighted average useful lives (years) | Acquisition cost | Effect of foreign currency | Accumulated amortization | Carrying value | ||||||||||||||||
| Technology | $ | $ | $ | $ | ||||||||||||||||
| Customer relationships | ||||||||||||||||||||
| Trade names and trademarks | ||||||||||||||||||||
| Total intangible assets | $ | $ | $ | $ | ||||||||||||||||
Intangibles assets recognized from the acquisition of IFP were allocated to the IFPG operating and reportable segment.
Expenses related to the amortization of
intangible assets charged to the condensed consolidated statements of operations and other comprehensive income (loss) for the three
months ended March 31, 2025 and 2024 was $
Expenses related to the amortization of
intangible assets charged to the condensed consolidated statements of operations and other comprehensive income (loss) for the nine
months ended March 31, 2025 and 2024 was $
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Amortization expense for the intangible assets is expected to be as follows over the next five years, and thereafter:
| Fiscal year | Amount | |||
| Remainder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
There were
NOTE 8. NOTE PAYABLE
As a result of the acquisition of IFP in October 2022,
the Company assumed a note payable due to a distributor of IFP. The unpaid principal balance of the loan will accrue interest at a rate
of
| ● | Payments of | |
| ● |
The classification of the notes payables is based on sales forecast prepared by the management.
NOTE 9. SHAREHOLDERS’ EQUITY
Warrants
As of March 31, 2025, there were warrants outstanding
to purchase
During the nine months ended March 31, 2025,
the Company raised approximately $
The Company accounts for warrants in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging - Contracts on an Entity’s Own Equity, and determined that the warrants do not meet the criteria for liability treatment thereunder.
At The Market (ATM) Offering
As a result of the sale of shares of common
stock by the Company pursuant to the previously disclosed ATM Agreement between the Company and Ladenburg, the Company has raised
approximately $
February Offering
On February 20, 2025, the Company entered into an underwriting agreement
with Ladenburg, as representative (the February Representative) for the underwriters named in Schedule 1 thereto, relating to an underwritten
public offering of shares of the Company’s common stock. The public offering price for each share was $ per share
and the February Underwriters agreed to purchase shares. The Company granted the February Underwriters a 45-day option to purchase
an additional shares of common stock at the public offering price of $ per share, less the underwriting discounts and commissions.
On February 20, 2025, the February Representative fully exercised the over-allotment option to purchase an additional shares of
common stock. All of the shares were sold by the Company. The February Offering closed on February 21, 2025. As a result of the over-allotment
option being exercised in full, the Company raised approximately $ (net of underwriting discounts and commissions of approximately
$
Advisory Agreement
On February 29, 2024, the Company entered into
an Investor Relations and Corporate Development Advisory Agreement (the “ClearThink Agreement”) with ClearThink Capital
LLC (“ClearThink”) pursuant to which ClearThink provides certain advisory and investor relations services to the
Company. As consideration for such services, the Company agreed pay a fee consisting of: (a) an initial grant of
restricted shares of common stock (the “Initial Grant”) and (b) a monthly fee consisting of (i) a cash fee of a $
Stock-based payments under 2019 Stock Incentive Plan
On September 25, 2024, the Company granted its
employees
shares of common stock as compensation. The Company recorded stock compensation expense of $
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NOTE 10. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases office facilities under operating leases expiring in August 2025 and April 2026. Certain of these arrangements have free or escalating rent payment provisions and optional renewal clauses. All of the Company’s leases are accounted for as operating leases. There has been no material change in the Company’s lease commitments during the nine months ended March 31, 2025.
Agreement with CenExel
On August 1, 2024, the Company signed an
agreement with CenExel to perform a method comparison clinical study as part of the Company’s FDA 510(k) clinical study plan.
As a part of the agreement, the Company is committed to pay $
The Company has no material purchase commitments.
From time to time, the Company may become a party to various legal proceedings arising in the ordinary course of business. Based on information currently available, the Company is not involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity. However, legal matters are inherently uncertain, and the Company cannot guarantee that the outcome of any potential legal matter will be favorable to the Company.
Basic loss per common share is computed by dividing net loss allocable to common shareholders by the weighted average number of shares of common stock or common stock equivalents outstanding. Diluted loss per common share is computed similar to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net loss attributable to Intelligent Bio Solutions Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per share attributed to common shareholders | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
| As of March 31, | ||||||||
| 2025 | 2024 | |||||||
| Warrants | ||||||||
NOTE 12. SUBSEQUENT EVENTS
The Company raised approximately $
The Company issued shares of common stock in connection with the cashless exercise of outstanding warrants between March 31, 2025 through May 9, 2025.
Other than the event noted, no material subsequent events have taken place that require disclosure in these condensed consolidated financial statements noted between March 31, 2025, and the date of this report.
| 14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included in our Annual Report on Form 10-K for fiscal 2024 and our unaudited condensed consolidated financial statements for the fiscal quarter ended March 31, 2025, included elsewhere in this Quarterly Report on Form 10-Q. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks, uncertainties, and other factors. Actual results could differ materially because of the factors discussed below or elsewhere in this Quarterly Report on Form 10-Q. See Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q and Part I, Item 1A. “Risk Factors” of the 2024 Form 10-K.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, we present “contribution margin” and “contribution margin %”, which are non-GAAP financial measures. Contribution margin and contribution margin % are presented in the section titled “Contribution Margin (non-GAAP)”. We have also included reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with US GAAP. These measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. Moreover, presentation of contribution and contribution margin is provided for year-over-year comparison purposes. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.
Forward-Looking Information
All statements other than statements of historical fact or relating to present facts or current conditions included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “should,” “can have,” “likely” and the negative of such words and other words and terms of similar meaning, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Item 1A — Risk Factors” of this Quarterly Report on Form 10-Q and in our 2024 Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by the federal securities laws, we are under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.
Overview
Intelligent Bio Solutions Inc. and its wholly owned Delaware subsidiary, GBS Operations Inc., were each formed on December 5, 2016, under the laws of the state of Delaware. The Company’s Australian subsidiary, Intelligent Bio Solutions (APAC) Pty Ltd, was formed on August 4, 2016, under the laws of New South Wales, Australia and was renamed to Intelligent Bio Solutions (APAC) Pty Ltd on January 6, 2023. On October 4, 2022, INBS acquired Intelligent Fingerprinting Limited (“IFP”), a company registered in England and Wales. The Company’s headquarters are in New York, New York.
Intelligent Bio Solutions Inc. is a medical technology company focused on developing and delivering intelligent, rapid, non-invasive testing and screening solutions. The Company operates globally with the objective of providing innovative and accessible solutions that improve the quality of life.
| 15 |
The Company’s current product portfolio includes:
| ● | Intelligent Fingerprinting Platform: A proprietary portable platform that analyzes fingerprint sweat using a one-time cartridge and portable handheld reader. The flagship product from this platform, which is commercially available in certain countries outside of the United States, is the Intelligent Fingerprinting Drug Screening System (the “IFP System” or “IFP Products”), a two-part system that consists of non-invasive, fingerprint sweat-based diagnostic testing products designed to detect drugs of abuse including opiates, cocaine, methamphetamines, benzodiazepines, cannabis, methadone, and buprenorphine. The system comprises a small, tamper-evident drug screening cartridge onto which ten fingerprint sweat samples are collected in under a minute before the portable analysis unit provides an on-screen result in under ten minutes. Samples collected with a confirmatory kit can also be sent to a third-party laboratory service provider for confirmation testing. Customers include safety-critical industries such as construction, transportation and logistics, manufacturing, engineering, drug treatment organizations in the rehabilitation sector, and judicial organizations. | |
| ● | Biosensor Platform: Under the terms of an Amended and Restated License Agreement dated September 12, 2019 (the “BPT License Agreement”), between the Company and Life Science Biosensor Diagnostics Pty Ltd (“LSBD” or “Licensor”), the Company held an exclusive license in the Asia Pacific Region (“APAC Region”) to the Licensor’s proprietary rights to the biosensor technology (the “Biosensor IP”) used in the biosensor platform we refer to as the Biosensor Platform Technology (“BPT”), or simply the “Biosensor Platform”. This platform consists of a small, printable modified organic thin-film transistor strip designed to detect multiple biological analytes by substituting the top enzyme layer of the biosensor to suit each analyte. We refer to products that use the BPT as the “Licensed Products”. This platform technology has the potential to develop a range of Point of Care Tests. We understand that following the appointment of a liquidator to LSBD on July 21, 2023, the Biosensor IP we licensed from LSBD has reverted back to the University of Newcastle (the “University”). Following our ongoing discussions with the University, it is the Company’s understanding that the University cannot finalize licensing of the Biosensor IP until the liquidation of LSBD is complete. As the timeline for the completion of LSBD’s liquidation is unknown, the Company does not expect any updates or finalization of any license terms until this occurs. As a result, further development of the BPT has been postponed until we are able to finalize licensing arrangements related to the BPT. |
Highlights of Achievements
Our major achievements through the three months ended March 31, 2025:
| ● | On March 31, the Company announced it had integrated Arabic as the second international language to its Intelligent Fingerprinting Drug Screening System as part of the Company’s multilingual upgrade. | |
| ● | On March 27, the Company announced it had expanded access to its fingerprint drug testing in Spain and Andorra through a strategic collaboration with Detecto, a division of Spanish distributor MTB Distribuciones Tecnologicas SL. | |
| ● | On March 26, the Company announced it had been granted patent in the United States relating to its Intelligent Fingerprinting Drug Screening Cartridge, marking its sixth patent. | |
| ● | On January 31, the Company announced plans for a major upgrade to its Intelligent Fingerprinting Drug Screening System. The system upgrade will support multiple languages spoken across North and South America, Europe, Asia Pacific, and the Middle East. | |
| ● | On January 28, the Company announced the strengthening of its foothold throughout Europe and the Middle East through its partnership with IVY Diagnostics Srl. | |
| ● |
The Company secured 35 new accounts throughout the quarter ended March 31, 2025, bringing total active customer accounts
to over 450 in 24 countries.
|
| 16 |
Results of Operations
Comparison of the Three and Nine Months Ended March 31, 2025 and 2024
| Three months ended March 31, | Nine months ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | 728,867 | $ | 823,800 | $ | 2,208,648 | $ | 2,383,957 | ||||||||
| Cost of revenue (exclusive of amortization shown separately below) | (387,499 | ) | (645,311 | ) | (1,297,366 | ) | (1,773,889 | ) | ||||||||
| Gross profit | 341,368 | 178,489 | 911,282 | 610,068 | ||||||||||||
| Other income | ||||||||||||||||
| Government support income | 173,271 | 83,842 | 433,039 | 346,917 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | (2,407,558 | ) | (2,425,830 | ) | (6,165,688 | ) | (6,587,934 | ) | ||||||||
| Development and regulatory approval expenses | (358,351 | ) | (471,313 | ) | (1,814,047 | ) | (923,712 | ) | ||||||||
| Depreciation and amortization | (301,978 | ) | (318,923 | ) | (907,577 | ) | (916,796 | ) | ||||||||
| Total operating expenses | (3,067,887 | ) | (3,216,066 | ) | (8,887,312 | ) | (8,428,442 | ) | ||||||||
| Loss from operations | (2,553,248 | ) | (2,953,735 | ) | (7,542,991 | ) | (7,471,457 | ) | ||||||||
| Other income (expense), net | ||||||||||||||||
| Interest expense | (15,000 | ) | (42,674 | ) | (50,829 | ) | (112,590 | ) | ||||||||
| Realized foreign exchange loss | (113 | ) | (996 | ) | (914 | ) | (1,551 | ) | ||||||||
| Fair value gain on revaluation of financial instrument | - | - | - | 175,738 | ||||||||||||
| Interest income | 17,687 | 10,640 | 92,464 | 14,288 | ||||||||||||
| Total other income, net | 2,574 | (33,030 | ) | 40,721 | 75,885 | |||||||||||
| Net loss | (2,550,674 | ) | (2,986,765 | ) | (7,502,270 | ) | (7,395,572 | ) | ||||||||
| Net loss attributable to non-controlling interest | (7,148 | ) | (9,098 | ) | (23,641 | ) | (23,060 | ) | ||||||||
| Net loss attributable to Intelligent Bio Solutions Inc. | $ | (2,543,526 | ) | $ | (2,977,667 | ) | $ | (7,478,629 | ) | $ | (7,372,512 | ) | ||||
| Other comprehensive income (loss), net of tax | ||||||||||||||||
| Foreign currency translation gain (loss) | 116,007 | (144,026 | ) | 189,197 | (86,909 | ) | ||||||||||
| Total other comprehensive income (loss) | 116,007 | (144,026 | ) | 189,197 | (86,909 | ) | ||||||||||
| Comprehensive loss | (2,434,667 | ) | (3,130,791 | ) | (7,313,073 | ) | (7,482,481 | ) | ||||||||
| Comprehensive loss attributable to non-controlling interest | (7,148 | ) | (9,098 | ) | (23,641 | ) | (23,060 | ) | ||||||||
| Comprehensive loss attributable to Intelligent Bio Solutions Inc. | (2,427,519 | ) | (3,121,693 | ) | (7,289,432 | ) | (7,459,421 | ) | ||||||||
| Net loss per share, basic and diluted | $ | (0.44 | ) | $ | (1.43 | ) | $ | (1.59 | ) | $ | (6.64 | ) | ||||
| Weighted average shares outstanding, basic and diluted | 5,771,911 | 2,079,864 | 4,698,494 | 1,110,089 | ||||||||||||
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Revenue
Sales of goods
Revenue from sales of goods decreased by $94,933 to $728,867 from $823,800 for the three months ended March 31, 2025, compared to same period in 2024. This decrease is mainly due to instability in the construction sector which resulted in the lower number of readers being sold during the period.
Revenue from sales of goods decreased by $175,309 to $2,208,648 from $2,383,957 for the nine months ended March 31, 2025, compared to same period in 2024. This decrease is mainly due to instability in the construction sector which resulted in the lower number of readers being sold during the period.
Despite a general decrease in sales due to lower readers sales, the Company managed to increase its gross profit margin as it concentrated its efforts on selling high margin cartridges. Cartridge sales, being consumable and recurring, offers a contribution margin of approximately 90.00% compared to 66.68% for readers. The increase in gross profit is discussed further in the following section.
Revenue from the IFPG segment relates to the sale of readers, cartridges and other sales which represents accessories and is summarized as follows:
| Three Months ended March 31, | Nine Months ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales of goods - cartridges | $ | 442,029 | $ | 448,868 | $ | 1,278,840 | $ | 1,159,876 | ||||||||
| Sales of goods - readers | 165,801 | 227,361 | 520,374 | 752,052 | ||||||||||||
| Other sales | 121,037 | 147,571 | 409,434 | 472,029 | ||||||||||||
| Total revenue | $ | 728,867 | $ | 823,800 | $ | 2,208,648 | $ | 2,383,957 | ||||||||
Cost of revenue
Cost of revenue decreased by $257,812 to $387,499 from $645,311 for the three months ended March 31, 2025, compared to same period in 2024. The decrease in cost of revenue is mainly due to a decrease in revenue and enhanced production capacity, which has led to reduced direct labor, direct materials and direct overhead costs.
Cost of revenue decreased by $476,523 to $1,297,366 from $1,773,889 for the nine months ended March 31, 2025, compared to same period in 2024. The decrease in cost of revenue is mainly due to a decrease in revenue and enhanced production capacity, which has led to reduced direct labor, direct materials and direct overhead costs.
The following table shows the composition of cost of revenue:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Direct material cost | $ | 195,464 | $ | 202,563 | $ | 678,604 | $ | 750,548 | ||||||||
| Direct labor cost | 186,095 | 427,768 | 585,491 | 949,704 | ||||||||||||
| Direct overhead cost | 5,940 | 14,980 | 33,271 | 73,637 | ||||||||||||
| Total cost of revenue (exclusive of amortization) | $ | 387,499 | $ | 645,311 | $ | 1,297,366 | $ | 1,773,889 | ||||||||
Gross profit
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | 728,867 | $ | 823,800 | $ | 2,208,648 | $ | 2,383,957 | ||||||||
| Direct material cost | (195,464 | ) | (202,563 | ) | (678,604 | ) | (750,548 | ) | ||||||||
| Direct labor cost | (186,095 | ) | (427,768 | ) | (585,491 | ) | (949,704 | ) | ||||||||
| Direct overhead cost | (5,940 | ) | (14,980 | ) | (33,271 | ) | (73,637 | ) | ||||||||
| Cost of revenue (exclusive of amortization) | (387,499 | ) | (645,311 | ) | (1,297,366 | ) | (1,773,889 | ) | ||||||||
| Gross profit | $ | 341,368 | $ | 178,489 | $ | 911,282 | $ | 610,068 | ||||||||
| Gross profit margin | 46.84 | % | 21.67 | % | 41.26 | % | 25.59 | % | ||||||||
Gross profit is solely attributable to the IFPG segment. Gross profit increased by $162,879 to $341,368 from $178,489 for the three months ended March 31, 2025, compared to same period in 2024.
Gross profit increased by $301,214 to $911,282 from $610,068 for the nine months ended March 31, 2025, compared to same period in 2024.
The growth in the gross profit margin is mainly due to larger share of our revenue coming from high margin cartridges sales, coupled with enhanced production capacity, which has led to reduced direct labor, direct materials and direct overhead costs. The company continues to improve on its strategic sales mix and operational streamlining thus driving the increased gross profit as noted above.
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Contribution margin (non-GAAP)
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | 728,867 | $ | 823,800 | $ | 2,208,648 | $ | 2,383,957 | ||||||||
| Direct material cost | (195,464 | ) | (202,563 | ) | (678,604 | ) | (750,548 | ) | ||||||||
| Contribution margin (non-GAAP) | $ | 533,403 | $ | 621,237 | $ | 1,530,044 | $ | 1,633,409 | ||||||||
| Contribution margin % (non-GAAP) | 73.18 | % | 75.41 | % | 69.28 | % | 68.52 | % | ||||||||
Contribution margin (non-GAAP)
Contribution margin, which is a non-GAAP measure of our financial performance, decreased by $87,834 to $533,403 from $621,237 for the three months ended March 31, 2025, compared to same period in 2024. This decrease is primarily due to a decline in the revenue.
Contribution margin decreased by $103,365 to $1,530,044 from $1,633,409 for the nine months ended March 31, 2025, compared to same period in 2024. This decrease is primarily due to a decline in the revenue. However, the contribution margin improved by approximately 0.76%, driven by improved production efficiency and sales mix.
Reconciliation of contribution margin (non-GAAP)
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue (GAAP) | $ | 728,867 | $ | 823,800 | $ | 2,208,648 | $ | 2,383,957 | ||||||||
| Less: Cost of revenue (exclusive of amortization) (GAAP) | (387,499 | ) | (645,311 | ) | (1,297,366 | ) | (1,773,889 | ) | ||||||||
| Gross Profit (GAAP) | $ | 341,368 | $ | 178,489 | $ | 911,282 | $ | 610,068 | ||||||||
| Add: Direct labor cost | 186,095 | 427,768 | 585,491 | 949,704 | ||||||||||||
| Add: Direct overhead cost | 5,940 | 14,980 | 33,271 | 73,637 | ||||||||||||
| Contribution margin (non-GAAP) | $ | 533,403 | $ | 621,237 | $ | 1,530,044 | $ | 1,633,409 | ||||||||
| Contribution margin % (non-GAAP) | 73.18 | % | 75.41 | % | 69.28 | % | 68.52 | % | ||||||||
Government support income
Government support income increased by $89,429 to $173,271 from $83,842 for the three months ended March 31, 2025, compared to same period in 2024. This increase was primarily attributable to the Company’s investment on qualifying research and development expenditures for research and development government subsidies.
Government support income increased by $86,122 to $433,039 from $346,917 for the nine months ended March 31, 2025, compared to same period in 2024. This increase was primarily attributable to the Company’s investment on qualifying research and development expenditures for research and development government subsidies.
The grant support income is primarily attributable to INBS’s subsidiary companies recognizing a research and development (“ R&D”) tax refund as the Company believes that it is probable that the amount will be recovered in full through a future claim (see Note 3 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for further information and disclosures relating to R&D tax refund).
Operating expenses
Selling, general and administrative expenses
Selling, general and administrative expenses decreased by $18,272 to $2,407,558 from $2,425,830 for the three months ended March 31, 2025, compared to the same period in 2024. This decrease is primarily due to a decrease in legal, insurance, and general overhead costs offset by an increase in advertising, marketing and travel costs. We anticipate these costs will increase as we continue to expand in new regions.
Selling, general and administrative expenses decreased by $422,246 to $6,165,688 from $6,587,934 for the nine months ended March 31, 2025, compared to the same period in 2024. This decrease is primarily due to a decrease in legal, insurance, and general overhead costs offset by an increase in advertising, marketing and travel costs.
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Development and regulatory approval expenses
Development and regulatory approval expenses decreased by $112,962 to $358,351 from $471,313 for the three months ended March 31, 2025, compared to the same period in 2024. This decrease is primarily driven by the timing of engagement of the research partner for R&D.
Development and regulatory approval expenses increased by $890,335 to $1,814,047 from $923,712 for the nine months ended March 31, 2025, compared to the same period in 2024. This increase is primarily driven by the amounts spent on in-house R&D staff and timing of R&D work performed by the research partners required for FDA 510(k) clinical study plan.
During the nine months ended March 31, 2025, the Company partnered with CenExel, a nationwide clinical research site network, and completed a method comparison clinical study on its Intelligent Fingerprinting Drug Screening System, confirming the sensitivity, specificity, accuracy, and usability of the System.
Depreciation and amortization
Depreciation and amortization decreased by $16,945 to $301,978 from $318,923 for the three months ended March 31, 2025, compared to same period in 2024. This decrease is mainly due to the fluctuation in the foreign exchange rate for conversion of the account balances.
Depreciation and amortization decreased by $9,219 to $907,577 from $916,796 for the nine months ended March 31, 2025, compared to same period in 2024. This decrease is mainly due to the fluctuation in the foreign exchange rate for conversion of the account balances.
Other income and expenses
Interest expense
Interest expense decreased by $27,674 to $15,000 from $42,674 for the three months ended March 31, 2025, as compared to the same period in 2024. This decrease was attributable to the reduction of the interest recorded for leased assets and notes payable as the leases are nearing its termination date.
Interest expense decreased by $61,761 to $50,829 from $112,590 for the nine months ended March 31, 2025, as compared to the same period in 2024. This decrease was attributable to the reduction of the interest expense recorded for leased assets and notes payable as the leases are nearing its termination date.
Fair value gain on revaluation of financial instruments
The fair value gain on revaluation of financial instruments decreased by $175,738 to $0 from $175,738 for the nine months ended March 31, 2025, as compared to the same period in 2024. This decrease is due to the revaluation gain on contingent consideration for holdback Series C Preferred Stock resulting from the acquisition of IFP. The holdback Series C Preferred Stock shares were converted into common stock in October 2023. There was no fair value revaluation gain or loss on financial instruments for the three months ended March 31, 2025 and 2024.
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Interest income
Interest income increased by $7,047 to $17,687 from $10,640 for the three months ended March 31, 2025, as compared to the same period in 2024. This increase was attributable to funds received from capital raising activities, which contributed to the balance on which interest was earned.
Interest income increased by $78,176 to $92,464 from $14,288 for the nine months ended March 31, 2025, as compared to the same period in 2024. This increase was attributable to funds received from capital raising activities, which contributed to the balance on which interest was earned.
Income tax (expense) benefit
There was no income tax expense for both the three and nine months ended March 31, 2025, and 2024, respectively, as the Company has established a full valuation allowance for all its deferred tax assets.
Other comprehensive income (loss)
Foreign currency translation gain (loss)
Unrealized foreign currency translation gain increased by $260,033 to a gain of $116,007 from a loss of $144,026 for the three months ended March 31, 2025, compared to the same period in 2024. This is due to the favorable exchange rate calculated based on the Company’s unsettled transactions in currencies other than its functional currency and translation of assets and liabilities of foreign subsidiaries in reporting currency.
Unrealized foreign currency translation gain increased by $276,106 to a gain of $189,197 from a loss of $86,909 for the nine months ended March 31, 2025, compared to the same period in 2024. This is due to the favorable exchange rate calculated based on the Company’s unsettled transactions in currencies other than its functional currency and translation of assets and liabilities of foreign subsidiaries in reporting currency.
Net loss attributable to INBS
Net loss attributable to the Company decreased by $434,141 to $2,543,526 from $2,977,667 for the three months ended March 31, 2025, compared to the same period in 2024. This decrease is primarily driven by an improved gross profit margin and increase in government support income due to the Company’s investment on qualifying research and development expenditure for research and development government subsidies.
Net loss attributable to the Company increased by $106,117 to $7,478,629 from $7,372,512 for the nine months ended March 31, 2025, compared to the same period in 2024. This increase is primarily driven by the Company’s investment in R & D work through the development and regulatory approval expenses which for the nine months increased by $890,335 to $1,814,047 required for its FDA 510(k) clinical study plan.
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Liquidity and Capital Resources
We use working capital and cash measures to evaluate the performance of our operations and our ability to meet our financial obligations. We define Working Capital as current assets less current liabilities. This measure should not be considered in isolation or as a substitute for any standardized measure under US GAAP. This information is intended to provide investors with information about our liquidity. Other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Since our inception, our operations have primarily been financed through the issuance of our common stock, redeemable convertible preferred stock, and the incurrence of debt. As of March 31, 2025, we had $2,807,112 in cash and cash equivalents and working capital of $542,946.
At the Market (ATM) Offering - On September 18, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”). Pursuant to the terms of the ATM Agreement, the Company may sell from time to time through Ladenburg, as sales agent and/or principal, shares of the Company’s common stock, with an aggregate sales price of up to $3.0 million. On March 11, 2025, the Company filed a prospectus supplement (the “2025 ATM Supplement”) to the ATM Prospectus (defined below) in connection with the offer, sale, and issuance of additional shares. During the period between September 18, 2024, through to March 31, 2025, the Company raised approximately $1,486,340 (net of commissions of approximately $45,971 paid to Ladenburg) through the sale and issuance of 920,363 shares of Company common stock pursuant to the ATM Agreement. During the three months ended March 31, 2025, the Company raised approximately $809,721 (net of commissions of approximately $25,044 paid to Ladenburg) through the sale and issuance of 481,996 shares of Company common stock pursuant to the ATM Agreement. Any sale of shares pursuant to the ATM Agreement are made under the Company’s effective “shelf” registration statement on Form S-3 (File No. 333-264218), which became effective on April 20, 2022, and included base prospectus, and under the related prospectus supplement (the “ATM Prospectus”) filed with the U.S. Securities and Exchange Commission (the “SEC”), dated September 18, 2024, as supplemented by the 2025 ATM Supplement filed with the SEC on March 11, 2025.
February Offering - On February 20, 2025, the Company entered into an underwriting agreement with Ladenburg, as representative (the “February Representative”) for the underwriters named in Schedule 1 thereto (collectively, the “February Underwriters”) relating to an underwritten public offering of 1,304,348 shares of the Company’s common stock. The public offering price for each share was $2.00 per share and the February Underwriters agreed to purchase 1,304,348 shares (the “February Offering”). The Company granted the February Underwriters a 45-day option to purchase an additional 195,652 shares of common stock at the public offering price of $2.00 per share, less the underwriting discounts and commissions. On February 20, 2025, the February Representative fully exercised the over-allotment option to purchase an additional 195,652 shares of common stock. All of the shares were sold by the Company. The February Offering closed on February 21, 2025. As a result of the over-allotment option being exercised in full, the Company raised approximately $2,645,000 (net of underwriting discounts and commissions of approximately $355,000).
The Company expects that its cash and cash equivalents as of March 31, 2024, may be insufficient to allow the Company to fund its current operating plan through at least the next twelve months from the issuance of these unaudited condensed consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least one year from the date these unaudited condensed consolidated financial statements are issued. There can be no assurance that, in the event that the Company requires additional financing, such financing may be available on terms which are favorable to us, or at all.
In the event we require additional capital, there can be no assurances that we will be able to raise such capital on acceptable terms, or at all. Failure to generate sufficient revenues or raise additional capital through debt or equity financings, or through collaboration agreements, strategic alliances or marketing and distribution arrangements, could have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business plan. Our failure to obtain such funding when needed could create a negative impact on our stock price or could potentially lead to a reduction in our operations or the failure of our Company. Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern unless it can successfully raise additional capital.
As of March 31, 2025, and June 30, 2024, we did not have any off-balance sheet arrangements.
Extended Transition Period for “Emerging Growth Companies”
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. Because our financial statements may not be comparable to companies that comply with public company effective dates, investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value and liquidity of our common stock.
Critical Accounting Estimates
The preparation of our consolidated financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that impact the amounts reported in our consolidated financial statements and accompanying notes that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.
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The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
A summary of our significant accounting policies is included in Note 3 “Summary of significant accounting policies” to the accompanying unaudited condensed consolidated financial statements. Certain of our accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain. Our critical policies are summarized in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Recently issued Accounting Pronouncements
For the impact of recently issued accounting pronouncements on the Company’s unaudited condensed consolidated financial statements, see Note 3 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and incorporated herein by reference.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial and Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures as of March 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were ineffective due to the material weakness in internal control over financial reporting discussed below.
Notwithstanding this conclusion, we believe that our consolidated financial statements and other information contained in this quarterly report on Form 10-Q present fairly, in all material respects, our business, financial condition and results of operations for the periods presented.
Material Weakness
In its assessment of the effectiveness of internal control over financial reporting as of March 31, 2025, management identified material weaknesses in control environment, risk assessment, control activities, information and communication and monitoring. Specifically, the material weaknesses identified relate to the fact that the Company has not yet designed and maintained an effective control environment commensurate with its financial reporting requirements, including (a) has not yet completed formally documenting policies and procedures with respect to review, supervision and monitoring of the Company’s accounting and reporting functions, (b) lack of evidence to support the performance of controls and the adequacy of review procedures, including the completeness and accuracy of information used in the performance of controls and (c) we have limited accounting personnel and other supervisory resources necessary to adequately execute the Company’s accounting processes and address its internal controls over financial reporting.
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Ongoing Remediation Plan
Management is committed to continuing the steps necessary to remediate the control deficiencies that constituted the above material weaknesses. We made the following enhancements and continue to make progress to enhance our control environment:
● We added accounting and finance personnel to provide additional individuals to allow for segregation of duties in the preparation and review of schedules, calculations and journal entries that support financial reporting, to provide oversight, structure and reporting lines to provide additional review over our disclosures. We have also commenced the implementation of the new accounting system which aids in reducing these control deficiencies;
● We enhanced our controls to improve the preparation and review of complex accounting measurements, the application of US GAAP to significant accounts and transactions and our financial statement disclosures;
● We engage independent experts when complex transactions are entered into;
● We have recruited and plan to recruit additional financial reporting and accounting personnel with adequate knowledge of US GAAP and SEC rules; and
● We are in the process of engaging outside consultants to assist us in our evaluation of the design, implementation and documentation of internal controls that address the relevant risks, to provide appropriate evidence of performance of our internal controls (including completeness and accuracy procedures).
● We have commenced implementing new accounting system that will enhance our internal controls by improving efficiency, accuracy, and reliability in financial reporting and data management.
Under the direction of the Audit Committee of our board of directors, management will continue to take measures to remediate the material weaknesses. As such, we will continue to enhance corporate oversight over process-level controls and structures to ensure that there is an appropriate assignment of authority, responsibility and accountability to enable remediation of our material weakness.
As we continue to evaluate, and work to improve, our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.
Changes in Internal Control Over Financial Reporting
Other than the ongoing remediation effort, described above, there have been no changes to the Company’s internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d 15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitation on the Effectiveness of Internal Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business. We are not currently engaged in any material legal proceedings.
ITEM 1A. RISK FACTORS
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on September 18, 2024, except for risks described below. Any of those risk factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
We will need to raise additional capital to fund our operations in the future. If we are unsuccessful in attracting new capital, we may not be able to continue operations or may be forced to sell assets to do so. Alternatively, capital may not be available to us on favorable terms, or at all. If available, financing terms may lead to significant dilution of our stockholders’ equity.
We are not profitable and have had negative cash flow from operations since our inception. To fund our operations and to develop and commercialize our products (including the BPT and planned applications of Intelligent Fingerprinting Drug Screening System), we have relied primarily on equity and some debt financing and government support income. The Company believes there is material risk that its cash and cash equivalents as of March 31, 2025, of $2,807,112 may be insufficient to allow the Company to fund its current operating plan through at least the next twelve months from the issuance of its unaudited condensed consolidated financial statements for the fiscal quarter ended March 31, 2025. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least one year from the date these unaudited condensed consolidated financial statements were issued. Accordingly, the Company will be required to raise additional funds during the next 12 months. However, there can be no assurance that when the Company requires additional financing, such financing will be available on terms which are favorable to the Company, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay or reduce the scope of its research programs and/or limit or cease its operations. In addition, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.
To obtain the additional capital necessary to fund our operations, we expect to finance our cash needs through public or private equity offerings, debt financing and/or other capital sources. Even if capital is available, it might be available only on unfavorable terms. Any additional equity or convertible debt financing into which we enter could be dilutive to our existing stockholders. Any future debt financing into which we enter may impose covenants upon us that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, we may need to relinquish rights to our technologies or our products or grant licenses on terms that are not favorable to us. If access to sufficient capital is not available as and when needed, our business will be materially impaired and we may be required to cease operations, curtail one or more product development or commercialization programs, scale back or eliminate the development of business opportunities, or significantly reduce expenses, sell assets, seek a merger or joint venture partner, file for protection from creditors or liquidate all of our assets. Any of these factors could harm our operating results.
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The Company has only completed 4 of the 8 agreed-upon milestones set forth in the Company’s grant agreement with the Australian government related to the construction of a manufacturing facility in Australia. Because we were unable to achieve certain agreed-upon milestones for the grant by the prescribed deadline of March 28, 2025, we will be required to refund certain amounts from the grant.
We received Medical Products Priority Grant funding from the Australian government in June 2021 as contributions towards establishing a high-tech manufacturing facility in Australia. Amounts under this grant were paid to the Company based upon timelines and updates. On April 16, 2024, the Australian government extended the deadline to complete the project to March 28, 2025, with certain modifications in project costs. Since we were unable to achieve the balance of the agreed-upon milestones for the grant by the prescribed deadline of March 28, 2025, we will be required to refund certain amounts from the grant after agreed upon adjustments and terms to be finalized after the prescribed deadline. The accounting policy for the treatment of these grants is to treat the proceeds received as a liability and deduct qualifying expenditure from this liability. Accordingly, the maximum to be refunded to the Australian government is disclosed under liabilities in the balance sheet as “Current portion of deferred grant income”. The balance of this liability in the balance sheet as of March 31, 2025, is $2,278,681.
As a result of the liquidation of Life Science Biosensor Diagnostics Pty Ltd (LSBD) and the intellectual property rights licensed by the Company from LSBD (the Biosensor IP) reverting back to the University of Newcastle, there is a risk of extended delays in negotiating the terms of licensing the Biosensor IP with the University, or that such negotiations may result in less favorable licensing terms for the Company, or that such negotiations may not be successful, which, in any event, would negatively impact the Company’s ability to develop and commercialize the BPT or Licensed Products.
We are party to the BPT License Agreement with LSBD, pursuant to which, among other things, the Company licenses from LSBD certain intellectual property related to the biosensor technology used in the Biosensor Platform, which we refer to as the Biosensor IP. The Company also holds a 50% interest in BiosensX (North America) Inc., which has exclusive license to use, make, sell and offer to sell products under the intellectual property rights in connection with the biosensor technology and the glucose/diabetes management field in the United States, Mexico and Canada.
We understand that following the appointment of a liquidator to LSBD on July 21, 2023, the Biosensor IP has reverted back to the University of Newcastle. Following our ongoing discussions with the University, it is the Company’s understanding that the University cannot finalize licensing of the Biosensor IP until the liquidation of LSBD is complete. As the timeline for the completion of LSBD’s liquidation is unknown, the Company does not expect any updates or finalization of any license terms until this occurs. As a result, further development of the BPT has been postponed until we are able to finalize licensing arrangements related to the BPT.
Accordingly, there is an inherent risk of extended delays in negotiating the terms of licensing the Biosensor IP with the University, or that such negotiations may result in less favorable licensing terms for the Company, or that such negotiations may not be successful, which, in any event, would negatively impact the Company’s ability to develop and commercialize the BPT or Licensed Products.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Other than any sales previously reported in the Company’s Current Reports on Form 8-K, the Company did not sell any unregistered securities during the period covered by this report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During
the period covered by this Quarterly Report on Form 10-Q, none of the Company’s directors or executive officers has
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ITEM 6. EXHIBITS
# Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Intelligent Bio Solutions Inc. | |||
| Date: | May 13, 2025 | By: | /s/ Harry Simeonidis |
| HARRY SIMEONIDIS | |||
| CHIEF EXECUTIVE OFFICER AND PRESIDENT | |||
| (Principal Executive Officer) | |||
| Date: | May 13, 2025 | By: | /s/ Spiro Sakiris |
| SPIRO SAKIRIS | |||
| CHIEF FINANCIAL OFFICER | |||
| (Principal Financial Officer) | |||
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