Read through the press releases and have a look through the financial reports and you will probably think that things are going along nicely for Applied DNA Sciences Inc (OTCBB:APDN) and their shareholders. Have a look at the chart on the right, however, and you’ll see that the stock performance is not that pretty. We decided to see if we will find the cause for all this.
First of all, we should point out that we’re rather impressed with the business idea that they’ve been following for the last almost five years. They have quite a long list of products that they’re developing at the same time, but they are all centered at using botanical DNA for authentication of various items. The complex code of contained in the deoxyribonucleic acid means that it’s virtually impossible to replicate and if they are able to develop and commercialize the technology, they could be in for some massive growth.
We’ve seen a fair chunk of small cap ventures with some clever ideas and ambitious business plans, but a large part of them is hampered by the complete lack of financial resources. APDN stand out from the crowd in this field. The latest quarterly report covers the first three months of 2013 and we have summarized the most important figures in it:
- cash: $4.4 million
- current assets: $4.8 million
- current liabilities: $809 thousand
- quarterly revenue: $344 thousand
- quarterly net loss: $3.1 million
As you can see they have managed to keep the current portion of their liabilities at bay and, crucially, during the first calendar quarter of 2013 the amount of cash on hand has improved dramatically. Unfortunately, it’s not all good news. The same period of 2012 resulted in $518 thousand in revenues and around $1.5 million in losses. More worryingly, the decrease in revenues is explained by “slower than anticipated” switch the sale of authentication services to the sales of the revolutionary DNA markers.
Despite all this, traders were apparently impressed with the financials and when the report came out on May 15, it created a bit of a frenzy. A total of 20 million shares changed hands and by the end of the sessions the ticker had gained a respectable 12% finishing the day at $0.264. People thought that the only direction from there on is up, but unfortunately, it wasn’t to be. The very next day marked the start of a gradual descend for APDN and when the ticker dropped below the $0.20 per share mark, a lot of people got mightily disappointed.
The shareholders were the ones who got most outraged and in many ways the problem they’re experiencing is quite similar to the one we’ve seen at Advanced Cell Technology, Inc. (OTCBB:ACTC). Both companies have set themselves some quite ambitious plans and despite all the odds, the management teams seem determined to succeed. They are taking quite an awful lot of time, though. Just like ACTC, APDN still have the comfort of shareholders willing to suffer the prolonged development stage, but with less than perfect stock performance, there’s no telling when their patience will run out.
Only time will tell if APDN will manage to make a significant impact on the personal security industry which seems to be growing by the minute. Right now, we see much more in terms of bright ideas and wishful thinking than actual results and that’s exactly why a potential investment still hides its risks. It’s vital that you consider them before making your final decision on APDN.