Genomics

EVOLUTIONARY GENOMICS : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)


The following discussion and analysis should be read in conjunction with the
Audited Financial Statements and related notes included elsewhere in this 10-K.
The following discussion includes certain forward-looking statements. For a
discussion of important factors which could cause actual results to differ
materially from the results referred to in the forward-looking statements, see
“Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.

Recent Highlights of Evolutionary Genomics

·

During 2013, Evolutionary Genomics received results from our contracted
independent lab at UW confirming that Evolutionary Genomics’ gene, EG261, has a
significant impact on resistance to soybean cyst nematodes.

·

During 2019, we identified our FusR1 gene in bananas for disease resistance and
filed a patent application.

·

During 2020, WCIC completed a project for the Company to transform soybean
plants using our EG261 and EG19 genes and to develop resulting plants through
generation T2 seeds.



·

During 2020, we entered into the DCA with Dole and a Research Agreement with
WCIC for the development of the FusR1 gene and banana plants that are resistant
to Panama Disease.

Consolidated Results of Operations:


                                               Twelve Months Ended December 31,
                                            2020                             2019
                                                 Percent of                        Percent of
                                   Amount          Revenue          Amount          Revenue
Grant revenue                   $     12,500           100.0 %   $    122,686            100.0 %
Research and development           1,793,145         14345.2 %        472,613            385.2 %
Salaries and benefits                495,518          3964.1 %        205,828            167.8 %
General and administrative           603,632          4829.1 %        219,070            178.6 %
Total operating expenses           2,892,295         23138.4 %        897,511            731.6 %
Operating loss                    (2,879,795 )      -23038.4 %       (774,825 )         -631.6 %
Other income and (expenses)          180,559          1444.5 %         13,592             11.1 %
Income Taxes                         987,353          7898.8 %        (31,907 )          -26.0 %
Net loss                        $ (1,711,883 )      -13695.1 %   $   (793,140 )         -646.5 %
Preferred stock dividend            (285,567 )       -2284.5 %       (269,379 )         -219.6 %
Net loss attributable to
common stockholders             $ (1,997,450 )      -15979.6 %   $ (1,062,519 )         -866.0 %





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Grant Revenue

Grant revenue decreased $110,186, or 89.8%, to $12,500 for the year ended
December 31, 2020 from $122,686 for the year ended December 31, 2019. The
decrease was primarily due to the decrease in revenue received from the State of
Colorado
grant which was completed in the first quarter of 2020.

Operating Expenses

Operating expenses increased $1,741,792, or 194.1%, to $2,639,303 for the year
ended December 31, 2020 from $897,511 for the year ended December 31, 2019.
Operating expenses consist of research and development expense, salaries and
benefits and general and administrative expense. Changes in these items are
described below.



Research and Development


Research and development increased $1,320,532, or 279.4%, to $1,793,145 for the
year ended December 31, 2020 from $472,613 for the year ended December 31, 2019.
The increase was primarily due to increased costs incurred on our research
agreement with UW for the development of our FusR1 banana gene. Under the terms
of our Development and Commercialization Agreement with Dole Food Company, Dole
provides funding for our banana project expenses at the University of Wisconsin
in the form of notes payable.



Salaries and Benefits


Salaries and benefits increased $289,690, or 140.7%, to $495,518 for the year
ended December 31, 2020 from $205,828 for the year ended December 31, 2019. The
increase was due to bonuses paid in the year ended December 31, 2020 and
increased stock compensation costs.

General and Administrative

General and administrative expenses increased $384,562, or 175.5%, to $603,632
for the year ended December 31, 2020 from $219,070 for the year ended December
31, 2019
. The increase was primarily due to amortization of our intangible asset
which began in the year ended December 31, 2020.

Other Income and (Expenses)

Total other income and (expenses) increased $166,967, or 1228.4%, to $180,559
for the year ended December 31, 2020 from $13,592 for the year ended December
31, 2019
. The increase was primarily due to increases in the value of our
investments and forgiveness of our Small Business Administration Payroll
Protection Program loan (“PPP”).

Income Taxes

Income tax benefit increased $1,019,260 to $987,353 for the year ended December
31, 2020
from income tax expense of $31,907 for the year ended December 31,
2019
. The increase was the result of placing the in progress research and
development into service and the asset now having a finite life.

Net Loss

Net loss increased $918,743, or 115.8%, to $1,711,883 for the year ended
December 31, 2020 from $793,140 for the year ended December 31, 2019. The
increase was primarily due to increased costs incurred on our research agreement
with the University of Wisconsin for the development of our FusR1 banana gene,
increased costs for the amortization of our intangible asset and increased
bonuses and stock compensation costs partially offset by the income tax benefit,
PPP loan forgiveness and gains on investments.

Financial Condition

The Company’s working capital increased $175,681 to $274,429 as of December 31,
2020
from $98,748 as of December 31, 2019 primarily due to proceeds from notes
payable from Dole, PPP loan and Economic Injury Disaster Loan (“EIDL”) and sale
of our investments partially offset by the net loss from operations, increases
in prepaid expenses and decreases in accounts payable and accrued expenses.




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Liquidity and Capital Resources

The Company has historically financed operations through cash flows from
operations and equity transactions. Net cash used in operating activities was
$2,297,317 for the year ended December 31, 2020 compared to $625,980 for the
year ended December 31, 2019. The $1,597,069, or 255.1%, increase was primarily
due to the increased net operating loss. Net cash provided from the sale of
investments was $147,613 for the year ended December 31, 2020 compared to $0 for
the year ended December 31, 2019. Net cash provided from financing activities
was $2,245,831 from notes payable from Dole, PPP loan and EIDL in the year ended
December 31, 2020 compared to $540,015 from preferred stock issuances for the
year ended December 31, 2019.

As of December 31, 2020, the Company had $215,836 in bank accounts and during
2020 used $2,297,317 of cash in operations. The Company’s current projections
for 2021 requires cash of $1,351,436. These factors raise substantial doubt as
to the Company’s ability to continue as a going concern.

To address these factors, management believes that it will secure additional
funding to meet prospective cash requirements. Management believes the
Company’s existing cash balances along with funding from our agreement with
Dole, prospective funding from marketing additional genes, and additional
contributions from our largest shareholder will provide the necessary liquidity
to meet our obligations as they come due over the next year. We expect that the
funding from these sources will be more than enough to cover our obligations for
the next twelve months. However, if the funding does not arrive, the Company
may not be able to meet its obligations as they become due.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have a material current
effect, or that are reasonably likely to have a material future effect, on its
financial condition, changes in financial condition, revenue or expenses,
results of operations, liquidity, capital expenditures, or capital resources.

Contractual Obligations

The Company leases its operating facility on a month-to-month basis, with
monthly rental installments of $2,378. The Company’s rent expense for the years
ended December 31, 2020 and 2019 was $28,535.

Critical Accounting Policies

For a review of our critical accounting policies, please refer to our audited
financial statements.

© Edgar Online, source Glimpses



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