Intelligent Bio Solutions Inc. (NASDAQ:INBS) 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.

Business Overview

INBS currently has two main product offerings: the Intelligent Fingerprinting Platform and the Biosensor Platform. The Intelligent Fingerprinting Platform includes the Intelligent Fingerprinting Drug Screening System, a non-invasive, fingerprint sweat-based diagnostic testing product designed to detect drugs of abuse. This system is commercially available in certain countries outside the United States. The Biosensor Platform, which is in the development stage, includes the Saliva Glucose Biosensor, a Point of Care Test expected to complement traditional finger pricking for diabetic patients.

INBS has licensing agreements in place for the Biosensor Platform technology in the Asia Pacific region and globally for COVID-19 diagnostic tests. The company also has a 50% equity interest in BiosensX (North America) Inc., which has a separate technology license agreement covering the glucose/diabetes management field in North America.

Financials

For the three months ended March 31, 2024, INBS reported revenue of $823,800, up from $457,058 in the same period in 2023. This increase was driven by the expansion of the customer base, both in pre-existing markets and new regions. Gross profit for the quarter was $178,489, compared to $33,049 in the prior year period.

Government support income, which includes R&D tax refunds, decreased to $83,842 in Q3 2024 from $117,680 in Q3 2023, primarily due to timing of qualifying R&D expenditures.

Operating expenses increased to $3,216,066 in Q3 2024 from $6,694,128 in Q3 2023. This was mainly due to higher selling, general and administrative expenses related to engagement of consultants for marketing, media, investor relations, and legal and compliance as the company continues to expand its business and conduct clinical studies.

Net loss attributable to INBS decreased to $2,977,667 in Q3 2024 from $6,343,906 in Q3 2023, primarily driven by the $4.1 million goodwill impairment charge recognized in the prior year period.

For the nine months ended March 31, 2024, INBS reported revenue of $2,383,957, up from $813,737 in the same period in 2023. Gross profit for the nine-month period was $610,068, compared to $277,093 in the prior year period.

Government support income decreased to $346,917 in the first nine months of 2024 from $698,625 in the same period in 2023, again due to timing of qualifying R&D expenditures.

Operating expenses decreased to $8,428,442 in the first nine months of 2024 from $10,868,456 in the same period in 2023, primarily due to the $4.1 million goodwill impairment charge recognized in the prior year period.

Net loss attributable to INBS decreased to $7,372,512 in the first nine months of 2024 from $7,972,799 in the same period in 2023.

Liquidity

As of March 31, 2024, INBS had $9.4 million in cash and cash equivalents and working capital of $5.8 million. However, the company believes there is material risk that its cash and cash equivalents may be insufficient to fund its current operating plan through at least the next twelve months. These conditions raise substantial doubt about the company's ability to continue as a going concern.

To address its liquidity needs, INBS has taken several actions:

• In October 2023, the company raised approximately $3.8 million, net of offering expenses, through a public offering of common stock, preferred stock and warrants.

• In February 2024, the company raised approximately $1.6 million, net of fees and expenses, through a warrant inducement transaction.
• In March 2024, the company raised approximately $9.1 million, net of placement agent fees and other offering expenses, through a private placement of common stock and warrants.

Despite these recent capital raises, the company may need to raise additional funds in the next 12 months to continue funding its operations. There can be no assurance that such financing will be available on terms favorable to the company, or at all. If the company is unable to raise additional capital, it may be forced to delay or reduce the scope of its research programs and/or limit or cease operations.

Segment Performance

INBS operates in two reportable segments: Intelligent Fingerprinting Products (IFPG) and Saliva Glucose Biosensor Platform (SGBP).

The IFPG segment, which includes the company's commercially available Intelligent Fingerprinting Drug Screening System, accounted for 100% of INBS's revenue during the three and nine months ended March 31, 2024 and 2023. Revenue in this segment increased to $823,800 in Q3 2024 from $457,058 in Q3 2023, and to $2,383,957 in the first nine months of 2024 from $813,737 in the same period in 2023. This growth was driven by expansion of the customer base in both existing and new geographic markets.

The SGBP segment, which includes the company's development stage Saliva Glucose Biosensor platform, did not generate any revenue during the reported periods. However, the company continues to invest in the development of this platform, with $471,313 and $923,712 in development and regulatory approval expenses incurred in Q3 2024 and the first nine months of 2024, respectively.

Geographic Breakdown

Geographically, the majority of INBS's revenue in the IFPG segment was derived from the United Kingdom, which accounted for $799,811, or 97.1%, of total revenue in Q3 2024 and $2,210,409, or 92.7%, of total revenue in the first nine months of 2024. Australia contributed $8,789, or 1.1%, of revenue in Q3 2024 and $33,676, or 1.4%, of revenue in the first nine months of 2024. The remaining revenue came from other regions.

Risks and Challenges

INBS faces several risks and challenges that could impact its future performance:

1. Liquidity Concerns: The company's ability to continue as a going concern is dependent on its ability to raise additional capital in the next 12 months. Failure to secure sufficient funding could force the company to delay or scale back its operations.

2. Regulatory Approval: The company's products, particularly the Saliva Glucose Biosensor, will require regulatory approvals in various markets before commercialization. Delays or failures in obtaining these approvals could hinder the company's growth.

3. Intellectual Property Risks: The company's licensing agreements for its technology platforms could be impacted by changes in the ownership or status of the underlying intellectual property rights.

4. Competition: INBS faces competition from other companies developing non-invasive diagnostic and screening solutions, which could impact the adoption and pricing of its products.

5. Geographic Concentration: A significant portion of the company's revenue is currently derived from the United Kingdom market. Overreliance on a single geography could expose INBS to regional economic and political risks.

Outlook

Despite the liquidity concerns, INBS has made significant progress in expanding its customer base and advancing its product pipeline. The company remains focused on obtaining regulatory approvals, particularly for the Saliva Glucose Biosensor, and expanding its geographic reach.

In February 2024, INBS announced a partnership with Cliantha Research to conduct the pharmacokinetic (PK) study as part of its FDA 510(k) clinical studies plan for the Intelligent Fingerprinting Drug Screening System. This represents a critical milestone towards the planned product launch in the United States in 2025.

Additionally, the company secured 26 new customer accounts during the quarter, representing a combined headcount of approximately 16,779 employees. This demonstrates the growing demand for INBS's proprietary fingerprint sweat-based technology.

While the company's liquidity situation remains a concern, the recent capital raises and continued progress on the product development and commercialization fronts suggest that INBS is well-positioned to navigate the challenges ahead and capitalize on the significant market opportunities for its innovative testing and screening solutions.