BICX.OIDBiocorrx INC
10-Q: BioCorRx Inc. Reports Q2 2024 Results: Revenue Declines Amidst Increased Operating Expenses
Sentiment:
Quarterly Report
BioCorRx Inc. reported a significant decrease in revenue for the second quarter of 2024, coupled with increased operating expenses, leading to a larger net loss compared to the same period last year.
Capital raiseThe company intends to raise additional capital through private placements of debt and equity securities.There is no assurance that these funds will be available on terms acceptable to the company or will be sufficient to enable the company to fully complete its development activities or sustain operations.
Worse than expectedThe company's revenue decreased significantly, operating expenses increased substantially, and the net loss widened compared to the same period last year.
Summary
- BioCorRx Inc. experienced a 79% decrease in net revenue for the three months ended June 30, 2024, totaling $4,045, compared to $19,635 in the same period of 2023.
- Operating expenses increased by $406,861, reaching $1,373,397 for the three months ended June 30, 2024, primarily due to higher research and development costs and increased accounting and legal fees.
- Interest expenses also rose significantly, with related party interest expense at $203,549 and net interest expense at $317,907 for the three months ended June 30, 2024.
- The company recorded a net loss of $1,233,996 for the three months ended June 30, 2024, compared to a net loss of $923,547 for the same period in 2023.
- For the six months ended June 30, 2024, net revenue decreased by 87% to $7,665, compared to $60,077 in the same period of 2023.
- Operating expenses for the six months ended June 30, 2024, totaled $2,345,709, an increase of $282,416 compared to the same period in 2023.
- The company's net loss for the six months ended June 30, 2024, was $2,471,459, compared to a net loss of $1,934,133 for the same period in 2023.
- The company's cash balance as of June 30, 2024, was $8,365, and it has a working capital deficit of $7,142,958.
- BioCorRx received a grant of $11,029,977 from the National Institutes of Health for research of BICX104, with $4,131,123 in funding during the first year.
Sentiment
Score: 2
Explanation: The document indicates significant financial challenges, including declining revenue, increasing losses, and a going concern risk. While there is positive news about a grant, the overall financial picture is concerning.
Positives
- BioCorRx Pharmaceuticals Inc. was awarded a grant of $11,029,977 from the National Institutes of Health for research of BICX104.
- The company received $4,131,123 in funding during the first year of the grant.
Negatives
- The company experienced a significant decrease in revenue for both the three and six months ended June 30, 2024.
- Operating expenses increased substantially, driven by higher research and development costs and increased accounting and legal fees.
- Interest expenses, both related party and net, increased significantly.
- The company's net loss increased for both the three and six months ended June 30, 2024.
- The company has a working capital deficit of $7,142,958 and a low cash balance of $8,365 as of June 30, 2024.
Risks
- The company's ability to continue as a going concern is in doubt due to its low cash balance, working capital deficit, and history of net losses.
- The company is dependent on raising additional capital through private placements of debt and equity securities, which may not be available on acceptable terms.
- The company's revenue is highly concentrated among a few customers, which poses a risk if those relationships are disrupted.
- The company has identified material weaknesses in its internal control over financial reporting.
- The company is involved in ongoing legal proceedings, including a judgment against them for $332,503 plus accrued interest.
Future Outlook
The company intends to raise additional capital through private placements of debt and equity securities, but there is no assurance that these funds will be available or sufficient. The company is also dependent on the grant funding for the ongoing research of BICX104.
Management Comments
- Management believes that its current cash on hand will not be sufficient to fund its projected operating requirements for the next twelve months.
- Management has concluded that the financial statements fairly present the company's financial condition, results of operations, and cash flows despite material weaknesses in internal controls.
Industry Context
The company operates in the addiction treatment and pharmaceutical development industries, which are characterized by high research and development costs, regulatory hurdles, and competition. The company's focus on naltrexone implants for opioid and alcohol use disorders aligns with the growing need for effective addiction treatment solutions.
Comparison to Industry Standards
- The company's revenue decline is concerning compared to industry peers, many of whom are experiencing growth in the addiction treatment sector.
- The increase in operating expenses, particularly in research and development, is typical for pharmaceutical companies in the clinical stage, but the magnitude of the increase is significant.
- The company's reliance on grant funding is common in the biotech industry, but the company's ability to secure additional funding is critical for its survival.
- The company's low cash balance and working capital deficit are significantly below industry benchmarks for companies at a similar stage of development.
- The company's ongoing legal issues and material weaknesses in internal controls are also concerning compared to industry standards.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| President | Brady Granier | Lou Lucido | 2024-02-01 | Brady Granier resigned from his position as President. |
| Board Member | Harsha Murthy | 2024-04-02 | Harsha Murthy resigned from his position as a member of the Board. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Auditor Change | The Board of Directors dismissed Marcum LLP and engaged M&K CPAS, PLLC as the company's independent registered public accounting firm. | 2024-07-08 | This change may indicate a need for improved financial oversight and reporting. |
Legal Proceedings
- The company is involved in ongoing litigation with Pellecome, with a judgment against the company for $332,503 plus accrued interest.
Related Party Transactions
- The company has significant related party payables, including compensation and interest payable to directors.
- The company has received advances and issued promissory notes to related parties, including Kent Emry, Louis C Lucido, and Lourdes Felix.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and going concern issues.
- Employees may be impacted by potential cost-cutting measures or restructuring.
- Customers may be affected by the company's ability to continue providing services and products.
- Creditors face increased risk of non-payment due to the company's financial difficulties.
Next Steps
- The company needs to secure additional funding to continue operations.
- The company needs to address the material weaknesses in its internal control over financial reporting.
- The company needs to manage its legal proceedings and financial obligations.
- The company needs to continue the research and development of BICX104.
Key Dates
| Date | Description |
|---|---|
| 2013-01-22 | The company issued an unsecured promissory note payable to Kent Emry. |
| 2014-11-13 | The Board of Directors authorized and approved the adoption of the 2014 Stock Option Plan. |
| 2015-12-10 | The company entered into a royalty agreement with Alpine Creek Capital Partners LLC. |
| 2016-06-15 | The board of Directors authorized and approved the adoption of the 2016 Equity Incentive Plan. |
| 2016-07-28 | BioCorRx Inc. formed BioCorRx Pharmaceuticals, Inc. |
| 2018-05-15 | The Board of Directors approved and adopted the BioCorRx Inc. 2018 Equity Incentive Plan. |
| 2018-10-12 | BioCorRx Pharmaceuticals Inc. acquired six patent families for sustained delivery platforms. |
| 2019-01-17 | The company received a Notice of Award from the United States Department of Health and Human Services for a grant from the National Institutes of Health (NIH) in support of BICX102/BICX104. |
| 2019-03 | The company entered into two Subscription and Royalty Agreements. |
| 2019-05-24 | The company entered into a Master Services Agreement (MSA) with Charles River Laboratories, Inc. |
| 2019-09-30 | The company entered into a Conversion Agreement with BICX Holding Company LLC. |
| 2020-07-17 | The company executed the standard loan documents required for securing a loan from SBA under its Economic Injury Disaster Loan assistance program. |
| 2020-10-31 | The company entered into a written management services agreement with Joseph DeSanto MD, Inc. |
| 2021-01-01 | Mr. Galligan acquired from Alpine Creek the rights to the royalty agreement. |
| 2021-05-14 | The company has entered into four consulting agreements. |
| 2021-08-27 | The company received a Notice of Award from the United States Department of Health and Human Services for a grant from National Institute on Drug Abuse in support of BICX104. |
| 2021-09-09 | The company issued an unsecured promissory note payable to Kent Emry for $500,000. |
| 2021-09-09 | The company issued an unsecured promissory note payable to one third party for $200,000. |
| 2022-01-11 | The company entered into a Master Clinical Trial Agreement (MCTA) with Memorial Research Medical Clinic dba Orange County Research Center. |
| 2022-04-22 | The Board of Directors approved and adopted the BioCorRx Inc. 2022 Equity Incentive Plan. |
| 2022-10-06 | The company issued an unsecured promissory note payable to a third party for $100,000. |
| 2022-11-01 | The company issued an unsecured promissory note payable to Louis C Lucido for $300,000. |
| 2023-01-25 | The company issued an unsecured promissory note payable to a third party for $50,000. |
| 2023-03-29 | Mr. Granier submitted his letter of resignation from his position as a member of the Board. |
| 2023-04-03 | The company entered into the Louis 2023 Exchange Agreement. |
| 2023-08-29 | The company issued an unsecured promissory note payable to Louis C Lucido for $150,000. |
| 2023-09-06 | The company issued an unsecured promissory note payable to one third party for $150,000. |
| 2023-10-04 | The Court of Appeal of the State of California upheld the March 30, 2022 judgement in favor of Pellecome. |
| 2023-10-30 | The Board approved Brady Graniers request for a paid administrative leave of absence. |
| 2023-11-09 | The company entered into a Subscription Agreement (the 2023 Q4 Galligan Subscription Agreement) with the J and R Galligan Revocable Trust. |
| 2023-11-09 | The company entered into a Subscription Agreement (the 2023 Q4 Lucido Subscription Agreement) with Louis C Lucido. |
| 2023-11-10 | The company issued an unsecured promissory note payable to a third party. |
| 2023-12-08 | The company issued an unsecured promissory note payable to a third party. |
| 2023-12-29 | Brady Granier submitted his letter of resignation as President of the Company and Chief Executive Officer of BioCorRx Pharmaceuticals. |
| 2024-01-05 | The California Superior Court for Orange County entered an amended judgement of $332,503 in favor of Pellecome. |
| 2024-01-05 | The Companys board of directors appointed Lou Lucido as Interim President. |
| 2024-01-26 | The interest rate on the promissory note issued on January 25, 2023 was increased to 20% due to default. |
| 2024-02-01 | Lou Lucido transitioned to President of the company. |
| 2024-03-01 | BioCorRx Pharmaceuticals Inc. was awarded a grant of $11,029,977 from the National Institutes of Healths National Institute on Drug Abuse. |
| 2024-03-08 | The company entered into an amendment agreement to a promissory note originally issued on November 10, 2023. |
| 2024-03-14 | The company issued an unsecured promissory note payable to a third party. |
| 2024-03-25 | The company entered into an amendment agreement to a promissory note originally issued on December 8, 2023. |
| 2024-03-29 | Harsha Murthy submitted his letter of resignation from his position as a member of the Board. |
| 2024-04-02 | Harsha Murthy's resignation from the Board was effective. |
| 2024-04-09 | The company and its landlord agreed that the company would move to a larger space. |
| 2024-04-24 | The company entered into an Exchange Agreement (the Louis 2024 Exchange Agreement) with Mr. Lucido. |
| 2024-04-24 | The company entered into an Exchange Agreement (the Lourdes 2024 Exchange Agreement) with Lourdes Felix. |
| 2024-05-01 | The company extended the term of its lease for an additional 60 months. |
| 2024-06-30 | End of the quarterly period. |
| 2024-07-02 | The company entered into three stock grant award agreements. |
| 2024-07-08 | The Board of Directors of the Company dismissed Marcum LLP as the Companys independent registered public accounting firm. |
| 2024-07-08 | The Board of Directors approved the engagement of M&K CPAS, PLLC to serve as the Companys independent registered public accounting firm. |
| 2024-07-11 | The company entered into two promissory note amendment agreements. |
| 2024-08-12 | There were 10,890,521 shares of registrants common stock outstanding. |
| 2024-08-13 | Date of the report. |
Keywords
BioCorRx, BICX104, Naltrexone, Opioid Use Disorder, Methamphetamine Use Disorder, Financial Results, Quarterly Report, Revenue, Operating Expenses, Net Loss, Grant Funding, Going Concern, Debt, Stock Issuance
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