UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
(Mark
One)
For
the fiscal year ended June 30, 2022
or
For
the transition period from _____ to _____
Commission
File Number 001-39825
GBS
Inc.
(Exact
name of Registrant as specified in its Charter)
WeWork c/o GBS Inc., 142 West, 57th Street, 11th Floor, New York, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (646)828-8258
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share GBS Nasdaq Capital Market
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐NO ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒
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. YES ☒ 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). YES ☒ 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 ☐
Non-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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
The
aggregate market value of the Common Stock (based on the closing price of these shares on the Nasdaq Capital Market) on June 30, 2022,
the last business day of the registrant’s most recently completed fiscal year, held by nonaffiliates, was $9,857,116.
As
of September 22, 2022, there were 14,889,904 of the registrant’s Common Stock issued and outstanding.
Table
of Contents
Page
PART I
Item 1. Business 3
Item 1A. Risk Factors 17
Item 1B. Unresolved Staff Comments 42
Item 2. Properties 42
Item 3. Legal Proceedings 42
Item 4. Mine Safety Disclosures 43
PART II
Item 6. Reserved 43
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50
Item 8. Financial Statements and Supplementary Data 50
Item 9A. Controls and Procedures 50
Item 9B. Other Information 52
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspection 52
PART III
Item 10. Directors, Executive Officers and Corporate Governance 52
Item 11. Compensation of executive officers and directors 58
Item 12. Security Ownership of Certain Beneficial Owners and Management 63
Item 14. Principal Accounting Fees and Services 65
PART IV
Item 15. Exhibits, Financial Statement Schedules 67
Signatures 71
ii
PART
I
Cautionary
Note Regarding Forward-Looking Statements
All
statements other than statements of historical fact or relating to present facts or current conditions included in this Annual Report
on Form 10-K 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
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 Annual Report on Form 10-K 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 “Risk Factors.” 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 prospectus 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 Annual Report on Form 10-K or to conform
these statements to actual results or revised expectations.
In
this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “Company,” or “GBS”
refer to GBS Inc. together with its wholly owned subsidiaries.
ITEM
1. BUSINESS.
Overview
GBS
Inc. and its wholly owned subsidiary, GBS Operations Inc. were each formed on December 5, 2016 under the laws of the state of
Delaware. Glucose Biosensor Systems (Greater China) Pty Ltd (“GBSPL”) was formed on August 4, 2016 under the laws of New
South Wales, Australia and was renamed to GBS (APAC) Pty Ltd on October 14, 2020. Glucose Biosensor Systems (Japan) Pty Ltd and
Glucose Biosensor Systems (APAC) Pty Ltd were formed under the laws of New South Wales, Australia on February 22, 2017 and February
23, 2017 respectively. These companies (collectively, “we,” “us,” “our,” or the
“Company,”) were formed to provide a non-invasive, pain free innovation to make it easier for people to manage diabetes
using the Company’s Saliva Glucose Biosensor (“SGB” and, together with the software app that interfaces the SGB
with the Company’s digital information system, the “SGT”). Our headquarters are in New York, New York.
We
are a biosensor diagnostic technology company operating across the Asia-Pacific region (the “APAC Region”) and an
interest in the North America region with the biosensor platform comprising of biochemistry, immunology, tumor markers, hormones,
and nucleic acid diagnostic modalities, and worldwide with our SARS-CoV-2 test.
Our
objective is to introduce and launch initially the SGB, the diagnostic test that stems from the Biosensor Platform that we license from
Life Science Biosensor Diagnostics Pty Ltd (“LSBD” or the “Licensor”), in our regions and the SARS-CoV-2 test
globally. This will be followed by developing the platform to its full capacity testing across the diagnostic modalities of immunology,
hormones, chemistry, tumor markers and nucleic acid tests.
Highlights of Achievements
Our major highlights of achievements for the fiscal year 2022:
The
Saliva Glucose Biosensor
The
APAC Region includes over 164 million people living with diabetes, which accounts for 38% of the world’s diabetic population. Rapid
urbanization, unhealthy diets and increasingly sedentary lifestyles have resulted in ever increasing rates of obesity and diabetes across
the region.
Self-testing
blood glucose monitors were introduced to the market in the 1970s and, since then, the method of glucose self-monitoring has not meaningfully
changed. The industry remains dominated by invasive methods that ultimately use blood or interstitial fluid to measure glucose. We believe
the methodology of the SGB represents a breakthrough in glucose monitoring as it represents the only non-invasive, painless, and cost-effective
saliva-based method of measuring glucose levels. The biosensor technology has been developed over several decades of university-based
scientific research and has been extensively referenced in scientific literature.
The
SGB is an organic, thin-film transistor, which in its structure embeds the glucose oxidase enzyme (referred to as “GOX”).
When the single-use SGB interacts with saliva it initiates a sequence of enzymatic and electrochemical reactions, producing an electrical
signal directly correlated to the amount of glucose present in the saliva. This measurement is then converted into a real-time saliva
glucose reading, through the biosensor app installed on a smart device or a dedicated reader. The reading may then be stored in a cloud-based
digital information system.
The
patent protected SGB is able to detect glucose in saliva at concentrations between 8 and 200 μM and exhibits linear glucose sensing
characteristics at these concentrations, sensing glucose at levels 100 times lower than blood.
In
our development of the SGT, we aim to go beyond the innovation of changing the sampling medium from blood to saliva, and further create
value for the patient and the payers by decreasing the cost of managing diabetes, improving the outcomes of the disease and providing
convenience in testing methodology. This will be achieved by directly transferring the SGB reading from the smart device or dedicated
reader to a cloud-based digital information system to enable all patients the option to create their own medical records where the SGB
results will be uploaded.
Our
digital information system is intended to be interfaced to an artificial intelligence system and will be able to, at the patient’s
or authorized care giver’s direction, disseminate patient data to a remote caregiver, a service for consultation or to any other
individual with whom the patient chooses to share his or her glucose level measurements. We believe patients and payers will be able
to leverage our digital information system to decrease cost and improve outcomes and convenience.
With
the SGB we aim to drive economic value beyond the revenue stemming from the sale of the SGB units – it also allows for monetization
and the creation of separate revenue streams from the patient network and other data that resides within our digital information system,
by way of the following:
We
plan to leverage this usage, safe sharing and collection of data in the following four revenue-generating channels:
Direct
Monetization Channel. This channel focuses on the development of revenue based on commercial relationships for the use of anonymized
and compliant information derived from data generation. These services may include, but will not be limited to:
● Fee for service, per performed action by pharma, or other commercial partners.
● Subscription, regular recurring payments for continued access to service.
● Prescription, value acknowledged by payer reimbursement per active user.
● Risk sharing/profit sharing, success-based payment models.
● Added value of GBS brand loyalty.
Commercial
Adjacencies Channel. This channel focuses on the development of revenue from data generated through patient engagement and market
insights from a clinical and medical perspective. These services may include, but will not limited to:
● Medical – Generation of Patient Reported Outcomes, or “PROs”.
● Consumer – e-commerce platform, third party customer care, advertising.
Product
and Service Bundles Channel. This channel focuses on ancillary revenue generated through bespoke service opportunities across the
industry, for example, by working with insurers to develop products that integrate the usage of testing as part of their service offering.
These services may include, but will not be limited to:
● Over-the-counter model.
● Bundle payment model with insurance subsidy.
● Pay for outcomes model.
Core
Operations Synergy Channel. Through combining the data generation with the use of artificial intelligence, we expect to have a deep
insight into our customer base, providing an elevated level of customer insight. It is expected that this insight will drive high customer
retention levels and generate a considerable number of broader revenue opportunities through direct and specific interaction with our
customer base. These opportunities may include, but will not be limited to:
● Direct access to customers for better experience in customer care.
● Peer learning and support to decrease customer care resource commitment.
● More customer data for targeted marketing & marketing impact monitoring.
● PRO data to support unique marketing claims.
● Higher engagement, customer loyalty and customer lifetime value.
● Consumer driven innovation and customer involvement in development.
● Involvement in testing & refining to develop demand-oriented products rapidly.
● Easy and fast clinical evaluation recruitment.
The
SGB has been under continuous development for over seven years, first by the University of Newcastle, Australia, then by the Licensor
and us. The SGB development program is currently at the design and manufacturing process development stage, which includes the testing
needed to verify and validate the final product. This stage involves implementation of the clinical evidence module, which incorporates
the commercial production of the investigative biosensor devices to commence the clinical evaluation of analytical performance of the
device and generate the clinical evidence necessary to gain regulatory approval.
On
May 1, 2020, the Licensor filed a submission with the FDA for the Saliva Glucose Biosensor Diagnostic Test, currently in development
as a point-of-care test intended to replace blood glucose testing for diabetes management. Following the 513(g) submission to the FDA
(Submitted May 1, 2020), it was determined that the Company could seek the De Novo application pathway for the Saliva Glucose Biosensor
Diagnostic Test, we were appointed an expert contact person, Acting Branch Chief from the Diabetes Diagnostic Devices Branch. We have
further commenced planning discussions with the FDA Office of In Vitro Diagnostics and Radiological Health and the Office of Product
Evaluation and Quality pertaining to the clinical development and study plan of the Saliva Glucose Biosensor. We expect to leverage synergies
from the planned approval process with the FDA within the Asia Pacific region, We will first seek regulatory approval with the Therapeutic Goods Administration (TGA) in
Australia. However, we intend to apply for regulatory approval in each jurisdiction across the APAC Region.
The
SGB is manufactured using modified reel-to-reel printing technology that was developed at the Australian National Fabrication Facility.
This technology allows mass volume printing at a low cost. Previous research published in the journal Solar Energy Materials and Solar
Cells has shown that the cost of manufacture of printed organic electronic devices (like the SGB) using mass volume printing is $7.85
per square meter, with an uncertainty of 30%. The size of the printed biosensors is approximately one square centimeter, resulting in
a manufacturing cost per biosensor of approximately $0.01.
We
anticipate that the non-invasive nature of saliva-based glucose testing will make patients more amenable to glucose monitoring, with
the expected result of increasing the number of times a patient tests per day. The data generated by the SGB, combined with the interface
of the smart device or dedicated reader with our digital information system and the artificial intelligence feedback, will allow the
patient to achieve better glucose control through a practical understanding of lifestyle factors that affect glucose levels, thereby
helping prevent or delay diabetes complications and ultimately personalizing diabetes management.
The
SARS-CoV-2 Biosensor
The
COVID-19 pandemic will not simply go away, and we believe it will remain with us for many years. Development of an improved antibody
assays to detect prior infection with SARS-CoV-2 has been identified as one of the top unmet needs in the ongoing COVID-19 pandemic response.
Precise knowledge of SARS-CoV-2 infection at the individual level can potentially inform clinical decision-making, whereas at the population
level, precise knowledge of prior infection, immunity, and attack rates (particularly asymptomatic infection) is needed to prioritize
risk management decision-making about social distancing, treatments, and vaccination (once the latter two become available). If saliva
can support measurements of both the presence of SARS-CoV-2 as well as antibodies against SARS-CoV-2, this sample type could provide
an important opportunity to monitor individual and population-level SARS-CoV-2 transmission, infection, and immunity dynamics over place
and time.
We anticipate there to be 3 different applications
for the near future:
We
believe our SARS-CoV-2 test will have significant advantages and we anticipate it will be a ground-breaking development in the
management of COVID-19.
Based
on a recent paper publicly available and authored by the team at Johns Hopkins Department of Environmental Health and Engineering, Bloomberg
School of Public Health, results indicate it is feasible to accurately measure the salivary IgG response to identify individuals with
a prior SARS-CoV-2 infection. A saliva-based approach could serve as a non-invasive approach for accurate and large-scale SARS-CoV-2
“sero”-surveillance.
A
saliva antibody test can greatly increase the scale of testing—particularly among susceptible populations—compared to blood
and could clarify population immunity and susceptibility to SARS-CoV-2. The team at John Hopkins further demonstrated in the laboratory
that when saliva was collected ≥10 days post symptom onset, the anti-SARS-CoV-2 IgG assay detects SARS-CoV-2 infection with 100% sensitivity
and 99% specificity. In addition, the team demonstrated that the temporal kinetics of SARS CoV-2-specific IgG responses in saliva are
consistent with those observed in serum and indicate that most individuals seroconvert approximately 10 days after COVID-19 symptom onset
or approximately two weeks post-presumed infection.
By
utilizing the biosensor platform for detecting SARS-CoV-2 we expect to have lower detection limits, improve on sensitivity and specificity
characteristics of current diagnostic methods, be able to provide real time results at the point of care and provide quantitative results
as opposed to negative or positive which is how other point of care testing (“POCT”) report the results.
Accurate
and scalable point-of-care (POC) tests for the diagnosis of COVID-19 would increase the scope for diagnosis to be made in the community
and outside the laboratory setting They would have the potential to reduce the time to obtaining an actionable result, could support
early identification of those with COVID-19 and could also support appropriate use of isolation resources, infection control measures,
and recruitment into clinical trials of treatments.
Our
Products
Biosensor
Platform Technology
The
“Biosensor Platform” on which the SGB is based is a modified Organic Thin Film Transistor (OTFT). The OTFT structure
consists of a source and drain electrode, a semiconducting layer, a gate electrode, an optional separation (or dielectric) layer, all
printed on a substrate material and superimposed by a polyelectrolyte membrane/enzyme layer onto which the analyte is placed. The layered
biosensor architecture and fabrication allows the recognition element within the biosensor to be exchanged. The sensing principle for
the SARS-CoV-2 Test is similar to the Saliva Glucose Test: an enzymatic reaction causes changes at the OTFT surface that lead to a measurable
change in electrical current that is detected by the transistor. The major difference is that a binding reaction between immunoglobulin
to SARS-CoV-2 in the sample amplifies the transistor signal by bringing and enzyme conjugate into close proximity with the transistor
surface. The underlying layers of the OTFT remain unchanged. This significantly simplifies our development effort to make a blood- or
saliva-based SARS-CoV-2 diagnostic test.
The
Saliva Glucose Test (SGT)
The
SGT consists of:
● The SGB – a single use disposable saliva biosensor, and
The
Saliva Glucose Biosensor (SGB)
The
SGB was invented at the Centre for Organic Electronics (COE) at the University of Newcastle, Australia. Patents for the SGB technology
have been granted in the United States (9,766,199) and China (ZL201380022888.2). The core innovative characteristic of the SGB is the
sensitivity of the glucose biosensor that enables it to detect glucose in saliva at concentrations between 8-200 μM and exhibits
linear glucose sensing characteristics at these concentrations, sensing glucose at levels 100 times lower than in blood. In addition
to the patent disclosures, details of the SGB design have been published in Applied Physical Letters, a peer-reviewed physics journal.
The Licensor owns patents in Australia, China and the United States protecting the following technological claims of the SGB: the architecture
of a biofunctional organic thin film transistor device comprising a gate electrode, a dielectric layer, a partially-organic semiconducting
layer, a source electrode, a drain electrode, a substrate and an enzyme; the method for producing the organic thin film transistor device;
and the method for determining the concentration of a compound in a sample by interpreting the amperometric signals generated by the
device. The Chinese and the United States patent belong to the same patent family, originating from the Australian patent. As such, all
of the patents relate to identical technology claims.
The
basic OTFT structure consists of a source and drain electrode on a semiconducting material which is itself separated from a third gate
electrode by a thin insulating layer. The COE has pioneered the fabrication of these novel biosensors based on integrating biomolecules,
such as enzymes, directly into the architecture of organic transistors; producing electronic devices with both high sensitivity and high
specificity for the target analyte. In these biosensors, a molecular recognition element can simply be integrated directly into the device
structure, and in the case of the SGB, the recognition element is GOX.
The
SGB interacts with the glucose in the saliva and initiates an enzymatic reaction whereby GOX enzyme produces hydrogen peroxide from glucose,
which modifies the properties of the OTFT gate material, producing an electrical signal directly correlated to the amount of glucose
present in the saliva. This measurement is then converted into a real-time saliva glucose reading, through the software app installed
on a smart device or a dedicated smart reader. The data may then be transferred to our digital information system coupled with an artificial
intelligence system, which will provide the patient with personalized healthcare advice enabling a practical understanding of lifestyle
factors that may affect their glucose levels.
High
quality OTFTs have been routinely fabricated at the materials node of the Australian National Fabrication Facility. The COE has pioneered
the fabrication of novel biosensors based on integrating biomolecules, such as enzymes, directly into the architecture of organic transistors,
producing electronic devices with both high sensitivity and high specificity for the target analyte and in this case, glucose.
The
development of an intermediate device that communicates to the smart device has been completed. The intermediate device emulates a glucometer,
providing the mechanical and electrical interfaces to receive and power the SGB as well as the required circuitry for accurately reading
the amperometric signals. We intend to transfer the responsibilities of the intermediate device to the SGB. A possible route to achieve
this technical aim is to leverage near-field-communication, or “NFC,” tags, available off the shelf and routinely
used in consumer electronics, to power the SGB and implement the communication protocol. NFC tags are compatible with flexible electronics
and widely used in “internet of things” applications in view of their low cost. We believe that NFC tags suitable for integration
with the SGB can be purchased for approximately $0.10 per tag, even at low volumes. The cost of electronic components is well known to
significantly reduce as volume increases. Due to the large, expected volumes of the SGB, we believe it is reasonable to assume that the
cost of suitable NFC tags will be viable and less than $0.04.
The
use of saliva as a meaningful proxy for estimating blood glucose level has been reported in scientific literature, including articles
published in independent journals such as the Journal of Obesity, the Journal of International Oral Health, the Journal
of Clinical and Experimental Dentistry, the Journal of Oral Biology and Craniofacial Research, Diabetes & Metabolic Syndrome,
the Journal of Biological Regulators and Homeostatic Agents and Diabetologia, among others. However, a few articles have reported
finding little or no significant correlation, including articles in the Journal of Clinical and Diagnostic Research and the Journal
of Oral Science. Consequently, GBS is performing clinical research to determine if saliva can be utilized as a non-invasive alternative
to blood to monitor glycemic status in diabetes patients.
At
this time, GBS has concluded the in-clinic portion of a clinical study to measure glucose in oral fluids and blood. The study consented
40 subjects with type 2 diabetes, and collected saliva, gingival crevicular fluid, venous blood and fingerstick capillary blood over
the course of a two-hour oral glucose tolerance test. GBS is in the process of analyzing the data from this study.
History
and Background of the Saliva Glucose Biosensor
The
SGB leverages the decades of history of all-polymer printed OTFTs. Through the research conducted at COE, this OTFT technology has been
transformed into a medical device and expected to conform to the highest medical device standards globally. The SGB is based on a modified
OTFT architecture incorporating GOX as the recognition element. It has been demonstrated that the SGB exhibits linear glucose sensing
at concentrations of 8-200 μM (micro molar) offering a saliva-based test for diabetes diagnosis and monitoring.
Fundamentals
of the biosensor technology have been well-characterized and have deep scientific foundations. Since their invention in 1947, transistors
have dominated the mainstream microelectronics industry. Field Effect Transistors, or “FETs,” are a class of transistor
in which the current between a pair of source and drain electrodes separated by a semiconductor is controlled by a voltage applied to
a third electrode known as the gate. The gate electrode is separated from the source-drain region by a thin (~100 nm) insulating dielectric
region and thus is coupled to the semiconductor. By altering the bias voltage applied to the gate region, the source-drain region can
be altered from conducting to insulating and thus the device can be turned on or off. Importantly, the presence of a relatively small
number of charges on the gate electrode alters the flow of a great many charges between the source and drain electrodes. Accordingly,
the FET acts as a switch as well as an amplifier.
The
SGB integrates another scientific discovery known as organic electronic polymers. This work, which was conducted in the 1970s, focused
on the development of doped polyacetylene. Historically conductive polymers can also be traced back to the early 1960s. Conductive polymers
have several advantages over other organic conductors with regard to their processability and hence their use is becoming increasingly
widespread. The polymers that show the most promise in this area are based on the polythiophene structure. The flexible nature of these
polymers allows them to be processed into almost any desired shape or form, making them attractive for the low-cost production of flexible
electronic circuits, such as FETs.
The
first demonstrated combination of FETs and organic electronic polymers was in the solid-state OTFT developed in 1986 using polythiophene
(an organic electronic polymer) as the semi-conducting layer, with a similar device being reported in 1988. The performance of OTFTs
in comparison with conventional silicon-based transistors has been considered encouraging and they have already been used in applications
in logic circuits or as the driving elements in active matrix displays. Biosensor fabrication based on organic electronics is also well-established,
primarily driven by the appealing features offered by these materials such as flexible and adjustable chemical properties, and room temperature
operation.
One
of the most attractive features of organic electronics is the potential for flexible low-cost fabrication. A common feature of early
OTFTs was the use of silicon as the substrate material, and thus since these hybrid devices are not truly all-polymer-based they do not
offer all the advantages with respect to fabrication. In the world of sensors, the vast majority of previous scientific research and
subsequent technological implementation of organic sensors has involved electrochemically grown films exhibiting performance levels that
are, in most cases, inadequate for real applications. Solution-processed polymers, on the other hand, offer the greatest potential for
the fabrication of low-cost electronics since they can be easily processed as liquids, unlike the organic crystals and short chain oligomers
which are typically vapor deposited. Combining these unique material properties with low-cost techniques, such as ink-jet or reel-to-reel
printing, offers the ability to rapidly produce disposable printed electronic circuits.
The
first all-polymer printed OTFT was reported in 1994. OTFTs are an exciting class of devices within the organic electronics field. The
prospect of low cost organic electronic modules incorporating OTFTs fabricated at low temperatures using low energy techniques is very
attractive. Low temperature solution-based processes, such as ink-jet printing, allow for compatibility with flexible substrates, upon
which it would be impossible to fabricate conventional electronics. In addition, conducting polymers can be synthesized in a laboratory
without using rare or expensive materials.
Other
Tests Based on the Biosensor Platform
As
discussed above, the architecture of the Biosensor Platform allows the recognition element of the biosensor to be exchanged. Accordingly,
the GOX element used to detect glucose in the case of the SGB can be substituted for a different enzyme, or with antibodies specific
to SARS-CoV-2, cancer biomarkers, immunological tests, hormones and other biomarkers. The substitute recognition element will catalyze
a reaction leading to a signal that is proportional to the amount of analyte, or participate in a binding reaction of labelled antibodies
that will lead to a signal proportional to the amount of analyte of interest. Given the underlying sensing mechanism is unaltered, we
believe the technical risk associated with the development and manufacturing scale-up of other tests for biomarkers other than glucose
is considered to be relatively low.
Performance
Testing, Current State of Development and Next Steps
Preliminary
Analytical Performance Testing
Regulatory
Approval SARS-CoV-2 Test
For
the SARS-CoV-2 Test we intend to use the section 564 of the Federal Food, Drug and Cosmetic (FD&C) Act, that there is a public health
emergency that has a significant potential to affect national security or the health and security of United States citizens living abroad,
and that involves a novel (new) coronavirus (nCoV) first detected in Wuhan City, Hubei Province, China in 2019 (2019-nCoV). The virus
is now named severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), which causes the disease COVID-19.
On
the basis of this determination, the Secretary of HHS has subsequently declared that circumstances exist justifying the Emergency Use
Authorization (“EUA”) of in vitro diagnostics for the detection and/or diagnosis of COVID-19 (February 4, 2020), personal
respiratory protective devices (March 2, 2020), and other medical devices, including alternative products used as medical devices (March
24, 2020), for use during the COVID-19 outbreak pursuant to section 564 of the Act and subject to the terms of any authorization issued
under that section.
The
criteria for issuance of EUA are the following:
● Serious or life-threatening disease
Commercialization
It
is the Company’s intent to introduce and launch the test globally, through assignment of a sublicense and or distributors agreements.
The development path will follow the geographical regulatory path, beginning by the North American markets. The Saliva Glucose Biosensor
has been designed and developed to meet the ISO 15197:2013 standard and we intend to seek regulatory approval under the specifications
of this standard. The research team at the University of Newcastle, in order to benchmark the performance of the biosensor prototype
systems, compared it with the partial requirements of the ISO standard ISO 15197:2013. This standard dictates the analytical standards
and performance evaluation of a blood-glucose monitoring system for self-testing in managing diabetes mellitus. The standard dictates
that at least 95 % of results for a given system have to be within ± 15 mg/dL at glucose concentrations less than 100 mg/dL and
within ± 15 % at glucose concentrations greater than or equal to 100 mg/dL. Artificial saliva was prepared based on the most widely
used Fusayama Meyer solution consisting of 11 different glucose concentrations of 0, 0.18, 0.36, 0.9, 1.8, 3.6, 9.01, 18.02, 36.04, 90.1,
180.2 mg/dL. Only the first seven concentrations are clinically relevant in saliva (0 – 9.01 mg/dL)3. However, at this stage of
product development we wanted to assess the dynamic range of the biosensor to 20-fold of the upper physiological range (9.01 mg/dL)3.
The concentration range of greater than 9.01-180.2 mg/dL is not clinically relevant criteria for glucose in saliva. The results of the
116 prototype biosensors that were assessed for precision and accuracy by implementing the ISO standard. In conclusion, from the 116
devices assessed 110 devices (94.8 %) met the blood glucose ISO standard in relation to the adapted system accuracy (i.e. 95 % of the
measured results must fall within ± 15 mg/dL at glucose concentrations less than 100 mg/dL).
We
believe the deficiency of the 6 prototype devices that failed to meet the ISO standard is attributable to the previously non-validated
manual printing process of the biosensors, rather than a biosensor technology deficiency. Currently the biosensor is in the process of
transferring to a quality-controlled pilot production phase , standardizing the automated processes, and characterization procedures
which will eliminate such manufacturing deviations in the released biosensor product format. Regardless, 110 prototype sensors in this
test performed at a level to allow compliance with the ISO standard. It is important to note that the ISO standard references blood glucose
monitors rather than salivary glucose monitors so a direct application of the standard here is not entirely practical.
Manufacturing
The
facilities required for the fabrication of these OTFT devices are all in place at the Australian National Fabrication Facility, which
we have used for fabrication and testing. These facilities are being extensively used, and we anticipate they can also be used for initial
manufacturing and charged under a cost recovery basis.
We
received approval for $4.7 million (excluding GST/VAT) Medical Products Priority Grant funding by the Australian Government in June 2021
as contributions towards the establishment of a high-tech manufacturing facility in Australia. Amounts will be paid under this grant
upon GBS in achieving certain deliverables.
Inherent
in the manufacturing process is a separate calibration process that is batch dependent and ensures analytical performance quality control.
Further to this an authenticity validation process verifies that the biosensor is authentic or otherwise flags a device.
The
Company and University of Newcastle have identified and selected an initial site to begin operations on campus. Management along with
university leadership and staff will commence this next phase of the commercial buildout that will utilize the already delivered equipment,
while the architectural design phase is finalized later this year and the primary manufacturing and construction begins on this second
site location. The Company anticipates construction to commence before end of calendar year 2022.
Distribution
We
intend, assuming the completion of development and regulatory approval, to market and distribute the SGT in the APAC Region. We propose
to enter into arrangements with distributors to market and sell the SGB. We have entered into an agreement in principle with a medical
affairs commercialization company to drive prelaunch activity with the scope to create awareness and build “share of voice”
with local referring physicians, diabetes educators, patient associations, government organizations and general practitioners. We also
recently entered into non-binding memoranda of understanding with two large distributors in China, which express our intent to enter
into definitive agreements to collaborate on the manufacture, regulatory approval, and distribution and sale of, and the medical affairs,
marketing, and identification of strategic opportunities for, the SGB in China. We engaged L.E.K Consulting to assist in expanding the
scope of commercial partners.
Our
strategy will depend in part on finding qualified distributors for the marketing and sale of our products. We will work with these distributors
to market our products. These distributors typically would sell a variety of other, non-competing products and will be expected to devote
certain resources to selling the SGB. We expect to devote suitable time and effort to recruiting and retaining qualified third-party
distributors and training them in our technology and product offering. We plan to adopt a multiple channel strategy to balance the marketing
and sales efforts.
The
Glucose Monitoring Industry
The
Self-Monitoring of Blood Glucose
Self-Monitoring
of blood glucose is the main approach for glucose monitoring and has been used for over 40 years. Currently, self-monitoring of blood
glucose is conducted periodically by the patient using a blood glucose measuring device. Blood glucometers require pricking a finger
with a lancet and applying a drop of blood on the test strip. The test strip is then inserted into the device which provides a reading
of glucose level in blood. Test strips are supplied by the glucometer manufacturer and are generally device-specific, although generic
test strips are also available. There are more than 100 types of blood glucometers currently are commercially available and they differentiate
based on size and weight, cost, data storage capacity, test accuracy, blood sample size and screen visibility (users with poor eyesight
may prefer larger screens).
Continuous
Glucose Monitoring
Continuous
glucose monitoring is not an alternative to finger prick self-monitoring of blood glucose. Only one system to date has been deemed of
equivalent use “as an aid to monitor the effectiveness of diabetes control” or non-adjunctive use. The procedure is invasive
and involves the insertion of a glucose biosensor into the subcutaneous tissue layer or the hypodermis. The biosensor, which measures
glucose levels in interstitial fluid, is attached to a transmitter that sends signals to either an insulin pump or a portable meter.
These devices are generally worn for about one week and require regular calibration through conventional blood glucose detection, about
twice a day. While the accuracy of these devices has been an issue, it has improved in recent years. Continuous glucose monitoring can
track a patients’ glucose throughout the day and night, notifying the patient of highs and lows so the person can act. Subcutaneous
glucose levels change more slowly than plasma glucose, which can be a restriction to their effectiveness, particularly if glucose levels
are changing rapidly. Subcutaneous glucose levels have a time lag compared to blood glucose measurements, and measurements may not always
match blood glucose. Continuous glucose monitoring is commonly used in conjunction with continuous subcutaneous insulin infusion, or
“CSII,” which involves a patient wearing an insulin pump and infusion set that infuses insulin into the body. Although
pumps are currently manually controlled by the patient, continuous glucose monitoring combined with CSII could potentially be used as
part of a closed-loop. CSII is generally restricted to Type 1 diabetics, where the need for ongoing insulin infusion is highest. Continuous
glucose monitoring is mainly used in a limited proportion of diabetics, particularly those concerned about severe, nocturnal hypoglycemia,
pregnant women who require meticulous glucose control or those who may not be able to easily administer a self-monitoring test (e.g.,
those living in remote or hostile environments). However, continuous glucose monitoring is more expensive than traditional self-monitoring
of blood glucose and in many cases is not eligible for reimbursement.
Importance
of Glucose Monitoring
One
of the main aims of diabetes monitoring and management is to maintain blood glucose levels within a specified target range. Self-monitoring
of blood glucose should be part of a regular management plan for patients with diabetes to enable this. Self-monitoring provides information
regarding an individual’s dynamic blood glucose profile. This information can help with the appropriate scheduling of food, activity,
and medication. It is also required for understanding of the timing of blood glucose variations. Lack of regular self-monitoring predicts
hospitalization for diabetes-related complications. Self-monitoring of blood glucose is an essential tool for people with diabetes who
are taking insulin or for those who experience fluctuations in their blood glucose levels, especially hypoglycemia. For patients taking
insulin and adjusting their dose, self-monitoring is needed for self-management. For others receiving oral medication, profiling glucose
trends and the confirmation of high or low blood glucose can be a useful addendum to successful management.
Self-monitoring
of blood glucose aids the management of diabetes by:
● improving patients’ recognition of hypoglycemia or severe hyperglycemia; and
The
role of blood glucose control in preventing the development and progression of complications has been proven in both type 1 and type
2 diabetes, with an especially strong relationship between intensive blood glucose control and complications such as neuropathy (affecting
limbs) and diabetic retinopathy (leading to blindness).
Over
time, glucose measurements are expected to provide the patient and their health care professionals with the information and insights
required to determine the best management strategy for diabetes, potentially minimizing the fluctuations in their glucose levels and
resulting in better health outcomes.
The
role of blood glucose monitoring and control in preventing the development and progression of diabetes complications has been well established.
Studies show that those who properly monitored blood glucose levels had better health outcomes (such as reduced complications of diabetes)
compared to those who did not.
For
a person with diabetes, however, this daily process is not only painful but can be exhausting, disruptive, frustrating, frightening and
consuming, which often leads to poor compliance and poor health outcomes. People with diabetes have reported that stigma is a significant
concern to them. This causes tension and anxiety and, because the procedure is perceived as inconvenient and difficult, leads to suboptimal
monitoring and poor adherence. Many people with diabetes do not test as often as clinically recommended, increasing the risk of complications.
Technology
License Agreement
On
June 23, 2020, we entered into a certain Technology License Agreement, or the “License Agreement,” with Life Science Biosensor
Diagnostics Pty Ltd, (“LSBD” or “Licensor”).
The
License Agreement sets forth our contractual rights and responsibilities relating to the Licensed Products. The “Licensed Products”
include: (i) a biosensor strip for antibodies against SARS-CoV-2; (ii) a proprietary smartphone application for the purpose reading,
storing, analyzing and providing patient support programs for any one or more of the Indicators for the purpose of measuring the amount
or concentration of immunoglobulins (IgG, IgM, IgA) specific to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2); and/or
(iii) a dedicated sensor strip reading device for any one or more of the Indicators for the purpose of measuring the amount or concentration
of immunoglobulins (IgG, IgM, IgA) specific to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).
An
“Authorized Supplier” includes us, the Licensor, any of our affiliates or any affiliates of the Licensor, or any third party
manufacturer and/or reseller that the Licensor has expressly identified or approved in advance in writing for the purpose of quality
control for the supply of Licensed Products to us.
Pursuant
to the License Agreement, the Licensor granted to us an exclusive license to the Licensor’s proprietary rights to the biosensor
technology used in the Licensed Products, worldwide and solely to:
● collect data acquired from the Licensed Products.
We
are required to collect and anonymize demographic information about the end users of the Licensed Products and data acquired from the
Licensed Products. While the anonymized data will be owned by the Licensor, we will own during the term of the License Agreement the
personally identifiable data, including health data, collected by us. In addition, the Licensor will provide us with certain of the data
acquired from the Licensed Products. The demographic information and personally identifiable information will be used, following patient
consent, as a disease management tool to offer patients value-added services, i.e., personalized education services for lifestyle, diet
and glucose management. These services will be in accordance with the applicable local medical codes and regulatory environment. The
use of such consensual information will be in accordance with privacy laws of the relevant countries and territories.
The
license is non-transferable, non-assignable and non-sublicensable, except that the Licensor will in good faith consider any request by
us for any sublicense.
Commencing
after the receipt of regulatory approval in a jurisdiction, and the earning of revenue we will be required to pay the Licensor a minimum
royalty fee with respect to such jurisdiction for each year, or the “Minimum Royalty,” in four equal quarterly installments.
The Minimum Royalty will be 13% of the projected net sales in such jurisdiction for each such year. The projected net sales will be an
amount mutually agreed between us and the Licensor for the first such year. For each ensuing year after the first year, the projected
net sales will be the number of Licensed Products sold in such jurisdiction in the prior year, as adjusted for the mutually agreed expected
market growth. In addition to the expected market growth, there will be an additional growth rate percentage of 7% for each year through
the tenth year. In the event of a dispute between us and the Licensor regarding the determination of the expected market growth or the
additional growth percentage, the License Agreement provides for resolution by an independent third party. At the end of each quarter,
if the quarterly installment of the Minimum Royalty is less than 13% of the actual net sales of Licensed Products in such jurisdiction
for such quarter, or the “Actual Royalty,” we will pay Licensor the difference between the quarterly installment of the Minimum
Royalty and the Actual Royalty. The royalty fee rate will be reduced from 13% to 3% upon the expiration of the patent portfolio covered
by the License Agreement.
As
between us and the Licensor, the Licensor solely owns all right, title and interest to, among other items of intellectual property, the
biosensor technology (including any improvements made to the biosensor technology by us), the anonymized data collected by us and any
other technology of the Licensor, and all derivations based on, and all proprietary rights in, the foregoing. The Licensor will have
the right to decide whether to protect or enforce, and the right to control any action relating to the protection and enforcement of,
any of the foregoing intellectual property and proprietary rights.
There
is no set expiration date for the License Agreement. However, the exclusivity of the license granted under the License Agreement runs
until the expiration of the patent portfolio covered by the License Agreement, which is currently until 2033. We expect that the patent
portfolio will be extended as new patents are created throughout product development, thereby extending the exclusivity of the License
Agreement. For instance, we expect to seek additional patents in connection with the development of the Prostate Specific Antigen test,