Chromosome Dynamics' business continuity questioned by auditor; what does the company's management say?

The auditor of Chromosome Dynamics' financial statements for last year questions the continuity of the company's activity, as shown in the report of the developer of IT solutions oriented to agribusiness, published on the company's website at the beginning of last week.

Chromosome Dynamics ended last year with a loss of almost seven million lei, which the company's management states does not come from a usual commercial strategy, but rather is the consequence of an exceptional situation. In addition, director Ioan Mugurel Gabriel claims, in an opinion sent to Ziarul Bursa, that the results of the first quarter of this year will reflect an improved financial position of Chromosome Dynamics.

• Ioan Mugurel Gabriel: We are not unable to continue our activity

MGMT Audit & BPO writes in the audit report that the developer of IT solutions for agribusiness has a low level of cash and bank liquidity, net current assets are negative, amounting to 0.73 million lei, and the operating result represents a loss of almost 7.1 million lei.

"These aspects indicate the existence of an uncertainty that could generate doubts regarding the company's ability to continue its activity without the implementation of adequate recovery measures," the report states.

Ioan Mugurel Gabriel, director and founder of Chromosome Dynamics, believes that the mention of "significant uncertainty related to the continuity of the activity" reflects a one-time assessment by the auditor, which does not fully capture the current context of the company.

"Chromosome Dynamics has made available to the auditor all the commercial contracts in progress, as well as the updated financial statements, from which it is clear that we are not unable to continue our activity. In fact, the same auditor has issued a similar statement in the past in the case of another company in the agribusiness field, and subsequent reality has demonstrated the opposite, with the respective company continuing its activity successfully", Ioan Mugurel Gabriel told us.

In his opinion, most likely, the auditing process also involves 100% assurance that the audited company has guaranteed business continuity (n.r. guaranteeing business continuity) through major contracts and a total lack of risks (something that does not apply, at least in the agribusiness of 2025).

• Total debt ratio of 78%

Chromosome Dynamics reported a loss of 6.9 million lei for last year, compared to a positive net result of 0.2 million lei in 2023. Operating income amounted to 8.7 million lei, 22% lower compared to the previous year, while operating expenses were 15.8 million lei, up 46%.

"The loss reported in 2024 was caused by certain cyclical factors and accounting, commercial and fiscal constraints, which were assumed in order to minimize higher risks (non-collection of debts or non-valuation of a technological asset)," says Chromosome Dynamics' annual report.

According to the document, there are two major elements that caused the company's loss last year:

- GPR technology. A technology received from Agricloud, in compensation for a debt. Practically, in exchange for the debt, a technological transfer was made, but it did not generate income during the analyzed period, being in the "conservation" stage. In the absence of a clear justification regarding the amortization or commercial capitalization of the technology within a foreseeable period, an accounting loss of three million lei was recorded, although no actual operational expense occurred;

- Compensation with soil fertilizers. The Iarmaroc Tradiţional company had a debt to Chromosome Dynamics, which it could not honor in cash, so that, in order to avoid a total loss (non-collection of the debt), it opted for compensation by taking over a considerable quantity of soil fertilizers. The difference between the entry price (the price at which the debts were compensated) and the actual selling price (market price) generated a loss of approximately 3.5 million lei.

"It is essential to emphasize that the loss (recorded by Chromosome Dynamics last year) does not come from the company's core business or from an incorrect development strategy," the report states, adding: "The management team is taking all necessary steps to capitalize on these transactions in the future and to ensure sustainable growth of the company."

At the end of last year, the company's total assets amounted to 11.2 million lei, 31% below those of 2023, while total liabilities were almost 8.8 million lei, 36% above those of last year. Short-term liabilities increased by 73%, to 8.5 million lei, due to the purchase of raw materials and goods, while long-term liabilities decreased by 83%, to 0.25 million lei. The company's total debt ratio was 78%, as shown in Chromosome Dynamics' financial reports.

• Ioan Mugurel Gabriel: The first quarter results will reflect an improved financial position, a significant reduction in debt and a constant commercial activity

Regarding the timing of the publication of the audit report on April 14, just two weeks before the company's shareholders' meeting, which will take place on April 28, Ioan Mugurel Gabriel says that the process was started in February 2025, and the issuer collaborated in a sustained and active manner, making all the requested documents available.

"The completion of the audit on April 14 resulted from the internal processes of the audit firm, and the publication of the report was made immediately after its official receipt. This was due exclusively to the speed of processing the documentation by the auditing company, not to our availability to provide the requested documents in real-time", Ioan Mugurel Gabriel told us.

The founder of Chromosome Dynamics added: "In the immediate future, we will publish the financial results for the first quarter of 2025, which will reflect an improved financial position, a significant reduction in debt and a constant commercial activity. These data will concretely support our statements regarding the stability of the company. The management of Chromosome Dynamics remains fully committed to ensuring the continuity and sustainable development of the company, in a transparent and responsible manner towards all its partners."

In the middle of last year, Ioan Mugurel Gabriel had 57.8% of the issuer listed on the AeRO Market of the Bucharest Stock Exchange, whose stock market valuation amounts to approximately five million lei.