Know Labs, Inc. Reports First Quarter FY2024 Results
- Reduction in net loss by 9.8% compared to Q1 FY 2023.
- Earnings Per Share improved by 50% to a loss of $0.04.
- Cash and cash equivalents of $4.82 million as of December 31, 2023.
- Plans to raise funds through equity, preferred stock, and convertible debentures.
- Recorded a non-cash charge to earnings of $792,000 related to stock-based compensation.
- Decrease in R&D expenses by 14.7% year over year.
- Increase in selling, general, and administrative expenses by 5.6%.
Insights
Financial Performance Evaluation: The reported reduction in net loss from $3.82 million to $3.45 million indicates a 9.8% improvement year-over-year, which is a positive sign of management's control over expenses. However, a net loss still raises concerns about the company's profitability and long-term sustainability. The earnings per share improvement from a loss of $0.08 to $0.04 is notable and may reflect well on management's efficiency in cost control or strategic shifts. It is also important to consider the non-cash charges, such as the $792,000 related to stock-based compensation, which investors often adjust for to assess the company's operating performance. The decrease in R&D expenses could suggest a more streamlined approach to product development, but it also raises questions about the potential impact on innovation and future revenue streams.
Liquidity Position: The cash and cash equivalents have decreased significantly from $8.02 million to $4.82 million. This decline in liquidity could be a red flag for investors, as it may indicate a higher cash burn rate than anticipated, despite the company's efforts to reduce fixed expenses. The net cash used in operations has increased compared to the previous year, which may suggest that the company is still in a phase where it is investing heavily in growth, which is typical for companies in the development stage. The ability of the company to operate until at least June 30, 2024, without additional funding, is a critical factor for investors to monitor.
Market and Competitive Landscape: The decrease in R&D spending could be interpreted in various ways by the market. On one hand, it may signal efficiency and a pivot towards leveraging existing research. On the other, it could raise concerns about the company's commitment to innovation, especially in the highly competitive medical diagnostics sector where continuous research is key to maintaining a competitive edge. The strategic move to reduce personnel costs and use external consultants might be a response to the need for flexibility in managing operating expenses. However, it's essential to assess how these changes align with industry benchmarks and the company's long-term strategic goals.
Equity Financing Prospects: The intention to raise additional funds through equity, preferred stock and convertible debentures, along with the effective $18 million S-3 shelf registration statement, may provide the necessary capital for continued operations and development. However, this also signals potential dilution for current shareholders. The timing and success of these financing efforts will be closely watched by the market, as they will impact the company's ability to continue its development plans and could affect investor sentiment.
Regulatory Compliance and Disclosure: The disclosure of the going concern qualification by the independent registered public accounting firm is a critical piece of information for investors, indicating that there is substantial doubt about the company's ability to continue as a going concern. This highlights the importance of the company's future financing plans and casts uncertainty on its financial stability. The adherence to New York Stock Exchange's Company Guide Sections 401(h) and 610(b) in making this announcement demonstrates the company's commitment to transparency and regulatory compliance, which is essential for maintaining investor trust.
Financial Highlights:
-
In Q1 FY 2024, Know Labs reported a net loss of
$3.45 million dollars$3.82 million dollars9.8% . This translates to Earnings Per Share of a loss of$0.04 $0.08 50% , before preferred stock dividends. -
Recorded a non-cash charge to earnings of
$792,000 $699,000 -
Research and development expense for Q1 FY2024 was
$1.48 million dollars$1.74 million dollars14.7% year over year. The decrease in R&D expense was related to decreased personnel and the use of external consultants to reduce the cost of product development. -
Selling, general and administrative expenses for Q1 FY 2024 was
$2.01 million $106,000 $1.91 million dollars5.6% . -
As of December 31, 2023, we had cash and cash equivalents of
$4.82 million dollars$8.02 million $3.39 million dollars$2.92 million -
During the year ended September 30, 2023, the Company made adjustments to its fixed expenses and the impact of those adjustments has significantly reduced our monthly burn rate. Given the significant reduction in fixed expenses, the Company believes that it has enough available cash and flexibility with its operating expenses to operate until at least June 30, 2024. As we have stated in our Q1 FY 2024 10-Q, we expect to raise additional funds through the issuance of equity, preferred stock and convertible debentures. To that end, we filed an
$18 million -
Shareholder equity for Q1 FY 2024 was
$1.23 million $3.74 million
As previously disclosed in its annual report on Form 10-K for the fiscal year ended September 30, 2023, which was filed with the Securities and Exchange Commission on December 19, 2023, the audit opinion contained a going concern qualification from the Company's independent registered public accounting firm. This announcement is being made solely to comply with the New York Stock Exchange's Company Guide Sections 401(h) and 610(b), which require separate disclosure of receipt of an audit opinion that contains a going concern qualification. This announcement does not represent any change or amendment to the Company's 2023 audited financial statements or to its 2023 annual report on Form 10-K.
Conference Call:
Know Labs will host an audio webcast to discuss its results and provide a business update today, February 14, 2024, at 4:30 pm ET (1:30 pm PT). The live webcast will be available on the Investors page of the Company’s website, www.knowlabs.co/investors, and a replay will be available for six months.
Participant Dial-In: 877-514-3621 / +1 215-268-9856
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=u3gcCI6A
A copy of the form 10-Q filed with the SEC can also be downloaded from the Company’s website.
Income Statement:
| KNOW LABS, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| Three Months Ended, | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| OPERATING EXPENSES- | ||||||||
| RESEARCH AND DEVELOPMENT EXPENSES | $ | 1,486,388 |
|
$ | 1,743,051 |
|
||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 2,011,246 |
|
1,905,071 |
|
||||
| Total operating expenses | 3,497,634 |
|
3,648,122 |
|
||||
| OPERATING LOSS | (3,497,634 |
) |
(3,648,122 |
) |
||||
| OTHER INCOME (EXPENSE), NET | ||||||||
| Interest income | 51,010 |
|
- |
|
||||
| Interest expense | - |
|
(227,170 |
) |
||||
| Other (expense) income, net | - |
|
52,433 |
|
||||
| Total other income (expense), net | 51,010 |
|
(174,737 |
) |
||||
| LOSS BEFORE INCOME TAXES | (3,446,624 |
) |
(3,822,859 |
) |
||||
| Income tax expense | - |
|
- |
|
||||
| NET LOSS | (3,446,624 |
) |
(3,822,859 |
) |
||||
| Deemed dividends on Series C and D Preferred Stock | (63,629 |
) |
- |
|
||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (3,510,253 |
) |
$ | (3,822,859 |
) |
||
| Basic and diluted loss per share | $ | (0.04 |
) |
$ | (0.08 |
) |
||
| Weighted average shares of common stock outstanding- basic and diluted | 81,094,007 |
|
48,187,339 |
|
||||
Balance Sheet:
| KNOW LABS, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| December 31, 2023 | 9/30/2023 (1) | |||||||
| ASSETS | Unaudited | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 4,821,477 |
|
$ | 8,023,716 |
|
||
| Total current assets | 4,821,477 |
|
8,023,716 |
|
||||
| PROPERTY AND EQUIPMENT, NET | 75,298 |
|
81,325 |
|
||||
| OTHER ASSETS | ||||||||
| Other assets | 18,767 |
|
15,766 |
|
||||
| Operating lease right-of-use asset | 97,567 |
|
145,090 |
|
||||
| TOTAL ASSETS | $ | 5,013,109 |
|
$ | 8,265,897 |
|
||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable - trade | $ | 627,058 |
|
$ | 1,292,861 |
|
||
| Accrued expenses | 95,952 |
|
94,062 |
|
||||
| Accrued expenses - related parties | 196,241 |
|
218,334 |
|
||||
| Convertible notes payable, net | 2,761,931 |
|
2,761,931 |
|
||||
| Current portion of operating lease right-of-use liability | 106,038 |
|
154,797 |
|
||||
| Total current liabilities | 3,787,220 |
|
4,521,985 |
|
||||
| COMMITMENTS AND CONTINGENCIES (Note 11) | - |
|
- |
|
||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock - |
||||||||
| and outstanding as follows: | ||||||||
| Series C Convertible Preferred stock |
||||||||
| 17,858 shares issued and outstanding at 12/31/2023 and 9/30/2023, respectively | 1,790 |
|
1,790 |
|
||||
| Series D Convertible Preferred stock |
||||||||
| 10,161 shares issued and outstanding at 12/31/2023 and 9/30/2023, respectively | 1,015 |
|
1,015 |
|
||||
| Common stock - |
||||||||
| shares issued and outstanding at 12/31/2023 and 9/30/2023, respectively | 81,347 |
|
80,358 |
|
||||
| Additional paid in capital | 126,492,778 |
|
125,501,537 |
|
||||
| Accumulated deficit | (125,351,041 |
) |
(121,840,788 |
) |
||||
| Total stockholders' equity | 1,225,889 |
|
3,743,912 |
|
||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 5,013,109 |
|
$ | 8,265,897 |
|
||
Cash Flow:
| KNOW LABS, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| Three Months Ended, | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (3,446,624 |
) |
$ | (3,822,859 |
) |
||
| Adjustments to reconcile net loss to net cash (used in) | ||||||||
| operating activities | ||||||||
| Depreciation and amortization | 18,724 |
|
103,160 |
|
||||
| Stock based compensation - stock option grants | 699,246 |
|
744,640 |
|
||||
| Issuance of common stock for services | 26,250 |
|
- |
|
||||
| Amortization of operating lease right-of-use asset | 47,523 |
|
44,404 |
|
||||
| Interest expense for extension of notes and warrants | - |
|
206,994 |
|
||||
| Changes in operating assets and liabilities: | ||||||||
| Other long-term assets | (3,001 |
) |
(1,998 |
) |
||||
| Operating lease right-of-use liability | (48,759 |
) |
(45,732 |
) |
||||
| Accounts payable - trade and accrued expenses | (686,006 |
) |
(146,026 |
) |
||||
| NET CASH (USED IN) OPERATING ACTIVITIES | (3,392,647 |
) |
(2,917,417 |
) |
||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of research and development equipment | (12,697 |
) |
(10,846 |
) |
||||
| NET CASH (USED IN) INVESTING ACTIVITIES: | (12,697 |
) |
(10,846 |
) |
||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock offering, net | 203,105 |
|
- |
|
||||
| Proceeds from issuance of common stock for stock options exercise | - |
|
2,343 |
|
||||
| Proceeds from issuance of common stock for warrant exercise | - |
|
12,500 |
|
||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 203,105 |
|
14,843 |
|
||||
| NET (DECREASE) IN CASH AND CASH EQUIVALENTS | (3,202,239 |
) |
(2,913,420 |
) |
||||
| CASH AND CASH EQUIVALENTS, beginning of period | 8,023,716 |
|
12,593,692 |
|
||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 4,821,477 |
|
$ | 9,680,272 |
|
||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | - |
|
$ | - |
|
||
| Taxes paid | $ | - |
|
$ | - |
|
||
| Supplemental disclosure of non-cash financing activity: | ||||||||
| Deemed dividends on Series C and D Preferred Stock | $ | 63,629 |
|
$ | - |
|
||
About Know Labs, Inc.
Know Labs, Inc. is a public company whose shares trade on the NYSE American Exchange under the stock symbol “KNW.” The Company’s platform technology uses spectroscopy to direct electromagnetic energy through a substance or material to capture a unique molecular signature. The technology can be integrated into a variety of wearable, mobile or bench-top form factors. This patented and patent-pending technology makes it possible to effectively identify and monitor analytes that could only previously be performed by invasive and/or expensive and time-consuming lab-based tests. The first application of the technology will be in a product marketed as a non-invasive glucose monitor. The device will provide the user with accessible and affordable real-time information on blood glucose levels. This product will require
Safe Harbor Statement
This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements appear in a number of places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of Know Labs, Inc., its directors or its officers with respect to, among other things: (i) financing plans; (ii) trends affecting its financial condition or results of operations; (iii) growth strategy and operating strategy; and (iv) performance of products. You can identify these statements by the use of the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond Know Labs, Inc.’s ability to control, and actual results may differ materially from those projected in the forward-looking statements as a result of various factors. These risks and uncertainties also include such additional risk factors as are discussed in the Company’s filings with the
View source version on businesswire.com: https://www.businesswire.com/news/home/20240214439657/en/
For Know Labs Media Inquiries Contact:
Matter Health
Abby Mayo
Knowlabs@matternow.com
Ph. (617) 272-0592
Know Labs, Inc. Contact:
Jordyn Hujar
jordyn@knowlabs.co
Ph. (206) 629-6414
Source: Know Labs, Inc.
FAQ
What was Know Labs' net loss in Q1 FY 2024?
What was the improvement in Earnings Per Share compared to the prior year quarter?
How much cash and cash equivalents did Know Labs have as of December 31, 2023?
How does Know Labs plan to raise additional funds?
