Know Labs, Inc. Reports Fourth Quarter and Fiscal Year 2023 Results
- Reduction in net loss of 23.8% from FY2022 to FY2023
- Increase in R&D expenses by 43.5% year over year
- Expectation to raise additional funds through the issuance of equity, preferred stock, and convertible debentures
- Net cash used in operations for FY2023 was $10.35 million dollars compared with $6.92 million in the prior year
- Shareholder equity for the fiscal year 2023 was $3.74 million versus $9.86 million in fiscal year 2022
Insights
Reviewing the financial performance of Know Labs, Inc., a reduction in net loss from $20.07 million in FY2022 to $15.29 million in FY2023 is noteworthy, indicating an improved loss per share from $0.50 to $0.41. This reflects a tighter control over expenses and potentially more effective management strategies. The 43.5% increase in R&D expenses is a strategic investment, aligning with the company's focus on developing its Generation 1 device and moving towards FDA clinical trials and commercialization.
The company's proactive measures in reducing selling, general and administrative expenses by 19.1% are commendable and demonstrate a commitment to optimizing operational efficiency. However, the increase in net cash used in operations and a decrease in cash and cash equivalents raise concerns about liquidity and the company's ability to sustain operations without additional financing, which they plan to seek through equity and debt instruments.
Investors should consider the dilutive effects of potential equity issuances and the impact of preferred stock dividends on common shareholders' value. The company's belief in sustaining operations until at least mid-2024 provides a timeline for evaluating the progress towards commercialization and potential revenue generation.
The medical diagnostics sector is highly competitive and capital-intensive, particularly for companies like Know Labs that are in the pre-commercialization phase. The increase in R&D expenses is a common trend among companies striving for innovation, especially when approaching pivotal clinical trials. The financial statements reveal no revenue from digital asset sales in FY2023, a significant drop from the previous year, suggesting a pivot away from this area or a strategic refocus.
An analysis of the balance sheet shows a decrease in shareholder equity, which may reflect the issuance of additional stock to fund operations. This could potentially dilute existing shareholders but also indicates an active approach to managing the company's capital structure. The reduction in fixed expenses and the company's cash runway projection are critical for stakeholders monitoring the company's financial health and strategic direction.
The non-cash charges related to preferred stock dividends and the losses on debt extinguishment and sale of assets reveal complex financial transactions that may have legal and regulatory implications. It is essential for the company to maintain transparency with regulators and investors regarding these transactions. The mention of the 10-K filing provides assurance that the company adheres to SEC reporting requirements, which is crucial for maintaining investor confidence.
Future fundraising activities, such as the issuance of equity, preferred stock and convertible debentures, will require careful legal navigation to ensure compliance with securities laws and to protect the interests of current and future stakeholders. The company's communication about its intention to raise additional funds is a positive indication of its proactive approach to capital management and legal compliance.
Financial Highlights:
-
Know Labs reported a net loss of
$15.29 million dollars$20.07 million dollars23.8% . This translates to Earnings Per Share of a loss of$0.41 $0.50 18% , before preferred stock dividends.
-
In FY2023, recorded a non-cash charge to earnings of
$4.77 million $2.96 million $1.81 million $310,000 $550,000 $507,000 $350,000 $142,000
-
Research and development expense for FY2023 was
$7.73 million dollars$5.39 million dollars43.5% year over year. The increase in R&D expense was related to increases in engineering, third-party technical services, and expenditures related to the development of our Generation 1 device, which we completed and announced on June 7th, as we continue to execute our path to FDA clinical trials and commercialization.
-
Selling, general and administrative expenses for FY2023 was
$6.57 million $1.55 million $8.12 million dollars19.1% , as we continue our initiatives to reduce our cash burn.
-
As of September 30, 2023, we had cash and cash equivalents of
$8.02 million dollars$12.59 million $10.35 million dollars$6.92 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 FY 2023 10-K, we expect to raise additional funds through the issuance of equity, preferred stock and convertible debentures.
-
Shareholder equity for the fiscal year 2023 was
$3.74 million $9.86 million
Income Statement:
KNOW LABS, INC. AND SUBSIDIARIES |
||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
| Years Ended, | ||||||
| September 30, 2023 | September 30, 2022 | |||||
| REVENUE- DIGITAL ASSET SALES | $ | - |
|
$ | 4,360,087 |
|
| OPERATING EXPENSES- | ||||||
| RESEARCH AND DEVELOPMENT EXPENSES | 7,727,467 |
|
5,385,586 |
|
||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 6,570,597 |
|
8,118,137 |
|
||
| SELLING AND TRANSACTIONAL COSTS FOR DIGITAL ASSETS | (274,019 |
) |
3,430,438 |
|
||
| Total operating expenses | 14,024,045 |
|
16,934,161 |
|
||
| OPERATING LOSS | (14,024,045 |
) |
(12,574,074 |
) |
||
| OTHER INCOME (EXPENSE), NET | ||||||
| Interest income | 127,145 |
|
15,283 |
|
||
| Interest expense | (389,626 |
) |
(8,034,081 |
) |
||
| Loss on debt extinguishment | (506,865 |
) |
- |
|
||
| Other (expense) income, net | (495,776 |
) |
521,628 |
|
||
| Total other (expense), net | (1,265,122 |
) |
(7,497,170 |
) |
||
| LOSS BEFORE INCOME TAXES | (15,289,167 |
) |
(20,071,244 |
) |
||
| Income tax expense | - |
|
- |
|
||
| NET LOSS | (15,289,167 |
) |
(20,071,244 |
) |
||
| Common stock dividends on Series D Preferred Stock | (1,627,230 |
) |
- |
|
||
| Deemed dividends on Series C and D Preferred Stock | (3,526,653 |
) |
- |
|
||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (20,443,050 |
) |
$ | (20,071,244 |
) |
| Basic and diluted loss per share | $ | (0.41 |
) |
$ | (0.50 |
) |
| Weighted average shares of common stock outstanding- basic and diluted | 49,581,467 |
|
40,370,473 |
|
||
Balance Sheet:
KNOW LABS, INC. AND SUBSIDIARIES |
||||||
CONSOLIDATED BALANCE SHEETS |
||||||
| September 30, 2023 | September 30, 2022 | |||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ | 8,023,716 |
|
$ | 12,593,692 |
|
| Total current assets | 8,023,716 |
|
12,593,692 |
|
||
| PROPERTY AND EQUIPMENT, NET | 81,325 |
|
862,977 |
|
||
| OTHER ASSETS | ||||||
| Other assets | 15,766 |
|
13,767 |
|
||
| Operating lease right-of-use asset | 145,090 |
|
287,930 |
|
||
| TOTAL ASSETS | $ | 8,265,897 |
|
$ | 13,758,366 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable - trade | $ | 1,292,861 |
|
$ | 526,968 |
|
| Accrued expenses | 94,062 |
|
462,940 |
|
||
| Accrued expenses - related parties | 218,334 |
|
348,264 |
|
||
| Convertible notes payable, net | 2,761,931 |
|
2,255,066 |
|
||
| Current portion of operating lease right-of-use liability | 154,797 |
|
215,397 |
|
||
| Total current liabilities | 4,521,985 |
|
3,808,635 |
|
||
| NON-CURRENT LIABILITIES: | ||||||
| Operating lease right-of-use liability, net of current portion | - |
|
87,118 |
|
||
| Total non-current liabilities | - |
|
87,118 |
|
||
| 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 9/30/2023 and 9/30/2022, respectively | 1,790 |
|
1,790 |
|
||
| Series D Convertible Preferred stock |
||||||
| 10,161 shares issued and outstanding at 9/30/2023 and 9/30/2022, respectively | 1,015 |
|
1,015 |
|
||
| Common stock - |
||||||
| shares issued and outstanding at 9/30/2023 and 9/30/2022, respectively | 80,358 |
|
48,158 |
|
||
| Additional paid in capital | 125,501,537 |
|
111,209,388 |
|
||
| Accumulated deficit | (121,840,788 |
) |
(101,397,738 |
) |
||
| Total stockholders' equity | 3,743,912 |
|
9,862,613 |
|
||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 8,265,897 |
|
$ | 13,758,366 |
|
Cash Flow:
KNOWLABS, INC. AND SUBSIDIARIES |
||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
| Years Ended, | ||||||
| September 30, 2023 | September 30, 2022 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net loss | $ | (15,289,167 |
) |
$ | (20,071,244 |
) |
| Adjustments to reconcile net loss to net cash (used in) | ||||||
| operating activities | ||||||
| Depreciation and amortization | 313,019 |
|
320,995 |
|
||
| Issuance of common stock for services | - |
|
183,000 |
|
||
| Issuance of common stock warrants for services | - |
|
451,487 |
|
||
| Gain on debt settlement | (50,000 |
) |
(268,872 |
) |
||
| Loss on disposal of property and equipment | 549,431 |
|
- |
|
||
| Loss on debt extinguishment | 506,865 |
|
- |
|
||
| Modification of notes and warrants - interest expense | 349,721 |
|
- |
|
||
| Stock based compensation- stock option grants | 2,955,933 |
|
4,421,634 |
|
||
| Gain on forgiveness of notes payable-PPP Loans | - |
|
(252,700 |
) |
||
| Amortization of operating lease right-of-use asset | 142,840 |
|
35,963 |
|
||
| Amortization of debt discount to interest expense | - |
|
7,272,911 |
|
||
| Changes in operating assets and liabilities: | ||||||
| Other long-term assets | (1,999 |
) |
- |
|
||
| Operating lease right-of-use liability | (147,719 |
) |
(22,917 |
) |
||
| Accounts payable - trade and accrued expenses | 317,085 |
|
1,009,935 |
|
||
| NET CASH (USED IN) OPERATING ACTIVITIES | (10,353,991 |
) |
(6,919,808 |
) |
||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchase of property and equipment | (80,797 |
) |
(855,468 |
) |
||
| NET CASH (USED IN) INVESTING ACTIVITIES: | (80,797 |
) |
(855,468 |
) |
||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from isssuance of common stock for NYSE uplisting | - |
|
8,280,000 |
|
||
| Proceeds from issuance of common stock offering, net | 5,472,791 |
|
- |
|
||
| Payments for stock for NYSE uplisting | - |
|
(855,321 |
) |
||
| Settlement of notes payable-PPP loans | - |
|
(179,103 |
) |
||
| Proceeds from issuance of common stock for stock options exercise | 4,687 |
|
26,687 |
|
||
| Proceeds from issuance of common stock for warrant exercise | 387,334 |
|
838,487 |
|
||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 5,864,812 |
|
8,110,750 |
|
||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (4,569,976 |
) |
335,474 |
|
||
| CASH AND CASH EQUIVALENTS, beginning of period | 12,593,692 |
|
12,258,218 |
|
||
| CASH AND CASH EQUIVALENTS, end of period | $ | 8,023,716 |
|
$ | 12,593,692 |
|
| Supplemental disclosures of cash flow information: | ||||||
| Interest paid | $ | - |
|
$ | - |
|
| Taxes paid | $ | - |
|
$ | - |
|
| Supplemental disclosure of non-cash financing activity: | ||||||
| Conversion of debt | $ | - |
|
$ | 14,209,000 |
|
| Conversion of accrued interest | $ | - |
|
$ | 1,136,720 |
|
| Common stock dividends on Series D Preferred Stock | $ | 1,627,230 |
|
$ | - |
|
| Deemed dividends on Series C and D Preferred Stock | $ | 3,526,653 |
|
$ | - |
|
| Issuance costs from common stock offering | $ | 1,527,209 |
|
$ | - |
|
Conference Call:
Know Labs will host an audio webcast to discuss its results and provide a business update today, December 19, 2023, at 4:30pm 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=MtMDMZ5d
A copy of the form 10-K filed with the SEC can also be downloaded from the Company’s website. All holders, including stockholders and bondholders, can request and receive a hard copy of the complete audited financial statements free of charge. Requests must be submitted to ask@knowlabs.co.
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/20231219236136/en/
For Know Labs Media Inquiries:
Matter Health
Abby Mayo
Knowlabs@matternow.com
Ph. (617) 272-0592
Know Labs, Inc.:
Jordyn Hujar
jordyn@knowlabs.co
Ph. (206) 629-6414
Source: Know Labs, Inc.
FAQ
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