Know Labs, Inc. to Report First Quarter FY 2025 Results

Rhea-AI Summary

Know Labs (KNWN) reported Q1 FY2025 financial results, showing a net loss of $4.67 million, up 35.4% from $3.45 million in Q1 FY2024. The company recorded a non-cash charge of $2.45 million related to stock-based compensation, debt extinguishment, warrant repricing, and debt issuance costs.

R&D expenses decreased 46.1% to $802,000, while SG&A expenses dropped 2% to $1.97 million. Cash and equivalents stood at $1.03 million as of December 31, 2024, down from $3.11 million on September 30, 2024. The company closed a $300,000 registered direct offering and believes it has sufficient funds to operate until April 30, 2025.

Shareholder equity was negative $3.91 million, and the company's auditors included a going concern warning in their opinion.

Positive

• R&D expenses decreased by 46.1% year-over-year
• SG&A expenses reduced by 2% year-over-year
• Net cash used in operations decreased to $1.89M from $3.39M year-over-year

Negative

• Net loss increased 35.4% to $4.67M
• Cash position declined to $1.03M from $3.11M in three months
• Negative shareholder equity of $3.91M
• Going concern warning from auditors
• cash runway until April 30, 2025
• Non-cash charge of $2.45M affecting earnings

Insights

Financial Analyst

The Q1 FY2025 financial results paint a challenging picture for Know Labs, with several critical concerns that demand investor attention. The increased net loss of $4.67 million includes substantial non-cash charges, primarily from stock-based compensation and debt-related expenses, indicating significant financial engineering to manage the company's capital structure.

The reduction in R&D expenses by 46.1% to $802,000, while appearing positive for cash conservation, raises questions about the pace of technology development. The shift to consultant-based development, while cost-effective in the short term, may impact the company's ability to maintain its competitive edge in the non-invasive medical diagnostic technology space.

The company's liquidity position is particularly concerning. Cash reserves have declined by 66.8% to $1.03 million, with a stated operational runway only until April 2025. The recent $300,000 registered direct offering provides minimal cushion, and the negative shareholder equity of $3.91 million complicates future fundraising efforts.

The strategy to convert debt to equity, while potentially improving the balance sheet structure, signals likely significant dilution for current shareholders. The going concern warning from auditors underscores the urgency of securing additional funding, particularly given the company's accumulated deficit of $143.4 million.

The introduction of the Know Labs Technology Licensing initiative represents a potential pivot in business strategy, possibly aimed at generating near-term revenue streams while the core diagnostic technology development continues. However, the success of this initiative remains speculative without concrete licensing agreements or revenue projections.

SEATTLE--(BUSINESS WIRE)-- Know Labs, Inc. (previously NYSE American: KNW, now OTC Markets: KNWN), a pioneering leader in the development and application of radio frequency dielectric spectroscopy (RFDS) for non-invasive medical diagnostic technology and diverse other fields of use through its newly initiated Know Labs Technology Licensing (KTL) initiative, today reported financial results for the first quarter of the fiscal year 2025.

Financial Highlights:

• In Q1 FY 2025, Know Labs reported a net loss of $4.67 million dollars, compared to a net loss of $3.45 million dollars in Q1 FY 2024, an increase in net loss of 35.4%. This translates to earnings per share of a loss of $0.04, unchanged from the prior year earnings per share loss of $0.04, before preferred stock dividends.
• Recorded a non-cash charge to earnings of $2.45 million dollars principally related to stock-based compensation of $551,000, loss on debt extinguishment of $728,000, interest expense for the repricing of warrants of $747,000, and amortization of debt issuance costs of $386,000.
• Research and development expense for Q1 FY 2025 was $802,000 as compared to $1.49 million dollars in Q1 FY 2024, a decrease of 46.1% year over year. The decrease was due primarily to the continued use of consultants to reduce the cost of product development.
• Selling, general and administrative expenses for Q1 FY 2025 was $1.97 million dollars, which was 2.0% lower than the $2.01 million dollars in the year ago period. The decrease in SG&A was due primarily to lower insurance and other expenses.
• As of December 31, 2024, Know Labs had cash and cash equivalents of $1.03 million dollars, as compared to $3.11 million dollars at the end of September 30, 2024. Net cash used in operations for the first quarter of FY 2025 was $1.89 million dollars compared with $3.39 million dollars in the year ago period of Q1 FY 2024.
• The Company continues to undertake initiatives to significantly reduce fixed expenses and monthly burn rate. Subsequent to the end of Q1 FY 2025, on December 12, 2024, Know Labs closed a registered direct offering of $300,000, which with the cash on hand, the Company believes that it has enough available cash and flexibility with its operating expenses to operate until April 30, 2025. As noted in the Q1 FY 2025 10-Q, the Company plans to seek additional funding via equity and debt offerings.
• Shareholder equity for Q1 FY 2025 was a negative $3.91 million dollars versus a negative $3.16 million dollars in FY 2024, ending September 30, 2024. The Company is actively taking steps to address its negative shareholder equity through the conversion of convertible debt to equity.

KNOW LABS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
		December 31, 2024			September 30, 2024 (1)
ASSETS		Unaudited
CURRENT ASSETS:
Cash and cash equivalents	$	1,032,329		$	3,110,755
Total current assets		1,032,329			3,110,755
PROPERTY AND EQUIPMENT, NET		56,913			66,796
OTHER ASSETS
Other assets		149,174			149,174
Operating lease right-of-use asset		309,011			337,703
TOTAL ASSETS	$	1,547,427		$	3,664,428
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable - trade	$	889,009		$	552,680
Accrued expenses		92,086			101,582
Accrued expenses - related parties		103,473			84,573
Current portion of convertible notes payable, net		2,128,687			2,855,058
Current portion of convertible notes payable - related parties		1,876,073			1,460,926
Current portion of operating lease right-of-use liability		109,960			108,560
Total current liabilities		5,199,288			5,163,379
NON-CURRENT LIABILITIES:
Operating lease liability, net of current portion		218,196			249,728
Non-current portion of convertible notes payable, net		44,843			407,522
Total liabilities		5,462,327			5,820,629
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS’ DEFICIT
Preferred stock - $0.001 par value, 5,000,000 shares authorized, Series C and D shares issued and outstanding as follows:
Series C Convertible Preferred stock $0.001 par value, 30,000 shares authorized, 17,858 shares issued and outstanding at 12/31/2024 and 9/30/2024, respectively		1,790			1,790
Series D Convertible Preferred stock $0.001 par value, 20,000 shares authorized, 10,161 shares issued and outstanding at 12/31/2024 and 9/30/2024, respectively		1,015			1,015
Common stock - $0.001 par value, 300,000,000 shares authorized, 111,166,117 and
108,097,936 shares issued and outstanding at 12/31/2024 and 9/30/2024, respectively		111,089			108,021
Additional paid in capital		139,405,148			136,468,855
Accumulated deficit		(143,433,942	)		(138,735,882	)
Total stockholders' deficit		(3,914,900	)		(2,156,201	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,547,427		$	3,664,428

As previously disclosed in its Annual Report on Form 10-K for the year ended September 30, 2024, which was filed on November 14, 2024, with the Securities and Exchange Commission, the audited financial statements contained an audit opinion from its independent registered public accounting firm that included an explanatory paragraph related to the Company’s ability to continue as a going concern. See further discussion in Note 2 to the Company’s financial statements included in the Company’s First Quarterly Report for FY 2025 on Form 10-Q. This announcement is made pursuant to NYSE American LLC Company Guide Section 610(b), which requires public announcement of the receipt of an audit opinion containing a going concern paragraph. This announcement does not represent any change or amendment to the Company’s financial statements or to its Annual Report on Form 10-K for the year ended September 30, 2024, or its First Quarterly Report on Form 10-Q for the quarter ending December 31, 2024.

Conference Call:

Know Labs will host an audio webcast to discuss its results and provide a business update today, February 14, 2025, at 4:30 pm ET (1:30 pm PT). The webcast will be available on the Company’s website, https://www.knowlabs.co/, and a replay will be available for six months.

Participant Listening Options

Participant Dial-In: 877-514-3621 / +1 215-268-9856
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=YGSi6C2S

For more information on Know Labs’ diagnostic platform technology and its KTL initiative visit www.knowlabs.co.

About Know Labs Technology Licensing (KTL)

Know Labs Technology Licensing (KTL) is the dedicated licensing division of Know Labs, Inc. (OTC: KNWN), facilitating the global adoption of its patented Radio Frequency Dielectric Spectroscopy (RFDS) technology. With an extensive intellectual property portfolio, a structured licensing framework, and the proprietary e-RFDS^© digital watermark, KTL enables corporations, universities, and research institutions to innovate with confidence while securing their developments from counterfeiting and unauthorized use.

About Know Labs, Inc.

Know Labs, Inc.’s platform technology uses radio frequency spectroscopy to direct electromagnetic energy through a substance or material to capture a unique molecular signature. The technology is designed to be able to integrate into a variety of wearable, mobile or bench-top form factors. The Company believes that 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. Among the Company’s first expected applications of the technology will be in a product marketed as a non-invasive glucose monitor. The device is designed to provide the user with accessible and affordable real-time information on blood glucose levels. This product will require U.S. Food and Drug Administration (FDA) clearance prior to its introduction to the market. Other products, developed through KTL may not require such prior FDA approval.

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 U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended September 30, 2024, Forms 10-Q and 8-K, and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Relations section of our website at www.knowlabs.co. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250214417989/en/

Know Labs, Inc. Contact:

Investor Relations

T: 206-903-1351

ask@knowlabs.co

Source: Know Labs, Inc.

FAQ

What was Know Labs (KNWN) net loss in Q1 FY2025?

Know Labs reported a net loss of $4.67 million in Q1 FY2025, representing a 35.4% increase from the $3.45 million loss in Q1 FY2024.

How much cash does KNWN have and how long will it last?

As of December 31, 2024, KNWN had $1.03 million in cash and cash equivalents, plus a subsequent $300,000 offering. The company believes this will fund operations until April 30, 2025.

What caused the $2.45M non-cash charge in KNWN's Q1 FY2025 earnings?

The $2.45M non-cash charge consisted of $551,000 in stock-based compensation, $728,000 loss on debt extinguishment, $747,000 in warrant repricing interest expense, and $386,000 in debt issuance cost amortization.

How much did KNWN reduce its R&D expenses in Q1 FY2025?

KNWN reduced its R&D expenses by 46.1% year-over-year, from $1.49 million in Q1 FY2024 to $802,000 in Q1 FY2025, primarily through increased use of consultants.