Know Labs, Inc. (NYSE:KNW), a leading developer of non-invasive medical diagnostic technology, today reported financial results for the third quarter of the fiscal year 2024 ended June 30, 2024.
Financial Highlights:
- In Q3 FY 2024, Know Labs reported a net loss of $4.10 million dollars, compared to a net loss of $3.60 million dollars in Q3 FY 2023, an increase in net loss of 13.9%. This translates to earnings per share of a loss of $0.05, better than the prior year earnings per share loss of $0.07, before preferred stock dividends.
- Recorded a non-cash charge to earnings of $1.58 million dollars principally related to stock-based compensation of $1.0 million dollars, amortization of operating lease right-of-use asset of $276,000, and interest expense for the extension of notes and warrants of $240,000.
- Research and development expense for Q3 FY 2024 was $1.35 million dollars as compared to $1.88 million dollars in Q3 FY 2023, a decrease of 28.2% year over year. The decrease was due primarily to the completion of hardware and software product development milestones and continued use of consultants to reduce the cost of product development.
- Selling, general and administrative expenses for Q3 FY 2024 was $2.49 million dollars, which was higher by $1.13 million dollars than the $1.36 million dollars in the year ago period. The increase was due primarily to salary expenses for several key hires, legal expenses related to financing activities and intellectual property assets, and an increase in stock-based compensation.
- As of June 30, 2024, Know Labs had cash and cash equivalents of $2.13 million dollars, as compared to $8.02 million dollars at the end of September 30, 2023. Net cash used in operations for the first nine months of FY 2024 was $9.57 million dollars compared with $8.98 million dollars in the same nine-month period of FY 2023.
- The Company is undertaking initiatives to significantly reduce fixed expenses and monthly burn rate. Subsequent to the end of Q3 FY 2024, on August 9, 2024, Know Labs closed a firm commitment underwritten public offering of $3.45 million dollars; which with the cash on hand, the Company believes that it has enough available cash and flexibility with its operating expenses to operate until at least December 31, 2024.
- As noted in the Q3 FY 2024 10-Q, the Company plans to seek additional funding under the effective S-3 shelf registration statement to ensure operations well into 2025.
- Shareholder equity for Q3 FY 2024 was a negative $4.60 million dollars versus $3.74 million dollars in FY 2023, ending September 30, 2023. The Company is actively taking steps to address its negative shareholder equity through the conversion of convertible debt to equity.
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, August 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, https://ir.knowlabs.co/, 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=bN3zHkNr
A copy of the form 10-Q filed with the SEC can also be downloaded from the Company's website.
Income Statement:
| Three Months Ended, | Nine Months Ended, | |||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||
| OPERATING EXPENSES- | ||||||||
| RESEARCH AND DEVELOPMENT EXPENSES | $ |
1,348,985 |
$ |
1,879,519 |
$ |
5,010,618 |
$ |
6,186,039 |
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 2,486,846 |
1,359,782 |
7,025,503 |
5,507,511 |
||||
| Total operating expenses | 3,835,831 |
3,239,301 |
12,036,121 |
11,693,550 |
||||
| OPERATING LOSS | (3,835,831) |
(3,239,301) |
(12,036,121) |
(11,693,550) |
||||
| OTHER INCOME (EXPENSE), NET | ||||||||
| Interest income | 30,619 |
23,511 |
126,872 |
114,325 |
||||
| Interest expense | (298,248) |
- |
(1,038,499) |
(389,626) |
||||
| Other (expense) | - |
(384,137) |
- |
(384,137) |
||||
| Total other expense, net | (267,629) |
(360,626) |
(911,627) |
(659,438) |
||||
| LOSS BEFORE INCOME TAXES | (4,103,460) |
(3,599,927) |
(12,947,748) |
(12,352,988) |
||||
| Income tax expense | - |
- |
- |
- |
||||
| NET LOSS | (4,103,460) |
(3,599,927) |
(12,947,748) |
(12,352,988) |
||||
| Deemed dividends on Series C and D Preferred Stock | (100,045) |
(3,337,494) |
(262,283) |
(3,337,494) |
||||
| Common stock dividends on Series D Preferred Stock | - |
(1,627,230) |
- |
(1,627,230) |
||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ |
(4,203,505) |
$ |
(8,564,651) |
$ |
(13,210,031) |
$ |
(17,317,712) |
| Basic and diluted loss per share | $ |
(0.05) |
$ |
(0.18) |
$ |
(0.16) |
$ |
(0.36) |
| Weighted average shares of common stock outstanding- basic and diluted | 83,038,866 |
48,928,911 |
82,314,925 |
48,604,274 |
||||
Balance Sheet:
| June 30, 2024 | September 30, 2023 (1) | |||
| ASSETS | (Unaudited) | |||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $ |
2,129,954 |
$ |
8,023,716 |
| Total current assets | 2,129,954 |
8,023,716 |
||
| PROPERTY AND EQUIPMENT, NET | 88,668 |
81,325 |
||
| OTHER ASSETS | ||||
| Other assets | 159,244 |
15,766 |
||
| Operating lease right-of-use asset | 364,342 |
145,090 |
||
| TOTAL ASSETS | $ |
2,742,208 |
$ |
8,265,897 |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Accounts payable - trade | $ |
1,255,888 |
$ |
1,292,861 |
| Accrued expenses | 116,666 |
94,062 |
||
| Accrued expenses - related parties | 99,692 |
218,334 |
||
| Current portion of convertible notes payable, net | 4,539,818 |
2,761,931 |
||
| Current portion of operating lease right-of-use liability | 105,653 |
154,797 |
||
| Total current liabilities | 6,117,717 |
4,521,985 |
||
| NON-CURRENT LIABILITIES: | ||||
| Operating lease liability, net of current portion | 280,714 |
- |
||
| Non-current portion of convertible notes payable, net | 945,258 |
- |
||
| Total liabilities | 7,343,689 |
4,521,985 |
||
| COMMITMENTS AND CONTINGENCIES (Note 11) | ||||
| STOCKHOLDERS' (DEFICIT) EQUITY | ||||
| 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 6/30/2024 and 9/30/2023, 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 6/30/2024 and 9/30/2023, respectively | 1,015 |
1,015 |
||
| Common stock - $0.001 par value, 200,000,000 shares authorized, 86,368,897 and 80,358,463 shares issued and outstanding at 6/30/2024 and 9/30/2023, respectively | 86,369 |
80,358 |
||
| Additional paid in capital | 130,360,164 |
125,501,537 |
||
| Accumulated deficit | (135,050,819) |
(121,840,788) |
||
| Total stockholders' (deficit) equity | (4,601,481) |
3,743,912 |
||
| TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | $ |
2,742,208 |
$ |
8,265,897 |
Cash Flow:
| Nine Months Ended, | ||||
| June 30, 2024 | June 30, 2023 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Net loss | $ |
(12,947,748) |
$ |
(12,352,988) |
| Adjustments to reconcile net loss to net cash (used in) operating activities | ||||
| Depreciation and amortization | 59,009 |
259,541 |
||
| Stock based compensation - stock option grants | 2,331,516 |
2,464,045 |
||
| Issuance of common stock for services | 277,010 |
- |
||
| Loss on disposal of assets | - |
384,137 |
||
| Amortization of operating lease right-of-use asset | 162,647 |
96,161 |
||
| Amortization of debt issuance costs | 375,859 |
- |
||
| Interest expense for extension of notes and warrants | 594,761 |
349,721 |
||
| Changes in operating assets and liabilities: | ||||
| Other long-term assets | (143,478) |
(1,999) |
||
| Operating lease right-of-use liability | (150,329) |
(99,803) |
||
| Accounts payable - trade and accrued expenses | (133,011) |
(74,866) |
||
| NET CASH (USED IN) OPERATING ACTIVITIES | (9,573,764) |
(8,976,051) |
||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
| Purchase of research and development equipment | (66,352) |
(80,798) |
||
| NET CASH (USED IN) INVESTING ACTIVITIES: | (66,352) |
(80,798) |
||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Proceeds from debt offering | 3,805,699 |
- |
||
| Proceeds from issuance of common stock offering, net | 203,105 |
- |
||
| Payments for debt offering | (262,450) |
- |
||
| Proceeds from issuance of common stock for stock options exercise | - |
4,687 |
||
| Proceeds from issuance of common stock for warrant exercise | - |
387,335 |
||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 3,746,354 |
392,022 |
||
| NET (DECREASE) IN CASH AND CASH EQUIVALENTS | (5,893,762) |
(8,664,827) |
||
| CASH AND CASH EQUIVALENTS, beginning of period | 8,023,716 |
12,593,692 |
||
| CASH AND CASH EQUIVALENTS, end of period | $ |
2,129,954 |
$ |
3,928,865 |
|
|
|||
| Supplemental disclosure of non-cash financing activity: |
|
|
||
| Deemed dividends on Series C and D Preferred Stock | $ |
262,283 |
$ |
3,337,494 |
| Common stock dividends on Series D Preferred Stock | $ |
- |
$ |
1,627,230 |
| Warrants issued for debt offering | $ |
1,536,743 |
$ |
- |
| Common stock issued for debt payment | $ |
240,000 |
$ |
- |
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 U.S. Food and Drug Administration clearance prior to its introduction to the market.
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, 2023, 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.
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