10-Q: Know Labs Reports Q3 2024 Results, Cites Progress in Non-Invasive Glucose Monitoring Technology

Know Labs, Inc. released its Q3 2024 financial results, highlighting ongoing development of its non-invasive glucose monitoring technology and recent capital raising activities.

Summary

• Know Labs reported a net loss of $12.9 million for the nine months ended June 30, 2024, compared to a net loss of $12.3 million for the same period in 2023.
• The company's research and development expenses decreased to $5.0 million for the nine months ended June 30, 2024, from $6.2 million in the same period of 2023.
• Selling, general, and administrative expenses increased to $7.0 million for the nine months ended June 30, 2024, from $5.5 million in the same period of 2023.
• The company's cash and cash equivalents were $2.1 million as of June 30, 2024, down from $8.0 million as of September 30, 2023.
• Know Labs has a net working capital deficit of $3.9 million as of June 30, 2024.
• The company believes it has sufficient cash to operate until October 31, 2024.
• A recent debt offering with Lind Global Fund II, LP provided net proceeds of $3.8 million.
• The company has an at-the-market offering agreement for up to $5 million, but no funds have been received under this agreement as of June 30, 2024.
• The company issued 13,250,000 units at $0.26 per unit in a public offering on August 9, 2024, raising approximately $3.445 million before expenses.

Sentiment

Score: 4

Explanation: The document highlights progress in technology development and recent capital raises, but the significant net losses, decreasing cash reserves, and going concern risk temper the overall sentiment. The company is still in the early stages of commercialization and faces significant challenges.

Positives

• The company has made progress in developing its non-invasive glucose monitoring technology.
• The company has a strong intellectual property portfolio.
• The company has secured additional funding through a debt offering and a public offering.
• The company's technology has shown promising results in internal clinical testing.
• The company is actively exploring various commercialization strategies.

Negatives

• The company has incurred significant net losses.
• The company has a net working capital deficit.
• The company's cash reserves are decreasing.
• The company's ability to continue as a going concern is dependent on raising additional capital.
• The company is still in the early stages of commercialization and faces significant competition.

Risks

• The company may not be able to continue as a going concern.
• The company's technology may not be successful in obtaining FDA clearance.
• The company faces significant competition from established players and new entrants.
• The company may not be able to raise sufficient capital to fund its operations.
• The company's stock price may fluctuate significantly.
• The company's convertible notes payable have complex terms and conditions.
• The company's obligations under the Notes are secured by a first-priority security interest in all of its assets.
• The company's subsidiary Particle, Inc., has guaranteed all of the obligations of the Company in connection with the Offering.

Future Outlook

The company anticipates recording losses from operations for the foreseeable future and is dependent on raising additional capital to continue operations. The company is focused on obtaining FDA clearance for its non-invasive glucose monitoring device and expanding its technology to other applications.

Management Comments

• The company is focused on the development and commercialization of its proprietary sensor technology utilizing radio and microwave spectroscopy.
• The company's technology is capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy.
• The first application of the company's sensor technology is in a product to non-invasively monitor blood glucose levels.
• The company is expanding its testing, both internally and externally, and will continue to refine the device over time.
• The company is building the internal and external development team necessary to commercialize its technology.
• The company is focused on building strong external validation of the technology.
• The company is exploring several potential avenues for moving its first product and potential follow-on products into the marketplace.
• The company is focused on accessibility and affordability for the populations it will serve around the globe.

Industry Context

The company is operating in the highly competitive medical diagnostics and glucose monitoring market. The company's non-invasive technology aims to differentiate itself from existing invasive methods and other non-invasive approaches. The company is also exploring opportunities outside of the medical diagnostic realm.

Comparison to Industry Standards

• The company's technology is compared to the leading continuous glucose monitors from Abbott Labs (Freestyle Libre) and Dexcom (G6).
• The company's technology has shown a Mean Absolute Relative Difference (MARD) of 11.1% in internal clinical testing using venous blood as a comparator, which is within the range of independently reported values for certain FDA-cleared blood glucose monitoring devices.
• The company's technology is differentiated by its non-invasive nature, which addresses the limitations of optical technologies.
• The company's technology is also differentiated by its ability to measure a wide range of organic and inorganic materials and analytes in real-time.
• The company's technology is also differentiated by its potential for use in a variety of wearable, mobile, or counter-top form factors.

Related Party Transactions

• The company has convertible notes payable to Clayton A. Struve, a significant stockholder.
• The company has convertible notes payable to Ronald P. Erickson and J3E2A2Z, an entity affiliated controlled by Ronald P. Erickson.
• The company issued stock option grants to Ronald P. Erickson and Peter J. Conley.
• The company issued stock option grants to six directors.

Stakeholder Impact

• Shareholders face the risk of dilution and potential loss of investment.
• Employees are impacted by the company's financial performance and potential need for further cost reductions.
• Customers may benefit from the company's non-invasive glucose monitoring technology if it is successfully commercialized.
• Suppliers and creditors are exposed to the company's financial risks.
• The company's technology has the potential to improve the lives of people with diabetes.

Next Steps

• The company will continue internal and external testing of its non-invasive glucose monitoring device.
• The company will continue to refine its algorithms using AI and ML.
• The company will pursue FDA clearance for its non-invasive glucose monitoring device.
• The company will explore various commercialization strategies.
• The company will continue to build its internal commercial and marketing team.
• The company will continue to expand its patent portfolio.
• The company will continue to identify new analytes and applications for its sensor technology.

Key Dates

Keywords

non-invasive glucose monitoring, radio frequency spectroscopy, medical diagnostics, FDA clearance, intellectual property, capital raise, clinical trials, wearable technology, diabetes management, machine learning