8-K: Know Labs Reports Reduced Net Loss in First Quarter of Fiscal Year 2024, Plans for Future Funding

Know Labs reported a reduced net loss for the first quarter of fiscal year 2024 and is planning to raise additional capital through equity and debt offerings.

Summary

• Know Labs reported a net loss of $3.45 million for the first quarter of fiscal year 2024, which is an improvement compared to the $3.82 million loss in the same period of the previous year.
• The company's loss per share improved to $0.04, compared to a loss of $0.08 in the prior year quarter.
• Research and development expenses decreased by 14.7% year-over-year to $1.48 million, due to reduced personnel and use of external consultants.
• Selling, general, and administrative expenses increased by 5.6% to $2.01 million.
• The company's cash and cash equivalents decreased to $4.82 million as of December 31, 2023, from $8.02 million at the end of September 2023.
• Net cash used in operations was $3.39 million for the quarter, compared to $2.92 million in the same quarter of the previous year.
• Know Labs believes it has sufficient cash to operate until at least June 30, 2024, due to adjustments to fixed expenses.
• The company plans to raise additional funds through the issuance of equity, preferred stock, and convertible debentures.
• An $18 million S-3 shelf registration statement was filed on December 22, 2023, and declared effective on January 11, 2024.
• Shareholder equity decreased to $1.23 million from $3.74 million at the end of fiscal year 2023.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the reduced net loss and improved EPS, but tempered by the company's need for additional funding and the going concern qualification.

Positives

• The company reduced its net loss by 9.8% compared to the same quarter last year.
• Loss per share improved by 50% year-over-year.
• Research and development expenses decreased by 14.7% due to cost-cutting measures.
• The company believes it has enough cash to operate until at least June 30, 2024.

Negatives

• The company experienced a net loss of $3.45 million for the quarter.
• Cash and cash equivalents decreased from $8.02 million to $4.82 million during the quarter.
• Net cash used in operations increased to $3.39 million from $2.92 million year-over-year.
• Shareholder equity decreased to $1.23 million from $3.74 million at the end of fiscal year 2023.
• Selling, general and administrative expenses increased by 5.6%.

Risks

• The company has a going concern qualification from its independent auditor.
• The company is relying on raising additional capital to continue operations.
• The company's cash reserves are decreasing.
• The company is still operating at a loss.

Future Outlook

The company expects to raise additional funds through the issuance of equity, preferred stock, and convertible debentures and believes it has sufficient cash to operate until at least June 30, 2024.

Management Comments

• The company believes that it has enough available cash and flexibility with its operating expenses to operate until at least June 30, 2024.
• The company expects to raise additional funds through the issuance of equity, preferred stock and convertible debentures.

Industry Context

Know Labs is an emerging developer in the non-invasive medical diagnostic technology space, specifically focusing on a non-invasive glucose monitor. The company's financial results and plans for future funding are relevant to investors and competitors in this sector.

Comparison to Industry Standards

• It is difficult to directly compare Know Labs to established medical device companies due to its early stage of development and focus on a novel technology.
• Companies like Dexcom and Abbott are leaders in continuous glucose monitoring, but their technologies are different from Know Labs' non-invasive approach.
• Know Labs' R&D spending is relatively low compared to larger medical device companies, reflecting its current stage of development.
• The company's cash burn rate is a concern, as it is relying on future capital raises to continue operations, which is common for early-stage biotech companies.

Stakeholder Impact

• Shareholders may be impacted by the potential dilution from future equity offerings.
• Employees may be impacted by the company's cost-cutting measures.
• Customers may be impacted by the timeline for the release of the non-invasive glucose monitor.
• Creditors may be impacted by the company's need for additional funding.

Next Steps

• The company will host an audio webcast to discuss its results and provide a business update on February 14, 2024.
• The company will seek to raise additional capital through the issuance of equity, preferred stock, and convertible debentures.
• The company will continue to develop its non-invasive glucose monitoring technology.

Key Dates

Keywords

non-invasive medical diagnostics, glucose monitor, financial results, net loss, research and development, capital raise, shelf registration, cash flow, operating expenses, stock compensation