Q3 2024 Know Labs Inc Earnings Call
Hello everyone, I'm Jordyn Hujar, I'm Jordyn Hujar, I'm Jordyn Hujar, I'm Jordyn Hujar,
Operator: Welcome to the Know Labs third quarter 2024 conference call. Please note, this conference call is being recorded. I will now turn the conference over to Ron Erickson, Know Labs Chairman and Chief Executive Officer. Please go ahead.
Speaker Change: Greetings. Welcome to the Know Labs 3rd Quarter 2024 Earnings Conference Call.
Speaker Change: Please note, this conference call is being recorded. I will now turn the conference over to Ron Erickson, Know Labs Chairman and Chief Executive Officer. Please go ahead.
Ronald Erickson: Thank you, Operator. Thank you, everyone, for joining us for today's conference call to review Know Labs' third quarter 2024 financial results and operating highlights. Joining me today is Pete Conley, our Chief Financial Officer and Senior Vice President of Intellectual Property, who will discuss our financial results. Also absent today is Jordan Hujar, who many of you have heard from, our long-term chief of staff. Jordan is on maternity leave, taking care of her new son, and doing wonderful well.
Ron Erickson: Thank you, Operator. Thank you, everyone, for joining us for today's conference call to review NOLAB's third quarter 2024 financial results and operating highlights.
Pete Conley: Joining me today is Pete Conley, our Chief Financial Officer and Senior Vice President of Intellectual Property, who will discuss our financial results.
Speaker Change: Missing today is Jordyn Hujar, who many of you have heard from, our long-term Chief of Staff. Jordyn is on maternity leave, taking care of her new son and doing wonderfully well.
Ronald Erickson: If you have not seen our financial results today, the press release, and the 10-Q filings, they're available on the investor page on the company's website at www.knowlabs.co. Before providing an update on our activities, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements regarding future events. Any statements that are not historical facts are forward-looking statements.
Speaker Change: If you have not seen our financial results today, the press release, the 10-Q filings, they're available on the investor page on the company's website at www.knowlabs.co.
Ronald Erickson: We encourage you to review the company's SEC filings, including, without limitation, the company's Forms 10-K and 10-Qs, which identify specific risk factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These factors may include, without limitation, risks inherent in the development and or commercialization of potential diagnostic products, uncertainty in the results of clinical trials or regulatory approvals, the need to obtain third-party reimbursement for patient's use of any diagnostic products the company commercializes, our need and ability to obtain future capital and maintenance of IP rights, risks inherent in strategic transactions such as a failure to realize anticipated benefits, legal, regulatory or political changes in the applicable jurisdictions, accounting and quality controls, greater than estimated allocation of resources to develop and commercialize technologies, or failure to maintain any laboratory accreditation or FDA certification. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements.
Ronald Erickson: Know Labs expressly disclaims any intent or obligation to update these forward-looking statements except as otherwise may be required under applicable law. We recently completed a new capital raise, announced on August 7th. Pete Conley will cover this event and will provide additional details throughout his financial update. However, as we are following SEC guidance and regulations, we won't have a question and answer session at the end of this call, as we are within what is known as the quiet period.
Speaker Change: Before providing an update on our activities, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements regarding future events.
Ronald Erickson: I encourage you to join our annual shareholders meeting, now scheduled for September 26th at 1.30 p.m. Pacific time, when the quiet period will be over, and we can take questions from our investors. With that said, I will continue the call by reviewing the operating highlights of our third quarter for fiscal year 2024. Since our last earnings call on May 15, many milestones have been achieved. These milestones resulted from an accelerated work program we implemented at the beginning of 2023. Today, I'll provide a brief update on these milestones and the progress we've made against the core workstreams we've previously articulated. Workstream one, hardware.
Ronald Erickson: A critical work stream in an area with a lot of progress has been hardware development. In June 2023, we announced the completion of our portable Generation 1 prototype device for non-invasive glucose monitoring. We spent the next several months testing this device in and outside our lab, both in vitro and with humans. Data collected throughout these tests was compared to data collected with FDA-cleared glucometers, helping us to understand how our sensor performs in real-life settings. Pulling from these findings, we continue to miniaturize the Gen 1 prototype. These efforts resulted in the announcement of the NOU on February 27.
Ronald Erickson: Only 8 months after the introduction of the Gen 1 research prototype, the KnowU is a wearable, non-invasive, continuous glucose monitoring device (or CGM). It is 85% smaller than the Generation 1 and is capable of 24-hour wearable data collection. It incorporates our proprietary technology and sensor, which we plan to submit to the FDA for clearance. We also introduced the No Use Companion Mobile Application, making it a fully integrated system.
Speaker Change: Any statements that are not historical facts are forward-looking statements.
Speaker Change: We encourage you to review the company's SEC filings, including, without limitation, the company's Forms 10-K and 10-Qs, which identify specific risk factors that may cause actual results or events to differ materially from those described in these forward-looking statements.
Speaker Change: These factors may include, without limitation, risks inherent in the development and or commercialization of potential diagnostic products.
Speaker Change: Uncertainty in the results of clinical trials or regulatory approvals, the need to obtain third-party reimbursement for patients' use of any diagnostic products the company commercializes, our need and ability to obtain future capital and maintenance of IP rights,
Speaker Change: risks inherent in strategic transactions such as a failure to realize anticipated benefits, legal, regulatory, or political changes in the applicable jurisdictions,
Speaker Change: Accounting and Quality Controls, Greater than Estimated Allocation of Resources to Develop and Commercialize Technologies, or Failure to Maintain any Laboratory Accreditation or FDA Certification.
Speaker Change: Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements.
Speaker Change: No labs expressly disclaims any intent or obligation to update these forward-looking statements except as otherwise may be required under applicable law.
Speaker Change: We recently completed a new capital raise, announced on August 7. Pete Conley will cover this event and will provide additional details throughout his financial update.
Speaker Change: However, as we are following SEC guidance and regulations, we won't have a question and answer session at the end of this call as we are within what is known as the quiet period.
Speaker Change: I encourage you to join our annual shareholders meeting, now scheduled for September 26th at 1.30 p.m. Pacific time, when the quiet period will be over and we can take questions from our investors.
Speaker Change: With that, I will continue the call by reviewing the operating highlights of our third quarter for fiscal year 2024.
Speaker Change: Since our last earnings call on May 15, many milestones have been achieved. These milestones resulted from an accelerated work program we implemented at the beginning of 2023.
Speaker Change: Today, I'll provide a brief update on these milestones and the progress we've made against the core work streams we've previously articulated.
Speaker Change: Workstream 1, Hardware.
Speaker Change: A critical work stream and an area with a lot of progress has been hardware development. In June 2023, we announced the completion of our portable Generation 1 prototype device for non-invasive glucose monitoring.
Speaker Change: We spent the next several months testing this device in and outside our lab, both in vitro and with humans. Data collected throughout these tests was compared to data collected with FDA-cleared glucometers, helping us to understand how our sensor performs in real-life settings.
Speaker Change: Pulling from these findings, we continued to miniaturize the Gen 1 prototype. These efforts resulted in the announcement of the KnowU on February 27.
Speaker Change: to 2024, only eight months after the introduction of the Gen 1 research prototype. The KnowU is a wearable, non-invasive, continuous glucose monitoring device, or CGM. It is 85% smaller than the Generation 1 and is capable of 24-hour wearable data collection.
Speaker Change: It incorporates our proprietary technology and sensor, which we plan to submit to the FDA for clearance. We also introduced the no-use companion mobile application, making it a fully integrated system.
Ronald Erickson: Since the announcement of the KnowU, we've been using it to accelerate data collection and determine the technology performance throughout continuous wear in different locations on the body and within more expansive glycemic ranges and diverse populations. The wearable format allows us to amplify the technology's testing and validation, launching 24-7 clinical trials inside and outside Know Labs' R&D laboratory. We expect more work will be needed to prepare Know You for commercialization, including further miniaturization and adjustments based on inputs from clinical trials and human factors testing.
Speaker Change: Since the announcement of the KnowU, we've been using it to accelerate data collection and determine the technology's performance throughout continuous wear, in different locations on the body, and within more expansive glycemic ranges and diverse populations.
Speaker Change: The wearable format allows us to amplify the technology's testing and validation.
Speaker Change: launching 24-7 clinical trials inside and outside NOLAB's R&D laboratory. We expect more work will be needed to prepare the NOU for commercialization, including further miniaturization and adjustments based on inputs from clinical trials and human factors testing.
Ronald Erickson: Workstream 2 is clinical testing and data gathering; clinical testing continues to be an important development for the company. Since our last earnings call, we've completed additional testing, including an IRB-approved internal trial with more than 30 participants with pre-divities or type 2 diabetes. The data collected in this trial was presented and published at the following conference. Clinical research results were presented at the American Diabetes Association 84th Scientific Sessions in Orlando. A mean absolute relative difference, or MARD, of 11.8% on the test data set was achieved.
Speaker Change: Workstream 2 is clinical testing and data gathering.
Speaker Change: Clinical testing continues to be an important area of development for the company. Since our last earning calls, we've completed additional testing, including an IRB-approved internal trial with more than 30 participants with pre-diabetes or type 2 diabetes.
Speaker Change: The data collected in this trial was presented and published in the following conferences.
Speaker Change: Clinical research results were presented at the American Diabetes Association 84th Scientific Sessions in Orlando.
Speaker Change: A mean absolute relative difference, or MARD, of 11.8% on the test dataset was achieved. Data from 22 participants with type 2 diabetes or prediabetes were included in this dataset.
Ronald Erickson: Data from 22 participants with type 2 diabetes or prediabetes were included in this data set. Clinical research results were presented at the 2024 American Association of Clinical Endocrinology annual meeting in New Orleans. The test data set achieved a mean absolute relative difference, or MARD, of 11.1%.
Speaker Change: Clinical research results were presented at the 2024 American Association of Clinical Endocrinology annual meeting in New Orleans.
Speaker Change: The test data set achieved a mean absolute relative difference, or MARD, of 11.1%. Data from 10 participants with type 2 diabetes or pre-diabetes were included in this data set.
Ronald Erickson: Data from 10 participants with type 2 diabetes or pre-diabetes were included in this data set; clinical research results were presented at the American Physiological Society Summit in Baltimore. A mean absolute relative difference or MARD of 10.8% was achieved for this data set. Data from 13 healthy participants were included in this data set; clinical research results were presented at the 17th International Conference on Advanced Technologies and Treatments for Diabetes in Florence, Italy.
Speaker Change: Clinical research results were presented at the American Physiological Society Summit in Baltimore. A mean absolute relative difference or MARD of 10.8% on this data set was achieved. Data from 13 healthy participants were included in this data set.
Speaker Change: Clinical research results were presented at the 17th International Conference on Advanced Technologies and Treatments for Diabetes in Florence, Italy. A mean absolute relative difference or MARD of 11.1% on the test data set was achieved.
Ronald Erickson: A mean absolute relative difference or MARD of 11.1% on the test data set was achieved. Data from 10 participants with type 2 diabetes or pre-diabetes were included in this data set. In general, 80% of the data collected from our sensor was randomly selected to train our algorithm.
Speaker Change: Data from 10 participants with type 2 diabetes or pre-diabetes were included in this dataset.
Speaker Change: In general, 80% of the data collected from our sensor was randomly selected to train our algorithm. The remaining 20% of the data was then applied to the trained algorithm and compared to a paired algorithm.
Ronald Erickson: The remaining 20% of the data was then applied to the trained algorithm and compared to a paired venous blood glucose reference value, resulting in the mean absolute relative difference, MARD, presented at these conferences. This was the first time we implemented a clinical research protocol involving people with diabetes and using venous blood as a comparative reference, the gold standard expected by the FDA. Dr. Varen K. Summers from the Mayo Clinic has been an avid contributor to our research as an author and co-investigator.
Speaker Change: Venus Blood Glucose Reference Value, resulting in the Mean Absolute Relative Difference, MARD, presented at these conferences.
Speaker Change: This was the first time we implemented a clinical research protocol involving people with diabetes and using venous blood as a comparative reference, the gold standard expected by the FDA.
Ronald Erickson: Dr. Summers has personally presented these results at global conferences, most notably at the 17th International Conference on Advanced Technologies and Treatments for Diabetes in Florence, Italy, and the 84th American Diabetes Association Scientific Sessions in Orlando. Dr. Varen K. Summers from the Mayo Clinic has been an avid contributor to our research as an avid contributor to our research as an avid contributor, We also recently published a paper in a leading diabetes journal, our study, entitled, quote, a glycemic status classification model using a radiofrequency noninvasive blood glucose monitor, close quote, was published in Diabetes Technology and Therapeutics, a leading peer-reviewed journal covering all aspects of diagnosing and managing diabetes with cutting-edge devices, drugs, drug delivery systems, and software.
Speaker Change: Dr. Varun K. Somers from the Mayo Clinic has been an avid contributor to our research as an author and co-investigator. Dr. Somers has personally presented these results at global conferences, most notably at the 17th International Conference on Advanced Technologies and Treatments for Diabetes in Florence, Italy, and the 84th International Conference on Diabetes in the United States.
Speaker Change: American Diabetes Association Scientific Sessions in Orlando.
Speaker Change: We also recently published a paper in a leading diabetes journal. Our study…
Speaker Change: entitled, quote, a glycemic status classification model using a radio frequency non-invasive
Speaker Change: was published in Diabetes Technology and Therapeutics, a leading peer-reviewed journal covering all aspects of diagnosing and managing diabetes with cutting-edge devices, drugs, drug delivery systems, and software.
Ronald Erickson: This study demonstrated that our proprietary non-invasive radio frequency dialectic sensor and trade secret machine learning algorithms correctly classified an individual glycemic status as hyperglycemic, normal glycemic, or hypoglycemic with a 93.37% accuracy compared to venous blood glucose values. This serves as an early proof of concept for a novel non-invasive dive speed screening device, expanding the potential application of the Know You Beyond non-invasive blood A core focus of our next series of trials will be enrolling a more diverse population, including people with type 1 diabetes. This is necessary to collect more data in the very low hypoglycemic range and in the very high hypoglycemic range.
Speaker Change: This study demonstrated that our proprietary, non-invasive radio-frequency dialectic sensor and trade-secret machine learning algorithms
Speaker Change: correctly classified an individual's glycemic status as hyperglycemic, normal glycemic, or hypoglycemic with a 93.37% accuracy compared to venous blood glucose values.
Speaker Change: serving as an early proof of concept for a novel, non-invasive diabetes screening device.
Speaker Change: Expanding the potential application of KnowU beyond noninvasive blood glucose monitoring means our technology can support underserved global populations by facilitating early identification and intervention as a noninvasive screening device.
Speaker Change: A core focus of our next series of trials will be enrolling a more diversified population, including people with type 1 diabetes. This is necessary to collect more data in the very low hypoglycemic range and the very high hyperglycemic range.
Ronald Erickson: The FDA is focused on these ranges, and accuracy is critical for those managing diabetes. The wearable nature of the know-you will also enable continuous data collection and yield a large volume of data that machine learning algorithms require to improve accuracy across all intended use cases. This increase in data will be used to further refine and inform our algorithm development. Workstream 3 is Algorithm Development We leverage all the data that is collected during our sensor characterization work in vitro trials and clinical trials for algorithm development.
Speaker Change: The FDA has focused on these ranges and accuracy is critical for those managing diabetes.
Speaker Change: The wearable nature of the KnowU will also enable continuous data collection and yield a large volume of data that machine learning algorithms require to improve accuracy across all intended use cases.
Speaker Change: This increase in data will be used to further refine and inform our algorithm development.
Speaker Change: Workstream 3 is Algorithm Development. We leverage all the data that is collected during our sensor characterization work in vitro trials and clinical trials for algorithm development.
Ronald Erickson: As we continue refining the algorithm, we learn exactly what data is needed to increase accuracy. This includes a wider range of glycemic levels, along with data from a more diverse population and data that takes into account temperature, location on the body, and other interference.
Speaker Change: As we continue refining the algorithm, we learn exactly what data is needed to increase accuracy. This includes a wider range of glycemic levels, along with data from a more diverse population, and data that takes into account temperature, location on the body, and other interferences.
Ronald Erickson: Our goal is to achieve an algorithm with a mean absolute relative difference, or MARD, of 10% or less. But more importantly, we will also need to meet the FDA's requirements for accuracy in varying glycemic ranges and over different periods of time, all of which we are considering during algorithm development. The goals of our data science and algorithm development efforts in 2024 will include building personalized models for each user following a calibration period. The outcome will be an algorithm that can develop an accurate glucose value estimate for these individuals whenever they are wearing the KnowU device.
Speaker Change: Our goal is to achieve an algorithm with a mean absolute relative difference, or MARD, of 10% or less. More importantly, we will also need to meet the FDA's requirements for accuracy in varying glycemic ranges and over different periods of time, all of which we are considering during algorithm development.
Speaker Change: The goals of our data science and algorithm development efforts in 2024, including building personalized models for each user following a calibration period. The outcome will be an algorithm that can develop an accurate glucose value estimate for these individuals whenever they are wearing the KnowU device.
Ronald Erickson: Building personalized models is an early step toward a generalized algorithm, but the ability to create these models proved to be viable in an FDA-clared commercial. The current version of our algorithm performs well with an unknown population from data collected in our lab in Seattle.
Speaker Change: Building personalized models is an early step toward a generalized algorithm, but the ability to create these models may themselves prove to be viable in an FDA-cleared commercial device.
Speaker Change: The current version of our algorithm report.
Speaker Change: performs well within a known population from data collected in our lab in Seattle. We are first focused on understanding performance in different settings outside of the lab and expanding our population study to those with type 1 diabetes. As we move forward, new approaches such as device calibration will be tested.
Ronald Erickson: We are first focused on understanding performance in different settings outside of the lab and expanding our population study to those with type 1 diabetes. As we move forward, new approaches, such as device calibration, will be tested. Workstream 4, Intellectual Property. With respect to intellectual property, we continue to grow our IP portfolio. At the end of the quarter, we had over 330 patents issued, pending, and in process, reflecting our continually high rate of innovation. Know Labs' rate of innovation is roughly two times faster than the overall non-invasive glucose monetary IP market growth rate. The issue then pending patents cover fundamental aspects of our radio-frequency spectroscopy technology and several unique applications.
Ronald Erickson: Intellectual property will continue to be a focus for the company, and we will work to build and reinforce a defensible IP mode around our technology. We remain focused on maintaining our position as the worldwide IP holder leading in this non-invasive blood glucose monitoring space. Trade secrets are also critical, so we launched an initiative to identify, qualify, and quantify them. As a result of this exercise, we've gathered and codified in excess of 600 trade secrets which provide a proprietary working element of the Know Labs platform technology. This is very important.
Speaker Change: Workstream 4, Intellectual Property.
Speaker Change: With respect to intellectual property, we continue to grow our IP portfolio. At the end of the quarter, we had over 330 patents issued pending and in process, reflecting our continuing high rate of innovation.
Speaker Change: Know Labs' rate of innovation is roughly two times faster than the overall non-invasive glucose monitoring IP market growth rate. The issued and pending patents cover fundamental aspects of our radiofrequency spectroscopy technology and several unique applications.
Speaker Change: Intellectual property will continue to be a focus for the company and will work to build and reinforce a defensible IP moat around our technology.
Speaker Change: We remain focused on maintaining our position as the worldwide IP holder leading in this non-invasive blood glucose monitoring space.
Speaker Change: Trade secrets are also critical. So we launched an initiative to identify and qualify them and quantify them. As a result of this exercise, we've gathered
Speaker Change: and codified in excess of 600 trade secrets, which provide a proprietary working element of the NOLAB platform technology. This is very important.
Ronald Erickson: Lastly, in May 2024, we created the Know Labs Skunkworks to pursue IP monetization and a global patent licensing program. We believe there is a large opportunity to work with potential strategic partners and customers and derive revenue from non-core fields of use of the Know Labs platform technology in both the U.S. and the rest of the world, with regard to corporate updates. On the corporate side, we launched several initiatives focused on maximizing shareholder value and increasing our chances of success.
Speaker Change: Lastly, in May 2024, we created the Know Labs Conqux to pursue IP monetization and a global patent licensing program.
Speaker Change: We believe there is a large opportunity to work with potential strategic partners and customers and derive revenue from non-core fields of use of the NoLabs platform technology in both the U.S. and the rest of the world.
Speaker Change: with regards to a corporate update.
Speaker Change: On the corporate side, we launched several initiatives focused on maximizing shareholder value and increasing our chances of success. For instance, we expanded our medical and scientific advisory board, appointing four new members with extensive clinical diabetes management and FDA expertise.
Ronald Erickson: For instance, we expanded our medical and scientific advisory board, appointing four new members with extensive clinical diabetes management and FDA expertise, and expanded our board of directors, appointing three new directors with deep sector expertise. We also joined the Children with Diabetes Industry Advisory Board and the Industrial Participant Program of the Weiss Institute for Biologically Inspired Engineering at Harvard University.
Speaker Change: and expanded our board of directors, appointing three new directors with deep sector expertise.
Speaker Change: We also joined the Children with Diabetes Industry Advising Board and the Industrial Participant Program of the Weiss Institute for Biologically Inspired Engineering at Harvard University.
Ronald Erickson: Both of these programs increase Know Labs' exposure to thought leaders in the healthcare space, allowing our team to leverage their expertise and apply their experience to our product development, accelerating time to market. We're also making a targeted effort to spread our story and our work. Consequently, we presented our company at multiple investor and sector-focused conferences, such as the third annual Bernstein CGM Disruptors Conference, the Benchmark Companies Discovery Conference, the Emerging MedTech Summit 2024 by Life Sciences Intelligence, the Life Science Innovation Northwest 2024, and the Bio International Convention of 2024.
Operator: Welcome to the Know Labs' third quarter, 2024 earnings conference call. Please note, this conference call is being recorded.
Speaker Change: Both of these programs increase Nolab's exposure to thought leaders in the healthcare space, allowing our team to leverage their expertise and apply their experience to our product development, accelerating time to market.
Ron Erickson: I will now turn the conference over to Ron Erickson, Know Labs chairman and chief executive officer. Please go ahead. Thank you operator. Thank you everyone for joining us for today's conference call to review Know Labs' third quarter, 2024 financial results and operating highlights.
Speaker Change: We're also making a targeted effort to spread our story and our work.
Speaker Change: Consequently, we presented our company at multiple investor and sector-focused conferences such as the 3rd Annual Bernstein CGM Disruptors Conference.
Ron Erickson: Joining me today is Pete Conley, our chief financial officer and senior vice president of intellectual property who will discuss our financial results.
Speaker Change: the Benchmark Companies Discovery Conference, the Emerging MedTech Summit 2024 by Life Sciences Intelligence, the Life Science Innovation Northwest 2024, and the Bio-International Convention of 2024.
Ron Erickson: Missing today is Jordyn Hujar, who many of you have heard from our long term chief of staff. Jordan is on maternity leave, taking care of her new son and doing wonderfully well. If you have not seen our financial results today, the press release the 10 queue filings they're available on the investor page on the company's website at www.knowlabs.co Before providing an update on our activities, I'd like to remind you that during this conference call that company will make projections and forward-looking statements regarding future events.
Ronald Erickson: We continue to focus on our core objective, which is the successful development of the KnowU to obtain FDA approval. However, we believe we can achieve faster monetization of our technology through strategic collaboration with major players and the capitalization of our intellectual property assets. We've increased our efforts on this front, and we'll continue funneling resources into that arena. These work streams can help us maximize shareholder value while bringing disruptive technologies to the market that can impact the lives of millions of people around the globe. We are proud of what we achieved during the past quarter. We remain committed, and the recent milestones bring us closer to a future where equitable care and diabetes management will become a reality.
Speaker Change: We continue to focus on our core objective, which is a successful development of the KnowU to obtain FDA approval.
Speaker Change: However, we believe we can achieve faster monetization of our technology through strategic collaboration with major players and the capitalization of our intellectual property assets.
Speaker Change: We've increased our efforts on this front and will continue funneling resources into that arena. These work streams can help us maximize shareholder value while bringing disruptive technology to the market that can impact the lives of millions of people around the globe.
Ron Erickson: Any statements that are not historical facts are forward-looking statements. We encourage you to review the company's SEC filings, including without limitation the company's forms 10K and 10Qs, which identify specific risk factors that may cause actual results or events to differ materially. These factors may include, without limitation, risks inherent in the development and commercialization of potential diagnostic products. Uncertainly in the results of clinical trials or regulatory approvals, the need to obtain third-party reimbursement for patients use of any diagnostic products the company commercializes.
Speaker Change: I'm proud of what we've achieved during the past quarter. We remain committed, and the recent milestones bring us closer to a future where equitable care and diabetes management will become a reality.
Ronald Erickson: I encourage you to visit our investor relations website at ir.knowlabs.co to stay updated on our progress. Now, I'd like to turn the call over to Pete Conley so he can review our financials. Okay, Pete?
Pete Conley: I encourage you to visit our investor relations website at ir.knowlabs.co to stay updated with our progress. Now, I'd like to turn the call to Pete Conley so he can review our financials. Pete?
Peter Conley: Thank you Ron. We detailed our financial results in today's third quarter of fiscal year 2024 earnings release, which as noted by Ron, you can find on our website. But I'll share a few key line items; for Q3 fiscal 2024, Know Labs reported a net loss of $4.1 million, compared to a net loss of $3.6 million in Q3 fiscal 23, an increase of 13.9%. This translates to earnings per share of a loss of five, better than the prior year quarter earnings per share loss of 7 cents and an improvement of 29% before preferred stock dividend.
Pete Conley: Thank you, Ron. We detailed our financial results in today's...
Pete Conley: Third quarter of fiscal year 2024 earnings release, which is noted by Ron, you can find on our website, but I'll share a few key line items.
Ron Erickson: Our need and ability to obtain future capital and maintenance of IP rights. Risk inherent in strategic transactions such as a failure to realize anticipated benefits legal regulatory or political changes in the applicable jurisdictions. Accounting and quality controls greater than estimated allocation of resources to develop and commercialize technologies or failure to mean any laboratory accreditation or FDA certification. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements.
Pete Conley: For Q3 fiscal 2024, Know Labs reported a net loss of $4.1 million, compared to a net loss of $3.6 million in Q3 fiscal 23, an increase of 13.9%.
Pete Conley: This translates to earnings per share of a loss of $0.05, better than the prior year quarter earnings per share loss of $0.07, an improvement of 29%, before preferred stock dividends.
Peter Conley: It is important to note the net loss for the quarter included non-cash expenses of $1.58 million. The non-cash items include stock-based compensation of $1 million, amortization of the 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 fiscal year 2024 decreased $531,000 to $1.35 million as compared to $1.88 million in Q3 fiscal 2023, a decrease of 28.2% year-over-year.
Ron Erickson: No labs expressly disclaims any intent or obligation to update these forward-looking statements except as otherwise may be required under applicable law. We recently completed a new capital raise announced on August 7. Peacons will cover this event and will provide additional details throughout his financial update. However, as we are following SEC guidance and regulations, we won't have a question-and-answer session at the end of this call as we are within what is known as the quiet period.
Speaker Change: It is important to note, the net loss for the quarter included non-cash expenses of $1.58 million.
Speaker Change: The non-cash items include stock-based compensation of $1 million Amazon's authorization of operating lease right of the app, right of use asset of 276,000 and interest expense for the extension of notes and warrants of 240,000.
Ron Erickson: I encourage you to join our annual shareholders meeting. Now scheduled for September 26 at 130 p.m. Pacific time when the quiet period will be over and we can take questions from our investors.
Speaker Change: Research and development expense for Q3 fiscal year 2024 decreased $531,000.
Speaker Change: to $1.35 million as compared to $1.88 million.
Ron Erickson: With that, I will continue the call by reviewing the operating highlights of our third quarter for fiscal year 2024. Since our last earnings call on May 15, many milestones have been achieved. These milestones resulted from an accelerated work program we implemented at the beginning of 2023. Today, I'll provide a brief update on these milestones and the progress we've made against the core work streams we previously articulate. Workstream 1, Hardware. A critical works name in an area with a lot of progress has been Hardware development.
Speaker Change: and Q3 fiscal 2023, a decrease of 28.2% year-over-year.
Peter Conley: 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 Fiscal 24 increased $1.1 million to $2.49 million as compared to $1.36 million for the year-ago quarter.
Speaker Change: 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.
Speaker Change: Selling general and administrative expenses for Q3 Fiscal 24 increased $1.1 million to $2.49 million as compared to $1.36 million for the year-ago quarter.
Peter Conley: The increase primarily was due to an increase of $276,000 in salary related to several key hires, an increase in legal expense of $257,000 related to our financing activity and further investment in our intellectual property assets, an increase in stock-based compensation of $479,000, and an increase in other expenses of $116,000. As part of the selling, general, and administrative expense for 2-3 fiscal 24, we recorded $99,000 and $63,000, respectively, of investor relations and business development expense.
Speaker Change: The increase primarily was due to an increase of $276,000 in salaries related to several key hires.
Ron Erickson: In June 2023, we announced the completion of our portable Generation 1 prototype device for non-invasive glucose monitoring. We understand how our sensor performs in real-life settings. Pulling from these findings, we continue to miniaturize the Gen1 prototype. These efforts resulted in the announcement of the NOU on February 27 to 2024. Only eight months after the introduction of the Gen1 research prototype, the NOU is a wearable, non-invasive, continuous glucose monitoring device or CGN.
Speaker Change: an increase in legal expense of $257,000 related to our financing activity and further investment in our intellectual property assets.
Speaker Change: and an increase in stock-based compensation of $479,000 and an increase in other expenses of $116,000.
Speaker Change: As part of the selling, general and administrative expense for Q3 Fiscal 24, we recorded $99,000 and $63,000 respectively of investor relation and business development expense.
Ron Erickson: It is 85% smaller than the Generation 1 and is capable of 24-hour wearable data collection. It incorporates our proprietary technology and sensor which we plan to submit to the FDA for clearance. We also introduced the NOU's companion mobile application making it a fully integrated system. Since the announcement of the NOU, we've been using it to accelerate data collection and determine the technology performance throughout continuous wear in different locations on the body and within more expansive glycemic ranges and diverse populations.
Peter Conley: Turning now to the mail. We had cash and cash equivalents of approximately $2.13 million at June 30, 2024 as compared to $8.02 million at the end of September 30, 2023. The company is undertaking initiatives to significantly reduce our fixed expenses and monthly burners subsequent to the end of Q3 fiscal 2024. On August 9, 2024, as noted by Ron, we closed a firm commitment underwritten public offering of $3.445 million, which was a unit offering priced at $2,600,000, comprised of one share of common stock and one warrant exercisable for cash at 26 cents, providing a pass to an additional $3.4 million of future funding.
Speaker Change: Turning now to the balance sheet.
Speaker Change: We had cash and cash equivalents of approximately $2.13 million at June 30, 2024, as compared to $8.02 million at the end of September 30, 2023.
Speaker Change: The company is undertaking initiatives to significantly reduce our fixed expenses and monthly burn rate.
Speaker Change: subsequent to the end of Q3 fiscal 2024.
Speaker Change: On August 9, 2024, as noted by Ron, we closed a firm commitment underwritten public offering of $3.445 million.
Ron Erickson: The wearable format allows us to amplify the technology's testing and validation, launching 24-7 clinical trials inside and outside NOLabs R&D laboratory. We expect more work will be needed to prepare the NOU for commercialization, including further menstrualization and adjustments based on inputs from clinical trials and human factors testing.
Ron Erickson: which was a unit offering priced at $0.26, comprised of one share of common stock and one warrant exercisable for cash at $0.26, providing a pass
Ron Erickson: to an additional $3.4 million of future fundings.
Peter Conley: This financing, along with the cash on hand, the company believes it has enough cash and flexibility with operating expenses to operate until at least December 31, 2024. As noted in our Q3 of fiscal year 2024-10Q, the company plans to seek additional funding under our effective S3 shelf registration to ensure its operations well into 2025. Finally, shareholder equity for Q3 fiscal year 2024 was a negative $4.6 million versus $3.74 million in fiscal year 2023, ending September 30, 2023.
Ron Erickson: This financing, along with the cash on hand, the company believes it has enough cash
Ron Erickson: Workstream 2 is clinical testing and data gathering. Clinical testing continues to be an important area of development for the company. Since our last earning calls, we've completed additional testing including an IRB approved internal trial with more than 30 participants with pre-diabetes or type 2 diabetes. The data collected in this trial was presented and published in the following conferences. Clinical research results were presented at the American Diabetes Association 84th Scientific Sessions in Orlando.
Ron Erickson: and Flexibility with Operating Expenses to operate until at least December 31, 2024.
Ron Erickson: As noted in our Q3 fiscal year 2024-10Q, the company plans to seek additional funding under our effective S3 shelf registration to ensure our operations well into 2025.
Ron Erickson: Finally, Cheryl, the equity for Q3 fiscal year 2024.
Cheryl: was a negative 4.6 million versus
Ron Erickson: A mean absolute relative difference or marred of 11.8% on the test data set was achieved. Data from 22 participants with type 2 diabetes or pre-diabetes were included in this data set. Clinical research results were presented at the 2024 American Association of Clinical Under Chronology Annual Meeting in New Orleans. The test data set achieved a mean absolute relative difference or marred of 11.1%. Data from 10 participants with type 2 diabetes or pre-diabetes were included in this data set.
Speaker Change: 3.74 million in fiscal year 2023, ending September 30, 2023. The company is actively taking steps to address its shareholder equity, including the conversion of debt to equity.
Ronald Erickson: The company is actively taking steps to address its shareholder equity, including the conversion of debt to equity. This concludes my review of our financial highlights, and I'll return the call to Ron for closing. Thanks, Pete. As already mentioned, we won't have a Q&A session on this call, as we are in the quiet period imposed by SEC regulations due to our recent capital raise. I encourage you once again to join our annual shareholders meeting scheduled for the end of September, when the quiet period will be over, and we can take questions from investors.
Speaker Change: This concludes my review of our financial highlights and I'll return the call to Ron for closing remarks.
Ron Erickson: Thanks, Pete. As already mentioned, we won't have a Q&A session at this call as we're in the quiet period imposed by SEC regulations due to our recent capital raise. I encourage you once again to join our annual shareholders meeting scheduled for the end of September when the quiet period will be over and we can take questions from investors.
Ron Erickson: Clinical research results were presented at the American Physiological Society Summit in Baltimore. A mean absolute relative difference or marred of 10.8% on this data set was achieved. Data from 13 healthy participants were included in this data set. Clinical research results were presented at the 17th International Conference on Advanced Technologies and Treatments for Diabetes in Florence, Italy, a mean absolute relative difference of 11.1% on the test data set was achieved. Data from 10 participants with type 2 diabetes or pre-diabetes were included in this data set.
Ronald Erickson: This conference call replay will be available on our website in the coming days. In the meantime, thank you for joining us, and I appreciate it very much. There's a lot to look forward to in the balance of 2024, and we're excited to report on our progress. We appreciate the support of each of you, our shareholders. We appreciate the efforts of our employees, board members, advisors, and strategic partners.
Operator: Thanks so very much. Thank you and have a great day. All the best. This concludes today's conference. You may now disconnect your lines. Thank you for your time.
Ron Erickson: This conference call replay will be available on our website in the coming days. In the meantime,
Ron Erickson: Thank you for joining, and I appreciate it very much. There's a lot to look forward to in the balance of 2024, and we're excited to report on our progress. We appreciate the support of each of you, our shareholders.
Ron Erickson: We appreciate the efforts of our employees, board members, advisors, and strategic partners. Thanks so very much. Thank you and have a great day. All the best.
Speaker Change: This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.
Ron Erickson: In general, 80% of the data collected from our sensor was randomly selected to train our algorithm. The remaining 20% of the data was then applied to the trained algorithm and compared to a paired Venus blood glucose reference value, resulting in the mean absolute relative difference, Mard, presented at these conferences. This was the first time we implemented a clinical research protocol involving people with diabetes and using Venus blood as a comparative reference, the gold standard expected by the FDA.
Ron Erickson: Dr. Varen K. Summers from the Mayo Clinic has been an avid contributor to our research as an author and co-investigator. Dr. Summers has personally presented these results at global conferences, most notably at the 17th International Conference on Advanced Technologies and Treatments for Diabetes in Florence, Italy, and the 84th American Diabetes Association scientific sessions in Orlando.
Ron Erickson: We also recently published a paper in a leading diabetes journal, our study entitled quote, a glycemic status classification model using a radio frequency non-invasive blood glucose monitor, close quote, was published in diabetes technology and therapeutics, a leading peer-reviewed covering all aspects of diagnosing and managing diabetes with cutting edge devices, drugs, drug delictory systems, and software. This study demonstrated that our proprietary non-invasive radio frequency dialectic sensor and trade secret machine learning algorithms correctly classified an individual glycemic status as hyperglycemic normal glycemic or hypoglycemic with a 93.37 percent accuracy compared to Venus blood glucose values, serving as an early proof of concept for a novel non-invasive diabetes screening device.
Ron Erickson: Expanding the potential application of the know-you-be on non-invasive blood glucose monitoring means our technology can support underserved global populations by facilitating early identification and intervention as a non-invasive screening device. A core focus of our next series of trials will be enrolling in more diversified population, including people with type 1 diabetes. This is necessary to collect more data in the very low hypoglycemic range and the very high hyperglycemic. The FDA is focused on these ranges and accuracy is critical for those managing diabetes.
Ron Erickson: The wearable nature of the know-you will also enable continuous data collection and yield a large volume of data that machine learning algorithms require to improve accuracy across all intended use cases. This increase in data will be used to further refine and inform our algorithm developed.
Ron Erickson: Workstream 3 is algorithm development. We leverage all the data that is collected during our sensor characterization work in vitro trials and clinical trials for algorithm development. As we continue refining the algorithm, we learn exactly what data is needed to increase accuracy. This includes a wider range of glycemic levels along with data from a more diverse population, and the data that takes into account temperature, location on the body and other interferences. Our goal is to achieve an algorithm with a mean absolute relative difference or margin of 10% or less.
Ron Erickson: More importantly, we'll also need to meet the FDA's requirements for accuracy in varying glycemic ranges in over different periods of time, all of which we are considering during algorithm development. The goals of our data science and algorithm development efforts in 2024, including building personalized models for each user following a calibration period. The outcome will be an algorithm that can develop an accurate glucose value estimate for these individuals whenever they are wearing the NOU device.
Ron Erickson: Building personalized models is an early step toward a generalized algorithm, but the ability to create these models may themselves prove to be viable in an FDA-cleared commercial device. The current version of our algorithm performs well with an unknown population from data collected in our lab in Seattle. We are first focused on understanding performance in different settings outside of the lab and expanding our population study to those with type 1 diabetes. As we move forward, new approaches such as device calibration will be tested.
Ron Erickson: Workstream 4 intellectual property. With respect to intellectual property, we continue to grow our IP portfolio. At the end of the quarter, we had over 330 patents issued pending and in process, reflecting our continuing high rate of innovation. No labs rate of innovation is roughly two times faster than the overall non-invasive glucose monetary IP market growth rate. The issued and pending patents cover fundamental aspects of our radio frequency spectroscopy technology and several unique applications.
Ron Erickson: In the intellectual property will continue to be a focus for the company and will work to build and reinforce a defensible IP mode around our technology. We remain focused on maintaining our position as the worldwide IP holder leading in this non-invasive blood glucose monitoring space. Trade secrets are also critical, so we launched an initiative to identify and qualify them and quantify them. As a result of this exercise, we gathered and codified in excess of 600 trade secrets, which provide a proprietary working element of the no lab platform technology. This is very important.
Ron Erickson: Lastly, in May 2024, we created the no lab skunk works to pursue IP monetization and a global patent licensing program. We believe there is large opportunity to work with potential strategic partners and customers and drive revenue from non core fields of use of the no labs platform technology in both the US and the rest of the world, with regards to corporate update. On the corporate side, we launched several initiatives focused on maximizing shareholder value and increasing our chances of success.
Ron Erickson: For instance, we expanded our medical and scientific advisory board appointing four new members with extensive clinical diabetes management and FDA expertise and expanded our board of directors appointing three new directors with deep sector expertise. We also joined the children with diabetes industry advisory board and the industrial participant program of the white institute for biologically inspired engineering at Harvard University. Both of these programs increase Know Labs exposure to thought leaders in the healthcare space allowing our team to leverage their expertise and apply their experience to our product development accelerating time to market.
Ron Erickson: We're also making a targeted effort to spread our story and our work. Consequently, we presented our company at multiple investors and sector focus conferences such as the third annual Bernstein CGM Disruptors Conference, the benchmark company's discovery conference, the Emerging MedTech Summit 2024 by Life Sciences Intelligence, a Life Science Innovation Northwest 2024, and the Bio-International Convention of 2024.
Ron Erickson: We continue to focus on our core objective which is a successful development of the know you to obtain FDA approval. However, we believe we can achieve faster monetization of our technology through strategic collaboration with major players and the capitalization of our intellectual property assets. We've increased our efforts on this front and we'll continue funneling resources into that arena. These work streams can help us maximize shareholder value while bringing disruptive technologies to the market that can impact the lives of millions of people around the globe.
Ron Erickson: I'm proud of what we've achieved during the past quarter. We remain committed and the recent milestones bring us closer to a future where equitable care and diabetes management will become a reality.
Ron Erickson: I encourage you to visit our investor relations website at ir.knowlabs.co to stay updated with our progress.
Pete Conley: Now I'd like to turn the call to Pete Conley so he can review our financials. Pete? Thank you Ron. We detailed our financial results in today's third quarter of fiscal year 2024 earnings release which is noted by Ron you can find on our website but I'll share a few key line items. For Q3 fiscal 2024 know-labs reported a net loss of 4.1 million dollars compared to a net loss of 3.6 million dollars in Q3 fiscal 23 an increase of 13.9%.
Pete Conley: This translates to earnings per share of a loss of five cents better than the prior year quarter earnings per share loss of seven cents and improvement of 29% before preferred stock dividends. It is important to note the net loss of a quarter included non-cash expenses of 1.58 million dollars. The non-cash items include stock-based compensation of 1 million dollars amortization of operating lease right of the right abuse asset of 276,000 and interest expense for the extension of notes and warrants of 240,000.
Pete Conley: Research and development expense for Q3 fiscal year 2024 decreased 531,000 to $1.35 million as compared to $1.88 million in Q3 fiscal 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 fiscal 24 increased 1.1 million to 2.49 million as compared to 1.36 million for the year ago quarter.
Pete Conley: The increase primarily was due to an increase of $276,000 in salaries related to several key hires, an increase in legal expense of $257,000 related to our financing activity and further investment in our intellectual property assets, and an increase in stock-based compensation of $479,000, and an increase in other expenses of $116,000 as part of the selling general and administrative expense for Q3 fiscal 24, we recorded $99,063,000 respectively of investor relation and business development expense. Turning now to the balance sheet, we had cash and cash equivalence of approximately $2.13 million at June 30, 2024 as compared to $8.02 million at the end of September 30, 2023.
Pete Conley: The company is undertaking initiatives to significantly reduce our fixed expenses in monthly burn rate. Subsequent to the end of Q3 fiscal 2024, on August 9, 2024, as noted by Ron, we closed a firm commitment underwritten public offering of $3.445 million, which was a unit offering priced at $26,000, comprised of one share of common stock and one warrant exercisable for cash at $26,000, providing a pass to an additional $3.4 million of future fundings.
Pete Conley: This financing along with the cash on hand, the company believes it has enough cash and flexibility with operating expenses to operate until at least December 31, 2024. As noted in our Q3 fiscal year 2024-10Q, the company plans to seek additional funding under our effective S3 shell registration to ensure our operations well into 2025. Finally, Cheryl, the equity for Q3 fiscal year 2024 was a negative $4.6 million versus $3.74 million in the fiscal year 2023 ending September 30, 2023.
Pete Conley: The company is actively taking steps to address the shareholder equity, including the conversion of debt to ex- Equity.
Ron Erickson: This concludes my review of our financial highlights and I'll return the call to Ron for closing remarks. Thanks, Pete.
Ron Erickson: As already mentioned, we won't have a Q&A session at this call as we're in the quiet period imposed by SEC regulations due to our recent capital raise. I encourage you once again to join our annual shareholders meeting scheduled for the end of September when the quiet period will be over, we'll be over and we can take questions from investors. This conference call replay will be available on our website in the coming days.
Ron Erickson: In the meantime, thank you for joining and appreciate it very much. There's a lot to look forward to in the balance of 2024 and we're excited to report on our progress. We appreciate the support of each of you, our shareholders. We appreciate the efforts of our employees, board members, advisors and strategic partners. Thanks so very much. Thank you and have a great day. All the best.
Operator: This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.