KNW Know Labs Inc

Know Labs, Inc. (NYSE American: KNW), an emerging developer of non-invasive medical diagnostic technology, today reported financial results for the fourth quarter and fiscal year ended September 30, 2023.

Financial Highlights:

• Know Labs reported a net loss of $15.29 million dollars in FY2023, compared to a net loss of $20.07 million dollars in FY2022, a reduction in net loss of 23.8%. This translates to Earnings Per Share of a loss of $0.41, better than FY2022 Earnings Per Share Loss of $0.50, an improvement of 18%, before preferred stock dividends.
• In FY2023, recorded a non-cash charge to earnings of $4.77 million principally related to the fair market value of dividends on our Series C and D preferred stock in the amount of $2.96 million, that were either paid or accrued in shares of common stock, and the remaining $1.81 million non-cash charge comprised of $310,000 in depreciation & amortization, $550,000 loss on the sale of assets, $507,000 loss on debt extinguishment, $350,000 from the modification of notes and warrants and $142,000 from the amortization of operating lease right of use during FY 2023.
• Research and development expense for FY2023 was $7.73 million dollars as compared to $5.39 million dollars in FY2022, an increase of 43.5% year over year. The increase in R&D expense was related to increases in engineering, third-party technical services, and expenditures related to the development of our Generation 1 device, which we completed and announced on June 7th, as we continue to execute our path to FDA clinical trials and commercialization.
• Selling, general and administrative expenses for FY2023 was $6.57 million, which was lower by $1.55 million than the $8.12 million dollars in FY 2022, an improvement of 19.1%, as we continue our initiatives to reduce our cash burn.
• As of September 30, 2023, we had cash and cash equivalents of $8.02 million dollars, as compared to $12.59 million at the end of September 30, 2022. Net cash used in operations for FY2023 was $10.35 million dollars compared with $6.92 million in the prior year.
• During the year ended September 30, 2023, the Company made adjustments to its fixed expenses and the impact of those adjustments has significantly reduced our monthly burn rate. Given the significant reduction in fixed expenses, the Company believes that it has enough available cash and flexibility with its operating expenses to operate until at least June 30, 2024. As we have stated in our FY 2023 10-K, we expect to raise additional funds through the issuance of equity, preferred stock and convertible debentures.
• Shareholder equity for the fiscal year 2023 was $3.74 million versus $9.86 million in fiscal year 2022.

Income Statement:

KNOW LABS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

  Years Ended, September 30, 2023 September 30, 2022   REVENUE- DIGITAL ASSET SALES $

-

 

$

4,360,087

 

OPERATING EXPENSES- RESEARCH AND DEVELOPMENT EXPENSES

7,727,467

 

5,385,586

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

6,570,597

 

8,118,137

 

SELLING AND TRANSACTIONAL COSTS FOR DIGITAL ASSETS

(274,019

)

3,430,438

 

Total operating expenses

14,024,045

 

16,934,161

 

OPERATING LOSS

(14,024,045

)

(12,574,074

)

  OTHER INCOME (EXPENSE), NET Interest income

127,145

 

15,283

 

Interest expense

(389,626

)

(8,034,081

)

Loss on debt extinguishment

(506,865

)

-

 

Other (expense) income, net

(495,776

)

521,628

 

Total other (expense), net

(1,265,122

)

(7,497,170

)

  LOSS BEFORE INCOME TAXES

(15,289,167

)

(20,071,244

)

  Income tax expense

-

 

-

 

  NET LOSS

(15,289,167

)

(20,071,244

)

  Common stock dividends on Series D Preferred Stock

(1,627,230

)

-

 

Deemed dividends on Series C and D Preferred Stock

(3,526,653

)

-

 

  NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $

(20,443,050

)

$

(20,071,244

)

  Basic and diluted loss per share $

(0.41

)

$

(0.50

)

  Weighted average shares of common stock outstanding- basic and diluted

49,581,467

 

40,370,473

 

Balance Sheet:

KNOW LABS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

  September 30, 2023 September 30, 2022 ASSETS   CURRENT ASSETS: Cash and cash equivalents $

8,023,716

 

$

12,593,692

 

Total current assets

8,023,716

 

12,593,692

 

  PROPERTY AND EQUIPMENT, NET

81,325

 

862,977

 

  OTHER ASSETS Other assets

15,766

 

13,767

 

Operating lease right-of-use asset

145,090

 

287,930

 

  TOTAL ASSETS $

8,265,897

 

$

13,758,366

 

  LIABILITIES AND STOCKHOLDERS' EQUITY   CURRENT LIABILITIES: Accounts payable - trade $

1,292,861

 

$

526,968

 

Accrued expenses

94,062

 

462,940

 

Accrued expenses - related parties

218,334

 

348,264

 

Convertible notes payable, net

2,761,931

 

2,255,066

 

Current portion of operating lease right-of-use liability

154,797

 

215,397

 

Total current liabilities

4,521,985

 

3,808,635

 

  NON-CURRENT LIABILITIES: Operating lease right-of-use liability, net of current portion

-

 

87,118

 

Total non-current liabilities

-

 

87,118

 

  COMMITMENTS AND CONTINGENCIES (Note 11)

-

 

-

 

  STOCKHOLDERS' 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 9/30/2023 and 9/30/2022, 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 9/30/2023 and 9/30/2022, respectively

1,015

 

1,015

 

Common stock - $0.001 par value, 200,000,000 shares authorized, 80,358,463 and 48,156,062 shares issued and outstanding at 9/30/2023 and 9/30/2022, respectively

80,358

 

48,158

 

Additional paid in capital

125,501,537

 

111,209,388

 

Accumulated deficit

(121,840,788

)

(101,397,738

)

Total stockholders' equity

3,743,912

 

9,862,613

 

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $

8,265,897

 

$

13,758,366

 

Cash Flow:

KNOWLABS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended, September 30, 2023 September 30, 2022   CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $

(15,289,167

)

$

(20,071,244

)

Adjustments to reconcile net loss to net cash (used in) operating activities Depreciation and amortization

313,019

 

320,995

 

Issuance of common stock for services

-

 

183,000

 

Issuance of common stock warrants for services

-

 

451,487

 

Gain on debt settlement

(50,000

)

(268,872

)

Loss on disposal of property and equipment

549,431

 

-

 

Loss on debt extinguishment

506,865

 

-

 

Modification of notes and warrants - interest expense

349,721

 

-

 

Stock based compensation- stock option grants

2,955,933

 

4,421,634

 

Gain on forgiveness of notes payable-PPP Loans

-

 

(252,700

)

Amortization of operating lease right-of-use asset

142,840

 

35,963

 

Amortization of debt discount to interest expense

-

 

7,272,911

 

Changes in operating assets and liabilities: Other long-term assets

(1,999

)

-

 

Operating lease right-of-use liability

(147,719

)

(22,917

)

Accounts payable - trade and accrued expenses

317,085

 

1,009,935

 

NET CASH (USED IN) OPERATING ACTIVITIES

(10,353,991

)

(6,919,808

)

  CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment

(80,797

)

(855,468

)

NET CASH (USED IN) INVESTING ACTIVITIES:

(80,797

)

(855,468

)

  CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from isssuance of common stock for NYSE uplisting

-

 

8,280,000

 

Proceeds from issuance of common stock offering, net

5,472,791

 

-

 

Payments for stock for NYSE uplisting

-

 

(855,321

)

Settlement of notes payable-PPP loans

-

 

(179,103

)

Proceeds from issuance of common stock for stock options exercise

4,687

 

26,687

 

Proceeds from issuance of common stock for warrant exercise

387,334

 

838,487

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

5,864,812

 

8,110,750

 

  NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(4,569,976

)

335,474

 

  CASH AND CASH EQUIVALENTS, beginning of period

12,593,692

 

12,258,218

 

  CASH AND CASH EQUIVALENTS, end of period $

8,023,716

 

$

12,593,692

 

  Supplemental disclosures of cash flow information: Interest paid $

-

 

$

-

 

Taxes paid $

-

 

$

-

 

  Supplemental disclosure of non-cash financing activity: Conversion of debt $

-

 

$

14,209,000

 

Conversion of accrued interest $

-

 

$

1,136,720

 

Common stock dividends on Series D Preferred Stock $

1,627,230

 

$

-

 

Deemed dividends on Series C and D Preferred Stock $

3,526,653

 

$

-

 

Issuance costs from common stock offering $

1,527,209

 

$

-

 

Conference Call:

Know Labs will host an audio webcast to discuss its results and provide a business update today, December 19, 2023, at 4:30pm ET (1:30 pm PT). The live webcast will be available on the Investors page of the Company’s website, www.knowlabs.co/investors, 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=MtMDMZ5d

A copy of the form 10-K filed with the SEC can also be downloaded from the Company’s website. All holders, including stockholders and bondholders, can request and receive a hard copy of the complete audited financial statements free of charge. Requests must be submitted to ask@knowlabs.co.

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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For Know Labs Media Inquiries: Matter Health Abby Mayo Knowlabs@matternow.com Ph. (617) 272-0592

Know Labs, Inc.: Jordyn Hujar jordyn@knowlabs.co Ph. (206) 629-6414