Earnings call transcript: Know Labs Q1 2025 widens net loss, plans expansion
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Overview
The earnings call reveals significant challenges: a net loss increase, negative shareholder equity, and potential delisting. Although cost management has improved, financial risks and capital raising issues overshadow positives. The Q&A section highlights unclear management responses, particularly concerning the KTL program and equity issues. The absence of shareholder return initiatives further dampens sentiment. Given these factors, a negative stock price reaction is likely.
Key Financial Performance
Net Loss $4,670,000 (increase of $1,220,000 or 35% from $3,450,000 in Q1 FY 2024) due to significantly higher non-cash expenses related to GAAP based derivative accounting.
Non-Cash Expense $2,450,000 (increase of 209% from the previous year) primarily due to stock-based compensation, loss on debt extinguishment, interest expense for the repricing of warrants, and amortization of debt issuance costs.
Cash Earnings Net loss of $2,450,000 (improvement of 8% from $2,660,000 in Q1 FY 2024) after adjusting for non-cash charges.
GAAP Earnings Per Share Loss of $0.04 (unchanged from Q1 FY 2024) due to the same non-cash expenses.
Cash EPS Loss of $0.02 (improvement of 33% from $0.03 in Q1 FY 2024) after adjusting for non-cash expenses.
Research and Development Expense $802,000 (decrease of 46% from $1,490,000 in Q1 FY 2024) due to the continued use of consultants to reduce product development costs.
Selling, General and Administrative Expense $1,970,000 (2% lower than $2,010,000 in Q1 FY 2024) primarily due to lower insurance and other expenses.
Cash and Cash Equivalents $1,030,000 (decrease from $3,110,000 at the end of September 2024) reflecting cash burn and operational adjustments.
Net Cash Used in Operations $1,890,000 (decrease of 44% from $3,390,000 in Q1 FY 2024) due to adjustments in fixed expenses.
Shareholder Equity Negative $3,910,000 (worsened from negative $3,160,000 in FY 2024) as a result of ongoing losses.
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Operating Highlights
KTL Program: NOLabs has launched the KTL program to expand the reach and application of its RFDS technology by partnering with industry leaders and researchers.
Cash Burn Rate: Net cash used in operations decreased by 44% year over year, indicating improved operational efficiency.
R&D Expense: Research and development expenses decreased by 46% year over year due to the use of consultants.
Technology Licensing: NOLabs is focusing on monetizing its intellectual property through the KTL program, aiming for faster revenue generation and strategic collaborations.
Market Positioning: The company aims to establish RFDS as a standard technology across various industries, enhancing its market presence.
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Risk or Challenges
Regulatory Risks: Uncertainty in the results of clinical trials or regulatory approvals, and the need to obtain third-party reimbursement for patients' use of any diagnostic products.
Financial Risks: The company reported a net loss of $4,670,000 for Q1 FY 2025, which was impacted by significantly higher non-cash expenses related to GAAP-based derivative accounting.
Capital Raising Challenges: Difficulty in raising capital due to short selling attacks, which led to the suspension of trading in NOLAP stock and the commencement of a delisting process.
Intellectual Property Risks: Risks inherent in maintaining IP rights and the potential failure to realize anticipated benefits from strategic transactions.
Operational Risks: Greater than estimated allocations of resources to develop and commercialize technologies, and the failure to maintain laboratory accreditation or FDA certification.
Market Competition: The need to establish RFDS as a standard technology in various fields amidst competitive pressures.
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Guidance & Outlook
KTL Program: The NOLabs technology licensing program, referred to as KTL, aims to expand the reach and application of the RFDS technology by partnering with industry leaders and fostering innovation.
RFDS Technology: NOLabs is focused on the development and commercialization of its RFDS technology, which has applications in medical diagnostics and industrial processes.
Global Expansion: NOLabs aims to expand the KTL program on a global scale by partnering with international organizations and industry leaders.
Revenue Generation: The company is pursuing strategic collaborations to generate near-term revenues from its technology.
Financial Outlook: NOLabs expects to raise additional funds through equity issuance, preferred stock, and convertible debentures.
Cash Position: As of 12/31/2024, NOLABS had cash and cash equivalents of $1,030,000, with an expectation to operate until 04/30/2025.
Shareholder Equity: The company is addressing negative shareholder equity through the conversion of convertible debt to equity and new equity issuances.
Cost Management: NOLabs has significantly reduced its cash burn rate by 44% compared to the previous year.
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Shareholder Return Plan
Shareholder Return Plan: NOLabs is focused on maximizing shareholder value through the KTL program, which aims to generate near-term revenues from its technology. The company is committed to strategic collaborations to capitalize on its intellectual property assets, which will help mitigate the need for capital and address the impact of short sellers.
Share Repurchase Program: None
Dividend Program: None
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Key Q&A
Q:Can you provide an update on the KTL program and its objectives?
A:The KTL program aims to expand the reach and application of our RFDS technology by partnering with industry leaders, fostering innovation, and enhancing market presence.
Q:What are the financial results for Q1 fiscal year 2025?
A:NOLABS reported a net loss of $4,670,000, which was impacted by higher non-cash expenses related to GAAP based derivative accounting.
Q:How is the company addressing its negative shareholder equity?
A:We are taking steps to address negative shareholder equity through the conversion of convertible debt to equity and new equity issuances.
Q:What is the status of the company's stock trading and delisting process?
A:The NYSE American has suspended trading in NOLAP stock and commenced a delisting process, which we have appealed.
Q:What are the expected future funding strategies?
A:We expect to raise additional funds through the issuance of equity, preferred stock, and convertible debentures.
Q:Review of Unclear Management Responses
A:Management did not provide a Q&A session, and some responses lacked clarity, particularly regarding the specifics of the KTL program's implementation and the timeline for addressing negative shareholder equity.
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KNW Transcript
Earnings call transcript: Know Labs Q1 2025 widens net loss, plans expansion
Unknown2-14
The earnings call reveals significant challenges: a net loss increase, negative shareholder equity, and potential delisting. Although cost management has improved, financial risks and capital raising issues overshadow positives. The Q&A section highlights unclear management responses, particularly concerning the KTL program and equity issues. The absence of shareholder return initiatives further dampens sentiment. Given these factors, a negative stock price reaction is likely.
Know Labs, Inc. (KNW) Q3 2024 Earnings Call Transcript
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Know Labs, Inc. (KNW) Q2 2024 Earnings Call Transcript
Unknown5-16
The earnings call reveals a mixed financial performance with reduced losses but declining cash reserves and increased SG&A expenses. Strategic partnerships are still in discussion, delaying revenue generation. The Q&A section highlights potential risks, such as supply chain readiness and financing challenges. Despite some positive developments like improved EPS and reduced R&D expenses, the overall sentiment is negative due to financial health concerns and lack of finalized partnerships.
Know Labs, Inc. (KNW) Q4 2023 Earnings Call Transcript
Unknown12-19
The earnings call highlights several concerns: regulatory uncertainty, financial constraints, and competitive pressures. While there is a decrease in net loss, the company still faces a significant cash burn and operational challenges. The public offering at a low share price indicates financial distress. Unclear timelines for strategic collaborations and FDA approval add to the uncertainty. Despite some positive developments, the overall sentiment is negative due to these risks and the lack of clear guidance.
KNW Report
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