Greetings. Welcome to Know Labs Second Quarter 2024 Earnings Conference Call. Please note, this conference call is being recorded. I will now turn the conference over to Jordyn Hujar with Know Labs Chief of Staff. You may begin.

Thank you, operator. Thank you everyone for joining us for today's conference call to review Know Labs Second Quarter 2024 financial results and operating highlights. If you have not seen today's financial results press release or 10-Q filing, please visit the Investors page on the company's website at www.knowlabs.co. Before turning the call over to Ron Erickson, Know Labs Chairman and Chief Executive Officer, I would 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. We encourage you to review the company's SEC filings, including, without limitation, the company's Forms 10-K and 10-Q, 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 patients 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 failure to realize anticipated benefits, legal, regulatory or political changes in the applicable jurisdictions, accounting and quality controls, greater-than-estimated allocations 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. Know Labs expressly disclaims any intent or obligation to update these forward-looking statements except as otherwise may be required under applicable law. A Q&A session will follow this call. Your questions can be submitted through the webcast portal, which can be accessed through our website. We will not be taking questions over the phone during today's call. With that, I'll turn the call over to Ron Erickson, Know Labs' CEO.

Thank you, Jordyn. Welcome, everyone, to our conference call to review the financial results and operating highlights of our second quarter for fiscal year 2024. Joining me today is Pete Conley, our Chief Financial Officer and Senior Vice President of Intellectual Property, who will discuss our financial results. Since our last earnings call on February 14, many milestones have been achieved. These milestones resulted from an accelerated work program we implemented at the beginning of 2023. Now I'll provide a brief update on these milestones and the progress we've made against the 4 core work streams we previously articulated. Work stream number one, hardware. 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 noninvasive glucose monitoring. We spent the next several months with this device undergoing sensor characterization to better understand how our sensor performs in a completely wireless unit and answer questions surrounding battery life, signal quality and temperature. These tests included testing in and outside of our lab, both in vitro and with humans. Data collected through these tests was compared to data collected with FDA-cleared glucose monitors helping us to understand how our sensor performs in real-life settings. Pulling from these findings, our product team, alongside our hardware, firmware, electrical engineering and industrial design partners continued to miniaturize the Generation 1 prototype further. These efforts resulted in the announcement of the KnowU, our Gen 2 device on February 27. The KnowU is a wearable noninvasive continuous glucose monitoring device or CGM. It incorporates our proprietary technology and sensor, which we plan to submit to the FDA for clearance. This center has now been tested and proven stable and accurate. By including it in a wearable…

Thank you, Ron. We detail the financial results in today's second quarter of FY 2024 earnings release, which as noted by Jordyn, you can find on our website, but I'll share a few key line items. For Q2 fiscal 2024, Know Labs reported an operating loss of $4.73 million compared to an operating loss of $4.81 million in Q2 fiscal 2023, a reduction in operating loss of 1.7%. This translates to earnings per share of a loss of $0.07 better than the prior year earnings per share loss of $0.10, an improvement of 30% before preferred stock dividends. In Q2 fiscal 2024, we also recorded a noncash charge to earnings of $976,000 principally related to stock-based compensation of $617,000 and issuance of common stock for services of $251,000. Research and development expense for Q2 fiscal 2024 was $2.18 million as compared to $2.56 million in Q2 fiscal 2023, a decrease of 15.1% year-over-year. The decrease in R&D expense was related to decreased personnel and the use of external consultants to reduce the cost of product development. Selling, general and administrative expense for Q2 fiscal 2024 was $2.55 million, which was higher by $308,000 than the $2.24 million in the year ago period, an increase of 13.7%, reflecting key hires made in the quarter as well as an increase in legal expenses related to IP and financing activities. Turning now to the balance sheet. As of March 31, 2024, we had cash and cash equivalents of $4.71 million compared to $8.02 million at the end of September 30, 2023. Net cash used in operations for the first 6 months of FY '24 was $7.05 million compared with $6.34 million in the 6-month period of fiscal 2023. During the year ended September 30, 2023, the company made adjustments to its fixed expenses…

Thanks, Pete. We'll now dedicate the next 10 to 15 minutes to questions submitted through the webcast portal. And bear with me a second as I take a look at the screen. Let me start here as they come in, they scroll in. The first question is, what is the status? One of our work streams we've talked about is over time in joint development agreements. And we've talked about those with medical device manufacturers, big pharmaceutical companies, consumer electronic companies. One thing that I have said in the past, we don't mention who those companies are. I would say that we continue to engage in dialogue with those companies. And as those evolve over time, there will be an opportunity to let the market know who those companies are and what our transactions involved. But at this point in time, I'll say we're just continuing to nurture a number of relationships that have the potential to be very significant. One of the question is, what happened to the risk worn device similar to a smart watch? We've gone to -- as I indicated, we've been going through a process of miniaturization. The KnowU, our Generation 2 device is significantly smaller than the Gen 1. We think between here and the -- and delivering that product to the FDA for FDA clearance and FDA-approved clinical trials, there will be future miniaturization. Among other things, I've talked to people about the fact that this device, the KnowU has an off-the-shelf battery. The battery is larger than an [indiscernible], we can have a custom battery. I think there's some other opportunities for miniaturization there. Between here and a wrist worn device, that's much, much smaller, would be the need for an ASIC. And that takes time, that takes money. So I think…

Yes, Ron. We are, as disclosed in our 10-Q and on this call have indicated we are seeking additional equity financing. And we are very, very sensitive to dilution for several reasons. One of them is our shareholder base who has seen us through multiple rounds of funding since 2019, 6 rounds in total will -- are a -- the foundation to our shareholder ownership, and we are very mindful of their loyalty to us and our support of us. And so dilution is something we take very seriously. So while we are currently seeking additional equity financing, I'll state for the record, we will not do any sort of structured finance. There won't be any penny warrants or anything of that nature, which could potentially harm our current investors. We are in the process and have been in the process of talking to institutional investors long only, fundamentally focused, and that is where we intend to raise equity capital.

There appears a question that said that we had announced an N100 clinical trial to be completed end of February, when can investors expect to see the result of the N100 study? Well, this is really -- this is an interesting one because the IRB protocol, when we send these out, these are independently approved. Our protocols are independently approved. So it's independently approved for up to 100 participants. Once we got into the study and collected the data and analyze the data from 30 participants in 85 sessions, and we looked at all that data, we saw that the performance was satisfactory and at a level that was significant enough for us to shift our attention to testing with our Gen 2 KnowU. So basically, we were approved to go to 100. We got great data using our Gen 1 because as you recall, the IRB was approved before we had the Gen 2. And so we made great progress and love the data, and so we didn't have to do the whole 100 and then made the decision to shift our focus on testing to the KnowU, the Gen 2 device that we had in our hands starting early March.

Ron, I might add, we have presented interim results at ATTD. And lastly, to the American Association for Clinical Endocrinology annual meeting, the results can be found on the research and development page of our website. And as the analysis concludes, we will continue to publish accordingly.

There's a question about international markets. As I indicated during my formal remarks, we will be announcing tomorrow morning, the hiring of Chris Somogyi. Chris' title is President, International. And given Chris' background, as you'll see from the materials that we release tomorrow morning, he's going to be focusing on international and also focusing on monetization of our intellectual property in fields of use outside of diagnostics. So he's got a bigger responsibility, but his title is President of International, and that's going to be a core focus of this. Here's a great question. And this is an unusual question. One of the individuals, are you feeling fatigued? Are you getting enough rest, work, family balance? A rare question from a shareholder. And I'm going to say we appreciate -- I can't mention the individual's name unless it can be seen out there by everybody. But I want to appreciate the empathy. I think that truth be known, we are so energized and excited about what we're doing about the developments that we have internally, the way things are going. Now I'm going to say, listen, we don't -- I know that people would like to see more press announcements. If we make it a sort of a way we operate, we don't like to do press announcements unless we have something material to talk about that is really important. But I'll just say that our level of energy and excitement and enthusiasm internally is really tremendous. So short answer, we're not fatigue. I think always, there's that when you're building a business and everybody is moving fast, we are all alert to that work - family balance. And I would say that we make sure that, that happens, right? We really make sure that, that would be -- that's one of the core values of this company. We really care about our people. We care about their lives. We care about the work they do. We care about their commitment to the vision for the enterprise. And that vision is to create a noninvasive diagnostic device with a first focus on glucose that literally can make a difference in the world and make a difference in people's lives. And the whole team is committed to that. And -- so that we get 100%, you've got to have that work - life balance. And I think we work hard toward that. So thanks for the question, by the way.

Ron, if I could just amplify on what you're saying part of what drives our excitement and enthusiasm literally every day is not a week goes by when we don't learn something new. And I'll give an example of that. 2 weeks ago, the first week of May in the Journal of Diabetes Science and Technology, the peer-review publication, a publication was included in the journal comparing the performance of the Dexcom G7 and the Abbott FreeStyle Libre. And we learned, contrary to Dexcom's stated MARD of 8.2% that in the study, the overall rate was 15.1%. Now we look at what we're doing, our most recently disclosed MARD is in the 11% range. And then we come to realize that there's a very high failure rate of the Dexcom G7, depending on the source in that same period of publication indicated the failure rate was 35%, call it, 1 and 3. We have seen from other postings and other sources, failure rate of 23%, call it, 1 and 4. When you combine those facts with the fact that in the world, nearly 600 million people have diabetes. And the combined installed base of Dexcom, Abbott and Medtronic is only about 4 million. You realize the CGM penetration worldwide is less than 1%. So when you look at accuracy, reliability and the fact that 99% of the world still doesn't have a viable solution, that gives us very excited and very energized to bring the next generation of CGM to the world.

Thanks, Pete. So here's the question, is our noninvasive technology, a trade secret or patent? And what countries is it patented pending in aside from the U.S.A.? Pete -- by the way, as everybody knows, Pete is our Senior VP, Intellectual Property and has core responsibility for that. So Pete, would you respond to this, please?

Sure. As of March 31, 2024, we have 332 patent assets that are either issued patents, pending patents or in process patents, meaning patents in the process of being filed. Of those patents, they are in 18 jurisdictions. The majority of them, 215 of the 332 are in the United States. And then we have patent coverage through the PCT, Patent Cooperation Treaty, where we were able to file in multiple countries. We also have coverage in the EU, the U.K. and literally a whole host of other countries: China, Japan, South Korea and so forth. So we have global coverage. We have dominant coverage in our core technology of RF spectroscopy. And we look at this as a strategic asset that we plan to monetize in future discussions with potential JV partners and the like.

I would just want to add to that trade secrets. We have a significant body of trade secrets that may, by actual number be twice the number of patents we hold. So we don't talk a lot about trade secrets because they are secret. They're secret. We have them organized internally. We acknowledge they exist internally. I'm going to call it -- it's our secret sauce, and that is a significant part of our intellectual property. But can I say it's a secret, right? And it's a significant trade secret, that's a real big part of our intellectual property asset base. I want to thank everyone for their questions. I do want to say there are couple of questions that add some -- that are very precise questions. And as a consequence of being precise, and asking for some things that are really -- we can't disclose. I'm not able to respond to some of those more detailed questions. And I apologize for that. Those are the kinds of things that I could only disclose if we had a nondisclosure agreement with people. There is one final question that has to do with the FDA and the FDA process. We have already started the process of, I'll say, socializing our technology with the FDA. And the next step will be a presubmission meeting with the FDA, which we have -- which we hope to have during fiscal year '24. And thereafter, with the final product, the refined Gen 2, if you will, that's a product that we take to the FDA and go through clinical trials with them sort of organized with and through them pursuant to our protocols. And -- so that's an undertaking that we are eager to get underway and have already begun through, as I indicate…

The conference call replay will be available on our website in the coming days. Thank you for your participation.

This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.