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spk01: Greetings. Welcome to the NOLAB's fourth quarter and fiscal year 2022 earnings conference call. Please note this conference is being recorded. I will now turn the conference over to Jordan Hujar, NOLAB's Chief of Staff. You may begin.
spk02: Thank you, Operator. Thank you, everyone, for joining us for today's conference call to discuss NOLAB's fourth quarter and year-end 2022 financial results and recent operating highlights. you have not seen today's financial results press release and 10k filing please visit the investors page on the company's website before turning the call over to ron erickson no labs executive chairman and founder 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 filing 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 and uncertainties associated with the COVID-19 pandemic and its possible effects on our operations. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. No lab expressly disclaims any intent or obligation to update these forward-looking statements except as otherwise may be required under applicable law. With that, I'll turn the call over to Ron Erickson. Ron?
spk04: Thank you, Jordan. Welcome, everyone. Thank you for joining us today on this conference call to discuss our fourth quarter 2022 and year-end financial results and operating highlights. Joining me today is Pete Conley, our Chief Financial Officer, who will discuss our financial results. I'm going to walk through our progress against our strategic milestones, as well as provide an overview of our achievements for fiscal year ending September 30, 2022, and a preview of our goals for fiscal year 2023. As we discussed in our outlook for the year provided in March 2022, we set forth our plan to bring the first FDA-cleared noninvasive glucose monitoring device to the market. Our plan is comprised of four coordinated workstreams. Specifically, one, continued development of our hardware solution, namely our patented BioRFID sensor. Two, the continued development of our software solution, namely our proprietary algorithm and machine learning platform. Three, continued in vivo testing both internally and under current and future IRB approved protocols to drive our clinical data collection and analysis. And four, continued strategic development of our intellectual property portfolio namely our patents issued pending and in development, as well as codifying our trade secrets. We are pleased to report progress on all four work streams during the course of the fiscal year 2022. First, our BioRFID prototype sensor has achieved its intended performance goals, and while it will be continually improved, has enabled us to collect data and conduct testing on a prototype sensor to accurately measure and monitor in vivo glucose readings in real time. Second, as a result of our internal testing, we've generated tens of millions of clinical observations to comprise our data set, from which to refine our algorithms and train our machine learning platform to accurately measure glucose levels in vivo in real time. Third, our internal studies have yielded results with greater than 90% correlation to our gold standard Dexcom G6, with less than 10% mean absolute error. To this end, last fall we announced internal results which resulted in a mean MARD reading of 5.8% when benchmarked to FDA cleared Roche's AccuCheck, Abbott's Freestyle Libra, and Dexcom's G6 across 180 paired observations within a plus or minus 15%. While we believe these internal results speak strongly to the specificity and sensitivity necessary to achieve our goal of FDA clearance and our competitive standing, we're working tirelessly in anticipation of upcoming third-party validation of our clinical protocols in 2023. And fourth, our unrelenting effort to build the world's most robust patent portfolio has been independently validated by PatSnap Research and IP Capital Group. two leading patent analytic firms who each ranked NOLAB's number one for patent leadership in non-invasive glucose monitoring. To that end, we're pleased to announce today the U.S. Patent and Trademark Office granted our U.S. patent $11,529,077 entitled, quote, High-Performance Glucose Sensor, close quote. While we'll have more to say about the 077 patent in the coming days, we believe this patent, as the title states, is a significant event for the noninvasive CGM industry, as we believe that this will be the first and only patent granted where its claims explicitly state a MARD range, an FDA-accepted benchmark of clinical accuracy of 5% to 9.9%, which is equal to or superior to the MARD reading of FDA-cleared products. In reviewing our progress for fiscal 2022, we're very pleased to say that we also achieved our longstanding goal of an uplist to a major exchange from the OTC market. On September 15, 2022, we successfully completed an $8.3 million underwritten IPO in the New York Stock Exchange American with the new stock symbol, quote, KNW, close quote. We're now beginning to realize our goal of increased market liquidity and institutional ownership. On November 18, 2022, we were invited to and presented at the Bernstein's second annual CGM Disruptors Conference, where we shared our story to Bernstein's institutional audience for the first time. Looking ahead to 2023, we're very focused on continuing progress across our four workstations. On hardware product development, we plan to finalize our Gen 1 product, which we plan to take to the FDA. On software development, we plan to complete our algorithm development and machine learning platform to enable us to proceed on our path to the FDA. On clinical studies, our goal is to secure third-party validation from leading research centers. And fourth, we will continue our efforts to build a world-class patent portfolio that will serve as a foundation for our company to derive strategic value in the marketplace. In summary, we believe we are executing on delivering on our goal to be the first FDA cleared noninvasive glucose monitoring device to market and our broader vision to transform medical diagnostics through a noninvasive means. Now I'd like to turn the call over to Pete Connolly to review our financials. Pete.
spk03: Thank you, Ron. Hi, everybody, and thanks for joining our call. Our consolidated revenues for fiscal year 2022 were $4.36 million, comprised of one-time sales of NFTs generated from our AI subsidiary. Going forward, there will not be any further NFT sales. Cost of revenue for the fiscal year was zero, resulting in gross profit of $4.36 million. Research and development expense for the fiscal year was $5.386 million. $5.386 million as compared to $3.97 million in 2021. The increase in R&D expense was related to staff increases in engineering, third-party technical services, and expenditures related to the development of our BioRFID technology as we continue to execute our path to FDA clinical trials and commercialization. Selling general and administrative expense for fiscal year 2022 was $11.548 million as compared to $6.476 million in 2021, which increased versus the prior year primarily due to $3.43 million in selling and transactional costs for the disposition of digital assets and $3.393 million in non-cash stock-based compensation. During 2022, we incurred increased professional and legal fees related to our NYSE IPO, which we account for as a one-time expense. Now I would like to turn to our GAAP and non-GAAP analysis. We believe that non-GAAP, which are cash-based metrics, provide a more meaningful measure of our underlying operating performance. GAAP net loss, as reported for fiscal year 2022, was $20.071 million as compared to a GAAP net loss of $25.36 million from the prior year. However, net of non-cash expenses, which consisted primarily of amortization of debt discount as interest expense and stock-based compensation, non-GAAP net loss as adjusted for the full year was $7.929 million a slight increase of $270,000 to the prior year. For fiscal 2022, GAAP EPS was a loss of 50 cents as compared to a loss of 86 cents per share during 2021. Now turning to the balance sheet, fiscal 2022 saw a significant strengthening of our liquidity. Current assets for the full year stood at $12.594 million versus current liabilities of 3.81 million for a healthy current ratio of 3.61, a significant improvement in our liquidity versus a current ratio of 1.17 from the prior year. As of September 30, 2022, we had cash and cash equivalents of 12.594 million as compared with 12.258 million in 2021. Net cash used in operations for the year was $6.92 million, which was essentially flat to the prior year of $6.851 million. We believe our cash on hand will be sufficient to fund our operations through December 31, 2023. Our shareholder equity on September 30, 2022 was $9.862 million an increase of $8.62 million over 2021 shareholder equity of $1.242 million. That concludes my review of our financial highlights, and I'll return the call to Ron for closing remarks.
spk04: Thanks, Pete, and thank you everyone for joining us. There's a lot to look forward to in 2023, and we're excited to report on our progress. We appreciate your support, and I also want to acknowledge the incredible effort of our team of talented employees. I want to thank each and every one of you. Have a wonderful holiday season. Merry Christmas and a bountiful new year. All the very best.
spk02: The conference call replay will be available on our website in the coming days. Thank you all for your participation.
spk01: Thank you. This concludes today's conference. All parties may disconnect. Have a good evening.
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