Know Labs, Inc.

Greetings. Welcome to NOLAB's second quarter 2024 earnings conference call. Please note this conference call is being recorded. I will now turn the conference over to Jordan Hujar with NOLAB's Chief of Staff. You may begin.

Thank you, Operator. Thank you, everyone, for joining us for today's conference call to review NOLAB's second quarter 2024 financial results and operating highlights. If you have not seen today's financial results, press release, or 10Q filing, please visit the investors page on the company's website at www.nolabs.co. Before turning the call over to Ron Erickson, NOLAB's 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-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 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. No lab 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, NOLAB's CEO.

Thank you, Jordan. 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 14th, 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 four 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 27th. 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 sensor has now been tested and proven stable and accurate. By including it in a wearable format, we can amplify the technology's testing and validation outside the lab. The KnowU can be worn with an adhesive, allowing the user to clip the sensor on and off or on the arm or forearm with a strap. The device, significantly smaller and lighter than the Generation 1 prototype, includes onboard computing power and built-in machine learning capabilities. The KnowU is designed to optimize the customer experience, which is expected to last for years, ultimately getting rid of eliminating costly disposables, and connecting with an easy-to-use companion mobile app. More work will need to be done to prepare the KnowYou for commercialization, including further miniaturization and adjustments based on inputs from clinical trials and human factors testing, and most important, what works best for the patient user. Through 2024, the KnowYou device will support accelerated data collection, including determining the technology's performance through continuous wear in different locations on the body and within more expansive glycemic ranges and diverse populations. If you haven't seen it, I encourage you to watch the video we've published on our website with specific details on the new features. Workstream number two involves clinical trials and data collection. Clinical testing continues to be an important area of development for the company. During the first half of our fiscal year 2024, we completed an IRB-approved internal trial with more than 30 participants with prediabetes or type 2 diabetes. Eighty percent of the data collected from our sensor was randomly selected to train our algorithm. The remaining 20 percent of the data was then applied to the trained algorithm and compared to a paired venous blood glucose reference value, resulting in a mean absolute relative difference, or MARD, of 11.1 percent. This was the first time we implemented a clinical research protocol involving people with diabetes using venous blood as a comparative reference, the gold standard expected by the FDA. That's very important. Dr. Summers, Varen Summers from the Mayo Clinic was an author and a co-investigator on that research protocol. Dr. Summers presented and we announced on March 6th the interim results of this study. titled, quote, Noninvasive Blood Glucose Monitoring in People with Diabetes Using an RF Sensor and Venous Blood Comparator. This he did at the 17th International Conference on Advanced Technologies and Treatments for Diabetes, or ATTD, in Florence, Italy. This trial has been completed and enabled the R&D team to collect more data in the hyper- and hypoglycemic ranges. In previously published studies, Most of the data collected was within the normal glycemic range, 70 to 100 milligrams per deciliter, and glucose values from a popular CGM were used as a comparative reference. By including participants with type 2 diabetes, this study increased the number of data points outside the normal glycemic range. Demonstrating similar accuracy across all ranges is an essential milestone in our technology development roadmap. While many devices typically underperform outside the normal glycemic range, our sensor delivered consistent accuracy across the hyper, normal, and hypoglycemic ranges in this study. The MARD for these ranges were 11.5%, 11%, and 9.5% respectively. These results suggest that our sensor, paired with our trade secret machine learning AI algorithms, holds considerable promise for noninvasive blood glucose measurement. 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 of 40 to 70 milligrams per deciliters and the very high hyperglycemic range of 350 to 400 milligrams per deciliters. The FDA is focused on these ranges, and accuracy is critical for those managing diabetes. 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. This increase in data will be used to further refine and inform our algorithm development. Our work stream three is algorithm development. We leverage all the data that's collected during our sensor characterization work, in vitro tests 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 ranges along with data from a more diverse population and 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 MARD of 10% or less. More importantly, we also need to meet the FDA's requirements for accuracy in varying glycemic ranges and over different periods of time, all of which we're considering during our algorithm development. The goal of our data science and algorithm development efforts during fiscal 2024 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 those individuals whenever they are wearing the Know You device. 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 within a known population from data collected in our lab in Seattle. We're first focused on understanding performance in different settings outside of the lab and expanding our population of study to those with type 1 diabetes. As we move forward, new approaches such as device calibration will be tested. Our fourth work stream involves intellectual property. With respect to intellectual property, we continue to grow our portfolio. At the end of this quarter, we had over 300 patents issued pending and in process, reflecting our very high continuing rate of innovation. The issued and pending patents cover fundamental aspects of our radio frequency spectroscopy technology and several unique applications. Intellectual property that includes patents and trade secrets will continue to be a focus for the company, and we will work to reinforce a defensible intellectual property moat around our technology. We remain focused on maintaining our position as the leading worldwide IP holder in noninvasive blood glucose monitoring. Finally, a corporate update. As I already mentioned, our team was in Florence, Italy in early March to attend the 17th International Conference on Advanced Technologies and Treatments for Diabetes. The industry calls it ATTD, and it's the number one worldwide show each year on the subject. We displayed the NOEU to attendees and presented the results of our recent clinical study. We also had meetings with companies in our space and physicians leading critical diabetes research around the world. We co-hosted a luncheon event with Children with Diabetes, a well-known nonprofit organization dedicated to providing education and support to families living with type 1 diabetes. This luncheon was attended by more than 60 physicians who are prominent thought leaders in the diabetes management field. This group had the opportunity to learn more about our company, our technology, and our technology roadmap. Many medical and technical questions were addressed and new clinical collaboration opportunities were discussed, and we continue to follow up on those. The ATTD organization also awarded us an emerging technology grant as an outstanding startup company presenting an innovative product. As a part of this grant, we participated in the International Fair of New Technologies with two scheduled presentations and an exhibition hall booth that allowed us to display our progress to the more than 5,000 attendees at the conference. We will continue to attend, present, and engage with the medical community at other conferences that are important for the diabetes space, including American Association for Clinical Endocrinology, where we just presented May 9 to 11 in New Orleans, the American Diabetes Association Scientific Sessions, June 21 to 24 in Orlando, and the ATDC Conference on Practical Targets for Diabetes Care from July 10 to 13 in Keystone, Colorado. And there are many others. These conferences have proven to be valuable in our continued efforts to pursue collaboration agreements with other companies and to engage with preeminent clinicians from around the world. Lastly, we entered into a funding agreement for an investment of up to $12 million. This agreement was executed with LHIN Global Fund 2LP, an investment entity managed by the LHIN partners. This investment will enable us to accelerate development across our four core work streams that I've enumerated, including hardware development, expanded data collection, algorithm development, and our IP. It will allow us also to reinforce our team in areas that are critical for our development roadmap and our desire to start generating revenues from our robust IP portfolio. In this arena, we recently brought on board Chris Simoji as president international. Chris has an academic and career background in biomedical engineering and over 40 years of experience in commercializing innovation across related industries. Chris will play a pivotal role in identifying global opportunities to license our extensive intellectual property portfolio and will focus on securing strategic development partnerships as we look at opportunities in the rest of the world. You will see a more comprehensive overview on Chris and his areas of focus in a press release that will issue tomorrow morning prior to the market open. It's important as we approach the market with what we call the next generation of the glucose monitor to do so in the context of the progress that's been made over the last 40 years. Glucose levels were historically determined by testing urine. In the early 1980s came the introduction of the finger stick with its enzymatic determination of glucose levels from blood drawn from the finger. In the early 2000s, companies came to the market with the first continuous glucose monitors utilizing their own enzymatic determination of blood glucose from interstitial fluid. The Nolab's noninvasive glucose monitor is the next generation, whether used in a continuous form or in a spot check screening manner. I'm very proud of our team's achievements during the last quarter. We remain committed to delivering an accessible, affordable, and accurate solution that improves the current standard of care and enhances the quality of life for those living with diabetes. The recent milestones, such as the Know You product, bring us closer to a future where equitable care and diabetes management can become a reality. I encourage you to visit our investor relations website at ir.nolabs.co to stay updated with our progress. And now, I'd like to turn the call to Pete Connolly, who can review our financials. Pete?