8-K: Current report filing
Published on March 15, 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 15,
2021
KNOW LABS, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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000-30262
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90-0273142
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(State
of other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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500 Union Street, Suite 810
Seattle, Washington 98101
(Address of principal executive office)
(206) 903-1351
(Registrant’s telephone number, including area
code)
not applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
☐ Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a -12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d -2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e -4(c))
Securities registered pursuant to Section 12(b) of the Act:
None.
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth company. ☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 3.02 Unregistered Sales of Equity
Securities.
On March 15, 2021, Know Labs, Inc. (the “Company”)
closed a private placement and received gross proceeds of
$14,279,000 in exchange for issuing Subordinated Convertible Notes
(the “Convertible Notes”) and Warrants (the
“Warrants”) in a private placement to 87 accredited
investors, pursuant to a series of substantially identical
Securities Purchase Agreements, Common Stock Warrants, and related
documents.
The Convertible Notes have a principal amount of $14,279,000 and
bear annual interest of 8%. Both the principal amount of and the
interest are payable on a payment-in-kind basis in shares of Common
Stock of the Company (the “Common Stock”). They are due
and payable (in Common Stock) on the earlier of (a) mandatory and
automatic conversion of the Convertible Notes into a financing that
yields gross proceeds of at least $5,000,000 (a “Qualified
Financing”) or (b) on the one-year anniversary of the
Convertible Notes (the “Maturity Date”). Investors will
be required to convert their Convertible Notes into Common Stock in
any Qualified Financing at a conversion price per share equal to
the lower of (i) $2.00 per share or (ii) a 25% discount to the
price per share paid by investors in the Qualified Financing. If
the Convertible Notes have not been paid or converted prior to the
Maturity Date, the outstanding principal amount of the Convertible
Notes will be automatically converted into shares of Common Stock
at the lesser of (a) $2.00 per share or (b) any adjusted price
resulting from the application of a “most favored
nations” provision, which requires the issuance of additional
shares of Common Stock to investors if the Company issues certain
securities at less than the then-current conversion
price.
The Warrants were granted on a 1:0.5 basis (one-half Warrant for
each full share of Common Stock into which the Convertible Notes
are convertible). The Warrants have a five-year term and an
exercise price equal to 120% of the per share conversion price of
the Qualified Financing or other mandatory conversion.
The Convertible Notes are initially convertible into 7,139,500
shares of Common Stock, subject to certain adjustments, and the
Warrants are initially exercisable for 3,569,750 shares of Common
Stock at an exercise price of $2.40 per share of Common Stock, also
subject to certain adjustments.
In connection with the private placement, the placement agent for
the Convertible Notes and the Warrants received a cash fee of
$661,720 and warrants to purchase 496,290 shares of the
Company’s common stock, all based on 4.63% of gross proceeds
to the Company.
As part of the Purchase Agreement, the Company entered into a
Registration Rights Agreement, which grants the investors
“demand” and “piggyback” registration
rights to register the shares of Common Stock issuable upon the
conversion of the Convertible Notes and the exercise of the
Warrants with the Securities and Exchange Commission for resale or
other disposition. In addition, the Convertible Notes are
subordinated to certain senior debt of the Company pursuant to a
Subordination Agreement executed by the investors.
The Convertible Notes and Warrants were issued in transactions that
were not registered under the Securities Act of 1933, as amended
(the “Act”) in reliance upon applicable exemptions from
registration under Section 4(a)(2) of the Act and/or Rule 506 of
SEC Regulation D under the Act.
The Company has closed the Convertible Notes and Warrants
offering.
The foregoing description of the financing is qualified in its
entirety by reference to the complete terms and conditions of
the forms of Securities Purchase Agreement, Subscription
Agreement, Subordinated Convertible Note, Common Stock Purchase
Warrant, Subordination Agreement, and Registration Rights
Agreement, copies of which are attached to this Current Report
on Form 8-K as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6,
respectively, and which are incorporated by reference into this
Item 3.02.
Item 9.01 Financial Statements and
Exhibits.
(d) Exhibits
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Exhibit No.
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Description
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Form of
Securities Purchase Agreement (filed herewith)
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Form of
Subscription Agreement (filed herewith)
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Form of
8% Subordinated Convertible Note (filed herewith)
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Form of
Common Stock Purchase Warrant (filed herewith)
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Form of
Subordination Agreement (filed herewith)
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Form of
Registration Rights Agreement (filed herewith)
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Press
Release dated March 15, 2021 related to the closing of Know Labs,
Inc. funding.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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KNOW LABS,
INC.
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Date:
March
15, 2021
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By:
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/s/ Ronald
P. Erickson
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Ronald P. Erickson |
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Chairman
of the Board
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