10-Q: Quarterly report [Sections 13 or 15(d)]
Published on May 14, 2025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT |
For the transition period from _______ to ________
Commission File number
(Exact name of registrant as specified in charter) |
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant's telephone number, including area code) |
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619 Western Avenue, Suite 610, Seattle, Washington USA |
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(Former name, address, and fiscal year, if changed since last report) |
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares of common stock, $0.001 par value, issued and outstanding as of May 14, 2025:
DOCUMENTS INCORPORATED BY REFERENCE: None.
TABLE OF CONTENTS |
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Page Number |
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PART I |
FINANCIAL INFORMATION |
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3 |
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Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024 |
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3 |
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Consolidated Statements of Operations for the three and six months ended March 31, 2025 and 2024 |
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5 |
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Consolidated Statements of Cash Flows for the six months ended March 31, 2025 and 2024 |
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6 |
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7 |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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20 |
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33 |
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33 |
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34 |
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35 |
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35 |
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35 |
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36 |
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37 |
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| 2 |
| Table of Contents |
ITEM 1. FINANCIAL STATEMENTS
KNOW LABS, INC. AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS Unaudited |
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March 31, 2025 |
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September 30, 2024 (1) |
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ASSETS |
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Unaudited |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
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$ |
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Total current assets |
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PROPERTY AND EQUIPMENT, NET |
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OTHER ASSETS |
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Other assets |
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Operating lease right-of-use asset |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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CURRENT LIABILITIES: |
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Accounts payable - trade |
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$ |
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$ |
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Accrued expenses |
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Accrued expenses - related parties |
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Current portion of convertible notes payable, net |
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Current portion of convertible notes payable - related parties |
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Current portion of operating lease right-of-use liability |
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Total current liabilities |
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NON-CURRENT LIABILITIES: |
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Operating lease liability, net of current portion |
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Non-current portion of convertible notes payable, net |
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Total liabilities |
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COMMITMENTS AND CONTINGENCIES (Note 11) |
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STOCKHOLDERS’ DEFICIT |
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Preferred stock - $ |
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Series C Convertible Preferred stock $ |
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Series D Convertible Preferred stock $ |
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Common stock - $ |
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Additional paid in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders' deficit |
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( |
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( |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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$ |
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$ |
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(1) |
Derived from the audited consolidated balance sheet. |
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(2) |
Information pertaining to the number of shares outstanding gives retroactive effect to a 1 for 40 reverse stock split that became effective on February 19, 2025. |
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
| Table of Contents |
KNOW LABS, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited |
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Three Months Ended, |
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Six Months Ended, |
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March 31, 2025 |
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March 31, 2024 |
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March 31, 2025 |
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March 31, 2024 |
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Unaudited |
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Unaudited |
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Unaudited |
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Unaudited |
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OPERATING EXPENSES- |
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RESEARCH AND DEVELOPMENT EXPENSES |
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$ |
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$ |
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$ |
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$ |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
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Total operating expenses |
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OPERATING LOSS |
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( |
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( |
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( |
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OTHER INCOME (EXPENSE), NET |
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Interest income |
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Interest expense |
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( |
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Loss on debt settlements |
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Total other expense, net |
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LOSS BEFORE INCOME TAXES |
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( |
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( |
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( |
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Income tax expense |
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NET LOSS |
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( |
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( |
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( |
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( |
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Deemed dividends on Series C and D Preferred Stock |
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( |
) |
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( |
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( |
) |
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( |
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NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS |
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$ | ( |
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$ | ( |
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$ | ( |
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$ | ( |
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Basic and diluted loss per share |
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$ | ( |
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$ | ( |
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$ | ( |
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$ | ( |
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Weighted average shares of common stock outstanding- basic and diluted (1) |
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(1) |
Information pertaining to the number of shares outstanding and per share data gives retroactive effect to a 1 for 40 reverse stock split that became effective on February 19, 2025. |
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
| Table of Contents |
KNOW LABS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
Unaudited
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Total |
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Series C Convertible Preferred Stock |
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Series D Convertible Preferred Stock |
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Common Stock |
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Additional Paid in |
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Accumulated |
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Stockholders' Equity/ |
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Shares |
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$ |
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Shares |
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$ |
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Shares (1) |
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$ |
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Capital |
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Deficit |
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(Deficit) |
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Balance as of October 1, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ | ( |
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$ |
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Stock compensation expense - employee options |
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- |
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- |
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- |
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Issuance of common stock for services |
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- |
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- |
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Deemed dividends on Series C and D Preferred Stock |
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- |
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- |
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- |
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( |
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Isssuance of common stock for common stock offering |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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( |
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( |
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Balance as of December 31, 2023 |
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( |
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Stock compensation expense - employee options |
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- |
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- |
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- |
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Issuance of common stock for services |
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- |
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- |
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Issuance of common stock for exercise of warrants |
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- |
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- |
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( |
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Deemed dividends on Series C and D Preferred Stock |
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- |
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- |
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- |
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( |
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Expenses for extension of notes and warrants |
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- |
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- |
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- |
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Issuance of shares and warrants in connection with debt offering |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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( |
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( |
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Balance as of March 31, 2024 |
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( |
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Balance as of October 1, 2024 |
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( |
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( |
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Stock compensation expense - employee options |
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- |
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- |
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- |
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Deemed dividends on Series C and D Preferred Stock |
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- |
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- |
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- |
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( |
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Isssuance of common stock for common stock offering |
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- |
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- |
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Issuance of common stock for debt payment |
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- |
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- |
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Repricing of convertible notes payable and warrants |
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- |
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- |
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- |
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Extension of warrants |
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- |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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( |
) |
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( |
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Balance as of December 31, 2024 |
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( |
) |
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( |
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Stock compensation expense - employee options |
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- |
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- |
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- |
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Deemed dividends on Series C and D Preferred Stock |
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- |
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- |
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- |
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( |
) |
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Isssuance of common stock for At The Market common stock offering |
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- |
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- |
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Issuance of common stock for debt payment |
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- |
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- |
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Impact of reverse stock split due to rounding |
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- |
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- |
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( |
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Net loss |
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- |
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|
- |
|
|
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|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) | ||||
Balance as of March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ | ( |
) |
|
$ | ( |
) | |||||||
|
(1) |
Information pertaining to the number of shares outstanding gives retroactive effect to a 1 for 40 reverse stock split that became effective on February 19, 2025. |
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
| Table of Contents |
KNOW LABS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
|
|
Six Months Ended, |
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|||||
|
|
March 31, 2025 |
|
|
March 31, 2024 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net loss |
|
$ | ( |
) |
|
$ | ( |
) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
||
Stock based compensation - stock option grants |
|
|
|
|
|
|
||
Issuance of common stock for services |
|
|
|
|
|
|
||
Amortization of operating lease right-of-use asset |
|
|
|
|
|
|
||
Loss on debt extinguishment |
|
|
|
|
|
|
||
Interest expense for default of convertible notes |
|
|
|
|
|
|
||
Interest expense for repricing of warrants |
|
|
|
|
|
|
||
Interest expense for extension of warrants |
|
|
|
|
|
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Other long-term assets |
|
|
|
|
|
( |
) | |
Operating lease right-of-use liability |
|
|
( |
) |
|
|
( |
) |
Accounts payable - trade and accrued expenses |
|
|
|
|
|
( |
) | |
NET CASH USED IN OPERATING ACTIVITIES |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of research and development equipment |
|
|
|
|
|
( |
) | |
NET CASH USED IN INVESTING ACTIVITIES: |
|
|
|
|
|
( |
) | |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Repayment of note payable |
|
|
( |
) |
|
|
|
|
Proceeds from debt offering |
|
|
|
|
|
|
||
Payments for debt offering |
|
|
|
|
|
( |
) | |
Proceeds from issuance of common stock offering, net |
|
|
|
|
|
|
||
Proceeds from At The Market common stock offering |
|
|
|
|
|
|
||
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, beginning of period |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
|
|
$ |
|
||
Taxes paid |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash financing activity: |
|
|
|
|
|
|
|
|
Deemed dividends on Series C and D Preferred Stock |
|
$ |
|
|
$ |
|
||
Common stock issued for debt payment |
|
$ |
|
|
$ |
|
||
Repricing of convertible notes payable and warrants |
|
$ |
|
|
$ |
|
||
Warrants issued for debt offering |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
| Table of Contents |
KNOW LABS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared by Know Labs, Inc, (“the Company,” “us,” “we,” or “our”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of our management, all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of the financial position, results of operations, and cash flows for the fiscal periods presented have been included.
These unaudited financial statements should be read in conjunction with the audited financial statements and related notes included in our Annual Report filed on Form 10-K for the year ended September 30, 2024, filed with the Securities and Exchange Commission on November 14, 2024 and as amended on December 10, 2024. The results of operations for the six months ended March 31, 2025 are not necessarily indicative of the results expected for the full fiscal year, or for any other fiscal period.
1. ORGANIZATION
Know Labs, Inc. (the “Company”) was incorporated under the laws of the State of Nevada in 1998. The Company currently has authorized
The Company is focused on the development and commercialization of our proprietary sensor technology utilizing radio and microwave spectroscopy. When paired with our machine learning platform, our technology is capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy to detect, record, identify, and measure the unique “signature” of said materials or analytes.
The focus for our first application of our platform sensor technology has been in a product to non-invasively monitor blood glucose levels. Our device will provide the user with real-time information on their blood glucose levels. We launched the Generation 2 working prototype device during the year ended September 30, 2024. This device embodies the sensor which has been used in internal clinical testing. The device, which is a wearable format and may be a final form factor, ready for commercialization. That device will be utilized in expanded internal and external testing. The device may be refined over time and will require FDA clearance prior to entering the market. While we continue working on this device, we have recently initiated formal activities to license our platform technology in other fields of use. This activity, the Know Labs Technology Licensing (KTL) program, was recently announced and formalized in response to external demand for access to our platform technology.
2. LIQUIDITY AND GOING CONCERN
The Company has cash and cash equivalents of $
On December 12, 2024, the Company entered into subscription agreements with certain investors for a registered direct offering of
On December 31, 2024, the Company entered into a Capital on Demand Sales Agreement (“Sales Agreement”) with JonesTrading Institutional Services LLC, as sales agent, pursuant to which the Company may, from time to time, offer and sell shares of its common stock, through or to JonesTrading as its sales agent or manager.
| 7 |
| Table of Contents |
The offer and sale of the Shares will be made pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-276246) (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (“SEC”) on December 22, 2023 and declared effective by the SEC on January 11, 2024, as supplemented by a prospectus supplement dated December 31, 2024 and filed with the SEC pursuant to Rule 424(b) (the “Prospectus Supplement”) under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the Prospectus Supplement, the Company may offer and sell up to a maximum of $
The proceeds of warrants currently outstanding, to the extent not exercised on a cashless basis, may generate potential proceeds. We cannot provide assurance that any of these warrants will be exercised.
Management of the Company intends to raise additional funds through the issuance of equity securities or debt. The Company is currently working on some capital fund raising transactions. There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all. Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives. As a result, the substantial doubt about the Company’s ability to continue as a going concern has not been alleviated. The accompanying unaudited consolidated financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS
Basis of Presentation –These consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).
Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Particle. Intercompany items and transactions have been eliminated in consolidation.
Cash and Cash Equivalents – The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $
Property and Equipment – Equipment consists of machinery, leasehold improvements and furniture and fixtures, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset, generally
Long-Lived Assets – The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset).
Revenue Recognition – The Company determines revenue recognition from contracts with customers through the following steps:
|
· |
identification of the contract, or contracts, with the customer; |
|
|
|
|
· |
identification of the performance obligations in the contract; |
|
|
|
|
· |
determination of the transaction price; |
|
|
|
|
· |
allocation of the transaction price to the performance obligations in the contract; and |
|
|
|
|
· |
recognition of the revenue when, or as, the Company satisfies a performance obligation. |
Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
Research and Development Expenses – Research and development expenses consist of the cost of officers, employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes.
| 8 |
| Table of Contents |
The Company’s current research and development efforts are primarily focused on improving its radio frequency spectroscopy technology and its first focus on non-invasive monitoring of blood glucose levels; extending its capacity and developing new and unique applications for this technology. The Company believes that continued development of new and enhanced technologies is essential to its future success. The Company incurred expenses of $
Advertising – Advertising costs are charged to selling, general and administrative expenses as incurred. Advertising and marketing costs were $
Fair Value Measurements and Financial Instruments – ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 – Quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of March 31, 2025 and September 30, 2024 are based upon the short-term nature of the assets and liabilities. The fair value of the Company’s convertible notes payable are not readily available given the terms and conditions, including the conversion features, are complex.
The Company has a money market account which is considered a Level 1 asset. The balances as of March 31, 2025 and September 30, 2024 were $
Derivative Financial Instruments – Pursuant to ASC 815 “Derivatives and Hedging”, the Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company then determines if an embedded derivative must be bifurcated and separately accounted for. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.
The Company determined that the conversion features for purposes of bifurcation within its currently outstanding convertible notes payable were immaterial and there was no derivative liability to be recorded as of March 31, 2025 and September 30, 2024.
Stock Based Compensation – The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. The Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit.
Convertible Securities – Based upon ASC 815-15, the Company has adopted a sequencing approach regarding the application of ASC 815-40 to convertible securities. The Company will evaluate its contracts based upon the earliest issuance date. In the event partial reclassification of contracts subject to ASC 815-40-25 is necessary, due to the Company’s inability to demonstrate it has sufficient shares authorized and unissued, shares will be allocated on the basis of issuance date, with the earliest issuance date receiving first allocation of shares. If a reclassification of an instrument were required, it would result in the instrument issued latest being reclassified first.
Net Loss per Share – Under the provisions of ASC 260, “Earnings Per Share,” basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Deemed dividends to preferred shareholders increase the net loss available to common shareholders and impact the net loss per share calculation.
| 9 |
| Table of Contents |
As of March 31, 2025, the Company had
As of March 31, 2024, the Company had
Comprehensive loss – Comprehensive loss is defined as the change in equity of a business during a period from non-owner sources. There were no differences between net loss for the three and six months ended March 31, 2025 and 2024 and comprehensive loss for those periods.
Dividend Policy – The Company has never paid any cash dividends and intends, for the foreseeable future, to retain any future earnings for the development of its business. The Company’s future dividend policy will be determined by the board of directors on the basis of various factors, including results of operations, financial condition, capital requirements and investment opportunities.
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
Based on the Company’s review of accounting standard updates recently issued, those standards not yet required to be adopted and proposed standards for the future, the Company does believe such items are not expected to have a significant impact on the Company’s consolidated financial statements.
4. PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2025 and September 30, 2024 was comprised of the following:
|
|
|
|
|
|
|
|
|||
|
|
Estimated Useful Lives |
|
March 31, 2025 |
|
|
September 30, 2024 |
|
||
Machinery and equipment |
|
|
$ |
|
|
$ |
|
|||
Furniture and fixtures |
|
|
|
|
|
|
|
|||
Less: accumulated depreciation |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
$ |
|
|
$ |
|
||
Total depreciation expense was $
| 10 |
| Table of Contents |
5. LEASES
Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases. Right of use lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The incremental borrowing taking into consideration the Company’s credit quality and borrowing rate for similar assets is used in determining the present value of future payments. Lease expense is recorded as general and administrative expenses on the Company’s consolidated statements of operations. We elected the package of transitional practical expedients, under which we (1) did not reassess whether any expired or existing contracts are or contain leases, (2) we did not reassess the lease classification for any expired or existing leases and (3) we did not reassess initial direct costs for any existing leases. Additionally, we elected the short-term lease recognition exemption for all leases that qualify, meaning it does not recognize right-of use assets or lease liabilities for those leases. We also elected the practical expedient to not separate lease and non-lease components for all asset classes. The Company adopted ASC 842 effective October 1, 2022 and the adoption did not have any impact on previously reported stockholders’ deficit
The Company has entered into operating leases for office and development facilities which range from two to three years and include options to renew. The Company determines whether an arrangement is or contains a lease based upon the unique facts and circumstances at the inception of the lease. Operating lease liabilities and their corresponding right-of-use asses are recorded based upon the present value of the lease payments over the expected lease term. As of March 31, 2025 and September 30, 2024 total operating lease liabilities were $
The weighted average remaining lease term for the operating leases was 28 months at March 31, 2025 and the weighted average discount rate was
The minimum future lease payments as of March 31, 2025 are as follows:
March 31, |
|
|
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Total remaining payments |
|
|
|
|
Less imputed interest |
|
|
( |
) |
Total lease liability |
|
$ |
|
|
6. CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE
Convertible notes payable as of March 31, 2025 and September 30, 2024 are summarized below:
|
|
March 31, 2025 |
|
|
September 30, 2024 |
|
||
Convertible note- Clayton A. Struve |
|
$ |
|
|
$ |
|
||
Convertible note- Ronald P. Erickson and affiliates |
|
|
|
|
|
|
||
Convertible note - 1800 Diagonal Lending LLC |
|
|
|
|
|
|
||
Lind Global Fund II LP |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
Long term |
|
$ |
|
|
$ |
|
||
Short term - third party |
|
|
|
|
|
|
||
Short term - related party |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Convertible Promissory Notes with Clayton A. Struve
The Company owes Clayton A. Struve, a significant stockholder, $
| 11 |
| Table of Contents |
The Company recorded in convertible note payable the incremental value related to the conversion feature and as such, we recorded the extension value as an expense with an offset to convertible note payable. The extension value will be reclassified to equity upon conversion. The Company is currently working on a further extension for the notes.
Pursuant to their terms, the Convertible Promissory Notes are subject to repricing.
Convertible Redeemable Promissory Notes with J3E2A2Z – Related Party
The Company owes Ronald P. Erickson and J3E2A2Z, an entity affiliated and controlled by Ronald P. Erickson owed $
On September 15, 2023, the due dates on the notes were extended to September 30, 2024. The Company expensed $
On October 22, 2024, the due dates on the notes were further extended to September 30, 2025 and increased the interest rate from
On December 12, 2024, the Company sold units consisting of shares of common stock and warrants at $
Pursuant to their terms, the Convertible Promissory Notes are subject to repricing.
Senior Convertible Note with Lind Global Fund II, LP
On February 27, 2024, the Company (a) entered into a securities purchase agreement (the “Lind Purchase Agreement”) with Lind Global Fund II, LP (“Lind”),
The convertible notes issued under the Lind Purchase Agreement bearing an Original Issue Discount (the “OID”) equal to
| 12 |
| Table of Contents |
Upon the occurrence of any event of default, the notes will become immediately due and payable and the Company must pay Lind an amount equal to 120% of the then outstanding principal amount of each Note, in addition to any other remedies under the note or the other transaction documents. Events of default include, among others, the Company’s failure to make any note payment when due, a default in any indebtedness or adverse judgements in excess of $
The warrant may be exercised via cashless exercise in the event there is no effective registration statement covering the shares of common stock underlying a warrant exercise.
Pursuant to the terms of the securities purchase agreement, if at any time prior to a date that is 24 months following the closing of the offering, the Company proposes to offer or sell any additional securities in a subsequent financing, the Company shall first offer Lind the opportunity to purchase up to 20% of such new securities.
The Company received net proceeds of $
In connection with this securities purchase agreement,
The Company recorded $
During the six months ended March 31, 2025, the Company issued
On December 12, 2024, the Company sold units consisting of shares of common stock and warrants at $
The warrants issued to Lind had similar down-round protection features as the Senior Convertible Note. Upon the occurrence of the triggering event that resulted in a reduction of the strike price, the Company measured the value of the effect of the feature as the difference between the fair value of the warrants without the down round feature or before the strike price reduction and the fair value of the warrants with a strike price corresponding to the reduced strike price upon the down round feature being triggered. Accordingly, the Company recognized interest expense of $
Pursuant to their terms, the Convertible Promissory Notes are subject to repricing.
Promissory Note with 1800 Diagonal Lending LLC
On February 28, 2025, the Company entered into a Promissory Note with 1800 Diagonal Lending LLC, pursuant to which the Company issued a Promissory Note for $
| 13 |
| Table of Contents |
7. EQUITY
Authorized Capital Stock
The following description summarizes important terms of the classes of our capital stock as of March 31, 2025. This summary does not purport to be complete and is qualified in its entirety by the provisions of our articles of incorporation as amended, restated and supplemented to date, or our articles of incorporation, and our second amended and restated bylaws, or our bylaws, which have been filed as exhibits to the Company Annual Report on Form 10-K filed with the SEC on November 14, 2024 and as amended on December 10, 2024.
Authorized Capital Stock. The Company’s authorized capital stock currently consists of:
|
· |
|
|
|
|
|
· |
|
· |
|
|
|
|
|
· |
Outstanding Shares of Capital Stock. The Company’s common stock is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. All outstanding shares of the Company’s capital stock are fully paid and nonassessable. As of March 31, 2025, there were:
|
· |
|
|
|
|
|
· |
|
|
|
|
|
· |
Reverse Stock Split
The Board of Directors the Company approved a reverse stock split of the Company’s authorized and issued and outstanding shares of common stock, par value $0.001 per share at a ratio of 1-for-40 (the “Reverse Stock Split”). The Company filed a Certificate of Change (the “Certificate of Change”) pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of State of the State of Nevada on February 10, 2025. The reverse stock split was processed and announced by FINRA on February 18, 2025 and became effective on February 19, 2025.
As a result of the reverse stock split on the effective date, the number of shares of the Company’s authorized common stock was reduced from
The reverse stock split has no effect on the par value of the Company’s common stock or authorized or outstanding shares of preferred stock, and did not modify any voting rights or other terms of the common stock or preferred stock.
Securities Subject to Price Adjustments
If in the future, the Company sells its common stock at a price below $
| 14 |
| Table of Contents |
Series C and D Convertible Preferred Stock, Warrants and Dividends
On August 5, 2016, the Company closed a Series C Convertible Preferred Stock and Warrant Purchase Agreement with Clayton A. Struve, an accredited investor for the purchase of $
In 2017 the Company closed a $
Based upon the modified terms and conditions of our Series C and D Convertible Preferred Stock certificates of designations dated August 10, 2023, it was determined that Series C and D Convertible Preferred Stock dividends need to be accreted going forward. As of March 31, 2025, the Company has recorded $
Common Stock
Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders for a vote, and no cumulative voting for directors is permitted. Stockholders do not have any preemptive rights to acquire additional securities issued by the Company.
Six Months Ended March 31, 2025
On December 12, 2024, the Company entered into subscription agreements with certain investors (for a registered direct offering of
On December 31, 2024, the Company entered into a Capital on Demand Sales Agreement (“Sales Agreement”) with JonesTrading Institutional Services LLC, as sales agent, pursuant to which the Company may, from time to time, offer and sell shares of its common stock, through or to JonesTrading as its sales agent or manager.
The offer and sale of the Shares will be made pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-276246) (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (“SEC”) on December 22, 2023 and declared effective by the SEC on January 11, 2024, as supplemented by a prospectus supplement dated December 31, 2024 and filed with the SEC pursuant to Rule 424(b) (the “Prospectus Supplement”) under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the Prospectus Supplement, the Company may offer and sell up to a maximum of $5,000,000 of Shares under the Sales Agreement. The Company issued
During the six months ended March 31, 2025, the Company issued
| 15 |
| Table of Contents |
Warrants to Purchase Common Stock
Six Months Ended March 31, 2025
On December 12, 2024, the Company closed a registered direct offering and issued
The Company issued a warrant to purchase common stock of
Warrants to purchase
Extension of Warrant with Clayton A. Struve
On December 17, 2024, the Company approved the Extension of Warrant Agreement with Clayton Struve, extending the exercise dates as follows:
Warrant No./Class |
Issue Date |
No. Warrant Shares |
Exercise Price |
Current Expiration Date |
Amended Expiration Date |
Clayton A. Struve Warrant |
$ |
||||
Clayton A. Struve Warrant |
$ |
||||
Clayton A. Struve Warrant |
$ |
||||
Clayton A. Struve Warrant |
$ |
We recorded interest expense of $
A summary of the warrants outstanding as of March 31, 2025 were as follows:
|
|
|
|
|
Weighted |
|
||
|
|
|
|
|
Average |
|
||
|
|
|
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The significant weighted average assumptions relating to the valuation of the Company’s warrants for the six months ended March 31, 2025 were as follows:
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| 16 |
| Table of Contents |
8. STOCK INCENTIVE PLANS
On August 12, 2021, the Company established the Know Labs, Inc. 2021 Equity Incentive Plan (the “2021 Plan”) which was adopted by the Company’s shareholders on October 15, 2021. On October 25, 2024, shareholders approved a Plan Amendment which increased the maximum number of shares of our common stock that may be delivered to participants under the 2021 Plan to
Six Months Ended March 31, 2025
During the six months ended March 31, 2025, the Company issued a stock option grant to one employee for
During the six months ended March 31, 2025, stock option grants for
Stock option activity for the six months ended March 31, 2025 was as follows:
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The significant weighted average assumptions relating to the valuation of the Company’s stock option grants for the six months ended March 31, 2025 were as follows:
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| 17 |
| Table of Contents |
9. INCOME TAXES
The Company recorded a provision for income taxes of $
The Company’s effective tax rate was
For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company also computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.
As of March 31, 2025 and September 30, 2024, the Company retains a full valuation allowance on its deferred tax assets. The realization of the Company’s deferred tax assets depends primarily on its ability to generate taxable income in future periods. The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income.
10. SIGNIFICANT AND OTHER TRANSACTIONS WITH RELATED PARTIES
Transactions with Clayton Struve
See Notes 6 and 7 for related party transactions with Clayton A. Struve, a significant stockholder.
Related Party Transactions with Ronald P. Erickson
See Notes 6, 7 and 11 for related party transactions with Ronald P. Erickson, the Company’s Chairman and Chief Executive Officer and affiliated entities.
Related Party Transactions with Directors
Mr. Cronin served as a director between November 2023 and September 2024 when he was appointed our Interim Chief Technology Officer. Mr. Cronin is an experienced inventor and intellectual property strategist. Mr. Cronin is Chairman and CEO of ipCapital Group, Inc. The Company has recorded expenses with ipCapital Group of approximately $
11. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
Legal Proceedings
The Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. The Company is currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to the Company’s business.
Properties and Operating Leases
On March 2, 2024, the Company entered into a lease for executive and research and testing facilities at 619 Western Avenue, Suite 610, Seattle, Washington 98104. The Company leased 5,996 square feet and the current net monthly payment is $
12. SEGMENT REPORTING
The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Chief Executive Officer and Chief Financial Officer are the Company’s CODM. The CODM monitors the expense components of the various products and services we offer, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year. Accordingly, all operations are considered by management to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations to the consolidated financial statements. The CODM uses consolidated net income (loss) as its required measure of segment profit/loss, as such measure is determined in accordance with the measurement principles most consistent with the consolidated financial statements.
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| Table of Contents |
13. SUBSEQUENT EVENTS
The Company evaluated subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements were issued. Subsequent to March 31, 2025 the Company had the following material transaction that requires disclosure:
The Company issued
The Company issued
Employees, board members and consultants of the Company voluntarily cancelled stock option grants to purchase
The Company issued
| 19 |
| Table of Contents |
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements in this report reflect the good-faith judgment of our management and the statements are based on facts and factors as we currently know them. Forward-looking statements are subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, those discussed below as well as those discussed elsewhere in this report (including in Part II, Item 1A (Risk Factors)). Readers are urged not to place undue reliance on these forward-looking statements because they speak only as of the date of this report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report.
BUSINESS
Overview
We are an emerging leader in non-invasive diagnostics utilizing our proprietary technology. We are focused on the development and commercialization of our proprietary sensor technology utilizing radio and microwave dielectric spectroscopy. Our sensor technology activates a dielectric response that is unique for every molecule. It is based upon “first principles of physics”. We believe that our patented technology is capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy to detect, record, identify, and measure the unique “signature” of said materials or analytes and any rate of change when paired with our proprietary artificial intelligence and machine learning derived algorithms, While our core focus has been on medical diagnostics, our technology is designed to be a true platform with a myriad of applications across numerous fields of use.
Our initial focus for the first application of our sensor technology is in a product to non-invasively monitor blood glucose levels. Our device is intended to provide the user with real-time information on their blood glucose levels. During the quarter ended March 31, 2024, we announced our KnowU™ non-invasive wearable continuous glucose monitor working prototype device, which includes our proprietary sensor that has been used in internal clinical testing. We intend, over time, to expand our testing, both internally and externally, and to continue to refine the device which will require Food & Drug Administration (“FDA”) clearance before entering the market. As we continue to refine the device, in parallel we are seeking joint venture partners with whom we can collaborate through the FDA process and into the marketplace thereafter. The need for a joint venture partner has been become clear given the large expense associated with FDA clinical trials and vagaries of the capital markets as they relate to pre-revenue bio-pharma and medical device companies.
While medical diagnostics applications, with blood glucose monitoring paramount, remain the focus of Know Labs, we believe that our proprietary radio frequency and microwave dielectric spectroscopy platform has broad applicability outside of the medical diagnostic realm. We have identified and intend to implement new core workstreams to leverage our intellectual property portfolio of over 300 active patent assets, to generate revenues through patent licensing of opportunities developed in a “Skunkworks” program.
| 20 |
| Table of Contents |
On January 21, 2025, we announced the launch of Know Labs Technology Licensing (KTL). KTL is dedicated to licensing Know Labs’ robust intellectual property (IP) portfolio to corporate partners, academic institutions and research organizations, fostering innovation and accelerating the adoption of RFDS platform technology across a broad range of industries and the academic and scientific ecosystem. On February 6, 2025, we announced the fully operational KTL program with the licensing partner roadmap set forth in detail on our website.
Corporate History and Structure
We were incorporated under the laws of the State of Nevada in 1998. Since 2007, our company has been focused primarily on research and development of proprietary spectroscopic technologies spanning the electromagnetic spectrum.
Know Labs has one wholly owned subsidiary, Particle, Inc. incorporated on April 30, 2020. At this time there is no material activity in the Particle subsidiary while we focus our attention on our sensor technology and glucose monitoring device development.
The Know Labs Technology
We have internally and under contract with third parties developed proprietary platform technology that we believe is able to uniquely identify and measure almost any organic and inorganic material or analyte. Our patented technology is designed to direct electromagnetic energy in the radio wave and microwave frequencies to a substance or material to capture a unique molecular signature through the activation of a dialectic response known as permittivity from targeted analytes. Our technology then performs analytics with our intelligence and machine learning driven algorithms which are designed to allow our sensors to accurately identify and measure individual materials and analytes at the molecular level. In its most basic application, the technology is able to determine differences in real time in solids, liquids and gases.
Our technology provides a unique platform upon which we believe a myriad of applications can be developed. We believe that our radio frequency dielectric spectroscopy technology is an “enabling” technology that brings the science of electromagnetic energy to low-cost, real-world commercialization opportunities across multiple industries. Our technology is foundational, based upon “first principals of physics” and, as such, the basis upon which we believe significant businesses can be built. While we continue to pursue our work on a non-invasive continuous blood glucose monitor, we believe non-core clinical, non-clinical and medical research applications represent a multitude of opportunities for strategic collaboration, joint development, and licensing agreements with leading companies in their respective industries. Additionally, certain fields of use of our platform technology could provide the core element of a “spin-off” company. It is this belief, and our desire to generate near-term revenues for us, along with numerous inquiries from third parties, that prompted the development of Know Labs Technology Licensing (KTL).
We believe an important competitive differentiator for our sensor technology to be its ability to not only identify a wide range of organic and inorganic materials and analytes, but to do so non-invasively, and in real-time.
Know Labs Sensor Technology: Hardware and Software
Our sensor technology embodies two key components: hardware and software. The key hardware component includes a sensor which both sends and receives a radio frequency signal. The data obtained by the receiving aspect of the sensor is analyzed by software. Today, the sensor portion of our hardware development remains subject to adjustment and refinement. The sensor is currently being used in our internal tests, and has been for the past year, gathering billions of data points to further refine our algorithms. It is the core component in our KnowU wearable, continuous glucose monitor prototype device and will be a core component of future versions of our device for applications in other fields of use.
Technology Validation
We are focused on building strong external validation of our technology. This on-going initiative should provide additional evidence and support as we look to approach FDA approval. We continue to submit our work, when appropriate, to peer reviewed journals in an effort to set forth in detail how and why our technology works. We have announced several significant validating studies.
We have previously announced the results of an internal exploratory study comparing tests between our sensor technology and the leading continuous glucose monitors from Abbott Labs (Freestyle Libre®) and Dexcom (G6®) and (G7®). These results have provided evidence of a high degree of correlation between our technology and the current industry leaders and their continuous glucose monitors. Our patented technology is fundamentally differentiated from these industry leaders as our technology completely non-invasively monitors blood glucose levels. We also believe our technology successfully addresses the limiting qualities of non-invasive optical technologies whose diagnostic capacities may be inhibited by skin tones and other factors
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| Table of Contents |
On March 6, 2024, we announced interim results from our internal clinical research study, which assessed the accuracy of our proprietary radiofrequency (RF) dielectric sensor in non-invasively measuring blood glucose in participants with prediabetes and Type 2 diabetes using venous blood as a comparative reference – resulting in an overall Mean Absolute Relative Difference (MARD) of 11.1%. The machine learning model was trained to estimate reference venous blood glucose values on 80% of the data (520 paired values) randomly selected from measured values and then tested on the remaining, held out 20% (130 paired values), where a paired value is defined as data collected from the novel RF sensor paired with a single venous blood glucose value. This study has since been completed and represents an important step in our clinical development by using venous blood as a comparator, which will be required for future FDA clearance, and testing within the target population of the ultimate commercial product.
Interim results of our most recent clinical research study titled, “Non-Invasive Blood Glucose Monitoring in People with Diabetes Using an RF Sensor and Venous Blood Comparator.” This study was conducted in house at our lab and the interim results were presented at 17th International Conference on Advanced Technologies & Treatments for Diabetes (ATTD) in Florence, Italy on March 6-9, 2024. The study assessed the accuracy of Know Labs’ proprietary radiofrequency dielectric sensor in non-invasively measuring blood glucose in participants with prediabetes and Type 2 diabetes using venous blood as a comparative reference – resulting in an overall Mean Absolute Relative Difference (MARD) of 11.1%.
Results of a proof-of-principle study titled, “Detecting Unique Analyte-Specific Radio Frequency Spectral Responses in Liquid Solutions, Implications for Non-Invasive Physiologic Monitoring.” This study was conducted in collaboration with Mayo Clinic, sponsored by us, and its results were presented at the 2023 American Physiological Society (APS) Summit. The study demonstrated the accuracy of the sensor in quantifying three different analytes in vitro. In the peer-reviewed publication, it was found Bio-RFID achieved 100% accuracy in quantifying these three different analytes in vitro. The study was peer-reviewed by Sensors Journal and American Physiology Society.
Results of our technical feasibility study titled, “Technical Feasibility of a Novel Sensor for Non-Invasive Blood Glucose Monitoring Compared to Dexcom G6®.” These results were presented at the American Association of Clinical Endocrinology (AACE) Annual Meeting in Seattle, WA on May 5, 2023. The study was performed by the Know Labs Clinical Development Team at Know Labs Research Laboratory in Seattle. The purpose of this technical feasibility study was to demonstrate hardware and software infrastructure stability, and to collect additional data to determine the accuracy of the sensor at quantifying BGC in vivo non-invasively using radio frequency by means of training a neural network (NN) model to predict readings of the Dexcom G6® as a proxy for BGC. The study was peer-reviewed by the American Association of Clinical Endocrinology.
Results of a study titled, “Algorithm Refinement in the Non-Invasive Detection of Blood Glucose Using Know Labs’ Bio-RFID Technology.” The study demonstrates that algorithm optimization using a light gradient-boosting machine (lightGBM) [machine learning model improved the accuracy of Know Labs’ Bio-RFID™ sensor technology at quantifying blood glucose using predicted readings of the Dexcom G6® as a proxy for BGC, demonstrating an overall Mean Absolute Relative Difference (MARD) of 12.9% – which is within the range of independently reported values for certain FDA-cleared blood glucose monitoring devices. The study was performed by the Know Labs Clinical Development Team at Know Labs Research Laboratory in Seattle, and reviewed by members of Know Labs’ Scientific Advisory Board.
Results from a study titled, “Novel data preprocessing techniques in an expanded dataset improve machine learning model accuracy for a non-invasive blood glucose monitor.” The study demonstrates that continued algorithm refinement and more high-quality data improved the accuracy of Know Labs’ proprietary Bio-RFID sensor technology, resulting in an overall Mean Absolute Relative Difference (MARD) of 11.3%. As with all Know Labs’ previous research, this study was designed to assess the ability of the Bio-RFID sensor to non-invasively and continuously quantify blood glucose, using the Dexcom G6® continuous glucose monitor (CGM) as a reference device and proxy for BGC. In this study where data collection was completed in May of 2023, Know Labs applied novel data preprocessing techniques and trained a light gradient-boosting machine (lightGBM) model to predict blood glucose values of Dexcom G6® CGM using 3,311 observations – or reference device values – from over 330 hours of data collected from 13 healthy participants. With this method, Know Labs was able to predict blood glucose in the test set – the dataset that provides a blind evaluation of model performance – with a MARD of 11.3%. The study was performed by the Know Labs Clinical Development Team at Know Labs Research Laboratory in Seattle and reviewed by members of Know Labs’ Scientific Advisory Board.
Results from a study titled “A Glycemic Status Classification Model Using a Radiofrequency Noninvasive Blood Glucose Monitor,” demonstrated that our technology correctly classified an individual’s glycemic status as hyperglycemic, normoglycemic, or hypoglycemic with 93.37% accuracy compared to venous blood glucose values, serving as an early proof-of-concept for a novel, non-invasive diabetes screening device. This study was published in Diabetes Technology & Therapeutics, a leading, peer-reviewed journal covering all aspects of diagnosing and managing diabetes with cutting-edge devices, drugs, drug delivery systems, and software.
Results from a study titled, “Non-Invasive Blood Glucose Measurement Using RF Spectroscopy and a lightGBM AI Model,” details historical developments and limitations with RF-based sensing technologies, and the distinctiveness of Know Labs’ sensor architecture and trade-secret prediction [machine learning algorithm. This study most recent one, was published in the IEEE Sensors Journal. IEEE Sensors is the leading scientific journal in the U.S. that focuses on the theory, design, fabrication and applications of sensing devices, with an emphasis on emerging sensor innovations.
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| Table of Contents |
As we successfully completed our foundational studies and developed a software infrastructure to manage and interpret large, novel datasets, we intend to continue to expand our testing and data gathering with larger and more diverse populations. We expect that these new studies will help determine the need for individual calibration and we intend to evaluate the technology’s performance throughout continuous wear, in more real-world environments, and within more expansive glycemic ranges, including the hypoglycemic range (<70 mg/dL). Our data science and algorithm development efforts in 2024 include refining our algorithm to create personalized models, seeking to ensure that it is calibrated with blood glucose reference data from each individual and to enable an accurate glucose value estimation for a known population. 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.
We continue to build the internal and external development team necessary to commercialize our technology. Our ability to obtain exacting results from the data collected through our sensor technology is enabled by our trade secret algorithms built through our intelligence and machine learning platform. We have been and continue to refine these algorithms so they can accurately determine blood glucose levels across a broad population. We believe our platform technology can also provide accurate measurements for blood alcohol and blood oxygen levels, both of which we have identified in preliminary tests. We expect our platform to provide the analytics for the long list of other potential analytes in the human body, many of which are set forth in our issued patent USPTO 11,033,208 B1. Similarly, the list of potential industrial applications is long and covered by several patents issued and pending. Many of these potential applications will be pursued through KTL.
While we continue to refine our device, our algorithms and our testing, it has become increasingly evident that the cost associated with obtaining FDA approval of our non-invasive blood glucose monitoring technology is prohibitive for a small company. Our robust technology, strong intellectual property foundation, and early peer reviewed results make us a promising candidate for a partnership with any number of large global companies in the pharmaceutical, medical device and big data arena as we continue our work toward FDA approval. The same holds true for licensing partners in the diverse fields of use the KTL initiative is responsive to. Additionally, we will also partner with academic institutions advancing the state of medical diagnostics.
While lack of access to capital has hindered our ability to continue with human testing, we have continued to explore the capacity of our sensor technology to perform detailed non-invasive analytics in areas of importance in both medical diagnostics and industrial applications. Recently we concluded detailed laboratory work where our sensor non-invasively determined minute differences in pH levels through PVC pipe with no direct contact with the analyte.
That work was recently published in the peer reviewed study entitled Contactless Detection of pH Change in a Liquid Analyte.
In that study, published in Sensors journal, we describe an experiment in which we employ our radiofrequency sensor to measure pH changes in a liquid solution. The experiment is novel in a few ways. First, the sensor does not have contact with the liquid but rather detects the change from the outside of a PVC pipe. Second, the change is detected using a Linear Discriminant Analysis model using values from an inverse Fourier transform of the frequency data as its features. We believe this to be the first use of Fourier analysis in contactless pH measurement using radio frequencies.
Accurate and reliable measurement of pH levels is vital across a broad range of applications, including industrial processes, agricultural and environmental monitoring, and biomedical diagnostics. Conventional methods, such as optical and electrode-based pH meters, are widely used due to their demonstrated accuracy and ease of use. However, these methods have limitations, primarily stemming from the need for direct contact with the analyte.
Product Strategy
We are focused on a two-tiered product strategy. Our core emphasis remains on the application of our non-invasive platform technology to medical diagnostics with a first focus on blood glucose monitoring. In order to drive real-time revenues from our platform technology we are also focused on the recently announced Know Labs Technology Licensing (KTL) initiative and applications that have a more rapid path to the marketplace.
Medical Diagnostics
Early in 2024, we announced the next iteration of our Generation 1 prototype device, the KnowU®, a significantly smaller, wearable non-invasive continuous glucose monitor. We are currently undergoing further internal development work of this product. The wearable nature of the KnowU is expected to enable continuous data collection and yield a large volume of data that machine learning algorithms require to improve accuracy across all intended use-cases. We have also announced that we are in discussions with several strategic partners focused on sensor technology, product design, data science, machine learning, manufacturing and regulatory affairs and clinical collaboration, who we will work with to bring this product to the market.
As we showcased our Generation 1 prototype device and our KnowU prototype wearable non-invasive continuous glucose monitor to audiences around the world, we have received strong interest in the use of our technology as a screening device, especially in populations with high incidence of diabetes, where early detection can lead to improved outcomes. Our non-invasive device may be used by multiple individuals in diverse settings (i.e. hospitals, schools, clinics, etc.) which is not possible with the legacy incumbent CGM manufacturers Dexcom and Abbott Labs. Internally, we identify this as a Rest of the World product. We expect to make further announcements regarding our products and technology as development, testing, manufacturing, clinical trials and regulatory approval work progresses.
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Know Labs Technology Licensing (KTL)
On January 21, 2025, we announced Know Labs Technology Licensing (KTL). KTL is dedicated to licensing Know Labs’ robust intellectual property (IP) portfolio to corporate partners, academic institutions and research organizations, fostering innovation and accelerating the adoption of RFDS platform technology across a broad range of industries and the academic and scientific ecosystem. KTL is built upon key Know Labs strengths which include:
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Published Technology: Multiple peer-reviewed publications demonstrating use cases including groundbreaking results in non-invasive glucose monitoring. |
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Extensive Intellectual Property Portfolio: Over 330 patents globally, positioning Know Labs as a leader in RF spectroscopy and related innovations. |
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Broad Applicability: Applications span medical diagnostics, industrial processes, and automotive health monitoring, showcasing unparalleled versatility. |
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Complete Commercialization Toolkit: Offering IP licensing, white-label mobile apps, software development kits (SDKs), wet lab support, and prototyping capabilities. |
The KTL process involves phased on-boarding of licensing partners. Those are:
Phase 1 Licensee On-boarding and Initial Assessment
Phase 2 Data Collection and Customization
Phase 3 Advanced Data Integration and AI Modeling
Phase 4 Optional Wet Lab Support
Phase 5 Intellectual Property (IP) and Reporting
The pricing model for each phase will depend upon the use case of the Know Labs platform technology and the scope and nature of the ultimate licensing agreement. Inquiries from third parties and our own internal analysis inform us that the applications outside of the medical diagnostic arena are significant and include material analysis, pharmaceutical and petrochemical industry applications, agricultural, food industry, polymer and plastics manufacturing applications and many more.
Sales and Marketing
While we continue with our internal development efforts and launch the KTL initiative we are continuing discussions with potential biopharma, medical device, and consumer electronics partners regarding joint development agreements. These agreements could be strategic collaborations that could help us accelerate development and commercial launch. Others could focus on development and clinical work to identify additional analytes or work to integrate our technology into and with that of a joint development partner. We have initiated an outbound sales and marketing effort targeted at a broad array of potential licensing partners in addition to responding to inbound inquiries gathered over time.
Competition
Competition for Know Labs technology comes generally from other providers of RF sensor technology and from other sensor technologies including photoelectric, ultrasonic, inductive, capacitive, magnetic and many other technologies. Know Labs believes that it has a leadership position in RF sensor technology based upon its experience and robust patent portfolio and large body of trade secrets. Competition from other sensor technologies varies upon the field of use. There are many variables in the competitive sensor landscape.
The sensor industry is a dynamic and competitive market, driven by advancements in IoT, AI, automation, and increasing demand across various sectors like automotive, healthcare, consumer electronics, and industrial applications. Here’s an overview of the competitive landscape:
The sensor technology industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities by industry participants. To compete successfully, we will need to demonstrate the advantages of our products and technologies over well-established alternative solutions, products, and technologies, including legacy technology providers. There are also new entrants working to achieve a non-invasive solution or more acceptable blood glucose monitoring solutions which may or may not be similar to our technology. Ultimately, we must convince not only our partners, our licensors and in medical applications, the FDA, but we must convince the marketplace generally of the advantages of our products and technologies.
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As it relates to all competitors, we continue to focus on building the world’s most robust patent portfolio in this space. PatSnap Research and ipCapital Group, two leading patent analytic firms, have ranked Know Labs #1 for global patent leadership in non-invasive blood glucose monitoring patents. We have retained both organizations to perform patent related work. We continue to build out our patent portfolio and grow our trade secret intelligence and machine learning driven algorithms. Patents issued, pending, and in-process increased to over 300 reflecting our high rate of innovation.
In particular, it is important, as we work on collaborative joint venture agreements with what we call the “next generation” of glucose monitor, to do so in the context of the progress that has been made over the last forty years. In the 1940s, glucose levels were historically determined by testing urine. In the early 1980s, the fingerstick was introduced with its enzymatic determination of glucose levels from blood drawn from the finger. In the early 2000s, Dexcom and Abbott Labs came to the market with the first continuous glucose monitors utilizing their own enzymatic determination of blood glucose from interstitial fluid.
We believe that our non-invasive glucose monitor represents the next generation whether used in a continuous or as spot check screening manner.
The size of the global population suffering from diabetes is estimated by the International Diabetes Federation to be 579 million. It is expected to reach 643 million by 2030 and 784 million by 2040. Currently, the leading CGM providers, Dexcom, Abbott and Medtronic have 100% of the market share of CGMs. The latest available information from their regulatory filings indicate that they have penetrated less than 1% of the global addressable market. While competitive analysis is always an important part of our business strategy and thinking, the scope of the market provides room for a number of providers of accurate, less expensive and more sustainable technology.
Mergers and acquisitions in the medical devices, biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors. Other small or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large established companies. There are also several academic and other institutions involved in various phases of technology development regarding blood glucose monitoring devices. The same can be said for the use of the myriads of sensor technologies focused on other fields of use. Regardless, we believe we have several competitive advantages.
Competitive Advantages
We believe our key competitive strengths include:
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Through first principles, our sensor technology’s is expected to not only identify a wide range of organic and inorganic materials and analytes, but to do so non-invasively, accurately, and in real time, which potentially enables new multivariate models of clinical diagnostics, and health and wellness monitoring. |
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Our sensor technology is designed to be non-invasive, using radio waves to identify and measure what is going on inside the body. |
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Our sensor technology platform is designed to be integrated into a variety of wearable, mobile, or counter-top form factors, and we believe eventual interoperability with existing products from current market leaders. |
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No needles nor invasive transmitters in the user’s body, making our sensor convenient and pain-free. |
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No expensive supplies, such as replaceable sensors, test strips and lancets or other disposables, are required to operate our device. |
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A core focus on accessibility and affordability for the populations we will serve around the globe. |
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The current prototype sensor collects approximately 1.5 million data points per hour, which allows us to potentially build a deep understanding of health and wellness that other sensors may be unable to match. |
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Know Labs is the world intellectual property leader in non-invasive blood glucose monitoring and has a significant position in other applications and fields of use of its technology according to ipCapital Group and PatSnap Research. |
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Growth Strategy
A platform sensor technology strategy involves developing sensor solutions that can be integrated across multiple applications and industries. The best growth strategy depends on market positioning, differentiation, and scalability. The company intends to expand into high growth opportunities with an aggressive out-bound sales and marketing effort assisted by the many relationships that have been historically developed with its myriad shareholders and stakeholders. These high growth areas include first and foremost, healthcare and medical diagnostics. Other target markets are automotive, industrial, agriculture and food safety. There are a number of applications relating to authentication flowing from the “watermark” capacity of the company’s proprietary RF dialectic spectroscopy scans.
Research and Development
Our current research and development efforts are primarily focused on improving our radio frequency dielectric spectroscopy technology for the monitoring of blood glucose. As part of this effort, we continuously perform clinical testing of our devices, and we conduct on-going laboratory testing to ensure that application methods are compatible with the end-user and regulatory requirements, and that they can be implemented in a cost-effective manner. Over time, we plan to focus on extending the capacity of our sensor technology to identify new analytes and applications. Our current internal team along with outside consultants have considerable experience working with the application of our technologies. We engage third party experts as required to supplement our internal team. We incurred expenses of approximately $418,000 and $2,175,000 for the three months ended March 31, 2025 and 2024, respectively, on development activities. We incurred expenses of approximately $1,220,000 and $3,661,000 for the six months ended March 31, 2025 and 2024, respectively, on development activities.
The cornerstone of our foundational platform technology is our intellectual property portfolio. We have pursued an active intellectual property strategy which includes focus on patents where appropriate and a diligent protection of trade secrets. To date, we have been granted 43 patents. We currently have a number of patents pending and continue, on a regular basis, with the filing of new patents. Including pending and in process patents, our IP portfolio reaches 158 patents issued and pending, which positions us as the top worldwide IP holder in non-invasive blood glucose monitoring, according to ipCapital Group, a leading IP and innovation consulting firm. We possess all rights, title and interest to all issued, pending and in process patents.
Our issued patents will expire at various times between 2027 and 2047. Pending patents, if and when issued, may have expiration dates that extend further in time. The duration of our trademark registrations varies from country to country. However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.
The issued patents cover the fundamental aspects of our radio frequency spectroscopy technology and a number of unique applications. We have filed patents, which are pending, on the additional fundamental aspects of our technology and growing number of unique applications. We intend to continue, over time, to expand our patent portfolio.
Additionally, significant aspects of our technology are maintained as trade secrets which may not be disclosed through the patent filing process. We are diligent in maintaining and securing our trade secrets, in particular as they involve our intelligence and machine learning driven algorithms.
We also have an exclusive, perpetual and royalty free right to any patent(s) or other intellectual property which Phillip Bosua, our former CEO, someone working under direction of Mr. Bosua, or any successor or assignee develops, relating to Know Labs’ technology prior to January 23, 2028.
Related Patent Assets
Inherent in a platform technology is the ability to develop or license technology in diverse fields of use apart from our core focus. We focus on human health and wellness with a first focus on the non-invasive monitoring of blood glucose. We plan to pursue the identification of a multitude of analytes in the human body that are important to diagnostics over time. We also work to identify opportunities for our intellectual property to be deployed in areas outside of human health and wellness.
We may, although we cannot guarantee that we will, create other such subsidiaries over time. Additionally, we may license our intellectual property to third parties so that they may pursue activities that are not a part of our core focus.
Employees
As of March 31, 2025, we had six full-time and part-time employees. Our senior management and other personnel are co-located in our Seattle, Washington offices and remote. We expanded our utilization of consulting firms and individual contractors to supplement our reduced workforce in an effort to reduce fixed expenses and extend operating resources.
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| Table of Contents |
RESULTS OF OPERATIONS
Overview
Know Labs is an emerging leader in non-invasive medical diagnostics. We are focused on the development and commercialization of our proprietary sensor technology utilizing radio and microwave spectroscopy. When paired with our machine learning platform, our technology is capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy to detect, record, identify, and measure the unique “signature” of said materials or analytes.
Recent Developments
On December 12, 2024 we entered into subscription agreements with certain investors (for a registered direct offering of 31,250 units consisting of one share of our common stock, and one warrant to purchase one share of Common Stock at an exercise price equal to $9.60 per share of Common Stock at an offering price of $9.60 per Unit, for an aggregate purchase price of $300,000. The aggregate gross proceeds to the company from the Offering was approximately $300,000, before deducting fees payable to the placement agent and advisors and other estimated offering expenses payable by the Company, and excluding the proceeds from any exercise of the Warrants.
On December 31, 2024, we entered into a Capital on Demand Sales Agreement with JonesTrading Institutional Services LLC, as sales agent, pursuant to which we may, from time to time, offer and sell shares of its common stock, through or to JonesTrading as its sales agent or manager.
The offer and sale of the Shares will be made pursuant to our effective shelf registration statement on Form S-3 (File No. 333-276246) (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (“SEC”) on December 22, 2023 and declared effective by the SEC on January 11, 2024, as supplemented by a prospectus supplement dated December 31, 2024 and filed with the SEC pursuant to Rule 424(b) (the “Prospectus Supplement”) under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the Prospectus Supplement, we may offer and sell up to a maximum of $5,000,000 of Shares under the Sales Agreement. We issued 379,451 shares and received proceeds of $510,705 during the six months ended March 31, 2025.
We issued a press releases on January 21, 2025 and on February 6, 2025 relating to the announcement of and the creation of the Know Labs Technology Licensing (KTL) program. KTL is a formalized approach for licensing the many diverse applications in numerous fields of use for our platform RF dialectic spectroscopy technology became operational on February 2, 2026.
On September 27, 2024, we received a notification from the NYSE American stating that our company is not in compliance with the minimum stockholders’ equity requirements of Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”). On October 27, 2024, we submitted a plan (the “Plan”) of actions it has taken or will take to regain compliance with the continued listing standards by March 27, 2026. On December 10, 2024, we received notice from the NYSE American that it had accepted our plan to regain compliance with the NYSE American continued listing standards and granted a plan period through March 27, 2026.
On January 29, 2025, NYSE American publicly announced and provided a notice to the Company that the NYSE Regulation has suspended trading of, and determined to commence proceedings to delist, the Company’s common stock from NYSE American. NYSE Regulation has determined that the Company is no longer suitable for listing pursuant to Section 1003(f)(v) of the Company Guide due to the low selling price of the Common Stock.
On February 18, 2025, FINRA announced at reverse stock split a ratio of 1-for-40 (the “Reverse Stock Split”), which became effective February 19, 2025. The Reverse Stock Split was effected for the primary purpose of meeting the per share price requirements for our Common Stock in order to maintain the listing of our Common Stock on the NYSE American.
On February 28, 2025, the staff of NYSE Regulation withdrew its delisting determination and lifted the trading suspension of our common stock on the NYSE American. The NYSE Regulation staff determined that the Company's common stock was now trading above the threshold of low selling price as described in Section 1003(f)(v) of the Company Guide. The Know Labs common stock resumed trading on the NYSE American on March 5, 2025, under the symbol "KNW” and CUSIP “499238202.”
Notwithstanding the lifting of the trading suspension, we continue to remain subject to its previously disclosed plan to regain compliance with the NYSE American’s continued listing standards, which was accepted by the NYSE American on December 10, 2024. As noted in its press release on December 11, 2024, Know Labs has been granted a target completion date of March 27, 2026, to implement its plan and regain compliance with the NYSE American’s continued listing standards set forth in Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iii) of the Company Guide.
If we are not in compliance with the continued listing standards by March 27, 2026, or if it does not make progress consistent with the plan during the plan period, the NYSE American may again initiate delisting proceedings as appropriate. We intend to regain compliance with the NYSE American’s continued listings standards by such date; however, there is no assurance that Know Labs will be able to accomplish this.
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Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors:
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the ability of our research and development team to produce an FDA clearance quality technology; |
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our ability to recruit and maintain quality personnel with the talent to bring our technology to the market; |
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the production of market ready products that can sustain FDA clearance quality results; |
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the clearance by FDA after their rigorous clinical trial process of our products for the marketplace; |
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the receptivity of the marketplace and the addressable diabetes community to our new non-invasive glucose monitoring technology; and |
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access to sufficient capital to support us until our products achieve FDA clearance and are accepted in the marketplace. |
Segment Reporting
The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Chief Executive Officer and Chief Financial Officer are the Company’s CODM. The CODM monitors the expense components of the various products and services we offer, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year. Accordingly, all operations are considered by management to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations to the consolidated financial statements. The CODM uses consolidated net income (loss) as its required measure of segment profit/loss, as such measure is determined in accordance with the measurement principles most consistent with the consolidated financial statements.
Results of Operations
The following table sets forth key components of our results of operations during the three months ended March 31, 2025 and 2024.
(dollars in thousands)
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Three Months Ended March 31, |
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2025 |
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2024 |
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$ Variance |
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% Variance |
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||||
Operating expenses- |
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|
||||
Research and development and operating expenses- |
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||||
Research and development expenses |
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$ | 418 |
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$ | 2,175 |
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$ | 1,757 |
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80.8 | % |
Selling, general and administrative expenses |
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1,790 |
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|
|
2,551 |
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761 |
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|
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29.8 | % |
Total operating expenses |
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2,208 |
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|
|
4,726 |
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2,518 |
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53.3 | % |
Operating loss |
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(2,208 | ) |
|
|
(4,726 | ) |
|
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2,518 |
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53.3 | % |
Other (Expense) Income, Net: |
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|
|
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|
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|
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Interest income |
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3 |
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45 |
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(42 | ) |
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-93.3 | % |
Interest expense |
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(1,374 | ) |
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(717 | ) |
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(657 | ) |
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-91.6 | % |
Total other (expense), net |
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(1,371 | ) |
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(672 | ) |
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(699 | ) |
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-104.0 | % |
Loss before income taxes |
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(3,579 | ) |
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(5,398 | ) |
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1,819 |
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33.7 | % |
Income tax expense |
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- |
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|
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- |
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- |
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0.0 | % |
Net loss |
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$ | (3,579 | ) |
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$ | (5,398 | ) |
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$ | 1,819 |
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33.7 | % |
Research and Development Expenses. Research and development expenses for the three months ended March 31, 2025 decreased $1,757,000 to $418,000 as compared to $2,175,000 for the three months ended March 31, 2024. The decrease was due to reduced personnel, use of consultant, expenditures related to the development of our radio frequency spectroscopy Bio-RFID™ technology. We reduced our headcount by four and reduced the use of external consultants to reduce the future cost of the development of our Bio-RFID™ technology. During the three months ended March 31, 2024, we developed generation 3.
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| Table of Contents |
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended March 31, 2025 decreased $761,000 to $1,790,000 as compared to $2,551,000 for the three months ended March 31, 2024. The decrease was due to reduced stock based compensation, salaries and other expenses. As part of the selling, general and administrative expenses for the three months ended March 31, 2025 and 2024, we recorded $115,000 and $109,000, respectively, of investor relationship and business development expenses.
Other Income (Expense), Net. Other expense, net for the three months ended March 31, 2025 was $1,371,000 as compared to other expense net of $672,000 for the three months ended March 31, 2024. The other expense, net for the three months ended March 31, 2025 included interest income of $3,000, offset by interest expense of $1,374,000. The increase in interest expense is related to the default fees on Lind convertible note.
The other expense, net for the three months ended March 31, 2024 included interest income of $45,000. Increase in interest expense is related to $595,000 interest expense related to extension of notes and warrants in February 2024.
Net Loss. Net loss for the three months ended March 31, 2025 was $3,579,000 as compared to $5,398,000 for the three months ended March 31, 2024. The net loss for the three months ended March 31, 2025 included non-cash expenses of $1,976,000. The non-cash items include (i) depreciation and amortization of $7,000; (ii) stock based compensation-stock options of $593,000; (iii) amortization of operating lease right-of-use asset of $27,000; (iv) interest expense for default of convertible notes $749,000; and (v) amortization of debt issuance costs of $600,000.
The net loss for the three months ended March 31, 2024 included non-cash expenses of $976,000. The non-cash items include (i) depreciation and amortization of $20,000; (ii) stock based compensation- stock options of $617,000; (iii) issuance of common stock for services of $251,000; and (iv) amortization of operating lease right-of-use asset of $88,000.
The following table sets forth key components of our results of operations during the six months ended March 31, 2025 and 2024.
(dollars in thousands)
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Six Months Ended March 31, |
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2025 |
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2024 |
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$ Variance |
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% Variance |
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Operating expenses- |
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|
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Research and development and operating expenses- |
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Research and development expenses |
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$ | 1,220 |
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$ | 3,661 |
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$ | 2,441 |
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66.7 | % |
Selling, general and administrative expenses |
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3,755 |
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|
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4,539 |
|
|
|
784 |
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|
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17.3 | % |
Total operating expenses |
|
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4,975 |
|
|
|
8,200 |
|
|
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3,225 |
|
|
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39.3 | % |
Operating loss |
|
|
(4,975 | ) |
|
|
(8,200 | ) |
|
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3,225 |
|
|
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39.3 | % |
Other (Expense) Income, Net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
16 |
|
|
|
96 |
|
|
|
(80 | ) |
|
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-83.3 | % |
Interest expense |
|
|
(2,557 | ) |
|
|
(740 | ) |
|
|
(1,817 | ) |
|
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-245.5 | % |
Loss on debt extinguishment |
|
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(729 | ) |
|
|
- |
|
|
|
(729 | ) |
|
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-100.0 | % |
Total other (expense), net |
|
|
(3,270 | ) |
|
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(644 | ) |
|
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(2,626 | ) |
|
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-407.8 | % |
Loss before income taxes |
|
|
(8,245 | ) |
|
|
(8,844 | ) |
|
|
599 |
|
|
|
6.8 | % |
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.0 | % |
Net loss |
|
$ | (8,245 | ) |
|
$ | (8,844 | ) |
|
$ | 599 |
|
|
|
6.8 | % |
Research and Development Expenses. Research and development expenses for the six months ended March 31, 2025 decreased $2,441,000 to $1,220,000 as compared to $3,661,000 for the six months ended March 31, 2024. We reduced our headcount by nine and reduced the use of external consultants to reduce the future cost of the development of our Bio-RFID™ technology. During the three months ended March 31, 2024, we developed generation 3.
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the six months ended March 31, 2025 decreased $784,000 to $3,755,000 as compared to $4,539,000 for the six months ended March 31, 2024. The decrease was due to reduced insurance, stock based compensation, salaries and other expenses. As part of the selling, general and administrative expenses for the six months ended March 31, 2025 and 2024, we recorded $347,000 and $189,000, respectively, of investor relationship and business development expenses.
Other Income (Expense), Net. Other expense, net for the six months ended March 31, 2025 was $3,270,000 as compared to other expense net of $644,000 for the six months ended March 31, 2024. The other expense, net for the six months ended March 31, 2025 included interest income of $16,000, offset by interest expense of $2,557,000 and the loss on debt extinguishment of $729,000. The increase in interest expense is related to the extension and repricing of notes and warrants, default fees on Lind convertible note and amortization of issuance costs related to the Lind convertible note.
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The other expense, net for the six months ended March 31, 2024 included interest income of $96,000, offset by interest expense of $740,000. The increase in interest expense is related to the extension of notes and warrants in February 2024.
Net Loss. Net loss for the six months ended March 31, 2025 was $8,245,000 as compared to $8,844,000 for the six months ended March 31, 2024. The net loss for the six months ended March 31, 2025 included non-cash expenses of $4,427,000. The non-cash items include (i) depreciation and amortization of $17,000; (ii) stock based compensation-stock options of $1,144,000; (iii) amortization of operating lease right-of-use asset of $56,000; (iv) loss on debt extinguishment of $728,000; (v) interest expense for default of convertible notes of $749,000; (vi) interest expense for repricing of warrants $234,000; (vii) interest expense for extension of warrants of $513,000; and (viii) amortization of debt issuance costs of $986,000.
The net loss for the six months ended March 31, 2024 included non-cash expenses of $2,462,000. The non-cash items include (i) depreciation and amortization of $38,000; (ii) stock based compensation- stock options of $1,316,000; (iii) issuance of common stock for services of $277,000; (iv) amortization of operating lease right-of-use asset of $136,000, (v) amortization of debt issuance costs of $100,000 and (vi) interest expense for extension of notes and warrants of $595,000.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
As of March 31, 2025, we have cash and cash equivalents of $444,000 and a net working capital deficit of approximately $6,190,000. We anticipate that we will record losses from operations for the foreseeable future. We believe that we have enough available cash to operate until June 30, 2025. As of March 31, 2025, our accumulated deficit was $147,037,000 and net losses in the amount of $8,245,000, $16,582,000 and $15,289,000 during the six months ended March 31, 2025 and the years ended September 30, 2024 and 2023, respectively.
We intend to seek additional cash via equity and debt offerings. As a result of not having at least twelve months of cash available and not having any firm commitment for debt or equity financing, substantial doubt about our ability to continue on a going concern exists.
We have financed our corporate operations and our technology development through the issuance of convertible debentures, the sale of common or preferred stock and the exercise of warrants. During 2025, we expect to raise additional funds through the issuance of preferred stock, convertible debentures or equity. There can be no assurance that we will be able to secure any needed funding, or that if such funding is available, the terms or conditions would be acceptable to us.
On December 12, 2024, the we entered into subscription agreements with certain investors (for a registered direct offering of 31,250 units consisting of one share of our common stock, and one warrant to purchase one share of Common Stock at an exercise price equal to $9.60 per share of Common Stock at an offering price of $9.60 per Unit, for an aggregate purchase price of $300,000. The aggregate gross proceeds to us from the Offering was approximately $300,000, before deducting fees payable to the placement agent and advisors and other estimated offering expenses payable by us, and excluding the proceeds from any exercise of the Warrants.
On December 31, 2024, we entered into a Capital on Demand Sales Agreement with JonesTrading Institutional Services LLC, as sales agent, pursuant to which we may, from time to time, offer and sell shares of its common stock, through or to JonesTrading as its sales agent or manager. We issued 379,451 shares and received proceeds of $510,705 during the six months ended March 31, 2025.
The proceeds of warrants currently outstanding, to the extent not exercised on a cashless basis, may generate potential proceeds. We cannot provide assurance that any of these warrants will be exercised.
Operating Activities
Net cash used in operating activities for the six months ended March 31, 2025 and 2024 was $3,198,000 and $7,048,000, respectively. The net cash used in operating activities for the six months ended March 31, 2025 was primarily related to (i) a net loss of $8,245,000; offset by (ii) working capital changes of $620,000; and (iii) non-cash expenses of $4,427,000. The non-cash items include (iv) depreciation and amortization of $17,000; (v) stock based compensation-stock options of $1,144,000; (vi) amortization of operating lease right-of-use asset of $56,000; (vii) loss on debt extinguishment of $728,000; (viii) interest expense for default of convertible notes of $749,000; (ix) interest expense for repricing of warrants $234,000; (x) interest expense for extension of warrants of $513,000; and (xi) amortization of debt issuance costs of $986,000.
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The net cash used in operating activities for the six months ended March 31, 2024 was primarily related to (i) a net loss of $8,844,000; (ii) working capital changes of $666,000; and offset by (iii) non-cash expenses of $2,462,000. The non-cash items include (iv) depreciation and amortization of $38,000; (v) stock based compensation- stock options of $1,316,000; (vi) issuance of common stock for services of $277,000; (vii) amortization of operating lease right-of-use asset of $136,000; (viii) amortization of debt issuance costs of $100,000; and (ix) interest expense for extension of notes and warrants of $595,000.
Investing Activities
Net cash used in investing activities for the six months ended March 31, 2025 and 2024 was $0 and $13,000, respectively. These amounts were primarily related to the investment in equipment for research and development.
Financing Activities
Net cash provided by financing activities for the for the six months ended March 31, 2025 and 2024 was $531,000 and $3,746,000, respectively. The net cash provided by financing activities for the six months ended March 31, 2025 was primarily related to (i) proceeds from the issuance of common stock, net of $300,000; (ii) proceeds from At The Market common stock offering of $511,000; (iii) proceeds from a debt offering of $200,000; and offset by (iv) repayment of note payable of $480,000. The equity and debt offerings and repayment of notes payable were previously discussed.
Net cash provided by financing activities for the for the six months ended March 31, 2024 was $3,746,000. The net cash provided by financing activities for the six months ended March 31, 2024 was primarily related to the proceeds from debt offering of $3,806,000 less expenses of $262,000 and issuance of common stock for a common stock offering, net of expenses of $203,000. On February 27, 2024, we (a) entered into a securities purchase agreement with the selling stockholder pursuant to which we may issue to the selling stockholder one or more senior convertible notes in the aggregate principal amount of up $14,400,000 for an aggregate purchase price equal to up to $12,000,000 and common stock purchase warrants and (b) issued the Note and the Warrant to the selling stockholder in exchange for a purchase price of $4,000,000. On October 26, 2023, we closed an offering of our common stock pursuant to which we sold 22,077 shares of common stock, at a purchase price of $10.00 per share. After deducting underwriting commissions and other offering expenses, we received net proceeds of $203,000.
Our contractual cash obligations as of March 31, 2025 are summarized in the table below:
Contractual Cash Obligations (1) |
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Total |
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1 Year |
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1-3 Years |
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|||
Operating leases |
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$ | 326,047 |
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$ | 129,863 |
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$ | 196,184 |
|
Convertible notes payable |
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5,729,966 |
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|
|
5,729,966 |
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|
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- |
|
|
|
$ | 6,056,013 |
|
|
$ | 5,859,829 |
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|
$ | 196,184 |
|
(1) |
Convertible notes payable reflects $4,966,065 ($5,729,966 before adjustments for debt extinguishment accounting and debt issuance costs) that can be converted into common stock upon demand. We expect to incur capital expenditures related to the development of the “Bio-RFID™” and “ChromaID” technologies. None of the expenditures are contractual obligations as of March 31, 2025. |
We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies Involving Significant Estimates
The following discussion relates to critical accounting policies for our company which involve significant estimates. The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
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Revenue Recognition. We determine revenue recognition from contracts with customers through the following steps:
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· |
identification of the contract, or contracts, with the customer; |
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· |
identification of the performance obligations in the contract; |
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· |
determination of the transaction price; |
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· |
allocation of the transaction price to the performance obligations in the contract; and |
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recognition of the revenue when, or as our company satisfies a performance obligation. |
Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Research and Development Expenses. Research and development expenses consist of the cost of officers, employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes.
Fair Value Measurements and Financial Instruments. ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of six levels:
Level 1 – Quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, and accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of March 31, 2025 and September 30, 2024 are based upon the short-term nature of the assets and liabilities.
We have a money market account which is considered a Level 1 asset. The balance as of March 31, 2025 and September 30, 2024 was $58,000 and $2,942,000, respectively. No other assets or liabilities are required to be recorded at fair value on a recurring nature.
Derivative Financial Instruments. Pursuant to ASC 815 “Derivatives and Hedging”, we evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. We then determine if embedded derivative must be bifurcated and separately accounted for. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. We determined that the conversion features for purposes of bifurcation within convertible notes payable issued during 2020 and 2021 were immaterial and as of March 31, 2025 all such convertible notes have been converted to common stock.
Stock Based Compensation. We have share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of common stock at the fair market value at the time of grant. Stock-based compensation cost to employees is measured by us at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, we recognize stock compensation costs utilizing the fair value methodology over the related period of benefit.
Convertible Securities. Based upon ASC 815-15, we have adopted a sequencing approach regarding the application of ASC 815-40 to convertible securities to determine if an instrument should be accounted for as equity or a liability. We will evaluate our contracts based upon the earliest issuance date.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We had no holdings of derivative financial or commodity instruments as of March 31, 2025.
We are exposed to financial market risks, including changes in interest rates. We do not use any financial instruments for speculative or trading purposes. Fluctuations in interest rates would not have a material effect on our financial position, results of operations or cash flows.
ITEM 4. CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures are effective at the reasonable assurance level.
b) Inherent Limitations on Internal controls
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their cost.
c) Changes in Internal Control over Financial Reporting
During the three months ended March 31, 2025, there were no changes in our internal controls over financial reporting, which were identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that materially affected, or is reasonably likely to have a material effect on our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We may from time to time become a party to various legal proceedings arising in the ordinary course of our business. We are currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to our business.
ITEM 1A. RISK FACTORS
RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. Our market risks are similar to those disclosed under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended September 30, 2024, and our other filings with the SEC, all of which are incorporated by reference herein.
Subsequent to filing our Form 10-K for the year ended September 30, 2024 and other filings with the Securities and Exchange Commission, there are additional and/or updated risks factors below that you should carefully consider as well as the risk factors described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K, as amended, for the year ended September 30, 2024 and the risk factors contained in our subsequent Quarterly Reports on Form 10-Q and any registration statements that we file with the Securities and Exchange Commission. We expect to update these Risk Factors from time to time in the periodic and current reports that we file with the Securities and Exchange Commission after the date of this Form 8-K.
Risks Related to Ownership of Our Common Stock
Exhaustion of our authorized shares of Common Stock.
As of the date of this report, we have exhausted all of our authorized shares of Common Stock and are unable to issue any additional shares of Common Stock. The exhaustion of authorized shares presents significant risks, including but not limited to, affecting our ability to raise capital, meet contractual obligations under outstanding preferred stock and convertible debt agreements, maintain stock liquidity, avoid dilution concerns, comply with regulatory requirements, and execute strategic initiatives.
Until we are able to hold a meeting of stockholders to amend our Articles of Incorporation, as amended (“Articles”), and increase our authorized common shares, we may be unable to raise additional capital through equity and debt offerings, thereby limiting our capacity to finance operations, new projects, acquisitions, expansion initiatives, or meet our current obligations under our outstanding preferred stock and convertible debt agreements.
Because we have no remaining authorized shares of Common Stock left to issue, we must amend our articles of incorporation.
We are, and will continue to be, unable to issue more shares of our Common Stock without amending our articles of incorporation to increase the number authorized shares. This procedure will necessitate holding a special meeting of our stockholders to seek approval to amend our Articles in order to increase our authorized shares of Common Stock which can be both time-consuming and costly as we will need to file a Schedule 14A proxy statement. Furthermore, there is uncertainty as to whether our stockholders will approve amending our Articles because it could lead to concerns among our existing stockholders regarding potential dilution of their holdings, as increasing the number of authorized shares might reduce their ownership percentage and voting power.
Exhaustion of our authorized shares of Common Stock may negatively impact the liquidity of our Common Stock.
Because we have issued all of our authorized shares of Common Stock, the liquidity of our issued and outstanding shares of Common Stock may be adversely affected. With no shares of Common Stock available for issuance, the market supply of our Common Stock remains static at this time, which can lead to increased volatility and challenges for investors seeking to buy or sell shares of our Common Stock at desired prices. Reduced liquidity may also deter institutional investors and negatively impact our stock price.
The exercise and conversion prices of securities subject to price adjustments, including certain warrants, outstanding convertible notes payable and our preferred stock may require further adjustment.
If in the future we sell our common stock at a price below $9.60 per share, the conversion price of (i) the outstanding shares of Series C and D Convertible Preferred Stock; (ii) promissory notes convertible into shares of our common stock; and (iii) warrants to purchase shares of common stock would adjust below $9.60 per share. The Company has the option to repay Lind in cash or common stock. Should we make our monthly payments in common stock, there may be a price adjustment.
We owe Clayton A. Struve, a significant stockholder, $1,071,000 under convertible promissory or OID notes under convertible promissory or OID notes. Mr. Struve also holds shares of Series C and D Convertible Preferred Stock and warrants to purchase shares of common stock. The potential repricing adjustments that these convertible securities are entitled to may not be permitted without increasing our authorize common stock.
We owe Ronald P. Erickson and J3E2A2Z, an entity affiliated controlled by Ronald P. Erickson $1,184,066 under convertible promissory notes. The potential repricing adjustments that these convertible securities are entitled to may not be permitted without increasing our authorized common stock.
We are currently in default of our convertible note with Lind Global Fund II, LP.
We are currently in default of that certain senior convertible note issued to Lind Global Fund II, LP as the result of having exhausted our authorized common stock and we may be subject to further default. Upon the occurrence of any event of default, the notes will become immediately due and payable and the Company must pay Lind an amount equal to 120% of the then outstanding principal amount of each note, in addition to any other remedies under the note or the other transaction documents. Events of default include, among others, the Company’s failure to make any note payment when due, a default in any indebtedness or adverse judgements in excess of $250,000, our failure to instruct its transfer agent to issue unlegended certificates, the Company’s shares of common stock no longer being public traded or listed on a national securities exchange, any stop order or trading suspension restricting the trading in our common stock, and our market capitalization is below $15 million for consecutive 10 days.
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There is substantial doubt relating to our ability to continue as a going concern.
We have recurring net losses, which have resulted in an accumulated deficit of $147,037,000 as of March 31, 2025. At March 31, 2025, we had cash and cash equivalents of $444,000. We have concluded that these factors raise substantial doubt about our ability to continue as a going concern for one year from the issuance of the March 31, 2025 financial statements. Now that we have exhausted our authorized shares of common stock, we will be unable to continue to seek to raise additional working capital through public equity, private equity or convertible debt financings. If we fail to raise additional working capital, or do so on commercially unfavorable terms, it would materially and adversely affect our business, prospects, financial condition and results of operations, and we may be unable to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms, if at all.
Summary of Risk Factors
An investment in our common stock involves a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the “Risk Factors” section immediately following this summary. These risks include, but are not limited to, the following:
Risks Related to Our Business and Industry
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We might not be able to continue as a going concern. We believe that our cash on hand will be sufficient to fund our operations at least through June 30, 2025. |
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We are still in the early stages of commercialization, refining our technology. Our success depends on our ability to conclude development and market devices that are recognized as accurate, safe, and cost-effective as other options currently available in the market and cleared by FDA. |
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We are subject to extensive regulation by FDA, which could restrict the sales and marketing of our products and could cause us to incur significant costs. |
Risks Related to Ownership of Our Common Stock and Public Warrants
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The market price of our common stock may fluctuate, and you could lose all or part of your investment. |
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We may not be able to maintain a listing of our common stock or achieve the listing of the Public Warrants on the NYSE American. |
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We have exhausted all authorized common stock. Until we hold a meeting of Stockholders we have no authorized stock to issue which may result in default under certain outstanding convertible securities. |
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We do not expect to declare or pay dividends in the foreseeable future. |
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Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our securities to decline and would result in the dilution of your holdings. |
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Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock. |
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We may be unable to achieve FDA clearance of our KnowU™ product and a change in control of our company may not occur prior to the expiration of the Public Warrants, in which case the Public Warrants will not become exercisable for shares of our common stock. |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2025, we had the following sales of unregistered sales of equity securities:
During the six months ended March 31, 2025, we issued 428,573 shares of our common stock at $1.74 per share related to a principal payment of convertible debt settled with a common stock issuance for a total value of $746,001.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The exhibits required to be filed herewith by Item 601 of Regulation S-K, as described in the following index of exhibits, are attached hereto unless otherwise indicated as being incorporated by reference, as follows:
(a) |
Exhibits |
Exhibit No. |
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Description |
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101.INS* |
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Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document). |
101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document |
101.CAL* |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
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Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE* |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* |
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The Cover Page Interactive Data File, formatted in Inline XBRL (included within the Exhibit 101 attachments) |
* |
Filed herewith |
** |
Furnished herewith |
† |
Executive compensation plan or arrangement |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KNOW LABS, INC.
(Registrant)
Date: May 14, 2025 |
By: |
/s/ Ronald P. Erickson |
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Ronald P. Erickson |
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Chief Executive Officer, and Director |
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(Principal Executive Officer) |
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Date: May 14, 2025 |
By: |
/s/ Peter J. Conley |
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Peter J. Conley |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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