SEC Filing Summary: Know Labs, Inc. (KNW)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2025, for Know Labs, Inc. (KNW), a Nevada corporation developing proprietary radio and microwave spectroscopy sensor technology. The company's primary focus is the commercialization of a non-invasive continuous glucose monitor (KnowU™) and a new technology licensing initiative (KTL). The filing reflects a 1-for-40 reverse stock split effective February 19, 2025.
Key Financial Metrics
| Metric | Three Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2025 | As of Mar 31, 2025 |
|---|---|---|---|
| Revenue | $0 | $0 | N/A |
| Net Loss | $(3,579,036) | $(8,244,544) | N/A |
| Operating Expenses | $2,207,522 | $4,974,757 | N/A |
| Cash and Equivalents | N/A | N/A | $443,913 |
| Working Capital | N/A | N/A | $(6,189,548) Deficit |
| Total Convertible Debt | N/A | N/A | $4,966,065 |
| Accumulated Deficit | N/A | N/A | $(147,036,640) |
Material Changes vs. Prior Period
- Expense Reduction: Total operating expenses decreased by 53.3% ($2.5M) for the three months ended March 31, 2025, compared to the prior year period, driven by reduced headcount and consultant usage. R&D expenses dropped 80.8% to $418,207.
- Increased Interest Expense: Interest expense surged to $1,374,045 for the quarter (up 91.6% YoY) due to default penalties on the Lind Global Fund II convertible note and amortization of debt issuance costs.
- Debt Settlement: The company recorded a $728,298 loss on debt extinguishment during the six-month period related to note extensions and repricing.
- Stock Structure: A 1-for-40 reverse stock split was executed in February 2025 to address low share price delisting risks. As of March 31, 2025, the company has exhausted all authorized common shares.
Outlook, Risks, and Management Commentary
- Liquidity and Going Concern: Management states substantial doubt exists regarding the company's ability to continue as a going concern. Cash on hand ($443,913) is projected to sustain operations only until June 30, 2025.
- Capital Constraints: The company has exhausted its authorized common stock (7.5M shares), preventing further equity issuance without a shareholder vote to amend the Articles of Incorporation. This limitation hinders the ability to meet conversion obligations on outstanding debt.
- Delisting Status: Trading was suspended by NYSE American in January 2025 due to low share price but resumed on March 5, 2025, following the reverse split. The company remains on a plan to regain full compliance by March 27, 2026.
- Debt Default Risk: The company is in default on its senior convertible note with Lind Global Fund II, LP, due to the inability to issue shares for monthly payments. This triggers a 120% penalty on the outstanding principal.
- Strategic Shift: Launched the Know Labs Technology Licensing (KTL) program to generate revenue by licensing its IP portfolio to third parties while continuing development of the glucose monitor.
Investor Verification Checklist
- Capital Raise Feasibility: Verify the timeline and likelihood of shareholder approval to increase authorized common stock, which is critical for avoiding further debt defaults.
- Cash Runway: Confirm the accuracy of the June 30, 2025, liquidity runway given the current burn rate and lack of revenue.
- Debt Conversion Terms: Review the specific terms of the Lind Global Fund II note and the potential 120% penalty acceleration if the default is not resolved.
- Authorized Share Exhaustion: Assess the immediate impact of having zero authorized shares remaining on the ability to settle debt or pay employees via stock.
- Listing Compliance: Monitor progress on the NYSE American compliance plan to avoid future delisting proceedings.