SEC Filing Summary: Know Labs, Inc. (KNW)
Business Context and Reporting Period
Company: Know Labs, Inc. (Note: Request metadata listed "USBC, Inc.", but filing text confirms registrant is Know Labs, Inc.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2025
Business Overview: Know Labs develops proprietary sensor technology using radio and microwave spectroscopy for non-invasive medical diagnostics (specifically blood glucose monitoring) and industrial applications. The company is currently in the development phase, focusing on refining its Generation 2 prototype and launching a technology licensing program (KTL). The company has no revenue from product sales.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2025 |
Nine Months Ended June 30, 2025 |
Nine Months Ended June 30, 2024 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(1,528,601) | $(9,773,145) | $(12,947,748) |
| Net Loss Attributable to Common Shareholders | $(3,686,762) | $(11,987,520) | $(13,210,031) |
| Operating Expenses | $1,254,345 | $6,229,102 | $12,036,121 |
| Cash and Cash Equivalents (End of Period) | $172,503 | $172,503 | $2,129,954 |
| Net Working Capital Deficit | $(4,959,519) | $(4,959,519) | N/A |
| Total Convertible Notes Payable | $3,597,679 | $3,597,679 | $4,723,506 |
| Accumulated Deficit | $(150,723,402) | $(150,723,402) | $(135,050,819) |
Material Changes vs. Prior Period
- Expense Reduction: Total operating expenses decreased by 67.3% ($2.58M) for the three months ended June 30, 2025, compared to the prior year period. This was driven by reduced headcount, lower consultant usage, and decreased stock-based compensation.
- Cash Burn: Cash and cash equivalents declined significantly from $3.11M at September 30, 2024, to $172,503 at June 30, 2025. Net cash used in operating activities was $4.49M for the nine months ended June 30, 2025, compared to $9.57M in the prior year period.
- Debt Restructuring: The company converted $1.18M of related-party debt into Series H Convertible Preferred Stock. Additionally, the company recorded a $728,298 loss on debt extinguishment and significant interest expenses related to the repricing of warrants and notes due to down-round triggers.
- Stock Structure: A 1-for-40 reverse stock split became effective on February 19, 2025. As of June 30, 2025, the company had exhausted its authorized common stock (7.5M shares), creating a risk of default on securities requiring share issuance.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern: Management has expressed substantial doubt about the company's ability to continue as a going concern due to recurring losses, an accumulated deficit of $151M, and minimal cash reserves ($172,503). The company relies on the closing of a private placement to fund operations.
- Private Placement: On June 5, 2025, the company entered a Securities Purchase Agreement with Goldeneye 1995 LLC for up to $15M in cash plus 1,000 Bitcoin. Closing is subject to conditions including stockholder approval and conversion of preferred stock. A bridge loan of up to $350,000 was also secured in July 2025.
- Listing Status: The company faced a trading suspension and delisting proceedings by NYSE American due to low stock price. A reverse split was executed to regain compliance, and trading resumed in March 2025. The company remains on a plan to regain full compliance by March 27, 2026.
- Unusual Items: Significant non-cash charges included $1.45M in deemed dividends on preferred stock due to repricing, $749K in interest expense for default penalties on convertible notes, and $513K in interest expense for warrant extensions.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $172,503 cash balance against the $3.8M in contractual obligations due within one year (primarily convertible notes and leases).
- Private Placement Closing: Confirm the status of the Goldeneye 1995 LLC transaction, as the company's liquidity is contingent upon its closing.
- Authorized Shares: Verify the outcome of the stockholder meeting regarding the increase in authorized common stock, which is required to avoid default on convertible securities.
- Debt Defaults: Review the status of the Lind Global Fund II LP note, which previously triggered a default penalty due to listing issues and share exhaustion.
- Preferred Stock Conversion: Assess the dilution impact of the Series C, D, and H preferred stock, which are convertible at $0.335 per share and carry cumulative dividends.