Know Labs, Inc. — FY2023 Form 10-K
Entity and period: The supplied filing identifies Know Labs, Inc. (NYSE American: KNW), not USBC, Inc. It covers the fiscal year ended September 30, 2023; it is not a quarterly report. Amounts below are U.S. dollars.
Business context
Know Labs is developing radio- and microwave-spectroscopy sensors combined with machine learning, initially for non-invasive blood-glucose monitoring. Its Generation 1 prototype is used for data collection; a wearable Generation 2 prototype is under development. The company has no cleared product and had no product revenue in FY2023. It dissolved AI Mind, which generated NFT revenue in FY2022, and says it does not expect that revenue to recur.
Financial and operating performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $0 | $4.36 million |
| Research and development | $7.73 million | $5.39 million |
| General and administrative | $6.57 million | $8.12 million |
| Operating loss | $14.02 million | $12.57 million |
| Net loss | $15.29 million | $20.07 million |
| Net loss attributable to common shareholders | $20.44 million | $20.07 million |
| Basic and diluted loss per share | $0.41 | $0.50 |
| Cash used in operating activities | $10.35 million | $6.92 million |
Margins are not meaningful because FY2023 revenue was zero. R&D increased about 43%, reflecting greater development spending; G&A declined about 19%. Operating loss nevertheless widened as the prior-year NFT revenue did not recur. Net loss narrowed largely because FY2022 included substantial non-cash interest expense from debt discounts. FY2023 included $1.63 million of common-stock dividends and $3.53 million of deemed preferred-stock dividends, increasing the loss attributable to common shareholders.
At September 30, 2023, cash and cash equivalents were $8.02 million (versus $12.59 million a year earlier), total assets were $8.27 million, and stockholders’ equity was $3.74 million (versus $9.86 million). Current liabilities were $4.52 million, including $2.76 million of convertible notes payable. Management reported working capital of approximately $6.26 million excluding convertible notes; balance-sheet working capital including those notes was approximately $3.50 million. The company raised $5.47 million net in a September 2023 common-stock offering of 28 million shares at $0.25 per share. Notes owed to significant stockholders and CEO-affiliated entities were extended to September 30, 2024.
Material changes, outlook and risks
- Liquidity and going concern: Management estimated available cash would fund operations through June 30, 2024 and expected to seek additional equity or debt. No financing commitment was in place as of the filing; management and the auditor both reported substantial doubt about the company’s ability to continue as a going concern.
- Product validation and regulation: The company reported an 11.3% MARD result using Dexcom G6 readings as a proxy, based on 3,311 observations over 330 hours from 13 healthy participants. This is an internal study, not FDA clearance or evidence of performance in a broad population. FDA pathway and timeline remain uncertain; the filing says a De Novo request may be required.
- Cost and workforce actions: The company reduced headcount by nine during FY2023 and reported 11 full- and part-time employees at year-end, supplementing the team with consultants. It said the reductions lowered monthly cash burn and that it may further reduce costs if financing is unavailable.
- Dilution and listing risk: Common shares outstanding rose from 48.16 million to 80.36 million during the year. Options, warrants, convertible preferred stock and convertible notes represent additional potential dilution. NYSE American staff had informally advised that the company might not meet certain continued-listing equity standards.
- Other risks and contingencies: The filing highlights clinical-trial, FDA, commercialization, competition, supplier, cybersecurity and intellectual-property risks. The company reported no legal proceedings it believed would have a material adverse effect. It also disclosed related-party notes, interest and preferred-stock arrangements.
- Subsequent events: In October 2023, underwriters exercised an over-allotment option for an additional 883,061 shares at $0.25 per share. This occurred after year-end.
No revenue, profit or commercialization guidance is provided. Management’s outlook is conditional on raising capital, advancing development and obtaining regulatory authorization.
Key facts investors should verify
- Confirm the intended issuer: the filing is for Know Labs, Inc. (KNW), despite the request metadata naming USBC, Inc.
- Review the full audited statements and notes for debt balances, maturity terms, related-party obligations and the going-concern assumptions.
- Reconcile the filing’s varying figures for shares outstanding, warrants and preferred-stock dividend-related potential shares; assess the resulting dilution.
- Track cash burn and subsequent financing against management’s June 30, 2024 cash runway estimate and the absence of committed funding at filing.
- Assess independent clinical validation, study-population diversity, reference-device limitations and the FDA’s eventual classification and evidence requirements.
- Check NYSE American listing compliance and confirm whether subsequent events changed liquidity or share counts.