S-1/A: Know Labs Eyes $6.5 Million in Unit Offering to Fuel Non-Invasive Diagnostics Development

Know Labs, Inc. plans to raise approximately $6.5 million through a unit offering to further develop and commercialize its non-invasive medical diagnostic technology.

Summary

• Know Labs, Inc. is offering 13,000,000 units, each consisting of one share of common stock and one warrant to purchase one share of common stock, at an assumed offering price of $0.50 per unit, aiming to raise approximately $6.5 million.
• The warrants will have an exercise price of $0.50 per share and are exercisable only upon FDA clearance of the KnowU product or a change in control, and after an amendment to increase authorized shares to at least 400,000,000.
• The offering includes registering shares of common stock issuable upon exercise of the warrants.
• Boustead Securities, LLC is the sole book-running manager for the offering.
• The company intends to use the net proceeds for product development, clinical studies, intellectual property development, marketing, operating expenses, and general corporate purposes.
• The offering also includes a unit purchase option for the underwriters to purchase 7.0% of the units offered.
• The company's cash on hand is expected to fund operations through October 31, 2024.
• The company has a history of operating losses and an accumulated deficit of $130,847,000 as of March 31, 2024.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company is pursuing a promising technology and has growth strategies, it faces significant financial challenges and regulatory hurdles. The potential for future success is balanced by current financial instability and risks associated with FDA approval and market acceptance.

Positives

• The company's technology has broad applicability outside of medical diagnostics.
• The company is the world intellectual property leader in non-invasive blood glucose monitoring, according to ipCG Capital and PatSnap Research.
• The company's sensor technology platform can be integrated into a variety of wearable, mobile, or counter-top form factors.
• The company's current prototype sensor collects approximately 1.5 million data points per hour.

Negatives

• The company has a history of operating losses and an accumulated deficit of $130,847,000 as of March 31, 2024.
• The company believes that its cash on hand will be sufficient to fund its operations through October 31, 2024.
• The warrants are speculative in nature and there is not expected to be an active trading market for the warrants.
• The warrants will become exercisable only if the company achieves FDA clearance of its KnowU product or its company completes a control prior to expiration of the warrants and if its shareholders approve an amendment to its articles of incorporation increasing the number of its authorized shares of common stock to at least 400,000,000.

Risks

• The company might not be able to continue as a going concern.
• The company is still in the early stages of commercialization, refining its technology.
• The company is subject to extensive regulation by FDA, which could restrict the sales and marketing of its products and could cause it to incur significant costs.
• The market price of the company's common stock may fluctuate, and investors could lose all or part of their investment.
• The company may not be able to maintain a listing of its common stock on the NYSE American.
• The company may be unable to achieve FDA clearance of its KnowU product and a change in control of its company may not occur prior to the expiration of the warrants, in which case the warrants will not become exercisable for shares of its common stock.

Future Outlook

The company plans to expand its sensor technology to other non-invasive medical diagnostic applications and develop a technology that can provide predictive health, or an early warning system regarding the onset of disease.

Industry Context

The company operates in the highly competitive medical device industry, particularly in blood glucose monitoring, competing with established players like Dexcom and Abbott, as well as new entrants seeking non-invasive solutions.

Comparison to Industry Standards

• The company's technology is differentiated from industry leaders like Abbott Labs (Freestyle Libre) and Dexcom (G6) by its non-invasive approach.
• The company's technology aims to address the limiting qualities of non-invasive optical technologies, whose diagnostic capacities may be inhibited by skin tones and other factors.
• The company's internal clinical research study resulted in an overall Mean Absolute Relative Difference (MARD) of 11.1%, which is within the range of independently reported values for certain FDA-cleared blood glucose monitoring devices.

Related Party Transactions

• Convertible promissory notes with Clayton A. Struve and Ronald P. Erickson.
• Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, warrants and dividends with Clayton A. Struve.
• Stock option grants to Ronald P. Erickson and Peter J. Conley.
• Payments to ipCapital Group, Inc., where director John Cronin is Chairman and CEO.

Stakeholder Impact

• Shareholders face potential dilution from the offering and future issuances of equity or debt securities.
• Employees' job security is dependent on the company's ability to secure funding and achieve profitability.
• Customers may benefit from the development of a non-invasive blood glucose monitoring device.
• Suppliers and creditors face risks associated with the company's financial instability.

Next Steps

• Continue product development and refinement of algorithms.
• Expand testing and data gathering with larger and more diverse populations.
• Pursue FDA clearance for the non-invasive blood glucose monitor.
• Explore potential avenues for moving the first product and potential follow-on products into the marketplace.

Key Dates

Keywords

Know Labs, unit offering, non-invasive glucose monitoring, FDA clearance, warrants, medical diagnostics, KNW, Boustead Securities, common stock, capital raise