SCHEDULE: Know Labs Insider Ownership Drops Below 5%

Ronald P. Erickson's beneficial ownership in Know Labs, Inc. has fallen to 0.7% following a private placement and Series H Preferred Stock redemption.

Summary

• Ronald P. Erickson, a reporting person for Know Labs, Inc., has filed an Amendment No. 1 to Schedule 13G, indicating his beneficial ownership has dropped below 5% of the company's common stock.
• This filing serves as an "exit filing" for Mr. Erickson, meaning he is no longer required to report his holdings on Schedule 13G.
• As of August 7, 2025, Mr. Erickson's aggregate beneficial ownership is 2,569,569 shares, representing 0.7% of the 384,234,130 outstanding common shares.
• The change in ownership is primarily due to the closing of a private placement with Goldeneye 1995 LLC on August 6, 2025.
• Additionally, J3E2A2Z Limited Partnership, an entity affiliated with Mr. Erickson, redeemed 16,916 shares of Series H Preferred Stock for a total value of approximately $1,324,276.15.
• The redemption payment included $654,276.15 in cash and 2,000,000 shares of Common Stock issued at a conversion price of $0.335 per share.
• Mr. Erickson also received a new award of 335,000 shares of Common Stock, with 50% vesting immediately and the remainder vesting quarterly over two years, contingent on continued employment.

Sentiment

Score: 6

Explanation: The filing is largely procedural, detailing a change in beneficial ownership due to a private placement and preferred stock redemption. The private placement and capital restructuring are generally positive for the company's financial position, but the decrease in a significant insider's reported ownership could be viewed neutrally or slightly negatively by some, though it's a consequence of the transactions rather than a direct negative action.

Positives

• Completion of a private placement, which typically provides capital to the company.
• Redemption of Series H Preferred Stock, simplifying the capital structure by converting preferred shares to common stock and cash.
• New common stock award to Ronald P. Erickson, aligning his incentives with long-term company performance through vesting conditions.

Negatives

• A significant insider's beneficial ownership dropping below 5% could be perceived negatively by some investors, though it is a procedural outcome of other transactions.

Risks

• The vesting of Mr. Erickson's restricted shares is contingent on his continued employment, posing a risk if his employment ceases.
• The full vesting of restricted shares upon sale of sensor-related intellectual property or involuntary termination could incentivize certain actions or create specific financial obligations for the company.

Future Outlook

The filing does not provide explicit forward-looking statements or guidance beyond the vesting schedule of Mr. Erickson's new share award.

Industry Context

This filing primarily concerns a change in beneficial ownership for a specific individual and related capital structure adjustments. It does not provide broader industry trends or competitive analysis. The private placement suggests capital raising activity, which is common across industries for growth or operational needs.

Comparison to Industry Standards

• This filing is a procedural disclosure of a change in beneficial ownership and related transactions. It does not contain information that allows for direct comparison to industry-specific operational or financial benchmarks of comparable companies or projects.

Related Party Transactions

• The redemption of 16,916 shares of Series H Preferred Stock held by J3E2A2Z LP, an entity affiliated with and controlled by Ronald P. Erickson, constitutes a related party transaction.
• The transaction involved a cash payment of $654,276.15 and the issuance of 2,000,000 common shares to J3E2A2Z LP.

Stakeholder Impact

• Shareholders: The private placement and preferred stock redemption could dilute existing common shareholders due to the issuance of new shares, but also strengthen the company's capital base. The decrease in a significant insider's reported ownership might be noted.
• Employees: Ronald P. Erickson's new share award with vesting conditions ties his incentives to the company's future performance and continued employment.

Next Steps

• Vesting of Ronald P. Erickson's restricted shares in 8 quarterly installments, with the first two installments vesting six months after the August 6, 2025 closing date.

Key Dates

Recommendation

The filing primarily details a procedural change in beneficial ownership following a private placement and preferred stock redemption. While the capital raise is generally positive for the company's financial health, the reduction of a significant insider's reported stake below 5% is a neutral event in itself, being a consequence of the transactions. Without further operational or financial updates, the information suggests a 'hold' as it doesn't present strong catalysts for immediate significant upside or downside, but rather a restructuring of capital and ownership.

Keywords

Know Labs, KNOW, SEC Filing, Schedule 13G, Beneficial Ownership, Ronald P. Erickson, Private Placement, Series H Preferred Stock, Common Stock, Insider Ownership, Exit Filing