10-Q: Know Labs Reports Q1 2025 Results, Highlights Technology Licensing Initiative

Know Labs, Inc. reports a net loss for Q1 2025 while advancing its non-invasive diagnostic technology and launching a technology licensing program.

Summary

• Know Labs, Inc. reported a net loss of $4.666 million for the three months ended December 31, 2024, compared to a net loss of $3.447 million for the same period in 2023.
• Research and development expenses decreased to $802,000 from $1.487 million year-over-year.
• Selling, general, and administrative expenses decreased slightly to $1.965 million.
• The company's cash and cash equivalents totaled $1.032 million as of December 31, 2024, with a net working capital deficit of $4.167 million.
• Know Labs believes it has enough cash to operate until April 30, 2025.
• The company launched Know Labs Technology Licensing (KTL) to license its intellectual property.
• The company completed a registered direct offering of 1,250,000 units at $0.24 per unit, raising $300,000.
• Know Labs entered into a Capital on Demand Sales Agreement with JonesTrading to sell up to $5 million of common stock.
• The company is pursuing a two-tiered product strategy focusing on medical diagnostics and the KTL initiative.
• The company is working on a further extension for convertible notes.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the company is making progress with its technology and licensing initiatives, the financial results are weak, and there is doubt about its ability to continue as a going concern.

Positives

• The company launched Know Labs Technology Licensing (KTL) to generate revenue from its intellectual property.
• Research and development expenses decreased, indicating cost management efforts.
• The company completed a registered direct offering, raising additional capital.
• Know Labs entered into a sales agreement with JonesTrading for potential future capital.
• The company is pursuing strategic partnerships for its medical diagnostics technology.
• The company is working on a further extension for convertible notes.

Negatives

• The company reported a net loss of $4.666 million for Q1 2025.
• The company has a net working capital deficit of $4.167 million.
• The company believes it only has enough cash to operate until April 30, 2025.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company is working on a further extension for convertible notes.

Risks

• The company's ability to continue as a going concern is in doubt.
• The company is dependent on raising additional capital.
• The company is subject to extensive regulation by the FDA.
• The company faces competition from other sensor technologies and companies.
• The company's common stock may be delisted from the NYSE American.
• The company may be unable to achieve FDA clearance of its KnowU product.

Future Outlook

The company anticipates recording losses from operations for the foreseeable future and believes it has enough available cash and flexibility with its operating expenses to operate until April 30, 2025. Management intends to raise additional funds through the issuance of equity securities or debt.

Management Comments

• The company is focused on the development and commercialization of its proprietary sensor technology utilizing radio and microwave dielectric spectroscopy.
• The company believes that its patented technology is capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy.
• The company's initial focus is on a product to non-invasively monitor blood glucose levels.
• The company launched Know Labs Technology Licensing (KTL) in response to external demand for access to its platform technology.

Industry Context

The company operates in the competitive medical diagnostics and sensor technology industries, facing competition from established players like Dexcom and Abbott Labs, as well as other emerging technology companies. The company is trying to differentiate itself with non-invasive technology and a broad intellectual property portfolio.

Comparison to Industry Standards

• The document mentions Dexcom and Abbott Labs as leading CGM providers, indicating they are benchmarks in the blood glucose monitoring market.
• The company's technology aims to address the limitations of non-invasive optical technologies, suggesting a focus on improving upon existing industry standards.
• The company's goal is to achieve accuracy comparable to FDA-cleared blood glucose monitoring devices, indicating a benchmark for performance.

Related Party Transactions

• The Company owes Clayton A. Struve, a significant stockholder, $1,590,585 under convertible promissory or OID notes.
• The Company owes Ronald P. Erickson and J3E2A2Z, an entity affiliated and controlled by Ronald P. Erickson owed $1,876,073 under convertible promissory notes.
• The Company has recorded expenses with ipCapital Group of approximately $188,954 and $101,000, respectively in professional fees during the three months ended December 31, 2024 and 2023.

Stakeholder Impact

• Shareholders face the risk of dilution from future equity issuances and potential delisting of the company's stock.
• Employees face uncertainty due to the company's financial situation and potential need for cost reductions.
• Customers may benefit from the development of a non-invasive blood glucose monitoring device.
• Suppliers and creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• Continue internal and external testing of the KnowU device.
• Refine the KnowU device and seek FDA clearance.
• Pursue joint venture partners for FDA clinical trials and commercialization.
• Expand the Know Labs Technology Licensing (KTL) program.
• Seek additional funding through equity or debt offerings.

Key Dates