10-Q: Know Labs Reports Q2 2025 Results, Faces Going Concern Uncertainty Amidst Delisting Proceedings

Know Labs reports a net loss of $3.58 million for Q2 2025 and expresses substantial doubt about its ability to continue as a going concern.

Summary

• Know Labs, Inc. reported its financial results for the quarter ended March 31, 2025.
• The company is focused on developing and commercializing its proprietary sensor technology for non-invasive diagnostics, particularly blood glucose monitoring.
• Know Labs launched its Know Labs Technology Licensing (KTL) program to license its intellectual property in various fields.
• The company's cash and cash equivalents as of March 31, 2025, were $443,913, with a net working capital deficit of $6,189,548.
• The net loss for the three months ended March 31, 2025, was $3,579,036, compared to a net loss of $5,397,664 for the same period in 2024.
• Research and development expenses decreased to $418,207 from $2,175,245 year-over-year.
• Selling, general, and administrative expenses decreased to $1,789,315 from $2,550,848 year-over-year.
• The company is working on extending due dates on convertible promissory notes.
• Know Labs is in default of its convertible note with Lind Global Fund II, LP.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company is seeking additional funding through equity and debt offerings.
• NYSE American suspended trading of Know Labs' common stock due to low selling price, but the suspension was later lifted after a reverse stock split.
• The company is working to regain compliance with NYSE American continued listing standards by March 27, 2026.

Sentiment

Score: 3

Explanation: The document presents a concerning financial situation with significant losses, liquidity issues, and a going concern warning. While there are some positive developments like cost-cutting and new initiatives, the overall outlook is negative.

Positives

• Research and development expenses decreased significantly, indicating cost-cutting measures.
• Selling, general, and administrative expenses decreased, reflecting improved operational efficiency.
• The launch of Know Labs Technology Licensing (KTL) provides a potential new revenue stream.
• NYSE American lifted the trading suspension of Know Labs' common stock after the reverse stock split.
• The company is actively seeking additional funding to address its liquidity concerns.

Negatives

• The company reported a net loss of $3.58 million for the quarter.
• Cash and cash equivalents are low at $443,913, with a significant net working capital deficit of $6.19 million.
• There is substantial doubt about the company's ability to continue as a going concern.
• Know Labs is in default of its convertible note with Lind Global Fund II, LP.
• The company is working to extend due dates on convertible promissory notes, indicating potential financial strain.
• NYSE American suspended trading of Know Labs' common stock due to low selling price, reflecting market concerns.

Risks

• The company's ability to continue as a going concern is uncertain due to recurring net losses and limited cash reserves.
• Failure to secure additional funding could materially and adversely affect the company's business and operations.
• The company is in default of its convertible note with Lind Global Fund II, LP, which could result in significant financial penalties.
• The company's ability to regain compliance with NYSE American continued listing standards is not assured.
• The company's success depends on obtaining FDA clearance for its products, which is a lengthy and expensive process.
• The company faces competition from other providers of RF sensor technology and other sensor technologies.
• The company has exhausted all authorized common stock and is unable to issue any additional shares of Common Stock.

Future Outlook

The company anticipates recording losses from operations for the foreseeable future and believes it has enough available cash to operate until June 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 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 launched its Know Labs Technology Licensing (KTL) program to license its intellectual property in various fields.
• The company is seeking joint venture partners with whom it can collaborate through the FDA process and into the marketplace thereafter.

Industry Context

Know Labs operates in the competitive medical diagnostics and sensor technology industry, facing competition from established players like Dexcom and Abbott Labs in the blood glucose monitoring market. The company is attempting to differentiate itself through its non-invasive technology and broader applications of its sensor platform.

Comparison to Industry Standards

• The report mentions competitors like Abbott Labs (Freestyle Libre) and Dexcom (G6 and G7) in the continuous glucose monitoring market.
• Know Labs aims to achieve a Mean Absolute Relative Difference (MARD) comparable to FDA-cleared blood glucose monitoring devices.
• The company's technology is positioned as a next-generation solution compared to traditional fingerstick methods and existing CGM devices that rely on enzymatic determination of glucose levels from interstitial fluid.
• The company's non-invasive approach differentiates it from competitors, potentially addressing limitations related to skin tones and other factors that affect optical technologies.

Related Party Transactions

• The Company owes Clayton A. Struve, a significant stockholder, $1,595,000 under convertible promissory or OID notes.
• The Company owes Ronald P. Erickson and J3E2A2Z, an entity affiliated and controlled by Ronald P. Erickson owed $1,879,515 under convertible promissory notes.
• The Company has recorded expenses with ipCapital Group of approximately $50,000 and $163,000, respectively in professional fees during the three months ended March 31, 2025 and 2024.
• The Company has recorded expenses with ipCapital Group of approximately $238,594 and $264,000, respectively in professional fees during the six months ended March 31, 2025 and 2024.

Stakeholder Impact

• Shareholders face significant risks due to the company's financial instability and potential dilution from future equity offerings.
• Employees may be affected by cost-cutting measures and potential restructuring.
• Customers and partners may experience uncertainty due to the company's going concern warning.
• Creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company intends to seek additional cash via equity and debt offerings.
• The company is working to regain compliance with NYSE American continued listing standards by March 27, 2026.
• The company will continue to develop and commercialize its proprietary sensor technology.
• The company will pursue licensing agreements through the Know Labs Technology Licensing (KTL) program.

Key Dates

Keywords

Know Labs, financial results, going concern, reverse stock split, KTL, non-invasive diagnostics, blood glucose monitoring, NYSE American, convertible notes, liquidity, default, funding, research and development, intellectual property, FDA clearance