knwn_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT

For the transition period from _______ to ________

Commission File number 000-30262

KNOW LABS, INC.

(Exact name of registrant as specified in charter)

Nevada		90-0273142
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

619 Western Avenue, Suite 610 Seattle, Washington 98104		98101
(Address of principal executive offices)		(Zip Code)

206-903-1351

(Registrant's telephone number, including area code)

500 Union Street, Suite 810, Seattle, Washington USA

(Former name, address, and fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		KNW		NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock, $0.001 par value, issued and outstanding as of August 14, 2024: 99,618,897 shares.

DOCUMENTS INCORPORATED BY REFERENCE: None.

TABLE OF CONTENTS
		Page Number

PART I	FINANCIAL INFORMATION

ITEM 1	Financial Statements (Unaudited)	3

	Consolidated Balance Sheets as of June 30, 2024 and September 30, 2023	3

	Consolidated Statements of Operations for the nine months ended June 30, 2024 and 2023	4

	Consolidated Statements of Changes in Stockholders’ (Deficit) Equity	5

	Consolidated Statements of Cash Flows for the nine months ended June 30, 2024 and 2023	6

	Notes to the Financial Statements	7

ITEM 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	30

ITEM 4	Controls and Procedures	30

PART II	OTHER INFORMATION

ITEM 1A.	Risk Factors	31

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	32

ITEM 3	Defaults upon Senior Securities	32

ITEM 4	Other Information	32

ITEM 6	Exhibits	32

	SIGNATURES	33

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

KNOW LABS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Unaudited

	June 30, 2024			September 30, 2023 (1)
ASSETS	(Unaudited)

CURRENT ASSETS:
Cash and cash equivalents	$	2,129,954		$	8,023,716
Total current assets		2,129,954			8,023,716

PROPERTY AND EQUIPMENT, NET		88,668			81,325

OTHER ASSETS
Other assets		159,244			15,766
Operating lease right-of-use asset		364,342			145,090

TOTAL ASSETS	$	2,742,208		$	8,265,897

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

CURRENT LIABILITIES:
Accounts payable - trade	$	1,255,888		$	1,292,861
Accrued expenses		116,666			94,062
Accrued expenses - related parties		99,692			218,334
Current portion of convertible notes payable, net		4,539,818			2,761,931
Current portion of operating lease right-of-use liability		105,653			154,797
Total current liabilities		6,117,717			4,521,985

NON-CURRENT LIABILITIES:
Operating lease liability, net of current portion		280,714			-
Non-current portion of convertible notes payable, net		945,258			-
Total liabilities		7,343,689			4,521,985

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS’ (DEFICIT) EQUITY

Preferred stock - $0.001 par value, 5,000,000 shares authorized, Series C and D shares issued and outstanding as follows:
Series C Convertible Preferred stock $0.001 par value, 30,000 shares authorized, 17,858 shares issued and outstanding at 6/30/2024 and 9/30/2023, respectively		1,790			1,790
Series D Convertible Preferred stock $0.001 par value, 20,000 shares authorized, 10,161 shares issued and outstanding at 6/30/2024 and 9/30/2023, respectively		1,015			1,015
Common stock - $0.001 par value, 200,000,000 shares authorized, 86,368,897 and 80,358,463 shares issued and outstanding at 6/30/2024 and 9/30/2023, respectively		86,369			80,358
Additional paid in capital		130,360,164			125,501,537
Accumulated deficit		(135,050,819	)		(121,840,788	)
Total stockholders' (deficit) equity		(4,601,481	)		3,743,912

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY	$	2,742,208		$	8,265,897

(1)	Derived from the audited consolidated balance sheet.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

KNOW LABS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

	Three Months Ended,						Nine Months Ended,
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
OPERATING EXPENSES-
RESEARCH AND DEVELOPMENT EXPENSES	$	1,348,985		$	1,879,519		$	5,010,618		$	6,186,039
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		2,486,846			1,359,782			7,025,503			5,507,511
Total operating expenses		3,835,831			3,239,301			12,036,121			11,693,550
OPERATING LOSS		(3,835,831	)		(3,239,301	)		(12,036,121	)		(11,693,550	)

OTHER INCOME (EXPENSE), NET
Interest income		30,619			23,511			126,872			114,325
Interest expense		(298,248	)		-			(1,038,499	)		(389,626	)
Other (expense)		-			(384,137	)		-			(384,137	)
Total other expense, net		(267,629	)		(360,626	)		(911,627	)		(659,438	)

LOSS BEFORE INCOME TAXES		(4,103,460	)		(3,599,927	)		(12,947,748	)		(12,352,988	)

Income tax expense		-			-			-			-

NET LOSS		(4,103,460	)		(3,599,927	)		(12,947,748	)		(12,352,988	)

Deemed dividends on Series C and D Preferred Stock		(100,045	)		(3,337,494	)		(262,283	)		(3,337,494	)
Common stock dividends on Series D Preferred Stock		-			(1,627,230	)		-			(1,627,230	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(4,203,505	)	$	(8,564,651	)	$	(13,210,031	)	$	(17,317,712	)

Basic and diluted loss per share	$	(0.05	)	$	(0.18	)	$	(0.16	)	$	(0.36	)

Weighted average shares of common stock outstanding- basic and diluted		83,038,866			48,928,911			82,314,925			48,604,274

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

KNOW LABS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY

Unaudited

	Series C Convertible				Series D Convertible								Additional						Total Stockholders'
	Preferred Stock				Preferred Stock				Common Stock				Paid in			Accumulated			Equity/
	Shares		$		Shares		$		Shares		$		Capital			Deficit			(Deficit)
Balance as of October 1, 2022		17,858	$	1,790		10,161	$	1,015		48,156,062	$	48,158	$	111,209,388		$	(101,397,738	)	$	9,862,613
Stock compensation expense - employee options		-		-		-		-		-		-		744,640			-			744,640
Issuance of common stock for stock option exercises		-		-		-		-		1,875		1		2,342			-			2,343
Issuance of common stock for exercise of warrants		-		-		-		-		50,000		50		12,450			-			12,500
Expenses for extension of notes and warrants		-		-		-		-		-		-		206,994			-			206,994
Net loss		-		-		-		-		-		-		-			(3,822,859	)		(3,822,859	)
Balance as of December 31, 2022		17,858		1,790		10,161		1,015		48,207,937		48,209		112,175,814			(105,220,597	)		7,006,231
Stock compensation expense - employee options		-		-		-		-		-		-		1,182,547			-			1,182,547
Expenses for extension of notes and warrants		-		-		-		-		-		-		142,727			-			142,727
Net loss		-		-		-		-		-		-		-			(4,930,202	)		(4,930,202	)
Balance as of March 31, 2023		17,858		1,790		10,161		1,015		48,207,937		48,209		113,501,088			(110,150,799	)		3,401,303
Stock compensation expense - employee options		-		-		-		-		-		-		536,858			-			536,858
Issuance of common stock for stock option exercises		-		-		-		-		165,015		165		2,179			-			2,344
Issuance of common stock for exercise of warrants		-		-		-		-		2,582,727		2,581		372,254			-			374,835
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		1,402,784		1,403		1,625,827			(1,627,230	)		-
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		-		-		3,337,494			(3,337,494	)		-
Net loss		-		-		-		-		-		-		-			(3,599,927	)		(3,599,927	)
Balance as of June 30, 2023		17,858		1,790		10,161		1,015		52,358,463		52,358		119,375,700			(118,715,450	)		715,413

Balance as of October 1, 2023		17,858		1,790		10,161		1,015		80,358,463		80,358		125,501,537			(121,840,788	)		3,743,912
Stock compensation expense - employee options		-		-		-		-		-		-		699,246			-			699,246
Issuance of common stock for services		-		-		-		-		105,000		105		26,145			-			26,250
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		-		-		63,629			(63,629	)		-
Isssuance of common stock for common stock offering		-		-		-		-		883,061		884		202,221			-			203,105
Net loss		-		-		-		-		-		-		-			(3,446,624	)		(3,446,624	)
Balance as of December 31, 2023		17,858		1,790		10,161		1,015		81,346,524		81,347		126,492,778			(125,351,041	)		1,225,889
Stock compensation expense - employee options		-		-		-		-		-		-		616,317			-			616,317
Issuance of common stock for services		-		-		-		-		348,492		347		170,413			-			170,760
Issuance of common stock for exercise of warrants		-		-		-		-		714,848		715		(715	)		-			-
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		-		-		98,609			(98,609	)		-
Expenses for extension of notes and warrants		-		-		-		-		-		-		594,761			-			594,761
Issuance of shares and warrants in connection with debt offering		-		-		-		-		102,302		103		1,035,860			-			1,035,963
Net loss		-		-		-		-		-		-		-			(5,397,664	)		(5,397,664	)
Balance as of March 31, 2024		17,858		1,790		10,161		1,015		82,512,166		82,512		129,008,023			(130,847,314	)		(1,753,974	)
Stock compensation expense - employee options		-		-		-		-		-		-		1,015,953			-			1,015,953
Issuance of common stock for exercise of warrants		-		-		-		-		108,500		108		(108	)		-			-
Common stock dividends on Series C and D Preferred Stock		-		-		-		-		3,201,534		3,202		(3,202	)		-			-
Deemed dividends on Series C and D Preferred Stock		-		-		-		-

SEC Form 10-Q filed by Know Labs Inc.