美國

證券交易委員會

華盛頓特區20549

形式 10-K

(Mark一）

截至財年： 2024年9月30日

對於從__

委員會文件號 001-37479

(206) 903-1351

（註冊人的電話號碼，包括地區代碼）

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通過勾選標記標明註冊人是否（1）在過去12個月內（或在註冊人被要求提交此類報告的較短期限內）提交了1934年證券交易法第13或15（d）條要求提交的所有報告，以及（2）在過去90天內是否遵守此類提交要求。 是☒沒有☐

通過勾選標記檢查註冊人是否已在過去12個月內（或在註冊人被要求提交此類文件的較短期限內）以電子方式提交了根據S-t法規第405條（本章第232.405條）要求提交的所有交互數據文件。 是☒沒有☐

通過複選標記來確定註冊人是大型加速申報人、加速申報人、非加速申報人、小型報告公司還是新興成長型公司。請參閱《交易法》第120億.2條規則中「大型加速備案人」、「加速備案人」、「小型報告公司」和「新興成長型公司」的定義。

如果是新興成長型公司，請通過勾選標記表明註冊人是否選擇不利用延長的過渡期來遵守根據《交易法》第13（a）條規定的任何新的或修訂的財務會計準則。 ☐

通過勾選標記檢查註冊人是否已提交報告並證明其管理層根據《薩班斯-奧克斯利法案》（15 U.S.C.）第404（b）條對其財務報告內部控制有效性的評估7262（b））由編制或發佈審計報告的註冊會計師事務所執行。 ☐

如果證券是根據該法案第12（b）條登記的，請通過勾選標記表明文件中包含的登記人的財務報表是否反映了對先前發布的財務報表錯誤的更正。 ☐

通過勾選標記來驗證這些錯誤更正是否是需要根據§240.10D-1（b）對註冊人的任何高管在相關恢復期內收到的激勵性補償進行恢復分析的重述。☐

通過勾選標記檢查註冊人是否是空殼公司（定義見該法案第120條第2款）。是的 ☐沒有☒

截至2024年3月29日（我們最近完成的第二財年的最後一個工作日），根據該日最後報告的交易，非關聯公司持有的有投票權和無投票權普通股的總市值為美金49,096,582.

截至2024年11月14日，共有 108,097,936 註冊人已發行和發行的普通股股份。

通過引用併入的文獻

沒有。

了解實驗室公司

10-K表格年度報告

截至2024年9月30日的年度

目錄

介紹性說明

用語

除非上下文另有說明且僅出於本報告的目的，本報告中提及的「我們」、「我們」、「我們的」和「我們的公司」均指Know Labs，Inc.，一家內華達州公司及其合併子公司。

關於前瞻性陳述的特別說明

本報告包含基於我們管理層的信念和假設以及我們當前可用的信息的前瞻性陳述。除歷史事實陳述外的所有陳述均爲前瞻性陳述。這些陳述與未來事件或我們未來的財務表現有關，涉及已知和未知的風險、不確定性和其他因素，這些因素可能導致我們的實際結果、活動水平、績效或成就與這些前瞻性陳述所表達或暗示的任何未來結果、活動水平、績效或成就存在重大差異。前瞻性陳述包括但不限於以下陳述：

在某些情況下，您可以通過「可能」、「可能」、「將」、「應該」、「將」、「預期」、「計劃」、「打算」、「預期」、「相信」、「估計」、「預測」、「潛在」、「項目」或「繼續」等術語或這些術語或其他類似術語的否定意義來識別前瞻性陳述。這些聲明只是預測。你不應該過分依賴前瞻性陳述，因爲它們涉及已知和未知的風險、不確定性和其他因素，這些因素在某些情況下是我們無法控制的，可能會對結果產生重大影響。可能導致實際結果與當前預期大相徑庭的因素包括，除其他外，在項目1A下列出的因素：危險因素“在這份報告的其他地方。如果這些風險或不確定性中的一個或多個發生，或者如果我們的基本假設被證明是不正確的，實際事件或結果可能與前瞻性陳述中暗示或預測的大不相同。任何前瞻性聲明都不是對未來業績的保證。

此外，「我們相信」的聲明和類似聲明反映了我們對相關主題的信念和觀點。這些聲明基於截至本報告日期我們可用的信息，雖然我們相信此類信息構成了此類聲明的合理基礎，但此類信息可能是有限的或不完整的，並且我們的聲明不應被解讀爲表明我們已經對所有潛在可用的相關信息進行了詳盡的調查或審查。這些陳述本質上是不確定的，警告投資者不要過度依賴這些陳述。

本報告中的前瞻性陳述僅與截至本報告中陳述之日的事件或信息有關。除非聯邦證券法明確要求，否則不承諾公開更新或修改任何前瞻性陳述，無論是由於新信息、未來事件、情況變化還是任何其他原因。

商標、商標名稱和服務商標

我們擁有或擁有我們在業務運營中使用的商標、服務標記和商品名稱的權利，包括我們的公司名稱、徽標和網站名稱。本報告中出現的其他商標、服務標記和商品名稱均爲其各自所有者的財產。僅爲方便起見，本報告中提到的一些商標、服務商標和商品名稱未列出 ^® 和™符號，但我們將根據適用法律最大限度地維護我們對商標、服務標記和商品名稱的權利。本報告可能包括我們或其他公司擁有的商標、服務標記和商品名稱。本年度報告中包含的所有商標、服務標記和商品名稱均爲其各自所有者的財產。

第一部分

項目1.業務

概述

了解實驗室公司(the「公司」）是無創醫療診斷領域的新興領導者。我們專注於利用無線電和微波介電光譜技術的專有傳感器技術的開發和商業化。我們的傳感器技術產生了對每個分子來說都獨特的介電響應。它基於物理學的第一原理。我們相信，我們的專利技術能夠使用電磁能來唯一地識別和測量幾乎任何材料或分析物，以檢測、記錄、識別和測量所述材料或分析物的獨特「簽名」以及任何變化率，與我們專有的人工智能和機器學習衍生算法相結合，雖然我們的核心重點是醫療診斷，其技術旨在成爲一個真正的平台，具有醫療診斷領域之外的無數應用程序。

我們的傳感器技術的第一個應用是在無創監測血糖水平的產品中。我們的設備旨在爲用戶提供有關血糖水平的實時信息。在截至2024年3月31日的季度中，我們宣佈推出KnowU™無創可穿戴連續血糖監測儀工作原型設備，其中包括已用於內部臨床測試的專有傳感器。我們打算擴大內部和外部測試，並隨着時間的推移繼續完善該設備，這需要在進入市場之前獲得美國食品藥品監督管理局（「FDA」）的批准。

在FDA批准我們的無創血糖監測設備後，Know Labs計劃將其傳感器技術擴展到其他無創醫療診斷應用。作爲一種平台技術，我們相信它將能夠識別人體中對醫學診斷和人類健康至關重要的許多其他分析物。通過我們的傳感器隨着時間的推移收集的數據並通過我們的算法進行分析，我們的長期願景是開發一種可以提供我們所謂的「預測健康」或有關疾病發作的預警系統的技術。

雖然以血糖監測爲首要任務的醫療診斷應用是Know Labs的重點，但我們相信我們專有的射頻和微波介電光譜平台在醫療診斷領域之外具有廣泛的適用性。我們已經確定並打算實施新的核心工作流程，以利用我們300多項活躍專利資產的知識產權組合，通過「Skunkworks」計劃中開發的機會的專利許可來創造收入。有關這項活動的公告將隨着工作進展和重大事件的發生而發佈。

公司歷史和結構

我們於1998年根據內華達州法律成立。自2007年以來，我們公司一直主要專注於研究和開發跨越電磁頻譜的專有光譜技術。

Know Labs擁有一家全資子公司Partel，Inc.於2020年4月30日註冊成立。目前Partel子公司沒有任何實質性活動，而我們則專注於傳感器技術和葡萄糖監測設備的開發。

知識實驗室技術

我們在內部並與第三方簽訂合同開發了專有平台技術，我們相信該技術能夠獨特地識別和測量幾乎任何有機和無機材料或分析物。我們的專利技術旨在將無線電波和微波頻率中的電磁能引導到物質或材料，通過激活目標分析物的介電常數的辯證響應來捕獲獨特的分子特徵。然後，我們的技術利用我們的智能和機器學習驅動的算法進行分析，這些算法旨在使我們的傳感器能夠在分子水平上準確識別和測量單個材料和分析物。

我們的技術提供了一個獨特的平台，我們相信可以在此平台上開發無數的應用程序。我們相信，我們的射頻介電光譜技術是一項「使能」技術，可將電磁能科學帶入多個行業的低成本、現實世界的商業化機會。該技術是基礎性的，因此也是我們相信可以建立重大業務的基礎。雖然我們的核心重點是將無創連續血糖監測儀商業化，但我們相信非核心臨床、非臨床和醫學研究應用代表了與各自行業領先公司進行戰略合作、聯合開發和許可協議的衆多機會。此外，我們平台技術的某些使用領域可以提供「分拆」公司的核心要素。

我們相信，我們的傳感器技術的一個重要競爭差異在於它不僅能夠識別廣泛的有機和無機材料和分析物，而且能夠非侵入性地實時識別，這可能會實現臨床診斷的新多元模型以及健康和健康監測。

Know Labs傳感器技術：硬件和軟件

我們的傳感器技術包含兩個關鍵組件：硬件和軟件。關鍵硬件組件包括一個傳感器，可以發送和接收射頻信號。傳感器接收方面獲得的數據通過軟件進行分析。如今，我們硬件開發的傳感器部分仍然需要調整和完善。該傳感器目前正在我們的內部測試中使用，並且在過去的一年裏收集了數十億個數據點以進一步完善我們的算法。它是我們KnowU可穿戴動態血糖監測儀原型設備的核心組件，也將成爲我們設備未來版本的核心組件。

因此，我們的很大一部分重點已經從產品開發轉移到數據收集和算法開發。這涉及智能和機器學習算法的複雜開發，這些算法從我們的傳感器獲得的原始數據中獲取有意義的信息。這些算法是通過訓練各種模型來利用智能和機器學習來開發的。我們打算繼續收集數據，以進一步完善算法的準確性，直到我們有信心在FDA臨床試驗中取得成功，並將第一款無創連續血糖監測儀推向市場。

早期結果

我們之前宣佈了一項內部探索性研究的結果，該研究比較了我們的傳感器技術與Abbott Labs（Freestyle Libre®）和Dexcom（G6®）和（G7®）領先的連續血糖監測儀之間的測試。這些結果提供了證據，證明我們的技術與當前行業領導者及其連續血糖監測儀之間存在高度相關性。我們的專利技術與這些行業領導者從根本上區分開來，因爲我們的技術完全非侵入性監測血糖水平。我們還相信，我們的技術成功地解決了非侵入性光學技術的限制性問題，這些技術的診斷能力可能會受到膚色和其他因素的抑制。

2024年3月6日，我們公佈了內部臨床研究的中期結果，該研究評估了我們專有的射頻(RF)介電傳感器以靜脈血爲對照，非侵入性測量糖尿病前期和2型糖尿病參與者血糖的準確性-導致總體平均絕對相對誤差(MARD)爲11.1%。機器學習模型被訓練來估計從測量值中隨機選擇的80%的數據(520個配對值)上的參考靜脈血糖值，然後在其餘的數據上進行測試，保持20%(130個配對值)，其中配對值被定義爲從新型RF傳感器收集的數據與單個靜脈血糖值配對。自那以後，這項研究已經完成，代表着我們臨床開發的重要一步，使用靜脈血作爲比較器，這將是未來FDA批准和在最終商業產品的目標人群中進行測試所必需的。

我們繼續建立將我們的技術商業化所需的內部和外部開發團隊。我們能夠從通過傳感器技術收集的數據中獲得精確結果，這是由我們的智能和機器學習平台構建的商業祕密算法實現的。我們一直並將繼續完善這些算法，以便它們能夠準確地確定廣泛人群的血糖水平。我們相信我們的平台技術還可以提供血液酒精和血氧水平的準確測量，這兩個指標我們在初步測試中已經確定。我們希望我們的平台能夠爲人體中一長串其他潛在分析物提供分析，其中許多分析物在我們發佈的專利USPTO 11，033，208 B1中有所闡述。

驗證和FDA批准

我們還專注於對該技術進行強有力的外部驗證。當我們希望獲得FDA批准時，這項正在進行的舉措應該提供額外的證據和支持。在過去的一年裏，我們宣佈了幾項重要的驗證研究。其中包括：

我們最近的臨床研究的中期結果題爲，「使用RF傳感器和靜脈血液比較器對糖尿病患者進行無創血糖監測。」 這項研究是在我們的實驗室內部進行的，中期結果於2024年3月6日至9日在意大利佛羅倫薩舉行的第17屆國際糖尿病先進技術和治療會議（ATTD）上公佈。該研究評估了Know Labs專有的射頻介電傳感器在使用靜脈血作爲比較參考無創測量糖尿病前期和2型糖尿病參與者血糖方面的準確性，得出的總體平均絕對相對差（MARD）爲11.1%。

一項題爲“原則驗證研究的結果檢測液體溶液中獨特的分析物特定射頻頻譜響應，對無創生理監測的影響。“這項研究是與梅奧診所合作進行的，由我們公司贊助，其結果已在2023年美國生理學會（APS）峯會上展示。該研究證明了該傳感器在體外定量三種不同分析物方面的準確性。在同行評審的出版物中，發現Bio-RFID在體外定量這三種不同分析物方面實現了100%的準確性。該研究得到了《傳感器雜誌》和美國生理學學會的同行評審。

我們的技術可行性研究結果題爲“與Dexcom G6®相比，新型無創血糖監測傳感器的技術可行性.”這些結果於2023年5月5日在華盛頓州西雅圖舉行的美國臨床內分泌學會（AACE）年會上公佈。該研究由西雅圖Know Labs研究實驗室的Know Labs臨床開發團隊進行。這項技術可行性研究的目的是證明硬件和軟件基礎設施的穩定性，並收集額外數據，以確定傳感器在使用射頻無創地體內量化BGC時的準確性，方法是訓練神經網絡（NN）模型來預測Dexcom G6®的讀數作爲BGC的代理。該研究得到了美國臨床內分泌協會的同行評審。

一項題爲「」的研究結果使用Know Labs的Bio-RFID技術進行無創血糖檢測的算法改進。“該研究表明，使用輕型梯度增強機器進行算法優化（lightGBM）[機器學習模型提高了Know Labs Bio-RFID™傳感器技術使用Dexcom G6®的預測讀數作爲BGC的代理來量化血糖的準確性，總體平均絕對相對差（MARD）爲12.9% -該值在某些FDA批准的血糖監測設備的獨立報告值範圍內。該研究由西雅圖Know Labs研究實驗室的Know Labs臨床開發團隊進行，並由Know Labs科學顧問委員會成員審查。

一項研究的結果，題爲擴展數據集中的新數據預處理技術提高了非侵入性血糖監測儀的機器學習模型精度。研究表明，持續的算法改進和更高質量的數據提高了Know Labs專有的Bio-RFID傳感器技術的準確性，總體平均絕對相對差異(MARD)爲11.3%。與All Know Labs之前的研究一樣，這項研究旨在使用Dexcom G6®連續血糖監測儀作爲血糖監測的參考設備和代理，評估生物射頻識別傳感器非侵入性和連續定量血糖的能力。在這項研究中，數據收集於2023年5月完成，Know Labs應用了新的數據預處理技術，並訓練了光梯度增強機(LightGBM)模型，從13名健康參與者收集的330多小時數據中，使用3,311個觀察值(或參考設備值)預測Dexcom G6®CGM的血糖值。通過這種方法，Know Labs能夠預測測試集中的血糖-提供模型性能的盲目評估的數據集-MARD爲11.3%。這項研究是由西雅圖KNOW實驗室的KNOW實驗室臨床開發團隊進行的，並由KNON實驗室科學顧問委員會的成員審查。

一項題爲“使用放射性無創血糖監測儀的血糖狀況分類模型”，證明我們的技術將個人的血糖狀態正確分類爲高血糖、正常血糖或低血糖，與靜脈血糖值相比，準確率爲93.37%，作爲新型、非侵入性糖尿病篩查設備的早期概念驗證。這項研究發表在《糖尿病技術與治療學》上，這是一本領先的同行評審期刊，涵蓋了使用尖端設備、藥物、藥物輸送系統和軟件診斷和管理糖尿病的各個方面。

一項研究的結果，題爲使用RF光譜和lightGBm AI模型進行無創血糖測量”詳細介紹了基於RF的傳感技術的歷史發展和侷限性，以及Know Labs傳感器架構和商業祕密預測[機器學習算法]的獨特性。這項最新研究發表在《IEEE Sensors Journal》上。IEEE Sensors是美國領先的科學期刊，專注於傳感設備的理論、設計、製造和應用，重點關注新興的傳感器創新。

隨着我們成功完成我們的基礎研究，創造了可提供可重複結果的穩定傳感器，並開發了管理和解釋大型、新穎數據集的軟件基礎設施，我們打算繼續擴大我們的測試和數據收集，讓更多、更多樣化的人群參與進來。我們預計，這些新的研究將有助於確定是否需要進行個人校準，我們打算評估該技術在連續佩戴期間、在更真實的環境中以及在更廣泛的血糖範圍內的性能，包括降血糖範圍(<70 mg/dL)。我們在2024年的數據科學和算法開發工作包括改進我們的算法以創建個性化模型，尋求確保它與每個人的血糖參考數據進行校準，並能夠對已知人群的血糖值進行準確估計。構建個性化模型是通向通用算法的早期步驟，但創建這些模型的能力本身可能被證明在FDA批准的商業設備中是可行的。

我們還開始了內部和外部程序，以尋求FDA批准我們的無創血糖監測儀。我們的首席醫療官、醫療和監管諮詢委員會、我們的整個執行團隊以及外部顧問在這一過程中指導我們。此外，我們的第三方質量保證和文檔顧問有助於確保滿足FDA的嚴格要求。我們無法估計FDA批准所需的時間或該努力成功的可能性。

產品策略

在截至2024年3月31日的季度中，我們宣佈了第一代原型設備的下一個版本KnowU，這是一款可穿戴無創連續血糖監測儀。我們目前正在對該產品進行進一步的內部開發工作。KnowU的可穿戴性質預計將實現持續的數據收集併產生大量數據，機器學習算法需要這些數據來提高所有預期用例的準確性。我們還宣佈，我們正在與幾個專注於傳感器技術、產品設計、數據科學、機器學習、製造和監管事務以及臨床合作的戰略合作伙伴進行討論，我們將與他們合作將該產品推向市場。

當我們向世界各地的觀衆展示我們的第一代原型設備和KnowU原型可穿戴無創連續血糖監測儀時，我們對使用我們的技術作爲篩查設備產生了濃厚的興趣，特別是在糖尿病發病率高的人群中，早期檢測可以改善結果。我們的非侵入性設備可以由不同環境（即醫院、學校、診所等）中的多個人使用這對於傳統的現有CGm製造商Dexcom和Abbott Labs來說是不可能的。在內部，我們將其視爲世界其他地區的產品。隨着開發、測試、製造、臨床試驗和監管審批工作的進展，我們預計將就我們的產品發佈進一步公告。

我們的努力完全集中在產品化我們的傳感器技術並收集高質量的數據用於驗證目的，包括第三方研究以及適當且所需的臨床試驗。在我們開發週期的這個階段，硬件繼續進一步小型化和優化，產品外形正在朝着最終產品的方向發展，該產品將用於FDA臨床試驗，並且從我們的傳感器收集的數據中提供結果的算法正在被完善以提高準確性。

銷售和市場營銷

在我們繼續進行內部開發工作和爲FDA批准我們的非侵入性血糖監測儀進行臨床試驗的同時，我們將探索將我們的第一款產品和潛在的後續產品推向市場的幾種潛在途徑。正在探索的途徑包括直接面向消費者、初始推出合作伙伴、廣泛的分銷合作伙伴、許可合作伙伴和進入市場的自有品牌方法等。作爲我們增長戰略的一部分，我們已經開始與潛在的生物製藥、醫療設備和消費電子合作伙伴就聯合開發協議進行談判。這些協議可能是戰略合作，可以幫助我們加快開發和商業推出。其他人可以專注於開發和臨床工作，以確定更多的分析物，或者努力將我們的技術整合到聯合開發合作伙伴的技術中。我們參加並參與了全球範圍內以糖尿病管理和技術爲重點的會議，這對建立Know Labs在行業中的聲譽和網絡非常有價值。

競爭

一般來說，技術行業，尤其是血糖監測和其他醫療診斷市場，競爭激烈，變化迅速，並受到行業參與者新產品推出和其他市場活動的顯着影響。爲了成功競爭，我們需要展示我們的產品和技術相對於成熟的替代解決方案、產品和技術（包括傳統的血糖監測技術提供商）的優勢。還有一些新進入者正在努力實現非侵入性解決方案或更可接受的血糖監測解決方案，這些解決方案可能與我們的技術相似，也可能不相似。最終，我們必須讓患者、醫療和保險報銷市場相信我們產品和技術的優勢。

我們把我們的比賽分成三大類。它們是：(I)可能進入血糖監測和其他醫療診斷市場的大型全球科技公司；(Ii)傳統的血糖監測技術供應商；(Iii)致力於實現非侵入性解決方案或更可接受的血糖監測解決方案的新進入者，這些解決方案可能與我們的技術相似，也可能不相似。對於每個類別的公司，我們從所有可公開獲得的有關其相關技術和產品計劃的信息來源進行盡職調查。當我們努力將自己的技術推向市場時，這些信息會告知並改進我們的活動，並強調我們的緊迫感。由於它關係到所有競爭對手，我們將繼續專注於在這一領域建立世界上最強大的專利組合。PatSnap Research和ipCapital Group這兩家領先的專利分析公司將Know Labs在非侵入性血糖監測專利方面的全球專利領先地位評爲第一。我們聘請了這兩個組織來執行與專利相關的工作。我們繼續擴大我們的專利組合，並發展我們的商業祕密情報和機器學習驅動的算法。已頒發、正在申請和正在申請的專利每年從159項增加到279項，反映出我們的高創新率。

關於我們計劃的非侵入性連續血糖監測儀，我們將面臨來自許多競爭對手的直接和間接競爭，這些競爭對手已經或正在開發用於連續監測血糖水平的產品。這些競爭對手包括德克斯康公司、雅培、美敦力、羅氏診斷公司、LifeScan公司、阿森西亞糖尿病護理控股公司、Senseonics控股公司、Integrity應用公司、Nemaura醫療公司、Biolinq公司和普羅富薩公司。我們計劃中的解決方案還將與傳統血糖儀競爭，後者仍然是一種廉價的替代產品。我們還與Movano，Inc.、Hagar、Afon和DiaMonTech AG等尋求創造非侵入性血糖監測儀的公司競爭。由於我們產品的潛在市場規模巨大，新的或現有的競爭對手可能會開發出與我們的解決方案相比更有效、更安全或成本更低的競爭產品、程序或臨床解決方案。競爭對手推出新產品、程序或臨床解決方案可能會導致降價、降低利潤率或失去市場份額，或者可能使我們的產品過時。與我們競爭的許多公司享有比我們更高的知名度，在研發、製造、臨床前測試、進行臨床試驗、獲得監管批准以及批准產品的銷售和營銷方面擁有明顯更多的財務資源和專業知識。

當我們推出所謂的「下一代」葡萄糖監測儀進入市場時，重要的是在過去四十年取得的進步的背景下這樣做。歷史上，葡萄糖水平是通過測試尿液來確定的。20世紀80年代初，指尖針刺技術被引入，其通過酶法測定手指血液中的葡萄糖水平。2000年代初，Dexcom和Abbott Labs推出了第一款連續血糖監測儀，該監測儀利用他們自己的酶法測定組織液中的血糖。

我們相信，無論是以連續還是作爲抽查篩查方式使用，我們的無創血糖監測儀都代表了下一代。

國際糖尿病聯合會估計，全球糖尿病患者規模爲57900萬。預計到2030年將達到64300萬，到2040年將達到78400萬。目前，領先的CGM提供商Dexcom、Abbott和美敦力擁有CGM 100%的市場份額。其監管文件中的最新可用信息表明，他們的滲透率不到全球可訪問市場的1%。雖然競爭分析始終是我們業務戰略和思維的重要組成部分，但市場範圍爲許多準確、更便宜和更可持續的技術提供商提供了空間。

醫療器械、生物技術和診斷行業的併購可能會導致更多的資源集中在少數競爭對手手中。其他小型或早期公司也可能成爲重要的競爭對手，特別是通過與大型和成熟公司的合作安排。還有一些學術機構和其他機構參與了血糖監測設備技術開發的各個階段。

競爭優勢

我們相信我們的主要競爭優勢包括：

增長戰略

我們發展業務戰略的關鍵要素包括：

研究與開發

我們目前的研發工作主要集中在改進用於監測血糖的射頻介電光譜技術。作爲這項工作的一部分，我們不斷對設備進行臨床測試，並進行持續的實驗室測試，以確保應用方法與最終用戶和監管要求兼容，並且可以以具有成本效益的方式實施。隨着時間的推移，我們計劃專注於擴展傳感器技術的能力，以識別新的分析物和應用。我們目前的內部團隊和外部顧問在我們技術的應用方面擁有豐富的經驗。我們根據需要聘請第三方專家來補充我們的內部團隊。截至2024年9月30日和2023年9月30日止年度，我們在開發活動上分別產生了約6，114，000美元和7，727，000美元的費用。

我們基礎平台技術的基石是我們的知識產權組合。我們奉行積極的知識產權戰略，包括在適當的情況下關注專利和勤奮保護商業祕密。迄今爲止，我們已獲得75項專利。我們目前有多項專利正在申請中，並繼續定期提交新專利。根據領先的知識產權和創新諮詢公司ipCapital Group的數據，包括未決和在製品專利，我們的知識產權組合已發佈和未決專利279項，這使我們成爲無創血糖監測領域全球頂級知識產權持有者。我們擁有所有已發佈、待審和在製品專利的所有權利、所有權和利益。

我們頒發的專利將在2027年至2047年期間的不同時間到期。待決專利，如果發佈，其有效期可能會進一步延長。我們商標註冊的期限因國家而異。然而，商標通常有效，只要它們在使用和/或其註冊得到適當維護，就可以無限期更新。

已頒發的專利涵蓋了我們的射頻光譜技術的基本方面以及許多獨特的應用。我們已就我們技術的其他基本方面和越來越多的獨特應用申請了專利，這些專利正在申請中。隨着時間的推移，我們打算繼續擴大我們的專利組合。

此外，我們技術的重要方面均作爲商業祕密保存，不得通過專利申請過程披露。我們努力維護和保護我們的商業祕密，特別是因爲它們涉及我們的智能和機器學習驅動的算法。

我們還對我們的前首席執行官Phillip Bosua、在Bosua先生的指導下工作的人或任何繼任者或受託人開發的與Know Labs技術相關的任何專利或其他知識產權擁有獨家、永久和免版稅的權利2028年1月23日之前。

相關專利資產

平台技術的固有特徵是開發或許可除我們核心關注點之外的不同使用領域的技術的能力。我們專注於人類健康，首先關注血糖的無創監測。我們計劃識別人體中隨着時間的推移對診斷至關重要的多種分析物。我們還計劃隨着時間的推移，尋找將我們的知識產權部署到人類健康以外的領域的機會。

員工

截至2024年9月30日，我們共有12名全職和兼職員工。我們的高級管理人員和其他人員位於西雅圖、華盛頓辦事處和遠程辦公室。我們擴大了諮詢公司和個體承包商的利用，以補充減少的勞動力，以減少固定費用並擴大運營資源。

政府監管

我們的業務在我們或我們的研發合作伙伴開展業務的司法管轄區遵守全面的聯邦、州和地方法律法規。管理我們業務的法律法規以及對這些法律法規的解釋經常會發生變化。我們的盈利運營能力將在一定程度上取決於我們以及我們的研發合作伙伴和附屬公司遵守適用法律和法規的運營能力。適用於我們的業務以及我們的合作伙伴和附屬公司的與醫療器械相關的法律和法規正在不斷髮展，因此，我們必須投入大量資源來監測這些領域的立法、執法和監管方面的發展。隨着適用法律和法規的變化，我們可能會不時對我們的業務流程進行合規性修改。我們不能保證法院或監管機構對我們業務的審查不會導致可能對我們的運營產生不利影響的決定，或者監管環境不會以限制我們運營的方式發生變化。

美國FDA法規

Know Labs KnowU葡萄糖監測產品的設計旨在使我們的傳感器技術平台能夠生成葡萄糖值，併爲用戶提供有關其血糖水平的實時信息。患者的血糖數據將通過配套應用程序顯示，並將直接傳輸到某些兼容的移動設備，包括iPhone®和Android®設備。

我們的醫療診斷產品和業務，最初是KnowU血糖監測產品，根據聯邦食品、藥物和化妝品法案(FFDCA)及其實施條例、指南文件和標準，受到FDA廣泛而嚴格的監管。我們的產品將作爲醫療器械受到FDA的監管。FDA對美國醫療器械的設計、開發、研究、測試、製造、安全、標籤、儲存、記錄保存、推廣、分銷、銷售和廣告進行監管，以確保在國內分銷的醫療產品對於其預期用途是安全和有效的。FDA還對美國製造的醫療器械向國際市場的出口進行監管。任何違反這些法律法規的行爲都可能對我們的業務、財務狀況和經營結果造成實質性的不利影響。此外，如果法律、法規或司法解釋發生變化，我們可能會被要求改變我們的商業慣例，這可能會對我們的業務、財務狀況和經營業績產生實質性的不利影響。

根據FFDCA，醫療器械通常分爲三個類別之一-I類、II類或III類-具體取決於與每個醫療器械相關的患者和/或用戶面臨的風險程度以及確保安全性和有效性所需的控制程度。器械分類還取決於器械的預期用途和使用適應症。此外，設備分配的類別還決定了FDA批准上市所需的上市前提交/申請類型。

第一類包括風險最低、危害可能性最小的設備，並且可以通過遵守FDA對醫療設備的「一般控制」來確保安全性和有效性。這包括遵守FDA質量體系法規或QSR的適用部分、機構註冊和產品列表、不良醫療事件的報告以及適當、真實和非誤導性的標籤、廣告和宣傳材料。一些I類設備需要FDA通過下文所述的510（k）上市前通知流程獲得上市前批准，但大多數設備豁免510（k）上市前通知要求。

II類設備是中等風險設備，其風險高於I類設備。第二類設備受FDA的一般控制，以及FDA認爲爲確保設備的安全性和有效性所需的任何其他「特殊控制」，如性能標準、特定產品指南文件、特殊標籤要求、患者登記或上市後監測。FDA對II類設備的售前審查和批准是通過510(K)售前通知程序完成的，儘管某些II類設備不受此售前審查程序的影響。當需要510(K)時，製造商必須向FDA提交上市前通知，證明該設備與合法銷售的設備「基本相同」，在某些情況下，這可能需要提交臨床數據。如果FDA確定該設備或其預期用途實質上不等同於合法上市的設備，則FDA將該設備或該設備的特定用途歸入III類，然後設備贊助商必須滿足更嚴格的上市前要求。此外，除非適用特定豁免，否則提交510(K)售前通知需繳納使用費。

第三類包括風險最大的人，因爲他們維持或維持生命，被植入，或存在潛在的不合理的疾病或受傷風險。換句話說，III類設備由FDA認爲構成最大風險的設備組成，例如維持生命的、支持生命的或可植入的設備，或被認爲實質上不等同於預測設備的設備。III類裝置的安全和有效性不能僅通過一般或特殊控制來保證。在III類設備繼續上市之前，通常需要提交和FDA批准上市前批准或PMA申請。PMA流程比510(K)上市前通知流程要求高得多。PMA應用程序旨在證明該設備是安全和有效的，必須有大量數據支持，通常包括臨床前研究和人體臨床試驗數據。此外，與提交510(K)計劃一樣，除非獲得豁免，否則提交PMA需要繳納使用費。

可以使用三種不同的方法來確定產品可能的分類-通過FDA的產品分類數據庫搜索適當的產品分類;通過FDA的510（k）許可數據庫、PMA數據庫或De Novo數據庫搜索通過許可或批准的類似設備;或通過FDA的企業註冊和設備列表數據庫的設備列表搜索類似設備。

還有De Novo和未機密的設備類型。未分類的設備類型是修訂前的設備（即，在1976年醫療器械修正案之前上市，但未被原分類小組分類），其分類法規尚未頒佈。在未分類的器械類型被正式分類並且FDA制定法規之前，通常需要提交510（k）上市前通知。

下文更詳細描述的De Novo分類提供了對新型醫療器械進行分類的營銷途徑，此類醫療器械的一般和/或特殊控制爲預期用途的安全性和有效性提供了合理保證，但沒有合法上市的器械可作爲確定實質等同器械（即，沒有等同產品、新的預期用途或引發不同安全性和有效性問題的不同技術特徵）。通過De Novo請求分類爲I類或II類的設備可以進行營銷並用作未來其他提交的等同器械（如適用）。

510（k）許可

爲了獲得醫療器械的510(K)許可，申請人必須向FDA提交一份上市前通知提交，證明擬議的器械與合法上市的器械「基本等同」(即安全有效)，即所謂的「斷言器械」。合法上市的判定設備可以包括在1976年5月28日之前合法銷售且不需要PMA的設備(根據1976年《醫療器械修正案》頒佈之日稱爲「修訂前設備」)、已從III類重新分類爲II類或I類的設備、通過510(K)流程發現基本相同的設備或通過De Novo分類過程獲得營銷授權且不豁免上市前通知要求的設備。就謂詞裝置而言，如果它具有相同的預期用途，並且具有(I)相同的技術特徵或(Ii)不同的技術特徵，但510(K)提交書中提供的信息表明該裝置不會引起新的安全和有效性問題，並且至少與合法銷售的謂詞裝置一樣安全和有效，則該裝置基本上是等效的。有時，但並不總是需要臨床數據和非臨床工作臺性能數據，包括工程性能測試、無菌、電磁兼容性、軟件驗證、生物兼容性評估等數據。

在FDA接受510（k）提交材料進行實質性審查之前，FDA將首先評估該提交材料是否滿足最低可接受閾值。如果FDA確定510（k）提交不完整，則FDA將發出一封「拒絕接受」信函，其中通常概述FDA認爲允許進行實質性審查並就實質等同性做出決定所需的信息。申請人必須提交所需的信息，然後FDA才能對提交的申請進行額外審查。根據法規，一旦510（k）提交材料被接受審查，FDA有90天的時間來審查併發布決定。實際上，清理通常需要更長的時間。FDA可能需要額外信息，包括額外的臨床和非臨床數據，以確定實質等效性。

如果FDA同意該器械與目前市場上的同品種器械實質等同，則將授予該器械商業銷售的510（k）許可。如果FDA確定該設備與之前獲得批准的設備「不實質等同」，則該設備將自動指定爲III類設備。然後，設備申辦者必須滿足更嚴格的PMA要求，或者可以根據De Novo流程要求對設備進行基於風險的分類確定。

器械獲得510（k）許可後，任何可能顯着影響其安全性或有效性的修改，或者構成其預期用途的重大變更或修改的修改，都需要獲得新的510（k）許可，或者根據修改，需要獲得PMA批准。修改是否會顯着影響設備的安全性或有效性最初由製造商根據現有的FDA指南來確定。如今，許多小修改都是通過「備案信」完成的，其中製造商記錄了變更的理由以及不需要新510（k）的原因。然而，FDA可以隨時審查此類提交的信件，以評估改良產品的監管狀態，並可以要求製造商停止營銷並召回改良器械，直到獲得510（k）許可或PMA批准。製造商還可能受到巨額監管罰款或處罰。

PMA批准

對於被歸類爲III類的任何設備，必須向FDA提交PMA，否則無法通過510(K)流程(儘管FDA有權繼續允許某些修訂前的III類設備使用510(K)流程)。PMA申請必須得到有效的科學證據的支持，證明設備的安全性和有效性，這通常需要廣泛的數據，包括技術、臨床前、臨床和製造數據(例如，研究方案、不良反應和併發症、設備故障和更換、患者信息、患者投訴、所有單獨受試者的數據列表、統計分析結果)，以及非臨床實驗室或安全研究(例如微生物學、毒理學、免疫學、生物兼容性、應激、磨損、保質期和其他實驗室或動物測試)。PMA還必須包含設備及其組件的完整描述、用於製造的方法、設施和控制的完整描述，以及建議的標籤。

收到PMA申請後，一旦FDA確定申請足夠完整，可以進行實質性審查，FDA將正式接受審查申請。根據法規和法規，FDA有180天的時間來審查「已接受」的PMA申請，儘管對申請的審查通常在更長的時間內進行，並且可能需要長達數年的時間。在審查期間，FDA通常會要求提供更多信息或澄清已提供的信息。此外，可能會召集FDA以外的專家諮詢小組來審查和評估申請，並就設備的可批准性向FDA提供建議。FDA可能會接受也可能不會接受專家組的建議。此外，FDA通常會對製造工廠進行批准前檢查，以確保符合QSR。

如果FDA對PMA申請和生產設施的評估均有利，FDA將發出批准函或可批准函，其中通常包含確保PMA最終批准必須滿足的許多條件。如果FDA對PMA或生產設施的評價不佳，FDA將拒絕批准PMA或發出不可批准的信函。不可批准的信函將概述申請中的缺陷，並在可行的情況下確定使PMA可批准所需的內容。FDA還可能確定需要進行額外的臨床試驗，在這種情況下，PMA批准可能會在試驗進行期間推遲數月或數年。一旦獲得批准，如果未遵守批准後要求、批准條件或其他監管標準或在初次上市後發現問題，FDA可能會撤回PMA批准。

在批准PMA時，FDA還可能要求在必要時進行某種形式的上市後監督，以保護公衆健康或爲設備提供額外的安全性和有效性數據。在這種情況下，製造商可能需要跟蹤某些患者群體數年，並定期向FDA報告這些患者的臨床狀況。

影響PMA批准的器械安全性或有效性的修改需要新的PMA或PMA補充，包括例如對器械的適應症、製造工藝、標籤和設計進行某些類型的修改。PMA補充文件通常需要提交與PMA相同類型的信息，但補充文件僅限於支持原始PMA涵蓋的器械的任何變更所需的信息，並且可能不需要大量的臨床數據或召集諮詢小組。

De Novo分類

FDA以前沒有被歸類爲I類、II類或III類的醫療器械類型自動歸類爲III類，無論它們構成的風險水平如何。1997年的食品和藥物管理局現代化法案爲低到中等風險的醫療器械建立了一條進入市場的新途徑，這些醫療器械由於缺乏謂詞裝置而被自動歸入III類，稱爲「自動III類指定的評估請求」，或從頭開始分類程序。該程序允許其新型設備被自動歸類爲III類的製造商根據其設備存在低或中等風險而請求將其醫療設備降級爲I類或II類，而不需要提交和批准PMA申請。如果製造商尋求重新歸類爲II類，製造商必須包括一份特別控制的建議草案，這些特別控制是爲醫療器械的安全性和有效性提供合理保證所必需的。此外，如果FDA確定了一種合法上市的適用於510(K)計劃的謂詞設備，或者確定該設備的風險不是低到中等，或者一般控制措施不足以控制風險，並且無法開發特殊控制措施，則FDA可能會拒絕重新分類申請。根據2017年醫療器械使用費修正案(MDUFA IV)，FDA的目標是在150個審查日內就De Novo請求做出決定。審查天數按FDA收到De Novo請求之日和FDA作出決定之日之間的日曆天數計算，不包括請求暫停提供額外信息請求的天數。

我們目前認爲，我們的KnowU血糖監測產品可能需要 從頭 分類請求。隨着我們繼續與監管顧問密切合作，這一點將得到進一步完善。

突破性器械項目

突破設備計劃是針對某些醫療設備和設備主導的組合產品的自願計劃，爲危及生命或不可逆轉的衰弱疾病或病症提供更有效的治療或診斷。

突破性設備計劃的目標是通過加快開發、評估和審查，爲患者和醫療保健提供者提供及時使用這些醫療設備的機會，同時保留上市前批准、510（k）許可和De Novo營銷授權的法定標準，與該機構保護和促進公共健康的使命一致。

突破性設備計劃取代了醫療設備的快速訪問途徑和優先審查，併爲製造商提供了與FDA互動的機會，以有效解決上市前審查階段出現的主題。FDA認爲根據快速訪問路徑獲得指定的設備是突破性設備計劃的一部分。

所有突破性指定請求必須在提交上市申請之前提交，FDA可以隨時撤銷。此外，有資格獲得突破性設備指定的設備必須（1）爲危及生命或不可逆轉地使人衰弱的人類疾病或病症提供更有效的治療或診斷;以及（2）至少滿足以下一項：（i）代表突破性技術;（ii）沒有已批准或批准的替代品;（iii）比現有已批准或批准的替代品具有顯着優勢;或（iv）其可用性符合患者的最佳利益。

我們可能會爲我們的KnowU血糖監測產品尋求突破設備計劃。

臨床研究

當FDA批准或批准I類、II類或III類器械需要進行人體臨床試驗時，並且如果該器械對人類健康構成「重大風險」，則要求器械申辦者在開始人體臨床試驗之前向FDA提交IDE申請並獲得IDE批准。如果該設備被認爲具有「非重大風險」，則不需要向FDA提交IDE，但仍然必須遵循IDE要求，例如監測調查、確保研究人員獲得知情同意以及遵守標籤和記錄保存要求。相反，只需要獲得監督每個臨床試驗中心研究的機構審查委員會（IRb）的批准。與III類器械的批准有關的人體臨床研究通常需要，並且I類和II類器械可能需要進行人體臨床研究。

無論醫療器械帶來的風險程度如何，臨床研究都必須得到每個臨床研究中心的IRb的批准並在其監督下進行。IRb負責對IDE進行初始和持續審查，並可能對研究的進行提出額外要求。如果IDE申請獲得FDA和一個或多個IRS批准，則可以在FDA批准的特定數量的患者數量的特定數量的研究中心開始人體臨床試驗。

申辦者還需要在臨床試驗期間遵守適用的FDA要求（例如，試驗監測、選擇臨床研究者併爲他們提供研究計劃、確保IRb審查、不良事件報告、記錄保存和禁止推廣研究器械或對其做出安全性或有效性聲明）。申辦者可以將其與臨床研究相關的部分或全部義務轉讓給第三方，但無論這些義務是否通過合同轉讓，申辦者最終對合規性負責。

臨床研究中的臨床研究者還受FDA法規的約束，必須獲得患者的知情同意，嚴格遵循研究計劃和研究方案，控制研究器械的處置，並遵守所有報告和記錄保存要求。此外，試驗開始後，我們、FDA或IRb可以隨時因各種原因暫停或終止臨床試驗，包括相信研究受試者面臨的風險超過預期受益。

FDA或每個正在進行臨床試驗的機構的IRb可以隨時因各種原因暫停臨床試驗，包括相信受試者面臨不可接受的健康風險。即使試驗完成，臨床測試的結果也可能無法充分證明該設備的安全性和有效性，或者可能不足以獲得FDA的批准或批准在美國銷售該產品。

上市後限制和執行

設備投放市場後，將適用許多監管要求。這些包括但不限於：

醫療器械的廣告和促銷，除了受到FDA的監管外，還受到聯邦貿易委員會(FTC)以及類似的州消費者保護法的監管。最近，其他公司受FDA監管的產品的促銷活動已成爲根據醫療報銷法和消費者保護法提起的執法行動的對象。此外，根據聯邦蘭漢姆法案和類似的州法律，競爭對手和其他人可以提起與廣告索賠有關的訴訟。如果FDA確定我們的宣傳材料或培訓構成宣傳未經批准或未經許可的用途，則可以要求我們修改我們的培訓或宣傳材料，或要求我們採取監管或執法行動。如果其他聯邦、州或外國執法機構認爲我們的宣傳或培訓材料構成對未經批准或未經批准的用途的宣傳，也可能會採取行動，這可能會導致其他法定機構的巨額罰款或處罰，例如禁止虛假報銷的法律。在這種情況下，我們的聲譽可能會受到損害，產品的採用也會受到影響。

此外，根據FDA醫療器械報告（「MDR」）法規，醫療器械製造商必須向FDA報告設備已經或可能已經導致或促成死亡或嚴重傷害的信息，或者如果該設備或該製造商的類似設備的故障再次發生，則可能導致或促成死亡或嚴重傷害的故障。提交MDR的決定涉及製造商的判斷。如果FDA不同意製造商的決定，FDA可以採取執法行動。

MDR要求還延伸到使用醫療設備爲患者提供護理的醫療保健機構或「設備用戶機構」，其中包括醫院、門診手術機構、療養院、門診診斷機構或門診治療機構，但不包括醫生辦公室。設備用戶機構必須在事件發生後10天內向FDA和設備製造商報告任何與設備相關的死亡，或向製造商報告任何與設備相關的嚴重傷害（或者，如果製造商未知，則向FDA）。如果故障再次發生，設備用戶機構無需報告可能導致或導致死亡或嚴重傷害的設備故障，但可以通過MedWatch（FDA的安全信息和不良事件報告計劃）自願報告此類故障。

如果存在材料缺陷或設計或製造缺陷，FDA還有權要求召回商業化醫療器械產品。要求召回的權力必須基於FDA的調查結果，即該設備有合理的可能性會導致嚴重的不良健康後果或死亡。如果任何分銷設備不符合既定規範、根據FFDCA被貼錯標籤或摻假，或者發現任何其他重大缺陷，製造商可以主動召回產品。FDA要求在啓動召回後十個工作日內向FDA報告某些類別的召回。

不遵守適用的監管要求可能會導致FDA採取執法行動，其中可能包括以下任何制裁：

爲了確保遵守監管要求，醫療器械製造商必須接受FDA的市場監督以及定期、預先安排和未宣佈的檢查，這些檢查可能包括分包商的製造設施。

Federal Trade Commission Regulatory Oversight

Our advertising for our products and services is subject to federal truth-in-advertising laws enforced by the FTC as well as comparable state consumer protection laws. Under the Federal Trade Commission Act (the “FTC Act”), the FTC is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties, including civil penalties, injunctions affecting the manner in which we would be able to market services or products in the future, or criminal prosecution.

International

Any future international sales are subject to regulatory requirements in the countries in which our products are sold. The regulatory review process varies from country to country and may in some cases require the submission of clinical data.

Available Information

You can find reports on our company including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports on our website www.knowlabs.co under the “Investors” heading. These reports are available free of charge and as soon as reasonably practicable after they have been filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”). We are providing the address of our website solely for the information of investors and the information on our website is not a part of or incorporated into this or any report that we file with the SEC.

ITEM 1A. RISK FACTORS.

An investment in our common stock involves a high degree of risk. You should carefully read and consider all of the risks described below, together with all of the other information contained or referred to in this report, before making an investment decision with respect to our common stock. If any of the following events occur, our financial condition, business and results of operations (including cash flows) may be materially adversely affected. In that event, the market price of our common stock could decline, and you could lose all or part of your investment.

Summary of Risk Factors

An investment in our securities involves a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the “Risk Factors” section immediately following this summary. These risks include, but are not limited to, the following:

Risks Related to Our Business and Industry

Risks Related to Ownership of Our Common Stock and Warrants

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully read and consider all of the risks described below, together with all of the other information contained or referred to in this report, before making an investment decision with respect to our common stock. If any of the following events occur, our financial condition, business and results of operations (including cash flows) may be materially adversely affected. In that event, the market price of our common stock could decline, and you could lose all or part of your investment.  

Risks Related to Our Business and Industry  

We need additional financing to support our technology development and ongoing operations, pay our debts and maintain ownership of our intellectual property. 

We are currently operating at a loss and using substantial cash to fund our operation. We believe that our cash on hand will be sufficient to fund our operations through February 28, 2025. We may need additional financing to implement our business plan and to service our ongoing operations, pay our current debts (described below) and maintain ownership of our intellectual property. There can be no assurance that we will be able to secure any needed funding, or that if such funding is available, the terms or conditions would be acceptable to us. If we are unable to obtain additional financing when it is needed, we will need to restructure our operations and/or divest all or a portion of our business. We are seeking additional capital through a combination of private and public equity offerings, debt financings and strategic collaborations. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, and could increase our expenses and require that our assets secure such debt. Equity financing, if obtained, could result in dilution to our then-existing stockholders and/or require such stockholders to waive certain rights and preferences. If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back, eliminate the development of business opportunities and our operations and financial condition may be materially adversely affected. There can be no assurance that we will be able to sell that number of shares, if any.  

We need to continue as a going concern if our business is to succeed. 

Because we have generated limited revenues in prior years and currently operate at a loss, we are completely dependent on the continued availability of financing in order to continue our business. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. 

As of September 30, 2024, we have cash and cash equivalents of $3,111,000 and a net working capital deficit of approximately $2,053,000. We anticipate that we will record losses from operations for the foreseeable future. We believe that we have enough available cash to operate until February 28, 2025. As of September 30, 2024, our accumulated deficit was $138,736,000. We intend to seek additional cash via equity and debt offerings. As a result of not having at least twelve months of cash available and not having any firm commitment for debt or equity financing, substantial doubt about our ability to continue on a going concern exists.  

We have financed our corporate operations and our technology development through the issuance of convertible debentures, the issuance of preferred stock, the sale of common stock and the exercise of warrants. During the remainder of 2024, we expect to raise additional funds through the issuance of preferred stock, convertible debentures or equity. 

The proceeds of warrants currently outstanding, to the extent not exercised on a cashless basis, may generate potential proceeds. We cannot provide assurance that any of these warrants will be exercised.

As of September 30, 2024, we owed approximately $4,724,000 and if we do not satisfy these obligations, the lenders may have the right to demand payment in full or exercise other remedies. 

We owe $4,724,000 under various convertible promissory notes as of September 30, 2024. We may need additional financing, to service and/or repay these debt obligations. If we raise additional capital through borrowing or other debt financing, we may incur substantial interest expense. If and when we raise more equity capital in the future, it will result in substantial dilution to our current stockholders.  

We have a history of operating losses and there can be no assurance that we can achieve or maintain profitability.

We have experienced net losses since inception. As of September 30, 2024, we had an accumulated deficit of $138,736,000 and net losses in the amount of $16,582,000 and $15,289,000 for the years ended September 30, 2024 and 2023, respectively. There can be no assurance that we will achieve or maintain profitability. If we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Failure to become and remain profitable would impair our ability to sustain operations and adversely affect the price of our common stock and our ability to raise capital. Our operating expenses may increase as we spend resources on growing our business, and if our revenue does not correspondingly increase, our operating results and financial condition will suffer. Our businesses have produced minimal revenues and may not produce significant revenues in the near term, or at all, which would harm our ability to continue our operations or obtain additional financing and require us to reduce or discontinue our operations. You must consider our business and prospects in light of the risks and difficulties we will encounter as a business with an early-stage technology in a new and rapidly evolving industry. We may not be able to successfully address these risks and difficulties, which could significantly harm our business, operating results, financial condition and common stock price per share. 

We may not be able to generate sufficient revenue from the commercialization of our technology and related products to achieve or sustain profitability. 

We are in the early stages of commercializing our technology. Failure to develop and sell products based upon our technology could have a material adverse effect on our business, financial condition and results of operations. To date, we have not generated revenue from sales of our technology or products. We believe that our commercialization success is dependent upon our ability to significantly increase the number of customers that will use our products. In addition, demand for our products may not materialize, or increase as quickly as planned, and we may therefore be unable to increase our revenue levels as expected. We are currently not profitable. Even if we succeed in introducing our technology and related products to our target markets, we may not be able to generate sufficient revenue to achieve or sustain profitability. 

We are subject to extensive regulation by the FDA, which could require us to take significant time and could cause us to incur significant costs. 

Our KnowU glucose monitoring products are subject to extensive regulation by FDA. These regulations relate to manufacturing, labeling, sale, promotion, distribution and shipping. Before a new medical device, or a new intended use of a legally marketed device, can be marketed in the United States, it must be cleared or approved by FDA through the applicable premarket review process (510(k), PMA, or de novo classification), unless an exemption applies.  

The KnowU and glucose monitoring products and substantially equivalent devices of this type that may later receive marketing authorization are similar to products referred to as integrated continuous glucose monitoring (CGM) systems. Integrated continuous glucose monitoring systems are generally classified by FDA as Class II devices and have established special controls outlining requirements for assuring CGM accuracy, reliability, and clinical relevance. FDA also has descriptions of the types of studies and data required to demonstrate acceptable CGM performance. Though it is our current belief that our initial product, the KnowU and glucose monitoring products, are appropriate for a de novo classification request (i.e., a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device that is described in more detail below), we expect similar classification, special controls, and testing. 

If we receive 510(k) clearance for our KnowU and glucose monitoring products, we may be required to obtain new 510(k) clearances for significant post-market modifications. Each premarket submission and review process can be expensive and lengthy, and entail significant user fees, unless exempt. The classification and special controls for all other products using our proprietary radio frequency and microwave spectroscopy platform will be dependent on product type and explored as applicable. 

In addition, regulatory clearance or approval by FDA does not ensure registration, clearance, approval, or certification by regulatory authorities or notified bodies internationally. While the regulatory requirements for marketing in international markets may require that we obtain clearance, approval, or certification by an international specified regulatory body or notified body. Complying with foreign regulatory requirements, including obtaining registrations, clearances, approvals, or certifications, can be expensive and time consuming, and we may not receive regulatory clearances, approvals, or certifications in each country or region in which we plan to market our products or we may be unable to do so on a timely basis. In turn, this could limit our expected international growth and profitability, which could have a material adverse effect on our business, financial condition, and results of operations. 

The clinical trial process is lengthy and expensive with uncertain outcomes. Results of earlier studies may not be predictive of future clinical trial results, or the safety or efficacy profile for such products. 

Clinical trials are generally required to support an application for clearance of a new device type such as our KnowU and glucose monitoring products. All clinical trials must be conducted in accordance with FDA’s Investigational Device Exemption (IDE) regulations, which govern investigational device labeling, prohibit promotion, and specify an array of Good Clinical Practice requirements, which include among other things, recordkeeping, reporting, and monitoring responsibilities of study sponsors and study investigators. Clinical trials must further comply with FDA’s regulations for institutional review board approval and for informed consent and other human subject protections. Required records and reports are subject to inspection by FDA. 

Results of clinical testing may be unfavorable or, even if +the intended safety and efficacy success criteria are achieved, may not be considered sufficient for FDA to grant approval or clearance of a product. In additional, the commencement or completion of any of our clinical trials may be delayed or halted for numerous reasons, including, but not limited to, the following:  

Additionally, the ability of FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel, the availability of industry-paid user fees, and statutory, regulatory, and policy changes. Average review times for product approvals at FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable. 

Disruptions at FDA and other agencies, including those resulting from global concerns (e.g., the ongoing COVID-19 global pandemic), may also slow the time necessary for new products to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, if a prolonged government shutdown and/or government employee furloughs were to occur, or if FDA’s response to a global issue diverts FDA resources and attention to other regulatory efforts, then the ability of FDA to timely review and process our regulatory submissions could be significantly impacted, which could have a material adverse effect on our business, financial condition, and results of operations. Further, in our operations as a public company, future government shutdowns, furloughs, or public health emergencies could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Any of these occurrences may significantly harm our business, financial condition, and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

Moreover, even if our products are cleared in the United States, commercialization of our products in foreign countries would require clearance or approval by regulatory authorities in those countries. Clearance or approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials.

The safety and efficacy of our products is not yet supported by long-term clinical data, which could limit sales, and our products might therefore prove to be less safe or effective than initially thought.

Given the regulatory environment in which we operate, we lack the breadth of published long-term clinical data supporting the safety and efficacy of the KnowU and glucose monitoring products and the benefits it offers that might have been generated in connection with other marketing authorization pathways. For these reasons, clinicians may be slow to adopt our products, we may not have comparative data that our competitors have or are generating, and we may be subject to greater regulatory and product liability risks. Further, future patient studies or clinical experience may indicate that treatment with our product does not improve patient outcomes. Such results would slow the adoption of our product by physicians, would significantly reduce our ability to achieve expected sales, and could prevent us from achieving and maintaining profitability.

In addition, because the KnowU and glucose monitoring products have never been marketed, we have limited complaints or patient success rate data with respect to using these products. If future patient studies or clinical testing do not support our belief that our products offer a more advantageous blood glucose monitoring, then market acceptance of our products could fail to increase or could decrease, and our business could be harmed. Moreover, if future results and experience indicate that our product has potentially recurring malfunctions or causes unexpected or serious complications or other unforeseen negative effects, then we could be subject to mandatory or voluntary product recalls, suspension or withdrawal of FDA clearance, as well as significant legal liability or harm to our business reputation and financial results.

If we choose to, or are required to, conduct additional clinical studies and the outcome of such studies are not positive, then this could reduce the rate of coverage and reimbursement for the KnowU and glucose monitoring products. This may slow the market adoption of our product by physicians, significantly reduce our ability to achieve expected revenues and prevent us from becoming profitable.

We believe that publications of scientific and medical results in peer-reviewed journals and presentations at leading conferences are critical to the broad adoption of our products. Publication in leading medical journals is subject to a peer-review process, and peer reviewers may not consider the results of studies involving our products sufficiently novel or worthy of publication. The failure to be listed in physician guidelines or to be published in peer-reviewed journals could limit the adoption of our products. Unless specifically stated to be “peer-reviewed,” the studies referred to in this filing are not peer reviewed.

We are subject to extensive regulation which could restrict the sales and marketing of our products and could cause us to incur significant costs.

Medical devices may be marketed only for the indications for which they are approved or cleared. Further, clearances can be revoked if safety or effectiveness problems develop once the device is on the market.

The current regulatory requirements to which we are subject may change in the future in a way that adversely affects us. If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by FDA, which may include any of the following sanctions: 

The occurrence of any of these events would have a material adverse effect on our business, financial condition and results of operations and could result in stockholders losing their entire investment. 

Additionally, any relationships we may have with healthcare professionals, clinical investigators, and payors in connection with our current and future business activities may be subject to federal and state healthcare fraud and abuse laws, false claims laws, transparency laws, and health information privacy and security laws, which could expose us to, among other things, criminal sanctions, civil penalties, contractual damages, exclusion from governmental healthcare programs, reputational harm, administrative burdens, and diminished profits and future earnings. 

Healthcare providers and payors play a primary role in the recommendation and/or prescription of any product candidates for which we obtain future marketing approval. Our current and future arrangements with healthcare professionals, clinical investigators, payors, and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell, and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following: 

State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. For instance, the collection and use of health data in the European Union is governed by the General Data Protection Regulation, or the GDPR, which extends the geographical scope of European Union data protection law to non-European Union entities under certain conditions, tightens existing European Union data protection principles, creates new obligations for companies and new rights for individuals. Failure to comply with the GDPR may result in substantial fines and other administrative penalties. In addition, the California Consumer Privacy Act, or CCPA, creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability, and similar laws have been proposed at the federal level and in other states. 

Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare laws and regulations will involve on-going substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, then we may be subject to significant penalties, including civil, criminal, and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, temporary or permanent debarment, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations. Defending against any such actions can be costly, time-consuming, and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, then they may be subject to criminal, civil, or administrative sanctions, including exclusions from government funded healthcare programs. 

A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business. 

We may seek regulatory approval of our product candidates outside of the U.S., and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including: 

These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations. 

We may face difficulties with respect to coverage and reimbursement by various payors. 

Sales of any medical device depend often, in part, on the extent to which the product will be covered and reimbursed by government payors (e.g., federal and state healthcare programs), third-party payors (e.g., commercial insurance and managed healthcare organizations), and other payors (e.g., foreign government healthcare programs). In the United States, various glucose monitoring products are covered for individuals with both Type 1 and Type 2 diabetes by Medicare and Medicaid in the majority of states and by commercial insurers, subject to satisfaction of certain eligibility and coverage criteria. 

But significant uncertainty exists as to the coverage and reimbursement status of any newly approved product. For example, there is no assurance that a product will be considered medically reasonable and necessary for a specific indication, will be considered cost-effective by payors, that an adequate level of reimbursement will be established even if coverage is available, or that the payors’ reimbursement policies will not adversely affect the ability for manufacturers to sell products profitably. 

Decisions regarding the extent of coverage and reimbursement amount are generally made on a plan-by-plan basis meaning one payors’ decision to cover a particular product does not ensure that other payors will also provide similar coverage. As a result, the coverage determination process can require manufactures to provide scientific and clinical support for the use of a product, and require providers to show medical necessity for use, to each payor separately. This process can be time-consuming, with no assurance that coverage and adequate reimbursement will be applied consistently or even obtained. 

Payors are also increasingly reducing reimbursements for devices through continued implementation of cost-containment programs, including price controls and restrictions on coverage and reimbursement, which could further limit sales of any product. In addition, payors continue to question safety and efficacy while also challenging the prices charged, examining medical necessity and reviewing the cost effectiveness of devices in an effort to avoid coverage and reimbursement. But decreases of this nature surrounding the reimbursement for any product or a decision by a government and third-party payor not to cover a product could result in reduced physician usage and patient demand for the product. 

Moreover, in international markets, reimbursement and healthcare payment systems vary significantly by country, with many countries have instituted price ceilings on specific products and therapies. 

The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of FDA or another governmental authority, could have a negative impact on us.

We are subject to FDA’s medical device reporting regulations, which require us to report to FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event.  

We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the initial use of the device. If we fail to comply with our reporting obligations, FDA could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, seizure of our products, or, if premarket review is required in the future, delay in clearance of future products. 

FDA and foreign regulatory bodies have the authority to require the recall of commercialized medical device products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health. FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found. A government-mandated or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects, labeling or design deficiencies, packaging defects, or other deficiencies or failures to comply with applicable regulations. We cannot assure you that product defects or other errors will not occur in the future. Recalls involving our products could have a material adverse effect on our business, financial condition, and results of operations. 

Moreover, medical device manufacturers are required to maintain certain records of recalls and corrections, even if they are not reportable to FDA. We may initiate voluntary withdrawals or corrections for our devices in the future that we determine do not require notification of FDA. If FDA disagrees with our determinations, then it could require us to report those actions as recalls and we may be subject to enforcement action. A future recall announcement could harm our reputation with customers, potentially lead to product liability and malpractice claims against us and negatively affect our sales. 

We may face difficulties from changes to current regulations and future legislation, both in the U.S. as well as in other foreign jurisdictions where we may be operating. 

Existing regulations and regulatory policies may change, and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates. Legislative changes may impact our future business and operations, including those that may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our product candidates, if approved, and accordingly, our business, financial condition, and results of operations.  

Both before and after a product is commercially released, we have ongoing responsibilities under various laws and regulations. If a regulatory authority were to conclude that we are not in compliance with applicable laws or regulations, or that any of our products are ineffective or pose an unreasonable risk for the end-user, then the authority may ban such devices, detain or seize adulterated or misbranded devices, order a recall, repair, replacement, or refund of such instruments, and require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health. A regulatory authority may also impose operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices, and assess civil or criminal penalties against our officers, employees, or us. The regulatory authority may also recommend prosecution by law enforcement agencies. Any governmental law or regulation, existing or imposed in the future, or enforcement action taken may have a material adverse effect on our business, financial condition, and results of operations. 

We cannot predict the likelihood, nature, or extent of any legislative changes will be enacted or government regulation that may arise from future legislation or administrative action, either in the U.S. or abroad. Similarly, we cannot predict whether FDA regulations, guidance, or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, then we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability. 

Our industry is highly competitive and subject to significant or rapid technological change. 

Our fields of therapeutic interest is highly competitive and subject to significant and rapid technological change. Accordingly, our success may depend, in part, on our ability to respond quickly to such change through the development and introduction of new products.  

If our product candidates are approved by FDA, then potential competitors who seek to introduce similar product candidates may seek to take advantage of a shorter and less costly development program for a product that competes with our products. Our ability to compete successfully against currently existing and future alternatives to our product candidates and systems and competitors who compete directly with us may depend, in part, on our ability to attract and retain skilled scientific and research personnel, develop technologically superior products, develop competitively priced products, obtain patent or other required regulatory approvals for our products, be an early entrant to the market and manufacture, market, and sell our products, independently or through collaborations. 

We currently rely upon external resources for many engineering and product development services. If we are unable to secure engineering or product development partners or establish satisfactory engineering and product development capabilities, we may not be able to successfully commercialize our technology. 

Our success depends upon our ability to develop products that are accurate and provide solutions for our customers. Achieving the desired results for our customers requires solving engineering issues in concert with them. Any failure of our technology or related products to meet customer expectations could result in customers choosing to retain their existing methods or to adopt systems other than ours. 

Historically, we have not had sufficient internal resources to work on all necessary engineering and product development matters. We have used third parties in the past and will continue to do so. These resources are not always readily available, and the absence of their availability could inhibit our research and development efforts and our responsiveness to our customers. Our inability to secure those resources could impact our ability to provide engineering and product development services and could have an impact on our customers’ willingness to use our technology. Moreover, third parties have their own internal demands on time and resources which may not always align with ours. Hence, our own expectations for development and product timelines may not be shared by third parties upon whom we rely. 

We are in the early stages of commercialization and our technology and related products may never achieve significant commercial market acceptance. 

Our success depends on our ability to develop and market devices that are recognized as accurate, safe and cost-effective. They must be safe and deliver the required level of accuracy under any condition, regardless of the user, as determined by their intended use. This will be achieved through continued refinement of our technology. Before presenting it to the FDA, additional development is needed to increase its generalizability. 

Many of our potential customers may be reluctant to use our new technology. Market acceptance will depend on many factors, including our ability to convince potential customers that our technology and related products are an attractive alternative to existing technologies. We will need to demonstrate that our products provide accurate and cost-effective alternatives to existing technologies. Compared to most competing technologies, our technology is new, and most potential customers will have limited knowledge of, or experience with, our products. Prior to implementing our technology and related products, some potential customers may be required to devote significant time and effort to testing and validating our products. Any failure of our technology or related products to meet customer expectations could result in customers choosing to retain their existing methods or to adopt systems other than ours.

Many factors influence the perception of a new technology including its use by leaders in the industry. If we are unable to induce industry leaders in our target markets to implement and use our technology and related products, acceptance and adoption of our products could be slowed. In addition, if our products fail to gain significant acceptance in the marketplace and we are unable to expand our customer base, we may never generate sufficient revenue to achieve or sustain profitability. 

Additionally, we may not be able to penetrate or successfully operate in international markets or encounter difficulty expanding into international markets because of limited brand recognition in certain parts of the world, which may lead to delayed acceptance of our products by consumers in these international markets. If we are unable to expand internationally and manage the complexity of international operations successfully, then it could have a material adverse effect on our business, financial condition, and results of operations. If our efforts to introduce our products into foreign markets are not successful, then we may have expended significant resources without realizing the expected benefit. Ultimately, the investment required for expansion into foreign markets could exceed the results of operations generated from this expansion. 

We are dependent on key personnel. 

Our success depends to a significant degree upon the continued contributions of key management and other personnel, some of whom could be difficult to replace. While our continued operation and ultimate success is not dependent upon one individual, our success does depend on the performance of our officers, our ability to retain and motivate our officers, our ability to integrate new officers into our operations, and the ability of all personnel to work together effectively as a team. Our failure to retain and recruit officers and other key personnel could have a material adverse effect on our business, financial condition and results of operations. Our success also depends on our continued ability to identify, attract, hire, train, retain and motivate highly skilled technical, managerial, manufacturing, administrative and sales and marketing personnel. Competition for these individuals is intense, and we may not be able to successfully recruit, assimilate or retain sufficiently qualified personnel. In particular, we may encounter difficulties in recruiting and retaining a sufficient number of qualified technical personnel, which could harm our ability to develop new products and adversely impact our relationships with existing and future customers. The inability to attract and retain necessary technical, managerial, manufacturing, administrative and sales and marketing personnel could harm our ability to obtain new customers and develop new products and could adversely affect our business and operating results.

We rely on the timely supply of components and parts and could suffer if suppliers fail to meet their delivery obligations, raise prices or cease to supply us with components or parts. 

The manufacture of our products is complex and requires the integration of a number of components from several sources of supply. We rely on numerous critical suppliers for various key components that are used in the manufacturing of our products. We can make no assurance that we will be able to maintain such supply arrangements. If we are unable to maintain supply arrangements, our access to key components could be reduced, which could harm our business.  

Additionally, if demand for our products decreases, we may have excess inventory and inventory that may expire, which could result in inventory write-offs that would have a material adverse effect on our business, financial condition, and results of operations. We may also encounter defects in materials and/or workmanship, which could lead to a failure to adhere to regulatory requirements. Any defects could delay operations at our contract manufacturers’ facilities, lead to regulatory fines, or halt or discontinue manufacturing indefinitely. Any of these outcomes could have a material adverse effect on our business, financial condition, and results of operations. 

This reliance also adds additional risks to the manufacturing process that are beyond our control. For example, the occurrence of epidemics or pandemics may cause one or more of our suppliers to close or reduce the scope of their operations either temporarily or permanently. In addition, these suppliers may provide components and products to our competitors. The medical device industry’s reliance on a limited number of key components and product suppliers subjects us to the risk that in the event of an increase in demand, our suppliers may fail to provide supplies to us in a timely manner while they continue to supply our competitors, many of which have greater purchasing power than us, or seek to supply components to us at a higher cost.  

The failure of our suppliers to deliver components or products in a timely fashion could have disruptive effects on our ability to produce our products in a timely manner, or we may be required to find new suppliers at an increased cost.  

Moreover, our reputation and the quality of our products are in part dependent on the quality of the components that we source from third-party suppliers. If we are unable to control the quality of the components supplied to us or to address known quality problems in a timely manner, then our reputation in the market may be damaged and sales of our products may suffer. As a result, we may experience a material adverse effect on our business, financial condition, and results of operations. 

We have limited insurance which may not cover claims by third parties against us or our officers and directors. 

We have directors’ and officers’ liability insurance and commercial liability insurance policies. Claims, however, by third parties against us may exceed policy amounts and we may not have amounts to cover these claims. Any significant claims would have a material adverse effect on our business, financial condition and results of operations. In addition, our limited directors’ and officers’ liability insurance may affect our ability to attract and retain directors and officers. 

Our inability to effectively protect our intellectual property would adversely affect our ability to compete effectively, our revenue, our financial condition and our results of operations. 

We rely on a combination of patent, trademark, and trade secret laws, and confidentiality procedures to protect our intellectual property rights. Creating and maintaining a strong patent portfolio is important to our business. Patent law relating to the scope of claims in the technology fields in which we operate is complex and uncertain, so we cannot be assured that we will be able to obtain or maintain patent rights, or that the patent rights we may obtain will be valuable, provide an effective barrier to competitors or otherwise provide competitive advantages. Others have filed, and in the future are likely to file, patent applications that are similar or identical to ours or those of our licensors. To determine the priority of inventions or demonstrate that we did not derive our invention from another, we may have to participate in interference or derivation proceedings in the United States Patent and Trademark Office or in court that could result in substantial costs in legal fees and could substantially affect the scope of our patent protection. We cannot be assured our patent applications will prevail over those filed by others. Also, our intellectual property rights may be subject to other challenges by third parties. Patents we obtain could be challenged in litigation or in administrative proceedings such as ex parte reexam, inter parties review, or post grant review in the United States or opposition proceedings in Europe or other jurisdictions.  

There can be no assurance that: 

If we are prevented from selling our products, or if we are required to develop new technologies or pay significant monetary damages or are required to make substantial royalty payments, our business and results of operations would be harmed.

Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic maintenance fees, renewal fees, annuity fees, various other governmental fees on patents and/or applications due in several stages over the lifetime of patents and/or applications, as well as the cost associated with complying with numerous procedural provisions during the patent application process. We may or may not choose to pursue or maintain protection for particular inventions. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forgo patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer. 

Legal actions to enforce our patent rights can be expensive and may involve the diversion of significant management time. In addition, these legal actions could be unsuccessful and could also result in the invalidation of our patents or a finding that they are unenforceable. We may or may not choose to pursue litigation or interferences against those that have infringed on our patents, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could have a material adverse effect on our results of operations and business. 

Claims by others that our products infringe their patents or other intellectual property rights could prevent us from manufacturing and selling some of our products or require us to pay royalties or incur substantial costs from litigation or development of non-infringing technology. 

In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. We may receive notices that claim we have infringed upon the intellectual property of others. Even if these claims are not valid, they could subject us to significant costs. Any such claims, with or without merit, could be time-consuming to defend, result in costly litigation, divert our attention and resources, cause product shipment delays or require us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all. We have not been engaged in litigation but litigation may be necessary in the future to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation may also be necessary to defend against claims of infringement or invalidity by others. A successful claim of intellectual property infringement against us and our failure or inability to license the infringed technology or develop or license technology with comparable functionality could have a material adverse effect on our business, financial condition and operating results. 

The analysis of our patent portfolio by PatSnap Research and ipCapital Group is not a legal analysis and does not predict the outcome of any legal challenges we or others might make in regard to patents, nor does it constitute a view on the overall legal strength of our patents.  

If we are unable to secure a sales and marketing partner or establish satisfactory sales and marketing capabilities at our company, we may not be able to successfully commercialize our technology. 

If we are not successful entering into appropriate collaboration arrangements or recruiting sales and marketing personnel or in building a sales and marketing infrastructure, we will have difficulty successfully commercializing our technology, which would adversely affect our business, operating results and financial condition. 

We may not be able to enter into collaboration agreements on terms acceptable to us or at all. In addition, even if we enter into such relationships, we may have limited or no control over the sales, marketing and distribution activities of these third parties. Our future revenues may depend heavily on the success of the efforts of these third parties. If we elect to establish a sales and marketing infrastructure, we may not realize a positive return on this investment. In addition, we must compete with established and well-funded pharmaceutical and biotechnology companies to recruit, hire, train and retain sales and marketing personnel. Factors that may inhibit our efforts to commercialize technology without strategic partners or licensees include: 

We may engage in acquisitions, mergers, strategic alliances, joint ventures and divestures that could result in final results that are different than expected. 

In the normal course of business, we engage in discussions relating to possible acquisitions, equity investments, mergers, strategic alliances, joint ventures and divestitures. Such transactions are accompanied by a number of risks, including the use of significant amounts of cash, potentially dilutive issuances of equity securities, incurrence of debt on potentially unfavorable terms as well as impairment expenses related to goodwill and amortization expenses related to other intangible assets, the possibility that we may pay too much cash or issue too many of our shares as the purchase price for an acquisition relative to the economic benefits that we ultimately derive from such acquisition, and various potential difficulties involved in integrating acquired businesses into our operations. 

From time to time, we have also engaged in discussions with candidates regarding the potential acquisitions of our product lines, technologies and businesses. If a divestiture such as this does occur, we cannot be certain that our business, operating results and financial condition will not be materially and adversely affected. A successful divestiture depends on various factors, including our ability to effectively transfer liabilities, contracts, facilities and employees to any purchaser; identify and separate the intellectual property to be divested from the intellectual property that we wish to retain; reduce fixed costs previously associated with the divested assets or business; and collect the proceeds from any divestitures. 

If we do not realize the expected benefits of any acquisition or divestiture transaction, our financial position, results of operations, cash flows and stock price could be negatively impacted. 

We may make strategic acquisitions in the future, and if the acquired companies do not perform as expected, this could adversely affect our operating results, financial condition and existing business. 

We may continue to expand our business through strategic acquisitions. The success of any acquisition will depend on, among other things: 

We may not be successful in effectively integrating acquired businesses and completing acquisitions in the future. We also may incur substantial expenses and devote significant management time and resources in seeking to complete acquisitions. Acquired businesses may fail to meet our performance expectations. If we do not achieve the anticipated benefits of an acquisition as rapidly as expected, or at all, investors or analysts may not perceive the same benefits of the acquisition as we do. If these risks materialize, our stock price could be materially adversely affected. 

Government regulatory approval may be necessary before some of our products can be sold and there is no assurance such approval will be granted. 

Our technology will have a number of potential applications in fields of use that will require prior governmental regulatory approval before the technology can be introduced to the marketplace. For example, we are exploring the use of our technology for certain medical diagnostic applications, with an initial focus on the monitoring of blood glucose. There is no assurance that we will be successful in developing glucose monitoring medical applications for our technology. If we were to be successful in developing glucose monitoring medical applications of our technology, prior clearance by FDA and other governmental regulatory bodies will be required before the technology could be introduced into the marketplace. Our devices leverage machine learning and artificial intelligence to process the massive data collected through the Bio-RFID sensor. Our intelligence and machine learning also controls the sensor operation, enabling the device to emit and capture data, and, ultimately, to identify and measure blood glucose levels. Machine learning enabled device software functions (ML-DSF) continue to be evaluated by FDA, which recently released new guidance proposing a science-based approach for machine learning and artificial intelligence enabled medical devices to be modified and improved more quickly. There is no assurance that such regulatory approval would be obtained for a glucose monitoring medical diagnostic device or other applications requiring such approval. FDA can refuse to grant, delay, and limit or deny approval of an application for clearance of marketing a glucose monitoring device for many reasons. We may not obtain the necessary regulatory approvals or clearances to market these glucose monitoring systems in the United States or outside of the United States. Any delay in, or failure to receive or maintain, approval or clearance for our products could prevent us from generating revenue from these products or achieving profitability. 

We or our manufacturers may be unable to obtain or maintain international regulatory clearances or approvals for our current or future products, or our distributors may be unable to obtain necessary qualifications, which could harm our business thus limited sales to the U.S. 

Sales of our products internationally are subject to foreign regulatory requirements that vary widely from country to country. In addition, FDA regulates exports of medical devices from the U.S. Complying with international regulatory requirements can be an expensive and time-consuming process, and marketing approval or clearance is not certain. The time required to obtain clearances or approvals, if required by other countries, may be longer than that required for FDA clearance or approvals, and requirements for such clearances or approvals may significantly differ from FDA requirements. We may rely on third-party distributors to obtain regulatory clearances and approvals required in other countries, and these distributors may be unable to obtain or maintain such clearances or approvals. Our distributors may also incur significant costs in attempting to obtain and in maintaining foreign regulatory approvals or clearances, which could increase the difficulty of attracting and retaining qualified distributors. If our distributors experience delays in receiving necessary qualifications, clearances or approvals to market our products outside the U.S., or if they fail to receive those qualifications, clearances or approvals, then we may be unable to market our products or enhancements in international markets effectively, or at all. 

Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent and, to the extent we market and sell our products outside of the U.S., we may be subject to rigorous international regulation in the future. In these circumstances, we would be required to rely on our foreign independent distributors to comply with the varying regulations, and any failures on their part could result in restrictions on the sale of our product in foreign countries. 

Cybersecurity risks and cyber incidents could result in the compromise of confidential data or critical data systems and give rise to potential harm to customers, remediation and other expenses, expose us to liability under consumer protection laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations. 

Cyber incidents can result from deliberate attacks or unintentional events. We collect and store on our networks sensitive information, including intellectual property, proprietary business information and personally identifiable information of our customers. The secure maintenance of this information and technology is critical to our business operations. We have implemented multiple layers of security measures to protect the confidentiality, integrity and availability of this data and the systems and devices that store and transmit such data. We utilize current security technologies, and our defenses are monitored and routinely tested internally and by external parties. Despite these efforts, threats from malicious persons and groups, new vulnerabilities and advanced new attacks against information systems create risk of cybersecurity incidents. These incidents can include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventative measures. 

These threats can come from a variety of sources, ranging in sophistication from an individual hacker to malfeasance by employees, consultants or other service providers to state-sponsored attacks. Cyber threats may be generic, or they may be custom crafted against our information systems. Over the past several years, cyber-attacks have become more prevalent and much harder to detect and defend against. Our network and storage applications may be vulnerable to cyber-attack, malicious intrusion, malfeasance, loss of data privacy or other significant disruption and may be subject to unauthorized access by hackers, employees, consultants or other service providers. In addition, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, contractors and temporary staff. 

There can be no assurance that we will not be subject to cybersecurity incidents that bypass our security measures, impact the integrity, availability or privacy of personal health information or other data subject to privacy laws or disrupt our information systems, devices or business, including our ability to deliver services to our customers. As a result, cybersecurity, physical security and the continued development and enhancement of our controls, processes and practices designed to protect our enterprise, information systems and data from attack, damage or unauthorized access remain a priority for us. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cybersecurity vulnerabilities. 

Additionally, the U.S. may institute additional cybersecurity requirements especially for medical devices. For example, the data security requirements in the Food and Drug Omnibus Reform Act (“FDORA”), enacted in December 2022, that among other provisions, requires developers of certain “cyber devices” to design and implement plans to monitor, identify and address cybersecurity vulnerabilities of those devices and to submit those plans to FDA as part of every new 510(k) or PMA for a cyber device. “Cyber devices” are defined as devices that include software, connect to the internet, and contain any technological features that could be vulnerable to cybersecurity threats. This provision entered into effect on March 29, 2023, and FDA has indicated that it expects sponsors of cyber devices to begin to comply with these requirements as of October 1, 2023. FDA has stated that failure to comply with these requirements will result in FDA denying approval of the cyber device application. 

We are subject to corporate governance and internal control requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements could adversely affect our business. 

We must comply with corporate governance requirements under the Sarbanes-Oxley Act of 2002 and the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, as well as additional rules and regulations currently in place and that may be subsequently adopted by the Securities and Exchange Commission, or the SEC, and the Public Company Accounting Oversight Board. These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future. The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial. 

We cannot assure you that we will be able to fully comply with these laws, rules, and regulations that address corporate governance, internal control reporting, and similar matters in the future. Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition, and the value of our securities. 

Risks Related to Ownership of Our Common Stock 

If we are unable to comply with the continued listing requirements of the NYSE American, then our common stock would be delisted from the NYSE American, which would limit investors’ ability to effect transactions in our common stock and subject us to additional trading restrictions. 

Our common stock is currently listed on the NYSE American and the continued listing of our common stock on the NYSE American is contingent on our continued compliance with a number of listing requirements. If we are unable to comply with the continued listing requirements of the NYSE American, our common stock would be delisted from the NYSE American, which would limit investors’ ability to effect transactions in our common stock subject us to additional trading restrictions. In order to maintain our listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of stockholders’ equity and a minimum number of public stockholders, as well as satisfy other listing requirements of the NYSE American. In addition to these objective standards, NYSE American may delist the securities of any issuer for other reasons involving the judgment of NYSE American.  

On September 27, 2024, we received a notification from the NYSE American LLC (the “NYSE American”) stating that our company is not in compliance with the minimum stockholders’ equity requirements of Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”) requiring stockholders’ equity of $2.0 million or more if our company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years, $4.0 million or more if our company has reported losses from continuing operations and/or net losses in three of the four most recent fiscal years and $6.0 million or more if our company has reported losses from continuing operations and/or net losses in its five most recent fiscal years, respectively. As of June 30, 2024, we had stockholders’ deficit of $4.6 million and we have had losses in the most recent five fiscal years ended September 30, 2023.

We are now subject to the procedures and requirements of Section 1009 of the Company Guide. On October 27, 2024, we submitted a plan (the “Plan”) of actions it has taken or will take to regain compliance with the continued listing standards by March 27, 2026. If the NYSE American accepts the Plan, we will be able to continue its listing during the Plan period and will be subject to periodic reviews including quarterly monitoring for compliance with the Plan until it has regained compliance. If the Plan is not accepted by the NYSE American, delisting proceedings will commence. We may appeal a staff delisting determination in accordance with Section 1010 and Part 12 of the Company Guide.

There is no assurance that we will be able to maintain compliance with the NYSE American continued listing rules and/or continue its listing on the NYSE American in the future. 

If the NYSE American delists our common stock from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect the common stock would qualify to be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including: 

The price of our common stock is volatile, which may cause investment losses for our stockholders.  

The market price of our common stock has been and is likely in the future to be volatile. Our common stock price may fluctuate in response to factors such as: 

These broad market and industry factors may have a material adverse effect on the market price of our common stock, regardless of our actual operating performance. These factors could have a material adverse effect on our business, financial condition, and results of operations.

The sale of a significant number of our shares of common stock could depress the price of our common stock. 

As of September 30, 2024, we had 108,097,936 shares of common stock issued and outstanding. As of September 30, 2024, there were options outstanding for the purchase of 27,506,731 shares of our common stock (including unearned stock option grants totaling 3,869,825 shares related to performance targets), warrants for the purchase of 49,341,861 shares of our common stock, 8,108,356 shares of our common stock issuable, collectively, upon the conversion of our Series C and D Convertible Preferred Stock, and approximately 480,436 shares of our common stock, collectively, reserved to pay accrued dividends on our Series C and Series D Convertible Preferred Stock. In addition, we currently have 9,020,264 shares of our common stock are issuable upon conversion of convertible debentures of $2,761,931 and 3,840,000 shares of our common stock are issuable upon conversion of convertible debentures of $1,961,575.  Further, under the current terms of our Series C and D Convertible Preferred Stock, and assuming no changes in the ownership thereof, going forward on a quarterly basis we will accrete as a preferred dividend the value of approximately 160,000 shares of common stock, which are issuable if such dividends become payable as additional shares of preferred stock, and such preferred stock is then converted into common stock. We have the option to repay Lind in cash or common stock. Should we make our monthly payments in common stock, there may be a price adjustment. All of the foregoing shares could potentially dilute future earnings per share and are excluded from the September 30, 2024, calculation of diluted net loss per share because their impact is antidilutive. 

Significant shares of common stock are held by our principal stockholders, other company insiders and other large stockholders. As “affiliates,” as defined under Rule 144 under the Securities Act, our principal stockholders, other of our insiders and other large stockholders may only sell their shares of common stock in the public market pursuant to an effective registration statement or in compliance with Rule 144. 

These options, warrants, convertible notes payable and convertible preferred stock could result in further dilution to common stockholders and may affect the market price of the common stock. 

Future capital raises or other issuances of equity or debt securities may dilute our existing stockholders’ ownership and/or have other adverse effects on our operations. 

Pursuant to our articles of incorporation, we are authorized to issue 300,000,000 shares of common stock. To the extent that common stock is available for issuance, subject to compliance with applicable stock exchange listing rules, our board of directors has the ability to issue additional shares of common stock in the future for such consideration as the board of directors may consider sufficient. The issuance of any additional shares could, among other things, result in substantial dilution of the percentage ownership of our stockholders at the time of issuance, result in substantial dilution of our earnings per share and adversely affect the prevailing market price for our common stock. 

Pursuant to our articles of incorporation, we are also authorized to issue 5,000,000 shares of blank check preferred stock of which 30,000 shares have been designated as our Series C Convertible Preferred Stock and 20,000 shares have been designated as our Series D Convertible Preferred Stock. Such preferred stock is senior to our common stock in terms of dividend priority and liquidation preference. Any preferred stock that we issue in the future may rank ahead of our common stock in terms of dividend priority or liquidation preference and may have greater voting rights than our common stock. In addition, such preferred stock may contain provisions allowing those shares to be converted into shares of common stock, which could dilute the value of our common stock to current stockholders and could adversely affect the market price, if any, of our common stock. In addition, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company. Although we have no present intention to designate or issue any shares of our authorized blank check preferred stock, there can be no assurance that we will not do so in the future. 

As a result of the modifications of our Series C and D Convertible Preferred Stock (see Description of Securities—Preferred Stock), assuming no changes in the amount of outstanding Series C Convertible Preferred Stock or Series D Convertible Preferred Stock ownership, going forward on a quarterly basis we will accrete as a preferred dividend the value of approximately 160,000 shares of common stock. Future accreted dividends will be settled by issuing additional shares of preferred stock which can then be converted to common stock.  

In the future, we may also attempt to increase our capital resources by offering debt securities. These debt securities would have rights senior to those of our common stock and the terms of the debt securities issued could impose significant restrictions on our operations, including liens on our assets. 

Because our decision to issue securities or incur debt in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financing. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future. Thus, you will bear the risk of our future offerings reducing the value of your shares and diluting your interest in us. 

The exercise prices of certain warrants, and the conversion prices of our outstanding convertible notes payable and our preferred stock may require further adjustment.  

If in the future, if we sell our common stock at a price below $0.25 per share, the conversion price of (i) the outstanding shares of Series C and D Convertible Preferred Stock; (ii) promissory notes convertible into 9,020,264 shares of our common stock; and (iii) warrants to purchase 7,634,381 shares of common stock would adjust below $0.25 per share. We have the option to repay Lind in cash or common stock. Should we make our monthly payments in common stock, there may be a price adjustment.

If our company were to dissolve or wind-down operations, holders of our common stock would not receive a liquidation distribution. 

If we were to wind up or dissolve our company and liquidate and distribute our assets, our common stockholders would share in our assets only after we satisfy any amounts we owe to our creditors and preferred equity holders. If our liquidation or dissolution were attributable to our inability to profitably operate our business, then it is likely that we would have material liabilities at the time of liquidation or dissolution. Accordingly, it is very unlikely that sufficient assets will remain available after the payment of our creditors and preferred equity holders to enable common stockholders to receive any liquidation distribution with respect to any common stock. 

Provisions of the warrants could discourage an acquisition of us by a third party.

Certain provisions of our outstanding warrants could make it more difficult or expensive for a third party to acquire us. The warrants prohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among other things, the surviving entity assumes our obligations under the warrants. These and other provisions of our outstanding warrants could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to you.

We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. 

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business, and we do not anticipate paying any cash dividends on our capital stock in the foreseeable future. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 1C. CYBERSECURITY

Our cybersecurity and risk management program is intended to protect the confidentiality, integrity, and availability of our critical information systems and the data resident on them. Due to the nature of our business and our customers, we face cybersecurity challenges and threats, including attempts to gain unauthorized access to our intellectual property, trade secrets, codebase, proprietary or confidential information, denial-of-service attacks, attacks from foreign nations, as well as threats to our identity and personnel. We have designed our IT systems and processes with the intention that our solutions should defend against the ever-evolving threat landscape while remaining agile to keep up with such threats.

We leverage a combination of cyber security frameworks to protect its assets. We use the controls from these frameworks as well as guidelines and best practices from the industry to develop our cybersecurity plan. Our cybersecurity plan and its elements are reviewed regularly to ensure they meet the requirements and expectations of our security needs. We have an information security policy in place, which includes monthly meetings with outside cybersecurity experts to review and maintain the procedures up to current standards.

Our cybersecurity program is spearheaded by its software department, with support from external advisors and approval from executive management. The stakeholders have been identified and know their roles within the cyber security process as well as having all roles be documented.

The Audit Committee of the Board of Directors performs an annual review of our cybersecurity program, including management’s actions to identify and detect threats.  The Board receives periodic reports and annual updates on our crisis management plan which includes cybersecurity. Both the Chief Science Officer and the Chief Financial Officer share responsibility for our program and solicit support of third party experts as necessary.

Risk is assessed based on multiple factors. First, our IT and administrative team updates and maintains our asset inventory to ensure all assets are included in our risk management process. From there, key assets are identified, and risk is assessed based on business impact, availability of information, and attack feasibility. After the risks have been identified, they are reviewed with the stakeholders for action plans or sign-off on the acceptance of risk.

We leverage third party applications and software to help identify vulnerabilities within our system’s boundaries. These vulnerability lists are used to create remediation plans and are prioritized based on severity and attack feasibility.

An incident response plan has been established which provides detailed information on actions to take in the event of an incident. The incident response plan includes the scope of the plan, establishes the incident response team, details the incident response lifecycle, and provides templates to make the process easier to document and follow. Timelines, communication methods, and notification information are included in the plan to ensure the process can be followed in high pressure situations which can occur during incidents.

Sensitive and confidential data is a part of business. We leverage an encryption and signing policy that identifies the type of information we store and what level of encryption and signing is required for the data. This document also details the overarching requirements for encryption such as allowed cyphers, encryption methods, and key storage.

We have had one cybersecurity incident in the last decade. A company-issued computer was reported stolen from an employee’s residence. This incident represented a potential cybersecurity threat, as the device contained sensitive company information, including access credentials, confidential data, and proprietary software. The threat was quickly identified and isolated before significant damage could be done. This incident did not affect business operations and did not have a financial impact on our company. Our cybersecurity experts promptly locked the device, changed all relevant passwords and access credentials, initiated a remote wipe, and notified relevant teams and law enforcement, everything according to its info security plan. No proprietary information was lost.

ITEM 2. PROPERTIES.

Properties and Operating Leases

On March 2, 2024, we signed a lease on executive and research and testing facilities at 619 Western Avenue, Suite 610, Seattle, Washington 98104. We leased 5,996 square feet and the current net monthly payment is $11,492 and increases at 3% annually after year one. The lease commenced on May 1, 2024 and terminates on July 31, 2027.

ITEM 3. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock began trading on NYSE American under the symbol “KNW” on September 16, 2022.

Number of Holders of our Common Shares

As of September 30, 2024, there were 108,097,936 shares of common stock issued and outstanding, held by 181 stockholders of record. This number does not include approximately 5,000 beneficial owners whose shares are held in the names of various security brokers, dealers and registered clearing agencies.

Dividend Policy

We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common stock in the near future. We may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common stock. Any future determination to declare dividends will be made at the discretion of our board of directors subject to limitations under applicable law (including Nevada Revised Statutes 78.288) and will depend on our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. See also Item 1A “Risk Factors—Risks Related Ownership of Our Common Stock— We do not anticipate paying any cash dividends on our capital stock in the foreseeable future.”

Our Series C and D Convertible Preferred Stock do not accrue or pay cash dividends. All future dividends will be accrued and paid in Series C or D Convertible Preferred Stock, as applicable. See “Description of Securities—Preferred Stock.”

Securities Authorized for Issuance under Equity Compensation Plans

See Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Recent Sales of Unregistered Securities

During the three months ended September 30, 2024, we had no sales of unregistered equity securities.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Description of Securities

The following description summarizes certain terms of our capital stock. Because this is a summary description, it does not contain all of the information that may be important to you. This summary does not purport to be complete and is qualified in its entirety by the provisions of our articles of incorporation as amended, restated and supplemented to date, or our articles of incorporation, and our second amended and restated bylaws, or our bylaws,  as well as the applicable provisions of the Nevada Revised Statutes.

The following description summarizes important terms of the classes of our capital stock as of September 30, 2024.

Authorized Capital Stock

Our authorized capital stock currently consists of:

Outstanding Shares of Capital Stock

Our common stock is our only security registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. All outstanding shares of our capital stock are fully paid and nonassessable. As of September 30, 2024, there were:

Common Stock

We currently have authority to issue up to 300,000,000 shares of common stock, $0.001 par value per share. As of September 30, 2024, we had 108,097,936, shares of common stock outstanding. From time to time we may amend our certificate of incorporation to increase the number of authorized shares of common stock. Any such amendment would require the approval of the holders of a majority of the voting power of the shares entitled to vote thereon.

Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, including the election of directors, and are entitled to receive dividends when and as declared by our Board out of funds legally available therefore for distribution to stockholders and to share ratably in the assets legally available for distribution to stockholders in the event of the liquidation or dissolution, whether voluntary or involuntary, of our company. We have not paid any dividends and do not anticipate paying any dividends on our common stock in the foreseeable future. It is our present policy to retain earnings, if any, for use in the development of our business. Our common stockholders do not have cumulative voting rights in the election of directors and have No preemptive, subscription, or conversion rights. Our common stock is subject to redemption by us. 

Securities Subject to Price Adjustments 

If in the future, if we sell our common stock at a price below $0.25 per share, the conversion price of (i) the outstanding shares of Series C and D Convertible Preferred Stock; (ii) promissory notes convertible into 9,020,264 shares of our common stock; and (iii) warrants to purchase 7,634,381 shares of common stock would adjust below $0.25 per share. We have the option to repay Lind in cash or common stock. Should we make our monthly payments in common stock, there may be a price adjustment.

Series C and D Convertible Preferred Stock, Warrants and Dividends

In 2016, we closed a Series C Convertible Preferred Stock and Warrant Purchase Agreement with Clayton A. Struve, an accredited investor for the purchase of $1,250,000 of preferred stock with a conversion price of $0.70 per share. The preferred stock has a cumulative dividend of 8% and an ownership blocker of 4.99%. Dividends are due and payable in cash when declared or when the stock is converted. Series C Convertible Preferred Stock is senior to Series D Convertible Preferred Stock and is entitled to receive equal dividends paid to Series D Convertible Preferred Stock. In addition, Mr. Struve received a five-year warrant to acquire 1,785,714 shares of common stock at $0.70 per share. On August 14, 2017, the price of the Series C Convertible Preferred Stock and warrant and its conversion price, were adjusted to $0.25 per share pursuant to the documents governing such instruments. As of September 30, 2024, Mr. Struve owns all of the 17,858 issued and outstanding shares of Series C Convertible Preferred Stock. Each holder of Series C Convertible Preferred Stock is allowed to vote as a common shareholder as if the shares were converted to common stock up to the ownership blocker of 4.99%.

In 2017, we closed a $750,000 Series D Convertible Preferred Stock and Warrant offering with Mr. Struve. As of March 31, 2024, Mr. Struve owns all of the 10,161 issued and outstanding shares of Series D Convertible Preferred Stock. Each outstanding share of Series D Convertible Preferred Stock will accrue cumulative cash dividends at a rate equal to 8.0% per annum, subject to adjustment as provided in the Series D Convertible Preferred Stock certificate of designations. Dividends are due and payable in cash when declared or when the stock is converted. In addition, On August 14, 2017, the price of the Series D Convertible Preferred Stock were adjusted to $0.25 per share pursuant to the documents governing such instruments. Each holder of Series D Convertible Preferred Stock is allowed to vote as a common shareholder as if the shares were converted to common stock up to the ownership blocker of 4.99%.

Based upon the modified terms and conditions of our Series C and Series D Convertible Preferred Stock certificates of designations dated August 10, 2023, it was determined that Series C and Series D Convertible Preferred Stock dividends need to be accreted going forward. As of September 30, 2024, we have recorded $121,000 in cumulative deemed dividends related to Series C and D Convertible Preferred Stock which have not been paid, net of (i) $350,696 of accumulated dividends with respect to the Series D Convertible Preferred Stock that were settled for 1,402,784 shares of common stock on June 28, 2023 and (ii) $800,384 of accumulated dividends with respect to the Series C and D Convertible Preferred Stock that were settled for 3,201,534 shares of common stock on June 18, 2024. Mr. Struve is subject to an ownership blocker limiting his ownership to 4.99% of our outstanding shares of common stock and thus the number of common shares he can receive for dividends. Unpaid accreted stock dividends will be issued to Mr. Struve if he converts preferred stock or if the Board declares a dividend thereon, limited to his 4.99% ownership blocker. Assuming no changes in the amount of outstanding Series C and Series D Convertible Preferred Stock ownership, going forward on a quarterly basis we will accrete as a preferred dividend the value of approximately 160,000 shares of common stock, which are issuable if such dividends become payable as additional shares of preferred stock, and such preferred stock is then converted into common stock.

Equity Incentive Plan

There are 27,506,731 (including unearned stock option grants totaling 3,869,825 shares related to performance milestones) options to purchase common stock at an average exercise price of $0.81 per share outstanding as of September 30, 2024 under the 2021 Plan. The expiration dates of these stock options range from now to September 11, 2029.

Warrants to Purchase Common Stock

As of September 30, 2024, we have issued warrants for the purchase of 49,341,861 shares of common stock at a weighted average exercise price of $0.66. The expiration dates of these warrants range from February 28, 2025 to August 13, 2029.

Clayton A. Struve has warrants to purchase 6,269,715 shares of common stock that have a beneficial ownership blocker at 4.99%.

Lind Global Fund II LP has warrants to purchase up to 6,000,000 shares of common stock that have a beneficial ownership blocker at 4.99%-9.99%.

The proceeds of warrants currently outstanding, to the extent not exercised on a cashless basis, may generate potential proceeds. We cannot provide assurance that any of these warrants will be exercised.

Convertible Promissory Notes with Clayton A. Struve

We owe Clayton A. Struve, a significant stockholder, $1,301,005 ($1,071,000, excluding $230,005 recorded as loss on debt extinguishment) under convertible promissory or OID notes. We recorded accrued interest of $101,582 and $94,062 as of September 30, 2024 and 2023, respectively. On September 15, 2023, the due dates on the notes was further extended to September 30, 2024. We expensed $230,005 as loss on debt extinguishment during the year ended September 30, 2023 related to the extension of the notes. We recorded in convertible note payable the incremental value related to the conversion feature and as such, we recorded the extension value as an expense with an offset to convertible note payable. The extension value will be reclassified to equity upon conversion. We are currently working on a further extension for the notes.

Convertible Redeemable Promissory Notes with J3E2A2Z

We owe Ronald P. Erickson and J3E2A2Z, an entity affiliated controlled by Ronald P. Erickson $1,460,926 ($1,184,066, excluding $276,860 as loss on debt extinguishment) under convertible promissory notes. On March 16, 2018, we entered into a Note and Account Payable Conversion Agreement pursuant to which (a) all $664,233 currently owing under the J3E2A2Z Notes was converted to a Convertible Redeemable Promissory Note in the principal amount of $664,233, and (b) all $519,833 of the J3E2A2Z Account Payable was converted into a Convertible Redeemable Promissory Note in the principal amount of $519,833 together with a warrant to purchase up to 1,039,666 shares of common stock of our for a period of five years. The initial exercise price of the warrants described above is $0.50 per share, also subject to certain adjustments. We recorded accrued interest of $84,573 and $218,334 as of September 30, 2024 and 2023, respectively.

On September 15, 2023, the due dates on the notes were extended to September 30, 2024. We expensed $276,860 as interest during the year ended September 30, 2023 related to the extension of the notes. We recorded in convertible note payable the incremental value related to the conversion feature and as such, we recorded the extension value as an expense with an offset to convertible note payable. The extension value will be amortized to equity upon conversion. On October 22, 2024, the due dates on the notes was further extended to September 30, 2025 and increased the interest rate from 6% to 8%.

Senior Convertible Note with Lind Global Fund II, LP

On February 27, 2024, we (a) entered into a securities purchase agreement (the “Lind Purchase Agreement”) with Lind Global Fund II, LP (“Lind”), pursuant to which we may issue Lind one or more senior convertible notes the aggregate principal amount of up to $14,400,000 for an aggregate purchase price equal to up to $12,000,000 and warrants to purchase a number of shares equal to the applicable funding amount multiplied by 75% and divided by the volume weighted average price of the common stock on the trading date immediately preceding the issuance date of the warrant and (b) issued to Lind an initial convertible note with an outstanding principal amount of $4,800,000 in exchange for a purchase price of $4,000,000, that is convertible into shares of our common stock at an adjusted conversion price of $0.26 per share, subject to adjustment, and an initial five year warrant to purchase up to 6,000,000 shares of our common stock at an adjusted exercise price of $0.26 per share, subject to adjustment.

The convertible notes issued under the Lind Purchase Agreement bearing an Original Issue Discount (the “OID”) equal to 20% of the principal amount of the note and do not accrue interest. Beginning on the date that is 120 days from the issuance date of each note and on each one month anniversary thereafter for 20 months, we are obligated to pay to Lind an amount equal to the greater of (x) 5% of the aggregate principal amount of such note or (y) $240,000, until the outstanding principal amount of such note has been paid in full prior to or on its maturity date or, if earlier, upon acceleration, conversion or redemption of such note in accordance with the terms. At our discretion, the monthly payments may be made in cash, in shares of our common stock, or in a combination of cash and shares. If made in shares, the number of shares shall be determined by dividing (x) the principal amount being paid in shares by (y) 90% of the average of the 3 lowest daily VWAPs during the 20 trading days prior to the applicable payment date. The notes set forth certain conditions that must be satisfied before we may make any monthly payments in shares of common stock. If we make a monthly payment in cash, we must also pay Lind a cash premium of 5% of such monthly payment. Lind may elect with respect to no more than two (2) monthly payments to increase the amount of such monthly payment up to $750,000 which increase would be paid only in shares of our common stock upon notice by us. Any such increased payment shall be deducted from the amount of the last monthly payment owed under the note.

Issuance of note shares and warrant shares upon repayment or conversion of notes and exercise of warrants is subject to an ownership limitation equal to 4.99% of our outstanding shares of common stock; provided, that if Lind and its affiliates beneficially own in excess of 4.99% of our outstanding shares of common stock, then such limitation shall automatically increase to 9.99% so long as Lind and its affiliates own in excess of 4.99% of such common stock (and shall, for the avoidance of doubt, automatically decrease to 4.99% upon Lind and its affiliates ceasing to own in excess of 4.99% of such common stock).

Upon the occurrence of any event of default, the notes will become immediately due and payable and we must pay Lind an amount equal to 120% of the then outstanding principal amount of each Note, in addition to any other remedies under the note or the other transaction documents. Events of default include, among others, our failure to make any note payment when due, a default in any indebtedness or adverse judgements in excess of $250,000, our failure to instruct its transfer agent to issue unlegended certificates, our shares of common stock no longer being public traded or listed on a national securities exchange, any stop order or trading suspension restricting the trading in our common stock, and our market capitalization is below $15 million for consecutive 10 days.

The warrant may be exercised via cashless exercise in the event there is no effective registration statement covering the shares of common stock underlying a warrant exercise.

Pursuant to the terms of the securities purchase agreement, if at any time prior to a date that is 24 months following the closing of the offering, we propose to offer or sell any additional securities in a subsequent financing, we shall first offer Lind the opportunity to purchase up to 20% of such new securities.

Our obligations under the notes are secured by a first-priority security interest in all of its assets pursuant to the terms of a security agreement in favor of Lind. In addition, in connection with the offering, our subsidiary Particle, Inc., a Nevada corporation, has guaranteed all of our obligations in connection with the offering pursuant to the terms of a guaranty in favor of Lind.

We received net proceeds of $3,805,699 in exchange for the issuance of the $4,800,000 notes and a warrant to purchase 6,000,000 shares of our common stock. The fair value of the 6,000,000 warrant shares was $2,110,731 on the date of issuance of which $1,411,052 was classified in equity after the allocation of issuance costs. The value of the warrant shares was recorded as debt discount (with an offset to APIC) and will be amortized over the two-year term of the Note.

In connection with this securities purchase agreement, we incurred approximately $994,000 of issuance costs of which $557,000 were allocated to the note and $437,000 to the warrant shares. The amount allocated to the notes was recorded as debt discount (with an offset to APIC) and will be amortized over the two-year term of the notes.

We recorded $830,948 of amortization of debt issuance costs during the year ended September 30, 2024 related to this security purchase agreement.

On June 27, 2024, we issued 546,697 shares of our common stock at $0.44 per share related to a principal payment of convertible debt settled with a common stock issuance for a total value of $240,000. During the year ended September 30, 2024, we made principal payments of $720,000 and interest payments of $36,000.

Anti-takeover Provisions

Anti-Takeover Effects of Certain Provisions of Nevada Law and our Governing Documents

Provisions of the Nevada Revised Statutes, our articles of incorporation and our bylaws could have the effect of delaying or preventing a third-party from acquiring us, even if the acquisition could benefit our stockholders. Such provisions of the Nevada Revised Statutes, our articles of incorporation and our bylaws can have the effect of enhancing continuity and stability in the composition of our board of directors and the policies formulated by the board of directors, and can also have the effect of discouraging certain types of transactions that may involve an actual or threatened change of control of our company. These provisions also may have the effect of reducing our vulnerability to an unsolicited proposal for a takeover that does not contemplate the acquisition of all of our outstanding shares, or an unsolicited proposal for the restructuring or sale of all or part of our company.

Nevada Anti-Takeover Statutes 

The Nevada Revised Statutes, or NRS, contain provisions governing the acquisition of a controlling interest in certain Nevada corporations. Nevada’s “acquisition of controlling interest” statutes (NRS 78.378 through 78.3793, inclusive) contain provisions governing the acquisition of a controlling interest in certain Nevada corporations. These “control share” laws provide generally that any person that acquires a “controlling interest” in certain Nevada corporations may be denied voting rights, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights. These laws will apply to us as of a particular date if we were to have 200 or more stockholders of record (at least 100 of whom have addresses in Nevada appearing on our stock ledger at all times during the 90 days immediately preceding that date) and do business in the State of Nevada directly or through an affiliated corporation, unless our articles of incorporation or bylaws in effect on the tenth day after the acquisition of a controlling interest provide otherwise. These laws provide that a person acquires a “controlling interest” whenever a person acquires shares of a subject corporation that, but for the application of these provisions of the NRS, would enable that person to exercise (1) one-fifth or more, but less than one-third, (2) one-third or more, but less than a majority or (3) a majority or more, of all of the voting power of the corporation in the election of directors. Once an acquirer crosses one of these thresholds, shares which it acquired in the transaction taking it over the threshold and within the 90 days immediately preceding the date when the acquiring person acquired or offered to acquire a controlling interest become “control shares” to which the voting restrictions described above apply. These laws may have a chilling effect on certain transactions if our articles of incorporation or bylaws are not amended to provide that these provisions do not apply to us or to an acquisition of a controlling interest, or if our disinterested stockholders do not confer voting rights in the control shares.

Nevada’s “combinations with interested stockholders” statutes (NRS 78.411 through 78.444, inclusive) provide that specified types of business “combinations” between certain Nevada corporations and any person deemed to be an “interested stockholder” of the corporation are prohibited for two years after such person first becomes an “interested stockholder” unless the corporation’s board of directors approves the combination (or the transaction by which such person becomes an “interested stockholder”) in advance, or unless the combination is approved by the board of directors and sixty percent of the corporation’s voting power not beneficially owned by the interested stockholder, its affiliates and associates. Furthermore, in the absence of prior approval certain restrictions may apply even after such two-year period. For purposes of these statutes, an “interested stockholder” is any person who is (1) the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding voting shares of the corporation, or (2) an affiliate or associate of the corporation and at any time within the two previous years was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding shares of the corporation. The definition of the term “combination” is sufficiently broad to cover most significant transactions between a corporation and an “interested stockholder”. These laws generally apply to Nevada corporations with 200 or more stockholders of record. However, a Nevada corporation may elect in its articles of incorporation not to be governed by these particular laws, but if such election is not made in the corporation’s original articles of incorporation, the amendment (1) must be approved by the affirmative vote of the holders of stock representing a majority of the outstanding voting power of the corporation not beneficially owned by interested stockholders or their affiliates and associates, and (2) is not effective until 18 months after the vote approving the amendment and does not apply to any combination with a person who first became an interested stockholder on or before the effective date of the amendment. Neither our original articles of incorporation nor our current articles of incorporation include such an election.

NRS 78.139 also provides that directors may resist a change or potential change in control of the corporation if the board of directors determines that the change or potential change is opposed to or not in the best interest of the corporation upon consideration of any relevant facts, circumstances, contingencies or constituencies pursuant to NRS 78.138(4). The Nevada Revised Statutes also provide that any director may be removed from our board of directors by the vote or written consent of stockholders representing not less than two-thirds of the voting power of the issued and outstanding shares entitled to vote, and this standard is also reflected in our bylaws.

Bylaws

Our bylaws contain limitations as to who may call special meetings and also establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors.

Authorized but Unissued Shares

Our authorized but unissued shares of common stock are available for our board of directors to issue without stockholder approval. We may use these additional shares for a variety of corporate purposes, including future public or private offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of our authorized but unissued shares of common stock could render it more difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or other transaction. Our authorized but unissued shares may be used to delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. 

Market Price of and Dividends on Common Equity and Related Stockholder Matters

Our common stock trades on the NYSE American under the symbol “KNW”. On November 8, 2024, the last reported sales price of our common stock on the NYSE American was $0.25 per share.

Trades in our common stock may be subject to Rule 15g-9 of the Exchange Act, which imposes requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, broker/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement to the transaction before the sale.

As of November 8, 2024, the high and low sales price of our common stock was $0.28 per share and $0.23 per share, respectively. As of November 8, 2024, we had 108,097,936 shares of common stock issued and outstanding, held by 181 stockholders of record. This number does not include approximately 5,000 beneficial owners whose shares are held in the names of various security brokers, dealers and registered clearing agencies.

Transfer Agent and Registrar

We have appointed Equiniti Trust Company located at 48 Wall Street, Floor 23, New York New York 10005, telephone number (800) 937-5449, as the transfer agent for our common stock.

ITEM 6. RESERVED

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Overview

Know Labs is an emerging leader in non-invasive medical diagnostics. We are focused on the development and commercialization of our proprietary sensor technology utilizing radio and microwave spectroscopy. When paired with our [machine learning platform, our technology is capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy to detect, record, identify, and measure the unique “signature” of said materials or analytes.

Recent Developments

On August 9, 2024, we completed a registered securities offering (the “Underwritten Offering”) of 13,250,000 units consisting of one share of our common stock, par value $0.001 per share, and one warrant to purchase one share of common stock at an exercise price equal to $0.26 per share of common stock. The net proceeds from the Offering were approximately $3.445 million, before deducting underwriting discounts and commissions and offering expenses paid by us. We expect to use the proceeds of the Underwritten Offering to fund general corporate purposes, including working capital, capital expenditures, or research and development. We granted the Representatives a 30-day option to purchase up to an additional 1,987,500 shares of common stock and 1,987,500 warrants to cover over-allotments, if any. On August 8, 2024, the representatives partially exercised their over-allotment option to purchase 1,987,500 shares. Between the closing date and August 21, 2024, the representatives fully exercised their over-allotment option to purchase 1,987,500 shares. The Offering closed on August 9, 2024. After deducting underwriting commissions and other offering expenses, the Company received net proceeds of $3.468 million from the offering and exercise of over-allotment option.

On August 16, 2024, we completed a registered securities offering (the “Registered Offering”) of 6,365,385 units consisting of one share of our common stock, par value $0.001 per share, and one warrant to purchase one share of common stock at an exercise price equal to $0.26 per share of common stock. The net proceeds from the Registered Offering were approximately $1.655 million, before offering expenses paid by us. We expect to use the proceeds of the Registered Offering to fund general corporate purposes, including working capital, capital expenditures, or research and development. As compensation for the Advisors’ services in connection with this Offering, we have agreed to pay a cash fee of 5% of the aggregate gross proceeds of this Offering and to issue to the Advisors (Boustead Securities, LLC and The Benchmark Company, LLC) warrants to purchase 636,538 shares of our common stock. After deducting underwriting commissions and other offering expenses, the Company received net proceeds of $1.515 million from the direct offering.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors: 

Segment Reporting

We consider the business to currently have one operating segment; the development of its radio frequency spectroscopy technology with a first focus on non-invasively ascertaining blood glucose levels.

Results of Operations

The following table sets forth key components of our results of operations during the years ended September 30, 2024 and 2023.

Research and Development Expenses. Research and development expenses for the year ended September 30, 2024 decreased $1,613,000 to $6,114,000 as compared to $7,727,000 for the year ended September 30, 2023. The decrease was due to reduced personnel, use of consultant, expenditures related to the development of our radio frequency spectroscopy Bio-RFID™ technology. During the year ended September 30, 2024, we reduced our headcount by nine and operating expenses and used external consultants to reduce the future cost of the development of our Bio-RFID™ technology. We launched the Generation 2 working prototype device during the year ended September 30, 2024.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended September 30, 2024 increased $2,538,000 to $9,109,000  as compared to $6,571,000 for the year ended September 30, 2023. The increase primarily was due to (i) an increase of $1,257,000 in salaries; (ii) an increase in legal expense of $669,000; (iii) issuance of common stock for services of $277,000; (iv) an increase in other expenses of $335,000. As part of the selling, general and administrative expenses for the years ended September 30, 2024 and 2023, we recorded $606,000 and $305,000, respectively, of investor relationship and business development expenses.     

Other Income (Expense), Net. Other expense, net for the year ended September 30, 2024 was $1,359,000 as compared to other expense net of $1,265,000 for the year ended September 30, 2023. The other expense, net for the years ended September 30, 2024 included interest income of $155,000, offset by interest expense of $1,514,000. The increase in interest expense is related to $595,000 in interest expense for the extension of notes and warrants in February 2024 and amortization of issuance costs related to the Lind convertible note.

The other expense, net for the year ended September 30, 2023 included (i) interest income of $127,000; offset by (ii) interest expense of $390,000 related to convertible notes payable and the modification and extension of terms; (iii) loss on debt extinguishment of $507,000 related to the extension of convertible notes payable; and (iv) other expense of $495,000 related to the write-off of certain equipment.

Net Loss. Net loss for the year ended September 30, 2024 was $16,582,000 as compared to $15,289,000 for the year ended September 30, 2023. The net loss for the year ended September 30, 2024 included non-cash expenses of $4,930,000. The non-cash items include (i) depreciation and amortization of 81,000; (ii) stock based compensation- stock options of $2,958,000;  (iii) issuance of common stock for services of $277,000; (iv) amortization of operating lease right-of-use asset of $189,000; amortization of debt issuance costs of $831,000; and (v) interest expense for extension of notes and warrants of $594,000.

The net loss for the year ended September 30, 2023 included non-cash expenses of $4,768,000. The non-cash items include (i) depreciation and amortization of $313,000; (ii) loss on sale of assets of $550,000; (iii) loss on debt extinguishment of $507,000; (iv) modification of notes and warrants- interest expense of $350,000; (v) stock based compensation- stock options of $2,956,000; (vi) amortization of operating lease right-of-use asset of $142,000; and (vii) gain on debt settlement of $50,000.  

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

As of September 30, 2024, we have cash and cash equivalents of $3,111,000 and a net working capital deficit of approximately $2,053,000. We anticipate that we will record losses from operations for the foreseeable future. We believe that we have enough available cash to operate until February 28, 2025. As of September 30, 2024, our accumulated deficit was $138,736,000 and net losses in the amount of $16,582,000 and $15,289,000 during years ended September 30, 2024 and 2023, respectively.

We intend to seek additional cash via equity and debt offerings. As a result of not having at least twelve months of cash available and not having any firm commitment for debt or equity financing, substantial doubt about our ability to continue on a going concern exists.  

We have financed our corporate operations and our technology development through the issuance of convertible debentures, the sale of common or preferred stock and the exercise of warrants. During the remainder of 2024 and in 2025, we expect to raise additional funds through the issuance of preferred stock, convertible debentures or equity. There can be no assurance that we will be able to secure any needed funding, or that if such funding is available, the terms or conditions would be acceptable to us.

On February 27, 2024, we (a) entered into a securities purchase agreement with Lind Global Fund II LP pursuant to which we may issue to Lind one or more senior convertible notes in the aggregate principal amount of up to $14,400,000 for an aggregate purchase price equal to up to $12,000,000 and common stock purchase warrants and (b) issued a $4,800,000 note and a warrant to purchase 6,000,000 shares of our common stock to Lind in exchange for a purchase price of $4,000,000 and net proceeds of $3,805,699. 

On March 20, 2024, we entered into an At the Market Offering Agreement with The Benchmark Company, LLC pursuant to which we may, from time to time, offer and sell shares of our common stock through or to The Benchmark Company, LLC as our sales agent or manager in an aggregate amount of up to $5,000,000. We have not received any of the $15,000 in funds due under this agreement as of September 30, 2024.

On August 7, 2024, we entered into an Underwriting Agreement with Boustead Securities, LLC and The Benchmark Company, LLC, as representatives of the underwriters named therein, relating to our registered public offering of 13,250,000 units consisting of one share of our common stock, par value $0.001 per share, and one warrant to purchase one share of Common Stock at an exercise price equal to $0.26 per share of Common Stock. The public offering price was $0.26 per Unit. The underwriters agreed to purchase 13,250,000 units at a 7.0% discount to the public offering price. We granted the Representatives a 30-day option to purchase up to an additional 1,987,500 shares of common stock and 1,987,500 warrants to cover over-allotments, if any. The gross proceeds from the Offering are approximately $3.445 million, or approximately $3.961 million if the representatives exercise in full their over-allotment option, before deducting underwriting discounts and commissions and other offering expenses. On August 8, 2024, the representatives partially exercised their over-allotment option to purchase 1,987,500 warrants. Between the closing date and August 21, 2024, the representatives fully exercised their over-allotment option to purchase 1,987,500 shares. The Offering closed on August 9, 2024. After deducting underwriting commissions and other offering expenses, the Company received net proceeds of $3.468 million from the offering and exercise of over-allotment option.

On August 15, 2024, we entered into Subscription Agreements with certain investors for a registered direct offering of 6,365,385 units consisting of one share of our common stock, par value $0.001 per share and one warrant to purchase one share of Common Stock at an exercise price equal of $0.26 per share of Common Stock at an offering price of $0.26 per Unit, for an aggregate purchase price of $1.655 million. As compensation for the Advisors’ services in connection with this Offering, we have agreed to pay a cash fee of 5% of the aggregate gross proceeds of this Offering and to issue to the Advisors warrants to purchase 636,538 shares of our common stock. After deducting underwriting commissions and other offering expenses, the Company received net proceeds of $1.515 million from the direct offering.

The proceeds of warrants currently outstanding, to the extent not exercised on a cashless basis, may generate potential proceeds. We cannot provide assurance that any of these warrants will be exercised.

Operating Activities 

Net cash used in operating activities for the years ended September 30, 2024 and 2023 was $12,829,000 and $10,354,000, respectively. The net cash used in operating activities for the year ended September 30, 2024 was primarily related to (i) a net loss of $16,582,000; (ii) working capital changes of $1,177,000; and offset by (iii) non-cash expenses of $4,930,000. The non-cash items include (iv) depreciation and amortization of 81,000; (v) stock based compensation-stock options of $2,958,000;  (vi) issuance of common stock for services of $277,000; (vii) amortization of operating lease right-of-use asset of $189,000; amortization of debt issuance costs of $831,000; and (viii) interest expense for extension of notes and warrants of $594,000.

The net cash used in operating activities for the year ended September 30, 2023 was primarily related to (i) a net loss of $15,289,000; offset by (ii) working capital changes of $167,000; and (iii) non-cash expenses of $4,768,000. The non-cash items include (iv) depreciation and amortization of $313,000; (v) loss on disposal assets of $550,000; (vi) loss on debt extinguishment of $507,000; (vii) modification of notes and warrants- interest expense of $350,000; (viii) stock based compensation- stock options of $2,956,000; and (ix) amortization of operating lease right-of-use asset of $142,000.  

Investing Activities

Net cash used in investing activities for the years ended September 30, 2024 and 2023 was $66,000 and $81,000, respectively. These amounts were primarily related to the investment in equipment for research and development.

Financing Activities

Net cash provided by financing activities for the for the years ended September 30, 2024 and 2023 was $7,983,000 and $5,865,000, respectively. The net cash provided by financing activities for the year ended September 30, 2024 was primarily related to (i) the proceeds from debt offering net of expenses of $3,764,000; (ii) and  proceeds from common stock offering, net of expenses of $5,193,000; (iii) proceeds from the issuance of common stock for the exercise of warrants of $8,000; offset by (iv) repayment of note payable of $720,000; and (v) payments of debt offering of $262,000. The debt and equity offerings were previously discussed.

The net cash provided by financing activities for the year ended September 30, 2023 was primarily related to (i) proceeds from the issuance of common stock for the exercise of warrants of $387,000; (ii) proceeds from the issuance of common stock for the exercise of stock option grants of $5,000; proceeds from issuance  common stock offering, net of expenses of $5,473,000. On September 29, 2023, we closed an offering of our common stock pursuant to which we sold 28,000,000 shares of common stock, at a purchase price of $0.25 per share. After deducting underwriting commissions and other offering expenses, we received net proceeds of $5,473,000.

Our contractual cash obligations as of September 30, 2024 are summarized in the table below:

We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies Involving Significant Estimates

The following discussion relates to critical accounting policies for our company which involve significant estimates. The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

Revenue Recognition. We determine revenue recognition from contracts with customers through the following steps:

Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Research and Development Expenses. Research and development expenses consist of the cost of officers, employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes.

Fair Value Measurements and Financial Instruments. ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of six levels:

Level 1 – Quoted prices in active markets for identical assets and liabilities; 

Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and.  

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.   

The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, and accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of September 30, 2024 and 2023 are based upon the short-term nature of the assets and liabilities. 

We have a money market account which is considered a Level 1 asset. The balance as of September 30, 2024 and 2023 was $2,942,000 and $7,836,000, respectively. No other assets or liabilities are required to be recorded at fair value on a recurring nature.

Derivative Financial Instruments. Pursuant to ASC 815 “Derivatives and Hedging”, we evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. We then determine if embedded derivative must be bifurcated and separately accounted for. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. We determined that the conversion features for purposes of bifurcation within convertible notes payable issued during 2020 and 2021 were immaterial and as of September 30, 2024 all such convertible notes have been converted to common stock. 

Stock Based Compensation. We have share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of common stock at the fair market value at the time of grant. Stock-based compensation cost to employees is measured by us at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, we recognize stock compensation costs utilizing the fair value methodology over the related period of benefit.

Convertible Securities. Based upon ASC 815-15, we have adopted a sequencing approach regarding the application of ASC 815-40 to convertible securities to determine if an instrument should be accounted for as equity or a liability. We will evaluate our contracts based upon the earliest issuance date. 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The full text of our audited consolidated financial statements are submitted as a separate section of this Annual Report on Form 10-K beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

a) Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures are effective at the reasonable assurance level.

b) Management’s Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of our company are being made only in accordance with authorization of management and directors of our company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control-Integrated Framework. Based on its evaluation, management has concluded that our internal control over financial reporting was effective as of September 30, 2024.

Pursuant to Regulation S-K Item 308(b), this Annual Report on Form 10-K does not include an attestation report of our company’s registered public accounting firm regarding internal control over financial reporting. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their cost.

c) Changes in Internal Control over Financial Reporting

During the year ended September 30, 2024, there were no other changes in our internal controls over financial reporting, which were identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that materially affected, or is reasonably likely to have a material effect on our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

We have no information to disclose that was required to be disclosed in a report on Form 8-K during fourth quarter of fiscal year 2024 but was not reported.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The following table sets forth certain information about our current directors and executive officers:

Set forth below is information regarding our directors and executive officers as of the date of this report.

Ronald P. Erickson. Mr. Erickson was appointed as Chief Executive Officer in January 2023. Mr. Erickson previously served as our Chief Executive Officer from November 2009 to April 2018. He has served as Chairman of the Board from 2004 to 2011 and from 2015 to the present. A senior executive with more than 30 years of experience in the technology, telecommunications, software, and digital media industries, Mr. Erickson was the founder of our company. He is formerly Chairman, CEO and Co-Founder of Blue Frog Media, a mobile media and entertainment company; Chairman and CEO of eCharge Corporation, an Internet-based transaction procession company; Chairman, CEO and Co-founder of GlobalTel Resources, a provider of telecommunications services; Chairman, Interim President and CEO of Egghead Software, Inc., a software reseller where he was an original investor; Chairman and CEO of NBI, Inc.; and Co-founder of MicroRim, Inc., the database software developer. Earlier, Mr. Erickson practiced law in Seattle and worked in public policy in Washington, DC and New York, NY. Additionally, Mr. Erickson has been an angel investor and board member of a number of public and private technology companies. In addition to his business activities, Mr. Erickson was Chairman and a member of the Board of Trustees from 2010 to 2021 of Central Washington University where he received his BA degree. He also holds an MA from the University of Wyoming and a JD from the University of California, Davis. He is licensed to practice law in the State of Washington. Mr. Erickson is our founder and was appointed as a director because of his extensive experience in developing technology companies.

Peter J. Conley. Mr. Conley has served as our Chief Financial Officer and SVP Intellectual Property since May 2022. In addition, Mr. Conley currently serves as Senior Managing Director and Head of Intellectual Property Banking at Boustead Securities, LLC, a position he has held since October 2014, where he provides equity financing and M&A advisory services to small-cap public companies. Prior to that, from 2012 to 2016, Mr. Conley was a cofounder and Chief Operating Officer of ipCreate, a global IP development and innovation services company serving large multinational companies. He also served as managing director of ipCapital Venture Group, where he provided IP strategy and venture advisory services. During his career spanning more than 35 years, Mr. Conley has held leadership roles at MDB Capital Group, The Analytiq Group / RDEX Research, Roth Capital Partners, and Lehman Brothers. He was on the founding team and Head of Equity Capital Markets at E*Offering, the investment bank of E*Trade. Mr. Conley attended the University of Hawaii at Manoa and the University of London, Center for Financial & Management Studies, SOAS.

John Cronin. Mr. Cronin served as a director between November 2023 and September 2024 when he was appointed our Interim Chief Technology Officer. Mr. Cronin is an experienced inventor and intellectual property strategist. Mr. Cronin is Chairman and CEO of ipCapital Group, Inc. (“ipCG”), a globally recognized IP strategy consulting firm founded in 1998, offering more than 45 different services. Mr. Cronin has authored greater than 1,600 patents and applications across hundreds of technology spaces, leveraging the ipCapital Methodology. Before forming ipCG, Mr. Cronin spent over 17 years at IBM and became its top inventor with over 100 patents and 150 patent publications. He created and ran the IBM Patent Factory, which was essential in helping IBM become number one in US patents and led the team that contributed to the startup and success of IBM’s licensing program. Mr. Cronin is also the Chair of the Board of Directors of AdrenalineIP, Chairman of IX-Innovations, and is the Founder of HarvestWeb, a 501(c)3 charitable organization that provides an easy online way to make donations to food pantries. Mr. Cronin previously served on the board of directors of HopTo Inc. (OTC: HPTO) from 2014 to September 2018, and ImageWare® Systems, Inc. (OTCQB: IWSY) from 2012 until April 2020. Mr. Cronin has a B.S. (E.E.), an M.S. (E.E), and a B.A. degree in Psychology from the University of Vermont. As of the year ended September 30, 2024 and 2023, we have paid ipCG approximately $390,000 and $713,000, respectively in professional fees. Mr. Cronin currently serves as Interim Chief Technology Officer and is not considered an independent director. Mr. Cronin was appointed as a director based on his domain expertise and extensive experience in patent strategy, development and monetization.

William A. Owens. Admiral Owens has served as an independent director since May 2018. William A. Owens is the co-founder and executive chairman of Red Bison Technology Group, a company which installs and operates high speed telecoms networks and technology in large office buildings. He is the Chairman of Visionary Vehicles which is building a series of automobiles focused on electric and hydrogen powered cars, Kyrrex which is a successful and growing Crypto Currency Exchange operating in Europe, and Massif, an electric bicycle company. Owens serves on the board of directors of the public companies, Siply, Know Labs, and Compass, and is a director of the private companies: TruU, Tethr, ViruSight, Prism, Steel Grove, JennyCo, Axxess Capital, Versium, and Viome. Owens was the chairman of the board of CenturyLink Telecom (now Lumen), the third largest telecommunications company in the United States and SAP USA. Owens is on the board of trustees of Seattle University, and the Fiscal Responsibility Amendment (CFFRA) Association which aims to establish a balanced budget amendment to the US Constitution. He is a member of the Council of Foreign Relations. He is the Founder and senior General on a China US forum to bring 4star generals together for China US cooperation. He is a Senior Fellow at Stimson Institute. From 2007 to 2015, Owens was the Chairman and Senior Partner of AEA Investors Asia, a private equity firm located in Hong Kong, and Vice Chairman of the NYSE for Asia. Owens also served as the Chairman of Eastern Airlines. He has served on over 25 public boards including Daimler, British American Tobacco, Telstra, Nortel Networks, and Polycom.

Owens was the CEO of Nortel, a fortune 500 company, the CEO/Chairman of Teledesic, a Bill Gates/Craig McCaw company bringing worldwide broadband through an extensive satellite network and was the President of Science Applications International Corporation (SAIC). He also served on the boards of the not-for-profit organizations; Fred Hutchinson Cancer Research Center, Carnegie Corporation of New York, Brookings Institution, East West Institute, and RAND Corporation.

Owens is a retired four-star US Navy Admiral. He was Vice Chairman of the Joint Chiefs of Staff, the second-ranking United States military officer in the US, with responsibility for reorganizing and restructuring the armed forces in the post- Cold War era. He is widely recognized for bringing commercial high-grade technology into the Department of Defense for military applications. Owens was the architect of the Revolution in Military Affairs (RMA), an advanced systems technology approach to military operations, the most significant change in the system of requirements, budgets and technology for the four armed forces since World War II. Owens was Commander of the U.S. Sixth Fleet from 1990 to 1992, which included Operation Desert Storm. Owens also served as the deputy Chief of Naval Operations for Resources and Requirements. Owens was the Senior Military Assistant to two Secretaries of Defense (Cheney and Carlucci) and served in the Office of Program Appraisal for the Secretary of the Navy. He began his military career as a nuclear submariner. He served on four strategic nuclear-powered submarines and three nuclear attack submarines, including tours as Commanding Officer of the USS Sam Houston, USS Michigan, and USS City of Corpus Christi.

Owens is a 1962 honor graduate of the United States Naval Academy in mathematics, holds bachelors and masters degrees in politics, philosophy and economics from Oxford University, and a master’s degree in management from George Washington University. He has written more than 50 articles on national security and authored the book “High Seas.”  His book, “Lifting the Fog of War,” was published in April 2000 with a revision published in Mandarin in 2009. And his book “China-US 2039: The Endgame?” was published in 2019 in both English and Mandarin.

Owens has received numerous recognitions and awards: the “Légion d’Honneur” by France, and the highest awards given to foreigners by the countries of Indonesia and Sweden. He was named as one of The 50 Most Powerful People in Networking by Network World, one of the 100 Best Board Members in the United States for 2011 and again in 2016 awarded by NACD, and the Intrepid Salute Award in recognition of his business achievements and support of important philanthropic activities. Owens is active in philanthropy to foster Chinese – American relations including dialogues between the most senior retired officers in the United States and Chinese militaries. He is a North Dakota’s Roughriders recipients, the award given annually to the most prominent North Dakotans. Admiral Owens was appointed as a director of Know Labs because of his financials and governance skills.

Jon Pepper. Mr. Pepper has served as an independent director since April 2006. Mr. Pepper founded Pepcom, a company that become the industry leader at producing press-only technology showcase events around the country and internationally, in 1980. He sold his stake in the corporation and retired as a partner at the end of 2018. Prior to that, Mr. Pepper started the DigitalFocus newsletter, a ground-breaking newsletter on digital imaging that was distributed to leading influencers worldwide. Mr. Pepper has been closely involved with the high technology revolution since the beginning of the personal computer era. He was formerly a well-regarded journalist and columnist. His work on technology subjects appeared in The New York Times, Fortune, PC Magazine, Men’s Journal, Working Woman, PC Week, Popular Science and many other well-known publications. Mr. Pepper was educated at Union College in Schenectady, New York and the Royal Academy of Fine Arts in Copenhagen. He continues to be active in non-profit work and private company boards and in 2017 founded Mulberry Tree Films, a non-profit that supports independent high-quality documentary films and other publishing and creative projects that are oriented toward increasing the understanding of human potential and creativity. Mulberry Tree funded and produced the acclaimed documentary, “The Gates of Shinto” and is currently at work on additional projects. Mr. Pepper was appointed as a director because of his marketing skills with technology companies. Mr. Pepper was appointed as a director because of his marketing skills with technology companies.

Ichiro Takesako. Mr. Takesako has served as an independent director since December 2012. Mr. Takesako has held executive positions with Sumitomo Precision Products Co., Ltd, or Sumitomo, and its affiliates since 1983. In the past few years, Mr. Takesako has held the following executive position in Sumitomo and its affiliates: in June 2008, he was appointed as General Manager of Sales and Marketing Department of Micro Technology Division; in April 2009, he was appointed as General Manager of Overseas Business Department of Micro Technology Division, in charge of M&A activity of certain business segment and assets of Aviza Technology, Inc.; in July 2010, he was appointed as Executive Director of SPP Process Technology Systems, a 100% owned subsidiary of Sumitomo Precision Products at the time; in August 2011, he was appointed as General Manager, Corporate Strategic Planning Group; in January 2013, he was appointed as Chief Executive Officer of M2M Technologies, Inc., a company invested by Sumitomo Precision products; in April 2013, has was appointed as General Manager of Business Development Department, in parallel of CEO of M2M Technologies, Inc.; in April 2014, he was relieved from General Manager of Business Development Department and is responsible for M2M Technologies Inc. as its CEO; in March 2017, he established At Signal, Inc. which took over the entire business operation from M2M Technologies, Inc.; and in April 2017, he was appointed as Chief Executive Officer of At Signal, Inc. Mr. Takesako graduated from Waseda University, Tokyo, Japan where he majored in Social Science and graduated with a Degree of Bachelor of Social Science. Mr. Takesako was appointed as a director based on his previous position with Sumitomo and Sumitomo’s previous significant partnership with our company. Mr. Takesako was appointed as a director based on his previous position with Sumitomo and Sumitomo’s previous significant partnership with our company.

Larry K. Ellingson. Mr. Ellingson has served as an independent director since November 2023.  Mr. Ellingson holds a BS, Pharmacy, from North Dakota State University (NDSU), Fargo, North Dakota and an Executive MBA from Babson College, Babson Park, Massachusetts. From April 23, 2019 to present, Mr. Ellingson has served as a member of Know Labs advisory board. From 2013 to present, Mr. Ellingson is Co-Founder of the Diabetes Leadership Council and Vice Chair Global initiatives. Since 2006 to present, Mr. Ellingson has been President of Global Diabetes Consulting LTD.

Mr. Ellingson retired from Eli Lilly and Company in May 2001 after having been involved as a leader of global diabetes for Lilly for more than half of his career. He has held several other positions at Lilly including Director of Pharmaceutical New Product Planning for gastrointestinal, skeletal, endocrine and infectious diseases, along with responsibility for marketed products in those areas in the late 1980s.

Mr. Ellingson continues to remain active with committee work and board positions for a multitude of organizations, among them are NDSU, Research Park, International Diabetes Federation, Academy of Nutrition and Dietetics, Nurse Practitioners Healthcare Foundation and the American Diabetes Association®. His contributions to the Association have been abundant and far-reaching and have spanned over 20 years. He has held numerous positions within the Association such as member of the Industry Advisory, Strategic Marketing Task Force, Strategic Planning Task Force, Big Ticket Task Force, Pinnacle Society and the Income Development Committee. He has been Chair or Vice Chair for an equally extensive list of bodies within the Association including the Board of Directors, Fundraising Committee, Executive Committee and Nominating Committee. He has unquestionably been a positive force and an integral part of mission delivery.

Mr. Ellingson has been honored several times for his achievements in his field. He was honored by being the first and only non–scientist to receive Eli Lilly’s President’s Award and the Lilly Research Award for contributions to diabetes research. In 2001, Eli Lilly created the Ellingson Legacy Award to honor those who provide outstanding service to the customer. Ellingson was the first recipient of the award. The ADA, Indiana affiliate awarded Mr. Ellingson the J.K. Lilly Award in 2004 for his contributions & service to the field of diabetes. NDSU awarded him the highest honor in 2007, naming him An Outstanding Alumni of the Year for his contributions to the field and to the University. The American Diabetes Association® recognized Mr. Ellingson in 2006 with the Charles H. Best Medal for Outstanding Service for his exceptional contributions as Chair of the Board. The ADA recognized Mr. Ellingson with the prestigious Wendell Mayes Jr. Award in 2013 for his long-term service in diabetes. Mr. Ellingson received an Honorary Membership in 2020 to the Academy of Nutrition and Dietetics for his contributions to the Academy. He continues to be engaged in diabetes programs and projects through the Diabetes Leadership Council which he cofounded in 2013. He continues to be engaged in diabetes programs and projects through the Diabetes Leadership Council which he cofounded in 2013. Mr. Ellingson was appointed as a director based on his substantial experience in the diabetes industry and his global thought leadership in the field of diabetes.

Term of Office

Our directors currently have terms which will end at our next annual meeting of stockholders or until their successors are elected and qualify, subject to their prior death, resignation or removal. Officers serve at the discretion of the Board.   

Family Relationships

There are no family relationships among any of our officers or directors.

Involvement in Certain Legal Proceedings

We are not aware of any of our directors or officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses) or being subject to any of the items set forth under Item 401(f) of Regulation S-K.

Corporate Governance

The Board’s Role in Risk Oversight

Our Board oversees that the assets of our company are properly safeguarded, that the appropriate financial and other controls are maintained, and that our business is conducted wisely and in compliance with applicable laws and regulations and proper governance. Included in these responsibilities is the Board’s oversight of the various risks facing our company. In this regard, our Board seeks to understand and oversee critical business risks. Our Board does not view risk in isolation.  Risks are considered in virtually every business decision and as part of our business strategy. Our Board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for our company to be competitive on a global basis and to achieve our objectives.

While the Board oversees risk management, company management is charged with managing risk. Management communicates routinely with the Board and individual directors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do, communicate directly with senior management.

Our Board administers its risk oversight function as a whole by making risk oversight a matter of collective consideration; however, much of the work is delegated to committees, which will meet regularly and report back to the full Board. The audit committee oversees risks related to our financial statements, the financial reporting process, accounting and legal matters, the compensation committee evaluates the risks and rewards associated with our compensation philosophy and programs, and the nominating and corporate governance committee evaluates risks associated with management decisions and strategic direction.

Attendance at Annual Meetings of Stockholders

We expect that all of our Board members will attend our annual meetings of stockholders in the absence of a showing of good cause for failure to do so and all of our Board members who were directors at the time attended our virtual 2024 annual meeting of stockholders.

Board Meetings and Committees

During our last fiscal year, each of our directors attended at least 75% of the aggregate of (i) the total number of Board meetings and (ii) the total number of meetings of the committees on which the director served.

Independent Directors

NYSE American’s rules generally require that a majority of an issuer’s board of directors must consist of independent directors. Our board of directors currently consists of six (6) directors, four (4) of whom, Messrs. Owens, Pepper, Takesako, and Ellingson are independent within the meaning of NYSE American rules.

Committees of the Board of Directors

Our Board has established an audit committee, a compensation committee and a nominating and corporate governance committee, each comprised only of members who meet the independence requirements of the Exchange Act and NYSE American rules and each with its own charter approved by the Board. Each committee’s charter is available on our website at www.knowlabs.co. In addition, our Board may, from time to time, designate one or more additional committees, which shall have the duties and powers granted to it by our Board.

Audit Committee

William A. Owens, Jon Pepper and Ichiro Takesako serve on our audit committee, with Mr. Pepper serving as the chairman. Our Board has determined that Mr. Owens qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K. The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements.

The audit committee is responsible for, among other things: (i) retaining and overseeing our independent accountants; (ii) assisting the Board in its oversight of the integrity of our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal and regulatory requirements; (iii) reviewing and approving the plan and scope of the internal and external audit; (iv) pre-approving any audit and non-audit services provided by our independent auditors; (v) approving the fees to be paid to our independent auditors; (vi) reviewing with our chief executive officer and principal financial officer and independent auditors the adequacy and effectiveness of our internal controls; (vii) reviewing hedging transactions; and (viii) reviewing and assessing annually the audit committee’s performance and the adequacy of its charter. The audit committee is also responsible for preparing a report to be included with this Proxy Statement. Our audit committee met 4 times during the last fiscal year. 

Compensation Committee

William A. Owens, John Cronin and Jon Pepper serve on our compensation committee, with Mr. Owens serving as the chairman. The members of the compensation committee are also “non-employee directors” within the meaning of Section 16 of the Exchange Act. The compensation committee assists the Board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Mr. Cronin will be replaced with an independent director shortly.   

The compensation committee is responsible for, among other things: (i) reviewing and approving the remuneration of our executive officers; (ii) making recommendations to the Board regarding the compensation of our independent directors; (iii) making recommendations to the Board regarding equity-based and incentive compensation plans, policies and programs; and (iv) reviewing and assessing annually the compensation committee’s performance and the adequacy of its charter. Our compensation committee met 4 times during the last fiscal year.

Nominating and Corporate Governance Committee

Larry K. Ellingson, Jon Pepper and Ichiro Takesako serve on our nominating and corporate governance committee, with Mr. Ellingson serving as the chairman. The nominating and corporate governance committee assists the Board in selecting individuals qualified to become our directors and in determining the composition of the Board and its committees. 

The nominating and corporate governance committee is responsible for, among other things: (i) identifying and evaluating individuals qualified to become members of the Board by reviewing nominees for election to the Board submitted by stockholders and recommending to the Board director nominees for each annual meeting of stockholders and for election to fill any vacancies on the Board; (ii) advising the Board with respect to Board organization, desired qualifications of Board members, the membership, function, operation, structure and composition of committees (including any committee authority to delegate to subcommittees), and self-evaluation and policies; (iii) advising on matters relating to corporate governance and monitoring developments in the law and practice of corporate governance; (iv) overseeing compliance with our code of ethics; and (v) approving any related party transactions.

The nominating and corporate governance committee’s methods for identifying candidates for election to our Board (other than those proposed by our stockholders, as discussed below) include the solicitation of ideas for possible candidates from a number of sources – members of our Board, our executives, individuals personally known to the members of our Board, and other research. The nominating and corporate governance committee may also, from time-to-time, retain one or more third-party search firms to identify suitable candidates.

In making director recommendations, the nominating and corporate governance committee may consider some or all of the following factors: (i) the candidate’s judgment, skill, and experience with other organizations of comparable purpose, complexity and size, and subject to similar legal restrictions and oversight; (ii) the interplay of the candidate’s experience with the experience of other Board members; (iii) the extent to which the candidate would be a desirable addition to the Board and any committee thereof; (iv) whether or not the person has any relationships that might impair his or her independence; and (v) the candidate’s ability to contribute to the effective management of our company, taking into account the needs of our company and such factors as the individual’s experience, perspective, skills and knowledge of the industry in which we operate.

A stockholder may nominate one or more persons for election as a director at an annual meeting of stockholders if the stockholder complies with the notice and information provisions contained in our Bylaws. Such notice must be received in writing to our company not later than the close of business fourteen (14) days nor earlier than the close of business eighty (80) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if less than twenty-one (21) days’ notice of the meeting is given to stockholders, such writing shall be received by the Secretary of the Corporation not later than the close of the seventh (7th) day following the day on which notice of the meeting was mailed to stockholders.  In addition, stockholders furnishing such notice must be a holder of record on both (i) the date of delivering such notice and (ii) the record date for the determination of stockholders entitled to vote at such meeting.

Code of Ethics

We have adopted a code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Such code of ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, and reporting of violations of the code.

A copy of the code of ethics has been filed as an exhibit to our registration statement on Form S-1, as amended, July 29, 2022, and is also available on our website as www.knowlabs.io. We are required to disclose any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions. We intend to use our website as a method of disseminating this disclosure as well as by SEC filings, as permitted or required by applicable SEC rules. Any such disclosure will be posted to our website within four (4) business days following the date of any such amendment to, or waiver from, a provision of our code of ethics. 

Communication with our Board of Directors

Our stockholders and other interested parties may communicate with our Board by sending written communication in an envelope addressed to “Board of Directors” in care of the Secretary, 619 Western Avenue, Suite 610, Seattle, Washington 98104.

Delinquent Section 16(a) Reports

Our executive officers, directors and 10% stockholders are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Copies of these reports must also be furnished to us.

Based solely on a review of copies of reports furnished to us, as of September 30, 2024 our executive officers, directors and 10% holders complied with all filing requirements except as follows:

Ronald P. Erickson - Mr. Erickson extended notes on January 30, 2024 and filed his Form 4 on May 31, 2024. This was an amendment of notes disclosed through our ongoing SEC filings.

Compensation Recovery Policy

We have adopted a Compensation Recovery Policy for the recovery of Erroneously Awarded Compensation in order to comply with Section 10D of the Exchange Act, Rule 10D-1 promulgated under the Exchange Act, and the listing standards of the NYSE American adopted pursuant thereto. In the event we are required to prepare an accounting restatement of our financial results as a result of a material noncompliance by us with any financial reporting requirement under the federal securities laws, we will have the right to use reasonable efforts to recover from any current or former executive officers who received incentive compensation (whether cash or equity) from us during the three-year period preceding the date on which we were required to prepare the accounting restatement, any excess incentive compensation awarded as a result of the misstatement. This policy is administered by the Compensation Committee of the Board.

Stock Ownership Guidelines

The Board does not currently have stock ownership guidelines.

Insider Trading Policy; Anti-Hedging and Anti-Pledging

We have adopted an insider trading policy governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees that includes restrictions and limitations on the ability of our directors, officers and other employees to engage in transactions involving the hedging and pledging of our stock. Under the policy, hedging or monetization transactions, such as collars, forward sale contracts, equity swaps, puts, calls, collars, forwards and other derivative instruments, which allow an employee to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock, and thus to continue to own our stock without the full risks and rewards of ownership, are prohibited. In addition, the policy addresses the practices of holding our stock in a margin account, under which the securities may be sold by the broker without the customer’s consent if the customer fails to meet a margin call, and of pledging our stock as collateral for a loan, in which event the securities may be sold in foreclosure if the borrower defaults on the loan. Securities held in a margin account or pledged as collateral may not exceed 25% of the total number of shares owned by the employee or director.

ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our Chief Executive Officer and two other most highly compensated executive officers (our “named executive officers”) for services rendered in all capacities during the fiscal years ended September 30, 2024 and September 30, 2023, respectively. No other executive officers received total annual salary and bonus compensation in excess of $100,000.

Employment Agreements

On April 10, 2018, we entered into an amended employment agreement with Ronald P. Erickson which amends our employment agreement with him dated July 1, 2017. The current salary is $500,000. Mr. Erickson will be entitled to participate in all group employment benefits that are offered by us to our senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. The employment agreement is for an initial term of 12 months (subject to earlier termination) and will be automatically extended for additional 12-month terms unless either party notifies the other party of its intention to terminate the employment agreement at least ninety (90) days prior to the end of the initial term or renewal term. If we terminate Mr. Erickson’s employment at any time prior to the expiration of the term without cause, as defined in the employment agreement, or if Mr. Erickson terminates his employment at any time for “good reason” or due to a “disability,” Mr. Erickson will be entitled to receive (i) his base salary amount for one year; and (ii) medical benefits for eighteen months. On January 23, 2023, the Board appointed Mr. Erickson our Chief Executive Officer. Mr. Erickson was appointed to serve until his successor is duly elected.

On May 13, 2022, we entered into an employment agreement with Peter J. Conley reflecting his appointment as our Chief Financial Officer and Senior Vice President, Intellectual Property. The current salary is $400,000.  Mr. Conley may also be entitled to bonuses from time to time as determined by our Board or our compensation committee in their sole discretion. Mr. Conley is eligible to participate in all our employee benefit plans, policies and arrangements that are applicable to other executive officers, as such plans, policies and arrangements may exist or change from time to time at our discretion. We will reimburse Mr. Conley for reasonable travel, entertainment and other expenses he incurs in the furtherance of his duties under the employment agreement. The employment agreement is at will, meaning either we or Mr. Conley may terminate the employment relationship at any time, with or without cause, upon written notice to the other party. The employment agreement provides for severance pay equal to 12 months of then-in-effect base salary if Mr. Conley is terminated without “cause” or voluntarily terminates his employment for “good reason,” as defined in the employment agreement.

Outstanding Equity Awards at Fiscal Year-End

The following table includes certain information with respect to the value of all unexercised options and unvested shares of restricted stock previously awarded to the executive officers named above at the fiscal year ended September 30, 2024.