Executive Summary / Key Takeaways

• Know Labs (NYSE American: KNW) is developing proprietary non-invasive diagnostic technology utilizing radio and microwave spectroscopy, with a primary focus on a continuous blood glucose monitor (CGM) and a secondary strategy to license its extensive IP portfolio in other fields.
• Recent operational progress includes the development of the wearable KnowU (Generation 2) prototype, achieving promising early clinical study results with MARD figures around 11% compared to venous blood, and significantly expanding its global patent portfolio (>300 assets).
• The company faces significant financial challenges, including recurring losses, a net working capital deficit of $6.19 million as of March 31, 2025, and cash sufficient to operate only until June 30, 2025, raising substantial doubt about its ability to continue as a going concern.
• A critical near-term hurdle is the exhaustion of authorized common stock, which prevents further equity issuance for fundraising or meeting obligations under convertible debt, necessitating shareholder approval for an increase.
• Despite financial pressures and competitive intensity from established players like Dexcom (DXCM) and Abbott (ABT), Know Labs believes its non-invasive technology and IP leadership position it for potential disruption in the vast, underpenetrated diabetes management market and other industrial applications, contingent on successful development, regulatory clearance, and securing necessary funding.

Setting the Scene: A Quest for Non-Invasive Diagnostics

Know Labs, Inc., incorporated in 1998 and focused since 2007 on spectroscopic technologies, is on a mission to revolutionize diagnostics through non-invasive means. At the heart of its endeavor is a proprietary sensor technology leveraging radio and microwave spectroscopy, paired with a sophisticated machine learning platform. This technology is designed to uniquely identify and measure materials or analytes by detecting their distinct electromagnetic signatures. The initial and paramount application of this platform is the development of a non-invasive device for monitoring blood glucose levels, aiming to provide real-time information without the need for needles or disposables.

The company's journey has been marked by strategic shifts, including streamlining operations and personnel in early 2023 to accelerate development while reducing its monthly burn rate. This period saw the unveiling of the Generation 1 prototype, a crucial step for data collection and sensor characterization outside the lab. Building on this, Know Labs introduced the wearable KnowU (Generation 2) prototype in February 2024, signaling its intended form factor for regulatory submission. Parallel to its medical device development, the company formalized the Know Labs Technology Licensing (KTL) initiative in early 2025, seeking to monetize its extensive intellectual property in diverse non-medical fields. These strategic pillars define Know Labs' current trajectory as it seeks to bring its foundational technology to market.

The Technological Core: RF Spectroscopy and the Promise of Non-Invasiveness

Know Labs' technological differentiation lies in its unique application of radio frequency dielectric spectroscopy (RFDS). Unlike traditional glucose monitoring methods or even current minimally invasive continuous glucose monitors (CGMs) that rely on enzymatic reactions in interstitial fluid, Know Labs' sensor emits radio and microwave energy that sweeps through the entire tissue stack – including capillary and venous blood, interstitial fluid, and cellular material. This process activates a dielectric response, capturing a high-resolution voltage data stream.

The tangible benefits articulated by the company are significant:

• Deep Tissue Penetration: The technology's energy field penetrates more than 1 inch into the body, in contrast to current minimally invasive devices like the Dexcom G6/G7 and Abbott Lab's FreeStyle Libre systems, which are limited to readings of interstitial fluid typically within 0.2 inches of the skin surface. This deeper penetration is expected to provide a more comprehensive picture of glucose levels.
• High-Speed Data Collection: The current prototype sensor collects approximately 1.5 million data points per hour. During testing, the sensor completes a sweep every 22 seconds, meaning it can potentially deliver 13 different readings for every one reading obtained from an IV sample or traditional CGM, potentially mitigating latency issues.
• Non-Invasive Convenience: The technology is designed to be completely non-invasive, eliminating the need for needles, lancets, test strips, or replaceable sensors. This offers the potential for greater user comfort, convenience, and reduced ongoing costs compared to existing solutions.
• Platform Versatility: The core RFDS technology is described as a platform capable of identifying and measuring almost any material or analyte. Recent research demonstrating the non-invasive identification of pH levels through PVC pipe highlights this versatility and the potential for applications beyond glucose monitoring.

The data collected by the sensor is analyzed by proprietary artificial intelligence and machine learning algorithms. R&D efforts are heavily focused on refining these algorithms to accurately determine blood glucose levels across diverse populations and varying glycemic ranges. Early clinical study results using venous blood as a comparative reference have shown promising Mean Absolute Relative Difference (MARD) figures around 11.1% and 11.3%, which the company notes are within the range of independently reported values for certain FDA-cleared devices. A study with Type 2 diabetes/prediabetes participants even showed consistent accuracy across hyper (11.5%), normal (11%), and hypoglycemic (9.5%) ranges. The stated goal for algorithm refinement is to achieve a MARD under 10% and meet the FDA's stringent accuracy requirements across all glycemic ranges, including the critical low and high ends.

This technological foundation, particularly the non-invasive approach and deep tissue analysis, forms the core of Know Labs' competitive moat. It positions the company to potentially disrupt the established diabetes management market by offering a fundamentally different user experience, provided it can achieve the necessary accuracy and regulatory clearance.

Competitive Landscape: Battling Giants and Emerging Rivals

Know Labs operates within a dynamic and intensely competitive landscape, primarily vying for position in the vast diabetes management market, currently dominated by established players offering continuous glucose monitors (CGMs) and traditional blood glucose meters. Key competitors include Dexcom, Abbott Laboratories, and Medtronic (MDT), who collectively hold 100% of the current CGM market share. Becton, Dickinson and Company (BDX) also competes in the broader diagnostics space.

These incumbents possess significant advantages:

• Market Share and Scale: Dexcom and Abbott, in particular, command substantial market share in the CGM segment and benefit from extensive global distribution networks, established manufacturing capabilities, and large customer bases.
• Financial Strength: Compared to Know Labs, these companies are vastly larger, with robust revenue streams, profitability, and cash flow generation. For example, Dexcom reported a TTM gross profit margin of 61% and operating margin of 15%, while Abbott showed a TTM gross margin of 55% and operating margin of 16%. Medtronic and BDX also exhibit solid margins and scale. In contrast, Know Labs, being pre-revenue, reports 0% TTM gross and operating margins and significant net losses.

• Regulatory Experience: Established players have extensive experience navigating the complex FDA approval processes and maintaining compliance.

However, Know Labs believes its technology offers distinct competitive advantages:

• Non-Invasiveness: This is the most significant differentiator, addressing a key pain point for millions of people with diabetes. The elimination of needles and disposables offers a potentially superior user experience and lower long-term cost of ownership.
• Intellectual Property Leadership: Know Labs asserts it is the world's intellectual property leader in non-invasive blood glucose monitoring, with over 300 active patent assets and over 600 codified trade secrets. This robust IP portfolio is intended to create a defensible moat around its technology.
• Platform Potential: The technology's applicability beyond glucose monitoring opens doors to other diagnostic and industrial markets, providing diversification opportunities not directly pursued by core CGM competitors.

Despite these potential advantages, Know Labs faces significant challenges in competing with well-funded, established players. Its smaller scale leads to higher relative R&D costs and operational inefficiencies compared to the streamlined manufacturing and distribution of incumbents. The need to convince not only regulatory bodies but also the marketplace of the accuracy, reliability, and benefits of a fundamentally new non-invasive approach is a substantial hurdle. The market, while large (estimated 579 million people with diabetes globally, with less than 1% CGM penetration), is also subject to pricing pressures and the rapid pace of innovation from competitors who are continuously improving their existing technologies and exploring new approaches, including AI integration. Recent FDA warnings regarding unapproved, inexpensive wrist-type devices claiming non-invasive glucose monitoring also highlight the need for clear regulatory validation to distinguish legitimate medical devices from unproven consumer gadgets.

Strategic Pathways: Medical Diagnostics and IP Monetization

Know Labs is pursuing a two-pronged strategic approach to bring its technology to market and generate revenue:

1. Medical Diagnostics (Primary Focus): The core strategy remains the development and regulatory clearance of the KnowU wearable CGM. This involves:

   • Hardware Refinement: Further miniaturization and design adjustments of the KnowU based on clinical trial inputs and human factors testing.
   • Expanded Clinical Testing: Conducting larger trials with more diverse populations, including Type 1 diabetes, to gather extensive data across the full spectrum of glycemic ranges (hypo, normal, hyper) using venous blood as the gold standard comparator. The goal is to collect sufficient data to refine algorithms for accuracy and generalizability.
   • Algorithm Development: Leveraging the billions of data points collected to improve machine learning models, targeting a MARD under 10% and developing personalized models as a step towards a generalized algorithm suitable for an FDA-cleared device.
   • FDA Engagement: Progressing towards a pre-submission meeting with the FDA (hoped for in FY24, as mentioned in Q2 2024 call) and ultimately submitting the refined KnowU device for rigorous clinical trials and clearance.
   • Strategic Partnerships: Seeking joint venture partners with expertise in the medical device space to collaborate on the FDA process and market entry, acknowledging the significant expense and complexity involved.

2. Know Labs Technology Licensing (KTL): Launched in early 2025, this initiative aims to generate near-term revenue by licensing the company's platform technology and IP portfolio in fields outside of medical diagnostics.

   • Target Markets: Identifying and pursuing opportunities in areas such as material analysis, pharmaceutical and petrochemical industries, agriculture, food safety, polymer/plastics manufacturing, and authentication.
   • Licensing Model: Offering IP licensing, potentially coupled with white-label mobile apps, software development kits (SDKs), wet lab support, and prototyping capabilities, with phased onboarding for partners.
   • Revenue Generation: This initiative is intended to provide a more rapid path to revenue compared to the lengthy and expensive FDA clearance process for medical devices.
   • Dedicated Resources: The hiring of Chris Somogyi as President, International, underscores the focus on international markets and IP monetization outside the core medical diagnostic area.

These strategies reflect management's effort to balance the long-term, high-value goal of FDA-cleared medical devices with the more immediate need to generate revenue and leverage the full breadth of the platform technology.

Financial Performance and Liquidity: A Tightrope Walk

Know Labs' financial performance reflects its stage as a pre-revenue R&D company heavily investing in technology development. For the six months ended March 31, 2025, the company reported a net loss of $8.24 million, compared to $8.84 million for the same period in 2024. Operating expenses decreased, with Research and Development falling by $2.44 million to $1.22 million and Selling, General and Administrative expenses decreasing by $784,000 to $3.75 million, primarily due to reduced personnel and consultant use.

However, Other expense, net significantly increased to $3.27 million from $644,000, driven by higher interest expense related to debt extensions, repricing, default fees on the Lind convertible note, and amortization of issuance costs, as well as a loss on debt extinguishment of $729,000.

The company's liquidity position is precarious. As of March 31, 2025, Know Labs had cash and cash equivalents of only $443,913 and a net working capital deficit of $6.19 million. Management explicitly states that based on available cash and operating expense flexibility, the company believes it can operate only until June 30, 2025. This limited cash runway, coupled with recurring losses and an accumulated deficit of $147.04 million as of March 31, 2025, leads management to conclude that substantial doubt exists about the company's ability to continue as a going concern.

Financing activities are critical. During the six months ended March 31, 2025, the company received proceeds from a registered direct offering ($300,000) and its At The Market (ATM) common stock offering ($510,705). Subsequent to March 31, 2025, the ATM offering continued, generating an additional $773,917 from the issuance of 1.33 million shares. The company also issued 1.95 million shares valued at $758,600 to settle convertible debt principal payments. Despite these efforts, the company's ability to raise additional funds through equity or debt is paramount but uncertain.

A significant challenge impacting financing is the exhaustion of authorized common stock. As of the filing date (May 14, 2025), the company had issued all 7.5 million authorized shares. This prevents the issuance of new shares for capital raises, debt conversions, or other obligations without increasing the authorized share count, which requires time-consuming and costly shareholder approval. This limitation also contributed to a default on the senior convertible note with Lind Global Fund II, LP, potentially triggering a requirement to pay 120% of the outstanding principal.

The company's contractual obligations include operating leases ($326,047 total remaining payments as of March 31, 2025) and convertible notes payable ($5.73 million before adjustments, which can be converted into common stock upon demand). The ability to meet these obligations and fund future operations hinges on successfully raising additional capital.

Outlook and Forward Path: Development, Regulation, and Monetization

Know Labs' outlook is centered on advancing its core technology towards commercialization and generating revenue through its IP. Management anticipates continued losses in the foreseeable future as R&D efforts persist. The immediate focus is on securing necessary funding to extend the operational runway beyond June 30, 2025.

Key development goals include:

• Achieving the target MARD of under 10% for the glucose monitoring algorithm.
• Expanding clinical trials to gather more diverse and comprehensive data, particularly in the hypo and hyperglycemic ranges and with Type 1 diabetes participants.
• Refining the KnowU prototype based on ongoing testing.
• Progressing towards formal engagement with the FDA, including a planned pre-submission meeting.

The KTL initiative represents a crucial part of the forward path, aiming to leverage the IP portfolio for revenue generation in non-medical fields, potentially providing financial support while the medical device pursues regulatory clearance.

The company also faces the immediate task of increasing its authorized common stock to facilitate future financing and manage existing obligations. Successfully obtaining shareholder approval for this is vital. Furthermore, while the trading suspension on NYSE American was lifted following the reverse stock split, the company remains under a plan to regain full compliance with listing standards by March 27, 2026, adding another layer of execution risk.

Management expresses confidence in the potential of the technology and the team's ability to execute, but the path forward is heavily dependent on securing substantial additional funding and successfully navigating the rigorous FDA process for its medical device.

Risks and Challenges: A High-Stakes Environment

Investing in Know Labs involves significant risks, many of which are heightened by the company's early stage and limited financial resources. The most critical risks highlighted include:

• Going Concern Risk: The limited cash runway and recurring losses raise substantial doubt about the company's ability to continue operations without securing significant additional funding.
• Capital Raising Dependency: The company is entirely dependent on its ability to raise equity or debt financing, which may not be available on favorable terms, or at all, especially given its financial condition and the current exhaustion of authorized shares.
• Exhaustion of Authorized Shares: This is an immediate and severe constraint, preventing necessary capital raises and potentially leading to defaults on obligations until shareholder approval for an increase is obtained.
• Regulatory Uncertainty: The FDA clearance process for a novel non-invasive device is lengthy, expensive, and its outcome is uncertain. Failure to achieve clearance would severely impact the core business strategy.
• Technology Development Risk: Despite progress, there is no guarantee that the technology can achieve the required accuracy and reliability across all necessary conditions (diverse populations, glycemic ranges, real-world environments) to meet regulatory standards and market expectations.
• Market Acceptance: Even with FDA clearance, there is no assurance that the market and individuals with diabetes will adopt a new non-invasive technology over established, albeit invasive, solutions.
• Competitive Pressures: Competing with large, well-funded companies with established market positions, distribution, and regulatory experience is challenging.
• IP Protection: While the IP portfolio is extensive, maintaining and defending it against potential infringement is costly and complex.
• NYSE Listing Risk: Failure to regain full compliance with NYSE American listing standards by the deadline could result in delisting, impacting stock liquidity and access to capital markets.

These risks underscore the speculative nature of an investment in Know Labs. The potential rewards are tied to the successful development, regulatory clearance, and commercialization of its technology, while the risks are substantial and near-term, particularly concerning liquidity and the ability to raise necessary capital.

Conclusion

Know Labs stands at a pivotal juncture, armed with a potentially disruptive non-invasive diagnostic technology and a dual strategy targeting both the massive diabetes management market and broader IP licensing opportunities. The progress in developing the wearable KnowU prototype, achieving promising early clinical accuracy metrics, and building a leading IP portfolio demonstrates tangible advancement on the technological front. The KTL initiative offers a potential avenue for earlier revenue generation, distinct from the lengthy medical device regulatory path.

However, the company faces acute financial challenges, highlighted by its limited cash runway, significant working capital deficit, and the critical constraint posed by exhausted authorized shares. The ability to secure substantial additional funding is paramount and directly impacts the timeline and feasibility of all strategic objectives, including completing necessary clinical trials and pursuing FDA clearance. While the non-invasive technology offers a compelling long-term vision and a clear differentiation from current market leaders, the path to realizing this potential is fraught with execution risk, regulatory hurdles, and the ever-present need for capital. For investors, Know Labs represents a high-risk, high-reward opportunity, where the successful navigation of near-term financial and operational challenges will be critical determinants of its ability to bring its innovative technology to fruition and deliver shareholder value.