USBC, Inc 10-Q for FY2025 Q1

USBC, Inc. (USBC)

10-Q 2025-05-14 For: 2025-03-31

Added on April 10, 2026

About this 10-Q

USBC, Inc filed this 10-Q on May 14, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).

Headline figures

Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $3.58M; compared with a net loss of $5.4M a year earlier
Diluted EPS: -$1.24; compared with -$2.69 a year earlier

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

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

	206-903-1351
	(Registrant's telephone number, including area code)

	619 Western Avenue, Suite 610, Seattle, Washington USA
	(Former name, address, and fiscal year, if changed since last report)

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

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

TABLE OF CONTENTS
		Page Number

PART I	FINANCIAL INFORMATION

ITEM 1	Financial Statements (Unaudited)	3

	Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024	3

	Consolidated Statements of Operations for the three and six months ended March 31, 2025 and 2024	4

	Consolidated Statements of Changes in Stockholders’ Deficit	5

	Consolidated Statements of Cash Flows for the six months ended March 31, 2025 and 2024	6

	Notes to the Financial Statements	7

ITEM 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	33

ITEM 4	Controls and Procedures	33

PART II	OTHER INFORMATION

ITEM 1A.	Risk Factors	34

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	35

ITEM 3	Defaults upon Senior Securities	35

ITEM 4	Other Information	35

ITEM 6	Exhibits	36

	SIGNATURES	37

	March 31, 2025			September 30, 2024 (1)
ASSETS	Unaudited

CURRENT ASSETS:
Cash and cash equivalents	$	443,913		$	3,110,755
Total current assets		443,913			3,110,755

PROPERTY AND EQUIPMENT, NET		49,751			66,796

OTHER ASSETS
Other assets		149,174			149,174
Operating lease right-of-use asset		281,347			337,703

TOTAL ASSETS	$	924,185		$	3,664,428

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable - trade	$	1,060,795		$	552,680
Accrued expenses		380,217			101,582
Accrued expenses - related parties		113,443			84,573
Current portion of convertible notes payable, net		3,086,550			2,855,058
Current portion of convertible notes payable - related parties		1,879,515			1,460,926
Current portion of operating lease right-of-use liability		112,941			108,560
Total current liabilities		6,633,461			5,163,379

NON-CURRENT LIABILITIES:
Operating lease liability, net of current portion		174,273			249,728
Non-current portion of convertible notes payable, net		-			407,522
Total liabilities		6,807,734			5,820,629

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS’ DEFICIT
Preferred stock - $0.001 par value, 5,000,000 shares authorized, Series C and D shares issued and outstanding as follows:
Series C Convertible Preferred stock $0.001 par value, 30,000 shares authorized, 17,858 shares issued and outstanding at 3/31/2025 and 9/30/2024, respectively		1,790			1,790
Series D Convertible Preferred stock $0.001 par value, 20,000 shares authorized, 10,161 shares issued and outstanding at 3/31/2025 and 9/30/2024, respectively		1,015			1,015
Common stock - $0.001 par value, 7,500,000 shares authorized, 3,541,707 and 2,702,444 shares issued and outstanding at 3/31/2025 and 9/30/2024, respectively (2)		113,101			108,021
Additional paid in capital		141,037,185			136,468,855
Accumulated deficit		(147,036,640	)		(138,735,882	)
Total stockholders' deficit		(5,883,549	)		(2,156,201	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	924,185		$	3,664,428

	(1)	Derived from the audited consolidated balance sheet.
	(2)	Information pertaining to the number of shares outstanding gives retroactive effect to a 1 for 40 reverse stock split that became effective on February 19, 2025.

	Three Months Ended,						Six Months Ended,
	March 31, 2025			March 31, 2024			March 31, 2025			March 31, 2024
	Unaudited			Unaudited			Unaudited			Unaudited
OPERATING EXPENSES-
RESEARCH AND DEVELOPMENT EXPENSES	$	418,207		$	2,175,245		$	1,220,309		$	3,661,633
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		1,789,315			2,550,848			3,754,448			4,538,657
Total operating expenses		2,207,522			4,726,093			4,974,757			8,200,290
OPERATING LOSS		(2,207,522	)		(4,726,093	)		(4,974,757	)		(8,200,290	)

OTHER INCOME (EXPENSE), NET
Interest income		2,531			45,243			16,355			96,253
Interest expense		(1,374,045	)		(716,814	)		(2,557,844	)		(740,251	)
Loss on debt settlements		-			-			(728,298	)		-
Total other expense, net		(1,371,514	)		(671,571	)		(3,269,787	)		(643,998	)

LOSS BEFORE INCOME TAXES		(3,579,036	)		(5,397,664	)		(8,244,544	)		(8,844,288	)

Income tax expense		-			-			-			-

NET LOSS		(3,579,036	)		(5,397,664	)		(8,244,544	)		(8,844,288	)

Deemed dividends on Series C and D Preferred Stock		(23,662	)		(98,609	)		(56,214	)		(162,238	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(3,602,698	)	$	(5,496,273	)	$	(8,300,758	)	$	(9,006,526	)

Basic and diluted loss per share	$	(1.24	)	$	(2.69	)	$	(2.95	)	$	(4.42	)

Weighted average shares of common stock outstanding- basic and diluted (1)		2,909,985			2,044,153			2,809,757			2,035,706

																				Total
	Series C Convertible Preferred Stock				Series D Convertible Preferred Stock				Common Stock					Additional Paid in			Accumulated			Stockholders' Equity/
	Shares		$		Shares		$		Shares (1)			$		Capital			Deficit			(Deficit)
Balance as of October 1, 2023		17,858	$	1,790		10,161	$	1,015		2,008,961		$	80,358	$	125,501,537		$	(121,840,788	)	$	3,743,912.0
Stock compensation expense - employee options		-		-		-		-		-			-		699,246			-			699,246
Issuance of common stock for services		-		-		-		-		2,625			105		26,145			-			26,250
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		-			-		63,629			(63,629	)		-
Isssuance of common stock for common stock offering		-		-		-		-		22,077			884		202,221			-			203,105
Net loss		-		-		-		-		-			-		-			(3,446,624	)		(3,446,624	)
Balance as of December 31, 2023		17,858		1,790		10,161		1,015		2,033,663			81,347		126,492,778			(125,351,041	)		1,225,889
Stock compensation expense - employee options		-		-		-		-		-			-		616,317			-			616,317
Issuance of common stock for services		-		-		-		-		8,712			347		170,413			-			170,760
Issuance of common stock for exercise of warrants		-		-		-		-		17,871			715		(715	)		-			-
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		-			-		98,609			(98,609	)		-
Expenses for extension of notes and warrants		-		-		-		-		-			-		594,761			-			594,761
Issuance of shares and warrants in connection with debt offering		-		-		-		-		2,558			103		1,035,860			-			1,035,963
Net loss		-		-		-		-		-			-		-			(5,397,664	)		(5,397,664	)
Balance as of March 31, 2024		17,858		1,790		10,161		1,015		2,062,804			82,512		129,008,023			(130,847,314	)		(1,753,974	)

Balance as of October 1, 2024		17,858		1,790		10,161		1,015		2,702,444			108,021		136,468,855			(138,735,882	)		(2,156,201	)
Stock compensation expense - employee options		-		-		-		-		-			-		550,703			-			550,703
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		-			-		32,552			(32,552	)		-
Isssuance of common stock for common stock offering		-		-		-		-		31,250			1,250		298,750			-			300,000
Issuance of common stock for debt payment		-		-		-		-		45,455			1,818		238,182			-			240,000
Repricing of convertible notes payable and warrants		-		-		-		-		-			-		1,302,607			-			1,302,607
Extension of warrants		-		-		-		-		-			-		513,499			-			513,499
Net loss		-		-		-		-		-			-		-			(4,665,508	)		(4,665,508	)
Balance as of December 31, 2024		17,858		1,790		10,161		1,015		2,779,149			111,089		139,405,148			(143,433,942	)		(3,914,900	)
Stock compensation expense - employee options		-		-		-		-		-			-		593,681			-			593,681
Deemed dividends on Series C and D Preferred Stock		-		-		-		-		-			-		23,662			(23,662	)		-
Isssuance of common stock for At The Market common stock offering		-		-		-		-		379,451			1,628		509,077			-			510,705
Issuance of common stock for debt payment		-		-		-		-		383,118			384		505,617			-			506,001
Impact of reverse stock split due to rounding		-		-		-		-		(11	)		-		-			-			-
Net loss		-		-		-		-		-			-		-			(3,579,036	)		(3,579,036	)
Balance as of March 31, 2025		17,858	$	1,790		10,161	$	1,015		3,541,707		$	113,101	$	141,037,185		$	(147,036,640	)	$	(5,883,549	)

	·	identification of the contract, or contracts, with the customer;

	·	identification of the performance obligations in the contract;

	·	determination of the transaction price;

	·	allocation of the transaction price to the performance obligations in the contract; and

	·	recognition of the revenue when, or as, the Company satisfies a performance obligation.


	Estimated Useful Lives	March 31, 2025			September 30, 2024
Machinery and equipment	2-3 years	$	279,683		$	279,683
Furniture and fixtures	3 years		21,366			21,366
Less: accumulated depreciation			(251,298	)		(234,253	)
		$	49,751		$	66,796

March 31,
2026	$	129,863
2027		145,948
2028		50,236
Total remaining payments		326,047
Less imputed interest		(38,834	)
Total lease liability	$	287,214

	March 31, 2025		September 30, 2024
Convertible note- Clayton A. Struve	$	1,595,000	$	1,301,005
Convertible note- Ronald P. Erickson and affiliates		1,879,515		1,460,926
Convertible note - 1800 Diagonal Lending LLC		232,118		-
Lind Global Fund II LP		1,259,432		1,961,575
	$	4,966,065	$	4,723,506

Long term	$	-	$	407,522
Short term - third party		3,086,550		1,554,053
Short term - related party		1,879,515		2,761,931
	$	4,966,065	$	4,723,506

	·	7,500,000 shares of common stock, par value $0.001 per share; and

	·	5,000,000 shares of “blank check” preferred stock, par value $0.001 per share, of which:

	·	30,000 shares have been designated as our Series C Convertible Preferred Stock, $0.001 par value per share; and

	·	20,000 shares have been designated as our Series D Convertible Preferred Stock, $0.001 par value per share.

	·	3,541,707 shares of common stock issued and outstanding, held by holders of record; held by held by 164 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.

	·	17,858 shares of Series C Convertible Preferred Stock issued and outstanding, held by one holder of record; and

	·	10,161 shares of Series D Convertible Preferred Stock issued and outstanding, held by one holder of record.

Warrant No./Class	Issue Date	No. Warrant Shares	Exercise Price	Current Expiration Date	Amended Expiration Date
Clayton A. Struve Warrant	08-14-2017	36,000	$9.60	08-13-2025	08-13-2030
Clayton A. Struve Warrant	12-12-2017	30,000	$9.60	12-11-2025	12-11-2030
Clayton A. Struve Warrant	08-04-2016	44,643	$9.60	08-04-2025	08-04-2030
Clayton A. Struve Warrant	02-28-2018	33,600	$9.60	02-28-2025	02-28-2030

				Weighted
				Average
				Exercise
	Shares			Price
Outstanding October 1, 2024		1,233,547		$	26.58
Issued		34,688			9.60
Exercised		-			-
Forfeited		(1,188	)		(87.98	)
Expired		-			-
Outstanding at end of period		1,267,047		$	23.35

Assumptions
Dividend yield		0	%
Stock price	$	10.00
Exercise price	$	9.60
Expected life	3 years
Expected volatility		107	%
Risk free interest rate		4.26	%

	Weighted Average
	Options			Exercise Price
Outstanding as of September 30, 2024		687,668		$	32.54
Granted		7,500			9.60
Forfeitures		(81,702	)		(41.73	)
Outstanding as of March 31, 2025		613,466		$	31.04

	·	Published Technology: Multiple peer-reviewed publications demonstrating use cases including groundbreaking results in non-invasive glucose monitoring.

	·	Extensive Intellectual Property Portfolio: Over 330 patents globally, positioning Know Labs as a leader in RF spectroscopy and related innovations.

	·	Broad Applicability: Applications span medical diagnostics, industrial processes, and automotive health monitoring, showcasing unparalleled versatility.

	·	Complete Commercialization Toolkit: Offering IP licensing, white-label mobile apps, software development kits (SDKs), wet lab support, and prototyping capabilities.

	·	Through first principles, our sensor technology’s is expected to not only identify a wide range of organic and inorganic materials and analytes, but to do so non-invasively, accurately, and in real time, which potentially enables new multivariate models of clinical diagnostics, and health and wellness monitoring.

	·	Our sensor technology is designed to be non-invasive, using radio waves to identify and measure what is going on inside the body.

	·	Our sensor technology platform is designed to be integrated into a variety of wearable, mobile, or counter-top form factors, and we believe eventual interoperability with existing products from current market leaders.

	·	No needles nor invasive transmitters in the user’s body, making our sensor convenient and pain-free.

	·	No expensive supplies, such as replaceable sensors, test strips and lancets or other disposables, are required to operate our device.

	·	A core focus on accessibility and affordability for the populations we will serve around the globe.

	·	The current prototype sensor collects approximately 1.5 million data points per hour, which allows us to potentially build a deep understanding of health and wellness that other sensors may be unable to match.

	·	Know Labs is the world intellectual property leader in non-invasive blood glucose monitoring and has a significant position in other applications and fields of use of its technology according to ipCapital Group and PatSnap Research.

	·	the ability of our research and development team to produce an FDA clearance quality technology;

	·	our ability to recruit and maintain quality personnel with the talent to bring our technology to the market;

	·	the production of market ready products that can sustain FDA clearance quality results;

	·	the clearance by FDA after their rigorous clinical trial process of our products for the marketplace;

	·	the receptivity of the marketplace and the addressable diabetes community to our new non-invasive glucose monitoring technology; and

	·	access to sufficient capital to support us until our products achieve FDA clearance and are accepted in the marketplace.

	Three Months Ended March 31,
	2025			2024			$ Variance			% Variance

Operating expenses-
Research and development and operating expenses-
Research and development expenses	$	418		$	2,175		$	1,757			80.8	%
Selling, general and administrative expenses		1,790			2,551			761			29.8	%
Total operating expenses		2,208			4,726			2,518			53.3	%
Operating loss		(2,208	)		(4,726	)		2,518			53.3	%
Other (Expense) Income, Net:
Interest income		3			45			(42	)		-93.3	%
Interest expense		(1,374	)		(717	)		(657	)		-91.6	%
Total other (expense), net		(1,371	)		(672	)		(699	)		-104.0	%
Loss before income taxes		(3,579	)		(5,398	)		1,819			33.7	%
Income tax expense		-			-			-			0.0	%
Net loss	$	(3,579	)	$	(5,398	)	$	1,819			33.7	%

	Six Months Ended March 31,
	2025			2024			$ Variance			% Variance

Operating expenses-
Research and development and operating expenses-
Research and development expenses	$	1,220		$	3,661		$	2,441			66.7	%
Selling, general and administrative expenses		3,755			4,539			784			17.3	%
Total operating expenses		4,975			8,200			3,225			39.3	%
Operating loss		(4,975	)		(8,200	)		3,225			39.3	%
Other (Expense) Income, Net:
Interest income		16			96			(80	)		-83.3	%
Interest expense		(2,557	)		(740	)		(1,817	)		-245.5	%
Loss on debt extinguishment		(729	)		-			(729	)		-100.0	%
Total other (expense), net		(3,270	)		(644	)		(2,626	)		-407.8	%
Loss before income taxes		(8,245	)		(8,844	)		599			6.8	%
Income tax expense		-			-			-			0.0	%
Net loss	$	(8,245	)	$	(8,844	)	$	599			6.8	%

Contractual Cash Obligations (1)	Total		1 Year		1-3 Years
Operating leases	$	326,047	$	129,863	$	196,184
Convertible notes payable		5,729,966		5,729,966		-
	$	6,056,013	$	5,859,829	$	196,184

	·	We might not be able to continue as a going concern. We believe that our cash on hand will be sufficient to fund our operations at least through June 30, 2025.

	·	We are still in the early stages of commercialization, refining our technology. Our success depends on our ability to conclude development and market devices that are recognized as accurate, safe, and cost-effective as other options currently available in the market and cleared by FDA.

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

	·	The market price of our common stock may fluctuate, and you could lose all or part of your investment.

	·	We may not be able to maintain a listing of our common stock or achieve the listing of the Public Warrants on the NYSE American.

	·	We have exhausted all authorized common stock. Until we hold a meeting of Stockholders we have no authorized stock to issue which may result in default under certain outstanding convertible securities.

	·	We do not expect to declare or pay dividends in the foreseeable future.

	·	Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our securities to decline and would result in the dilution of your holdings.

	·	Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock.

	·	We may be unable to achieve FDA clearance of our KnowU™ product and a change in control of our company may not occur prior to the expiration of the Public Warrants, in which case the Public Warrants will not become exercisable for shares of our common stock.

Exhibit No.		Description
3.1		Certificate of Change filed with the Secretary of State of the State of Nevada on February 10, 2025 (incorporated by reference to the Company’s Form 8-K, filed February 18, 2025)
4.1†		2021 Know Labs Inc. Equity Incentive Plan, as amended (incorporated by reference to Company’s Current Report on Form 8-K, filed October 30, 2024)
10.1		Capital on Demand Sales Agreement, dated December 31, 2024, by and between Know Labs, Inc. and JonesTrading Institutional Services LLC (incorporated by reference to the Company's Current Report on Form 8-K, filed January 2, 2025)
31.1*		Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document).
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		The Cover Page Interactive Data File, formatted in Inline XBRL (included within the Exhibit 101 attachments)

*	Filed herewith
**	Furnished herewith
†	Executive compensation plan or arrangement

Date: May 14, 2025	By:	/s/ Ronald P. Erickson
		Ronald P. Erickson
		Chief Executive Officer, and Director
		(Principal Executive Officer)

Date: May 14, 2025	By:	/s/ Peter J. Conley
		Peter J. Conley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

1.	I have reviewed this Quarterly Report on Form 10-Q of Know Labs, Inc.;

2.	Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.