USBC, Inc.
For the period ended Sep 30, 2025. Filed Dec 19, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Dec 19, 2025
USBC$0.37+2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-09-30; filed 2024-11-14.
0001654954-24-014480
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-09-30; filed 2025-12-19.
0001654954-25-014138
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 51 previous paragraphs and 73 current paragraphs.
9 unchanged; 5 reworded; 59 added; 36 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (59)
Current report
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Current report
The following discussion and analysis should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in or implied by these forward-looking statements due to factors including those described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” We do not undertake to update forward-looking statements except as required by law.
Current report
USBC, Inc. is a publicly traded multi-disciplinary technology company that we believe is an industry leading innovator in digital financial technologies. Under the leadership of Chairman and Chief Executive Officer, Greg Kidd, USBC develops transformative financial services, including digital assets and banking solutions as well as non-invasive health monitoring research.
Current report
USBC has implemented a Bitcoin treasury strategy to bolster pre-launch development and research across its various divisions. A key focus of USBC is the further development of the USBC tokenized deposit offering, a U.S.-dollar denominated tokenized deposit that will operate on blockchain technology, be embedded with digital identity, and may offer high-yield rewards. With a focus on identity, inclusion, innovation, and risk management, USBC is dedicated to creating long-term shareholder value in a rapidly evolving financial landscape.
Current report
As previously disclosed, on August 6, 2025, we issued approximately 357.8 million shares of our common stock, par value $0.001 per share to Goldeneye 1995 LLC, an affiliate of our Chairman and Chief Executive Officer Greg Kidd, at a per share purchase price of $0.335 in exchange for aggregate purchase price of: (i) 1,000 Bitcoin, and (ii) $15 million in cash. In connection with the issuance of the shares, the board of directors approved the change in the name of the Company to USBC, Inc. from Know Labs, Inc. and the change in trading symbol of the Company to “USBC” from “KNW” on the New York Stock Exchange American LLC (“NYSE”), to align with our strategic transition into a multi-disciplinary enterprise following closing.
Current report
Our Bitcoin treasury strategy operates in parallel with our continuing non-invasive health monitoring technology research, and the further development of the USBC tokenized deposit offering. We are focused on developing go-to market and sales strategies to acquire customers and drive future revenue while optimizing efficiency and ensuring transparency.
Current report
We view our Bitcoin holdings as long-term holdings and we intend to strategically utilize Bitcoin as a primary treasury reserve asset to generate yield to help support the current business and future growth and expansion of new business lines. We have developed partnerships with premier Bitcoin financial services platforms and institutional services providers, leveraging their expertise to ensure secure execution, robust governance, and market transparency of our yield generation treasury strategy.
Current report
On August 6, 2025, we appointed Hyrcanian Asset Management, LLC to provide discretionary investment management services with respect to our Bitcoin treasury trading strategy which resulted in an addition of 2.6 Bitcoin, or approximately $283,000, to our Bitcoin holdings during the three months ended September 30, 2025, based on the price of a Bitcoin as of September 30, 2025. We held approximately 1,003 Bitcoin on our balance sheet with a carrying value of approximately $115.0 million as of September 30, 2025, which value may be materially impacted as the market value of Bitcoin fluctuates. We believe that we are well-positioned to execute on our long-term yield generation trading strategy, coupled with our relative position and liquidity.
Current report
On September 29, 2025, our stockholders approved the Amended and Restated USBC, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan, among other things, (i) increased the number of shares of common stock authorized for issuance by 65,000,000 shares; (ii) provides flexibility to the Board and/or its compensation committee to expressly permit repricings and other exchanges of awards under the 2021 Plan from time to time; and (iii) amended the evergreen provision so that, beginning January 1, 2026 and each January 1 thereafter through January 1, 2030, the share reserve may automatically increase by up to 15,000,000 shares, 4% of outstanding common stock, or such lower amount as determined by the Board.
Current report
On October 7, 2025, our Board of Directors approved the repricing of the 48,620,000 option grants awarded in August 2025, lowering the exercise price to $1.10 per share from $2.45 per share. There were no other changes to the vesting schedule or timelines of these awards.
Current report
During October 2025, our Board of Directors approved the issuance of stock option grants for 62,530,000 shares at a weighted average exercise price of $1.07 per share. The stock option grants expire in ten years and vest over four years.
Current report
On October 23, 2025, we announced a preliminary partnership with Uphold and Vast Bank to launch the USBC tokenized deposit program. Uphold is an infrastructure provider for on-chain finance and Vast Bank is a nationally-chartered bank. The new strategic partnership will introduce the world’s first retail tokenized deposit offering, providing unprecedented global access to U.S. dollar-denominated tokenized deposits and U.S. dollar deposit accounts worldwide for individuals, enterprises and financial institutions.
Current report
With this new partnership, Uphold’s customers will be able to open U.S. dollar deposit accounts enabling customers to hold and transfer digital representations of their U.S. dollar deposits at Vast Bank on USBC’s privacy-preserving blockchain ledger. Enabled by Vast Bank’s national charter and compliance framework, USBC tokenized deposit offering is being designed to enable the underlying deposit account to be eligible for FDIC insurance (in accordance with applicable limits and requirements) and subject to Reg E protections. Uphold, Vast and USBC have entered into a non-binding Memorandum of Understanding (MOU) to finalize the terms of their strategic partnership in a definitive agreement. While non-binding, the MOU reflects a shared intent to finalize the terms of the partnership during the fourth quarter of 2025, with the final agreement being subject to requisite board and regulatory approvals.
Current report
Results of Operations
Current report
Our operating results for the year ended September 30, 2025 include the results of operations of our Bitcoin treasury trading strategy and the shift to our financial-technology development initiative following the Goldeneye capital investment on August 6, 2025.
Current report
Revenues. We did not generate any operating revenue during either period presented. The legacy Know Labs business is a pre-commercial research enterprise without product sales. Following the shift in our business plan on August 6, 2025 to include the management of digital assets and financial-technology development opportunities, we expect future operating revenues to primarily be generated from financial technology network services such as the recent partnership with Uphold and Vast Bank that is expected to bring the first retail U.S. dollar-denominated tokenized deposits designed to provide worldwide access to U.S. dollar deposit accounts.
Current report
Selling, General and Administrative. SG&A expense increased by $7,185,000 to $16,294,000 for the year ended September 30, 2025 as compared to $9,109,000 for the year ended September 30, 2024, primarily due to an increase in non-cash stock -based compensation expense of $4,450,000, severance of $530,000, and legal and advisory fees of $2,323,000, partially offset by other science division expense reductions.
Current report
Other (Expense) Income, Net. Other expense, net increased by $2,891,000 to $4,250,000 for the year ended September 30, 2025 as compared to $1,359,000 for the year ended September 30, 2024, which was primarily driven by a combination of increases in interest expense of $1,320,000, loss on debt settlements, net of $942,000 and a decrease of $823,000 in fair value of digital assets. These increases reflect the impact of non-cash interest expense and amortization of debt discount related to legacy convertible instruments, partially offset by other derivative income, net from the yield generated by option premiums collected on our Bitcoin treasury trading strategy of $283,000.
Current report
*Net Loss.*We reported a net loss of $22,123,000 for the year ended September 30, 2025 compared with a net loss of $16,582,000 for the year ended September 30, 2024. The higher net loss of $5,541,000 primarily reflects increases in operating expenses, including $7,407,000 of non-cash stock-based compensation expense recognized, partially offset by the decrease in research and development expenses and the other derivative income, net generated from derivative trading activities beginning in the year ended September 30, 2025. Although we expect our operating losses to continue in the near term, we believe our potential revenue opportunities and strengthened capital structure have the potential to provide us with the flexibility to pursue our digital-asset and financial-technology initiatives.
Current report
Known Trends and Uncertainties
Current report
We anticipate that our future operating results will be heavily influenced by the following factors:
Current report
As of September 30, 2025, we had cash and cash equivalents of $8,822,000 and working capital of $6,018,000. We have historically incurred recurring losses and we had an accumulated deficit of $163,090,000 as of September 30, 2025. We recorded net losses of $22,123,000 and $16,582,000 during the years ended September 30, 2025 and 2024, respectively.
Current report
Our liquidity primarily reflects the net proceeds of the equity issuance from the private placement completed on August 6, 2025 in which we issued approximately 357.8 million shares of common stock at $0.335 per share, for an aggregate purchase price consisting of 1,000 Bitcoin and $15 million in cash. As such, a substantial portion of our assets consist of Bitcoin. We view our Bitcoin holdings as long-term strategic reserves rather than trading assets although we may convert Bitcoin to cash periodically to fund operations. Management believes existing liquidity is sufficient for at least 12 months after issuance of these financial statements.
Current report
Non-GAAP Financial Measure
Current report
Adjusted EBITDA is a non-GAAP financial measure used by our management to better help evaluate our financial performance and provide more useful information to investors and others in understanding our operating results. This measure removes the effect of certain non-cash items, non-recurring items, unrealized gains or losses or other similar non-cash items that are included in our net loss that otherwise do not contribute directly to management's evaluation of its operating results.
Current report
Adjusted EBITDA is defined as net loss excluding interest expense primarily incurred in connection with the conversion or extinguishment of our convertible debt obligations, stock-based compensation expense, non-cash changes in the fair value of digital assets, income taxes, and any other items that management has determined are not reflective of our operating performance because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. Adjusted EBITDA should be viewed independently of our reported GAAP net loss as this metric is meant to be considered in addition to, not as a substitute for or in isolation from, our net loss prepared in accordance with GAAP.
Current report
The following table reconciles Adjusted EBITDA to net loss, the most closely comparable GAAP financial measure, for the periods indicated:
Current report
Financing Transactions Related to the Private Placement
Current report
In connection with the private placement of shares of our common stock with Goldeneye 1995 LLC, the following financing transactions closed on August 6, 2025:
Current report
The net effect of these transactions was the elimination of all outstanding preferred equity and convertible debt, a significant increase in authorized capital (from 7.5 million shares to 750 million shares), and the creation of net equity.
Current report
The $15 million cash component of the purchase price was partially used to satisfy these redemptions, repayments, and transaction costs, with the remainder allocated to working capital.
Current report
Net cash used in operating activities for the fiscal years ended September 30, 2025 and 2024 was $7,596,000 and $12,829,000, respectively.
Current report
Net cash used in operating activities for fiscal year 2025 was primarily related to a net loss of $22,123,000, partially offset by working capital changes of $1,883,000 and non-cash expenses of $12,644,000. The non-cash items primarily include (i) stock-based compensation of $7,407,000; (ii) amortization of debt issuance costs of $1,186,000; (iii) issuance of common stock for services of $1,096,000; (iv) loss on debt extinguishment of $942,000; (v) change in fair value of digital assets of $823,000; (vi) interest expense for default of convertible notes of $749,000; (vii) extension of notes and warrants of $513,000; and (viii) offset by other non-cash items of $72,000.
Current report
Net cash provided by financing activities for the fiscal years ended 2025 and 2024 was $13,307,000 and $7,983,000, respectively.
Current report
Net cash provided by financing activities for fiscal year 2025 was primarily related to (i) proceeds from issuance of common stock-Goldeneye 1995 LLC capital investment of $15,000,000: (ii) proceeds from a debt offering of $200,000; (iii) proceeds from Original Issuance Discount Notes of $246,000; (iv) proceeds from the issuance of common stock, net of $300,000; (v) proceeds from the At The Market common stock offering of $1,284,000; (vi) proceeds from convertible notes payable of $656,000 offset by (vii) repayment of notes payable of $3,419,000; and (viii) redemption of Series H preferred stock of $514,000.
Current report
Capital Requirements and Future Liquidity
Current report
We expect to continue incurring operating losses as we fund the further development of our tokenized deposit program. Our ability to sustain operations and execute our strategy depends on our capacity to raise additional capital through equity or debt financings.
Current report
Future capital needs will depend on, among other things:
Current report
Management is actively evaluating whether a divestiture of the legacy non-invasive sensor business could enhance our strategic focus, margin profile and longer-term shareholder value. If we elect to proceed with a divestiture, we may redeploy capital to help fund the tokenized deposit program instead of the sensor business. Because discussions are preliminary, there is no assurance that any transactions will be consummated, nor can we estimate the timing, terms or financial impact of any potential sale.
Current report
Based on our current projections, management believes we have adequate resources to meet our obligations for the next twelve months; however, continuation of operations beyond that period will depend on market conditions for additional capital and the financial performance of our tokenized deposit program.
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Previous report
Overview
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Principal Factors Affecting Our Financial Performance
Previous report
Our operating results are primarily affected by the following factors:
Previous report
Segment Reporting
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Revenue Recognition. We determine revenue recognition from contracts with customers through the following steps:
Previous report
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.
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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.
Previous report
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:
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Level 1 – Quoted prices in active markets for identical assets and liabilities;
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Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and.
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Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
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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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
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Previous wording
The following table sets forth key components of our results of operations during the years ended September 30, 2024 and 2023.
Current wording
The following table sets forth key components of our results of operations for the years ended September 30, 2025 and 2024.
Previous wording
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.
Current wording
*Research and Development.*R&D expense decreased by $4,361,000 to $1,753,000 for the year ended September 30, 2025 as compared to $6,114,000 for the year ended September 30, 2024, primarily due to reduced personnel, use of consultants, and lower expenditures related to the development of our radio frequency spectroscopy Bio-RFID™ technology. During the year ended September 30, 2025, we reduced headcount and the use of external consultants, reducing the cost of development of our radio frequency spectroscopy Bio-RFID™ technology. During the year ended September 30, 2024, we developed Generation 3 and launched the Generation 2 working prototype device.
Previous wording
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.
Current wording
Net cash used in operating activities for fiscal year 2024 was primarily related to (i) a net loss of $16,582,000; (ii) working capital changes of $1,177,000; and partially offset by (iii) 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.
Previous wording
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.
Current wording
Net cash used in investing activities for fiscal year 2024 was $66,000, primarily related to investments in equipment for research and development. No net cash was used in investing activities during fiscal year 2025.
Previous wording
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.
Current wording
Net cash provided by financing activities for the fiscal year ended 2024 was primarily related to (i) the proceeds from debt offering, net of expenses, of $3,764,000; (ii) proceeds from common stock offering, net of expenses of $5,193,000; (iii) proceeds from the issuance of common stock from the exercise of warrants of $8,000; partially offset by (iv) repayment of note payable of $720,000; and (v) payments of debt offering of $262,000.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.