8-K: Know Labs Secures $350,000 Bridge Loan at 12% Interest from Goldeneye 1995 LLC

Know Labs, Inc. has entered into a promissory note agreement with Goldeneye 1995 LLC for a bridge loan of up to $350,000 at a 12% annual interest rate, due by January 28, 2026, or upon demand.

Summary

• Know Labs, Inc. (the Company) entered into a Promissory Note (Bridge Note) with Goldeneye 1995 LLC (the Buyer/Lender) on July 28, 2025.
• The Bridge Note provides for a loan of up to $350,000.
• An initial term loan of $90,000 was provided on July 28, 2025.
• Additional term loans of up to $260,000 may be provided at the Lender's sole discretion until the Maturity Date.
• The Bridge Loan accrues interest daily at a rate of 12% per annum, calculated on a 365-day year.
• Interest is payable monthly in kind by adding to the principal balance, and in cash on the Maturity Date.
• The loan is due in full, with all accrued interest, on the earlier of January 28, 2026 (Maturity Date) or upon demand by the Buyer.
• The Company can prepay the loan without penalty.
• Events of Default include failure to pay, bankruptcy filings, or involuntary petitions, which can lead to immediate acceleration of the loan.
• This Bridge Loan is in connection with a previously announced private placement of common stock with the same Buyer, Goldeneye 1995 LLC, from June 6, 2025.

Sentiment

Score: 3

Explanation: The company secured short-term funding, which is positive for immediate liquidity. However, the high 12% interest rate, the demand feature of the loan, and the reliance on a bridge loan ahead of a private placement suggest financial pressure and less favorable terms, indicating a challenging capital environment for the company.

Positives

• Secured immediate short-term financing of $90,000, with access to an additional $260,000, totaling up to $350,000, to support operations.
• Ability to prepay the loan without premium or penalty.

Negatives

• The loan carries a high annual interest rate of 12%, indicating a potentially high cost of capital.
• The loan is due on the earlier of January 28, 2026, or upon demand by the Lender, introducing significant repayment uncertainty and potential liquidity risk.
• The loan is tied to a private placement of common stock, which could lead to shareholder dilution.
• A default interest rate of 5% plus the standard rate (totaling 17%) applies to overdue amounts.

Risks

• Fluctuations in the market price of Bitcoin and associated impairment charges if the price falls below the Company's carrying value.
• Uncertainties and effects related to ongoing volatility in interest rates.
• Ability to achieve and maintain profitability in the future.
• Risks related to the timing and consummation of the proposed private placement transaction, including conditions not being satisfied or the transaction not occurring.
• Impact of the regulatory environment on the Company's business and complexities with compliance, including changes in securities laws or other regulations.
• Changes in the accounting treatment relating to the Company's Bitcoin holdings.
• Ability to respond to general economic conditions.
• Ability to manage growth effectively and expectations regarding business development and expansion.
• Ability to access sources of capital, including debt financing and other sources, to finance operations and growth.
• General risks and uncertainties detailed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, and other SEC filings.

Future Outlook

The Company anticipates potential future capital needs and acknowledges risks related to achieving profitability, managing growth, and accessing capital. The consummation of the proposed private placement transaction is a key forward-looking event.

Management Comments

• The Company undertakes no duty to update such information after the date of this announcement except as required under applicable law.

Industry Context

Companies, especially those in development or pre-revenue stages, often rely on bridge financing to cover short-term liquidity needs while awaiting larger, more structured capital raises (like the mentioned private placement). A 12% interest rate is relatively high for a bridge loan, suggesting either a higher risk profile for the borrower or limited alternative financing options. The mention of Bitcoin holdings and associated risks indicates a company with diversified or non-traditional assets, which can introduce additional volatility.

Comparison to Industry Standards

• A 12% annual interest rate for a bridge loan is on the higher end compared to typical corporate debt, which might range from 5-10% for established companies, but can be common for early-stage or higher-risk ventures. For example, venture debt or distressed company financing often sees rates in this range or higher.
• The 'demand' feature of the loan, allowing the lender to call the loan due at any time, is a significant lender-favorable term, less common in standard corporate loans and more indicative of a lender seeking strong control or reflecting perceived higher risk.
• The structure of an initial tranche followed by discretionary additional tranches is common in bridge financing, allowing the lender to control exposure based on the borrower's progress or continued need.

Related Party Transactions

• The Promissory Note is with Goldeneye 1995 LLC. The filing mentions Mr. Greg Kidd (Manager of Goldeneye 1995 LLC) as a potential participant in proxy solicitations and refers to the Company's Annual Report on Form 10-K and proxy statement for information on 'Security Ownership of Certain Beneficial Owners and Management and Certain Relationships and Related Party Transactions.' This strongly implies Goldeneye 1995 LLC is a related party.

Stakeholder Impact

• Shareholders: Potential for dilution from the associated private placement. The high interest rate and demand feature of the bridge loan could signal financial distress, potentially impacting share price negatively.
• Creditors: Goldeneye 1995 LLC becomes a creditor with significant control due to the demand feature and high interest rate. Other creditors might view this as a sign of increased risk.
• Employees: Securing short-term funding may provide stability for operations, but underlying financial challenges could still pose long-term risks to employment.

Next Steps

• The Company will continue to seek consummation of the proposed private placement transaction with Goldeneye 1995 LLC.
• The Company may request additional term loans up to $260,000 from Goldeneye 1995 LLC, subject to the Lender's discretion and approval of use of proceeds.
• The Company will need to repay the Bridge Loan by January 28, 2026, or earlier if demanded by the Lender.
• Investors and security holders are urged to read the proxy statement and other documents filed with the SEC in connection with the proposed transaction.

Key Dates

Recommendation

The terms of this bridge loan, particularly the high 12% interest rate and the demand feature, suggest the company is in a precarious financial position and is securing capital on unfavorable terms. While the funding provides immediate liquidity, it comes at a high cost and with significant repayment uncertainty. The reliance on such financing, coupled with the mention of a related private placement that could dilute existing shareholders, indicates underlying financial weakness. The risks outlined, including profitability and access to capital, are significant. For a seasoned investor, these factors point to a company facing considerable headwinds, making the stock a 'sell' given the unfavorable financing terms and implied financial distress.

Keywords

Know Labs, KNW, SEC filing, 8-K, bridge loan, promissory note, private placement, Goldeneye 1995 LLC, debt financing, capital raise, liquidity, interest rates, Bitcoin, financial risk, corporate governance