Ronald Erickson

About Ronald Erickson

Ronald P. Erickson (age 80) is Chairman and Chief Executive Officer of Know Labs (appointed CEO January 23, 2023) and the company’s founder, with 30+ years in technology, telecom and digital media; he holds a BA (Central Washington University), MA (University of Wyoming), and JD (UC Davis), and is a licensed attorney in Washington . Know Labs is pre-revenue and operates under going-concern uncertainty; FY2024 net loss was $16.6M with accumulated deficit $138.7M, emphasizing execution risk tied to FDA clearance and financing capacity . As CEO/Chairman, Erickson leads commercialization of the non-invasive glucose monitor (KnowU) amid capital structure changes (reverse split and financings) .

Past Roles

External Roles

Fixed Compensation

Notes:

• Salary progression: $375,000 through 3/1/2024, then $500,000 thereafter; current salary $500,000 per employment agreement .
• No target bonus % disclosed; 2024 bonus paid was discretionary .

Performance Compensation

Performance metrics and payout formulas for annual incentives were not disclosed; the 2021 Plan permits performance criteria, but Erickson’s realized pay reflects equity grants with time-based vesting and a tranche with market-cap performance vesting .

Key outstanding award terms (selected):

• 12/15/2020 options (1,865,675 shares at $1.53): vest upon sustained market capitalization milestones ($100M up to $1B) .
• 12/14/2022 options (1,000,000 at $1.41): vest quarterly over four years .
• 10/10/2023 options (4,640,844 at $0.25): vest quarterly over four years .
• Legacy performance option (11/4/2019; 1,200,000 at $1.10): tied to uplisting (achieved) .

Contingent 2025 awards (subject to shareholder approval on June 30, 2025): 335,000 options (“stock grants”) with $0.50 exercise price, contingent on plan amendment approval .

Equity Ownership & Alignment

Beneficial ownership and instruments

Option exercisability (FY2024 year-end)

Ownership/pledging policies and guidelines

• No stock ownership guidelines; the Board “does not currently have stock ownership guidelines” .
• Insider trading policy prohibits hedging; pledging/margin account exposure capped at 25% of owned shares for any employee/director .
• No pledges by Erickson were disclosed.

Insider selling pressure indicators

• Erickson/J3E2A2Z hold $1.46M in convertible redeemable notes (extended to 9/30/2025 at 8% interest), convertible into common; note conversions could add selling pressure upon liquidity needs .
• Company-wide Lind note requires monthly amortization in cash or shares, a potential continuing source of dilution; while not Erickson-specific, it affects overall float and liquidity dynamics .

Employment Terms

Other contractual protections

• Company-wide clawback (Compensation Recovery Policy) adopted in 2023, aligned with SEC/NYSE rules .

Board Governance

• Dual role: Erickson serves as both Chairman and CEO (independence concern mitigated by four independent directors out of six as of FY2024) .
• Committees: Audit (Pepper—Chair; Owens; Takesako) ; Compensation (Owens—Chair; Pepper; Cronin—non-independent; to be replaced by an independent director) ; Nominating/Governance (Ellingson—Chair; Pepper; Takesako) .
• Attendance: Each director attended ≥75% of meetings in the last fiscal year .
• Controlled company risk: If the June 2025 Private Placement closes, KNW would become a “controlled company” (Goldeneye 1995 LLC ~91.7% fully diluted), allowing exemptions from majority-independent board and fully independent committees .
• Late Section 16 filing: Erickson filed a Form 4 late for a January 30, 2024 note extension (filed May 31, 2024) .

Director Compensation (context)

• Independent directors receive a $10,000 cash retainer plus equity; FY2024 total director comp (non-employee) included stock and options .
• Erickson does not receive separate director fees; his compensation is reported as an executive .

Related Party Transactions (Erickson-specific)

• Convertible notes with J3E2A2Z (affiliate controlled by Erickson): $1,460,926 outstanding; interest rate increased from 6% to 8% and maturity extended to September 30, 2025; warrants issued under original 2018 conversion agreement .
• FY2024 “All Other Compensation” includes $205,000 interest paid to J3E2A2Z LP .
• Warrant extensions for Erickson and his affiliate (January 19, 2023 and January 30, 2024) .

Risk Indicators & Red Flags

• Going-concern uncertainty and liquidity dependence on external financing; cash runway estimated through Feb 28, 2025 at FY2024 filing date .
• Material governance shift anticipated with Private Placement—controlled company exemptions; potential reduction in independent oversight .
• Combined CEO/Chair roles and a non-independent member on Compensation Committee (targeted for replacement) .
• Dilution overhang: significant options, warrants, preferred, and convertible notes outstanding with potential anti-dilution/price-reset features .
• Delinquent Section 16 filing by Erickson (administrative) .

Expertise & Qualifications

• Industry experience across technology, telecom, software, and digital media; established operator and founder across multiple ventures .
• Legal training (JD) and board governance experience (public/private companies; university trustee/chair) .

Work History & Career Trajectory

Compensation Structure Analysis

• Year-over-year: total comp rose to $1.65M in FY2024 from $1.10M in FY2023, driven by higher salary and stock awards; a $100k cash bonus was paid in FY2024 .
• Mix and risk: Large equity component through options and stock awards; option grants include a substantial performance-vested tranche (market-cap milestones), aligning upside with valuation growth .
• Discretion: No detailed annual performance metric disclosure for the FY2024 bonus; indicates board discretion rather than formulaic pay-for-performance .
• Equity plan expansion: Share reserve increases (to 40M in Oct 2024; proposal to 50M in June 2025) increase potential dilution but also enable equity-based retention in a lean team .

Equity Ownership & Alignment Details

• High personal exposure to KNW equity/convertibles: 11.5% beneficial ownership as of 9/30/2024; 33.9% as of 6/20/2025 post-reverse split (reflects different share bases and inclusion of new preferred) .
• Policy prohibits hedging and materially limits pledging (>25% prohibited), supporting alignment .
• No board ownership guidelines; potential misalignment if ownership declines over time, but current holdings are significant .

Employment Terms Summary

Investment Implications

• Alignment and retention: Erickson’s sizable equity and option holdings (including performance-based options) align long-term incentives with valuation; automatic renewal and 12-month severance provide continuity but create moderate severance risk ($500k cash + benefits, plus equity acceleration) .
• Governance quality: Combined CEO/Chair and a pending “controlled company” status (if the Private Placement closes) weaken independence safeguards; however, current board has majority independents and functioning committees .
• Liquidity and dilution: Related-party notes (Erickson/J3E2A2Z) and company-level convertibles (Lind) present ongoing potential share issuance; this can pressure shares and complicate pay-for-performance optics despite Erickson’s equity exposure .
• Execution risk: The business requires FDA clearance and continued financing; going-concern language underscores that leadership’s ability to secure capital and meet regulatory milestones is the central driver of value realization .

Overall: Erickson’s compensation emphasizes equity with meaningful performance-vesting and large beneficial ownership, supporting alignment; yet governance and dilution risks (controlled company path, financing structures) and going-concern uncertainty elevate execution and shareholder protection concerns .