Know Labs Inc (KNW)

[DoughDiligence]

The company is pursuing the fraudulent products market.

I think this is a good start.

If you buy something from China, your are not assured of getting what you paid for. It could be medical products like pills, cleaning supplies, and food.

There were several cases where Chinese milk suppliers were putting white colored chemicals into the milk to artficially boost the 'protein' level instead of providing 100% real milk. This milk blend was being consumed by Chinese children.

I also talked to the company about scanning metals. However, I do not know how the scanner works on various metals.

The problem with metal is that it all looks alike. However, small variations of elements can make steel much stronger or weaker. When engineers design buildings they need specific strength steel which is specified in the design documents. The metals purchased need to exceed those requirements, but the testing of metals delivered is often overlooked. So cheaper metals can be substituted for more expensive metal.

In Seattle, a contractor was caught using inferior metal for our overhead train system a few years ago. However, the structures were not demolished since the difference was deemed to be still safe enough.

With metals, the problem is that many metals are covered up with oils to prevent rust or painted over on first use. So a color scan may be affected by the oil or dirt within a dusty work environment. So each scan would require cleaning the scan area at least.

In general, Companies need to be careful about the products that get delivered to them which they use to build their own products: they need to specify the quality of materials that they expect and they need to inspect the quality of materials that arrive at their doorstep. This is where Visualant's scanner will be most useful in the short-term.

My main question is - many of these inspections are going on now - so which uses will the Cyclops scanner be used to replace a different type of inspection.

The new types of inspections will be the growth area for this product - but the justification of paying $500 per scanner or more for an identification that is not currently done is the question here.