Zeo ScientifiX, Inc 10-Q for FY2022 Q3
Zeo ScientifiX, Inc. (ZEOX)
About this 10-Q
Zeo ScientifiX, Inc filed this 10-Q on June 14, 2022, covering the quarter ended April 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended April 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.74M
- up 45.2% from $1.2M a year earlier
- Net loss
- $1.46M
- compared with a net loss of $2.24M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
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the quarterly period ended
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ORGANICELL REGENERATIVE MEDICINE, INC.
TABLE OF CONTENTS
i
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements
Organicell Regenerative Medicine, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| April 30, | October 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for bad debts | ||||||||
| Prepaid expenses | ||||||||
| Inventories | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Other assets – right of use | ||||||||
| Security deposits | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued liabilities to management | ||||||||
| Notes payable | ||||||||
| Advances payable | ||||||||
| Finance lease obligations | ||||||||
| Operating lease obligations | ||||||||
| Deferred revenue | ||||||||
| Debentures payable | ||||||||
| Promissory Note, net of debt discount | ||||||||
| Commitment Fee Shortfall Obligation | ||||||||
| Liabilities attributable to discontinued operations | ||||||||
| Total Current Liabilities | ||||||||
| Long term finance lease obligations | ||||||||
| Long term operating lease obligations | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Deficit | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
1
Organicell Regenerative Medicine, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended April 30, |
Six Months Ended April 30, |
|||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in Commitment Fee Shortfall Obligation | ( | ) | ( | ) | ||||||||||||
| Other | ||||||||||||||||
| Loss before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
2
Organicell Regenerative Medicine, Inc.
CONSOLIDATED CHANGES TO STOCKHOLDERS’ DEFICIT
For the Three Months And Six Months Ended April 30, 2022 and 2021
(Unaudited)
Three Months Ended April 30,
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Par Value | Capital | Deficit | Deficit | ||||||||||||||||
| Balance February 1, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Sale of common stock | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Stock issued in settlement of litigation | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance April 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance February 1, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Sale of common stock | ||||||||||||||||||||
| Exchange of accounts payable for stock | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance April 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
3
Six Months Ended April 30,
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Par Value | Capital | Deficit | Deficit | ||||||||||||||||
| Balance October 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Sale of common stock | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Common stock issued as commitment fee for Promissory Note | ||||||||||||||||||||
| Stock issued in settlement of litigation | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance April 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance October 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Sale of common stock | ||||||||||||||||||||
| Exchange of accounts payable for stock | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance April 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
Organicell Regenerative Medicine, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended April 30, |
||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Amortization of OID and commitment fee discount – Promissory Note | ||||||||
| Change in Commitment Fee Shortfall Obligation | ||||||||
| Stock-based compensation | ||||||||
| Stock issued in settlement of litigation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued liabilities to management | ||||||||
| Security deposits | ( | ) | ( | )) | ||||
| Deferred revenue | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of Promissory Note | ||||||||
| Payments on finance lease | ( | ) | ( | ) | ||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Proceeds from sale of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| (Decrease) in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||||||||
| OID discount on proceeds received from Promissory Note | $ | $ | ||||||
| Stock purchased from payments due on accounts payable | $ | $ | ||||||
| Common stock issued as commitment fee for Promissory Note | $ | $ | ||||||
| Commitment Fee Shortfall Obligation | $ | $ | ||||||
| Promissory note issued for past due Professional Fees | $ | $ | ||||||
| Purchase of fixed assets | $ | $ | ||||||
| Exchange of accounts payable interest into common stock | $ | $ | ||||||
| Operating lease – right of use assets | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Organicell Regenerative Medicine, Inc. f/k/a Biotech Products Services and Research, Inc. (“Organicell” or the “Company”) was incorporated on August 9, 2011 in the State of Nevada. The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and to provide other related services. Our proprietary products are derived from perinatal sources and are principally used in the health care industry administered through doctors and clinics (collectively, “Providers”).
On May 21, 2018, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the Company’s name from Biotech Products Services and Research, Inc. to Organicell Regenerative Medicine, Inc., effective June 20, 2018 (the “Name Change”) and during November 2021 the Name Change was effectuated in the marketplace by the Financial Industry Regulatory Agency.
For the six months ended April 30, 2022, the Company principally operated through General Surgical of Florida, Inc., a Florida corporation and wholly owned subsidiary, which was formed to sell the Company’s therapeutic products to Providers.
The Company’s leading product, Zofin™ (also known as OrganicellTM Flow), is an acellular, biologic therapeutic derived from perinatal sources and is manufactured to retain naturally occurring microRNAs, without the addition or combination of any other substance or diluent.
In June 2021, the Company announced that it was launching a service platform for its first autologous product called Patient Pure XTM (PPXTM). PPXTM is a non-manipulated biologic containing the nanoparticle fraction from a patient’s own peripheral blood. The Company began to accept minimal orders for this service since October 2021.
In November 2020, the Company formed Livin’ Again Inc., a wholly owned subsidiary, for the purpose of among other things, providing independent education, advertising and marketing services, to Providers that provide medical and other healthcare, anti-aging and regenerative services. including FDA-approved IV vitamin and mineral liquid infusions (“IV Drip Therapies”). To date, there has been no significant activity and the Company has no timetable, if any, as to when IV Drip Therapies revenues will commence.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities Exchange Commission, although we believe that the disclosures made are adequate to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended October 31, 2021 filed with the Securities and Exchange Commission.
Concentrations of Credit Risk
The
balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents. Balances in
accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $
6
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
Accounts Receivable
Accounts receivable are recorded at net realizable value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to pay their obligation. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions.
The
policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net
60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible
receivables is made. For the three months and six months ended April 30, 2022 and 2021, the Company did
Stock Subscriptions Receivable
Stock subscriptions receivable for equity investments in the Company are classified as current assets once a fully executed stock subscription agreement is received and provided that the receivable is collected prior to the issuance of the financial statements. In the event that the Company receives a fully executed stock subscription agreement but the receivable is not collected prior to the issuance of the financial statements, the receivable is classified as a direct reduction to stockholders’ equity. At April 30, 2022 and October 31, 2021, there were stock subscriptions receivable outstanding.
Inventory
Inventory
is stated at the lower of cost or net realizable value using the average cost method. The Company provides reserves
for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any
firm purchase orders, as well as product shelf life. At April 30, 2022 and October 31, 2021, the Company determined that there
were
Property and Equipment
Property
and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful
lives of the related assets. The estimated useful lives of property and equipment range from
Construction in Progress
The cost of all projects under construction for new laboratory facilities and other improvements that are in progress (under way) at a particular point in time and have not yet been placed into service are reported as construction in progress until such time as the project is complete.
7
Revenue Recognition
The Company follows the guidance of FASB Accounting Standards Update (“ASU”) Topic 606 “Revenue from Contracts with Customers” which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts.
The Company recognizes revenue only when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control is transferred at a point-in-time, which is typically when the transfer and title to the product sold has taken place and there is evidence of our customer’s satisfactory acceptance of the product shipment or delivery except in those instances when the customer has made prior arrangements with the Company to store the product purchased by the customer at the Company’s facilities that is to be delivered at a later date to be designated by the customer.
Basic income (loss) per common share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity instruments.
At
April 30, 2022, the Company had common shares issuable upon the exercise of warrants and unpaid Original Base Salary and
Incremental Salary that could be convertible into approximately
All stock-based payments are recognized in the financial statements based on their fair values.
Research and Development Costs
Research
and development costs consist of direct and indirect costs associated with the development of the Company’s technologies. These
costs are expensed as incurred. Our research and development expenses were approximately $
Income Taxes
The Company is required to file a consolidated tax return that includes all of its subsidiaries.
Provisions for income taxes are based on taxes payable or refundable for the current year taxable income for federal and state income tax reporting purposes and deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of the operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized.
8
The Company accounts for uncertain tax positions in accordance with FASB Topic 740 – Income Taxes. This pronouncement prescribes a recognition threshold and measurement process for financial statement recognition of uncertain tax positions taken or expected to be taken in a tax return. The interpretation also provides guidance on recognition, derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
For the three months and six months ended April 30, 2022 and 2021 the Company incurred operating losses, and therefore, there was not any income tax expense amount recorded during those periods. There is a full valuation allowance established for the tax benefit associated with the net losses for the three months and six months ended April 30, 2022 and 2021.
Valuation of Derivatives
The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
Sequencing
The Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares.
The Company currently has authorized shares of common stock of which shares are issued and outstanding as of June 14, 2022. The Company expects that it will continue to issue common stock in the future in connection with debt and/or equity financings, transactions with third parties, performance incentives and as compensation to its employees. Currently the amount of authorized shares is sufficient to provide for the additional shares that the Company may be contingently obligated to issue under existing arrangements.
Fair Value of Financial Instruments
The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.
The Company follows FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It 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. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.
The Company follows the provisions of ASC 820 with respect to its financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
Level one — Quoted market prices in active markets for identical assets or liabilities;
9
Level two — Inputs other than level one inputs that are either directly or indirectly observable such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level three — Unobservable inputs that are supported by little or no market activity and developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
The
Company did
Operating Lease Obligations
Under the provisions of Accounting Standards Update (ASU) No. 2016-02 (Topic 842) (“ASC 842”), the Company recognizes a right of use (“ROU”) asset and corresponding lease liability for all operating leases upon commencement of the lease. The Company applies the modified retrospective approach which includes a number of optional practical expedients on leases that commenced before the effective date of ASC 842, including continuing to account for leases that commenced before the effective date in accordance with previous guidance, unless the lease is modified and the inclusion of amounts pertaining to the maintenance portion of the leased assets.
The
Company’s policy is to treat operating leases that have a term of one year or less at lease commencement date and do not include
a purchase option that is reasonably certain of exercise, consistent with the lease recognition approach as previously outlined under
ASC 840. In addition, month to month leases which do not involve additional financial commitments on the part of the Company are also
treated consistent with the lease recognition approach as previously outlined under ASC 840. The Company has established a capitalization
threshold of $
Subsequent Events
The Company has evaluated subsequent events that occurred after April 30, 2022 through the financial statement issuance date for subsequent event disclosure consideration.
NOTE 3 – GOING CONCERN
The
unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles,
which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company
incurred net losses of $
New United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective beginning in May 2021 (postponed from November 2020 due to the COVID-19 pandemic) require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). The Company has not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s.
10
In addition to the above, the adverse public health developments and economic effects of the ongoing COVID-19 pandemic in the United States have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy.
As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted; (b) the United States economy returns to pre-COVID-19 conditions; and/or (c) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company’s current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.
In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (a) the Company is able to continue to produce products or obtain products under supply arrangements which are in compliance with current and future regulatory guidelines; (b) the United States economy returns to pre-COVID-19 market conditions; (c) the Company will be able to establish a stabilized source of revenues, including efforts to expand sales internationally and the development of new product offerings and/or designations of products; (d) obligations to the Company’s creditors are not accelerated; (e) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (f) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and ongoing safety and efficacy of its products; and/or (g) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.
There is no assurance that the products we currently produce will not be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s and/or the Company will be able to complete its revenue growth strategy. There is no assurance that the Company’s research and development activities will be successful or that the Company will be able to timely fund the required costs of those activities. Without sufficient cash reserves, the Company’s ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant effort since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues.
If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved, if the Company’s ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws. As of April 30, 2022, based on the factors described above, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of these financial statements.
11
NOTE 4 – INVENTORIES
| Schedule of Inventories | ||||||||
| April 30, 2022 | October 31, 2021 | |||||||
| Raw materials and supplies | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
NOTE 5 – PROPERTY AND EQUIPMENT
| Schedule of Property and Equipment | ||||||||
| April 30, 2022 | October 31, 2021 | |||||||
| Computer equipment | $ | $ | ||||||
| Finance
lease equipment | ||||||||
| Manufacturing equipment | ||||||||
| Property and equipment, gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net before leasehold improvements | ||||||||
| Construction in progress: | ||||||||
| Leasehold improvements | ||||||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
expense totaled $
As
described in Note 6, during the year ended October 31, 2021, the Company began the build-out of additional laboratory processing,
product distribution and administrative office capacity at its Basalt Lab Lease location. The total costs incurred as of April 30,
2022 were $
NOTE 6 – LEASE OBLIGATIONS
Finance Lease Obligations:
During
March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $
During
October 2021, the Company entered into a second lease agreement in the amount of $
12
Operating Lease Obligations:
Administrative Office
The
Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by
Dr. Mitrani. During July 2020, the Company entered into an extension of the operating lease agreement. The lease term is for an
additional 36 months beginning July 1, 2020 and expiring June 30, 2023, with a monthly rental rate of $
Lease
amortization expense for the three months ended April 30, 2022 and 2021 was $
Beginning
October 1, 2020, the Company entered into a second lease agreement with Mariluna LLC for office space located in Aspen, CO. The
initial term of the lease was for one year, expiring on September 30, 2021 and the lease has been subsequently extended on a month
to month basis. Under the terms of the lease, the Company is required to make monthly rental payments of $
Laboratory Facilities:
In
connection with the Company’s decision to again operate a placental tissue bank processing laboratory in Miami, Florida,
during February 2019, the Company entered into a renewable month to month lease agreement (“Miami Lab Lease”) for
an approximately 450 square foot laboratory and a 100 square foot administrative office space. In connection with the Miami Lab
Lease, the Company was required to post a security deposit of $
During
March 2021, the Company entered into a lease agreement for an approximately 2,452 square foot commercial space located in Basalt,
Colorado (the “Basalt Lab Lease”). The Company intends to build additional laboratory processing, product distribution and
administrative office capacity from this location. The term of the Basalt Lab Lease is for three years and may be renewed for an additional
(3) three-year term provided the Company is not in default (“First Renewal Option”). Rental expense is $
In
connection with the execution of the Basalt Lab Lease, the Company recorded a ROU asset and corresponding operating lease obligation
of $
Lease
amortization expense for the three months and six months ended April 30, 2022 was $
13
NOTE 7 – RELATED PARTY TRANSACTIONS
The
Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by
Dr. Mitrani. The term of the lease expires in June 2023. Monthly rent is $
Beginning
October 1, 2020, the Company entered into a second lease agreement with Mariluna LLC for office space located in Aspen, CO. The
initial term of the lease was for one year, expiring on September 30, 2021 and the lease has been subsequently extended on a month
to month basis. Under the terms of the lease, the Company is required to make monthly rental payments of $
In
connection with Mr. Bothwell’s executive employment agreements, the Company agreed to reimburse Rover Advanced Technologies, LLC,
a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative
fees, etc.) totaling $
For
the three months and six months ended April 30, 2022, the Company sold a total of approximately $
At
April 30, 2022, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $
During
June 2022, Albert Mitrani made a capital contribution of $
NOTE 8 – NOTES PAYABLE
Notes Payable
Debentures
On
June 20, 2018, the Company issued a total of $
14
Unsecured Promissory Note For Professional Fees Owed
On
January 24, 2022, the Company reached an agreement with a professional firm in connection with unpaid legal services owing as of
December 31, 2021 in the amount of $
Unsecured Promissory Note
On
February 5, 2019, the Company entered into an unsecured loan agreement with a third party with a principal balance of $
Promissory Note - SPA
On
January 11, 2022, the Company entered into a Securities Purchase Agreement (“SPA”) with AJB Capital Investments, LLC
(“Purchaser”) pursuant to which we sold a promissory note in the principal amount of $
The
Promissory Note matures on July 11, 2022, subject to extension at the option of the Company for up to an additional six month period,
bears interest at the a rate of
The Promissory Note may be prepaid by the Company at any time without penalty. The Promissory Note also contains covenants, events of defaults, penalties, default interest and other terms and conditions customary in transactions of this nature.
15
Pursuant
to the terms of the SPA, the Company paid a commitment fee to the Purchaser in the amount of $
In
the event that by the first anniversary of repayment of the Promissory Note by the Company, the Purchaser has not generated the amount
of $
The offer and sale of the Promissory Note to the Purchaser was made in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”), in reliance on exemptions afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.
Upon
the closing, the Company recorded a discount of the Promissory Note in the amount of $
NOTE 9 – IRS PENALTIES
The
Company’s income tax returns for the periods since inception through the tax year ended October 31, 2015 were not filed with
the Internal Revenue Service (“IRS”) until August 2017 (“Delinquent Filed Returns”). The Company’s
income tax returns for the tax year ended October 31, 2016 were filed with the IRS during December 2017. In connection with
the Delinquent Filed Returns, during the period September 2017 through October 2017, the Company received notices that it was
being assessed approximately $
16
NOTE 10 – CAPITAL STOCK
Preferred Stock
The Company is authorized to issue shares of $ par value preferred stock in one or more designated series, each of which shall be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. The Company’s board of directors is authorized, without stockholders’ approval, within any limitations prescribed by law and the Company’s Articles of Incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock.
Issued Shares
As of April 30, 2022, there were designations of Preferred Stock authorized or outstanding.
Common Stock
Issuances of Common Stock - Sales:
In
November 2021, the Company sold an aggregate of shares of common stock to one “accredited investor” at $
per share for an aggregate purchase price of $
In
January 2022, the Company sold an aggregate of shares of common stock to one “accredited investor” at $
per share for an aggregate purchase price of $
In
February 2022, the Company sold an aggregate of shares of common stock to one “accredited investor” at $
per share for an aggregate purchase price of $
Issuances of Common Stock – Stock-Based Compensation:
On
December 27, 2021, the Company and an employee agreed to an amendment of the employee’s employment agreement. Under the terms
of the amendment, the employee agreed to extend the term of the agreement through December 31, 2024 and the Company agreed to increase
the employee’s annual salary from $
In connection with the VP Agreements, during the six months ended April 30, 2022, the Company issued each of the Sales Executive an additional Performance Shares (total shares) valued at $ per share, the closing price of the common stock of the Company on the grant date. The Company will amortize the value of the stock-based compensation of $ over the remaining term of the VP Agreements. The Company has recorded a total of $ and $ of stock-based compensation expense during the three and six months ended April 30, 2022, respectively, in connection with these shares.
17
On
March 17, 2022, the Company entered into a consulting agreement with a third party to assist the Company with certain services associated
with the implementation of the PPXTM service platform as well as other customary day to day activities as reasonably requested.
The term of the agreement expires on September 30, 2022 (“Initial Term”) and may be renewed for four additional six-month
terms upon mutual agreement. As consideration for agreeing to provide consulting services to the Company during the Initial Term, the
Company agreed to issue the consultant
During
June 2020, the Company entered into a consulting agreement with a third party in connection with past and future consulting and
advisory services to be provided to the Company. The consulting agreement expires on June 30, 2022 and may be extended for additional
monthly periods provided each party agrees in writing at least 5 days prior to expiration of the term. In connection with the consulting
agreement, the Company issued the consultant
Equity Line of Credit Commitment:
During
November 2021, the Company entered into an agreement with an investor whereby the investor has agreed to provide the Company with
a $
Shares Issued – Promissory Note:
As
described in Note 8, in connection with the issuance of the Promissory Note on January 11, 2022, the Company issued the Purchaser’s
commitment shares valued at $
Shares Issued – Settlement of Litigation:
As
described in Note 12, during April 2022 the Company settled a lawsuit whereby the Company paid LAE $
Management and Consultants Performance Stock Plan
On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (“MCPP”) providing for the grant to current senior executive members of management and third-party consultants shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”).
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On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below.
| Schedule of minimum pre-transaction price per share | ||||||||||
| Pre-Transaction
Price Per Share Valuation (a) | Executive
Bonus Shares Issued (b) | Non-executive
Board Bonus Shares Issued (c) | ||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| (a) |
| (b) |
| (c) |
On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below:
| Schedule of debt and/or equity financings | ||||||||||
| Aggregate Funding Amount | Shares | |||||||||
| From | To | |||||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
On
September 23, 2020,
In addition, each of the current executives were entitled to receive an additional 7 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such milestone occurs during the term of employment with the Company.
On February 10, 2021, the Board amended the MCPP, providing for the grant of common stock of the Company of 5 million shares for each Phase II clinical trial completed, 5 million shares for each Phase III clinical trial approved and initiated (deemed to be upon the time the first patient is enrolled) and 10.0 million shares for each Phase III clinical trial fully enrolled. In addition, the CMO’s portion of a designated grant for an achievement of any applicable Milestone subsequent to September 23, 2020 was reduced to 30% until the time that the CMO becomes a full-time employee of the Company.
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Pursuant to the MCPP, a total of 342,500,000 shares have been issued and as described above, additional shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board:
| Schedule of management and consultants performance stock plan | ||||||||
| Name | MCPP SharesIssued | MCPP Shares Authorized | ||||||
| Albert Mitrani | ||||||||
| Ian Bothwell | ||||||||
| Dr. Maria Mitrani | ||||||||
| Dr. George Shapiro | ||||||||
| Dr. Allen Meglin | ||||||||
| Michael Carbonara | ||||||||
| Consultants | ||||||||
| Total | ||||||||
The Company will record stock-based compensation expense in connection with any MCPP Shares that are actually awarded based on the fair value as of the initial grant date that the respective milestone for the MCPP Shares were approved. In connection with the MCPP Shares that have been awarded to date, all such shares were issued in connection with the MCPP Shares approved on April 25, 2020 and accordingly were valued $0.027 per share, the closing price of the common stock of the Company on the date that those respective MCPP Shares were approved.
Upon completion of the Share Exchange on October 29, 2021, the MCPP (but not Awards of unexchanged shares of our common stock) was terminated.
Unvested Equity Instruments:
A summary of unvested equity instruments outstanding for the six months ended April 30, 2022 and 2021 are presented below:
| Schedule of Nonvested Share Activity | ||||||||
| Number
of Nonvested Shares | Weighted- Average Grant Date Fair Value | |||||||
| Outstanding at October 31, 2021 | $ | |||||||
| Non-Vested Shares Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Expired/Forfeited | $ | |||||||
| Outstanding at April 30, 2022 | $ | |||||||
| Number
of Nonvested Shares | Weighted- Average Grant Date Fair Value | |||||||
| Outstanding at October 31, 2020 | $ | |||||||
| Non-Vested Shares Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Expired/Forfeited | $ | |||||||
| Outstanding at April 30, 2021 | $ | |||||||
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NOTE 11 – WARRANTS
A summary of warrant activity for the six months ended April 30, 2022 and 2021 are presented below:
| Schedule of Summary of Warrant Activity | ||||||||||||||||
| Number
of Shares | Weighted- average Exercise Price | Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at October 31, 2021 | $ | $ | ||||||||||||||
| Granted | $ | - | $ | |||||||||||||
| Exercised | $ | - | $ | |||||||||||||
| Expired/Forfeited | $ | - | $ | |||||||||||||
| Outstanding and exercisable at April 30, 2022 | $ | $ | ||||||||||||||
| Number
of Shares | Weighted- | Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at October 31, 2020 | $ | $ | ||||||||||||||
| Granted | $ | - | $ | |||||||||||||
| Exercised | $ | - | $ | |||||||||||||
| Expired/Forfeited | $ | - | $ | |||||||||||||
| Outstanding and exercisable at April 30, 2021 | $ | $ | ||||||||||||||
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Preparation of IRB, Pre-IND, IND Protocols for Clinical Applications and Clinical Trial Initiation and Monitoring:
In connection with the Company’s ongoing research and development efforts and the Company’s efforts to meet compliance with current and anticipated United States Food and Drug Administration (“FDA”) regulations expected to be enforced beginning in May 2021 pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products that fall under Section 351 of the Public Health Services Act (“HCT/Ps”), the Company has applied for and received Investigation New Drug (“IND”) approval from the FDA to commence clinical trials in connection with the use of the Company’s products and related treatment protocols for specific indications. The ability to successfully complete the above efforts will be dependent on the actual outcomes in connection with the use of the Company’s products and related treatment protocols for each clinical trial, the Company’s ability to timely enroll patients and fund the required payments and complete the applicable clinical trials, which is subject to available working capital generated from operations, financing arrangements with the third-party vendors involved in the studies and/or from additional debt and/or equity financings as well as the ultimate approval from the FDA.
New CRO Agreements
During
August 2021, October 2021, and December 2021, the Company entered into agreements with a new CRO to provide ongoing clinical
research and related services in connection with three of the Company’s approved clinical research trials (“New CRO Agreements”).
In connection with the New CRO Agreements, the Company is obligated to make aggregate payments to the CRO of approximately $1,700,000
plus estimated aggregate pass-through costs and other third-party direct costs of approximately $565,000 as well as site and patient
related costs. The Company is obligated to make the CRO payments in equal monthly installments over the term of the clinical trial beginning
on the commencement of the work by the CRO in connection with the applicable clinical trial and the payments for the pass-through costs
and other third-party direct costs as well as site and patient related costs are paid in accordance with completion of agreed upon milestones.
As of April 30, 2022, the Company has been billed a total of approximately $477,000 in connection with the New CRO Agreements of
which approximately $
21
Contingent Convertible Obligations Into Equity Securities
Obligations Due Under Executive Employment Agreements
Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.
Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.
None of the Executives have yet to elect to convert any portion of their unpaid Original Base Salary.
As
of April 30, 2022,
Legal Matters
On June 17, 2021, Organicell received a subpoena dated June 14, 2021, from the Atlanta Regional Office of the SEC requiring the production of certain documents and communications in connection with the treatment and results of various COVID-19 patients, as discussed in the Company’s Current Reports on Form 8-K filed with the SEC during the period from May 27, 2020 through May 11, 2021. The Company is fully cooperating with the SEC’s investigation and believes that it will be able to provide all of the information requested by the SEC. The Company can make no assurances as to the time or resources that will need to be devoted to this investigation or its final outcome, or the impact, if any, of this investigation or any proceedings on the Company’s current business, financial condition, results of operations, cash flows, or the Company’s future operations.
On
August 17, 2021, the Company was served with a summons and complaint by LAE International Consulting, LLC (“LAE”), in
the case styled LAE International Consulting, LLC v. Organicell Regenerative Medicine, Inc. et al., Case No. 2021-018461-CA-01 (In
the Circuit Court of the 11th Judicial Circuit in and for Miami Dade County, Florida) (the “Lawsuit”). Albert Mitrani,
Mari Mitrani and Ian Bothwell (the “Individual Defendants”) were also named as defendants in the Lawsuit. In the Lawsuit,
LAE alleges breach of contract, unjust enrichment, violation of Florida’s Unfair and Deceptive Trade Practices Act, breach of obligation
of good faith and fair dealing, negligent misrepresentation and fraudulent misrepresentation in connection with a prior consulting agreement
entered into between the Company and LAE. During April 2022 the Lawsuit was settled whereby the Company agreed to pay LAE $
In addition to the foregoing, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.
NOTE 13 – SEGMENT INFORMATION
The Company has only one operating segment.
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Unless stated otherwise, the words “we,” “us,” “our,” the “Company” or “Organicell” in this Quarterly Report on Form 10-Q refer to Organicell Regenerative Medicine, Inc., a Nevada corporation, and its subsidiaries.
Cautionary Note Regarding Forward- Looking Statements
The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “may,” “could,” “should,” “expect,” “plan,” “project,” “strategy,” “forecast,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” or similar expressions help identify forward-looking statements.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance, and management cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will in fact occur. The Company’s actual results may differ materially from those anticipated, estimated, projected or expected by management.
All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.
Business Overview
We are a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and to provide other related services. Our proprietary products are derived from perinatal sources and manufactured to retain the naturally occurring microRNAs, without the addition or combination of any other substance or diluent (“RAAM Products”). Our RAAM Products and related services are principally used in the health care industry administered through doctors and clinics (“Providers”).
Since May 2019, Organicell has operated a placental tissue bank processing laboratory in Miami, Florida for the purpose of performing research and development and the manufacturing and processing of the anti-aging and cellular therapy derived products that we sell and distribute to our customers.
The Company’s leading product, Zofin™ (also known as OrganicellTM Flow), is an acellular, biologic therapeutic derived from perinatal sources and is manufactured to retain naturally occurring microRNAs, without the addition or combination of any other substance or diluent. This product contains over 300 growth factors, cytokines, chemokines, and 102 unique microRNAs as well as other exosomes/nanoparticles derived from perinatal tissues.
To date, the Company has obtained certain Investigation New Drug (“IND”), and eighteen emergency IND (“eIND”) approvals from the FDA, including applicable Institutional Review Board (“IRB”) approvals which authorized the Company to commence clinical trials or treatments in connection with the use of Zofin™ and related treatment protocols. The Company is pursuing efforts to complete its already approved clinical studies (see below) as well as obtaining approval to commence additional studies for other specific indications it has identified that the use of its products will provide more favorable and desired health related benefits for patients seeking alternative treatment options than are currently available. The ability of the Company to succeed in these efforts is subject to among other things, the Company having sufficient available working capital to fund the substantial costs of completing clinical trials, which the Company currently does not have, and ultimately, obtaining approval from the FDA.
23
New FDA guidance which was announced in November 2017 and which became effective in May 2021 (postponed from November 2020 due to the COVID-19 pandemic) requires that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”).
We have not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products we currently produce would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s. However, we do not believe that our products fall within these guidelines and intend to vigorously defend against any adverse interpretation by the FDA on the classification of our products that may be deemed as falling under this defined regulation, if any. Notwithstanding the foregoing, we are undertaking efforts on an ongoing basis to mitigate any potential risks associated with an adverse ruling by the FDA and the subsequent limitations on our ability to continue to generate revenues from the sale of our products in the United States until the Company obtains the required licenses. The efforts include continuing with clinical trials, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations.
In June 2021, the Company announced that it was launching a service platform for its first autologous product called Patient Pure XTM (PPXTM). PPXTM is a non-manipulated biologic containing the nanoparticle fraction from a patient’s own peripheral blood. The Company began to accept minimal orders for this service since October 2021.
In November 2020, the Company formed Livin’ Again Inc., a wholly owned subsidiary, for the purpose of among other things, providing independent education, advertising and marketing services, to Providers that provide medical and other healthcare, anti-aging and regenerative services. including FDA-approved IV vitamin and mineral liquid infusions (“IV Drip Therapies”). To date, there has been no significant activity and the Company has no timetable, if any, as to when IV Drip Therapies revenues will commence.
COVID-19 impact on Economy and Business Environment
The adverse public health developments and economic effects of the ongoing COVID-19 outbreak in the United States have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities; (b) is seeking to raise additional debt and/or equity financing to support working capital requirements; and (c) continues to take steps to stabilize and increase revenues from the sale of its products.
There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing a similar or worse devastating impact to the United States and worldwide economies or our business.
The following discussion of the Company’s results of operations and liquidity and capital resources should be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing in Item 1. of this Quarterly Report on Form 10-Q.
24
Results of Operations
Three months ended April 30, 2022 as compared to three months ended April 30, 2021
Revenues. Our revenues for the three months ended April 30, 2022 were $1,735,173, compared to revenues of $1,195,076 for the three months ended April 30, 2021. The increase in revenues during the three months ended April 30, 2022 of $540,097 or 45.2%, was primarily the result of the Company being able to realize an increase of approximately 31.5% (approximately $376,600) in the average sales prices for the products sold during the three months ended April 30, 2022 compared with the average sales prices realized on products sold during the three months ended April 30, 2022, an increase of approximately 8.49% (approximately $133,500) in the overall unit sales of its products during the three months ended April 30, 2022 compared with the three months ended April 30, 2021, and the Company’s ability to generate approximately $30,500 of new revenues associated with its recently launched PPXTM service platform during the three months ended April 30, 2022. The increase in the average sales prices realized on products sold during the three months ended April 30, 2022 compared with the three months ended April 30, 2021, was due to increases in sales of higher priced medical grade product and the reduction in volume pricing discounts granted to distributors for large orders of the Company’s medical grade product offerings, partially offset from the reduction in the sales of the Company’s aesthetic product offerings, which are sold at lower prices than the Company’s medical grade product offerings.
Cost of Revenues. Our cost of revenues for the three months ended April 30, 2022 were $126,418, compared with cost of revenues of $136,321 for the three months ended April 30, 2021. The decrease in the cost of revenues during the three months ended April 30, 2022 of $9,903 or 7.3%, compared with the three months ended April 30, 2021, was due to a reduction in the cost of units sold of 14.5% (approximately ($19,800) during the three months ended April 30, 2022, compared to costs of units sold during the three months ended April 30, 2021, partially offset from an increase in the amount of units sold of 8.5% (approximately $9,900) during the three months ended April 30, 2022, compared with the three months ended April 30, 2021. The decrease in the cost of units sold was primarily the result of the Company’s ability to obtain lower cost of raw materials used in the processing of the units that were sold during the three months ended April 30, 2022, compared with the three months ended April 30, 2021.
Gross Profit. Our gross profit for the three months ended April 30, 2022 was $1,608,755 (92.7% of revenues), compared with gross profit of $1,058,755 (88.6% of revenues) for the three months ended April 30, 2021. The increase in gross profit during the three months ended April 30, 2022 of $550,000 was the result of increase in average sales prices for the products sold, lower costs associated with units sold and the new revenues associated with its recently launched PPXTM service platform during the three months ended April 30, 2022, compared to the three months ended April 30, 2021.
General and Administrative Expenses. General and administrative expenses for the three months ended April 30, 2022 were $2,867,017, compared with $3,292,158 for the three months ended April 30, 2021, a decrease of $425,141 or 12.9%. The decrease in the general and administrative expenses for the three months ended April 30, 2022 compared with the three months ended April 30, 2021, was primarily the result of a decrease in stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $957,000 partially offset by increases in payroll and consulting fees of $81,000, increases in commissions due from sales of the Company’s products of approximately $180,000, increased professional fees of approximately $33,400, research and development costs of approximately $42,000 and increased laboratory related costs of approximately $78,000. The decrease in stock-based compensation costs was the result of a reduction in the amount of shares issued as stock-based compensation during the three months ended April 30, 2022 compared with the three months ended 2020 and decreases in the costs attributable to the shares issued as stock-based compensation based on decreases in the Company’s share price during periods that the stock-based compensation was granted.
Other Income (Expense). Other (expense) for the three months ended April 30, 2022 was $197,781, compared with other (expense) of $6,092 for the three months ended April 30, 2021. The increase in other (expense) of $191,689 during the three months ended April 30, 2022 compared to the three months ended April 30, 2021, was principally the result of increased costs of approximately $130,000 from the amortization of discounts associated with a $600,000 promissory note (“Note”) issued and sold by the Company to AJB Capital Investments, LLC (“AJB”) in January 2022, the increase in the Commitment Fee Shortfall Obligation of approximately $49,000 under our Securities Purchase Agreement with AJB (“SPA”) and the increase of $15,000 in interest costs associated with the Note during the three months ended April 30, 2022 compared with the three months ended 2021.
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Six months ended April 30, 2022 as compared to six months ended April 30, 2021
Revenues. Our revenues for the six months ended April 30, 2022 were $3,334,321, compared to revenues of $2,563,516 for the six months ended April 30, 2021. The increase in revenues during the six months ended April 30, 2022 of $770,805 or 30.0% was primarily the result of the Company being able to realize an increase of approximately 26.8% (approximately $687,000) in the average sales prices for the products sold during the six months ended April 30, 2022 compared with the average sales prices realized on products sold during the six months ended April 30, 2021 and the Company’s ability to generate approximately $78,500 of new revenues associated with its recently launched PPXTM service platform during the six months ended April 30, 2022. The increase in the average sales prices realized on products sold during the six months ended April 30, 2022 compared with the six months ended April 30, 2021 was due to increases in sales of higher priced medical grade product and the reduction in volume pricing discounts granted to distributors for large orders of the Company’s medical grade product offerings.
Cost of Revenues. Our cost of revenues for the six months ended April 30, 2022 were $275,539, compared with cost of revenues of $304,492 for the six months ended April 30, 2021. The decrease in the cost of revenues during the six months ended April 30, 2022 of $28,953 or 9.5% compared with the six months ended April 30, 2021 was due to a reduction in the cost of units sold of 9.66% (approximately ($29,400) during the six months ended April 30, 2022 compared to costs of units sold during the six months ended April 30, 2021. The decrease in the cost of units sold was primarily the result of the Company’s ability to obtain lower cost of raw materials used in the processing of the units that were sold during the six months ended April 30, 2022, compared with the six months ended April 30, 2021.
Gross Profit. Our gross profit for the six months ended April 30, 2022 was $3,058,782 (91.7% of revenues), compared with gross profit of $2,259,024 (88.1% of revenues) for the six months ended April 30, 2021. The increase in gross profit during the six months ended April 30, 2022 of $799,758 was the result of increase in average sales prices for the products sold, lower costs associated with units sold and the new revenues associated with its recently launched PPXTM service platform during the six months ended April 30, 2022 compared to the six months ended April 30, 2021.
General and Administrative Expenses. General and administrative expenses for the six months ended April 30, 2022 were $5,958,477, compared with $12,657,788 for the six months ended April 30, 2021, a decrease of $6,699,311 or 52.9%. The decrease in the general and administrative expenses for the six months ended April 30, 2022 compared with the six months ended April 30, 2021, was primarily the result of a decrease in stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $7,052,000 reduced research and development costs of approximately $343,000, partially offset by increases in commissions due from sales of the Company’s products of approximately $350,000, increased professional fees of approximately $220,000 and increased laboratory and office related expenses of approximately $90,000. The decrease in stock-based compensation costs was the result of a reduction in the amount of shares issued as stock-based compensation during the six months ended April 30, 2022 compared with the six months ended April 30, 2021 and decreases in the costs attributable to the shares issued as stock-based compensation based on decreases in the Company’s share price during periods that the stock-based compensation was granted.
Other Income (Expense). Other (expense) for the six months ended April 30, 2022 was ($250,084), compared with other income, net, of $9,264 for the six months ended April 30, 2021. The increase in other (expense), net, of $259,348 during the six months ended April 30, 2022 compared to the six months ended April 30, 2021 was principally the result of increased costs of approximately $162,000 from the amortization of the discounts associated with the Note, the increase in the Commitment Fee Shortfall Obligation of approximately $60,500 under the SPA, the increase of approximately $18,300 in interest costs associated with the Note and the reduction in other income of approximately $21,575 from settlements received during the six months ended April 30, 2022 compared with the six months ended 2021.
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Liquidity and Capital Resources
Cash and Cash Equivalents
The following table summarizes the sources and uses of cash for the periods stated. The Company held no cash equivalents for any of the periods presented.
| For the Six Months Ended April 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash, beginning of year | $ | 108,570 | $ | 590,797 | ||||
| Net cash used in operating activities | (623,943 | ) | (1,618,020 | ) | ||||
| Net cash used in investing activities | (385,036 | ) | (46,264 | ) | ||||
| Net cash provided by financing activities | 966,411 | 1,269,402 | ||||||
| Cash, end of period | $ | 66,002 | $ | 195,915 | ||||
During the six months April 30, 2022, the Company used cash in operating activities of $623,943, compared to $1,618,020 for the six months April 30, 2021, a decrease in cash used of $994,077. The decrease in cash used in operating activities was due to the increase in revenues and gross profit, the increase in accrued liabilities to management and the reduction in accounts receivable balances during the six months April 30, 2022 as compared to the six months April 30, 2021, partially offset from the increase in cash to pay increasing operating expenses on a current basis associated with professional fees, payroll, consulting costs and laboratory related expenses in connection with the Company’s expansion of its research and development activities as well as payment of past due accounts payable and accrued expenses during the six months April 30, 2022 as compared to the six months April 30, 2021.
During the six months April 30, 2022, the Company had cash used in investing activities of $385,036, compared to cash used in investing activities of $46,264 for the six months April 30, 2021. The increase in cash used in investing activities of $338,772 was due primarily due the Company’s leasehold improvements associated with the new lab facility in Basalt, CO of $379,100 during the six months April 30, 2022 as compared to the six months April 30, 2021, partially offset from reduced laboratory equipment purchased for the Company’s laboratory facilities during the six months April 30, 2022 as compared to the six months April 30, 2021.
During the six months April 30, 2022, the Company had cash provided by financing activities of $966,411 compared to cash provided by financing activities of $1,269,402 for the six months April 30, 2021. The decrease in cash provided by financing activities of $302,991 was due to decreases in proceeds from the sale of equity securities of approximately $680,000 and increases in repayments of outstanding debt obligations of approximately $165,600, partially offset from the increase in proceeds of $540,000 from the issuance of the Note to AJB, during the six months April 30, 2022 as compared to the six months April 30, 2021.
Capital Resources
The Company has historically relied on the sale of debt or equity securities, the restructuring of debt obligations and/or the issuance and/or exchange of equity securities to meet the shortfall in cash to fund its operations. During the six months ended April 30, 2022 and through the date of this report, the Company completed the following private sales of its securities:
| 1. | In November 2021, the Company sold an aggregate of 8,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $400,000. The proceeds were used for working capital. |
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| 2. | In January 2022, the Company sold an aggregate of 666,667 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $20,000. The purchase price was paid through an offset of an outstanding balance owed by the Company to the investor at the time of the sale of $20,000. |
| 3. | On January 11, 2022, the Company entered into the SPA with AJB, pursuant to which we sold the Note in the principal amount of $600,000 to AJB in a private transaction for a purchase price of $540,000 (giving effect to original issue discount of $60,000). The proceeds were used for working capital. |
| 4. | In February 2022, the Company sold an aggregate of 8,333,333 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $250,000. The proceeds were used for working capital. |
The Company issued the foregoing securities pursuant to the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Going Concern Consideration
The unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company incurred net losses of $3,149,779 for the six months ended April 30, 2022. In addition, the Company had an accumulated deficit of $44,774,528 at April 30, 2022. The Company had a negative working capital position of $5,680,451 at April 30, 2022.
New United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective beginning in May 2021 (postponed from November 2020 due to the COVID-19 pandemic) require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). The Company has not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s.
In addition to the above, the adverse public health developments and economic effects of the ongoing COVID-19 pandemic in the United States have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy.
As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted; (b) the United States economy returns to pre-COVID-19 conditions; and/or (c) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company’s current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.
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In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (a) the Company is able to continue to produce products or obtain products under supply arrangements which are in compliance with current and future regulatory guidelines; (b) the United States economy returns to pre-COVID-19 market conditions; (c) the Company will be able to establish a stabilized source of revenues, including efforts to expand sales internationally and the development of new product offerings and/or designations of products; (d) obligations to the Company’s creditors are not accelerated; (e) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (f) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and ongoing safety and efficacy of its products; and/or (g) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.
There is no assurance that the products we currently produce will not be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s and/or the Company will be able to complete its revenue growth strategy. There is no assurance that the Company’s research and development activities will be successful or that the Company will be able to timely fund the required costs of those activities. Without sufficient cash reserves, the Company’s ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant effort since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues.
If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved, if the Company’s ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws. As of April 30, 2022, based on the factors described above, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of these financial statements.
Off-Balance Sheet Arrangements
Our liquidity is not dependent on the use of off-balance sheet financing arrangements (as that term is defined in Item 303(a) (4) (ii) of Regulation S-K) and as of April 30, 2022 and through the date of this report, we had no such arrangements.
Recently Issued Financial Accounting Standards
There were no recently issued financial accounting standards that would have an impact on the Company’s financial statements.
Critical Accounting Policies
Our unaudited consolidated financial statements reflect the selection and application of accounting policies which require us to make significant estimates and judgments. See Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021, “Summary of Significant Accounting Policies”.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported in accordance with the rules of the Securities and Exchange Commission (the “SEC”). Disclosure controls are also designed with the objective of ensuring that such information is accumulated appropriately and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosures.
Our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial and accounting officer) evaluated the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of April 30, 2022, the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. See the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2021, for a description of the Company’s material weaknesses in internal control over financial reporting.
Changes in Internal Controls over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended April 30, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II – OTHER INFORMATION
Item 1. Legal Proceedings.
On August 17, 2021, the Company was served with a summons and complaint by LAE International Consulting, LLC (“LAE”), in the case styled LAE International Consulting, LLC v. Organicell Regenerative Medicine, Inc. et al., Case No. 2021-018461-CA-01 (In the Circuit Court of the 11th Judicial Circuit in and for Miami Dade County, Florida) (the “Lawsuit”). Albert Mitrani, Mari Mitrani and Ian Bothwell (the “Individual Defendants”) were also named as defendants in the Lawsuit. In the Lawsuit, LAE alleges breach of contract, unjust enrichment, violation of Florida’s Unfair and Deceptive Trade Practices Act, breach of obligation of good faith and fair dealing, negligent misrepresentation and fraudulent misrepresentation in connection with a prior consulting agreement entered into between the Company and LAE. During April 2022 the Lawsuit was settled whereby the Company agreed to pay LAE $45,000 in cash and 2,000,000 shares of restricted common stock of the Company.
In addition to matters previously reported in our periodic filings under the Exchange Act, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.
Item 1A. Risk Factors.
As a “smaller reporting company” we are not required to disclose information under this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We issued the following securities during the six months ended April 30, 2022 and through the date of this Quarterly Report on Form 10-Q:
| 1. | In November 2021, the Company sold an aggregate of 8,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $400,000. The proceeds were used for working capital. |
| 2. | In January 2022, the Company sold an aggregate of 666,667 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $20,000. The purchase price was paid through an offset of an outstanding balance owed by the Company to the investor at the time of the sale of $20,000. |
| 3. | On January 11, 2022, the Company entered into a Securities Purchase Agreement with AJB Capital Investments, LLC (“AJB”) pursuant to which we sold a Promissory Note in the principal amount of $600,000 to AJB in a private transaction for a purchase price of $540,000 (giving effect to original issue discount of $60,000). The proceeds were used for working capital. |
| 4. | In February 2022, the Company sold an aggregate of 8,333,333 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $250,000. The proceeds were used for working capital. |
None of the above issuances involved any underwriters, underwriting discounts or commissions, or any public offering and we believe were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) and Regulation D promulgated thereunder due to the fact that there was no solicitation or advertising and the did not involve a public offering of securities.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
| Exhibit No: | Description: | |
| 31.1* | Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer | |
| 31.2* | Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial and Accounting Officer | |
| 32.1* | Section 1350 Certification of Principal Executive Officer | |
| 32.2* | Section 1350 Certification of Principal Financial and Accounting Officer | |
| 101.INS ** | XBRL Instance Document | |
| 101.SCH** | XBRL Taxonomy Extension Schema Document | |
| 101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB** | XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document |
| * | Filed herewith. |
| ** | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ORGANICELL REGENERATIVE MEDICINE, INC. | ||
| By: | /s/ ALBERT MITRANI | |
| Albert Mitrani | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| June 14, 2022 |
| By: | /s/ IAN T. BOTHWELL | |
| Ian T. Bothwell | ||
| Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
| June 14, 2022 |
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Exhibit 31.1
CERTIFICATION
I, Albert Mitrani, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended April 30, 2022 of Organicell Regenerative Medicine, Inc. (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of 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 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 reports 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. |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors or persons performing: |
| 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. |
| Date: June 14, 2022 | /s/ ALBERT MITRANI |
| Albert Mitrani | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Ian T. Bothwell, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended April 30, 2022 of Organicell Regenerative Medicine, Inc. (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of 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 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 reports 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. |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors or persons performing: |
| 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. |
| Date: June 14, 2022 | /s/ Ian T. Bothwell |
| Ian T. Bothwell, | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Organicell Regenerative Medicine, Inc. on Form 10-Q for the quarter ended April 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Albert Mitrani, Chief Executive Officer and President of Organicell Regenerative Medicine, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(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 Organicell Regenerative Medicine, Inc.
| Date: June 14, 2022 | /s/ ALBERT MITRANI |
| Albert Mitrani | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Organicell Regenerative Medicine, Inc. on Form 10-Q for the quarter ended April 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Ian T. Bothwell, Chief Financial Officer of Organicell Regenerative Medicine, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(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 Organicell Regenerative Medicine, Inc.
| Date: June 14, 2022 | /s/ IAN T. BOTHWELL |
| Ian T. Bothwell | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |