Zeo ScientifiX, Inc 10-Q for FY2026 Q1
Zeo ScientifiX, Inc. (ZEOX)
About this 10-Q
Zeo ScientifiX, Inc filed this 10-Q on September 15, 2025, covering the quarter ended July 31, 2025 (FY2026 Q1).
Headline figures
Quarter ended July 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.31M
- up 19.7% from $1.09M a year earlier
- Net loss
- $2.07M
- compared with a net loss of $1.01M a year earlier
- Diluted EPS
- -$0.32
- compared with -$0.16 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For the quarterly
period ended
OR
For the transition period from ____________ to ____________
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
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| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files.)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “accelerated filer”, “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of September 12, 2025, there were shares of common stock, $0.001 par value per share, issued and outstanding.
ZEO SCIENTIFIX, INC.
TABLE OF CONTENTS
i
Unless stated otherwise, the words “we,” “us,” “our,” the “Company” or “ZEO” in this Quarterly Report on Form 10-Q (this “Report”) refer to Zeo ScientifiX, Inc., a Nevada corporation, and its subsidiaries.
Cautionary Note Regarding Forward- Looking Statements
The statements contained in this Report 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 Report 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 Report 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 Report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.
ii
Part I – FINANCIAL INFORMATION
| Item 1. | Financial Statements |
Zeo ScientifiX, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts rounded to the nearest thousand except share amounts)
| July 31, 2025 |
October 31, 2024 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for bad debts | ||||||||
| Other receivables | ||||||||
| Prepaid expenses | ||||||||
| Inventories | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, SHARES SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Finance lease obligations | ||||||||
| Convertible promissory note, net of debt discount of $ |
||||||||
| Obligation to repurchase shares | ||||||||
| Deferred revenue | ||||||||
| Total Current Liabilities | ||||||||
| Long term finance lease obligations | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Shares Subject To Possible Redemption | ||||||||
| Series C Preferred Stock, $ par value, shares authorized; and shares issued and outstanding, respectively | ||||||||
| 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, SHARES SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Zeo ScientifiX, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts rounded to the nearest thousand except share amounts)
(Unaudited)
| Three Months Ended July 31, |
Nine Months Ended July 31, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues (includes sales to related parties
of approximately $ |
$ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Impairment of non-marketable securities in a related entity | ( |
) | ( |
) | ||||||||||||
| Other income | ||||||||||||||||
| 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 condensed consolidated financial statements.
2
Zeo ScientifiX, Inc.
CONDENSED CONSOLIDATED CHANGES TO STOCKHOLDERS’ DEFICIT
For the Three Months and Nine Months Ended July 31, 2025 and 2024
(Amounts rounded to the nearest thousand except share amounts)
(Unaudited)
Three Months Ended July 31,
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Par Value | Capital | Deficit | Deficit | ||||||||||||||||
| Balance May 1, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Sale of common stock | ||||||||||||||||||||
| Reverse split round-up adjustment | - | |||||||||||||||||||
| Cancellation of shares in connection with litigation | - | |||||||||||||||||||
| Exchange of accounts payable for stock | - | |||||||||||||||||||
| Fair value of equity instruments issued for compensation: | ||||||||||||||||||||
| Fair value of vested shares issued | - | |||||||||||||||||||
| Fair value of vested options issued | - | |||||||||||||||||||
| Fair value of vested warrants issued | - | |||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||
| Balance July 31, 2024 | ( |
) | ( |
) | ||||||||||||||||
| Balance May 1, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Fair value of equity instruments issued for compensation: | ||||||||||||||||||||
| Fair value of vested shares issued | ||||||||||||||||||||
| Fair value of vested options issued | - | |||||||||||||||||||
| Fair value of vested warrants issued | - | |||||||||||||||||||
| Purchase of BioLumina assets | ||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||
| Balance July 31, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
Nine Months Ended July 31,
| Common Stock | Additional Paid In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Par Value | Capital | Deficit | Deficit | ||||||||||||||||
| Balance October 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Sale of common stock | ||||||||||||||||||||
| Reverse split round-up adjustment | ||||||||||||||||||||
| Cancellation of shares in connection with litigation | ( | ) | ( | ) | ||||||||||||||||
| Exchange of accounts payable for stock | ||||||||||||||||||||
| Fair value of equity instruments issued for compensation: | ||||||||||||||||||||
| Fair value of vested shares issued | ||||||||||||||||||||
| Fair value of vested options issued | - | |||||||||||||||||||
| Fair value of vested warrants issued | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance July 31, 2024 | ( | ) | ( | ) | ||||||||||||||||
| Balance October 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Fair value of equity instruments issued for compensation: | ||||||||||||||||||||
| Fair value of vested shares issued | ||||||||||||||||||||
| Fair value of vested options issued | - | |||||||||||||||||||
| Fair value of vested warrants issued | - | |||||||||||||||||||
| Purchase of BioLumina assets | ||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance July 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Zeo ScientifiX, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts rounded to the nearest thousand except share amounts)
(Unaudited)
| Nine Months Ended July 31, |
||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Amortization of OID and commitment fee discount – Promissory notes | ||||||||
| Stock-based compensation | ||||||||
| Reserve of non- marketable securities – related party | ||||||||
| Change in obligation to repurchase shares | ||||||||
| Write-off of advances payable to former officer | ( |
) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net of allowance for bad debts | ( |
) | ||||||
| Other receivable | ||||||||
| Prepaid expenses | ( |
) | ( |
) | ||||
| Inventories | ( |
) | ||||||
| Accounts payable and accrued expenses | ( |
) | ||||||
| Security deposits | ||||||||
| Deferred revenue | ( |
) | ||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of fixed assets | ( |
) | ||||||
| Investment in non-marketable equity securities – related party | ( |
) | ||||||
| Net cash used in financing activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Payments on finance leases | ( |
) | ( |
) | ||||
| 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: | ||||||||
| Reduction in accounts payable for equipment returned to vendor | $ | $ | ||||||
| Exchange of shares for payables | $ | $ | ||||||
| Finance lease obligations | $ | $ | ||||||
| Stock issued – Purchase of BioLumina assets | $ | $ | ||||||
| Royalty payable in connection with purchase of BioLumina assets | $ | $ | ||||||
| Obligation to repurchase shares in connection with purchase of BioLumina assets | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Zeo ScientifiX, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS PERIODS ENDED JULY 31, 2025 AND 2024
(UNAUDITED)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Zeo ScientifiX, Inc. (“ZEO” or the “Company”) (f/k/a Organicell Regenerative Medicine, Inc.) was incorporated on August 9, 2011 in the State of Nevada under the name Bespoke Tricycles Inc. (changed to Biotech Products Services and Research, Inc. during September 2015 and to Organicell Regenerative Medicine, Inc., effective June 20, 2018). Effective February 20, 2024, we further amended our Articles of Incorporation to assume our current name, Zeo ScientifiX, Inc.
The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine. The Company’s proprietary products, including Zofin™, are derived from perinatal sources and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles and Patient Pure X™ (“PPX™”), an autologous biologic containing a nanoparticle fraction that is precipitated from a patient’s own peripheral blood (“RAAM Products”). Our RAAM Products and related services are principally used in the health care industry administered through doctors and clinics (“Providers”).
The Company has recently developed and begun to distribute additional products that incorporate its proprietary ingredients for products to be used in topical aesthetic applications and is actively exploring further development of additional products to be used in other topical aesthetic applications. During November 2024, the Company announced that it was launching the first planned collaborative topical product with its affiliate Exotropin LLC; “ZEO HAIR GROW™ Powered By Exotropin™”.
For the nine months ended July 31, 2025 and 2024, 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.
Effective November 28, 2023, we implemented a one-for-200 reverse stock split (the “Reverse Split”). The par value of the Company’s common stock was unchanged at $0.001 per share after the Reverse Split. As a result, on the effective date of the Reverse Split, the stated capital on the Company’s balance sheet attributable to the Company’s common stock was reduced proportionately based on the Reverse Split ratio of one-for-200 and the additional paid-in capital account was credited with the amount by which the stated capital was reduced. All share and per share amounts referenced herein give effect to the Reverse Split as of the earliest period presented.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the condensed unaudited consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position as of July 31, 2025, the results of its operations for the three and nine months ended July 31, 2025 and 2024 and the cash flows for the nine months ended July 31, 2025 and 2024. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.
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, 2024 filed with the Securities and Exchange Commission.
All amounts presented have been rounded to the nearest thousand except share amounts, share prices and earnings per share.
5
Concentrations of Risk
Credit Risk
The balance sheet items that potentially subject
us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Balances in accounts are insured
up to Federal Deposit Insurance Corporation (“FDIC”) limits of $
Major Customers
During the three months ended July 31, 2025,
the Company sold products and services totaling approximately $
During the nine months ended July 31, 2025, the Company sold products and services totaling approximately $
During the three months ended July 31, 2024,
the Company sold products and services totaling approximately $
During the nine months ended July 31, 2024, the Company sold products and services totaling approximately $
The Company’s sales agreements are non-exclusive and the Company does not believe it has any exposure based on the customers of its products.
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.
Those estimates and assumptions include estimates for credit loss reserves for accounts receivable, assumptions used in valuing inventories at net realizable value, impairment testing of recorded long-term assets, the valuation allowance for deferred tax assets, accruals for potential liabilities, assumptions made in valuing equity instruments issued for services, and assumptions used in the determination of the Company’s liquidity.
Revenue Recognition
The Company follows the guidance of the Financial Accounting Standards Board (“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. Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on the Company’s consolidated balance sheet.
6
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 fully vested 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 fully vested shares outstanding during the year. 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 July 31, 2025, the Company had common shares issuable upon the exercise of options and warrants (vested and unvested), unvested restricted stock ( unissued), $ of convertible debt securities (convertible into a maximum of 120,834 shares) and $ of future obligations in connection with the purchase of the BioLumina assets that may be settled through the issuance of common stock (convertible into a maximum of 40,000 shares) that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the nine months ended July 31, 2025.
At July 31, 2024, the Company had common shares issuable upon the exercise of options and warrants (vested and unvested), unvested and unissued restricted stock and $ of convertible debt securities (convertible into a maximum of 120,834 shares) that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the nine months ended July 31, 2024.
All stock-based payments are recognized in the financial statements based on their fair values.
The Company periodically issues stock options and stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.
The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
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 $
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.
7
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;
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 carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of convertible notes approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.
Segment Information
Under ASC 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company has one component. Therefore, the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations as a single operating segment for the manufacture and distribution of its products.
Recently Issued Accounting Pronouncements
In January 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, in November 2024, and ASU 2025-01, Clarifying the Effective Date. These 6 updates require entities to provide disaggregated disclosure of income statement expenses. The ASUs do not affect the expense captions presented on the face of the income statement but instead require the disaggregation of certain expense captions into specified categories within the footnotes to the financial statements. The ASUs will become effective for the Company beginning December 1, 2027, and is not expected to have a material impact on its consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. This ASU requires public companies with a single reportable segment to provide all disclosures required under ASC 280. In addition, this ASU requires public companies to include in interim reports all disclosures related to a reportable segment’s profit or loss and assets that are currently required in annual reports. While the ASU implements further segment disclosure requirements, it does not change how an entity identifies its operating or reportable segments and it will have no impact on the Company’s consolidated financial condition, results of operations or cash flows. This ASU is applicable to the Company’s Annual Report on Form 10-K for the fiscal year ending October 31, 2025, and subsequent interim periods. Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented.
Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statements, including their presentation and related disclosures.
8
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
$
United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective in May 2021 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.
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; and/or (b) 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 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; (c) obligations to the Company’s creditors are not accelerated; (d) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (e) 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 (f) 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 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.
The independent auditor’s report dated January 29, 2025 included in our Annual Report on Form 10-K for the year ended October 31, 2024 included an explanatory paragraph as to the Company’s ability to continue as a going concern. As of July 31, 2025, 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.
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NOTE 4 – INVENTORIES
| Schedule of inventories | ||||||||
| July 31, 2025 |
October 31, 2024 |
|||||||
| Raw materials and supplies | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
NOTE 5 – PROPERTY AND EQUIPMENT
| Schedule of property and equipment | ||||||||
| July 31, 2025 |
October 31, 2024 |
|||||||
| Finance lease equipment | $ | $ | ||||||
| Manufacturing equipment | ||||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expense totaled $
Depreciation expense totaled $
NOTE 6 – EQUITY IN NON-MARKETABLE SECURITIES OF AFFILIATED ENTITY
| Schedule of equity in non marketable securities | ||||||||
| July 31, 2025 |
October 31, 2024 |
|||||||
| Equity in non-marketable securities | $ | |||||||
| Reserve on carrying value of investment in non-marketable securities | $ | ( |
) | ( |
) | |||
| Equity in non-marketable securities | $ | |||||||
As of July 31, 2025 and October 31, 2024, the Company invested $
As of July 31, 2025 and October 31, 2024, the Company has recorded total reserves against the carrying value of its investment of Exotropin of $
During November 2024, the Company received a capital call notice from Exotropin, in which the Company’s pro-rata share was $126,000 (“November Capital Call”). The Company has yet committed to participating in the November Capital Call. If the Company does not participate, its interest in Exotropin would be reduced to approximately 5.8% from 9.0% based on all other members fully participating in the November Capital Call. There have been no further capital calls on the Company.
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Sales Representative Agreement
In November 2023, the Company entered into a Sales Representative Agreement (the “Sales Agreement”) with Exotropin to support the commercialization of its proprietary topical products. Under the Sales Agreement, the Company is entitled to receive commissions on the net sales value of Exotropin products sold to pre-approved customers introduced by the Company, including retailers (10%), wholesale distributors (5%), private label customers (10%), and direct-to-consumer customers (15%).
In connection with the Sales Agreement, the Company and Exotropin co-developed a topical product for the treatment of hair loss, branded as “ZEO HAIR GROW™ Powered By Exotropin™,” which launched in November 2024 (the “Collaboration”). Under the terms of the Collaboration, the Company is responsible for sales and marketing, and the parties agreed to share equally in the net profits from product sales, after reimbursement of direct cash costs incurred by either party.
On August 15, 2025, the Company provided Exotropin with formal notice of termination of the Sales Agreement for cause. Exotropin has denied the allegations and responded with its own demands, including that the Company cease sales of the co-developed product. The Company is currently evaluating its legal options and intends to protect its rights under the Sales Agreement and the Collaboration.
For the three months ended July 31, 2025 and 2024, $
NOTE 7 – FINANCE LEASE OBLIGATIONS
During
April 2025, the Company entered into a lease agreement for certain lab equipment in the amount of $
During June 2025, the Company entered into a
lease agreement for certain lab equipment in the amount of $
As of July 31, 2025, $
NOTE 8 – RELATED PARTY TRANSACTIONS
For the three months ended July 31, 2025 and 2024 and the nine months ended July 31, 2025 and 2024, the Company sold a total of approximately $
During November 2024, the Company received a capital call notice from Exotropin, in which the Company’s pro-rata share was $126,000 (“November Capital Call”). The Company has yet committed to participating in the November Capital Call. If the Company does not elect to participate, its interest in Exotropin would be reduced to approximately 5.6% based on all other members fully participating in the November Capital Call (see Note 6).
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NOTE 9 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
| Schedule of account payable and accrued expenses | ||||||||
| July 31, 2025 |
October 31, 2024 |
|||||||
| Accrued payroll related liabilities | $ | $ | ||||||
| Lab equipment and supplies payables | ||||||||
| Clinical trial and research payables | ||||||||
| Legal fees payable | ||||||||
| Other professional fees payable | ||||||||
| Interest payable | ||||||||
| Royalty payable | ||||||||
| Accrued commissions payable | ||||||||
| Construction payables | ||||||||
| Other payables and accrued expenses | ||||||||
| Total Accounts Payable and Accrued Expenses | $ | $ | ||||||
NOTE 10 – NOTES PAYABLE
| Schedule of notes payable | ||||||||
| July 31, 2025 |
October 31, 2024 |
|||||||
| Convertible Promissory Notes | $ | $ | ||||||
| Unamortized discount | ( |
) | ( |
) | ||||
| Total Notes Payable | $ | $ | ||||||
Convertible Promissory Notes
The Convertible Promissory Notes are due
The Convertible Promissory Notes may be prepaid by the Company, in whole, but not in part, at any time prior to the Maturity Date, subject to payment of a premium of 10%, provided that the Company gives the holders fifteen (15) business notice prior to prepayment, during which period, Investors may elect to convert the Notes and accrued but unpaid interest thereon into Shares at a conversion price equal to 80% of the average of the daily VWAP of the Shares (as defined in the Note) for twenty consecutive (
Holders of the Convertible Promissory Notes will
have the right, at any time during the period commencing on April 1, 2024 and ending on the earliest to occur of the Maturity
Date, the date of a Prepayment or the date of an automatic conversion, to convert the Convertible Promissory Note in whole, but not
in part, and accrued interest thereon into Shares at a conversion price equal to 80% of the average of the daily VWAP of the Shares
(as defined in the Convertible Promissory Note) for twenty consecutive (20) trading days ending on the date the investor gives the
Company a notice of conversion, subject to a minimum conversion price of $
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In addition, the Convertible Promissory Notes and accrued but unpaid interest thereon will automatically convert into Shares in the event that prior to the Maturity Date, the Company consummates a “Qualified Financing” or a “Qualified Sale” (as defined in the Convertible Promissory Note) at a conversion price equal to 80% of the offering price of Shares sold in the Qualified Financing or 80% of the purchase price per Share to be received by stockholders following consummation of a Qualified Sale.
In connection with the issuance of the Convertible Promissory Notes, the Company recorded a discount in the amount of $
At July 31, 2025, the unamortized debt discount recorded in connection with the issuance of the Convertible Promissory Notes was $
NOTE 11 – CAPITAL STOCK
Series C Preferred Shares
During December 2024, Skycrest requested that it be allowed to transfer the shares of Series C Preferred Shares of the Company it holds to Ian T. Bothwell, the Company’s Interim Chief Executive Officer and Chief Financial Officer (“Transfer”). In December 2024, the Board of Directors of the Company approved the Transfer and the Transfer was completed.
Common Stock
On November 7, 2023, the Company filed a certificate of amendment to its Articles of Incorporation to affect a reverse split of our issued and outstanding common stock on a one-for-two-hundred basis. The reverse stock split was effective with FINRA on November 28, 2023 (the “Reverse Split”). The par value of the Company’s common stock was unchanged at $ per share after the Reverse Split. All share and per share amounts have been retroactively adjusted to reflect the split as if it occurred at the earliest period presented.
2021 Plan
In September 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”). The 2021 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, and Performance Shares (an “Award”) to any person who is an employee or director of, or consultant to the Company. The maximum aggregate number of shares that may be issued pursuant to all Awards was 1,250,000 shares. On June 6, 2023, the Company’s board of directors and stockholders holding a majority of the Company’s voting power, approved an increase in the number of shares of the Company’s common stock reserved for issuance under the Company’s 2021 Plan from shares to shares.
The 2021 Plan is administered by (a) the board of the directors of the Company; or (b) a committee designated by the board, which Committee shall be constituted in such a manner as to satisfy the applicable laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such committee shall continue to serve in its designated capacity until otherwise directed by the board. The board of directors may at any time amend, suspend, or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Company’s shareholders to the extent such approval is required by applicable laws.
As of July 31, 2025, a total of Awards (net of Awards redeposited for future issuance) that have been awarded under the 2021 Plan remain issued and outstanding.
13
Sale Of Common Stock
On July 25, 2025, ZEO entered into a subscription agreement with a single accredited investor (the “Investor”). Pursuant to which the Investor agreed to purchase 250,000 shares of our common stock (the “Shares”) in a private transaction for an aggregate purchase price of $1,000,000 (the “Purchase Price”). The Shares will be issued and sold and the Purchase Price paid in ten (10) equal monthly installments commencing on August 1, 2025 and ending on May 1, 2026. The August 1, 2025 and September 1, 2025 installment payments were made in accordance with the subscription agreement and the Company issued the investor 25,000 and 25,000 Shares, respectively.
Restricted Stock Awards
Effective February 1, 2025, in connection with an agreement with an
independent sales representative (“Representative”), the Company agreed to grant the Representative
On May 8, 2025, the Company entered into an agreement
with a non-affiliated consultant (the “Consultant”) to advise the Company on strategic communication investor relation programs
(“Consulting Agreement”).
Effective May 23, 2025,
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On June 25, 2025, in connection with the Acquisition (see Note 13),
the Company issued restricted shares of the Company’s common stock valued at $
A summary of unvested restricted stock activity for the nine months ended July 31, 2025 are presented below:
| Schedule of non vested share activity | ||||||||||||
| Number of Non-vested Shares |
Fair Value | Weighted- Average Grant Date Value |
||||||||||
| Non-vested Shares at October 31, 2024 | $ | $ | ||||||||||
| Non-vested Shares Granted | $ | $ | ||||||||||
| Vested | ) | $ | ) | $ | ||||||||
| Expired/Forfeited | $ | $ | ||||||||||
| Non-vested Shares at July 31, 2025 | $ | $ | ||||||||||
The Company recorded a total of $ and $ of stock-based compensation expense based on the grant date fair value of these shares during the three months and nine months ended July 31, 2025, respectively.
There was approximately $ of unamortized compensation associated with unvested stock grants outstanding as of July 31, 2025 that will be amortized over their respective remaining service periods.
NOTE 12 – STOCK OPTIONS AND WARRANTS
The Company has issued option securities under its Incentive Plan and warrants entitling the holder to purchase shares of its common stock at specified prices and for specified exercise periods.
Options
A summary of the Company’s option activity for the nine months ended July 31, 2025 is presented below:
| Schedule of stock options and warrants | ||||||||||||||||
| Number of Shares |
Weighted- average Exercise Price |
Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding at October 31, 2024 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Exercised | $ | - | $ | |||||||||||||
| Expired/Forfeited | ) | $ | $ | |||||||||||||
| Outstanding at July 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at July 31, 2025 | $ | $ | ||||||||||||||
During the nine months ended July 31, 2025, under its Incentive Plan, the Board approved the granting of options to certain employees to purchase shares of its common stock. The
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The Company valued the options using a Black-Scholes option pricing model with the following assumptions:
| Schedule of assumptions used for options granted | ||||
| Exercise prices | $ | |||
| Expected dividends | ||||
| Expected volatility | % | |||
| Risk free interest rate | % | |||
| Expected term of options | years |
During the nine months ended July 31, 2025, the
Board approved the granting of options to purchase shares of its common stock to Dr. Everts, Chief Science and Technology Officer
of the Company and Mr. Ron Borsheim, Chief Sales Officer of the Company in accordance with their employment agreements. The options are
exercisable until the fifth anniversary date of the date of issuance and had an aggregate fair value of $
| Schedule of assumptions used | ||||
| Exercise prices | $ | - $ | ||
| Expected dividends | - | |||
| Expected volatility | - | % | ||
| Risk free interest rate | - | % | ||
| Expected term of options | years |
On May 8, 2025, under its Incentive Plan, the
Board approved the granting of options to certain employees, officers and directors to purchase
| Schedule of option pricing model assumptions | ||||
| Exercise prices | $ | |||
| Expected dividends | ||||
| Expected volatility | % | |||
| Risk free interest rate | % | |||
| Expected term of options | years |
Options totaling that were previously issued to certain employees that were no longer employed by the Company as of July 31, 2025, were forfeited.
During the three months ended July 31, 2025 and 2024, the Company amortized $ and $, respectively, of stock compensation costs associated with options vesting during the period.
During the nine months ended July 31, 2025 and 2024, the Company amortized $ and $, respectively, of stock compensation costs associated with options vesting during the period.
There was approximately $ of unamortized compensation associated with options outstanding as of July 31, 2025 that will be amortized over their respective remaining service periods.
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Warrants
A summary of the Company’s warrant activity for the nine months ended July 31, 2025 is presented below:
| Schedule of warrant activity | ||||||||||||||||
| Number of Shares |
Weighted- average Exercise Price |
Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding at October 31, 2024 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Exercised | ) | $ | $ | |||||||||||||
| Expired/Forfeited | $ | - | $ | |||||||||||||
| Outstanding at July 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at July 31, 2025 | $ | $ | ||||||||||||||
On May 8, 2025, the Company awarded warrants to
purchase
| Schedule of option pricing model | ||||
| Exercise prices | $ | |||
| Expected dividends | ||||
| Expected volatility | % | |||
| Risk free interest rate | % | |||
| Expected term of options | years |
On July 25, 2025, the
During the three months ended July 31, 2025 and 2024, the Company amortized $ and $, respectively, of stock compensation costs associated with warrants vesting during the period.
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During the nine months ended July 31, 2025 and 2024, the Company amortized $ and $, respectively, of stock compensation costs associated with warrants vesting during the period.
There was approximately $ of unamortized compensation associated with warrants outstanding as of July 31, 2025 that will be amortized over their respective remaining service periods.
All stock compensation expense is classified under general and administrative expenses in the consolidated statements of operations.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Joint Venture with BioXtek, LLC
On February 4, 2025, the Company entered into a Binding Memorandum of Understanding (“Binding MOU”) with BioXtek, LLC, a Florida limited liability company (“BioXtek”) setting forth the terms of a joint development, manufacturing, marketing and funding arrangement to be entered into by the Company and BioXtek in various phases (“Joint Venture”).
The Joint Venture contemplates, among other matters:
| ● | The Company relocating its current operations located at Nova Southeastern University in Davie, Florida, to sublet space at the BioXtek Facility in Pompano Beach, Florida expected to be completed by May 31. 2025, which will include administrative, laboratory (research and development) and clean room (tissue processing) space, as well as shared common area space; |
| ● | The Company and BioXtek establishing a jointly-owned (50/50) special purpose entity (the “SPE”), to pursue the development and commercialization of agreed upon products including membrane patches that are used primarily in the wound care and surgical markets (“Membrane Products”), and conduct and complete required clinical trials and/or studies for mutually agreed upon indications and products with the goal of the SPE obtaining FDA approval in the form of a BLA license or other designated license required by the FDA to permit the SPE to commercialize the product(s) (the “SPE Business”). The Company and BioXtek have agreed to use their respective commercially reasonable efforts to secure funding for the SPE Business. In addition, under the terms of the Joint Venture, the SPE will become the exclusive distributor (subject to certain agreed upon exceptions for current customers of BioXtek) of the Membrane Products; |
| ● | In addition, as a result of the Joint Venture, the parties intend to seek operating efficiencies as a result of overlap in their respective operations, including administrative, laboratory and research personnel and research and manufacturing assets used in connection with the SPE Business and their respective individual businesses; |
The Company and BioXtek are continuing to work in good faith towards the preparation, authorization, execution and delivery of a series of definitive agreements documenting the Joint Venture, including the mutual agreement to modify certain terms as set forth in the Binding MOU with respect to the Company relocating its operations to the BioXtek Facility and the structure of how the parties will collaborate in future clinical trials and the sale of products that were intended to be sold in connection with the SPE Business.
Deferred Revenue
Amounts received by the Company for future purchases of inventory or for products that have yet to be delivered to the customers as of July 31, 2025 and October 31, 2024 are reflected in the Company’s balance sheet as deferred revenues and were comprised of the following:
| Schedule of deferred revenue | ||||||||
| July 31, 2025 |
October 31, 2024 |
|||||||
| Advances On Future Purchases Of Inventory | $ | $ | ||||||
| Sales To Customers Not Yet Delivered | ||||||||
| Total Deferred Revenue | $ | $ | ||||||
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Employment Agreements
Dr. Peter A. M. Everts, Ph.D.
Effective February 7, 2025, Dr. Peter A. M. Everts, Ph.D. (“Dr. Everts”) was appointed the Company’s Chief Scientific and Technology Officer. Dr. Everts’ employment agreement provides for a base salary of $
Dr. Everts may also be paid a performance bonus to the extent earned, based on criteria established by the Company’s Board of Directors, and may be eligible to participate in the employee benefit plans maintained by the Company and generally applicable to other senior executives of the Company.
Dr. Everts’ employment with the Company is “At Will” meaning that his employment with the Company and his employment agreement may be terminated by the Company at any time, for any reason or for no reason at all and with or without “Cause” (as defined in the Agreement). Notwithstanding the foregoing, if at any time after the first ninety (90) days of the term, the Company terminates Dr. Everts’ employment without Cause or Dr. Everts terminates his employment with the Company for “Good Reason” (as defined in the Agreement), Dr. Everts will be entitled to receive an amount equal to one quarter (1/4) month’s salary for each successive three (3) months of employment completed as severance.
On July 18, 2025, Dr. Everts resigned his position with the Company effective August 1, 2025. As a result of Dr. Everts resignation, the Everts Option was forfeited effective August 1, 2025.
Ron Borsheim
Effective April 1, 2025,
Mr. Borsheim may also be paid a performance bonus to the extent earned, based on criteria established by the Company’s Board of Directors or its Compensation Committee, and is eligible to participate in the employee benefit plans maintained by the Company and generally applicable to other senior executives of the Company.
Mr. Borsheim’s employment with the Company is “At Will” meaning that his employment with the Company and his employment agreement may be terminated by the Company at any time, for any reason or for no reason at all and with or without “Cause” (as defined in the employment agreement). Notwithstanding the foregoing, if at any time after the first ninety (90) days of the term, the Company terminates Mr. Borsheim’s employment without Cause or Mr. Borsheim terminates his employment with the Company for “Good Reason” (as defined in the employment agreement), Mr. Borsheim will be entitled to receive an amount equal to one quarter (1/4) month’s salary for each successive three (3) months of employment completed as severance.
Mr. Borsheim’s employment agreement contains customary confidentiality, non-competition and non-solicitation covenants.
19
Purchase Commitments
During July 2025, the Company entered into an exclusive supply agreement (“Supply Agreement”) with a third-party contract manufacturer (“CDMO”) in connection with the manufacturing and processing of certain biological products (“CDMO Products”) that the Company that the Company intends to sell to third party medical providers. Under the terms of the Supply Agreement, the Company paid an initial deposit of $225,000 on August 1, 2025 and is required to pay an additional $225,000 deposit upon confirmation that the CDMO has initiated cGMP processing of the CDMO Products. Under the terms of the Supply Agreement, the deposits will be applied against the actual CDMO Products that are released to the Company. The Company has agreed to make a minimum of 8 purchase orders within specified periods based on satisfactory release of prior productions of the CDMO Products (“Minimum Purchase Orders”). In connection with each purchase order, the Company is required to have minimum deposits paid to the CDMO equal to 50% of the value of the purchase order. The Supply Agreement may be extended by the Company based on submitting a minimum amount of additional purchase orders after the Minimum Purchase Orders have been released.
Legal Matters
Dr. Golub
On November 19, 2024, Howard Golub, M.D., the Company’s former Chief Science Officer (“Plaintiff”), filed a complaint in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida against the Company, alleging a breach of contract as a result of the Company’s failure to pay Plaintiff severance in the amount of $
Other
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 14 – ACQUISITION OF BIOLUMINA ASSETS
On June 25, 2025 (“Closing Date”),
the Company entered into a stock purchase agreement with BioLumina, LLC (“BIO”), a Delaware limited liability company, and
all of its members (each a “Member” and collectively “Members”), whereby the Company acquired all of the outstanding
membership interests of BIO (“Acquisition”) held by the Members for a total purchase price of $
The Purchase Price is to be paid as follows:
| (a) | A $25,000 cash payment (the “Cash Purchase Price”), paid on the Closing Date to the Members pro rata; and |
| (b) | restricted shares of the Company’s common stock valued at $ (the “Zeo Shares”) issued on the Closing Date, to the Members, pro rata; with respect to which the Members will be accorded (1) piggyback registration rights under the Securities Act of 1933, as amended and (2) a right to put their Zeo Shares back to the Company on the first anniversary of Closing (the “True Up Date”) at a price of $2.50 per share ($75,000 in the aggregate); and |
20
| (c) | A royalty, payable to the Members, pro rata, equal to 10% of the gross cash proceeds (excluding shipping, handling, returns and credits) received by the Company from the sale of BIO’s Inventory acquired at closing (the “Product”) during the first year following the Closing Date, up to a maximum of $100,000 (the “Royalty”) which Royalty will be payable to the Members, pro rata, within 5 business days of the True-Up Date. In the event the Royalty amount as of the True-Up Date is less than $100,000 (a “Shortfall”), then the Company agrees to pay the Members, pro rata, a cash payment in the amount of the Shortfall within 90 days after the True-Up Date. In addition, the Members shall have the option, to apply their pro rata share of the Royalty (inclusive of any Shortfall), to the purchase of additional restricted shares of the Company’s common stock at purchase price equal to 75% of the average closing trading price of the common stock for the 5 trading days immediately prior to the True-Up Date, provided however that in no event shall the purchase price be lower than $2.50 per Share. |
In connection with the Acquisition, the Company
recorded an obligation of $16,500 representing the difference in the fair value of the ZEO Shares on the Closing Date ($58,500) and the
amount that the Company has agreed to provide in the event of a Shortfall. At July 31, 2025, the Company recorded an additional obligation
of $
NOTE 15 – OTHER INCOME
| Schedule of other Income | ||||||||
| Three Months Ended July 31, |
||||||||
| 2025 | 2024 | |||||||
| Other income | ||||||||
| Gain on write-off of advances payable to former officer | $ | $ | ||||||
| Commissions on sales of Exotropin products | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
| Nine Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Other income | ||||||||
| Gain on write-off of advances payable to former officer | $ | $ | ||||||
| Resolution and settlement of long outstanding payables | ||||||||
| Commissions on sales of Exotropin products | ||||||||
| Proceeds from insurance claim | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
21
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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 regenerative medicine. The Company’s proprietary products, including Zofin™, are derived from perinatal sources and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles and Patient Pure X™ (“PPX™”), an autologous biologic containing a nanoparticle fraction that is precipitated from a patient’s own peripheral blood (“RAAM Products”). Our RAAM Products and related services are principally used in the health care industry administered through doctors and clinics (“Providers”).
The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine. The Company’s proprietary products, including Zofin™, are derived from perinatal sources and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles and Patient Pure X™ (“PPX™”), an autologous biologic containing a nanoparticle fraction that is precipitated from a patient’s own peripheral blood (“RAAM Products”). Our RAAM Products and related services are principally used in the health care industry administered through doctors and clinics (“Providers”).
The Company has recently developed and begun to distribute additional products that incorporate its proprietary ingredients for products to be used in topical aesthetic applications and is actively exploring further development of additional products to be used in other topical aesthetic applications.
To date, the Company has obtained certain Investigational New Drug (“IND”), 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 PPX™ and related treatment protocols. The Company is pursuing efforts to complete its already approved clinical studies 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.
Current FDA guidance 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.
22
All share and per share amounts referenced herein give effect as of the earliest period presented to a 200 for one reverse stock split implemented effective November 28, 2023.
The following discussion of the Company’s results of operations and liquidity and capital resources should be read in conjunction with our condensed unaudited financial statements and related notes thereto appearing in “Item 1. Financial Statements” of Part I of this Report.
Results of Operations
Three months ended July 31, 2025, as compared to three months ended July 31, 2024
Revenues. Our revenues for the three months ended July 31, 2025 were $1,306,000, compared to revenues of $1,091,000 for the three months ended July 31, 2024. The increase in revenues during the three months ended July 31, 2025 of $215,000 or 19.7% from the three months ended July 31, 2024, was due to increases in revenues associated with its PPX™ service platform during the three months ended July 31, 2025, compared with the three months ended July 31, 2024, partially offset by decreases in revenues from the Company’s allogenic aesthetic biologic products sold during the three months ended July 31, 2025, compared with the three months ended July 31, 2024.
The revenues and percentage of overall unit sales derived from the Company’s higher concentration allogenic aesthetic biologic product offerings, lower concentration allogenic aesthetic biologic product offerings and its PPX™ service platform for the three months ended July 31, 2025, as compared to the three months ended July 31, 2024 are presented below:
| Three Months Ended July 31, 2025 |
Three Months Ended July 31, 2024 |
Change In Revenues & |
Inc (Dec) In Units Sold |
|||||||||||||||||||||||||
| Higher Concentration Allogenic Aesthetic Biologics | $ | 573,000 | 43.9 | % | $ | 529,000 | 48.5 | % | $ | 44,000 | 4.0 | % | 12.4 | % | ||||||||||||||
| Lower Concentration Allogenic Aesthetic Biologics | $ | 299,000 | 22.9 | % | $ | 366,000 | 33.5 | % | $ | (67,000 | ) | -6.1 | % | -13.9 | % | |||||||||||||
| $ | 872,000 | 66.8 | % | $ | 895,000 | 82.0 | % | $ | (23,000 | ) | -2.1 | % | ||||||||||||||||
| PPX™ | $ | 363,000 | 27.8 | % | $ | 157,000 | 14.4 | % | $ | 206,000 | 18.9 | % | ||||||||||||||||
| Other | $ | 71,000 | 5.4 | % | $ | 39,000 | 3.6 | % | $ | 32,000 | 2.9 | % | ||||||||||||||||
| Total | $ | 1,306,000 | 100.0 | % | $ | 1,091,000 | 100.0 | % | $ | 215,000 | 19.7 | % | ||||||||||||||||
The increase in the overall unit sales associated with its PPX™ service platform was primarily due the Company’s continued sales and marketing efforts which included engaging additional sales representatives, participation in industry related conferences, sponsoring of educational webinars and from sales of PPX™ to the Company’s existing customers.
The Company attributes the net decrease in revenues from higher and lower concentration allogenic aesthetic biologic products sold during the three months ended July 31, 2025, compared to the three months ended July 31, 2024 due to additional product competition in the marketplace which attracted greater demand for the Company’s lower priced allogenic aesthetic biologic product offerings and lower demand for the Company’s higher priced allogenic aesthetic biologic product offerings during the three months ended July 31, 2025, compared with the three months ended July 31, 2024.
23
Cost of Revenues. Our cost of revenues for the three months ended July 31, 2025 was $228,000, as compared to cost of revenues of $176,000 for the three months ended July 31, 2024. The increase in the cost of revenues for the three months ended July 31, 2025 of $52,000 or 29.9%, from the three months ended July 31, 2024, was due to the increase of approximately $57,000 of cost of revenues associated with its PPX™ service platform during the three months ended July 31, 2025, compared with the three months ended July 31, 2024, partially offset by a decrease of approximately $5,000 in the costs of revenues for its allogenic aesthetic biologic products sold for the three months ended July 31, 2025, as compared to the three months ended July 31, 2024.
The increase in the cost of revenues associated with its PPX™ service platform was the result of an increase in units sold during the three months ended July 31, 2025, as compared to the three months ended July 31, 2024.
Gross Profit. Our gross profit for the three months ended July 31, 2025 was $1,078,000 (82.5% of revenues), as compared to gross profit of $915,000 (83.9% of revenues) for the three months ended July 31, 2024. The increase in gross profit during the three months ended July 31, 2025 of $163,000 (17.7%) was the result of increases in the gross margins received from sales of its PPX™ service platform, partially offset from reduced gross margins received from the sale of its allogenic aesthetic biologic products.
In addition, the percentage of the Company’s revenues associated with its PPX™ service platform, which has a higher cost of revenues as compared to the Company’s allogenic aesthetic biologic product offerings, increased to 27.8% of revenues for the three months ended July 31, 2025, as compared with 14.4% of revenues for the three months ended July 31, 2024. The percentage of the Company’s revenues associated with its allogenic aesthetic biologic product decreased to 66.8% of revenues for the three months ended July 31, 2025, as compared with 82.0% of revenues for the three months ended July 31, 2024.
General and Administrative Expenses. General and administrative expenses for the three months ended July 31, 2025 were $3,149,000, as compared with $2,083,000 for the three months ended July 31, 2024, an increase of $1,066,000 or 51.0%. The increase in the general and administrative expenses for the three months ended July 31, 2025, from the three months ended July 31, 2024, was primarily the result of (a) increased stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $959,000 and (b) increased professional fees of approximately $118,000 during the three months ended July 31, 2025, as compared to the three months ended July 31, 2024.
Other income. Other income for the three months ended July 31, 2025 was $22,000, as compared to other income of $224,000 for the three months ended July 31, 2024, a decrease of $202,000. The decrease in other income was principally due to a reduction in non-recurring income in connection with the write-off of advances payable to an affiliate of a former executive of $221,000 resulting from the inability of the affiliate to enforce a claim to collect the advances as the period of statute of limitations had run that occurred during the three months ended July 31, 2024, partially offset from the increase in commissions received from sales of Exotropin products of approximately $18,000 during the three months ended July 31, 2025 as compared to the three months ended July 31, 2024.
Other expense for the three months ended July 31, 2025 was $23,000, as compared to other expense of $68,000, for the three months ended July 31, 2024, a decrease of $45,000. The decrease in other expense was the result of reserves recorded during the three months ended July 31, 2024 against the carrying value of the Company’s investments in equity securities of $45,000. There were no reserves against the carrying value of the Company’s investments in equity securities during the three months ended July 31, 2025.
Nine months ended July 31, 2025, as compared to nine months ended July 31, 2024
Revenues. Our revenues for the nine months ended July 31, 2025 were $3,545,000, compared to revenues of $3,376,000 for the nine months ended July 31, 2024. The increase in revenues during the nine months ended July 31, 2025 of $169,000 (5.0%) from the nine months ended July 31, 2024, was due to increases in revenues associated with its PPX™ service platform during the nine months ended July 31, 2025, compared with the nine months ended July 31, 2024, partially offset by decreases in revenues from the Company’s allogenic aesthetic biologic products sold during the nine months ended July 31, 2025, compared with the nine months ended July 31, 2024.
24
The revenues and percentage of overall unit sales derived from the Company’s higher concentration allogenic aesthetic biologic product offerings, lower concentration allogenic aesthetic biologic product offerings and its PPX™ service platform for the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024 are presented below:
| Nine Months Ended July 31, 2025 |
Nine Months Ended 2024 |
Change
In Revenues & Percentage Of Overall Revenues |
Inc (Dec) In Units |
|||||||||||||||||||||||||
| Higher Concentration Allogenic Aesthetic Biologics | $ | 1,450,000 | 40.9 | % | $ | 1,987,000 | 58.9 | % | $ | (537,000 | ) | -15.9 | % | -33.1 | % | |||||||||||||
| Lower Concentration Allogenic Aesthetic Biologics | $ | 1,037,000 | 29.3 | % | $ | 920,000 | 27.3 | % | $ | 117,000 | 3.5 | % | 34.2 | % | ||||||||||||||
| $ | 2,487,000 | 70.2 | % | $ | 2,907,000 | 86.1 | % | $ | (420,000 | ) | -12.4 | % | ||||||||||||||||
| PPX™ | $ | 878,000 | 24.8 | % | $ | 326,000 | 9.7 | % | $ | 552,000 | 16.4 | % | ||||||||||||||||
| Other | $ | 180,000 | 5.1 | % | $ | 143,000 | 4.2 | % | $ | 37,000 | 1.1 | % | ||||||||||||||||
| Total | $ | 3,545,000 | 100.0 | % | $ | 3,376,000 | 100.0 | % | $ | 169,000 | 5.0 | % | ||||||||||||||||
The increase in the overall unit sales associated with its PPX™ service platform was primarily due the Company’s continued sales and marketing efforts which included engaging additional sales representatives, participation in industry related conferences, sponsoring of educational webinars and from sales of PPX™ to the Company’s existing customers.
The Company attributes the net decrease in revenues from higher and lower concentration allogenic aesthetic biologic products sold during the nine months ended July 31, 2025, compared to the nine months ended July 31, 2024 due to additional product competition in the marketplace which attracted greater demand for the Company’s lower priced allogenic aesthetic biologic product offerings and lower demand for the Company’s higher priced allogenic aesthetic biologic product offerings during the nine months ended July 31, 2025, compared with the nine months ended July 31, 2024.
Cost of Revenues. Our cost of revenues for the nine months ended July 31, 2025 was $675,000, as compared to cost of revenues of $619,000 for the nine months ended July 31, 2024. The increase in the cost of revenues for the nine months ended July 31, 2025 of $56,000 or 9.1%, from the nine months ended July 31, 2024, was due to the increase of approximately $136,000 of cost of revenues associated with its PPX™ service platform during the nine months ended July 31, 2025, compared with the nine months ended July 31, 2024, partially offset by a decrease of approximately $80,000 in the costs of revenues for its allogenic aesthetic biologic products sold for the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
The increase in the cost of revenues associated with its PPX™ service platform was the result of an increase in units sold during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
Gross Profit. Our gross profit for the nine months ended July 31, 2025 was $2,870,000 (81.0% of revenues), as compared to gross profit of $2,757,000 (81.7% of revenues) for the nine months ended July 31, 2024. The increase in gross profit during the nine months ended July 31, 2025 of $113,000 (4.1%) was the result of increases in the gross margins received from sales of its PPX™ service platform, partially offset from reduced gross margins received from the sale of its allogenic aesthetic biologic products.
In addition, the percentage of the Company’s revenues associated with its PPX™ service platform, which has a higher cost of revenues as compared to the Company’s allogenic aesthetic biologic product offerings, increased to 24.8% of revenues for the nine months ended July 31, 2025, as compared with 9.7% of revenues for the nine months ended July 31, 2024. The percentage of the Company’s revenues associated with its allogenic aesthetic biologic product decreased to 70.2% of revenues for the nine months ended July 31, 2025, as compared with 86.1% of revenues for the nine months ended July 31, 2024.
25
General and Administrative Expenses. General and administrative expenses for the nine months ended July 31, 2025 were $7,588,000, as compared with $6,651,000 for the nine months ended July 31, 2024, an increase of $937,000 or 14.1%. The increase in the general and administrative expenses for the nine months ended July 31, 2025, from the nine months ended July 31, 2024, was primarily the result of 1) increased stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $1,187,000, (2) increased laboratory related costs of approximately $57,000 and (3) increased professional fees of approximately $134,000 during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024, which were partially offset by (a) decreased payroll and consulting fees of approximately $215,000 and (b) decreased commissions and travel costs of approximately $205,000 during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
The decrease in commissions and travel costs during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024, was principally the result of a larger percentage of sales that were generated from house accounts with much lower commission costs than paid to distributors and/or independent sales representatives. The decrease in payroll related expenses during the nine months ended July 31, 2025, from the nine months ended July 31, 2024, was principally the result of the non-renewal of certain executive employment contracts in May 2024.
Other income. Other income for the nine months ended July 31, 2025 was $78,000, as compared to other income of $558,000 for the nine months ended July 31, 2024. The decrease in other income was principally due to reductions in the write-off of advances payable to an affiliate of a former executive of $221,000 resulting from the inability of the affiliate to enforce a claim to collect the advances as the period of statute of limitations had run, the reduction in abatements of IRS penalties of $93,000, the reduction in settlement income from insurance claims of $89,000, reduction in commissions received from sales of Exotropin products of $26,000 and reductions in income from the settlement of liabilities of approximately $61,000, partially offset from increases in other income of $10,000 during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
Other expense for the nine months ended July 31, 2025 was $66,000, as compared to other expense of $115,000 for the nine months ended July 31, 2024. The decrease in other expense of $49,000 was principally the result of the reduction of reserves recorded against the carrying value of the Company’s investments in equity securities of $45,000 during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024, Other expense also consisted of interest expense and amortization of discounts associated with the Company’s convertible promissory notes outstanding which was mostly unchanged for the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
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 Nine Months Ended July 31, |
||||||||
| 2025 | 2024 | |||||||
| Cash, beginning of period | $ | 657,000 | $ | 1,756,000 | ||||
| Net cash used in operating activities | (335,000 | ) | (1,084,000 | ) | ||||
| Net cash used in investing activities | (23,000 | ) | (45,000 | ) | ||||
| Net cash provided by financing activities | 15,000 | 478,000 | ||||||
| Cash, end of period | $ | 314,000 | $ | 1,105,000 | ||||
26
During the nine months ended July 31, 2025, the Company had cash used in operating activities of $335,000, as compared to cash used in operating activities of $1,084,000 for the nine months ended July 31, 2024, a decrease in cash used of $749,000. The decrease in cash used was primarily the result of a reduction in general and administrative expenses and other income (expense) after adjusting for non-cash related activities of $4,000 and increases in cash provided from changes in operating assets and liabilities of $642,000 for the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024, partially offset by increases in gross profit of $113,000 for the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
The increase in cash provided from changes in operating assets and liabilities was due to increases in accounts payable and accrued expenses and decreases in accounts receivable and prepaid expenses, partially offset from decreases in deferred revenues during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024. The reduction in general and administrative expenses and other income (expense) after adjusting for non-cash related activities was the result of reduced operating expenses associated with payroll, consulting costs and commission expenses during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
During the nine months ended July 31, 2025, the Company had cash used in investing activities of $23,000, compared to cash used in investing activities of $45,000 for the nine months ended July 31, 2024, a decrease in cash used from investing activities of $22,000. The decrease in cash used by investing activities was primarily due to the decrease in investments from non-marketable securities of $45,000, partially offset from the increase in payments made in connection with the Company’s purchase of laboratory equipment of $23,000 during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
During the nine months ended July 31, 2025, the Company had provided by financing activities of $15,000, as compared to cash provided by financing activities of $478,000 for the nine months ended July 31, 2024. The decrease in cash provided by financing activities of $464,000 was due to the decrease in proceeds from the sale of equity securities of $500,000 and increases in payments on finance leases of $13,000 partially offset from the increase in proceeds received from the exercise of warrants of $50,000 during the nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024.
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.
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 $4,706,000 for the nine months ended July 31, 2025 and used $335,000 of cash in operating activities during that period. In addition, the Company had a stockholders’ deficit of $2,314,000 at July 31, 2025.
United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective in May 2021 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.
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; and/or (b) 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.
27
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 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; (c) obligations to the Company’s creditors are not accelerated; (d) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (e) 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 (f) 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 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.
The independent auditor’s report dated January 29, 2025 included in our Annual Report on Form 10-K for the year ended October 31, 2024 included an explanatory paragraph as to the Company’s ability to continue as a going concern. As of July 31, 2025, 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 July 31, 2025 and through the date of this report, we had no such arrangements.
Recently Issued Financial Accounting Standards
See Note 2 to our unaudited condensed consolidated financial statements included in this report for a discussion of recent accounting pronouncements.
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, 2024, “Summary of Significant Accounting Policies”.
28
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Not applicable.
| 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 (“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 Interim Chief Executive Officer and Chief Financial Officer (our principal executive, 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 July 31, 2025, the end of the period covered by this report. Based on that evaluation, our Interim 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, 2024, 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 July 31, 2025, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
29
Part II – OTHER INFORMATION
| Item 1. | Legal Proceedings. |
In addition to matters which have been reported in previous periodic Exchange Act filings, 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. |
On July 25, 2025, the Company received notice from a holder of warrants to exercise 21,277 warrants to purchase 21,277 shares of common stock of the Company for a total exercise price of $50,000 ($2.35 per share). The proceeds were received, and the shares were issued on July 30, 2025. The proceeds were used for working capital purposes.
The above securities were offered and sold to in accordance with the exemption from registration afforded by Section 4(a) (2) of the Securities Act of 1933, as amended (the “Securities Act”), as the purchaser provided the Company with appropriate representations as to the purchaser’s investment intent and status as an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
| Item 3. | Defaults upon Senior Securities. |
None.
| Item 4. | Mine Safety Disclosures. |
Not applicable.
| Item 5. | Other Information. |
| Item 6. | Exhibits. |
| Exhibit No: | Description: | |
| 31.1* | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer and Chief Financial Officer (filed herewith) | |
| 32.1* | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (filed herewith) | |
| 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. |
30
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.
| ZEO SCIENTIFIX, INC. | ||
| By: | /s/ Ian T. Bothwell | |
| Ian T. Bothwell | ||
| Interim Chief Executive Officer and Chief Financial Officer | ||
| (Principal Executive, Financial and Accounting Officer) | ||
| September 15, 2025 | ||
31
Exhibit 31.1
CERTIFICATION PURSUANT TO 18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ian T. Bothwell, certify that:
| 1. | I am the Interim Chief Executive Officer and Chief Financial Officer (principal executive, financial and accounting officer) of Zeo ScientifiX, Inc., a Nevada corporation (the “Registrant”) and have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 31, 2025, of the Registrant (the “Report”); |
| 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. | As the Registrant’s Interim Chief Executive Officer and Chief Financial Officer (principal executive, financial and accounting officer), I am 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. | As the Registrant’s principal executive, financial and accounting officer, I have disclosed, based on the most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| 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: September 15, 2025 | /s/ Ian T. Bothwell |
| Ian T. Bothwell | |
| Interim Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive, 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 Zeo ScientifiX, Inc. on Form 10-Q for the quarter ended July 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Ian T. Bothwell, Interim Chief Executive Officer and Chief Financial Officer (principal executive, financial and accounting officer) of Zeo ScientifiX, Inc., a Nevada corporation (the “Company”), hereby certifies, 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 Zeo ScientifiX, Inc. |
| Date: September 15, 2025 | /s/ Ian T. Bothwell |
| Ian T. Bothwell | |
| Interim Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive, Financial and Accounting Officer) |