Zeo ScientifiX Inc

Previous wording

The Company’s leading product, Zofin™ (also known as Organicell TM Flow), is an acellular, biologic therapeutic derived from perinatal sources and is manufactured to retain naturally occurring microRNAs, without the addition or combination of any other substance or diluent.

Current wording

The Company’s leading product, Zofin™ (also known as Organicell™ Flow), is an acellular, biologic therapeutic derived from perinatal sources and is manufactured to retain naturally occurring microRNAs, without the addition or combination of any other substance or diluent.

Previous wording

The Company recently launched a service platform for its first autologous product called Patient Pure X™ (“PPX™”). PPX™ is a non-manipulated biologic containing the nanoparticle fraction from a patient’s own peripheral blood. To date, revenues from PPX™ continue to be minimal.

Current wording

The Company recently launched a service platform for its first autologous product called Patient Pure X™ (“PPX™”). PPX™ is a non-manipulated biologic containing the nanoparticle fraction from a patient’s own peripheral blood.

Previous wording

The Company has recently began to expand the use of its proprietary products in future formulations for a variety of topical use applications in the skin-care industry.

Current wording

The Company is currently exploring the use of its proprietary products in future formulations for a variety of topical use applications in the skin-care industry.

Previous wording

Revenues. Our revenues for the three months ended January 31, 2024 were $1,154,000, compared to revenues of $1,070,000 for the three months ended January 31, 2023. The increase in revenues during the three months ended January 31, 2024 of $84,000 or 7.9%, was primarily the result of an increase of approximately 10.5% (approximately $104,000) in the overall unit sales of its high concentration biologic products during the three months ended January 31, 2024 and an increase of approximately $34,000 of revenues associated with its recently launched PPX™ service platform during the three months ended January 31, 2024, compared with the three months ended January 31, 2023, partially offset by a decrease of approximately 5.2% (approximately $54,000) in the average sales prices for the high concentration biologic products sold during the three months ended January 31, 2024, compared with the three months ended January 31, 2023.

Current wording

Revenues. Our revenues for the three months ended April 30, 2024 were $1,131,000, compared to revenues of $845,000 for the three months ended April 30, 2023. The increase in revenues during the three months ended April 30, 2024 of $286,000 or 33.8% from the three months ended April 30, 2023, was primarily the result of an increase of approximately 19.2% (approximately $163,000) in the overall unit sales of its high concentration biologic products during the three months ended April 30, 2024, an increase of approximately 3.8% (approximately $31,000) in the average sales prices for the high concentration biologic products sold during the three months ended April 30, 2024, and an increase of approximately $92,000 of revenues associated with its recently launched PPX™ service platform during the three months ended April 30, 2024.

Previous wording

The decrease in the average sales prices realized on high concentration biologic products sold during the three months ended January 31, 2024, compared with the three months ended January 31, 2023, was due to the sales of a newly introduced lower priced medical grade product during the three months ended January 31, 2024 that was not offered during the three months ended January 31, 2023. The percentage of overall unit sales of the Company’s high concentration medical grade biologic product offerings increased to 62.4% from 49.4% and decreased to 37.6% from 50.6% for the Company’s high concentration aesthetic biologics product offerings, respectively, for the three months ended January 31, 2024, compared to the three months ended January 31, 2023.

Current wording

The percentage of overall unit sales of the Company’s high concentration medical grade biologic product offerings decreased to 46.6% from 49.1% and increased to 53.4% from 50.9% for the Company’s high concentration aesthetic biologics product offerings, respectively, for the three months ended April 30, 2024, as compared to the three months ended April 30, 2023.

Previous wording

Cost of Revenues. Our cost of revenues for the three months ended January 31, 2024 were $159,000, compared with cost of revenues of $104,000 for the three months ended January 31, 2023. The increase in the cost of revenues for the three months ended January 31, 2024 of $55,000 or 52.6%, from the three months ended January 31, 2023, was due the increase of approximately 10.5% (approximately $11,000) in the overall unit sales of its high concentration biologic products, an increase of approximately 11.6% (approximately $11,000) in the average cost of revenues for the high concentration biologic products, and an increase of approximately $33,000 of cost of revenues associated with its recently launched PPX™ service platform during the three months ended January 31, 2024, compared with the three months ended January 31, 2023.

Current wording

Cost of Revenues. Our cost of revenues for the three months ended April 30, 2024 was $284,000, as compared to cost of revenues of $108,000 for the three months ended April 30, 2023. The increase in the cost of revenues for the three months ended April 30, 2024 of $176,000 or 163.0%, from the three months ended April 30, 2023, was due the increase of approximately 19.2% (approximately $34,000) in the overall unit sales of its high concentration biologic products, an increase of approximately 66.4% (approximately $70,000) in the average cost of revenues for the high concentration biologic products, and an increase of approximately $72,000 of cost of revenues associated with its recently launched PPX™ service platform during the three months ended April 30, 2024, compared with the three months ended April 30, 2023.

Previous wording

Gross Profit. Our gross profit for the three months ended January 31, 2024 was $995,000 (86.3% of revenues), compared with gross profit of $966,000 (90.3% of revenues) for the three months ended January 31, 2023. The increase in gross profit during the three months ended January 31, 2024 of $29,000 was the result of increases in the amount of high concentration biologic products sold and increases in the sales of its recently launched PPX™ service platform, partially offset from the increase in costs of revenues associated with those product sales during the three months ended January 31, 2024, compared to the three months ended January 31, 2023.

Current wording

Gross Profit. Our gross profit for the three months ended April 30, 2024 was $847,000 (74.9% of revenues), as compared to gross profit of $737,000 (87.2% of revenues) for the three months ended April 30, 2023. The increase in gross profit during the three months ended April 30, 2024 of $110,000 was the result of increases in the amount of high concentration biologic products sold and increases in the sales of its recently launched PPX™ service platform, partially offset from the increase in costs of revenues associated with those product sales during the three months ended April 30, 2024, compared to the three months ended April 30, 2023.

Previous wording

The decrease in stock-based compensation costs during the three months ended January 31, 2024 compared with the three months ended January 31, 2023 was principally the result of reduced amortization of costs from warrants issued as stock-based compensation to consultants in connection with the August 2022 change of control and restructuring of the company, stock issued as payment for services, and warrants issued to outside directors. The decrease in laboratory related costs was principally the result of the Company’s sale of the Basalt laboratory facility in August 2023 and as a result, there were no associated costs associated with operating that facility during the three months ended January 31, 2024 compared with the three months ended January 31, 2023. The decrease in research and development costs during the three months ended January 31, 2024, compared with the three months ended January 31, 2023 was principally the result of the Company’s completion of its Phase 1 trials during July 2023, and there being no other significant ongoing clinical trial costs incurred since that time. The decrease in professional fees was principally the result of reduced audit fees, tax preparation fees and legal fees during the three months ended January 31, 2024, compared with the three months ended January 31, 2023.

Current wording

The decrease in laboratory related costs was principally the result of the Company’s sale of the Basalt laboratory facility in August 2023 and as a result, there were no associated costs associated with operating that facility during the three months ended April 30, 2024, as compared with the three months ended April 30, 2023. The decrease in research and development costs during the three months ended April 30, 2024, from the three months ended April 30, 2023 was principally the result of the Company’s completion of its Phase 1 trials during July 2023, and there being no other significant clinical trial costs incurred since that time. The decrease in professional fees was principally the result of reduced audit fees, tax preparation fees and legal fees during the three months ended April 30, 2024, as compared to the three months ended April 30, 2023. The increase in stock-based compensation costs during the three months ended April 30, 2024, as compared to the three months ended April 30, 2023 was principally the result of increased amortization of costs from shares and options issued to executives and advisors and options issued to employees and outside directors.

Previous wording

Other expense for the three months ended January 31, 2024 was $27,000, compared with other expense of $111,000 for the three months ended January 31, 2023. The decrease in other expense of $84,000 during the three months ended January 31, 2024, compared to the three months ended January 31, 2023, was principally the result of reduced interest and amortization of loan discounts of approximately $35,000 and reduced costs associated with changes in the fair value of the Commitment Fee of $49,000 during the three months ended January 31, 2024, compared to the three months ended January 31, 2023.

Current wording

Other expense for the three months ended April 30, 2024 was $20,000, as compared to other expense of $109,000 for the three months ended April 30, 2023. The decrease in other expense of $89,000 during the three months ended April 30, 2024, as compared to the three months ended April 30, 2023, was principally the result of reduced amortization of loan discounts of approximately $86,000, reduced IRS interest and penalties of approximately 13,000, partially offset from increased interest expenses on debt obligations of $10,000 during the three months ended April 30, 2024, as compared to the three months ended April 30, 2023.

Previous wording

General and Administrative Expenses. General and administrative expenses for the three months ended January 31, 2024 were $2,157,000, compared with $3,142,000 for the three months ended January 31, 2023, a decrease of $985,000 or 31.3%. The decrease in the general and administrative expenses for the three months ended January 31, 2024, from the three months ended January 31, 2023, was primarily the result of decreased research and development costs of approximately $169,000, decreases in insurance costs of approximately $97,000, decreased marketing and investor relations costs of approximately $151,000, decreases in commissions from sales of the Company’s products and travel and entertainment costs of approximately $105,000, decreases in stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $202,000, decreased office related expenses of approximately $55,000, decreased laboratory related costs of approximately $242,000 and decreased professional fees of approximately $171,000, which were partially offset by increased payroll and consulting fees of approximately $207,000.

Current wording

General and Administrative Expenses. General and administrative expenses for the six months ended April 30, 2024 were $4,568,000, as compared to $5,792,000 for the six months ended April 30, 2023, a decrease of $1,224,000 or 21.1%. The decrease in the general and administrative expenses for the six months ended April 30, 2024, from the six months ended April 30, 2023, was primarily the result of decreased research and development costs of approximately $569,000, decreases in insurance costs of approximately $123,000, decreased marketing and investor relations costs of approximately $123,000, decreases in commissions from sales of the Company’s products and travel and entertainment costs of approximately $94,000, decreased office related expenses of approximately $99,000, decreased laboratory related costs of approximately $508,000 and decreased professional fees of approximately $277,000, which were partially offset by increased payroll and consulting fees of approximately $283,000 and increases in stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $286,000.

Previous wording

Other income (expense). Other income for the three months ended January 31, 2024 was $149,000, compared with other income of $0 for the three months ended January 31, 2023. The increase in other income was due to the settlement of insurance claims of $89,000, increases in commissions received from sales of Formulator products of $34,000 and increases in income from the settlement of liabilities of approximately $26,000 during the three months ended January 31, 2024, compared to the three months ended January 31, 2023.

Current wording

Other income (expense). Other income for the six months ended April 30, 2024 was $334,000, as compared to other income of $0 for the six months ended April 30, 2023. The increase in other income was due to the abatement of IRS penalties of $93,000, settlement of insurance claims of $89,000, increases in commissions received from sales of Formulator products of $87,000 and increases in income from the settlement of liabilities of approximately $61,000 during the six months ended April 30, 2024, as compared to the six months ended April 30, 2023.

Previous wording

During the three months ended January 31, 2024, the Company used cash in operating activities of $575,000, compared to $1,283,000 for the three months ended January 31, 2023, a decrease in cash used of $708,000. 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 $813,000 and increases in gross profit of $16,000 for the three months ended January 31, 2024, compared to the three months ended January 31, 2023, partially offset by reductions in cash provided from changes in operating assets and liabilities of $121,000 for the three months ended January 31, 2024, compared to the three months ended January 31, 2023.

Current wording

During the six months ended April 30, 2024, the Company used cash in operating activities of $990,000, as compared to $1,954,000 for the six months ended April 30, 2023, a decrease in cash used of $964,000. 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 $1,472,000 and increases in gross profit of $139,000 for the six months ended April 30, 2024, as compared to the six months ended April 30, 2023, partially offset by reductions in cash provided from changes in operating assets and liabilities of $647,000 for the six months ended April 30, 2024, as compared to the six months ended April 30, 2023.

Previous wording

The decrease in cash provided from changes in operating assets and liabilities was due to decreases in accounts payable and accrued expenses and prepaid expenses, partially offset from increases in deferred revenues during the three months ended January 31, 2024, as compared to the three months ended January 31, 2023. The reduction in general and administrative expenses and other oncome (expense) after adjusting for non-cash related activities was the result of reduced operating expenses associated with professional fees, payroll, consulting costs, research and laboratory related expenses during the three months ended January 31, 2024, as compared to the three months ended January 31, 2023.

Current wording

The decrease in cash provided from changes in operating assets and liabilities was due to decreases in accounts payable and accrued expenses and prepaid expenses, partially offset from increases in deferred revenues during the six months ended April 30, 2024, as compared to the six months ended April 30, 2023. The reduction in general and administrative expenses and other oncome (expense) after adjusting for non-cash related activities was the result of reduced operating expenses associated with professional fees, payroll, consulting costs, research and laboratory related expenses during the six months ended April 30, 2024, as compared to the six months ended April 30, 2023.

Previous wording

During the three months ended January 31, 2024, the Company did not have any investing activities, compared to cash used in investing activities of $16,000 for the three months ended January 31, 2023 a decrease in cash used from investing activities of $16,000. The decrease in cash used by investing activities was primarily due to the reduction of payments made in connection with the Company’s purchase of laboratory equipment.

Current wording

During the six months ended April 30, 2024, the Company did not have any investing activities, compared to cash used in investing activities of $116,000 for the six months ended April 30, 2023 a decrease in cash used from investing activities of $116,000. The decrease in cash used by investing activities was primarily due to the reduction of payments made in connection with the Company’s purchase of laboratory equipment and the decrease in investments from non-marketable securities of $100,000 during the six months ended April 30, 2024, as compared to the six months ended April 30, 2023.

Previous wording

During the three months ended January 31, 2024, the Company had cash used in financing activities of $9,000, compared to cash used in financing activities of $1,032,000 for the three months ended January 31, 2023. The decrease in cash used in financing activities of $1,023,000 was due to the reduction in repayment of notes payable of $600,000, reductions in funds held in escrow for shares to be repurchased in connection with litigation of $500,000 and decreases in payments on finance leases of approximately $22,000, partially offset from decreases in proceeds from the sale of equity securities of $100,000.

Current wording

During the six months ended April 30, 2024, the Company had cash used in financing activities of $20,000, as compared to cash used in financing activities of $552,000 for the six months ended April 30, 2023. The decrease in cash used in financing activities of $532,000 was due to the reduction in repayment of notes payable of $600,000, reductions in funds held in escrow for shares to be repurchased in connection with litigation of $500,000 and decreases in payments on finance leases of approximately $36,000, partially offset from decreases in proceeds from the sale of equity securities of $100,000 and decreases in proceeds from the issuance of promissory notes of $504,000 during the six months ended April 30, 2024, as compared to the six months ended April 30, 2023.

Previous wording

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 $1,040,000 for the three months ended January 31, 2024 and used $575,000 of cash from operating activities during that period. In addition, the Company had a stockholders’ deficit of $1,508,000 at January 31, 2024. The Company had a working capital deficit of $2,031,000 at January 31, 2024.

Current wording

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 $2,439,000 for the six months ended April 30, 2024 and used $990,000 of cash from operating activities during that period. In addition, the Company had a stockholders’ deficit of $1,700,000 at April 30, 2024. The Company had a working capital deficit of $2,203,000 at April 30, 2024.

Previous wording

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. As of January 31, 2024, 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.

Current wording

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.