| ● | Secure additional working capital; |
| ●○ | Fund shortfalls in working capital to fund ongoing expenses and required payments to vendors and creditors until revenues are stabilized; |
| ●○ | Fund ongoing costs to pursuecomplete current pipeline of clinical trials as well as future clinical trials; |
| ●○ | Fund capital expenditures associated with maintaining compliance of our facilities and products; |
| ●○ | Fund our strategy to develop and expand our revenues for the sales and distribution of RAAM related products described above; |
| ●○ | Hire additional personnel to support our growth and planned expansion; and |
| ●○ | Enhance our CRM, e-commerce and ERP capabilities to facilitate marketing, sales and distribution functionality and accounting for our operations. |
| ● | Enhance Company Corporate Governance; |
| ○ | Appoint additional independent members to the Board of Directors that will provide overall industry expertise and fulfill audit committee and independent director requirements to meet listing requirements for the national stock exchanges; |
| ○ | Continue to develop and expand the Company’s internal control policies; and |
| ○ | Continue to explore previously announced plans to uplist the Company to the Nasdaq for the purpose of enhancing interest and investment opportunities for the Company once the Company is able to demonstrate compliance with initial listing requirements, including minimum share price and stockholder’s equity thresholds. |
Market Overview The population of the United States and the developed world is getting older and living longer. According to a United States Consensus Bureau’s report, “An Aging World: 2015,” America’s 65-and-over population is projected to nearly double over the next three decades, ballooning from 48 million to 88 million by 2050 and that worldwide, the 65-and-over population will more than double to 1.6 billion by 2050. According to the report, in 2015, 14.9% of the U.S. population was 65 or over and the United States was the 48th oldest country out of 228 countries and areas in the world in 2015. Baby boomers began reaching age 65 in 2011 and by 2050 the older share of the U.S. population will increase to 22.1%. The world average age of death has increased by 35 years since 1970, with declines in death rates in all age groups, including those aged 60 and older (Source: Institute for Health Metrics and Evaluation, 2013; Mathers et al.al., 2015). The leading causes of death are shifting, in part because of increasing longevity. Between 1990 and 2013, the number of deaths from non-communicable diseases (“NCDs”) has increased by 42%; and the largest increases in the proportion of global deaths took place among the population aged 80 and over. An estimated 42.8% of deaths worldwide occur in the population aged 70 and over, with 22.9% in the population aged 80 and over. Also, according to the Centers for Disease Control (the “CDC”), “Medical Tourism” (a term commonly used to describe people traveling outside their home country for medical treatment) is a worldwide, multibillion-dollar phenomenon that is expected to grow substantially in the next 5–10 years. Studies have estimated that hundreds of thousands of medical tourists travel from the United States annually and that patients pursue medical care abroad for a variety of reasons, including a desire to receive a procedure or therapy not available in their country of residence. Common categories of procedures that US travelers pursue during medical tourism trips include orthopedic surgery, cosmetic surgery, cardiology (cardiac surgery), oncologic care, and dentistry. Common destinations include Thailand, Mexico, Singapore, India, Malaysia, Cuba, Brazil, Argentina, and Costa Rica. If we are able to implement our intended business plan, we believe that we will be well situated to address this increased consumer demand for alternative medical treatments.
Marketing and Sales Currently, we market our RAAM products and services to a network of Providers through in-house, contracted sales personnel and/or from independent distributors. As of the date of this prospectus, we had four in-house salespeople who marketed our RAAM products and services. In addition, we had arrangements with several independent distributors that were marketing and distributing our products. We intend in the future to expand our in-house sales force and independent distributors as our working capital improves, our product line expands and as volumes increase. We also intend to develop and offer ongoing training seminars to provide the best possible information on the latest advances on anti-aging, and regenerative medicine to Providers. Raw Materials and Sources of Supply
We acquire the raw materials and supplies for our RAAM research and development and the manufacturing of our RAAM placental-related products from unaffiliated third-party laboratories pursuant to supply arrangements. In the event any one or more of our current suppliers are unwilling or unable to sell us required raw materials and/or products, for any reason, we may not be able to provide replacement products to our customers, or if other supply arrangements can be made, the replacement products and terms may not be as favorable.
Customers Our RAAM business is not dependent on any one or more customers, especially as our customer and distribution network expands. Our customer base is increasingly broad based and throughout the United States and worldwide. Intellectual Property The table below sets forth a summary of our intellectual property rights. Patents: | Patents: | None | | | | | Patent Applications: |
| OrganicellTM has a U.S. Patent Application on file for its OrganicellTMOrganicell™ line of products and the proprietary techniques used in during processing perinatal fluid. | | | U.S. Patent Application No. 17/226,587 | | | Titled: COMPOSITIONS COMPRISING NANOPARTICLES, METHOD OF MAKING AND USES THEREOF | | | Filed: April 9, 2021 | | | Inventor: Maria Ines Mitrani | | | Applicant: Organicell Regenerative Medicine, Inc. | | | Conversion Filing Deadline: April 10, 2021 | | | Assignment: MARIA INES MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee) | | | Recorded: April 9, 2021 | | | Real/Frame: 055878 / 0801 & 055878 / 0900 | | | | | | OrganicellTM has an International Patent Application on file for its OrganicellTMOrganicell™ line of products and the proprietary techniques used in during processing perinatal fluid. | | | International Patent Application No. PCT/IB2021/052982 | | | Titled: COMPOSITIONS COMPRISING NANOPARTICLES, METHOD OF MAKING AND USES THEREOF | | | Filed: April 10, 2021 | | | Inventor: Maria Ines Mitrani | | | Applicant: Organicell Regenerative Medicine, Inc. | | | National Phase Filing Deadline: October 10, 2022 | | | Assignment: MARIA INES MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee) | | | | | | OrganicellTM has a U.S. Provisional Patent Application on file for its OrganicellTMOrganicell™ PPX product and the proprietary techniques used in the administration of blood-derived exosomes to treat pain. | | | U.S. Provisional Patent Application No. 63/287,466 | | | Titled: METHOD OF TREATING PAIN IN A PATIENT COMPRISING THE USE OF EXTRACELLULAR VESICLES | | | Filed: December 8, 2021 | | | Inventors: Maria Ines Mitrani, Michael Bellio, and Albert Mitrani Applicant: Organicell Regenerative Medicine, Inc.
Conversion Filing Deadline: December 8, 2022
| | | Applicant: Organicell Regenerative Medicine, Inc. | | | Conversion Filing Deadline: December 8, 2022 |
Trademarks: |
| Word Mark: ZENOX | | | Goods/Services: Radiation sterilized biologically derived products developed from perinatal tissue material in the nature of cultured biological tissue and non-cultured biological tissue, for aesthetic purposes, other than for medical or veterinary purposes (IC 001) | | | Serial Number: 90331202 | | | Filing Date: November 19, 2020 | | | Owner: Organicell Regenerative Medicine, Inc. | | | Status: Notice of allowance received August 17, 2021 | | | | | | Word Mark: ZENOX | | | Goods/Services: Radiation sterilized biologically derived products developed from perinatal tissue material for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005) | | | Serial Number: 90331195 | | | Filing Date: November 19, 2020 | | | Owner: Organicell Regenerative Medicine, Inc. | | | Status: Notice of allowance received August 17, 2021 |
| | Word Mark: XENOX | | | Goods/Services: Radiation sterilized biologically derived products developed from perinatal tissue material in the nature of cultured biological tissue and non-cultured biological tissue, for aesthetic purposes, other than for medical or veterinary purposes (IC 001) | | | Serial Number: 97075336 | | | Filing Date: October 14, 2021 | | | Owner: Organicell Regenerative Medicine, Inc. | | | Status: Pending, awaiting examination | | | | | | Word Mark: XENOX | | | Goods/Services: Radiation sterilized biologically derived products developed from perinatal tissue material for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005) | | | Serial Number: 97075340 | | | Filing Date: October 14, 2021 | | | Owner: Organicell Regenerative Medicine, Inc. | | | Status: Pending, awaiting examination | | | | | | Word Mark: XOTIN | | | Goods/Services: Biologically derived nanoparticles, namely, exosomes and extracellular vesicles, developed from perinatal tissue material for aesthetic purposes, other than for medical or veterinary purposes (IC 001) | | | Serial Number: 90168590 | | | Filing Date: September 9, 2020 | | | Owner: Organicell Regenerative Medicine, Inc. | | | Status: Notice of Allowance issued January 26, 2021; 1st extension of time requested and approved. |
| | Word Mark: XOTIN | | | Goods/Services: Biologically derived nanoparticles, namely, exosomes and extracellular vesicles, developed from perinatal tissue for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005) | | | Serial Number: 90168599 | | | Filing Date: September 9, 2020 | | | Owner: Organicell Regenerative Medicine, Inc. | | | Status: Notice of Allowance issued January 26, 2021; 1st extension of time filed and approved. | | | | | | Word Mark: ZOFIN | | | Goods/Services: Biologically derived products developed from perinatal tissue material in the nature of cultured biological tissue and non-cultured biological tissue, for aesthetic purposes, other than for medical or veterinary purposes (IC 001); Biologically derived products developed from perinatal tissue material for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005) | | | Serial Number: 90050511 | | | Filing Date: July 13, 2020 | | | Owner: Organicell Regenerative Medicine, Inc. | | | Status: Notice of allowance issued May 18, 2021 – 1st extension of time filed and approved |
| | Word Mark: Organicell | | Goods/Services: Biologically derived products developed from perinatal tissue material in the nature of cultured biological tissue and non-cultured biological tissue, for aesthetic purposes, other than for medical or veterinary purposes (IC 001); Biologically derived products developed from perinatal tissue material for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005) | | Serial Number: 88903989 | | Filing Date: May 6, 2020 | | Owner: Organicell Regenerative Medicine, Inc. | | Status: Notice of Allowance issued December 22, 2020; Office Action received July 27, 2021 | | | | Word Mark: Organicell | | Goods/Services: Non-medicated anti-aging serum; non-medicated skin serums; all of the aforementioned goods are made in whole or in substantial part of organic ingredients (IC 003) | | Serial Number: 87311045 | | Filing Date: January 23, 2017 | | Owner: Organicell Regenerative Medicine, Inc. | | Registration Number: 5289671 | | Registration Date: September 19, 2017 | | Status: Live | | | | Word Mark: PATIENT PURE X - PPX | | Goods/Services: plasma extracts for medical use, namely, plasma extract containing purified and concentrated exosomes derived from whole human blood | | Serial Number: 88771931 | | Filing Date: January 24, 2020 | | Owner: Organicell Regenerative Medicine, Inc. | | Status: Notice of Allowance issued July 28, 2020 – 2nd extension of time filed and approved |
| Word Mark: PATIENT PURE X - PPX | | Goods/Services: plasma processing services for others, namely, extracting purified and concentrated exosomes based on whole blood harvested from patients for use by hospitals, clinics, or other organizations or persons involved in delivering healthcare services to patients | | Serial Number: 88771934 | | Filing Date: January 24, 2020 | | Owner: Organicell Regenerative Medicine, Inc. | | Status: Notice of Allowance issued August 18, 2020 – 2nd extension of time filed and approved |
Pursuant to our employment agreements with our executives, all work product that is created, prepared, produced, authored, edited, amended, conceived or reduced to practice by each executive individually or jointly with others during the period of their employment by the Company and relating in any way to the business or contemplated business, research or development of the Company (regardless of when or where the Work Product is prepared or whose equipment or other resources is used in preparing the same), as well as any and all rights in and to copyrights, trade secrets, trademarks (and related goodwill), patents and other intellectual property rights therein arising in any jurisdiction throughout the world and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations thereof, and continuations, divisions, continuations-in-part, reissues, extensions and renewals thereof (collectively, “Intellectual Property Rights”), the sole and exclusive property of the Company. All of the Work Product consisting of copyrightable subject matter shall be deemed “work“work made for hire”hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company or if not applicable, deemed to be irrevocably assigned to the Company, for no additional consideration. The Intellectual Property Rights in any “Pre-ExistingPre-existing Materials” included contained in the Work Product shall be retained by the executive but the executive shall be deemed to have granted to the Company an irrevocable, worldwide, unlimited, royalty-free license to use, publish, reproduce, display, distribute copies of, and prepare derivative works based upon, such Pre-Existing Materials and derivative works thereof. The Company may not assign, transfer and sublicense such rights to others without executive’s consent, other than to a wholly owned subsidiary of the Company. The executive shall provide written notice to the Company’s Chief Executive Officer therein notifying the Company new intellectual property including the Pre-Existing Materials.
Competition The regenerative medicine field is highly competitive and subject to rapid technological change and regulation. Companies compete on the basis of product efficacy, pricing, and ease of handling/logistics. A critically important factor for growth in the US market is third-party reimbursement, which is difficult to obtain, and the process can be time-consuming and expensive. We expect that it will take some time before RAAM products will be widely accepted under health insurance coverage. In addition, growth of this industry is expected to expand as additional research and development into the benefits of regenerative products and specific products becomes more widely accepted as a result of FDA mandated or optional clinical trials are performed by industry stakeholders. As stated previously, there is a growing urgencycompanies competing in the industry for companies tomust now meet the anticipated new and more stringent regulatory deadlines to be imposed by the FDA in connection with regulation of RAAM products that are scheduled to gowent into effect in May 2021(extended2021 (postponed from November 2020 due to the COVID-19 pandemic Although we believe that our current products fall within these guidelines, aspandemic). As a result of these concerns, the Company and itsour competitors are pursuingexpected to need to pursue research and development efforts, and submittingsubmit IND applications for FDA approval to commence clinical trials for RAAM products beingand ultimately obtaining a biologic license for their products to be sold, to assure that their respective operations and products remain compliant with FDA regulations and there is no adverse impact to future operations. In addition, the Company believes that the ability to demonstrate that products and operations comply with regulations are important factors for companies in the industry to be successful in the future. 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 both domestically and internationally, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations, including the Company’s recent launching of PPX™.
We intend to perform clinical trials for our RAAM Products for the purpose of obtaining biologics license status from the FDA to provide us with advantages over our competitors, including acceleration for acceptance of our products in traditional insurance plans, compliance with FDA regulations andand/or to provide our customers with superior education and support of the benefits of our products. Initially we are positioning ourselves as a cash-based health care alternative for consumers that can provide higher levels of improvement, that is not available from traditional allopathic medicine at this time. The Company competes in multiple areas of clinical treatment where regenerative biomaterials may be employed to modulate inflammation, enhance healing and reduce scar tissue formation: advanced wound care treatment, including spine, orthopedic, surgerysports medicine, and sports medicine.surgical as well as regenerative and aesthetics applications. The primary competitive products in this space includeand which are now subject to being classified as an HCT/P product that must meet current regulatory guidelines and require IND approvals, clinical trials, and ultimately biologic license are allograft products derived from perinatal sources including amniotic fluid, amniotic and placental powders, amniotic or placental frozen tissues or liquids, cord blood derived products, and Wharton’s jelly derived products. As a result of this increased regulatory oversight of HCT/P’s, competitors have begun shifting their product portfolios to autologous solutions including serums derived from blood, bone marrow, and adipose tissue (Regena) and allografttissue. These products derived from amniotic fluid or amniotic membrane, umbilical cord blood or umbilical cord tissue matrix, or from culture-expanded perinatal cells. are the fastest growing sector of regenerative medicine due to their compliant regulatory position with the FDA.
Our allogenic competitors are primarily producer-distributor companies which includehistorically included Predictive Biotech, Kimera Labs, MiMedix Group, Inc., Invitrx Therapeutics, Liveyon, BioD and(“dermaSciences”), Signature Biologics, Direct Biologics and Vitti Labs, as well as a number of distributors who sell white-labeled products from those producer-distributor entities. Additionally, there are a variety of accredited blood, bone, and soft tissue banks that we will be competinghistorically competed against, including Utah Cord Bank and Cord for Life. Currently one of the largest companies in the autologous segment is Regenexx. We also expect to see the growth of many additional autologous equipment manufacturers during 2022, including APEX Biologix LLC.
In connection with the new FDA regulations that went into effect in May 2021 described above, the Company believes that two of the largest perinatal product manufacturers in the United States, Predictive Biotech and Utah Cord Bank, have closed their operations. In addition, the FDA has indicated that hundreds of other manufacturers and clinics have already received warning letters of violations of the new FDA regulations. To date, the Company has not received any warning letters or correspondence from the FDA indicating that our products were not in compliance with the current FDA regulations. As stated previously, the demand for RAAM products is very high and expected to grow with the growing baby boomer generation getting older, the increase in patients desiring to seek health care options outside of traditional therapies, the growing trend in the desire of individuals to remain active longer in life and the ongoing rise in health care costs which RAAM products may provide a more efficient and economical alternative for certain conditions. Government Regulation General The Company’s operations are subject to FDA regulations in connection with the sales and distribution of its RAAM products. In addition, the Company relies on supply agreements with birth tissue recovery companies, supply manufacturers and/or third party distributors for the supply of RAAM products and/or the Company’s intended objectives to conduct research and development and clinical trials of RAAM products, all of whom are required to comply with FDA regulations. We anticipate these regulations will be heavily enforced and subject to more restrictive regulations by the FDA in the future. A summary of the current FDA regulations is set forth below:below.
FDA Premarket Clearance and Approval Requirements Tissue Products Currently the products that are sold by the Company are derived from human tissue that is purchased by the Company and processed directly in the Company’s laboratory facilities. At times when the Company did not manufacture its own products, the products sold were manufactured and processed by third party manufacturers. As discussed below, some tissue-based products are regulated solely under Section 361 of the Public Health Service Act as human cells, tissues and cellular and tissue-based products, or HCT/Ps, which do not require premarket clearance or approval by the FDA. Other tissue products are regulated as biologics and, in order to be lawfully marketed in the United States, require an FDA-approved BLA. The FDA is continually changing and formulating new guidelines for this industry. In addition, the FDA has published some additional draft guidelines related to this industry and the ultimate form of the regulations are not yet known. Products Regulated as HCT/Ps The FDA has specific regulations governing human cells, tissues and cellular and tissue-based products, or HCT/Ps. An HCT/P is a product containing or consisting of human cells or tissue intended for transplantation into a human patient. HCT/Ps that meet the criteria for regulation solely under Section 361 of the Public Health Service Act (so-called “361 HCT/Ps”) are not subject to approval requirements and they are subject to post-market regulatory requirements. To be a 361 HCT/P, a product generally should meet following criteria: | ● | Be minimally manipulated, no structural change, or be mixed with anything; |
| ● | Be intended for homologous use, essentially used for the same purpose that it was used in the donor; |
| ● | Its manufacture must not involve combination with another article, except for water, crystalloids or a sterilizing, preserving or storage agent; and |
| ● | It must not be dependent upon the metabolic activity of living cells for its primary function. |
Products Regulated as Biologics- The BLA Pathway The typical steps for obtaining FDA approval of a BLA to market a biologic product in the U.S. include: | ● | Completion of preclinical laboratory tests, animal studies and formulations studies under the FDA’s good laboratory practices regulations; |
| ● | Submission to the FDA of an Investigational New Drug Application (“IND”IND”) for human clinical testing, which must become effective before human clinical trials may begin and which must include independent Institutional Review Board (“IRB”) approval at each clinical site before the trials may be initiated; |
| ● | Performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication; |
| ● | Submission to the FDA of a Biologics License Application for marketing the product, which includes, among other things, reports of the outcomes and full data sets of the clinical trials, and proposed labeling and packaging for the product; |
| ● | Satisfactory completion of an FDA Advisory Committee review; and |
| ● | Satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with Current Good Manufacturing Practices (“cGMP”cGMP”) regulations. |
Generally, clinical trials are conducted in three phases: | ● | Phase I trials typically involve a small number of healthy volunteers and are designed to provide information about the product safety. |
| ● | Phase II trials are conducted in a larger but limited group of patients afflicted with a specific diagnosis in order to determine preliminary efficacy, and to identify possible adverse effects. |
| ○ | Dosage studies are designated as Phase IIA and efficacy studies are designated as Phase IIB. |
| ● | Phase III clinical trials are generally large-scale, multi-center, comparative trials conducted with patients who have a specific condition in order to provide statistically valid proof of efficacy, as well as safety and potency. |
| ● | In some cases, the FDA will require Phase IV, or post-marketing trials, to collect additional data after a product is on the market. |
The process of obtaining an approved BLA requires the expenditure of substantial time, effort and financial resources and may take years to complete. FDA Post-Market Regulation Tissue processors are required to register as an establishment with the FDA. We intend on becoming a registered establishment, accredited by the American Association of Tissue Banks (“AATB”) for the storage and distribution of tissue products that we purchase directly or indirectly from third party manufacturers. Once we are registered, we will be required to comply with regulations, including those regulations regarding storage, controls, access, labeling, record keeping, security, processes, compliance with established Good Tissue Practices, and documentation associated with the sale of our products by our customers to their patients. Our facilities will be subject to periodic inspections to assess our records and determination of our compliance with the regulations. Products covered by a BLA, 510(k) clearance, or a PMA are subject to numerous additional regulatory requirements, which include, among others, compliance with cGMP, which imposes certain procedural, substantive and record keeping requirements, labeling regulations, the FDA’s general prohibition against promoting products for unapproved or “off-label” uses, and additional adverse event reporting. Other Regulation Specific to Tissue Products The AATB, has issued operating standards for tissue banking, whether manufacturing and/or storing products as a distributor of manufactured products by third parties. Compliance with these standards is a requirement in order to become a licensed tissue bank. 21st Century Cures Act In December 2016, President Obama signed the 21st Century Cures Act (the “Cures Act”) into law. The Cures Act includes many provisions that aim to speed up the process of bringing new drugs and devices to market. One of the Cures Act’s most significant amendments to the Federal Food, Drug and Cosmetic Act allows the FDA to grant accelerated approval to regenerative medicine products, while also providing the agency with wide discretion on creating new approaches to regenerative medicine. This legislative development is the result of increased pressure from patients and other stakeholders to move regenerative medicine advancements more quickly from the lab into the clinic. Specifically, the new accelerated approval pathway authorized by the Cures Act allows certain regenerative medicine products to be designated as “regenerative advanced therapy” and become eligible for priority review by FDA. To qualify for this pathway, the product must be aimed at a serious disease and have the potential to deal with currently unmet medical needs. It must also meet the Cures Act’s new definition of a regenerative advanced therapy, which is defined as “cell therapy, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, except for those regulated solely under section 361 of the Public Health Service Act.” This broad definition would seem to encompass the majority of regenerative medicine products known to be currently in the development stages. As with the existing accelerated approval pathway for drugs and biologics, this new regulatory pathway would allow a regenerative medicine product to be approved for marketing based on surrogate or intermediate clinical trial endpoints rather than longer term clinical outcomes. The use of such endpoints can decrease the number, duration, and complexity of clinical trials that are needed to prove a longer-term outcome. Subsequently, a sponsor would have to conduct confirmatory clinical trials to ensure that the surrogate or intermediate endpoint was in fact predictive of patients’ clinical response to the product, otherwise the accelerated approval could be withdrawn. The Cures Act also requires the FDA to work with the National Institute of Standards and Technology (“NIST”) and other stakeholders to develop standards and consensus definitions for regenerative medicine products. Such standards are expected to play a large role in advancing this nascent industry by allowing companies to rely on FDA-recognized standards, rather than creating and validating their own as is the case today. The Cures Act attempts to create a research network and a public-private partnership to assist developers in generating definitive evidence about whether their proposed therapies indeed provide clinical benefits that are hoped for. The Cures Act also requires the FDA to track and report the number and type of applications filed for regenerative medicine products, including the number of products approved through the new accelerated approval pathway. The law also includes provisions that require the FDA to publish guidance on how it will design and implement an approval process for regenerative medicine devices. November 2017 FDA Guidelines In November 2017, the FDA released four guidance documents (two final, two draft) in an effort to implement a “comprehensive“comprehensive policy framework”framework” for existing laws and regulations governing regenerative medicine products, including human cells, tissues, and cellular and tissue-based products (“HCT/Ps”). These guidance documents build upon the previous regulatory framework for these products, which was completed in 2005. A guidance document cannot alter a regulation, but can clarify how the FDA intends to enforce the regulation. The Comprehensive regenerative medicine policy framework intends to spur innovation, efficient access to potentially transformative products, while ensuring safety and& efficacy. The framework builds upon the FDA’s existing risk-based regulatory approach to more clearly describe what products are regulated as drugs, devices, and/or biological products. Further, two of the guidance documents propose an efficient, science-based process for helping to ensure the safety and effectiveness of these therapies, while supporting development in this area. The suite of guidance documents also defines a risk-based framework for how the FDA intends to focus its enforcement actions against those products that raise potential significant safety concerns. This modern framework is intended to balance the agency’s commitment to safety with mechanisms to drive further advances in regenerative medicine so innovators can bring new, effective therapies to patients as quickly and safely as possible. The policy also delivers on important provisions of the Act. Final Guidance Documents The two final guidance documents clarify the FDA’s interpretation of the risk-based criteria manufacturers use to determine whether a product is subject to the FDA’s premarket review. The first guidance provides greater clarity around when cell and tissue-based products would be exempted from the established regulations if they are removed from and implanted into the same individual within the same surgical procedure and remain in their original form. The second final guidance helps stakeholders better understand how existing regulatory criteria apply to their products by clarifying how the agency interprets the existing regulatory definitions “minimal manipulation”“minimal manipulation” and “homologous use.“homologous use.” As this field advances, the FDA has noted that there are a growing number of regenerative medicine products subject to FDA premarket authorization. These guidance documents will help explain how the FDA will provide a risk-based framework for its oversight. The policy framework defines how the FDA intends to take action against unsafe products while facilitating continued innovation of promising technologies. To accomplish this goal, the guidance document has clarified the FDA’s view of “minimal manipulation”“minimal manipulation” and “homologous use.” These are two concepts that are defined in current regulation to establish the legal threshold for when a product is subject to the FDA’s premarket approval requirements. By further clarifying these terms in the final guidance, the FDA is applying a modern framework for its oversight.
FDA regulations at 21 C.F.R. Part 1271, previous draft guidance documents, and untitled letters establish the agency’s approach to regulating HCT/Ps. Some HCT/Ps are exempt from premarket approval and are subject to regulation solely under section 361 of the Public Health Service Act (“PHS Act”) (so-called “361 HCT/Ps”) whereas others require premarket approval (i.e., as a drug, device, or biologic) (so-called “351 HCT/Ps”). Both 361 HCT/Ps and 351 HCT/Ps are subject to FDA requirements (at Part 1271) for registration and listing, donor-eligibility, current good tissue practices, and other requirements intended to prevent transmission of communicable diseases. Those that are the subject of the “same surgical procedure” exception – are exempt from both premarket approval requirements and the requirements of Part 1271. This regime is outlined in a flow chart, which is one of the few new features of the final guidance documents and is presented below:
Enforcement Discretion In order to allow manufacturers of products time to comply with the guidance requirements, the FDA announced that it intended (originally through November 2020 and extended to May 2021 because of the COVID-19 pandemic) to exercise enforcement discretion for certain products that are subject to the FDA’s premarket review under the existing regulations, but are not currently meeting these requirements. The FDA does not intend to exercise such enforcement discretion for those products that pose a potential significant safety concern. Going forward, the FDA will apply a risk-based approach to enforcement, taking into account how products are being administered as well as the diseases and conditions for which they are being used. This risk-based approach allows product manufacturers time to engage with the FDA, as to determine if they need to submit a marketing authorization application and, if so, submit their application to the FDA for approval.
The FDA’s enforcement discretion policy for IND and premarket approval requirements does not apply to products that have been associated with reported safety concerns or have the potential to cause significant safety concerns to patients. The FDA has stepped up its oversight of cellular and related products in recent years and has issued compliance actions, including numerous warning and untitled letters, and pursued litigation for serious violations of the law, including some involving patient harm. The FDA has indicated it intends to focus enforcement actions on “products with higher risk,” taking into account factors such as non-autologous (allogeneic) use, the route of administration, the site of administration, and whether the product is intended for homologous or non-homologous use. For example, HCT/Ps administered via intravenous injection or infusion, aerosol inhalation, intraocular injection, or injection or infusion into the central nervous system, will be prioritized over HCT/Ps administered by intradermal, subcutaneous, or intra-articular injection. Similarly, HCT/Ps intended for non-homologous use, particularly those intended to treat serious or life-threatening conditions, “are more likely to raise significant safety concerns than HCT/Ps intended for homologous use”.use.” The Company believes that the new regulatory restrictions being implemented by the FDA are intended to assure that all parties involved in the chain of gathering, processing, distributing and/or administrating RAAM related products have met the required standards to assure that the manufacturing, marketing the administration of the RAAM regulated products are not misleading and are performed in a safe and ethical manner and in accordance with the “objective intent”“objective intent” of the manufacturer. 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. New Draft Guidance Documents The two draft guidances provide important information to help spur development and access to innovative regenerative therapies. The first draft guidance, which builds off the regenerative medicine provisions in the Act, addresses how the FDA intends to simplify and streamline its application of the regulatory requirements for devices used in the recovery, isolation, and delivery of regenerative medicine advanced therapies, including combination products. The guidance specifies that devices intended for use with a specific RMAT (as defined below0 may, together with the RMAT, be considered to comprise a combination product. The second draft guidance describes the expedited programs that may be available to sponsors of regenerative medicine therapies, including the new Regenerative Medicine Advanced Therapy (“RMAT”) designation created by the 21st Century Cures Act, Priority Review, and Accelerated Approval. In addition, the guidance describes the regenerative medicine therapies that may be eligible for RMAT designation – including cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, as well as gene therapies that lead to a durable modification of cells or tissues (including genetically modified cells).
Fraud, Abuse and False Claims We are directly and indirectly subject to various federal and state laws governing relationships with healthcare providers and pertaining to healthcare fraud and abuse, including anti-kickback laws. In particular, the federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for or recommending a good or service for which payment may be made in whole or part under federal healthcare programs, such as the Medicare and Medicaid programs. (See 42 U.S.C. § 1320a-7b). Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. The Anti-Kickback Statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. In implementing the statute, the Office of Inspector General of the U.S. Department of Health and Human Services (“OIG”) has issued a series of regulations, known as the “safe harbors.“safe harbors.” These safe harbors set forth provisions that, if all their applicable requirements are met, will assure healthcare providers and other parties that they will not be prosecuted under the Anti-Kickback Statute. AdvaMed has established guidelines and protocols for medical device manufacturers in their relationships with healthcare professionals on matters including research and development, product training and education, grants and charitable contributions, support of third-party educational conferences, and consulting arrangements. Adoption of the AdvaMed Code by a medical device manufacturer is voluntary, and while the OIG and other federal and state healthcare regulatory agencies encourage its adoption and may look to the AdvaMed Code, they do not view adoption of the AdvaMed Code as proof of compliance with applicable laws. We have incorporated the principles of the AdvaMed Code in our standard operating procedures, sales force training programs, and relationships with health care professionals. Manufacturing (Processing) We intend on becoming a registered establishment, accredited by the American Association of Tissue Banks (“AATB”) for the storage and distribution of tissue products that we purchase directly or indirectly from third party manufacturers. Our laboratory and distribution facilities are subject to periodic unannounced inspections by regulatory authorities based on the activities we may be engaged, and may undergo compliance inspections conducted by the FDA and corresponding state and foreign agencies based on our operations. We intend to seek American Association Blood Banks (“AABB”) or AATB accreditation in connection with the storage of products we intend to distribute.
FDA Compliance Steps In connection with the Company’s ongoing research and development efforts and the Company’s efforts to meet compliance with current and anticipated FDA regulations expected to be enforced beginning in June 2021 requiring 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”),To date, the Company has obtained certain Investigation New Drug (“IND”) and 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 the Company’s productsZofin™ and related treatment protocols. The status of the Company’s current IND’s and eIND’s submitted and approved for past or planned treatments and/or clinical trials are described below:
In connection with the Company’s approved eIND’s,eINDs, the approvals provide authorizedauthorize physicians to treat their patients with ZofinTM under a specified protocol.protocol when there is no comparable or satisfactory therapy option available for an individual patient who has a serious or immediately life-threatening disease. These are not formal clinical trials and the Company doesis not obtaingiven access to full patient data associated with such treatments. TheFollowing FDA’s reporting requirements, the Company andsubmitted an annual report for all of the designated physicians and treatment sites are requiredeINDs to notify the FDA into formally close each of the event thateINDs. The annual report consists of a severewritten summary of the results including any adverse event occurseffects.
For each of the Company’s approved eIND’s described below, the approved protocol consisted of administering three or four individual doses of Zofin™ over an 8-day period and monitoring the patient for a period of 21-days from the date of administering the initial dose.
The use of an eIND for “expanded access” is primarily to treat patients with a patient that has been treated with ZofinTM and/the investigational drug and not to answer safety or associated with an approved eIND and/or IND. efficacy questions about the drug.
With respect to the Company’s approved INDs and ongoing clinical trials, until such time that the clinical trial is closed and the associated data is reviewed and analyzed by third parties, the Company is not privy to actual patient outcomes and is unable to provide updates on the results of such clinical trials.
To date, there has not been no reporteda severe adverse event that has been reported to be associated fromwith the use of Zofin™.. The information provided below represents the Company’s most up to date information regarding results from the Company’s FDA approved and submitted and/oreINDs and approved phase I/II IND’sINDs and other trial related activities:
For each of the patients that have been treated under the Company’s approved eIND’s described below, the Company had endeavored to obtain initial and follow-up patient information beginning with the initial date that Zofin™ was administered. As stated earlier, the collection of this information was not required by applicable FDA regulations, but the Company desired to obtain such information in an effort to support and improve its ongoing research and development activities. The patient outcome information provided below for each eIND identified is based on information provided by the patient’s treating physicians, has not been audited and/or verified by the Company or by any independent third party for accuracy or completeness and the Company does not make any representations as to the accuracy or completeness of such information. Furthermore, the Company is not making any claims and/or inferences as to any direct or indirect correlation of the reported patient outcomes and the use of ZofinTM by providing such information. | 1. | eIND#22370 approved on 05/11/2020 - Treatment for Acute hypoxic respiratory failure with ARDS secondary to COVID-19 infection for single patient. Patient required mechanical ventilation prior to treatment and developed acute metabolic encephalopathy with ICU delirium along with acute kidney injury and anemia. The patient was treated in May 2020. Patient’s respiratory function at 21-days post treatment, transitioned from a 21% t-collar to room air PMV and decannulation on day 26. The physician reported that patient was discharged from hospital after 29-days post treatment. The single eIND was closed during FDA’s annual reporting. |
| 2. | eIND#22371 approved on 05/11/2020 - Treatment for Acute hypoxic respiratory secondary to bilateral pneumonia secondary to COVID-19 with ARDS for single patient. Patient had also developed acute kidney failure due to sepsis and was placed on hemodialysis. The patient was treated in May 2020. During the course of the treatment, patient’s respiratory function transitioned from CPAP 5 PS 10 30% ventilation to 30% T-Collar ventilation by day 28. The patient’s acute delirium improved. During the observational 21-day period, the physician reported that the patient remained in the step-down unit and required regular hemodialysis treatment due to the kidney injury. The physician reported that the patient passed away 104 days after treatment. The single eIND was closed during FDA’s annual reporting. |
| 3. | eIND#22897 approved on 05/29/2020 - Treatment for Acute respiratory failure with hypoxia, secondary to COVID-19 with ARDS for single patient. Patient had respiratory impairment due to ARDS and an acute kidney injury that required regular hemodialysis. The patient was treated in June 2020. After receiving the treatment, the patient’s respiratory function improved with a complete decannulation from oxygen therapy by day 4. The patient had a complete recovery of renal function, with decreased creatinine concentration levels, and was removed from hemodialysis by day 17. The physician indicated that the patient was discharged 26-days post treatment initiation. The single eIND was closed during FDA’s annual reporting. |
| 4. | eIND#25426 approved on 07/24/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in July 2020. The patient was experiencing fatigue, cough, and shortness of breath at rest and upon exertion. At baseline, the patient’s oxygen saturation was 94% with elevated inflammatory biomarkers TNF-a, IL-6, CRP, and D-dimer. Patient reported improvement in fatigue, cough, and shortness of breath by day 21. Furthermore, inflammatory biomarkers IL-6, CRP, and TNF-alpha all decreased into normal range within 21 days. The physician indicated that the patient reported returning to normal activity by day 28. The single eIND was closed during FDA’s annual reporting. |
| 5. | eIND#25888 approved on 8/01/2020 - Treatment of post COVID-19 complication for single patient. The patient was treated in August 2020. Patient was experiencing shortness of breath, fevers, total malaise, arthropathies vomiting, diarrhea, headaches, and loss of smell. At baseline, bilateral pneumonia with shortness of breath was the primary factor that lead to the long-hauler diagnosis. Blood oxygen saturation level was 95%. The patient began to experience improvements in shortness of breath complications early in the treatment protocol. By the conclusion of the study, the physician indicated that the patient returned to normal with no observation of impairments or respiratory distress. The single eIND was closed during FDA’s annual reporting. |
| 6. | eIND#26560 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient. The patient was treated in August 2020. At baseline, the patient reported prolonged fatigue and shortness of breath. No abnormalities were found in chest x-ray images, oxygen saturation, or inflammatory biomarkers. 20 days post treatment, the physician indicated that the patient continued to experience post-COVID-19 fatigue, shortness of breath, muscle aches, and hair loss. The single eIND was closed during FDA’s annual reporting. |
| 7. | eIND#26561 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient. The patient was treated in August 2020. At baseline, the patient reported prolonged fatigue, shortness of breath, body aches and headaches. Significant improvements in fatigue, mental fog, and shortness of breath with exertion were reported 3 days after the 3rd dose. The physician indicated that the patient refused to have further follow up 3 days after the 3rd dose. The single eIND was closed during FDA’s annual reporting. |
| 8. | eIND#26676 approved on 8/20/2020 - Treatment of respiratory failure due to COVID-19 infection for single patient. The patient was treated in August 2020. Patient was in ICU in severe critical condition prior to initiation of the treatment. The physician indicated that the patient passed away 5 days after initiation of the treatment, having received two of the three doses of ZofinTM as per the protocol. The single eIND was closed during FDA’s annual reporting |
| 9. | eIND#26700 approved on 8/21/2020 - Treatment for ARDS associated with COVID-19 for a single patient. The patient was treated in August 2020. Patient was in ICU in severe critical condition prior to initiation of the treatment. The physician indicated that the patient passed away 7 days after initiation of the treatment, having received two of the three doses of Zofin™ as per the protocol. The single eIND was closed during FDA’s annual reporting. |
| 10. | eIND#26776 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in September 2020. Patient was experiencing significant fatigue, cough, and shortness of breath; inflammatory biomarker CRP was also elevated at baseline. Initial O2 saturation levels fluctuated from 88-95%. Significant improvements were first noted 2 days after the 2nd dose including a decrease in fever and overall improvement in wellbeing. At day 14, the physician reported that the patient returned to work, with a resolution of all reported symptoms. The patients O2 saturation returned to a stable 98% and CRP biomarker levels decreased to normal levels by day 14. The single eIND was closed during FDA’s annual reporting. |
| 11. | eIND#26777 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in September 2020. At baseline, patient was experiencing symptoms of fever, fatigue, cough, and shortness of breath. Patient first reported 25% improvement after the first dose and 95% improvement 2 days after the second dose. At the day 8 time point, the only clinical feature still present was an occasional cough. The physician reported that the patient returned to work 24 hours after the 3rd dose. The single eIND was closed during FDA’s annual reporting. |
| 12. | eIND#26864 approved on 9/05/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in September 2020. Patient was in ICU in severe critical condition, on ECMO, prior to initiation of the treatment. The patient received 4 doses of ZofinTM and the physician indicated that the patient remained stable on ECMO 21 days after the 1st dose. The physician reported that the patient passed away 41 days after treatment initiation. The single eIND was closed during FDA’s annual reporting. |
| 13. | eIND#26821 approved on 9/22/2020 - Treatment of post COVID-19 complications for single patient. The patient was treated in September 2020. At time of initiation of the treatment, the patient reported symptoms to include generalized myalgias, headaches and fatigue. On day 60, the physician indicated that the patient reported marked improvement with arthralgias and achiness but still had complaints of fatigue, headaches and shortness of breath.. The single IND was closed during FDA’s annual reporting. |
| 14. | eIND#26964 approved on 10/10/2020 - Treatment for ARDS associated with COVID-19 for single patient. The patient was treated in October 2020. Patient was in ICU for 16 days and in severe critical condition receiving 100% FiO2, PC mode of ventilator and PEEP 10 prior to initiation of treatment. The physician reported that the patient passed away 1 day after treatment initiation (only 1 dose of the protocol was administered). The single eIND was closed during FDA’s annual reporting. |
| 15. | eIND#26972 approved on 10/14/2020 - Treatment for ARDS associated with COVID-19 for single patient. The patient was treated in October 2020. Patient was in ICU in severe critical condition prior to initiation of the treatment. The physician reported that the patient passed away 13 days after initiation of the first dose and having only received 2 of the 4 doses as per the protocol. The single eIND was closed during FDA’s annual reporting. |
| 16. | eIND#26978 approved on 10/16/2020 - Treatment for ARDS associated with COVID-19 for single patient. The patient was treated in October 2020. Patient was in ICU suffering with pneumonia and respiratory failure. Initiation of treatment was 6-days post hospital admission and the patient received a total of 4 doses of Zofin™. Physician reported patient was discharged and reported to be in stable condition with complete respiratory improvement. The single eIND was closed during FDA’s annual reporting. |
| 17. | eIND#27128 approved on 12/04/2020 - Treatment of mild to moderate symptoms of COVID-19 for a single patient. The patient was treated in December 2020. Clinical features prior to infusion included low-grade fever, chills, muscle and joint aches, severe headaches, dry cough, feeling slightly breathless and fatigue. Upon day 13, physician reported the patient had less muscle and joint aches and increased energy. The single eIND was closed during FDA’s annual reporting. |
| 18. | eIND#27165 approved on 12/15/2020 - Treatment of COVID-19 pneumonia and respiratory failure with ARDS for a single patient. The patient was treated in December 2020. Patient had a severely debilitating medical situation following COVID-19. Prior to the use of Zofin™, patient required use of 100% oxygen non-rebreather face mask. The physician reported that the patient passed away 75 days after only receiving the initial dose of the protocol (only 1 dose of Zofin™ was administered, the patient refused the second and third doses at day 4 and 8 as prescribed by the protocol). The single eIND was closed during FDA’s annual reporting. |
| 19. | Expanded Access to ZofinTM (Organicell™ Flow) approved on 09/24/2020 - Treatment of Patients with COVID-19 Outpatient and Inpatient Population. The IRB was approved by the Institute of Regenerative and Cellular Medicine on December 16, 2020 (approval number: IRCM-2020-269). The trial was conducted at United Memorial Medical Center in Houston, Texas. The study enrolled a total of 11 subjects: adults between the age of 35 to 69 who were fighting COVID-19 infection and presented respiratory fatigue with and without exertion, cough, and shortness of breath and met all inclusion/exclusion criteria. One patient withdrew before receiving any doses of Zofin™. Two subjects withdrew at day 14 post treatment with Zofin™. As a result, eight subjects completed the day 30 follow-up and are included in the data analysis. The administration of Zofin™ in the trial was well tolerated in all enrolled subjects, with no adverse events. Chest X-ray data demonstrated that 75% of subjects had bilateral opacities caused by COVID-19 infection at day 0 (baseline), prior to treatment with Zofin™ and thirty (30) days after Zofin™ treatment, chest X-ray data showed 83% of treated subjects had normal lung imaging, indicating complete recovery. Upon such time that Organicell enrolls and submits additional patient data from the above-mentioned study, Organicell intends to submit the updated results of the trial to the FDA for approval of an amendment to the Company’s previously approved IND (NCT04384445) to perform a placebo-controlled Phase II clinical trial to confirm safety and efficacy in a randomized fashion. |
| 20. | IND # 19881 approved on 04/30/2020 - A Phase I/II Randomized, Double Blinded, Placebo Trial to Evaluate the Safety and Potential Efficacy of Intravenous Infusion of OrganicellTM Flow for the Treatment of Moderate to Severe Acute Respiratory Syndrome (SARS) Related to COVID-19 Infection vs Placebo. IRB was approved by the Institute of Regenerative and Cellular Medicine (“IRCM”) on 06/04/2020 (approval number: IRCM-2020-254). The clinical trial is currently in process. A total of ten patients have been enrolled to the study thus far and currently the clinical trial is not enrolling subjects due to the absencechallenges of enrolling the remaining study population. |
| 2.21. | eIND#22370IND #27378 approved on 05/11/2020 -06/24/21. A Phase I/II Randomized, Double Blinded, Placebo Trial to Evaluate the Safety and Potential Efficacy of Intravenous Infusion of Zofin™ (Organicell™ Flow) for the Treatment for Acute hypoxic respiratory failureof Post COVID-19 Complications “Long Haulers” vs Placebo. The Company and the CRO are currently working to initiate the trial which the Company expects enrollment to begin during March 2022, subject to the successful negotiation and execution of definitive agreements with ARDS secondarythe site facility where the study patients will be treated and the Company raising sufficient working capital to COVID-19 infection for single patient. The patient was treated in May 2020. |
| 3. | eIND#22371 approved on 05/11/2020 - Treatment for Acute hypoxic respiratory secondaryfinance the trial, as to bilateral pneumonia secondary to COVID-19 with ARDS for single patient. The patient was treated in May 2020.all of which no assurance can be given. |
| 4. | eIND#22897 approved on 05/29/2020 – Treatment for Acute respiratory failure with hypoxia, secondary to COVID-19 with ARDS for single patient. The patient was treated in June 2020. |
| 5. | eIND#25426 approved on 07/24/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in July 2020. |
| 6. | eIND#25888 approved on 8/01/2020 - Treatment of post COVID-19 complication for single patient. The patient was treated in August 2020. |
| 7. | eIND#26560 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient. The patient was treated in August 2020. |
| 8. | eIND#26561 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient. The patient was treated in August 2020. |
| 9. | eIND#26676 approved on 8/20/2020 - Treatment of respiratory failure due to COVID-19 infection for single patient. The patient was treated in August 2020. |
| 10. | eIND#26700 approved on 8/21/2020 - Treatment for ARDS associated with COVID-19 for single patient. The patient was treated in August 2020. |
| 11. | eIND#26776 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in September 2020. |
| 12. | eIND#26777 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in September 2020. |
| 13. | eIND#26864 approved on 9/05/2020 - Treatment of COVID-19 positive for single patient. The patient was treated in September 2020. |
| 14. | IND#26821 approved on 9/22/2020 - Treatment of post COVID-19 complications for single patient. The patient was treated in September 2020. |
| 15. | eIND#26964 approved on 10/10/2020 - Treatment for ARDS associated with COVID-19 for single patient. The patient was treated in October 2020. |
| 16. | eIND#26972 approved on 10/14/2020 - Treatment for ARDS associated with COVID-19 for single patient. The patient was treated in October 2020. |
| 17. | eIND#26978 approved on 10/16/2020 - Treatment for ARDS associated with COVID-19 for single patient. The patient was treated in October 2020. |
| 18. | eIND#27128 approved on 12/04/2020 - Treatment of mild to moderate symptoms of COVID-19 for a single patient. The patient was treated in December 2020. |
| 19. | eIND#27165 approved on 12/04/2020 - Treatment of COVID-19 pneumonia and respiratory failure with ARDS for a single patient. The patient was treated in December 2020. |
| 20. | Expanded Access to ZofinTM (OrganicellTM Flow) approved on 09/24/2020 - Treatment of Patients with COVID-19 Outpatient and Inpatient Population. The IRB was approved by the Institute of Regenerative and Cellular Medicine on December 16, 2020 (approval number: IRCM-2020-254). The study enrolled a total of 11 subjects: adults between the age of 35 to 69 who were fighting COVID-19 infection and presented respiratory fatigue with and without exertion, cough, and shortness of breath and met all inclusion/exclusion criteria. One patient withdrew before receiving any doses of ZofinTM. Two subjects withdrew at day 14 post treatment with ZofinTM. As a result, eight subjects completed the day 30 follow-up and are included in the data analysis. The Company intends to submit the results of the trial to the FDA for approval of an amendment to the Company’s previously approved IND (NCT04384445) to perform a placebo-controlled Phase II clinical trial to confirm safety and efficacy in a randomized fashion. |
| 21.22. | IND # 23198 approved on 01/27/2021. A Phase I/II Double Blinded, Placebo Trial to Evaluate the Safety and Potential Efficacy of Intravenous Infusion of Zofin™ (OrganicellTM(Organicell™ Flow) for the Treatment of patients diagnosed with chronic obstructive pulmonary disease (COPD). Expected to start trial during the quarter ending April 30, 2022. The Company and the CRO are currently working to initiate the trial which the Company expects enrollment to begin during the quarter ending April 30, 2022.2022, subject to the successful negotiation and execution of definitive agreements with the site facility where the study patients will be treated and the Company raising sufficient working capital to finance the trial, as to all of which no assurance can be given. |
| 22.23. | IND # 23788 approved on 04/06/2021. A Phase I/II Randomized, Double Blinded, Placebo Trial to Evaluate the Safety and Potential Efficacy of ZofinTM Infused Intravenously in Patients Suffering with Knee Osteoarthritis vs Placebo. The Company and the CRO are currently working to initiate the trial which the Company expects enrollment to begin during the quarter ending July 31, 2022.2022, subject to the successful negotiation and execution of definitive agreements with the site facility where the study patients will be treated and the Company raising sufficient working capital to finance the trial, as to all of which no assurance can be given. |
| 23.24. | IND #27378In April 2021, we announced that an initial trial of ten COVID -19 patients in India conducted by CWI India, our Indian partner, generated positive results. The trial had been conducted by CWI India, our Indian partner with whom we had entered a product testing and distribution agreement in February 2021, to collaborate on a study or studies to evaluate the effects of Zofin™ on moderate to severe COVID-19 patients in India. The ten patients in the initial trial were treated at hospitals in Bangalore, Kozhikode and Chennai, and all ten patients recovered from their symptoms and were discharged from the hospital. Based on the initial results of this trial, CWI India has since been seeking to obtain government approval to conduct an expanded trial of up to sixty-five patients with moderate to severe COVID-19, who were to be treated at these hospitals. To date, CWI India has not obtained the required approval and it is uncertain if they will ultimately be successful in doing so. If approval is eventually obtained, we anticipate that CWI India will conduct the trials in a timely manner. If the results of the expanded trial prove to be positive, Organicell and CWI India intend to file with the ICMR (Indian Council for Medical Research) for Emergency Use Approval to use Zofin™ in India as a therapeutic for treating COVID-19. |
| 25. | In May 2021, the Company announced that its Zofin™ therapy has been approved on 06/24/21. A Phase I/II Randomized, Double Blinded, Placebo Trialby Pakistani regulators to Evaluatebe used for a treatment of a single COVID-19 patient hospitalized at the Safety and Potential EfficacyPakistan Institute of Intravenous InfusionMedical Sciences under compassionate grounds. In addition to this compassionate grounds authorization, Organicell received further indications to begin a broader trial of ZofinTM (OrganicellTM Flow) forwith up to 60 additional patients suffering from moderate to severe COVID-19. The Company has already shared data with Pakistani regulatory authorities in the Treatmentcountry in support of Post COVID-19 Complications “Long Haulers” vs Placebo. Thethis effort. To date, the Company and the CRO are currently working to initiateCompany’s Pakistani partner for the proposed study have not obtained the required approvals and the Company is uncertain if they will ultimately be successful in doing so. If approval is eventually obtained, we anticipate that the trial will be conducted in a timely manner. In addition, in May 2021, Organicell also entered into a one-year exclusive distribution agreement with Apex Services Pakistan to import and distribute Zofin™ to hospitals and clinics in the country, subject to the issuance of all necessary approvals and licenses by the Drug Regulatory Authority of Pakistan, which the Company expects enrollment to begin during the quarter ending January 31, 2022.as previously stated, have not yet been obtained. |
The Company is pursuing efforts to complete all of its approved clinical studies underwaytrials and to obtain approval for and 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.
Environmental Laws Since May 2019, we have operated laboratory facilities that process or directly handled biomedical materials whereby we receive and/or generate wastes that are required to be disposed. We contract with third parties for the transport, treatment, and disposal of the waste that we obtain and at all times plan on being compliant with applicable laws and regulations promulgated by the Resource Conservation and Recovery Act, the U.S. Environmental Protection Agency and similar state agencies. Employees As of the date of this prospectus, we have 22 full-time employees and no part-time employees. We also engageengaged two other persons as consultants that assisted with various regulatory and administrative activities. From time to time, the Company engages independent contractors for sales and administration activities. There are no collective bargaining agreements.
Properties The Company’s corporate administrative offices are located at 515 North Shore Drive, Miami Beach, Florida 33141. The office space is leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Maria Mitrani, the Chief Science Officer and director of the Company. The term of the lease runs through June 2023 and the monthly rent is $3,500 per month. Since October 2020, we have been party to a second lease with MariLuna LLC for office space located in Aspen, CO. The initial term of the lease was for one year, expiring on September 30, 2021 and the lease has been subsequently extended on a month to month basis. The monthly rent is $6,500. Our laboratory and related general office space is located at 1951 NW 7th Ave., Suite 300, Miami, Florida 33136. Such space is occupied pursuant to a services agreement with a non-affiliated third party at a monthly rental of approximately $11,000. The services agreement is month to month with automatic renewals. During March 2021, the Company entered into a lease agreement for an approximately 2,452 square foot commercial space located in Basalt, Colorado (the “Basalt“Basalt Lab Lease”Lease”). The Company is the process of building out the space to provide additional laboratory processing, product distribution and administrative office capacity. The term of the Basalt Lab Lease is for three years and may be renewed for an additional (3) three-year term provided the Company is not in default. Rental expense is $6,600 per month and provides for annual increases of 3% or the Denver Aurora Metropolitan CPI index, whichever is greater. In connection with the Basalt Lab Lease, the Company was required to post a security deposit of $13,600. Item 3. Legal ProceedingsProceedings. On June 17, 2021, Organicell received a subpoena dated June 14, 2021, from the Atlanta Regional Office of the SEC requiring the production of certain documents and communications in connection with the treatment and results of various COVID-19 patients, as discussed in the Company’s Current Reports on Form 8-K filed with the SEC during the period from May 27, 2020 through May 11, 2021. The Company is fully cooperating with the SEC’s investigation and believes that it will be able to provide all of the information requested by the SEC. The Company can make no assurances as to the time or resources that will need to be devoted to this investigation or its final outcome, or the impact, if any, of this investigation or any proceedings on the Company’s current business, financial condition, results of operations, cash flows, or the Company’s future operations. On August 17, 2021, the Company was served with a summons and complaint by LAE International Consulting, LLC (“LAE”), in the case styled LAE International Consulting, LLC v. Organicell Regenerative Medicine, Inc. et al., Case No. 2021-018461-CA-01 (In the Circuit Court of the 11th Judicial Circuit in and for Miami Dade County, Florida) (the “Lawsuit”). Albert Mitrani, Mari Mitrani and Ian Bothwell (the “Individual Defendants”) are also named as defendants in the Lawsuit. In the Lawsuit, LAE alleges breach of contract, unjust enrichment, violation of Florida’s Unfair and Deceptive Trade Practices Act, breach of obligation of good faith and fair dealing, negligent misrepresentation and fraudulent misrepresentation in connection with a prior consulting agreement entered into between the Company and LAE. Prior to institution of the Lawsuit, the Company terminated the consulting agreement. In the Lawsuit, LAE is seeking judgment for compensatory damages, interest, costs, and attorneys’ fees. The Company denies any wrongdoing and responsibility in connection with the Lawsuit, and believes it has strong defenses to the Lawsuit. Although the Lawsuit is in its early stages, the Company and the Individual Defendants have filed motions to dismiss due to, among other things, (a) that the consulting agreement expressly negates LAE’s claims; (b) there was, in fact, no breach of contract by the Company; (c) LAE provides no grounds, and cannot provide any grounds, for its barebones claims that the Company and Individual Defendants induced LAE into a contract that they did not intend to perform; (d) many of the claims against the Individual Defendants do not exist as a matter of law; and (e) technical deficiencies in the complaint itself, The Company is awaiting a ruling on the motion, and the hearing for the Individual Defendants’ motion to dismiss will be sethas been scheduled for hearing in due course.March 2022. 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.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDERSTOCKHOLDER MATTERS Our common stock is traded on the OTCQB tier of the over-the-counter market operated by OTC Markets Group, Inc. under the symbol “OCEL”. The trading market for our common stock is limited and sporadic. We can provide no assurance that our shares of common stock will continue to be traded on the over-the counter market or another national securities exchange, or if traded, that any public market for our common stock will be active and sustained. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, because our common stock is subject to the penny stock rules, shareholdersstockholders may have difficulty selling those securities. Holders of our Common Stock As of the date of this prospectus, we had 1,143,361,0051,157,637,928 shares of common stock issued and outstanding and approximately 200 holders of record of our common stock. One of these holders is CEDE and Company which is the mechanism used for brokerage firms to hold securities in book entry form on behalf of their clients and as of November 15, 2021,February 22, 2022, they held 268,936,361296,360,848 shares of common stock for these shareholders.stockholders. Based on a recent industry report obtained detailing the number of non-objecting holders of our common stock held through brokerage firms, we believe that the Company has significantly in excess of 6,000 beneficial shareholdersstockholders as of the date of this prospectus. Transfer Agent Action Stock Transfer, 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, Utah 84121, is the transfer agent for our common stock. Dividend Policy We have never paid or declared dividends on our securities. The payment of cash dividends, if any, in the future is within the discretion of our board of directors and will depend upon our earnings, our capital requirements, financial condition and other relevant factors. We do not expect to pay dividends for the foreseeable future, and intend to retain future earnings, if any, towards the use in our business and growth strategies. Rule 144 Shares Rule 144 under the Securities Act provides that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six months (if the issuer is a reporting company, as is the case with Organicell) or twelve (12) months (if the issuer is a non-reporting company), may, under certain conditions, sell all or any of his shares without volume limitation. Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock in any three-month period. There is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a shareholderstockholder who has not been an officer, director or control person for the three months prior to sale) after the restricted securities have been held by the owner for the aforementioned prescribed period of time. 705,944,750702,971,404 of the outstanding shares of our common stock not covered by this prospectus are currently eligible for public sale pursuant to Rule 144, 83,844,43283,577,778 shares of our common stock not covered by this prospectus are not vested as of the date of this prospectus and the remaining 6,285,0006,476,923 outstanding shares of our common stock not covered by this prospectus will become eligible for public sale pursuant to Rule 144 at various times from December 2021April 2022 to MayJuly 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors we describe under “Risk Factors” and elsewhere in this prospectus
COVID-19 Impact on Economy and Business Environment
The adverse public health developments and economic effects of the ongoing COVID-19 outbreak in the United States have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities; (b) is seeking to raise additional debt and/or equity financing to support working capital requirements; and (c) continues to take steps to stabilize and increase revenues from the sale of its products.
There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing a similar or worse devastating impact to the United States and worldwide economies or our business. Results of Operations Nine monthsFiscal year ended JulyOctober 31, 2021 as compared to nine monthsfiscal year ended JulyOctober 31, 2020
Revenues. Our revenues for the nine monthsyear ended JulyOctober 31, 2021 were $3,931,411,$5,597,487, compared to revenues of $2,072,511$3,055,776 for the nine monthsyear ended JulyOctober 31, 2020. The increase in revenues during the nine monthsyear ended JulyOctober 31, 2021 of $1,858,900 (89.7%$2,541,711 (83.2%) was primarily the result of the Company being able to realize an increase of approximately 116.6%103.7% (approximately $2,116,060)$2,849,000) in unit sales of its products during the nine monthsyear ended JulyOctober 31, 2021 compared with the nine monthsyear ended JulyOctober 31, 2020, partially offset from a decrease of approximately 12.4%10.0% (approximately $257,160)$308,000) in the average sales prices for the products sold during the nine monthsyear ended JulyOctober 31, 2021 compared with the average sales prices realized on products sold during the nine monthsyear ended JulyOctober 31, 2020. The increase in the units sold was partly attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness, less discounting of product prices to new customers, the introduction of new and more advanced product offerings and increased research and development efforts which provided customers with greater comfort in the Company’s products and ability to better address potential market uncertainty regarding anticipated FDA regulations. The decrease in the average sales prices realized on products sold during the nine monthsyear ended JulyOctober 31, 2021 compared with the nine monthsyear ended JulyOctober 31, 2020 was due to volume pricing discounts for large orders of the Company’s medical grade product offerings and the increase in the sales of the Company’s aesthetic product offerings which are sold at lower prices than the Company’s medical grade product offerings. Cost of Revenues. Our cost of revenues for the nine monthsyear ended JulyOctober 31, 2021 were $440,536,$547,881, compared with cost of revenues of $297,905$398,606 for the nine monthsyear ended JulyOctober 31, 2020. The increase in the cost of revenues during the nine monthsyear ended JulyOctober 31, 2021 of $142,631 (47.9%$149,275 (37.4%) compared with the nine monthsyear ended JulyOctober 31, 2020 was due to an increase in the amount of units sold of 116.6%103.7% (approximately $237,120)$278,886) during the nine monthsyear ended JulyOctober 31, 2021 compared with the nine monthsyear ended JulyOctober 31, 2020, partially offset from the reduction in the cost of units sold of 31.7%32.5% (approximately ($94,490)129,611) during the nine monthsyear ended JulyOctober 31, 2021 compared to costs of units sold during the nine monthsyear ended JulyOctober 31, 2020, which as described above was primarily the result of the Company’s increase in the sales of the Company’s aesthetic product offerings during the nine monthsyear ended JulyOctober 31, 2021 compared to the nine monthsyear ended JulyOctober 31, 2020 which have a lower cost of revenue than the Company’s medical grade product offerings. Gross Profit. Our gross profit for the nine monthsyear ended JulyOctober 31, 2021 was $3,490,875,$5,049,606 (90.1% of revenues), compared with gross profit of $1,774,606$2,657,170 (87.0% of revenues) for the nine monthsyear ended JulyOctober 31, 2020. The increase in gross profit during the nine monthsyear ended JulyOctober 31, 2021 was the result of higher amount of units sold and lower cost of units sold during the nine monthsyear ended JulyOctober 31, 2021 compared to the nine monthsyear ended JulyOctober 31, 2020. The increase in the units sold was partly attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness and the introduction of new and more advanced product offerings. The lower cost of units sold was due to the Company’s increase in the sales of the Company’s aesthetic product offerings during the nine monthsyear ended JulyOctober 31, 2021 compared to the nine monthsyear ended JulyOctober 31, 2020 which have a lower cost of revenue than the Company’s medical grade product offerings.
General and Administrative Expenses. General and administrative expenses for the nine monthsyear ended JulyOctober 31, 2021 were $15,282,596,$17,793,709, compared with $9,065,950$15,095,111 for the nine monthsyear ended JulyOctober 31, 2020, an increase of $6,216,646.$2,698,598 (17.9%). The increase in the general and administrative expenses for the nine monthsyear ended JulyOctober 31, 2021 compared with the nine monthsyear ended JulyOctober 31, 2020 was primarily the result of increased research and development costs of approximately $886,000, increased commissions due from sales of the Company’s products of approximately $915,000, increased payroll and consulting costs of approximately $1,400,000, increased professional fees of approximately $384,000, increased office related costs of approximately $141,000 and approximately $209,000 of increased laboratory related expenses, partially offset by a decrease in stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $2,877,000, increased research and development costs of approximately $994,000, increased commissions due from sales of the Company’s products of approximately $699,000, increased payroll and consulting costs of approximately $1,029,000, increased professional fees of approximately $270,000, increased office related costs of approximately $116,000 and approximately $214,000 of increased laboratory related expenses.$1,262,000. The increase in research and development costs, payroll and consulting costs, professional fees and laboratory related expenses was the result of the Company’s expansion of its research and development activities primarily relating to the filing and approval of IND applications and the performance of clinical trials and public company compliance related costs.costs during the year ended October 31, 2021 compared with the year ended 2020. The increase in commissions was the result in the increase in revenues sales during the year ended October 31, 2021 compared with the year ended 2020. The decrease in stock-based compensation costs was the result of a reduction in the amount of shares issued as stock compensation during the year ended October 31, 2021 compared with the year ended 2020, partially offset from the increase in the costs attributable to the shares issued as stock compensation based on increases in the Company’s share price during periods that the stock compensation was granted (average cost of shares granted during the year ended October 31, 2021 was $0.062 versus average cost of shares granted during the year ended October 31, 2020 of $0.029). Other Income (Expense). Other expense, net, for the nine monthsyear ended JulyOctober 31, 2021 was $6,687,$12,457, compared with other (expense),expense, net, of ($126,820)$145,027 for the nine monthsyear ended JulyOctober 31, 2020. The net decrease in other expense, net, of $120,133$132,570 was principally the result of reduced interest costs during the year ended October 31, 2021 of approximately $94,000 recorded$118,350 in connection with the amount of the discount to the fair value of common stock associated with the conversion of a funding facility into equity and the reduction in interest expense of approximately $25,000 associated with such funding facility of approximately $25,000 during the nine months ended July 31, 2020.
Fiscal year ended October 31, 2020 as compared to fiscal year ended October 31, 2019
Revenues. Our revenues for the year ended October 31, 2020 were $3,055,776, compared with revenues of $1,702,271 for the year ended October 31, 2019. The increase in revenuesfacility. These costs occurred during the year ended October 31, 2020 of $1,353,505 (79.5%) was primarily the result of the Company’s ability to increase unit sales of its products by 125.0% (approximately $1,697,898)and did not occur during the year ended October 31, 2020 compared with the year ended October 31, 2019, partially offset from the reduction of approximately 20.2% (approximately $344,393) in the average sales prices for the products sold during the year ended October 31, 2020 compared with the average sales prices realized on products sold during the year ended October 31, 2019. The increase in the units sold was partly attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness, less discounting of product prices to new customers, the introduction of new and more advanced product offerings and increased research and development efforts which provided customers with greater comfort in the Company’s products and ability to better address potential market uncertainty regarding anticipated FDA regulations. The decrease in the average sales prices realized on products sold during the year ended October 31, 2020 compared with the year ended October 31, 2019 was due to an increase in the sales of the Company’s aesthetic product offerings which are sold at lower prices than the Company’s medical grade product offerings.2021.
Cost of Revenues. Our cost of revenues for the year ended October 31, 2020 were $398,606, compared with cost of revenues of $300,837 for the year ended October 31, 2019. The increase in the cost of revenues during the year ended October 31, 2020 compared with the year ended October 31, 2019 was due to an increase in the amount of units sold of 125.0% (approximately $221,480) during the year ended October 31, 2020 compared with the year ended October 31, 2019, partially offset from the reduction in the cost of units sold of 40.7% (approximately ($123,711) during the year ended October 31, 2020 compared to costs of units sold during the year ended October 31, 2019, which as described above was primarily the result of the Company’s increase in the sales of the Company’s aesthetic product offerings during the year ended October 31, 2020 compared to the year ended October 31, 2019 which have a lower cost of revenue than the Company’s medical grade product offerings and also from the Company’s ability to supply inventory through lower costing inventory manufactured by the Company beginning in May 2019 rather than from more costly third party manufacturers for the six months ended April 30, 2019.
Gross Profit. Our gross profit for the year ended October 31, 2020 was $2,657,170, compared with gross profit of $1,401,434 for the year ended October 31, 2019. The increase in gross profit during the year ended October 31, 2020 of $1,255,736 (89.6%) was the result of the increase in the amount of units sold during the year ended October 31, 2020 compared to the year ended October 31, 2019 and the lower costs of units sold during the year ended October 31, 2020 compared to the year ended October 31, 2019. The increase in the units sold was attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness and the introduction of new and more advanced product offerings. The lower cost of units sold was due to the Company’s increase in the sales of the Company’s aesthetic product offerings during the year ended October 31, 2020 compared to the year ended October 31, 2019 which have a lower cost of revenue than the Company’s medical grade product offerings and also from the Company’s ability to supply inventory through lower costing inventory manufactured by the Company beginning in May 2019 rather than from more costly third party manufacturers for the six months ended April 30, 2019.
General and Administrative Expenses. General and administrative expenses for the year ended October 31, 2020 were $15,095,111, compared with $3,177,924 for the year ended October 31, 2019, an increase of $11,917,187. The increase in the general and administrative expenses for the year ended October 31, 2020 compared to the year ended October 31, 2019 was primarily the result of increased stock-based compensation costs to advisors, consultants and administrative staff totaling $9,187,087, increased payroll and consulting costs of approximately $2,171,000, approximately $308,000 of increased laboratory related expenses and approximately $260,000 of increased professional fees and administrative expenses. The increase in payroll and consulting costs and laboratory related expenses was the result of the Company’s expansion of its research and development activities primarily relating to the filing and approval of IND applications and the performance of clinical trials.
Other Income (Expense). Other (expense), net, for the year ended October 31, 2020 was ($145,027), compared with other income, net, of $38,191 for the year ended October 31, 2019, a decrease of $183,218. The net decrease in the other income was the result of reduced income realized from the settlement of obligations of $52,074 and increased interest costs associated with interest-bearing obligations totaling $13,394 and $118,350 in connection with the amount of the discount to the fair value of the common stock issued in connection with the conversion of the debt.
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.presented: | | For the Nine Months Ended July 31, | | | For the Fiscal Year Ended October 31, | | | | 2021 | | | 2020 | | | 2021 | | | 2020 | | Cash, beginning of year | | $ | 590,797 | | | $ | 132,557 | | | $ | 590,797 | | | $ | 132,557 | | Net cash used in operating activities | | | (2,120,925 | ) | | | (973,592 | ) | | | (2,609,085 | ) | | | (1,812,499 | ) | Net cash used in investing activities | | | (224,809 | ) | | | (138,694 | ) | | | (496,011 | ) | | | (138,694 | ) | Net cash provided by financing activities | | | 1,784,844 | | | | 1,296,674 | | | | 2,622,869 | | | | 2,409,433 | | Cash, end of period | | $ | 29,207 | | | $ | 319,945 | | | Cash, end of year | | | $ | 108,570 | | | $ | 590,797 | |
During the nine monthsyear ended JulyOctober 31, 2021, the Company used cash in operating activities of $2,120,925,$2,609,085, compared to $973,592$1,812,499 for the nine monthsyear ended JulyOctober 31, 2020, an increase in cash used of $1,147,333.$796,586. The increase in cash used in operating activities was due to the increase in the general and administrative expenses during the nine monthsyear ended JulyOctober 31, 2021 after adjusting for non-cash charges (mostly related to stock-based compensation), resulting from increased payroll and consulting costs and laboratory related expenses in connection with the Company’s expansion of its research and development activities during the nine monthsyear ended JulyOctober 31, 2021, partially offset from the increase in revenues and gross profit during the nine monthsyear ended JulyOctober 31, 2021.
During the nine monthsyear ended JulyOctober 31, 2021, the Company had cash used in investing activities of $224,809,$496,011, compared to cash used in investing activities of $138,694 for the nine monthsyear ended JulyOctober 31, 2020. The increase in cash used in investing activities of $86,115$357,317 was due primarily due the Company’s construction ofleasehold improvements associated with the new lab facility in Basalt, CO of $406,709, partially offset from lower capital expenditures for the acquisition of additional fixed assets required in connection with the Company’s laboratory operations during the nine monthsyear ended JulyOctober 31, 2021 as compared to the nine monthsyear ended JulyOctober 31, 2020. During the nine monthsyear ended JulyOctober 31, 2021, the Company had cash provided by financing activities of $1,784,844$2,622,869 compared to cash provided by financing activities of $1,296,674$2,409,433 for the nine monthsyear ended JulyOctober 31, 2020. The increase in cash provided by financing activities of $213,436 was due to increases in proceeds from the sale of equity securities and convertible notes of approximately $431,000,$512,000, decreases in repayments of outstanding debt obligations of approximately $48,000$96,900, and reduced payments on finance leases of approximately $9,000.$9,000, partially offset from reduced proceeds received from the issuance of notes payable of $400,000 during the year ended October 31, 2021 as compared to the year ended October 31, 2020. Capital Resources The Company has historically relied on the private sale of debt or equity securities, the restructuring of debt obligations and/or the issuance and/or exchange of equity securities to meet the shortfall in cash to fund its operations. During the fiscal nine monthsyear ended JulyOctober 31, 2021 and through the date of this prospectus, the Company completed the following private sales of its securities: | 1. | During November 2020, the Company sold 800,000 shares of common stock to an “accredited investor”, at $0.05 per share, for an aggregate purchase price of $40,000. The proceeds were used for working capital. |
| 2. | During February 2021, the Company sold an aggregate of 12,340,910 shares of common stock to five “accredited investors” at prices ranging from $0.05 per share to $0.06 per share for an aggregate purchase price of $665,000. The proceeds were used for working capital. |
| 3. | On February 22, 2021, the Company sold 1,818,181 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.055 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital. |
| 4. | During April 2021, the Company sold an aggregate of 13,677,821 shares of common stock to seven “accredited investors” at prices ranging from $0.03 per share to $0.25 per share for an aggregate purchase price of $535,000. The proceeds were used for working capital. |
| 5. | During May 2021, the Company sold an aggregate of 2,087,822 shares of common stock to eight “accredited investors” at prices ranging from $0.13 per share to $0.15 per share for an aggregate purchase price of $286,250. The proceeds were used for working capital. |
| 6. | During the period June 2021 through July 2021, the Company sold an aggregate of 11,541,500 shares of common stock to four “accredited investors” at prices ranging from $0.05 per share to $0.13 per share for an aggregate purchase price of $631,020. The proceeds were used for working capital. |
| 7. | During August 2021, the Company sold an aggregate of 3,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $150,000. The proceeds were used for working capital. |
| 8. | During October 2021, the Company sold an aggregate of 7,500,000 shares of common stock to four “accredited investors” at $0.04 per share for an aggregate purchase price of $300,000. The proceeds were used for working capital. |
| 9. | In November 2021, the Company sold an aggregate of 8,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $400,000. The proceeds were used for working capital. |
| 10. | In January 2022, the Company sold an aggregate of 666,667 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $20,000. The purchase price was paid through an offset of an outstanding balance owed by the Company to the investor at the time of the sale of $20,000. | | | | | 11. | On January 11, 2022, the Company entered into a Securities Purchase Agreement with AJB Capital Investments, LLC (the “Purchaser”) pursuant to which we sold a Promissory Note in the principal amount of $600,000 to the Purchaser in a private transaction to for a purchase price of $540,000 (giving effect to original issue discount of $60,000). See “Business – Other Recent Developments” for further details regarding this transaction. |
| 12. | In February 2022, the Company sold an aggregate of 8,333,333 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $250,000. The proceeds were used for working capital. |
The Company issued the foregoing securities pursuant to the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. Going Concern Consideration
The unauditedaccompanying consolidated financial statements for the nine months ended July 31, 2021 included elsewhere in this prospectus, 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 operating losses of $11,791,721$12,744,103 for the nine monthsyear ended JulyOctober 31, 2021. In addition, the Company had an accumulated deficit of $40,666,597$41,624,749 at JulyOctober 31, 2021. The Company had a negative working capital position of $3,095,005$3,609,174 at JulyOctober 31, 2021. New United States FDA guidanceregulations which waswere announced in November 2017 and which became effective beginning in May 2021 (postponed from November 2020 due to the COVID -19COVID-19 pandemic) requiresrequire 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.P’s. In addition to the above, the adverse public health developments and economic effects of the ongoing COVID-19 outbreakpandemic in the United States have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted;restricted, (b) the United States economy resumes to pre-COVID-19 conditions;conditions and/or (c) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company’s current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.
In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (a)(1) 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)guidelines, (2) the effects of the COVID-19 crisis resume to pre-COVID-19 market conditions; (c)conditions, (3) the Company will be able to establish a stabilized source of revenues, including efforts to expand sales internationally and the development of new product offerings and/or designations of products; (d)products, (4) obligations to the Company’s creditors are not accelerated; (e)accelerated, (5) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (f)obligations, (6) 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;products, and/or (g)(7) 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 as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and our business. In addition, 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. As described above, the COVID-19 crisis has significantly impaired the Company and the overall Unites States and World economies. If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved, if the Company’s ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws. As of JulyOctober 31, 2021, 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 date of the issuance of thethese financial statements.
Critical Accounting Policies Our audited consolidated financial statements reflect the selection and application of accounting policies which require us to make significant estimates and judgments. See “Note 2. “Summary of Significant Accounting Policies” to our audited consolidated financial statements included elsewhere in this prospectus. Critical Accounting Policies
Revenue Recognition
In May 2014 the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry specific guidance. This new standard requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The FASB subsequently issued the following amendments to ASU No. 2014-09 that have the same effective date and transition date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company adopted these amendments with ASU 2014-09 (collectively, the new revenue standards).
The new revenue standards became effective for the Company on January 1, 2018 and were adopted using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the majority of its revenues continue to be recognized when the customer takes control of its product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption.
Under the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.
Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.
Property, Plant and Equipment
Purchase of property, plant and equipment are recorded at cost. Improvements and replacements of property, plant and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the Statements of Operations. Depreciation is provided over the estimated economic useful lives of each class of assets and is computed using the straight-line method.
Impairment of Long-Lived Assets
The carrying value of long-lived assets are reviewed when facts and circumstances suggest that the assets may be impaired or that the amortization period may need to be changed. The Company considers internal and external factors relating to each asset, including cash flows, local market developments, industry trends and other publicly available information. If these factors and the projected undiscounted cash flows of the Company over the remaining amortization period indicate that the asset will not be recoverable, the carrying value will be adjusted to the fair market value.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates included deferred revenue, costs incurred related to deferred revenue, the useful lives of property and equipment and the useful lives of intangible assets.
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
In accordance with Financial Accounting Standards Board ASC Topic 740, Income Taxes, management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
Income tax benefits are recognized for income tax positions taken or expected to be taken in a tax return, only when it is determined that the income tax position will more-likely than-not be sustained upon examination by taxing authorities. The Company has analyzed tax positions taken for filings with the Internal Revenue Service and all tax jurisdictions where it operates. The Company believes that income tax filing positions will be sustained upon examination and does not anticipate any adjustments that would result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. Accordingly, the Company has not recorded any reserves, or related accruals for interest and penalties for uncertain income tax positions at October 31, 2020 and 2019.
Off-Balance Sheet Arrangements There are noOur liquidity is not dependent on the use of off-balance sheet financing arrangements (as that have or are reasonably likely to have a current or future effect on our financial condition, changesterm is defined in financial condition, revenues or expenses, resultsItem 303(a) (4) (ii) of operations, liquidity, capital expenditures or capital resources that is material to investors.Regulation S-K) and as of the date of this prospectus, we had no such arrangements.
MANAGEMENT Directors and Executive Officers Below are the names of and certain information regarding the Company’s current executive officers and directors: Name: | | Age: | | Position: | | Director Since: | Albert Mitrani | | 6667 | | Chief Executive Officer, Chief Operating Officer, President, Secretary and Director (Principal Executive Officer) | | June 24, 2015 | Ian T. Bothwell | | 61 | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | September 11, 2019 March 8, 2017-April 13, 2018 | Dr. Maria Ines Mitrani | | 41 | | Chief Science Officer, VP and Director | | August 14, 2019 November 4, 2016-April 13, 2018 | Dr. George Shapiro | | 61 | | Chief Medical Officer and Director | | February 7, 2019 | Dr. Allen Meglin | | 63 | | Director | | April 2, 2020 | Michael Carbonara | | 38 | | Director | | April 2, 2020 |
Directors are elected to serve until the next annual meeting of shareholdersstockholders and until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of shareholdersstockholders and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified. Executive officers are appointed by, and serve at the pleasure of, the board of directors of the Company, subject to any contractual arrangements. Professional Experience Albert Mitrani has been serving as our President, Secretary, Treasurer, and a member of the board of directors since June 24, 2015. Mr. Mitrani has also been serving as our Chief Executive Officer since September 2019. Mr. Mitrani was also our Chief Executive Officer and Chairman of the Board from June 24, 2015 until April 13, 2018. Mr. Mitrani served as the Chief Executive Officer of Analytical Stem Cell Corp. from April 2014 through May 2015. Analytical Stem Cell was involved in stem cell research and patient treatment referral centers. From February 2012 through March 2014 Mr. Mitrani was the Chief Executive Officer of Americell Trinidad and the President of ASCAAC LLC (American Stem Cell) from March 2011 through January 2013. Mr. Mitrani was the Chief Executive Officer of American Cellular Center Quito Ecuador from 2009 through 2012.
Ian T. Bothwell was elected as a member of the board of directors of the Company effective September 11, 2019. Mr. Bothwell previously served as a member of the board of directors of the Company from March 8, 2017 until his resignation in April 2018, when the Company executed a Plan and Agreement of Reorganization. Mr. Bothwell serves as the Chief Financial Officer of the Company, a position he has held since November 4, 2016. From 2003 through November 2015, Mr. Bothwell served in various executive positions for Central Energy GP LLC, the general partner of Central Energy Partners LP, a previously publicly traded master limited partnership. From July 2007 through November 2015, Mr. Bothwell served as President and a director of Regional Enterprises, Inc. Since April 2007, Mr. Bothwell has served as the President and controlling member of Rover Advanced Technologies, LLC, a company formed to provide management solutions to the public transportation industry. Since 2015, Mr. Bothwell has also served as the President and controlling member of CountOnMe Inc., a company that provides software solutions for the educational industry. Mr. Bothwell received his Bachelor of Science in Business Administration from Boston University in 1984.
Dr. Maria Ines Mitrani was elected as a member of the board of directors of the Company effective August 14, 2019. Dr. Mitrani previously served as a member of the board of directors of the Company from November 4, 2016 until her resignation in April 2018, when the Company executed a Plan and Agreement of Reorganization. Dr. Mitrani is a cofounder of the Company and is its Chief Science Officer. Dr. Mitrani previously served as the Executive Vice President of Analytical Stem Cell from 2014 to 2015. From 2012 to 2014, Dr. Mitrani served as the Executive Vice President, Medical Tourism Coordinator and Patient Referral Coordinator of Americell Trinidad, LLC. From 2008 to 2014, Dr. Mitrani was with the American Stem Cell & Anti-Aging center where she co-founded the first autologous stem cell center in Quito, Ecuador. Dr. Mitrani received a degree in medicine from Universidad San Francisco de Quito, in Quito, Ecuador.
Dr. George Shapiro was elected as a member of the board of directors of the Company effective February 2019. Since September 2018, Dr. Shapiro has served as the Company’s Chief Medical Officer. George C. Shapiro has been in practice for over 27 years. His career in medicine began in 1988 when he graduated from New York Medical College. An internship and residency then followed at Albert Einstein college of Medicine, after which, Dr. Shapiro completed a Cardiovascular Disease fellowship at Columbia University College of Physicians and Surgeons in 1994. Dr. Shapiro is currently a cardiologist in private practice. Michael Carbonara was elected as a member of the board of directors of the Company effective April 2020. Since 2015. Mr. Carbonara has served as the Chief Executive Officer of the Phoenix Group, a company that provides international financial and banking services. In addition, Mr. Carbonara has successfully worked directly with financial regulators in Canada, Europe, and Asia to establish regulated banking and payment institutions as well as a SICAV (Société d’investissement à Capital Variable) alternative investment fund. Mr. Carbonara currently serves on the board of directors of several private United States and international companies. Mr. Carbonara is a member of the Association of Certified Anti-Money Laundering Specialists® (“ACAMS”), the largest international membership organization dedicated to enhancing the knowledge skills and expertise of anti- money laundering/counter terrorist financing and financial crime detection and prevention professionals. Mr. Carbonara received his Associates Degree in Business Administration in 2006. The Company believes that Mr. Carbonara’s financial and business experience, including his significant international business experience and expertise in financial technology, regulatory compliance, payments, cross border remittance and e-commerce consulting services makes him qualified to be a member of the board of directors. Dr. Allen Meglin was elected as a member of the board of directors of the Company effective April 2020. Since 2015. Since June 2019, Dr. Meglin has served on the Company’s Products and Technical Advisory Board. Since 2005, Dr. Meglin has served as a staff radiologist for Chatham Radiologists, P.A. a medical facility specializing in interventional radiology and musculoskeletal radiology. Dr. Meglin also serves as the Medical Director for Northeast Georgia Aesthetics and is the owner operator of several proprietorships involved in providing aesthetics, chiropractic, and wellness services. Throughout his career, Dr Meglin has been a frequent lecturer and presenter, has issued many medical related publications, has served on the faculty and taught various courses at educational institutions, has participated in as a principal investigator in several clinical research studies, and holds several medical based patents. Dr. Meglin also currently serves on the board of directors of several private United States companies. Dr. Meglin is also a member of the American Heart Association - Scientific Council Committee, the American Academy of Regenerative Medicine and serves on the FDA’s education materials committee. Dr. Meglin currently holds the following licenses and certifications: | ● | Registered Vascular Technologist, ARDMS |
| ● | Certificate in Added Qualifications in Vascular and Interventional Radiology from the American Board of Radiology |
| ● | National Board of Medical Examiners Diplomate |
| ● | Medical License from the state of North Carolina |
Dr. Meglin earned a M.D from the University of Pittsburgh - School of Medicine, Pittsburgh, PA and completed his Diagnostic Radiology Residency from the Walter Reed Army Medical Center, Washington, DC. The Company believes that Dr. Meglin’s medical industry expertise makes him qualified to be a member of the board of directors.
Family Relationships Albert Mitrani, our President and Chief Executive Officer, and Dr. Maria Ines Mitrani, our Chief Science Officer, are spouses. Director Independence
At present, the Company does not have a majority of “independent directors,” as defined under the applicable rules and listing requirements of the SEC and national securities exchanges such as the Nasdaq Stock Market. At such time as the Company seeks to up-list its common stock for trading on a national securities exchange, it will be required to have a board of directors, a majority of whom are independent, as well as at least one who qualifies as an “audit committee financial expert” under such rules and standards. Notwithstanding the foregoing, we believe that both Michael Carbonara and Dr. Allen Meglin qualify as “independent” under the applicable rules and listing standards of the SEC and the Nasdaq Stock Market and based on his financial and business experience, Mr. Carbonara qualifies as an “audit committee financial expert” under such rules and standards. Committees of the Board of Directors
At present, we do not have standing audit, compensation and nominating and corporate governance committees. We intend to establish such committees, which will be composed entirely of independent directors in the near future and will be required to do so if we see to up-list our common stock for trading on a national securities exchange. Code of Ethics
Due to our small size, we have not adopted a Code of Ethics and Business Conduct that applies to our officers, directors, and employees. We intend to adopt a Code of Ethics and Business Conduct in the near future as we grow our operations and hire additional employees. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the total compensation paid or accrued by the Company during the last two fiscal years indicated to (i) all individuals that served as the Company’s principal executive officer or acted in a similar capacity for the Company at any time during the fiscal year ended October 31, 2020;2021; (ii) the two most highly compensated executive officers who were serving as executive officers of the Company at the end of the fiscal year ended October 31, 20202021 whose total compensation exceeded $100,000; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to clause (ii) above but for the fact that the individual was not serving as an executive officer of the Company at the end of the fiscal year ended October 31, 2020.2021. SUMMARY COMPENSATION TABLE Name and Principal Position | | Fiscal Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-equity Incentive Plan Compensation ($) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Consideration ($) | | | Total Actually Received ($) | | Albert Mitrani | | 2020 | | | 382,620 | (5) | | | 37,500 | (5) | | | 1,755,000 | | | | -0- | | | | -0- | | | | -0- | | | | 68,017 | (9) | | | 2,243,137 | | CEO, President, Secretary and Treasurer (1) | | 2019 | | | 339,852 | (5) | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 50,205 | (9) | | | 390,057 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dr. Maria I. Mitrani, | | 2020 | | | 300,000 | (6) | | | 37,500 | (6) | | | 1,755,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 2,092,500 | | VP and Chief Science Officer (2) | | 2019 | | | 277,083 | (6) | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 277,083 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ian T. Bothwell, | | 2020 | | | 300,000 | (7) | | | 37,500 | (7) | | | 1,755,000 | | | | 176,250 | | | | -0- | | | | -0- | | | | -0- | | | | 2,268,750 | | Chief Financial Officer (3) | | 2019 | | | 277,083 | (7) | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 277,083 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dr. George Shapiro, | | 2020 | | | 54,833 | (8) | | | -0- | | | | 1,895,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 1,949,833 | | Chief Medical Officer (4) | | 2019 | | | -0- | | | | -0- | | | | 134,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 134,000 | |
Name and Principal Position | | Fiscal Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-equity Incentive Plan Compensation ($) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Consideration ($) | | | Total Actually Received ($) | | Albert Mitrani - CEO, President | | 2021 | | | | 488,546 | (5) | | | 50,000 | (5) | | | 2,205,000 | | | | -0- | | | | -0- | | | | -0- | | | | 81,056 | (9) | | | 2,824,602 | | Secretary and Treasurer (1) | | 2020 | | | | 382,620 | (5) | | | 37,500 | (5) | | | 1,755,000 | | | | -0- | | | | -0- | | | | -0- | | | | 68,017 | (9) | | | 2,243,137 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dr. Maria I. Mitrani, VP and | | 2021 | | | | 300,000 | (6) | | | 200,000 | (6) | | | 2,205,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 2,705,000 | | Chief Science Officer (2) | | 2020 | | | | 300,000 | (6) | | | 37,500 | (6) | | | 1,755,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 2,092,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ian T. Bothwell, | | 2021 | | | | 300,000 | (7) | | | 200,000 | (7) | | | 2,205,000 | | | | -0- | | | | -0- | | | | -0- | | | | 21,854 | (10) | | | 2,726,854 | | Chief Financial Officer (3) | | 2020 | | | | 300,000 | (7) | | | 37,500 | (7) | | | 1,755,000 | | | | 176,250 | | | | -0- | | | | -0- | | | | -0- | | | | 2,268,750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | George Shapiro, | | 2021 | | | | 81,417 | (8) | | | -0- | | | | 121,500 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 202,917 | | Chief Medical Officer (4) | | 2020 | | | | 54,833 | (8) | | | -0- | | | | 1,895,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 1,949,833 | |
| (1) | Albert Mitrani was appointed as the Chief Executive Officer, President, Secretary and Treasurer of the Company on June 24, 2015. He was replaced as Chief Executive Officer in April 2018. He was appointed as Chief Executive Officer and principal executive officer in September 2019. During fiscal year 2021 and 2020, Mr. Mitrani was granted 30,000,000 and 65,000,000 shares of common stock of the Company with an aggregate grant value of $1,755,000.$2,205,000 and $1,755,000, respectively. See Note 10 to the October 31, 20202021 audited consolidated financial statements for a description of the assumptions used in determining the value of the stock granted. |
| (2) | Dr. Maria I. Mitrani was appointed as the Vice President and Chief Science Officer of the Company on November 4, 2016. During fiscal year 2021 and 2020, Dr. Mitrani was granted 30,000,000 and 65,000,000 shares of common stock of the Company with an aggregate grant value of $1,755,000.$2,205,000 and $1,755,000, respectively. See Note 10 to the October 31, 2021 audited consolidated financial statements for a description of the assumptions used in determining the value of the stock granted. |
| (3) | Ian Bothwell was appointed as the Chief Financial Officer of the Company on November 4, 2016. During fiscal year 2021 and 2020, Mr. Bothwell was granted a warrant to purchase 7,500,000 shares of common stock30,000,000 and 65,000,000 shares of common stock of the Company with an aggregate grant value of 176,250$2,205,000 and $1,755,000, respectively. In addition, during fiscal year 2020, Mr. Bothwell was granted a warrant to purchase 7,500,000 shares of common stock of the Company with an aggregate grant value of 176,250. See Notes 10 and 11 to the October 31, 2021 audited consolidated financial statements for a description of the assumptions used in determining the value of the stock granted and the warrants issued. |
| (4) | Dr. George Shapiro was appointed as the Chief Medical Officer in September 2018. During fiscal year 2021 and 2020, Dr. Shapiro was granted 4,500,000 and 70,000,000 shares of common stock of the Company with an aggregate grant value of $1,895,000. During fiscal year 2019, Dr. Shapiro was granted 5,000,000 shares of common stock of the Company with an aggregate grant value of $134,000.$121,500 and $1,895,000, respectively. See Note 10 to the October 31, 20202021 audited consolidated financial statements for a description of the assumptions used in determining the value of the stock granted. |
| (5) | $216,436275,824 and $132,105$216,436 of salary and commissions were accrued and unpaid at October 31, 20202021 and 2019,2020, respectively. |
| (6) | $233,655362,455 and $129,613$233,655 of salary was accrued and unpaid at October 31, 20202021 and 2019,2020, respectively. |
| (7) | $649,407843,378 and $321,907$649,407 of salary was accrued and unpaid at October 31, 20202021 and 2019,2020, respectively. |
| (8) | $54,83354,000 and $54,833 of salary was accrued and unpaid at October 31, 2020.2021 and 2020, respectively. |
| (9) | Albert Mitrani’s and his wife, Dr. Maria I. Mitrani, received benefits totaling approximately $81,056 and $68,017 and $50,205 during the fiscal year ended October 31, 2021 and 2020, and 2019, respectively. |
(10) | Ian Bothwell received benefits totaling approximately $21,854 during fiscal year ended October 31, 2021. |
We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans. Outstanding Equity Awards at Fiscal Year-End There were no outstanding equity awards as of October 31, 2020.2021. Executive Employment Agreements
April 2018 Executive Employment Agreements
The description of Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements executed in April 2018 (collectively referred to as the “April 2018 Executive Employment Agreements”) are summarized below: General Pursuant to Albert Mitrani’s April 2018 Executive Employment Agreement, Mr. Mitrani serves as the Company’s President and Chief Operating Officer. Mr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Mitrani is also entitled to a commission on all sales attributable to him (i.e., excluding existing customers of the Company at the time of the Reorganization) at the rate of five percent (5%) of the “Net Sales” as defined in the agreement and an expense allowance of $5,000 per month. Pursuant to Ian Bothwell’s April 2018 Executive Employment Agreement, Mr. Bothwell continues to serve as the Company’s Chief Financial Officer. Mr. Bothwell’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Bothwell has not been paid salary since July 2018. Pursuant to Dr. Maria I. Mitrani’s April 2018 Executive Employment Agreement, Dr. Mitrani continues to serve as the Company’s Chief Science Officer. Dr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Term The term of each of the April 2018 Executive Employment Agreements commences as of the Effective Date and continues until December 31, 2020 (Mr. Bothwell) or December 31, 2023 (Mr. Mitrani and Dr. Mitrani) (“(the “InitInitialial Term”), unless terminated earlier pursuant to the terms of the April 2018 Executive Employment Agreement; provided that on such expiration of the Initial Term, and each annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), the agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term of the April 2018 Executive Employment Agreement at least 90 days’ prior to the applicable renewal Date. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
Unpaid Advances The Company was required to repay the unpaid advances subsequent to December 31, 2017, and the unreimbursed expenses incurred subsequent to December 31, 2017, on May 15, 2018. Such payments were not made as required. Fringe Benefits and Perquisites During the Employment Term, each Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.
Termination The Company may terminate the April 2018 Executive Employment Agreement at any time for good cause, as defined in the April 2018 Executive Employment Agreement, including, the Executive’s death, disability, Executive’s willful and intentional failure or refusal to follow reasonable instructions of the Company’s Board of Directors, reasonable and material policies, standards and regulations of the Company���sCompany’s Board of Directors or management.
Amendments To The April 2018 Executive Employment Agreements
February 26, 2020 Amendment
On February 26, 2020, the Company agreed to modify the employment agreement of Mr. Ian T. Bothwell, the Company’s Chief Financial Officer to provide Mr. Bothwell with: | ● | an extension to his employment agreement dated April 13, 2018 from December 2020 to December 2023 consistent with other executives of the Company; and |
| ● | a one-time bonus in the form of a fully vested cashless warrant to purchase 7,500,000 shares of common stock of the Company, exercisable for ten years at an exercise price of $0.28 per share, the closing price of the common stock on the date of the grant. |
On February 26, 2020, pursuant to the respective employment agreements with each of the Company’s executive officers, the Board granted each of Mr. Albert Mitrani, Dr. Maria Mitrani and Mr. Ian Bothwell a cash bonus of $37,500 for the calendar year ended December 31, 2019.
April 25, 2020 Amendment
On April 25, 2020, the Company agreed to amend and revise the each of Albert Mitrani, Ian Bothwell and Dr. Maria I. Mitrani, (individually each of A. Mitrani, Bothwell and Dr. Mitrani are referred to individually, as an “Executive” and collectively as the “Executives”) April 2018 Executive Employment Agreements. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following: | Term: | An extension to the term of the employment agreements dated April 13, 2018 from December 31, 2023 to December 31, 2025. |
| Base Salary: | An increase in base annual salary from $162,500 to $300,000. The amended salary amount of $300,000 shall be retroactively adjusted to commence as of January 1, 2019. The increased annual salary of $137,500 (“Incremental Salary”Salary”) over the prior annual salary amount of $162,500 (“Original Base Salary”Salary”) shall only be paid only upon there being sufficient available cash. Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019. |
Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019. Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.
Severance Provisions:Provisions Company termination without cause, Executive for good reason:
| ● | All existing accrued obligations existing at time of termination shall be paid to Executive.Executive; |
| ● | Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to equity incentive plansthe MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination,termination; |
| ● | Executive shall be entitled to a cash payment equal to his unpaid base salary for the remaining term in effect at time of the time of the termination or an amount equal to four times (4x’s) the base salary in effect at the time of termination, whichever is greater,greater; and |
| ● | Executive shall be entitled to a cash payment equal to his 200% of the prior year’s cash or stock bonus (excluding any stock grants received pursuant to equity incentive plans)the MCPP). |
Change In Control: In the event of a Change in Control and the Executive’s employment agreement is not extended for period of five years from the date of the Change in Control with all other terms and conditions of the agreement remaining the same, then the Executive may terminate the agreement for good reason and all respective severance terms as provided for a termination by Executive for good reason described in clause 1 above shall be provided to Executive. Executive termination due to disability, death, or non-renewal by the Company:
| ● | All existing accrued obligations existing at time of termination shall be paid to Executive. |
| ● | Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to equity incentive plansthe MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination. |
| ● | Executive shall be entitled to a cash payment equal to 299% of Executive’s base salary in effect at the time of termination, plus a gross up amount to cover Executive’s tax liability associated with such payment. |
| ● | 200% of the prior year’s cash or stock bonus (excluding equity incentive plansMCPP performance stock grants). |
June 29, 2020 Amendment On June 29, 2020, the board of directors of the Company agreed to further amend and revise the April 2018 Executive Employment Agreements for each of Executives. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following: | Base Salary: | An increase in each Executive’sthe Executives annual base annual salary upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months. Upon the achievement of the defined salary milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur. |
Monthly Revenues (in millions) | Monthly Revenues (in millions) | | | Base Salary Increase | | Monthly Revenues (in millions) | | Base Salary Increase | | $ | 1.00 | | | $ | 130,000 | | 1.00 | | | $ | 130,000 | | $ | 1.50 | | | $ | 200,000 | | 1.50 | | | $ | 200,000 | | $ | 2.00 | | | $ | 275,000 | | 2.00 | | | $ | 275,000 | | $ | 3.50 | | | $ | 630,000 | | 3.50 | | | $ | 630,000 | | $ | 5.00 | | | $ | 900,000 | | 5.00 | | | $ | 900,000 | |
Board Stock Compensation Plan On February 26, 2020, the Company established the Board Stock Compensation Plan (the “Board Plan”“Board Plan”) which provides compensation for non-executive Board members of the board of directors for participation in boardBoard meetings retroactive to November 1, 2019. The Board Plan provides for a grant of $7,500 in equivalent shares of common stock (based on trading price at the end of the applicable current quarter) on the last day of each respective fiscal quarter that a member attends at least 75% of all meetings held during such quarter and in which a minimum of one1 meeting is held, for a maximum annual compensation amount of $30,000 per year per member. In addition, boardBoard members that participate on future board committees will also be eligible to receive additional compensation for serving on such committees, in amounts to be determined by the board of directors.Board. The maximum aggregate number of shares that are currently authorized to be issued pursuant to the Board Plan is 5,000,000 shares. On April 15, 2020, the Company issued 486,808 shares of common stock to Mr. Robert Zucker, a former director, in accordance with the Board Plan.
On June 29, 2020, the board of directors amended the MCPP, providing for the grant of common stock of the Company to the current non-executive members of the board of directors (Mr. Carbonara and Dr. Meglin) based on the achievement of certain defined milestones.
InDuring December 2020, the board of directorsBoard approved the bonus of newly issued common stock to the non-executive Board members (consisting of the board of directors (Mr.Mr. Carbonara and Dr. Meglin) totaling 2,000,000 shares.
2020 Plan On February 26, 2020, the Company established the 2020 Stock Incentive Plan (the “2020 Plan”). The 2020 Plan provided for the grant of options, appreciation rights, dividend equivalent right and restricted common stock of the Company (an “Award”“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 is 50,000,000 shares, plus an annual yearly increase. No awards were issued under the 2020 Plan and the 2020 Plan was terminated in connection with the adoption of the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) and share exchange as described in “ - 2021 Plan and Share Exchange” below.
Management and Consultants Performance Stock Plan On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (the “MCPP”) providing for the grant to current senior executive members of management and third-party consultants of an aggregate of approximately 205,000,000 shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”). On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the board of directorsBoard based on the Company completing any transaction occurring while employed and/or serving as a member of the board of directorsBoard, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (a “Qualifying Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Qualifying Transactionpre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below. Pre-Transaction Price Per Share Valuation (a) | | | Executive Bonus Shares Issued (b) | | | Non-executive Board Bonus Shares Issued (c) | | $ | 0.22 | | | | 40,000,000 | | | | 2,000,000 | | $ | 0.34 | | | | 60,000,000 | | | | 3,000,000 | | $ | 0.45 | | | | 80,000,000 | | | | 4,000,000 | | $ | 0.54 | | | | 100,000,000 | | | | 5,000,000 | |
(a) | proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances |
(b) | per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro |
(c) | per each non-executive board of directorsBoard member consisting of Dr. Allen Meglin and Michael Carbonara |
On August 14, 2020, the board of directorsBoard amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross funding grantsfundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below: Aggregate Funding Amount | | | Shares | | From | | | To | | | | | $ | 2,500,000 | | | $ | 5,000,000 | | | | 5,000,000 | | $ | 5,000,001 | | | $ | 10,000,000 | | | | 10,000,000 | | $ | 10,000,001 | | | $ | 30,000,000 | | | | 30,000,000 | |
On September 23, 2020, the board of directorsBoard amended the MCPP, providing for the grant of common stock of the Company of 15.0 million, 7.5 million and 15.0 million shares of common stock of the Company, respectively, to each Albert Mitrani, Dr. Maria I. Mitrani and Ian Bothwell upon such time that the Company’s common stock trades above $0.25 per share, $0.50 per share and $0.75 per share, respectively, for 30 consecutive trading days subsequent to March 31, 2021 and provided such milestone occurs during the term of employment with the Company. In addition, each of the current executives were entitled to receive an additional 7.07 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43.043 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such Milestonemilestone occurs during the term of employment with the Company.
On February 10, 2021, the Board amended the MCPP, providing for the grant of common stock of the Company of 5,000,000 shares for each Phase II clinical trial completed, 5 million shares for each Phase III clinical trial approved and initiated (deemed to be upon the time the first patient is enrolled) and 10,000,000 shares for each Phase III clinical trial fully enrolled. In addition, the CMO’s portion of a designated grant for an achievement of any applicable Milestone subsequent to September 23, 2020 was reduced to 30% until the time that the CMO becomes a full-time employee of the Company. Pursuant to the MCPP, a total of 342,500,000 shares have been issued and approximately 582,500,000as described above, additional shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the Milestonesmilestones are achieved while the individual is employed and/or serving as a member of the board of directors:Board: | | | | | MCPP | | MCPP | | | | | MCPP | | Remaining | | Total | | | MCPP | | MCPP Remaining | | | | Shares | | Shares | | Shares | | | Shares | | Shares | | Name | | Awarded | | | Available | | | Approved | | | Issued | | | Authorized | | Albert Mitrani | | | 80,000,000 | | | | 137,500,000 | | | | 217,500,000 | | | | 80,000,000 | | | | 137,500,000 | | Ian Bothwell | | | 80,000,000 | | | | 167,500,000 | | | | 247,500,000 | | | | 80,000,000 | | | | 167,500,000 | | Dr. Maria I. Mitrani | | | 80,000,000 | | | | 167,500,000 | | | | 247,500,000 | | | Dr. Maria Mitrani | | | | 80,000,000 | | | | 167,500,000 | | Dr. George Shapiro | | | 69,500,000 | | | | 100,000,000 | | | | 169,500,000 | | | | 69,500,000 | | | | 100,000,000 | | Dr. Allen Meglin | | | - | | | | 5,000,000 | | | | 5,000,000 | | | | - | | | | 5,000,000 | | Michael Carbonara | | | - | | | | 5,000,000 | | | | 5,000,000 | | | | - | | | | 5,000,000 | | Consultants | | | 33,000,000 | | | | - | | | | 33,000,000 | | | | 33,000,000 | | | | - | | Total | | | 342,500,000 | | | | 582,500,000 | | | | 925,000,000 | | | | 342,500,000 | | | | 582,500,000 | |
FollowingDuring the adoption of theyears ended October 31, 2021 Plan and consummation2020, a total 49,500,000 shares and 293,000,000 shares, respectively, were issued in connection with certain Milestones achieved.
Upon completion of the Share Exchange in October 2021(as described in “ - 2021 Plan and Share Exchange” below,below), the MCCP, butMCPP (but not Awards of unexchanged shares awarded under the MCCPof our common stock) was terminated.
2021 Plan and Share Exchange Agreement In September 2021, the Company adopted the 2021 Plan.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 is 250,000,000 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 shareholdersstockholders to the extent such approval is required by applicable laws. On October 29, 2021, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with shareholders (including executive officers) who were issued shares under (i) various consulting and employment agreements during 2021 (the “Service Providers”), and (ii) those shareholders who were issued shares of common stock pursuant to the MCPP (the “MCPP Holders”“MCPP Holders”). The Service Providers who executed the Exchange Agreement were issued a total of 30,300,000 shares under their respective consulting or employment agreements (the “Service Provider Shares”), and the MCPP Holders who executed the Exchange Agreement received a total of 49,500,000 shares under the MCPP, for an aggregate of 79,800,000 shares of common stock. As of the effective date of the Exchange Agreement, the Service Providers and MCPP Holders who executed the Exchange Agreement agreed to exchange their respective Service Provider Shares or the shares issued under the MCPP for newly issued shares pursuant to the 2021 Plan (on a 1:1 basis, resulting in the issuance of 79,800,000 shares of common stock under the 2021 Plan (the “Exchange Shares”). Upon completion of the Share Exchange, the 2020 Plan and the MCPP (but not Awards of unexchanged shares of our common stock) were terminated. As of the date of this prospectus, a total of 83,400,00085,300,000 shares of our common stock, including the Exchange Shares have been awarded under the 2021 Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of the date of this prospectus, the beneficial ownership of our common stock by each director and executive officer, by each person known by us to beneficially own 5% or more of our common stock and by directors and executive officers as a group. Unless otherwise stated, the address of the persons set forth in the table is c/o the Company, 4045 Sheridan Avenue, Suite 239, Miami Beach, FL 33140. NAME | | TITLE | | COMMON SHARES | | | PERCENTAGE (1) | | | TITLE | | COMMON SHARES | | PERCENTAGE (1) | | Officers and Directors | | | | | | | | | | | | | | | Albert Mitrani (2) | | Chief Executive Officer, President and Director | | | 253,497,990 | | | | 23.93 | % | | Chief Executive Officer, President and Director | | | 253,497,990 | | 23.61 | % | Dr. Maria Mitrani (3) | | Chief Science Officer and Director | | | 253,497,990 | | | | 23.93 | % | | Chief Science Officer and Director | | 253,497,990 | | 23.61 | % | Ian Bothwell (4) | | Chief Financial Officer and Director | | | 140,518,726 | | | | 13.17 | % | | Chief Financial Officer and Director | | 140,518,726 | | 13.00 | % | Dr. George Shapiro(5) | | Chief Medical Officer and Director | | | 75,604,187 | | | | 7.14 | % | | Chief Medical Officer and Director | | 75,604,187 | | 7.04 | % | Michael Carbonara (6) | | Director | | | 47,818,181 | | | | 4.51 | % | | Director | | 47,818,181 | | 4.45 | % | Dr. Allen Meglin | | Director | | | 14,589,180 | | | | 1.32 | % | | Director | | 14,589,180 | | 1.36 | % | | | | | | | | | | | | | | | | All officers and directors as a group (6 persons) (7) | | | 582,028,264 | | | | 52.44 | % | | | 532,028,264 | | 45.66 | % |
| (1) | Based on 1,143,361,0051,157,637,928 shares of common stock outstanding as of the date of this prospectus. |
| (2) | Includes 101,707,800 shares of common stock held by Dr. Maria Mitrani, Albert Mitrani’s wife. Does not include 15,000,000 shares of common stock issued to Dr. Mitrani which vest on December 31, 2023. |
| (3) | Includes 151,790,190 shares of common stock held by Albert Mitrani, Dr. Mitrani’s husband. Does not include 15,000,000 shares of common stock issued to Albert Mitrani which vest on December 31, 2023. |
| (4) | Includes 7,500,000 warrants to purchase 7,500,000 shares of common stock of the Company. Does not include 15,000,000 shares of common stock issued to Mr. Bothwell which vest on December 31, 2023. |
| (5) | Does not include 15,000,0005,000,000 shares of common stock issued to Mr. Shapiro which vest on December 31, 2023. |
| (6) | Held indirectly by Republic Asset Holdings LLC, an entity of which Michael Carbonara has voting and dispositive control. The address for this shareholderstockholder is 102 NE 2nd Street, Boca Raton, FL 33432. |
| (7) | Does not include the unvested shares of common stock set forth in footnotes (2) through (6)(5) above. |
The Company has not received any filings by a third party indicating beneficial ownership of more than 5% of our outstanding voting capital stock that are not listed herein. |
The Company has not received any filings by a third party indicating beneficial ownership of more than 5% of our outstanding voting capital stock that are not listed herein. The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the SEC, a person (or group of persons) is deemed to be a “beneficial owner” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Review, Approval and Ratification of Related Party Transactions
Review, approval, or ratification of transactions with our executive officers, directors and significant stockholders are subject to approval or ratification by a majority of disinterested directors. Once our board of directors is comprised of a majority of independent directors, we anticipate that such transactions will require approval or ratification by a majority of our independent directors or a committee of the board of directors consisting of independent directors.
Leases
The Company’s corporate administrative offices are located at 515 North Shore Drive, Miami Beach, Florida 33141. The office space is leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Maria Mitrani, the Chief Science Officer and director of the Company. The term of the lease runs through June 2023 and the monthly rent is $3,500 per month. Since October 2020, we have been party to a second lease with MariLuna LLC for office space located in Aspen, CO. The initial term of the lease was for one year, expiring on September 30, 2021 and the lease has been subsequently extended on a month to month basis. The monthly rent is $6,500. Reimbursements In its employment agreement with Ian Bothwell, the Company agreed to reimburse Rover Advanced Technologies, LLC, a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative fees, etc.) totaledtotaling $31,192 and $24,788 and $27,333 for the years ended October 31, 2020 and October 31, 2019, respectively, and $23,177 and $18,145 for the nine months ended July 31, 2021 and July 31, 2020, respectively. Advances by Executive Officers In addition, fromFrom time to time, Mr. Bothwell and/or his respective affiliates have advanced funds to the Company to pay for certain expenses of the Company. As of October 31, 2021 and 2020, $6,253 and October 31, 2019, $1,965, and $48,184 wasrespectively, is owed to Mr. Bothwell and/or his affiliates, respectively and as of July 31, 2021 and July 31, 2020, $0 and $31,677 was owed to Mr. Bothwell and/or his affiliates, respectively.respective affiliates.
Manuel. Iglesias, the Company’s former Chief Executive Officer, and/or his affiliates advanced funds to the Company to pay for certain expenses of the Company. As of JulyOctober 31, 2021, and October 31, 2020, $220,897 was owed to Mr. Iglesias and/or his affiliates.affiliates, respectively. Mr. Iglesias also personally guaranteed a $100,000 credit facility secured by the Company in September 2019. Funding FacilitySale Of Equity
During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July, August and October 2020, the Company sold an additional 1,166,666 shares, 422,514 shares, and 625,000 shares of common stock to Dr. Allen Meglin at $0.03 per share, $0.10 per share and $0.08 per share, respectively, for an aggregate purchase price of $127,251. On October 10, 2019, the Company and Michael Carbonara, a director of the Company agreed to a convertible funding facility arrangement (the “Funding Facility”) whereby Mr. Carbonara or hisits designee funded the Company $500,000. The Funding Facility was converted into 40,000,000 shares of newly issued restricted common stock of the Company on February 12, 2020, issued to Republic Asset Holdings LLC, a Company controlled by Mr. Carbonara. On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC at $0.02 per share for an aggregate purchase price of $100,000. On February 22, 2021, the Company sold 1,818,181 shares of common stock to Republic Asset Holdings LLC at $0.055 per share for an aggregate purchase price of $100,000. Sales to Related Parties
During the fiscal year ended October 31, 2020, sales to the medical practices related to Dr. George Shapiro and Dr. Allen Meglin and to customers related to Mr. Michael Carbonara totaled $53,740, $27,385, and $14,320, respectively. During the fiscal year ended October 31, 2019, sales to sales to the medical practices related to Dr. George Shapiro, and Dr. Allen Meglin and customers related to Mr. Michael Carbonara totaled $52,170, $15,640, and $4,160, respectively. For the nine months ended July 31, 2021, the Company sold a total of $665,000approximately $881,600 of product to a management services organization (“MSO”) that provides administrative services and contracts for medical supplies for several medical practices, including $117,020$211,505 of products purchased from the Company that were attributable to the medical practice owned by Dr. George Shapiro. Dr. Shapiro also has an indirect economic interest in the parent company that owns the MSO. For the nine monthsyear ended JulyOctober 31, 2020,2021, the total amount of sales of products to the medical practice owned by Dr. Allen Meglin and to customers related to Mr. Michael Carbonara totaled $13,820 and $32,655, respectively. During the fiscal year ended October 31, 2020, sales to the medical practices related to Dr. George Shapiro and Dr. Allen Meglin and to customers related to Mr. Michael Carbonara totaled $29,795,$53,740, $27,385, and $14,320, respectively.
Review, Approval and Ratification of Related Party Transactions
Review, approval, or ratification of transactions with our executive officers, directors and significant shareholders are subject to approval or ratification by a majority of disinterested directors. Once our board of directors is comprised of a majority of independent directors, we anticipate that such transactions will require approval or ratification by a majority of our independent directors or a committee of the board of directors consisting of independent directors.
DESCRIPTION OF CAPITAL STOCK General
Our authorized capital stock consists of 2,500,000,000 shares of common stock, par value $0.001 and 10,000,000 shares of preferred stock, par value $0.001, of which, as of the date of this prospectus, 1,143,361,0051,157,637,928 shares of common stock are issued and outstanding and no shares of preferred stock are issued and outstanding. Common Stock All issued and outstanding shares, including the shares registered hereby, are fully paid and non-assessable. Each holder of shares is entitled to one vote for each share owned on all matters voted upon by shareholdersstockholders and a majority vote is required for all actions taken by shareholders.stockholders. In the event we liquidate, dissolve or wind-up our operations, the holders of the shares are entitled to share equally and ratably in our assets, if any, remaining after the payment of all our debts and liabilities and the liquidation preference of any shares of preferred stock that may then be outstanding. The shares have no pre-emptive rights, cumulative voting rights and no redemption, sinking fund, or conversion provisions. Holders of common stock are entitled to receive dividends, if and when declared by the board of directors, out of funds legally available for such purpose, subject to the dividend and liquidation rights of any preferred stock that may then be outstanding. Preferred Stock Our board of directors has the authority, without further action by the shareholders,stockholders, to issue shares of preferred stock in one or more series and to fix the rights, preferences and the number of shares constituting any series of the designation of such series. While our Articles of Incorporation and bylaws do not contain any provisions that may delay, defer or prevent a change in control, the issuance of preferred stock may have the effect of delaying or preventing a change in control or make removal of our management more difficult. LEGAL MATTERS The validity of the common stock being offered hereby has been passed upon by Gutiérrez Bergman Boulris, PLLC, Coral Gables, Florida. EXPERTS The audited financial statements included in this prospectus and elsewhere in the registration statement have so been included in reliance upon the report of Marcum LLP independent registered public accountants, for the years ended October 31, 20202021 and October 31, 2019,2020, upon the authority of said firm as experts in accounting and auditing in giving its report. The report on the consolidated financial statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern. AVAILABLE INFORMATION We have filed a registration statement on Form S-1 under the Securities Act with the SEC with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements, or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company. You may inspect the registration statement and exhibits, as well as periodic reports, proxy statements and other documents that we file electronically with the SEC, on the SEC’s website at http://www.sec.gov.
DISCLOSURE OF SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
In accordance with the provisions in our Articles of Incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law. We are also party to indemnification agreements with each of our non-employee directors. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
ORGANICELL REGENERATIVE MEDICINE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | | Page | | | Audited Financial Statements: | | | | Report of Independent Registered Public Accounting FirmsFirm | F-2 | | | F-2 | | | | Consolidated Balance Sheets atas of October 31, 20202021 and October 31, 20192020 | F-3 | | | F-3 | | | | Consolidated Statements of Operations for the Years Ended October 31, 20202021 and October 31, 20192020 | F-4 | | | F-4 | | | | Consolidated StatementsStatement of Changes In Stockholders’ Deficit for the Years Ended October 31, 20202021 and October 31, 20192020 | F-5 | | | Consolidated Statements of Cash Flows for the Years Ended October 31, 2020 and October 31, 2019 | F-6F-5 | | | Notes to Consolidated Financial Statements | F-7 | | | Unaudited Financial Statements: | | | | Consolidated Balance Sheets as of July 31, 2021 and October 31, 2020 (unaudited) | F-33 | | | Consolidated Statements of Operations for the Nine Months ended July 31, 2021 and July 31, 2020 (unaudited) | F-34 | | | Consolidated Statements of Stockholders’ Deficit for the Nine Months ended July 31, 2021 and July 31, 2020 (unaudited) | F-35 | | | Consolidated Statements of Cash Flowsflows for the Nine Months ended JulyYears Ended October 31, 2021 and July 31, 2020 (unaudited) | F-36 | | F-6 | | | | Notes to Consolidated Financial Statements (unaudited) | F-37 | F-7 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Organicell Regenerative Medicine, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Organicell Regenerative Medicine, Inc. (the “Company”) as of October 31, 20202021 and 2019,2020, the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for each of the two years in the period ended October 31, 2020,2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 20202021 and 2019,2020, and the results of its operations and its cash flows for each of the two years in the period ended October 31, 2020,2021, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 3, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion. Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Marcum llp Marcum llpLLP We have served as the Company’s auditor since 2015 Fort Lauderdale, FL February 5, 2021 February 14, 2022
Organicell Regenerative Medicine, Inc. CONSOLIDATED BALANCE SHEETS As of October 31, 2020,2021 and 20192020
| | | | | | | | | | | | | | | | October 31, | | October 31, | | | October 31, | | October 31, | | | | 2020 | | | 2019 | | | 2021 | | | 2020 | | ASSETS | | | | | | | | | | | | | | Current Assets | | | | | | | | | | | | | | Cash | | $ | 590,797 | | | $ | 132,557 | | | $ | 108,570 | | | $ | 590,797 | | Accounts receivable, net of allowance for bad debts | | | 29,385 | | | | 26,031 | | | | 104,150 | | | | 29,385 | | Prepaid expenses | | | 78,790 | | | | 121,394 | | | | 69,647 | | | | 78,790 | | Inventories | | | 146,811 | | | | 77,963 | | | | 234,827 | | | | 146,811 | | Total Current Assets | | | 845,783 | | | | 357,945 | | | | 517,194 | | | | 845,783 | | | | | | | | | | | | | | | | | | | Property and equipment, net | | | 365,234 | | | | 263,315 | | | | 1,113,416 | | | | 365,234 | | Other assets – right of use | | | 105,355 | | | | 22,813 | | | | 254,665 | | | | 105,355 | | Security deposits | | | 17,800 | | | | 5,000 | | | | 47,682 | | �� | | 17,800 | | TOTAL ASSETS | | $ | 1,334,172 | | | $ | 649,073 | | | $ | 1,932,957 | | | $ | 1,334,172 | | | | | | | | | | | | | | | | | | | LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | | | | | Current Liabilities | | | | | | | | | | | | | | | | | Accounts payable and accrued expenses | | $ | 765,652 | | | $ | 552,426 | | | $ | 1,873,022 | | | $ | 765,652 | | Accrued liabilities to management | | | 1,156,295 | | | | 631,809 | | | | 1,542,130 | | | | 1,156,295 | | Notes payable | | | 6,949 | | | | 212,438 | | | | 4,392 | | | | 6,949 | | Advances from affiliate | | | 220,897 | | | | 220,897 | | | | 220,897 | | | | 220,897 | | Finance lease obligations | | | 50,843 | | | | 72,208 | | | | 92,270 | | | | 50,843 | | Deferred revenue | | | | 9,575 | | | | 0 | | Operating lease obligations | | | 38,037 | | | | 22,813 | | | | 114,231 | | | | 38,037 | | Convertible debentures | | | 175,000 | | | | 220,000 | | | | 144,000 | | | | 175,000 | | Liabilities attributable to discontinued operations | | | 125,851 | | | | 125,851 | | | | 125,851 | | | | 125,851 | | Total Current Liabilities | | | 2,539,524 | | | | 2,058,442 | | | | 4,126,368 | | | | 2,539,524 | | | | | | | | | | | | | | | | | | | Long term finance lease obligations | | | 119,146 | | | | 153,180 | | | | 331,748 | | | | 119,146 | | Long term operating lease obligations | | | 67,318 | | | | - | | | | 140,434 | | | | 67,318 | | Total Liabilities | | | | 4,598,550 | | | | 2,725,988 | | | | | | | | | | | | | | | | | | | Commitments and contingencies | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stockholders’ Deficit | | | | | | | | | | | | | | | | | Common stock, $0.001 par value, 1,500,000,000 shares authorized; 939,942,783 and 502,936,805 shares issued and outstanding, respectively | | | 939,943 | | | | 502,937 | | | Common stock, $0.001 par value, 2,500,000,000 shares authorized; 1,132,361,005 and 939,942,783 shares issued and outstanding, respectively | | | | 1,132,361 | | | | 939,943 | | Additional paid-in capital | | | 26,536,430 | | | | 14,219,736 | | | | 37,826,795 | | | | 26,536,430 | | Accumulated deficit | | | (28,868,189 | ) | | | (16,285,222 | ) | | | (41,624,749 | ) | | | (28,868,189 | ) | Total Stockholders’ Deficit | | | (1,391,816 | ) | | | (1,562,549 | ) | | | (2,665,593 | ) | | | (1,391,816 | ) | | | | | | | | | | | | | | | | | | TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | $ | 1,334,172 | | | $ | 649,073 | | | $ | 1,932,957 | | | $ | 1,334,172 | |
The accompanying notes are an integral part of these consolidated financial statements.
Organicell Regenerative Medicine, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended October 31, 20202021 and 20192020 | | | | | | | | | | | | | | | | | | | Year Ended October 31, | | | Year Ended October 31, | | | | 2020 | | | 2019 | | | 2021 | | | 2020 | | Revenues | | $ | 3,055,776 | | | $ | 1,702,271 | | | $ | 5,597,487 | | | $ | 3,055,776 | | | | | | | | | | | | Cost of revenues | | | 398,606 | | | | 300,837 | | | | 547,881 | | | | 398,606 | | | | | | | | | | | | Gross profit | | | 2,657,170 | | | | 1,401,434 | | | | 5,049,606 | | | | 2,657,170 | | | | | | | | | | | | General and administrative expenses | | | 15,095,111 | | | | 3,177,924 | | | | 17,793,709 | | | | 15,095,111 | | | | | | | | | | | | Loss from operations | | | (12,437,941 | ) | | | (1,776,490 | ) | | | (12,744,103 | ) | | | (12,437,941 | ) | | | | | | | | | | | Other income (expense) | | | | | | | | | | | | | | | | | Interest expense | | | (177,744 | ) | | | (46,600 | ) | | | (37,934 | ) | | | (177,744 | ) | Other | | | 32,717 | | | | 84,791 | | | | 25,477 | | | | 32,717 | | | | | | | | | | | | Loss before income taxes | | | (12,582,967 | ) | | | (1,738,299 | ) | | | (12,756,560 | ) | | | (12,582,967 | ) | | | | | | | | | | | Provision for income taxes | | | - | | | | - | | | | 0 | | | | 0 | | | | | | | | | | | | Net loss | | | (12,582,967 | ) | | | (1,738,299 | ) | | $ | (12,756,560 | ) | | $ | (12,582,967 | ) | Net loss attributable to the non-controlling interest | | | - | | | | (978 | ) | | Net loss attributable to Organicell Regenerative Medicine, Inc. | | $ | (12,582,967 | ) | | $ | (1,737,321 | ) | | | | | | | | | | | | Net loss per common share - basic and diluted | | $ | (0.02 | ) | | $ | (0.00 | ) | | $ | (0.01 | ) | | $ | (0.02 | ) | | | | | | | | | | | Weighted average number of common shares outstanding - basic and diluted | | | 670,817,666 | | | | 466,984,320 | | | | 1,059,488,329 | | | | 670,817,666 | |
The accompanying notes are an integral part of these consolidated financial statements. Organicell Regenerative Medicine, Inc. CONSOLIDATED CHANGES TO STOCKHOLDERS’ DEFICIT For the Years Ended October 31, 20192020 and 20202021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Additional | | | | | | Total Stockholders’ Deficit | | Non- | | Total | | | Common Stock | | | Additional Paid In | | | Accumulated | | | Total Stockholders’ | | | | Common Stock | | Paid In | | Accumulated | | Attributable | | | Controlling | | Stockholders’ | | | Shares | | | Par Value | | | Capital | | | Deficit | | | Deficit | | | | Shares | | Par Value | | Capital | | Deficit | | To Organicell | | Interest | | Deficit | | | Balance October 31, 2018 | | | 436,490,110 | | | $ | 436,490 | | | $ | 12,853,608 | | | $ | (14,547,901 | ) | | $ | (1,257,803 | ) | | $ | 42,977 | | | $ | (1,214,826 | ) | | Sale of common stock | | | 20,352,000 | | | | 20,352 | | | | 439,148 | | | | | | | | 459,500 | | | | | | | | 459,500 | | | Exchange of debt obligations | | | 7,619,695 | | | | 7,620 | | | | 196,044 | | | | - | | | | 203,664 | | | | - | | | | 203,664 | | | Stock-based compensation | | | 31,675,000 | | | | 31,675 | | | | 695,737 | | | | - | | | | 727,412 | | | | - | | | | 727,412 | | | Acquisition of non-controlling interests | | | 6,800,000 | | | | 6,800 | | | | 35,199 | | | | - | | | | 41,999 | | | | (41,999 | ) | | | - | | | Net loss | | | - | | | | - | | | | - | | | | (1,737,321 | ) | | | (1,737,321 | ) | | | (978 | ) | | | (1,738,299 | ) | | Balance October 31, 2019 | | | 502,936,805 | | | | 502,937 | | | | 14,219,736 | | | | (16,285,222 | ) | | | (1,562,549 | ) | | | - | | | | (1,562,549 | ) | | | 502,936,805 | | | $ | 502,937 | | | $ | 14,219,736 | | | $ | (16,285,222 | ) | | $ | (1,562,549 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sale of common stock | | | 65,454,170 | | | | 65,454 | | | | 2,129,867 | | | | - | | | | 2,195,321 | | | | | | | | 2,195,321 | | | | 65,454,170 | | | | 65,454 | | | | 2,129,867 | | | | - | | | | 2,195,321 | | | | | | | | | | | | | | | | | | | | | | | | Conversion of debt and accrued interest | | | 40,000,000 | | | | 40,000 | | | | 559,400 | | | | - | | | | 599,400 | | | | | | | | 599,400 | | | | 40,000,000 | | | | 40,000 | | | | 559,400 | | | | - | | | | 599,400 | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation | | | 331,391,808 | | | | 331,392 | | | | 9,583,107 | | | | - | | | | 9,914,499 | | | | | | | | 9,914,499 | | | | 331,391,808 | | | | 331,392 | | | | 9,583,107 | | | | - | | | | 9,914,499 | | | | | | | | | | | | | | | | | | | | | | | | Exchange of debt | | | 160,000 | | | | 160 | | | | 44,320 | | | | - | | | | 44,480 | | | | | | | | 44,480 | | | | 160,000 | | | | 160 | | | | 44,320 | | | | - | | | | 44,480 | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | - | | | | - | | | | - | | | | (12,582,967 | ) | | | (12,582,967 | ) | | | - | | | | (12,582,967 | ) | | | - | | | | - | | | | - | | | | (12,582,967 | ) | | | (12,582,967 | ) | | | | | | | | | | | | | | | | | | | | | | | Balance October 31, 2020 | | | 939,942,783 | | | $ | 939,943 | | | $ | 26,536,430 | | | $ | (28,868,189 | ) | | $ | (1,391,816 | ) | | $ | - | | | $ | (1,391,816 | ) | | | 939,942,783 | | | | 939,943 | | | | 26,536,430 | | | | (28,868,189 | ) | | | (1,391,816 | ) | | | | | | | | | | | | | | | | | | | | | | | Sale of common stock | | | | 52,766,234 | | | | 52,766 | | | | 2,654,504 | | | | | | | | 2,707,270 | | | | | | | | | | | | | | | | | | | | | | | | Exchange of accounts payable for stock | | | | 676,988 | | | | 677 | | | | 112,529 | | | | | | | | 113,206 | | | | | | | | | | | | | | | | | | | | | | | | Stock issued for future services | | | | 60,000 | | | | 60 | | | | 9,940 | | | | | | | | 10,000 | | | | | | | | | | | | | | | | | | | | | | | | Stock based compensation | | | | 138,915,000 | | | | 138,915 | | | | 8,513,392 | | | | | | | | 8,652,307 | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | | | | | | | | | | | | (12,756,560 | ) | | | (12,756,560 | ) | | | | | | | | | | | | | | | | | | | | | | | Balance October 31, 2021 | | | | 1,132,361,005 | | | $ | 1,132,361 | | | $ | 37,826,795 | | | $ | (41,624,749 | ) | | $ | (2,665,593 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
Organicell Regenerative Medicine, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended October 31, 20202021 and 20192020
| | | | | | | | | | | | | | | | | | | Year Ended October 31, | | | Year Ended October 31, | | | | 2020 | | | 2019 | | | 2021 | | | 2020 | | CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | | | Net loss | | $ | (12,582,967 | ) | | $ | (1,738,299 | ) | | $ | (12,756,560 | ) | | $ | (12,582,967 | ) | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | | | | | Depreciation expense | | | 36,775 | | | | 14,794 | | | | 52,702 | | | | 36,775 | | Bad debt expense | | | 340 | | | | 10,635 | | | | 0 | | | | 340 | | Interest expense on conversion of debt | | | 118,350 | | | | - | | | Interest expense on conversion of Funding Facility | | | | 0 | | | | 118,350 | | Stock-based compensation | | | 9,914,499 | | | | 727,412 | | | | 8,652,307 | | | | 9,914,499 | | Interest payment in kind | | | - | | | | 13,668 | | | Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | | Accounts receivable, net of allowance for bad debts | | | (3,690 | ) | | | 11,359 | | | | (74,765 | ) | | | (3,690 | ) | Prepaid expenses | | | 42,604 | | | | (106,173 | ) | | | 19,143 | | | | 42,604 | | Inventories | | | (68,848 | ) | | | (77,963 | ) | | | (88,016 | ) | | | (68,848 | ) | Accounts payable and accrued expenses | | | 218,755 | | | | 75,589 | | | | 1,220,576 | | | | 218,755 | | Accrued liabilities to management | | | 524,483 | | | | 525,044 | | | | 385,835 | | | | 524,483 | | Security deposits | | | (12,800 | ) | | | - | | | | (29,882 | ) | | | (12,800 | ) | Deferred revenue | | | - | | | | (21,520 | ) | | | 9,575 | | | | 0 | | Net cash used in operating activities | | | (1,812,499 | ) | | | (565,454 | ) | | | (2,609,085 | ) | | | (1,812,499 | ) | | | | | | | | | | | | | | | | | | CASH FLOWS FROM INVESTING | | | | | | | | | | | | | | | | | Purchase of fixed assets | | | (138,694 | ) | | | (32,736 | ) | | | (496,011 | ) | | | (138,694 | ) | | | | | | | | | | | Net cash used in investing activities | | | (138,694 | ) | | | (32,736 | ) | | | (496,011 | ) | | | (138,694 | ) | | | | | | | | | | | | | | | | | | CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | | | | | | Proceeds from issuance of notes payable | | | 400,000 | | | | 255,000 | | | | 0 | | | | 400,000 | | Payments on finance lease | | | (55,399 | ) | | | (14,207 | ) | | | (50,844 | ) | | | (55,399 | ) | Repayments of notes payable | | | (130,489 | ) | | | (12,562 | ) | | | (33,557 | ) | | | (130,489 | ) | Proceeds from sale of common stock | | | 2,195,321 | | | | 459,500 | | | | 2,707,270 | | | | 2,195,321 | | Net cash provided by financing activities | | | 2,409,433 | | | | 687,731 | | | | 2,622,869 | | | | 2,409,433 | | | | | | | | | | | | | | | | | | | Increase in cash | | | 458,240 | | | | 89,541 | | | Increase (decrease) in cash | | | | (482,227 | ) | | | 458,240 | | Cash at beginning of period | | | 132,557 | | | | 43,016 | | | | 590,797 | | | | 132,557 | | Cash at end of period | | $ | 590,797 | | | $ | 132,557 | | | $ | 108,570 | | | $ | 590,797 | | | | | | | | | | | | | | | | | | | SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | | | | | | | | | | | Cash paid for taxes | | $ | – | | | $ | – | | | $ | 0 | | | $ | 0 | | Cash paid for interest | | $ | 56,877 | | | $ | 20,165 | | | $ | 28,473 | | | $ | 56,877 | | | | | | | | | | | | | | | | | | | NON-CASH INVESTING AND FINANCING TRANSACTIONS: | | | | | | | | | | | | | | | | | Exchange of accounts payable for common stock | | | $ | 113,206 | | | $ | 0 | | Stock issued for future services | | | $ | 10,000 | | | $ | 0 | | Finance lease obligations | | $ | - | | | $ | 239,595 | | | $ | 304,873 | | | $ | 0 | | Operating lease – right of use assets | | $ | 117,659 | | | $ | 55,777 | | | $ | 235,313 | | | $ | 117,659 | | Conversion of debt and accrued interest into common stock | | $ | 643,880 | | | $ | 203,668 | | | $ | 0 | | | $ | 643,880 | |
The accompanying notes are an integral part of these consolidated financial statements.
ORGANICELL REGENERATIVE MEDICINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Organicell Regenerative Medicine, Inc. (formerly Biotech Products Services and Research, Inc.) (“Organicell” or the “Company”) was incorporated on August 9, 2011 in the State of Nevada. The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and to provide other related services. Our proprietary products are derived from perinatal sources and are principally used in the health care industry administered through doctors and clinics (collectively, the “Providers”). On May 21, 2018, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the Company’s name from Biotech Products Services and Research, Inc. to Organicell Regenerative Medicine, Inc., effective June 20, 2018 (the “Name Change”). As discussed in Note 12, and during November 2021 the Name Change has not yet beenwas effectuated in the marketplace by the Financial Industry Regulatory Agency (“FINRA”). For the year ended October 31, 2020,2021, the Company principally operated through General Surgical of Florida, Inc., a Florida corporation (“General Surgical”) and wholly owned subsidiary, with a business purpose to sell therapeutic products to Providers. During November 2020, the Company formed Livin Again Inc. (“Livin”), a wholly owned subsidiary of the Company for the purpose of among other things, providing advertising and marketing services, to Providers of medical and other healthcare, anti-aging and regenerative services (“Regenerative Services”) including FDA-approved IV vitamin and mineral liquid infusions. To date, there has been no significant activity and the Company has no timetable, if any, as to when IV Drip Therapies revenues will commence. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly ownedwholly-owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Reclassifications
The advances from affiliates previously included in accrued liabilities to management at October 31, 2019 have been reclassified to conform with the current financial statement presentation.
Concentrations of 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 $250,000 per institution. At October 31, 2020,2021, the Company helddid not hold cash balances in oneany financial institution in excess of FDIC insurance coverage limits. During the fiscal year ended October 31, 2021, the Company sold a total of approximately $2,140,000 (37.6%) to a large distributor and the distributors customers, approximately $709,000 (12.5%) to customers of another distributor and $881,600 (15.7%) of product to a management services organization (MSO) that provides administrative services and contracts for medical supplies for several medical practices. During the fiscal year ended October 31, 2020, the Company did not have any customer that accounted for more than 10% 10% of the total revenues for the year ended October 31, 2020.
During the fiscal year ended October 31, 2019,2021, the Company had one customer thatpurchased the tissue raw material used in manufacturing of its products from two suppliers, of which each accounted for approximately $206,400 148,600of revenues ( and $12.2131,600 or 53.0%). No other customer accounted for more than 10% and 47.0%, respectively, of the total revenues for the year ended October 31, 2019.
amount of tissue raw material purchased during that period. During the fiscal year ended October 31, 2020, the Company purchased the tissue raw material used in manufacturing of its products from two suppliers, of which each accounted for approximately $179,000and $30,000or 85.6% and 14.4%, respectively, of the total amount of tissue raw material purchased during that period. During the period November 1, 2018 through April 30, 2019, the Company purchased finished goods inventory that was sold to customers from two suppliers, of which each accounted for approximately $29,000 and $65,000 or 31.0% and 69.0%, respectively, of the total amount of finished goods inventory purchased during that period. During the May 1, 2019 through October 31, 2019, the Company purchased the tissue raw material used in manufacturing of its products from two suppliers, of which each accounted for approximately $61,000 and $47,500 or 56.0% and 44.0%, respectively, of the total amount of tissue raw material purchased during that period.
The Company’s sales and supply agreements are non-exclusive and the Company does not believe it has any exposure based on the customers of its products and/or the availability of raw materials and/or products from other suppliers. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Accounts Receivable
Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions. The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. For the year ended October 31, 20202021 and 2019,2020, the Company recorded bad debt expense of $340 0and $10,635340, respectively., respectively. Inventory Inventory is stated at the lower of cost or net realizable value using the average cost method. We provide reserves for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At October 31, 2020,2021, we determined that there were not any reserves required in connection with our finished goods.
Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of property and equipment range from 3 to 15 years. Upon sale or retirement, the cost and related accumulated depreciation and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred. Revenue Recognition The Company follows the guidance of FASB Accounting Standards Update (“ASU”) Topic 606 “Revenue from Contracts with Customers” which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts. The Company applied the new standard using a modified retrospective approach. 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.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.
Net Income (Loss) Per Common Share 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.equity instruments. At October 31, 2020,2021, the Company had 9,500,000common shares issuable upon the exercise of warrants and unpaid Original Base Salary and Incremental Salary that could be convertible into approximately 35,684,900 common shares that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2020.2021. At October 31, 2019,2020, the Company had4,529,371 9,500,000 common shares issuable upon the exercise of warrants and unpaid Original Base Salary and Incremental Salary that could be convertible into approximately 32,671,100 common shares that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2019.2020.
Stock-Based Compensation All stock-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.
Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based upon the estimated fair value of the option or warrant.
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 $233,5261,120,067 and $54,863233,526 for the years ended October 31, 20202021 and 2019,2020, respectively. The research and development costs primarily relate to the filing and approval of IND applications and the performance of clinical trials. Income Taxes The Company is required to filefiles a consolidated tax return that includes all of its subsidiaries. Provisions for income taxes are based on taxes payable or refundable for the current year taxable income for federal and state income tax reporting purposes and deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of the operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with FASB Topic 740 – Income Taxes. This pronouncement prescribes a recognition threshold and measurement process for financial statement recognition of uncertain tax positions taken or expected to be taken in a tax return. The interpretation also provides guidance on recognition, derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. For the years ended October 31, 20202021 and 20192020 the Company incurred operating losses, and therefore, there was not any income tax expense amount recorded during those periods. There is a full valuation allowance established for the tax benefit associated with the net losses for the years ended October 31, 20202021 and 2019.
Since January 1, 2018, the nominal corporate tax rate in the United States of America is 21 percent due to the passage of the “Tax Cuts and Jobs Act” on December 20, 2017 by the US Senate and House of Representatives.2020.
Valuation of Derivatives The Company evaluates its financial instruments, including convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. Sequencing
The Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. The Company currently has 1,500,000,000 2,500,000,000 authorized shares of common stock of which 992,207,783 1,149,204,595 shares are issued and outstanding. As described in Note 10, the Company approved the filingoutstanding as of an amendment to the Articles of Incorporation of the Company to increase the authorized shares of common stock from 1,500,000,000 to 2,500,000,000 (“Amendment”).January 28, 2022. The Company expects that it will continue to issue common stock in the future in connection with debt and/or equity financings, transactions with third parties, performance incentives and as compensation to its employees. UponCurrently the effectiveness of the Amendment referred to above, expected to be February 9, 2021, the Company will have a sufficient numberamount of authorized shares is sufficient to meet allprovide for the additional shares that the Company may be contingently obligated issuances of common stockto issue under existing arrangements.
Fair Value of Financial Instruments
The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made. The Company follows FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. The Company follows the provisions of ASC 820 with respect to its financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
Level one — Quoted market prices in active markets for identical assets or liabilities;
Level two — Inputs other than level one inputs that are either directly or indirectly observable such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level three — Unobservable inputs that are supported by little or no market activity and developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company did not have any convertible instruments outstanding at October 31, 20202021 and October 31, 20192020 that qualify ascontain derivatives. Operating and Finance Lease Obligations Effective November 1, 2019,Under the Company adoptedprovisions of Accounting Standards Update (ASU) No. 2016-02 (Topic 842) (“ASC 842”), that requires organizations thatthe Company recognizes a right of use (“ROU”) asset and corresponding lease assets to recognize assets and liabilities onliability for all operating leases upon commencement of the balance sheet and provide updated disclosures related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases.lease. The Company adoptedapplies the new standard using a modified retrospective approach. The modified retrospective approach includedwhich includes a number of optional practical expedients on leases that commenced before the effective date of ASC 842, including continuing to classifyaccount for leases that commenced before the effective date in accordance with previous guidance, unless the lease is modified. modified and the inclusion of amounts pertaining to the maintenance portion of the leased assets.
Under the provisions of ASC 842, the Company is required to recognize a right of use (“ROU”) asset and corresponding lease liability for all operating leases upon commencement of the lease. The Company’s policy is to treat operating leases that have a term of one year or less at lease commencement date and do not include a purchase option that is reasonably certain of exercise, consistent with the lease recognition approach as previously outlined under ASC 840. In addition, month to month leases which do not involve additional financial commitments on the part of the Company are also treated consistent with the lease recognition approach as previously outlined under ASC 840. The Company has established a capitalization threshold of $15,000$15,000 in determining whether any future operating leases will be capitalized. The adoption of ASC 842 resulted in the Company retrospectively recording a ROU asset and corresponding operating lease obligation of $55,777 on November 1, 2018.
Subsequent Events The Company has evaluated subsequent events that occurred after October 31, 20202021 through the financial statement issuance date for subsequent event disclosure consideration.or recording.
NOTE 3 – GOING CONCERN The 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 operating losses of $12,437,94112,744,103 for the year ended October 31, 2020.2021. In addition, the Company had an accumulated deficit of $28,868,18941,624,749 at October 31, 2020.2021. The Company had a negative working capital position of $1,693,7413,609,174 at October 31, 2020.2021.
New United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective beginning in May 2021 (postponed from November 2020 due to the COVID -19 pandemic) require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). The Company has not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s. In addition to the above, the outbreak of the novel coronavirus (“COVID-19”) during March 2020 and the resulting adverse public health developments and economic effects toof the ongoing COVID-19 pandemic in the United States business environments have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities, (b) is seeking to raise additional debt and/or equity financing to support working capital requirements, and (c) continues to take steps to stabilize and increase revenues from the sale of its products.
As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted, (b) the United States economy resumes to pre-COVID-19 conditions and (b)and/or (c) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and theresearch 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 (1) the effects of the COVID-19 crisis resume to pre-COVID-19 market conditions, (2) the Company will be able to establish a stabilized source of revenues, (3) obligations to the Company’s creditors are not accelerated, (4) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations, (5) 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, (2) the effects of the COVID-19 crisis resume to pre-COVID-19 market conditions, (3) 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, (4) obligations to the Company’s creditors are not accelerated, (5) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations, (6) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and theongoing safety and efficacy of its products, andand/or (7) 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 as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and our business. In addition, 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, its expected requiredstrategy. There is no assurance that the Company’s research and development activities will be successful or otherwise obtain sufficient working capitalthat the Company will be able to cover ongoing cash requirements.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. As described above, the COVID-19 crisis has significantly impaired the Company and the overall Unites States and World economies.
If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved, if the Company’s ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws. As of October 31, 2020,2021, 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.
NOTE 4 – INVENTORIES
Schedule of Inventories | | | | | | | | | | | | | | | | | | | October 31, 2020 | | | October 31, 2019 | | | October 31, 2021 | | | October 31, 2020 | | Raw materials and supplies | | $ | 26,199 | | | $ | 5,123 | | | $ | 92,601 | | | $ | 26,199 | | Finished goods | | | 120,612 | | | | 72,840 | | | | 142,226 | | | | 120,612 | | | | | | | | | | | | Total inventories | | $ | 146,811 | | | $ | 77,963 | | | $ | 234,827 | | | $ | 146,811 | |
NOTE 5 -– PROPERTY AND EQUIPMENT
Schedule of Property and Equipment | | | | | | | | | | | October 31, 2021 | | | October 31, 2020 | | Computer equipment | | $ | 10,684 | | | $ | 8,653 | | Finance lease equipment | | | 544,378 | | | | 239,595 | | Manufacturing equipment | | | 258,791 | | | | 171,430 | | | | | 813,853 | | | | 419,678 | | Less: accumulated depreciation | | | (107,146 | ) | | | (54,444 | ) | | | | 706,707 | | | | 365,234 | | Construction in progress: | | | | | | | | | Leasehold improvements | | | 406,709 | | | | - | | Total property and equipment, net | | $ | 1,113,416 | | | $ | 365,234 | |
Depreciation expense totaled $52,702 and $36,775 for the years ended October 31, 2021 and 2020, respectively.
As described in Note 6, during the year ended October 31, 2021, the Company began the build-out of additional laboratory processing, product distribution and administrative office capacity at its Basalt Lab Lease location. The total costs incurred as of October 31, 2021 was $406,709 and is reflected as construction in progress. Amortization of these costs will begin once the build-out is complete and the facility becomes operational.
NOTE 6 – LEASE OBLIGATIONS Schedule of Property and Equipment | | | | | | | | | | | October 31, 2020 | | | October 31, 2019 | | Computer equipment | | $ | 8,653 | | | $ | 8,653 | | Finance lease equipment | | | 239,595 | | | | 239,595 | | Manufacturing equipment | | | 171,430 | | | | 32,736 | | | | | 419,678 | | | | 280,984 | | Less: accumulated depreciation | | | (54,444 | ) | | | (17,669 | ) | Total property and equipment, net | | $ | 365,234 | | | $ | 263,315 | |
Finance Lease Obligations: During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $239,595. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $4,513 $4,513 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00.$1.00. As a result, the lease agreement is being accounted for as a finance lease obligation. The annual interest rate charged in connection with the lease is 4.5%. The leased equipment isare being depreciated over their estimated useful lives of 15 years. Depreciation expense totaledDuring October 2021, the Company entered into a second lease agreement in the amount of $36,775 and $14,794304,873 for certain lab equipment that is being installed at the years ended October 31, 2020Basalt lab location. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $5,478 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a finance lease obligation. The annual interest rate charged in connection with the lease is 3.0%. Lease payments and 2019, respectively.depreciation of the leased equipment has not commenced pending completion of the Basalt lab buildout (see below) and the facility becomes operational. The leased equipment will be depreciated over their estimated useful lives of 15
years. NOTE 6 – LEASE OBLIGATIONS
2019 Lab Facility:The weighted average remaining term of the Company’s Finance Leases as of October 31, 2021 was 45.4 months. The minimum lease payments pursuant to the Finance Leases are as follows:
Schedule of Financial Lease Payment | | | | | | | Minimum | | Year Ended October 31, | | Rent | | 2022 | | $ | 103,454 | | 2023 | | | 119,887 | | 2024 | | | 83,783 | | 2025 | | | 65,731 | | 2026 | | | 65,731 | | Thereafter | | | 16,432 | | Total undiscounted finance lease payments | | | 455,018 | | Less: imputed interest | | | (31,000 | ) | Present value of finance lease liabilities | | $ | 424,018 | |
Operating Lease Obligations:
Administrative Office
The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. During July 2020, the Company entered into an extension of the operating lease agreement. The lease term is for an additional 36 months beginning July 1, 2020 and expiring June 30, 2023, with a monthly rental rate of $3,500. On July 1, 2020, in connection with the adoption of ASC 842, the Company recorded a ROU asset and corresponding operating lease obligation of $117,659 (present value of the associated leased payments based on an assumed borrowing rate of 4.5%).
Lease amortization expense for the year ended October 31, 2021 and 2020 was $38,037 and $35,117, respectively.
Beginning October 1, 2020, the Company entered into a second lease agreement with Mariluna LLC for office space located in Aspen, CO. The initial term of the lease was for one year, expiring on September 30, 2021 and the lease has been subsequently extended on a month to month basis. Under the terms of the lease, the Company is required to make monthly rental payments of $6,500 and was required to provide a security deposit of $11,000 upon execution of the lease agreement.
Laboratory Facilities: In connection with the Company’s decision to again operate a placental tissue bank processing laboratory in Miami, Florida, during February 2019, the Company entered into a renewable month to month lease agreement (“Miami Lab Lease”) for an approximately 450 square foot laboratory and a 100 square foot administrative office facility. Monthly lease payments are approximately $5,200plus administrative fees and taxes. In connection with the Miami Lab Lease, the Company was required to post a security deposit of $6,332. During6,332. From November 2020 through May 31, 2021, the Company entered into an additional month to month lease agreement in the same facility as the Miami Lab Lease for an additional 390 square foot laboratory. Monthly lease payments arewere approximately $4,400plus administrative fees and taxes.
Finance Lease Obligations:
During March 2019,2021, the Company entered into a lease agreement for certain lab equipmentan approximately 2,452 square foot commercial space located in the amount of $239,595Basalt, Colorado (the “Basalt Lab Lease”). Under the termsThe Company intends to build additional laboratory processing, product distribution and administrative office capacity from this location. The term of the lease agreement,Basalt Lab Lease is for three years and may be renewed for an additional (3) three-year term provided the Company is required to make 60 equal monthly paymentsnot in default. Rental expense is $6,800 per month and provides for annual increases of $4,513 plus applicable sales taxes. Under3% or the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreementDenver Aurora Metropolitan CPI index, whichever is being accounted for as a finance lease obligation. The annual interest rate charged ingreater. In connection with the leaseBasalt Lab Lease, the Company was required to post a security deposit of $13,600. The Company is currently constructing the laboratory and office build-out at an estimated cost of $4.5500,000%. The leased equipment are being depreciated over their estimated useful lives of 15 years.
Company expects the construction to be completed during the quarter ended January 31, 2022. The minimum lease payments pursuant to the Finance Lease are as follows:
Finance Lease, Liability Maturity | | | | | | | Minimum | | Year Ended October 31, | | Rent | | 2021 | | $ | 58,669 | | 2022 | | | 54,156 | | 2023 | | | 54,156 | | 2024 | | | 18,052 | | Total undiscounted finance lease payments | | | 185,033 | | Less: imputed interest | | | (15,044 | ) | Present value of finance lease liabilities | | $ | 169,989 | |
Operating Lease Obligations:
Administrative Office
The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. The monthly rental rate is $2,900. On November 1, 2018, in connection with the adoption of ASC 842, the Company has recorded a ROU asset and corresponding operating lease obligation of $55,777235,313. During July 2020, the Company entered into an extension of the operating lease agreement. The lease term is for an additional 36 months beginning July 1, 2020, with a monthly rental rate of $3,500. The present (present value of the associated leased payments based on an assumed borrowing rate of 4.5% was $117,659)..
Lease amortization expense for the years ended October 31, 20202021 and 20192020 was $35,11747,967 and $32,9640, respectively., respectively. The weighted average remaining term of the Company’s operating leases as of October 31, 2021 was 24.1 months. The minimum lease payments pursuant to the Aspen, CO office lease and the Basalt Lab Lease are as follows: Operating Lease, Liability, Maturity | | | | | | Schedule of Operating Lease | | | | | | | | Minimum | | | Minimum | | Year Ended October 31, | | Rent | | | Rent | | 2021 | | $ | 42,000 | | | 2022 | | | 42,000 | | | $ | 125,232 | | 2023 | | | 28,000 | | | | 113,729 | | 2024 | | | | 28,857 | | Total undiscounted operating lease payments | | | 112,000 | | | | 267,818 | | Less: imputed interest | | | (6,645 | ) | | | (13,153 | ) | Present value of operating lease liabilities | | $ | 105,355 | | | $ | 254,665 | |
Beginning October 1, 2020, the Company entered into a second lease agreement with MariLuna LLC for office space located in Aspen, CO. The lease expires on September 30, 2021 and does not provide for any renewal terms. Under the terms of the lease. The Company is required to make monthly rental payments of $6,500 and was required to provide a security deposit of $11,000 upon execution of the lease agreement.
NOTE 7 – RELATED PARTY TRANSACTIONS On February 26, 2020, April 25, 2020 and June 29, 2020, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s employment agreements were amended. See Note 12 for a more detailed description of the executive employment agreements and the respective amendments referred to above. Effective February 26, 2020, Mr. Bothwell was granted cashless warrants to purchase 7,500,000shares of common stock of the Company. The newly granted warrants vest immediately, have an exercise price of $0.028 per share and are exercisable for ten years from the effective date of the grant.grant (see Note 11). During April 2020, June 2020, August 2020, and September 2020, February 2021 and April 2021, each of the current executives of the Company, Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell and Dr. George Shapiro (“Current Executives”) were granted rights under the Management and Consultant Performance Plan (“MCPP”) to receive common stock of the Company based on the achievement of certain defined milestones. In addition, during June 2020, each of the current non-executive members of the Board were granted rights under the MCPP to receive common stock of the Company based on the achievement of certain defined milestones (see Note 10). On October 29, 2021, the Company entered into an Exchange Agreement (see Note 10) with the current executive officers of the Company (as well as other non-related party shareholders) whereby the executive officers of the Company exchanged an aggregate of 50,000,000 shares previously issued to them under consulting and employment agreements and/or pursuant to the MCPP for newly issued shares pursuant to the 2021 Plan (on a 1:1 basis).
The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. TheDuring July 2020, the term of the lease has beenwas extended through June 2023. The current monthly rent is $2,900 and beginningBeginning July 2020, the monthly rent increased from $2,900 to $3,500.$3,500. The Company paid a security deposit of $5,000.5,000. Total rent expense for the year ended October 31, 20202021 and 20192020 was $37,20042,000 and $34,80037,200, respectively.
Beginning October 1, 2020, the Company entered into a second lease agreement with MariLunaMariluna LLC for office space located in Aspen, CO. The initial term of the lease expireswas for one year, expiring on September 30, 2021 and does not provide for any renewal terms.the lease has been subsequently extended on a month to month basis. Under the terms of the lease. Thelease, the Company is required to make monthly rental payments of $6,500 and was required to provide a security deposit of $11,000 upon execution of the lease agreement. Total rent expense for the years ended October 31, 2021 and 2020 was $78,000 and $6,500, respectively. In connection with Mr. Bothwell’s executive employment agreements, the Company agreed to reimburse Rover Advanced Technologies, LLC, a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative fees, etc.) totaling $31,192 and $24,788 for the yearyears ended October 31, 2020.2021 and 2020, respectively. For the year ended October 31, 20202021, the Company sold a total of approximately $881,600 of product to a management services organization (“MSO”) that provides administrative services and 2019,contracts for medical supplies for several medical practices, including $211,505 of products purchased from the Company that were attributable to the medical practice owned by Dr. George Shapiro. Dr. Shapiro also has an indirect economic interest in the parent company that owns the MSO. For the year ended October 31, 2021, the total amount of sales of products to the medical practice owned by Dr. Allen Meglin and to customers related to our board of director members and/or employees of the CompanyMr. Michael Carbonara totaled $95,45513,820 and $71,65032,655, respectively.
From time to time, Mr. Bothwell and/or his respective affiliates have advanced funds to During the Company to pay for certain expenses of the Company. As offiscal year ended October 31, 2020, $1,965 is owedsales to Mr. Bothwell and/or his respective affiliates. In addition, at October 31, 2020, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $216,436, $233,655 and $649,407, respectively and consulting fees owedthe medical practices related to Dr. George Shapiro wereand Dr. Allen Meglin and to customers related to Mr. Michael Carbonara totaled $54,83353,740., $27,385, and $14,320, respectively.
During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 $0.02 per share for an aggregate purchase price of $220,000. During July, August and October 2020, the Company sold an additional 1,166,666 shares, 422,514 shares, and 625,000 shares of common stock to Dr. Allen Meglin at $0.03 per share, $0.10per share and $0.08$0.08 per share, respectively, for an aggregate purchase price of $127,251 (see Note 10). On October 10, 2019, the Company and Michael Carbonara, a director of the Company agreed to a convertible funding facility arrangement (“Funding Facility”) whereby Mr. Carbonara or its designee funded the Company $500,000. The Funding Facility was converted into 40,000,000 shares of newly issued restricted common stock of the Company on February 12, 2020, issued to Republic Asset Holdings LLC, a Company controlled by Mr. Carbonara.
On April 27, 2020, the Company sold 5,000,000shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a directorLLC at $0.02 per share for an aggregate purchase price of $100,000. On February 22, 2021, the Company sold 1,818,181 shares of common stock to Republic Asset Holdings LLC at $0.02 0.055per share for an aggregate purchase price of $100,000 (see Note 10).
On February 26, 2020, the Company agreed to immediately grant Dr. George Shapiro, the Company’s Chief Medical Officer (“CMO”) 5,000,000 shares of common stock in recognition of past services provided to the Company through February 2020. In addition, the Company agreed to enter into a consulting agreement with the CMO to provide ongoing services to the Company. The CMO will receive compensation of $82,250 annually, commencing March 1, 2020. The term of the consulting agreement is one year, with automatic renewals for annual periods thereafter unless prior written notice is provided by either party of the desire to terminate. During February 2021, the consulting arrangement was amended whereby the CMO’s accrued and unpaid consulting fees of $82,250 through February 2021 were fully satisfied through the issuance of 500,000 shares of newly issued common stock of the Company. Furthermore, until the CMO becomes a full-time employee of the Company and provided the CMO continues to serve in his current position, the CMO shall receive compensation equal to $27,000 per quarter beginning May 1, 2021, payable in cash or in stock (based on the average monthly trading price of the common stock during the applicable quarter) at the option of the Company. In connection with Mr. Robert Zucker’s resignation as a member of the Board of Directors of the Company in April 2020, the Board approved the issuance to Mr. Zucker of 736,808 shares of unregistered common stock of the Company valued at $0.022 per share, the closing price of the common stock of the Company on the grant date (see Note 10).
On May 28, 2020, the Company entered into a distribution agreement with a company owned by Jack Mitrani, the son of Mr. Mitrani. Under the terms of the agreement, the Company agreed to grant the distributor 3,000,000 shares of unregistered common stock valued at $0.115per share, the closing price of the common stock of the Company on the grant date (see Note 10). Effective December 21, 2020, the Company granted a bonus of $50,000and 15,000,000 shares of common stock of the Company each to Mr. Mitrani, Dr. Mitrani and Mr. Bothwell and 1,000,000 shares of common stock of the Company each to Mr. Carbonara and Dr. Allen Meglin (see Note 10).
At October 31, 2021, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $275,924, $362,455 and $843,478, respectively and consulting fees owed to Dr. George Shapiro were $54,000. At October 31, 2020, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $216,436, $233,655 and $649,407, respectively and consulting fees owed to Dr. George Shapiro were $54,833.
NOTE 8 -– NOTES PAYABLE Private Placement Of Convertible Debentures On June 20, 2018, the Company issued a total of $150,000of convertible 6%6% debentures (“150,000 Debentures”) to an accredited investor. The principal amount of the $150,000 Debentures, plus accrued and unpaid interest through June 30, 2019 were payable on the 10th business day subsequent to June 30, 2019, unless the payment of the $150,000 Debentures were prepaid at the sole option of the Company, were converted as provided for under the terms of the $150,000 Debentures, and/or accelerated due to an event of default in accordance with the terms of the $150,000 Debentures. Interest on the $150,000 Debentures for each calendar quarter ended beginning with the quarter ended June 30, 2018 is payable on the 10th business day following the immediately prior calendar quarter. The $150,000 Debentures havewere not yet been repaid as required.
On August 10, 2018, At October 31, 2021, the Company issued a total of $100,000 of convertible 6% debentures (“100,000 Debentures”) to two accredited investors. The principal amountbalance of the $100,000$150,000 Debentures plusoutstanding was $144,000 and accrued and unpaid interest through July 31, 2019 are payable on the 10th business day subsequent to July 31, 2019, unless the payment of the $100,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $100,000 Debentures. Interest on the $100,000 Debentures for each calendar quarter ended beginning with the quarter ended October 31, 2018 is payable on the 10th business day following the immediately prior calendar quarter.was $2,160.
During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of the $100,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction).
During October 2018, the Company issued a total of $70,000of convertible 6% debentures (“70,000 Debentures”) to two accredited investors. The principal amount of the $70,000 Debentures, plus accrued and unpaid interest through September 30, 2019 were payable on the 10th business day subsequent to September 30, 2019. The $70,000 Debentures were not paid on the required maturity dates. On June 25, 2020, the Company entered into a settlement and general release agreement with the holder of the $50,000$50,000 Debenture (one of the two holders that participated in the $70,000 Debentures described above), whereby the Company is required to repay the balance of the $50,000$50,000 Debenture in eight monthly installments of $6,250 plus outstanding accrued interest beginning June 30, 2020 and ending on January 31, 2021. During October 2020, the Company and the holder of the $20,000$20,000 debenture (one of the two holders that participated in the $70,000 Debentures described above), agreed to convert the principal amount of the $20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,300 into 160,000 shares of common stock of the Company (approximately $0.125 per share). The conversion price was at a discount to the trading price of $0.278$0.278 as of the effective date of the transaction, resulting in additional interest costs of $24,180, which have been recorded during the year ended October 31, 2020.
During March 2019, the Company issued a $30,000F-15
Table of convertible 6% debentures (“30,000 Debenture”) to one accredited investor. The principal amount of the $30,000 Debenture, plus accrued and unpaid interest through June 30, 2020 are payable on the 10th business day subsequent to June 30, 2020, unless the payment of the $30,000 Debenture is prepaid at the sole option of the Company, is converted as provided for under the terms of the $30,000 Debenture (see below), and/or accelerated due to an event of default in accordance with the terms of the $30,000 Debenture. Interest on the $30,000 Debenture for each calendar quarter ended beginning with the quarter ended June 30, 2019 is payable on the 10th business day following the immediately prior calendar quarter. During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction).Contents Unsecured Promissory Note On February 5, 2019, the Company entered into an unsecured loan agreement with a third party with a principal balance of $25,000. The outstanding principal was due March 8, 2019. The loan was not repaid on the maturity date as required. The third party subsequently agreed to apply amounts due for invoices due from third party for future purchases of the Company products to the extent of the outstanding balances owed by the Company in connection with the loan (interest and principal). As of October 31, 2020,2021, the remaining amount due under this arrangement was approximately $4,3924,392..
Credit Facility On September 19, 2019, the Company’s wholly owned subsidiary, General Surgical Florida, received $100,000$100,000 in connection with an unsecured line of credit (“Credit Facility”). The Credit Facility was fully repaid on November 2, 2020. Under the terms of the Credit Facility, the Company was required to make weekly payments averaging approximately $2,541 (payments$2,541 (payments totaling $132,160)$132,160). The effective annual interest rate was approximately 45.67%45.67%. Proceeds received from the Credit Facility were used for working capital purposes. Mr. Iglesias, who at the time was the Company’s Chief Executive Officer, provided a personal guaranty in connection with amounts required to paid under the Credit Facility.
Funding Facility
On October 10, 2019, the Company and an investor (“Noteholder”) agreed to a funding facility arrangement (“Funding Facility”) whereby the Noteholder was required to fund the Company an initial tranche of $100,000$100,000 on October 15, 2019 (“Initial Funding Date”) and had the option to fund the Company up to an aggregate of $500,000$500,000 (“Funding Facility Limit”) in minimum $100,000$100,000 monthly tranches by no later than February 15, 2020 (“Funding Expiration Date”). The Funding Facility matures on February 15, 2021 (“Maturity Date”) and accrues interest at 6.0% 6.0% per annum. The Funding Facility, plus all accrued interest, automatically converts into 40,000,000 shares of newly issued restricted common stock of the Company (“Converted Stock”) if the Noteholder funds the full $500,000$500,000 by the Funding Expiration Date. The Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company issued the Noteholder the Converted Stock to the Noteholders designated entity, Republic Asset Holdings LLC. The Company determined the fair value of the Converted Stock in accordance with ASC 820, which was determined to be approximately $599,400. As a result, the Company has recorded additional interest expense in the amount of $94,170, as of the date of conversion, representing the amount of the discount to the fair value of the Converted Stock associated with the conversion of the Funding Facility obligation totaling $505,230 on the date of conversion (principal and accrued interest). Mint Organics Inc.
On June 22, 2017, Mint Organics entered into an unsecured loan agreement with a third party (“Third Party”) with a principal balance of $60,000, an annual interest rate of 10%, and all accrued and unpaid interest and outstanding principal were due on the one-year anniversary of the note. The loan was not repaid on the maturity date as required.
On May 1, 2019, the Company, Mint Organics and the Third party agreed to a settlement of the outstanding loan whereby the Company agreed to issue the Third Party 2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction. In connection with the exchange, the Third Party provided a release to the Company in connection with any claims associated with the loan agreement.
Interest expense for the years ended October 31, 2020 and 2019 was $0 and $4,349, respectively.
NOTE 9 —– INCOME TAXES The Company files a consolidated federal income tax return that includes all of its subsidiaries. For the years ended October 31, 20202021 and 2019,2020, the Company incurred operating losses, and therefore, there was not any current income tax expense amount recorded during those periods.
The consolidated provision for income taxes for October 31, 20202021 and 20192020 consists of the following: Schedule of Components of Income Tax Expense (Benefit) | | | | | | | | | | Schedule of consolidated provision for income taxes | | | | | | | | | | | | Year Ended October 31, | | Year Ended October 31, | | | Year Ended October 31, | | Year Ended October 31, | | | | 2020 | | | 2019 | | | 2021 | | | 2020 | | Current: | | | | | | | | | | | | | | Federal | | $ | – | | | $ | – | | | $ | 0 | | | $ | 0 | | State | | | – | | | | – | | | | 0 | | | | 0 | | Current Income Tax Expense (Benefit) | | $ | – | | | $ | – | | | $ | 0 | | | $ | 0 | | Deferred: | | | | | | | | | | | | | | | | | Federal | | $ | (2,626,791 | ) | | $ | (185,045 | ) | | $ | (2,651,809 | ) | | $ | (2,626,791 | ) | State | | | (540,796 | ) | | | (19,471 | ) | | | (563,409 | ) | | | (540,796 | ) | Deferred Income Tax Expense (Benefit) | | | (3,167,587 | ) | | | (204,516 | ) | | | (3,215,218 | ) | | | (3,167,587 | ) | Change in Valuation Allowance | | | 3,167,587 | | | | 204,516 | ) | | | 3,215,218 | | | | (3,167,587 | ) | Income tax provision | | $ | – | | | $ | – | | | $ | 0 | | | $ | 0 | |
Effective tax rates differ from the federal statutory rate of 21% for 20202021 and 20192020 applied to income before income taxes. A reconciliation of the U.S. federal statutory tax amount to the Company’s effective tax amount is as follows: Schedule of Effective Income Tax Rate Reconciliation | | | | | | | | | | Schedule of Income before Income Taxes | | | | | | | | | | | | October 31, 2020 | | | October 31, 2019 | | | October 31, 2021 | | | October 31, 2020 | | Tax at federal statutory rate | | $ | (2,642,423 | ) | | $ | (361,687 | ) | | $ | (2,678,878 | ) | | $ | (2,642,423 | ) | State taxes, net of federal benefit | | | (546,730 | ) | | | (74,835 | ) | | | (554,273 | ) | | | (546,730 | ) | Permanent differences | | | 18,782 | | | | 10,468 | | | | 27,070 | | | | 18,782 | | Other | | | 2,784 | | | | 221,538 | | | | (9,137 | ) | | | 2,784 | | Total income tax expense (benefit) | | | (3,167,587 | ) | | | (204,516 | ) | | | (3,215,218 | ) | | | (3,167,587 | ) | Change in valuation allowance | | | 3,167,587 | | | | 204,516 | ) | | | 3,215,218 | | | | 3,167,587 | | Income tax provision | | $ | – | | | $ | – | | | $ | 0 | | | $ | 0 | |
The Company had a federal net operating loss carryover of $3,050,776 7,200,185as of October 31, 2020.2021. The tax effects of temporary differences and carry-forwards that give rise to deferred tax assets and liabilities for the Company were as follows: Schedule of Deferred Tax Assets and Liabilities | | | | | | | | | | | October 31, 2020 | | | October 31, 2019 | | Deferred Tax Assets: | | | | | | | Stock based compensation | | $ | 5,184,240 | | | $ | 2,670,914 | | Accrued compensation | | | 315,122 | | | | 136,127 | | Net operating loss carryforward-Federal | | | 640,663 | | | | 222,754 | | Net operating loss carryforward-State | | | 118,160 | | | | 34,918 | | Other | | | 177 | | | | 177 | | Total deferred tax assets: | | | 6,258,362 | | | | 3,064,890 | | Deferred Tax Liabilities: | | | | | | | | | Property and equipment | | | 92,535 | | | | 66,650 | | Total deferred tax liabilities: | | | 92,535 | | | | 66,650 | | | | | | | | | | | Valuation Allowance | | | (6,165,827 | ) | | | (2,998,240 | ) | Net deferred tax assets | | $ | – | | | $ | – | |
Schedule of Deferred Tax assets and Liabilities | | | | | | | | | | | October 31, 2021 | | | October 31, 2020 | | Deferred Tax Assets: | | | | | | | | | Stock based compensation | | $ | 7,281,332 | | | $ | 5,184,240 | | Accrued compensation | | | 480,109 | | | | 315,122 | | Net operating loss carryforward-Federal | | | 1,512,039 | | | | 640,663 | | Net operating loss carryforward-State | | | 282,780 | | | | 118,160 | | State bonus depreciation | | | 29,986 | | | | – | | Other | | | 177 | | | | 177 | | Total deferred tax assets: | | | 9,586,423 | | | | 6,258,362 | | | | | | | | | | | Deferred Tax Liabilities: | | | | | | | | | Property and equipment | | | 205,378 | | | | 92,535 | | Total deferred tax liabilities: | | | 205,378 | | | | 92,535 | | | | | | | | | | | Valuation Allowance | | | (9,381,045 | ) | | | (6,165,827 | ) | Net deferred tax assets | | $ | 0 | | | $ | 0 | |
FASB ASC 740 requires a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. At October 31, 20202021 and October 31, 2019,2020, the net deferred tax asset was offset by a full valuation allowance.
Pursuant to Code Sec. 382 of the Internal Revenue Code (“the Code”), the utilization of net operating loss carryforwards may be limited as a result of a cumulative change in stock ownership of more than 50% over a three-year period.
Certain of the above amounts reported for the year ended October 31, 2019 have been revised to conform with the current year presentation and to reflect the actual amounts that were reported in the Company’s tax filings.
IRS Penalties The Company’s income tax returns for the periods since inception through the tax year ended October 31, 2015 were not filed with the Internal Revenue Service (“IRS”) until August 2017 (“Delinquent Filed Returns”). The Company’s income tax returns for the tax year ended October 31, 2016 were filed with the IRS during December 2017. In connection with the Delinquent Filed Returns, during the period September 2017 through October 2017, the Company received notices that it was being assessed approximately $90,000of penalties, plus interest (“IRS Penalties”), in connection with the late filing of certain information returns that were included as part of the Delinquent Filed Returns. In connection with the notices, the IRS indicated its intent to levy property of the Company if the IRS penalties were not paid as required. During January 2018, the Company requested from the IRS an abatement of the IRS penalties based on reasonable cause. During April 2018, the IRS notified the Company that the IRS penalties for the tax year ended 2011 of $20,000,, plus interest, were abated and the request for abatement for the IRS penalties for the tax years ended 2012 – 2015 were denied. The Company is currently appealing the initial determination by the IRS to exclude the IRS penalties for the tax years 2012-2015 in its consideration of abatement.abatement and filed a “Request for Collection Due Process Equivalent Hearing” (“Request”) in September 2021. During the period that the appealRequest is being reviewed and a determination is madeprocessed by the IRS, the IRS has agreed to put a hold on taking any levy action against the Company for the remaining amounts of the IRS Penalties that are still outstanding. In connection with the notices, the Company has accrued $83,684 and $70,000 of accrued tax penalties and interest on the balance sheet as of October 31, 2021 and October 31, 2020, and 2019.respectively.
NOTE 10 – CAPITAL STOCK Preferred Stock The Company is authorized to issue 10,000,000 shares of $0.001par value preferred stock in one or more designated series, each of which shall be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. The Company’s board of directors is authorized, without stockholders’ approval, within any limitations prescribed by law and the Company’s Articles of Incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock. Issued Shares As of October 31, 2020,2021, there were 0 designations of Preferred Stock authorized or outstanding.
Common Stock On May 18, 2020 and May 19, 2020, pursuant to the Nevada Revised Statutes and the Bylaws of the Company, the Board of Directors of the Company and the stockholders having the voting equivalency of 50.30%of the outstanding capital stock, respectively, approved the filing of an amendment to the Articles of Incorporation of the Company to increase the authorized amount of common stock from 750,000,000 to 1,500,000,000, without changing the par value of the common stock or authorized number and par value of “blank check” Preferred Stock. On June 2, 2020, the Company filed a Definitive 14C with the SEC regarding the corporate action. On June 24, 2020, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effectuate the corporate action on June 24, 2020. On December 21, 2020 and January 4, 2021, pursuant to the Nevada Revised Statutes and the Bylaws of the Company, the Board of Directors of the Company and the stockholders having the voting equivalency of 53.55% of the outstanding capital stock, respectively, approved the filing of an amendment to the Articles of Incorporation of the Company to increase the authorized amount of common stock from 1,500,000,000 to 2,500,000,000, without changing the par value of the common stock or authorized number and par value of “blank check” Preferred Stock. On January 19, 2021, the Company filed a Definitive 14C with the SEC regarding the corporate action. On February 9, 2021, the Company intends to file the Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effectuate the corporate action on February 9, 2021.
Issuances of Common Stock - Sales:
During November 2019 through January 2020, the Company sold 3,250,000 shares of common stock to three “accredited investors” at $0.02 per share for an aggregate purchase price of $65,000. The proceeds were used for working capital. During February 2020 through April 2020, the Company sold 11,050,000 shares of common stock to five “accredited investors” at $0.02 per share for an aggregate purchase price of $221,000. The proceeds were used for working capital. During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02per share for an aggregate purchase price of $220,000. During July, August and October 2020, the Company sold an additional1,166,666 shares, 422,514shares, and 625,000shares of common stock to Dr. Allen Meglin at $0.03 per share, $0.10 per share and $0.08 per share, respectively, for an aggregate purchase price of $127,251. The proceeds from all of the above sales were used for working capital. Certain of the above transactions were at sales prices that were at a discount to the trading prices as of the effective dates of the transactions, resulting in additional stock-based compensation expense of $195,869, which has been recorded during the year ended October 31, 2020. On April 27, 2020, the Company sold 5,000,000shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02per share for an aggregate purchase price of $100,000. The proceeds were used for working capital. The sales price was at a discount to the trading price of $0.0269$0.0269 as of the effective date of the transaction, resulting in additional stock-based compensation expense of $34,500, which has been recorded during the year ended October 31, 2020. During May 2020, the Company sold 3,000,000shares of common stock to two “accredited investors” at $0.02 per share for an aggregate purchase price of $60,000. The proceeds were used for working capital. During July and August 2020, the Company completed the private placement to 19 accredited investors for the sale of 13,499,992 shares of Common stock of the Company at a selling price of $0.03per share for an aggregate amount of $405,000 (“Sale”). In connection with the Sale, the Company agreed that all of the proceeds from the Sale are to be deposited into a separate bank account (“Sale Account”) of the Company and the proceeds are to be used exclusively to fund the costs associated with the Company’s ongoing public company filing requirements, including audit, tax, valuation and legal fees. The Company also agreed to maintain the Sale Account with a minimum cash balance of $25,000 at all times until such time that the Company has filed all required financial reports through the period ended July 31, 2021. During July 2020, the Company sold 1,000,000shares of common stock to two “accredited investors”, at $0.02per share and $0.03per share, respectively for an aggregate purchase price of $25,000. The proceeds were used for working capital. During August 2020, the Company sold 8,606,665 shares of common stock to nine “accredited investors”, at prices ranging from $0.03 per share and $0.06per share, for an aggregate purchase price of $392,100. The proceeds were used for working capital. During September 2020, the Company sold4,800,000 shares of common stock to five “accredited investors”, at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $410,000. The proceeds were used for working capital.
During October 2020, the Company sold 2,033,333 shares of common stock to five “accredited investors”, at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $170,000. The proceeds were used for working capital. During November 2020, the Company sold800,000 shares of common stock to an “accredited investor”, at $0.05 per share, for an aggregate purchase price of $40,000. The proceeds were used for working capital. During February 2021, the Company sold an aggregate of 12,340,910 shares of common stock to five “accredited investors”, at prices ranging from $0.05 per share to $0.06 per share for an aggregate purchase price of $665,000. The proceeds were used for working capital.
On February 22, 2021, the Company sold 1,818,181 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.055 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital. The sales price was at a discount to the trading price of $0.086 as of the effective date of the transaction, resulting in additional stock-based compensation expense of $56,364, which has been recorded during the year ended October 31, 2021.
During April 2021, the Company sold an aggregate of 13,677,821 shares of common stock to seven “accredited investors” at prices ranging from $0.03 per share to $0.25 per share for an aggregate purchase price of $535,000. The proceeds were used for working capital.
During May 2021, the Company sold an aggregate of 2,087,822 shares of common stock to eight “accredited investors” at prices ranging from $0.13 per share to $0.15 per share for an aggregate purchase price of $286,250. The proceeds were used for working capital.
During the period June 2021 through July 2021, the Company sold an aggregate of 11,541,500 shares of common stock to four “accredited investors” at prices ranging from $0.05 per share to $0.13 per share for an aggregate purchase price of $631,020. The proceeds were used for working capital.
During August 2021, the Company sold an aggregate of 3,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $150,000. The proceeds were used for working capital.
During October 2021, the Company sold an aggregate of 7,500,000 shares of common stock to four “accredited investors” at $0.04 per share for an aggregate purchase price of $300,000. The proceeds were used for working capital.
In November 2021, the Company sold an aggregate of 8,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $400,000. The proceeds were used for working capital.
In February 2022, the Company sold an aggregate of 8,333,333 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $250,000. The proceeds were used for working capital.
Issuances of Common Stock – Stock Compensation: As described in Note 12, uponUpon execution of the VP Agreements, each of the Sales Executives were granted 1,000,000 shares of unregistered common stock of the Company (“Execution Shares”) valued at $0.035 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $35,000 of stock-based compensation expense on the grant date for each issuance. The VP Agreements also provide each Sales Executives the right to receive an additional a minimum of 750,000 shares of common stock at the end of each quarterly anniversary of the VP Agreements throughout the Initial Term (maximum 9,000,000 shares) (“Performance Shares”), provided that the VP Agreements remain in effect during the applicable quarterly period. As ofFor the year ended October 31, 2021 and 2020, each Sales Executive has vested an additional 6,300,000 and 2,250,000 Performance Shares (total 4,500,00017,100,000) shares). The Company recorded stock-based compensation expense for each respective quarterly period that the Performance Shares vested during the yearyears ended October 31, 2021 and 2020 in connection with the vested Execution Shares and Performance Shares of $52,500 (total $157,500323,400) and $227,500, respectively (see Note 12).
As described in Note 12, inIn connection with the execution of the Consultants Agreement, the Company issued to the Consultants 12,000,000 shares of unregistered common stock (“Shares”) valued at $0.022 per share, the closing price of the common stock of the Company on the grant date. The Company recorded a total of $266,400 of stock-based compensation expense during the year ended October 31, 2020 based on the vesting of the Shares (50% of the Shares vest as of the Effective Date of the Consultants Agreement and 50% of the Shares vest on the six-month anniversary of the Consultants Agreement). In connection with the execution of the Amendment of the Consultant’s Agreement, the Company issued to the Consultants 20,000,000 shares of unregistered common stock (“Shares”) valued at $0.0614 per share, the closing price of the common stock of the Company on the grant date. The Company will amortize the costs associated with this issuance of $1,228,000 over the remaining term of the Consultant’s Agreement. The shares issued vest 50% as of the date of the Amendment and the remaining 50% will vest on December 31, 2021 or upon the date that the Company obtains approval for certain IND’s submitted, whichever is sooner. The Company recorded a total of $358,167 of stock-based compensation expense during the year ended October 31, 2021.
During the period November 1, 2019 through January 31, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to three individuals an aggregate of 650,000 shares of unregistered common stock valued between $0.027 and $0.031 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $18,650of stock-based compensation expense during the year ended October 31, 2020. During the period February 1, 2020 through April 30, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to four individuals an aggregate of 2,725,000shares of unregistered common stock valued between $0.029 and $0.034 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $89,458 of stock-based compensation expense during the year ended October 31, 2020. During the period May 1, 2020 through July 31, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to eight individuals an aggregate of 925,000 shares of unregistered common stock valued between $0.031 and $0.048 per share, the closing price of the common stock of the Company on the respective grants dates. For certain of the issuances, the stock vests on January 31, 2021, provided the recipient remains engaged with the Company during the period. The Company recorded $27,809of stock-based compensation expense during the year ended October 31, 2020. During April 2020, May 2020, September 2020 and October 2020, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to nine individuals an aggregate of 1,050,000 shares of unregistered common stock valued between $0.023 and $0.28per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $96,600 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2020. During February 2020, in recognition of past services provided to the Company through February 2020, the Board approved the issuance to the CMO of5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $140,000 of stock-based compensation expense during the year ended October 31, 2020 based on the fair value of these shares on the grant date. In connection with the resignation of an independent member of the Board of Directors of the Company in April 2020, the Board approved the issuance to the director of 736,808 shares of unregistered common stock valued at $0.022per share, the closing price of the common stock of the Company on the grant date. The Company recorded $16,210of stock-based compensation expense during the during the year ended October 31, 2020 based on the fair value of these shares on the grant date.
On May 28, 2020, the Company entered into a distribution agreement with a company owned by Jack Mitrani, the son of Mr. Mitrani. Under the terms of the agreement, the Company agreed to grant the distributor 3,000,000 shares of unregistered common stock valued at $0.115 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $345,000 of stock-based compensation expense during the quarteryear ended JulyOctober 31, 2020 based on the fair value of these shares on the grant date. In addition, the distribution agreement also provides for future stock incentives based on future sales that are generated by the distributor based on a conversion price equal to 75% of the trading price of the common stock on the last day of the month in which the incentive was earned. On May 15, 2020 (“Effective Date”), the Company entered into an advisor agreement with a third party (“Advisor”) whereby the Advisor will provide financial advisory services (see Note 12). As consideration, the Company agreed to issue the Advisor 1,000,000 shares of common stock (“Grant”), of which 250,000 shares shall be fully vested as of the Effective Date, 250,000 shares vest on the sixth month anniversary of the Effective Date, 250,000 shares vest on the ninth month anniversary of the Effective Date and 250,000 shares vest on the twelfth month anniversary of the Effective Date, provided however that the Agreement is in full effect during such vesting period(s) for the respective portion of the Grant.In addition, Company agreed to grant 3-year warrants to the Advisor to purchase 6,000,000shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”), of which Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of the agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the agreement, respectively, provided however that the Agreement is renewed and in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Grant or Warrants prescribed above will immediately become vested shares if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5MM or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25MM. The Grant shares were valued at $0.04 per share, the closing price of the common stock of the Company on the grant date. The Company will record $10,000$10,000 of stock-based compensation expense during each quarter in which the Grant shares become vested based on the fair value of these vested shares on the grant date. During October 2020, the Company terminated the agreement with the Advisor as provided for under the advisor agreement. During July 2020, the Company entered into a consulting agreement with a third party to provide investment banking related consulting services for a minimum period of six months. As consideration for agreeing to provide consulting services to the Company, the Company issued the consultant 5,000,000 shares of unregistered common stock valued at $0.05per share, the closing price of the common stock of the Company on the effective date of the agreement. All of the shares granted vested immediately on the date of issuance. The Company recorded $250,000 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2020. During August 2020, the Company entered into two separate consulting agreements with third parties to provide marketing and public relations services for a minimum period of six months. As consideration for agreeing to provide consulting services to the Company, the Company issued the consultants 300,000shares and 25,000 shares, respectively, of unregistered common stock valued at $0.127 per share, the closing price of the common stock of the Company on the effective date of the agreements. The Company recorded a total of $40,790 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2020. During October 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to two individuals an aggregate of 230,000 shares of unregistered common stock valued between $0.035 and $0.17per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $8,730of stock-based compensation expense during the during the year ended October 31, 2020.
During November 2020, the Company entered into an additional consulting agreement with a third party to provide consulting services in connection with the development of international research and development, sales and distribution and financing opportunities for a period of six months. As consideration for agreeing to provide the consulting services to the Company, the Company issued the consultant 2,000,000 shares of fully vested unregistered common stock valued at $0.1450.151 per share, the closing price of the common stock of the Company on the effective date of the agreement. The Company will recordrecorded $290,000 302,000of stock-based compensation expense during the three monthsyear ended JanuaryOctober 31, 2021. On August 9, 2021, the Company and the third party entered into another consulting agreement with substantially the same terms and condition as provided for in the original agreement. The 2,000,000 shares of fully vested unregistered common stock issued to the consultant under the new agreement were valued at $185,400 (valued at $0.093 per share, the closing price of the common stock of the Company on the effective date of the agreement). The Company recorded $92,700 of stock-based compensation expense during the year ended October 31, 2021 based on the grant date fair value of these shares amortized over the term of the agreement.
During November 2020, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to one individual an aggregate of 250,000 shares of unregistered common stock valued at $0.145 per share, the closing price of the common stock of the Company on the respective grant dates. The Company will recordrecorded $36,225 of stock-based compensation expense based on the grant date fair value of these shares during the quarteryear ended JanuaryOctober 31, 2021. During December 2020, the Board approved the bonus of 47,675,000shares of newly issued common stock to executive management (consisting of Mr. Mitrani, Dr. Mitrani and Mr. Bothwell) totaling 45,000,000 shares; non-executive Board members (consisting of Mr. Carbonara and Dr. Meglin) totaling 2,000,000 shares; administrative staff totaling550,000; and to several medical advisors totaling 125,000 shares.shares valued at $0.12 per share, the closing price of the common stock of the Company on the respective grant dates. The Company will recordrecorded a total of $5,721,000 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2021.
During April 2021, the Board approved the bonus of 500,000 shares of newly issued common stock to an employee valued at $0.055 per share, the closing price of the common stock of the Company on the grant date. The Company recorded a total of $27,450 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2021.
During December 2020, January 2021 and February 2021, the Company issued to various employees and consultants 25,000, 240,000 and 50,000 shares of unregistered common stock, respectively, valued at prices ranging from $0.035 to $0.17 per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded a total of $19,855 of stock-based compensation expense during the year ended October 31, 2021 based on the grant date fair value of these shares.
During February 2021, the Company entered into a consulting agreement with a third party to provide consulting services for a one-year period. As consideration for agreeing to provide consulting services to the Company, the Company agreed to issue the consultant 500,000 shares of unregistered common stock upon completion of the three-month anniversary of the agreement. In addition, the Company has agreed to provide an additional 250,000 shares of newly issued common stock for each celebrity and/or athlete which the consultant arranges to provide marketing services to the Company and that is responsible for bringing a minimum of $75,000 of monthly revenues in connection with sales of the Company’s products, up to a maximum of 1,500,000 shares. The shares issued were valued at $0.095 per share, the closing price of the common stock of the Company on the effective date of the agreement, totaling $47,500. The Company will amortize the costs associated with the issuance over the term of the agreement. The Company amortized $35,625 of stock-based compensation expense during the year ended October 31, 2021.
During April 2021, the Company entered into a consulting agreement with a third party to provide investor relation services. The term of the agreement is month to month and may be terminated with or without cause. As consideration for agreeing to provide the consulting services to the Company, the Company has agreed to pay the consultants a minimum of $15,000 per month and to issue 500,000 shares of restricted common stock which vested fully on May 21, 2021 (valued at $0.057 per share, the closing price of the common stock of the Company on the grant date). The Company recorded a total of $28,500 of stock-based compensation expense during the year ended October 31, 2021.
During March 2021, April 2021 and May 2021, the Company granted a total of 750,000 of common stock to various consultants valued at prices ranging from $0.049per share to $0.40per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded $85,075 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2021.
On June 4, 2021, the Company and an employee agreed to amendment of the employee’s employment agreement. Under the terms of the amendment, the employee agreed to extend the term of the agreement through December 31, 2022 and the Company agreed to grant the employee 1,000,000 shares of common stock of the Company to vest upon execution of the amendment (valued at $0.136 per share, the closing price of the +common stock of the Company on the grant date). In addition, the employee is eligible to receive up to an aggregate of 3,000,000 additional shares of common stock based on achievement of certain milestones. The total value of the stock granted in connection with the amendment of $136,000 will be amortized beginning June 4, 2021 over the remaining term of the agreement. The Company recorded $35,789 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2021.
During June 2021, the Company granted a total of 1,100,000 of common stock to various consultants and service providers valued at prices ranging from $0.14 per share to $0.148 per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded $154,740 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2021.
On June 10, 2021, the Company agreed to issue 60,000 shares of common stock to a service provider as a prepayment for future services to be provided to the Company valued at $10,000 (valued at $0.167 per share, the closing price of the common stock of the Company on the date of the agreement).
On December 27, 2021, the Company and an employee agreed to amendment of the employee’s employment agreement. Under the terms of the amendment, the employee agreed to extend the term of the agreement through December 31, 2024 and the Company agreed to increase the employee’s annual salary from $180,000 per year to $210,000 per year effective January 1, 2022. In connection with the amendment, the Company agreed to grant the employee the employee 1,000,000 shares of common stock of the Company to vest over the remaining term of the agreement (valued at $.029 per share, the closing price of the common stock of the Company on the grant date). The total value of the stock granted in connection with the amendment of $29,000 will be amortized over the remaining term of the agreement.
Equity Line Of Credit Commitment:
During November 2021, the Company entered into an agreement with an investor whereby the investor has agreed to provide the Company with a $10,000,000 equity line of credit facility (“ELOC”), subject to many conditions including the Company determining to proceed with the ELOC, approval and execution of definitive agreements for the ELOC and the Company subsequently filing a registration statement covering the underlying shares to be sold under the ELOC. The Company is not obligated to proceed with the ELOC or file a registration statement for the ELOC. In connection with the above, the investor agreed to purchase 7,000,000 restricted common shares of the Company priced at $0.05 per share ($350,000) upon such time that the Company initially files the registration statement for the ELOC. In connection with the above, the Company agreed to pay a commitment fee to the investor in the amount of 3,000,000 shares of common stock of the Company fully vested (valued at $0.067 per share, the closing price of the common stock of the Company on the date of the agreement). The Company will record $201,000 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended January 31, 2021.2022. Issuances of Common Stock – Exercise of warrants, Conversion of Debt and Exchanges:Debt: As more fully described in Note 8, the Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company (approximately $0.013$0.013 per share). As more fully described in Note 8, during October 2020, the Company and the holder of the $20,000$20,000 debenture, agreed to convert the principal amount of the $20,000$20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,300$20,300 into 160,000 shares of common stock of the Company (approximately $0.125$0.125 per share).
Issuances of Common Stock – Exchange of balances due on accounts payable for stock:
During February 2021, the consulting arrangement was amended whereby the CMO’s accrued and unpaid consulting fees of $82,250 were fully satisfied though the issuance of 500,000 shares of newly issued common stock of the Company valued at $0.165 per share (share price was $0.084 per share on the date of the exchange). Furthermore, until the CMO becomes a full-time employee of the Company and provided the CMO continues to serve in his current position, the CMO shall receive compensation equal to $27,000 per quarter beginning May 1, 2021, payable in cash or in stock (based on the average monthly trading price of the common stock during the applicable quarter) at the option of the Company.
During May 2021, the Company and two employees agreed to exchange $30,973 of commission payables due to the employees for 176,989 shares of newly issued common stock valued at $0.175 per share, the closing price of the common stock of the Company on the date of the exchange. Management and Consultants Performance Stock Plan On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (“MCPP”) providing for the grant to current senior executive members of management and third-party consultants of an aggregate of approximately 205,000,000 shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”). On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below. | Schedule of minimum pre- transaction price per share | | | | | | | | | | Schedule of minimum pre-Transaction price per share | | | | | | | | | | Pre-Transaction Price Per Share Valuation (a) | Pre-Transaction Price Per Share Valuation (a) | | Executive Bonus Shares Issued (b) | | Non-executive Board Bonus Shares Issued (c) | | Pre-Transaction Price Per Share Valuation (a) | | | Executive Bonus Shares Issued (b) | | | Non-executive Board Bonus Shares Issued (c) | | $ | 0.22 | | | | 40,000,000 | | | | 2,000,000 | | 0.22 | | | | 40,000,000 | | | | 2,000,000 | | $ | 0.34 | | | | 60,000,000 | | | | 3,000,000 | | 0.34 | | | | 60,000,000 | | | | 3,000,000 | | $ | 0.45 | | | | 80,000,000 | | | | 4,000,000 | | 0.45 | | | | 80,000,000 | | | | 4,000,000 | | $ | 0.54 | | | | 100,000,000 | | | | 5,000,000 | | 0.54 | | | | 100,000,000 | | | | 5,000,000 | |
(a) | proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances |
(b) | per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro |
(c) | per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara |
On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundingfundings (grants for research and development and clinical trials, purchase contracts for Company products)products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below: | Schedule of debt and/or equity financings | | | | | | | | | | Aggregate Funding Amount | | | Shares | | From | | | To | | | | | $ | 2,500,000 | | | $ | 5,000,000 | | | | 5,000,000 | | $ | 5,000,001 | | | $ | 10,000,000 | | | | 10,000,000 | | $ | 10,000,001 | | | $ | 30,000,000 | | | | 30,000,000 | |
On September 23, 2020, the Board amended the MCPP, providing for the grant of common stock of the Company of 15.0 million, 7.5 million and 15.0 million shares of common stock of the Company, respectively, to each Albert Mitrani, Dr. Maria I. Mitrani and Ian Bothwell upon such time that the Company’s common stock trades above $0.25$0.25 per share, $0.50 $0.50 per share and $0.75$0.75 per share, respectively, for 30 consecutive trading days subsequent to March 31, 2021 and provided such milestone occurs during the term of employment with the Company. In addition, each of the current executives were entitled to receive an additional 7 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such milestone occurs during the term of employment with the Company. On February 10, 2021, the Board amended the MCPP, providing for the grant of common stock of the Company of 5 million shares for each Phase II clinical trial completed, 5 million shares for each Phase III clinical trial approved and initiated (deemed to be upon the time the first patient is enrolled) and 10.0 million shares for each Phase III clinical trial fully enrolled. In addition, the CMO’s portion of a designated grant for an achievement of any applicable Milestone subsequent to September 23, 2020 was reduced to 30% until the time that the CMO becomes a full-time employee of the Company.
Pursuant to the MCPP, a total of 293,000,000342,500,000 shares have been issued and approximately 582,500,000 as described above, additional shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board: Schedule of management and consultants performance stock plan | | | | | | | | | | | | | | | | | | | | | | | | | | MCPP | | MCPP | | | | | MCPP | | Remaining | | Total | | | MCPP | | MCPP Remaining | | | | Shares | | Shares | | Shares | | | Shares | | Shares | | Name | | Awarded | | | Available | | | Approved | | | Issued | | | Authorized | | Albert Mitrani | | | 65,000,000 | | | | 137,500,000 | | | | 202,500,000 | | | | 80,000,000 | | | | 137,500,000 | | Ian Bothwell | | | 65,000,000 | | | | 167,500,000 | | | | 232,500,000 | | | | 80,000,000 | | | | 167,500,000 | | Dr. Maria I. Mitrani | | | 65,000,000 | | | | 167,500,000 | | | | 232,500,000 | | | Dr. Maria Mitrani | | | | 80,000,000 | | | | 167,500,000 | | Dr. George Shapiro | | | 65,000,000 | | | | 100,000,000 | | | | 165,000,000 | | | | 69,500,000 | | | | 100,000,000 | | Dr. Allen Meglin | | | - | | | | 5,000,000 | | | | 5,000,000 | | | | - | | | | 5,000,000 | | Michael Carbonara | | | - | | | | 5,000,000 | | | | 5,000,000 | | | | - | | | | 5,000,000 | | Consultants | | | 33,000,000 | | | | - | | | | 33,000,000 | | | | 33,000,000 | | | | - | | Total | | | 293,000,000 | | | | 582,500,000 | | | | 875,500,000 | | | | 342,500,000 | | | | 582,500,000 | |
The Company will record stock-based compensation expense in connection with any MCPP Shares that are actually awarded based on the fair value as of the initial grant date that the respective milestone for the MCPP Shares were approved. For the MCPP Shares approved on April 25, 2020, June 29, 2020, August 14, 2020 and September 23, 2020, the closing price of the common stock of the Company was $0.027, $0.056, $0.128 and $0.28, respectively.
In connection with the MCPP Shares that have been awarded to date, all such shares were issued in connection with the MCPP Shares approved on April 25, 2020 and accordingly were valued $0.027 per share, the closing price of the common stock of the Company on the date that those respective MCPP Shares were approved.
During the years ended October 31, 2021 and 2020, a total 49,500,000 shares and 293,000,000 shares, respectively, were issued in connection with certain Milestones achieved. The Company recorded a total of $1,336,500 and $7,911,000 of stock-based compensation expense during the yearyears ended October 31, 2021 and 2020, basedrespectively. For the MCPP Shares approved on April 25, 2020, June 29, 2020, August 14, 2020, September 23, 2020, and February 10, 2021, the fair valueclosing price of the actualcommon stock of the Company was $0.027, $0.056, $0.128, $0.28 and 0.108, respectively.
Upon completion of the Share Exchange (see below), the MCPP (but not Awards of unexchanged shares of our common stock) was terminated.
2021 Plan and Share Exchange Agreement
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 awarded.(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 is 250,000,000 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.
On October 29, 2021, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with shareholders (including executive officers) who were issued shares under (i) various consulting and employment agreements during 2021 (the “Service Providers”), and (ii) those shareholders who were issued shares of common stock pursuant to the MCPP (the “MCPP Holders”).
The Service Providers who executed the Exchange Agreement were issued a total of 30,300,000 shares under their respective consulting or employment agreements (the “Service Provider Shares”), and the MCPP Holders who executed the Exchange Agreement received a total of 49,500,000 shares under the MCPP, for an aggregate of 79,800,000 shares of common stock. As of the effective date of the Exchange Agreement, the Service Providers and MCPP Holders who executed the Exchange Agreement agreed to exchange their respective Service Provider Shares or the shares issued under the MCPP for newly issued shares pursuant to the 2021 Plan (on a 1:1 basis, resulting in the issuance of 79,800,000 shares of common stock under the 2021 Plan (the “Exchange Shares”). Upon completion of the Share Exchange, the 2020 Plan and the MCPP (but not Awards of unexchanged shares of our common stock) were terminated.
The shares received in connection with the Exchange Agreement were treated as a modification to the original awards granted. The Company determined that there was not any incremental value resulting from the exchange and as a result there was no additional compensation costs recorded.
As of October 31, 2021, a total of 83,400,000 shares of our common stock, including the Exchange Shares have been awarded under the 2021 Plan.
Unvested Equity Instruments:
A summary of unvested equity instruments outstanding for the years ended October 31, 2021 and 2020 are presented below:
Schedule of unvested equity instruments outstanding | | | | | | | | | | | Number of Nonvested Shares | | | Weighted- Average Grant Date Value | | Outstanding at October 31, 2020 | | | 1,111,111 | | | $ | 0.029 | | Non-Vested Shares Granted | | | 83,400,000 | | | $ | 0.062 | | Vested | | | 666,666 | | | $ | 0.029 | | Expired/Forfeited | | | - | | | $ | - | | Outstanding at October 31, 2021 | | | 83,844,445 | | | $ | 0.062 | |
| | Number of Nonvested Shares | | | Weighted- Average Grant Date Value | | Outstanding at October 31, 2019 | | | 1,777,777 | | | $ | 0.029 | | Non-Vested Shares Granted | | | - | | | $ | - | | Vested | | | 666,666 | | | $ | 0.029 | | Expired/Forfeited | | | - | | | $ | - | | Outstanding at October 31, 2020 | | | 1,111,111 | | | $ | 0.029 | |
As of October 31, 2021, the total compensation cost related to nonvested awards not yet recognized and the weighted-average period over which such costs are expected to be recognized was $1,093,022 and 14.3 months, respectively.
As of October 31, 2020, the total compensation cost related to nonvested awards not yet recognized and the weighted-average period over which such costs are expected to be recognized was $32,222 and 20.0 months, respectively.
NOTE 11 – WARRANTS A summary of warrant activity for the years ended October 31, 20192021 and 2020 are presented below: Summary of Warrant Activity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of Shares | | | Weighted- average Exercise Price | | | Remaining Contractual Term (years) | | | Aggregate Intrinsic Value | | | Number of Shares | | | Weighted-average Exercise Price | | | Remaining Contractual Term (years) | | | Aggregate Intrinsic Value | | Outstanding at October 31, 2018 | | | 3,687,484 | | | $ | 0.41 | | | | 1.14 | | | $ | - | | | Outstanding at October 31, 2020 | | | | 9,500,000 | | | $ | 0.03 | | | | 7.90 | | | $ | 1,268,000 | | Granted | | | 2,000,000 | | | $ | 0.08 | | | | 1.00 | | | $ | - | | | | - | | | $ | - | | | | - | | | $ | - | | Exercised | | | - | | | $ | - | | | | | | | | | | | | - | | | $ | - | | | | - | | | $ | - | | Expired/Forfeited | | | (1,158,313 | ) | | $ | 0.67 | | | | 0.04 | | | | - | | | | - | | | $ | - | | | | - | | | $ | - | | Outstanding at October 31, 2019 | | | 4,529,371 | | | $ | 0.20 | | | | 0.30 | | | $ | - | | | | | | | | | | | | | | | | | | | | | Exercisable at October 31, 2019 | | | 4,529,371 | | | $ | 0.20 | | | | 0.30 | | | $ | - | | | Outstanding and exercisable at October 31, 2021 | | | | 9,500,000 | | | $ | 0.03 | | | | 6.90 | | | $ | 289,500 | |
| | Number of Shares | | | Weighted- average Exercise Price | | | Remaining Contractual Term (years) | | | Aggregate Intrinsic Value | | | Number of Shares | | | Weighted-average Exercise Price | | | Remaining Contractual Term (years) | | | Aggregate Intrinsic Value | | Outstanding at October 31, 2019 | | | 4,529,371 | | | $ | 0.20 | | | | 0.30 | | | $ | - | | | | 4,529,371 | | | $ | 0.20 | | | | 0.30 | | | $ | - | | Granted | | | 9,500,000 | | | $ | 0.03 | | | | 8.53 | | | $ | - | | | | 9,500,000 | | | $ | 0.03 | | | | 8.53 | | | $ | - | | Exercised | | | - | | | $ | - | | | | | | | $ | - | | | | - | | | $ | - | | | | | | | $ | - | | Expired/Forfeited | | | (4,529,371 | ) | | $ | 0.20 | | | | - | | | $ | - | | | | (4,529,371 | ) | | $ | 0.20 | | | | - | | | $ | - | | Outstanding and exercisable at October 31, 2020 | | | 9,500,000 | | | $ | 0.03 | | | | 7.90 | | | $ | - | | | | 9,500,000 | | | $ | 0.03 | | | | 7.90 | | | $ | 1,268,000 | |
On February 26, 2020, the Company issued the CFO a cashless warrant to purchase an aggregate of 7,500,000shares of common stock in connection with the CFO’s employment agreement. The warrant is exercisable for $0.028 per share (the closing price of the Company’s common stock on the date of grant), until the tenth anniversary date of the date of issuance. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 1.14%, (2) term of 10 years, (3) expected stock volatility of 87%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $176,250. The Company recorded $176,250$176,250 of stock-based compensation expense during the year ended October 31, 2020 based on the fair value of these warrants on the grant date.
On May 15, 2020 (“Effective Date”), the Company granted the Advisor warrants to purchase6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”) and exercisable for three years from the Effective Date. Warrants to purchase 2,000,000 shares shall be vested upon the Effective Date of the agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the agreement, respectively, provided however that the agreement is renewed and in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Warrants prescribed above will immediately become vested if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5,000,000 or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25,000,000. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate0.31%, (2) term of3years, (3) expected stock volatility of 90%, and (4) expected dividend rate of0%. The grant date fair value of the warrants issued was $121,200. The Company will record $40,400of stock-based compensation expense during the period that the Grant shares vest based on the fair value of these warrants on the grant date. During October 2020, the Company terminated the agreement with the Advisor as provided for under the advisor agreement (see Note 12). All stock compensation expense is classified under general and administrative expenses in the consolidated statements of operations NOTE 12 – COMMITMENTS AND CONTINGENCIES The description of Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements executed in April 2018 (collectively referred to as the April 2018 Executive Employment Agreements) are summarized below: April 2018 Executive Employment Agreements
General Pursuant to Albert Mitrani’s April 2018 Executive Employment Agreement, Mr. Mitrani serves as the Company’s President and Chief Operating Officer. Mr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Mitrani is also entitled to a commission on all sales attributable to him (i.e., excluding existing customers of the Company at the time of the Reorganization) at the rate of five percent (5%) of the “Net Sales” as defined in the agreement and an expense allowance of $5,000 per month. Pursuant to Ian Bothwell’s April 2018 Executive Employment Agreement, Mr. Bothwell continues to serve as the Company’s Chief Financial Officer. Mr. Bothwell’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Bothwell has not been paid salary since July 2018. Pursuant to Dr. Maria I. Mitrani’s April 2018 Executive Employment Agreement, Dr. Mitrani continues to serve as the Company’s Chief Science Officer. Dr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Term The term of each of the April 2018 Executive Employment Agreements commences as of the Effective Date and continues until December 31, 2020 (Mr. Bothwell) or December 31, 2023 (Mr. Mitrani and Dr. Mitrani) (“Initial Term”), unless terminated earlier pursuant to the terms of the April 2018 Executive Employment Agreement; provided that on such expiration of the Initial Term, and each annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), the agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term of the April 2018 Executive Employment Agreement at least 90 days’ prior to the applicable renewal Date. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
Unpaid Advances The Company was required to repay the unpaid advances subsequent to December 31, 2017, and the unreimbursed expenses incurred subsequent to December 31, 2017, on May 15, 2018. Such payments were not made as required (see Note 7).
Fringe Benefits and Perquisites
During the Employment Term, each Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.
Termination
The Company may terminate the April 2018 Executive Employment Agreement at any time for good cause, as defined in the April 2018 Executive Employment Agreement, including, the Executive’s death, disability, Executive’s willful and intentional failure or refusal to follow reasonable instructions of the Company’s Board of Directors, reasonable and material policies, standards and regulations of the Company’s Board of Directors or management.
Amendments To The April 2018 Executive Employment Agreements
February 26, 2020 Amendment
| 1. | On February 26, 2020, the Company agreed to modify the employment agreement of Mr. Ian T. Bothwell, the Company’s Chief Financial Officer to provide Mr. Bothwell with: |
| a) | an extension to his employment agreement dated April 13, 2018 from December 2020 to December 2023 consistent with other executives of the Company; and |
| b) | a one-time bonus in the form of a fully vested cashless warrant to purchase 7,500,000 shares of common stock of the Company, exercisable for ten years at an exercise price of $0.28 per share, the closing price of the common stock on the date of the grant. |
| 2. | On February 26, 2020, pursuant to the respective employment agreements with each of the Company’s executive officers, the Board granted each of Mr. Albert Mitrani, Dr. Maria Mitrani and Mr. Ian Bothwell a cash bonus of $37,500 for the calendar year ended December 31, 2019. |
April 25, 2020 Amendment
On April 25, 2020, the Company agreed to amend and revise the each of Albert Mitrani, Ian Bothwell and Dr. Maria I. Mitrani, (individually each of A. Mitrani, Bothwell and Dr. Mitrani are referred to as an “Executive” and collectively the “Executives”) April 2018 Executive Employment Agreements. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:
| Term: | An extension to the term of the employment agreements dated April 13, 2018 from December 31, 2023 to December 31, 2025. |
| Base Salary: | An increase in base annual salary from $162,500 to $300,000. The amended salary amount of $300,000 shall be retroactively adjusted to commence as of January 1, 2019. The increased annual salary of $137,500 (“Incremental Salary”) over the prior annual salary amount of $162,500 (“Original Base Salary”) shall only be paid only upon there being sufficient available cash. Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019. |
Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.
Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.
Severance Provisions:
| 1. | Company termination without cause, Executive for good reason: |
| a) | All existing accrued obligations existing at time of termination shall be paid to Executive. |
| b) | Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination, |
| c) | Executive shall be entitled to a cash payment equal to his unpaid base salary for the remaining term in effect at time of the time of the termination or an amount equal to four times (4x’s) the base salary in effect at the time of termination, whichever is greater, |
| d) | Executive shall be entitled to a cash payment equal to his 200% of the prior year’s cash or stock bonus (excluding any stock grants received pursuant to the MCPP). |
| 2. | Change In Control: In the event of a Change in Control and the Executive’s employment agreement is not extended for period of five years from the date of the Change in Control with all other terms and conditions of the agreement remaining the same, then the Executive may terminate the agreement for good reason and all respective severance terms as provided for a termination by Executive for good reason described in clause 1 above shall be provided to Executive. |
| 3. | Executive termination due to disability, death, or non-renewal by Company: |
| a) | All existing accrued obligations existing at time of termination shall be paid to Executive. |
| b) | Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination. |
| c) | Executive shall be entitled to a cash payment equal to 299% of Executive’s base salary in effect at the time of termination, plus a gross up amount to cover Executive’s tax liability associated with such payment. |
| d) | 200% of the prior year’s cash or stock bonus (excluding MCPP performance stock grants). |
June 29, 2020 Amendment
On June 29, 2020, the board of directors of the Company (“Board”) agreed to further amend and revise the April 2018 Executive Employment Agreements for each of Executives. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:
| Base Salary: | An increase in the Executives annual base annual salary upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months. Upon the achievement of the defined salary milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur. |
| Schedule of adjustment revenues | | | | | | Monthly Revenues (in millions) | | | Base Salary Increase | | $ | 1.00 | | | $ | 130,000 | | $ | 1.50 | | | $ | 200,000 | | $ | 2.00 | | | $ | 275,000 | | $ | 3.50 | | | $ | 630,000 | | $ | 5.00 | | | $ | 900,000 | |
Advisor Agreement
Effective May 15, 2020 (“Effective Date”), the Company entered into a one-year agreement (“Advisor Agreement”) with an individual to provide financial advisory services to the Company (“Advisor”). The Advisor Agreement is subject to successive, automatic one (1) year extensions unless either party has given the other 30- day written notice prior to the expiration of then in effect termination date, of their desire not to renew the Advisor Agreement. As the compensation for Advisor’s services and his fulfilment of all obligations under the agreement the Company agreed to issue the Advisor 1,000,000 shares of common stock (“Stock Grant”), of which 250,000 shares shall be fully vested as of the Effective Date, 250,000 shares vest on the sixth month anniversary of the Effective Date, 250,000 shares vest on the ninth month anniversary of the Effective Date and 250,000 shares vest on the twelfth month anniversary of the Effective Date, provided however that the Advisor Agreement is in full effect during such vesting period(s) for the respective portion of the Stock Grant. In addition, Company agreed to grant 3-year warrants to the Advisor to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”), of which Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of the Advisor Agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the Advisor agreement, respectively, provided however that the Advisor Agreement is in full effect during the applicable vesting period(s) for the respective portion of the grant. The Advisor Agreement may be terminated by the Company based on Advisor’s breach of any of the terms of the Advisor Agreement, the Company’s determination that Advisor is not meeting the desired objectives or if either party provides notice of the desire not to renew the Advisor Agreement upon expiration. During October 2020, the Company terminated the agreement with the Advisor as provided for under the advisor agreement. The unvested portion of the Stock Grant and Warrants as of the termination date were cancelled.
Sales Executives
On January 6, 2020, the Company entered into employment agreements with two individuals (“Sales Executives”), each to serve as a Vice President – Global Sales and Marketing. The terms of each Sales Executive employment agreement are identical (“VP Agreements”). The initial term of the VP agreements are for three years and provide for automatic annual renewals thereafter, unless either party provides 90-day written notice prior to expiration of the then current term. The VP Agreements may also be terminated by the Company beginning June 30, 2020 in the event the Sales Executive fails to meet certain defined minimum revenue growth milestones. The Sales Executives will receive compensation in the form of monthly salary of $18,000 and a quarterly override based on revenues earned by the Company during a quarterly period that exceed $600,000 beginning for the quarter ended June 30, 2020. In addition, upon execution of the Agreement, each of the Sales Executives were granted 1,000,000 shares of unregistered common stock of the Company valued at $0.035 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $35,000 of stock-based compensation expense on the grant date for each issuance. The VP Agreements also provide the Sales Executives with the right for each to receive an additional 750,000 shares of common stock at the end of each quarterly anniversary of the VP Agreements throughout the Initial Term (maximum 9,000,000 shares) (“Performance Shares”), provided that the VP Agreements remain in effect during the applicable quarterly period. The vesting of the Performance Shares may also be accelerated based on achievement of certain revenue milestones. The Company will record stock-based compensation expense for each respective quarterly period that the Performance Shares vest of $52,500.
Consultant Agreements
Effective March 30, 2020 (the “Effective Date”), the Company entered into a consulting agreement (“Agreement”) with Assure Immune L.L.C. (the “Consultant”) for an initial term of one year (the “Initial Term”) with automatic renewals for two (2) additional annual periods (each a “Renewal Term,” and together with the “Initial Term,” the “Term”), unless written notice is provided by either party at least 45 days prior to the applicable termination date. Under the Agreement, the Consultant will provide the Company during the Term with expertise, experience, advice and direction associated with the critical functional executive level roles of the Company as it relates to the oversight and management of the Company’s regulatory, research and development and laboratory operations, consistent with the Company’s corporate mission and strategies and subject to the resource limitations of the Company. In connection with the Agreement, the Consultants will receive monthly fees of $30,000 during the Initial Term and monthly consulting fees of $35,000 and $40,000 the first and second Renewal Terms, if any. In addition. the Company agreed to issue to the Consultant or its designees 12,000,000 shares of common stock of the Company (“Shares”), 50% of which Shares vest as of the Effective Date and balance of which Shares vest upon the six-month anniversary of the Effective Date. The Agreement also provides that upon the commencement of each Renewal Term, if any, the Consultant will receive up to 6,000,000 additional Shares, 50% of which Shares will vest on the commencement date of the Renewal Term and the balance of which additional Shares will vest on the six (6) month anniversary of such date. In connection with the Agreement, the Consultant (and its principals) are obligated to comply with customary confidentiality, non-compete and non-solicitation covenants and have agreed that all intellectual property developed during the term of the Agreement shall remain the property of the Company.
In addition to the Shares to be issued above, the Consultant or its designees were entitled to participate in the Company’s Management and Consultants Performance Stock Plan (the “MCPP”), more fully described in Note 10. Pursuant to the MCPP, the Consultant or its designees were awarded 33,000,000 Shares, based on the achievement of certain defined operational performance milestones (“Milestones”).
During October 2020, the Company entered into a consulting agreement with a third party to provide consulting services in connection with the development of international research and development, sales and distribution and investment opportunities. As consideration for agreeing to provide the consulting services to the Company, the Company has agreed to pay the consultants a minimum of $12,500 per month during the term of the agreement and to issue up to 5,000,000 shares of restricted common stock (valued at $0.175 per share, the closing price of the common stock of the Company on the grant date), based on successful performance of defined milestones. The agreement may be terminated after the third month anniversary of the agreement with or without cause. The Company will record up to $875,000 of stock-based compensation expense at the time that any shares actually become vested as a result of achievement of the defined milestones.
Preparation of IRB, Pre-IND, IND Protocols for Clinical Applications and Clinical Trial Initiation and Monitoring:
In connection with the Company’s ongoing research and development efforts and the Company’s efforts to meet compliance with current and anticipated United States Food and Drug Administration (“FDA”) regulations expected to be enforced beginning in May 2021 pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products that fall under Section 351 of the Public Health Services Act (“HCT/Ps”), the Company has applied for and received Investigation New Drug (“IND”) approval from the FDA to commence clinical trials in connection with the use of the Company’s products and related treatment protocols for specific indications. The ability to successfully complete the above efforts will be dependent on the Company’s ability to timely fund the required payments and complete the applicable clinical trials, which is subject to available working capital generated from operations, financing arrangements with the third-party vendors involved in the studies and/or from additional debt and/or equity financings as well as ultimate approval from the FDA.
During November 2020, the Company entered into an agreement with a third-party contract research organization (“CRO”) to provide ongoing clinical research services, clinical research professionals and contract clinical, technical and other related services in connection with a planned future clinical trial. In connection with the CRO agreement, the Company is obligated to make payments of approximately $777,714 plus pass through costs and other third-party direct costs during the term of clinical trial expected to run until September 2021. In connection with the agreement, the Company is obligated to pay in accordance with defined completed milestones, beginning with approximately $195,524 upon work order execution.
During January 2021, the Company entered into an additional agreement with the CRO to provide ongoing clinical research services, clinical research professionals and contract clinical, technical and other related services in connection with a planned future clinical trial. In connection with the CRO agreement, the Company is obligated to payments of approximately $476,943 plus pass through costs and other third-party direct costs during the term of clinical trial expected to run until August 2021. In connection with the agreement, the Company is obligated to pay in accordance with defined completed milestones, beginning with approximately $147,363 upon work order execution.
Contingent Convertible Obligations Into Equity Securities
Obligations Due Under Executive Employment Agreements
Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.
Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.
None of the Executives have yet to elect to convert any portion of their unpaid Original Base Salary.
As of October 31, 2020, there was approximately $721,415 of unpaid Original Base Salary and Incremental Salary related to the period prior to December 31, 2019 and $378,083 of unpaid Original Base Salary and Incremental Salary related to the period January 1, 2020 through October 31, 2020, that could be converted in the future into approximately 29,715,538 shares of common stock.
Leases
Ethan NY
On September 3, 2015, Ethan NY entered into a five-year lease agreement (“Ethan Lease”) for a store located in New York City, New York. The Ethan Lease commenced on October 1, 2015. Under the terms of the Ethan Lease, minimum monthly lease payments of $9,500 per month were to commence in December 2015 through October 2020. During June 2016, Ethan NY exited from its leased premises. Ethan NY did not make any of the required minimum monthly lease payments as required. The total amount of minimum lease payments that Ethan NY is obligated to pay pursuant to this 5-year lease is $586,242 (excluding late fees and interest provided for under the Ethan Lease).
All of Ethan NY’s obligations under the Ethan Lease are recourse only to the assets at Ethan NY, except for certain obligations under the Ethan Lease that were guaranteed by a former employee. Under the terms of the Ethan Lease, the obligations of Ethan NY for future rents are to be mitigated based on the amount of any future rents that are received for the rental of the leased premises to other tenants during the initial term. During August 2016, Ethan NY received confirmation that the leased premises had been leased to another tenant. In connection with the termination of the Ethan Lease, Ethan NY has made several unsuccessful attempts to contact the landlord for the purpose of obtaining a settlement and release for any amounts that the landlord may claim are owing under the Ethan Lease, if any. Ethan NY is not aware of any claim pending or threatened in connection with the Ethan Lease. At October 31, 2020 and 2019, Ethan NY has recorded in liabilities of discontinued operations the amount of rent obligations through June 30, 2016 and a reserve for estimated losses in connection with termination of the Ethan Lease of $101,905 and $101,905, respectively.
NOTE 13 – MINT ORGANICS
Exchange Agreements
On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohr Baugh in connection with participation agreement referred to above in exchange for 4,400,000 shares of common stock of the Company (approximately $0.034 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction). In connection with the exchange, Mr. Rohrbaugh provided a release to the Company in connection with any claims associated with his original investment.
On May 1, 2019, the Company and Mint Organics Florida entered into an exchange agreement whereby the Company agreed to acquire all of the outstanding non-controlling interests in Mint Organics Florida, Inc. outstanding in exchange for 2,400,000 shares of common stock of the Company (approximately $0.042 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).
Non-controlling interests in Mint Organics and Mint Organics Florida
Effective May 1, 2019, the Company has acquired all of the minority interests issued in Mint Organics and Mint Organics Florida, and accordingly, there no longer exists any non-controlling interests in those entities as of such date.
NOTE 14 – LIABILITIES ATTRIBUTABLE TO DISCONTINUED OPERATIONS
During September 2015, the Company formed Ethan NY for the purpose of selling clothing and accessories through a retail store. During June 2016, the Ethan NY operations were closed.
The following summarizes the carrying amounts of the assets and liabilities of Ethan NY at October 31, 2019 and 2018 (see Note 14):
Schedule of Disposal Groups Including Discontinued Operations Income Statement Balance Sheet and Additional Disclosures | | | | | | | | | | | October 31, | | | | 2019 | | | 2018 | | Assets | | $ | - | | | $ | - | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | | Accounts Payable | | $ | 94,835 | | | $ | 94,835 | | Accrued Expenses | | | 31,016 | | | | 31,016 | | Liabilities, total | | $ | 125,851 | | | $ | 125,851 | |
NOTE 15 - SEGMENT INFORMATION
For the years ended October 31, 2020 and 2019, the Company operated only one 1 operating segment.
NOTE 16 – SUBSEQUENT EVENTS
Several subsequent events are disclosed in Notes 7, 10, and 12. There were no other subsequent events for disclosure purposes.
Organicell Regenerative Medicine, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | July 31, | | | October 31, | | | | 2021 | | | 2020 | | ASSETS | | | | | | | | | Current Assets | | | | | | | | | Cash | | $ | 29,907 | | | $ | 590,797 | | Accounts receivable, net of allowance for bad debts | | | 48,225 | | | | 29,385 | | Stock subscription receivable | | | 400,000 | | | | - | | Prepaid expenses | | | 112,457 | | | | 78,790 | | Inventories | | | 243,364 | | | | 146,811 | | Total Current Assets | | | 833,953 | | | | 845,783 | | | | | | | | | | | Property and equipment, net | | | 552,062 | | | | 365,234 | | Other assets – right of use | | | 282,491 | | | | 105,355 | | Security deposits | | | 47,682 | | | | 17,800 | | TOTAL ASSETS | | $ | 1,716,188 | | | $ | 1,334,172 | | | | | | | | | | | LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | Current Liabilities | | | | | | | | | Accounts payable and accrued expenses | | $ | 1,938,604 | | | $ | 765,652 | | Accrued liabilities to management | | | 1,332,190 | | | | 1,156,295 | | Notes payable | | | 4,392 | | | | 6,949 | | Advances from affiliate | | | 220,897 | | | | 220,897 | | Finance lease obligations | | | 48,792 | | | | 50,843 | | Operating lease obligations | | | 114,231 | | | | 38,037 | | Convertible debentures | | | 144,000 | | | | 175,000 | | Liabilities attributable to discontinued operations | | | 125,851 | | | | 125,851 | | Total Current Liabilities | | | 3,928,958 | | | | 2,539,524 | | | | | | | | | | | Long term finance lease obligations | | | 82,328 | | | | 119,146 | | Long term operating lease obligations | | | 168,260 | | | | 67,318 | | Total Liabilities | | | 4,179,545 | | | | 2,725,988 | | | | | | | | | | | Commitments and contingencies | | | | | | | | | | | | | | | | | | Stockholders’ Deficit | | | | | | | | | Common stock, $0.001 par value, 2,500,000,000 shares authorized; 1,116,136,005 and 939,942,783 shares issued and outstanding, respectively | | | 1,116,136 | | | | 939,943 | | Additional paid-in capital | | | 37,087,104 | | | | 26,536,430 | | Accumulated deficit | | | (40,666,597 | ) | | | (28,868,189 | ) | Total Stockholders’ Deficit | | | (2,463,357 | ) | | | (1,391,816 | ) | | | | | | | | | | TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | $ | 1,716,188 | | | $ | 1,334,172 | |
The accompanying notes are an integral part of these consolidated financial statements.
Organicell Regenerative Medicine, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | Nine Months Ended July 31, | | | | 2021 | | | 2020 | | Revenues | | $ | 3,931,411 | | | $ | 2,072,511 | | Cost of revenues | | | 440,536 | | | | 297,905 | | Gross profit | | | 3,490,875 | | | | 1,774,606 | | General and administrative expenses | | | 15,282,596 | | | | 9,065,950 | | Loss from operations | | | (11,791,792 | ) | | | (7,291,344 | ) | Other income (expense) | | | | | | | | | Interest expense | | | (31,783 | ) | | | (144,177 | ) | Other | | | 25,096 | | | | 17,357 | | Provision for income taxes | | | – | | | | – | | Net loss per common share - basic and dilute | | $ | (0.01 | ) | | $ | (0.01 | ) | Weighted average number of common shares outstanding - basic and diluted | | | 1,040,476,900 | | | | 599,404,172 | |
The accompanying notes are an integral part of these consolidated financial statements.
Organicell Regenerative Medicine, Inc.
CONSOLIDATED CHANGES TO STOCKHOLDERS’ DEFICIT
For the Nine Months Ended July 31, 2021 and 2020 (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | Additional | | | | | | Total | | | | | | | Additional | | | | | | Total | | | | Common Stock | | | Paid In | | | Accumulated | | | Stockholders’ | | | | Shares | | | Par Value | | | Capital | | | Deficit | | | Deficit | | Balance October 31, 2020 | | | 939,942,783 | | | $ | 939,943 | | | $ | 26,536,430 | | | $ | (28,868,189 | ) | | $ | (1,391,816 | ) | | | | | | | | | | | | | | | | | | | | | | Sale of common stock | | | 42,266,234 | | | | 42,266 | | | | 2,215,004 | | | | - | | | | 2,257,270 | | | | | | | | | | | | | | | | | | | | | | | Exchange of accounts payable for stock | | | 676,988 | | | | 677 | | | | 112,529 | | | | - | | | | 113,206 | | | | | | | | | | | | | | | | | | | | | | | Stock issued for future services | | | 60,000 | | | | 60 | | | | 9,940 | | | | - | | | | 10,000 | | | | | | | | | | | | | | | | | | | | | | | Stock based compensation | | | 133,190,000 | | | | 133,190 | | | | 8,213,201 | | | | - | | | | 8,346,391 | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | - | | | | - | | | | - | | | | (11,798,408 | ) | | | (11,798,408 | ) | | | | | | | | | | | | | | | | | | | | | | Balance July 31, 2021 | | | 1,116,136,005 | | | $ | 1,116,136 | | | $ | 37,087,104 | | | $ | (40,666,597 | ) | | $ | (2,463,357 | ) | | | | | | | | | | | | | | | | | | | | | | Balance October 31, 2019 | | | 502,936,805 | | | $ | 502,937 | | | $ | 14,219,736 | | | $ | (16,285,222 | ) | | $ | (1,562,549 | ) | | | | | | | | | | | | | | | | | | | | | | Sale of common stock | | | 45,466,661 | | | | 45,467 | | | | 980,533 | | | | - | | | | 1,026,000 | | | | | | | | | | | | | | | | | | | | | | | Conversion of debt and accrued interest | | | 40,000,000 | | | | 40,000 | | | | 559,400 | | | | - | | | | 599,400 | | | | | | | | | | | | | | | | | | | | | | | Stock based compensation | | | 181,036,808 | | | | 181,036 | | | | 5,287,931 | | | | - | | | | 5,468,967 | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | - | | | | - | | | | - | | | | (7,418,164 | ) | | | (7,418,164 | ) | | | | | | | | | | | | | | | | | | | | | | Balance July 31, 2020 | | | 769,440,274 | | | $ | 769,440 | | | $ | 21,047,600 | | | $ | (23,703,386 | ) | | $ | (1,886,346 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
Organicell Regenerative Medicine, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | Nine Months Ended July 31, | | | | 2021 | | | 2020 | | CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | Net loss | | $ | (11,798,408 | ) | | $ | (7,418,164 | ) | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | Depreciation expense | | | 37,981 | | | | 25,879 | | Interest expense on conversion of Funding Facility | | | - | | | | 94,170 | | Stock-based compensation | | | 8,346,391 | | | | 5,468,967 | | Changes in operating assets and liabilities: | | | | | | | | | Accounts receivable, net of allowance for bad debts | | | (18,840 | ) | | | (41,784 | ) | Prepaid expenses | | | (23,667 | ) | | | 38,632 | | Inventories | | | (96,553 | ) | | | (84,557 | ) | Accounts payable and accrued expenses | | | 1,286,158 | | | | 452,102 | | Accrued liabilities to management | | | 175,895 | | | | 492,961 | | Security deposits | | | (29,882 | ) | | | (1,800 | ) | Net cash used in operating activities | | | (2,120,925 | ) | | | (973,592 | ) | | | | | | | | | | CASH FLOWS FROM INVESTING | | | | | | | | | Purchase of fixed assets | | | (224,809 | ) | | | (138,694 | ) | Net cash used in investing activities | | | (224,809 | ) | | | (138,694 | ) | | | | | | | | | | CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | Proceeds from issuance of notes payable | | | - | | | | 400,000 | | Payments on finance lease | | | (38,869 | ) | | | (47,815 | ) | Repayments of notes payable | | | (33,557 | ) | | | (81,511 | ) | Proceeds from sale of common stock | | | 1,857,270 | | | | 1,026,000 | | Net cash provided by financing activities | | | 1,784,844 | | | | 1,296,674 | | | | | | | | | | | Increase (decrease) in cash | | | (560,890 | ) | | | 184,388 | | Cash at beginning of period | | | 590,797 | | | | 132,557 | | Cash at end of period | | $ | 29,907 | | | $ | 316,945 | | | | | | | | | | | SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | | | Cash paid for taxes | | $ | – | | | $ | – | | Cash paid for interest | | $ | 19,243 | | | $ | 49,940 | | | | | | | | | | | NON-CASH INVESTING AND FINANCING TRANSACTIONS: | | | | | | | | | Exchange of accounts payable for common stock | | $ | 113,206 | | | $ | - | | Stock issued for future services | | $ | 10,000 | | | $ | - | | Stock subscription receivable | | $ | 400,000 | | | $ | - | | Operating lease – right of use assets | | $ | 235,313 | | | $ | 117,659 | | Conversion of debt and accrued interest into common stock | | $ | - | | | $ | 599,400 | |
The accompanying notes are an integral part of these consolidated financial statements.
Organicell Regenerative Medicine, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2021 (Unaudited)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Organicell Regenerative Medicine, Inc. f/k/a Biotech Products Services and Research, Inc. (“Organicell” or the “Company”) was incorporated on August 9, 2011 in the State of Nevada. The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and to provide other related services. Our proprietary products are derived from perinatal sources and are principally used in the health care industry administered through doctors and clinics (collectively, “Providers”).
On May 21, 2018, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the Company’s name from Biotech Products Services and Research, Inc. to Organicell Regenerative Medicine, Inc., effective June 20, 2018 (the “Name Change”). The Name Change has not yet been effectuated in the marketplace by the Financial Industry Regulatory Agency (“FINRA”).
For the nine months ended July 31, 2021, the Company principally operated through General Surgical of Florida, Inc., a Florida corporation and wholly owned subsidiary, with a business purpose to sell therapeutic products to Providers. During November 2020, the Company formed Livin Again Inc. (“Livin”), a wholly owned subsidiary of the Company for the purpose of among other things, providing independent education, advertising and marketing services, to Providers of medical and other healthcare, anti-aging and regenerative services (“Regenerative Services”) including FDA-approved IV vitamin and mineral liquid infusions. As of July 31, 2021, Livin did not have any significant activity.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities Exchange Commission, although we believe that the disclosures made are adequate to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended October 31, 2020 filed with the Securities and Exchange Commission.
Concentrations of Credit Risk
The balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents. Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $250,000 per institution. At July 31, 2021, the Company did not hold cash balances in any financial institution in excess of FDIC insurance coverage limits.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
Accounts Receivable
Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to pay their obligation. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions.
The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. For the three months and nine months ended July 31, 2021 and 2020, the Company did not record any bad debt expense. 0
Stock Subscriptions Receivable
Once the Company receives from an investor a fully executed stock subscription agreement to provide an equity investment in the Company and the purchase price has been fully paid to the Company in a timely manner, the Company will record that commitment as a subscription receivable and a credit to stockholders equity as of the date of the commitment. For stock subscription agreements that are not fully paid to the Company in a timely manner, the Company will record the purchase at the time that the entire purchase price has been received.
Inventory
Inventory is stated at the lower of cost or net realizable value using the average cost method. The Company provides reserves for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At July 31, 2021, the Company determined that there were not any reserves required in connection with our finished goods.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of property and equipment range from 3 to 15 years. Upon sale or retirement, the cost and related accumulated depreciation and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
Construction in Progress
The cost of all projects under construction for new laboratory facilities and other improvements that are in progress (under way) at a particular point in time and have not yet been placed into service are reported as construction in progress until such time as the project is complete.
Revenue Recognition
The Company follows the guidance of FASB Accounting Standards Update (“ASU”) Topic 606 “Revenue from Contracts with Customers” which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts. The Company applied the new standard using a modified retrospective approach.
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.
Net Income (Loss) Per Common Share
Basic income (loss) per common share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity instruments.
At July 31, 2021, the Company had 9,500,000 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the three months and nine months ended July 31, 2021. At July 31, 2020, the Company had 9,500,000common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the three months and nine months ended July 31, 2020.
Stock-Based Compensation
All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.
Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based upon the estimated fair value of the option or warrant.
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 $233,100 and $30,000 for the three months ended July 31, 2021 and 2020, respectively. Our research and development expenses were approximately $1,129,300 and $135,800 for the nine months ended July 31, 2021 and 2020, respectively. The research and development costs primarily relate to the filing and approval of IND applications and the performance of clinical trials.
Income Taxes
The Company is required to file a consolidated tax return that includes all of its subsidiaries.
Provisions for income taxes are based on taxes payable or refundable for the current year taxable income for federal and state income tax reporting purposes and deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of the operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertain tax positions in accordance with FASB Topic 740 – Income Taxes. This pronouncement prescribes a recognition threshold and measurement process for financial statement recognition of uncertain tax positions taken or expected to be taken in a tax return. The interpretation also provides guidance on recognition, derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
For the three months and nine months ended July 31, 2021 and 2020 the Company incurred operating losses, and therefore, there was not any income tax expense amount recorded during that period. There is a full valuation allowance established for the tax benefit associated with the net losses for the three months and nine months ended July 31, 2021 and 2020.
Valuation of Derivatives
The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
Sequencing
The Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares.
The Company currently has 2,500,000,000 authorized shares of common stock of which 1,121,161,005 shares are issued and outstanding as of September 14, 2021. The Company expects that it will continue to issue common stock in the future in connection with debt and/or equity financings, transactions with third parties, performance incentives and as compensation to its employees. Currently the amount of authorized shares is sufficient to provide for the additional shares that the Company may be contingently obligated to issue under existing arrangements.
Fair Value of Financial Instruments
The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.
The Company follows FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.
The Company follows the provisions of ASC 820 with respect to its financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
Level one — Quoted market prices in active markets for identical assets or liabilities;
Level two — Inputs other than level one inputs that are either directly or indirectly observable such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level three — Unobservable inputs that are supported by little or no market activity and developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
The Company did not have any convertible instruments outstanding at July 31, 2021 and October 31, 2020 that qualify as derivatives.
Operating and Finance Lease Obligations
Effective November 1, 2019, the Company adopted Accounting Standards Update (ASU) No. 2016-02 (Topic 842) (“ASC 842”), that requires organizations that lease assets to recognize assets and liabilities on the balance sheet and provide updated disclosures related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. The Company adopted the new standard using a modified retrospective approach. The modified retrospective approach included a number of optional practical expedients on leases that commenced before the effective date of ASC 842, including continuing to account for leases that commenced before the effective date in accordance with previous guidance, unless the lease is modified.
Under the provisions of ASC 842, the Company is required to recognize a right of use (“ROU”) asset and corresponding lease liability for all operating leases upon commencement of the lease. The Company’s policy is to treat operating leases that have a term of one year or less at lease commencement date and do not include a purchase option that is reasonably certain of exercise, consistent with the lease recognition approach as previously outlined under ASC 840. In addition, month to month leases which do not involve additional financial commitments on the part of the Company are also treated consistent with the lease recognition approach as previously outlined under ASC 840. The Company has established a capitalization threshold of $15,000 in determining whether any future operating leases will be capitalized.
Subsequent Events
The Company has evaluated subsequent events that occurred after July 31, 2021 through the financial statement issuance date for subsequent event disclosure consideration.
NOTE 3 – GOING CONCERN
The unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company incurred operating losses of $11,791,721 11,791,792 for the nine months ended July 31, 2021. In addition, the Company had an accumulated deficit of $40,666,597 at July 31, 2021. The Company had a negative working capital position of $3,095,005 at July 31, 2021.
New United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective beginning in May 2021 (postponed from November 2020 due to the COVID -19 pandemic) require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). The Company has not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s.
In addition to the above, the outbreak of the novel coronavirus (“COVID-19”) during March 2020 and the resulting adverse public health developments and economic effects to the United States business environments have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy.
As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted, (b) the United States economy resumes to pre-COVID-19 conditions and/or (c) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company’s current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.
In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (1) 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, (2) the effects of the COVID-19 crisis resume to pre-COVID-19 market conditions, (3) 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, (4) obligations to the Company’s creditors are not accelerated, (5) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations, (6) 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 (7) 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 as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and our business. In addition, 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. As described above, the COVID-19 crisis has significantly impaired the Company and the overall Unites States and World economies.
If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved, if the Company’s ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws. As of July 31, 2021, 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.
NOTE 4 – STOCK SUBSCIPTION RECEIVABLES
On July 28, 2021, an investor had entered into a stock purchase agreement with the Company to purchase common stock of the Company for a total purchase price of $500,000. As of July 31, 2021, the Company had received $100,000 of the purchase price. The remaining amount due of $400,000 is recorded as a stock subscription receivable as of July 31, 2021. On August 2, 2021, the Company received the full amount outstanding under the stock subscription receivable from the investor.
NOTE 5 – INVENTORIES
Schedule of Inventories | | | | | | | | | | | July 31, 2021 | | | October 31, 2020 | | Raw materials and supplies | | $ | 112,153 | | | $ | 26,199 | | Finished goods | | | 131,211 | | | | 120,612 | | Total inventories | | $ | 243,364 | | | $ | 146,811 | |
NOTE 6 – PROPERTY AND EQUIPMENT
Schedule of Property and Equipment | | | | | | | | | | | July 31, 2021 | | | October 31, 2020 | | Computer equipment | | $ | 8,653 | | | $ | 8,653 | | Finance lease equipment | | | 239,595 | | | | 239,595 | | Manufacturing equipment | | | 238,553 | | | | 171,430 | | | | | 486,801 | | | | 419,678 | | Less: accumulated depreciation | | | (92,425 | ) | | | (54,444 | ) | | | | 394,376 | | | | 365,234 | | Construction in progress: | | | | | | | | | Leasehold improvements | | | 157,686 | | | | - | | Total property and equipment, net | | $ | 552,062 | | | $ | 365,234 | |
During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $239,595. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $4,513 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a finance lease obligation. The annual interest rate charged in connection with the lease is 4.5%. The leased equipment is being depreciated over their estimated useful lives of 15 years.
Depreciation expense totaled $13,125 and $10,720 for the three months ended July 31, 2021 and 2020, respectively. Depreciation expense totaled $37,981 and $25,879 for the nine months ended July 31, 2021 and 2020, respectively.
As described in Note 7, during the nine months ended July 31, 2021, the Company began the build-out of additional laboratory processing, product distribution and administrative office capacity at its Basalt Lab Lease location. The total costs incurred as of July 31, 2021 was $157,686 and is reflected as construction in progress. Amortization of these costs will begin once the build-out is complete and the facility becomes operational.
NOTE 7 – LEASE OBLIGATIONS
Finance Lease Obligations:
During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $239,595. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $4,513 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a finance lease obligation. The annual interest rate charged in connection with the lease is 4.5%. The leased equipment are being depreciated over their estimated useful lives of 15 years.
Operating Lease Obligations:
Administrative Office
The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. During July 2020, the Company entered into an extension of the operating lease agreement. The lease term is for an additional 36 months beginning July 1, 2020 and expiring June 30, 2023, with a monthly rental rate of $3,500. On July 1, 2020, in connection with the adoption of ASC 842, the Company recorded a ROU asset and corresponding operating lease obligation of $117,659 (present value of the associated leased payments based on an assumed borrowing rate of 4.5%).
Lease amortization expense for the three months ended July 31, 2021 and 2020 was $9,562 and $8,826, respectively.
Lease amortization expense for the nine months ended July 31, 2021 and 2020 was $28,367 and $25,872, respectively.
Beginning October 1, 2020, the Company entered into a second lease agreement with Mariluna LLC for office space located in Aspen, CO. The lease expires on September 30, 2021 and does not provide for any renewal terms. Under the terms of the lease, the Company is required to make monthly rental payments of $6,500 and was required to provide a security deposit of $11,000 upon execution of the lease agreement.
Laboratory Facilities:
In connection with the Company’s decision to again operate a placental tissue bank processing laboratory in Miami, Florida, during February 2019, the Company entered into a renewable month to month lease agreement (“Miami Lab Lease”) for an approximately 450 square foot laboratory and a 100 square foot administrative office facility. Monthly lease payments are approximately $5,200 plus administrative fees and taxes. In connection with the Miami Lab Lease, the Company was required to post a security deposit of $6,332. From November 2020 through July 31, 2021, the Company entered into an additional month to month lease agreement in the same facility as the Miami Lab Lease for an additional 390 square foot laboratory. Monthly lease payments were approximately $4,400 plus administrative fees and taxes.
During March 2021, the Company entered into a lease agreement for an approximately 2,452 square foot commercial space located in Basalt, Colorado (the “Basalt Lab Lease”). The Company intends to build additional laboratory processing, product distribution and administrative office capacity from this location. The term of the Basalt Lab Lease is for three years and may be renewed for an additional (3) three-year term provided the Company is not in default. Rental expense is $6,600 per month and provides for annual increases of 3% or the Denver Aurora Metropolitan CPI index, whichever is greater. In connection with the Basalt Lab Lease, the Company was required to post a security deposit of $13,600. The Company is currently constructing the laboratory and office build-out at an estimated cost of $340,000. The Company expects the construction to be completed during the fiscal year ended October 31, 2021. The Company has recorded a ROU asset and corresponding operating lease obligation of $235,313 (present value of the associated leased payments based on an assumed borrowing rate of 4.5%). Lease amortization expense for the three and nine months ended July 31, 2021 was $17,953 and $29,811, respectively.
NOTE 8 – RELATED PARTY TRANSACTIONS
On February 26, 2020, April 25, 2020 and June 29, 2020, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s employment agreements were amended. See Note 13 for a more detailed description of the executive employment agreements and the respective amendments referred to above.
During April 2020, June 2020, August 2020, September 2020, February 2021 and April 2021, each of the current executives of the Company, Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell and Dr. George Shapiro (“Current Executives”) were granted rights under the Management and Consultant Performance Plan (“MCPP”) to receive common stock of the Company based on the achievement of certain defined milestones. In addition, during June 2020, each of the current non-executive members of the Board were granted rights under the MCPP to receive common stock of the Company based on the achievement of certain defined milestones (see Note 11).
The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. During July 2020, the term of the lease has been extended through June 2023. Beginning July 2020, the monthly rent increased from $2,900 to $3,500. The Company paid a security deposit of $5,000. Total rent expense for the three months and nine months ended July 31, 2021 was $10,500 and $31,500, respectively.
Beginning October 1, 2020, the Company entered into a second lease agreement with Mariluna LLC for office space located in Aspen, CO. The lease expires on September 30, 2021 and does not provide for any renewal terms. Under the terms of the lease. The Company is required to make monthly rental payments of $6,500 and was required to provide a security deposit of $11,000 upon execution of the lease agreement. Total rent expense for the three months and nine months ended July 31, 2021 was $19,500 and $58,500, respectively.
In connection with Mr. Bothwell’s executive employment agreements, the Company agreed to reimburse Rover Advanced Technologies, LLC, a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative fees, etc.) totaling $7,453 and $23,177 for the three months and nine months ended July 31, 2021.
For the three months and nine months ended July 31, 2021, the Company sold a total of approximately $173,000 and $665,000, respectively, of product to a management services organization (MSO) that provides administrative services and contracts for medical supplies for several medical practices, including approximately $44,000 and $117,000 for the three months and nine months ended July 31, 2021, respectively, of products purchased from the Company that were attributable to the medical practice owned by one of our board of director members. The board of director member also has an indirect economic interest in the parent company that owns the MSO. For the three months and nine months ended July 31, 2020, the total amount of sales of products to customers related to our board of director members and/or employees of the Company totaled approximately $25,200 and $71,500, respectively.
On February 26, 2020, the Company agreed to enter into a consulting agreement with Dr. George Shapiro, the Company’s Chief Medical Officer (“CMO”) to provide ongoing services to the Company. The CMO will receive compensation of $82,250 annually, commencing March 1, 2020. The term of the consulting agreement is one year, with automatic renewals for annual periods thereafter unless prior written notice is provided by either party of the desire to terminate. During February 2021, the consulting arrangement was amended whereby the CMO’s accrued and unpaid consulting fees of $82,250 through February 2021 were fully satisfied through the issuance of 500,000 shares of newly issued common stock of the Company. Furthermore, until the CMO becomes a full-time employee of the Company and provided the CMO continues to serve in his current position, the CMO shall receive compensation equal to $27,000 per quarter beginning May 1, 2021, payable in cash or in stock (based on the average monthly trading price of the common stock during the applicable quarter) at the option of the Company. At July 31, 2021, consulting fees owed to the CMO were $27,000.
At July 31, 2021, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $261,537, $287,555 and $756,078, respectively.
Effective December 21, 2020, the Company granted a bonus of $50,000 and 15,000,000 shares of common stock of the Company each to Mr. Mitrani, Dr. Mitrani and Mr. Bothwell and 1,000,000 shares of common stock of the Company each to Mr. Carbonara and Dr. Allen Meglin (see Note 11).
On February 22, 2021, the Company sold 1,818,181 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.055 per share for an aggregate purchase price of $100,000 (see Note 11).
NOTE 9 – NOTES PAYABLE
On June 20, 2018, the Company issued a total of $150,000 of convertible 6% debentures (“150,000 Debentures”) to an accredited investor. The principal amount of the $150,000 Debentures, plus accrued and unpaid interest through June 30, 2019 were payable on the 10th business day subsequent to June 30, 2019, unless the payment of the $150,000 Debentures were prepaid at the sole option of the Company, were converted as provided for under the terms of the $150,000 Debentures, and/or accelerated due to an event of default in accordance with the terms of the $150,000 Debentures. Interest on the $150,000 Debentures for each calendar quarter ended beginning with the quarter ended June 30, 2018 is payable on the 10th business day following the immediately prior calendar quarter. At July 31, 2021, the principal balance of the $150,000 Debentures outstanding was $144,000 and accrued and unpaid interest was $5,040.
During October 2018, the Company issued a total of $70,000 of convertible 6% debentures (“70,000 Debentures”) to two accredited investors. The principal amount of the $70,000 Debentures, plus accrued and unpaid interest through September 30, 2019 were payable on the 10th business day subsequent to September 30, 2019. The $70,000 Debentures were not paid on the required maturity dates. On June 25, 2020, the Company entered into a settlement and general release agreement with the holder of the $50,000 Debenture (one of the two holders that participated in the $70,000 Debentures described above), whereby the Company was required to repay the balance of the $50,000 Debenture in eight monthly installments of $6,250 plus outstanding accrued interest beginning June 30, 2020 and ending on January 31, 2021. During February 2021, the $50,000 Debenture was repaid in full. During October 2020, the Company and the holder of the $20,000 debenture (one of the two holders that participated in the $70,000 Debentures described above), agreed to convert the principal amount of the $20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,300 into 160,000 shares of common stock of the Company (approximately $0.125 per share).
Credit Facility
On September 19, 2019, the Company’s wholly owned subsidiary, General Surgical Florida, received $100,000 in connection with an unsecured line of credit (“Credit Facility”). The Credit Facility was fully repaid on November 2, 2020. Under the terms of the Credit Facility, the Company was required to make weekly payments averaging approximately $2,541 (payments totaling $132,160). The effective annual interest rate was approximately 45.67%. Proceeds received from the Credit Facility were used for working capital purposes. Mr. Iglesias, who at the time was the Company’s Chief Executive Officer, provided a personal guaranty in connection with amounts required to paid under the Credit Facility.
NOTE 10 – IRS PENALTIES
The Company’s income tax returns for the periods since inception through the tax year ended October 31, 2015 were not filed with the Internal Revenue Service (“IRS”) until August 2017 (“Delinquent Filed Returns”). The Company’s income tax returns for the tax year ended October 31, 2016 were filed with the IRS during December 2017. In connection with the Delinquent Filed Returns, during the period September 2017 through October 2017, the Company received notices that it was being assessed approximately $90,000 of penalties, plus interest (“IRS Penalties”), in connection with the late filing certain information returns that were included as part of the Delinquent Filed Returns. In connection with the notices, the IRS indicated its intent to levy property of the Company if the IRS penalties were not paid as required. During January 2018, the Company requested from the IRS an abatement of the IRS penalties based on reasonable cause. During April 2018, the IRS notified the Company that the IRS penalties for the tax year ended 2011 of $20,000, plus interest, were abated and the request for abatement for the IRS penalties for the tax years ended 2012 – 2015 were denied. The Company is currently appealing the initial determination by the IRS to exclude the IRS penalties for the tax years 2012-2015 in its consideration of abatement. During the period that the appeal is being reviewed and a determination is made by the IRS, the IRS has agreed to put a hold on taking any levy action against the Company for the remaining amounts of the IRS Penalties that are still outstanding. In connection with the notices, the Company has accrued $83,684 and $70,000 of accrued tax penalties and interest on the balance sheet as of July 31, 2021 and October 31, 2020, respectively.
NOTE 11 – CAPITAL STOCK
Preferred Stock
The Company is authorized to issue 10,000,000 shares of $0.001 par value preferred stock in one or more designated series, each of which shall be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. The Company’s board of directors is authorized, without stockholders’ approval, within any limitations prescribed by law and the Company’s Articles of Incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock.
Issued Shares
As of July 31, 2021, there were 0 designations of Preferred Stock authorized or outstanding.
Common Stock
On December 21, 2020 and January 4, 2021, pursuant to the Nevada Revised Statutes and the Bylaws of the Company, the Board of Directors of the Company and the stockholders having the voting equivalency of 53.55% of the outstanding capital stock, respectively, approved the filing of an amendment to the Articles of Incorporation of the Company to increase the authorized amount of common stock from 1,500,000,000 to 2,500,000,000, without changing the par value of the common stock or authorized number and par value of “blank check” Preferred Stock. On January 19, 2021, the Company filed a Definitive 14C with the SEC regarding the corporate action. On February 10, 2021, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effectuate the corporate action on February 9, 2021.
Issuances of Common Stock - Sales:
During November 2020, the Company sold 800,000 shares of common stock to an “accredited investor”, at $0.05 per share, for an aggregate purchase price of $40,000. The proceeds were used for working capital.
During February 2021, the Company sold an aggregate of 12,340,910 shares of common stock to five “accredited investors”, at prices ranging from $0.05 per share to $0.06 per share for an aggregate purchase price of $665,000. The proceeds were used for working capital.
On February 22, 2021, the Company sold 1,818,181 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.055 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital. The sales price was at a discount to the trading price of $0.086 as of the effective date of the transaction, resulting in additional stock-based compensation expense of $56,364, which has been recorded during the nine months ended July 31, 2021.
During April 2021, the Company sold an aggregate of 13,677,821 shares of common stock to seven “accredited investors” at prices ranging from $0.03 per share to $0.25 per share for an aggregate purchase price of $535,000. The proceeds were used for working capital.
During May 2021, the Company sold an aggregate of 2,087,822 shares of common stock to eight “accredited investors” at prices ranging from $0.13 per share to $0.15 per share for an aggregate purchase price of $286,250. The proceeds were used for working capital.
During the period June 2021 through July 2021, the Company sold an aggregate of 11,541,500 shares of common stock to four “accredited investors” at prices ranging from $0.05 per share to $0.13 per share for an aggregate purchase price of $631,020 (see Note 4). The proceeds were used for working capital.
During August 2021, the Company sold an aggregate of 3,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $150,000. The proceeds were used for working capital.
Issuances of Common Stock – Stock Compensation:
During November 2020, the Company entered into an additional consulting agreement with a third party to provide consulting services in connection with the development of international research and development, sales and distribution and financing opportunities for a period of six months. As consideration for agreeing to provide the consulting services to the Company, the Company issued the consultant 2,000,000 shares of fully vested unregistered common stock valued at $0.151 per share, the closing price of the common stock of the Company on the effective date of the agreement. The Company recorded $302,000 of stock-based compensation expense during the nine months ended July 31, 2021. On August 9, 2021, the Company and the third party entered into another consulting agreement with substantially the same terms and condition as provided for in the original agreement. The 2,000,000 shares of fully vested unregistered common stock issued to the consultant under the new agreement were valued at $0.093 per share, the closing price of the common stock of the Company on the effective date of the agreement. The Company will amortize $185,400 of stock-based compensation expense based on the grant date fair value of these shares over the term of the agreement.
During November 2020, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to one individual an aggregate of 250,000 shares of unregistered common stock valued at $0.145 per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded $36,225 of stock-based compensation expense based on the grant date fair value of these shares during the nine months ended July 31, 2021.
During December 2020, the Board approved the bonus of 47,675,000 shares of newly issued common stock to executive management (consisting of Mr. Mitrani, Dr. Mitrani and Mr. Bothwell) totaling 45,000,000 shares; non-executive Board members (consisting of Mr. Carbonara and Dr. Meglin) totaling 2,000,000 shares; administrative staff totaling 550,000; and to several medical advisors totaling 125,000 shares valued at $0.12 per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded a total of $5,721,000 of stock-based compensation expense based on the grant date fair value of these shares during the nine months ended July 31, 2021.
During April 2021, the Board approved the bonus of 500,000 shares of newly issued common stock to an employee valued at $0.55 per share, the closing price of the common stock of the Company on the grant date. The Company recorded a total of $27,450 of stock-based compensation expense based on the grant date fair value of these shares during the nine months ended July 31, 2021.
During December 2020, January 2021 and February 2021, the Company issued 25,000, 240,000 and 50,000 shares of unregistered common stock, respectively, valued at prices ranging from $0.035 to $0.17 per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded a total of $19,855 of stock-based compensation expense during the nine months ended July 31, 2021 based on the grant date fair value of these shares.
During February 2021, the Company entered into a consulting agreement with a third party to provide consulting services for a one-year period. As consideration for agreeing to provide consulting services to the Company, the Company agreed to issue the consultant 500,000 shares of unregistered common stock upon completion of the three-month anniversary of the agreement. In addition, the Company has agreed to provide an additional 250,000 shares of newly issued common stock for each celebrity and/or athlete which the consultant arranges to provide marketing services to the Company and that is responsible for bringing a minimum of $75,000 of monthly revenues in connection with sales of the Company’s products, up to a maximum of 1,500,000 shares. The shares issued were valued at $0.095 per share, the closing price of the common stock of the Company on the effective date of the agreement, totaling $47,500. The Company will amortize the costs associated with the issuance over the term of the agreement. The Company amortized $23,750 of stock-based compensation expense during the nine months ended July 31, 2021.
As described in Note 13, in connection with the execution of the Amendment, the Company issued to the Consultants 20,000,000 shares of unregistered common stock (“Shares”) valued at $0.0614 per share, the closing price of the common stock of the Company on the grant date. The Company will amortize the costs associated with the issuance of $1,228,000 over the remaining term of the agreement. The shares issued vest 50% as of the date of the Amendment and the remaining 50% will vest on December 31, 2021 or upon the date that the Company obtains approval for certain IND’s submitted, whichever is sooner. The Company recorded a total of $204,667 of stock-based compensation expense during the nine months ended July 31, 2021.
During April 2021, the Company entered into a consulting agreement with a third party to provide investor relation services. The term of the agreement is month to month and may be terminated with or without cause. As consideration for agreeing to provide the consulting services to the Company, the Company has agreed to pay the consultants a minimum of $15,000 per month and to issue 500,000 shares of restricted common stock which vested fully on May 21, 2021 (valued at $0.057 per share, the closing price of the common stock of the Company on the grant date). The Company recorded a total of $28,500 of stock-based compensation expense during the nine months ended July 31, 2021.
During March 2021, April 2021 and May 2021, the Company granted a total of 750,000 of common stock to various consultants valued at prices ranging from $0.049 per share to $0.40 per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded $82,392 of stock-based compensation expense based on the grant date fair value of these shares during the nine months ended July 31, 2021.
On June 4, 2021, the Company and an employee agreed to amendment of the employee’s employment agreement. Under the terms of the amendment, the employee agreed to extend the term of the agreement through December 31, 2022 and the Company agreed to grant the employee 1,000,000 shares of common stock of the Company to vest upon execution of the amendment (valued at $0.136 per share, the closing price of the common stock of the Company on the grant date). In addition, the employee is eligible to receive up to an aggregate of 3,000,000 additional shares of common stock based on achievement of certain milestones. The total value of the stock granted in connection with the amendment of $136,000 will be amortized beginning June 4, 2021 over the remaining term of the agreement. The Company recorded $14,316 of stock-based compensation expense based on the grant date fair value of these shares during the nine months ended July 31, 2021.
During June 2021, the Company granted a total of 1,100,000 of common stock to various consultants and service providers valued at prices ranging from $0.14 per share to $0.148 per share, the closing price of the common stock of the Company on the respective grant dates. The Company recorded $154,740 of stock-based compensation expense based on the grant date fair value of these shares during the nine months ended July 31, 2021.
On June 10, 2021, the Company agreed to issue 60,000 shares of common stock to a service provider as a prepayment for future services to be provided to the Company valued at $10,000 (valued at $0.167 per share, the closing price of the common stock of the Company on the date of the agreement).
Issuances of Common Stock – Exchange of balances due on accounts payable for stock:
During February 2021, the consulting arrangement was amended whereby the CMO’s accrued and unpaid consulting fees of $82,250 were fully satisfied though the issuance of 500,000 shares of newly issued common stock of the Company valued at $0.165 per share (share price was $0.084 per share on the date of the exchange). Furthermore, until the CMO becomes a full-time employee of the Company and provided the CMO continues to serve in his current position, the CMO shall receive compensation equal to $27,000 per quarter beginning May 1, 2021, payable in cash or in stock (based on the average monthly trading price of the common stock during the applicable quarter) at the option of the Company.
During May 2021, the Company and two employees agreed to exchange $30,973 of commission payables due to the employees for 176,989 shares of newly issued common stock valued at $0.175 per share, the closing price of the common stock of the Company on the date of the exchange.
Management and Consultants Performance Stock Plan
On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (“MCPP”) providing for the grant to current senior executive members of management and third-party consultants of an aggregate of approximately 205,000,000 shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”).
On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below.
| Schedule of minimum pre-Transaction price per share | | | | | | | | | | Pre-Transaction Price Per Share Valuation (a) | | | Executive Bonus Shares Issued (b) | | | Non-executive Board Bonus Shares Issued (c) | | $ | 0.22 | | | | 40,000,000 | | | | 2,000,000 | | $ | 0.34 | | | | 60,000,000 | | | | 3,000,000 | | $ | 0.45 | | | | 80,000,000 | | | | 4,000,000 | | $ | 0.54 | | | | 100,000,000 | | | | 5,000,000 | |
| (a) | proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances |
| (b) | per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro |
| (c) | per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara |
On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below:
| Schedule of debt and/or equity financings | | | | | | | | | | Aggregate Funding Amount | | | Shares | | From | | | To | | | | | $ | 2,500,000 | | | $ | 5,000,000 | | | | 5,000,000 | | $ | 5,000,001 | | | $ | 10,000,000 | | | | 10,000,000 | | $ | 10,000,001 | | | $ | 30,000,000 | | | | 30,000,000 | |
On September 23, 2020, the Board amended the MCPP, providing for the grant of common stock of the Company of 15.0 million, 7.5 million and 15.0 million shares of common stock of the Company, respectively, to each Albert Mitrani, Dr. Maria I. Mitrani and Ian Bothwell upon such time that the Company’s common stock trades above $0.25 per share, $0.50 per share and $0.75 per share, respectively, for 30 consecutive trading days subsequent to March 31, 2021 and provided such milestone occurs during the term of employment with the Company.
In addition, each of the current executives were entitled to receive an additional 7 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such milestone occurs during the term of employment with the Company.
On February 10, 2021, the Board amended the MCPP, providing for the grant of common stock of the Company of 5 million shares for each Phase II clinical trial completed, 5 million shares for each Phase III clinical trial approved and initiated (deemed to be upon the time the first patient is enrolled) and 10.0 million shares for each Phase III clinical trial fully enrolled. In addition, the CMO’s portion of a designated grant for an achievement of any applicable Milestone subsequent to September 23, 2020 was reduced to 30% until the time that the CMO becomes a full-time employee of the Company.
Pursuant to the MCPP, a total of 342,500,000 shares have been issued and as described above, additional shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board:
Schedule of management and consultants performance stock plan | | | | | | | MCPP | | | | Shares | | Name | | Awarded | | Albert Mitrani | | | 80,000,000 | | Ian Bothwell | | | 80,000,000 | | Dr. Maria I. Mitrani | | | 80,000,000 | | Dr. George Shapiro | | | 69,500,000 | | Consultants | | | 33,000,000 | | Total | | | 342,500,000 | |
The Company will record stock-based compensation expense in connection with any MCPP Shares that are actually awarded based on the fair value as of the initial grant date that the respective milestone for the MCPP Shares were approved. For the MCPP Shares approved on April 25, 2020, June 29, 2020, August 14, 2020, September 23, 2020, and February 10, 2021, the closing price of the common stock of the Company was $0.027, $0.056, $0.128, $0.28 and 0.108, respectively.
In connection with the MCPP Shares that have been awarded to date, all such shares were issued in connection with the MCPP Shares approved on April 25, 2020 and accordingly were valued $0.027 per share, the closing price of the common stock of the Company on the date that those respective MCPP Shares were approved.
During the three months and nine months ended July 31, 2021, a total of 0 and 49,500,000 shares, respectively, were issued in connection with certain Milestones achieved. The Company recorded a total of $1,336,500 and $3,915,000 of stock-based compensation expense during the nine months ended July 31, 2021 and 2020, respectively, based on the fair value of the actual MCPP Shares awarded during each of those respective periods.
NOTE 12 – WARRANTS
A summary of warrant activity for the nine months ended July 31, 2021 and 2020 are presented below.
Summary of Warrant Activity | | | | | | | | | | | | | | | | | | | Number of Shares | | | Weighted-average Exercise Price | | | Remaining Contractual Term (years) | | | Aggregate Intrinsic Value | | Outstanding at October 31, 2020 | | | 9,500,000 | | | $ | 0.03 | | | | 7.90 | | | $ | 1,268,000 | | Granted | | | – | | | $ | 0 | | | | – | | | $ | – | | Exercised | | | – | | | $ | 0 | | | | – | | | $ | – | | Expired/Forfeited | | | – | | | $ | 0 | | | | – | | | $ | – | | Outstanding and exercisable at July 31, 2021 | | | 9,500,000 | | | $ | 0.03 | | | | 7.15 | | | $ | 685,650 | |
| | Number of Shares | | | Weighted-average Exercise Price | | | Remaining Contractual Term (years) | | | Aggregate Intrinsic Value | | Outstanding at October 31, 2019 | | | 4,529,371 | | | $ | 0.20 | | | | 0.30 | | | $ | – | | Granted | | | 9,500,000 | | | $ | 0.03 | | | | 8.53 | | | $ | – | | Exercised | | | - | | | $ | - | | | | - | | | $ | – | | Expired/Forfeited | | | (4,529,371 | ) | | $ | 0.20 | | | | - | | | $ | – | | Outstanding and exercisable at July 31, 2020 | | | 9,500,000 | | | $ | 0.03 | | | | 8.15 | | | $ | 185,000 | |
NOTE 13 – COMMITMENTS AND CONTINGENCIES
The description of Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements executed in April 2018 (collectively referred to as the April 2018 Executive Employment Agreements) are summarized below:
April 2018 Executive Employment Agreements
General
Pursuant to Albert Mitrani’s April 2018 Executive Employment Agreement, Mr. Mitrani serves as the Company’s President and Chief Operating Officer. Mr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Mitrani is also entitled to a commission on all sales attributable to him (i.e., excluding existing customers of the Company at the time of the Reorganization) at the rate of five percent (5%) of the “Net Sales” as defined in the agreement and an expense allowance of $5,000 per month.
Pursuant to Ian Bothwell’s April 2018 Executive Employment Agreement, Mr. Bothwell continues to serve as the Company’s Chief Financial Officer. Mr. Bothwell’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Bothwell has not been paid salary since July 2018.
Pursuant to Dr. Maria I. Mitrani’s April 2018 Executive Employment Agreement, Dr. Mitrani continues to serve as the Company’s Chief Science Officer. Dr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term.
Term
The term of each of the April 2018 Executive Employment Agreements commences as of the Effective Date and continues until December 31, 2020 (Mr. Bothwell) or December 31, 2023 (Mr. Mitrani and Dr. Mitrani) (“Initial Term”), unless terminated earlier pursuant to the terms of the April 2018 Executive Employment Agreement; provided that on such expiration of the Initial Term, and each annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), the agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term of the April 2018 Executive Employment Agreement at least 90 days’ prior to the applicable renewal Date. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
Unpaid Advances
The Company was required to repay the unpaid advances subsequent to December 31, 2017, and the unreimbursed expenses incurred subsequent to December 31, 2017, on May 15, 2018.Such payments were not made as required.
Fringe Benefits and Perquisites During the Employment Term, each Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company. Termination The Company may terminate the April 2018 Executive Employment Agreement at any time for good cause, as defined in the April 2018 Executive Employment Agreement, including, the Executive’s death, disability, Executive’s willful and intentional failure or refusal to follow reasonable instructions of the Company’s Board of Directors, reasonable and material policies, standards and regulations of the Company’s Board of Directors or management.
Amendments To The April 2018 Executive Employment Agreements
February 26, 2020 Amendment
| 1. | On February 26, 2020, the Company agreed to modify the employment agreement of Mr. Ian T. Bothwell, the Company’s Chief Financial Officer to provide Mr. Bothwell with: |
On February 26, 2020, the Company agreed to modify the employment agreement of Mr. Ian T. Bothwell, the Company’s Chief Financial Officer to provide Mr. Bothwell with: | a) | an extension to his employment agreement dated April 13, 2018 from December 2020 to December 2023 consistent with other executives of the Company; and |
| b) | and a one-time bonus in the form of a fully vested cashless warrant to purchase 7,500,000 shares of common stock of the Company, exercisable for ten years at an exercise price of $0.28 per share, the closing price of the common stock on the date of the grant. |
| 2. | On February 26, 2020, pursuant to the respective employment agreements with each of the Company’s executive officers, the Board granted each of Mr. Albert Mitrani, Dr. Maria Mitrani and Mr. Ian Bothwell a cash bonus of $37,500 for the calendar year ended December 31, 2019. |
April 25, 2020 Amendment
On April 25, 2020, the Company agreed to amend and revise the each of Albert Mitrani, Ian Bothwell and Dr. Maria I. Mitrani, (individually each of A. Mitrani, Bothwell and Dr. Mitrani are referred to as an “Executive” and collectively the “Executives”) April 2018 Executive Employment Agreements. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following: Term: | An extension to the term of the employment agreements dated April 13, 2018 from December 31, 2023 to December 31, 2025. |
Base Salary: | An increase in base annual salary from $162,500 to $300,000. The amended salary amount of $300,000 shall be retroactively adjusted to commence as of January 1, 2019. The increased annual salary of $137,500 (“Incremental Salary”) over the prior annual salary amount of $162,500 (“Original Base Salary”) shall only be paid only upon there being sufficient available cash. Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019. |
Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019. Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company. Severance Provisions: | 1. | Company termination without cause, Executive for good reason: |
| a) | All existing accrued obligations existing at time of termination shall be paid to Executive. |
| b) | Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination, |
| c) | Executive shall be entitled to a cash payment equal to his unpaid base salary for the remaining term in effect at time of the time of the termination or an amount equal to four times (4x’s) the base salary in effect at the time of termination, whichever is greater, |
| d) | Executive shall be entitled to a cash payment equal to his 200% of the prior year’s cash or stock bonus (excluding any stock grants received pursuant to the MCPP). |
| 2. | Change In Control: In the event of a Change in Control and the Executive’s employment agreement is not extended for period of five years from the date of the Change in Control with all other terms and conditions of the agreement remaining the same, then the Executive may terminate the agreement for good reason and all respective severance terms as provided for a termination by Executive for good reason described in clause 1 above shall be provided to Executive. |
| 3. | Executive termination due to disability, death, or non-renewal by Company: |
| a) | All existing accrued obligations existing at time of termination shall be paid to Executive. |
| b) | Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination. |
| c) | Executive shall be entitled to a cash payment equal to 299% of Executive’s base salary in effect at the time of termination, plus a gross up amount to cover Executive’s tax liability associated with such payment. |
| d) | 200% of the prior year’s cash or stock bonus (excluding MCPP performance stock grants). |
June 29, 2020 Amendment On June 29, 2020, the board of directors of the Company (“Board”) agreed to further amend and revise the April 2018 Executive Employment Agreements for each of Executives. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following: Base Salary: | An increase in the Executives annual base annual salary upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months. Upon the achievement of the defined salary milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur. |
| Schedule of adjustment revenues | | | | | | Schedule of Employee Benefits | | | | | | Monthly Revenues (in millions) | Monthly Revenues (in millions) | | | Base Salary Increase | | Monthly Revenues (in millions) | | | Base Salary Increase | | $ | 1.00 | | | $ | 130,000 | | 1.00 | | | $ | 130,000 | | $ | 1.50 | | | $ | 200,000 | | 1.50 | | | $ | 200,000 | | $ | 2.00 | | | $ | 275,000 | | 2.00 | | | $ | 275,000 | | $ | 3.50 | | | $ | 630,000 | | 3.50 | | | $ | 630,000 | | $ | 5.00 | | | $ | 900,000 | | 5.00 | | | $ | 900,000 | |
Bonuses
On February 26, 2020, pursuant to the respective employment agreements with each of the Company’s executive officers, the Board granted each of Mr. Albert Mitrani, Dr. Maria Mitrani and Mr. Ian Bothwell a cash bonus of $37,500 for the calendar year ended December 31, 2019. Effective December 21, 2020, the Company granted a bonus of $50,000 and 15,000,000 shares of common stock of the Company each to Mr. Mitrani, Dr. Mitrani and Mr. Bothwell (see Note 10).
Advisor Agreement
Effective May 15, 2020 (“Effective Date”), the Company entered into a one-year agreement (“Advisor Agreement”) with an individual to provide financial advisory services to the Company (“Advisor”). The Advisor Agreement is subject to successive, automatic one (1) year extensions unless either party has given the other 30- day written notice prior to the expiration of then in effect termination date, of their desire not to renew the Advisor Agreement. As the compensation for Advisor’s services and his fulfillment of all obligations under the agreement the Company agreed to issue the Advisor 1,000,000 shares of common stock (“Stock Grant”), of which 250,000 shares shall be fully vested as of the Effective Date, 250,000 shares vest on the sixth month anniversary of the Effective Date, 250,000 shares vest on the ninth month anniversary of the Effective Date and 250,000 shares vest on the twelfth month anniversary of the Effective Date, provided however that the Advisor Agreement is in full effect during such vesting period(s) for the respective portion of the Stock Grant. In addition, Company agreed to grant 3-year warrants to the Advisor to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”), of which Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of the Advisor Agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the Advisor agreement, respectively, provided however that the Advisor Agreement is in full effect during the applicable vesting period(s) for the respective portion of the grant. The Advisor Agreement may be terminated by the Company based on Advisor’s breach of any of the terms of the Advisor Agreement, the Company’s determination that Advisor is not meeting the desired objectives or if either party provides notice of the desire not to renew the Advisor Agreement upon expiration. During October 2020, the Company terminated the agreement with the Advisor as provided for under the advisor agreement. The unvested portion of the Stock Grant and Warrants as of the termination date were cancelled.
Sales Executives On January 6, 2020, the Company entered into employment agreements with two individuals (“Sales Executives”), each to serve as a Vice President – Global Sales and Marketing. The terms of each Sales Executive employment agreement are identical (“VP Agreements”). The initial term of the VP agreements are for three years and provide for automatic annual renewals thereafter, unless either party provides 90-day written notice prior to expiration of the then current term. The VP Agreements may also be terminated by the Company beginning June 30, 2020 in the event the Sales Executive fails to meet certain defined minimum revenue growth milestones. The Sales Executives will receive compensation in the form of monthly salary of $18,000$18,000 and a quarterly override during the calendar year 2020 based on revenues earned by the Company during each quarterly period that exceed $600,000 (“Override Threshold”) beginning for the quarter ended June 30, 2020. The VP Agreements also require the Sales Executives and the Company to mutually agree on the Override Threshold for calendar years 2021 and 2022 to be eligible for the Override Threshold for those years, which has yet to be agreed to. Upon execution of the VP Agreements, each of the Sales Executives were granted 1,000,000 shares of unregistered common stock of the Company valued at $0.035 per share, the closing price of the common stock of the Company on the grant date. The VP Agreements also provide theeach Sales Executives with the right for each to receive an additional a minimum of 750,000 shares of common stock at the end of each quarterly anniversary of the VP Agreements throughout the Initial Term (maximum 9,000,000 shares) (“Performance Shares”), provided that the VP Agreements remain in effect during the applicable quarterly period. The vesting of the Performance Shares may also be accelerated based on achievement of certain revenue milestones. During the three months ended July 31, 2021, a total of 3,600,000 of Performance shares vested in connection with the VP Agreements resulting in stock-based compensation expense of $126,000. During the nine months ended July 31, 2021, a total of 9,000,000 of Performance shares vested in connection with the VP Agreements resulting in stock-based compensation expense of $315,000 (valued at $0.035 per share, the closing price of the common stock of the Company on the date of the grant).
Consultant Agreements Effective March 30, 2020 (the “Effective Date”), the Company entered into a consulting agreement (“Agreement”) with Assure Immune L.L.C. (the “Consultant”) for an initial term of one year (the “Initial Term”) with automatic renewals for two (2) additional annual periods (each a “Renewal Term,” and together with the “Initial Term,” the “Term”), unless written notice is provided by either party at least 45 days prior to the applicable termination date. Neither party provided written notice within the specified deadlines to terminate upon expiration of the Initial Term and as a result the Term has been extended to March 30, 2022. Under the Agreement, the Consultant will provide the Company during the Term with expertise, experience, advice and direction associated with the critical functional executive level roles of the Company as it relates to the oversight and management of the Company’s regulatory, research and development and laboratory operations, consistent with the Company’s corporate mission and strategies and subject to the resource limitations of the Company. In connection with the Agreement, the Consultants will receive monthly fees of $30,000$30,000 during the Initial Term and monthly consulting fees of $35,000 during the first Renewal Term and $40,000 during the second Renewal Terms, if any. In addition. the Company agreed to issue to the Consultant or its designees 12,000,000 shares of common stock of the Company (“Shares”), 50% of which Shares vest as of the Effective Date and balance of which Shares vest upon the six-month anniversary of the Effective Date. The Agreement also provides that upon the commencement of each Renewal Term, if any, the Consultant will receive up to 6,000,000 additional Shares, 50% of which Shares will vest on the commencement date of the Renewal Term and the balance of which additional Shares will vest on the six (6) month anniversary of such date. In connection with the Agreement, the Consultant (and its principals) are obligated to comply with customary confidentiality, non-compete and non-solicitation covenants and have agreed that all intellectual property developed during the term of the Agreement shall remain the property of the Company. In addition to the Shares to be issued above, the Consultant or its designees will be entitled to participate in the Company’s Management and Consultants Performance Stock Plan (the “MCPP”), more fully described in Note 11.10.
Effective March 29, 2021, the Company and the Consultant entered into an amendment to the Agreement (“Amendment”). Under the terms of the Amendment, the initial term of the Agreement was extended for an additional 2 years and the terms for eligibility of the Consultants to receive future grants of stock above those stock issuances granted as of the date of the Amendment based on achievement of certain future milestones previously provided for in the Agreement were eliminated. In addition, the Amendment provided additional terms in connection with termination of the Agreement. Under the terms of the Amendment, the Consultant received an additional 20,000,000 shares of common stock that vest 50% upon execution of the Amendment and 50% on the sooner of (1) December 31, 2021 or (2) upon the approval of both of the Company’s IND’s to be submitted for Osteoarthritis and COVID 19 “Long Hauler”. The shares issued in connection with the Amendment were valued at $0.0614 per share, the closing price of the common stock of the Company on the grant date, totaling $1,228,000. The Company will amortize the costs associated with the issuance over the remaining life of the Amendment (see Note 11). During October 2020, the Company entered into a consulting agreement with a third party to provide consulting services in connection with the development of international research and development, sales and distribution and investment opportunities. As consideration for agreeing to provide the consulting services to the Company, the Company has agreed to pay the consultants a minimum of $12,500 $12,500 per month for the first three months of the agreement and to issue up to 5,000,000 shares of restricted common stock (valued at $0.175 per share, the closing price of the common stock of the Company on the grant date), based on successful performance of defined milestones. The agreement could be terminated on the third month anniversary of the agreement or later with or without cause. The Company notified the consultant prior to the third month anniversary that it was going to terminate the agreement on third month anniversary unless mutually agreed upon amendments to the agreement were completed. The parties never formally reached any arrangement regarding the future amendments.amendments (see Legal Matters below). Preparation of IRB, Pre-IND, IND Protocols for Clinical Applications and Clinical Trial Initiation and Monitoring: In connection with the Company’s ongoing research and development efforts and the Company’s efforts to meet compliance with current and anticipated United States Food and Drug Administration (“FDA”) regulations expected to be enforced beginning in May 2021 pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products that fall under Section 351 of the Public Health Services Act (“HCT/Ps”), the Company has applied for and received Investigation New Drug (“IND”) approval from the FDA to commence clinical trials in connection with the use of the Company’s products and related treatment protocols for specific indications. The ability to successfully complete the above efforts will be dependent on the actual outcomes in connection with the use of the Company’s products and related treatment protocols for each clinical trial, the Company’s ability to timely enroll patients and fund the required payments and complete the applicable clinical trials, which is subject to available working capital generated from operations, financing arrangements with the third-party vendors involved in the studies and/or from additional debt and/or equity financings as well as the ultimate approval from the FDA.
CRO Agreement 1 and CRO Agreement 2 During November 2020, the Company entered into an agreement with a third-party contract research organization (“CRO”) to provide ongoing clinical research services, clinical research professionals and contract clinical, technical and other related services in connection with a planned future clinical trial (“CRO Agreement 1”). In connection with the CRO Agreement 1, the Company was obligated to make payments of approximately $778,000$778,000 plus pass through costs and other third-party direct costs during the term of clinical trial expected to run until September 2021. In connection with the CRO Agreement 1, the Company was obligated to pay in accordance with defined completed milestones, beginning with approximately $195,524$195,524 upon work order execution. During January 2021, the Company entered into an additional agreement with the CRO to provide ongoing clinical research services, clinical research professionals and contract clinical, technical and other related services in connection with a planned future clinical trial (“CRO Agreement 2”). In connection with the CRO Agreement 2, the Company was obligated to payments of approximately $477,000$477,000 plus pass through costs and other third-party direct costs during the term of clinical trial expected to run until August 2021. In connection with the CRO Agreement 2, the Company was obligated to pay in accordance with defined completed milestones, beginning with approximately $147,000$147,000 upon work order execution. During February 2021, the Company provided notice to the CRO that it was terminating the engagement of the CRO in connection with the two above-described projects as a result of the significant increases in projected trial costs over the originally contracted amounts. For the nine months ended July 31, 2021, the Company has recorded approximately $535,000 of expenses in connection with invoices submitted by the CRO up through the date the projects were terminated of which $220,000 was outstanding to the CRO at July 31, 2021.
On July 29, 2021, the parties reached a settlement agreement and general release in connection with termination of both of the agreements and all remaining past due amounts of $265,000 whereby the Company paid $25,000 on August 2, 2021the CRO $100,000 and $25,000 on August 26, 2021 and is obligated to pay $25,000 on or before September 26, 2021 and $25,000 on or before October 26, 2021. Upon completion of all the required payments, the Company will bewas fully released from paying the remaining unpaid invoiced amounts of $145,000$145,000. For the year ended October 31, 2021, the Company has recorded approximately $390,000, net of expenses in connection with services performed by the CRO up through the date the projects were terminated..
New CRO Agreement 3Agreements During August 2021, October 2021, and December 2021, the Company entered into an agreementagreements with anothera new CRO to provide ongoing clinical research services, clinical research professionals and contract clinical, technical and other related services in connection with a planned futurethree of the Company’s approved clinical trialresearch trials (“New CRO Agreement 3”Agreements”). In connection with the New CRO Agreement 3,Agreements, the Company is obligated to make aggregate payments to the CRO of approximately $555,000$1,700,000 plus estimated aggregate pass through costs and other third-party direct costs during the term of clinical trial expected to run until July 2023.approximately $565,000 as well as site and patient related costs. In connection with the CRO Agreement 1,payments, the Company is obligated the to pay in equal monthly installments over the term of the clinical trial beginning on the commencement of the applicable clinical trial. Payments for the pass through costs and other third-party direct costs as well as site and patient related costs are paid in accordance with completion of agreed upon milestones. Contingent Convertible Obligations Into Equity Securities
Obligations Due Under Executive Employment Agreements
Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.
Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.
None of the Executives have yet to elect to convert any portion of their unpaid Original Base Salary.
As of October 31, 2021, there was approximately $721,000 of unpaid Original Base Salary and Incremental Salary related to the period prior to December 31, 2019 and approximately $760,000 of unpaid Original Base Salary and Incremental Salary related to the period January 1, 2020 through October 31, 2021, that could be converted in the future into approximately 35,685,000 shares of common stock (weighted average conversion price of $0.042 per share).
Leases
Ethan NY
On September 3, 2015, Ethan NY entered into a five-year lease agreement (“Ethan Lease”) for a store located in New York City, New York. The Ethan Lease commenced on October 1, 2015. Under the terms of the Ethan Lease, minimum monthly lease payments of $9,500 per month were to commence in December 2015 through October 2020. During June 2016, Ethan NY exited from its leased premises. Ethan NY did not make any of the required minimum monthly lease payments as required. The total amount of minimum lease payments that Ethan NY is obligated to pay pursuant to this 5-year lease is $586,242 (excluding late fees and interest provided for under the Ethan Lease).
All of Ethan NY’s obligations under the Ethan Lease are recourse only to the assets at Ethan NY, except for certain obligations under the Ethan Lease that were guaranteed by a former employee. Under the terms of the Ethan Lease, the obligations of Ethan NY for future rents are to be mitigated based on the amount of any future rents that are received for the rental of the leased premises to other tenants during the initial term. During August 2016, Ethan NY received confirmation that the leased premises had been leased to another tenant. In connection with the termination of the Ethan Lease, Ethan NY has made several unsuccessful attempts to contact the landlord for the purpose of obtaining a settlement and release for any amounts that the landlord may claim are owing under the Ethan Lease, if any. Ethan NY is not aware of any claim pending or threatened in connection with the Ethan Lease. At October 31, 2021 and 2020, Ethan NY has recorded in liabilities of discontinued operations the amount of rent obligations through June 30, 2016 and a reserve for estimated losses in connection with termination of the Ethan Lease of $101,905 and $101,905, respectively. In New York State, the statute of limitations for filing a breach of contract claim is 6 years.
Legal Matters On June 17, 2021, Organicell received a subpoena dated June 14, 2021, from the Atlanta Regional Office of the SEC requiring the production of certain documents and communications in connection with the treatment and results of various COVID-19 patients, as discussed in the Company’s Current Reports on Form 8-K filed with the SEC during the period from May 27, 2020 through May 11, 2021. The Company is fully cooperating with the SEC’s investigation and believes that it will be able to provide all of the information requested by the SEC. The Company can make no assurances as to the time or resources that will need to be devoted to this investigation or its final outcome, or the impact, if any, of this investigation or any proceedings on the Company’s current business, financial condition, results of operations, cash flows, or the Company’s future operations.
On August 17, 2021, the Company was served with a summons and complaint by LAE International Consulting, LLC (“LAE”), in the case styled LAE International Consulting, LLC v. Organicell Regenerative Medicine, Inc. et al., Case No. 2021-018461-CA-01 (In the Circuit Court of the 11th Judicial Circuit in and for Miami Dade County, Florida) (the “Lawsuit”). Albert Mitrani, Mari Mitrani and Ian Bothwell (the “Individual Defendants”) are also named as defendants in the Lawsuit. In the Lawsuit, LAE alleges breach of contract, unjust enrichment, violation of Florida’s Unfair and Deceptive Trade Practices Act, breach of obligation of good faith and fair dealing, negligent misrepresentation and fraudulent misrepresentation in connection with a prior consulting agreement entered into between the Company and LAE. Prior to institution of the Lawsuit, the Company terminated the consulting agreement. In the Lawsuit, LAE is seeking judgment for compensatory damages, interest, costs, and attorneys’ fees. The Company denies any wrongdoing and responsibility in connection with the Lawsuit, and believes it has strong defenses to the Lawsuit. Although the Lawsuit is in its early stages, the Company and the Individual Defendants have filed motions to dismiss due to, among other things, (a) that the consulting agreement expressly negates LAE’s claims; (b) there was, in fact, no breach of contract by the Company; (c) LAE provides no grounds, and cannot provide any grounds, for its barebones claims that the Company and Individual Defendants induced LAE into a contract that they did not intend to perform; (d) many of the claims against the Individual Defendants do not exist as a matter of law; and (e) technical deficiencies in the complaint itself The Company is awaiting a ruling on the motion, and the Individual Defendants’ motion to dismiss will be set for hearing in due course.
In addition to the foregoing, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.
NOTE 13 – LIABILITIES ATTRIBUTABLE TO DISCONTINUED OPERATIONS
During September 2015, the Company formed Ethan NY for the purpose of selling clothing and accessories through a retail store. During June 2016, the Ethan NY operations were closed.
The following summarizes the carrying amounts of the assets and liabilities of Ethan NY at October 31, 2021 and 2020:
Schedule of carrying amounts of the assets and liabilities | | | | | | | | | | | October 31, | | | | 2021 | | | 2020 | | Assets | | $ | - | | | $ | - | | | | | | | | | | | Liabilities: | | | | | | | | | Accounts Payable | | $ | 94,835 | | | $ | 94,835 | | Accrued Expenses | | | 31,016 | | | | 31,016 | | | | $ | 125,851 | | | $ | 125,851 | |
In New York State, the statute of limitations for filing a breach of contract claim is 6 years.
NOTE 14 – SEGMENT INFORMATION
For the years ended October 31, 2021 and 2020, the Company operated only 1one operating segment.
NOTE 15 – SUBSEQUENT EVENTS
SPA - Promissory Note
On January 11, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (the “Purchaser”) pursuant to which we sold a Promissory Note in the principal amount of $600,000 (the “Note”) to the Purchaser in a private transaction to for a purchase price of $540,000 (giving effect to original issue discount of $60,000). In connection with the sale of the Note, the Company also paid the Purchaser’s legal fees and due diligence costs of $12,500 and brokerage fees of $9,000 to J.H. Darbie & Co., a registered broker-dealer. After payment of the legal fees and brokerage fees, the net proceeds to the Company were $518,500, which will be used for working capital and other general corporate purposes.
The Note matures on July 11, 2022, subject to extension at the option of the Company for up to an additional six month period, bears interest at the a rate of 10% per annum for the first six months and 12% per annum thereafter if extended, and only following an event of default (as defined in the Note), is convertible into shares of the Company’s common stock at a conversion price equal to the lower of the “VWAP” (as hereinafter defined) of the common stock during (i) the twenty (20) trading day period preceding the issuance date of the Note; or (ii) the twenty (20) trading day period preceding the date of conversion of the Note. As used in the Note, “VWAP” means, for any date, the price of our common stock as determined by the first of the following clauses that applies: (i) if the common stock is then listed or quoted on one or more established stock exchanges or national market systems, the daily volume weighted average price of the common stock for such date on the trading market on which the common stock is then listed or quoted as reported by Bloomberg L.P.; or (ii) if the common stock is regularly quoted on an automated quotation system (including applicable tiers of the over-the-counter market maintained by OTC Market Group, Inc.) or by a recognized securities dealer, the volume weighted average price of the common stock for such date on the applicable OTC Markets Group, Inc. tier or as quoted by such securities dealer. In accordance with the terms of the SPA, as of January 11, 2022, the Company has reserved 36,923,080 shares of its authorized but unissued common stock for issuance in the event the Purchaser exercises its right to convert the Note following an event of default.
The Note may be prepaid by the Company at any time without penalty. The Note also contains covenants, events of defaults, penalties, default interest and other terms and conditions customary in transactions of this nature.
Pursuant to the terms of the SPA, the Company paid a commitment fee to the Purchaser in the amount of $200,000 (the “Initial Commitment Fee”) in the form of 3,076,921 shares of the Company’s common stock (the “Initial Commitment Fee Shares”). In addition, if the Company exercises the option to extend the maturity date of the Note, the Company will pay an additional commitment fee to the Purchaser in the amount of $100,000 (the “Additional Commitment Fee,” and together with the Initial Commitment Fee, collectively, the “Commitment Fee”) in the form of an additional 1,538,462 shares of its common stock (the “Additional Commitment Fee Shares,” and together with the Initial Commitment Fee Shares, collectively, the “Commitment Fee Shares”). In the event that by the first anniversary of repayment of the Note by the Company, the Purchaser has not generated the amount of the Commitment Fee from public sales of the Commitment Fee Shares, the Company shall either pay the amount of any such shortfall either (i) by issuing additional shares of our common stock at a price equal to the VWAP for the common stock during the five (5) trading day period prior to such anniversary date; or (ii) in cash, in which case, the Company shall repurchase any unsold Commitment Fee Shares then held by the Purchaser for such shortfall amount.
The offer and sale of the Note to the Purchaser was made in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), in reliance on exemptions afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.
The Company will record a discount of the Note in the amount of approximately $260,000, consisting of the original issue discount of $60,000 and the amount of the guaranty for the proceeds to be received by the Purchaser’s from the sale of the Initial Commitment Shares issued at closing equal to $200,000. The discount will be amortized over the initial term of the Note.
Other
Several other subsequent events are disclosed in Notes 7, 10, and 12. There were no other subsequent events for disclosure purposes.
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 13. | OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION |
ITEM 13.OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees | | $ | 363.15 | | | $ | 363.15 | | Transfer Agent Fees | | $ | 5,000.00 | | | $ | 5,000.00 | | Accounting Fees and Expenses | | $ | 15,000.00 | | | $ | 15,000.00 | | Legal Fees and Expenses | | $ | 25,000.00 | | | $ | 25,000.00 | | Miscellaneous Fees and Expenses | | $ | 2.,36.85 | | | $ | 2,136.85 | | Total | | $ | 47,500.00 | | | $ | 47,500.00 | |
All amounts are estimates other than the SEC’s registration fee. We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders.stockholders. The selling shareholders,stockholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale. ITEM 14. | INDEMNIFICATION OF DIRECTORS AND OFFICERS |
ITEM 14.INDEMNIFICATION OF DIRECTORS AND OFFICERS Our Articles of Incorporation and bylaws provide for indemnification of our officers and directors to the fullest extent permitted by Nevada law. We are also party to indemnification agreements with each of our non-employee directors. ITEM 15. | RECENT SALES OF UNREGISTERED SECURITIES |
ITEM 15.RECENT SALES OF UNREGISTERED SECURITIES During the past three years, we effected the following transactions in reliance upon exemptions from registration under the Securities Act: | 1 | During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of the $100,0000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction). | | | | | 2 | During October 2018, the Company issued a total of $70,000 of convertible 6% debentures (“70,000 Debentures”) to two accredited investors. The principal amount of the $70,000 Debentures, plus accrued and unpaid interest through September 30, 2019 are payable on the 10th business day subsequent to September 30, 2019, unless the payment of the $70,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $70,000 Debentures, and/or accelerated due to an event of default in accordance with the terms of the $70,000 Debentures. |
| 3 | On February 5, 2019, the Company entered into an unsecured loan agreement with a third party with a principal balance of $25,000. The third party agreed to accept payment in kind consisting of certain products of the Company in lieu of cash interest. The outstanding principal was due March 8, 2019. The loan was not repaid on the maturity date as required. |
| 41. | On March 7, 2019, the Company sold an aggregate of 7,500,000 shares of common stock and granted warrants to purchase an aggregate 2,000,000 common shares to three “accredited investors” investors. The warrants have exercise prices of $0.08 and have a one -year term. The aggregate grant date fair value of the warrants issued in connection with these issuances were $6,600. The proceeds were used for working capital. |
| 5 | | | 2. | During March 2019, the Company issued a $30,000 of convertible 6% debentures (“30,000 Debenture”) to one accredited investor. The principal amount of the $30,000 Debenture, plus accrued and unpaid interest through June 30, 2020 are payable on the 10th business day subsequent to June 30, 2019, unless the payment of the $30,000 Debenture is prepaid at the sole option of the Company, is converted as provided for under the terms of the $30,000 Debenture, and/or accelerated due to an event of default in accordance with the terms of the $30,000 Debenture. |
| 6 | | | 3. | During April 2019, the Company sold 5,102,000 shares of common stock to seven “accredited investors” at $0.03 per share for an aggregate purchase price of $154,500. The proceeds were used for working capital. |
| 7 | | | 4. | On May 1, 2019, the Company, Mint Organics and the holder of a promissory note issued by Mint Organics agreed to a settlement of the outstanding loan whereby the Company agreed to issue the holder of the note 2,735,000_shares2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction). |
| 8 | | | 5. | During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction). |
| 96. | During July 2019, the Company sold 2,500,000 shares of common stock to one “accredited investors” at $0.02 per share for an aggregate purchase price of $50,000. The proceeds were used for working capital. |
| | | | 107. | During August 2019 through September 2019, the Company sold 5,250,000 shares of common stock to four “accredited investors” at $0.02 per share for an aggregate purchase price of $105,000. The proceeds were used for working capital. | | | | | 11.8. | On October 10, 2019, the Company and an investor (the “Noteholder”) agreed to a funding facility arrangement (the “Funding Facility”) whereby the Noteholder was required to fund the Company an initial tranche of $100,000 on October 15, 2019 (the “Initial Funding Date”) and had the option to fund the Company up to an aggregate of $500,000 (the “Funding Facility Limit”) in minimum $100,000 monthly tranches by no later than February 15, 2020 (the “Funding Expiration Date”). The Funding Facility had a scheduled maturity of February 15, 2021 (the “Maturity Date”) and accrued interest at 6.0% per annum. The Funding Facility, plus all accrued interest, automatically converts into 40,000,000 shares of newly issued common stock of the Company if the Noteholder funded the full $500,000 by the Funding Expiration Date. The Noteholder fully funded the Funding Facility provided on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company that were issued to the Noteholders designated entity, Republic Asset Holdings LLC. a Company controlled by Michael Carbonara, who currently is a director of Organicell. |
| 12. | | | 9. | During November 2019 through January 2020, the Company sold 3,250,000 shares of common stock to three “accredited investors” at $0.02 per share for an aggregate purchase price of $65,000. The proceeds were used for working capital. | | | | | 13.10. | During February 2020 through April 2020, the Company sold 11,050,000 shares of common stock to five “accredited investors” at $0.02 per share for an aggregate purchase price of $221,000. The proceeds were used for working capital. |
| 14 |
| | 11. | During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, currently a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July, August and October 2020, the Company sold an additional 1,166,666 shares, 422,514 shares, and 625,000 shares of common stock to Dr. Meglin at $0.03 per share, $0.10 per share and $0.08 per share, respectively, for an aggregate purchase price of $127,251. The proceeds from all of the above sales were used for working capital. | | �� | | | 15.12. | On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital. |
| 16. | | | 13. | During May 2020, the Company sold 3,000,000 shares of common stock to two “accredited investors” at $0.02 per share for an aggregate purchase price of $60,000. The proceeds were used for working capital. | | | | | 17.14. | During July and August 2020, the Company completed a private placement to 19 “accredited investors” of 13,499,992 shares of Common stock of the Company at a selling price of $0.03 per share for an aggregate amount of $405,000 (the “Sale”). The proceeds were and are being used to fund the Company’s public company financial reporting requirements. | | | | | 18.15. | During July 2020, the Company sold 1,000,000 shares of common stock to two “accredited investors” at $0.02 per share and $0.03 per share, respectively for an aggregate purchase price of $25,000. The proceeds were used for working capital. | | | | | 19.16. | During August 2020, the Company sold 8,606,665 shares of common stock to nine “accredited investors” at prices ranging from $0.03 per share and $0.06 per share, for an aggregate purchase price of $392,100. The proceeds were used for working capital. | | | | | 20.17. | During September 2020, the Company sold 4,800,000 shares of common stock to five “accredited investors” at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $410,000. The proceeds were used for working capital. | | | | | 21.18. | During October 2020, the Company sold 2,033,333 shares of common stock to five “accredited investors” at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $170,000. The proceeds were used for working capital. |
| | | | 22.19. | During October 2020, the Company and the holder of a $20,000 debenture due September 30, 2019, agreed to convert the principal amount of the $20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,300 into 160,000 shares of common stock of the Company. | | | | | 23.20. | During November 2020, the Company sold 800,000 shares of common stock to an “accredited investor” at $0.05 per share, for an aggregate purchase price of $40,000. The proceeds were used for working capital. | | | | | 24.21. | During February 2021, the Company sold an aggregate of 12,340,910 shares of common stock to five “accredited investors” at prices ranging from $0.05 per share to $0.06 per share for an aggregate purchase price of $665,000. The proceeds were used for working capital. |
| 25. | | | 22. | On February 22, 2021, the Company sold 1,818,181 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.055 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital. | | | | | 26.23. | During April 2021, the Company sold an aggregate of 13,677,821 shares of common stock to seven “accredited investors” at prices ranging from $0.03 per share to $0.25 per share for an aggregate purchase price of $535,000. The proceeds were used for working capital.
| | 27. | | | 24. | During May 2021, the Company sold an aggregate of 741,667 shares of common stock to two “accredited investors” at $0.15 per share for an aggregate purchase price of $111,250. The proceeds were used for working capital | | | | | 28.25. | During August 2021, the Company sold an aggregate of 3,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $150,000. The proceeds were used for working capital. | | | | | 29.26. | During October 2021, the Company sold an aggregate of 7,500,000 shares of common stock to four “accredited investors” at $0.04 per share for an aggregate purchase price of $300,000. The proceeds were used for working capital. | | | | | 30.27.
| In November 2021, the Company sold an aggregate of 8,000,000 shares of common stock to one “accredited investor” at $0.05 per share for an aggregate purchase price of $400,000. The proceeds were used for working capital. | | | | | 28. | In January 2022, the Company sold an aggregate of 666,667 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $20,000. The purchase price was paid through an offset of an outstanding balance owed by the Company to the investor at the time of the sale of $20,000. | | | | | 29. | On January 11, 2022, the Company entered into a Securities Purchase Agreement with AJB Capital Investments, LLC (the “Purchaser”) pursuant to which we sold a Promissory Note in the principal amount of $600,000 to the Purchaser in a private transaction to for a purchase price of $540,000 (giving effect to original issue discount of $60,000). The proceeds were used for working capital. | | | | | 30. | In February 2022, the Company sold an aggregate of 8,333,333 shares of common stock to one “accredited investor” at $0.03 per share for an aggregate purchase price of $250,000. The proceeds were used for working capital. |
The Company issued the foregoing securities pursuant to the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Exhibit Number | |
Description of Exhibit | 2.1 | | Plan and Agreement of Reorganization, dated April 23, 2018, between Management and Business Associates, LLC and Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on April 26, 2018 and incorporated by reference herein) | 3.1 | | Articles of Incorporation, as amended (Filed as an exhibit to Registration Statement on Form S-1 filed on September 4, 2012 (File No: 333-183710) and incorporated by reference herein) | 3.2 | | Certificate of Amendment to the Articles of Incorporation (Filed as an exhibit to Form 8-K filed on November 3, 2015 and incorporated by reference herein) | 3.3 | | Amendment to the Certificate of Incorporation of Biotech Products Services and Research, Inc., filed with the Secretary of State of Nevada on July 22, 2017, effective July 10, 2017 (Filed as an exhibit to Form 10-K for the fiscal year ended October 31, 2017 filed on July 7, 2018 and incorporated by reference herein) | 3.4 | | Series A Non-Convertible Preferred Stock Certificate of Designation, effective November 1, 2016 (Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein) | 3.5 | | Amendment to Certificate of Designation of Series A Non-Convertible Preferred Stock of Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 3.6 | | Series B Convertible Preferred Stock Certificate of Designation, effective November 1, 2016 (Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein) | 3.7 | | Amendment to the Certificate of Incorporation of Biotech Products Services and Research, Inc., filed with the Secretary of State of Nevada on May 21, 2018, effective June 20, 2018 (Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein) | 3.8 | | Certificate of Correction filed with the Secretary of State of Nevada on June 18, 2018 (Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein) | 3.9 | | Certificate of Withdrawal filed with the Secretary of State of Nevada on June 14, 2018 (Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein) | 3.10 | | Amended and Restated By-laws of Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 3.11 | | Second Amended and Restated By-laws of Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on December 18, 2017 and incorporated by reference herein) | 3.12 | | Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of Nevada on June 24, 2020, effective June 24, 2020. (Filed as an exhibit to Form 8-K filed on July 14, 2020 and incorporated by reference herein) | 5.1 | | Opinion of Gutiérrez Bergman Boulris, PLLC (to be filed by amendment)(filed herewith) | 10.1 | | Stock Purchase Agreement dated October 30, 2015 between Biotech Products Services and Research, Inc. and John Goodhew (Filed as an exhibit to Form 8-K filed on November 3, 2015 and incorporated by reference herein) | 10.2 | | Series A Non-Convertible Preferred Stock Share Exchange Agreement, dated November 1, 2016, between Biotech Products Services and Research, Inc. and Albert Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein) | 10.3 | | Series B Convertible Preferred Stock Share Exchange Agreement, dated November 1, 2016, between Biotech Products Services and Research, Inc. and Albert Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein) | 10.4+ | | Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Albert Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein) | 10.5+ | | Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein) | 10.6+ | | Amendment No.1, dated March 8, 2017, to Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.7+ | | Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein) |
Exhibit Number | |
Description of Exhibit | 10.8+10.8+ | | Amendment No.1, dated March 8, 2017, to Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.9+ | | Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Maria Ines Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein) | 10.10+10.10+ | | Amendment No.1, dated March 8, 2017, to Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Maria Ines Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.11+ | | Employment Agreement, dated March 8, 2017, between Biotech Products Services and Research, Inc. and Terrell Suddarth (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.12+ | | Warrant, dated November 4, 2016, issued to Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein) | 10.13+ | | Warrant, dated November 4, 2016, issued to Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein) | 10.14+ | | Warrant, dated November 4, 2016, issued to Dr. Maria Ines Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein) | 10.15+ | | Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.16+10.16+ | | Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.17+10.17+ | | Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Dr. Maria Ines Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.18+ | | Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Terrell Suddarth (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein) | 10.19 | | Form of the Securities Purchase Agreement, dated March 29, 2017, by and among Biotech Products Services and Research, Inc., each of its Subsidiaries, the Agent, LLC, Dr. Bruce Werber and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein) | 10.20 | | Form of the 10% Original Issue Discount Convertible Secured Promissory Note and Guarantee, dated March 29, 2017, of Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein) | 10.21 | | Form of the Security Agreement, dated March 29, 2017, by and among Biotech Products Services and Research, Inc., each of its Subsidiaries, and the Agent (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein) | 10.22 | | Form of the Intellectual Property Security Agreement, dated March 29, 2017, by and among Biotech Products Services and Research, Inc., and each of its, Subsidiaries, and the Agent (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein) | 10.23 | | Form of the Subsidiary Guarantee, dated March 29, 2017, by and among Biotech Products Services and Research, Inc. and each of its Subsidiaries (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein) | 10.24+ | | Employment Agreement, dated as of May 1, 2017, by and between Peter Taddeo and Mint Organics Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on May 24, 2017 and incorporated by reference herein) | 10.25 | | Lease Agreement, dated May 23, 2017, by and between Sunwest Office Park, LLC and Anu Life Sciences, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on May 24, 2017 and incorporated by reference herein) | 10.26 | | Asset Purchase Agreement, dated February 5, 2018, by and among Vera Acquisition, LLC, Anu Life Sciences, Inc., Biotech Products Services and Research, Inc. and Controlling Stockholders, and General Surgical Florida, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on February 9, 2018 and incorporated by reference herein) | 10.27 | | Distribution Agreement, dated February 5, 2018, by and between Vera Acquisition, LLC, and Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on February 9, 2018 and incorporated by reference herein) |
Exhibit Number | |
Description of Exhibit | 10.28
| | Separation and General Release Agreement, dated April 6, 2018, by and between Peter Taddeo, and Mint Organics, Inc., Mint Organics Florida, Inc., Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein) | 10.29 | | Share Purchase and General Release Agreement, dated April 6, 2018, by and between Peter Taddeo and Biotech Products Services and Research, Inc. and Mint Organics, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein) | 10.30+ | | Amendment No. 2, dated April 6, 2018, to Employment Agreement between Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein) | 10.31+ | | Amendment No. 2, dated April 6, 2018, to Employment Agreement between Biotech Products Services and Research, Inc. and Maria I. Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein) | 10.32 | | Form of Employment Agreement (Filed as an exhibit to the Registrant’s Form 8-K filed on April 26, 2018 and incorporated by reference herein) | 10.33 | | Form of 2018 6% Convertible Debenture Issued by Biotech Products Services And Research, Inc., a Nevada corporation (Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein) | 10.34 | | Consulting Services Agreement effective as of March 30, 2020 between Assure Immune L.L.C and the Company (Filed as an exhibit to the Registrant’s Form 8-K filed on April 30, 2020 and incorporated by reference herein) | 10.35+ | | Amended and Restated Employment Agreement between Organicell Regenerative Medicine Inc. and Albert Mitrani dated June 29, 2020 (Filed as an exhibit to the Registrant’s Form 10-K filed on October 16, 2020 and incorporated by reference herein) | 10.36+ | | Amended and Restated Employment Agreement between Organicell Regenerative Medicine Inc. and Dr. Maria Mitrani dated June 29, 2020 (Filed as an exhibit to the Registrant’s Form 10-K filed on October 16, 2020 and incorporated by reference herein) | 10.37+ | | Amended and Restated Employment Agreement between Organicell Regenerative Medicine Inc. and Ian T. Bothwell dated June 29, 2020 (Filed as an exhibit to the Registrant’s Form 10-K filed on October 16, 2020 and incorporated by reference herein) | 10.38+ | | Warrant for the purchase of shares of common stock of Organicell Regenerative Medicine inc.Inc. issued to Ian Bothwell dated February 26, 2020 (Filed as an exhibit to the Registrant’s Form 10-K filed on October 16, 2020 and incorporated by reference herein) | 10.39 | | Warrant for the purchase of shares of common stock of Organicell Regenerative Medicine inc.Inc. issued to Raymond Zoeller dated May 15, 2020 (Filed as an exhibit to the Registrant’s Form 10-K filed on October 16, 2020 and incorporated by reference herein) | 10.40+ | | 2021 Equity Incentive Plan (Filed as an exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-26062) and incorporated by reference therein) | 10.41+ | | Exchange Agreement (Filed as an exhibit to the Registrant’s Form 8-K filed on November 2, 2021 and incorporated herein by reference) | 10.42 | | Securities Purchase Agreement dated January 11, 2022 with AJB Capital Investment (Filed as an exhibit to the Registrant’s Form 10-K filed on February 14, 2022 and incorporated herein by reference) | 10.43 | | Promissory Note dated January 11, 2022 made in favor of AJB Capital Investment (Filed as an exhibit to the Registrant’s Form 10-K filed on February 14, 2022 and incorporated herein by reference) | 21.1 | | Subsidiaries of the Registrant (Filed as an exhibit to the Registrant’s Form 10-K filed on February 8, 202114, 2022 and incorporated by reference herein) | 23.1* | | Consent of Marcum LLP (Filed herewith) | 23.2 | | Consent of Gutiérrez Bergman Boulris, PLLC (to be(included in Exhibit 5.1 filed by amendment)herewith) | 24* | | Power of Attorney (included in the Signature Page hereto) | 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 |
| + | Management compensation plan or arrangement. |
** | 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. |
The undersigned registrant hereby undertakes: 1. To file, during any period in which offers, or sales are being made, a post-effective amendment to this registration statement; (a) to include any prospectus required by Section 10(a) (3) of the Securities Act of 1933; (b) to reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and Notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation From the low or high end of the estimated maximum offering range may be reflected in the form of prospects filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.; and (c) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in the registration statement. 2. That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act of 1933, and we will be governed by the final adjudication of such issue. Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B of the Securities Act or other than prospectuses filed in reliance on Rule 430A of the Securities Act, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorized to this registration statement to be signed on its behalf by the undersigned, in Miami Beach, Florida, on December 14, 2021.March 7, 2022. | ORGANICELL REGENERATIVE MEDICINE, INC. | | | | | By: | /s/ Albert Mitrani | | | Albert Mitrani | | | Chief Executive Officer | | | (Principal Executive Officer) | | | | | By: | /s/ Ian T. Bothwell | | | Ian T. Bothwell | | | Chief Financial Officer | | | (Principal Financial and Accounting Officer) |
POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Albert Mitrani and Ian T. Bothwell, and each of them, as a true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for each of them and in each name, place and stead, in any and all capacities, to sign any and all pre- or post-effective amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as each might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement was signed by the following person in the capacities and on the dates stated. Signature | | Title | | Date | | | | | | /s/ Albert Mitrani | | Chief Executive Officer, President, Chief Operating Officer and | | December 14, 2021March 7, 2022
| Albert Mitrani | | Secretary, Director (Principal Executive Officer) | | | | | | | | /s/ Ian T. Bothwell | | Chief Financial Officer, Director | | December 14, 2021March 7, 2022
| Ian T. Bothwell | | (Principal Financial and Accounting Officer) | | | | | | | | /s/ Maria Ines Mitrani | | Chief Science Officer, Director | | December 14, 2021March 7, 2022 | Maria Ines Mitrani | | | | | | | | | | /s/ George Shapiro | | Chief Medical Officer, Director | | December 14, 2021March 7, 2022 | George Shapiro | | | | | | | | | | /s/ Allen Meglin | | Director | | December 14, 2021March 7, 2022 | Allen Meglin | | | | | | | | | | /s/ Michael Carbonara | | Director | | December 14, 2021March 7, 2022 | Michael Carbonara | | | | |
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