Zeo ScientifiX (ZEOX) grows revenue 33% but flags going-concern risk in Q1
Zeo ScientifiX, Inc. reported strong top-line growth but continued losses and liquidity pressure for the quarter ended January 31, 2026. Revenue rose to $1.446M from $1.09M, a 32.7% increase driven by higher sales of allogenic aesthetic biologics and its PPX™ service platform. Gross profit improved to $1.165M, or 80.6% of revenue, while the net loss narrowed to $852,000 from $1.243M, or $0.12 per share. Operating cash flow was negative $471,000, and Zeo ended the quarter with $1.03M in cash, total assets of $2.571M, liabilities of $2.954M, and a stockholders’ deficit of $383,000. The company funded operations through $1.3M of private unit sales during the quarter and an additional $650,000 raised in February 2026. Management highlights growth opportunities from Florida’s new stem cell law (SB 1768) and an IRB-approved PPX™ musculoskeletal study, but reiterates substantial doubt about Zeo’s ability to continue as a going concern due to accumulated deficits, a working capital deficit of $879,000, dependence on external capital, and regulatory uncertainty around FDA biologics enforcement.
Positive
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Negative
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Insights
Revenue is growing quickly, but the balance sheet and going-concern warning keep risk high.
Zeo ScientifiX is showing meaningful commercial traction. Quarterly revenue grew 32.7% year over year to $1.446M, with strong contributions from higher-concentration allogenic aesthetic biologics and the PPX™ platform. Gross margin remained high at 80.6%, and the net loss improved to $852,000.
However, the capital structure is weak. At January 31, 2026, liabilities of $2.954M exceeded assets of $2.571M, leaving a stockholders’ deficit of $383,000 and a working capital deficit of $879,000. Operating cash burn was $471,000 in the quarter, covered only by $1.3M of private equity-unit proceeds.
Management explicitly concludes there is substantial doubt about Zeo’s ability to continue as a going concern over the next 12 months. This reflects regulatory uncertainty around FDA biologics rules versus Florida’s SB 1768, dependence on ongoing capital raises, and multiple pending legal matters. The investment case hinges on continued revenue growth, access to financing, and regulatory outcomes.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For the quarterly period ended
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ZEO SCIENTIFIX, INC.
TABLE OF CONTENTS
| PAGE NO. | ||||
| PART I | FINANCIAL INFORMATION | |||
| Item 1. | Condensed Unaudited Financial Statements | 1 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 20 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 26 | ||
| Item 4. | Controls and Procedures. | 26 | ||
| PART II | OTHER INFORMATION | |||
| Item 1. | Legal Proceedings. | 27 | ||
| Item 1A. | Risk Factors. | 27 | ||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 27 | ||
| Item 3. | Defaults Upon Senior Securities. | 27 | ||
| Item 4. | Mine Safety Disclosures. | 27 | ||
| Item 5. | Other Information. | 27 | ||
| Item 6. | Exhibits. | 28 | ||
| Signatures | 29 | |||
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Unless stated otherwise, the words “we,” “us,” “our,” the “Company” or “ZEO” in this Quarterly Report on Form 10-Q (this “Report”) refer to Zeo ScientifiX, Inc., a Nevada corporation, and its subsidiaries.
Cautionary Note Regarding Forward- Looking Statements
The statements contained in this Report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “may,” “could,” “should,” “expect,” “plan,” “project,” “strategy,” “forecast,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” or similar expressions help identify forward-looking statements.
The forward-looking statements contained in this Report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this Report are not guarantees of future performance, and management cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will in fact occur. The Company’s actual results may differ materially from those anticipated, estimated, projected or expected by management.
All forward-looking statements speak only as of the date of this Report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.
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Part I – FINANCIAL INFORMATION
| Item 1. | Financial Statements |
Zeo ScientifiX, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts rounded to the nearest thousand except share amounts)
| January 31, 2026 |
October 31, 2025 |
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| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for bad debts | ||||||||
| Prepaid expenses | ||||||||
| Inventories | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, SHARES SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Finance lease obligations | ||||||||
| Convertible promissory note, net of debt discount of $ |
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| Obligation to repurchase shares | - | |||||||
| Deferred revenue | ||||||||
| Total Current Liabilities | ||||||||
| Long term finance lease obligations | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Shares Subject To Possible Redemption | ||||||||
| Series C Preferred Stock, $ |
- | - | ||||||
| Stockholders’ Deficit | ||||||||
| Common stock, $ |
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| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total Stockholders’ Deficit | ( |
) | ( |
) | ||||
| TOTAL LIABILITIES, SHARES SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Zeo ScientifiX, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts rounded to the nearest thousand except share amounts)
(Unaudited)
| Three Months ended January 31, |
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| 2026 | 2025 | |||||||
| Revenues (includes sales to related parties of approximately $ |
$ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| General and administrative expenses | ||||||||
| Loss from operations | ( |
) | ( |
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| Other income (expense) | ||||||||
| Interest expense | ( |
) | ( |
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| Change in obligation to repurchase shares | - | |||||||
| Other income | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Net loss per common share - basic and diluted | $ | ( |
) | $ | ( |
) | ||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Zeo ScientifiX, Inc.
CONSOLIDATED CHANGES TO STOCKHOLDERS’ DEFICIT
For the Three Months Ended January 31, 2025 and 2026
(Amounts rounded to the nearest thousand except share amounts)
| Common Stock |
Additional Paid In |
Accumulated | Total Stockholders’ |
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| Shares | Par Value | Capital | Deficit | Deficit | ||||||||||||||||
| Balance October 31, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Fair value of equity instruments issued for compensation: | ||||||||||||||||||||
| Fair value of shares issued | - | - | - | |||||||||||||||||
| Fair value of options issued | - | - | - | |||||||||||||||||
| Fair value of warrants issued | - | - | - | |||||||||||||||||
| Net loss | - | - | - | ( |
) | ( |
) | |||||||||||||
| Balance January 31, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Balance October 31, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Sale of common stock | - | - | ||||||||||||||||||
| Fair value of equity instruments issued for compensation: | ||||||||||||||||||||
| Fair value of shares issued | - | |||||||||||||||||||
| Fair value of options issued | - | - | - | |||||||||||||||||
| Fair value of warrants issued | - | - | - | |||||||||||||||||
| Net loss | - | - | - | ( |
) | ( |
) | |||||||||||||
| Balance January 31, 2026 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
Zeo ScientifiX, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts rounded to the nearest thousand except share amounts)
(Unaudited)
| Three months ended January 31, |
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| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Amortization of OID and commitment fee discount – Promissory notes | ||||||||
| Stock-based compensation | ||||||||
| Change in obligation to repurchase shares | ( |
) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net of allowance for bad debts | ( |
) | ||||||
| Other receivable | - | |||||||
| Prepaid expenses | ( |
) | ( |
) | ||||
| Inventories | ( |
) | ( |
) | ||||
| Accounts payable and accrued expenses | ( |
) | ||||||
| Deferred revenue | ||||||||
| Net cash (used in) provided by operating activities | ( |
) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of fixed assets | ( |
) | - | |||||
| Net cash used in financing activities | ( |
) | - | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from sale of common stock | - | |||||||
| Payments on finance leases | ( |
) | ( |
) | ||||
| Net cash provided by (used in) financing activities | ( |
) | ||||||
| Increase in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | - | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Zeo ScientifiX, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS PERIODS ENDED JANUARY 31, 2026 AND 2025 (UNAUDITED)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Zeo ScientifiX, Inc. (“ZEO” or the “Company”) was incorporated on August 9, 2011 in the State of Nevada under the name Bespoke Tricycles Inc. (changed to Biotech Products Services and Research, Inc. during September 2015 and to Organicell Regenerative Medicine, Inc., effective June 20, 2018). Effective February 20, 2024, we further amended our Articles of Incorporation to assume our current name, Zeo ScientifiX, Inc.
The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine. In connection with the state of Florida’s new “stem cell therapy” law, effective July 1, 2025 (“SB 1768”)., the Company has begun to pursue clinical research and commercial sales strategies that are compliant with SB 1768. The Company has a portfolio of proprietary products derived from ethically sourced birth tissue, including mesenchymal stem cells, stem cell and amniotic fluid derived exosomes and Whartons Jelly matrix. The Company’s principal product is Zofin™, a product derived from amniotic fluid and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles. ZEO also manufactures Patient Pure X™ (“PPX™”), a proprietary autologous biologic containing a nanoparticle fraction that is precipitated from a patient’s own peripheral blood. ZEO’s products are all manufactured in FDA-registered, cGMP-compliant laboratory facilities. Our portfolio of products (“RAAM Products”) and related services are principally used in the health care industry administered through doctors and clinics (“Providers”).
In addition to the Company’s efforts to now supply products that are compliant with SB 1768, the Company has recently developed and begun to distribute additional products that incorporate its proprietary ingredients for products to be used in topical aesthetic applications and is actively exploring further development of additional products to be used in other topical aesthetic applications.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the condensed unaudited consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position as of January 31, 2026, the results of its operations for the three months ended January 31, 2026 and 2025 and the cash flows for the three months ended January 31, 2026 and 2025. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities Exchange Commission, although we believe that the disclosures made are adequate to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended October 31, 2025 filed with the Securities and Exchange Commission.
All amounts presented have been rounded to the nearest thousand except share amounts, share prices and earnings per share.
5
Concentrations of Risk
Credit Risk
The balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $
Major Customer
During the three months ended January 31, 2026, the Company sold products and services totaling approximately $
During the three months ended January 31, 2025, the Company sold products and services totaling approximately $
The Company’s sales agreements are non-exclusive and the Company does not believe it has any exposure based on the customers of its products.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Those estimates and assumptions include estimates for credit loss reserves for accounts receivable, assumptions used in valuing inventories at net realizable value, impairment testing of recorded long-term assets, the valuation allowance for deferred tax assets, accruals for potential liabilities, assumptions made in valuing equity instruments issued for services, and assumptions used in the determination of the Company’s liquidity.
Revenue Recognition
The Company follows the guidance of the Financial Accounting Standards Board (“FASB’) Accounting Standards Update (“ASU”) Topic 606 “Revenue from Contracts with Customers” which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts.
The Company recognizes revenue only when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control is transferred at a point-in-time, which is typically when the transfer and title to the product sold has taken place and there is evidence of our customer’s satisfactory acceptance of the product shipment or delivery except in those instances when the customer has made prior arrangements with the Company to store the product purchased by the customer at the Company’s facilities that is to be delivered at a later date to be designated by the customer. Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on the Company’s consolidated balance sheet.
6
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 are calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of fully vested shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity instruments.
At January 31, 2026, the Company had
At January 31, 2025, the Company had
Stock-Based Compensation
All stock-based payments are recognized in the financial statements based on their fair values.
The Company periodically issues stock options and stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.
The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
Research and Development Costs
Research and development costs consist of direct and indirect costs associated with the development of the Company’s technologies. These costs are expensed as incurred. Our research and development expenses were approximately $
Fair Value of Financial Instruments
The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.
7
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 carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of convertible notes approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.
Recently Issued Accounting Pronouncements
In November 2024, FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses. The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation and amortization expense for each caption on the income statement where such expenses are included. The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on its financial statement disclosures.
We have reviewed all accounting pronouncements recently issued by the FASB and the SEC. The authoritative pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the authoritative pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof.
8
NOTE 3 – GOING CONCERN
The unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company incurred net losses of $
United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective in May 2021 require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). Notwithstanding the above, certain states, including Florida (SB 1768) have approved legislation that permits the use and sale of products that would otherwise be restricted under current FDA regulations. The Company has not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s.
As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted; and/or (b) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company’s current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.
In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (i) 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; (ii) 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; (iii) obligations to the Company’s creditors are not accelerated; (iv) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (v) 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 (vi) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.
There is no assurance that the products we currently produce will not be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s and/or the Company will be able to complete its revenue growth strategy. There is no assurance that the Company’s research and development activities will be successful or that the Company will be able to timely fund the required costs of those activities. Without sufficient cash reserves, the Company’s ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant efforts since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues.
9
If revenues do not increase and stabilize, if the Company’s ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws.
The independent auditor’s report dated January 29, 2026 included in our Annual Report on Form 10-K for the year ended October 31, 2025 included an explanatory paragraph as to the Company’s ability to continue as a going concern. As of January 31, 2026, 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 | ||||||||
| January 31, 2026 |
October 31, 2025 |
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| Raw materials and supplies | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
NOTE 5 – PROPERTY AND EQUIPMENT
| Schedule of property and equipment | ||||||||
| January 31, 2026 |
October 31, 2025 |
|||||||
| Finance lease equipment | $ | $ | ||||||
| Manufacturing equipment | ||||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expense totaled $
NOTE 6 – EQUITY IN NON-MARKETABLE SECURITIES OF AFFILIATED ENTITY
| Schedule of equity in non marketable securities | ||||||||
| January 31, 2026 |
October 31, 2025 |
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| Equity in non-marketable securities | $ | |||||||
| Reserve on carrying value of investment in non-marketable securities | $ | ( |
) | ( |
) | |||
| Equity in non-marketable securities | $ | - | - | |||||
As of January 31, 2026 and October 31, 2025, the Company invested $
As of January 31, 2026 and October 31, 2025, the Company has recorded total reserves against the carrying value of its investment of Exotropin of $
As of January 31, 2026 and October 31, 2025, the
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Sales Representative Agreement
In November 2023, the Company entered into a Sales Representative Agreement (the “Sales Agreement”) with Exotropin to support the commercialization of its proprietary topical products. Under the Sales Agreement, the Company is entitled to receive commissions on the net sales value of Exotropin products sold to pre-approved customers introduced by the Company, including retailers (10%), wholesale distributors (5%), private label customers (10%), and direct-to-consumer customers (15%).
In connection with the Sales Agreement, the Company and Exotropin co-developed a topical product for the treatment of hair loss, branded as “ZEO HAIR GROW™ Powered By Exotropin™,” which launched in November 2024 (the “Collaboration”). Under the terms of the Collaboration, the Company is responsible for sales and marketing, and the parties agreed to share equally in the net profits from product sales, after reimbursement of direct cash costs incurred by either party.
On August 15, 2025, the Company provided Exotropin with formal notice of termination of the Sales Agreement for cause (see Note 13).
For the three months ended January 31, 2026 and 2025, $
NOTE 7 – FINANCE LEASE OBLIGATIONS
During April 2025, the Company entered into a lease agreement for certain lab equipment in the amount of $
During June 2025, the Company entered into a lease agreement for certain lab equipment in the amount of $
As of January 31, 2026, $
NOTE 8 – RELATED PARTY TRANSACTIONS
For the three months ended January 31, 2026 and 2025, the Company sold a total of approximately $
11
NOTE 9 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
| Schedule of account payable and accrued expenses | ||||||||
| January 31, 2026 |
October 31, 2025 |
|||||||
| Accrued payroll related liabilities | $ | $ | ||||||
| Lab equipment and supplies payables | ||||||||
| Clinical trial and research payables | ||||||||
| Legal fees payable | ||||||||
| Other professional fees payable | ||||||||
| Interest payable | ||||||||
| Royalty payable | ||||||||
| Accrued commissions payable | ||||||||
| Construction payables | ||||||||
| Other payables and accrued expenses | ||||||||
| Total Accounts Payable and Accrued Expenses | $ | $ | ||||||
NOTE 10 – CONVERTIBLE PROMISSORY NOTES
| Schedule of notes payable | ||||||||
| January 31, 2026 |
October 31, 2025 |
|||||||
| Convertible Promissory Note | $ | $ | ||||||
| Unamortized discount | ( |
) | ( |
) | ||||
| Total Notes Payable | $ | $ | ||||||
The Convertible Promissory Note is due
The Convertible Promissory Note may be prepaid by the Company, in whole, but not in part, at any time prior to the Maturity Date, subject to payment of a premium of 10%, provided that the Company gives the holder fifteen (15) business notice prior to prepayment, during which period, the investor may elect to convert the Note and accrued but unpaid interest thereon into Shares at a conversion price equal to 80% of the average of the daily VWAP of the Shares (as defined in the Note) for twenty consecutive (
The Holder of the Convertible Promissory Note will have the right, at any time during the period commencing on April 1, 2024 and ending on the earliest to occur of the Maturity Date, the date of a Prepayment or the date of an automatic conversion, to convert the Convertible Promissory Note in whole, but not in part, and accrued interest thereon into Shares at a conversion price equal to 80% of the average of the daily VWAP of the Shares (as defined in the Convertible Promissory Note) for twenty consecutive (20) trading days ending on the date the investor gives the Company a notice of conversion, subject to a minimum conversion price of $
In addition, the Convertible Promissory Note and accrued but unpaid interest thereon will automatically convert into Shares in the event that prior to the Maturity Date, the Company consummates a “Qualified Financing” or a “Qualified Sale” (as defined in the Convertible Promissory Note) at a conversion price equal to 80% of the offering price of Shares sold in the Qualified Financing or 80% of the purchase price per Share to be received by stockholders following consummation of a Qualified Sale.
In connection with the issuance of the Convertible Promissory Notes, the Company recorded a discount in the amount of $
At January 31, 2026, the unamortized debt discount recorded in connection with the issuance of the Convertible Promissory Note was $
12
NOTE 11 – CAPITAL STOCK
Common Stock
2021 Plan
In September 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”). The 2021 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, and Performance Shares (an “Award”) to any person who is an employee or director of, or consultant to the Company. The maximum aggregate number of shares that may be issued pursuant to all Awards was 1,250,000 shares. On June 6, 2023, the Company’s board of directors and stockholders holding a majority of the Company’s voting power, approved an increase in the number of shares of the Company’s common stock reserved for issuance under the Company’s 2021 Plan from
The 2021 Plan is administered by (a) the board of the directors of the Company; or (b) a committee designated by the board, which Committee shall be constituted in such a manner as to satisfy the applicable laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such committee shall continue to serve in its designated capacity until otherwise directed by the board. The board of directors may at any time amend, suspend, or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Company’s shareholders to the extent such approval is required by applicable laws.
As of January 31, 2026, a total of
Sale Of Common Stock
On July 25, 2025, ZEO entered into a subscription agreement (“Subscription Agreement”) with a single accredited investor (the “Investor”). Pursuant to which the Investor agreed to purchase 250,000 shares of our common stock (the “Shares”) in a private transaction for an aggregate purchase price of $1,000,000 (the “Purchase Price”). The Shares were to be issued and sold and the Purchase Price paid in ten (10) equal monthly installments commencing on August 1, 2025 and ending on May 1, 2026. As of October 31, 2025, 75,000 shares have been sold for an aggregate of $300,000 in accordance with the Subscription Agreement. During the three months ended January 31, 2026, an additional 25,000 shares were sold for $100,000 in accordance with the Subscription Agreement. As of January 31, 2026, a total of 100,000 shares have been sold for an aggregate amount of $400,000 pursuant to the Subscription Agreement. On February 10, 2026, the Subscription Agreement was amended whereby the total number of Shares to be purchased under the Subscription Agreement was reduced to 100,000 Shares.
The Shares were offered and sold to the investor in accordance with the exemption from registration afforded by Section 4(a) (2) of the Securities Act of 1933, as amended (the “Securities Act”), as the investor provided the Company with appropriate representations as to the Investor’s investment intent and status as an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
Private Offering – Common Stock and Warrants
From November 2025 to January 2026, the Company sold
The above securities were offered and sold to the investors in accordance with the exemption from registration afforded by Section 4(a)(2) of Rule 506(b) of Regulation D under the Securities Act.
13
Restricted Stock Awards
On December 1, 2025, the
Company entered into a consulting agreement with a third party to provide certain market engagement and investor relations consulting
services to the Company. Pursuant to the Consulting Agreement, the Company issued the consultant
On December 23, 2025, in
consideration for his performance, the Company award an employee of the Company, a bonus in the form of a restricted stock grant under
the Company’s 2021 Plan of
On January 14, 2026,
pursuant to the Company’s 2021 Plan, the Company’s Compensation Committee (“Comp Board”) awarded
In connection with Dr.
Kisiday’s Employment Agreement, Dr. Kisiday was granted
A summary of unvested restricted stock activity for the three months ended January 31, 2026 are presented below:
| Schedule of non vested share activity | ||||||||||||
| Number of Non-vested Shares |
Fair Value | Weighted- Average Grant Date Value |
||||||||||
| Non-vested Shares at October 31, 2025 | $ | $ | ||||||||||
| Shares Granted | $ | $ | ||||||||||
| Vested | ( |
) | $ | ( |
) | $ | - | |||||
| Expired/Forfeited | ( |
) | $ | ( |
) | $ | ||||||
| Non-vested Shares at January 31, 2026 | $ | $ | ||||||||||
The Company recorded a total of $
14
NOTE 12 – STOCK OPTIONS AND WARRANTS
The Company has issued option securities under its Incentive Plan and warrants entitling the holder to purchase shares of its common stock at specified prices and for specified exercise periods.
Options:
A summary of the Company’s option activity for the three months ended January 31, 2026 is presented below:
| Schedule of stock options and warrants | ||||||||||||||||
| Number of Shares |
Weighted- average Exercise Price |
Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding at October 31, 2025 | $ | $ | - | |||||||||||||
| Granted | - | $ | - | - | $ | - | ||||||||||
| Exercised | - | $ | - | - | $ | - | ||||||||||
| Expired/Forfeited | ( |
) | $ | $ | - | |||||||||||
| Outstanding at January 31, 2026 | $ | $ | ||||||||||||||
| Exercisable at January 31, 2026 | $ | $ | ||||||||||||||
Options totaling
During the three months ended January 31, 2026 and 2025, the Company amortized $
There was approximately $
Warrants:
A summary of the Company’s warrant activity for the nine months ended January 31, 2025 is presented below:
| Schedule of warrant activity | ||||||||||||||||
| Number of Shares |
Weighted- average Exercise Price |
Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding at October 31, 2025 | $ | $ | - | |||||||||||||
| Granted | $ | $ | - | |||||||||||||
| Exercised | - | $ | - | - | $ | - | ||||||||||
| Expired/Forfeited | - | $ | - | - | $ | - | ||||||||||
| Outstanding at January 31, 2026 | $ | $ | ||||||||||||||
| Exercisable at January 31, 2026 | $ | $ | ||||||||||||||
As described in Note 11, from November 2025 to January 2026, the Company sold
15
During the three months ended January 31, 2026 and 2025, the Company amortized $
There was approximately $
All stock compensation expense is classified under general and administrative expenses in the consolidated statements of operations.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Deferred Revenue
Amounts received by the Company for future purchases of inventory or for products that have yet to be delivered to the customers as of January 31, 2026 and October 31, 2025 are reflected in the Company’s balance sheet as deferred revenues and were comprised of the following:
| Schedule of deferred revenue | ||||||||
| January 31, 2026 |
October 31, 2025 |
|||||||
| Advances On Future Purchases Of Inventory | $ | $ | ||||||
| Sales To Customers Not Yet Delivered | ||||||||
| Total Deferred Revenue | $ | $ | ||||||
Employment Agreement
Dr. John D. Kisiday, Ph.D.
Effective January 23, 2026, Dr. Kisiday was appointed the Company’s Chief Technology Officer. Dr. Kisiday’s employment agreement (“Employment Agreement”) provides for a base salary of $
Dr. Kisiday’s employment with the Company is “At Will” meaning that his employment with the Company and his Employment Agreement may be terminated by the Company at any time, for any reason or for no reason at all and with or without “Cause” (as defined in the Employment Agreement). Notwithstanding the foregoing, if at any time after the first ninety (90) days of the term, the Company terminates Dr. Kisiday’s employment without Cause or Dr. Kisiday terminates his employment with the Company for “Good Reason” (as defined in the Employment Agreement), Dr. Kisiday will be entitled to receive severance in an amount equal to one quarter (1/4) month’s salary for each successive three (3) months of employment completed.
Dr. Kisiday’s employment agreement contains customary confidentiality, non-competition and non-solicitation covenants.
16
Purchase Commitments
During July 2025, the Company entered into an exclusive supply agreement (“Supply Agreement”) with a third-party contract manufacturer (“CDMO”) in connection with the manufacturing and processing of certain biological products (“CDMO Products”) that the Company intends to sell to third party medical providers. Under the terms of the Supply Agreement, the Company prepaid $500,000. Under the terms of the Supply Agreement, the deposits will be applied against the actual CDMO Products that are released to the Company. The Company has agreed to make a minimum of 8 purchase orders within specified periods based on satisfactory release of prior productions of the CDMO Products (“Minimum Purchase Orders”). In connection with each purchase order, the Company is required to have minimum deposits paid to the CDMO equal to 50% of the value of the purchase order. The Supply Agreement may be extended by the Company based on submitting a minimum amount of additional purchase orders after the Minimum Purchase Orders have been released.
Legal Matters
Neurovive Holding Co., LLC
On January 26, 2026, Neurovive Holding Co., LLC (“Neurovive”), Paragon Medical Group, LLC (“Paragon”), and Dr. David Buechner (“Dr. Buechner,” and together with Neurovive and Paragon, “Plaintiffs”), filed a complaint in the Circuit Court of Benton County, Arkansas Civil Division against the Company asserting claims for breach of contract, breach of fiduciary duty, misappropriation of trade secrets, fraud, promissory estoppel, unjust enrichment and conversion (“Complaint”). The Company removed the state court case to the United States District Court for the Western District of Arkansas. Plaintiffs are seeking preliminary and permanent injunctive relief and compensatory damages in an unspecified amount. The litigation arises from a prior arrangement between Plaintiffs and the Company relating to a proposed clinical trial and associated funding obligations. The parties dispute the circumstances under which the arrangement was terminated. The Company’s disputes all allegations in the Complaint and intends to vigorously defend the action. At this early stage of the proceedings, the Company is unable to predict the ultimate outcome of the litigation.
Dr. Golub
The Company’s employment agreement Dr. Howard Golub, its former Chief Science Officer (“Golub Employment Agreement”) had an initial term that ended May 31, 2024. The Golub Employment Agreement was not renewed and accordingly, the Golub Employment Agreement expired and the employment of Dr. Golub by the Company ended on May 31, 2024.
On November 19, 2024, Dr. Golub (“Plaintiff”), filed a complaint in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida against the Company, alleging a breach of contract as a result of the Company’s failure to pay Plaintiff severance in the amount of $
Exotropin
On August 15, 2025, the Company terminated the Sales Agreement for cause. Exotropin filed a complaint (case No. CACE-25-013178, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida) against the Company for declaratory judgment on August 29, 2025, concerning the parties’ June 19, 2024, Amended and Restated Sales Representative Agreement, seeking declarations related to termination and the survival/enforceability of certain restrictive and other clauses. On November 6, 2025, the Company moved to dismiss Exotropin’s complaint and to strike the jury demand pursuant to the agreement’s jury waiver. The Company filed counterclaims on November 17, 2025, alleging, among other things, unjust enrichment tied to diverted sales, tortious interference with business relationships, and seeking imposition of a constructive trust, as well as recovery of attorneys’ fees and costs, with rights reserved to amend and supplement. On January 7, 2026, Exotropin filed a First Amended Complaint adding claims for breach of contract and breach of fiduciary duty and seeking injunctive and monetary relief. Pleadings and motion practice remain in progress. Discovery is ongoing; no depositions have been taken to date. The Company denies Exotropin’s allegations and disputes Exotropin’s entitlement to any relief. The Company continues to evaluate its legal options and intends to protect its rights under the Sales Agreement.
17
BioXtex
In June 2025, BioXtek sought to terminate the Binding MOU and the Joint Venture for alleged breaches by the Company, which the Company contested. As the Company and BioXtek were not able to amicably resolve the dispute, on December 17, 2025, the Company commenced an action against BioXtek (case No. CACE-25-019364, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida) and an amended complaint on January 5, 2026, asserting claims for breach of contract and implied covenant, fraudulent inducement, violation of the Florida Deceptive Unfair Trade Practices Act, equitable accounting, and declaratory judgment. The Company seeks damages expectancy/consequential losses, equitable relief, and fees. The Clerk of the Court issued a Summons for BioXtek, but BioXtek has not been served with the Summons and Amended Complaint. Therefore, BioXtek’s response to the Amended Complaint is not yet due. The case is pending. The Company continues to evaluate its legal options and intends to protect its rights under the Binding MOU and the Joint Venture.
Other
In addition to the foregoing, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.
NOTE 14 – OTHER INCOME
| Schedule of other Income | ||||||||
| Three Months Ended January 31, |
||||||||
| 2026 | 2025 | |||||||
| Other income | ||||||||
| Commissions on sales of Exotropin products | - | |||||||
| Other | - | |||||||
| Total | $ | $ | ||||||
NOTE 15 – SEGMENT INFORMATION
Under ASC 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one reportable and operating segment. The measure of segment assets is reported on the balance sheet as total assets.
The Company’s Chief Executive Officer, who is also the CODM reviews financial information presented and decides how to allocate resources based on net income (loss). Net income (loss) is used for evaluating financial performance.
18
Significant segment expenses include research and development, salaries, insurance, and stock-based compensation. Operating expenses include all remaining costs necessary to operate our business, which primarily include external professional services and other administrative expenses. The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM for the three months ended January 31, 2026 and 2025.
| Schedule of segment reporting | ||||||||
| Three months ended January 31, |
||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ( |
) | ( |
) | ||||
| Salaries & consulting fees | ( |
) | ( |
) | ||||
| Professional fees | ( |
) | ( |
) | ||||
| Stock based compensation | ( |
) | ( |
) | ||||
| Lab expenses | ( |
) | ||||||
| Research & development | ( |
) | ( |
) | ||||
| Commissions | ( |
) | ( |
) | ||||
| Marketing | ( |
) | ( |
) | ||||
| Office expenses & other | ( |
) | ( |
) | ||||
| Other income (expenses), net | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
NOTE 16 – SUBSEQUENT EVENTS
Private Offering – Common Stock and Warrants
During February 2026, the Company sold
The above securities were offered and sold to the investors in accordance with the exemption from registration afforded by Section 4(a)(2) of Rule 506(b) of Regulation D under the Securities Act.
19
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Business Overview
We are a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine.
The Company has a portfolio of proprietary products derived from ethically sourced birth tissue, including mesenchymal stem cells, stem cell and amniotic fluid derived exosomes and Whartons Jelly matrix. The Company’s principal product is Zofin™, a product derived from amniotic fluid and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles. ZEO also manufactures Patient Pure X™ (“PPX™”), a proprietary autologous biologic containing a nanoparticle fraction that is precipitated from a patient’s own peripheral blood. ZEO’s products are all manufactured in FDA-registered, cGMP-compliant laboratory facilities. Our portfolio of products (“RAAM Products”) and related services are principally used in the health care industry administered through doctors and clinics (“Providers”).
The state of Florida enacted a new “stem cell therapy” law, effective July 1, 2025 (“SB 1768”). The legislation authorizes licensed physicians to administer non-FDA-approved stem cell and other human tissue-derived therapies for orthopedic, wound care, and pain management indications. It mandates compliance with cGMP and prohibits the use of stem cells derived from aborted fetuses, promoting ethically sourced materials such as adult stem cells and umbilical cord blood. SB 1768 also requires informed patient consent and disclosure that treatments are not FDA-approved.
Zeo expects that SB 1768 will create substantial new demand for current and future stem cell therapy products by: (i) meeting existing physician and patient interest in regenerative therapies, (ii) increasing awareness of the availability and potential efficacy of stem cell therapy treatments, and (iii) attracting medical tourists who previously sought stem cell therapy treatments abroad but can now access comparable procedures in Florida under higher regulatory standards and at lower cost. Accordingly, the Company has begun to pursue clinical research and commercial sales strategies that are compliant with SB 1768.
By enabling physicians to adopt Zeo’s products for approved indications in Florida, the Company anticipates significant revenue growth and faster advancement of its clinical trial objectives at reduced cost. ZEO expects to further distinguish itself through leadership in research, quality, safety, and regulatory compliance for biologics. The new law also allows Zeo to collect real-world safety and outcome data from providers—data that previously could only be obtained through FDA Investigational New Drug (IND) applications or Institutional Review Board (IRB)-approved studies. Access to this data is expected to lower risks associated with the Company’s future FDA submissions for product approvals.
While prioritizing the anticipated growth of Florida’s stem cell market, Zeo continues to advance its research programs, including clinical studies, product development, and ongoing quality and compliance initiatives. The Company recently launched an IRB-approved clinical study titled “Open-Label Prospective Longitudinal Clinical Trial to Evaluate the Safety and Potential Efficacy of PPX™ in Patients Suffering from Musculoskeletal Joint Pathologies Using Real-World Data to Monitor Patient Outcomes.” The study will enroll up to 350 patients, with five clinics already participating and seven patients enrolled to date.
In addition to the Company’s efforts to develop, manufacture and market products that are compliant with SB 1768, the Company has recently developed and begun to distribute additional products that incorporate its proprietary ingredients for products to be used in topical aesthetic applications and is actively exploring further development of additional products to be used in other topical aesthetic applications.
ZEO operates an extracellular vesicle processing laboratory in Davie, Florida for the purpose of performing research and development and the manufacturing and processing of the anti-aging and cellular therapy derived products that we sell and distribute to our customers.
20
To date, the Company has obtained certain Investigational New Drug (“IND”), emergency IND (“eIND”) approvals from the FDA, including applicable Institutional Review Board (“IRB”) approvals which authorized the Company to commence clinical trials or treatments in connection with the use of Zofin™ and related treatment protocols. The Company is pursuing efforts to complete its already approved clinical studies as well as obtaining approval to commence additional studies for other specific indications it has identified that the use of its products will provide more favorable and desired health related benefits for patients seeking alternative treatment options than are currently available. The ability of the Company to succeed in these efforts is subject to among other things, the Company having sufficient available working capital to fund the substantial costs of completing clinical trials, which the Company currently does not have, and ultimately, obtaining approval from the FDA.
Current FDA guidance requires that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue-based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”).
We have not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products we currently supply and/or produce would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s or fall within SB 1768 that permits the use and sale of certain stem cell therapies and products that would otherwise be restricted under current FDA regulations. However, we believe that our products are compliant and fall within the respective guidelines and intend to vigorously defend against any adverse interpretation by the FDA and/or the state of Florida on the classification of our products that may be deemed as not being compliant under currently defined regulations, 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.
The following discussion of the Company’s results of operations and liquidity and capital resources should be read in conjunction with our condensed unaudited financial statements and related notes thereto appearing in “Item 1. Financial Statements” of Part I of this Report.
Results of Operations
Three months ended January 31, 2026, as compared to three months ended January 31, 2025
Revenues. Our revenues for the three months ended January 31, 2026 were $1,446,000, as compared to revenues of $1,090,000 for the three months ended January 31, 2024. The increase in revenues for the three months ended January 31, 2026 of $356,000 or 32.7%, was due to overall increases in revenues associated with its allogenic aesthetic biologic products and its PPX™ service platform during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025.
21
The revenues and percentage of overall unit sales derived from the Company’s higher concentration allogenic aesthetic biologic product offerings, lower concentration allogenic aesthetic biologic product offerings and its PPX™ service platform for the three months ended January 31, 2026, as compared to the three months ended January 31, 2025 are presented below:
| Three Months Ended January 31, 2026 |
Three Months Ended January 31, 2025 |
Change In |
Inc (Dec) In Units Sold |
|||||||||||||||||||||||||
| Higher Concentration Allogenic Aesthetic Biologics | $ | 721,000 | 49.9 | % | $ | 542,000 | 49.7 | % | $ | 179,000 | 16.4 | % | 139.6 | % | ||||||||||||||
| Lower Concentration Allogenic Aesthetic Biologics | $ | 388,000 | 26.8 | % | $ | 265,000 | 24.3 | % | $ | 123,000 | 11.3 | % | 72.2 | % | ||||||||||||||
| $ | 1,109,000 | 76.7 | % | $ | 807,000 | 74.0 | % | $ | 302,000 | 27.7 | % | |||||||||||||||||
| PPX™ | $ | 261,000 | 18.0 | % | $ | 233,000 | 21.4 | % | $ | 28,000 | 2.6 | % | ||||||||||||||||
| Other | $ | 76,000 | 5.3 | % | $ | 50,000 | 4.6 | % | $ | 26,000 | 2.4 | % | ||||||||||||||||
| Total | $ | 1,446,000 | 100.0 | % | $ | 1,090,000 | 100.0 | % | $ | 356,000 | 32.7 | % | ||||||||||||||||
The increase in the overall unit sales associated with the Company’s higher concentration allogenic aesthetic biologic product offerings, lower concentration allogenic aesthetic biologic product offerings and its PPX™ service platform was primarily due the Company’s continued sales and marketing efforts which included engaging additional sales representatives, conducting educational masterclasses, participation in industry related conferences and digital marketing aimed at increasing Company and product awareness.
Cost of Revenues. Our cost of revenues for the three months ended January 31, 2026 were $281,000, as compared to cost of revenues of $191,000 for the three months ended January 31, 2025. The increase in the cost of revenues for the three months ended January 31, 2026 of $90,000 or 47.1%, from the three months ended January 31, 2025, was due to the increase in the overall unit sales associated with its allogenic aesthetic biologic products and its PPX™ service platform during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025.
Gross Profit. Our gross profit for the three months ended January 31, 2026 was $1,165,000 (80.6% of revenues), as compared to gross profit of $899,000 (82.5% of revenues) for the three months ended January 31, 2025. The increase in gross profit during the three months ended January 31, 2026 of $266,000 (29.6%) was the result of increases in the gross margins received from sales of its allogenic aesthetic biologic products and its PPX™ service platform during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025.
General and Administrative Expenses. General and administrative expenses for the three months ended January 31, 2026 were $2,043,000, as compared to $2,152,000 for the three months ended January 31, 2025, a decrease of $109,000 or 5.1%. The decrease in the general and administrative expenses for the three months ended January 31, 2026, from the three months ended January 31, 2025, was primarily the result of decreased stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $499,000 during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025, partially offset from increased (i) laboratory related costs of approximately $165,000; (ii) commissions and travel costs of approximately $121,000; (iii) marketing related costs of approximately $41,000; (iv) administrative and office related costs of $21,000; (v) payroll related expenses of approximately $14,000; (vi) professional fees of approximately $14,000; and (vii) research and development costs of approximately $13,000 during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025.
22
The decrease in stock-based compensation costs during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025 was principally the result of decreased amortization of costs from shares and options issued to executives and advisors and options issued to employees and outside directors.
The increase in commissions during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025 was principally the result of the increase in overall revenues during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025, partially offset from a larger percentage of sales that were generated from house accounts with much lower commission costs than paid to distributors and/or independent sales representatives.
Other income. Other income for the three months ended January 31, 2026 was $36,000, as compared to other income of $32,000 for the three months ended January 31, 2025. The increase in other income of was principally due to the change in obligation to repurchase shares of $19,000 and other non-recurring income of $17,000, partially offset from the reduction in commissions received from sales of Exotropin products of $32,000 during the three months ended January 31, 2026, as compared to the three months ended January 31, 2025.
Other expense for the three months ended January 31, 2026 was $10,000, as compared to other expense of $22,000 for the three months ended January 31, 2025. The decrease in other expense was principally the result of reduced interest costs and amortization of loan discounts on Notes payable resulting from the conversion of $475,000 of Notes payable during October 2025.
Liquidity and Capital Resources
Cash and Cash Equivalents
The following table summarizes the sources and uses of cash for the periods stated. The Company held no cash equivalents for any of the periods presented:
| For the Three Months Ended January 31, |
||||||||
| 2026 | 2025 | |||||||
| Cash, beginning of period | $ | 221,000 | $ | 657,000 | ||||
| Net cash (used in) provided by operating activities | (471,000 | ) | 65,000 | |||||
| Net cash used in investing activities | (14,000 | ) | - | |||||
| Net cash provided by (used in) financing activities | 1,294,000 | (2,000 | ) | |||||
| Cash, end of period | $ | 1,030,000 | $ | 720,000 | ||||
During the three months ended January 31, 2026, the Company used cash in operating activities of $471,000, as compared to $65,000 of cash provided by operating activities for the three months ended January 31, 2025, an increase in cash used of $536,000. The increase in cash used was primarily the result of increases in general and administrative expenses and other income (expense) after adjusting for non-cash related activities of $216,000 and decreases in cash provided from changes in operating assets and liabilities of $406,000, partially offset from an increase in gross profit of $87,000 the for the three months ended January 31, 2026 as compared to the three months ended January 31, 2025.
The decrease in cash provided from changes in operating assets and liabilities was due to increases in accounts receivable and decreases in accounts payable and accrued expenses for the three months ended January 31, 2026 as compared to the three months ended January 31, 2025.
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During the three months ended January 31, 2026, the Company had cash used in investing activities of $14,000 compared to $0 for the three months ended January 31, 2025, an increase in cash used in investing activities of $14,000. The increase in cash used by investing activities was primarily due to the increase in payments made in connection with the Company’s purchase of laboratory equipment of $14,000 during the three months ended January 31, 2026 as compared to the three months ended January 31, 2025.
During the three months ended January 31, 2025, the Company had cash provided by financing activities of $1,294,000 as compared to cash used in financing activities of $2,000 for the three months ended January 31, 2024. The increase in cash provided by financing activities of $1,296,000 was due to the increase in proceeds received from the sale of common stock of $1,300,000 partially offset from increases in payments on finance leases of $6,000 during the three months ended January 31, 2026 compared to the three months ended January 31, 2025.
Capital Resources
The Company has historically relied on the sale of debt or equity securities, the restructuring of debt obligations and/or the issuance and/or exchange of equity securities to meet the shortfall in cash to fund its operations. During the three months ended January 31, 2026 and through the date of this Quarterly Report, the Company completed the following private sales of its securities:
From November 2025 to January 2026, the Company sold 4.8 Units to eight investors for an aggregate purchase price of $1,200,000 in a private transaction. Each Unit consists of (i) 62,500 shares of common stock and (ii) warrants to purchase 62,500 shares of common stock of the Company at an exercise price of $4.00 until November 30, 2030. The warrants may be exercised on a cashless basis. In connection with the sale of the Units, the Company issued 300,000 shares of common stock and 300,000 warrants to purchase shares of common stock.
During February 2026, the Company sold and additional 2.6 Units to eight investors for an aggregate purchase price of $650,000. In connection with the sale of the Units, the Company issued 162,500 shares of common stock and 162,500 warrants to purchase shares of common stock.
The above securities were offered and sold to the investors in accordance with the exemption from registration afforded by Section 4(a)(2) of Rule 506(b) of Regulation D under the Securities Act of 1933, as amended.
Going Concern Consideration
The unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company incurred net losses of $852,000 for the three months ended January 31, 2026 and used $471,000 of cash from operating activities during that period. In addition, the Company had an accumulated deficit and a stockholders’ deficit of $68,586,000 and $383,000, respectively, at January 31, 2026. The Company had a working capital deficit of $879,000 at January 31, 2026.
United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective in May 2021 require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). Notwithstanding the above, certain states, including Florida (SB 1768) have approved legislation that permits the use and sale of products that would otherwise be restricted under current FDA regulations. 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.
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As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted; and/or (b) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company’s current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.
In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (i) 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; (ii) 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; (iii) obligations to the Company’s creditors are not accelerated; (iv) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (v) 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 (vi) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.
There is no assurance that the products we currently produce will not be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s and/or the Company will be able to complete its revenue growth strategy. There is no assurance that the Company’s research and development activities will be successful or that the Company will be able to timely fund the required costs of those activities. Without sufficient cash reserves, the Company’s ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant efforts since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues.
If revenues do not increase and stabilize, if the Company’s ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws.
The independent auditor’s report dated January 29, 2026 included in our Annual Report on Form 10-K for the year ended October 31, 2025 included an explanatory paragraph as to the Company’s ability to continue as a going concern. As of January 31, 2026, based on the factors described above, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of these financial statements.
Off-Balance Sheet Arrangements
Our liquidity is not dependent on the use of off-balance sheet financing arrangements (as that term is defined in Item 303(a) (4) (ii) of Regulation S-K) and as of January 31, 2026 and through the date of this report, we had no such arrangements.
Recently Issued Financial Accounting Standards
See Note 2 to our unaudited condensed consolidated financial statements included in this report for a discussion of recent accounting pronouncements.
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Critical Accounting Policies
Our unaudited condensed consolidated financial statements reflect the selection and application of accounting policies which require us to make significant estimates and judgments. See Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, “Summary of Significant Accounting Policies”.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Not applicable.
| Item 4. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported in accordance with the rules of the Securities and Exchange Commission (“SEC”). Disclosure controls are also designed with the objective of ensuring that such information is accumulated appropriately and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosures.
Our Chief Executive Officer and Chief Financial Officer (our principal executive, financial and accounting officer) evaluated the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of January 31, 2026, the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. See the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2025, for a description of the Company’s material weaknesses in internal control over financial reporting.
Changes in Internal Controls over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended January 31, 2026, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II – OTHER INFORMATION
| Item 1. | Legal Proceedings. |
On January 26, 2026, Neurovive Holding Co., LLC (“Neurovive”), Paragon Medical Group, LLC (“Paragon”), and Dr. David Buechner (“Dr. Buechner,” and together with Neurovive and Paragon, “Plaintiffs”), filed a complaint in the Circuit Court of Benton County, Arkansas Civil Division against the Company asserting claims for breach of contract, breach of fiduciary duty, misappropriation of trade secrets, fraud, promissory estoppel, unjust enrichment and conversion (“Complaint”). The Company removed the state court case to the United States District Court for the Western District of Arkansas. Plaintiffs are seeking preliminary and permanent injunctive relief and compensatory damages in an unspecified amount. The litigation arises from a prior arrangement between Plaintiffs and the Company relating to a proposed clinical trial and associated funding obligations. The parties dispute the circumstances under which the arrangement was terminated. The Company’s disputes all allegations in the Complaint and intends to vigorously defend the action. At this early stage of the proceedings, the Company is unable to predict the ultimate outcome of the litigation.
In addition to the above and to matters which have been resolved as reported in previous periodic reports filed under the Securities Exchange Act of 1934, as amended, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.
| Item 1A. | Risk Factors. |
As a “smaller reporting company” we are not required to disclose information under this Item.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
From November 2025 to January 2026, the Company sold 4.8 Units to eight investors for an aggregate purchase price of $1,200,000 in a private transaction. Each Unit consists of (i) 62,500 shares of common stock and (ii) warrants to purchase 62,500 shares of common stock of the Company at an exercise price of $4.00 until November 30, 2030. The warrants may be exercised on a cashless basis. In connection with the sale of the Units, the Company issued 300,000 shares of common stock and 300,000 warrants to purchase shares of common stock.
During February 2026, the Company sold and additional 2.6 Units to eight investors for an aggregate purchase price of $650,000. In connection with the sale of the Units, the Company issued 162,500 shares of common stock and 162,500 warrants to purchase shares of common stock.
The above securities were offered and sold to the investors in accordance with the exemption from registration afforded by Section 4(a)(2) of Rule 506(b) of Regulation D under the Securities Act of 1933, as amended.
| Item 3. | Defaults upon Senior Securities. |
None.
| Item 4. | Mine Safety Disclosures. |
Not applicable.
| Item 5. | Other Information. |
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| Item 6. | Exhibits. |
| Exhibit No: | Description: | |
| 31.1* | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer and Chief Financial Officer (filed herewith) | |
| 32.1* | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (filed herewith) | |
| 101.INS ** | XBRL Instance Document | |
| 101.SCH** | XBRL Taxonomy Extension Schema Document | |
| 101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB** | XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document |
| * | Filed herewith. |
| ** | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ZEO SCIENTIFIX, INC. | ||
| By: | /s/ Ian T. Bothwell | |
| Ian T. Bothwell | ||
| Chief Executive Officer and Chief Financial Officer | ||
| (Principal Executive, Financial and Accounting Officer) | ||
| March 17, 2026 | ||
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FAQ
How did Zeo ScientifiX (ZEOX) perform financially in the January 31, 2026 quarter?
What is the financial condition and cash position of Zeo ScientifiX as of January 31, 2026?
Why does Zeo ScientifiX’s 10-Q disclose substantial doubt about its going concern status?
How is Florida’s SB 1768 stem cell law expected to affect Zeo ScientifiX’s business?
What capital-raising activities did Zeo ScientifiX (ZEOX) complete around the quarter?
What are the key clinical and product initiatives for Zeo ScientifiX?
Does Zeo ScientifiX have any significant debt obligations outstanding?
