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F-29
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Controls and Procedures.
In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management is required to perform an evaluation under the supervision and with the participation of the Company’s management, including the Company’s principal executive and principal financial officers, or persons performing similar functions, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period.
Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 31, 2023, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
General
Our management (currently Ian Bothwell, our Interim Chief Executive Officer and Chief Financial Officer) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act, as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of October 31, 2024, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework of 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments.
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Based on that evaluation under this framework, our management concluded that as of October 31, 2024, our internal control over financial reporting was not effective because of the following material weaknesses:
| ● | Due to our small number of employees and resources, we have limited segregation of duties, as a result of which there is insufficient independent review of duties performed. |
| ● | Due to our small number of employees and resources, we have limited segregation of duties, as a result of which do not have the ability to implement internal controls over the granting of access to our IT environment. |
| ● | As a result of the limited number of accounting personnel, we rely on inexperienced staff and outside consultants for the preparation of our financial reports, including tax preparation, which could require adjustments and lead to overlooking items requiring disclosure. |
| ● | As a result of the Company’s limited financial and personnel resources, there may be difficulties in timely analyzing and identifying potential operational and disclosure transactions within management and to comply with financial reporting regulations. |
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have expanded our accounting and administrative support staff during the fiscal year ended October 31, 2024. We also continue to engage outside tax consultants to assist in advising the Company in tax matters on an ongoing basis.
If and when the Company obtains sufficient capital resources, the Company intends to hire additional personnel with sufficient U.S. GAAP knowledge and business experience and to segregate appropriate duties among them. The Company has also begun efforts to further automate its accounting, sales ordering and inventory management functions.
Our board of directors consists of a majority of independent directors. We have also established an audit committee of our board of directors consisting of two independent directors, which is responsible for the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management). We plan to seek additional independent director candidates in the proximate future.
This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.
Changes in Internal Controls
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 fourth quarter ended October 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information.
| (a) | None. |
| (b) | During the fiscal quarter ended October 31, 2024, none of our officers or directors, as defined in Rule 16a-1(f), informed us of the adoption, modification or termination of any “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K. |
The Company has adopted insider trading policies and procedures governing the purchase, sale and/or other dispositions of our securities by directors, officers, employees, and the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations and listing standards.
During the fiscal quarter ended October 31, 2024, the Company has not , modified or any “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
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 or Officer Since: | |||
| Ian T. Bothwell | 64 | Interim Chief Executive Officer Chief Financial Officer and Director | November 4, 2016 | |||
| Dr. George Shapiro | 64 | Chief Medical Officer and Director | February 7, 2019 | |||
| Chuck Bretz | 67 | Director – Chairman of the Board | September 23, 2022 | |||
| Gurvinder Pal Singh | 63 | Director | September 23, 2022 | |||
| S. Jerry Glauser | 77 | Director | September 23, 2022 | |||
| Leathem Stearn | 76 | Director | September 23, 2022 |
Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of stockholders 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
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 Interim Chief Executive Officer (since June 1, 2024) and Chief Financial Officer of the Company (since November 4, 2016). In addition, he previously served as Interim Chief Executive Officer of the Company from November 22, 2022, until June 6, 2023. 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. 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.
Chuck Bretz became a director of the Company and Vice Chairman of the Board on September 23, 2022. Mr. Bretz has been a practicing attorney for the last 40 years in both the private and public sectors. Since 1999, Mr. Bretz, has been a principal of the Joliet, Illinois law firm he founded, which is now known as Chuck Bretz & Associates, P.C. The firm advises various businesses in multiple commercial and real estate matters. Mr. Bretz is also currently actively involved in advising entrepreneurs across the country in structuring and negotiating business and real estate transactions.
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Gurvinder Pal Singh joined our Board of Directors on September 23, 2022, has over 35 years of professional experience in business strategy, corporate finance and financial accounting covering varied areas such as mergers and acquisitions, statutory compliance, capital raising, budgeting and internal controls, audit, financial management, risk management, investor relations and tax planning. Since 1996, he has served as Chief Finance Officer of Modi Holdings, whose holdings include various companies in India, Singapore and the U.S., in the fields of mobile services, mobile devices, mobile retain, healthcare, new energy and wellness. Mr. Singh is a graduate of the University of New Delhi and a Chartered Accountant in India.
S. Jerry Glauser joined the Company’s board of directors on September 23, 2022. He has been in the automobile business for 50 years, starting in the family business in South New Jersey. In 1973, Mr. Glauser bought his first dealership in Sarasota Florida and over the next three decades expanded to ownership of a dozen dealerships in Florida. In 2004, he sold his Florida dealerships and acquired a Mercedes-Benz dealership in Denver, Colorado, which he sold in 2006. He then bought a Mercedes-Benz dealership in Houston, Texas, which he operated until its sale. For the last eight years, Mr. Glauser has been a private investor in various biotech companies and real estate ventures.
Leathem Stearn joined the board of directors on September 23, 2002. Since 1970, Mr. Stearn been an inventor, designer, entrepreneur and investor in various industries and with multiple companies. In 1986, Mr. Stearn founded Scunci International, LLC, where he developed the “Scrunchy” product and Scunci Brand of women hair accessories. He managed the Company until its sale in 1988, but continues to hold and license the Scunci Trademark® world-wide. From 1992 to1995, Mr. Stearn was a partner and CEO of Artnet, a company which he co-founded that became the leading art information company in the Art industry. Mr. Stearn has also founded or co-founded, developed and managed a number of other ventures including; Showcase International, LLC (from 1989 to 1992), which developed the first entertainment industry multi-media portfolio database; Smith Stearn Yachts LLC (from 2004 to 2010), which developed and operated a yacht sharing business and a number of other companies in the maritime industry.
Family Relationships
None.
Board Committees
The Board has established three standing committees; an audit committee, a compensation committee and a nominating and corporate governance committee. The members of the audit committee are Messrs. Singh and Glauser, with Mr. Singh acting as Chairman, the members of the compensation committee are Mr. Bretz and Mr. Stearn, with Mr. Bretz acting as Chairman and the members of the nominating and corporate governance committee are Messrs. Bretz and Singh, with Mr. Bretz serving as Chairman.
Independence
The Board has determined that each of our non-executive directors is “independent” within the meaning of the applicable rules and regulations of the SEC and the listing standards of the Nasdaq Stock Market.
In addition, we believe Mr. Singh qualifies an “audit committee financial expert” as the term is defined by the applicable rules and regulations of the SEC and the Nasdaq Stock Market listing standards, based on his business professional experience in the financial and accounting fields. At the time of the listing of our common stock for trading on the Nasdaq Stock Market, we are required to certify to the Nasdaq Stock Market, that our audit committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
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Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with under Section 16 of the Exchange Act during the fiscal year ended October 31, 2024 and up through the date of this Annual Report, except that Mr. Albert Mitrani and Dr. Maria Ines Mitrani, former directors and executive officers of the Company have not filed Form 4 reports with respect to 682,161 and 481,831 of our common stock held by them, respectively, which was returned to the Company on November 14, 2023, in connection with the settlement of various claims the Company had against the Mitranis.
Rule 10b5-1 Trading Arrangements
During the quarter ended October 31, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).
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Item 11. Executive Compensation.
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 years ended October 31, 2024 and October 31, 2023; (ii) all individuals that served as the Company’s principal financial officer or acted in a similar capacity for the Company at any time during the fiscal years ended October 31, 2024 and October 31, 2023; and (ii) the other individuals who were serving as executive officers of the Company at the end of the fiscal year ended October 31, 2024 whose total compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Fiscal Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All
Other Consideration ($) |
Total
Actually Received ($) |
||||||||||||||||||||||||||
| Harry Leider, MD | 2024 | 189,583 | -0- | -0- | 133,000 | (1) | -0- | -0- | 47,199 | (7) | 369,782 | ||||||||||||||||||||||||
| Former Chief Executive Officer(1) | 2023 | 135,584 | -0- | -0- | 95,000 | (1) | -0- | -0- | 4,383 | (7) | 234,967 | ||||||||||||||||||||||||
| Ian T. Bothwell, | 2024 | 245,461 | -0- | -0- | 59,487 | (2) | -0- | -0- | 19,222 | (8) | 324,170 | ||||||||||||||||||||||||
| Interim Chief Executive Officer and Chief Financial Officer(2) | 2023 | 166,667 | -0- | -0- | -0- | -0- | -0- | 41,648 | (8) | 208,315 | |||||||||||||||||||||||||
| Matthew Sinnreich, | 2024 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||||||||||
| Former Acting Chief Executive Officer(3) | 2023 | -0- | -0- | 49,618 | (3) | -0- | -0- | -0- | -0- | 49,618 | (3) | ||||||||||||||||||||||||
| Howard Golub, | 2024 | 87,500 | -0- | -0- | 350,000 | (4) | -0- | -0- | -0- | 437,500 | |||||||||||||||||||||||||
| (Former) Chief Science Officer and Executive Vice President(4) | 2023 | 62,500 | -0- | -0- | 250,000 | (4) | -0- | -0- | -0- | 312,500 | |||||||||||||||||||||||||
| Dr. George Shapiro, | 2024 | 146,667 | -0- | -0- | 59,487 | (5) | -0- | -0- | -0- | 206,154 | |||||||||||||||||||||||||
| Chief Medical Officer(5) | 2023 | 100,000 | -0- | -0- | -0- | -0- | -0- | -0- | 100,000 | ||||||||||||||||||||||||||
| Albert Mitrani - | 2024 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||||||||||
| Former Chief Executive Officer(6) | 2023 | 93,750 | -0- | -0- | -0- | -0- | -0- | 22,834 | (9) | 116,584 | |||||||||||||||||||||||||
| (1) | Dr. Leider served as Chief Executive Officer of the Company from June 6, 2023 until May 31, 2024. During the year ended October 31, 2023, Dr. Leider received an option to purchase 285,000 shares of common stock of the Company with an aggregate grant value of $684,000, of which 55,417 options ($133,000) and 39,583 options ($95,000) was vested for the years ended October 31, 2024 and 2023, respectively. See Note 13 to the October 31, 2024 audited consolidated financial statements for a description of the assumptions used in determining the value of the options granted. |
All options issued to Dr. Leider, that were not vested amounting to 190,000 at the time of the expiration of his employment agreement were forfeited. In addition, all options issued to Dr. Leider that were vested amounting to 95,000 at the time of the expiration of his employment agreement, were not exercised by August 31, 2024 as required under the Incentive Plan, and as a result expired.
| (2) | Mr. Bothwell has served as Interim Chief Executive officer since June 1, 2024 and Chief Financial Officer of the Company since November 4, 2016. From November 22, 2022, through June 6, 2023, he served as Interim Chief Executive Officer. During the year ended October 31, 2024, Mr. Bothwell received an option to purchase 125,000 shares of common stock of the Company with an aggregate grant value of $293,750, of which 24,306 options ($133,000) was vested for the year ended October 31, 2024. See Note 13 to the October 31, 2024 audited consolidated financial statements for a description of the assumptions used in determining the value of the options granted. |
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| (3) | Matthew Sinnreich served as Acting Chief Executive Officer and Chief Operating Officer of the Company from July 21, 2022 to September 23, 2022 and as Acting Chief Executive Officer and President from September 23, 2022 to November 22, 2022, when he resigned. Mr. Sinnreich was also issued 120,000 shares of common stock of the Company in lieu of any cash salary during his first year of employment with an aggregate grant value of $823,200, of which 7,233 ($49,618) was vested for the year ended October 31, 2023. In July 2023, Mr. Sinnreich paid the Company $50,000 and returned to the Company all shares and options to purchase shares previously issued in connection with his employment agreement. | |
| (4) | Dr. Golub served as Vice President and Chief Science Officer of the Company from June 6, 2023 until May 31, 2024. During the year ended October 31, 2023, Dr. Golub was issued a warrant to purchase 250,000 shares of common stock of the Company with an aggregate grant value of $600,000, of which 145,833 warrants ($350,000) and 104,167 warrants ($250,000) was vested for the years ended October 31, 2024 and 2023, respectively. See Note 13 to the October 31, 2024 audited consolidated financial statements for a description of the assumptions used in determining the value of the options granted. |
All options issued to Dr. Golub that were vested amounting to 250,000 at the time of the expiration of his employment agreement, were not exercised by August 31, 2024 as required under the Incentive Plan, and as a result expired.
| (5) | Dr. George Shapiro has served as the Chief Medical Officer of the Company since September 2018. During the year ended October 31, 2024, Dr. Shapiro received an option to purchase 125,000 shares of common stock of the Company with an aggregate grant value of $293,750, of which 24,306 options ($133,000) was vested for the year ended October 31, 2024. See Note 13 to the October 31, 2024 audited consolidated financial statements for a description of the assumptions used in determining the value of the options granted. | |
| (6) | Albert Mitrani served as Chief Executive Officer from September 2019 until July 21, 2022 when he stepped down from that position and assumed the position of Executive Vice President of Sales. Mr. Mitrani was terminated in May 2023. | |
| (7) | Dr. Leider received benefits totaling approximately $7,199 and $4,383 during fiscal years ended October 31, 2024 and 2023, respectively. Effective August 12, 2024, the Company and Dr. Leider entered into a settlement agreement and general release whereby the Company agreed to pay Dr. Leider $40,000 in exchange for each party executing mutual releases in connection with the non-renewal of Dr. Leider’s employment agreement. | |
| (8) | Ian Bothwell received benefits totaling approximately $19,222 and $41,648 during fiscal years ended October 31, 2024 and 2023, respectively. | |
| (9) | Albert Mitrani and his wife, Dr. Maria I. Mitrani, former Chief Science Officer of the Company received benefits totaling approximately $0 and $22,834 during fiscal years ended October 31, 2024 and 2023, respectively. |
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.
In response to Item 402(x)(1) of Regulation S-K, the Company does not currently grant new awards of stock options, stock appreciation rights, or similar option-like instruments within four business days before or one business day after the release of a Form 10-Q, 10-K, or 8-K that discloses material nonpublic information (MNPI). Accordingly, the Company has no specific policy or practice on the timing of awards of such options in relation to the disclosure of MNPI by the Company. In the event the Company determines to grant new awards of such options, the Board will evaluate the appropriate steps to take in relation to the foregoing.
Executive Employment Agreement
The Company is party to an executive employment agreement with Ian T. Bothwell, our Interim Chief Executive Officer and Chief Financial Officer.
Mr. Bothwell’s executive employment agreement, as amended to date, provides for a term expiring on December 31, 2025, an annual base salary currently fixed at $250,000. Mr. Bothwell’s executive employment agreement contains customary confidentiality and non-competition covenants. and specified expense reimbursement allowances.
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Outstanding Equity Awards at Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
| Name (a) |
Number of Securities Underlying Unexercised Options Exercisable (b) |
Number of Securities Underlying Unexercised Options Unexercisable (c) |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (d) |
Option Exercise Price (e) |
Option Expiration Date (f) |
Stock Awards Number of Shares or Units of Stock That Have Not Vested (g) |
Market Value of Shares or Units of Stock That Have Not Vested (h) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (i) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units of Other Rights That Have Not Vested (j) |
|||||||||||||||||||||||||
| Ian T. Bothwell | 37,500 | - | - | $ | 5.60 | 02/26/30 | - | - | - | $ | - | |||||||||||||||||||||||
| 150,000 | - | - | $ | 4.00 | 07/13/32 | - | - | - | $ | - | ||||||||||||||||||||||||
| 24,306 | - | 100,694 | $ | 2.35 | 07/10/34 | - | - | - | $ | - | ||||||||||||||||||||||||
| Dr. George Shapiro | 15,750 | - | - | $ | 4.00 | 07/13/32 | - | - | - | $ | - | |||||||||||||||||||||||
| 24,306 | - | 100,694 | $ | 2.35 | 07/10/34 | - | - | - | $ | - | ||||||||||||||||||||||||
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 approved an increase in the number of shares of the Company’s common stock reserved for issuance under the Company’s 2021 Plan from 1,250,000 shares to 2,500,000 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.
As of October 31, 2024, a total of 1,386,288 Awards (net of 1,211,500 Awards redeposited for future issuance) that have been awarded under the 2021 Plan remain issued and outstanding.
Compensation of Directors Table
The following table summarizes all compensation paid to our non-executive directors for the fiscal year ended October 31, 2024.
| Name | Fees Earned Or Paid In Cash ($) |
Option/Equity Awards (#) |
Non-Equity Plan Compensation ($) |
Non-Qualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
||||||||||||||||||
| Chuck Bretz | - | 55,000 | - | - | - | - | ||||||||||||||||||
| Jerry Glauser | - | 380,000 | - | - | - | - | ||||||||||||||||||
| Leathem Stearn | - | 255,000 | - | - | - | - | ||||||||||||||||||
| Gurvinder Pal Singh | - | 5,000 | - | - | - | - | ||||||||||||||||||
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Narrative Disclosure to the Director Compensation Table
Each of our non-executive directors will be party to a Director’s Service Agreement. Pursuant to that agreement, non-employee directors will be compensated for their services by the annual issuance of warrants to acquire up to 5,000 shares of the Company’s common stock at an exercise price equal to fair market value of the common stock as of the date of grant (the “Director Warrants”). The Director Warrants shall be exercisable for a period of ten (10) years from the date of grant and shall vest in equal monthly installments of 416.67 shares, subject to continued service by the director as a member of the board of directors. The agreement will also provide for indemnification of directors to the fullest extent permitted by Nevada law.
It is contemplated that non-executive directors will be granted a comparable amount of Director Warrants or stock options for each year of service. The Company has not yet authorized or issued Director Warrants or stock options for the third year of service of its non-executive directors, which commenced on September 23, 2024.
Non-employee directors are also reimbursed for out-of-pocket costs incurred in connection with attending meetings.
Other Issuances
On April 1, 2024, pursuant to the 2021 Plan, the Board awarded 125,000 and 62,500 shares of common stock to Jerry Glauser and Leatham Stern or their nominees, respectively (“Stock Grants”). The Stock Grants vest in full as of the date of the grant.
On July 11, 2024, pursuant to the 2021 Plan, the Board granted options to purchase 125,000 shares, 125,000 shares and 50,000 shares of common stock (“Options”) to Jerry Glauser, Leatham Stern and Chuck Bretz or their nominees, respectively. The Options vest in equal monthly installments over a period of eighteen (18) months from the date of grant, subject to continued service to the Company. Once vested, the Options are exercisable for a period of ten (10) years from the date of grant at an exercise price of $2.35 per share (subject to adjustment for stock splits, stock dividends and similar recapitalization events) and are subject to the other terms of the 2021 Plan.
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.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of January 28, 2025, 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, 3321 College Ave, Suite 246, Davie, Florida 33314:
| Officers and Directors | Title | Shares | % of Class(1) |
% of Voting Power(2) |
||||||||||
| Ian Bothwell(3) | Interim Chief Executive Officer and Chief Financial Officer and Director | 986,622 | 14.97 | % | 32.83 | % | ||||||||
| Dr. George Shapiro(4) | Chief Medical Officer and Director | 477,799 | 7.44 | % | 3.65 | % | ||||||||
| Chuck Bretz(5) | Director – Chairman of the Board | 33,611 | * | * | ||||||||||
| Jerry Glauser(6) | Director | 327,362 | 5.10 | % | 2.50 | % | ||||||||
| Leathem Stearn(7) | Director | 197,362 | 3.08 | % | 1.51 | % | ||||||||
| Gurvinder Pal Singh(8) | Director | 10,000 | * | * | ||||||||||
| All officers and directors as a group (6 persons) | 2,032,755 | 29.68 | % | 40.05 | % | |||||||||
| Other 5% or Greater Stockholders | ||||||||||||||
| Greyt Ventures LLC(9) | 1,165,278 | 16.05 | % | 33.36 | % | |||||||||
| Dr. Bhupendra Kumar Modi(10) | 500,000 | 7.88 | % | 3.86 | % | |||||||||
| Gary Kompothecras(11) | 333,333 | 5.19 | % | 2.54 | % | |||||||||
| * | Less than 1%. |
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| (1) | Based on 6,344,817 shares of vested common stock outstanding as of January 28, 2025. |
| (2) | Based on 6,344,817 shares of vested common stock and 100 Series C Preferred Shares outstanding as of January 28, 2025. The shares of common stock and the Series C Preferred Shares vote together as a single class on all matters presented to stockholders, except as required by Nevada law. Each Series C Preferred Share entitles the holder to 51.0% of the combined voting power of the Company’s capital stock and an aggregate of 51.0% for all 100 Series C Preferred Shares outstanding, notwithstanding the number of shares of common stock outstanding. |
| (3) | Includes vested warrants to purchase 37,500 shares of common stock of the Company, vested options to purchase 195,139 shares of common stock of the Company under the Plan, options to purchase 13,889 shares of common stock of the Company under the Plan that vest within sixty (60) days of January 28, 2025 and 50 Series C Preferred Shares. |
| (4) | Includes vested options to purchase 60,889 shares of common stock of the Company under the Plan and options to purchase 13,889 shares of common stock of the Company under the Plan that vest within sixty (60) days of January 28, 2025. |
| (5) | Includes vested options to purchase 28,056 shares of common stock of the Company under the Plan and options to purchase 13,889 shares of common stock of the Company under the Plan that vest within sixty (60) days of January 28, 2025. |
| (6) | Includes vested options to purchase 55,139 shares of common stock of the Company under the Plan and options to purchase 13,889 shares of common stock of the Company under the Plan that vest within sixty (60) days of January 28, 2025. |
| (7) | Includes 125,000 shares of common stock held of record by Stearn Enterprises LLC, of which Mr. Stearn is the sole beneficial owner. Includes vested options to purchase 55,139 shares of common stock of the Company under the Plan and options to purchase 13,889 shares of common stock of the Company under the Plan that vest within sixty (60) days of January 28, 2025. |
| (8) | Includes vested options to purchase 10,000 shares of common stock of the Company under the Plan. |
| (9) | 20533 Biscayne Blvd., Suite 648, Aventura, FL 33180. Represents 250,000 shares of common stock, vested warrants to purchase 876,389 shares of common stock, warrants to purchase 38,889 shares of common stock of the Company that vest within sixty (60) days of January 28, 2025 and 50 Series C Preferred Shares held of record by Greyt Ventures LLC, of which Ms. Wendy Grey is the sole member and manager. |
| (10) | 6 Marina Boulevard # 63-18, Singapore 018985. Represents 250,000 shares of common stock held of record by Beyond 100 FZE and 250,000 shares of common stock held of record by Smart Co. Holding Pte. Ltd., each of which Dr. Modi is the sole beneficial owner. |
| (11) | 6910 Point of Rocks Rd., Sarasota, FL 34242. Represents 250,000 shares of common stock and warrants to purchase 83,333 shares of common stock held of record by Gary Kompothecras and Elizabeth Kompothecras Joint Tenants By Entireties. |
The Company has not received any other 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. Beneficial ownership is determined in accordance with SEC rules and includes only vested securities and those securities which a person or entity may have the right to acquire and/or vest in the next 60 days, but excludes shares of common stock underlying options or other convertible securities held by any other person. Except as noted otherwise, the amounts reflected above are based upon information provided to the Company and filings with the SEC.
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Securities Authorized for Issuance under Equity Compensation Plans
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| Board Stock Compensation Plan(1) | -0- | - | 22,570 | |||||||||
| 2021 Equity Incentive Plan | 772,538 | $ | 2.70 | 1,113,712 | ||||||||
| (1) | The Company is no longer using the Board Stock Compensation Plan to compensate its non-executive directors. |
Item 13. Certain Relationships and Related Transactions and Director Independence.
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.
Reimbursements
In connection with Mr. Bothwell’s executive employment agreement, the Company agreed to reimburse Rover Advanced Technologies, LLC (“Rover”), a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative fees, etc.) totaling $0 and $41,648 for the years ended October 31, 2024 and 2023, respectively.
Advances by Executive Officer
Manuel Iglesias, the Company’s former Chief Executive Officer, and/or his affiliates (“Iglesias”) previously advanced funds to the Company to pay for certain expenses of the Company. At October 31, 2023, advances payable to Iglesias were $221,000. The advances were non-interest bearing and there were no formal arrangements regarding the repayment of the advances. During the year ended October 31, 2024, the Company had determined that the statute of limitations had run for the ability of Iglesias to enforce a claim to collect the advances. As a result, the Company wrote-off the full balance of the advances payable to Iglesias of $221,000. The Company recorded the write-off as other income during the year ended October 31, 2024.
Interests in Affiliated Entities
During the year ended October 31, 2023, the Company invested $100,000 in cash (representing a 10% equity interest at the time of the investment) in the non-marketable equity securities of Exotropin LLC, a privately held skin-care formulator (“Exotropin”). Both Greyt, a principal shareholder of the Company and Skycrest, a former principal shareholder of the Company, each owned a 20% interest in Exotropin. In addition, Mr. Robert Smoley, a consultant and advisor to the Company was also the Chief Operating Officer of Exotropin (until November 2024). In addition, the Company’s Chief Medical Officer was granted an option to acquire up to 200,000 membership interests in Exotropin, of which 100,000 vested immediately and the remaining $100,000 will vest based on future sales of Exotropin attributed to the Chief Medical Officer. The option price is $20,000 for the 200,000 membership interests.
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During the year ended October 31, 2024, pursuant to a capital call notice received from Exotropin, the Company invested an additional $45,000 in cash (representing its 8.96% equity interest at the time of the capital call).
During November 2024, the Company received a capital call notice from Exotropin, in which the Company’s pro-rata share was $126,000 (“November Capital Call”). The Company has yet committed to participating in the November Capital Call. If the Company does not elect to participate, its interest in Exotropin would be reduced to approximately 5.6% based on all other members fulling participating in the November Capital Call.
The Company and Exotropin also have entered into arrangements and intend to continue to collaborate on future opportunities on a case-by-case basis in connection with the development, sales and/or distribution of products.
Sales to Related Parties
For the year ended October 31, 2024 and 2023, the Company sold a total of approximately $199,000 and $181,000 of product to a management services organization (“MSO”) that provides administrative services and contracts for medical supplies for several medical practices, of which Dr. George Shapiro, the Company’s Chief Medical Officer and a member of the board of directors has an indirect economic interest in the parent company that owns the MSO.
Transfer Of Series C Preferred Stock
In December 2024, Skycrest requested that it be allowed to transfer the 50 shares of Series C Preferred Shares of the Company it holds to Ian T. Bothwell, the Company’s Interim Chief Executive officer and Chief Financial officer (“Transfer”). In December 2024, the Board of Directors of the Company approved the Transfer and the Transfer was completed.
Item 14. Principal Accounting Fees and Services.
Weinberg & Company P.A. (“Weinberg”) as served as the Company’s independent registered public accounting firm for the fiscal years ended October 31, 2024 and October 31, 2023.
Audit Fees
The aggregate fees billed the Company for the fiscal years ended October 31, 2024 and October 31, 2023 for professional services rendered by Weinberg for their audit of our annual financial statements and review of financial statements included in our quarterly reports or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were:
| Fiscal Year Ended October 31, 2024: | $ | 150,000 | ||
| Fiscal Year Ended October 31, 2023: | $ | 150,000 |
Audit-Related Fees
The aggregate fees billed the Company for the fiscal years ended October 31, 2024 and October 31, 2023 for assurance and related services by Weinberg that are reasonably related to the performance of the audit or review of the registrant’s financial statements and are not reported under Item 9(e)(1) of Schedule 14A.
| Fiscal Year Ended October 31, 2024: | $ | 10,300 | ||
| Fiscal Year Ended October 31, 2023: | $ | 25,000 |
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Tax Fees
The aggregate fees billed the Company for the fiscal years ended October 31, 2024 and October 31, 2023 for professional services rendered by Weinberg for tax compliance, tax advice, and tax planning.
| Fiscal Year Ended October 31, 2024: | $ | 25,000 | ||
| Fiscal Year Ended October 31, 2023: | $ | 25,213 |
All Other Fees
The aggregate fees billed the Company for the fiscal years ended October 31, 2024 and October 31, 2023 for products and services provided by Weinberg, other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A.
| Fiscal Year Ended October 31, 2024: | $ | - | ||
| Fiscal Year Ended October 31, 2023: | $ | - |
Pre-Approval Policies and Procedures
We have not used Weinberg for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We did not engage Weinberg to provide compliance outsourcing services.
Our Board pre-approves all services provided by our independent registered public accounting firms. All of the above services and fees were reviewed and approved by the Board either before or after the respective services were rendered. The Board has considered the nature and amount of fees billed by Weinberg and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independence.
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PART IV
Item 15. Exhibits and Financial Statement Schedules.
The following documents are filed as part of this Report:
| (1) | Financial Statements. The following consolidated financial statements and the report of our independent registered public accounting firm, are filed as “Item 8. Financial Statements and Supplementary Data” of this Report: |
| (2) | Financial Statement Schedules. |
Financial Statement Schedules are omitted because the information required is not applicable or the required information is shown in the financial statements or notes thereto.
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| (3) | Exhibits. |
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| 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 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 |
| + | 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 filing 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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Item 16. Form 10-K Summary.
None.
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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 | ||
| Interim Chief Executive Officer, Chief Financial Officer | ||
|
(Principal Executive, Financial and Accounting Officer) January 29, 2025 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
| Signature | Title | Date | ||
| /s/ Ian T. Bothwell |
Interim Chief Executive Officer, Chief Financial Officer, Director |
January 29, 2025 | ||
| Ian T. Bothwell | (Principal Executive, Financial and Accounting Officer) | |||
| /s/ George Shapiro, M.D. |
Chief Medical Officer, Director |
January 29, 2025 | ||
| George Shapiro, M.D. | ||||
| /s/ Chuck Bretz | Director and Chairman of the Board | January 29, 2025 | ||
| Chuck Bretz | ||||
| /s/ Gurvinder Pal Singh | Director | January 29, 2025 | ||
| Gurvinder Pal Singh | ||||
| /s/ S. Jerry Glauser | Director | January 29, 2025 | ||
| S. Jerry Glauser | ||||
| /s/ Leathem Stearn | Director | January 29, 2025 | ||
| Leathem Stearn |
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