0001683168-20-003466.txt : 20201016 0001683168-20-003466.hdr.sgml : 20201016 20201016081126 ACCESSION NUMBER: 0001683168-20-003466 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 84 CONFORMED PERIOD OF REPORT: 20191031 FILED AS OF DATE: 20201016 DATE AS OF CHANGE: 20201016 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Organicell Regenerative Medicine, Inc. CENTRAL INDEX KEY: 0001557376 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS TRANSPORTATION EQUIPMENT [3790] IRS NUMBER: 474180540 FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-55008 FILM NUMBER: 201242826 BUSINESS ADDRESS: STREET 1: 4045 SHERIDAN AVENUE STREET 2: SUITE 239 CITY: MIAMI STATE: FL ZIP: 33140 BUSINESS PHONE: 888-963-7881 MAIL ADDRESS: STREET 1: 4045 SHERIDAN AVENUE STREET 2: SUITE 239 CITY: MIAMI STATE: FL ZIP: 33140 FORMER COMPANY: FORMER CONFORMED NAME: Biotech Products Services & Research, Inc. DATE OF NAME CHANGE: 20150917 FORMER COMPANY: FORMER CONFORMED NAME: BESPOKE TRICYCLES INC DATE OF NAME CHANGE: 20120831 10-K 1 organicell_10k-103119.htm FORM 10-K

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

[X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended: October 31, 2019

 

[_]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from: _____________________

 

Commission file number: 000-55008

 

ORGANICELL REGENERATIVE MEDICINE, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   47-4180540
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

4045 Sheridan Ave, Suite 239

Miami, FL 33140

(Address of principal executive offices)

 

(888) 963-7881

(Issuer’s telephone number)

 

Securities registered under Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
None N/A N/A

 

Securities registered under Section 12(g) of the Act:

 

Common Stock, $0.001 par value

(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

  Large accelerated filer   Accelerated filer
  Non-accelerated filer   Smaller reporting company
        Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $4,154,116 based on the closing price of $0.052 per share of common stock and 79,886,847 shares of common stock of the Registrant held by non-affiliates on April 30, 2019, the last business day of the Registrant’s mostly recently completed second fiscal quarter.

 

As of September 30, 2020, there were 875,194,450 shares of common stock, $0.001 par value per share, issued and outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE: None

 

 

 

   

 

 

TABLE OF CONTENTS

 

PART I 1
FORWARD LOOKING STATEMENTS 1
ITEM 1. BUSINESS. 2
ITEM 1A. RISK FACTORS. 21
ITEM 1B. UNRESOLVED STAFF COMMENTS. 41
ITEM 2. PROPERTIES. 41
ITEM 3. LEGAL PROCEEDINGS. 41
ITEM 4. MINE SAFETY DISCLOSURES. 41
PART II 42
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 42
ITEM 6. SELECTED FINANCIAL DATA. 47
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 47
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 53
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 53
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 99
ITEM 9A. CONTROLS AND PROCEDURES. 99
ITEM 9B. OTHER INFORMATION. 101
PART III 102
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 102
ITEM 11. EXECUTIVE COMPENSATION 106
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. 113
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. 118
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. 120
PART IV 122
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 122
SIGNATURES 126

 

 

 

 

 

 

 i 

 

 

PART I

 

FORWARD LOOKING STATEMENTS

 

This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking statements and information within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. This information includes assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of our products by the market, and management’s plans and objectives. In addition, certain statements included in this and our future filings with the Securities and Exchange Commission (“SEC”), in press releases, and in oral and written statements made by us or with our approval, which are not statements of historical fact, are forward-looking statements. Words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “expectation,” “anticipate,” “estimate,” “intend,” “seeks,” “plan,” “project,” “continue,” “predict,” “will,” “should,” and other words or expressions of similar meaning are intended by us to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are found at various places throughout this report and in the documents incorporated herein by reference. These statements are based on our current expectations about future events or results and information that is currently available to us, involve assumptions, risks, and uncertainties, and speak only as of the date on which such statements are made.

 

Forward-looking statements include, but are not limited to, the following:

 

nOur products’ advantages;
nExpectations regarding our future growth;
nExpectations regarding available cash resources to fund current operations and future growth;
nOur ability to comply with regulations governing the production and sale of our products;
nOur ability to receive regulatory approvals;
nMarket opportunities for our services and products;
nOur ability to compete effectively;
nOur ability to respond to market forces; and
nOur ability to protect our intellectual property.

 

Actual results and outcomes may differ materially from those expressed or implied in these forward-looking statements. Factors that may cause such a difference include, but are not limited to, those discussed in Part I, Item 1A, “Risk Factors,” below. Except as expressly required by the federal securities laws, we undertake no obligation to update any such factors, or to publicly announce the results of, or changes to any of the forward-looking statements contained herein to reflect future events, developments, changed circumstances, or for any other reason.

 

Unless otherwise noted, as used herein, the terms “Organicell Regenerative Medicine”, “Organicell”, the “Company”, “we”, “our” and “us” refer to Organicell Regenerative Medicine, Inc., a Nevada corporation formerly known as Biotech Product Services and Research, Inc., and its subsidiaries consolidated as a combined entity.

 

 

 

 1 

 

 

ITEM 1. BUSINESS.

 

Overview

 

We are engaged in the health care industry, principally focusing on supplying products and services related to the growing field of regenerative anti-aging medicine (“RAAM”). Our focus is the processing, distribution and supply of biologically processed cellular and tissue-based products developed from internally-based research and development activities and/or from other state-of-the-art RAAM-related products developed by third parties under exclusive and/or favorable supply arrangements and to provide other related services used in the regenerative medicine field (“RAAM Products”). Organicell distributes and supplies the RAAM Products and market RAAM-related services to the health care industry through a doctors and clinics (collectively, the “Providers”).

 

From November 2016 to February 2018, we operated our own laboratory facilities to process and distribute RAAM Products developed through trade secrets acquired in connection with the employment of newly hired executives during November 2016 and March 2017. During this time, we also implemented an in-house sales force and made arrangements with newly identified independent distributors to sell our RAAM Products.

 

In February 2018, we sold or transferred our laboratory facilities and all related assets (“Sale”), including intellectual property rights, to Vera Acquisition LLC, a Utah limited liability company (“Vera”). From the date of the Sale until the Company’s new laboratory facility became operational, as described below, the Company relied on short-term supply agreements with third party manufacturers to provide it with the products it sold and distributed to its customers.

 

Commencing in February 2019, the Company began taking steps to once again operate a placental tissue bank processing laboratory in Miami, Florida for the purpose of performing research and development and the manufacturing and processing of anti-aging and cellular therapy derived products. This new laboratory facility became operational in May 2019 and thereupon, the Company began producing products that are now being sold and distributed to its customers.

 

The Company has actively taken steps to meet compliance with current and anticipated United States Food and Drug Administration (“FDA”) regulations expected to be enforced beginning in May 2021 requiring that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). To date, the Company has obtained approximately 14 Investigation New Drug (“IND”), emergency IND (“eIND”) and/or non-emergency IND (“non-eIND”) approvals from the FDA, including applicable Institutional Review Board (“IRB”) approvals which authorized the Company to commence clinical trials or treatments in connection with the use of the Company’s products and related treatment protocols. The Company is aggressively pursuing efforts to commence and complete the 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.

 

COVID-19 Impact To Economy And Business Environment

 

The current outbreak of the novel coronavirus (“COVID-19”) and resulting impact to the United States economic environments began to take hold during March 2020. The adverse public health developments and economic effects of the COVID-19 outbreak in the United States, have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities, particularly in regards to potential health benefits of the Company’s products in addressing various health concerns associated with COVID-19 and (b) is aggressively seeking to raise additional debt and/or equity financing to support working capital requirements until sale for its products to providers resumes to levels pre COVID-19.

 

There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and to our business.

 

 

 

 2 

 

 

Developments During Fiscal 2018 and 2019:

 

After the completion of the Sale of our laboratory facilities and all related assets, including intellectual property rights, to Vera in February 2018, the Company remained in the business of selling and distributing regenerative biologic therapies based on amnion placental tissue derived products to doctors and hospitals but was required to depend on third party supply agreements, rather than from products manufactured internally by ANU, for the supply of these advanced biologically processed cellular and tissue based products.

 

Since the Sale was completed, including the departure of several key executives in connection therewith, the Company had difficulty in generating sufficient revenues and, as a result, continued to have a lack of working capital to meet current operating costs, hiring of additional sales personnel, pay past due accounts payable obligations to its vendors, pay past due and/or current salaries to its remaining management or fund potential growth opportunities.

 

On April 23, 2018, the Company and Management and Business Associates, LLC, a Florida limited liability company (“MBA”), executed a Plan and Agreement of Reorganization (“Reorganization”) whereby the Company agreed to issue to MBA an aggregate of 222,425,073 shares of its common stock of the Company, representing at the time 51% of the outstanding shares of common stock of the Company on fully-diluted basis, for $0.001 per share (or an aggregate of $222,425), in consideration for Mr. Manuel Iglesias’ agreement to serve as the Company’s Chief Executive Officer and a member of the Board of the Company. Manuel E. Iglesias is the sole Manager of MBA and thus may be deemed to control MBA. The Reorganization was effective as of April 13, 2018 (“Effective Date”).

 

On May 21, 2018, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the Company’s name from Biotech Products Services and Research, Inc. to Organicell Regenerative Medicine, Inc., effective June 20, 2018 in order to express more clearly the Company’s focus in the stem cell business (the “Name Change”). However, due to the Company’s failing to have the required Exchange Act reports filed with the SEC at the time of the filing, FINRA did not announce or effectuate the Name Change in the marketplace. If the Company intends to proceed with the Name Change, the Company will be required to submit a new Issuer Company-Related Notification Form for approval upon the Company becoming current in its Exchange Act filings.

 

On June 14, 2018, the Company filed a Certificate of Withdrawal with the Secretary of State of Nevada thereby withdrawing and terminating all previously issued designations of the Company’s Series A Preferred Stock and Series B Preferred Stock. On June 1, 2018, the Company submitted an Issuer Company-Related Notification Form (“June 1 Notification Form”) with the Financial Industry Regulatory Agency (“FINRA”) pursuant to Rule 10b-17 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding the Name Change and Reverse Split.

 

During February 2019, the Company began arranging to once again operate a new laboratory facility in Miami, Florida for the purpose of performing research and development, production and manufacturing of anti-aging and cellular therapy products. This new laboratory facility became operational in May 2019 and during the same period, the Company began producing and distributing the products that are being sold and distributed to its customers. The Company believes that this strategy will provide the Company with competitive advantages and greater assurances that it can continue to comply with expected future FDA regulations.

 

On September 24, 2019, due to the Company’s limited success since the Reorganization in stabilizing revenues and the growing urgency for the Company to remain compliant and meet the anticipated new and more stringent regulatory deadlines to be imposed by the FDA in connection with the Company’s products and operations that were previously announced to go into effect in May 2021, the Board determined that it would require the services of a full-time CEO with the requisite expertise and experience to lead the Company as it (a) moves forward with its strategy to expand its research and development efforts and submit IND applications for FDA approval to commence clinical trials for its products to assure that the Company, its operations and its products remain compliant with FDA regulations and (b) implements additional strategies to minimize the potential impact in the future on sales of its products as a result of future changes in FDA regulations and/or restrictions associated with clinical trials that are utilizing the products that are currently being sold by the Company. Accordingly, the Board voted to remove Manuel Iglesias from his position as CEO of the Company. The Board has since appointed Albert Mitrani to serve as the Company’s CEO.

 

 

 

 3 

 

 

In connection with the Company’s ongoing research and development efforts and the Company’s efforts to meet compliance with current and anticipated United States Food and Drug Administration (“FDA”) regulations expected to be enforced beginning in May 2021 requiring that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”), the Company has obtained certain Investigation New Drug (“IND”), emergency IND (“eIND”) and/or non-emergency IND (“non-eIND”) approvals from the FDA, including applicable Institutional Review Board (“IRB”) approvals which authorized the Company to commence clinical trials or treatments in connection with the use of the Company’s products and related treatment protocols. The status of the Company’s current IND’s, eIND’s, non-eIND’s submitted and approved for past or planned treatments and/or clinical trials are described below:

 

Company’s FDA approved phase I/II IND, eIND’s and non-eIND’s:

 

  1. IND # 19881 approved on 04/30/2020 - A Phase I/II Randomized, Double Blinded, Placebo Trial to Evaluate the Safety and Potential Efficacy of Intravenous Infusion of OrganicellTM Flow for the Treatment of Moderate to Severe Acute Respiratory Syndrome (SARS) Related to COVID-19 Infection vs Placebo. IRB was approved by the Institute of Regenerative and Cellular Medicine (“IRCM”) on 06/04/2020 (approval number: IRCM-2020-254). Clinical trial is currently in process.
  2. eIND#22370 approved on 05/11/2020 - Treatment for Acute hypoxic respiratory failure with ARDS secondary to COVID-19 infection for single patient.
  3. eIND#22371 approved on 05/11/2020 - Treatment for Acute hypoxic respiratory secondary to bilateral pneumonia secondary to COVID-19 with ARDS for single patient.
  4. eIND#22897 approved on 05/29/2020 – Treatment for Acute respiratory failure with hypoxia, secondary to COVID-19 with ARDS for single patient.
  5. eIND#25426 approved on 07/24/2020 - Treatment of COVID-19 positive for single patient.
  6. eIND#25888 approved on 8/01/2020 - Treatment of post COVID-19 complication for single patient
  7. eIND#26560 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient.
  8. eIND#26561 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient.
  9. eIND#26676 approved on 8/20/2020 - Treatment of respiratory failure due to COVID-19 infection for single patient.
  10. eIND#26700 approved on 8/21/2020 - Treatment for ARDS associated with COVID-19 for single patient.
  11. eIND#26776 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient.
  12. eIND#26777 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient.
  13. eIND#26864 approved on 9/05/2020 - Treatment of COVID-19 positive for single patient.
  14. Non-eIND#26821 approved on 9/22/2020 - Treatment of post COVID-19 complications for single patient.
  15. Expanded Access to ZofinTM (OrganicellTM Flow) approved on 09/24/2020 - Treatment of Patients with COVID-19 Outpatient and Inpatient Population. IRB pending.
  16. A Phase II Multicenter, Randomized, Double Blinded, Placebo Trial to Evaluate the Efficacy and Safety of Intramuscular Injections of ZofinTM Comparing with Intravenous Infusions for the Treatment of Post COVID-19 Complications and Severe Sequelae vs Placebo. IND submitted on 09/28/2020. Pending IND and IRB approval.

 

The Company is aggressively pursuing efforts to commence and complete the above described 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 the approval from the FDA.

 

 

 

 4 

 

 

Industry Overview

 

Health Care Industry Overview:

 

The traditional health care industry in the United States is predominantly controlled by the rules of the Centers for Medicare & Medicaid Services (“CMS”) (wwws.cms.gov) and commercial health insurance companies. This control limits patients’ access to alternative medical therapies, that recent medical literature demonstrates highly beneficial outcomes in the field of anti-aging and regenerative medicine. Traditional allopathic medicine of health care provided to patients in the United States relies on government and commercial health insurance for payment of the costs associated with their day-to-day health care. Because of this close relationship, physicians must follow government and commercial insurers guidelines in order to stay in the plans and receive reimbursement. Physicians are restricted in their ability to expand the nature of the treatments provided beyond industry practices because of legal ramifications and/or lack of knowledge concerning protocol of cutting-edge anti-aging and regenerative medical treatments.

 

Despite the above, anecdotal and medical literature has shown an increased demand by patients for access to alternative medical therapies and treatments. Patients are seeking these alternatives to traditional allopathic medicine, due to the adverse events associated with traditional pharmaceuticals, risks associated with surgeries, and that traditional medicine and insurers are not addressing wellness or preventive medicine sufficiently. To address a wide variety of aging issues, safe alternatives to pathologies, including access to other treatments and pharmaceuticals and to achieve beneficial “elective” health treatments, we intend utilize the latest regenerative technologies. These alternative pathways to date have had significant restrictions because of regulations imposed by the FDA, other regulatory bodies and insurers due to lack of randomized controlled studies, yet many published case series demonstrate safety and efficacy. Patients and consumers are looking to safe alternatives compared more traditional medicine, including the following:

 

·Cellular/ Tissue based therapies
oAdipose-derived stromal vascular fraction
oBone marrow-derived stem cell therapies
oPeripheral blood derived therapies (i.e., platelet rich plasma);
oPlacental-based therapies
ØTechnology documented since 1910 for safety and efficacy, tissue processed from human amniotic membrane and fluid, donated by consenting mothers delivering a full-term healthy baby by scheduled Caesarean section, avoiding any ethical or moral concerns, proven safety record, case series documented success in a multitude of systemic and local pathologies
oGrowth factor, cytokine therapies
·Anti-Aging
oSupplements
ØVitamin
ØMineral
ØMedical foods
oWeight control
oTopical lotions and creams for the largest organ the skin

 

·Nontraditional medical alternatives
oAcupuncture
oNaturopathic
oChiropractic

 

·Self-directed
oMeditation
oYoga
oTai Chi

 

 

 

 5 

 

 

Currently, patients who desire alternative treatments rely on the following options:

 

nMedical Tourism
oIn United States
oOff-shore United States
ØCentral and South America
ØCaribbean
ØEurope

 

nConsulting directly with physicians knowledgeable in providing regenerative medical services
nUnlicensed life coaches

 

Business Strategy

 

Current Business Strategy:

 

Our current business strategy is to achieve the following goals and milestones:

 

Develop and expand operations to provide for growth of our revenues for the sales and distribution of RAAM related products;

oIncrease revenues for RAAM related products;
·Hiring of additional in-house sales personnel
·Selectively engaging independent distributors
·Marketing private label products to distributors
·Increasing market recognition for our Organicell brand from:
Ømarketing and participating in industry trade shows
oExpand our sales market outside of the United States
oIncrease the number of RAAM product offerings for various modalities using proprietary processing, formulas and administration techniques
oExtending our referral network of Providers based on:
·Superior product offerings
·Demonstrating a realistic and executable regulatory roadmap to assure Company and product compliance with current and anticipated FDA regulations
·Developing and providing educational support to Providers regarding our products and regulatory concerns

 

 

 

 6 

 

 

Execute on current strategy to assure the Company’s ability to maintain compliance with existing and the anticipated changes to FDA regulations regarding the use and sale of our current products published in November 2017 and expected to take effect by May 2021, as well as readiness to respond to ongoing future changes to those regulations:

 

oPerform clinical based studies associated with the use of our products (independently and/or in conjunction with Providers and/or Manufacturers) and seek accelerated approval for each product application in accordance with the 21st Century Cures Act (“Cures Act”) and/or through the granting of an FDA-approved biologics application (BLA) to allow products to be lawfully marketed and/or sold in the United States in accordance with newly established FDA guidelines outlined in November 2017 expected to take effect by May 2021; and
oContinue to build out our lab facilities to meet expected production and research requirements; and
oEngage high profile and industry recognized medical advisors and scientists to help identify new and emerging technologies concerning biologics and to assure our Products remain cutting edge and competitive to products offered by other companies; and
oIdentify alternative products and services to (a) offset any potential decline in revenues resulting from FDA limitations on the sales and distribution of our existing products currently being sold and distributed as a result of our commencement of clinical trials using such products and/or future expected FDA restrictions on RAAM products and (b) provide our Providers with alternative product and treatment options to remain competitive with the market and our Providers to meet the needs and demands of their patients; and
oExpand our sales market and network of Providers outside of the United States
oIdentify sources of exclusive and superior suppliers of RAAM products; and
oIdentify strategic relationships to acquire existing Providers and/or suppliers or owners of IP associated with additional desired RAAM products; and
oEngage new researchers that bring additional expertise and capacity to develop ongoing research and development and growth opportunities for additional RAAM-related products.

 

Secure additional working capital;

oFund shortfalls in working capital to fund ongoing expenses and required payments to vendors and creditors until revenues are stabilized; and
oFund ongoing costs to pursue clinical trials; and
oFund capital expenditures associated with maintaining compliance of our facilities and products; and
oFund our strategy to develop and expand our revenues for the sales and distribution of RAAM related products described above; and
oHire additional personnel to support our growth and planned expansion; and
oEnhance our CRM, e-commerce and ERP capabilities to facilitate marketing, sales and distribution functionality and accounting for our operations.

 

Enhance Company Corporate Governance;

oRevisit previously announced plans to complete a reverse split, and a reduction in the authorized shares outstanding. The Company believes a reverse split will bring value to the issued and outstanding shares of the Company by limiting dilution of operating results by an excessive number of shares overhanging the market;
oAppoint additional independent members to the Board of Directors that will provide overall industry expertise and fulfill audit committee and independent director requirements to meet listing requirements for the national stock exchanges; and
oContinue to develop and expand the Company’s internal control policies

 

Potential Effects of COVID-19 Pandemic

 

The current outbreak of the novel coronavirus (“COVID-19”) and resulting impact to the United States economic environments began to take hold during March 2020. The adverse public health developments and economic effects of the COVID-19 outbreak in the United States, have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities, particularly in regards to potential health benefits of the Company’s products in addressing various health concerns associated with COVID-19 and (b) is aggressively seeking to raise additional debt and/or equity financing to support working capital requirements until sale for its products to providers resumes to levels pre COVID-19.

 

 

 

 7 

 

 

There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies.

 

Market Overview

 

The population of the United States and the developed world is getting older and living longer. According to a United States Consensus Bureau’s report, “An Aging World: 2015,” America’s 65-and-over population is projected to nearly double over the next three decades, ballooning from 48 million to 88 million by 2050 and that worldwide, the 65-and-over population will more than double to 1.6 billion by 2050. According to the report, in 2015, 14.9% of the U.S. population was 65 or over and the United States was the 48th oldest country out of 228 countries and areas in the world in 2015. Baby boomers began reaching age 65 in 2011 and by 2050 the older share of the U.S. population will increase to 22.1%.

 

The world average age of death has increased by 35 years since 1970, with declines in death rates in all age groups, including those aged 60 and older (Source: Institute for Health Metrics and Evaluation, 2013; Mathers et al., 2015). The leading causes of death are shifting, in part because of increasing longevity. Between 1990 and 2013, the number of deaths from non-communicable diseases (“NCDs”) has increased by 42%; and the largest increases in the proportion of global deaths took place among the population aged 80 and over. An estimated 42.8% of deaths worldwide occur in the population aged 70 and over, with 22.9% in the population aged 80 and over.

 

Also, according to the Center for Disease Control (“CDC”), “Medical Tourism” (a term commonly used to describe people traveling outside their home country for medical treatment) is a worldwide, multibillion-dollar phenomenon that is expected to grow substantially in the next 5–10 years. Studies have estimated that hundreds of thousands of medical tourists travel from the United States annually and that patients pursue medical care abroad for a variety of reasons, including a desire to receive a procedure or therapy not available in their country of residence. Common categories of procedures that US travelers pursue during medical tourism trips include orthopedic surgery, cosmetic surgery, cardiology (cardiac surgery), oncologic care, and dentistry. Common destinations include Thailand, Mexico, Singapore, India, Malaysia, Cuba, Brazil, Argentina, and Costa Rica.

 

If we are able to implement our intended business plan, we believe that we will be well situated to address this increased consumer demand for alternative medical treatments.

 

Marketing and Sales

 

Currently, we market our RAAM products and services to a network of Providers through in-house, contracted sales personnel and/or from independent distributors. As of October 31, 2019, we had two salespeople who marketed our RAAM products and services by using social media outlets, medical conferences and seminars and from development of prior and newly identified Providers and related professional relationships. In addition, we had arrangements with several independent distributors that were marketing and distributing our products. We intend in the future to expand our in-house sales force and independent distributors as our working capital improves, our product line expands and as volumes increase. We also intend to develop and offer ongoing training seminars to provide the best possible information on the latest advances on anti-aging, and regenerative medicine to Providers.

 

Sources and Availability of Raw Materials and the Names of Principal Suppliers

 

From the completion of the Sale in February 2018 through April 2019, we purchased all of our RAAM Products through supply arrangements directly with third-party manufacturers or indirectly from distributors of other third-party manufacturers.

 

Beginning May 2019, we once again began to manufacture our own RAAM Products in our newly developed Miami, Florida laboratory facilities and acquired the required raw materials and supplies for our RAAM research and development and the manufacturing of our RAAM placental-related products from unaffiliated third-party laboratories pursuant Supply Arrangements.

 

 

 

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In the event any one or more of our current suppliers are unwilling or unable to sell us required raw materials and/or products, for any reason, we may not be able to provide replacement products to our customers, or if other supply arrangements can be made, the replacement products and terms may not be as favorable.

 

Dependence on One or a Few Major Customers

 

During the year ended October 31, 2019, one customer accounted for approximately 12.2% of our revenues. Our RAAM business is not expected to be dependent on any one or more customers, especially as our customer and distribution network expands. We expect that our customer and consumers will be broad based and throughout the United States and worldwide.

 

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts

 

The table below sets forth a summary of our intellectual property rights.

 

Patents: None
   
Patent Applications:

OrganicellTM has a U.S. Provisional Patent Application on file for its OrganicellTM line of products and the proprietary techniques used in during processing perinatal fluid.

U.S. Provisional Patent Application No. 63/008,355

Titled: COMPOSITIONS COMPRISING NANOPARTICLES, METHOD OF MAKING AND USES THEREOF

Filed: April 10, 2020

Inventor: Maria Ines Mitrani

Applicant: Organicell Regenerative Medicine, Inc.

Conversion Filing Deadline: April 10, 2021

Assignment: MARIA INES MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee)

Recorded: April 15, 2020

Real/Frame: 052403 / 0365 

 

Trademarks:

Word Mark: ZOFIN

Goods/Services: Biologically derived products developed from perinatal tissue material for medical, regenerative and aesthetic purposes

Serial Number: 90050511

Filing Date: July 13, 2020

Owner: Organicell Regenerative Medicine, Inc.

Status: Pending, awaiting examination

 

Word Mark: Organicell

Goods/Services: Biologically derived products developed from perinatal tissue material for medical, regenerative and aesthetic purposes

Serial Number: 88903989

Filing Date: May 6, 2020

Owner: Organicell Regenerative Medicine, Inc.

Status: Office Action issued August 8, 2020

 

 

 

 

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Word Mark: Organicell

Goods/Services: Non-medicated anti-aging serum; non-medicated skin serums; all of the aforementioned goods are made in whole or in substantial part of organic ingredients

Serial Number: 87311045

Filing Date: January 23, 2017

Owner: Organicell Regenerative Medicine, Inc.

Registration Number: 5289671

Registration Date: September 19, 2017

Status: Live

 

Word Mark: PATIENT PURE X - PPX

Goods/Services: plasma extracts for medical use, namely, plasma extract containing purified and concentrated exosomes derived from whole human blood

Serial Number: 88771931

Filing Date: January 24, 2020

Owner: Organicell Regenerative Medicine, Inc.

Status: Notice of Allowance issued July 28, 2020

 

Word Mark: PATIENT PURE X - PPX

Goods/Services: plasma processing services for others, namely, extracting purified and concentrated exosomes based on whole blood harvested from patients for use by hospitals, clinics, or other organizations or persons involved in delivering healthcare services to patients

Serial Number: 88771934

Filing Date: January 24, 2020

Owner: Organicell Regenerative Medicine, Inc.

Status: Notice of Allowance issued August 18, 2020

   
Registered Copyrights: None
   
Domain Names: www.organicell.com
   
IP Licenses:

None

 

 

 

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The status of the Company’s current IND’s, eIND’s, non-eIND’s submitted and approved for past or planned treatments and/or clinical trials are described below:

 

Company’s FDA approved phase I/II IND, eIND’s and non-eIND’s:

 

  1. IND # 19881 approved on 04/30/2020 - A Phase I/II Randomized, Double Blinded, Placebo Trial to Evaluate the Safety and Potential Efficacy of Intravenous Infusion of OrganicellTM Flow for the Treatment of Moderate to Severe Acute Respiratory Syndrome (SARS) Related to COVID-19 Infection vs Placebo. IRB was approved by the Institute of Regenerative and Cellular Medicine (“IRCM”) on 06/04/2020 (approval number: IRCM-2020-254). Clinical trial is currently in process.
  2. eIND#22370 approved on 05/11/2020 - Treatment for Acute hypoxic respiratory failure with ARDS secondary to COVID-19 infection for single patient.
  3. eIND#22371 approved on 05/11/2020 - Treatment for Acute hypoxic respiratory secondary to bilateral pneumonia secondary to COVID-19 with ARDS for single patient.
  4. eIND#22897 approved on 05/29/2020 – Treatment for Acute respiratory failure with hypoxia, secondary to COVID-19 with ARDS for single patient.
  5. eIND#25426 approved on 07/24/2020 - Treatment of COVID-19 positive for single patient.
  6. eIND#25888 approved on 8/01/2020 - Treatment of post COVID-19 complication for single patient.
  7. eIND#26560 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient.
  8. eIND#26561 approved on 8/17/2020 - Treatment of post-COVID-19 complications for single patient.
  9. eIND#26676 approved on 8/20/2020 - Treatment of respiratory failure due to COVID-19 infection for single patient.
  10. eIND#26700 approved on 8/21/2020 - Treatment for ARDS associated with COVID-19 for single patient.
  11. eIND#26776 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient.
  12. eIND#26777 approved on 8/25/2020 - Treatment of COVID-19 positive for single patient.
  13. eIND#26864 approved on 9/05/2020 - Treatment of COVID-19 positive for single patient.
  14. Non-eIND#26821 approved on 9/22/2020 - Treatment of post COVID-19 complications for single patient.
  15. Expanded Access to ZofinTM (OrganicellTM Flow) approved on 09/24/2020 - Treatment of Patients with COVID-19 Outpatient and Inpatient Population. IRB pending.
  16. A Phase II Multicenter, Randomized, Double Blinded, Placebo Trial to Evaluate the Efficacy and Safety of Intramuscular Injections of ZofinTM Comparing with Intravenous Infusions for the Treatment of Post COVID-19 Complications and Severe Sequelae vs Placebo. IND submitted on 09/28/2020. Pending IND and IRB approval.

 

Pursuant to our employment agreements with our executives, all work product that is created, prepared, produced, authored, edited, amended, conceived or reduced to practice by each executive individually or jointly with others during the period of their employment by the Company and relating in any way to the business or contemplated business, research or development of the Company (regardless of when or where the Work Product is prepared or whose equipment or other resources is used in preparing the same), as well as any and all rights in and to copyrights, trade secrets, trademarks (and related goodwill), patents and other intellectual property rights therein arising in any jurisdiction throughout the world and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations thereof, and continuations, divisions, continuations-in-part, reissues, extensions and renewals thereof (collectively, "Intellectual Property Rights"), the sole and exclusive property of the Company. All of the Work Product consisting of copyrightable subject matter shall be deemed "work made for hire" as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company or if not applicable, deemed to be irrevocably assigned to the Company, for no additional consideration. The Intellectual Property Rights in any “Pre-existing Materials” included contained in the Work Product shall be retained by the executive but the executive shall be deemed to have granted to the Company an irrevocable, worldwide, unlimited, royalty-free license to use, publish, reproduce, display, distribute copies of, and prepare derivative works based upon, such Pre-Existing Materials and derivative works thereof. The Company may not assign, transfer and sublicense such rights to others without executive’s consent, other than to a wholly-owned subsidiary of the Company. The executive shall provide written notice to the Company’s Chief Executive Officer therein notifying the Company new intellectual property including the Pre-Existing Materials.

 

Competition

 

The regenerative medicine field is highly competitive and subject to rapid technological change and regulation. Companies compete on the basis of product efficacy, pricing, and ease of handling/logistics. A critically important factor for growth in the US market is third-party reimbursement, which is difficult to obtain, and the process can be time-consuming and expensive. We expect that it will take some time before RAAM products will be widely accepted under health insurance coverage. In addition, growth of this industry is expected to expand as additional research and development into the benefits of regenerative products and specific products becomes more widely accepted as a result of FDA mandated or optional clinical trials are performed by industry stakeholders.

 

 

 

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As stated previously, there is a growing urgency in the industry for companies to meet the anticipated new and more stringent regulatory deadlines to be imposed by the FDA in connection with regulation of RAAM products that were previously announced to go into effect in May 2021. As a result of these concerns, the Company and our competitors are expected to need to pursue research and development efforts and submit IND applications for FDA approval to commence clinical trials for RAAM products being sold to assure that their respective operations and products remain compliant with FDA regulations and there is no adverse impact to future operations. In addition, the Company believes that the ability to demonstrate that products and operations comply with regulations are important factors for companies in the industry to be successful in the future.

 

We intend to perform clinical trials for our RAAM Products for the purpose of obtaining biologics license status from the FDA to provide us with advantages over our competitors, including acceleration for acceptance of our products in traditional insurance plans, compliance with FDA regulations and to provide our customers with superior education and support of the benefits of our products. Initially we are positioning ourselves as a cash-based health care alternative for consumers that can provide higher levels of improvement, that is not available from traditional allopathic medicine at this time.

 

The Company competes in multiple areas of clinical treatment where regenerative biomaterials may be employed to modulate inflammation, enhance healing and reduce scar tissue formation: advanced wound care treatment, spine, orthopedic, surgery and sports medicine.

    

The primary competitive products in this space include autologous serums derived from blood, bone marrow, and adipose tissue (Regenexx) and allograft products derived from amniotic fluid or amniotic membrane, umbilical cord blood or umbilical cord tissue matrix, or from culture-expanded perinatal cells. Our competitors are primarily producer-distributor companies which include Predictive Biotech, Kimera Labs, MiMedix Group, Inc., Invitrx Therapeutics, Liveyon, BioD (“dermaSciences”), and Direct Biologics, as well as a number of distributors who sell white-labeled products from those producer-distributor entities. Additionally, there are a variety of accredited blood, bone, and soft tissue banks that we will be competing against, including Utah Cord Bank and Cord for Life.

 

As stated previously, the demand for RAAM products is very high and expected to grow with the growing baby boomer generation getting older, the increase in patients desiring to seek health care options outside of traditional therapies, the growing trend in the desire of individuals to remain active longer in life and the ongoing rise in health care costs which RAAM products may provide a more efficient and economical alternative for certain conditions.

 

Government Regulation

 

General

 

The Company’s operations are subject to FDA regulations in connection with the sales and distribution of its RAAM products. In addition, the Company relies on supply agreements with birth tissue recovery companies, supply manufacturers and/or third party distributors for the supply of RAAM products and/or the Company’s intended objectives to conduct research and development and clinical trials of RAAM products, all of whom are required to comply with FDA regulations. We anticipate these regulations will be heavily enforced and subject to more restrictive regulations by the FDA in the future. A summary of the current FDA regulations is set forth below:

 

FDA Premarket Clearance and Approval Requirements

 

Tissue Products

 

Currently the products that are sold by the Company are derived from human tissue that is purchased by the Company and processed directly in the Company’s laboratory facilities. At times when the Company did not manufacture its own products, the products sold were manufactured and processed by third party manufacturers. As discussed below, some tissue-based products are regulated solely under Section 361 of the Public Health Service Act as human cells, tissues and cellular and tissue-based products, or HCT/Ps, which do not require premarket clearance or approval by the FDA. Other tissue products are regulated as biologics and, in order to be lawfully marketed in the United States, require an FDA-approved BLA.

 

 

 

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The FDA is continually changing and formulating new guidelines for this industry. In addition, the FDA has published some additional draft guidelines related to this industry and the ultimate form of the regulations are not yet known.

 

Products Regulated as HCT/Ps

 

The FDA has specific regulations governing human cells, tissues and cellular and tissue-based products, or HCT/Ps. An HCT/P is a product containing or consisting of human cells or tissue intended for transplantation into a human patient. HCT/Ps that meet the criteria for regulation solely under Section 361 of the Public Health Service Act (so-called “361 HCT/Ps”) are not subject to approval requirements and they are subject to post-market regulatory requirements.

 

To be a 361 HCT/P, a product generally should meet following criteria:

 

·Be minimally manipulated, no structural change, or be mixed with anything;

 

·Be intended for homologous use, essentially used for the same purpose that it was used in the donor;

 

·Its manufacture must not involve combination with another article, except for water, crystalloids or a sterilizing, preserving or storage agent; and

 

·It must not be dependent upon the metabolic activity of living cells for its primary function.

 

Products Regulated as Biologics- The BLA Pathway

 

The typical steps for obtaining FDA approval of a BLA to market a biologic product in the U.S. include:

 

·Completion of preclinical laboratory tests, animal studies and formulations studies under the FDA’s good laboratory practices regulations;

 

·Submission to the FDA of an Investigational New Drug Application (“IND”) for human clinical testing, which must become effective before human clinical trials may begin and which must include independent Institutional Review Board (“IRB”) approval at each clinical site before the trials may be initiated;

 

·Performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication;

 

·Submission to the FDA of a Biologics License Application for marketing the product, which includes, among other things, reports of the outcomes and full data sets of the clinical trials, and proposed labeling and packaging for the product;

 

·Satisfactory completion of an FDA Advisory Committee review; and

 

·Satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with Current Good Manufacturing Practices (“cGMP”) regulations.

 

 

 

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Generally, clinical trials are conducted in three phases:

 

·Phase I trials typically involve a small number of healthy volunteers and are designed to provide information about the product safety.

 

·Phase II trials are conducted in a larger but limited group of patients afflicted with a specific diagnosis in order to determine preliminary efficacy, and to identify possible adverse effects.
oDosage studies are designated as Phase IIA and efficacy studies are designated as Phase IIB.

 

·Phase III clinical trials are generally large-scale, multi-center, comparative trials conducted with patients who have a specific condition in order to provide statistically valid proof of efficacy, as well as safety and potency.

 

·In some cases, the FDA will require Phase IV, or post-marketing trials, to collect additional data after a product is on the market.

 

The process of obtaining an approved BLA requires the expenditure of substantial time, effort and financial resources and may take years to complete.

 

FDA Post-Market Regulation

 

Tissue processors are required to register as an establishment with the FDA. We intend on becoming a registered establishment, accredited by the American Association of Tissue Banks (“AATB”) for the storage and distribution of tissue products that we purchase directly or indirectly from third party manufacturers. Once we are registered, we will be required to comply with regulations, including those regulations regarding storage, controls, access, labeling, record keeping, security, processes, compliance with established Good Tissue Practices, and documentation associated with the sale of our products by our customers to their patients. Our facilities will be subject to periodic inspections to assess our records and determination of our compliance with the regulations.

 

Products covered by a BLA, 510(k) clearance, or a PMA are subject to numerous additional regulatory requirements, which include, among others, compliance with cGMP, which imposes certain procedural, substantive and record keeping requirements, labeling regulations, the FDA’s general prohibition against promoting products for unapproved or “off-label” uses, and additional adverse event reporting.

 

Other Regulation Specific to Tissue Products

 

The AATB, has issued operating standards for tissue banking, whether manufacturing and/or storing products as a distributor of manufactured products by third parties. Compliance with these standards is a requirement in order to become a licensed tissue bank.

 

21st Century Cures Act

 

In December 2016, President Obama signed the 21st Century Cures Act (the “Act”) into law.  The Act includes many provisions that aim to speed up the process of bringing new drugs and devices to market. One of the Act’s most significant amendments to the Federal Food, Drug and Cosmetic Act will allow the FDA to grant accelerated approval to regenerative medicine products, while also providing the agency with wide discretion on creating new approaches to regenerative medicine. This legislative development is the result of increased pressure from patients and other stakeholders to move regenerative medicine advancements more quickly from the lab into the clinic.

 

 

 

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Specifically, the new accelerated approval pathway authorized by the Act allows certain regenerative medicine products to be designated as “regenerative advanced therapy” and become eligible for priority review by FDA. To qualify for this pathway, the product must be aimed at a serious disease and have the potential to deal with currently unmet medical needs. It must also meet the Act’s new definition of a regenerative advanced therapy, which is defined as “cell therapy, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, except for those regulated solely under section 361 of the Public Health Service Act.” This broad definition would seem to encompass the majority of regenerative medicine products known to be currently in the development stages.

 

As with the existing accelerated approval pathway for drugs and biologics, this new regulatory pathway would allow a regenerative medicine product to be approved for marketing based on surrogate or intermediate clinical trial endpoints rather than longer term clinical outcomes. The use of such endpoints can decrease the number, duration, and complexity of clinical trials that are needed to prove a longer-term outcome. Subsequently, a sponsor would have to conduct confirmatory clinical trials to ensure that the surrogate or intermediate endpoint was in fact predictive of patients’ clinical response to the product, otherwise the accelerated approval could be withdrawn.

 

The Act also requires the FDA to work with the National Institute of Standards and Technology (“NIST”) and other stakeholders to develop standards and consensus definitions for regenerative medicine products. Such standards are expected to play a large role in advancing this nascent industry by allowing companies to rely on FDA-recognized standards, rather than creating and validating their own as is the case today. 

 

The Act attempts to create a research network and a public-private partnership to assist developers in generating definitive evidence about whether their proposed therapies indeed provide clinical benefits that are hoped for. The Act also requires the FDA to track and report the number and type of applications filed for regenerative medicine products, including the number of products approved through the new accelerated approval pathway. The law also includes provisions that require the FDA to publish guidance on how it will design and implement an approval process for regenerative medicine devices.

 

November 2017 FDA Guidelines

 

In November 2017, the FDA released four guidance documents (two final, two draft) in an effort to implement a “comprehensive policy framework” for existing laws and regulations governing regenerative medicine products, including human cells, tissues, and cellular and tissue-based products (“HCT/Ps”).  These guidance documents build upon the previous regulatory framework for these products, which was completed in 2005. A guidance document cannot alter a regulation, but can clarify how the FDA intends to enforce the regulation. The Comprehensive regenerative medicine policy framework intends to spur innovation, efficient access to potentially transformative products, while ensuring safety & efficacy.

 

The framework builds upon the FDA’s existing risk-based regulatory approach to more clearly describe what products are regulated as drugs, devices, and/or biological products. Further, two of the guidance documents propose an efficient, science-based process for helping to ensure the safety and effectiveness of these therapies, while supporting development in this area. The suite of guidance documents also defines a risk-based framework for how the FDA intends to focus its enforcement actions against those products that raise potential significant safety concerns. This modern framework is intended to balance the agency’s commitment to safety with mechanisms to drive further advances in regenerative medicine so innovators can bring new, effective therapies to patients as quickly and safely as possible. The policy also delivers on important provisions of the Act.

 

Final Guidance Documents

 

The two final guidance documents clarify the FDA’s interpretation of the risk-based criteria manufacturers use to determine whether a product is subject to the FDA’s premarket review.

 

The first guidance provides greater clarity around when cell and tissue-based products would be exempted from the established regulations if they are removed from and implanted into the same individual within the same surgical procedure and remain in their original form. The second final guidance helps stakeholders better understand how existing regulatory criteria apply to their products by clarifying how the agency interprets the existing regulatory definitions “minimal manipulation” and “homologous use.” As this field advances, the FDA has noted that there are a growing number of regenerative medicine products subject to FDA premarket authorization. These guidance documents will help explain how the FDA will provide a risk-based framework for its oversight. The policy framework defines how the FDA intends to take action against unsafe products while facilitating continued innovation of promising technologies.

 

 

 

 

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To accomplish this goal, the guidance document has clarified the FDA’s view of “minimal manipulation” and “homologous use.” These are two concepts that are defined in current regulation to establish the legal threshold for when a product is subject to the FDA’s premarket approval requirements. By further clarifying these terms in the final guidance, the FDA is applying a modern framework for its oversight.

 

FDA regulations at 21 C.F.R. Part 1271, previous draft guidance documents, and untitled letters establish the agency’s approach to regulating HCT/Ps. Some HCT/Ps are exempt from premarket approval and are subject to regulation solely under section 361 of the Public Health Service Act (“PHS Act”) (so-called “361 HCT/Ps”) whereas others require premarket approval (i.e., as a drug, device, or biologic) (so-called “351 HCT/Ps”).  Both 361 HCT/Ps and 351 HCT/Ps are subject to FDA requirements (at Part 1271) for registration and listing, donor-eligibility, current good tissue practices, and other requirements intended to prevent transmission of communicable diseases.  Those that are the subject of the “same surgical procedure” exception – are exempt from both premarket approval requirements and the requirements of Part 1271.  This regime is outlined in a flow chart, which is one of the few new features of the final guidance documents and is presented below:

 

 

 

 

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Enforcement Discretion

 

In order to allow manufacturers of products time to comply with the requirements, the FDA announced that it intended (originally through November 2020) to exercise enforcement discretion for certain products that are subject to the FDA’s premarket review under the existing regulations, but are not currently meeting these requirements. The FDA does not intend to exercise such enforcement discretion for those products that pose a potential significant safety concern. Going forward, the FDA will apply a risk-based approach to enforcement, taking into account how products are being administered as well as the diseases and conditions for which they are being used. This risk-based approach allows product manufacturers time to engage with the FDA, as to determine if they need to submit a marketing authorization application and, if so, submit their application to the FDA for approval.

 

On July 20, 2020, the FDA announced it was extending the enforcement discretion policy an additional six months through May 2021 as a result of the challenges presented by the COVID-19 pandemic.

 

The FDA’s enforcement discretion policy for IND and premarket approval requirements does not apply to products that have been associated with reported safety concerns or have the potential to cause significant safety concerns to patients. The FDA has stepped up its oversight of cellular and related products in recent years and has issued compliance actions, including numerous warning and untitled letters, and pursued litigation for serious violations of the law, including some involving patient harm.

 

Although the FDA has not changed its basic approach to regulating HCT/Ps, the FDA intends to exercise enforcement discretion up through May 2021 with regard to 351 HCT/Ps requiring premarket approval. The guidance states that, in order to “give manufacturers time to determine if they need to submit an IND or marketing application in light of this guidance,” the FDA intends to exercise enforcement discretion (i.e., the Agency may permit marketing without an approved marketing application) if the HCT/P “is intended for autologous use and its use does not raise reported safety concerns or potential significant safety concerns.” 

 

The FDA has indicated it intends to focus enforcement actions on “products with higher risk,” taking into account factors such as non-autologous (allogeneic) use, the route of administration, the site of administration, and whether the product is intended for homologous or non-homologous use. For example, HCT/Ps administered via intravenous injection or infusion, aerosol inhalation, intraocular injection, or injection or infusion into the central nervous system, will be prioritized over HCT/Ps administered by intradermal, subcutaneous, or intra-articular injection. Similarly, HCT/Ps intended for non-homologous use, particularly those intended to treat serious or life-threatening conditions, “are more likely to raise significant safety concerns than HCT/Ps intended for homologous use”.

 

The Company believes that the new regulatory restrictions being implemented by the FDA are intended to assure that all parties involved in the chain of gathering, processing, distributing and/or administrating RAAM related products have met the required standards to assure that the manufacturing, marketing the administration of the RAAM regulated products are not misleading and are performed in a safe and ethical manner and in accordance with the “objective intent” of the manufacturer.

 

New Draft Guidance Documents

 

The two draft guidances provide important information to help spur development and access to innovative regenerative therapies. The first draft guidance, which builds off the regenerative medicine provisions in the Act, addresses how the FDA intends to simplify and streamline its application of the regulatory requirements for devices used in the recovery, isolation, and delivery of regenerative medicine advanced therapies, including combination products. The guidance specifies that devices intended for use with a specific RMAT may, together with the RMAT, be considered to comprise a combination product.

 

 

 

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The second draft guidance describes the expedited programs that may be available to sponsors of regenerative medicine therapies, including the new Regenerative Medicine Advanced Therapy (“RMAT”) designation created by the 21st Century Cures Act, Priority Review, and Accelerated Approval. In addition, the guidance describes the regenerative medicine therapies that may be eligible for RMAT designation – including cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, as well as gene therapies that lead to a durable modification of cells or tissues (including genetically modified cells).

 

Fraud, Abuse and False Claims

 

We are directly and indirectly subject to various federal and state laws governing relationships with healthcare providers and pertaining to healthcare fraud and abuse, including anti-kickback laws. In particular, the federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for or recommending a good or service for which payment may be made in whole or part under federal healthcare programs, such as the Medicare and Medicaid programs. (See 42 U.S.C. § 1320a-7b).  Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. The Anti-Kickback Statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. In implementing the statute, the Office of Inspector General of the U.S. Department of Health and Human Services (“OIG”) has issued a series of regulations, known as the “safe harbors.” These safe harbors set forth provisions that, if all their applicable requirements are met, will assure healthcare providers and other parties that they will not be prosecuted under the Anti-Kickback Statute.

 

AdvaMed has established guidelines and protocols for medical device manufacturers in their relationships with healthcare professionals on matters including research and development, product training and education, grants and charitable contributions, support of third-party educational conferences, and consulting arrangements. Adoption of the AdvaMed Code by a medical device manufacturer is voluntary, and while the OIG and other federal and state healthcare regulatory agencies encourage its adoption and may look to the AdvaMed Code, they do not view adoption of the AdvaMed Code as proof of compliance with applicable laws. We have incorporated the principles of the AdvaMed Code in our standard operating procedures, sales force training programs, and relationships with health care professionals.

 

Manufacturing (Processing)

 

From February 2018, when we sold our manufacturing assets to a third party in connection with the Sale through April 2019, we relied upon third party manufacturers and processors. In May 2019, we opened our new placental tissue bank processing laboratory in Miami, Florida and resumed operations of a placental tissue bank processing laboratory in Miami, Florida.

 

During the period that we were not manufacturing our own products, the products we sold to our customers were delivered directly to them by the manufacturer of the products. Now that we are once again are operating a laboratory facility, we intend on becoming a registered establishment, accredited by the American Association of Tissue Banks (“AATB”) for the storage and distribution of tissue products that we purchase directly or indirectly from third party manufacturers.

 

Our laboratory and distribution facilities are subject to periodic unannounced inspections by regulatory authorities based on the activities we may be engaged, and may undergo compliance inspections conducted by the FDA and corresponding state and foreign agencies based on our operations. We intend to seek American Association Blood Banks (“AABB”) or AATB accreditation in connection with the storage of products we intend to distribute.

 

 

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Placental Donation Program

 

During the times that we operated our laboratory facilities, we purchased placental tissue that was used in our minimally manipulated 361 compliant process to produce allografts to be used in regenerative therapy specialties from several birth tissue recovery companies. During this time, we were able to procure an adequate supply of tissue to meet our anticipated demand. We do not expect there will be any shortages of placental tissue and/or birth tissue supply companies for our future processing requirements.

 

Environmental Laws

 

From the date of the Sale in February 2018 through April 2019, we did not process or directly handle biomedical materials. Beginning in May 2019, we operated laboratory facilities that process or directly handled biomedical materials whereby we receive and/or generate wastes that are required to be disposed. We contract with third parties for the transport, treatment, and disposal of the waste that we obtain and at all times plan on being compliant with applicable laws and regulations promulgated by the Resource Conservation and Recovery Act, the U.S. Environmental Protection Agency and similar state agencies.

 

During the period from the Sale through May 2019, we sold products that were purchased from third party manufacturers. All of our shipments prior to December 2018, were delivered directly from the product manufacturers to our customers and accordingly we did not take possession of any product at any time.

 

Employees

 

At October 31, 2019, we had six full-time employees and no part-time employees. We also engaged two other persons as consultants that assisted with various administrative activities. From time to time, the Company engages independent contractors for sales and administration activities. There are no collective bargaining agreements.

 

Corporate History and Change in Control

 

The Company was incorporated in the state of Nevada on August 9, 2011 as Bespoke Tricycles Inc. for the purpose of designing, manufacturing, and selling vending tricycles for commercial customers. On June 24, 2015, Albert Mitrani, our Chairman, Chief Executive Officer and President, purchased an aggregate of 135,000,000 shares of common stock of Bespoke Tricycles, Inc. from John Goodhew, representing approximately 87.8% of the then issued and outstanding shares of the Company on a fully-diluted basis and constituting a change in control of the Company. The transaction was in accordance with the terms and provisions of the stock purchase agreement, dated May 29, 2015 (“Mitrani Purchase Agreement”), by and among the Company, Mr. Mitrani and Mr. Goodhew. The purchase price of $40,000 for the shares was paid by Mr. Mitrani to Mr. Goodhew on June 24, 2016. In connection with the execution and delivery of the Mitrani Purchase Agreement, as of May 29, 2015, Mr. Goodhew resigned as the sole officer of the Company and appointed Albert Mitrani to the Board of Directors and as the sole officer of the Company. Mr. Goodhew remained on the Board of Directors of the Company.

 

On August 6, 2015, Mr. Mitrani returned 60,120,000 shares of common stock of the Company to the Company for cancellation. As a result, Mr. Mitrani’s ownership was 74,880,000 shares of common stock of the Company, representing approximately 80% of the 93,600,000 shares of common stock issued and outstanding on such date.

 

On September 1, 2015, the Company filed a Certificate of Amendment with the Secretary of State of Nevada therein changing its name to Biotech Products Services and Research, Inc. and increasing the amount of authorized common stock from 90 million (90,000,000) shares to 250 million (250,000,000) shares. The amount authorized “blank check” preferred stock remained 10 million (10,000,000) and the par value of the common stock and preferred stock remained $0.001 per share.

 

 

 

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On September 17, 2015, the Company completed an eighteen-for-one (18:1) forward split of the Company’s issued and outstanding common stock. Unless otherwise noted, the disclosure in this Annual Report on Form 10-K, including the consolidated audited financial statements contained herein, reflect a retroactive adjustment for the forward stock split. The forward stock split had no effect on the authorized capital stock of the Company.

 

On November 1, 2016, the Company filed a Certificate of Designation with the Secretary of State of Nevada therein designating out of the 10,000,000 authorized shares of Preferred Stock, a class of Preferred Stock as “Series A Non-Convertible Preferred Stock” consisting of 100 shares (the “Series A Certificate of Designation “). On March 2, 2017, the Company filed with the Secretary of State of Nevada an amendment to increase the number of shares provided for in the Series A Certificate of Designation from 100 shares to 400 shares. Generally, the outstanding shares of Series A Non-Convertible Preferred Stock shall vote together with the shares of common stock and other voting securities of the Company as a single class and, regardless of the number of shares of Series A Non-Convertible Preferred Stock outstanding, and as long as at least one share of Series A Non-Convertible Preferred Stock is outstanding, such shares shall represent eighty percent (80%) of all votes entitled to be voted at any annual or special meeting of stockholders of the Company or action by written consent of stockholders. Each outstanding share of the Series A Non-Convertible Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Non-Convertible Preferred Stock.

 

On November 1, 2016, the Company filed a Certificate of Designation with the Secretary of State of Nevada therein designating out of the 10,000,000 authorized shares of Preferred Stock, a class of Preferred Stock as “Series B Convertible Preferred Stock” consisting of 1,000,000 shares (“Series B Certificate of Designation”). Each holder of Series B Preferred Stock shall have the right, at such holder’s option, at any time or from time to time from and after the day immediately following the date the Series B Preferred Stock is first issued, to convert each share of Series B Preferred Stock into 20 fully-paid and non-assessable shares of common stock.

 

On June 6, 2017, pursuant to the Nevada Revised Statutes and the Bylaws of the Company, the Board of Directors of the Company and the stockholders holding the Company’s outstanding Series A Preferred Stock, having the voting equivalency of 80% of the outstanding capital stock, approved the filing of an amendment to the Articles of Incorporation of the Company to increase the authorized amount of common stock from 250,000,000 to 750,000,000, without changing the par value of the common stock or authorized number and par value of “blank check” Preferred Stock. On June 19, 2017, the Company filed a Definitive 14C with the SEC regarding the corporate action. On June 22, 2017, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effectuate the corporate action on July 10, 2017.

 

On April 23, 2018, in connection with the Reorganization, the Company issued MBA an aggregate of 222,425,073 shares of common stock of the Company, representing at the time a 51% fully diluted equity interest in the Company at a price of $0.001 per share (an aggregate value of $222,425). The foregoing issuance resulted in a change in control of the Company.

 

On May 8, 2018, the Company received the written consent of the Board of Directors of the Company (“Board”) and, on May 9, 2018, the written consent of the shareholders holding a majority in interest of the voting power of the Company (86.9%) adopting resolutions which authorized the Company to amend its Articles of Incorporation to change the name of the Company from "Biotech Products Services and Research, Inc." to “Organicell Regenerative Medicine, Inc.” The Company filed a Certificate of Amendment with the Nevada Secretary of State and, effective June 20, 2018, the Company’s name has been changed to Organicell Regenerative Medicine, Inc.

 

On May 8, 2018, the Board adopted resolutions to (i) amend its Articles of Incorporation to reduce the number of authorized shares of common stock from 750,000,000 to 250,000,000 and (ii) reverse split the issued and outstanding shares of the Company’s common stock on a ratio of seventeen (17) current shares for one (1) share of new shares. On May 9, 2018, shareholders holding a majority in interest of the voting power of the Company (86.9%) approved the amendment and the reverse stock split.

 

 

 

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On June 1, 2018, the Company filed a Company-Related Action Notification with FINRA (“Notification Form”) to provide notice of certain proposed actions by the Company, including the amendment and reverse stock split. However, due to the Company’s failing to have the required Exchange Act reports filed with the SEC at the time of the filing, FINRA did not announce or effectuate the Name Change or Reverse Split in the marketplace. On June 18, 2018, the Company filed a Certificate of Correction with the Secretary of State of Nevada to reverse the amendments related to the Reverse Split. If the Company intends in the future to proceed with the Name Change and/or Reverse Split with FINRA, the Company will be required to submit a new Issuer Company-Related Notification Form for approval upon the Company becoming current in its Exchange Act filings. Should the Company proceed with the Reverse Split, then at such time as FINRA processes the announcement, the Company would then effect the reverse split of its common stock and amend its Articles to reduce its authorized common stock.

 

On June 6, 2018, the Company approved resolutions to cancel and terminate the Series A Preferred Stock designation and filed a certificate of withdrawal with the State of Nevada on June 14, 2018 thereby withdrawing and terminating the designation of the Series A Preferred Stock. As a result of the aforementioned actions, as of June 14, 2018, there were no shares of Series A Preferred Stock authorized or outstanding.

 

On June 6, 2018, the Company approved resolutions to cancel and terminate the Series B Preferred Stock designations and filed a certificate of withdrawal with the State of Nevada on June 14, 2018 thereby withdrawing and terminating the designation of the Series B Preferred Stock. As a result of the aforementioned actions, as of June 14, 2018, there were no shares of Series B Preferred Stock authorized or outstanding.

 

On May 18, 2020 and May 19, 2020, pursuant to the Nevada Revised Statutes and the Bylaws of the Company, the Board of Directors of the Company and the stockholders having the voting equivalency of 50.30% of the outstanding capital stock, respectively, approved the filing of an amendment to the Articles of Incorporation of the Company to increase the authorized amount of common stock from 750,000,000 to 1,500,000,000, without changing the par value of the common stock or authorized number and par value of “blank check” Preferred Stock. On June 2, 2020, the Company filed a Definitive 14C with the SEC regarding the corporate action. On June 24, 2020, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effectuate the corporate action on June 24, 2020.

 

ITEM 1A. RISK FACTORS.

 

AN INVESTMENT IN OUR SECURITIES IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. WE FACE A VARIETY OF RISKS THAT MAY AFFECT OUR OPERATIONS OR FINANCIAL RESULTS AND MANY OF THOSE RISKS ARE DRIVEN BY FACTORS THAT WE CANNOT CONTROL OR PREDICT. BEFORE INVESTING IN THE SECURITIES YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS, TOGETHER WITH THE FINANCIAL AND OTHER INFORMATION CONTAINED IN THIS REPORT. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS, PROSPECTS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK WOULD LIKELY DECLINE AND YOU MAY LOSE ALL OR A PART OF YOUR INVESTMENT. ONLY THOSE INVESTORS WHO CAN BEAR THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT SHOULD CONSIDER AN INVESTMENT IN OUR SECURITIES.

 

This Annual Report contains certain statements relating to future events or the future financial performance of our Company. Prospective investors are cautioned that such statements are only predictions and involve risks and uncertainties, and that actual events or results may differ materially. In evaluating such statements, prospective investors should specifically consider the various factors identified in this Annual Report, including the matters set forth below, which could cause actual results to differ materially from those indicated by such forward-looking statements.

 

If any of the following or other risks materialize, the Company’s business, financial condition, and results of operations could be materially adversely affected which, in turn, could adversely impact the value of our securities. In such a case, investors in our securities could lose all or part of their investment.

 

 

 

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Prospective investors should consider carefully whether an investment in the Company is suitable for them in light of the information contained in this Report and the financial resources available to them. The risks described below do not purport to be all the risks to which the Company could be exposed. This section is a summary of certain risks and is not set out in any particular order of priority. They are the risks that we presently believe are material to the operations of the Company. Additional risks of which we are not presently aware or which we presently deem immaterial may also impair the Company’s business, financial condition or results of operations.

 

Risks Related to Our Business

 

The ongoing COVID-19 outbreak and economic crisis has caused a significant disruption to the overall economy and there is no certainty as to when or how the situation will evolve, including whether or not the virus will be controlled and/or the state of our economy and business environment upon emerging from the crisis.

 

The current outbreak of the novel coronavirus (“COVID-19”) and resulting impact to the United States economic environments began to take hold during March 2020. The adverse public health developments and economic effects of the COVID-19 outbreak in the United States, have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities, particularly in regards to potential health benefits of the Company’s products in addressing various health concerns associated with COVID-19 and (b) is aggressively seeking to raise additional debt and/or equity financing to support working capital requirements until sale for its products to providers resumes to levels pre COVID-19.

 

There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and our business.

 

There is no assurance that the COVID-19 crisis will be fully resolved or if resolved, that the overall economy will resume in a manner that allows the Company to resume operations as planned. We may not be able to generate revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.

 

We have limited cash on hand and there is substantial doubt as to our ability to continue as a going concern.

 

The Company incurred operating losses of $1,776,490 for the year ended October 31, 2019. In addition, the Company had an accumulated deficit of $16,285,222 at October 31, 2019. The Company had a negative working capital position of $1,677,684 at October 31, 2019. In their report for the fiscal year ended October 31, 2019, our auditors have expressed that there is substantial doubt as to our ability to continue as a going concern. We have incurred operating losses since our formation and expect to incur substantial losses and negative operating cash flows for the foreseeable future and may never become profitable. We also expect to continue to incur significant operating and capital expenditures for the next several years and anticipate that our expenses will increase substantially in the foreseeable future. We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.

 

 

 

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We have a limited operating history upon which investors can evaluate our future prospects.

 

In connection with the change in control of our Company in June 2015, there was a change in the Company’s management, board of directors and line of business. Our current processing facility only began operations in May 2019. Therefore, we have limited operating history upon which an evaluation of our current business plan or performance and prospects can be made. The business and prospects of the Company must be considered in the light of the potential problems, delays, uncertainties and complications encountered in connection with a newly established business. The risks include, but are not limited to, the possibility that we will not be able to develop or identify functional and scalable products and services, or that although functional and scalable, our products and services will not be economical to market; that our competitors hold proprietary rights that preclude us from marketing such products; that our competitors market a superior or equivalent product; that we are not able to upgrade and enhance our technologies and products to accommodate new features and expanded service offerings; or the failure to receive necessary regulatory clearances for our products. To successfully introduce and market our products at a profit, we must establish brand name recognition and competitive advantages for our products. There are no assurances that the Company can successfully address these challenges. If it is unsuccessful, the Company and its business, financial condition and operating results could be materially and adversely affected.

 

Given the limited operating history, management has little basis on which to forecast future demand for our products from our existing customer base, much less new customers. The current and future expense levels of the Company are based largely on estimates of planned operations and future revenues rather than experience. It is difficult to accurately forecast future revenues because the business of the Company is new and its market has not been developed. If the forecasts for the Company prove incorrect, the business, operating results and financial condition of the Company will be materially and adversely affected. Moreover, the Company may be unable to adjust its spending in a timely manner to compensate for any unanticipated reduction in revenue. As a result, any significant reduction in revenues would immediately and adversely affect the business, financial condition and operating results of the Company.

 

We depend upon our officers and key personnel, the loss of which could seriously harm our business.

 

Our operating performance is substantially dependent on the continued services of our executive officers and key employees, in particular, Albert Mitrani, our Chief Executive Officer and President; and Ian T. Bothwell, our Chief Financial Officer. The unexpected loss of the services of any of them could have a material adverse effect on our business, operations, financial condition and operating results, as well as the value of our common stock.

 

We may not be able to compete successfully with current and future competitors.

 

We have many potential competitors in the regenerative medicine industry. We will compete, in our current and proposed businesses, with other established companies, most of which have far greater marketing and financial resources and experience than we do. We cannot guarantee that we will be able to penetrate our intended markets and be able to compete profitably, if at all. In addition to established competitors, there are moderate obstacles for competitors to enter this market, but they are not insurmountable if they have the financial resources and intellectual team. Effective competition could result in price reductions, reduced margins or have other negative implications, any of which could adversely affect our business and chances for success. Competition is likely to increase significantly as new companies enter the market and current competitors expand their services. Many of these potential competitors are likely to enjoy substantial competitive advantages, including, but not limited to, larger staffs, greater name recognition, larger and established customer bases and substantially greater financial, marketing, technical and other resources. To be competitive, we must respond promptly and effectively to industry dynamics, evolving standards and competitors’ innovations by continuing to enhance our services and sales and marketing channels. Any pricing pressures, reduced margins or loss of market share resulting from increased competition, or our failure to compete effectively, could fatally damage our business and chances for success.

 

 

 

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We currently rely on non-exclusive supply arrangements with birth tissue recovery companies for obtaining the raw material used in manufacturing the products we sell. Also, during the periods that we did not operate our own manufacturing facility, we have relied on non-exclusive supply arrangements from other third-party manufacturers or distributors of products from third party manufacturers to obtain the supply of products we sold.

 

If our current supply arrangements under supply agreements with birth tissue recovery companies or third party manufacturers or distributors of products from third party manufacturers are disrupted for any reason, we may not be able to provide products to our customers, or if other supply arrangements can be made, the products and terms may not be as favorable, and that will adversely impact our operations and profitability.

 

If we do not continually update our products and/or services, they may become obsolete and we may not be able to compete with other companies.

 

We cannot assure you that we will be able to keep pace with technological advances, or that our current suppliers will be able to keep pace with technological advances and as such, our products and/or services may become obsolete. We cannot assure you that competitors will not develop related or similar services and offer them before we do, or do so more successfully, or that they will not develop services and products more effective than any that we and/or our suppliers have or are intending to develop. In addition, although we may be able to identify new suppliers that can provide more effective services and products to be more competitive, we may not be able to arrange satisfactory arrangements in a timely manner, if at all. If that happens, our business, prospects, results of operations and financial condition will be materially adversely affected.

 

We enter into supply agreements for the raw materials and/or products we sell, which make us vulnerable to the ability of such suppliers to remain current and innovative in their product offerings, to timely process and supply the products we desire to purchase, and to remain compliant with the current and changing regulatory environment. If our raw material and/or product suppliers are not successful in managing these responsibilities, it will have an adverse effect on our operations and profitability.

 

Our current birth tissue supply arrangements for manufacturing the products we sell and our third-party supply arrangements for the supply of products we sell provide for the supply and pricing for those products. There can be no assurance that our suppliers will continue to produce the products that we currently purchase under our existing arrangements, that our suppliers will be able to comply with the required FDA regulations for the manufacturing of such products, that our suppliers will continue to develop technology associated with their manufactured products to remain competitive with other companies, or that our suppliers will remain a going concern in the future. If any of our suppliers were to cause a disruption in our ability to obtain products as desired and expected and/or we are not provided advance notice of such potential disruption, we may not be able to timely identify and replace our current suppliers, if at all, and as a result, we may not be able to provide products to our customers, which will have an adverse impact to our operations.

 

In the event of default under our outstanding indebtedness, or we are unable to pay other obligations and accounts payable when due, our creditors may file a creditors petition or force us into involuntary bankruptcy which may have an adverse impact on our business.

 

The Company had a negative working capital position of $1,677,684 at October 31, 2019. In addition, the outbreak of the novel coronavirus (“COVID-19”) during March 2020 and the resulting adverse public health developments and economic effects to the United States business environments have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. 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 additional sources of working capital through operations or debt and/or equity financings are realized. The Company has not repaid its outstanding indebtedness on the required due dates and the loans remain still outstanding. Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses. The Company does not have significant fixed and/or intangible assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on short term supply agreements to obtain the supply of raw materials used in manufacturing the products it currently sells and distributes to its customers. The Company’s current market capitalization and common stock liquidity will hinder its ability to raise equity proceeds to implement its business plan and could adversely affect the value of our securities, including the common stock.

 

 

 

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We may be required to borrow funds in the future.

 

If the Company incurs indebtedness, a portion of its cash flow will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants, which may impair the Company’s operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to the rights of the Company’s stockholders. A judgment creditor would have the right to foreclose on any of the Company’s assets resulting in a material adverse effect on the Company’s business, operating results or financial condition.

 

Currently the Company has limited assets which could be used as collateral in obtaining future borrowings. Because of the Company’s inability to provide lenders with collateral and a limited history of successful operations, the Company may not be successful in its efforts to obtain additional funds though borrowings and as a result may not be able to fund required costs of operations.

 

Our growth depends on external sources of capital, which may not be available on favorable terms or at all.

 

Our access to capital will depend upon a number of factors over which we have little or no control, including general market conditions, government regulations and the market’s perception of our current and potential future earnings. If general economic instability or downturn leads to an inability to borrow at attractive rates or at all, our ability to obtain capital to finance working capital requirements could be negatively impacted.

 

If we are unable to obtain capital on terms and conditions that we find acceptable, we likely will have to scale back our business operations. In addition, our ability to refinance all or any debt we may incur in the future, on acceptable terms or at all, is subject to all of the above factors, and will also be affected by our future financial position, results of operations and cash flows, which additional factors are also subject to significant uncertainties, and therefore we may be unable to refinance any debt we may incur in the future, as it matures, on acceptable terms or at all. All of these events would have a material adverse effect on our business, financial condition, liquidity and results of operations.

 

Failure to establish or enhance our brand recognition could have a material adverse effect on our business and results of operations.

 

We believe we will need to expend significant time, effort and resources to enhance the recognition of our brands. We believe developing our brand will be important to our sales and marketing efforts. If we fail to establish or enhance the recognition of our brands, it could have a material adverse effect on our ability to sell our products and adversely affect our business and results of operations. If we fail to develop a positive public image and reputation, our business with our existing customers could decline and we may fail to develop additional business, which could adversely affect our results of operations.

 

Defects in the products we sell or failures in quality control related to our distribution of products could impair our ability to sell our products or could result in product liability claims, litigation and other significant events involving substantial costs.

 

Detection of any significant defects in our products that we sell or failure in our quality control procedures or the quality control procedures of our suppliers may result in, among other things, delay in time-to-market, loss of sales and market acceptance of our products, diversion of development resources, injury to our reputation and restrictions imposed by governmental agencies. The costs we may incur in correcting any product defects may be substantial and we may not be able to identify adequate remedies, if required. Additionally, errors, defects or other performance problems could result in financial or other damages to our customers, which could result in litigation. Product liability litigation, even if we prevail and/or our suppliers, would be time consuming and costly to defend, and if we and/or our product suppliers do not prevail, could result in the imposition of a damages award. We presently maintain product liability insurance and we are named insured on our suppliers’ insurance policy; however, it may not be adequate to cover any claims.

 

 

 

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There can be no assurances of protection for proprietary rights or reliance on trade secrets.

 

In certain cases, the Company may rely on trade secrets to protect intellectual property, proprietary technology and processes, which the Company has acquired, developed or may develop in the future. There can be no assurances that secrecy obligations will be honored or that others will not independently develop similar or superior products or technology. The protection of intellectual property and/or proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated. The prosecution of proprietary claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. The Company, in common with other firms, may also be subject to claims by other parties with regard to the use of intellectual property, technology information and data, which may be deemed proprietary to others.

 

Our ability to become profitable and continue as a going concern will be dependent on our ability to attract, employ and retain highly skilled individuals to serve our clients.

 

The nature of our business requires that we employ skilled persons to perform highly skilled and specialized tasks for our Company. Our failure to retain such personnel could have a material adverse effect on our ability to offer services to clientele, and could potentially have a negative effect on our business. There is no guarantee that skilled persons will be available and willing to work for us in the future, nor is there any guarantee that we could afford to retain them if they are available at a future time.

 

Our ability to commence and complete clinical studies and other research and development objectives that are required by the FDA, including possible deadlines for certain products as early as May 2021 will require that we are properly funded to assure that we can commence and proceed with the required research activities promptly and that the results are favorable.

 

The Company is aggressively pursuing efforts to commence and complete 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 timely and sufficient available working capital to fund the substantial costs of completing clinical trials, which the Company currently does not have, and ultimately the approval from the FDA.

 

Our projections and forward-looking information may prove to be incorrect.

 

Management has prepared projections regarding the Company’s anticipated financial performance. The Company’s projections are hypothetical and based upon a presumed financial performance of the Company, the addition of a sophisticated and well-funded marketing plan, and other factors influencing the business of the Company. The projections are based on Management’s best estimate of the probable results of operations of the Company, based on present circumstances, and have not been reviewed by the Company’s independent accountants. These projections are based on several assumptions, set forth therein, which Management believes are reasonable. Some assumptions upon which the projections are based, however, invariably will not materialize due to the inevitable occurrence of unanticipated events and circumstances beyond Management’s control. Therefore, actual results of operations will vary from the projections, and such variances may be material. Assumptions regarding future changes in sales and revenues are necessarily speculative in nature. In addition, projections do not and cannot take into account such factors as general economic conditions, unforeseen regulatory changes, the entry into the Company’s market of additional competitors, the terms and conditions of future capitalization, and other risks inherent to the Company’s business. While Management believes that the projections accurately reflect possible future results of the Company’s operations, those results cannot be guaranteed.

 

 

 

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We may not be able to manage our growth effectively.

 

We must continually implement and improve our products and/or services, operations, operating procedures and quality controls on a timely basis, as well as expand, train, motivate and manage our work force in order to accommodate anticipated growth and compete effectively in our market segment. Successful implementation of our strategy also requires that we establish and manage a competent, dedicated work force and employ additional key employees in corporate management, product development, client service and sales. We can give no assurance that our personnel, systems, procedures and controls will be adequate to support our existing and future operations. If we fail to implement and improve these operations, there could be a material, adverse effect on our business, operating results and financial condition.

        

If we make any acquisitions or enter into a merger or similar transaction, our business may be negatively impacted.

 

We have no present plans for any specific acquisition. However, in the event that we make acquisitions in the future, we could have difficulty integrating the acquired companies’ personnel and operations with our own. In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions, mergers and other similar transactions are accompanied by a number of inherent risks, including, without limitation, the following:

 

  the difficulty of integrating acquired products, services or operations;
     
  the potential disruption of the ongoing businesses and distraction of our Management and the management of acquired companies;
     
  the difficulty of incorporating acquired rights or products into our existing business;
     
  difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities;
     
  difficulties in maintaining uniform standards, controls, procedures and policies;
     
  the potential impairment of relationships with employees and customers as a result of any integration of new management personnel;
     
  the potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers;
     
  the effect of any government regulations which relate to the business acquired; and
     
  potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing and sales of acquired products or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition.

 

Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with these acquisitions, many of which cannot be presently identified, these risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

 

 

 

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There might be unanticipated obstacles to the execution of our business plan.

 

The Company’s business plans may change significantly. The Company’s potential business endeavors are capital intensive. Management believes that the Company’s chosen activities and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of the Company’s principals and advisors. Management reserves the right to make significant modifications to the Company’s stated strategies depending on future events.

  

We may engage in transactions that present conflicts of interest.

 

The Company’s officers and directors may enter into agreements with the Company from time to time which may not be equivalent to similar transactions entered into with an independent third party. A conflict of interest arises whenever a person has an interest on both sides of a transaction. While we believe that it will take prudent steps to ensure that all transactions between the Company and any officer or director is fair, reasonable, and no more than the amount it would otherwise pay to a third party in an “arms-length” transaction, there can be no assurance that any transaction will meet these requirements in every instance.

 

We have agreed to indemnify our officers and directors against lawsuits to the fullest extent of the law.

 

Organicell is a Nevada corporation. Nevada law permits the indemnification of officers and directors against expenses incurred in successfully defending against a claim. Nevada law also authorizes Nevada corporations to indemnify their officers and directors against expenses and liabilities incurred because of their being or having been an officer or director. Our organizational documents provide for this indemnification to the fullest extent permitted by law.

 

We currently do not maintain any directors & officers insurance coverage. The commercial insurance policies we do have in place contain policy limits and exclusions for certain coverages and losses. In the event that we are found liable for damage or other losses, and such amounts are not covered under our existing insurance policies, we would incur substantial and protracted losses in paying any such claims or judgments. Although we intend to acquire coverage immediately upon resources becoming available, there is no guarantee that we can secure such coverage or that any insurance coverage would protect us from any damages or loss claims filed against it.

 

Our operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control.

 

We are subject to the following factors, among others, that may negatively affect our operating results:

 

·The announcement or introduction of new products by our competitors;
·Failure of Government and private health plans to adequately and timely reimburse the users of our products;
·Our ability to upgrade and develop our systems and infrastructure to accommodate growth;
·Our ability to attract and retain key personnel in a timely and cost effective manner;
·The amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure;
·Regulation by Federal, State or Local Governments; and
·General economic conditions (including fallout from current and future pandemics) as well as economic conditions specific to the healthcare industry.

 

 

 

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We have based our current and future expense levels largely on our investment plans and estimates of future events, although certain of our expense levels are, to a large extent, fixed. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenue relative to our planned expenditures would have an immediate adverse effect on our business, results of operations and financial condition. Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions that could have a material and adverse effect on our business, results of operations and financial condition. Due to the foregoing factors, our revenue and operating results are and will remain difficult to forecast.

 

We are in a highly competitive and evolving field and face competition from well-established tissue processors and medical device manufacturers, as well as new market entrants.

 

Our business is in a very competitive and evolving field. Competition from other tissue processors, medical device companies and from research and academic institutions is intense, expected to increase, subject to rapid change, and could be significantly affected by new product introductions. The presence of this competition in our market may lead to pricing pressure, which would make it more difficult to sell our products at a price that will make us profitable or prevent us from selling our products at all. Our success will depend on our ability and/or the ability of our suppliers to perfect and protect their intellectual property rights related to their technologies as well as to develop new technologies and new applications for our technologies. Our failure to compete effectively would have a material and adverse effect on our business, results of operations and financial condition.

 

Rapid technological change could cause our products to become obsolete.

 

The technologies underlying the products we sell and intend to sell are subject to rapid and profound technological change. Competition intensifies as technical advances in each field are made and become more widely known. We can give no assurance that our suppliers will be able to develop services, products, or processes with significant advantages over the competing products, services, and processes. Any such occurrence could have a material and adverse effect on our business, results of operations and financial condition.

 

Our products are dependent on the availability of sufficient quantities of tissue from human donors, and any disruption in supply could adversely affect our business.

 

The success of the human tissue products we sell depends upon, among other factors, the availability of sufficient quantities of tissue from human donors. The availability of donated tissue could be adversely impacted by regulatory changes, public opinion of the donor process as well as our and our suppliers’ reputations in the industry. Any disruption in the supply of donated human tissue could restrict our growth and could have a material adverse impact on our business and financial condition. We cannot be sure that the supply of human tissue will continue to be available at current levels or will be sufficient to meet our future needs.

 

The products we offer are derived from human tissue and therefore have the potential for disease transmission.

 

The utilization of human tissue creates the potential for transmission of communicable disease, including, but not limited to, HIV, viral hepatitis, syphilis and other viral, fungal or bacterial pathogens. Our suppliers are required to comply with federal and state regulations intended to prevent communicable disease transmission.

 

Although we believe that our suppliers maintain strict quality controls over the procurement and processing of the human tissue used to make the products we sell, there is no assurance that these quality controls are or will continue to be adequate. In addition, negative publicity concerning disease transmission from other companies improperly processed donated tissue could have a negative impact on the demand for our products.

 

 

 

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In order to grow revenues from certain of our products, we must expand our relationships with distributors and independent sales representatives.

 

We derive significant revenues through our relationships with distributors and independent sales representatives. During the year ended October 31, 2019, one distributor was affiliated with revenues received from customers comprising approximately 18.2% of our revenues.  If such relationships were terminated for any reason, it could materially and adversely affect our ability to generate revenues and profits. We intend to obtain the assistance of additional distributors and independent sales representatives to continue our sales growth with respect to certain of our products. We may not be able to find additional distributors and independent sales representatives who will agree to market and/or distribute those products on commercially reasonable terms, if at all. In addition, adding new distributors and independent sales representatives require additional administrative and accounting efforts for which the Company may not have sufficient resources to manage effectively. If we are unable to establish new distribution and independent sales representative relationships or renew current distribution and sales agency agreements on commercially acceptable terms or manage the growth effectively, our business, financial condition and results of operations could be materially and adversely affected.

 

We continue to invest significant capital in expanding our internal sales force, and there can be no assurance that these efforts will continue to result in significant increases in sales.

 

We are engaged in a major initiative to build and further expand our internal sales and marketing capabilities which has contributed to our increased sales. As a result, we continue to invest in a direct sales force for certain of our products to allow us to reach new customers. These expenses impact our operating results, and there can be no assurance that we will continue to be successful in significantly expanding the sales of our products.

 

Our revenues may need to depend on adequate reimbursement from public and private insurers and health systems.

 

Currently, a significant number of public and private insurers and health systems currently do not provide reimbursement for our products. Our success and extent of our growth depends on the extent to which reimbursement for the costs of our products and related treatments will be available from third party payers, such as public and private insurers and health systems. Government and other third-party payers attempt to contain healthcare costs by limiting both coverage and the level of reimbursement of new products. Therefore, significant uncertainty usually exists as to the reimbursement status of new healthcare products. If we are not successful in obtaining adequate reimbursement for our products from these third-party payers, the market's acceptance of our products could be adversely affected. Inadequate reimbursement levels also likely would create downward price pressure on our products. Even if we do succeed in obtaining widespread reimbursement for our products, future changes in reimbursement policies could have a negative impact on our business, financial condition and results of operations.

 

To be commercially successful, we must convince physicians that our products are compliant with regulations, safe and effective alternatives to existing treatments and that our products should be used in their procedures.

 

We believe physicians will only adopt our products if they determine, based on experience, clinical data and published peer reviewed journal articles, that the use of our products in a particular procedure is a favorable alternative to conventional methods. Physicians may be slow to change their medical treatment practices for the following reasons, among others:

 

·Their lack of experience with prior procedures in the field using our products;
·Lack of evidence supporting additional patient benefits and our products over conventional methods;
·Perceived liability risks generally associated with the use of new products and procedures;
·Perceived exposure from regulatory agencies that monitor the use of our products;
·Limited availability of reimbursement from third party payers; and
·The time that must be dedicated to training.

 

 

 

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In addition, we believe recommendations for and support of our products by influential physicians are essential for market acceptance and adoption. If we do not receive this support or if we are unable to demonstrate favorable long-term clinical data, physicians and hospitals may not use our products, which would significantly reduce our ability to achieve expected revenue and would prevent us from sustaining profitability.

 

We will need to expand our organization and managing growth may be more difficult than expected.

 

Managing our growth may be more difficult than we expect. We anticipate that a period of significant expansion will be required to penetrate and service the market for our existing and anticipated future products and to continue to develop new products. This expansion will place a significant strain on management, operational and financial resources. To manage the expected growth of our operations and personnel, we must both modify our existing operational and financial systems, procedures and controls and implement new systems, procedures and controls.  We must also expand our finance, administrative, and operations staff. Management may be unable to hire, train, retain, motivate and manage necessary personnel or to identify, manage and exploit existing and potential strategic relationships and market opportunities.

 

We face the risk of product liability claims and may not be able to obtain or maintain adequate product liability insurance.

 

Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, processing and marketing of human tissue products. We may be subject to such claims if the products we sell cause, or appear to have caused, an injury. Claims may be made by patients, healthcare providers or others selling our products. We currently maintain product liability insurance that contain limits of coverage for the insured. Defending a lawsuit, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market. There can be no assurance that adequate insurance will be available in the event of a lawsuit, if at all. A product liability claim could result in significant costs and significant harm to our business.

 

We may implement a product recall or voluntary market withdrawal, which could significantly increase our costs, damage our reputation and disrupt our business.

 

The manufacturing, marketing and processing of the tissue products we sell or intend to sell involve an inherent risk that they do not meet applicable quality standards and requirements. In that event, there may be recall or market withdrawal required by a regulatory authority. A recall or market withdrawal of one of our products would be costly and would divert management resources. A recall or withdrawal of one of the products we sell, or a similar product processed, also could impair sales of our products as a result of confusion concerning the scope of the recall or withdrawal, or as a result of the damage to our reputation for quality and safety.

 

Significant disruptions of information technology systems or breaches of information security could adversely affect our business.

 

We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinary course of business, we collect, store and transmit large amounts of confidential information (including, but not limited to, personal information and intellectual property). We also have outsourced significant elements of our operations to third parties, including significant elements of our information technology infrastructure and, as a result, we are managing many independent vendor relationships with third parties who may or could have access to our confidential information. The size and complexity of our information technology and information security systems, and those of our third-party vendors with whom we contract (and the large amounts of confidential information that is present on them), make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including, but not limited to, industrial espionage and market manipulation) and expertise. While we have invested significantly in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches. Although we may obtain cyber-insurance coverage that may cover certain events described above, this insurance is subject to deductibles and coverage limitations and we may not be able to maintain this insurance. Also, it is possible that claims could exceed the limits of our coverage. Any interruption or breach in our systems could adversely affect our business operations and/or result in the loss of critical or sensitive confidential information or intellectual property, and could result in financial, legal, business and reputational harm to us or allow third parties to gain material, inside information that they use to trade in our securities.

 

 

 

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New lines of business or new products and services may subject us to additional risks.

 

From time to time, we may implement or may acquire new lines of business or offer new products and services within existing lines of business. There are risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed or are evolving. In developing and marketing new lines of business and new products and services, we may invest significant time and resources. External factors, such as regulatory compliance obligations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition.

 

Risks Related to Our Intellectual Property

 

There can be no assurances of protection for proprietary rights or reliance on trade secrets.

 

In certain cases, the Company may rely on trade secrets to protect intellectual property, proprietary technology and processes, which the Company has acquired, developed or may develop in the future. There can be no assurances that secrecy obligations will be honored or that others will not independently develop similar or superior products or technology. The protection of intellectual property and/or proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated. The prosecution of proprietary claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. The Company, in common with other firms, may also be subject to claims by other parties with regard to the use of intellectual property, technology information and data, which may be deemed proprietary to others.

 

Our suppliers’ ability to protect their intellectual property and proprietary technology through patents and other means is uncertain and may be inadequate, which could have a material and adverse effect on us. 

 

We depend significantly on our suppliers’ ability to protect their proprietary rights to the technologies used in the products we purchase from them and resell. Traditional legal means afford only limited protection and may not adequately protect their rights or permit them to gain or keep any competitive advantage. To the extent that they are unable to protect their intellectual property against infringement by others or by claims of infringement by such suppliers, our business could be materially adversely affected.

 

We may be subject to damages resulting from claims that we, our employees, or our independent contractors have wrongfully used or disclosed alleged trade secrets of others.

 

Some of our employees were previously employed at other medical device or tissue companies. We may also hire additional employees who are currently employed at other medical device or tissue companies, including our competitors. Additionally, consultants or other independent agents with which we may contract may be or have been in a contractual arrangement with one or more of our competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or independent contractors have used or disclosed any party's trade secrets or other proprietary information. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail to defend such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to market existing or new products, which could severely harm our business.

 

 

 

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If we are unable to protect our trademarks from infringement, our business prospects may be harmed.

 

We currently have applied for a registered trademark for the use of Organicell in association with our family of biologic products offered in the United States. Although we may take steps to monitor the possible infringement or misuse of our Organicell or other trademarks once they are obtained, it is possible that third parties may infringe, dilute or otherwise violate our trademark rights. Any unauthorized use of our trademarks could harm our reputation or commercial interests. In addition, our enforcement against third-party infringers or violators may be unduly expensive and time-consuming, and any remedy obtained may constitute insufficient redress relative to the damages we may suffer. Our business may be materially adversely affected in the event we are unable to protect our trademarks.

 

Risks Related to Regulatory Approval of Our Products and Other Government Regulations

 

To the extent our products do not qualify for regulation as human cells, tissues and cellular and tissue-based products under Section 361 of the Public Health Service Act, this could result in removal of the applicable products from the market, would make the introduction of new tissue products more expensive and significantly delay the expansion of our tissue product offerings and subject us to additional post-market regulatory requirements.

 

The products we offer are derived from human tissue. The FDA has specific regulations governing human cells, tissues and cellular and tissue-based products, or HCT/Ps. An HCT/P is a product containing or consisting of human cells or tissue intended for transplantation into a human patient. HCT/Ps that meet the criteria for regulation solely under Section 361 of the Public Health Service Act (so-called “361 HCT/Ps”) are not subject to any premarket clearance or approval requirements and are subject to less stringent post-market regulatory requirements.

 

If a product is deemed not to be a 361 HCT/P, FDA regulations will require premarket clearance or approval requirements that will involve significant time and cost investments by the Company. Further, there can be no assurance that the FDA will not, at some future point, change its position on current or future products' 361 HCT/P status, and any regulatory reclassification could have adverse consequences for us and make it more difficult or expensive for us to conduct our business by requiring premarket clearance or approval and compliance with additional post-market regulatory requirements with respect to those products. Moreover, increased regulatory scrutiny within the industry in which we operate could lead to increased regulation of HCT/Ps, including 361 HCT/Ps.  We also cannot assure you that the FDA will not impose more stringent definitions with respect to products that qualify as 361 HCT/Ps.

 

See “Government Regulation” in Item 1 for a discussion of 361 HCT/Ps and the FDA's position on our products. If the FDA does allow the Company to continue to market those products that fall under the proposed regulations without a biologics license either prior to or after finalization of the draft guidance documents, it may impose conditions, such as labeling restrictions and compliance with cGMP. Although the Company is preparing for these requirements in connection with its pursuit of a BLA for certain of its products, earlier compliance with these conditions would require significant additional time and cost investments by the Company. It is also possible that the FDA will not allow the Company to market any form of it’s products without a biologics license even prior to finalization of the draft guidance documents and could even require the Company to recall it’s products.

 

The FDA has recently announced that it intends to begin enforcement of regulations to manufacturers of certain biologics tissue products, including the products that we may purchase through supply agreements with those identified manufacturers. If the FDA were to take enforcement action against those suppliers, it would have a material adverse impact to our operations.

 

In November 2017, the FDA issued guidance documents to clarify the FDA’s interpretation of the risk-based criteria manufacturers used to determine which manufactured tissue products are subject to the FDA’s premarket review and in order to be lawfully marketed in the United States, require an FDA-approved BLA.

 

 

 

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The FDA intends to exercise enforcement discretion through May 2021 with regard to allowing manufacturers for certain products that are subject to the FDA’s premarket review under the existing regulations, but are not currently meeting these requirements.

 

The Company believes that the current products it distributes are not specifically identified within the scope of these regulations and that the new regulatory restrictions being implemented by the FDA are intended to assure that all parties involved in the chain of gathering, processing, distributing and/or administrating RAAM related products have met the required standards to assure that the manufacturing, marketing the administration of the RAAM regulated products are not misleading and are performed in a safe and ethical manner and in accordance with the “objective intent” of the manufacturer.

 

There is no assurance that the FDA will not take enforcement action against us or our suppliers in connection with the products we manufacture and/or purchase from suppliers and sell to our customers. Furthermore, our supply agreements provide that we comply with all FDA requirements for in the use of the products we purchase from our suppliers, including the way we market the products to our customers, including our representatives and sub-distributors, and any activities that we take that might be inconsistent with the “manufacturers objective intent”, including potential significant safety concerns on how the products are being administered as well as the diseases and conditions for which they are being used. If the FDA were to take any adverse action against ourselves and/or our suppliers and/or representatives and distributors and/or it is determined that any of our activities are the basis for FDA enforcement, it will have a significant adverse effect on our operations.

 

Our business is subject to continuing regulatory compliance by the FDA and other authorities, which is costly and our failure to comply could result in negative effects on our business.

 

As discussed above, the FDA has specific regulations governing our tissue-based products, or HCT/Ps. The FDA has broad post-market and regulatory and enforcement powers.  The FDA's regulation of HCT/Ps includes requirements for registration and listing of products, donor screening and testing, processing and distribution (“Current Good Tissue Practices”), labeling, record keeping and adverse-reaction reporting, and inspection and enforcement.

 

Biologics and medical devices are subject to even more stringent regulation by the FDA. Even if pre-market clearance or approval is obtained, the approval or clearance may place substantial restrictions on the indications for which the product may be marketed or to whom it may be marketed, may require warnings to accompany the product or impose additional restrictions on the sale and/or use of the product. In addition, regulatory approval is subject to continuing compliance with regulatory standards, including the FDA's quality system regulations.

 

If we fail to comply with the FDA regulations regarding our tissue products or medical devices, the FDA could take enforcement action, including, without limitation, any of the following sanctions and the manufacture of our products or processing of our tissue could be delayed or terminated:

 

·Untitled letters, warning letters, fines, injunctions, and civil penalties;
·Recall or seizure of our products;
·Operating restrictions, partial suspension or total shutdown of production;
·Refusing our requests for clearance or approval of new products;
·Withdrawing or suspending current applications for approval or approvals already granted;
·Refusal to grant export approval for our products; and
·Criminal prosecution.

 

 

 

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It is likely that the FDA's regulation of HCT/Ps will continue to evolve in the future.  Complying with any such new regulatory requirements may entail significant time delays and expense, which could have a material adverse effect on our business. The AATB has issued operating standards for tissue banking.  Compliance with these standards is a requirement in order to become an accredited tissue bank. In addition, some states have their own tissue banking regulations.

 

In November 2017, the FDA released four guidance documents (two final, two draft) in an effort to implement a “comprehensive policy framework” for existing laws and regulations governing regenerative medicine products, including human cells, tissues, and cellular and tissue-based products (“HCT/Ps”). These guidance documents build upon the previous regulatory framework for these products, which was completed in 2005. The Comprehensive regenerative medicine policy framework intends to spur innovation, efficient access to potentially transformative products, while ensuring safety & efficacy.

 

The framework builds upon the FDA’s existing risk-based regulatory approach to more clearly describe what products are regulated as drugs, devices, and/or biological products. Further, two of the guidance documents propose an efficient, science-based process for helping to ensure the safety and effectiveness of these therapies, while supporting development in this area. The suite of guidance documents also defines a risk-based framework for how the FDA intends to focus its enforcement actions against those products that raise potential significant safety concerns. This modern framework is intended to balance the agency’s commitment to safety with mechanisms to drive further advances in regenerative medicine so innovators can bring new, effective therapies to patients as quickly and safely as possible. The policy also delivers on important provisions of the Act.

 

Although the FDA has not changed its basic approach to regulating HCT/Ps, the agency intends to exercise enforcement discretion until May 2021 with regard to 351 HCT/Ps requiring premarket approval. The guidance states that, in order to “give manufacturers time to determine if they need to submit an IND or marketing application in light of this guidance,” the FDA intends to exercise enforcement discretion (i.e., the agency may permit marketing without an approved marketing application) if the HCT/P “is intended for autologous use and its use does not raise reported safety concerns or potential significant safety concerns.”

 

The Company believes that the new regulatory restrictions being implemented by the FDA are intended to assure that all parties involved in the chain of gathering, processing, distributing and/or administrating RAAM related products have met the required standards to assure that the manufacturing, marketing the administration of the RAAM regulated products are not misleading and are performed in a safe, ethical and in accordance with “objective intent”.

 

In addition, procurement of certain human organs and tissue for transplantation is subject to the restrictions of the National Organ Transplant Act (“NOTA”), which prohibits the transfer of certain human organs, including skin and related tissue for valuable consideration, but permits the reasonable payment associated with the removal, transportation, implantation, processing, preservation, quality control and storage of human tissue and skin. We reimburse tissue banks, hospitals and physicians for their services associated with the recovery, storage and transportation of donated human tissue. Although we have independent third party appraisals that confirm that reasonableness of the service fees we pay, if we were to be found to have violated NOTA's prohibition on the sale or transfer of human tissue for valuable consideration, we would potentially be subject to criminal enforcement sanctions, which could materially and adversely affect our results of operations.

 

Finally, as discussed above, we and other manufacturers of skin substitutes are required to provide ASP information to CMS on a quarterly basis. The Medicare payment rates are updated quarterly based on this ASP information. If a manufacturer is found to have made a misrepresentation in the reporting of ASP, such manufacturer is subject to civil monetary penalties of up to $10,000 for each misrepresentation for each day in which the misrepresentation was applied.

 

 

 

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We and our sales representatives, whether employees or independent contractors, must comply with various federal and state anti-kickback, self-referral, false claims and similar laws, any breach of which could cause a material adverse effect on our business, financial condition and results of operations.

 

Our relationships with physicians, hospitals and other healthcare providers are subject to scrutiny under various federal anti-kickback, self-referral, false claims and similar laws, often referred to collectively as healthcare fraud and abuse laws.  Healthcare fraud and abuse laws are complex, and even minor, inadvertent violations can give rise to claims that the relevant law has been violated. Possible sanctions for violation of these fraud and abuse laws include monetary fines, civil and criminal penalties, exclusion from federal and state healthcare programs, including Medicare, Medicaid, Veterans Administration health programs, workers' compensation programs and TRICARE (the healthcare system administered by or on behalf of the U.S. Department of Defense for uniformed services beneficiaries, including active duty and their dependents, retirees and their dependents), and forfeiture of amounts collected in violation of such prohibitions. Certain states have similar fraud and abuse laws, imposing substantial penalties for violations. Any Government investigation or a finding of a violation of these laws would likely result in a material adverse effect on the market price of our common stock, as well as our business, financial condition and results of operations.

 

Anti-kickback laws and regulations prohibit any knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for the referral of an individual or the ordering or recommending of the use of a product or service for which payment may be made by Medicare, Medicaid or other Government-sponsored healthcare programs. We will enter into consulting agreements, speaker agreements, research agreements and product development agreements with physicians, including some who may order our products or make decisions to use them. In addition, some of these physicians own our stock, which they purchased in arm's length transactions on terms identical to those offered to non-physicians, or received stock awards from us as consideration for services performed by them. While these transactions were structured with the intention of complying with all applicable laws, including state anti-referral laws and other applicable anti-kickback laws, it is possible that regulatory or enforcement agencies or courts may in the future view these transactions as prohibited arrangements that must be restructured or for which we would be subject to other significant civil or criminal penalties. As discussed above, we have incorporated the AdvaMed code principles into our relationships with healthcare professionals under our consulting agreements, and our policies regarding payment of travel and lodging expenses, research and educational grant procedures and sponsorship of third-party conferences. In addition, we have conducted training sessions on these principles. However, there can be no assurance that regulatory or enforcement authorities will view these arrangements as being in compliance with applicable laws or that one or more of our employees or agents will not disregard the rules we have established. Because our strategy relies on the involvement of physicians who consult with us on the design of our products, perform clinical research on our behalf or educate the market about the efficacy and uses of our products, we could be materially impacted if regulatory or enforcement agencies or courts interpret our financial relationships with physicians who refer or order our products to be in violation of applicable laws and determine that we would be unable to achieve compliance with such applicable laws. This could harm our reputation and the reputations of the physicians we engage to provide services on our behalf. In addition, the cost of noncompliance with these laws could be substantial since we could be subject to monetary fines and civil or criminal penalties, and we could also be excluded from federally-funded healthcare programs, including Medicare and Medicaid, for non-compliance.

 

The Federal False Claims Act (“FCA”) imposes civil liability on any person or entity that submits, or causes the submission of, a false or fraudulent claim to the U.S. Government. Damages under the FCA can be significant and consist of the imposition of fines and penalties.  The FCA also allows a private individual or entity with knowledge of past or present fraud against the Federal Government to sue on behalf of the Government to recover the civil penalties and treble damages. The U.S. Department of Justice (“DOJ”) on behalf of the Government has previously alleged that the marketing and promotional practices of pharmaceutical and medical device manufacturers, including the off-label promotion of products or the payment of prohibited kickbacks to doctors, violated the FCA, resulting in the submission of improper claims to federal and state healthcare entitlement programs such as Medicaid.  In certain cases, manufacturers have entered into criminal and civil settlements with the federal government under which they entered into plea agreements, paid substantial monetary amounts and entered into corporate integrity agreements that require, among other things, substantial reporting and remedial actions going forward.

 

The scope and enforcement of all of these laws is uncertain and subject to rapid change, especially in light of the lack of applicable precedent and regulations. There can be no assurance that federal or state regulatory or enforcement authorities will not investigate or challenge our current or future activities under these laws. Any investigation or challenge could have a material adverse effect on our business, financial condition and results of operations. Any state or federal regulatory or enforcement review of us, regardless of the outcome, would be costly and time consuming. Additionally, we cannot predict the impact of any changes in these laws, whether these changes are retroactive or will have effect on a going-forward basis only.

 

 

 

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We face significant uncertainty in the industry due to Government healthcare reform.

 

There have been and continue to be proposals by the Federal Government, State Governments, regulators and third-party payers to control healthcare costs, and generally, to reform the healthcare system in the United States. There are many programs and requirements for which the details have not yet been fully established or the consequences are not fully understood. These proposals may affect aspects of our business. We also cannot predict what further reform proposals, if any, will be adopted, when they will be adopted, or what impact they may have on us.

 

Risks Relating to Ownership of Our Common Stock

 

Our articles of incorporation allow for our board to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

 

Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors have the authority to issue up to 10,000,000 shares of our preferred stock terms of which may be determined by the Board without further stockholder approval. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our Board of Directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders. Although we have no present intention to issue any additional shares of preferred stock or to create any additional series of preferred stock, we may issue such shares in the future.

 

You may experience dilution of your ownership interests because of the future issuance of additional shares of common stock.

 

In the future, we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our shareholders. We may also issue additional shares of our securities that are convertible into or exercisable for common stock, as the case may be, in connection with hiring or retaining employees, future acquisitions, future sales of its securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of common stock may create downward pressure on the value of our securities. There can be no assurance that we will not be required to issue additional shares of common stock, warrants or other convertible securities in the future in conjunction with any capital raising efforts, including at a price (or exercise prices) below the price at which our shares may be valued or are trading in a public market.

 

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

If our stockholders sell substantial amounts of their shares of our common stock, or shares of our common stock underlying any outstanding securities held by them, in the public market under Rule 144 or upon registration of such shares pursuant to an effective registration statement, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

 

 

 

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There can be no assurances that an active trading market may develop for our common stock, or if developed, be maintained.

 

The average trading volume in our stock has been historically low, with little or no trading at all on some days. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations of the price of, our common stock. Accordingly, investors must assume they may have to bear the economic risk of an investment in our common stock for an indefinite period of time. There can be no assurance that a more active market for the common stock will develop, or if one should develop, there is no assurance that it will be maintained. This severely limits the liquidity of our common stock, and would likely have a material adverse effect on the market price of our common stock and on our ability to raise additional capital.

 

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

 

The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 

that a broker or dealer approve a person’s account for transactions in penny stocks; and
   
the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

 

obtain financial information and investment experience objectives of the person; and
   
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth:

 

the basis on which the broker or dealer made the suitability determination; and
   
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of common stock and cause a decline in the market value of stock.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

 

 

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The price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation.

 

The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as:

 

actual or anticipated variations in our operating results;
   
announcements of developments by us or our competitors;
   
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
   
adoption of new accounting standards affecting our Company’s industry;
   
additions or departures of key personnel;
   
sales of our common stock or other securities in the open market; and
   
other events or factors, many of which are beyond our control.

 

The stock market is subject to significant price and volume fluctuations. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against the company. Litigation initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention and resources, which could harm our business and financial condition.

 

We do not anticipate dividends to be paid on our common stock, and investors may lose the entire amount of their investment.

 

Cash dividends have never been declared or paid on the common stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.

 

We must obtain approval from FINRA if we wish to reduce our authorized shares of common stock and/or to effectuate a reverse split of the issued and outstanding shares of the common stock, of which the impact to the trading price of our common stock and/or the liquidity for trading our common stock may be adverse to current stockholders and may not result in desired benefits to the Company.

 

The Company currently has 1,500,000,000 authorized shares of common stock and 875,194,450 shares issued and outstanding. The Company expects that it will continue to issue common stock in the future in connection with debt and/or equity financings, transactions with third parties, performance incentives and as compensation to its employees. The Company believes that a reverse split would bring value to the issued and outstanding shares of the Company by limiting dilution of operating results by an excessive number of shares overhanging the market.

 

 

 

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The Company’s ability to effectuate a reverse split will require approval from FINRA. FINRA has previously informed the Company that it will not approve and process announcements for company-related actions such as a reverse split, until the Company’s delinquencies in its Exchange Act reports with the SEC have been fully resolved and a Notification Form is submitted.

 

If completed, and the reverse split does not bring value to the current shareholders and/or our ability to attract prospective investors, including possible adverse impact to the trading price of our common stock and/or the liquidity for trading our common stock, it would likely have a material adverse effect on the market price of our common stock and on our ability to raise additional capital.

 

If securities analysts do not initiate coverage or continue to cover our common stock or publish unfavorable research or reports about our business, this may have a negative impact on the market price of our common stock.

 

The trading market for the common stock will depend on the research and reports that securities analysts publish about our business and the Company. We do not have any control over these analysts. There is no guarantee that securities analysts will cover the common stock. If securities analysts do not cover the common stock, the lack of research coverage may adversely affect its market price. If we are covered by securities analysts, and our stock is the subject of an unfavorable report, our stock price and trading volume would likely decline. If one or more of these analysts ceases to cover the Company or fails to publish regular reports on the Company, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

 

Approximately 48.41% of the outstanding shares of common stock is currently owned and/or controlled by our Board members and executive management of the Company. Our Board members and executive management currently have significant ability to influence the election of our directors and the outcome of matters submitted to our stockholders.

 

As of September 30, 2020, there are 875,194,450 shares of common stock outstanding, of which 423,719,370 shares of common stock (approximately 48.41% of the outstanding shares of common stock) are owned and/or controlled by our Board and executive officers, Albert Mitrani, Ian T. Bothwell, Dr. Maria Mitrani, Dr. George Shapiro, Michael Carbonara and Dr. Allen Meglin, and two of the members of management are spouses, Albert Mitrani and Dr. Maria Mitrani. In addition, all four of our executive officers are also members of the Board of Directors, which currently consists of six members. In addition, our executive officers may receive additional stock grants in the future based on the achievement of certain performance milestones and from the conversion of unpaid compensation into common stock, which if fully issued would provide our Board and executive officers with over 51% of the outstanding shares of common stock outstanding. As a result, the foregoing persons have the ability to significantly influence the outcome of issues submitted to our stockholders. Although our officers and directors have a fiduciary obligation to the Company stockholders, their interests may not always coincide with our interests or the interests of other stockholders. As a consequence, it may be difficult for the other stockholders to remove our management. The ownership of these officers/directors could also deter unsolicited takeovers, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices.

 

We identified material weaknesses in our internal controls over financial reporting that existed at October 31, 2019.  If we fail to properly identify or remediate any future weaknesses or deficiencies, or fail to achieve and maintain effective internal control, our ability to produce accurate and timely financial statements could be impaired and investors could lose confidence in our financial statements.

 

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. At October 31, 2019, our management determined that our internal controls over financial reports were ineffective. Although management intends to implement remedial actions to correct these inefficiencies, there can be no assurance that our remedial measures will be sufficient to address the material weaknesses or that our internal control over financial reporting will not be subject to additional material weaknesses in the future. If the remedial measures that we take are insufficient to address the material weaknesses or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. Additionally, we may encounter problems or delays in implementing any changes necessary for management to make a favorable assessment of our internal control over financial reporting. If we cannot favorably assess the effectiveness of our internal control over financial reporting, investors could lose confidence in our financial information and the price of our common stock could decline.

 

 

 

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The Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our common stock.

 

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority, which we refer to as FINRA, has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our common stock and have an adverse effect on the market for shares of our common stock.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS.

 

Not applicable.

 

ITEM 2. PROPERTIES.

 

The Company’s corporate administrative offices were moved to office space located at 515 North Shore Drive, Miami Beach, Florida 33141. The office space is leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Maria Mitrani, the Chief Science Officer and director of the Company. The term of the lease runs through June 2023 and the monthly rent was$2,900 through July 2020, at which time it increased to $3,500 per month. The Company paid a security deposit of $5,000.

 

Since February 2019, we have rented laboratory and general office space located at 1951 NW 7th Ave., Suite 300, Miami, Florida 33136 pursuant to a Services Agreement, dated February 2019, between Organicell Regenerative Medicine Inc., as licensee, and CIC Miami, LLC, as licensor, for approximately $7,000 per month.

 

We also maintain websites located at www.organicell.com, the contents of which are not incorporated into this Report. Our telephone number is (888) 963-7881.

 

ITEM 3. LEGAL PROCEEDINGS.

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

We are currently not aware of any pending legal proceedings to which we are a party or of which any of our property is the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

 

 

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PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information

 

The symbol for our common stock is BPSR. Due to the late filing of this Form 10-K and other Exchange Act Reports, our common stock is currently quoted on the OTCPink tier of the over-the counter market operated by OTC Markets Group, Inc.

 

Common Stock

 

As of September 30, 2020, 875,194,450 shares of our common stock were outstanding.

 

Holders of Our Common Stock

 

As of September 30, 2020, we had approximately 191 record holders of our common stock. One of these holders is CEDE and Company which is the mechanism used for brokerage firms to hold securities in book entry form on behalf of their clients and as of September 30, 2020, they held 33,033,743 shares of common stock for these shareholders. Accordingly, we believe that we have significantly in excess of 1,000 beneficial shareholders as of the date of this report. 

 

Dividend Policy

 

We have never paid or declared dividends on our securities. The payment of cash dividends, if any, in the future is within the discretion of our Board and will depend upon our earnings, our capital requirements, financial condition and other relevant factors. We do not expect to pay dividends for the foreseeable future, and intend to retain future earnings, if any, towards the use in our business and growth strategies.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

2020 Plan

 

On February 26, 2020, the Company established the 2020 Stock Incentive Plan (“2020 Plan”). The 2020 Plan permits the grant of options, appreciation rights, dividend equivalent right and restricted common stock of the Company (“Award”) to any person who is an employee or director of, or consultant to the Company. The maximum aggregate number of shares that may be issued pursuant to all Awards is 50,000,000 shares, plus an annual increase to be added on the first day of the calendar year beginning January 1, 2021 equal to (i) the greater of such number of shares as (A) will set the maximum number of shares that may be issued pursuant to all Awards equal to 15% of the number of Shares outstanding as of such date; or (B) 2% of the number of shares outstanding as of such date; or (ii) a lesser number of shares determined by the administrator of the 2020 Plan (“Administrator”) in good faith. The maximum aggregate number of shares available for grant of shares and/or incentive stock options shall be 25,000,000 shares, increased on the first day of the calendar year beginning January 1, 2021, in a number of Shares proportionate to the increase in the total number of shares that may be issued pursuant to all Awards under the Plan.

 

The Plan shall be administered by (A) the board of the directors of the Company (“Board”) or (B) a committee (“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 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.

 

The Company has yet to appoint the Administrator for the Plan and no Awards have yet to be granted under the Plan.

 

 

 

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Board Stock Compensation Plan

 

On February 26, 2020, the Company established the Board Stock Compensation Plan (“Board Plan”) which provides compensation for non-executive Board members for participation in Board meetings retroactive to November 1, 2019. The Board Plan provides for a grant of $7,500 in equivalent shares of common stock (based on trading price at the end of the applicable current quarter) on the last day of each respective fiscal quarter that a member attends at least 75% of all meetings held during such quarter and in which a minimum of 1 meeting is held, for a maximum annual compensation amount of $30,000 per year per member.  In addition, Board members that participate on future board committees will also be eligible to receive additional compensation for serving on such committees, in amounts to be determined by the Board. The maximum aggregate number of shares that are currently authorized to be issued pursuant to the Board Plan is 5,000,000 shares.

 

On April 15, 2020, the Company issued 236,808 shares of common stock to a non-executive Board member in accordance with the Board Plan.

 

Management and Consultants Performance Stock Plan

 

On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (“MCPP”) providing for the grant to current senior executive members of management and third-party consultants of an aggregate of approximately 205,000,000 shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”).

 

On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below.

 

Pre-Transaction Price Per Share Valuation (a)   Executive Bonus Shares Issued (b)   Non-executive Board Bonus Shares Issued (c) 
          
$0.22    40,000,000    2,000,000 
$0.34    60,000,000    3,000,000 
$0.45    80,000,000    4,000,000 
$0.54    100,000,000    5,000,000 

 

(a)proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances
(b)per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro
(c)per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara

 

 

 

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On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below:

 

Aggregate Funding Amount

   Shares 
          
 From    To      
$2,500,000   $5,000,000    5,000,000 
$5,000,001   $10,000,000    10,000,000 
$10,000,001   $30,000,000    30,000,000 

 

On September 23, 2020, the Board amended the MCPP, providing for the grant of common stock of the Company of 15.0 million, 7.5 million and 15.0 million shares of common stock of the Company, respectively, to each Albert Mitrani, Dr. Maria I. Mitrani and Ian Bothwell upon such time that the Company’s common stock trades above $0.25 per share, $0.50 per share and $0.75 per share, respectively, for 30 consecutive trading days subsequent to March 31, 2021 and provided such milestone occurs during the term of employment with the Company.

 

In addition, each of the current executives were entitled to receive an additional 7 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such milestone occurs during the term of employment with the Company.

 

Pursuant to the MCPP, as of September 23, 2020, a total of 233,000,000 shares have been issued and approximately 582,500,000 shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board:

 

       MCPP   MCPP 
   MCPP   Remaining   Total 
   Shares   Shares   Shares 
Name  Awarded   Available   Approved 
             
Albert Mitrani   50,000,000    137,500,000    187,500,000 
Ian Bothwell   50,000,000    167,500,000    217,500,000 
Dr. Maria I. Mitrani   50,000,000    167,500,000    217,500,000 
Dr. George Shapiro   50,000,000    100,000,000    150,000,000 
Dr. Allen Meglin       5,000,000    5,000,000 
Michael Carbonara       5,000,000    5,000,000 
Consultants   33,000,000        33,000,000 
                
Total   233,000,000    582,500,000    815,500,000 

 

 

 

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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))

 
             
2020 Plan   -0-    -0-    50,000,000 
                
Board Stock Compensation Plan   -0-    -0-    4,763,192 
                
Management And Consultants Performance Stock Plan   -0-    -0-    582,500,000 

 

Recent Sales of Unregistered Securities

 

1.On February 5, 2019, the Company entered into an unsecured loan agreement with a third party with a principal balance of $25,000. The outstanding principal was due March 8, 2019. The loan was not repaid on the maturity date as required. The third party agreed to accept payment in kind consisting of certain products of the Company in lieu of cash interest.

 

2.On March 7, 2019, the Company sold an aggregate of 7,500,000 shares of common stock and granted warrants to purchase an aggregate 2,000,000 common shares to three “accredited investors” investors. The warrants had exercise prices of $0.08 and had a one -year term. The aggregate grant date fair value of the warrants issued in connection with these issuances were $6,600. The warrants expired on March 7, 2020. The proceeds were used for working capital.

 

3.During March 2019, the Company issued a $30,000 of convertible 6% debentures (“30,000 Debenture”) to one accredited investor. The principal amount of the $30,000 Debenture, plus accrued and unpaid interest through June 30, 2020 were payable on the 10th business day subsequent to June 30, 2020, unless the payment of the $30,000 Debenture was prepaid at the sole option of the Company, or was converted as provided for under the terms of the $30,000 Debenture, and/or accelerated due to an event of default in accordance with the terms of the $30,000 Debenture.

 

During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction).

 

4.During April 2019, the Company sold 5,102,000 shares of common stock to seven “accredited investors” at $0.03 per share for an aggregate purchase price of $154,500. The proceeds were used for working capital.

 

5.During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of the $100,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction).

 

6.On May 1, 2019, the Company, Mint Organics and the holder of a promissory note issued by Mint Organics agreed to a settlement of the outstanding loan whereby the Company agreed to issue the holder of the note 2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction.

 

 

 

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7.On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with the initial capitalization of Mint Organics (see note 15) in exchange for 4,400,000 shares of common stock of the Company (approximately $0.034 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

8.On May 1, 2019, the Company and Mint Organics Florida entered into an exchange agreement whereby the Company agreed to acquire the 21.25 units from the minority equity holder of Mint Organics Florida (see note 15) in exchange for 2,400,000 shares of common stock of the Company (approximately $0.042 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

9.During July 2019, the Company sold 2,500,000 shares of common stock to one “accredited investor” at $0.02 per share for an aggregate purchase price of $50,000. The proceeds were used for working capital.

 

10.During August 2019 through September 2019, the Company sold 5,250,000 shares of common stock to four “accredited investors” at $0.02 per share for an aggregate purchase price of $105,000. The proceeds were used for working capital.

 

11.On October 10, 2019, the Company and an investor (“Noteholder”) agreed to a funding facility arrangement (“Funding Facility”) whereby the Noteholder was required to fund the Company an initial tranche of $100,000 on October 15, 2019 (“Initial Funding Date”) and had the option to fund the Company up to an aggregate of $500,000 (“Funding Facility Limit”) in minimum $100,000 monthly tranches by no later than February 15, 2020 (“Funding Expiration Date”). The Funding Facility matures on February 15, 2021 (“Maturity Date”) and accrues interest at 6.0% per annum. The Funding Facility, plus all accrued interest, automatically converts into 40,000,000 shares of newly issued common stock of the Company if the Noteholder funds the full $500,000 by the Funding Expiration Date. The Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company that were issued to the Noteholders designated entity, Republic Asset Holdings LLC.

 

On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital.

 

12.During November 2019 through January 2020, the Company sold 3,250,000 shares of common stock to three “accredited investors” at $0.02 per share for an aggregate purchase price of $65,000. The proceeds were used for working capital.

 

13.During February 2020 through April 2020, the Company sold 11,050,000 shares of common stock to five “accredited investors” at $0.02 per share for an aggregate purchase price of $221,000. The proceeds were used for working capital.

 

14.During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July and August 2020, the Company sold an additional 1,166,666 shares and 422,514 shares of common stock to Dr. Allen Meglin at $0.03 per share and $0.10 per share, respectively, for an aggregate purchase price of $77,251. The proceeds from all of the above sales were used for working capital.

 

15.During May 2020, the Company sold 3,000,000 shares of common stock to two “accredited investors” at $0.02 per share for an aggregate purchase price of $60,000. The proceeds were used for working capital.

 

 

 

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16.During July and August 2020, the Company completed the private placement to 19 accredited investors for the sale of 13,499,992 shares of Common stock of the Company at a selling price of $0.03 per share for an aggregate amount of $405,000 (“Sale”). The proceeds are being used to fund the Company’s public company financial reporting requirements.

 

17.During the period July 2020, the Company sold 1,000,000 shares of common stock to two “accredited investors”, at $0.02 per share and $0.03 per share, respectively for an aggregate purchase price of $25,000. The proceeds were used for working capital.

 

18.During the period August 2020, the Company sold 8,606,665 shares of common stock to nine “accredited investors”, at prices ranging from $0.03 per share and $0.06 per share, for an aggregate purchase price of $392,100. The proceeds were used for working capital.

 

19.During the period September 2020, the Company sold 4,800,000 shares of common stock to five “accredited investors”, at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $410,000. The proceeds were used for working capital.

 

None of the above issuances involved any underwriters, underwriting discounts or commissions, or any public offering and we believe were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) by virtue of Section 4(a)(2) and Regulation D promulgated thereunder due to the fact that there was no solicitation or advertising and the did not involve a public offering of securities.

 

ITEM 6. SELECTED FINANCIAL DATA.

 

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this item of Form 10-K.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors we describe under “Risk Factors” and elsewhere in this report.

 

Forward Looking Statements

 

Some of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. You should read statements that contain these words carefully because they:

 

  discuss our future expectations;
     
  contain projections of our future results of operations or of our financial condition; and
     
  state other “forward-looking” information.

 

We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Item 1. Business,” “Item 1A Risk Factors,” “Business” and elsewhere in this report.

 

 

 

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COVID-19 Impact To Economy And Business Environment

 

The current outbreak of the novel coronavirus (“COVID-19”) and resulting impact to the United States economic environments began to take hold during March 2020. The adverse public health developments and economic effects of the COVID-19 outbreak in the United States, have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition.

 

There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing a similar or worse devastating impact to the United States and worldwide economies or our business.

 

Results of Operations

 

Fiscal year ended October 31, 2019 as compared to fiscal year ended October 31, 2018

 

Revenues

 

Our revenues for the year ended October 31, 2019 were $1,702,271, compared with revenues of $964,530 for the year ended October 31, 2018. The increase in revenues during the year ended October 31, 2019 of $737,741 (76.5%) was primarily the result of the Company being able to realize an increase of approximately 38.7% (approximately $373,166) in the average sales prices for the products sold during the year ended October 31, 2019 compared with the average sales prices realized on products sold during the year ended October 31, 2018 and the Company’s ability to increase unit sales of its products by 27.3% (approximately $364,575) during the year ended October 31, 2019 compared with the year ended October 31, 2018. The increase in the prices realized on product sold and units sold was partly attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness, less discounting of product prices to new customers, the introduction of new and more advanced product offerings and increased research and development efforts which provided customers with greater comfort in the company’s products and ability to better address potential market uncertainty regarding anticipated FDA regulations.

 

Cost of Revenues

 

Our cost of revenues for the year ended October 31, 2019 were $300,837, compared with cost of revenues of $209,298 for the year ended October 31, 2018 and increase of $91,539 (43.7%). The increase in cost of revenues during the year ended October 31, 2019 was primarily the result of the increase in the number of units sold amounting to $64,430 and increases in the average cost per unit sold amounting to $27,109 during the year ended October 31, 2019 compared with October 31, 2018. The costs per unit sold were significantly higher during the periods February 6, 2018 through April 2019 as those units sold were acquired through third party manufacturers. During the other periods, the Company’s costs of revenues were significantly lower as a result of manufacturing those products in-house.

 

Gross Profit

 

Our gross profit for the year ended October 31, 2019 was $1,401,434, compared with gross profit of $755,232 for the year ended October 31, 2018 an increase of $646,202 (85.6%). The increase in gross profit during the year ended October 31, 2019 was the result of higher sales prices received for products sold to its customers partially offset by higher costs of revenues for those products sold. The increase in the prices realized on product sold and units sold was partly attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness, less discounting of product prices to new customers, the introduction of new and more advanced product offerings and increased research and development efforts which provided customers with greater comfort in the company’s products and ability to better address potential market uncertainty regarding anticipated FDA regulations.

 

 

 

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General and Administrative Expenses

 

General and administrative expenses for the year ended October 31, 2019 were $3,177,924, compared with $4,245,349 for the year ended October 31, 2018, a decrease of $1,067,425 (25.1%). The decrease in the general and administrative expenses for the year ended October 31, 2019 was primarily the result of reduced stock-based compensation costs to executives during the year ended October 31, 2019 totaling $3,296,580, decreases in bad debt reserves and escrow receivable reserves of $99,105 and reduced salaries of approximately $142,000 attributable to the resignation of certain executives in connection with the Sale and Taddeo settlement and reduced salaries under current executives employment agreements, partially offset from non-recurring reductions in payroll costs totaling approximately $1,063,083 resulting from the termination and/or restructuring of executive employments agreements in connection with the Sale and the Taddeo settlement and gains realized on the sale of the Anu assets of $824,798 during the year ended October 31, 2018 and increased commissions paid on sales of products of $108,598, increased marketing related costs of $288,937, $138,438 of increase laboratory related expenses and $56,313 of increased professional fees and office expenses during the year ended October 31, 2019 compared with the year ended October 31, 2018.

 

Other Income (Expense)

 

Other income, net, for the year ended October 31, 2019 was $38,191, compared with other income, net, of $58,694 for the year ended October 31, 2018, a decrease of $20,503. The net decrease in the other income was the result of reduced income realized on the reduction of derivative liabilities of $265,597, partially offset by increased income from the settlement of obligations of $63,367 and reduced interest costs and amortization of discounts associated with the SPA and other interest bearing obligations totaling $181,727.

 

Liquidity and Capital Resources

 

During the fiscal year ended October 31, 2019 and through the date of the filing of this Form 10-K, the Company has 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.

 

1.On February 5, 2019, the Company entered into an unsecured loan agreement with a third party with a principal balance of $25,000. The outstanding principal was due March 8, 2019. The loan was not repaid on the maturity date as required. The third party agreed to accept payment in kind consisting of certain products of the Company in lieu of cash interest.

 

2.On March 7, 2019, the Company sold an aggregate of 7,500,000 shares of common stock and granted warrants to purchase an aggregate 2,000,000 common shares to three “accredited investors” investors. The warrants had exercise prices of $0.08 and had a one -year term. The aggregate grant date fair value of the warrants issued in connection with these issuances were $6,600. The warrants expired on March 7, 2020. The proceeds were used for working capital.

 

3.During March 2019, the Company issued a $30,000 of convertible 6% debentures (“30,000 Debenture”) to one accredited investor. The principal amount of the $30,000 Debenture, plus accrued and unpaid interest through June 30, 2020 were payable on the 10th business day subsequent to June 30, 2020, unless the payment of the $30,000 Debenture was prepaid at the sole option of the Company, or was converted as provided for under the terms of the $30,000 Debenture, and/or accelerated due to an event of default in accordance with the terms of the $30,000 Debenture.

 

During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction).

 

4.During April 2019, the Company sold 5,102,000 shares of common stock to seven “accredited investors” at $0.03 per share for an aggregate purchase price of $154,500. The proceeds were used for working capital.

 

 

 

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5.During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of the $100,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction).

 

6.On May 1, 2019, the Company, Mint Organics and the holder of a promissory note issued by Mint Organics agreed to a settlement of the outstanding loan whereby the Company agreed to issue the holder of the note 2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction.

 

7.On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with the initial capitalization of Mint Organics (see note 15) in exchange for 4,400,000 shares of common stock of the Company (approximately $0.034 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

8.On May 1, 2019, the Company and Mint Organics Florida entered into an exchange agreement whereby the Company agreed to acquire the 21.25 units from the minority equity holder of Mint Organics Florida (see note 15) in exchange for 2,400,000 shares of common stock of the Company (approximately $0.042 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

9.During July 2019, the Company sold 2,500,000 shares of common stock to one “accredited investor” at $0.02 per share for an aggregate purchase price of $50,000. The proceeds were used for working capital.

 

10.During August 2019 through September 2019, the Company sold 5,250,000 shares of common stock to four “accredited investors” at $0.02 per share for an aggregate purchase price of $105,000. The proceeds were used for working capital.

 

11.On September 19, 2019, the Company’s wholly owned subsidiary, General Surgical Florida, received $100,000 in connection with an unsecured line of credit (“Credit Facility”). The Credit Facility matures in one-year and the Company is required to make 52 weekly payments of $2,403 (payments totaling $125,000). The Credit Facility can be prepaid at any time by the Company. The effective annual interest rate of the facility based on 52 equal monthly payments is 45.67% Proceeds received from the Credit Facility were used for working capital.

 

12.On October 10, 2019, the Company and an investor (“Noteholder”) agreed to a funding facility arrangement (“Funding Facility”) whereby the Noteholder was required to fund the Company an initial tranche of $100,000 on October 15, 2019 (“Initial Funding Date”) and had the option to fund the Company up to an aggregate of $500,000 (“Funding Facility Limit”) in minimum $100,000 monthly tranches by no later than February 15, 2020 (“Funding Expiration Date”). The Funding Facility matures on February 15, 2021 (“Maturity Date”) and accrues interest at 6.0% per annum. The Funding Facility, plus all accrued interest, automatically converts into 40,000,000 shares of newly issued common stock of the Company if the Noteholder funds the full $500,000 by the Funding Expiration Date. The Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company that were issued to the Noteholders designated entity, Republic Asset Holdings LLC.

 

On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital.

 

 

 

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13.During November 2019 through January 2020, the Company sold 3,250,000 shares of common stock to three “accredited investors” at $0.02 per share for an aggregate purchase price of $65,000. The proceeds were used for working capital.

 

14.During February 2020 through April 2020, the Company sold 11,050,000 shares of common stock to five “accredited investors” at $0.02 per share for an aggregate purchase price of $221,000. The proceeds were used for working capital.

 

15.During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July and August 2020, the Company sold an additional 1,166,666 shares and 422,514 shares of common stock to Dr. Allen Meglin at $0.03 per share and $0.10 per share, respectively, for an aggregate purchase price of $77,251. The proceeds from all of the above sales were used for working capital.

 

16.During May 2020, the Company sold 3,000,000 shares of common stock to two “accredited investors” at $0.02 per share for an aggregate purchase price of $60,000. The proceeds were used for working capital.

 

17.During July and August 2020, the Company completed the private placement to 19 accredited investors for the sale of 13,499,992 shares of Common stock of the Company at a selling price of $0.03 per share for an aggregate amount of $405,000 (“Sale”). The proceeds are being used to fund the Company’s public company financial reporting requirements.

 

18.During the period July 2020, the Company sold 1,000,000 shares of common stock to two “accredited investors”, at $0.02 per share and $0.03 per share, respectively for an aggregate purchase price of $25,000. The proceeds were used for working capital.

 

19.During the period August 2020, the Company sold 8,606,665 shares of common stock to nine “accredited investors”, at prices ranging from $0.03 per share and $0.06 per share, for an aggregate purchase price of $392,100. The proceeds were used for working capital.

 

20.During the period September 2020, the Company sold 4,800,000 shares of common stock to five “accredited investors”, at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $410,000. The proceeds were used for working capital.

 

The Company issued the foregoing securities pursuant to the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

 

Going Concern Consideration

 

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company incurred operating losses of $1,776,490 for the year ended October 31, 2019. In addition, the Company had an accumulated deficit of $16,285,222 at October 31, 2019. The Company had a negative working capital position of $1,677,684 at October 31, 2019.

 

In addition to the above, the outbreak of the novel coronavirus (“COVID-19”) during March 2020 and the resulting adverse public health developments and economic effects to the United States business environments have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities, particularly in regards to potential health benefits of the Company’s products in addressing various health concerns associated with COVID-19 and (b) is aggressively seeking to raise additional debt and/or equity financing to support working capital requirements until sale for its products to providers resumes to levels pre COVID-19.

 

 

 

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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 United States economy resumes to pre-COVID-19 conditions and (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 the costs 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 and common stock liquidity will hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.

 

In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (1) the effects of the COVID-19 crisis resume to pre-COVID 19 market conditions, (2) the Company will be able to establish a stabilized source of revenues, (3) obligations to the Company’s creditors are not accelerated, (4) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations, (5) the Company is able to continue to produce products or obtain products under supply arrangements which are in compliance with current and future regulatory guidelines, (6) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and the safety and efficacy of its products, and (7) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.

 

There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and our business. In addition, there is no assurance that the Company will be able to complete its revenue growth strategy, its expected required research and development activities or otherwise obtain sufficient working capital to cover ongoing cash requirements. Without sufficient cash reserves, the Company’s ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant effort since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues. As described above, the COVID-19 crisis has significantly impaired the Company and the overall Unites States and World economies. If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws.  As of October 31, 2019, 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.

 

Cash and Cash Equivalents

 

The following table summarizes the sources and uses of cash for the years stated. The Company held no cash equivalents for any of the periods presented.

 

   For the Fiscal Year Ended October 31, 
         
    2019    2018 
Cash, beginning of year  $43,016   $39,560 
Net cash used in operating activities   (565,454)   (511,997)
Net cash provided by (used in) investing activities   (32,736)   95,453 
Net cash provided by financing activities   687,731    420,000 
Cash, end of year  $132,557   $43,016 

 

 

 

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During the year ended October 31, 2019, the Company used cash in operating activities of $565,454, compared to $511,997 for the year ended October 31, 2018, a reduction of in cash used of $53,457. The change in cash used in operating activities was due to a decrease in the net loss during the year ended October 31, 2019 resulting from increased revenues and gross margin combined with lower general and administrative expenses after adjusting for non-cash charges (mostly related to stock based compensation, bad debt expense, settlement of executive employment obligations, reduction in derivative liabilities and the gain from the sale of the Anu assets) and liabilities owed to executive management.

 

During the year ended October 31, 2019, the Company had cash used in investing activities of ($32,736), compared to cash provided by investing activities of $95,453 for the year ended October 31, 2018. The increase in the change in cash used in investing activities was due primarily to increased costs associated with acquisition of fixed assets and reduced proceeds received from the sale of the Anu assets of $140,022, and reduced expenditures associated with the purchase of minority interests in Mint Organics of $40,000.

 

During the year ended October 31, 2019, the Company had cash provided by financing activities of $687,731, compared to cash provided by financing activities of $420,000 for the year ended October 31, 2017, an overall increase of $267,731. The increase in cash provided by financing activities was due to increases in proceeds received in connection with the sale of equity securities of $359,500, partially offset from the decreases in the issuances of notes payable of $65,000 and payments on notes payable of $12,562 and capital lease obligations of $14,207.

 

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 October 31, 2019 and through the date of this report, we had no such arrangements.

 

New Accounting Pronouncements

 

In February 2016, a pronouncement was issued by the FASB that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company does not expect that implementation of the new pronouncement will have a material impact to its financial statements.

 

Critical Accounting Policies

 

Our audited consolidated financial statements reflect the selection and application of accounting policies which require us to make significant estimates and judgments. See Note 2 to our audited consolidated financial statements included in this Annual Report on Form 10-K, “Summary of Significant Accounting Policies”.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this item of Form 10-K.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

 

 

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

  PAGE NO.
Organicell Regenerative Medicine, Inc.  
Reports of Independent Registered Public Accounting Firm 55
Consolidated Balance Sheets as of October 31, 2019 and 2018 56
Consolidated Statements of Operations for the Years Ended October 31, 2019 and 2018 57
Consolidated Statement of Changes In Stockholders’ Deficit for the Years Ended October 31, 2019 and 2018 58
Consolidated Statements of Cash flows for the Years Ended October 31, 2019 and 2018 59
Notes to Consolidated Financial Statements 60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and Board of Directors of

Organicell Regenerative Medicine, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Organicell Regenerative Medicine, Inc. (the “Company”) as of October 31, 2019 and 2018, the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for each of the two years in the period ended October 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended October 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph – Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 3, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.

 

/s/ Marcum llp

 

Marcum llp

 

We have served as the Company’s auditor since 2015

Fort Lauderdale, FL
October 15, 2020

 

 

 

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Organicell Regenerative Medicine, Inc.

CONSOLIDATED BALANCE SHEETS

As of October 31, 2019 and 2018

 

 

   October 31,   October 31, 
ASSETS  2019   2018 
Current Assets          
Cash  $132,557   $43,016 
Accounts receivable, net of allowance for bad debts   26,031    48,025 
Prepaid expenses   121,394    15,221 
Inventories   77,963     
Total Current Assets   357,945    106,262 
           
Property and equipment, net   263,315    5,778 
Security deposits   5,000    5,000 
TOTAL ASSETS  $626,260   $117,040 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current Liabilities          
Accounts payable and accrued expenses  $552,426   $476,833 
Accrued liabilities to management   852,706    327,662 
Notes payable   212,438    60,000 
Capital lease obligations   72,208     
Convertible debentures   220,000    320,000 
Deferred revenue       21,520 
Liabilities attributable to discontinued operations   125,851    125,851 
Total Current Liabilities   2,035,629    1,331,866 
           

Long term capital lease obligations

   153,180     
           
Commitments and contingencies          
           
Stockholders’ Deficit          
Common stock, $0.001 par value, 1,500,000,000 shares authorized; 502,936,805 and 436,490,110 shares issued and outstanding, respectively   502,937    436,490 
Additional paid-in capital   14,219,736    12,853,608 
Accumulated deficit   (16,285,222)   (14,547,901)
Total stockholders’ deficit attributable to Organicell Regenerative Medicine, Inc.   (1,562,549)   (1,257,803)
Non-controlling interest       42,977 
Total Stockholders’ Deficit   (1,562,549)   (1,214,826)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $626,260   $117,040 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

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Organicell Regenerative Medicine, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended October 31, 2019 and 2018

 

   Year Ended October 31, 
   2019   2018 
         
Revenues  $1,702,271   $964,530 
           
Cost of revenues   300,837    209,298 
           
Gross profit   1,401,434    755,232 
           
General and administrative expenses   3,177,924    4,245,349 
           
Loss from operations   (1,776,490)   (3,490,117)
           
Other income (expense)          
Interest expense   (46,600)   (228,327)
Reduction of derivative liabilities       265,597 
Other   84,791    21,434 
           
Loss before income taxes   (1,738,299)   (3,431,413)
           
Provision for income taxes        
           
Net loss   (1,738,299)   (3,431,413)
           
Net income (loss) attributable to the non-controlling interest   (978)   30,745 
           
Net loss attributable to Organicell Regenerative Medicine, Inc.  $(1,737,321)  $(3,462,158)
           
Net loss per common share - basic and diluted  $(0.00)  $(0.01)
           
Weighted average number of common shares outstanding - basic and diluted   466,984,320    271,809,401 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

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Organicell Regenerative Medicine, Inc.

CONSOLIDATED CHANGES TO STOCKHOLDERS’ DEFICIT

For the Years Ended October 31, 2019 and 2018

 

 

  Preferred Stock     Additional     Total Stockholders’ Deficit Attributable  Non-  Total 
  Series A  Series B  Common Stock  Paid In  Accumulated  To  Controlling  Stockholders’ 
  Shares  Par Value  Shares  Par Value  Shares  Par Value  Capital  Deficit  Organicell  Interest  Deficit 
Balance October 31, 2017  400  $     $   111,464,987  $111,465  $7,417,321  $(11,085,743) $(3,556,957) $52,744  $(3,504,213)
                                             
Cancellation of preferred stock in connection with Reorganization  (400)                              
                                             
Acquisition of non-controlling interest                    3,658      3,658   (43,658)  (40,000)
                                             
Proceeds from sale of common stock              6,250,050   6,250   93,750      100,000      100,000 
                                             
Exercise of cashless warrants              70,382,456   70,382   (70,382)            
                                             
Stock-based compensation              248,392,617   248,393   3,772,453      4,020,846   3,146   4,023,992 
                                             
Executive forgiveness of employment obligations in connection with Reorganization                    1,636,808      1,636,808      1,636,808 
                                             
Net income (loss)                       (3,462,158)  (3,462,158)  30,745   (3,431,413)
                                             
Balance October 31, 2018              436,490,110   436,490   12,853,608   (14,547,901)  (1,257,803)  42,977   (1,214,826)
                                             
Proceeds from sale of common stock              20,352,000   20,352   439,148      459,500      459,500 
                                             
Exchange of debt obligations              7,619,695   7,620   196,044      203,664      203,664 
                                             
Stock-based compensation              31,675,000   31,675   695,737      727,412      727,412 
                                             
Acquisition of non-controlling interests              6,800,000   6,800   35,199      41,999   (41,999)   
                                             
Net income (loss)                       (1,737,321)  (1,737,321)  (978)  (7,738,299)
                                             
Balance October 31, 2019    $     $   502,936,805  $502,937  $14,219,736  $(16,285,222) $(1,562,549) $  $(1,562,549)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

 

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Organicell Regenerative Medicine, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended October 31, 2019 and 2018

   Year Ended October 31, 
   2019   2018 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(1,738,299)  $(3,431,413)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation expense   14,794    7,835 
Bad debt expense   10,635    62,240 
Allowance for escrow receivable reserve       47,500 
Stock-based compensation   727,412    4,023,992 
Interest expense paid in kind   13,668     
Amortization of debt discount       179,968 
Settlement of executive employment obligations       (1,063,083)
Gain on sale of Anu assets       (821,070)
Reduction of derivative liabilities       (265,597)
Changes in operating assets and liabilities:          
Accounts receivable, net of allowance for bad debts   11,359    4,695 
Prepaid expenses   (106,173)   (8,217)
Inventories   (77,963)   60,319 
Accounts payable and accrued expenses   75,589    64,789 
Accrued liabilities to management   525,044    686,578 
Deferred rent       1,948 
Deferred revenue   (21,520)   (62,480)
Net cash used in operating activities   (565,454)   (511,997)
           
CASH FLOWS FROM INVESTING          
Purchase of fixed assets   (32,736)   (4,569)
Purchase of non-controlling interests in Mint Organics       (40,000)
Proceeds from the sale of Anu assets       140,022 
Net cash provided by (used in) investing activities   (32,736)   95,453 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from issuance of notes payable & debentures   255,000    320,000 
Payments on notes payables   (12,562)    
Payments on capital leases   (14,207)    
Proceeds from sale of common stock and warrants   459,500    100,000 
Net cash provided by financing activities   687,731    420,000 
           
Increase in cash   89,541    3,456 
Cash at beginning of year   43,016    39,560 
Cash at end of year  $132,557   $43,016 
           

SUPPLEMENTAL CASH FLOW INFORMATION:

          
Cash paid for taxes  $   $ 
Cash paid for interest  $20,165   $32,534 
           
NON-CASH INVESTING AND FINANCING TRANSACTIONS:          
Executive forgiveness of employment obligations in connection with Reorganization  $   $1,636,808 
Outstanding SPA and other obligations satisfied in connection with the Sale  $   $809,978 
Capital lease obligations  $239,595   $ 
Conversion of debt into common stock  $203,668   $ 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

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ORGANICELL REGENERATIVE MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Organicell Regenerative Medicine, Inc. (formerly Biotech Products Services and Research, Inc.) (“Organicell” or the “Company”) was incorporated on August 9, 2011 in the State of Nevada. Until October 30, 2015, the Company’s business included the designing, manufacturing, and selling vending tricycles for commercial customers. Since June 2015, the Company has been engaged in the health care industry, principally focusing on supplying products and services related to the growing field of regenerative anti-aging medicine. 

 

On April 23, 2018, the Company and Management and Business Associates, LLC, a Florida limited liability company (“MBA”), executed a Plan and Agreement of Reorganization (“Reorganization”), whereby the Company issued to MBA an aggregate of 222,425,073 shares of its common stock of the Company, representing at the time 51% of the outstanding shares of common stock of the Company on fully-diluted basis, for $0.001 per share (or an aggregate of $222,425), in consideration for Mr. Manuel Iglesias’ agreement to serve as the Company’s Chief Executive Officer (“CEO”) and a member of the Board of the Company. The Reorganization was effective as of April 13, 2018 (“Effective Date”). The Reorganization also provided for the cancelation and termination of the Company’s previously issued and outstanding Series A Preferred Stock and Series B Preferred Stock. As a result of the above Reorganization, MBA acquired at the time a controlling interest of the Company (see Note 5).

 

On May 21, 2018, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the Company’s name from Biotech Products Services and Research, Inc. to Organicell Regenerative Medicine, Inc., effective June 20, 2018 (the “Name Change”). As discussed in Note 12, the Name Change has not yet been effectuated in the marketplace by the Financial Industry Regulatory Agency (“FINRA”).

 

For the year ended October 31, 2019, the Company principally operated through General Surgical of Florida, Inc., a Florida corporation (“General Surgical”) and wholly owned subsidiary, with a business purpose to sell cellular therapy products to doctors and hospitals.

 

During the year ended October 31, 2019, the Company revenues were principally derived from the sale and distribution of regenerative biologic therapies based on amnion placental tissue derived products to doctors and hospitals. For the period November 1, 2018 through April 2019, the Company sold products produced and supplied through third party supply agreements. During February 2019, the Company began arranging to operate a new laboratory facility for the purpose of performing research and development, production and manufacturing of anti-aging and cellular therapy products. This new laboratory facility became operational in May 2019 and during the same period, the Company began producing and distributing the products that are being sold to its customers.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

 

 

 

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Concentrations of Credit Risk

 

The balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $250,000 per institution. At October 31, 2019, the Company did not have any cash balances in financial institutions in excess of FDIC insurance coverage.

 

During the fiscal year ended October 31, 2019, the Company had one customer that accounted for approximately $206,400 of revenues (12.2%). No other customer accounted for more than 10% of the total revenues for the year ended October 31, 2019.

 

During the period November 1, 2018 through April 30, 2019, the Company purchased finished goods inventory that was sold to customers from two suppliers, of which each accounted for approximately $29,000 and $65,000 or 31.0% and 69.0%, respectively, of the total amount of finished goods inventory purchased during that period.

 

During the May 1, 2019 through October 31, 2019, the Company purchased the tissue raw material used in manufacturing of its products from two suppliers, of which each accounted for approximately $61,000 and $47,500 or 56.0% and 44.0%, respectively, of the total amount of tissue raw material purchased during that period.

 

The Company’s sales and supply agreements are non-exclusive and the Company does not believe it has any exposure based on the customers of its products and/or the availability of raw materials and/or products from other suppliers. Since May 1, 2019, the Company manufactured and distributed proprietary products that reduce exposure from the reliance on third party suppliers of inventory but increased exposure of reliance on raw materials and other supplies used in the manufacturing 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.

 

Cash Equivalents 

 

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

 

Accounts Receivable

 

Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions.

 

The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. For the year ended October 31, 2019 and 2018, the Company recorded bad debt expense of $10,635 and $62,420, respectively.

 

 

 

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Inventory

 

Inventory is stated at the lower of cost or net realizable value using the average cost method. We provide reserves for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At October 31, 2019, we determined that there were not any reserves required in connection with our finished goods.

 

Property and Equipment

 

Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of property and equipment range from 3 to 15 years. Upon sale or retirement, the cost and related accumulated depreciation and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.

 

Revenue Recognition

 

Effective November 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) Topic 606 “Revenue from Contracts with Customers” which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts. The Company applied the new standard using a modified retrospective approach.

 

The Company recognizes revenue only when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control is transferred at a point-in-time, which is typically when the transfer and title to the product sold has taken place and there is evidence of our customer’s satisfactory acceptance of the product shipment or delivery. Due to the nature of the Company’s sales transactions, this adoption did not have any impact to the Company’s financial statements for the year ended October 31, 2019.

 

Net Income (Loss) Per Common Share

 

Basic income (loss) per common share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

 

At October 31, 2019, the Company had 4,529,371 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2019. At October 31, 2018, the Company had 3,647,484 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2018.

 

Stock-Based Compensation

 

All stock-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.

 

Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based upon the estimated fair value of the option or warrant.

 

 

 

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Income Taxes

 

The Company is required to file a consolidated tax return that includes all of its subsidiaries.

 

Provisions for income taxes are based on taxes payable or refundable for the current year taxable income for federal and state income tax reporting purposes and deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of the operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

The Company accounts for uncertain tax positions in accordance with FASB Topic 740 – Income Taxes. This pronouncement prescribes a recognition threshold and measurement process for financial statement recognition of uncertain tax positions taken or expected to be taken in a tax return. The interpretation also provides guidance on recognition, derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

 

For the year ended October 31, 2019 the Company incurred operating losses, and therefore, there was not any income tax expense amount recorded during that period. During the year ended October 31, 2018 there was a change in ownership which caused a change in control under IRC Section 382 (“Section 382 event”). Prior to the Section 382 event, the Company utilized a portion of its available net operating loss carryforwards to offset income through that date mainly resulting from the sale of ANU. Any remaining net operating losses which had been carried forward from years ended October 31, 2017 and before the Section 382 event were lost. There is a full valuation allowance for years ended October 31, 2019 and 2018.

 

Since January 1, 2018, the nominal corporate tax rate in the United States of America is 21 percent due to the passage of the "Tax Cuts and Jobs Act" on December 20, 2017 by the US Senate and House of Representatives.

 

Valuation of Derivatives 

 

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. We analyzed the derivative financial instruments in accordance with ASC 815.

 

The Company utilized Monte Carlo Simulation models that value the derivative liability based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

 

The derivative liabilities result in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes. This derivative liability is marked-to-market each quarter with the change in fair value recorded in the income statement. Unamortized discount is amortized to interest expense using the effective interest method over the life of the Convertible Note.

 

 

 

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Fair Value of Financial Instruments

 

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made. 

 

The Company follows FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.

 

The Company follows the provisions of ASC 820 with respect to its financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s convertible features associated with its promissory notes (see Note 9) which were required to be measured at fair value on a recurring basis under of ASC 815 as of January 31, 2018, the date immediately prior to the event that eliminated the convertible instrument related to the derivative liability, and October 31, 2017, were all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities as of January 31, 2018 and October 31, 2017: 

 

Level one — Quoted market prices in active markets for identical assets or liabilities;

 

Level two — Inputs other than level one inputs that are either directly or indirectly observable such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level three — Unobservable inputs that are supported by little or no market activity and developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s derivative liability is measured at fair value on a recurring basis. The Company classifies the fair value of the derivative liability under level three.

 

Based on ASC Topic 815 and related guidance, the Company concluded the common stock issuable pursuant to the conversion features of the convertible promissory notes are required to be accounted for as derivatives as of the issue date due to a reset feature on the exercise price. At the date of issuance common stock derivative liabilities were measured at fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The Company records the fair value of these derivatives on its balance sheet at fair value with changes in the values of these derivatives reflected in the consolidated statements of operations as “change in fair value of derivative liabilities.” These derivative instruments are not designated as hedging instruments under ASC 815-10 and are disclosed on the balance sheet under Derivative Liabilities.

 

Further, and in accordance with ASC 815, the embedded derivatives are revalued using a Monte Carlo Simulation model at issuance and at each balance sheet date and marked to fair value with the corresponding adjustment as a “gain or loss on change in fair values” in the consolidated statement of operations.

 

 

 

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The Company classifies the fair value of these securities under level three of the fair value hierarchy of financial instruments. Changes in the unobservable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments.

 

During the year ended October 31, 2018, the Company recorded a gain of $265,597 associated with the change in fair value of the derivative liabilities from October 31, 2017.

 

The Company did not have any convertible instruments outstanding at October 31, 2019 and 2018 that qualify as derivatives.

 

Subsequent Events

 

The Company has evaluated subsequent events that occurred after October 31, 2019 through the financial statement issuance date for subsequent event disclosure consideration.

 

New Accounting Pronouncements

 

In February 2016, a pronouncement was issued by the FASB that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company does not expect that implementation of the new pronouncement will have a material impact to its financial statements.

 

NOTE 3 – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company incurred operating losses of $1,776,490 for the year ended October 31, 2019. In addition, the Company had an accumulated deficit of $16,285,222 at October 31, 2019. The Company had a negative working capital position of $1,677,684 at October 31, 2019.

 

In addition to the above, the outbreak of the novel coronavirus (“COVID-19”) during March 2020 and the resulting adverse public health developments and economic effects to the United States business environments have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities, particularly in regards to potential health benefits of the Company’s products in addressing various health concerns associated with COVID-19 and (b) is aggressively seeking to raise additional debt and/or equity financing to support working capital requirements until sale for its products to providers resumes to levels pre COVID-19.

 

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 United States economy resumes to pre-COVID-19 conditions and (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.

 

 

 

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Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and the costs 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 and common stock liquidity will hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.

 

In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (1) the effects of the COVID-19 crisis resume to pre-COVID 19 market conditions, (2) the Company will be able to establish a stabilized source of revenues, (3) obligations to the Company’s creditors are not accelerated, (4) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations, (5) the Company is able to continue to produce products or obtain products under supply arrangements which are in compliance with current and future regulatory guidelines, (6) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and the safety and efficacy of its products, and (7) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.

 

There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and our business. In addition, there is no assurance that the Company will be able to complete its revenue growth strategy, its expected required research and development activities or otherwise obtain sufficient working capital to cover ongoing cash requirements. Without sufficient cash reserves, the Company’s ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant effort since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues. As described above, the COVID-19 crisis has significantly impaired the Company and the overall Unites States and World economies. If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws.  As of October 31, 2019, 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 – SALE AND TRANSFER OF ANU MANUFACTURING ASSETS

 

Effective February 5, 2018 (“Closing Date”), Vera Acquisition LLC, a Utah limited liability company ("Vera"), Organicell, ANU and General Surgical, executed an Asset Purchase Agreement ("Purchase Agreement") pursuant to which ANU sold to Vera (“Sale”) their right, title and interest in certain tangible and other assets associated with its manufacturing operations, including prepaid expenses, raw and finished goods inventory, a long term lease for ANU’s laboratory facility in Sunrise, Florida (including associated security deposits), furniture and equipment, and certain intellectual property rights. General Surgical transferred its rights to certain third-party distribution agreements between General Surgical and distributors of products manufactured by ANU (“Sold Assets”) in exchange for a cash payment of $950,000 and the execution of a long-term distribution agreement with Organicell (“Organicell Distribution Agreement”) described below. In connection with the Sale, Vera received credit for $100,000 previously paid to ANU for prepaid product supply that was not yet delivered to Vera as of the Closing Date.

 

In connection with the Sale, the Company was required to use cash proceeds from the Sale to satisfy and extinguish all of the Notes outstanding related to the SPA as of the date of the Sale, totaling approximately $762,477 (comprised of $527,778 of face value of the Notes outstanding, $8,589 of accrued and unpaid interest from January 1, 2018 through the date of the Sale, $211,111 of prepayment penalties and $15,000 for reimbursement of legal fees), which were secured by a first priority lien on all of the Company’s assets, and to be used to pay all of ANU’s remaining trade accounts payable outstanding as of the Closing Date. In addition, the Purchase Agreement required ANU to fund the placental donor tissue costs that were required by Vera to process additional product subsequent to the Closing to replace the shortfall of the actual inventory product amounts as of the Closing Date and the specified inventory quantities provided for in the Purchase Agreement. The Purchase Agreement also required ANU to escrow $47,500 (5%) of the cash purchase price and for General Surgical to escrow, subsequent to the Closing Date, up to $47,500 from collections of accounts receivable that were existing as of the Closing Date for a period of 90 days subsequent to the Closing Date to cover pre-closing related liabilities of ANU that were not identified as of the Closing Date, if any, and other obligations of ANU associated with the Purchase Agreement.

 

 

 

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Effective upon the closing of the Sale, Dr. Werber and Mr. Suddarth each entered into a separation and general release agreement with the Company, which provided for the immediate resignation of Dr. Werber and Mr. Suddarth of all their respective executive and board of director positions held with Organicell and/or any of Organicell’s subsidiaries, and settlement of all obligations of each party to the other pursuant to the respective employment agreements, including the release of all rights the Company may have held in any intellectual property of Dr. Werber and Mr. Suddarth and any non-compete restrictions on Dr. Werber and Mr. Suddarth. In connection with such releases, Dr. Werber and Mr. Suddarth each agreed to forfeit all warrants previously granted and outstanding (a total of 77,150,000 warrants to purchase shares of common stock of the Company), forfeit any and all accrued and unpaid amounts owing under the employment agreements for past due wages, benefits, severance obligations, unreimbursed expenses and any other obligations owing to one another as of the Closing Date (totaling $906,515) in exchange for a grant of 7,500,000 newly issued shares of restricted common stock of the Company to each of Dr. Werber and Mr. Suddarth, with a fair value of $83,250, based on the closing price of the common stock of the Company on the date of the Sale.

 

In connection with the Sale, ANU and General Surgical retained all cash on-hand as of the Closing Date and General Surgical retained all accounts receivable existing at the Closing Date, trademarks and inventory associated with the distribution of its “Organicell” product, and certain agreements between General Surgical and distributors of the ANU products that General Surgical intends to continue to supply after the Closing Date pursuant to the Organicell Distribution Agreement. After the completion of the Sale, the Company remained in the business of selling and distributing regenerative biologic therapies based on amnion placental tissue derived products to doctors and hospitals but was required to depend on third party supply agreements, rather than from products manufactured internally by ANU, for the supply of these advanced biologically processed cellular and tissue based products. During February 2019, the Company began arranging to operate a new laboratory facility for the purpose of performing research and development, production and manufacturing of anti-aging and cellular therapy products. This new laboratory facility became operational in May 2019 and during the same period, the Company began producing and distributing the products that are being sold to its customers.

 

Notice Of Change In Vera Operations

 

During August 2018, Vera notified the Company that it had sold most of the principal assets acquired in the Sale to another entity, that it was no longer in the business originally acquired in connection with the Sale and that it was no longer able to supply products to the Company. As a result, since that date, up thru May 2019, the date Organicell began again producing products internally, the Company has entered into other short-term supply agreements with other third-party manufacturers to provide it with the products it sells to its customers.

 

Since Vera’s disposition of the assets originally acquired in connection with the Sale as described above, the Company has yet to receive any payments from Vera associated with the original escrow deposit of $47,500 that was withheld from the proceeds from the Sale. Due to the uncertainty of Vera’s ability and/or desire to repay the escrow receivable amount outstanding to the Company, the Company has recorded a reserve for the full amount of escrow receivable totaling $47,500 during the fourth quarter ended October 31, 2018.

 

NOTE 5 – REORGANIZATION

 

On April 23, 2018, the Company and MBA, executed a Plan and Agreement of Reorganization (“Reorganization”) whereby the Company agreed to issue to MBA an aggregate of 222,425,073 shares of its common stock, representing at the time 51% of the outstanding shares of common stock of the Company on fully-diluted basis, for $0.001 per share, in consideration for Mr. Manuel Iglesias’ agreement to serve as the Company’s Chief Executive Officer and a member of the Board of the Company. The Reorganization was effective as of April 13, 2018.

 

The Company has recorded $2,758,071 of stock compensation expense associated with the issuance of the shares referred to above for Mr. Iglesias’s agreement to serve as the Company’s Chief Executive Officer. As a result of the above transactions, MBA obtained a controlling interest in the voting and equity interests of the Company. Manuel E. Iglesias is the sole Manager of MBA and thus may be deemed to control MBA. Since the date of the Reorganization, MBA’s interests held in the equity of the Company have been reduced from 51.0% to approximately 24.6%.

 

 

 

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Under the terms of the Reorganization, as of the Effective Date:

 

1.Mr. Iglesias replaced Albert Mitrani as Chief Executive Officer of the Company.
2.Mr. Iglesias and Richard Fox were appointed as members to the Board of Directors of the Company. Mr. Fox resigned in May 2019 and Mr. Robert Zucker was appointed to fill his vacancy. Mr. Zucker resigned from the Board of Directors in April 2020.
3.Ian Bothwell and Maria Mitrani resigned from the Board of Directors of the Company. Ms. Mitrani was re-appointed to the Board of Directors of the Company during August 2019. Mr. Bothwell was re-appointed to the Board during September 2019.
4.Albert Mitrani, Ian Bothwell and Maria Mitrani each agreed to terminate their respective employment agreements in favor of new employment agreements. In connection with the new employment agreements, Mr. Mitrani agreed to serve as the Company’s President, Ian Bothwell agreed to remain Chief Financial Officer and Maria Mitrani agreed to remain Chief Science Officer of the Company.
5.Albert Mitrani, Ian Bothwell and Maria Mitrani each agreed to the cancellation of their 100 shares of the Company’s Series A Preferred Stock. In addition, the Company agreed that it would cancel the Certificates of Designation for the Company’s Series A Preferred Stock and Series B Preferred Stock.
6.The Company agreed to terminate Sections 4.08(c) and 4.08(d) of the Company’s Second Amended and Restated By-Laws which had required supermajority approval of the Board for certain corporate actions.
7.Ian Bothwell and Maria Mitrani exercised, on a cashless basis, all of their warrants for 48,624,561 and 21,757,895, respectively, shares of common stock of the Company based on the exercise price of $0.001 and the closing price of the Company’s common stock on the Effective Date.
8.Ian Bothwell and Maria Mitrani were granted an additional 4,675,439 and 2,092,105, respectively, shares of common stock of the Company (see Note 12).
9.Albert Mitrani, Ian Bothwell and Maria Mitrani each agreed to release the Company for all amounts owed to them for unpaid salaries through the Effective Date and advances and/or expenses incurred prior to December 31, 2017 totaling $1,636,808.

 

NOTE 6 – INVENTORIES

 

Inventories totaled $77,963 and $0 at October 31, 2019 and October 31, 2018, respectively.

 

   October 31, 2019   October 31, 2018 
         
Raw materials and supplies  $5,123   $ 
Finished goods   72,840     
           
Total inventories  $77,963   $ 

 

NOTE 7 - PROPERTY AND EQUIPMENT

 

   October 31, 2019   October 31, 2018 
         
Computer equipment  $8,653   $8,653 
Manufacturing equipment   272,331     
    280,984    8,653 
Less: accumulated depreciation and amortization   (17,669)   (2,875)
Total property and equipment, net  $263,315   $5,778 

 

 

 

 

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Depreciation expense totaled $14,794 and $7,835 for the years ended October 31, 2019 and 2018, respectively.

 

During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $239,595. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $4,513 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a capital lease obligation. The annual interest rate charged in connection with the lease is 4.5%. The leased equipment is being depreciated over their estimated useful lives of 15 years.

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

Effective February 5, 2018, Dr. Werber’s and Mr. Suddarth’s executive employment agreements were terminated and the parties entered into a settlement agreement providing for the release of all obligations owed to Dr. Werber and Mr. Suddarth as of the date of the Sale in exchange for each receiving a grant for 7,500,000 shares of common stock of the Company. On April 6, 2018, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements were amended to modify the exercise price of their outstanding warrants under certain conditions. Effective April 13, 2018, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements were terminated and replaced with new executive employment agreements. On February 26, 2020, April 25, 2020 and June 29, 2020, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s employments agreement were further amended. See Note 14 for a more detailed description of the executive employment agreements and the respective amendments referred to above.

 

In connection with the Reorganization, Mr. Bothwell and Dr. Mitrani each agreed to exercise on a cashless basis all of their warrants to purchase 53,300,000 and 23,850,000 shares of common stock of the Company, respectively. Based on the closing price of the Company’s common stock on the Effective Date of $0.012 per share and the warrant exercise price of $0.001 per share, Mr. Bothwell and Dr. Mitrani were required to use 4,675,439 and 2,092,105 shares of common stock received from the exercise of the warrants, respectively, to pay for the exercise price for exercising all of the warrants (see Note 13).

 

Effective April 13, 2018, Mr. Bothwell and Dr. Mitrani were each granted 4,675,439 and 2,092,105 shares of common stock of the Company, respectively. The newly granted shares vest immediately and were valued at $57,975 and $25,942, respectively, based on the closing trading price of the common stock on the effective date of the grant.

 

In connection with the previous appointment of an independent member to the Board of Directors of the Company, during August 2019, the Board approved the issuance to the director of 5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date.

 

Effective February 26, 2020, Mr. Bothwell was granted cashless warrants to purchase 7,500,000 shares of common stock of the Company. The newly granted warrants vest immediately, have an exercise price of $0.028 per share and are exercisable for ten years from the effective date of the grant.

 

During April 2020, June 2020, August 2020 and September 2020, each of the current executives of the Company, Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell and George Shapiro (“Current Executives”) were granted rights under the Management and Consultant Performance Plan (“MCPP”) to receive common stock of the Company based on the achievement of certain defined milestones. In addition, during June 2020, each of the current non-executive members of the Board were granted rights under the MCPP to receive common stock of the Company based on the achievement of certain defined milestones (see Note 12).

 

The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. The term of the lease has been extended through June 2023. The current monthly rent is $2,900 and beginning July 2020, the monthly rent increases to $3,500. The Company paid a security deposit of $5,000.

 

In connection with Mr. Bothwell’s executive employment agreements, the Company agreed to reimburse Rover Advanced Technologies, LLC, a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative fees, etc.).

 

On February 5, 2018, in connection with the Sale (see Note 4), all amounts owed to the Mr. Bothwell and Dr. Werber in connection with the SPA were repaid.

 

 

 

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On February 5, 2018, in connection with Dr. Werber’s resignation and termination, Dr. Werber agreed to the forfeit and the cancellation of the 100 shares of the Series A Preferred Stock previously issued. Effective April 13, 2018, in connection with the Reorganization, Mr. Mitrani, Mr. Bothwell and Dr. Mitrani each agreed to the forfeit and cancellation of their 100 shares of the Series A Preferred Stock.

 

On April 6, 2018, Peter Taddeo resigned as a member of the Board of Directors of the Company and as the Chief Executive Officer and member of the board of directors of the Mint Organics Entities. In connection with Mr. Taddeo’s resignation, Mr. Taddeo entered into a Separation and General Release Agreement (“Taddeo Separation Agreement”) whereby Mr. Taddeo agreed to release the Mint Organics Entities from all obligations in connection with the Taddeo Agreement and all other agreements and/or financial obligations between the parties related to the Taddeo’s employment or services performed with any of Mint Organics Entities. In consideration for Taddeo entering into the Taddeo Separation Agreement, the Mint Organics Entities paid Taddeo $5,000 and Mr. Bothwell paid $3,000 to Taddeo for the purchase of the 1,000,000 shares of common stock of the Company that were granted to Taddeo in connection with the Taddeo Agreement. Contemporaneously with the execution of the Taddeo Separation Agreement, the Company and Mr. Taddeo entered into a Share Purchase and General Release Agreement whereby the Company agreed to purchase from Mr. Taddeo his 150 shares of Mint Series A Preferred Stock for an aggregate purchase price of $40,000 (see Note 15).

 

On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with the initial capitalization of Mint Organics in exchange for 4,400,000 shares of common stock of the Company.

 

As described in Note 5, on April 23, 2018, the Company and MBA executed a Plan and Agreement of Reorganization. As a result of the Reorganization, MBA acquired at the time a controlling interest of the Company. Manuel E. Iglesias is the sole Manager of MBA and thus may be deemed to control MBA.

 

For the year ended October 31, 2019 and 2018, the total amount of sales to customers related to our board of director members and/or employees of the Company totaled $71,650 and $19,550, respectively.

 

From time to time, Mr. Iglesias and Mr. Bothwell and/or their respective affiliates have advanced funds to the Company to pay for certain expenses of the Company. As of October 31, 2019, $220,897 and $48,184 are owed to Mr. Iglesias and Mr. Bothwell and/or their respective affiliates, respectively. In addition, the Company has not provided Mr. Bothwell required salary payments since July 2018. At October 31, 2019, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $132,105, $129,613 and $321,907, respectively.

 

As described in Note 9, Mr. Iglesias has provided a personal guaranty in connection with amounts required to paid under the Credit Facility.

 

During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July and August 2020, the Company sold an additional 1,166,666 shares and 422,514 shares of common stock to Dr. Allen Meglin at $0.03 per share and $0.10 per share, respectively, for an aggregate purchase price of $77,251.

 

On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000.

 

 

 

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During September 2018, in consideration for Dr. George Shapiro agreeing to serve as the Company’s Chief Medical Officer (“CMO”) and render other medical consulting and advisory services to the Company, the Board approved the issuance to the CMO of 2,500,000 shares of common stock. In connection with the CMO’s appointment to the Board of Directors of the Company during February 2019, during February 2019 and August 2019, the Board approved the issuance to the CMO of 2,000,000 and 3,000,000 shares, respectively, of common stock. On February 26, 2020, the Company agreed to immediately grant the CMO 5,000,000 shares of common stock in recognition of past services provided to the Company through February 2020. In addition, the Company agreed to enter into a consulting agreement with the CMO to provide ongoing services to the Company. The CMO will receive compensation of $82,250 annually, commencing March 1, 2020. The term of the consulting agreement is one year, with automatic renewals for annual periods thereafter unless prior written notice is provided by either party of the desire to terminate.

 

In connection with Mr. Robert Zucker’s resignation as a member of the Board of Directors of the Company in April 2020, the Board approved the issuance to Mr. Zucker of 736,808 shares of unregistered common stock of the Company valued at $0.022 per share, the closing price of the common stock of the Company on the grant date ($16,210).

 

NOTE 9 - NOTES PAYABLE

 

Private Placement Of Convertible Debentures

 

On June 20, 2018, the Company issued a total of $150,000 of convertible 6% debentures (“150,000 Debentures”) to an accredited investor. The principal amount of the $150,000 Debentures, plus accrued and unpaid interest through June 30, 2019 are payable on the 10th business day subsequent to June 30, 2019, unless the payment of the $150,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $150,000 Debentures (see below), and/or accelerated due to an event of default in accordance with the terms of the $150,000 Debentures. Interest on the $150,000 Debentures for each calendar quarter ended beginning with the quarter ended June 30, 2018 is payable on the 10th business day following the immediately prior calendar quarter.

 

On August 10, 2018, the Company issued a total of $100,000 of convertible 6% debentures (“100,000 Debentures”) to two accredited investors. The principal amount of the $100,000 Debentures, plus accrued and unpaid interest through July 31, 2019 are payable on the 10th business day subsequent to July 31, 2019, unless the payment of the $100,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $100,000 Debentures (see below), and/or accelerated due to an event of default in accordance with the terms of the $100,000 Debentures. Interest on the $100,000 Debentures for each calendar quarter ended beginning with the quarter ended October 31, 2018 is payable on the 10th business day following the immediately prior calendar quarter.

 

During October 2018, the Company issued a total of $70,000 of convertible 6% debentures (“70,000 Debentures”) to two accredited investors. The principal amount of the $70,000 Debentures, plus accrued and unpaid interest through September 30, 2019 are payable on the 10th business day subsequent to September 30, 2019, unless the payment of the $70,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $70,000 Debentures (see below), and/or accelerated due to an event of default in accordance with the terms of the $70,000 Debentures. Interest on the $70,000 Debentures for each calendar quarter ended beginning with the quarter ended December 31, 2018 is payable on the 10th business day following the immediately prior calendar quarter.

 

During March 2019, the Company issued a $30,000 of convertible 6% debentures (“30,000 Debenture”) to one accredited investor. The principal amount of the $30,000 Debenture, plus accrued and unpaid interest through June 30, 2020 are payable on the 10th business day subsequent to June 30, 2020, unless the payment of the $30,000 Debenture is prepaid at the sole option of the Company, is converted as provided for under the terms of the $30,000 Debenture (see below), and/or accelerated due to an event of default in accordance with the terms of the $30,000 Debenture. Interest on the $30,000 Debenture for each calendar quarter ended beginning with the quarter ended June 30, 2019 is payable on the 10th business day following the immediately prior calendar quarter.

 

 

 

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Under the terms of the $150,000 Debentures, the $100,000 Debentures, the $70,000 Debentures and the $30,000 Debenture (collectively referred to as the “Convertible Debentures”), the Company is permitted to issue additional convertible 6% debentures up to a maximum aggregate principal amount of $1,000,000 of convertible 6% debentures, all of like tenor except as to the issuance date which shall be determined based on the date that additional convertible debentures are issued, if any. The Company used the proceeds from the Convertible Debentures totaling $350,000 for general working capital purposes.

 

The Convertible Debentures may be prepaid at any time by the Company in whole or in part without penalty upon 30 days written notice but not to exceed 60 days (“Repayment Notice”) at a price equal to the principal amount outstanding of the Convertible Debentures’ elected to be repaid by the Company, plus all unpaid and accrued interest up through the date of prepayment provided in the Repayment Notice (“Prepayment Date”).

 

The Convertible Debentures (the principal and all accrued but unpaid interest thereon) contained provisions that under certain conditions, provided the ability of the holders of the Convertible Debentures at their option at any time, from time to time to convert into shares of the common stock of the Company. The conversion prices were based on the Company completing a contemplated pending reverse split at the Company’s sole discretion (which the Company elected not to pursue) or at conversion prices greatly in excess of the historical prices of the Company’s common stock and reasonably expected prices of the Company’s common stock to be realized during the term of the Convertible Debentures. As a result, none of the Convertible Debentures have been or are expected to be converted in accordance with their conversion provisions. The contingent rights to convert for certain of the convertible debentures did not result in any underlying value attributable to the fair value of the embedded derivatives liabilities associated with respective Convertible Debentures.

 

During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of the $100,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction).

 

During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction).

 

As a result of the above conversions, the principal amount of Convertible Debentures outstanding as of October 31, 2019 was $220,000. These remaining Convertible Debentures were not repaid on their required maturity dates.

 

On June 25, 2020, the Company entered into a settlement and general release agreement with the holder of the $50,000 Debenture whereby the Company is required to repay the balance of the $50,000 Debenture in eight monthly installments of $6,250 plus outstanding accrued interest beginning June 30, 2020 and ending on January 31, 2021.

 

During October 2020, the Company and the holder of the $20,000 debenture (one of the two holders that participated in the $70,000 Debentures described above), agreed to convert the principal amount of the $20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,100 into 160,000 shares of common stock of the Company (approximately $0.125 per share representing a discount to the trading price of $0.278 as of the effective date of the transaction).

 

Unsecured Promissory Note

 

On February 5, 2019, the Company entered into an unsecured loan agreement with a third party with a principal balance of $25,000. The outstanding principal was due March 8, 2019. The loan was not repaid on the maturity date as required. The third party subsequently agreed to apply amounts due for invoices due from third party for future purchases of the Company products to the extent of the outstanding balances owed by the Company in connection with the loan (interest and principal).

 

 

 

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Credit Facility

 

On September 19, 2019, the Company’s wholly owned subsidiary, General Surgical Florida, received $100,000 in connection with an unsecured line of credit (“Credit Facility”). The Credit Facility matures in one-year and the Company is required to make 52 weekly payments of $2,403 (payments totaling $125,000). The Credit Facility can be prepaid at any time by the Company. The effective annual interest rate of the facility based on 52 equal monthly payments is 45.67%. Proceeds received from the Credit Facility were used for working capital purposes. Mr. Iglesias provided a personal guaranty in connection with amounts required to paid under the Credit Facility.

 

Capital Lease Obligations

 

During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $239,595. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $4,513 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a capital lease obligation. The annual interest rate charged in connection with the lease is 4.5%. The leased equipment are being depreciated over their estimated useful lives of 15 years.

 

Funding Facility

 

On October 10, 2019, the Company and an investor (“Noteholder”) agreed to a funding facility arrangement (“Funding Facility”) whereby the Noteholder was required to fund the Company an initial tranche of $100,000 on October 15, 2019 (“Initial Funding Date”) and had the option to fund the Company up to an aggregate of $500,000 (“Funding Facility Limit”) in minimum $100,000 monthly tranches by no later than February 15, 2020 (“Funding Expiration Date”). The Funding Facility matures on February 15, 2021 (“Maturity Date”) and accrues interest at 6.0% per annum. The Funding Facility, plus all accrued interest, automatically converts into 40,000,000 shares of newly issued common stock of the Company if the Noteholder funds the full $500,000 by the Funding Expiration Date. The Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company that were issued to the Noteholders designated entity, Republic Asset Holdings LLC.

 

Mint Organics Inc.

 

On June 22, 2017, Mint Organics entered into an unsecured loan agreement with a third party (“Third Party”) with a principal balance of $60,000, an annual interest rate of 10%, and all accrued and unpaid interest and outstanding principal were due on the one-year anniversary of the note. The loan was not repaid on the maturity date as required.

 

On May 1, 2019, the Company, Mint Organics and the Third party agreed to a settlement of the outstanding loan whereby the Company agreed to issue the Third Party 2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction. In connection with the exchange, the Third Party provided a release to the Company in connection with any claims associated with the loan agreement.

 

Interest expense for the years ended October 31, 2019 and 2018 was $4,349 and $6,049, respectively.

 

NOTE 10 – DERIVATIVE LIABILITIES

 

In connection with the sale of debt or equity instruments, the Company may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

 

 

 

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The Company's derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, the Company estimates fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the instrument.

 

The Company classifies the fair value of these securities under level three of the fair value hierarchy of financial instruments. The fair value of the derivative liability was calculated using a Monte Carlo Simulation model that values the liability of the Convertible Notes based on a risk neutral valuation where the price of the option is its discounted expected value. The technique applied generates a large number of possible (but random) price paths for the underlying (or underlyings) via simulation, and then calculate the associated conversion value (i.e. "payoff") of the note (limited by a percentage of trading volume) for each path. These payoffs are then averaged and discounted to the date of valuation resulting in the fair value of the option.

 

In connection with the Sale, the underlying debt instrument associated with the derivative liability was paid in full without utilization of any of the conversion features associated with the debt instrument. During the year ended October 31, 2018, the Company recorded a gain of $265,597 associated with the change in fair value of the derivative liabilities from October 31, 2017.

 

NOTE 11 — INCOME TAXES

 

The Company files a consolidated federal income tax return that includes all of its subsidiaries. For the year ended October 31, 2019, the Company incurred operating losses, and therefore, there was not any current income tax expense amount recorded during that period. During the year ended October 31, 2018 there was a change in ownership which caused a change in control under IRC Section 382 (“Section 382 event”). Prior to the Section 382 event, the Company utilized a portion of its available net operating loss carryforwards to offset income through that date mainly resulting from the sale of ANU.

 

The consolidated provision for income taxes for October 31, 2019 and 2018 consists of the following:

 

   Year Ended
October 31,
   Year Ended
October 31,
 
   2019   2018 
           
Current:          
Federal  $   $ 
State        
   $   $ 
Deferred:          
Federal  $(185,045)  $911,472 
State   (19,471)   164,180 
    (204,516)   1,075,652 
Change in Valuation Allowance   204,516    (1,075,652)
   $   $ 

 

 

 

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Effective tax rates differ from the federal statutory rate of 21% for 2019 and the blended rate of 23.17% for 2018 applied to income before income taxes. A reconciliation of the U.S. federal statutory tax amount to the Company’s effective tax amount is as follows:

 

   October 31, 2019   October 31, 2018 
Tax at federal statutory rate  $(361,687)  $(802,067)
State taxes, net of federal benefit   (74,835)   (68,278)
Permanent differences   10,468    427,759 
Effect of change in income tax rate       1,052,690 
Other   221,538    46,139 
Section 382 limitation       419,409 
Total income tax expense (benefit)   (204,516)   1,075,652 
Change in valuation allowance   204,516    (1,075,652)
   $   $ 

 

 

The Company had a federal net operating loss carryover of $1,060,732 as of October 31, 2019. On December 22, 2017, the United States enacted into law the Tax Cuts and Jobs Act (“TCJA”). This law provides for a comprehensive overhaul of the corporate income tax code, including amongst other provisions, a reduction of the statutory corporate tax rate from 34% to 21%, effective on January 1, 2018, and an indefinite carryforward of net operating losses arising from tax years ending after December 31, 2017 limited to a deduction of 80% of taxable income. FASB ASC 740, Income Taxes, requires that the effects of changes in tax rates be recognized in the period enacted. As a result, we remeasured our deferred tax assets and liabilities to reflect the new statutory federal rate of 21% which resulted in a net adjustment of approximately $1.1 million to deferred income tax expense for the year ended October 31, 2018. This adjustment was offset by a reduction in the valuation allowance.

 

The tax effects of temporary differences and carry-forwards that give rise to deferred tax assets and liabilities for the Company were as follows:

 

   October 31, 2019  

October 31, 2018

 
Deferred Tax Assets:          
Stock based compensation  $2,670,914   $2,686,859 
Accrued compensation   136,127     
Net operating loss carryforward-Federal   222,754    91,501 
Net operating loss carryforward-State   34,918    16,612 
Other   177    137 
Total deferred tax assets:   3,064,890    2,795,109 
Deferred Tax Liabilities:          
Property and equipment   66,650    1,385 
Total deferred tax liabilities:   66,650    1,385 
           
Valuation Allowance   (2,998,240)   (2,793,724)
Net deferred tax assets  $   $ 

 

 

 

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FASB ASC 740 requires a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. At October 31, 2019 and October 31, 2018, the net deferred tax asset was offset by a full valuation allowance.

 

Pursuant to Code Sec. 382 of the Internal Revenue Code (“the Code”), the utilization of net operating loss carryforwards may be limited as a result of a cumulative change in stock ownership of more than 50% over a three-year period. The Company underwent such a change in April 2018 and consequently, the net operating loss carryforward was adjusted to write off the portion that will expire unused. At October 31, 2018, the Company had net operating losses approximating $395,000 which carry over indefinitely.

 

Certain of the above amounts reported for the year ended October 31, 2018 have been revised to conform with the current year presentation and to reflect the actual amounts that were reported in the Company’s tax filings.

  

IRS Penalties

 

The Company’s income tax returns for the periods since inception through the tax year ended October 31, 2015 were not filed with the Internal Revenue Service (“IRS”) until August 2017 (“Delinquent Filed Returns”). The Company’s income tax returns for the tax year ended October 31, 2016 were filed with the IRS during December 2017. In connection with the Delinquent Filed Returns, during the period September 2017 through October 2017, the Company received notices that it was being assessed approximately $90,000 of penalties, plus interest (“IRS Penalties”), in connection with the late filing certain information returns that were included as part of the Delinquent Filed Returns. In connection with the notices, the IRS indicated its intent to levy property of the Company if the IRS penalties were not paid as required. During January 2018, the Company requested from the IRS an abatement of the IRS penalties based on reasonable cause. During April 2018, the IRS notified the Company that the IRS penalties for the tax year ended 2011 of $20,000, plus interest, were abated and the request for abatement for the IRS penalties for the tax years ended 2012 – 2015 were denied. The Company is currently appealing the initial determination by the IRS to exclude the IRS penalties for the tax years 2012-2015 in its consideration of abatement. During the period that the appeal is being reviewed and a determination is made by the IRS, the IRS has agreed to put a hold on taking any levy action against the Company for the remaining amounts of the IRS Penalties that are still outstanding. In connection with the notices, the Company has accrued $70,000 of accrued tax penalties on the balance sheet as of October 31, 2019 and 2018.

 

NOTE 12 – CAPITAL STOCK

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of $0.001 par value preferred stock in one or more designated series, each of which shall be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. The Company’s board of directors is authorized, without stockholders’ approval, within any limitations prescribed by law and the Company’s Articles of Incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock.

 

Series A Non-Convertible Preferred Stock

 

On November 1, 2016, the Company filed a Certificate of Designation with the Secretary of State of Nevada therein designating out of the 10,000,000 authorized shares of Preferred Stock, a class of Preferred Stock as “Series A Non-Convertible Preferred Stock” consisting of 100 shares (the “ Series A Certificate of Designation “). On March 2, 2017, the Company filed with the Secretary of State of Nevada an amendment to increase the number of shares provided for in the Series A Certificate of Designation from 100 shares to 400 shares.

 

Set forth below is a summary of the Series A Certificate of Designation, as amended.

 

 

 

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Voting

 

Generally, the outstanding shares of Series A Non-Convertible Preferred Stock shall vote together with the shares of common stock and other voting securities of the Company as a single class and, regardless of the number of shares of Series A Non-Convertible Preferred Stock outstanding, and as long as at least one share of Series A Non-Convertible Preferred Stock is outstanding, such shares shall represent 80% of all votes entitled to be voted at any annual or special meeting of stockholders of the Company or action by written consent of stockholders. Each outstanding share of the Series A Non-Convertible Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Non-Convertible Preferred Stock.

 

Dividends

 

The holders of shares of Series A Non-Convertible Preferred Stock shall not be entitled to receive any dividends.

 

Ranking

 

The Series A Non-Convertible Preferred Stock shall, with respect to distribution rights on liquidation, winding up and dissolution, (i) rank senior to any of the shares of common stock of the Company, and any other class or series of stock of the Company which by its terms shall rank junior to the Series A Non-Convertible Preferred Stock, and (ii) rank junior to any other series or class of preferred stock of the Company and any other class or series of stock of the Company which by its term shall rank senior to the Series A Non-Convertible Preferred Stock.

 

So long as any shares of Series A Non-Convertible Preferred Stock are outstanding, the Company shall not alter or change any of the powers, preferences, privileges or rights of the Series A Non-Convertible Preferred Stock, without first obtaining the approval by vote or written consent, in the manner provided by law, of the holders of at least a majority of the outstanding shares of Series A Non-Convertible Preferred Stock, as to changes affecting the Series A Non-Convertible Preferred Stock.

 

Issued Shares

 

On November 1, 2016, the Company issued 100 shares of its Series A Non-Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) to the CEO. On March 8, 2017, the Company issued 100 shares of the Series A Preferred Stock, to each of the COO, CSO and CFO. In connection with an independent valuation using the “Market Approach”, the Company determined that the value attributable to the Series A Preferred Stock issued was nominal.

 

On February 5, 2018, in connection with the COO’s resignation and termination, the COO agreed to forfeit and the cancellation of the 100 shares of the Series A Preferred Stock previously issued.

 

Effective April 13, 2018, in connection with the Reorganization, the CEO, CFO and CSO each agreed to forfeit and the cancellation their 100 shares of the Series A Preferred Stock previously issued.

 

On June 6, 2018, the Company approved resolutions to cancel and terminate the Series A Preferred Stock designation and file a certificate of amendment with the State of Nevada, withdrawing the designation of the Series A Preferred Stock. On June 14, 2018, the Company filed a Certificate of Withdrawal with the Secretary of State of Nevada thereby withdrawing and terminating all previously issued designations of the Company’s Series A Preferred Stock. As a result of the aforementioned actions, as of June 14, 2018, there were no designations of Series A Preferred Stock authorized or outstanding.

 

 

 

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Series B Convertible Preferred Stock

 

On November 1, 2016, the Company filed a Certificate of Designation with the Secretary of State of Nevada therein designating out of the 10,000,000 authorized shares of Preferred Stock, a class of Preferred Stock as “Series B Convertible Preferred Stock” consisting of 1,000,000 shares (“Series B Certificate of Designation”).

 

Set forth below is a summary of the Series B Certificate of Designation.

 

Conversion

 

Each holder of Series B Preferred Stock shall have the right, at such holder’s option, at any time or from time to time from and after the day immediately following the date the Series B Preferred Stock is first issued, to convert each share of Series B Preferred Stock into 20 fully-paid and non-assessable shares of common stock.

 

Rank

 

Except as specifically provided below, the Series B Preferred Stock shall, with respect to dividend rights, rights on liquidation, winding up and dissolution, rank junior to the Series A Non-Convertible Preferred Stock of the Company and senior to (i) all classes of common stock of the Company and (ii) any class or series of capital stock of the Company hereafter created (unless, with the consent of the holder(s) of Series B Preferred Stock).

 

Issued Shares

 

On June 6, 2018, the Company approved resolutions to cancel and terminate the Series B Preferred Stock designations and file a certificate of amendment with the State of Nevada, withdrawing the designation of the Series B Preferred Stock. On June 14, 2018, the Company filed a Certificate of Withdrawal with the Secretary of State of Nevada thereby withdrawing and terminating all previously issued designations of the Company’s Series B Preferred Stock. As a result of the aforementioned actions, as of June 14, 2018, there were no designations of Series B Preferred Stock authorized or outstanding.

 

Common Stock

 

On May 8, 2018, the Board adopted resolutions to (i) amend its Articles of Incorporation to reduce the number of authorized shares of common stock from 750,000,000 to 250,000,000 and (ii) reverse split the issued and outstanding shares of the Company’s common stock on a ratio of seventeen (17) current shares for one (1) share of new shares. On May 9, 2018, shareholders holding a majority in interest of the voting power of the Company (86.9%) approved the amendment and the reverse stock split.

 

On June 1, 2018, the Company filed a Company-Related Action Notification with FINRA (“Notification Form”) to provide notice of certain proposed actions by the Company, including the amendment and reverse stock split. However, due to the Company’s delinquency its Exchange Act reports with the SEC at the time of the filing (by failing to file the October 31, 2017 Annual Report and its Quarterly Reports for the quarters ended January 31, 2018 and April 30, 2018, FINRA did not announce or effectuate the Name Change or Reverse Split in the marketplace. On June 18, 2018, the Company filed a Certificate of Correction with the Secretary of State of Nevada to reverse the amendments related to the Reverse Split. FINRA has since informed the Company that a new Issuer Company-Related Notification Form will be required to be submitted should the Company desire to effectuate the Name Change and Reverse Split in the future, provided the Company is current in its Exchange Act filings. At such time as FINRA processes the announcements, the Company will effect the reverse split of its common stock and amend its Articles to reduce its authorized common stock.

 

 

 

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On May 18, 2020 and May 19, 2020, pursuant to the Nevada Revised Statutes and the Bylaws of the Company, the Board of Directors of the Company and the stockholders having the voting equivalency of 50.30% of the outstanding capital stock, respectively, approved the filing of an amendment to the Articles of Incorporation of the Company to increase the authorized amount of common stock from 750,000,000 to 1,500,000,000, without changing the par value of the common stock or authorized number and par value of “blank check” Preferred Stock. On June 2, 2020, the Company filed a Definitive 14C with the SEC regarding the corporate action. On June 24, 2020, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effectuate the corporate action on June 24, 2020.

 

Issuances of Common Stock - Sales:

 

On March 7, 2019, the Company sold an aggregate of 7,500,000 shares of common stock and granted warrants to purchase an aggregate 2,000,000 common shares to three “accredited investors” investors. The warrants have exercise prices of $0.08, and have a one -year term. The aggregate grant date fair value of the warrants issued in connection with these issuances were $6,600. The proceeds were used for working capital.

 

During April 2019, the Company sold 5,102,000 shares of common stock to seven “accredited investors” at $0.03 per share for an aggregate purchase price of $154,500. The proceeds were used for working capital.

 

During July 2019, the Company sold 2,500,000 shares of common stock to one “accredited investors” at $0.02 per share for an aggregate purchase price of $50,000. The proceeds were used for working capital.

 

During August 2019 through September 2019, the Company sold 5,250,000 shares of common stock to four “accredited investors” at $0.02 per share for an aggregate purchase price of $105,000. The proceeds were used for working capital.

 

During November 2019 through January 2020, the Company sold 3,250,000 shares of common stock to three “accredited investors” at $0.02 per share for an aggregate purchase price of $65,000. The proceeds were used for working capital.

 

During February 2020 through April 2020, the Company sold 11,050,000 shares of common stock to five “accredited investors” at $0.02 per share for an aggregate purchase price of $221,000. The proceeds were used for working capital.

 

During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July and August 2020, the Company sold an additional 1,166,666 shares and 422,514 shares of common stock to Dr. Allen Meglin at $0.03 per share and $0.10 per share, respectively, for an aggregate purchase price of $77,251. The proceeds from all of the above sales were used for working capital.

 

On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital.

 

During May 2020, the Company sold 3,000,000 shares of common stock to two “accredited investors” at $0.02 per share for an aggregate purchase price of $60,000. The proceeds were used for working capital.

 

 

 

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During July and August 2020, the Company completed the private placement to 19 accredited investors for the sale of 13,499,992 shares of Common stock of the Company at a selling price of $0.03 per share for an aggregate amount of $405,000 (“Sale”). In connection with the Sale, the Company agreed that all of the proceeds from the Sale are to be deposited into a separate bank account (“Sale Account”) of the Company and the proceeds are to be used exclusively to fund the costs associated with the Company’s ongoing public company filing requirements, including audit, tax, valuation and legal fees. The Company also agreed to maintain the Sale Account with a minimum cash balance of $25,000 at all times until such time that the Company has filed all required financial reports through the period ended July 31, 2021.

 

During the period July 2020, the Company sold 1,000,000 shares of common stock to two “accredited investors”, at $0.02 per share and $0.03 per share, respectively for an aggregate purchase price of $25,000. The proceeds were used for working capital.

 

During the period August 2020, the Company sold 8,606,665 shares of common stock to nine “accredited investors”, at prices ranging from $0.03 per share and $0.06 per share, for an aggregate purchase price of $392,100. The proceeds were used for working capital.

 

During the period September 2020, the Company sold 4,800,000 shares of common stock to five “accredited investors”, at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $410,000. The proceeds were used for working capital.

 

Issuances of Common Stock – Stock Compensation:

 

On June 5, 2018, as further amended, the Company and a third party (“Consultant”) entered into a consulting agreement whereby the Consultant agreed to provide business development and other services to the Company (“Consulting Agreement”). The Consulting Agreement terminated on May 31, 2019. Under the terms of the Consulting Agreement, the Company agreed to grant the Consultant 4,500,000 shares of common stock of the Company (“Consultant Shares”). The Consultant Shares vested as follows; 1,700,000 shares upon execution of the Consultant Agreement; 1,700,000 shares on December 5, 2018; and 1,100,000 shares on January 1, 2019. The common stock was valued at $0.017 per share based on the closing price of the common stock of the Company on the execution date of the Consulting Agreement. The Company has recorded $45,900, $18,580 and $12,020 of stock-based compensation expense on June 5, 2018, December 5, 2018 and January 1, 2019 respectively.

 

During September 2018, in consideration for agreeing to serve as the Company’s Chief Medical Officer (“CMO”) and render other medical consulting and advisory services to the Company, the Board approved the issuance to the CMO of 2,500,000 shares of unregistered common stock valued at $0.0138 per share, the closing price of the common stock of the Company on that date. The Company recorded $34,500 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2018. In connection with the CMO’s appointment to the Board of Directors of the Company during February 2019, during February 2019 and August 2019, the Board approved the issuance to the CMO of 2,000,000 and 3,000,000 shares, respectively, of unregistered common stock valued at $0.025 per share and $0.028 per share, respectively, the closing price of the common stock of the Company on the grant dates. The Company recorded $50,000 and $84,000, during the quarters ended April 30, 2019 and October 31, 2019, respectively, of stock-based compensation expense based fair value of these shares on the grant date.

 

During the period November 1, 2018 through January 31, 2019, in consideration for agreeing to render medical consulting and advisory services to the Company, the Board approved the issuance to eight individuals an aggregate of 4,200,000 shares of unregistered common stock valued between $0.0055 and $0.0244 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $28,680 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended January 31, 2019.

 

 

 

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During the period February 1, 2019 through April 30, 2019, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to seven individuals an aggregate of 1,750,000 shares of unregistered common stock valued between $0.024 and $0.049 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $55,500 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended April 30, 2019.

 

During the period February 1, 2019 through April 30, 2019, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to nine individuals an aggregate of 225,000 shares of unregistered common stock valued between $0.0265 and $0.080 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $11,888 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended April 30, 2019.

 

During the period May 1, 2019 through July 31, 2019, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to twelve individuals an aggregate of 3,475,000 shares of unregistered common stock (of which 2,000,000 of the common stock issued shall vest over 36 months beginning July 2019) valued between $0.019 and $0.040 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $46,186 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2019.

 

During the period May 1, 2019 through July 31, 2019, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to six individuals an aggregate of 2,675,000 shares of unregistered common stock valued between $0.023 and $0.040 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $70,725 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2019.

 

During May 2019, the Company entered into a sales representation agreement (“Sales Rep Agreement”) with a third party (“Sales Representative”) to market, promote and sell the Company’s products. As part of the Sales Rep Agreement, the Company agreed to provide the Sales Representative 1,000,000 million shares of common stock of the Company upon execution of the Sales Rep Agreement (valued at $0.035 per share, the closing price of the common stock of the Company on that date). The Company recorded $35,000 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2019. The initial term of the Sales Rep Agreement was one year, subject to earlier termination as provided for in the Sales Rep Agreement. In addition, under the terms of the Sales Rep Agreement, the Sales Representative was entitled to receive performance incentives for up to 10,500,000 million additional shares of common stock of the Company based on the Sales Representative achieving certain future quarterly sales milestones. None of the performance incentive shares were earned by the Sales Representative. Effective September 30, 2019, the Sales Representative and the Company mutually agreed to terminate the Sales Rep Agreement.

 

During the period August 1, 2019 through October 31, 2019, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to two individuals an aggregate of 200,000 shares of unregistered common stock valued between $0.035 and $0.038 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $7,300 of stock-based compensation expense during the quarter ended October 31, 2019.

 

During the period August 1, 2019 through October 31, 2019, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to four individuals an aggregate of 5,350,000 shares of unregistered common stock valued between $0.029 and $0.038 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $162,700 of stock-based compensation expense during the quarter ended October 31, 2019.

 

In connection with the previous appointment of an independent member to the Board of Directors of the Company, during August 2019, the Board approved the issuance to the director of 5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $140,000 of stock-based compensation expense during the quarter ended October 31, 2019.

 

 

 

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As described in Note 14, upon execution of the VP Agreements, each of the Sales Executives were granted 1,000,000 shares of unregistered common stock of the Company valued at $0.035 per share, the closing price of the common stock of the Company on the grant date. The Company will record $35,000 of stock-based compensation expense on the grant date for each issuance. The VP Agreements also provide each Sales Executives the right to receive an additional 750,000 shares of common stock at the end of each quarterly anniversary of the VP Agreements throughout the Initial Term (maximum 9,000,000 shares) (“Performance Shares”), provided that the VP Agreements remain in effect during the applicable quarterly period. As of September 30, 2020, each Sales Executive has vested an additional 2,250,000 Performance Shares (total 4,500,000). The Company will record stock-based compensation expense for each respective quarterly period that the Performance Shares vest of $52,500 (total $157,500).

 

As described in Note 14, in connection with the execution of the Consultants Agreement, the Company issued to the Consultants 12,000,000 shares of unregistered common stock (“Shares”) valued at $0.022 per share, the closing price of the common stock of the Company on the grant date. The Company will record a total of $264,000 of stock-based compensation expense based on the vesting of the Shares (50% of the Shares vest as of the Effective Date of the Consultants Agreement 50% of the Shares vest on the six-month anniversary of the Consultants Agreement). The Company recorded $132,000 of stock-based compensation expense on the grant date and $132,000 during the quarter ended October 31, 2020.

 

During the period November 1, 2019 through January 31, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to three individuals an aggregate of 650,000 shares of unregistered common stock valued between $0.027 and $0.031 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $18,650 of stock-based compensation expense during the three months ended January 31, 2020.

 

During the period February 1, 2020 through April 30, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to four individuals an aggregate of 2,725,000 shares of unregistered common stock valued between $0.029 and $0.034 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $89,650 of stock-based compensation expense during the three months ended April 30, 2020.

 

During the period May 1, 2020 through July 31, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to eight individuals an aggregate of 925,000 shares of unregistered common stock valued between $0.031 and $0.048 per share, the closing price of the common stock of the Company on the respective grants dates. For certain of the issuances, the stock vests on November 1, 2020, provided the recipient remains engaged with the Company during the period. The Company recorded $17,475 and $15,500 of stock-based compensation expense during the three months ended July 31, 2020 and on November 1, 2020, respectively.

 

During April 2020, May 2020, and September 2020, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to eight individuals an aggregate of 950,000 shares of unregistered common stock valued between $0.023 and $0.28 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $16,100, $6,900 and $56,600 of stock-based compensation expense based on the grant date fair value of these shares during the quarters ended April 30, 2020, July 31, 2020 and October 31, 2020, respectively.

 

During February 2020, in recognition of past services provided to the Company through February 2020, the Board approved the issuance to the CMO of 5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $140,000 of stock-based compensation expense during the quarter ended April 30, 2020 based on the fair value of these shares on the grant date.

 

In connection with the resignation of an independent member of the Board of Directors of the Company in April 2020, the Board approved the issuance to the director of 736,808 shares of unregistered common stock valued at $0.022 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $16,210 of stock-based compensation expense during the quarter ended April 30, 2020 based on the fair value of these shares on the grant date.

 

 

 

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In connection with an agreement with an independent distributor dated May 28, 2020, the Company agreed to grant the distributor 3,000,000 shares of unregistered common stock valued at $0.115 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $345,000 of stock-based compensation expense during the quarter ended July 31, 2020 based on the fair value of these shares on the grant date. In addition, the distribution agreement also provides for future stock incentives based on future sales that are generated by the distributor based on a conversion price equal to 75% of the trading price of the common stock on the last day of the month in which the incentive was earned.

 

On May 15, 2020 (“Effective Date”), the Company entered into an advisor agreement with a third party (“Advisor”) whereby the Advisor will provide financial advisory services (see Note 14). As consideration, the Company agreed to issue the Advisor 1,000,000 shares of common stock (“Grant”), of which 250,000 shares shall be fully vested as of the Effective Date, 250,000 shares vest on the sixth month anniversary of the Effective Date, 250,000 shares vest on the ninth month anniversary of the Effective Date and 250,000 shares vest on the twelfth month anniversary of the Effective Date, provided however that the Agreement is in full effect during such vesting period(s) for the respective portion of the Grant. In addition, Company agreed to grant 3-year warrants to the Advisor to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”), of which Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of the agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the agreement, respectively, provided however that the Agreement is renewed and in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Grant or Warrants prescribed above will immediately become vested shares if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5MM or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25MM. The Grant shares were valued at $0.04 per share, the closing price of the common stock of the Company on the grant date. The Company will record $10,000 of stock-based compensation expense during each quarter in which the Grant shares become vested based on the fair value of these vested shares on the grant date.

 

During July 2020, the Company entered into a consulting agreement with a third party to provide investment banking related consulting services for a minimum period of six months. As consideration for agreeing to provide consulting services to the Company, the Company issued the consultant 5,000,000 shares of unregistered common stock valued at $0.05 per share, the closing price of the common stock of the Company on the effective date of the agreement. All of the shares granted vested immediately on the date of issuance. The Company recorded $250,000 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2020.

 

During August 2020, the Company entered into two separate consulting agreements with third parties to provide marketing and public relations services for a minimum period of six months. As consideration for agreeing to provide consulting services to the Company, the Company issued the consultants 300,000 shares and 25,000 shares, respectively, of unregistered common stock valued at $0.127 per share, the closing price of the common stock of the Company on the effective date of the agreements. The Company recorded a total of $40,790 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended October 31, 2020.

 

Issuances of Common Stock – Exercise of warrants, Conversion of Debt and Exchanges:

 

During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of $100,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction).

 

During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debenture plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction).

 

 

 

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On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with the initial capitalization of Mint Organics (see note 15) in exchange for 4,400,000 shares of common stock of the Company (approximately $0.034 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

On May 1, 2019, the Company, Mint Organics and the holder of a promissory note issued by Mint Organics (see note 15) agreed to a settlement of the outstanding loan whereby the Company agreed to issue the holder of the note 2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction.

 

On May 1, 2019, the Company and Mint Organics Florida entered into an exchange agreement whereby the Company agreed to acquire the 21.25 units from the minority equity holder of Mint Organics Florida (see note 15) in exchange for 2,400,000 shares of common stock of the Company (approximately $0.042 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

As more fully described in Note 9, the Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company (approximately $0.013 per share representing a discount of 60.5% to the trading price of $0.032 as of the effective date of the transaction).

 

During October 2020, the Company and the holder of the $20,000 debenture (one of the two holders that participated in the $70,000 Debentures described above), agreed to convert the principal amount of the $20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,100 into 160,000 shares of common stock of the Company (approximately $0.125 per share representing a discount to the trading price of $0.278 as of the effective date of the transaction).

 

Management and Consultants Performance Stock Plan

 

On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (“MCPP”) providing for the grant to current senior executive members of management and third-party consultants of an aggregate of approximately 205,000,000 shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”).

 

On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below.

 

Pre-Transaction Price Per Share Valuation (a)   Executive Bonus Shares Issued (b)   Non-executive Board Bonus Shares Issued (c) 
          
$0.22    40,000,000    2,000,000 
$0.34    60,000,000    3,000,000 
$0.45    80,000,000    4,000,000 
$0.54    100,000,000    5,000,000 

 

(a)proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances
(b)per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro
(c)per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara

 

 

 

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On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below:

 

Aggregate Funding Amount

   Shares 
          
 From    To      
$2,500,000   $5,000,000    5,000,000 
$5,000,001   $10,000,000    10,000,000 
$10,000,001   $30,000,000    30,000,000 

 

On September 23, 2020, the Board amended the MCPP, providing for the grant of common stock of the Company of 15.0 million, 7.5 million and 15.0 million shares of common stock of the Company, respectively, to each Albert Mitrani, Dr. Maria I. Mitrani and Ian Bothwell upon such time that the Company’s common stock trades above $0.25 per share, $0.50 per share and $0.75 per share, respectively, for 30 consecutive trading days subsequent to March 31, 2021 and provided such milestone occurs during the term of employment with the Company.

 

In addition, each of the current executives were entitled to receive an additional 7 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such milestone occurs during the term of employment with the Company.

 

Pursuant to the MCPP, as of September 23, 2020, a total of 233,000,000 shares have been issued and approximately 582,500,000 shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board:

 

       MCPP   MCPP 
   MCPP   Remaining   Total 
   Shares   Shares   Shares 
Name  Awarded   Available   Approved 
             
Albert Mitrani   50,000,000    137,500,000    187,500,000 
Ian Bothwell   50,000,000    167,500,000    217,500,000 
Dr. Maria I. Mitrani   50,000,000    167,500,000    217,500,000 
Dr. George Shapiro   50,000,000    100,000,000    150,000,000 
Dr. Allen Meglin       5,000,000    5,000,000 
Michael Carbonara       5,000,000    5,000,000 
Consultants   33,000,000        33,000,000 
                
Total   233,000,000    582,500,000    815,500,000 

 

 

 

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The Company will record stock-based compensation expense in connection with any MCPP Shares that are actually awarded based on the fair value as of the initial grant date that the respective milestone for the MCPP Shares were approved. For the MCPP Shares approved on April 25, 2020, June 29, 2020, August 14, 2020 and September 23, 2020, the closing price of the common stock of the Company was $0.027, $0.056, $0.128 and $0.28, respectively.

 

In connection with the MCPP Shares that have been awarded to date, all such shares were issued in connection with the MCPP Shares approved on April 25, 2020 and accordingly were valued $0.027 per share, the closing price of the common stock of the Company on the date that those respective MCPP Shares were approved. The Company will record a total of $3,915,000 of stock-based compensation expense during the quarter ended July 31, 2020 and $2,376,000 during the quarter ended October 31, 2020, respectively, based on the fair value of the actual MCPP Shares awarded.

 

NOTE 13 – WARRANTS

 

A summary of warrant activity for the years ended October 31, 2019 and 2018 are presented below:

 

   Number of
Shares
   Weighted-average
Exercise Price
   Remaining
Contractual
Term (years)
   Aggregate
Intrinsic Value
 
Outstanding at October 31, 2018   3,687,484   $0.41    1.14   $ 
Granted   2,000,000   $0.08    1.00   $ 
Exercised      $           
Expired/Forfeited   (1,158,313)  $0.67    0.04     
Outstanding at October 31, 2019   4,529,371   $0.20    0.30   $ 
                     
Exercisable at October 31, 2019   4,529,371   $0.20    0.30   $ 

 

   Number of
Shares
   Weighted-average
Exercise Price
   Remaining
Contractual
Term (years)
   Aggregate
Intrinsic Value
 
Outstanding at October 31, 2017   158,137,484   $0.05    9.02   $ 
Granted      $       $ 
Exercised   (77,300,000)  $0.04    8.20   $ 
Expired/Forfeited   (77,150,000)  $0.04    8.17   $ 
Outstanding and exercisable at October 31, 2018   3,687,484   $0.41    1.14   $ 

 

In connection with the Sale of ANU assets on February 5, 2018, and the immediate resignation and termination of the Company’s Chief Operating Officer, the Chief Operating Officer agreed to forfeit 53,300,000 warrants to purchase shares of the Company’s common stock held at the time of the resignation and the Company agreed to grant the Chief Operating Officer 7,500,000 shares of newly issued common stock of the Company.

 

In connection with the Sale of ANU assets on February 5, 2018, and the immediate resignation and termination of the Company’s Chief Technology Officer, the Chief Technology Officer agreed to forfeit 23,850,000 warrants to purchase shares of the Company’s common stock held at the time of the resignation and the Company agreed to grant the Chief Technology Officer 7,500,000 shares of newly issued common stock of the Company.

 

 

 

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In connection with the amendment to the Chief Financial Officer’s employment agreement on April 6, 2018, the terms of the 31,800,000 and 21,500,000 warrants to purchase common shares of the Company previously granted to the Chief Financial Officer described above were modified to provide that in the event of an occurrence of a change in control or termination of the employment (as defined in the agreement), pursuant to the terms thereof, the exercise price for all outstanding warrants granted to the Chief Financial Officer to purchase common stock of the Company during the term of his employment agreement shall be reduced to $0.001 per share. The Company valued the repricing of the warrants based on the date of the modification using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.58%, (2) remaining term of 8.6 years - 8.9 years, (3) expected stock volatility of 68%, and (4) expected dividend rate of 0%. The grant date fair value of the modified warrants originally issued during November 2016 and March 2017 was $318,000 and $215,000, respectively. The Company recorded the expense for the total amount associated with modification of $533,000 at the time of the Reorganization, the event which triggered the vesting provision associated with the modification (see Note 5).

 

In connection with the amendment to the Chief Science Officer’s employment agreement on April 6, 2018, the terms of the 10,000,000 and 13,850,000 warrants to purchase common shares of the Company previously granted to the Chief Science Officer described above were modified to provide that in the event of an occurrence of a change in control or termination of the employment (as defined in the agreement), pursuant to the terms thereof, the exercise price for all outstanding warrants granted to the Chief Science Officer to purchase common stock of the Company during the term of her employment agreement shall be reduced to $0.001 per share. The Company valued the repricing of the warrants based on the date of the modification using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.58%, (2) remaining term of 8.6 years - 8.9 years, (3) expected stock volatility of 68%, and (4) expected dividend rate of 0%. The grant date fair value of the modified warrants originally issued during November 2016 and March 2017 was $100,000 and $138,500, respectively. The Company recorded the expense for the total amount associated with modification of $238,500 at the time of the Reorganization, the event which triggered the vesting provision associated with the modification (see Note 5).

 

In connection with the Reorganization, The CFO and CSO each agreed to exercise on a cashless basis all of their warrants to purchase 53,300,000 and 23,850,000 shares of common stock of the Company, respectively. Based on the closing price of the Company’s common stock on the Effective Date of $0.012 per share and the warrant exercise price of $0.001 per share, the CFO and CSO were required to use 4,675,439 and 2,092,105 shares of common stock received from the exercise of the warrants, respectively, to pay for the exercise price for exercising all of the warrants.

 

On March 7, 2019, the Company issued 2,000,000 warrants in connection with common stock offerings and valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.44%, (2) term of 1 year, (3) expected stock volatility of 108%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $6,600.

 

On February 26, 2020, the Company issued the CFO a cashless warrant to purchase an aggregate of 7,500,000 shares of common stock in connection with the CFO’s employment agreement. The warrant is exercisable for $0.028 per share (the closing price of the Company’s common stock on the date of grant, until the tenth anniversary date of the date of issuance. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 1.14%, (2) term of 4 years, (3) expected stock volatility of 87%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $214,500. The Company will record $214,500 of stock-based compensation expense during the quarter ended April 30, 2020 based on the fair value of these warrants on the grant date.

 

On May 15, 2020 (“Effective Date”), the Company granted the Advisor warrants to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”) and exercisable for three years from the Effective Date. Warrants to purchase 2,000,000 shares shall be vested upon the Effective Date of the agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the agreement, respectively, provided however that the agreement is renewed and in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Warrants prescribed above will immediately become vested if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5,000,000 or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25,000,000. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 0.31%, (2) term of 3 years, (3) expected stock volatility of 90%, and (4) expected dividend rate of 0%. The grant date fair value of the warrants issued was $121,200. The Company will record $40,400 of stock-based compensation expense during the period that the Grant shares vest based on the fair value of these warrants on the grant date (see Note 14).

 

 

 

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NOTE 14 – COMMITMENTS AND CONTINGENCIES

 

Executive Employment Agreements

 

Effective November 4, 2016, the Company entered into executive employment agreements with Albert Mitrani, Dr. Maria Mitrani, Bruce Werber, and Ian Bothwell. On March 8, 2017, the Company entered into an executive employment agreement with Terrell Suddarth, and amended the employment agreements of Dr. Mitrani, Dr. Werber and Mr. Bothwell. On February 5, 2018, Dr. Werber’s and Mr. Suddarth’s’ employment agreements were terminated in connection with the Sale. On April 6, 2018, the Company amended Mr. Bothwell’s and Dr. Mitrani’s employment agreement, which provided among other things, that in the event of an occurrence of a change in control or termination of the employment (as defined in agreement) pursuant to the terms thereof, the exercise price for all outstanding warrants granted to Mr. Bothwell and Dr. Mitrani to purchase common stock of the Company during the term of the agreement shall be reduced to $0.001 per share. In addition, Mr. Bothwell’s employment agreement was amended to increase the initial term and the automatic renewal term provided for in the employment agreement from three years to five years, increased the amount of automobile expense allowance and removed the cap for the reimbursement of office related expenses. Collectively, the aforementioned executive employment agreements are referred to as the FY 2017 Executive Employment Agreements.

 

In connection with Sale (see Note 4), Werber and Suddarth each entered into a Separation and General Release Agreement with the Company effective upon the closing of the Sale which provided for the immediate resignation of Werber and Suddarth of all their respective executive and Board of Director positions held with the Company and/or any of the Company’s subsidiaries, and the termination and settlement of all obligations of each party to the other pursuant to the respective employment agreements, including the release of all rights the Company may have held in any intellectual property of Werber and Suddarth and any non-compete restrictions on Werber and Suddarth. In connection with such releases, Werber and Suddarth each agreed to forfeit all warrants previously granted and outstanding (a total of 77,150,000 warrants to purchase shares of common stock of the Company), forfeit any and all accrued and unpaid amounts owing under the employment agreements for past due wages, benefits, severance obligations, unreimbursed expenses and any other obligations owing to one another as of the date of the Sale totaling $906,515 in exchange for a grant of 7,500,000 shares of restricted common stock of the Company to each of Werber and Suddarth (the grant date fair value of the newly issued shares issued to each of Werber and Suddarth was $83,250).

 

In connection with the Reorganization, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s FY 2017 Executive Employment Agreements were terminated in favor of newly executed employment agreements (collectively referred to as the April 2018 Executive Employment Agreements). In addition, as a condition of the Reorganization, Mr. Mitrani, Mr. Bothwell and Dr. Mitrani each agreed to release the Company for all amounts owed to them for unpaid salaries through the Effective Date and unpaid advances and/or expenses incurred prior to December 31, 2017 totaling $1,636,808. This amount is reflected in stockholders’ deficit for the year ended October 31, 2018. The significant terms provided for in the FY 2017 Executive Employment Agreements and the April 2018 Executive Employment Agreements are summarized below:

 

April 2018 Executive Employment Agreements

 

General

 

Pursuant to Albert Mitrani’s April 2018 Executive Employment Agreement, Mr. Mitrani serves as the Company’s President and Chief Operating Officer. Mr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Mitrani is also entitled to a commission on all sales attributable to him (i.e., excluding existing customers of the Company at the time of the Reorganization) at the rate of five percent (5%) of the "Net Sales" as defined in the agreement and an expense allowance of $5,000 per month.

 

Pursuant to Ian Bothwell’s April 2018 Executive Employment Agreement, Mr. Bothwell continues to serve as the Company’s Chief Financial Officer. Mr. Bothwell’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Bothwell has not been paid salary since July 2018.

 

 

 

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Pursuant to Dr. Maria I. Mitrani’s April 2018 Executive Employment Agreement, Dr. Mitrani continues to serve as the Company’s Chief Science Officer. Dr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term.

 

Term

 

The term of each of the April 2018 Executive Employment Agreements commences as of the Effective Date and continues until December 31, 2020 (Mr. Bothwell) or December 31, 2023 (Mr. Mitrani and Dr. Mitrani) (“Initial Term”), unless terminated earlier pursuant to the terms of the April 2018 Executive Employment Agreement; provided that on such expiration of the Initial Term, and each annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), the agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term of the April 2018 Executive Employment Agreement at least 90 days’ prior to the applicable renewal Date. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”

 

Unpaid Advances

 

The Company was required to repay the unpaid advances subsequent to December 31, 2017, and the unreimbursed expenses incurred subsequent to December 31, 2017, on May 15, 2018.  Such payments were not made as required.

 

Fringe Benefits and Perquisites

 

During the Employment Term, each Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.

 

Termination

 

The Company may terminate the April 2018 Executive Employment Agreement at any time for good cause, as defined in the April 2018 Executive Employment Agreement, including, the Executive’s death, disability, Executive’s willful and intentional failure or refusal to follow reasonable instructions of the Company’s Board of Directors, reasonable and material policies, standards and regulations of the Company’s Board of Directors or management.

 

Amendments To The April 2018 Executive Employment Agreements

 

February 26, 2020 Amendment

 

On February 26, 2020, the Company agreed to modify the employment agreement of Mr. Ian T. Bothwell, the Company’s Chief Financial Officer to provide Mr. Bothwell with:

 

a)an extension to his employment agreement dated April 13, 2018 from December 2020 to December 2023 consistent with other executives of the Company; and
b)and a one-time bonus in the form of a fully vested cashless warrant to purchase 7,500,000 shares of common stock of the Company, exercisable for ten years at an exercise price of $0.28 per share, the closing price of the common stock on the date of the grant.

 

On February 26, 2020, pursuant to the respective employment agreements with each of the Company’s executive officers, the Board granted each of Mr. Albert Mitrani, Dr. Maria Mitrani and Mr. Ian Bothwell a cash bonus of $37,500 for the calendar year ended December 31, 2019.

 

 

 

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April 25, 2020 Amendment

 

On April 25, 2020, the Company agreed to amend and revise the each of Albert Mitrani, Ian Bothwell and Dr. Maria I. Mitrani, (individually each of A. Mitrani, Bothwell and Dr. Mitrani are referred to as an “Executive” and collectively the “Executives”) April 2018 Executive Employment Agreements. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:

 

Term:An extension to the term of the employment agreements dated April 13, 2018 from December 31, 2023 to December 31, 2025.
  
Base Salary:

An increase in base annual salary from $162,500 to $300,000. The amended salary amount of $300,000 shall be retroactively adjusted to commence as of January 1, 2019. The increased annual salary of $137,500 (“Incremental Salary”) over the prior annual salary amount of $162,500 (“Original Base Salary”) shall only be paid only upon there being sufficient available cash. Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.

 

Severance Provisions:

1.Company termination without cause, Executive for good reason:
a)All existing accrued obligations existing at time of termination shall be paid to Executive.
b)Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination,
c)Executive shall be entitled to a cash payment equal to his unpaid base salary for the remaining term in effect at time of the time of the termination or an amount equal to four times (4x's) the base salary in effect at the time of termination, whichever is greater,
d)Executive shall be entitled to a cash payment equal to his 200% of the prior year’s cash or stock bonus (excluding any stock grants received pursuant to the MCPP).

 

2.Change In Control: In the event of a Change in Control and the Executive’s employment agreement is not extended for period of five years from the date of the Change in Control with all other terms and conditions of the agreement remaining the same, then the Executive may terminate the agreement for good reason and all respective severance terms as provided for a termination by Executive for good reason described in clause 1 above shall be provided to Executive.

 

3.Executive termination due to disability, death, or non-renewal by Company:
a)All existing accrued obligations existing at time of termination shall be paid to Executive.
b)Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination.
c)Executive shall be entitled to a cash payment equal to 299% of Executive’s base salary in effect at the time of termination, plus a gross up amount to cover Executive’s tax liability associated with such payment.
d)200% of the prior years cash or stock bonus (excluding MCPP performance stock grants).

 

 

 

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June 29, 2020 Amendment

 

On June 29, 2020, the board of directors of the Company (“Board”) agreed to further amend and revise the April 2018 Executive Employment Agreements for each of Executives. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:

 

Base Salary: An increase in the Executives annual base annual salary upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months. Upon the achievement of the defined salary milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur.

 

Monthly Revenues
(in millions)
   Base Salary
Increase
 
      
$1.00   $130,000 
$1.50   $200,000 
$2.00   $275,000 
$3.50   $630,000 
$5.00   $900,000 

 

Coordinator Agreement

 

Effective September 30, 2019, the Sales Representative and the Company mutually agreed to terminate the Sales Rep Agreement in exchange for the principal executive of the Sales Representative (“Coordinator”) agreeing to become an employee of the Company effective October 1, 2019 (“Coordinator Agreement”). The Coordinator Agreement provided that the parties would seek to negotiate in good faith a definitive employment agreement. The parties did not executive a definitive agreement and the Coordinator is no longer providing services to the Company.

 

Advisor Agreement

 

Effective May 15, 2020 (“Effective Date”), the Company entered into a one-year agreement (“Advisor Agreement”) with an individual to provide financial advisory services to the Company (“Advisor”). The Advisor Agreement is subject to successive, automatic one (1) year extensions unless either party has given the other 30- day written notice prior to the expiration of then in effect termination date, of their desire not to renew the Advisor Agreement. As the compensation for Advisor’s services and his fulfillment of all obligations under the agreement the Company agreed to issue the Advisor 1,000,000 shares of common stock (“Stock Grant”), of which 250,000 shares shall be fully vested as of the Effective Date, 250,000 shares vest on the sixth month anniversary of the Effective Date, 250,000 shares vest on the ninth month anniversary of the Effective Date and 250,000 shares vest on the twelfth month anniversary of the Effective Date, provided however that the Advisor Agreement is in full effect during such vesting period(s) for the respective portion of the Stock Grant. In addition, Company agreed to grant 3-year warrants to the Advisor to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”), of which Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of the Advisor Agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the Advisor agreement, respectively, provided however that the Advisor Agreement is in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Stock Grant or Warrants prescribed above will immediately become vested shares if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5,000,000 or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25,000,00. The Advisor Agreement may be terminated by the Company based on Advisor’s breach of any of the terms of the Advisor Agreement, the Company’s determination that Advisor is not meeting the desired objectives or if either party provides notice of the desire not to renew the Advisor Agreement upon expiration.

 

 

 

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Sales Executives

 

On January 6, 2020, the Company entered into employment agreements with two individuals (“Sales Executives”), each to serve as a Vice President – Global Sales and Marketing. The terms of each Sales Executive employment agreement are identical (“VP Agreements”). The initial term of the VP agreements are for three years and provide for automatic annual renewals thereafter, unless either party provides 90-day written notice prior to expiration of the then current term. The VP Agreements may also be terminated by the Company beginning June 30, 2020 in the event the Sales Executive fails to meet certain defined minimum revenue growth milestones. The Sales Executives will receive compensation in the form of monthly salary of $18,000 and a quarterly override based on revenues earned by the Company during a quarterly period that exceed $600,000 beginning for the quarter ended June 30, 2020. In addition, upon execution of the Agreement, each of the Sales Executives were granted 1,000,000 shares of unregistered common stock of the Company valued at $0.035 per share, the closing price of the common stock of the Company on the grant date. The Company will record $35,000 of stock-based compensation expense on the grant date for each issuance. The VP Agreements also provide the Sales Executives with the right for each to receive an additional 750,000 shares of common stock at the end of each quarterly anniversary of the VP Agreements throughout the Initial Term (maximum 9,000,000 shares) (“Performance Shares”), provided that the VP Agreements remain in effect during the applicable quarterly period. The vesting of the Performance Shares may also be accelerated based on achievement of certain revenue milestones. The Company will record stock-based compensation expense for each respective quarterly period that the Performance Shares vest of $52,500.

 

Consultants Agreement

 

Effective March 30, 2020 (the “Effective Date”), the Company entered into a consulting agreement (“Agreement”) with Assure Immune L.L.C. (the “Consultant”) for an initial term of one year (the “Initial Term”) with automatic renewals for two (2) additional annual periods (each a “Renewal Term,” and together with the “Initial Term,” the “Term”), unless written notice is provided by either party at least 45 days prior to the applicable termination date. Under the Agreement, the Consultant will provide the Company during the Term with expertise, experience, advice and direction associated with the critical functional executive level roles of the Company as it relates to the oversight and management of the Company’s regulatory, research and development and laboratory operations, consistent with the Company’s corporate mission and strategies and subject to the resource limitations of the Company. In connection with the Agreement, the Consultants will receive monthly fees of $30,000 during the Initial Term and monthly consulting fees of $35,000 and $40,000 the first and second Renewal Terms, if any. In addition. the Company agreed to issue to the Consultant or its designees 12,000,000 shares of common stock of the Company (“Shares”), 50% of which Shares vest as of the Effective Date and balance of which Shares vest upon the six-month anniversary of the Effective Date. The Agreement also provides that upon the commencement of each Renewal Term, if any, the Consultant will receive up to 6,000,000 additional Shares, 50% of which Shares will vest on the commencement date of the Renewal Term and the balance of which additional Shares will vest on the six (6) month anniversary of such date. In connection with the Agreement, the Consultant (and its principals) are obligated to comply with customary confidentiality, non-compete and non-solicitation covenants and have agreed that all intellectual property developed during the term of the Agreement shall remain the property of the Company.

 

In addition to the Shares to be issued above, the Consultant or its designees will be entitled to participate in the Company’s Management and Consultants Performance Stock Plan (the “MCPP”), more fully described in Note 12. Pursuant to the MCPP, the Consultant or its designees may be awarded up to 33,000,000 Shares, based on the achievement of certain defined operational performance milestones (“Milestones”) during the Term of the Agreement and for a period of twelve (12) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for “cause” or the Consultant’s non-renewal of the Agreement.

 

Leases

 

Ethan NY

 

On September 3, 2015, Ethan NY entered into a five-year lease agreement (“Ethan Lease”) for a store located in New York City, New York. The Ethan Lease commenced on October 1, 2015. Under the terms of the Ethan Lease, minimum monthly lease payments of $9,500 per month were to commence in December 2015 through October 2020. During June 2016, Ethan NY exited from its leased premises. Ethan NY did not make any of the required minimum monthly lease payments as required. The total amount of minimum lease payments that Ethan NY is obligated to pay pursuant to this 5-year lease is $586,242 (excluding late fees and interest provided for under the Ethan Lease).

 

 

 

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All of Ethan NY’s obligations under the Ethan Lease are recourse only to the assets at Ethan NY, except for certain obligations under the Ethan Lease that were guaranteed by a former employee. Under the terms of the Ethan Lease, the obligations of Ethan NY for future rents are to be mitigated based on the amount of any future rents that are received for the rental of the leased premises to other tenants during the initial term. During August 2016, Ethan NY received confirmation that the leased premises had been leased to another tenant. In connection with the termination of the Ethan Lease, Ethan NY has made several unsuccessful attempts to contact the landlord for the purpose of obtaining a settlement and release for any amounts that the landlord may claim are owing under the Ethan Lease, if any. Ethan NY is not aware of any claim pending or threatened in connection with the Ethan Lease. At October 31, 2018 and 2019, Ethan NY has recorded in liabilities of discontinued operations the amount of rent obligations through June 30, 2016 and a reserve for estimated losses in connection with termination of the Ethan Lease of $101,905 and $101,905, respectively.

 

Lab Facilities:

 

Anu Life Sciences, Inc.

 

Anu Life Sciences Inc. a Florida corporation (“ANU”), entered into a five-year lease agreement (“Lab Lease”) for an approximately 3,500 square foot laboratory and administrative office facility in Sunrise, Florida. The Lab Lease was effective July 1, 2017 and was to expire on June 30, 2022.

 

As described in Note 4, in connection with the Sale, ANU sold or transferred to Vera its right, title and interest in the Lab Lease (including the associated security deposits of $37,275) and all leasehold improvements.

 

The minimum monthly lease payments under the Lab Lease, excluding applicable Florida sales tax and additional rents as may be required under the terms of the Lab Lease, were approximately $7,900 for the first 24 months and $9,000 per month, $9,200 per month and $9,400 per month for the third, fourth and fifth years, respectively. Minimum lease payments commenced July 1, 2017. The Company recorded lease expense on a straight-line basis over the life of the lease. The Company recorded lease expense in connection with the Lab Lease of $25,803 for the period November 1, 2017 through February 5, 2018.

 

2019 Lab Facility:

 

In connection with the Company’s decision to again operate a placental tissue bank processing laboratory in Miami, Florida, during February 2019, the Company entered into a renewable month to month lease agreement (“Miami Lab Lease”) for an approximately 450 square foot laboratory and a 100 square foot administrative office facility. Monthly lease payments are approximately $5,200 plus administrative fees and taxes. In connection with the Miami Lab Lease, the Company was required to post a security deposit of $6,332.

 

Effective March 2019, the Company entered into an agreement to lease certain manufacturing equipment (“Equipment Lease”) to be used in its lab, including a full care maintenance plan for such equipment totaling approximately $239,595. The lease agreement is for five years and requires minimum monthly lease payments of approximately $4,513 per month, plus sales taxes.

 

The minimum lease payments pursuant to the Equipment Lease are as follows:

 

Year Ended   Minimum 
October 31,   Rent 
2020   $72,208 
2021    54,156 
2022    54,156 
2023    54,156 
2024    18,052 
Total   $252,728 

 

 

 

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Administrative Office:

 

The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. The term of the lease runs through June 2023 and the monthly rental rate through June 2020 is $2,900 and thereafter $3,500.

 

The minimum lease payments pursuant to the office lease are as follows:

 

Year Ended   Minimum 
October 31,   Rent 
2020   $37,200 
2021    42,000 
2022    42,000 
2023    28,000 
2024     
Total   $149,200 

 

Preparation of IRB, Pre-IND, IND Protocols for Clinical Applications and Clinical Trial Initiation and Monitoring:

 

In connection with the Company’s ongoing research and development efforts and the Company’s efforts to meet compliance with current and anticipated United States Food and Drug Administration (“FDA”) regulations expected to be enforced beginning in May 2021 pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products that fall under Section 351 of the Public Health Services Act (“HCT/Ps”), the Company has applied for and received Investigation New Drug (“IND”) approval from the FDA to commence clinical trials in connection with the use of the Company’s products and related treatment protocols for specific indications. The ability to successfully complete the above efforts will be dependent on the Company’s ability to timely fund the required payments and complete the applicable clinical trials, which is subject to available working capital generated from operations, financing arrangements with the third party vendors involved in the studies and/or from additional debt and/or equity financings as well as ultimate approval from the FDA.

 

Contingent Convertible Obligations Into Equity Securities

 

Private Placement Of Convertible 6% Debentures

 

As more fully described in Note 9, the remaining outstanding Convertible Debentures (the principal and all accrued but unpaid interest thereon) contained provisions that under certain conditions, provided the ability of the holders of the Convertible Debentures at their option at any time, from time to time to convert into shares of the common stock of the Company. The conversion prices were based on the Company completing a contemplated pending reverse split at the Company’s sole discretion (which the Company elected not to pursue) or at conversion prices greatly in excess of the historical prices of the Company’s common stock and reasonably expected prices of the Company’s common stock to be realized during the term of the Convertible Debentures. As a result, none of the Convertible Debentures have been or are expected to be converted in accordance with their conversion provisions. The contingent rights to convert for certain of the convertible debentures did not result in any underlying value attributable to the fair value of the embedded derivatives liabilities associated with respective Convertible Debentures.

 

 

 

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Obligations Due Under Executive Employment Agreements

 

Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

None of the Executives have yet to elect to convert any portion of their unpaid Original Base Salary.

 

As of June 30, 2020, there was approximately $721,415 of unpaid Original Base Salary and Incremental Salary related to the period prior to December 31, 2019 and $93,110 of unpaid Original Base Salary and Incremental Salary related to the period January 1, 2020 through June 30, 2020.

 

NOTE 15 – MINT ORGANICS

 

Mint Organics Inc. (“Mint Organics”) authorized capital consists of (i) 1,000 shares of Class A voting common stock, par value $0.001 per share (“Class A Common Stock”); (ii) 1,000 shares of Class B Non-voting common stock, par value $0.001 per share (“Class B Common Stock”); and (iii) 1,000 shares of Preferred Stock, par value $0.001 per share. Organicell owns 550 shares of Class A Common Stock, representing 100% of the outstanding shares of Class A Common Stock. There are no shares of Class B Common Stock currently outstanding.

 

Pursuant to the Certificate Of Designation filed on February 28, 2017 and as amended on March 23, 2017, Mint Organics authorized 300 shares of Series A convertible preferred stock, par value $0.001 per share and a stated value of $1,000 per share (“Mint Series A Preferred Stock”). The Mint Series A Preferred Stock is non-voting and non-redeemable. The amount of each share of the Mint Series A Preferred Stock shall automatically convert into 1.5 shares of Class B Common Stock of Mint Organics upon the earlier of (a) the fifth anniversary of the date such share of Mint Series A Preferred Stock was issued; or (b) Mint Organics’ receipt of the necessary licenses and permits required to operate business operations in the medical cannabis industry. In addition, commencing on the first anniversary of the issuance date and for the 90-day period thereafter, each holder of the Mint Series A Preferred Stock shall have the right, but not the obligation, to convert some or all of such holder’s shares of Mint Series A Preferred Stock (or Class B Common Stock equivalent) into unregistered shares, par value $0.001 per share, of common stock of Organicell, based on the stated value divided by the average trading price of Organicell common stock for the ten trading days prior the conversion date. Notwithstanding the foregoing, the number of shares of Class B Common Stock issuable upon the conversion of the outstanding Mint Series A Preferred Stock shall be adjusted to ensure that the outstanding Class B Common Stock represents 45% of the outstanding capital stock of Mint Organics (based on conversion of 300 shares of the Mint Series A Preferred Stock or pro rata portion thereof).

 

Mint Organics issued to each of Taddeo and Rohrbaugh (i) 150 shares of Mint Series A Preferred Stock and (ii) a warrant exercisable for up to 150,000 shares of Organicell’s common stock for $0.15 per share exercisable from the date of issuance until the third anniversary of the date of issuance (see Note 13).

 

Mr. Peter Taddeo (“Taddeo) and Mr. Wayne Rohrbaugh (“Rohrbaugh”) each invested $150,000 to fund the initial operations of Mint Organics. The Company immediately established Mint Organics, , a 55%-owned subsidiary of the Company and Mint Organics Florida, Inc. (“Mint Organics Florida”), a wholly owned subsidiary of Mint Organics, each dedicated to obtain a license to dispense medical cannabis in Florida (collectively Mint Organics and Mint Organics Florida are referred to as the “Mint Organics Entities”). In connection with the investment, Mint Organics issued to each of Taddeo and Rohrbaugh (i) 150 shares of Mint Series A Preferred Stock and (ii) a warrant exercisable for up to 150,000 shares of Organicell’s common stock for $0.15 per share exercisable from the date of issuance until the third anniversary of the date of issuance (see Note 13).

 

 

 

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In addition, in connection with the agreement, Taddeo was appointed as the Chief Executive Officer and as a director of the Mint Organics Entities. Rohrbaugh was appointed as the Chief Operating Officer and as a director of the Mint Organics Entities.

 

On March 8, 2017, Mint Organics issued warrants to purchase shares of Class A Common Stock, of Mint Organics, vesting on the date Mint Organics, through one of its subsidiaries, obtains a license from a state to dispense cannabis until the fifth anniversary thereof to the following executives of Mint Organics:

 

Name:  Warrants   Exercise Price: 
Albert Mitrani   79   $0.001 
Ian T. Bothwell   79   $0.001 
Dr. Maria I. Mitrani   79   $0.001 
TOTAL   237      

 

In connection with an independent valuation using a Black-Scholes option model, the fair value of the warrants issued were determined to be $34,949. At the time of issuance, the Company estimated that the warrants would be fully vested by December 31, 2017. The Company has recorded amortization expense totaling $0 and $6,889 during the year ended October 31, 2019 and 2018, respectively, as additional stock-based compensation.

 

Taddeo Employment Agreement

 

Pursuant to an employment agreement entered into effective May 1, 2017, with Mr. Taddeo (“Taddeo”) and Mint Organics (“Taddeo Employment Agreement”), Mr. Taddeo shall serve as the Chief Executive Officer of Mint Organics (“Mint CEO”) and a member of the Board of Directors of Mint Organics (“Mint Board”). The employment term shall be for three years, unless terminated earlier pursuant to the terms of the agreement, and thereafter deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term at least 90 days prior to the applicable renewal date. The Mint CEO’s base annual salary is $180,000 during the period prior to Mint Organics, through one of its subsidiaries, or by other means, obtains or acquires access for a license from a state to dispense cannabis which shall accrue commencing as of the effective date and shall be payable upon Mint Organics generating sufficient net revenue or obtaining sufficient third party financing; and thereafter payable in periodic installments in accordance with Mint Organics customary payroll practices, but no less frequently than monthly. The Mint CEO’s base salary shall automatically be adjusted to an annual rate of base salary of $250,000 once the license is obtained. The base salary shall be reviewed at least annually by the Mint Board and the Mint Board may, but shall not be required to, increase the base salary during the employment term. In connection with the execution of the agreement, Mint Organics agreed to pay the Mint CEO a $25,000 signing bonus which shall be accrued and paid by Mint Organics upon Mint Organics having sufficient cash flow. The agreement also contains terms regarding eligibility for future annual bonuses, annual equity awards under Mint Organics’ equity plan, if any, fringe benefits and perquisites consistent with the practices Mint Organics (including health and dental insurance, an automobile expense allowance of $1,000 per month, and reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the Mint CEO in accordance with Mint Organics’ expense reimbursement policies. Mint Organics may terminate the agreement at any time with or without “Cause” and the Mint CEO may resign at any time with or without “Good Reason” (as defined in the agreement). The nature of the obligations owing to the Mint CEO upon termination is more fully described in the agreement. In connection with the execution of the agreement, the Company granted the Mint CEO 1,000,000 shares of unregistered common stock of Organicell, which vested on December 31, 2017 (see Note 12).

 

On April 6, 2018, Peter Taddeo (“Mint CEO”) resigned as a member of the Board of Directors of the Company and as the Chief Executive Officer and member of the board of directors of the Mint Organics Entities. In connection with Mr. Taddeo’s resignation, Mr. Taddeo entered into a Separation and General Release Agreement (“Taddeo Separation Agreement”) whereby Mr. Taddeo agreed to release the Mint Organics Entities from all obligations in connection with the Taddeo Agreement and all other agreements and/or financial obligations between the parties related to the Taddeo’s employment or services performed with any of Mint Organics Entities totaling $156,568. In consideration for Taddeo entering into the Taddeo Separation Agreement, the Mint Organics Entities paid Taddeo $5,000 and Mr. Bothwell paid $3,000 to Taddeo for the purchase of the 1,000,000 shares of common stock of the Company that were granted to Taddeo in connection with the Taddeo Agreement. Contemporaneously with the execution of the Taddeo Separation Agreement, the Company and Mr. Taddeo entered into a Share Purchase and General Release Agreement whereby the Company agreed to purchase from Mr. Taddeo his 150 shares of Mint Series A Preferred Stock for an aggregate purchase price of $40,000.

 

 

 

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Exchange Agreement

 

On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with participation agreement referred to above in exchange for 4,400,000 shares of common stock of the Company (approximately $0.034 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction). In connection with the exchange, Mr. Rohrbaugh provided a release to the Company in connection with any claims associated with his original investment.

 

Mint Organics Florida, Inc.

 

Mint Organics Florida’s authorized capital structure consists of (1) 10,000 shares of Class A voting common stock (“Class A Common Stock”), par value $0.001 per share and (ii) 10,000 shares of Class B Non-voting common stock (“Class B Common Stock”), par value $0.001 per share. The Class A Common Stock shall have the sole right and power to vote on all matters on which a vote of shareholders is to be taken. In all matters, with respect to actions both by vote and by consent, each holder of shares of the Class A Common Stock shall be entitled to cast one vote in person or by proxy for each share of Class A Common Stock standing in such holder’s name on the transfer books of the Corporation. The Class B Common Stock shall not be entitled to vote on any matters.

 

On February 28, 2017, the Board of Mint Organics Florida issued 2,125 shares of Class A Common Stock, par value $0.001 per share, of Mint Organics Florida to Mint Organics and determined that the fair consideration for the initial issuance of the Class A Common Stock is $0.001 per share.

 

Offering:

 

On March 17, 2017, Mint Organics Florida initiated an offering to raise up to $1,000,000 in exchange for up to 212.5 shares of Class B Common Stock, representing approximately 10.0% of the outstanding equity of Mint Organics Florida as of the date of the offering. The proceeds of the offering were to be used for general working capital purposes. On April 6, 2017, Mint Organics received proceeds of $100,000 in connection with the sale of 21.25 units to an investor in connection with the offering (representing a 1% minority interest in the equity of Mint Organics Florida).

 

On May 1, 2019, the Company and Mint Organics Florida entered into an exchange agreement whereby the Company agreed to acquire the 21.25 units from the investor referred to above in exchange for 2,400,000 shares of common stock of the Company (approximately $0.042 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction). In connection with the exchange, the investor provided a release to the Company in connection with any claims associated with the investor’s original investment.

 

Non-controlling interests in Mint Organics and Mint Organics Florida

 

The Company’s non-controlling interests in Mint Organics and Mint Organics Florida at October 31, 2019 and October 31, 2018 are determined based on the pro rata equity percentage held by the non-controlling equity holders of Mint Organics and Mint Organics Florida during each of the respective periods, provided however, that the carrying amount of non-controlling interests shall not be negative.

 

Effective May 1, 2019, the Company has acquired all of the minority interests issued in Mint Organics and Mint Organics Florida, and accordingly, there no longer exists any non-controlling interests in those entities as of such date.

 

At October 31, 2018, the non-controlling interests of Mint Organics Inc. and Mint Organics Florida were 22.5% and 4.0%, respectively. As of October 31, 2018, the non-controlling interests representing the minority interest’s share of both Mint Organics and Mint Organics Florida equity was $42,977.

 

 

 

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NOTE 16 – LIABILITIES ATTRIBUTABLE TO DISCONTINUED OPERATIONS

 

During September 2015, the Company formed Ethan NY for the purpose of selling clothing and accessories through a retail store. During June 2016, the Ethan NY operations were closed.

 

The following summarizes the carrying amounts of the assets and liabilities of Ethan NY at October 31, 2019 and 2018 (see Note 14):

 

   October 31, 
   2019   2018 
         
Assets  $   $ 
           
Liabilities:          
           
Accounts Payable  $94,835   $94,835 
Accrued Expenses   31,016    31,016 
   $125,851   $125,851 

 

NOTE 17 - SEGMENT INFORMATION

 

For the years ended October 31, 2019 and 2018, the Company operated only one operating segment.

 

NOTE 18 – SUBSEQUENT EVENTS

 

Several subsequent events are disclosed in Notes 4, 5, 8, 9, 12, 13, 14, and 15. There were no other subsequent events for disclosure purposes.

 

 

 

 

 

 

 

 

 

 

 

 

 

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

As previously reported in a Form 8-K filed on August 16, 2018, effective July 1, 2018, our principal independent accountants, GBH CPAs, PC (“GBH”) completed the combination of its practice into Marcum LLP (“Marcum”). As a result of the aforementioned, on August 13, 2018, we formally accepted the resignation of GBH and engaged Marcum as its independent registered public accountants. The engagement of Marcum was approved by our board of directors.

 

In connection with the foregoing change in accountants, there was no disagreement of the type described in paragraph (a)(1)(iv) if Item 304 of Regulation S-K or any reportable event as described in paragraph (a)(1)(v) of such Item.

 

ITEM 9A. CONTROLS AND PROCEDURES.

 

Evaluation of Controls and Procedures.

 

In accordance with Exchange Act Rules 13a-15 and 15d-15, 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, 2019, 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 

 

Our management 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 Securities Exchange Act of 1934, as amended, 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.

 

 

 

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As of October 31, 2019, 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.

 

Based on that evaluation under this framework, our management concluded that as of October 31, 2019, 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 lead to overlooking items requiring disclosure.

 

§The Company’s Board of Directors at October 31, 2019 were solely comprised of two outside directors and the remaining directors served also as the executive management of the Company. The Board does not have an audit committee or an independent audit committee financial expert nor did it have either one at October 31, 2019. While not being legally obligated to have an audit committee or independent audit committee financial expert, it is the management’s view that to have an audit committee, comprised of independent board members, and an independent audit committee financial expert, is an important entity-level control over the Company’s financial statements.

 

§The Company did not file this Annual Report on Form 10-K or the three quarterly reports on Form 10-Q for the fiscal quarters January 31, 2019, April 30, 2019 and July 31, 2019 by their required due dates. In addition, the Company has not filed the three quarterly reports on Form 10-Q for the fiscal quarters ended January 31, 2020, April 30, 2020 and July 31, 2020 within the appropriate filing deadlines. The Company has been delinquent in its filings with the SEC under the Securities Exchange Act of 1934, as amended. This delinquency is due to the Company’s limited financial and personnel resources. These delays limit the Company’s ability to timely analyze and identify 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, in addition to the engagement of Ian T. Bothwell as the Chief Financial Officer (Principal Financial and Accounting Officer) of the Company in November 2016, the Company in May 2019 hired a new accountant to fill the vacancy of the prior accountant that resigned in October 2018. In addition, the Company has increased its other administrative support personnel since May 2019. The Company also engaged outside tax consultants in December 2018 to assist in advising the Company in ongoing tax matters. During July and August 2020, the Company completed a private placement in the amount of $405,000 (“Sale”). The proceeds are to be used exclusively to fund the costs associated with the Company’s ongoing public company filing requirements, including audit, tax, valuation and legal fees.

 

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.

 

We also intend to appoint one or more independent members to our Board of Directors who shall also be appointed to a standing audit committee which will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management. While we are actively seeking outside members, including candidates with accounting experience, we cannot provide any assurance that we will be successful. Given the size of our Company, lack of revenues and current lack of financing to continue with our business, it is unlikely that we will be able to hire any additional personnel or that independent directors will agree to join our Board until general economic conditions and our own business prospects improve significantly.

 

 

 

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This annual 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, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION.

 

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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 Since:
Albert Mitrani 65

Chief Executive Officer, Chief Operating Officer, President,

Secretary and Director

(Principal Executive Officer)

June 24, 2015
Ian T. Bothwell 60

Chief Financial Officer and Director

(Principal Financial and Accounting Officer)

September 11, 2019

March 8, 2017 - April 13, 2018

Dr. Maria Ines Mitrani 40 Chief Science Officer, VP and Director

August 14, 2019

November 4, 2016 - April 13, 2018

Dr. George Shapiro 59 Director and Chief Medical Officer February 7, 2019
Dr. Allen Meglin 61 Director

April 2, 2020

Michael Carbonara 37 Director

April 2, 2020

 

Mr. Manuel Iglesias and Mr. Robert Zucker both served as Directors of the Company during the fiscal year ended October 31, 2019 and both resigned as Directors of the Company on April 25, 2020 and April 15, 2020, respectively.

 

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.

 

A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to the action.

 

Executive officers are appointed by, and serve at the pleasure of, the Board of Directors of the Company, subject to any contractual arrangements.

 

Professional Experience

 

Albert Mitrani has been serving as our President, Secretary, Treasurer and a member of the Board of Directors since June 24, 2015. Mr. Mitrani has also been serving as our Chief Executive Officer since September 2019. Mr. Mitrani was also our Chief Executive Officer and Chairman of the Board from June 24, 2015 until April 13, 2018. Mr. Mitrani served as the Chief Executive Officer of Analytical Stem Cell Corp. from April 2014 through May 2015. Analytical Stem Cell was involved in stem cell research and patient treatment referral centers. From February 2012 through March 2014 Mr. Mitrani was the Chief Executive Officer of Americell Trinidad and the President of ASCAAC LLC (American Stem Cell) from March 2011 through January 2013. Mr. Mitrani was the Chief Executive Officer of American Cellular Center Quito Ecuador from 2009 through 2012.

 

 

 

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Ian T. Bothwell was elected as a member of the Board of Directors of the Company effective September 11, 2019. Mr. Bothwell previously served as a member of the Board of Directors of the Company from March 8, 2017 until his resignation in April 2018, when the Company executed a Plan and Agreement of Reorganization. Mr. Bothwell serves as the Chief Financial Officer of the Company, a position he has held since November 4, 2016. From 2003 through November 2015, Mr. Bothwell served in various executive positions for Central Energy GP LLC, the general partner of Central Energy Partners LP, a previously publicly traded master limited partnership. From July 2007 through November 2015, Mr. Bothwell served as President and a director of Regional Enterprises, Inc. Since April 2007, Mr. Bothwell has served as the President and controlling member of Rover Advanced Technologies, LLC, a company formed to provide management solutions to the public transportation industry. Since 2015, Mr. Bothwell has also served as the President and controlling member of CountOnMe Inc., a company that provides software solutions for the educational industry. Mr. Bothwell received his Bachelor of Science in Business Administration from Boston University in 1984.

 

Dr. Maria Ines Mitrani was elected as a member of the Board of Directors of the Company effective August 14, 2019. Dr. Mitrani previously served as a member of the Board of Directors of the Company from November 4, 2016 until her resignation in April 2018, when the Company executed a Plan and Agreement of Reorganization. Dr. Mitrani is a cofounder of the Company and is its Chief Science Officer. Dr. Mitrani previously served as the Executive Vice President of Analytical Stem Cell from 2014 to 2015. From 2012 to 2014, Dr. Mitrani served as the Executive Vice President, Medical Tourism Coordinator and Patient Referral Coordinator of Americell Trinidad, LLC. From 2008 to 2014, Dr. Mitrani was with the American Stem Cell & Anti-Aging center where she co-founded the first autologous stem cell center in Quito, Ecuador. Dr. Mitrani received a degree in medicine from Universidad San Francisco de Quito, in Quito, Ecuador.

 

Dr. Mitrani is the spouse of Albert Mitrani, Chief Executive Officer, President, Chief Operating Officer, Co-Founder and a director of the Company.

 

Dr. George Shapiro was elected as a member of the Board of Directors of the Company effective February 2019. Since September 2018, Dr. Shapiro has served as the Company’s Chief Medical Officer. George C. Shapiro has been in practice for over 27 years. His career in medicine began in 1988 when he graduated from New York Medical College. An internship and residency then followed at Albert Einstein college of Medicine, after which, Dr. Shapiro completed a Cardiovascular Disease fellowship at Columbia University College of Physicians and Surgeons in 1994. Dr. Shapiro is currently a cardiologist in private practice.

 

Michael Carbonara was elected as a member of the Board of Directors of the Company effective April 2020. Since 2015. Mr. Carbonara has served as the Chief Executive Officer of the Phoenix Group, a company that provides international financial and banking services. In addition, Mr. Carbonara has successfully worked directly with financial regulators in Canada, Europe and Asia to establish regulated banking and payment institutions as well as a SICAV (Société d'investissement à Capital Variable) alternative investment fund. Mr. Carbonara currently serves on the board of directors of several private United States and international companies. Mr. Carbonara is a member of the Association of Certified Anti-Money Laundering Specialists® (“ACAMS”), the largest international membership organization dedicated to enhancing the knowledge skills and expertise of anti- money laundering/counter terrorist financing and financial crime detection and prevention professionals. 

 

Mr. Carbonara received his Associates Degree in Business Administration in 2006.  The Company believes that Mr. Carbonara’s financial and business experience, including his significant international business experience and expertise in financial technology, regulatory compliance, payments, cross border remittance and e-commerce consulting services make him qualified to be a member of the Board.

 

 

 

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Dr. Allen Meglin was elected as a member of the Board of Directors of the Company effective April 2020. Since 2015. Since June 2019, Dr. Meglin has served on the Company’s Products and Technical Advisory Board. Since 2005, Dr. Meglin has served as a staff radiologist for Chatham Radiologists, P.A. a medical facility specializing in interventional radiology and musculoskeletal radiology. Dr. Meglin also serves as the Medical Director for Northeast Georgia Aesthetics and is the owner operator of several proprietorships involved in providing aesthetics, chiropractic and wellness services. Throughout his career, Dr Meglin has been a frequent lecturer and presenter, has issued many medical related publications, has served on the faculty and taught various courses at educational institutions, has participated in as a principal investigator in several clinical research studies, and holds several medical based patents. Dr. Meglin also currently serves on the board of directors of several private United States companies. Dr. Meglin is also a member of the American Heart Association - Scientific Council Committee, the American Academy of Regenerative Medicine and serves on the FDA’s education materials committee.

 

Dr. Meglin currently holds the following licenses and certifications:

·Registered Vascular Technologist, ARDMS
·Certificate in Added Qualifications in Vascular and Interventional Radiology from the American Board of Radiology
·National Board of Medical Examiners Diplomate
·Medical License from the state of North Carolina

 

Dr. Meglin earned a M.D from the University of Pittsburgh - School of Medicine, Pittsburgh, PA and completed his Diagnostic Radiology Residency from the Walter Reed Army Medical Center, Washington, DC. The Company believes that Dr. Meglin’s medical industry expertise make him qualified to be a member of the Board.

 

Family Relationships

 

Albert Mitrani, our President and Chief Executive Officer, and Dr. Maria Ines Mitrani, our Chief Science Officer, are spouses.

 

Involvement in Certain Legal Proceedings

 

None of our directors or executive officers has been involved in any of the following events during the past ten years:

 

  any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
     
  any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
     
  being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or
     
  being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

Audit Committee

 

We currently do not have a separately standing Audit Committee due to our limited size and our Board performs the functions that would otherwise be performed by an Audit Committee.

 

 

 

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Compensation Committee

 

The Company does not have a Compensation Committee due to our limited size and our Board performs the functions that would otherwise be performed by a Compensation Committee. Our Board intends to form a Compensation Committee when needed.

  

Other Committees

 

We do not currently have a separately designated standing nominating committee. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our Board, it is not practical for us to have committees other than those described above, or to have more than two directors on such committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and our committees and allocate responsibilities accordingly.

 

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.

 

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% shareholders 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, 2019 and up through the date of this filing except as follows: Ian T. Bothwell filed a late Form 4 in August 2020 regarding the grant of warrants in February 2020 and the grant of common shares in May 2020 and a late Form 4 in September 2020 regarding the grant of common shares in August 2020 and September 2020; Dr. Allen Meglin filed a late Form 3 in August 2020 regarding his appointment as a director in March 2020 and a late Form 4 in August 2020 regarding the purchase of common shares in April 2020, May 2020 and July 2020 and a late Form 4 in September 2020 regarding the purchase of common shares in August 2020; Dr. Maria Ines Mitrani filed a late Form 4 in August 2020 regarding the grant of common shares in May 2020 and a late Form 4 in September 2020 regarding the grant of common shares in August 2020 and September 2020; Dr. George Shapiro filed a late Form 4 in August 2020 regarding the grant of common shares in May 2020 and a late Form 4 in September 2020 regarding the grant of common shares in August 2020 and September 2020; Robert W. Zucker filed a late Form 4 in August 2020 in connection with his grant of common shares in April 2020; and Albert Mitrani filed a late Form 4 in August 2020 regarding the grant of common shares in May 2020 and a late Form 4 in September 2020 regarding the grant of common shares in August 2020, September 2020c.n and as a result of being the spouse Dr. Maria Ines Mitrani, who was a reporting person from the issuances and exercises described above.

 

Michael Carbonara filed a late Form 3 in September 2020 regarding his appointment as a director in March 2020 and a late Form 4 in September 2020 regarding the purchase of common shares in April 2020.

 

 

 

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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 year ended October 31, 2019; (ii) the two most highly compensated executive officers who were serving as executive officers of the Company at the end of the fiscal year ended October 31, 2019 whose total compensation exceeded $100,000; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to clause (ii) above but for the fact that the individual was not serving as an executive officer of the Company at the end of the fiscal year ended October 31, 2019.

 

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 ($) 
                                     
Manuel Iglesias,   2019    -0-    -0-    -0-    -0-    -0-    -0-    -0-    -0- 
CEO (1), (7)   2018    -0-    -0-    2,758,071(1)   -0-    -0-    -0-    -0-    2,758,071 
                                              
Albert Mitrani -
CEO, President
   2019    339,852(8)   -0-    -0-    -0-    -0-    -0-    50,205(13)    390,057 
Secretary and Treasurer (2) (7)   2018    264,343(8)   -0-(14)   -0-    -0-    -0-    -0-    27,503(13)   291,846 
                                              
Dr. Maria I. Mitrani, VP and   2019    277,083(9)   -0-    -0-    -0-    -0-    -0-    -0-    277,083 
Chief Science Officer (3) (7)   2018    224,726(9)   -0-(15)   25,942(3)   238,500(3)   -0-    -0-    -0-    489,168 
                                              
Ian T. Bothwell,   2019    277,083(10)   -0-    -0-    -0-    -0-    -0-    -0-    277,083 
Chief Financial Officer (4) (7)   2018    251,685(10)   -0-(16)   57,975(4)   533,000(4)   -0-    -0-    -0-    842,660 
                                              
Dr. Bruce Werber,   2019    -0-    -0-    -0-    -0-    -0-    -0-    -0-    -0- 
Chief Operating Officer (5)   2018    95,671(11)    -0-(17)   83,250(5)   -0-    -0-    -0-    -0-    178,921 
                                              
Terrell Suddarth,   2019    -0-    -0-    -0-    -0-    -0-    -0-    -0-    -0- 
Chief Technology Officer (6)   2018    79,726(12)   -0-(18)   83,250(6)   -0-    -0-    -0-    -0-    162,976 

 

(1)Mr. Iglesias was appointed as the Chief Executive Office and principal executive officer in April 2018. Mr. Iglesias was removed as Chief Executive Officer and principal executive officer in September 2019. Mr. Iglesias did not receive any salary for his services during the years ended October 31, 2019 and 2018. In connection with the Reorganization, Management and Business Associates, LLC, an entity of which Manuel E. Iglesias has voting and dispositive control received 222.425,073 shares of common stock. The Company recorded $2,758,071 of stock compensation expense associated with the issuance of the shares referred to above and Mr. Iglesias’s agreement to serve as the Company’s Chief Executive Officer.

 

 

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(2)Albert Mitrani was appointed as the Chief Executive Officer, President, Secretary and Treasurer of the Company on June 24, 2015. He was replaced as Chief Executive Officer in April 2018. He was appointed as Chief Executive Officer and principal executive officer in September 2019.
(3)Dr. Maria I. Mitrani is Albert Mitrani’s wife. Dr. Maria I. Mitrani was appointed as the Vice President and Chief Science Officer of the Company on November 4, 2016. During April 2018, Dr. Mitrani’s employment agreement was amended to provide for a reduction in the exercise price of her outstanding warrants to $0.001 per share in the event of a change in control. The value of the warrant modification was $238,500 which vested at the time of the Reorganization when the change in control event was triggered. Effective April 13, 2018, Dr. Mitrani was granted 2,092,105 shares of common stock of the Company with a grant value of $25,942. See Notes 12 and 13 to the October 31, 2018 audited consolidated financial statements for a description of the assumptions used in determining the value of the warrants modified and the stock granted.
(4)Ian Bothwell was appointed as the Chief Financial Officer of the Company on November 4, 2016. During the year ended October 31, 2018, $156,615 of the costs associated with the warrants previously granted to Mr. Bothwell were vested. During April 2018, Mr. Bothwell’s employment agreement was amended to provide for a reduction in the exercise price of his warrants to $0.001 per share in the event of a change in control. The value of the warrant modification was $533,000 which vested at the time of the Reorganization when the change in control event was triggered. Effective April 13, 2018, Mr. Bothwell was granted 4,675,439 shares of common stock of the Company with a grant value of $57,975. See Notes 12 and 13 to the October 31, 2018 audited consolidated financial statements for a description of the assumptions used in determining the value of warrants modified and the stock granted.
(5)Dr. Bruce Werber was appointed as the Chief Operating Officer of the Company on November 4, 2016. Dr. Werber resigned in February 2018. In connection with Dr. Werber’s resignation in February 2018, Dr. Werber forfeited all accrued and unpaid compensation owed as of the date of the Sale and all the warrants he previously received in connection with his employment agreement in exchange for receiving 7,500,000 shares of common stock with a grant value of $83,250.
(6)Terrell Suddarth was appointed as the Chief Technology Officer of the Company on March 8, 2017. Mr. Suddarth resigned in February 2018. In connection with Mr. Suddarth’s resignation in February 2018, Mr. Suddarth forfeited all accrued and unpaid compensation owed as of the date of the Sale and all the warrants he previously received in connection with his employment agreement in exchange for receiving 7,500,000 shares of common stock with a grant value of $83,250.
(7)Effective April 13, 2018, in connection with Reorganization, Manuel Iglesias replaced Albert Mitrani as the Chief Executive Officer of the Company, Ian Bothwell resigned from the Board of Directors of the Company and Dr. Maria Mitrani resigned from the Board of Directors of the Company. In addition, effective April 13, 2018, Albert Mitrani, Ian Bothwell, and Dr. Maria Mitrani, each agreed to terminate their respective executive employment agreements, dated November 4, 2016, as amended, in favor of new employment agreements (“April 2018 Executive Employment Agreements”) and Albert Mitrani, Ian Bothwell and Dr. Maria Mitrani each agreed to release the Company for all amounts owing to them for unpaid salaries through the Effective Date and advances and/or expenses incurred prior to December 31, 2017.
(8)$132,105 and $12,659 of salary and commissions were accrued and unpaid at October 31, 2019 and 2018, respectively. During April 2018 in connection with the Reorganization, a total of $480,304 of accrued and unpaid salary was forfeited and written off.
(9)$129,613 and $22,210 of salary was accrued and unpaid at October 31, 2019 and 2018, respectively. During April 2018 in connection with the Reorganization, a total of $401,089 of accrued and unpaid salary was forfeited and written off.
(10)$321,907 and $44,824 of salary was accrued and unpaid at October 31, 2019 and 2018, respectively. During April 2018 in connection with the Reorganization, a total of $486,938 of accrued and unpaid salary was forfeited and written off.
(11)$0 of salary was accrued and unpaid at October 31, 2019 and 2018. During February 2018 in connection with the Sale, a total of $467,670 of accrued and unpaid salary was forfeited and written off.
(12)$0 of salary was accrued and unpaid at October 31, 2019 and 2018. During February 2018 in connection with the Sale, a total of $271,818 of accrued and unpaid salary was forfeited and written off.
(13)Albert Mitrani’s and his wife, Dr. Maria I. Mitrani, received benefits totaling approximately $50,205 and $27,503 during the fiscal year ended October 31, 2019 and 2018, respectively.
(14)The unpaid signing bonus in the amount of $100,000 was forfeited and written off in connection with the Reorganization in April 2018.
(15)The unpaid signing bonus in the amount of $50,000 was forfeited and written off in connection with the Reorganization in April 2018.
(16)The unpaid signing bonus in the amount of $35,000 was forfeited and written off in connection with the Reorganization in April 2018.
(17)The unpaid signing bonus in the amount of $35,000 was forfeited and written off in connection with the Sale in February 2018.
(18)The unpaid signing bonus in the amount of $35,000 and $105,000 in additional bonus was forfeited and written off in connection with the Sale in February 2018.

 

 

 

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We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.

  

Outstanding Equity Awards at Fiscal Year-End

 

There were no outstanding equity awards as of October 31, 2019. The Company has securities authorized for issuance under the 2020 Plan, the Board Plan and the MCPP that were granted subsequent to October 31, 2020.

 

Executive Employment Agreements

 

Effective November 4, 2016, the Company entered into executive employment agreements with Albert Mitrani, Dr. Maria Mitrani, Bruce Werber, and Ian Bothwell. On March 8, 2017, the Company entered into an executive employment agreement with Terrell Suddarth, and amended the employment agreements of Dr. Mitrani, Dr. Werber and Mr. Bothwell. On February 5, 2018, Dr. Werber’s and Mr. Suddarth’s’ employment agreements were terminated in connection with the Sale. On April 6, 2018, the Company amended Mr. Bothwell’s and Dr. Mitrani’s employment agreement, which provided among other things, that in the event of an occurrence of a change in control or termination of the employment (as defined in agreement) pursuant to the terms thereof, the exercise price for all outstanding warrants granted to Mr. Bothwell and Dr. Mitrani to purchase common stock of the Company during the term of the agreement shall be reduced to $0.001 per share. In addition, Mr. Bothwell’s employment agreement was amended to increase the initial term and the automatic renewal term provided for in the employment agreement from three years to five years, increased the amount of automobile expense allowance and removed the cap for the reimbursement of office related expenses. Collectively, the aforementioned executive employment agreements are referred to as the FY 2017 Executive Employment Agreements.

 

In connection with Sale, Werber and Suddarth each entered into a Separation and General Release Agreement with the Company effective upon the closing of the Sale which provided for the immediate resignation of Werber and Suddarth of all their respective executive and Board of Director positions held with the Company and/or any of the Company’s subsidiaries, and the termination and settlement of all obligations of each party to the other pursuant to the respective employment agreements, including the release of all rights the Company may have held in any intellectual property of Werber and Suddarth and any non-compete restrictions on Werber and Suddarth. In connection with such releases, Werber and Suddarth each agreed to forfeit all warrants previously granted and outstanding (a total of 77,150,000 warrants to purchase shares of common stock of the Company), forfeit any and all accrued and unpaid amounts owing under the employment agreements for past due wages, benefits, severance obligations, unreimbursed expenses and any other obligations owing to one another as of the date of the Sale totaling $906,515 in exchange for a grant of 7,500,000 shares of restricted common stock of the Company to each of Werber and Suddarth (the grant date fair value of the newly issued shares issued to each of Werber and Suddarth was $83,250).

 

In connection with the Reorganization, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s FY 2017 Executive Employment Agreements were terminated in favor of newly executed employment agreements (collectively referred to as the April 2018 Executive Employment Agreements). In addition, as a condition of the Reorganization, Mr. Mitrani, Mr. Bothwell and Dr. Mitrani each agreed to release the Company for all amounts owed to them for unpaid salaries through the Effective Date and unpaid advances and/or expenses incurred prior to December 31, 2017 totaling $1,636,808. The significant terms provided for in the FY 2017 Executive Employment Agreements and the April 2018 Executive Employment Agreements are summarized below:

 

April 2018 Executive Employment Agreements

 

General

 

Pursuant to Albert Mitrani’s April 2018 Executive Employment Agreement, Mr. Mitrani serves as the Company’s President and Chief Operating Officer. Mr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Mitrani is also entitled to a commission on all sales attributable to him (i.e., excluding existing customers of the Company at the time of the Reorganization) at the rate of five percent (5%) of the "Net Sales" as defined in the agreement and an expense allowance of $5,000 per month.

 

 

 

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Pursuant to Ian Bothwell’s April 2018 Executive Employment Agreement, Mr. Bothwell continues to serve as the Company’s Chief Financial Officer. Mr. Bothwell’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Bothwell has not been paid salary since July 2018.

 

Pursuant to Dr. Maria Mitrani’s April 2018 Executive Employment Agreement, Dr. Mitrani continues to serve as the Company’s Chief Science Officer. Dr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term.

 

Term

 

The term of each of the April 2018 Executive Employment Agreements commences as of the Effective Date and continues until December 31, 2020 (Mr. Bothwell) or December 31, 2023 (Mr. Mitrani and Dr. Mitrani) (“Initial Term”), unless terminated earlier pursuant to the terms of the April 2018 Executive Employment Agreement; provided that on such expiration of the Initial Term, and each annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), the agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term of the April 2018 Executive Employment Agreement at least 90 days’ prior to the applicable renewal Date. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”

 

Unpaid Advances

 

The Company was required to repay the unpaid advances subsequent to December 31, 2017, and the unreimbursed expenses incurred subsequent to December 31, 2017, on May 15, 2018.  Such payments were not made as required.

 

Fringe Benefits and Perquisites

 

During the Employment Term, each Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.

 

Termination

 

The Company may terminate the April 2018 Executive Employment Agreement at any time for good cause, as defined in the April 2018 Executive Employment Agreement, including, the Executive’s death, disability, Executive’s willful and intentional failure or refusal to follow reasonable instructions of the Company’s Board of Directors, reasonable and material policies, standards and regulations of the Company’s Board of Directors or management.

 

 

 

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Amendments To The April 2018 Executive Employment Agreements

 

February 26, 2020 Amendment

 

On February 26, 2020, the Company agreed to modify the employment agreement of Mr. Ian T. Bothwell, the Company’s Chief Financial Officer to provide Mr. Bothwell with:

 

a)an extension to his employment agreement dated April 13, 2018 from December 2020 to December 2023 consistent with other executives of the Company; and
b)and a one-time bonus in the form of a fully vested cashless warrant to purchase 7,500,000 shares of common stock of the Company, exercisable for ten years at an exercise price of $0.28 per share, the closing price of the common stock on the date of the grant.

 

On February 26, 2020, pursuant to the respective employment agreements with each of the Company’s executive officers, the Board granted each of Mr. Albert Mitrani, Dr. Maria Mitrani and Mr. Ian Bothwell a cash bonus of $37,500 for the calendar year ended December 31, 2019.

 

April 25, 2020 Amendment

 

On April 25, 2020, the Company agreed to amend and revise the each of Albert Mitrani, Ian Bothwell and Dr. Maria I. Mitrani, (individually each of A. Mitrani, Bothwell and Dr. Mitrani are referred to as an “Executive” and collectively the “Executives”) April 2018 Executive Employment Agreements. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:

 

Term:An extension to the term of the employment agreements dated April 13, 2018 from December 31, 2023 to December 31, 2025.
  
Base Salary:

An increase in base annual salary from $162,500 to $300,000. The amended salary amount of $300,000 shall be retroactively adjusted to commence as of January 1, 2019. The increased annual salary of $137,500 (“Incremental Salary”) over the prior annual salary amount of $162,500 (“Original Base Salary”) shall only be paid only upon there being sufficient available cash. Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.

 

 

 

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Severance Provisions:

Company termination without cause, Executive for good reason:

a)All existing accrued obligations existing at time of termination shall be paid to Executive.
b)Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination,
c)Executive shall be entitled to a cash payment equal to his unpaid base salary for the remaining term in effect at time of the time of the termination or an amount equal to four times (4x's) the base salary in effect at the time of termination, whichever is greater,
d)Executive shall be entitled to a cash payment equal to his 200% of the prior year’s cash or stock bonus (excluding any stock grants received pursuant to the MCPP).

 

Change In Control: In the event of a Change in Control and the Executive’s employment agreement is not extended for period of five years from the date of the Change in Control with all other terms and conditions of the agreement remaining the same, then the Executive may terminate the agreement for good reason and all respective severance terms as provided for a termination by Executive for good reason described in clause 1 above shall be provided to Executive.

 

Executive termination due to disability, death, or non-renewal by Company:

a)All existing accrued obligations existing at time of termination shall be paid to Executive.
b)Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination.
c)Executive shall be entitled to a cash payment equal to 299% of Executive’s base salary in effect at the time of termination, plus a gross up amount to cover Executive’s tax liability associated with such payment.
d)200% of the prior years cash or stock bonus (excluding MCPP performance stock grants).

 

June 29, 2020 Amendment

 

On June 29, 2020, the board of directors of the Company agreed to further amend and revise the April 2018 Executive Employment Agreements for each of Executives. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:

 

Base Salary: An increase in the Executives annual base annual salary upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months. Upon the achievement of the defined salary milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur.

 

Monthly Revenues
(in millions)
   Base Salary
Increase
 
      
$1.00   $130,000 
$1.50   $200,000 
$2.00   $275,000 
$3.50   $630,000 
$5.00   $900,000 

 

 

 

 111 

 

 

Peter Taddeo

 

Pursuant to an employment agreement entered into effective May 1, 2017, with Mr. Taddeo (“Taddeo”) and Mint Organics (“Taddeo Employment Agreement”), Mr. Taddeo shall serve as the Chief Executive Officer of Mint Organics (“Mint CEO”) and a member of the Board of Directors of Mint Organics (“Mint Board”). The employment term shall be for three years, unless terminated earlier pursuant to the terms of the agreement, and thereafter deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term at least 90 days prior to the applicable renewal date. The Mint CEO’s base annual salary is $180,000 during the period prior to Mint Organics, through one of its subsidiaries, or by other means, obtains or acquires access for a license from a state to dispense cannabis which shall accrue commencing as of the effective date and shall be payable upon Mint Organics generating sufficient net revenue or obtaining sufficient third party financing; and thereafter payable in periodic installments in accordance with Mint Organics customary payroll practices, but no less frequently than monthly. The Mint CEO’s base salary shall automatically be adjusted to an annual rate of base salary of $250,000 once the license is obtained. The base salary shall be reviewed at least annually by the Mint Board and the Mint Board may, but shall not be required to, increase the base salary during the employment term. In connection with the execution of the agreement, Mint Organics agreed to pay the Mint CEO a $25,000 signing bonus which shall be accrued and paid by Mint Organics upon Mint Organics having sufficient cash flow. The agreement also contains terms regarding eligibility for future annual bonuses, annual equity awards under Mint Organics’ equity plan, if any, fringe benefits and perquisites consistent with the practices Mint Organics (including health and dental insurance, an automobile expense allowance of $1,000 per month, and reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the Mint CEO in accordance with Mint Organics’ expense reimbursement policies. Mint Organics may terminate the agreement at any time with or without “Cause” and the Mint CEO may resign at any time with or without “Good Reason” (as defined in the agreement). The nature of the obligations owing to the Mint CEO upon termination is more fully described in the agreement. In connection with the execution of the agreement, the Company granted the Mint CEO 1,000,000 shares of unregistered common stock of Organicell, which vested on December 31, 2017.

 

On April 6, 2018, Peter Taddeo resigned as a member of the Board of Directors of the Company and as the Chief Executive Officer and member of the board of directors of the Mint Organics Entities. In connection with Mr. Taddeo’s resignation, Mr. Taddeo entered into a Separation and General Release Agreement (“Taddeo Separation Agreement”) whereby Mr. Taddeo agreed to release the Mint Organics Entities from all obligations in connection with the Taddeo Agreement and all other agreements and/or financial obligations between the parties related to the Taddeo’s employment or services performed with any of Mint Organics Entities totaling $156,568. In consideration for Taddeo entering into the Taddeo Separation Agreement, the Mint Organics Entities paid Taddeo $5,000 and Mr. Bothwell paid $3,000 to Taddeo for the purchase of the 1,000,000 shares of common stock of the Company that were granted to Taddeo in connection with the Taddeo Agreement. Contemporaneously with the execution of the Taddeo Separation Agreement, the Company and Mr. Taddeo entered into a Share Purchase and General Release Agreement whereby the Company agreed to purchase from Mr. Taddeo his 150 shares of Mint Series A Preferred Stock for an aggregate purchase price of $40,000.

 

Resignation, Retirement, Other Termination, or Change in Control Arrangements

 

Our current executive officers Albert Mitrani, Dr. Maria Mitrani and Ian Bothwell have employment agreements that provide for payments to executives at, following, or in connection with the resignation, retirement or other termination of our directors or executive officers, or a change in control of our company or a change in our executive officers’ responsibilities during the term of their employment and/or following a change in control.

 

We have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to our directors at, following, or in connection with the resignation, retirement or other termination of our directors, or a change in control of our company or a change in our directors’ responsibilities following a change in control.

 

Director Compensation

 

No director received or accrued any compensation for his or her services as a director during the fiscal year ended October 31, 2019.

 

 

 

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On February 26, 2020, the Company established the Board Stock Compensation Plan (“Board Plan”) which provides compensation for non-executive Board members for participation in Board meetings retroactive to November 1, 2019. The Board Plan provides for a grant of $7,500 in equivalent shares of common stock (based on trading price at the end of the applicable current quarter) on the last day of each respective fiscal quarter that a member attends at least 75% of all meetings held during such quarter and in which a minimum of 1 meeting is held, for a maximum annual compensation amount of $30,000 per year per member.  In addition, Board members that participate on future board committees will also be eligible to receive additional compensation for serving on such committees, in amounts to be determined by the Board. The maximum aggregate number of shares that are currently authorized to be issued pursuant to the Board Plan is 5,000,000 shares.

 

On April 15, 2020, the Company issued 236,808 shares of common stock to a non-executive Board member in accordance with the Board Plan.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the applicable table below are deemed beneficially owned by the holders of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. Subject to community property laws, where applicable, the persons or entities named in the tables below have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.

 

The following table sets forth information with respect to the beneficial ownership of our common stock as of September 30, 2020, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our outstanding voting capital stock, (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our capital stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.

 

The percentages below are calculated based on 875,194,450 shares of common stock outstanding as of September 30, 2020. Except as noted, the business address of the persons listed below is c/o Organicell Regenerative Medicine, Inc. at 4045 Sheridan Ave., #239, Miami Beach, FL 33140.

 

NAME TITLE COMMON SHARES PERCENTAGE (1)
Officer and Directors      
Albert Mitrani (3) Chief Executive Officer, President and Director 197,955,190 22.43%
Maria Ines Mitrani (4) Chief Science Officer and Director 197,955,190 22.43%
Ian Bothwell (5) Chief Financial Officer and Director 112,800,000 12.78%
George Shapiro Chief Medical Officer and Director   62,500,000  7.08%
Michael Carbonara (2) Director 45,000,000 5.10%
Allen Meglin Director 12,964,180  1.47%
       
All officers and directors as a group (6 persons) (6) --

431,219,370

 

 

48.85%
       
5% Stockholders (7)      
Management and Business Associates Inc. (8) -- 215,425,073 24.41%

 

 

 

 113 

 

 

(1)Based on 875,194,450 shares of common stock outstanding as of September 30, 2020 and 7,500,000 warrants to purchase 7,500,000 shares of common stock of the Company. 
(2)Held indirectly by Republic Asset Holdings LLC, an entity of which Michael Carbonara has voting and dispositive control. 102 NE 2nd Street, Boca Raton, FL 33432.
(3)Includes 73,850,000 shares of common stock held by Maria Mitrani, Albert Mitrani’s wife.
(4)Includes 124,105,190 shares of common stock held by Albert Mitrani, Maria Mitrani’s husband.
(5)Includes 7,500,000 warrants to purchase 7,500,000 shares of common stock of the Company.
(6)Includes 7,500,000 warrants to purchase 7,500,000 shares of common stock of the Company.
(7)The Company has not received any filings by a third party indicating beneficial ownership of more than 5% of our outstanding voting capital stock that are not listed herein.
(8)2060 Dartmouth Ave. N, St. Petersburg, Fl 33713.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

2020 Plan

 

On February 26, 2020, the Company established the 2020 Stock Incentive Plan (“2020 Plan”). The 2020 Plan permits the grant of options, appreciation rights, dividend equivalent right and restricted common stock of the Company (“Award”) to any person who is an employee or director of, or consultant to the Company. The maximum aggregate number of shares that may be issued pursuant to all Awards is 50,000,000 shares, plus an annual increase to be added on the first day of the calendar year beginning January 1, 2021 equal to (i) the greater of such number of shares as (A) will set the maximum number of shares that may be issued pursuant to all Awards equal to 15% of the number of Shares outstanding as of such date; or (B) 2% of the number of shares outstanding as of such date; or (ii) a lesser number of shares determined by the administrator of the 2020 Plan (“Administrator”) in good faith. The maximum aggregate number of shares available for grant of shares and/or incentive stock options shall be 25,000,000 shares, increased on the first day of the calendar year beginning January 1, 2021, in a number of Shares proportionate to the increase in the total number of shares that may be issued pursuant to all Awards under the Plan.

 

The Plan shall be administered by (A) the board of the directors of the Company (“Board”) or (B) a committee (“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 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.

 

The Company has yet to appoint the Administrator for the Plan and no Awards have yet to be granted under the Plan.

 

Board Stock Compensation Plan

 

On February 26, 2020, the Company established the Board Stock Compensation Plan (“Board Plan”) which provides compensation for non-executive Board members for participation in Board meetings retroactive to November 1, 2019. The Board Plan provides for a grant of $7,500 in equivalent shares of common stock (based on trading price at the end of the applicable current quarter) on the last day of each respective fiscal quarter that a member attends at least 75% of all meetings held during such quarter and in which a minimum of 1 meeting is held, for a maximum annual compensation amount of $30,000 per year per member.  In addition, Board members that participate on future board committees will also be eligible to receive additional compensation for serving on such committees, in amounts to be determined by the Board. The maximum aggregate number of shares that are currently authorized to be issued pursuant to the Board Plan is 5,000,000 shares.

 

On April 15, 2020, the Company issued 236,808 shares of common stock to a non-executive Board member in accordance with the Board Plan.

 

 

 

 114 

 

 

Management and Consultants Performance Stock Plan

 

On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (“MCPP”) providing for the grant to current senior executive members of management and third-party consultants of an aggregate of approximately 205,000,000 shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”).

 

On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below.

 

Pre-Transaction Price Per Share Valuation (a)   Executive Bonus Shares Issued (b)   Non-executive Board Bonus Shares Issued (c) 
          
$0.22    40,000,000    2,000,000 
$0.34    60,000,000    3,000,000 
$0.45    80,000,000    4,000,000 
$0.54    100,000,000    5,000,000 

 

(a)proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances
(b)per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro
(c)per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara

 

On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below:

 

Aggregate Funding Amount

   Shares 
          
 From    To      
$2,500,000   $5,000,000    5,000,000 
$5,000,001   $10,000,000    10,000,000 
$10,000,001   $30,000,000    30,000,000 

 

On September 23, 2020, the Board amended the MCPP, providing for the grant of common stock of the Company of 15.0 million, 7.5 million and 15.0 million shares of common stock of the Company, respectively, to each Albert Mitrani, Dr. Maria I. Mitrani and Ian Bothwell upon such time that the Company’s common stock trades above $0.25 per share, $0.50 per share and $0.75 per share, respectively, for 30 consecutive trading days subsequent to March 31, 2021 and provided such milestone occurs during the term of employment with the Company.

 

 

 

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In addition, each of the current executives were entitled to receive an additional 7 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such milestone occurs during the term of employment with the Company.

 

Pursuant to the MCPP, as of September 23, 2020, a total of 233,000,000 shares have been issued and approximately 582,500,000 shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board:

 

       MCPP   MCPP 
   MCPP   Remaining   Total 
   Shares   Shares   Shares 
Name  Awarded   Available   Approved 
             
Albert Mitrani   50,000,000    137,500,000    187,500,000 
Ian Bothwell   50,000,000    167,500,000    217,500,000 
Dr. Maria I. Mitrani   50,000,000    167,500,000    217,500,000 
Dr. George Shapiro   50,000,000    100,000,000    150,000,000 
Dr. Allen Meglin       5,000,000    5,000,000 
Michael Carbonara       5,000,000    5,000,000 
Consultants   33,000,000        33,000,000 
                
Total   233,000,000    582,500,000    815,500,000 

 

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))

 
             
2020 Plan   -0-    -0-    50,000,000 
                
Board Stock Compensation Plan   -0-    -0-    4,763,192 
                
Management And Consultants Performance Stock Plan   -0-    -0-    582,500,000 

 

 

 

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Changes in Control

 

On April 23, 2018, the Company and Management and Business Associates, LLC, a Florida limited liability company (“MBA”), executed a Plan and Agreement of Reorganization (“Reorganization”) whereby the Company agreed to issue to MBA an aggregate of 222,425,073 shares of common stock, par value $0.001 per share of the Company, representing at the time, 51% of the outstanding shares of common stock of the Company on fully-diluted basis, for $0.001 per share (or an aggregate of $222,425), in consideration for Mr. Manuel Iglesias’ agreement to serve as the Company’s Chief Executive Officer and a member of the Board of the Company. The Reorganization was retroactive as of April 13, 2018 (“Effective Date”). The Reorganization also provided for the cancelation and termination of the Company’s previously issued and outstanding Series A Preferred Stock and Series B Preferred Stock. As a result of the Reorganization, MBA acquired at the time a controlling interest of the Company. Manuel E. Iglesias is the sole Manager of MBA and thus may be deemed to control MBA. Currently MBA’s beneficial ownership of the Company is 24.6%

 

As of September 30, 2020, there are 875,194,450 shares of common stock outstanding, of which 395,719,370 shares of common stock (approximately 47.07% of the outstanding shares of common stock) are owned and/or controlled by our Board and executive officers, Albert Mitrani, Ian T. Bothwell, Dr. Maria Mitrani, Dr. George Shapiro, Michael Carbonara and Dr. Allen Meglin, and two of the members of management are spouses, Albert Mitrani and Dr. Maria Mitrani. In addition, all four of our executive officers are also members of the Board of Directors, which currently consists of six members. In addition, our executive officers may receive additional stock grants in the future based on the achievement of certain performance milestones and from the conversion of unpaid compensation into common stock, which if fully issued would provide our Board and executive officers with over 51% of the outstanding shares of common stock outstanding. As a result, the foregoing persons have the ability to significantly influence the outcome of issues submitted to our stockholders. Although our officers and directors have a fiduciary obligation to the Company stockholders, their interests may not always coincide with our interests or the interests of other stockholders. As a consequence, it may be difficult for the other stockholders to remove our management. The ownership of these officers/directors could also deter unsolicited takeovers, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices.

 

We are not aware of any other arrangements, including any pledge by any person of our securities, the operation of which may result in a change in control of the Company. However, pursuant to our Articles of Incorporation, our board has the authority, without further stockholder approval, to provide for the issuance of up to 10 million shares of our preferred stock in one or more series and to determine the dividend rights, conversion rights, voting rights, rights in terms of redemption, liquidation preferences, the number of shares constituting any such series and the designation of such series. Our Board has the power to afford preferences, powers and rights (including voting rights) to the holders of any preferred stock preferences, such rights and preferences being senior to the rights of holders of common stock.

 

Pursuant to our Second Amended and Restated Bylaws, the consent of a “supermajority” (as defined the Bylaws and dependent on how many directors there are at the time) of the Board is required for various actions which might be taken in connection with delaying or preventing a change in control of the Company desired by a majority of our Board of Directors, including, but not limited to, (i) the sale, exchange or other disposition of the Company’s assets with an aggregate value of at least $100,000 or all, or substantially all, of the Company’s assets, whichever is less, occurring as part of a single transaction or plan, or in multiple transactions over a six (6) month period, except in the orderly liquidation and winding up of the business of the Company upon its duly authorized dissolution, (ii) the acquisition of the stock or assets of another entity or the merger therewith, regardless of the nature or amount of consideration given therefor. Other than the foregoing, there are no provisions in our Articles of Incorporation or Bylaws that would delay, defer or prevent a change in control of our Company.

 

 

 

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

 

Under Rule 404 of Regulation S-K, we are required to describe any transaction, since the beginning of the fiscal year ended October 31, 2018, or any currently proposed transaction, in which the Company was or is to be a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s common stock, or an immediate family member of any of those persons.

 

Effective February 5, 2018, Dr. Werber’s and Mr. Suddarth’s executive employment agreements were terminated and the parties entered into a settlement agreement providing for the release of all obligations owed to Dr. Werber and Mr. Suddarth as of the date of the Sale in exchange for each receiving a grant for 7,500,000 shares of common stock of the Company. On April 6, 2018, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements were amended to modify the exercise price of their outstanding warrants under certain conditions. Effective April 13, 2018, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements were terminated and replaced with new executive employment agreements. On February 26, 2020, April 25, 2020 and June 29, 2020, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s employments agreement were further amended.

 

In connection with the Reorganization, Mr. Bothwell and Dr. Mitrani each agreed to exercise on a cashless basis all of their warrants to purchase 53,300,000 and 23,850,000 shares of common stock of the Company, respectively. Based on the closing price of the Company’s common stock on the Effective Date of $0.012 per share and the warrant exercise price of $0.001 per share, Mr. Bothwell and Dr. Mitrani were required to use 4,675,439 and 2,092,105 shares of common stock received from the exercise of the warrants, respectively, to pay for the exercise price for exercising all of the warrants.

 

Effective April 13, 2018, Mr. Bothwell and Dr. Mitrani were each granted 4,675,439 and 2,092,105 shares of common stock of the Company, respectively. The newly granted shares vest immediately and were valued at $57,975 and $25,942, respectively, based on the closing trading price of the common stock on the effective date of the grant.

 

In connection with the previous appointment of an independent member to the Board of Directors of the Company, during August 2019, the Board approved the issuance to the director of 5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date.

 

Effective February 26, 2020, Mr. Bothwell was granted cashless warrants to purchase 7,500,000 shares of common stock of the Company. The newly granted warrants vest immediately, have an exercise price of $0.028 per share and are exercisable for ten years from the effective date of the grant.

 

During April 2020, June 2020, August 2020 and September 2020, each of the current executives of the Company, Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell and George Shapiro (“Current Executives”) were granted rights under the Management and Consultant Performance Plan (“MCPP”) to receive common stock of the Company based on the achievement of certain defined milestones. In addition, during June 2020, each of the current non-executive members of the Board were granted rights under the MCPP to receive common stock of the Company based on the achievement of certain defined milestones.

 

The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. The term of the lease has been extended through June 2023. The current monthly rent is $2,900 and beginning July 2020, the monthly rent increases to $3,500. The Company paid a security deposit of $5,000.

 

In connection with Mr. Bothwell’s executive employment agreements, the Company agreed to reimburse Rover Advanced Technologies, LLC, a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative fees, etc.).

 

On February 5, 2018, in connection with the Sale, all amounts owed to the Mr. Bothwell and Dr. Werber in connection with the SPA were repaid.

 

 

 

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On February 5, 2018, in connection with Dr. Werber’s resignation and termination, Dr. Werber agreed to the forfeit and the cancellation of the 100 shares of the Series A Preferred Stock previously issued. Effective April 13, 2018, in connection with the Reorganization, Mr. Mitrani, Mr. Bothwell and Dr. Mitrani each agreed to the forfeit and cancellation of their 100 shares of the Series A Preferred Stock.

 

On April 6, 2018, Peter Taddeo resigned as a member of the Board of Directors of the Company and as the Chief Executive Officer and member of the board of directors of the Mint Organics Entities. In connection with Mr. Taddeo’s resignation, Mr. Taddeo entered into a Separation and General Release Agreement (“Taddeo Separation Agreement”) whereby Mr. Taddeo agreed to release the Mint Organics Entities from all obligations in connection with the Taddeo Agreement and all other agreements and/or financial obligations between the parties related to the Taddeo’s employment or services performed with any of Mint Organics Entities. In consideration for Taddeo entering into the Taddeo Separation Agreement, the Mint Organics Entities paid Taddeo $5,000 and Mr. Bothwell paid $3,000 to Taddeo for the purchase of the 1,000,000 shares of common stock of the Company that were granted to Taddeo in connection with the Taddeo Agreement. Contemporaneously with the execution of the Taddeo Separation Agreement, the Company and Mr. Taddeo entered into a Share Purchase and General Release Agreement whereby the Company agreed to purchase from Mr. Taddeo his 150 shares of Mint Series A Preferred Stock for an aggregate purchase price of $40,000.

 

On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with the initial capitalization of Mint Organics in exchange for 4,400,000 shares of common stock of the Company.

 

On April 23, 2018, the Company and MBA executed a Plan and Agreement of Reorganization. As a result of the Reorganization, MBA acquired at the time a controlling interest of the Company. Manuel E. Iglesias is the sole Manager of MBA and thus may be deemed to control MBA.

 

From time to time, Mr. Iglesias and Mr. Bothwell and/or their respective affiliates have advanced funds to the Company to pay for certain expenses of the Company. As of October 31, 2019, $220,897 and $48,184 are owed to Mr. Iglesias and Mr. Bothwell and/or their respective affiliates, respectively. In addition, the Company has not provided Mr. Bothwell required salary payments since July 2018. At October 31, 2019, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $132,105, $129,613 and $321,907, respectively.

 

Mr. Iglesias has provided a personal guaranty in connection with amounts required to paid under the Credit Facility.

 

During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July and August 2020, the Company sold an additional 1,166,666 shares and 422,514 shares of common stock to Dr. Allen Meglin at $0.03 per share and $0.10 per share, respectively, for an aggregate purchase price of $77,251.

 

On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000.

 

During September 2018, in consideration for Dr. George Shapiro agreeing to serve as the Company’s Chief Medical Officer (“CMO”) and render other medical consulting and advisory services to the Company, the Board approved the issuance to the CMO of 2,500,000 shares of common stock. In connection with the CMO’s appointment to the Board of Directors of the Company during February 2019, during February 2019 and August 2019, the Board approved the issuance to the CMO of 2,000,000 and 3,000,000 shares, respectively, of common stock. On February 26, 2020, the Company agreed to immediately grant the CMO 5,000,000 shares of common stock in recognition of past services provided to the Company through February 2020. In addition the Company agreed to enter into a consulting agreement with the CMO to provide ongoing services to the Company. The CMO will receive compensation of $82,250 annually, commencing March 1, 2020. The term of the consulting agreement is one year, with automatic renewals for annual periods thereafter unless prior written notice is provided by either party of the desire to terminate.

 

 

 

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For the year ended October 31, 2019 and 2018, the total amount of sales to customers related to our board of director members and/or employees of the Company totaled $71,650 and $19,550, respectively.

 

In connection with Mr. Robert Zucker’s resignation from the Board of Directors of the Company in April 2020, the Board approved the issuance to Mr. Zucker of 736,808 shares of unregistered common stock of the Company.

 

Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board of Directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” Nevertheless, we believe that both Michael Carbonara and Dr. Allen Meglin qualify as “independent” under the applicable standards of the SEC and the NASDAQ stock market.

  

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

As previously reported in a Form 8-K filed on August 16, 2018, effective July 1, 2018, our principal independent accountants, GBH CPAs, PC (“GBH”) completed the combination of its practice into Marcum LLP (“Marcum”).

 

Audit Fees

 

The aggregate fees billed the Company for the fiscal years ended October 31, 2019 and October 31, 2018 for professional services rendered by our principal accountants 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:

 

Marcum LLP

 

Fiscal Year Ended October 31, 2019:  $150,000 
      
Fiscal Year Ended October 31, 2018:  $175,000 

 

Audit-Related Fees

 

The aggregate fees billed the Company for the fiscal years ended October 31, 2019 and 2018 for assurance and related services by the principal accountant 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, 2019:  $ 
      
Fiscal Year Ended October 31, 2018:  $ 

 

Tax Fees

 

The aggregate fees billed the Company for the fiscal years ended October 31, 2019 and 2018 for professional services rendered by the principal accountants for tax compliance, tax advice, and tax planning.

 

Fiscal Year Ended October 31, 2019:  $ 
      
Fiscal Year Ended October 31, 2018:  $ 

 

 

 

 

 120 

 

 

All Other Fees

 

The aggregate fees billed the Company for the fiscal years ended October 31, 2019 and 2018 for products and services provided by the principal accountants, other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A.

 

Fiscal Year Ended October 31, 2019:  $ 
      
Fiscal Year Ended October 31, 2018:  $ 

 

Pre-Approval Policies and Procedures

 

We have not used Marcum 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 Marcum to provide compliance outsourcing services.

 

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered. The board of directors has considered the nature and amount of fees billed by Marcum and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independence.

 

 

 

 

 

 

 

 

 

 121 

 

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

Exhibit No:   Description:
2.1   Plan and Agreement of Reorganization, dated April 23, 2018, between Management and Business Associates, LLC and Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on April 26, 2018 and incorporated by reference herein)
     
3.1   Articles of Incorporation, as amended (Filed as an exhibit to Registration Statement on Form S-1 filed on September 4, 2012 (File No: 333-183710) and incorporated by reference herein)
     
3.2   Certificate of Amendment to the Articles of Incorporation (Filed as an exhibit to Form 8-K filed on November 3, 2015 and incorporated by reference herein)
     
3.3   Amendment to the Certificate of Incorporation of Biotech Products Services and Research, Inc., filed with the Secretary of State of Nevada on July 22, 2017, effective July 10, 2017 (Filed as an exhibit to Form 10-K for the fiscal year ended October 31, 2017 filed on July 7, 2018 and incorporated by reference herein)
     
3.4   Series A Non-Convertible Preferred Stock Certificate of Designation, effective November 1, 2016 (Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein)
     
3.5   Amendment to Certificate of Designation of Series A Non-Convertible Preferred Stock of Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
3.6   Series B Convertible Preferred Stock Certificate of Designation, effective November 1, 2016 (Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein)
     
3.7   Amendment to the Certificate of Incorporation of Biotech Products Services and Research, Inc., filed with the Secretary of State of Nevada on May 21, 2018, effective June 20, 2018 (Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein)
     
3.8   Certificate of Correction filed with the Secretary of State of Nevada on June 18, 2018(Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein)
     
3.9   Certificate of Withdrawal filed with the Secretary of State of Nevada on June 14, 2018 (Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein)
     
3.10   Amended and Restated By-laws of Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
3.11   Second Amended and Restated By-laws of Biotech Products Services and Research, Inc.(Filed as an exhibit to the Registrant’s Form 8-K filed on December 18, 2017 and incorporated by reference herein)
     
3.12   Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of Nevada on June 24, 2020, effective June 24, 2020. (Filed as an exhibit to Form 8-K filed on July 14, 2020 and incorporated by reference herein)

 

 

 

 122 

 

 

     
10.1   Stock Purchase Agreement dated October 30, 2015 between Biotech Products Services and Research, Inc. and John Goodhew (Filed as an exhibit to Form 8-K filed on November 3, 2015 and incorporated by reference herein)
     
10.2   Series A Non-Convertible Preferred Stock Share Exchange Agreement, dated November 1, 2016, between Biotech Products Services and Research, Inc. and Albert Mitrani(Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein)
     
10.3   Series B Convertible Preferred Stock Share Exchange Agreement, dated November 1, 2016, between Biotech Products Services and Research, Inc. and Albert Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 3, 2016 and incorporated by reference herein)
     
10.4   Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Albert Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein)
     
10.5   Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein)
     
10.6   Amendment No. 1, dated March 8, 2017, to Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.7   Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein)
     
10.8   Amendment No. 1, dated March 8, 2017, to Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.9   Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Maria Ines Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein)
     
10.10   Amendment No. 1, dated March 8, 2017, to Employment Agreement, dated November 4, 2016, between Biotech Products Services and Research, Inc. and Dr. Maria Ines Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.11   Employment Agreement, dated March 8, 2017, between Biotech Products Services and Research, Inc. and Terrell Suddarth (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.12   Warrant, dated November 4, 2016, issued to Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein)
     
10.13   Warrant, dated November 4, 2016, issued to Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein)
     
10.14   Warrant, dated November 4, 2016, issued to Dr. Maria Ines Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on November 14, 2016 and incorporated by reference herein)

 

 

 

 123 

 

 

     
10.15   Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Dr. Bruce Werber (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.16   Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Ian T. Bothwell(Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.17   Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Dr. Maria Ines Mitrani(Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.18   Warrant, dated March 8, 2017, from Biotech Products Services and Research, Inc. to Terrell Suddarth (Filed as an exhibit to the Registrant’s Form 8-K filed on March 15, 2017 and incorporated by reference herein)
     
10.19   Form of the Securities Purchase Agreement, dated March 29, 2017, by and among Biotech Products Services and Research, Inc., each of its Subsidiaries, the Agent, LLC, Dr. Bruce Werber and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein)
     
10.20   Form of the 10% Original Issue Discount Convertible Secured Promissory Note and Guarantee, dated March 29, 2017, of Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein)
     
10.21   Form of the Security Agreement, dated March 29, 2017, by and among Biotech Products Services and Research, Inc., each of its Subsidiaries, and the Agent (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein)
     
10.22   Form of the Intellectual Property Security Agreement, dated March 29, 2017, by and among Biotech Products Services and Research, Inc., and each of its, Subsidiaries, and the Agent (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein)
     
10.23   Form of the Subsidiary Guarantee, dated March 29, 2017, by and among Biotech Products Services and Research, Inc. and each of its Subsidiaries (Filed as an exhibit to the Registrant’s Form 8-K filed on April 3, 2017 and incorporated by reference herein)
     
10.24   Employment Agreement, dated as of May 1, 2017, by and between Peter Taddeo and Mint Organics Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on May 24, 2017 and incorporated by reference herein)
     
10.25   Lease Agreement, dated May 23, 2017, by and between Sunwest Office Park, LLC and Anu Life Sciences, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on May 24, 2017 and incorporated by reference herein)
     
10.26   Asset Purchase Agreement, dated February 5, 2018, by and among Vera Acquisition, LLC, Anu Life Sciences, Inc., Biotech Products Services and Research, Inc. and Controlling Stockholders, and General Surgical Florida, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on February 9, 2018 and incorporated by reference herein)
     
10.27   Distribution Agreement, dated February 5, 2018, by and between Vera Acquisition, LLC, and Biotech Products Services and Research, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on February 9, 2018 and incorporated by reference herein)
     
10.28   Separation and General Release Agreement, dated April 6, 2018, by and between Peter Taddeo, and Mint Organics, Inc., Mint Organics Florida, Inc., Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein)

 

 

 

 124 

 

 

     
10.29   Share Purchase and General Release Agreement, dated April 6, 2018, by and between Peter Taddeo and Biotech Products Services and Research, Inc. and Mint Organics, Inc. (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein)
     
10.30   Amendment No. 2, dated April 6, 2018, to Employment Agreement between Biotech Products Services and Research, Inc. and Ian T. Bothwell (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein)
     
10.31   Amendment No. 2, dated April 6, 2018, to Employment Agreement between Biotech Products Services and Research, Inc. and Maria I. Mitrani (Filed as an exhibit to the Registrant’s Form 8-K filed on April 12, 2018 and incorporated by reference herein)
     
10.32   Form of Employment Agreement (Filed as an exhibit to the Registrant’s Form 8-K filed on April 26, 2018 and incorporated by reference herein)
     
10.33   Form of 2018 6% Convertible Debenture Issued by Biotech Products Services And Research, Inc., a Nevada corporation (Filed as an exhibit to the Registrant’s Form 10-K filed on November 1, 2018 and incorporated by reference herein)
     
10.34   Consulting Services Agreement effective as of March 30, 2020 between Assure Immune L.L.C and the Company (Filed as an exhibit to the Registrant’s Form 8-K filed on April 30, 2020 and incorporated by reference herein)
     
10.35*   Amendment and Restated Employment Agreement between Organicell Regenerative Medicine Inc. and Albert Mitrani dated June 29, 2020
     
10.36*   Amendment and Restated Employment Agreement between Organicell Regenerative Medicine Inc. and Dr. Maria Mitrani dated June 29, 2020
     
10.37*   Amendment and Restated Employment Agreement between Organicell Regenerative Medicine Inc. and Ian T. Bothwell dated June 29, 2020
     
10.38*   Warrant for the purchase of shares of common stock of Organicell Regenerative Medicine inc. issued to Ian Bothwell dated February 26, 2020
     
10.39*   Warrant for the purchase of shares of common stock of Organicell Regenerative Medicine inc. issued to Raymond Zoeller dated May 15, 2020
     
21.1*   Subsidiaries of the Registrant
     
31.1*   Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer
     
31.2*   Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial and Accounting Officer
     
32.1*   Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting Officer
     
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.

 

  ORGANICELL REGENERATIVE MEDICINE, INC.
     
  By: /s/ Albert Mitrani                          
    Albert Mitrani
    Chief Executive Officer
    (Principal Executive Officer)
     
    October 15, 2020
     
  By: /s/ Ian T. Bothwell                           
    Ian T. Bothwell
    Chief Financial Officer
   

(Principal Financial and Accounting Officer)

 

October 15, 2020

 

     
   

 

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/ Albert Mitrani

  Chief Executive Officer, President, Chief Operating Officer and Secretary, Director (Principal Executive Officer)   October 15, 2020
Albert Mitrani        
         
/s/ Ian T. Bothwell   Chief Financial Officer, Director   October 15, 2020
Ian T. Bothwell   (Principal Financial and Accounting Officer)    
         
/s/ Maria Ines Mitrani   Chief Science Officer, Director   October 15, 2020
Maria Ines Mitrani        

 

/s/ George Shapiro   Chief Medical Officer, Director   October 15, 2020
George Shapiro        

 

/s/ Allen Meglin   Director   October 15, 2020
Allen Meglin          
         
/s/ Michael Carbonara   Director   October 15, 2020
Michael Carbonara        

 

 

 

 

 

 

 126 

EX-10.35 2 organicell_ex1035.htm AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT - ALBERT MITRANI

Exhibit 10.35

 

 

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT

 

This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered June 29, 2020 (the "Effective Date"), by and between ORGANICELL REGENERATIVE MEDICINE, a Nevada corporation, (the "Company") and ALBERT MITRANI, an individual (the "Executive").

 

RECITALS

 

WHEREAS, the Company and the Executive have heretofore entered into an Employment Agreement, made and entered into effective as of April 13, 2018 (the "Original Employment Agreement"), pursuant to which the Company employed the Executive; and

 

WHEREAS, in connection with the Company's continued employment of the Executive, the Company and the Executive wish to modify and amend certain terms of the Executive's employment by the Company and in connection therewith, restate the Original Employment Agreement in its entirety by entering into this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.              Recitals. The above recitals are true and correct and are incorporated herein by reference.

 

2.              Position and Duties. The Executive shall serve as Acting Chief Executive Officer, President and Chief Operating Officer of the Company reporting to the Company's board of directors (the "Board"). The Executive shall perform those services customary to those offices and such other lawful duties that may be reasonably assigned to him from time to time by the Board, provided those duties are consistent with the Executive's position and authority. The Executive further agrees to use his best efforts to promote the interests of the Company and to devote his full business time and energies to the business and affairs of the Company.

 

3.              Term. The Company shall continue to employ the Executive and the Executive shall continue to serve the Company, on the terms and conditions set forth herein, for the period commencing on the Effective Date and expiring on the December 31, 2025, unless this Agreement is sooner terminated as set forth herein (the "Initial Term"). This Agreement shall automatically renew for successive three (3) year periods (each, a "Renewal Term," and together with the Initial Term, the "Term"), unless either party give notice of non-renewal of this Agreement at least sixty (60) days prior to expiration of the Initial Term or any Renewal Term, or unless this Agreement is sooner terminated as set forth herein.

 

3.               Compensation and Related Matters.

 

(a)          Base Salary. The Executive's annual base salary shall be three hundred thousand dollars ($300,000), retroactive to January 1, 2019 (together with any subsequent increases thereto as hereinafter provided, the "Base Salary"), including the salary adjustments described below in 3(b) below.

 

(b)          The Executive's Base Salary shall be increased upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months ("Revenue Milestone"). Upon the achievement of the defined Revenue Milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur.

 

 

 

 1 

 

 

Monthly Revenues (in
millions)
Base Salary
Increase
$1.00  $130,000 
$1.50  $200,000 
$2.00  $275,000 
$3.50  $630,000 
$5.00  $900,000 

 

 

(c)           $162,500 of the Base Salary ("Original Base Salary") shall be payable in accordance with the Company's normal payroll procedures in effect from time to time. Any Base Salary amount in excess of the Original Base Salary shall only be paid only upon there being sufficient available cash and when payable, shall be in accordance with the Company's normal payroll procedures in effect from time to time.

 

(d)           Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock of the Company at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Base Salary in excess of the Original Base Salary ("Incremental Salary") for periods after January 1, 2020 may be converted by the Executive into common stock of the Company at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.

 

(e)            In addition to the foregoing, the Base Salary may be increased by the Board or its compensation committee (the "Committee"), if any, from time to time during the Term, but shall be reviewed by the Board or the Committee, if any, at least annually.

 

(f)           Annual Bonus. During the Term, the Executive may be paid a performance bonus to the extent earned, based on criteria established by the Board or the Committee from time to time during the Term (the "Bonus"). The amount of any Bonus and the performance criteria for earning the Bonus, if any for any subsequent fiscal year shall be determined by the Board or the Committee, in good faith, no later than sixty (60) days after the commencement of the relevant fiscal year. The Executive's Bonus for a bonus period shall be determined by the Board or the Committee after the end of the applicable bonus period and be paid to the Executive in the year following the year to which the Bonus relates when annual bonuses for that year are paid to other senior executives of the Company generally.

 

(g)          Performance Plan Incentives. During the Term, the Executive will be entitled to participate in the Company's Management and Consultants Performance Stock Plan (the "MCPP"). The MCPP shall provide the Executive fully vested shares of common stock of the Company based on the achievement of certain defined operational performance milestones as determined by the Board ("Milestones"), during the Term of the Agreement and for a period of thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement.

 

 

 

 2 

 

 

(h)          Tax True-up. During the Term, the Executive will be entitled to receive additional compensation equal to the amount of personal income tax that the Executive is required to pay in connection with federal and or state income taxes associated with any equity award granted to the Executive during the Executive's employment with the Company ("Tax True-up"), provided however that the amount of the Tax True-up shall only be provided to the extent of any shortfall in the amount of proceeds that the Executive is reasonably able to obtain through timely liquidation of the associated equity award that is subject to income taxes through non-distressed open market sales or loans obtained by Executive secured by such equity award. The Company shall provide the additional cash compensation to the Executive in a timely manner in order to allow Executive the ability to timely make the Executive's required income tax payments.

 

In addition to the above, the Company will also reimburse Executive for any incremental taxes (excluding income taxes) which the Executive is liable as a result of the Company not paying its applicable portion of payroll related taxes associated with compensation paid to Executive.

 

(i)            Commissions. During the Term, the Executive shall be entitled to receive commissions equal to five percent (5%) of "Net Sales" on all sales of the Company's products directly attributable to him. As used in this Agreement, "Net Sales" means that amount actually paid by the Company's customers for its products, excluding returns, cost of goods sold (including freight-in and freight out) and all allowances, rebates and discounts, including but not limited to volume discounts, early payment discounts, promotional discounts and other discounts approved by the Company. Commissions earned during each calendar month shall be calculated and paid to the Executive within twenty (20) days after the end of such calendar month.

 

(j)            Car and Mileage Allowance. During the Term (and retroactive to January 1, 2020), the Company shall pay the Executive a monthly car and mileage allowance of up to two thousand dollars ($2,000) based on actual costs incurred (which may be increased by the Board or the Committee in their sole discretion).

 

(k)           Cellular Telephone and Internet Service Allowance. During the Term (and retroactive to January 1, 2020), the Company the Company shall reimburse the Executive for costs associated with (i) the Executive's use of multiple cellular telephones at Executive's cost and expense; and (ii) the Executive's monthly interne service in an amount of up to two hundred dollars ($200).

 

(l)            Business Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable pre-approved business expenses incurred by him in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers. Partially or wholly in the alternative, the Company may furnish the Executive with a Company credit card on which he may charge all authorized business expenses.

 

(m)          Life Insurance. The Executive shall be entitled to receive prompt reimbursement for Executive's costs to obtain individual life insurance on himself, in an amount of $1,000,000, which shall contain customary coverage provisions. The beneficiary of the life insurance shall be to the Executive's designee.

 

(n)           Directors' and Officers' Liability Insurance. Promptly following the Effective Date, the Company shall use commercially reasonable efforts to secure Directors' and Officers' Liability Insurance in an amount not less than $1,000,000, which shall contain customary coverage for the Executive. The Company shall maintain such coverage in effect during the Term as long as it can be secured at commercially reasonable cost.

 

 

 

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(o)           Other Benefits. The Executive (including Executive's spouse and dependents) shall be eligible to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including, without limitation, the Company's group medical, dental, vision, disability, life insurance, and flexible-spending account plans.

 

If during anytime throughout the Term (and retroactive to January 1, 2020), the Company does not provide Executive with acceptable health, dental and/or vision insurance coverage, the Executive shall be entitled to obtain and the Company shall reimburse the Executive for all costs associated with such health, dental and/or vision insurance paid by Executive.

 

(p)           Vacation and Personal Time Off.

 

(i)       The Executive shall be entitled to four (4) weeks of vacation during each year of the Term, which shall accrue at the rate of one (1) week for each consecutive three (3) month period. The Executive shall take vacation time at such times as the Executive may select, and the affairs of the Company may permit.

 

(ii)       The Executive shall also be entitled to ten (10) personal days of personal time off during each year of the Term or such greater number of days of personal time off as may be afforded employees generally under the Company's policy in effect from time to time during the Term.

 

(iii)      Vacation and personal time off days shall be taken by the Executive without loss of compensation or other benefits to which he is entitled under this Agreement. Unused vacation or personal days at the end of each year of the Term shall accrue and be carried over to the subsequent year but shall not be paid out to the Executive in any circumstance, including termination of the Executive's employment for any reason.

 

(q)          Withholding. All amounts payable to the Executive under this Section 3 shall be subject to all required federal, state and local withholding, payroll and insurance taxes.

 

(r)           Board Discretion. Nothing in this Section 3 shall obligate the Board to implement any particular benefit plan or prevent the Board from amending or terminating any benefit plan implemented.

 

4.               Termination. The Executive's employment may be terminated and this Agreement terminated under the following circumstances:

 

(a)           Death. The Executive's employment hereunder shall terminate upon his death.

 

(b)           Disability. The Company may terminate the Executive's employment if the Executive becomes subject to a Disability. For purposes of this Agreement, "Disability" means the Executive is unable to perform the essential functions of his position, with or without a reasonable accommodation, for a period of one hundred twenty (120) consecutive calendar days or one hundred eighty (180) non-consecutive calendar days within any rolling twelve (12) month period because of physical, mental, or emotional incapacity, resulting from injury, sickness, or disease, as determined by the Executive's physician (or his guardian).

 

 

 

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(c)           Termination by Company for Cause. The Company may terminate the Executive's employment for Cause. For purposes of this Agreement, "Cause" means the Executive (i) is convicted of a felony which is related to the Executive's employment or the business of the Company; (ii) in carrying out his duties hereunder, the Executive has been found in a civil action to have committed gross negligence or intentional misconduct resulting, in either case, in material harm to the Company; (iii) subject to a preliminary or permanent injunction issued by a court of competent jurisdiction enjoining the Executive from violating any federal securities law or any rule or regulation thereunder promulgated by the Securities and Exchange Commission (the "SEC"); (iv) the Executive becomes subject to a cease and desist order or other order issued by the SEC after an opportunity for a hearing; or (v) the Executive has been found in a civil action to have materially breached any provision of Section 8 and/or Section 9 and to have thereby caused material harm to the Company. The term "found in a civil action" shall not apply until all appeals permissible under the applicable rules of procedure or statutes have been determined and no further appeals are permissible. to the extent curable.

 

(d)           Termination by the Company Without Cause. A termination of the Executive's employment by the Company for any reason, except death, disability or Cause, will be deemed to be a termination "Without Cause."

 

(e)           Termination by the Executive for Good Reason. The Executive may terminate his employment for "Good Reason." For purposes of this Agreement, "Good Reason" means (i) without the Executive's written consent, a material reduction of his duties, positions or responsibilities; (ii) without the Executive's written consent, a reduction by the Company in Base Salary as in effect immediately prior to such reduction; (iii) the occurrence of a "Change in Control" (as defined in Section 6); or (iii) the Company's material breach of this Agreement; provided that within ninety (90) days of the Company's act or omission giving rise to a resignation for Good Reason, the Executive notifies the Company in writing of the act or omission, the Company fails to correct the act or omission (to the extent curable) within thirty (30) days after receiving the Executive's written notice and the Executive actually terminates his employment within sixty (60) days after the date the Company receives the Executive's notice.

 

(f)           Termination by the Executive Without Good Reason. A resignation of the Executive's employment for any reason other than Good Reason will be deemed to be a resignation "Without Good Reason." The Executive may terminate his employment at any time Without Good Reason, upon thirty (30) days prior written notice to the Company, provided however, the Company may accelerate the date of such termination to any date following the receipt of such written notice.

 

(g)          Termination by the Company due to Non-renewal. A termination of the Executive's employment by the Company due to the Company's non-renewal of this Agreement pursuant to Section 3, will be deemed to be a termination "Non-Renewal."

 

(h)           Termination Date. The "Termination Date" means (i) if the Executive's employment is terminated by his death under Section 4(a), the date of his death; (ii) if the Executive's employment is terminated on account of his Disability under Section 4(b), the date on which the Company provides the Executive a written termination notice; (iii) if the Company terminates the Executive's employment for Cause under Section 4(c), the date on which the Company provides the Executive a written termination notice; (iv) if the Company terminates the Executive's employment Without Cause under Section 4(d), the date on which the Company provides the Executive a written termination notice; (v) if the Executive resigns his employment for Good Reason under Section 4(e), the date on which the Executive provides the Company a written termination notice; (vii) if the Executive resigns his employment Without Good Reason under Section 4(f), thirty (30) days after the date on which the Executive provides the Company a written termination notice or (viii) if the Company terminates this Agreement though Non-Renewal under Section 4(g), the date on which the Agreement expires.

 

 

 

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5.                Compensation Upon Termination.

 

(a)          Termination by the Company for Cause or by the Executive Without Good Reason. If the Executive's employment with the Company is terminated pursuant to Sections 4(c), or 4(f), the Company shall pay or provide to the Executive (or to his authorized representative or estate) (1) any earned but unpaid Base Salary as of the Termination Date; (ii) unpaid expense reimbursements as of the Termination Date; (iii) any unpaid Tax True-up amounts, (iv) any earned but unpaid Bonus as of the Termination Date; and (v) any vested benefits the Executive may be entitled to under any employee benefit plan of the Company, equity securities (stock, options, and/or warrants) awarded during the Term or all equity securities eligible to the Executive pursuant to the MCPP based on identified milestones achieved as of the date of Termination and/or which may be achieved within twelve (12) months after the date of Termination (the "Accrued Obligations"), on or before the time required by law but in no event more than thirty (30) days after the Termination Date (and or no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP within the 12 months after date of Termination).

 

(b)          Termination for Disability, Death or Non-renewal. If the Executive's Employment is terminated by reason of Disability pursuant to Section 4(a), 4(b) or 4(g) then the Executive shall be entitled to the following:

 

(i)        The Company shall pay the Executive the Accrued Obligations earned through the Termination Date, on or before thirty (30) days after the Termination Date.

 

(ii)       All equity securities granted to the Executive during the Term shall immediately be issued, become immediately vested, and/or exercised, if applicable, by the Executive or his legal representatives in accordance with the terms of the applicable employees plan or award document.

 

(iii)      All equity securities eligible to the Executive pursuant to the MCPP based on identified milestones not yet achieved as of the date of Termination shall remain eligible to Executive for a period thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement. The Company shall provide to the Executive no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP pursuant to this Section 5(b)(iii)).

 

(iv)     a lump sum payment equal to two hundred ninety-nine percent (299%) of Executive's "base period income" as determined under (e) below, plus an additional amount representing a gross-up of any state or federal taxes payable by Executive as a result of any such payment plus any amount of Tax True-up associated with issuance of equity securities pursuant to 5(b)(ii) and 5(b)(iii) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(v)      The Executive's "base period income" shall be his Base Salary and Bonuses paid or payable to him during or with respect to the twelve (12) month period preceding the date of his termination of affiliation (excluding any equity issued to Executive pursuant to the MCPP).

 

(vi)     Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall reimburse the Executive the monthly premium payable to continue his and his eligible dependents' participation in the Company's group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive's eligible dependents) for a period of one year from the Termination Date, provided, however, that the Executive remains eligible for COBRA coverage during such one-year period.

 

 

 

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(c)           Termination by the Company Without Cause or by the Executive With Good Reason. If the Executive's employment is terminated by the Company Without Cause or the Executive terminates his employment for Good Reason, then the Executive shall be entitled to the following:

 

(i)        The Company shall pay the Executive the Accrued Obligations earned through the Termination Date, on or before thirty (30) days after the Termination Date.

 

(ii)       The Company shall pay the Executive his Base Salary (less applicable withholding taxes) for the balance of the Term or for a period of four years from the Termination Date, whichever is longer, in accordance with the Company's normal payroll practices in effect on the Termination Date.

 

(iii)      Two hundred percent (200%) of the greater of the Executive's Bonus for the year of termination or the Bonus actually earned for the year prior to the year of termination, if any; which amount will be paid within sixty (60) days of the later of the Termination Date or the calculation of such Bonus. This provision shall exclude any equity grants to Executive pursuant to the MCPP.

 

(iv)     All equity securities granted to the Executive during the Term shall immediately be issued, become immediately vested, and/or exercised, if applicable, by the Executive or his legal representatives in accordance with the terms of the applicable employees plan or award document.

 

(v)      All equity securities eligible to the Executive pursuant to the MCPP based on identified milestones not yet achieved as of the date of Termination shall remain eligible to Executive for a period thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement. The Company shall provide to the Executive no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP pursuant to this Section 5(c)(viii)).

 

(vi)     a lump sum payment equal to any amount of Tax True-up associated with issuance of equity securities pursuant to 5(c)(iv) and 5(b)(v) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(vii)    Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall reimburse the Executive the monthly premium payable to continue his and his eligible dependents' participation in the Company's group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive's eligible dependents) for the period that the Executive is eligible and remains eligible for COBRA coverage, provided, however, that in the event that the Executive obtains other employment that offers group health benefits, such continuation of coverage by the Company shall immediately cease.

 

6.                Change in Control.

 

(a)           For the purposes of this Agreement, a "Change of Control" shall be deemed to have taken place if (i) any person who is not an executive officer or director of the Company as of the Effective Date, either individually or as a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the owner or beneficial owner of Company securities, after the date of this Agreement, having fifty point one percent (50.1%) or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is the majority at the time the purchases are made); or (ii) the persons who were directors of the Company before such transactions shall cease to constitute a majority of the Board of the Company, or any successor to the Company, as the direct or indirect result of or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transaction.

 

 

 

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(b)           The Company and the Executive hereby agree that, if the Executive is affiliated with the Company on the date on which a Change of Control occurs (the "Change of Control Date"), the Company will continue to retain the Executive and the Executive will remain affiliated with the Company for the period commencing on the Change of Control Date and ending on the fifth (5th) anniversary of the Change in Control Date, to exercise such authority and perform such executive duties as are commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Change of Control Date. If after the Change of Control Executive is requested, and, in his sole and absolute discretion, consents to change his principal business location, the Company will reimburse the Executive for his reasonable relocation expenses, including, without limitation, moving expenses, temporary living and travel expenses for a reasonable time while arranging to move his residence to the changed location, closing costs, if any, associated with the sale of his existing residence and the purchase of a replacement residence at the changed location, plus an additional amount representing a gross-up of any state or federal taxes payable by the Executive as a result of any such reimbursement. If the Executive shall not consent to change his business location, the Executive may continue to provide the services required of him hereunder from his then residence and/or business address, and the Company shall continue to maintain an office for the Executive at that location commensurate with the Company's office prior to the Change of Control Date.

 

(c)           During the remaining Term of this Agreement commencing upon the Change of Control Date, the Company will (1) continue to pay Executive a salary at not less than the level applicable to Executive on the Change of Control Date; (ii) pay Executive Bonuses in amounts not less in amount than those paid during the twelve (12) month period preceding the Change of Control Date; and (iii) continue employee benefit programs as to Executive at levels in effect on the Change of Control Date (but subject to such reductions as may be required to maintain such plans in compliance with applicable federal law regulating employee benefit programs).

 

(d)           If during the remaining Term of this Agreement after the Change of Control Date (i) Executive's employment is terminated by the Company; or (ii) there shall have occurred a material reduction in Executive's compensation or employment related benefits, or a material change in the Executive's status, working conditions, management responsibilities or titles, and Executive voluntarily terminates his relationship with the Company within sixty (60) days of an such occurrence, or the last in a series of occurrences, then Executive shall be entitled to receive, in addition to the compensation provided for in Section 5(c), and subject to the provisions of subsections (e) and (f) below, a lump sum payment equal to two hundred percent (200°x©) of Executive's "base period income" as determined under (e) below, plus an additional amount representing a gross-up of any state or federal taxes payable by Executive as a result of any such payment plus any amount of Tax True-up associated with issuance of equity securities pursuant to 5(c)(iv) and 5(c)(v) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(e)           The Executive's "base period income" shall be his Base Salary and Bonuses paid or payable to him during or with respect to the twelve (12) month period preceding the date of his termination of affiliation.

 

(f)             In the event of a proposed Change in Control, the Company will allow Executive to participate in all meetings and negotiations related thereto.

 

7.               Section 409A Compliance.

 

(a)           All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

 

 

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(b)           To the extent that any of the payments or benefits provided for in Section 5(b) are deemed to constitute non-qualified deferred compensation benefits subject to Section 409A of the United States Internal Revenue Code (the "Code"), the following interpretations apply to Section 5: Any termination of the Executive's employment triggering payment of benefits under Section 5(b) must constitute a "separation from service" under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before distribution of such benefits can commence. To the extent that the termination of the Executive's employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by the Executive to the Company or any of its parents, subsidiaries or affiliates at the time the Executive's employment terminates), any benefits payable under Section 5 that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this Section 7(b) shall not cause any forfeiture of benefits on the Executive's part, but shall only act as a delay until such time as a "separation from service" occurs. Further, if the Executive is a "specified employee" (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date his separation from service becomes effective, any benefits payable under Section 5 that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (i) the business day following the six-month anniversary of the date his separation from service becomes effective; and (ii) the date of the Executive's death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (i) the business day following the six-month anniversary of the date his separation from service becomes effective; and (ii) the Executive's death, the Company shall pay the Executive in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid the Executive prior to that date under Section 5(b) of this Agreement. It is intended that each installment of the payments and benefits provided under Section 5(b) of this Agreement shall be treated as a separate "payment" for purposes of Section 409A of the Code. Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code.

 

8.               Confidential Information.

 

(a)           As used in this Agreement, "Confidential Information" means information belonging to the Company which is of value to the Company in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to the Company. Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of the Company. Confidential Information includes information developed by the Executive in the course of the Executive's employment by the Company, as well as other information to which the Executive may have access in connection with his employment. Confidential Information also includes the confidential information of others with which the Company has a business relationship. Notwithstanding the foregoing, Confidential Information does not include (i) information which now or in the future comes into the public domain, unless due to breach of the Executive's duties under this Section 8(a); (ii) information which is disclosed to Executive by others who are not, to Executive's actual knowledge, under obligation of nondisclosure to the Company; (iii) information which is independently developed by the Executive without breach of the Executive's duties under this Section 8(a); or (iv) information which is disclosed by the Company to others without obligation of confidentiality.

 

(b)           At all times, both during the Executive's employment with the Company and after its termination, the Executive will keep in confidence and trust all Confidential Information, and will not use or disclose for his own benefit or the benefit of any other Person any such Confidential Information without the written consent of the Company, except as may be necessary in the ordinary course of performing the Executive's duties to the Company.

 

 

 

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9.               Documents, Records, Etc. All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Company or are produced by the Executive in connection with the Executive's employment will be and remain the sole property of the Company. The Executive will return to the Company all such materials and property as and when requested by the Company. In any event, the Executive will return all such materials and property immediately upon termination of the Executive's employment for any reason. The Executive will not retain any such material or property or any copies thereof after the termination of his employment.

 

10.             Non-Competition. From the Effective Date through the second (2") anniversary of the Termination Date, regardless of the reason for such termination or expiration (the "Restricted Period") the Executive will not, directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage, prepare to engage, participate, assist or invest in any Competing Business anywhere in the United States or any other geographic area in which the Company is actively distributing its products or providing its services as of the Termination Date. Notwithstanding the foregoing, (i) the Executive may own up to two percent (2%) of the outstanding stock of a publicly held corporation which constitutes or is affiliated with a Competing Business; and (ii) the Executive may be employed by a large organization which is engaged in a Competing Business as its non-primary business, so long as Executive is not involved with or assisting such Competing Business, and so long as Executive does not breach his obligations regarding Confidential Information.

 

11.             No Solicitation. During the Restricted Period, the Executive shall not, directly or indirectly, take any of the following actions, and, to the extent the Executive owns, manages, operates, controls, is employed by or participates in the ownership, management, operation or control of, or is connected in any manner with, any business, the Executive shall use his best efforts to ensure that such business does not take any of the following actions:

 

(a)           persuade or attempt to persuade any Customer, Prospective Customer or Supplier to cease doing business with the Company, or to reduce the amount of business it does with the Company;

 

(b)           solicit or service for himself or for any Person the business of a Customer, Prospective Customer or Supplier in order to provide goods or services that are competitive with the goods and services provided by the Company;

 

(c)            persuade or attempt to persuade any Service Provider to cease providing services to the Company; or

 

(d)           solicit for hire or hire for himself or for any third party any Service Provider. The following definitions are applicable to Sections 8, 9, 10, and 11:

 

(i)            "Competing Business" means the offering in-office ancillary opportunities and third-party billing to physicians and clinics and any other business in which the services which the Company is engaged in as of the Termination Date.

 

(ii)           "Customer" means any Person that purchased goods or services from the Company at any time within two (2) years prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(iii)          “Prospective Customer" means any Person with whom the Company met or to whom the Company presented for the purpose of soliciting the Person to become a Customer of the Company within six (6) months prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(iv)          "Service Provider" means any Person who is an employee or independent contractor of the Company or the Company or who was within twelve (12) months preceding the solicitation prohibited by Sections 11(a) or (b) an employee or independent contractor of the Company or the Company.

 

 

 

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(v)           "Supplier" means any Person that sold goods or services to the Company at any time within twelve (12) months prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(vi)          "Person" means an individual, a sole proprietorship, a corporation, a limited liability company, a partnership, an association, a trust, or other business entity, whether or not incorporated.

 

12.              Intellectual Property.

 

(a)           All creations, inventions, ideas, designs, copyrightable materials, trademarks, and other technology and rights (and any related improvements or modifications), whether or not subject to patent or copyright protection (collectively, "Creations"), relating to any activities of the Company which are conceived by the Executive or developed by the Executive in the course of his employment with the Company, whether prior to or during the Term, whether conceived alone or with others and whether or not conceived or developed during regular business hours, shall be the sole property of the Company and, to the maximum extent permitted by applicable law, shall be deemed "works made for hire" as that term is used in the United States Copyright Act.

 

(b)           To the extent, if any, that the Executive retains any right, title or interest with respect to any Creations delivered to the Company or related to his employment with the Company, the Executive hereby grants to the Company an irrevocable, paid-up, transferable, sub-licensable, worldwide right and license: (i) to modify all or any portion of such Creations, including, without limitation, the making of additions to or deletions from such Creations, regardless of the medium (now or hereafter known) into which such Creations may be modified and regardless of the effect of such modifications on the integrity of such Creations; and (ii) to identify the Executive, or not to identify his, as one or more authors of or contributors to such Creations or any portion thereof, whether or not such Creations or any portion thereof have been modified. The Executive further waives any "moral" rights, or other rights with respect to attribution of authorship or integrity of such Creations that he may have under any applicable law, whether under copyright, trademark, unfair competition, defamation, and right of privacy, contract, tort or other legal theory.

 

(c)           The Executive will promptly inform the Company of any Creations. The Executive will also allow the Company to inspect any Creations he conceives or develops within one (1) year after the termination of his employment for any reason to determine if they are based on Confidential Information. The Executive shall (whether during his employment or after the termination of his employment) execute such written instruments and do other such acts as may be necessary in the opinion of the Company or its counsel to secure the Company's rights in the Creations, including obtaining a patent, registering a copyright, or otherwise (and the Executive hereby irrevocably appoints the Company and any of its officers as his attorney in fact to undertake such acts in his name). The Executive's obligation to execute written instruments and otherwise assist the Company in securing its rights in the Creations will continue after the termination of his employment for any reason. The Company shall reimburse the Executive for any out-of-pocket expenses (but not attorneys' fees) he incurs in connection with his compliance with this Section 12(c).

 

13.             Acknowledgement. The Executive understands that the restrictions set forth in Sections 8, 9, 10, 11 and 12 of this Agreement are intended to protect the Company's interest in its Confidential Information, goodwill and established employee and customer relationships, and agrees that such restrictions are reasonable and appropriate for this purpose.

 

14.             Indemnification. During the Term and thereafter, the Company shall indemnify and hold the Executive and the Executive's heirs and representatives harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses and expenses (including reasonable attorneys' fees) as a result of any claim or proceeding (whether civil, criminal, administrative or investigative), or any threatened claim or proceeding (whether civil, criminal, administrative or investigative), against the Executive that arises out of or relates to the Executive's service as an officer, director or employee, as the case may be, of the Company, or the Executive's service in any such capacity or similar capacity with any affiliate of the Company or other entity at the Company's request, both prior to and after the Effective Date, and to promptly advance to the Executive or the Executive's heirs or representatives such expenses, including litigation costs and attorneys' fees, upon written request with appropriate documentation of such expense upon receipt of an undertaking by the Executive or on the Executive's behalf to repay such amount if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company. During the Term and thereafter, the Company also shall provide the Executive with coverage under its current directors' and officers' liability policy to the same extent that it provides such coverage to its other executive officers. If the Executive has any knowledge of any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, as to which the Executive may request indemnity under this provision, the Executive will give the Company prompt written notice thereof; provided that the failure to give such notice shall not affect the Executive's right to indemnification. The Company shall be entitled to assume the defense of any such proceeding and the Executive will use reasonable efforts to cooperate with such defense. To the extent that the Executive in good faith determines that there is an actual or potential conflict of interest between the Company and the Executive in connection with the defense of a proceeding, the Executive shall so notify the Company and shall be entitled to separate representation at the Company's expense by counsel selected by the Executive (provided that the Company may reasonably object to the selection of counsel within ten (10) business days after notification thereof) which counsel shall cooperate, and coordinate the defense, with the Company's counsel and minimize the expense of such separate representation to the extent consistent with the Executive's separate defense.

 

 

 

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15.              Survival. The provisions of Sections 8, 9, 10, 11, 12, 14, 15, 16 and 22 of this Agreement shall survive its expiration or termination.

 

16.              Disputes.

 

(a)           The parties agree to resolve any dispute arising under or relating to the interpretation or enforcement of this Agreement, the Executive's employment or the termination of the Executive's employment before the Florida state courts of Miami-Dade County, Florida or the United States District Court for the Southern District of Florida, and hereby consent to the exclusive jurisdiction of such courts. Accordingly, with respect to any such court action, the Executive and the Company each (i) submits to the personal jurisdiction of these courts; (ii) consents to service of process under the notice provisions set forth in Section 21 of this Agreement; (iii) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process; and (iv) waives any objection to jurisdiction based on improper venue or improper jurisdiction.

 

(b)           Notwithstanding anything else provided in this Agreement, the Executive agrees that it would be difficult to measure any damages caused to the Company which might result from any breach by the Executive of Sections 8, 9, 10, 11 and 12 of this Agreement. Accordingly, if the Executive breaches or proposes to breach, any term of Sections 8, 9, 10, 11 and 12 of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to a temporary and preliminary injunction or other appropriate equitable relief to restrain any such breach without showing or providing any actual damage to the Company from any court having competent jurisdiction over the Executive.

 

(c)           BOTH THE COMPANY AND THE EXECUTIVE HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE FEDERAL OR STATE LAW.

 

(d)           The prevailing party shall be entitled to reasonable attorneys' fees and costs from the non-prevailing party in connection with any action filed under this Section 16.

 

17.             Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties concerning such subject matter, including without limitation, the Original Employment Agreement.

 

18.            Successors. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive's death after his termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executive's beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation). The Company shall require any successor to the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

19.            Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

 

 

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20.           Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

21.           Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, at its main offices, attention of the Chief Financial Officer. Notices shall be effective on receipt, if delivered by hand, the next business day, if sent by overnight courier service or on the third (r) business day after mailing, if sent by mail.

 

22.           Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

 

23.           Governing Law. This is a Florida contract and shall be construed under and be governed in all respects by the laws of Florida for contracts to be performed in that state and without giving effect to the conflict of laws principles of Florida or any other state.

 

24.            "Company" Defined. As used in this Agreement, the term "Company" shall mean the Company, its parent, subsidiaries and divisions.

 

25.           Counterparts. This Agreement may he executed in any number of counterparts, including by facsimile, .PDF or other electronic transmission (which shall be deemed to be an original), each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

 

 

  THE COMPANY:
   
  ORGANICELL REGENERATIVE MEDICINE, INC.
   
  By: /s/ Ian Bothwell
         Name: Ian Bothwell
         Title: CFO
   
   
  THE EXECUTIVE:
   
/s/ Albert Mitrani
  Albert Mitrani, COO
   

 

 

 

 14 

 

EX-10.36 3 organicell_ex1036.htm AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT - MARIA MITRANI

Exhibit 10.36

 

 

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT

 

This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered June 29, 2020 (the "Effective Date"), by and between ORGANICELL REGENERATIVE MEDICINE, a Nevada corporation, (the "Company") and MARIA INES MITRANI, an individual (the "Executive").

 

RECITALS

 

WHEREAS, the Company and the Executive have heretofore entered into an Employment Agreement, made and entered into effective as of April 13, 2018 (the "Original Employment Agreement"), pursuant to which the Company employed the Executive; and

 

WHEREAS, in connection with the Company's continued employment of the Executive, the Company and the Executive wish to modify and amend certain terms of the Executive's employment by the Company and in connection therewith, restate the Original Employment Agreement in its entirety by entering into this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.              Recitals. The above recitals are true and correct and are incorporated herein by reference.

 

2.              Position and Duties. The Executive shall serve as Chief Science Officer of the Company reporting to the Company's Chief Executive Officer and the board of directors (the "Board"). The Executive shall perform those services customary to those offices and such other lawful duties that may be reasonably assigned to him from time to time by the Board, provided those duties are consistent with the Executive's position and authority. The Executive further agrees to use his best efforts to promote the interests of the Company and to devote his full business time and energies to the business and affairs of the Company.

 

3.              Term. The Company shall continue to employ the Executive and the Executive shall continue to serve the Company, on the terms and conditions set forth herein, for the period commencing on the Effective Date and expiring on the December 31, 2025, unless this Agreement is sooner terminated as set forth herein (the "Initial Term"). This Agreement shall automatically renew for successive three (3) year periods (each, a "Renewal Term," and together with the Initial Term, the "Term"), unless either party give notice of non-renewal of this Agreement at least sixty (60) days prior to expiration of the Initial Term or any Renewal Term, or unless this Agreement is sooner terminated as set forth herein.

 

3.              Compensation and Related Matters.

 

(a)           Base Salary. The Executive's annual base salary shall be three hundred thousand dollars ($300,000), retroactive to January 1, 2019 (together with any subsequent increases thereto as hereinafter provided, the "Base Salary"), including the salary adjustments described below in 3(b) below.

 

(b)          The Executive's Base Salary shall be increased upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months ("Revenue Milestone"). Upon the achievement of the defined Revenue Milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur.

 

 

 

 1 

 

 

Monthly Revenues (in
millions)
  Base Salary
Increase
$1.00  $130,000 
$1.50  $200,000 
$2.00  $275,000 
$3.50  $630,000 
$5.00  $900,000 

 

 

(c)           $162,500 of the Base Salary ("Original Base Salary") shall be payable in accordance with the Company's normal payroll procedures in effect from time to time. Any Base Salary amount in excess of the Original Base Salary shall only be paid only upon there being sufficient available cash and when payable, shall be in accordance with the Company's normal payroll procedures in effect from time to time.

 

(d)           Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock of the Company at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Base Salary in excess of the Original Base Salary ("Incremental Salary") for periods after January 1, 2020 may be converted by the Executive into common stock of the Company at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019. Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.

 

(e)           In addition to the foregoing, the Base Salary may be increased by the Board or its compensation committee (the "Committee"), if any, from time to time during the Term, but shall be reviewed by the Board or the Committee, if any, at least annually.

 

(f)            Annual Bonus. During the Term, the Executive may be paid a performance bonus to the extent earned, based on criteria established by the Board or the Committee from time to time during the Term (the "Bonus"). The amount of any Bonus and the performance criteria for earning the Bonus, if any for any subsequent fiscal year shall be determined by the Board or the Committee, in good faith, no later than sixty (60) days after the commencement of the relevant fiscal year. The Executive's Bonus for a bonus period shall be determined by the Board or the Committee after the end of the applicable bonus period and be paid to the Executive in the year following the year to which the Bonus relates when annual bonuses for that year are paid to other senior executives of the Company generally.

 

(g)           Performance Plan Incentives. During the Term, the Executive will be entitled to participate in the Company's Management and Consultants Performance Stock Plan (the "MCPP"). The MCPP shall provide the Executive fully vested shares of common stock of the Company based on the achievement of certain defined operational performance milestones as determined by the Board ("Milestones"), during the Term of the Agreement and for a period of thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement.

 

 

 

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(h)           Tax True-up. During the Term, the Executive will be entitled to receive additional compensation equal to the amount of personal income tax that the Executive is required to pay in connection with federal and or state income taxes associated with any equity award granted to the Executive during the Executive's employment with the Company ("Tax True-up"), provided however that the amount of the Tax True-up shall only be provided to the extent of any shortfall in the amount of proceeds that the Executive is reasonably able to obtain through timely liquidation of the associated equity award that is subject to income taxes through non-distressed open market sales or loans obtained by Executive secured by such equity award. The Company shall provide the additional cash compensation to the Executive in a timely manner in order to allow Executive the ability to timely make the Executive's required income tax payments.

 

In addition to the above, the Company will also reimburse Executive for any incremental taxes (excluding income taxes) which the Executive is liable as a result of the Company not paying its applicable portion of payroll related taxes associated with compensation paid to Executive.

 

(i)            Fixed Bonus. During the Term, the Executive will be entitled to receive a fixed bonus of $12,500 for each incremental achievement of $250,000 in overall revenues earned by the Company during any monthly period during the Term provided that the minimum revenues are $500,000 or more per month.

 

(j)             Car and Mileage Allowance. During the Term (and retroactive to January 1, 2020), the Company shall pay the Executive a monthly car and mileage allowance of up to one thousand five hundred dollars ($1,500) based on actual costs incurred (which may be increased by the Board or the Committee in their sole discretion).

 

(k)           Cellular Telephone and Internet Service Allowance. During the Term (and retroactive to January 1, 2020), the Company the Company shall reimburse the Executive for costs associated with (i) the Executive's use of his cellular telephones at Executive's cost and expense; and (ii) the Executive's monthly internet service in an amount of up to one hundred fifty dollars ($150).

 

(l)            Business Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable pre-approved business expenses incurred by him in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers. Partially or wholly in the alternative, the Company may furnish the Executive with a Company credit card on which he may charge all authorized business expenses.

 

(m)          Life Insurance. The Executive shall be entitled to receive prompt reimbursement for Executive's costs to obtain individual life insurance on himself, in an amount of $1,000,000, which shall contain customary coverage provisions. The beneficiary of the life insurance shall be to the Executive's designee.

 

(n)           Directors' and Officers' Liability Insurance. Promptly following the Effective Date, the Company shall use commercially reasonable efforts to secure Directors' and Officers' Liability Insurance in an amount not less than $1,000,000, which shall contain customary coverage for the Executive. The Company shall maintain such coverage in effect during the Term as long as it can be secured at commercially reasonable cost.

 

(o)           Other Benefits. The Executive (including Executive's spouse and dependents) shall be eligible to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including, without limitation, the Company's group medical, dental, vision, disability, life insurance, and flexible-spending account plans.

 

 

 

 3 

 

 

If during anytime throughout the Term (and retroactive to January 1, 2020), the Company does not provide Executive with acceptable health, dental and/or vision insurance coverage, the Executive shall be entitled to obtain and the Company shall reimburse the Executive for all costs associated with such health, dental and/or vision insurance paid by Executive.

 

(p)           Vacation and Personal Time Off.

 

(i)       The Executive shall be entitled to four (4) weeks of vacation during each year of the Term, which shall accrue at the rate of one (1) week for each consecutive three (3) month period. The Executive shall take vacation time at such times as the Executive may select, and the affairs of the Company may permit.

 

 (ii)      The Executive shall also be entitled to ten (10) personal days of personal time off during each year of the Term or such greater number of days of personal time off as may be afforded employees generally under the Company's policy in effect from time to time during the Term.

 

(iii)     Vacation and personal time off days shall be taken by the Executive without loss of compensation or other benefits to which he is entitled under this Agreement. Unused vacation or personal days at the end of each year of the Term shall accrue and be carried over to the subsequent year but shall not be paid out to the Executive in any circumstance, including termination of the Executive's employment for any reason.

 

(q)           Withholding. All amounts payable to the Executive under this Section 3 shall be subject to all required federal, state and local withholding, payroll and insurance taxes.

 

(r)           Board Discretion. Nothing in this Section 3 shall obligate the Board to implement any particular benefit plan or prevent the Board from amending or terminating any benefit plan implemented.

 

4.              Termination. The Executive's employment may be terminated and this Agreement terminated under the following circumstances:

 

(a)            Death. The Executive's employment hereunder shall terminate upon his death.

 

(b)           Disability. The Company may terminate the Executive's employment if the Executive becomes subject to a Disability. For purposes of this Agreement, "Disability" means the Executive is unable to perform the essential functions of his position, with or without a reasonable accommodation, for a period of one hundred twenty (120) consecutive calendar days or one hundred eighty (180) non-consecutive calendar days within any rolling twelve (12) month period because of physical, mental, or emotional incapacity, resulting from injury, sickness, or disease, as determined by the Executive's physician (or his guardian).

 

(c)           Termination by Company for Cause. The Company may terminate the Executive's employment for Cause. For purposes of this Agreement, "Cause" means the Executive (i) is convicted of a felony which is related to the Executive's employment or the business of the Company; (ii) in carrying out his duties hereunder, the Executive has been found in a civil action to have committed gross negligence or intentional misconduct resulting, in either case, in material harm to the Company; (iii) subject to a preliminary or permanent injunction issued by a court of competent jurisdiction enjoining the Executive from violating any federal securities law or any rule or regulation thereunder promulgated by the Securities and Exchange Commission (the "SEC"); (iv) the Executive becomes subject to a cease and desist order or other order issued by the SEC after an opportunity for a hearing; or (v) the Executive has been found in a civil action to have materially breached any provision of Section 8 and/or Section 9 and to have thereby caused material harm to the Company. The term "found in a civil action" shall not apply until all appeals permissible under the applicable rules of procedure or statutes have been determined and no further appeals are permissible. to the extent curable.

 

 

 

 4 

 

 

(d)           Termination by the Company Without Cause. A termination of the Executive's employment by the Company for any reason, except death, disability or Cause, will be deemed to be a termination "Without Cause."

 

(e)           Termination by the Executive for Good Reason. The Executive may terminate his employment for "Good Reason." For purposes of this Agreement, "Good Reason" means (i) without the Executive's written consent, a material reduction of his duties, positions or responsibilities; (ii) without the Executive's written consent, a reduction by the Company in Base Salary as in effect immediately prior to such reduction; (iii) the occurrence of a "Change in Control" (as defined in Section 6); or (iii) the Company's material breach of this Agreement; provided that within ninety (90) days of the Company's act or omission giving rise to a resignation for Good Reason, the Executive notifies the Company in writing of the act or omission, the Company fails to correct the act or omission (to the extent curable) within thirty (30) days after receiving the Executive's written notice and the Executive actually terminates his employment within sixty (60) days after the date the Company receives the Executive's notice.

 

(f)            Termination by the Executive Without Good Reason. A resignation of the Executive's employment for any reason other than Good Reason will be deemed to be a resignation "Without Good Reason." The Executive may terminate his employment at any time Without Good Reason, upon thirty (30) days prior written notice to the Company, provided however, the Company may accelerate the date of such termination to any date following the receipt of such written notice.

 

(g)           Termination by the Company due to Non-renewal. A termination of the Executive's employment by the Company due to the Company's non-renewal of this Agreement pursuant to Section 3, will be deemed to be a termination "Non-Renewal."

 

(h)          Termination Date. The "Termination Date" means (i) if the Executive's employment is terminated by his death under Section 4(a), the date of his death; (ii) if the Executive's employment is terminated on account of his Disability under Section 4(b), the date on which the Company provides the Executive a written termination notice; (iii) if the Company terminates the Executive's employment for Cause under Section 4(c), the date on which the Company provides the Executive a written termination notice; (iv) if the Company terminates the Executive's employment Without Cause under Section 4(d), the date on which the Company provides the Executive a written termination notice; (v) if the Executive resigns his employment for Good Reason under Section 4(e), the date on which the Executive provides the Company a written termination notice; (vii) if the Executive resigns his employment Without Good Reason under Section 4(f), thirty (30) days after the date on which the Executive provides the Company a written termination notice or (viii) if the Company terminates this Agreement though Non-Renewal under Section 4(g), the date on which the Agreement expires.

 

5.              Compensation Upon Termination.

 

(a)           Termination by the Company for Cause or by the Executive Without Good Reason. If the Executive's employment with the Company is terminated pursuant to Sections 4(c), or 4(1), the Company shall pay or provide to the Executive (or to his authorized representative or estate) (i) any earned but unpaid Base Salary as of the Termination Date; (ii) unpaid expense reimbursements as of the Termination Date; (iii) any unpaid Tax True-up amounts, (iv) any earned but unpaid Bonus as of the Termination Date; and (v) any vested benefits the Executive may be entitled to under any employee benefit plan of the Company, equity securities (stock, options, and/or warrants) awarded during the Term or all equity securities eligible to the Executive pursuant to the MCPP based on identified milestones achieved as of the date of Termination and/or which may be achieved within twelve (12) months after the date of Termination (the "Accrued Obligations"), on or before the time required by law but in no event more than thirty (30) days after the Termination Date (and or no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP within the 12 months after date of Termination).

 

(b)          Termination for Disability, Death or Non-renewal. If the Executive's Employment is terminated by reason of Disability pursuant to Section 4(a), 4(b) or 4(g) then the Executive shall be entitled to the following:

 

 

 

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(i)        The Company shall pay the Executive the Accrued Obligations earned through the Termination Date, on or before thirty (30) days after the Termination Date.

 

(ii)       All equity securities granted to the Executive during the Term shall immediately be issued, become immediately vested, and/or exercised, if applicable, by the Executive or his legal representatives in accordance with the terms of the applicable employees plan or award document.

 

(iii)      All equity securities eligible to the Executive pursuant to the MCPP based on identified milestones not yet achieved as of the date of Termination shall remain eligible to Executive for a period thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement. The Company shall provide to the Executive no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP pursuant to this Section 5(b)(iii)).

 

(iv)      a lump sum payment equal to two hundred ninety-nine percent (299%) of Executive's "base period income" as determined under (e) below, plus an additional amount representing a gross-up of any state or federal taxes payable by Executive as a result of any such payment plus any amount of Tax True-up associated with issuance of equity securities pursuant to 5(b)(ii) and 5(b)(iii) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(v)       The Executive's "base period income" shall be his Base Salary and Bonuses paid or payable to him during or with respect to the twelve (12) month period preceding the date of his termination of affiliation (excluding any equity issued to Executive pursuant to the MCPP).

 

(vi)      Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall reimburse the Executive the monthly premium payable to continue his and his eligible dependents' participation in the Company's group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive's eligible dependents) for a period of one year from the Termination Date, provided, however, that the Executive remains eligible for COBRA coverage during such one-year period.

 

(c)           Termination by the Company Without Cause or by the Executive With Good Reason. If the Executive's employment is terminated by the Company Without Cause or the Executive terminates his employment for Good Reason, then the Executive shall be entitled to the following:

 

(i)        The Company shall pay the Executive the Accrued Obligations earned through the Termination Date, on or before thirty (30) days after the Termination Date.

 

(ii)       The Company shall pay the Executive his Base Salary (less applicable withholding taxes) for the balance of the Term or for a period of four years from the Termination Date, whichever is longer, in accordance with the Company's normal payroll practices in effect on the Termination Date.

 

(iii)      Two hundred percent (200%) of the greater of the Executive's Bonus for the year of termination or the Bonus actually earned for the year prior to the year of termination, if any; which amount will be paid within sixty (60) days of the later of the Termination Date or the calculation of such Bonus. This provision shall exclude any equity grants to Executive pursuant to the MCPP.

 

 

 

 6 

 

 

(iv)     All equity securities granted to the Executive during the Term shall immediately be issued, become immediately vested, and/or exercised, if applicable, by the Executive or his legal representatives in accordance with the terms of the applicable employees plan or award document.

 

(v)      All equity securities eligible to the Executive pursuant to the MCPP based on identified milestones not yet achieved as of the date of Termination shall remain eligible to Executive for a period thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement. The Company shall provide to the Executive no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP pursuant to this Section 5(c)(viii)).

 

(vi)     a lump sum payment equal to any amount of Tax True-up associated with issuance of equity securities pursuant to 5(c)(iv) and 5(b)(v) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(vii)    Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall reimburse the Executive the monthly premium payable to continue his and his eligible dependents' participation in the Company's group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive's eligible dependents) for the period that the Executive is eligible and remains eligible for COBRA coverage, provided, however, that in the event that the Executive obtains other employment that offers group health benefits, such continuation of coverage by the Company shall immediately cease.

 

6.              Change in Control.

 

(a)           For the purposes of this Agreement, a "Change of Control" shall be deemed to have taken place if (i) any person who is not an executive officer or director of the Company as of the Effective Date, either individually or as a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the owner or beneficial owner of Company securities, after the date of this Agreement, having fifty point one percent (50.1%) or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is the majority at the time the purchases are made); or (ii) the persons who were directors of the Company before such transactions shall cease to constitute a majority of the Board of the Company, or any successor to the Company, as the direct or indirect result of or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transaction.

 

(b)           The Company and the Executive hereby agree that, if the Executive is affiliated with the Company on the date on which a Change of Control occurs (the "Change of Control Date"), the Company will continue to retain the Executive and the Executive will remain affiliated with the Company for the period commencing on the Change of Control Date and ending on the fifth (5th) anniversary of the Change in Control Date, to exercise such authority and perform such executive duties as are commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Change of Control Date. If after the Change of Control Executive is requested, and, in his sole and absolute discretion, consents to change his principal business location, the Company will reimburse the Executive for his reasonable relocation expenses, including, without limitation, moving expenses, temporary living and travel expenses for a reasonable time while arranging to move his residence to the changed location, closing costs, if any, associated with the sale of his existing residence and the purchase of a replacement residence at the changed location, plus an additional amount representing a gross-up of any state or federal taxes payable by the Executive as a result of any such reimbursement. If the Executive shall not consent to change his business location, the Executive may continue to provide the services required of him hereunder from his then residence and/or business address, and the Company shall continue to maintain an office for the Executive at that location commensurate with the Company's office prior to the Change of Control Date.

 

 

 

 7 

 

 

(c)           During the remaining Term of this Agreement commencing upon the Change of Control Date, the Company will (i) continue to pay Executive a salary at not less than the level applicable to Executive on the Change of Control Date; (ii) pay Executive Bonuses in amounts not less in amount than those paid during the twelve (12) month period preceding the Change of Control Date; and (iii) continue employee benefit programs as to Executive at levels in effect on the Change of Control Date (but subject to such reductions as may be required to maintain such plans in compliance with applicable federal law regulating employee benefit programs).

 

(d)           If during the remaining Term of this Agreement after the Change of Control Date (i) Executive's employment is terminated by the Company; or (ii) there shall have occurred a material reduction in Executive's compensation or employment related benefits, or a material change in the Executive's status, working conditions, management responsibilities or titles, and Executive voluntarily terminates his relationship with the Company within sixty (60) days of an such occurrence, or the last in a series of occurrences, then Executive shall be entitled to receive, in addition to the compensation provided for in Section 5(c), and subject to the provisions of subsections (e) and (f) below, a lump sum payment equal to two hundred percent (200%) of Executive's "base period income" as determined under (e) below, plus an additional amount representing a gross-up of any state or federal taxes payable by Executive as a result of any such payment plus any amount of Tax True-up associated with issuance of equity securities pursuant to 5(c)(iv) and 5(c)(v) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(e)           The Executive's "base period income" shall be his Base Salary and Bonuses paid or payable to him during or with respect to the twelve (12) month period preceding the date of his termination of affiliation.

 

(f)            In the event of a proposed Change in Control, the Company will allow Executive to participate in all meetings and negotiations related thereto.

 

7.              Section 409A Compliance.

 

(a)           All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

(b)           To the extent that any of the payments or benefits provided for in Section 5(b) are deemed to constitute non-qualified deferred compensation benefits subject to Section 409A of the United States Internal Revenue Code (the "Code"), the following interpretations apply to Section 5: Any termination of the Executive's employment triggering payment of benefits under Section 5(b) must constitute a "separation from service" under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before distribution of such benefits can commence. To the extent that the termination of the Executive's employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by the Executive to the Company or any of its parents, subsidiaries or affiliates at the time the Executive's employment terminates), any benefits payable under Section 5 that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this Section 7(b) shall not cause any forfeiture of benefits on the Executive's part, but shall only act as a delay until such time as a "separation from service" occurs. Further, if the Executive is a "specified employee" (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date his separation from service becomes effective, any benefits payable under Section 5 that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (i) the business day following the six-month anniversary of the date his separation from service becomes effective; and (ii) the date of the Executive's death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (i) the business day following the six-month anniversary of the date his separation from service becomes effective; and (ii) the Executive's death, the Company shall pay the Executive in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid the Executive prior to that date under Section 5(b) of this Agreement. It is intended that each installment of the payments and benefits provided under Section 5(b) of this Agreement shall be treated as a separate "payment" for purposes of Section 409A of the Code. Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code.

 

 

 

 8 

 

 

8.              Confidential Information.

 

(a)           As used in this Agreement, "Confidential Information" means information belonging to the Company which is of value to the Company in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to the Company. Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of the Company. Confidential Information includes information developed by the Executive in the course of the Executive's employment by the Company, as well as other information to which the Executive may have access in connection with his employment. Confidential Information also includes the confidential information of others with which the Company has a business relationship. Notwithstanding the foregoing, Confidential Information does not include (i) information which now or in the future comes into the public domain, unless due to breach of the Executive's duties under this Section 8(a); (ii) information which is disclosed to Executive by others who are not, to Executive's actual knowledge, under obligation of nondisclosure to the Company; (iii) information which is independently developed by the Executive without breach of the Executive's duties under this Section 8(a); or (iv) information which is disclosed by the Company to others without obligation of confidentiality.

 

(b)          At all times, both during the Executive's employment with the Company and after its termination, the Executive will keep in confidence and trust all Confidential Information, and will not use or disclose for his own benefit or the benefit of any other Person any such Confidential Information without the written consent of the Company, except as may be necessary in the ordinary course of performing the Executive's duties to the Company.

 

9.            Documents, Records, Etc. All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Company or are produced by the Executive in connection with the Executive's employment will be and remain the sole property of the Company. The Executive will return to the Company all such materials and property as and when requested by the Company. In any event, the Executive will return all such materials and property immediately upon termination of the Executive's employment for any reason. The Executive will not retain any such material or property or any copies thereof after the termination of his employment.

 

10.         Non-Competition. From the Effective Date through the second (2") anniversary of the Termination Date, regardless of the reason for such termination or expiration (the "Restricted Period") the Executive will not, directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage, prepare to engage, participate, assist or invest in any Competing Business anywhere in the United States or any other geographic area in which the Company is actively distributing its products or providing its services as of the Termination Date. Notwithstanding the foregoing, (i) the Executive may own up to two percent (2%) of the outstanding stock of a publicly held corporation which constitutes or is affiliated with a Competing Business; and (ii) the Executive may be employed by a large organization which is engaged in a Competing Business as its non-primary business, so long as Executive is not involved with or assisting such Competing Business, and so long as Executive does not breach his obligations regarding Confidential Information.

 

11.          No Solicitation. During the Restricted Period, the Executive shall not, directly or indirectly, take any of the following actions, and, to the extent the Executive owns, manages, operates, controls, is employed by or participates in the ownership, management, operation or control of, or is connected in any manner with, any business, the Executive shall use his best efforts to ensure that such business does not take any of the following actions:

 

(a)           persuade or attempt to persuade any Customer, Prospective Customer or Supplier to cease doing business with the Company, or to reduce the amount of business it does with the Company;

 

 

 

 9 

 

 

(b)           solicit or service for himself or for any Person the business of a Customer, Prospective Customer or Supplier in order to provide goods or services that are competitive with the goods and services provided by the Company;

 

(c)           persuade or attempt to persuade any Service Provider to cease providing services to the Company; or

 

(d)           solicit for hire or hire for himself or for any third party any Service Provider. The following definitions are applicable to Sections 8, 9, 10, and 11:

 

(i)              "Competing Business" means the offering in-office ancillary opportunities and third-party billing to physicians and clinics and any other business in which the services which the Company is engaged in as of the Termination Date.

 

(ii)             "Customer" means any Person that purchased goods or services from the Company at any time within two (2) years prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(iii)             "Prospective Customer" means any Person with whom the Company met or to whom the Company presented for the purpose of soliciting the Person to become a Customer of the Company within six (6) months prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(iv)              "Service Provider" means any Person who is an employee or independent contractor of the Company or the Company or who was within twelve (12) months preceding the solicitation prohibited by Sections 11(a) or (b) an employee or independent contractor of the Company or the Company.

 

(v)                "Supplier" means any Person that sold goods or services to the Company at any time within twelve (12) months prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(vi)               "Person" means an individual, a sole proprietorship, a corporation, a limited liability company, a partnership, an association, a trust, or other business entity, whether or not incorporated.

 

12.            Intellectual Property.

 

(a)         All creations, inventions, ideas, designs, copyrightable materials, trademarks, and other technology and rights (and any related improvements or modifications), whether or not subject to patent or copyright protection (collectively, "Creations"), relating to any activities of the Company which are conceived by the Executive or developed by the Executive in the course of his employment with the Company, whether prior to or during the Term, whether conceived alone or with others and whether or not conceived or developed during regular business hours, shall be the sole property of the Company and, to the maximum extent permitted by applicable law, shall be deemed "works made for hire" as that term is used in the United States Copyright Act.

 

(b)         To the extent, if any, that the Executive retains any right, title or interest with respect to any Creations delivered to the Company or related to his employment with the Company, the Executive hereby grants to the Company an irrevocable, paid-up, transferable, sub-licensable, worldwide right and license: (i) to modify all or any portion of such Creations, including, without limitation, the making of additions to or deletions from such Creations, regardless of the medium (now or hereafter known) into which such Creations may be modified and regardless of the effect of such modifications on the integrity of such Creations; and (ii) to identify the Executive, or not to identify his, as one or more authors of or contributors to such Creations or any portion thereof, whether or not such Creations or any portion thereof have been modified. The Executive further waives any "moral" rights, or other rights with respect to attribution of authorship or integrity of such Creations that he may have under any applicable law, whether under copyright, trademark, unfair competition, defamation, and right of privacy, contract, tort or other legal theory.

 

 

 

 10 

 

 

(c)         The Executive will promptly inform the Company of any Creations. The Executive will also allow the Company to inspect any Creations he conceives or develops within one (1) year after the termination of his employment for any reason to determine if they are based on Confidential Information. The Executive shall (whether during his employment or after the termination of his employment) execute such written instruments and do other such acts as may be necessary in the opinion of the Company or its counsel to secure the Company's rights in the Creations, including obtaining a patent, registering a copyright, or otherwise (and the Executive hereby irrevocably appoints the Company and any of its officers as his attorney in fact to undertake such acts in his name). The Executive's obligation to execute written instruments and otherwise assist the Company in securing its rights in the Creations will continue after the termination of his employment for any reason. The Company shall reimburse the Executive for any out-of-pocket expenses (but not attorneys' fees) he incurs in connection with his compliance with this Section 12(c).

 

13.          Acknowledgement. The Executive understands that the restrictions set forth in Sections 8, 9, 10, 11 and 12 of this Agreement are intended to protect the Company's interest in its Confidential Information, goodwill and established employee and customer relationships, and agrees that such restrictions are reasonable and appropriate for this purpose.

 

14.          Indemnification. During the Term and thereafter, the Company shall indemnify and hold the Executive and the Executive's heirs and representatives harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses and expenses (including reasonable attorneys' fees) as a result of any claim or proceeding (whether civil, criminal, administrative or investigative), or any threatened claim or proceeding (whether civil, criminal, administrative or investigative), against the Executive that arises out of or relates to the Executive's service as an officer, director or employee, as the case may be, of the Company, or the Executive's service in any such capacity or similar capacity with any affiliate of the Company or other entity at the Company's request, both prior to and after the Effective Date, and to promptly advance to the Executive or the Executive's heirs or representatives such expenses, including litigation costs and attorneys' fees, upon written request with appropriate documentation of such expense upon receipt of an undertaking by the Executive or on the Executive's behalf to repay such amount if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company. During the Term and thereafter, the Company also shall provide the Executive with coverage under its current directors' and officers' liability policy to the same extent that it provides such coverage to its other executive officers. If the Executive has any knowledge of any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, as to which the Executive may request indemnity under this provision, the Executive will give the Company prompt written notice thereof; provided that the failure to give such notice shall not affect the Executive's right to indemnification. The Company shall be entitled to assume the defense of any such proceeding and the Executive will use reasonable efforts to cooperate with such defense. To the extent that the Executive in good faith determines that there is an actual or potential conflict of interest between the Company and the Executive in connection with the defense of a proceeding, the Executive shall so notify the Company and shall be entitled to separate representation at the Company's expense by counsel selected by the Executive (provided that the Company may reasonably object to the selection of counsel within ten (10) business days after notification thereof) which counsel shall cooperate, and coordinate the defense, with the Company's counsel and minimize the expense of such separate representation to the extent consistent with the Executive's separate defense.

 

15.            Survival. The provisions of Sections 8, 9, 10, 11, 12, 14, 15, 16 and 22 of this Agreement shall survive its expiration or termination.

 

16.            Disputes.

 

(a)         The parties agree to resolve any dispute arising under or relating to the interpretation or enforcement of this Agreement, the Executive's employment or the termination of the Executive's employment before the Florida state courts of Miami-Dade County, Florida or the United States District Court for the Southern District of Florida, and hereby consent to the exclusive jurisdiction of such courts. Accordingly, with respect to any such court action, the Executive and the Company each (i) submits to the personal jurisdiction of these courts; (ii) consents to service of process under the notice provisions set forth in Section 21 of this Agreement; (iii) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process; and (iv) waives any objection to jurisdiction based on improper venue or improper jurisdiction.

 

 

 

 11 

 

 

(b)         Notwithstanding anything else provided in this Agreement, the Executive agrees that it would be difficult to measure any damages caused to the Company which might result from any breach by the Executive of Sections 8, 9, 10, 11 and 12 of this Agreement. Accordingly, if the Executive breaches or proposes to breach, any term of Sections 8, 9, 10, 11 and 12 of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to a temporary and preliminary injunction or other appropriate equitable relief to restrain any such breach without showing or providing any actual damage to the Company from any court having competent jurisdiction over the Executive.

 

(c)          BOTH THE COMPANY AND THE EXECUTIVE HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE FEDERAL OR STATE LAW.

 

(d)         The prevailing party shall be entitled to reasonable attorneys' fees and costs from the non-prevailing party in connection with any action filed under this Section 16.

 

17.          Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties concerning such subject matter, including without limitation, the Original Employment Agreement.

 

18.          Successors. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive's death after his termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executive's beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation). The Company shall require any successor to the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

19.          Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

20.          Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

21.          Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, at its main offices, attention of the Chief Financial Officer. Notices shall be effective on receipt, if delivered by hand, the next business day, if sent by overnight courier service or on the third (3rd) business day after mailing, if sent by mail.

 

22.          Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

 

23.          Governing Law. This is a Florida contract and shall be construed under and be governed in all respects by the laws of Florida for contracts to be performed in that state and without giving effect to the conflict of laws principles of Florida or any other state.

 

24.          "Company" Defined. As used in this Agreement, the term "Company" shall mean the Company, its parent, subsidiaries and divisions.

 

25.          Counterparts. This Agreement may be executed in any number of counterparts, including by facsimile, .PDF or other electronic transmission (which shall be deemed to be an original), each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

  

  THE COMPANY:
   
  ORGANICELL REGENERATIVE MEDICINE, INC.
   
  By: /s/ Ian Bothwell
         Name: Ian Bothwell
         Title: CFO
   
   
  THE EXECUTIVE:
   
/s/ Maria Ines Mitrani
Maria Ines Mitrani, Chief Science Officer

 

 

 

 

 

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EX-10.37 4 organicell_ex1037.htm AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT - BOTHWELL

Exhibit 10.37

 

 

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT

 

This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered June 29, 2020 (the "Effective Date"), by and between ORGANICELL REGENERATIVE MEDICINE, a Nevada corporation, (the "Company") and IAN BOTHWELL, an individual (the "Executive").

 

RECITALS

 

WHEREAS, the Company and the Executive have heretofore entered into an Employment Agreement, made and entered into effective as of April 13, 2018 (the "Original Employment Agreement"), pursuant to which the Company employed the Executive; and

 

WHEREAS, in connection with the Company's continued employment of the Executive, the Company and the Executive wish to modify and amend certain terms of the Executive's employment by the Company and in connection therewith, restate the Original Employment Agreement in its entirety by entering into this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.             Recitals. The above recitals are true and correct and are incorporated herein by reference.

 

2.             Position and Duties. The Executive shall serve as Chief Financial Officer of the Company reporting to the Company's Chief Executive Officer and the board of directors (the "Board"). The Executive shall perform those services customary to those offices and such other lawful duties that may be reasonably assigned to him from time to time by the Board, provided those duties are consistent with the Executive's position and authority. The Executive further agrees to use his best efforts to promote the interests of the Company and to devote his full business time and energies to the business and affairs of the Company.

 

3.             Term. The Company shall continue to employ the Executive and the Executive shall continue to serve the Company, on the terms and conditions set forth herein, for the period commencing on the Effective Date and expiring on the December 31, 2025, unless this Agreement is sooner terminated as set forth herein (the "Initial Term"). This Agreement shall automatically renew for successive three (3) year periods (each, a "Renewal Term," and together with the Initial Term, the "Term"), unless either party give notice of non-renewal of this Agreement at least sixty (60) days prior to expiration of the Initial Term or any Renewal Term, or unless this Agreement is sooner terminated as set forth herein.

 

3.             Compensation and Related Matters.

 

(a)          Base Salary. The Executive's annual base salary shall be three hundred thousand dollars ($300,000), retroactive to January 1, 2019 (together with any subsequent increases thereto as hereinafter provided, the "Base Salary"), including the salary adjustments described below in 3(b) below.

 

(b)          The Executive's Base Salary shall be increased upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months ("Revenue Milestone"). Upon the achievement of the defined Revenue Milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur.

 

 

 

 1 

 

 

Monthly Revenues (in
millions)
  Base Salary
Increase
$1.00  $130,000 
$1.50  $200,000 
$2.00  $275,000 
$3.50  $630,000 
$5.00  $900,000 

 

 

(c)           $162,500 of the Base Salary ("Original Base Salary") shall be payable in accordance with the Company's normal payroll procedures in effect from time to time. Any Base Salary amount in excess of the Original Base Salary shall only be paid only upon there being sufficient available cash and when payable, shall be in accordance with the Company's normal payroll procedures in effect from time to time.

 

(d)          Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock of the Company at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Base Salary in excess of the Original Base Salary ("Incremental Salary") for periods after January 1, 2020 may be converted by the Executive into common stock of the Company at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.

 

(e)          In addition to the foregoing, the Base Salary may be increased by the Board or its compensation committee (the "Committee"), if any, from time to time during the Term, but shall be reviewed by the Board or the Committee, if any, at least annually.

 

(f)           Annual Bonus. During the Term, the Executive may be paid a performance bonus to the extent earned, based on criteria established by the Board or the Committee from time to time during the Term (the "Bonus"). The amount of any Bonus and the performance criteria for earning the Bonus, if any for any subsequent fiscal year shall be determined by the Board or the Committee, in good faith, no later than sixty (60) days after the commencement of the relevant fiscal year. The Executive's Bonus for a bonus period shall be determined by the Board or the Committee after the end of the applicable bonus period and be paid to the Executive in the year following the year to which the Bonus relates when annual bonuses for that year are paid to other senior executives of the Company generally.

 

(g)          Performance Plan Incentives. During the Term, the Executive will be entitled to participate in the Company's Management and Consultants Performance Stock Plan (the "MCPP"). The MCPP shall provide the Executive fully vested shares of common stock of the Company based on the achievement of certain defined operational performance milestones as determined by the Board ("Milestones"), during the Term of the Agreement and for a period of thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement.

 

 

 

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(h)          Tax True-up. During the Term, the Executive will be entitled to receive additional compensation equal to the amount of personal income tax that the Executive is required to pay in connection with federal and or state income taxes associated with any equity award granted to the Executive during the Executive's employment with the Company ("Tax True-up"), provided however that the amount of the Tax True-up shall only be provided to the extent of any shortfall in the amount of proceeds that the Executive is reasonably able to obtain through timely liquidation of the associated equity award that is subject to income taxes through non-distressed open market sales or loans obtained by Executive secured by such equity award. The Company shall provide the additional cash compensation to the Executive in a timely manner in order to allow Executive the ability to timely make the Executive's required income tax payments.

 

In addition to the above, the Company will also reimburse Executive for any incremental taxes (excluding income taxes) which the Executive is liable as a result of the Company not paying its applicable portion of payroll related taxes associated with compensation paid to Executive.

 

(i)           Fixed Bonus. During the Term, the Executive will be entitled to receive a fixed bonus of $12,500 for each incremental achievement of $250,000 in overall revenues earned by the Company during any monthly period during the Term provided that the minimum revenues are $500,000 or more per month.

 

(j)           Car and Mileage Allowance. During the Term (and retroactive to January 1, 2020), the Company shall pay the Executive a monthly car and mileage allowance of up to one thousand five hundred dollars ($1,500) based on actual costs incurred (which may be increased by the Board or the Committee in their sole discretion).

 

(k)          Cellular Telephone and Internet Service Allowance. Duringt he Term (and retroactive to January 1, 2020), the Company the Company shall reimburse the Executive for costs associated with (i) the Executive's use of his cellular telephones at Executive's cost and expense; and (ii) the Executive's monthly interne service in an amount of up to one hundred fifty dollars ($150).

 

(l)           Business Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable pre-approved business expenses incurred by him in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers. Partially or wholly in the alternative, the Company may furnish the Executive with a Company credit card on which he may charge all authorized business expenses.

 

(m)          Life Insurance. The Executive shall be entitled to receive prompt reimbursement for Executive's costs to obtain individual life insurance on himself, in an amount of $1,000,000, which shall contain customary coverage provisions. The beneficiary of the life insurance shall be to the Executive's designee.

 

(n)          Directors' and Officers' Liability Insurance. Promptly following the Effective Date, the Company shall use commercially reasonable efforts to secure Directors' and Officers' Liability Insurance in an amount not less than $1,000,000, which shall contain customary coverage for the Executive. The Company shall maintain such coverage in effect during the Term as long as it can be secured at commercially reasonable cost.

 

(o)          Other Benefits. The Executive (including Executive's spouse and dependents) shall be eligible to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including, without limitation, the Company's group medical, dental, vision, disability, life insurance, and flexible-spending account plans.

 

If during anytime throughout the Term (and retroactive to January 1, 2020), the Company does not provide Executive with acceptable health, dental and/or vision insurance coverage, the Executive shall be entitled to obtain and the Company shall reimburse the Executive for all costs associated with such health, dental and/or vision insurance paid by Executive.

 

 

 

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(p)          Vacation and Personal Time Off.

 

(i)       The Executive shall be entitled to four (4) weeks of vacation during each year of the Term, which shall accrue at the rate of one (1) week for each consecutive three (3) month period. The Executive shall take vacation time at such times as the Executive may select, and the affairs of the Company may permit,

 

(ii)       The Executive shall also be entitled to ten (10) personal days of personal time off during each year of the Term or such greater number of days of personal time off as may be afforded employees generally under the Company's policy in effect from time to time during the Term.

 

(iii)      Vacation and personal time off days shall be taken by the Executive without loss of compensation or other benefits to which he is entitled under this Agreement. Unused vacation or personal days at the end of each year of the Term shall accrue and be carried over to the subsequent year but shall not be paid out to the Executive in any circumstance, including termination of the Executive's employment for any reason.

 

(q)           Withholding. All amounts payable to the Executive under this Section 3 shall be subject to all required federal, state and local withholding, payroll and insurance taxes.

 

(r)           Board Discretion. Nothing in this Section 3 shall obligate the Board to implement any particular benefit plan or prevent the Board from amending or terminating any benefit plan implemented.

 

4.             Termination. The Executive's employment may be terminated and this Agreement terminated under the following circumstances:

 

(a)           Death. The Executive's employment hereunder shall terminate upon his death.

 

(b)           Disability. The Company may terminate the Executive's employment if the Executive becomes subject to a Disability. For purposes of this Agreement, "Disability" means the Executive is unable to perform the essential functions of his position, with or without a reasonable accommodation, for a period of one hundred twenty (120) consecutive calendar days or one hundred eighty (180) non-consecutive calendar days within any rolling twelve (12) month period because of physical, mental, or emotional incapacity, resulting from injury, sickness, or disease, as determined by the Executive's physician (or his guardian).

 

(c)           Termination by Company for Cause. The Company may terminate the Executive's employment for Cause. For purposes of this Agreement, "Cause" means the Executive (i) is convicted of a felony which is related to the Executive's employment or the business of the Company; (ii) in carrying out his duties hereunder, the Executive has been found in a civil action to have committed gross negligence or intentional misconduct resulting, in either case, in material harm to the Company; (iii) subject to a preliminary or permanent injunction issued by a court of competent jurisdiction enjoining the Executive from violating any federal securities law or any rule or regulation thereunder promulgated by the Securities and Exchange Commission (the "SEC"); (iv) the Executive becomes subject to a cease and desist order or other order issued by the SEC after an opportunity for a hearing; or (v) the Executive has been found in a civil action to have materially breached any provision of Section 8 and/or Section 9 and to have thereby caused material harm to the Company. The term "found in a civil action" shall not apply until all appeals permissible under the applicable rules of procedure or statutes have been determined and no further appeals are permissible. to the extent curable.

 

(d)           Termination by the Company Without Cause. A termination of the Executive's employment by the Company for any reason, except death, disability or Cause, will be deemed to be a termination "Without Cause."

 

 

 

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(e)           Termination by the Executive for Good Reason. The Executive may terminate his employment for "Good Reason." For purposes of this Agreement, "Good Reason" means (i) without the Executive's written consent, a material reduction of his duties, positions or responsibilities; (ii) without the Executive's written consent, a reduction by the Company in Base Salary as in effect immediately prior to such reduction; (iii) the occurrence of a "Change in Control" (as defined in Section 6); or (iii) the Company's material breach of this Agreement; provided that within ninety (90) days of the Company's act or omission giving rise to a resignation for Good Reason, the Executive notifies the Company in writing of the act or omission, the Company fails to correct the act or omission (to the extent curable) within thirty (30) days after receiving the Executive's written notice and the Executive actually terminates his employment within sixty (60) days after the date the Company receives the Executive's notice.

 

(f)           Termination by the Executive Without Good Reason. A resignation of the Executive's employment for any reason other than Good Reason will be deemed to be a resignation "Without Good Reason." The Executive may terminate his employment at any time Without Good Reason, upon thirty (30) days prior written notice to the Company, provided however, the Company may accelerate the date of such termination to any date following the receipt of such written notice.

 

(g)          Termination by the Company due to Non-renewal. A termination of the Executive's employment by the Company due to the Company's non-renewal of this Agreement pursuant to Section 3, will be deemed to be a termination "Non-Renewal."

 

(h)          Termination Date. The "Termination Date" means (i) if the Executive's employment is terminated by his death under Section 4(a), the date of his death; (ii) if the Executive's employment is terminated on account of his Disability under Section 4(b), the date on which the Company provides the Executive a written termination notice; (iii) if the Company terminates the Executive's employment for Cause under Section 4(c), the date on which the Company provides the Executive a written termination notice; (iv) if the Company terminates the Executive's employment Without Cause under Section 4(d), the date on which the Company provides the Executive a written termination notice; (v) if the Executive resigns his employment for Good Reason under Section 4(e), the date on which the Executive provides the Company a written termination notice; (vii) if the Executive resigns his employment Without Good Reason under Section 4(f), thirty (30) days after the date on which the Executive provides the Company a written termination notice or (viii) if the Company terminates this Agreement though Non-Renewal under Section 4(g), the date on which the Agreement expires.

 

5.             Compensation Upon Termination.

 

(a)           Termination by the Company for Cause or by the Executive Without Good Reason. If the Executive's employment with the Company is terminated pursuant to Sections 4(c), or 4(f), the Company shall pay or provide to the Executive (or to his authorized representative or estate) (i) any earned but unpaid Base Salary as of the Termination Date; (ii) unpaid expense reimbursements as of the Termination Date; (iii) any unpaid Tax True-up amounts, (iv) any earned but unpaid Bonus as of the Termination Date; and (v) any vested benefits the Executive may be entitled to under any employee benefit plan of the Company, equity securities (stock, options, and/or warrants) awarded during the Term or all equity securities eligible to the Executive pursuant to the MCPP based on identified milestones achieved as of the date of Termination and/or which may be achieved within twelve (12) months after the date of Termination (the "Accrued Obligations"), on or before the time required by law but in no event more than thirty (30) days after the Termination Date (and or no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP within the 12 months after date of Termination).

 

(b)          Termination for Disability, Death or Non-renewal. If the Executive's Employment is terminated by reason of Disability pursuant to Section 4(a), 4(b) or 4(g) then the Executive shall be entitled to the following:

 

(i)        The Company shall pay the Executive the Accrued Obligations earned through the Termination Date, on or before thirty (30) days after the Termination Date.

 

 

 

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(ii)       All equity securities granted to the Executive during the Term shall immediately be issued, become immediately vested, and/or exercised, if applicable, by the Executive or his legal representatives in accordance with the terms of the applicable employees plan or award document.

 

(iii)      All equity securities eligible to the Executive pursuant to the MCPP based on identified milestones not yet achieved as of the date of Termination shall remain eligible to Executive for a period thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement. The Company shall provide to the Executive no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP pursuant to this Section 5(b)(iii)).

 

(iv)      a lump sum payment equal to two hundred ninety-nine percent (299%) of Executive's "base period income" as determined under (e) below, plus an additional amount representing a gross-up of any state or federal taxes payable by Executive as a result of any such payment plus any amount of Tax True-up associated with issuance of equity securities pursuant to 5(b)(ii) and 5(b)(iii) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(v)       The Executive's "base period income" shall be his Base Salary and Bonuses paid or payable to him during or with respect to the twelve (12) month period preceding the date of his termination of affiliation (excluding any equity issued to Executive pursuant to the MCPP).

 

(vi)      Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall reimburse the Executive the monthly premium payable to continue his and his eligible dependents' participation in the Company's group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive's eligible dependents) for a period of one year from the Termination Date, provided, however, that the Executive remains eligible for COBRA coverage during such one-year period.

 

(c)          Termination by the Company Without Cause or by the Executive With Good Reason. If the Executive's employment is terminated by the Company Without Cause or the Executive terminates his employment for Good Reason, then the Executive shall be entitled to the following:

 

(i)        The Company shall pay the Executive the Accrued Obligations earned through the Termination Date, on or before thirty (30) days after the Termination Date.

 

(ii)       The Company shall pay the Executive his Base Salary (less applicable withholding taxes) for the balance of the Term or for a period of four years from the Termination Date, whichever is longer, in accordance with the Company's normal payroll practices in effect on the Termination Date.

 

(iii)      Two hundred percent (200%) of the greater of the Executive's Bonus for the year of termination or the Bonus actually earned for the year prior to the year of termination, if any; which amount will be paid within sixty (60) days of the later of the Termination Date or the calculation of such Bonus. This provision shall exclude any equity grants to Executive pursuant to the MCPP.

 

(iv)      All equity securities granted to the Executive during the Term shall immediately be issued, become immediately vested, and/or exercised, if applicable, by the Executive or his legal representatives in accordance with the terms of the applicable employees plan or award document.

 

(v)       All equity securities eligible to the Executive pursuant to the MCPP based on identified milestones not yet achieved as of the date of Termination shall remain eligible to Executive for a period thirty-six (36) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for "Cause" or the Executive's Non-Renewal of the Agreement. The Company shall provide to the Executive no more than thirty (30) days after any shares that become eligible to Executive pursuant to the MCPP pursuant to this Section 5(c)(viii)).

 

 

 

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(vi)      a lump sum payment equal to any amount of Tax True-up associated with issuance of equity securities pursuant to 5(c)(iv) and 5(b)(v) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(vii)     Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall reimburse the Executive the monthly premium payable to continue his and his eligible dependents' participation in the Company's group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive's eligible dependents) for the period that the Executive is eligible and remains eligible for COBRA coverage, provided, however, that in the event that the Executive obtains other employment that offers group health benefits, such continuation of coverage by the Company shall immediately cease.

 

6.             Change in Control.

 

(a)           For the purposes of this Agreement, a "Change of Control" shall be deemed to have taken place if (i) any person who is not an executive officer or director of the Company as of the Effective Date, either individually or as a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the owner or beneficial owner of Company securities, after the date of this Agreement, having fifty point one percent (50.1%) or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is the majority at the time the purchases are made); or (ii) the persons who were directors of the Company before such transactions shall cease to constitute a majority of the Board of the Company, or any successor to the Company, as the direct or indirect result of or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transaction.

 

(b)           The Company and the Executive hereby agree that, if the Executive is affiliated with the Company on the date on which a Change of Control occurs (the "Change of Control Date"), the Company will continue to retain the Executive and the Executive will remain affiliated with the Company for the period commencing on the Change of Control Date and ending on the fifth (5th) anniversary of the Change in Control Date, to exercise such authority and perform such executive duties as are commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Change of Control Date. If after the Change of Control Executive is requested, and, in his sole and absolute discretion, consents to change his principal business location, the Company will reimburse the Executive for his reasonable relocation expenses, including, without limitation, moving expenses, temporary living and travel expenses for a reasonable time while arranging to move his residence to the changed location, closing costs, if any, associated with the sale of his existing residence and the purchase of a replacement residence at the changed location, plus an additional amount representing a gross-up of any state or federal taxes payable by the Executive as a result of any such reimbursement. If the Executive shall not consent to change his business location, the Executive may continue to provide the services required of him hereunder from his then residence and/or business address, and the Company shall continue to maintain an office for the Executive at that location commensurate with the Company's office prior to the Change of Control Date.

 

(c)           During the remaining Term of this Agreement commencing upon the Change of Control Date, the Company will (i) continue to pay Executive a salary at not less than the level applicable to Executive on the Change of Control Date; (ii) pay Executive Bonuses in amounts not less in amount than those paid during the twelve (12) month period preceding the Change of Control Date; and (iii) continue employee benefit programs as to Executive at levels in effect on the Change of Control Date (but subject to such reductions as may be required to maintain such plans in compliance with applicable federal law regulating employee benefit programs).

 

 

 

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(d)           If during the remaining Term of this Agreement after the Change of Control Date (i) Executive's employment is terminated by the Company; or (ii) there shall have occurred a material reduction in Executive's compensation or employment related benefits, or a material change in the Executive's status, working conditions, management responsibilities or titles, and Executive voluntarily terminates his relationship with the Company within sixty (60) days of an such occurrence, or the last in a series of occurrences, then Executive shall be entitled to receive, in addition to the compensation provided for in Section 5(c), and subject to the provisions of subsections (e) and (f) below, a lump sum payment equal to two hundred percent (200%) of Executive's "base period income" as determined under (e) below, plus an additional amount representing a gross-up of any state or federal taxes payable by Executive as a result of any such payment plus any amount of Tax True-up associated with issuance of equity securities pursuant to 5(c)(iv) and 5(c)(v) above. Such amounts will be paid to Executive within thirty (30) days after his termination of his affiliation with the Company and/or upon such time that the Tax True-up amount is determinable.

 

(e)          The Executive's "base period income" shall be his Base Salary and Bonuses paid or payable to him during or with respect to the twelve (12) month period preceding the date of his termination of affiliation.

 

(f)           In the event of a proposed Change in Control, the Company will allow Executive to participate in all meetings and negotiations related thereto.

 

7.             Section 409A Compliance.

 

(a)          All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

(b)          To the extent that any of the payments or benefits provided for in Section 5(b) are deemed to constitute non-qualified deferred compensation benefits subject to Section 409A of the United States Internal Revenue Code (the "Code"), the following interpretations apply to Section 5: Any termination of the Executive's employment triggering payment of benefits under Section 5(b) must constitute a "separation from service" under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before distribution of such benefits can commence. To the extent that the termination of the Executive's employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by the Executive to the Company or any of its parents, subsidiaries or affiliates at the time the Executive's employment terminates), any benefits payable under Section 5 that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this Section 7(b) shall not cause any forfeiture of benefits on the Executive's part, but shall only act as a delay until such time as a "separation from service" occurs. Further, if the Executive is a "specified employee" (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date his separation from service becomes effective, any benefits payable under Section 5 that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (i) the business day following the six-month anniversary of the date his separation from service becomes effective; and (ii) the date of the Executive's death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (i) the business day following the six-month anniversary of the date his separation from service becomes effective; and (ii) the Executive's death, the Company shall pay the Executive in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid the Executive prior to that date under Section 5(b) of this Agreement. It is intended that each installment of the payments and benefits provided under Section 5(b) of this Agreement shall be treated as a separate "payment" for purposes of Section 409A of the Code. Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code.

 

 

 

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8.             Confidential Information.

 

(a)          As used in this Agreement, "Confidential Information" means information belonging to the Company which is of value to the Company in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to the Company. Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of the Company. Confidential Information includes information developed by the Executive in the course of the Executive's employment by the Company, as well as other information to which the Executive may have access in connection with his employment. Confidential Information also includes the confidential information of others with which the Company has a business relationship. Notwithstanding the foregoing, Confidential Information does not include (i) information which now or in the future comes into the public domain, unless due to breach of the Executive's duties under this Section 8(a); (ii) information which is disclosed to Executive by others who are not, to Executive's actual knowledge, under obligation of nondisclosure to the Company; (iii) information which is independently developed by the Executive without breach of the Executive's duties under this Section 8(a); or (iv) information which is disclosed by the Company to others without obligation of confidentiality.

 

(b)          At all times, both during the Executive's employment with the Company and after its termination, the Executive will keep in confidence and trust all Confidential Information, and will not use or disclose for his own benefit or the benefit of any other Person any such Confidential Information without the written consent of the Company, except as may be necessary in the ordinary course of performing the Executive's duties to the Company.

 

9.           Documents, Records, Etc. All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Company or are produced by the Executive in connection with the Executive's employment will be and remain the sole property of the Company. The Executive will return to the Company all such materials and property as and when requested by the Company. In any event, the Executive will return all such materials and property immediately upon termination of the Executive's employment for any reason. The Executive will not retain any such material or property or any copies thereof after the termination of his employment.

 

10.            Non-Competition. From the Effective Date through the second (2nd) anniversary of the Termination Date, regardless of the reason for such termination or expiration (the "Restricted Period") the Executive will not, directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage, prepare to engage, participate, assist or invest in any Competing Business anywhere in the United States or any other geographic area in which the Company is actively distributing its products or providing its services as of the Termination Date. Notwithstanding the foregoing, (i) the Executive may own up to two percent (2%) of the outstanding stock of a publicly held corporation which constitutes or is affiliated with a Competing Business; and (ii) the Executive may be employed by a large organization which is engaged in a Competing Business as its non-primary business, so long as Executive is not involved with or assisting such Competing Business, and so long as Executive does not breach his obligations regarding Confidential Information.

 

11.           No Solicitation. During the Restricted Period, the Executive shall not, directly or indirectly, take any of the following actions, and, to the extent the Executive owns, manages, operates, controls, is employed by or participates in the ownership, management, operation or control of, or is connected in any manner with, any business, the Executive shall use his best efforts to ensure that such business does not take any of the following actions:

 

 

 

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(a)           persuade or attempt to persuade any Customer, Prospective Customer or Supplier to cease doing business with the Company, or to reduce the amount of business it does with the Company;

 

(b)          solicit or service for himself or for any Person the business of a Customer, Prospective Customer or Supplier in order to provide goods or services that are competitive with the goods and services provided by the Company;

 

(c)           persuade or attempt to persuade any Service Provider to cease providing services to the Company; or

 

(d)          solicit for hire or hire for himself or for any third party any Service Provider. The following definitions are applicable to Sections 8, 9,10, and 11:

 

 

 

(i)             "Competing Business" means the offering in-office ancillary opportunities and third-party billing to physicians and clinics and any other business in which the services which the Company is engaged in as of the Termination Date.

 

(ii)            "Customer" means any Person that purchased goods or services from the Company at any time within two (2) years prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(iii)           "Prospective Customer" means any Person with whom the Company met or to whom the Company presented for the purpose of soliciting the Person to become a Customer of the Company within six (6) months prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(iv)           "Service Provider" means any Person who is an employee or independent contractor of the Company or the Company or who was within twelve (12) months preceding the solicitation prohibited by Sections 11(a) or (b) an employee or independent contractor of the Company or the Company.

 

(v)            "Supplier" means any Person that sold goods or services to the Company at any time within twelve (12) months prior to the date of the solicitation prohibited by Sections 11(a) or (b).

 

(vi)           "Person" means an individual, a sole proprietorship, a corporation, a limited liability company, a partnership, an association, a trust, or other business entity, whether or not incorporated.

 

12.           Intellectual Property.

 

(a)          All creations, inventions, ideas, designs, copyrightable materials, trademarks, and other technology and rights (and any related improvements or modifications), whether or not subject to patent or copyright protection (collectively, "Creations"), relating to any activities of the Company which are conceived by the Executive or developed by the Executive in the course of his employment with the Company, whether prior to or during the Term, whether conceived alone or with others and whether or not conceived or developed during regular business hours, shall be the sole property of the Company and, to the maximum extent permitted by applicable law, shall be deemed "works made for hire" as that term is used in the United States Copyright Act.

 

(b)          To the extent, if any, that the Executive retains any right, title or interest with respect to any Creations delivered to the Company or related to his employment with the Company, the Executive hereby grants to the Company an irrevocable, paid-up, transferable, sub-licensable, worldwide right and license: (i) to modify all or any portion of such Creations, including, without limitation, the making of additions to or deletions from such Creations, regardless of the medium (now or hereafter known) into which such Creations may be modified and regardless of the effect of such modifications on the integrity of such Creations; and (ii) to identify the Executive, or not to identify his, as one or more authors of or contributors to such Creations or any portion thereof, whether or not such Creations or any portion thereof have been modified. The Executive further waives any "moral" rights, or other rights with respect to attribution of authorship or integrity of such Creations that he may have under any applicable law, whether under copyright, trademark, unfair competition, defamation, and right of privacy, contract, tort or other legal theory.

 

 

 

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(c)          The Executive will promptly inform the Company of any Creations. The Executive will also allow the Company to inspect any Creations he conceives or develops within one (1) year after the termination of his employment for any reason to determine if they are based on Confidential Information. The Executive shall (whether during his employment or after the termination of his employment) execute such written instruments and do other such acts as may be necessary in the opinion of the Company or its counsel to secure the Company's rights in the Creations, including obtaining a patent, registering a copyright, or otherwise (and the Executive hereby irrevocably appoints the Company and any of its officers as his attorney in fact to undertake such acts in his name). The Executive's obligation to execute written instruments and otherwise assist the Company in securing its rights in the Creations will continue after the termination of his employment for any reason. The Company shall reimburse the Executive for any out-of-pocket expenses (but not attorneys' fees) he incurs in connection with his compliance with this Section 12(c).

 

13.           Acknowledgement. The Executive understands that the restrictions set forth in Sections 8, 9, 10, 11 and 12 of this Agreement are intended to protect the Company's interest in its Confidential Information, goodwill and established employee and customer relationships, and agrees that such restrictions are reasonable and appropriate for this purpose.

 

14.            Indemnification. During the Term and thereafter, the Company shall indemnify and hold the Executive and the Executive's heirs and representatives harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses and expenses (including reasonable attorneys' fees) as a result of any claim or proceeding (whether civil, criminal, administrative or investigative), or any threatened claim or proceeding (whether civil, criminal, administrative or investigative), against the Executive that arises out of or relates to the Executive's service as an officer, director or employee, as the case may be, of the Company, or the Executive's service in any such capacity or similar capacity with any affiliate of the Company or other entity at the Company's request, both prior to and after the Effective Date, and to promptly advance to the Executive or the Executive's heirs or representatives such expenses, including litigation costs and attorneys' fees, upon written request with appropriate documentation of such expense upon receipt of an undertaking by the Executive or on the Executive's behalf to repay such amount if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company. During the Term and thereafter, the Company also shall provide the Executive with coverage under its current directors' and officers' liability policy to the same extent that it provides such coverage to its other executive officers. If the Executive has any knowledge of any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, as to which the Executive may request indemnity under this provision, the Executive will give the Company prompt written notice thereof; provided that the failure to give such notice shall not affect the Executive's right to indemnification. The Company shall be entitled to assume the defense of any such proceeding and the Executive will use reasonable efforts to cooperate with such defense. To the extent that the Executive in good faith determines that there is an actual or potential conflict of interest between the Company and the Executive in connection with the defense of a proceeding, the Executive shall so notify the Company and shall be entitled to separate representation at the Company's expense by counsel selected by the Executive (provided that the Company may reasonably object to the selection of counsel within ten (10) business days after notification thereof) which counsel shall cooperate, and coordinate the defense, with the Company's counsel and minimize the expense of such separate representation to the extent consistent with the Executive's separate defense.

 

15.           Survival. The provisions of Sections 8, 9, 10, 11, 12, 14, 15, 16 and 22 of this Agreement shall survive its expiration or termination.

 

16.           Disputes.

 

(a)           The parties agree to resolve any dispute arising under or relating to the interpretation or enforcement of this Agreement, the Executive's employment or the termination of the Executive's employment before the Florida state courts of Miami-Dade County, Florida or the United States District Court for the Southern District of Florida, and hereby consent to the exclusive jurisdiction of such courts. Accordingly, with respect to any such court action, the Executive and the Company each (i) submits to the personal jurisdiction of these courts; (ii) consents to service of process under the notice provisions set forth in Section 21 of this Agreement; (iii) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process; and (iv) waives any objection to jurisdiction based on improper venue or improper jurisdiction.

 

 

 

 11 

 

 

(b)          Notwithstanding anything else provided in this Agreement, the Executive agrees that it would be difficult to measure any damages caused to the Company which might result from any breach by the Executive of Sections 8, 9, 10, 11 and 12 of this Agreement. Accordingly, if the Executive breaches or proposes to breach, any term of Sections 8, 9, 10, 11 and 12 of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to a temporary and preliminary injunction or other appropriate equitable relief to restrain any such breach without showing or providing any actual damage to the Company from any court having competent jurisdiction over the Executive.

 

(c)           BOTH THE COMPANY AND THE EXECUTIVE HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE FEDERAL OR STATE LAW.

 

(d)          The prevailing party shall be entitled to reasonable attorneys' fees and costs from the non-prevailing party in connection with any action filed under this Section 16.

 

17.           Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties concerning such subject matter, including without limitation, the Original Employment Agreement.

 

18.           Successors. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive's death after his termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executive's beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation). The Company shall require any successor to the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

19.           Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

20.           Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

21.           Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, at its main offices, attention of the Chief Financial Officer. Notices shall be effective on receipt, if delivered by hand, the next business day, if sent by overnight courier service or on the third (3rd) business day after mailing, if sent by mail.

 

22.           Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

 

23.           Governing Law. This is a Florida contract and shall be construed under and be governed in all respects by the laws of Florida for contracts to be performed in that state and without giving effect to the conflict of laws principles of Florida or any other state.

 

24.           "Company" Defined. As used in this Agreement, the term "Company" shall mean the Company, its parent, subsidiaries and divisions.

 

25.           Counterparts. This Agreement may be executed in any number of counterparts, including by facsimile, .PDF or other electronic transmission (which shall be deemed to be an original), each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

 

 

 

 12 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

 

 

  THE COMPANY:
   
  ORGANICELL REGENERATIVE MEDICINE, INC.
   
  By: /s/ Albert Mitranil
         Name: Albert Mitrani
         Title: CEO
   
   
  THE EXECUTIVE:
   
/s/ Ian Bothwell
  Ian Bothwell
   

 

 

 

 13 

EX-10.38 5 organicell_ex1038.htm WARRANT - BOTHWELL

Exhibit 10.38

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS (i) SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS AND (ii) AT THE OPTION OF THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED HAS BEEN DELIVERED TO THE COMPANY.

 

Holder(s): Ian T. Bothwell Warrant Number: WA 2020-01
Issue Date: February 26, 2020 Termination Date: February 26, 2030

 

WARRANT FOR THE
PURCHASE OF SHARES OF COMMON STOCK
OF
ORGANICELL REGENERATIVE MEDICINE INC.
(a/k/a Biotech Products Services and Research Inc.)

 

THIS CERTIFIES THAT, for valuable consideration, the undersigned, together with her successors and permitted assigns (the “Holder”) is entitled to purchase, subject to the terms set forth below, up to 7,500,000 (Seven million Five Hundred Thousand) shares of duly authorized, validly issued, fully paid and nonassessable shares of common stock, $0.001 par value per share (the “Common Stock”), of ORGANICELL REGENERATIVE MEDICINE INC. (a/k/a Biotech Products Services and Research Inc.), Inc., a Nevada corporation (the “Company”).

 

1.       Exercise of Warrant. The terms and conditions upon which this Warrant may be exercised, and the Common Stock covered hereby (the “Warrant Stock”) may be purchased, are as follows:

 

(a)    Term. Subject to the terms hereof, the purchase right represented by this Warrant may be exercised in whole or in part, but not as to a fractional share of Warrant Stock, at any time and from time to time until 4 p.m. Eastern Time on February 26, 2030.

 

(b)    Number of Shares. The number of shares of Common Stock for which this Warrant is initially exercisable is 7,500,000 (Seven Million Five Hundred Thousand) shares of the Company’s common stock, which number is subject to adjustment pursuant to Section 2 of this Warrant.

 

(c)    Purchase Price. The per share purchase price for the shares of Common Stock to be issued upon exercise of this Warrant shall be equal to $.028 (Two and Eight/tenths Cents) per share (the “Warrant Price”).

 

(d)    Method of Exercise. The exercise of the purchase rights evidenced by this Warrant shall be effected by (a) the surrender of the Warrant, together with a duly executed copy of the form of a subscription attached hereto, to the Company at its principal offices at 4045 Sheridan Ave. Miami Beach, FL 33140 (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) and (b) the delivery of the purchase price in an amount equal to the number of shares for which the purchase rights hereunder are being exercised multiplied by the Warrant Price, which amount may be paid by cashier’s check payable to the Company’s order or by wire transfer to the Company’s account. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company together with the purchase price as provided herein or at such later date as may be specified in the executed form of subscription, and at such time the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such exercise as provided herein shall be deemed to have become the holder or holders of record thereof.

 

 

 

 1 

 

 

(e)    Exercise by Surrender of Warrant or Other Securities; “Cashless” Exercise. In addition to the method of payment set forth in Sections 1(d) and in lieu of any cash payment required thereunder, the Holder(s) of the Warrants shall have the right at any time and from time to time to exercise the Warrants in full or in part by surrendering shares of Common Stock, this Warrant or other securities issued by the Company in the manner and at the place specified in Section 1(d) as payment of the aggregate Exercise Price for the Warrants to be exercised. The number of Warrants, shares of Common Stock or other securities issued by the Company to be surrendered in payment of the aggregate Exercise Price for the Warrants to be exercised shall be determined by multiplying the number of Warrants to be exercised by the Exercise Price, and then dividing the product thereof by an amount equal to the Market Price (as defined below) on the date that all documents and instruments required to be delivered or surrendered to the Company for exercise of the Warrant have been so delivered or surrendered. The number of shares of other securities to be surrendered in payment of the aggregate Exercise Price for the Warrants to be exercised shall be determined in accordance with the preceding sentence as if the other securities had been converted into Common Stock immediately prior to exercise or, in the case the Company has issued other securities that are not convertible into Common Stock, at the Market Price thereof.

 

(f)     Definition of Market Price. As used herein, the phrase “Market Price” at any date shall be deemed to be (i) if the principal trading market for such securities is NASDAQ Stock Market or another exchange, the average of the high reported sale prices per share of Common Stock for the five preceding consecutive trading days on which the Common Stock trades ending on the date immediately before the date of determination, (ii) if the principal market for the Common Stock is the over-the-counter market, the average of the closing sale prices per share for the five preceding consecutive trading days ending on the date immediately before the date of determination on such trading days or, (iii) if the Common Stock is not quoted by such over-the-counter market, the average of the average of the mean of the bid and asking prices per share on such trading days as set forth in the National Quotation Bureau sheet listing such securities for such days. Notwithstanding the foregoing, if there is no reported high sale price, as the case may be, reported on any of the ten trading days preceding the event requiring a determination of Market Price hereunder, then the Market Price shall be the average of the high bid and asked prices for such days; and if there is no reported high bid and asked prices, as the case may be, reported on any of the ten trading days preceding the event requiring a determination of Market Price hereunder, then the Market Price shall be determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it or in the event of a dispute of the determination of the Board of Directors of the Company provided in clause (b) above, by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen by the Company and reasonably acceptable to a majority in interest of the holders of Warrants from a panel of persons qualified by education and training to pass on the matter to be decided.

 

(g)    Issuance of Shares. As soon as reasonably practicable after each exercise of this Warrant, in whole or in part, the Company at its expense will cause to be issued in the name of and delivered to the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct,

 

(i)a certificate or certificates for the number of duly authorized validly issued, fully paid and nonassessable shares of Common Stock to which such Holder shall be entitled upon such exercise, and

 

(ii)in case such exercise is in part only, a new warrant or warrants of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (without giving effect to any adjustment thereof) to the number of such shares called for on the face of this Warrant minus the number of such shares designated by the Holder upon such exercise as provided herein.

 

2.       Certain Adjustments.

 

(a) Mergers, Consolidations or Sale of Assets. If at any time after the date hereof while this Warrant remains outstanding and unexpired there shall be a capital reorganization (other than a combination or subdivision of Warrant Stock otherwise provided for herein), or a merger or consolidation of the Company with or into another corporation, or the sale of the Company’s properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the purchase price, the number of shares of stock or other securities, cash or property of the Company or the successor corporation resulting from such reorganization, merger, consolidation or sale, to which a Holder of the Common Stock deliverable upon exercise of this Warrant would have been entitled under the provisions of the agreement in such reorganization, merger, consolidation or sale if this Warrant had been exercised immediately before that reorganization, merger, consolidation or sale. In any such case, appropriate adjustment (as determined reasonably and in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the reorganization, merger, consolidation or sale to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and the number of shares of Warrant Stock) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

 

 

 

 2 

 

 

(b) Splits and Subdivisions; Dividends. In the event the Company should at any time or from time to time while this Warrant remains outstanding and unexpired effect or fix a record date for the effectuation of a split or subdivision of the outstanding shares of its Common Stock or the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or warrants, options or other rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as the “Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of distribution, split or subdivision if no record date is fixed), the per share Warrant Price shall be appropriately increased in proportion to such increase (or potential increase) of outstanding shares.

 

(c)       Combination of Shares. If the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Common Stock, the per share purchase price shall be appropriately increased and the number of shares of Warrant Stock shall be appropriately decreased in proportion to such decrease in outstanding shares.

 

(d) Certificate as to Adjustments. In the case of each adjustment or readjustment of the Warrant Price pursuant to this Section 2, the Company at its expense will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate, signed by the Company’s principal financial officer, setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based to be delivered to the Holder of this Warrant. The Company will furnish or cause to be furnished to such Holder a certificate setting forth:

 

(i)Such adjustments and readjustments;

 

(ii)The purchase price at the time in effect and how it was calculated; and

 

(iii)The number of shares of Warrant Stock and the amount, if any, of other property at the time receivable upon the exercise of the Warrant.

 

(e) Notices of Record Date, etc. In the event of:

 

  (i) Any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend payable at the same rate as that of the last such cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or

 

(ii)Any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of assets of the Company to any other person or any consolidation or merger involving the Company; or

 

(iii)Any voluntary or involuntary dissolution, liquidation or winding-up of the Company; the Company will mail to the Holder of this Warrant at least ten (10) business days prior to the earliest date specified therein, a notice specifying:

 

(1)The date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; and

 

(2)The date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining stockholders entitled to vote thereon and the time.

 

 

 

 3 

 

 

3.                Fractional Shares. No fractional shares shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional share, the Company shall make a cash payment equal to the then fair market value of such fractional share as determined in good faith by the Company’s Board of Directors.

 

4.                No Privilege of Stock Ownership. Prior to the exercise of this Warrant, the Holder shall not be entitled, by virtue of holding this Warrant, to any rights of a stockholder of the Company, including (without limitation) the right to vote, receive dividends or other distributions, exercise preemptive rights or be notified of stockholder meetings, and such Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company. Nothing in this Section 4, however, shall limit the right of the Holder to be provided the notices described in Section 2 hereof, or to participate in distributions described in Section 2 hereof if the Holder exercises this Warrant.

 

5.                Limitation of Liability. Except as otherwise provided herein, in the absence of affirmative action by the Holder hereof to purchase the Warrant Stock, no mere enumeration herein of the rights or privileges of the Holder hereof shall give rise to any obligation of such Holder to purchase any securities or any liability of such Holder for the purchase price or as a stockholder of the Company, whether such obligation or liability is asserted by the Company or by creditors of the Company.

 

6.                Representations and Warranties of the Holder. The Holder represents and warrants to the Company as follows:

 

(a)    Purchase Entirely for Own Account. This Warrant is issued to the Holder in reliance upon such Holder’s representation to the Company, which by the Holder’s execution of this Warrant the Holder hereby confirms, that the Warrant and Warrant Stock are being acquired for investment for the Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the federal or state securities laws.

 

(b)    Investment Experience. The Holder represents that it can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Stock. If an entity, the Holder also represents it has not been organized solely for the purpose of acquiring the Warrant or the Warrant Stock.

 

(c)    Restricted Securities. The Holder understands that the Warrant being issued hereunder and the Warrant Stock to be purchased hereunder are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the “Securities Act”), only in certain limited circumstances. In this connection, the Holder represents that it is familiar with Securities and Exchange Commission Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(d) Legends. It is understood that the certificates evidencing the Warrant Stock may bear a legend substantially in the following form:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS (COLLECTIVELY, THE “SECURITIES LAWS”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES LAWS (i) UNLESS SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES LAWS AND (ii) THE COMPANY, IF IT SO REQUESTS, HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

In addition, the certificates evidencing the Warrant Stock may bear any legend required by the Company’s charter documents or the laws of the State of Nevada and any other state in which the securities will be issued.

 

7.       Transfers and Exchanges.

 

(a)    The Holder may not sell, hypothecate, pledge or otherwise dispose of any interest in the Warrant or the Warrant Stock unless such transfer would not violate any provision of this Section 7.

 

 

 

 4 

 

 

(b)    Subject to the conditions of this Section 7, upon delivery to the Company of a duly completed and executed Assignment in substantially the form attached hereto, a new warrant shall be issued to the transferee therein named. All new warrants issued in connection with transfers or exchanges shall not require the signature of the new Holder hereof and shall be identical in form and provision to this Warrant except as to the number of shares.

 

(c)    It shall be a condition to any transfer of this Warrant that the transferee shall be an accredited investor, within the meaning of the Securities Act, and that the Company shall have received, at the time of such transfer or exercise (i) a representation letter, or at the option of the Company, a legal opinion, in form and substance reasonably satisfactory to the Company and its counsel, reciting the pertinent circumstances surrounding the proposed transfer and stating that such transfer is exempt from the prospectus and registration requirements of the Securities Act and applicable state securities laws and (ii) a statement in writing from, and signed by, any proposed transferees containing the same representations and warranties as set forth in Section 6 hereof and agreeing to be bound by the provisions of this Section 7, such statement to be in the form of Assignment attached hereto. Notwithstanding the foregoing, as long as the transfer of this Warrant is in compliance with applicable securities laws and there are no significant issues of fact (such as whether or not the Holder is an “affiliate,” as such term is defined in Rule 144 of the Securities Act) or unusual questions of law, the requirement of a representation letter or legal opinion shall not apply to (a) the transfer of this Warrant or any part thereof to a partnership of which the Holder is a partner or to the beneficial owners or affiliates of such partnership, (b) the transfer of this Warrant or any part thereof to beneficial owners, employees or affiliates of the Holder, (c) bona fide gifts to a member of a Holder’s immediate family or trustee for a member of a Holder’s immediate family, (d) transfers by will upon the death of a Holder, or

 

(e)    transfers pursuant to a divorce or dissolution of the marriage of a Holder.

 

(d)    Ownership of Warrants. The Company may treat the person in whose name any Warrant is registered on the register kept by the Company or its transfer agent as the owner and Holder thereof for all purposes, notwithstanding any notice to the contrary. A Warrant, if properly assigned, may be exercised by a new Holder without a new Warrant first having been issued. Nothing in this Section 7(d) shall relieve the Holder of his obligations under Section 7(c) hereof.

 

8.                Successors and Assigns. The terms and provisions of this Warrant shall be binding upon the Company and the Holder and their respective successors and assigns, subject at all times to the restrictions set forth herein.

 

9.                Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it and its counsel of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.

 

10.             Saturdays, Sundays, Holiday, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or Sunday or shall be a legal holiday in the State of Washington, then such action may be taken, or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

 

11.             Amendments and Waivers. Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder. Any such amendment or waiver shall be binding on the parties.

 

12.             Governing Law; Venue. The terms and conditions of this Warrant shall be governed by and construed in accordance with the law of the State of Florida, without regard to conflict of law provisions. The parties expressly stipulate that any litigation under this Warrant shall be brought in the state courts of Broward County, Florida or in the United States District Court for the Southern District of Florida. The parties agree to submit to the exclusive jurisdiction and venue of those courts.

 

 

 

 5 

 

 

13.             Notices. All notices and other communications under this Warrant shall be in writing and shall be delivered in person, via facsimile machine, sent by documented overnight delivery service, or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed (a) if to the Holder, at the registered address of such Holder as set forth in the register kept at the principal office of the Company, or (b) if to the Company, to the attention of its President at its principal offices at 4045 Sheridan Ave. Miami Beach, FL 33140, provided that the exercise of any Warrant shall be effected in the manner provided in Section 1. Unless otherwise specified in this Warrant, all such notices and other written communications shall be effective (and considered delivered and received for the purposes of this Agreement) (i) if delivered, upon delivery, (ii) if by facsimile machine during normal business hours upon transmission with confirmation of receipt by the receiving party’s facsimile terminal and if not sent during normal business hours, then on the next day, (iii) if sent by documented overnight delivery service, on the date following the date on which such notice is delivered to such overnight delivery service for mailing, or (iv) if mailed via first-class regular mail, three (3) day after depositing in the U.S. Mail.

 

 

 

 

 

 

 6 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Warrant effective as of the date first written above.

 

  THE COMPANY:
   
   
  ORGANICELL REGENERATIVE
MEDICINE INC. (a/k/a Biotech Products Services and Research Inc.)
   
  a Nevada corporation
   
  By: /s/ Al Mitrani
  Name: Al Mitrani
  Title:
   
  HOLDER
   
   
   
  By: ______________________
  Name _____________________
  Title: _____________________
  Address: __________________
  _________________________
  _________________________
  Facsimile: _________________

 

 

 

 6 

 

 

EXHIBIT A

 

VESTING SCHEDULE

 

 

(a)Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of that certain Consultation and Advisory Board Agreement dated May 15, 2020 between the Company and the Holder (“Agreement”)

 

(b)2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the Agreement, respectively, provided however that the Agreement is in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Warrants prescribed above will immediately become vested shares if (a) the Company concludes a transaction involving any of the entities listed by Holder on Exhibit A of the Agreement based on a transaction value greater than $5MM or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25MM.

 

 

 

 

 

 

 

 

 

 

 7 

 

 

SUBSCRIPTION

 

ORGANICELL REGENERATIVE MEDICINE INC.

4045 Sheridan Ave.

Miami Beach, FL 33140

 

Ladies and Gentlemen:

 

The undersigned, ___________________________, hereby elects to purchase, pursuant to the provisions of the Warrant dated February 26, 2020 held by the undersigned,________________shares of Common Stock of ORGANICELL REGENERATIVE MEDICINE INC. (a/k/a Biotech Products Services and Research Inc.), a Nevada corporation, and tenders herewith payment of the purchase price of such shares in full.

 

The undersigned hereby confirms and acknowledges the investment representations and warranties made in Section 6 of the Warrant and accepts such shares subject to the restrictions of the Warrant, copies of which are available from the Secretary of the Company.

 

Date: _____________________ Print Name(s)  
     
  Signature:  
     
  Title if applicable:  
     
  Signature  
     
  Title if applicable:  
     
  Address:  
     

 

 

 

 

 8 

 

 

FORM OF ASSIGNMENT

 

The undersigned hereby assigns this Warrant to

 

 

 

0

 

 

 

(Print or type name, address and zip code of assignee)

 

Please insert Social Security or other identifying number of assignee:

 

_________________

 

and irrevocably appoints __________ as agent to transfer this Warrant on the books of the Company. The agent may substitute another to act for him or it.

 

Date: __________________

 

Signed:

 

 

(All owners must sign exactly as name(s) appear(s) on the front of this Warrant)

 

The undersigned assignee hereby confirms and acknowledges the investment representations and warranties made in Section 6 of the Warrant and agrees to be bound by the obligations set forth in the Warrant, copies of which are available from the Secretary of the Company.

 

Date: __________________ By: ___________________
   
         Name: _________________
   
         Title: __________________
   
   

 

 

 

 

EX-10.39 6 organicell_ex1039.htm WARRANT - ZOELLER

Exhibit 10.39

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS (i) SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS AND (ii) AT THE OPTION OF THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED HAS BEEN DELIVERED TO THE COMPANY.

 

Holder(s): Raymond Zoeller Warrant Number: WA 2020-02
Issue Date: May 15, 2020 Termination Date: May 15, 2023

 

WARRANT FOR THE
PURCHASE OF SHARES OF COMMON STOCK
OF
ORGANICELL REGENERATIVE MEDICINE INC.
(a/k/a Biotech Products Services and Research Inc.)

 

THIS CERTIFIES THAT, for valuable consideration, the undersigned, together with her successors and permitted assigns (the “Holder”) is entitled to purchase, subject to the terms set forth below, and in accordance with the Vesting Schedule attached hereto as Exhibit A up to 6,000,000 (Six Million) shares of duly authorized, validly issued, fully paid and nonassessable shares of common stock, $0.001 par value per share (the “Common Stock”), of ORGANICELL REGENERATIVE MEDICINE INC. (a/k/a Biotech Products Services and Research Inc.), Inc., a Nevada corporation (the “Company”).

 

1.       Exercise of Warrant. The terms and conditions upon which this Warrant may be exercised, and the Common Stock covered hereby (the “Warrant Stock”) may be purchased, are as follows:

 

(a)    Term. Subject to the terms hereof, the purchase right represented by this Warrant may be exercised in whole or in part, but not as to a fractional share of Warrant Stock, at any time and from time to time until 4 p.m. Eastern Time on May 15, 2023.

 

(b)    Number of Shares. The number of shares of Common Stock for which this Warrant is initially exercisable is 6,000,000 (Six Million) shares of the Company’s common stock, which number is subject to adjustment pursuant to Section 2 of this Warrant.

 

(c)    Purchase Price. The per share purchase price for the shares of Common Stock to be issued upon exercise of this Warrant shall be equal to $.04 (Four Cents) per share (the “Warrant Price”).

 

(d)    Method of Exercise. The exercise of the purchase rights evidenced by this Warrant shall be effected by (a) the surrender of the Warrant, together with a duly executed copy of the form of a subscription attached hereto, to the Company at its principal offices at 4045 Sheridan Ave. Miami Beach, FL 33140 (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) and (b) the delivery of the purchase price in an amount equal to the number of shares for which the purchase rights hereunder are being exercised multiplied by the Warrant Price, which amount may be paid by cashier’s check payable to the Company’s order or by wire transfer to the Company’s account. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Companytogether with the purchase price as provided herein or at such later date as may be specified in the executed form of subscription, and at such time the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such exercise as provided herein shall be deemed to have become the holder or holders of record thereof.

 

 

 

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(e) Issuance of Shares. As soon as reasonably practicable after each exercise of this Warrant, in whole or in part, the Company at its expense will cause to be issued in the name of and delivered to the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct,

 

(i)a certificate or certificates for the number of duly authorized validly issued, fully paid and nonassessable shares of Common Stock to which such Holder shall be entitled upon such exercise, and

 

(ii)in case such exercise is in part only, a new warrant or warrants of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (without giving effect to any adjustment thereof) to the number of such shares called for on the face of this Warrant minus the number of such shares designated by the Holder upon such exercise as provided herein.

 

2.       Certain Adjustments.

 

(a)    Mergers, Consolidations or Sale of Assets. If at any time after the date hereof while this Warrant remains outstanding and unexpired there shall be a capital reorganization (other than a combination or subdivision of Warrant Stock otherwise provided for herein), or a merger or consolidation of the Company with or into another corporation, or the sale of the Company’s properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the purchase price, the number of shares of stock or other securities, cash or property of the Company or the successor corporation resulting from such reorganization, merger, consolidation or sale, to which a Holder of the Common Stock deliverable upon exercise of this Warrant would have been entitled under the provisions of the agreement in such reorganization, merger, consolidation or sale if this Warrant had been exercised immediately before that reorganization, merger, consolidation or sale. In any such case, appropriate adjustment (as determined reasonably and in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the reorganization, merger, consolidation or sale to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and the number of shares of Warrant Stock) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

 

(b)    Splits and Subdivisions; Dividends. In the event the Company should at any time or from time to time while this Warrant remains outstanding and unexpired effect or fix a record date for the effectuation of a split or subdivision of the outstanding shares of its Common Stock or the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or warrants, options or other rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as the “Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of distribution, split or subdivision if no record date is fixed), the per share Warrant Price shall be appropriately increased in proportion to such increase (or potential increase) of outstanding shares.

 

(c)    Combination of Shares. If the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Common Stock, the per share purchase price shall be appropriately increased and the number of shares of Warrant Stock shall be appropriately decreased in proportion to such decrease in outstanding shares.

 

(d) Certificate as to Adjustments. In the case of each adjustment or readjustment of the Warrant Price pursuant to this Section 2, the Company at its expense will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate, signed by the Company’s principal financial officer, setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based to be delivered to the Holder of this Warrant. The Company will furnish or cause to be furnished to such Holder a certificate setting forth:

 

 

 

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(i)Such adjustments and readjustments;

 

(ii)The purchase price at the time in effect and how it was calculated; and

 

(iii)The number of shares of Warrant Stock and the amount, if any, of other property at the time receivable upon the exercise of the Warrant.

 

(e) Notices of Record Date, etc. In the event of:

 

(i)Any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend payable at the same rate as that of the last such cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or

 

(ii)Any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of assets of the Company to any other person or any consolidation or merger involving the Company; or

 

(iii)Any voluntary or involuntary dissolution, liquidation or winding-up of the Company; the Company will mail to the Holder of this Warrant at least ten (10) business days prior to the earliest date specified therein, a notice specifying:

 

(1)The date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; and

 

(2)The date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining stockholders entitled to vote thereon and the time.

 

3.                Fractional Shares. No fractional shares shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional share, the Company shall make a cash payment equal to the then fair market value of such fractional share as determined in good faith by the Company’s Board of Directors.

 

4.                No Privilege of Stock Ownership. Prior to the exercise of this Warrant, the Holder shall not be entitled, by virtue of holding this Warrant, to any rights of a stockholder of the Company, including (without limitation) the right to vote, receive dividends or other distributions, exercise preemptive rights or be notified of stockholder meetings, and such Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company. Nothing in this Section 4, however, shall limit the right of the Holder to be provided the notices described in Section 2 hereof, or to participate in distributions described in Section 2 hereof if the Holder exercises this Warrant.

 

5.                Limitation of Liability. Except as otherwise provided herein, in the absence of affirmative action by the Holder hereof to purchase the Warrant Stock, no mere enumeration herein of the rights or privileges of the Holder hereof shall give rise to any obligation of such Holder to purchase any securities or any liability of such Holder for the purchase price or as a stockholder of the Company, whether such obligation or liability is asserted by the Company or by creditors of the Company.

 

6.                Representations and Warranties of the Holder. The Holder represents and warrants to the Company as follows:

 

(a)    Purchase Entirely for Own Account. This Warrant is issued to the Holder in reliance upon such Holder’s representation to the Company, which by the Holder’s execution of this Warrant the Holder hereby confirms, that the Warrant and Warrant Stock are being acquired for investment for the Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the federal or state securities laws.

 

 

 

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(b)    Investment Experience. The Holder represents that it can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Stock. If an entity, the Holder also represents it has not been organized solely for the purpose of acquiring the Warrant or the Warrant Stock.

 

(c)    Restricted Securities. The Holder understands that the Warrant being issued hereunder and the Warrant Stock to be purchased hereunder are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the “Securities Act”), only in certain limited circumstances. In this connection, the Holder represents that it is familiar with Securities and Exchange Commission Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(d)    Legends. It is understood that the certificates evidencing the Warrant Stock may bear a legend substantially in the following form:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS (COLLECTIVELY, THE “SECURITIES LAWS”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES LAWS (i) UNLESS SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES LAWS AND (ii) THE COMPANY, IF IT SO REQUESTS, HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

In addition, the certificates evidencing the Warrant Stock may bear any legend required by the Company’s charter documents or the laws of the State of Nevada and any other state in which the securities will be issued.

 

7.                Transfers and Exchanges.

 

(a)    The Holder may not sell, hypothecate, pledge or otherwise dispose of any interest in the Warrant or the Warrant Stock unless such transfer would not violate any provision of this Section 7.

 

(b)    Subject to the conditions of this Section 7, upon delivery to the Company of a duly completed and executed Assignment in substantially the form attached hereto, a new warrant shall be issued to the transferee therein named. All new warrants issued in connection with transfers or exchanges shall not require the signature of the new Holder hereof and shall be identical in form and provision to this Warrant except as to the number of shares.

 

(c)    It shall be a condition to any transfer of this Warrant that the transferee shall be an accredited investor, within the meaning of the Securities Act, and that the Company shall have received, at the time of such transfer or exercise (i) a representation letter, or at the option of the Company, a legal opinion, in form and substance reasonably satisfactory to the Company and its counsel, reciting the pertinent circumstances surrounding the proposed transfer and stating that such transfer is exempt from the prospectus and registration requirements of the Securities Act and applicable state securities laws and (ii) a statement in writing from, and signed by, any proposed transferees containing the same representations and warranties as set forth in Section 6 hereof and agreeing to be bound by the provisions of this Section 7, such statement to be in the form of Assignment attached hereto. Notwithstanding the foregoing, as long as the transfer of this Warrant is in compliance with applicable securities laws and there are no significant issues of fact (such as whether or not the Holder is an “affiliate,” as such term is defined in Rule 144 of the Securities Act) or unusual questions of law, the requirement of a representation letter or legal opinion shall not apply to (a) the transfer of this Warrant or any part thereof to a partnership of which the Holder is a partner or to the beneficial owners or affiliates of such partnership, (b) the transfer of this Warrant or any part thereof to beneficial owners, employees or affiliates of the Holder, (c) bona fide gifts to a member of a Holder’s immediate family or trustee for a member of a Holder’s immediate family, (d) transfers by will upon the death of a Holder, or (e) transfers pursuant to a divorce or dissolution of the marriage of a Holder.

 

(d) Ownership of Warrants. The Company may treat the person in whose name any Warrant is registered on the register kept by the Company or its transfer agent as the owner and Holder thereof for all purposes, notwithstanding any notice to the contrary. A Warrant, if properly assigned, may be exercised by a new Holder without a new Warrant first having been issued. Nothing in this Section 7(d) shall relieve the Holder of his obligations under Section 7(c) hereof.

 

 

 

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8.                Successors and Assigns. The terms and provisions of this Warrant shall be binding upon the Company and the Holder and their respective successors and assigns, subject at all times to the restrictions set forth herein.

 

9.                Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it and its counsel of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.

 

10.             Saturdays, Sundays, Holiday, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or Sunday or shall be a legal holiday in the State of Washington, then such action may be taken, or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

 

11.             Amendments and Waivers. Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder. Any such amendment or waiver shall be binding on the parties.

 

12.             Governing Law; Venue. The terms and conditions of this Warrant shall be governed by and construed in accordance with the law of the State of Florida, without regard to conflict of law provisions. The parties expressly stipulate that any litigation under this Warrant shall be brought in the state courts of Broward County, Florida or in the United States District Court for the Southern District of Florida. The parties agree to submit to the exclusive jurisdiction and venue of those courts.

 

13.             Notices. All notices and other communications under this Warrant shall be in writing and shall be delivered in person, via facsimile machine, sent by documented overnight delivery service, or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed (a) if to the Holder, at the registered address of such Holder as set forth in the register kept at the principal office of the Company, or (b) if to the Company, to the attention of its President at its principal offices at 4045 Sheridan Ave. Miami Beach, FL 33140, provided that the exercise of any Warrant shall be effected in the manner provided in Section 1. Unless otherwise specified in this Warrant, all such notices and other written communications shall be effective (and considered delivered and received for the purposes of this Agreement) (i) if delivered, upon delivery, (ii) if by facsimile machine during normal business hours upon transmission with confirmation of receipt by the receiving party’s facsimile terminal and if not sent during normal business hours, then on the next day, (iii) if sent by documented overnight delivery service, on the date following the date on which such notice is delivered to such overnight delivery service for mailing, or (iv) if mailed via first-class regular mail, three (3) day after depositing in the U.S. Mail.

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Warrant effective as of the date first written above.

 

  THE COMPANY:
   
   
  ORGANICELL REGENERATIVE
MEDICINE INC. (a/k/a Biotech Products Services and Research Inc.)
   
  a Nevada corporation
   
  By: /s/ Al Mitrani
  Name: Al Mitrani
  Title:
   
  HOLDER
   
   
   
  By: ______________________
  Name _____________________
  Title: _____________________
  Address: __________________
  _________________________
  _________________________
  Facsimile: _________________

 

 

 

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EXHIBIT A

 

VESTING SCHEDULE

 

 

(a)Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of that certain Consultation and Advisory Board Agreement dated May 15, 2020 between the Company and the Holder (“Agreement”)

 

(b)2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the Agreement, respectively, provided however that the Agreement is in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Warrants prescribed above will immediately become vested shares if (a) the Company concludes a transaction involving any of the entities listed by Holder on Exhibit A of the Agreement based on a transaction value greater than $5MM or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25MM.

 

 

 

 

 

 

 

 

 

 

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SUBSCRIPTION

 

ORGANICELL REGENERATIVE MEDICINE INC.

4045 Sheridan Ave.

Miami Beach, FL 33140

 

Ladies and Gentlemen:

 

The undersigned, _____________________, hereby elects to purchase, pursuant to the provisions of the Warrant dated February 26, 2020 held by the undersigned, ______________shares of Common Stock of ORGANICELL REGENERATIVE MEDICINE INC. (a/k/a Biotech Products Services and Research Inc.), a Nevada corporation, and tenders herewith payment of the purchase price of such shares in full.

 

The undersigned hereby confirms and acknowledges the investment representations and warranties made in Section 6 of the Warrant and accepts such shares subject to the restrictions of the Warrant, copies of which are available from the Secretary of the Company.

 

 

Date: _____________________ Print Name(s)  
     
  Signature:  
     
  Title if applicable:  
     
  Signature  
     
  Title if applicable:  
     
  Address:  
     

 

 

 

 

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FORM OF ASSIGNMENT

 

The undersigned hereby assigns this Warrant to

 

 

 

0

 

 

 

(Print or type name, address and zip code of assignee)

 

Please insert Social Security or other identifying number of assignee:

 

_________________

 

and irrevocably appoints __________ as agent to transfer this Warrant on the books of the Company. The agent may substitute another to act for him or it.

 

Date: __________________

 

Signed:

 

 

(All owners must sign exactly as name(s) appear(s) on the front of this Warrant)

 

The undersigned assignee hereby confirms and acknowledges the investment representations and warranties made in Section 6 of the Warrant and agrees to be bound by the obligations set forth in the Warrant, copies of which are available from the Secretary of the Company.

 

Date: __________________ By: ___________________
   
         Name: _________________
   
         Title: __________________
   
   

 

 

 

 

 

 

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EX-21.1 7 organicell_ex2101.htm SUBSIDIARIES OF THE REGISTRANT

Exhibit 21.1

 

SUBSIDIARIES OF THE REGISTRANT

 

        

Below is a list of subsidiaries of Organicell Regenerative Medicine, Inc. (the “Company”), all of which are wholly-owned by the Company, other than noted by an asterisk.

        

Subsidiary Name:

Date of

Formation:

State of Formation:
1.       ANU Life Sciences, Inc. 8/4/16 FL
2.       BD Source and Distribution Corp. 7/23/15

FL

 

3.       Beyond Cells Corp. 7/22/15 FL
4.       Ethan New York, Inc. 8/10/15 NY

5.       General Surgical Florida, Inc.

 

1/15/16 FL
6.       Mint Organics, Inc. 2/28/17 FL
7.       Mint Organics Florida, Inc. 2/28/17 FL

 

 

 

 

 

EX-31.1 8 organicell_ex3101.htm CERTIFICATION

Exhibit 31.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Albert Mitrani, certify that:

 

1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended October 31, 2019 (the “Report”) of Organicell Regenerative Medicine, Inc., a Nevada corporation (the “Registrant”);
   
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
   
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
(d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date: October 15, 2020 /s/ Albert Mitrani
  Albert Mitrani
  Chief Executive Officer
  (Principal Executive Officer)
   

 

EX-31.2 9 organicell_ex3102.htm CERTIFICATION

Exhibit 31.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Ian T. Bothwell, certify that:

 

1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended October 31, 2019 (the “Report”) of Organicell Regenerative Medicine, Inc., a Nevada corporation (the “Registrant”);
   
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
   
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
(d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date: October 15, 2020 /s/ Ian T. Bothwell
  Ian T. Bothwell
  Chief Financial Officer
  (Principal Financial and Accounting Officer)

 

 

 

EX-32.1 10 organicell_ex3201.htm CERTIFICATION

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

The undersigned Albert Mitrani, Chief Executive Officer and Ian T. Bothwell, Chief Financial Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) the Annual Report on Form 10-K of Organicell Regenerative Medicine, Inc., a Nevada corporation (the “Registrant”), for the fiscal year ended October 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date: October 15, 2020 /s/ Albert Mitrani
  Albert Mitrani
  Chief Executive Officer
  (Principal Executive Officer)
   

 

Date: October 15, 2020 /s/ Ian T. Bothwell
  Ian T. Bothwell
  Chief Financial Officer
  (Principal Financial and Accounting Officer)

 

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Mitrani [Member] Accredited Investors [Member] Acquisition of non-controlling interest, value Agent [Member] Albert Mitrani [Member] Allowance for escrow receivable reserve Anu Life Sciences Inc [Member] Bothwell [Member] Cancellation of preferred stock in connection with Reorganization, shares Chief Science Officer [Member] Common Shares Issuable Upon Exercise of Warrants [Member] Common stock granted. Common stock received from exercise of warrants. Debenture issued. Dr. Bruce Werber [Member] Dr. Maria I. Mitrani [Member] Dr. Maria Ines Mitrani [Member] Employment Agreement [Member] Ethan NY [Member] Executive Employment Agreements [Member] Executive forgiveness of employment obligations in connection with Reorganization Exercise of cashless warrants, shares Face value of notes outstanding. Fair value stock issued. Five-Year Lease Agreement [Member] Ian T. Bothwell [Member] Investors [Member] Issuance of common stock. 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Werber [Member] Working capital Schedule of minimum pre-Transaction price per share [Table Text Block] Schedule of debt and/or equity financings [Table Text Block] Schedule of management and consultants performance stock plan [Table Text Block] Conversion of debt into common stock Cancellation of preferred stock in connection with Reorganization, value Exchange of debt obligations, value Exchange of debt obligations, shares Acquisition of non-controlling interest, shares Schedule of adjustment revenues [Table Text Block] Preferred stock, shares designated. Percentage of voting equivalency of outstanding capital stock. Warrant Term. Weighted average remaining contractual term for option awards granted, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Commercially available product percentage. Estimated reserve for losses on lease. Exercise Price. Preferred stock, stated value. Percentage of outstanding capital stock represents the common stock conversion. Number of common stock warrants exercisable. Fair value of warrant issued. Adjustment of annual rate of base salary acquire of license. Accrued and unpaid signing bonus. Health, dental and automobile expense per month. Fair consideration for the initial issuance of common stock. Payments required to pay as monthly fee. Accrued Fees. Non-controlling interests amount. EightIndividualMember Assets, Current Assets [Default Label] Liabilities, Current Stockholders' Equity Attributable to Parent Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Liabilities and Equity Gross Profit Interest Expense Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Net Income (Loss) Attributable to Parent Shares, Outstanding SettlementOfExecutiveEmploymentObligations Gain (Loss) on Disposition of Assets for Financial Service Operations Increase (Decrease) in Accounts Receivable Increase (Decrease) in Prepaid Expense Increase (Decrease) in Inventories Increase (Decrease) in Accounts Payable and Accrued Liabilities Increase (Decrease) in Accrued Liabilities Increase (Decrease) in Deferred Charges Increase (Decrease) in Deferred Revenue Net Cash Provided by (Used in) Operating Activities Payments to Acquire Property, Plant, and Equipment Payments to Noncontrolling Interests Net Cash Provided by (Used in) Investing Activities Capital Leases, Contingent Rental Payments Received Net Cash Provided by (Used in) Financing Activities Repayments of Debt and Lease Obligation Inventory Disclosure [Text Block] WarrantsDisclosureTextBlock MintOrganicsDisclosureTextBlock Property, Plant and Equipment, Policy [Policy Text Block] Income Tax, Policy [Policy Text Block] Subsequent Events, Policy [Policy Text Block] Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment Current Income Tax Expense (Benefit) Deferred Federal Income Tax Expense (Benefit) Deferred State and Local Income Tax Expense (Benefit) Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount Effective Income Tax Rate Reconciliation, Other Adjustments, Amount Terrell Suddarth [Member] [Default Label] Deferred Tax Assets, Other Deferred Tax Assets, Gross Deferred Tax Liabilities, Net Deferred Tax Assets, Valuation Allowance Deferred Tax Assets, Net Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Outstanding Exercise Price [Default Label] Salary and Wage, Excluding Cost of Good and Service Sold EX-101.PRE 17 bpsr-20191031_pre.xml XBRL PRESENTATION FILE XML 18 R1.htm IDEA: XBRL DOCUMENT v3.20.2
Document and Entity Information - USD ($)
12 Months Ended
Oct. 31, 2019
Sep. 30, 2020
Apr. 30, 2019
Cover [Abstract]      
Entity Registrant Name Organicell Regenerative Medicine, Inc.    
Entity Central Index Key 0001557376    
Document Type 10-K    
Document Period End Date Oct. 31, 2019    
Amendment Flag false    
Current Fiscal Year End Date --10-31    
Entity a Well-known Seasoned Issuer No    
Entity a Voluntary Filer No    
Entity's Reporting Status Current No    
Entity Filer Category Non-accelerated Filer    
Entity Emerging Growth Company false    
Entity Small Business true    
Entity Shell Company false    
Entity Public Float     $ 4,154,116
Entity Common Stock, Shares Outstanding   875,194,450  
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2019    
Entity File Number 000-55008    
Entity Interactive Data Current Yes    
Entity Incorporation, State or Country Code NV    

XML 19 R2.htm IDEA: XBRL DOCUMENT v3.20.2
Consolidated Balance Sheets - USD ($)
Oct. 31, 2019
Oct. 31, 2018
Current Assets    
Cash $ 132,557 $ 43,016
Accounts receivable, net of allowance for bad debts 26,031 48,025
Prepaid expenses 121,394 15,221
Inventories 77,963 0
Total Current Assets 357,945 106,262
Property and equipment, net 263,315 5,778
Security deposits 5,000 5,000
TOTAL ASSETS 626,260 117,040
Current Liabilities    
Accounts payable and accrued expenses 552,426 476,833
Accrued liabilities to management 852,706 327,662
Notes payable 212,438 60,000
Capital lease obligations 72,208 0
Convertible debentures 220,000 320,000
Deferred revenue 0 21,520
Liabilities attributable to discontinued operations 125,851 125,851
Total Current Liabilities 2,035,629 1,331,866
Long term capital lease obligations 153,180 0
Commitments and contingencies
Stockholders' Deficit    
Common stock, $0.001 par value, 1,500,000,000 shares authorized; 502,936,805 and 436,490,110 shares issued and outstanding, respectively 502,937 436,490
Additional paid-in capital 14,219,736 12,853,608
Accumulated deficit (16,285,222) (14,547,901)
Total deficit attributable to Organicell Regenerative Medicine, Inc. (1,562,549) (1,257,803)
Non-controlling interest 0 42,977
Total Stockholders' Deficit (1,562,549) (1,214,826)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 626,260 $ 117,040
XML 20 R3.htm IDEA: XBRL DOCUMENT v3.20.2
Consolidated Balance Sheets (Parenthetical) - $ / shares
Oct. 31, 2019
Oct. 31, 2018
Statement of Financial Position [Abstract]    
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 1,500,000,000 1,500,000,000
Common stock, shares issued 502,936,805 436,490,110
Common stock, shares outstanding 502,936,805 436,490,110
XML 21 R4.htm IDEA: XBRL DOCUMENT v3.20.2
Consolidated Statements of Operations - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Income Statement [Abstract]    
Revenues $ 1,702,271 $ 964,530
Cost of revenues 300,837 209,298
Gross profit 1,401,434 755,232
General and administrative expenses 3,177,924 4,245,349
Loss from operations (1,776,490) (3,490,117)
Other income (expense)    
Interest expense (46,600) (228,327)
Reduction of derivative liabilities 0 265,597
Other 84,791 21,434
Loss before income taxes (1,738,299) (3,431,413)
Provision for income taxes 0 0
Net loss (1,738,299) (3,431,413)
Net income (loss) attributable to the non-controlling interest (978) 30,745
Net loss attributable to Organicell Regenerative Medicine, Inc. $ (1,737,321) $ (3,462,158)
Net loss per common share - basic and diluted $ (0.00) $ (0.01)
Weighted average number of common shares outstanding - basic and diluted 466,984,320 271,809,401
XML 22 R5.htm IDEA: XBRL DOCUMENT v3.20.2
Consolidated Changes To Stockholders' Deficit - USD ($)
Series A
Series B
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Total Stockholders' Deficit Attributable To Organicell
Noncontrolling Interest
Total
Balance, value at Oct. 31, 2017 $ 111,465 $ 7,417,321 $ (11,085,743) $ (3,556,957) $ 52,744 $ (3,504,213)
Balance, shares at Oct. 31, 2017 400 111,464,987          
Cancellation of preferred stock in connection with Reorganization, value    
Cancellation of preferred stock in connection with Reorganization, shares (400)          
Acquisition of non-controlling interest, value     3,658 3,658 (43,658) (40,000)
Proceeds from sale of common stock, value $ 6,250 93,750 100,000 100,000
Proceeds from sale of common stock, shares 6,250,050          
Exercise of cashless warrants, value $ 70,382 (70,382)
Exercise of cashless warrants, shares 70,382,456          
Stock-based compensation, value $ 248,393 3,772,453 4,020,846 3,146 4,023,992
Stock-based compensation, shares 248,392,617          
Executive forgiveness of employment obligations in connection with Reorganization 1,636,808 1,636,808 1,636,808
Net income (loss) (3,462,158) (3,462,158) 30,745 (3,431,413)
Balance, value at Oct. 31, 2018 $ 436,490 12,853,608 (14,547,901) (1,257,803) 42,977 (1,214,826)
Balance, shares at Oct. 31, 2018 436,490,110          
Acquisition of non-controlling interest, value $ 6,800 35,199 41,999 (41,999)
Acquisition of non-controlling interest, shares 6,800,000          
Proceeds from sale of common stock, value $ 20,352 439,148 459,500 459,500
Proceeds from sale of common stock, shares 20,352,000          
Exchange of debt obligations, value $ 7,620 196,044 203,664 203,664
Exchange of debt obligations, shares 7,619,695          
Exercise of cashless warrants, value            
Exercise of cashless warrants, shares            
Stock-based compensation, value $ 31,675 695,737 727,412 727,412
Stock-based compensation, shares 31,675,000          
Executive forgiveness of employment obligations in connection with Reorganization          
Net income (loss) (1,737,321) (1,737,321) (978) (1,738,299)
Balance, value at Oct. 31, 2019 $ 502,937 $ 14,219,736 $ (16,285,222) $ (1,562,549) $ (1,562,549)
Balance, shares at Oct. 31, 2019 502,936,805          
XML 23 R6.htm IDEA: XBRL DOCUMENT v3.20.2
Consolidated Statements of Cash Flows - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (1,738,299) $ (3,431,413)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation expense 14,794 7,835
Bad debt expense 10,635 62,240
Allowance for escrow receivable reserve 0 47,500
Stock-based compensation 727,412 4,023,992
Interest expense paid in kind 13,668 0
Amortization of debt discount 0 179,968
Settlement of executive employment obligations 0 (1,063,083)
Gain on sale of Anu assets 0 (821,070)
Reduction of derivative liabilities 0 (265,597)
Changes in operating assets and liabilities:    
Accounts receivable, net of allowance for bad debts 11,359 4,695
Prepaid expenses (106,173) (8,217)
Inventories (77,963) 60,319
Accounts payable and accrued expenses 75,589 64,789
Accrued liabilities to management 525,044 686,578
Deferred rent 0 1,948
Deferred revenue (21,520) (62,480)
Net cash used in operating activities (565,454) (511,997)
CASH FLOWS FROM INVESTING    
Purchase of fixed assets (32,736) (4,569)
Purchase of non-controlling interests in Mint Organics 0 (40,000)
Proceeds from the sale of Anu assets 0 140,022
Net cash (used in) investing activities (32,736) 95,453
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from issuance of notes payable & debentures 255,000 320,000
Payments on notes payables (12,562) 0
Payments on capital leases (14,207) 0
Proceeds from sale of common stock and warrants 459,500 100,000
Net cash provided by financing activities 687,731 420,000
Increase in cash 89,541 3,456
Cash at beginning of year 43,016 39,560
Cash at end of year 132,557 43,016
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid for taxes 0 0
Cash paid for interest 20,165 32,534
NON-CASH INVESTING AND FINANCING TRANSACTIONS:    
Executive forgiveness of employment obligations in connection with Reorganization 1,636,808
Outstanding SPA and other obligations satisfied in connection with the Sale 0 809,978
Capital lease obligations 239,595 0
Conversion of debt into common stock $ 203,668 $ 0
XML 24 R7.htm IDEA: XBRL DOCUMENT v3.20.2
1. Organization and Description of Business
12 Months Ended
Oct. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Organicell Regenerative Medicine, Inc. (formerly Biotech Products Services and Research, Inc.) (“Organicell” or the “Company”) was incorporated on August 9, 2011 in the State of Nevada. Until October 30, 2015, the Company’s business included the designing, manufacturing, and selling vending tricycles for commercial customers. Since June 2015, the Company has been engaged in the health care industry, principally focusing on supplying products and services related to the growing field of regenerative anti-aging medicine. 

 

On April 23, 2018, the Company and Management and Business Associates, LLC, a Florida limited liability company (“MBA”), executed a Plan and Agreement of Reorganization (“Reorganization”), whereby the Company issued to MBA an aggregate of 222,425,073 shares of its common stock of the Company, representing at the time 51% of the outstanding shares of common stock of the Company on fully-diluted basis, for $0.001 per share (or an aggregate of $222,425), in consideration for Mr. Manuel Iglesias’ agreement to serve as the Company’s Chief Executive Officer (“CEO”) and a member of the Board of the Company. The Reorganization was effective as of April 13, 2018 (“Effective Date”). The Reorganization also provided for the cancelation and termination of the Company’s previously issued and outstanding Series A Preferred Stock and Series B Preferred Stock. As a result of the above Reorganization, MBA acquired at the time a controlling interest of the Company (see Note 5).

 

On May 21, 2018, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the Company’s name from Biotech Products Services and Research, Inc. to Organicell Regenerative Medicine, Inc., effective June 20, 2018 (the “Name Change”). As discussed in Note 12, the Name Change has not yet been effectuated in the marketplace by the Financial Industry Regulatory Agency (“FINRA”).

 

For the year ended October 31, 2019, the Company principally operated through General Surgical of Florida, Inc., a Florida corporation (“General Surgical”) and wholly owned subsidiary, with a business purpose to sell cellular therapy products to doctors and hospitals.

 

During the year ended October 31, 2019, the Company revenues were principally derived from the sale and distribution of regenerative biologic therapies based on amnion placental tissue derived products to doctors and hospitals. For the period November 1, 2018 through April 2019, the Company sold products produced and supplied through third party supply agreements. During February 2019, the Company began arranging to operate a new laboratory facility for the purpose of performing research and development, production and manufacturing of anti-aging and cellular therapy products. This new laboratory facility became operational in May 2019 and during the same period, the Company began producing and distributing the products that are being sold to its customers.

XML 25 R8.htm IDEA: XBRL DOCUMENT v3.20.2
2. Summary of Significant Accounting Policies
12 Months Ended
Oct. 31, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

 

Concentrations of Credit Risk

 

The balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $250,000 per institution. At October 31, 2019, the Company did not have any cash balances in financial institutions in excess of FDIC insurance coverage.

 

During the fiscal year ended October 31, 2019, the Company had one customer that accounted for approximately $206,400 of revenues (12.2%). No other customer accounted for more than 10% of the total revenues for the year ended October 31, 2019.

 

During the period November 1, 2018 through April 30, 2019, the Company purchased finished goods inventory that was sold to customers from two suppliers, of which each accounted for approximately $29,000 and $65,000 or 31.0% and 69.0%, respectively, of the total amount of finished goods inventory purchased during that period.

 

During the May 1, 2019 through October 31, 2019, the Company purchased the tissue raw material used in manufacturing of its products from two suppliers, of which each accounted for approximately $61,000 and $47,500 or 56.0% and 44.0%, respectively, of the total amount of tissue raw material purchased during that period.

 

The Company’s sales and supply agreements are non-exclusive and the Company does not believe it has any exposure based on the customers of its products and/or the availability of raw materials and/or products from other suppliers. Since May 1, 2019, the Company manufactured and distributed proprietary products that reduce exposure from the reliance on third party suppliers of inventory but increased exposure of reliance on raw materials and other supplies used in the manufacturing 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.

 

Cash Equivalents 

 

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

 

Accounts Receivable

 

Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions.

 

The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. For the year ended October 31, 2019 and 2018, the Company recorded bad debt expense of $10,635 and $62,420, respectively.

 

Inventory

 

Inventory is stated at the lower of cost or net realizable value using the average cost method. We provide reserves for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At October 31, 2019, we determined that there were not any reserves required in connection with our finished goods.

 

Property and Equipment

 

Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of property and equipment range from 3 to 15 years. Upon sale or retirement, the cost and related accumulated depreciation and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.

 

Revenue Recognition

 

Effective November 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) Topic 606 “Revenue from Contracts with Customers” which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts. The Company applied the new standard using a modified retrospective approach.

 

The Company recognizes revenue only when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control is transferred at a point-in-time, which is typically when the transfer and title to the product sold has taken place and there is evidence of our customer’s satisfactory acceptance of the product shipment or delivery. Due to the nature of the Company’s sales transactions, this adoption did not have any impact to the Company’s financial statements for the year ended October 31, 2019.

 

Net Income (Loss) Per Common Share

 

Basic income (loss) per common share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

 

At October 31, 2019, the Company had 4,529,371 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2019. At October 31, 2018, the Company had 3,647,484 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2018.

 

Stock-Based Compensation

 

All stock-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.

 

Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based upon the estimated fair value of the option or warrant.

 

Income Taxes

 

The Company is required to file a consolidated tax return that includes all of its subsidiaries.

 

Provisions for income taxes are based on taxes payable or refundable for the current year taxable income for federal and state income tax reporting purposes and deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of the operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

The Company accounts for uncertain tax positions in accordance with FASB Topic 740 – Income Taxes. This pronouncement prescribes a recognition threshold and measurement process for financial statement recognition of uncertain tax positions taken or expected to be taken in a tax return. The interpretation also provides guidance on recognition, derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

 

For the year ended October 31, 2019 the Company incurred operating losses, and therefore, there was not any income tax expense amount recorded during that period. During the year ended October 31, 2018 there was a change in ownership which caused a change in control under IRC Section 382 (“Section 382 event”). Prior to the Section 382 event, the Company utilized a portion of its available net operating loss carryforwards to offset income through that date mainly resulting from the sale of ANU. Any remaining net operating losses which had been carried forward from years ended October 31, 2017 and before the Section 382 event were lost. There is a full valuation allowance for years ended October 31, 2019 and 2018.

 

Since January 1, 2018, the nominal corporate tax rate in the United States of America is 21 percent due to the passage of the "Tax Cuts and Jobs Act" on December 20, 2017 by the US Senate and House of Representatives.

 

Valuation of Derivatives 

 

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. We analyzed the derivative financial instruments in accordance with ASC 815.

 

The Company utilized Monte Carlo Simulation models that value the derivative liability based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

 

The derivative liabilities result in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes. This derivative liability is marked-to-market each quarter with the change in fair value recorded in the income statement. Unamortized discount is amortized to interest expense using the effective interest method over the life of the Convertible Note.

 

Fair Value of Financial Instruments

 

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made. 

 

The Company follows FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.

 

The Company follows the provisions of ASC 820 with respect to its financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s convertible features associated with its promissory notes (see Note 9) which were required to be measured at fair value on a recurring basis under of ASC 815 as of January 31, 2018, the date immediately prior to the event that eliminated the convertible instrument related to the derivative liability, and October 31, 2017, were all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities as of January 31, 2018 and October 31, 2017: 

 

Level one — Quoted market prices in active markets for identical assets or liabilities;

 

Level two — Inputs other than level one inputs that are either directly or indirectly observable such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level three — Unobservable inputs that are supported by little or no market activity and developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s derivative liability is measured at fair value on a recurring basis. The Company classifies the fair value of the derivative liability under level three.

 

Based on ASC Topic 815 and related guidance, the Company concluded the common stock issuable pursuant to the conversion features of the convertible promissory notes are required to be accounted for as derivatives as of the issue date due to a reset feature on the exercise price. At the date of issuance common stock derivative liabilities were measured at fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The Company records the fair value of these derivatives on its balance sheet at fair value with changes in the values of these derivatives reflected in the consolidated statements of operations as “change in fair value of derivative liabilities.” These derivative instruments are not designated as hedging instruments under ASC 815-10 and are disclosed on the balance sheet under Derivative Liabilities.

 

Further, and in accordance with ASC 815, the embedded derivatives are revalued using a Monte Carlo Simulation model at issuance and at each balance sheet date and marked to fair value with the corresponding adjustment as a “gain or loss on change in fair values” in the consolidated statement of operations.

 

The Company classifies the fair value of these securities under level three of the fair value hierarchy of financial instruments. Changes in the unobservable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments.

 

During the year ended October 31, 2018, the Company recorded a gain of $265,597 associated with the change in fair value of the derivative liabilities from October 31, 2017.

 

The Company did not have any convertible instruments outstanding at October 31, 2019 and 2018 that qualify as derivatives.

 

Subsequent Events

 

The Company has evaluated subsequent events that occurred after October 31, 2019 through the financial statement issuance date for subsequent event disclosure consideration.

 

New Accounting Pronouncements

 

In February 2016, a pronouncement was issued by the FASB that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company does not expect that implementation of the new pronouncement will have a material impact to its financial statements.

XML 26 R9.htm IDEA: XBRL DOCUMENT v3.20.2
3. Going Concern
12 Months Ended
Oct. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

NOTE 3 – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company incurred operating losses of $1,776,490 for the year ended October 31, 2019. In addition, the Company had an accumulated deficit of $16,285,222 at October 31, 2019. The Company had a negative working capital position of $1,677,684 at October 31, 2019.

 

In addition to the above, the outbreak of the novel coronavirus (“COVID-19”) during March 2020 and the resulting adverse public health developments and economic effects to the United States business environments have adversely affected the demand for our products and services by our customers and from patients of our customers as a result of quarantines, facility closures and social distancing measures put into effect in connection with the COVID-19 outbreak and which currently still continue to have a negative impact to our business and the economy. These restrictions have adversely affected the Company’s sales, results of operations and financial condition. In response to the COVID-19 outbreak, the Company (a) has accelerated its research and development activities, particularly in regards to potential health benefits of the Company’s products in addressing various health concerns associated with COVID-19 and (b) is aggressively seeking to raise additional debt and/or equity financing to support working capital requirements until sale for its products to providers resumes to levels pre COVID-19.

 

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 United States economy resumes to pre-COVID-19 conditions and (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 the costs 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 and common stock liquidity will hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.

 

In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (1) the effects of the COVID-19 crisis resume to pre-COVID 19 market conditions, (2) the Company will be able to establish a stabilized source of revenues, (3) obligations to the Company’s creditors are not accelerated, (4) the Company’s operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations, (5) the Company is able to continue to produce products or obtain products under supply arrangements which are in compliance with current and future regulatory guidelines, (6) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and the safety and efficacy of its products, and (7) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.

 

There is no assurance as to when the adverse impact to the United States and worldwide economies resulting from the COVID-19 outbreak will be eliminated, if at all, and whether any new or recurring pandemic outbreaks will occur again in the future causing similar or worse devastating impact to the United States and worldwide economies and our business. In addition, there is no assurance that the Company will be able to complete its revenue growth strategy, its expected required research and development activities or otherwise obtain sufficient working capital to cover ongoing cash requirements. Without sufficient cash reserves, the Company’s ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant effort since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues. As described above, the COVID-19 crisis has significantly impaired the Company and the overall Unites States and World economies. If revenues do not increase and stabilize, if the COVID-19 crisis is not satisfactorily managed and/or resolved or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws.  As of October 31, 2019, 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.

XML 27 R10.htm IDEA: XBRL DOCUMENT v3.20.2
4. Sale and Transfer of Anu Manufacturing Assets
12 Months Ended
Oct. 31, 2019
Business Combinations [Abstract]  
Sale and Transfer of Anu Manufacturing Assets

NOTE 4 – SALE AND TRANSFER OF ANU MANUFACTURING ASSETS

 

Effective February 5, 2018 (“Closing Date”), Vera Acquisition LLC, a Utah limited liability company ("Vera"), Organicell, ANU and General Surgical, executed an Asset Purchase Agreement ("Purchase Agreement") pursuant to which ANU sold to Vera (“Sale”) their right, title and interest in certain tangible and other assets associated with its manufacturing operations, including prepaid expenses, raw and finished goods inventory, a long term lease for ANU’s laboratory facility in Sunrise, Florida (including associated security deposits), furniture and equipment, and certain intellectual property rights. General Surgical transferred its rights to certain third-party distribution agreements between General Surgical and distributors of products manufactured by ANU (“Sold Assets”) in exchange for a cash payment of $950,000 and the execution of a long-term distribution agreement with Organicell (“Organicell Distribution Agreement”) described below. In connection with the Sale, Vera received credit for $100,000 previously paid to ANU for prepaid product supply that was not yet delivered to Vera as of the Closing Date.

 

In connection with the Sale, the Company was required to use cash proceeds from the Sale to satisfy and extinguish all of the Notes outstanding related to the SPA as of the date of the Sale, totaling approximately $762,477 (comprised of $527,778 of face value of the Notes outstanding, $8,589 of accrued and unpaid interest from January 1, 2018 through the date of the Sale, $211,111 of prepayment penalties and $15,000 for reimbursement of legal fees), which were secured by a first priority lien on all of the Company’s assets, and to be used to pay all of ANU’s remaining trade accounts payable outstanding as of the Closing Date. In addition, the Purchase Agreement required ANU to fund the placental donor tissue costs that were required by Vera to process additional product subsequent to the Closing to replace the shortfall of the actual inventory product amounts as of the Closing Date and the specified inventory quantities provided for in the Purchase Agreement. The Purchase Agreement also required ANU to escrow $47,500 (5%) of the cash purchase price and for General Surgical to escrow, subsequent to the Closing Date, up to $47,500 from collections of accounts receivable that were existing as of the Closing Date for a period of 90 days subsequent to the Closing Date to cover pre-closing related liabilities of ANU that were not identified as of the Closing Date, if any, and other obligations of ANU associated with the Purchase Agreement.

 

Effective upon the closing of the Sale, Dr. Werber and Mr. Suddarth each entered into a separation and general release agreement with the Company, which provided for the immediate resignation of Dr. Werber and Mr. Suddarth of all their respective executive and board of director positions held with Organicell and/or any of Organicell’s subsidiaries, and settlement of all obligations of each party to the other pursuant to the respective employment agreements, including the release of all rights the Company may have held in any intellectual property of Dr. Werber and Mr. Suddarth and any non-compete restrictions on Dr. Werber and Mr. Suddarth. In connection with such releases, Dr. Werber and Mr. Suddarth each agreed to forfeit all warrants previously granted and outstanding (a total of 77,150,000 warrants to purchase shares of common stock of the Company), forfeit any and all accrued and unpaid amounts owing under the employment agreements for past due wages, benefits, severance obligations, unreimbursed expenses and any other obligations owing to one another as of the Closing Date (totaling $906,515) in exchange for a grant of 7,500,000 newly issued shares of restricted common stock of the Company to each of Dr. Werber and Mr. Suddarth, with a fair value of $83,250, based on the closing price of the common stock of the Company on the date of the Sale.

 

In connection with the Sale, ANU and General Surgical retained all cash on-hand as of the Closing Date and General Surgical retained all accounts receivable existing at the Closing Date, trademarks and inventory associated with the distribution of its “Organicell” product, and certain agreements between General Surgical and distributors of the ANU products that General Surgical intends to continue to supply after the Closing Date pursuant to the Organicell Distribution Agreement. After the completion of the Sale, the Company remained in the business of selling and distributing regenerative biologic therapies based on amnion placental tissue derived products to doctors and hospitals but was required to depend on third party supply agreements, rather than from products manufactured internally by ANU, for the supply of these advanced biologically processed cellular and tissue based products. During February 2019, the Company began arranging to operate a new laboratory facility for the purpose of performing research and development, production and manufacturing of anti-aging and cellular therapy products. This new laboratory facility became operational in May 2019 and during the same period, the Company began producing and distributing the products that are being sold to its customers.

 

Notice Of Change In Vera Operations

 

During August 2018, Vera notified the Company that it had sold most of the principal assets acquired in the Sale to another entity, that it was no longer in the business originally acquired in connection with the Sale and that it was no longer able to supply products to the Company. As a result, since that date, up thru May 2019, the date Organicell began again producing products internally, the Company has entered into other short-term supply agreements with other third-party manufacturers to provide it with the products it sells to its customers.

 

Since Vera’s disposition of the assets originally acquired in connection with the Sale as described above, the Company has yet to receive any payments from Vera associated with the original escrow deposit of $47,500 that was withheld from the proceeds from the Sale. Due to the uncertainty of Vera’s ability and/or desire to repay the escrow receivable amount outstanding to the Company, the Company has recorded a reserve for the full amount of escrow receivable totaling $47,500 during the fourth quarter ended October 31, 2018.

XML 28 R11.htm IDEA: XBRL DOCUMENT v3.20.2
5. Reorganization
12 Months Ended
Oct. 31, 2019
Reorganizations [Abstract]  
Reorganization

NOTE 5 – REORGANIZATION

 

On April 23, 2018, the Company and MBA, executed a Plan and Agreement of Reorganization (“Reorganization”) whereby the Company agreed to issue to MBA an aggregate of 222,425,073 shares of its common stock, representing at the time 51% of the outstanding shares of common stock of the Company on fully-diluted basis, for $0.001 per share, in consideration for Mr. Manuel Iglesias’ agreement to serve as the Company’s Chief Executive Officer and a member of the Board of the Company. The Reorganization was effective as of April 13, 2018.

 

The Company has recorded $2,758,071 of stock compensation expense associated with the issuance of the shares referred to above for Mr. Iglesias’s agreement to serve as the Company’s Chief Executive Officer. As a result of the above transactions, MBA obtained a controlling interest in the voting and equity interests of the Company. Manuel E. Iglesias is the sole Manager of MBA and thus may be deemed to control MBA. Since the date of the Reorganization, MBA’s interests held in the equity of the Company have been reduced from 51.0% to approximately 24.6%.

 

Under the terms of the Reorganization, as of the Effective Date:

 

  1. Mr. Iglesias replaced Albert Mitrani as Chief Executive Officer of the Company.

 

  2. Mr. Iglesias and Richard Fox were appointed as members to the Board of Directors of the Company. Mr. Fox resigned in May 2019 and Mr. Robert Zucker was appointed to fill his vacancy. Mr. Zucker resigned from the Board of Directors in April 2020.

 

  3. Ian Bothwell and Maria Mitrani resigned from the Board of Directors of the Company. Ms. Mitrani was re-appointed to the Board of Directors of the Company during August 2019. Mr. Bothwell was re-appointed to the Board during September 2019.

 

  4. Albert Mitrani, Ian Bothwell and Maria Mitrani each agreed to terminate their respective employment agreements in favor of new employment agreements. In connection with the new employment agreements, Mr. Mitrani agreed to serve as the Company’s President, Ian Bothwell agreed to remain Chief Financial Officer and Maria Mitrani agreed to remain Chief Science Officer of the Company.

 

  5. Albert Mitrani, Ian Bothwell and Maria Mitrani each agreed to the cancellation of their 100 shares of the Company’s Series A Preferred Stock. In addition, the Company agreed that it would cancel the Certificates of Designation for the Company’s Series A Preferred Stock and Series B Preferred Stock.

 

  6. The Company agreed to terminate Sections 4.08(c) and 4.08(d) of the Company’s Second Amended and Restated By-Laws which had required supermajority approval of the Board for certain corporate actions.

 

  7. Ian Bothwell and Maria Mitrani exercised, on a cashless basis, all of their warrants for 48,624,561 and 21,757,895, respectively, shares of common stock of the Company based on the exercise price of $0.001 and the closing price of the Company’s common stock on the Effective Date.

 

  8. Ian Bothwell and Maria Mitrani were granted an additional 4,675,439 and 2,092,105, respectively, shares of common stock of the Company (see Note 12).

 

  9. Albert Mitrani, Ian Bothwell and Maria Mitrani each agreed to release the Company for all amounts owed to them for unpaid salaries through the Effective Date and advances and/or expenses incurred prior to December 31, 2017 totaling $1,636,808.
XML 29 R12.htm IDEA: XBRL DOCUMENT v3.20.2
6. Inventories
12 Months Ended
Oct. 31, 2019
Inventory Disclosure [Abstract]  
Inventories

NOTE 6 – INVENTORIES

 

Inventories totaled $77,963 and $0 at October 31, 2019 and October 31, 2018, respectively.

 

    October 31, 2019     October 31, 2018  
             
Raw materials and supplies   $ 5,123     $  
Finished goods     72,840        
                 
Total inventories   $ 77,963     $  
XML 30 R13.htm IDEA: XBRL DOCUMENT v3.20.2
7. Property and Equipment
12 Months Ended
Oct. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment

NOTE 7 - PROPERTY AND EQUIPMENT

 

    October 31, 2019     October 31, 2018  
             
Computer equipment   $ 8,653     $ 8,653  
Manufacturing equipment     272,331        
      280,984       8,653  
Less: accumulated depreciation and amortization     (17,669 )     (2,875 )
Total property and equipment, net   $ 263,315     $ 5,778  

 

Depreciation expense totaled $14,794 and $7,835 for the years ended October 31, 2019 and 2018, respectively.

 

During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $239,595. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $4,513 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a capital lease obligation. The annual interest rate charged in connection with the lease is 4.5%. The leased equipment is being depreciated over their estimated useful lives of 15 years.

XML 31 R14.htm IDEA: XBRL DOCUMENT v3.20.2
8. Related Party Transactions
12 Months Ended
Oct. 31, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 8 – RELATED PARTY TRANSACTIONS

 

Effective February 5, 2018, Dr. Werber’s and Mr. Suddarth’s executive employment agreements were terminated and the parties entered into a settlement agreement providing for the release of all obligations owed to Dr. Werber and Mr. Suddarth as of the date of the Sale in exchange for each receiving a grant for 7,500,000 shares of common stock of the Company. On April 6, 2018, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements were amended to modify the exercise price of their outstanding warrants under certain conditions. Effective April 13, 2018, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s executive employment agreements were terminated and replaced with new executive employment agreements. On February 26, 2020, April 25, 2020 and June 29, 2020, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s employments agreement were further amended. See Note 14 for a more detailed description of the executive employment agreements and the respective amendments referred to above.

 

In connection with the Reorganization, Mr. Bothwell and Dr. Mitrani each agreed to exercise on a cashless basis all of their warrants to purchase 53,300,000 and 23,850,000 shares of common stock of the Company, respectively. Based on the closing price of the Company’s common stock on the Effective Date of $0.012 per share and the warrant exercise price of $0.001 per share, Mr. Bothwell and Dr. Mitrani were required to use 4,675,439 and 2,092,105 shares of common stock received from the exercise of the warrants, respectively, to pay for the exercise price for exercising all of the warrants (see Note 13).

 

Effective April 13, 2018, Mr. Bothwell and Dr. Mitrani were each granted 4,675,439 and 2,092,105 shares of common stock of the Company, respectively. The newly granted shares vest immediately and were valued at $57,975 and $25,942, respectively, based on the closing trading price of the common stock on the effective date of the grant.

 

In connection with the previous appointment of an independent member to the Board of Directors of the Company, during August 2019, the Board approved the issuance to the director of 5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date.

 

Effective February 26, 2020, Mr. Bothwell was granted cashless warrants to purchase 7,500,000 shares of common stock of the Company. The newly granted warrants vest immediately, have an exercise price of $0.028 per share and are exercisable for ten years from the effective date of the grant.

 

During April 2020, June 2020, August 2020 and September 2020, each of the current executives of the Company, Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell and George Shapiro (“Current Executives”) were granted rights under the Management and Consultant Performance Plan (“MCPP”) to receive common stock of the Company based on the achievement of certain defined milestones. In addition, during June 2020, each of the current non-executive members of the Board were granted rights under the MCPP to receive common stock of the Company based on the achievement of certain defined milestones (see Note 12).

 

The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. The term of the lease has been extended through June 2023. The current monthly rent is $2,900 and beginning July 2020, the monthly rent increases to $3,500. The Company paid a security deposit of $5,000.

 

In connection with Mr. Bothwell’s executive employment agreements, the Company agreed to reimburse Rover Advanced Technologies, LLC, a company owned and controlled by Mr. Bothwell for office rent and other direct expenses (phone, internet, copier and direct administrative fees, etc.).

 

On February 5, 2018, in connection with the Sale (see Note 4), all amounts owed to the Mr. Bothwell and Dr. Werber in connection with the SPA were repaid.

 

On February 5, 2018, in connection with Dr. Werber’s resignation and termination, Dr. Werber agreed to the forfeit and the cancellation of the 100 shares of the Series A Preferred Stock previously issued. Effective April 13, 2018, in connection with the Reorganization, Mr. Mitrani, Mr. Bothwell and Dr. Mitrani each agreed to the forfeit and cancellation of their 100 shares of the Series A Preferred Stock.

 

On April 6, 2018, Peter Taddeo resigned as a member of the Board of Directors of the Company and as the Chief Executive Officer and member of the board of directors of the Mint Organics Entities. In connection with Mr. Taddeo’s resignation, Mr. Taddeo entered into a Separation and General Release Agreement (“Taddeo Separation Agreement”) whereby Mr. Taddeo agreed to release the Mint Organics Entities from all obligations in connection with the Taddeo Agreement and all other agreements and/or financial obligations between the parties related to the Taddeo’s employment or services performed with any of Mint Organics Entities. In consideration for Taddeo entering into the Taddeo Separation Agreement, the Mint Organics Entities paid Taddeo $5,000 and Mr. Bothwell paid $3,000 to Taddeo for the purchase of the 1,000,000 shares of common stock of the Company that were granted to Taddeo in connection with the Taddeo Agreement. Contemporaneously with the execution of the Taddeo Separation Agreement, the Company and Mr. Taddeo entered into a Share Purchase and General Release Agreement whereby the Company agreed to purchase from Mr. Taddeo his 150 shares of Mint Series A Preferred Stock for an aggregate purchase price of $40,000 (see Note 15).

 

On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with the initial capitalization of Mint Organics in exchange for 4,400,000 shares of common stock of the Company.

 

As described in Note 5, on April 23, 2018, the Company and MBA executed a Plan and Agreement of Reorganization. As a result of the Reorganization, MBA acquired at the time a controlling interest of the Company. Manuel E. Iglesias is the sole Manager of MBA and thus may be deemed to control MBA.

 

For the year ended October 31, 2019 and 2018, the total amount of sales to customers related to our board of director members and/or employees of the Company totaled $71,650 and $19,550, respectively.

 

From time to time, Mr. Iglesias and Mr. Bothwell and/or their respective affiliates have advanced funds to the Company to pay for certain expenses of the Company. As of October 31, 2019, $220,897 and $48,184 are owed to Mr. Iglesias and Mr. Bothwell and/or their respective affiliates, respectively. In addition, the Company has not provided Mr. Bothwell required salary payments since July 2018. At October 31, 2019, salary amounts owed to Albert Mitrani, Dr. Mari Mitrani and Ian Bothwell were $132,105, $129,613 and $321,907, respectively.

 

As described in Note 9, Mr. Iglesias has provided a personal guaranty in connection with amounts required to paid under the Credit Facility.

 

During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July and August 2020, the Company sold an additional 1,166,666 shares and 422,514 shares of common stock to Dr. Allen Meglin at $0.03 per share and $0.10 per share, respectively, for an aggregate purchase price of $77,251.

 

On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000.

 

During September 2018, in consideration for Dr. George Shapiro agreeing to serve as the Company’s Chief Medical Officer (“CMO”) and render other medical consulting and advisory services to the Company, the Board approved the issuance to the CMO of 2,500,000 shares of common stock. In connection with the CMO’s appointment to the Board of Directors of the Company during February 2019, during February 2019 and August 2019, the Board approved the issuance to the CMO of 2,000,000 and 3,000,000 shares, respectively, of common stock. On February 26, 2020, the Company agreed to immediately grant the CMO 5,000,000 shares of common stock in recognition of past services provided to the Company through February 2020. In addition, the Company agreed to enter into a consulting agreement with the CMO to provide ongoing services to the Company. The CMO will receive compensation of $82,250 annually, commencing March 1, 2020. The term of the consulting agreement is one year, with automatic renewals for annual periods thereafter unless prior written notice is provided by either party of the desire to terminate.

 

In connection with Mr. Robert Zucker’s resignation as a member of the Board of Directors of the Company in April 2020, the Board approved the issuance to Mr. Zucker of 736,808 shares of unregistered common stock of the Company valued at $0.022 per share, the closing price of the common stock of the Company on the grant date ($16,210).

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9. Notes Payable
12 Months Ended
Oct. 31, 2019
Debt Disclosure [Abstract]  
Notes Payable

NOTE 9 - NOTES PAYABLE

 

Private Placement Of Convertible Debentures

 

On June 20, 2018, the Company issued a total of $150,000 of convertible 6% debentures (“150,000 Debentures”) to an accredited investor. The principal amount of the $150,000 Debentures, plus accrued and unpaid interest through June 30, 2019 are payable on the 10th business day subsequent to June 30, 2019, unless the payment of the $150,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $150,000 Debentures (see below), and/or accelerated due to an event of default in accordance with the terms of the $150,000 Debentures. Interest on the $150,000 Debentures for each calendar quarter ended beginning with the quarter ended June 30, 2018 is payable on the 10th business day following the immediately prior calendar quarter.

 

On August 10, 2018, the Company issued a total of $100,000 of convertible 6% debentures (“100,000 Debentures”) to two accredited investors. The principal amount of the $100,000 Debentures, plus accrued and unpaid interest through July 31, 2019 are payable on the 10th business day subsequent to July 31, 2019, unless the payment of the $100,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $100,000 Debentures (see below), and/or accelerated due to an event of default in accordance with the terms of the $100,000 Debentures. Interest on the $100,000 Debentures for each calendar quarter ended beginning with the quarter ended October 31, 2018 is payable on the 10th business day following the immediately prior calendar quarter.

 

During October 2018, the Company issued a total of $70,000 of convertible 6% debentures (“70,000 Debentures”) to two accredited investors. The principal amount of the $70,000 Debentures, plus accrued and unpaid interest through September 30, 2019 are payable on the 10th business day subsequent to September 30, 2019, unless the payment of the $70,000 Debentures are prepaid at the sole option of the Company, are converted as provided for under the terms of the $70,000 Debentures (see below), and/or accelerated due to an event of default in accordance with the terms of the $70,000 Debentures. Interest on the $70,000 Debentures for each calendar quarter ended beginning with the quarter ended December 31, 2018 is payable on the 10th business day following the immediately prior calendar quarter.

 

During March 2019, the Company issued a $30,000 of convertible 6% debentures (“30,000 Debenture”) to one accredited investor. The principal amount of the $30,000 Debenture, plus accrued and unpaid interest through June 30, 2020 are payable on the 10th business day subsequent to June 30, 2020, unless the payment of the $30,000 Debenture is prepaid at the sole option of the Company, is converted as provided for under the terms of the $30,000 Debenture (see below), and/or accelerated due to an event of default in accordance with the terms of the $30,000 Debenture. Interest on the $30,000 Debenture for each calendar quarter ended beginning with the quarter ended June 30, 2019 is payable on the 10th business day following the immediately prior calendar quarter.

 

Under the terms of the $150,000 Debentures, the $100,000 Debentures, the $70,000 Debentures and the $30,000 Debenture (collectively referred to as the “Convertible Debentures”), the Company is permitted to issue additional convertible 6% debentures up to a maximum aggregate principal amount of $1,000,000 of convertible 6% debentures, all of like tenor except as to the issuance date which shall be determined based on the date that additional convertible debentures are issued, if any. The Company used the proceeds from the Convertible Debentures totaling $350,000 for general working capital purposes.

 

The Convertible Debentures may be prepaid at any time by the Company in whole or in part without penalty upon 30 days written notice but not to exceed 60 days (“Repayment Notice”) at a price equal to the principal amount outstanding of the Convertible Debentures’ elected to be repaid by the Company, plus all unpaid and accrued interest up through the date of prepayment provided in the Repayment Notice (“Prepayment Date”).

 

The Convertible Debentures (the principal and all accrued but unpaid interest thereon) contained provisions that under certain conditions, provided the ability of the holders of the Convertible Debentures at their option at any time, from time to time to convert into shares of the common stock of the Company. The conversion prices were based on the Company completing a contemplated pending reverse split at the Company’s sole discretion (which the Company elected not to pursue) or at conversion prices greatly in excess of the historical prices of the Company’s common stock and reasonably expected prices of the Company’s common stock to be realized during the term of the Convertible Debentures. As a result, none of the Convertible Debentures have been or are expected to be converted in accordance with their conversion provisions. The contingent rights to convert for certain of the convertible debentures did not result in any underlying value attributable to the fair value of the embedded derivatives liabilities associated with respective Convertible Debentures.

 

During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of the $100,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction).

 

During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction).

 

As a result of the above conversions, the principal amount of Convertible Debentures outstanding as of October 31, 2019 was $220,000. These remaining Convertible Debentures were not repaid on their required maturity dates.

 

On June 25, 2020, the Company entered into a settlement and general release agreement with the holder of the $50,000 Debenture whereby the Company is required to repay the balance of the $50,000 Debenture in eight monthly installments of $6,250 plus outstanding accrued interest beginning June 30, 2020 and ending on January 31, 2021.

 

During October 2020, the Company and the holder of the $20,000 debenture (one of the two holders that participated in the $70,000 Debentures described above), agreed to convert the principal amount of the $20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,100 into 160,000 shares of common stock of the Company (approximately $0.125 per share representing a discount to the trading price of $0.278 as of the effective date of the transaction).

 

Unsecured Promissory Note

 

On February 5, 2019, the Company entered into an unsecured loan agreement with a third party with a principal balance of $25,000. The outstanding principal was due March 8, 2019. The loan was not repaid on the maturity date as required. The third party subsequently agreed to apply amounts due for invoices due from third party for future purchases of the Company products to the extent of the outstanding balances owed by the Company in connection with the loan (interest and principal).

 

Credit Facility

 

On September 19, 2019, the Company’s wholly owned subsidiary, General Surgical Florida, received $100,000 in connection with an unsecured line of credit (“Credit Facility”). The Credit Facility matures in one-year and the Company is required to make 52 weekly payments of $2,403 (payments totaling $125,000). The Credit Facility can be prepaid at any time by the Company. The effective annual interest rate of the facility based on 52 equal monthly payments is 45.67%. Proceeds received from the Credit Facility were used for working capital purposes. Mr. Iglesias provided a personal guaranty in connection with amounts required to paid under the Credit Facility.

 

Capital Lease Obligations

 

During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $239,595. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $4,513 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a capital lease obligation. The annual interest rate charged in connection with the lease is 4.5%. The leased equipment are being depreciated over their estimated useful lives of 15 years.

 

Funding Facility

 

On October 10, 2019, the Company and an investor (“Noteholder”) agreed to a funding facility arrangement (“Funding Facility”) whereby the Noteholder was required to fund the Company an initial tranche of $100,000 on October 15, 2019 (“Initial Funding Date”) and had the option to fund the Company up to an aggregate of $500,000 (“Funding Facility Limit”) in minimum $100,000 monthly tranches by no later than February 15, 2020 (“Funding Expiration Date”). The Funding Facility matures on February 15, 2021 (“Maturity Date”) and accrues interest at 6.0% per annum. The Funding Facility, plus all accrued interest, automatically converts into 40,000,000 shares of newly issued common stock of the Company if the Noteholder funds the full $500,000 by the Funding Expiration Date. The Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company that were issued to the Noteholders designated entity, Republic Asset Holdings LLC.

 

Mint Organics Inc.

 

On June 22, 2017, Mint Organics entered into an unsecured loan agreement with a third party (“Third Party”) with a principal balance of $60,000, an annual interest rate of 10%, and all accrued and unpaid interest and outstanding principal were due on the one-year anniversary of the note. The loan was not repaid on the maturity date as required.

 

On May 1, 2019, the Company, Mint Organics and the Third party agreed to a settlement of the outstanding loan whereby the Company agreed to issue the Third Party 2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction. In connection with the exchange, the Third Party provided a release to the Company in connection with any claims associated with the loan agreement.

 

Interest expense for the years ended October 31, 2019 and 2018 was $4,349 and $6,049, respectively.

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10. Derivative Liabilities
12 Months Ended
Oct. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Liabilities

NOTE 10 – DERIVATIVE LIABILITIES

 

In connection with the sale of debt or equity instruments, the Company may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

 

The Company's derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, the Company estimates fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the instrument.

 

The Company classifies the fair value of these securities under level three of the fair value hierarchy of financial instruments. The fair value of the derivative liability was calculated using a Monte Carlo Simulation model that values the liability of the Convertible Notes based on a risk neutral valuation where the price of the option is its discounted expected value. The technique applied generates a large number of possible (but random) price paths for the underlying (or underlyings) via simulation, and then calculate the associated conversion value (i.e. "payoff") of the note (limited by a percentage of trading volume) for each path. These payoffs are then averaged and discounted to the date of valuation resulting in the fair value of the option.

 

In connection with the Sale, the underlying debt instrument associated with the derivative liability was paid in full without utilization of any of the conversion features associated with the debt instrument. During the year ended October 31, 2018, the Company recorded a gain of $265,597 associated with the change in fair value of the derivative liabilities from October 31, 2017.

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11. Income Taxes
12 Months Ended
Oct. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 11 — INCOME TAXES

 

The Company files a consolidated federal income tax return that includes all of its subsidiaries. For the year ended October 31, 2019, the Company incurred operating losses, and therefore, there was not any current income tax expense amount recorded during that period. During the year ended October 31, 2018 there was a change in ownership which caused a change in control under IRC Section 382 (“Section 382 event”). Prior to the Section 382 event, the Company utilized a portion of its available net operating loss carryforwards to offset income through that date mainly resulting from the sale of ANU.

 

The consolidated provision for income taxes for October 31, 2019 and 2018 consists of the following:

 

    Year Ended
October 31,
    Year Ended
October 31,
 
    2019     2018  
                 
Current:                
Federal   $     $  
State            
    $     $  
Deferred:                
Federal   $ (185,045 )   $ 911,472  
State     (19,471 )     164,180  
      (204,516 )     1,075,652  
Change in Valuation Allowance     204,516       (1,075,652 )
    $     $  

 

Effective tax rates differ from the federal statutory rate of 21% for 2019 and the blended rate of 23.17% for 2018 applied to income before income taxes. A reconciliation of the U.S. federal statutory tax amount to the Company’s effective tax amount is as follows:

 

    October 31, 2019     October 31, 2018  
Tax at federal statutory rate   $ (361,687 )   $ (802,067 )
State taxes, net of federal benefit     (74,835 )     (68,278 )
Permanent differences     10,468       427,759  
Effect of change in income tax rate           1,052,690  
Other     221,538       46,139  
Section 382 limitation           419,409  
Total income tax expense (benefit)     (204,516 )     1,075,652  
Change in valuation allowance     204,516       (1,075,652 )
    $     $  

 

 

The Company had a federal net operating loss carryover of $1,060,732 as of October 31, 2019. On December 22, 2017, the United States enacted into law the Tax Cuts and Jobs Act (“TCJA”). This law provides for a comprehensive overhaul of the corporate income tax code, including amongst other provisions, a reduction of the statutory corporate tax rate from 34% to 21%, effective on January 1, 2018, and an indefinite carryforward of net operating losses arising from tax years ending after December 31, 2017 limited to a deduction of 80% of taxable income. FASB ASC 740, Income Taxes, requires that the effects of changes in tax rates be recognized in the period enacted. As a result, we remeasured our deferred tax assets and liabilities to reflect the new statutory federal rate of 21% which resulted in a net adjustment of approximately $1.1 million to deferred income tax expense for the year ended October 31, 2018. This adjustment was offset by a reduction in the valuation allowance.

 

The tax effects of temporary differences and carry-forwards that give rise to deferred tax assets and liabilities for the Company were as follows:

 

    October 31, 2019     October 31, 2018  
Deferred Tax Assets:                
Stock based compensation   $ 2,670,914     $ 2,686,859  
Accrued compensation     136,127        
Net operating loss carryforward-Federal     222,754       91,501  
Net operating loss carryforward-State     34,918       16,612  
Other     177       137  
Total deferred tax assets:     3,064,890       2,795,109  
Deferred Tax Liabilities:                
Property and equipment     66,650       1,385  
Total deferred tax liabilities:     66,650       1,385  
                 
Valuation Allowance     (2,998,240 )     (2,793,724 )
Net deferred tax assets   $     $  

 

FASB ASC 740 requires a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. At October 31, 2019 and October 31, 2018, the net deferred tax asset was offset by a full valuation allowance.

 

Pursuant to Code Sec. 382 of the Internal Revenue Code (“the Code”), the utilization of net operating loss carryforwards may be limited as a result of a cumulative change in stock ownership of more than 50% over a three-year period. The Company underwent such a change in April 2018 and consequently, the net operating loss carryforward was adjusted to write off the portion that will expire unused. At October 31, 2018, the Company had net operating losses approximating $395,000 which carry over indefinitely.

 

Certain of the above amounts reported for the year ended October 31, 2018 have been revised to conform with the current year presentation and to reflect the actual amounts that were reported in the Company’s tax filings.

  

IRS Penalties

 

The Company’s income tax returns for the periods since inception through the tax year ended October 31, 2015 were not filed with the Internal Revenue Service (“IRS”) until August 2017 (“Delinquent Filed Returns”). The Company’s income tax returns for the tax year ended October 31, 2016 were filed with the IRS during December 2017. In connection with the Delinquent Filed Returns, during the period September 2017 through October 2017, the Company received notices that it was being assessed approximately $90,000 of penalties, plus interest (“IRS Penalties”), in connection with the late filing certain information returns that were included as part of the Delinquent Filed Returns. In connection with the notices, the IRS indicated its intent to levy property of the Company if the IRS penalties were not paid as required. During January 2018, the Company requested from the IRS an abatement of the IRS penalties based on reasonable cause. During April 2018, the IRS notified the Company that the IRS penalties for the tax year ended 2011 of $20,000, plus interest, were abated and the request for abatement for the IRS penalties for the tax years ended 2012 – 2015 were denied. The Company is currently appealing the initial determination by the IRS to exclude the IRS penalties for the tax years 2012-2015 in its consideration of abatement. During the period that the appeal is being reviewed and a determination is made by the IRS, the IRS has agreed to put a hold on taking any levy action against the Company for the remaining amounts of the IRS Penalties that are still outstanding. In connection with the notices, the Company has accrued $70,000 of accrued tax penalties on the balance sheet as of October 31, 2019 and 2018.

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12. Capital Stock
12 Months Ended
Oct. 31, 2019
Equity [Abstract]  
Capital Stock

NOTE 12 – CAPITAL STOCK

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of $0.001 par value preferred stock in one or more designated series, each of which shall be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. The Company’s board of directors is authorized, without stockholders’ approval, within any limitations prescribed by law and the Company’s Articles of Incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock.

 

Series A Non-Convertible Preferred Stock

 

On November 1, 2016, the Company filed a Certificate of Designation with the Secretary of State of Nevada therein designating out of the 10,000,000 authorized shares of Preferred Stock, a class of Preferred Stock as “Series A Non-Convertible Preferred Stock” consisting of 100 shares (the “ Series A Certificate of Designation “). On March 2, 2017, the Company filed with the Secretary of State of Nevada an amendment to increase the number of shares provided for in the Series A Certificate of Designation from 100 shares to 400 shares.

 

Set forth below is a summary of the Series A Certificate of Designation, as amended.

 

Voting

 

Generally, the outstanding shares of Series A Non-Convertible Preferred Stock shall vote together with the shares of common stock and other voting securities of the Company as a single class and, regardless of the number of shares of Series A Non-Convertible Preferred Stock outstanding, and as long as at least one share of Series A Non-Convertible Preferred Stock is outstanding, such shares shall represent 80% of all votes entitled to be voted at any annual or special meeting of stockholders of the Company or action by written consent of stockholders. Each outstanding share of the Series A Non-Convertible Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Non-Convertible Preferred Stock.

 

Dividends

 

The holders of shares of Series A Non-Convertible Preferred Stock shall not be entitled to receive any dividends.

 

Ranking

 

The Series A Non-Convertible Preferred Stock shall, with respect to distribution rights on liquidation, winding up and dissolution, (i) rank senior to any of the shares of common stock of the Company, and any other class or series of stock of the Company which by its terms shall rank junior to the Series A Non-Convertible Preferred Stock, and (ii) rank junior to any other series or class of preferred stock of the Company and any other class or series of stock of the Company which by its term shall rank senior to the Series A Non-Convertible Preferred Stock.

 

So long as any shares of Series A Non-Convertible Preferred Stock are outstanding, the Company shall not alter or change any of the powers, preferences, privileges or rights of the Series A Non-Convertible Preferred Stock, without first obtaining the approval by vote or written consent, in the manner provided by law, of the holders of at least a majority of the outstanding shares of Series A Non-Convertible Preferred Stock, as to changes affecting the Series A Non-Convertible Preferred Stock.

 

Issued Shares

 

On November 1, 2016, the Company issued 100 shares of its Series A Non-Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) to the CEO. On March 8, 2017, the Company issued 100 shares of the Series A Preferred Stock, to each of the COO, CSO and CFO. In connection with an independent valuation using the “Market Approach”, the Company determined that the value attributable to the Series A Preferred Stock issued was nominal.

 

On February 5, 2018, in connection with the COO’s resignation and termination, the COO agreed to forfeit and the cancellation of the 100 shares of the Series A Preferred Stock previously issued.

 

Effective April 13, 2018, in connection with the Reorganization, the CEO, CFO and CSO each agreed to forfeit and the cancellation their 100 shares of the Series A Preferred Stock previously issued.

 

On June 6, 2018, the Company approved resolutions to cancel and terminate the Series A Preferred Stock designation and file a certificate of amendment with the State of Nevada, withdrawing the designation of the Series A Preferred Stock. On June 14, 2018, the Company filed a Certificate of Withdrawal with the Secretary of State of Nevada thereby withdrawing and terminating all previously issued designations of the Company’s Series A Preferred Stock. As a result of the aforementioned actions, as of June 14, 2018, there were no designations of Series A Preferred Stock authorized or outstanding.

 

Series B Convertible Preferred Stock

 

On November 1, 2016, the Company filed a Certificate of Designation with the Secretary of State of Nevada therein designating out of the 10,000,000 authorized shares of Preferred Stock, a class of Preferred Stock as “Series B Convertible Preferred Stock” consisting of 1,000,000 shares (“Series B Certificate of Designation”).

 

Set forth below is a summary of the Series B Certificate of Designation.

 

Conversion

 

Each holder of Series B Preferred Stock shall have the right, at such holder’s option, at any time or from time to time from and after the day immediately following the date the Series B Preferred Stock is first issued, to convert each share of Series B Preferred Stock into 20 fully-paid and non-assessable shares of common stock.

 

Rank

 

Except as specifically provided below, the Series B Preferred Stock shall, with respect to dividend rights, rights on liquidation, winding up and dissolution, rank junior to the Series A Non-Convertible Preferred Stock of the Company and senior to (i) all classes of common stock of the Company and (ii) any class or series of capital stock of the Company hereafter created (unless, with the consent of the holder(s) of Series B Preferred Stock).

 

Issued Shares

 

On June 6, 2018, the Company approved resolutions to cancel and terminate the Series B Preferred Stock designations and file a certificate of amendment with the State of Nevada, withdrawing the designation of the Series B Preferred Stock. On June 14, 2018, the Company filed a Certificate of Withdrawal with the Secretary of State of Nevada thereby withdrawing and terminating all previously issued designations of the Company’s Series B Preferred Stock. As a result of the aforementioned actions, as of June 14, 2018, there were no designations of Series B Preferred Stock authorized or outstanding.

 

Common Stock

 

On May 8, 2018, the Board adopted resolutions to (i) amend its Articles of Incorporation to reduce the number of authorized shares of common stock from 750,000,000 to 250,000,000 and (ii) reverse split the issued and outstanding shares of the Company’s common stock on a ratio of seventeen (17) current shares for one (1) share of new shares. On May 9, 2018, shareholders holding a majority in interest of the voting power of the Company (86.9%) approved the amendment and the reverse stock split.

 

On June 1, 2018, the Company filed a Company-Related Action Notification with FINRA (“Notification Form”) to provide notice of certain proposed actions by the Company, including the amendment and reverse stock split. However, due to the Company’s delinquency its Exchange Act reports with the SEC at the time of the filing (by failing to file the October 31, 2017 Annual Report and its Quarterly Reports for the quarters ended January 31, 2018 and April 30, 2018, FINRA did not announce or effectuate the Name Change or Reverse Split in the marketplace. On June 18, 2018, the Company filed a Certificate of Correction with the Secretary of State of Nevada to reverse the amendments related to the Reverse Split. FINRA has since informed the Company that a new Issuer Company-Related Notification Form will be required to be submitted should the Company desire to effectuate the Name Change and Reverse Split in the future, provided the Company is current in its Exchange Act filings. At such time as FINRA processes the announcements, the Company will effect the reverse split of its common stock and amend its Articles to reduce its authorized common stock.

 

On May 18, 2020 and May 19, 2020, pursuant to the Nevada Revised Statutes and the Bylaws of the Company, the Board of Directors of the Company and the stockholders having the voting equivalency of 50.30% of the outstanding capital stock, respectively, approved the filing of an amendment to the Articles of Incorporation of the Company to increase the authorized amount of common stock from 750,000,000 to 1,500,000,000, without changing the par value of the common stock or authorized number and par value of “blank check” Preferred Stock. On June 2, 2020, the Company filed a Definitive 14C with the SEC regarding the corporate action. On June 24, 2020, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effectuate the corporate action on June 24, 2020.

 

Issuances of Common Stock - Sales:

 

On March 7, 2019, the Company sold an aggregate of 7,500,000 shares of common stock and granted warrants to purchase an aggregate 2,000,000 common shares to three “accredited investors” investors. The warrants have exercise prices of $0.08, and have a one -year term. The aggregate grant date fair value of the warrants issued in connection with these issuances were $6,600. The proceeds were used for working capital.

 

During April 2019, the Company sold 5,102,000 shares of common stock to seven “accredited investors” at $0.03 per share for an aggregate purchase price of $154,500. The proceeds were used for working capital.

 

During July 2019, the Company sold 2,500,000 shares of common stock to one “accredited investors” at $0.02 per share for an aggregate purchase price of $50,000. The proceeds were used for working capital.

 

During August 2019 through September 2019, the Company sold 5,250,000 shares of common stock to four “accredited investors” at $0.02 per share for an aggregate purchase price of $105,000. The proceeds were used for working capital.

 

During November 2019 through January 2020, the Company sold 3,250,000 shares of common stock to three “accredited investors” at $0.02 per share for an aggregate purchase price of $65,000. The proceeds were used for working capital.

 

During February 2020 through April 2020, the Company sold 11,050,000 shares of common stock to five “accredited investors” at $0.02 per share for an aggregate purchase price of $221,000. The proceeds were used for working capital.

 

During April 2020 through May 2020, the Company sold 11,000,000 shares of common stock to Dr. Allen Meglin, a director of the Company at $0.02 per share for an aggregate purchase price of $220,000. During July and August 2020, the Company sold an additional 1,166,666 shares and 422,514 shares of common stock to Dr. Allen Meglin at $0.03 per share and $0.10 per share, respectively, for an aggregate purchase price of $77,251. The proceeds from all of the above sales were used for working capital.

 

On April 27, 2020, the Company sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at $0.02 per share for an aggregate purchase price of $100,000. The proceeds were used for working capital.

 

During May 2020, the Company sold 3,000,000 shares of common stock to two “accredited investors” at $0.02 per share for an aggregate purchase price of $60,000. The proceeds were used for working capital.

 

During July and August 2020, the Company completed the private placement to 19 accredited investors for the sale of 13,499,992 shares of Common stock of the Company at a selling price of $0.03 per share for an aggregate amount of $405,000 (“Sale”). In connection with the Sale, the Company agreed that all of the proceeds from the Sale are to be deposited into a separate bank account (“Sale Account”) of the Company and the proceeds are to be used exclusively to fund the costs associated with the Company’s ongoing public company filing requirements, including audit, tax, valuation and legal fees. The Company also agreed to maintain the Sale Account with a minimum cash balance of $25,000 at all times until such time that the Company has filed all required financial reports through the period ended July 31, 2021.

 

During the period July 2020, the Company sold 1,000,000 shares of common stock to two “accredited investors”, at $0.02 per share and $0.03 per share, respectively for an aggregate purchase price of $25,000. The proceeds were used for working capital.

 

During the period August 2020, the Company sold 8,606,665 shares of common stock to nine “accredited investors”, at prices ranging from $0.03 per share and $0.06 per share, for an aggregate purchase price of $392,100. The proceeds were used for working capital.

 

During the period September 2020, the Company sold 4,800,000 shares of common stock to five “accredited investors”, at prices ranging from $0.06 per share and $0.10 per share, for an aggregate purchase price of $410,000. The proceeds were used for working capital.

 

Issuances of Common Stock – Stock Compensation:

 

On June 5, 2018, as further amended, the Company and a third party (“Consultant”) entered into a consulting agreement whereby the Consultant agreed to provide business development and other services to the Company (“Consulting Agreement”). The Consulting Agreement terminated on May 31, 2019. Under the terms of the Consulting Agreement, the Company agreed to grant the Consultant 4,500,000 shares of common stock of the Company (“Consultant Shares”). The Consultant Shares vested as follows; 1,700,000 shares upon execution of the Consultant Agreement; 1,700,000 shares on December 5, 2018; and 1,100,000 shares on January 1, 2019. The common stock was valued at $0.017 per share based on the closing price of the common stock of the Company on the execution date of the Consulting Agreement. The Company has recorded $45,900, $18,580 and $12,020 of stock-based compensation expense on June 5, 2018, December 5, 2018 and January 1, 2019 respectively.

 

During September 2018, in consideration for agreeing to serve as the Company’s Chief Medical Officer (“CMO”) and render other medical consulting and advisory services to the Company, the Board approved the issuance to the CMO of 2,500,000 shares of unregistered common stock valued at $0.0138 per share, the closing price of the common stock of the Company on that date. The Company recorded $34,500 of stock-based compensation expense based on the grant date fair value of these shares during the year ended October 31, 2018. In connection with the CMO’s appointment to the Board of Directors of the Company during February 2019, during February 2019 and August 2019, the Board approved the issuance to the CMO of 2,000,000 and 3,000,000 shares, respectively, of unregistered common stock valued at $0.025 per share and $0.028 per share, respectively, the closing price of the common stock of the Company on the grant dates. The Company recorded $50,000 and $84,000, during the quarters ended April 30, 2019 and October 31, 2019, respectively, of stock-based compensation expense based fair value of these shares on the grant date.

 

During the period November 1, 2018 through January 31, 2019, in consideration for agreeing to render medical consulting and advisory services to the Company, the Board approved the issuance to eight individuals an aggregate of 4,200,000 shares of unregistered common stock valued between $0.0055 and $0.0244 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $28,680 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended January 31, 2019.

 

During the period February 1, 2019 through April 30, 2019, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to seven individuals an aggregate of 1,750,000 shares of unregistered common stock valued between $0.024 and $0.049 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $55,500 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended April 30, 2019.

 

During the period February 1, 2019 through April 30, 2019, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to nine individuals an aggregate of 225,000 shares of unregistered common stock valued between $0.0265 and $0.080 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $11,888 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended April 30, 2019.

 

During the period May 1, 2019 through July 31, 2019, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to twelve individuals an aggregate of 3,475,000 shares of unregistered common stock (of which 2,000,000 of the common stock issued shall vest over 36 months beginning July 2019) valued between $0.019 and $0.040 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $46,186 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2019.

 

During the period May 1, 2019 through July 31, 2019, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to six individuals an aggregate of 2,675,000 shares of unregistered common stock valued between $0.023 and $0.040 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $70,725 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2019.

 

During May 2019, the Company entered into a sales representation agreement (“Sales Rep Agreement”) with a third party (“Sales Representative”) to market, promote and sell the Company’s products. As part of the Sales Rep Agreement, the Company agreed to provide the Sales Representative 1,000,000 million shares of common stock of the Company upon execution of the Sales Rep Agreement (valued at $0.035 per share, the closing price of the common stock of the Company on that date). The Company recorded $35,000 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2019. The initial term of the Sales Rep Agreement was one year, subject to earlier termination as provided for in the Sales Rep Agreement. In addition, under the terms of the Sales Rep Agreement, the Sales Representative was entitled to receive performance incentives for up to 10,500,000 million additional shares of common stock of the Company based on the Sales Representative achieving certain future quarterly sales milestones. None of the performance incentive shares were earned by the Sales Representative. Effective September 30, 2019, the Sales Representative and the Company mutually agreed to terminate the Sales Rep Agreement.

 

During the period August 1, 2019 through October 31, 2019, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to two individuals an aggregate of 200,000 shares of unregistered common stock valued between $0.035 and $0.038 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $7,300 of stock-based compensation expense during the quarter ended October 31, 2019.

 

During the period August 1, 2019 through October 31, 2019, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to four individuals an aggregate of 5,350,000 shares of unregistered common stock valued between $0.029 and $0.038 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $162,700 of stock-based compensation expense during the quarter ended October 31, 2019.

 

In connection with the previous appointment of an independent member to the Board of Directors of the Company, during August 2019, the Board approved the issuance to the director of 5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $140,000 of stock-based compensation expense during the quarter ended October 31, 2019.

 

As described in Note 14, upon execution of the VP Agreements, each of the Sales Executives were granted 1,000,000 shares of unregistered common stock of the Company valued at $0.035 per share, the closing price of the common stock of the Company on the grant date. The Company will record $35,000 of stock-based compensation expense on the grant date for each issuance. The VP Agreements also provide each Sales Executives the right to receive an additional 750,000 shares of common stock at the end of each quarterly anniversary of the VP Agreements throughout the Initial Term (maximum 9,000,000 shares) (“Performance Shares”), provided that the VP Agreements remain in effect during the applicable quarterly period. As of September 30, 2020, each Sales Executive has vested an additional 2,250,000 Performance Shares (total 4,500,000). The Company will record stock-based compensation expense for each respective quarterly period that the Performance Shares vest of $52,500 (total $157,500).

 

As described in Note 14, in connection with the execution of the Consultants Agreement, the Company issued to the Consultants 12,000,000 shares of unregistered common stock (“Shares”) valued at $0.022 per share, the closing price of the common stock of the Company on the grant date. The Company will record a total of $264,000 of stock-based compensation expense based on the vesting of the Shares (50% of the Shares vest as of the Effective Date of the Consultants Agreement 50% of the Shares vest on the six-month anniversary of the Consultants Agreement). The Company recorded $132,000 of stock-based compensation expense on the grant date and $132,000 during the quarter ended October 31, 2020.

 

During the period November 1, 2019 through January 31, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to three individuals an aggregate of 650,000 shares of unregistered common stock valued between $0.027 and $0.031 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $18,650 of stock-based compensation expense during the three months ended January 31, 2020.

 

During the period February 1, 2020 through April 30, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to four individuals an aggregate of 2,725,000 shares of unregistered common stock valued between $0.029 and $0.034 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $89,650 of stock-based compensation expense during the three months ended April 30, 2020.

 

During the period May 1, 2020 through July 31, 2020, in consideration for agreeing to provide lab and administrative consulting services to the Company, the Board approved the issuance to eight individuals an aggregate of 925,000 shares of unregistered common stock valued between $0.031 and $0.048 per share, the closing price of the common stock of the Company on the respective grants dates. For certain of the issuances, the stock vests on November 1, 2020, provided the recipient remains engaged with the Company during the period. The Company recorded $17,475 and $15,500 of stock-based compensation expense during the three months ended July 31, 2020 and on November 1, 2020, respectively.

 

During April 2020, May 2020, and September 2020, in consideration for agreeing to provide medical consulting and advisory services to the Company, the Board approved the issuance to eight individuals an aggregate of 950,000 shares of unregistered common stock valued between $0.023 and $0.28 per share, the closing price of the common stock of the Company on the respective grants dates. The Company recorded $16,100, $6,900 and $56,600 of stock-based compensation expense based on the grant date fair value of these shares during the quarters ended April 30, 2020, July 31, 2020 and October 31, 2020, respectively.

 

During February 2020, in recognition of past services provided to the Company through February 2020, the Board approved the issuance to the CMO of 5,000,000 shares of unregistered common stock valued at $0.028 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $140,000 of stock-based compensation expense during the quarter ended April 30, 2020 based on the fair value of these shares on the grant date.

 

In connection with the resignation of an independent member of the Board of Directors of the Company in April 2020, the Board approved the issuance to the director of 736,808 shares of unregistered common stock valued at $0.022 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $16,210 of stock-based compensation expense during the quarter ended April 30, 2020 based on the fair value of these shares on the grant date.

 

In connection with an agreement with an independent distributor dated May 28, 2020, the Company agreed to grant the distributor 3,000,000 shares of unregistered common stock valued at $0.115 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $345,000 of stock-based compensation expense during the quarter ended July 31, 2020 based on the fair value of these shares on the grant date. In addition, the distribution agreement also provides for future stock incentives based on future sales that are generated by the distributor based on a conversion price equal to 75% of the trading price of the common stock on the last day of the month in which the incentive was earned.

 

On May 15, 2020 (“Effective Date”), the Company entered into an advisor agreement with a third party (“Advisor”) whereby the Advisor will provide financial advisory services (see Note 14). As consideration, the Company agreed to issue the Advisor 1,000,000 shares of common stock (“Grant”), of which 250,000 shares shall be fully vested as of the Effective Date, 250,000 shares vest on the sixth month anniversary of the Effective Date, 250,000 shares vest on the ninth month anniversary of the Effective Date and 250,000 shares vest on the twelfth month anniversary of the Effective Date, provided however that the Agreement is in full effect during such vesting period(s) for the respective portion of the Grant. In addition, Company agreed to grant 3-year warrants to the Advisor to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”), of which Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of the agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the agreement, respectively, provided however that the Agreement is renewed and in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Grant or Warrants prescribed above will immediately become vested shares if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5MM or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25MM. The Grant shares were valued at $0.04 per share, the closing price of the common stock of the Company on the grant date. The Company will record $10,000 of stock-based compensation expense during each quarter in which the Grant shares become vested based on the fair value of these vested shares on the grant date.

 

During July 2020, the Company entered into a consulting agreement with a third party to provide investment banking related consulting services for a minimum period of six months. As consideration for agreeing to provide consulting services to the Company, the Company issued the consultant 5,000,000 shares of unregistered common stock valued at $0.05 per share, the closing price of the common stock of the Company on the effective date of the agreement. All of the shares granted vested immediately on the date of issuance. The Company recorded $250,000 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended July 31, 2020.

 

During August 2020, the Company entered into two separate consulting agreements with third parties to provide marketing and public relations services for a minimum period of six months. As consideration for agreeing to provide consulting services to the Company, the Company issued the consultants 300,000 shares and 25,000 shares, respectively, of unregistered common stock valued at $0.127 per share, the closing price of the common stock of the Company on the effective date of the agreements. The Company recorded a total of $40,790 of stock-based compensation expense based on the grant date fair value of these shares during the quarter ended October 31, 2020.

 

Issuances of Common Stock – Exercise of warrants, Conversion of Debt and Exchanges:

 

During May 2019, the Company and holders of the $100,000 Debentures agreed to convert the principal amount of $100,000 Debentures plus interest accrued and unpaid through the date of the conversion totaling $100,622 into 3,773,584 shares of common stock of the Company (approximately $0.0267 per share representing a discount to the trading price of $0.0285 as of the effective date of the transaction).

 

During June 2019, the Company and the holder of the $30,000 Debenture agreed to convert the principal amount of the $30,000 Debenture plus interest accrued and unpaid through the date of the conversion totaling $30,478 into 1,111,111 shares of common stock of the Company (approximately $0.0274 per share representing a premium to the trading price of $0.0253 as of the effective date of the transaction).

 

On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with the initial capitalization of Mint Organics (see note 15) in exchange for 4,400,000 shares of common stock of the Company (approximately $0.034 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

On May 1, 2019, the Company, Mint Organics and the holder of a promissory note issued by Mint Organics (see note 15) agreed to a settlement of the outstanding loan whereby the Company agreed to issue the holder of the note 2,735,000 shares of newly issued common stock of the Company. At the time of the settlement, the outstanding obligation under the note, including late fees and penalties was approximately $72,568. The common stock issued was priced at $0.0265 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction.

 

On May 1, 2019, the Company and Mint Organics Florida entered into an exchange agreement whereby the Company agreed to acquire the 21.25 units from the minority equity holder of Mint Organics Florida (see note 15) in exchange for 2,400,000 shares of common stock of the Company (approximately $0.042 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction).

 

As more fully described in Note 9, the Noteholder fully funded the Funding Facility as prescribed on February 12, 2020 and the Company converted the Funding Facility into 40,000,000 shares of common stock of the Company (approximately $0.013 per share representing a discount of 60.5% to the trading price of $0.032 as of the effective date of the transaction).

 

During October 2020, the Company and the holder of the $20,000 debenture (one of the two holders that participated in the $70,000 Debentures described above), agreed to convert the principal amount of the $20,000 debenture plus interest accrued and unpaid through the date of the conversion totaling approximately $20,100 into 160,000 shares of common stock of the Company (approximately $0.125 per share representing a discount to the trading price of $0.278 as of the effective date of the transaction).

 

Management and Consultants Performance Stock Plan

 

On April 25, 2020, the Company approved the adoption of the Management and Consultants Performance Stock Plan (“MCPP”) providing for the grant to current senior executive members of management and third-party consultants of an aggregate of approximately 205,000,000 shares of common stock of the Company (“Shares”) based on the achievement of certain defined operational performance milestones (“Milestones”).

 

On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below.

 

Pre-Transaction Price Per Share Valuation (a)     Executive Bonus Shares Issued (b)     Non-executive Board Bonus Shares Issued (c)  
               
$ 0.22       40,000,000       2,000,000  
$ 0.34       60,000,000       3,000,000  
$ 0.45       80,000,000       4,000,000  
$ 0.54       100,000,000       5,000,000  

 

  (a) proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances

 

  (b) per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro

 

  (c) per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara

 

On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below:

 

Aggregate Funding Amount

    Shares  
               
  From       To          
$ 2,500,000     $ 5,000,000       5,000,000  
$ 5,000,001     $ 10,000,000       10,000,000  
$ 10,000,001     $ 30,000,000       30,000,000  

 

On September 23, 2020, the Board amended the MCPP, providing for the grant of common stock of the Company of 15.0 million, 7.5 million and 15.0 million shares of common stock of the Company, respectively, to each Albert Mitrani, Dr. Maria I. Mitrani and Ian Bothwell upon such time that the Company’s common stock trades above $0.25 per share, $0.50 per share and $0.75 per share, respectively, for 30 consecutive trading days subsequent to March 31, 2021 and provided such milestone occurs during the term of employment with the Company.

 

In addition, each of the current executives were entitled to receive an additional 7 million shares, which when combined with all previous IND and/or eIND’s Milestones previously issued under the MCPP of 43 million shares, represents the total of all incentive shares to be issued to each executive in connection with the combined thirteen IND’s and/or eIND’s Milestones achieved through September 23, 2020. In the future, each of the current executives shall be entitled to receive 5 million shares as a performance incentive for each IND and/or “Expanded Access” approval (and excluding all eIND’s) received by the Company that involve more than 15 patients and provided such milestone occurs during the term of employment with the Company.

 

Pursuant to the MCPP, as of September 23, 2020, a total of 233,000,000 shares have been issued and approximately 582,500,000 shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board:

 

          MCPP     MCPP  
    MCPP     Remaining     Total  
    Shares     Shares     Shares  
Name   Awarded     Available     Approved  
                   
Albert Mitrani     50,000,000       137,500,000       187,500,000  
Ian Bothwell     50,000,000       167,500,000       217,500,000  
Dr. Maria I. Mitrani     50,000,000       167,500,000       217,500,000  
Dr. George Shapiro     50,000,000       100,000,000       150,000,000  
Dr. Allen Meglin           5,000,000       5,000,000  
Michael Carbonara           5,000,000       5,000,000  
Consultants     33,000,000             33,000,000  
                         
Total     233,000,000       582,500,000       815,500,000  

 

The Company will record stock-based compensation expense in connection with any MCPP Shares that are actually awarded based on the fair value as of the initial grant date that the respective milestone for the MCPP Shares were approved. For the MCPP Shares approved on April 25, 2020, June 29, 2020, August 14, 2020 and September 23, 2020, the closing price of the common stock of the Company was $0.027, $0.056, $0.128 and $0.28, respectively.

 

In connection with the MCPP Shares that have been awarded to date, all such shares were issued in connection with the MCPP Shares approved on April 25, 2020 and accordingly were valued $0.027 per share, the closing price of the common stock of the Company on the date that those respective MCPP Shares were approved. The Company will record a total of $3,915,000 of stock-based compensation expense during the quarter ended July 31, 2020 and $2,376,000 during the quarter ended October 31, 2020, respectively, based on the fair value of the actual MCPP Shares awarded.

XML 36 R19.htm IDEA: XBRL DOCUMENT v3.20.2
13. Warrants
12 Months Ended
Oct. 31, 2019
Warrants  
Warrants

NOTE 13 – WARRANTS

 

A summary of warrant activity for the years ended October 31, 2019 and 2018 are presented below:

 

    Number of
Shares
    Weighted-average
Exercise Price
    Remaining
Contractual
Term (years)
    Aggregate
Intrinsic Value
 
Outstanding at October 31, 2018     3,687,484     $ 0.41       1.14     $  
Granted     2,000,000     $ 0.08       1.00     $  
Exercised         $                  
Expired/Forfeited     (1,158,313 )   $ 0.67       0.04        
Outstanding at October 31, 2019     4,529,371     $ 0.20       0.30     $  
                                 
Exercisable at October 31, 2019     4,529,371     $ 0.20       0.30     $  

 

    Number of
Shares
    Weighted-average
Exercise Price
    Remaining
Contractual
Term (years)
    Aggregate
Intrinsic Value
 
Outstanding at October 31, 2017     158,137,484     $ 0.05       9.02     $  
Granted         $           $  
Exercised     (77,300,000 )   $ 0.04       8.20     $  
Expired/Forfeited     (77,150,000 )   $ 0.04       8.17     $  
Outstanding and exercisable at October 31, 2018     3,687,484     $ 0.41       1.14     $  

 

In connection with the Sale of ANU assets on February 5, 2018, and the immediate resignation and termination of the Company’s Chief Operating Officer, the Chief Operating Officer agreed to forfeit 53,300,000 warrants to purchase shares of the Company’s common stock held at the time of the resignation and the Company agreed to grant the Chief Operating Officer 7,500,000 shares of newly issued common stock of the Company.

 

In connection with the Sale of ANU assets on February 5, 2018, and the immediate resignation and termination of the Company’s Chief Technology Officer, the Chief Technology Officer agreed to forfeit 23,850,000 warrants to purchase shares of the Company’s common stock held at the time of the resignation and the Company agreed to grant the Chief Technology Officer 7,500,000 shares of newly issued common stock of the Company.

 

In connection with the amendment to the Chief Financial Officer’s employment agreement on April 6, 2018, the terms of the 31,800,000 and 21,500,000 warrants to purchase common shares of the Company previously granted to the Chief Financial Officer described above were modified to provide that in the event of an occurrence of a change in control or termination of the employment (as defined in the agreement), pursuant to the terms thereof, the exercise price for all outstanding warrants granted to the Chief Financial Officer to purchase common stock of the Company during the term of his employment agreement shall be reduced to $0.001 per share. The Company valued the repricing of the warrants based on the date of the modification using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.58%, (2) remaining term of 8.6 years - 8.9 years, (3) expected stock volatility of 68%, and (4) expected dividend rate of 0%. The grant date fair value of the modified warrants originally issued during November 2016 and March 2017 was $318,000 and $215,000, respectively. The Company recorded the expense for the total amount associated with modification of $533,000 at the time of the Reorganization, the event which triggered the vesting provision associated with the modification (see Note 5).

 

In connection with the amendment to the Chief Science Officer’s employment agreement on April 6, 2018, the terms of the 10,000,000 and 13,850,000 warrants to purchase common shares of the Company previously granted to the Chief Science Officer described above were modified to provide that in the event of an occurrence of a change in control or termination of the employment (as defined in the agreement), pursuant to the terms thereof, the exercise price for all outstanding warrants granted to the Chief Science Officer to purchase common stock of the Company during the term of her employment agreement shall be reduced to $0.001 per share. The Company valued the repricing of the warrants based on the date of the modification using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.58%, (2) remaining term of 8.6 years - 8.9 years, (3) expected stock volatility of 68%, and (4) expected dividend rate of 0%. The grant date fair value of the modified warrants originally issued during November 2016 and March 2017 was $100,000 and $138,500, respectively. The Company recorded the expense for the total amount associated with modification of $238,500 at the time of the Reorganization, the event which triggered the vesting provision associated with the modification (see Note 5).

 

In connection with the Reorganization, The CFO and CSO each agreed to exercise on a cashless basis all of their warrants to purchase 53,300,000 and 23,850,000 shares of common stock of the Company, respectively. Based on the closing price of the Company’s common stock on the Effective Date of $0.012 per share and the warrant exercise price of $0.001 per share, the CFO and CSO were required to use 4,675,439 and 2,092,105 shares of common stock received from the exercise of the warrants, respectively, to pay for the exercise price for exercising all of the warrants.

 

On March 7, 2019, the Company issued 2,000,000 warrants in connection with common stock offerings and valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.44%, (2) term of 1 year, (3) expected stock volatility of 108%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $6,600.

 

On February 26, 2020, the Company issued the CFO a cashless warrant to purchase an aggregate of 7,500,000 shares of common stock in connection with the CFO’s employment agreement. The warrant is exercisable for $0.028 per share (the closing price of the Company’s common stock on the date of grant, until the tenth anniversary date of the date of issuance. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 1.14%, (2) term of 4 years, (3) expected stock volatility of 87%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $214,500. The Company will record $214,500 of stock-based compensation expense during the quarter ended April 30, 2020 based on the fair value of these warrants on the grant date.

 

On May 15, 2020 (“Effective Date”), the Company granted the Advisor warrants to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”) and exercisable for three years from the Effective Date. Warrants to purchase 2,000,000 shares shall be vested upon the Effective Date of the agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the agreement, respectively, provided however that the agreement is renewed and in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Warrants prescribed above will immediately become vested if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5,000,000 or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25,000,000. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 0.31%, (2) term of 3 years, (3) expected stock volatility of 90%, and (4) expected dividend rate of 0%. The grant date fair value of the warrants issued was $121,200. The Company will record $40,400 of stock-based compensation expense during the period that the Grant shares vest based on the fair value of these warrants on the grant date (see Note 14).

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14. Commitments and Contingencies
12 Months Ended
Oct. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 14 – COMMITMENTS AND CONTINGENCIES

 

Executive Employment Agreements

 

Effective November 4, 2016, the Company entered into executive employment agreements with Albert Mitrani, Dr. Maria Mitrani, Bruce Werber, and Ian Bothwell. On March 8, 2017, the Company entered into an executive employment agreement with Terrell Suddarth, and amended the employment agreements of Dr. Mitrani, Dr. Werber and Mr. Bothwell. On February 5, 2018, Dr. Werber’s and Mr. Suddarth’s’ employment agreements were terminated in connection with the Sale. On April 6, 2018, the Company amended Mr. Bothwell’s and Dr. Mitrani’s employment agreement, which provided among other things, that in the event of an occurrence of a change in control or termination of the employment (as defined in agreement) pursuant to the terms thereof, the exercise price for all outstanding warrants granted to Mr. Bothwell and Dr. Mitrani to purchase common stock of the Company during the term of the agreement shall be reduced to $0.001 per share. In addition, Mr. Bothwell’s employment agreement was amended to increase the initial term and the automatic renewal term provided for in the employment agreement from three years to five years, increased the amount of automobile expense allowance and removed the cap for the reimbursement of office related expenses. Collectively, the aforementioned executive employment agreements are referred to as the FY 2017 Executive Employment Agreements.

 

In connection with Sale (see Note 4), Werber and Suddarth each entered into a Separation and General Release Agreement with the Company effective upon the closing of the Sale which provided for the immediate resignation of Werber and Suddarth of all their respective executive and Board of Director positions held with the Company and/or any of the Company’s subsidiaries, and the termination and settlement of all obligations of each party to the other pursuant to the respective employment agreements, including the release of all rights the Company may have held in any intellectual property of Werber and Suddarth and any non-compete restrictions on Werber and Suddarth. In connection with such releases, Werber and Suddarth each agreed to forfeit all warrants previously granted and outstanding (a total of 77,150,000 warrants to purchase shares of common stock of the Company), forfeit any and all accrued and unpaid amounts owing under the employment agreements for past due wages, benefits, severance obligations, unreimbursed expenses and any other obligations owing to one another as of the date of the Sale totaling $906,515 in exchange for a grant of 7,500,000 shares of restricted common stock of the Company to each of Werber and Suddarth (the grant date fair value of the newly issued shares issued to each of Werber and Suddarth was $83,250).

 

In connection with the Reorganization, Mr. Mitrani’s, Dr. Mitrani’s and Mr. Bothwell’s FY 2017 Executive Employment Agreements were terminated in favor of newly executed employment agreements (collectively referred to as the April 2018 Executive Employment Agreements). In addition, as a condition of the Reorganization, Mr. Mitrani, Mr. Bothwell and Dr. Mitrani each agreed to release the Company for all amounts owed to them for unpaid salaries through the Effective Date and unpaid advances and/or expenses incurred prior to December 31, 2017 totaling $1,636,808. This amount is reflected in stockholders’ deficit for the year ended October 31, 2018. The significant terms provided for in the FY 2017 Executive Employment Agreements and the April 2018 Executive Employment Agreements are summarized below:

 

April 2018 Executive Employment Agreements

 

General

 

Pursuant to Albert Mitrani’s April 2018 Executive Employment Agreement, Mr. Mitrani serves as the Company’s President and Chief Operating Officer. Mr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Mitrani is also entitled to a commission on all sales attributable to him (i.e., excluding existing customers of the Company at the time of the Reorganization) at the rate of five percent (5%) of the "Net Sales" as defined in the agreement and an expense allowance of $5,000 per month.

 

Pursuant to Ian Bothwell’s April 2018 Executive Employment Agreement, Mr. Bothwell continues to serve as the Company’s Chief Financial Officer. Mr. Bothwell’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Mr. Bothwell has not been paid salary since July 2018.

 

Pursuant to Dr. Maria I. Mitrani’s April 2018 Executive Employment Agreement, Dr. Mitrani continues to serve as the Company’s Chief Science Officer. Dr. Mitrani’s base annual salary is $162,500, which shall accrue commencing on the Effective Date and shall be payable in equal semi-monthly installments, commencing May 1, 2018, in arrears. The base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term.

 

Term

 

The term of each of the April 2018 Executive Employment Agreements commences as of the Effective Date and continues until December 31, 2020 (Mr. Bothwell) or December 31, 2023 (Mr. Mitrani and Dr. Mitrani) (“Initial Term”), unless terminated earlier pursuant to the terms of the April 2018 Executive Employment Agreement; provided that on such expiration of the Initial Term, and each annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), the agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term of the April 2018 Executive Employment Agreement at least 90 days’ prior to the applicable renewal Date. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”

 

Unpaid Advances

 

The Company was required to repay the unpaid advances subsequent to December 31, 2017, and the unreimbursed expenses incurred subsequent to December 31, 2017, on May 15, 2018.  Such payments were not made as required.

 

Fringe Benefits and Perquisites

 

During the Employment Term, each Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.

 

Termination

 

The Company may terminate the April 2018 Executive Employment Agreement at any time for good cause, as defined in the April 2018 Executive Employment Agreement, including, the Executive’s death, disability, Executive’s willful and intentional failure or refusal to follow reasonable instructions of the Company’s Board of Directors, reasonable and material policies, standards and regulations of the Company’s Board of Directors or management.

 

Amendments To The April 2018 Executive Employment Agreements

 

February 26, 2020 Amendment

 

On February 26, 2020, the Company agreed to modify the employment agreement of Mr. Ian T. Bothwell, the Company’s Chief Financial Officer to provide Mr. Bothwell with:

 

  a) an extension to his employment agreement dated April 13, 2018 from December 2020 to December 2023 consistent with other executives of the Company; and

 

  b) and a one-time bonus in the form of a fully vested cashless warrant to purchase 7,500,000 shares of common stock of the Company, exercisable for ten years at an exercise price of $0.28 per share, the closing price of the common stock on the date of the grant.

 

On February 26, 2020, pursuant to the respective employment agreements with each of the Company’s executive officers, the Board granted each of Mr. Albert Mitrani, Dr. Maria Mitrani and Mr. Ian Bothwell a cash bonus of $37,500 for the calendar year ended December 31, 2019.

 

April 25, 2020 Amendment

 

On April 25, 2020, the Company agreed to amend and revise the each of Albert Mitrani, Ian Bothwell and Dr. Maria I. Mitrani, (individually each of A. Mitrani, Bothwell and Dr. Mitrani are referred to as an “Executive” and collectively the “Executives”) April 2018 Executive Employment Agreements. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:

 

  Term: An extension to the term of the employment agreements dated April 13, 2018 from December 31, 2023 to December 31, 2025.
     
  Base Salary:

An increase in base annual salary from $162,500 to $300,000. The amended salary amount of $300,000 shall be retroactively adjusted to commence as of January 1, 2019. The increased annual salary of $137,500 (“Incremental Salary”) over the prior annual salary amount of $162,500 (“Original Base Salary”) shall only be paid only upon there being sufficient available cash. Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Until such time as the Executive elects to convert, the accrued and unpaid salary, including Original Base Salary and Incremental Salary shall remain an obligation of the Company.

 

Severance Provisions:

  1. Company termination without cause, Executive for good reason:

 

  a) All existing accrued obligations existing at time of termination shall be paid to Executive.

 

  b) Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination,

 

  c) Executive shall be entitled to a cash payment equal to his unpaid base salary for the remaining term in effect at time of the time of the termination or an amount equal to four times (4x's) the base salary in effect at the time of termination, whichever is greater,

 

  d) Executive shall be entitled to a cash payment equal to his 200% of the prior year’s cash or stock bonus (excluding any stock grants received pursuant to the MCPP).

 

  2. Change In Control: In the event of a Change in Control and the Executive’s employment agreement is not extended for period of five years from the date of the Change in Control with all other terms and conditions of the agreement remaining the same, then the Executive may terminate the agreement for good reason and all respective severance terms as provided for a termination by Executive for good reason described in clause 1 above shall be provided to Executive.

 

  3. Executive termination due to disability, death, or non-renewal by Company:

 

  a) All existing accrued obligations existing at time of termination shall be paid to Executive.

 

  b) Any unvested equity grants in favor of Executive shall immediately become fully vested and any pending grants pursuant to the MCPP eligible to be issued to Executive shall be granted to Executive, regardless of whether the associated milestone were achieved prior to termination.

 

  c) Executive shall be entitled to a cash payment equal to 299% of Executive’s base salary in effect at the time of termination, plus a gross up amount to cover Executive’s tax liability associated with such payment.

 

  d) 200% of the prior years cash or stock bonus (excluding MCPP performance stock grants).

 

June 29, 2020 Amendment

 

On June 29, 2020, the board of directors of the Company (“Board”) agreed to further amend and revise the April 2018 Executive Employment Agreements for each of Executives. The primary amended terms associated with the agreements for each Executive were substantially similar and consisted of the following:

 

  Base Salary: An increase in the Executives annual base annual salary upon such time that the Company achieves monthly revenues in the amounts provided below, provided such monthly revenue increase occurs for four consecutive months. Upon the achievement of the defined salary milestone, the salary adjustment will be retroactive to the first month in which the salary threshold was met. Any adjustment pursuant to this provision shall not be reduced for any future reduction in revenues that may occur.

 

Monthly Revenues
(in millions)
    Base Salary
Increase
 
         
$ 1.00     $ 130,000  
$ 1.50     $ 200,000  
$ 2.00     $ 275,000  
$ 3.50     $ 630,000  
$ 5.00     $ 900,000  

 

Coordinator Agreement

 

Effective September 30, 2019, the Sales Representative and the Company mutually agreed to terminate the Sales Rep Agreement in exchange for the principal executive of the Sales Representative (“Coordinator”) agreeing to become an employee of the Company effective October 1, 2019 (“Coordinator Agreement”). The Coordinator Agreement provided that the parties would seek to negotiate in good faith a definitive employment agreement. The parties did not executive a definitive agreement and the Coordinator is no longer providing services to the Company.

 

Advisor Agreement

 

Effective May 15, 2020 (“Effective Date”), the Company entered into a one-year agreement (“Advisor Agreement”) with an individual to provide financial advisory services to the Company (“Advisor”). The Advisor Agreement is subject to successive, automatic one (1) year extensions unless either party has given the other 30- day written notice prior to the expiration of then in effect termination date, of their desire not to renew the Advisor Agreement. As the compensation for Advisor’s services and his fulfillment of all obligations under the agreement the Company agreed to issue the Advisor 1,000,000 shares of common stock (“Stock Grant”), of which 250,000 shares shall be fully vested as of the Effective Date, 250,000 shares vest on the sixth month anniversary of the Effective Date, 250,000 shares vest on the ninth month anniversary of the Effective Date and 250,000 shares vest on the twelfth month anniversary of the Effective Date, provided however that the Advisor Agreement is in full effect during such vesting period(s) for the respective portion of the Stock Grant. In addition, Company agreed to grant 3-year warrants to the Advisor to purchase 6,000,000 shares of common stock of the Company at a purchase price of $0.04 per share (“Warrants”), of which Warrants to purchase 2,000,000 unrestricted shares shall be vested upon the Effective Date of the Advisor Agreement and 2,000,000 and 2,000,000 of the remaining Warrants shall vest on the eighteenth month and thirtieth month anniversary of the Effective Date of the Advisor agreement, respectively, provided however that the Advisor Agreement is in full effect during the applicable vesting period(s) for the respective portion of the grant. Notwithstanding the above, any unvested Stock Grant or Warrants prescribed above will immediately become vested shares if (a) the Company concludes a transaction involving any of the entities introduced by Advisor based on a transaction value greater than $5,000,000 or (b) the Company completes any transaction that results in a change in control or any financing transaction with an aggregate value of at least $25,000,00. The Advisor Agreement may be terminated by the Company based on Advisor’s breach of any of the terms of the Advisor Agreement, the Company’s determination that Advisor is not meeting the desired objectives or if either party provides notice of the desire not to renew the Advisor Agreement upon expiration.

 

Sales Executives

 

On January 6, 2020, the Company entered into employment agreements with two individuals (“Sales Executives”), each to serve as a Vice President – Global Sales and Marketing. The terms of each Sales Executive employment agreement are identical (“VP Agreements”). The initial term of the VP agreements are for three years and provide for automatic annual renewals thereafter, unless either party provides 90-day written notice prior to expiration of the then current term. The VP Agreements may also be terminated by the Company beginning June 30, 2020 in the event the Sales Executive fails to meet certain defined minimum revenue growth milestones. The Sales Executives will receive compensation in the form of monthly salary of $18,000 and a quarterly override based on revenues earned by the Company during a quarterly period that exceed $600,000 beginning for the quarter ended June 30, 2020. In addition, upon execution of the Agreement, each of the Sales Executives were granted 1,000,000 shares of unregistered common stock of the Company valued at $0.035 per share, the closing price of the common stock of the Company on the grant date. The Company will record $35,000 of stock-based compensation expense on the grant date for each issuance. The VP Agreements also provide the Sales Executives with the right for each to receive an additional 750,000 shares of common stock at the end of each quarterly anniversary of the VP Agreements throughout the Initial Term (maximum 9,000,000 shares) (“Performance Shares”), provided that the VP Agreements remain in effect during the applicable quarterly period. The vesting of the Performance Shares may also be accelerated based on achievement of certain revenue milestones. The Company will record stock-based compensation expense for each respective quarterly period that the Performance Shares vest of $52,500.

 

Consultants Agreement

 

Effective March 30, 2020 (the “Effective Date”), the Company entered into a consulting agreement (“Agreement”) with Assure Immune L.L.C. (the “Consultant”) for an initial term of one year (the “Initial Term”) with automatic renewals for two (2) additional annual periods (each a “Renewal Term,” and together with the “Initial Term,” the “Term”), unless written notice is provided by either party at least 45 days prior to the applicable termination date. Under the Agreement, the Consultant will provide the Company during the Term with expertise, experience, advice and direction associated with the critical functional executive level roles of the Company as it relates to the oversight and management of the Company’s regulatory, research and development and laboratory operations, consistent with the Company’s corporate mission and strategies and subject to the resource limitations of the Company. In connection with the Agreement, the Consultants will receive monthly fees of $30,000 during the Initial Term and monthly consulting fees of $35,000 and $40,000 the first and second Renewal Terms, if any. In addition. the Company agreed to issue to the Consultant or its designees 12,000,000 shares of common stock of the Company (“Shares”), 50% of which Shares vest as of the Effective Date and balance of which Shares vest upon the six-month anniversary of the Effective Date. The Agreement also provides that upon the commencement of each Renewal Term, if any, the Consultant will receive up to 6,000,000 additional Shares, 50% of which Shares will vest on the commencement date of the Renewal Term and the balance of which additional Shares will vest on the six (6) month anniversary of such date. In connection with the Agreement, the Consultant (and its principals) are obligated to comply with customary confidentiality, non-compete and non-solicitation covenants and have agreed that all intellectual property developed during the term of the Agreement shall remain the property of the Company.

 

In addition to the Shares to be issued above, the Consultant or its designees will be entitled to participate in the Company’s Management and Consultants Performance Stock Plan (the “MCPP”), more fully described in Note 12. Pursuant to the MCPP, the Consultant or its designees may be awarded up to 33,000,000 Shares, based on the achievement of certain defined operational performance milestones (“Milestones”) during the Term of the Agreement and for a period of twelve (12) months after the expiration or earlier termination of the Agreement, provided that expiration or termination is not for “cause” or the Consultant’s non-renewal of the Agreement.

 

Leases

 

Ethan NY

 

On September 3, 2015, Ethan NY entered into a five-year lease agreement (“Ethan Lease”) for a store located in New York City, New York. The Ethan Lease commenced on October 1, 2015. Under the terms of the Ethan Lease, minimum monthly lease payments of $9,500 per month were to commence in December 2015 through October 2020. During June 2016, Ethan NY exited from its leased premises. Ethan NY did not make any of the required minimum monthly lease payments as required. The total amount of minimum lease payments that Ethan NY is obligated to pay pursuant to this 5-year lease is $586,242 (excluding late fees and interest provided for under the Ethan Lease).

 

All of Ethan NY’s obligations under the Ethan Lease are recourse only to the assets at Ethan NY, except for certain obligations under the Ethan Lease that were guaranteed by a former employee. Under the terms of the Ethan Lease, the obligations of Ethan NY for future rents are to be mitigated based on the amount of any future rents that are received for the rental of the leased premises to other tenants during the initial term. During August 2016, Ethan NY received confirmation that the leased premises had been leased to another tenant. In connection with the termination of the Ethan Lease, Ethan NY has made several unsuccessful attempts to contact the landlord for the purpose of obtaining a settlement and release for any amounts that the landlord may claim are owing under the Ethan Lease, if any. Ethan NY is not aware of any claim pending or threatened in connection with the Ethan Lease. At October 31, 2018 and 2019, Ethan NY has recorded in liabilities of discontinued operations the amount of rent obligations through June 30, 2016 and a reserve for estimated losses in connection with termination of the Ethan Lease of $101,905 and $101,905, respectively.

 

Lab Facilities:

 

Anu Life Sciences, Inc.

 

Anu Life Sciences Inc. a Florida corporation (“ANU”), entered into a five-year lease agreement (“Lab Lease”) for an approximately 3,500 square foot laboratory and administrative office facility in Sunrise, Florida. The Lab Lease was effective July 1, 2017 and was to expire on June 30, 2022.

 

As described in Note 4, in connection with the Sale, ANU sold or transferred to Vera its right, title and interest in the Lab Lease (including the associated security deposits of $37,275) and all leasehold improvements.

 

The minimum monthly lease payments under the Lab Lease, excluding applicable Florida sales tax and additional rents as may be required under the terms of the Lab Lease, were approximately $7,900 for the first 24 months and $9,000 per month, $9,200 per month and $9,400 per month for the third, fourth and fifth years, respectively. Minimum lease payments commenced July 1, 2017. The Company recorded lease expense on a straight-line basis over the life of the lease. The Company recorded lease expense in connection with the Lab Lease of $25,803 for the period November 1, 2017 through February 5, 2018.

 

2019 Lab Facility:

 

In connection with the Company’s decision to again operate a placental tissue bank processing laboratory in Miami, Florida, during February 2019, the Company entered into a renewable month to month lease agreement (“Miami Lab Lease”) for an approximately 450 square foot laboratory and a 100 square foot administrative office facility. Monthly lease payments are approximately $5,200 plus administrative fees and taxes. In connection with the Miami Lab Lease, the Company was required to post a security deposit of $6,332.

 

Effective March 2019, the Company entered into an agreement to lease certain manufacturing equipment (“Equipment Lease”) to be used in its lab, including a full care maintenance plan for such equipment totaling approximately $239,595. The lease agreement is for five years and requires minimum monthly lease payments of approximately $4,513 per month, plus sales taxes.

 

The minimum lease payments pursuant to the Equipment Lease are as follows:

 

Year Ended     Minimum  
October 31,     Rent  
2020     $ 72,208  
2021       54,156  
2022       54,156  
2023       54,156  
2024       18,052  
Total     $ 252,728  

 

Administrative Office:

 

The Company’s corporate administrative offices are leased from MariLuna, LLC, a Florida limited liability company which is owned by Dr. Mitrani. The term of the lease runs through June 2023 and the monthly rental rate through June 2020 is $2,900 and thereafter $3,500.

 

The minimum lease payments pursuant to the office lease are as follows:

 

Year Ended     Minimum  
October 31,     Rent  
2020     $ 37,200  
2021       42,000  
2022       42,000  
2023       28,000  
2024        
Total     $ 149,200  

 

Preparation of IRB, Pre-IND, IND Protocols for Clinical Applications and Clinical Trial Initiation and Monitoring:

 

In connection with the Company’s ongoing research and development efforts and the Company’s efforts to meet compliance with current and anticipated United States Food and Drug Administration (“FDA”) regulations expected to be enforced beginning in May 2021 pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products that fall under Section 351 of the Public Health Services Act (“HCT/Ps”), the Company has applied for and received Investigation New Drug (“IND”) approval from the FDA to commence clinical trials in connection with the use of the Company’s products and related treatment protocols for specific indications. The ability to successfully complete the above efforts will be dependent on the Company’s ability to timely fund the required payments and complete the applicable clinical trials, which is subject to available working capital generated from operations, financing arrangements with the third party vendors involved in the studies and/or from additional debt and/or equity financings as well as ultimate approval from the FDA.

 

Contingent Convertible Obligations Into Equity Securities

 

Private Placement Of Convertible 6% Debentures

 

As more fully described in Note 9, the remaining outstanding Convertible Debentures (the principal and all accrued but unpaid interest thereon) contained provisions that under certain conditions, provided the ability of the holders of the Convertible Debentures at their option at any time, from time to time to convert into shares of the common stock of the Company. The conversion prices were based on the Company completing a contemplated pending reverse split at the Company’s sole discretion (which the Company elected not to pursue) or at conversion prices greatly in excess of the historical prices of the Company’s common stock and reasonably expected prices of the Company’s common stock to be realized during the term of the Convertible Debentures. As a result, none of the Convertible Debentures have been or are expected to be converted in accordance with their conversion provisions. The contingent rights to convert for certain of the convertible debentures did not result in any underlying value attributable to the fair value of the embedded derivatives liabilities associated with respective Convertible Debentures.

 

Obligations Due Under Executive Employment Agreements

 

Beginning July 1, 2020, at the sole option of the Executive, any portion of unpaid Original Base Salary for periods after January 1, 2020, including unpaid bonus salary, may be converted by Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Original Base Salary that existed prior to January 1, 2020, including unpaid bonus salary, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

Beginning December 1, 2020, at the sole option of the Executive, all unpaid Incremental Salary for periods after January 1, 2020 may be converted by the Executive into common stock at a conversion rate equal to the average trading price during the month in which the accrued salary pertains. For any unpaid Incremental Salary that existed prior to January 1, 2020, the amounts may be converted at a conversion price using the closing trading price of the stock on the last trading day in December 2019.

 

None of the Executives have yet to elect to convert any portion of their unpaid Original Base Salary.

 

As of June 30, 2020, there was approximately $721,415 of unpaid Original Base Salary and Incremental Salary related to the period prior to December 31, 2019 and $93,110 of unpaid Original Base Salary and Incremental Salary related to the period January 1, 2020 through June 30, 2020.

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15. Mint Organics
12 Months Ended
Oct. 31, 2019
Mint Organics  
Mint Organics

NOTE 15 – MINT ORGANICS

 

Mint Organics Inc. (“Mint Organics”) authorized capital consists of (i) 1,000 shares of Class A voting common stock, par value $0.001 per share (“Class A Common Stock”); (ii) 1,000 shares of Class B Non-voting common stock, par value $0.001 per share (“Class B Common Stock”); and (iii) 1,000 shares of Preferred Stock, par value $0.001 per share. Organicell owns 550 shares of Class A Common Stock, representing 100% of the outstanding shares of Class A Common Stock. There are no shares of Class B Common Stock currently outstanding.

 

Pursuant to the Certificate Of Designation filed on February 28, 2017 and as amended on March 23, 2017, Mint Organics authorized 300 shares of Series A convertible preferred stock, par value $0.001 per share and a stated value of $1,000 per share (“Mint Series A Preferred Stock”). The Mint Series A Preferred Stock is non-voting and non-redeemable. The amount of each share of the Mint Series A Preferred Stock shall automatically convert into 1.5 shares of Class B Common Stock of Mint Organics upon the earlier of (a) the fifth anniversary of the date such share of Mint Series A Preferred Stock was issued; or (b) Mint Organics’ receipt of the necessary licenses and permits required to operate business operations in the medical cannabis industry. In addition, commencing on the first anniversary of the issuance date and for the 90-day period thereafter, each holder of the Mint Series A Preferred Stock shall have the right, but not the obligation, to convert some or all of such holder’s shares of Mint Series A Preferred Stock (or Class B Common Stock equivalent) into unregistered shares, par value $0.001 per share, of common stock of Organicell, based on the stated value divided by the average trading price of Organicell common stock for the ten trading days prior the conversion date. Notwithstanding the foregoing, the number of shares of Class B Common Stock issuable upon the conversion of the outstanding Mint Series A Preferred Stock shall be adjusted to ensure that the outstanding Class B Common Stock represents 45% of the outstanding capital stock of Mint Organics (based on conversion of 300 shares of the Mint Series A Preferred Stock or pro rata portion thereof).

 

Mint Organics issued to each of Taddeo and Rohrbaugh (i) 150 shares of Mint Series A Preferred Stock and (ii) a warrant exercisable for up to 150,000 shares of Organicell’s common stock for $0.15 per share exercisable from the date of issuance until the third anniversary of the date of issuance (see Note 13).

 

Mr. Peter Taddeo (“Taddeo) and Mr. Wayne Rohrbaugh (“Rohrbaugh”) each invested $150,000 to fund the initial operations of Mint Organics. The Company immediately established Mint Organics, , a 55%-owned subsidiary of the Company and Mint Organics Florida, Inc. (“Mint Organics Florida”), a wholly owned subsidiary of Mint Organics, each dedicated to obtain a license to dispense medical cannabis in Florida (collectively Mint Organics and Mint Organics Florida are referred to as the “Mint Organics Entities”). In connection with the investment, Mint Organics issued to each of Taddeo and Rohrbaugh (i) 150 shares of Mint Series A Preferred Stock and (ii) a warrant exercisable for up to 150,000 shares of Organicell’s common stock for $0.15 per share exercisable from the date of issuance until the third anniversary of the date of issuance (see Note 13).

 

In addition, in connection with the agreement, Taddeo was appointed as the Chief Executive Officer and as a director of the Mint Organics Entities. Rohrbaugh was appointed as the Chief Operating Officer and as a director of the Mint Organics Entities.

 

On March 8, 2017, Mint Organics issued warrants to purchase shares of Class A Common Stock, of Mint Organics, vesting on the date Mint Organics, through one of its subsidiaries, obtains a license from a state to dispense cannabis until the fifth anniversary thereof to the following executives of Mint Organics:

 

Name:   Warrants     Exercise Price:  
Albert Mitrani     79     $ 0.001  
Ian T. Bothwell     79     $ 0.001  
Dr. Maria I. Mitrani     79     $ 0.001  
TOTAL     237          

 

In connection with an independent valuation using a Black-Scholes option model, the fair value of the warrants issued were determined to be $34,949. At the time of issuance, the Company estimated that the warrants would be fully vested by December 31, 2017. The Company has recorded amortization expense totaling $0 and $6,889 during the year ended October 31, 2019 and 2018, respectively, as additional stock-based compensation.

 

Taddeo Employment Agreement

 

Pursuant to an employment agreement entered into effective May 1, 2017, with Mr. Taddeo (“Taddeo”) and Mint Organics (“Taddeo Employment Agreement”), Mr. Taddeo shall serve as the Chief Executive Officer of Mint Organics (“Mint CEO”) and a member of the Board of Directors of Mint Organics (“Mint Board”). The employment term shall be for three years, unless terminated earlier pursuant to the terms of the agreement, and thereafter deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term at least 90 days prior to the applicable renewal date. The Mint CEO’s base annual salary is $180,000 during the period prior to Mint Organics, through one of its subsidiaries, or by other means, obtains or acquires access for a license from a state to dispense cannabis which shall accrue commencing as of the effective date and shall be payable upon Mint Organics generating sufficient net revenue or obtaining sufficient third party financing; and thereafter payable in periodic installments in accordance with Mint Organics customary payroll practices, but no less frequently than monthly. The Mint CEO’s base salary shall automatically be adjusted to an annual rate of base salary of $250,000 once the license is obtained. The base salary shall be reviewed at least annually by the Mint Board and the Mint Board may, but shall not be required to, increase the base salary during the employment term. In connection with the execution of the agreement, Mint Organics agreed to pay the Mint CEO a $25,000 signing bonus which shall be accrued and paid by Mint Organics upon Mint Organics having sufficient cash flow. The agreement also contains terms regarding eligibility for future annual bonuses, annual equity awards under Mint Organics’ equity plan, if any, fringe benefits and perquisites consistent with the practices Mint Organics (including health and dental insurance, an automobile expense allowance of $1,000 per month, and reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the Mint CEO in accordance with Mint Organics’ expense reimbursement policies. Mint Organics may terminate the agreement at any time with or without “Cause” and the Mint CEO may resign at any time with or without “Good Reason” (as defined in the agreement). The nature of the obligations owing to the Mint CEO upon termination is more fully described in the agreement. In connection with the execution of the agreement, the Company granted the Mint CEO 1,000,000 shares of unregistered common stock of Organicell, which vested on December 31, 2017 (see Note 12).

 

On April 6, 2018, Peter Taddeo (“Mint CEO”) resigned as a member of the Board of Directors of the Company and as the Chief Executive Officer and member of the board of directors of the Mint Organics Entities. In connection with Mr. Taddeo’s resignation, Mr. Taddeo entered into a Separation and General Release Agreement (“Taddeo Separation Agreement”) whereby Mr. Taddeo agreed to release the Mint Organics Entities from all obligations in connection with the Taddeo Agreement and all other agreements and/or financial obligations between the parties related to the Taddeo’s employment or services performed with any of Mint Organics Entities totaling $156,568. In consideration for Taddeo entering into the Taddeo Separation Agreement, the Mint Organics Entities paid Taddeo $5,000 and Mr. Bothwell paid $3,000 to Taddeo for the purchase of the 1,000,000 shares of common stock of the Company that were granted to Taddeo in connection with the Taddeo Agreement. Contemporaneously with the execution of the Taddeo Separation Agreement, the Company and Mr. Taddeo entered into a Share Purchase and General Release Agreement whereby the Company agreed to purchase from Mr. Taddeo his 150 shares of Mint Series A Preferred Stock for an aggregate purchase price of $40,000.

 

Exchange Agreement

 

On May 1, 2019, the Company and Mint Organics entered into an exchange agreement whereby the Company agreed to acquire the 150 shares of Mint Series A Preferred Stock and the 150,000 warrants to purchase shares of common stock of the Company originally issued to Mr. Wayne Rohrbaugh in connection with participation agreement referred to above in exchange for 4,400,000 shares of common stock of the Company (approximately $0.034 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction). In connection with the exchange, Mr. Rohrbaugh provided a release to the Company in connection with any claims associated with his original investment.

 

Mint Organics Florida, Inc.

 

Mint Organics Florida’s authorized capital structure consists of (1) 10,000 shares of Class A voting common stock (“Class A Common Stock”), par value $0.001 per share and (ii) 10,000 shares of Class B Non-voting common stock (“Class B Common Stock”), par value $0.001 per share. The Class A Common Stock shall have the sole right and power to vote on all matters on which a vote of shareholders is to be taken. In all matters, with respect to actions both by vote and by consent, each holder of shares of the Class A Common Stock shall be entitled to cast one vote in person or by proxy for each share of Class A Common Stock standing in such holder’s name on the transfer books of the Corporation. The Class B Common Stock shall not be entitled to vote on any matters.

 

On February 28, 2017, the Board of Mint Organics Florida issued 2,125 shares of Class A Common Stock, par value $0.001 per share, of Mint Organics Florida to Mint Organics and determined that the fair consideration for the initial issuance of the Class A Common Stock is $0.001 per share.

 

Offering:

 

On March 17, 2017, Mint Organics Florida initiated an offering to raise up to $1,000,000 in exchange for up to 212.5 shares of Class B Common Stock, representing approximately 10.0% of the outstanding equity of Mint Organics Florida as of the date of the offering. The proceeds of the offering were to be used for general working capital purposes. On April 6, 2017, Mint Organics received proceeds of $100,000 in connection with the sale of 21.25 units to an investor in connection with the offering (representing a 1% minority interest in the equity of Mint Organics Florida).

 

On May 1, 2019, the Company and Mint Organics Florida entered into an exchange agreement whereby the Company agreed to acquire the 21.25 units from the investor referred to above in exchange for 2,400,000 shares of common stock of the Company (approximately $0.042 per share representing a discount to the trading price of $0.049 as of the effective date of the transaction). In connection with the exchange, the investor provided a release to the Company in connection with any claims associated with the investor’s original investment.

 

Non-controlling interests in Mint Organics and Mint Organics Florida

 

The Company’s non-controlling interests in Mint Organics and Mint Organics Florida at October 31, 2019 and October 31, 2018 are determined based on the pro rata equity percentage held by the non-controlling equity holders of Mint Organics and Mint Organics Florida during each of the respective periods, provided however, that the carrying amount of non-controlling interests shall not be negative.

 

Effective May 1, 2019, the Company has acquired all of the minority interests issued in Mint Organics and Mint Organics Florida, and accordingly, there no longer exists any non-controlling interests in those entities as of such date.

 

At October 31, 2018, the non-controlling interests of Mint Organics Inc. and Mint Organics Florida were 22.5% and 4.0%, respectively. As of October 31, 2018, the non-controlling interests representing the minority interest’s share of both Mint Organics and Mint Organics Florida equity was $42,977.

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16. Liabilities Attributable to Discontinued Operations
12 Months Ended
Oct. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Liabilities Attributable to Discontinued Operations

NOTE 16 – LIABILITIES ATTRIBUTABLE TO DISCONTINUED OPERATIONS

 

During September 2015, the Company formed Ethan NY for the purpose of selling clothing and accessories through a retail store. During June 2016, the Ethan NY operations were closed.

 

The following summarizes the carrying amounts of the assets and liabilities of Ethan NY at October 31, 2019 and 2018 (see Note 14):

 

    October 31,  
    2019     2018  
             
Assets   $     $  
                 
Liabilities:                
                 
Accounts Payable   $ 94,835     $ 94,835  
Accrued Expenses     31,016       31,016  
    $ 125,851     $ 125,851  
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17. Segment Information
12 Months Ended
Oct. 31, 2019
Segment Reporting [Abstract]  
Segment Information

NOTE 17 - SEGMENT INFORMATION

 

For the years ended October 31, 2019 and 2018, the Company operated only one operating segment.

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18. Subsequent Events
12 Months Ended
Oct. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

NOTE 18 – SUBSEQUENT EVENTS

 

Several subsequent events are disclosed in Notes 4, 5, 8, 9, 12, 13, 14, and 15. There were no other subsequent events for disclosure purposes.

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2. Summary of Significant Accounting Policies (Policies)
12 Months Ended
Oct. 31, 2019
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Concentrations of Credit Risk

Concentrations of Credit Risk

 

The balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $250,000 per institution. At October 31, 2019, the Company did not have any cash balances in financial institutions in excess of FDIC insurance coverage.

 

During the fiscal year ended October 31, 2019, the Company had one customer that accounted for approximately $206,400 of revenues (12.2%). No other customer accounted for more than 10% of the total revenues for the year ended October 31, 2019.

 

During the period November 1, 2018 through April 30, 2019, the Company purchased finished goods inventory that was sold to customers from two suppliers, of which each accounted for approximately $29,000 and $65,000 or 31.0% and 69.0%, respectively, of the total amount of finished goods inventory purchased during that period.

 

During the May 1, 2019 through October 31, 2019, the Company purchased the tissue raw material used in manufacturing of its products from two suppliers, of which each accounted for approximately $61,000 and $47,500 or 56.0% and 44.0%, respectively, of the total amount of tissue raw material purchased during that period.

 

The Company’s sales and supply agreements are non-exclusive and the Company does not believe it has any exposure based on the customers of its products and/or the availability of raw materials and/or products from other suppliers. Since May 1, 2019, the Company manufactured and distributed proprietary products that reduce exposure from the reliance on third party suppliers of inventory but increased exposure of reliance on raw materials and other supplies used in the manufacturing of its products.

Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

Cash Equivalents

Cash Equivalents 

 

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Accounts Receivable

Accounts Receivable

 

Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions.

 

The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. For the year ended October 31, 2019 and 2018, the Company recorded bad debt expense of $10,635 and $62,420, respectively.

Inventory

Inventory

 

Inventory is stated at the lower of cost or net realizable value using the average cost method. We provide reserves for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At October 31, 2019, we determined that there were not any reserves required in connection with our finished goods.

Property and Equipment

Property and Equipment

 

Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of property and equipment range from 3 to 15 years. Upon sale or retirement, the cost and related accumulated depreciation and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.

Revenue Recognition

Revenue Recognition

 

Effective November 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) Topic 606 “Revenue from Contracts with Customers” which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts. The Company applied the new standard using a modified retrospective approach.

 

The Company recognizes revenue only when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control is transferred at a point-in-time, which is typically when the transfer and title to the product sold has taken place and there is evidence of our customer’s satisfactory acceptance of the product shipment or delivery. Due to the nature of the Company’s sales transactions, this adoption did not have any impact to the Company’s financial statements for the year ended October 31, 2019.

Net Income (Loss) Per Common Share

Net Income (Loss) Per Common Share

 

Basic income (loss) per common share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

 

At October 31, 2019, the Company had 4,529,371 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2019. At October 31, 2018, the Company had 3,647,484 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the year ended October 31, 2018.

Stock-Based Compensation

Stock-Based Compensation

 

All stock-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.

 

Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based upon the estimated fair value of the option or warrant.

Income Taxes

Income Taxes

 

The Company is required to file a consolidated tax return that includes all of its subsidiaries.

 

Provisions for income taxes are based on taxes payable or refundable for the current year taxable income for federal and state income tax reporting purposes and deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of the operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

The Company accounts for uncertain tax positions in accordance with FASB Topic 740 – Income Taxes. This pronouncement prescribes a recognition threshold and measurement process for financial statement recognition of uncertain tax positions taken or expected to be taken in a tax return. The interpretation also provides guidance on recognition, derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

 

For the year ended October 31, 2019 the Company incurred operating losses, and therefore, there was not any income tax expense amount recorded during that period. During the year ended October 31, 2018 there was a change in ownership which caused a change in control under IRC Section 382 (“Section 382 event”). Prior to the Section 382 event, the Company utilized a portion of its available net operating loss carryforwards to offset income through that date mainly resulting from the sale of ANU. Any remaining net operating losses which had been carried forward from years ended October 31, 2017 and before the Section 382 event were lost. There is a full valuation allowance for years ended October 31, 2019 and 2018.

 

Since January 1, 2018, the nominal corporate tax rate in the United States of America is 21 percent due to the passage of the "Tax Cuts and Jobs Act" on December 20, 2017 by the US Senate and House of Representatives.

Valuation of Derivatives

Valuation of Derivatives 

 

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. We analyzed the derivative financial instruments in accordance with ASC 815.

 

The Company utilized Monte Carlo Simulation models that value the derivative liability based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

 

The derivative liabilities result in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes. This derivative liability is marked-to-market each quarter with the change in fair value recorded in the income statement. Unamortized discount is amortized to interest expense using the effective interest method over the life of the Convertible Note.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made. 

 

The Company follows FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.

 

The Company follows the provisions of ASC 820 with respect to its financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s convertible features associated with its promissory notes (see Note 9) which were required to be measured at fair value on a recurring basis under of ASC 815 as of January 31, 2018, the date immediately prior to the event that eliminated the convertible instrument related to the derivative liability, and October 31, 2017, were all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities as of January 31, 2018 and October 31, 2017: 

 

Level one — Quoted market prices in active markets for identical assets or liabilities;

 

Level two — Inputs other than level one inputs that are either directly or indirectly observable such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level three — Unobservable inputs that are supported by little or no market activity and developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s derivative liability is measured at fair value on a recurring basis. The Company classifies the fair value of the derivative liability under level three.

 

Based on ASC Topic 815 and related guidance, the Company concluded the common stock issuable pursuant to the conversion features of the convertible promissory notes are required to be accounted for as derivatives as of the issue date due to a reset feature on the exercise price. At the date of issuance common stock derivative liabilities were measured at fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The Company records the fair value of these derivatives on its balance sheet at fair value with changes in the values of these derivatives reflected in the consolidated statements of operations as “change in fair value of derivative liabilities.” These derivative instruments are not designated as hedging instruments under ASC 815-10 and are disclosed on the balance sheet under Derivative Liabilities.

 

Further, and in accordance with ASC 815, the embedded derivatives are revalued using a Monte Carlo Simulation model at issuance and at each balance sheet date and marked to fair value with the corresponding adjustment as a “gain or loss on change in fair values” in the consolidated statement of operations.

 

The Company classifies the fair value of these securities under level three of the fair value hierarchy of financial instruments. Changes in the unobservable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments.

 

During the year ended October 31, 2018, the Company recorded a gain of $265,597 associated with the change in fair value of the derivative liabilities from October 31, 2017.

 

The Company did not have any convertible instruments outstanding at October 31, 2019 and 2018 that qualify as derivatives.

Subsequent Events

Subsequent Events

 

The Company has evaluated subsequent events that occurred after October 31, 2019 through the financial statement issuance date for subsequent event disclosure consideration.

New Accounting Pronouncements

New Accounting Pronouncements

 

In February 2016, a pronouncement was issued by the FASB that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company does not expect that implementation of the new pronouncement will have a material impact to its financial statements.

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6. Inventories (Tables)
12 Months Ended
Oct. 31, 2019
Inventory Disclosure [Abstract]  
Schedule of Inventories

Inventories totaled $77,963 and $0 at October 31, 2019 and October 31, 2018, respectively.

 

    October 31, 2019     October 31, 2018  
             
Raw materials and supplies   $ 5,123     $  
Finished goods     72,840        
                 
Total inventories   $ 77,963     $  
XML 44 R27.htm IDEA: XBRL DOCUMENT v3.20.2
7. Property and Equipment (Tables)
12 Months Ended
Oct. 31, 2019
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment
    October 31, 2019     October 31, 2018  
             
Computer equipment   $ 8,653     $ 8,653  
Manufacturing equipment     272,331        
      280,984       8,653  
Less: accumulated depreciation and amortization     (17,669 )     (2,875 )
Total property and equipment, net   $ 263,315     $ 5,778  
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11. Income Taxes (Tables)
12 Months Ended
Oct. 31, 2019
Income Tax Disclosure [Abstract]  
Schedule of Components of Income Tax Expense (Benefit)

The consolidated provision for income taxes for October 31, 2019 and 2018 consists of the following:

 

    Year Ended
October 31,
    Year Ended
October 31,
 
    2019     2018  
                 
Current:                
Federal   $     $  
State            
    $     $  
Deferred:                
Federal   $ (185,045 )   $ 911,472  
State     (19,471 )     164,180  
      (204,516 )     1,075,652  
Change in Valuation Allowance     204,516       (1,075,652 )
    $     $  
Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the U.S. federal statutory tax amount to the Company’s effective tax amount is as follows:

 

    October 31, 2019     October 31, 2018  
Tax at federal statutory rate   $ (361,687 )   $ (802,067 )
State taxes, net of federal benefit     (74,835 )     (68,278 )
Permanent differences     10,468       427,759  
Effect of change in income tax rate           1,052,690  
Other     221,538       46,139  
Section 382 limitation           419,409  
Total income tax expense (benefit)     (204,516 )     1,075,652  
Change in valuation allowance     204,516       (1,075,652 )
    $     $  
Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carry-forwards that give rise to deferred tax assets and liabilities for the Company were as follows:

 

    October 31, 2019     October 31, 2018  
Deferred Tax Assets:                
Stock based compensation   $ 2,670,914     $ 2,686,859  
Accrued compensation     136,127        
Net operating loss carryforward-Federal     222,754       91,501  
Net operating loss carryforward-State     34,918       16,612  
Other     177       137  
Total deferred tax assets:     3,064,890       2,795,109  
Deferred Tax Liabilities:                
Property and equipment     66,650       1,385  
Total deferred tax liabilities:     66,650       1,385  
                 
Valuation Allowance     (2,998,240 )     (2,793,724 )
Net deferred tax assets   $     $  
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12. Capital Stock (Tables)
12 Months Ended
Oct. 31, 2019
Equity [Abstract]  
Schedule of minimum pre-Transaction price per share

On June 29, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to the current senior executive members of management and the current non-executive members of the Board based on the Company completing any transaction occurring while employed and/or serving as a member of the Board, respectively, that results in a change in control of the Company or any sale of substantially all the assets of the Company (“Transaction”) which upon after giving effect to such issuance of shares below, corresponds to a minimum pre-Transaction fully diluted price per share of the Company’s common stock in the amounts indicated below.

 

Pre-Transaction Price Per Share Valuation (a)     Executive Bonus Shares Issued (b)     Non-executive Board Bonus Shares Issued (c)  
               
$ 0.22       40,000,000       2,000,000  
$ 0.34       60,000,000       3,000,000  
$ 0.45       80,000,000       4,000,000  
$ 0.54       100,000,000       5,000,000  

 

  (a) proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances

 

  (b) per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro

 

  (c) per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara
Schedule of debt and/or equity financings

On August 14, 2020, the Board amended the MCPP, providing for the additional grant of common stock of the Company to each Dr. Maria I. Mitrani and Ian Bothwell based on the Company obtaining aggregate gross fundings (grants for research and development and clinical trials, purchase contracts for Company products, debt and/or equity financings) or other financial awards during the term of employment with the Company based on the amounts indicated below:

 

Aggregate Funding Amount

    Shares  
               
  From       To          
$ 2,500,000     $ 5,000,000       5,000,000  
$ 5,000,001     $ 10,000,000       10,000,000  
$ 10,000,001     $ 30,000,000       30,000,000  
Schedule of management and consultants performance stock plan

Pursuant to the MCPP, as of September 23, 2020, a total of 233,000,000 shares have been issued and approximately 582,500,000 shares are authorized to be issued under the MCPP subject to the achievement of the defined contingent performance based milestones described above and provided the milestones are achieved while the individual is employed and/or serving as a member of the Board:

 

          MCPP     MCPP  
    MCPP     Remaining     Total  
    Shares     Shares     Shares  
Name   Awarded     Available     Approved  
                   
Albert Mitrani     50,000,000       137,500,000       187,500,000  
Ian Bothwell     50,000,000       167,500,000       217,500,000  
Dr. Maria I. Mitrani     50,000,000       167,500,000       217,500,000  
Dr. George Shapiro     50,000,000       100,000,000       150,000,000  
Dr. Allen Meglin           5,000,000       5,000,000  
Michael Carbonara           5,000,000       5,000,000  
Consultants     33,000,000             33,000,000  
                         
Total     233,000,000       582,500,000       815,500,000  
XML 47 R30.htm IDEA: XBRL DOCUMENT v3.20.2
13. Warrants (Tables)
12 Months Ended
Oct. 31, 2019
Warrants  
Summary of Warrant Activity

A summary of warrant activity for the years ended October 31, 2019 and 2018 are presented below:

 

    Number of
Shares
    Weighted-average
Exercise Price
    Remaining
Contractual
Term (years)
    Aggregate
Intrinsic Value
 
Outstanding at October 31, 2018     3,687,484     $ 0.41       1.14     $  
Granted     2,000,000     $ 0.08       1.00     $  
Exercised         $                  
Expired/Forfeited     (1,158,313 )   $ 0.67       0.04        
Outstanding at October 31, 2019     4,529,371     $ 0.20       0.30     $  
                                 
Exercisable at October 31, 2019     4,529,371     $ 0.20       0.30     $  

 

    Number of
Shares
    Weighted-average
Exercise Price
    Remaining
Contractual
Term (years)
    Aggregate
Intrinsic Value
 
Outstanding at October 31, 2017     158,137,484     $ 0.05       9.02     $  
Granted         $           $  
Exercised     (77,300,000 )   $ 0.04       8.20     $  
Expired/Forfeited     (77,150,000 )   $ 0.04       8.17     $  
Outstanding and exercisable at October 31, 2018     3,687,484     $ 0.41       1.14     $  
XML 48 R31.htm IDEA: XBRL DOCUMENT v3.20.2
14. Commitments and Contingencies (Tables)
12 Months Ended
Oct. 31, 2019
Schedule of adjustment revenues
Monthly Revenues
(in millions)
    Base Salary
Increase
 
         
$ 1.00     $ 130,000  
$ 1.50     $ 200,000  
$ 2.00     $ 275,000  
$ 3.50     $ 630,000  
$ 5.00     $ 900,000  
Equipment Lease [Member]  
Schedule of Lease Payments

The minimum lease payments pursuant to the Equipment Lease are as follows:

 

Year Ended     Minimum  
October 31,     Rent  
2020     $ 72,208  
2021       54,156  
2022       54,156  
2023       54,156  
2024       18,052  
Total     $ 252,728  
Office Lease [Member]  
Schedule of Lease Payments

The minimum lease payments pursuant to the office lease are as follows:

 

Year Ended     Minimum  
October 31,     Rent  
2020     $ 37,200  
2021       42,000  
2022       42,000  
2023       28,000  
2024        
Total     $ 149,200  
XML 49 R32.htm IDEA: XBRL DOCUMENT v3.20.2
15. Mint Organics (Tables)
12 Months Ended
Oct. 31, 2019
Mint Organics  
Schedule of Warrants Issued to Purchase Common Stock for Executives

On March 8, 2017, Mint Organics issued warrants to purchase shares of Class A Common Stock, of Mint Organics, vesting on the date Mint Organics, through one of its subsidiaries, obtains a license from a state to dispense cannabis until the fifth anniversary thereof to the following executives of Mint Organics:

 

Name:   Warrants     Exercise Price:  
Albert Mitrani     79     $ 0.001  
Ian T. Bothwell     79     $ 0.001  
Dr. Maria I. Mitrani     79     $ 0.001  
TOTAL     237          
XML 50 R33.htm IDEA: XBRL DOCUMENT v3.20.2
16. Liabilities Attributable to Discontinued Operations (Tables)
12 Months Ended
Oct. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Disposal Groups Including Discontinued Operations Income Statement Balance Sheet and Additional Disclosures

The following summarizes the carrying amounts of the assets and liabilities of Ethan NY at October 31, 2019 and 2018 (see Note 14):

 

    October 31,  
    2019     2018  
             
Assets   $     $  
                 
Liabilities:                
                 
Accounts Payable   $ 94,835     $ 94,835  
Accrued Expenses     31,016       31,016  
    $ 125,851     $ 125,851  
XML 51 R34.htm IDEA: XBRL DOCUMENT v3.20.2
1. Organization and Description of Business (Details Narrative) - Management and Business Associates, LLC [Member]
Apr. 23, 2018
USD ($)
$ / shares
shares
Number of common stock shares purchased during the period | shares 222,425,073
Stock purchased during the period, value | $ $ 222,425
Purchase price per share | $ / shares $ 0.001
Percentage of owned subsidiary 51.00%
XML 52 R35.htm IDEA: XBRL DOCUMENT v3.20.2
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($)
6 Months Ended 12 Months Ended
Oct. 31, 2019
Apr. 30, 2019
Oct. 31, 2019
Oct. 31, 2018
FDIC limits per institutions $ 250,000   $ 250,000  
Revenue     1,702,271 $ 964,530
Accounts receivable $ 26,031   26,031 48,025
Cost of revenues     300,837 209,298
Bad debt expense     $ 10,635 62,240
Corporate tax rate     21.00%  
Change in fair value of derivative liabilities     $ 0 $ 265,597
Minimum [Member]        
Property and equipment estimated useful lives     3 years  
Maximum [Member]        
Property and equipment estimated useful lives     15 years  
First Supplier [Member]        
Concentration credit risk percentage 56.00% 31.00%    
Cost of revenues $ 61,000 $ 29,000    
Second Supplier [Member]        
Concentration credit risk percentage 44.00% 69.00%    
Cost of revenues $ 47,500 $ 65,000    
Sales Revenue, Net [Member] | One Customer [Member]        
Revenue     $ 206,400  
Concentration credit risk percentage     12.20%  
Common Shares Issuable Upon Exercise of Warrants [Member]        
Antidilutive securities excluded from computation of earnings per share     4,529,371 3,647,484
XML 53 R36.htm IDEA: XBRL DOCUMENT v3.20.2
3. Going Concern (Details Narrative) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Loss from operations $ (1,776,490) $ (3,490,117)
Accumulated deficit 16,285,222 $ 14,547,901
Working capital deficit $ (1,677,684)  
XML 54 R37.htm IDEA: XBRL DOCUMENT v3.20.2
4. Sale and Transfer of Anu Manufacturing Assets (Details Narrative) - USD ($)
12 Months Ended
Feb. 05, 2018
Oct. 31, 2019
Oct. 31, 2018
Warrants forfeited   77,150,000  
Issuance of common stock   7,500,000  
Fair value stock issued   $ 83,250  
Escrow deposit     $ 47,500
Securities Purchase Agreement [Member]      
Proceeds from sale of Notes outstanding $ 762,477    
Face value of Notes outstanding 527,778    
Accrued and unpaid interest 8,589    
Prepayment penalties 211,111    
Reimbursement of legal fees 15,000    
Vera Acquisition LLC [Member] | Organicell Distribution Agreement [Member]      
Cash payment for purchase of assets 950,000    
Prepaid of product supply $ 100,000    
XML 55 R38.htm IDEA: XBRL DOCUMENT v3.20.2
5. Reorganization (Details Narrative) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Stock compensation expense $ 727,412 $ 4,023,992
Ian T. Bothwell [Member]    
Warrants Exercised 48,624,561  
Exercise Price $ 0.001  
Common stock granted 4,675,439  
Dr. Maria Ines Mitrani [Member]    
Warrants Exercised 21,757,895  
Exercise Price $ 0.001  
Common stock granted 2,092,105  
Reorganization Plan [Member] | Management and Business Associates, LLC [Member]    
Stock issued during period, shares, new issues 222,425,073  
Stock compensation expense $ 2,758,071  
XML 56 R39.htm IDEA: XBRL DOCUMENT v3.20.2
6. Inventories (Details) - USD ($)
Oct. 31, 2019
Oct. 31, 2018
Inventory Disclosure [Abstract]    
Raw materials and supplies $ 5,123 $ 0
Finished goods 72,840 0
Total Inventories $ 77,963 $ 0
XML 57 R40.htm IDEA: XBRL DOCUMENT v3.20.2
6. Inventories (Details Narrative) - USD ($)
Oct. 31, 2019
Oct. 31, 2018
Inventory Disclosure [Abstract]    
Inventories $ 77,963 $ 0
XML 58 R41.htm IDEA: XBRL DOCUMENT v3.20.2
7. Property and Equipment (Details) - USD ($)
Oct. 31, 2019
Oct. 31, 2018
Property and equipment, gross $ 280,984 $ 8,653
Less: accumulated depreciation and amortization (17,669) (2,875)
Total property and equipment, net 263,315 5,778
Computer Equipment [Member]    
Property and equipment, gross 8,653 8,653
Manufacturing Equipment [Member]    
Property and equipment, gross $ 272,331 $ 0
XML 59 R42.htm IDEA: XBRL DOCUMENT v3.20.2
7. Property and Equipment (Details Narrative) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Mar. 31, 2019
Depreciation expense $ 14,794 $ 7,835  
Lease Agreement [Member]      
Lab equipment     $ 239,595
Annual interest rate 4.50%    
Estimated useful lives of leased equipment 15 years    
XML 60 R43.htm IDEA: XBRL DOCUMENT v3.20.2
8. Related Party Transactions (Details Narrative) - USD ($)
1 Months Ended 2 Months Ended 12 Months Ended
Mar. 01, 2020
May 02, 2019
Aug. 31, 2020
Jul. 31, 2020
Apr. 30, 2020
Apr. 27, 2020
Feb. 26, 2020
Aug. 31, 2019
Feb. 28, 2019
Oct. 31, 2018
Oct. 31, 2017
Feb. 28, 2017
Aug. 31, 2020
May 31, 2020
Oct. 31, 2019
Oct. 31, 2018
Mar. 08, 2017
Nov. 02, 2016
Warrants forfeited                             77,150,000      
Monthly rent expense                             $ 2,900      
Security deposit                   $ 5,000         $ 5,000 $ 5,000    
Warrant exercise price per share                       $ 0.15     $ 0.02   $ 0.02  
Cost of sale related parties                             $ 71,650 $ 19,550    
Number of common stock sold                     100,000              
Series A Non-Convertible Preferred Stock [Member]                                    
Preferred stock, shares issued                             400     100
Preferred stock par value                             $ 0.001      
Preferred stock voting percentage                             The outstanding shares of Series A Non-Convertible Preferred Stock shall vote together with the shares of common stock and other voting securities of the Company as a single class and, regardless of the number of shares of Series A Non-Convertible Preferred Stock outstanding, and as long as at least one share of Series A Non-Convertible Preferred Stock is outstanding, such shares shall represent 80% of all votes entitled to be voted at any annual or special meeting of stockholders of the Company or action by written consent of stockholders. Each outstanding share of the Series A Non-Convertible Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Non-Convertible Preferred Stock.      
Series A Preferred Stock [Member]                                    
Preferred stock, shares issued                   400         0 400    
Preferred stock par value                   $ 0.001         $ 0.001 $ 0.001    
Series A Preferred Stock [Member] | Mint Organics [Member]                                    
Preferred stock par value                             $ 0.001      
Number of shares aquired   150                                
Warrants purchased   150,000                                
Chief Executive Officer [Member] | Series A Non-Convertible Preferred Stock [Member]                                    
Preferred stock, shares issued                             100     100
Preferred stock par value                             $ 0.001     $ 0.001
Director [Member]                                    
Number of common stock sold     422,514 1,166,666   5,000,000               11,000,000        
Purchase price           $ 100,000             $ 77,251 $ 220,000        
Chief Financial Officer [Member]                                    
Warrants forfeited                             53,300,000      
Common stock received from exercise of warrants                             4,675,439      
Common stock granted                             4,675,439      
Value of shares granted                             $ 57,975      
Warrant exercise price per share             $ 0.028                   $ 0.001  
Due to related party                             48,184      
Accrued salary                             $ 321,907      
Number of cashless warrants granted             7,500,000                      
Chief Financial Officer [Member] | Series A Preferred Stock [Member]                                    
Preferred stock, shares issued                                 100  
Preferred stock, shares Forfeited                             100      
Chief Science Officer [Member]                                    
Warrants forfeited                             23,850,000      
Common stock received from exercise of warrants                             2,092,105      
Common stock granted                             2,092,105      
Value of shares granted                             $ 25,942      
Warrant exercise price per share                                 $ 0.001  
Accrued salary                             $ 129,613      
Chief Science Officer [Member] | Series A Preferred Stock [Member]                                    
Preferred stock, shares issued                                 100  
Preferred stock, shares Forfeited                             100      
Chief Executive Officer [Member]                                    
Warrant exercise price per share                                 $ 0.001  
Chief Executive Officer [Member] | Series A Preferred Stock [Member]                                    
Preferred stock, shares issued                                   100
Preferred stock par value                                   $ 0.001
Preferred stock, shares Forfeited                             100      
Chief Operating Officer [Member]                                    
Accrued salary                             $ 132,105      
Number of common stock sold                       250,000            
Issuance of common stock                             7,500,000      
Chief Operating Officer [Member] | Series A Preferred Stock [Member]                                    
Preferred stock, shares issued                                 100  
Preferred stock, shares Forfeited                             100      
Mr. Wayne Rohrbaugh [Member]                                    
Preferred stock, shares issued                       150            
Warrant exercise price per share                       $ 0.15            
Number of shares exchanged   4,400,000                                
Lglesias [Member]                                    
Due to related party                             $ 220,897      
Director [Member]                                    
Share Price     $ 0.10 $ 0.03   $ 0.02   $ 0.028         $ 0.10 $ 0.02        
Issuance of common stock               5,000,000                    
Chief Medical Officer [Member]                                    
Issuance of common stock               3,000,000 2,000,000 2,500,000                
Option granted             5,000,000                      
Compensation $ 82,250                                  
Robert Zucker                                    
Share Price         $ 0.022                          
Issuance of common stock         736,808                          
Grant date value         $ 16,210                          
XML 61 R44.htm IDEA: XBRL DOCUMENT v3.20.2
9. Notes Payable (Details Narrative)
1 Months Ended 12 Months Ended
Oct. 15, 2019
USD ($)
shares
May 02, 2019
USD ($)
$ / shares
shares
Aug. 10, 2018
USD ($)
Integer
$ / shares
Oct. 31, 2020
USD ($)
$ / shares
shares
Jun. 25, 2020
USD ($)
Sep. 19, 2019
USD ($)
Jun. 30, 2019
USD ($)
shares
May 31, 2019
USD ($)
shares
Mar. 31, 2019
USD ($)
Integer
Oct. 31, 2018
USD ($)
Integer
Jun. 20, 2018
USD ($)
Integer
Oct. 31, 2019
USD ($)
Oct. 31, 2018
USD ($)
Feb. 05, 2019
USD ($)
Jun. 22, 2017
USD ($)
Debt principal amount                       $ 220,000      
Stock issued during period, value, new issues                       83,250      
Unsecured loan principal balance                           $ 25,000  
Debt Conversion, Converted Instrument, Amount             $ 30,478 $ 100,622              
Debt Conversion, Converted Instrument, Shares Issued | shares             1,111,111 3,773,584              
Unsecured line of credit           $ 100,000                  
Credit Facility           $ 125,000                  
Accredited Investors [Member]                              
Debt trading days | Integer     30           30 30 30        
Debt conversion price per share | $ / shares     $ 0.45                        
Unamortized discount     $ 100,000           $ 30,000   $ 150,000 $ 70,000      
Interest rate     6.00%           6.00%   6.00% 6.00%      
Debenture issued     $ 100,000           $ 30,000 $ 70,000 $ 150,000        
Payment for general working capital purposes                 350,000            
Unsecured Loan Agreement [Member] | Mint Organics Inc [Member]                              
Interest expense                       $ 4,349 $ 6,049    
Unsecured loan principal balance                             $ 60,000
Interest rate                             10.00%
Lease Agreement [Member]                              
Lab equipment                 $ 239,595            
Annual interest rate                       4.50%      
Estimated useful lives of leased equipment                       15 years      
Debenture holder [Member]                              
Debt conversion price per share | $ / shares       $ 0.125                      
Debt Conversion, Converted Instrument, Amount       $ 20,100                      
Debt Conversion, Converted Instrument, Shares Issued | shares       160,000                      
Debenture holder [Member] | Settlement And General Release Agreement [Member]                              
Debt principal amount         $ 50,000                    
Periodic payments         $ 6,250                    
Third Party [Member] | Mint Organics Inc [Member]                              
Stock issued during period, shares, new issues | shares   2,735,000                          
Stock issued during period, value, new issues   $ 72,568                          
Share Price | $ / shares   $ 0.0265                          
Noteholder | FundingFacility                              
Debt principal amount $ 500,000                            
Debt interest percentage 6.00%                            
Debt due date Feb. 15, 2021                            
Debt Conversion, Converted Instrument, Amount $ 500,000                            
Debt Conversion, Converted Instrument, Shares Issued | shares 40,000,000                            
XML 62 R45.htm IDEA: XBRL DOCUMENT v3.20.2
10. Derivative Liabilities (Details Narrative) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]    
Change in fair value of derivative liabilities $ 0 $ 265,597
XML 63 R46.htm IDEA: XBRL DOCUMENT v3.20.2
11. Income Taxes (Details - Components of Income Tax Expense (Benefit)) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Current:    
Federal $ 0 $ 0
State 0 0
Current Income Tax Expense (Benefit) 0 0
Deferred:    
Federal (185,045) 911,472
State (19,471) 164,180
Deferred Income Tax Expense (Benefit) (204,516) 1,075,652
Change in Valuation Allowance 204,516 (1,075,652)
Income tax provision $ 0 $ 0
XML 64 R47.htm IDEA: XBRL DOCUMENT v3.20.2
11. Income Taxes (Details - Effective Reconciliation of Income Tax) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Income Tax Disclosure [Abstract]    
Tax at federal statutory rate $ (361,687) $ (802,067)
State taxes, net of federal benefit (74,835) (68,278)
Permanent differences 10,468 427,759
Effect of change in income tax rate 0 1,052,690
Other 221,538 46,139
Section 332 limitation 0 419,409
Total income tax expense (benefit) (204,516) 1,075,652
Change in valuation allowance 204,516 (1,075,652)
Income tax provision $ 0 $ 0
XML 65 R48.htm IDEA: XBRL DOCUMENT v3.20.2
11. Income Taxes (Details - Deferred Tax Assets) - USD ($)
Oct. 31, 2019
Oct. 31, 2018
Deferred tax asset:    
Stock based compensation $ 2,670,914 $ 2,686,859
Accrued compensation 136,127
Net operating loss carryforward-Federal 222,754 91,501
Net operating loss carryforward-State 34,918 16,612
Other 177 137
Total deferred tax assets: 3,064,890 2,795,109
Deferred Tax Liabilities:    
Property and equipment 66,650 1,385
Total deferred tax liabilities: 66,650 1,385
Less valuation allowance (2,998,240) (2,793,724)
Total $ 0 $ 0
XML 66 R49.htm IDEA: XBRL DOCUMENT v3.20.2
11. Income Taxes (Details Narrative) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Income Tax Disclosure [Abstract]    
Statutory income tax rate 21.00% 23.17%
Net operating loss carryforward $ 1,060,732 $ 395,000
Penalties 90,000  
Accrued tax penalties 70,000 70,000
Deferred income tax expense $ (204,516) $ 1,075,652
XML 67 R50.htm IDEA: XBRL DOCUMENT v3.20.2
12. Capital Stock (Details - Minimum pre-Transaction price per share)
12 Months Ended
Oct. 31, 2019
$ / shares
shares
$0.22  
Pre-transaction price per share valuation | $ / shares $ 0.22 [1]
Executive bonus shares issued 40,000,000 [2]
Non-executive board bonus shares issued 2,000,000 [3]
$0.34  
Pre-transaction price per share valuation | $ / shares $ 0.34 [1]
Executive bonus shares issued 60,000,000 [2]
Non-executive board bonus shares issued 3,000,000 [3]
$0.45  
Pre-transaction price per share valuation | $ / shares $ 0.45 [1]
Executive bonus shares issued 80,000,000 [2]
Non-executive board bonus shares issued 4,000,000 [3]
$0.54  
Pre-transaction price per share valuation | $ / shares $ 0.54 [1]
Executive bonus shares issued 100,000,000 [2]
Non-executive board bonus shares issued 5,000,000 [3]
[1] proforma for issuance of all shares to be issued pursuant to the MCPP and other in the money contingent share issuances
[2] per each executive consisting of Albert Mitrani, Dr. Mari Mitrani, Ian Bothwell, and Dr. George Shapiro
[3] per each non-executive Board member consisting of Dr. Allen Meglin and Michael Carbonara
XML 68 R51.htm IDEA: XBRL DOCUMENT v3.20.2
12. Capital Stock (Details - Debt and/or equity financings)
12 Months Ended
Oct. 31, 2019
USD ($)
shares
Range 1 [Member]  
Aggregate funding amount, minimum $ 2,500,000
Aggregate funding amount, maximum $ 5,000,000
Shares | shares 5,000,000
Range 2 [Member]  
Aggregate funding amount, minimum $ 5,000,001
Aggregate funding amount, maximum $ 10,000,000
Shares | shares 10,000,000
Range 3 [Member]  
Aggregate funding amount, minimum $ 10,000,001
Aggregate funding amount, maximum $ 30,000,000
Shares | shares 30,000,000
XML 69 R52.htm IDEA: XBRL DOCUMENT v3.20.2
12. Capital Stock (Details - Management and consultants performance stock plan)
12 Months Ended
Oct. 31, 2019
shares
Mcpp shares awarded 233,000,000
Mcpp remaining shares available 582,500,000
Mcpp total shares approved 815,500,000
Albert Mitrani  
Mcpp shares awarded 50,000,000
Mcpp remaining shares available 137,500,000
Mcpp total shares approved 187,500,000
Ian Bothwell [Member]  
Mcpp shares awarded 50,000,000
Mcpp remaining shares available 167,500,000
Mcpp total shares approved 217,500,000
Maria I. Mitrani [Member]  
Mcpp shares awarded 50,000,000
Mcpp remaining shares available 167,500,000
Mcpp total shares approved 217,500,000
George Shapiro [Member]  
Mcpp shares awarded 50,000,000
Mcpp remaining shares available 100,000,000
Mcpp total shares approved 150,000,000
Allen Meglin [Member]  
Mcpp shares awarded 0
Mcpp remaining shares available 5,000,000
Mcpp total shares approved 5,000,000
Michael Carbonara [Member]  
Mcpp shares awarded 0
Mcpp remaining shares available 5,000,000
Mcpp total shares approved 5,000,000
Consultants [Member]  
Mcpp shares awarded 33,000,000
Mcpp remaining shares available 0
Mcpp total shares approved 33,000,000
XML 70 R53.htm IDEA: XBRL DOCUMENT v3.20.2
12. Capital Stock (Details Narrative) - USD ($)
1 Months Ended 2 Months Ended 3 Months Ended 12 Months Ended
Nov. 01, 2020
May 15, 2020
Oct. 15, 2019
May 02, 2019
Mar. 07, 2019
Jan. 02, 2019
Dec. 05, 2018
Jun. 05, 2018
Apr. 06, 2017
Sep. 17, 2015
Oct. 31, 2020
Sep. 30, 2020
Sep. 23, 2020
Aug. 31, 2020
Jul. 31, 2020
May 31, 2020
May 28, 2020
Apr. 30, 2020
Apr. 27, 2020
Apr. 25, 2020
Feb. 29, 2020
Oct. 31, 2019
Aug. 31, 2019
Jul. 31, 2019
Jun. 30, 2019
May 31, 2019
Apr. 30, 2019
Feb. 28, 2019
Feb. 26, 2019
Oct. 31, 2018
Sep. 30, 2018
Oct. 31, 2017
Feb. 28, 2017
Aug. 31, 2020
May 31, 2020
Sep. 30, 2019
Oct. 31, 2020
Jul. 31, 2020
Apr. 30, 2020
Jan. 31, 2020
Oct. 31, 2019
Oct. 31, 2019
Oct. 31, 2018
Feb. 26, 2020
Mar. 08, 2017
Nov. 02, 2016
Common stock, shares authorized                                           1,500,000,000               1,500,000,000                     1,500,000,000 1,500,000,000 1,500,000,000      
Common stock, par value                                           $ 0.001               $ 0.001                     $ 0.001 $ 0.001 $ 0.001      
Forward stock split                   eighteen-for-one forward stock split                                                                        
Number of common stock shares sold during the period                                                               100,000                            
Proceeds from issuance of common stock                                                               $ 60,000 $ 30,000                   $ 400,000      
Warrants to purchase share of common stock         2,000,000                                                                                  
Exercise price of warrants                                           $ 0.02                     $ 0.15               $ 0.02 $ 0.02     $ 0.02  
Fair value of warrants issued         $ 6,600                                                                                  
Stock issued during period, value, new issues                                                                                   $ 459,500 100,000      
Stock-based compensation expense                                                                                   727,412 $ 4,023,992      
Debt Conversion, Converted Instrument, Amount                                                 $ 30,478 $ 100,622                                        
Debt Conversion, Converted Instrument, Shares Issued                                                 1,111,111 3,773,584                                        
Stock issued during period, value, new issues                                                                                   83,250        
Mint Organics Florida, Inc [Member]                                                                                            
Number of common stock shares sold during the period                 21.25                                                                          
Proceeds from issuance of common stock                 $ 100,000                                                                          
Number of shares aquired       21.25                                                                                    
Number of shares exchanged       2,400,000                                                                                    
Sales Rep Agreement [Member]                                                                                            
Stock issued during period, value, new issues                                                   $ 1,000,000                                        
Stock-based compensation expense                                                   35,000                                        
VPAgreement [Member]                                                                                            
Stock issued during period, value, new issues                       $ 2,250,000                           1,000,000                                        
Stock-based compensation expense                       52,500                           $ 35,000                                        
Consultants Agreement [Member]                                                                                            
Stock issued during period, value, new issues                       12,000,000                                                                    
Stock-based compensation expense                       $ 264,000                                                                    
Three Accredited Investors [Member]                                                                                            
Number of common stock shares sold during the period         7,500,000                                                                     3,250,000            
Proceeds from issuance of common stock                                                                               $ 65,000            
Warrants to purchase share of common stock         2,000,000                                                                                  
Exercise price of warrants         $ 0.08                                                                                  
Fair value of warrants issued         $ 6,600                                                                                  
Seven Accredited Investors [Member]                                                                                            
Number of common stock shares sold during the period                                                     5,102,000                                      
Proceeds from issuance of common stock                                                     $ 154,500                                      
Accredited Investors [Member]                                                                                            
Number of common stock shares sold during the period                                               2,500,000                                            
Proceeds from issuance of common stock                                               $ 50,000                                            
Four Accredited Investors [Member]                                                                                            
Number of common stock shares sold during the period                                                                       5,250,000                    
Proceeds from issuance of common stock                                                                       $ 105,000                    
Five Accredited Investors [Member]                                                                                            
Number of common stock shares sold during the period                       4,800,000                                                     11,050,000              
Proceeds from issuance of common stock                       $ 410,000                                                     $ 221,000              
Two Accredited Investors [Member]                                                                                            
Number of common stock shares sold during the period                             1,000,000 3,000,000                                                            
Proceeds from issuance of common stock                             $ 25,000 $ 60,000                                                            
19 accredited investors [Member]                                                                                            
Number of common stock shares sold during the period                                                                   13,499,992                        
Proceeds from issuance of common stock                                                                   $ 405,000                        
Nine Accredited Investors [Member]                                                                                            
Number of common stock shares sold during the period                           8,606,665                                                                
Proceeds from issuance of common stock                           $ 392,100                                                                
Consultant [Member]                                                                                            
Stock issued during period, value, new issues                           325,000 5,000,000                                                              
Stock-based compensation expense                           $ 40,790 $ 250,000                                                              
Consultant [Member] | Consulting Agreement [Member]                                                                                            
Stock issued during period, value, new issues           $ 1,100,000 $ 1,700,000 $ 1,700,000                                                                            
Stock-based compensation expense           $ 12,020 $ 18,580 $ 45,900                                                                            
Chief Medical Officer [Member]                                                                                            
Stock issued during period, value, new issues                                         $ 5,000,000           2,000,000     $ 3,000,000 $ 2,500,000                              
Stock-based compensation expense                                         $ 140,000           $ 50,000     $ 84,000 $ 34,500                              
Stock issued during period, shares, new issues                                             3,000,000         2,000,000   2,500,000                                
Eight Individuals [Member]                                                                                            
Stock issued during period, value, new issues                       $ 950,000       $ 950,000   $ 950,000                                       $ 925,000       4,200,000        
Stock-based compensation expense $ 15,500                                                                       $ 56,600 17,475 16,100     $ 28,680        
Seven Individuals [Member]                                                                                            
Stock issued during period, value, new issues                                                                                 $ 1,750,000          
Stock-based compensation expense                                                                                 55,500          
Nine Individuals [Member]                                                                                            
Stock issued during period, value, new issues                                                                                 225,000          
Stock-based compensation expense                                                                                 11,888          
Twelve Individuals [Member]                                                                                            
Stock issued during period, value, new issues                                                                                 3,475,000          
Stock-based compensation expense                                                                                 46,186          
Six Individuals [Member]                                                                                            
Stock issued during period, value, new issues                                                                                 2,675,000          
Stock-based compensation expense                                                                                 70,725          
Two Individuals [Member]                                                                                            
Stock issued during period, value, new issues                                                                               650,000 200,000          
Stock-based compensation expense                                                                               $ 18,650 7,300          
Four Individuals [Member]                                                                                            
Stock issued during period, value, new issues                                                                             2,725,000   5,350,000          
Stock-based compensation expense                                                                             $ 89,650   $ 162,700          
Independent Member [Member]                                                                                            
Stock issued during period, value, new issues                                           $ 5,000,000                                                
Stock-based compensation expense                                           $ 140,000                                                
Eight Individuals [Member]                                                                                            
Stock-based compensation expense                                                                           6,900                
Director [Member]                                                                                            
Stock issued during period, value, new issues                                   736,808                                                        
Stock-based compensation expense                                   $ 16,210                                                        
Stock issued during period, shares, new issues                                             5,000,000                                              
Distributor [Member]                                                                                            
Stock issued during period, value, new issues                                 $ 3,000,000                                                          
Stock-based compensation expense                                 $ 345,000                                                          
Advisor [Member]                                                                                            
Stock issued during period, value, new issues   $ 250,000                                                                                        
Stock-based compensation expense   $ 10,000                                                                                        
Senior executive members [Member]                                                                                            
Stock issued during period, value, new issues                                       $ 205,000,000                                                    
Mr. Wayne Rohrbaugh [Member]                                                                                            
Exercise price of warrants                                                                 $ 0.15                          
Number of shares exchanged       4,400,000                                                                                    
Third Party [Member] | Mint Organics Inc [Member]                                                                                            
Stock issued during period, shares, new issues       2,735,000                                                                                    
Stock issued during period, value, new issues       $ 72,568                                                                                    
Noteholder | FundingFacility                                                                                            
Debt Conversion, Converted Instrument, Amount     $ 500,000                                                                                      
Debt Conversion, Converted Instrument, Shares Issued     40,000,000                                                                                      
Debenture holder [Member]                                                                                            
Debt Conversion, Converted Instrument, Amount                     $ 20,100                                                                      
Debt Conversion, Converted Instrument, Shares Issued                     160,000                                                                      
Milestones [Member]                                                                                            
Stock-based compensation expense                                                                         $ 18,676,000 $ 6,367,000                
Director [Member]                                                                                            
Number of common stock shares sold during the period                           422,514 1,166,666       5,000,000                               11,000,000                      
Proceeds from issuance of common stock                                     $ 100,000                             $ 77,251 $ 220,000                      
Related Party [Member]                                                                                            
Number of common stock shares sold during the period                                                                 250,000                 250,000        
Proceeds from issuance of common stock                                                                                   $ 10,000        
Chief Executive Officer [Member]                                                                                            
Common stock granted                         15,000,000                                                                  
Chief Science Officer [Member]                                                                                            
Common stock granted                         7,500,000                                                                  
Chief Financial Officer [Member]                                                                                            
Warrants to purchase share of common stock                                                                                       7,500,000    
Exercise price of warrants                                                                                       $ 0.028    
Fair value of warrants issued                                                         $ 214,500                                  
Common stock granted                         15,000,000                                                                  
Series A Preferred Stock [Member]                                                                                            
Preferred stock, shares authorized                                           0               400                     0 0 400      
Preferred stock, par value                                           $ 0.001               $ 0.001                     $ 0.001 $ 0.001 $ 0.001      
Percentage of voting equivalency of outstanding capital stock                                           80.00%                                     80.00% 80.00%        
Series A Preferred Stock [Member] | Mint Organics [Member]                                                                                            
Preferred stock, shares authorized                                           300                                     300 300        
Preferred stock, par value                                           $ 0.001                                     $ 0.001 $ 0.001        
Number of shares aquired       150                                                                                    
Warrants purchased       150,000                                                                                    
Series A Non-Convertible Preferred Stock [Member]                                                                                            
Preferred stock, shares authorized                                           10,000,000                                     10,000,000 10,000,000       10,000,000
Preferred stock, par value                                           $ 0.001                                     $ 0.001 $ 0.001        
Preferred stock voting rights                                                                                   The outstanding shares of Series A Non-Convertible Preferred Stock shall vote together with the shares of common stock and other voting securities of the Company as a single class and, regardless of the number of shares of Series A Non-Convertible Preferred Stock outstanding, and as long as at least one share of Series A Non-Convertible Preferred Stock is outstanding, such shares shall represent 80% of all votes entitled to be voted at any annual or special meeting of stockholders of the Company or action by written consent of stockholders. Each outstanding share of the Series A Non-Convertible Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Non-Convertible Preferred Stock.        
Series A Non-Convertible Preferred Stock [Member] | Chief Executive Officer [Member]                                                                                            
Preferred stock, par value                                           $ 0.001                                     $ 0.001 $ 0.001       $ 0.001
Series B Convertible Preferred Stock [Member]                                                                                            
Preferred stock, shares authorized                                           10,000,000                                     10,000,000 10,000,000       10,000,000
Preferred stock, shares designated                                           1,000,000                                     1,000,000 1,000,000        
XML 71 R54.htm IDEA: XBRL DOCUMENT v3.20.2
13. Warrants (Details - Warrant Activity) - Warrant [Member] - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Number of Shares Outstanding beginning balance 3,687,484 158,137,484
Number of Shares, Granted 2,000,000 0
Number of Shares, Exercised 0 (77,300,000)
Number of Shares, Expired/Forfeited (1,158,313) (77,150,000)
Number of Shares Outstanding ending balance 4,529,371 3,687,484
Number of shares Exercisable 4,529,371 3,687,484
Weighted-average Exercise Price Outstanding beginning balance $ 0.41 $ 0.05
Weighted-average Exercise Price, Granted 0.08
Weighted-average Exercise Price, Exercised 0.04
Weighted-average Exercise Price, Expired/Forfeited 0.67 0.04
Weighted-average Exercise Price Outstanding ending balance 0.2 0.41
Weighted-average Exercise Price, Exercisable $ 0.2 $ 0.41
Remaining Contractual Term (years) Outstanding beginning balance 1 year 1 month 20 days 9 years 7 days
Remaining Contractual Term (years), Granted 1 year  
Remaining Contractual Term (years), Exercised   8 years 2 months 12 days
Remaining Contractual Term (years),Expired/Forfeited 15 days 8 years 2 months 1 day
Remaining Contractual Term (years) Outstanding ending balance 3 months 19 days 1 year 1 month 20 days
Remaining Contractual Term (years), Exercisable 3 months 19 days 1 year 1 month 20 days
Aggregate Intrinsic Value Outstanding beginning balance $ 0 $ 0
Aggregate Intrinsic Value, Granted 0 0
Aggregate Intrinsic Value, Exercised 0 0
Aggregate Intrinsic Value, Expired/Forfeited 0 0
Aggregate Intrinsic Value Outstanding ending balance 0 0
Aggregate Intrinsic Value, Exercisabe $ 0 $ 0
XML 72 R55.htm IDEA: XBRL DOCUMENT v3.20.2
13. Warrants (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
May 15, 2020
Mar. 07, 2019
Apr. 06, 2018
Feb. 26, 2019
Mar. 31, 2017
Nov. 30, 2016
Apr. 30, 2020
Oct. 31, 2019
Oct. 31, 2018
Feb. 26, 2020
Mar. 08, 2017
Feb. 28, 2017
Number of warrant shares issued   2,000,000                    
Risk free interest rate   2.44%                    
Expected term   1 year                    
Expected volatility   108.00%                    
Expected dividend rate   0.00%                    
Fair value of warrants   $ 6,600                    
Exercise price of warrants               $ 0.02     $ 0.02 $ 0.15
Warrants forfeited               77,150,000        
Stock-based compensation expense               $ 727,412 $ 4,023,992      
Warrant [Member]                        
Stock-based compensation expense             $ 214,500          
Chief Technology Officer [Member]                        
Issuance of common stock               7,500,000        
Chief Operating Officer [Member]                        
Issuance of common stock               7,500,000        
Chief Financial Officer [Member]                        
Exercise price of warrants                   $ 0.028 0.001  
Warrants forfeited               53,300,000        
Common stock received from exercise of warrants               4,675,439        
Chief Science Officer [Member]                        
Exercise price of warrants                     0.001  
Warrants forfeited               23,850,000        
Common stock received from exercise of warrants               2,092,105        
Chief Financial Officer [Member]                        
Number of warrant shares issued                   7,500,000    
Risk free interest rate       0.14%                
Expected term       4 years                
Expected volatility       87.00%                
Expected dividend rate       0.00%                
Fair value of warrants       $ 214,500                
Exercise price of warrants                   $ 0.028    
Advisor [Member]                        
Number of warrant shares issued 6,000,000                      
Risk free interest rate 0.31%                      
Expected term 3 years                      
Expected volatility 90.00%                      
Expected dividend rate 0.00%                      
Fair value of warrants $ 121,200                      
Stock-based compensation expense $ 40,400                      
Employment Agreement [Member]                        
Exercise price of warrants                     $ 0.02  
Employment Agreement [Member] | Chief Financial Officer [Member]                        
Number of warrant shares issued     31,800,000                  
Fair value of warrants         $ 215,000 $ 318,000            
Reorganization cost               $ 533,000        
Employment Agreement [Member] | Chief Financial Officer [Member] | Minimum [Member]                        
Expected term               8 years 7 months 6 days        
Employment Agreement [Member] | Chief Financial Officer [Member] | Maximum [Member]                        
Expected term               8 years 10 months 25 days        
Commercially available product percentage               2.58%        
Employment Agreement [Member] | Chief Science Officer [Member]                        
Number of warrant shares issued     10,000,000                  
Risk free interest rate     2.58%                  
Expected volatility     68.00%                  
Expected dividend rate     0.00%                  
Fair value of warrants         $ 138,500 $ 100,000            
Employment Agreement [Member] | Chief Science Officer [Member] | Minimum [Member]                        
Expected term     8 years 7 months 6 days                  
Employment Agreement [Member] | Chief Science Officer [Member] | Maximum [Member]                        
Expected term     8 years 10 months 25 days                  
Executive Employment Agreement [Member] | Chief Financial Officer [Member]                        
Risk free interest rate     2.58%                  
Expected volatility     68.00%                  
Expected dividend rate     0.00%                  
XML 73 R56.htm IDEA: XBRL DOCUMENT v3.20.2
14. Commitments and Contingencies (Details - Adjustment of revenues) - USD ($)
12 Months Ended
Oct. 31, 2019
Oct. 31, 2018
Monthly Revenues $ 1,702,271 $ 964,530
Revenue 1 [Member]    
Monthly Revenues 1,000,000  
Base Salary Increase 130,000  
Revenue 2 [Member]    
Monthly Revenues 1,500,000  
Base Salary Increase 200,000  
Revenue 3 [Member]    
Monthly Revenues 2,000,000  
Base Salary Increase 275,000  
Revenue 4 [Member]    
Monthly Revenues 3,500,000  
Base Salary Increase 630,000  
Revenue 5 [Member]    
Monthly Revenues 5,000,000  
Base Salary Increase $ 900,000  
XML 74 R57.htm IDEA: XBRL DOCUMENT v3.20.2
14. Commitments and Contingencies (Details - Lease)
Oct. 31, 2019
USD ($)
Equipment Lease [Member]  
2020 $ 72,208
2021 54,156
2022 54,156
2023 54,156
2024 18,052
Total 252,728
Office Lease [Member]  
2020 37,200
2021 42,000
2022 42,000
2023 28,000
2024 0
Total $ 149,200
XML 75 R58.htm IDEA: XBRL DOCUMENT v3.20.2
14. Commitments and Contingencies (Details Narrative)
1 Months Ended 4 Months Ended 6 Months Ended 12 Months Ended
May 15, 2020
$ / shares
shares
Jan. 06, 2020
USD ($)
$ / shares
shares
Dec. 01, 2019
USD ($)
Sep. 30, 2020
USD ($)
Dec. 31, 2019
USD ($)
May 31, 2019
USD ($)
Feb. 25, 2018
USD ($)
Jun. 30, 2020
USD ($)
Oct. 31, 2019
USD ($)
ft²
$ / shares
Oct. 31, 2018
USD ($)
Feb. 26, 2020
$ / shares
Mar. 31, 2019
USD ($)
Mar. 07, 2019
shares
Feb. 28, 2019
USD ($)
Mar. 08, 2017
$ / shares
Feb. 28, 2017
$ / shares
Nov. 04, 2016
$ / shares
Jun. 30, 2016
USD ($)
Warrant to purchase shares of common stock | shares                         2,000,000          
Exercise price of warrants | $ / shares                 $ 0.02           $ 0.02 $ 0.15    
Security deposit                 $ 5,000 $ 5,000                
Stock-based compensation expense                 727,412 4,023,992                
Unpaid Original Base Salary and Incremental Salary         $ 721,415     $ 93,110                    
Ian T. Bothwell [Member]                                    
Exercise price of warrants | $ / shares                                 $ 0.06  
Dr. Maria Ines Mitrani [Member]                                    
Exercise price of warrants | $ / shares                                 0.06  
Ethan NY [Member]                                    
Minimum monthly lease payments                 586,242                  
Estimated reserve for losses on lease                 101,905 $ 101,905                
Chief Executive Officer [Member]                                    
Exercise price of warrants | $ / shares                             0.001      
Chief Financial Officer [Member]                                    
Exercise price of warrants | $ / shares                     $ 0.028       0.001      
Chief Science Officer [Member]                                    
Exercise price of warrants | $ / shares                             $ 0.001      
Executive Employment Agreement [Member] | Ian T. Bothwell [Member]                                    
Exercise price of warrants | $ / shares                                 0.06  
Executive Employment Agreement [Member] | Dr. Maria Ines Mitrani [Member]                                    
Exercise price of warrants | $ / shares                                 $ 0.06  
Executive Employment Agreement [Member] | Chief Executive Officer [Member] | A. Mitrani [Member]                                    
Base salary     $ 300,000                              
Executive Employment Agreement [Member] | Chief Financial Officer [Member] | Ian T. Bothwell [Member]                                    
Base salary     300,000                              
Executive Employment Agreement [Member] | Chief Science Officer [Member] | Dr. Maria Ines Mitrani [Member]                                    
Base salary     $ 300,000                              
Advisor Agreement [Member]                                    
Warrant to purchase shares of common stock | shares 6,000,000                                  
Exercise price of warrants | $ / shares $ 0.04                                  
Number of common stock issued | shares 1,000,000                                  
VPAgreement [Member]                                    
Stock-based compensation expense       $ 52,500   $ 35,000                        
VPAgreement [Member] | Vice President [Member]                                    
Stock-based compensation expense   $ 35,000                                
Number of common stock issued | shares   750,000                                
Stock granted | shares   1,000,000                                
Common stock share price | $ / shares   $ 0.035                                
Five-Year Lease Agreement [Member] | Anu Life Sciences Inc [Member]                                    
Security deposit                 $ 37,275                  
Laboratory and administrative office space | ft²                 3,500                  
Lease expiration date                 Jun. 30, 2022                  
Five-Year Lease Agreement [Member] | Ethan NY [Member]                                    
Minimum monthly lease payments                                   $ 9,500
Miami Lab Lease Agreement [Member]                                    
Lease expense             $ 25,803                      
Equipment                           $ 239,595        
Security deposit                       $ 6,332            
Minimum monthly lease payments                       $ 5,200   $ 4,513        
XML 76 R59.htm IDEA: XBRL DOCUMENT v3.20.2
15. Mint Organics (Details)
12 Months Ended
Oct. 31, 2019
$ / shares
shares
Warrants, Total 237
Albert Mitrani [Member]  
Warrants, Total 79
Exercise Price | $ / shares $ 0.001
Chief Financial Officer [Member]  
Warrants, Total 79
Exercise Price | $ / shares $ 0.001
Dr. Maria I. Mitrani [Member]  
Warrants, Total 79
Exercise Price | $ / shares $ 0.001
XML 77 R60.htm IDEA: XBRL DOCUMENT v3.20.2
15. Mint Organics (Details Narrative) - USD ($)
1 Months Ended 12 Months Ended
May 02, 2019
May 17, 2017
Apr. 06, 2017
Mar. 29, 2017
Mar. 17, 2017
Mar. 08, 2017
Feb. 28, 2017
Feb. 14, 2017
Nov. 04, 2016
Sep. 23, 2020
Oct. 31, 2017
Feb. 28, 2017
Oct. 31, 2019
Oct. 31, 2018
Feb. 26, 2020
Nov. 02, 2016
Proceeds from debt financing                           $ 300,000    
Common stock, shares authorized                         1,500,000,000 1,500,000,000    
Common stock, par value                         $ 0.001 $ 0.001    
Number of common stock warrants exercisable             150,000                  
Exercise price of warrants           $ 0.02 $ 0.15         $ 0.15 $ 0.02      
Fair value of warrant issued           34,949                    
Amortization                         $ 0 $ 6,889    
Number of common stock issued                         502,936,805 436,490,110    
Proceeds from sale of units                     $ 60,000 $ 30,000   $ 400,000    
Number of units sold during the period                     100,000          
Participation Agreement [Member]                                
Exercise price of warrants           $ 0.15                    
Employment Agreement [Member]                                
Exercise price of warrants           $ 0.02                    
Taddeo [Member] | Taddeo Agreement [Member]                                
Number of units sold during the period   1,000,000                            
Bothwell [Member] | Securities Purchase Agreement [Member]                                
Number of units sold during the period       1,000,000                        
Agents [Member] | Securities Purchase Agreement [Member]                                
Number of units sold during the period       2,000,000                        
Werber [Member] | Securities Purchase Agreement [Member]                                
Number of units sold during the period       1,000,000                        
Ian T. Bothwell [Member]                                
Proceeds from debt financing                 $ 1,500,000              
Exercise price of warrants                 $ 0.06              
Ian T. Bothwell [Member] | Securities Purchase Agreement [Member]                                
Proceeds from debt financing                 $ 300,000              
Ian T. Bothwell [Member] | Executive Employment Agreement [Member]                                
Exercise price of warrants                 $ 0.06              
Related Party [Member]                                
Proceeds from sale of units                         $ 10,000      
Number of units sold during the period                       250,000 250,000      
Mint CEO [Member] | Taddeo Employment Agreement [Member]                                
Base salary                         $ 180,000      
Adjustment of annual rate of base salary acquire of license                         250,000      
Health, dental and automobile expense per month                         $ 1,000      
Number of unregistered common stock shares granted                         1,000,000      
Mint CEO [Member] | Employment Agreement [Member]                                
Accrued and unpaid signing bonus                         $ 25,000      
Chief Science Officer [Member]                                
Number of unregistered common stock shares granted                   7,500,000            
Chief Financial Officer [Member]                                
Exercise price of warrants                             $ 0.028  
Number of unregistered common stock shares granted                   15,000,000            
Terrell Suddarth [Member] | Executive Employment Agreement [Member]                                
Exercise price of warrants                 0.02              
Dr. Maria Ines Mitrani [Member]                                
Exercise price of warrants                 0.06              
Dr. Maria Ines Mitrani [Member] | Executive Employment Agreement [Member]                                
Exercise price of warrants                 0.06              
Dr. Bruce Werber [Member]                                
Exercise price of warrants                 0.06              
Dr. Bruce Werber [Member] | Executive Employment Agreement [Member]                                
Exercise price of warrants                 $ 0.06              
Chief Executive Officer [Member]                                
Number of unregistered common stock shares granted                   15,000,000            
Series A Preferred Stock [Member]                                
Preferred stock, shares authorized                         0 400    
Preferred stock, par value                         $ 0.001 $ 0.001    
Number of preferred stock issued                         0 400    
Common Stock [Member]                                
Number of units sold during the period                     600,000 300,000        
Class A Voting Common Stock [Member] | Participation Agreement [Member]                                
Common stock, shares authorized               550                
Equity ownership percentage               100.00%                
Series B Preferred Stock [Member]                                
Preferred stock, shares authorized                         0 1,000,000    
Preferred stock, par value                         $ 0.001 $ 0.001    
Number of preferred stock issued                         0 0    
Series A Non-Convertible Preferred Stock [Member]                                
Preferred stock, shares authorized                         10,000,000     10,000,000
Preferred stock, par value                         $ 0.001      
Number of preferred stock issued                         400     100
Series A Non-Convertible Preferred Stock [Member] | Chief Operating Officer [Member]                                
Number of preferred stock issued           100                    
Series A Non-Convertible Preferred Stock [Member] | Chief Science Officer [Member]                                
Number of preferred stock issued           100                    
Series A Non-Convertible Preferred Stock [Member] | Chief Financial Officer [Member]                                
Number of preferred stock issued           100                    
Series A Non-Convertible Preferred Stock [Member] | Chief Executive Officer [Member]                                
Preferred stock, par value                         $ 0.001     $ 0.001
Number of preferred stock issued                         100     100
Series B Convertible Preferred Stock [Member]                                
Preferred stock, shares authorized                         10,000,000     10,000,000
Mr. Wayne Rohrbaugh [Member]                                
Number of preferred stock issued             150         150        
Exercise price of warrants             $ 0.15         $ 0.15        
Number of shares exchanged 4,400,000                              
Chief Operating Officer [Member]                                
Number of unregistered common stock shares granted       1,000,000                        
Number of units sold during the period                       250,000        
Chief Operating Officer [Member] | Series A Preferred Stock [Member]                                
Number of preferred stock issued           100                    
Chief Financial Officer [Member]                                
Exercise price of warrants           $ 0.001                 $ 0.028  
Number of unregistered common stock shares granted       1,000,000                        
Chief Financial Officer [Member] | Series A Preferred Stock [Member]                                
Number of preferred stock issued           100                    
Investors [Member] | Participation Agreement [Member]                                
Non-controlling interest percentage               55.00%                
Investments               $ 150,000                
Proceeds from debt financing               $ 150,000                
Chief Science Officer [Member]                                
Exercise price of warrants           $ 0.001                    
Chief Science Officer [Member] | Series A Preferred Stock [Member]                                
Number of preferred stock issued           100                    
Chief Executive Officer [Member]                                
Exercise price of warrants           $ 0.001                    
Chief Executive Officer [Member] | Series A Preferred Stock [Member]                                
Preferred stock, par value                               $ 0.001
Number of preferred stock issued                               100
Mr. Peter Taddeo [Member]                                
Number of preferred stock issued             150         150        
Exercise price of warrants             $ 0.15         $ 0.15        
Mint Organics Florida, Inc [Member]                                
Equity ownership percentage     3.00%                          
Proceeds from sale of units     $ 100,000                          
Number of units sold during the period     21.25                          
Non-controlling equity holders percentage                         22.50% 4.00%    
Non-controlling interests amount                         $ 42,977 $ 42,977    
Number of shares aquired 21.25                              
Number of shares exchanged 2,400,000                              
Mint Organics Florida, Inc [Member] | Class B Non-Voting Common Stock [Member]                                
Equity ownership percentage         10.00%                      
Conversion of stock, amount         $ 1,000,000                      
Conversion of stock, shares converted         212.5                      
Mint Organics Florida, Inc [Member] | Class B Non-Voting Common Stock [Member] | Participation Agreement [Member]                                
Common stock, shares authorized                         10,000      
Common stock, par value                         $ 0.001      
Common stock voting rights                         The Class B Common Stock shall not be entitled to vote on any matters.      
Mint Organics Florida, Inc [Member] | Class A Voting Common Stock [Member]                                
Common stock, par value             $ 0.001         $ 0.001        
Number of common stock issued             2,125         2,125        
Fair consideration for the initial issuance of common stock             $ 0.001         $ 0.001        
Mint Organics Florida, Inc [Member] | Class A Voting Common Stock [Member] | Participation Agreement [Member]                                
Common stock, shares authorized                         10,000      
Common stock, par value                         $ 0.001      
Common stock voting rights                         The amount of each share of the Mint Series A Preferred Stock shall automatically convert into 1.5 shares of Class B Common Stock of Mint Organics upon the earlier of (a) the fifth anniversary of the date such share of Mint Series A Preferred Stock was issued; or (b) Mint Organics’ receipt of the necessary licenses and permits required to operate business operations in the medical cannabis industry.      
Mint Organics [Member]                                
Non-controlling equity holders percentage                         22.50% 4.00%    
Non-controlling interests amount                         $ 42,977 $ 42,977    
Mint Organics [Member] | Series A Preferred Stock [Member]                                
Preferred stock, shares authorized                         300      
Preferred stock, par value                         $ 0.001      
Percentage of outstanding capital stock represents the common stock conversion                         45.00%      
Number of shares aquired 150                              
Warrants purchased 150,000                              
Mint Organics Inc [Member] | Participation Agreement [Member]                                
Preferred stock, shares authorized               1,000                
Preferred stock, par value               $ 0.001                
Mint Organics Inc [Member] | Class B Non-Voting Common Stock [Member] | Participation Agreement [Member]                                
Common stock, shares authorized               1,000                
Common stock, par value               $ 0.001                
Mint Organics Inc [Member] | Series A Convertible Preferred Stock [Member]                                
Preferred stock, shares authorized             300         300        
Preferred stock, par value             $ 0.001         $ 0.001        
Preferred stock, stated value             $ 1,000         $ 1,000        
Convertible preferred stock description             The amount of each share of the Mint Series A Preferred Stock shall automatically convert into 1.5 shares of Class B Common Stock of Mint Organics upon the earlier of (a) the fifth anniversary of the date such share of Mint Series A Preferred Stock was issued; or (b) Mint Organics’ receipt of the necessary licenses and permits required to operate business operations in the medical cannabis industry.                  
Percentage of outstanding capital stock represents the common stock conversion             45.00%                  
Mint Organics Inc [Member] | Class A Voting Common Stock [Member] | Participation Agreement [Member]                                
Common stock, shares authorized               1,000                
Common stock, par value               $ 0.001                
Mint Organics Inc [Member] | Investors [Member] | Series A Preferred Stock [Member]                                
Number of preferred stock issued             150         150        
XML 78 R61.htm IDEA: XBRL DOCUMENT v3.20.2
16. Liabilities Attributable to Discontinued Operations (Details - Schedule of Assets and Liabilities) - USD ($)
Oct. 31, 2019
Oct. 31, 2018
Liabilities    
Liabilities, total $ 125,851 $ 125,851
Ethan NY [Member]    
Assets 0 0
Liabilities    
Accounts payable 94,835 94,835
Accrued expenses 31,016 31,016
Liabilities, total $ 125,851 $ 125,851
XML 79 R62.htm IDEA: XBRL DOCUMENT v3.20.2
17. Segment Information (Details Narrative)
12 Months Ended
Oct. 31, 2019
Integer
Segment Reporting [Abstract]  
Number of operating segments 1
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