Quarterly Report for Quarter Ending July 31, 2024 (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2024

OR

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

For the transition period from _______________ to _______________

Commission file number: 000-55008

Zeo ScientifiX, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		47-4180540
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
3321 College Avenue, Suite 246 Davie, FL		33314
(Address of Principal Executive Offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code: (888) 963-7881

Securities registered pursuant to 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 pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 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, a smaller reporting company or an emerging growth company. See the definitions of "accelerated filer", "large accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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☒

As of September 13, 2024, there were 6,582,419shares of common stock, $0.001 par value per share, issued and outstanding.

ZEO SCIENTIFIX, INC.

TABLE OF CONTENTS

				PAGE NO.
PART I		FINANCIAL INFORMATION
Item 1.		Condensed Unaudited Financial Statements		1
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations.		22
Item 3.		Quantitative and Qualitative Disclosures About Market Risk.		29
Item 4.		Controls and Procedures.		29
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings.		30
Item 1A.		Risk Factors.		30
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds.		30
Item 3.		Defaults Upon Senior Securities.		30
Item 4.		Mine Safety Disclosures.		30
Item 5.		Other Information.		30
Item 6.		Exhibits.		31
Signatures		32

Unless stated otherwise, the words "we," "us," "our," the "Company" or "ZEO" in this Quarterly Report on Form 10-Q (this "Report") refer to Zeo ScientifiX, Inc. (f/k/a Organicell Regenerative Medicine, Inc.), a Nevada corporation, and its subsidiaries.

Cautionary Note Regarding Forward- Looking Statements

The statements contained in this Report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as "may," "could," "should," "expect," "plan," "project," "strategy," "forecast," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursue," "target," "continue," or similar expressions help identify forward-looking statements.

The forward-looking statements contained in this Report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management's assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this Report are not guarantees of future performance, and management cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will in fact occur. The Company's actual results may differ materially from those anticipated, estimated, projected or expected by management.

All forward-looking statements speak only as of the date of this Report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

Zeo ScientifiX, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts rounded to the nearest thousand except share amounts)

		July 31, 2024			October 31, 2023
		(Unaudited)
ASSETS
Current Assets
Cash		$	1,105,000			$	1,756,000
Accounts receivable, net of allowance for bad debts			19,000				18,000
Other receivables			12,000				12,000
Prepaid expenses			339,000				106,000
Inventories			250,000				310,000
Total Current Assets			1,725,000				2,202,000
Property and equipment, net			496,000				573,000
Security deposits			-				7,000
TOTAL ASSETS		$	2,221,000			$	2,782,000
LIABILITIES, SHARES SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses		$	1,850,000			$	2,612,000
Advances payable to former officer			-				221,000
Finance lease obligations			5,000				23,000
Convertible promissory note, net of debt discount of $51,000and $68,000			674,000				657,000
Deferred revenue			1,105,000				497,000
Total Current Liabilities			3,634,000				4,010,000
Long term finance lease obligations			9,000				13,000
Total Liabilities			3,643,000				4,023,000
Commitments and contingencies
Shares Subject To Possible Redemption
Series C Preferred Stock, $0.001par value, 100shares authorized; 100and 100shares issued and outstanding, respectively			-				-
Stockholders' Deficit
Common stock, $0.001par value, 2,500,000,000shares authorized; 6,582,419and 7,283,483shares issued and outstanding, respectively			6,000				7,000
Additional paid-in capital			59,531,000				56,260,000
Accumulated deficit			(60,959,000	)			(57,508,000	)
Total Stockholders' Deficit			(1,422,000	)			(1,241,000	)
TOTAL LIABILITIES, SHARES SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS' DEFICIT		$	2,221,000			$	2,782,000

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

Zeo ScientifiX, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts rounded to the nearest thousand except share amounts)

(Unaudited)

		Three Months Ended July 31,			Nine Months Ended July 31,
		2024			2023			2024			2023
Revenues (includes sales to related parties of approximately $35,000, $43,000, $117,000, and $151,000, respectively)		$	1,091,000			$	1,221,000			$	3,376,000			$	3,136,000
Cost of revenues			176,000				162,000				619,000				375,000
Gross profit			915,000				1,059,000				2,757,000				2,761,000
General and administrative expenses			2,083,000				2,505,000				6,651,000				8,297,000
Loss from operations			(1,168,000	)			(1,446,000	)			(3,894,000	)			(5,536,000	)
Other income (expense)
Interest expense			(23,000	)			(172,000	)			(70,000	)			(341,000	)
Write-off of advances payable to former officer			221,000				-				221,000				-
Resolution and settlement of long outstanding payables			-				-				154,000				-
Reserve of non-marketable securities			(45,000	)			-				(45,000	)			-
Commissions on sales of Formulator products			-				-				87,000				-
Proceeds from insurance claim			-				-				89,000				-
Other income			3,000				-				7,000				-
Change in Commitment Fee Shortfall Obligation			-				-				-				(19,000	)
Net loss		$	(1,012,000	)		$	(1,618,000	)		$	(3,451,000	)		$	(5,896,000	)
Net loss per common share - basic and diluted		$	(0.16	)		$	(0.23	)		$	(0.55	)		$	(0.84	)
Weighted average number of common shares outstanding - basic and diluted			6,259,975				7,103,521				6,254,652				7,027,005

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

Zeo ScientifiX, Inc

CONDENSED CONSOLIDATED CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

For the Three Months And Nine Months Ended July 31, 2024 and 2023

(Amounts rounded to the nearest thousand except share amounts)

(Unaudited)

Three Months Ended July 31,

								Additional						Total Stockholders'
		Common Stock			Paid-In			Accumulated			Equity
		Shares			Par Value			Capital			Deficit			(Deficit)
Balance May 1, 2023			7,453,388			$	7,000			$	54,653,000			$	(54,799,000	)		$	(139,000	)
Fair value of equity instruments issued for compensation:
Fair value of vested shares issued			94				-				-				-				-
Fair value of vested options and warrants issued			-				-				735,000				-				735,000
Return of former executive's shares and warrants			(170,000	)			-				-				-				-
Net loss			-				-				-				(1,618,000	)			(1,618,000	)
Balance July 31, 2023			7,283,482			$	7,000			$	55,388,000			$	(56,417,000	)		$	(1,022,000	)
Balance May 1, 2024			6,332,419			$	6,000			$	58,241,000			$	(59,947,000	)		$	(1,700,000	)
Sale of common stock			250,000				-				500,000				-				500,000
Fair value of equity instruments issued for compensation:
Fair value of vested shares issued			-				-				31,000				-				31,000
Fair value of vested options and warrants issued			-				-				759,000								759,000
Net loss			-				-				-				(1,012,000	)			(1,012,000	)
Balance July 31, 2024			6,582,419			$	6,000			$	59,531,000			$	(60,959,000	)		$	(1,422,000	)

Nine Months Ended July 31,

								Additional						Total Stockholders'
		Common Stock			Paid-In			Accumulated			Equity
		Shares			Par Value			Capital			Deficit			(Deficit)
Balance October 31, 2022			7,395,632			$	7,000			$	52,403,000			$	(50,521,000	)		$	1,889,000
Sale of common stock			22,282				-				100,000				-				100,000
Fair value of equity instruments issued for compensation:
Fair value of vested shares issued			25,969				-				452,000				-				452,000
Fair value of vested options and warrants issued			-				-				1,958,000				-				1,958,000
Issuance of Common stock and Warrants as commitment fee for SPA 23 Note			75,000				-				282,000				-				282,000
Stock issued in satisfaction of Commitment Fee Shortfall Obligation			58,600				-				193,000				-				193,000
Cancellation of shares repurchased in connection with litigation			(124,000	)			-				-				-				-
Return of former executive's shares and warrants			(170,000	)			-				-				-				-
Net loss			-				-				-				(5,896,000	)			(5,896,000	)
Balance July 31, 2023			7,283,482			$	7,000			$	55,388,000			$	(56,417,000	)		$	(1,022,000	)
Balance October 31, 2023			7,283,483			$	7,000			$	56,260,000			$	(57,508,000	)		$	(1,241,000	)
Sale of common stock			250,000				-				500,000				-				500,000
Reverse split round-up adjustment			5,803				-				-				-				-
Cancellation of shares in connection with litigation			(1,164,742	)			(1,000	)			1,000				-				-
Exchange of accounts payable for stock			20,000				-				20,000				-				20,000
Fair value of equity instruments issued for compensation:
Fair value of vested shares issued			187,875				-				418,000				-				418,000
Fair value of vested options and warrants issued			-				-				2,332,000				-				2,332,000
Net loss			-				-				-				(3,451,000	)			(3,451,000	)
Balance July 31, 2024			6,582,419			$	6,000			$	59,531,000			$	(60,959,000	)		$	(1,422,000	)

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

Zeo ScientifiX, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts rounded to the nearest thousand except share amounts)

(Unaudited)

		Nine Months Ended July 31,
		2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(3,451,000	)		$	(5,896,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense			56,000				470,000
Amortization of OID and commitment fee discount - Promissory notes			18,000				283,000
Change in Commitment Fee Shortfall Obligation			-				19,000
Write-off of fixed assets			-				33,000
Write-off of receivables from officers and other receivable			-				129,000
Write-off of advances payable to former officer			(221,000	)			-
Reserve of non-marketable securities - related party			45,000				-
Stock-based compensation			2,751,000				2,410,000
Changes in operating assets and liabilities:
Accounts receivable			(2,000	)			34,000
Other receivables			-				(14,000	)
Prepaid expenses			(233,000	)			29,000
Inventories			60,000				(9,000	)
Accounts payable and accrued expenses			(721,000	)			49,000
Security deposits			7,000				12,000
Deferred revenue			607,000				33,000
Net cash used in operating activities			(1,084,000	)			(2,418,000	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets			-				(20,000	)
Investment in non-marketable equity securities - related party			(45,000	)			(100,000	)
Net cash used in investing activities			(45,000	)			(120,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Promissory Note			-				504,000
Shares repurchased in connection with litigation			-				(500,000	)
Payments on finance lease			(22,000	)			(86,000	)
Repayments of notes payable			-				(600,000	)
Proceeds from sale of common stock			500,000				100,000
Net cash provided by (used in) financing activities			478,000				(582,000	)
Decrease in cash			(651,000	)			(3,120,000	)
Cash at beginning of period			1,756,000				3,753,000
Cash at end of period		$	1,105,000			$	633,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for taxes		$	-			$	-
Cash paid for interest		$	3,000			$	54,000
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Reduction in accounts payable for equipment returned to vendor		$	21,000			$	-
Exchange of shares for payables		$	20,000			$	-
OID discount on proceeds received from promissory notes		$	-			$	11,000
Common stock and warrants issued as commitment fee for promissory notes		$	-			$	283,000
Common stock issued in satisfaction of Commitment Fee Shortfall Obligation		$	-			$	193,000

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

Zeo ScientifiX, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Zeo ScientifiX, Inc. ("ZEO" or the "Company") (f/k/a Organicell Regenerative Medicine, Inc.) was incorporated on August 9, 2011 in the State of Nevada under the name Bespoke Tricycles Inc. (changed to Biotech Products Services and Research, Inc. during September 2015 and to Organicell Regenerative Medicine, Inc., effective June 20, 2018). Effective February 20, 2024, we further amended our Articles of Incorporation to assume our current name, Zeo ScientifiX, Inc.

The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine. The Company's proprietary products, including Zofin™, are derived from perinatal sources and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles and Patient Pure X™ ("PPX™"), an autologous biologic containing a nanoparticle fraction that is precipitated from a patient's own peripheral blood ("RAAM Products"). Our RAAM Products and related services are principally used in the health care industry administered through doctors and clinics ("Providers").

For the nine months ended July 31, 2024 and 2023, the Company principally operated through General Surgical of Florida, Inc., a Florida corporation and wholly owned subsidiary, which was formed to sell the Company's therapeutic products to Providers.

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

Effective November 28, 2023, we implemented a one-for-200 reverse stock split (the "Reverse Split"). The par value of the Company's common stock was unchanged at $0.001 per share after the Reverse Split. As a result, on the effective date of the Reverse Split, the stated capital on the Company's balance sheet attributable to the Company's common stock was reduced proportionately based on the Reverse Split ratio of one-for-200 and the additional paid-in capital account was credited with the amount by which the stated capital was reduced. All share and per share amounts referenced herein give effect to the Reverse Split as of the earliest period presented.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the condensed unaudited consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of July 31, 2024, the results of its operations for the three months and nine months ended July 31, 2024 and 2023 and the cash flows for the nine months ended July 31, 2024 and 2023. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities Exchange Commission, although we believe that the disclosures made are adequate to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended October 31, 2023 filed with the Securities and Exchange Commission.

All amounts presented have been rounded to the nearest thousand except share amounts, share prices and earnings per share.

Concentrations of Risk

Credit Risk

The balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Balances in accounts are insured up to Federal Deposit Insurance Corporation ("FDIC") limits of $250,000per institution. At July 31, 2024, the Company held a total of approximately $343,000of cash balances in two financial institutions in excess of FDIC insurance coverage limits.

Major Customer

During the three months ended July 31, 2024, the Company sold products and services totaling approximately $178,000(16.3%) to a large distributor. During the three months ended July 31, 2023, the Company sold products and services totaling approximately $334,000(27.3%) to a large distributor and approximately $125,000(10.2%) to an individual medical practice.

During the nine months ended July 31, 2024, the Company sold products and services totaling approximately $570,000(16.8%) to a large distributor, approximately $418,000(12.3%) to another large distributor and approximately $382,000(11.2%) to an individual medical practice. During the nine months ended July 31, 2023, the Company sold a total of approximately $880,000(28.1%) to a large distributor and approximately $448,000(14.3%) to another large distributor.

The Company's sales agreements are non-exclusive and the Company does not believe it has any exposure based on the customers of its products.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

Those estimates and assumptions include estimates for credit loss reserves for accounts receivable, assumptions used in valuing inventories at net realizable value, impairment testing of recorded long-term tangible and intangible assets, the valuation allowance for deferred tax assets, accruals for potential liabilities, assumptions made in valuing equity instruments issued for services, and assumptions used in the determination of the Company's liquidity.

Revenue Recognition

The Company follows the guidance of FASB Accounting Standards Update ("ASU") Topic 606 "Revenue from Contracts with Customers" which requires the Company to recognize revenue in amounts that reflect the prorata completion of the performance obligations of the Company required under the contracts.

The Company recognizes revenue only when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control is transferred at a point-in-time, which is typically when the transfer and title to the product sold has taken place and there is evidence of our customer's satisfactory acceptance of the product shipment or delivery except in those instances when the customer has made prior arrangements with the Company to store the product purchased by the customer at the Company's facilities that is to be delivered at a later date to be designated by the customer. Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on the Company's consolidated balance sheet.

Net Income (Loss) Per Common Share

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

At July 31, 2024, the Company had 3,787,527common shares issuable upon the exercise of options and warrants and 182,500unvested shares of restricted stock that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the three months and nine months ended July 31, 2024

At July 31, 2023, the Company had 2,549,000common shares issuable upon the exercise of options and warrants and 250,000unvested shares of restricted stock that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the three months and nine months ended July 31, 2023.

Stock-Based Compensation

All stock-based payments are recognized in the financial statements based on their fair values.

The Company periodically issues stock options and stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.

The fair value of the Company's stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.

Research and Development Costs

Research and development costs consist of direct and indirect costs associated with the development of the Company's technologies. These costs are expensed as incurred. Our research and development expenses were approximately $75,000and $335,000for the three months ended July 31, 2024 and 2023, respectively. Our research and development expenses were approximately $80,000and $938,000for the nine months ended July 31, 2024 and 2023, respectively. The research and development costs primarily relate to the filing and approval of IND applications and the performance of clinical trials.

Income Taxes

The Company files a consolidated tax return that includes all of its subsidiaries.

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

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

For the three months and nine months ended July 31, 2024 and 2023 the Company incurred operating losses, and therefore, there was not any income tax expense amount recorded during those periods. There is a full valuation allowance established for the tax benefit associated with the net losses for the nine months ended July 31, 2024 and 2023.

Fair Value of Financial Instruments

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

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

The Company follows the provisions of ASC 820 with respect to its financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

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

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

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

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

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.

Segment Information

For the three months and nine months ended July 31, 2024 and 2023, the Company operated only one operating segment.

Subsequent Events

The Company has evaluated subsequent events that occurred after July 31, 2024 through the financial statement issuance date for subsequent event disclosure consideration.

NOTE 3 - GOING CONCERN

The unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company incurred net losses of $3,451,000for the nine months ended July 31, 2024 and used $1,084,000of cash from operating activities during that period. In addition, the Company had a stockholders' deficit of $1,422,000at July 31, 2024. The Company had a working capital deficit of $1,909,000at July 31, 2024.

United States Food and Drug Administration ("FDA") regulations which were announced in November 2017 and which became effective in May 2021 require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products ("HCT/Ps") can only be sold pursuant to an approved biologics license application ("BLA"). The Company has not obtained any opinion or ruling regarding the Company's operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA's previously announced intended enforcement policies regarding HCT/P's.

As a result of the above, the Company's efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company's ability to process, sell and distribute the products currently being produced or developed in the future are not restricted; and/or (b) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company's current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.

In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (a) the Company is able to continue to produce products or obtain products under supply arrangements which are in compliance with current and future regulatory guidelines; (b) the Company will be able to establish a stabilized source of revenues, including efforts to expand sales internationally and the development of new product offerings and/or designations of products; (c) obligations to the Company's creditors are not accelerated; (d) the Company's operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (e) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and ongoing safety and efficacy of its products; and/or (f) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.

There is no assurance that the products we currently produce will not be subject to the FDA's previously announced intended enforcement policies regarding HCT/P's and/or the Company will be able to complete its revenue growth strategy. There is no assurance that the Company's research and development activities will be successful or that the Company will be able to timely fund the required costs of those activities. Without sufficient cash reserves, the Company's ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant effort since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues.

If revenues do not increase and stabilize, if the Company's ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws.

The independent auditor's report dated January 29, 2024 included in our Annual Report on Form 10-K for the year ended October 31, 2023 included an explanatory paragraph as to the Company's ability to continue as a going concern. As of July 31, 2024, based on the factors described above, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of these financial statements.

NOTE 4 - INVENTORIES

		July 31, 2024			October 31, 2023
Raw materials and supplies		$	179,000			$	154,000
Finished goods			71,000				156,000
Total inventories		$	250,000			$	310,000

NOTE 5 - PROPERTY AND EQUIPMENT

		July 31, 2024			October 31, 2023
Finance lease equipment		$	15,000			$	260,000
Manufacturing equipment			755,000				535,000
			770,000				795,000
Less: accumulated depreciation and amortization			(274,000	)			(222,000	)
Total property and equipment, net		$	496,000			$	573,000

During February 2024, in connection with the expiration of the lease for certain lab equipment originally valued at $240,000, the Company exercised its buyout option for the equipment for a total cost of $1(see Note 6).

Depreciation expense totaled $18,000and $31,000for the three months ended July 31, 2024 and 2023, respectively. Depreciation expense totaled $56,000and $90,000for the nine months ended July 31, 2024 and 2023, respectively.

Amortization expense totaled $0and $127,000for the three months ended July 31, 2024 and 2023, respectively. Amortization expense totaled $0and $380,000for the nine months ended July 31, 2024 and 2023, respectively.

NOTE 6 - LEASE OBLIGATIONS

Finance Lease Obligations:

During March 2019, the Company entered into a lease agreement for certain lab equipment in the amount of $240,000. The lease expired in February 2024. Under the terms of the lease agreement, the Company acquired all of the leased equipment for $1.

During October 2021, the Company entered into a second lease agreement in the amount of $305,000for certain lab equipment that is being installed at the Basalt lab location. On August 7, 2023, certain equipment under the second lease agreement were assigned to a third party resulting in the reduction of the Company's remaining obligations under the second lease agreement from $6,000per month to $1,000per month.

As of July 31, 2024, finance lease obligations were $14,000, of which $5,000were current.

NOTE 7 - EQUITY IN NON-MARKETABLE SECURITIES OF AFFILIATED ENTITY

		July 31, 2024			October 31, 2023
Equity in non-marketable securities		$	145,000				100,000
Reserve on carrying value of investment in non-marketable securities		$	(145,000	)			(100,000	)
Equity in non-marketable securities		$	-				-

During the year ended October 31, 2023, the Company invested $100,000in cash (representing a 10% equity interest at the time of the investment) in the non-marketable equity securities of one privately held skin-care formulator ("Formulator") in an effort to accelerate the Company's development of expertise with respect to the skincare industry and the potential supply of the Company's products in future topical formulations. The Company evaluated its ownership, contractual and other interests in this entity and determined the Company does not have a variable interest in this entity and therefore it is not required to be consolidated in the Company's consolidated financial statements, as the Company is not the primary beneficiary and does not have the power to direct activities that most significantly impact the entities' economic performance. The Company's maximum loss exposure is limited to the carrying value of this investment.

At the time of the investment, both Greyt Ventures, LLC and Skycrest Holdings, LLC, principal shareholders of the Company, each owned a 20% interest in the Formulator. In addition, Mr. Robert Smoley, a consultant and advisor to the Company is also the Chief Operating Officer of the Formulator. The Company's, Greyt Ventures, LLC's and Skycrest Holdings, LLC's equity interests in the Formulator have since been reduced to 8.96%, 17.93% and 17.93%, respectively, as a result of additional sales of equity interests in the Formulator to outside parties.

As of October 31, 2023, the Company recorded a reserve against the carrying value of its investment of the Formulator of $100,000, based on the limited financial history of the Formulator to date to ascertain the fair value of the Formulator and the Company's limited rights to control future dilution to the Company's interests and the timing of available distributions, if any, of the Formulator. As such, at October 31, 2023, the carrying value of the Company's investments in equity securities without readily determinable fair values totaled $0.

During the quarter ended July 31, 2024, pursuant to a capital call notice received from the Formulator, the Company invested an additional $45,000 in cash (representing its 8.96% equity interest at the time of the capital call). As of July 31, 2024, the Company has recorded an additional reserve against the carrying value of its investment of the Formulator in connection with the additional investment of $45,000 based on the limited financial history of the Formulator to date to ascertain the fair value of the Formulator and the Company's limited rights to control future dilution to the Company's interests and the timing of available distributions, if any, of the Formulator.

As of July 31, 2024, the Company has recorded total reserves against the carrying value of its investment of the Formulator of $145,000, As such, at July 31, 2024, the carrying value of the Company's investments in equity securities without readily determinable fair values totaled $0.

NOTE 8 - RELATED PARTY TRANSACTIONS

For the three months and nine months ended July 31, 2024, the Company sold a total of approximately $35,000and $117,000of product to a management services organization ("MSO") that provides administrative services and contracts for medical supplies for several medical practices, of which Dr. George Shapiro, the Company's Chief Medical Officer and a member of the board of directors has an indirect economic interest in the parent company that owns the MSO.

For the three months and nine months ended July 31, 2023, the Company sold a total of approximately $43,000and $151,000of product to a management services organization ("MSO") that provides administrative services and contracts for medical supplies for several medical practices, of which Dr. George Shapiro, the Company's Chief Medical Officer and a member of the board of directors has an indirect economic interest in the parent company that owns the MSO.

At October 31, 2023, advances payable to a former officer were $221,000. The advances are non-interest bearing and there were no formal arrangements regarding the repayment of the advances. As of July 31, 2024, the Company had determined that the statute of limitations had run for the ability of the affiliate to enforce a claim to collect the advances. As a result, the Company wrote-off the full balance of the advances payable to an affiliate of a former executive of $221,000on July 31, 2024. The Company recorded the write-off as other income during the three months and nine months ended July 31, 2024.

During the quarter ended July 31, 2024, pursuant to a capital call notice received from the Formulator, as discussed in Note 7, the Company invested an additional $45,000in cash (representing its 8.96% equity interest at the time of the capital call).

In connection with the sale of securities to the Investor (see Note 11), the Company entered into a supply agreement with an affiliate of the Investor to sell our products to such party and entered into a non-binding term sheet with another affiliate of the Investor pursuant to which such affiliate will have the option (subject to various conditions including the negotiation and execution of definitive agreements) to invest in a newly formed subsidiary through which ZEO intends to conduct clinical trials on its present and planned products.

NOTE 9 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

		July 31, 2024			October 31, 2023
Accrued payroll related liabilities		$	667,000			$	667,000
Lab equipment and supplies payables			91,000				407,000
Clinical trial and research payables			624,000				675,000
Legal fees payable			180,000				479,000
Other professional fees payable			105,000				81,000
Accrued IRS penalty			-				86,000
Accrued commissions payable			32,000				102,000
Construction payables			9,000				9,000
Other payables and accrued expenses			142,000				106,000
Total Accounts Payable and Accrued Expenses		$	1,850,000			$	2,612,000

During February 2024, the Internal Revenue Service ("IRS") notified the Company that the Company's appeal for full abatement of penalties and interest ($92,000as of February 2024) associated with delinquent filed returns for the tax years ended 2012 - 2015 was granted. The Company recorded the abatement as other income for the nine months ended July 31, 2024.

NOTE 10 - NOTES PAYABLE

		July 31, 2024			October 31, 2023
Convertible Promissory Notes		$	725,000			$	725,000
Unamortized discount			(51,000	)			(68,000	)
Total Notes Payable		$	674,000			$	657,000

Convertible Promissory Notes

The Convertible Promissory Notes are due September 30, 2026. Interest on the Convertible Promissory Notes is 8.0 %payable annually and together with the principal amount on the maturity date.

The Convertible Promissory Notes may be prepaid by the Company, in whole, but not in part, at any time prior to the Maturity Date, subject to payment of a premium of 10%, provided that the Company gives the holders fifteen (15) business notice prior to prepayment, during which period, Investors may elect to convert the Notes and accrued but unpaid interest thereon into Shares at a conversion price equal to 80% of the average of the daily VWAP of the Shares (as defined in the Note) for twenty consecutive (20) trading days ending on the date the Company gives the holders of the Convertible Promissory Notes notice of prepayment.

Holders of the Convertible Promissory Notes will have the right, at any time during the period commencing on April 1, 2024 and ending on the earliest to occur of the Maturity Date, the date of a Prepayment or the date of an automatic conversion, to convert the Convertible Promissory Note in whole, but not in part, and accrued interest thereon into shares of common stock ("Shares") at a conversion price equal to 80% of the average of the daily VWAP of the Shares (as defined in the Convertible Promissory Note) for twenty consecutive (20) trading days ending on the date the investor gives the Company a notice of conversion, subject to a minimum conversion price of $6.00per Share.

In addition, the Convertible Promissory Notes and accrued but unpaid interest thereon will automatically convert into Shares in the event that prior to the Maturity Date, the Company consummates a "Qualified Financing" or a "Qualified Sale" (as defined in the Convertible Promissory Note) at a conversion price equal to 80% of the offering price of Shares sold in the Qualified Financing or 80% of the purchase price per Share to be received by stockholders following consummation of a Qualified Sale.

In connection with the issuance of the Convertible Promissory Notes, the Company recorded a discount in the amount of $72,000. The discount is being amortized over the term of Convertible Promissory Notes. For the three months and nine months ended July 31, 2024, $5,000and $17,000, respectively, of the discounts recorded in connection with the issuance of the Convertible Promissory Notes have been amortized, resulting to unamortized debt discount of $51,000as of July 31, 2024.

NOTE 11 - CAPITAL STOCK

Common Stock

On November 7, 2023, the Company filed a certificate of amendment to its Articles of Incorporation to affect a reverse split of our issued and outstanding common stock on a one-for-two-hundred basis. The reverse stock split was effective with FINRA on November 28, 2023 (the "Reverse Split"). The par value of the Company's common stock was unchanged at $0.001per share after the Reverse Split. All share and per share amounts have been retroactively adjusted to reflect the split as if it occurred at the earliest period presented.

Issuances Of Common Stock - Sales:

On July 8, 2024, the Company completed a $500,000 private financing ("Financing") with a single accredited investor ("Investor"). In the Financing, the Company sold and issued to the Investor 250,000shares of common stock ("Shares") and warrants to purchase an additional 83,333Shares (the "Warrants") (see Note 12). In connection with the Financing, the Company agreed to provide the Investor certain piggy-back registration rights under the Securities Act of 1933, as amended ("Securities Act") with respect to the Shares purchased and the Shares underlying the Warrants purchased. The proceeds are being used for working capital purposes.

Issuance of Common Stock for Services:

On April 1, 2024, pursuant to the Company's 2021 Incentive Stock Plan ("Incentive Plan"), the Company's Board of Directors ("Board") awarded 125,000and 62,500shares of Zeo common stock to Jerry Glauser and Leatham Stern or their nominees, respectively ("Stock Grants"), both members of the Board, valued at $2.00per share, the closing price of the common stock of the Company on the grant date. The Stock Grants vest in full as of the date of the grant. The Company recorded a total of $0and $375,000of stock-based compensation expense during the three months and nine months ended July 31, 2024, respectively, in connection with the Stock Grants.

Issuances of Common Stock - Exchange of balances due on accounts payable for stock:

Effective January 31, 2024, the Company and a legal firm performing services to the Company agreed to exchange $20,000of legal fees payable due to the legal firm for 20,000shares of newly issued common stock valued at $20,000, representing a 20% discount to the closing price of the common stock of the Company on the date the arrangement was agreed to by both the Company and the legal firm. The shares were issued to the legal firm in April 2024.

Shares Repurchased - Settlement of Litigation:

In connection with a settlement agreement entered into during November 2023 (see Note 13), Albert Mitrani and Dr. Maria Ines Mitrani returned to the Company 682,161and 481,831shares of ZEO common stock held by them respectively and the parties exchanged mutual releases.

Equity Line Of Credit Commitment:

On February 23, 2024, pursuant to the Purchase Agreement dated as of September 1, 2022 ("Agreement"), by and between the Company and Tysadco Partners, LLC ("Tysadco"), the Company provided Tysadco formal notice that it was terminating the Agreement and the $10,000,000 equity line of credit facility ("ELOC").

Grant of Restricted Common Stock:

A summary of restricted stock activity for the nine months ended July 31, 2024 are presented below:

		Number of Non-vested Shares			Fair Value			Weighted- Average Grant Date Value
Non-vested at October 31, 2023			-			$	-			$	-
Non-vested Shares Granted			182,500			$	325,000			$	1.78
Vested			-			$	(43,000	)		$	-
Expired/Forfeited			-			$	-			$	-
Non-vested at July 31, 2024			182,500			$	282,000			$	1.78

Effective April 1, 2024, the Company entered into sales distribution agreement with a sales and marketing company ("Salesco"). Salesco will be entitled to receive commissions on sales of the Company's products to customers introduced by Salesco in the form of cash and common stock of the Company based on sales milestones. In connection with the agreement, the Company agreed to pay Salesco a monthly advance of $15,000for the first 6 months, provided however, that the last 2 monthly retainers are subject to Salesco achieving a certain minimum amount in sales during the applicable month. The monthly retainers are to be repaid from commissions earned by Salesco on sales of the Company's products that are generated through Salesco. In addition, the Salesco was granted 30,000shares of the Company's common stock which vests over 2years, quarterly, except the quarterly vesting period will "cliff vest" upon the Company receiving $300,000in cumulative sales from customers introduced by Salesco. The agreement may be terminated by the Company upon the six-month anniversary of the agreement. The 30,000grant of shares were valued at $2.00 per share, the closing price of the common stock of the Company on the effective date of the agreement. The Company will amortize $60,000of stock-based compensation expense over the 2-year vesting terms. The Company recorded $7,000and $10,000of stock-based compensation expense during the three months and nine months ended July 31, 2024, respectively.

During April 2024 thru July 2024, in consideration for agreeing to serve on the Company's medical advisory board, the Board approved the issuance to a total of twenty individuals an aggregate of 152,500shares of unregistered common stock valued at ranges between $1.04per share and $2.75per share, the closing price of the common stock of the Company on the respective grant dates. The shares vest annually over the three-year period from the date of grant. The Company will amortize $265,000of stock-based compensation expense over a three-year vesting period. The Company recorded a total of $24,000and $33,000of stock-based compensation expense based on the grant date fair value of these shares during the three months and nine months ended July 31, 2024, respectively.

There was approximately $282,000of unamortized compensation associated with unvested stock grants outstanding as of July 31, 2024 that will be amortized over their respective remaining service periods.

NOTE 12 - STOCK OPTIONS AND WARRANTS

The Company has issued option securities under its Incentive Plan and warrants entitling the holder to purchase shares of its common stock at specified prices and for specified exercise periods.

Options:

A summary of the Company's option activity for the nine months ended July 31, 2024 are presented below:

		Number of Shares			Weighted-average Exercise Price			Remaining Contractual Term (years)			Aggregate Intrinsic Value
Outstanding at October 31, 2023			895,750			$	2.97				5.67			$	-
Granted			622,538			$	2.52				9.42			$	-
Exercised			-			$	-				-			$	-
Expired/Forfeited			(190,000	)		$	2.40				3.84			$	-
Outstanding at July 31, 2024			1,328,288			$	2.84				7.15			$	-
Exercisable at July 31, 2024			589,531			$	3.26				5.65			$	-

During the nine months ended July 31, 2024, under its Incentive Plan, the Board approved the granting of options to certain employees, officers and directors to purchase 622,538shares of its common stock. The options vest over various periods ranging from 6 months to 3 years, expire five to ten yearsfrom the date of grant and had an aggregate fair value of $1,438,000at the date of grant. The Company valued the options using a Black-Scholes option pricing model.

The assumptions used for the options granted during the period are as follows:

Exercise prices		$	2.00- 4.50
Expected dividends			-
Expected volatility			156%-159	%
Risk free interest rate			4.20%-4.34	%
Expected life of options			6.0

During the nine months ended July 31, 2024 and 2023, the Company amortized $692,000and $351,000, respectively, of stock compensation costs associated with options issued.

There was approximately $1,545,000of unamortized compensation associated with options outstanding as of July 31, 2024 that will be amortized over their respective remaining service periods.

Warrants:

A summary of the Company's warrant activity for the nine months ended July 31, 2024 are presented below:

		Number of Shares			Weighted-average Exercise Price			Remaining Contractual Term (years)			Aggregate Intrinsic Value
Outstanding at October 31, 2023			1,675,906			$	4.54				8.47			$	-
Granted			783,333			$	2.31				10.00			$	-
Exercised			-			$	-				-			$	-
Expired/Forfeited			-			$	-				-			$	-
Outstanding at July 31, 2024			2,459,239			$	3.83				8.43			$	-
Exercisable at July 31, 2024			1,778,059			$	4.39				7.85			$	-

On July 8, 2024, in connection with the Financing (see Note 11), the Company issued the Investor a cashless warrant to purchase an aggregate of 83,333shares of common stock. The warrant is exercisable for $2.00per share (the closing price of the Company's common stock on the date of grant was $1.66), until the tenth anniversary date of the date of issuance. The exercise price and number of shares issuable upon exercise of the warrant are subject to adjustment to give effect to stock splits, stock dividends and other recapitalization events and the sale of shares at a purchase price less than the exercise price then in effect.

On July 11, 2024, our board of directors granted warrants to purchase 350,000shares of our common stock (the "Warrants") to each of two consultants to the Company, Skycrest Holdings, LLC and Greyt Ventures LLC (the "Consultants"). The Warrants vest in equal monthly installments over an eighteen (18) month period from the date of grant. Once vested, the Warrants are exercisable for a period of ten (10) years from the date of grant at an exercise price of $2.35per share (subject to adjustment for stock splits, stock dividends and similar recapitalization events). The Consultants, who are the controlling stockholders of the Company, were also accorded piggy-back registration rights under the Securities Act with respect to the shares of common stock issuable upon exercise of the Warrants. The Company valued the Warrants on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 4.20%, (2) term of 10years, (3) expected stock volatility of 159%, and (4) expected dividend rate of 0%. The grant date fair value of the total 700,000Warrants granted was $1,645,000. The Company issued the foregoing securities pursuant to the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) thereof.

During the nine months ended July 31, 2024 and 2023, the Company amortized $1,640,000and $1,607,000, respectively, of stock compensation costs associated with warrants issued.

There was approximately $3,631,000 of unamortized compensation associated with warrants outstanding as of July 31, 2024 that will be amortized over their respective remaining service periods.

All stock compensation expense is classified under general and administrative expenses in the consolidated statements of operations.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Skincare Agreement

In September 2022, the Company entered into a joint development agreement and supply agreement with a third-party supplier ("Supplier") that develops and manufactures various devices and related equipment and consumables used in the skincare industry ("Skincare Agreement") that are marketed and sold directly and/or through its affiliates or third parties, in the United States of America and in most major international markets. Under the terms of the Skincare Agreement, the Company was obligated to provide and the Third Party was obligated to purchase a minimum volume of raw material ingredient ("Ingredient") from the Company to be used as part of formulations in exclusive biologic topical products ("Products") to be marketed and sold by Supplier during the first year of the Agreement in the amount of $167,000 ("Minimum Purchase") and mutually agreed upon minimal annual amounts thereafter. In June 2023, the Supplier informed the Company that there were delays in the Supplier's development of the Products, including the timing of providing a purchase order for the Minimum Purchase of the Company's Ingredient.

During September 2023, the Company and the Supplier agreed to enter into an Amendment and Restatement of the Skincare Agreement ("Amended Skincare Agreement"). Under the terms of the Amended Skincare Agreement, the products to be provided by the Company was modified to include both the Ingredient and a topical moisturizer ("Moisturizer") supplied by the Formulator. The Ingredient and the Moisturizer are hereinafter referred to as the "Combined Product". The Supplier was obligated to deliver a purchase order for a minimum of $403,000 of the Combined Product by September 30, 2023 ("Initial Purchase Order") and a total of $648,000 of the Combined Product during the first year of the Amended Skincare Agreement.

During November 2023, the Supplier paid the Company $403,000 in connection with the Initial Purchase Order. Pursuant to Sales Agreement with the Formulator, the Company paid the Formulator $235,000 representing the amount of Initial Purchase Order associated with the Company's arrangement with the Formulator to supply the Moisturizer ("Moisturizer Prepayment"). As of July 31, 2024, both the Company and the Formulator had yet to deliver the Ingredient or the Moisturizer to the Supplier. As of July 31, 2024, the Company has recorded deferred revenues of $403,000and prepaid expenses of $235,000for payments received and paid, respectively, in connection with the Amended Skincare Agreement.

On August 12, 2024, in connection with the mutual agreement to terminate the Amended Skincare Agreement, the Company and the Supplier entered into a settlement agreement and general release ("Settlement"). In connection with the Settlement, the parties released each other from all outstanding duties and/or obligations owed by one party to the other party as set forth in the Settlement, including but not limited to the Company's obligation to supply any Combined Product to the Supplier and the Supplier's obligation to make or place any additional orders to the Company for the Combined Product. In connection with the Settlement, the Company retained the $403,000 payment that the Supplier made to the Company in connection with the Initial Purchase Order, and the Company was not obligated to deliver any of the Combined Product to the Supplier, including the portion of the Combined Product to be provided in connection with the Initial Purchase Order. Concurrent with the execution of the Settlement, the Company and the Formulator entered into a settlement and general release ("Release") whereby the parties released each other from all outstanding duties and/or obligations owed by one party to the other party as set forth in the Release including but not limited to the Formulator's obligation to supply any Moisturizer to the Company pursuant to the Amended Skincare Agreement and the Company's obligation to make or place any additional orders to the Formulator for the Moisturizer. In connection with the Release, the Formulator retained the Moisturizer Prepayment, and the Formulator was not obligated to deliver any of the Moisturizer to the Company, including portion of the Moisturizer to be provided in connection with the Moisturizer Prepayment.

Deferred Revenue

During the year ended October 31, 2023, the Company received an advance payment of $500,000 in connection with a distribution agreement entered into between the Company and a third party ("Purchaser") which was to be applied against future invoices for product inventory to be delivered over time which amount was recorded as deferred revenue. As of October 31, 2023, $101,000 of product inventory was invoiced and delivered reducing the deferred revenue amount to $399,000.During the period November 1, 2023 thru July 29, 2024, $399,000 of product inventory was invoiced and delivered, reducing the deferred revenue balance to $0. On August 5, 2024, the Purchaser prepaid an amount of $375,000 to the Company which is to be applied against future invoices for specific product inventory to be delivered over time which amount was initially recorded as deferred revenue.

During July 2024, the Company received an advance payment of $500,000 in connection with a distribution agreement entered into between the Company and an affiliate of the Investor (see Note 11) which was to be applied against future invoices for product inventory to be delivered over time which amount was recorded as deferred revenue. As of July 31, 2024, $40,000 of product inventory was invoiced and delivered reducing the deferred revenue amount to $460,000.

Amounts received by the Company for products that have yet to be delivered to the customers as of July 31, 2024 and October 31, 2023 are reflected in the Company's balance sheet as deferred revenues and were comprised of the following:

		July 31, 2024			October 31, 2023
Initial Purchase Order - Amended Skincare Agreement		$	403,000			$	-
Advances On Future Purchases Of Inventory			460,000				399,000
Sales To Customers Not Yet Delivered			242,000				98,000
Total Deferred Revenue		$	1,105,000			$	497,000

Investor Option

In connection with the sale of securities to the Investor (see Note 11), the Company entered into a non-binding term sheet with another affiliate of the Investor pursuant to which such affiliate will have the option (subject to various conditions including the negotiation and execution of definitive agreements) to invest in a newly formed subsidiary through which ZEO intends to conduct clinical trials on its present and planned products.

Legal Matters

Albert Mitrani and Dr. Maria Ines Mitrani

Effective November 13, 2023, the Company entered into a settlement agreement with Albert Mitrani and Dr. Maria Ines Mitrani (former executives of the Company), pursuant to which it resolved various claims against the Mitranis, including those set forth in the previously reported Florida state action the Company had filed against the Mitranis. As part of the settlement, Albert Mitrani and Dr. Maria Ines Mitrani returned to the Company 682,161and 481,831shares of ZEO common stock held by them respectively and the parties exchanged mutual releases.

Drs. Leider and Golub

The Company's employment agreements with Dr. Harry Leider, its former Chief Executive Officer and Dr. Howard Golub, its former Chief Science Officer ("Employment Agreements") had an initial term that ended May 31, 2024. The Employment Agreements were not renewed and accordingly, the Employment Agreements expired and the employment of Drs. Leider and Golub by the Company ended on May 31, 2024. Effective August 12, 2024, the Company and Dr. Leider entered into a settlement agreement and general release whereby the Company agreed to pay Dr. Leider $40,000 in exchange for each party executing mutual releases in connection with the non-renewal of Dr. Leider's employment agreement.

All options issued to the former Chief Executive Officer that were not vested amounting to 190,000 at the time of termination were forfeited. In addition, all options issued to the former Chief Executive Officer and Dr. Howard Golub, its former Chief Science Officer that were vested amounting to 345,000 at the time of termination, were not exercised by August 31, 2024 as required under the Incentive Plan, and as a result expired.

Other

In addition to the foregoing, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.

NOTE 14 - SUBSEQUENT EVENTS

During August 2024, the Company entered into a agreement with a third party to provide consulting services for a one-year period. As consideration for agreeing to provide consulting services to the Company, the Company agreed to issue the consultant vested warrants to purchase 100,000shares of unregistered common stock. The Company valued the warrants on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 3.96%, (2) term of 3years, (3) expected stock volatility of 147%, and (4) expected dividend rate of 0%. The grant date fair value of the warrants granted was $185,000. The Company will amortize $185,000of stock-based compensation expense over the term of the consulting agreement.

Effective August 5, 2024, the Company entered into a settlement agreement with a prior consultant of the Company, pursuant to which it resolved various claims that had been brought by the Company against the consultants. As part of the settlement, the consultants agreed to return to the Company 237,602shares of ZEO common stock held by the consultants in exchange for a payment of $80,000and the parties exchanged mutual releases.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Business Overview

We are a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine. The Company's proprietary products, including Zofin™, are derived from perinatal sources and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles and Patient Pure X™ ("PPX™"), an autologous non-manipulated biologic containing a nanoparticle fraction that is precipitated from a patient's own peripheral blood ("RAAM Products"). Our RAAM Products and related services are principally used in the health care industry administered through doctors and clinics ("Providers").

ZEO operates an extracellular vesicle processing laboratory in Davie, Florida for the purpose of performing research and development and the manufacturing and processing of the anti-aging and cellular therapy derived products that we sell and distribute to our customers.

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

To date, the Company has obtained certain Investigational New Drug ("IND"), and 18 emergency IND ("eIND") approvals from the FDA, including applicable Institutional Review Board ("IRB") approvals which authorized the Company to commence clinical trials or treatments in connection with the use of Zofin™ and related treatment protocols. The Company is pursuing efforts to complete its already approved clinical studies as well as obtaining approval to commence additional studies for other specific indications it has identified that the use of its products will provide more favorable and desired health related benefits for patients seeking alternative treatment options than are currently available. The ability of the Company to succeed in these efforts is subject to among other things, the Company having sufficient available working capital to fund the substantial costs of completing clinical trials, which the Company currently does not have, and ultimately, obtaining approval from the FDA.

Current FDA guidance requires that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue-based products ("HCT/Ps") can only be sold pursuant to an approved biologics license application ("BLA").

We have not obtained any opinion or ruling regarding the Company's operations and whether the processing, sales and distribution of the products we currently produce would be subject to the FDA's previously announced intended enforcement policies regarding HCT/P's. However, we do not believe that our products fall within these guidelines and intend to vigorously defend against any adverse interpretation by the FDA on the classification of our products that may be deemed as falling under this defined regulation, if any. Notwithstanding the foregoing, we are undertaking efforts on an ongoing basis to mitigate any potential risks associated with an adverse ruling by the FDA and the subsequent limitations on our ability to continue to generate revenues from the sale of our products in the United States until the Company obtains the required licenses. The efforts include continuing with clinical trials, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations.

All share and per share amounts referenced herein give effect as of the earliest period presented to a 200 for one reverse stock split implemented effective November 28, 2023.

The following discussion of the Company's results of operations and liquidity and capital resources should be read in conjunction with our condensed unaudited financial statements and related notes thereto appearing in "Item 1. Financial Statements" of Part I of this Report.

Results of Operations

Three months ended July 31, 2024 as compared to three months ended July 31, 2023

Revenues. Our revenues for the three months ended July 31, 2024 were $1,091,000, compared to revenues of $1,221,000 for the three months ended July 31, 2023. The decrease in revenues during the three months ended July 31, 2024 of $130,000 or 10.6% from the three months ended July 31, 2023, was primarily the result of a decrease of approximately 18.3% (approximately $212,000) in the average sales prices for the high concentration biologic products sold during the three months ended July 31, 2024, compared with the three months ended July 31, 2023, partially offset by an increase of approximately 142.8% (approximately $92,000) of revenues associated with its recently launched PPX™ service platform during the three months ended July 31, 2024, compared with the three months ended July 31, 2023.

The increase in the overall unit sales associated with its recently launched PPX™ service platform was primarily due the Company's expanded sales and marketing efforts which included engaging additional sales representatives, participation in industry related conferences and sponsoring of educational webinars.

The decrease in the average sales prices for the high concentration biologic products sold during the three months ended July 31, 2024, compared to the three months ended July 31, 2023 was due to a reduction in sales of the Company's higher priced medical grade biologic product offerings as compared to the Company's lower priced aesthetic biologics product offerings. Although the total number of unit sales of its high concentration biologic products did not change significantly during the three months ended July 31, 2024, compared to the three months ended July 31, 2023 (a difference of 1.0%), the percentage of overall unit sales of the Company's high concentration medical grade biologic product offerings decreased to 42.1% from 57.1% and increased to 57.9% from 42.8% for the Company's high concentration aesthetic biologics product offerings, respectively, for the three months ended July 31, 2024, as compared to the three months ended July 31, 2023.

Cost of Revenues. Our cost of revenues for the three months ended July 31, 2024 was $176,000, as compared to cost of revenues of $162,000 for the three months ended July 31, 2023. The increase in the cost of revenues for the three months ended July 31, 2024 of $14,000 or 8.6%, from the three months ended July 31, 2023, was due the increase of approximately $37,000 of cost of revenues associated with its recently launched PPX™ service platform during the three months ended July 31, 2024, compared with the three months ended July 31, 2023, partially offset from a decrease of approximately 18.2% (approximately $24,000) in the average cost of revenues for the high concentration biologic products for the three months ended July 31, 2024, as compared to the three months ended July 31, 2023.

Gross Profit. Our gross profit for the three months ended July 31, 2024 was $915,000 (83.9% of revenues), as compared to gross profit of $1,059,000 (86.7% of revenues) for the three months ended July 31, 2023. The decrease in gross profit during the three months ended July 31, 2024 of $144,000 was the result of decreases in the average sales prices from its high concentration biologic products sold, partially offset from the increases in the sales of its recently launched PPX™ service platform and the increase in costs of revenues associated with those product sales during the three months ended July 31, 2024, compared to the three months ended July 31, 2023.

In addition, the percentage of the Company's revenues associated with its recently launched PPX™ service platform, which has a lower gross margin percentage as compared to the Company's high concentration biologic product offerings, increased to 14.4% of revenues for the three months ended July 31, 2024, as compared with 5.3% of revenues for the three months ended July 31, 2023.

General and Administrative Expenses. General and administrative expenses for the three months ended July 31, 2024 were $2,083,000, as compared with $2,505,000 for the three months ended July 31, 2023, a decrease of $422,000 or 16.8%. The decrease in the general and administrative expenses for the three months ended July 31, 2024, from the three months ended July 31, 2023, was primarily the result of decreased research and development costs of approximately $233,000, decreased laboratory related costs of approximately $80,000, decreased commissions and travel costs of approximately $187,000 and decreased professional fees of approximately $102,000, which were partially offset by increased in stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $55,000 and increased payroll and consulting fees of approximately $209,000 during the three months ended July 31, 2024, as compared to the three months ended July 31, 2023.

The decrease in research and development costs during the three months ended July 31, 2024, from the three months ended July 31, 2023 was principally the result of the Company's completion of its Phase 1 trials during July 2023, and there being no other significant clinical trial costs incurred since that time. The decrease in laboratory related costs was principally the result of the Company's sale of the Basalt laboratory facility in August 2023 and as a result, there were no associated costs associated with operating that facility during the three months ended July 31, 2024, as compared with the three months ended July 31, 2023. The decrease in professional fees was principally the result of reduced audit fees, tax preparation fees and legal fees during the three months ended July 31, 2024, as compared to the three months ended July 31, 2023. The decrease in commissions and travel costs during the three months ended July 31, 2024, as compared to the three months ended July 31, 2023 was principally the result of reduced sales and a larger percentage of sales that were generated from house accounts with much lower commission costs than paid to distributors and/or independent sales representatives.

Other income. Other income for the three months ended July 31, 2024 was $224,000, as compared to other income of $0 for the three months ended July 31, 2023. The increase in other income was principally due to the write-off of advances payable to an affiliate of a former executive of $221,000 resulting from the inability of the affiliate to enforce a claim to collect the advances as the period of statute of limitations had run during the three months ended July 31, 2024.

Other expense for the three months ended July 31, 2024 was $68,000, as compared to other expense of $172,000 for the three months ended July 31, 2023. The decrease in other expense of $104,000 during the three months ended July 31, 2024, as compared to the three months ended July 31, 2023, was principally the result of reduced amortization of loan discounts of approximately $149,000, partially offset from increases in the reserve against the carrying value of the Company's investments in equity securities of $45,000 during the three months ended July 31, 2024, as compared to the three months ended July 31, 2023.

Nine months ended July 31, 2024 as compared to nine months ended July 31, 2023

Revenues. Our revenues for the nine months ended July 31, 2024 were $3,376,000, as compared to revenues of $3,136,000 for the nine months ended July 31, 2023. The increase in revenues for the nine months ended July 31, 2024 of $240,000 or 7.7%, was primarily the result of an increase of approximately $208,000 of revenues associated with its recently launched PPX™ service platform during the nine months ended July 31, 2024, compared with the nine months ended July 31, 2023 and an increase of approximately 8.6% (approximately $242,000) in the overall unit sales of its high concentration biologic products during the nine months ended July 31, 2024, compared with the nine months ended July 31, 2023, partially offset by a decrease of approximately 7.0% (approximately $210,000) in the average sales prices for the high concentration biologic products sold during the nine months ended July 31, 2024, compared with the nine months ended July 31, 2023.

The increase in the overall unit sales of its high concentration biologic products and revenues associated with its recently launched PPX™ service platform during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023 was primarily due the Company's expanded sales and marketing efforts which included engaging additional sales representatives, participation in industry related conferences and sponsoring of educational webinars.

The decrease in the average sales prices for the high concentration biologic products sold during the nine months ended July 31, 2024, compared to the nine months ended July 31, 2023 was due to increases in unit sales of lower priced products comprising the Company's higher priced medical grade biologic product offerings and an increase in the Company's lower priced aesthetic biologics product offerings. The percentage of overall unit sales of the Company's high concentration medical grade biologic product offerings decreased to 50.1% from 52.3% and increased to 49.9% from 47.7% for the Company's high concentration aesthetic biologics product offerings, respectively, for the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023.

Cost of Revenues. Our cost of revenues for the nine months ended July 31, 2024 were $619,000, as compared to cost of revenues of $375,000 for the nine months ended July 31, 2023. The increase in the cost of revenues for the nine months ended July 31, 2024 of $244,000 or 65.1%, from the nine months ended July 31, 2023, was due an increase of approximately $142,000 of cost of revenues associated with its recently launched PPX™ service platform during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023, the increase of approximately 20.2% (approximately $67,000) in the average cost of revenues for the high concentration biologic products during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023 and the increase of approximately 8.6% (approximately $35,000) in the overall unit sales of its high concentration biologic products, during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023.

Gross Profit. Our gross profit for the nine months ended July 31, 2024 was $2,757,000 (81.7% of revenues), compared to gross profit of $2,761,000 (88.1% of revenues) for the nine months ended July 31, 2023. The minor change in gross profit during the nine months ended July 31, 2024 compared to the nine months ended July 31, 2023 was the result of increases in the amount of high concentration biologic products sold and increases in the sales of its recently launched PPX™ service platform, offset from the increase in costs of revenues associated with those product sales during the nine months ended July 31, 2024, compared to the nine months ended July 31, 2023.

The percentage of the Company's revenues associated with its recently launched PPX™ service platform, which has a lower gross margin percentage as compared to the Company's high concentration biologic product offerings, increased to 9.6% of revenues for the nine months ended July 31, 2024, as compared to 3.8% of revenues for the nine months ended July 31, 2023.

General and Administrative Expenses. General and administrative expenses for the nine months ended July 31, 2024 were $6,651,000, as compared to $8,297,000 for the nine months ended July 31, 2023, a decrease of $1,646,000 or 19.8%. The decrease in the general and administrative expenses for the nine months ended July 31, 2024, from the nine months ended July 31, 2023, was primarily the result of decreased research and development costs of approximately $803,000, decreased laboratory related costs of approximately $588,000, decreased commissions and travel costs of approximately $281,000, decreased marketing related costs of approximately $98,000 and decreased professional fees of approximately $379,000, which were partially offset by increased in stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $341,000 and increased payroll and consulting fees of approximately $492,000 during the three months ended July 31, 2024, as compared to the three months ended July 31, 2023.

The decrease in research and development costs during the nine months ended July 31, 2024, from the nine months ended July 31, 2023 was principally the result of the Company's completion of its Phase 1 trials during July 2023, and there being no other significant ongoing clinical trial costs incurred since that time. The decrease in laboratory related costs was principally the result of the Company's sale of the Basalt laboratory facility in August 2023 and as a result, there were no associated costs associated with operating that facility during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023. The decrease in commissions and travel costs during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023 was principally the result of a larger percentage of sales that were generated from lower priced products and sales through house accounts with much lower commission costs than paid to distributors and/or independent sales representatives. The decrease in professional fees was principally the result of reduced audit fees, tax preparation fees and legal fees during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023.

The increase in stock-based compensation costs during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023 was principally the result of increased amortization of costs from shares and options issued to executives and advisors and options issued to employees and outside directors.

The increase in payroll and consulting fees during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023 was principally the result of the Company's hiring of a new executives during June 2024 and July 2024 are there no associated costs during the nine months ended July 31, 2023, as compared to the nine months ended July 31, 2024.

Other income. Other income for the nine months ended July 31, 2024 was $558,000, as compared to other income of $0 for the nine months ended July 31, 2023. The increase in other income was due to the write-off of advances payable to an affiliate of a former executive of $221,000 resulting from the inability of the affiliate to enforce a claim to collect the advances as the period of statute of limitations had run, the abatement of IRS penalties of $93,000, the settlement of insurance claims of $89,000, the increases in commissions received from sales of Formulator products of $87,000 and the increases in income from the settlement of liabilities of approximately $61,000 during the nine months ended July 31, 2024.

Other expense for the nine months ended July 31, 2024 was $115,000, as compared to other expense of $360,000 for the nine months ended July 31, 2023. The decrease in other expense of $245,000 during the nine months ended July 31, 2024, compared to the nine months ended July 31, 2023, was principally the result of reduced amortization of loan discounts of approximately $266,000, reduced IRS interest and penalties of approximately 16,000, and reduced costs associated with changes in the fair value of a commitment fee of $19,000 related to a January 2022 $600,000 debt financing, during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023, partially offset from increased interest expenses on debt obligations of $9,000 and from increases in the reserve against the carrying value of the Company's investments in equity securities of $45,000 during the three months ended July 31, 2024, as compared to the three months ended July 31, 2023.

Liquidity and Capital Resources

Cash and Cash Equivalents

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

		For the Nine Months Ended July 31,
		2024			2023
Cash, beginning of period		$	1,756,000			$	3,753,000
Net cash used in operating activities			(1,084,000	)			(2,418,000	)
Net cash used in investing activities			(45,000	)			(120,000	)
Net cash provided by (used in) financing activities			478,000				(582,000	)
Cash, end of period		$	746,000			$	633,000

During the nine months ended July 31, 2024, the Company used cash in operating activities of $1,084,000, as compared to $2,418,000 for the nine months ended July 31, 2023, a decrease in cash used of $1,334,000. The decrease in cash used was primarily the result of a reduction in general and administrative expenses and other income (expense) after adjusting for non-cash related activities of $1,713,000 and increases in gross profit of $85,000 for the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023, partially offset by reductions in cash provided from changes in operating assets and liabilities of $465,000 for the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023.

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

During the nine months ended July 31, 2024, the Company had cash used in investing activities of $45,000, compared to cash used in investing activities of $120,000 for the nine months ended July 31, 2023, a decrease in cash used from investing activities of $75,000. The decrease in cash used by investing activities was primarily due to the decrease in investments from non-marketable securities of $55,000 and the reduction of payments made in connection with the Company's purchase of laboratory equipment of $20,000 during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023.

During the nine months ended July 31, 2024, the Company had cash provided by financing activities of $500,000, as compared to cash provided by financing activities of $604,000 for the nine months ended July 31, 2023. During the nine months ended July 31, 2024, the Company had cash used in financing activities of $22,000, as compared to cash used in financing activities of $1,186,000 for the nine months ended July 31, 2023.

The decrease in cash provided by financing activities of $104,000 was due to decreases in proceeds from the issuance of promissory notes of $504,000, partially offset from increases in proceeds from the sale of equity securities of $400,000 during the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023. The decrease in cash used in financing activities of $1,164,000 was due to the reduction in repayment of notes payable of $600,000, reductions in shares repurchased in connection with litigation of $500,000 and decreases in payments on finance leases of approximately $64,000.

Capital Resources

The Company has historically relied on the sale of debt or equity securities, the restructuring of debt obligations and/or the issuance and/or exchange of equity securities to meet the shortfall in cash to fund its operations.

Going Concern Consideration

The unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has had limited revenues since its inception. The Company incurred net losses of $3,451,000 for the nine months ended July 31, 2024 and used $1,084,000 of cash from operating activities during that period. In addition, the Company had a stockholders' deficit of $1,422,000 at July 31, 2024. The Company had a working capital deficit of $1,909,000 at July 31, 2024.

United States Food and Drug Administration ("FDA") regulations which were announced in November 2017 and which became effective in May 2021 require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products ("HCT/Ps") can only be sold pursuant to an approved biologics license application ("BLA"). The Company has not obtained any opinion or ruling regarding the Company's operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA's previously announced intended enforcement policies regarding HCT/P's.

As a result of the above, the Company's efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company's ability to process, sell and distribute the products currently being produced or developed in the future are not restricted; and/or (b) additional sources of working capital through operations or debt and/or equity financings are realized. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management anticipates that the Company will remain dependent, for the near future, on additional investment capital to fund ongoing operating expenses and research and development costs related to development of new products and to perform required clinical studies in connection with the sale of its products. The Company does not have any assets to pledge for the purpose of borrowing additional capital. In addition, the Company relies on its ability to produce and sell products it manufactures that are subject to changing technology and regulations that it currently sells and distributes to its customers. The Company's current market capitalization, common stock liquidity and available authorized shares may hinder its ability to raise equity proceeds. The Company anticipates that future sources of funding, if any, will therefore be costly and dilutive, if available at all.

In view of the matters described in the preceding paragraphs, recoverability of the recorded asset amounts shown in the accompanying consolidated balance sheet assumes that (a) the Company is able to continue to produce products or obtain products under supply arrangements which are in compliance with current and future regulatory guidelines; (b) the Company will be able to establish a stabilized source of revenues, including efforts to expand sales internationally and the development of new product offerings and/or designations of products; (c) obligations to the Company's creditors are not accelerated; (d) the Company's operating expenses remain at current levels and/or the Company is successful in restructuring and/or deferring ongoing obligations; (e) the Company is able to continue its research and development activities, particularly in regards to remaining compliant with the FDA and ongoing safety and efficacy of its products; and/or (f) the Company obtains additional working capital to meet its contractual commitments and maintain the current level of Company operations through debt or equity sources.

There is no assurance that the products we currently produce will not be subject to the FDA's previously announced intended enforcement policies regarding HCT/P's and/or the Company will be able to complete its revenue growth strategy. There is no assurance that the Company's research and development activities will be successful or that the Company will be able to timely fund the required costs of those activities. Without sufficient cash reserves, the Company's ability to pursue growth objectives will be adversely impacted. Furthermore, despite significant effort since July 2015, the Company has thus far been unsuccessful in achieving a stabilized source of revenues.

If revenues do not increase and stabilize, if the Company's ability to process, sell and/or distribute the products currently being produced or developed in the future are restricted, and/or if additional funds cannot otherwise be raised, the Company might be required to seek other alternatives which could include the sale of assets, closure of operations and/or protection under the U.S. bankruptcy laws.

The independent auditor's report dated January 29, 2024 included in our Annual Report on Form 10-K for the year ended October 31, 2023 included an explanatory paragraph as to the Company's ability to continue as a going concern. As of July 31, 2024, based on the factors described above, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of these financial statements.

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 July 31, 2024 and through the date of this report, we had no such arrangements.

Recently Issued Financial Accounting Standards

There were no recently issued financial accounting standards that would have an impact on the Company's financial statements.

Critical Accounting Policies

Our unaudited consolidated financial statements reflect the selection and application of accounting policies which require us to make significant estimates and judgments. See Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, "Summary of Significant Accounting Policies".

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported in accordance with the rules of the Securities and Exchange Commission ("SEC"). Disclosure controls are also designed with the objective of ensuring that such information is accumulated appropriately and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosures.

Our Interim Chief Executive Officer and Chief Financial Officer (our principal executive, financial and accounting officer) evaluated the effectiveness of our "disclosure controls and procedures" (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of July 31, 2024, the end of the period covered by this report. Based on that evaluation, our Interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. See the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2023, for a description of the Company's material weaknesses in internal control over financial reporting.

Changes in Internal Controls over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended July 31, 2024, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Part II - OTHER INFORMATION

Item 1.

Legal Proceedings.

In addition to matters which have been resolved as reported in previous periodic Exchange Act filings, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.

Item 1A.

Risk Factors.

As a "smaller reporting company" we are not required to disclose information under this Item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information.

None.

Item 6.

Exhibits.

Exhibit No:		Description:
31.1*		Rule 13(a)-14(a)/15(d)-14(a) Certification of Interim Chief Executive Officer and Chief Financial Officer (filed herewith)
32.1*		Section 1350 Certification of Interim Chief Executive Officer and Chief Financial Officer (filed herewith)
101.INS **		XBRL Instance Document
101.SCH**		XBRL Taxonomy Extension Schema Document
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**		XBRL Taxonomy Extension Labels Linkbase Document
101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.
**	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ZEO SCIENTIFIX, INC.
	By:	/s/ Ian T. Bothwell
		Ian T. Bothwell
		Interim Chief Executive Officer and Chief Financial Officer
		(Principal Executive, Financial and Accounting Officer)
		September 16, 2024

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