OCEL Organicell Regenerative Medicine Inc (QB)

Organicell Regenerative Medicine, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

Organicell Regenerative Medicine, Inc.

CONDENSED CONSOLIDATED CHANGES TO STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months And Six Months Ended April 30, 2023 and 2022

(Unaudited)

Three Months Ended April 30,

Six Months Ended April 30,

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

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

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Organicell Regenerative Medicine, Inc. f/k/a Biotech Products Services and Research, Inc. (“Organicell” or the “Company”) was incorporated on August 9, 2011 in the State of Nevada. The Company is a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and the provision of other related services. The Company’s proprietary products are derived from perinatal sources and manufactured to retain the naturally occurring extracellular vesicles, hyaluronic acid, and proteins without the addition or combination of any other substance or diluent. Our proprietary products are principally used in the health care industry administered through doctors and clinics (collectively, “Providers”).

On May 21, 2018, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the Company’s name from Biotech Products Services and Research, Inc. to Organicell Regenerative Medicine, Inc., effective June 20, 2018 (the “Name Change”) and during November 2021 the Name Change was effectuated in the marketplace by the Financial Industry Regulatory Agency.

For the six months ended April 30, 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’s leading product, Zofin™ (also known as Organicell™ Flow), is an acellular, biologic therapeutic derived from perinatal sources and is manufactured to retain naturally occurring microRNAs, without the addition or combination of any other substance or diluent.

In June 2021, the Company announced that it was launching a service platform for its first autologous product called Patient Pure X™ (PPX™). PPX™ is a non-manipulated biologic containing the nanoparticle fraction from a patient’s own peripheral blood. The Company began to accept minimal orders for this service in October 2021 and to date revenues from PPX™ continue to be immaterial.

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 April 30 2023, and the results of its operations and its cash flows for the three and six months ended April 30, 2023 and 2022.

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, 2022 filed with the Securities and Exchange Commission.

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 $250,000 per institution. At April 30, 2023, the Company held a total of $471,045 of cash balances in two financial institutions in excess of FDIC insurance coverage limits.

Major Customer

During the six months ended April 30, 2023, the Company sold products and services totaling approximately $437,000 (22.0%) to a large distributor and the distributors customers and approximately $412,000 (21.5%) to customers of another distributor and the distributors customers.

During the six months ended April 30, 2022, the Company sold products and services totaling approximately $1,297,000 (39.0%) to a large distributor and the distributors customers and approximately $683,000 (21.0%) to customers of another distributor and the distributors customers.

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 stock instruments issued for services, and assumptions used in valuing warrant liabilities, and assumptions used in the determination of the Company’s liquidity.

Cash Equivalents

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

Accounts Receivable

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

The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. For the six months ended April 30, 2023 and 2022, the Company did not record any bad debt expense.

Inventory

Inventory is stated at the lower of cost or net realizable value using the average cost method. The Company provides reserves for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At April 30, 2023 and 2022, the Company determined that there were not any reserves required in connection with our inventory.

Property and Equipment

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

Non-marketable Securities

Non-marketable securities consist of equity investments in privately-held companies, which are classified as other assets on the consolidated balance sheets. These non-marketable equity securities do not have readily determinable fair values. Under the measurement alternative election, the Company accounts for these non-marketable securities at cost and adjusted for observable price changes in orderly transactions for the identical or similar investments of the same issuer or upon impairment and are not eligible for the net-asset-value practical expedient from fair value measurement. The measurement alternative election is reassessed each reporting period to determine whether the non-marketable securities continue to be eligible for this election.

The Company periodically evaluates its non-marketable securities for impairment when events and circumstances indicate that the carrying amount of the investment may not be recovered. Impairment indicators may include, but are not limited to, a significant deterioration in earnings performance, credit rating, asset quality or business outlook or a significant adverse change in the regulatory, economic, or technological environment.

Under current U.S. GAAP, equity investments without readily determinable fair values are reported at cost minus impairment. However, impairment losses are recognized only if they are considered other-than- temporary.

Leasehold Improvements

Leasehold improvements in excess of $1,000 that are made in connection with leases having a term of more than 12 months are capitalized by the Company and amortized over the shorter of the useful life of the asset or the remaining lease periods and renewals that are deemed to be reasonably certain at the date the leasehold improvements are purchased. Costs associated with leasehold improvements that do not exceed $1,000 are expensed as incurred.

Revenue Recognition

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

The Company 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.

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 April 30, 2023, the Company had 418,800,000 common shares issuable upon the exercise of warrants that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the six months ended April 30, 2023. At April 30, 2022, the Company had 9,500,000 common shares issuable upon the exercise of warrants and unpaid Original Base Salary and Incremental Salary that could be convertible into approximately 49,960,000 common shares that were not included in the computation of dilutive loss per share because their inclusion is anti-dilutive for the six months ended April 30, 2022.

Stock-Based Compensation

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 Company recognizes the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of the services rendered.

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 $407,700 and $276,600 for the three months ended April 30, 2023 and 2022, respectively. Our research and development expenses were approximately $602,400 and $552,900 for the six months ended April 30, 2023 and 2022, 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 six months ended April 30, 2023 and 2022 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 three months and six months ended April 30, 2023 and 2022.

Valuation of Derivatives

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

Sequencing

The Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares.

The Company currently has 2,500,000,000 authorized shares of common stock of which 1,490,696,392 shares are issued and outstanding as of June 15, 2023. The Company expects that it will continue to issue common stock in the future in connection with debt and/or equity financings, transactions with third parties, performance incentives and as compensation to its employees. Currently the amount of authorized shares is sufficient to provide for the additional shares that the Company may be contingently obligated to issue under existing arrangements.

Fair Value of Financial Instruments

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

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

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

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

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

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

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

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

The Company did not have any convertible instruments outstanding at April 30, 2023 and October 31, 2022 that qualify as derivatives.

Operating Lease Obligations

Under the provisions of Accounting Standards Update (ASU) No. 2016-02 (Topic 842) (“ASC 842”), the Company recognizes a right of use (“ROU”) asset and corresponding lease liability for all operating leases upon commencement of the lease.

The Company’s policy is to treat operating leases that have a term of one year or less at lease commencement date and do not include a purchase option that is reasonably certain of exercise, consistent with the lease recognition approach as previously outlined under ASC 840. In addition, month to month leases which do not involve additional financial commitments on the part of the Company are also treated consistent with the lease recognition approach as previously outlined under ASC 840. The Company has established a capitalization threshold of $15,000 in determining whether any future operating leases will be capitalized.

Subsequent Events

The Company has evaluated subsequent events that occurred after April 30, 2023 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 $4,277,954 for the six months ended April 30, 2023. In addition, the Company had an accumulated deficit and a stockholders’ deficit of $54,799,260 and $138,908, respectively, at April 30, 2023. The Company had a working capital deficit of $1,509,799 at April 30, 2023.

United States Food and Drug Administration (“FDA”) regulations which were announced in November 2017 and which became effective beginning in May 2021 (postponed from November 2020 due to the COVID-19 pandemic) require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products (“HCT/Ps”) can only be sold pursuant to an approved biologics license application (“BLA”). The Company has not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s.

In addition to the above, the adverse public health developments associated with the ongoing COVID-19 pandemic combined with the downturn in the overall United States and global economies have adversely affected the demand for our products and services by our customers and from patients of our customers and which currently still continue to have a negative impact to our business and the economy.

As a result of the above, the Company’s efforts to establish a stabilized source of sufficient revenues to cover operating costs has yet to be achieved and ultimately may prove to be unsuccessful unless (a) the Company’s ability to process, sell and distribute the products currently being produced or developed in the future are not restricted; 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. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s October 31, 2022 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. As of April 30, 2023, 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.

Depreciation expense totaled $29,502 and $18,605 for the three months ended April 30, 2023 and 2022, respectively. Depreciation expense totaled $58,645 and $32,775 for the six months ended April 30, 2023 and 2022, respectively.

As described in Note 7, during the year ended October 31, 2021, the Company began the build-out of additional laboratory processing, product distribution and administrative office capacity at its Basalt Lab Lease location. The Basalt Lab Lease location became operational during May 2022 and amortization of these costs began during May 2022. Amortization expense totaled $126,657 and $0 for the three months ended April 30, 2023 and 2022, respectively. Amortization expense totaled $253,314 and $0 for the six months ended April 30, 2023 and 2022, respectively.

On April 30, 2023, the Company wrote off certain computer and manufacturing equipment with a cost basis of $43,755 and accumulated depreciation of $16,406, resulting in a loss of $27,349 for the three months and six months ended April 30, 2023.

During the six months ended April 30, 2023, the Company invested $100,000 in cash 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 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 April 30, 2023 and October 31, 2022, the carrying value of the Company’s investments in equity securities without readily determinable fair values totaled $100,000 and $0, respectively. For the six months ended April 30, 2023 and 2022, there were no adjustments to the carrying value of equity securities without readily determinable fair values.

Both Greyt Ventures, LLC and Skycrest Holdings, LLC, shareholders in the Company, each own 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.

NOTE 7 – LEASE OBLIGATIONS

Finance Lease Obligations:

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

During October 2021, the Company entered into a second lease agreement in the amount of $304,873 for certain lab equipment that is being installed at the Basalt lab location. Under the terms of the lease agreement, the Company is required to make 60 equal monthly payments of $5,478 plus applicable sales taxes. Under the Lease Agreement, the Company has the right to acquire all of the leased equipment for $1.00. As a result, the lease agreement is being accounted for as a finance lease obligation. The annual interest rate charged in connection with the lease is 3.0%. Lease payments and depreciation of the leased equipment began during May 2022, the date that the Basalt lab buildout was completed (see below) and the facility became operational. The leased equipment are being depreciated over their estimated useful lives of 15 years.

As of April 30, 2023, finance lease obligations were $307,220, of which $116,711 were current.

Short Term Lease Obligations:

On August 30, 2022, the Company entered into a one-year lease agreement (“LA Office Lease”) for office space in Los Angeles, California commencing September 1, 2022 and ending August 31, 2023. The Company was required to make a one-time prepayment of the annual rent in the amount of $160,000 and provide a security deposit of $10,000 upon execution of the lease agreement. The lease is non-renewable.

Effective July 1, 2022, the Company entered into a six-month lease agreement for an approximately 450 square foot laboratory and additional administrative office space effective July 1, 2022 (“New Miami Lab Lease”). Monthly lease payments are approximately $9,500 per month plus administrative fees and taxes. The New Miami Lab Lease was not renewed and expired on December 31, 2022. The Company security deposit of $6,332 was returned upon expiration of the New Miami Lab Lease.

Effective October 10, 2022, the Company relocated its Miami laboratory to a 1,156 square foot administrative and laboratory facility at the Nova Southeastern University Center for Collaborative Research in Davie, Florida. This space is occupied pursuant to one year license agreement (“University Lease”) for an annual base license fee of $20,230.

Operating Lease:

During March 2021, the Company entered into a lease agreement for an approximately 2,452 square foot commercial space located in Basalt, Colorado (the “Basalt Lab Lease”). The Company intends to build additional laboratory processing, product distribution and administrative office capacity from this location. The term of the Basalt Lab Lease is for three years and may be renewed for an additional (3) three-year term provided the Company is not in default (“First Renewal Option”). Rental expense is $6,800 per month and provides for annual increases of 3% or the Denver Aurora Metropolitan CPI index, whichever is greater. In connection with the Basalt Lab Lease, the Company was required to post a security deposit of $13,600. The Company completed the construction of the initial laboratory and office build-out at a cost of $925,932. The Basalt Lab Lease location became operational during May 2022.

In connection with the execution of the Basalt Lab Lease, the Company recorded a ROU asset and corresponding operating lease obligation of $235,313 (present value of the associated leased payments based on an assumed borrowing rate of 4.5%). The right of use asset was $70,675 and $110,955 at April 30, 2023 and October 31, 2022, respectively.

Lease amortization expense for the three months ended April 30, 2023 and 2022 was $20,482 and $18,977, respectively. Lease amortization expense for the six months ended April 30, 2023 and 2022 was $40,320 and $37,338, respectively.

As of April 30, 2023, the remaining operating lease obligation was $70,675.

NOTE 8 – RELATED PARTY TRANSACTIONS

For the three months and six months ended April 30, 2023, the Company sold a total of approximately $83,600 and $108,900, respectively, of product to a management services organization (“MSO”) that provides administrative services and contracts for medical supplies for several medical practices, including $22,820 and $48,050, respectively, of products purchased from the Company that were attributable to the medical practice owned by Dr. George Shapiro the Company’s Chief Medical Officer and a member of the board of directors. Dr. Shapiro also has an indirect economic interest in the parent company that owns the MSO.

For the three months and six months ended April 30, 2022, the Company sold a total of approximately $203,700 and $283,000, respectively, of products to a management services organization (“MSO”) that provides administrative services and contracts for medical supplies for several medical practices, including approximately $53,000 and $76,000 of products purchased from the Company for the three months and six months ended April 30, 2022, respectively, that were attributable to the medical practice owned by Dr. George Shapiro. Dr. Shapiro also has an indirect economic interest in the parent company that owns the MSO. For the three months and six months ended April 30, 2022, the total amount of sales of products to customers related to Mr. Michael Carbonara totaled $2,160 and $10,320, respectively. For the three months and six months ended April 30, 2022, the total amount of sales of products to customers related to Dr. Allen Meglin totaled $7,660.

During the six months ended April 30, 2023, the Company invested $100,000 in cash for a 10% minority interest in the non-marketable equity securities of a privately-held skin-care formulator (“Formulator”). Both Greyt Ventures, LLC and Skycrest Holdings, LLC, shareholders in the Company, each own 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.

Promissory Note – SPA 22

On January 11, 2022, the Company entered into a Securities Purchase Agreement (“SPA 22”) with AJB Capital Investments, LLC (“Purchaser”) pursuant to which we sold a promissory note in the principal amount of $600,000 (“Promissory Note”) to the Purchaser in a private transaction for a purchase price of $540,000 (giving effect to original issue discount of $60,000). The Promissory Note matured on January 11, 2023 and the Promissory Note was paid in full.

Pursuant to the terms of the SPA 22, the Company paid a commitment fee to the Purchaser in the amount of $123,000 (“Initial Commitment Fee”) in the form of 3,076,923 shares of the Company’s common stock (“Initial Commitment Fee Shares”) valued at $0.04, the closing price of the common stock of the Company on the closing date. In addition, in connection with the Extension, the Company paid an additional commitment fee to the Purchaser in the amount of $33,231 in the form of an additional 1,538,462 shares of its common stock (“Additional Commitment Fee Shares,” and together with the Initial Commitment Fee Shares, collectively, “Commitment Fee Shares”) valued at $0.0216, the closing price of the common stock of the Company on the Extension date.

In the event that by the earlier of the first anniversary of repayment of the Promissory Note by the Company or the date that the Purchaser has sold all of the Commitment Fee Shares (“True-Up Date”), the Purchaser has not generated the amount of $300,000 from public sales of the Commitment Fee Shares, the Company shall either pay the amount of any such shortfall either (i) by issuing additional shares of our common stock at a price equal to the VWAP for the common stock during the five (5) trading day period prior to the True-up Date (“Conversion Price”); or (ii) in cash, in which case, the Company shall repurchase any unsold Commitment Fee Shares then held by the Purchaser for such shortfall amount (“Commitment Fee Shortfall Obligation”).

Upon the closing, the Company recorded a discount of the Promissory Note in the amount of $260,000, consisting of the original issue discount of $60,000, the fair value of the Initial Commitment Fee Shares of $123,000 and the Commitment Fee Shortfall Obligation of $77,000. These costs were fully amortized over the initial term of the Promissory Note from January 11, 2022 to July 11, 2022. In connection with the extension of the Promissory Note from July 12, 2022 to January 11, 2023, the Company recorded a discount of the Promissory Note in the amount of $100,000, consisting of the fair value of the Additional Commitment Fee Shares of $33,231 and the Additional Commitment Fee Shortfall Obligation of $66,769. These costs were amortized over the term of the Extension.

For the three months ended April 30, 2023 and 2022, $36,889 and $130,000, respectively, of the total discounts recorded in connection with the issuance of the Promissory Note have been amortized.

At February 10, 2023, the date that the Company received notice to repay the Commitment Fee Shortfall Obligation (see below) and April 30, 2022, the fair value of the Commitment Fee Shares was approximately $76,200 (valued at $0.0165 the closing price of the common stock of the Company on February 10, 2023) and approximately $62,462 (valued at $0.0203 the closing price of the common stock of the Company on April 29, 2022), respectively. The Company recorded an increase in the Commitment Fee Shortfall Obligation in the amount of $0 and $49,384 for the three months and six months ended April 30, 2023. The Company recorded an increase in the Commitment Fee Shortfall Obligation in the amount of $48,539 and $60,539 for the three months and six months ended April 30, 2022.

On February 10, 2023, the Company received a notice from the Purchaser that it had sold all of the Commitment Fee Shares and that the Commitment Fee Shortfall Obligation of $187,519 was due. The Company elected to satisfy the obligation through the issuance of 11,719,925 shares of common stock based on a Conversion Price as defined in the SPA 22 of $0.016 per share, which resulted in a reduction of $30,468 from the Commitment Fee Shortfall Obligation recorded as of February 10, 2023).

The total Commitment Fee Shortfall Obligation at April 30, 2023 and October 31, 2022 was $0 and $174,462, respectively.

Promissory Note – SPA 23

On March 6, 2023, the Company entered into another Securities Purchase Agreement (“SPA 23”) with the Purchaser, pursuant to which we sold a promissory note in the principal amount of $530,000 (“Note”) to the Purchaser in a private transaction to for a purchase price of $519,400 (giving effect to original issue discount of $10,600). In connection with the sale of the Note, the Company also paid the Purchaser’s legal fees and due diligence costs of $15,000, resulting in net proceeds to the Company of $504,400, which will be used for working capital and other general corporate purposes.

The Note matures on September 6, 2023, bears interest at the rate of 12% per annum and only following an event of default (as defined in the Note), is convertible into shares of the Company’s common stock at a conversion price equal to the lower of the “VWAP” (as hereinafter defined) of the common stock during (i) the ten (10) trading day period preceding the issuance date of the Note; or (ii) the ten (10) trading day period preceding the date of conversion of the Note (the “Conversion Shares”). As used in the Note, “VWAP” means, for any date, the price of our common stock as determined by the first of the following clauses that applies: (i) if the common stock is then listed or quoted on one or more established stock exchanges or national market systems, the daily volume weighted average price of the common stock for such date on the trading market on which the common stock is then listed or quoted as reported by Bloomberg L.P.; or (ii) if the common stock is regularly quoted on an automated quotation system (including applicable tiers of the over-the-counter market maintained by OTC Markets Group, Inc.) or by a recognized securities dealer, the volume weighted average price of the common stock for such date on the applicable OTC Markets Group, Inc. tier or as quoted by such securities dealer. In accordance with the terms of the SPA 23, as of March 6, 2023, the Company has reserved 120,000,000 shares of its authorized but unissued common stock for issuance in the event the Purchaser exercises its right to convert the Note following an event of default.

The Note may be prepaid by the Company at any time without penalty. The Note also contains covenants, events of defaults, penalties, default interest and other terms and conditions customary in transactions of this nature.

Pursuant to the terms of the SPA 23, the Company paid a commitment fee to the Purchaser (“Commitment Fee”) in the form of 15,000,000 shares of the Company’s common stock (“Commitment Fee Shares”) and issued the Purchaser a Warrant exercisable for a five-year period to purchase up to 10,000,000 shares of our common stock at a price of $0.06 per share (“Warrant Shares”).

Upon the closing, the Company recorded a discount of the Promissory Note in the amount of $308,000, consisting of the original issue discount of $10,600, transaction fees of $15,000, the fair value of the Commitment Fee Shares of $169,500 and the fair value of the Warrant Shares of $113,000.

The discount is being amortized over the term of Note. For the three months and six months ended April 30, 2023, $92,095 of the total discounts recorded in connection with the issuance of the Note have been amortized.

Pursuant to the terms of the SPA 23, the Company granted certain piggyback registration rights under the Securities Act of 1933, as amended with respect to the Conversion Shares, the Warrant Shares and the Commitment Fee Shares.

NOTE 11 – IRS PENALTIES

The Company’s income tax returns for the periods since inception through the tax year ended October 31, 2015 were not filed with the Internal Revenue Service (“IRS”) until August 2017 (“Delinquent Filed Returns”). The Company’s income tax returns for the tax year ended October 31, 2016 were filed with the IRS during December 2017. In connection with the Delinquent Filed Returns, during the period September 2017 through October 2017, the Company received notices that it was being assessed approximately $90,000 of penalties, plus interest (“IRS Penalties”), in connection with the late filing of certain information returns that were included as part of the Delinquent Filed Returns. In connection with the notices, the IRS indicated its intent to levy property of the Company if the IRS penalties were not paid as required. During January 2018, the Company requested from the IRS an abatement of the IRS penalties based on reasonable cause. During April 2018, the IRS notified the Company that the IRS penalties for the tax year ended 2011 of $20,000, plus interest, were abated and the request for abatement for the IRS penalties for the tax years ended 2012 – 2015 were denied. The Company is currently appealing the initial determination by the IRS to exclude the IRS penalties for the tax years 2012-2015 in its consideration of abatement and filed a “Request for Collection Due Process Equivalent Hearing” (“Request”) in September 2021. A hearing was held on June 28, 2022 and the Company is awaiting the IRS’ determination. During the period that the Request is being reviewed and processed by the IRS, the IRS has agreed to put a hold on taking any levy action against the Company for the remaining amounts of the IRS Penalties that are still outstanding. In connection with the notices, the Company has accrued $86,319 and $83,684 of accrued tax penalties and interest on the balance sheet as of April 30, 2023 and October 31, 2022, respectively.

NOTE 12 – CAPITAL STOCK

Common Stock

Issuances of Common Stock – Stock-Based Compensation:

On December 1, 2022, the Company granted 150,000 shares of common stock to an employee as provided for in the employment agreement valued at $0.03 per share, the closing price of the common stock of the Company on the grant date. The Company recorded $4,500 of stock-based compensation expense based on the grant date fair value of these shares during the three months ended April 30, 2023.

On December 29, 2022, the Company agreed to issue 5,000,000 shares of common stock to a service provider in exchange for the provider providing discounts of 10% on all services provided retroactive to August 2022. The common stock granted was valued at $100,000 based on the closing price of the common stock of the Company on the date of the agreement of $0.02 per share. The Company recorded $100,000 of stock-based compensation expense based on the grant date fair value of these shares during the three months ended April 30, 2023.

As of October 31, 2022, the Company had issued 47,500,000 shares of its common stock for services with an original fair value of $2,140,450 of which $1,248,583 was amortized and the remaining $891,867 of the unamortized compensation costs are to be amortized over their respective remaining service periods (“Unamortized 2022 Stock Awards”). Included in this amount was unamortized compensation of $545,229 relating to 15,846,576 shares that was forfeited upon resignation of the Company’s former CEO in November 2022. During the six months ended April 30, 2023, the Company amortized approximately $347,000 of compensation costs relating to the Unamortized 2022 Stock Awards. As of April 30, 2023, all of the Unamortized 2022 Stock Awards had been fully amortized or forfeited.

Equity Line of Credit Commitment:

During November 2021, the Company entered into an term sheet agreement with Tysadco Partners LLC, a Delaware limited company (“Tysadco”) whereby Tysadco agreed to provide the Company with a $10,000,000 equity line of credit facility (“ELOC”), subject to many conditions including the Company determining to proceed with the ELOC, approval and execution of definitive agreements for the ELOC and the Company subsequently filing a registration statement covering the underlying shares to be sold under the ELOC. The Company was not obligated to proceed with the ELOC or file a registration statement for the ELOC.

On September 1, 2022, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Tysadco and a Registration Rights Agreement (the “Registration Rights Agreement”) with Tysadco.

Pursuant to the Purchase Agreement, Tysadco committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 worth of the Company’s common stock (the “Commitment”), over a period of 24 months from the effectiveness of the registration statement registering the resale of shares purchased by Tysadco pursuant to the Purchase Agreement (the “Registration Statement”). Pursuant to the terms of the Registration Rights Agreement, the Company was obligated to use its commercially reasonable efforts to file a registration statement with the Securities and Exchange Commission within thirty (30) days after the date of such agreement, to register the resale by Tysadco of the shares of common stock issuable under the Purchase Agreement. On September 2, 2022, the Company filed the required registration statement and on October 24, 2022, the Registration Statement was declared effective.

The Purchase Agreement provides that at any time after the effective date of the Registration Statement, from time to time on any business day selected by the Company (the “Purchase Date”), the Company shall have the right, but not the obligation, to direct Tysadco to buy the lesser of $1,000,000 in common stock per sale or 500% of the daily average share value traded for the 10 days prior to the closing request date, at a purchase price of 80% of the of the two lowest individual daily VWAPs during the ten (10) trading days preceding the draw down or put notice (“Valuation Period”), with a minimum request of $25,000 (“Request”). The payment for the shares covered by each request notice will occur on the business day immediately following the Valuation Period.

In addition, Tysadco will not be obligated to purchase shares if Tysadco’s total number of shares beneficially held at that time would exceed 9.99% of the number of shares of the Company’s common stock as determined in accordance with Rule 13d-1(j) of the Securities Exchange Act of 1934, as amended. In addition, the Company is not permitted to draw on the Purchase Agreement unless the Registration Statement covering the resale of the shares is effective.

The Purchase Agreement also contains customary representations and warranties of each of the parties. The assertions embodied in those representations and warranties were made for purposes of the Purchase Agreement and are subject to qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Purchase Agreement. The Purchase Agreement further provides that the Company and Tysadco are each entitled to customary indemnification from the other for, among other things, any losses or liabilities they may suffer as a result of any breach by the other party of any provisions of the Purchase Agreement or Registration Rights Agreement. The Company has the unconditional right, at any time, for any reason and without any payment or liability, to terminate the Purchase Agreement.

Pursuant to the Purchase Agreement, on December 2, 2022, the Company submitted a put request to Tysadco to purchase 4,456,326 registered shares at a purchase price of $0.02244, for a total of $100,000 (“Put Request”). On December 5, 2022, Tysadco funded the Put Request and the Company issued 4,456,326 shares to Tysadco. The proceeds from the share sale are being used for working capital and general corporate purposes.

Shares Repurchased – Settlement of Litigation:

As described in Note 14, effective October 13, 2022, the Company settled a lawsuit by agreeing to repurchase 24,800,001 shares of common stock for $500,000. The shares repurchased were transferred to the Company on February 2. 2023 and redeposited back into the Company’s treasury of authorized and unissued shares on February 3, 2023.

Shares Issued – SPA 23:

As described in Note 10, in connection with the issuance of the Note on March 6, 2023, the Company issued the Purchaser’s 15,000,000 commitment shares of the Company’s common stock valued at $169,500 based on the closing price of the common stock of the Company on the date of the agreement of $0.0113 per share.

As described in Note 10, in connection with the issuance of the Note on March 6, 2023, the Company issued the Purchaser’s 10,000,000 commitment Warrant Shares exercisable for a five-year period at a price of $0.06 per share. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 3.98%, (2) term of 5 years, (3) expected stock volatility of 169%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $113,000. The Company recorded $113,000 as a loan discount which is being amortized over the term of the Note.

As of October 31, 2022, the Company had issued warrants to purchase 347,150,000 shares of its common stock for services with a fair value of $7,250,775 of which $573,250 was amortized and the remaining $6,677,525 of the unamortized compensation costs are to be amortized over their respective remaining service periods (“Unamortized 2022 Warrants”). Included in this amount was unamortized compensation of $620,548 relating to 21,000,000 warrants that were forfeited upon resignation of the warrant holders during the six months ended April 30, 2023. During the six months ended April 30, 2023, the Company amortized approximately $1,222,500 of compensation costs relating to the Unamortized 2022 Warrants. As of April 30, 2023, there was approximately $4,834,500 of unamortized compensation of the Unamortized 2022 Warrants that will be amortized over their respective remaining service periods.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

Executive Employment Agreements

The Company is party to executive employment agreements with each of Ian T. Bothwell (our Chief Financial Officer), Dr. Maria Ines Mitrani (our Chief Science Officer) (see below) and Albert Mitrani, our Executive Vice President of Sales) (see below), originally executed in April 2018 and subsequently amended (the “Executive Employment Agreements”). As amended, the Executive Employment Agreements provide for a term expiring on December 31, 2025 and a base annual salary of $300,000 and specified expense reimbursement allowances. They also contain customary confidentiality and non-competition provisions.

Pursuant to the terms of the SPA, the Executive Employment Agreements were further amended on August 19, 2022 and February 9, 2023 as follows:

In the February 9, 2023 amendment, each of Albert Mitrani, Dr. Maria Ines Mitrani and Ian Bothwell agreed to a reduction in each executive’s annual salary to $150,000 per year effective December 15, 2022 in the case of Dr. Mari Mitrani and Albert Mitrani and November 30, 2022 in the case of Mr. Bothwell. The reduction will remain in effect through such time that net revenues from operations are breakeven when calculating the salaries of all three executives without the agreed upon reductions (“Salary Reduction Period”). There is no obligation of the Company to repay that portion of Base Salary that has been reduced during the Salary Reduction Period.

In connection with the February 9, 2023 amendment to the Executive Employment Agreements, Mr. Bothwell and Mr. Mitrani also agreed to repay approximately $44,600 and $84,300, respectively, of previously reimbursed expenses to the Company and the Company and the executives exchanged mutual releases.

On April 28, 2023, the Company terminated Dr. Maria Ines Mitrani as its Chief Scientific Officer and contemporaneously terminated her employment agreement with the Company (see Note 17).

On May 12, 2023, the Company terminated Albert Mitrani as its Executive Vice President of Sales and contemporaneously terminated his employment agreement with the Company. As a result of the litigation filed on June 7, 2023 (see Note 17), the Company has recorded a reserve of $75,900 against the amounts due from Mr. Mitrani.

As of April 30, 2023 and October 31, 2022, the total amounts due from related parties were $44,600 and $128,939, respectively and is included in receivables from related party in the accompanying consolidated balance sheets.

Resignation Of Matthew Sinnreich

On July 21, 2022 (“Effective Date”), Matthew Sinnreich was appointed by the Board of Directors to the position of Chief Operating Officer and Acting Chief Executive Officer.

On the Effective Date, Organicell and Mr. Sinnreich entered into a term sheet (the “Term Sheet”) setting forth in principle the terms of Mr. Sinnreich’s employment agreement with and compensation by the Company. The Term Sheet was subject to the negotiation and execution of a definitive employment agreement embodying the provisions of the Term Sheet, as well as customary terms and conditions for an executive employment agreement (the “Employment Agreement”). The parties agreed to use their respective commercial best efforts to negotiate and execute the Employment Agreement.

In connection with the Term Sheet, as an inducement for Mr. Sinnreich to join the Company, Mr. Sinnreich was issued 10,000,000 shares of restricted common stock and ten-year warrants to purchase 40,000,000 shares at a price of $0.034 per share, exercisable on a “cashless” basis. The foregoing shares and warrants vested immediately upon issuance.

During the first year of the Initial Term, Mr. Sinnreich was to be compensated by the issuance of 24,000,000 shares of Organicell’s common stock, which were to vest in equal monthly installments of 2,000,000 shares each (“Salary Shares”). During the second year of the Initial Term, Mr. Sinnreich will be entitled to receive a base salary of $25,000 per month, payable in cash or shares of Organicell’s common stock, at his election.

On September 13, 2022, Mr. Sinnreich assumed the position of President and Acting Chief Executive Officer. He subsequently resigned from the Company on November 22, 2022. During the period November 1, 2022 through November 22, 2022 and as of November 22, 2022, a total of 1,446,575 and 8,153,424 of the Salary Shares were vested, respectively. The Company is currently seeking to rescind previously issued shares and payments to Mr. Sinnreich in light of the resignation.

Chief Executive Officer and Chief Science Officer

On June 6, 2023, our board of directors appointed Harry Leider, M.D., M.B.A., as Chief Executive Officer and a member of the board of directors and Howard J. Golub, M.D., as Executive Vice President and Chief Science Officer. Ian T. Bothwell, who has served as Interim Chief Executive Officer since November 2022, in addition to his position as Chief Financial Officer will continue in his Chief Financial Officer role.

Dr. Leider’s employment agreement provides for a base salary of $325,000 per year and the grant of an option under Organicell’s Equity Incentive Plan (“Incentive Plan”) to purchase 57,000,000 shares of our common stock at a price of $0.012 per share (fair market value on the date of grant) (“Leider Option”). The Leider Option vests in equal quarterly installments over a three-year period, contingent upon Dr. Leider’s continued employment with the Company and expires five years from the date of grant. The vesting of the Leider Option is accelerated in the event of a change in control of the Company (as described in the employment agreement) or if the Company achieves certain market cap valuations.

Dr. Leider shall also be entitled to earn a commission of ten percent (10%) of the net profit (sales less cost of goods sold) generated by the sale of any of the Company’s biologic products sold directly by him solely from sources generated by him alone.

Dr. Leider’s employment with the Company is “At Will” meaning that his employment with the Company and his employment agreement may be terminated by the Company at any time, for any reason or for no reason at all and with or without “Cause” (as defined in the Agreement). Notwithstanding the foregoing, in the event the Company terminates Dr. Leider’s employment without Cause or Dr. Leider terminates his employment with the Company for “Good Reason” (as defined in the Agreement), Dr. Leider will be entitled to receive an amount equal to one year’s salary as severance, less the value of the Leider Option as vested on the date of termination, as calculated by subtracting the market price for the shares underlying the option as of the date of termination, less the exercise price for such shares, provided further, that the combined amount of the severance payment and market value of the Leider Option shall not be less than $200,000. In such circumstance he will also be entitled to receive a pro-rated share of any bonus earned for the year in which the termination takes place.

Dr. Golub’s employment agreement provides for a base salary of $150,000 per year. Dr. Golub will not be a full-time employee, but rather will devote such amount of his working time as the Company deems reasonably necessary to fulfill his duties thereunder (estimated to be approximately ½ his working time). Dr. Golub will perform his duties remotely from his residence, with travel, as required by his position. He will be permitted to continue serving as a Principal of Care-Safe, LLC.

Dr. Golub is also granted an option under the Incentive Plan to purchase 50,000,000 shares of our common stock at a price of $0.012 per share (fair market value on the date of grant) (“Golub Option”). The Golub Option vests in equal quarterly installments over a one-year period, contingent upon Dr. Golub’s continued employment with the Company and expires five (5) years from the date of grant.

Dr. Golub’s employment with the Company is “At Will” meaning that his employment with the Company and his employment agreement may be terminated by the Company at any time, for any reason or for no reason at all and with or without “Cause” (as defined in the Agreement). Notwithstanding the foregoing, in the event the Company terminates Dr. Golub’s employment without Cause or Dr. Golub terminates his employment with the Company for “Good Reason” (as defined in the Agreement), Dr. Golub will be entitled to receive an amount equal to one year’s base salary as severance. He will also be entitled to receive a pro-rated share of any bonus earned for the year in which the termination takes place.

Both employment agreements contain customary confidentiality, non-competition and non-solicitation covenants.

Consultant Agreements

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

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

New CRO Agreements

During August 2021, October 2021, and December 2021, the Company entered into agreements with a new CRO to provide ongoing clinical research and related services in connection with two of the Company’s approved clinical research trials (“New CRO Agreements”). On August 23, 2022 the New CRO Agreements were amended. In connection with the New CRO Agreements, the Company is obligated to make aggregate payments to the CRO of approximately $1,443,000 plus estimated aggregate pass-through costs and other third-party direct costs of approximately $495,000 (“Pass-Through Costs”) as well as site and patient related costs. The Company is obligated to make the CRO payments based on the actual costs incurred over the term of the clinical trial beginning on the commencement of the work by the CRO in connection with the applicable clinical trial and the payments for the pass-through costs and other third-party direct costs as well as site and patient related costs are paid in accordance with completion of agreed upon milestones.

As of April 30, 2023, the Company has been billed a total of approximately $1,230,900 in connection with the Proxima Agreements, Pass-Through Costs and Site related costs, respectively, of which approximately $630,000 was outstanding as of April 30, 2023.

Legal Matters

SEC Matter

On June 17, 2021, Organicell received a subpoena dated June 14, 2021, from the Atlanta Regional Office of the SEC requiring the production of certain documents and communications in connection with the treatment and results of various COVID-19 patients, as discussed in the Company’s Current Reports on Form 8-K filed with the SEC during the period from May 27, 2020 through May 11, 2021. The Company is fully cooperating with the SEC’s investigation and believes that it will be able to provide all of the information requested by the SEC. The Company can make no assurances as to the time or resources that will need to be devoted to this investigation or its final outcome, or the impact, if any, of this investigation or any proceedings on the Company’s current business, financial condition, results of operations, cash flows, or the Company’s future operations.

Daniel Pepock and Tracy Yourke

The Company terminated the employment agreements with the Sales Executives Daniel Pepock (“Pepock”) and Tracy Yourke (“Yourke”) effective June 30, 2022.

On June 6, 2022, Pepock filed a Complaint against Organicell Regenerative Medicine, Inc. (“Organicell”) in the Court of Common Pleas of Westmoreland County, Pennsylvania. Organicell removed the case to the United States District Court for the Western District of Pennsylvania, and on July 15, 2022 Mr. Pepock filed an Amended Complaint asserting two counts.

On June 27, 2022, Ms. Yourke filed a complaint against Organicell in the State of Michigan, 6^th Judicial Circuit, County of Oakland. Organicell removed the case to the United States District Court for the Eastern District of Michigan, Southern Division, and on August 10, 2022 Ms. Yourke filed an Amended Complaint asserting three counts.

As of July 31, 2022, all past due wages to Pepock and Yourke were paid.

Mr. Pepock’s action against Organicell was designated for placement into the United States District Court’s Alternative Dispute Resolution program and the Parties agreed to mediate. On August 22, 2022, Mr. Pepock, Ms. Yourke and Organicell agreed to a material settlement term sheet (“Settlement”) which provided for the resolution and full settlement and release of all claims among the parties and for the Company to buy back all of the shares of common stock of the Company issued to and owned by Mr. Pepock and Ms. Yourke at the time of the Settlement (represented by Mr. Pepock and Ms. Yourke to be in excess of 24,800,000 shares) in exchange for a payment by the Company of $500,000 (“Purchase Price”). In addition, the Company agreed to release Mr. Pepock and Ms. Yourke from their non-compete restrictions upon transfer of the shares to the Company. The Settlement relates to disputed claims and nothing therein shall be construed as an admission of liability or wrongdoing by the Company or any other party.

Effective October 13, 2022, the parties executed a Confidential Settlement Agreement and Mutual General Release memorializing the terms of the Settlement. Under the terms of the Settlement, the Company agreed to repurchase 24,800,001 shares of common stock for $500,000.

The shares repurchased were transferred to the Company on February 2. 2023. The shares repurchased were redeposited back into the Company’s treasury of authorized and unissued shares on February 3, 2023. As a result of the above, the matter has been fully settled and Mr. Pepock and Ms. Yourke were released from their non-compete restrictions.

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 15 – ADVISOR AND PLACEMENT AGENT AGREEMENTS

Effective May 1, 2023 (“Effective Date”), the Company entered into a six-month advisory agreement (“Advisory Services Agreement”) and a six month private placement agent agreement (“Placement Agreement”) with an investment banking firm (“I-Bank”) whereby I-bank will provide financial advisory services and will seek to raise financing through one or more private placements of the Company’s debt and/or equity securities of up to $10.0 million (or other amount mutually agreed to by the partis) (“Offering”).

The Advisory Services Agreement and Placement Agreement is subject to successive, automatic one (1) month extensions unless either party has given the other 30-day written notice prior to the expiration of then in effect termination date, of their desire not to renew the Advisory Services Agreement and/or the Placement Agreement.

As compensation for I-Bank’s services and fulfillment of all obligations under the Advisory Services Agreement, the Company agreed to pay I-Bank a monthly cash fee of $10,000 and grant I-Bank agreed 5-year “cashless” warrants to purchase 25,000,000 shares of common stock of the Company at an exercise price of $0.02 per share (“Warrants”). The Warrants shall vest monthly over the initial term of the Advisory Services Agreement.

In addition, as more fully described in the Advisory Services Agreement, the Company agreed to provide I-Bank with a right of first refusal for a 6-month period following the closing of an initial financing (“Bridge Financing”) completed by I-Bank under the Placement Agreement. In addition, the Placement Agreement provides that the Company will pay I-Bank legal fees up to $25,000 for their legal counsel to review documents associated with the Offering, a non-refundable retainer of $12,500 to be applied against any future success fees owed to I-Banker and a success fee equal to 10% of the gross proceeds received by the Company from an Offering, excluding the Bridge Financing (subject to reduction as provided for in the Placement Agreement) and a warrant equal to 10% of the total number of securities issued in the Offering, at an exercise price equal to the price of the common stock sold in the Offering.

NOTE 16 – SEGMENT INFORMATION

The Company has only one operating segment.