Quarterly Report for Quarter Ending April 30, 2026 (Form 10-Q)

Item 2.

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

Business Overview

We are a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine.

The Company has a portfolio of proprietary products derived from ethically sourced birth tissue, including mesenchymal stem cells, stem cell and amniotic fluid derived exosomes and Whartons Jelly matrix. The Company's principal product is Zofin™, a product derived from amniotic fluid and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles. The Company also manufactures Patient Pure X™ ("PPX™"), a proprietary autologous biologic containing a nanoparticle fraction that is precipitated from a patient's own peripheral blood. The Company's products are all manufactured in FDA-registered, cGMP-compliant laboratory facilities. Our portfolio of products ("RAAM Products") and related services are principally used in the health care industry administered through doctors and clinics ("Providers").

The state of Florida enacted a new "stem cell therapy" law, effective July 1, 2025 ("SB 1768"). The legislation authorizes licensed physicians to administer non-FDA-approved stem cell and other human tissue-derived therapies for orthopedic, wound care, and pain management indications. It mandates compliance with cGMP and prohibits the use of stem cells derived from aborted fetuses, promoting ethically sourced materials such as adult stem cells and umbilical cord blood. SB 1768 also requires informed patient consent and disclosure that treatments are not FDA-approved. Since the enactment of SB 1768, several other states have announced intentions to enact similar legislation as SB 1768.

The Company expects that SB 1768 and other approved legislation that is expected in other states, will create substantial new demand for current and future stem cell therapy products by: (i) meeting existing physician and patient interest in regenerative therapies, (ii) increasing awareness of the availability and potential efficacy of stem cell therapy treatments, and (iii) attracting medical tourists who previously sought stem cell therapy treatments abroad but can now access comparable procedures in Florida under higher regulatory standards and at lower cost. Accordingly, the Company has begun to pursue clinical research and commercial sales strategies that are compliant with SB 1768 and the several other states that have announced intentions to enact similar legislation as SB 1768.

By enabling physicians to adopt Zeo's products for approved indications in Florida, the Company anticipates significant revenue growth and faster advancement of its clinical trial objectives at reduced cost. The Company expects to further distinguish itself through leadership in research, quality, safety, and regulatory compliance for biologics. The new law also allows the Company to collect real-world safety and outcome data from providers-data that previously could only be obtained through FDA Investigational New Drug (IND) applications or Institutional Review Board (IRB)-approved studies. Access to this data is expected to lower risks associated with the Company's future FDA submissions for product approvals, while at the same time providing physicians currently considering the use of the Company's products with needed evidenced based data.

While prioritizing the anticipated growth of Florida's stem cell market, Zeo continues to advance its research programs, including clinical studies, product development, and ongoing quality and compliance initiatives. The Company recently launched an IRB-approved clinical study titled "Open-Label Prospective Longitudinal Clinical Trial to Evaluate the Safety and Potential Efficacy of PPX™ in Patients Suffering from Musculoskeletal Joint Pathologies Using Real-World Data to Monitor Patient Outcomes." The study will enroll up to 350 patients, with five clinics already participating and seven patients enrolled to date.

In addition to the Company's efforts to develop, manufacture and market products that are compliant with SB 1768, the Company has recently developed and begun to distribute additional products that incorporate its proprietary ingredients for products to be used in topical aesthetic applications and is actively exploring further development of additional products to be used in other topical aesthetic applications.

The Company 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.

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

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

We have not obtained any opinion or ruling regarding the Company's operations and whether the processing, sales and distribution of the products we currently supply and/or produce would be subject to the FDA's previously announced intended enforcement policies regarding HCT/P's or fall within SB 1768 that permits the use and sale of certain stem cell therapies and products that would otherwise be restricted under current FDA regulations. However, we believe that our products are compliant and fall within the respective guidelines and intend to vigorously defend against any adverse interpretation by the FDA and/or the state of Florida on the classification of our products that may be deemed as not being compliant under currently defined regulations, if any. Notwithstanding the foregoing, we are undertaking efforts on an ongoing basis to mitigate any potential risks associated with an adverse ruling by the FDA and the subsequent limitations on our ability to continue to generate revenues from the sale of our products in the United States until the Company obtains the required licenses. The efforts include continuing with clinical trials, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations.

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

Results of Operations

Three months ended April 30, 2026, as compared to three months ended April 30, 2025

Revenues. Our revenues for the three months ended April 30, 2026 were $2,581,000, as compared to revenues of $1,149,000 for the three months ended April 30, 2025. The increase in revenues for the three months ended April 30, 2026 of $1,432,000 or 124.6%, was due primarily to overall increases in revenues associated with its allogenic biologic products during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025.

The revenues and percentage of overall unit sales derived from the Company's allogenic biologic product offerings, its PPX™ service platform and other services for the three months ended April 30, 2026, as compared to the three months ended April 30, 2025 are presented below:

		Three Months Ended April 30, 2026								Three Months Ended April 30, 2025								Change In Revenues & Percentage Of Overall Revenues								Inc (Dec) In Units Sold
Higher Concentration Allogenic Biologics		$	1,415,000				54.8	%		$	334,000				29.1	%		$	1,081,000				94.1	%			352.4	%
Lower Concentration Allogenic Biologics		$	745,000				28.9	%		$	472,000				41.1	%		$	273,000				23.8	%			51.6	%
		$	2,160,000				83.7	%		$	806,000				70.1	%		$	1,354,000				117.8	%
PPX™		$	287,000				11.1	%		$	280,000				24.4	%		$	7,000				0.6	%
Other		$	134,000				5.2	%		$	63,000				5.5	%		$	71,000				6.2	%
Total		$	2,581,000				100.0	%		$	1,149,000				100.0	%		$	1,432,000				124.6	%

The increase in the overall unit sales associated with the Company's higher concentration allogenic biologic product offerings and lower concentration allogenic biologic product offerings was primarily due the Company's continued sales and marketing efforts which included engaging additional sales representatives, conducting educational masterclasses, participation in industry related conferences and digital marketing aimed at increasing Company and product awareness.

Cost of Revenues. Our cost of revenues for the three months ended April 30, 2026 were $526,000, as compared to cost of revenues of $256,000 for the three months ended April 30, 2025. The increase in the cost of revenues for the three months ended April 30, 2026 of $270,000 or 105.6%, from the three months ended April 30, 2025, was due to the increase in the overall unit sales associated with its allogenic biologic products during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025

Gross Profit. Our gross profit for the three months ended April 30, 2026 was $2,055,000 (79.6% of revenues), as compared to gross profit of $893,000 (77.7% of revenues) for the three months ended April 30, 2025. The increase in gross profit during the three months ended April 30, 2026 of $1,162,000 (130.1%) was the result of increases in sales of its allogenic biologic products and the resulting gross margins received from sales of its allogenic biologic products during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025.

General and Administrative Expenses. General and administrative expenses for the three months ended April 30, 2026 were $2,567,000, as compared to $2,287,000 for the three months ended April 30, 2025, an increase of $280,000 or 12.3%. The increase in the general and administrative expenses for the three months ended April 30, 2026, from the three months ended April 30, 2025, was primarily the result of increased (i) payroll related expenses of approximately $123,000; (ii) marketing related costs of approximately $165,000; (iii) commissions of approximately $188,000; (iv) laboratory related costs of approximately $165,000; and (v) professional fees of approximately $158,000 during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025, partially offset from decreased stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $506,000 during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025.

The decrease in stock-based compensation costs during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025 was principally the result of decreased amortization of costs from shares and options issued to executives and advisors and options issued to employees and outside directors.

The increase in payroll, marketing, and laboratory related costs was principally related to the Company's efforts to meet and increase the demand for the Company's products, including hiring of additional staff and increasing levels of product inventory and market commercialization efforts during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025. The increased commissions during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025, was principally the result of the increase in the overall revenues during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025. The increase in professional fees during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025, was principally the result of additional litigation costs incurred during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025.

Other income. Other income for the three months ended April 30, 2026 was $395,000, as compared to other income of $24,000 for the three months ended April 30, 2025. The increase in other income was principally due to the gain on the sale of Exotropin interests of $390,000 that occurred during the three months ended April 30, 2026, partially offset from the reduction in commissions received from sales of Exotropin products of $19,000 during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025.

Other expense for the three months ended April 30, 2026 was $28,000, as compared to other expense of $21,000 for the three months ended April 30, 2025. The increase in other expense of $7,000 was principally the result of the change in obligation to repurchase shares of $17,000, partially offset by reduced interest costs and amortization of loan discounts on Notes payable of $10,000 resulting from the conversion of $475,000 of Notes payable during October 2025.

Six months ended April 30, 2026, as compared to six months ended April 30, 2025

Revenues. Our revenues for the six months ended April 30, 2026 were $4,027,000, as compared to revenues of $2,239,000 for the six months ended April 30, 2025. The increase in revenues for the six months ended April 30, 2026 of $1,788,000 or 79.9%, was due primarily to overall increases in revenues associated with its allogenic biologic products during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025.

The revenues and percentage of overall unit sales derived from the Company's allogenic biologic product offerings, its PPX™ service platform and other services for the six months ended April 30, 2026, as compared to the six months ended April 30, 2025 are presented below:

		Sir Months Ended April 30, 2026								Sir Months Ended April 30, 2025								Change In Revenues & Percentage Of Overall Revenues								Inc (Dec) In Units Sold
Higher Concentration Allogenic Biologics		$	2,126,000				52.8	%		$	875,000				39.1	%		$	1,251,000				55.9	%			236.8	%
Lower Concentration Allogenic Biologics		$	1,144,000				28.4	%		$	737,000				32.9	%		$	407,000				18.2	%			58.6	%
		$	3,270,000				81.2	%		$	1,612,000				72.0	%		$	1,658,000				74.1	%
PPX™		$	548,000				13.6	%		$	513,000				22.9	%		$	35,000				1.6	%
Other		$	209,000				5.2	%		$	114,000				5.1	%		$	95,000				4.2	%
Total		$	4,027,000				100.0	%		$	2,239,000				100.0	%		$	1,788,000				79.9	%

The increase in the overall unit sales associated with the Company's higher concentration allogenic biologic product offerings and lower concentration allogenic biologic product offerings was primarily due the Company's continued sales and marketing efforts which included engaging additional sales representatives, conducting educational masterclasses, participation in industry related conferences and digital marketing aimed at increasing Company and product awareness.

Cost of Revenues. Our cost of revenues for the six months ended April 30, 2026 were $807,000, as compared to cost of revenues of $447,000 for the six months ended April 30, 2025. The increase in the cost of revenues for the six months ended April 30, 2026 of $360,000 or 80.5%, from the six months ended April 30, 2025, was due to the increase in the overall unit sales associated with its allogenic biologic products during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025

Gross Profit. Our gross profit for the six months ended April 30, 2026 was $3,220,000 (80.0% of revenues), as compared to gross profit of $1,792,000 (80.4% of revenues) for the six months ended April 30, 2025. The increase in gross profit during the six months ended April 30, 2026 of $1,428,000 (79.7%) was due to the increase in the overall unit sales associated with its allogenic biologic products during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025

General and Administrative Expenses. General and administrative expenses for the six months ended April 30, 2026 were $4,610,000, as compared to $4,439,000 for the six months ended April 30, 2025, an increase of $171,000 or 3.9%. The increase in the general and administrative expenses for the six months ended April 30, 2026, from the six months ended April 30, 2025, was primarily the result of increased (i) payroll related expenses of approximately $137,000; (ii) marketing related costs of approximately $228,000; (iii) commissions of approximately $287,000; (iv) laboratory related costs of approximately $332,000; and (v) professional fees of approximately $172,000 during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025, partially offset from decreased stock-based compensation costs to advisors, consultants and administrative staff totaling approximately $1,005,000 during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025.

The decrease in stock-based compensation costs during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025 was principally the result of decreased amortization of costs from shares and options issued to executives and advisors and options issued to employees and outside directors.

The increase in payroll, marketing, and laboratory related costs was principally related to the Company's efforts to meet and increase the demand for the Company's products, including hiring of additional staff and increasing levels of product inventory and market commercialization efforts during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025. The increased commissions during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025, was principally the result of the increase in the overall revenues during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025. The increase in professional fees during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025, was principally the result of additional litigation costs incurred during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025.

Other income. Other income for the six months ended April 30, 2026 was $413,000, as compared to other income of $56,000 for the six months ended April 30, 2025. The increase in other income was principally due to the gain on the sale of Exotropin interests of $390,000 that occurred during the six months ended April 30, 2026, partially offset from the reduction in commissions received from sales of Exotropin products of $51,000 during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025.

Other expense for the six months ended April 30, 2026 was $20,000, as compared to other expense of $43,000 for the six months ended April 30, 2025. The decrease in other expense of $23,000 was principally the result of reduced interest costs and amortization of loan discounts on Notes payable resulting from the conversion of $475,000 of Notes payable during October 2025.

Liquidity and Capital Resources

Cash and Cash Equivalents

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

		For the Six Months Ended April 30,
		2026				2025
Cash, beginning of period		$	221,000			$	657,000
Net cash used in operating activities			(609,000	)			(78,000	)
Net cash provided by investing activities			298,000				-
Net cash provided by (used in) financing activities			1,936,000				(37,000	)
Cash, end of period		$	1,846,000			$	542,000

During the six months ended April 30, 2026, the Company used cash in operating activities of $609,000, as compared to $78,000 of cash used in operating activities for the six months ended April 30, 2025, an increase in cash used of $531,000. The increase in cash used was primarily the result of increases in general and administrative expenses and other income (expense) after adjusting for non-cash related activities of $1,192,000 and decreases in cash provided from changes in operating assets and liabilities of $767,000, partially offset from an increase in gross profit of $1,428,000 the for the six months ended April 30, 2026 as compared to the six months ended April 30, 2025.

The increase in cash provided from changes in operating assets and liabilities was due to increases in accounts receivable, prepaid expenses and inventories, partially offset from increases in deferred revenues for the six months ended April 30, 2026 as compared to the six months ended April 30, 2025.

During the six months ended April 30, 2026, the Company had cash provided by investing activities of $298,000 compared to $0 for the six months ended April 30, 2025. The increase in cash provided by investing activities was primarily due to the increase in proceeds received on the sale of Exotropin interests of $376,000 partially offset from payments made in connection with the Company's purchase of laboratory equipment of $78,000 during the six months ended April 30, 2026.

During the six months ended April 30, 2025, the Company had cash provided by financing activities of $1,936,000 as compared to cash used in financing activities of $37,000 for the six months ended April 30, 2024. The increase in cash provided by financing activities of $1,973,000 was due to the increase in proceeds received from the sale of common stock of $1,950,000 and reductions in payments on finance leases of $23,000 during the six months ended April 30, 2026 compared to the six months ended April 30, 2025.

Capital Resources

The Company has historically relied on the sale of debt or equity securities, the restructuring of debt obligations and/or the issuance and/or exchange of equity securities to meet the shortfall in cash to fund its operations. During the six months ended April 30, 2026 and through the date of this Quarterly Report, the Company completed the following private sales of its securities:

On November 1, 2025, pursuant to a subscription agreement ("Subscription Agreement") with a single accredited investor (the "Investor"), the Investor purchased 25,000 shares for a purchase price of $100,000.

From November 2025 to April 2026, the Company sold 7.4 Units to fifteen investors for an aggregate purchase price of $1,850,000 in a private transaction. Each Unit consists of (i) 62,500 shares of common stock and (ii) warrants to purchase 62,500 shares of common stock of the Company at an exercise price of $4.00 until November 30, 2030. The warrants may be exercised on a cashless basis. In connection with the sale of the Units, the Company issued 462,500 shares of common stock and 462,500 warrants to purchase shares of common stock.

During May 2026 and June 2026, the Company sold and additional 0.8 Units to two investors for an aggregate purchase price of $200,000. In connection with the sale of the Units, the Company issued 50,000 shares of common stock and 50,000 warrants to purchase shares of common stock.

The above securities were offered and sold to the investors in accordance with the exemption from registration afforded by Section 4(a)(2) of and/or Rule 506(b) of Regulation D under the Securities Act.

Going Concern Consideration

The unaudited accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company incurred net losses of $997,000 for the six months ended April 30, 2026 and used $609,000 of cash from operating activities during that period. In addition, the Company had an accumulated deficit of $68,731,000 at April 30, 2026 and stockholders' equity of $712,000 at April 30, 2026. The Company had working capital of $155,000 at April 30, 2026.

United States Food and Drug Administration ("FDA") regulations which were announced in November 2017 and which became effective in May 2021 require that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue based products ("HCT/Ps") can only be sold pursuant to an approved biologics license application ("BLA"). Notwithstanding the above, certain states, including Florida (SB 1768) have approved legislation that permits the use and sale of products that would otherwise be restricted under current FDA regulations. The Company has not obtained any opinion or ruling regarding the Company's operations and whether the processing, sales and distribution of the products it currently produces would be subject to the FDA's previously announced intended enforcement policies regarding HCT/P's.

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

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

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

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

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

As of April 30, 2026, based on the factors described above, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of these financial statements. In addition, the Company's independent registered public accounting firm, in its report on the Company's October 31, 2025 financial statements, has expressed substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company's ability to raise additional funds and implement its strategies. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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 April 30, 2026 and through the date of this report, we had no such arrangements.

Recently Issued Financial Accounting Standards

See Note 2 to our unaudited condensed consolidated financial statements included in this report for a discussion of recent accounting pronouncements.

Critical Accounting Policies

Our unaudited condensed consolidated financial statements reflect the selection and application of accounting policies which require us to make significant estimates and judgments. See Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, "Summary of Significant Accounting Policies".