10-Q/A: BioRegenx Inc. Reports First Quarter 2024 Results Following Merger, Cites Ongoing Losses and Internal Control Weaknesses

BioRegenx Inc. reports a net loss of $704,806 for the first quarter of 2024, following a merger and highlighting material weaknesses in internal controls.

Summary

• BioRegenx Inc. reported a net loss of $704,806 for the three months ended March 31, 2024, compared to a net loss of $229,838 for the same period in 2023.
• The company's net sales were $618,116 for the quarter, down from $1,075,585 in the prior year's first quarter.
• Gross profit decreased to $458,766 from $763,891 year-over-year.
• Operating expenses increased to $1,095,532 from $947,997 in the same period last year.
• The company's total assets increased significantly to $20,515,943, primarily due to acquisitions, compared to $1,691,925 at the end of 2023.
• Total liabilities also increased to $3,504,846 from $2,878,972 at the end of 2023.
• The company's accumulated deficit increased to $10,166,964 from $9,462,158 at the end of 2023.
• The company completed a merger with Findit, Inc. on March 8, 2024, resulting in a change of control and a name change to BioRegenx, Inc.
• The company issued 851,977,296 common shares and 3,800 Series A preferred shares in the merger.
• The company also acquired DocSun Biomedical Holdings, Inc. on January 8, 2024, for 76,800,000 common shares.
• Management has identified material weaknesses in internal control over financial reporting, including lack of segregation of duties and a limited corporate governance structure.

Sentiment

Score: 3

Explanation: The document presents a concerning financial picture with increased losses, decreased sales, and identified material weaknesses in internal controls. While there are some positives like acquisitions, the overall tone is negative due to the company's financial instability and going concern issues.

Positives

• The company's total assets increased significantly due to acquisitions, indicating growth in the company's holdings.
• The company completed a merger with Findit, Inc. and acquired DocSun Biomedical Holdings, Inc., expanding its business operations and product line.

Negatives

• The company experienced a significant increase in net loss compared to the same period last year.
• Net sales decreased substantially year-over-year.
• Operating expenses increased, contributing to the larger loss.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company's accumulated deficit continues to grow.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital and achieving profitable operations.
• The identified material weaknesses in internal control over financial reporting could lead to misstatements in financial reporting.
• The company's ongoing losses and cash flow deficits raise substantial doubt about its ability to continue operations.
• The company's dependence on officers for future business development poses a risk if key personnel leave.
• The company's lack of an independent board and audit committee could lead to governance issues.

Future Outlook

Management intends to raise additional debt or equity financing to fund ongoing operations and for necessary working capital, but there is no assurance that such financing plans will be successful. The company anticipates generating losses and may be unable to continue operations in the future.

Management Comments

• Management plans to raise equity capital to finance the operating and capital requirements of the Company.
• Management has yet to find a solution to its funding requirements.
• Management believes the conversion of debt to equity will free up cash for operations, assist in raising capital, and allow the Company to better pursue its objectives.

Industry Context

The company operates in the biotechnology and healthcare sector, which is characterized by high research and development costs and the need for significant capital investment. The company's recent acquisitions and merger reflect a trend of consolidation and expansion in the industry. The company's financial results and internal control issues are not uncommon for early-stage companies in this sector.

Comparison to Industry Standards

• BioRegenx's Q1 2024 net loss of $704,806 is significantly worse than many established biotech companies, which often report losses in early stages but typically have stronger revenue streams or more robust funding.
• For example, companies like Novavax (NVAX) or Moderna (MRNA), while experiencing losses in their early stages, had substantial revenue from government contracts and product sales, which BioRegenx currently lacks.
• The company's reliance on equity and debt financing is typical for early-stage biotech firms, but the lack of a clear path to profitability and the identified internal control weaknesses are concerning compared to industry best practices.
• Compared to companies like Exact Sciences (EXAS) or Guardant Health (GH), which have established commercial products and revenue streams, BioRegenx is still in a very early stage of development and commercialization.
• The company's intangible assets, primarily from acquisitions, are a common feature in biotech, but the lack of a clear path to monetization and the impairment issues raise concerns compared to companies with more established intellectual property portfolios.

Management Changes

Corporate Governance

Related Party Transactions

• The company has financed past activities, in part, with borrowing from certain related parties.
• The company rents its home office from BBD Holdings, LLC which is controlled by Joseph Bird, an officer and director.
• The company sells a product subject to a royalty agreement with the VHS Pool, in which an officer and director has a creditor interest.
• The company has a worldwide distribution agreement with GlycoCheck B.V., where directors of BioRegenx, Inc. may have an ownership interest.
• The company has made advances to related parties, including GlycoCheck B.V. and Robert Long.
• The company reimburses certain officers and board members for company expenses paid through individual credit cards.

Stakeholder Impact

• Shareholders face the risk of further dilution due to potential capital raises.
• Employees may be concerned about the company's financial stability and potential job security.
• Customers may be affected by the company's ability to deliver products and services.
• Suppliers and creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company intends to raise additional debt or equity financing.
• The company will continue to monitor and assess the costs and benefits of additional staffing to address internal control weaknesses.
• The company will continue to develop its business and expand operations.

Key Dates

Keywords

BioRegenx, Merger, Acquisition, Financial Results, Internal Controls, Net Loss, Going Concern, Share Issuance, Healthcare, Biotechnology