10-Q: BioRegenx Reports First Quarter 2024 Results Following Merger, Revenue Declines

BioRegenx, Inc. reports a net loss of $704,806 for the first quarter of 2024, following a merger and experiencing a decrease in revenue compared to the same period last year.

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 decreased to $618,116 in Q1 2024 from $1,075,585 in Q1 2023.
• Gross profit for the quarter was $458,766, down from $763,891 in the prior year's first quarter.
• Operating expenses increased to $1,095,532 in Q1 2024 from $947,997 in Q1 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 merger involved the exchange of BioRegenx, Inc. shares for 851,977,296 common shares and 3,800 Series A preferred shares of the surviving company.
• The company's total assets increased significantly to $20,515,943 due to the merger, compared to $1,691,925 at the end of 2023.
• The company's 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's cash and cash equivalents decreased to $114,158 from $125,402 at the end of 2023.

Sentiment

Score: 3

Explanation: The document indicates significant financial challenges, including a substantial net loss, declining revenue, and ineffective internal controls. The company's going concern warning and reliance on future capital raises further contribute to a negative outlook.

Positives

• The merger with Findit, Inc. significantly increased the company's total assets.
• The company secured an increase in SBA loans of $330,716.
• The company had net cash provided by operating activities of $38,074 for the three months ended March 31, 2024.

Negatives

• The company experienced a significant increase in net loss to $704,806 in Q1 2024 compared to $229,838 in Q1 2023.
• Net sales decreased from $1,075,585 in Q1 2023 to $618,116 in Q1 2024.
• The company's internal controls over financial reporting were deemed ineffective due to material weaknesses.
• The company's cash and cash equivalents decreased to $114,158 from $125,402 at the end of 2023.
• The company has a going concern warning due to recurring losses and cash flow deficits.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital and achieving profitable operations.
• The company's internal controls over financial reporting are ineffective due to material weaknesses, which could lead to misstatements in financial reporting.
• The company is involved in various lawsuits, claims, and other legal matters that could have a material adverse effect on its financial condition.
• The company's revenue decreased significantly in the first quarter of 2024 compared to the same period in 2023.
• The company's management has yet to find a solution to its funding requirements.

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.
• Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding managements control objectives.

Industry Context

The company's performance reflects challenges in the biotechnology and medical device sector, where companies often face high research and development costs and long lead times to profitability. The merger and acquisitions indicate a strategy to expand product offerings and market reach, which is a common approach in this industry to achieve economies of scale and diversification.

Comparison to Industry Standards

• The company's significant net loss and declining revenue are concerning when compared to industry benchmarks for early-stage biotech and medical device companies.
• Many comparable companies in the sector, such as those in the medical device space like InMode or medical testing companies like Exact Sciences, often show a more consistent revenue growth trajectory, even if they are not yet profitable.
• The company's lack of effective internal controls is a significant deviation from industry best practices, where robust financial controls are essential for investor confidence and regulatory compliance.
• The company's reliance on related-party transactions and loans is also a concern, as it can raise questions about transparency and potential conflicts of interest, which is not typical for well-established companies in the sector.

Management Changes

Corporate Governance

Legal Proceedings

• The Company is involved in various lawsuits, claims, and other legal matters from time to time that arise in the ordinary course of conducting business.

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, where 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.

Stakeholder Impact

• Shareholders face increased risk due to the company's financial losses and going concern warning.
• Employees may be impacted by potential restructuring or layoffs if the company fails to secure additional funding.
• Customers may experience disruptions in product availability or service if the company's financial situation worsens.
• Suppliers and creditors face increased risk of non-payment due to the company's financial instability.

Next Steps

• The company plans to raise additional capital through debt or equity financing.
• The company will continue to monitor and assess the costs and benefits of additional staffing to remediate material weaknesses in internal controls.
• The company will continue to develop its business and expand operations.

Key Dates

Keywords

merger, financial results, net loss, revenue, internal controls, going concern, acquisitions, BioRegenx, Findit, capital raise