10-Q: Therapeutic Solutions International Reports Third Quarter 2024 Results, Cites Increased Consulting Fees and Ongoing Losses

Therapeutic Solutions International reported a net loss of $3.26 million for the nine months ended September 30, 2024, driven by increased consulting and legal fees, despite a decrease in research and development expenses.

Summary

• Therapeutic Solutions International (TSOI) reported a net loss of $2,035,427 for the three months ended September 30, 2024, compared to a net loss of $602,857 for the same period in 2023.
• The company's net loss for the nine months ended September 30, 2024, was $3,264,052, an increase from the $1,743,994 loss reported for the same period in 2023.
• Net sales decreased to $19,667 for the three months ended September 30, 2024, from $25,730 in 2023, and to $61,486 for the nine months ended September 30, 2024, from $75,161 in 2023.
• Operating expenses increased significantly, reaching $1,974,779 for the three months ended September 30, 2024, and $3,079,660 for the nine months ended September 30, 2024.
• The increase in operating expenses was primarily due to a substantial rise in consulting fees, which reached $1,568,563 for the three months and $1,836,025 for the nine months ended September 30, 2024.
• Legal and professional fees also increased, reaching $155,068 for the three months and $490,224 for the nine months ended September 30, 2024.
• Research and development expenses decreased to $16,053 for the three months and $92,235 for the nine months ended September 30, 2024.
• The company's accumulated deficit since inception is $22.3 million as of September 30, 2024.
• TSOI has a working capital deficit of approximately $1.3 million as of September 30, 2024.
• Management has expressed substantial doubt about the company's ability to continue as a going concern due to recurring losses and a working capital deficit.

Sentiment

Score: 3

Explanation: The document presents a concerning financial picture with increasing losses, decreasing sales, and a going concern warning. While there are some positives in terms of patents and subsidiary development, the overall sentiment is negative due to the company's financial instability.

Positives

• Research and development expenses decreased significantly, indicating a potential shift in resource allocation.
• The company has a large portfolio of immunotherapies and patents, suggesting potential for future growth.
• TSOI has established several subsidiary companies focused on specific therapeutic areas, which could lead to more focused development and commercialization efforts.

Negatives

• The company experienced a significant increase in net losses for both the three and nine-month periods ending September 30, 2024.
• Net sales decreased in both the three and nine-month periods ending September 30, 2024.
• Operating expenses increased substantially, primarily due to a large rise in consulting fees.
• The company has a substantial accumulated deficit of $22.3 million and a working capital deficit of $1.3 million.
• Management has expressed substantial doubt about the company's ability to continue as a going concern.

Risks

• The company's ability to continue as a going concern is dependent on securing additional financing and achieving profitable operations.
• There is no guarantee that the company will be able to secure additional funding or obtain it on favorable terms.
• The company's reliance on third-party manufacturers and the potential for product liability claims pose significant risks.
• The company's stock is currently classified as a penny stock, which may lead to volatility and illiquidity.
• The company has reported material weaknesses in its internal control over financial reporting.

Future Outlook

The company intends to finance operating costs through existing financial resources and may raise additional capital through equity offerings, debt financings, collaborations, and/or licensing arrangements. If adequate funds are not available, the company may be required to delay, reduce the scope of, or curtail its operations.

Management Comments

• Management does not expect existing cash as of September 30, 2024, to be sufficient to fund the Company's operations for at least twelve months from the issuance date of these financial statements.
• The Company intends to finance operating costs over the next twelve months through its existing financial resources and we may also raise additional capital through equity offerings, debt financings, collaborations and/or licensing arrangements.
• Management believes the outcome of currently identified potential claims and lawsuits will not have a material adverse effect on our financial condition or results of operations.

Industry Context

The company operates in the biotechnology and nutraceutical industries, which are characterized by high research and development costs, regulatory hurdles, and competition. The company's focus on immune modulation and regenerative medicine aligns with current trends in these industries, but its financial challenges and going concern issues raise concerns about its ability to compete effectively.

Comparison to Industry Standards

• Compared to other early-stage biotech companies, TSOI's high operating expenses, particularly in consulting fees, are concerning.
• Many biotech companies at a similar stage focus on securing grants and partnerships to fund research, while TSOI appears to be relying heavily on debt and equity financing.
• The company's revenue is significantly lower than many of its peers, indicating a need to improve commercialization efforts.
• The company's accumulated deficit and working capital deficit are also higher than many comparable companies, raising concerns about its long-term viability.
• While the company has a large patent portfolio, the lack of significant revenue generation and the going concern warning are significant red flags.

Legal Proceedings

• TSOI has filed suit against anonymous online posters for defamation.
• Kyle Shepard sued the Veltmeyer Institute, Dr. James Veltmeyer, TSOI, and Dr. Thomas Ichim for fraud, breach of fiduciary duty, conversion, and intentional interference with contracts.

Related Party Transactions

• The Company has unsecured interest-bearing demand notes outstanding to certain officers and directors amounting to $719,215 as of September 30, 2024.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern warning.
• Employees may be impacted by potential cost-cutting measures or operational changes.
• Customers may be affected by potential delays or changes in product availability.
• Suppliers and creditors face increased risk due to the company's financial challenges.

Next Steps

• The company intends to finance operating costs through existing financial resources and may raise additional capital.
• The company will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of complex transactions.
• The company will continue to work on its clinical programs and commercialization efforts.

Key Dates

Keywords

Therapeutic Solutions International, TSOI, Net Loss, Consulting Fees, Operating Expenses, Financial Results, Immunotherapies, Stem Cells, Nutraceuticals, Patents, Going Concern, Financial Reporting, Clinical Trials