EQUITY IN NON-MARKETABLE SECURITIES OF AFFILIATED ENTITY

3 Months Ended

Jan. 31, 2025

Equity In Non-marketable Securities Of Affiliated Entity

EQUITY IN NON-MARKETABLE SECURITIES OF AFFILIATED ENTITY

NOTE 6 – EQUITY IN NON-MARKETABLE SECURITIES OF AFFILIATED ENTITY

	January 31, 2025			October 31, 2024
Equity in non-marketable securities	$	145,000			145,000
Reserve on carrying value of investment in non-marketable securities	$	(145,000	)		(145,000	)
Equity in non-marketable securities	$	-			-

As of January 31, 2025 and October 31, 2024, the Company invested $145,000 in the non-marketable equity securities of Exotropin (“Exotropin”), a privately-held skin-care 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. As of January 31, 2025 and October 31, 2024, the Company has recorded total reserves against the carrying value of its investment of Exotropin of $145,000, based on the limited financial history of Exotropin to date and the lack of any information to ascertain the fair value of Exotropin.

During November 2024, the Company received a capital call notice from Exotropin, in which the Company’s pro-rata share was $126,000 (“November Capital Call”). The Company has yet committed to participating in the November Capital Call. If the Company does not elect to participate, its interest in Exotropin would be reduced to approximately 5.6% based on all other members fully participating in the November Capital Call.

Sales Representative Agreement

During November 2023, the Company and Exotropin entered into a Sales Representative Agreement (“Sales Agreement”) in connection with the Company’s efforts to expand the use of its proprietary products for a variety of topical use applications. In connection with the Sales Agreement, the Company will receive commissions on the net sales value of Exotropin products that are sold to pre-approved retailers, wholesale distributors, private label customers and direct to consumer customers which were introduced to Exotropin by the Company of 10%, 5%, 10% and 15%, respectively.

In addition, under the terms of the Sales Agreement, the Company and Exotropin have co-developed a new product offering for the treatment of hair loss to be sold through physicians. This first collaborative topical product “ZEO HAIR GROW™ Powered By Exotropin™” was launched in November 2024 (“Collaboration”). Under the terms of the Collaboration, the Company will be responsible for the sales and marketing of the products and the parties will share equally in the net profits from the sales of the products after reimbursement of all direct cash costs incurred by either party in connection with the development, supply and sale of the products.

For the three months ended January 31, 2025 and 2024, $32,000 and $34,000, respectively, of commissions were earned under the Sales Agreement and are reflected in other income in the unaudited consolidated financial statements.