RemSleep Holdings Inc.: Form 10-Q for the period ended Sep 30, 2023

Forward-looking Statements

Except for statements of historical fact, the information presented herein constitutes forward-looking statements. These forward-looking statements generally can be identified by phrases such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,” “intends,” “plans,” or other words of similar import. Similarly, statements herein that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, our ability to: successfully commercialize our technology; generate revenues and achieve profitability in an intensely competitive industry; compete in products and prices with substantially larger and better capitalized competitors; secure, maintain and enforce a strong intellectual property portfolio; attract additional capital sufficient to finance our working capital requirements, as well as any investment of plant, property and equipment; develop a sales and marketing infrastructure; identify and maintain relationships with third party suppliers who can provide us a reliable source of raw materials; acquire, develop, or identify for our own use, a manufacturing capability; attract and retain talented individuals; continue operations during periods of uncertain general economic or market conditions, and; other events, factors and risks previously and from time to time disclosed in our filings with the Securities and Exchange Commission. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on our forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Overview

We were incorporated in the State of Nevada on June 6, 2007. On August 2, 2010, we changed our name from Bella Viaggio, Inc. to Kat Gold Holdings Corp. Effective January 1, 2015, we completed an exchange agreement to purchase 100% of the outstanding interests of REMSleep LLC in exchange for 50,000,000 common shares of REMSleep Holdings, Inc.’s stock, at which time REMSleep LLC became our wholly-owned subsidiary and adopted their business of developing and distributing our sleep apnea products. On January 5, 2015, we changed our name to REMSleep Holdings, Inc. to reflect our new business model.

Our officers have 35 years of sleep-industry experience, including having been employed at sleep industry companies. Our officers invented our DeltaWave CPAP interface (the “DeltaWave”) as an innovative new device to treat patients with sleep apnea. The patent-pending DeltaWave product is a nasal-pillows type interface that will result in better comfort and, therefore, better compliance since it was specifically designed with unique airflow characteristics to enable patients with sleep apnea to breathe normally. A survey that appeared in DME Business found that 89% of patients stated that mask-interface comfort was their primary concern. The primary issue that we have addressed with the DeltaWave is the “work of breathing” component. We believe that our DeltaWave is designed to effectively address the stubborn issues that continue to affect a patient’s ability to comply with treatment, as follows:

• Does not disrupt normal breathing mechanics;
• Is not claustrophobic;
• Causes zero work of breathing (WOB);
• Minimizes or eliminates drying of the sinuses;
• Uses less driving pressure; and
• Allows users to feel safe and secure while sleeping.

2

Pending adequate financing, we plan to conduct clinical trials to test product effectiveness.

On June 28, 2016, we applied for a patent for a new, innovative sleep apnea product that serves as an interface for the delivery of CPAP therapy and other respiratory needs. Our goal is to develop sleep products that achieve optimum compliance and comfort for CPAP patients.

Our website is located at: http://remsleep.com.

Results of Operations

The three months ended September 30, 2023 compared to the three months ended September 30, 2022

Revenues

We recognized revenue and cost of goods for the sale of our CPAP machines of $51,947 and $49,940, respectively for the three months ended September 30, 2023 and $137,568 and $86,250 respectively for the three months ended September 30, 2022. We saw a decrease in sales in the current period due to both the number of sales but also due to fewer sales for multiple units.

Operating Expenses

Professional fees were $30,690 and $14,200 for the three months ended September 30, 2023 and 2022, respectively, an increase of $16,490, or 116.1%. Professional fees consist mostly of accounting, audit and legal fees. The increase in the current period is due to increased legal fees.

Compensation expenses were $32,000 and $72,000 for the three months ended September 30, 2023 and 2022, respectively, a decrease of $40,000 or 55.6%. Effective June 1, 2023, Mr. Bird, our former Chairman, resigned from all positions with the Company.

Development expenses related to our CPAP systems was $13,887 and $121,170 for the three months ended September 30, 2023 and 2022, respectively, a decrease of $107,283 or 88.5%. Our development expenses have decreased in the current period as we get closer to completing the development and testing of our DeltaWave product.

Lease expenses were $33,590 and $21,296 for the three months ended September 30, 2023 and 2022, respectively, a decrease of $12,294 or 57.7%. In the prior year we incurred additional rent expense for a short-term apartment rental for employees to stay at when in town. We did have this expense in the current period.

General and administrative expenses (“G&A”) were $163,167 and $129,156 for the three months September 30, 2023 and 2022, respectively, an increase of $34,011 or 26.3%. In the current period we had an increase for our 510K testing expense of $56,261, which was offset by a decrease of approximately $16,000 in other G&A expense.

Our loss from operations decreased $35,177 to $271,327 in the current period from $306,504 in the prior period.

Other Expenses

The total other income for the three months ended September 30, 2023, was $894 from a gain on the disposal of a vehicle that was traded in for a new vehicle. Total other expense for the three months ended September 30, 2022, was $5,656, for interest expense.

Net Loss

For the three months ended September 30, 2023, we had a net loss of $270,433 as compared to a net loss of $312,160 for the three months ended September 30, 2022.

The nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

Revenues

We recognized revenue and cost of goods for the sale of our CPAP machines of $196,262 and $173,578, respectively for the nine months ended September 30, 2023 and $257,238 and $176,010, respectively for the nine months ended September 30, 2022. We saw a decrease in sales in the current period due to both the number of sales but also due to fewer sales for multiple units.

Operating Expenses

Professional fees were $78,392 and $100,165 for the nine months ended September 30, 2023 and 2022, respectively, a decrease of $21,773 or 21.7%. Professional fees consist mostly of accounting, audit and legal fees. The decrease is attributed to a decrease in legal fees of approximately $32,000 from the prior period.

Compensation expenses were $144,000 and $165,000 for the nine months ended September 30, 2023 and 2022, respectively, a decrease of $21,000 or 12.7%. On April 1, 2022, compensation expense for our CEO and Chairman increased and effective June 1, 2023, Mr. Bird resigned from all positions with the Company.

Development expenses related to our CPAP systems was $85,599 and $184,888 for the nine months ended September 30, 2023 and 2022, respectively, a decrease of $95,289 or 51.5%. Our development expenses have decreased in the current period as we get closer to completing the development and testing of our DeltaWave product.

Lease expenses were $103,089 and $51,160 for the nine months ended September 30, 2023 and 2022, respectively, an increase of $51,929 or 101.5%. Our monthly lease expense has increased from the prior period per the terms od our lease agreement.

General and administrative expenses (“G&A”) were $321,298 and $385,720 for the nine months September 30, 2023 and 2022, respectively, a decrease of $64,422 or 16.7%. In the current period we had decreases in travel expense of approximately $24,400, employee expense of approximately $26,600 and web design of $19,300.

Our loss from operations decreased $92,011 to $713,694 for the nine months ended September 30, 2023 from $805,705 for the nine months ended September 30, 2022.

Other Expenses

The total other expense of $6,196, for the nine months ended September 30, 2023, included $7,090 for interest expense, which was offset by $894 from a gain on the disposal of a vehicle that was traded in for a new vehicle. Total other expense for the nine months ended September 30, 2022, was $263,046. Other expenses included a loss in the change of fair value of $3,048, loss on disposal of fixed assets of $28,264 and interest expense of $231,734 (includes $206,157 amortization of debt discount).

Net Loss

For the nine months ended September 30, 2023, we had a net loss of $719,890 as compared to a net loss of $1,068,751 for the nine months ended September 30, 2022. Our net loss decreased due to the decrease in other expenses, which in the prior period consisted mostly of non-cash expenses related to our convertible debt and to the decrease of development expense, during the current period.

Liquidity and Capital Resources

Cash flow from operations

Cash used in operating activities for the nine months ended September 30, 2023, was $617,739 compared to $1,962,684 of cash used in operating activities for the nine months ended September 30, 2022. In the prior period we used approximately $1.2 mil for the purchase of inventory.

Cash Flows from Investing

Cash used in investing activities for the purchase of equipment, tooling and a new automobile, for the nine months ended September 30, 2023 was $135,955 as compared to $71,462 of cash used in investing activities for the nine months ended September 30, 2022.

Cash Flows from Financing

For the nine months ended September 30, 2023, we repaid $183,931 of the loan payable due to our chairman. For the nine months ended September 30, 2022, we repaid $45,000 of a loan payable. We also received $855,000 from the sale of common stock.

As of September 30, 2023, we have current assets of $2,267,698 which includes $904,363 of cash and $886,026 of inventory.

Going Concern

As of September 30, 2023, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow from revenue to fund our proposed business.

We have suffered recurring losses from operations since our inception. In addition, we have yet to generate an internal cash flow from our business operations or successfully raised the financing required to develop our proposed business. As a result of these and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.

Management’s plans with regard to these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency, and (ii) implementing a plan to generate sales. Our continued existence is dependent upon our ability to resolve our liquidity problems and increase profitability in our current business operations. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies

Refer to Note 2 to the Financial Statements for the nine months ended September 30, 2023, for a condensed discussion of our critical accounting policies and our Form 10-K for the year ended December 31, 2022, for a full discussion of our critical accounting policies and procedures.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.

Disclosure Controls and Procedures

Each of our principal executive and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on their evaluation, each such person concluded that our disclosure controls and procedures were not effective as of September 30, 2023 due to a lack of segregation of duties.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Changes in Internal Control over Financial Reporting.

Our management has evaluated whether any change in our internal control over financial reporting occurred during the last fiscal quarter. Based on that evaluation, management concluded that there has been no change in our internal control over financial reporting during the relevant period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.