RemSleep Holdings Inc.: Form 10-Q for the period ended Jun 30, 2024

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.

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.

On April 27, 2021, Remsleep was awarded utility patent 10987481 for its new Deltawave CPAP Pillows Mask for delivery of CPAP therapy and other respiratory needs. On March 5, 2024, Remsleep was awarded design patent D1,017,025 S. Our goal is to continue to develop sleep products for the treatment of OSA and capture 10% of the market in the next 24 months.

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

Results of Operations

The three months ended June 30, 2024 compared to the three months ended June 30, 2023

Revenues

We recognized revenue and cost of goods for the sale of our CPAP machines of $27,594 and $5,940 respectively for the three months ended June 30, 2024 and $58,660 and $50,062 for the three months ended June 30, 2023. 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 $56,715 and $29,810 for the three months ended June 30, 2024 and 2023, respectively, an increase of $26,905 or 90.3%. Professional fees consist mostly of accounting, audit and legal fees. The increase is attributed mostly to a $20,760 increase in legal fees. Audit fees also increased by approximately $5,600.

Compensation expenses were $33,812 and $52,000 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $18,188 or 35%. On June 1, 2023, Mr. Bird resigned from all positions with the Company, this resulted in the decrease to compensation expense.

Development expenses related to our CPAP systems were $132,020 and $48,930 for the three months ended June 30, 2024 and 2023, respectively, an increase of $83,090 or 169.8%. Our development expenses have increased in the current period for additional expenses incurred for the development, testing and final FDA approval of our DeltaWave product.

Lease expense was $22,016 and $23,195 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $1,179 or 5.1%. In the prior year the Company rented an apartment used by Company personnel. The apartment was a monthly, short-term rental.

General and administrative expenses (“G&A”) were $73,956 and $76,054 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $2,098 or 2.8%.

Our loss from operations increased $75,474 to $296,865 for the three months ended June 30, 2024 from $221,391 for the three months ended June 30, 2023.

Other Expenses

The total other income of $71,266 for the three months ended June 30, 2024, included $29,719 for interest expense, for the amortization of debt discount. We also recognized a gain on the change in the fair value of derivatives of $104,198. Total other expense for the three months ended June 30, 2023, was $1,807 for interest expense.

Net Loss

For the three months ended June 30, 2024, we had a net loss of $225,599 as compared to a net loss of $223,198 for the three months ended June 30, 2023.

The six months ended June 30, 2024 compared to the six months ended June 30, 2023

Revenues

We recognized revenue and cost of goods for the sale of our CPAP machines of $85,475 and $19,530 respectively for the six months ended June 30, 2024 and $144,315 and $123,638 for the six months ended June 30, 2023. 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 $64,685 and $47,702 for the six months ended June 30, 2024 and 2023, respectively, an increase of $16,983 or 35.6%. Professional fees consist mostly of accounting, audit and legal fees. The increase is attributed mostly to a $24,260 increase in legal fees, which was offset with a $7,777 decrease of audit fees.

Compensation expense was $56,000 and $112,000 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $56,000 or 50%. On June 1, 2023, Mr. Bird resigned from all positions with the Company, this resulted in a $40,000 decrease to compensation expense. Our COO also reduced his work hours for an additional $16,000 to compensation expense.

Development expenses related to our CPAP systems were $156,020 and $75,712 for the six months ended June 30, 2024 and 2023, respectively, an increase of $80,308 or 106.1%. Our development expenses have increased in the current period for additional expenses incurred for the development, testing and final FDA approval of our DeltaWave product.

Lease expense was $50,924 and $69,499 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $18,575 or 26.7%. In the prior year the Company rented an apartment used by Company personnel. The apartment was a monthly, short-term rental.

General and administrative expenses (“G&A”) were $159,396 and $158,131 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $1,265 or 0.8%.

Our loss from operations decreased $21,287 to $421,080 for the six months ended June 30, 2024 from $442,367 for the six months ended June 30, 2023.

Other Expenses

The total other expense of $57,099 for the six months ended June 30, 2024, included $60,911 for interest expense, of which $54,485 was for the amortization of debt discount. We also recognized a gain on the change in fair value of derivatives of $3,812. Total other expense for the six months ended June 30, 2023, was $7,090 for interest expense.

Net Loss

For the six months ended June 30, 2024, we had a net loss of $478,179 as compared to a net loss of $449,457 for the six months ended June 30, 2023. Our net loss increased due to the reasons discussed above.

Liquidity and Capital Resources

Cash flow from operations

Cash used in operating activities for the six months ended June 30, 2024, was $265,373 compared to $447,346 of cash used in operating activities for the six months ended June 30, 2023.

Cash Flows from Investing

We used no cash for investing activities for the six months ended June 30, 2024. Cash used in investing activities for the purchase of equipment and tooling, for the six months ended June 30, 2023 was $128,450.

Cash Flows from Financing

For the six months ended June 30, 2024, we received $125,000 for the issuance of a convertible note payable and $120,000 from the sale of common stock. For the six months ended June 30, 2023, we repaid $183,931 of the loan payable due to our chairman.

As of June 30, 2024, we have current assets of $804,538 which includes $698,727 of cash and $79,617 of inventory.

Going Concern

As of June 30, 2024, 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 six months ended June 30, 2024, for a condensed discussion of our critical accounting policies and our Form 10-K for the year ended December 31, 2023, 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 June 30, 2024 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.