What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-12-15 compared with 2020-09-11 · 618 added, 576 removed, 512 unchanged (70% of the section changed)

4 unchanged sentences

The results of operations for the three

and six months ended July 31, 2020 and 2019 are not necessarily indicative of the results for the entire fiscal year or for any

other period.

and nine months ended October 31, 2020 and 2019 are not necessarily indicative of the results for the entire fiscal year or for

any other period.

NUTRIBAND INC.

16 unchanged sentences

Deferred revenue

Notes payable-related parties

Convertible debt- net of debt discount of $-0- and $202,500 as of July 31, 2020 and January 31, 2020, respectively

Notes payable-related party

Finance lease liabilities-current portion

Note payable-current portion

Convertible debt- net

Total Current Liabilities

LONG-TERM LIABILITIES:

Note payable-net of current portion

Finance lease liabilities-net of current portion

Total Liabilities

2 unchanged sentences

Preferred stock, $.001 par value, 10,000,000 shares authorized, -0- outstanding

Common stock, $.001 par value, 250,000,000 shares

5,517,928 and 5,441,100 shares issued and outstanding at July 31,

2020 and January 31, 2020, respectively

Common stock, $.001 par value, 250,000,000 shares authorized;

6,126,509 and 5,441,100 shares issued and outstanding at October 31, 2020 and January 31, 2020, respectively

Additional paid-in-capital

3 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS’

See notes to unaudited consolidated financial

See notes to unaudited consolidated financial statements

NUTRIBAND INC.

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

AND COMPREHENSIVE LOSS

Three Months Ended

Six Months Ended

Nine Months Ended

Costs and expenses:

6 unchanged sentences

Early prepayment fee on convertible debentures

Gain on change of fair value of derivative

Derivative expense

Gain (loss) on change of fair value of derivative

Interest expense

Total other income (expense)

Total other expense

Loss before provision for income taxes

2 unchanged sentences

Net loss per share of common stock-basic and diluted

Weighted average shares of

common stock outstanding - basic and diluted

Other Comprehensive Income (Loss):

Weighted average shares of common stock outstanding - basic and diluted

Other Comprehensive Loss:

$ (1,777,192 )

Foreign currency translation adjustment

Total Comprehensive Income (Loss)

Total Comprehensive Loss

$ (1,777,444 )

See notes to unaudited consolidated financial

See notes to unaudited consolidated financial statements

NUTRIBAND INC.

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

Six Months Ended July 31, 2020

Nine Months Ended October 31, 2019

Comprehensive

Income (Loss)

Balance, February 1, 2019

$ (6,180,650 )

Issuance of common stock for services

Sale of common stock for cash

Conversion of debt for common stock

Reclass of warrants from liability to equity

Net loss for the six months ended July 31, 2020

Issuance of warrants for services

Relative fair value of warrants issued with debt

Foreign currency translation adjustment

Balance, July 31, 2020

Net loss for the nine months ended October 31, 2019

Balance, October 31, 2019

$ (7,957,842 )

Six Months Ended July 31, 2019

Nine Months Ended October 31, 2020

Comprehensive

Income (Loss)

Balance, February 1, 2020

$ (8,902,277 )

Issuance of warrants for services

Foreign currency translation adjustment

Net loss for the six months ended July 31, 2019

Balance, July 31, 2019

Issuance of common stock for services

Sale of common stock for cash

Conversion of debt for common stock

Reclass of warrants from liability to equity

Issuance of common stock for acquisition

Net loss for the nine months ended October 31, 2020

Balance, October 31, 2020

$ (9,582,909 )

Three Months Ended July 31, 2020

Three Months Ended October 31, 2019

Comprehensive

Income (Loss)

Balance, April 30, 2020

Balance, August 1, 2019

$ (7,204,568 )

Issuance of common stock for services

Net loss for the three months ended July 31, 2020

Foreign currency translation adjustment

Balance, July 31, 2020

Relative fair value of warrants issued with debt

Net loss for the three months ended October 31, 2019

Balance, October 31, 2019

$ (7,957,842 )

Three Months Ended July 31, 2019

Three Months Ended October 31, 2020

Comprehensive

Income (Loss)

Balance, April 30, 2019

Balance, August 1, 2020

$ (9,540,340 )

Net loss for the three months ended July 31, 2019

Balance, July 31, 2019

Issuance of common stock for acquisition

Net loss for the three months ended October 31, 2020

Balance, October 31, 2020

$ (9,582,909 )

See notes to unaudited consolidated financial

See notes to unaudited consolidated financial statements

NUTRIBAND INC.

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF CASH

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization

Derivative expense

Amortization of debt discount

Gain on change in fair value of derivative

(Gain) loss on change in fair value of derivative

Early prepayment fee on convertible debentures

Amortization of right of use asset

Loss on extinguisment of debt

Loss on extinguishment of debt

Stock-based compensation

2 unchanged sentences

Prepaid expenses

Deposit on sales

Deferred revenue

Operating lease liability

1 unchanged sentence

Net Cash Used In Operating Activities

Cash flows from investing activities:

Cash received from acquisition

Cash flows from financing activities:

1 unchanged sentence

Proceeds from notes payable

Payment of notes payable

Proceeds from sale of convertible debt and warrants

Payment on finance leases

Payment on convertible debt

10 unchanged sentences

Common stock issued for settlement of notes payable

Common stock issued for prepaid consulting

Derivative liability warrant reclassed to equity

See notes to unaudited consolidated financial

Common stock and note payable issued in

See notes to unaudited consolidated financial statements

NUTRIBAND INC.

1 unchanged sentence

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

as of and for the Nine Months Ended October

31, 2020 and 2019

AND DESCRIPTION OF BUSINESS

ORGANIZATION AND DESCRIPTION OF BUSINESS

(the “Company”) is a Nevada corporation, incorporated on January 4, 2016.

18 unchanged sentences

the acquisition of 4P Therapeutics, 4P Therapeutics’

drug development business became the Company’s principal business.

The Company’s approach is to use generic drugs that are off patent and incorporate them into the Company’s transdermal

drug delivery system.

Although these medications have received FDA approval in oral or injectable form, the Company needs to conduct

a transdermal product development program which will include the preclinical and clinical trials that are necessary to receive

FDA approval before the Company can market any pharmaceutical transdermal products.

drug development business became one of the Company’s principal

The Company’s approach is to use generic drugs that are off patent and incorporate them into the Company’s

transdermal drug delivery system.

Although these medications have received FDA approval in oral or injectable form, the Company

needs to conduct a transdermal product development program which will include the preclinical and clinical trials that are necessary

to receive FDA approval before the Company can market any pharmaceutical transdermal products.

On August 25, 2020, the Company formed Pocono Pharmaceuticals

(“Pocono”), a wholly owned subsidiary of the Company.

On August 31, 2020, the Company acquired certain assets

and liabilities associated with the Transdermal, Topical, Cosmetic, and Nutraceutical business of Pocono Coated Products LLC (“PCP”).

The net assets were contributed to Pocono.

Included in the transaction, the Company also acquired 100% of the membership interests

of Active Intelligence LLC (“Active Intelligence”), who became a wholly owned subsidiary of the Company.

price was (i) $6,000,000 paid with the issuance of 608,519 shares in the Company’s common stock of Nutriband at a value of

the average price of the previous 90 days at the date of the closing, and (ii) a promissory note of the note of the Company in

the principal amount of $1,500,000 which is due upon the earlier of (a) twelve (12) months from issuance or (b) immediately following

a capital raise of no less the $4,000,000 and/or a public offering of no less than $4,000,000.

See Note 3 for further details of

the acquisition.

Pocono is a coated products manufacturing entity that takes

advantage of its unique process capabilities and experience.

Pocono helps its customers with product design and development along

with manufacturing to bring new products to market with minimal capital investment.

Pocono’s competitive edge is a low-cost

manufacturing base:

a result of its unique processes and state of the art material technology.

Active Intelligence manufactures

activated kinesiology tape.

The tape has transdermal and topical properties.

This tape is used same as traditional kinesiology

2019, COVID-19 emerged and has subsequently spread world-wide.

15 unchanged sentences

information in these financial statements retroactively reflect the reverse split.

Company’s consolidated financial statements for the six months ended July 31, 2020 have been prepared on a going concern

basis which contemplates the realization of assets and settlement of liabilities in the normal course of business.

months ended July 31, 2020, the Company generated revenue of $203,814 on which it recorded cost of revenues of $191,876 and a loss

from operations of $373,310.

Subsequent to January 31, 2020, because of the lack of available cash and the decline in business

resulting in part from the effects of the COVID-19 pandemic, the Company has temporarily closed its operations, and does not expect

it will be able to commence operations until it receives substantial funding.

Successful business operations and its transition

to attaining profitability are dependent upon obtaining significant additional financing, generating revenue primarily from its

professional services to cover its overhead, developing its products, and obtaining FDA approval to market any product it develops

and implementing a marketing program for such products.

These factors raise substantial doubt about ability of the Company to continue

as a going concern for a period of at least one year from the date that these financial statements were issued.

Without such financing,

the Company may not be able to continue in business.

The financial statements do not include any adjustments that might result

from the outcome of this uncertainty.

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

Company’s consolidated financial statements for the nine months ended October 31, 2020 have been prepared on a going

concern basis which contemplates the realization of assets and settlement of liabilities in the normal course of business.

For the nine months ended October 31, 2020, the Company generated revenue of $595,611 on which it recorded cost of revenues

of $420,648 and a loss from operations of $414,261.

Subsequent to January 31, 2020, because of the lack of available cash and

the decline in business resulting in part from the effects of the COVID-19 pandemic, the Company has temporarily closed its

operations, and does not expect it will be able to commence operations until it receives substantial funding.

business operations and its transition to attaining profitability are dependent upon obtaining significant additional

financing, generating revenue primarily from its professional services to cover its overhead, developing its products, and

obtaining FDA approval to market any product it develops and implementing a marketing program for such products.

factors raise substantial doubt about ability of the Company to continue as a going concern for a period of at least one year

from the date of these financial statements.

Without such financing, the Company may not be able to continue in business.

financial statements do not include any adjustments that might result from the outcome of this uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements

consolidated balance sheet as of July 31, 2020 and the consolidated statements of operations, stockholders’

equity, and cash

flows for the periods presented have been prepared by the Company and are unaudited.

The consolidated financial statements are

prepared in accordance with the requirements for unaudited interim periods pursuant to Rule 8-03 of Regulation S-X, and consequently,

consolidated balance sheet as of October 31, 2020 and the consolidated statements of operations, stockholders’

cash flows for the periods presented have been prepared by the Company and are unaudited.

The consolidated financial statements

are prepared in accordance with the requirements for unaudited interim periods pursuant to Rule 8-03 of Regulation S-X, and consequently,

do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States

10 unchanged sentences

The operations of 4P Therapeutics are included in the Company’s financial

statements from the date of acquisition of August 1, 2018.

statements from the date of acquisition of August 1, 2018 and the operations of Pocono and Active Intelligence are included in

the Company’s financial statements from the date of acquisition of September 1, 2020.

The wholly owned subsidiaries are as

4P Therapeutics

Pocono Pharmaceuticals

and its wholly owned subsidiary

Active Intelligence LLC

discussion and analysis of our plan of operations is based upon our consolidated financial statements, which have been prepared

7 unchanged sentences

from estimates and assumptions used in the preparation of our consolidated financial statements.

Company’s significant policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended

January 31, 2020.

There were no significant changes to the accounting policies during the six months ended July 31, 2020, and the

Company does not expect that the adoption of other accounting pronouncements will have a material impact on its financial statements.

The Company’s significant policies are summarized in Note

1 of the Company’s Annual Report on Form 10-K for the year ended January 31, 2020.

There were no significant changes to the

accounting policies during the nine months ended October 31, 2020, and the Company does not expect that the adoption of other accounting

pronouncements will have a material impact on its financial statements.

Company recognized revenue in accordance with Topic 606 “Revenue from Contracts with Customers.

16 unchanged sentences

following is a description of the Company’s revenue service types, which include professional services and sale of goods:

● Professional services include contract

research and development related services with clients in the life sciences field on an as-needed basis.

Deliverables primarily

consist of detailed findings and conclusion reports provided to the client for each given research project engaged.

● Sales revenues are derived from the sale

To date, sales related to consumer products sold to the Company’s South Korean distributor.

Upon receipt of

a purchase order, the Company has the order filled and shipped.

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

● Professional services include contract research and development related services with clients in

the life sciences field on an as-needed basis.

Deliverables primarily consist of detailed findings and conclusion reports provided

to the client for each given research project engaged.

● Sales revenues are derived from the sale of products.

To date, sales related to consumer

products sold to the Company’s South Korean distributor and sales related to consumer products sold by Pocono and Active Intelligence.

Upon receipt of a purchase order, the Company has the order

filled and shipped.

Contracts with Customers

9 unchanged sentences

it receives consideration from a contract before achieving certain criteria that must be met for revenue to be recognized in conformity

As of July 31, 2020 and 2019, the balance of deferred revenue was $29,725 and $0.

Performance Obligations

11 unchanged sentences

on a monthly basis for the work performed during that month.

revenue recognized in the statement of operations is revenue from contracts with customers.

All revenue recognized in

the statement of operations is revenue from contracts with customers.

Disaggregation of Revenues

3 unchanged sentences

by service type:

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended

Nine Months Ended

Sale of goods

by geographic location:

Three Months Ended July 31,

Six Months Ended July 31,

Revenue by geographic location:

Three Months Ended

Nine Months Ended

United States

5 unchanged sentences

by both specific identification of customer accounts where appropriate and the application of historical loss to non-applicable

For the six months ended July 31, 2020 and 2019, the Company recorded no bad debt expense for doubtful accounts related

For the nine months ended October 31, 2020 and 2019, the Company recorded no bad debt expense for doubtful accounts related

to account receivable.

5 unchanged sentences

(based on normal operating capacity).

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

Plant and Equipment

21 unchanged sentences

of ten years.

represents the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities

at the date of acquisition.

Goodwill is reviewed for impairment annually on January 31, and more frequently as circumstances warrant,

and written down only in the period in which the recorded value of such assets exceeds their fair value.

The Company does amortize

goodwill in accordance with ASC 350.

Goodwill represents the difference between the total purchase

price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition.

Goodwill is reviewed for

impairment annually on January 31, and more frequently as circumstances warrant, and written down only in the period in which the

recorded value of such assets exceeds their fair value.

The Company does not amortize goodwill in accordance with ASC 350.

31, 2020, in connection with the Company’s acquisition of certain assets and liabilities of Pocono Coated Products LLC and

Active Intelligence LLC, the Company recorded Goodwill of $6,467,961.

As of October 31, 2020, Goodwill amounted to $8,187,196.

reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying

8 unchanged sentences

outstanding during the period.

Diluted earnings per share is computed by dividing net earnings by the weighted average

number of shares of common stock and potential shares of common stock outstanding during the period.

Potential shares of common

stock consist of shares issuable upon the exercise of outstanding options and common stock purchase warrants.

As of July 31, 2020

Diluted earnings per share is computed by dividing net earnings by the weighted average number of

shares of common stock and potential shares of common stock outstanding during the period.

Potential shares of common stock

consist of shares issuable upon the exercise of outstanding options and common stock purchase warrants.

As of October 31, 2020,

and 2019, there were 141,830 and 133,214 common stock equivalents outstanding, respectively, that were not included in the calculation

3 unchanged sentences

transactions in which employee services, and, since February 1, 2019, non-employees, are acquired.

Transactions include incurring

Transactions include

liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans

13 unchanged sentences

ASC 820 also establishes a fair

value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

ASC 820 describes three levels of inputs that may be to measure fair value.

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and

8 unchanged sentences

These tiers are defined as follows:

Observable inputs

such as quoted market prices in active markets.

Inputs other than

quoted prices in active markets that are either directly or indirectly observable.

Unobservable inputs

about which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Observable inputs such as quoted market prices in active markets.

Inputs other than quoted prices in active markets that are either directly or indirectly observable.

Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions.

carrying value of the Company’s financial instruments including cash and cash equivalents, accounts receivable, prepaid expenses,

24 unchanged sentences

instruments at fair value as discussed above.

As of July 31, 2020 and January 31, 2020, the Company had a $-0- and $928,774 derivative

liability, respectively.

As of October 31, 2020, and January 31, 2020, the Company had a $-0- and $928,774

derivative liability, respectively.

value estimates are made at a specific point in time, based on relevant market information about the financial statement.

6 unchanged sentences

that might have a material impact on its consolidated financial statements or results of operations.

ACQUISITION OF BUSINESS

On August 31, 2020, the Company

entered into a Purchase Agreement (“Agreement”), with Pocono Coated Products (“PCP”) and Active Intelligence

LLC (“Active Intelligence”), pursuant to which (1) PCP agreed to sell the Company certain of the assets and liabilities

associated with its Transdermal, Topical, Cosmetic, and Nutraceutical business, including all the equipment, intellectual property

and trade secrets, cash balances, receivables, bank accounts and inventory, free and clear of all liens, except for certain lease

obligations (the “PCP Segment”), and (2) Active Intelligence agreed to sell the Company 100% of its membership interest

(collectively the “Assets”).

The net Assets acquired were contributed to Pocono Pharmaceuticals Inc, a newly formed

wholly owned subsidiary of the Company.

The purchase price for the Assets was (i) $6,000,000 paid with the issuance of 608,519

shares in the Company’s common stock of Nutriband at a value of the average price of the previous 90 days at the date of

Closing (the “Shares”), and (ii) a promissory note of the Company in the principal amount of $1,500,000 (the “Note”)

which is due upon the earlier of (a) twelve (12) from issuance, or (b) immediately following a capital raise of no less than $4,000,000

and/or a public offering of no less than $4,000,000.

Michael Myer, the CEO of PCP, has been elected to the Board of Directors

of the Company for period of one year at the annual meeting of shareholders of the Company held in October 2020.

The Agreement provides that it is effective August 31, 2020,

on which date the parties also entered into an escrow agreement (the “Escrow Agreement”), with legal counsel serving

as the escrow agent, providing for holding of the Note, certificate for the shares, and title to the Assets (held in a special

purpose entity controlled by the escrow agent) as collateral security for completion of all closing conditions under the Agreement.

On that date, the parties also entered into a security agreement granting PCP a security interest in all proceeds of the Assets

held as collateral under the Escrow Agreement.

The purpose of the Company entering

into the transaction is to enhance the transdermal products operations of the Company.

The PCP Segment was a portion of an existing

vendor of Nutriband.

Some of the expenses leading up to the acquisition date are related party revenues.

The fair value of consideration

given was allocated to the net tangible assets acquired.

GAAP, both the PCP segment and Active Intelligence were considered

to be businesses and, as such, the transaction was accounted for under the acquisition method of accounting.

Details of the net assets acquired

are as follows:

Common stock issued

Note payable issued

Accounts receivable

Accounts payable and accrued expenses

Deferred revenue

Net assets acquired

Goodwill (provisional)

The following unaudited pro forma condensed financial information

presents the combined results of operations of the Company, the PCP segment and Active Intelligence, as if the acquisition occurred

as part of the beginning of cash period presented.

The unaudited pro forma condensed financial information is not intended to represent

or be indicative of the consolidated results of operations of the Company that would have been reported had the acquisition occurred

at the beginning of the period presented and should not be taken as being representation of the future consolidated results of

operations of the Company.

Nine Months Ended

Loss per common share - basic and diluted

Since the date of acquisition, Pocono had net revenues

of $186,917 and incurred a net profit of $30,416.

PROPERTY AND EQUIPMENT

3 unchanged sentences

Net Property and Equipment

Depreciation expense amounted to $17,558 for the six

months ended July 31, 2020 and 2019, respectively.

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

NOTES PAYABLE AND CONVERTIBLE DEBT

Depreciation expense

amounted to $55,760 and 26,338 for the nine months ended October 31, 2020 and 2019, respectively .

NOTES PAYABLE/CONVERTIBLE DEBT

Notes Payable

2 unchanged sentences

the Paycheck Protection Program (“PPP”) which funds small businesses through federally guaranteed loans.

PPP, companies are eligible for forgiveness of principle and interest if the proceeds are used for eligible payroll costs, rent

PPP, companies are eligible for forgiveness of principal and interest if the proceeds are used for eligible payroll costs, rent

and utility costs.

On June 17, 2020, the Company’s subsidiary, 4P Therapeutics, was advanced $34,870 under the PPP, all of

which was outstanding as of July 31, 2020.

which was outstanding as of October 31, 2020.

The note matures June 17, 2022 and accrues interest at 0.98% per year.

8 unchanged sentences

The loan is interest free and due upon

The loan was outstanding as of July 31, 2020.

Party Payable

The loan was outstanding as of October 31, 2020.

Intelligence, the Company’s newly acquired subsidiary, entered into an agreement with the Carolina Small Business Development

Fund for a line of credit of $160,000 due October 16, 2029 with interest of 5% per year.

The loan requires monthly payments of

principal and interest of $1,697.

As of October 31, 2020, the amount due was $133,549, of which $19,000 is current.

has two finance leases secured by equipment.

The leases mature in 2025 and 2026.

The incremental borrowing rate is 5.0%.

October 31, 2020, the minimum lease payments are as follow:

January 31, 2021

January 31, 2022

January 31, 2023

January 31, 2024

January 31, 2025

January 31, 2026

Related Party Payable

January 31, 2020, the Company owed its chief financial officer and chief operating officer $29,067 from advances made to the Company.

During the six months ended July 31, 2020, the Company’s chief financial officer paid expenses of $3,628 on behalf of the

Company, the Company’s chief executive officer and chief operating officer advanced the Company $5,500 and the officers were

repaid $33,628.

During the nine months ended October 31, 2020, the Company’s chief financial officer paid expenses of $3,628 on behalf of

the Company, the Company’s chief executive officer and chief operating officer advanced the Company $11,567 and the officers

were repaid $44,262.

As of October 31, 2020, the amount the officers were fully repaid.

31, 2020, in connection with the Company’s acquisition of Pocono Products LLC, the Company issued to Pocono Coated Products

LLC a promissory note in the amount of $1,500,000 with interest accruing at an annual rate of 0.17%, due on August 28, 2021 or

immediately following the earlier of a capital raise of no less than $4,000,000 and/or a public offering of no less than $4,000,000.

Pocono Coated Products LLC, a relate party, is a shareholder of the Company.

Convertible Debt

30, 2019, the Company entered into a securities purchase agreement with two investors pursuant to which the Company issued to the

18 unchanged sentences

embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivative and Hedging.

fair of the conversion feature was $128,870 and the fair value of the warrants in connection with the notes

valued at $888,789 and were recorded based on their relative fair values.

A debt discount to the note payables of $270,000 and

an initial derivative expense of $767,650 was recorded.

fair of the conversion feature was $128,870 and the fair value of the warrants in connection with the notes were valued at $888,789

and were recorded based on their relative fair values.

A debt discount to the note payables of $270,000 and an initial derivative

expense of $767,650 was recorded.

debt discount will be amortized over the life of the note.

4 unchanged sentences

As a result of the payment of the

notes, the derivative liability, which was $928,774 at January 31, 2020, was reduced to zero.

notes, the derivative liability, which was $928,774 as of January 31, 2020, was reduced to zero.

The warrants are no longer a derivative

1 unchanged sentence

See Note 6 for further information.

expense for the six months ended July 31, 2020 including the amortization of the debt discount was $205,218.

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

July 31, 2020 and January 31, 2020, intangible assets consisted of intellectual property, customer base and trademarks, net of

amortization, as follows:

expense for the nine months ended October 31, 2020 including the amortization of the debt discount was $205,900.

INTANGIBLE ASSETS

As of October 31, 2020, and

January 31, 2020, intangible assets consisted of intellectual property, customer base and trademarks, net of amortization, as follows:

Customer base

4 unchanged sentences

the Company after completing a valuation and are being amortized over a period of ten years.

Amortization expense for the six

months ended July 31, 2020 and 2019 was $18,535 and $18,535, respectively.

Amortization expense for the nine

months ended October 31, 2020 and 2019 was $27,802 and $27,802, respectively.

Estimated Amortization:

5 unchanged sentences

The fair value of the liabilities will be re-measured at the end of every

reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative

financial instruments.

reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial

table below sets forth a summary in the fair value of the Company’s Level 3 financial liabilities:

2 unchanged sentences

Change in value of embedded conversion option

Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities (Binomial Model) and

for its valuation methodology of the warrants reclassed to equity (Black Scholes Model) based on various assumptions.

issuance, the expected volatility was 158.3%;

The Company uses Level 3

inputs for its valuation methodology for the embedded conversion option liabilities (Binomial Model) and for its valuation methodology

of the warrants reclassed to equity (Black Scholes Model) based on various assumptions.

At issuance, the expected

volatility was 158.3%;

risk-free interest rate of 1.58%;

and expected term of one year.

For the revaluation

January 31, 2020, the expected volatility was 184.4%;

For the revaluation January 31, 2020, the

expected volatility was 184.4%;

risk-free rate of return of 1.43%;

and expected term of nine months.

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

PARTY TRANSACTIONS

former owner of 4P Therapeutics has been a director of the Company since April 2018,

when the Company entered into an agreement to acquire 4P Therapeutics.

In connection

with the terms of the acquisition of 4P Therapeutics, the former owner received $400,000

in cash and 250,000 shares of common stock valued at $1,850,000.

The former owner was

not a director of the Company when the acquisition agreement was signed.

February 19, 2019, the Company granted an executive officer an option to purchased 25,000

shares of the Company’s common stock at an exercise price equal to 75% of the market

price on the date the Company receives notice of exercise.

fair value of the warrant on the date of grant using the Black Scholes model was $252,700 and was expensed during the six months

ended July 31, 2019.

The warrant expired unexercised on May 19, 2019.

of January 31, 2020, the Company owed its chief financial officer and chief operating

officer $29,067 from advances made to the Company.

During the six months ended July 31,

2020, the Company’s chief financial officer paid expenses of $3,628 on behalf of

the Company, the Company’s chief executive officer and chief operating officer

advanced the Company $5,500 and the officers were repaid $33,628.

See also note 4.

RELATED PARTY TRANSACTIONS

a) The former owner of 4P Therapeutics has been a director of the Company since April 2018, when the

Company entered into an agreement to acquire 4P Therapeutics.

In connection with the terms of the acquisition of 4P Therapeutics,

the former owner received $400,000 in cash and 250,000 shares of common stock valued at $1,850,000.

The former owner was not a

director of the Company when the acquisition agreement was signed.

b) On February 19, 2019, the Company granted an executive officer an option to purchased 25,000 shares

of the Company’s common stock at an exercise price equal to 75% of the market price on the date the Company receives notice

The fair value of the warrant

on the date of grant using the Black Scholes model was $252,700 and was expensed during the six months ended July 31, 2019.

warrant expired unexercised on May 19, 2019.

As of January 31, 2020, the Company owed its chief financial officer and chief operating officer $29,067 from advances made to the Company.

During the nine months ended October 31, 2020, the Company’s chief financial officer paid expenses of $3,628 on behalf the Company, the Company’s chief executive officer and chief operating officer advanced the Company $11,567 and the officers were repaid $35,195.

As of October 31, 2020, the Company owed the officers $-0-.

In connection with the acquisition of the PCP Segment (Note 3), some customer collections and payments for certain expenses had not yet transitioned to Pocono Pharmaceuticals bank accounts and therefore a net balance receivable is due from Pocono Coated Products LLC, a related entity.

Pocono Coated Products LLC is a shareholder of Nutriband and is an entity controlled by the family of a Nutriband director.

This transition was completed as of October 2020.

The transactions included revenue of $121,563, purchase of materials of $70,230, expenses paid of $9,324 and finance payments of $3,307.

As of October 31, 2020, Pocono Coated Products LLC owed the Company a net amount of $39,777, comprised of $69,855 of trade accounts receivable and $30,078 in Accounts payable and Accrued expenses on the balance sheet.

The PCP Segment was a former vendor of Nutriband and prior to September 1, 2020, these expenses have not been eliminated as intercompany expenses, like they are after the acquisition date.

These expenses amounted to $173,310.

STOCKHOLDERS’

January 15, 2016, the board of directors of the Company approved a certificate of amendment to the articles of incorporation and

changed the authorized capital stock of the Company to include and authorize 10,000,000 shares of Preferred Stock, par value $0.001

May 24, 2019, the board of directors created a series of preferred stock consisting of 2,500,000 shares designated as the Series

A Convertible Preferred Stock (“Series A Preferred Stock”).

On June 20, 2019, the Series A preferred Stock was terminated

and the 2,500,000 shares were restored to the status of authorized but unissued shares of Preferred Stock, without designation

as to series, until such stock is once more designated as part of a particular series by the board of directors.

June 25, 2019, the Company effected a one-for four reverse split, pursuant to which each share of common stock became converted

into 0.25 shares of common stock, and the Company decreased its authorized common stock from 100,000,000 to 25,000,000 shares.

January 27, 2020, the Company amended its articles of incorporation to increase its authorized common shares from 25,000,000 shares

to 250,000,000 shares.

March 22, 2020, the Company issued in a private placement 46,828 units at a price of $11 per unit.

Each unit consisted of one

share of common stock and a warrant to purchase one share of common stock at an exercise price of $14 per share.

expire April 30, 2023.

The Company issued a total of 46,828 shares of common stock and warrants to purchase 46,828 shares of common

Preferred Stock

On January 15, 2016, the board of directors of the

Company approved a certificate of amendment to the articles of incorporation and changed the authorized capital stock of the Company

to include and authorize 10,000,000 shares of Preferred Stock, par value $0.001 per share.

On May 24, 2019, the board of directors created a

series of preferred stock consisting of 2,500,000 shares designated as the Series A Convertible Preferred Stock (“Series

A Preferred Stock”).

On June 20, 2019, the Series A preferred Stock was terminated, and the 2,500,000 shares were restored

to the status of authorized but unissued shares of Preferred Stock, without designation as to series, until such stock is once

more designated as part of a particular series by the board of directors.

On June 25, 2019, the Company effected a one-for four

reverse split, pursuant to which each share of common stock became converted into 0.25 shares of common stock, and the Company

decreased its authorized common stock from 100,000,000 to 25,000,000 shares.

On January 27, 2020, the Company amended its articles

of incorporation to increase its authorized common shares from 25,000,000 shares to 250,000,000 shares.

On March 22, 2020, the Company issued in a private

placement 46,828 units at a price of $11 per unit.

Each unit consisted of one share of common stock and a warrant to purchase one

share of common stock at an exercise price of $14 per share.

The warrants expire April 30, 2023.

The Company issued a total of

46,828 shares of common stock and warrants to purchase 46,828 shares of common stock.

The Company received proceeds of $515,108.

March 2020, a minority shareholder who had previously made loans of $215,000, made an additional loan to the Company in the amount

of $60,000, increasing the loans to shareholder to $275,000.

On March 27, 2020, the Company issued 25,000 shares of common stock

upon reaching a settlement with the noteholder to convert the notes in the principal amount of $275,000.

The transaction resulted

in a loss on extinguishment of $12,500.

June 30, 2020, the Company issued 5,000 shares to a consultant for services rendered to the Company.

The fair value of the common

stock at the date of issuance was $50,000, of which $38,000 is included in selling and general administrative expense for the

six months ended July 31, 2020 and $12,000 is included in prepaid expenses.

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

following table summarizes the changes in warrants outstanding and the related price of the shares of the Company’s common

stock issued to non-employees of the Company.

In March 2020, a minority shareholder who had previously

made loans of $215,000, made an additional loan to the Company in the amount of $60,000, increasing the loans to shareholder to

On March 27, 2020, the Company issued 25,000 shares of common stock upon reaching a settlement with the noteholder to

convert the notes in the principal amount of $275,000.

The transaction resulted in a loss on extinguishment of $12,500.

On June 30, 2020, the Company issued 5,000 shares to a consultant

for services rendered to the Company.

The fair value of the common stock at the date of issuance was $50,000, which is included

in selling and general administrative expense for the nine months ended October 31, 2020.

On August 31, 2020, the Company acquired the membership

interests in Pocono Coated Products LLC and issued 608,519 shares of its common stock, valued at $6,000,000, and issued a promissory

note in the amount of $1,500,000.

See Note 3 for further information.

The following table summarizes

the changes in warrants outstanding and the related price of the shares of the Company’s common stock issued to non-employees

of the Company.

Outstanding, January 31, 2020

Expired/Cancelled

Outstanding-period ending July 31, 2020

Exercisable - period ending July 31, 2020

result of the terms of a completed private placement, the warrants to purchase 50,000 shares at the lesser of (i) $20.90 or, (ii)

if the Company completes a private offering of its common stock, 110% of the initial public offering price of the Common Stock

in the public offering, became a warrant to purchase 95,000 shares at $11 per share, subject to adjustment pursuant to the antidilution

provisions of the warrant.

The Company recorded a derivative liability for the warrants in the amount of $906,678 and reclassed

the derivative liability to additional paid-in capital as of July 31, 2020.

connection with a private placement in March 2020, the Company issued warrants to purchase 46,828 shares of its common stock at

$14 per share.

Outstanding-period ending October 31, 2020

Exercisable - period ending October 31, 2020

As result of the terms of a completed private placement,

the warrants to purchase 50,000 shares at the lesser of (i) $20.90 or, (ii) if the Company completes a private offering of its

common stock, 110% of the initial public offering price of the Common Stock in the public offering, became a warrant to purchase

95,000 shares at $11 per share, subject to adjustment pursuant to the antidilution provisions of the warrant.

The Company recorded

a derivative liability for the warrants in the amount of $906,678 and reclassed the derivative liability to additional paid-in

capital as of October 31, 2020.

In connection with a private placement in March 2020,

the Company issued warrants to purchase 46,828 shares of its common stock at $14 per share.

The warrants expire April 30, 2023.

(See Note 9).

following table summarizes additional information relating to the warrants outstanding at July 31, 2020:

Range of Exercise

Remaining Contractual

Exercise Price for Shares

following table summarizes additional information relating to the warrants outstanding as of October 31, 2020:

Range of Exercise Prices

Number Outstanding

Remaining Contractual Life(Years)

Exercise Price for Shares Outstanding

Number Exercisable

Exercise Price for Shares Exercisable

Intrinsic Value

CONTINGENCIES

July 27, 2018, the Company commenced an action in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida,

against Advanced Health Brands, Inc., Raymond Kalmar, Paul Murphy, Michelle Polly-Murphy, Laura Fillman and John Baker, together

with a Motion for Temporary Injunction Without Notice and a Motion for Prejudgment Writ of Replevin arising from the Company’s

decision to seek to rescind for misrepresentation the agreement by which the Company acquired advanced Health Brands, Inc.

1,250,000 shares of common stock valued at $2,500,000 and seek return of the shares.

On August 2, 2018, the court entered a Temporary

Injunction Without Notice and an Order to Show Cause against the defendants.

Defendants Kalmar, Murphy, Polly-Murphy, and Baker

filed a Motion to Dismiss the Company’s Verified Complaint, Motion to Dissolve Temporary Injunction Without Notice and Response

to Order to Show Cause, and Motion to Compel Arbitration.

On January 4, 2019, the court dismissed the Company’s complaint

with prejudice, and directed the defendants to assign the Company within 30 days, the six patents never duly transferred to the

On February 1, 2019, the Company appealed the court’s order.

Pursuant to a settlement agreement with one of the

defendants, that defendant returned the 50,000 shares which had been issued to her, and the shares were cancelled as of January

On June 7, 2019, the individual defendants (other than the defendant whom the Company has a settlement agreement), filed

a motion for sanctions and civil contempt against us, which generally claimed that we failed to comply with the Court’s

January 4, 2019 order by refusing to issue the Ruling 144 letters that would allow the defendants to transfer their shares of

common stock.

On October 29, 2019, the Court denied the defendants motion.

On March 20, 2020, the Florida district court of appeal

reversed the lower court ruling in the Florida state court action that dismissed our complaint with prejudice, and gave us leave

to file an amended complaint

NUTRIBAND INC.

AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial

as of and for the Six Months Ended July

31, 2020 and 2019

August 22, 2018, four of the defendants in the Florida action described in the previous paragraph filed a complaint against the

Company in the Franklin County, Ohio Court of Common Pleas seeking a declaratory judgment permitting them to sell the shares of

common stock they received pursuant to the acquisition agreement.

The parties have agreed to a stay pending the outcome of the

Florida litigation.

April 29, 2019, the Company filed a securities fraud action in the U.S.

District Court for the Eastern District of New York against

Raymond Kalmar, Paul Murphy, Michelle Polly-Murphy, Advanced Health Brands and TD Therapeutic, Inc.

In the complaint the Company

alleges that in 2017, the defendants fraudulently and deceitfully obtained 1,250,000 shares of common stock by orchestrating a

months-long scheme to defraud the Company.

The Company is seeking the return of the shares of common stock and monetary damages

resulting from the defendants’

fraudulent conduct.

The defendants filed a motion to dismiss the complaint on August 23,

2019, and on September 13, 2019 the Company filed its response.

On July 20, 2020, the Court denied the defendant’s motion

to dismiss the complaint, and the parties have recently commenced the discovery phase of the litigation.

No trial date has been

scheduled by the Court.

Company has employment agreements with its chief executive officer and chief financial officer dated April 23, 2019 pursuant to

which we agree to employ them as chief executive officer and chief financial officer, respectively.

The agreement also provides

that the Company will include each of them as our nominee for director.

The agreements have a term ending on January 31, 2024,

and continuing on a year-to-year basis thereafter unless terminated by either party on not less than 30 days’

prior to the expiration of the initial term or any one-year extension.

Pursuant to the employment agreements at January 31, 2020,

the chief executive officer is receiving compensation at an annual rate of $42,000, and chief financial officer is not currently

receiving any compensation.

Commencing with the month in which the Company has raised at least $2,500,000 from public or private

financing of its equity securities, they will each receive salary at the annual rate of $170,000.

Company has an employment agreement May 16, 2018 with its president pursuant to which the Company employed him as president for

a term with no expiration date at annual salary of $60,000, which may paid in stock or cash.

The president serves on a part-time

Company has an employment agreement dated February 19, 2019 with its chief scientific officer pursuant to which the Company agrees

to employ him as chief scientific officer for annual compensation of $60,000, payable in cash or stock, as the Company may elect.

The agreement has a term ending on January 31, 2021 and continues thereafter on a quarter-to-quarter basis unless terminated by

either party on 30 days’

On July 27, 2018, the Company

commenced an action in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida, against Advanced Health

Brands, Inc., Raymond Kalmar, Paul Murphy, Michelle Polly-Murphy, Laura Fillman and John Baker, together with a Motion for Temporary

Injunction Without Notice and a Motion for Prejudgment Writ of Replevin arising from the Company’s decision to seek to rescind

for misrepresentation the agreement by which the Company acquired advanced Health Brands, Inc.

for 1,250,000 shares of common stock

valued at $2,500,000 and seek return of the shares.

On August 2, 2018, the court entered a Temporary Injunction Without Notice

and an Order to Show Cause against the defendants.

Defendants Kalmar, Murphy, Polly-Murphy, and Baker filed a Motion to Dismiss

the Company’s Verified Complaint, Motion to Dissolve Temporary Injunction Without Notice and Response to Order to Show Cause,

and Motion to Compel Arbitration.

On January 4, 2019, the court dismissed the Company’s complaint with prejudice, and directed

the defendants to assign the Company within 30 days, the six patents never duly transferred to the Company.

On February 1, 2019,

the Company appealed the court’s order.

Pursuant to a settlement agreement with one of the defendants, that defendant returned

the 50,000 shares which had been issued to her, and the shares were cancelled as of January 31, 2019.

On June 7, 2019, the individual

defendants (other than the defendant whom the Company has a settlement agreement), filed a motion for sanctions and civil contempt

against us, which generally claimed that we failed to comply with the Court’s January 4, 2019 order by refusing to issue

the Ruling 144 letters that would allow the defendants to transfer their shares of common stock.

On October 29, 2019, the Court

denied the Defendants motion.

On March 20, 2020, the Florida district court of appeal reversed the lower court ruling in the Florida

state court action that dismissed our complaint, with prejudice, and gave us leave to file an amended complaint.

On July 7, 2020,

Defendants filed Notice for Trial, requesting the court to set a trial date.

The Company and defendants have served their first

set of interrogatories on each other and have filed answers and responses to each other’s first set of interrogatories.

On August 22, 2018, four of the

defendants in the Florida action described in the previous paragraph filed a complaint against the Company in the Franklin County,

Ohio Court of Common Pleas seeking a declaratory judgment permitting them to sell the shares of common stock they received pursuant

to the acquisition agreement.

The parties have agreed to a stay pending the outcome of the Florida litigation.

On April 29, 2019, the Company

filed a securities fraud action in the U.S.

District Court for the Eastern District of New York against Raymond Kalmar, Paul Murphy,

Michelle Polly-Murphy, Advanced Health Brands and TD Therapeutic, Inc.

In the complaint the Company alleges that in 2017, the defendants

fraudulently and deceitfully obtained 1,250,000 shares of common stock by orchestrating a months-long scheme to defraud the Company.

The Company is seeking the return of the shares of common stock and monetary damages resulting from the defendants’

The defendants filed a motion to dismiss the complaint on August 23, 2019, and on September 13, 2019 the Company filed

its response.

On July 20, 2020, the Court denied the defendant’s motion to dismiss the complaint, and the parties have recently

commenced the discovery phase of the litigation.

No trial date has been scheduled by the Court.

The Company has employment agreements

with its chief executive officer and chief financial officer dated April 23, 2019 pursuant to which we agree to employ them as

chief executive officer and chief financial officer, respectively.

The agreement also provides that the Company will include each

of them as our nominee for director.

The agreements have a term ending on January 31, 2024 and continuing on a year-to-year basis

thereafter unless terminated by either party on not less than 30 days’

notice given prior to the expiration of the initial

term or one-year extension.

Pursuant to the employment agreements at January 31, 2020, the chief executive officer is receiving

compensation at an annual rate of $42,000, and chief financial officer is not currently receiving any compensation.

with the month in which the Company has raised at least $2,500,000 from public or private financing of its equity securities, they

will each receive salary at the annual rate of $170,000.

The Company has an employment

agreement May 16, 2018 with its president pursuant to which the Company employed him as president for a term with no expiration

date at annual salary of $60,000, which may be paid in stock or cash.

The president serves on a part-time basis.

The Company has an employment

agreement dated February 19, 2019 with its chief scientific officer pursuant to which the Company agrees to employ him as chief

scientific officer for annual compensation of $60,000, payable in cash or stock, as the Company may elect.

The agreement has a

term ending on January 31, 2021 and continues thereafter on a quarter-to-quarter basis unless terminated by either party on 30

The chief scientific officer serves on a part-time basis.

August 31, 2020, the Company entered into a Purchase Agreement (“Agreement”), with Pocono Coated Products (“PCP”),

pursuant to which PCP agreed to sell the Company all of the assets associated with its Transdermal, Topical, Cosmetic, and Nutraceutical

business (the “Business”), including:

(1) all the equipment, intellectual property and trade secrets, cash balances,

receivables, bank accounts and inventory, free and clear of all liens, except for certain lease obligations, and (2), a 100% membership

interest in PCP’s subsidiary Active Intelligence, LLC ( collectively the “Assets”).

The purchase price for the

Assets is (i) $6,000,000 paid with the issuance of 608,519 shares in the Company’s common stock at a value of the average

price of the previous 90 days at the date of Closing (the “Shares”), and (ii) a promissory note of the Company in

the principal amount of $1,500,000 which is due upon the earlier of (a) twelve (12) months from issuance, or (b) immediately following

a capital raise of no less than $4,000,000 and/or a public offering of no less than $4,000,000.

The parties to the Agreement waived

the condition precedent that an audit of PCP be completed prior to the closing under the Agreement, and the audit will be commenced

Michael Myer, the CEO of PCP, will be nominated for election to the Board of Directors of the Company at the annual

meeting of shareholders of the Company to be held in October 2020.

Agreement provides that it is effective August 31, 2020, on which date the parties also entered into an escrow agreement (

the “Escrow Agreement”), with legal counsel serving as the escrow agent, providing for holding of the Note,

certificate for the shares, and title to the Assets ( held in a special purpose subsidiary) as collateral security for

completion of all closing conditions under the Agreement.

On that date, the parties also entered into a security agreement

granting PCP a security interest in all proceeds of the Assets held as collateral under the Escrow Agreement.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

39 unchanged sentences

and its subsidiaries unless the context indicates otherwise.

Unless the context indicates otherwise, references to 4P Therapeutics relate to the operations of 4P Therapeutics LLC prior to

our acquisition of 4P Therapeutics on August 1, 2018.

Unless the context

indicates otherwise, references to 4P Therapeutics relate to the operations of 4P Therapeutics LLC prior to our acquisition of

4P Therapeutics on August 1, 2018 and references to Pocono and Active Intelligence to operations of those companies prior to our

acquisition of the PCP segment on August 31, 2020.

We are primarily engaged in the development

9 unchanged sentences

drugs or biologics that are typically delivered by injection.

Our marketing effort with respect to our

consumer transdermal products is presently limited to our distribution agreement dated April 13, 2018 with EMI-Korea (Best Choice),

Inc., whom we refer to as Best Choice, for marketing in certain regions in Asia.

Pursuant to an exclusive distribution agreement,

we granted Best Choice exclusive distribution rights for all of our transdermal consumer products in South Korea, Taiwan (the Republic

of China), the People’s Republic of China and South Asia.

Best Choice is presently planning to market three of our consumer

products only in South Korea, and is responsible for complying with all applicable regulations.

The ability of Best Choice to market

products at the volume we anticipated when we signed the contract with Best Choice was affected be a number of factors, including

its inability to obtain necessary regulatory approval, which, as of the date of this annual report, has not been obtained.

Choice has advised us that it is working with the South Korean Ministry of Food and Drug Safety (“MFDS”) to determine

a classification for our products, which is necessary before Best Choice can obtain approval from the MFDS to market our products

to consumers.

Our supplier had manufacturing problems in the United States because it ran into supply problems for certain foil

components used in the transdermal patches due to the new tariffs on Chinese imports into the United States, design changes in

the pouch, and quality problems with material in the pouch, all of which resulted in manufacturing delays in meeting the first

order for Best Choice.

We solved the problem by delivering the patch in bulk and unpackaged, and Best Choice has the assembly of

the patch completed in South Korea.

Best Choice’s purchases to date were for preliminary marketing activities.

has advised us that its preliminary marketing activities consisted of purchasing inventory in anticipation of obtaining regulatory

approval, meeting with potential distributors and trying to build brand awareness through various marketing approaches most notably

on social media.

Until Best Choice has obtained the necessary regulatory approval, we do not anticipate generating any significant

revenue from Best Choice.

Our agreement with Best Choice agreement had an initial term which expired on April 30, 2019 and was

extended to July 6, 2021.

The agreement provides for an automatic renewal for three years and for five-year periods thereafter

if certain minimum purchases are made.

As of the date of this report, the minimum purchases for the current contract year have

not been met.

We have agreed to extend with Best Choice

regardless of the minimum purchases not being met for this year as much of the reason the minimum purchases were not reached was

due to Best Choice needing additional time to confirm that any planned sales were fully in line with regulations in Korea, manufacturing

process restructuring and the effects of the Coronavirus outbreak.

Year 1 minimum sales requirements have been restarted as of

April 30, 2020 and the coronavirus impact on Best Choice will be monitored to decide if an allowance will be made again for the

next 12-month minimums.

The Company has no current plans to market

our own consumer products.

Following the acquisition of Pocono our focus has turned to contract manufacturing primarily in the

Asia region with our partner Best Choice Inc.

Best Choice Inc.

currently works with a number of brands to whom we now provide consulting

for and contract manufacturing services.

The terms of our distribution agreement with Best Choice dated April 13, 2018 remain in

Year 1 minimum sales requirements have

been restarted as of April 30, 2020 and the coronavirus impact on Best Choice will be monitored to decide if an allowance will

be made again for the next 12-month minimums.

With our acquisition of 4P Therapeutics

on August 1, 2018, our focus changed, and we are seeking to develop and seek FDA approval on a number of transdermal pharmaceutical

on August 1, 2018, our focus changed, and we plan to develop, and seek FDA approval on, a number of transdermal pharmaceutical

products under development by 4P Therapeutics.

As a result of the acquisition of 4P Therapeutics, we have a pipeline of potential

4P Therapeutics has not generated any revenue

from any of its products under development.

Rather, prior to our acquisition, 4P Therapeutics generated revenue to provide cash

for its operations through contract research and development and related services for a small number of clients in the life sciences

field on an as-needed basis.

We are, for the near term, continuing this activity, although we do not anticipate that it will generate

significant revenues or gross margin.

Currently, there are no long-term contractual obligations for us, and either party can terminate

the engagement at any time.

During the six months ended July 31, 2020, we experienced a significant decline in revenue from 4P

Therapeutics’

4P Therapeutics has not generated any

revenue from any of its products under development.

Rather, prior to our acquisition, 4P Therapeutics generated revenue to provide

cash for its operations through contract research and development and related services for a small number of clients in the life

sciences field on an as-needed basis.

We are, for the near term, continuing this activity, although we do not anticipate that

it will generate significant revenues or gross margin.

Currently, there are no long-term contractual obligations for us, and either

party can terminate the engagement at any time.

During the nine months ended October 31, 2020, we experienced a significant decline

in revenue from 4P Therapeutics’

largest customer, as a result of which our revenue from 4P Therapeutics was $127,625.

4P Therapeutics continues

to operate and is currently working on a research agreement.

4P expects to execute a new lease in 2020 and to continue working

on contracts with former customers.

Our revenue from our South Korean distributor for the six months ended July 31, 2020 was $120,770.

Our cost of revenue for the six months ended July 31, 2020 was $99,735.

The Company expects the revenue from the South Korean distributor

to increase substantially during the balance of the Company’s fiscal year.

Therapeutics continues to operate and is currently working on a research agreement.

4P expects to execute a new lease in 2020

and to continue working on contracts with former customers.

Our revenue from our South Korean distributor for the nine months

ended October 31, 2020 was $357,484.

Our cost of revenue for the nine months ended October 31, 2020 was $249,725.

expects the revenue from the South Korean distributor to increase substantially during the balance of the Company’s fiscal

The Company also had revenue of $110,502 from the sale of transdermal patches from Pocono.

With the change in our focus, our capital

18 unchanged sentences

to complete the development of our lead product.

Effective August 31, 2020, the Company entered into a Purchase

Agreement (“Agreement”) with Pocono Coated Products (“PCP”), the manufacturer of the Company’s transdermal

products, pursuant to which PCP agreed to sell the Company the all of the assets associated with its Transdermal, Topical, Cosmetic

and Nutraceutical business (the “Business”), including all related equipment, intellectual property and trade secrets,

cash balances, receivables, bank accounts and inventory.

The purchase price for the assets of the Business is (i) $6,000,000 paid

in 608,519 shares of the Company’s common stock, based on the average price for the Company’s common stock for the

previous 90 days as of the date of Closing (the “Shares”);

(ii) a promissory note of the Company in the principal amount

of $1,500,000, which is due upon the earlier of (a) twelve (12) months from issuance, or (b) immediately following a capital raise

of no less than $4,000,000 and/or a public offering of no less than $4,000,000.

The parties to the Agreement waived the condition precedent

that an audit of PCP be completed prior to the closing under the Agreement, and the audit will be commenced shortly.

Michael Myers,

the CEO of PCP, will be nominated for election to the Board of Directors of the Company at the annual meeting of shareholders of

the Company to be held in October 2020.

The Agreement provides that it is effective August 31, 2020,

on which date the parties also entered into an escrow agreement (the “Escrow Agreement”), with legal counsel serving

as the escrow agent, providing for holding of the Note, certificate for the Shares, and the title to the Assets (held in a special

purpose acquisition subsidiary) as collateral security for completion of all closing conditions under the Agreement.

On that date,

the parties also entered into a security agreement granting PCP a security interests in all proceeds of the Assets held as collateral

under the Escrow Agreement.

On August 25, 2020, the Company formed

Pocono Pharmaceuticals Inc.(“Pocono”), a wholly owned subsidiary of the Company.

Effective August 31, 2020, the Company

entered into a Purchase Agreement (“Agreement”) with Pocono Coated Products (“PCP”), the manufacturer of

the Company’s transdermal products, pursuant to which PCP agreed to sell the Company certain of the assets and liabilities

associated with its Transdermal, Topical, Cosmetic and Nutraceutical business (the “Business”), including all related

equipment, intellectual property and trade secrets, cash balances, receivables, bank accounts and inventory.

The net assets were

contributed to Pocono.

Included in the transaction, the Company acquired 100% of the membership interests of Active Intelligence

LLC (“Active Intelligence”).

The purchase price for the assets of the Business is (i) $6,000,000 paid in 608,519 shares

of the Company’s common stock, based on the average price for the Company’s common stock for the previous 90 days as

of the date of Closing (the “Shares”);

(ii) a promissory note of the Company in the principal amount of $1,500,000,

which is due upon the earlier of (a) twelve (12) months from issuance, or (b) immediately following a capital raise of no less

than $4,000,000 and/or a public offering of no less than $4,000,000.

Michael Myers, the CEO of PCP, was elected

to the Board of Directors of the Company at the annual meeting of shareholders of the Company held November 12, 2020.

The Agreement provides that it is effective

August 31, 2020, on which date the parties also entered into an escrow agreement (the “Escrow Agreement”), with legal

counsel serving as the escrow agent, providing for holding of the Note, certificate for the Shares, and the title to the Assets

(held in a special purpose acquisition subsidiary) as collateral security for completion of all closing conditions under the Agreement.

On that date, the parties also entered into a security agreement granting PCP a security interests in all proceeds of the Assets

held as collateral under the Escrow Agreement.

Results of Operations

Three Months Ended July 31, 2020 and

For the three months ended July 31, 2020,

we generated revenue of $84,450 and our costs of revenues were $116,937, resulting in a negative gross profit of $32,487.

three months ended July 31, 2019, we generated revenue of $74,913 and our cost of revenue was $117,959 resulting in negative gross

profit of $43,046.

We commenced generating revenues during the third quarter of 2018.

Our revenue for the three months ended 2020

was derived from two sources –

a continuation of research and development contracts of the type that 4P Therapeutics performed

prior to our acquisition, which accounted for $ 25,000, and sales of our consumer transdermal product to our South Korean distributor,

which accounted for $59,450, which our distributor purchased for its preliminary marketing efforts since the product has not obtained

regulatory approval for retail sales in South Korea.

We anticipate that all of our revenue for the quarter ended October 31, 2020

will be generated from research and development contracts and sales of our consumer transdermal products.

Our cost of revenue was

$67,889 for our research and development contracts and $49,050 for the consumer patches.

Since we do not have the funds for the

development of our lead product, the 4P Therapeutics fixed costs are allocated to the contract services that we perform for clients.

The Company moved from their 4P facilities, and many of the prior costs relating to the facility were not incurred.

However, this

resulted in our operations continuing to show a negative gross profit for the three months ended July 31, 2020.

For the three months ended July 31, 2020

our selling, general and administrative expenses were $193,331, primarily legal, accounting and payroll expense, compared to $406,566

in the three months ended July 31, 2019.

The decrease from 2019 is primarily due to a decrease in payroll related expenses and

non-cash compensation and decreases in legal fees during the three months.

As a result of the foregoing, we sustained

a net loss of $225,869, or $(0.04) per share (basic and diluted) for the three months ended July 31, 2020, compared with a loss

of $450,565 or $(0.08) per share (basic and diluted) for the three months ended July 31, 2019.

Six Months Ended July 31, 2020 and 2019

For the six months ended July 31, 2020,

we generated revenue of $203,814 and our costs of revenues were $191,876, resulting in gross profit of $11,938.

For the six months

ended July 31, 2019, we generated revenue of $268,503 and our cost of revenue was $316,753 resulting in negative gross profit of

We commenced generating revenues during the third quarter of 2018.

Our revenue for the six months ended July 31, 2020

was derived from two sources –

(1) a continuation of research and development contracts of the type that 4P Therapeutics

performed prior to our acquisition, which accounted for $ 83,044, and (2) sales of our consumer transdermal product to our South

Korean distributor, which accounted for $120,770, which our distributor purchased for its preliminary marketing efforts since the

product has not obtained regulatory approval for retail sales in South Korea.

We anticipate that all of our revenue for the quarter

ended October 31, 2020 will be generated from research and development contracts and sales of our consumer transdermal products.

Three Months Ended October 31, 2020

For the three months ended October 31, 2020, we generated revenue

of $391,787 and our costs of revenues were $228,772, resulting in a gross profit of $163,015.

For the three months ended October

31, 2019, we generated revenue of $82,567 and our cost of revenue was $106,126 resulting in negative gross profit of $23,359.

commenced generating revenues during the third quarter of 2018.

Our revenue for the three months ended 2020 was derived from three

sources –

a continuation of research and development contracts of the type that 4P Therapeutics performed prior to our acquisition,

which accounted for $ 44,581, sales of our consumer transdermal product to our South Korean distributor, which accounted for $236,714,

which our distributor purchased for its preliminary marketing efforts since the product has not obtained regulatory approval for

retail sales in South Korea, and sales of transdermal from our recent acquisition of $110,502.

We anticipate that all of our revenue

for the quarter ended January 31, 2021 will be generated from research and development contracts and sales of our consumer transdermal

Our cost of revenue was $26,491 for our research and development contracts and $202,279 for the consumer patches.

Since we do not

have the funds for the development of our lead product, the 4P Therapeutics fixed costs are allocated to the contract services

that we perform for clients.

The Company moved from their 4P facilities, and many of the prior costs relating to the facility were

not incurred.

For the six months ended July 31, 2020

our selling, general and administrative expenses were $385,248, primarily legal, accounting and payroll expense, compared to $974,523

in the six months ended July 31, 2019.

The decrease from 2019 is primarily due to a decrease in payroll related expenses and non-cash

compensation and decreases in legal fees during the six months.

Additionally, stock-based compensation was $38,000 for the six

months ended July 31, 2020 and $252,700 for the six months ended July 31, 2019.

During the six months ended July 31, 2020,

we incurred gain on change in fair value of derivatives of $22,096 in connection with our October 2019 financing in which we raised

gross proceeds of $250,000 and net proceeds of approximately $203,000 from the sale of convertible notes and warrants.

derivative expense during the six months ended July 31, 2019.

We incurred interest expense of $205,218

for the six months ended July 31, 2020 including the amortization of debt discounts of $202,500.

We incurred interest expense of

$1,145 in the six months ended July 31, 2019.

The Company also incurred a loss on extinguishment of debt of $12,500 in connection

with conversion of debt to equity and a $69,131 early prepayment fee on the repayment of convertible debentures during the six

months ended July 31, 2020.

As a result of the foregoing, we sustained

a net loss of $638,063, or $(0.12) per share (basic and diluted) for the six months ended July 31, 2020, compared with a loss of

$1,023,918, or $(0.19) per share (basic and diluted) for the six months ended July 31, 2019.

we do not have the funds for the development of our lead product, the 4P Therapeutics fixed costs are allocated to the contract

services that we perform for clients.

The Company moved from their 4P facilities, and many of the prior costs relating to the facility

were not incurred.

However, this resulted in our operations continuing to show a negative gross profit for the three months ended

October 31, 2020.

For the three months ended October 31, 2020 our selling, general

and administrative expenses were $203,976, primarily legal, accounting and payroll expense, compared to $307,015 in the three months

ended October 31, 2019.

The decrease from 2019 is primarily due to a decrease in payroll related expenses and non-cash compensation

and decreases in legal fees during the three months.

As a result of the foregoing, we sustained a net loss of $42,569,

or $(0.01) per share (basic and diluted) for the three months ended October 31, 2020, compared with a loss of $753,274 or $(0.14)

per share (basic and diluted) for the three months ended October 31, 2019.

Nine Months Ended October 31, 2020 and 2019

For the nine months ended October 31, 2020, we generated revenue

of $595,611 and our costs of revenues were $420,648, resulting in gross profit of $174,963.

For the nine months ended October 31,

2019, we generated revenue of $351,070 and our cost of revenue was $422,879 resulting in negative gross profit of $71,809.

generating revenues during the third quarter of 2018.

Our revenue for the nine months ended October 31, 2020 was derived from three

sources –

(1) a continuation of research and development contracts of the type that 4P Therapeutics performed prior to our

acquisition, which accounted for $ 127,625, (2) sales of our consumer transdermal product to our South Korean distributor, which

accounted for $357,484 which our distributor purchased for its preliminary marketing efforts since the product has not obtained

regulatory approval for retail sales in South Korea, and (3) sales from our recent acquisition of transdermal patches, which accounted

for $110,502.

We anticipate that all of our revenue for the quarter ended October 31, 2020 will be generated from research and

development contracts and sales of our consumer transdermal products.

Our cost of revenue was $118,634 for our research and development

contracts and $302,014 for the consumer patches.

Since we do not have the funds for the development of our lead product, the 4P

Therapeutics fixed costs are allocated to the contract services that we perform for clients.

The Company moved from their 4P facilities,

and many of the prior costs relating to the facility were not incurred.

For the nine months ended October 31, 2020 our selling, general

and administrative expenses were $589,224, primarily legal, accounting and payroll expense, compared to $1,281,538 in the nine

months ended October 31, 2019.

The decrease from 2019 is primarily due to a decrease in payroll related expenses and non-cash compensation

and decreases in legal fees during the nine months.

Additionally, stock-based compensation was $38,000 for the nine months ended

October 31, 2020 and $252,700 for the nine months ended July 31, 2019.

During the nine months ended October 31, 2020, we incurred gain

on change in fair value of derivatives of $22,096 in connection with our October 2019 financing in which we raised gross proceeds

of $250,000 and net proceeds of approximately $203,000 from the sale of convertible notes and warrants.

We had no derivative expense

during the nine months ended July 31, 2019.

We incurred interest expense of $206,836 for the nine months

ended October 31, 2020 including the amortization of debt discounts of $202,500.

We incurred interest expense of $1,559 in the

nine months ended October 31, 2019.

The Company also incurred a loss on extinguishment of debt of $12,500 in connection with conversion

of debt to equity and a $69,131 early prepayment fee on the repayment of convertible debentures during the nine months ended October

As a result of the foregoing, we sustained a net loss of $680,632,

or $(0.12) per share (basic and diluted) for the nine months ended October 31, 2020, compared with a loss of $1,777,192, or $(0.33)

per share (basic and diluted) for the nine months ended October 31, 2019.

Liquidity and Capital Resources

As of July 31, 2020, we had $39,248 in

cash and cash equivalents and a working capital deficiency of $774,345, as compared with cash and cash equivalents of $10,181 and

working capital deficiency of $1,979,141 at January 31, 2020.

In March 2020, the Company repaid the convertible debt that the Company

received in October 2019.

As of October 31, 2020, we had $193,392 in cash and cash equivalents

and a working capital deficiency of $2,230,240, as compared with cash and cash equivalents of $10,181 and working capital deficiency

of $1,979,141 as of January 31, 2020.

In March 2020, the Company repaid the convertible debt that the Company received in October

The total payments, including a prepayment fee of $69,131 and accrued interest, was $345,565.

2019, the Company completed a private placement and received proceeds of $515,108.

For the six months ended July 31, 2020,

we used cash of $313,562 in our operations.

The principal adjustments to our net loss of $638,063 were amortization of debt discount

of $202,500, depreciation and amortization of $36,094, and loss on extinguishment of debt and early prepayment fee on convertible

debentures of $81,631 offset by an decrease in accounts payable of $38,462 and a gain on change in fair value of derivative of

For the six months ended July 31, 2020,

we had cash flows of $342,719 from financing activities, primarily $515,108 from gross proceeds from the sale of Units consisting

of shares of common stock and warrants to purchase common stock offset by the repayment of convertible debt, including an early

prepayment fee, of $339,131.

In May 2019, the Company completed

a private placement and received proceeds of $515,108.

The increase in our working capital deficiency is primarily due to the issuance

of a $1,500,000 note due in August 2021 in connection with the Company’s recent acquisition.

For the nine months ended October 31, 2020, we used cash of

$213,909 in our operations.

The principal adjustments to our net loss of $680,632 were amortization of debt discount of $202,500,

depreciation and amortization of $83,562, and loss on extinguishment of debt and early prepayment fee on convertible debentures

of $81,631 offset by a gain on change in fair value of derivative of $22,096.

For the nine months ended October 31, 2020, we had cash flows

of $330,126 from financing activities, primarily $515,108 from gross proceeds from the sale of Units consisting of shares of common

stock and warrants to purchase common stock offset by the repayment of convertible debt, including an early prepayment fee, of

The Company also received a PPP loan of $34,870 and a minority shareholder advanced the Company $160,000.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements

that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We have no off-balance sheet arrangements that have or are reasonably

likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses,

results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Going Concern

The Company’s consolidated financial

statements for the six months ended July 31, 2020 have been prepared on a going concern basis which contemplates the realization

of assets and settlement of liabilities in the normal course of business.

For the six months ended July 31, 2020, the Company generated

revenue of $203,814 on which it recorded cost of revenues of $191,876 and a loss from operations of $373,310.

The Company’s consolidated financial statements for the

nine months ended October 31, 2020 have been prepared on a going concern basis which contemplates the realization of assets and

settlement of liabilities in the normal course of business.

For the nine months ended October 31, 2020, the Company generated revenue

of $595,611 on which it recorded cost of revenues of $420,648 and a loss from operations of $414,261.

Subsequent to January 31,

31, 2020, because of the lack of available cash and the decline in business resulting in part from the effects of the COVID-19

pandemic, the Company has temporarily closed its 4P operations, but 4P continues operations and expects to find new facilities

before the end of its fiscal year Successful business operations and its transition to attaining profitability are dependent upon

obtaining significant additional financing, generating revenue primarily from its professional services to cover its overhead,

developing its products, and obtaining FDA approval to market any product it develops and implementing a marketing program for

such products.

These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period

of at least one year from the date of these financial statements.

Without such financing, the Company may not be able to continue

2020, because of the lack of available cash and the decline in business resulting in part from the effects of the COVID-19 pandemic,

the Company has temporarily closed its 4P facility, but 4P continues operations and expects to find new facilities before the

end of its fiscal year Successful business operations and its transition to attaining profitability are dependent upon obtaining

significant additional financing, generating revenue primarily from its professional services to cover its overhead, developing

its products, and obtaining FDA approval to market any product it develops and implementing a marketing program for such products.

These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of at least

one year from the date of these financial statements.

Without such financing, the Company may not be able to continue in business.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

1 unchanged sentence

In May 2014, the FASB issued ASU No.

“Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the accounting standards for

revenue recognition.

ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to

be entitled when products are transferred to a customer.

We adopted the guidance under the new revenue standards using the modified

retrospective method effective February 1, 2018.

Topic 606 requires us to recognize revenues when control of the promised goods

or services and receipt of payment is probable.

The Company recognizes revenue based on the five criteria for revenue recognition

established under Topic 606:

1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction

price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations

are satisfied.

2014-09, “Revenue

from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the accounting standards for revenue recognition.

ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products

are transferred to a customer.

We adopted the guidance under the new revenue standards using the modified retrospective method

effective February 1, 2018.

Topic 606 requires us to recognize revenues when control of the promised goods or services and receipt

of payment is probable.

The Company recognizes revenue based on the five criteria for revenue recognition established under Topic

1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the

transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied.

Revenue Service Types

The following is a description of our revenue

service types, which include professional services and sales of goods:

The following is a description of our revenue service types,

which include professional services and sales of goods:

Professional services include the contract of research and development related services with our clients in the life sciences field on an as-needed basis.

3 unchanged sentences

Contracts with Customers

A contract with a customer exists when

(i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services

to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance

and, (iii) we determine that collection of substantially all consideration for services that are transferred is probable based

on the customer’s intent and ability to pay the promised consideration

A contract with a customer exists when (i) we enter into an

enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and

identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine

that collection of substantially all consideration for services that are transferred is probable based on the customer’s

intent and ability to pay the promised consideration

Deferred Revenue

Deferred revenue is a liability related

to a revenue producing activity for which revenue has not been recognized.

The Company records deferred revenue when it receives

consideration from a contract before achieving certain criteria that must be met for revenue to be recognized in accordance with

As of July 31, 2020 and 2019, the balance of deferred revenue was $27,725 and $-0-.

Deferred revenue is a liability related to a revenue producing

activity for which revenue has not been recognized.

The Company records deferred revenue when it receives consideration from a

contract before achieving certain criteria that must be met for revenue to be recognized in accordance with GAAP.

As of October

31, 2020, and January 31, 2020, the balance of deferred revenue was $118,017 and $—0-.

Performance Obligations

A performance obligation is a promise in

a contract to transfer a distinct good or service to the customer and is the unit of account in the new revenue standard.

transaction price is allocated to each distinct prformance obligation and recognized as revenue when, or as, the performance obligation

is satisfied.

A performance obligation is a promise in a contract to transfer

a distinct good or service to the customer and is the unit of account in the new revenue standard.

The contract transaction price

is allocated to each distinct prformance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

For the Company’s different revenue service types, the performance obligation is satisfied at different times.

Our performance obligations include providing products and professional services in the area of research.

We recognize product

revenue performance obligations in most cases when the product has shipped to the customer.

When we perform professional service

work, we recognize revenue when we have the right to invoice the customer for the work completed, which typically occurs on a monthly

basis for work performed during that month.

All revenue recognized in the statement

of operations is considered to be revenue from contracts with customers.

Our performance

obligations include providing products and professional services in the area of research.

We recognize product revenue performance

obligations in most cases when the product has shipped to the customer.

When we perform professional service work, we recognize

revenue when we have the right to invoice the customer for the work completed, which typically occurs on a monthly basis for work

performed during that month.

All revenue recognized in the statement of operations is considered

to be revenue from contracts with customers.

Stock-Based Compensation

ASC 718, “Compensation —

Compensation,”

prescribes accounting and reporting standards for all stock-based payment transactions in which employee services,

and, since February 1, 2019, non-employee services, are acquired.

Transactions include incurring liabilities, or issuing or offering

to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights.

payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements

based on their fair values.

That expense is recognized over the period during which an employee is required to provide services

in exchange for the award, known as the requisite service period (usually the vesting period).

Stock Compensation,”

prescribes accounting and reporting standards for all stock-based payment transactions in which employee services, and, since February

1, 2019, non-employee services, are acquired.

Transactions include incurring liabilities, or issuing or offering to issue shares,

options and other equity instruments such as employee stock ownership plans and stock appreciation rights.

Stock-based payments

to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based

on their fair values.

That expense is recognized over the period during which an employee is required to provide services in exchange

for the award, known as the requisite service period (usually the vesting period).

New Financial Accounting Standards

Management does not believe that any other

recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the consolidated

financial statements included herewith.

Management does not believe that any other recently issued,

but not yet effective, accounting standard if currently adopted would have a material effect on the consolidated financial statements

included herewith.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements