What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-12-14 compared with 2021-09-03 · 340 added, 269 removed, 10 unchanged (98% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LOOKING STATEMENTS

report contains forward-looking statements regarding our business, financial condition, results of operations and prospects.

as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”

“estimates” and similar expressions or variations of such words are intended to identify forward-looking statements but are

not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report.

Additionally, statements

concerning future matters are forward-looking statements.

forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts

and factors currently known by us.

Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual

results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements.

Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed

under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual

report on Form 10-K for the year ended January 31, 2021, in “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” in this Form 10-Q and information contained in other reports that we file with the SEC.

You are urged

not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.

file reports with the SEC.

The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other

information regarding issuers that file electronically with the SEC, including us.

undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise

after the date of this report, except as required by law.

Readers are urged to carefully review and consider the various disclosures

made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that

may affect our business, financial condition, results of operations and prospects.

to “we,” “us,” “our” and words of like import refer to Nutriband Inc.

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, and references to Pocono and Active Intelligence to operations

of those companies prior to our acquisition of the PCP segment on August 31, 2020.

primary business is the development of a portfolio of transdermal pharmaceutical products.

Our lead product is our abuse deterrent fentanyl

transdermal system which we are developing to provide clinicians and patients with an extended-release transdermal fentanyl product for

use in managing chronic pain requiring around the clock opioid therapy combined with properties designed to help combat the opioid crisis

by deterring the abuse and misuse of fentanyl patches.

We believe that our abuse deterrent technology can be broadly applied to various

transdermal products and our strategy is to follow the development of our abuse deterrent fentanyl transdermal system with the development

of additional transdermal prescription products for pharmaceuticals that have risks or a history of abuse.

In addition, we are developing

a portfolio of transdermal pharmaceutical products to deliver commercially available drugs or biologics that are typically delivered

by injection but with the potential to improve compliance and therapeutic outcomes.

of our financial position, we have put our development efforts with respect to these products on hold, and our only business is the performance

of contract services for a small number of customers.

Because of both our financial position and the effects of the COVID-19 pandemic,

our contract service business has also been scaled back.

The description of our business in this annual report is based on our ability

to raise significant financing or enter into a joint venture agreement with a third party that has the financial ability to fund the

joint venture’s operations.

We cannot assure you that we will be able to obtain necessary financing or enter into a joint venture

agreement on reasonable, if any, terms.

If we are not able to continue obtain financing or enter into a joint venture agreement, we may

not be able to continue in business.

July 31, 2018, our business was the development of a line of consumer and health products that are delivered through a transdermal patch

which we plan to sell internationally.

Consumer products are products that are sold over the counter and do not require a prescription.

Most of our consumer products require FDA approval for sale in the United States, and we have not sought to obtain, and we do not plan

to seek to obtain, FDA approval to market these products in the United States at this time.

Following our acquisition of Pocono, our

focus is primarily now on providing contract manufacturing services and consulting services to 3 rd party brands with no intention

at this time to launch our own consumer products.

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 products under development by 4P Therapeutics.

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

pipeline of potential products.

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 and, since our acquisition, it has generated a negative gross margin.

long-term contractual obligations, and either party can terminate at any time.

the change in our focus, our capital requirements have increased substantially.

The process of developing pharmaceutical products and

submitting them for FDA approval is both time consuming and expensive, with no assurance of obtaining approval from the FDA to market

our product in the United States.

We have budgeted $5.0 million for research and development of our abuse deterrent fentanyl transdermal

system, including clinical manufacturing and clinical trials that need to be completed in order to obtain FDA approval.

total cost could be substantially in excess of that amount.

March 25, 2020, we completed a private placement of 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.

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

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements

regarding our business, financial condition, results of operations and prospects.

Words such as “expects,” “anticipates,”

“intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions

or variations of such words are intended to identify forward-looking statements but are not deemed to represent an all-inclusive means

of identifying forward-looking statements as denoted in this report.

Additionally, statements concerning future matters are forward-looking

Although forward-looking statements in this report

reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us.

Consequently,

forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from

the results and outcomes discussed in or anticipated by the forward-looking statements.

Factors that could cause or contribute to such

differences in results and outcomes include, without limitation, those specifically addressed under the headings “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended January

31, 2021, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q

and information contained in other reports that we file with the SEC.

You are urged not to place undue reliance on these forward-looking

statements, which speak only as of the date of this report.

We file reports with the SEC.

The SEC maintains

a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically

with the SEC, including us.

We undertake no obligation to revise or update

any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required

Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report,

which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of

operations and prospects.

References to “we,” “us,”

“our” and words of like import refer to Nutriband Inc.

and its subsidiaries unless the context indicates otherwise.

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.

Our primary business is the development of a portfolio

of transdermal pharmaceutical products.

Our lead product is our abuse deterrent fentanyl transdermal system which we are developing to

provide clinicians and patients with an extended-release transdermal fentanyl product for use in managing chronic pain requiring around

the clock opioid therapy combined with properties designed to help combat the opioid crisis by deterring the abuse and misuse of fentanyl

We believe that our abuse deterrent technology can be broadly applied to various transdermal products and our strategy is to

follow the development of our abuse deterrent fentanyl transdermal system with the development of additional transdermal prescription

products for pharmaceuticals that have risks or a history of abuse.

In addition, we are developing a portfolio of transdermal pharmaceutical

products to deliver commercially available drugs or biologics that are typically delivered by injection but with the potential to improve

compliance and therapeutic outcomes.

Because of our financial position, we have put

our development efforts with respect to these products on hold, and our only business is the performance of contract services for a small

number of customers.

Because of both our financial position and the effects of the COVID-19 pandemic, our contract service business has

also been scaled back.

The description of our business in this annual report is based on our ability to raise significant financing or

enter into a joint venture agreement with a third party that has the financial ability to fund the joint venture’s operations.

cannot assure you that we will be able to obtain necessary financing or enter into a joint venture agreement on reasonable, if any, terms.

If we are not able to continue obtain financing or enter into a joint venture agreement, we may not be able to continue in business.

Through July 31, 2018, our business was the development

of a line of consumer and health products that are delivered through a transdermal patch which we plan to sell internationally.

products are products that are sold over the counter and do not require a prescription.

Most of our consumer products require FDA approval

for sale in the United States, and we have not sought to obtain, and we do not plan to seek to obtain, FDA approval to market these products

in the United States at this time.

Following our acquisition of Pocono, our focus is primarily now on providing contract manufacturing

services and consulting services to 3 rd party brands with no intention at this time to launch our own consumer products.

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 products under

development by 4P Therapeutics.

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

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 and, since our acquisition, it has generated a negative gross margin.

We have no long-term contractual obligations, and either

party can terminate at any time.

With the change in our focus, our capital requirements

have increased substantially.

The process of developing pharmaceutical products and submitting them for FDA approval is both time consuming

and expensive, with no assurance of obtaining approval from the FDA to market our product in the United States.

We have budgeted $5.0

million for research and development of our abuse deterrent fentanyl transdermal system, including clinical manufacturing and clinical

trials that need to be completed in order to obtain FDA approval.

However, the total cost could be substantially in excess of that amount.

On March 25, 2020, we completed a private placement

of 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.

We issued a total of 46,828 shares of common stock and warrants to purchase 46,828 shares of common stock.

We issued a total of 46,828 shares of common stock and

warrants to purchase 46,828 shares of common stock.

We received proceeds of $515,113.

March 25, 2020, w e paid off the convertible notes in the principal amount of $270,000 from the proceeds of the private placement.

The total payments, including the prepayment penalty and accrued interest, was $345,656.

The payment was made from the proceeds of the

private placement.

As a result of the payment of the notes, the derivative liability, which was $928,774 at July 31, 2020, was reduced

As a result 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 its public 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 warrants 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 January 31, 2021.

March 2020, a minority stockholder who had previously made loans to us in the total amount of $215,00, made an additional loan to us

in the amount of $60,000, increasing the total loans from the stockholder to $275,000.

On March 27, 2020, we issued 25,000 shares of

common stock upon conversion of the notes.

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 “Assets”).

On March 25, 2020, w e paid off the convertible

notes in the principal amount of $270,000 from the proceeds of the private placement.

The total payments, including the prepayment penalty

and accrued interest, was $345,656.

The payment was made from the proceeds of the private placement.

As a result of the payment of the

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

As a result 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 its public 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 warrants

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 January 31, 2021.

In March 2020, a minority stockholder who had

previously made loans to us in the total amount of $215,00, made an additional loan to us in the amount of $60,000, increasing the total

loans from the stockholder to $275,000.

On March 27, 2020, we issued 25,000 shares of common stock upon conversion of the notes.

Pursuant to a Stock Purchase Agreement (“SPA”),

dated December 7, 2020, with the Company, BPM Inno Ltd., Kiryat, Israel, purchased 81,396 shares of common stock at a price of $8.60 per

share, or $700,000, which provided payment for the RamBam license.

The transaction was completed at a closing on February 26, 2021.

On 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

PCP is the manufacturer of our transdermal products, and we bought that business from them.

purchase price for the Assets was (i) $6,000,000 paid in shares of the Company’s common stock at a value of the average price of

the previous 90 days at 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

price for the Assets was (i) $6,000,000 paid in shares of the Company’s common stock at a value of the average price of the

previous 90 days at 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.

August 31, 2021 we entered into an amendment to the Agreement with the parties to the Agreement that provides for an extension of the

August 31, 2021 due date of the $1,500,000 note issued in the transaction to September 30, 2021, and extends the time limit set forth

in Section 5.3(a) of the Agreement for completion of the Listing and for payment of the Note in full until September 30, 2021.

to a Stock Purchase Agreement (“SPA”), dated December 7, 2020, with the Company, BPM Inno Ltd., Kiryat, Israel, purchased

81,396 shares of common stock at a price of $8.60 per share, or $700,000, which provided payment for the RamBam license.

The transaction

was completed at a closing on February 26, 2021.

of Operations

Months Ended July 31, 2021 and 2020

the three months ended July 31, 2021, we generated revenue of $213,739 and our costs of revenue were $186,762, resulting in a gross margin

For the three months ended July 31, 2020, we generated revenue of $84,450 and our costs of revenue were $116,937, resulting

in negative gross margin of $32,487.

Our revenue for July 31, 2021 was derived from sales from our recent acquisition of transdermal

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

services that we perform for clients.

Our cost of revenue for our contract research and development services represents our labor cost

plus a modest amount of material costs which we passed on to the client.

The Company moved from the 4P facilities, and many of the prior

costs relating to the facility were not incurred.

We did not have any revenue from our South Korean customer but expect revenue will

recommence during the third quarter.

the three months ended July 31, 2021, our selling, general and administrative expenses were $509,219 primarily legal, accounting and

non-cash expenses compared to $193,331 for the three months ended July 31, 2020.The increase from 2020 is primarily attributable to non-cash

consulting expenses of $127,500 and the inclusion of expenses of $151,278 of Active Intelligence in 2021.

incurred interest expense of $41,019, primarily from the amortization of debt discounts for the three months ended July 31, 2021, as

compared to $51 for the three months ended July 31, 2020.

a result of the foregoing, we sustained a net loss of $519,523 or $(0.08) per share (basic and diluted) for the three months ended July

31, 2021, compared with a loss of $225,869, or $(0.04) per share (basic and diluted) for the three months ended July 31, 2020.

Months Ended July 31, 2021 and 2020

the six months ended July 31, 2021, we generated revenue of $647,227 and our costs of revenue were $355,606, resulting in a gross margin

For the six months ended July 31, 2020, we generated revenue of $203,814 and our costs of revenue were $191,876, resulting

in a gross margin of $11,938.

Our revenue for July 31, 2021 was derived from three sources – (1) a continuation of research and

development contracts of the type 4P Therapeutics performed prior to our acquisition, which accounted for $105,976, (2) sales of our

consumer transdermal product to or South Korean distributor, which accounted for $86,600 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 $454,651.

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

the 4P Therapeutics fixed costs are allocated to the contract services that we perform for clients.

Our cost of revenue for our contract

research and development services represents basically our labor cost plus a modest amount of material costs which we passed on to the

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

the six months ended July 31, 2021, our selling, general and administrative expenses were $1,088,827 primarily legal, accounting and

non-cash expenses compared to $355,248 for the six months ended July 31, 2020.The increase from 2020 is primarily attributable to non-cash

consulting expenses of $225,000 and the inclusion of expenses of $315,915 of Active Intelligence in 2021.

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 $230,000 from the sale of convertible

notes and warrants.

During the six months ended July 31, 2021, the Company incurred a gain on extinguishment of debt of $43,214, consisting

primarily of forgiveness of a PPP loan.

incurred interest expense of $81,888, primarily from the amortization of debt discounts for the six months ended July 31, 2021, as compared

to $205,218 for the six months ended July 31, 2020.

a result of the foregoing, we sustained a net loss of $835,880 or $(0.13) per share (basic and diluted) for the six months ended July

31, 2021, compared with a loss of $638,063, or $(0.12) per share (basic and diluted) for the six months ended July 31, 2020.

and Capital Resources

of July 31, 2021, we had $304,258 in cash and cash equivalents and a working capital deficiency of $2,048,806, as compared with cash

and cash equivalents of $151,993 and working capital deficiency of $2,254,418 as of January 31, 2021.

The Company received proceeds of

$583,000 from the sale of common stock during the six months ended July 31, 2021.

the six months ended July 31, 2021, we used cash of $367,944 in our operations.

The principal adjustments to our net loss of $835,880

were amortization of debt discount of $73,108, depreciation and amortization of $155,822, and stock-based compensation of $625,000, offset

by a gain on extinguishment of debt of $43,214.

the six months ended July 31, 2021, we used cash in investing activities of $49,396 primarily for the purchase of equipment.

year ended July 31, 2020, we had no investing activities.

the six months ended July 31, 2021, we had cash flows of $569,605 from financing activities, primarily $583,000 from gross proceeds from

the sale of common stock.

Balance Sheet Arrangements

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.

Accounting Policies

As of July 31, 2021, the Company believes the

substantial doubt about its status as a going concern has been resolved.

The going concern conditions that caused substantial doubt consisted

of current quarter net loss, negative working capital, negative cash flow, and accumulated deficit.

Management has implemented plans to

alleviate the substantial doubt.

These plans include a substantial increase in sales commitments, a decrease in planned overhead expenses,

equity funding that has been received and additional funding expected to be received, and the net revenue from its recent acquisitions.

The note was repaid in full in October 2021.

to the repayment of the note, the Shares were released from escrow.

On October 5, 2021, the Company, having been approved for the listing

of its common stock on The Nasdaq Capital Market effective October 1, 2021, consummated a public offering (the “IPO”) of units

(the “Units”), of common stock and warrants that were offered in the IPO on The Nasdaq Capital Market, which included 1,056,000

(each a “Unit”), each Unit consisting of one share of common stock, par value $0.001 per share, and one warrant (each a “Warrant”)

at a price of $6.25 per Unit.

Each Warrant is immediately exercisable, will entitle the holder to purchase one share of common stock at

an exercise price of $7.50 and will expire five (5) years from the date of issuance.

The underwriters’ over-allotment option was

exercised for 158,400 warrants to purchase shares of common stock bringing to total net proceeds to the Company from the IPO to $5,836,230.

The shares of common stock and Warrants are separately transferred immediately upon issuance.

As of October 31, 2021, 275,000 Warrants

issued in the IPO have been exercised, with net proceeds to the Company of $2,062,500.

In November 2021, an additional 30,000 warrants

were exercised, with net proceeds to the Company of $225,000.

On November 1, 2021, The Board of Directors adopted

the 2021 Employee Stock Option Plan (the “Plan”).

The Company has reserved 350,000 shares to issue and sell upon the exercise

of stock options issued under the Plan.

On November 20,2021, the Board approved options to purchase 163,500 shares of the Company’s

common stock issued to executive officers and directors of the Company at a price of $5.96 per share.

On November 3, 2021, the Company

filed a Registration Statement on Form S-8, to register under the Securities Act of 1933, as amended, the 350,000 shares of common stock

reserved for issuance under the Plan.

Results of Operations

Three Months Ended October 31, 2021 and 2020

For the three months ended October 31, 2021, we

generated revenue of $283,037 and our costs of revenue were $173,694, resulting in a gross margin of $109,343.

For the three months ended

October 31, 2020, we generated revenue of $391,797 and our costs of revenue were $228,772, resulting in a gross margin of $163,025.

revenue for October 31, 2021 was derived from sales from our recent acquisition of transdermal patches.

Since we do not have the funds

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

Our cost of revenue for our contract research and development services represents our labor cost plus a modest amount of material costs

which we passed on to the client.

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

not incurred.

We did not have any revenue from our South Korean customer but expect revenue will recommence during the fourth quarter.

For the three months ended October 31, 2021, our

selling, general and administrative expenses were $1,486,784 primarily legal, accounting, administrative salaries and non-cash expenses

compared to $203,976 for the three months ended October 31, 2020.The increase from 2020 is primarily attributable to non-cash consulting

expenses and amortization of warrants of $529,400, administrative salaries of $250,000 and the inclusion of expenses of $171,702 of Active

Intelligence in 2021.

During the three months ended October 31, 2021, the Company commenced

its research and development expenses of its Aversa product and incurred $144,000 of salary liabilities that were paid with the issuance

of common stock.

We incurred interest expense of $33,380, primarily

from the amortization of debt discounts for the three months ended October 31, 2021, as compared to $1,618 for the three months ended

October 31, 2020.

As a result of the foregoing, we sustained a net

loss of $1,768,410 or $(0.27) per share (basic and diluted) for the three months ended October 31, 2021, compared with a loss of $42,569,

or $(0.01) per share (basic and diluted) for the three months ended October 31, 2020.

The net loss for 2021 includes a deemed dividend

of $196,589 from the settlement of a warrant round down.

Nine Months Ended October 31, 2021 and 2020

For the nine months ended October 31, 2021, we

generated revenue of $930,264 and our costs of revenue were $529,300, resulting in a gross margin of $400,964.

For the nine months ended

October 31, 2020, we generated revenue of $595,611 and our costs of revenue were $420,648, resulting in a gross margin of $174,963.

revenue for October 31, 2021 was derived from three sources – (1) a continuation of research and development contracts of the type

4P Therapeutics performed prior to our acquisition, which accounted for $205,976, (2) sales of our consumer transdermal product to or

South Korean distributor, which accounted for $86,600 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 $637,688.

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

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

Our cost of revenue for our contract research and development services

represents basically our labor cost plus a modest amount of material costs which we passed on to the client.

The Company moved from the

4P facilities, and many of the prior costs relating to the facility were not incurred.

For the nine months ended October 31, 2021, our

selling, general and administrative expenses were $2,575,611 primarily legal, accounting, administrative salaries and non-cash expenses

compared to $589,224 for the nine months ended October 31, 2020.The increase from 2020 is primarily attributable to non-cash consulting

expenses of $754,400 and the inclusion of expenses of $487,617 of Active Intelligence in 2021.

During the quarter ended October 31, 2021, the Company commenced research

and development expenses on its Aversa product and incurred $144,000 of salary liabilities that were paid with the issuance of common

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 $230,000 from the sale of convertible notes and warrants.

During the nine months

ended October 31, 2021, the Company incurred a gain on extinguishment of debt of $43,214, consisting primarily of forgiveness of a PPP

We incurred interest expense of $115,268, primarily

from the amortization of debt discounts for the nine months ended October 31, 2021, as compared to $206,836 for the nine months ended

October 31, 2020.

As a result of the foregoing, we sustained a net

loss of $2,604,290 or $(0.40) per share (basic and diluted) for the nine months ended October 31, 2021, compared with a loss of $680,632,

or $(0.12) per share (basic and diluted) for the nine months ended October 31, 2020.

The net loss for 2021 includes a deemed dividend

of $196,589 from the settlement of a warrant round down.

Liquidity and Capital Resources

As of October 31, 2021, we had $5,485,344 in cash

and cash equivalents and working capital of $4,939,237, as compared with cash and cash equivalents of $151,993 and working capital deficiency

of $2,254,418 as of January 31, 2021.

The Company received proceeds of approximately$8.5 million from the completion of its public offering,

exercise of warrants and the sale of common stock during the nine months ended October 31, 2021.

For the nine months ended October 31, 2021, we

used cash of $1,576,789 in our operations.

The principal adjustments to our net loss of $2,407,701 were amortization of debt discount

of $97,477, depreciation and amortization of $235,380, and stock-based compensation of $754,400, offset by a gain on extinguishment of

debt of $43,214.

For the nine months ended October 31, 2021, we

used cash in investing activities of $51,388 primarily for the purchase of equipment.

During the year ended October 31, 2020, cash received

from acquisition amounted to $66,964.

For the nine months ended October 31, 2021, we

had cash flows of $6,961,528 from financing activities, primarily $8.5 million from the completion of our public offering, exercise of

warrants, and gross proceeds from the sale of common stock offset by a payment on long-term debt of $1.5 million.

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.

Critical Accounting Policies

Going Concern

As of October 31, 2021,

the Company believes the substantial doubt about its status as a going concern has been resolved.

The going concern conditions that caused

substantial doubt no longer exist as the Company has positive cash flow during the last quarter and as of October 31, 2021, has positive

working capital.

In October 2021, the Company consummated a public offering and received net proceeds of $5,836,230.

The Company also

received $2,026,500 of proceeds from the exercise of warrants.

Management retired most of its debt and other current obligations.

has implemented other plans to alleviate the substantial doubt.

These plans include a substantial increase in projected sales commitments.

These factors did not exist in prior years during its start-up operations.

The Company’s recent history of losses has continued

but future positive cash flow projections due to its increased revenue commitments and decreases in overhead as well as future equity

funding will enable the Company to alleviate the substantial doubt about the Company’s ability to continue as a going concern.

but future positive cash flow projections due to its management’s plans which includes its acquisition in the latter part of 2020

will enable the Company to alleviate the substantial doubt about the Company’s ability to continue as a going concern.

plans have been currently implemented.

1 unchanged sentence

financial statements are issued.

May 2014, the FASB issued ASU No.

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 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

Service Types

following is a description of our revenue service types, which include professional services and sales of goods:

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

Deliverables primarily consist of detailed findings and conclusion reports provided to the client for each given research

project engaged.

revenues are generated from the sale of our products.

Revenue Recognition

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

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:

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:

● Professional services include

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

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

● Sales revenues are generated

from the sale of our products.

Upon the receipt of a purchase order, we have the order filled and shipped.

with Customers

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.

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 July 31, 2021 and January 31, 2021, the balance of deferred revenue was $69,894 and $86,846, respectively.

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 performance 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.

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

718, “Compensation — 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).

assets include trademarks, intellectual property and customer base acquired through business combinations.

The Company accounts for Other

Intangible Assets under the guidance of ASC 350, “Intangibles-Goodwill and Other.” The Company capitalizes certain costs

related to patent technology.

A substantial component of the purchase price related to the Company’s acquisition has also been

assigned to intellectual property and other intangibles.

Under the guidance, other intangible assets with definite lives are amortized

over their estimated useful lives.

Intangible assets with indefinite lives are tested annually for impairment.

Trademarks, intellectual

property and customer base are being amortized over their estimated useful lives 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 not amortize goodwill

in accordance with ASC 350.

On August 31, 2020, in connection with the Company’s acquisition of Pocono Coated Products LLC and

Active Intelligence LLC, the Company recorded Goodwill of $5,810,640.

As of July 31, 2021 and January 31, 2021, Goodwill amounted to

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

amount of an asset may not be recoverable.

An impairment exists when the carrying amount of the long-lived asset is not recoverable

and exceeds its fair value.

The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated

undiscounted cash flows expected to result from the use and eventual disposition of the asset.

If an impairment exists, the resulting

write-down would be the difference between fair market value of the long-lived asset and the related net book value.

Financial Accounting Standards

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.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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.

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 GAAP.

As of October 31, 2021 and January 31,

2021, the balance of deferred revenue was $239,582 and $86,846, respectively.

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.

The contract transaction

price is allocated to each distinct performance 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.

Stock-Based Compensation

ASC 718, “Compensation — 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).

Intangible Assets

Intangible assets include trademarks, intellectual

property and customer base acquired through business combinations.

The Company accounts for Other Intangible Assets under the guidance

of ASC 350, “Intangibles-Goodwill and Other.” The Company capitalizes certain costs related to patent technology.

A substantial

component of the purchase price related to the Company’s acquisition has also been assigned to intellectual property and other intangibles.

Under the guidance, other intangible assets with definite lives are amortized over their estimated useful lives.

Intangible assets with

indefinite lives are tested annually for impairment.

Trademarks, intellectual property and customer base are being amortized over their

estimated useful lives of ten years.

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.

On August 31,

2020, in connection with the Company’s acquisition of Pocono Coated Products LLC and Active Intelligence LLC, the Company recorded

Goodwill of $5,810,640.

As of October 31, 2021 and January 31, 2021, Goodwill amounted to $7,529,875.

Management reviews long-lived assets for potential

impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value.

The carrying amount

of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use

and eventual disposition of the asset.

If an impairment exists, the resulting write-down would be the difference between fair market

value of the long-lived asset and the related net book value.

New Financial Accounting Standards

The Company has implemented all new pronouncements, including the adoption

of ASU 2018-13, ASU 2019-12, and ASU 2020-06, that are in effect and that may impact its consolidated financial statements and does not

believe that there any new accounting pronouncements that have been issued that might have a material impact on its consolidated financial

statements or results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

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 2. Management’s Discussion and Analysis