What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-31 compared with 2021-12-14 · 219 added, 235 removed, 115 unchanged (80% of the section changed)

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

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

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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.

It should be noted that current public health

threats could adversely affect our ongoing or planned business operations.

In particular, the novel coronavirus (COVID-19) has resulted

in quarantines, restrictions on travel and other business and economic disruptions.

We cannot presently predict the scope and severity

of any potential business shutdowns or disruptions, but if we or any of the third parties with whom we engage, including the partners

and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct

our business in the manner and on the timelines presently planned could be materially and adversely impacted.

The measures being taken

by service providers and government agencies to suppress the spread of COVID-19 infection may delay time to production of our planned

abuse deterrent fentanyl transdermal system product and therefor delay the time of filing with FDA for approval.

Our primary business is the development of a portfolio

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

We received on January 28, 2022 an Issue Notification from the United

States Patent and Trademark Office (USPTO) for its United States patent entitled, “Abuse and Misuse Deterrent Transdermal System,”

that protects our AVERSA™ transdermal abuse deterrent technology.

In addition, we are developing a portfolio of transdermal pharmaceutical

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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.

We are proceeding with our development efforts

with respect to these products and to performing 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 to 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.

of a line of consumer and health products that are delivered through a transdermal or topical patch.

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.

With our acquisition of 4P Therapeutics on August

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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.

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.

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 “Assets”).

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

The 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

(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 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.

Subsequent to the repayment of the note, the Shares were released

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.

30, 2022, 392,396 Warrants issued in the IPO have been exercised, with net proceeds to the Company of $2,942,970.

On November 1, 2021, The Board of Directors adopted

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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.

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.

On January 21, 2022,

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 $4.85 ($5.34 per share for two of the officers as required by IRS rules).

Results of Operations

Three Months Ended October 31, 2021 and 2020

For the three months ended October 31, 2021, we

Three Months Ended April 30, 2022 and 2021

For the three months ended April 30, 2022, we

generated revenue of $477,922 and our costs of revenue were $277,436, resulting in a gross margin of $200,486.

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.

April 30, 2021, we generated revenue of $433,488 and our costs of revenue were $195,610, resulting in a gross margin of $237,878.

revenue for April 30, 2022 was derived from sales of $401,990 from our Pocono Pharmaceutical segment and $75,992 from contract services

from our 4P Therapeutics segment.

The increase in revenue from the Pocono Pharmaceutical segment is primarily due to an increase in demand

which has continued in the subsequent quarter.

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.

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.

For the three months ended April 30, 2022, our

selling, general and administrative expenses were $768,551 primarily legal, accounting and administrative salaries compared to $551,942

for the three months ended April 30, 2021.The increase from 2021 is primarily attributable to increases in administrative salaries of

$148,000 and other overhead costs including professional fees and travel.

During the three months ended April 30, 2022,

the Company incurred research and development expenses of its Aversa product of $117,814, primarily of salaries and development costs

from Kindeva.

We incurred interest expense of $4,110 for the

three months ended April 30, 2022, as compared to $40,869 for the three months ended April 30, 2021.

Interest expense for 2021 was primarily

attributable to the amortization of debt discounts.

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.

loss of $689,989 or $(0.09) per share (basic and diluted) for the three months ended April 30, 2022, compared with a loss of $315,957,

or $(0.05) per share (basic and diluted) for the three months ended April 30, 2021.

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.

As of April 30, 2022, we had $4,010,644 in cash

and cash equivalents and working capital of $3,918,855, as compared with cash and cash equivalents of $4,898,868 and working capital of

$4,686,112 as of January 31, 2022.

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

exercise of warrants and the sale of common stock during the year ended January 31, 2022.

For the three months ended April 30, 2022, we used cash of $744,257

in our operations.

The principal adjustments to our net loss of $689,989 were depreciation and amortization of $77,475, offset by changes

in operating assets and liabilities of $146,728.

For the three months ended April 30, 2022, we

used cash in investing activities of $43,803 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.

For the three months ended April 30, 2022, we

used cash in financing activities of $93,164 primarily from the purchase of treasury stock of $89,196.

Off Balance Sheet Arrangements

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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 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.

The plans enable the Company to meet its obligations for at least one year from the date when the

financial statements are issued.

Going Concern Assessment

Management assesses liquidity and going concern

uncertainty in the Company’s condensed consolidated financial statements to determine whether there is sufficient cash on hand

and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated

financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined

As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider

various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected

cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital,

if necessary, among other factors.

Based on this assessment, as necessary or applicable, management makes certain assumptions around

implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations

can be achieved and management has the proper authority to execute them within the look-forward period.

As of April 30, 2022, we had cash

and cash equivalents of $4,010,644 and working capital of $3,918,885.

For the three months ended April 30, 2022, the Company incurred

an operating loss of $689,989 and used cash flow from operations of $744,257.

The Company has generated operating losses since its inception

and has relied on sales of securities and issuance of third-party and related party debt to support cash flow from operations.

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

The Company also received $2,942,970 proceeds

from the exercise of warrants.

Management has prepared estimates of operations for fiscal year 2022 and 2023 believes that sufficient funds will

be generated from operations to fund its operations for one year from the date of the filing of these condensed consolidated financial

statements, which indicates improved operations and the Company’s ability to continue operations as a going concern.

of COVID-19 on the Company’s business has been considered in these assumptions;

however, it is too early to know the full impact

of COVD-19 or its timing on a return to more normal operations.

believes the substantial doubt about the ability of the Company to continue as a going concern is alleviated by the above assessment.

Use of Estimates

The preparation of the

consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires

the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related

disclosure of contingent assets and liabilities.

On an ongoing basis, the Company evaluates its estimates including, but not limited to,

those related to such items as income tax exposures, accruals, depreciable/useful lives, allowance for doubtful accounts and valuation

The Company bases its estimates on historical experience and on other various assumptions that are believed to be reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that

are not readily apparent from other sources.

Actual results could differ from those estimates.

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.

In 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.

The Company adopted the guidance under the new revenue standards using the

modified retrospective method effective February 1, 2018 and determined no cumulative effect adjusted to retained earnings was necessary

upon adoption.

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

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.

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).

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.

Accounts receivable

Trade accounts receivables

are recorded at the net invoice value and are not interest bearing.

The Company maintains allowances for doubtful accounts for estimated

losses from the inability of its customers to make required payments.

The Company determines its allowances by both specific identification

of customer accounts where appropriate and the application of historical loss to non-applicable accounts.

For the three months ended April

30, 2022 and 2021, the Company recorded no bad debt expense for doubtful accounts related to account receivable.

Inventories are valued

at the lower of cost and reasonable value determined using the first-in, first-out (FIFO) method.

Net realized value is the estimated

selling price in the ordinary course of business, less applicable variable selling expenses.

The cost of finished goods and work in process

is comprised of material costs, direct labor costs and other direct costs and related production overheads (based on normal operating

As of April 30, 2022 and January 31, 2022, 100% of the inventory consists of raw materials.

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.

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

A substantial component of the purchase price related to the Company’s acquisitions have also been assigned to intellectual

property and other intangibles.

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

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

In connection with the Company’s acquisition of 4P Therapeutics LLC in 2018, the Company recorded Goodwill of $1,719,235.

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.

During the year ended January 31, 2022, the Company recorded an impairment charge of $2,180,836

reducing the Active Intelligence LLC Goodwill to $3,629,813.

As of April 30, 2022 and January 31, 2022, Goodwill amounted to $5,349,039.

Long-lived Assets

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.

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

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 the fair market value of the long-lived asset and the related book value.

Earnings per Share

Basic earnings per share

of common stock is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period.

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 April 30, 2022, and 2021, there were 1,394,032 and 141,830 common stock equivalents

outstanding, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.

Stock-Based Compensation

ASC 718, “Compensation

- Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee

services, and, since February 1, 2019, non-employees, 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).

As of February 1, 2019, pursuant to ASC 2018-07, ASC

718 was applied to stock-based compensation for both employees and non-employees.

Research and Development

Research and development

costs are expensed as incurred.

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