What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-04-26 compared with 2022-04-29 · 290 added, 241 removed, 75 unchanged (88% of the section changed)

18 unchanged sentences

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

AVERSA™ transdermal abuse deterrent technology.

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.

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

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

compliance and therapeutic outcomes.

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 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

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.

Our lead product is our abuse deterrent fentanyl transdermal system which will require approval

from the Food and Drug Administration (“FDA”) and substantial additional capital for research and development.

Our abuse deterrent

transdermal product under development has the potential 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 deter the abuse

and misuse of fentanyl patches.

In addition, 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 abuse

deterrent transdermal 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™ technology platform.

Transdermal Pharmaceutical Products

Through October 31, 2018, our business was the

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

Following our acquisition

of 4P Therapeutics on August 1, 2018, our focus expanded to include prescription pharmaceuticals, and we are seeking to develop and seek

FDA approval on a number of transdermal pharmaceutical products under development by 4P Therapeutics.

Most of our planned 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 selected assets from Pocono Coated Products, LLC (“Pocono”),

we are primarily focused 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.

4P Therapeutics has not generated any revenue

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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.

revenues and, since our acquisition, it has generated minor gross margins.

We have no long-term contractual obligations, and either party

can terminate at any time.

With the change in our focus, our capital requirements

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

We have budgeted $5.0

We will require approximately

$13 million for research and development of our abuse deterrent fentanyl transdermal system, including clinical manufacturing and clinical

1 unchanged sentence

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 received proceeds of $515,113.

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

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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.

is the manufacturer of our transdermal consumer 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 “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 note was repaid in full in October 2021.

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

Subsequent to the repayment of the note, the

Shares were released from escrow.

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

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

As of January

As of October

31, 2022, 457,795 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 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 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).

On November 1, 2021, The Board of Directors adopted

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

The Company has reserved 408,333 shares to issue and sell upon the exercise

of stock options issued 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 408,333 shares of common stock reserved for issuance under the Plan, and on October 12, 2022,

a Post-Effective Amendment to the Form S-8 was filed with the SEC.

On January 21, 2022, the Board approved options to purchase 190,751

shares of the Company’s common stock under the Plan issued to executive officers and directors of the Company at an exercise price

of $4.16 ($4.58 per share for two of the officers as required by IRS rules).

On August 1, 2022, the Board approved option grants previously

approved by the Compensation Committee for an aggregate of 137,084 shares of common stock at exercise prices $4.09 or $4.50 per share

depending on IRS rules as applicable to the recipient,, and on September 30, 2022, approved option issuances under the Plan for an aggregate

of 35,000 shares of common stock at an exercise price of $3.59 per share for services provided by the independent directors, as previously

approved by the Compensation Committee.

The Company received a favorable verdict on July

13, 2022 from the Circuit Court, Orange County, Florida, providing for rescission of the Company’s 2017 acquisition of Advanced

Health Brands and recovery by the Company of the 1,400,000 shares(adjusted for a 1-for-4 reverse stock split effective June 23, 2019 and

the 7-for-six forward stock split effective August 15, 2022) of common stock issued in the acquisition, effectively allowing the Company

on July 25, 2022 to cancel 1.4M shares of common stock held by the defendants.

On October 31, 2022, the Company filed the Proxy

Statement with the SEC for its Annual Meeting of Stockholders, to be held December 9, 2022, in Orlando, Florida.

This Proxy Statement

is available on our website at HTTPS://Nutriband.com/proxy .

Forward Split of our Common Stock.

On July 26, 2022, our Board of Directors approved

the amendment to our Articles of Incorporation to effect a 7 for 6 forward stock split (the “Stock Split”) of our outstanding

common stock.

We filed the amendment set forth in a Certificate of Change with the Secretary of State of Nevada on August 4, 2022.

7:6 forward split was effective for trading purposes on the Nasdaq Capital Market on August 12, 2022.

Each shareholder of record as of

the August 15, 2022 record date received one (1) additional share of common stock for each six (6) shares held as of the record date.

No fractional shares of common stock were issued in connection with the Stock Split.

Instead, all shares were rounded up to the next whole

In connection with the Stock Split, which did not require shareholder approval under the Nevada corporation law, the number of

authorized shares of common stock of the Company was increased in the same ratio as the shares of outstanding common stock were increased

in the Stock Split, from 250,000,000 authorized shares to 291,666,666 authorized shares.

Years Ended January 31, 2023 and 2022

For the year ended January 31, 2022, we generated revenue of $1,422,154

and our costs of revenue were $917,844, resulting in a gross margin of $504,310.

For the year ended January 31, 2021, we generated revenue

of $943,702 and our costs of revenue were $627,378, resulting in a gross margin of $316,324.

Our revenue for January 31, 2022 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 $242,354, (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 $1,093,200.

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 year ended January 31, 2022, our selling, general and administrative

expenses were $4,022,824, primarily legal, accounting, administrative salaries and non-cash expenses of $1,364,732, compared to $2,912,269

for the year ended January 31, 2021.The increase from 2021 is primarily attributable to non-cash consulting expenses of $1,364,732, and

the inclusion of expenses of $668,661 of Active Intelligence in 2022.

During the year ended January 31, 2022, the Company recorded an impairment

expense of $2,180,836 due to a write down of Goodwill in connection with its Pocono acquisition.

The write down of goodwill is attributable

primarily to the effects of the pandemic.

The valuation of the reporting unit does not exceed the carrying amount of goodwill using the

value in use or the going concern premise.

For the year ended January 31, 2023, we generated

revenue of $2,079,609 and our costs of revenue were $1,329,200, resulting in a gross margin of $750,409.

For the year ended January 31,

2022, we generated revenue of $1,422,154 and our costs of revenue were $917,844, resulting in a gross margin of $504,310 in the subsequent

Our revenue for the year ended January 31, 2023, was derived from sales of $1,785,507 from our transdermal patch manufacturing segment

and $294,102 from contract services from our 4P Therapeutics segment.

The increase in revenue of $657,455 from the transdermal patch manufacturing

segment is primarily due to an increase in demand which has continued in the subsequent year.

The transdermal patch manufacturing segment

increased its margin by 3% during the period.

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.

Our sales and cost of sales remained constant

for our contract services compared to the prior year.

For the year ended January 31, 2023, our selling,

general and administrative expenses were $3,916,041, primarily legal, accounting, administrative salaries and equity-based payments, compared

to $4,022,824 for the year ended January 31, 2022.

The amount remained relatively constant for the prior year.

During the years ended January 31, 2023 and 2022,

the Company recorded an impairment expense of $327,326 and $2,180,836, respectively, due to a write down of Goodwill in connection with

its Pocono acquisition.

The write down of goodwill is attributable primarily to the effects of the pandemic.

The valuation of the reporting

unit does not exceed the carrying amount of goodwill using the value in use or the going concern premise.

During the year January 31, 2023, 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 stock and other expenses of $267,303.

During the year ended January 31, 2021, 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 year ended January

31, 2022, the Company incurred a gain on extinguishment of debt of $53,028, consisting primarily of forgiveness of a PPP loan.

We incurred interest expense of $118,421, primarily

from the amortization of debt discounts for the Year ended January 31, 2022, as compared to $280,686 for the year ended January 31, 2021.

As a result of the foregoing, we sustained a net

loss of $6,372,715, or $(0.94) per share (basic and diluted) for the year ended January 31, 2022, compared with a loss of $2,932,828,

or $(0.51) per share (basic and diluted) for the year ended January 31, 2021.

The net loss for 2022 includes a deemed dividend of $196,589

from the settlement of a warrant round down.

incurred research and development expenses on its Aversa Fentanyl product of $982,227, primarily of salaries and development costs from

Kindeva as compared to $411,383 for the year ended January 31, 2022.

During the year ended January 31, 2022, the Company

incurred a gain on extinguishment of debt of $53,028, consisting primarily of forgiveness of a PPP loan.

There was no gain on extinguishment

of debt during the year ended January 31, 2023.

We incurred interest expense of $8,289 for the

year ended January 31, 2023, as compared to $118,421 for the year ended January 31, 2022, primarily from the amortization of debt discounts.

As a result of the foregoing, we sustained a net loss of $4,483,474,

or $(0.53) per share (basic and diluted) for the year ended January 31, 2023, compared with a loss of $6,372,715, or $(0.80) per share

(basic and diluted) for the year ended January 31, 2022.

The net loss for 2022 includes a deemed dividend of $196,589 from the settlement

of a warrant round down.

Liquidity and Capital Resources

As of January 31, 2022, we had $4,891,868 in cash and cash equivalents

and working capital of $4,686,112, as compared with cash and cash equivalents of $151,993 and working capital deficiency of $2,254,418

As of January 31, 2023, we had $1,985,440 in cash

and cash equivalents and working capital of $1,945,132, as compared with cash and cash equivalents of $4,891,868 and working capital of

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

The Company received proceeds of approximately $8.8 million from the completion of its public offering, exercise

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

The Company received proceeds of approximately $8.8 million from the completion of its public offering,

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

For the year ended January 31, 2023, we used cash of $2,987,198 in

our operations.

The principal adjustments to our net loss of $4,483,474 were depreciation and amortization of $330,143, and stock-based

compensation of $1,019,310, and goodwill impairment of $327,326.

For the year ended January 31, 2023, we used cash

of $2,809,223 in our operations.

The principal adjustments to our net loss of $6,176,126 were amortization of debt discount of $97,477,

depreciation and amortization of $308,741, and stock-based compensation of $1,314,401, and goodwill impairment of $2,180,836, offset by

a gain on extinguishment of debt of $53,028.

For the year ended January 31, 2022, we used cash in investing activities

of $81,595 primarily for the purchase of equipment.

During the year ended January 31, 2021, cash received from acquisition amounted to

For the year ended January 31, 2022, we had cash flows of $7,630,721

from financing activities, primarily $9.4 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 and the repurchase of treasury stock.

in investing activities of $79,304 primarily for the purchase of equipment.

For the year ended January 31, 2023, we provided cash in financing

activities of $160,074, primarily from the proceeds of $296,875 from the exercise of warrants, offset from the purchase of treasury stock

For the year ended January 31, 2022, we had cash flows of $7,630,693 from financing activities, primarily $9.4 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 and the repurchase of treasury stock.

Off Balance Sheet Arrangements

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Critical Accounting Policies

Going Concern

As of January 31, 2022,

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 year ended and as of January 31, 2022 and has positive

working capital as of January 31, 2022.

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

The Company also received $2,942,970 of proceeds from the exercise of warrants.

Management retired most of its debt and other current

Management 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.

Management’s 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.

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.

Forward Stock Split

On July 26, 2022, our

Board of Directors approved the amendment to our Articles of Incorporation to effect a 7 for 6 forward stock split (the “Stock Split”)

of our outstanding common stock.

The Company filed the amendment set forth in a Certificate of Change with the Secretary of State of Nevada

on August 4, 2022.

The 7:6 forward stock split was effective for trading purposes on the Nasdaq Capital Market on August 12, 2022.

shareholder of record as of the August 15, 2022 record date received one (1) additional share for each six (6) shares held as of the record

No fractional shares of common stock were issued in connection with the Stock Split.

Instead, all shares were rounded up to the

next whole share.

In connection with the Stock Split, which did not require shareholder approval under the Nevada corporation law, the

number of shares of common stock of the Company was increased in the same ratio as the shares of outstanding common stock were increased

in the Stock Split, from 250,000,000 authorized shares to 291,666,666 authorized shares.

All share and per share

information in these financial statements retroactively reflect the forward stock split.

Going Concern Assessment

Management assesses liquidity

and going concern uncertainty in the Company’s condensed 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 in

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 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 January 31, 2023, the Company had cash and cash equivalents of

$1,985,440 and working capital of $1,945,132.

For the year ended January 31, 2023, the Company incurred an operating loss of $4,483,474

and used cash flow from operations of $2,987,198.

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.

In October 2021, the Company consummated

a public offering and received net proceeds of $5,836,230.

The Company also received to date $2,942,970 proceeds from the exercise of

The Company has used these proceeds to fund operations and will continue to use the funds as needed.

In March 2023, the Company

entered into a three-year $2,000,000 Creditline Note facility for $2 million which will permit the Company to draw on the credit line

to fund the Company’s research and development of its Aversa Fentanyl product.

Management has prepared

estimates of operations for the next twelve months and 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.

The impact 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 COVID-19 or its timing on a return to normal operations.

Management 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 allowances.

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.

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.

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 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.

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 years ended January 31, 2022 and 2021, the

Company recorded no bad debt expense for doubtful accounts related to account 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 years ended January 31, 2023 and 2022, 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 January 31, 2023 and 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 acquisitions have also been assigned to intellectual property and other

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

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.

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 PCP Assets and Active Intelligence , 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 PCP Assets and Active Intelligence goodwill to $3,629,813.

down of goodwill is attributable primarily to the effect of the pandemic.

Covid-19, unmet sales expectations, and other factors the Company

determined resulted in the impairment.

The valuation of the reporting unit does not exceed the carrying amount of goodwill using the value

in use or the going concern premise.

As of January 31, 2022 and 2021, goodwill amounted to $5,349,039 and $7,529,875, respectively.

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 years ended January 31, 2023 and 2022, the Company recorded an impairment charge of

$327,326 and $2,180,836, respectively, reducing the Active Intelligence LLC Goodwill to $3,302,478.

As of January 31, 2023 and 2022, Goodwill

amounted to $5,021,713 and $5,349,039, respectively.

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 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 the fair market

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

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.

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.

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

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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.

Share-based payments to employees, including

grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values.

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.

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.

Taxes are calculated

in accordance with taxation principles currently effective in the United States and Ireland.

The Company accounts

for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected

future tax consequences of events that have been included in the financial statements.

Under this method, deferred tax assets

and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using

enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates

on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net

deferred tax assets to the extent they believe these assets will more-likely-than-not be realized.

In making such determination,

the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,

projected future taxable income, tax planning strategies and recent financial operations.

In the event the Company was to determine

that it would be able to realize its deferred income tax assets in the future in excess of its net recorded amount, the Company would

make an adjustment to the valuation allowance which would reduce the provision for income taxes.

Concentration of

Financial instruments

which potentially subject the Company to concentrations of credit risk consist principally of cash.

The Company’s cash and cash

equivalents are concentrated primarily in banks.

At times, such deposits could be in excess of insured limits.

Management believes that

the financial institutions that hold the Company’s financial instruments are financially sound and, accordingly, minimal credit

risk is believed to exist with respect to those financial interests.

As of and for the year ended January 31, 2023, two customers accounted

for 34% and 14% of the Company’s revenue and one customer accounted for 94% of accounts receivable.

As of and for the year ended

January 31, 2022, three customers accounted for 19%, 17% and 13% of the Company’s revenue and three customers accounted for 58%,

21% and 17% of accounts receivable.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

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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-K

Item 7. Management’s Discussion and Analysis