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Item 2. Management’s Discussion and Analysis

2025-12-11 compared with 2025-09-09 · 97 added, 103 removed, 102 unchanged (66% of the section changed)

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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.

“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

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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, 2025, 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.

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

31, 2025, 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

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On April 19, 2024, the Company completed an $8,400,000

equity financing with European investors (the “Offering”) of 2,100,000 units (“Units”), at a price of $4.00

per Unit, each Unit consisting of one share of common stock (“Shares”) and a Warrant to purchase two Shares of common stock,

the Warrants having an initial exercise price of $6.43, are exercisable by payment of the exercise price in cash only and expire April

equity financing with European investors (the “Offering”) of 2,100,000 units (“Units”), at a price of $4.00 per

Unit, each Unit consisting of one share of common stock (“Shares”) and a Warrant to purchase two Shares of common stock, the

Warrants having an initial exercise price of $6.43, are exercisable by payment of the exercise price in cash only and expire April 19,

2029, five years from the date of issuance (“Warrants”).

The Offering was made solely to investors resident outside

the United States and was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities

laws of any jurisdiction, including any jurisdiction outside the United States, but was made privately by the Company pursuant to the

exemptions from registration provided in the SEC’s Regulation S and other exemptions under the Securities Act.

The Offering was made solely to investors resident outside the United

States and was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws

of any jurisdiction, including any jurisdiction outside the United States, but was made privately by the Company pursuant to the exemptions

from registration provided in the SEC’s Regulation S and other exemptions under the Securities Act.

AVERSA Abuse Deterrent Transdermal Products

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In January 2024, we signed a commercial development

and clinical supply agreement with Kindeva Drug Delivery, formerly 3M Drug Delivery (“Kindeva”), for the development of

AVERSA Fentanyl using Kindeva’s FDA-approved fentanyl patch.

This agreement replaced the previous feasibility agreement between

the two companies which was focused on establishing the feasibility of incorporating our AVERSA abuse deterrent transdermal technology

into Kindeva’s commercial transdermal manufacturing process.

The commercial development and clinical supply agreement is focused

on developing the commercial manufacturing process for AVERSA Fentanyl.

and clinical supply agreement with Kindeva Drug Delivery, formerly 3M Drug Delivery (“Kindeva”), for the development of AVERSA

Fentanyl using Kindeva’s FDA-approved fentanyl patch.

This agreement replaced the previous feasibility agreement between the two

companies which was focused on establishing the feasibility of incorporating our AVERSA abuse deterrent transdermal technology into Kindeva’s

commercial transdermal manufacturing process.

The commercial development and clinical supply agreement is focused on developing the commercial

manufacturing process for AVERSA Fentanyl.

On November 1, 2021, The Board of Directors adopted

the 2021 Employee Stock Option Plan (the “Plan”), and the Plan then adopted provided for an initial 350,000 shares

the 2021 Employee Stock Option Plan (the “Plan”), and the Plan then adopted provided for an initial 350,000 shares to

issue and sell upon the exercise of stock options issued under the Plan.

As of September 8, 2025, the Company has reserved 1,645,751 shares

to issue and sell upon the exercise of stock options issued under the Plan.

As of September 8, 2025, the Company has reserved 1,645,751

shares to issue and sell upon the exercise of stock options issued under the Plan.

The Plan provides for an automatic annual increase

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holder into one share of Common Stock following the date of the approval for commercial sale by the Federal Drug Administration of the

Company’s transdermal pharmaceutical products that are based on the Company’s AVERSA ™ abuse deterrent

transdermal technology.

The holders of Series A Preferred Stock that do not convert their shares shall be eligible for dividends as declared

by the Board of Directors for those holders, and the Series A Preferred is also eligible for dividends declared by the Board of Directors

on the class of common stock.

In the preferred stock dividend, 3,008,643 shares of the Series A Preferred Stock (including shares of common

stock issued to stockholders exercising warrants following the distribution of the dividend) were issued to our stockholders.

value of the dividend was $21,814,166.

Company’s transdermal pharmaceutical products that are based on the Company’s AVERSA ™ abuse deterrent t technology.

The holders of Series A Preferred Stock that do not convert their shares shall be eligible for dividends as declared by the Board of Directors

for those holders, and the Series A Preferred is also eligible for dividends declared by the Board of Directors on the class of common

In the preferred stock dividend, 3,008,643 shares of the Series A Preferred Stock (including shares of common stock issued to stockholders

exercising warrants following the distribution of the dividend) were issued to our stockholders.

The fair value of the dividend was $21,814,166.

Results of Operations

Three Months Ended July 31, 2025 and 2024

For the three months ending July 31, 2025, we

generated revenue of $622,452 and our revenue costs were $465,571, resulting in a gross profit of $156,881.

Three Months Ended October 31, 2025 and 2024

For the three months ending October 31, 2025,

we generated revenue of $346,058 and our revenue costs were $277,553, resulting in a gross profit of $68,505.

For the three months ending

July 31, 2024, we generated revenue of $442,830 and our costs of revenue were $341,272, resulting in a gross profit of $101558.

for the three months ending July 31, 2025, was derived from sales from our Pocono Pharmaceuticals segment and $-0- from contract research

and development services from our 4P Therapeutics segment.

The revenue from the Pocono Pharmaceuticals segment increased from the prior

year as the Company ordered additional equipment to meet the new demand and implemented this equipment during the third quarter of the

An increase in demand is expected in the balance of the current year.

There were no sales in our 4P Therapeutics segment in

the current year due to a shift in focus and the main contract wound down in the prior year.

The increase in gross margin is due primarily

to higher margins in our sales mix.

For the three months ending July 31, 2025, our

selling, general and administrative expenses were $1,597,540, primarily legal, accounting and compensation expenses compared to $737,325

for the three months ending July 31, 2024.

October 31, 2024, we generated revenue of $645,796 and our costs of revenue were $454,767, resulting in a gross profit of $191,029.

revenue for the three months ending October 31, 2025, was derived from sales from our Pocono Pharmaceuticals segment and $-0- from contract

research and development services from our 4P Therapeutics segment.

The revenue from the Pocono Pharmaceuticals segment decreased from

the prior year as one of the Company’s principal customers moved their operations to Asia.

A decrease in demand is expected in

the balance of the current year.

There were no sales in our 4P Therapeutics segment in the current year due to a shift in focus and the

main contract wound down in the prior year.

The increase in gross margin is due primarily to higher margins in our sales mix.

For the three months ending October 31, 2025, our selling, general

and administrative expenses were $3,491,728, primarily legal, accounting and compensation expenses compared to $737,102 for the three

months ending October 31, 2024.

The increase from 2024 is primarily attributable to increases in compensation-based expenses.

During the three months ending July 31, 2025,

the Company incurred research and development expenses of its Aversa Fentanyl product of $562,554, primarily of salaries and development

costs from Kindeva as compared to $773,975 for the three months ending July 31, 2024.

During the three months ending October 31, 2025, the Company incurred

research and development expenses of its Aversa Fentanyl product of $457,113, primarily of salaries and development costs from Kindeva

as compared to $880,768 for the three months ending October 31, 2024.

The decrease is primarily attributable to a reduction in labor costs.

We incurred interest expenses of $5,546 for the three months ending

October 31, 2025, as compared to $4,031 for the three months ending October 31, 2024.

Interest income for the three months ending October

31, 2025 was $13,517 as compared to $68,235 for the three months ending October 31, 2024.

The decrease is primarily due to a decrease

in cash used in the Company’s operations.

As a result of the foregoing, we sustained a net loss of $3,872,367

for the three months ending October 31, 2025, or ($0.32) per share (basic and diluted) , compared with a loss of $1,362,637, or $(0.12)

per share (basic and diluted) for the three months ending October 31, 2024.

Nine Months Ended October 31, 2025 and 2024

For the nine months ending October 31, 2025, we

generated revenue of $1,635,942 and our revenue costs were $1,158,575, resulting in a gross profit of $477,367.

For the nine months ending

October 31, 2024, we generated revenue of $1,497,158 and our costs of revenue were $1,039,785, resulting in a gross profit of $453,373.

Our revenue for the nine months ending October 31, 2025, was derived from sales from our Pocono Pharmaceuticals segment and $-0- from

contract research and development services from our 4P Therapeutics segment.

The revenue from the Pocono Pharmaceuticals segment increased

from the prior year as the Company ordered additional equipment to meet the new demand and implemented this equipment during the third

quarter of the prior year.

An increase in demand is expected in the balance of the current year.

There were no sales in our 4P Therapeutics

segment in the current year due to a shift in focus and the main contract wound down in the prior year.

The increase in gross margin is

due primarily to higher margins in our sales mix.

For the nine months ending October 31, 2025, our selling, general and

administrative expenses were $6,071,320, primarily legal, accounting and compensation expenses compared to $2,554,155 for the nine months

ending October 31, 2024.

The increase from 2024 is primarily attributable to increases in equity-based expenses.

During the nine months ending October 31, 2025, the Company incurred

research and development expenses of its Aversa Fentanyl product of $1,703,093, primarily of salaries and increases in development costs

from Kindeva as compared to $2,629,278 for the nine months ending October 31, 2024.

The decrease is primarily attributable to a reduction

in labor costs.

We incurred interest expenses of $5,773 for the

three months ending July 31, 2025, as compared to $5,018 for the three months ending July 31, 2024.

Interest income for the three months ending July

31, 2025 was $8,849 as compared to $77,332 for the three months ending July 31, 2024.

The decrease is primarily due to a decrease in cash

used in the Company’s operations..

As a result of the foregoing, we sustained a net

loss of $2,000,337 for the three months ending July 31, 2025, exclusive of the net loss available to common stockholders of $23,814,503

or ($2.12) per share (basic and diluted) after the preferred stock dividend, compared with a loss of $1,705,465, or $(0.15) per share

(basic and diluted) for the three months ending July 31, 2024.

Six Months Ended July 31, 2025 and 2024

For the six months ending July 31, 2025, we generated

revenue of $1,289,884 and our revenue costs were $881,022, resulting in a gross profit of $408,862.

For the six months ending July 31,

2024, we generated revenue of $851,362 and our costs of revenue were $585,018, resulting in a gross profit of $266,344.

Our revenue for

the six months ending July 31, 2025, was derived from sales from our Pocono Pharmaceuticals segment and $-0- from contract research and

development services from our 4P Therapeutics segment.

The revenue from the Pocono Pharmaceuticals segment increased from the prior year

as the Company ordered additional equipment to meet the new demand and implemented this equipment during the third quarter of the prior

An increase in demand is expected in the balance of the current year.

There were no sales in our 4P Therapeutics segment in the

current year due to a shift in focus and the main contract wound down in the prior year.

The increase in gross margin is due primarily

to higher margins in our sales mix.

For the six months ending July 31, 2025, our selling,

general and administrative expenses were $2,579,592, primarily legal, accounting and compensation expenses compared to $1,817,053 for

the six months ending July 31, 2024.

The increase from 2024 is primarily attributable to increases equity-based expenses.

During the six months ending July 31, 2025, the

Company incurred research and development expenses of its Aversa Fentanyl product of $1,245,980, primarily of salaries and increases in

development costs from Kindeva as compared to $1,748,510 for the six months ending July 31, 2024.

The decrease is primarily attributable

to a reduction in labor costs.

We incurred interest expenses of $11,853 for the

six months ending July 31, 2025, as compared to $13,837 for the six months ending July 31, 2024.

Interest income for the six months ending July

31, 2025 was $39,157 as compared to $77,350 for the six months ending July 31, 2024.

The decrease is primarily due to cash used in the

Company development operations.

We incurred interest expenses of $17,201 for the nine months ending

October 31, 2025, as compared to $17,668 for the nine months ending October 31, 2024.

Interest income for the nine months ending October 31, 2025 was $52,674

as compared to $145,585 for the nine months ending October 31, 2024.

The decrease is primarily due to cash used in the Company development

As a result of the foregoing, we sustained a net

loss of $3,389,206 for the six months ending July 31, 2025, exclusive of the net loss available to common of stockholders of $25,203,372

loss of $7,261,573 for the nine months ending October 31, 2025, exclusive of the net loss available to common of stockholders of $29,075,739

or (2.54) per share (basic and diluted) after the preferred stock dividend, compared with a loss of $4,966,179, or $(0.48) per share (basic

and diluted) for the six months ending July 31, 2024.

and diluted) for the nine months ending October 31, 2024.

Liquidity and Capital Resources

As of July 31, 2025, we had $6,995,101 in cash

and cash equivalents and working capital of $5,948,628, as compared with cash and cash equivalents of $4,311,719 and working capital of

$3,811,420 as of January 31, 2025.

For the six months ending July 31, 2025, we used

cash of $2,650,313 in our operations.

The principal adjustments to our net loss of $3,389,206 were depreciation and amortization of $114,862,

and the issuance of employee stock for services in the amount of $104,400.

For the six months ending July 31, 2025, we used

cash in investing activities of $5,324 primarily for the purchase of equipment.

For the six months ending July 31, 2025, cash

provided from financing activities was $5,339,019 primarily from the exercise of warrants.

As of October 31, 2025, we had $5,312,177 in cash and cash equivalents

and working capital of $5,042,540, as compared with cash and cash equivalents of $4,311,719 and working capital of $3,811,420 as of January

For the nine months ending October 31, 2025, we used cash of $4,402,800

in our operations.

The principal adjustments to our net loss of $7,261,573 were depreciation and amortization of $157,918, and the issuance

of employee stock for services in the amount of $2,639,883.

For the nine months ending October 31, 2025, we

used cash in investing activities of $5,324 primarily for the purchase of equipment.

For the nine months ending October 31, 2025, cash provided from financing

activities was $5,408,582 primarily from the exercise of warrants.

Off Balance Sheet Arrangements

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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-Q

Item 2. Management’s Discussion and Analysis