What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-04-29 compared with 2025-04-28 · 130 added, 159 removed, 221 unchanged (57% of the section changed)

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

On March 20, 2024, our Board of Directors adopted

an amendment to the Company’s 2021 Employees Stock Option Plan (the “Plan”) increasing the number of shares of

common stock subject to the Plan (as of March 20, 2024) to 1,400,00 shares (the “Amendment”).

The Plan adopted by the Board

on November 1, 2021, provided for an initial 350,000 shares to issue and sell upon the exercise of stock options issued under the

We submitted the Amendment to the Plan to our stockholders for adoption and approval at the 2025 Annual Meeting, increasing the

authorized number of shares of common stock available for issuance of options to 1,400,000 shares, which Amendment was approved by our

stockholders at the meeting.

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 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.

Years Ended January 31, 2026 and 2025

For the year ending January 31, 2026, we generated

revenue of $2,139,537 and our costs of revenue were $1,396,220 resulting in a gross margin of $743,317.

revenue of $2,036,651 and our costs of revenue were $1,470,343 resulting in a gross profit of $566,308.

For the year ending January 31,

2024, we generated revenue of $2,085,314 and our costs of revenue were $1,223,209 resulting in a gross margin of $862,105.

2025, we generated revenue of $2,139,537 and our costs of revenue were $1,396,220 resulting in a gross profit of $743,317.

for the year ended January 31, 2026, was derived from sales from our Pocono Pharmaceuticals segment and $-0- from contract research and

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

The decline in gross margin is due primarily to lower margins on tape sales.

The decline in gross profit is due primarily

to lower margins on tape sales.

For the year ending January 31, 2026, our selling,

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The increase from

2024 is primarily due to an increase in non-cash compensation and public relations.

2025 is primarily due to an increase in equity-based expenses

During the year ending January 31, 2026, the Company

incurred research and development expenses for its Aversa Fentanyl product of $3,119,134, primarily due to labor and material costs incurred

at our contract manufacturer, Kindeva Drug Delivery, as compared to $1,960,425 for the year ending January 31, 2024.

incurred research and development expenses of its Aversa Fentanyl product of $1,891,129, primarily of salaries and increases in development

costs incurred at our contract manufacturer, Kindeva Drug Delivery, as compared to $3,119,134 for the year ending January 31, 2025.

decrease is primarily attributable to a reduction in labor costs.

During the year ending January 31, 2025, the Company

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incurred a loss on extinguishment of debt of $368,036 in connection with issuance of common stock and warrants to a related party debtor.

During the year ending January 31, 2024, the Company incurred a loss on extinguishment of debt of $554,423, consisting primarily of the

loss on the conversion of $2,000,000 of credit line note into 1,026,750 shares of the Company’s common stock.

We incurred interest expense of $22,535 for the

year ending January 31, 2026, as compared to $21,407 for the year ended January 31, 2025.

The decrease is primarily due to the decrease

in the Company’s related party credit line note.

Interest income for the year ending January 31,

2025, was $191,669 as compared to $16,850 for the year ending January 31, 2024.

The increase is primarily due to the investment of excess

cash from the Company’s equity financing.

2026, was $ 71,604 as compared to $191,669 for the year

ending January 31, 2025.

The decrease is primarily due to cash used in the Company’s development operations.

As a result of the foregoing, we sustained a net

loss of $10,482,617, or $(0.99) per share (basic and diluted) for the year ended January 31, 2025, compared with a loss of $5,485,314,

or $(0.69) per share (basic and diluted) for the year ended January 31, 2024.

loss of $8,229,632 for the year ending January 31, 2026 , exclusive of the net loss available to common shareholders of $30,043,798 or

$(2.58) per share (basic and diluted) after the preferred stock dividend, compared with a loss of $10,482,617, or $(0.99) per share (basic

and diluted) for the year ended January 31, 2025.

Liquidity and Capital Resources

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

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.

For the year ending January 31, 2026, we used

cash of $5,134,630 in our operations.

The principal adjustments to our net loss of $10,284,483 were an impairment charge of $3,595,216,

depreciation and amortization of $285,054, net loss on extinguishment of debt of $368,036 and stock-based compensation of $1,542,285.

For the year ending January 31, 2025, we used

cash in investing activities of $92,043 primarily for the purchase of equipment.

For the year ending January 31, 2025, we provided

cash in financing activities of $8,537,384, primarily from the proceeds of $8,400,000 from the sale of common stock and warrants and $300,000

from its line of credit.

The principal adjustments to our net loss of $8,229,632 were depreciation and amortization of $193,797,

and the issuance of employee stock options and warrants for services of $2,633,996.

For the year ending January 31, 2026, net cash

provided by financing activities of $5,403,092, primarily from the exercise of warrants.

Off Balance Sheet Arrangements

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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, 2025, the Company had cash and cash equivalents of

$4,311,719 and working capital of $3,811,420.

For the year ended January 31, 2025, the Company incurred a net loss from operations of

$10,284,843 and used cash flow from operations of $4,626,564.

The Company has generated operating losses since its inception and has relied

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

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

Credit Line Note facility with a related party, amended on July 13, 2023, to $5,000,000, which will permit the Company to draw down on

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

On April 19, 2024, the Company received proceeds

of $8,400,000 from equity financing with European investors.

and going concern uncertainty in the Company’s 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 GAAP.

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

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, 2026,

the Company had cash and cash equivalents of $4,574,857 and working capital of $4,204,632.

For the year ended January 31, 2026, the Company

incurred a net loss from operations of $8,229,632 and used cash flow from operations of $5,134,630.

The Company has generated operating

losses since its inception and has relied on sales of securities and the issuance of third-party and related-party debt to support cash

flow from operations.

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

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.

for one year from the date of the filing of these consolidated financial statements, which indicates improved operations and the Company’s

ability to continue operations as a going concern.

Management believes the

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of the Company’s revenue types, which include professional services and sale of goods:

● Contract development and manufacturing services

for consumer health transdermal, topical and tape products with revenues listed under sale of goods.

● Product revenues derived from the sale of the

Company’s consumer transdermal, topical and tape products with sales listed under sale of goods.

● Contract research and development services for

pharmaceutical and medical devices for life sciences customers with revenues listed under services.

Contract development and manufacturing services for consumer health transdermal, topical and tape products with revenues listed under sale of goods.

Product revenues derived from the sale of the Company’s consumer transdermal, topical and tape products with sales listed under sale of goods.

Contract research and development services for pharmaceutical and medical devices for life sciences customers with revenues listed under services.

Contracts with Customers

A contract with a customer exists when

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

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

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

intent and ability to pay the promised consideration.

A contract with a customer exists when (i) we

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

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

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

and ability to pay the promised consideration.

Contract Liabilities

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 conformity with GAAP.

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 conformity with GAAP.

Performance Obligations

A performance obligation is a promise

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

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

is satisfied.

A performance obligation is a promise in a contract

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

The contract transaction

price is allocated to each distinct 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.

Company’s performance obligations include providing products and professional services in the area of research.

The Company recognizes

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 over time on

a monthly basis for the work performed during that month.

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

The Company’s

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

The Company recognizes 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 over time on a monthly basis for

the work performed during that month.

All revenue recognized

in the income statement is considered to be revenue from contracts with customers.

Cash and cash equivalents.

Cash and cash equivalents include cash on

hand, snd cash on deposit in money market accounts.

The Company considers short-term highly liquid investments with an original maturity

date of three months or less that are not part of an investment pool to be cash equivalents.

As of January 31, 2025, the Company had $3,804,000

that exceeded federally insured cash balance limits.

Cash and cash equivalents include cash on hand, and cash on deposit

in money market accounts.

The Company considers short-term highly liquid investments with an original maturity date of three months or

less that are not part of an investment pool to be cash equivalents.

As of January 31, 2026, the Company had 4,064,000 that exceeded federally

insured cash balance limits.

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 the 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, 2025, and 2024, the Company recorded bad debt expenses of $1,200 and $11,836, respectively, for doubtful accounts related to accounts

During the year ended January 31, 2024, the Company entered into an accounts receivable sale agreement for one of its subsidiaries.

The Company received $106,528 in funds against an account receivable that is currently a claim in bankruptcy.

The net accounts receivable

remain on the books of the Company and a corresponding amount has been included as a secured borrowing liability under Notes payable.

As of January 31, 2025, the receivable has been reserved in full.

If the bankruptcy claim is not paid in full by the debtor, Company is

obligated to pay any difference to the factor.

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 the 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, 2026, and 2025, the Company recorded

bad debt expenses of $11,130 and $-0-, respectively, for doubtful accounts related to accounts receivable.

During the year ended January

31, 2024, the Company entered into an accounts receivable sale agreement for one of its subsidiaries.

The Company received $106,528 in

funds against an account receivable that is currently a claim in bankruptcy.

The net accounts receivable remains on the books of the Company

and a corresponding amount has been included as a secured borrowing liability under Notes payable.

As of January 31, 2025, the receivable

has been reserved in full.

If the bankruptcy claim is not paid in full by the debtor, Company is obligated to pay any difference to the

The loan bears interest at 10%.

The Company adopted ASU 2016-13 during 2013 and implemented

the guidance on expected credit losses.

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, 2025, total inventory was $212,041, consisting of work-in-process of $46,255, finished goods of $16,609 and

raw materials of $149,177.

As of January 31, 2024, total inventory was $168,605, consisting of work-in-process of $7,466, finished goods

of $8,707 and raw materials of $152,432.

The Company adopted ASU 2016-13 during 2013 and implemented the guidance on expected credit losses.

Inventories are valued at the lower of cost and net realizable 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 capacity).

As of January 31, 2026, total inventory

was $117,987, consisting of work in progress:

$26,364, finished goods:

$2,814, and raw materials:

Property, Plant

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charge of $293,038 to its Intellectual property.

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 Pocono Coated Products LLC and Active Intelligence LLC, the Company recorded Goodwill of $5,810,640.

During the years ending

January 31, 2025 and 2024, the Company recorded an impairment charge of $3,302,478 and $-0-, respectively, reducing the Active Intelligence

LLC Goodwill to $-0-.

As of January 31, 2025, and 2024, Goodwill amounted to $1,719,535 and $5,021,713, respectively.

There was no impairment during the year ended January 31, 2026.

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 ending January 31, 2026 and 2025, the Company recorded an impairment charge

of $-0- and $3,302,478, respectively, reducing the Active Intelligence LLC Goodwill to $-0-.

As of January 31, 2026, and 2025, Goodwill

amounted to $1,719,535 and $1,719,535, respectively.

Long-lived Assets

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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 January 31, 2025, and 2024, there were 6,920,641 and 2,157,873 common stock equivalents

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

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.

Potential shares of common stock consist of shares issuable upon the exercise of outstanding options and common

stock purchase warrants.

As of January 31, 2026, and 2025, there were 9,347,682 and 6,920,641 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.

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 grant date 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.

Business Combinations

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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