NutriBand Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NUTRIBAND INC. January 31, 2026 Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 3627 ) F-2 Consolidated Balance Sheet as of January 31, 2026 and 2025 F-3 Consolidated Statements of Operations for the years ended January 31, 2026 and 2025 F-4 Consolidated Statements of Stockholders’ Equity for the year ended January 31, 2026 and 2025 F-5 Consolidated Statements of Cash Flows for the years ended January 31, 2026 and 2025 F-6 Notes to Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Nutriband Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Nutriband Inc. and subsidiaries (“the Company”) as of January 31, 2026 and 2025, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended January 31, 2026, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. /s/ Sadler, Gibb & Associates, LLC We have served as the Company’s auditor since 2016. Draper, UT April 29, 2026 F- 2 NUTRIBAND INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS January 31, ASSETS 2026 2025 CURRENT ASSETS: Cash and cash equivalents $ 4,574,857 $ 4,311,719 Accounts receivable-net 118,404 73,847 Inventory- net 117,987 212,041 Prepaid expenses 177,470 196,658 Total Current Assets 4,988,718 4,794,265 PROPERTY & EQUIPMENT-net 567,255 695,063 OTHER ASSETS: Goodwill 1,719,535 1,719,535 Operating lease right of use asset 72,000 - Intangible assets-net 200,427 261,092 TOTAL ASSETS $ 7,547,935 $ 7,469,955 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 502,654 $ 698,821 Deferred revenue 120,303 155,880 Operating lease liability-current portion 32,453 - Notes payable-current portion 128,871 128,144 Total Current Liabilities 784,281 982,845 LONG-TERM LIABILITIES: Note payable-net of current portion 35,861 58,205 Operating lease liability-net of current portion 48,305 - Total Liabilities 868,447 1,041,050 Commitments and Contingencies - - STOCKHOLDERS’ EQUITY: Preferred stock, $ .001 par value, 10,000,000 shares authorized, 3,008,643 and - 0 - issued and outstanding as of January 31, 2026 and 2025, respectively 3,009 - Common stock, $ .001 par value, 291,666,666 shares authorized, 12,174,883 and 11,107,210 shares issued at January 31, 2026 and 31, 2025, respectively, 12,155,983 and 11,074,810 shares outstanding as of January 31, 2026 and 2025, respectively 12,156 11,075 Additional paid-in-capital 53,443,747 45,029,317 Accumulated other comprehensive loss ( 304 ) ( 304 ) Treasury stock, 18,900 and 32,400 shares at cost, as of January 31, 2026 and 2025, respectively ( 86,852 ) ( 148,547 ) Accumulated deficit ( 46,692,268 ) ( 38,462,636 ) Total Stockholders’ Equity 6,679,488 6,428,905 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 7,547,935 $ 7,469,955 See notes to consolidated financial statements F- 3 NUTRIBAND INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended January 31, 2026 2025 Revenue $ 2,036,651 $ 2,139,537 Costs and expenses: Cost of revenues 1,470,343 1,396,220 Research and development 1,891,129 3,119,134 Goodwill and intangibles impairment - 3,595,216 Selling, general and administrative 6,993,140 4,313,810 Total Costs and Expenses 10,354,612 12,424,380 Loss from operations ( 8,317,961 ) ( 10,284,843 ) Other income (expense): Other income 110,864 191,669 Loss on extinguishment of debt - ( 368,036 ) Interest expense ( 22,535 ) ( 21,407 ) Total other income (expense) 88,329 ( 197,774 ) Loss before provision for income taxes ( 8,229,632 ) ( 10,482,617 ) Provision for income taxes - - Net loss $ ( 8,229,632 ) $ ( 10,482,617 ) Preferred shares dividend ( 21,814,166 ) - Net loss available to common stockholders- basic and diluted $ ( 30,043,798 ) $ ( 10,482,617 ) Net loss per share attributable to common stockholders- basic and diluted $ ( 2.58 ) $ ( 0.99 ) Weighted average common shares outstanding - basic and diluted 11,640,995 10,607,477 See notes to consolidated financial statements F- 4 NUTRIBAND INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Year Ended January 31, 2026 Accumulated Common Stock Preferred Stock Additional Other Number of Number of Paid In Comprehensive Accumulated Treasury Total shares Amount shares Amount Capital Income (Loss) Deficit Stock Balance, February 1, 2025 $ 6,428,905 11,074,810 $ 11,075 - $ - $ 45,029,317 $ ( 304 ) $ ( 38,462,636 ) $ ( 148,547 ) Treasury stock issued for services 104,400 13,500 14 - - 42,691 - - 61,695 Exercise of warrants 5,305,503 825,117 825 - - 5,304,678 - - - Warrants issued for services 1,250,264 - - - - 1,250,264 - - - Exercise of employee stock options 119,206 40,055 40 - - 119,166 - - - Employee stock options exercised for settlement of debt 317,110 120,000 120 - - 316,990 - - - Preferred Shares issued as Common stock dividend - - - 3,008,643 3,009 ( 3,009 ) - - - Employee stock options issued for services 1,383,732 - - - - 1,383,732 - - - Cashless exercise of warrants - 82,501 82 - - ( 82 ) - - - Net loss ( 8,229,632 ) - - - - - - ( 8,229,632 ) - Balance, January 31, 2026 $ 6,679,488 12,155,983 $ 12,156 3,008,643 $ 3,009 $ 53,443,747 $ ( 304 ) $ ( 46,692,268 ) $ ( 86,852 ) Year Ended January 31, 2025 Accumulated Common Stock Preferred Stock Additional Other Number of Number of Paid In Comprehensive Accumulated Treasury Total shares Amount shares Amount Capital Income (Loss) Deficit Stock Balance, February 1, 2024 $ 6,438,235 8,859,870 $ 8,860 - $ - $ 34,442,339 $ ( 304 ) $ ( 27,980,019 ) $ ( 32,641 ) Proceeds from sale of common stock and warrants 8,400,000 2,100,000 2,100 - - 8,397,900 - - - Options issued for services 1,408,935 - - - - 1,408,935 - - - Common stock and warrants issued for conversion of debt 672,958 76,230 76 - - 672,882 - - - Treasury stock and warrants issued for services 133,350 10,000 10 - - 100,699 - - 32,641 Purchase of treasury stock ( 148,547 ) ( 32,400 ) ( 32 ) - - 32 - - ( 148,547 ) Exercise of warrants 6,591 61,110 61 - - 6,530 - - - Net loss ( 10,482,617 ) - - - - - - ( 10,482,617 ) - Balance, January 31, 2025 $ 6,428,905 11,074,810 $ 11,075 - $ - $ 45,029,317 $ ( 304 ) $ ( 38,462,636 ) $ ( 148,547 ) See notes to consolidated financial statements F- 5 NUTRIBAND INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended January 31, 2026 2025 Cash flows from operating activities: Net loss $ ( 8,229,632 ) $ ( 10,482,617 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 193,797 285,054 Operating lease expense 36,000 31,374 Loss on extinguishment of debt - 368,036 Goodwill and intangible impairment - 3,595,216 Stock-based compensation-shares issued for services 104,400 133,350 Stock-based compensation-options and warrants 2,633,996 1,408,935 Changes in operating assets and liabilities: Accounts receivable ( 44,557 ) 74,802 Prepaid expenses 19,188 15,009 Inventories 94,054 ( 43,436 ) Deferred revenue ( 35,577 ) ( 1,622 ) Operating lease liability ( 27,242 ) ( 34,276 ) Accounts payable and accrued expenses 120,943 23,611 Net Cash Used In Operating Activities ( 5,134,630 ) ( 4,626,564 ) Cash flows from investing activities: Purchase of equipment ( 5,324 ) ( 92,043 ) Net Cash Used in Investing Activities ( 5,324 ) ( 92,043 ) Cash flows from financing activities: Proceeds from note payable-related party - 300,000 Proceeds from the exercise of employee stock options 119,206 - Proceeds from sale of common stock and exercise of warrants 5,305,503 8,406,591 Purchase of treasury stock - ( 148,547 ) Payment on note payable ( 21,617 ) ( 20,660 ) Net Cash Provided by Financing Activities 5,403,092 8,537,384 Net change in cash 263,138 3,818,777 Cash and cash equivalents - Beginning of period 4,311,719 492,942 Cash and cash equivalents - End of period $ 4,574,857 $ 4,311,719 Supplementary information: Cash paid for: Interest $ 1,250 $ 5,631 Income taxes $ - $ - Supplemental disclosure of non-cash investing and financing activities: Cashless conversion of warrants $ 82 $ 60 Measurement of operating lease right-of-use assets and liabilities $ 108,000 $ - Debt settlement issued by the issuance of common stock and warrants $ - $ 672,956 Preferred Shares issued as Common stock dividend $ 21,814,166 $ - Options exercised in exchange for debt $ 317,110 $ - See notes to consolidated financial statements F- 6 NUTRIBAND INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements as of and for the Years Ended January 31, 2026 and 2025 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Nutriband Inc. (the “Company”) is a Nevada corporation, incorporated on January 4, 2016. In January 2016, the Company acquired Nutriband Ltd, an Irish company which was formed by the Company’s chief executive officer in 2012 to enter the health and wellness market by marketing transdermal patches. References to the Company relate to the Company and its subsidiaries unless the context indicates otherwise. On August 1, 2018, the Company acquired 4P Therapeutics LLC (“4P Therapeutics”) for $ 2,250,000 , consisting of 250,000 shares of common stock, valued at $ 1,850,000 , and $ 400,000 , and a royalty of 6 % on all revenue generated by the Company from the abuse deterrent intellectual property that had been developed by 4P Therapeutics payable to the former owner of 4P Therapeutics. The former owner of 4P Therapeutics was a director of the Company from April 2018, when the Company entered into an agreement to acquire 4P Therapeutics until he resigned as a director in January 2022. 4P Therapeutics is engaged in the development of transdermal pharmaceutical products. With the acquisition of 4P Therapeutics, 4P Therapeutics’ drug development business became the Company’s principal business. The primary focus of the business is to incorporate the Company’s Aversa abuse deterrent technology into transdermal patches containing already approved drugs. Although these drugs are already approved, the Company needs to conduct a product development program which will include the preclinical and clinical trials that are necessary to receive FDA approval before we can market any of our pharmaceutical products. On August 25, 2020, the Company formed Pocono Pharmaceuticals Inc. (“Pocono Pharmaceuticals”), a wholly owned subsidiary of the Company. On August 31, 2020, the Company acquired certain assets and liabilities associated with the Transdermal, Topical, Cosmetic, and Nutraceutical businesses of Pocono Coated Products LLC (“PCP”). The net assets were contributed to Pocono Pharmaceuticals. Included in the transaction, Pocono Pharmaceuticals also acquired 100 % of the membership interests of Active Intelligence LLC (“Active Intelligence”). Pocono Pharmaceuticals is a coated products contract development and manufacturing organization that supports their customers with product design, development and manufacturing services. Pocono Pharmaceuticals has specialized expertise and state-of-the-art manufacturing capabilities for topical, transdermal and kinesiology tape products. Active Intelligence manufactures activated kinesiology tape for customers in the sports and physical markets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going Concern Assessment Management assesses liquidity 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. 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. F- 7 As of January 31, 2026, the Company had cash and cash equivalents of $ 4,574,857 and working capital of $ 4,204,437 . For the year ended January 31, 2026, the Company incurred a net loss from operations of $ 8,317,961 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. 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. During the year ended January 31, 2026, the Company received proceeds of $ 5,425,709 from the exercise of warrants and employee stock options. Management has prepared estimates for 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 consolidated financial statements, which indicates improved operations and the Company’s ability to continue operations as a going concern. Management believes the substantial doubt about the ability of the Company to continue as a going concern is alleviated by the above assessment. Principles of Consolidation The consolidated financial statements of the Company include the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated. The operations of 4P Therapeutics are included in the Company’s financial statements from the date of acquisition of August 1, 2018, and the acquired operations of Pocono Coated Products and Active Intelligence are included in the Company’s financial statements from the date of acquisition of September 1, 2020, under Pocono Pharmaceuticals Inc. The wholly owned subsidiaries are as follows: Nutriband Ltd. 4P Therapeutics LLC Pocono Pharmaceuticals Inc. 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. 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. Revenue Types The following is a description 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 device life sciences customers with revenues listed under services. F- 8 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. 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. 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 accounts 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. 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. Disaggregation of Revenues The Company disaggregates its revenue from contracts with customers by type and by geographical location. See the tables: Years Ending January 31, 2026 2025 Revenue by type: Sale of goods $ 2,036,651 $ 2,139,537 Services - - Total $ 2,036,651 $ 2,139,537 Years Ending January 31, 2026 2025 Revenue by geographic location: United States $ 2,029,021 $ 2,139,537 Foreign 7,630 - Total $ 2,036,651 $ 2,139,537 Cash and cash equivalents. 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 approximately $ 4,064,000 that exceeded federally insured cash balance limits. F- 9 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, 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, 2026, 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. The loan bears interest at 10 %. The Company adopted ASU 2016-13 during 2013 and implemented the guidance on expected credit losses. Concentration of credit risk The Company discloses that potential credit risk concentration exists with revenue. For the year ended January 31, 2026, three customers accounted for 63 % of total revenue. The Company lost a customer that represented 24 % of total revenue. Inventories 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-process of $ 26,365 , finished goods of $ 2,815 and raw materials of $ 88,808 . 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 . Property, Plant and Equipment Property and equipment represent an important component of the Company’s assets. The Company depreciates its plant and equipment on a straight-line basis over the estimated useful life of the assets. Property, plant and equipment is stated at historical cost. Expenditures for minor repairs, maintenance and replacement parts which do not increase the useful lives of the assets are charged to expense as incurred. All major additions and improvements are capitalized. Depreciation is computed using the straight-line method. The lives over which the fixed assets are depreciated range from 3 to 20 years as follows: Lab Equipment 5 - 10 Years Furniture and Equipment 3 - 5 Years Machinery and Equipment 5 - 20 Years 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 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 . During the year ended January 31, 2025, the Company recorded an impairment charge of $ 293,038 to its intellectual property. During the year ended January 31, 2026, there was no impairment. Goodwill 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 ended 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. F- 10 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. Treasury Stock The Company records the purchase of its treasury shares under the historical cost method. The reissuance of treasury shares are recorded using the average cost method. 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. 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 9,347,862 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. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their 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 The Company recognizes the assets acquired, the liabilities assumed, and any non-controlling interest in the acquired entity at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the accounting literature. In accordance with this guidance, acquisition-related costs, including restructuring costs, must be recognized separately from the acquisition and will generally be expensed as incurred. That replaces the cost-allocation process detailed in previous accounting literature, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair value. Leases In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), to provide a new comprehensive model for lease accounting under this guidance, lessees and lessors should apply a “right-of-use” model in accounting for all leases (including subleases) and eliminate the concept of operating leases and off-balance-sheet leases. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. The Company applies guidance for right-of-use accounting for all leases and records the operating lease liabilities on its balance sheet. The Company completed the necessary changes to its accounting policies, processes, disclosure and internal control over financial reporting. Research and Development Expenses Research and development costs are expensed as incurred. F- 11 Income Taxes 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 a 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 determined 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. Fair Value Measurements FASB ASC 820, “Fair Value Measurements and Disclosure” (“ASC 820”), defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of input that may be used to measure fair value. The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: Level 1 - Observable inputs such as quoted market prices in active markets. Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions. The carrying value of the Company’s financial instruments, including accounts receivable, prepaid expenses, accounts payable and accrued expenses, and deferred revenue approximate their fair value due to the short maturities of these financial instruments. Recent Accounting Standards The Company has reviewed all other FASB-issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter previous GAAP and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management and certain standards are under consideration. F- 12 3. PROPERTY AND EQUIPMENT Years Ending January 31, 2026 2025 Lab equipment $ 144,585 $ 144,585 Machinery and equipment 1,389,756 1,384,432 Furniture and Fixtures 19,643 19,643 $ 1,553,984 $ 1,548,660 Less: Accumulated depreciation ( 986,729 ) ( 853,597 ) Net Property and Equipment $ 567,255 $ 695,063 Depreciation expenses amounted to $ 133,132 and $ 171,903 for the years ended January 31, 2026, and 2025, respectively. During the years ended January 31, 2026, and 2025, depreciation expenses of $ 89,935 and $ 127,888 , respectively, have been allocated to the cost of goods sold. 4. NOTES PAYABLE Notes Payable Active Intelligence, entered into an agreement with the Carolina Small Business Development Fund for a line of credit of $ 160,000 due October 16, 2028 , with interest of 5 % per year. The amount assumed was $ 139,184 . The loan requires monthly payments of principal and interest of $ 1,697 . During the year ended January 31, 2026, the Company made $ 16,954 of principal payments. As of January 31, 2026, the amount due was $ 52,178 , of which $ 17,541 is current. As of January 31, 2025, the amount due was $ 69,132 . On April 3, 2022, the Company entered into a retail installment agreement for the purchase of an automobile. The contract price was $ 32,274 , of which $ 22,795 was financed. The agreement is for five years bearing interest at 2.95 % per annum with payments of $ 410 per month. The loan is secured by automobile. As of January 31, 2026, the amount due was $ 6,026 , of which $ 4,802 is current. As of January 31, 2025, the amount due was $ 10,689 . Note payable-related party. On July 17, 2023, the Company entered an amended Credit Line Note agreement, for an increased $ 5,000,000 credit line facility to the Company entered on March 17, 2023. Outstanding advances under the Note bears interest at 7 % per annum. The promissory note is due and payable in full on July 13, 2026. Interest is payable annually on December 31 of each year during the term of the note. The Company received advances of $ 300,000 during the nine months ended October 31, 2024. On May 15, 2024, the Company agreed to convert the $ 300,000 debt. The conversion was made pursuant to the terms of a Conversion Agreement, which provided the conversion of $ 300,000 of principal and $ 4,922 of accrued interest. The Company issued 76,230 shares of common stock and 152,460 warrants exercisable at $ 6.43 per share, resulting in a $ 368,036 loss on extinguishment. As of January 31, 2026 and 2025, the balance due was $- 0 - and $- 0 -, respectively. The Company recorded interest expense of $- 0 - and $ 4,163 for the years ended January 31, 2026, and 2025, respectively. Secured borrowing liability. On July 19, 2023, the Company entered into an accounts receivable sale agreement for one of its subsidiaries in connection with a bankruptcy claim. The Company received $ 106,528 and recorded the transaction as a secured loan payable against the account receivable. The sale of the account receivable balance was to an outside third party, whereby if the bankruptcy court does not pay the balance in full, the Company will owe back the unpaid portion. The loan is classified as a current liability as the Company expects the bankruptcy will be resolved in the next twelve months. The loan bears interest at 10 %. For the years ended January 31, 2026, and 2025, the Company recorded an interest expense of $ 10,454 and $ 10,482 , respectively. Interest expenses for the years ended January 31, 2026, and 2025, were $ 22,535 and $ 21,407 , respectively. F- 13 5. INCOME TAXES The Company adopted the provisions of ASC 740, “Income Taxes (“ASC 740”). As a result of the implementation of ASC 740, the Company recognized no adjustment in the net liability for unrecognized income tax benefits. The Company believes there are no potential uncertain tax positions, and all tax returns are correct as filed. Should the Company recognize a liability for uncertain tax positions, the Company will separately recognize the liability for uncertain tax positions on its balance sheet. Included in any liability or uncertain tax positions, the Company will also set up a liability for interest and penalties. The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes. There is no U.S. tax provision due to losses from U.S. operations for the years ending January 31, 2026 and 2025. Deferred income taxes are provided for the temporary differences between the financial reporting and tax basis of the Company’s assets and liabilities. The principal item giving rise to deferred taxes is the net operating loss carryforward in the U.S. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has set up a valuation allowance for losses for certain carryforwards that it believes may not be realized. The Provision for income taxes consists of the following: Years Ending January 31, 2026 2025 Current Federal $ - Foreign - - Deferred Federal $ - Foreign - - A reconciliation of taxes on income computed at the federal statutory rate to amounts provided is as follows: Years Ending January 31, 2026 2025 Book Income (loss from operations) $ ( 1,728,223 ) $ ( 2,201,350 ) Common Stock issued for services 575,063 323,880 Impairment expense - 754,996 Unused operating losses $ 1,153,160 1,122,474 Income tax expense $ - As of January 31, 2026, the Company recorded a deferred tax asset associated with a net operation loss (“NOL”) carry forward of approximately $ 26,600,000 that was fully offset by a valuation allowance due to the determination that it was more likely than not that the Company would be unable to utilize those benefits in the foreseeable future. The Company’s NOL expires in 2041. The tax effect of the valuation allowance increased by approximately $ 1,700,000 during the year ending January 31, 2026. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) significantly revised U.S. corporate income tax law by, among other things, reducing the corporate rate from 34 % to 21 %. Because the Company recognizes a valuation allowance for the entire balance, there is no impact on the Company’s balance sheet or results of operations. F- 14 The types of temporary differences between tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred tax liability and deferred tax asset and their approximate tax effects are as follows: Years Ending January 31, 2026 2025 Net Operating loss carryforward (expire through 2041) $ ( 5,378,247 ) $ ( 4,435,172 ) Stock issued for services ( 2,355,840 ) ( 1,779,728 ) Intangible impairment expense ( 1,806,709 ) ( 1,806,709 ) Valuation allowance net deferred taxes 9,540,796 8,021,609 $ - $ - 6. INTANGIBLE ASSETS As of January 31, 2026 and 2025, intangible assets consisted of intellectual property and trademarks, customer base, and license agreement, net of amortization, as follows: Years Ending January 31, 2026 2025 Customer base $ 214,640 $ 214,640 Intellectual property and trademarks 623,822 623,822 Total $ 838,462 $ 838,462 Less: Accumulated amortization ( 638,035 ) ( 577,370 ) Net Intangible Assets $ 200,427 $ 261,092 Amortization expenses for the years ended January 31, 2026 and 2025 amounted to $ 60,665 and $ 113,150 , respectively. During the year ended January 31, 2025, the Company recorded an impairment charge of $ 293,038 to its Intellectual property. There was no impairment charges during the year ended January 31, 2026. Year Ended January 31, Total 2027 $ 60,666 2028 60,666 2029 41,736 2030 23,596 2031 13,763 $ 200,427 F- 15 7. RELATED PARTY TRANSACTIONS Activity during the year ended January 31, 2026 a) During the year ended January 31, 2026, a director of the Company and a related party exercised warrants and were issued 311, 041 and 160,000 shares of common stock, respectively. b) During the year ended January 31, 2026, 454,814 options to purchase common shares of the Company were issued to executive officers and employees exercisable at prices of $ 5.47 - $ 6.85 per share. The options vest immediately and expire three years from the date of issuance. The fair value of the options issued for services amounted to $ 1,383,732 . c) In October 2025, the Company’s President and CFO exercised employee stock options, and the Company issued 140,000 shares of common stock. Activity during the year ended January 31, 2025 a) During the year ended January 31, 2024, options to purchase 689,584 shares of common stock to executives and employees of the Company at a price of $ 2.37 and $ 8.08 per share. The options vest immediately and expire in three years . The fair value of the options issued amounted to $ 1,408,935 and was expensed during the year ended January 31, 2025. b) On April 19, 2024, the Company completed an $ 8,400,000 equity financing with European investors which included related parties. The two related parties invested a total of $ 7,120,000 and received 1,780,000 shares of common stock and warrants to purchase 3,560,000 shares of common stock at $ 6.43 per share. One related party, a director of the Company, invested $ 4.5 million which included $ 500,000 from his son and $ 700,000 from an entity he controls. The other related party invested $ 2.62 million from entities controlled by the investor. See Note 8 for further information. c) During the year ended January 31, 2025, the Company received $ 300,000 from the credit line facility with TII Jet Services LDA. On May 15, 2024, the Company converted the debt and accrued interest into 76,240 shares of common stock and issued 152,460 warrants to the lender. See Note 4 for further information. d) On June 5, 2024, the Company’s Chief Financial Officer exercised 87,500 warrants as a cashless conversion and was issued 60,085 shares of common stock. 8. STOCKHOLDERS’ EQUITY Preferred Stock On January 15, 2016, the board of directors of the Company approved a certificate of amendment to the articles of incorporation and changed the authorized capital stock of the Company to include and authorize 10,000,000 shares of Preferred Stock, par value $ 0.001 per share. On July 9,2025, the board of directors created a series of non-voting preferred stock consisting initially of shares designated as the Series A Convertible Preferred Stock (the “the Series A Preferred Stock”). The terms of the Series A Preferred Stock provide that, 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 technology, each share of Series A Preferred Stock will be convertible at the option of the holder into one share of Common Stock. 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 of the Series A Preferred Stock, and the Series A Preferred Stock is also eligible for dividends declared by the board of directors on the class of common stock. The Company authorized on July 9, 2025, a preferred stock dividend to be issued by the Company to all shareholders on the basis of one share of Series A Preferred stock issued for each four shares of common stock owned by the holder. The record date for the dividend was July 25, 2025. On the date of distribution of the dividend, 3,008,643 shares of the Series A Preferred Stock were issued to our shareholders. The fair value of the preferred stock dividend was $ 21,814,166 . Common Stock On July 26, 2022, the Board of Directors of the Company approved a 7-for-6 forward stock split , effective for trading purposes as of August 12, 2022, pursuant to which each shareholder as of the August 15, 2022 record date received one (1) additional share for each six (6) shares held as of the record date. Pursuant to the operation of the amendment providing for the forward stock split filed with the Secretary of State of Nevada on August 4, 2022, the authorized common stock of the Company was increased from 250,000,000 shares to 291,666,666 shares in connection with the forward split. F- 16 Activity during the Year Ended January 31, 2026 (a) As of January 31, 2026, the Company holds 18,900 shares of treasury stock. During the year ended January 31, 2026, 13,500 shares of treasury stock held by the Company were issued to employees for services rendered. The Company recorded an expense of $ 104,400 during the year ended January 31, 2026, in connection with the transactions. (b) In February 2025, the Company’s outside counsel exercised 58,433 warrants as a cashless conversion and the Company issued 46,961 shares of common stock. (c) In July 2025, third parties exercised 98,560 warrants as a cashless conversion, and the Company issued 35,540 shares of common stock. (d) In July 2025, two employees exercised employee stock options. The Company received proceeds of $ 44,206 and issued 20,055 shares of common stock. (e) In July 2025, the Company received proceeds of $ 303,477 from the exercise of public warrants and the Company issued 47,076 shares of common stock. (f) In July 2025, the Company received proceeds of $ 5,002,026 from the exercise of warrants and the Company issued 778,041 shares of common stock. (g) In October 2025, the Company’s CFO exercised employee exercised employee stock options. The Company received proceeds of $ 75,000 and issued 20,000 shares of common stock. (h) In October 2025, the Company’s President exercised employee stock options in exchange for a settlement of debt. The Company issued 120,000 shares of common stock in exchange for $ 317,110 of debt. Activity during the Year Ended January 31, 2025 (a) On September 10, 2024, 10,000 shares of treasury stock held by the Company were issued to an investor relations firm for services rendered. The Company recorded an expense of $ 38,700 during the year ending January 31, 2025, in connection with the transaction. During the year ending January 31, 2025, the Company purchased 32,400 shares of treasury stock for $ 148,547 . As of January 31, 2025, the Company held 32,400 shares of treasury stock. (b) 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, consisting of one share of common stock (“Shares”) and a Warrant to purchase two Shares of common stock, the Warrant having an 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 residing outside the United States and was not registered under the Security Act of 1933, as amended, (the “Security Act”), or the security law of any jurisdiction, including 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. (c) On May 15, 2024, the Company agreed to convert $ 300,000 of debt and $ 4,922 of accrued interest under the Credit Line Note agreement. The conversion was made pursuant to the terms of a Conversion Agreement, which provided the conversion of the debt and accrued interest. The Company issued 76,230 shares of common stock and 152,460 warrants exercisable at $ 6.43 per share resulting in a loss on settlement of $ 368,036 . (d) On June 5, 2024, the Company’s Chief Financial exercised 87,500 warrants as a cashless conversion and the Company issued 60,085 shares of common stock. (e) During the year ending January 31, 2025, the Company received $ 6,591 from the exercise of warrants and issued 1,025 shares of common stock. 9. OPTIONS and WARRANTS Warrants On April 19, 2024, in connection with a private placement of the Company’s common stock, the Company issued 4,200,000 warrants. The warrants are exercisable at a price of $ 6.43 per share and expire five years from the date of issuance. On May 15, 2024, the Company issued 152,460 warrants in connection with extinguishment of debt of $ 300,000 and accrued interest. The warrants are exercisable at a price of $ 6.43 per share and expire five years from the date of issuance. Non-cash expense of $ 390,145 is included in loss on extinguishment of debt. F- 17 On June 5, 2024, the Company’s Chief Financial Officer exercised 87,500 warrants as a cashless conversion and the Company issued 60,085 shares of common stock. On September 10, 2024, the Company issued 50,000 warrants to an investor relations firm. The warrants are exercisable at a price of $ 4.00 per share and expire three years from the date of issuance. The Company recorded a non-cash expense of $ 94,650 during the year ending January 31, 2025. The agreement is for twelve months and includes the issuance of 10,000 treasury shares and monthly payments of $ 12,500 . The warrants and shares vest immediately and because they are non-forfeitable, the expense was recognized immediately. The Company cancelled the warrants as of January 31, 2025. Non-cash compensation for the year ended January 31, 2025, amounted to $ 484,975 . The Company used the Black Scholes valuation model to record fair value of the value of the warrants issued during the year ending January 31, 2025. The valuation model used a dividend rate of 0 %; expected terms of 1.5 - 2.5 years; volatility rates of 105.98 %- 145.05 %; and risk-free rates of 3.65 %- 4.45 %. In September 2025, the Company issued 340,393 warrants to investors for services rendered, including a director and a related party of the Company. The warrants are exercisable at a price of $ 6.00 per share and expire three years from the date of issuance. The Company recorded a non-cash expense of $ 1,250,264 during the year ended January 31, 2026. The Company used the Black Scholes valuation model to record fair value of the warrants issued during the year ending January 31, 2026. The valuation model used a dividend rate of 0 %; expected terms of 2.5 years; volatility rates of 105 %; and risk-free rate of 4 %. The following table summarizes the changes in the outstanding warrants and the related price of the shares of the common stock issued to non-employees of the Company during the years ended January 31, 2026 and 2025. Exercise Remaining Intrinsic Shares Price Life Value Outstanding, January 31, 2024 1,283,038 $ 5.88 2.97 years $ - Granted 4,402,460 6.40 4.72 years - Expired/Cancelled ( 50,000 ) 4.00 - - Exercised ( 88,525 ) 1.98 - - Outstanding, January 31, 2025 5,546,973 5.89 3.68 years - Granted 340,393 6.00 - - Expired/Cancelled - - - - Exercised ( 982,010 ) 6.16 - - Outstanding- January 31, 2026 4,905,356 $ 6.39 2.82 years $ 23,700 Exercisable - January 31, 2026 4,905,356 $ 6.39 2.82 years $ 23,700 F- 18 The following table summarizes additional information relating to the warrants outstanding as of January 31, 2026: Range of Exercise Prices Number Outstanding Remaining Contractual Life (Years) Exercise Price for Shares Outstanding Number Exercisable Exercise Price for Shares Exercisable Intrinsic Value $ 4.00 30,000 2.10 $ 4.00 30,000 $ 4.00 $ 23,700 $ 6.00 340,393 4.61 $ 6.00 340,393 $ 6.00 $ - $ 6.43 4,509,963 2.69 $ 6.43 4,509,953 $ 6.43 $ - $ 7.50 25,000 1.77 $ 7.50 25,000 $ 7.50 $ - 4,905,356 $ 6.39 4,905,346 $ 6.39 $ 23,700 Option s On November 1, 2021, the Board of Directors adopted the 2021 Employee Stock Option Plan (the “Plan”). The Company has reserved 408,333 shares for issuance and sale upon the exercise of stock options. In accordance with the Plan, on February 1, 2022, the Company reserved an additional 233,333 shares and on February 1, 2023, the Company reserved an additional 233,333 shares. The options vest immediately and expire in three years. Under the Plan, options may be granted which are intended to qualify as Incentive Stock Options (“ISO’s”) under Section 422 of the Internal Revenue Code of 1986 (the “Code”) or which are not (“non-ISO’s”) intended to qualify as Incentive Stock Options thereunder. The Plan also provides for restricted stock awards representing shares of common stock that are issued subject to such restrictions on transfer and other incidents of ownership and such forfeiture conditions as the Board of Directors, or the committee administering the Plan composed of directors who qualify as “independent” under Nasdaq rules, may determine. 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. On March 20, 2024, our Board of Directors adopted an amendment to the Company’s Employee Stock Option Plan (the “Plan”) increasing the number of shares of common stock subject to the Plan (as of March 20, 2024, 875,000 shares) to 1,400,000 shares (the “Amendment”). The Company submitted the Amendment to the Plan to our stockholders for adoption and approval at the 2025 Annual Meeting. The Amendment was approved by the stockholders on January 23, 2025. As of January 31, 2026, with the February 1, 2025, automatic issuance of shares available under the Plan, 56,082 shares remain available for issuance of options under the Plan. During the year ending January 31, 2025, 689,584 options to purchase shares of the Company’s common stock were issued to executive officers and employees at prices of $ 2.37 - $ 8.07 per share. The options vest immediately and expire three years from the date of issuance. The fair value of the options issued for services amounted to $ 1,408,935 and were recorded during the year ending January 31, 2025. The Company used the Black-Scholes valuation model to record the fair value. The valuation model used a dividend rate of 0 %; expected term of 1.5 years; volatility rate of 97.83 %- 114.86 %; and a risk-free rate of 4.00 %- 4.87 %. During the year ending January 31, 2026, 454,834 options to purchase shares of the Company’s common stock were issued to executive officers and employees at prices of $ 5.47 - $ 6.85 per share. The options vest immediately and expire three years from the date of issuance. The fair value of the options issued amounted to $ 1,383,732 and were recorded during the year ending January 31, 2026. The Company used the Black Scholes valuation model to record the fair value. The valuation model used a dividend rate of 0 %; expected term of 1.5 years; volatility rate of 96.55 %- 108.35 %; and a risk-free rate of 3.65 %- 3.91 %. F- 19 The following table summarizes the changes in outstanding options and the related price of the shares of the Company’s common stock issued to employees of the Company. See Note 7 for the issuance of related party options. Exercise Remaining Intrinsic Shares Price Life Value Outstanding, January 31, 2024 874,835 $ 3.23 2.31 years Granted 689,584 4.40 1.93 years - Expired/Cancelled ( 190,751 ) - - Exercised - - - Outstanding, January 31, 2025 1,373,668 3.23 1.90 years Granted 454,834 6.35 - Expired/Cancelled ( 234,584 ) - - Exercised ( 160,055 ) 1.46 - Outstanding- January 31, 2026 1,433,863 $ 4.57 1.63 years $ 1,719,313 Exercisable - January 31, 2026 1,433,863 $ 4.57 1.63 years $ 1,719,313 The following table summarizes additional information relating to the options outstanding as of January 31, 2026. Range of Exercise Prices Number Outstanding Weighted Average Life (Years) Weighted Average Exercise Price for Shares Outstanding Number Exercisable Weighted Average Exercise Price for Shares Exercisable Intrinsic Value $ 1.93 206,945 0.73 $ 1.93 206,945 $ 1.93 $ 591,863 $ 2.12 70,000 0.73 $ 2.12 70,000 $ 2.12 $ 186,900 $ 2.37 182,500 1.13 $ 2.37 182,500 $ 2.37 $ 441,650 $ 2.61 170,000 1.13 $ 2.61 170,000 $ 2.61 $ 370,600 $ 2.65 20,000 0.63 $ 2.65 20,000 $ 2.65 $ 42,800 $ 2.75 30,000 1.00 $ 2.75 30,000 $ 2.75 $ 61,200 $ 3.98 30,000 0.00 $ 3.98 30,000 $ 3.98 $ 24,300 $ 5.47 45,667 2.99 $ 5.47 45,667 $ 5.47 $ - $ 5.99 30,000 1.41 $ 5.99 30,000 $ 5.99 $ - $ 6.22 260,833 2.55 $ 6.22 260,833 $ 6.22 $ - $ 6.84 108,334 2.55 $ 6.84 108,334 $ 6.84 $ - $ 6.85 40,000 2.53 $ 6.85 40,000 $ 6.85 $ - $ 7.34 180,918 1.99 $ 7.34 180,918 $ 7.34 $ - $ 8.07 58,666 1.98 $ 8.07 58,666 $ 8.07 $ - 1,433,863 1.63 $ 4.57 1,433,863 $ 4.57 $ 1,719,313 F- 20 10. SEGMENT REPORTING We organize and manage our business by the following two segments which meet the definition of reportable segments under ASC 280-10, Segment Reporting: Sales of Goods and Services. These segments are based on the customer type of products or services provided and are the same as our business units. Separate financial information is available and regularly reviewed by our chief operating decision maker (“CODM”), who is our chief executive officer , in making resource allocation decisions for our segments. Our CODM evaluates segment performance to the GAAP measure of gross profit. Years Ending January 31, 2026 2025 Net Sales Pocono Pharmaceuticals $ 2,036,651 $ 2,139,537 4P Therapeutics - - 2,036,651 2,139,537 Gross Profit Pocono Pharmaceuticals 566,308 743,317 4P Therapeutics - - 566,308 743,317 Operating Expense Selling, general and administrative - Pocono Pharmaceuticals 594,676 661,805 Selling, general and administrative - 4P Therapeutics 218,003 136,294 Selling, general and administrative - Corporate 6,180,461 3,515,711 Goodwill and intangibles impairment - 3,595,216 Research and development - 4P Therapeutics 1,891,129 3,119,134 8,884,269 11,028,160 Depreciation and Amortization Pocono Pharmaceuticals $ 156,727 $ 235,941 Corporate - 12,043 4P Therapeutics 37,070 37,070 $ 193,797 $ 285,054 The following table presents information about net sales and property and equipment, net of accumulated depreciation, in the United States and elsewhere. Years Ending January 31, 2026 2025 Net Sales United States $ 2,029,021 $ 2,139,537 Outside the United States 7,630 - $ 2,036,651 $ 2,139,537 Property and equipment, not of accumulated depreciation United States $ 567,255 $ 695,063 Outside of the United States - - $ 567,255 $ 695,063 Assets Corporate $ 4,437,703 $ 4,205,577 Pocono Pharmaceuticals 1,815,731 1,404,285 4P Therapeutics 1,294,501 1,859,793 $ 7,547,935 $ 7,469,655 F- 21 11. COMMITMENTS AND CONTINGENCIES Employment Agreements The Company entered into three-year employment agreements with Gareth Sheridan, our CEO, and Serguei Melnik, our President, effective February 1, 2022. The agreement also provides that the executives will continue as directors and officers of the Company for the respective terms thereof. The agreement provides for an initial term, commencing on the effective date of the agreement and ending on January 31, 2025 , and continuing on a year-to-year basis thereafter unless terminated by either party on not less than 30 days’ notice given prior to the expiration of the initial term or any one-year extension. For their services to the Company during the term of the agreement, Mr. Sheridan and Mr. Melnik will receive an annual salary of $ 250,000 per annum, commencing on the effective date of the agreement. Mr. Sheridan and Mr. Melnik will also receive a performance bonus of 3.5 % of net income before income taxes. As of July 31, 2022, the Company and Mr. Sheridan and Mr. Melnik mutually agreed to reduce their annual salary to $ 150,000 . These agreements, and the employment of Mr. Goodman, automatically renew for one-year terms following expiration of the initial three-year terms and each successive one-year term. The Company entered into a three-year employment agreement with Gerald Goodman, our CFO, effective February 1, 2022. The agreement provides for an initial term, commencing on the effective date of the agreement and ending on January 31, 2025, and continuing on a year-to-year basis thereafter unless terminated by either party on not less than 30 days’ notice given prior to the expiration of the initial term or any one-year extension. For his services to the Company during the term of the agreement, Mr. Goodman will receive an annual salary of $ 210,000 per annum, commencing on the effective date of the agreement. As of July 31, 2022, the Company and Mr. Goodman mutually agreed to reduce his annual salary to $ 110,000 . Kindeva Drug Delivery Agreement On January 4, 2024, the Company signed a commercial development and clinical supply agreement for their lead product, Aversa Fentanyl, with Kindeva Drug Delivery, L.P. (“Kindeva”). Under this agreement, Kindeva will perform commercial manufacturing process development, manufacturing of clinical supplies for the human abuse liability clinical study, and development of chemistry, manufacturing and controls (CMC) information required by the FDA in support of a New Drug Application (“NDA”). As of January 31, 2026, the Company has incurred expenses of $ 4.7 million under this agreement. The Company expects approximately $ 3.2 million to complete the development. On February 4, 2025, the agreement was amended to reduce the hourly rate for the labor on the project in exchange for a milestone payment payable upon FDA approval. Under the amended agreement, the remaining budget as of January 31, 2026, through NDA submission for the current workplan was reduced to $ 2.5 million. The amended agreement also includes a milestone payment of $ 3.0 million to be paid to Kindeva when the Company receives FDA approval. Lease Agreement On February 1, 2022, Pocono Pharmaceuticals entered into a lease agreement with Geometric Group, LLC for 12,000 square feet of warehouse space currently occupied by Active Intelligence. The monthly rental is $ 3,000 and the lease expired on January 31, 2025 . On February 1, 2025, the lease has been extended for an additional three years at the same monthly rental. F- 22 Sorrento Therapeutics, Inc. Agreement On July 25, 2023, 4P Therapeutics assigned its claim under the bankruptcy proceedings from Sorrento Therapeutics Inc. and received proceeds of $ 106,528 . The amount due under the claim was $ 118,675 and 4P Therapeutics recorded a reserve for bad debts of $ 118,675 during the year ended January 31, 2024. Under the agreement with the buyer of the claim, 4P Therapeutics will make proportional restitution and/or repayment of the purchase amount to the extent the claim is disallowed, reduced or not paid at the same time or distribution rate as other general unsecured claims against the Debtor are paid. The Company has recorded the amount of the proceeds as a secured loan payable to the factor as of January 31, 2026. Legal Proceedings The Company is currently a defendant in a lawsuit initiated by Joseph Gunnar, LLC (“Gunnar”) and Lucosky Brookman LLP (“LB”) in the Supreme Court of the State of New York, New York County, under Index No.654633/2023. The lawsuit alleges multiple allegations such as breach of contract, fraudulent activities, and tortious interference and seeks damages following the Company’s termination of an engagement letter for assistance with a public stock offering. Gunnar is seeking over $ 500,000 in damages plus punitive damages, while LB is demanding reimbursement of legal fees. In response, the Company denies all allegations, alleging that the engagement letter was unenforceable, and its termination was legally justified. The Company has also initiated counterclaims against Joseph Gunnar & Co., accusing them of intentional interference and breach of fiduciary duty, and is seeking $ 1,000,000 for each claim along with a declaratory judgment affirming the legality and justification of the termination. The plaintiffs have denied these counterclaims. Currently, there are no pending hearings or motions, and the case is in the discovery stage. In early 2024, the plaintiffs proposed a settlement offer of $ 100,000 . The Company has not responded to that proposed settlement offer. 12. SUBSEQUENT EVENTS (a) On February 13, 2026, the Company’s Board of Directors approved the termination immediately of the Company’s agreement for the sale of its subsidiary, Pocono Pharmaceuticals, Inc., to Earth Vision Bio Inc., due to the purchaser’s failure to pay applicable late fees under the purchase agreement for their not closing on the December 31, 2025 closing date under the purchase agreement. The Company received $ 30,000 in late fees but have not received any further payments since January 21, 2026. The contract was agreed upon in December 2025 for a total purchase price of $ 5 million. F- 23 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.