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Item 7. Management’s Discussion and Analysis

2024-03-28 compared with 2023-04-04 · 112 added, 153 removed, 4 unchanged (99% of the section changed)

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

following discussion highlights the principal factors that have affected our financial condition and results of operations as well as

our liquidity and capital resources for the periods described.

This discussion should be read in conjunction with our financial statements

and the related notes included in this report.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion highlights the principal

factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods

This discussion should be read in conjunction with our financial statements and the related notes included in this report.

This discussion contains forward-looking statements.

Please see “Cautionary Note

Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking

of Operations

of Results of Operations for the fiscal years ended December 31, 2022 and 2021

During our fiscal

year ended December 31, 2022, we generated revenues of $4,345,603, compared to revenues of $228,426, in 2021.

The increase was the result

of our acquisition of Nora Pharma in October 2022, which accounted for $3,803,106 of these revenues.

The cost of sales in 2022 and 2021

for generating these revenues was $2,649,028 and $117,830, respectively.

General and administrative expenses for our fiscal year ended

December 31, 2022, were $28,697,325, compared to $2,550,730 during our fiscal year ended December 31, 2021, an increase of $26,146,595.

The increase was largely a result of goodwill impairment of $18,326,719 and costs and expenses relating to the Nora Pharma acquisition.

We also incurred $39,412 in interest expense and $0 in losses

from debt conversion in 2022, compared to $328,818 in interest expense and $9,726,485 in losses from debt conversion in 2021.

in interest expense and losses from debt conversion in 2022 was due to our repayment of all outstanding debt in 2022.

As a result, we incurred a net loss of $26,511,136 for the

year ended December 31, 2022, compared to a net loss of $12,436,447 for the year ended December 31, 2021.

and Capital Resources

of December 31, 2022, we had cash and cash equivalents of $21,826,437.

February 17, 2022, we completed an underwritten public offering of common stock and warrants for gross proceeds of $8 million.

net proceeds of approximately $6.8 million from the offering.

March 14, 2022, we completed a private placement of common stock and warrants for gross proceeds of $8 million.

We received net proceeds

of approximately $6.8 million from the private placement.

April 28, 2022, we completed a private placement of common stock and warrants for gross proceeds of approximately $19.5 million.

net proceeds of approximately $16.8 million from the private placement.

the fiscal year ended December 31, 2022, we received aggregate proceeds of $13,193,177 in connection with warrant exercises.

the year ended December 31, 2021, we issued a total of 559,144 shares of our common stock valued at $12,705,214 for the conversion of

outstanding notes payable, reducing the debt by $2,867,243 and interest payable by $127,986 and generating a loss on conversion of $9,726,485.

the year ended December 31, 2021, we did not sell any of our capital stock for cash;

however, we entered into the following new debt

arrangements:

On January 12, 2021, we

issued a note in the principal amount of $150,000 with interest accruing at 5% per year, due January 12, 2023.

The note was convertible

after 180 days from issuance into common stock at a price of $0.30 per share.

This note was converted to common stock on December

On January 27, 2021, we

issued a note in the principal amount of $300,000 with interest accruing at 5% per year, due January 27, 2023.

The note was convertible

after 180 days from issuance into common stock at a price equal to $0.50 per share.

This note was converted to common stock on December

On February 12, 2021, we

issued a note in the principal amount of $700,000 with interest accruing at 5% per year, due February 12, 2023.

The note was convertible

after 180 days from issuance into common stock at a price of $0.60 per share.

This note was converted to common stock on December

On April 5, 2021, we issued

a note in the principal amount of $330,000 with interest accruing at 10% per year, due January 5, 2022.

The note was convertible

after 180 days from issuance into common stock at a price 35% below market value.

On October 13, 2021, the noteholder converted $330,000

in principal and $16,500 in accrued interest into 26,250 shares of common stock leaving a principal balance of $0.

We repaid this

On April 20, 2021, we issued

a note in the principal amount of $500,000 with interest accruing at 5% per year, due April 20, 2023.

The note was convertible after

180 days from issuance into common stock at a price of $0.30 per share.

We repaid this note following the closing of our public offering

in February 2022.

On July 6, 2021, we issued

a note in the principal amount of $900,000 with interest accruing at 5% per year, due July 6, 2023.

The note was convertible after

180 days from issuance into common stock at a price of $0.30 per share.

We repaid this note following the closing of our public offering

in February 2022.

In connection with this debt financing, we agreed to allow the lender, who is also the holder of a note dated November

25, 2020, to convert a total of $240,000 in principal into 120,000 shares of common stock leaving a principal balance of $10,000

and accrued interest of $7,750.

On July 6, 2021, we paid off the remaining principal balance of this note and received forgiveness

of the accrued interest.

On August 18, 2021, we issued

a note in the principal amount of $500,000 with interest accruing at 5% per year, due August 18, 2023.

The note is convertible after

180 days from issuance into common stock at a price equal to $0.30 per share.

We repaid this note following the closing of our public

offering in February 2022.

Cash flows used

in investing activities were $14,619,390 during the year ended December 31, 2022, compared to $0 during our fiscal year ended December

The reason for the increase was due to the acquisition of Nora Pharma.

Please see “Cautionary Note Regarding Forward-Looking Statements” for

a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

Results of Operations

Comparison of Results of Operations for the

fiscal years ended December 31, 2023 and 2022

During our fiscal year ended December 31, 2023,

we generated revenues of $24,092,787, compared to revenues of $4,345,603 in 2022.

The increase was the result of twelve months of Nora

Pharma sales included in the 2023 results compared to only seventy-two days of sales in 2022 (October 20, 2022, the date of acquisition

of Nora Pharma, through December 31, 2022).

The cost of sales in 2023 and 2022 for generating these revenues was $15,753,616 and $2,649,028,

respectively.

General and administrative (“G&A”)

expenses for our fiscal year ended December 31, 2023, were $13,124,470, compared to $28,697,325 during our fiscal year ended December

31, 2022, a decrease of $15,572,855.

However, excluding the one-time impairment of goodwill in the amount of $18,326,719 from the 2022

G&A expenses, reveals an increase in G&A expenses of $2,753,864 in 2023.

This increase is due to G&A expenses incurred by

Nora Pharma during all of 2023, compared to only 72 days of G&A expenses included in 2022.

We had interest income of $811,974 in 2023, compared

to interest income of $518,650 in 2022.

We incurred $137,308 in interest expense in 2023, compared to $39,412 in interest expense in 2022.

As a result, we incurred a net loss of $4,506,044

for the year ended December 31, 2023, compared to a net loss of $26,744,440 for the year ended December 31, 2022.

Liquidity and Capital Resources

As of December 31, 2023, we had cash and cash equivalents of $16,292,347.

On February 17, 2022, we completed an underwritten

public offering of common stock and warrants for gross proceeds of $8 million.

We received net proceeds of approximately $6.8 million

from the offering.

On March 14, 2022, we completed a private placement

of common stock and warrants for gross proceeds of $8 million.

We received net proceeds of approximately $6.8 million from the private

On April 28, 2022, we completed a private placement

of common stock and warrants for gross proceeds of approximately $19.5 million.

We received net proceeds of approximately $16.8 million

from the private placement.

During the fiscal years ended December 31, 2022

and 2023, we received aggregate proceeds of $13,196,681 in connection with warrant exercises.

On May 16, 2023, we completed a private placement

of common stock and warrants for gross proceeds of approximately $5 million.

We received net proceeds of approximately $4.1 million from

the private placement.

Cash flows used in investing activities were $656,150

during the year ended December 31, 2023, compared to $14,619,390 during our fiscal year ended December 31, 2022.

The reason for the decrease

was due to the acquisition of Nora Pharma which took place on October 20, 2022.

Net cash flows provided by financing activities were $3,425,587

in 2023, compared to $39,465,107 in 2022.

The increase was primarily a result of the three (3) rounds of financing which took

place in February, March, and April 2022.

Net cash used in operations was $5,248,358 in 2022, compared to $1,829,128 in 2021.

for the increase was the acquisition of Nora Pharma.

are not generating adequate revenues from our operations to fully implement our business plan as set forth herein.

On February 17,

2022, we received net proceeds of approximately $6.8 million from the sale of common stock and warrants in an underwritten public

On March 14, 2022, we received net proceeds of approximately $6.8 million from the sale of common stock and warrants in a

private placement.

On April 28, 2022, we received net proceeds of approximately $16.8 million from the sale of common stock and

warrants in a private placement.

We believe our existing cash will be sufficient to fund our operations, including general and

administrative expenses, expanded research and development activities, and OTC supplements business, for the next 24 months.

is no assurance our estimates will be accurate.

We have no committed sources of capital and we anticipate that we will need to raise

additional capital in the future, including for further research and development activities and possibly clinical trials, as well as

expansion of our generic pharmaceuticals operations arising from the Nora Pharma acquisition.

Additional capital may not be

available on terms acceptable to us, or at all.

Accounting Estimates

discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been

prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial statements

requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure

of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates based on historical experience and on various other

assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ

from these estimates under different assumptions or conditions.

follow the guidance in ASC 842 “ Accounting for Leases ,” as amended, which requires us to evaluate the lease agreements

we enter into to determine whether they represent operating or capital leases at the inception of the lease.

wholly owned subsidiary, Nora Pharma, currently occupies a 15,000 square foot facility located at 1565 Boulevard Lionel-Boulet, Varennes,

Quebec, Canada, J3X 1P7 pursuant to a lease agreement that expires January 31, 2025, with an option to extend for 5 years.

is comprised of 15,000 square feet that includes 10,000 square feet of warehouse space and 5,000 square feet of executive office space.

The facility houses all administrative, marketing, quality control, regulatory affairs, and other operations personal, as well as, a

Health Canada licensed warehouse space.

We pay a monthly rent of $17,250 CAD (approximately $12,750 USD), including taxes.

Adopted Accounting Standards

February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) -

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related

to Accounting Standards Update No.

2016-02, Leases (Topic 842) which amends the effective date of the original pronouncement for

smaller reporting companies.

ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in

fiscal years beginning after December 15, 2022.

The Company believes the adoption will modify the way the Company analyzes financial

instruments, but it does not anticipate a material impact on results of operations.

The Company is in the process of determining the

effects adoption will have on its consolidated financial statements.

August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) , (“ASU 2020-06”).

ASU 2020-06 simplifies

the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and

contracts on an entity’s own equity.

The ASU2020-06 amendments are effective for fiscal years beginning after December 15, 2023,

and interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December

15, 2020, including interim periods within those fiscal years.

The Company is evaluating the impact of this guidance on its unaudited

consolidated financial statements.

Sheet Arrangements

have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our

financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered

material to investors.

The decrease was primarily a result of three (3) rounds of financing which took place in February,

March, and April 2022 and only one (1) relatively small financing in 2023.

Net cash used in operations was $8,775,111 in 2023, compared

to $5,248,358 in 2022.

The increase was due to expansion of Nora Pharma drugs portfolio.

We are not generating adequate revenues from our

operations to fully implement our business plan as set forth herein.

We believe our existing cash will be sufficient to fund our pharmaceuticals

sales operations and research and development activities for the next 24 months.

There is no assurance our estimates will be accurate.

We have no committed sources of capital and we anticipate that we will need to raise additional capital in the future, including for further

research and development activities and possibly clinical trials, as well as expansion of our generic pharmaceuticals operations.

capital may not be available on terms acceptable to us, or at all.

Critical Accounting Estimates

The discussion and analysis of our financial condition

and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally

accepted in the United States.

The preparation of these financial statements requires us to make estimates and judgments that affect the

amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis,

we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the

circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not

readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

We follow the guidance in ASC 842 “ Accounting

for Leases ,” as amended, which requires us to evaluate the lease agreements we enter into to determine whether they represent

operating or capital leases at the inception of the lease.

Our wholly owned subsidiary, Nora Pharma, currently

occupies a 23,500 square foot facility located at 1565 Boulevard Lionel-Boulet, Varennes, Quebec, Canada, J3X 1P7 pursuant to a lease

agreement that expires in January 2030, with an option to extend for 5 years.

This site is composed of 18,500 square feet of warehouse

space and 5,000 square feet of executive office space.

The facility houses all administrative, marketing, quality control, regulatory

affairs, and other operations personal, as well as a Health Canada licensed warehouse space.

We pay a monthly rent of $27,250 CAD (approximately

$19,900 USD), including taxes.

Recently Adopted Accounting Standards

In February 2020, the FASB issued ASU 2020-02, Financial

Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016-02, Leases (Topic 842) which amends

the effective date of the original pronouncement for smaller reporting companies.

ASU 2016-13 and its amendments will be effective for

the Company for interim and annual periods in fiscal years beginning after December 15, 2022.

The Company believes the adoption will modify

the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations.

is in the process of determining the effects adoption will have on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt

– Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity

(Subtopic 815 – 40) , (“ASU 2020-06”).

ASU 2020-06 simplifies the accounting for certain financial instruments with

characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

The ASU2020-06

amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal

The Company is evaluating the impact of this guidance on its unaudited consolidated financial statements.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet

arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

required for a smaller reporting company.

Not required for a smaller reporting company.

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