What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-12-18 compared with 2020-12-17 · 132 added, 80 removed, 181 unchanged (54% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the Company's

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Results of Operations

For the Three Months Ended January

31, 2020 and January 31, 2019

For the Three Months Ended July 31,

2020 and July 31, 2019

Our revenues for the three months ended

January 31, 2020 were $696,948, compared with revenues of $175,953 for the three months ended January 31, 2019.

The increase in

revenues during the three months ended January 31, 2020 of $520,995 (296.1%) was primarily the result of the Company being able

to realize an increase of approximately 354.6% (approximately $543,634) in unit sales of its products during the three months ended

January 31, 2020 compared with the three months ended January 31, 2019, partially offset from a decrease of approximately 12.9%

(approximately $22,639) in the average sales prices for the products sold during the three months ended January 31, 2020 compared

with the average sales prices realized on products sold during the three months ended January 31, 2019.

The increase in the units

sold was partly attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market

awareness, less discounting of product prices to new customers, the introduction of new and more advanced product offerings and

increased research and development efforts which provided customers with greater comfort in the company’s products and ability

to better address potential market uncertainty regarding anticipated FDA regulations.

The decrease in the average sales prices

realized on products sold during the three months ended January 31, 2020 compared with the three months ended January 31, 2019

was due to an increase in the sales of the Company’s aesthetic product offerings which are sold at lower prices than the

Company’s medical grade product offerings.

July 31, 2020 were $767,333, compared with revenues of $578,705 for the three months ended July 31, 2019.

The increase in revenues

during the three months ended July 31, 2020 of $188,628 (32.6%) was primarily the result of the Company being able to realize an

increase of approximately 84.4% (approximately $351,277) in unit sales of its products during the three months ended July 31, 2020

compared with the three months ended July 31, 2019, partially offset from a decrease of approximately 28.1% (approximately $162,649)

in the average sales prices for the products sold during the three months ended July 31, 2020 compared with the average sales prices

realized on products sold during the three months ended July 31, 2019.

The increase in the units sold was partly attributable to

favorable responses to the Company’s sales and marketing efforts establishing greater market awareness, less discounting

of product prices to new customers, the introduction of new and more advanced product offerings and increased research and development

efforts which provided customers with greater comfort in the company’s products and ability to better address potential market

uncertainty regarding anticipated FDA regulations.

The decrease in the average sales prices realized on products sold during the

three months ended July 31, 2020 compared with the three months ended July 31, 2019 was due to an increase in the sales of the

Company’s aesthetic product offerings which are sold at lower prices than the Company’s medical grade product offerings.

Cost of Revenues

Our cost of revenues for the three months

ended January 31, 2020 were $99,720, compared with cost of revenues of $45,419 for the three months ended January 31, 2019.

increase in the cost of revenues during the three months ended January 31, 2020 compared with the three months ended January 31,

2019 was due to an increase in the amount of units sold of 354.6% (approximately $77,784) during the three months ended January

31, 2020 compared with the three months ended January 31, 2019, partially offset from the reduction in the cost of units sold of

51.7% (approximately ($23,483) during the three months ended January 31, 2020 compared to costs of units sold during the three

months ended January 31, 2019, which as described above was primarily the result of the Company’s increase in the sales of

the Company’s aesthetic product offerings during the three months ended January 31, 2020 compared to the three months ended

January 31, 2019 which have a lower cost of revenue than the Company’s medical grade product offerings and also from the

Company’s ability to supply inventory through lower costing inventory manufactured by the Company beginning in May 2019 rather

than from more costly third party manufacturers for the three months ended January 31, 2019.

ended July 31, 2020 were $100,907, compared with cost of revenues of $80,630 for the three months ended July 31, 2019.

in the cost of revenues during the three months ended July 31, 2020 compared with the three months ended July 31, 2019 was due

to an increase in the amount of units sold of 84.4% (approximately $46,194) during the three months ended July 31, 2020 compared

with the three months ended July 31, 2019, partially offset from the reduction in the cost of units sold of 32.1% (approximately

($25,917) during the three months ended July 31, 2020 compared to costs of units sold during the three months ended July 31, 2019,

which as described above was primarily the result of the Company’s increase in the sales of the Company’s aesthetic

product offerings during the three months ended July 31, 2020 compared to the three months ended July 31, 2019 which have a lower

cost of revenue than the Company’s medical grade product offerings.

Our gross profit for the three months ended

January 31, 2020 was $597,228, compared with gross profit of $130,534 for the three months ended January 31, 2019.

in gross profit during the three months ended January 31, 2020 was the result of higher amount of units sold and lower cost of

units sold during the three months ended January 31, 2020 compared to the three months ended January 31, 2019.

The increase in

the units sold was partly attributable to favorable responses to the Company’s sales and marketing efforts establishing greater

market awareness and the introduction of new and more advanced product offerings.

The lower cost of units sold was due to the Company’s

increase in the sales of the Company’s aesthetic product offerings during the three months ended January 31, 2020 compared

to the three months ended January 31, 2019 which have a lower cost of revenue than the Company’s medical grade product offerings

and also from the Company’s ability to supply inventory through lower costing inventory manufactured by the Company beginning

in May 2019 rather than from more costly third party manufacturers for the three months ended January 31, 2019.

July 31, 2020 was $666,426, compared with gross profit of $498,075 for the three months ended July 31, 2019.

The increase in gross

profit during the three months ended July 31, 2020 was the result of higher amount of units sold and lower cost of units sold during

the three months ended July 31, 2020 compared to the three months ended July 31, 2019.

The increase in the units sold was partly

attributable to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness and

the introduction of new and more advanced product offerings.

The lower cost of units sold was due to the Company’s increase

in the sales of the Company’s aesthetic product offerings during the three months ended July 31, 2020 compared to the three

months ended July 31, 2019 which have a lower cost of revenue than the Company’s medical grade product offerings.

General and Administrative Expenses

General and administrative expenses for

the three months ended January 31, 2020 were $1,286,013, compared with $419,877 for the three months ended January 31, 2019, an

increase of $866,136.

The increase in the general and administrative expenses for the three months ended January 31, 2020 compared

with the three months ended January 31, 2019 was primarily the result of increased stock-based compensation costs to advisors,

consultants and administrative staff totaling $34,203, increased commissions due on sales of the Company’s products of $138,316,

increased payroll and consulting costs of approximately $382,490, increased trade show and marketing related costs of $126,412,

increased professional fees of $59,632 and approximately $118,895 of increased laboratory related expenses.

The increase in payroll

and consulting costs and laboratory related expenses was the result of the Company’s expansion of its research and development

activities primarily relating to the filing and approval of IND applications and the performance of clinical trials.

the three months ended July 31, 2020 were $5,913,107, compared with $837,219 for the three months ended July 31, 2019, an increase

of $5,075,888.

The increase in the general and administrative expenses for the three months ended July 31, 2020 compared with the

three months ended July 31, 2019 was primarily the result of increased stock-based compensation costs to advisors, consultants

and administrative staff totaling $4,524,517, increased payroll costs of approximately $490,000 and approximately $40,000 of increased

laboratory related expenses.

Other Income (Expense)

Other expense, net, for the three months

ended January 31, 2020 was ($7,656), compared with other income, net, of $44,806 for the three months ended January 31, 2019.

net decrease in other income, net, was the result of reduced income realized from the settlement of obligations of $36,924 and

increased interest costs associated with interest-bearing obligations totaling $15,538 during the three months ended January 31,

ended July 31, 2020 was $12,079, compared with other expense, net, of $11,449 for the three months ended July 31, 2019, an insignificant

increase of $630.

For the Nine Months Ended July 31,

2020 and July 31, 2019

Our revenues for the nine months ended

July 31, 2020 were $2,072,511, compared with revenues of $1,116,627 for the nine months ended July 31, 2019.

The increase in revenues

during the nine months ended July 31, 2020 of $955,884 (85.6%) was primarily the result of the Company’s ability to increase

unit sales of its products by 130.6% (approximately $1,173,653) during the nine months ended July 31, 2020 compared with the nine

months ended July 31, 2019, partially offset from the reduction of approximately 19.5% (approximately $217,769) in the average

sales prices for the products sold during the nine months ended July 31, 2020 compared with the average sales prices realized on

products sold during the nine months ended July 31, 2019.

The increase in the units sold was partly attributable to favorable responses

to the Company’s sales and marketing efforts establishing greater market awareness, less discounting of product prices to

new customers, the introduction of new and more advanced product offerings and increased research and development efforts which

provided customers with greater comfort in the Company’s products and ability to better address potential market uncertainty

regarding anticipated FDA regulations.

The decrease in the average sales prices realized on products sold during the nine months

ended July 31, 2020 compared with the nine months ended July 31, 2019 was due to an increase in the sales of the Company’s

aesthetic product offerings which are sold at lower prices than the Company’s medical grade product offerings.

Cost of Revenues

Our cost of revenues for the nine months

ended July 31, 2020 were $297,905, compared with cost of revenues of $194,640 for the nine months ended July 31, 2019.

in the cost of revenues during the nine months ended July 31, 2020 compared with the nine months ended July 31, 2019 was due to

an increase in the amount of units sold of 130.6% (approximately $168,702) during the nine months ended July 31, 2020 compared

with the nine months ended July 31, 2019, partially offset from the reduction in the cost of units sold of 33.6% (approximately

($65,437) during the nine months ended July 31, 2020 compared to costs of units sold during the nine months ended July 31, 2019,

which as described above was primarily the result of the Company’s increase in the sales of the Company’s aesthetic

product offerings during the nine months ended July 31, 2020 compared to the nine months ended July 31, 2019 which have a lower

cost of revenue than the Company’s medical grade product offerings and also from the Company’s ability to supply inventory

through lower costing inventory manufactured by the Company beginning in May 2019 rather than from more costly third party manufacturers

for the six months ended April 30, 2019.

Our gross profit for the nine months ended

July 31, 2020 was $1,774,606, compared with gross profit of $921,987 for the nine months ended July 31, 2019.

The increase in gross

profit during the nine months ended July 31, 2020 of $852,619 (92.5%) was the result of the increase in the amount of units sold

during the nine months ended July 31, 2020 compared to the nine months ended July 31, 2019 and the lower costs of units sold during

the nine months ended July 31, 2020 compared to the nine months ended July 31, 2019.

The increase in the units sold was attributable

to favorable responses to the Company’s sales and marketing efforts establishing greater market awareness and the introduction

of new and more advanced product offerings.

The lower cost of units sold was due to the Company’s increase in the sales of

the Company’s aesthetic product offerings during the nine months ended July 31, 2020 compared to the nine months ended July

31, 2019 which have a lower cost of revenue than the Company’s medical grade product offerings and also from the Company’s

ability to supply inventory through lower costing inventory manufactured by the Company beginning in May 2019 rather than from

more costly third party manufacturers for the six months ended April 30, 2019.

General and Administrative Expenses

General and administrative expenses for

the nine months ended July 31, 2020 were $9,065,950, compared with $1,987,737 for the nine months ended July 31, 2019, an increase

of $7,078,213.

The increase in the general and administrative expenses for the nine months ended July 31, 2020 compared to the

nine months ended July 31, 2019 was primarily the result of increased stock-based compensation costs to advisors, consultants and

administrative staff totaling $5,140,389, increased payroll and consulting costs of approximately $1,603,000 and approximately

$217,000 of increased laboratory related expenses.

The increase in payroll and consulting costs and laboratory related expenses

was the result of the Company’s expansion of its research and development activities primarily relating to the filing and

approval of IND applications and the performance of clinical trials.

Other Income (Expense)

(expense), net, for the nine months ended July 31, 2020 was ($126,820), compared with other income, net, of $49,530 for the nine

months ended July 31, 2019, a decrease of $176,350.

The net decrease in the other income was the result of reduced income realized

from the settlement of obligations of $64,107 and increased interest costs associated with interest-bearing obligations totaling

$18,073 and $94,170 in connection with the amount of the discount to the fair value of the Converted Stock associated with

the conversion of the Funding Facility.

Liquidity and Capital Resources

During the fiscal three months ended January

During the fiscal nine months ended July

31, 2020 and through the date of the filing of this Form 10-Q, the Company has relied on the sale of debt or equity securities,

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common stock of the Company that were issued to the Noteholders designated entity, Republic Asset Holdings LLC.

On April 27, 2020, the Company sold 5,000,000

shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of the Company, at

$0.02 per share for an aggregate purchase price of $100,000.

On April 27, 2020, the Company

sold 5,000,000 shares of common stock to Republic Asset Holdings LLC., a Company controlled by Michael Carbonara, a director of

the Company, at $0.02 per share for an aggregate purchase price of $100,000.

The proceeds were used for working capital.

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The Company incurred operating losses

of $688,785 for the three months ended January 31, 2020.

In addition, the Company had an accumulated deficit of $16,981,662 at

January 31, 2020.

The Company had a negative working capital position of $2,250,994 at January 31, 2020.

of $7,291,344 for the nine months ended July 31, 2020.

In addition, the Company had an accumulated deficit of $23,703,386 at July

The Company had a negative working capital position of $2,175,767 at July 31, 2020.

In addition to the above, the outbreak

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bankruptcy laws.

As of January 31,

As of July 31,

2020, based on the factors described above, the Company concluded that there was substantial doubt about its ability to continue

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The Company held no cash equivalents for any of the periods presented:

For the Three Months Ended January 31,

For the Nine Months Ended July 31,

Cash, beginning of year

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Cash, end of year

During the three months ended January 31,

2020, the Company used cash in operating activities of $277,053, compared to $30,976 for the three months ended January 31, 2019,

an increase in cash used of $246,077.

The increase in cash used in operating activities was due to the increase in the general

and administrative expenses during the three months ended January 31, 2020 after adjusting for non-cash charges (mostly related

to stock-based compensation), resulting from increased payroll and consulting costs and laboratory related expenses in connection

with the Company’s expansion of its research and development activities during the three months ended January 31, 2020, partially

offset from the increase in revenues and gross profit during the three months ended January 31, 2020.

During the three months ended January 31,

During the nine months ended July 31, 2020,

the Company used cash in operating activities of $973,592, compared to $372,568 for the nine months ended July 31, 2019, an increase

in cash used of $601,024.

The change in cash used in operating activities was due to the increase in the general and administrative

expenses during the nine months ended July 31, 2020 after adjusting for non-cash charges (mostly related to stock-based compensation

and interest expense on conversion of Funding Facility), resulting from increased payroll and consulting costs and laboratory related

expenses in connection with the Company’s expansion of its research and development activities during the nine months ended

July 31, 2020, partially offset from the increase in revenues and gross profit during the nine months ended July 31, 2020.

During the nine months ended July 31, 2020,

the Company had cash used in investing activities of $138,694, compared to cash used in investing activities of $32,736 for the

three months ended January 31, 2019.

The increase in cash used in investing activities was due primarily due the acquisition of

nine months ended July 31, 2019.

The increase in the cash used in investing activities was due primarily due the acquisition of

additional fixed assets required in connection with the expansion of the Company’s laboratory operations.

During the three months ended January 31,

During the nine months ended July 31, 2020,

the Company had cash provided by financing activities of $1,296,674, compared to cash provided by financing activities of $398,866

for the three months ended January 31, 2019.

The increase in cash provided by financing activities was due to increases in proceeds

from the sale of equity securities and notes payable of $65,000 and $300,000, respectively, partially offset from increased payments

on outstanding debt obligations and finance leases.

for the nine months ended July 31, 2019, an overall increase of $897,808.

The increase in cash provided by financing activities

was due to increases in proceeds from the sale of equity securities and notes payable of $671,500 and $345,000, respectively, partially

offset from increased payments on outstanding debt obligations and finance and operating leases.

Off-Balance Sheet Arrangements

Our liquidity is not dependent on the use

of off-balance sheet financing arrangements (as that term is defined in Item 303(a) (4) (ii) of Regulation S-K) and as of January

of off-balance sheet financing arrangements (as that term is defined in Item 303(a) (4) (ii) of Regulation S-K) and as of July

31, 2020 and through the date of this report, we had no such arrangements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis