CANNAGISTICS INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements." These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Cannagistics, Inc. (Formerly FIGO Ventures, Inc., formerly Precious Investments, Inc.) ('The Company') was incorporated under the laws of the State of Nevada on May 26, 2004. The Company was an Exploration Stage Company with the principal business being the acquisition and exploration of resource properties.

The Company had allowed its charter with the state of Nevada to be revoked by the Secretary of State for failure to file the required annual lists and pay the required annual fees. Its last known officers and directors reflected in the records of the Secretary of State were unresponsive or stated they were no longer involved with the Company. The purported replacement officers and directors were unresponsive.

On September 14, 2012, NPNC Management, LLC filed a petition in the Eighth Judicial District Court in Clark County, Nevada and was appointed custodian of the Company on January 15, 2012.

On October 24, 2012, the interim board authorized the sale of 55,000,000 (2,200,000 split adjusted) shares of common stock for $6,000 to NPNC Management, LLC, in a private placement transaction exempt from the Securities Act of 1933, as amended, pursuant to section 4(2) thereof and the rules and regulations promulgated there under.

On March 1, 2017, the Company then entered into a joint venture agreement with Eddeb Management ("Eddeb"). The purpose of the joint venture is to build a fund for the purpose of trading in precious gems, notably, colored diamonds.

On November 16, 2017, the Company entered into an Agreement of Merger and Plan of Reorganization (the "Merger Agreement") with American Freight Xchange, Inc., a privately held New York corporation ("American Freight"), and Shipzooka Acquisition Corp. ("Shipzooka Sub"), a newly formed wholly owned Nevada subsidiary of Precious Investments, Inc. In connection with the closing of this merger transaction, Shipzooka Sub merged with and into American Freight (the "Merger") on December 5, 2017, with the filing of Articles of Merger with the Nevada Secretary of State and Certificate of Merger with the New York Division of Corporations.

The transaction resulted in the Company acquiring Subsidiary by the exchange of all of the outstanding shares of Subsidiary for 1,000,000 newly issued Series C Preferred shares of stock, $0.001 par value (the "Preferred Stock") of Parent which have conversion and voting rights of 72.5 votes for each share, representing approximately 90.2% of the voting rights.

For accounting purposes, the transaction was treated as a reverse merger since the acquired entity now forms the basis for operations and the transaction resulted in a change in control, with the acquired company electing to become the successor issuer for reporting purposes. The accompanying financial statements have been prepared to reflect the assets, liabilities and operations of American Freight Xchange, Inc. exclusive of Precious Investments, Inc since all predecessor operations were discontinued.

As part of the transaction, amounts due to former officers were forgiven, with the balances recorded as Contributed Capital. For equity purposes, accumulated deficit shown are those American Freight Xchange, Inc. Shipzooka Acquisition Corp. is a dormant corporation.

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On July 23, 2018, the Company amended the name of its subsidiary, KRG Logistics, Inc., to Global3pl, Inc. (an Ontario corporation).

On September 4, 2018, the Company incorporated Cannagistics, Inc., in the province of Ontario, Canada. This is intended to be a possible new line of business for the Company but is dormant at this time.

On April 17, 2019, we filed Articles of Merger with the Secretary of State of Nevada in order to effectuate a merger with our wholly owned subsidiary, Cannagistics, Inc. Shareholder approval was not required under Section 92A.180 of the Nevada Revised Statutes. As part of the merger, our board of directors authorized a change in our name to "Cannagistics, Inc." and our Articles of Incorporation have been amended to reflect this name change.

On September 26, 2019, the Board of Directors approved the registered spinout of its Global3pl, Inc., (a New York corporation) ("Global3pl") subsidiary. Global3pl is to be a logistics technology provider, along with the American Freight Xchange and UrbanX Platforms that have been under development by the Company.

The Board of Directors also declared a stock dividend for all shareholders, with a record date of October 10, 2019. For every 50 shares of common stock of the Company, all shareholders of record on the record date will receive one share of common stock in Global3pl. Global3pl will also file a registration statement as part of its raise of capital to complete the development of American Freight Xchange, a North American freight broker-driven 3pl network to handle the management of long haul LTL (less than truckload), and specialty freight (white glove) services and Urbanx, a North American network of rush-messenger local trucking services for forward and reverse last mile delivery (including white glove service).

However, the Company has carefully reconsidered its position with respect to the previously announced and subsequently amended spin off of Global3pl, Inc., (a New York corporation). Due to the current situation resulting from the COVID-19 pandemic and especially in light of the development of the supply chain management strategy of the Company, it has been determined that the finalization of the development of the Global3pl platform will be integral and serve as the "engine" for the supply chain management of the Company. Therefore, at this time the "spin-off" has been indefinitely postponed until such time and it may make sense from a business standpoint. The Company has not issued any shares in the Global3pl, Inc (New York) subsidiary.

Effective October 1, 2019, the Company suspended operations of its subsidiary Global3pl, Inc., formerly known as KRG Logistics, Inc., (an Ontario corporation), suspended future operations related to the operations in Mississauga, Ontario. It is in the process of collecting accounts receivables still due and working on a plan to pay its payables. It has entered into an agreement with 10451029 Canada Inc., d/b/a Reliable Logistics, for the assignment and of the assets of Global3pl, Inc., (an Ontario Corporation). The transaction was completed on November 6, 2019. The Company anticipates formally liquidating and dissolving the subsidiary in the next fiscal Quarter. This is a separate corporation from Global3pl, Inc. (A New York corporation).

On May 6, 2021, the issuer (having been renamed, immediately prior to this Holding Company Reorganization, from "Cannagistics, Inc." to "Global Transition Corporation") completed a corporate reorganization (the "Holding Company Reorganization") pursuant to which Global Transition Corporation, as previously constituted (the "Predecessor") merged with a company which became a direct, wholly-owned subsidiary of a newly formed Delaware Corporation, Cannagistics, Inc. (in this capacity referred to as the "Holding Company"), which became the successor issuer. In other words, the Holding Company is now the public entity, albeit with the same name as the original issue or the Predecessor. The Holding Company Reorganization was effected by a merger conducted pursuant to Delaware General Corporation Law (the "DGCL"), which provides for the formation of a holding company without a vote of the stockholders of the constituent corporations (such constituent corporations being the Predecessor, as renamed to Global Transition Corporation formerly Cannagistics, Inc. (formerly Precious Investments, Inc.), a Nevada corporation, now called Global3pl, Inc., a Delaware corporation, which is a subsidiary of the Company and the newly formed Cannagistics, Inc a Delaware corporation).

In accordance with the DGCL, Global3pl, Inc. ("Merger Sub"), another newly formed Delaware Corporation and, prior to the Holding Company Reorganization, was an indirect, wholly owned subsidiary of the Holding Company, merged with and into the Predecessor, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of the Holding Company (the "Merger"). The Merger was completed pursuant to the terms of an Agreement and Plan of Merger among the Predecessor, the Holding Company and Merger Sub, dated May 6, 2021 (the "Merger Agreement").

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As of the effective time of the Merger and in connection with the Holding Company Reorganization, all outstanding shares of common stock and preferred stock of the Predecessor were automatically converted into identical shares of common stock or preferred stock, as applicable, of the Holding Company on a one-for-one basis, and the Predecessor's existing stockholders and other holders of equity instruments, became stockholders and holders of equity instruments, as applicable, of the Holding Company in the same amounts and percentages as they were in the Predecessor immediately prior to the Holding Company Reorganization.

The executive officers and board of directors of the Holding Company are the same as those of the Predecessor in effect immediately prior to the Holding Company Reorganization.

For purposes of Rule 12g-3(a), the Holding Company is the successor issuer to the Predecessor, now as the sole shareholder of the Predecessor. Accordingly, upon consummation of the Merger, the Holding Company's common stock was deemed to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 12g-3(a) promulgated thereunder.

The previously executed Letter of Intent with Recommerce Group, Inc. has expired, although the Company has continued discussions with Recommerce Group, Inc. about a potential business combination.

On July 1, 2021, we entered into a Reorganization and Stock Purchase Agreement with Availa Bio, Inc. and Cannaworx Holdings, Inc. (now known as "The Integrity Wellness Group, Inc." hereinafter "Integrity Wellness") pursuant to which we acquired Integrity Wellness in exchange for 4,400,000 shares of the Company's Series F Convertible Preferred Stock. We also changed our state of incorporation to Delaware. A significant majority of our operations are now operated through Integrity Wellness which because of the transaction became a wholly owned subsidiary of the Company. We expect to change our name to The Integrity Wellness Group, Inc. subject to regulatory compliance.

Following our acquisition of Integrity Wellness, we shifted to our current business plan and focus which is the development, marketing and sale of OTC, pharmaceutical, nutraceutical, cosmetic and health and wellness products with a focus on products infused with phytocannabinnoid, which we refer to as "CBD." We now have a portfolio of products designed for the treatment of ailments and symptoms and/or general improvement of health and wellbeing by topical or oral administration. These product offerings, which are described more fully below, are designed to provide a variety of treatments, benefits and uses including pain relief, anti-aging, hygiene, energy, and immune system and biochemical support. We also have products designed for veterinary and agricultural uses. We have six patents and 15 patent applications pending for our products, as well as a number of trademarks. Our mission is to alleviate suffering and adverse consequences caused by certain health and biological conditions and enhance users' quality of life through the use of inventions and science including through the use of CBD.

On September 15, 2021, the Company filed a Def14C Information Statement. The Def14C Information Statement set out the plan of the Company to amend its name to The Integrity Wellness Group, Inc., or some other similar name, and to effectuate a reverse stock split of its common stock of one (1) new share of common stock for each forty (40) old shares of common stock. The Company is in the process of filing with FINRA to make these changes effective.

Our Products

Through Integrity Wellness we currently have 4 developed products, the majority of which we offer at retail prices ranging from approximately $30 to $60 (excluding our veterinary and agricultural product offerings). [Our current developed products are either backlogged, in the process of being produced or are ready for production.] We have received approval from the U.S. Food and Drug Administration (the "FDA") for 4 of our products' claims, and we have FDA applications in process for 1 product claims, as indicated below. We have patents issued for six of our products, and 15 patent applications pending, as indicated below. However, we presently lack the capital to produce sufficient inventory and, accordingly, will be reliant upon raising additional funds. If we are unable to raise sufficient funds, the production and distribution of these products may be delayed or discontinued. Further, some of the patent rights and licenses for the below products are subject to uncertainty due to potential procedural and documentation issues in connection with the July 2021 Integrity Wellness acquisition. See the risk titled "If we cannot obtain or protect intellectual property rights related to our products, including due to uncertainties surrounding our acquisition of Integrity Wellness and its purported product portfolio, we may not be able to compete effectively in our markets" for more information. The following is a brief description our current products portfolio:

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Products with Issued Patents

Canagel®,- (Anhydrous Hydrogel Composition and delivery system)

Patented Full Spectrum Phytocannabinoid delivery with FDA approved pain claim. The one and only FDA-approved pain claim in the market for an oral CBD product.

We have Exclusive World-wide access to Patent No. US 10,143,755

Patent Issued: December 4, 2018

Patent Expires: December 8, 2037

Comments: Please note this patent is owned by Acupac Packaging Inc., however an exclusive worldwide license agreement has been granted to SkinScience labs, Inc.

Silverpro ®, - (FDA Cleared)

Patented Compression Fabric in the marketplace with FDA pain clearance

Patent No. US 9,878,175 (European Patent has been allowed)

Patent Issued: January 30, 2018

Patent Expires: June 2036



Thin Film Toothpaste Strip

Product Name: KidzStrips ®,

Patented Fluoride doses-controlled children's toothpaste strip

(2 Patents issued) Patent No. US 9,656,102

Patent Issued: May 23, 2017

Patent Expires: December 21, 2033

Patent No. US 10,105,296

Patent Issued: October 23, 2018

Patent Expires: December 31, 2034

ImmuniZin TM (Immune Booster)

Some ImmunaZin Ingredients and Expectations

? Pepsin -- the main ingredient now famous for rapid recovery. We take pepsin and break it down into fragmented particles that are better absorbed into the digestive tract. These pepsin fragments directly modulate immune system activity by inducing potent T-cell response resulting in boosted immunity.

? Hemp seed oil helps balance healthy cholesterol levels, fights depression and anxiety, improves eye health, promotes brain health, reduces metabolic syndrome, reduces inflammation, fights autoimmune disease and mental disorders, reduces fatty liver, promotes bone and joint health and improves sleep and skin.

Irreversibly-inactivated pepsinogen fragments for modulating immune function (Immune Booster- FDA Cleared)

Patent No. US 8,309,072

Patent Issued: November 13, 2012

Patent Expires: June 18, 2029



Novel Fertilizer

Product Name: HydroSoil ®

Patent No. US 9,981,886

Patent Issued: May 29, 2018

Patent Expires: August 12, 2036

Pending Patent Applications

Cannabinoid, Menthol and Caffeine Dissolvable Film Composition, Devices and Methods

US Application No. 16/558,872; International Application PCT/US2019/049309

Cannabinoid and Menthol Gum and Lozenge Compositions and Methods

US Application No. 16/555,022 (US Application No. 62/869,121 is a provisional US application for this US application); International Application PCT/US2019/048740

Cannabinoid and Anesthetic Gum and Lozenge Compositions and Methods

US Application No. 16/554,930 (US Application No. 62/869,118 is a provisional US application for this US application); International Application PCT/US2019/048728

Cannabinoid and Anesthetic Compositions and Methods

US Application No. 16/419,274; International Application PCT/US2019/048690

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C-Biscuit TM

Hemp rich suppository for racehorse industry for rapid recovery from injury Veterinary Cannabinoid, Menthol and Anesthetic Compositions and Methods

Application No. 16/555,241; International Application PCT/US2019/048789

Veterinary Cannabinoid and Menthol Compositions and Methods

Application No. 16/419,392; International Application PCT/US2019/048695

Cannabinoid and Menthol Gel Compositions, Patches and Methods

US Application No. 16/558,780; International Application PCT/US2019/049294

Cannabinoid and Menthol Compositions and Methods

US Application No. 16/419,336; International Application PCT/US2019/048691

Thin Film Toothpaste Strip, European Application

Product Name: KidzStrips ®

Application No. 14876319.6

Thin Film Toothpaste Strip, Eurasian Application

Product Name: KidzStrips ®

Application No. 201600502/28.

U.S. Application No. 17/412442

Fertilizer

Product Name: HydroSoil ®,

Water retaining Hemp enhanced fertilizer, water plant once every two weeks

U.S. Application No. 15/986,111

Inactivated Pepsin Fragment (IPF) and Full Spectrum Cannabidiol (CBD) Compositions and Methods

U.S. Provisional Patent Application No. 62/859,422

Skin Cream

Relates to compositions and methods for the prevention and treatment of skin disorders and for the rejuvenation of the skin. In particular, the application describes topical compositions and methods of treatments comprising the combined use of one or more cannabinoids and one or more hydroxy acids in a suitable carrier.

U.S. Application No. Application 15/233,251

Other Products

IcyEase

U.S. Application No. 16/807229

Adhesive Ice Pack for muscle/joint pain to cool surface and address pain.

Patent-pending, FDA pain claim in progress

Slim-D

Appetite-suppressant oral strip with 50 mg Hoodia & 10 mg Full Spectrum Phytocannabinoid

Energy Lighting Strips

High caffeine fast dissolving oral energy strip with Matcha Green Tea and Hemp/Full Spectrum Phytocannabinoid

Micro Voltage Trans Derm C

for pain with unique and superior absorbing features due to wearer's movement generated Micro Voltage

CBD 600

Hemp Rich oral tincture with FDA cleared legal pain claim. One and only with FDA clearance.

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Research & Development and Product Manufacturing

Our products are produced using third party manufacturers who are responsible for sourcing the raw materials and ingredients and adhering to applicable specifications and regulatory requirements including the FDA's good manufacturing practices (GMP) certification. We also use some of these same third parties for research and development and testing functions as and when the need arises. We rely on a limited number of these manufacturers to develop and produce our product offerings.

The availability and production capability of our manufacturers depends on the raw material supplies and sources, as well as other projects on which our manufacturers may be engaged at a given time. Because of these contingencies, the lead times on production and delivery schedules can fluctuate, which may cause us to fail to meet internal or contractual deadlines. As we grow, we hope to be able to accurately forecast and manage these processes to try and ensure we have adequate inventory on hand to meet demand. A primary raw material utilized in the production process for our products is CBD isolate which can only be produced in certain states. While we believe there are sufficient sources for CBD isolate and other raw materials necessary to meet our production needs, shortages and delays can occur, which could harm us by prolonging or suspending expected deliveries or increasing production costs.

COVID-19

The COVID-19 pandemic has resulted in a global slowdown of economic activity which is likely to continue to reduce the future demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply chains for an unknown period of time until the virus is fully contained. Supply chain disruptions have been increasingly common since the pandemic began, and such disruptions may affect us in the future.

Sales and Distribution

Our products will be sold both online on our website, and through wholesale and retail establishments including both brick and mortar stores and ecommerce platforms. We also intend to sell our products in part using a direct selling model in which we contract with independent contractors who are compensated by commissions from their sales of our products. We intend to dedicate substantial capital, including a portion of the proceeds from this offering, to build a sales force consisting of a combination of employees of the Company and independent contractors.

Planned Operations and Products Under Development

New and Planned Products

In addition to our developed products, we are also in the process of evaluating and developing new products. Our ability to develop and launch these products within the timeframes intended or at all depends in large part on the Company receiving sufficient proceeds. If we are unable to raise at least $ 2,500,000 the development, production and distribution of these products may be delayed or discontinued. Even with the required capital, planned or future projects may not come to fruition. Below is a brief summary of the projects which are planned and/or under development.

Exosome Product Research and Development

We are in the early stages of developing a new business which will focus on a new line of products using naturally occurring nanosized compounds (approximately 30-150 nanometers in diameter), referred to as "exosomes," which are derived from stem cells and cause growth and regeneration by acting as biologic messengers at the cellular level of the human body. Exosomes work by delivering chemical signals to the cells they permeate, instigating the production of regenerative proteins and other compounds while also inhibiting destructive inflammatory cytokines. We intend to explore the potential use of exosome science to develop products designed to serve regenerative and health and wellness functions such as hair and skin regeneration. However, we are still in the very early development of this project, and no assurances can be given that we will be able to proceed with our planned exosome product operations as intended or at all. We do not expect to own or acquire intellectual property rights or participate directly in the development and manufacturing efforts for exosome products, and instead intend to license the intellectual property rights of third parties in order to market and sell the finished products.

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SaaS Logistics Platform

Prior to the acquisition of Integrity Wellness, we were in the process of developing a SaaS platform intended to enable users to monitor and manage numerous aspects of the supply chain as they obtain raw materials, develop and produce products, and bring their products to the marketplace. The intended focus of the platform and services was on OTC, pharmaceutical, cosmetic, nutraceutical, hemp/CBD and health and wellness products. The development efforts to date have been conducted primarily by Corengine, Inc., a third-party software development company. However, we have yet to develop and commercialize the platform, which has been delayed in part due to the COVID-19 pandemic. The platform's intended function is to assist users with the tracking, monitoring and management of their respective manufacturing and distribution processes. The SaaS-based platform will be designed to fully integrate the various components of the supply chain, from obtaining raw materials through product manufacturing and distribution and inventory and shelf-life batch tracking. We had previously announced the spin-off of the business which was subsequently suspended indefinitely due to COVID-19.

Our principal executive offices are located at 150 Motor Parkway, Suite 401, Hauppauge, NY 11787. Our telephone number is 631-787-8455.

Parent Holding Company Reorganization

On May 6, 2021, the issuer (having been renamed, immediately prior to this Holding Company Reorganization, from "Cannagistics, Inc." to "Global Transition Corporation") completed a corporate reorganization (the "Holding Company Reorganization") pursuant to which Global Transition Corporation, as previously constituted (the "Predecessor") merged with a company which became a direct, wholly-owned subsidiary of a newly formed Delaware Corporation, Cannagistics, Inc. (in this capacity referred to as the "Holding Company"), which became the successor issuer. In other words, the Holding Company is now the public entity, albeit with the same name as the original issue or the Predecessor. The Holding Company Reorganization was effected by a merger conducted pursuant to Delaware General Corporation Law (the "DGCL"), which provides for the formation of a holding company without a vote of the stockholders of the constituent corporations (such constituent corporations being the Predecessor, as renamed to Global Transition Corporation and the newly formed Cannagistics, Inc.).

In accordance with the DGCL, Global3pl, Inc. ("Merger Sub"), another newly formed Delaware Corporation and, prior to the Holding Company Reorganization, was an indirect, wholly owned subsidiary of the Holding Company, merged with and into the Predecessor, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of the Holding Company (the "Merger"). The Merger was completed pursuant to the terms of an Agreement and Plan of Merger among the Predecessor, the Holding Company and Merger Sub, dated May 6, 2021 (the "Merger Agreement").

As of the effective time of the Merger and in connection with the Holding Company Reorganization, all outstanding shares of common stock and preferred stock of the Predecessor were automatically converted into identical shares of common stock or preferred stock, as applicable, of the Holding Company on a one-for-one basis, and the Predecessor's existing stockholders and other holders of equity instruments, became stockholders and holders of equity instruments, as applicable, of the Holding Company in the same amounts and percentages as they were in the Predecessor immediately prior to the Holding Company Reorganization.

The executive officers and board of directors of the Holding Company are the same as those of the Predecessor in effect immediately prior to the Holding Company Reorganization.

For purposes of Rule 12g-3(a), the Holding Company is the successor issuer to the Predecessor, now as the sole shareholder of the Predecessor. Accordingly, upon consummation of the Merger, the Holding Company's common stock was deemed to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 12g-3(a) promulgated thereunder.

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Results of Operation for Three months Ended October 31, 2021 and 2020

Revenues

No revenue was generated for the three months ended October 31, 2021 and October 31, 2020.

Our cost of revenues was $0 for the three months ended October 31, 2021, as compared with cost of revenue of $0 for the same period ended October 31, 2020.

Operating Expenses

Total operating expenses increased to $825,907 for the three months ended October 31, 2021, from $156,445 at October 31, 2020. This increase was mainly due mainly to an increase in Bad Debt, Consulting and Professional fees.

Operating expenses for the three months ended October 31, 2021, consisted of general and administrative expenses of $27,126, professional fees of $187,908, rent of $4928, and consulting fees of $584,979. Our operating expenses for the three months ended October 31, 2020, consisted of general and administrative expenses of $37,575, professional fees of $82,884, rent of $7,486, and consulting fees of $28,500.

Other Income and Expenses

We had interest income of $27,759 for the three months ended October 31, 2021, and $21,759 for the three months ended October 31, 2020. We had interest expense of $351,918 for the three months ended October 31, 2021 as compared to $147,634 for the three months ended October 31, 2020. We had Settlement Fees of $(69,875) for the three months ended October 31, 2021, as compared to $(25,000) for the three months ended October 31, 2020. We had a Loss on Derivative Liabilities of $130,909 for the three months ended October 31, 2021, as compared to $(936,075) for the October 31 months ended October 31, 2020. We had a Change in fair value of derivative labilities of $128,541 for the three months ended October 31, 2021, as compared to $(42,782)0.0 for three months ended October 31, 2020.

Net Loss

Net loss for the three months ended October 31, 2021 was $996,491 compared to net loss of $1,286,177 for the three months ended October 31, 2020.

Liquidity and Capital Resources

As of October 31, 2021, we had total current assets of $67,158 and total current liabilities of $6,033,316 as of October 31, 2021. We had a negative working capital of $5,966,158 as of October 31, 2021.

We intend to fund operations through sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Off Balance Sheet Arrangements

As of October 31, 2021, there were no off-balance sheet arrangements.

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Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our accounting policies are discussed in detail in the footnotes to our financial statements included in our Annual Report on Form 10-K for the year ended July 31, 2020, however we consider our critical accounting policies to be those related to inventory, fair value of financial instruments, derivative financial instruments and long-lived assets

Going Concern

As of October 31, 2021, we had an accumulated deficit of $31,538,682. Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations. While we are expanding our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about our ability to continue as a going concern.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow

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