The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the condensed financial statements and notes thereto included in Item 1 in this Quarterly Report on Form 10-Q.

Our Management's Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. Forward-looking statements are often identified by words like: "believe", "expect", "estimate", "anticipate", "intend", "project" and similar expressions, or words that, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in herein and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Prospective investors should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements."





Overview

Reviv3 Procare Company is engaged in the manufacturing, marketing, sale and distribution of professional quality hair and skin care products under various trademarks and brands. We have adopted and used the trademarks of our products for distribution throughout the United States, Canada, Europe, and Asia pursuant to the terms of twelve exclusive distribution agreements with various parties throughout our targeted market. Our manufacturing operations are outsourced and fulfilled by our co-packers and manufacturing partners. Currently, we produce seven products with sixteen separate stock-keeping units ("SKUs") and look to expand our product lines over the next twelve months.


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Jumpstart Our Business Startups Act of 2012 ("JOBS Act")

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an "emerging growth company," we intend to rely on certain of these exemptions from, without limitation, (i) providing an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an "emerging growth company" until the earliest of (a) the last day of our fiscal year following the fifth anniversary of the closing of this offering, (b) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (c) the last day of our fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, or Exchange Act (which would occur if the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter), or (d) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.





Results of Operations

For the Three Months and Nine months Ended February 28, 2021 Compared to the Three Months and Nine months Ended February 29, 2020

Sales for the three months ended February 28, 2021 and February 29, 2020 were $364,966 and $157,880, respectively. Sales for the three months ended February 28, 2021 increased by $207,086 or 131% over the same comparable period in 2020. Sales for nine months ended February 28, 2021 and February 29, 2020 were $1,277,480 and $612,114 respectively. Sales for the nine months ended February 28, 2021 increased by $665,366 or 109% over the same comparable period in 2020. Revenues increased in the 2020 respective periods due to (1) increased sales generated by our existing distributors during the quarter ended February 28, 2021, (2) general increase in our direct sales to consumer segment during the quarter ended November 20, 2020 and continued revenue generation in this segment for the quarter ended February 28, 2021.

Cost of sales consisted primarily of cost of product, freight-in costs, distribution and merchant fees. Cost of sales for the three months ended February 28, 2021 and February 29, 2020 was $93,491 and $45,736, respectively. Cost of sales as a percentage of sales for the three months ended February 28, 2021 and February 29, 2020 was 26% and 29%, respectively. Cost of sales for the nine months ended February 28, 2021 and February 29, 2020 was $477,578 and $260,603, respectively. Cost of sales as a percentage of sales for the nine months ended February 28, 2021 and February 29, 2020 was 37% and 43%, respectively. Cost of sales as a percentage of sales decreased in 2021 for the respective periods as compared to the same comparable periods in 2020 primarily due to our continued expansion in the direct sales to consumer segment. In addition, the freight-out costs increased significantly due to the increased number of shipments in the direct sales to consumer sales

Gross profit for the three months ended February 28, 2021 and February 29, 2020 was $271,475 and $112,114 respectively. Gross profit as a percentage of sales for the three months ended February was 74% as compared to 71% for the same comparable period in 2020. Gross profit for the nine months ended February 28, 2021 and February 29, 2020 was $799,902 and $351,511, respectively. Gross profit as a percentage of revenues for the nine months ended February 28, 2021 was 63% as compared to 57% for the same comparable period in 2020. The increase in gross profit was primarily attributable to the increased sale of products in the direct-to-consumer sales segment.


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Operating expenses consisted of marketing and selling expenses, professional and consulting fees, compensation to employees and other general and administrative expenses. Operating expenses for the three months ended February 28, 2021 and February 29, 2020 were $392,503 and $153,255, respectively. Operating expenses as a percentage of sales for the three months ended February 28, 2021 and February 29, 2020 were 108% and 97%, respectively. Operating expenses for the three months ended February 28, 2021 increased by $239,248 or 156% over the comparable period in 2020. This increase is primarily due to increase in marketing and advertising expense to promote the Company's product line and brand in the direct- to-consumer channels. Operating expenses for the nine months ended February 28, 2021 and February 29, 2020 were $934,411 and $523,039, respectively. Operating expenses as a percentage of revenues for the nine months ended February 28, 2021 and February 29, 2020 were 73% and 85%, respectively. Operating expenses for the nine months ended February 28, 2021 increased by $411,372 or 79% over the comparable period in 2020. The increase in operating expenses for the nine months, is attributed primarily to the increase in marketing and advertising expense by $360,791 to $501,051 to promote Company's brand name and its products in the direct to consumer channels; a general increase in the professional and consulting expenses by $55,348 to $197,611; an increase in general and administrative costs in 2021 by $7,182 to 208,881, offset by reduction in compensation and related taxes in 2021 by $11,949 to $26,868 compared to the same comparable periods in 2020.

Other income (expense) consisted of interest income, interest expense and other finance charges, and gain on settlement of debt. Interest income for the three months ended February 28, 2021 and February 29, 2020 was $12 and $25, respectively. Interest expense and finance changes for the three months ended February 28, 2021 and February 29, 2020 were $1,757 and $513, respectively, primarily due to interest expense related to business credit card financing charges. The Company also recognized a gain of $16,313 on debt settlement, during the three months ended February 28, 2021. Interest income for the nine months ended February 28, 2021 and February 29, 2020 was $31 and $95, respectively. Interest expense and finance changes for the nine months ended February 28, 2021 and February 29, 2020 were $4,461 and $1,149, respectively, primarily due to interest expense related to business credit card financing charges. Additionally, the Company recognized a gain of $16,313, on debt settlement, during the nine months ended February 28, 2021.

As a result of the above, we reported a net loss of $106,460 compared to a net loss of $41,499 for the three months ended February 28, 2021 and February 29, 2020, respectively. As a result of the above, we reported a net loss of $122,626 and $172,582 for the nine months ended February 28, 2021 and February 29, 2020, respectively.

Liquidity and Capital Resources

We are an emerging growth company and currently engaged in our initial product sales and development. We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during the fiscal year 2020. We believe our current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet our working capital requirements in the short term. We continue to control our cash expenses as a percentage of expected revenue on an annual basis and thus may use our cash balances in the short-term to invest in revenue growth. We have and will continue to generate sufficient cash for our operational needs, including any required debt payments, for at least one year from the date of issuance of the accompanying financial statements. Management is focused on growing the Company's existing products offering, as well as its customer base, to increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements





Cash Flows



Operating Activities

Net cash flows provided by operating activities for the nine months ended February 28, 2021 was $74,212, attributable to a net loss of $122,626, depreciation of $7,622, bad debt expense of $574, stock based compensation expense of $66,400, non-cash lease expense of $1,714, a gain of $16,313 on debt settlement and net change in operating assets and liabilities of $136,841 primarily due to decrease in accounts receivable and increase in accounts payable, offset by an increase in inventory and prepaid expenses and decrease in customer deposits. Net cash flows used in operating activities for the nine months ended February 29, 2020 was $191,974, attributable to a net loss of $172,582, depreciation of $7,998, bad debts recovery of $2,342, write-off of intangibles of $474, and net change in operating assets and liabilities of $26,379 primarily due to decrease in accounts receivable, prepaid expenses and other current assets, and increase in accounts payable offset by an increase in inventory and security deposits.



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Investing Activities

Net cash flows used by investing activities for the nine months ended February 28, 2021 and February 29, 2020 was $15,408 and $9,230, respectively, attributable to purchase of property and equipment during the nine months period.





Financing Activities

Net cash flows provided by financing activities for the nine months ended February 28, 2021 was $24,231. Net cash flows used in financing activities for the nine months ended February 29, 2020 was $2,285. For the nine months ended February 28, 2021, we received advances from a related party of $20,406, proceeds from loan payable of $6,300 and repaid $2,475 towards equipment financing. For the nine months ended February 28, 2020, we repaid $2,285 towards equipment financing.

As a result of the activities described above, we recorded a net increase in cash of $83,305 for the nine months ended February 28, 2021, and a net decrease in cash of $203,489 for the nine months ended February 29, 2020.

We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

We are dependent on our product sales to fund our operations and may require the sale of additional common stock to expand our operations. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.

If we are unable to raise the funds required to fund our operations, we will seek alternative financing through other means, such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.





Critical Accounting Policies

The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of expenses during the reporting period. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require the most difficult, subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These critical accounting policies relate to revenue recognition, impairment of intangible assets and long-lived assets, inventory, stock compensation, and evaluation of contingencies. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial condition or results of operations.


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Significant Accounting Policies

See the footnotes to our unaudited condensed financial statements for the quarter ended February 28, 2021, included with this quarterly report.





Impact of COVID-19

For over one year, the effects of a new coronavirus ("COVID-19") and related actions to attempt to control its spread began to impact our business. The impact of COVID-19 on our operating results for the three months ended February 28, 2021 was limited, in all material respects, to our sales in Europe and in China where the Chinese government mandated numerous measures, including closures of businesses, limitations on movements of individuals and goods, and the imposition of other restrictive measures, in its efforts to mitigate the spread of COVID-19 within the country.

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Governments around the world have mandated, and continue to introduce, orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions that prohibit many employees from going to work. Uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets.

To the extent that COVID-19 continues or worsens, governments may impose additional restrictions or additional governments may impose restrictions. The result of COVID-19 and those restrictions could result in a number of adverse impacts to our business, including but not limited to additional disruption to the economy and consumers' willingness and ability to spend, temporary or permanent closures by businesses that consume our products, such as salons and spas, additional work restrictions, and supply chains being interrupted, slowed, or rendered inoperable. As a result, it may be challenging to obtain and process raw materials and supply chains to support our business needs, and individuals could become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. Also, governments may impose other laws, regulations or taxes which could adversely impact our business, financial condition or results of operations. Further, if our customers' businesses or incomes are similarly affected, they might delay or reduce purchases from us. The potential effects of COVID-19 also could impact us in a number of other ways including, but not limited to, reductions to our profitability, laws and regulations affecting our business, the availability of future borrowings, the cost of borrowings, and credit risks of our customers and counterparties.

Given the evolving health, economic, social, and governmental environments, the potential impact that COVID-19 could have on our business remains uncertain and could be significant.

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