NutriBand Inc

Previous wording

On November 1, 2021, The Board of Directors adopted the 2021 Employee Stock Option Plan (the “Plan”). The Company has reserved 408,333 shares to issue and sell upon the exercise of stock options issued under the Plan. On November 3, 2021, the Company filed a Registration Statement on Form S-8, to register under the Securities Act of 1933, as amended, the 408,333 shares of common stock reserved for issuance under the Plan, and on October 12, 2022, a Post-Effective Amendment to the Form S-8 was filed with the SEC. In accordance with the Plan, on February 1, 2022, the Company reserved an additional 233,333 shares and on February 1, 2023, the Company reserved an additional 233,333 shares. On March 20, 2024, our Board of Directors adopted an amendment to the Company’s 2021 Employees Stock Option Plan (the “Plan”) increasing the number of shares of common stock subject to the plan (as of March 20, 2024 875,000 shares) to 1,400,00 shares (the “Amendment”). The plan adopted by the Board on November 1, 2021, provided for an initial 350,000 shares to issue and sell upon the exercise of stock options issued under the Plan. The Plan provides for an automatic annual increase to be added on February 1 of each year equal to the lesser of (i) 250,000 shares of Common Equity or (ii) five percent (5%) of the total shares of Common Stock outstanding on such date (including for this purpose any shares of Common Stock issuable upon conversion of any outstanding capital equity of the Company) or (iii) such lesser number as determined by the Board. We will submit the Amendment to the Plan to our stockholders for adoption and approval at the 2025 Annual Meeting. If the Amendment is not approved by stockholders within one year of adoption by the increase in shares subject to the Plan will be void, together with any options issued following March 20, 2024 in the period pending approval of the Plan by our stockholders. As of April 30, 2024, 135,165 shares remain available for issuance of options under the Plan.

Current wording

On November 1, 2021, The Board of Directors adopted the 2021 Employee Stock Option Plan (the “Plan”). The Company has reserved 408,333 shares to issue and sell upon the exercise of stock options issued under the Plan. On November 3, 2021, the Company filed a Registration Statement on Form S-8, to register under the Securities Act of 1933, as amended, the 408,333 shares of common stock reserved for issuance under the Plan, and on October 12, 2022, a Post-Effective Amendment to the Form S-8 was filed with the SEC. In accordance with the Plan, on February 1, 2022, the Company reserved an additional 233,333 shares and on February 1, 2023, the Company reserved an additional 233,333 shares. On March 20, 2024, our Board of Directors adopted an amendment to the Company’s 2021 Employees Stock Option Plan (the “Plan”) increasing the number of shares of common stock subject to the plan (as of March 20, 2024 875,000 shares) to 1,400,00 shares (the “Amendment”). The plan adopted by the Board on November 1, 2021, provided for an initial 350,000 shares to issue and sell upon the exercise of stock options issued under the Plan. The Plan provides for an automatic annual increase to be added on February 1 of each year equal to the lesser of (i) 250,000 shares of Common Equity or (ii) five percent (5%) of the total shares of Common Stock outstanding on such date (including for this purpose any shares of Common Stock issuable upon conversion of any outstanding capital equity of the Company) or (iii) such lesser number as determined by the Board. We will submit the Amendment to the Plan to our stockholders for adoption and approval at the 2025 Annual Meeting. If the Amendment is not approved by stockholders within one year of adoption by the increase in shares subject to the Plan will be void, together with any options issued following March 20, 2024, in the period pending approval of the Plan by our stockholders. As of July 31, 2024, 75,166 shares remain available for issuance of options under the Plan.

Previous wording

On December 27, 2023, the Company issued 1,026,720 shares of common stock in conversion of the outstanding $2,000,000 principal amount, plus accrued interest for the Credit Line Note of the Company held TII Jet Services LDA; and on May 14, 2024, TII Jet Services agreed to convert an additional $300,000 of principal of the Credit Line Note plus accrued interest at a conversion price of $4.00 per share, in exchange for the issuance of 76,230 shares of common stock.

Current wording

On December 27, 2023, the Company issued 1,026,720 shares of common stock in conversion of the outstanding $2,000,000 principal amount, plus accrued interest for the Credit Line Note of the Company held TII Jet Services LDA; and on May 14, 2024, TII Jet Services agreed to convert an additional $300,000 of principal of the Credit Line Note plus accrued interest at a conversion price of $4.00 per share, in exchange for the issuance of 76,230 shares of common stock. The fair value of the common stock at the date of issuance was $3.71 per share, which resuled a gain on the settlement of debt of $22,109.

Previous wording

On April 19, 2024, the Company completed an $8,400,000 equity financing with European investors, of which $7.12 million is from related parties, (the “Offering”) of 2,100,000 units (“Units”), at a price of $4.00 per Unit, each Unit consisting of one share of common stock (“Shares”) and a Warrant to purchase two Shares of common stock, the Warrants having an initial exercise price of $6.43, are exercisable by payment of the exercise price in cash only and expire April 19, 2029, five years from the date of issuance (“Warrants”). The Offering was made solely to investors resident outside the United States and was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any jurisdiction, including any jurisdiction outside the United States, but was made privately by the Company pursuant to the exemptions from registration provided in the SEC’s Regulation S and other exemptions under the Securities Act.

Current wording

On April 19, 2024, the Company completed an $8,400,000 equity financing with European investors (the “Offering”) of 2,100,000 units (“Units”), at a price of $4.00 per Unit, each Unit consisting of one share of common stock (“Shares”) and a Warrant to purchase two Shares of common stock, the Warrants having an initial exercise price of $6.43, are exercisable by payment of the exercise price in cash only and expire April 19, 2029, five years from the date of issuance. The Offering was made solely to investors resident outside the United States and was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any jurisdiction, including any jurisdiction outside the United States, but was made privately by the Company pursuant to the exemptions from registration provided in the SEC’s Regulation S and other exemptions under the Securities Act.

Previous wording

For the three months ended April 30, 2024, we generated revenue of $408,532 and our costs of revenue were $243,746. For the three months ended April 30, 2023, we generated revenue of $478,942 and our costs of revenue were $254,648. Our revenue for April 30, 2024, was derived from sales from contract manufacturing services performed in our Pocono Pharmaceuticals (Active Intelligence) segment $-0- from contract research and development services from our 4P Therapeutics segment. The revenue from the Transdermal Patches segment remained relatively constant from the prior year. An increase in demand is expected in the balance of the current year. The Company’s contract with Sorrento Therapeutics was completed and 4P Therapeutics devoted most of its time to the development of its Aversa product, our cost of revenue for our contract research and development services represents our labor cost plus a modest amount of material costs which we passed on to the client.

Current wording

For the three months ended July 31, 2024, we generated revenue of $442,830 and our costs of revenue were $341,272. For the three months ended July 31, 2023, we generated revenue of $655,928 and our costs of revenue were $356,256. Our revenue for July 31, 2024, was derived from sales from contract manufacturing services performed in our Pocono Pharmaceuticals (Active Intelligence) segment and $-0- from contract research and development services from our 4P Therapeutics segment. The revenue from the Transdermal Patches segment decreased slightly from the prior year as the Company ordered additional equipment to meet the new demand and will implement this equipment during the third quarter. An increase in demand is expected in the balance of the current year. The Company’s contract with Sorrento Therapeutics was completed and 4P Therapeutics devoted most of its time to the development of its Aversa product. Our cost of revenue for our contract research and development services represents our labor cost plus a modest amount of material costs which we passed on to the client.

Previous wording

For the three months ended April 30, 2024, our selling, general and administrative expenses were $1,078,728 primarily legal, accounting and administrative salaries and non-cash compensation from the issuance of employee stock options compared to $422,955 for the three months ended April 30, 2024.The increase from 2023 is primarily attributable to increases in non-cash equity-based expenses.

Current wording

For the three months ended July 31, 2024, our selling, general and administrative expenses were $737,325 primarily legal, accounting and administrative salaries and non-cash compensation from the issuance of employee stock options compared to $678,738 for the three months ended July 31, 2023.The increase from 2023 is primarily attributable to increases in professional fees and non-cash equity-based expenses.

Previous wording

During the three months ended April 30, 2024, the Company incurred research and development expenses of its Aversa Fentanyl product of $974,535, primarily of salaries and increases in development costs from Kindeva as compared to $400,430 for the three months ended April 30, 2023.

Current wording

During the three months ended July 31, 2024, the Company incurred research and development expenses of its Aversa Fentanyl product of $773,975, primarily of salaries and increases in development costs from Kindeva as compared to $445,122 for the three months ended July 31, 2023.

Previous wording

We incurred interest expense of $8,618 for the three months ended April 30, 2024, as compared to $3,166 for the three months ended April 30, 2023. The increase is primarily due to interest in the Company’s related party loans.

Current wording

We incurred interest expenses of $5,019 for the three months ended July 31, 2024, as compared to $9,235 for the three months ended July 31, 2024. The decrease is primarily due to the decrease in the Company’s related party loans.

Previous wording

As a result of the foregoing, we sustained a net loss of $1,898,077 or $(0.21) per share (basic and diluted) for the three months ended April 30, 2024, compared with a loss of $1,015,235, or $(0.13) per share (basic and diluted) for the three months ended April 30, 2023.

Current wording

As a result of the foregoing, we sustained a net loss of $1,705,465 or $(0.15) per share (basic and diluted) for the three months ended July 31, 2024, compared with a loss of $829,173, or $(0.11) per share (basic and diluted) for the three months ended July 31, 2023.

Previous wording

As of April 30, 2024, we had $8,347,740 in cash and cash equivalents and working capital of $7,313,072, as compared with cash and cash equivalents of $492,942 and working capital of $22,870 as of January 31, 2024.

Current wording

As of July 31, 2024, we had $6,759,967 in cash and cash equivalents and working capital of $6,144,483, as compared with cash and cash equivalents of $492,942 and working capital of $22,770 as of January 31, 2024.

Previous wording

For the three months ended April 30, 2024, we used cash of $833,926 in our operations. The principal adjustments to our net loss of $1,898,077 were depreciation and amortization of $69,101, and the issuance of employee stock options for services in the amount of $422,955.

Current wording

For the six months ended July 31, 2024, we used cash of $2,377,673 in our operations. The principal adjustments to our net loss of $3,603,542 were depreciation and amortization of $139,050, the issuance of employee stock options and warrants for services in the amount of $553,335 and the loss on extinguishment of debt of $368,036.

Previous wording

For the three months ended April 30, 2024, we used cash in investing activities of $6,195 primarily for the purchase of equipment.

Current wording

For the six months ended July 31, 2024, we used cash in investing activities of $45,085 primarily for the purchase of equipment.

Previous wording

As of April 30, 2024, the Company had cash and cash equivalents of $8,347,740 and working capital of $7,313,082. For the three months ended April 30, 2024, the Company incurred a net loss from operations of $1,898,077 and used cash flow from operations of $833,926. The Company has generated operating losses since its inception and has relied on sales of securities and issuance of third-party and related-party debt to support cash flow from operations. The Company has used these proceeds from the sales of securities and issuance of third-party and related party debt to fund operations and will continue to use the funds as needed. In March 2023, the Company entered into a three-year $2,000,000 Credit Line Note facility with a related party, amended on July 13, 2023, to $5,000,000, which will permit the Company to draw down on the credit line to fund the Company’s research and development of its Aversa product. On April 19, 2024, the Company received proceeds of $8,400,000 from equity financing with European investors, of which $7.12 million is from related parties.

Current wording

As of July 31, 2024, the Company had cash and cash equivalents of $6,759,967 and working capital of $6,144,483. For the six months ended July 31, 2024, the Company incurred a net loss from operations of $3,299,219 and used cash flow from operations of $2,377,673. The Company has generated operating losses since its inception and has relied on sales of securities and issuance of third-party and related-party debt to support cash flow from operations. The Company has used these proceeds to fund operations and will continue to use the funds as needed. In March 2023, the Company entered into a three-year $2,000,000 Credit Line Note facility with a related party, amended on July 13, 2023, to $5,000,000, which will permit the Company to draw down on the credit line to fund the Company’s research and development of its Aversa product. On April 19, 2024, the Company received proceeds of $8,400,000 from an equity financing with European investors.

Previous wording

Cash and cash equivalents include cash on hand, cash on deposit in money market accounts. The Company considers short-term highly liquid investments with an original maturity date of three months or less that are not part of an investment pool to be cash equivalents. As of April 30, 2024, the Company had $7,879,000 that exceeded federally insured limits.

Current wording

Cash and cash equivalents include cash on hand, cash on deposit in money market accounts. The Company considers short-term highly liquid investments with an original maturity date of three months or less that are not part of an investment pool to be cash equivalents. As of July 31, 2024, the Company had $6,461,000 that exceeded federally insured limits.

Previous wording

Trade accounts receivables are recorded at the net invoice value and are not interest bearing. The Company maintains allowances for doubtful accounts for estimated losses from the inability of its customers to make required payments. The Company determines its allowances by both specific identification of customer accounts where appropriate and the application of historical loss to non-applicable accounts. For the three months ended April 30, 2024, and 2023, the Company recorded bad debt expenses of $1,200 and $-0-, respectively, for doubtful accounts related to accounts receivable. During the year ended January 31, 2024, the Company entered into an accounts receivable sale agreement for one of its subsidiaries. The Company received $106,528 in funds against an account receivable that is currently a claim in bankruptcy. The net accounts receivable remain on the books of the Company and a corresponding amount has been included as a secured borrowing liability under Notes payable. As of April 30, 2024, the receivable has been reserved in full. If the bankruptcy claim is not paid in full by the debtor, Company is obligated to pay any difference to the factor. The loan bears interest at 10%. The Company adopted ASU 2016-13 during 2013, and implemented the guidance on expected credit losses.

Current wording

Trade accounts receivables are recorded at the net invoice value and are not interest bearing. The Company maintains allowances for doubtful accounts for estimated losses from the inability of its customers to make required payments. The Company determines its allowances by both specific identification of customer accounts where appropriate and the application of historical loss to non-applicable accounts. For the six months ended July 31, 2024, and 2023, the Company recorded bad debt expenses of $1,200 and $11,836, respectively, for doubtful accounts related to accounts receivable. During the year ended January 31, 2024, the Company entered into an accounts receivable sale agreement for one of its subsidiaries. The Company received $106,528 in funds against an account receivable that is currently a claim in bankruptcy. The net accounts receivable remain on the books of the Company and a corresponding amount has been included as a secured borrowing liability under Notes payable. As of July 31, 2024, the receivable has been reserved in full. If the bankruptcy claim is not paid in full by the debtor, Company is obligated to pay any difference to the factor. The loan bears interest at 10%. The Company adopted ASU 2016-13 during 2013 and implemented the guidance on expected credit losses.

Previous wording

Inventories are valued at the lower of cost and reasonable value determined using the first-in, first-out (FIFO) method. Net realized value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The cost of finished goods and work in process is comprised of material costs, direct labor costs and other direct costs and related production overheads (based on normal operating capacity). As of April 30, 2024, total inventory was $168,505, consisting of work-in-process of $27,447, finished goods of $26,751 and raw materials of $114,307. As of January 31, 2024, total inventory was $168,605, consisting of work-in-process of $7,466, finished goods of $8,707 and raw materials of $134,691.

Current wording

Inventories are valued at the lower of cost and reasonable value determined using the first-in, first-out (FIFO) method. Net realized value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The cost of finished goods and work in process is comprised of material costs, direct labor costs and other direct costs and related production overheads (based on normal operating capacity). As of July 31, 2024, total inventory was $223,860, consisting of work-in-process of $46,458, finished goods of $21,681 and raw materials of $155,721. As of January 31, 2024, total inventory was $168,605, consisting of work-in-process of $7,466, finished goods of $8,707 and raw materials of $134,691.

Previous wording

Basic earnings per share of common stock is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock and potential shares of common stock outstanding during the period. Potential shares of common stock consist of shares issuable upon the exercise of outstanding options and common stock purchase warrants. As of April 30, 2024, and 2023, there were 6,747,873 and 1,783,373 common stock equivalents outstanding, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.

Current wording

Basic earnings per share of common stock is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock and potential shares of common stock outstanding during the period. Potential shares of common stock consist of shares issuable upon the exercise of outstanding options and common stock purchase warrants. As of July 31, 2024, and 2023, there were 6,872,833 and 1,783,373 common stock equivalents outstanding, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.