NutriBand Inc

Previous wording

On July 26, 2022, our Board of Directors approved the amendment to our Articles of Incorporation to effect a 7 for 6 forward stock split (the “Stock Split”) of our outstanding common stock. We filed the amendment set forth in a Certificate of Change with the Secretary of State of Nevada on August 4, 2022. The 7:6 forward split was effective for trading purposes on the Nasdaq Capital Market on August 12, 2022. Each shareholder of record as of the August 15, 2022 record date received one (1) additional share of common stock for each six (6) shares held as of the record date. No fractional shares of common stock were issued in connection with the Stock Split. Instead, all shares were rounded up to the next whole share. In connection with the Stock Split, which did not require shareholder approval under the Nevada corporation law, the number of authorized shares of common stock of the Company was increased in the same ratio as the shares of outstanding common stock were increased in the Stock Split, from 250,000,000 authorized shares to 291,666,666 authorized shares.

Current wording

On July 26, 2022, our Board of Directors approved the amendment to our Articles of Incorporation to effect a 7 for 6 forward stock split (the “Stock Split”) of our outstanding common stock. We filed the amendment set forth in a Certificate of Change with the Secretary of State of Nevada on August 4, 2022. The 7:6 forward split was effective for trading purposes on the Nasdaq Capital Market on August 12, 2022. Each shareholder of record as of the August 15, 2022 record date received one (1) additional share of common stock for each six (6) shares held as of the record date. No fractional shares of common stock were issued in connection with the Stock Split. Instead, all shares were rounded up to the next whole share. In connection with the Stock Split, which did not require shareholder approval under the Nevada corporation law, the number of authorized shares of common stock of the Company increased in the same ratio as the shares of outstanding common stock were increased in the Stock Split, from 250,000,000 authorized shares to 291,666,666 authorized shares.

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. 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.

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 resulted a gain on the settlement of debt of $22,109.

Previous 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.

Current wording

For the three months ended October 31, 2024, we generated revenue of $645,796 and our costs of revenue were $454,767. For the three months ended October 31, 2023, we generated revenue of $427,841 and our costs of revenue were $268,920. Our revenue for October 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 increased from the prior year as the Company ordered additional equipment to meet the new demand and implemented 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 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.

Current wording

For the three months ended October 31, 2024, our selling, general and administrative expenses were $737,102 primarily legal, accounting and administrative salaries and non-cash compensation from the issuance of employee stock options compared to $1,330,929 for the three months ended October 31, 2023.The decrease from 2023 is primarily attributable to decreases in professional fees and non-cash equity-based expenses.

Previous 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.

Current wording

During the three months ended October 31, 2024, the Company incurred research and development expenses of its Aversa Fentanyl product of $880,768, primarily of salaries and increases in development costs from Kindeva as compared to $551,503 for the three months ended October 31, 2023.

Previous 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.

Current wording

We incurred interest expenses of $4,031 for the three months ended October 31, 2024, as compared to $40,200 for the three months ended October 31, 2024. The decrease is primarily due to the decrease in the Company’s related party loans.

Previous wording

Interest income for the three months ended July 31, 2024 was $77,332 as compared to $4,250 for the three months ended July 31, 2023. The increase is primarily due to investment of excess cash from the Company’s equity financing.

Current wording

Interest income for the three months ended October 31, 2024 was $68,235 as compared to $3,765 for the three months ended October 31, 2023. The increase is primarily due to investment of excess cash from the Company’s equity financing.

Previous 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.

Current wording

As a result of the foregoing, we sustained a net loss of $1,362,637 or $(0.12) per share (basic and diluted) for the three months ended October 31, 2024, compared with a loss of $1,759,940, or $(0.22) per share (basic and diluted) for the three months ended October 31, 2023.

Previous wording

For the six months ended July 31, 2024, we generated revenue of $851,362 and our costs of revenue were $585,018 resulting in a gross margin of $266,344. For the six months ended July 31, 2023, we generated revenue of $1,132,860 and our costs of revenue were $610,904, resulting in a gross margin of $521,956. Our revenue for July 31, 2024, was derived from sales from our Transdermal Patches segment and $-0- from contract services from our 4P Therapeutics segment. The revenue from the Transdermal Patches segment decreased from the prior year. An increase in demand is expected in the subsequent quarter. 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. Our cost of sales decreased during the period for our contract services in comparison to the prior year as our main contract has been completed and the balance of the contract is being recognized with limited additional costs.

Current wording

For the nine months ended October 31, 2024, we generated revenue of $1,497,158 and our costs of revenue were $1,039,785 resulting in a gross margin of $457,373. For the nine months ended October 31, 2023, we generated revenue of $1,560,701 and our costs of revenue were $879,824, resulting in a gross margin of $680,877. Our revenue for October 31, 2024, was derived from sales from our Transdermal Patches segment and $-0- from contract services from our 4P Therapeutics segment. The revenue from the Transdermal Patches segment decreased from the prior year. An increase in demand is expected in the subsequent quarter. 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. Our cost of sales decreased during the period for our contract services in comparison to the prior year as our main contract has been completed and the balance of the contract is being recognized with limited additional costs.

Previous wording

For the six months ended July 31, 2024, our selling, general and administrative expenses were $1,817,053 primarily legal, accounting and non-cash compensation compared to $1,518,470 for the six months ended July 31, 2023.The increase from 2023 is primarily attributable to an increase in increase in investor relations expenses and professional fees.

Current wording

For the nine months ended October 31, 2024, our selling, general and administrative expenses were $2,554,155 primarily legal, accounting and non-cash compensation compared to $2,849,399 for the nine months ended October 31, 2023.The decrease from 2023 is primarily attributable to a decrease in investor relations expenses and professional fees.

Previous wording

During the six months ended July 31, 2024, the Company incurred research and development expenses of its Aversa Fentanyl product of $ 1,748,510 primarily of salaries and increases in development costs from Kindeva as compared to $845,552 for the six months ended July 31, 2023.

Current wording

During the nine months ended October 31, 2024, the Company incurred research and development expenses of its Aversa Fentanyl product of $ 2,629,278 primarily of salaries and increases in development costs from Kindeva as compared to $1,397,055 for the nine months ended October 31, 2023.

Previous wording

We incurred interest expense of $13,637 for the six months ended July 31, 2024, as compared to $12,401 for the six months ended July 31, 2023.

Current wording

We incurred interest expense of $17,668 for the nine months ended October 31, 2024, as compared to $52,601 for the nine months ended October 31, 2023. The decrease is primarily due to the decrease in the Company’s related party debt.

Previous wording

Interest income for the six months ended July 31, 2024 was $77,350 as compared to $10,065 for the six months ended July 31, 2023. The increase is primarily due to the investment of excess cash from the Company’s equity financing.

Current wording

Interest income for the nine months ended October 31, 2024 was $145,585 as compared to $13,830 for the nine months ended October 31, 2023. The increase is primarily due to the investment of excess cash from the Company’s equity financing.

Previous wording

During the three months ended July 31, 2024, the Company incurred a loss on extinguishment of debt of $368,036 in connection with the issuance of common stock and warrants to a related party debtor.

Current wording

During the nine months ended October 31, 2024, the Company incurred a loss on extinguishment of debt of $368,036 in connection with the issuance of common stock and warrants to a related party debtor.

Previous wording

As a result of the foregoing, we sustained a net loss of $3,603,542 or $(0.36) per share (basic and diluted) for the six months ended July 31, 2024 compared with a loss of $1,844,402, or $(0.24) per share (basic and diluted) for the six months ended July 31, 2023.

Current wording

As a result of the foregoing, we sustained a net loss of $4,966,179 or $0.48)per share (basic and diluted) for the nine months ended October 31, 2024 compared with a loss of $3,604,348, or $0.46 per share (basic and diluted) for the nine months ended October 31, 2023.

Previous 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.

Current wording

As of October 31, 2024, we had $5,698,187 in cash and cash equivalents and working capital of $4,943,816, 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 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.

Current wording

For the nine months ended October 31, 2024, we used cash of $3,387,320 in our operations. The principal adjustments to our net loss of $4,966,179 were depreciation and amortization of $212,199, the issuance of employee stock options and warrants for services in the amount of $686,685 and the loss on extinguishment of debt of $368,036.

Previous wording

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

Current wording

For the nine months ended October 31, 2024, we used cash in investing activities of $92,043 primarily for the purchase of equipment.

Previous wording

For the six months ended July 31, 2024, we provided cash in financing activities of $8,689,783 primarily from the proceeds of $8,400,000 from the sale of common stock and warrants and $300,000 from its line of credit.

Current wording

For the nine months ended October 31, 2024, we provided cash in financing activities of $8,684,608 primarily from the proceeds of $8,400,000 from the sale of common stock and warrants and $300,000 from its line of credit.

Previous 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.

Current wording

As of October 31, 2024, the Company had cash and cash equivalents of $5,698,187 and working capital of $4,934,816. For the nine months ended October 31, 2024, the Company incurred a net loss from operations of $4,726,060 and used cash flow from operations of $3,387,320. 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 July 31, 2024, the Company had $6,461,000 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 October 31, 2024, the Company had $5,171,000 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 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.

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 nine months ended October 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 October 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 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.

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 October 31, 2024, total inventory was $168,299, consisting of work-in-process of $31,418, finished goods of $966 and raw materials of $135,914. 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 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.

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 October 31, 2024, and 2023, there were 6,922,833 and 2,157,873 common stock equivalents outstanding, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.

Previous wording

The Company applies the guidance for right-of-use accounting for all leases and records the operating lease liabilities on its balance sheet. The Company completed the necessary changes to its accounting policies, processes, disclosure and internal control over financial reporting.

Current wording

The Company applies guidance for right-of-use accounting for all leases and records the operating lease liabilities on its balance sheet. The Company completed the necessary changes to its accounting policies, processes, disclosure and internal control over financial reporting.

Previous wording

The Company records net deferred tax assets to the extent they believe these assets will more-likely-than-not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event the Company was to determine that it would be able to realize its deferred income tax assets in the future in excess of its net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

Current wording

The Company records net deferred tax assets to the extent they believe these assets will more likely than not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event the Company was to determine that it would be able to realize its deferred income tax assets in the future in excess of its net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.