Nutriband (NTRB) - 2022 Q4 - Annual Report

FORM 10-K Cover Page Nutriband Inc. is a non-accelerated filer, smaller reporting, and emerging growth company, opting out of extended accounting transition periods - Nutriband Inc. is a non-accelerated filer, smaller reporting company, and emerging growth company, opting out of the extended transition period for new accounting standards[4][5] Key Filing Status and Market Data (as of Jan 31, 2022) | Metric | Value | | :--- | :--- | | Fiscal Year Ended | January 31, 2022 | | Filer Status | Non-accelerated, Smaller Reporting, Emerging Growth | | Market Value of Non-Affiliate Common Equity (July 31, 2021) | $33,326,538 | | Common Stock Outstanding (April 22, 2022) | 7,821,176 shares | Forward-Looking Statements Forward-looking statements are subject to various risks and uncertainties, and the company does not commit to updating them - Forward-looking statements are subject to risks and uncertainties, including financing, FDA approval, COVID-19 impact, intellectual property, and competition, and actual results may vary materially[13][14][16][17] - The company does not assume any obligation to update any forward-looking statement[15][16] PART I Business Overview Nutriband Inc. develops transdermal pharmaceutical products, with AVERSA™ abuse-deterrent fentanyl patch as its lead, and provides contract manufacturing - Primary business is the development of transdermal pharmaceutical products, with AVERSA™ technology for abuse deterrence as the lead product[21][23] - Acquired 4P Therapeutics in August 2018 to shift focus to pharmaceutical transdermal products and Pocono Coated Products in August 2020 for contract manufacturing services[21][29][30][33] Business Summary Nutriband Inc. focuses on developing transdermal pharmaceutical products, with AVERSA™ abuse-deterrent technology as its core, and offers contract manufacturing - Nutriband Inc.'s core business is the development of transdermal pharmaceutical products, with AVERSA™ technology for abuse deterrence as the lead product, specifically an AVERSA fentanyl patch[21] - The company also manufactures transdermal, topical, coated, and consumer products on a contract basis following the acquisition of Pocono Coated Products[21] Selected Business Risks The business faces significant risks from health pandemics, lengthy FDA approval processes, product launch challenges, and intellectual property protection issues - Significant risks include adverse effects from health pandemics (e.g., COVID-19), lengthy and expensive FDA regulatory processes with no guarantee of approval, and challenges in product launch, distribution, and manufacturing[22][25] - Other risks involve the inability to secure joint ventures or strategic relationships, protect intellectual property, manage unanticipated side effects, comply with regulations, and estimate financial needs accurately[25] Our Business and Product Pipeline The company develops transdermal pharmaceutical products using AVERSA abuse-deterrent technology, with AVERSA Fentanyl as its lead, and explores other transdermal delivery systems - The company's core business is developing transdermal pharmaceutical products using proprietary AVERSA abuse-deterrent technology, applicable to drugs susceptible to abuse[23][24] - Lead product is AVERSA Fentanyl, an abuse-deterrent fentanyl transdermal system, with plans to expand to AVERSA Buprenorphine and AVERSA Methylphenidate[24] - Also developing transdermal delivery systems for approved injectable drugs like exenatide (type 2 diabetes) and FSH (infertility) to improve compliance and outcomes[24][31] - A feasibility agreement with Kindeva Drug Delivery is in place for AVERSA Fentanyl development, focusing on integrating AVERSA technology into Kindeva's FDA-approved fentanyl patch manufacturing process[26] - The regulatory path for AVERSA products is planned as a 505(b)(2) NDA submission, leveraging existing safety and efficacy data for the reference-listed drug[27] Acquisition of 4P Therapeutics The 2018 acquisition of 4P Therapeutics shifted the company's focus to pharmaceutical transdermal products, including AVERSA Fentanyl, and added contract R&D - Acquired 4P Therapeutics on August 1, 2018, for $2,250,000 (62,500 common shares valued at $1,850,000 and $400,000 cash), plus a 6% royalty on revenue from acquired abuse-deterrent intellectual property[29] - The acquisition shifted the company's business focus from consumer transdermal products to 4P Therapeutics' portfolio of pharmaceutical transdermal products, including AVERSA Fentanyl[30][31] - 4P Therapeutics also performs contract research and development services for life sciences clients to support operations, though significant revenues are not expected from these services[32] Acquisition of Pocono Coated Products The 2020 acquisition of Pocono Coated Products expanded the company's capabilities into contract manufacturing of transdermal, topical, and consumer products - Formed Pocono Pharmaceuticals Inc. on August 25, 2020, and acquired the Transdermal, Topical, Cosmetic, and Nutraceutical business assets and liabilities of Pocono Coated Products (PCP) on August 31, 2020[33] - The purchase price included $6,000,000 in 608,519 common shares and a $1,500,000 promissory note (paid in full by October 1, 2021), also including Active Intelligence LLC[33] Company Organization and Status Incorporated in Nevada in 2016, Nutriband Inc. qualifies as an 'emerging growth company' and 'smaller reporting company,' benefiting from reduced reporting - Nutriband Inc. was incorporated in Nevada on January 4, 2016, acquiring Nutriband Ltd., an Irish company founded in 2012[34] - Qualifies as an 'emerging growth company' under the JOBS Act, allowing for reduced reporting requirements, such as presenting two years of audited financial statements and exemptions from certain executive compensation disclosures[35][36][37] - The company will continue to qualify as a 'smaller reporting company' as long as its public float is less than $250 million or annual revenues are less than $100 million with a public float under $700 million[38] COVID-19 Pandemic Effects The COVID-19 pandemic may negatively impact the company's financing, joint ventures, supply chain, and regulatory approvals - The COVID-19 pandemic may adversely affect the company's ability to raise financing, enter joint ventures, and perform contract services due to market uncertainty and investor focus on COVID-19 related products[39][40] - Potential impacts include reduced investor willingness, financial health of customers, supply chain disruptions, and delays in regulatory approval for consumer patches[40] Detailed Pharmaceutical Products in Development The company develops AVERSA Fentanyl and other abuse-deterrent transdermal products, plus transdermal delivery systems for existing injectable drugs, contingent on funding - AVERSA Fentanyl is designed to deter abuse of fentanyl patches by oral, buccal, and inhaled routes, incorporating taste and sensory aversive agents on the patch backing, separate from the drug matrix[41] - The AVERSA technology has broad applicability to other transdermal products, with plans to develop AVERSA Buprenorphine and AVERSA Methylphenidate[42] - Research pipeline includes off-patent drug compounds for transdermal delivery (e.g., exenatide for type 2 diabetes, FSH for infertility) as alternatives to injections, aiming for improved compliance and safety[43][44][45][47] - The company plans to utilize the 505(b)(2) NDA regulatory pathway for these products, referencing existing safety data to reduce clinical trial requirements, though FDA concurrence is not assured[43][45][47] - Development of these products is contingent on securing sufficient funding or joint venture agreements[49] Pharmaceutical Manufacturing and Supply Manufacturing of pharmaceutical transdermal products will be outsourced to FDA cGMP-compliant contract manufacturers, subject to regulatory review and inspection - Manufacturing of pharmaceutical transdermal products will be outsourced to contract manufacturers compliant with FDA cGMP and local regulations[51] - All manufacturing processes and facilities are subject to FDA review and inspection during development, prior to approval, and routinely thereafter[51] Employees As of January 31, 2022, the company had 13 full-time employees, including five officers, with no union representation - As of January 31, 2022, the company had 13 full-time employees, including five officers, with no union representation[52] Government Regulation The pharmaceutical business is extensively regulated by the FDA and international authorities, requiring lengthy approval, post-approval compliance, and cGMP adherence - The pharmaceutical business is subject to extensive government regulation, primarily by the FDA in the United States and by respective authorities in other countries[53] - FDA approval for drug-device combinations, even with approved drugs, requires preclinical and clinical trials, with the AVERSA products aiming for the 505(b)(2) NDA pathway to leverage existing safety data[55] - The full FDA regulatory pathway involves preclinical, Phase 1, Phase 2, and Phase 3 clinical trials, followed by a New Drug Application (NDA) submission and review[56][57] - Post-approval requirements include ongoing FDA regulation, record-keeping, adverse event reporting, compliance with cGMP, and restrictions on promotion and advertising[65][67] - International market access requires compliance with varying regulatory requirements in each country, which can be time-consuming and may involve additional testing and pricing negotiations[72][75][76][77] Intellectual Property AVERSA abuse-deterrent technology is protected by an international patent portfolio covering 44 countries until 2035, supplemented by trade secrets and trademarks - The AVERSA abuse-deterrent technology is protected by an international intellectual property portfolio with patents issued in 44 countries (including US, Europe, Japan, Korea, Russia, Mexico, Australia) and pending in Canada and China, providing coverage until 2035[80] - The company also relies on trade secrets and seeks trademark protection for names like Nutriband and AVERSA[80][81] Competition The pharmaceutical industry is highly competitive, with AVERSA opioid products aiming to deter abuse and misuse against existing and developing technologies - The pharmaceutical industry is highly competitive, with potential competitors including large pharmaceutical, biotechnology, specialty, and generic drug companies[82] - Key competitive factors include product performance (safety, efficacy), patient compliance, healthcare professional acceptance, and insurance reimbursement[82] - AVERSA opioid products aim to deter abuse and misuse, competing with existing non-abuse-deterrent products and other abuse-deterrent technologies, though no other abuse-deterrent transdermal products are currently known to be in development or marketed[83] Risk Factors This section details significant risks that could adversely affect Nutriband Inc.'s business, financial condition, and stock price, including operational, regulatory, and market challenges - Investment in common stock is highly speculative due to the company's early stage, minimal revenue, history of losses, and expected future substantial losses[85][86] - External factors like the Russia/Belarus-Ukrainian conflict and the COVID-19 pandemic pose risks to financing, supply chains, and overall economic stability, potentially impacting business operations[87][88] Business-Specific Risks The company faces risks from a history of losses, reliance on FDA approval, manufacturing dependencies, product liability, and intense market competition - The company has a history of losses ($6,372,715 in FY2022) and negative cash flow from operations ($2,809,223 in FY2022), with no assurance of future profitability[86] - Failure to develop and obtain FDA approval for the lead product, AVERSA fentanyl transdermal system, could jeopardize the company's ability to continue in business[89][90] - Significant delays in clinical trials, reliance on third-party contract research organizations, and the extensive FDA approval process (including potential REMS policies and post-approval review) pose substantial risks to market entry and commercial success[92][93][94][97][104][106][107] - Lack of commercial manufacturing capability necessitates reliance on FDA-approved contract manufacturers, introducing risks related to quality, regulatory compliance, and favorable pricing[101][102] - Product liability claims, especially for products with severe side effects like fentanyl, could exceed insurance coverage and harm the company's reputation and financial stability[119][120] - The company may need to enter joint ventures or strategic alliances for product development and marketing, potentially requiring giving up significant equity or rights[122] - Failure to achieve broad physician or market acceptance, keep up with rapid technological changes, or compete effectively against better-capitalized companies could adversely affect operating results[124][127][128] - Healthcare reforms and reductions in pharmaceutical pricing/reimbursement by third-party payors could decrease product utilization and revenue[129][130][131][133][134] - Protecting intellectual property is difficult and costly, with risks of patent challenges, infringement by third parties, and inability to fund litigation[135][136][137][139][140] - Past and future acquisitions carry risks of integration difficulties, key employee resignations, undisclosed liabilities, and failure to meet anticipated value or profitability[139][141][142] Securities-Related Risks Risks include ineffective internal controls, stock price volatility, potential dilution from future equity issuances, Nasdaq de-listing, and significant insider ownership - Ineffective internal controls over financial reporting, due to limited staff and recent acquisitions, may deter investors and complicate capital raising[148][351][352] - Low trading volume in common stock may lead to price volatility and susceptibility to manipulation, influenced by financial condition, funding ability, regulatory changes, and litigation[149][150][156][158] - Future equity or convertible debt issuances to raise substantial funds will likely result in significant dilution for existing stockholders[151][152][159][160] - Failure to meet Nasdaq continued listing requirements could result in de-listing, negatively impacting stock price and liquidity[153] - A settled SEC investigation regarding inaccurate disclosures may affect market perception and stock exchange listing ability[154] - Executive officers and directors collectively own approximately 32% of common stock, giving them significant power over director elections and stockholder approvals[157] - The company does not intend to pay cash dividends in the foreseeable future[163] Unresolved Staff Comments This item states that there are no unresolved staff comments applicable to the company - No unresolved staff comments are applicable[164] Properties Nutriband Inc. leases an office in Orlando, Florida, and manufacturing space in Cherryville, North Carolina, under a three-year lease with a renewal option - The company leases an office in Orlando, Florida, for $2,500/month and manufacturing space in Cherryville, North Carolina, for $3,000/month[165] - The manufacturing lease, effective February 1, 2022, is for three years with a renewal option[165] Legal Proceedings Nutriband Inc. settled an SEC administrative proceeding and is engaged in ongoing litigation to rescind an acquisition and recover common shares - Settled an SEC administrative cease-and-desist proceeding on December 26, 2018, for violations related to inaccurate registration statements and annual reports; officers paid $25,000 civil penalties each[166][167] - Ongoing litigation in Florida and New York against Advanced Health Brands, Inc. and its stockholders to rescind a 2017 acquisition and recover 1,250,000 common shares due to alleged misrepresentation and fraudulent conduct[168][170] - A Florida district court of appeal reversed a lower court's dismissal, allowing the company to file an amended complaint in the Florida action[168] - The U.S. District Court for the Eastern District of New York denied the defendants' motion to dismiss the securities fraud action, with a trial scheduled for June 2022[170] Mine Safety Disclosures This item states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[171] PART II Market for Common Equity, Stockholder Matters, and Equity Purchases Nutriband Inc.'s common stock and warrants trade on NASDAQ, with approximately 83 record holders, no anticipated cash dividends, and a recent share repurchase - Common stock (NTRB) and warrants (NTRBW) listed on The NASDAQ Capital Market since October 1, 2021[174] - As of April 15, 2022, there were approximately 83 holders of record for common stock[175] - The company has not declared and does not anticipate declaring cash dividends in the foreseeable future[176] Issuer Purchases of Equity Securities (December 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Shares Purchased as Part of Publicly Announced Plans | Maximum Number (or Approximate Dollar Value) of Shares That May Yet to Be Purchased | | :--- | :--- | :--- | :--- | :--- | | December 2021 | 28,125 | $3.71 | 28,125 | $895,000 | [Reserved] This item is reserved, as the company, being a smaller reporting company, is not required to provide the information - Item 6 is reserved as the company is a smaller reporting company and not required to provide this information[181] Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews Nutriband Inc.'s financial condition and operational results, highlighting its shift to pharmaceutical development, capital requirements, and improved liquidity - Primary business focus is on developing transdermal pharmaceutical products, particularly the AVERSA abuse-deterrent fentanyl system, and contract services[184][185] - The company's ability to continue operations is contingent on raising significant financing or entering joint venture agreements[185] Overview The company's core business is developing transdermal pharmaceutical products, with AVERSA™ fentanyl as its lead, requiring significant financing for continued development - The company's primary business is developing transdermal pharmaceutical products, with AVERSA™ abuse-deterrent fentanyl transdermal system as the lead product, protected by a recent US patent[184] - The business focus shifted from consumer transdermal products to pharmaceutical development after the 4P Therapeutics acquisition (August 2018) and now includes contract manufacturing services from Pocono (August 2020)[187][188] - Significant financing or joint venture agreements are required for continued development, with a budgeted $5.0 million for AVERSA fentanyl R&D, though total costs could exceed this[185][190] Results of Operations (Years Ended January 31, 2022 and 2021) Revenue increased by 50.7% in FY2022, but net loss significantly widened due to a goodwill impairment charge and higher operating expenses Consolidated Statements of Operations and Comprehensive Loss | Metric | Year Ended Jan 31, 2022 | Year Ended Jan 31, 2021 | | :--- | :--- | :--- | | Revenue | $1,422,154 | $943,702 | | Cost of Revenues | $917,844 | $627,378 | | Gross Margin | $504,310 | $316,324 | | Research and Development Expenses | $411,383 | $- | | Goodwill Impairment | $2,180,836 | $- | | Selling, General and Administrative Expenses | $4,022,824 | $2,912,269 | | Loss from Operations | $(6,110,733) | $(2,595,945) | | Net Loss | $(6,176,126) | $(2,932,828) | | Net Loss Attributable to Common Shareholders | $(6,372,715) | $(2,932,828) | | Net Loss Per Share (Basic and Diluted) | $(0.94) | $(0.51) | | Weighted Average Shares Outstanding | 6,799,624 | 5,770,944 | - Revenue increased by 50.7% from $943,702 in FY2021 to $1,422,154 in FY2022, primarily driven by sales from the Pocono acquisition ($1,093,200) and contract R&D services ($242,354)[199] - Net loss significantly widened from $(2,932,828) in FY2021 to $(6,372,715) in FY2022, largely due to a $2,180,836 goodwill impairment charge related to the Pocono acquisition and increased selling, general, and administrative expenses[201][202][206] - Research and development expenses commenced in FY2022, totaling $411,383, including $144,000 in salary liabilities paid with common stock[203] Liquidity and Capital Resources Liquidity significantly improved in FY2022 due to proceeds from a public offering and warrant exercises, resolving prior going concern doubts Liquidity and Capital Resources Summary | Metric | As of Jan 31, 2022 | As of Jan 31, 2021 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $4,891,868 | $151,993 | | Working Capital | $4,686,112 | $(2,254,418) | | Net Cash Used in Operating Activities | $(2,809,223) | $(297,055) | | Net Cash Provided by Financing Activities | $7,630,693 | $371,873 | | Proceeds from Public Offering & Warrant Exercises (FY2022) | ~$8.8 million | - | - The company's liquidity significantly improved, with cash and cash equivalents increasing from $151,993 in FY2021 to $4,891,868 in FY2022, and working capital shifting from a deficit to a surplus[207] - This improvement was primarily driven by approximately $8.8 million in proceeds from a public offering and warrant exercises during FY2022, which also allowed for the retirement of most debt[207][210][213] - The substantial doubt about the company's going concern status has been resolved due to positive cash flow, positive working capital, and management's plans including increased sales commitments and debt retirement[213][255] Off Balance Sheet Arrangements The company has no off-balance sheet arrangements that materially affect its financial condition or results of operations - The company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition or results of operations[211] Critical Accounting Policies Key accounting policies include revenue recognition, estimates, intangible assets, goodwill impairment, and stock-based compensation, with a significant goodwill impairment recorded in FY2022 - Key accounting policies include revenue recognition (Topic 606), use of estimates, accounts receivable, intangible assets (amortized over 10 years), goodwill (tested annually for impairment), long-lived assets (reviewed for impairment), and stock-based compensation (ASC 718)[214][215][216][217][218][219][221] - Goodwill impairment of $2,180,836 was recorded in FY2022, reducing the PCP Assets and Active Intelligence goodwill to $3,629,813, primarily due to the pandemic and unmet sales expectations[218][269] - The company adopted ASU 2019-12 (Income Taxes) and ASU 2020-06 (Convertible Instruments) in FY2021, with no material impact, and does not expect ASU 2021-08 (Business Combinations) to have a material effect[284][285][286] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Nutriband Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[222] Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for FY2022 and FY2021, confirming fair presentation in GAAP, with critical audit matters noted for asset impairment - The consolidated financial statements for January 31, 2022 and 2021, are presented in conformity with GAAP, as audited by Sadler, Gibb & Associates, LLC[227] - Critical audit matters included the evaluation of impairment analyses for long-lived assets and goodwill, due to significant estimates and assumptions in cash flow models[232][234][235] Report of Independent Registered Public Accounting Firm Sadler, Gibb & Associates, LLC audited the consolidated financial statements, expressing a fair presentation opinion while highlighting critical audit matters regarding asset impairment - Sadler, Gibb & Associates, LLC audited the consolidated financial statements for the years ended January 31, 2022 and 2021, expressing an opinion that they present fairly, in all material respects, the financial position and results of operations[227] - Critical audit matters identified were the evaluation of impairment analyses for long-lived assets and goodwill, due to significant estimates and assumptions in management's cash flow models[232][233][234][235] Consolidated Balance Sheets Cash and cash equivalents significantly increased in FY2022, contributing to higher total assets and stockholders' equity, while goodwill decreased due to impairment Consolidated Balance Sheet Summary | Metric | January 31, 2022 | January 31, 2021 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $4,891,868 | $151,993 | | Total Current Assets | $5,465,368 | $314,188 | | Property & Equipment-net | $979,297 | $1,076,626 | | Goodwill | $5,349,039 | $7,529,875 | | Intangible assets-net | $926,913 | $1,006,730 | | TOTAL ASSETS | $12,739,660 | $9,927,419 | | LIABILITIES | | | | Total Current Liabilities | $779,256 | $2,568,606 | | Total Liabilities | $880,375 | $2,815,473 | | STOCKHOLDERS' EQUITY | | | | Total Stockholders' Equity | $11,859,285 | $7,111,946 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,739,660 | $9,927,419 | - Cash and cash equivalents increased significantly from $151,993 in FY2021 to $4,891,868 in FY2022, contributing to a substantial increase in total current assets[239] - Goodwill decreased from $7,529,875 in FY2021 to $5,349,039 in FY2022, reflecting an impairment charge of $2,180,836[239][218] - Total liabilities decreased substantially from $2,815,473 in FY2021 to $880,375 in FY2022, while total stockholders' equity increased from $7,111,946 to $11,859,285[239] Consolidated Statements of Operations and Comprehensive Loss Revenue increased by 50.7% in FY2022, but net loss attributable to common shareholders more than doubled due to goodwill impairment and higher SG&A expenses Consolidated Statements of Operations and Comprehensive Loss | Metric | Year Ended Jan 31, 2022 | Year Ended Jan 31, 2021 | | :--- | :--- | :--- | | Revenue | $1,422,154 | $943,702 | | Cost of Revenues | $917,844 | $627,378 | | Gross Profit | $504,310 | $316,324 | | Research and Development Expenses | $411,383 | $- | | Goodwill Impairment | $2,180,836 | $- | | Selling, General and Administrative Expenses | $4,022,824 | $2,912,269 | | Loss from Operations | $(6,110,733) | $(2,595,945) | | Net Loss | $(6,176,126) | $(2,932,828) | | Net Loss Attributable to Common Shareholders | $(6,372,715) | $(2,932,828) | | Net Loss Per Share (Basic and Diluted) | $(0.94) | $(0.51) | | Weighted Average Shares Outstanding | 6,799,624 | 5,770,944 | - Revenue increased by 50.7% year-over-year, from $943,702 in FY2021 to $1,422,154 in FY2022[240] - Net loss attributable to common shareholders more than doubled, from $(2,932,828) in FY2021 to $(6,372,715) in FY2022, primarily due to a $2,180,836 goodwill impairment and higher SG&A expenses[240] Consolidated Statements of Stockholders' Equity Total Stockholders' Equity increased significantly in FY2022, driven by proceeds from public offerings and warrant exercises, despite an increased accumulated deficit - Total Stockholders' Equity increased from $7,111,946 in FY2021 to $11,859,285 in FY2022, driven by proceeds from public offerings, warrant exercises, and common stock issuances[242][243] - Significant equity activities in FY2022 included $5,836,230 from a public offering, $2,942,970 from warrant exercises, and various common stock issuances for services and debt settlement[242] - Accumulated deficit increased from $(11,835,105) to $(18,011,231) due to the net loss for the year[242] Consolidated Statements of Cash Flows Net cash used in operating activities increased in FY2022, but net cash provided by financing activities significantly improved liquidity, resulting in a substantial cash balance Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Year Ended Jan 31, 2022 | Year Ended Jan 31, 2021 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | $(2,809,223) | $(297,055) | | Net Cash Provided by (used in) Investing Activities | $(81,595) | $66,994 | | Net Cash Provided by Financing Activities | $7,630,693 | $371,873 | | Net Change in Cash | $4,739,875 | $141,812 | | Cash and Cash Equivalents - End of Period | $4,891,868 | $151,993 | - Net cash used in operating activities increased to $(2,809,223) in FY2022 from $(297,055) in FY2021, despite higher revenue, due to increased expenses and goodwill impairment[245] - Net cash provided by financing activities significantly increased to $7,630,693 in FY2022, primarily from $5,836,230 in public offering proceeds and $2,942,970 from warrant exercises[245] - The company ended FY2022 with $4,891,868 in cash and cash equivalents, a substantial increase from $151,993 in FY2021[245] Notes to Consolidated Financial Statements The notes detail accounting policies, the Pocono acquisition and goodwill impairment, resolution of going concern status, revenue breakdown, and significant financing activities - The notes detail the company's organization, significant accounting policies (including revenue recognition, goodwill, and stock-based compensation), and recent accounting standards adoption[248][255][258][268][269][272][284][285][286] - The acquisition of Pocono Coated Products on August 31, 2020, for $7,418,073 (common stock and promissory note) resulted in the recognition of $5,810,640 in goodwill, which was later impaired by $2,180,836 in FY2022[288][291][269] - The company's going concern status is resolved due to improved liquidity from a public offering and warrant exercises, allowing debt retirement and increased sales commitments[255] Revenue by Type and Geographic Location | Revenue Type | FY2022 | FY2021 | | :--- | :--- | :--- | | Sale of goods | $1,179,620 | $737,519 | | Services | $242,534 | $206,183 | | Total Revenue | $1,422,154 | $943,702 | | Geographic Location | FY2022 | FY2021 | | :--- | :--- | :--- | | United States | $1,335,554 | $360,378 | | Foreign | $86,600 | $583,324 | | Total Revenue | $1,422,154 | $943,702 | - Intangible assets, including intellectual property and customer base, are amortized over ten years, with amortization expense of $129,817 in FY2022[268][310] - The company has a net operating loss (NOL) carryforward of approximately $7,700,000 as of January 31, 2022, fully offset by a valuation allowance[296] - Significant financing activities include a public offering in October 2021 ($5,836,230 net proceeds) and warrant exercises ($2,942,970 proceeds), which helped repay a $1,500,000 related party note[197][299][302] - The company signed a feasibility agreement with Kindeva Drug Delivery in January 2022 to develop AVERSA Fentanyl, with an estimated cost of $1.7 million over 8-12 months[345][347] - Development of the RAMBAM Closed System Transfer Device (CSTD) has been suspended due to preliminary reviews finding it not commercially viable[342] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This item states that there have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[351] Controls and Procedures Management concluded that disclosure controls were ineffective as of January 31, 2022, due to material weaknesses, but has implemented improvements - Disclosure controls and procedures were not effective as of January 31, 2022, due to limited internal audit function, small staff, and recent acquisitions[351] - Material weaknesses in internal control over financial reporting include lack of segregation of duties, inadequate review of financial statements and complex transactions, and excessive reliance on third-party consultants[352] - Management has implemented improvements by adding qualified accounting personnel and establishing additional monitoring controls, expressing confidence that financial statements fairly present the company's condition[353] - No material changes in internal control over financial reporting occurred during the quarter ended January 31, 2022[355] Other Information This item states that there is no other information to report - No other information to report[356] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item states that disclosure regarding foreign jurisdictions that prevent inspections is not applicable - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[357] PART III Directors, Executive Officers and Corporate Governance This section provides information on Nutriband Inc.'s executive officers and directors, corporate governance structure, board leadership, and committee functions Executive Officers and Directors | Name | Age | Position | | :--- | :--- | :--- | | Gareth Sheridan | 32 | Chief Executive Officer and Director | | Serguei Melnik | 49 | Chairman of the Board and President | | Gerald Goodman | 74 | Chief Financial Officer | | Alan Smith, Ph.D. | 56 | Chief Operating Officer and President of 4P Therapeutics | | Patrick Ryan | 36 | Chief Technical Officer | | Jeff Patrick, Pharm.D. | 52 | Chief Scientific Officer | | Larry Dillaha, MD | 57 | Chief Medical Officer | | Radu Bujoreanu | 52 | Director | | Mark Hamilton | 37 | Director | | Stefan Mancas | 45 | Director | | Irina Gram | 34 | Director | - Gareth Sheridan is CEO and founder, Serguei Melnik is President and expected Chairman, and Gerald Goodman is CFO[359][361][368] - The Board of Directors consists of nine members, with five independent directors, and oversees risk through interaction with management[377] - Three standing committees (audit, compensation, and nominating/corporate governance) are chaired and composed entirely of independent directors[375][379][380][381][383] - The company has adopted a code of ethics applicable to employees, directors, and officers, available on its website[388] Executive Compensation This section details compensation for named executive officers and non-employee directors, including salaries, bonuses, stock awards, and new employment agreement terms Executive Compensation Table (FY2022 & FY2021) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option/Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gareth Sheridan, CEO | 2022 | 149,000 | 100,000 | - | 61,778 | 310,770 | | | 2021 | 60,000 | - | 150,000 | - | 210,000 | | Serguei Melnik, President | 2022 | 149,000 | 100,000 | - | 61,778 | 310,770 | | Alan Smith, COO | 2022 | 148,000 | - | - | 32,654 | 264,654 | Non-Employee Director Compensation (FY2022) | Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Mark Hamilton | 5,000 | 29,340 | 34,340 | | Sean Gallagher | 5,000 | 32,500 | 37,500 | | Radu Bujourneau | 5,000 | 26,120 | 31,120 | | Stefani Mancas | 5,000 | 21,222 | 26,222 | | Steven Damon | 5,000 | 16,325 | 21,325 | | Vselovod Grigore | 5,000 | 16,325 | 21,325 | - New employment agreements effective February 1, 2022, for CEO Gareth Sheridan and President Serguei Melnik include annual salaries of $250,000 each and a performance bonus based on net operating profit before income taxes[340][401] - CFO Gerald Goodman's new employment agreement includes an annual salary of $210,000[341][401] - In case of termination without cause or for good reason, executives are entitled to lump-sum payments including salary, bonuses, and accelerated vesting of stock options and warrants[402][403] - The company currently has no pension plans for officers[410] Security Ownership of Certain Beneficial Owners and Management This section details beneficial ownership of common stock by directors, executive officers, and principal stockholders, highlighting their significant collective voting power Beneficial Ownership of Common Stock (as of April 22, 2022) | Name | Shares of Common Stock Owned Directly | Shares of Derivative Securities Owned | Total Beneficial Ownership Including Option Grants | Percentage | | :--- | :--- | :--- | :--- | :--- | | Gareth Sheridan | 1,510,000 | 20,000 | 1,530,000 | 19.56% | | Serguei Melnik | 707,500 | 20,000 | 727,500 | 9.3% | | Gerald Goodman | 22,500 | 85,000 | 107,500 | 1.36% | | All officers and directors as a group (11 individuals) | 2,374,924 | 188,500 | 2,563,424 | 32.00% | - As of April 22, 2022, 7,821,176 shares of common stock were outstanding[413] - Officers and directors as a group beneficially own 32.00% of the common stock, giving them effective power to elect directors and approve stockholder actions[414][157] - No contracts or arrangements are known that would result in a change in control of the company[420] Certain Relationships and Related Transactions, and Director Independence This section outlines related party transactions, primarily stock option and common stock issuances to directors and executive officers as compensation, and notes director independence - In FY2021, 51,825 shares of common stock (valued at $777,375) were issued to executive officers and 78,500 shares (valued at $1,177,500) to current and former independent directors as compensation[322][323][424] - On January 21, 2022, the Board approved stock option awards under the 2021 Employee Stock Option Plan to officers and directors for services rendered in fiscal 2022, with exercise prices of $4.85 or $5.34 per share[426][427] - Four directors (Radu Bujoreanu, Mark Hamilton, Dr. Mancas, and Irina Gram) are considered independent based on NASDAQ definitions[384] Principal Accounting Fees and Services This section details fees paid to the independent accountants for audit and other services for FY2022 and FY2021, all pre-approved by the audit committee Principal Accounting Fees and Services | Fee Type | Year Ended Jan 31, 2022 ($) | Year Ended Jan 31, 2021 ($) | | :--- | :--- | :--- | | Audit fees | 69,250 | 63,500 | | Audit – related fees | 12,200 | - | | Tax fees | - | - | | All other fees | - | 65,637 | - Audit fees increased from $63,500 in FY2021 to $69,250 in FY2022. Audit-related fees of $12,200 were incurred in FY2022, while 'All other fees' decreased from $65,637 in FY2021 to $0 in FY2022[429] - All audit and permissible non-audit services performed by the independent accountants were pre-approved by the audit committee[431] PART IV Exhibits and Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including corporate documents, various agreements, stock plans, and required certifications - The report includes various exhibits such as Articles of Incorporation, By-laws, Securities Purchase Agreements, Forms of Warrants, Stock Option Plans, and key Employment Agreements[434] - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by the Sarbanes-Oxley Act, are also included[434] - Inline XBRL documents for the instance, schema, calculation, definition, label, and presentation linkbases are provided[434] Form 10-K Summary This item states that a Form 10-K Summary is not applicable - Form 10-K Summary is not applicable[437] Signatures The report is signed by the Chief Executive Officer, Chief Financial Officer, and other directors on April 28, 2022 - The report is signed by Gareth Sheridan (Chief Executive Officer and Director), Gerald Goodman (Chief Financial Officer), Serguei Melnik (Director), Radu Bujoreanu (Director), Mark Hamilton (Director), Stefan Mancas (Director), and Irina Gram (Director)[442] - The report was signed on April 28, 2022[441]