Nutriband (NTRB) - 2023 Q1 - Quarterly Report

Part I Financial Statements For the three months ended April 30, 2022, the company reported increased revenue but a significantly widened net loss due to higher operating costs, leading to decreased cash and negative operating cash flow Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | April 30, 2022 | January 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,010,644 | $4,891,868 | | Total Current Assets | $4,641,912 | $5,465,368 | | Goodwill | $5,349,039 | $5,349,039 | | Total Assets | $11,984,475 | $12,739,660 | | Liabilities & Equity | | | | Total Current Liabilities | $723,057 | $779,256 | | Total Liabilities | $904,375 | $880,375 | | Total Stockholders' Equity | $11,080,100 | $11,859,285 | | Total Liabilities and Stockholders' Equity | $11,984,475 | $12,739,660 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Three Months Ended April 30, 2022 | Three Months Ended April 30, 2021 | | :--- | :--- | :--- | | Revenue | $477,922 | $433,488 | | Cost of revenues | $277,436 | $195,610 | | Research and development expenses | $117,814 | $ - | | Selling, general and administrative expenses | $768,551 | $551,942 | | Loss from operations | $(685,879) | $(314,064) | | Net loss | $(689,989) | $(315,057) | | Net loss per share - basic and diluted | $(0.09) | $(0.05) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended April 30, 2022 | Three Months Ended April 30, 2021 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | $(744,257) | $(279,415) | | Net Cash Used in Investing Activities | $(43,803) | $(38,779) | | Net Cash Provided by (used in) Financing Activities | $(93,164) | $576,955 | | Net change in cash | $(881,224) | $258,761 | | Cash and cash equivalents - End of period | $4,010,644 | $410,754 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's strategic shift to transdermal pharmaceutical product development, its going concern assessment, key product development agreements, revenue disaggregation, and ongoing legal proceedings - The company's principal business is now the development of transdermal pharmaceutical products, a shift that occurred after the acquisition of 4P Therapeutics in 2018[22] - Management believes that the net proceeds of $5,836,230 from a public offering in October 2021 and $2,942,970 from warrant exercises alleviate substantial doubt about the company's ability to continue as a going concern, despite historical operating losses[30][32] Revenue Disaggregation by Type (Three Months Ended April 30) | Revenue Type | 2022 | 2021 | | :--- | :--- | :--- | | Sale of goods | $401,990 | $327,512 | | Services | $75,932 | $105,976 | | Total | $477,922 | $433,488 | - The company signed a feasibility agreement with Kindeva Drug Delivery in January 2022 to develop its lead product, AVERSAL Fentanyl, with an estimated cost of $1.7 million over 8-12 months[96][98] - The development of the RAMBAM CSTD Device has been suspended as preliminary reviews found the product was not commercially viable in its current form[93] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic shift to transdermal pharmaceutical product development, acknowledging the early stage, history of losses, and significant capital requirements, while affirming sufficient liquidity for the next year despite increased net loss - The company's primary business is the development of transdermal pharmaceutical products, with its lead product being an abuse-deterrent fentanyl transdermal system (AVERSA™)[108] - The company has budgeted $5.0 million for research and development of its abuse-deterrent fentanyl transdermal system, but acknowledges the total cost could be substantially higher[113] Results of Operations Comparison (Three Months Ended April 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $477,922 | $433,488 | | Gross Margin | $200,486 | $237,878 | | SG&A Expenses | $768,551 | $551,942 | | R&D Expenses | $117,814 | $ - | | Net Loss | $(689,989) | $(315,957) | - As of April 30, 2022, the company had $4,010,644 in cash and cash equivalents and working capital of $3,918,855, which management believes are sufficient for operations for at least one year[127][133] Quantitative and Qualitative Disclosures about Market Risk The company has determined that quantitative and qualitative disclosures about market risk are not applicable for this reporting period - The company has determined that quantitative and qualitative disclosures about market risk are not applicable for this reporting period[146] Controls and Procedures Management concluded that disclosure controls and procedures were not effective due to identified material weaknesses, including lack of segregation of duties, with remediation efforts underway - The company's disclosure controls and procedures were concluded to be not effective as of the end of the period covered by the report[148] - Material weaknesses were identified due to the absence of segregation of duties and excessive reliance on third-party consultants for accounting and financial reporting[149] - Remediation efforts include adding qualified accounting personnel and improving internal controls over revenue, accounts receivable, and accounts payable transactions[149] Part II Risk Factors The company identifies significant risks related to its early-stage operations, including funding, clinical trial success, FDA approval, health pandemics, competition, product liability, and intellectual property protection - The company is an early-stage enterprise with a history of losses and expects to continue incurring losses, making future profitability uncertain[156] - Major risks include the ability to obtain necessary funding, success of clinical trials, obtaining FDA approval, and market acceptance of products[160] - The business could be adversely affected by health pandemics like COVID-19, which may disrupt business operations, delay clinical programs, and impact the supply chain[160] - The company may not be able to protect its intellectual property rights and could be subject to expensive and disruptive litigation[164] Unregistered Sales of Equity Securities and Use of Proceeds While no unregistered sales occurred during the quarter, the company subsequently issued 24,500 shares as compensation and purchased 23,002 shares for treasury stock in March 2022 - On May 10, 2022, the company issued 24,500 shares of common stock to directors, management, employees, and consultants as compensation[161][101] - In March 2022, the company purchased 23,002 shares of its common stock for $89,186, which were recorded as Treasury Stock[162] Exhibits This section lists the exhibits filed with the quarterly report, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[166] - The filing includes Inline XBRL documents for financial data tagging (Instance, Schema, Calculation, Definition, Label, Presentation)[166]