Item 1A. Risk Factors
ITEM
1A.
RISK
FACTORS
You
should carefully consider the risks described below together with all of the other information included in this prospectus before making
an investment decision with regard to our securities. The risks set forth below are not the only risks facing us. Additional risks and
uncertainties may exist that could also adversely affect our business, prospects or operations. If any of the following risks actually
occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock
could decline, and you may lose all or a significant part of your investment.
Because
of a lack of funds, we have suspended our pharmaceutical product development operations.
Our
business is the development of transdermal systems for the delivery of pharmaceuticals. The development of pharmaceutical products is
highly cash intensive, and many early-stage drug development companies are unable to raise sufficient cash to complete the development
and testing of their products and obtain regulatory approval, with the result that they either obtain funding on very unfavorable terms,
cease to conduct business or sell or license their intellectual property on unfavorable terms. Because of our lack of cash and the absence
of any significant financing, we have suspended our development activities relating to our transdermal pharmaceutical products. Because
of the anticipated lack of revenues until we have an approved product that we can market and the time required to obtain FDA approval,
which can take many years, we must rely on our ability to raise money in the private or public equity market or enter into a joint venture
relationship with a company that has the funds, the willingness and the ability to fund or obtain funds for the project that is the subject
of the joint venture. In March 2020, we withdrew a registration statement relating to a proposed public offering. If we are able to raise
funds or enter into a joint venture, it is likely that the term will not be favorable to us. We cannot assure you that we will be able
to raise funds in a public or private financing or a joint venture, and, if we are unable to do so, we may cease operations.
Because
we are an early-stage company with minimal revenue and a history of losses and we expect to continue to incur substantial losses for
the foreseeable future, we cannot assure you that we can or will be able to operate profitably.
We
did not generate any revenue prior to the quarter ended October 31, 2018 and since then, we have incurred losses as, 4P Therapeutics
generated only modest revenue from contract research and development services which are not related to our pharmaceutical transdermal
patch business. Although we anticipate that, for the near term, we will continue to perform research and development services for third
parties, we do not expect to generate significant revenue from performing contract research and development services for our clients
and we have generated losses from operations from this business. During the year ended January 31, 2021, we experienced a significant
decline in revenue from 4P Therapeutics’ largest customer. We generated negative cash flow from operations for the years ended
January 31, 2021 and 2020. We are subject to the risks common to start-up, pre-revenue enterprises, including, among other factors, undercapitalization,
cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. Drug development companies
typically incur substantial losses during the product development and FDA testing phase of the business and do not generate revenues
until after the drug has received FDA approval, which cannot be assured, and until the company has started to sell the product. We can
give no assurance that we can or will ever be successful in achieving profitability and the likelihood of our success must be considered
in light of our early stage of operations. We cannot assure you that we will be able to operate profitably or generate positive cash
flow. If we cannot achieve profitability, we may be forced to cease operations and you may suffer a total loss of your investment.
Because
we do not have a product we can market in the United States, we cannot predict when or whether we will operate profitably.
We
have not completed the development of our lead product, which is our abuse deterrent fentanyl transdermal system, and we do not have
any product that we can market in the United States. Because of the numerous risks and uncertainties associated with product development,
we cannot assure you that we will be able to develop and market any products or achieve or attain profitability. If we are able to obtain
financing for our operations, we expect that we will incur substantial expenses as we continue with our product development and clinical
trials. Further, if we are required by applicable regulatory authorities, including the FDA as well as the comparable regulatory agencies
in other countries in which we may seek to market product, to perform studies in addition to those we currently anticipate, our expenses
will increase beyond expectations and the timing of any potential product approval may be delayed. As a result, we expect to continue
to incur substantial losses and negative cash flow for the foreseeable future.
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A
number of factors, including, but not limited to the following, may affect our ability to develop our business and operate profitably:
● our
ability to obtain necessary funding to develop our proposed products;
●
the
success of clinical trials for our products;
●
our
ability to obtain FDA approval for us to market any proposed product in our pipeline in the United States;
●
any
delays in regulatory review and approval of product in development;
●
if
we obtain FDA approval to market our product, our ability to establish manufacturing and distribution operations or entering into
manufacturing and distribution agreements with qualified third parties;
●
market
acceptance of our products;
●
our
ability to establish an effective sales and marketing infrastructure;
●
our
ability to protect our intellectual property;
●
competition
from existing products or new products that may emerge;
●
the
ability to commercialize our products;
●
potential
product liability claims and adverse events;
●
our
ability to adequately support future growth; and
●
our
ability to attract and retain key personnel to manage our business effectively.
We
are dependent on obtaining additional financing to enable us to pay off debt and to resume our product development operations.
Our
continued operations are substantially dependent on our ability to obtain additional financing to pay off substantial debt incurred in
our August 31, 2020 acquisition of Pocono Coated Products, LLC and to provide us with the ability to resume product development operations
and continue to finance our current operations and generate growth in our revenues.
Our
business is impacted by the following additional key risks :
●
Our
business could be adversely affected by the effects of health pandemics or epidemics, including the recent outbreak of COVID-19,
which was declared by the World Health Organization as a global pandemic, and is resulting in travel and other restrictions to reduce
the spread of the disease, including state and local orders across the country, which, among other things, direct individuals to
shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations,
prohibit certain non-essential gatherings, and order cessation of non-essential travel. The effects of these orders, government-imposed
quarantines and measures we would take, such as work-from-home policies, may negatively impact productivity, disrupt our business
and could delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the
restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps
more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.
Further, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions
on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at third-party
manufacturing facilities in the United States and other countries, or the availability or cost of materials, which could disrupt
our supply chain.
29
●
The
FDA regulatory process may take longer and be more expensive than we anticipate without any assurance that we will obtain FDA approval.
●
If
we are not able to obtain FDA approval for our lead product, we may not have the resources to develop any other product, and we may
not be able to continue in business.
●
We
may not be able to launch any products for which we receive FDA marketing approval.
●
We
may not be able to establish a distribution network for the marketing and sale of any products for which we receive FDA approval.
●
We
may not be able to establish manufacturing facilities in compliance with FDA good manufacturing practices or to enter into manufacturing
agreements for the manufacture of our products in an FDA approved manufacturing facility.
●
It
may be necessary to us to enter into a joint venture or other strategic relationship in order to develop, perform clinical testing
for, manufacture or market any of our proposed products. We may not be able to enter into such a relationship, and any relationship
may not be successful, and the other party may have business interests and priorities that are different from ours.
●
We
are party to a settlement agreement with the SEC resulting from statements in our SEC filings that did not accurately reflect the
FDA’s jurisdiction over our consumer products and did not disclose that we could not legally market these products in the United
States. The settlement included a cease-and-desist order against violating the provisions of the Securities Exchange Act which require
us to file accurate registration statements and annual reports with the SEC. Our failure to comply with our obligations under the
settlement agreement could result in enforcement proceedings against us or our officers.
●
We
may not be able to protect our rights in our intellectual property, and we may be subject to intellectual property litigation which
would be expensive and disruptive of our operations even if we eventually prevail on the merits.
●
Unanticipated
side effects or other adverse events resulting from the use of our product could require a recall of our products and, even if no
recall is required, our reputation could be impaired by side effects.
●
We
may not be able to evaluate potential acquisition candidates, with the result that we may not be able to benefit from the acquisition
or integrate the acquired business with our business. We have recently incurred an impairment charge as a result of an acquisition
when the intellectual property assets of the acquired company were not as represented. We cannot assure you that we will not incur
similar or other problems with any future acquisitions.
●
We
may fail to comply with all applicable laws and regulations relating to our product. We may have to change or adapt our operations
in the event of changes in national, regional and local government regulations, taxation, controls and political and economic developments
that affect our products and the market for our products;
●
We
may be unable to accurately estimate anticipated expenses, capital requirements and needs for additional financing;
30
ITEM
6.
EXHIBITS.
Exhibit
Number
Description
of Exhibits
31.1
Section 302 Certificate of Chief Executive Officer.
31.2
Section 302 Certification of Chief Financial Officer
32.1
Section 906 Certificate of Chief Executive Officer and Principal Financial Officer.
101.INS
XBRL
Instance Document
101.SCH
XBRL
Taxonomy Schema Document
101.CAL
XBRL
Taxonomy Calculation Linkbase Document
101.DEF
XBRL
Taxonomy Definition Linkbase Document
101.LAB
XBRL
Taxonomy Label Linkbase Document
101.PRE
XBRL
Taxonomy Presentation Linkbase Document
31
SIGNATURES
In
accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NUTRIBAND
INC.
September
3, 2021
By:
/s/
Gareth Sheridan
Gareth
Sheridan,
Chief
Executive Officer
(Principal
Executive Officer)
September
3, 2021
By:
/s/
Gerald Goodman
Gerald
Goodman,
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
32
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.