What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-12-02 compared with 2022-09-08 · 148 added, 138 removed, 213 unchanged (57% of the section changed)

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statements, which speak only as of the date of this report.

We file reports with the SEC.

The SEC maintains

a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically

with the SEC, including us.

We undertake no obligation to revise or update

any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required

any forward-looking statements to reflect any event or circumstance that may arise after the date of this report, except as required by

Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report,

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abuse deterrent fentanyl transdermal system product and therefor delay the time of filing with FDA for approval.

AVERSA™ transdermal abuse deterrent technology.

Our primary business is the development of a portfolio

of transdermal pharmaceutical products.

Our lead product is our abuse deterrent fentanyl transdermal system which we are developing to

provide clinicians and patients with an extended-release transdermal fentanyl product for use in managing chronic pain requiring around

the clock opioid therapy combined with properties designed to help combat the opioid crisis by deterring the abuse and misuse of fentanyl

We believe that our abuse deterrent technology can be broadly applied to various transdermal products and our strategy is to

follow the development of our abuse deterrent fentanyl transdermal system with the development of additional transdermal prescription

products for pharmaceuticals that have risks or a history of abuse.

We received on January 28, 2022 an Issue Notification from the United

States Patent and Trademark Office (USPTO) for its United States patent entitled, “Abuse and Misuse Deterrent Transdermal System,”

that protects our AVERSA™ transdermal abuse deterrent technology.

In addition, we are developing a portfolio of transdermal pharmaceutical

products to deliver commercially available drugs or biologics that are typically delivered by injection but with the potential to improve

compliance and therapeutic outcomes.

We are proceeding with our development efforts

with respect to these products and to performing contract services for a small number of customers.

Because of both our financial position

and the effects of the COVID-19 pandemic, our contract service business has also been scaled back.

The description of our business in

this annual report is based on our ability to raise significant financing or enter into a joint venture agreement with a third party that

has the financial ability to fund the joint venture’s operations.

We cannot assure you that we will be able to obtain necessary

financing or enter into a joint venture agreement on reasonable, if any, terms.

If we are not able to continue to obtain financing or

enter into a joint venture agreement, we may not be able to continue in business.

Through July 31, 2018, our business was the development

Our lead product is our abuse deterrent fentanyl transdermal system which will require approvals

from the Food and Drug Administration (“FDA”) and substantial additional capital for development and FDA approvals.

products under development would provide clinicians and patients with an extended-release transdermal fentanyl product for use in managing

chronic pain requiring around the clock opioid therapy combined with properties designed to help combat the opioid crisis by deterring

the abuse and misuse of fentanyl patches.

We believe that our abuse deterrent technology can be broadly applied to various transdermal

products and our strategy is to follow the development of our abuse deterrent fentanyl transdermal system with the development of additional

transdermal prescription products for pharmaceuticals that have risks or a history of abuse.

We received on January 28, 2022 an Issue

Notification from the United States Patent and Trademark Office (USPTO) for its United States patent entitled, “Abuse and Misuse

Deterrent Transdermal System,” that protects our Aversa™ technology platform.

Transdermal Pharmaceutical Products

Through October 31, 2018, our business was the development

of a line of consumer and health products that are delivered through a transdermal or topical patch.

Consumer products are products that

are sold over the counter and do not require a prescription.

Most of our consumer products require FDA approval for sale in the United

States, and we have not sought to obtain, and we do not plan to seek to obtain, FDA approval to market these products in the United States

at this time.

Following our acquisition of Pocono, our focus is primarily now on providing contract manufacturing services and consulting

services to 3 rd party brands with no intention at this time to launch our own consumer products.

With our acquisition of 4P Therapeutics on August

1, 2018, our focus changed, and we are seeking to develop and seek FDA approval on a number of transdermal pharmaceutical products under

development by 4P Therapeutics.

As a result of the acquisition of 4P Therapeutics, we have pipeline of potential products.

Following our acquisition of 4P Therapeutics

on August 1, 2018, our focus expanded to include prescription pharmaceuticals, and we are seeking to develop and seek FDA approval on

a number of transdermal pharmaceutical products under development by 4P Therapeutics.

As a result of the acquisition of 4P Therapeutics,

we have pipeline of transdermal products.

In addition, we are developing a portfolio of

transdermal pharmaceutical products to deliver commercially available drugs or biologics that are typically delivered by injection but

with the potential to improve compliance and therapeutic outcomes.

We are proceeding with our development efforts with respect to these

products and to performing contract services for a small number of customers.

Most of our planned consumer products require FDA

approval for sale in the United States, and we have not sought to obtain, and we do not plan to seek to obtain, FDA approval to market

these products in the United States at this time.

Following our acquisition of selected assets from Pocono Coated Products, LLC (“Pocono”),

our contract services are primarily focused on providing contract manufacturing services and consulting services to 3 rd party

brands with no intention at this time to launch our own consumer products.

4P Therapeutics has not generated any revenue

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We are, for the near term, continuing this activity, although we do not anticipate that it will generate significant

revenues and, since our acquisition, it has generated a negative gross margin.

We have no long-term contractual obligations, and either

party can terminate at any time.

revenues and, since our acquisition, it has generated minor gross margins.

We have no long-term contractual obligations, and either party

can terminate at any time.

With the change in our focus, our capital requirements

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Subsequent to the repayment of the note, the Shares were released

On October 5, 2021, the Company, having been approved for the listing

of its common stock on The Nasdaq Capital Market effective October 1, 2021, consummated a public offering (the “IPO”) of units

(the “Units”), of common stock and warrants that were offered in the IPO on The Nasdaq Capital Market, which included 1,231,200

(each a “Unit”), each Unit consisting of one share of common stock, par value $0.001 per share, and one warrant (each a “Warrant”)

at a price of $5.36 per Unit.

Each Warrant is immediately exercisable, will entitle the holder to purchase one share of common stock at

an exercise price of $6.43 and will expire five (5) years from the date of issuance.

The underwriters’ over-allotment option was

exercised for 184,800 warrants to purchase shares of common stock bringing to total net proceeds to the Company from the IPO to $5,836,230.

On October 5, 2021, the Company, having been approved

for the listing of its common stock on The Nasdaq Capital Market effective October 1, 2021, consummated a public offering (the “IPO”)

of units (the “Units”), of common stock and warrants that were offered in the IPO on The Nasdaq Capital Market, which included

1,231,200 (each a “Unit”), each Unit consisting of one share of common stock, par value $0.001 per share, and one warrant

(each a “Warrant”) at a price of $5.36 per Unit.

Each Warrant is immediately exercisable, will entitle the holder to purchase

one share of common stock at an exercise price of $6.43 and will expire five (5) years from the date of issuance.

The underwriters’

over-allotment option was exercised for 184,800 warrants to purchase shares of common stock bringing to total net proceeds to the Company

from the IPO to $5,836,230.

The shares of common stock and Warrants are separately transferred immediately upon issuance.

As of_July 31, 2022, 457,795 Warrants issued

in the IPO have been exercised, with net proceeds to the Company of $2,942,970.

As of October

31, 2022, 457,795 Warrants issued in the IPO have been exercised, with net proceeds to the Company of $2,942,970.

On November 1, 2021, The Board of Directors adopted

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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.

On January 21, 2022,

the Board approved options to purchase 190,751 shares of the Company’s common stock issued to executive officers and directors of

the Company at a price of $4.16 ($4.58 per share for two of the officers as required by IRS rules).

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.

On January 21, 2022, the Board approved options to purchase 190,751

shares of the Company’s common stock under the Plan issued to executive officers and directors of the Company at an exercise price

of $4.16 ($4.58 per share for two of the officers as required by IRS rules).

On August 1, 2022, the Board approved option grants previously

approved by the Compensation Committee for an aggregate of_137,084 shares of common stock at exercise prices $4.09 or $4.50 per share

depending on IRS rules as applicable to the recipient,, and on September 30, 2022, approved option issuances under the Plan for an aggregate

of 35,00 shares of common stock at an exercise price of $3.59 per share for services provided by the independent directors, as previously

approved by the Compensation Committee.

The Company received a favorable verdict on July

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on July 25, 2022 to cancel 1.4M shares of common stock held by the defendants.

On October 31, 2022, the Company filed the Proxy

Statement with the SEC for its Annual Meeting of Stockholders, to be held December 9, 2022, in Orlando, Florida.

This Proxy Statement

is available on our website at HTTPS://Nutriband.com/proxy .

Forward Split of our Common Stock.

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Results of Operations

Three Months Ended July 31, 2022 and 2021

For the three months ended July 31, 2022, we generated

revenue of $ 456,149 and our costs of revenue were $304,353 resulting in a gross margin of $151,796.

For the three months ended July 31,

2021, we generated revenue of $213,739 and our costs of revenue were $214,455, resulting in a gross loss of $716.

Our revenue for July

31, 2022 was derived from sales of $ 394,904 from our Pocono Pharmaceutical segment and $61,245 from contract services from our 4P Therapeutics

The increase in revenue from the Pocono Pharmaceutical segment is primarily due to an increase in demand which has continued

in the subsequent quarter.

Since we do not have the funds for development of our lead product, the 4P Therapeutics fixed costs are allocated

to the contract services that we perform for clients.

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.

The Company moved from the 4P facilities, and

many of the prior costs relating to the facility were not incurred.

For the three months ended July 31, 2022, our

Three Months Ended October 31, 2022 and 2021

For the three months ended October 31, 2022, we

generated revenue of $618,003 and our costs of revenue were $349,272 resulting in a gross margin of $268,731.

For the three months ended

October 31, 2021, we generated revenue of $283,037 and our costs of revenue were $207,700, resulting in a gross margin of $75,337.

revenue for October 31, 2022, was derived from sales of $ 528,333 from our Transdermal Patches segment and $89,770 from contract services

from our 4P Therapeutics segment.

The increase in revenue of $320,646 from the Transdermal Patches segment is primarily due to an increase

in demand which has continued in the subsequent quarter.

The Transdermal Patches segment increased gross margin 14% during the period.

Since we do not have the funds for development of our lead product, the 4P Therapeutics fixed costs are allocated to the contract services

that we perform for clients.

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 sales and cost of sales remained constant during the period for our contract

services in comparison to the prior year.

For the three months ended October 31, 2022, our

selling, general and administrative expenses were $1,049,532 primarily legal, accounting and administrative salaries compared to $1,452,778

for the three months ended July 31, 2021.The increase from 2021 is primarily attributable to increases in administrative salaries of $162,501and

for the three months ended October 31, 2021.The decrease from 2021 is primarily attributable to decreases in administrative salaries and

other overhead costs including professional fees and travel.

During the three months ended July 31, 2022, the

Company incurred research and development expenses of its Aversa product of $ 277,869, primarily of salaries and development costs from

During the three months ended October 31, 2022,

the Company incurred research and development expenses of its Aversa product of $ 290,718, primarily of salaries and development costs

from Kindeva as compared to $161,000 for the three months ended October 31, 2021.

The Company did not incur expenses from Kindeva until

the current fiscal year.

We incurred interest expense of $ 3,966 for the

three months ended July 31, 2022, as compared to $41,019 for the three months ended July 31, 2021.

Interest expense for 2021 was primarily

attributable to the amortization of debt discounts.

three months ended October 31, 2022, as compared to $33,380 for the three months ended October 31, 2021.

Interest expense for 2021 was

primarily attributable to the amortization of debt discounts.

As a result of the foregoing, we sustained a net

loss of $1,038,675 or $(0.12) per share (basic and diluted) for the three months ended July 31, 2022, compared with a loss of $519,923,

or $(0.08) per share (basic and diluted) for the three months ended July 31, 2021.

Six Months Ended July 31, 2022 and 2021

For the six months ended July 31, 2022, we generated revenue of $934,071and

our costs of revenue were $581,789 resulting in a gross margin of $352,282.

For the six months ended July 31, 2021, we generated revenue

of $647,227and our costs of revenue were $409,606, resulting in a gross margin of $237,621.

Our revenue for the six months ended July

31, 2022 was derived from sales of $796,894 from our Pocono Pharmaceutical segment and $137,177from contract services from our 4P Therapeutics

The increase in revenue from the Pocono Pharmaceutical segment is primarily due to an increase in demand which has continued

in the subsequent quarter.

Since we do not have the funds for development of our lead product, the 4P Therapeutics’ fixed costs

are allocated to the contract services that we perform for clients.

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.

The Company moved from the 4P facilities,

and many of the prior costs relating to the facility were not incurred.

For the six months ended July 31, 2022, our selling,

general and administrative expenses were $1,676,724 primarily legal, accounting and administrative salaries compared to $1,088,827 for

the six months ended July 31, 2021.The increase from 2021 is primarily attributable to increases in administrative salaries of $310,467

and other overhead costs including professional fees and travel.

During the six months ended July 31, 2022, the

Company incurred research and development expenses of its Aversa product of $ 395,683, primarily of salaries and development costs from

loss of $1,075,485 or $(0.14) per share (basic and diluted) for the three months ended October 31, 2022, compared with a loss of $1,578,821,

or $(0.23) per share (basic and diluted) for the three months ended October 31, 2021.

Nine Months Ended October 31, 2022 and 2021

For the nine months ended October 31, 2022, we

generated revenue of $1,552,074 and our costs of revenue were $931,061 resulting in a gross margin of $621,013.

For the nine months ended

October 31, 2021, we generated revenue of $930,264 and our costs of revenue were $617,300, resulting in a gross margin of $312,964.

revenue for the nine months ended October 31, 2022 was derived from sales of $1,327,127 from our Transdermal Patchessegment and $226,947

from contract services from our 4P Therapeutics segment.

The increase in revenue of $600,839 from the Transdermal Patches segment is primarily

due to an increase in demand which has continued in the subsequent quarter.

The Transdermal Patches segment increase margin 3% during

Since we do not have the funds for development of our lead product, the 4P Therapeutics’ fixed costs are allocated to

the contract services that we perform for clients.

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 sales and cost of sales remained constant for

our contract services compared to the prior year.

For the nine months ended October 31, 2022, our

selling, general and administrative expenses were $2,726,256 primarily legal, accounting and administrative salaries compared to $2,487,611

for the nine months ended October 31, 2021.The increase from 2021 is primarily attributable to increases in administrative salaries and

other overhead costs including professional fees and travel.

During the nine months ended October 31, 2022,

the Company incurred research and development expenses of its Aversa product of $ 686,401, primarily of salaries and development costs

from Kindeva as compared to $161,000 for the nine months ended October 31, 2021.

The Company did not incur expenses from Kindeva until

the current fiscal year.

We incurred interest expense of $12,505 for the

six months ended July 31, 2022, as compared to $81,888 for the six months ended July 31, 2021.

Interest expense for 2021 was primarily

attributable to the amortization of debt discounts.

nine months ended October 31, 2022, as compared to $115,268 for the nine months ended October 31, 2021.

Interest expense for 2021 was

primarily attributable to the amortization of debt discounts.

As a result of the foregoing, we sustained a net

loss of $ 1,728,664 or $(0.20) per share (basic and diluted) for the six months ended July 31, 2022, compared with a loss of $835,880,

or $(0.11) per share (basic and diluted) for the six months ended July 31, 2021.

loss of $ 2,804,149 or $(0.32) per share (basic and diluted) for the nine months ended October 31, 2022, compared with a loss of $2,407,701,

or $(0.34) per share (basic and diluted) for the nine months ended October 31, 2021.

Liquidity and Capital Resources

As of July 31, 2022, we had $3,344,558 in cash

As of October 31, 2022, we had $2,816,318 in cash

and cash equivalents and working capital of $2,717,449, as compared with cash and cash equivalents of $4,891,868 and working capital of

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exercise of warrants and the sale of common stock during the year ended January 31, 2022.

For the Six months ended July 31, 2022, we used

cash of $1,652,750 in our operations.

The principal adjustments to our net loss of $1,728,664 were depreciation and amortization of $156,146

and common stock issued from services of $93,1000.

For the Six months ended July 31, 2022, we used

cash in investing activities of $68,009 primarily for the purchase of equipment.

For the Six months ended July 31, 2022, we provided

cash in financing activities of $173,449 primarily from the proceeds of $296,875 from the exercise of warrants, offset from the purchase

of treasury stock of $116,766.

For the nine months ended October 31, 2022, we

used cash of $2,173,193 in our operations.

The principal adjustments to our net loss of $2,804,149 were depreciation and amortization

of $255,925, common stock issued from services of $931,100 and the issuance of employee stock options in the amount of $405,021.

For the nine months ended October 31, 2022, we

used cash in investing activities of $69,281 primarily for the purchase of equipment.

For the nine months ended October 31, 2022, we

provided cash in financing activities of $166,924 primarily from the proceeds of $296,875 from the exercise of warrants, offset from the

purchase of treasury stock of $118,766.

Off Balance Sheet Arrangements

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has the proper authority to execute them within the look-forward period.

As of July 31, 2022, we had cash and cash equivalents

As of October 31, 2022, we had cash and cash equivalents

of $2,816,318 and working capital of $2,717,449.

For the six months ended July 31, 2022, the Company incurred an operating loss of $1,720,125

For the nine months ended October 31, 2022, the Company incurred an operating loss of

$2,791,644 and use cash flow from operations of $2,173,193.

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.

In October 2021, the Company consummated

a public offering and received net proceeds of $5,836, 230.

The Company also received to date $3,239,845proceeds from the exercise of

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.

In October 2021, the Company

consummated a public offering and received net proceeds of $5,836, 230.

The Company also received to date $3,239,845proceeds from the

exercise of warrants.

The Company has used these proceeds to fund operations and will continue to use these proceeds to fund operations

in the future.

Management has prepared estimates of operations

for fiscal year 2022 and 2023 believes that sufficient funds will be generated from operations to fund its operations for one year from

for the next twelve months and believes that sufficient funds will be generated from operations to fund its operations for one year from

the date of the filing of these condensed consolidated financial statements, which indicates improved operations and the Company’s

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to be entitled when products are transferred to a customer.

The Company adopted the guidance under the new revenue standards using the

modified retrospective method effective February 1, 2018 and determined no cumulative effect adjusted to retained earnings was necessary

upon adoption.

Topic 606 requires the Company to recognize revenues when control of the promised goods or services and receipt of payment

The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606:

the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among

the performance obligations, and 5) recognize revenue as the performance obligations are satisfied.

The Company recognizes revenue based on the five criteria for revenue recognition

established under Topic 606:

1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price,

4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied.

Accounts receivable

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of customer accounts where appropriate and the application of historical loss to non-applicable accounts.

For the Six months ended July

For the nine months ended October

31, 2022 and 2021, the Company recorded no bad debt expense for doubtful accounts related to account receivable.

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is comprised of material costs, direct labor costs and other direct costs and related production overheads (based on normal operating

As of July 31, 2022 and January 31, 2022, 100% of the inventory consists of raw materials.

As of October 31, 2022 and January 31, 2022, 100% of the inventory consists of raw materials.

Intangible Assets

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reducing the Active Intelligence LLC Goodwill to $3,629,813.

As of July 31, 2022 and January 31, 2022, Goodwill amounted to $5,349,039.

As of October 31, 2022 and January 31, 2022, Goodwill amounted to $5,349,039.

Long-lived Assets

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options and common stock purchase warrants.

As of July 31, 2022, and 2021, there were 1,570,955 and 165,468 common stock equivalents outstanding,

that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.

As of October 31, 2022, and 2021, there were 1,645,506 and 1,572,825 common stock equivalents

outstanding, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.

Stock-Based Compensation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis