What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-12-13 compared with 2023-09-11 · 105 added, 92 removed, 294 unchanged (40% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

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

As of October

31, 2023, 457,795 Warrants issued in the IPO have been exercised, with net proceeds to the Company of $2,942,970.

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for two of the officers as required by IRS rules).

On February 1, 2023, the Board approved an option grant to purchase 30,000 shares of

common stock at an exercise price of $3.975 per share previously approved by the Compensation Committee to an executive officer for services.

As of July 31, 2023, 374,666 shares remain in the Plan.

During the nine months ended October 31, 2023, the Board approved option grants to

purchase 404,500 shares of common stock at exercise prices of $1.93-$3.975 per share previously approved by the Compensation Committee

to executive officers and employees for services.

As of October 31, 2023, 166 shares remain in the Plan.

See Note 8 for further information.

The Company received a favorable verdict on July

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

The Company on July 13, 2023 entered into an amended three-year $5,000,000 credit line facility (replacing the $2,000,000 facility that

we had entered into on March 19, 2023), drawdowns under which bear interest at the rate of 7% per annum.

The credit line provides the

Company with available financing through the FDA approval process and into commercial scale manufacturing, for the Company’s patented

lead product, AVERSA™ Fentanyl, an abuse-deterrent fentanyl transdermal system.

The Company on July 13, 2023 entered into an amended

three-year $5,000,000 credit line facility (replacing the $2,000,000 facility that we had entered into on March 19, 2023), drawdowns under

which bear interest at the rate of 7% per annum.

The credit line provides the Company with available financing through the FDA approval

process and into commercial scale manufacturing, for the Company’s patented lead product, AVERSA™ Fentanyl, an abuse-deterrent

fentanyl transdermal system.

Results of Operations

Three Months Ended July 31, 2023 and 2022

For the three months ended July 31, 2023, we generated

revenue of $655,928 and our costs of revenue were $356,256 resulting in a gross margin of $299,672.

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.

Our revenue for

July 31, 2023, was derived from sales of $566,769 from our Transdermal Patches segment and $89,159 from contract services from our 4P

Therapeutics segment.

The revenue from the Transdermal Patches segment remained relatively constant from the prior year.

An increase in

demand continued 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.

For the three months ended July 31, 2023, our

selling, general and administrative expenses were $678,738 primarily legal, accounting and administrative salaries compared to $908,173

for the three months ended July 31, 2022.The decrease from 2022 is primarily attributable to decreases in non-cash equity-based expenses

and administrative salaries.

During the three months ended July 31, 2023, the

Company incurred research and development expenses of its Aversa Fentanyl product of $ 445,122, primarily of salaries and increases in

development costs from Kindeva as compared to $277,869 for the three months ended July 31, 2022.

Three Months Ended October 31, 2023 and 2022

For the three months ended October 31, 2023, we

generated revenue of $427,841 and our costs of revenue were $268,920.

For the three months ended October 31, 2022, we generated revenue

of $618,003 and our costs of revenue were $349,272.

Our revenue for October 31, 2023, was derived from sales of $427,841 from our Transdermal

Patches segment and $-0- from contract services from our 4P Therapeutics segment.

The revenue from the Transdermal Patches segment remained

relatively constant from the prior year.

An increase in demand continued in the fourth quarter.

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.

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.

For the three months ended October 31, 2023, our

selling, general and administrative expenses were $1,330,929 primarily legal, accounting and administrative salaries and non-cash compensation

from the issuance of employee stock options compared to $1,049,532 for the three months ended October 31, 2022.The increase from 2022

is primarily attributable to increases in non-cash equity-based expenses.

During the three months ended October 31, 2023,

the Company incurred research and development expenses of its Aversa Fentanyl product of $551,503, primarily of salaries and increases

in development costs from Kindeva as compared to $290,718 for the three months ended October 31, 2022.

We incurred interest expense of $40,200 for the

three months ended July 31, 2023, as compared to $4,429 for the three months ended July 31, 2022.

As a result of the foregoing, we sustained a net

loss of $829,173 or $(0.11) per share (basic and diluted) for the three months ended July 31, 2023, compared with a loss of $1,038,675,

or $(0.12) per share (basic and diluted) for the three months ended July 31, 2022.

Six Months Ended July 31, 2023 and 2022

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.

For the six months ended July 31,

2022, we generated revenue of $934,071 and our costs of revenue were $581,789, resulting in a gross margin of $352,282.

Our revenue for

July 31, 2023, was derived from sales of $967,826 from our Transdermal Patches segment and $165,034 from contract services from our 4P

Therapeutics segment.

The revenue from the Transdermal Patches segment increased from the prior year.

An increase in demand continued

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.

For the six months ended July 31, 2023, our selling,

general and administrative expenses were $1,518,470 primarily legal, accounting and administrative salaries compared to $1,676,624 for

the six months ended July 31, 2022.The decrease from 2022 is primarily attributable to a decrease in salaries and wages offset by an increase

in investor relations expenses.

During the six months ended July 31, 2023, the

Company incurred research and development expenses of its Aversa Fentanyl product of $ 845,552, primarily of salaries and increases in

development costs from Kindeva as compared to $395,683 for the six months ended July 31, 2022.

three months ended October 31, 2023, as compared to $3,966 for the three months ended October 31, 2022.

The increase is primarily due

to interest in the Company’s related party loans.

As a result of the foregoing, we sustained a net loss

of $1,759,946 or $(0.22) per share (basic and diluted) for the three months ended October 31, 2023, compared with a loss of $1,075,485,

or $(0.14) per share (basic and diluted) for the three months ended October 31, 2022.

Nine Months Ended October 31, 2023 and 2022

For the nine months ended October 31, 2023, we

generated revenue of $1,560,701 and our costs of revenue were $879,824.

For the nine months ended October 31, 2022, we generated revenue

of $1,552,074 and our costs of revenue were $931,061.

Our revenue for October 31, 2023, was derived from sales of $1,395,701 from our

Transdermal Patches segment and $165,034 from contract services from our 4P Therapeutics segment.

The revenue from the Transdermal Patches

segment increased from the prior year.

An increase in demand continued 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.

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.

For the nine months ended October 31, 2023, our

selling, general and administrative expenses were $2,849,399 primarily legal, accounting and administrative salaries including non-cash

compensation from the issuance of warrants and employee stock options compared to $2,726,256 for the nine months ended October 31, 2022.The

increase from 2022 is primarily attributable to an increase in investor relations expenses offset by a decrease in salaries and wages

to executives of the Company.

During the nine months ended October 31, 2023,

the Company incurred research and development expenses of its Aversa Fentanyl product of $1,397,055, primarily of salaries and increases

in development costs from Kindeva as compared to $686,401 for the nine months ended October 31, 2022.

We incurred interest expense of $52,601 for the

six months ended July 31, 2023, as compared to $8,539 for the six months ended July 31, 2022.

nine months ended October 31, 2023, as compared to $12,505 for the nine months ended October 31, 2022.

The increase is primarily due to

interest in the Company’s related party loans.

As a result of the foregoing, we sustained a net

loss of $1,844,402 or $(0.24) per share (basic and diluted) for the six months ended July 31, 2023, compared with a loss of $1,728,664,

or $(0.20) per share (basic and diluted) for the six months ended July 31, 2022.

loss of $3,604,348 or $(0.46) per share (basic and diluted) for the nine months ended October 31, 2023, compared with a loss of $2,804,149,

or $(0.32) per share (basic and diluted) for the nine months ended October 31, 2022.

Liquidity and Capital Resources

As of July 31, 2023, we had $2,334,553 in cash

As of October 31, 2023, we had $1,265,323 in cash

and cash equivalents and working capital of $1,281,963, as compared with cash and cash equivalents of $1,985,440 and working capital of

$1,945,132 as of January 31, 2023.

During the six months ended July 31, 2023, the Company on March 19, 2023, entered into a three-year

During the nine months ended October 31, 2023, the Company on March 19, 2023, entered a three-year

Credit Line Note facility for $2 million, to fund its research and development of its Aversa Fentanyl product, and an amendment thereto

on July 13, 2023, increasing the amount available under the credit line.

At July 31, 2023, the Company had drawn down a total of $2,000,000

under the credit line.

For the six months ended July 31, 2023, we used

cash of $1,744,999 in our operations.

The principal adjustments to our net loss of $1,844,402 were depreciation and amortization of $150,511,

and the issuance of employee stock options and warrants for services in the amount of $162,120.

For the six months ended July 31, 2023, we used

cash in investing activities of $2,624 primarily for the purchase of equipment.

For the six months ended July 31, 2023, we provided

cash in financing activities of $2,096,736 primarily from the proceeds of $2,000,000 from its line of credit and $106,528 from a factoring

arrangement, offset from the payment on notes of $9,792.

on July 13, 2023, increasing the amount available under the credit line to $5 million.

As of October 31, 2023, the Company had drawn down

a total of $2,000,000 under the credit line.

For the nine months ended October 31, 2023, we

used cash of $2,809,269 in our operations.

The principal adjustments to our net loss of $3,604,348 were depreciation and amortization

of $218,382, and the issuance of employee stock options and warrants for services in the amount of $742,696.

For the nine months ended October 31, 2023, we

used cash in investing activities of $2,624 primarily for the purchase of equipment.

For the nine months ended October 31, 2023, we

provided cash in financing activities of $2,091,776 primarily from the proceeds of $2,000,000 from its line of credit and $106,528 from

a factoring arrangement, offset from the payment on notes of $14,752.

Off Balance Sheet Arrangements

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

As of July 31, 2023, the Company had cash and

As of October 31, 2023, the Company had cash and

cash equivalents of $1,265,323 and working capital of $1,281,963.

For the six months ended July 31, 2023, the Company incurred an operating

loss of $1,844,402 and used cash flow from operations of $1,744,999.

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.

For the nine months ended October 31, 2023, the Company incurred a loss

from operations of $3,565,577 and used cash flow from operations of $2,809,269.

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.

2021, the Company consummated a public offering and received net proceeds of $5,836,230.

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In March 2023, the Company entered into a three-year $2,000,000 Credit Line Note facility, amended on July 13, 2023, to increase the credit

line to $5 million, which will permit the Company to draw down on the credit line to fund the Company’s research and development

line 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.

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Accounts Receivable

Trade accounts receivables are recorded at the

net invoice value and are not interest bearing.

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

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

For the six months ended July 31, 2023 and 2022,

the Company recorded bad debt expense of $11,836 and $-0-, respectively, for doubtful accounts related to account receivable related to

a factoring arrangement.

For the nine months ended October 31, 2023 and 2022,

the Company recorded bad debt expense of $11,836 and $-0-, respectively, for doubtful accounts related to account receivable.

nine months ended October 31, 2023, the Company entered into an accounts receivable sale agreement for one of its subsidiaries.

received $106,528 in funds against an accounts 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.

bankruptcy claim is not paid in full by the debtor, the Company is obligated to pay any difference to the factor.

The bankruptcy

claim has not yet been settled by the bankruptcy court.

Inventories are valued at the lower of cost and

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costs, direct labor costs and other direct costs and related production overheads (based on normal operating capacity).

As of July 31,

As of October

31, 2023, total inventory was $174,641, consisting of work-in-process of $30,089 and raw materials of $144,552.

As of January 31, 2023, total

inventory was $229,335, consisting of work-in-process of $11,021 and raw materials of $218,334.

As of January 31, 2023,

total inventory was $229,335, consisting of work-in-process of $11,021 and raw materials of $218,334.

Intangible Assets

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respectively, reducing the Active Intelligence LLC Goodwill to $3,302,478.

As of July 31, 2023 and January 31 2023, Goodwill amounted

As of October 31, 2023 and January 31 2023, Goodwill amounted

to $5,021,713 and $5,021,713, respectively.

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options and common stock purchase warrants.

As of July 31, 2023, and 2022, there were 1,783,373 and 1,570,955 common stock equivalents

As of October 31, 2023, and 2022, there were 2,157,873 and 1,645,506 common stock equivalents

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

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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