Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Management’s Conclusions Regarding Effectiveness
of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness
of our disclosure controls and procedures, as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as of January 31, 2024, the end of the period covered by this annual report. The disclosure
controls evaluation was done under the supervision and with the participation of management, including our chief executive officer and
chief financial officer, who are two of our three full-time employees. There are inherent limitations to the effectiveness of any system
of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance
of achieving their control objectives. Based upon this evaluation, our chief executive officer and chief financial officer concluded that,
due to our limited internal audit function, our very limited staff, and our acquisition of 4P Therapeutics and Pocono Coated Products,
which are principally responsible for our business operations and were privately owned when we acquired them, were not effective as of
January 31, 2024, such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to
the chief executive officer/chief financial officer, as appropriate to allow timely decisions regarding disclosure.
Management’s Report on Internal Control
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange
Act. Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance
with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Management assessed the effectiveness of our internal
control over financial reporting as of January 31, 2024. In making this assessment, we used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. During our assessment of the effectiveness
of internal control over financial reporting as of January 31, 2024, management identified material weaknesses related to (i) our internal
audit functions (ii) inadequate levels of review of the financial statements, (iii) a lack of segregation of duties within accounting
functions, (iv) inadequate monitoring review controls in accounting for complex transactions. Therefore, our internal controls over financial
reporting were not effective as of January 31, 2024.
Management has determined that our internal controls
contain material weaknesses due to the absence of segregation of duties, as well as lack of qualified accounting personnel, excessive
reliance on third party consultants for accounting, financial reporting and related activities, and the lack of any separation of duties.
During the past fiscal year, we have added qualified accounting personnel, so the Company does not have to rely on third party consultants.
The Company has established additional monitoring controls over the financial statements. We have also improved our internal controls
to provide for a detailed accounting review of all revenue items, and accounts receivable and payable transactions in connection with
the entry and categorization of each transaction in the preparation of the Company’s financial statements. As a result of these
improvements, we are confident our financial statements as of January 31, 2024 and for the two years then ended, fairly present in all
material respects our financial condition and results of operations for all that reporting period covered by this report.
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies and procedures may deteriorate.
Changes in Internal Control over Financial
Reporting.
During the quarterly period ended January 31,
2024, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange
Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None .
ITEM 9C. DISCLOSURE REGARDING FOREIGH JURISDICTIONS THAT PREVENT
INSPECTIONS.
Not applicable.
35
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
MANAGEMENT
Set forth below are the name, age, position of
and biographical information about each nominee, all of whom are currently directors and compromise our entire Board as of the record
date.
Name
Age
Position
Gareth Sheridan
34
Chief Executive Officer and Director
Serguei Melnik
51
Chairman of the Board, President and Secretary
Mark Hamilton (1)(3)
37
Director
Radu Bujoreanu (1)(2)(3)
54
Director
Stefani Mancas (2)(3)
47
Director
Irina Gram (2)(1)
36
Director
Gerald Goodman
76
Chief Financial Officer
Alan Smith, Ph.D.
57
Chief operating officer and president of 4P Therapeutics
Jeff Patrick, Pharm.D.
55
Chief scientific officer
(1)
Member of the Audit Committee.
(2)
Member of the Compensation Committee.
(3)
Member of the Nominating and Corporate Governance Committee.
Gareth Sheridan, our founder, has been chief executive
officer and a director since our organization in 2016. In 2012, Mr. Sheridan founded Nutriband Ltd., an Irish company which we acquired
in 2016. Mr. Sheridan was named Ireland’s ‘Young Entrepreneur of the Year’ in 2014 in the National Bank of Ireland
Startup Awards for establishing Nutriband Ltd. Mr. Sheridan has further business awards from S. Dublin’s Best Young Entrepreneur
and Nutriband Ltd as S. Dublin’s Best Startup Company. Mr. Sheridan has also worked as a Business Mentor with 100 Minds,
a social enterprise founded in 2013, that brings together some of Ireland’s top college students and connects them with one cause
to achieve large charitable goals in a short space of time. Mr. Sheridan is also a past Nissan Generation Next Ambassador, receiving
the acknowledgement in 2015 by Nissan Ireland as one of Ireland’s future generational leaders. In 2019 Mr. Sheridan served
on the Board of the St. James Hospital foundation, the charitable foundation for Ireland’s largest public hospital. Mr. Sheridan
received a B.Sc. in Business and Management from Dublin Institute of Technology in 2012 where he concentrated on international economics,
venture creation and entrepreneurship.
Serguei Melnik, who was elected by the Board as
President on October 8, 2021, serves as a member of the board of directors and is a co-founder of Nutriband Inc. Mr. Melnik
has previously served as our chief financial officer and a director since January 2016. Mr. Melnik has been involved in general
business consulting for companies in the U.S. financial markets and setting up a legal and financial framework for operations of
foreign companies in the U.S. Mr. Melnik advised UNR Holdings, Inc. with regard to the initiation of the trading of its stock
in the over-the-counter markets in the U.S. and has provided general advice with respect to the U.S. financial markets for companies
located in the U.S. and abroad. From February 2003 to May 2005, he was the Chief Operations Officer and a Board member
of Asconi Corporation, Winter Park, Florida, with regard to restructuring the company and listing it on the American Stock Exchange. Mr. Melnik
from June 1995 to December 1996 was a lawyer in the Department of Foreign Affairs, JSC Bank “Inteprinzbanca,”, Chisinau,
Moldova, and prior thereto practiced law in Moldova in various positions. Mr. Melnik is fluent in Russian, Romanian, English and
Spanish.
Mark Hamilton, an independent director since July 2018,
is an experienced director level professional who joined global consulting firm, Korn Ferry in 2020 as a Managing Consultant. Prior to
moving into organizational consulting, Mark qualified as a Chartered Accountant in global advisory firm, BDO, where he spent 12 years
advising some of Ireland’s most successful businesses. His work originated in corporate finance/corporate recovery and more recently,
he spent 5 years leading BDO’s client management and sales function, as Head of Business Development.
Mr. Hamilton is a Member of the Association
of Chartered Accountants (ACA), since 2012. Mr. Hamilton’s accounting/consulting background and experience in corporate finance,
restructuring, sales and talent assists us in his role as an independent Board member and Committee Chair. Mr. Hamilton has a very
strong presence in the business community across jurisdictions, along with an accomplished track record in project management and business
development. Educated at Terenure College, Mark went on to study a B.Sc. degree in Business & Management at Dublin Institute
of Technology and subsequently received First Class Honours in his postgraduate degree, for which he specialized in Accountancy in
2009. In addition to his ACA qualification, Mark has also recently completed a diploma in Corporate Governance and is now a member of
the Corporate Governance Institute which will assist him in his role as Independent Director, alongside his recent approval by the Central
Bank of Ireland to act as an Independent Director to regulated entities.
Radu Bujoreanu has been a director since June 2019. Mr Bujoreanu is
a real estate agent and investor since 2019 and currently he is with Samson Properties LLC. Mr. Bujoreanu has been the owner and
executive director of Consular Assistance, Inc., which provided assistance in obtaining visas, travel documents, other national and foreign
documents and related services since December 2002 to December 2020. From 2003 to 2005 he served as an independent director and member
of the Board of Directors of Asconi Corporation. From August 1999 to August 2002 Mr. Bujoreanu worked as a consular officer at the Embassy
of the Republic of Moldova to the United States. Before that from May 1994 to August 1999 he was Chief of Bilateral Treaties section in
the International Law and Treaties Department of the Ministry of Foreign Affairs of the Republic of Moldova. Mr. Bujoreanu received
his bachelor degree in international public law from the University of Moldova.
36
Dr. Stefani Mancas graduated Summa cum Laude from
the Military Navy College in Constanta, Romania. After attending the faculty of Cybernetics from the Academy of Economic Studies in Bucharest,
Stefani transferred to University of Central Florida, and graduated with a dual B.Sc. in Mathematics/ Aerospace Engineering, a Master's
Degree in Applied Mathematics, and a Ph.D. in Mathematical Sciences from the Department of Mathematics. The Ph.D. dissertation topic was
"Dissipative solitons in the cubic-quintic complex Ginzburg-Landau equation: Bifurcations and Spatiotemporal Structure", for
which Stefani received the UCF Outstanding Dissertation Award.
Currently, Stefani is a tenured full Professor,
and a researcher in the Department of Mathematics at Embry-Riddle Aeronautical University in Daytona Beach, Florida. Stefani's research
areas deal with finding analytical solutions to nonlinear dissipative equations that can be reduced through Darboux transformations to
Riccati or Abel equations. The main focus is on Schrödinger equation, for which Stefani is using methods based on factorization,
and variational formulation together with ansatz reduction with global minimizers of objective functions, applied to supersymmetric quantum
mechanics. Another important area of interest is the theory of elliptic functions with applications to nonlinear optics, soliton theory,
general relativity, as well as optimization of the blockchain, and quantum cryptography.
Irina Gram was elected as a director of the Company
at the January 21, 2022 stockholders meeting. Irina is a Senior Financial Analyst at Thales IFEC, Melbourne, Florida. There she is
responsible for financial planning, analysis and risk and opportunities reviews of multiple development and customer programs. From 2016
to 2017, she was a Project Engineering Coordinator at Thales IFEC, where she executed budgeting and forecasting activities with specialized
focus on SFRD spending, interfaced with engineering team to monitor and report the performance of the financial impact of projects. From
2013 to 2016, she held various project management, accounting and reporting positions with Siemens Building Technology, Inc., Winter Park,
Florida. She received a Bachelor’s Degree in Finance from the University of Central Florida, Orlando, Florida, where she graduated
in May 2015, with honors, and received a Masters Degree in business administration from the University of Central Florida, Orlando,
Florida, in May 2019.
Gerald Goodman has been our chief accounting officer
since July 31, 2018 and was elected our Chief Financial Officer on November 12, 2020. Mr. Goodman is a certified public
accountant and, since 2014, has practiced with his own firm, Gerald Goodman CPA P.C. From January 1, 2010 until December 31,
2014, Mr. Goodman practiced with Madsen & Associates, CPA’s Inc., Murray, Utah, and was a non-equity partner and managed
the firm’s SEC practice. Mr. Goodman is a director of Lifestyle Medical Network, Inc., which provides management services to
healthcare providers. From 1971 to 2010, Mr. Goodman was a partner in the accounting firm of Wiener, Goodman & Company P.C. Mr. Goodman
is a 1970 graduate of Pennsylvania State University where he received a B.S. Degree in Accounting.
Alan Smith, Ph.D., serves as Chief Operating Officer
of Nutriband and President of 4P Therapeutics, a wholly owned subsidiary of Nutriband. He joined the Company after Nutriband acquired
4P Therapeutics in 2018. Dr. Smith co-founded 4P Therapeutics in 2011 to develop drug-device and biologic-device combination products
to meet the needs of patients, physicians, and payers, and was Vice President, Clinical, Regulatory, Quality and Operations at the time
of the acquisition. Dr. Smith is co-inventor of the Company’s Aversa™ abuse deterrent transdermal system technology.
Dr. Smith has over 20 years of experience in the research and development of drug and biologic delivery systems, diagnostics
and medical devices for treatment and management of chronic pain, diabetes, and cardiovascular disease. Previously, he was with Altea
Therapeutics, a venture capital funded company focused on novel transdermal drug and biologic delivery, most recently serving as Vice
President, Product Development and Head of Clinical R&D, Regulatory Affairs, and Project Management. Prior to joining Altea Therapeutics,
he led the development of transdermal glucose monitoring systems at SpectRx, Inc., a publicly traded noninvasive diagnostics company.
Dr. Smith received Ph.D. and M.S. degrees in Biomedical Engineering from Rutgers University and the University of Medicine and Dentistry
of New Jersey. He currently serves on the Editorial Advisory Board of Expert Opinion on Drug Delivery.
Jeff Patrick Pharm.D. currently serves as Director
of Drug Development Institute at the Ohio State University Comprehensive Cancer Center. Dr. Patrick most recently serving as Chief
Scientific Officer for New Haven Pharmaceuticals. Prior roles included global vice president of professional affairs at Mallinckrodt Pharmaceuticals,
Inc.; and roles with ascending responsibilities at Dyax, Myogen/Gilead, Actelion and Sanofi-Synthelabo, Inc. Dr. Patrick is a residency-trained
clinical pharmacist with approximately 20 years of pharmaceutical industry experience. He brings expertise in executive leadership,
scientific and medical strategy, drug development and commercialization to the company. Prior to pursuing a career in research and development,
Patrick was an ambulatory care clinical pharmacist at the University of Tennessee Medical Center and a clinical assistant professor of
pharmacy at the University of Tennessee College of Pharmacy, where he earned his doctorate in pharmacy. He also completed the Wharton
School of Business Pharmaceutical Executive Program. Dr. Patrick works for us on a part-time basis.
37
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
Board Leadership Structure and Risk Oversight
Gareth Sheridan serves as Chief Executive Officer
and Serguei Melnik is serving as our Chairman and President. Our Chairman leads the Board of Directors in its discussions and has such
other duties as are prescribed by the Board. As Chief Executive Officer, Mr. Sheridan is responsible for implementing the Company’s
strategic and operating objectives and day-to-day decision-making related to such implementation.
The Board of Directors currently has three standing
committees (audit, compensation, and nominating and corporate governance) that are chaired and composed entirely of directors who are
independent under Nasdaq and SEC rules. Given the role and scope of authority of these committees, and that a majority of the members
of the Board are independent, the Board of Directors believes that its leadership structure is appropriate. We select directors as members
of these committees with the expectation that they will be free of relationships that might interfere with the exercise of independent
judgement.
Our Board of Directors is our Company’s
ultimate decision-making body, except with respect to those matters reserved to the stockholders. Our Board of Directors selects our senior
management team, which is charged with the conduct of our business. Our Board of Directors also acts as an advisor and counselor to senior
management and oversees its performance.
Board Composition
Our business and affairs are managed under the
direction of our Board of Directors. The number of directors is determined by our board of directors, subject to the terms of our certificate
of incorporation and bylaws. Our board of directors currently consists of six members, four of which are independent directors.
Meetings
Our Board of Directors held two meetings and acted
by written consent eight times during fiscal 2024.
Committees of the Board of Directors
The board of directors has created three committees — the
audit committee, the compensation committee and the nominating and corporate governance committee. Each of the committees has a charter
which meets the Nasdaq Stock Market requirements and is composed of three independent directors.
Audit Committee
The audit committee is comprised of Mr. Hamilton,
as chairman, Mr. Bujoreanu and Irina Gram. We believe that Mark Hamilton qualifies as an “audit committee financial expert”
under the rules of the Nasdaq Stock Market. The audit committee oversees, reviews, acts on and reports on various auditing and accounting
matters to the board, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the
independent accountants, the performance of our independent accountants and our accounting practices, all as set forth in our audit committee
charter. The Audit Committee met three times in fiscal 2024.
Compensation Committee
The compensation committee is comprised of Irina
Gram, Chairperson, Mr. Bujoreanu and Dr. Mancas. The compensation committee oversees the compensation of our chief executive
officer and our other executive officers and reviews our overall compensation policies for employees generally as set forth in the audit
committee charter. If so authorized by the board, the compensation committee may also serve as the granting and administrative committee
under any option or other equity-based compensation plans which we may adopt. The compensation committee will not delegate its authority
to fix compensation; however, as to officers who report to the chief executive officer, the compensation committee will consult with the
chief executive officer, who may make recommendations to the compensation committee. Any recommendations by the chief executive officer
are accompanied by an analysis of the basis for the recommendations. The committee will also discuss with the chief executive officer
and other responsible officers the compensation policies for employees who are not officers. The compensation committee has the responsibilities
and authority relating to the retention, compensation, oversight and funding of compensation consultants, legal counsel and other compensation
advisers. The compensation committee members will consider the independence of such advisors before selecting or receiving advice from
such advisors. The compensation committee met three times in fiscal 2024.
38
Nominating and Corporate Governance Committee
The nominating and corporate governance committee,
which is comprised of Dr. Mancas, Mark Hamilton and Mr. Bujoreanu, will identify, evaluate and recommend qualified nominees
to serve on our board; develop and oversee our internal corporate governance processes, and maintain a management succession plan. The
nominating and corporate governance committee met two times in fiscal 2024.
Risk Management
The Board has an active role, as a whole and also
at the committee level, in overseeing the management of our risks. The Compensation Committee of our Board is responsible for overseeing
the management of risks relating to our executive compensation plans and arrangements. The Audit Committee of our Board oversees management
of financial risks, under its charter it is to meet periodically and at least four times per year with management to review and assess
the Company’s major financial risk exposures and the manner in which such risks are being monitored and controlled. The Nominating
and Corporate Governance Committee of our Board is responsible for the management of risks associated with the independence of the Board
members and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management
of such risks, the entire Board of Directors is informed about such risks.
Independent Directors
Four of our directors, Mark Hamilton, Radu Bujoreanu,
Stefani Mancas and Irina Gram are independent directors based on the NASDAQ definition of independent director.
Family Relationships
There are no family relationships among our directors
and executive officers.
Compensation Committee Interlocks and Insider
Participation
None of our executive officers serve on the board
of directors or compensation committee of a company that has an executive officer who serves on our Board or compensation committee. No
member of our Board is an executive officer of a company in which one of our executive officers serves as a member of the board of directors
or compensation committee of that company.
Conflicts of Interest
Certain conflicts of interest exist and may continue
to exist between the Company and its officers and directors due to the fact that each has other business interests to which they devote
their primary attention. Each officer and director may continue to do so notwithstanding the fact that management time should be devoted
to the business of the Company.
Certain conflicts of interest may exist between
the Company and its management, and conflicts may develop in the future. The Company has not established policies or procedures for the
resolution of current or potential conflicts of interest between the Company, its officers and directors or affiliated entities. There
can be no assurance that management will resolve all conflicts of interest in favor of the Company, and conflicts of interest may arise
that can be resolved only through the exercise by management their best judgment as may be consistent with their fiduciary duties. Management
will try to resolve conflicts to the best advantage of all concerned.
39
Compliance with Section 16(a) of
the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act
requires our officers and directors, and persons who beneficially own more than ten percent of our Common Stock, to file reports of ownership
and changes of ownership of such securities with the SEC. Mr. Goodman, Dr. Smith, Dr. Patrick, Mr. Bujoreanu,
and Ms. Gram have not yet filed their Form 3 reports.
Gareth Sheridan and Serguei Melnik have not filed
Form 4’s reporting receipt of compensation in fiscal years 2024 and 2025; With the exception of Gerald Goodman, who has filed Form
5’s to catch up on Form 4’s due over the past three fiscal years. Mr. Goodman is late with respect to Form 4’s required
to be filed for stock option compensation issuances for fiscal 2024 and 2025. No other officer or director has filed any ownership reports.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
The table below shows the compensation for services
in all capacities we paid during the years ended January 31, 2024 and 2023 to the individuals serving as our principal executive
officers during the last completed fiscal year and our other two most highly paid executive officers at the end of the last completed
fiscal year (whom we refer to collectively as our “named executive officers”);
Name
and Principal Position
Year
Salary
$
Bonus
Awards
$
Stock
Awards
$
Option/
Awards (1) $
Incentive
Plan
Compensation
$
Nonqualified
Deferred
Earnings
$
All Other
Compensation
$
Total
$
Gareth Sheridan,
2024
150,000
82,110
25,000
257,110
CEO (1)
2023
200,000
38,000
140,672
378,672
Serguei Melnik
2024
150,000
82,110
25,000
257,110
President
2023
200,000
146,672
346,672
Alan Smith
2024
154,000
42,720
5,000
201,720
Chief Operating Officer
2023
179,000
57,490
236,490
Gerald Goodman
2024
110,000
52,866
30,000
192,866
Chief Financial Officer
2023
160,000
—
114,976
—
—
274,976
(1) During the year ended January 31, 2023, we issued to
Gareth Sheridan, our CEO, 11,667 shares of common stock valued at $38,000, representing compensation for the year ended January 31,
2023.
40
Directors Compensation
Fees Earned
or Paid in
Cash
Stock
Awards
Option
Awards
Non-Equity
Incentive
Plan
Compensation’
Change in
Pension
Value and
NonQualified Deferred
Compensation
Earnings
All Other
Compensation
Total
Name
($)
($)
($)
($)
($)
($)
($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Mark Hamilton
$ 5,000
$ -
$ 10,146
$ -
$ -
$ -
$ 15,146
Radu Bujorneau
$ 5,000
$ -
$ 11,214
$ -
$ -
$ -
$ 16,214
Stefani Mancas
$ 5,000
$ -
$ 10,146
$ -
$ -
$ -
$ 15,146
Irina Gram
$ 5,000
$ -
$ 10,146
$ -
$ -
$ -
$ 15,146
Employment Agreements with Company Officers
The Company entered into a three-year employment
agreement with Gareth Sheridan, our CEO, and Serguei Melnik, our President, effective February 1, 2022. The agreement also provides that
the executives will continue as a director. The agreement provides for an initial term, commencing on the effective date of the agreement
and ending on January 31, 2025, and continuing on a year-to-year basis thereafter unless terminated by either party on not less than 30
days’ notice given prior to the expiration of the initial term or any one-year extension. For their services to the Company during
the term of the agreement, Mr. Sheridan and Mr. Melnik will receive an annual salary of $250,000 per annum, commencing on the effective
date of the agreement. Mr. Sheridan and Mr. Melnik will also receive a performance bonus of 3.5% of net income before income taxes. As
of July 31, 2022, the Company and Mr. Sheridan and Mr. Melnik mutually agreed to reduce their annual salary to $150,000.
The Company entered into a three-year employment
agreement with Gerald Goodman, our CFO, effective February 1, 2022. The agreement provides for an initial term, commencing on the effective
date of the agreement and ending on January 31, 2025, and continuing on a year-to-year basis thereafter unless terminated by either party
on not less than 30 days’ notice given prior to the expiration of the initial term or any one-year extension. For his services to
the Company during the term of the agreement, Mr. Goodman will receive an annual salary of $210,000 per annum, commencing on the effective
date of the agreement. As of July 31, 2022, the Company and Mr. Goodman mutually agreed to reduce his annual salary to $110,000.
The Employment Agreements provide for incentive
payments as established by the Board of Directors, and the Employment Agreements with Mr. Sheridan and Mr. Melnik provide for
a performance bonus as follows:
Net Operating Profit Before Income Taxes
Performance Bonus
On the First $10 Million
3.5 %
On the Next $40 Million
3.5 %
On the Next $50 Million
3.5 %
On all Amounts Over $100 Million
3.5 %
41
Each of the Employment Agreements contains
similar provisions for discharge for “cause”, including breach of the Employment Agreement or specified detrimental
conduct by the employee, in which cases accrued compensation would payable as provided in the Employment Agreements. The Agreements
also provide for termination by the executives for “good reason”, comprising events such as breach of the Agreement by
the Company, assignment of duties inconsistent with the Executive’s position, , or in the event of a change in control
of the Company. In the event of a termination by the Company without cause, or by the executive for “good reason”, the
Company is required to pay to the Executive in a lump sum in cash within 30 days after the date of termination the aggregate of
the following amounts:
A. the sum of (1) the executive’s annual minimum
salary through the date of termination to the extent not theretofore paid, (2) any annual incentive payment earned by the executive
for a prior period to the extent not theretofore paid and not theretofore deferred, (3) any annual performance bonus payment earned
by the executive for a prior period to the extent not theretofore paid and not theretofore deferred,(4) any accrued and unused vacation
pay and (5) any business expenses incurred by the executive that are unreimbursed as of the date of termination;
B. The product of (1) the performance bonus payment and
(2) a fraction, the numerator of which is the number of days that have elapsed in the fiscal year of the Company in which the
date of termination occurs as of the date of termination, and the denominator of which is 365;
C. the amount equal to the sum of (1) three (3) times
the executive’s annual minimum salary; (2) one (1) times the performance bonus payment and (3) one (1) times
the incentive payment;
D. In the event executive is not fully vested in any retirement
benefits with the Company from pension, profit sharing or any other qualified or non-qualified retirement plan, the difference between
the amounts executive would have been paid if he or she had been vested on the date his/her employment was terminated and the amounts
paid or owed to the executive pursuant to such retirement plans;
E. The product of (1) the incentive payment and (2) a
fraction, the numerator of which is the number of days that have elapsed in the fiscal year of the Company in which the date of
termination occurs as of the date of termination, and the denominator of which is 365; and
F. If applicable, the present value of the amount equal to the
sum of five (5) years’ Performance Bonus pay with such amount being calculated based on the Performance Bonus paid to the
Employee the year prior to Termination.
In addition, all stock options and warrants outstanding
as of the date of termination and held by the executive shall vest in full and become immediately exercisable for the remainder of their
full term; all restricted stock shall no longer be restricted to the extent permitted by law, and the Company will use its best efforts,
at its sole cost to register such restricted stock as expeditiously as possible.
Gross-up Reimbursement on Excise Taxes Paid
by Employee on Certain Payments received from Company
The Employment Agreements of Mr. Sheridan
and Mr. Melnik provide that, to the extent any payment under the Employment Agreement to the executive is subject to the excise tax
imposed by section 4999 of the Internal Revenue Code, the executive is entitled to a gross-up payment from the Company to reimburse the
executive for additional federal, state and local taxes imposed on executive by reason of the excise tax and the Company’s payment
of the initial taxes on such amount. The Company is also required to bear the costs and expenses of any proceeding with any taxing authority
in connection with the imposition of any such excise tax.
Employment Agreement with Alan Smith
The Company entered into a three-year employment
agreement with Alan Smith, our Chief Operating Officer, effective October 1, 2021, for an initial term of three years through September
30, 2024. For his services to the Company during the term of the agreement, Mr. Smith receives a fixed base salary of $204,000 per year,
payable no less frequently than monthly. This base salary is reviewed not later than the end of each calendar year that Mr. Smith is employed
by the Company. As of July 31, 2022, the Company and Mr. Smith mutually agreed to reduce his annual salary to $154,000.
42
Pension Benefits
We currently have no plans that provide for payments
or other benefits at, following, or in connection with retirement of our officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards
Stock Awards
Number of
Shares of
Common Stock
Underlying
Unexercised
Options
Exercisable
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned Options
Options Exercise
Price
Options
Expiration Date
Number of
Shares or
Units of
Stock
that
Have
Not
Vested
Market
Value of
Shares or
Units of Stock
That
Have
Not
Vested
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other Rights That
Have
Not Vested
Incentive
Plan
Awards:
Market or
Payout
Value
of
Unearned
Shares, Units or
Other
Rights That
Name
(#)
(#)
(#)
($)
($)
(#)
($)
(#)
($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Gareth Sheridan, CEO
23,333
-
-
$ 4.58
January 21, 2025
-
-
-
-
29,167
-
-
$ 4.50
August 2, 2025
-
-
-
-
25,000
-
-
$ 4.12
December 8, 2025
-
-
-
-
70,000
-
-
$ 2.12
October 27, 2026
-
-
-
-
Serguei Melnik, President
23,333
-
-
$ 4.58
January 21, 2025
-
-
-
-
29,167
-
-
$ 4.50
August 2, 2025
-
-
-
-
25,000
-
-
$ 4.12
December 8, 2025
-
-
-
-
70,000
-
-
$ 2.12
October 27, 2026
-
-
-
-
Alan Smith, COO
11,667
-
-
$ 4.16
January 21, 2025
-
-
-
-
11,667
-
-
$ 4.09
August 2, 2025
-
-
-
-
10,000
-
-
$ 3.75
December 8, 2025
-
-
-
-
40,000
-
-
$ 1.93
October 27, 2026
-
-
-
-
Gerald Goodman, CFO
11,667
-
-
$ 4.16
January 21, 2025
-
-
-
-
23,333
-
-
$ 4.09
August 2, 2025
-
-
-
-
20,000
-
-
$ 3.75
December 8, 2025
-
-
-
-
49,500
-
-
$ 1.93
October 27, 2026
-
-
-
-
87,500 (1)
-
-
$ 1.93
October 27, 2026
-
-
-
-
(1)
This option held by Mr. Goodman is in the form of a common stock purchase warrant.
Bonuses
Any bonuses granted in
the future will relate to meeting certain performance criteria that are directly related to areas within the named executive’s responsibilities
with the Company. As we continue to grow, more defined bonus programs may be established to attract and retain our employees at all levels.
Other Director Compensation
There are no agreements
or arrangements by which any directors or nominees are to receive compensation or other payments from third parties in return for serving
on the Board of Directors.
Pension Benefits
We currently have no
plans that provide for payments or other benefits at, following, or in connection with retirement of our officers.
43
ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table provides information concerning
the beneficial ownership of the Company’s common Stock by each director, certain executive officers, by all directors and officers
of the Company as a group as of April 26, 2024. In addition, the table provides information concerning the current beneficial owners,
if any, known to the Company to hold more than five percent (5%) of the outstanding common stock of the Company.
The amounts and percentage of stock beneficially
owned are reported based on regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules
of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,”
which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner
of any securities of which that person has a right to acquire beneficial ownership within 60 days after April 26, 2024. Under these
rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities
in which he has no economic interest. The percentage of common stock beneficially owned is based on 10,969,870 shares of common stock
outstanding as of April 26 , 2024.
Name and Address (1) of Beneficial Owner (Management and Directors)
Shares of
Common
Stock
Owned
Directly
Shares of
Derivative
Securities
Owned
Beneficially
Total
Beneficial
Ownership
Including
Option
Grants
Percentage of
Issued and
Outstanding
Common
Stock
Gareth Sheridan
1,761,667
245,000
2,006,667
17.89 %
Serguei Melnik (2)
820,418
245,000
1,065,418
9.50 %
Stefani Mancas
14,125
25,583
39,708
*
Mark Hamilton
17,208
28,500
45,708
*
Radu Bujoreanu
15,750
29,333
45,083
*
Irina Gram
1,167
18,000
19,167
*
Dr. Jeff Patrick
36,612
160,000
196,612
1.77 %
Alan Smith
48,893
143,334
192,227
1.73 %
Gerald Goodman (3)
26,250
267,000
293,250
2.61 %
All officers and directors as a group (9 individuals)
2,742,000
1,161,750
3,903,840
32.18 %
Other Beneficial Owners
Vitalie Botgros (4)
1,972,539
1,310,000
3,282,539
26.73 %
Serguei Glinka (5)
825,000
1,650,000
2,475,000
19.61 %
* Less than One (1%) Percent.
(1) The address for each director and officer, unless indicated
otherwise, is c/o Nutriband, Inc., 121 South Orange Ave., Suite 1500, Orlando, FL 32801.
(2) Includes 29,167 shares owned by Mr. Melnik’s wife,
as to which Mr. Melnik disclaims beneficial ownership, and 58,334 shares held under the UGMA for the benefit of his minor children.
(3) Gerald Goodman holds 26,250 shares directly and has been
granted three-year options under the Company’s 2021 Employee Stock Option Plan to purchase an aggregate of 267,000 shares of common
stock at exercise prices ranging from $1.93 per share to $4.16 per share. Mr. Goodman also was issued on October 22, 2021 a
stock purchase warrant for the purchase of 87,500 shares of common stock, exercisable at $4.20 per share. On October 27, 2023, this warrant
was replaced by a new three-year warrant expiring October 27, 2026, exercisable at $1.93 per share, for the same number of shares,
(4) Mr. Botgros, to the knowledge of the Company based on a Schedule 13-D filing on January 23, 2024, is
the ultimate beneficial owner of 1,347,524 shares of common stock held by TII Jet Services Ltd., which is wholly owned by Nociata
Holding Limited, a Cyprus company owned by Mr. Botgros. Nociata Holding Limited purchased 525,000 shares of common stock in
Nutriband’s equity financing that was completed April 19, 2024, and TII Jet Services Ltd. purchased 130,000 shares of common
stock in that financing, which results in Mr. Botgros having an estimated beneficial ownership of 1,972,539 shares of common stock
and of warrants to purchase 1,310,000 shares of common stock based on available records. Mr. Botgros’ address is c/o Nociata
Holding Limited, 1Apriliou, 47 Demetriou Bldg., 2,1st Floor, Flat/Office 12, 3117 Limassol, Cyprus.
(5) Mr. Glinka purchased 825,000 shares of common stock and 1,650,000
warrants in Nutriband’s equity financing that was completed April 19, 2024. Mr. Glinka’s address is 13 Morfu Str., Matina
Court FL 402, 3012 Limassol, Cyprus. The Company has no further information as to additional shares of common stock, if any, held by
Mr. Glinka.
44
To our knowledge, all beneficial owners named
in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them.
Changes in Control
We are unaware of any contract or other arrangement
the operation of which may at a subsequent date result in a change in control of our company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
UPDATE
On February 1, 2023,
the Board of Directors ratified and authorized the issuance of Option Award Agreements with respect option grants approved February 1,
2023, by the Compensation Committee, to officers and directors as set forth in the table below.
Name
No. of Shares
Jeff Patrick, Chief Scientific Officer
30,000
$ 3.98
Services Rendered in fiscal 2024
On September 18, 2023,
the Board of Directors ratified and authorized the issuance of Option Award Agreements with respect option grants approved September 18,
2023, by the Compensation Committee, to officers and directors as set forth in the table below.
Name
No. of Shares
Jeff Patrick, Chief Scientific Officer
20,000
$ 2.65
Services Rendered in fiscal 2024
On October 19, 2023,
the Board of Directors ratified and authorized the issuance of Option Award Agreements with respect option grants approved October19,
2023, by the Compensation Committee modified a common stock purchase warrant issued to Gerald Goodman, as set forth in the table below.
Name
No. of Shares
No. of Warrants
Gareth Sheridan, CEO
70,000
-
$ 2.12
Services Rendered in fiscal 2024
Serguei Melnik, Chairman & President
70,000
-
$ 2.12
Services Rendered in fiscal 2024
Gerald Goodman, CFO
49,500
-
$ 1.93
Services Rendered in fiscal 2024
Alan Smith, Chief Operating Officer
40,000
-
$ 1.93
Services Rendered in fiscal 2024
Jeff Patrick, Chief Scientific Officer
40,000
-
$ 1.93
Services Rendered in fiscal 2024
Gerald Goodman, CFO
-
87,500
$ 1.93
Services Rendered in fiscal 2024
Independent Directors
Four of our directors, Mark Hamilton, Radu Bujoreanu,
Stefani Mancas and Irina Gram are independent directors based on the NASDAQ definition of independent director.
45
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the fees billed
by our independent accountants, Sadler, Gibb & Associates, LLC, for each of our last two years for the categories of services indicated.
Year Ended
January 31
2024
2023
Audit fees
$
118,800
$
86,640
Audit – related fees
20,100
6,500
Tax fees
-
-
All other fees
$
-
$
-
Audit fees consist of fees related to professional
services rendered in connection with the audit of our annual financial statements and review of our interim financial statements.
Audit-Related Fees. Audit-related services consist
of fees billed by our independent registered public accounting firms for assurance and related services that are reasonably related to
the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.”
All other fees relate to professional services
rendered in connection with our registration statements and acquisition audits.
Our policy is to pre-approve all audit and permissible
non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services
and other services. Under our audit committee’s policy, pre-approval is generally provided for particular services or categories
of services, including planned services, project based services and routine consultations. In addition, the audit committee may also pre-approve
particular services on a case-by-case basis. Our board approved all services that our independent accountants provided to us in the past
two fiscal years.
46
PART IV
ITEM 15. Exhibits.
Exhibit
Number
Description
1.1
[ Reserved]
3.1A
Articles of Incorporation. (1)
3.1B
Amendment to Articles of Incorporation, filed May 12, 2016. (1)
3.1
Certificate of Amendment filed January 21, 2020. (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed January 27, 2020).
3.1C
Certificate of Change, filed with the Nevada Secretary of State on August 4, 2022. (13)
3.2
By-laws (1)
3.2B
Amended and Restated By-Laws adopted January 21, 2022. (12)
4.3
Securities purchase agreement dated October 29, 2019 among the Company, Jefferson Street Capital LLC and Platinum Point Capital LLC (6)
4.4
Form of convertible 6% promissory note issued pursuant to Exhibit 4.3 (6)
4.10
Form of Common Stock Purchase Warrant issued to Platinum Point Capital LLC and Jefferson Street Capital LLC (6)
4.14†
2021 Employee Stock Option Plan. (11)
4.15†
Form of Stock Option Grant Notice. (11)
4.16
Form of Common Stock Purchase Warrant issued in the Company’s initial public offering in 2021 (9)
4.17
Form of Warrant issued to the Representative. (14)
4.18†
2024 Amended and Restated Stock Option Plan, adopted March 20, 2024 . (15)
4.19
Form
of Common Stock Purchase Warrant issued in 2024 Equity Financing (18)
5.1
[ Reserved]
10.1
Share exchange agreement dated January 15, 2016 by and among the Company, Nutriband Limited, an Ireland corporation, and Gareth Sheridan and/or his nominee (1)
10.4
Acquisition agreement dated April 5, 2018 between the Company and 4P Therapeutics LLC. (3)
10.5†
Form of agreement with independent directors. (4)
10.6
Exclusive master distribution agreement dated April 13, 2018 between the Company and EMI-Korea (Best Choice), Inc. (4)
10.15†
Employment Agreement, dated April 23, 2019, between Gareth Sheridan and the Company. (5)
10.16†
Employment Agreement, dated April 23, 2019, between Serguei Melnik and the Company. (5)
10.17†
Employment Agreement, dated February 19, 2019, between Jeffrey Patrick and the Company. (5)
10.18†
Employment Agreement, dated January 1, 2018, between Sean Gallagher and the Company. (5)
10.19
Purchase Agreement, dated August 31, 2020, by and among the Company and Pocono Coated Products, LLC. (7)
10.20
Security Agreement, between the Company and Pocono Coated Products, LLC. (7)
10.21
Promissory Note Issued by the Company on August 31, 2020 to Pocono Coated Products, LLC. (7)
10.22
License Agreement, dated December 9, 2020, between the Company and Rambam Med-Tech Ltd. (8)
10.23
Distribution Agreement, dated March 26, 2021, between the Company and BPM Inno Ltd. (8)
10.24
Stock Purchase Agreement, dated December 7, 2020, between the Company and BPM Inno Ltd. (8)
10.25
Amendment No. 1 to Purchase Agreement, dated August 31, 2020, by and among the Company and Pocono Coated Products, LLC (8a)
10.26
Services Agreement dated October 4, 2021, between Active Intelligence, LLC and Diomics Corporation. (10)
10.27†
Employment Agreement effective February 1, 2022, between the Company and Gareth Sheridan. (12)
10.28†
Employment Agreement effective February 1, 2022, between the Company and Serguei Melnik. (12)
10.29†
Employment Agreement effective February 1, 2022, between the Company and Gerald Goodman. (12)
10.30
Creditline Promissory Note, dated July 13, 2023. (16)
10.31
Conversion Agreement, dated December 19, 2023. (17)
10.32
Form of Subscription Agreement for April 19, 2024 Equity Financing (19)
21.1
List of Subsidiaries of Nutriband Inc. (14)
23.1
[Reserved]
31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.*
31.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.*
32
Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley.*
101.INS
Inline XBRL Instance Document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
107
Filing Fee Table
*
Filed herewith.
†
Executive compensation plan or arrangement.
47
(1)
Filed as exhibit to the Company’s registration statement on Form 10, which was filed with the Commission on June 2, 2016, and incorporated herein by reference.
(2)
Filed as an exhibit to the Company’s report on Form 8-K, which was filed with the Commission on January 27, 2020 and incorporated herein by reference.
(3)
Filed as an exhibit to the Company’s report on Form 8-K, which was filed with the Commission on April 10, 2018 and incorporated herein by reference.
(4)
Filed as an exhibit to the Company’s annual report on Form 10-K for the year ended January 3, 2019 which was filed with the Commission on April 19, 2019, and incorporated herein by reference.
(5)
Filed as an exhibit to the Company’s Registration Statement on Form S-1/A, which was filed with the Commission on May 19, 2020, and incorporated herein by reference.
(6)
Filed as an exhibit to the Company’s report on Form 8-K, which was filed with the Commission on November 4, 2019, and incorporated herein by reference.
(7)
Filed as an exhibit to the Company’s report on Form 8-K, which was filed with the Commission on September 4, 2020, and incorporated herein by reference.
(8)
Filed as exhibits to the Company’s report on Form 8-K, which was filed with the Commission on March 11, 2021, and incorporated herein by reference.
(8a)
Filed as an exhibit to the Company’s report on Form 8-K, which was filed with the Commission on September 1, 2021, and incorporated herein by reference.
(9)
Filed as an exhibit to Amendment 2 to the Company’s Registration Statement on Form S-1, which was filed with the Commission on October 1, 2022.
(10)
Filed as an exhibit to the Company’s Current Report on Form 8-K, which was filed with the Securities and Exchange Commission on October 12, 2021, and incorporated herein by reference.
(11)
Filed as an exhibit to the Company’s Registration Statement on Form S-8, which was filed with the Commission on November 5, 2021, and incorporated herein by reference.
(12)
Filed as an exhibit to the Company’s Current Report on Form 8-K, which was filed with the Commission on January 27, 2022, and incorporated herein by reference.
(13)
Filed as Exhibit 3.1C to the Company’s Current Report on Form 8-K, which was filed with the Commission on August 10, 2022, and incorporated herein by reference.
(14)
Filed as an exhibit to the Company’s Registration Statement on Form S-1, which was filed with the Commission on June 26, 2023, and incorporated herein by reference
(15)
Filed as Exhibit 4.16 to the Company’s Amendment No. to its Current Report on Form 8-K, which
was filed with the Commission on March 28, 2024 and incorporated herein by reference.
(16)
Filed as Exhibit 10.30 to
the Company’s Current Report on Form 8-K, which was filed with the Commission on July 14, 2023.
(17)
Filed as Exhibit No. 10.31 to the Company’s Current Report on Form 8-K, which was filed with the Commission on December 29, 2023.
(18)
Filed as Exhibit No. 4.19 to the Company’s Current Report on Form 8-K, which was filed with the Commission on April 23, 2024.
(19)
Filed as Exhibit No. 10.32 to the Company’s Current Report on Form 8-K, which was filed with the Commission on April 23, 2024.
(b) Financial Statement Schedules
All schedules have been omitted because either
they are not required, are not applicable or the information is otherwise set forth in the financial statements and related notes thereto.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
48
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: April 30, 2024
NUTRIBAND INC.
By:
/s/ Gareth Sheridan
Gareth Sheridan
Chief Executive Officer
By:
/s/ Gerald Goodman
Gerald Goodman
Chief Financial Officer
(Principal Financial and Accounting Officer)
Signature
Title
Date
/s/ Gareth
Sheridan
Chief Executive Officer and Director
April 30, 2024
Gareth Sheridan
/s/ Serguei
Melnik
Director
April 30, 2024
Serguei Melnik
/s/ Radu Bujoreanu
Director
April 30, 2024
Radu Bujoreanu
/s/ Mark Hamilton
Director
April 30, 2024
Mark Hamilton
/s/ Stefani
Mancas
Director
April 30, 2024
Stefani Mancas
/s/
Irina Gram
Director
April 30, 2024
Irina Gram
49
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.