Nutriband Inc. — Form 10-Q Summary
Reporting period: Three months ended April 30, 2017. Financial statements are unaudited. Nutriband planned to enter the health-supplement market with transdermal patches; it reported no revenue in either the current or comparable prior-year quarter.
Financial performance and position
- Revenue: $0, unchanged from the three months ended April 30, 2016.
- Expenses and loss: Selling, general and administrative expenses were $35,617, down from $52,081. Net loss was $35,617 versus $52,081; basic and diluted loss per share was reported as $0.00. No income tax provision was recorded.
- Margins: Not meaningful because the company had no revenue.
- Cash flow: Cash used in operating activities was $28,081, compared with $55,199 in the prior-year quarter. Financing provided $1,550, including $2,300 in related-party loan proceeds and $750 in related-party payments. Cash fell by $26,531, from $27,124 to $593.
- Liquidity: Current assets were $9,663 and current liabilities were $22,267, resulting in a $12,604 working-capital deficit. Total assets were $9,663.
- Debt: Current liabilities included $10,518 of interest-free related-party debt due on demand, up from $8,888 at January 31, 2017, and $1,595 of current long-term debt. The latter was an interest-free loan due October 2017.
- Equity: Stockholders’ deficiency was $12,604, versus positive equity of $23,109 at January 31, 2017. Accumulated deficit increased from $177,464 to $213,081.
Changes, outlook, and risks
- SG&A declined by $16,464 year over year, primarily because professional fees were lower; the prior-year period included audit work and work on a Form 10.
- The company estimated next-12-month expenses of at least $85,000 and capital requirements of $85,000–$150,000, primarily for general costs, marketing, research and development, overhead, legal, and accounting. It said it would need to raise capital and had no financing arrangements in place; availability of funding was not assured.
- Management disclosed recurring losses, no revenue, limited cash, and a need for additional funding, raising substantial doubt about the company’s ability to continue as a going concern. It warned that operations may need to be curtailed or assets sold if financing is unavailable.
- As a subsequent event, on May 22, 2017, Nutriband agreed to acquire Advanced Health Brands Inc. and TD Therapeutics Inc. in exchange for 5,000,000 Nutriband shares. Advanced Health Brands held six provisional patents. Management expected the acquisitions to be profitable and to help fund operations; the filing does not provide acquisition financial results.
- Disclosure controls and procedures were determined to be ineffective. No material changes to internal controls over financial reporting were reported during the quarter.
- The filing identifies general business risks including the ability to finance and manage growth, retain key personnel, execute strategy, compete, and withstand adverse market or economic conditions. No off-balance-sheet arrangements were reported.
Important facts for investors to verify
- Whether the May 22 acquisitions closed as contemplated, including the issuance of 5,000,000 shares, and the acquired businesses’ financial condition and prospects.
- Whether Nutriband obtained sufficient financing to meet its stated $85,000–$150,000 capital needs and fund operations.
- Whether the company generated revenue after the reporting period and made progress toward commercializing its products.
- How management addressed ineffective disclosure controls and the disclosed going-concern uncertainty.
- The filing checked “No” for having filed all required reports during the preceding 12 months; investors may wish to verify the company’s filing history.