UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 000-55654

NUTRIBAND INC.

(Exact name of registrant as specified in its charter)

NEVADA		81-1118176
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

121 South Orange Ave., Suite 1500, Orlando, FL		32801
(Address of Principal Executive Offices)		(Zip Code)

(407) 377-6695

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s common stock, par value $0.001 per share, was 7,833,151 shares as of December 2, 2022.

NUTRIBAND INC.

INDEX

		Page No.
Part I: Financial Information

Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets as of October 31, 2022 (unaudited) and January 31, 2022	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and Nine months ended October 31, 2022 and 2021 (unaudited)	3
	Consolidated Statements of Stockholders’ Equity for the three and Nine months ended October 31, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine months ended October 31, 2022 and 2021 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4	Controls and Procedures	27

Part II: Other Information		28

Item 1A	Risk Factors	28

Item 6	Exhibits	31

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following financial statements pursuant to the rules and regulations of the Securities and Exchange Commission.

The results of operations for the three and nine months ended October 31, 2022 and 2021 are not necessarily indicative of the results for the entire fiscal year or for any other period.

NUTRIBAND INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	October 31,			January 31,
	2022			2022
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,816,318		$	4,891,868
Accounts receivable		80,455			71,380
Inventory		184,323			131,648
Prepaid expenses		426,105			370,472
Total Current Assets		3,507,201			5,465,368

PROPERTY & EQUIPMENT-net		933,642			979,297

OTHER ASSETS:
Goodwill		5,349,039			5,349,039
Operating lease right of use asset		70,599			19,043
Intangible assets-net		808,718			926,913

TOTAL ASSETS	$	10,669,199		$	12,739,660

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	535,841		$	639,539
Deferred revenue		201,990			106,267
Operating lease liability-current portion		30,586			19,331
Notes payable-current portion		21,335			14,119
Total Current Liabilities		789,752			779,256

LONG-TERM LIABILITIES:
Note payable-net of current portion		105,512			101,119
Operating lease liability-net of current portion		42,369			-
Total Liabilities		937,633			880,375

Commitments and Contingencies		-			-

STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value, 10,000,000 shares authorized, -0- outstanding		-			-
Common stock, $.001 par value, 291,666,666 shares authorized; 7,843,146 shares issued at October 31, 2022 and 9,187,659 issued at January 31, 2022, 7,803,263 and 9,154,846 shares outstanding as of October 31,2022 and January 31, 2022, respectively		7,803			9,155
Additional paid-in-capital		30,669,580			29,966,132
Accumulated other comprehensive loss		(304	)		(304	)
Treasury stock, 39,883 and 32,813 shares at cost, respectively		(130,133	)		(104,467	)
Accumulated deficit		(20,815,380	)		(18,011,231	)
Total Stockholders’ Equity		9,731,566			11,859,285

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	10,669,199		$	12,739,660

See notes to unaudited consolidated financial statements

NUTRIBAND INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	October 31,						October 31,
	2022			2021			2022			2021

Revenue	$	618,003		$	283,037		$	1,552,074		$	930,264

Costs and expenses:
Cost of revenues		349,272			207,700			931,061			617,300
Research and development expenses		290,718			161,000			686,401			161,000
Selling, general and administrative expenses		1,049,532			1,452,778			2,726,256			2,487,611
Total Costs and Expenses		1,689,522			1,821,478			4,343,718			3,265,911

Loss from operations		(1,071,519	)		(1,538,441	)		(2,791,644	)		(2,335,647	)

Other income (expense):
Gain on extinguishment of debt		-			-			-			43,214
Interest expense		(3,966	)		(33,380	)		(12,505	)		(115,268	)
Total other income (expense)		(3,966	)		(33,380	)		(12,505	)		(72,054	)

Loss before provision for income taxes		(1,075,485	)		(1,571,821	)		(2,804,149	)		(2,407,701	)

Provision for income taxes		-			-			-			-

Net loss		(1,075,485	)		(1,571,821	)		(2,804,149	)		(2,407,701	)

Deemed dividend related to warrant round-down		-			(196,589	)		-			(196,589	)

Net loss attributable to common shareholders	$	(1,075,485	)	$	(1,768,410	)	$	(2,804,149	)	$	(2,604,290	)

Net loss per share of common stock-basic and diluted	$	(0.14	)	$	(0.23	)	$	(0.32	)	$	(0.34	)

Weighted average shares of common stock outstanding - basic and diluted		7,803,264			7,589,457			8,659,522			7,684,741

Other Comprehensive Loss:

Net loss	$	(1,075,485	)	$	(1,571,821	)	$	(2,804,149	)	$	(2,407,701	)

Foreign currency translation adjustment		-			-			-			-

Total Comprehensive Loss	$	(1,075,485	)	$	(1,571,821	)	$	(2,804,149	)	$	(2,407,701	)

See notes to unaudited consolidated financial statements

NUTRIBAND INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Nine Months Ended October 31, 2022

													Accumulated
				Common Stock						Additional			Other
				Number of						Paid In			Comprehensive			Accumulated			Subscription		Treasury
	Total			shares			Amount			Capital			Income(Loss)			Deficit			Payable		Stock
Balance, February 1, 2022	$	11,859,285			9,154,846		$	9,155		$	29,966,132		$	(304	)	$	(18,011,231	)	$	-	$	(104,467	)

Exercise of warrants		296,875			55,417			56			296,819			-			-			-		-

Common stock returned in settlement		-			(1,400,000	)		(1,400	)		1,400			-			-			-		-

Treasury stock issued for services		93,100			28,583			28			(28	)		-			-			-		93,100

Treasury stock repurchased		(118,766	)		(35,583	)		(36	)		36			-			-			-		(118,766	)

Options issued for services		405,221			-			-			405,221			-			-			-		-

Net loss for the nine months ended October 31, 2022		(2,804,149	)		-			-			-			-			(2,804,149	)		-		-

Balance, October 31, 2022	$	9,731,566			7,803,263		$	7,803		$	30,669,580		$	(304	)	$	(20,815,380	)	$	-	$	(130,133	)

Nine Months Ended October 31, 2021

											Accumulated
				Common Stock				Additional			Other
				Number of				Paid In			Comprehensive			Accumulated			Subscription			Treasury
	Total			shares		Amount		Capital			Income(Loss)			Deficit			Payable			Stock
Balance, February 1, 2021	$	7,111,946			7,299,567	$	7,300	$	18,870,055		$	(304	)	$	(11,835,105	)	$	70,000		$	-

Proceeds from sale of common stock and warrants in public offering		5,836,230			1,232,000		1,232		5,834,998			-			-			-			-

Proceeds from exercise of warrants		2,062,500			320,833		321		2,062,179			-			-			-			-

Cashless exercise of warrants		-			17,347		17		(17	)		-			-			-			-

Issuance of common stock for notes payable		100,000			20,046		20		99,980			-			-			-			-

Common stock issued for settlement of liabilities		144,000			28,749		29		143,971			-			-			-			-

Warrants issued for services		365,000			-		-		365,000			-			-			-			-

Common stock issued for proceeds and in payment for license		640,000			94,962		95		699,905			-			-			(60,000	)		-

Common stock issued for services		466,900			21,119		21		409,979			-			-			56,900			-

Settlement of warrant round down		196,589			-		-		196,589			-			-			-			-

Deemed dividend for warrants		(196,589	)		-		-		(196,589	)		-			-			-			-

Net loss for the nine months ended October 31, 2021		(2,407,701	)		-		-		-			-			(2,407,701	)		-			-

Balance, October 31, 2021	$	14,318,875			9,034,623	$	9,035	$	28,486,050		$	(304	)	$	(14,242,806	)	$	66,900		$	-

Three Months Ended October 31, 2022

										Accumulated
				Common Stock				Additional		Other
				Number of				Paid In		Comprehensive			Accumulated			Subscription		Treasury
	Total			shares		Amount		Capital		Income(Loss)			Deficit			Payable		Stock
Balance, July 1, 2022	$	10,401,830			7,803,263	$	7,803	$	30,264,359	$	(304	)	$	(19,739,895	)	$	-	$	(130,133	)

Options issued for services		405,221			-		-		405,221		-			-			-		-

Net loss for the three months ended October 31, 2022		(1,075,485	)		-		-		-		-			(1,075,485	)		-		-

Balance, October 31, 2022	$	9,731,566			7,803,263	$	7,803	$	30,669,580	$	(304	)	$	(20,815,380	)	$	-	$	(130,133	)

Three Months Ended October 31, 2021

											Accumulated
				Common Stock				Additional			Other
				Number of				Paid In			Comprehensive			Accumulated			Subscription		Treasury
	Total			shares		Amount		Capital			Income(Loss)			Deficit			Payable		Stock
Balance, July 1, 2021	$	7,316,066			7,415,648	$	7,416	$	19,979,939		$	(304	)	$	(12,670,985	)	$	-	$	-

Proceeds from sale of common stock and warrants in public offering		5,836,230			1,232,000		1,232		5,834,998			-			-			-		-

Proceeds from exercise of warrants		2,062,500			320,833		321		2,062,179			-			-			-		-

Cashless exercise of warrants		-			17,347		17		(17	)		-			-			-		-

Issuance of common stock for notes payable		100,000			20,046		20		99,980			-			-			-		-

Common stock issued for settlement of liabilities		144,000			28,749		29		143,971			-			-			-		-

Warrants issued for services		365,000			-		-		365,000			-			-			-		-

Settlement of warrant round down		196,589			-		-		196,589			-			-			-		-

Deemed dividend for warrants		(196,589	)		-		-		(196,589	)		-			-			-		-

Subscription payable		66,900			-		-		-			-			-			66,900		-

Net loss for the three months ended October 31, 2021		(1,571,821	)		-		-		-			-			(1,571,821	)		-		-

Balance, October 31, 2021	$	14,318,875			9,034,623	$	9,035	$	28,486,050		$	(304	)	$	(14,242,806	)	$	66,900	$	-

See notes to unaudited consolidated financial statements

NUTRIBAND INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	October 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(2,804,149	)	$	(2,407,701	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		255,925			235,380
Amortization of debt discount		-			97,477
Amortization of right of use asset		42,578			-
(Gain) loss on extinguisment of debt		-			(43,214	)
Options issued for services		405,221			-
Treasury stock issued for services		93,100			-
Common stock issued for services		-			754,400
Changes in operating assets and liabilities:
Accounts receivable		(9,075	)		(37,064	)
Prepaid expenses		(55,633	)		(114,320	)
Inventories		(52,675	)		(72,089	)
Deferred revenue		95,723			152,736
Operating lease liability		(40,510	)		-
Accounts payable and accrued expenses		(103,698	)		(142,394	)
Net Cash Used In Operating Activities		(2,173,193	)		(1,576,789	)

Cash flows from investing activities:
Purchase of equipment		(69,281	)		(51,388	)
Net Cash Used in Investing Activities		(69,281	)		(51,388	)

Cash flows from financing activities:
Proceeds from sale of common stock		-			583,000
Proceeds from sale of common stock in public offering		-			5,836,230
Proceeds from the exercise of warrants		296,875			2,062,500
Payment on note payable		(11,185	)		(4,689	)
Payment on related party note payable		-			(1,500,000	)
Payment on finance leases		-			(15,513	)
Purchase of treasury stock		(118,766	)		-
Net Cash Provided by (used in) Financing Activities		166,924			6,961,528

Effect of exchange rate on cash		-			-

Net change in cash		(2,075,550	)		5,333,351

Cash and cash equivalents - Beginning of period		4,891,868			151,993

Cash and cash equivalents - End of period	$	2,816,318		$	5,485,344

Supplementary information:

Cash paid for:
Interest	$	12,505		$	9,447

Income taxes	$	-		$	-

Supplemental disclosure of non-cash investing and financing activities:

Common stock returned in settlement	$	1,400		$	-

Common stock issued for settlement of notes payable	$	-		$	100,000

Common stock issued for prepaid consulting	$	-		$	400,000

Non-cash payment for license agreement	$	-		$	57,000

Common stock issued for subscription payable	$	-		$	70,000

Adoption of ASC 842 Operating lease asset and liability	$	94,134		$	-

Promissory note on equipment purchase	$	32,843		$	-

Settlement of liabilities for common stock	$	-		$	144,000

Deemed dividend in connection with warrant round down	$	-		$	144,000

Cashless exercise of warrant	$	-		$	15

See notes to unaudited consolidated financial statements

NUTRIBAND INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

as of and for the Nine Months Ended October 31, 2022 and 2021

ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization

Nutriband Inc. (the “Company”) is a Nevada corporation, incorporated on January 4, 2016. In January 2016, the Company acquired Nutriband Ltd, an Irish company which was formed by the Company’s chief executive officer in 2012 to enter the health and wellness market by marketing transdermal patches. References to the Company relate to the Company and its subsidiaries unless the context indicates otherwise.

On August 1, 2018, the Company acquired 4P Therapeutics LLC (“4P Therapeutics”) for $2,250,000, consisting of 250,000 shares of common stock, valued at $1,850,000, and $400,000, and a royalty of 6% on all revenue generated by the Company from the abuse deterrent intellectual property that had been developed by 4P Therapeutics payable to the former owner of 4P Therapeutics. The former owner of 4P Therapeutics has been a director of the Company since April 2018, when the Company entered into an agreement to acquire 4P Therapeutics. The former owner resigned as a director in January 2022.

4P Therapeutics is engaged in the development of a series of transdermal pharmaceutical products, that are in the preclinical stage of development. Prior to the acquisition of 4P Therapeutics, the Company’s business was the development and marketing of a range of transdermal consumer patches. Most of these products are considered drugs in the United States and cannot be marketed in the United States without approval by the Food and Drug Administration (the “FDA”). The Company entered a feasibility agreement as an initial step to seek FDA approval of its consumer transdermal products and its consumer products which are not being marketed in the United States.

With the acquisition of 4P Therapeutics, 4P Therapeutics’ drug development business became the Company’s principal business. The Company’s approach is to use generic drugs that are off patent and incorporate them into the Company’s transdermal drug delivery system. Although these medications have received FDA approval in oral or injectable form, the Company needs to conduct a transdermal product development program which will include the preclinical and clinical trials that are necessary to receive FDA approval before we can market any of our pharmaceutical products.

On August 25, 2020, the Company formed Pocono Pharmaceuticals Inc. (“Pocono Pharmaceuticals”), a wholly owned subsidiary of the Company. On August 31, 2020, the Company acquired certain assets and liabilities associated with the Transdermal, Topical, Cosmetic, and Nutraceutical business of Pocono Coated Products LLC (“PCP”). The net assets were contributed to Pocono Pharmaceuticals. Included in the transaction, Pocono Pharmaceuticals also acquired 100% of the membership interests of Active Intelligence LLC (“Active Intelligence”).

Pocono Pharmaceuticals is a coated products manufacturing entity organized to take advantage of unique process capabilities and experience. Pocono helps their customer with product design and development along with manufacturing to bring new products to market with minimal capital investment. Pocono Pharmaceutical’s competitive edge is a low-cost manufacturing base: a result of its unique processes and state of the art material technology. Active Intelligence manufactures activated kinesiology tape. The tape has transdermal and topical properties. This tape is used as the same as traditional kinesiology tape.

In December 2019, COVID-19 emerged and has subsequently spread world-wide. The World Health Organization has declared COVID-19 a pandemic resulting in federal, state and local governments and private entities proscribing various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining people who may have been exposed to the virus. The effect of these orders, government imposed quarantines and measures the Company and suppliers and customers it works with might have to take, such as work-at-home policies, may negatively impact productivity, disrupt our business and could delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and disruptions in our operations, operating results and financial condition. Further, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns, or other restrictions on the conduct of business could occur, related to COVID-19 or other infectious diseases could impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which could disrupt our supply chain.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Financial Statements

The consolidated balance sheet as of October 31, 2022, and the consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the periods presented have been prepared by the Company and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders’ equity and cash flows for all periods presented have been made. The results of the nine months ended October 31, 2022, are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Nutriband’s Annual Report on Form 10-K for the year ended January 31, 2022.

Certain information and footnote disclosures required under generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from these consolidated financial statements pursuant to the rules and regulations, including interim reporting requirements of the U.S. Securities and Exchange Commission (“SEC”). The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosures of contingent amounts in our consolidated financial statements and accompanying footnotes. Actual results could differ from estimates.

The Company’s significant accounting policies are summarized in Note 1 in the Company’s Annual Report on Form 10-K for the year ended January 31, 2022. There were no significant changes to these accounting policies during the nine months ended October 31, 2022.

Forward Stock Split

On July 26, 2022, our Board of Directors approved the amendment to our Articles of Incorporation to effect a 7 for 6 forward stock split (the “Stock Split”) of our outstanding common stock. The Company filed the amendment set forth in a Certificate of Change with the Secretary of State of Nevada on August 4, 2022. The 7:6 forward stock split was effective for trading purposes on the Nasdaq Capital Market on August 12, 2022. Each shareholder of record as of the August 15, 2022 record date received one (1) additional share for each six (6) shares held as of the record date. No fractional shares of common stock were issued in connection with the Stock Split. Instead, all shares were rounded up to the next whole share. In connection with the Stock Split, which did not require shareholder approval under the Nevada corporation law, the number of shares of common stock of the Company was increased in the same ratio as the shares of outstanding common stock were increased in the Stock Split, from 250,000,000 authorized shares to 291,666,666 authorized shares.

All share and per share information in these financial statements retroactively reflect the forward stock split.

Going Concern Assessment

Management assesses liquidity and going concern uncertainty in the Company’s condensed financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period.

As of October 31, 2022, we had cash and cash equivalents of $2,816,318 and working capital of $2,717,449. 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 $3,239,845 proceeds from the exercise of warrants. The Company has used these proceeds to fund operations and will continue to use the funds as needed.

Management has prepared estimates of operations 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 ability to continue operations as a going concern. The impact of COVID-19 on the Company’s business has been considered in these assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to normal operations.

Management believes the substantial doubt about the ability of the Company to continue as a going concern is alleviated by the above assessment.

Principles of Consolidation

The consolidated financial statements of the Company include the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated. The operations of 4P Therapeutics are included in the Company’s financial statements from the date of acquisition of August 1, 2018, and the operations of Pocono and Active Intelligence are included in the Company’s financial statements from the date of acquisition of September 1, 2020. The wholly owned subsidiaries are as follows:

Nutriband Ltd.

4P Therapeutics LLC

Pocono Pharmaceuticals Inc.

Active Intelligence LLC

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates including, but not limited to, those related to such items as income tax exposures, accruals, depreciable/useful lives, allowance for doubtful accounts and valuation allowances. The Company bases its estimates on historical experience and on other various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to a customer. 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.

Revenue Types

The following is a description of the Company’s revenue types, which include professional services and sale of goods:

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Service revenues include the contract of research and development related services with the Company’s clients in the life sciences field on an as-needed basis. Deliverables primarily consist of detailed findings and conclusion reports provided to the client for each given research project engaged.

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