Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 30, 2020 | Jun. 04, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NutriBand Inc. | |
Entity Central Index Key | 0001676047 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 5,512,928 | |
Entity Interactive Data Current | No | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-55654 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 20,644 | $ 10,181 |
Accounts receivable | 39,644 | 12,833 |
Prepaid expenses | 6,417 | 20,167 |
Total Current Assets | 66,705 | 43,181 |
PROPERTY & EQUIPMENT-net | 102,250 | 111,029 |
OTHER ASSETS: | ||
Right of use asset, net | 4,805 | 9,610 |
Intangible assets, net | 305,433 | 314,700 |
Goodwill | 1,719,235 | 1,719,235 |
TOTAL ASSETS | 2,198,428 | 2,197,755 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 712,126 | 771,931 |
Derivative liability | 928,774 | |
Operating lease liability | 5,082 | 10,050 |
Notes payable- related party | 8,695 | 29,067 |
Note payable | 215,000 | |
Convertible debt- net of debt discount of $-0- and $202,500 as of April 30, 2020 and January 31, 2020, respectively | 67,500 | |
Total Current Liabilities | 725,903 | 2,022,322 |
Commitments and Contingencies | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $.001 par value, 10,000,000 shares authorized, -0- outstanding | ||
Common stock, $.001 par value, 250,000,000 shares authorized; 5,512,928 and 5,441,100 shares issued and outstanding at April 30, 2020 and January 31, 2020, respectively | 5,513 | 5,441 |
Additional paid-in-capital | 10,781,787 | 9,072,573 |
Accumulated other comprehensive loss | (304) | (304) |
Accumulated deficit | (9,314,471) | (8,902,277) |
Total Stockholders' Equity | 1,472,525 | 175,433 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,198,428 | $ 2,197,755 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 25,000,000 |
Common stock, shares issued | 5,512,928 | 5,441,100 |
Common stock, shares outstanding | 5,512,928 | 5,441,100 |
Convertible debt, net of debt discount | $ 0 | $ 202,500 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 119,364 | $ 193,590 |
Costs and expenses: | ||
Cost of revenues | 74,939 | 198,794 |
Selling, general and administrative expenses | 191,917 | 567,957 |
Total Costs and Expenses | 266,856 | 766,751 |
Loss from operations | (147,492) | (573,161) |
Other income (expense) | ||
Loss on extinguishment of debt | (12,500) | |
Early prepayment fee on convertible debenture | (69,131) | |
Gain on change of fair value of derivative | 22,096 | |
Interest expense | (205,167) | (192) |
Total other income(expense) | (264,702) | (192) |
Loss from operations before provision for income taxes | (412,194) | (573,353) |
Provision for income taxes | ||
Net loss | $ (412,194) | $ (573,353) |
Net loss per share of common stock-basic and diluted | $ (0.08) | $ (0.11) |
Weighted average shares of common stock outstanding - basic and diluted | 5,469,033 | 5,423,882 |
Other Comprehensive Loss: | ||
Net loss | $ (412,194) | $ (573,353) |
Foreign currency translation adjustment | (252) | |
Total Comprehensive Loss | $ (412,194) | $ (573,605) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance at Jan. 31, 2019 | $ 5,424 | $ 8,579,890 | $ (52) | $ (6,180,650) | $ 2,404,612 |
Balance, shares at Jan. 31, 2019 | 5,423,956 | ||||
Issuance of warrants for services | 252,700 | 252,700 | |||
Foreign currency translation adjustment | (252) | (252) | |||
Net loss for the three months ended | (573,353) | (573,353) | |||
Balance at Apr. 30, 2019 | $ 5,424 | 8,832,590 | (304) | (6,754,003) | 2,083,707 |
Balance, shares at Apr. 30, 2019 | 5,423,956 | ||||
Balance at Jan. 31, 2020 | $ 5,441 | 9,072,573 | (304) | (8,902,277) | 175,433 |
Balance, shares at Jan. 31, 2020 | 5,441,100 | ||||
Sale of common stock for cash | $ 47 | 515,061 | 515,108 | ||
Sale of common stock for cash, shares | 46,828 | ||||
Conversion of debt for common stock | $ 25 | 287,475 | 287,500 | ||
Conversion of debt for common stock, shaes | 25,000 | ||||
Reclass of warrants from liability to equity | 906,678 | 906,678 | |||
Net loss for the three months ended | (412,194) | (412,194) | |||
Balance at Apr. 30, 2020 | $ 5,513 | $ 10,781,787 | $ (304) | $ (9,314,471) | $ 1,472,525 |
Balance, shares at Apr. 30, 2020 | 5,512,928 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (412,194) | $ (573,353) |
Adjustments to reconcile net loss to net cash provided by (used-in) operating activities: | ||
Expenses paid on behalf of the Company by related party | 3,628 | |
Depreciation and amortization | 18,046 | 18,245 |
Amortization of debt discount | 202,500 | |
Gain on change in fair value of derivative | (22,096) | |
Early prepayment fee on convertible debenture | 69,131 | |
Amortization of right of use asset | 4,805 | 5,025 |
Loss on extinguishment of debt | 12,500 | |
Stock-based compensation | 252,700 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (26,811) | (31,769) |
Prepaid expenses | 13,750 | 34,225 |
Deposit on sales | (71,225) | |
Accounts payable and accrued expenses | (59,805) | 98,567 |
Operating lease liability | (4,968) | (4,968) |
Net Cash Used In Operating Activities | (201,514) | (272,553) |
Cash flows from financing activities: | ||
Proceeds from sale of common stock units | 515,108 | |
Proceeds from notes payable | 60,000 | |
Payment of convertible debt | (339,131) | |
Payment of related party payables | (24,000) | |
Net Cash Provided by Financing Activities | 211,977 | |
Effect of exchange rate on cash | (252) | |
Net change in cash | 10,463 | (272,805) |
Cash and cash equivalents - Beginning of period | 10,181 | 474,653 |
Cash and cash equivalents - End of period | 20,644 | 201,848 |
Cash paid for: | ||
Interest | 6,525 | |
Income taxes | ||
Supplemental disclosure of non-cash investing and financing activities | ||
Common stock issued for settlement of notes payable | 287,500 | |
Adoption of ASC 842 Operating lease asset and liability | 10,850 | |
Derivative liability warrant reclassed to equity | $ 906,678 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | 1. 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 62,500 shares of common stock, valued at $1,850,000, and $400,000, and a royalty payable to the former owner of 4P Therapeutics, of 6% on all revenue generated by the Company from the abuse deterrent intellectual property that had been developed by 4P Therapeutics. The former owner of 4P Therapeutics has been a director of the Company since April 2018, when the Company entered into the agreement to acquire 4P Therapeutics. 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 is not presently taking any steps to seek FDA approval of its consumer transdermal products and its consumer products 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 the Company can market any pharmaceutical transdermal products. Reverse Stock Split On June 25, 2019, the Company effected one-for-four reverse split, pursuant to which each share of common stock became and was converted into 0.25 share of common stock. The reverse split became effective in the marketplace on July 24, 2019. All share and per share information in these financial statements retroactively reflect the reverse split. Going Concern The Company’s consolidated financial statements for the three months ended April 30, 2020 have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities in the normal course of business. For the three months ended April 30, 2020, the Company generated revenue of $119,364 on which it recorded cost of revenues of $74,939 and a loss from operations of $147,492. Subsequent to January 31, 2020, because of the lack of available cash and the decline in business resulting in part from the effects of the COVID-19 pandemic, the Company has temporarily closed its operations, and does not expect it will be able to commence operations until it receives substantial funding. Successful business operations and its transition to attaining profitability are dependent upon obtaining significant additional financing, generating revenue primarily from its professional services to cover its overhead, developing its products, and obtaining FDA approval to market any product it develops and implementing a marketing program for such products. These factors raise substantial doubt about ability of the Company to continue as a going concern for a period of at least one year from the date of these financial statements. Without such financing, the Company may not be able to continue in business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Unaudited Interim Financial Statements The consolidated balance sheet as of April 30, 2020 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. The consolidated financial statements are prepared in accordance with the requirements for unaudited interim periods pursuant to Rule 8-03 of Regulation S-X, and consequently, do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States of America. 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 information for the consolidated balance sheet as of January 31, 2020 was derived from audited financial statements of the Company. 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. Use of Estimates The discussion and analysis of our plan of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect our reported results of operations and the amount of reported assets and liabilities. Some accounting policies involve judgments and uncertainties to such an extent there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. Actual results may differ from estimates and assumptions used in the preparation of our consolidated financial statements. The Company's significant accounting policies are summarized in Note 1 of the Company's Annual Report on Form 10-K for the year ended January 31, 2020. There were no significant changes to these accounting policies during the three months ended April 30, 2020, and the Company does not expect that the adoption of other accounting pronouncements will have a material impact on its financial statements. Revenue Recognition The Company recognized revenue in accordance with Topic 606 "Revenue from Contracts with Customers. Topic 606 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 adopted the guidance under the new revenue standards using the modified retrospective method effective February 1, 2018 and determined no cumulative effect adjusted to retained earnings was necessary upon adoption. Topic 606 requires the Company to recognize revenues when control of the promised goods or services and receipt of payment is probable. 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. Upon adoption, Topic 606 replaced most existing revenue recognition guidance in U.S. GAAP. The adoption of Topic the new revenue recognition standards did not have any impact on its consolidated financial statements since the Company did not recognize any revenue prior to the third quarter of 2018, and all revenue is recognized pursuant to Topic 606. Revenue Service Types The following is a description of the Company's revenue service types, which include professional services and sale of goods: ● Professional services include contract research and development related services with 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. ● Sales revenues are derived from the sale of products. To date, sales related to consumer products sold to the Company's South Korean distributor. Upon receipt of a purchase order, the Company has the order filled and shipped. Contracts with Customers A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party's rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer's intent and ability to pay the promised consideration. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the Company's different revenue types, the performance obligation is satisfied at different times. The Company's performance obligations include providing products and professional services in the area of research. The Company recognizes product revenue performance obligations in most cases when the product has shipped to the customer. When the Company performs professional service work, it recognizes revenue when it has the right to invoice the customer for the work completed, which typically occurs on a monthly basis for the work performed during that month. All revenue recognized in the statement of operations is revenue from contracts with customers. Disaggregation of Revenues The Company disaggregates its revenue from contracts with customers by service type and by geographical location. The following tables set forth revenue by service type and by geographical location. Revenue by service type: Three months ended 2020 2019 Sale of goods $ 61,320 $ 142,450 Services 58,044 51,140 Total $ 119,364 $ 193,590 Revenue by geographic location: Three months ended 2020 2019 United States $ 58,044 $ 51,140 Non-United States 61,320 142,450 Total $ 119,364 $ 193,590 Accounts receivable Trade accounts receivable 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 of its customers to make required payments. The Company determines its allowances by both specific identification of customer accounts where appropriate and the application of historical loss to non-specific accounts. For the three months ended April 30, 2020 and 2019, the Company recorded no bad debt expense and no allowance for doubtful accounts related to accounts receivable. Inventories Inventories are valued at the lower of cost and realizable value determined using the first-in, first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The cost of finished goods and work in progress is comprised of material costs, direct labor costs and other direct costs and related production overheads (based on normal operating capacity). Property, Plant and Equipment The Company depreciates its plant and equipment on a straight-line basis over the estimated useful life of the assets. Property, plant and equipment is stated at historical cost. Expenditures for minor repairs, maintenance and replacement parts which do not increase the useful lives of the assets are charged to expense as incurred. All major additions and improvements are capitalized. Depreciation is computed using the straight-line method. The lives over which the fixed assets are depreciated range from 3 to 5 years as follows: Lab equipment 5 years Furniture, fixtures and equipment 3 years Intangibles Assets Intangibles assets include trademarks, intellectual property and customer base acquired through business combinations. The Company accounts for Other Intangible Assets under the guidance of ASC 350, "Intangibles-Goodwill and Other." The Company capitalizes certain costs related to patent technology. A substantial component of the purchase price related to the Company's acquisition of 4P Therapeutics in 2018 has also been assigned to intellectual property and other intangibles. Under the guidance, other intangible assets with definite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are tested annually for impairment. Trademarks, intellectual property and customer base are being amortized over their estimated useful lives of ten years. Goodwill Goodwill represents the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition. Goodwill is reviewed for impairment annually on January 31, and more frequently as circumstances warrant, and written down only in the period in which the recorded value of such assets exceeds their fair value. The Company does not amortize goodwill in accordance with ASC 350. Long-lived Assets Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists, the resulting write-down would be the difference between fair market value of the long-lived asset and the related net book value. Earnings per Share Basic earnings per share of common stock is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock and potential shares of common stock outstanding during the period. Potential shares of common stock consist of shares issuable upon the exercise of outstanding options and common stock purchase warrants. As of April 30, 2020 and 2019, there were 161,828 and 82,500 common stock equivalents outstanding, respectively, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive. Stock-Based Compensation ASC 718, "Compensation - Stock Compensation," prescribes accounting and reporting standards for all share-based payment transactions in which employee services, and, since February 1, 2019, non-employees, are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). As of February 1, 2019, pursuant to ASC 2018-07, ASC 718 was applied to stock-based compensation for both employees and non-employees. Fair Value Measurements FASB ASC 820, "Fair Value Measurements and Disclosure" ("ASC 820"), defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be to measure fair value. The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: Level 1 -Observable inputs such as quoted market prices in active markets. Level 2 -Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 -Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions. The carrying value of the Company's financial instruments including cash and cash equivalents, accounts receivable, prepaid expenses, and accrued expenses approximate their fair value due to the short maturities of these financial instruments. Derivative liabilities are determined based on "Level 3" inputs, which are significant and unobservable and have the lowest priority. The recorded values of all other financial instruments approximate their current fair value because of their nature and respective short maturity dates or durations. See Note 6 for further information. Derivative Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, "Derivatives and Hedging" and all derivative instruments are reflected as either assets or liabilities at fair value on the balance sheet. The Company uses estimates at fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company's policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, when available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The value presented may not represent future fair values and may not be reliable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As of April 30, 2020 and January 31, 2020, the Company had a $-0- and $928,774 derivative liability, respectively. Fair value estimates are made at a specific point in time, based on relevant market information about the financial statement. These estimates are subjective in nature and involve uncertainties and matter of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Recent Accounting Standards The Company has implemented all new pronouncements, including the adoption of ASU 2018-13, that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial statements or results of operations. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Apr. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 3. PROPERTY AND EQUIPMENT April 30, January 31, 2020 2020 Lab equipment $ 144,585 $ 144,585 Furniture, fixtures and equipment 19,643 19,643 164,228 164,228 Less: Accumulated depreciation (61,978 ) (53,199 ) Net Property and Equipment $ 102,250 $ 111,029 Depreciation expense amounted to $8,779 and $8,779 for the three months ended April 30, 2020 and 2019, respectively. |
Notes Payable_Convertible Debt
Notes Payable/Convertible Debt | 3 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE/CONVERTIBLE DEBT | 4. NOTES PAYABLE/CONVERTIBLE DEBT In March 2020, a minority shareholder who had previously made loans of $215,000 as of January 31, 2020, made an additional loan to the Company in the amount of $60,000, increasing the total loans from the stockholder to $275,000. The loans are interest free and due upon demand. On March 27, 2020, the Company issued 25,000 shares of common stock upon reaching a settlement with the noteholder to convert the notes in the principal balance of $275,000. The transaction resulted in a loss on extinguishment of $12,500. As of January 31, 2020, the Company owed its chief financial officer and chief operating officer $29,067 from advances made to the Company. During the three months ended April 30, 2020, the Company’s chief financial officer paid expenses of $3,628 on behalf of the Company and the two officers were repaid $24,000. As of April 30, 2020, the amount due the chief financial officer was $8,895. On October 30, 2019, the Company entered into a securities purchase agreement with two investors pursuant to which the Company issued to the investors (i) 6% one-year convertible promissory notes in the principal amount of $270,000 and (ii) three-year warrant to purchase 50,000 shares of common stock at an exercise price equal to the lesser of (i) $20.90 or (ii) if the Company completes a public offering, 110% of the initial public offering price of the common stock in the public offering. The loans contained an original issue discount of $20,000 resulting in gross proceeds from this financing of $250,000. The notes are convertible at a conversion price equal to the lesser of (i) the per share price of our common stock offered in a public offering or (ii) the variable conversion price, which is defined as 70% of the lowest trading price of the common stock during the 20 trading days preceding the date of conversion. The conversion price and the percentage of the trading price is subject to downward adjustment in the event the Company fails to comply with the obligations under the notes. The Company has the right to prepay the notes during the 180 days following the issuance of the notes at a premium of 115% of the outstanding principal and interest during the 60 days following the date of issuance of the note, which percentage increases to 125% during the remainder of the 180 day period. The Company is required to pay the notes one business day after the closing of the first to occur of (a) the next public offering of the Company’s securities or (b) the next private placement of the Company’s equity or debt securities in which the Borrower received net proceeds of at least $1.0 million, (c) issuance of securities pursuant to an equity line of credit or (d) a financing with a bank or other institutional lender. The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivative and Hedging. The initial fair of the conversion feature was $128,870 and the fair value of the warrants in connection with the notes were valued at $888,789 and were recorded based on their relative fair values. A debt discount to the note payables of $270,000 and an initial derivative expense of $767,650 was recorded. The debt discount will be amortized over the life of the note. Amortization of the debt discount for the year ended January 31, 2020 was $67,500. As of January 31, 2020, the debt discount remaining was $202,500. On March 25, 2020, the Company prepaid the convertible notes in the principal amount of $270,000 from the proceeds of a private placement. The total payments, including a prepayment fee of $69,131 and accrued interest, was $345,565. As a result of the payment of the notes, the derivative liability, which was $928,774 at January 31, 2020, was reduced to zero. Interest expense for the three months ended April 30, 2020 including the amortization of the debt discount was $204,975. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Apr. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 5. INTANGIBLE ASSETS At April 30, 2020 and January 31, 2020, intangible assets consisted of intellectual property, customer base and trademarks, net of amortization, as follows: April 30, January 31, 2020 2020 Customer base $ 136,500 $ 136,500 Intellectual property 234,200 234,200 Total 370,700 370,700 Less: Accumulated amortization (65,267 ) (56,000 ) Net Intangible Assets $ 305,433 $ 314,700 The value of the intangible assets, consisting of intellectual property and customer base has been recorded at their fair value by the Company after completing a valuation and are being amortized over a period of ten years. Amortization expense for the three months ended April 30, 2020 and 2019 was $9,267 and $9,466, respectively. Estimated Amortization: Total Year Ended January 31, 2021 $ 27,802 2022 37,070 2023 37,070 2024 37,070 2025 and thereafter 166,421 $ 305,433 |
Derivative Liabilities
Derivative Liabilities | 3 Months Ended |
Apr. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITIES | 6. DERIVATIVE LIABILITIES The embedded conversion option of the convertible debentures described in Note 4 contain conversion features that qualify for embedded derivative classification. The fair value of the liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments. The table below sets forth a summary in the fair value of the Company's Level 3 financial liabilities: April 30, Balance at the beginning of the period $ 928,774 Derivative liability warrants reclassed to equity (906,678 ) Change in value of embedded conversion option (22,096 ) Balance at the end of the period $ - The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities (Binomial Model) and for its valuation methodology of the warrants reclassed to equity (Black Scholes Model) based on various assumptions. At issuance, the expected volatility was 158.3%; risk-free interest rate of 1.58%; and expected term of one year. For the revaluation January 31, 2020, the expected volatility was 184.4%; risk-free rate of return of 1.43%; and expected term of nine months. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Apr. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 7. RELATED PARTY TRANSACTIONS a) 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. See Note 4 in connection with the terms of the acquisition of 4P Therapeutics from the former owner. The former owner was not a director of the Company when the acquisition agreement was signed. b) On February 19, 2019, the Company granted an executive officer an option to purchased 25,000 shares of the Company’s common stock at an exercise price equal to 75% of the market price on the date the Company receives notice of exercise. The fair value of the warrant on the date of grant using the Black Scholes model was $252,700 and was expensed during the nine months ended October 31, 2019. The warrant expired unexercised on May 19, 2019. c) As of January 31, 2020, the Company owed its chief financial officer and chief operating officer $29,067 from advances made to the Company. During the three months ended April 30, 2020, the Company’s chief financial officer paid expenses of $3,628 on behalf the Company and the two officers were repaid $24,000. As of April 30, 2020, the Company owed the chief financial officer $8,695. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Apr. 30, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | 8. STOCKHOLDERS' EQUITY Preferred Stock On January 15, 2016, the board of directors of the Company approved a certificate of amendment to the articles of incorporation and changed the authorized capital stock of the Company to include and authorize 10,000,000 shares of Preferred Stock, par value $0.001 per share. On May 24, 2019, the board of directors created a series of preferred stock consisting of 2,500,000 shares designated as the Series A Convertible Preferred Stock ("Series A Preferred Stock"). On June 20, 2019, the Series A preferred Stock was terminated and the 2,500,000 shares were restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, until such stock is once more designated as part of a particular series by the board of directors. Common Stock On June 25, 2019, the Company effected a one-for four reverse split, pursuant to which each share of common stock became converted into 0.25 shares of common stock, and the Company decreased its authorized common stock from 100,000,000 to 25,000,000 shares. On January 27, 2020, the Company amended its articles of incorporation to increase its authorized common shares from 25,000,000 shares to 250,000 000 shares. On March 22, 2020, the Company issued in a private placement 46,828 units at a price of $11 per unit. Each unit consisted of one share of common stock and a warrant to purchase one share of common stock at an exercise price of $14 per share. The warrants expire April 30, 2023. The Company issued a total of 46,828 shares of common stock and warrants to purchase 46,828 shares of comm stock. The Company received proceeds of $515,108. In March 2020, a minority shareholder who had previously made loans of $215,000, made an additional loan to the Company in the amount of $60,000, increasing the loans to shareholder to $275,000. On March 27, 2020, the Company issued 25,000 shares of common stock upon reaching a settlement with the noteholder to convert the notes in the principal amount of $275,000. The transaction resulted in a loss on extinguishment of $12,500. |
Warrants
Warrants | 3 Months Ended |
Apr. 30, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
WARRANTS | 9. WARRANTS The following table summarizes the changes in warrants outstanding and the related price of the shares of the Company's common stock issued to non-employees of the Company. Exercise Remaining Intrinsic Shares Price Life Value Outstanding, January 31, 2020 70,000 $ 18.93 1.53 years $ - Granted 91,830 12.53 3.00 years - Expired/Cancelled - - - - Exercised - - - - Outstanding-period ending April 30, 2020 161,830 $ 12.24 1.53 years $ 95,000 Exercisable - period ending April 30, 2020 161,830 $ 12.24 1.53 years $ 95,000 As result of the terms of a completed private placement, the warrants to purchase 50,000 shares at the lesser of (i) $20.90 or, (ii) if the Company completes a private offering of its common stock, 110% of the initial public offering price of the Common Stock in the public offering, became a warrant to purchase 95,000 shares at $11 per share, subject to adjustment pursuant to the antidilution provisions of the warrant. As a result of this transaction, the outstanding warrants are no longer a derivative liability. Accordingly, the Company recorded a derivative liability for the warrants in the amount of $906,678 and reclassed the related derivative liability to additional paid-in capital as of April 30, 2020. In connection with a private placement in March 2020, the Company issued warrants to purchase 46,828 shares of its common stock at $14 per share. The warrants expire April 30, 2023. The following table summarizes additional information relating to the warrants outstanding at April 30, 2020: Range of Number Remaining Contractual Exercise Number Exercise Intrinsic Prices Outstanding (Years) Outstanding Exercisable Exercisable Value $ 11.00 95,000 2.50 $ 11.00 95,000 $ 11.00 $ 95,000 $ 14.00 66,830 2.15 $ 14.00 66,830 $ 14.00 $ - |
Contingencies
Contingencies | 3 Months Ended |
Apr. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | 10. CONTINGENCIES Legal Proceedings On July 27, 2018, the Company commenced an action in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida, against Advanced Health Brands, Inc., Raymond Kalmar, Paul Murphy, Michelle Polly-Murphy, Laura Fillman and John Baker, together with a Motion for Temporary Injunction Without Notice and a Motion for Prejudgment Writ of Replevin arising from the Company's decision to seek to rescind for misrepresentation the agreement by which the Company acquired advanced Health Brands, Inc. for 1,250,000 shares of common stock valued at $2,500,000 and seek return of the shares. On August 2, 2018, the court entered a Temporary Injunction Without Notice and an Order to Show Cause against the defendants. Defendants Kalmar, Murphy, Polly-Murphy, and Baker filed a Motion to Dismiss the Company's Verified Complaint, Motion to Dissolve Temporary Injunction Without Notice and Response to Order to Show Cause, and Motion to Compel Arbitration. On January 4, 2019, the court dismissed the Company's complaint with prejudice, and directed the defendants to assign the Company within 30 days, the six patents never duly transferred to the Company. On February 1, 2019, the Company appealed the court's order. Pursuant to a settlement agreement with one of the defendants, that defendant returned the 50,000 shares which had been issued to her, and the shares were cancelled as of January 31, 2019. On June 7, 2019, the individual defendants (other than the defendant whom the Company has a settlement agreement), filed a motion for sanctions and civil contempt against us, which generally claimed that we failed to comply with the Court's January 4, 2019 order by refusing to issue the Ruling 144 letters that would allow the defendants to transfer their shares of common stock. On October 29, 2019, the Court denied the defendants motion. On March 20, 2020, the Florida district court of appeal reversed the lower court ruling in the Florida state court action that dismissed our complaint with prejudice, and gave us leave to file an amended complaint On August 22, 2018, four of the defendants in the Florida action described in the previous paragraph filed a complaint against the Company in the Franklin County, Ohio Court of Common Pleas seeking a declaratory judgment permitting them to sell the shares of common stock they received pursuant to the acquisition agreement. The parties have agreed to a stay pending the outcome of the Florida litigation. On April 29, 2019, the Company filed a securities fraud action in the U.S. District Court for the Eastern District of New York against Raymond Kalmar, Paul Murphy, Michelle Polly-Murphy, Advanced Health Brands and TD Therapeutic, Inc. In the complaint the Company alleges that in 2017, the defendants fraudulently and deceitfully obtained 1,250,000 shares of common stock by orchestrating a months-long scheme to defraud the Company. The Company is seeking the return of the 1,200,000 shares of common stock and monetary damages resulting from the defendants' fraudulent conduct. The defendants filed a motion to dismiss on August 23, 2019, and the Company filed its response on September 13, 2019. Employment Agreements The Company has employment agreements with its chief executive officer and chief financial officer dated April 23, 2019 pursuant to which we agree to employ them as chief executive officer and chief financial officer, respectively. The agreement also provides that the Company will include each of them as our nominee for director. The agreements have a term ending on January 31, 2024, 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. Pursuant to the employment agreements at January 31, 2020, the chief executive officer is receiving compensation at an annual rate of $42,000, and chief financial officer is not currently receiving any compensation. Commencing with the month in which the Company has raised at least $2,500,000 from public or private financing of its equity securities, they will each receive salary at the annual rate of $170,000. The Company has an employment agreement May 16, 2018 with its president pursuant to which the Company employed him as president for a term with no expiration date at annual salary of $60,000, which may paid in stock or cash. The president serves on a part-time basis. The Company has an employment agreement dated February 19, 2019 with its chief scientific officer pursuant to which the Company agrees to employ him as chief scientific officer for annual compensation of $60,000, payable in cash or stock, as the Company may elect. The agreement has a term ending on January 31, 2021 and continues thereafter on a quarter-to-quarter basis unless terminated by either party on 30 days' notice. The chief scientific officer serves on a part-time basis. Royalty Agreement On August 1, 2018, the Company acquired 100% of the membership interests of 4P Therapeutics LLC, pursuant to an agreement dated April 5, 2018, for $2,250,000, consisting of 62,500 shares of common stock valued at $1,850,000, and $400,000, and a royalty of 6% on all revenue generated by us on the abuse deterrent intellectual property that had been developed by 4P Therapeutics LLC payable to the former owner of 4P Therapeutics LLC.The royalty agreement has no expiration date. Currently, there is no marketable product and there are material uncertainties, including FDA approval, as to whether or when any revenue will be generated from the intellectual property subject to the royalty. If any royalties are paid to the former owner of 4P Therapeutics LLC, the royalties will be expensed as incurred and treated as a cost of revenue. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 11. SUBSEQUENT EVENTS 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 mediating 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 would 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 other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, 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. In accordance with ASC 855-10, management reviewed all material events through the date of this report. There are no other material events to report. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
Unaudited Interim Financial Statements | Unaudited Interim Financial Statements The consolidated balance sheet as of April 30, 2020 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. The consolidated financial statements are prepared in accordance with the requirements for unaudited interim periods pursuant to Rule 8-03 of Regulation S-X, and consequently, do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States of America. 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 information for the consolidated balance sheet as of January 31, 2020 was derived from audited financial statements of the Company. |
Principles of Consolidation | 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. |
Use of Estimates | Use of Estimates The discussion and analysis of our plan of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect our reported results of operations and the amount of reported assets and liabilities. Some accounting policies involve judgments and uncertainties to such an extent there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. Actual results may differ from estimates and assumptions used in the preparation of our consolidated financial statements. The Company's significant accounting policies are summarized in Note 1 of the Company's Annual Report on Form 10-K for the year ended January 31, 2020. There were no significant changes to these accounting policies during the three months ended April 30, 2020, and the Company does not expect that the adoption of other accounting pronouncements will have a material impact on its financial statements. |
Revenue Recognition | Revenue Recognition The Company recognized revenue in accordance with Topic 606 "Revenue from Contracts with Customers. Topic 606 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 adopted the guidance under the new revenue standards using the modified retrospective method effective February 1, 2018 and determined no cumulative effect adjusted to retained earnings was necessary upon adoption. Topic 606 requires the Company to recognize revenues when control of the promised goods or services and receipt of payment is probable. 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. Upon adoption, Topic 606 replaced most existing revenue recognition guidance in U.S. GAAP. The adoption of Topic the new revenue recognition standards did not have any impact on its consolidated financial statements since the Company did not recognize any revenue prior to the third quarter of 2018, and all revenue is recognized pursuant to Topic 606. Revenue Service Types The following is a description of the Company's revenue service types, which include professional services and sale of goods: ● Professional services include contract research and development related services with 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. ● Sales revenues are derived from the sale of products. To date, sales related to consumer products sold to the Company's South Korean distributor. Upon receipt of a purchase order, the Company has the order filled and shipped. Contracts with Customers A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party's rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer's intent and ability to pay the promised consideration. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the Company's different revenue types, the performance obligation is satisfied at different times. The Company's performance obligations include providing products and professional services in the area of research. The Company recognizes product revenue performance obligations in most cases when the product has shipped to the customer. When the Company performs professional service work, it recognizes revenue when it has the right to invoice the customer for the work completed, which typically occurs on a monthly basis for the work performed during that month. All revenue recognized in the statement of operations is revenue from contracts with customers. Disaggregation of Revenues The Company disaggregates its revenue from contracts with customers by service type and by geographical location. The following tables set forth revenue by service type and by geographical location. Revenue by service type: Three months ended 2020 2019 Sale of goods $ 61,320 $ 142,450 Services 58,044 51,140 Total $ 119,364 $ 193,590 Revenue by geographic location: Three months ended 2020 2019 United States $ 58,044 $ 51,140 Non-United States 61,320 142,450 Total $ 119,364 $ 193,590 |
Accounts receivable | Accounts receivable Trade accounts receivable 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 of its customers to make required payments. The Company determines its allowances by both specific identification of customer accounts where appropriate and the application of historical loss to non-specific accounts. For the three months ended April 30, 2020 and 2019, the Company recorded no bad debt expense and no allowance for doubtful accounts related to accounts receivable. |
Inventories | Inventories Inventories are valued at the lower of cost and realizable value determined using the first-in, first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The cost of finished goods and work in progress is comprised of material costs, direct labor costs and other direct costs and related production overheads (based on normal operating capacity). |
Property, Plant and Equipment | which do not increase the useful lives of the assets are charged to expense as incurred. All major additions and improvements are capitalized. Depreciation is computed using the straight-line method. The lives over which the fixed assets are depreciated range from 3 to 5 years as follows: Lab equipment 5 years Furniture, fixtures and equipment 3 years |
Intangibles Assets | Intangibles Assets Intangibles assets include trademarks, intellectual property and customer base acquired through business combinations. The Company accounts for Other Intangible Assets under the guidance of ASC 350, "Intangibles-Goodwill and Other." The Company capitalizes certain costs related to patent technology. A substantial component of the purchase price related to the Company's acquisition of 4P Therapeutics in 2018 has also been assigned to intellectual property and other intangibles. Under the guidance, other intangible assets with definite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are tested annually for impairment. Trademarks, intellectual property and customer base are being amortized over their estimated useful lives of ten years. |
Goodwill | Goodwill Goodwill represents the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition. Goodwill is reviewed for impairment annually on January 31, and more frequently as circumstances warrant, and written down only in the period in which the recorded value of such assets exceeds their fair value. The Company does not amortize goodwill in accordance with ASC 350. |
Long-lived Assets | Long-lived Assets Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists, the resulting write-down would be the difference between fair market value of the long-lived asset and the related net book value. |
Earnings per Share | Earnings per Share Basic earnings per share of common stock is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock and potential shares of common stock outstanding during the period. Potential shares of common stock consist of shares issuable upon the exercise of outstanding options and common stock purchase warrants. As of April 30, 2020 and 2019, there were 161,828 and 82,500 common stock equivalents outstanding, respectively, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive. |
Stock-Based Compensation | Stock-Based Compensation ASC 718, "Compensation - Stock Compensation," prescribes accounting and reporting standards for all share-based payment transactions in which employee services, and, since February 1, 2019, non-employees, are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). As of February 1, 2019, pursuant to ASC 2018-07, ASC 718 was applied to stock-based compensation for both employees and non-employees. |
Fair Value Measurements | Fair Value Measurements FASB ASC 820, "Fair Value Measurements and Disclosure" ("ASC 820"), defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be to measure fair value. The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: Level 1 -Observable inputs such as quoted market prices in active markets. Level 2 -Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 -Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions. The carrying value of the Company's financial instruments including cash and cash equivalents, accounts receivable, prepaid expenses, and accrued expenses approximate their fair value due to the short maturities of these financial instruments. Derivative liabilities are determined based on "Level 3" inputs, which are significant and unobservable and have the lowest priority. The recorded values of all other financial instruments approximate their current fair value because of their nature and respective short maturity dates or durations. See Note 6 for further information. |
Derivative Liabilities | Derivative Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, "Derivatives and Hedging" and all derivative instruments are reflected as either assets or liabilities at fair value on the balance sheet. The Company uses estimates at fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company's policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, when available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The value presented may not represent future fair values and may not be reliable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As of April 30, 2020 and January 31, 2020, the Company had a $-0- and $928,774 derivative liability, respectively. Fair value estimates are made at a specific point in time, based on relevant market information about the financial statement. These estimates are subjective in nature and involve uncertainties and matter of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Recent Accounting Standards | Recent Accounting Standards The Company has implemented all new pronouncements, including the adoption of ASU 2018-13, that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial statements or results of operations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of disaggregation of revenues | Three months ended 2020 2019 Sale of goods $ 61,320 $ 142,450 Services 58,044 51,140 Total $ 119,364 $ 193,590 Three months ended 2020 2019 United States $ 58,044 $ 51,140 Non-United States 61,320 142,450 Total $ 119,364 $ 193,590 |
Schedule of property plant and equipment | Lab equipment 5 years Furniture, fixtures and equipment 3 years |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | April 30, January 31, 2020 2020 Lab equipment $ 144,585 $ 144,585 Furniture, fixtures and equipment 19,643 19,643 164,228 164,228 Less: Accumulated depreciation (61,978 ) (53,199 ) Net Property and Equipment $ 102,250 $ 111,029 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets consisted of intellectual property, customer base and trademarks, net of amortization | April 30, January 31, 2020 2020 Customer base $ 136,500 $ 136,500 Intellectual property 234,200 234,200 Total 370,700 370,700 Less: Accumulated amortization (65,267 ) (56,000 ) Net Intangible Assets $ 305,433 $ 314,700 |
Schedule of estimated amortization | Total Year Ended January 31, 2021 $ 27,802 2022 37,070 2023 37,070 2024 37,070 2025 and thereafter 166,421 $ 305,433 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule reconciliation of Derivative Liabilities | April 30, Balance at the beginning of the period $ 928,774 Derivative liability warrants reclassed to equity (906,678 ) Change in value of embedded conversion option (22,096 ) $ - |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of warrants | Exercise Remaining Intrinsic Shares Price Life Value Outstanding, January 31, 2020 70,000 $ 18.93 1.53 years $ - Granted 91,830 12.53 3.00 years - Expired/Cancelled - - - - Exercised - - - - Outstanding-period ending April 30, 2020 161,830 $ 12.24 1.53 years $ 95,000 Exercisable - period ending April 30, 2020 161,830 $ 12.24 1.53 years $ 95,000 |
Schedule of additional warrants outstanding | Range of Number Remaining Contractual Exercise Number Exercise Intrinsic Prices Outstanding (Years) Outstanding Exercisable Exercisable Value $ 11.00 95,000 2.50 $ 11.00 95,000 $ 11.00 $ 95,000 $ 14.00 66,830 2.15 $ 14.00 66,830 $ 14.00 $ - |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jun. 25, 2019 | Aug. 01, 2018 | Apr. 30, 2020 | Apr. 30, 2019 | |
Summary of Significant Accounting Policies (Textual) | ||||
Description of acquired | The Company acquired 4P Therapeutics LLC (“4P Therapeutics”) for $2,250,000, consisting of 62,500 shares of common stock, valued at $1,850,000, and $400,000, and a royalty payable to the former owner of 4P Therapeutics, of 6% on all revenue generated by the Company from the abuse deterrent intellectual property that had been developed by 4P Therapeutics. The former owner of 4P Therapeutics has been a director of the Company since April 2018, when the Company entered into the agreement to acquire 4P Therapeutics. | |||
Reverse stock split, description | The Company effected one-for-four reverse split, pursuant to which each share of common stock became and was converted into 0.25 share of common stock | |||
Revenue | $ 119,364 | $ 193,590 | ||
Cost of revenues | 74,939 | |||
Loss from operations | $ (147,492) | $ (573,161) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Accounting Policies [Abstract] | ||
Sale of goods | $ 61,320 | $ 142,450 |
Services | 58,044 | 51,140 |
Total | $ 119,364 | $ 193,590 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Total | $ 119,364 | $ 193,590 |
UNITED STATES [Member] | ||
Total | 58,044 | 51,140 |
Non-US [Member] | ||
Total | $ 61,320 | $ 142,450 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) | 3 Months Ended |
Apr. 30, 2020 | |
Lab Equipment [Member] | |
Property plant and equipment, Usefull life | 5 years |
Furniture, fixtures and equipment [Member] | |
Property plant and equipment, Usefull life | 3 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Summary of Significant Accounting Policies (Textual) | ||
Potential shares of common stock | 161,828 | 82,500 |
Derivative Liability | $ 0 | $ 928,774 |
Property plant and equipment, description | Depreciation is computed using the straight-line method. The lives over which the fixed assets are depreciated range from 3 to 5 years as follows. |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 164,228 | $ 164,228 |
Less: Accumulated depreciation | (61,978) | (53,199) |
Net Property and Equipment | 102,250 | 111,029 |
Lab equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Net Property and Equipment | 144,585 | 144,585 |
Furniture, fixtures and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Net Property and Equipment | $ 19,643 | $ 19,643 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 8,779 | $ 8,779 |
Notes Payable_Convertible Debt
Notes Payable/Convertible Debt (Details) - USD ($) | Jan. 31, 2020 | Mar. 27, 2020 | Mar. 25, 2020 | Oct. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Jan. 31, 2020 | Mar. 31, 2020 |
Notes Payable Convertible Debt (Textual) | ||||||||
Repaid amount | $ 24,000 | |||||||
Debt discount | $ 270,000 | $ 202,500 | $ 202,500 | |||||
Discount remaining amount | 202,500 | |||||||
Notes payable convertible debt description | The Company entered into a securities purchase agreement with two investors pursuant to which the Company issued to the investors (i) 6% one-year convertible promissory notes in the principal amount of $270,000 and (ii) three-year warrant to purchase 50,000 shares of common stock at an exercise price equal to the lesser of (i) $20.90 or (ii) if the Company completes a public offering, 110% of the initial public offering price of the common stock in the public offering. The loans contained an original issue discount of $20,000 resulting in gross proceeds from this financing of $250,000. | |||||||
Description of convertible notes | The lesser of (i) the per share price of our common stock offered in a public offering or (ii) the variable conversion price, which is defined as 70% of the lowest trading price of the common stock during the 20 trading days preceding the date of conversion. The conversion price and the percentage of the trading price is subject to downward adjustment in the event the Company fails to comply with the obligations under the notes. The Company has the right to prepay the notes during the 180 days following the issuance of the notes at a premium of 115% of the outstanding principal and interest during the 60 days following the date of issuance of the note, which percentage increases to 125% during the remainder of the 180 day period. The Company is required to pay the notes one business day after the closing of the first to occur of (a) the next public offering of the Company’s securities or (b) the next private placement of the Company’s equity or debt securities in which the Borrower received net proceeds of at least $1.0 million, (c) issuance of securities pursuant to an equity line of credit or (d) a financing with a bank or other institutional lender. | |||||||
Securities purchase agreement | Jan. 28, 2020 | |||||||
Fair value of conversion price | $ 128,870 | |||||||
Fair value of the warrants | 888,789 | |||||||
Initial derivative expense | $ 767,650 | |||||||
Interest expenses including debt discount amount | $ 204,975 | |||||||
Convertible debt amount | $ 275,000 | |||||||
Loss on extinguishment of debt | 12,500 | (12,500) | ||||||
Additional loan | 60,000 | |||||||
Loan | $ 215,000 | 215,000 | $ 215,000 | |||||
Total loan | $ 275,000 | |||||||
Conversion stock issued | 25,000 | |||||||
Fair value of derivative liabilities total | 928,774 | |||||||
Prepayment fee | 69,131 | |||||||
Accrued Interest | 345,565 | |||||||
Convertible debt net of debt discount | 67,500 | 67,500 | ||||||
Principal amount | $ 270,000 | |||||||
Notes Payable Convertible Debt [Member] | ||||||||
Notes Payable Convertible Debt (Textual) | ||||||||
Repaid amount | 270,000 | |||||||
Officers [Member] | ||||||||
Notes Payable Convertible Debt (Textual) | ||||||||
Balance due | 8,895 | |||||||
Advanced amount | $ 29,067 | $ 29,067 | ||||||
Expenses amount | $ 3,628 |
Intangible Assetsl (Details)
Intangible Assetsl (Details) - Intangible Assets [Member] - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 |
Total | $ 370,700 | $ 370,700 |
Less: Accumulated amortization | (65,267) | (56,000) |
Net Intangible Assets | 305,433 | 314,700 |
Customer base [Member] | ||
Total | 136,500 | 136,500 |
Intellectual property [Member] | ||
Total | $ 234,200 | $ 234,200 |
Intangible Assetsl (Details 2)
Intangible Assetsl (Details 2) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 |
Year Ended January 31, | ||
2021 | $ 27,802 | |
2022 | 37,070 | |
2023 | 37,070 | |
2024 | 37,070 | |
2025 and thereafter | 166,421 | |
Total amortization | $ 305,433 | $ 314,700 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense of intangible assets | $ 9,267 | $ 9,466 |
Derivative Liabilities (Details
Derivative Liabilities (Details) | 3 Months Ended |
Apr. 30, 2020USD ($) | |
Balance at the beginning of the period | $ 928,774 |
Balance at the end of the period | |
Level 3 [Member] | |
Balance at the beginning of the period | 928,774 |
Derivative liability warrants reclassed to equity | (906,678) |
Change in value of embedded conversion option | (22,096) |
Balance at the end of the period |
Derivative Liabilities (Detai_2
Derivative Liabilities (Details Textual) | 3 Months Ended | 12 Months Ended |
Apr. 30, 2020 | Jan. 31, 2020 | |
Derivative Liability (Textual) | ||
Expected volatility | 158.30% | |
Risk-free interest rate | 1.58% | |
Re-Valuation [Member] | ||
Derivative Liability (Textual) | ||
Expected volatility | 184.40% | |
Risk-free interest rate | 1.43% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2020 | Feb. 19, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Oct. 31, 2019 | |
Related Party Transactions (Textual) | |||||
Advance repaid | $ 24,000 | ||||
Chief Executive Officer [Member] | |||||
Related Party Transactions (Textual) | |||||
Advance repaid | $ 29,067 | ||||
Stock, description | The Company granted an executive officer an option to purchased 25,000 shares of the Company’s common stock at an exercise price equal to 75% of the market price on the date the Company receives notice of exercise. | ||||
Related party transaction, description | The Company’s chief financial officer paid expenses of $3,628 on behalf the Company and the two officers were repaid $24,000. As of April 30, 2020, the Company owed the chief financial officer $8,695. | ||||
Black Scholes model [Member] | |||||
Related Party Transactions (Textual) | |||||
Fair value of warrant | $ 252,700 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | May 24, 2019 | Mar. 31, 2020 | Mar. 22, 2020 | Apr. 30, 2020 | Apr. 30, 2019 | Jan. 31, 2020 | Jan. 27, 2020 | Jun. 25, 2019 | Jun. 20, 2019 | Jan. 15, 2016 |
Common Stock (Textual) | ||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||||
Common stock, value | $ 515,108 | |||||||||
Warrant to purchase of common stock | 11 | |||||||||
Exercise price of warrants | $ 14 | |||||||||
Common stock issued | 5,512,928 | 5,441,100 | ||||||||
Private placement | 46,828 | |||||||||
Received proceeds of common stock | $ 515,108 | |||||||||
Common Stock [Member] | ||||||||||
Common Stock (Textual) | ||||||||||
Issuance shares of common stock, shares | 46,828 | |||||||||
Common stock, value | $ 47 | |||||||||
Warrant to purchase of common stock | 46,828 | |||||||||
Converted price of common stock | $ 0.25 | |||||||||
Common stock of, description | In March 2020, a minority shareholder who had previously made loans of $215,000, made an additional loan to the Company in the amount of $60,000, increasing the loans to shareholder to $275,000. On March 27, 2020, the Company issued 25,000 shares of common stock upon reaching a settlement with the noteholder to convert the notes in the principal amount of $275,000. The transaction resulted in a loss on extinguishment of $12,500. | |||||||||
Received proceeds of common stock | $ 515,108 | |||||||||
Common Stock [Member] | Minimum [Member] | ||||||||||
Common Stock (Textual) | ||||||||||
Increase decreased in authorized common stock | 25,000,000 | 100,000,000 | ||||||||
Common Stock [Member] | Maximum [Member] | ||||||||||
Common Stock (Textual) | ||||||||||
Increase decreased in authorized common stock | 250,000,000 | 25,000,000 | ||||||||
Series A Preferred Stock [Member] | ||||||||||
Common Stock (Textual) | ||||||||||
Preferred stock, shares designated | 2,500,000 | |||||||||
Preferred stock, unissued shares | 2,500,000 | |||||||||
Board of directors [Member] | ||||||||||
Common Stock (Textual) | ||||||||||
Preferred stock, par value | $ 0.001 | |||||||||
Preferred stock, shares authorized | 10,000,000 |
Warrants (Details)
Warrants (Details) | 3 Months Ended |
Apr. 30, 2020USD ($)$ / sharesshares | |
Shares | |
Issued | 50,000 |
Outstanding, Ending Balance | 161,828 |
Exercise Price | |
Granted | $ / shares | $ 20.90 |
Warrant [Member] | |
Shares | |
Outstanding, Beginning Balance | 70,000 |
Granted | 91,830 |
Expired/Cancelled | |
Exercised | |
Outstanding, Ending Balance | 161,830 |
Exercisable | 161,830 |
Exercise Price | |
Outstanding, Beginning Balance | $ / shares | $ 18.93 |
Granted | $ / shares | 12.53 |
Expired/Cancelled | $ / shares | |
Exercised | $ / shares | |
Outstanding, Ending Balance | $ / shares | 12.24 |
Exercisable | $ / shares | $ 12.24 |
Remaining Life | |
Outstanding, Beginning period | 1 year 6 months 10 days |
Granted | 3 years |
Expired/Cancelled | |
Exercised | |
Outstanding, Ending period | 1 year 6 months 10 days |
Exercisable | 1 year 6 months 10 days |
Intrinsic Value | |
Granted | $ | |
Expired/Cancelled | $ | |
Exercised | $ | |
Outstanding, Ending Balance | $ | 95,000 |
Exercisable, Ending Balance | $ | $ 95,000 |
Warrants (Details 1)
Warrants (Details 1) | 3 Months Ended |
Apr. 30, 2020USD ($)$ / sharesshares | |
Range of Exercise Prices | 14 |
Number Outstanding | 66,830 |
Remaining Contractual Life (Years) | 2 years 1 month 24 days |
Exercise Price for Shares Outstanding | $ / shares | $ 14 |
Number Exercisable | 66,830 |
Exercise Price for Shares Exercisable | $ / shares | $ 14 |
Intrinsic value | $ | |
Warrants [Member] | |
Range of Exercise Prices | 11 |
Number Outstanding | 95,000 |
Remaining Contractual Life (Years) | 2 years 6 months |
Exercise Price for Shares Outstanding | $ / shares | $ 11 |
Number Exercisable | 95,000 |
Exercise Price for Shares Exercisable | $ / shares | $ 11 |
Intrinsic value | $ | $ 95,000 |
Warrants (Details Textual)
Warrants (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended |
Mar. 31, 2020 | Apr. 30, 2020 | |
Exercise price | $ 20.90 | |
Initial public offering price, percentage | 110.00% | |
Purchase of warrants shares | 50,000 | |
Derivative liability for warrant | $ 906,678 | |
IPO [Member] | ||
Purchase of warrants shares | 95,000 | |
Per share | $ 11 | |
Private Placement [Member] | ||
Purchase of warrants shares | 46,828 | |
Warrant maturity date | Apr. 30, 2023 | |
Per share | $ 14 |
Contingencies (Details)
Contingencies (Details) - USD ($) | Apr. 29, 2019 | Jan. 31, 2019 | Aug. 01, 2018 | May 16, 2018 | Jul. 27, 2018 | Apr. 30, 2020 | Jan. 31, 2020 | Feb. 19, 2019 |
Contingencies (Textual) | ||||||||
Acquired advanced shares of common stock value | $ 2,500,000 | |||||||
Acquired advanced shares of common stock | 1,250,000 | |||||||
Shares cancelled | 50,000 | |||||||
Compensation annual rate | $ 170,000 | |||||||
Public or private financing | $ 2,500,000 | |||||||
Intellectual property, description | The Company acquired 100% of the membership interests of 4P Therapeutics LLC, pursuant to an agreement dated April 5, 2018, for $2,250,000, consisting of 62,500 shares of common stock valued at $1,850,000, and $400,000, and a royalty of 6% on all revenue generated by us on the abuse deterrent intellectual property that had been developed by 4P Therapeutics LLC payable to the former owner of 4P Therapeutics LLC. | |||||||
Health Brans, Inc. [Member] | ||||||||
Contingencies (Textual) | ||||||||
Acquired advanced shares of common stock | 1,250,000 | |||||||
Returned, shares | 1,200,000 | |||||||
Defendants [Member] | ||||||||
Contingencies (Textual) | ||||||||
Shares cancelled | 50,000 | |||||||
Chief Executive Officer [Member] | ||||||||
Contingencies (Textual) | ||||||||
Compensation annual rate | $ 42,000 | |||||||
President [Member] | ||||||||
Contingencies (Textual) | ||||||||
Annual salary | $ 60,000 | |||||||
Chief Scientific Officer [Member] | ||||||||
Contingencies (Textual) | ||||||||
Compensation annual rate | $ 60,000 |