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NUTRALIFE BIOSCIENCES, INC - Quarter Report: 2019 September (Form 10-Q)

nlbs_10q.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

  

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the Quarterly Period Ended September 30, 2019

 

Commission File Number: 000-55144

 

NUTRALIFE BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

 

Florida

 

46-1482900

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

6601 Lyons Road, Suite L-6 Coconut Creek, FL 33073

(Address of principal executive offices) (Zip Code)

 

Telephone 888-509-8901

(Registrant’s telephone number, including area code)

 

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 periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ☐

 

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

x

(Do not check if a smaller reporting company)

Emerging Growth Company

x

 

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 x

 

As of November 12, 2019 we had 140,847,294 shares of common stock outstanding.

 

 
 
 
 

 

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

 22

 

Item 4.

Controls and Procedures

 

22

 

 

 

 

 

PART II-- OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

23

 

Item 1A.

Risk Factors

 

23

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 23

 

Item 3.

Defaults Upon Senior Securities

 

29

 

Item 4.

Mine Safety Disclosures

 

 29

 

Item 5.

Other Information

 

 29

 

Item 6.

Exhibits

 

29

 

 

 

 

 

SIGNATURES

 

30

 

 

 
2
 
Table of Contents

  

FINANCIAL STATEMENTS

   

NUTRALIFE BIOSCIENCES, INC., F/K/A NUTRAFUELS, INC.

Condensed Consolidated Balance Sheets

 

 

 

September 30,

2019

 

 

December 31,

2018

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Assets

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$207,259

 

 

$419,975

 

Accounts receivable, net of allowance for doubtful accounts in the amount of $31,000

 

 

77,921

 

 

 

43,503

 

Inventories

 

 

713,741

 

 

 

291,040

 

Prepaid and other current assets

 

 

479

 

 

 

115,004

 

Total current assets

 

 

999,400

 

 

 

869,522

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

2,339,841

 

 

 

925,807

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

784,057

 

 

 

-

 

Intangible assets

 

 

714,640

 

 

 

-

 

Other assets

 

 

203,915

 

 

 

35,000

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$5,041,853

 

 

$1,830,329

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$157,670

 

 

$243,503

 

Accrued expenses

 

 

452,656

 

 

 

468,838

 

Customer deposits

 

 

-

 

 

 

84,686

 

Liability for stock to be issued

 

 

265,500

 

 

 

-

 

Current portion of capital leases

 

 

24,000

 

 

 

3,836

 

Current portion of operating lease liability

 

 

214,000

 

 

 

-

 

Current portion of convertible promissory note payable

 

 

742,000

 

 

 

-

 

Convertible notes, net of unamortized discount of $280,400

 

 

-

 

 

 

199,600

 

Total current liabilities

 

 

1,855,826

 

 

 

1,000,463

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Convertible promissory note payable to shareholder, net of unamortized discount of $79,868 and current portion

 

 

178,132

 

 

 

-

 

Operating lease liability, net of current portion

 

 

614,410

 

 

 

-

 

Capital leases, net of current portion

 

 

38,705

 

 

 

14,614

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

2,687,073

 

 

 

1,015,077

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Preferred stock; $0.0001 par value, authorized 10,000 shares; no shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock; $0.0001 par value, 499,990,000 authorized shares; 140,063,383 and 97,315,941 shares issued and outstanding

 

 

14,015

 

 

 

9,732

 

Additional paid-in-capital

 

 

39,945,579

 

 

 

35,638,980

 

Accumulated deficit

 

 

(37,604,814)

 

 

(34,833,460)

Total stockholders' equity

 

 

2,354,780

 

 

 

815,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$5,041,853

 

 

$1,830,329

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
3
 
Table of Contents

 

NUTRALIFE BIOSCIENCES, INC., F/K/A NUTRAFUELS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2019

 

 

September 30,

2018

 

 

September 30,

2019

 

 

September 30,

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$527,392

 

 

$1,062,146

 

 

$1,966,628

 

 

$2,870,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

460,906

 

 

 

775,191

 

 

 

1,251,033

 

 

 

1,503,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

66,486

 

 

 

286,955

 

 

 

715,595

 

 

 

1,366,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncash compensation

 

 

112,676

 

 

 

183,453

 

 

 

385,757

 

 

 

1,167,290

 

General and administrative

 

 

823,570

 

 

 

774,846

 

 

 

2,639,880

 

 

 

1,607,244

 

Depreciation and amortization

 

 

-

 

 

 

10,824

 

 

 

88,124

 

 

 

96,852

 

Total operating expenses

 

 

936,246

 

 

 

969,123

 

 

 

3,113,761

 

 

 

2,871,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(869,760)

 

 

(682,168)

 

 

(2,398,166)

 

 

(1,504,392)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

19,590

 

 

 

8,928

 

 

 

(6,290)

 

 

12,537

 

Induced debt conversion loss

 

 

 

 

 

 

-

 

 

 

-

 

 

 

(18,004)

Loss on stock settlement of accounts payable

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

Finance costs

 

 

(76,996)

 

 

(43,887)

 

 

(366,897)

 

 

(44,374)

Total other expense

 

 

(57,406)

 

 

(34,959)

 

 

(373,187)

 

 

(49,841)

Net loss before income taxes

 

 

(927,166)

 

 

(717,127)

 

 

(2,771,353)

 

 

(1,554,233)

Income tax expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(927,166)

 

$(717,127)

 

$(2,771,353)

 

$(1,554,233)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per weighted average common share - basic and diluted

 

$(0.01)

 

$(0.01)

 

$(0.02)

 

$(0.02)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of weighted average shares outstanding - basic and diluted

 

 

134,242,843

 

 

 

88,635,101

 

 

 

124,667,664

 

 

 

85,997,383

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
4
 
Table of Contents

 

NUTRALIFE BIOSCIENCES, INC., F/K/A NUTRAFUELS, INC.

Condensed Consolidated Statement of Stockholders' Equity

(Unaudited)

 

 

 

Preferred Stock, Number of Shares

 

 

Common Stock, Number of Shares

 

 

Preferred

Stock, Par

 

 

Common

Stock, Par

 

 

APIC

 

 

Accumulated Deficit

 

 

Total Stockholders Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2019

 

 

1,000

 

 

 

97,315,941

 

 

$-

 

 

$9,732

 

 

 

35,638,980

 

 

$(34,833,460)

 

$815,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

-

 

 

 

28,055,061

 

 

 

-

 

 

 

2,806

 

 

 

2,221,674

 

 

 

-

 

 

 

2,224,480

 

Share issued in connection with purchase of intangible assets

 

 

-

 

 

 

1,800,000

 

 

 

-

 

 

 

180

 

 

 

318,960

 

 

 

-

 

 

 

319,140

 

Shares issued in connection with debt financing

 

 

-

 

 

 

100,000

 

 

 

-

 

 

 

10

 

 

 

18,590

 

 

 

-

 

 

 

18,600

 

Shares issued for services

 

 

-

 

 

 

946,281

 

 

 

-

 

 

 

95

 

 

 

160,486

 

 

 

-

 

 

 

160,581

 

Debt settled throught the issuance of stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

380,000

 

 

 

-

 

 

 

380,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,288,593)

 

 

(1,288,593)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

1,000

 

 

 

128,217,283

 

 

$-

 

 

$12,823

 

 

$38,738,690

 

 

$(36,122,053)

 

$2,629,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

-

 

 

 

2,588,535

 

 

 

-

 

 

 

263

 

 

 

219,741

 

 

 

-

 

 

 

220,004

 

Shares issued in connection with debt financing

 

 

-

 

 

 

1,000,000

 

 

 

-

 

 

 

100

 

 

 

190,900

 

 

 

-

 

 

 

191,000

 

Shares issued for services

 

 

-

 

 

 

1,375,000

 

 

 

-

 

 

 

140

 

 

 

155,754

 

 

 

-

 

 

 

155,894

 

Shares issued to pay accounts payable

 

 

-

 

 

 

434,000

 

 

 

-

 

 

 

44

 

 

 

43,357

 

 

 

-

 

 

 

43,401

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(555,595)

 

 

(555,595)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2019

 

 

1,000

 

 

 

133,614,818

 

 

$-

 

 

$13,370

 

 

$39,348,442

 

 

$(36,677,648)

 

$2,684,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

-

 

 

 

5,529,414

 

 

 

-

 

 

 

553

 

 

 

469,447

 

 

 

 

 

 

 

470,000

 

Shares issued for services

 

 

-

 

 

 

369,151

 

 

 

-

 

 

 

37

 

 

 

69,245

 

 

 

 

 

 

 

69,282

 

Shares issued to settle accounts payable

 

 

-

 

 

 

500,000

 

 

 

-

 

 

 

50

 

 

 

49,950

 

 

 

 

 

 

 

50,000

 

Shares issued in connection with debt financing

 

 

-

 

 

 

50,000

 

 

 

-

 

 

 

5

 

 

 

8,495

 

 

 

 

 

 

 

8,500

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(927,166)

 

 

(927,166)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

 

 

1,000

 

 

 

140,063,383

 

 

$-

 

 

$14,015

 

 

$39,945,579

 

 

$(37,604,814)

 

$2,354,780

 

 

 

 

Preferred Stock, Number of Shares

 

 

Common Stock, Number of Shares

 

 

Preferred Stock, Par

 

 

Common

Stock, Par

 

 

APIC

 

 

Accumulated Deficit

 

 

Total Stockholders Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2018

 

 

1,000

 

 

 

81,448,561

 

 

$-

 

 

$8,144

 

 

$33,411,300

 

 

$(32,758,920)

 

$660,524

 

Shares issued to settle accounts payable

 

 

 

 

 

 

169,159

 

 

 

-

 

 

 

17

 

 

 

49,477

 

 

 

-

 

 

 

49,494

 

Share issued for services

 

 

 

 

 

 

1,500,000

 

 

 

-

 

 

 

150

 

 

 

390,319

 

 

 

-

 

 

 

390,469

 

Shares issued to acquire fixed assets

 

 

 

 

 

 

2,000,000

 

 

 

-

 

 

 

200

 

 

 

569,000

 

 

 

-

 

 

 

569,200

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(614,452)

 

 

(614,452)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2018

 

 

1,000

 

 

 

85,117,720

 

 

 

-

 

 

 

8,511

 

 

 

34,420,096

 

 

 

(33,373,372)

 

 

1,055,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share issued for services

 

 

 

 

 

 

1,649,300

 

 

 

-

 

 

 

165

 

 

 

340,553

 

 

 

-

 

 

 

340,718

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(222,655)

 

 

(222,655)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2018

 

 

1,000

 

 

 

86,767,020

 

 

$-

 

 

$8,676

 

 

$34,760,649

 

 

$(33,596,027)

 

$1,173,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share issued for services

 

 

 

 

 

 

1,040,049

 

 

 

-

 

 

 

104

 

 

 

194,131

 

 

 

-

 

 

 

194,235

 

Shares issued for cash

 

 

 

 

 

 

260,000

 

 

 

-

 

 

 

26

 

 

 

43,306

 

 

 

-

 

 

 

43,332

 

Shares issued for issuance of debt

 

 

 

 

 

 

2,000,000

 

 

 

-

 

 

 

200

 

 

 

190,276

 

 

 

-

 

 

 

190,476

 

Warrants on convertible debt

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

114,161

 

 

 

-

 

 

 

114,161

 

Beneficial conversion feature on convertible debt

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

18,888

 

 

 

-

 

 

 

18,888

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(717,127)

 

 

(717,127)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2018

 

 

1,000

 

 

 

90,067,069

 

 

$-

 

 

$9,006

 

 

$35,321,411

 

 

$(34,313,154)

 

$1,017,263

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
5
 
Table of Contents

 

NUTRALIFE BIOSCIENCES, INC., F/K/A NUTRAFUELS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the
Nine Months
Ended

September 30,

2019

 

 

For the

Nine Months

Ended

September 30,

2018

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$(2,771,353)

 

$(1,554,233)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

88,124

 

 

 

96,852

 

Stock compensation and consulting services

 

 

385,757

 

 

 

945,309

 

Stock issued in connection with finance costs

 

 

27,100

 

 

 

-

 

Amortization of prepaid compensation

 

 

-

 

 

 

221,981

 

Amortization of debt discount

 

 

200,532

 

 

 

24,030

 

Bad Debts

 

 

-

 

 

 

84,183

 

Loss on stock settlement of accounts payable

 

 

-

 

 

 

18,004

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) in accounts receivable

 

 

(34,418)

 

 

(104,720)

(Increase) in inventories

 

 

(422,701)

 

 

(267,411)

Decrease in prepaid expenses

 

 

231,904

 

 

 

372

 

Increase in accounts payable

 

 

7,569

 

 

 

236,387

 

(Decrease) increase in lease liability

 

 

(50,941)

 

 

-

 

(Decrease) increase in accrued expenses

 

 

(16,182)

 

 

215,497

 

(Decrease) increase in customer deposits

 

 

(84,686)

 

 

202,832

 

 

 

 

 

 

 

 

 

 

Net Cash (Used in) Provided by Operating Activities

 

 

(2,439,295)

 

 

119,083

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Acquisition of intellectual property

 

 

(130,000)

 

 

-

 

Purchases of property and equipment

 

 

(1,457,903)

 

 

(505,173)

 

 

 

 

 

 

 

 

 

Net Cash Used in Investing Activities

 

 

(1,587,903)

 

 

(505,173)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from shareholder note payable

 

 

1,000,000

 

 

 

-

 

Proceeds from convertible debt

 

 

-

 

 

 

380,000

 

Common shares issued for cash

 

 

2,914,482

 

 

 

43,332

 

Payments on notes payable

 

 

(100,000)

 

 

-

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

 

3,814,483

 

 

 

423,332

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH

 

 

 

 

 

 

 

 

EQUIVALENTS

 

 

(212,716)

 

 

37,242

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT

 

 

 

 

 

 

 

 

BEGINNING OF PERIOD

 

 

419,975

 

 

 

172,948

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT

 

 

 

 

 

 

 

 

END OF PERIOD

 

$207,259

 

 

$210,190

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$-

 

 

$487

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued and issuable for the acquisition of intellectual property

 

$584,640

 

 

$-

 

Debt converted to equity

 

$380,000

 

 

$-

 

Property and equipment purchased with debt

 

$51,194

 

 

$19,179

 

Shares issued for commissions

 

$-

 

 

$106,638

 

Shares issued for the purchase of property and equipment

 

$-

 

 

$569,200

 

Shares issued for prepaid services

 

$-

 

 

$54,750

 

Shares issued to settle accounts payable

 

$93,402

 

 

$49,494

 

Shares issued in connection with finance costs

 

$218,100

 

 

$-

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
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NUTRALIFE BIOSCIENCES, INC. F/K/A NUTRAFUELS, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 1 - NATURE OF OPERATIONS AND CONSOLIDATION

 

NutraLife BioSciences, Inc. F/K/A NutraFuels, Inc. (“We and the Company”) is a developer, manufacturer and distributor of nutraceutical and CBD sprays, tinctures and related products and is engaged in the cultivation, processing and distribution of hemp in Wisconsin where it holds licenses to grow and cultivate hemp.

 

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America ("U.S.") as promulgated by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and with the rules and regulations of the U.S Securities and Exchange Commission ("SEC"). In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation. Interim results are not necessarily indicative of results for a full year. Therefore, the interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Precision Analytic Testing, LLC, NutraDerma Technologies, Inc., PhytoChem Technologies, Inc. and TransDermalRX, Inc. We operate as one reportable segment. All intercompany transactions and balances have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Cash and Equivalents

 

Cash equivalents are highly liquid investments with an original maturity of three months or less. The Company had no cash equivalents at September 30, 2019 and December 31, 2018. The Company maintains its cash in bank deposit accounts, which may, at times, exceed federally insured limits. The Company had cash balances in excess of FDIC insured limits of $0 and approximately $170,000 at September 30, 2019 and December 31, 2018, respectively.

 

Inventories

 

Inventories are stated at cost utilizing the weighted average method of valuation and consist of raw materials and finished goods. The Company reduces inventory on hand to its net realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below its original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below cost. Management regularly reviews the Company's inventories for such declines in value.

 

 
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Allowance for Doubtful Accounts

 

We establish the existence of bad debts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of our customers. The allowance for doubtful accounts is $31,000 for periods ended September 30, 2019 and December 31, 2018, respectively.

 

Property and Equipment

 

All property and equipment are recorded at cost and depreciated over their estimated useful lives, generally three, seven and twelve years, using the straight-line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred. Leasehold improvements are amortized over their estimated useful lives or the remaining term of the lease, whichever is shorter.

 

Impairment of Long‑Lived Assets

 

A long‑lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying value amount may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the long‑lived assets exceeds its fair value.

 

Impairment charges would be included with costs and expenses in the Company's condensed consolidated statements of operations and would result in reduced carrying amounts of the related assets on the Company's condensed consolidated balance sheets. No adjustments were made to long-lived assets during the period ended September 30, 2019, as a result of management's assessments.

 

Advertising

 

Advertising costs are charged to operations as incurred and are included in operating expenses. The amounts charged for the nine-month periods ended September 30, 2019 and 2018 totaled approximately $254,000 and $0, respectively.

 

Revenue Recognition

 

The Company adopted ASU 2014-09, “Revenue from Contracts with Customers” on January 1, 2018, using the modified retrospective method, which did not have a material impact on the timing and amount of product revenues.

 

The new revenue recognition standard prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

 

The Company generates revenues from the sale of products. The product is invoiced, and the revenue is recognized upon shipment and once transfer of risk has passed to the customer, which is the point at which the Company has satisfied its performance obligation.

 

The Company’s revenues accounted for under ASC 606 do not require significant estimates or judgements based on the nature of the Company’s revenue. The company’s contracts do not include multiple performance obligations or variable consideration.

 

 
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Income Taxes

 

The Company follows the provisions of ASC 740‑10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740‑10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.

 

Tax positions that meet the more‑likely‑than‑not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company has no amounts accrued for interest or penalties as of September 30, 2019 and December 31, 2018, respectively. The Company is no longer subject to examination by taxing authorities for years before December 31, 2014. The company does not expect the total amount of unrecognized tax benefits to significantly change in the next 12 months. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.

 

Net Loss Per Share

 

Basic loss per share excludes dilution and is computed by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the Company. Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless consideration of such dilutive potential shares would result in anti-dilution.

 

Financial Instruments and Fair Value Measurements

 

The carrying value of the Company’s current condensed consolidated financial instruments, which include cash and cash equivalents, accounts payable and accrued liabilities approximates their fair values because of the short‑term maturities of these instruments.

 

FASB ASC 820 Fair Value Measurement clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:

 

 

·Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

 

 

 

 

·Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

 

 

 

·Level 3: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

  

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

  

 
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Related Party Transactions

 

All transactions with related parties are in the normal course of operations and are measured at the exchange amount.

 

Leases

 

Effective January 1, 2019, the Company adopted the requirements of FASB ASU 2016-02, Leases (Topic 842) which defines a lease as any contract that conveys the right to use a specific asset for a period of time in exchange for consideration. Leases are classified as a finance lease, formerly called a capital lease, if any of the following criteria are met:

 

 

1.The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

 

 

 

 

2.The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

 

 

 

 

3.The lease term is for the major part of the remaining economic life of the underlying asset.

 

 

 

 

4.The present value of the sum of lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset.

 

 

 

 

5.The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

 

For any leases that do not meet the criteria identified above for finance leases, the Company treats such leases as operating leases. As of September 30, 2019, the Company has two finance leases and three operating leases.

 

Under the new guidance, both finance and operating leases are reflected on the balance sheet as lease or “right-of -use” assets and lease liabilities. Further note that under previous guidance, operating leases (non-capital leases) were not required to be recorded as an asset on the balance sheet.

 

There are some exceptions, which the Company has elected in its accounting policies. For leases with terms of twelve months or less, or below the Company’s general capitalization policy threshold, the Company elects an accounting policy to not recognize lease assets and lease liabilities for all asset classes. The Company recognizes lease expense for such leases generally on a straight-line basis over the lease term.

 

The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain to be exercised. Certain leases contain non-lease components, such as common area maintenance, which are generally accounted for separately. In general, the Company will assess if non-lease components are fixed and determinable, or variable, when determining if the component should be included in the lease liability. For purposes of calculating the present value of the lease obligations, the Company utilizes the implicit interest rate within the lease agreement when known and/or determinable, and otherwise utilizes its incremental borrowing rate at the time of the lease agreement.

 

As permitted under ASU 2018-11 the Company elected the optional transition method to adopt the new leases standard. Under this new transition method, the Company initially applied the new leases standard at the adoption date of January 1, 2019 and would have recognized a cumulative-effect adjustment, if appropriate, to the opening balance of retained earnings in the period of adoption. No cumulative-effect adjustment was recognized. The Company’s reporting for the comparative periods prior to 2019 in the financial statements will be presented in accordance with the existing GAAP in effect for 2018 and earlier (ASC Topic 840, Leases).

 

The impact of the adoption of this new standard resulted in an increase to the Company’s operating lease assets and liabilities on January 1, 2019 of approximately $800,000. The implementation did not have a material impact on our condensed consolidated statements of income and statements of cash flows.

 

 
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Intangible Assets

 

Intangible assets represent the value assigned to intellectual property and will be amortized based on the economic benefit expected to be realized.

 

NOTE 3 - LIQUIDITY AND GOING CONCERN CONSIDERATIONS

 

Our condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We sustained a net loss of approximately $2,771,000 for the nine months ended September 30, 2019 and have an accumulated deficit of approximately $37,605,000 at September 30, 2019. These conditions raise substantial doubt about our ability to continue as a going concern.

 

The independent auditors’ report on our consolidated financial statements for the year ended December 31, 2018 contain explanatory paragraphs expressing substantial doubt as to our ability to continue as a going concern.

 

Failure to successfully continue to grow operational revenues could harm our profitability and adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing sales channels.

 

We are continuing our plan to further grow and expand operations and seek sources of capital to pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

 

NOTE 4 – CONVERTIBLE NOTES PAYABLE TO SHAREHOLDER

 

In March 2019, the Company received proceeds of $200,000 from a shareholder, pursuant to a short-term promissory note payable, bearing interest at an annual rate of 3%, due April 20, 2019. The note and accrued interest were satisfied by subsequently converting to 2,352,941 shares common stock at $0.085 per share.

 

In June 2019, the Company entered into an Investment Agreement that included a secured convertible 8.5% promissory note payable for $1,000,000 with a shareholder. The note is subject to a security agreement whereby the first four Ennea Processors the Company has committed to commercialize and monetize will be secured as collateral for the note. The payment terms of the note will be interest only payments from July 7th, 2019 through December 7th, 2019 and commencing January 7th, 2020, the Company will make equal monthly installment payments that include principal and interest through the Maturity Date of December 7th 2020.

 

Included in the Investment Agreement is a royalty agreement whereby the investor received 500,000 shares of the Company’s common stock and will be entitled to a royalty of 8.5% from the revenue generated from the “collateral processors” while the principal is outstanding and 5% thereafter on the first two collateral processors.

 

In addition to the collateral, the note is secured by a Pledge Agreement from a related-party that included a mortgage lien on certain real property as additional collateral. As compensation for providing the additional collateral, the pledgor will receive 500,000 shares of the Company’s common stock and commencing on December 5th, 2019 monthly payments equal to the interest paid on the note, 8.5% of the revenue generated from the collateral processors while the principal is outstanding and 5% thereafter on the first two machines commercialized or monetized by the company.

 

 
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NOTE 5 - STOCKHOLDERS’ EQUITY

 

Stock issued for cash:

 

In January 2019, the Company issued 120,004 shares of common stock in exchange for $20,000 in cash, or $0.167 per share.

 

In January 2019, the Company issued 7,647,059 shares of common stock in exchange for $650,000 in cash, or $0.085 per share.

 

In February 2019, the Company issued 3,176,470 shares of common stock in exchange for $270,000 in cash, or $0.085 per share.

 

In March 2019, the Company issued 17,111,528 shares of common stock in exchange for $1,284,480 in cash, or $0.075 per share.

 

In April 2019, the Company issued 2,588,235 shares of common stock in exchange for $220,000 in cash, or $0.085 per share.

 

In August 2019, the Company issued 470,588 shares of common stock in exchange for $40,000 in cash, or $0.085 per share.

 

In September 2019, the Company issued 5,058,826 shares of common stock in exchange for $430,000 in cash, or $0.085 per share.

 

Stock issued for services:

 

In January 2019, the Company issued an aggregate of 883,781 shares of common stock valued at $149,956, or $0.17 per share for services.

 

In February 2019, the Company issued 62,500 shares of common stock valued at $10,625, or $0.17 per share for services.

 

In May 2019, the Company issued 62,500 shares of common stock valued at $14,687, or $0.235 per share for services.

 

In June 2019, the Company issued 1,362,800 shares of common stock valued at $138,430, or $0.102 per share for services.

 

In July 2019, the Company issued 120,203 shares of common stock valued at $21,981, or $0.183 per share for services.

 

In September 2019, the Company issued 248,948 shares of common stock valued at $47,300, or $0.19 per share for services.

 

Other

 

In March 2019, the Company issued 1,800,000 shares of common stock valued at $319,140 in connection with the acquisition of intellectual property.

 

In March 2019, the Company issued 100,000 shares of common stock valued at $18,600 in connection with a prior debt financing.

 

Additionally, the Company recorded $380,000 to Additional Paid-in Capital as a result of a settlement of a finance agreement with one of their investors.

 

In June 2019, the Company issued 1,000,000 shares of common stock valued at $191,000 in connection with a financing transaction with an investor.

 

In August 2019, the Company issued 500,000 shares of common stock valued at $50,000 in connection with the purchase of materials.

 

 
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Settlement Agreement

 

In March 2019, the Company reached an agreement with its third-party lender in connection with their $2,000,000 2018 “Investment Agreement” whereby the Company received only two payments from this lender aggregating $380,000 during 2018. The lender was in default of this agreement and thereby settled by agreeing to fund $1,000,000 for 13,764,705 restricted shares of common stock. Additionally, the lender received a warrant to purchase an additional 10 million common shares at a price of $.20 per share or an aggregate of $2 million under the terms set forth in this agreement. The warrant expires on March 4, 2022. Additionally, the lender had the ability to purchase an additional 7,647,058 common shares at the purchase price of $0.085 per share on an aggregate of $650,000 at any time prior to April 8, 2019. This option was never exercised and therefore expired. In connection with this agreement, the $380,000 previously funded was reclassified to additional paid-in capital.

 

NOTE 6 - LEASES

 

In conjunction with the new guidance for leases, as defined by the FASB with ASU 2016-02, Leases (Topic 842), the Company has described the existing leases as operating as further described below:

 

The Company leases their office and warehouse facilities located in Coconut Creek, Florida under a non-cancelable operating lease agreement that expired February 2019 and is currently occupied on a month-to month basis.

 

In July and September of 2019, the Company’s wholly-owned subsidiary, Phytochem, entered into two separate lease agreements for office and warehouse space located in Onalaska, Wisconsin, that commence on August 1 and October 1, respectively. Each lease is for six-month terms with four (4) renewal options to extend for six additional months. The Company expects to occupy these facilities for the full term of these leases totaling 30 months, the leases call for annual 3% increases to base rent. The weighted average remaining lease term on these leases is 28 months and the weighted average discount rate used is 10%.

 

In June 2017, the Company entered into a lease for an additional facility located in Deerfield Beach, Florida under a non-cancelable operating lease. The term of the lease is for 86 months beginning on January 1, 2018 and calls for yearly 3% increases to base rent, with monthly payments that commenced in March 2018.

 

In the September 30, 2019 condensed consolidated balance sheet, the Company has recorded an aggregate right-of-use asset of approximately $784,000 and a lease liability of $828,000, of which $214,000 is reported as a current liability. The weighted average remaining lease term is 65 months and weighted average discount rate used is 10%.

 

The following table presents a reconciliation of the undiscounted future minimum lease payments remaining under the operating leases reported as operating lease liability on the condensed consolidated balance sheet as of September 30, 2019:

 

Undiscounted future minimum lease payments:

 

 

 

2019 (remainder of year)

 

$52,000

 

2020

 

 

214,000

 

2021

 

 

220,000

 

2022

 

 

186,000

 

2023

 

 

184,000

 

Thereafter

 

 

222,000

 

Total undiscounted future minimum lease payments

 

 

1,078,000

 

Less: amount representing imputed interest

 

 

(253,000)

Operating lease liability

 

$828,000

 

 

A similar description of the lease obligation is disclosed in the Company’s December 31, 2018 Form 10-K.

 

Lease expense for the operating leases was approximately $214,000 for the nine months ended September 30, 2019.

 

 
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Capital Leases:

 

The Company has acquired certain equipment under agreements that are classified as a capital leases. The cost of the equipment under capital lease is included in the balance sheet as property and equipment. As of September 30, 2019, the cost of the capital lease equipment was approximately $91,000 and is not in service as yet, accordingly there has been no amortization expense on this equipment.

 

Minimum lease payments required by this lease is as follows:

 

Undiscounted future minimum lease payments:

 

 

 

2019 (remainder of year)

 

$7,000

 

2020

 

 

20,000

 

2021

 

 

20,000

 

2022

 

 

13,000

 

Total undiscounted future minimum lease payments

 

 

60,000

 

Less: amount representing interest

 

 

(8,800)

Present value of minimum lease payments

 

$51,200

 

 

NOTE 7 - INTANGIBLE ASSETS

 

In February 2019, the Company acquired certain intellectual property consisting of patent rights. The aggregate purchase price paid in connection with the patent purchase was $714,640, consisting of $130,000 cash, and 3,300,000 shares of the Company’s common stock valued at $0.177 per share or an aggregate of $584,640. Of the 3,300,000 shares, 1,800,000 shares were provided at closing and 1,500,000 will be provided one year thereafter. The acquired patent will be amortized over its remaining estimated useful life of approximately 11 years. Amortization was approximately $20,000.

 

NOTE 8 - COMMITMENTS AND CONTINGENCIES

 

Legal Proceedings

 

From time to time, the Company is subject to legal proceedings which arise in the ordinary course of the Company's business. Although there can be no assurance as to the ultimate disposition of these matters, the Company's management believes that the final disposition of such matters will not have a material adverse effect on the financial position or results of operations of the Company.

 

Consulting Agreement

 

In connection with the acquisition agreement discussed in Note 7, the Company entered into an agreement with the seller, whereby the seller has accepted the appointment to represent the Company to sell the products related to the above patent and intellectual property and receive a commission of 20% of the net sales from this product.

 

 
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NOTE 9 - EQUITY WARRANTS

 

At September 30, 2019, our warrants outstanding are as follows:

 

By Exercise Price:

 

2019

 

Warrants - $0.20

 

 

13,302,941

 

Warrants - $0.35

 

 

5,294,117

 

Warrants - $0.50

 

 

-

 

Warrants - $0.75

 

 

-

 

Warrants - $1.00

 

 

-

 

 

 

 

18,597,058

 

 

 

 

2019

 

Balance December 31, 2018

 

 

18,210,402

 

Warrants issued

 

 

10,352,941

 

Warrants exercised

 

 

-

 

Warrants expired

 

 

(9,966,285)

Warrants - $1.00

 

 

-

 

Balance September 30, 2019

 

 

18,597,058

 

 

In March 2019, the Company issued a warrant to purchase 10 million common shares at a price of $.20 per share or an aggregate of $2 million under the terms set forth in the settlement agreement referred to in Note 5. The warrant expires on March 4, 2022.

 

In September 2019, the Company issued 352,941 warrants to purchase common shares at a price of $.20 per share that expire in September 2020.

 

NOTE 10 - SUBSEQUENT EVENTS

 

In October 2019, the Company received proceeds aggregating $300,000 in connection with multiple short-term convertible promissory notes, due in November and December of 2019. The notes bear interest at 10% for the term of the note. Each noteholder has the right to convert all of the outstanding principal and accrued unpaid interest to the Company’s common stock at a price of $0.10 per share. Additionally, an aggregate of 3,000,000 warrants were issued to the noteholders. The warrants are exercisable at $0.10 per share and expire one year from the date of each respective note and may be extended for an additional year if the underlying stock price at the time of expiration is at or below the exercise price of $0.10 per share.

 

On October 23, 2019, the Company entered into an agreement with Bushman Family LLC (“Bushman”) with the following terms: (i) Bushman shall transport 40,000 plus pounds of hemp biomass from the Company’s facility in Wisconsin to Bushman’s facility where Bushman will dry, process and bag the hemp biomass, (ii) the Company and Bushman shall each own 20,000 pounds of the hemp biomass, (iii) after processing by Bushman, Bushman will deliver the hemp biomass back to the Company’s facility, (iv) the hemp biomass will be further processed by the Company into crude, (v) after processing by the Company the total market value shall be split evenly between the Company and Bushman, (v) the Company will pay costs of $34,500, and (vi) the Company will receive $80,000 of its costs upon commercialization.

 

 
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CAUTIONARY NOTE FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of the Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future operations, future cash needs, business plans and future financial results, and any other statements that are not historical facts.

 

From time to time, forward-looking statements also are included in our other periodic reports on Form 10-K, Forms 10-Q and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements.

 

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the audited annual Financial Statements included in the Company’s Form 10-K and unaudited interim Financial Statements and related notes included in this Form 10-Q filing, as well as the sections entitled “Risk Factors” in of this filing, as well as other cautionary statements and risks described elsewhere in this filing. Our actual results could differ materially from those discussed in the forward-looking statements.

 

Overview

 

NutraLife BioSciences, Inc. F/K/A NutraFuels, Inc, a Florida corporation (“us”, “we” or “our”) was formed as a limited liability company in the state of Florida on April 1, 2010, to engage in the development and distribution of nutritional and dietary oral spray products. On December 3, 2012, we converted from a Limited Liability Company to a Florida Corporation. We have four wholly owned subsidiaries:

 

 

·Precision Analytic Testing, LLC, a Florida limited liability company (“PAT”) formed on May 11, 2017,

 

 

 

 

·NutraDerma Technologies, Inc., (“NutraDerma”) a Florida corporation formed on January 28, 2019,

 

 

 

 

·PhytoChem Technologies, Inc., a Florida corporation (“PhytoChem”) formed on February 4, 2019, and

 

 

 

 

·TransDermalRX, Inc., a Florida corporation (“TransDermal”) formed on February 8, 2019.

 

NutraLife BioSciences, Inc. and its wholly owned subsidiaries are referred to herein as “us”, “we” “our” or the Company.

 

The Company is engaged in the development, manufacture and distribution of nutraceutical and hemp derived cannabidiol (CBD) sprays, tinctures and related products and the cultivation and processing of industrial hemp. The Company offers seventeen (17) different core formulations which it modifies to meet the specifications of its private label customers. It offers approximately 50 different variations of our core formulations. We have two facilities in South Florida and one facility in Wisconsin. Our primary manufacturing facility has been registered with the Food and Drug Administration and its manufacturing facility has operated in accordance with the Good Manufacturing Processes Standard (GMP) for more than five years. Our products adhere to high manufacturing standards throughout every step of the manufacturing and extraction process. The Company’s products are formulated, developed, manufactured and produced under the supervision of Edgar Ward, our Chief Executive Officer, President and Director. Once produced our products are tested by our in-house laboratory chemists. The Company’s nutraceutical and industrial CBD products are of the highest-quality and laboratory tested for strength, purity and contaminants such as heavy metals, pesticides, and solvents.

 

In the year ended December 31, 2018 and nine month period ended September 30, 2019, private label sales represented 78% and 67% of our revenue, respectively. Our private label sales represent 21 different brands of products manufactured by us. Sales of our industrial hemp CBD products represented 77%, 78% and 67% of private label sales in the year ended December 31, 2017 and 2018 and nine-month period ended September 30, 2019.

 

Our private label products were sold primarily to five (5) private-label distributors, 3 Point Ops, NF Skin, Organic by Nature, My Daily Choice, and Oxzgen, which represented 32%, 25%, 17%, 13%, and 4% percent of our sales in the year ended December 31, 2018 and 24%, 14%, 18%, 1% and 11% for the nine month period ended September 30, 2019. During the nine month period ended September 30, 2019, the Company lost three material private label customers of its CBD products due to the customer’s inability to obtain merchant processing which caused a decline of 31% of sales in the period. In June of 2019, the state of Florida legalized the sale of CBD products in the state of Florida following legalization under the Farm Bill, which thereby eliminated some of the uncertainty surrounding the sale of CBD and hemp products in Florida, where the Company has its manufacturing operations.

 

 
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Recent Highlights:

 

 

·In February of 2019, our wholly owned subsidiary PhytoChem Technologies, Inc. acquired the exclusive rights for approximately $85,000 in cash to commercialize certain technology for the extraction of CBD from hemp in North America, South America and the Caribbean. In May of 2019, the first prototype was completed. In July of 2019, manufacturing of the first commercial unit commenced, and we expect to receive delivery of the first commercial unit before January 2020. To date, we have paid $480,000 for the development and manufacturing of the commercial unit.

 

 

 

 

·In March of 2019, we received two licenses from the state of Wisconsin to grow and process industrial hemp. In June of this year, we planted our first crop (the “Crop”) of 20,000 Phytocannabinoid rich (PCR) hemp plants on 10 acres in Wisconsin.

 

 

 

 

·In August of 2019, we entered into a lease agreement for our 4,000 square foot Wisconsin facility at 200 Mason Street, Unit 20 Onalaska Wisconsin to store and process the Crop.

 

 

 

 

·On October 31, 2019, we successfully completed the harvest of the Crop in Wisconsin which resulted in 97% of the planted 20,000 plants that is now drying and curing hemp flower and biomass.

 

 

 

 

·

On October 23, 2019 we entered into an agreement with Bushman Family LLC (“Bushman”) whereby Bushman agreed to transport and process the Crop at its facility for shucking and bucking, and further drying. Transportation of the Crop to Bushman’s facility commenced on October 24 where the Crop will be dried, shucked/bucked, and bagged. After which, Bushman will deliver the Crop to our Wisconsin facility where the hemp from the crop will be extracted. Under the terms of the Agreement, the entire volume of the crop will be further processed into crude which will be split evenly between the Company and Bushman. We paid $34,500 of the costs of transportation by Bushman. Upon commercialization, we will be reimbursed $80,000 for plant costs.

 

Nine Months Ended September 30, 2019 and 2018

 

We had sales of $1,966,628 and $2,870,462 for the nine months ended September 30, 2019 and 2018, respectively, or 31.5% decrease from the first nine months of 2018. This decrease resulted from several of our wholesale customers having merchant processing issues with their banks related to CBD product sales.

 

Cost of sales was $1,251,033 compared to $1,503,468 for the nine months ended September 30, 2019 and 2018, respectively, or a sixteen-point eight percent (16.8%) decrease. This decrease is directly related to the decrease in sales.

 

Gross margin was $715,595 and $1,366,994 for the nine months ended September 30, 2019 and 2018, respectively, or a forty-seven point seven percent (47.7%) decrease. This decrease is directly related to the decrease in sales. Our cost of sales, as a percentage of sales, increased to 63.6% compared to 52.4%. This is a result of certain fixed costs that do not increase nor decrease based upon sales. This reduced our gross margin as a percentage of sales to 36.4% from 47.6%.

 

General and administrative expenses were $2,639,880 compared to $1,607,244 for the nine months ended September 30, 2019 and 2018, respectively, an increase of sixty-four-point two percent (64.2%). This increase is primarily due to the increase in the Company’s payroll due to expansion in FL and Wisconsin along with promotional and additional operating expenses regarding the Company’s subsidiary.

 

Stock based compensation was $385,757 and $1,167,290 for the nine months ended September 30, 2019 and 2018, respectively, or a sixty-seven percent (67%) decrease.

 

Our interest expense was $366,897 compared to $44,374 for the nine months ended September 30, 2019 and 2018, respectively, an increase of $322,523. This increase is the result of recognizing the expense related to the discount on convertible debt that was paid off in 2019.

 

We recorded a net loss of ($2,771,353) compared to ($1,554,233) for the nine months ended September 30, 2019 and 2018, respectively

 

 
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Three Months Ended September 30, 2019 and 2018

 

We had sales of $527,392 and $1,062,146 for the three months ended September 30, 2019 and 2018, respectively, or a fifty point three (50.3%) decrease from the comparable quarter of 2018. This decrease resulted from several of our wholesale customers having merchant processing issues with their banks related to CBD product sales.

 

Cost of sales was $460,906 compared to $775,191 for the three months ended September 30, 2019 and 2018, respectively, or a forty-point five (40.5%) decrease. This decrease is directly related to the decrease in sales from the comparable quarter of the prior year.

 

Gross margin was $66,486 and $286,955 for the three months ended September 30, 2019 and 2018, respectively, or a seventy-six-point eight percent (76.8%) decrease. This is the result of the increase of the cost of goods sold and decrease in sales. This decrease is directly related to the decrease in sales. Our cost of sales, as a percentage of sales, increased to 87.4% compared to 73.0%. This is a result of certain fixed costs that do not increase nor decrease based upon sales. This reduced our gross margin as a percentage of sales to 12.6% from 27.0%.

 

General and administrative expenses were $823,570 compared to $774,846 for the three months ended September 30, 2019 and 2018, respectively, an increase of six-point three percent (6.3%). This increase is primarily due to the increase in the Company’s payroll and expansion of operations in Wisconsin along with advertising and promotion, and expenses incurred in connection with the commencement of operations of one of the Company’s subsidiaries.

 

Stock based compensation was $112,676 and $183,453 for the three months ended September 30, 2019 and 2018, respectively, or a thirty-eight-point six percent (38.6%) decrease.

 

We recorded a net loss of ($927,166) compared to ($717,127) for the three months ended September 30, 2019 and 2018, respectively.

 

Liquidity and Capital Resources

 

Historically, the Company’s primary cash needs have been related to working capital items, which the Company has largely funded through our revenues, working capital, cash on hand, proceeds from borrowings and proceeds from the issuance of stock.

 

Failure to successfully continue to grow operational revenues could harm our profitability and adversely affect our financial condition and results of operations. We face all of the risks inherent in a young business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing new sales channels.

 

We are continuing our plan to further grow and expand operations and seek sources of capital to pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

 

Cash Flow Activities

 

As of September 30, 2019, the Company had a cash balance of $207,259.

 

 
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Operating Activities

 

Our cash decreased ($212,716) for the nine months ended September 30, 2019. Cash used in operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities, such as those included in working capital.

 

For the first nine months of 2019, the Company’s operating activities used cash of $2,439,295 compared to the first nine months of 2018 which provided cash of $119,083. This decrease resulted from several of our wholesale customers having merchant processing issues with their banks related to CBD product sales which reduced our sales 31.5%. For details of the operating cash flows refer to the condensed consolidated statements of cash flows in Part I – Financial Information.

 

Investing Activities

 

Cash used in investing activities during the first nine months of 2019 and 2018 was $1,587,903 and $505,173 respectively. During 2019, cash was used to purchase manufacturing equipment and for the acquisition of intellectual property.

 

Financing Activities

 

During the nine months ended September 30, 2019, we received proceeds of $2,914,482 from the sale of common stock and $1,000,000 from the issuance of promissory note with a shareholder. We paid $100,000 on short-term notes payable. For the nine months ended September 30, 2018, we received proceeds of $43,332 from the sale of common stock and $380,000 from the issuance of a convertible note.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including the following:

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition and, accounts receivable valuations, investment valuations, inventory valuations, goodwill valuation, stock-based compensation valuations and accounting for income taxes. Actual amounts could differ significantly from these estimates.

 

Fair Value of Financial Instruments

 

Our financial instruments consist of cash and cash equivalents, prepaid expenses, payables and accrued expenses. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. We consider the carrying values of our financial instruments in the consolidated financial statements to approximate fair value, due to their short-term nature.

 

 
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Revenue Recognition

 

The Company adopted ASU 2014-09, “Revenue from Contracts with Customers” on January 1, 2018, using the modified retrospective method, which did not have a material impact on the timing and amount of product revenues.

 

The new revenue recognition standard prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

 

The Company generates revenues from the sale of products. The product is invoiced, and the revenue is recognized upon shipment and once transfer of risk has passed to the customer, which is the point at which the Company has satisfied its performance obligation.

 

The Company’s revenues accounted for under ASC 606 do not require significant estimates or judgements based on the nature of the Company’s revenue. The company’s contracts do not include multiple performance obligations or variable consideration.

 

Property and Equipment

 

Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is provided for using straight-line methods over the estimated useful lives of the respective assets.

 

Leases

 

Effective January 1, 2019, the Company adopted the requirements of FASB ASU 2016-02, Leases (Topic 842) which defines a lease as any contract that conveys the right to use a specific asset for a period of time in exchange for consideration. Leases are classified as a finance lease, formerly called a capital lease, if any of the following criteria are met:

 

 

·The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

 

 

 

 

·The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

 

 

 

 

·The lease term is for the major part of the remaining economic life of the underlying asset.

 

 

 

 

·The present value of the sum of lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset.

 

 

 

 

·The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

 

For any leases that do not meet the criteria identified above for finance leases, the Company treats such leases as operating leases. As of September 30, 2019, the Company has one finance lease and one operating lease.

 

Under the new guidance, both finance and operating leases are reflected on the balance sheet as lease or “right-of -use” assets and lease liabilities. Further note that under previous guidance, operating leases (non-capital leases) were not required to be recorded as an asset on the balance sheet.

 

There are some exceptions, which the Company has elected in its accounting policies. For leases with terms of twelve months or less, or below the Company’s general capitalization policy threshold, the Company elects an accounting policy to not recognize lease assets and lease liabilities for all asset classes. The Company recognizes lease expense for such leases generally on a straight-line basis over the lease term.

 

The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain to be exercised. Certain leases contain non-lease components, such as common area maintenance, which are generally accounted for separately. In general, the Company will assess if non-lease components are fixed and determinable, or variable, when determining if the component should be included in the lease liability. For purposes of calculating the present value of the lease obligations, the Company utilizes the implicit interest rate within the lease agreement when known and/or determinable, and otherwise utilizes its incremental borrowing rate at the time of the lease agreement.

 

 
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As permitted under ASU 2018-11 the Company elected the optional transition method to adopt the new leases standard. Under this new transition method, the Company initially applied the new leases standard at the adoption date of January 1, 2019 and would have recognized a cumulative -effect adjustment, if appropriate, to the opening balance of retained earnings in the period of adoption. No cumulative-effect adjustment was recognized. The Company’s reporting for the comparative periods prior to 2019 in the financial statements will be presented in accordance with the existing GAAP in effect for 2018 and earlier (ASC Topic 840, Leases ).

 

The impact of the adoption of this new standard resulted in an increase to the Company’s operating lease assets and liabilities on January 1, 2019 of approximately $800,000. The implementation did not have a material impact on our condensed consolidated statements of income and statements of cash flows.

 

Valuation of Long-Lived Assets

 

We periodically evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset were less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.

 

Derivatives

 

The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a convertible note containing an embedded derivative instrument, the instrument is marked to fair value at the conversion date and that fair value is reclassified to equity. The shares issued upon conversion of the note are recorded at their fair value with gain or loss recognition as applicable.

 

Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4).

 

Recent Accounting Pronouncements

 

(See “Recently Issued Accounting Pronouncements” in Note 2 of Notes to the Condensed Consolidated Financial Statements.)

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s President, Chief Financial Officer, Secretary, Treasurer and Director, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reasons discussed below.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in the Company’s internal controls over financial reporting during the nine month period ending September 30th , 2019 or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

 
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PART II: OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. To the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

 

Item 1A. Risk Factors

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

From January 2, 2017 to present, we offered and sold the securities below which were not registered under the Securities Act of 1933, as amended. None of the issuances involved underwriters, underwriting discounts or commissions. We relied upon Sections 4(2) of the Securities Act, and Rule 506(b) of the Securities Act of 1933, as amended for the offer and sale of the securities.

 

On December 17, 2017, we issued 500,000 shares Hongxiang Hui for services rendered to us. We valued these shares at $.15 and $.10 per share.

 

On January 5, 2018, February 26, 2018, April 11, 2018, April 20, 2018 and June 2, 2018, we issued 43,759, 125,400, 51,700, 147,600 and 700,000 shares of our common stock to Hamilton & Associates Law Group, P.A. for services rendered which we valued these shares at $.30, $.29, $.18, $.245 and $.20 per share, respectively.

 

On January 23, 2018, we issued 200,000 common shares to Randy Avon for services rendered to us. We valued these shares at $.21 per share or an aggregate of $41,446.

 

On January 23, 2018, we issued 150,000 common shares to Daniel Slane for services rendered to us. We valued these shares at $.21 per share or an aggregate of $31,085.

 

On January 23, 2018, we issued 100,000 common shares to Michel Lohan for services rendered to us. We valued these shares at $.4762 per share or an aggregate of $47,618.

 

On January 23, 2018, we issued 350,000 shares David Zirulnikoff for services rendered to us. We valued these shares at $.26 per share or an aggregate of $89,374.

 

On January 23, 2018, we issued 200,000 common shares to Ronald Silver for services rendered to us. We valued these shares at $.21per share or an aggregate of $41,446.

 

On February 15, 2018, we issued 2,000,000 shares to Hall Global LLC, a limited liability controlled by Michael Anderson for equipment provided to us. We valued these shares at $.2846 per share or an aggregate of $569,200. Hall Global LLC returned the 2,000,000 shares to us for cancellation on November 1, 2018 pursuant to a settlement agreement dated September 7, 2018.

 

On February 15, 2018, we issued 500,000 common shares to Hongxiang Hui for services rendered to us. We valued these shares at $.28 per share or an aggregate of $140,000.

 

On May 11, 2018, we issued 250,000 common shares to Tony Hunter for services rendered to us. We valued these shares at $.19 per share or an aggregate of $54,750.

 

 
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On June 1, 2018, we issued 500,000 common shares to Lyons Capital for services rendered to us. We valued these shares at $.20 per share or an aggregate of $100,000.

 

On July 25, 2018, we issued 62,500 common shares to Mary Ellen Mahon for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On July 25, 2018, we issued 62,500 common shares to Anthony Centorani for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On July 25, 2018, we issued 250,000 common shares to Michael P. Dulak for services rendered to us. We valued these shares at $.16 per share or an aggregate of $40,000.

 

On July 25, 2018, we issued 62,500 common shares to Robert Patrick Scott for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On July 25, 2018, we entered into an agreement with Breadfruit Tree DBA NFSkin, a Florida corporation where by we agreed to pay them 15% of their net sales of our product. The 15% is payable in up to 3,000,000 shares of our common stock which the number of shares will be calculated based on a value of $.20 per share. On September 10, 2018, we issued 514,549 of the shares issuable under the agreement.

 

On July 31, 2018, we entered into an agreement as amended March 10, 2019, with New Leaf Assets, LLC, a Delaware limited liability company, wherein NewLeaf invested the sums of $250,000, $130,000 and $1,000,000 in our securities on July 31, 2018, August 31, 2018 and March 15, 2019, respectively. On July 31, 2018, NewLeaf was granted 2,000,000 shares on the Company’s common stock and warrants to purchase 625,000 shares of the Company’s common stock at the price of $.20 per share at any time for a period of three (3) years. On August 31, 2018 NewLeaf received warrants to purchase 325,000 shares of the Company’s common stock at the price of $.20 per share at any time for a period of three (3) years. On March 15, 2019, NewLeaf was issued 13,764,705 common shares, granted warrants to purchase an additional 10 million common shares at the price of $.20 per share at any time until March 4, 2022 and an option to purchase an aggregate of 7,647,058 common shares at the aggregate price of $650,000 at any time prior to April 8, 2019. As a result, NewLeaf holds an aggregate of 15,764,705 of the Company’s common shares at an average price of $.0726 per share, warrants to purchase an additional 10,950,000 common shares and an option to purchase an additional 7,647,058 common shares for an aggregate price of $650,000 at any time prior to April 8, 2019.

 

On August 24, 2018, we issued 200,000 shares of our common stock to Barrington Jenoure for an aggregate price of $33,332 or the per share price of $.167 per share.

 

On August 28, 2018, we issued 60,000 shares of our common stock to Barrington Jenoure for an aggregate price of $10,000 or the per share price of $.167 per share.

 

On September 20, 2018, we issued 62,000 common shares to John Gross for services rendered to us. We valued these shares at $.20 per share or an aggregate of $12,400.

 

On September 20, 2018, we issued 26,000 common shares to Ann Mahfood for services rendered to us. We valued these shares at $.20 per share or an aggregate of $5,200.

 

On October 11, 2018, we issued 250,000 common shares to Nicholas Ward, the son of our Chief Executive Officer, President and Director for services rendered to us. We valued these shares at $.196 per share or an aggregate of $49,000.

 

On October 11, 2018, we entered into a convertible note agreement in the principal amount of $37,500 with FMG Holding LLC, a Florida limited liability company controlled by Michael Farr. The note bears interest at the rate of 10% and has a maturity date of November 30, 2018. The principal and interest due under the note are convertible into our common shares at the rate of $.20 in whole or in part at any time until maturity. Mr. Farr received warrants to purchase 1,000,000 of our common shares at the price of $.21 per share at any time until October 31, 2021 as additional consideration for the note.

 

 
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On October 11, 2018, we entered into a convertible note agreement in the principal amount of $37,500 with Forage Complete, LLC, an Idaho limited liability company controlled by Cory Jenkins. The note bears interest at the rate of 10% and has a maturity date of November 30, 2018. The principal and interest due under the note are convertible into our common shares at the rate of $.20 in whole or in part at any time until maturity. Mr. Farr received warrants to purchase 1,000,000 of our common shares at the price of $.21 per share at any time until October 31, 2021 as additional consideration for the note.

 

On October 17, 2018, we issued 100,000 common shares to Michael P. Dulak for services rendered to us. We valued these shares at $ .19 per share or an aggregate of $19,000.

 

On October 17, 2018, we issued 62,500 common shares to Mary Ellen Mahon for services rendered to us. We valued these shares at $.19 per share or an aggregate of $11,875.

 

On October 17, 2018, we issued 62,500 common shares to Robert Patrick Scott for services rendered to us. We valued these shares at $.19 per share or an aggregate of $11,875.

 

On October 17, 2018, we issued 62,500 common shares to Anthony Centorani for services rendered to us. We valued these shares at $ .19 per share or an aggregate of $11,875.

 

On November 7, 2018, we entered into a convertible note agreement, as amended, on March 20, 2019 with Paul R. Botts, in the principal amount of $25,000. The note bears interest at the rate of 10% and has a maturity date of April 22, 2019. The principal and interest due under the note are convertible into our common shares at the rate of $.20 in whole or in part at any time until maturity. On March 19, 2019, we issued 100,000 common shares to Mr. Botts as additional consideration for the amended note.

 

On December 21, 2018, we issued 848,484 common shares to FMG Holdings, LLC a Florida limited liability company controlled by Michael Farr, for services rendered to us. We valued these shares at $ .19 per share or an aggregate of $161,127.11.

 

On December 21, 2018, we issued 848,484 common shares to Forage Complete, LLC, an Idaho limited liability company controlled by Cory Jenkins, for services rendered to us. We valued these shares at $.19 per share or an aggregate of $161,127.11.

 

On December 21, 2018, we issued 5,294,117 common shares to Kahn Family Limited PT II for a price of $.085 per share or an aggregate of $449,479.50

 

On December 21, 2018, we issued 1,176,470 common shares to Dennis Poland for a price of $.085 per share or an aggregate of $99,882.35.

 

On December 21, 2018, we issued 294,117 common shares to Barrington Jenoure for a price of $.085 per share or an aggregate of $24,970.59.

 

On December 24, 2018, we issued 250,000 common shares to SunX Analytical, LLC, a Maryland limited liability company controlled by Barry Pritchard, for services rendered to us. We valued these shares at $.170 per share or an aggregate of $42,475.

 

On January 3, 2019, we issued 120,004 common shares to Joshua J. Gooden for a price of $.167 per share or an aggregate of $20,000.

 

On January 29, 2019, we issued 62,500 common shares to Robert Patrick Scott for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

 
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On January 29, 2019, we issued 62,500 common shares to Anthony Centorani for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On January 29, 2019, we issued 62,500 common shares to Liska Rodriguez for services rendered to us. We valued these shares at $ .16 per share or an aggregate of $10,000.

 

On January 29, 2019, we issued 62,500 common shares to John Gross for services rendered to us. We valued these shares at $ .16 per share or an aggregate of $10,000.

 

On January 29, 2019, we issued 62,500 common shares to Esco Bell for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On January 29, 2019, we issued 62,500 common shares to Mary Ellen Mahon for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On January 30, 2019, we issued 62,500 common shares to Lawrence Muchnick for services rendered to us. We valued these shares at $ .16 per share or an aggregate of $10,000.

 

On January 30, 2019, we issued 62,500 common shares to Michael John Deblasis for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On January 31, 2019, we issued 321,281 common shares to Hamilton & Associates Law Group for services rendered to us. We valued these shares at $.18 per share or an aggregate of $57,830.58.

 

On February 1, 2019, we issued 7,647,059 common shares to Kahn Family Limited PT II for a price of $.085 per share or an aggregate of $650,000. On February 8, 2019, we issued 2,941,176 common shares to Kahn Family Limited PT II for a price of $.085 per share or an aggregate of $650,000. On March 12, 2019, we issued 300,000 common shares to Kahn Family Limited PT II for a price of $.085 per share or an aggregate of $25,550.

 

On February 4, 2019, we issued 62,500 common shares to Karina Rodriguez for services rendered to us. We valued these shares at $.16 per share or an aggregate of $10,000.

 

On February 8, 2019, we issued 250,000 common shares to Sunx Analytical, LLC a Maryland Company controlled by Barry Pritchard, for services rendered to us. We valued these shares at $.20 per share or an aggregate of $50,000.

 

On February 14, 2019, we issued 117,647 common shares to Herbert & Rosalind Chasman Family Trust for a price of $.085 per share or an aggregate of $10,000.

 

On February 14, 2019, we issued 235,294 common shares to Deborah Axelrod for a price of $.085 per share or an aggregate of $20,000.

 

On February 21, 2019, we issued 117,647 common shares to Stephan Golding for services rendered to us. We valued these shares at $.085 per share or an aggregate of $10,000.

 

On March 7, 2019, we issued 62,500 common shares to Austin Hunter for services rendered to us. We valued these shares at $.170 per share or an aggregate of $10,625.

 

On March 12, 2019, we issued 1,200,000 common shares to Bruce Burley for the purchase of certain assets. We value these shares at a price of $.17 per share or an aggregate of $204,000.

 

On March 12, 2019, we issued 300,000 common shares to Robert E. Borland Jr for the purchase of certain assets. We value these shares at a price of $.17 per share or an aggregate of $51,000.

 

On March 15, 2019, we issued 2,499,765 common shares to Orange Pumpkin Trust for a price of $.085 per share or an aggregate of $212,480.

 

 
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On March 19, 2019, we issued 176,470 common shares to Antonio Morgado for services rendered to us. We valued these shares at $.085 per share or an aggregate of $149,999.50.

 

On March 22, 2019, we issued 117,647 common shares to Scott Mast for a price of $.085 per share or an aggregate of $10,000.

 

On March 22, 2019, we issued 117,647 common shares to Charles Mast for a price of $.085 per share or an aggregate of $10,000.

 

On April 1, 2019, we issued 21,882 common shares to Paul R. Hemmes for services rendered to us. We valued these shares at $.186 per share or an aggregate of $4,070.

 

On April 2, 2019, we issued 2,389,470 common shares to Kahn Family Limited PT II in exchange for the aggregate principal and interest of $203,104 outstanding under a promissory note. We valued these shares at $.085 per share.

 

On April 2, 2019, we issued 200,000 common shares to Carmen Cortes for a price of $.085 per share or an aggregate of $17,000.

 

On April 9, 2019, we issued 117,647 common shares to Gerald Hersey for services rendered to us. We valued these shares at $.085 per share or an aggregate of $25,352.

 

On April 16, 2019, we issued 117,647 common shares to Gloria G. Ruiz for services rendered to us. We valued these shares at $.19 per share or an aggregate of $25,352.

 

On May 15, 2019, we issued 62,500 common shares to Sebastian Zagami for services rendered to us. We valued these shares at $.235 per share or an aggregate of $14,687.

 

On May 30, 2019, we issued 500,000 common shares to Owen Morgan for services rendered to us. We valued these shares at $.225 per share or an aggregate of $112,500.

 

On June 7, 2019, we issued 250,000 common shares to Nicholas Ward for services rendered to us. We valued these shares at $.195 per share or an aggregate of $48,750.

 

On June 7, 2019, we issued 62,500 common shares to Anthony Centorani for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 62,500 common shares to Robert Patrick Scott for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 62,500 common shares to Mary Ellen Mahon for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 62,500 common shares to John Grosi for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 62,500 common shares to Esco Bell for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 62,500 common shares to Austin Hunter for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 62,500 common shares to Cooper Dodd for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

 
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On June 7, 2019, we issued 62,500 common shares to Karina Rodriguez for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 62,500 common shares to Lisk Rodriguez for services rendered to us. We valued these shares at $.195 per share or an aggregate of $12,187.

 

On June 7, 2019, we issued 434,000 common shares to Sidnak Solutions Inc. for payment of the balance of invoices outstanding. We valued these shares at $.10 per share or an aggregate of $43,400.

 

On June 18, 2019, we issued 500,000 common shares to Brenda Hamilton for providing a pledge as collateral for a loan in the amount of $1,000,000 to us. We valued these shares at $.191 per share or an aggregate of $95,500.

 

On June 18, 2019, we issued 500,000 common shares to Kahn Family Limited PT II as additional consideration for a loan provided to us in the amount of $1,000,000. We valued these shares at $.191 per share or an aggregate of $95,500.

 

On July 16, 2019, we issued 50,000 common shares to Milena Castaneda for services rendered to us. We valued these shares at $.19 per share or an aggregate of $9,500.

 

On July 16, 2019, we issued 70,203 common shares to Paul R. Hemmes in exchange for services rendered to us. We valued these shares at $.19 per share or an aggregate of $13,339.

 

On August 6, 2019, we issued 500,000 common shares to Sidnak Solutions, Inc. for the purchase raw materials. We valued these shares at $.188 per share or an aggregate of $94,000.

 

On August 28, 2019, we issued 470,588 shares of common shares to Barbara Ludwig for a price of $.085 per share or an aggregate of $40,000.

 

On September 6, 2019, we issued 248,948 shares of our common stock to Hamilton & Associates Law Group, P.A. for services rendered which we valued these shares at $.19 per share or an aggregate of $47,300.

On September 12, 2019, we issued 588,235 shares of our common stock to Gregory Ross for a price of $.085 per share or an aggregate of $50,000.

On September 13, 2019, we issued 588,240 shares of our common stock to Eileen Miller for a price of $.085 per share or an aggregate of $50,000.

  

On September 24, 2019, we issued 1,764,705 shares of our common stock to Randall Oostra for a price of $.085 per share or an aggregate of $150,000.

 

On September 23, 2019, we issued 1,764,705 shares of our common stock to Simon Guo for a price of $.085 per share or an aggregate of $150,000.

 

On September 27, 2019, we issued 352,941 shares of our common stock to Rudolph Mass for a price of $.085 per share or an aggregate of $30,000. 

  

 
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Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit No.

 

Description

 

 

 

31.1*

 

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002

 

 

 

32.1*

 

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002

 

 

 

101

 

Interactive data files pursuant to Rule 405 of Regulation S-T

______

* Filed herewith.

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

 

 

 

NutraLife BioSciences, Inc.

 

 

 

 

 

Date: November 13, 2019

By:

/s/ Edgar Ward

 

 

Edgar Ward

President, Chief Executive Officer,

Acting Chief Financial Officer and Treasurer

(Principal Executive Officer and Principal Financial Officer)

 

 

 
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