SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 ☒     Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2018

 

OR

 

☐     Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from ___________ to ___________

 

Commission file number 000-55740

 

ANUTRA CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware		81-4625032
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

248 Hatteras Avenue

Clermont, FL 34711

(Address of principal executive offices) (zip code)

 

321-221-0233

(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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No

 

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

 

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

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards 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 ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of stock, as of the latest practicable date.

 

Common Stock, par value $0.0001 - 26,440,370 shares as of November 28, 2018.

 

 

 

ANUTRA CORPORATION

 

Index

  

Part I. Financial Information		1
Item 1.	Financial Statements
	Consolidated balance sheets – September 30, 2018 (unaudited) and December 31, 2017	1
	Consolidated statements of operations (unaudited) – Three and Nine months ended September 30, 2018 and 2017	2
	Consolidated statement of stockholders’ equity (deficit) (unaudited) – Nine months ended September 30, 2018	3
	Consolidated statements of cash flows (unaudited) – Nine months ended September 30, 2018 and 2017	4 - 5
	Notes to the consolidated financial statements – (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
Part II. Other Information		17
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	17
Signatures		18

 

  

Anutra Corporation and Subsidiary

Consolidated Balance Sheets

 

		September 30,				December 31,
		2018				2017
		(unaudited)
ASSETS
Current assets
Cash		$	535,508			$	94,378
Accounts receivable, net			2,962				15,055
Inventory			156,786				162,347
Prepaid expense			-				80,000
Total current assets			695,256				351,780
Equipment, net			5,985				6,771
Other assets
Security deposits			3,300				3,300
		$	704,541			$	361,851
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable		$	168,797			$	84,608
Accrued expenses			19,548				5,210
Patent license fee payable to a related party			666,650				-
Customer deposits			22,000				15,000
Note payable			50,000				50,000
Total current liabilities			926,995				154,818
Long-term liabilities
Notes payable			111,500				61,500
Notes payable, related parties			40,000				40,000
Total long-term liabilities			151,500				101,500
Total liabilities			1,078,495				256,318
Stockholders’ equity (deficit)
Common stock, $.0001 par value, 100,000,000 shares authorized, 26,223,400 and 20,000,000 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively			2,622				2,000
Additional paid-in capital			501,229				1,851
Retained earnings (accumulated deficit)			(877,805	)			101,682
Total stockholders’ equity (deficit)			(373,954	)			105,533
		$	704,541			$	361,851

 

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

 

 

Anutra Corporation and Subsidiary

Consolidated Statements of Operations

(Unaudited)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
Sales revenue		$	11,598			$	113,629			$	86,064			$	230,138
Cost of goods sold
Cost of goods			3,388				41,477				34,419				80,548
Freight and shipping			4,926				3,163				13,359				11,731
			8,314				44,640				47,778				92,279
Gross profit			3,284				68,989				38,286				137,859
Sales and marketing expenses			5,210				7,025				22,821				10,907
General and administrative			389,901				26,685				980,306				70,142
Total operating expenses			395,111				33,710				1,003,127				81,049
Income (loss) from operations			(391,827	)			35,279				(964,841	)			56,810
Other income (expense)
Retained customer deposit			-				25,901				-				74,432
Interest expense			(5,134	)			-				(14,646	)			-
Income (loss) before provision for income taxes			(396,961	)			61,180				(979,487	)			131,242
Provision for income taxes			-				-				-				-
Net income (loss)		$	(396,961	)		$	61,180			$	(979,487	)		$	131,242
Income (loss) per share - basic and diluted		$	(0.02	)		$	0.00			$	(0.05	)		$	0.01
Weighted average shares - basic and diluted			25,981,552				20,000,000				20,812,308				20,000,000

 

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

 

 

Anutra Corporation and Subsidiary

Consolidated Statement of Stockholders’ Equity (Deficit)

(Unaudited)

 

														Retained				Total
										Additional				Earnings				Stockholders’
		Common Stock								Paid-In				(Accumulated				Equity
		Shares				Amount				Capital				Deficit)				(Deficit)
Balance, January 1, 2018			20,000,000			$	2,000			$	1,851			$	101,682			$	105,533
Cancellation of common stock shares			(19,500,000	)			(1,950	)			1,950				-				-
Issuance of common stock shares			6,250,000				625				499,375				-				500,000
Common stock shares issued to affect reverse merger			19,473,400				1,947				(1,947	)			-				-
Net loss			-				-				-				(979,487	)			(979,487	)
Balance, September 30, 2018			26,223,400			$	2,622			$	501,229			$	(877,805	)		$	(373,954	)

 

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

 

 

Anutra Corporation and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited)

 

		Nine Months Ended
		September 30,
		2018				2017
Cash flows from operating activities
Cash received from customers		$	105,157			$	231,345
Cash paid to suppliers and employees			(208,893	)			(284,796	)
Interest paid			(5,134	)			-
Net cash used in operating activities			(108,870	)			(53,451	)
Cash flows from investing activities
Purchase of equipment			-				(650	)
Net cash used in investing activities			-				(650	)
Cash flows from financing activities
Issuance of common stock shares			500,000				-
Proceeds from note payable			50,000				99,475
Distributions to member			-				(56,894	)
Net cash provided by financing activities			550,000				42,581
Net increase (decrease) in cash and cash equivalents			441,130				(11,520	)
Cash and cash equivalents, beginning of period			94,378				14,673
Cash and cash equivalents, end of period		$	535,508			$	3,153

 

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

 

 

Anutra Corporation and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited)

 

		Nine Months Ended
		September 30,
		2018				2017
Reconciliation of net income (loss) to net cash used in operating activities:
Net income (loss)		$	(979,487	)		$	131,242
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation			786				662
Allowance for doubtful accounts			(6,890	)			4,246
Amortization of prepaid expense			80,000				-
Changes in operating assets and liabilities:
Accounts receivable			18,983				(77,471	)
Inventory			5,561				(23,805	)
Prepaid expense			-				(80,000	)
Accounts payable and accrued expenses			98,527				(8,325	)
Patent license fee payable to a related party			666,650				-
Customer deposits			7,000				-
Net cash used in operating activities		$	(108,870	)		$	(53,451	)

 

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

 

 

Anutra Corporation and Subsidiary

Notes to the Unaudited Consolidated Financial Statements

 

1.

NATURE OF BUSINESS

 

Anutra Corporation, formerly Still Sound Acquisition Corporation (the “Company”) was incorporated on December 7, 2016 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company changed its name in February 2018 in anticipation of a change in control. Effective May 4^th, 2018 the Company entered into a reverse merger agreement that is effectively a stock for ownership units exchange.

 

The Company produces and sells products made with a new cultivar of grain, marketed as ANUTRA® Grain. ANUTRA® Grain products are sold as food and nutritional supplements on the internet and through national health food retailers. ANUTRA® Grain is also sold to major food manufacturers as an ingredient for their products.

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s unaudited consolidated financial statements. Such unaudited consolidated financial statements and accompanying notes are the representation of the Company’s management, who are responsible for their integrity and objectivity. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commissions (“SEC”) for quarterly reports on Form 10-Q. Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements.

 

The unaudited financial information included in this report includes all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results of the full fiscal year.

 

The consolidated financial statements included in this report should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 8-K/A describing the reverse merger, as filed with the SEC on October 16, 2018.

 

Consolidation Policy

The accompanying consolidated financial statements include the accounts of Anutra Corporation and Anutra Super Grain LLC under the guidelines for consolidated financial statements as required by US GAAP. The guidelines require the elimination of intercompany transactions and balances from the consolidated financial statements.

 

Use of Estimates

The preparation of financial statements in conformity US GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

 

 

Anutra Corporation and Subsidiary

Notes to the Unaudited Consolidated Financial Statements

 

Accounts Receivables and Revenue Recognition

Accounts receivable are recorded at the principal amount receivable and are shown net of an allowance for uncollectible accounts. In establishing the allowance for uncollectible accounts management evaluates history with customers, their creditworthiness, and business and economic conditions.

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-19, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance addresses, in particular, contracts with more than one performance obligation, as well as the accounting for some costs to obtain or fulfill a contract with a customer, and provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. With respect to public entities, this update, together with subsequent amendments, was effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted this guidance effective January 1, 2018.

 

The core principal of ASU 2014-19 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Using this principle, a comprehensive framework was established for determining how much revenue to recognize and when it should be recognized. To be consistent with this core principle, an entity is required to apply the following five-step approach:

 

●

Identify the contract(s) with a customer;

 

●

Identify each performance obligation in the contract;

 

●

Determine the transaction price;

 

●

Allocate the transaction price to each performance obligation; and

 

●

Recognize revenue when or as each performance obligation is satisfied.

 

The Company’s revenue comes substantially from the sale of manufactured consumable products which are shipped to customers.

 

Revenue is reported net of discounts which include primarily early pay discounts and customer refunds. These discounts totaled $4,927 and $10,048 for the nine months ended September 30, 2018 and 2017, respectively.

 

The Company adopted ASU 2014-19 using the modified retrospective method and did not have any material change to their revenue resulting from this adoption.

 

Inventory and Costs of Goods Sold

Inventory consists of purchased grain and the related packaging materials and supplies. Inventory is stated at lower of cost or net realizable value determined on the first-in, first-out basis.

 

Inventory and packaging costs are recognized in costs of goods sold when the associated revenue is recorded.

 

 

Anutra Corporation and Subsidiary

Notes to the Unaudited Consolidated Financial Statements

 

Equipment

Equipment is carried at cost. Depreciation is provided over the estimated useful lives of the assets on the straight-line method. The estimated useful lives for the different classes of depreciable assets are:

 

Office Furniture and Equipment		3 – 10 years
Machinery and Equipment		20 – 25 years
Website		5 years

 

Expenditures for repairs and renovations that extend the useful lives of the equipment are capitalized when the expenditure exceeds $2,500. Expenditures for costs below this amount are charged to expense as incurred.

 

Customer Deposits

The Company occasionally requests deposits from customers on large orders that will be shipped overseas. These amounts may be refunded based on individual circumstances.

 

As of September 30, 2018 and December 31, 2017, the Company has recorded a customer deposit liability of $22,000 and $15,000, respectively for a deposit on an order that is expected to be shipped in the winter of 2018/19.

 

Advertising Costs

Advertising costs are expensed as incurred and are included in sales and marketing expenses in the statements of operations.

 

Income Taxes

Under FASB Accounting Standards Codification (“ASC”) 740, Income Taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of September 30, 2018 and December 31, 2017, the Company’s deferred tax assets and valuation allowances were $207,000 and $1,200, respectively. The Company’s deferred tax assets consist of net operating loss carryforwards of $833,652 and $4,851 as of September 30, 2018 and December 31, 2017, respectively. The carryforwards begin to expire in 2037.

 

None of the Company’s Federal or State income tax returns are currently under examination by the taxing authorities. Tax years 2014 and later are subject to tax examination.

 

The Company has reviewed and evaluated tax positions taken and has determined there are no uncertain tax positions taken that would require recognition of a liability or asset or disclosure in the financial statements.

 

Recently Issued Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The standard was effective for public companies for annual reporting periods beginning after December 15, 2016. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation Topic (718), Improvements to Nonemployee Share-Based Payment Accounting. ASU 2016-09 was part of the FASB’s Simplification Initiative. The areas for simplification involve several aspects of accounting for share-based payment transactions with employees, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2018-07 extended these provisions to share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 is effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted.

 

 

Anutra Corporation and Subsidiary

Notes to the Unaudited Consolidated Financial Statements

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard is effective for public companies for annual reporting periods beginning after December 15, 2018. Early adoption of the standard is permitted for all entities. This standard will require lessees to recognize right of use assets and lease liabilities arising from leases with terms of more than 12 months.

 

The Company does not expect that the adoption of these standards will have a material effect on its consolidated financial statements.

 

3.

ACCOUNTS RECEIVABLE

 

Accounts receivable consist of the following:

 

		September 30, 2018				December 31, 2017
Accounts receivable		$	10,035			$	29,018
Allowance for uncollectible accounts			(7,073	)			(13,963	)
		$	2,962			$	15,055

 

4.

INVENTORY

 

		September 30, 2018				December 31, 2017
Inventory consists of the following:
Raw materials and finished goods		$	125,147			$	135,864
Packaging materials			31,639				26,483
		$	156,786			$	162,347

 

Raw materials and finished goods inventories consist of chia grain and peanut flour. The grain is subject to different processes depending on whether the final product will be sold as whole, ground, or microfine grain.

 

5.

PREPAID EXPENSE

 

The Company consummated their reverse merger on May 4, 2018. The Company is planning a public stock offering for late 2018. During 2017, they entered into an agreement with a corporate consultant to assist with this process and have paid fees for services related to the reverse merger and public stock offering of $80,000. This amount was amortized as an expense and included in general and administrative expenses in the first two quarters of 2018. The full amount of $80,000 is included in general and administrative expenses for the nine months ended September 30, 2018.

 

 

Anutra Corporation and Subsidiary

Notes to the Unaudited Consolidated Financial Statements

 

6.

EQUIPMENT

 

		September 30, 2018				December 31, 2017
Equipment consists of the following:
Office Furniture and Equipment		$	1,575			$	1,575
Machinery and Equipment			4,650				4,650
Website			2,545				2,545
			8,770				8,770
Accumulated Depreciation			(2,785	)			(1,999	)
		$	5,985			$	6,771

 

7.

NOTES PAYABLE

 

To pay for the costs of the merger and stock offering, the Company borrowed $40,000 from three board members and $111,500 from 11 individuals in 2017, plus $50,000 from an individual in 2018. The note repayment terms include 10% annualized interest rate in addition to shares of the public company. Subsequent to September 30, 2018 $104,000 of the notes were repaid in total. $24,000 was repaid to a related party and $80,000 was repaid to non-related parties. As the issuance of shares upon the public offering is uncertain and the fair value is undeterminable no value has been recorded for these shares as of September 30, 2018. With the exception of one note for $50,000 which has a specified due date of December 31, 2018, these notes have no specified repayment date. However, they are due from the proceeds of the public offering, if and when it occurs.

 

8.

COMMITMENTS

 

Operating Leases

The Company has a one-year, renewable lease for combined warehouse and office space. The lease was last renewed in January 2018 for an additional one-year term. The monthly lease payment is $2,247.

 

The Company rents production equipment from its majority member. The leases have five-year terms and are renewable. The start dates and monthly rents are:

 

		Lease start date		Monthly rent
Equipment lease #1		January 1, 2016		$	150
Equipment lease #2		July 1, 2017			100
Equipment lease #3		November 1, 2017			100

 

Future minimum annual lease obligations on long term operating leases are:

 

Twelve months ending
September 30, 2019		$	4,200
September 30, 2020			4,200
September 30, 2021			2,850
September 30, 2022			2,100
September 30, 2023			100
		$	13,450

 

 

Anutra Corporation and Subsidiary

Notes to the Unaudited Consolidated Financial Statements

 

The Company has an informal agreement for refrigerated storage with an unrelated party.

 

Rent expense for the nine months ended September 30, 2018 and 2017 was $21,186 and $20,313, respectively and is included under operating expenses except for $3,370 and $1,766 included in cost of goods sold.

 

Patent License Agreement

On February 27, 2018, the Company entered into a Patent License agreement (the “License”) with its majority shareholder (“Licensor”). The License is effective for the duration of the patent in exchange for payments of $1,000,000 per year. Payment can be made in cash or stock. There is no maturity date. The terms of the License are controlled at the sole discretion of the Licensor. The balance owed at September 30, 2018 is $666,650.

 

Patent license fees for the nine months ended September 30, 2018 were $700,000.

 

9.

RELATED PARTY TRANSACTIONS

 

The Company leases equipment from the majority member. See disclosure under Commitments (Note 8).

 

The Company has a Patent Licensing Agreement with its majority shareholder. See disclosure under Commitments (Note 8).

 

The Company borrowed $40,000 from three board members. See disclosure under Notes Payable (Note 7).

 

On May 4, 2018, as a result of the reverse merger, the Company issued 14,597,760 shares of common stock, par value of $0.0001 per share, to an officer of the Company, and 2,888,640 shares of common stock to members of its Board of Directors.

 

10.

CONCENTRATIONS

 

The majority member holds patents on equipment and processes the Company uses to produce its products. The grain is currently processed by an unrelated company in Iowa.

 

Revenues for the nine months ended September 30, 2018 and 2017 include sales from major customers. The following are sales to these customers:

 

		2018				2017
Customer A		$	29,011			$	53,502
Customer B			19,200				63,771
Customer C			-				51,130

 

Accounts receivable from the same customers were as follows:

 

		September 30,				December 31,
		2018				2017
Customer A		$	-			$	12,486
Customer B			-				46,400
Customer C			-				-

 

 

Anutra Corporation and Subsidiary

Notes to the Unaudited Consolidated Financial Statements

 

11.

SUBSEQUENT EVENTS

 

In preparing these consolidated financial statements the Company has evaluated events and transactions for potential recognition or disclosure through November 28, 2018, the date the consolidated financial statements were available to be issued.

 

Subsequent to the date of the financial statements, and prior to issuance, the Company sold 24,250 shares of common stock. Additionally, the Company issued 16,470 shares of common stock in settlement of notes payable and accrued interest thereon; plus 144,000 shares of common stock in settlement of the provision in the note agreements for shares in the Company. The Company also repaid $104,000 of the Notes Payable in total. $24,000 was repaid to related parties and $80,000 was repaid to non-related parties (See Note 7). And the Company issued 32,250 shares of common stock in settlement of trade payables in the amount of $32,600.

 

12.	GOING CONCERN

 

The Company has sustained operating losses of $979,487 during the nine months ended September 30, 2018 and had an accumulated deficit of $877,805 as of September 30, 2018. These results are due primarily to the cost of taking the Company public, the accrual of the patent license fee, and the lack of sufficient sales to offset these costs. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flows from operations and obtain additional capital from the sale of its equity.

 

The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern. The above conditions raise substantial doubt about the Company’s ability to do so without raising additional capital. The unaudited consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  

The following discussion should be read in conjunction with our audited financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.

 

Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. This forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements, the continued growth of the Company’s industry, the success of our product development, marketing and sales activities, vigorous competition in the Natural Foods Industry, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.

 

Overview

 

These numbers are reflective of Anutra Super Grain being an emerging growth company and investing in taking the company public. As of September 30, 2018, the Company had a stockholders’ deficit of $373,954, and a cash balance of $535,508. During the nine months ended September 30, 2018, the Company had a net loss of $979,487.

 

Results of Operations

 

During the nine months ended September 30, 2018, the Company posted revenues of $86,064, cost of goods sold of $47,778, sales and marketing expenses of $22,821, general and administrative expenses of $980,306, interest expense of $14,646, and a net loss of $979,487. The patent license fee of $700,000 is included in general and administrative expenses and is a significant component of the net loss. In contrast, during the nine months ended September 30, 2017, the Company posted revenues of $230,138, cost of goods sold of $92,279, sales and marketing expenses of $10,907, general and administrative expenses of $70,142, other income from a retained customer deposit of $74,432, and net income of $131,242.

 

During the three months ended September 30, 2018, the Company posted revenues of $11,598, cost of goods sold of $8,314, sales and marketing expenses of $5,210, general and administrative expenses of $389,901, interest expense of $5,134, and net loss of $396,961. The patent license fee of $300,000 is included in general and administrative expenses and is a significant component of the net loss. In contrast, during the three months ended September 30, 2017, the Company posted revenues of $113,629, cost of goods sold of $44,640, sales and marketing expenses of $7,025, general and administrative expenses of $26,685, other income from a retained customer deposit of $25,901, and net income of $61,180.

 

Liquidity and Capital Resources

 

As of September 30, 2018, the Company had cash available of $535,508.

 

 

The Company borrowed $40,000 from three board members and $111,500 from 11 individuals in 2017, plus $50,000 from an individual in 2018. The note repayment terms include 10% annualized interest rate in addition to shares of the Company. As the issuance of shares upon the public offering is uncertain and the fair value is undeterminable no value has been recorded for these shares as of September 30, 2018. With the exception of one note for $50,000 which has a specified due date of December 31, 2018, these notes have no specified repayment date. However, they are due from the proceeds of the public offering, if and when it occurs. Subsequent to September 30, 2018 $104,000 of the notes were repaid in total. $24,000 was repaid to a related party and $80,000 was repaid to non-related parties.

 

There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, there is substantial doubt that the Company will continue as a going concern and be able to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through additional sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.

 

Discussion of Financial Position at September 30, 2018 compared to December 31, 2017

 

During the nine months ended September 30, 2018, the Company incurred a net loss of $979,487 due to the cost of becoming a public company and the cost of the patent license fee which went into effect February 28, 2018. This has negatively affected the Company’s financial position with an increase in accounts payable and accrued expenses of $98,527, an increase in patent license fee payable to a related party of $666,650, and an increase in notes payable of $50,000. During the three months ended September 30, 2018 the Company sold 250,000 shares in a private sale at $2 per share. The net effect of the operating losses, equity investment, and the increase in notes payable has resulted in an increase in cash of $441,130.

 

Management expects the negative trends to continue in the short term as it adds marketing focus to larger industrial food production users in conjunction with retail and on-line strategies.

  

Discussion of Nine Months ended September 30, 2018 compared to Nine Months ended September 30, 2017

 

During the nine months ended September 30, 2018, the Company posted revenues of $86,064. In contrast, during the nine months ended September 30, 2017, the Company posted revenues of $230,138 and a retained customer deposit of $74,432. The decrease in revenues resulted primarily from a product set reorganization and the loss of one of the Company’s major customers.

 

During the nine months ended September 30, 2018, the Company posted cost of goods sold of $47,778, sales and marketing expenses of $22,821, general and administrative expenses of $980,306, and interest expense of $14,646. In contrast, during the nine months ended September 30, 2017, the Company posted cost of goods sold of $92,279, sales and marketing expenses of $10,907 and general and administrative expenses of $70,142. The increase in expenses was related to a shift in marketing to larger industrial food production users, the costs of becoming a public company, and the patent license fee.

 

Net loss for the nine months ended September 30, 2018 was $979,487, as compared to net income of $131,242 for the nine months ended September 30, 2017. The decrease in profitability is attributable to decreased revenues resulting from a product set reorganization, the loss of one of the Company’s major customers, and increases in operating costs related to the shift in marketing to larger industrial food production users, the costs of becoming a public company, and the patent license fee.

During the nine months ended September 30, 2018, the Company used cash in operating activities of $108,870. During such period, the Company also generated cash from financing activities of $550,000. In contrast, during the nine months ended September 30, 2017, the Company used cash in operating activities of $53,451. During such period, the Company also used cash in investing activities of $650 and generated cash in financing activities of $42,581.

 

 

Discussion of Three Months ended September 30, 2018 compared to Three Months ended September 30, 2017

 

During the three months ended September 30, 2018, the Company posted revenues of $11,598. In contrast, during the three months ended September 30, 2017, the Company posted revenues of $113,629 and other income from a retained customer deposit of $25,901.

 

During the three months ended September 30, 2018, the Company posted cost of goods sold of $8,314, sales and marketing expenses of $5,210, general and administrative expenses of $389,901, and interest expense of $5,134. In contrast, during the three months ended September 30, 2017, the Company posted cost of goods sold of $44,640, sales and marketing expenses of $7,025 and general and administrative expenses of $26,685. The increase in expenses was related to the costs of becoming a public company and the patent license fee.

 

Net loss for the three months ended September 30, 2018 was $396,961, as compared to net income of $61,180 for the three months ended September 30, 2017. The decrease in profitability is due to increases in operating costs related to becoming a public company and the patent license fee.

 

Related Party Transactions

 

On February 28, 2018, the Company entered into a Patent License Agreement with Angelo Morini, its majority shareholder. The License is effective for the duration of the patent in exchange for payments of $1,000,000 per year. Payment can be made in cash or stock. There is no maturity date. The terms of the License are controlled at the sole discretion of the Licensor.

  

On January 1, 2016, Anutra Super Grain, LLC (“ASG”) entered into an Equipment Operating Lease Agreement with Angelo Morini (“Mr. Morini”), an officer and member of ASG, pursuant to which ASG leased certain equipment from Mr. Morini described as “Grinder, Shrink Wrap & Label Stamping Machines” in exchange for 60 payments of $150 due on a monthly basis. The agreement shall expire on December 31, 2020 unless terminated prior to the end of the lease term.

 

On July 1, 2017, ASG entered into an Equipment Operating Lease Agreement with Angelo Morini, an officer and member of ASG (“Mr. Morini”), pursuant to which ASG leased certain equipment from Mr. Morini described as “Auto Labeler” in exchange for 60 payments of $100 due on a monthly basis. The agreement shall expire on June 30, 2022 unless terminated prior to the end of the lease term.

 

On November 1, 2017, ASG entered into an Equipment Operating Lease Agreement with Angelo Morini, an officer and member of ASG (“Mr. Morini”), pursuant to which ASG leased certain equipment from Mr. Morini described as “All Fill Machine” in exchange for 60 payments of $100 due on a monthly basis. The agreement shall expire on October 31, 2022 unless terminated prior to the end of the lease term.

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements.

  

  

Source of Revenues

 

The Company earns revenue from selling its food products.

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Information not required to be file by smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report under the supervision and with the participation of the Company’s principal executive officer (who is also the principal financial officer).

  

Based upon that evaluation, the principal executive and financial officer believes that the Company’s disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Controls

 

There was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

   

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.

  

ITEM 1A. RISK FACTORS

 

Information not required to be filed by smaller reporting companies.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On March 15, 2018, the Company issued 6,000,000 shares to effect a change in control prior to engaging in a reverse merger as reported on Form 8-K filed March 15, 2018. On May 4, 2018, the Company issued 19,473,400 common shares pursuant to Section 4(2) of the Securities Act of 1933 at par to consummate the reverse merger as reported on Form 8-K/A filed October 16, 2018. On September 28, 2018 the Company sold 250,000 shares at $2 per share to a private investor.

 

The Company issued the following shares of its common stock:

  

Date		Name		Number of Shares
March 15, 2018		Angelo S. Morini			6,000,000
May 4, 2018		Angelo S. Morini			14,597,760
May 4, 2018		Minority owners of Anutra Super Grain LLC and others			4,875,640
September 28, 2018		Joseph Giordano			250,000
Subsequent to September 30, 2018 and prior to issuance of this quarterly report		23 individuals and companies			216,970

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIED

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable

 

ITEM 5. OTHER INFORMATION

 

	(a)	Form 8-K filed on March 15, 2018 is hereby incorporated by reference
	(b)	Form 8-K filed on May 7, 2018 is hereby incorporated by reference.

 

(c)

Form 8-K/A filed on October 16, 2018 is hereby incorporated by reference.

 

(d)

Item 407 (c)(3) of Regulation S-K:

  

During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 

ITEM 6. EXHIBITS

 

31	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

  

 

SIGNATURES

 

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

 

	ANUTRA CORPORATION
	By:	/s/ Angelo S. Morini
		Chief Executive Officer and Chief Financial Officer

  

Dated: November 28, 2018