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NEUTRA CORP. SEC Filing Form 10-Q Quartely report 2/2017, submited: 2017-06-14

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Form 10-Q

The SEC form 10-Q is a comprehensive report of a company's performance that must be submitted quarterly by all public companies to the Securities and Exchange Commission. In the 10-Q, firms are required to disclose relevant information regarding their financial position. The form must be submitted on time, and the information should be available to all interested parties.

The 10-Q is due 35 days (it used to be 45 days) after each of the first three fiscal quarters. There is no filing after the fourth quarter because that is when the 10-K is filed.

10-Q 1 form_10-q.htm FORM 10-Q FOR 04-30-2017

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


(MARK ONE)


[X]

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


For the quarterly period ended April 30, 2017


or


[_]

TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _________ to _________


Commission File Number: 0-55077


NEUTRA CORP.

(Exact name of registrant as specified in its charter)


Nevada

 

27-4505461

(State or other jurisdiction of Incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

 

 

400 South 4th Street, Suite 500
Las Vegas, Nevada

 

89101

(Address of principal executive offices)

 

(Zip code)


Registrant’s telephone number, including area code: 702-793-4121


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 [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.

Yes [X] 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” or “emerging growth company” in Rule 12b-2 of the Exchange Act.


 

Large accelerated filer

[_]

Accelerated filer

[_]

 

Non-accelerated filer

[_]

Smaller reporting company

[X]

 

(Do not check is smaller reporting company)

Emerging growth company

[_]


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


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [_] No [X]


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of June 14, 2017, 4,522,650 shares of common stock are issued and outstanding.




TABLE OF CONTENTS


PART I FINANCIAL INFORMATION

4

 

 

Item 1. Financial Statements

4

 

 

Consolidated Balance Sheets as of April 30, 2017 and January 31, 2017 (Unaudited)

4

 

 

Consolidated Statements of Operations for the three months ended April 30, 2017 and 2016 (Unaudited)

5

 

 

Consolidated Statement of Stockholders’ Deficit for the three months ended April 30, 2017 (Unaudited)

6

 

 

Consolidated Statements of Cash Flows for the three months ended April 30, 2017 and 2016 (Unaudited)

7

 

 

Notes to the Unaudited Consolidated Financial Statements

8

 

 

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

13

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

14

 

 

Item 4. Controls and Procedures

14

 

 

PART II OTHER INFORMATION

15

 

 

Item 1. Legal Proceedings

15

 

 

Item 1A. Risk Factors

15

 

 

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

15

 

 

Item 3. Defaults upon Senior Securities

15

 

 

Item 4. Mine Safety Disclosures

15

 

 

Item 5. Other Information

15

 

 

Item 6. Exhibits

15


- 2 -



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION


Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2017. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.


OTHER PERTINENT INFORMATION


When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to Neutra Corp., a Nevada corporation.


- 3 -



PART I — FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


NEUTRA CORP.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


 

 

April 30, 2017

 

January 31, 2017

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

44,203

 

$

 

Total current assets

 

 

44,203

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

44,203

 

$

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

421,685

 

$

471,477

 

Accounts payable to related party

 

 

120,584

 

 

83,692

 

Bank overdraft

 

 

 

 

1,443

 

Advances payable

 

 

3,450

 

 

3,450

 

Current portion of convertible notes payable, net of discount of $98,328 and $112,323, respectively

 

 

51,829

 

 

54,385

 

Current portion of accrued interest payable

 

 

16,908

 

 

13,698

 

Total current liabilities

 

 

614,456

 

 

628,145

 

 

 

 

 

 

 

 

 

Convertible notes payable, net of discount of $272,913 and $278,882, respectively

 

 

34,784

 

 

28,815

 

Accrued interest payable

 

 

26,099

 

 

18,596

 

TOTAL LIABILITIES

 

 

675,339

 

 

675,556

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

Common stock, $0.001 par value; 480,000,000 shares authorized; 4,262,310 and 2,981,660 shares issued and outstanding at April 30, 2017 and January 31, 2017, respectively

 

 

4,262

 

 

2,982

 

Series E preferred stock, $0.001 par value; 20,000,000 shares authorized; 1,000,000 shares issued or outstanding at April 30, 2017 and January 31, 2017, respectively

 

 

1,000

 

 

1,000

 

Additional paid-in capital

 

 

5,488,804

 

 

5,235,652

 

Accumulated deficit

 

 

(6,125,202

)

 

(5,915,190

)

Total stockholders’ deficit

 

 

(631,136

)

 

(675,556

)

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

44,203

 

$

 


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


- 4 -



NEUTRA CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


 

Three months ended

April 30,

 

 

2017

 

2016

 

 

 

 

 

 

REVENUE

$

 

$

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

General and administrative expenses

 

55,904

 

 

114,351

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(55,904

)

 

(114,351

)

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

Interest expense

 

(154,108

)

 

(76,615

)

Gain (loss) on note modification

 

 

 

7,628

 

Total other income (expense)

 

(154,108

)

 

(68,987

)

 

 

 

 

 

 

 

NET LOSS

$

(210,012

)

$

(183,338

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE –
Basic and fully diluted

$

(0.06

)

$

(0.10

)

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and fully diluted

 

3,580,354

 

 

1,763,088

 


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


- 5 -



NEUTRA CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)


 

 

Common Stock

 

Series E

Preferred Stock

 

Additional

Paid-In

 

Accumulated

 

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE,
January 31, 2017

 

2,981,660

 

$

2,982

 

1,000,000

 

$

1,000

 

$

5,235,652

 

$

(5,915,190

)

$

(675,556

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for debt conversion

 

1,280,650

 

 

1,280

 

 

 

 

 

144,226

 

 

 

 

145,506

 

Beneficial conversion discount on issuance of convertible note payable

 

 

 

 

 

 

 

 

108,926

 

 

 

 

108,926

 

Net loss

 

 

 

 

 

 

 

 

 

 

(210,012

)

 

(210,012

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE,
April 30, 2017

 

4,262,310

 

$

4,262

 

1,000,000

 

$

1,000

 

$

5,488,804

 

$

(6,125,202

)

$

(631,136

)


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


- 6 -



NEUTRA CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


 

 

Three months ended April 30,

 

 

 

2017

 

2016

 

 

 

 

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net Loss

 

$

(210,012

)

$

(183,338

)

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

 

 

 

 

 

 

 

Amortization of discount on convertible note payable

 

 

143,413

 

 

64,354

 

Gain on note modification

 

 

 

 

(7,628

)

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

(51,234

)

 

(9,570

)

Accounts payable to related party

 

 

36,892

 

 

 

Accrued interest payable

 

 

10,695

 

 

12,261

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(70,246

)

 

(123,921

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from advances

 

 

 

 

67,986

 

Proceeds from convertible notes payable

 

 

114,449

 

 

65,000

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

114,449

 

 

132,986

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

44,203

 

 

9,065

 

 

 

 

 

 

 

 

 

CASH, at the beginning of the period

 

 

 

 

 284

 

 

 

 

 

 

 

 

 

CASH, at the end of the period

 

$

44,203

 

$

9,349

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Interest

 

$

 

$

 

Taxes

 

$

 

$

 

 

 

 

 

 

 

 

 

Noncash investing and financing transaction:

 

 

 

 

 

 

 

Refinance of advances into convertible notes payable

 

$

 

$

67,986

 

Beneficial conversion discount on convertible note payable

 

$

108,926

 

$

132,986

 

Conversion of convertible notes payable.

 

$

145,506

 

$

47,105

 


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


- 7 -



NEUTRA CORP.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2017


Note 1. General Organization and Business


Neutra Corp. was incorporated in Nevada on January 11, 2011 to market and participate in the nutraceutical space by bringing products derived from all natural and organic origins. Along with participating in the actual nutraceutical products, we plan to research and bring new technology to the nutraceutical space. Nutraceutical natural medicine is an alternative system that focuses on natural remedies and the body’s vital ability to heal and maintain itself. One of the nutraceutical sub-markets is the new thriving medical cannabis market, in which we intend to participate. We intend to entrust the manufacturing to a nutraceutical contractor to private label all of our products and to sell them under our unique brand. We have established a fiscal year end of January 31.


As the global cannabis market grows exponentially, it is constantly in need of better technologies and products to be more efficient in how it grows, what it grows and how it consumes cannabis and its related products. From lighting to dosage devices, from pesticide replacements to plant enhancers, Neutra Corp. is constantly combing the industry for the latest and greatest to test, prove and bring to market.


We have not generated any revenues to date and our activities have been limited to developing our business plan and research and development of products. We will not have the necessary capital to fully develop or execute our business plan until we are able to secure additional financing. There can be no assurance that such financing will be available on suitable terms. We need to raise additional funds in order to implement our business plan. Our current cash on hand is insufficient to commercialize our products or fully develop our business strategy. If we are unable to raise adequate additional funds or if those funds are not available on terms that are acceptable to us, we will not be able to execute our business plan and we may cease operations.


Note 2. Going Concern


The accompanying financial statements have been prepared assuming that we will continue as a going concern. For the three months ended April 30, 2017, we had a net loss of $210,012 and negative cash flow from operating activities of $70,246. As of April 30, 2017, we had negative working capital of $570,253. Management does not anticipate having positive cash flow from operations in the near future.


These factors raise a substantial doubt about our ability to continue as a going concern. The accompanying 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 from the possible inability of the Company to continue as a going concern.


We do not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the we will not be able to remain in business.


Management has plans to address the Company’s financial situation as follows:


In the near term, management plans to continue to focus on raising the funds necessary to implement our business plan. Management will continue to seek out debt financing to obtain the capital required to meet our financial obligations. There is no assurance, however, that lenders will continue to advance capital to us or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about our ability to continue as a going concern.


In the long term, management believes that our projects and initiatives will be successful and will provide cash flow, which will be used to finance our future growth. However, there can be no assurances that our planned activities will be successful, or that we will ultimately attain profitability. Our long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and our ability to achieve adequate profitability and cash flows from operations to sustain its operations.


- 8 -



Note 3. Summary of Significant Accounting Policies


Interim Financial Statements


The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended January 31, 2017 and notes thereto and other pertinent information contained in our Form 10-K that we filed with the Securities and Exchange Commission (the “SEC”).


The results of operations for the three-month period ended April 30, 2017 are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2018.


Consolidated Financial Statements


The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries from the date of their formations. Significant intercompany transactions have been eliminated in consolidation.


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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


Earnings (Loss) per Common Share


We compute basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. The basic earnings (loss) per common share are calculated by dividing our net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per common share are calculated by dividing our net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no dilutive shares outstanding for any periods reported.


Recently Issued Accounting Pronouncements


We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We have carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.


Note 4. Related Party Transactions


During the three months ended January 31, 2017, we incurred salary expense of $22,500 related to services provided by our CEO Christopher Brown. We paid Mr. Brown $37,500 in salary during the three months ended January 31, 2017. As of January 31, 2017, we owe Mr. Brown $89,200, which is recorded on the balance sheet in “Accounts Payable – Related Party.”


Note 5. Advances


As of April 30, 2017 and January 31, 2017, we had amounts due under advances of $3,450 at each period. These advances are not collateralized, non-interest bearing and are due on demand.


- 9 -



Note 6. Convertible Notes Payable


Convertible notes payable consists of the following as of April 30, 2017 and January 31, 2017:


 

 

April 30, 2017

 

January 31, 2017

 

Convertible note, dated July 31, 2015, bearing interest at 10% per annum, maturing on July 31, 2017 and convertible into shares of common stock at $0.01 per share.

 

$

73,940

 

$

73,940

 

Convertible note, dated October 31, 2015, bearing interest at 10% per annum, maturing on October 31, 2018 and convertible into shares of common stock at $0.50 per share.

 

 

156,976

 

 

260,089

 

Convertible note, dated January 31, 2016, bearing interest at 10% per annum, maturing on January 31, 2019 and convertible into shares of common stock at a 60% discount to the market price.

 

 

82,735

 

 

82,735

 

Convertible note, dated March 14, 2016, bearing interest at 8% per annum, maturing on March 14, 2017, and convertible into shares of common stock at a 55% discount to the market price.

 

 

1,217

 

 

1,217

 

Convertible note, dated March 14, 2016, bearing interest at 8% per annum, maturing on March 14, 2017, and convertible into shares of common stock at a 55% discount to the market price.

 

 

 

 

16,551

 

Convertible note, dated May 26, 2016, bearing interest at 8% per annum, maturing on May 26, 2017, and convertible into shares of common stock at a 60% discount to the market price.

 

 

67,986

 

 

67,986

 

Convertible note, dated May 26, 2016, bearing interest at 8% per annum, maturing on May 26, 2017, and convertible into shares of common stock at a 55% discount to the market price.

 

 

 

 

75,000

 

Convertible note, dated May 26, 2016, bearing interest at 8% per annum, maturing on May 26, 2017, and convertible into shares of common stock at a 55% discount to the market price.

 

 

75,000

 

 

 

Total convertible notes payable

 

$

457,854

 

$

474,405

 

Less: current portion of convertible notes payable

 

 

(150,157

)

 

(166,708

)

Less: discount on noncurrent convertible notes payable

 

 

(272,913

)

 

(278,882

)

Convertible notes payable, net of discount

 

$

34,784

 

$

28,815

 

 

 

 

 

 

 

 

 

Current portion of convertible notes payable

 

$

150,157

 

$

166,708

 

Less: discount on current convertible notes payable

 

 

(98,328

)

 

(112,323

)

Convertible notes payable, net of discount

 

$

51,829

 

$

54,385

 


Issuance of Convertible Promissory Notes


During the three months ended April 30, 2017 and 2016, we issued Convertible Promissory Notes. The Convertible Promissory Notes bear interest and are payable at maturity along with accrued interest. The Convertible Promissory Notes and unpaid accrued interest are convertible into common stock at the option of the holder.


Date Issued

 

Maturity Date

 

Interest Rate

 

Conversion Rate

 

Amount of Note

 

March 14, 2016

 

March 14, 2017

 

 8%

 

55% discount

 

$

65,000

 

April 30, 2016

 

April 30, 2019

 

10%

 

60% discount

 

 

67,986

 



Date Issued/Funded

 

Maturity Date

 

Interest Rate

 

Conversion Rate

 

Amount of Note

 

February 9, 2017

 

March 14, 2017

 

8%

 

55% discount

 

$

48,449

 

April 27, 2017

 

May 27, 2017

 

8%

 

55% discount

 

 

75,000

 


- 10 -



We evaluated the terms of the new notes in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We then evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, each of the above notes was fully discounted with a beneficial conversion discount o the date of issuance. We recorded the beneficial conversion discounts as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. Discounts to the Convertible Notes Payable are amortized to interest expense over the life of the respective notes using the effective interest method. During the years ended January 31, 2017 and 2016, we recorded amortization of discounts on convertible notes payable and recognized interest expense of $143,413 and $64,354, respectively.


Modifications of Convertible Promissory Notes


On March 14, 2016, a third party purchased the outstanding principal and accrued interest of our convertible promissory noted dated April 30, 2015. We came to an agreement with the purchaser to change the conditions of the note. Principal and accrued interest on the existing note were refinanced into $68,991 of principal on the new note. The maturity date was changed to March 14, 2017. The interest rate was lowered to 8%, and the conversion rate was change to a 45% discount to the lowest trading price over the preceding 20 days with a floor on the conversion price of $0.00005.


We evaluated the terms of the new note in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion feature did not meet the definition of a liability, because there was a floor on the conversion price and the Board of Directors has the intent and ability to increase the number of outstanding shares if necessary to meet the conversion requirements of the note. We did not bifurcate the conversion feature and account for it as a separate derivative liability. We then evaluated the conversion feature for a beneficial conversion discount. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, we transferred the existing discount of $68,991 on the note to the new modified note on March 14, 2016. We recorded the beneficial conversion discount as an increase in additional paid-in capital and a discount to the Convertible Notes Payable.


We evaluated the terms of the modified note in accordance with ASC Topic No. 470 – 50, Modifications and Extinguishments. We determined this change in terms did constitute a modification. Therefore, we recognized a $7,628 gain on debt modification on March 14, 2016.


Convertible Promissory Notes Issued for Cash


On March 14, 2016, we issued a convertible promissory note to a third party for cash. The note (the “front-end note”) was in the amount of $65,000, and it matures on March 14, 2017. The note bears interest at 8% per year and is convertible into shares of our common stock at a 45% discount to our lowest trading price over the preceding 20 days with a floor on the conversion price of $0.00005.


We evaluated the terms of the note in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We then evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, we recognized beneficial conversion discount of $68,991 on March 14, 2016.  We recorded the beneficial conversion discount as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. Discounts to the Convertible Notes Payable are amortized to interest expense using the effective interest method over the life of the respective notes.


On the same date we issued a second note (the “back-end note”) in the amount of $65,000 in exchange for a note receivable in the same amount. The back-end note matures on March 14, 2017. The note bears interest at 8% per year and is convertible into shares of our common stock at a 45% discount to our lowest trading price over the preceding 20 days with a floor on the conversion price of $0.00005. The Company received proceeds of $16,551 on January 6, 2017 and the remaining proceeds of $48,449 on February 9, 2017. The note was secured by the note receivable for $65,000 from the same party.


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On May 26, 2016, we issued a convertible promissory note to a third party for cash. The note (the “front-end note”) was in the amount of $75,000, and it matures on May 26, 2017. The note bears interest at 8% per year and is convertible into shares of our common stock at a 45% discount to our lowest trading price over the preceding 20 days with a floor on the conversion price of $0.00005.


On the same date we issued a second note (the “back-end note”) in the amount of $75,000 in exchange for a note receivable in the same amount. The back-end note matures on May 26, 2017. The note bears interest at 8% per year and is convertible into shares of our common stock at a 45% discount to our lowest trading price over the preceding 20 days with a floor on the conversion price of $0.00005. The Company received the proceeds of this note on April 27, 2017. The note was secured by the note receivable for $75,000 from the same party.


Conversions to Common Stock


During three months ended April 30, 2016, the holders of our convertible promissory notes converted $47,105 of principal and accrued interest into 170,746 shares of our common stock. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement which provided for conversion.


During three months ended April 30, 2017, the holders of our convertible promissory notes converted $145,506 of principal and accrued interest into 1,280,650 shares of our common stock. See Note 10. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement which provided for conversion.


Note 7. Stockholders’ Equity


Conversions to common stock


During three months ended April 30, 2017, the holders of our convertible notes elected to convert principal and interest into shares of common stock as detailed below:


Date

 

Amount

Converted

 

Number of

Shares Issued

February 13, 2017

 

$

16,619

 

151,085

February 22, 2017

 

 

25,066

 

227,870

March 6, 2017

 

 

23,629

 

214,807

March 21, 2017

 

 

12,784

 

102,168

March 30, 2017

 

 

21,346

 

170,595

April 7, 2017

 

 

10,690

 

92,558

April 20, 2017

 

 

35,372

 

321,567

Total

 

$

145,506

 

1,280,650


During three months ended April 30, 2016, the holders of our convertible notes elected to convert principal and interest into shares of common stock as detailed below:


Date

 

Amount

Converted

 

Number of

Shares Issued

March 17, 2016

 

$

5,001

 

8,266

March 30, 2016

 

 

10,031

 

16,887

April 6, 2016

 

 

850

 

85,000

April 12, 2016

 

 

11,065

 

20,322

April 21, 2016

 

 

20,158

 

40,271

Total

 

$

47,105

 

170,746


Note 8. Subsequent Events


On May 22, 2017, we issued 130,582 shares of common stock as a result of the conversion of principal and accrued interest of $14,364 on a convertible note payable.


On June 2, 2017, we issued 160,748 shares of common stock as a result of the conversion of principal and accrued interest of $17,682 on a convertible note payable.


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


Overview


Neutra Corp. was incorporated in Nevada on January 11, 2011 to market and participate in the nutraceutical space by bringing products derived from all natural and organic origins. Along with participating in the actual nutraceutical products, we plan to research and bring new technology to the nutraceutical space. Nutraceutical natural medicine is an alternative system that focuses on natural remedies and the body’s vital ability to heal and maintain itself. One of the nutraceutical sub-markets is the new thriving medical cannabis market, in which we intend to participate. We intend to entrust the manufacturing to a nutraceutical contractor to private label all of our products and to sell them under our unique brand. We have established a fiscal year end of January 31.


As the global cannabis market grows exponentially, it is constantly in need of better technologies and products to be more efficient in how it grows, what it grows and how it consumes cannabis and its related products. From lighting to dosage devices, from pesticide replacements to plant enhancers, Neutra Corp. is constantly combing the industry for the latest and greatest to test, prove and bring to market.


We have not generated any revenues to date and our activities have been limited to developing our business plan and research and development of products. We will not have the necessary capital to fully develop or execute our business plan until we are able to secure additional financing. There can be no assurance that such financing will be available on suitable terms. We need to raise additional funds in order to implement our business plan. Our current cash on hand is insufficient to commercialize our products or fully develop our business strategy. If we are unable to raise adequate additional funds or if those funds are not available on terms that are acceptable to us, we will not be able to execute our business plan and we may cease operations.


Critical Accounting Policies


We prepare our Consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the condensed Consolidated financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed consolidated financial statements.


While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.


For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended January 31, 2017 on Form 10-K.


Results of Operations


Three months ended April 30, 2017 compared to the three months ended April 30, 2016.


General and Administrative Expenses


We recognized general and administrative expenses of $55,904 and $114,351 for the three months ended April 30, 2017 and 2016, respectively. The decrease is primarily due to reduced professional fees and reduced contributions to joint ventures.


Interest Expense


Interest expense increased from $76,615 for the three months ended April 30, 2016 to $154,108 for the three months ended April 30, 2017. During the three months ended  April 30, 2017, we amortized $143,413 of the discount on our convertible notes, compared to $64,354 for the comparable period of 2016. This was driven by fewer conversions of our convertible notes payable into common stock.  The remaining change is due to interest expense on our convertible promissory notes.


Gain on note modification


We recognized a gain on note modification of $0 and $7,628 for the three months ended April 30, 2017 and 2016, respectively. The gain is due the convertible promissory note issued on March 14, 2016.


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Net Loss


We incurred a net loss of $210,012 for three months ended April 30, 2017 as compared to $183,338 for the comparable period of 2016. The increased net loss is due to the derivative liability on our new convertible promissory notes, offset by reductions in professional fees and interest expense.


Liquidity and Capital Resources


At April 30, 2017, we had cash on hand of $44,203. We have negative working capital of $570,253. Net cash used in operating activities for the three months ended April 30, 2017 was $70,246. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to us. We have no material commitments for capital expenditures as of April 30, 2017.


Additional Financing


Additional financing is required to continue operations. Although actively searching for available capital, we do not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.


Off Balance Sheet Arrangements


We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


This item is not applicable to smaller reporting companies.


ITEM 4. CONTROLS AND PROCEDURES


Management’s Report on Internal Control over Financial Reporting


We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of April 30, 2017. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of April 30, 2017, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.


 

1.

As of April 30, 2017, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

 

 

 

 

2.

As of April 30, 2017, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.


Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.


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Change in Internal Controls Over Financial Reporting


There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.


PART II — OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.


ITEM 1A. RISK FACTORS


This item is not applicable to smaller reporting companies.


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


There were no sales of unregistered equity securities during the three months ended April 30, 2017.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


We have not defaulted upon senior securities.


ITEM 4. MINE SAFETY DISCLOSURES


This item is not applicable to the Company.


ITEM 5. OTHER INFORMATION


None.


ITEM 6. EXHIBITS


3.1

Articles of Incorporation (1)

 

 

3.2

Bylaws (1)

 

 

14.1

Code of Ethics (1)

 

 

21

Subsidiaries of the Registrant (2)

 

 

31.1

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (2)

 

 

32.1

Section 1350 Certification of principal executive officer and principal financial accounting officer. (2)

 

 

101

XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q. (2)(3)

__________

(1)

Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on February 24, 2011.

 

 

(2)

Filed or furnished herewith.

 

 

(3)

In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”


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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 thereunto duly authorized.


 

Neutra Corp.

 

 

 

 

Date: June 14, 2017

BY: /s/ Christopher Brown

 

Christopher Brown

 

President, Secretary, Treasurer, Principal Executive Officer,

Principal Financial and Accounting Officer, and Sole Director


- 16 -


NEUTRA CORP. Latest filings

Filing dateCompanyFormQuarterYear
2017-06-14NEUTRA CORP.10-Q22017view
2017-05-22NEUTRA CORP.10-K/A22017view
2017-05-17NEUTRA CORP.10-K22017view
2017-05-02NEUTRA CORP.NT 10-K22017view
2017-01-31NEUTRA CORP.10-Q12017view
2017-01-13NEUTRA CORP.10-Q/A12017view
2017-01-13NEUTRA CORP.10-Q/A12017view
2016-12-16NEUTRA CORP.NT 10-Q42016view
2016-10-17NEUTRA CORP.10-Q42016view
2016-09-01NEUTRA CORP.SC 13G32016view