The following discussion and analysis of the results of operations and financial
condition of the Company for the quarters ended September 30, 2022 and September
30, 2021, should be read in conjunction with the other sections of this
Quarterly Report, including the Financial Statements and notes thereto of the
Company included in this Quarterly Report. The various sections of this
discussion contain forward-looking statements, all of which are based on our
current expectations and could be affected by the uncertainties as well as other
matters over which we have no control. See "Cautionary Note Regarding
Forward-Looking Statements." Our actual results may differ materially. The
Company does not undertake any obligation to update forward-looking statements
to reflect events or circumstances occurring after the date of this Quarterly
Report.
Overview
NutraLife BioSciences, 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 manufacture and distribute oral spray nutritional and dietary products. Our
distribution strategy includes selling to private label customers retailers,
distributors, and consumers through retail outlets.
Nine Months Ended September 30, 2022 and 2021
We had sales of $251,462 and $246,124 for the nine months ended September 30,
2022 and 2021, respectively, or a 2.2% increase.
Cost of sales was $148,377 compared to $175,852 for the nine months ended
September 30, 2022 and 2021, respectively, or a 15.6% decrease.
Gross margin was $103,085 and $70,272 for the nine months ended September 30,
2022 and 2021, respectively, or an 46.7% increase.
General and administrative expenses were $1,309,813 compared to $1,306,192 for
the nine months ended September 30, 2022 and 2021, respectively, or a 2.8%
decrease.
Stock based compensation was $390,515 and $2,514,514 for the nine months ended
September 30, 2022 and 2021, respectively, or a 84.5% decrease.
Finance costs were $1,448,958 compared to $1,440,173 for the nine months ended
September 30, 2022 and 2021, respectively, an increase of $8,785. This increase
is the result of the recognizing the expenses related to the discount on
convertible debt and beneficial conversion features.
We incurred a net loss of ($3,162,632) compared to ($5,000,014) for the nine
months ended September 30, 2022 and 2021, respectively.
Three Months Ended September 30, 2022 and 2021
We had sales of $115,149 and $70,655 for the three months ended September 30,
2022 and 2021, respectively, or 63% increase from the third quarter of 2021.
Cost of sales was $20,587 compared to $43,568 for the three months ended
September 30, 2022 and 2021, respectively, or 52.7% decrease.
Gross profit was $94,562 and $27,087 for the three months ended September 30,
2022 and 2021, respectively, or 249.1% increase.
General and administrative expenses were $473,265 compared to $406,918 for the
three months ended September 30, 2022 and 2021, respectively, an increase of
5.1%.
Stock based compensation was $0 and $120,000 for the three months ended
September 30, 2022 and 2021, respectively, or a 100% decrease.
Our finance costs were $788,378 compared to $179,795 for the three months ended
September 30, 2022 and 2021 respectively, an increase of $608,583.
We incurred a net loss of ($1,177,981) compared to ($688,257) for the three
months ended September 30, 2022 and 2021 respectively.
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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 lending and proceeds from the
issuance of stock.
As of September 30, 2022, the Company had a cash balance of $431,713. 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.
Cash Flow Activities
As of September 30, 2022, the Company had a cash balance of $431,713.
Operating Activities
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 2022, the Company's operating activities used cash
of $1,141,333, compared to the third quarter of 2021 which used cash of
$959,286. For details of the operating cash flows refer to the condensed
consolidated statements of cash flows in Part I - Financial Information.
Investing Activities
During the nine months ended September 30, 2022, the Company's investing
activities included the acquisition of a license for $1,000,000 and an
investment of $225,000.
Financing Activities
During the nine months ended September 30, 2022, we received proceeds of
$2,360,000 for revenue share agreements $449,010 from the issuance of debt net
of $230,060 for the repayment of debt and $18,275 for the payment of finance
leases.
Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance with U.S. GAAP. The
preparation of our financial statements requires us to make estimates and
assumptions that affect the amounts and disclosures in the financial statements.
Our estimates are based on our historical experience, knowledge of current
events and actions we may undertake in the future, and on various other factors
that we believe are reasonable under the circumstances. Our critical accounting
policies and estimates are described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Critical Accounting Policies" in
our Annual Report on Form 10-K filed with the SEC on April 11, 2022. There were
no material changes to our accounting policies during the nine months ended
September 30, 2022.
Recent Accounting Pronouncements
(See "Recently Issued Accounting Pronouncements" in Note 2 of Notes to the
Condensed Consolidated Financial Statements.)
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