UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2019

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                           to                           

 

Commission File No. 000-54917

 

NATUR INTERNATIONAL CORP.

(Exact name of registrant as specified in its charter)

 

WYOMING   45-5547692
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

Parnassus Tower, Locatellikade 1

1076 AZ Amsterdam

The Netherlands

(Address of principal executive offices)

 

Registrant’s telephone number, including area code: 011 31 20 578 7700

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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. (1) Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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 whether 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 ☒

 

Securities registered pursuant to Section 12(b) of the Securities and Exchange Act of 1934:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None        

  

As of November 14, 2019, there were 322,230,038 shares of common stock, par value $0.001, of the registrant issued and outstanding.

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

The Unaudited Consolidated Financial Statements of Natur International Corp., a Wyoming corporation (the “Company,” “Natur,” “we,” “our,” “us” and words of similar import) were prepared by management and commence on the following page, together with related notes. In the opinion of management, the Unaudited Consolidated Financial Statements fairly present the financial condition of the Company.

 

Natur International Corp.

 

Index to Unaudited Financial Statements

 

Consolidated Balance Sheets 2
   
Unaudited Consolidated Statements of Operations 3
   
Unaudited Consolidated Statements of Cash Flows 5
   
Notes to Unaudited Consolidated Financial Statements 6

 

1

 

 

NATUR INTERNATIONAL CORP.

CONSOLIDATED BALANCE SHEETS

 

    NOTES  

(unaudited)

September 30,
2019

    December 31, 2018  
ASSETS                
Current Assets                
Cash and cash equivalents         93,125       128,364  
Accounts receivable         41,129       42,744  
Related party receivable         250,000       1,833  
Inventories         834,926       179,072  
Other current assets   5     372,332       99,535  
Current assets held for disposal   13     2,000       377,628  
Total Current Assets         1,593,512       829,176  
                     
Non-Current Assets                    
Intangible asset         34,057       37,353  
Fixed asset   4     56,539       523,510  
Other asset         -       201,160  
Non-current assets held for disposal   13     -       51,165  
Total Non-Current Assets         90,596       813,188  
                     
TOTAL ASSETS         1,684,108       1,642,364  
                     
LIABILITIES AND MEMBERS’ DEFICIT                    
                     
Current Liabilities                    
Accounts Payable         653,636       1,127,345  
Accrued expenses & other contingent liabilities   6     60,026       583,161  
Related party other liabilities   7     2,638,207       2,032,705  
Related party other notes   8     -       1,072,849  
Convertible note payable   9     581,235       1,600,710  
Related party convertible note payable   10     2,984,217       11,671,743  
Preferred Stock payable         3,843,851       -  
Current liabilities held for disposal   13     104,333       887,126  
Total Current Liabilities         10,865,505       18,975,639  
                     
TOTAL LIABILITIES         10,865,505       18,975,639  
                     
Stockholders’ Equity                    
Common stock, $0.001 par value, 750,000,000 and 200,000,000 shares authorized as of September 30, 2019 and December 31, 2018, respectively. 322,230,038 and 129,049,192 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively.         322,230       129,049  
Preferred stock A, $0.001 par value, 2,397.131 and 2,469.131 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. Convertible to common stock at a 1:33,000 ratio.         2       2  
Preferred stock B, 100,000 shares authorized, Nil and 100,000 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. Convertible to common stock at a 1:1000 ratio.         -       100  
Preferred stock C, $0.001 par value, Nil issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. Convertible to common stock at a 1:1000 ratio.         -       -  
Additional Paid in Capital         15,463,095       5,174,269  
Total Shareholders’ deficit         (25,431,804 )     (22,299,570 )
Accumulated other comprehensive loss         575,360       (337,125 )
Equity attributed to non-controlling interest         (110,280 )     -  
TOTAL EQUITY/(DEFICIT)         (9,181,397 )     (17,333,274 )
                     
LIABILITIES AND MEMBERS’ DEFICIT         1,684,108       1,642,364  

 

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

2

 

 

NATUR INTERNATIONAL CORP.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

    For the Three Months     For the Nine Months  
    September 30,
2019
    September 30,
2018
    September 30,
2019
    September 30,
2018
 
                         
REVENUE     259,006       377,565       331,559       1,319,998  
                                 
COST OF GOODS SOLD - RELATED PARTY     9,266       295,034       42,826       720,070  
COST OF GOODS SOLD     218,503       10,180       284,639       142,297  
      227,269       305,214       327,465       862,367  
                                 
GROSS MARGIN     31,237       72,350       4,094       457,631  
                                 
OPERATING EXPENSES                                
Wages & Salaries     284,495       475,607       657,559       1,268,286  
Selling, General & Administrative     1,533,564       1,272,264       4,179,035       3,291,730  
Amortization, depreciation and impairment     6,093       83,584       281,891       167,168  
                                 
Total operating expenses     1,824,152       1,831,455       5,118,485       4,727,184  
                                 
LOSS FROM OPERATIONS     (1,792,915 )     (1,759,105 )     (5,114,391 )     (4,269,553 )
                                 
Interest expense     691       64,841       40,786       128,102  
                                 
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES     (1,793,606 )     (1,823,946 )     (5,114,391 )     (4,269,553 )
                                 
Income taxes     -       -       -       -  
                                 
INCOME FROM CONTINUING OPERATIONS     (1,793,606 )     (1,823,946 )     (5,155,177 )     (4,397,655 )
                                 
Discontinued operations (NOTE 13)                                
Gain on disposal of subsidiary     -       -       1,891,985       -  
Loss from operations of discontinued Component     63,310       (119,136 )     (18,311 )     (1,214,837 )
                                 
NET LOSS ATTRIBUTED TO MEMBERS     (1,730,296 )     (1,943,082 )     (3,281,503 )     (5,612,492 )
                                 
Basic loss per share     (0.01 )     (0.02 )     (0.00 )     (0.05 )
    Diluted loss per share     (0.01 )     (0.02 )     (0.00 )     (0.05 )
                                 
COMPREHENSIVE INCOME                                
                                 
Net Loss     (1,730,296 )     (1,943,082 )     (3,281,503 )     (5,612,492 )
Other comprehensive income/(loss)     507,895       -       912,485       -  
Comprehensive loss attributed to non-controlling interest     149,269       -       149,269       -  
                                 
COMPREHENSIVE LOSS     (1,073,132 )     (1,943,082 )     (2,219,749 )     (5,612,492 )

  

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

 

3

 

 

NATUR INTERNATIONAL CORP.

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

 

    Common Stock     Preferred stock A     Preferred stock B     Preferred stock C                                
    Amount ($.001 par)     Number of
Shares
    Amount ($.001 par)     Number of
Shares
    Amount ($.001 par)     Number of
Shares
    Amount ($.001 par)     Number of
Shares
    Other Paid in Capital     Retained deficit     Accumulated OCI     Non-controlling interest     Total  
Balance at December 31, 2018     129,049       129,049,192       2       2,469.131       100       100,000       -       -       5,174,269       (22,299,570 )     (337,125 )             (17,333,275 )
                                                                                                         
Net Loss                                                                             (1,747,531 )                     (1,747,531 )
Share-based compensation                                                                     403,162                               403,162  
Conversion of Preferred A to Common Stock     2,376       2,376,002       (0 )     (72 )                                     (2,376 )                             (0 )
Accumulated other comprehensive gain/(loss)                                                                                     353,913               353,913  
Balance at March 31, 2019     131,425       131,425,194       2       2,397.131       100       100,000       -       -       5,575,055       (24,047,101 )     16,788       -       (18,323,731 )
                                                                                                         
Net Profit                                                                             196,324                       196,324  
Share-based compensation                                                                     685,044                               685,044  
Debt Converted to Common Stock     340       340,000                                                       13,218                               13,558  
Conversion of Preferred B to Common Stock     100,000       100,000,000                       (100 )     (100,000 )                     (99,900 )                             -  
Issuance of Preferred C Preferred Stock                                                     79       78,832       8,830,061                               8,830,140  
Conversion of Preferred C to Common Stock     78,832       78,832,399                                       (79 )     (78,832 )     (78,753 )                             -  
Accumulated other comprehensive gain/(loss)                                                                                     50,677               50,677  
Balance at June 30, 2019     310,597       310,597,593       2       2,397       -       -       -       -       14,924,725       (23,850,777 )     67,465       -       (8,547,988 )
                                                                                                         
Net Loss                                                                             (1,730,296 )                     (1,730,296 )
Non-controlling interest in business combination                                                                    

 

                      38,989       38,989  
Comprehensive loss attributed to non-controlling interest                                                                             149,269               (149,269 )     -  
Share-based compensation                                                                     (86,612 )                             (86,612 )
Debt Converted to Common Stock     11,633       11,632,445                                                       624,982                               636,615  
Accumulated other comprehensive gain/(loss)                                                                                     507,895               141,544  
Balance at September 30, 2019     322,299       322,230,038       2       2,397       -       -       -       -       15,463,095       (25,431,804 )     575,360       (110,280 )      (9,181,398 )

 

   

Common Stock

   

Preferred stock A

   

Preferred stock B

   

Preferred stock C

                         
    Amount
($.001 par)
    Number of Shares     Amount
($.001 par)
    Number of Shares     Amount
($.001 par)
    Number of Shares     Amount
($.001 par)
    Number of Shares     Other Paid in Capital     Retained deficit     Accumulated OCI     Total  
Balance at December 31, 2017     115,760       115,759,999       -       -       -       -       -       -       3,316,560       (15,250,748 )     (1,114,812 )     (12,933.240 )
                                                                                                 
Net Loss                                                                             (2,179,184 )             (2,179,184 )
Balance at March 31, 2018     115,760       115,759,999       -       -       -       -       -       -       3,316,560       (17,429,932 )     (1,114,812 )     (15,112,424 )
                                                                                               
Net Loss                                                                             (1,490,226 )             (1,490,226 )
Balance at June 30, 2018     115,760       115,759,999       -       -       -       -       -       -       3,316,560       (18,920,158 )     (1,114,812 )     (16,602,650  
                                                                                                 
Net Loss                                                                             (1,943,082 )             (1,943,082 )
Balance at September 30, 2018     115,760       115,759,999       -       -       -       -       -       -       3,316,560       (20,863,240 )     (1,114,812 )     (18,545,732 )

  

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

 

4

 

 

NATUR INTERNATIONAL CORP.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

    For the Nine Months  
    September 30,
2019
    September 30,
2018
 
CASH FLOW FROM OPERATING ACTIVITIES            
Net Loss     (3,281,503 )     (5,612,492 )
Adjustments to reconcile net loss to net cash used in operating activities                
Amortization, depreciation and impairment     281,241       108,432  
Share Based Compensation     1,001,594       -  
Gain on Disposal of Subsidiaries     (1,891,985 )     -  
Changes in:                
- Accounts receivable     (909 )     (10,923 )
- Related party receivable     (249,976 )     1,833  
- Inventories     (765,927 )     157,479  
- Other current assets     (313,182 )     39,262  
- Accounts payable     203,334       657,525  
- Accrued expenses     180,973       348,371  
- Accrued expenses - related parties     (61,341 )     629,049  
Net cash used in operating activities     (4,897,681 )     (3,686,484 )
Net cash (used in) from operating activities - Discontinued operations     (63,136 )     (292,864 )
                 
CASH FLOW FROM INVESTING ACTIVITIES                
   Net cash used in investing activities – Discontinued operations     51,165       -  
                 
CASH FLOW FROM FINANCING ACTIVITIES                
Related party loan additions     -       2,499,250  
Related party loan repayments     -       220,928  
Cash received from subscription of Preferred Stock     3,843,851       -  
Third party convertible note additions     575,915       184,393  
Net cash provided from financing activities     4,419,766       2,904,571  
Net cash from financing activities - Discontinued Operations     -       -  
                 
Effect of foreign exchange rate changes on cash and cash equivalents     454,647       -  
                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     (35,239 )     (1,074,777 )
                 
CASH AND CASH EQUIVALENTS beginning of period     128,364       1,082,734  
CASH AND CASH EQUIVALENTS end of period     93,125       7,957  
                 
NON-CASH TRANSACTIONS                
Preferred stock C issued for debt conversion     79       -  
Common stock issued for debt conversion     11,973       -  
Preferred stock A conversion     2,376       -  
Preferred stock C conversion     78,832       -  
Preferred stock B conversion     100,000       -  
Non-controlling interest     256,071       -  
Debt transferred from RP other liabilities to RP other notes payable     672,370       -  

  

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

 

5

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

Natur International Corp. was formerly named Future Healthcare of America. In November 2018, Natur Holding B.V. was acquired to continue the company as a provider of cold pressed juice beverages and healthy snacks. The original business of Future Healthcare of America, founded in 2012, was as a provider of home healthcare services, which had declined and is expected to be fully closed and liquidated in the fourth quarter of 2019.

 

The current name of the company is Natur International Corp., which was effected on January 7, 2019. The trading symbol for our common stock became NTRU as of that date and trades on The OTC Market.

 

Natur International Corp., is a Wyoming corporation, and operates its beverage business through a number of direct and indirect subsidiaries, of which the current principal one is Natur BPS B.V. (known by the trade name Natur Functionals), and is the successor to the business of Natur Holding B.V. (“we”, “our”, “the Company” or “Natur”). Our beverage business commenced in late 2015, with product distribution in Northern Europe. Currently, our operational headquarters is in Amsterdam, the Netherlands.

 

At the onset of 2019, our product line up centered on a range of cold pressed juices and healthy snacks. These products were sold either directly or through distribution partners in the Netherlands and the United Kingdom. Beginning in the fourth quarter of 2018, and throughout the first half of 2019, the Company focus shifted from dependence on the legacy fruit and vegetable juices and snacks toward innovating a new line of hemp-derived natural food and beverage products. The Company product value proposition is to provide affordable, culturally relevant, authentic, fresh fruit, vegetable and hemp-derived supplemented consumer products to democratize clean, healthy, eating and drinking, with plans to address the growing needs for products that address other personal needs in health, wellness and beauty care.

 

Through third party contract manufacturers, we apply patented technology to proprietary nutrient dense blends of fruit and vegetables, adding hemp-derived supplements. These are bottled or packed with technically advanced food and product safety measures and in some cases cold high-pressure processing to bring fresh tasting fruit, vegetable and hemp-derived supplemented blends to market through more than fifteen product types. These newly innovated products are brought to market, in Europe, through Natur’s distribution channels of direct-to-business, direct-to-consumer and through select distributors.

 

Natur operated as a private enterprise in the Netherlands from its founding in 2015 through November 13, 2018, when it was acquired as a wholly owned subsidiary in a share exchange transaction by Future Healthcare of America, pursuant to that certain Share Exchange Agreement, among the Company and the former shareholders of Natur Holding, B.V. (the “Share Exchange Transaction”). In connection with the Share Exchange Transaction, the former shareholders of Natur received the equivalent of 215,759,999 shares of the Common Stock (the “Common Stock”), which was issued in part as 115,760,000 shares of Common Stock and in part as 100,000 shares of voting, convertible Series B Preferred Stock (the “Series B Preferred Stock”) representing 100,000,000 shares of Common Stock upon conversion. The Share Exchange Transaction was accounted for as a reverse capitalization with Natur Holding B.V. being treated as the accounting acquirer. As such, the historical information for all periods presented prior to the merger date relate to Natur Holding B.V. Subsequent to the Share Exchange Transaction consummation date, the information in this report relates to the consolidated entities of Natur, including Natur Holding B.V. and successor subsidiary and the former subsidiaries of Future Healthcare of America, the latter of which are currently in the process of being wound down and presented as discontinued operations.

 

In connection with the Share Exchange Transaction, net cash received was $2,000,000 and costs incurred were $399,381 including professional fees for legal, accounting services and finance commission. Immediately after the Share Exchange Transaction, the former Natur shareholders collectively owned the controlling position among the shareholders of the Company.

 

On May 1, 2019, Natur Holding B.V. filed a Petition in the Netherlands Court for the District of Amsterdam (“Petition”) for the liquidation of the company and the transfer of certain assets and retained liabilities to Natur BPS B.V., a wholly owned subsidiary of Natur International Corp., which operates under the trade name Natur Functionals. This court process allowed the historical business of the Company’s beverage business to be continued and eliminates a substantial amount of the liabilities of the Company. The Petition permits the Company to focus on activities that will drive growth and future profits. As a result of the Petition the control of Natur International Corp. over Natur Holding B.V. is compromised for financial reporting purposes, and its investment in it will be deconsolidated as of May 1, 2019.

 

The Series B Preferred Stock was automatically converted upon the Company increasing the number of shares of Common Stock of its authorized capital, which happened on June 26, 2019. At the same time the Series C Preferred Stock was automatically converted to 78,832,399 shares of Common Stock. As of September 30, 2019, the total number of outstanding shares amounted to 322,230,038 shares of Common Stock with an authorized share capital of 750,000,000 shares of common Stock.

    

6

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS - continued

 

On June 30, 2019, the Company expressed its interest in pursuing a transaction with Share International Holding B.V. on a binding basis. The contemplated transaction is the acquisition of Share International Holding B.V. (“SIH”) and related assets for the operation of its business by the issuance of shares of Natur. The terms of this acquisition were negotiated and an agreement signed on October 26, 2019, with an anticipated closing date prior to fiscal year end.. At the same time as the Company entered into the letter of intent, it lent to SIH the sum $250,000 under a promissory note, due January 4, 2020. The note bears interest at the rate of 10%. The repayment obligation under the Note will be cancelled if no business arrangement is concluded due to a breach by the Company of any agreement for the business arrangement that is concluded in the future, either party to the note experiences a material adverse change, or the business arrangement is not approved by the shareholders or owners of the respective parties to the extent that approval is required. The note also has other standard default provisions under which the Company may declare a default. Also, at the same time as the foregoing letter of intent and loan were concluded, the board of directors of the Company appointed Mr. Paul Bartley as the Chief Executive Officer of the Company; Mr. Bartley is a principal of SIH

 

On July 25, 2019, the Company acquired a controlling position in Temple Turmeric, Inc., a Delaware corporation (“Temple”). Founded in 2009, Brooklyn, New York based Temple’s mission is to bring the highest quality turmeric to the world by pioneering the first Turmeric-based ready to drink beverage line. Temple has driven consumer understanding and demand for Turmeric as it has become more and more widely consumed through this decade. Temple now adds adaptogenic herbs and ancient super food formulations to beverages with a turmeric foundation.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation. The Company prepares its financial statements using the accrual basis of accounting in accordance with United States generally accepted accounting principles (“US GAAP”).

 

Consolidation - The financial statements presented reflect the accounts of Natur International Corp. and its direct and indirect subsidiaries. All inter-company transactions have been eliminated in consolidation. The company currently consolidates the following subsidiaries:

 

Natur BPS B.V., a Netherlands based company

 

Temple Turmeric, Inc, a New York based company

 

Future Healthcare Services Corp. a Wyoming based company

 

Interim Healthcare of Wyoming, Inc. a Wyoming based company

 

Use of Estimates in Financial Statement Preparation. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents. Cash equivalents include all highly liquid investments with original maturities of three months or less.

 

Accounts Receivable. Accounts receivable are comprised of unsecured amounts due from customers. The Company carries its accounts receivable at their face amounts less an allowance for bad debts. The allowance for bad debts is recognized based on management’s estimate of likely losses per year, based on past experience and review of customer profiles and the aging of receivable balances.

 

Accounts Receivable Related Party. Accounts receivables from related parties are comprised of unsecured amounts due from related parties. The Company carries this receivable at its face amounts less an allowance for bad debts. The allowance for bad debts is recognized based on management’s estimate.

 

The company sold proceed from future sale receivables for 3.5% of the outstanding trade receivable due. The accounts receivables associated with the sale has been removed from the books of the company at the date of factoring the balance. The company has no continue involvement with the collection of the associated accounts receivable balance after handing over the balance to the factoring company.

 

7

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

 

Inventory. Inventory, consisting of raw materials, work in progress and finished goods, is valued at the lower of the inventory’s costs or net realizable value, using the first in, first out method to determine the cost. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower.

 

Property and Equipment. Property and equipment are valued at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows:

 

Category   Estimated Useful lives
Building and improvements   5 years
Machines and installations   5 years
Furniture and fixtures   7 years
Hardware and software   3 years

 

Intangible Assets and Long-Lived Assets. The Company recognizes an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value.

 

The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Long lived assets are evaluated on a yearly basis and no impairment losses were incurred during the nine months ended September 30, 2019.

 

Related Party Transactions. The Board of Directors has adopted a Related Party Transaction Policy for the review of related person transactions. Under these policies and procedures, the management reviews related person transactions in which we are or will be a participant to determine if they are fair and beneficial to the Company. Financial transactions, arrangements, relationships or any series of similar transactions, arrangements or relationships in which a related person has or will have a material interest and that exceeds the lesser of: (i) $10,000, and (ii) one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, in the aggregate per year are subject to the boards review. Any member of the board who is a related person with respect to a transaction under review may not participate in the deliberation or vote requesting approval or ratification of the transaction. Transactions that are subject to the policy include any transaction, arrangement or relationship (including indebtedness or guarantees of indebtedness) in which the Company is a participant with a related person. The related person may have a direct or indirect material interest in the transaction. It is Company policy that the board shall approve any related party transaction before the commencement of the transaction. However, if the transaction is not identified before commencement, it must still be presented to the board for their review and ratification.

 

8

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

 

Revenue Recognition. Beginning on January 1, 2018, the Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:

 

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

 

The Company’s performance obligations are satisfied at the point in time when products are received by the customer, which is when the customer has title and the significant risks and rewards of ownership. Therefore, the Company’s contracts have a single performance obligation (shipment of product). The Company primarily receives fixed consideration for sales of product.

 

The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon delivery to the customer. The Company’s performance obligations are satisfied at that time.

 

Share-Based Payment Arrangements. The Company measures the cost of employee services received in exchange for an award of equity instruments (share-based payments, or SBP) based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the SBP award—the requisite service period (vesting period). For SBP awards subject to conditions, compensation is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the Black-Scholes-Merton option-pricing model. The Company adopted ASU 2018-07 in the first quarter of 2019 which aligns the accounting for share-based payment awards issued to employees and non-employees.

 

The fair value of each option granted during the period ended September 30, 2019 was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table:

 

    2019     2018  
Expected dividend yield     0 %     -  
Expected option term (years)     6       -  
Expected volatility     382 %     -  
Risk-free interest rate     3 %     -  

 

The expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility was based on the volatility in the trading of the Company’s common stock. The assumed discount rate was the default risk-free six-year interest rate in the Netherlands.

 

9

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

 

Revenues do not include sales or other taxes collected from customers.

 

The Company’s products are sold and distributed through various channels, which include selling directly to retail stores and other outlets such as food markets, institutional accounts and independent outlets. The Company typically collects payment from customers within 30 days from the date of sale. The following table presents our continued revenues disaggregated by geographical region for the nine-month period ended September 30, 2019:

 

   

September 30,

2019

   

September 30,

2018

 
Netherlands     109,495       1,319,998  
United States of America     222,064       -  
Total     331,559       1,319,998  

 

The Company sells its products and extends credit, generally without requiring collateral, based on an ongoing evaluation of the customer’s business prospects and financial condition. The Company evaluates the collectability of its trade accounts receivable based on a number of factors, including the Company’s historic collections pattern and changes to a specific customer’s ability to meet its financial obligations. The Company has established an allowance for doubtful accounts to adjust the recorded receivable to the estimated amount the Company believes will ultimately be collected.

 

The nature of the Company’s contracts does not give rise to variable consideration, such as prospective and retrospective rebates.

 

The Company experiences customer returns primarily as a result of damaged or out-of-date product. At any given time, the Company estimates less than 1% of sales could be at risk for return by customers. As the company do not deem this amount to be material no provision was recorded for the period ended 30 September, 2019. Returned product is recognized as a reduction of net sales.

 

Recent Accounting Pronouncements

 

Compensation—Stock Compensation: On June 20, 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The adoption had no impact on the Company’s historic financial statements.

 

Leases: In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This update requires the recognition of lease assets and lease liabilities on the balance sheet for leases classified as operating leases under previous guidance. The accounting for finance leases (capital leases) was substantially unchanged. The original guidance required application on a modified retrospective basis with adjustments to the earliest comparative period presented. In August 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements to ASC 842,” which included an option to not restate comparative periods in transition and elect to use the effective date of ASU No. 2016-02 as the date of initial application, which the Company elected. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, and continues to be reported under previous guidance that did not require the recognition of operating lease liabilities and corresponding lease assets on the consolidated balance sheet. As a result of the adoption of ASU No. 2016-02 on January 1, 2019, the Company recorded operating lease right-of-use assets of $580,310 and operating lease liabilities of $578,007.

 

Foreign Currency Translation. The Company follows Section 830-10-45 of the FASB Accounting Standards Codification (“Section 830-10-45”) for foreign currency translation to translate the financial statements from the functional currency, generally the local currency, into U.S. Dollars. Section 830-10-45 sets out the guidance relating to how a reporting entity determines the functional currency of a foreign entity (including of a foreign entity in a highly inflationary economy), re-measures the books of record (if necessary), and characterizes transaction gains and losses. Pursuant to Section 830-10-45, the assets, liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity. An entity’s functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment, or local currency, in which an entity primarily generates and expends cash.

 

The financial records of the Company are maintained in its local currency, the euro (“EUR”), which is the functional currency. Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars, at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the consolidated financial statements. Foreign currency translation gain (loss) resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumulated other comprehensive income in the consolidated statement of stockholders’ equity.

 

10

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

 

Unless otherwise noted, the rate presented below per U.S. $1.00 was the midpoint of the interbank rate as quoted by OANDA Corporation (www.oanda.com) contained in its consolidated financial statements. Translation of amounts from EUR into U.S. dollars has been made at the following exchange rates for the respective periods:

 

    September 30,
2019
    December 31,
2018
 
Balance Sheets     0.8929       0.8734  
Statements of operations and comprehensive income (loss)     0.8905       0.8464  
Equity     0.9037       0.9037  

 

Cost of Revenues. Cost of revenue includes all direct expenses incurred to produce the revenue for the period. This includes, but is not limited to, costs for finished products, pick packing costs, storage costs and transportation costs. Cost of revenues are recorded in the same period as the resulting revenue.

 

Employee Benefits. Wages, salaries, bonuses and social security contributions are recognized as an expense in the year in which the associated services are rendered by employees. For any unused portion of vacation leave, an accrual is recorded for carry over to the following year.

 

Income Taxes. The Company is subject to US corporation tax. The US combined federal and state corporate tax rate is 23%. The company’s United States net operating losses totaled $3,483,928 as of December 31, 2017 and begin to expire in tax years 2032 and following. Net losses from US operating totaled $157,386 for 2018 and may be carried forward indefinitely. The company is subject to US Internal Revenue Code rules limiting the use of US net operating losses after the merger with Future Health Care of America during 2018 (described in Note 17). This limitation has no effect on the Company’s financial statements because the Company has recognized no deferred tax asset with respect to its net operating loss carryforwards. The NOLs are the cumulative NOL’s per the Company’s 2017 federal income tax return. The 382 limit will not be factored in until the company has income and the limit is therefore applicable.

 

Natur BPS B.V., the Dutch subsidiary of Natur International Corp is structured as a Dutch limited liability company. Tax on the result is calculated based on the result before tax in the profit and loss account, considering losses available for set-off from previous years (to the extent that they have not already been included in the deferred tax assets) and exempt profit components and after the addition of non-deductible costs. Due account is also taken of changes which occur in the deferred tax assets and deferred tax liabilities in respect of changes in the applicable tax rate.

 

The corporate tax rate for profits above $238,812 (or €200,000) amounts to 25%. Below that amount the rate is 20%. Future profits can be carried back to prior year losses for a maximum of 9 years for the full amount of losses incurred.

 

In the financial statements of group companies, a tax charge is calculated on the basis of the accounting result. The corporate income tax that is due by these group companies is charged into the current accounts of the company.

 

Because of the compensable losses no deferred taxes are included in the financial statements. From incorporation of the company only the Corporation Tax return of 2015/2016 has been filed. All years are still subject to examination.

 

Fair Value of Financial Instruments. The carrying value of short-term instruments, including cash, accounts payable and accrued expenses, and short-term notes approximate fair value due to the relatively short period to maturity for these instruments. The long-term debt approximate fair value since the related rates of interest approximate current market rates.

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

 

Income /(Loss) Per Share - The Company computes income (loss) per share in accordance with Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260 Earnings Per Share, which requires the Company to present basic earnings per share and diluted earnings per share when the effect is dilutive (see Note 12).

 

11

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 3 – GOING CONCERN

 

The Company considered its going concern disclosure requirements in accordance with ASC 240-40-50. We have had material operating losses, working capital deficit and have not yet created positive cash flows. These factors raise substantial doubt as to our ability to continue as a going concern. The Company concluded, in spite of the decreased cash flow from operations, both the elimination of certain debt and the successful raising of new capital and obtaining new capital commitments during the second and third quarter of 2019, that it has materially improved its capital so as to continue as going concern. The Company implemented a plan in the second quarter of 2019 to further structurally improve the conditions for its continuing as a going concern; (i) the Company implemented certain cost savings, primarily to its overhead requirements, (ii) the Company will continue to generate additional revenue (and positive cash flows from operations) partly related to the Company’s expansion into new product lines during 2019 and partly related to the Company sales initiatives already implemented; and (iii) undertook a reorganization and restructuring program to reduce its debt that has now been completed. The corporate restructuring through the Petition in May 2019 is further disclosed in Note 13 to these financial statements. These actions have had an overall positive impact on the cost-basis of the organization. Notwithstanding the foregoing, the Company will continue to need additional capital from investors to fund its larger business plan and maintain the continuity and growth of its current operations. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

 

NOTE 4 – FIXED ASSETS

  

Property, equipment and intangible assets at September 30, 2019, and December 31, 2018, consisted of the following:

 

    September 30,     December 31,  
    2019     2018  
Building and improvements     -       491,847  
Machines and installations     -       65,886  
Furniture and fixtures     60,117       200,508  
Hardware and software     -       80,163  
      60,117       838,404  
                 
Less: Accumulated Depreciation & Amortization     (3,579 )     (314,894 )
      56,538       523,510  

 

The depreciation expense for the nine-months ended September 30 2019 and the year- ended December 31, 2018 was $3,579 and $179,600 respectively. 

 

NOTE 5 – OTHER CURRENT ASSETS

 

Other current assets at September 30, 2019 and December 31, 2018 consisted of the following:

 

    September 30,
2019
    December 31, 2018  
             
Value Added Tax receivable     71,327       67,388  
Prepaid expenses     201,128       32,054  
Other Receivables     99,877       93  
      372,332       99,535  

 

Prepaid expenses as at 30 September 2019 includes a payment to a law firm working for the company in the Netherlands totaling $33,042. A prepayment was also made to a key supplier for the purchase of raw materials totaling $22,940. 

12

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 6 – ACCRUED EXPENSES & OTHER CONTINGENT LIABILITIES

 

Accrued expenses & other contingent liabilities at September 30, 2019 and December 31, 2018 consisted of the following:

 

    September 30,
2019
    December 31, 2018  
             
Taxes payable     42,087       352,423  
Invoices to be received     -       3,972  
Holiday Allowance Payable     12,727       24,642  
Other accrued expenses & other contingent liabilities     5,212       202,124  
      60,026       583,161  

 

NOTE 7 – RELATED PARTY OTHER LIABILITIES

 

Related party other liabilities at September 30, 2019 and December 31, 2018 consisted of the following:

 

    September 30,
2019
    December 31, 2018  
             
NL Life Sciences B.V.     2,060,389       563,118  
STB Family Offices SARL     227,323       200,234  
STB Family Offices B.V.     -       661,432  
Stichting Thank You Nature     -       16,913  
Flare Media B.V.     -       25,458  
AMC     78,226       325,382  
Management & Board Fees     272,269       142,154  
Yoomoo Limited     -       98,014  
      2,638,207       2,032,705  

 

For the outstanding amount relating to AMC this transaction relates to the purchase of bottled juices for resale. Total purchases relating to goods sold for the nine-month period ended September 30, 2019, and the nine-month period ended September 30, 2018, was $60,542, and $1,069,888, respectively.

 

For the related party balance liability held from NL Life Sciences, STB Family Offices SARL and TriDutch Holding B.V there is no repayment schedule in place. No interest is being charged. For the related party liability held with Flare Media B.V., STB Family Office B.V. in May 2019 the debt was fully transferred to NL Life Sciences B.V. as part of a debt restructuring. Following approval by the SEC in the third quarter of 2019 to increase the authorized share capital the company plans to fully convert this balance into equity, in the form of common stock, in the fourth quarter of 2019.

 

The other loans consist of the procurement of goods and consulting fees for the management team that have accrued from previous periods. No interest is being charged.

 

13

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 8 – RELATED PARTY OTHER NOTES

 

Loan from other related parties at September 30, 2019 and December 31, 2018 consisted of the following:

 

    September 30,
2019
    December 31, 2018  
             
Efficiency Life Fund       -       400,750  
TriDutch Holding B.V.     -       672,099  
      -       1,072,849  

 

For the loan from TriDutch Holding B.V., in May 2019 the debt was fully transferred to NL Life Sciences B.V. as part of a debt restructuring. The debt is now shown consolidated under a single line under NL Life Sciences B.V. under note 7. There is a translation difference of $271 when compared to the cashflow due to foreign exchange translation differences.

 

NOTE 9 – CONVERTIBLE NOTE PAYABLE

 

Convertible loans payable at September 30, 2019 and December 31, 2018 consisted of the following:

 

    September 30,
2019
    December 31, 2018  
             
Convertible loan 1     -       629,750  
Convertible loan 2     -       970,960  
Convertible loan 3     581,235       -  
      581,235       1,600,710  

 

Convertible Loan 1

 

Party for loan 1 had granted a loan facility in the principle amount of $581,058 or €500,000 with the right, but not the obligation to convert the outstanding loan amounts into shares in the capital of Natur at a company valuation of $17.4 million or €15 million for a term from December 19, 2017, till the maturity date of December 31, 2018, at an interest rate of 10% per annum. In July 2019 the amount of $629,750 was fully converted to common stock of the company.

 

Convertible Loan 2

 

On October 20, 2017, an amount of $929,692 or €800,000 was advanced to the Company for a loan agreement that was drafted but never signed. An interest rate of 5% per annum is calculated and the loan has a maturity date of February 28, 2018. Repeated attempts at correspondence was made between the Company and the lender’s attorney in April and May 2019 to discuss converting the balance to common stock of the Company on the bankruptcy of Natur Holding B.V. As no response was received the amount remains in Natur Holding B.V. who’s estate is being managed independently by a court issued Curator. Neither Natur International Corp or any subsidiaries have any further obligation for this note.

 

Convertible Loan 3

 

Natur Holding B.V., the principle subsidiary of Natur International Corp, entered into a loan agreement with Dam! Holding B.V., under which Natur Holding could borrow up to US$560,915 or €500,000. The final terms of the agreement were concluded on February 18, 2019.The full drawdown of $560,915 was made in three tranches throughout January and February 2019. Repayment is due after six months from the date of receipt of the initial funds. The loan may be pre-paid in full or in part at any time. Interest, at the rate of 5% per annum, is due and payable quarterly. The loan carries a default interest rate of 11% per annum. There is a currently a translation difference of $20,320 due to foreign exchange rate differences. Following approval by the SEC in the third quarter of 2019 to increase the authorized share capital the company plans to fully convert this balance into equity, in the form of common stock, in the fourth quarter of 2019.

 

14

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 10 – RELATED PARTY CONVERTIBLE NOTE PAYABLE

 

Related party convertible note payable at September 30, 2019 and December 31, 2018 consisted of the following:

 

    September 30,
2019
    December 31, 2018  
                       
Convertible loan Efficiency Life Fund     2,984,217       11,671,743  

 

As at June 26, 2019, $8,830,140  of the balance was converted into Series C Preferred Stock, this stock then converted to shares of common stock after the increase in authorized share capital of the Company.

 

The Holder 6th Wave Efficiency Life Fund agrees that if it sells any of the shares of Common Stock it was directly or beneficially issued by the Parent Company on November 13, 2018, either as shares of Common Stock or the Common Stock underlying the Class B Preferred Stock, in exchange for its equity interest in the Company and any of the Conversion Shares (together the Common Stock, the Common Stock underlying the Class B Preferred Stock and the Conversion Shares are referred to as the “Value Calculation Shares”) at any time prior to December 31, 2022, and the gross proceeds to the Holder or its affiliates from the sale (or deemed sale as provided herein) of any or all of the Value Calculation Shares exceeds USD $15,000,000, then the balance of the Debt, equal to USD $3,000,000 as of the date hereof and any interest, expenses, penalties, and other charges of any nature due thereon under the terms of the Debt Agreement (the “Debt Balance”), will be deemed fully paid, discharged and extinguished and the Debt Agreement in all respects will be terminated and of no further effect. There is a currently a translation difference of $15,7823 due to foreign exchange rate differences.

 

Following approval by the SEC in the third quarter of 2019 to increase the authorized share capital the company plans to fully convert this balance into equity, in the form of common stock, in the fourth quarter of 2019.

 

NOTE 11 – OPTIONS & WARRANTS

 

On November 13, 2018, the Company closed a subscription agreement and debt conversion agreement with Alpha Capital Anstalt wherein the Company granted the following warrants to purchase:

 

- A total of 33,000,000 shares of common stock, at $0.0606060 per share, exercisable for four years.

 

- A total of 6,000,000 shares of common stock, at $0.15 per share, exercisable for four years.

 

On August 30, 2019 the Company and Alpha agree that the currently issued and outstanding warrant held by Alpha for the purchase of up to 33,000,000 will be reissued so that 16,500,000 of the shares thereunder may be purchased at the per share exercise price of $0.0304 and 16,500,000 of the shares may be purchased at the per share exercise price of $.06 (the original exercise price).

 

- A total of 16,500,000 shares of common stock, at $0.0606060 per share, exercisable for four years.

 

- A total of 16,500,000 shares of common stock, at $0.0304 per share, exercisable for four years.

 

- A total of 6,000,000 shares of common stock, at $0.15 per share, exercisable for four years.

 

A summary of the status of the warrants granted is presented below for the nine months ended:

 

    September 30, 2019     December 31, 2018  
    Shares     Weighted
Average
Exercise
Price
    Shares     Weighted
Average
Exercise
Price
 
Outstanding at beginning of period     39,000,000     $ 0.074       -     $ -  
Granted     -       (0.012 )     39,000,000       0.074  
Exercised     -       -       -       -  
Expired     -       -       -       -  
Outstanding at end of period     39,000,000     $ 0.062       39,000,000     $ 0.074  

  

On January 16, 2019, the Company completed compensatory arrangements with three board members of Natur International Corp. with the following terms:

 

Mr. Anthony Joel Bay, through La Bay Ventures Inc., will be issued a six-year option to purchase an aggregate of 7,319,321 shares of common stock of the Company. The option granted by the Company provides for equal quarterly vesting of the shares commencing March 31, 2019, over three years ending December 31, 2021, with the right to exercise vested shares at $.030303 per share at any time until March 31, 2025, the sixth-year anniversary. The option provides for cashless exercise and may be registered for resale at the election of the Company. If the service agreement is terminated for a breach thereof, all vested and unvested options will terminate, but if the service agreement is otherwise terminated, then only then vested options will continue to be exercisable for the full term.

 

Mr. Rudolf Derk Huisman, through Pas Beheer B.V., will be issued a six-year option to purchase an aggregate of 7,319,321 shares of common stock of the Company. The option granted by the Company provides for equal quarterly vesting of the shares commencing March 31, 2019, over three years ending December 31, 2021, with the right to exercise vested shares at $.030303 per share at any time until March 31, 2025, the sixth-year anniversary. The option provides for cashless exercise and may be registered for resale at the election of the Company If the service agreement is terminated for a breach thereof, all vested and unvested options will terminate, but if the service agreement is otherwise terminated, then only then vested options will continue to be exercisable for the full term.

15

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11 – OPTIONS & WARRANTS - continued

 

Ms. Ellen Berkers, through Montrose Executive Management, will be issued an aggregate of 5,800,000 share of options to purchase common stock of the Company as part of her termination arrangement dated May 30, 2019. The option granted by the Company provides for the right to exercise the shares at $.030303 per share at any time from April 1, 2022 until March 31, 2025. The option provides for cashless exercise and may be registered for resale at the election of the Company.

 

Mr. Robert A. Paladino, through Cavalier Aire LLC., was supposed to be issued a six-year option to purchase an aggregate of 7,319,321 shares of common stock of NTRU. The option granted by the Company provided for equal quarterly vesting of the shares commencing March 31, 2019, over three years ending December 31, 2021, with the right to exercise vested shares at $.030303 per share at any time until March 31, 2025, the sixth-year anniversary. The option further provided for cashless exercise and registration for resale at the election of the Company. As the service agreement has been breached by Paladino, all vested and unvested options have been terminated. Paladino and the Company are currently in a legal dispute in the Netherlands as Paladino is challenging the legal validity of the termination.

 

A summary of the status of the share options is presented below for the nine months ended:

 

    September 30, 2019     December 31, 2018  
    Shares     Weighted Average
Fair Value
    Shares     Weighted Average
Fair Value
 
Outstanding at beginning of period     -     $ -            -     $      -  
Vested    

10,679,584

      0.071       -       -  
Unvested    

10,978,954

      0.071                  
Exercised     -       -       -       -  
Expired     -       -       -       -  
Outstanding at end of period    

21,658,538

    $ 0.071       -     $ -  

  

The fair value of all stock options outstanding at 30 September, 2019 is $1,451,141 at a weighted average fair value of $0.071 per option.

 

16

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

  

NOTE 12 – LOSS PER SHARE

 

At September 30, 2019, the Company had 322,230,038 shares issues and outstanding at a par value of $.001. The Company also has 2,397.130 preferred A shares issued and outstanding. Alpha Capital Anstalt has two outstanding warrants issued on November 13, 2018, each with 4-year terms. The first warrant has an exercise price of $0.060606 for 36,000,000 shares and the second warrant is exercisable for 6,000,000 shares at a $0.15 exercise price. The Company has reserved 16,240,000  shares of Common Stock for management incentive awards. At December 31, 2018, the Company had 129,049,192 shares of common stock issued and outstanding.

  

NOTE 13 – DISCONTINUED OPERATIONS AND ASSETS/LIABILITIES HELD FOR DISPOSAL

  

Effective November 30, 2018, the Company closed the London office and shops as part of the restructuring plan. Functionally the operations were shut down before December 31, 2018, and therefore we have qualified it as discontinued operations the sale of assets is in process. The existing support functions were transferred to the headquarters in Amsterdam as part of the centralization of support staff initiative.

 

As of March 22, 2019, the company Naturalicious UK Limited was put into liquidation and the matters are being dealt with by a qualified administration firm in the United Kingdom. A board meeting was held on March 22, 2019, and it was agreed to liquidate the company. Currently the rights and obligations of the company are handled by the administration firm and the legal obligation over the liabilities are extinguished. As we no longer have any rights or obligations to the indirect subsidiary, it has been removed from the consolidation and the net liability position of the company is released and recognized as a gain on disposal.

 

Effective August 31, 2018, the Company offices in Casper, Wyoming were closed at the termination of its health care operations. The increase in costs coupled with a decrease in business activity, led to the decision to close the Casper, Wyoming operations. In closing the office, the Company transitioned its clients to new service providers, and terminated employees as the transition happened. The month to month lease was terminated with the landlord on August 31, 2018.

  

In line with the objective to secure the continuity of the Company, it was decided late 2018 to extend the product line with added functional extracts (Nutrigenomics, hemp-derived extracts). For this, the Company established Natur BPS B.V. (formerly Natur CBD B.V.) as a sister company of Natur Holding B.V. at March 13, 2019, wholly owned by Natur International Corp. Based on global developments and following the success of companies in the USA and Canada, the Company defined new growth objectives with complementary products based on hemp-derived extracts as a new revenue model. Additional funding was sought in the market, but it became apparent that the willingness of new investors to provide the company with funding in debt or equity was dependent on the restructuring of the existing debt on the balance sheet of the Company. As most of this debt is held on the balance sheet of Natur Holding B.V., it was decided to develop a restructuring plan to:

  

  A. Establish an asset transfer from Natur Holding B.V. to Natur CBD B.V., optimizing the proceeds for these assets and subsequently liquidate Natur Holding B.V.;

 

  B. Continue the business in Natur CBD B.V. with an extended portfolio of functional products, including food and beverages infused with hemp-derived extracts and deliver the objectives as set by the Board

 

  C. Expeditiously seek new funding in the form of (long-term) or convertible debt or equity. Discussions with Third parties are on-going. 

 

In May 2019 we reached agreements with most of the debtholders to convert their debt to equity and effective from May 1, 2019, the asset transfer between Natur Holding B.V. and its sister company Natur BPS B.V was executed and Natur Holding B.V. and its wholly owned subsidiaries were declared bankrupt by the Court in Amsterdam, the Netherlands.  

17

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13 – DISCONTINUED OPERATIONS AND ASSETS/LIABILITIES HELD FOR DISPOSAL - continued

 

The following table presents the carrying amounts of the major classes of assets and liabilities included in our discontinued operations as presented on our Unaudited Consolidated Balance Sheet as of September 30, 2019.

 

NATUR INTERNATIONAL CORP

UNAUDITED BALANCE SHEET OF DISCONTINUED OPERATIONS

 

    September 30, 2019     December 31, 2018  
Current assets            
Cash and cash equivalents     -       -  
Related party receivable     -       201,907  
Accounts receivable     -       124,016  
Inventories     -       -  
Other current assets     -       51,705  
Total current assets     -       377,628  
                 
Fixed Assets                
Tangible fixed assets     -       27,547  
Financial Fixed Assets     -       23,618  
Total fixed assets     -       51,165  
                 
TOTAL ASSETS     -       428,793  
                 
Short term debt                
Accounts Payable     39,333       643,616  
Accrued expenses & other contingent liabilities     65,000       243,510  
Total short-term debt     104,333       887,126  

 

NATUR INTERNATIONAL CORP

UNAUDITED INCOME STATEMENT OF DISCONTINUED OPERATIONS

 

    For the Three Months     For the Three Months  
    September 30, 2019     September 30, 2018  
             
REVENUE     -       -  
                 
COST OF GOODS SOLD     -       -  
                 
GROSS MARGIN     -       -  
                 
OPERATING EXPENSES                
Wages & Salaries     -       -  
Selling, General & Administrative*     (63,310 )     119,136  
Amortization & depreciation     -       -  
                 
Total operating expenses     (63,310 )     119,136  
                 
PROFIT/(LOSS) FROM OPERATIONS     63,310       (119,136 )
                 
Interest expense     -       -  
                 
PROFIT/(LOSS) FROM DISCONTINUED OPERATIONS     63,310       (119,136 )

 

* The positive expense balance is due to the legal fee accrual being released due to advances in the two cases in the third quarter of 2019.

 

18

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 14 – SUBSEQUENT EVENTS

 

S-1 Statement

 

On September 25, 2019, the Company submitted a Registration Statement on Form S-1 to the SEC, to register 200,000,000 shares of our common stock that may be sold by the Company, through the efforts of an officer of Natur International Corp., on a best efforts basis, with no minimum. The Registration Statement was declared effective on November 1, 2019. To date, the Company has not offered or sold any of the shares it has registered for its sale.

 

Share International

 

On June 30, 2019, the Company signed a binding letter of intent with SIH, a company having its main activities in China in the Chongqing region. On October 26, 2019 the Company signed a definitive agreement with SIH to acquire all of its shares in exchange of 24% of its fully diluted share capital in newly issued restricted shares, calculated as of November 1, 2019, which represents 235,873,452 shares of common stock of the Company, subject to equitable reduction for any adverse change in the financial condition of SIH, or the failure to deliver one or more of the assets of SIH listed in the Share Exchange Agreement). The closing is expected to take place before the end of this year.

 

Series D, Series E and Series G Preferred Stock

 

On October 16, 2019, the Company filed Certificates of Amendment to its Certificate of Incorporation to create 15,789.473 shares of Series D Preferred Stock (“Series D Preferred Stock”), 56,423.386 shares of Series E Preferred Stock (“Series E Preferred Stock”), and 58,736.843 shares of Series G Preferred Stock (“Series G Preferred Stock”). These were created in connection with the sale of preferred stock and warrants for an aggregate purchase price of approximately $3,980,864.

 

The three classes of Preferred Stock have no voting rights, except as provided by law. The liquidation preference of each class is based on the purchase price of the shares of that particular class, and is subordinate to prior issued, outstanding series of preferred stock and in preference to subsequent issued series of preferred stock. Each of the three series of Preferred Stock is convertible into shares of common stock at the option of the holder until December 31, 2021, and if not then converted will automatically convert into common stock on December 31, 2021. The conversion rate is subject to typical anti-dilution rights for stock splits and reorganizations. The total number of shares into which the three classes of Preferred Stock may be converted is 130,949,703.

 

In conjunction with the sale of the three classes of Preferred Stock, the Company also sold warrants to purchase an aggregate of 130,949,703 additional shares of common stock from time to time by the holders thereof.

 

The shares of common stock underlying the Preferred Stock and warrants sold to the holder of the Series G Preferred Stock were granted registration rights in connection with their purchase of the Company securities. The Company has fulfilled this obligation with the Registration Statement on Form S-1, declared effective on November 1, 2019.

 

Series F Preferred Stock

 

On October 16, 2019, the Company filed a Certificate of Amendment to its Certificate of Incorporation to create 49,342.105 shares of Series F Preferred Stock (“Series F Preferred Stock”).

 

The Series F Stock does not have any dividend rights, a liquidation preference per share of $30.40, payable after satisfaction of the liquidation preference of prior issued, outstanding preferred stock of the Company, the right to vote with the common stock on an as converted basis, and optional conversion rights. The Series F Stock also has the right to vote as a separate class as provided by law. It is mandatorily convertible if at any time (a) the closing price of the Company’s common stock on the trading market for the common stock exceeds $0.0608 (such dollar amount subject to appropriate adjustment in the event of an adjustment of the conversion ratio of the Series F Preferred Stock) and (b) the dollar value of the common stock traded on the Eligible Market (as defined) exceeds $200,000, provided that at such time there is a sufficient amount of authorized but unissued Common Stock available to be issued upon conversion in full of all the shares of Series F Preferred Stock. The Company will reimburse the holder for any buy-in penalties if it fails to timely deliver the shares of common stock upon conversion.

 

None of the shares of the Series F Preferred Stock have been issued.

 

Changes to Board/Management

 

On September 25, 2019, the Company appointed Spencer Chesman as co-CEO of the company and Michael Jones as Chief Strategy Officer. On November 7, 2019 both officers were appointed to the Board of the company. To accommodate their seating, the Board adopted a resolution to change the Bylaws of the company and increased the maximum number of board seats from 9 to 10.

 

Convertible Note

 

On October 2, 2019, a private investor granted a loan facility in the principle amount of $1,000,000 with the right, but not the obligation to convert the outstanding loan amounts into shares in the capital of Natur International Corp for a term from October 2, 2019, till the maturity date of April 1, 2020, at an interest rate equivalent to 20% per annum. The conversion price of the shares is $0.038 per unit of common stock.

 

Head Office

 

On October 1, 2019, the corporate head office of Natur International Corp. was changed from 124 Jachthavenweg, 1081 KJ Amsterdam, The Netherlands to Parnassus Tower, Locatellikade 1, 1076 AZ Amsterdam, The Netherlands. The Company, at the new location, has a lease for approximately 5,834 square feet, at an annual rent of $285,471 (€259,286), for a term of five years.

19

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 15 – RECAPITALIZATION 

 

As discussed in Note 1 – Organization and nature of business, effective November 13, 2018, Future Healthcare of America entered into a reverse capitalization transaction with Natur Holding B.V. In conjunction with the transaction the Company was recapitalized, resulting in the capital structure outlined below. The main purpose of the transaction was to raise additional capital for the purposes of growth. The historical number of common shares of Nature Holding B.V. presented in our financial statements were converted to post-acquisition shares on a 1 to 112 basis.

 

The following shares of common stock were issued in connection with the reverse capitalization transaction. Natur shareholders had a controlling voting percentage of 94% subsequent to the transaction: 

 

- 115,759,999 shares of common stock were issued to the Natur shareholders.

 

- 2,023,562 shares of common stock were issued to two of the  former management of the Company for their cancellation and release of accrued salaries

 

- 2,469,131 shares of Series A Preferred Stock were issued for a cash capital investment of $2,000,000 and debt forgiveness of $469,131. The shares of Series A Preferred Stock will convert at a ratio of 1 share to 33,000 common shares.

 

- 100,000 shares of Series B Preferred Stock were issued to the Natur Holding B.V. shareholders. These shares convert at a ratio of 1 share to 1,000 common shares.

 

NOTE 16 – STOCKHOLDERS’ DEFICIT 

 

On November 13, 2018, Future Healthcare of America completed a transactions pursuant to the Share Exchange Agreement discussed in Note 1. In connection with the Share Exchange Transaction, the Company issued the equivalent of 215,759,999 shares of the Common Stock to the former shareholders of Nature Holding B.V., which was issued in part as 115,760,000 shares of Common Stock and in part as 100,000 shares of voting, convertible Series B Preferred Stock (the “Series B Preferred Stock”) representing 100,000,000 shares of Common Stock upon conversion. The Series B Preferred Stock converted automatically into the Common Stock on June 26, 2019, when the Company increased its authorized capital in a sufficient amount to permit the conversion of the Series B Preferred Stock. At closing the number of common shares, issued and outstanding was 322,230,038. Per the OTC listing the shares were officially converted as of July 2, 2019.

 

On September 21, 2018, Parent Company executed a Securities Purchase Agreement (the “SPA”) by which it agreed to privately issue and sell to Alpha Capital Anstalt (the “Alpha”) 2,469.131 shares of non-voting, convertible Series A Preferred Stock, each share convertible into approximately 33,000 shares of Common Stock, based on a per common share conversion rate of $.030303. Alpha also purchased two warrants, one pursuant to the SPA that is exercisable for 33,000,000 shares of Common Stock at $.060606 per share and another one pursuant to a debt cancellation agreement exercisable for 6,000,000 shares of Common Stock at $.15 per share. The aggregate purchase price for the Series A Preferred Stock and the warrant for 33,333,000 shares of common stock was $2,000,000 in cash and conversion of $469,131 of outstanding debt. The other warrant was issued for conversion of outstanding interest due Alpha under a prior loan agreement to Future Healthcare of America. Prior to the acquisition of Natur Holding, B.V., Alpha also had cancelled approximately $651,000 of debt principle and interest due from the Company. These transactions eliminated $1,420,000 of debt principle and interest of the Company and improved its balance sheet. As part of the SPA transaction, Alpha has also agreed to reimburse up to $100,000 of the liabilities of Parent Company existing at the closing date, which has not yet been paid. 

 

On March 19, 2019, the holder of the Series A Preferred Stock converted 72 of such shares with a stated value of $72,000 for 2,376,002 shares of common stock. The applicable conversion price per common share was $0.030303. The Company did not receive any payment on this conversion, having received the consideration for the Series A Preferred Shares on November 12, 2018. There are remaining an aggregate of 2,397.131 shares of Series A Preferred Stock issued and outstanding. The shares of common stock issued on conversion are registered for resale by the holder.

 

On April 4, 2019, the Company filed an Articles of Amendment in the State of Wyoming to create a new class of Series C Preferred Stock, which was returned as of April 9, 2019. The Series C Preferred Stock was converted into 78,832,399 shares of Common Stock on June 26, 2019. Per the OTC listing the shares were officially converted as of July 2, 2019.

 

In June and July 2019, the Company entered into a series of agreements to sell shares of the following different series of preferred stock. The series of preferred stock were created on October 16, 2019, and the Company has issued shares of the Series D Preferred Stock, Series E Preferred Stock and Series G Preferred Stock to the investors. The Series F Preferred Stock has not been issued to date.

 

  Series Preferred Stock D: 15,789.473 preferred shares, conversion to common shares at a ratio of 1:1,000. price per share of $31.70, no voting rights and a warrant reflecting the right to buy 20,000,000 shares at an exercise price of $0.06

 

  Series Preferred Stock E: 56,443.551 preferred shares, conversion to common shares at a ratio of 1:1,000, price per share of $30,40, no voting rights and a warrant reflecting the right to buy 56,443,551 shares at an exercise price of $0.0304

 

  Series Preferred Stock F: 49,342.105 preferred shares, conversion to common shares at a ratio of 1:1,000, price per share $0.0304, registration rights, and warrant reflecting the right to buy 740,130,158 shares at an exercise price of $0.0304.

 

  Series Preferred Stock G: 46,947.368 preferred shares, conversion to common shares at a ratio of 1:1,000, price per share of $0.038, registration rights and a warrant reflecting the right to buy 46,947,368 shares at an exercise price of $0.076.

 

20

 

 

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 16 – STOCKHOLDERS’ DEFICIT - continued

 

During the first nine months of the 2019 fiscal year, in addition to pursuing the Petition to reorganize certain of its liabilities, the Company successfully negotiated the conversion of a further $6,114,790 of debt into 149,516,865 shares of common stock. During the third quarter $636,315 was converted to 11,632,445 shares of common stock. The remainder will be converted and issued in due course. More importantly, the Company has been conducting substantial fund-raising activities. It obtained new funding through a series of securities purchase agreements that have been funded in the amount of $3,843,851 that was completed during the third fiscal quarter of 2019. The securities consist of several new series of preferred stock convertible into up to 130,949,703 shares of Common Stock and warrants exercisable for up to 135,160,230 shares of Common Stock.

 

NOTE 17 – BUSINESS COMBINATION

 

On July 25, 2019, Natur International Corp. (“Company”) finalized a Purchase and Recapitalization Agreement, dated as of July 24, 2019 (“Agreement”), with DRBG Holdco, LLC, a Delaware limited liability company (“DRBG”), Temple Turmeric, Inc., a Delaware corporation (“Temple”), Daniel Sullivan, an individual (“DS”), Tim Quick, an individual (“TQ”), and TQ Holdings LLC, a New Hampshire limited liability company (“TQH”) to acquire the business of Temple. Under the Agreement the Company acquired 15,121,984 shares of Series A Preferred Stock (the “Series A Shares”) of Temple from DRBG for a nominal amount and agreed to acquire from TQH a promissory note in the principal amount of $100,000 plus all accrued and unpaid interest. The Company caused Temple to issue to DRBG a warrant to acquire a percentage of the Temple equity (“Warrant”). The Temple board of directors will have three of the five directors appointed by the Company pursuant to the terms of the Series A Shares and the current certificate of incorporation of Temple. The Series A Shares represent approximately 52% of the equity of Temple, on a fully diluted basis.

 

The reasoning for the acquisition was that the Temple business was seen to be a complementary business to Natur’s current operations. It has allowed the company to extend their geographical positioning in the functional juice category. Natur will also introduce the Temple products to the Eurasian market in the fourth quarter of 2019.

 

The Company recorded the acquisition under the guidance of ASC 805 “Business Combinations”. All the assets acquired and liabilities assumed are recorded at their corresponding fair values. The following tables present information for the business, including amortization of assets, revenues and earnings included in consolidated net loss for the year to date directly prior to the acquisition on July 24, 2019.

 

Assets acquired      
Cash and cash equivalents     40,374  
Accounts receivable     110,727  
Inventories     478,087  
Other current assets     8,500  
Total current assets acquired     637,688  
         
Fixed Assets Acquired        
Tangible fixed assets     1,250  
Financial Fixed Assets     -  
Total fixed assets acquired     1,250  
         
TOTAL ASSETS ACQUIRED     638,938  
         
Short term debt assumed        
Accounts Payable     440,044  
Related Party loan payable     115,000  
Accrued expenses & other contingent liabilities     2,666  
Total short-term debt assumed     557,710  
         
Total     81,228  
Attributed to Non-controlling Interest     38,989  

 

The net assets attributed to Non-controlling interest has been calculated based on the current book-value of the business as this has been deemed the most indicative measurement of the fair value based on the information that the company currently has available. The balance sheet presented above is currently provisional and is the company’s current best estimate of the fair value based on the provisional numbers we have available at this point.

 

As part of the sale, Temple issued warrants, exercisable for the greater of 1,493,735 shares of common stock of Temple or 2.5% of the equity of the Temple on a fully diluted basis. The exercise price per share is the par value of the common stock of Temple to be acquired upon exercise of the Warrant. The exercise period is ten years, but not later than the earlier of the consummation of the initial public offering by Temple or a sale transaction of Temple, as defined in the Warrant. The Warrant has a limited cashless conversion right and has typical anti-dilution rights for dividends, reverse splits and changes in the capitalization of Temple.  As of the date of this filing, it is understood that the holder of the issued warrants is in the process of filing for bankruptcy. Due to the current negative outlook for the business of the holder and the limited transfer rights of the warrant to a third party in the event of bankruptcy of the holder, the company has deemed the fair value of the warrant at this point in time to be $nil. The company will continue to monitor the situation on a regular basis and will adjust the value of the warrant based on the then actual situation.

21

 

 

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

 

General

 

Safe Harbor Statement.

 

Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company, including, without limitation, our ability to gain a larger share of the markets in which we offer our beverage and other products, our ability to retain our business relationships, our ability to raise capital and our ability to consolidate our business operations, acquisitions and grow our product offerings to meet consumer demands, Statements preceded by, followed by or that include the words “may”, “would”, “could”, “should”, “expects”, “projects”, “anticipates”, “believes”, “estimates”, “plans”, “intends”, “targets”, “tend” or similar expressions indicate forward-looking statements.

 

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in the Company’s reports on file with the Securities and Exchange Commission: general economic or industry conditions in the national and local communities in which the Company conducts business and sells its products, changes in the legislation or regulatory requirements that affect our products and their composition and the locations through and to which they can be transported and sold, the development of products that may be superior to those offered by the Company, competition in our product segments, changes in the quality or composition of the Company’s products, our ability to develop new products, our ability to raise capital, conditions in the securities markets that may affect the price and trading of our securities held by investors, changes in accounting principles, and other governmental, regulatory and technical factors affecting the Company’s operations.

  

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

 

New Vision & Mission

 

The Company is committed to meet the demands of the burgeoning market for healthy food & beverage products beyond our award-winning fruit and vegetable juices and snacks. The Company is preparing for the launch of a wider range of foods and beverages that are effectively functional. With consumers in increasing numbers eating more frequently, eating socially and being focused on the wellness derived from their choices, we are offering choices that can boost their immune system, support a sense of equilibrium in a stressful life, help to resist foods that are not healthy, and more.

 

The Company brings the forces of nature, existing naturally and organically, as functional supplements in our branded foods and beverages. The first of nature’s superfoods to join our line is hemp. We are preparing for the launch in Europe of our line of juices and snacks infused with hemp-derived extracts that are intended to offer improvement in quality of life. The human body’s endo-cannabinoid system is starved for sources of external cannabinoids. When fed, this system fires up the forces of immunity, pain management, heart health, a sense of equilibrium and much more. The Forces of Nature, from the industrial hemp plant, in their purest form, provide the best source for these important cannabinoids. These hemp-derived extracts are the non-psychoactive cannabinoid in the hemp plant that, in increasing numbers, is gain consumer fans for its potential role in treating many common health issues, including pain, inflammation, anxiety, depression, acne and heart disease.

 

Anticipating growing demand, Natur is developing collaborations in hemp cultivation, extraction and innovation – with growers, greenhouses, research and development scientists driving new products in the fields of hemp-derived medication, edibles and beverages, human and animal topicals and wellness products.

 

A further focus of the Company is to extend the markets for its products to China and Asia at large. With its innovative products and access to the Chinese Chongqing region market, the Company will be well positioned to play a leading role in the emerging functional and consumer goods marketplace and to become the professional direct-to-consumer market leader in “seed-to-sale” for both hemp-derived and health and wellness-based, functional solutions catering to both the food and non-food FMCG segments across the USA, Europe and Asia.

 

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Business Highlights

 

During the quarter ended September 30, 2019, the Company finalized the restructuring of its business in the Netherlands and the restructuring of the debt.

 

Based on the business plan, the Company acquired a majority stake in Temple, a functional beverage company in the USA in July 2019. It entered into a binding LOI in August 2019 to acquire a majority stake of Infinite, a USA-based CBD company. With SIH, a Dutch-based company with its main activities in China, a binding LOI was agreed in June 2019 to acquire SIH based on a share exchange, and the definitive share exchange agreement with SIH was signed October 26, 2019 and closing of the transaction is expected before the end of this fiscal year. During September 2019, the Company established an online sales platform in Bulgaria to service the Eastern European markets. Discussions with potential private investors are still on-going.

 

For the third quarter 2019, while sales revenues were considerably lower year over year. Contributing to negative margins was the reduction of inventories through liquidation.

 

Results of Operations and Financial Condition

  

Three Months Ended 30 September, 2019 versus Three Months Ended 30 September 2018

 

During the three months ended September 30, 2019, Natur recorded revenues of $259,006, a 31% decrease over revenues of $377,565 for the same period in 2018. The decrease in 2019 is attributed to the decision the Company made to discontinue selling to less profitable customers while developing its new culturally relevant product lines. It should be noted that in Q3 2018, revenues were generated by two large customers. Both of these customers proved to be less beneficial to the business than planned and by the beginning of Q1 2019 sales to these customers were discontinued. The Temple acquisition also contributed revenues of $222,064, with no comparable figure in the third quarter of 2018.

 

With the lower revenues in the third quarter, cost of goods sold included unleveraged warehousing, inventory reduction and product discard costs that totaled $227,769, a 25% decrease as compared to $305,215 in the comparable period of 2018. The Temple acquisition also contributed to cost of goods sold of $201,776, with no comparable figure in the third quarter of 2018.

 

Natur posted a gross profit of $31,237 during the third quarter of 2019, versus a gross profit of $72,350 for the third quarter of 2018. Of this amount, the Temple acquisition contributed gross margin of $20,288, with no comparable figure in the third quarter of 2018.

 

Nine Months Ended 30 September, 2019 versus Nine Months Ended 30 September 2018

 

During the nine months ended September 30, 2019, Natur recorded revenues of $331,559, a 75% decrease over revenues of $1,319,998, for the same period in 2018. The decrease in 2019 is attributed to the decision the Company made to discontinue selling to less profitable customers while developing its new culturally relevant product lines. It should be noted that in the first nine months of 2018, the introduction of two large customers generated initial opening orders, filling the supply chain. Both of these customers proved to be less beneficial to the business than planned and by the beginning of Q1 2019 sales to these customers were discontinued. The Temple acquisition also contributed revenues of $222,064, with no comparable figure in the comparable period of 2018.

 

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With the lower revenues in the nine-month period, cost of goods sold included unleveraged warehousing, inventory reduction and product discard costs and totaled $327,465, a 62% decrease as compared to $862,367 in the comparable period of 2018. The Temple acquisition also contributed to cost of goods sold of $201,776 with no comparable figure in the comparable period of 2018.

 

Natur posted a gross profit of $4,094 during the first nine-months of 2019, versus a gross profit of $457,631 for the same period of 2018. Of this amount, the Temple acquisition contributed gross margin of $20,288, with no comparable figure in the same period of 2018.

 

Natur continued to make year over year improvements in some controllable costs while recording total operating expenses of $5,118,485 during the first nine months of 2019, an 8% increase as compared to operating expenses of $4,727,184 in the same period of 2018. One of the biggest contributing factor to the overall increase in operating expenses is the stock option expense that is recorded in 2019 totaling $1,001,594, with no comparable figure in 2018. Of the total operating expenses amount, the Temple acquisition contributed operating costs of $333,286, with no comparable figure in the same period of 2018.

 

Wages & Salaries showed a strong improvement, totaling $657,559 in the first nine months of 2019 versus $1,268,286 in the first nine months of 2018, a decrease of 48% driven by significantly streamlined head-count compared to 2018. An additional strong contributing factor is the discontinuation of retail store activities in both the UK and the Netherlands. Selling, General & Administrative costs increased to $4,179,035 from $3,291,730 when comparing the first nine months of 2019 versus 2018, or 27%. This was driven mainly by an increase in the overall costs incurred by the business due to the administration costs of maintaining a public listing such as legal, board and accountancy fees. The Company also introduced a stock option scheme in 2019 with no similar such costs in the first nine months of 2018 with costs totaling $1,001,594 for 2019. Amortization depreciation and impairment costs increased to $281,891 from $167,168 when comparing the first nine months of 2019 versus 2018, or 69%. This was driven mainly by the Company taking a prudent measure to write down all assets in the retail stores (approximately $200,000) to Nil. As the Company could not comfortably assume we would receive any proceeds for these assets it will therefore only take gains on disposal in future periods should they be realized. These assets are now with the Curator pursuant to the Petition who is dealing with the liquidation of Natur Holding B.V.

 

The interest expense decreased from $128,102 in the first nine months of 2018 down to just $40,786 for the same period in 2019, a decrease of 68%. This was mainly attributed to the Company’s approach to source equity funding in 2019 compared to debt funding the operations in 2018.

 

Natur’s net loss available to common shareholders was $3,281,503 for the first nine months of 2019. This represents a 42% decrease from our net loss of $5,612,492 in the first nine months of 2018. The decrease in the loss was partially offset due to the liquidation of the UK business and a number of the subsidiaries in the Netherlands which allowed a gain on disposal of $1,891,985 to be realized in the second quarter of 2019. The Temple acquisition also contributed to net loss attributable to members of $163,730, with no comparable figure in the comparable period of 2018.

 

Restructuring Activities

 

Debt restructuring - Effective September 30, 2019, the Company and most of its debtholders have agreed and executed contracts to settle the amounts owed by the Company to the holders under individual debt agreements, including principle, interest expenses, penalties and other charges of whatsoever nature, all in an amount equal to $6,754,575, in exchange for and in consideration of the issuance to by the Company of an aggregate of 161,149,309 shares of Common Stock.

 

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Accounting Policies

 

ASC 842: In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This update requires the recognition of lease assets and lease liabilities on the balance sheet for leases classified as operating leases under previous guidance. The accounting for finance leases (capital leases) was substantially unchanged. The original guidance required application on a modified retrospective basis with adjustments to the earliest comparative period presented. In August 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements to ASC 842,” which included an option to not restate comparative periods in transition and elect to use the effective date of ASU No. 2016-02 as the date of initial application, which the Company elected. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, and continues to be reported under previous guidance that did not require the recognition of operating lease liabilities and corresponding lease assets on the consolidated balance sheet. As a result of the adoption of ASU No. 2016-02 on January 1, 2019, the Company recorded operating lease right-of-use assets of $580,310 and operating lease liabilities of $578,007. The adoption of ASU No. 2016-02 had an immaterial impact on the Company’s condensed consolidated statement of income and consolidated statement of cash flows for the nine-month period ended September 30, 2019. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward the historical lease classification, not reassess prior conclusions related to expired or existing contracts that are or that contain leases, and not reassess the accounting for initial direct costs.

 

Quantitative and Qualitative Disclosures About Market Risk.

 

Not required for smaller reporting companies.

 

Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), which we refer to as disclosure controls, are controls and procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any control system. A control system, no matter how well conceived and operated, can provide only reasonable assurance that its objectives are met. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

 

As of September 30, 2019, an evaluation was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of such date, the design and operation of these disclosure controls were ineffective to accomplish their objectives at the reasonable assurance level.

 

(b) Changes in Internal Control over Financial Reporting

 

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), occurred during the fiscal quarter ended September 30, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting

 

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PART II - OTHER INFORMATION

 

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes included in Part I, Item 1 of this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those described below. You should read the “Risk Factors” section of this Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

 

Certain figures, such as interest rates and other percentages included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.

 

ITEM 1 – LEGAL PROCEEDINGS

 

On June 17, 2016 and June 30, 2016 two complaints were filed, one with the Federal Equal Employment Opportunity Commission (“EEOC”) and one with the Wyoming State Department of Labor against the Company, alleging discrimination on the basis of sex and disability. The complaints did not seek any specific monetary relief. The complaints were mediated by the Wyoming State Department of Labor, and the U.S. Equal Employment Opportunity Commission. The Wyoming State Department of Labor issued a notice of dismissal for one of the complaints. After reviewing the facts and circumstances, the Company believes the claims made are weak, at best, and the Company has retained counsel and intends to continue a vigorous defense. On March 6, 2018, a complaint was filed with the Wyoming Court of Natrona County, alleging violation of the Wyoming Fair Employment Practices Act of 1965 for discrimination based upon sex, disability and retaliation. The complaint does not seek any specific monetary relief. At this time, management cannot reasonably estimate the cost to defend or the outcome of the complaints.

 

On October 29, 2019, we reached a tentative agreement with claimant to resolve her claims of sexual harassment.   The terms of this settlement are that Interim will pay to Lori Norby and her counsel, the total sum of $10,000 in exchange for a full release by Ms. Norby of Interim Healthcare of Wyoming, and claims asserted against John Busshaus, and Crystal Burback-Morse will be dismissed with prejudice.  A Notice of Settlement has been signed by Plaintiff’s counsel and filed with the Court, however we are still awaiting receipt of the final Settlement Agreement from the Plaintiff.   

 

On June 1, 2018, The U.S. EEOC decided that Interim Healthcare of Wyoming violated the wage discrimination laws (Title VII of the Civil Rights Act of 1964) by paying a male employee more than female employees. The EEOC initially claimed that back wages for these individuals plus liquidated damages total $43,593. On September 19, 2018, the Company attended a Conciliation meeting, at which the EEOC presented a revised settlement of $133,575 for back wages plus liquidated damages. The Company and the EEOC did not agree to a resolution. On September 28, 2018, the EEOC filed in the U.S. District Court for the District of Wyoming a complaint claiming Interim Healthcare of Wyoming violated the wage discrimination laws (Title VII of the Civil Rights Act of 1964) by paying a male employee more than female employees. It is too early to provide an educated opinion on the chances of a favorable outcome in this matter. There was a wage disparity present at Interim such that a male RN nurse employee was earning $1-$2 more per hour than all other RN nurse employees who were female. Interim employed approximately 6 female RN nurses, and this wage disparity existed for approximately 1 year of operation. We have asserted that this wage disparity was the result of market factors and not illegal gender discrimination, however whether we will be able to marshal sufficient evidence to overcome the presumption that arises from the admitted wage disparity. The Company recorded an accrual totaling $133,575 related to this matter in the period ended December 31, 2018.

 

On October 18, 2019, we entered into an Agreement with the Equal Employment Opportunity Commission (“EEOC”) to resolve the claims that Interim committed gender discrimination in paying male employees a higher wage than female employees.  The terms of that Agreement are that Interim agreed to entry of a judgment against it.  The terms of that Judgment include that Interim will pay the sum of $25,000 allocated to 5 previous female employees which make up the claimant group, as compensatory damages, plus an additional $25,000, and the employer portion of federal payroll taxes on those amounts, to these 5 previous employees as back wages.  Interim also agreed to a list of training and supervision requirements, but those requirements only become applicable if Interim Healthcare of Wyoming, Inc., operates “any healthcare or homecare-related business” in the US in the next 4 years.  We are currently working on issuing the payments described above to the previous employees, and should have that completed within the next 7-10 days.  In exchange for these payments, Interim is receiving the EEOC’s complete release of all claims for unlawful employment practices under Title VII and the Equal Pay Act that arise from the Charge of Discrimination filed by Nicole Aaker in Charge No. 541-2016-01546. 

 

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ITEM 1A – RISK FACTORS

 

Not required for smaller reporting companies.

 

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

 

None, not applicable.

 

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

 

None, not applicable.

 

ITEM 4 – MINE SAFETY DISCLOSURES

 

None, not applicable.

 

ITEM 5 – OTHER INFORMATION

 

ITEM 6 – EXHIBITS

 

Exhibit No.   Description
31.1   302 Certification of Paul Bartley
     
31.2   302 Certification of Ruud Huisman
     
32   906 Certification.
     
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema
101.CAL   XBRL Taxonomy Extension Calculation
101.DEF   XBRL Taxonomy Extension Definition
101.LAB   XBRL Taxonomy Extension Labels
101.PRE   XBRL Taxonomy Extension Presentation Linkbase

 

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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.

 

  NATUR INTERNATIONAL CORP.
     
Date: 11/14/19 By: /s/ Paul Bartley
    Paul Bartley
    Chief Executive Officer
     
Date: 11/14/19   /s/ Rudolf D. Huisman
    Ruud Huisman
    Chief Financial Officer

 

 

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