Item
1.
Business
Company
mission and overview.
Natur’s
vision is for technology to be the force of our innovation as we build culturally relevant consumer products that nurture the
human body. The mission of Natur is to deliver 100% natural products that are good for everyone and for nature, with an aim to
sell products that meet or exceed consumer expectations for health, wellness and good taste. Natur specially selects plant-based
ingredients, including Hemp Cannabidiol (CBD), fruits and vegetables, committing not to use concentrates, preservatives, stabilizers
or additives in our products. Natur further invests in sustainability projects to reduce the environmental impact of our own activities.
Business
Overview
Natur integrates new manufacturing technologies
with standard practices to extend the shelf life of its products and yet remain Naturalicious (natural & delicious) to build
out its value chain for the burgeoning market of nutritious beverages and healthy snacks with and without CBD or other nutrient
dense fusions. It has delivered its products in the Netherlands and the United Kingdom and plans on expanding in Europe and ultimately
the United States. Our understanding and application of the technological aspects of manufacturing assures a pathogen-free food
and beverage experience that preserves the nutrients and enzymes to the maximum level possible, while retaining the raw fresh
nature of the products. The result is what we believe to be the best tasting product with the maximum “goodness”
and highest nutrient density -- something the consumer seeks more and more in our target markets.
Our commitment to deliver to consumers
the best products possible in the market is strengthened with the market experience of our business partner, that is also a significant
shareholder, the AMC Group, which is one of the leading European suppliers of “white label” natural juices to over
70 of the largest retail chains in Europe. AMC is well known as the sector’s innovation leader with proprietary manufacturing,
software and production technologies.
The
AMC proprietary technologies, which at the core of the proposition incorporate HPP (Cold High-Pressure Processing) and SNFC
(Super Not From Concentrate), hold in the taste of freshness and yet extends shelf life to over 6 months. AMC was one
of the company’s founders that invested initially in AMC NT to lock in the strategic links between the
businesses.
The clear differentiator of the Company
is the
natur
™
brand which is supported by its disruptive marketing. Yes, we are branding nature.
The Company finds that consumers are interested in “
what we produce and how we voice this to the market
” more
than how it is made. From an investment perspective, this is a fundamental component of our business model as we are not
having to commit very significant capex to building our own modern production and bottling facilities to deliver into the increasing
demand for our product.
In
the future we anticipate delivering documented nutrigenomic (precision nutrition) properties that we believe will be an aid to
personal weight management, increase energy, lower cholesterol, counter sleep disorders and boost immunity response. We believe
that these product aspects will position the Natur products at the top of the European market at a mid-market price point. This
profile will be accessible internationally, as we have already undertaken preliminary discussions with distributors in major international
markets outside Europe.
Our
market profile will be further enhanced with the new Natur personalized snacking/juicing experience that will accelerate the trend
towards “
snackification
” already present in more mature markets in the United States and Europe.
This
all reflects the Natur
brand characteristics, shaped by the management vision of becoming a leader in the “hi-tech
health” food and beverage marketplace; achieved by responding to changing market needs and staying continuously ahead of
emerging trends. Natur also intends to address the demand of the consumer for knowledge about what he/she consumes with a greater
level of supply chain transparency.
Corporate
Management
The
Company and Natur have gathered a top team of experienced management and consultants in the field of food and beverage, who have
an in-depth knowledge of the market arena for our products and yet have the right fit of discipline and entrepreneurial vision
and drive.
The
Natur Holding non-executive board has top industry relevant experience and has a hands-on drive to make the company successful
and to gain a leadership position in the healthy product food and beverage market place through the offering of a palette of products
that not only are natural and delicious but with functional beneficial properties and can also be supplied as organic. Their
expertise and insights in the digital world will also help drive the Natur to embrace these new delivery frontiers.
From
Farm to Fridge
The
founders and management believe Natur will evolve to become one of the leaders in the European market and later in the United
States farm to fridge market segment, supplying superior fruit and vegetable juices, smoothies, and natural and organic snacks.
Natur is able to accommodate a great speed of market innovation and is able to meet market demands quickly; therefore, Natur
believes that it is well positioned to establish its market share and partner with the major international leaders to distribute
our products.
Products
The
Company divides its products in five categories: 1) Fruit and Vegetable Blend Juices, 250ml, Cold Pressed, High Pressure Processed
with 50 Days shelf life, 2) Fruit and Vegetable Blend Shots, 100 ml, Cold Pressed, High Pressure Processed with 50 Days shelf
life, 3) Not From Concentrate, Fruit and Vegetable Juice Blends, 250ml, Mildly Pasteurized, with 180 Days shelf life, 4) Not From
Concentrate Fruit Smoothies, 250ml, Mildly Pasteurized, with 180 Days shelf life, and 5) Innovative Snacking Occasions low in
calories and high in daily requirements for fruits and vegetables. Below is a product description within the categories.
Fruit
and Vegetable Blend Juices, 250ml, Cold Pressed, High Pressure Processed with 50 Days shelf life
natur.
Spicy Greens 6x 250ml NL/UK HPP ‘Grab and Go’
Spicy
Greens is a savory blend of cucumber, kale, spinach, lime, mint and ginger on an apple and pear base. The juice is high in vitamin
C which activates the natural energy and contributes to the immune system.
natur.
The Force 6x 250ml NL/UK HPP ‘Grab and Go’
The
Force is a savory blend of beetroot, carrot, cucumber, apple, acerola, blueberries, lime and ginger. The juice is high in vitamin
C which contributes to the normal function of the immune system.
natur.
Pearfection 6x 250ml NL/UK HPP ‘Grab and Go’
Pearfection
is a fresh blend of apple, pear and acerola. Pearfection contains potassium which is a mineral that contributes to the proper
functioning of your muscles.
natur.
Berrylicious 6x 250ml NL/UK HPP ‘Grab and Go’
Berrylicious
is a sweet juice of mixed forest fruits and apple. The juice is high in vitamin C which supports the natural defense mechanism.
natur.
Fountain of Youth 6x 250ml NL/UK
Fountain
of Youth is based on carrot and mango with a touch of passion fruit and turmeric. The juice is high in vitamin A which nurtures
the skin. Fountain of Youth also contains turmeric which is a natural painkiller with a powerful anti-inflammatory effect.
natur.
Emperor of the Sun 6x 250ml NL/UK
Emperor
of the Sun is a juice made from oranges with the highest nutritional values. This bottle contains more than 60% of the daily intake
of vitamin C which supports the firmness of the skin.
natur.
Vitamin Sea 6x 250ml NL/UK
Vitamin
Sea is a juice made from oranges and kiwis with the highest nutritional values. This bottle contains more than 60% of the daily
intake of vitamin C which supports the firmness of the skin.
natur.
Strawberry Sunrise 6x 250ml NL/UK
Strawberry
Sunrise is a juice made from oranges and strawberries with the highest nutritional values. This bottle contains more than 60%
of the daily intake of vitamin C which supports the firmness of the skin.
Fruit
and Vegetable Blend Shots, 100ml, Cold Pressed, High Pressure Processed with 50 Days shelf life
natur.
The Charger 8x 100ml NL/UK HPP ’Shots’
The
Charger is a savory blend of fennel, kale, spinach, cucumber, coriander, apple and lime. The juice is high in vitamin C which
contributes to the reduction of tiredness and fatigue and increases iron absorption.
natur.
The Clean 8x 100ml NL/UK HPP ’Shots’
The
Clean is a savory blend of apple, beetroot, carrot, spinach, celery and lemon. The shot is high in vitamin C which contributes
to the protection of cells and oxidative stress.
natur.
The Glow 8x 100ml NL/UK HPP ’Shots’
The
Glow is a blend based on carrot and mango with a touch of passion fruit and turmeric. The shot is high in vitamin A which nurtures
the skin. It also contains turmeric which is a natural painkiller with a powerful anti-inflammatory effect.
Not
From Concentrate, Fruit and Vegetable Juice Blends, 250ml, Mildly Pasteurized, with 180 Days shelf life
natur. Rocket Fuel 12x 250ml NL/UK
Rocket Fuel is a fruit and vegetable blend of apple,
coconut water, beetroot, raspberry, and persimmon. Vitamin B1 & C activate the natural energy while vitamin A, B6, B12 and
selenium contribute to the normal function of the immune system. Vitamin E contributes to the protection of cells from oxidative
stress.
natur.
Body Guard 12x 250ml NL/UK
Body
Guard is a fruit and vegetable blend of apple, carrot, orange, coconut water, peach, passion fruit and persimmon. Vitamin B1 &
C activate the natural energy while vitamin A, B6, B12 and selenium contribute to the normal function of the immune system. Vitamin
E contributes to the protection of cells from oxidative stress.
natur.
Power Plant 12x 250ml NL/UK
Power
Plant is a fruit and vegetable blend of apple, coconut water, pear, spinach, cucumber and persimmon. Vitamin B1 & C activate
the natural energy while vitamin A, B6, B12 and selenium contribute to the normal function of the immune system. Vitamin E contributes
to the protection of cells from oxidative stress.
Not
From Concentrate Fruit Smoothies, 250ml, Mildly Pasteurized, with 180 Days shelf life
natur.
Goji Galore 12x 250ml NL/UK
Goji
Galore is a fruit and vegetable smoothie with coconut water, strawberry, raspberry, goji, apple, kaki and blackcurrant. Vitamin
B1 & C activate the natural energy while vitamin A, B6, B12 and selenium contribute to the normal function of the immune system.
Vitamin E contributes to the protection of cells from oxidative stress.
natur.
Matcha Madness 12x 250ml NL/UK
Matcha
Madness is a fruit and vegetable smoothie with coconut water, pear, cucumber, spinach, banana, kaki, apple, spirulina and matcha.
Vitamin B1 & C activate the natural energy while vitamin A, B6, B12 and selenium contribute to the normal function of the
immune system. Vitamin E contributes to the protection of cells from oxidative stress.
natur.
Turmeric Tiger 12x 250ml NL/UK
Turmeric
Tiger is a fruit and vegetable smoothie with coconut water, banana, turmeric, pineapple, apple, lime and kaki. Vitamin B1 &
C activate the natural energy while vitamin A, B6, B12 and selenium contribute to the normal function of the immune system. Vitamin
E contributes to the protection of cells from oxidative stress.
Innovative
Snacking Occasions
Filling
the consumer need for guilt free products, the company is formulating an innovation without known equal. These will be made available
in 3 flavor variants. Research has revealed these are fully on trend, with 100% fruit & vegetables, 100% natural, no additives,
and rich in fiber.
natur.
on-the-go snackbox
This healthy natur. box is filled with 8 granola bars and 4 snacks. Our snacks only contain natural ingredients and are high in
fiber and protein. Perfect for on-the-go and suitable for the whole family.
natur. better bites box
This natur. snackbox is filled with 12 bites that are perfect as a topping for your yoghurt bowl or salad and great for on-the-go.
Our snacks contain only natural ingredients and are high in fiber and protein.
Product
Development
Since
inception the Company has been defining and refining its market and its innovative products accordingly.
The
target group is composed of health-conscious consumers looking for convenient fast-food alternatives. This drives product development
toward delivering a healthy, tasty and refreshing experience with 100% natural plant-based, fruit and vegetable juices and smoothies
and snacks to take away. Superior product quality and affordability allow the Company to broaden the consumer potential.
Initially
the Company developed an extensive line of cold pressed HPP juices consisting of 23 SKU’s, with consumer trending monikers,
including fruit and vegetable juices, coconut waters, coconut-water-based smoothies, dairy based smoothies, and nut milks.
Fruit
& Vegetable Juices
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Coconut
Waters
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Smoothies
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Nutmilks
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Tropical Greens
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Lemon Aid
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Whey Cool
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Strawberry Nut Fields
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The Clean
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Coco Beach
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Powerhouse
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La Vida
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Power Plant
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Berry Bliss
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Chilling in the Tropics
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Choc Fix
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Spicy Greens
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Berry’d Treasure
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Nut-tritious
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The Force
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Blueberry Hill
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Nutcracker Sweet
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Fountain of Youth
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Beet the Blues
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Refresher
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Berrylicious
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Pearfection
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In
2016 operating with market and consumer responsiveness, the Company optimized the original SKUs for efficiency and simultaneously
created four exclusive juices for a larger retail chain in The Netherlands. These were sold as the “SmartLine” and
included Coco Beach, Refresher (later called Drunk in Love), Power Plant and The Force.
The
Company further developed a tighter focused line of beverages to the rest of the market: Spicy Greens, The Clean, Berrylicious,
Pearfection, Fountain of Youth, Beet the Blues, and Whey Cool.
Once
the retailer exclusive period ended, it allowed the sale of the SmartLine to all other retailers the company again optimized the
line around consumer needs resulting in the following flavors to be marketed:
In
250ml PET bottles - Spicy Greens, The Clean, Berrylicious, Pearfection, Fountain of Youth, Beet the Blues, Drunk in Love. In 100ml
PET shots - The Charger, The Glow, and The Clean. The Company in 2017 made an entry in to the ’snack drinks’ arena
with two 250 ml robust SKUs called Cereal Smoothie, and Morning Glory.
Each
time the Company innovates, it considers the European markets best suited for distribution and labels its products accordingly.
It is common for the Company to ensure that product can be sold with the proper labels in The Netherlands, France, and the UK;
with opportunity assessments before label creation in other languages.
It
is common to earn ‘rotations’ for brand presence in large, visible, multi-outlet transportation retailers. In such
cases the Company innovates around the needs of those large retailers. In one such case the Company innovated a line of lemonades
and orange juices in the single serve package and in multi-serve one-liter packaging.
The Company has an innovation pipeline
for 2019 through 2021. These new innovations include CBD infused versions of our current product lines, and new entrants in Health
and Beauty and Animal Care. Some of these CBD infused snacks have been introduced on the eCommerce site in the first quarter of
2019. Already formulated are the products and labels required for a US Market entry. Additionally, the Company is finalizing the
Innovative Snacking Occasions product line and seasonal flavor varieties that bring new consumer trial to the brand.
The
market shift toward acceptable functional additives is being vetted and innovated by the company so that product introductions
might include plant waters, plant proteins, animal proteins (collagen), live cultures, and plant-based wellness supplements.
A
helpful tool for the Company’s innovation process is its flagship store in the Amsterdam canal district, where consumer
interactions can be noted and assessed by the marketing team. In the shop, the Company has introduced a CBD based shot in 30 ml
and is formulating other edibles. This is the beginning of other innovations in Fruit Waters / Waters, Protein Drinks, Non-Dairy
Nutmilks / Non-allergenic (alternative) Nutmilks, Vinegars, Alternative Sweeteners, Soups and other functional blends.
In
the creation of a snack line, the Company has development work being performed in the areas of Chocolates, Crackers, Chips, Fruit,
nut & granola bars, seaweed snacks, and cookies.
‘Next
from Natur’
(A)
Natur Breaks
In
close conjunction with a third-party manufacturer in 2018, the Company has invested heavily in New Product Development (NPD).
Consequently, the Company is proud to be ready to launch in Q2 2019 it’s innovation in Snacking: ‘Natur Break’.
The product portfolio extension consists of three variants:
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Natur.
Mango-Carrot-Pumpkin Break
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Natur.
Strawberry-Raspberry-Beetroot Break
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Natur.
Apple-spinach-Avocado break
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‘The
delicious ‘better-for-you snack’ line:
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100%
fruit & veggies (225gr)
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Crunchy
separately packaged topping with nuts and seeds (20gr)
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100%
natural, no additives
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One
serving contains 33% of vegetables- and 50% fruit of the Recommended Daily Intake (RDI)
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The
introduction is fully on trend:
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Increasing
demand for healthy and honest food.
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Increasing
awareness about fructose sugars in fruit.
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Opportunities
for combining vegetables and fruit.
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Growth
of convenience and healthy ‘on-the-go’ solutions
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This new range is in perfect complementary harmony with the
vision and existing portfolio of Natur. Based on conducted extensive qualitative consumer panel research in January 2019 and initial
trade response and acceptance, the Company believes this addition to the portfolio has the potential to add value to the category.
(B)
Natur Functionals
The
Company’s mission is to leverage technology as the driving force of innovation to build culturally relevant natural and/or
organic consumer products that are beneficial to the human body and improve the general wellbeing. Putting this into practice
the Company is developing two new product line extensions:
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1.
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Beverages
and snacks infused with Cannabidiol (CBD)
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Cannabidiol (CBD) is the non-psychoactive cannabinoid
of the cannabis plant, often known as hemp. CBD is not the THC cannabinoid of the plant that is intoxicating substance and is illegal
in many jurisdictions. CBD is legal worldwide, although a controlled substance in Canada, we do not deal in any illegal substance.
CBD is extracted and separated from specific varieties
of the industrial hemp plant. Although CBD can be found in other plants, it is the hemp plant that is used because of its abundance
in the plant, typically representing up to 40% of its extracts. When separated into its pure form, it cannot provide the intoxication
effects of THC.
CBD is
typically used for health reasons. Although there is much research to be done in the field, it is believed that there are a wide
range of health benefits. CBD products may be used for wellness purposes such as to aid sleep, or for pain or anxiety management:
they do not require prescription.
The Company’s plans on developing and commercializing medicinal and health-focused Functional Natural
Cannabis and hemp products that will embrace production transparency GMP product quality standards and novel technologies.
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Beverages
and snacks with Functional Nutraceuticals
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Primary
markets
The
fruit juices market was valued globally at USD 71.31 billion in 2016 and is expected to grow at a CAGR of 6.14% during the forecast
period, to reach an expected value of USD 121 billion by 2025. The global fruit and vegetable blends market was valued at USD
51.5 billion in 2016 and is expected to grow at a CAGR of 6.3% during the forecast period, to reach an expected value of USD 89.2
billion by 2025. The vegetable juices market was valued at USD 31.37 billion in 2016 and is expected to grow at a CAGR of
4.63% during the forecast period, to reach an expected value of USD 46.86 billion by 2025
3
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3
Source: Grand View Research 2018 - WHO, U.S. CDC, FDA, NIH Journals, Investor Presentations, Primary Interviews.
We
believe that the opportunity for the Natur products can be summarized as follows:
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globally
there is a generic shift towards a healthier lifestyle and healthier foods that is already well established in the more advanced
North American and European markets;
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there
is a fast-growing European market for healthy natural juices and snack foods that are easy-to-consume products suited to the needs
of a modern lifestyle;
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illustrating
these trends, within the Benelux and UK fruit juice market for example, there is a continuing shift to more complex and more expensive
premium juices;
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a
steadily increasing number of consumers are willing to pay a premium for niche brands with superior quality, functional outcomes
and special drinking experiences;
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the
major European retailers (including supermarket chains) are evaluating how they can differentiate their respective offerings and
enhance consumer experience to attract customers; and
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governments
are legislating against carbonated soft drinks with added sugar reinforcing consumers’ negative opinions of these products
and accelerating a shift to raw/fresh natural drinks for all family members.
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In addition to the above characteristics of the market in which we operate, we believe there are other
consumer trends that we need to take into consideration. These include the following:
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increased
availability of vegetarian and vegan products
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demand
for healthy and responsible snacks
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increase
of alternative ingredients from nature
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‘pure
nature’ provides ‘feeling good’ to the consumer
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The consumer trends also suggest that persons are wanting healthier
products generally. Typically, the following factors are taken into consideration:
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untreated products that do not use artificial coloring, flavors or preservatives;
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Products that are better for the environment;
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more demand for gluten-free, halal or Kosher products (‘free from’)
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Consumers not only consume for taste, but also for the function
of food. Natur is addressing these new factors in its products and marketing.
Craftmanship
and Artisanship
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more
demand for artisan and fresh products
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discovery
to new flavors and ethnic origin
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signature
from the craftsman
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Hero
products and story telling
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Sharing
Online - Products should look visually attractive to share on social media.
Sustainable
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consumers
are spending more on sustainable products every year
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no
waste, from either the packaging or the product itself
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Clean
Labels
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honesty
about the ingredients (‘from field to fork’)
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simple:
less ingredients
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simple:
ingredients that do what they have to do
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who
makes the product, where and how?
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More
Eating Occasions - with smaller and healthier portions
Blurring
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sports
drinks become mainstream. Reducing difference between on-the-go and retail
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Food
service becomes an important trigger.
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More
Direct Consumption - new eating occasions
Premiumization
- food is lifestyle. Increasing demand for premium variants.
Convenience
- the consumers are increasingly rushing and are looking for solutions.
Differentiated
Packaging - smaller production batches in alternative packaging
Online
Shopping - continued rapid growth. Regular grocery shopping shifting to online
Tailored
Offers - personal advantage e.g. consumer loyalty card
Super
Powders - maca, matcha, turmeric, spirulina, kale
Technology
- shelf life extension without additives
The
Company believes there is now mainstream acceptance in the Netherlands, UK and throughout Europe of ordering food over the internet
supported by a well-established fulfillment infrastructure for local delivery; there is no current significant competition from
large international players in either the Netherlands or UK, nor wider European markets, in the cold-pressed natural juices market
to the best of our knowledge. In the NFC market segment, there is no other brand that can match Natur’s Super NFC line in
nutrient density, with ambient delivery possibilities for up to four weeks while retaining the organoleptic properties and a shelf
life of up to six months.
Customer
Sales Authorizations
The
Company markets its products through five distinct channels in Europe – chain grocery, petrol and other smaller retail stores,
direct to consumer/business through e-commerce, caterers, and wholesalers (who reach independent retailers and Food Service locations).
Additionally, the Company operates a branded experiential consumer immersion store overlooking the Prinsengracht, one of the main
canals of Amsterdam providing heavy foot traffic by natives and tourists.
The
Company is building the brand through a combination of permanent shelf space and promotional rotational spaces. Over the past
two years, in the Netherlands, these have included presence in the 700-store chain Albert Heijn, the oldest organization owned
and operated by the Dutch supermarket operator Ahold and dominating the Food Grocery Market by 34,7% Market Share
4
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the progressive all-natural retailer Marqt (18 stores), and Plus Supermarkets (256 stores), to name a few. In the petrol sector,
the Company conducts business for example with the BP, Total and Avia petrol chains.
In the UK, during the past two years, the
Company served hundreds of independent natural food stores through direct relationships from a staff of several sales and marketing
personnel, while undertaking a branded takeover of WHSmith transportation retailers in a large-scale rotational promotion. The
Company has streamlined the market development for the UK and is resetting its strategies for a distributor-oriented expansion.
The company’s extended shelf life technologies will support the anticipated slowing at the border of a non-deal Brexit.
Presently, with distribution in several
hundred Dutch retailers, and with a new distribution agreement with one of the UK’s most customer-centric natural foods
distributors, the Company is poised for expansion to new authorizations in existing and new markets. An example of such expansion
is an authorization pending with the 600-store chain Jumbo, 2
nd
largest Food Grocery Retailer with 19,1% Market Share
,2
which is expected to place Natur products in 60 of its ‘on the go’ stores in 2019.
In
2018 HMS Host and Albert Heijn each represented more than ten percent of company revenues, together representing 58% of our revenues.
In 2017 no one represented more than ten percent of company revenues.
Direct
to Consumer & Businesses
The
Company has invested in an e-commerce platform from the https://nl.natur.eu/ buy now page that provides an end to end solution
to direct-to-consumer sales as well as shipments to businesses. This meets the expanding need for healthy snacking where consumers
live and work. Customers have the option to select a two-hour time window for when they want to receive their order. For these
customers the Company is using an external logistics company providing warehousing and order fulfillment. For business direct
customers the Company is using Leen Menken as logistics partner for the Netherlands.
Wholesale
Through
wholesalers like Lekkerland (€13 billion turnover in 2017), Sligro (€3 billion turnover in 2017) and Bidfood (€700
million turnover in 2017) the Company is distributing its products to a large variety of smaller outlets in both on- and off-trade
channels. From cafe to caterer, canteen to health care institution and from hotel to restaurant.
4
IRI 2018
Catering
The
Company pursues the catering category with the goal of prestigious availability for brand building and commercial interest. The
Company is selling to multiple sport clubs, offices, schools and many other public locations. This channel also includes airline
catering companies. The Company is in final negotiations with a larger Dutch provider in this channel. This channel also includes
outreach to convention centers where the Company has in place an agreement with RAI Amsterdam (largest in The Netherlands), exposing
the brand to 1.6 million visitors each year. Through our partner Absolute Taste, the Company has provided healthy juices to The
Ryder Cup, several Formula 1 races, Association of Tennis Professionals Finals and The Shard in London.
Festivals
and Events
The
Netherlands are famous for their festivals. Natur is attending the main dance festivals offering this crowd healthy refreshments,
while also selling through regular bars and via mobile sales and sampling teams. Through the customers like Absolute Taste, the
company delivers to international large festivals.
Anticipated
new business authorizations
The
Company is evaluating expansion in to additional European country markets and the US over the next twelve to twenty-four months.
The
first such European expansion will be to Switzerland, which is anticipated to be through Migros, Switzerland’s largest retail
company, its largest supermarket chain and largest employer. Migros is also one of the forty largest retailers in the world. With
over 600 retail grocery stores, over 200 specialty markets and over 315 restaurants in 5 countries, the Company is working with
Migros to select the ideal initial 200 outlets for a phase one implementation of Natur product availability.
The
company is also in discussions with a distributor for France, which is expected to start in the second quarter of 2019
Also,
in 2019, the Company is looking to extend the addressable market for its products with large distribution partners and/or retailers
in Germany, Austria, Israel, Eastern Europe and the Middle East.
Entering
the United States market will require a calculated expansion plan, beginning with the markets highest indexing in the development
of healthy eating and drinking products. New York City is one such market, along with Los Angeles, San Francisco and Central Texas.
The United States market is highly reliant on distribution agreements; and those distribution agreements are struck most easily
when large natural foods chains authorize the Company’s product lines. The Company plans to rely heavily on innovation to
foster success in the United States where working with functional supplements and innovating snacking allow for disruption and
competitive advantage.
Distribution
The
Company employs the practice of distributing product through independent, third party routes to market. In the Netherlands, the
Company deploys product to market through a contract relationship with Leen Menken Food Service Logistics who delivers greater
than 10% of the Company’s total Netherlands volume. This professional contract provider, from its distribution center in
Zoetermeer, is centrally located in the Randstad, close to the port of Rotterdam and Schiphol Airport. With 15,000 pallet spaces,
the Company’s relationship is scalable and efficient for refrigerated storage and transportation. Leen Menken applies work
automation according to the latest technical development. On the other hand, for certain activities, dedicated human attention
is needed, provided by a workforce of more than fifty people. Menken is certified, and the distribution center works according
to the quality requirements of ISO 9001, BRC, SKAL, Lean and Green & AEO.
In
the UK, the Company is using CLF Wholesaler to fulfill distribution requirements in that country. Founded in 1998, CLF are the
leading UK wholesaler of premium products such as those in the categories of sports nutrition, organic and health food products,
vitamins, minerals and supplements, personal care, household products and now chilled and frozen products. CLF offers a daily
delivery service from their warehousing facility in Southampton, Hampshire, and successfully provides continuity of supply across
over 15,000 products from over 750 leading brands. Their mission is to build upon their position as the wholesaler of choice to
the independent health food trade.
Production
The
Company relies on more than 10% of its salable product from its relationship with contract packer and investor AMC Group. This
special contribution to the strategic business plan represents a high barrier to entry for any potential competing participant,
as the scale and breadth of AMC’s operations are unmatched in Europe. Further, it is the platform on which the Company’s
plans for the European market will be delivered.
The
Company has an integrated product offering primarily using unique cold-pressed juices as a basis for (functional) supplements,
boosters and natural snacks. The products are considered as “safe foods” due to our Pure Pulse (PEF 2.0) and High-Pressure
Processing (HPP) processes. Pathogens receive a 5+Log reduction while all the goodness, minerals, nutrients and enzymes remain
intact. Also, thanks to the extended shelf life and consumption period of the Company’s products the process produces less
waste. The Company will deploy unique patented PEF 2.0 technology which creates a product that is not only cold pressed, but also
actually enhances the natural flavors. The PEF processing technology allows the Company to be extremely price competitive as less
factory workers are needed for this line production technology and, unlike with HPP production, no expensive refrigerated working
environment is needed.
For
products not produced by AMC, representing a very small percentage of current volume, the Company is working with other leading
Dutch and European contract manufacturers.
Sourcing
of Raw Materials
The
Company relies on the expertise of the AMC Group for sourcing fruit and vegetable juice. The AMC processes begin with proprietary
breeds of fruits and vegetables, taking the most advanced and many times patented proprietary extraction methods. Further, they
have pioneered proprietary methods for shelf life extension with the greatest retention of enzymes, nutrient density and natural
taste.
AMC
Group accounted in the aggregate for more than 10.3% of the current accounts payable at December 31, 2018, and the AMC Group companies
accounted for more than 21,5% of accounts payable at December 31, 2017.
Government
Regulations
There
are many food related regulations found in the laws of the different markets in which our products are distributed. The regulatory
regime is likely to expand and become more complicated over time in each of our markets. Two principal governing bodies provide
guidance and / or regulation in the human consumption food and beverage industry.
Europe’s
European Food Safety Authority (EFSA), under Regulation (EC) No 178/2002 (General Food Law Regulation) lays down the general principles
and requirements of food law, establishing the EFSA and laying down procedures in matters of food safety. The basic rule is that
no food shall be placed on the market that is unsafe, injurious to health or unfit. Under Regulation (EC) No. 852/2004 there are
additional food safety regulations based on the HACCP system, and businesses must maintain records of where the raw materials
for their products originated. The basic food labeling law is found in Regulations (EU) 1169/2011 and 1924/2006, which set out
the information that must be provide to consumers and indicates what can be provide as nutrition and health claims.
Member
States of the EU also have locally applicable laws and regulations covering aspects of public health, product safety, fair trading
and adequate information. Currently, because the products of the Company are sold in the Netherlands and the United Kingdom, the
Company has to comply with those laws in addition to the EU regulations. As the Company sells products in other Member States,
it will have to comply with any additional locally applicable laws.
Food
that is not compliant with the food safety requirements of the EU or a Member State will be subject to recall for destruction.
Retailers and distributors must help with the withdrawal of unsafe food and pass on information necessary to trace it. Consumers
and regulators are to be notified about recalled foods. The recall is typically at the expense of the product producer and typically
it can be very costly, not only in terms of monetary expense but also in terms of the reputation of a product.
While
not applicable at this time, should the Company enter the United States market with natural, wholesome better for you food and
beverages, it will be governed by the US Food and Drug Administration, and to some extent the United States Department of Agriculture.
In addition, state regulation may apply to our products and their distribution. Additionally, in the United States, there is a
substantial body of government regulation and case law that will impact what is deemed “natural” and other aspects
of the content of our products, product recalls, food safety and labeling.
The
failure to comply with any of the material provisions of the various applicable laws, regulations and other legal requirements
may result in fines, product recalls, or termination of our ability to manufacture and distribute our products. Contaminated products
may result in product liability claims. The result of these may have an adverse impact on our business reputation and our financial
position. We do not believe that any business insurance that we may hold will be adequate to recompense us for our financial damages.
Competition
The
Company has entered the very competitive space of better-for-you food and beverage products. There are a considerable number of
competitors comprised of a select few multi-national beverage and food conglomerates and a greater number of upstart independent
brands, many limited to specific markets.
The
multi-nationals with which the Company competes head to head are PepsiCo with their beverage product line Naked distributed broadly
in the United States and the European Union, and the Coca Cola Company, with their beverage line Innocent Drinks in the European
Union and Odwalla in the United States. The Company’s ability to be swift to respond to market opportunity is a competitive
advantage over the slower moving larger corporations. Also, Retailers’ own label beverages are considered as competition.
Typically, at a lower price point, the offer is extensive and widely available.
The
smaller, more nimble competitors in the beverage arena include the UK’s Savsé, Coolbest, grocery retailer private
labels brands, and countless start up beverage labels in the UK, Netherlands, and Switzerland. In the near future, the Company
expects to expand into the German, Moldavian, French, Swiss, and United States markets, and we will encounter further competition
from competitors that are active in those markets. New products are introduced all the time, many of which will be directly competitive
to our products or may be competitive on a tangential basis, but in all cases likely diluting our place in the market as a provider
of cold-pressed juice and other fruit and vegetable products.
We
also face competition from local outlets selling smoothie products and other fresh squeezed products. While we believe that we
compete favorably with our competitors on factors including quality, nutritional integrity, food safety, merchandising, service,
sales and distribution, multiple flavors, brand name recognition and loyalty, our products are typically sold at prices higher
than most other competing beverage and bar products. Significant competitive pressure from these or other companies could negatively
impact our sales and results of operations.
In
the emerging CBD food, beverage, snacks, health & beauty and animal products categories the competition consists of many small
players, all vying for leadership positions. The major food and beverage companies remain on the sidelines with experimental efforts
but not full-scale rollouts.
Employees
On
average Natur employed 16.3 employees. As of December 31, 2018, Natur had approximately 14 full time employees. Our employees
are mostly engaged in corporate headquarters (11.5) activities and the shop in Amsterdam (2.5). We believe employee relations
are generally good. Standard working hours are 40 hours a week.
On
average, 3.2 full time employees were employed in the shop for 2018. The employees in the shop have a collective bargaining agreement.
The employees work on an hourly rate basis, that includes vacation pay, holidays and a defined contribution pension scheme. The
store manager has a monthly contract.
Discontinued
Operations
Future
Healthcare of America, prior to becoming known as Natur International Corp. operated primarily in the home healthcare and healthcare
staffing services in Wyoming and Montana. As a result of its acquisition of Natur, it has taken steps to discontinue its operations
in this area of enterprise. Effective August 31, 2018 it had already closed its offices in Casper, Wyoming As of December 31,
2018, it has terminated all of is staffing services, sold off certain assets, and surrendered its professional servicing licenses.
Its current primary activity is to continue to collect outstanding reimbursement claims from various insurance providers and governmental
reimbursement organizations, addressing outstanding legal claims and terminating its business operations.
As
part of the Company’s strategy to operate in a lean and mean manner, the Company decided to centralize all support functions
at the headquarters in the Netherlands and to support global account management centrally. For that reason, effective November
30, 2018, the Company closed down the London office. The existing United Kingdom support functions were transferred to the headquarters
in Amsterdam as part of the centralization of support staff initiative.
Corporate
History and Information
Natur
was founded to formulate, manufacture and market a premium cold pressed juices product line (under the brand name “Naturalicious”
- natural + delicious) and associated natural organic snacks. Natur operates in the Netherlands under the name Natur Holding,
B.V.
Our
parent company was founded on June 22, 2012, as a Wyoming corporation. It recently operated under the name “Future Healthcare
of America.” That name was changed on December 28, 2018, when it was re-named “Natur International Corp.”
Future Healthcare of America operated two
subsidiaries in Wyoming and Montana to provide home health services and nurse staffing in the Western part of the United States.
After the share exchange transaction with Natur in November 2018, the parent company commenced the discontinuance of the home
healthcare operations and began to take steps to dissolve its subsidiaries and wind up its home healthcare business. Currently,
its principal activity is to collect outstanding receivables from the government agencies and insurance companies that insured
the recipients of its services, terminate its home healthcare operations and manage a couple of law suits. This termination is
close to being completed in April 2019.
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 on November 13, 2018, contemplated
by 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 Series B Preferred Stock will convert automatically
upon the Company increasing the number of shares of Common Stock of its authorized capital, which it plans to do promptly so as
to cause the conversion of the Series B Preferred Stock. Immediately after the Share Exchange Transaction, the former Natur shareholders
collectively own the controlling position among the shareholders of the Company.
On
September 21, 2018, the Company also executed the SPA to issue and sell to Alpha, the selling stockholder, 2,469.131 shares of
non-voting, convertible Series A Preferred Stock, each share convertible into approximately 33,000 shares of Common Stock at the
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 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 two warrants was $2,000,000 in cash and
conversion of approximately $769,000 of principal debt and interest due Alpha from the Company under a prior loan agreement. Alpha
also cancelled approximately $651,000 of principal debt and interest due from the Company. These transactions eliminated $1,420,000
of principal debt and interest of the Company. Alpha has also agreed to reimburse up to $100,000 of the liabilities of the Company
existing at the closing date. In connection with the SPA, the Company and Alpha also entered into a registration rights agreement
providing for the registration of the Common Stock issuable upon conversion of the Series A Stock and upon exercise of the two
warrants.
Item
1A.
Risk Factors
You
should carefully consider the following risk factors in addition to the other information contained in this Annual Report. Our
business, financial condition, results of operations and stock price could be materially adversely affected by any of these risks.
Risks
Related to Our Business
Because
our business and marketing plans may be unsuccessful, we may not be able to continue operations as a going concern.
Our
ability to continue as a going concern is dependent upon our generating cash flow that is sufficient to fund operations or finding
adequate investment or borrowed capital to support our operations. Our business and marketing plans may not be successful in achieving
a sustainable business and generating revenues. We have no arrangements in place for sufficient financing to be able to fully
implement our business plan. If we are unable to continue as planned currently, we may have to curtail some or all of our business
plan and operations. In such case, investors will lose all or a portion of their investment.
The
audit report for our financial statements and our financial statements have a “going concern” disclosure.
The Company has concluded that its negative working capital and decreased cash flows from operations are conditions that raised
substantial doubt about the Company’s ability to continue as a going concern. Without a successful plan in place from management
these conditions could negatively impact the Company’s ability to meet its financial obligations over the next year. The
Company has implemented a plan to address the going concern situation as follows: (i) the Company will continue to generate additional
revenue (and cash flows from operations) partly as a result of the Company’s expansion into new product lines during 2019
and partly from Company wide sales initiatives; and (ii) the Company has instituted cost saving initiatives and an organization
restructuring program that is designed to have an additional positive impact on the cost-basis of the organization. Notwithstanding
the foregoing, there is no assurance that the Company will not continue to have a going concern note or disclosure.
The Company is undertaking a reorganization
to reduce its debt, which if unsuccessful will have a continuing material effect on its ability to raise capital and fund operations.
The Company has been in negotiations to restructure its debt and effectively has taken steps to convert some of it to equity. The
Company has other debt that it is seeking to negotiate to reduce it or convert it to capital. The Company is considering using
a court procedure to amend or cancel some of its debt and other payment obligations. This process will require the Company to raise
new capital so as to implement the court reorganization. In such a court procedure, there is no assurance that the outcome will
be as planned because the trustee has powers to reject the arrangement applied for or modify it. The trustee even could require
a public sale of assets, in which case the Company may lose its operating assets and would have to cease its operations. No assurance
can be given that the Company will reorganize its debt sufficiently to improve its debt position and be able to continue its business
plan as currently structured.
Our
products have a limited shelf life.
The Natur products are made with fresh ingredients, therefore they have a limited
shelf life and must be transported and stored in cooled locations and consumer shelving. In order to maintain our “day-of-production”
flavor, we further restrict the shelf life of products through early expiration dates. The restricted shelf life means that we
don’t have any significant finished goods inventory and our operating results are highly dependent on our ability to accurately
forecast near term sales in order to adjust fresh fruit and vegetable sourcing and production. We do not have a long history of
forecasting product demands, and we may not be able to accurately forecast product demand in the future. When we don’t accurately
forecast product demand, we anticipate being either unable to meet higher than anticipated demand or producing excess inventory
that cannot be profitably sold.
Our
trade partners may have the right to return unsold products.
Natur may enter into agreements with our trade partners that
provide a right to return unsold products. Due to the limited shelf life Natur might need to destroy the products because they
can’t be sold anymore. This right may reduce the income due to Natur for the destroyed products, which will have a negative
impact on its earnings.
Cost
sensitivity
. Our profitability is highly sensitive to increases in raw materials, labor, shipping and other operating
costs. Unfavorable trends or developments related to inflation, raw material supply, labor and employee benefit costs, including
increases in hourly wage and minimum unemployment tax rates, rent increases resulting from the rent escalation provisions in our
leases, and the availability of employees may also adversely affect our
results.
Typical
of smaller companies at the early stage of development, we expect our quarterly results to fluctuate.
Due to our limited
scale and the need for expansion we expect that our results of operations will fluctuate on a quarterly basis and due to the total
size of the Company, which may have a large effect on our total financial results.
Claims
related to product liability.
Because our products are not irradiated or chemically treated, they are perishable and contain
certain naturally occurring microorganisms. We may receive complaints from consumers regarding ill effects allegedly caused by
our products. These claims may result in monetary damages payable to persons that have had adverse reactions to our products.
Also, these claims may result in adverse publicity. Either of these outcomes could seriously harm our business, our business reputation,
sales and results of operations. Although we maintain product liability insurance, our coverage may not be sufficient to cover
the cost of defense or related damages in the event of a significant product liability claim.
Claims
related to our product assertions.
Our products are sold as natural, cold pressed fruit and vegetable products containing
substantial amounts of various ingredients. We also make various other assertions about our products, such as no additives, no
sugar and no preservatives. Consumers and other consumer groups often challenge these types of claims. The law in the area of
what is natural and other aspects of our marketing our products is not settled and, in most cases, not statutory. In the US, there
is a mixture of federal and state law that is not consistent. Therefore, we may be subject to various claims about our advertising
and our products from time to time, which may cause us to pay monetary damages, change our advertising or change our products.
Any of these actions may result in adverse consequences to our operations, our product placement and results of operations.
Sources
of raw materials.
We depend upon the fruit and vegetable produced in various locations, with a current dependence on raw
materials from Spain and a few other countries. The farming locations and the agricultural production may be damaged or limited
as a result of windstorms, pests or plant disease. As our products are meant to be healthy options, our suppliers of raw materials
are not able to use many agricultural chemicals, and therefore, they may not be able to maintain production in the quantities
that we will need from time to time. Any decrease in the supply of fresh fruit and vegetables could have a material adverse effect
on our business and results of operations.
We
depend on one supplier for a significant amount of our raw materials and product development.
We rely on one supplier
for a majority of our raw materials. We also are largely dependent on this supplier for important aspects of our product development...
This supplier is a significant shareholder of the Company. In the believed unlikely event that this supplier is unable to provide
us with the current level of raw materials and any increase in the raw materials due to an increase in our product requirements,
our business may be adversely impacted. Additionally, if we are not able to obtain the product development services that are currently
provided, our business development and the innovation of our products will suffer, which may have an adverse impact on or business.
We do not have any alternative suppliers or product developers from which we can obtain the quality or quantity of raw materials
and services.
Concentration
of production capacity
. Virtually all of our juice production capacity is located at Murcia, Spain, which includes
our cold pressing, blending and bottling capability. Because currently we maintain minimal finished goods inventory at our
production location as part of our “day-of-production” production system, we could be challenged to continue to
produce an adequate supply of products in the event that production at or transportation from our production facility were
interrupted by fire, flood or other natural disasters, work stoppages, regulatory actions or other causes. Any significant
interruption would seriously harm our business and results of
operations.
Currently,
our products are distributed in a limited geographic area
. Our wholesale accounts and retail trade partners are located
in the Netherlands and the United Kingdom. Most of our sales are in the metropolitan areas within that region. Due to this concentration,
natural disasters, economic downturns and other conditions affecting the region may adversely affect our product distribution
and our business generally, and our results of operations.
Brexit
may have an adverse impact on the Company.
The consequences to the Company, if any, of Brexit cannot be determined at
this time. If there is an impact, it will depend on the quantity of products that are being sold by the Company to distributors
and consumers located in the United Kingdom, and what those sales represent of the overall sales and revenues of the Company.
Some of the consequences of Brexit may include (i) delays in the shipping and delivery of our products due to border conditions,
which delay may have an impact on the limited shelf life of our products, thereby limiting their marketability, (ii) increased
costs due to duties and other imposts imposed on the importation of goods into the United Kingdom, and (iii) other non-tariff
barriers that the United Kingdom may impose, such as changing regulations concerning our products that are different than those
of the European Union.
We
have a limited range of products and therefore have a limited diversification.
Natur’s business is vertically integrated
and centered around essentially one type of product, all-natural super-premium beverages and healthy snacks, sold primarily through
our direct-store-delivery system and a limited number of distributors. Any significant disruption in our product supply to the
consumer and any decrease in the consumption of our products generally or specifically would have an adverse effect on our business
and results of operations.
Risks
related to outsourced product development
. The Company obtains its finished products from third-party suppliers. Following
any anticipated or unanticipated change, shortages could result in an increase of the costs of goods, or adversely affect the
Company’s ability bring a product to market. Price increases due to inflationary pressures or supply side shortages from
a contract packer would directly affect the Company’s profitability if increases were not successfully passed on to customers.
Risks
related to expansion of our product lines and distribution.
Our continued growth depends in part upon our ability to expand
into new geographic areas, either through internal growth or by acquisition. It also depends on having the necessary capital,
being able to increase production, finding raw materials that satisfy our criteria, expanding distribution channels and securing
consumers through our marketing efforts and those of others. Due to the extent of our operating losses in recent years, we currently
anticipate limited expansion in during the next fiscal year and thereafter. There can be no assurance that we will expand into
new product lines or geographic areas or be able to invest in new markets. There can be no assurance that if expansion or investment
is undertaken that it will be successful or that expansion can be accomplished on a profitable basis. Demands on management and
working capital costs resulting from the perishable nature of our products may limit the ability, or increase the cost of, expansion
into new regions. Furthermore, consumer tastes vary by region, and there can be no assurance that consumers located in other regions
will be receptive to our products.
Acquisitions
of existing businesses have many risks, many of which cannot be anticipated.
Acquisitions of other businesses, assets
or products typically involve a number of special risks, including the diversion of management’s resources, issues related
to the assimilation of the operations and personnel of the acquired businesses, potential adverse effects on operating results
and amortization of acquired intangible assets. In addition, gross margins may be negatively impacted to the extent that gross
margins on acquired product lines are lower than our own product’s average gross margins. If we seek and find attractive
acquisition candidates, we may not be able to complete the transaction on acceptable terms, to successfully integrate the acquisition
into our operations, or to assure that the acquisition won’t have an adverse impact on our operations. Any plans to invest
in new markets or to consider additional acquisitions may cause us to seek additional financing that may be dilutive to current
investors or result in a higher debt-to-equity ratio than would otherwise be the case. Any financing we obtain may not be on terms
favorable to us, even if it is available.
Competition.
We currently compete with the following products distributed in our current markets: Innocent, Naked Juice, Savsé,
Coolbest and Retailer’s own label. In the near future, we expect to expand into the German, Moldavian, French, Swiss, and
United States markets and we will encounter further competition from competitors that are active in those markets. New products
are introduced all the time, many of which will be directly competitive to our products or may be competitive on a tangential
basis, but in all cases likely diluting our place in the market as a provider of cold-pressed juice and other fruit and vegetable
products. There are efforts by large established companies, regional companies and local producers to address the healthy living
and aging consumer goods products, such as Odwalla and Naked Juice. We also face competition from local outlets selling smoothie
products and other fresh squeezed products and white label products offered by chain outlets. While we believe that we compete
favorably with our competitors on factors including quality, nutritional integrity, food safety, merchandising, service, sales
and distribution, multiple flavors, brand name recognition and loyalty, our products are typically sold at prices higher than
most other competing beverage and bar products. Significant competitive pressure from these or other companies could negatively
impact our sales and results of operations.
Shifting
Consumer Tastes.
Consumer acceptance and desire for existing and emerging healthy foods, snacks and beverages are continually
changing and are extremely difficult to predict. The Company is striving to be on the right side of this macro shift at all times.
Increased consumer concerns about nutrition, healthy diets (some known as Paleo, KETO, Whole30, and GAPS regimens) and food allergies
are ever changing. This brings to our business the risk that sales of our products may decline due to perceived health concerns,
changes in consumer tastes or other reasons beyond the control of the Company. The consumer acceptance and resulting success of
new products will be one of the keys to the success of the Company’s business plan. There can be no assurance that the Company
will succeed in the development of any new products or that any new products developed by the Company will achieve market acceptance
or generate meaningful revenue for the Company.
Brand
Image.
Company success is tied to its ability to maintain the brand image and product quality for the Company’s
existing products, new products and brand extensions. The Company can give no assurance that the Company’s advertising,
marketing and promotional programs will have the desired impact on its products’ brand image and on consumer preferences.
Real or imagined product quality issues or contaminations, even if blatantly false, could adversely affect to the Company’s
profitability and brand image. There is no assurance that the Company will not be party to product liability litigation. If the
Company experiences product liability claims, the Company’s financial condition and business operations could be materially
adversely affected.
Marketing
Costs.
Adequate retail authorization, distribution and shelf space for product availability, particularly in hypermarkets,
are required for success in marketing health food, snack and beverage products. These authorizations can require additional marketing
support spending to obtain additional shelf space. In general, this is a competitive condition the Company will meet, or choose
otherwise. The Company may incur significant shelf space or other promotional costs as a necessary condition of entering into
competition or maintaining market share in particular markets or stores, and, if incurred, such costs may materially affect the
Company’s financial performance.
Our
products may be contaminated, tainted or damaged by third parties acting beyond our control.
Third parties, acting on
behalf of the Company, manufacture and physically distribute the Company’s products. Therefore, our products could become
contaminated, tainted or damaged by these other parties whose actions are beyond the control of the Company. The third parties
that we engage for manufacturing and distributing our product and the retail outlets for our products must take adequate precautions
not to contaminate, taint or damage the Company’s products. Although we have established handling protocols and we believe
our manufacturer, distributors and retailers will follow these protocols and use good commercial sense in handling a perishable
product, the Company cannot be certain that the its products will not be damaged in the ordinary course of business. In the event
the Company’s products are damaged, contaminated or tainted, the Company may experience an adverse financial effect due
to lost sales, the cost of a product recall, and product liability damages and an adverse business effect due to reputational
damage and reluctance of consumers to trust our products. The Company, at this time, cannot estimate any cost or liability amounts
that the Company might incur in connection damaged, contaminated or tainted products.
We
are dependent on the continued services and on the performance of our senior management and other key personnel.
The loss of the services of any of our executive officers, such as Robert Paladino, our ~Chief Executive
Officer, or Ellen Berkers, our Chief Executive and Financial Officer, or other key employees could have a material adverse effect
on our business, operating results and financial condition. We also depend on our ability to identify, attract, hire, train, retain
and motivate other highly skilled technical, managerial, sales, operational, business development and customer service personnel.
Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate
or retain sufficiently qualified personnel. The failure to attract and retain necessary skilled personnel could have a material
adverse effect on our business, operating results and financial condition.
If
the protection of trademark, brands and other proprietary rights is inadequate, we could lose our proprietary rights and experience
a loss of revenues.
We rely on a combination of copyright, trademark, trade dress and trade secret laws, employee and
third-party non-disclosure and invention assignment agreements and other methods to protect our proprietary technology. Despite
these precautions, it may be possible for unauthorized third parties to obtain and use information that we regard as proprietary.
In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United
States. There can be no assurance that the steps taken by us to protect our proprietary rights will be adequate or that third
parties will not infringe or misappropriate our trademarks, copyrights and similar proprietary rights. If we resort to legal proceedings
to enforce our IP rights, those proceedings could be expensive and time-consuming and could distract our management from our business
operations.
Intellectual
property claims against us can be costly and could impair our business.
We cannot predict whether third parties will assert
claims of infringement against us, or whether any future assertions or prosecutions will harm our business. Although we take significant
steps to make sure that our products do not infringe on the rights of others, there is always the possibility that another person
or company may assert that we infringed on their proprietary rights. If we are forced to defend against any such claims, whether
they are with or without merit or are determined in our favor, we may face costly litigation, diversion of management, or product
launch delays, any of which could adversely impact our business. As a result of such a dispute, we may have to enter into royalty
or licensing agreements. Such royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, if at
all. If there is a successful claim of intellectual property infringement against us and we are unable to license the infringed
or similar IP on a timely basis, our business could be impaired.
Prior
employers of our employees may assert violations of past employment arrangements.
Prior employers of our employees may
try to assert that our employees are breaching restrictive covenants and other limitations imposed by past employment arrangements.
We believe that all of our employees are free to work for us in their various capacities and have not breached past employment
arrangements. Notwithstanding our care in our employment practices, a prior employer may assert a claim. Such claims will be costly
to contest and highly disruptive to our work environment and may result in a detrimental effect on our operations.
Government
regulations may increase our costs of doing business.
The adoption or modification of laws or regulations relating to
our business could harm our operating results and financial condition by increasing our costs and administrative burdens. Laws
and regulations directly applicable our business is becoming more diverse and prevalent in all the markets where we are likely
to distribute our products. We must comply with regulations in Europe, the United States, as well as any other regulations adopted
by other countries where we do business. Compliance with any newly adopted laws or regulations may prove difficult for us and
may harm our business, operating results and financial condition.
We
will require additional capital in the future, which may not be available on terms acceptable to us, or at all.
Our future
liquidity and capital requirements will depend upon numerous factors, including the success of our products and market developments.
We will to need to raise funds through public or private financings, strategic relationships or other arrangements. There can
be no assurance that such funding, will be available on terms acceptable to us, or at all. If funds are raised through the issuance
of equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution
in net book value per share, and such equity securities may have rights, preferences or privileges senior to those of the holders
of our existing capital stock. Furthermore, any debt financing, if available, may involve restrictive covenants that may limit
our operating flexibility with respect to certain business matters. If adequate funds are not available on acceptable terms, we
may not be able to continue to develop or enhance our products, take advantage of future opportunities or respond to competitive
pressures, any of which could have a material adverse effect on our business, operating results and financial condition.
Risks
Related to Ownership of Our Common Stock
There
is not an active market for our Common Stock.
There has been no sustained activity in the market for our Common Stock
and we cannot provide any assurances that an active market for our Common Stock will ever develop. Investors should understand
that there may be no alternative exit strategy for them to recover or liquidate their investments in our Common Stock. Accordingly,
investors must be prepared to bear the entire economic risk of an investment in the Company for an indefinite period of time.
If an active market ever develops for our Common Stock, we anticipate that our then financial condition and product offerings
will greatly impact the market value of our Common Stock. The market value at any point in time may not reflect the value of our
business or our business prospects.
We
are subject to the reporting requirements of the United States securities laws, which will require expenditure of capital and
other resources.
We are a public reporting company subject to the information and reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and other federal securities laws, including, without limitation,
compliance with the Sarbanes-Oxley Act (“Sarbanes”). The costs of preparing and filing annual and quarterly reports,
proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to
be substantially higher than they would otherwise be if we were privately-held. It will be difficult, costly, and time-consuming
for us to develop and implement internal controls and reporting procedures required by Sarbanes, and we will require additional
staff and third-party assistance to develop and implement appropriate internal controls and procedures.
Because
we are subject to the “penny stock” rules as our shares are quoted on the over-the-counter bulletin board, the level
of trading activity in our stock may be reduced.
If an active trading market does develop for our stock, it is likely
that our stock will be subject to the regulations applicable to penny stocks. The regulations of the SEC promulgated under the
Exchange Act that require additional disclosure relating to the market for penny stocks in connection with trades in any stock
defined as a penny stock. The SEC regulations define penny stocks to be any non-exchange equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. Unless an exception is available, those regulations require the broker-dealer
to deliver, prior to any transaction involving a penny stock, a standardized risk disclosure schedule prepared by the SEC, to
provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the purchaser’s
account, to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level
of trading activity, if any, in the secondary market for a stock that becomes subject to the penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules
discourage market investor interest in and limit the marketability of our Common Stock.
In
addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry
Regulatory Authority, Inc. (“FINRA”) has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending
speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain
information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for
at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our
Common Stock, which may limit an investor’s ability to buy and sell our stock.
We
may not be able to attract the attention of major brokerage firms or securities analysts in our efforts to raise capital.
In due course, we plan to seek to have our Common Stock quoted on a national securities exchange in the United States. There can
be no assurance that we will be able to garner a quote for our Common Stock on an exchange. Even if we are successful in doing
so, security analysts and major brokerage houses may not provide coverage of us. We may also not be able to attract any brokerage
houses to conduct secondary offerings with respect to our securities.
Because
future sales by our stockholders could cause the stock price to decline, our investors may lose money on their investment in our
Common Stock.
No predictions can be made of the effect, if any, that market sales of shares of our Common Stock or the
availability of such shares for sale will have on the market price prevailing from time to time. Nevertheless, sales of significant
amounts of our Common Stock could adversely affect the prevailing market price of our Common Stock, as well as impair our ability
to raise capital through the issuance of additional equity securities.
Risks related to the corporate restructuring program
We maybe not be able to secure the
required funding for the restructuring
.
Because the restructuring requires funding of Natur CBD BV, there is the risk that
the company will not be able to secure the amount necessary to fund the acquisition of the assets and accept the liabilities in
the reorganization, in which case the restructuring will not result in the corporate objective sought, which is to reduce the debt
of the company on a consolidated basis.
We will not be able to terminate
the restructuring process
. Once the trustee has been appointed, there is no ability for the company to terminate the restructuring
process as described above. The trustee could decide to take decisions that were not anticipated in respect of the assets and liabilities
of Natur Holding, which may have an adverse impact on the restructuring and therefore on the entire company. The trustee may even
reject in its entirety the proposed restructuring plan.
Third parties may object to
the restructuring process
. If either because Natur CBD cannot complete its acquisition of the assets and acceptance of
continuing liabilities, or there is objection to the restructuring by third parties, or the trustee on its own initiative rejects
the restructuring plan, the trustee will have wide discretion in how to proceed. The trustee may sell the assets in a public sale
in which case the company would lose the assets, including their value to the creditors of Natur Holding and the ability to use
the assets. In this event, the company would most likely not be able to continue its operations as a producer of its products and
have to terminate operations. In the event of no operations, the investors in the company would lose the entirety of their investment.
The to be appointed trustee
may nit discharge debts
. There can be no assurance given that the trustee will discharge the debts that are sought to be
terminated in the reorganization. Therefore, the company may retain more debt obligations than anticipated and not be able to service
the debt. If the debt on the company is not reduced sufficiently, there is the risk that the company will not be able to operate
profitably or be able to continue its operations.
The company may face difficulties
to finance the surviving liabilities in the future.
The planned restructuring is anticipated to expunge all the debt other
than certain trade obligations, tax obligations and other general obligations of the operations in the Netherlands amounting to
approximately $ 800,000. The company anticipates being able to service this amount of assumed liabilities after the reorganization,
but there can be no assurance that it will be able to do so. In such event, the company may again face a reorganization or have
to otherwise change its business plan or cease operations.
The company will need to continue
to raise capital
. Although management and the board of directors believes that the restructuring will ultimately benefit
the company, there is no certainty that the restructuring will result in the required improvement to the financial condition of
the overall company or make operational funding available. The company will continue to need to raise working capital and obtain
funding in the future, for which no assurance can be given that the company will be able to find such funding on acceptable terms
or at all.