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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

 

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

 

For the quarterly period ended October 31, 2021

 

or

 

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

 

For the transition period from _________ to _________

 

Commission File Number: 0-55077

 

NEUTRA CORP.

(Exact name of registrant as specified in its charter)

 

Wyoming   27-4505461
(State or other jurisdiction of Incorporation or organization)   (I.R.S. Employer Identification Number)
     
54 Sugar Creek Center Blvd., Suite 200
Sugar Land, Texas
  77478
(Address of principal executive offices)   (Zip code)

 

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

 

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 Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] 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).

[X] 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.

 

  Large accelerated filer [_] Accelerated filer [_]
  Non-accelerated filer [X] Smaller reporting company [X]
    Emerging growth company [_]

 

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

 

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

[_] Yes  [X] No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of December 6, 2021, 1,714,873,799 shares of common stock are issued and outstanding.

 


 

TABLE OF CONTENTS

 

PART IFINANCIAL INFORMATION 4
   
Item 1. Financial Statements 4
   
Condensed Consolidated Balance Sheets (unaudited) 4
   
Condensed Consolidated Statements of Operations (unaudited) 5
   
Condensed Consolidated Statements of Stockholders’ Deficit (unaudited) 6
   
Condensed Consolidated Statements of Changes in Mezzanine Equity(unaudited) 7
   
Condensed Consolidated Statements of Cash Flows (unaudited) 8
   
Notes to the Unaudited Condensed Consolidated Financial Statements 9
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 17
   
Item 4. Controls and Procedures 17
   
PART IIOTHER INFORMATION 18
   
Item 1. Legal Proceedings 18
   
Item 1A. Risk Factors 18
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
   
Item 3. Defaults upon Senior Securities 18
   
Item 4. Mine Safety Disclosures 19
   
Item 5. Other Information 19
   
Item 6. Exhibits 19
   
Signatures 19

 

- 2 -


 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

OTHER PERTINENT INFORMATION

 

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

 

- 3 -


 

PART I — FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

NEUTRA CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

               
    October 31,   January 31,  
    2021   2021  
    (Unaudited)      
CURRENT ASSETS              
Cash and cash equivalents   $ 29,058   $ 23,308
Deposits     1,610     1,610  
Accounts receivable         25  
Inventory          
Total current assets     30,668     24,943  
               
Property and equipment, net     147,993     165,824  
               
TOTAL ASSETS   $ 178,661   $ 190,767  
               
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT              
Current Liabilities              
Accounts payable and accrued expenses   $ 438,701   $ 426,482  
Accounts payable to related party     131,755     131,755  
Advances payable     3,450     3,450  
Advances payable to related party     2,314     16,236  
Dividends payable on Series G preferred stock     6,229     2,634  
Convertible notes payable, in default     239,711     239,711  
Accrued interest payable     227,175     181,675  
Total current liabilities     1,049,335     1,001,943  
               
TOTAL LIABILITIES     1,049,335     1,001,943  
               
COMMITMENTS AND CONTINGENCIES              
               
MEZZANINE EQUITY              
Series G preferred stock; $1.00 stated value, 317,200 shares and 156,300 shares issued and outstanding at October 31, 2021 and January 31, 2021, respectively     317,200     156,300  
               
STOCKHOLDERS’ DEFICIT              
Common stock, $0.001 par value; unlimited shares authorized;1,677,410,163 and 1,492,765,422 shares issued and outstanding at October 31, 2021 and January 31, 2021, respectively     1,677,409     1,492,765  
Preferred stock, $0.001 par value; 20,000,000 shares authorized:              
Series A convertible preferred stock; 50,000 shares issued and outstanding at October 31, 2021 and January 31, 2021     50     50  
Series E preferred stock, 1,000,000 shares issued and outstanding at October 31, 2021 and January 31, 2021     1,000     1,000  
Series F preferred stock, $0.001 par value; 1,000,000 shares issued and outstanding at October 31, 2021 and January 31, 2021     1,000     1,000  
Additional paid-in capital     7,576,319     7,427,709  
Preferred stock subscribed but not issued     250,000     250,000  
Accumulated deficit     (10,693,652 )   (10,140,000 )
               
TOTAL STOCKHOLDERS’ DEFICIT     (1,187,874 )   (967,476 )
               
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT   $ 178,661   $ 190,767  

 

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

 

- 4 -


 

NEUTRA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

                           
    Three Months Ended   Nine Months Ended  
    October 31,   October 31,  
    2021   2020   2021   2020  
                           
REVENUE   $ 26,271   $ 726   $ 53,631   $ 7,467  
Cost of goods sold     24,622         51,214     1,912  
                           
Gross margin     1,649     726     2,417     5,555  
                           
OPERATING EXPENSES                          
Depreciation     19,726     10,675     58,058     17,363  
Sales commissions     4,634         13,871      
General and administrative expenses     152,400     84,270     353,402     217,786  
Total operating expenses     176,760     94,945     425,331     235,149  
                           
LOSS FROM OPERATIONS     (175,111 )   (94,219 )   (422,914 )   (229,594 )
                           
OTHER INCOME (EXPENSE)                          
Gain on settlement of liabilities     11,262         11,262     61,421  
Interest expense     (15,105 )   (15,105 )   (45,501 )   (123,827 )
Total other income (expense)     (3,843 )   (15,105 )   (34,239 )   (62,406 )
                           
Net loss   $ (178,954 ) $ (109,324 ) $ (457,153 ) $ (292,000 )
                           
Deemed dividend on Series G convertible preferred stock     (43,622 )   (15,200 )   (96,499 )   (30,700 )
                           
Net loss available to common shareholders   $ (222,576 ) $ (124,524 ) $ (553,652 ) $ (322,700 )
                           
Net loss per common share   $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 )
                           
Weighted average shares outstanding - basic and diluted     1,637,475,687     801,493,715     1,554,322,653     541,043,468  

 

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

 

- 5 -


 

NEUTRA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

 

                                                 
            Series A Convertible   Series E   Series F   Additional         Stock   Total  
  Common stock   Preferred Stock   Preferred Stock   Preferred Stock   paid-in   Accumulated   subscribed   Equity  
    Shares   Par   Shares   Amount   Shares   Amount   Shares   Amount   capital   Deficit   but not issued   (Deficit)  
                                                                   
Balance, January 31, 2021   1,492,765,422   $ 1,492,765   50,000   $ 50   1,000,000     1,000   1,000,000   $ 1,000   $ 7,427,709   $ (10,140,000 ) $ 250,000   $ (967,476 )
                                                                   
Common stock issued for preferred stock conversion   26,184,589     26,185                       61,941             88,126  
Dividends on Series G preferred stock                                 (4,260 )       (4,260 )
Deemed dividend on Series G preferred stock                                 (24,600 )       (24,600 )
Net loss                                 (137,316 )       (137,316 )
Balance, April 30, 2021   1,518,950,011   $ 1,518,950   50,000   $ 50   1,000,000   $ 1,000   1,000,000   $ 1,000   $ 7,489,650   $ (10,306,176 ) $ 250,000   $ (1,045,526 )
                                                                   
Common stock issued for preferred stock conversion   44,337,486     44,336                       29,607             73,943  
Dividends on Series G preferred stock                                 (5,867 )       (5,867 )
Deemed dividend on Series G preferred stock                                 (18,150 )       (18,150 )
Net loss                                 (140,883 )       (140,883 )
Balance, July 31, 2021   1,563,287,497   $ 1,563,286   50,000   $ 50   1,000,000   $ 1,000   1,000,000   $ 1,000   $ 7,519,257   $ (10,471,076 ) $ 250,000   $ (1,136,483 )
                                                                   
Common stock issued for preferred stock conversion   114,122,666     114,123                       57,062             171,185  
Dividends on Series G preferred stock                                 (5,822 )       (5,822 )
Deemed dividend on Series G preferred stock                                 (37,800 )       (37,800 )
Net loss                                 (178,954 )       (178,954 )
Balance, October 31, 2021   1,677,410,163   $ 1,677,409   50,000   $ 50   1,000,000   $ 1,000   1,000,000   $ 1,000   $ 7,576,319   $ (10,693,652 ) $ 250,000   $ (1,187,874 )
                                                                   
                                                                   
Balance, January 31, 2020   616,198,035   $ 616,198   50,000   $ 50   1,000,000   $ 1,000 $ 1,000,000   $ 1,000   $ 8,091,570   $ (9,559,308 ) $   $ (849,490 )
                                                                 
Common stock issued for debt conversion   314,534,051     314,534                       (269,034 )           45,500  
Net loss                                 (110,373 )       (110,373 )
Balance, April 30, 2020   930,732,086     930,732   50,000     50   1,000,000     1,000   1,000,000     1,000     7,822,536     (9,669,681 )       (914,363 )
                                                                 
Common stock issued for debt conversion   452,833,336     452,833                       (398,493 )           54,340  
Cash received for stock subscription                                     50,000     50,000  
Deemed dividend on Series G convertible preferred stock                                 (15,500 )       (15,500 )
Net loss                                 (72,303 )       (72,303 )
Balance, July 31, 2020   1,383,565,422   $ 1,383,565   50,000   $ 50   1,000,000   $ 1,000   1,000,000   $ 1,000   $ 7,424,043   $ (9,757,484 ) $ 50,000   $ (897,826 )
                                                                 
Deemed dividend on Series G convertible preferred stock                                 (15,200 )       (15,200 )
Net loss                                 (109,324 )       (109,324 )
Balance, October 31, 2020   1,383,565,422   $ 1,383,565   50,000   $ 50   1,000,000   $ 1,000   1,000,000   $ 1,000   $ 7,424,043   $ (9,882,008 ) $ 50,000   $ (1,022,350 )

 

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

 

- 6 -


 

NEUTRA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN MEZZANINE EQUITY

 

             
  Series G Preferred Stock  
  Shares   Amount  
         
Balance, January 31, 2021   156,300   $ 156,300  
             
Series G preferred stock issued for cash   164,600     164,600  
Series G preferred stock converted to common stock   (85,200 )   (85,200 )
             
Balance, April 30, 2021   235,700     235,700  
             
Series G preferred stock issued for cash   99,400     99,400  
Series G preferred stock converted to common stock   (71,100 )   (71,100 )
             
Balance, July 31, 2021   264,000   $ 264,000  
             
Series G preferred stock issued for cash   217,800     217,800  
Series G preferred stock converted to common stock   (164,600 )   (164,600 )
             
Balance, October 31, 2021   317,200   $ 317,200  

 

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

 

- 7 -


 

NEUTRA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

               
    Nine Months Ended  
    October 31,  
    2021   2020  
CASH FLOW FROM OPERATING ACTIVITIES:              
Net loss   $ (457,153 ) $ (292,000 )
Adjustments to reconcile net loss to net cash used in operating activities:              
Depreciation     58,058     17,363  
Amortization of discount on convertible note payable         72,621  
Gain on forgiveness of debt     (11,262 )    
Gain on extinguishment of convertible notes payable         (61,421 )
Changes in operating assets and liabilities              
Deposits         48  
Accounts receivable     25      
Inventory         1,468  
Accounts payable and accrued liabilities     12,219     7,536  
Accrued interest payable     45,500     51,207  
NET CASH (USED IN) OPERATING ACTIVITIES     (352,613 )   (203,178 )
               
CASH FLOWS FROM INVESTING ACTIVITIES              
Purchase of fixed assets     (40,227 )   (166,523 )
NET CASH (USED IN) INVESTING ACTIVITIES     (40,227 )   (166,523 )
               
CASH FLOWS FROM FINANCING ACTIVITIES              
Repayments of advance from related party     (17,422 )    
Stock subscriptions received         50,000  
Proceeds from sale of Series G convertible preferred stock     401,250     170,000  
Proceeds from advance from related party     3,500     11,000  
Proceeds from issuance of note payable     11,262      
Repayments of convertible notes payable         (25,000 )
NET CASH PROVIDED BY FINANCING ACTIVITIES     398,590     206,000  
               
NET CHANGE IN CASH AND CASH EQUIVALENTS     5,750     (163,701 )
               
Cash and cash equivalents at beginning of period     23,308     177,176  
               
Cash and cash equivalents at end of period   $ 29,058   $ 13,475  
               
Cash paid during the period for:              
Interest   $   $  
Taxes   $   $  
               
Noncash investing and financing transactions:              
Conversion of convertible notes payable   $   $ 99,840  
Conversion of Series G preferred stock   $ 320,900   $  
Deemed dividend on Series G convertible preferred stock   $ 80,550   $ 30,700  

 

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

 

- 8 -


 

NEUTRA CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2021

 

Note 1. Background Information

 

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

 

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

 

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

 

Note 2. Going Concern

 

For the nine months ended October 31, 2021, the Company had a net loss of $457,153 and did not have positive cash flow from operations. As of October 31, 2021, the Company has negative working capital of $1,018,667.

 

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

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

 

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

 

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

 

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

 

Note 3. Significant Accounting Policies

 

The significant accounting policies that the Company follows are:

 

- 9 -


 

Interim Financial Statements

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended January 31, 2021 and notes thereto and other pertinent information contained in our Form 10-K that we filed with the Securities and Exchange Commission (the “SEC”).

 

The results of operations for the nine-month period ended October 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2022.

 

Basis of Presentation

 

The condensed consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The condensed consolidated financial statements have been prepared using the accrual basis of accounting in accordance with GAAP.

 

Consolidated Financial Statements

 

The condensed consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, Diamond Anvil Designs, LLC Deity Corporation and Vivis Corporation (Vivis), from the date of their formations or acquisition. Significant intercompany transactions have been eliminated in consolidation.

 

Use of Estimates

 

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

 

Property and Equipment, net

 

Property and equipment consist of equipment used to manufacture the Company’s products and is presented at cost. Depreciation is recognized over the useful life of the equipment on a straight-line basis over three years beginning when the asset is put in service. For the nine months ended October 31, 2021 and 2020, the Company recognized depreciation expense of $58,058 and $17,363, respectively.

 

Revenue Recognition

 

On February 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and the related guidance in ASC 340-40 (collectively, the new revenue standard) using the modified retrospective method applied to those contracts which were not completed as of February 1, 2018. Under the modified retrospective method, the Company recognizes the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings; however, no adjustment was required as a result of adopting the new revenue standard. Results for reporting periods beginning after February 1, 2019 are presented under the new revenue standard. The comparative information has not been restated.

 

ASC 606 requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For the nine months ended October 31, 2021 and 2020, revenue from contracts with customers was $53,631 and $7,467, respectively.

 

Earnings (Loss) per Common Share

 

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

 

- 10 -


 

Commitments and Contingencies

 

The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

 

As discussed in more detail in Note 6, the Company agreed to pay 60% of all revenue from Deity Corporation to Sydney Jim, the Company’s CEO, up until a total of $250,000 is paid to Mr. Jim, at which point he will be entitled to 20% of revenue from Deity Corporation.

 

There were no other known commitments or contingencies as of October 31, 2021 and January 31, 2021.

 

Mezzanine equity

 

Where ordinary or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the issuer, and upon such event, the shares would become redeemable at the option of the holders, they are classified as ‘mezzanine equity’ (temporary equity). The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future.

 

 

Note 4. Deposits

 

Deposits represent cash on deposit with the Company’s attorney. As of October 31, 2021 and January 31, 2021, the Company had amounts on deposit with its attorney in the amount of $1,610 and $1,610, respectively.

 

Note 5. Property and equipment, net

 

Property and equipment consist of the following:

 

    October 31, 2021   January 31, 2021  
Equipment   $ 236,717   $ 196,490  
Total property and equipment     236,717     196,490  
Less: accumulated depreciation     (88,724 )   (30,666 )
Property and equipment, net   $ 147,993   $ 165,824  

 

 

Note 6. Related Party Transactions

 

During the nine months ended October 31, 2021, we incurred and paid salary expense of $77,667 to our CEO, Sydney Jim. In addition, we incurred commission expense of $13,817 payable to Mr. Jim during the same period. The commissions were not paid during the period. During the nine months ended October 31, 2021, the Company repaid advances of $12,219 owed to Mr. Jim. As of October 31, 2021, we owe Mr. Jim, or entities controlled by him, $131,755 which is recorded on the balance sheet in “Accounts Payable – Related Party” and $2,314 in “Advances payable to related party.” The Company also received a $3,500 non-interest bearing, due on demand advance from the Company’s Chief Financial officer during the three months ended July 31, 2021 that was repaid during the three months ended October 31, 2021.

 

During the three months ended July 31, 2021, the Company acquired the assets of Deity Corporation, a Texas corporation which the Sydney Jim, the Company’s CEO, had a controlling interest in that will produce hemp and cannabis products. The transaction was considered an asset acquisition, as there were no operations of Deity Corporation prior to the transaction. The Company received the formulas for certain hemp and cannabis-based products and a website to market the products that will be produced. In exchange, the Company will pay to Mr. Jim 60% of the revenue from Deity Corporation sales until a total of $250,000 is reached, at which point the Company will pay 20% of Deity Corporation revenue to Mr. Jim.

 

Note 7. Advances and Notes Payable

 

As of October 31, 2021 and January 31, 2021, we had amounts due under advances of $3,450 at each period. These advances are not collateralized, non-interest bearing and are due on demand.

 

During the three months ended April 30, 2021, the Company received $11,262 from the United States Small Business Administration Paycheck Protection Program. The loan bears interest at 1% annually and matures in April 2026. The loan was forgiven in full during the three months ended October 31, 2021, and the Company recorded a gain on debt forgiveness.

 

- 11 -


 

Note 8. Convertible Notes Payable

 

Convertible notes payable consists of the following as of October 31, 2021 and January 31, 2021:

 

    July 31, 2021   January 31, 2021  
Convertible note, dated October 31, 2015, bearing interest at 10% per annum, bearing default interest at 25% per annum, matured on October 31, 2018 and convertible into shares of common stock at $0.50 per share, in default   $ 156,976   $ 156,976  
Convertible note, dated January 31, 2016, bearing interest at 10% per annum, bearing default interest at 25% per annum, matured on January 31, 2019 and convertible into shares of common stock at a 60% discount to the market price, in default     82,735     82,735  
Total convertible notes payable   $ 239,711   $ 239,711  
Less: convertible notes payable, in default     (239,711 )   (239,711 )
Current convertible notes payable, net of discount   $   $  

 

Convertible Promissory Notes

 

During the nine months ended October 31, 2021 and 2020, we recorded amortization of discounts on convertible notes payable and recognized interest expense of $0 and $72,621, respectively.

 

Conversions to Common Stock

 

During the nine months ended October 31, 2020, the holders of our convertible promissory notes converted $99,840 of principal and accrued interest into 767,367,387 shares of our common stock. There were no conversion of convertible promissory notes during the nine months ended October 31, 2021.

 

See Note 9 for a detail of the conversions. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement which provided for conversion.

 

Note 9. Shareholders’ Equity

 

Series G convertible preferred stock

 

In three months ended April 30, 2021, the Company issued 164,600 shares of Series G convertible preferred stock and received cash proceeds of $140,000. The Series G convertible preferred stock has a stated value of $1.00 per share, carries no voting rights and earns dividends of 8% per annum on the stated value of the stock. Dividends are payable on liquidation, redemption or conversion. The Series G convertible preferred stock is redeemable at the option of the Company during the first six months it is outstanding at a premium of between 3% and 33% depending on the date of redemption. After the stock has been outstanding for six months, it is convertible into common stock of the Company at a 29% discount to the market value of the common stock. The Series G convertible preferred stock is included in mezzanine equity on the condensed consolidated balance sheet, because it is convertible at the stated value into a variable number of shares. The $24,600 difference between the stated value of the stock and the proceeds received has been recognized as a deemed dividend to the preferred shareholders. During the three months ended April 30, 2021, the Company accrued dividends of $4,260.

 

In three months ended July 31, 2021, the Company issued 99,400 shares of Series G convertible preferred stock and received cash proceeds of $91,250, with the same terms as previous Series G issuances. The Series G convertible preferred stock has a stated value of $1.00 per share, carries no voting rights and earns dividends of 8% per annum on the stated value of the stock. Dividends are payable on liquidation, redemption or conversion. The Series G convertible preferred stock is redeemable at the option of the Company during the first six months it is outstanding at a premium of between 3% and 33% depending on the date of redemption. After the stock has been outstanding for six months, it is convertible into common stock of the Company at a 29% discount to the market value of the common stock. The Series G convertible preferred stock is included in mezzanine equity on the condensed consolidated balance sheet, because it is convertible at the stated value into a variable number of shares. The $18,150 difference between the stated value of the stock and the proceeds received has been recognized as a deemed dividend to the preferred shareholders. During the three months ended July 31, 2021, the Company accrued dividends of $5,867.

 

- 12 -


 

During the three months ended October 31, 2021, the Company issued 217,800 shares of Series G convertible preferred stock and received cash proceeds of $180,000, with the same terms as previous Series G issuances. The Series G convertible preferred stock has a stated value of $1.00 per share, carries no voting rights and earns dividends of 8% per annum on the stated value of the stock. Dividends are payable on liquidation, redemption or conversion. The Series G convertible preferred stock is redeemable at the option of the Company during the first six months it is outstanding at a premium of between 3% and 33% depending on the date of redemption. After the stock has been outstanding for six months, it is convertible into common stock of the Company at a 29% discount to the market value of the common stock. The Series G convertible preferred stock is included in mezzanine equity on the condensed consolidated balance sheet, because it is convertible at the stated value into a variable number of shares. The $37,800 difference between the stated value of the stock and the proceeds received has been recognized as a deemed dividend to the preferred shareholders. During the three months ended October 31, 2021, the Company accrued dividends of $5,822.

 

Conversions to common stock

 

During the nine months ended October 31, 2021, the holders of our Series G preferred stock elected to preferred shares and accumulated dividends into shares of common stock as detailed below:

 

Date   Preferred
Shares
Converted
  Amount
Converted
  Number of
Shares Issued
March 4, 2021     48,200   $ 49,646   15,190,303
April 19, 2021     37,000     38,480   10,994,286
July 26, 2021     20,000     20,800   10,974,368
July 27, 2021     25,000     26,000   15,294,118
July 28, 2021     26,100     27,144   18,096,000
August 17, 2021     35,000     36,400   24,266,667
August 17, 2021     52,900     55,016   36,677,333
September20, 2021     38,500     40,040   26,693,333
September20, 2021     38,200     39,728   26,485,333
Total     320,900   $ 333,254   184,644,741

 

During nine months ended October 31, 2020, the holders of our convertible notes elected to convert principal and interest into shares of common stock as detailed below:

 

Date   Amount
Converted
  Number of
Shares Issued
March 3, 2020   $ 9,500   30,645,161
March 20, 2020     5,800   32,222,222
April 1, 2020     3,800   31,666,667
April 3, 2020     3,800   31,666,667
April 13, 2020     3,800   31,666,667
April 16, 2020     4,400   36,666,667
April 20, 2020     4,800   40,000,000
April 24, 2020     4,800   40,000,000
April 27, 2020     4,800   40,000,000
May 7, 2020     4,800   40,000,000
May 11, 2020     4,820   40,166,667
May 13, 2020     4,800   40,000,000
May 18, 2020     6,200   51,666,667
May 20,2020     6,200   51,666,667
May 21, 2020     6,200   51,666,667
May 26, 2020     6,200   51,666,667
May 26, 2020     6,200   51,666,667
May 27, 2020     6,200   51,666,667
May 27, 2020     2,720   22,666,667
Total   $ 99,840   767,367,387

 

No gain or loss was recognized on the above conversions as they occurred within the terms of the agreement which provided for conversion.

 

- 13 -


 

Note 10. Subsequent Events

 

Subsequent to October 31, 2021, the Company issued 33,200 shares of Series G convertible preferred stock and received cash proceeds of $28,750, with the same terms as previous Series G issuances.

 

Subsequent to October 31, 2021, the Company issued a total of 37,463,636 shares of common stock pursuant to the conversion of 39,000 shares of Series G Preferred stock and accrued dividends.

 

- 14 -


 

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

 

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives, and performance that involve risk, uncertainties, and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.

 

Background of our Company

 

Neutra Corp. was incorporated in Florida on January 11, 2011. On October 5, 2015, we reincorporated from Florida to Nevada. On August 16, 2019, we reincorporated from Nevada to Wyoming. The reincorporation was approved by our board of directors and by the holders of a majority of the voting rights for our common stock. There was no change in share ownership as a result of the reincorporation. Our authorized shares in the Wyoming corporation are unlimited shares of common stock and 20,000,000 shares of preferred stock.

 

We have established a fiscal year end of January 31.

 

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

 

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

 

Plan of Operations

 

We believe we do not have adequate funds to fully execute our business plan for the next twelve months unless we obtain additional funding. However, should we not raise this capital, we will allocate our funding to first assure that all State, Federal and SEC requirements are met.

 

As of October 31, 2021, we had cash on hand of $29,058.

 

We intend to pursue capital through public or private financing, as well as borrowing and other sources in order to finance our business activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.

 

Critical Accounting Policies

 

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

 

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

 

For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended January 31, 2021 on Form 10-K.

 

- 15 -


 

Results of Operations

 

Three months ended October 31, 2021 compared to the three months ended October 31, 2020.

 

Revenue and Cost of Goods Sold

 

During the three months ended October 31, 2021, we recognized revenue of $26,271 and cost of goods sold of $24,622 related to the sales of CBD products which began in the second half of the prior fiscal year. During the three months ended October 31, 2020, we recognized revenue of $726.

 

Depreciation

 

We recognized depreciation of $19,726 for the three months ended October 31, 2021 compared to $10,675 for the three months ended October 31, 2020, related to new equipment which was placed in service during the current fiscal year.

 

General and Administrative Expenses

 

We recognized general and administrative expenses of $152,400 and $84,270 for the three months ended October 31, 2021 and 2020, respectively. The increase is primarily related to the increase in expenses from higher company activity as a result of beginning to manufacture and sell products.

 

Interest Expense

 

Interest expense was from $15,105 for the three months ended October 31, 2021 and 2020 from outstanding convertible notes payable.

 

Gain on Settlement of liabilities

 

Gain on settlement of liabilities was $11,262 for the three months ended October 31, 2021, due to the gain on forgiveness of PPP debt.

 

Net Loss

 

We incurred a net loss of $178,954 for three months ended October 31, 2021 as compared to $109,324 for the comparable period of 2020.

 

Nine months ended October 31, 2021 compared to the nine months ended October 31, 2020.

 

Revenue and Cost of Goods Sold

 

During the nine months ended October 31, 2021, we recognized revenue of $53,631 and cost of goods sold of $51,214 related to the sales of CBD products which began in the second half of the prior fiscal year. During the nine months ended October 31, 2020, we recognized revenue of $7,467 and cost of goods sold of $1,912 related to the sales of CBD products which began in the second half of the prior fiscal year.

 

Depreciation

 

We recognized depreciation of $58,058 and $17,363 for the nine months ended October 31, 2021 and 2020, respectively related to equipment which was primarily placed in service during the current fiscal year.

 

General and Administrative Expenses

 

We recognized general and administrative expenses of $353,402 and $217,786 for the nine months ended October 31, 2021 and 2020, respectively. The increase is primarily related to the increase in expenses from higher company activity as a result of beginning to manufacture and sell products. We also recognized commissions expense of $13,871 and $0 during the nine months ended October 31, 2021 and 2020, respectively.

 

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Interest Expense

 

Interest expense decreased from $123,827 for the nine months ended October 31, 2020 to $45,501 for the nine months ended October 31, 2021. During the nine months ended October 31, 2021, we amortized $0 of the discount on our convertible notes, compared to $72,621 for the comparable period of 2020. The remaining decrease is due to lower levels of outstanding debt.

 

Gain on Settlement of liabilities

 

Gain on settlement of liabilities was $11,262 for the nine months ended October 31, 2021, due to the gain on forgiveness of PPP debt, compared to $61,421 during the nine months ended October 31, 2020 related to settlement on previously outstanding convertible notes payable.

 

Net Loss

 

We incurred a net loss of $457,153 for nine months ended October 31, 2021 as compared to $292,000 for the comparable period of 2020.

 

Liquidity and Capital Resources

 

At October 31, 2021, we had cash on hand of $29,058. We have negative working capital of $1,018,667. Net cash used in operating activities for the nine months ended October 31, 2021 was $352,613. Cash on hand is adequate to fund our operations for less than six months. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to us. We have no material commitments for capital expenditures as of October 31, 2021.

 

Additional Financing

 

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

 

Off Balance Sheet Arrangements

 

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

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

This item is not applicable to smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Management’s Report on Internal Control over Financial Reporting

 

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of July 31, 2021. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of July 31, 2021, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

1. As of October 31, 2021, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

 

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2. As of October 31, 2021, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.
   
3. As of October 31, 2021, we did not maintain effective controls over transactions with related parties. Specifically, controls were not designed and in place to ensure that all transactions with related parties were captured and tracked in our financial statements. The Company has no formal process related to the identification and approval of related party transactions. Management has determined that this control deficiency constitutes a material weakness.

 

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

 

Change in Internal Controls Over Financial Reporting

 

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

 

PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

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

 

ITEM 1A. RISK FACTORS

 

This item is not applicable to smaller reporting companies.

 

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

 

During the nine months ended October 31, 2021, the holders of our Series G preferred stock elected to convert preferred shares into shares of common stock as detailed below:

 

Date   Preferred
Shares
Converted
  Number of
Shares Issued
March 4, 2021     48,200   15,190,303
April 19, 2021     37,000   10,994,286
July 26, 2021     20,000   10,947,368
July 27, 2021     25,000   15,294,118
July 28, 2021     26,100   18,096,000
August 17, 2021     35,000   24,266,667
August 17, 2021     52,900   36,677,333
September 20, 2021     38,500   26,693,333
September 20, 2021     38,200   26,485,333
Total     320,900   184,644,741

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

We have not defaulted upon senior securities.

 

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ITEM 4. MINE SAFETY DISCLOSURES

 

This item is not applicable to the Company.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibit No. Description
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
14.1 Code of Ethics (1)
21 Subsidiaries of the Registrant (2)
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and accounting officer. (2)
32.1 Section 1350 Certification of principal executive officer and principal financial accounting officer. (2)
101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. (3)
101.SCH Inline XBRL Taxonomy Extension Schema Document (3)
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (3)
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (3)
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (3)
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (3)
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). (3)

__________

(1) Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on February 24, 2011.
(2) Filed or furnished herewith.
(3) In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

 

 

SIGNATURES

 

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

 

  Neutra Corp.
   
   
Date: December 10, 2021 BY: /s/ Sydney Jim
  Sydney Jim
 

President, Secretary, Treasurer, Principal Executive Officer,

Principal Financial and Accounting Officer, and Sole Director

 

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