NUTRA PHARMA CORP. Introduction
Our business during the third quarter of 2020 has focused upon marketing our homeopathic drugs for the treatment of pain:
? Nyloxin® (Stage 2 Pain)
? Nyloxin®
? Pet Pain-Away
During our second quarter of 2020 and thereafter, the following has occurred:
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Nyloxin®/Nyloxin®
We offer Nyloxin®/Nyloxin®
Nyloxin® and Nyloxin®
Nyloxin® and Nyloxin®
? safe and effective; ? all natural; ? long-acting; ? easy to use; ? non-narcotic; ? non-addictive; and
? analgesic and anti-inflammatory.
Potential side effects from the use of Nyloxin® are rare, but may include headache, nausea, vomiting, sore throat, allergic rhinitis and coughing.
The primary difference between Nyloxin® and Nyloxin®
Nyloxin® ? Topical Gel: 30 mcg/mL ?Oral Spray : 70 mcg/mL Nyloxin®Extra Strength ? Topical Gel: 60 mcg/mL ?Oral Spray : 140 mcg/mL
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We are currently marketing Nyloxin® and Nyloxin®
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Nyloxin® Military Strength
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International Sales
We are pursuing international drug registrations in
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Additionally, we plan to complete several human clinical studies aimed at
comparing the ability of Nyloxin®
To date, our marketing efforts have been limited due to lack of funding. As sales increase, we plan to begin marketing more aggressively to increase the sales and awareness of our products.
Pet Pain-Away
During June of 2013, we announced the launch of our new homeopathic formula for
the treatment of chronic pain in companion animals, Pet Pain-Away™. Pet
Pain-Away™ is a homeopathic, non-narcotic, non-addictive, over-the-counter pain
reliever, primarily aimed at treating moderate to severe chronic pain in
companion animals. It is specifically indicated to treat pain from hip
dysplasia, arthritis pain, joint pain, and general chronic pain in dogs and
cats. The initial product run was completed in December of 2014 and launched
through Lumaxa Distributors on
In May of 2016, we signed a license agreement to begin the process of creating
an infomercial (Direct Response) campaign for Pet Pain-Away™. In November of
2016, we announced the license agreement with
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In February of 2020, we took back the marketing of Pet Pain-Away and are currently selling the product on Amazon.com and through www.petpainaway.com.
Luxury Feet
In June of 2017 we announced the creation of Luxury Feet; an over-the-counter
pain reliever and anti-inflammatory product that is designed for women who
experience pain or discomfort due to high heels and stilettos. In March of 2021
we announced plans for the marketing and distribution of Luxury Feet and on
Equine Pain-Away (Formerly Equine Nyloxin)
In October of 2013, we announced that we were in the process of launching the newest addition to our line of homeopathic treatments for chronic pain, Equine Nyloxin. We had been working with trainers and veterinarians in the equine industry and have already identified distributors for the product. The Equine Nyloxin® represents the Company's first topical solution for the animal market. Equine Nyloxin was rebranded as Equine Pain-Away and officially rolled into the market in October of 2019. Equine Pain-Away is being marketed through several retailers and online at www.EquinePainAway.com and on Amazon.
Drug Discovery and Pipeline
RPI-MN
RPI-MN inhibits the entry of several viruses that are known to cause severe neurological damage in such diseases as encephalitis and Human Immunodeficiency Virus (HIV). It is being developed first for the treatment of HIV.
RPI-78M
RPI-78M is being developed for the treatment of Multiple Sclerosis (MS) and Adrenomyeloneuropathy (AMN). Other neurological and autoimmune disorders that may be served by RPI-78M include Myasthenia Gravis (MG), Rheumatoid Arthritis (RA) and Amyotrophic Lateral Sclerosis (ALS).
RPI-78M and RPI-MN contain anticholinergic peptides that recognize the same
receptors as nicotine (acetylcholine receptors) but have the opposite effect. In
a specific chemical process unique to
In September, 2015 RPI-78M was granted Orphan Status by the FDA for the
treatment of pediatric Multiple Sclerosis. This allows for much shorter
timelines to drug approval, waiver of FDA fees (around
RPI-MN and RPI-78M possess several desirable properties as drugs:
? They lack measurable toxicity but are still capable of attaching to and affecting the target site on the nerve cells. This means that patients cannot overdose.
? They display no serious adverse side effects following years of investigations in humans and animals.
? They are extremely stable and resistant to heat, which gives the drugs a long shelf life. The drugs' stability has been determined to be over 4 years at room temperature. This is extremely unusual for a biologic drug.
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? RPI-78M may be administered orally -- a first for a biologic MS drug. This will present MS patients with additional quality of life benefits by eliminating the requirement for routine injections.
? They are easy to administer.
We are currently working with consultants to develop trial protocols for a Phase I/II trial for the use of RPI-78M in the treatment of Pediatric Multiple Sclerosis. We expect to begin the trial in FY2021.
Critical Accounting Policies and Estimates
Our condensed consolidated unaudited financial statements and accompanying notes
have been prepared in accordance with accounting principles generally accepted
in
We regularly evaluate the accounting policies and estimates that we use to prepare our condensed consolidated financial statements. In general, management's estimates are based on historical experience, information from third party professionals, and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management under different and/or future circumstances.
We believe that our critical accounting policies and estimates include our ability to continue as a going concern, revenue recognition, accounts receivable and allowance for doubtful accounts, inventory obsolescence, accounting for long-lived assets and accounting for stock based compensation.
Ability to Continue as a Going Concern: Our ability to continue as a going concern is contingent upon our ability to secure additional financing, increase ownership equity, and attain profitable operations. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in established markets and the competitive environment in which we operate.
Revenue Recognition: The Company accounts for revenue from contracts with customers in accordance with Financial Accounting Standard Board ("FASB") Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"). Under ASC Topic 606, revenue recognition has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d)Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied.
Our revenues are primarily derived from customer orders for the purchase of our products. We recognize revenues as performance obligations are fulfilled when control passes to our customers. We record revenues net of promotions and discounts. For certain product sales to a distributor, we record revenue including a portion of the cash proceeds that is remitted back to the distributor.
Accounts Receivable and Allowance for Doubtful Accounts: We grant credit without collateral to our customers based on our evaluation of a particular customer's credit worthiness. Accounts receivable are due 30 days after the issuance of the invoice. In addition, allowances for doubtful accounts are maintained for potential credit losses based on the age of the accounts receivable and the results of periodic credit evaluations of our customers' financial condition. Accounts receivable are written off after collection efforts have been deemed to be unsuccessful. Accounts written off as uncollectible are deducted from the allowance for doubtful accounts, while subsequent recoveries are netted against the provision for doubtful accounts expense. We generally do not charge interest on accounts receivable. We use third party payment processors and are required to maintain reserve balances, which are included in accounts receivable.
Our accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances.
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Inventory Obsolescence: Inventories are valued at the lower of average cost or
market value. We periodically perform an evaluation of inventory for excess,
impairments and obsolete items. At
Long-Lived Assets: The carrying value of long-lived assets is reviewed annually and on a regular basis for the existence of facts and circumstances that may suggest impairment. If indicators of impairment are present, we determine whether the sum of the estimated undiscounted future cash flows attributable to the long-lived asset in question is less than its carrying amount. If less, we measure the amount of the impairment based on the amount that the carrying value of the impaired asset exceeds the discounted cash flows expected to result from the use and eventual disposal of the impaired assets.
Derivative Financial Instrument: Management evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
Convertible Debt: For convertible debt that does not contain an embedded derivative that requires bifurcation, the conversion feature is evaluated to determine if the rate of conversion is below market value and should be categorized as a beneficial conversion feature ("BCF"). A BCF related to debt is recorded by the Company as a debt discount and with the offset recorded to equity. The related convertible debt is recorded net of the discount for the BCF. The discount is amortized as additional interest expense over the term of the debt with the resulting debt discount being accreted over the term of the note.
The Fair Value Measurement Option: We have elected the fair value measurement option for convertible debt with embedded derivatives that require bifurcation, and record the entire hybrid financing instrument at fair value under the guidance of ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"). The Company reports interest expense, including accrued interest, related to this convertible debt under the fair value option, within the change in fair value of convertible notes and derivatives in the accompanying consolidated statement of operations.
Derivative Accounting for Convertible Debt and Options and Warrants: The Company evaluated the terms and conditions of the convertible debt under the guidance of ASC 815, Derivatives and Hedging. The conversion terms of some of the convertible notes are variable based on certain factors, such as the future price of the Company's common stock. The number of shares of common stock to be issued is based on the future price of the Company's common stock. The number of shares of common stock issuable upon conversion of the debt is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company's authorized share limit, the equity environment is tainted, and all additional convertible debt and options and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15, Embedded Derivatives, the fair values of the convertible debt, options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period.
Share-Based Compensation: We record share-based compensation in accordance with FASB ASC 718, Stock Compensation. FASB ASC 718 requires that the cost resulting from all share-based transactions are recorded in the financial statements over the respective service periods. It establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. FASB ASC 718 also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.
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Results of Operations - Comparison of Three Months Periods Ended
Sales for the three-month period ended
Cost of sales for the three-month period ended
Selling, general and administrative expenses ("SG&A") decreased
Rental income increased
Other income increased
Interest expense, including related party interest expense, increased
We carry certain of our debentures and common stock warrants at fair value. For
the three months ended
Stock issued for loan modification increased
As a result of the foregoing, our net loss decreased by
Comparison of Six Months Periods Ended
Sales for the six-month period ended
Cost of sales for the six-month period ended
Selling, general and administrative expenses ("SG&A") decreased
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Rental income increased
Other income increased
Interest expense, including related party interest expense, increased
We carry certain of our debentures and common stock warrants at fair value. For
the six months ended
Gain/loss on settlement of debts decreased
As a result of the foregoing, our net income/loss increased by
Liquidity and Capital Resources
We have incurred significant losses from operations and working capital and
stockholders' deficits raise substantial doubt about our ability to continue as
a going concern. Further, as stated in Note 1 to our condensed consolidated
unaudited financial statements for the period ended
Our ability to continue as a going concern is contingent upon our ability to secure additional financing, increase ownership equity, and attain profitable operations. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in established markets and the competitive environment in which we operate. As of the date of the filing of this report, we do not believe that our source of cash is adequate for the next 12 months of operation and there is substantial doubt about our ability to continue as a going concern.
Historically, we have relied upon loans from our Chief Executive Officer,
During the six months ended
We expect to utilize the proceeds from these funds and additional capital to
manufacture Nyloxin® and Pet Pain-Away and reduce our debt level. We estimate
that we will require approximately
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We began generating revenues from the sale of Cobroxin® in the fourth quarter of 2009 and from the sale of Nyloxin® during the first quarter of 2011. We began generating revenues from the sale of Pet Pain-Away™ in the fourth quarter of 2014. Our ability to meet our future operating expenses is highly dependent on the amount of such future revenues. To the extent that future revenues from the sales of Nyloxin® and Pet Pain-Away™ are insufficient to cover our operating expenses we may need to raise additional equity capital, which could result in substantial dilution to existing shareholders. There can be no assurance that we will be able to raise sufficient equity capital to fund our working capital requirements on terms acceptable to us, or at all. We may also seek additional loans from our officers and directors; however, there can be no assurance that we will be successful in securing such additional loans.
Impact of COVID-19 on our Operations
The ramifications of the outbreak of the novel strain of COVID-19, reported to
have started in
The Company is operating in a rapidly changing environment so the extent to which COVID-19 impacts its business, operations and financial results from this point forward will depend on numerous evolving factors that the Company cannot accurately predict. Those factors include the following: the duration and scope of the pandemic; governmental, business and individuals' actions that have been and continue to be taken in response to the pandemic; and the distribution of testing and a vaccine.
Uncertainties and Trends
Our operations and possible revenues are dependent now and in the future upon the following factors:
? whether Nyloxin®, Nyloxin®
? because Nyloxin® is a novel approach to the over-the-counter pain market, whether it will be accepted by consumers over conventional over-the-counter pain products;
? whether Nyloxin® Military Strength will be successfully launched and be accepted in the marketplace;
? whether our international drug applications will be approved and in how many countries;
? whether we will be successful in marketing Nyloxin®, Nyloxin®
? whether our drug delivery system, i.e. oral spray and gel, will be accepted by consumers who may prefer a pain pill delivery system;
? whether competitors' pain products will be found to be more attractive to consumers;
? whether we successfully develop and commercialize products from our research and development activities;
? whether we compete effectively in the intensely competitive biotechnology area;
? whether we successfully execute our planned partnering and out-licensing products or technologies;
? whether the current economic downturn and related credit and financial market crisis will adversely affect our ability to obtain financing, conduct our operations and realize opportunities to successfully bring our technologies to market;
? whether we are subject to litigation and related costs in connection with use of products;
? whether we will successfully contract with domestic distributor(s)/advertiser(s) for our products and whether that will cause interruptions in our operations;
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? whether we comply with FDA and other extensive legal/regulatory requirements affecting the healthcare industry.
Off-Balance Sheet Arrangements
We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under whom we have:
? An obligation under a guarantee contract.
? A retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets.
? Any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument.
? Any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.
We do not have any off-balance sheet arrangements or commitments other than those disclosed in this report that have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material.
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