Item 1. Business

Overview

NutraLife BioSciences, Inc., a Florida corporation (“us,” “we,” “our” or the “Company”) was founded in 2010 by Edgar Ward, the Company’s Chief Executive Officer, President & sole Director to engage in the development, manufacturing and distribution of nutritional and dietary oral spray products. Since then the Company has evolved into a branded and private label developer, manufacturer and distributor of a wide range of nutraceutical, wellness, and CBD products.

Amid the COVID-19 global pandemic, in 2020, the Company made a strategic pivot from our then-current nutraceutical manufacturing business by adding the manufacture of consumer sanitizer products utilizing the Company’s existing manufacturing capabilities and the Company’s ability to retrofit its operations and accommodate production due to the shortage of supply and increased demand for sanitizer products.

The Company’s manufacturing facility has been registered with the Food and Drug Administration and its manufacturing facility has operated in accordance with the Good Manufacturing Processes Standard (GMP) for more than five years. Our products adhere to high manufacturing standards throughout every step of the manufacturing and extraction process. Our products are formulated, developed, manufactured and produced under the supervision of Edgar Ward, our Chief Executive Officer, President and sole Director. Once produced, our products are tested by our in-house laboratory chemists. We believe that our nutraceutical and industrial CBD products are of the highest-quality and are laboratory tested for strength, purity and contaminants such as heavy metals, pesticides, and solvents.

We offer 13 different core formulations which we modify to meet the specifications of our private label customers. We provide approximately 50 different variations of our core formulations. Our private label products include CBD-infused oral sprays, tinctures, pet drops, pain balms, and face creams, and nutraceutical oral spray products for sleep support and weight loss packaged under the customer’s brand names.

Our spray products and tinctures are available in various formulations and strengths and are available for purchase online directly from the Company through its website at www.nutralifebiosciences.com, as well as through numerous other private label distributors, online retailers and retail outlets. Information available on, or accessible through the foregoing website is not a part of this Annual Report on Form 10-K and is not incorporated herein by reference.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We sustained a net loss of approximately $4.0 and $2.0 million for the years ended December 31, 2019 and 2018, respectively, and have an accumulated deficit of approximately $38.8 million at December 31, 2019. These conditions raise substantial doubt about our ability to continue as a going concern. The independent auditors’ reports on our financial statements for the years ended December 31, 2019 and 2018 contain explanatory paragraphs expressing substantial doubt as to our ability to continue as a going concern.

In December 2019, a novel strain of coronavirus was reported to have surfaced in China. The spread of this virus caused various business disruptions including temporary closures to the Company’s offices and facilities. While these disruptions are currently expected to be temporary, there is considerable uncertainty around the duration. Therefore, the Company expects this matter to negatively impact its operating results. The related financial impact and duration cannot be reasonably estimated at this time.

The Company is currently in the process of raising capital to complete and finalize the build-out of its facility in Deerfield Beach for the purpose of consolidating its operations. The structure of the capital raise is currently in-development. The Company is seeking to continue its path to profitability through increased business development, marketing and sales of the Company’s multiple lines of topical, ingestible and skincare health and wellness products. The Company is also focused on completing an efficacy clinical study on its patented mosquito bug patch with plans upon a successful conclusion to launch globally in the very near future, adding to the Company’s suite of wellness products. However, there can be no assurance that the foregoing can occur as planned, or at all.

Failure to successfully continue to grow operational revenues could harm our profitability and adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing sales channels.

We are continuing our plan to further grow and expand operations and seek sources of capital to pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Corporate History

NutraLife BioSciences, Inc, was formed as a limited liability company in the state of Florida on April 1, 2010. On December 3, 2012, we converted from a limited liability company to a Florida corporation.

We have four wholly owned subsidiaries:

Smaller Reporting Company

The Company is a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years. As long as we maintain our status as a “smaller reporting company,” these exemptions will continue to be available to us.

Bankruptcy, Receivership or Similar Proceedings

We have not been involved in a bankruptcy receivership or similar proceeding. Additionally, we have not been involved in a reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business.

Our Business

We are a manufacturer and distributor of nutraceutical, dietary, wellness and other products, such as sanitizer products. Our products are sold to private label distributors who sell the products we manufacture under their own brand names as well as under our own brand names. We generate revenues from the sales of our products.

For the years ending on December 31, of 2018 and 2019, we generated revenues of approximately $3,700,000 and $2,100,000, respectively from the sale of our products.

In March of 2017, we began selling CBD products. Since that time, revenues from sales of our CBD products decreased from $2,400,000 for the year ended December 31, 2018 to $1,800,000 for the year ended December 31, 2019 representing 78% and 100% of our revenues for such periods.

Our Products and Services

We manufacture and distribute private label and branded products. In the years ended December 31, 2018 and 2019, private label sales represented 99% and 99% of our revenue, respectively.  

Our Products

Our CBD products are derived from the seeds and mature stalks of the Cannabis Sativa plant which includes all parts and varieties of the cannabis sativa plant also known as hemp, which contain a tetrahydrocannabinol concentration (“THC”) that does not exceed 0.3 percent on a dry-weight basis. In December of 2018, the U.S. Food and Drug Administration completed an evaluation of three generally recognized as safe (GRAS) notices for hemp seed-derived food ingredients. The FDA stated that hulled hemp seed (GRN765), hemp seed protein powder (GRN771), and hemp seed oil (GRN778) are GRAS under their intended conditions of use.

Our CBD products are made from seeds and mature stalks of hemp and contain only trace amounts of THC which are far below 0.3 percent, and we believe they qualify as GRAS products.

Our CBD products include:

Our other products include:

Recent Developments

In November of 2018, our wholly owned subsidiary PAT began providing bulk material analytical, identity, potency and purity testing of raw industrial hemp.

In January of 2019, our wholly owned subsidiary, NutraDerma acquired the patent for a natural dermal skin patch that is designed to prevent mosquito and other insect bites.

In February of 2019, our wholly owned subsidiary Phytochem entered into an agreement with Owen Morgan, an individual, whereby Mr. Morgan agreed to provide certain know how and services to Phytochem for the commercialization of certain technologies to separate and/or process the components of hemp to remove and/or modify, purify, dilute and extract bioactive ingredients and/or remove unwanted substances to produce finished products for a variety of applications. This agreement is further described under the heading “Material Agreements” below.

In March of 2019, we licensed our technology for a unique system for pharmaceutical grade delivery of testosterone into the human body to licensed pharmacist, Orlando Pharmacy, as further described under the heading “Material Agreements” below.

In March of 2019, we entered into an agreement with NewLeaf Assets, LLC, a Delaware Limited Liability Company (“NewLeaf”) as amended, (the “Agreement”) whereby NewLeaf invested an aggregate of $1,380,000 (the “Investment”) in our securities. This Agreement is further described under the heading “Material Agreements” below.

On June 7, 2019, the Company granted a bonus to its Chief Executive Officer and President, Edgar Ward, of ten percent (10%) of the future gross revenue generated by the Company’s wholly owned subsidiary, PhytoChem for a period of seven (7) years from the date that PhytoChem receives its first revenue.

In June 2019, and as amended in November 2019 we entered into an investment agreement, note, Security Agreement, Purchase Royalty Agreement, Pledge Agreement, Pledgor Royalty Agreement with the Company, Phytochem Technologies, Inc., Kahn Family Limited PT II., and Brenda Hamilton as the pledgor, which were subsequently amended in November of 2019. The foregoing agreements are further described under the heading “Material Agreements” below.

Amid the COVID-19 global pandemic, in 2020, the Company made a strategic pivot from our then-current nutraceutical manufacturing business by adding the manufacture of consumer sanitizer products utilizing the Company’s existing manufacturing capabilities and the Company’s ability to retrofit its operations and accommodate production due to the shortage of supply and demand for sanitizer products. To do so, consistent with Food and Drug Administration (FDA) requirements, the Company registered and obtained a labeler code as an over-the-counter (OTC) manufacturing facility and began manufacturing and distributing a line of liquid-based multi-use sanitizer spray products under the Company’s in-house brand, “Eddie’s Clean Hands,” packaged as a multi-use sanitizer spray, formulated per the CDC’s recommendation of containing at least 60-95% ethanol or isopropanol alcohol to be effective.

In May 2020, we secured a supplier agreement with Grainger, and began drop-shipping its sanitizer products that include a 10-pack of Eddie’s Clean Hands 2 oz. sanitizer spray along with a larger 8 oz. sanitizer spray directly to Grainger and its customers. Grainger is a broad line, business-to-business distributor of maintenance, repair, and operating (MRO) products and services with operations primarily in North America, Japan, and Europe.

On September 30, 2020, the Company filed Articles of Amendment (the “Amendment”) to its Articles of Incorporation with the Florida Department of State that contained a Certificate of Designations to designate one hundred and ten (110) shares of the preferred stock of the Company, par value $0.0001 as Series B Convertible Preferred Stock (the “Series B Preferred Stock”). The Amendment was effective on September 30, 2020.

On November 2, 2020, the Company entered into a Stock Purchase Agreement with Lord Global Corporation and its wholly owned subsidiary, 27 Health Inc., and also entered into a Manufacturing, Distribution and Sales Agreement (the “MDS”) with 27 Health Inc. The MDS is a multi-year production, fulfillment, and distribution agreement with 27 Health Inc. to launch its patent-pending Oral Sanitizer mouth spray which we hope will provide some protection from viruses by reducing viral transmission. The foregoing agreements are further described under the heading “Material Agreements” below.

On December 18, 2020, the Company received its product registration number from the Food and Drug Administration (FDA) and completed its first production run of Oral Shield antiseptic protection mouth spray. The Company along with its partners plans to market and distribute the product on a global scale and seeks to provide a convenient, travel-size, quality, multi-functioning antiseptic mouth spray for consumers to use throughout the day. We believe that mouthwash products can be effective at killing viruses, reducing the viral load within the mouth essentially supporting the reduction of virus transmissions.

Our Operating Strategy

As noted above, in 2020, the Company made a strategic pivot from our then-current nutraceutical manufacturing business by adding the manufacture of consumer sanitizer products utilizing the Company’s existing manufacturing capabilities and the Company’s ability to retrofit its operations and accommodate production due to the shortage of supply and demand for sanitizer products. To do so, consistent with Food and Drug Administration (FDA) requirements, the Company registered and obtained a labeler code as an over-the-counter (OTC) manufacturing facility and began manufacturing and distributing a line of liquid-based multi-use sanitizer spray products under the Company’s in-house brand, “Eddie’s Clean Hands,” packaged as a multi-use sanitizer spray, formulated per the CDC’s recommendation of containing at least 60-95% ethanol or isopropanol alcohol to be effective. We plan to continue manufacturing and distributing liquid-based multi-use sanitizer spray products under the Company’s in-house brand, “Eddie’s Clean Hands.”

Also, as discussed above, on December 18, 2020, the Company received its product registration number from the Food and Drug Administration (FDA) and completed its first production run of Oral Shield antiseptic protection mouth spray. The Company along with its partners plans to market and distribute the product on a global scale and seeks to provide a convenient, travel-size, quality, multi-functioning antiseptic mouth spray for consumers to use throughout the day. We believe that mouthwash products can be effective at killing viruses, reducing the viral load within the mouth essentially supporting the reduction of virus transmissions.

We also plan to continue the development, manufacturing and distribution of nutritional and dietary oral spray products and we believe a number of current industry trends will increase demand for private label products particularly in the industrial hemp CBD market. Our operating strategy for such products consists of the following key elements:

Our Growth Strategy

We intend to grow our business by pursuing the following strategies:

Our Customers

Our customers for our consumer sanitizer products include Grainger, Riverhead Chamber of Commerce and ecommerce direct to consumer consumers.

Our private label sales represent 7 different brands of products manufactured by us. Sales to private label customers represented approximately 99% and 99% of our revenues for the years ended December 31, 2018 and 2019, respectively. Our industrial hemp CBD products represented 78% and 100% of private label sales in the year ended December 31, 2018 and 2019.

We do not enter into long term contracts with our private label distributors and all sales are made by purchase order. Our private label customers are not obligated to order a minimum amount of product from us and can discontinue purchasing our product at any time.

We believe our private label products offer numerous benefits to our customers:

Manufacturing

As noted above, in 2020, the Company made a strategic pivot from our then-current nutraceutical manufacturing business by adding the manufacture of consumer sanitizer products utilizing the Company’s existing manufacturing capabilities and the Company’s ability to retrofit its operations and accommodate production due to the shortage of supply and demand for sanitizer products. To do so, consistent with Food and Drug Administration (FDA) requirements, the Company registered and obtained a labeler code as an over-the-counter (OTC) manufacturing facility and began manufacturing and distributing a line of liquid-based multi-use sanitizer spray products under the Company’s in-house brand, “Eddie’s Clean Hands,” packaged as a multi-use sanitizer spray, formulated per the CDC’s recommendation of containing at least 60-95% ethanol or isopropanol alcohol to be effective. We plan to continue manufacturing and distributing liquid-based multi-use sanitizer spray products under the Company’s in-house brand, “Eddie’s Clean Hands”.

Also, as discussed above, on December 18, 2020, the Company received its product registration number from the Food and Drug Administration (FDA) and completed its first production run of Oral Shield antiseptic protection mouth spray. The Company along with its partners plans to market and distribute the product on a global scale and seeks to provide a convenient, travel-size, quality, multi-functioning antiseptic mouth spray for consumers to use throughout the day. We believe that mouthwash products can be effective at killing viruses, reducing the viral load within the mouth essentially supporting the reduction of virus transmissions.

Once developed, our products are manufactured at our facility in Coconut Creek, Florida. We obtain all raw materials and ingredients for our products from third party suppliers. For all orders we receive, we manufacture, package, label and ship the product to the customer. We lease an aggregate of six thousand four hundred (6,400) square feet of office and warehouse space at 6601 Lyons Rd, Suites L-6&7, Coconut Creek, Florida 33073. Approximately five thousand eight hundred (5,800) square feet at this location is used for manufacturing, storage and distribution of our products.

On June 6, 2017, we entered into an agreement to lease nineteen thousand eight hundred and thirty-one (19,831) square feet in Deerfield Beach, FL 33441. We plan to use seventeen thousand eight hundred (17,800) square feet of the new Deerfield Beach location for manufacturing, storage and distribution of our products. We expect to begin manufacturing at this location in August of 2021.

By manufacturing our own products, we believe that we maintain better control over product quality and availability while also reducing production costs. Our manufacturing process generally consists of the following operations: (a) sourcing ingredients for products, (b) warehousing raw ingredients, (c) efficacy testing and measuring ingredients for inclusion in products, and (d) blending using automatic equipment. The next step, bottling and packaging, involves filling, capping, coding, labeling and placing the product in packaging with appropriate tamper-evident features then sending the packaged product to our customers.

The Food and Drug Administration (“FDA”) requires companies manufacturing homeopathic medicines to have their facilities certified as Good Manufacturing Practices (“GMPs”). Our manufacturing facility is registered with the FDA and is compliant with its GMP certification. Our quality control program seeks to ensure the superior quality of our products and that they are manufactured in accordance with current GMP. Our processing methods are monitored closely to ensure that only quality ingredients are used and to ensure product purity. Periodically, we retain the services of outside GMP audit firms to assist us in our efforts to comply with GMPs.

Sources and Availability of Raw Materials

The raw materials for our industrial hemp CBD products consist of Cannabidiol rich oil and isolate. We obtain the raw materials for our industrial hemp CBD products from state licensed suppliers. We obtain the raw materials for our other non-CBD based products from several ingredient suppliers located in the U.S. These raw materials consist of naturally derived vitamins and nutrients. The raw materials used by us are available from a variety of suppliers. We maintain a good relationship with our suppliers and do not anticipate that any of our suppliers will terminate their relationship with us in the near term. We have ongoing relationships with secondary and tertiary suppliers. In the event, we are unable to obtain any of our raw materials from our suppliers; we believe that we could obtain alternative sources of any raw materials from other suppliers. We do not have contracts with our suppliers and we order our raw materials on an as needed basis. We have not experienced any material adverse effects on our business as a result of shortages of raw materials or packaging materials used in the manufacturing of our products. An unexpected interruption or a shortage in supply of raw materials could adversely affect our business derived from these products.

Shipping and Delivery of Finished Products

Upon completion of the manufacturing process, our products are shipped directly to customers. Private label products are packaged by us in the packaging provided by each customer. All shipping, bills of lading and invoices are generated by us from our Coconut Creek, Florida facility.

We ship the product ordered within forty-five (45) days to our private label distributors, thirty (30) days to retail customers and within thirty (30) days to wholesale and third party (non-private label) distributors. All orders are shipped by freight delivery at the cost of the customer. We require a deposit of fifty percent (50%) upon an order being placed from our private label customers and the balance prior to shipping. Our retail customers must pay for their order at the time that the order is placed.

Product Development & Quality

We have in place comprehensive quality control procedures seeking to ensure that raw materials and finished goods meet our exacting quality standards. Each product we offer is based upon the research of Edgar Ward, our Chief Executive Officer, President, and sole Director, with the assistance of our in-house chemists. Our products are and, in the future, will continue to be identified by Mr. Ward based upon suggestions from our customers, and from industry and market research he conducts on an ongoing basis. We do not employ medical professionals and our management does not have experience in the healthcare industry or in the treatment of disease. Our products have not been confirmed in any respect by the U.S. Food and Drug Administration or any other governmental agency and may not produce the results intended. In developing products, we require:

Sales and Marketing

Our Chief Executive Officer, President and sole Director, Edgar Ward actively participates in the planning of our marketing and selling efforts. We employ 1 in house sales representative and use the services independent sales representatives on a commission basis. We believe that this sales structure enables us to effectively control our costs and sales efforts.

We believe that our marketing mix of social media promotions and search engine optimization is an optimal strategy to increase sales for both our private label and branded products. We use web based marketing to promote our brands and products including social media and promotion of our website at www.nutralifebiosciences.com. The information available on or accessible through our website is not a part of, and is not incorporated by reference into this Annual Report. Our website provides useful information about our industry, new developments and our products and allows visitors to order our retail and wholesale wellness, nutraceutical and CBD products. We use Search Engine Optimization (SEO) on an ongoing basis to drive traffic to our website and social media pages and enhance our presence on major search engines such as Google, Bing and Yahoo.

We aim to emphasize the development of long-term relationships with our customers. We believe that we have established strong relationships with individual buyers at each of our private label customers, and more importantly we have also established relationships with senior management of our key private label customers.

A key component of our ability to achieve long-term relationships is the high level of services that we provide to our customers. Each salesperson is responsible for all aspects of a customer’s needs, including product samples, obtaining orders, coordinating product selection, monitoring production and delivering finished products. During the production process, such salesperson is responsible for informing the customer about the progress of an order, including any difficulties that might affect delivery time. In this way, we and our customer can make appropriate arrangements regarding any delay or other change in the order. Further, we seek to ensure that multiple salespersons are familiar with each customer account so that they can work cooperatively to assist one another on a reciprocal basis. We believe that this sales management technique provides an advantage over our competitors because it ensures that our customers always have a knowledgeable salesperson available to discuss product orders and related issues.

Our sales force is in constant contact with our customers to develop an understanding of the customers’ retail strategies and production requirements. We use this information to provide our customers with products that meet their particular requirements efficiently. We require that our sales force be knowledgeable about all aspects of our products. We believe our knowledgeable sales force enables it to provide our customers immediate feedback as to the various costs and availability of various raw materials, and production times.

Employees

As of the date hereof, we have approximately 14 full-time and part-time employees. 1 employee is a chemist engaged in product development and testing, 4 are engaged in executive or administrative capacities, 10 employees are engaged in manufacturing, packaging, or distribution and 1is engaged in sales.

From time to time, we employ temporary employees which provides us with flexibility to adjust staffing levels in response to demand.

None of our employees are employed under a collective bargaining agreement. We believe we have an excellent relationship with our employees and independent contractors.

Return and Refund Policy

We will exchange any product found to be defective. A written exchange request must be submitted when a customer returns defective or damaged products. Purchasers can apply for a refund in the full amount of purchased products within ten (10) days of purchase. All shipping fees for product exchanges or returns must be paid by the purchaser. Historically, product returns as a percentage of our net sales have been nominal.

Patents and Trademarks

We received federal trademark registration for the expression “Spray your way to a healthier day!” that we use, or intend to use, to distinguish ourselves from others. All trademark registrations are protected for an initial period of five (5) years and then are renewable after five (5) years, if still in use, and every ten (10) years thereafter. We hold the following trade names from the U.S. Patent and Trademark office:

Our wholly owned subsidiary, NutraDerma holds patent number 7,754,237 from the U.S. Patent and Trademark office, for an all natural dermal patch designed to prevent mosquito and other insect bites. We plan to test, manufacture and distribute this product in 2021.

Backlog of Orders

We have no backlog of orders.

Seasonal Aspect of our Business

None of our products are affected by seasonal factors.

Status of any Publicly Announced New Product or Service

As noted above, in 2020, the Company made a strategic pivot from our then-current nutraceutical manufacturing business by adding the manufacture of consumer sanitizer products utilizing the Company’s existing manufacturing capabilities and the Company’s ability to retrofit its operations and accommodate production due to the shortage of supply and demand for sanitizer products. To do so, consistent with Food and Drug Administration (FDA) requirements, the Company registered and obtained a labeler code as an over-the-counter (OTC) manufacturing facility and began manufacturing and distributing a line of liquid-based multi-use sanitizer spray products under the Company’s in-house brand, “Eddie’s Clean Hands,” packaged as a multi-use sanitizer spray, formulated per the CDC’s recommendation of containing at least 60-95% ethanol or isopropanol alcohol to be effective. We plan to continue manufacturing and distributing liquid-based multi-use sanitizer spray products under the Company’s in-house brand, “Eddie’s Clean Hands”.

Also, as discussed above, on December 18, 2020, the Company received its product registration number from the Food and Drug Administration (FDA) and completed its first production run of Oral Shield antiseptic protection mouth spray. The Company along with its partners plans to market and distribute the product on a global scale and seeks to provide a convenient, travel-size, quality, multi-functioning antiseptic mouth spray for consumers to use throughout the day. We believe that mouthwash products can be effective at killing viruses, reducing the viral load within the mouth essentially supporting the reduction of virus transmissions.

Material Agreements

Owen Morgan

On February 4, 2019, our wholly owned subsidiary known as Phytochem Technologies, Inc. (“Phytochem) entered into an agreement (the “Agreement”) with Owen Morgan, an individual, whereby Mr. Morgan agreed to provide certain know how and services to Phytochem for the commercialization of certain technologies (the “Technology”) to separate and/or process the components of hemp to remove and/or modify, purify, dilute and extract bioactive ingredients and/or remove unwanted substances to produce finished products for a variety of applications.

Mr. Morgan agreed to provide services to Phytochem for a period of one (1) year. In exchange for his services, Mr. Morgan received $65,520 upon execution of the Agreement and agreed to be compensated $15,000 monthly. Mr. Morgan’s services include overseeing all aspects of the manufacturing which shall be done in the United Kingdom. Phytochem is obligated to pay up to $10,000 to manufacture a demo unit (“Demo Unit”) using the Technology and $400,000 plus enhancement costs, shipping and installation to manufacture one commercial units using the Technology.

Phytochem was obligated to pay Mr. Morgan 40% of net revenues derived from the commercialization of the Technology. In addition, Mr. Morgan was to receive shares of the Company’s Common Stock upon certain milestones. Upon receipt of the Demo Unit and Commercial Unit, Mr. Morgan shall receive 500,000 and 1,500,000 shares, respectively. If the commercialization of the Technology results in revenues of $1,000,000, $5,000,000 and $10,000,000, Mr. Morgan was to receive 2,000,000 shares upon each milestone. If the commercialization of the Technology results in revenues of $25,000,000, $50,000,000, and $100,000,000, Mr. Morgan shall receive 4,000,000, 5,000,000 and 5,000,000 shares, respectively, upon each milestone.

This agreement is in default since Mr. Morgan failed to deliver the commercial units.

Orlando Pharmacy

On March 10, 2019, we entered into an agreement (the “Agreement”) with Orlando Pharmacy Inc., a Florida corporation (the “Pharmacy”) whereby we granted a limited exclusive license to the Pharmacy for a unique process for a delivery system to deliver testosterone into the human body using an oral spray. Under the terms of the Agreement, the Pharmacy was obligated to pay royalties to us of sixty-six and two thirds percent (66 2/3%) of its net sales of the “Product” within fifteen (15) days after the close of each calendar month. The Agreement had a term of five (5) years unless earlier terminated. The Agreement l automatically terminates upon:

This Agreement was terminated pursuant to clause (b) above upon three (3) months after execution, as the Pharmacy failed to have net revenues of at least $10,000 from the sale of the Product.

NewLeaf Assets LLC

On March 10, 2019, we entered into an agreement with NewLeaf Assets, LLC, a Delaware Limited Liability Company (“NewLeaf”) as amended, (the “Agreement”) whereby NewLeaf invested an aggregate of $1,380,000 (the “Investment”) in our securities (the “Securities”) as follows:

As a result of the Investment, NewLeaf holds an aggregate of 15,764,705 of our common shares, warrants to purchase an additional 10,950,000 common shares for an aggregate price of $2,190,000 and an had an option to purchase an additional 7,647,058 common shares for an aggregate price of $650,000 at any time prior to April 8, 2019, which was not exercised prior to such date.

The Company paid a finder’s fee of 10% in connection with the Investment to Mitchell Pasin. Under the terms of the Agreement, if NewLeaf sells, assigns, gifts or otherwise transfers any portion of the Securities to any other person or entity (the “Transferees”), the aggregate amount of the Securities that may be sold by all NewLeaf and the Transferees in the aggregate shall be 1% of the Company’s then outstanding common shares every ninety (90) days.

June 2019 Investment Agreement, Note, Security Agreement, Purchase Royalty Agreement, Pledge Agreement, Pledgor Royalty Agreement and November 2019 Amendments Thereto

June 2019 Investment Agreement

On June 6, 2019, the Company entered into that and Investment Agreement (the “June 2019 Investment Agreement” and collectively with the June 2019 Note, the June 2019 Purchaser Royalty Agreement, the June 2019 Security Agreement, the June 2019 Pledgor Royalty Agreement and the June 2019 Mortgage, each as hereinafter defined, the “Transaction Documents”) by and among the Company, PhytoChem a wholly owned subsidiary of the Company “PhytoChem” and together with NutraLife, the “Company”) and Kahn Family Limited PT II (the “Purchaser”). Pursuant to the terms of the June 2019 Investment Agreement, the Company agreed to issue and sell, and the Purchaser agreed to purchase, a full recourse secured convertible promissory note bearing interest at the rate of 8.5% per annum in the principal amount (the “Principal Amount”) of $1,000,000 (the “June 2019 Note”). In addition to repayment of the June 2019 Note and the payment of interest as set forth in the June 2019 Note, the Company agreed to pay the following consideration to the Purchaser: (i) 500,000 shares of the Company’s common stock, and (ii) 8.5% of the revenue generated from the first four of the Ennea Processors monetized and/or commercialized by the Company pursuant to an agreement by and between Owen J. Morgan and the Company dated February 4, 2019 (the “Collateral Processors”) while the Principal Amount of the June 2019 Note is outstanding and 5.0% thereafter as set forth in that certain Royalty Participation Agreement dated June 6, 2019 by and among the Company, PhytoChem and the Purchaser (the “June 2019 Purchaser Royalty Agreement”).

Pursuant to the terms of the June 2019 Investment Agreement, the Principal Amount of the June 2019 Note is secured by the Collateral Processors in accordance with the terms of the June 2019 Note and that certain Security Agreement (the “June 2019 Security Agreement”) dated June 6, 2019 by and among the Company, PhytoChem and the Purchaser. The Principal Amount of the June 2019 Note is also secured by certain real property (the “Real Property”) owned by Brenda Hamilton (the “Pledgor”) pursuant to the terms of that certain Pledge Agreement (the “June 2019 Pledge Agreement”) dated June 6, 2019 by and among NutraLife, PhytoChem, the Pledgor and the Purchaser. Pursuant to the terms of the June 2019 Investment Agreement and the mortgage on the Real Property (the “June 2019 Mortgage”), the June 2019 Mortgage will be reduced by any and all consideration of any nature that is paid to the Purchaser by the Company under the Transaction Documents.

The June 2019 Investment Agreement provides that any controversy or claim arising out of or relating to the June 2019 Investment Agreement will be settled by binding arbitration and judgment on the award entered in any court having jurisdiction.

The Agreement contains customary representations, warranties and conditions.

June 2019 Note

On June 6, 2019, the Company issued the June 2019 Note in the Principal Amount of $1,000,000. Pursuant to the terms of the June 2019 Note, the entire outstanding principal balance of the June 2019 Note matures on December 7, 2020. The June 2019 Note provides that until such time as the Principal Amount of the June 2019 Note has been paid in full, interest will accrue at the fixed rate of 8.5% per annum. Beginning July 7, 2019 and through December 7, 2019, the Company agreed to make interest only payments at a fixed rate of 8.5% per annum on the Principal Amount of the June 2019 Note. Beginning on January 7, 2020 and continuing until the maturity date, the Company agreed to make equal monthly installment payments of principal and interest at the fixed rate of 8.5% per annum in an amount sufficient to fully amortize the Principal Amount of the June 2019 Note and all accrued interest over an amortization period of 12 months, until the amounts due under the June 2019 Note are paid in full.

Pursuant to the terms of the June 2019 Note, all payments made by the Company to the Purchaser under the Transaction Documents, including but not limited to the June 2019 Note, will be first applied to the Principal Amount then to accrued interest outstanding. Any and all consideration paid by the Company to the Purchaser under the Transaction Documents will reduce the amounts secured by the June 2019 Mortgage without affecting the amounts owed by the Company to the Purchaser under the Transaction Documents. The June 2019 Note is secured by the Collateral Processors pursuant to the terms of the June 2019 Investment Agreement and the June 2019 Security Agreement. The Company agreed to deliver a pledge of the Real Property to secure the Principal Amount pursuant to the terms of the June 2019 Pledge Agreement and June 2019 Mortgage, and the June 2019 Mortgage will be reduced from time to time by the consideration paid by the Company to the Purchaser. Simultaneously with the payment of consideration equal to the Principal Amount of the June 2019 Note, the Purchaser will record with the Palm Beach County Property Appraiser’s Officer a Satisfaction of the Mortgage releasing the Purchaser’s June 2019 Mortgage on the Real Property.

In the event of a default of the June 2019 Note, Purchaser has full recourse to all the assets of the Company and the Purchaser will be required to proceed against or exhaust all remedies against both the Company and PhytoChem’s assets prior to proceeding against the June 2019 Mortgage and/or commencing an action to foreclose the June 2019 Mortgage.

At any time while the June 2019 Note is outstanding, the Purchaser will have the option of converting the Principal Amount and accrued interest due on the June 2019 Note into common stock of the Company at a price of $1.00 per share. Upon conversion of the Principal Amount and/or interest, the Company will be forever released from all of its obligations and liabilities under the June 2019 Note. In the event Purchaser converts less than all principal and interest outstanding, the amount converted under the June 2019 Note will be first applied to reduce the principal until it is paid in full. Additionally, upon conversion of all outstanding principal at the time of conversion, the June 2019 Mortgage will be released as security for the obligations and liabilities under the June 2019 Note.

For purposes of the June 2019 Note, an event of default means that the Company has failed to make any payment required under the June 2019 Note within 15 days after the date the payment is due. If the Company is in default under the June 2019 Note, the unpaid principal and accrued interests and any other unpaid amounts and costs due will bear interest at the rate of 10% (the “Default Rate”) until the event of default is cured. From and after the Maturity Date any unpaid principal and interest and any other unpaid amounts and costs under the June 2019 Note will bear interest at the Default Rate. Additionally, and without limitation, all amounts owed under any judgment obtained by Purchaser against the Company with respect to the June 2019 Note will bear interest at the Default Rate. The June 2019 Note provides that any controversy or claim arising out of or relating to the June 2019 Note will be settled by binding arbitration and judgment on the award entered in any court having jurisdiction.

June 2019 Security Agreement

Pursuant to the terms of the June 2019 Security Agreement, the Company assigned and granted to the Purchaser a continuing lien on and security interest in the Collateral. The Company agreed that it would not sell or offer to sell or otherwise transfer or grant or allow the imposition of a lien or security interest upon the Collateral or use any portion thereof in any manner inconsistent with the June 2019 Security Agreement or with the terms and conditions of any policy of insurance thereon. The Company also irrevocably authorized Purchaser at any time and from time to time to file in any Uniform Commercial Code (“UCC”) jurisdiction any initial financing statements and amendments thereto relating to the Collateral as provided in the June 2019 Security Agreement.

The Company will, at the Purchaser’s option, be in default under the June 2019 Security Agreement upon the happening of any of the following events or conditions (each, a “June 2019 Security Agreement Event of Default”): (a) a failure to pay any amount due under the June 2019 Note or the June 2019 Security Agreement within 15 days after the due date; (b) failure by the Company to perform any of its other obligations under the June 2019 Security Agreement within 30 days of notice from Purchaser of the same; (c) falsity, inaccuracy or material breach by the Company or any written warranty, representation or statement made or furnished to the Purchaser by or on behalf of the Company; (d) an uninsured material loss, theft, damage, or destruction to any of the Collateral, or the entry of any judgment against the Company or any lien against or making of any levy, seizure or attachment of or on the Collateral; or (e) the failure of the Purchaser to have a perfected first priority security interest in the Collateral.

Upon the occurrence of any June 2019 Security Agreement Event of Default and at any time thereafter, the Purchaser may declare all obligations secured by the June 2019 Security Agreement immediately due and payable and will have, in addition to any remedies provided in the June 2019 Security Agreement or by any applicable law or in equity, all the remedies of a secured party under the UCC. The June 2019 Security Agreement provides that any controversy or claim arising out of or relating to the June 2019 Security Agreement will be settled by binding arbitration and judgment on the award entered in any court having jurisdiction.

If the Company is in default under the June 2019 Note, the unpaid principal and accrued interests and any other unpaid amounts and costs due will bear interest at the rate of 10% (the “Default Rate”) until the event of default is cured. From and after the Maturity Date any unpaid principal and interest and any other unpaid amounts and costs under the June 2019 Note will bear interest at the Default Rate. Additionally, and without limitation, all amounts owed under any judgment obtained by Purchaser against the Company with respect to the June 2019 Note will bear interest at the Default Rate.

June 2019 Purchaser Royalty Agreement

Pursuant to the terms of the June 2019 Purchaser Royalty Agreement, which has a 10-year term, commencing upon the fiscal quarter in which revenue is derived directly or indirectly from any of the Collateral Processors, the Company will pay to the Purchaser non-refundable royalty payments consisting of 8.5% of all Net Revenue (as defined in the June 2019 Purchaser Royalty Agreement) received by the Company as a result of the commercialization and/or monetization of the Collateral Processors until such time as the Principal Amount has been paid. At such time as the Principal Amount has been paid to the Purchaser, Purchaser will receive non-refundable royalty payments consisting of 5.0% of Net Revenue received by the Company as a result of the commercialization and/or monetization of the first two processors of the Collateral Processors. The royalty payments will be paid by the Company to the Purchaser within 15 days after the end of the quarter in which the Company receives payment for any Net Revenue from the Collateral Processors. The June 2019 Purchaser Royalty Agreement provides that any controversy or claim arising out of or relating to the June 2019 Purchaser Royalty Agreement will be settled by binding arbitration and judgment on the award entered in any court having jurisdiction.

June 2019 Pledge Agreement

Pursuant to the terms of the Pledge Agreement, to induce Brenda Hamilton (the “Pledgor”) to enter into the June 2019 Pledge Agreement and the Mortgage, the Company represented and warranted to the Pledgor and the Purchaser that the Company will timely pay all amounts owing to the Purchaser, and that it will deliver full and timely payment of all and any amounts due and/or which may become due to the Purchaser from the Company from time to time in connection with the Transaction Documents without limitation. Purchaser agreed that it understood that all consideration delivered to the Purchaser by the Company pursuant to the Transaction Documents will be applied to the Principal Amount and as a result, the Mortgage will be reduced by any and all payments of consideration of any type made by the Company to the Purchaser under the Transaction Documents.

In addition, under the terms of the June 2019 Pledge Agreement, based upon the representations of the Company and the Purchaser that they will perform and comply with their obligations and duties under the Transaction Documents, the Pledgor agreed to provide the Purchaser with the June 2019 Mortgage which will secure the Company’s payment of the Principal Amount pursuant to the Transaction Document. The June 2019 Mortgage will be reduced from time to time by any and all payments made by the Company to the Purchaser under the Transaction Documents. In exchange for providing the Real Property collateral, the Pledgor agreed to receive:

As set forth in the June 2019 Pledge Agreement, the terms including payment due dates and maturity dates of the June 2019 Note may not be extended by the Purchaser and the Company without the express written consent of the Pledgor. In the event that the June 2019 Note is amended or modified including to extend a payment due date or the maturity date of the June 2019 Note, without the Pledgor’s written consent, then Pledgor’s obligation to provide security under the June 2019 Pledge Agreement will automatically cease, and the June 2019 Mortgage will be deemed satisfied and released in full as security for the Principal Amount of the Amended Note, and (iii) the Purchaser will immediately record with the Palm Beach County Property Appraiser’s Officer a Satisfaction of Mortgage releasing the Purchaser’s lien on the Real Property.

Pursuant to the terms of the June 2019 Pledge Agreement, a default means that the Company has failed to make any payment required under the June 2019 Note, within 15 days after the date the payment is due. If after exhaustion of all other remedies, including enforcement of the lien against the Collateral and collection of all amounts due from the Company, there remains a default, then the Purchaser will provide written notice to the Pledgor of the default and the Pledgor will have the option but not the obligation to cure the default. In such event, the amounts paid by the Pledgor will bear interest at the highest rate allowed under Florida law. So long as the Company is in default of its obligations under the June 2019 Note, then the Company will pay the Pledgor interest on the amounts outstanding under the June 2019 Note at a rate of 10%.

If the Company defaults on its obligations under the June 2019 Note, the June 2019 Pledge Agreement or any of the other Transaction Agreements, the Company will reimburse the Pledgor on demand for (i) payments made by the Pledgor to Purchaser to cure a default by the Company under the June 2019 Investment Agreement and/or the June 2019 Note, and (ii) all costs and expenses, including attorneys’ fees and disbursements that the Pledgor incurs in exercising any right, power, or remedy provided by the June 2019 Note, the June 2019 Purchaser Royalty Agreement, the June 2019 Security Agreement, the June 2019 Pledgor Royalty Agreement, the June 2019 Mortgage or by law or defending any action arising out of the June 2019 Note, the June 2019 Purchaser Royalty Agreement, the June 2019 Security Agreement, the June 2019 Pledgor Royalty Agreement or the June 2019 Mortgage. Additionally, in the event of a default by the Company, all costs incurred and paid by the Pledgor will bear interest at the highest rate allowed under Florida law. The June 2019 Pledge Agreement provides that any controversy or claim arising out of or relating to the June 2019 Pledge Agreement will be settled by binding arbitration and judgment on the award entered in any court having jurisdiction.

June 2019 Pledgor Royalty Agreement

Pursuant to the terms of the June 2019 Pledgor Royalty Agreement, which has a 10-year term, commencing upon the fiscal quarter in which revenue is derived directly or indirectly from any of the Collateral Processors, the Company will pay to the Pledgor non-refundable royalty payments consisting of 8.5% of all Net Revenue received by the Company as a result of the commercialization and/or monetization of the Collateral Processors until such time as the Principal Amount has been paid. At such time as the Principal Amount has been paid to the Purchaser, the Pledgor will receive non-refundable royalty payments consisting of 5.0% of Net Revenue received by the Company as a result of the commercialization and/or monetization of the first two processors of the Collateral Processors. The royalty payments will be paid by the Company to the Pledgor within 15 days after the end of the quarter in which the Company receives payment for any Net Revenue from the Collateral Processors. The June 2019 Pledgor Royalty Agreement provides that any controversy or claim arising out of or relating to the June 2019 Pledgor Royalty Agreement will be settled by binding arbitration and judgment on the award entered in any court having jurisdiction.

Amended Investment Agreement

On November 13, 2019, the Company entered into an amended Investment Agreement (the “Amended Investment Agreement” and collectively with the Amended Note, the Amended Purchaser Royalty Agreement, the Amended Security Agreement, the Amended Pledgor Royalty Agreement and the Amended Mortgage, each as hereinafter defined, the “Amended Transaction Documents”) by and among the Company and the Purchaser. Pursuant to the terms of the Amended Investment Agreement, the Principal Amount of the Amended Note is secured by the current assets and future assets of the Company and its subsidiaries (the “Collateral”), including the Collateral Processors in accordance with the terms of provisions of the Amended Note and the Amended Security Agreement. Except as set forth herein, the terms of the Amended Investment Agreement are substantially similar to the terms of the June 2019 Investment Agreement.

Amended Note

Pursuant to the terms of the Amended Note dated November 13, 2019 from the Company to the Purchaser (the “Amended Note”), the entire outstanding principal balance of the Amended Note matured on December 7, 2020. The Amended Note provides that the Company make the first interest only payment on December 7, 2019 at the fixed rate of 5.75% per annum. Beginning January 7, 2020 and continuing until the maturity date, the Company agreed to make equal monthly installment payments of principal and interest at the fixed rate of 5.75% per annum in an amount sufficient to fully amortize the Principal Amount of the Amended Note and all accrued interest over an amortization period of 18 months, until all amounts due under the Amended Note are paid in full. Interest will accrue from June 6, 2019 at the rate of 5.75% per annum until the maturity date of the Amended Note.

Pursuant to the terms of the Amended Note, all payments made by the Company to the Purchaser under the Transaction Documents, including but not limited to the Amended Note, will be first applied to the Principal Amount then to accrued interest outstanding. Any and all consideration paid by the Company to the Purchaser under the Transaction Documents will reduce the amounts secured by the Amended Mortgage without affecting the amounts owed by the Company to the Purchaser under the Transaction Documents.

The Amended Note is secured by the Collateral Processors, including the Collateral Processors. A pledge of the Real Property secures the Principal Amount pursuant to the terms of the Amended Pledge Agreement and Amended Mortgage, and the Amended Mortgage will be reduced from time to time by the consideration paid by the Company to the Purchaser. Simultaneously with the payment of consideration (whether interest, royalty and/or securities, as provided in the Amended Note and the Amended Investment Agreement) equal to the Principal Amount of the Amended Note, the Purchaser will record with the Palm Beach County Property Appraiser’s Officer a Satisfaction of the Mortgage releasing the Purchaser’s Amended Mortgage on the Real Property.

Pursuant to the terms of the Amended Note, Purchaser has full recourse to the Collateral and the Purchaser will be required to proceed against and exhaust all remedies against the Collateral prior to proceeding against the Amended Mortgage and/or commencing an action to foreclose the Amended Mortgage. Except as set forth herein, the terms of the Amended Note are substantially similar to the terms of the June 2019 Note.

Amended Security Agreement

Pursuant to the terms of an amended security agreement dated November 13, 2019 by and between the Company and the Purchaser (the “Amended Security Agreement”), the Company assigned and granted to the Purchaser a continuing lien on and security interest in the Collateral, including the Collateral Processors. Except as set forth herein, the terms of the Amended Security Agreement are substantially similar to the terms of the June 2019 Security Agreement.

Amended Purchaser Royalty Agreement

On November 13, 2019, the Company entered into that certain purchaser royalty agreement dated November 13, 2019 by and between the Company and the Purchaser (the “Amended Purchaser Royalty Agreement”). Aside from certain conforming changes, the terms of the Amended Purchaser Royalty Agreement are substantially similar to the terms of the June 2019 Purchaser Royalty Agreement.

Amended Pledge Agreement

On November 13, 2019, the Company entered into an amended pledge agreement by and among the Company, the Pledgor and the Purchaser (the “Amended Pledge Agreement”). Pursuant to the terms of the Amended Pledge Agreement, to induce Pledgor to enter into the Amended Pledge Agreement and the Mortgage, the Company and the Purchaser represented and warranted to the Pledgor that each of the Company and the Pledgor will timely comply with all requirements and obligations under the Transaction Documents and the Company will pay all amounts owing to the Purchaser, and that it will deliver full and timely payment of all and any amounts due and/or which may become due to the Purchaser from the Company from time to time in connection with the Transaction Documents without limitation. Purchaser agreed that it understood that all consideration delivered to the Purchaser by the Company pursuant to the Transaction Documents will be applied to reduce the Principal Amount secured by the Amended Mortgage and as a result, the Amended Mortgage will be reduced by any and all payments of consideration of any type (including cash or securities) made by the Company to the Purchaser under the Transaction Documents and the June 2019 Investment Agreement and June 2019 Note.

Pursuant to the terms of the Amended Pledge Agreement, based upon the representations of the Company and the Purchaser that they will perform and comply with their obligations and duties under the Transaction Documents, the Pledgor agreed to provide the Purchaser with the Amended Mortgage which will secure the Company’s payment of the Principal Amount pursuant to the Transaction Document. The Amended Mortgage will be reduced from time to time by any and all payments of any nature (including cash or securities) made by the Company to the Purchaser under the Transaction Documents. In exchange for providing the Real Property collateral, the Company agreed to pay to Pledgor:

As set forth in the Amended Pledge Agreement, the terms set forth in the Transaction Documents may not be extended by the Purchaser and the Company without the express written consent of the Pledgor so long as any portion of the Principal Amount is outstanding. In the event that any of the Transaction Documents is amended and/or modified in any respect without the Pledgor’s written consent while any portion of the Principal Amount is outstanding then (i) Pledgor’s obligation to provide security under the Amended Pledge Agreement will automatically cease, (ii) the Amended Mortgage will be deemed satisfied and released in full as security for the Principal Amount of the Amended Note, and (iii) the Purchaser will immediately record with the Palm Beach County Property Appraiser’s Officer a Satisfaction of Mortgage releasing the Purchaser’s lien on the Real Property at the cost of the Company.

Pursuant to the terms of the Amended Pledge Agreement, a default means that the Company has failed to make any payment required under the Amended Note, within 15 days after the date the payment is due. If after exhaustion of all other remedies, including enforcement of the lien against the Collateral and collection of all amounts due from the Company, there remains a default owed to the Purchaser, then the Purchaser will provide written notice to the Pledgor of the default and the Pledgor will have the option but not the obligation to cure the default. In such event, the amounts paid by the Pledgor to enforce its rights under the Amended Pledge Agreement will bear interest at the highest rate allowed under Florida law. So long as the Company is in default of its obligations under the Transaction Documents, then the Company will pay the Pledgor interest on the Principal and accrued interest outstanding under the Amended Note at the highest rate allowed under Florida law.

If the Company defaults on its obligations under the Amended Note, the Amended Pledge Agreement or any of the other Transaction Agreements, the Company will reimburse the Pledgor on demand for (i) payments made by the Pledgor to Purchaser to cure a default by the Company under the Amended Investment Agreement and/or the Amended Note, and (ii) all costs and expenses, including attorneys’ fees and disbursements that the Pledgor incurs in exercising any right, power, or remedy provided by the Amended Note, the Amended Purchaser Royalty Agreement, the Amended Security Agreement, the Amended Pledgor Royalty Agreement, the Amended Mortgage or by law or defending any action arising out of the Amended Note, the Amended Purchaser Royalty Agreement, the Amended Security Agreement, the Amended Pledgor Royalty Agreement or the Amended Mortgage. Additionally, in the event of a default by the Company, all costs incurred and paid by the Pledgor including but not limited to attorney fees and any amounts Pledgor pays to cure a default by the Company of the Amended Note will bear interest at the highest rate allowed under Florida law. Except as set forth herein, the terms of the Amended Pledge Agreement are substantially similar to the terms of the June 2019 Pledge Agreement.

Amended Pledgor Royalty Agreement

On November 13, 2019, the Company entered into the Amended Pledgor Royalty Agreement. Aside from certain conforming changes, the terms of the Amended Pledgor Royalty Agreement are substantially similar to the terms of the June 2019 Pledgor Royalty Agreement.

Company Default

The Company has not made the principal and interest payments on the Amended Note as of the date of this Annual Report. The Company now believes that it may have defenses to the enforcement of the Transaction Documents as written, however this may not be the case. Additionally, the Purchaser has not indicated to the Company that it will seek to enforce its rights under the Transaction Documents or that it will proceed against the Collateral.

Stock Purchase Agreement

On November 2, 2020 (the “Closing Date”), the Company entered into a Stock Purchase Agreement (the “SPA”) by and between the Company, Lord Global Corporation, a Nevada corporation (the “Lord Global”) and 27 Health, Inc., a wholly-owned subsidiary of Lord Global (“27 Health”). Pursuant to the SPA, the Company acquired from Lord Global 250 shares of Series X Convertible Preferred Stock of Lord Global (the “Series X Stock”) in exchange for the issuance by the Company to 27 Health of 12,500,000 shares of common stock, par value $0.0001 per share, of the Company (the “NutraLife Common Stock”). The transactions pursuant to the SPA closed on the Closing Date.

Each share of Series X Stock is convertible into shares of common stock, par value $0.001 per share, of Lord Global (the “Lord Global Common Stock”) at the rate of 1,000 shares of Lord Global Common Stock per share of Series X Stock, subject to customary adjustments for stock splits, stock dividend, stock combinations, recapitalizations or other similar transactions. The conversion of the Series X Stock is subject to a customary beneficial limitation such that the Company may not convert the Series X Stock into Lord Global Common Stock if such conversion would result in the Company and its affiliates having beneficial ownership of in excess of 4.99% of the outstanding shares of Lord Global Common Stock, provided that the Company may elect to waive this limitation on 61 days’ notice to Lord Global.

In addition to the Series X Stock issued to the Company, in the event that, on the first business day following the 180-day anniversary of the Closing Date, the average volume weighted average price of the Lord Global Common Stock for the 10 trading day period prior to that date is less than $4.00 (subject to customary adjustments), then Lord Global will issue to the Company, for no additional consideration payable by the Company, a number of shares of Lord Global Common Stock equal to (i) $1,000,000, divided by (ii) the share price as of such date, minus 250,000 (the “First Adjustment Shares”). A second such adjustment shall be completed on the first business day following the one-year anniversary of the Closing Date, provided that at this adjustment the number of First Adjustment Shares will also be deducted from any additional shares to be issued to the Company.

Manufacturing, Distribution and Sales Agreement

In connection with the SPA and the transactions as set forth therein, on the Closing Date the Company also entered into a Manufacturing, Distribution and Sales Agreement (the “MDS Agreement”) by and between the Company and 27 Health. 27 Health, together with Lord Global (referred to in this section jointly as “27 Health”) has developed and currently manufactures and markets certain products related to the testing and treatment of COVID-19 (the “Coviguard Products”).

Pursuant to the MDS Agreement, 27 Health engaged the Company to manufacture the Coviguard Products and granted the Company the right, on a non-exclusive basis, to sell and distribute the Coviguard Products manufactured by the Company though all channels of distribution on a worldwide basis and to undertake advertising and marketing as determined to be necessary by the Company, with written notice, in connection therewith.

During the term of the Agreement, the Company has the exclusive right to manufacture the Coviguard Products, subject to the Company’s continued ability to meet in all material respects the production requirements of 27 Health for the Coviguard Products. In the event that the Company is unable, in the sole determination of 27 Health, to meet the production requirements, 27 Health may seek other sources for the manufacturing of the Coviguard Products or may terminate the MDS Agreement.

Pursuant to the MDS Agreement, the Company may elect to market the Coviguard Products directly, without any requirement of an order for the manufacturing of the products being supplied by 27 Health or accepted by the Company. All such direct sales will be made by the Company to the recipient of the products, and the Company will pay to 27 Health a set distributor price for the products, and retain the balance paid by the buyer.

In the event that the Company identifies a potential third-party customer for the Coviguard Products, but does not elect to sell the Coviguard Products directly to the customer as set forth above, the Company may refer such potential customer to 27 Health. If the customer is a not a current customer of 27 Health, then for any and all sales of Coviguard Products to such new customers, 27 Health will pay to the Company 15% commissions on these sales. No commissions would be paid for sales to customers who were already customers of 27 Health at the time.

The MDS Agreement has an initial term of 5 years, with automatic extensions of 1 year each, subject to earlier expiration or termination as set forth therein.

Competitive Business Conditions

The nutritional, dietary supplement and industrial hemp CBD industries, as well as the sanitizer products industry, are highly competitive. Numerous manufacturers and distributors compete with us for customers throughout the United States selling products to private label customers and retailers such as mass merchandisers, drug store chains, independent pharmacies and health food stores. We are also vulnerable to competition from companies that can manufacture similar products to our products and compete for private label customers. The markets for our products are highly competitive. We seek to compete on the basis of customer service, product quality, pricing and marketing support.

We compete with major private label and broadline brand manufacturers many of which are larger and have access to greater resources than us. Among other factors, competition among private label manufacturers is based upon price. If one or more private label or broadline brand manufacturers significantly reduce their prices in an effort to gain market share, our results of operations or market position could be adversely affected. We also compete with manufacturers of nationally advertised brand name products which are larger and have resources substantially greater than us. In the future, one or more of these companies could seek to compete more directly with us by manufacturing private label products or by significantly lowering the prices of their national brand products.

Many of our indirect competitors are substantially larger, have more experience than us, have longer operating histories, and have materially greater financial and other resources than us.

Costs and Effects of Compliance with Environmental Laws

We are in a business that involves the use of raw materials in a manufacturing process, however, we believe that it is unlikely that such materials are likely to result in the violation of any existing environmental rules and/or regulations. Further, we do not own any real property that could lead to liability as a landowner. Therefore, we do not anticipate that there will be any material costs associated with compliance with environmental laws and regulations.

Product Liability Insurance

We maintain commercial liability, including product liability coverage, and property insurance. Our policy provides for a general liability of five million dollars ($5,000,000) per occurrence, and five million dollars ($5,000,000) annual aggregate coverage which includes our main corporate facility. We carry property coverage on our main office facility to cover our legal liability, tenant’s improvements, business property, and inventory.

Regulation of our Hemp Finished Products

The sale of our Hemp Finished Products is potentially subject to a complex web of federal and state regulations that are evolving at a rapid rate. The formulation, manufacturing, packaging, labeling, advertising, and distribution of our products are subject to regulation by one or more federal agencies, principally the Food and Drug Administration (“FDA”), the Federal Trade Commission (“FTC”), and, to a lesser extent, the Consumer Product Safety Commission (“CPSC”), the United States Department of Agriculture (“USDA”), Drug Enforcement Agency (“DEA”) and the Environmental Protection Agency (“EPA”). Our activities are also regulated by various governmental agencies for the states and localities in which our products are sold, as well as by governmental agencies in certain countries outside the United States in which our products are sold. These agencies can change their rules at any time. Should we become subject to FDA, DEA or other enforcement proceedings we would have to cease operations.

The FDA under the Federal Food, Drug, and Cosmetic Act regulates the formulation, manufacturing, packaging, labeling, distribution and sale of drugs, food, including dietary supplements, and over-the-counter drugs.

Until 2014, when 7 U.S. Code §5940 became federal law as part of the Agricultural Act of 2014 (the “2014 Farm Act”), products containing oils derived from hemp, notwithstanding a minimal or non-existing THC content, were classified as Schedule I illegal drugs. The 2014 Farm Act expired on September 30, 2018, and was thereafter replaced by the Agricultural Improvement Act of 2018 on December 20, 2018 (the “2018 Farm Act”), which amended various sections of the U.S. Code, thereby removing hemp, defined as cannabis with less than 0.3% of THC, from Schedule 1 status under the Controlled Substances Act (“CSA”), and legalizing the cultivation and sale of hemp at the federal level, subject to compliance with certain federal requirements and state law, amongst other things. THC is the psychoactive component of plants in the cannabis family generally identified as marihuana or marijuana. We believe that our hemp products are and will continue to be federally legal in the United States in that they contain and will continue to contain less than 0.3% of THC in compliance with the 2018 Farm Bill guidelines and will have no psychoactive effects on our customers’ bodies. Notwithstanding, there is no assurance that the 2018 Farm Act will not be repealed or amended such that our products containing hemp-derived CBD would once again be deemed illegal under federal law.

The 2018 Farm Bill also shifted regulatory authority from the Drug Enforcement Administration to the Department of Agriculture. The 2018 Farm Bill did not change the United States Food and Drug Administration’s (“FDA”) oversight authority over hemp products. The 2018 Farm Act delegated the authority to the states to regulate and limit the production of hemp and hemp derived products within their territories. Although many states have adopted laws and regulations that allow for the production and sale of hemp and hemp derived products under certain circumstances, no assurance can be given that such state laws may not be repealed or amended such that our hemp products would once again be deemed illegal under the laws of one or more states now permitting such products, which in turn would render such products illegal in those states under federal law even if the federal law is unchanged. In the event of either repeal of federal or of state laws and regulations, or of amendments thereto that are adverse to our hemp products, we may be restricted or limited with respect to those products that we may sell or distribute, which could adversely impact our operations with respect to such products.

Additionally, the FDA has indicated its view that certain types of hemp products may not be permissible under the United States Federal Food, Drug and Cosmetic Act (“FDCA”). The FDA’s position is related to its approval of Epidiolex, a marijuana-derived prescription medicine to be available in the United States. The active ingredient in Epidiolex is CBD. On December 20, 2018, after the passage of the 2018 Farm Bill, FDA Commissioner Scott Gottlieb issued a statement in which he reiterated the FDA’s position that, among other things, the FDA requires a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approved by the FDA for its intended use before it may be introduced into interstate commerce and that the FDCA prohibits introducing into interstate commerce food products containing added hemp, and marketing products containing hemp as a dietary supplement, regardless of whether the substances are hemp-derived. Although we believe our hemp product offerings comply with applicable federal and state laws and regulations, legal proceedings alleging violations of such laws could have a material adverse effect on our business, financial condition and results of operations.

We do not intend to offer and do not compete with companies that offer cannabis products containing high levels of psychoactive THC in the United States. Although legal in some states in the United States, we are not in, and do not intend to enter into this market. We offer hemp-based products to customers in the United States but do not compete with any medical or recreational marijuana sellers of products for high THC content sales due to legal and regulatory restrictions and uncertainty in the United States.

The FDA under the Federal Food, Drug, and Cosmetic Act regulates the formulation, manufacturing, packaging, labeling, distribution and sale of drugs, food, including dietary supplements, and over-the-counter drugs and any inclusion of cannabis or cannabis-derived compounds, like CBD, in such products would be regulated by the FDA regardless of the source of the cannabis substance, be it hemp or marijuana.

Our CBD products are derived from the seeds and mature stalks of the Cannabis Sativa plant which includes all parts and varieties of the cannabis sativa plant also known as hemp, which contain a tetrahydrocannabinol concentration (“THC”) that does not exceed 0.3 percent on a dry-weight basis. In December of 2018, the U.S. Food and Drug Administration completed an evaluation of three generally recognized as safe (GRAS) notices for hemp seed-derived food ingredients. The FDA stated that hulled hemp seed (GRN765), hemp seed protein powder (GRN771), and hemp seed oil (GRN778) are GRAS under their intended conditions of use. Some of the intended uses for these ingredients include adding them as source of protein, carbohydrates, oil, and other nutrients to beverages (juices, smoothies, protein drinks, plant-based alternatives to dairy products), soups, dips, spreads, sauces, dressings, plant-based alternatives to meat products, desserts, baked goods, cereals, snacks and nutrition bars. Our CBD products are made from seeds and mature stalks of hemp and contain only trace amounts of THC, we believe they qualify as GRAS products.

We have not obtained and do not plan to obtain FDA approval of our CBD products. As a result, we could be subject to enforcement proceedings by the FDA. We do not believe that FDA enforcement proceedings are likely since our products only contain trace elements of THC and do not cause the “high” associated with the THC in marijuana. Additionally, Hemp Finished Products like those sold by us are sold by large retailers online including Whole Foods, Publix, Wal-Mart and others. Despite the foregoing, should we become subject to FDA or other enforcement proceedings we could have to cease operations.

Other Regulations Impacting our Hemp Finished - CBD Products

Some states are considering various taxation of marijuana-related products including hemp finished products. These considerations seem to range from routine sales taxes to taxes similar to those imposed on tobacco products. Though, for the reasons described above, we do not believe the Hemp Finished Products to be subject to any marijuana-related taxation schemes, it is unclear whether Hemp Finished Products would fall under these tax plans if and when they are imposed.

IRS section 280(E) prevents cannabis companies from deducting expenses from their income, except for those considered cost of goods sold. No deduction or credit is allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by federal law or the law of any State in which such trade or business is conducted. Though, for the reasons described above, we do not believe the Hemp Finished Products to be appropriately treated as a controlled substance, if IRC 280(E) is enforced against us relating to deductions concerning our Hemp Finished Products, such tax treatment could create operating and cash flow problems in the future.

Cannabis versus Hemp

While hemp and cannabis are both derived from the same species (Cannabis sativa), there are major differences in the characteristics of the respective plant strains that produce industrial hemp on the one hand, and cannabis products on the other. In short, hemp is a strain of the Cannabis sativa plant that has been grown primarily for use in industrial applications and has been specifically cultivated to produce a low tetrahydrocannabinol (“THC”) content and a high cannabidiol (“CBD”) content. THC is the psychoactive constituent of cannabis and is responsible for producing the psychoactive effects of the drug. CBD is another active ingredient present in Cannabis sativa plants, and it largely acts to neutralize the psychoactive effects of THC and is not associated with psychoactive effects. Since hemp strains have very little THC and a lot of CBD, they do not produce psychoactive effects when ingested.

Regulation of our Products not Containing CBD

The formulation, manufacturing, packaging, labeling, advertising, and distribution of our non-hemp based products are subject to regulation by one or more federal agencies, principally the FDA, the Federal Trade Commission (“FTC”), and, to a lesser extent, the Consumer Product Safety Commission (“CPSC”), the United States Department of Agriculture (“USDA”), and the Environmental Protection Agency (“EPA”). Our activities are also regulated by various governmental agencies for the states and localities in which our products are sold, as well as by governmental agencies in certain countries outside the United States in which our products are sold. Among other matters, regulation by the FDA and FTC are concerned with product safety and claims made with respect to a product’s ability to provide health-related benefits. Specifically, the FDA, under the Federal Food, Drug, and Cosmetic Act, (“FDCA”), regulates the formulation, manufacturing, packaging, labeling, distribution and sale of food, including dietary supplements, and over-the-counter drugs. The FTC regulates the advertising of these products. The National Advertising Division (“NAD”) of the Council of Better Business Bureaus oversees an industry sponsored, self-regulatory system that permits competitors to resolve disputes over advertising claims. The NAD has no enforcement authority of its own, but may refer matters that appear to violate the Federal Trade Commission Act or the FDCA to the FTC or the FDA for further action, as appropriate.

Federal agencies, primarily the FDA and the FTC, have a variety of procedures and enforcement remedies available to them including initiating investigations, issuing warning letters and cease and desist orders, requiring corrective labeling or advertising, requiring consumer redress (for example, requiring that a company offer to repurchase products previously sold to consumers), seeking injunctive relief or product seizures, imposing civil penalties, or commencing criminal prosecution. In addition, certain state agencies have similar authority. These federal and state agencies have in the past used these remedies in regulating participants in the food, dietary supplement and over-the-counter drug industries, including the imposition of civil penalties in the millions of dollars against a few industry participants.

The Dietary Supplement Health and Education Act (“DSHEA”) was enacted in 1994, amending the FDCA. We believe DSHEA is generally favorable to consumers and to the dietary supplement industry. DSHEA establishes a statutory class of “dietary supplements”, which includes vitamins, minerals, herbs, amino acids and other dietary ingredients for human use to supplement the diet. Dietary ingredients marketed in the United States before October 15, 1994 may be marketed without the submission of a “new dietary ingredient” (“NDI”) premarket notification to the FDA. Dietary ingredients not marketed in the United States before October 15, 1994 may require the submission, at least seventy-five (75) days before marketing of an NDI notification containing information establishing that the ingredient is reasonably expected to be safe for its intended use. Among other things, DSHEA prevents the FDA from regulating dietary ingredients in dietary supplements as “food additives” and allows the use of statements of nutritional support on product labels and in labeling. The FDA has issued final regulations under DSHEA and has issued draft guidance on NDI notification requirements. Further guidance and regulations are expected. Several bills to amend DSHEA in ways that would make this law less favorable to consumers and industry have been proposed in Congress.

The Nutrition Labeling and Education Act of 1990 (“NLEA”) amended the FDCA to establish additional requirements for ingredient and nutrition labeling and labeling claims for foods. If the NLEA labeling requirements change at a future time, we may need to revise our product labeling. Our non-CBD products are classified as dietary supplements. The FDA has concluded that THC and CBD products are excluded from the definition of a dietary supplement. The FDA issued a Final Rule on GMPs for dietary supplements on June 22, 2007. The GMPs cover manufacturers and holders of finished dietary supplement products, including dietary supplement products manufactured outside the United States that are imported for sale into the United States. Among other things, the new GMPs: (a) require identity testing on all incoming dietary ingredients, call for a “scientifically valid system” for ensuring finished products meet all specifications, (b) include requirements related to process controls, including statistical sampling of finished batches for testing and requirements for written procedures, and (c) require extensive recordkeeping.

We have reviewed the GMPs and have taken steps to ensure compliance. While we believe we are in compliance, there can be no assurance that our operations or those of our suppliers will be in compliance in all respects at all times. Additionally, there is a potential risk of increased audits as the FDA and other regulators seek to ensure compliance with the GMP’s.

On December 22, 2006, Congress passed the Dietary Supplement and Nonprescription Drug Consumer Protection Act, which went into effect on December 22, 2007. The law requires, among other things, that companies that manufacture or distribute nonprescription drugs or dietary supplements report serious adverse events allegedly associated with their products to the FDA and institute recordkeeping requirements for all adverse events (serious and non-serious). There is a risk that consumers, the press and government regulators could misinterpret reported serious adverse events as evidence of causation by the ingredient or product complained of, which could lead to additional regulations, banned ingredients or products, increased insurance costs and a potential increase in product liability litigation, among other things.

The Consumer Product Safety Improvement Act of 2008 (“CPSIA”) primarily addresses children’s product safety but also improves the administrative process of the CPSC. Among other things, the CPSIA requires testing and certification of certain products and enhances the CPSC’s authority to order recalls.

The FDA Food Safety Modernization Act (“FSMA”), enacted January 4, 2011, amended the FDCA to significantly enhance the FDA’s authority over various aspects of food regulation. The FSMA granted the FDA mandatory recall authority when the FDA determines if there is reasonable probability that a food is adulterated or misbranded and that the use of, or exposure to, the food will cause serious adverse health consequences or death to humans or animals. Other changes include the FDA’s expanded access to records; the authority to suspend food facility registrations and require high risk imported food to be accompanied by a certification; stronger authority to administratively detain food; the authority to refuse admission of an imported food if it is from a foreign establishment to which a U.S. inspector is refused entry for an inspection; and the requirement that importers verify that the foods they import meet domestic standards.

One of the FSMA’s more significant changes is the requirement of hazard analysis and risk-based preventive controls (“HARBPC”) for all food facilities required to register with the FDA, except dietary supplement facilities in compliance with both GMPs and the serious adverse event reporting requirements. Although dietary supplement facilities are exempt from the HARBPC requirements, dietary ingredient facilities might not qualify for the exemption. The HARBPC requirements, which the FDA has yet to propose, are expected to be onerous because facilities will have to develop and implement preventive controls to assure that identified hazards are significantly minimized or prevented, monitor the effectiveness of the preventive controls and maintain numerous records related to the HARBPC. The HARBPC requirements may increase the costs of dietary ingredients and/or affect our ability to obtain dietary ingredients.

As required by Section 113(b) of the FSMA, the FDA published in July 2011, a draft guidance document clarifying when the FDA believes a dietary ingredient is an NDI, when a manufacturer or distributor must submit an NDI premarket notification to the FDA, the evidence necessary to document the safety of an NDI and the methods for establishing the identity of an NDI. The draft guidance, if implemented as proposed, could have a material impact on our operations. Although our industry has strongly objected to several aspects of the draft guidance, it is unclear whether the FDA will make changes to the final guidance. In addition, it is possible that the FDA will begin taking enforcement actions consistent with the interpretations in the draft guidance before issuing a final version. The new FSMA requirements, as well as the FDA enforcement of the NDI guidance as written, could require us to incur additional expenses, which could be significant, and negatively impact our business in several ways, including, but not limited to, the detention and refusal of admission of imported products, the injunction of manufacturing of any dietary ingredients or dietary supplements until the FDA determines that such ingredients or products are in compliance and the potential imposition of fees for re-inspection of noncompliant facilities. Each of these events would increase our liability and could have a material adverse effect on our financial condition, results of operations or cash flows.

The FTC and the FDA have pursued a coordinated effort to challenge what they consider to be unsubstantiated and unsafe weight-loss products, and have also coordinated enforcement against dietary supplement claims in other areas, including children’s products. Their efforts to date have focused on manufacturers and marketers as well as media outlets, and have resulted in a significant number of investigations and enforcement actions, some resulting in civil penalties of several million dollars under the Federal Trade Commission Act. We expect that the FTC and the FDA will continue to focus on health-related claims for dietary supplements and foods which could cause our non-CBD products to be the subject of an FTC/FDA inquiry.