What changed in this filing

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Item 1. Financial Statements

2020-11-16 compared with 2020-08-13 · 315 added, 333 removed, 818 unchanged (44% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

June 30, 2020

September 30, 2020

December 31, 2019

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Convertible notes, net of discount

Derivative liabilities

Total current liabilities

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295,000,000 shares authorized;

143,543,146 and 130,341,737 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

149,093,829 and 130,341,737 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

Additional paid in capital

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Consolidated Statements of Operations

the three and six months ended June 30, 2020 and 2019

For the three months ended June 30,

For the six months ended June 30,

Cost of revenue

Depreciation of Manufacturing Equipment

the three and nine months ended September 30, 2020 and 2019 (unaudited)

the three months ended September 30,

the nine months ended September 30,

of Manufacturing Equipment

and administrative

and Amortization

operating expenses

General and administrative

Depreciation and Amortization

Total operating expenses

Operating loss

Other (income)/expenses

Gain from derivative liability

Gain from debt extinguishment

Warrant modification

Interest expense

Total other expense/(income)

$ (1,179,520 )

$ (1,922,586 )

$ (3,421,178 )

Per share information - basic and fully diluted:

Weighted average shares outstanding

Net (loss) per share

(income)/expenses

from derivative liability

from debt extinguishment

other expense/(income)

share information - basic and fully diluted:

average shares outstanding

(loss) per share

the accompanying notes to the condensed consolidated financial statements

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Consolidated Statements of Cash Flows

the six months ended June 30, 2020 and 2019

Net Cash (used for) Operating Activities

the nine months ended September 30, 2020 and 2019 (unaudited)

Cash (used for) Operating Activities

$ (2,517,269 )

$ (3,191,642 )

Investing Activities

Purchase of property and equipment

Purchase of Intangibles

Net Cash (used for) Investing Activities

Financing Activities

Cash received for Warrant Exercises

Cash received for Stock

Proceeds from notes payable

Repayment of convertible notes

Payments of operating leases

Net Cash from Financing Activities

Net Change in Cash and Restricted Cash

Cash and Restricted Cash, Beginning of Year

Cash and Restricted Cash, End of Year

Non-Cash Financing and Investing Activities

Property and equipment included in accounts payable

Convertible note principal and interest settled through warrant exercise

Operating lease right of use asset

Executive Deferred Compensation settled through issuance of warrants

Net carrying value of convertible notes and accrued interest settled through issuance of stock (debt extinguishment)

Accrued interest settled through issuance of stock

Debt discount warrant and derivative liability

Offering and debt issuance costs included in accounts payable

of property and equipment

of Intangibles

Cash (used for) Investing Activities

received for Warrant Exercises

received for Stock, net of offering costs

from notes payable

of convertible notes

for debt issue costs

of operating leases

Cash from Financing Activities

Change in Cash and Restricted Cash

and Restricted Cash, Beginning of Year

and Restricted Cash, End of Year

Financing and Investing Activities

and equipment included in accounts payable

note principal and interest settled through warrant exercise

lease right of use asset

Deferred Compensation settled through issuance of warrants

carrying value of convertible notes and accrued interest settled through issuance of stock (debt extinguishment)

interest settled through issuance of stock

discount warrant and derivative liability

the accompanying notes to the condensed consolidated financial statements

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requires additional disclosures about restricted cash balances.

At June 30, 2020 and December 31, 2019, the Company had $368,582

and $91,385, respectively, in restricted cash related to our co-packing agreement with Yarnell Operations, LLC.

At September 30, 2020 and December 31, 2019, the Company had $368,582

and $91,385, respectively, in restricted cash related to a co-packing agreement.

Value Measurement

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is evaluated prior to a sale.

As of June 30, 2020 and December 31, 2019, the Company’s allowance for doubtful accounts was

$141,788 and $141,788, respectively.

As of September 30, 2020 and December 31, 2019, the Company’s allowance for doubtful accounts

was $141,788 and $141,788, respectively.

The allowance was estimated based on evaluation of collectability of outstanding accounts

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The Company monitors the remaining useful life of its inventory and establishes a reserve of obsolescence where appropriate.

As of June 30, 2020 and December 31, 2019, the Company’s inventory reserve was $31,476 and $100,651, respectively.

As of September 30, 2020 and December 31, 2019, the Company’s inventory reserve was $56,476 and $100,651, respectively.

assets are comprised of patents, net of amortization and trademarks.

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for research activities relating to product development and improvement are charged to general and administrative and are expensed

We incurred $93,730 and $116,786, in research and development

expenses for the three-months ended June 30, 2020 and 2019, respectively.

For the six-month periods ended June 30, 2020 and 2019,

research and development costs totaled $179,154 and $272,985, respectively.

We incurred $91,738 and $127,123, in research and development expenses for the three-months ended September 30, 2020

and 2019, respectively.

For the nine-month periods ended September 30, 2020 and 2019, research and development costs totaled $270,892

and $400,108, respectively.

and Storage Costs

and storage costs are included in general and administrative expenses.

the three-month periods ended June 30, 2020 and 2019, shipping and storage costs totaled $96,425 and $192,628, respectively.

the six-month periods ended June 30, 2020 and 2019, shipping and storage costs totaled $229,533 and $342,274, respectively.

For the three-month periods ended September 30, 2020 and

2019, shipping and storage costs totaled $126,737 and $248,291, respectively.

For the nine-month periods ended September 30, 2020

and 2019, shipping and storage costs totaled $356,270 and $681,188, respectively.

provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes

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than likely than not that some portion or all of the deferred tax assets will not be recognized.

the three and six-months ended June 30, 2020 and 2019, we did not have any interest and penalties or any unrecognized uncertain

the three and nine-months ended September 30, 2020 and 2019, we did not have any interest and penalties or any unrecognized uncertain

tax positions.

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Accordingly, the Company recorded a net gain $0 and $379,200, respectively, non-cash gain

on extinguishment of debt in its statements of operations for the three and six months ended June 30, 2020.

on extinguishment of debt in its statements of operations for the three and nine months ended September 30, 2020.

calculate net loss per share in accordance with ASC Topic 260, Earnings per Share.

Basic net loss per share is computed

by dividing net loss by the weighted average number of shares of common stock outstanding for the period, and diluted earnings

per share is computed by including common stock equivalents outstanding for the period in the denominator.

At June 30, 2020 and

2019 any equivalents would have been anti-dilutive as we had losses for the three and six months then ended.

Basic net loss per share is computed by dividing

net loss by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is

computed by including common stock equivalents outstanding for the period in the denominator.

At September 30, 2020 and 2019,

any equivalents would have been anti-dilutive as we had losses for the three and nine months then ended.

Based Compensation

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financial statements.

consists of the following at June 30, 2020 and December 31, 2019:

Raw materials

Finished goods, net of reserve

Inventory, net

consists of the following at September 30, 2020 and December 31, 2019:

goods, net of reserve

Company has recorded a reserve for slow moving and potentially obsolete inventory.

The reserve at June 30, 2020 and December 31,

The reserve at September 30, 2020 and December

31, 2019 was $56,476 and $100,651, respectively.

Property Plant and Equipment

classes of property and equipment at June 30, 2020 and December 31, 2019:

Furniture and fixtures

Manufacturing Equipment and customer equipment

Leasehold Improvements

classes of property and equipment at September 30, 2020 and December 31, 2019:

Manufacturing

Equipment and customer equipment

accumulated depreciation

Equipment not yet placed in service

Property and equipment, net of depreciation

recorded depreciation expense related to these assets of $153,500 and $155,074 for the three-months ended June 30, 2020 and 2019,

respectively and $303,648 and $357,051 for the six months ended June 30, 2020 and 2019, respectively.

Depreciation expense in

Cost of Goods Sold was $1,155 and $19,374 for three-months ended June 30, 2020 and 2019 respectively and $9,602 and $31,480 for

the six months ended June 30, 2020 and 2019, respectively.

not yet placed in service

and equipment, net of depreciation

recorded depreciation expense related to these assets of $122,827 and $123,836 for the three months ended September 30, 2020 and

2019, respectively, and $394,670 and $449,082 for the nine months ended September 30, 2020 and 2019, respectively.

expense in Cost of Goods Sold was $5,115 and $29,905 for the three months ended September 30, 2020 and 2019, respectively, and

$14,717 and $61,385 for the nine months ended September 30, 2020 and 2019, respectively.

Intangible Assets

of June 30, 2020, intangible assets consist of patent costs of $764,891, trademarks of $112,926 and accumulated amortization of

of September 30, 2020, intangible assets consist of patent costs of $768,138, trademarks of $117,008 and accumulated amortization

of December 31, 2019, intangible assets consist of patent costs of $764,891, trademarks of $108,632 and accumulated amortization

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The amount charged

to amortization was $15,902 and $15,902 for the three-months ended June 30, 2020 and 2019, respectively, and

$31,805 and $31,805 for the six months ended June 30, 2020 and 2019, respectively.

future amortization expense related to patents as of June 30, 2020, is as follows:

Total Amortization

Years ending December 31,

2020 (six months remaining)

to amortization was $15,902 and $15,902 for the three months ended September 30, 2020 and 2019, respectively, and $47,707 and

$47,707 for the nine months ended September 30, 2020 and 2019, respectively.

future amortization expense related to patents as of September 30, 2020, is as follows:

ending December 31,

(three months remaining)

Related Parties

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No forgiveness income has been recorded

for the quarter ended June 30, 2020.

The Company will be required to repay any remaining balance, plus interest accrued at 1 percent,

in monthly payments commencing upon notification that the loan will not be forgiven or only partially forgiven.

for the quarter ended September 30, 2020.

The Company will be required to repay any remaining balance, plus interest accrued at

1 percent, in monthly payments commencing upon notification that the loan will not be forgiven or only partially forgiven.

Convertible Notes (Related and Unrelated Party)

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which consists of the L and P Warrants), were calculated using the Black-Scholes option pricing model using the following assumptions:

Expected life (in years)

76.74- 98.00 %

Risk Free interest rate

Dividend yield (on common stock)

life (in years)

Free interest rate

yield (on common stock)

on the relative fair value, we recorded a debt discount of $75,184 related to the issue of P Warrants to CN 1 and CN 2 Noteholders.

The modification of the L Warrants resulted in an incremental increase in fair value of $17,082, which was recorded as a debt

convertible notes consist of the following components as of June 30, 2020 and December 31, 2019:

June 30, 2020

December 31, 2019

Convertible notes

convertible notes consist of the following components as of September 30, 2020 and December 31, 2019:

Debt discount (warrant value)

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incremental value of $1,817 was recorded as a debt discount related to the modification of existing L warrants.

convertible notes consist of the following components as of June 30, 2020 and December 31, 2019:

convertible notes consist of the following components as of September 30, 2020 and December 31, 2019:

Debt discount (warrant value)

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ending December 31,

March 20, 2020 the Company and the Holders of the Series CN Note 1 and Note 2 mutually agreed to amend its terms to change the

maturity date to March 20, 2022 and November 30, 2021, respectively.

March 20, 2020, the Company and the Holders of the Series CN Note 1 and Note 2 mutually agreed to amend its terms to change

the maturity date to March 20, 2022 and November 30, 2021, respectively.

The Company accounted for the modification in accordance

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Consequently, the derivative liabilities

referred to above survived outside of debt conversion and modified extension terms and were valued at $6,774 as of June 30, 2020.

referred to above survived outside of debt conversion and modified extension terms and were valued at $0 as of September 30, 2020.

fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent

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the Series CN 2 extension.

The derivative liability was revalued at June 30, 2020 with a value of $34,143.

The derivative liability was revalued at September 30, 2020 with a value of $21,033.

fair value of the derivative liabilities for CN Convertible Note 2 of 2 was calculated using the Black-Scholes model using the

following assumptions.

Expected life

100.44 -133.12 %

Risk Free interest rate

0.16 - 0.18 %

Dividend yield (on common stock)

Free interest rate

yield (on common stock)

Reconciliation

of the derivative liabilities measured at fair value on a recurring basis with the use of significant unobservable inputs (level

3) from December 31, 2019 to June 30, 2020:

December 31, 2019

Extinguishment change in derivative from conversion

Extinguishment change in derivative from extension

Initial derivative value –

3) from December 31, 2019 to September 30, 2020:

Extinguishment

change in derivative from conversion

Extinguishment

change in derivative from extension

derivative value –

March 20, 2020

Net gain from change in value

For the period ended June 30, 2020

gain from change in value

the period ended September 30, 2020

following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value

as of December 31, 2019 and June 30, 2020:

Derivative Liability December 31, 2019

Liability June 30, 2020

as of December 31, 2019 and September 30, 2020:

Liability December 31, 2019

Liability September 30, 2020

Commitments and Contingencies

lease office space under non-cancelable operating lease which expires on June 30, 2023.

lease office space under a non-cancelable operating lease which expires on June 30, 2023.

Our periodic lease cost and operating

cash flow was $19,782 and $13,612 for the three months ended June 30, 2020 and 2019, respectively.

Our periodic lease cost and

operating cash flow was $39,844 and $50,813 for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020,

cash flow was $19,813 and $19,609 for the three months ended September 30, 2020 and 2019, respectively.

Our periodic lease cost

and operating cash flow was $59,657 and $70,422 for the nine months ended September 30, 2020 and 2019, respectively.

As of September

30, 2020, our right of use asset and related liability was $162,319 and $174,025.

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The remaining term on the lease is 3 years.

following table presents the future operating lease payment as of June 30, 2020.

2020 (six months remaining)

Total Lease payments

following table presents the future operating lease payment as of September 30, 2020.

(three months remaining)

Lease payments

imputed interest

Total lease liability

lease liability

Stockholders’

the six months ended June 30, 2020, we issued 850,000 options to purchase our common stock to employees and 96,899 options to

a Board Member.

The exercise price of the options was $0.37 per share, with both cliff and graded vesting over 3 years, and are

exercisable for a period of 8 years.

fair value of the options issued ($209,700, in the aggregate) was calculated using the Black-Sholes option pricing model, based

on the criteria shown below.

Expected life (in years)

Volatility (based on a comparable company)

73.36%-75.82 %

Risk Free interest rate

Dividend yield (on common stock)

shares of our common stock were valued at the trading price on the date of grant, $0.38 per share

the six months ended June 30, 2020, 625,423 options expired or were cancelled.

the nine months ended September 30, 2020, we issued 870,000 options to purchase our common stock to employees and 199,358 options

to a Board Member.

The exercise price of the options was $0.37 per share, with both cliff and graded vesting over 3 years, and

are exercisable for a period of 8 years.

fair value of the options issued ($209,700, in the aggregate) was calculated using the Black-Scholes option pricing model,

based on the criteria shown below.

life (in years)

(based on a comparable company)

Free interest rate

yield (on common stock)

shares of our common stock were valued at the trading price on the date of grant, between $0.34 - $0.44 per share.

the nine months ended September 30, 2020, 625,423 options expired or were cancelled.

the first quarter of 2020, the Company settled certain Executive Deferred Compensation payments with the issuance of 1,573,988

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The difference between the fair value of the warrants and the Executive Deferred Compensation

settled of $83,945 was recorded as stock-based compensation during the six months ended June 30, 2020.

settled of $83,945 was recorded as stock-based compensation during the nine months ended September 30, 2020.

total amount of equity-based compensation included in additional paid in capital was $45,692 and $67,135 for the three months

ended June 30, 2020 and 2019, respectively.

The total amount of equity-based compensation included in additional paid in capital

was $194,524 and $271,548 for the six-months ended June 30, 2020 and 2019, respectively.

following is a summary of outstanding stock options issued to employees and directors as of June 30, 2020:

ended September 30, 2020 and 2019, respectively.

The total amount of equity-based compensation included in additional paid in

capital was $240,216 and $338,683 for the nine months ended September 30, 2020 and 2019, respectively.

following is a summary of outstanding stock options issued to employees and directors as of September 30, 2020:

price per share $

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intrinsic value

Outstanding January 1, 2020

January 1, 2020

Cancelled/Expired

Outstanding June 30, 2020

Exercisable, June 30, 2020

September 30, 2020

following is Changes in Stockholders’

Equity as of June 30, 2019 and June 30, 2020:

Balance January 1, 2019

Equity as of September 30, 2019 and September 30, 2020:

January 1, 2019

$ (41,153,820 )

Exercise of warrants

Issuance of stock for services

Equity based compensation

Warrants issued to Management

Issuance of stock for capital raise

Warrant modification

Net (loss) for the year

Balance June 30, 2019

of stock for services

based compensation

issued to Management

of stock for capital raise

(loss) for the year

September 30, 2019

$ (45,103,698 )

Balance January 1, 2020

January 1, 2020

$ (46,747,122 )

Issuance of stock for capital raise, net of offering costs of $27,200

Conversion of debt

Interest paid in shares

Issuance of stock for services

Equity based compensation

Warrants issued to management

Warrant Modification

Warrant issued for note extension

Restricted stock issuance

Net (loss) for the year

Balance June 30, 2020

of stock for capital raise, net of offering costs of $27,200

paid in shares

of stock for services

based compensation

issued to management

issued for note extension

stock issuance

(loss) for the year

September 30, 2020

$ (49,547,965 )

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automatically adjust to the sum of $0.10 per share and the Six-Month Price, but in no event less than $0.45 per share

September 28, 2020, the Company determined the volume-weighted average price was below the $0.35 per share and consequently issued

5,305,725 additional shares in accordance with provisions of the Private Placement Offering.

Similarly, the Company issued an

additional 2,652,868 Warrants to investors that contributed capital or exercised the conversion of their convertible note.

the Company issued an additional 459,000 Warrants for convertible noteholders that extended their convertible notes.

Outstanding Warrants

following is a summary of all outstanding warrants as of June 30, 2020:

remaining term in years

Warrants issued in connection with private placements of common stock

$ 0.53 - $1.00

Warrants issued in connection with private placement of notes

Warrants issued in connection with convertible note

Warrants issued in connection with settlement of deferred compensation

following is a summary of all outstanding warrants as of September 30, 2020:

issued in connection with private placements of common stock

issued in connection with private placement of notes

issued in connection with convertible note

issued in connection with settlement of deferred compensation

provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes (“ASC

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Accordingly, at this time the Company has placed a valuation allowance on all

As of June 30, 2020, the estimated effective tax rate for the year will be zero.

As of September 30, 2020, the estimated effective tax rate for the year will be zero.

are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2009

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interest and penalties, accounting in interim periods, disclosure, and transition.

the three and six-month periods ended June 30, 2020 and 2019, we did not have any interest and penalties associated with tax positions.

As of June 30, 2020 and December 31, 2019, we did not have any significant unrecognized uncertain tax positions.

the six months ended June 30, 2020, we used cash for operations of $1,930,045 and purchased equipment for $34,365.

We sold common stock in the amount of $3,825,000 and converted $2,394,763 of principal and interest from our Convertible

Notes into equity.

During the six months ended June 30, 2019, we used $2,354,225 of cash for operations and purchased equipment

for $319,157.

We raised cash of $2,400,000 from the issuance of common stock and we raised cash from the exercise of warrants

in the amount of $1,500,310.

the three and nine-month periods ended September 30, 2020 and 2019, we did not have any interest and penalties associated with

tax positions.

As of September 30, 2020, and December 31, 2019, we did not have any significant unrecognized uncertain tax positions.

the nine months ended September 30, 2020, we used cash for operations of $2,517,269 and purchased equipment for $40,873.

common stock in the amount of $3,825,000 and converted $2,394,763 of principal and interest from our Convertible Notes into equity.

During the nine months ended September 30, 2019, we used $3,191,642 of cash for operations and purchased equipment for $418,456.

We raised cash of $2,400,000 from the issuance of common stock and we raised cash from the exercise of warrants in the amount

of $1,500,310.

have a history of operating losses and negative cash flow.

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Management has evaluated these conditions and concluded substantial doubt was mitigated due

to the Company selling common stock as well as restructuring debt.

However, the Company cannot predict, with certainty, the outcome

of its actions to preserve liquidity, including the accuracy of its financial forecast, the ability to sustain the current trend

of cost cutting, the ability to raise additional capital or to extend the maturity date of the debt that is maturing in March

of June 30, 2020, we had $3,398,276 of cash and restricted cash on the balance sheet.

to measures taken to by the Company to manage its cash burn rate, launch new products to offset the impact of COVID-19 on existing

products, reduce General & Administrative expenses and Cost of Goods Sold.

However, the Company cannot predict, with certainty,

the outcome of its actions to preserve liquidity, including the accuracy of its financial forecast, the ability to sustain the

current trend of cost cutting, the ability to raise additional capital or to extend the maturity date of the debt that is maturing

in March of 2022.

of September 30, 2020, we had $2,743,523 of cash and restricted cash on the balance sheet.

We have continued to significantly

reduce core operating expenses, reducing total General and Administrative Expense in the first six months of 2020 by $1,480,799,

or 39%, as compared with the first six months of 2019.

reduce core operating expenses, reducing total General and Administrative Expense in the first nine months of 2020 by $2,165,849,

or 40%, as compared with the first nine months of 2019.

The Company’s forecast for the next twelve months reflects a continuation

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Many school districts closed regular

attendance during the 2019-2020 school year and are now debating whether to resume in person instruction for the 2020-2021 school

This directly impacts the sales of our Bulk Product into that sales channel.

Our headquarters is located in Los Angeles,

California, one of the hardest affected states.

We have not experienced a disruption in the supply chain for the manufacturing

of our products.

The Company applied for and obtained a Small Business Administration loan under the Paycheck Protection Program

[PPP] of the CARES Act for approximately $568,000.

On June 5, 2020, the President signed a bill which extended the period of loan

forgiveness for PPP loans from 8 to 24 weeks, which we believe will enable the loan to be completely forgiven.

While many states

have commenced the process of reopening various types of businesses, the path to recovering normal activity volumes is uncertain.

Three of the largest states [California, Florida and Texas] have experienced a resurgence of both new cases and fatalities.

Consequently,

the developments surrounding COVID-19 remain fluid and will require the Company to continue to monitor news headlines from government

and health officials, as well as, the business community.

attendance during the 2019-2020 school year and have extended this for the 2020-2021 school year.

This directly impacts the sales

of our Bulk Product into that sales channel.

Our headquarter office is located in Los Angeles, California, one of the hardest

affected states.

We have not experienced a disruption in the supply chain for the manufacturing of our products.

The Company applied

for and obtained a Small Business Administration loan under the Paycheck Protection Program [PPP] of the CARES Act for approximately

On June 5, 2020, the President signed a bill which extended the period of loan forgiveness for PPP loans from 8 to 24

weeks, which we believe will enable the loan to be completely forgiven.

While many states have commenced the process of reopening

various types of businesses, the path to recovering normal activity volumes is uncertain.

Consequently, the developments surrounding

COVID-19 remain fluid and will require the Company to continue to monitor news headlines from government and health officials,

as well as, the business community.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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to terminate the agreement upon 90 days written notice.

Neither party has exercised its right to terminate the agreement.

utilizes contract manufacturers to manufacture all of the products in the United States.

Production lines are currently operational

at three locations.

The first location is in Salt Lake City, which currently produces bulk easy pour products.

The second location

is with Turkey Hill Dairy, Inc.

located in Arkansas.

The Turkey Hill agreement, which was signed during June 2020, secures the

capacity to ramp up to an incremental production capacity of 100 million units.

Turkey Hill’s location enhances the Company’s

ability to efficiently move product throughout the supply chain to destinations in the eastern United States, home to many of

the country’s large foodservice outlets.

The third location is with Schreiber Foods, Inc.

and is located in Shippensburg,

Pennsylvania, where our 8oz Twist & Go products are manufactured.

at four locations.

The first location is in Utah, which currently produces bulk easy pour products.

The second location in Arkansas

produces single serve product.

The agreement for single serve product, which was signed during June 2020, secures the capacity

to ramp up to an incremental production capacity of 100 million units.

This location enhances the Company’s ability to efficiently

move product throughout the supply chain to destinations in the eastern United States, home to many of the country’s large

foodservice outlets.

The third location is based in Pennsylvania, where our 8oz Twist & Go products are manufactured.

our 5:1 juice concentrate is produced in Illinois.

November 2016, the Company received an equity investment from Unibel, the majority shareholder of the Bel Group (“Unibel”).

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of shares issued to such investor at closing and the number of shares that would have been issued to such investor at closing

at the Six Month Price, with an exercise price equal to the sum of $0.10 per share and the Six Month Price, but in no eventless

at the Six Month Price, with an exercise price equal to the sum of $0.10 per share and the Six Month Price, but in no event less

than $0.45 per share.

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the Six-Month Price, but in no event less than $0.45 per share.

addition, the Company obtained a 24-month extension on $1,071,000 in principal, and conversion of $720,000 of principal of the

addition, the Company obtained a 24-month extension on $1,071,000 of principal, and conversion of $720,000 of principal, of the

Milestone I Convertible Notes at a conversion price of $0.50 per share.

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than sixty cents ($0.60) per share of Common Stock.

The investor’s may elect to convert their principal into common stock

at a conversion price equal to the lower of:

(i) $0.88 per share of Common Stock, or (ii) 85% of the average closing bid prices

of the Common Stock over the twenty (20) consecutive trading day period immediately preceding the date of investor’s election

The investors may elect to convert their principal into common stock at a

conversion price equal to the lower of:

(i) $0.88 per share of Common Stock, or (ii) 85% of the average closing bid prices of

the Common Stock over the twenty (20) consecutive trading day period immediately preceding the date of investor’s election

but in no event lower than $0.60 per share of Common Stock.

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for cash at the greater of 120% of the closing price or $0.70 per share of common stock.

September 28, 2020, the Company determined the volume-weighted average price was below the $0.35 per share and consequently issued

5,305,725 additional shares in accordance with provisions of the Private Placement Offering.

Similarly, the Company issued an

additional 2,652,868 Warrants to investors that contributed capital or exercised the conversion of their convertible notes.

Lastly, the Company issued an additional 459,000 Warrants for convertible noteholders that extended their convertible notes.

we have 17 employees and 2 consultants.

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of Operations

of Operation for Three Months Ended June 30, 2020 as Compared to the Three Months Ended June 30, 2019

of Operation for Three Months Ended September 30, 2020 as Compared to the Three Months Ended September 30, 2019

and cost of revenue

decreased $857,566 (55%) from $1,565,176 in 2019 to $707,610 in 2020.

The overall revenue of the second quarter 2020 was lower

The overall revenue for the third quarter 2020 was lower

due to decreased sales of both single serve and bulk product which was directly impacted by COVID-19.

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2020 and 2019, respectively.

Gross margins were lower in the second quarter due to product mix and the launch of the new 8oz bottle.

We anticipate that our gross profit percentage for the remainder of 2020 will be 40%.

Gross margins were lower in the third quarter due to product mix which included the launch of the

new 8oz bottle and 5:1 juice concentrate.

We anticipate that our gross profit percentage for the remainder of 2020 will be approximately

40% due to the composition of revenue from product sales at lower gross margins.

operations were primarily directed towards increasing sales and expanding our distribution network.

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The following is a breakdown of our general and administrative expenses for the three months ended

June 30, 2020 and 2019:

June 30, 2020

June 30, 2019

Personnel costs

Stock based compensation/options

Legal and professional fees

Marketing and selling

Consulting fees

Director fees

Research and development

Shipping and Storage

Other expenses

September 30, 2020 and 2019:

September 30, 2020

September 30, 2019

based compensation/options

and professional fees

and development

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be

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of expense related to the settlement of Deferred Executive Compensation.

We had 24 full time employees at the end of the second

We had 24 full time employees at the end of the third

quarter of 2019, and we currently have 17 full time employees.

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to its employees from time to time under its Equity Compensation Plan.

and professional fees increased $16,284 (12%) from $134,751 in 2019 to $151,035 in 2020.

The increase was primarily due to higher

legal services related to negotiating terms with a contract manufacturer.

We anticipate legal fees related to our business and

financing activities to decrease as we have renegotiated arrangements with existing service providers.

and professional fees decreased $31,961 (52%) from $61,641 in 2019 to $29,680 in 2020.

The decrease was primarily due to renegotiated

fees for legal services.

We anticipate legal fees related to our business and financing activities to decrease as we have renegotiated

arrangements with existing service providers.

expenses decreased $54,636 (76%) from $71,967 in 2019 to $17,331 in 2020.

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that travel expenses for the remainder of this year will be comparable to the current quarter.

expense increased 45%, from $13,612 in the three months ended June 30, 2019, to $19,782 in the three months ended June 30, 2020.

expense increased 1%, from $19,609 in the three months ended September 30, 2019, to $19,813 in the three months ended September

Rent expense is primarily for our location in Los Angeles, California.

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fees were $9,005 in 2020, as compared with $53,207 in 2019.

The decrease of $44,202 was related primarily to sales consulting

in 2019 which did not recur.

Our consulting fees vary based on needs.

We engaged consultants in

the areas of finance during the quarter due to reduced headcount.

We engaged consultants in the areas of finance during the

quarter due to reduced headcount.

The need for future consulting services will be variable.

fees decreased $17,837 from $67,837 in 2019 to $50,000 in 2020 due to the resignation of one director in the first quarter of

Annual director fees are anticipated at $50,000 per non-employee director.

and development expenses decreased $23,056 (20%) from $116,786 in 2019 to $93,730 in 2020.

fees decreased $1,275 from $51,275 in 2019 to $50,000 in 2020.

Annual director fees are anticipated at $50,000 per non-employee

and development expenses increased $20,615 (16%) from $127,123 in 2019 to $147,738 in 2020.

These expenses relate to the services

performed by our Director of Manufacturing and Product Development, and consultants supporting that employee.

The decrease in

research and development expense was primarily driven by the reduction in labor hours.

The increase in

research and development expense was primarily driven by a write down related to the launch of our 8oz bottle, offset by a reduction

in labor hours for our development staff.

and storage expense decreased $147,851 (54%) from $274,588 in 2019 to $126,737 in 2020.

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of more efficient distribution arrangements.

expenses decreased $79,927 from $164,308 in 2019 to $84,381 in 2020 which due to lower expenses related to insurance, moving expense

and information technology.

Other expenses consist of ordinary operating expenses such as investor relations, office, telephone,

insurance, and stock related costs.

expenses decreased $128,748 from $233,756 in 2019 to $105,008 in 2020 which due to lower expenses related to insurance, moving

expense and information technology.

Other expenses consist of ordinary operating expenses such as investor relations, office,

telephone, insurance, and stock related costs.

We anticipate these expenses to be comparable for the balance of the year.

had operating losses of $1,122,234 and $1,089,848 for the three-month periods ended June 30, 2020 and 2019, respectively.

increase of $32,386 or 3%, was primarily due to lower revenues, offset by lower General and Administrative expenses.

change in fair value of the derivative liability was a gain of $6,197 for the three months ended June 30, 2020, as compared to

a gain of $798,746 for the three months ended of June 30, 2019.

had operating losses of $836,384 and $949,789 for the three-month periods ended September 30, 2020 and 2019, respectively.

decrease of $113,405 or 12%, was primarily due to lower revenues, offset by lower General and Administrative expenses.

change in fair value of the derivative liability was a gain of $19,884 for the three months ended September 30, 2020, as compared

to a gain of $704,798 for the three months ended of September 30, 2019.

The decrease in the gain was due to the exercise of Convertible

Notes and the change in the Company’s stock price.

expense for the three months ended June 30, 2020 was $63,483, as compared with $282,814 for the three months ended June 30, 2019.

expense for the three months ended September 30, 2020 was $61,757, as compared with $283,709 for the three months ended September

Interest relates to the unconverted portion of convertible debt in the amount of $1,071,000 that was issued on March

14, 2018, and in the unconverted portion of convertible debt in the amount of $235,200 that was issued on November 30, 2018.

rate of 10% remains unchanged on the convertible notes issued on November 30, 2018, however the interest rate on the convertible

notes issued on March 14, 2018 has been modified to 15%.

Interest expense includes amortization of $15,336 of the value of warrants

issued with the convertible debt.

had net losses of $1,179,520 and $573,916 in the three-month periods ended June 30, 2020 and 2019.

of Operation for Six Months Ended June 30, 2020 as Compared to the Six Months Ended June 30, 2019

interest rate of 10% remains unchanged on the convertible notes issued on November 30, 2018, however the interest rate on the

convertible notes issued on March 14, 2018 has been modified to 15%.

Interest expense includes amortization of $15,336 of the

value of warrants issued with the convertible debt.

had net losses of $878,257 and $528,700 in the three-month periods ended September 30, 2020 and 2019.

of Operation for Nine Months Ended September 30, 2020 as Compared to the Nine Months Ended September 30, 2019

and cost of revenue

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of revenue for 2019 was $1,584,033 as compared to $1,142,391 in 2020.

Our gross profit was $512,105 (41%) and $1,285,750 (58%) for

2020 and 2019, respectively.

Our gross profit was lower for the six months ended June 30, 2020 due to product mix and lower margins

on our new 8oz bottle.

We anticipate that our gross profit percentage for the remainder of 2020 will be approximately 40%.

Our gross profit was $790,658 (41%) and $2,136,957 (57%)

for 2020 and 2019, respectively.

Our gross profit was lower for the nine months ended September 30, 2020 due to lower margins

on our new 8oz bottle and 5:1 juice concentrate, as well as some product write-downs.

We anticipate that our gross profit percentage

for the remainder of 2020 will be approximately 40% due to the composition of revenue from product sales at lower gross margins.

operations were primarily directed towards increasing sales and expanding our distribution network.

general and administrative expenses decreased $1,480,799 (39%) from $3,789,264 in the first half of 2019 to $2,308,465 in the

first half of 2020, with the improvement primarily driven by lower personnel expenses resulting from the realignment of our sales

The following is a breakdown of our general and administrative expenses for the six months ended June 30, 2020 and 2019:

June 30, 2020

June 30, 2019

Personnel costs

Stock based compensation/options

Legal and professional fees

Marketing and selling

Consulting fees

Director fees

Research and development

Shipping and Storage

Other expenses

general and administrative expenses decreased $2,165,849 (40%) from $5,450,522 in the first nine months of 2019 to $3,284,673

for the first nine months of 2020, with the improvement primarily driven by lower personnel expenses resulting from the realignment

of our sales force.

The following is a breakdown of our general and administrative expenses for the nine months ended September

30, 2020 and 2019:

September 30, 2020

September 30, 2019

$ (1,068,725 )

based compensation/options

and professional fees

and development

$ (2,165,849 )

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be

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Personnel cost decreased $1,068,725 (47%) from $2,286,415 in 2019, to $1,217,690 in 2020.

We had 24 full time employees,

1 part time employee and 1 consultant at the end of the second quarter of 2019, and we currently have 17 full time employees and

2 consultants.

We had 24 full time

employees, 1 part time employee and 1 consultant at the end of the third quarter of 2019, and we currently have 17 full time employees

and 2 consultants.

based compensation is used as an incentive to attract new employees and to compensate existing employees.

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includes stock issued and options granted to employees and non-employees.

Stock compensation for the six months ended June 30,

Stock compensation for the nine months ended September

30, 2020 was $240,216, a decrease of $98,467, or 29%, from the year ago period expense of $338,683.

The decrease is primarily due

to the reductions in our work force and the timing of equity grants.

The decrease is primarily

due to the reductions in our work force and the timing of equity grants.

The Company issues additional stock options to its employees

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Lower marketing and selling expenses

were due to changes that were made to certain sales commission agreement.

were due to changes that were made to certain sales commission agreements.

fees were $69,193 in 2020, as compared with $86,706 in 2019.

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These expenses relate to the services

performed by our Director of Manufacturing and Product Development, consultants supporting that employee, and certain commissioning

expenses at our contract manufacturing locations

performed by our Director of Manufacturing and Product Development, consultants supporting that employee, a write down of 8 oz

bottle product, and certain commissioning expenses at our contract manufacturing locations

and storage expense decreased $260,592 (42%) from $616,862 in 2019 to $356,270 in 2020.

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the balance of the year.

had operating losses of $2,100,008 and $2,860,565 for the six-month periods ended June 30, 2020 and 2019, respectively.

The improvement

of $760,557 or 27%, was primarily due to lower General & Administrative expenses, offset by lower revenues and decreased margins.

from derivative liability was a gain of $157,099 for the six months ended June 30, 2020, as compared to a gain of $392,734 for

the six months ended of June 30, 2019.

The decrease in the gain was due to the change in the Company’s stock price, modification

of the terms of the Series CN1, and the conversion of convertible notes.

Interest expense for the six months ended June 30, 2020

was $358,877 and was $645,887 for the six months ended June 30, 2019.

Interest relates to remaining principal outstanding for

convertible debt in the amount of $1,071,000 that was issued on March 14, 2018, and in the amount of $235,200 that closed during

December, 2018, which bear interest at 15% and 10%, respectively.

Interest expense includes amortization of $233,391 of the value

of warrants issued with the convertible debt.

had net losses of $1,922,586 and $3,421,178 in the six-month periods ended June 30, 2020 and 2019.

had operating losses of $2,936,392 and $3,810,354 for the nine-month periods ended September 30, 2020 and 2019, respectively.

The improvement of $873,962 or 23%, was primarily due to lower General & Administrative expenses, offset by lower revenues

and decreased margins.

from derivative liability was a gain of $176,983 for the nine months ended September 30, 2020, as compared to a gain of $1,097,532

for the nine months ended of September 30, 2019.

The decrease in the gain was due to the change in the Company’s stock price,

modification of the terms of the Series CN1, and the conversion of convertible notes.

Interest expense for the nine months ended

September 30, 2020 was $420,634 and was $929,596 for the nine months ended September 30, 2019.

Interest relates to remaining principal

outstanding for convertible debt in the amount of $1,071,000 that was issued on March 14, 2018, and in the amount of $235,200

that closed during December, 2018, which bear interest at 15% and 10%, respectively.

Interest expense includes amortization of

$248,727 of the value of warrants issued with the convertible debt.

had net losses of $2,800,843 and $3,949,878 in the nine-month periods ended September 30, 2020 and 2019.

and Capital Resources

the six months ended June 30, 2020, we used cash for operations of $1,930,045 and purchased equipment for $34,365.

six months ended June 30, 2019, we used $2,354,225 of cash for operations and purchased equipment for $319,157.

We raised cash

of $2,400,000 from the issuance of common stock and we raised cash from the exercise of warrants in the amount of $1,550,310.

the nine months ended September 30, 2020, we used cash for operations of $2,517,269 and purchased equipment for $40,873.

cash of $3,797,800 from the issuance of common stock.

During the nine months ended September 30, 2019, we used $3,191,642 of cash

for operations and purchased equipment for $418,456.

We raised cash of $2,400,000 from the issuance of common stock and we raised

cash from the exercise of warrants in the amount of $1,500,309.

have a history of operating losses and negative cash flow.

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Management has evaluated these conditions and concluded substantial doubt was mitigated due

to the issuance of stock and the debt that was restructured.

However, the Company cannot predict, with certainty, the outcome

of its actions to preserve liquidity, including the accuracy of its financial forecast, the ability to sustain the current trend

of cost cutting, the ability to raise additional capital or to extend the maturity date of the debt that is maturing in November

2021 and March 2022.

of June 30, 2020, we had $3,398,276 of cash and restricted cash on the balance sheet.

We have continued to significantly reduce

core operating expenses, reducing total General and Administrative Expense in the first six months of 2020 by $1,480,799,

or 39%, as compared with the first six months of 2019.

to measures taken by the Company to manage its cash burn rate, launch new products to offset the impact of COVID-19 on existing

products, reduce General & Administrative expenses and Cost of Goods Sold.

However, the Company cannot predict, with certainty,

the outcome of its actions to preserve liquidity, including the accuracy of its financial forecast, the ability to sustain the

current trend of cost cutting, the ability to raise additional capital or to extend the maturity date of the debt that is maturing

in November 2021 and March 2022.

of September 30, 2020, we had $2,743,523 of cash and restricted cash on the balance sheet.

We have continued to significantly

reduce core operating expenses, reducing total General and Administrative Expense in the first nine months of 2020 by $2,165,849,

or 40%, as compared with the first nine months of 2019.

The Company’s forecast for the next twelve months reflects a continuation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements