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Item 1A. Risk Factors

2022-03-10 compared with 2021-04-14 · 324 added, 393 removed, 71 unchanged (91% of the section changed)

investment in the Company’s securities involves significant risks, including the risks described below.

The risks included

below are not the only ones that the Company faces.

Additional risks presently unknown to us or that we currently consider immaterial

or unlikely to occur could also impair our operations.

If any of the risks or uncertainties described below or any such additional

risks and uncertainties actually occur, our business, prospects, financial condition or results of operations could be negatively

impact of COVID-19 on the Company is constantly evolving on a daily and weekly basis.

The direct impact to our operations had

begun to take effect at the close of the first quarter ended March 31, 2020.

Specifically, our business has been impacted by dining

bans targeted at restaurants to reduce the size of public gatherings.

We have noted restaurant chains have closed operations and

furloughed employees which would preclude our single serve products from being served at those establishments for a number of

Furthermore, many school districts have closed regular attendance which could conceivably last to the end of the school

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

We are beginning to experience a disruption

in the supply chain for manufacturing our products due to COVID-19.

The developments surrounding COVID-19 remain fluid and dynamic,

and consequently, will require the Company to continue to monitor news headlines from government and health officials, as well

as, the business community.

investment in the Company’s securities involves significant risks, including the risks described below.

The risks included below

are not the only ones that the Company faces.

Additional risks presently unknown to us or that we currently consider immaterial or unlikely

to occur could also impair our operations.

If any of the risks or uncertainties described below or any such additional risks and uncertainties

actually occur, our business, prospects, financial condition or results of operations could be negatively affected.

impact of COVID-19 on the Company is constantly evolving.

The direct impact to our operations had begun to take effect at the close of

the first quarter ended March 31, 2020.

Specifically, our business was impacted by dining bans targeted at restaurants to reduce the

size of public gatherings.

Such bans precluded our single serve products from being served at those establishments for a number of weeks,

and in some instances, resulted in abandoned product launches.

Furthermore, many school districts closed regular attendance for a period

of time thereby disrupting sales of product into that channel.

More recently, we have experienced a disruption in the supply chain

for manufacturing our products due to COVID-19.

The developments surrounding COVID-19 remain fluid and dynamic, and consequently, will

require the Company to continue to monitor news headlines from government and health officials, as well as, the business community.

Related to Our Business

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have a history of operating losses and may not achieve or sustain profitability.

These operating losses have been generated while

we market to potential customers.

These operating losses have been generated while we

market to potential customers.

We cannot guarantee that we will become profitable.

Even if we achieve profitability, given

the competitive and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability

and our failure to do so would adversely affect the Company’s business, including our ability to raise additional funds.

we continue to suffer losses from operations, our working capital may be insufficient to support our ability to expand our business

operations as rapidly as we would deem necessary at any time, unless we are able to obtain additional financing.

no assurance that we will be able to obtain such financing on acceptable terms, or at all.

If adequate funds are not available

or are not available on acceptable terms, we may not be able to pursue our business objectives and would be required to reduce

our level of operations, including reducing infrastructure, promotions, sales and marketing programs, personnel and other operating

These events could adversely affect our business, results of operations and financial condition.

If adequate funds are

not available or if they are not available on acceptable terms, our ability to fund the growth of our operations, take advantage

of opportunities, develop products or services or otherwise respond to competitive pressures, could be significantly limited.

Even if we achieve profitability, given the competitive

and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability and our failure to do

so would adversely affect the Company’s business, including our ability to raise additional funds.

we continue to suffer losses from operations, our working capital may be insufficient to support our ability to expand our business operations

as rapidly as we would deem necessary at any time, unless we are able to obtain additional financing.

There can be no assurance that

we will be able to obtain such financing on acceptable terms, or at all.

If adequate funds are not available or are not available on

acceptable terms, we may not be able to pursue our business objectives and would be required to reduce our level of operations, including

reducing infrastructure, promotions, sales and marketing programs, personnel and other operating expenses.

These events could adversely

affect our business, results of operations and financial condition.

If adequate funds are not available or if they are not available

on acceptable terms, our ability to fund the growth of our operations, take advantage of opportunities, develop products or services

or otherwise respond to competitive pressures, could be significantly limited.

may need additional financing in the future, which may not be available when needed or may be costly and dilutive.

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The amount of additional capital we may require,

the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including

our strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing.

Additionally, the amount of capital required will depend on our ability to meet our case sales goals and otherwise successfully

execute our operating plan.

We believe it is imperative to meet these sales objectives in order to lessen our reliance on external

financing in the future.

Although we believe various debt and equity financing alternatives will be available to us to support

our working capital needs, financing arrangements on acceptable terms may not be available to us when needed.

Additionally, these

alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing shareholders.

Any such financing alternatives may not provide us with sufficient funds to meet our long-term capital requirements.

If necessary,

we may explore strategic transactions that we consider to be in the best interest of the Company and our shareholders, which may

include, without limitation, public or private offerings of debt or equity securities, and other strategic alternatives;

these options may not ultimately be available or feasible.

worsening of economic conditions or a decrease in consumer spending may adversely impact our ability to implement our business

success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions

and the availability of discretionary income.

There is no certainty regarding economic conditions in the United States, and credit

and financial markets and confidence in economic conditions could deteriorate at any time.

Accordingly, we may experience declines

in revenue during economic turmoil or during periods of uncertainty.

Any material decline in the amount of discretionary spending,

leading cost-conscious consumers to be more selective in restaurants visited, could have a material adverse effect on our revenue,

results of operations, business and financial condition.

the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our

strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing.

Additionally,

the amount of capital required will depend on our ability to meet our case sales goals and otherwise successfully execute our operating

We believe it is imperative to meet these sales objectives in order to lessen our reliance on external financing in the future.

Although we believe various debt and equity financing alternatives will be available to us to support our working capital needs, financing

arrangements on acceptable terms may not be available to us when needed.

Additionally, these alternatives may require significant cash

payments for interest and other costs or could be highly dilutive to our existing shareholders.

Any such financing alternatives may not

provide us with sufficient funds to meet our long-term capital requirements.

If necessary, we may explore strategic transactions that

we consider to be in the best interest of the Company and our shareholders, which may include, without limitation, public or private

offerings of debt or equity securities, and other strategic alternatives;

however, these options may not ultimately be available or feasible.

worsening of economic conditions or a decrease in consumer spending may adversely impact our ability to implement our business strategy.

success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the

availability of discretionary income.

There is no certainty regarding economic conditions in the United States, and credit and financial

markets and confidence in economic conditions could deteriorate at any time.

Accordingly, we may experience declines in revenue during

economic turmoil or during periods of uncertainty.

Any material decline in the amount of discretionary spending, leading cost-conscious

consumers to be more selective in restaurants visited, could have a material adverse effect on our revenue, results of operations, business

and financial condition.

challenges of competing with the many food services businesses may result in reductions in our revenue and operating margins.

compete with many well-established companies, food service and otherwise, on the basis of taste, quality and price of product

offered, customer service, atmosphere, location and overall guest experience.

Our success depends, in part, upon the popularity

of our products and our ability to develop new menu items that appeal to consumers across all four day parts.

Shifts in consumer

preferences away from our products, our inability to develop new menu items that appeal to consumers across all day parts, or

changes in our menu that eliminate items popular with some consumers could harm our business.

We compete with other smoothie and

juice bar retailers, specialty coffee retailers, yogurt and ice cream shops, bagel shops, fast-food restaurants, delicatessens,

cafés, take-out food service companies, supermarkets and convenience stores.

Our competitors change with each of the four

day parts, ranging from coffee bars and bakery cafés to casual dining chains.

Many of our competitors or potential competitors

have substantially greater financial and other resources than we do, which may allow them to react to changes in the market quicker

In addition, aggressive pricing by our competitors or the entrance of new competitors into our markets, could reduce

our revenue and operating margins.

We also compete with other employers in our markets for workers and may become subject to higher

labor costs as a result of such competition.

compete with many well-established companies, food service and otherwise, on the basis of taste, quality and price of product offered,

customer service, atmosphere, location and overall guest experience.

Our success depends, in part, upon the popularity of our products

and our ability to develop new menu items that appeal to consumers across all four day parts.

Shifts in consumer preferences away from

our products, our inability to develop new menu items that appeal to consumers across all day parts, or changes in our menu that eliminate

items popular with some consumers could harm our business.

We compete with other smoothie and juice bar retailers, specialty coffee retailers,

yogurt and ice cream shops, bagel shops, fast-food restaurants, delicatessens, cafés, take-out food service companies, supermarkets

and convenience stores.

Our competitors change with each of the four day parts, ranging from coffee bars and bakery cafés to casual

dining chains.

Many of our competitors or potential competitors have substantially greater financial and other resources than we do,

which may allow them to react to changes in the market quicker than we can.

In addition, aggressive pricing by our competitors or the

entrance of new competitors into our markets, could reduce our revenue and operating margins.

We also compete with other employers in

our markets for workers and may become subject to higher labor costs as a result of such competition.

recent global coronavirus outbreak could harm our business and results of operations.

March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic.

This contagious disease outbreak, which

has continued to spread, and any related adverse public health developments, has adversely affected workforces, customers, economies,

and financial markets globally, potentially leading to an economic downturn.

It has also disrupted the normal operations of many

businesses, including ours.

This outbreak could decrease spending, adversely affect demand for our product and harm our business

This contagious disease outbreak, which has

continued to spread, and any related adverse public health developments, has adversely affected workforces, customers, economies, and

financial markets globally, potentially leading to an economic downturn.

It has also disrupted the normal operations of many businesses,

including ours.

This outbreak could decrease spending, adversely affect demand for our product and harm our business and results of operations.

It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business

or results of operations at this time.

within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition

and results of operations.

It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak

and its effects on our business or results of operations at this time.

within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial

condition and results of operations.

ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to produce,

transport, distribute and sell products is critical to our success.

ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to produce, transport,

distribute and sell products is critical to our success.

or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion,

terrorism, pandemics such as COVD-19 and influenza, labor strikes or other reasons, could impair the manufacture, distribution

and sale of our products.

terrorism, pandemics such as COVD-19 and influenza, labor strikes or other reasons, could impair the manufacture, distribution and sale

of our products.

Many of these events are outside of our control.

Failure to take adequate steps to protect against or

mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely

affect our business, financial condition and results of operations.

Failure to take adequate steps to protect against or mitigate the likelihood

or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial

condition and results of operations.

addition, our reliance on a limited number of manufacturers and suppliers could further increase this risk.

Most of our suppliers

and manufacturers produce similar products for other companies, and our products may represent a small portion of their businesses.

Further, it takes a newly engaged manufacturer typically up to nine months of retrofitting/ preparation before it can begin producing

our products.

Most of our suppliers and

manufacturers produce similar products for other companies, and our products may represent a small portion of their businesses.

it takes a newly engaged manufacturer typically up to nine months of retrofitting/ preparation before it can begin producing our products.

We have contracts in place to produce sufficient units to meet projected demand;

however, if one of our manufactures

fails to perform, we would be faced with a significant interruption in our supply chain.

If one of our manufacturers or suppliers

fails to perform or deliver products, for any reason, our sales and results of operations could be adversely affected.

if we are unable to meet our customers’

demands due to a disruption in our supply chain, we may lose that customer which

could adversely affect our business, financial condition and results of operations.

dependence on independent contract manufacturers could make management of our manufacturing and distribution efforts inefficient

or unprofitable.

however, if one of our manufacturers fails to

perform, we would be faced with a significant interruption in our supply chain.

If one of our manufacturers or suppliers fails to perform

or deliver products, for any reason, our sales and results of operations could be adversely affected.

Furthermore, if we are unable to

meet our customers’ demands due to a disruption in our supply chain, we may lose that customer which could adversely affect our

business, financial condition and results of operations.

dependence on independent contract manufacturers could make management of our manufacturing and distribution efforts inefficient or unprofitable.

are expected to arrange for our contract manufacturing needs sufficiently in advance of anticipated requirements, which is customary

in the contract manufacturing industry for comparably sized companies.

Based on the cost structure and forecasted demand for the

particular geographic area where our contract manufacturers are located, we continually evaluate which of our contract manufacturers

To the extent demand for our products exceeds available inventory or the production capacity of our contract manufacturing

arrangements, or orders are not submitted on a timely basis, we will be unable to fulfill distributor orders on demand.

we may produce more product inventory than warranted by the actual demand for it, resulting in higher storage costs and the potential

risk of inventory spoilage.

Our failure to accurately predict and manage our contract manufacturing requirements and our inventory

levels may impair relationships with our independent distributors and key accounts, which, in turn, would likely have a material

adverse effect on our ability to maintain effective relationships with those distributors and key accounts.

Based on the cost structure and forecasted demand for the particular

geographic area where our contract manufacturers are located, we continually evaluate which of our contract manufacturers to use.

the extent demand for our products exceeds available inventory or the production capacity of our contract manufacturing arrangements,

or orders are not submitted on a timely basis, we will be unable to fulfill distributor orders on demand.

Conversely, we may produce

more product inventory than warranted by the actual demand for it, resulting in higher storage costs and the potential risk of inventory

Our failure to accurately predict and manage our contract manufacturing requirements and our inventory levels may impair relationships

with our independent distributors and key accounts, which, in turn, would likely have a material adverse effect on our ability to maintain

effective relationships with those distributors and key accounts.

we do not adequately manage our inventory levels, our operating results could be adversely affected.

need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis.

Our inventory supply

depends on our ability to correctly estimate demand for our products.

Our ability to estimate demand for our products is imprecise,

particularly for new products, seasonal promotions and new markets.

If we materially underestimate demand for our products or

are unable to maintain sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis.

we overestimate distributor or retailer demand for our products, we may end up with too much inventory, resulting in higher storage

costs, increased trade spending and the risk of inventory spoilage.

If we fail to manage our inventory to meet demand, we could

damage our relationships with our distributors and retailers and could delay or lose sales opportunities, which would unfavorably

impact our future sales and adversely affect our operating results.

In addition, if the inventory of our products held by our

distributors and retailers is too high, they will not place orders for additional products, which would also unfavorably impact

our sales and adversely affect our operating results.

Our inventory supply depends

on our ability to correctly estimate demand for our products.

Our ability to estimate demand for our products is imprecise, particularly

for new products, seasonal promotions and new markets.

If we materially underestimate demand for our products or are unable to maintain

sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis.

If we overestimate distributor or

retailer demand for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spending

and the risk of inventory spoilage.

If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors

and retailers and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating

In addition, if the inventory of our products held by our distributors and retailers is too high, they will not place orders

for additional products, which would also unfavorably impact our sales and adversely affect our operating results.

in costs of packaging, ingredients and contract manufacturing tolling fees may have an adverse impact on our gross margin.

costs such as paper and aluminum cans have experienced industry wide price increases in the past and there is always the risk

that the company’s co-packers increase their toll rates based on increases in their fixed and variable costs.

If the Company

is unable to pass on these costs, the gross margin will be significantly impacted.

costs such as paper and aluminum cans have experienced industry wide price increases in the past and there is always the risk that the

Company’s co-packers increase their toll rates based on increases in their fixed and variable costs.

If the Company is unable

to pass on these costs, the gross margin will be significantly impacted.

or legal proceedings could expose us to significant liabilities and damage our reputation.

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distraction of management attention away from our business operations.

We evaluate litigation claims and legal proceedings to

assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses.

Based on these assessments

and estimates, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate.

These assessments

and estimates are based on the information available to management at the time and involve a significant amount of management

Actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates.

policies and procedures require strict compliance by our employees and agents with all U.S.

and local laws and regulations applicable

to our business operations, including those prohibiting improper payments to government officials.

Nonetheless, our policies and

procedures may not ensure full compliance by our employees and agents with all applicable legal requirements.

Improper conduct

by our employees or agents could damage our reputation or lead to litigation or legal proceedings that could result in civil or

criminal penalties, including substantial monetary fines, as well as disgorgement of profits.

We evaluate litigation claims and legal proceedings to assess

the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses.

Based on these assessments and estimates,

we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate.

These assessments and estimates

are based on the information available to management at the time and involve a significant amount of management judgment.

Actual outcomes

or losses may differ materially from those envisioned by our current assessments and estimates.

Our policies and procedures require strict

compliance by our employees and agents with all U.S.

and local laws and regulations applicable to our business operations, including

those prohibiting improper payments to government officials.

Nonetheless, our policies and procedures may not ensure full compliance

by our employees and agents with all applicable legal requirements.

Improper conduct by our employees or agents could damage our reputation

or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines, as

well as disgorgement of profits.

have identified a material weakness in our disclosure controls and procedures and internal control over financial reporting.

not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial

reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial

obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common

If not remediated,

our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could

result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which

could have a material adverse effect on our financial condition and the trading price of our common stock.

effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce

reliable financial statements.

As discussed in Item 9A –

“Controls and Procedures”

of this Form 10-K, we have

re-evaluated our internal control over financial reporting and our disclosure controls and procedures and concluded that they

were not effective as of December 31, 2020.

material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such

that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be

prevented or detected on a timely basis.

As discussed in Item 9A – “Controls and Procedures” of this Form 10-K, we have re-evaluated

our internal control over financial reporting and our disclosure controls and procedures and concluded that they were not effective as

of December 31, 2021.

material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that

there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or

detected on a timely basis.

Management has concluded that there is a material weakness due to the control environment.

The control environment is impacted due to the company’s inadequate segregation of duties.

The control environment

is impacted due to the Company’s inadequate segregation of duties.

Company is committed to remediating its material weaknesses as promptly as possible.

Implementation of the Company’s remediation

plans has commenced and is being overseen by the audit committee.

However, there can be no assurance as to when these material

weaknesses will be remediated or that additional material weaknesses will not arise in the future.

Even effective internal control

can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.

to remediate the material weaknesses or the development of new material weaknesses in our internal control over financial reporting,

could result in material misstatements in our financial statements, which in turn could

have a material adverse effect on our financial condition and the trading price of our common stock and we could fail to

meet our financial reporting obligations.

However, there can be no assurance as to when these material weaknesses

will be remediated or that additional material weaknesses will not arise in the future.

Even effective internal control can provide only

reasonable assurance with respect to the preparation and fair presentation of financial statements.

Any failure to remediate the material

weaknesses or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements

in our financial statements, which in turn could have a material adverse effect on our financial

condition and the trading price of our common stock and we could fail to meet our financial reporting obligations.

in various food and supply costs, particularly fruit and dairy, could adversely affect our operating results.

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factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits.

addition, the prices of fruit and dairy, which are the main ingredients in our products, can be highly volatile.

the quality we seek tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase.

in pricing of any fruit that we are going to use in our products could have a significant adverse effect on our profitability.

We cannot assure you that we will be able to secure our fruit supply.

business depends substantially on the continuing efforts of our senior management and other key personnel, and our business may

be severely disrupted if we lose their services.

the prices of fruit and dairy, which are the main ingredients in our products, can be highly volatile.

The fruit of the quality we seek

tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase.

An increase in pricing of any fruit

that we are going to use in our products could have a significant adverse effect on our profitability.

We cannot assure you that we will

be able to secure our fruit supply.

business depends substantially on the continuing efforts of our senior management and other key personnel, and our business may be severely

disrupted if we lose their services.

future success heavily depends on the continued service of our senior management and other key employees.

If one or more of our

senior executives is unable or unwilling to continue to work for us in his present position, we may have to spend a considerable

amount of time and resources searching, recruiting, and integrating a replacement into our operations, which would substantially

divert management’s attention from our business and severely disrupt our business.

This may also adversely affect our ability

to execute our business strategy.

senior management’s limited experience managing a publicly traded company may divert management’s attention from operations

If one or more of our senior

executives is unable or unwilling to continue to work for us in his present position, we may have to spend a considerable amount of time

and resources searching, recruiting, and integrating a replacement into our operations, which would substantially divert management’s

attention from our business and severely disrupt our business.

This may also adversely affect our ability to execute our business strategy.

senior management’s limited experience managing a publicly traded company may divert management’s attention from operations

and harm our business.

senior management team has relatively limited experience managing a publicly traded company and complying with federal securities

laws, including compliance with recently adopted disclosure requirements on a timely basis.

Our management will be required to

design and implement appropriate programs and policies in responding to increased legal, regulatory compliance and reporting requirements,

and any failure to do so could lead to the imposition of fines and penalties and harm our business.

senior management team has relatively limited experience managing a publicly traded company and complying with federal securities laws,

including compliance with recently adopted disclosure requirements on a timely basis.

Our management will be required to design and implement

appropriate programs and policies in responding to increased legal, regulatory compliance and reporting requirements, and any failure

to do so could lead to the imposition of fines and penalties and harm our business.

may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation

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success depends to a significant degree upon our ability to attract, retain and motivate skilled and qualified personnel.

become a more mature company in the future, we may find recruiting and retention efforts more challenging.

If we do not succeed

in attracting, hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to

grow effectively.

The loss of any key employee, including members of our senior management team, and our inability to attract

highly skilled personnel with sufficient experience in our industries could harm our business.

a more mature company in the future, we may find recruiting and retention efforts more challenging.

If we do not succeed in attracting,

hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively.

loss of any key employee, including members of our senior management team, and our inability to attract highly skilled personnel with

sufficient experience in our industries could harm our business.

liability exposure may expose us to significant liability.

may face an inherent business risk of exposure to product liability and other claims and lawsuits in the event that the development

or use of our technology or prospective products is alleged to have resulted in adverse effects.

may face an inherent business risk of exposure to product liability and other claims and lawsuits in the event that the development or

use of our technology or prospective products is alleged to have resulted in adverse effects.

We may not be able to avoid significant

liability exposure.

Although we believe our insurance coverage to be adequate, we may not have sufficient insurance coverage,

and we may not be able to obtain sufficient coverage at a reasonable cost.

An inability to obtain product liability insurance

at acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization

of our products.

Although we believe our insurance coverage to be adequate, we may not have sufficient insurance coverage, and we

may not be able to obtain sufficient coverage at a reasonable cost.

An inability to obtain product liability insurance at acceptable

cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our products.

A product liability claim could hurt our financial performance.

Even if we ultimately avoid financial liability

for this type of exposure, we may incur significant costs in defending ourselves that could hurt our financial performance and

Even if we ultimately avoid financial liability for this type of exposure,

we may incur significant costs in defending ourselves that could hurt our financial performance and condition.

inability to protect our intellectual property rights may force us to incur unanticipated costs.

success will depend, in part, on our ability to obtain and maintain protection in the United States and internationally for certain

intellectual property incorporated into our products.

Our intellectual property rights may be challenged, narrowed, invalidated

or circumvented, which could limit our ability to prevent competitors from marketing similar solutions that limit the effectiveness

of our patent protection and force us to incur unanticipated costs.

In addition, existing laws of some countries in which we may

provide services or solutions may offer only limited protection of our intellectual property rights.

products may infringe the intellectual property rights of third parties, and third parties may infringe our proprietary rights,

either of which may result in lawsuits, distraction of management and the impairment of our business.

the number of patents, copyrights, trademarks and other intellectual property rights in our industry increases, products based

on our technology may increasingly become the subject of infringement claims.

Third parties could assert infringement claims against

us in the future.

Infringement claims with or without merit could be time consuming, result in costly litigation, cause product

shipment delays or require us to enter into royalty or licensing agreements.

Royalty or licensing agreements, if required, might

not be available on terms acceptable to us, or at all.

We may initiate claims or litigation against third parties for infringement

of our proprietary rights or to establish the validity of our proprietary rights.

Litigation to determine the validity of any

claims, whether or not the litigation is resolved in our favor, could result in significant expense to us and divert the efforts

of our technical and management personnel from productive tasks.

If there is an adverse ruling against us in any litigation, we

may be required to pay substantial damages, discontinue the use and sale of infringing products and expend significant resources

to develop non-infringing technology or obtain licenses to infringing technology.

Our failure to develop or license a substitute

technology could prevent us from selling our products.

securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our

share price and trading volume could decline.

trading market for our common stock may be impacted, in part, by the research and reports that securities or industry analysts

publish about our business or us.

There can be no assurance that analysts will cover us, continue to cover us or provide favorable

success will depend, in part, on our ability to obtain and maintain protection in the United States and internationally for certain intellectual

property incorporated into our products.

Our intellectual property rights may be challenged, narrowed, invalidated or circumvented, which

could limit our ability to prevent competitors from marketing similar solutions that limit the effectiveness of our patent protection

and force us to incur unanticipated costs.

In addition, existing laws of some countries in which we may provide services or solutions

may offer only limited protection of our intellectual property rights.

products may infringe the intellectual property rights of third parties, and third parties may infringe our proprietary rights, either

of which may result in lawsuits, distraction of management and the impairment of our business.

the number of patents, copyrights, trademarks and other intellectual property rights in our industry increases, products based on our

technology may increasingly become the subject of infringement claims.

Third parties could assert infringement claims against us in the

Infringement claims with or without merit could be time consuming, result in costly litigation, cause product shipment delays

or require us to enter into royalty or licensing agreements.

Royalty or licensing agreements, if required, might not be available on

terms acceptable to us, or at all.

We may initiate claims or litigation against third parties for infringement of our proprietary rights

or to establish the validity of our proprietary rights.

Litigation to determine the validity of any claims, whether or not the litigation

is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel

from productive tasks.

If there is an adverse ruling against us in any litigation, we may be required to pay substantial damages, discontinue

the use and sale of infringing products and expend significant resources to develop non-infringing technology or obtain licenses to infringing

Our failure to develop or license a substitute technology could prevent us from selling our products.

securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our share

price and trading volume could decline.

trading market for our common stock may be impacted, in part, by the research and reports that securities or industry analysts publish

about our business or us.

There can be no assurance that analysts will cover us, continue to cover us or provide favorable coverage.

If one or more analysts downgrade our stock or change their opinion of our stock, our share price may decline.

if one or more analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in

the financial markets, which could cause our share price or trading volume to decline.

will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote

substantial time to compliance initiatives and corporate governance practices.

In addition, if one or

more analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets,

which could cause our share price or trading volume to decline.

will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial

time to compliance initiatives and corporate governance practices.

a public company, we will continue to incur significant legal, accounting and other expenses.

The Sarbanes-Oxley Act of 2002,

the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations impose various

requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate

governance practices.

Our management and other personnel will need to continue to devote a substantial amount of time to these

compliance initiatives.

Moreover, these rules and regulations will increase our legal and financial compliance costs and make

some activities more time-consuming and costly.

cannot predict or estimate the amount of additional costs we may incur to continue to operate as a public company, nor can we

predict the timing of such costs.

These rules and regulations are often subject to varying interpretations, in many cases due

to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided

by regulatory and governing bodies which could result in continuing uncertainty regarding compliance matters and higher costs

necessitated by ongoing revisions to disclosure and governance practices.

The Sarbanes-Oxley Act of 2002, the Dodd-Frank

Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations impose various requirements on public

companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

Our management and other personnel will need to continue to devote a substantial amount of time to these compliance initiatives.

these rules and regulations will increase our legal and financial compliance costs and make some activities more time-consuming and costly.

cannot predict or estimate the amount of additional costs we may incur to continue to operate as a public company, nor can we predict

the timing of such costs.

These rules and regulations are often subject to varying interpretations, in many cases due to their lack of

specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing

bodies which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to

disclosure and governance practices.

to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States

companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining

Some foreign companies, including some that may compete with our Company, may not be subject to these prohibitions.

Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in countries in which

we conduct our business.

However, our employees or other agents may engage in conduct for which we might be held responsible.

If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences

that may have a material adverse effect on our business, financial condition and results of operations.

is difficult to predict the timing and amount of our sales because our distributors and national accounts may not be required

to place minimum orders with us.

a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies

from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business.

companies, including some that may compete with our Company, may not be subject to these prohibitions.

Corruption, extortion, bribery,

pay-offs, theft and other fraudulent practices may occur from time-to-time in countries in which we conduct our business.

employees or other agents may engage in conduct for which we might be held responsible.

If our employees or other agents are found to

have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our

business, financial condition and results of operations.

is difficult to predict the timing and amount of our sales because our distributors and national accounts may not be required to place

minimum orders with us.

distributors are not required to place minimum monthly or annual orders for our products.

Accordingly, we cannot predict the timing

or quantity of purchases by any of our independent distributors or whether any of our distributors will continue to purchase products

from us in the same frequencies and volumes as they may have done in the past.

Additionally, our larger distributors and partners

may make orders that are larger than we have historically been required to fill.

Shortages in inventory levels, supply of raw

materials or other key supplies could negatively affect us.

we do not adequately manage our inventory levels, our operating results could be adversely affected.

need to maintain adequate inventory levels to be able to deliver products on a timely basis.

Our inventory supply depends on our

ability to correctly estimate demand for our products.

Our ability to estimate demand for our products is imprecise, particularly

for new products, seasonal promotions and new markets.

If we materially underestimate demand for our products or are unable to

maintain sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis.

If we overestimate

retailer demand for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spend

and the risk of obsolete inventory.

If we fail to manage our inventory to meet demand, we could damage our relationships with

our retailers and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect

our operating results.

Accordingly, we cannot predict the timing or

quantity of purchases by any of our independent distributors or whether any of our distributors will continue to purchase products from

us in the same frequencies and volumes as they may have done in the past.

Additionally, our larger distributors and partners may make

orders that are larger than we have historically been required to fill.

Shortages in inventory levels, supply of raw materials or other

key supplies could negatively affect us.

Related to Ownership of Our Common Stock

common stock is quoted on the OTCQB, which may have an unfavorable impact on our stock price and liquidity.

common stock is quoted on the OTCQB, which is a significantly more limited trading market than the New York Stock Exchange, or

the NASDAQ Stock Market.

The quotation of the Company’s shares on the OTCQB may result in a less liquid market available

for existing and potential shareholders to trade shares of our common stock, could depress the trading price of our common stock

and could have a long-term adverse impact on our ability to raise capital in the future.

is limited liquidity on the OTCQB, which may result in stock price volatility and inaccurate quote information.

fewer shares of a security are being traded on the OTCQB, price volatility may increase and price movement may outpace the ability

to deliver accurate quote information.

Due to lower trading volumes in shares of our common stock, there may be a lower likelihood

of one’s orders for shares of our common stock being executed, and current prices may differ significantly from the price

one was quoted at the time of one’s order entry.

we are unable to adequately fund our operations, we may be forced to voluntarily file for deregistration of our common stock with

with the periodic reporting requirements required by the SEC consumes a considerable amount of both internal, as well external,

resources and represents a significant cost for us.

If we are unable to continue to devote adequate funding and the resources

needed to maintain such compliance, while continuing our operations, we could be forced to deregister with the SEC.

deregistration process, our common stock would only be tradable on the “Pink Sheets”

and could suffer a decrease in

or absence of liquidity.

we became public by means of a “reverse merger”, we may not be able to attract the attention of major brokerage firms.

risks may exist since we became public through a “reverse merger”.

Securities analysts of major brokerage firms may

not provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock.

cannot assure you that brokerage firms will want to conduct any secondary offerings on behalf of our Company in the future.

sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds

in future securities offerings.

sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur,

could adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds

in the future through a public offering of our securities.

common stock is thinly traded, so you may be unable to sell at or near asking prices or at all if you need to sell your shares

to raise money or otherwise desire to liquidate your shares.

the Company’s common stock is quoted in the OTCQB and future trading volume may be limited by the fact that many major institutional

investment funds, including mutual funds, as well as individual investors follow a policy of not investing in OTCQB stocks and

certain major brokerage firms restrict their brokers from recommending OTCQB stocks because they are considered speculative, volatile

and thinly traded.

The OTCQB market is an inter-dealer market much less regulated than the major exchanges and our common stock

is subject to abuses, volatility and shorting.

Thus, there is currently no broadly followed and established trading market for

the Company’s common stock.

An established trading market may never develop or be maintained.

Active trading markets generally

result in lower price volatility and more efficient execution of buy and sell orders.

Absence of an active trading market reduces

the liquidity of the shares traded there.

trading volume of our common stock has been and may continue to be limited and sporadic.

As a result of such trading activity,

the quoted price for the Company’s common stock on the OTCQB may not necessarily be a reliable indicator of its fair market

Further, if we cease to be quoted, holders would find it more difficult to dispose of our common stock or to obtain accurate

quotations as to the market value of the Company’s common stock and as a result, the market value of our common stock likely

would decline.

we are unable to adequately fund our operations, we may be forced to voluntarily file for deregistration of our common stock with the

with the periodic reporting requirements required by the SEC consumes a considerable amount of both internal, as well external, resources

and represents a significant cost for us.

If we are unable to continue to devote adequate funding and the resources needed to maintain

such compliance, while continuing our operations, we could be forced to deregister with the SEC.

After the deregistration process, our

common stock would only be tradable on the “Pink Sheets” and could suffer a decrease in or absence of liquidity.

we became public by means of a “reverse merger”, we may not be able to attract the attention of major brokerage firms.

risks may exist since we became public through a “reverse merger”.

Securities analysts of major brokerage firms may not provide

coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock.

We cannot assure you

that brokerage firms will want to conduct any secondary offerings on behalf of our Company in the future.

sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds in future

securities offerings.

sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could

adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds in the future

through a public offering of our securities.

common stock is subject to price volatility unrelated to our operations.

market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our

ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in

our common stock, changes in general conditions in the economy and the financial markets or other developments affecting the Company’s

competitors or the Company itself.

In addition, the OTCQB is subject to extreme price and volume fluctuations in general.

volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their

operating performance and could have the same effect on our common stock.

are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

common stock is currently quoted on the OTCQB.

Our common stock is subject to the requirements of Rule 15(g)-9, promulgated under

the Securities Exchange Act as long as the price of our common stock is below $5.00 per share.

Under such rule, broker-dealers

who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special

sales practice requirements, including a requirement that they make an individualized written suitability determination for the

purchaser and receive the purchaser’s consent prior to the transaction.

The Securities Enforcement Remedies and Penny Stock

Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.

Generally, the Commission defines a penny stock as any equity security not traded on a national exchange that has a market price

of less than $5.00 per share.

The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure

schedule explaining the penny stock market and the risks associated with it.

Such requirements could severely limit the market

liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.

we do not intend to pay dividends, shareholders will benefit from an investment in our common stock only if it appreciates in

market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability

to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock,

changes in general conditions in the economy and the financial markets or other developments affecting the Company’s competitors

or the Company itself.

we do not intend to pay dividends, shareholders will benefit from an investment in our common stock only if it appreciates in value.

have never declared or paid any cash dividends on our preferred stock or common stock.

For the foreseeable future, it is expected

that earnings, if any, generated from our operations will be used to finance the growth of our business, and that no dividends

will be paid to holders of the Company’s common stock.

As a result, the success of an investment in our common stock will

depend upon any future appreciation in its value.

For the foreseeable future, it is expected that

earnings, if any, generated from our operations will be used to finance the growth of our business, and that no dividends will be paid

to holders of the Company’s common stock.

As a result, the success of an investment in our common stock will depend upon any future

appreciation in its value.

There can be no guarantee that our common stock will appreciate in value.

5 unchanged sentences

announcements

by us or our competitors of significant acquisitions, strategic partnerships, joint ventures

or capital commitments;

by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

of new accounting standards affecting our industry;

or departures of key personnel;

● introduction

of new products by us or our competitors;

2 unchanged sentences

stock market is subject to significant price and volume fluctuations.

In the past, following periods of volatility in the market

price of a company’s securities, securities class action litigation has often been initiated against such a company.

initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention

and Company resources, which could harm our business and financial condition.

may experience dilution of their ownership interests because of the future issuance of additional shares of our common stock.

In the past, following periods of volatility in the market price

of a company’s securities, securities class action litigation has often been initiated against such a company.

Litigation initiated

against us, whether or not successful, could result in substantial costs and diversion of our management’s attention and Company

resources, which could harm our business and financial condition.

may experience dilution of their ownership interests because of future issuances of additional shares of our common stock.

intend to continue to seek financing through the issuance of equity or convertible securities to fund our operations.

1 unchanged sentence

we may also issue additional equity securities resulting in the dilution of the ownership interests of our present shareholders.

We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common

stock in connection with hiring or retaining employees, future acquisitions or for other business purposes.

The future issuance

of any such additional shares of common stock will result in dilution to our shareholders and may create downward pressure on

the trading price of our common stock.

in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to

our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in

connection with hiring or retaining employees, future acquisitions or for other business purposes.

The future issuance of any such additional

shares of common stock will result in dilution to our shareholders and may create downward pressure on the trading price of our common

in our Company charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our

stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control

of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium

for your shares.

These provisions could also limit the price that investors might be willing to pay in the future for shares of

our common stock, thereby depressing the market price of our common stock.

of our Company that stockholders may consider favorable, including transactions in which they might otherwise receive a

premium for their shares.

These provisions could also limit the price that investors might be willing to pay in the future for

shares of our common stock, thereby depressing the market price of our common stock.

In addition, because our board of directors is responsible

for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders

to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General

Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining

with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding

voting stock, unless the merger or combination is approved in a prescribed manner.

for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace

or remove our current management by making it more difficult for stockholders to replace members of our board of directors.

because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which

prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three

years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger

or combination is approved in a prescribed manner.

Unresolved Staff Comments.

principal executive offices are located at 3600 Wilshire Boulevard Suite 1720, Los Angeles, 90010.

Beginning in April 2019, we

leased this office space pursuant to a direct lease for $6,457 per month through March 31, 2023.

Beginning in April 2019, we leased

this office space pursuant to a direct lease for approximately $80,000 annually through March 31, 2023.

Legal Proceedings.

the Company nor its subsidiaries are party to or have property that is the subject of any material pending legal proceedings.

be subject to ordinary legal proceedings incidental to our business from time to time that are not required to be disclosed under this

Mine Safety Disclosures.

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-K

Item 1A. Risk Factors