What changed in this filing

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Item 1A. Risk Factors

2025-03-27 compared with 2024-03-22 · 109 added, 166 removed, 335 unchanged (45% of the section changed)

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

with a manufacturer have resulted in a significant loss for 2022 and 2023, as well as other negative impacts.

with a manufacturer have resulted in significant losses, as well as other negative impacts.

described more fully in Item 7, we experienced product quality issues with a contract manufacturer (the “Manufacturer”) that

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from the market and destroy existing inventory.

The results for 2022 reflect the estimated accounting impact of these actions, including

$493,000 in refunds and administrative fees due to customers and $932,000 to dispose of unsaleable inventory.

addition to the accounting impact, we must obtain suitable replacement contract manufacturers and regain the confidence of our customers

and investing public, all while seeking a resolution with the Manufacturer.

These tasks have required substantial amounts of personnel

and capital resources in 2023 with ongoing activities expected in 2024.

addition to the financial damage from the product withdrawal, we must obtain suitable replacement contract manufacturers and regain the

confidence of our customers and investing public, all while seeking a resolution with the Manufacturer.

These tasks have required substantial

amounts of personnel and capital resources in 2023 and 2024, including production trial and other start-up costs, with ongoing activities

expected in 2025.

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

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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 including uncertainty resulting from war, terrorism or contagious disease.

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.

success depends largely on government funding of school nutrition programs, which is influenced by government policy, and to a lesser

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 including uncertainty resulting from war, terrorism or contagious disease.

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 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.

customer service, and overall 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 primarily with other food manufacturers that participate in the K-12 market.

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.

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

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condition and results of operations.

the fourth quarter of 2023, the beverage industry began experiencing a shortage of 4-ounce and 8-ounce cartons, directly impacting our

“Twist & Go”™ product.

As of the date of this report, the shortage is continuing and could impair the ability of

our manufacturers to fulfill orders that we place with them and/or increase our costs.

If we are unable to pass on any increased costs,

our gross margin will decrease.

experience with the Manufacturer demonstrates how our reliance on a limited number of manufacturers and suppliers further increases this

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can begin producing our products.

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

however, if one of

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

In 2023 and 2024 we did not have contracts in place to produce sufficient units to meet projected demand.

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

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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 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.

for our products, we may end up with too much inventory, resulting in increased working capital requirements, 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

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

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

and prices of the various ingredients that we are going to use to can be affected by a variety of factors, such as weather, seasonal

fluctuations, demand, politics and economics in the producing countries.

and prices of the various ingredients that we are going to use can be affected by a variety of factors, such as weather, seasonal fluctuations,

demand, politics and economics in the producing countries.

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

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be able to secure our fruit supply.

an increasing portion of our sales is coming from school districts, our business is becoming more seasonal, which presents certain challenges

with respect to cash flow.

sales to school districts representing an increasing percentage of our total sales, we require a significant amount of working capital

to fund the production of inventory during the third calendar quarter.

Revenues from sales to school districts generally are reflected

in our first quarter and third quarter results.

We continue efforts to have less fluctuation with respect to working capital –

for example by developing a frozen juice pop product which we expect to be more popular during warmer months of the year – but

such efforts require time to be accepted in the marketplace.

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

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well as disgorgement of profits.

litigation with Manufacturer was voluntarily withdrawn from the court system in January 2023 and refiled in August 2023, as we were unable

to reach a suitable resolution.

While we believe that that our claims have merit, there is no assurance of a favorable outcome to this

litigation with the Manufacturer was voluntarily withdrawn from the court system in January 2023 and refiled in August 2023, as we were

unable to reach a suitable resolution.

While we believe that that our claims have merit, there is no assurance of a favorable outcome

to this case.

In 2024, we obtained litigation financing to pursue our claims without risk to our financial position or operating results.

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

success may 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.

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disclosure and governance practices.

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

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, 2023.

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.

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

Implementation of the Company’s remediation

plans has commenced , including adding appropriate staffing and implementing an improved information system.

Remediation 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.

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.

to 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.

management is responsible for establishing and maintaining effective internal control over financial reporting under Section 404 of the

Sarbanes-Oxley Act of 2002, as amended.

Internal control over financial reporting is a process to provide reasonable assurance regarding

the reliability of financial reporting for external purposes in accordance with generally accepted accounting principles in the United

States (“GAAP”).

Because of its inherent limitations, internal control over financial reporting is not intended to provide

absolute assurance that we would prevent or detect a misstatement of our financial statements or fraud.

Any failure to maintain an effective

system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or

to detect and prevent fraud.

The identification of a material weakness could indicate a lack of controls adequate to generate accurate

financial statements that, in turn, could cause a loss of investor confidence and a decline in the market price of our common stock.

We cannot assure you that we will be able to timely remediate any material weaknesses that may be identified in future periods or maintain

all of the controls necessary for continued compliance.

Likewise, we cannot assure you that we will be able to retain sufficient skilled

finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.

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

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Shared service centers managed by third parties provide an increasing number of services

important to conducting our business, including accounting, internal control, human resources and computing functions.

important to conduct our business, including accounting, internal control, human resources and computing functions.

of business applications and services has been, and may in the future be, disrupted by events such as infection by viruses or malware;

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Additionally,

continued geopolitical turmoil, including the ongoing war in Ukraine, has heightened the risk of cyberattacks.

When risks such as these

materialize, the need for us to coordinate with various third-party service providers and for third-party service providers to coordinate

amongst themselves might increase challenges and costs to resolve related issues.

Our information security program includes capabilities

designed to evaluate and mitigate cyber risks arising from third-party service providers.

Cyber threats to externally-hosted technology

and business services are beyond our control.

Additionally, new initiatives, such as those related to digital commerce and direct sales,

that increase the amount of confidential information that we process and maintain increase our potential exposure to a cybersecurity

Furthermore, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity

If our controls, disaster recovery and business continuity plans or those of our third-party providers do not effectively respond

to or resolve the issues related to any such disruptions in a timely manner, our product sales, financial condition, results of operations

and stock price may be materially and adversely affected, and we might experience delays in reporting our financial results, loss of

intellectual property and damage to our reputation or brands.

continued geopolitical turmoil, including the ongoing wars in Ukraine and Israel, has heightened the risk of cyberattacks.

such as these materialize, the need for us to coordinate with various third-party service providers and for third-party service providers

to coordinate amongst themselves might increase challenges and costs to resolve related issues.

Our information security program includes

capabilities designed to evaluate and mitigate cyber risks arising from third-party service providers.

Cyber threats to externally hosted

technology and business services are beyond our control.

Additionally, new initiatives, such as those related to digital commerce and

direct sales, that increase the amount of confidential information that we process and maintain increase our potential exposure to a

cybersecurity breach.

Furthermore, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our

cybersecurity risks.

If our controls, disaster recovery and business continuity plans or those of our third-party providers do not effectively

respond to or resolve the issues related to any such disruptions in a timely manner, our product sales, financial condition, results

of operations and stock price may be materially and adversely affected, and we might experience delays in reporting our financial results,

loss of intellectual property and damage to our reputation or brands.

Related to Ownership of Our Common Stock

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may not be able to continue to comply with Nasdaq listing standards.

May 2023, we received a letter from Nasdaq indicating that we were not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires

companies listed on The Nasdaq Stock Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing.

In our quarterly report on Form 10-Q for the period ended March 31, 2023, we reported stockholders’ equity of $1,845,000, thereby

failing to satisfy Listing Rule 5550(b)(1).

While we recently regained compliance with this Rule, our stockholders’ equity at December

Listing Rule 5550 requires companies that list on The Nasdaq Stock Market to maintain certain financial metrics.

In May 2023, we received

a letter from Nasdaq indicating that we were not in compliance with Nasdaq Listing Rule 5550(b), which requires companies listed on The

Nasdaq Stock Market with a history of losses to maintain either a minimum market value of listed securities of $35,000,000 or a minimum

of $2,500,000 in stockholders’ equity.

While we regained compliance with this Rule in 2023, our stockholders’ equity at December

31, 2024 was only $578,000.

Incurring net losses going forward may cause us to fail to meet Nasdaq listing standards and result in

our common stock only being tradable in the over-the-counter markets.

use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions.

use information technology and third-party service providers to support our business processes and activities, including supporting critical

business operations such as manufacturing and distribution;

communicating with our suppliers, customers and employees;

maintaining effective

accounting processes and financial and disclosure controls;

executing corporate transactions;

conducting research and development activities;

and meeting regulatory, legal and tax requirements.

Shared service centers managed by third parties provide an increasing number of services

important to conducting our business, including accounting, internal control, human resources and computing functions.

of business applications and services has been, and may in the future be, disrupted by events such as infection by viruses or malware;

other cybersecurity attacks;

issues with or errors in systems’ maintenance or security;

power outages;

hardware or software failures;

denial of service attacks;

telecommunication failures;

natural disasters;

terrorist attacks;

and other catastrophic occurrences.

use of new and emerging technologies such as cloud-based services and mobile applications continues to evolve, presenting new and additional

risks in managing access to our data, relying on third parties to manage and safeguard data, ensuring access to our systems and availability

of third-party systems.

In addition, we are experiencing new and more frequent attempts by third parties to gain access to our systems,

such as through increased email phishing of our workforce.

leverage third parties for various technology and business services who may experience cybersecurity breaches, whether from circumvention

of security systems, denial-of-service attacks or other cyberattacks such as hacking, phishing attacks, computer viruses, ransomware

or malware, cyber extortion, employee or insider error, malfeasance, social engineering, physical breaches or other actions or attempts

to exploit vulnerabilities may cause confidential information or Personally Identifiable Information belonging to us or our employees,

customers, consumers, partners, suppliers, or governmental or regulatory authorities to be misused or breached.

These risks could be

magnified since the number of employees, contractors and others working outside of offices increased since the COVID-19 pandemic.

Additionally,

continued geopolitical turmoil, including the ongoing war in Ukraine, has heightened the risk of cyberattacks.

When risks such as these

materialize, the need for us to coordinate with various third-party service providers and for third-party service providers to coordinate

amongst themselves might increase challenges and costs to resolve related issues.

Our information security program includes capabilities

designed to evaluate and mitigate cyber risks arising from third-party service providers.

Cyber threats to externally-hosted technology

and business services are beyond our control.

Additionally, new initiatives, such as those related to digital commerce and direct sales,

that increase the amount of confidential information that we process and maintain increase our potential exposure to a cybersecurity

Furthermore, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity

If our controls, disaster recovery and business continuity plans or those of our third-party providers do not effectively respond

to or resolve the issues related to any such disruptions in a timely manner, our product sales, financial condition, results of operations

and stock price may be materially and adversely affected, and we might experience delays in reporting our financial results, loss of

intellectual property and damage to our reputation or brands.

We have instead maintained compliance based on the $35,000,000 minimum market value requirement.

until we are able to achieve and maintain annual net income from continuing operations of $500,000, fluctuations in the market value

of our listed securities may cause us to fail to meet Nasdaq listing standards and result in our common stock only being tradable in

the over-the-counter markets.

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.

trading market for our common stock may be impacted, in part, by 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.

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.

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

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.

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

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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.

In the future,

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

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

may be required to seek financing through the issuance of equity or convertible securities to fund our operations.

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

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

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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-K

Item 1A. Risk Factors