BUDA JUICE, INC. 10-K

Item 1A. Risk Factors You should consider carefully the risks, uncertainties and other factors described below, in addition to the other information set forth in this Form 10-K, before making an investment decision. Any of these risks, uncertainties and other factors could materially and adversely affect our business, financial condition, results of operations, cash flows or prospects. In that case, the market price of our common stock could decline, and you may lose all or part of your investment in our common stock. Risks Related to our Business and Industry We have a limited operating history in new and evolving markets, which may make it difficult to evaluate our current business and future prospects and increase the risk of your investment. 8 Table of Contents We were organized in October 2013 starting with our own retail fronts in July 2014. In 2020, we shifted our business model to distribution through large retailers directly, and since then we have operated under our current business model and offering our current product portfolio. Our operating history is limited to Texas and surrounding states making it difficult to evaluate our future prospects and plan for growth outside our current region of distribution. Accordingly, our business and future prospects may be difficult to evaluate, the extent to which demand for our products will increase, if at all, could be impacted by our ability to do the following: ● attract new customers to our products; ● acquire and maintain market share; ● attract, integrate, train and retain leadership and other highly qualified personnel; ● achieve or manage growth in our operations particularly around the logistics of cold chain distribution and distance from production facilities; ● successfully develop and commercially market new products; ● timely address the increasingly ‘fresh’ market needs of our customers; ● secure sufficient quantities or cost-effective production of our products due to supply chain challenges; ● generate sufficient revenue to achieve or maintain profitability; and ● access initial and additional capital when required and on reasonable terms. If we fail to address these and other challenges, risks and uncertainties successfully, our business, results of operations, prospects and financial condition would be materially harmed. Our historical financial and operating results may not be indicative of future performance, and we may not be able to achieve and sustain the historical level of our profitability. For the years ended December 31, 2025 and 2024, we recorded net profit of $3.53 million, $3.57 million, respectively. However, our historical financial and operating results may not be indicative of our future performance. Our future profitability will depend on a variety of factors, including the performances of our products, competitive landscape, prices of supplies, customer preferences and macroeconomic and regulatory environment. You should not rely on our historical results to predict the future performance of our ordinary shares. We operate in a highly competitive beverage industry and may not be able to maintain or grow our market share against larger and better-capitalized competitors. The beverage industry is highly competitive and includes numerous national, regional, and local companies, many of which have significantly greater resources, more established brand recognition, and more sophisticated distribution capabilities than we do. Our competitors include both large multinational beverage manufacturers as well as emerging companies focused on health-conscious or functional beverages, including cold-crafted juices, smoothies, kombuchas, flavored waters, and plant-based drinks. These companies often have well-established relationships with distributors and retailers, as well as larger marketing budgets that enable them to promote their products more aggressively and secure more prominent shelf space in high-traffic retail locations. In addition, some of our competitors own or operate their own production and logistics infrastructure, which may reduce their cost to serve relative to our model. Others may be vertically integrated or have exclusive arrangements with growers, co-packers, or cold chain distributors, allowing them to respond more quickly or flexibly to market conditions. Many traditional juice brands are also expanding into premium or “better-for-you” categories, including fresh or cold-pressed product lines, leveraging their scale and retail presence to rapidly introduce alternatives to Buda Juice. If these competitors are successful in mimicking the freshness, taste, or branding of our products—or if they invest heavily in marketing to shift consumer perception—we may face declining shelf space, reduced sales velocity, and difficulty retaining or expanding our retail footprint. If we are unable to compete effectively on the basis of product quality, innovation, pricing, distribution, consumer awareness, or customer support, we may lose market share, experience slower growth, or fail to achieve or maintain profitability. Competitive pressures may also result in price reductions, increased promotional spending, and higher customer acquisition costs, which could adversely affect our margins and overall financial performance. Our success depends on the continued strength of our brand and consumer perception of the quality, safety, freshness, and healthfulness of our products. Our brand is integral to our business strategy and is critical to maintaining and expanding our customer base, attracting new retail customers, and distinguishing ourselves in a crowded beverage marketplace. We believe that our future growth depends in part on our ability to continue building a trusted and recognizable brand associated with freshness, clean-label ingredients, and better for you conscious consumer values. Damage to our brand or reputation, whether real or perceived, could materially harm our business. Consumer perception of our brand is shaped by a number of factors, including the taste and freshness of our products, the transparency and simplicity of our ingredient lists, and our ability to maintain product quality throughout our cold chain. Any actual or perceived failure in these areas—such as a lapse in food safety, inconsistency in quality, could lead to a loss of consumer confidence, negative publicity, and harm to our brand equity. 9 Table of Contents In addition, the rise of social media and third-party review platforms increases the risk that negative experiences with our products or customer service can be rapidly amplified, regardless of merit. Public perception may also be influenced by campaigns from interest groups, changing societal views, or evolving health trends that question the benefits of fruit-based beverages or challenge the sugar content in natural juices. Maintaining and enhancing the strength of our brand will require continued investment in marketing, innovation, supply chain integrity, and customer experience. If we fail to continue building brand equity or if consumer perceptions change in a way that diminishes our positioning, our sales could decline, our growth prospects could be impaired, and our business and financial condition could be materially adversely affected. Our future growth depends on the successful development and acceptance of new product and product innovation. To remain competitive in the dynamic beverage industry, we must continually develop and introduce new products and potentially expand into adjacent product categories. Consumer preferences evolve rapidly, and the failure to anticipate or respond to these trends could adversely affect our ability to attract and retain customers. Developing new products involves substantial time and investment, including market research, formulation, and marketing campaigns. There is no assurance that any new flavor or products or product variation will achieve market acceptance or generate revenue at anticipated levels. For example, a product that tests well in pilot markets may not scale successfully across broader geographies or retail channels. Additionally, any strategic shift may require us to modify our production capabilities, supply chain logistics, and branding, all of which involve execution risk. If we fail to execute innovation initiatives effectively or align them with consumer demand, our growth prospects could be limited and our brand diluted. We rely on a limited number of cold chain-dependent production and distribution facilities, and any disruption—due to mechanical failure, labor shortages, natural disasters, or other causes—could materially affect our operations. Our ability to produce and deliver UltraFresh™, cold-crafted juice products depends heavily on the uninterrupted operation of a limited number of production plants that are specifically designed to support our strict cold chain requirements. Currently, our manufacturing footprint includes our primary facility in Texas, with additional planned facilities in South Carolina (East Coast) and Arizona/Nevada (West Coast) in early planning stages of development. Because our product integrity, shelf life, and brand promise are highly dependent on maintaining low temperatures throughout the production and distribution process, any disruption at one or more of these plants could significantly impair our ability to meet customer demand. Disruptions to our plants or distribution channels may occur for a variety of reasons, including equipment or refrigeration failure, utility outages, cybersecurity breaches, supply shortages, labor disputes, staffing challenges, pandemics or health emergencies, transportation delays, or natural disasters such as floods, hurricanes, or extreme temperatures. Any such disruption could cause product spoilage, delays in order fulfillment, reduced product availability, and lost revenue. Given our short shelf-life and just-in-time inventory model, we may have limited ability to shift production or reroute distribution without impacting our ability to supply product, guarantee freshness and meet customer satisfaction. Moreover, our ability to scale relies on the successful commissioning and ramp-up of additional cold-crafting hubs. Delays in the development or regulatory approval of future plants, or failures to operate those plants at expected efficiency levels, could constrain our capacity and slow geographic expansion. We currently have one manufacturing and cold chain distribution plant, located in Texas. We do not maintain redundant manufacturing or cold chain distribution infrastructure. Insurance coverage may not fully compensate us for losses associated with operational interruptions. As a result, any significant disruption at our production and logistics plant could materially and adversely affect our business, financial condition, and operating results. Our business model depends on maintaining strict cold chain logistics from sourcing through delivery, which adds operational complexity, cost, and vulnerability to temperature excursions or logistical delays. A defining feature of our business and brand promise is the continuous cold chain we maintain from the sourcing of raw ingredients through production, storage, transportation, and final retail delivery. This cold chain infrastructure is essential to preserving the safety, freshness, nutritional value, and shelf life of our products without the use of pasteurization, preservatives, or heat treatment. However, operating within such a temperature-controlled environment chain adds significant logistical complexity, introduces higher operating costs, and increases our exposure to risk at every step in the supply chain. 10 Table of Contents Unlike shelf-stable or ambient beverage brands, we must ensure that our products remain at or below specified temperature thresholds throughout the entire sourcing, production and distribution lifecycle. Any failure in refrigeration—whether during transit, in the production facility, within a third-party warehouse, or on retail shelves—can compromise product safety and quality, resulting in spoilage, product loss, and reputational damage. Because our products have a relatively short shelf life and limited temperature tolerance, even brief temperature excursions or small delays in shipment can materially impact sell-through and customer satisfaction. Furthermore, our reliance on third-party refrigerated carriers means that we are dependent on the performance, capacity, and pricing of these providers, all of which are outside our direct control. Increases in cold freight costs, labor shortages among drivers, supply chain disruptions, or infrastructure failures (e.g., power outages, natural disasters) may increase our operational expenses or limit our ability to service new or existing geographies. As we expand into new markets, maintaining this high-integrity cold chain across broader distances and volumes may increase the risk of errors or delays. If we are unable to consistently execute our cold chain requirements, the value proposition of our brand could be compromised, resulting in adverse effects on our reputation, customer relationships, and financial performance. We have depended on a single customer for a substantial portion of our net sales, and the loss of this customer or a reduction in their purchases would materially and adversely affect our business, results of operations, and financial condition. We have relied on one customer, which represented approximately 97% and 95% of our net sales for the years ended December 31, 2025 and 2024, respectively. Although we have recently begun to diversify our customer base to include certain national grocery chains and anticipate increasing sales to these and other customers over the course of this year, our current business and results of operations remain highly dependent on a limited number of customers. The loss of this significant customer, a reduction in their purchases of our products, or an adverse change in the terms of our commercial relationship could materially reduce our revenue and cash flow. In addition, because our sales to this customer have represented a substantial majority of our revenue, even temporary disruptions or delays in orders and payment could have a material adverse effect on our operating results. Our efforts to diversify our customer base may not succeed as quickly or as fully as we expect, and there is no assurance that new customers will purchase products in volumes sufficient to offset any decline in sales to our historical customer. If we are unable to establish relationships with additional customers, or maintain favorable relationships with existing customers, our business, financial condition, and results of operations could be materially and adversely affected. We depend on a limited number of suppliers for our products, and the loss of one or more of these suppliers could disrupt our operations, increase our costs, or otherwise adversely affect our business. Our suppliers are located in California, Arizona, and Mexico. Some of these suppliers have represented more than 10% of our product purchases in a given year. As a result, our business depends in part on a limited number of suppliers, and our operations could be disrupted if we were to lose a key supplier, experience delays or shortages in supply, or face price increases from such suppliers. Any disruption in supply could negatively impact our ability to meet customer demand and may result in a loss of revenue and customer relationships. Although we rely on a limited number of suppliers, we believe that our supplier base for our raw materials is flexible and we have reduced our dependency on one particular supplier. For example, in 2025 no supplier represented more than 10% of our purchases. This shift demonstrates that we are able to source based on product quality and have the ability to substitute suppliers if necessary. However, there is no guarantee that alternative suppliers would be able to meet our needs in a timely manner, on favorable terms, or at comparable quality standards. If we are unable to obtain products from our existing suppliers or identify suitable substitutes on acceptable terms, our business, financial condition, and results of operations could be materially and adversely affected. We depend on the availability, cost, and quality of fresh citrus and other raw ingredients, and agricultural or climate-related disruptions could adversely affect our supply and margins . Our products rely heavily on high-quality, fresh citrus which are agricultural commodities subject to seasonal variability, environmental conditions, possible tariffs, and supply chain constraints. The availability, quality, and cost of these ingredients are critical to our ability to produce juices that meet our freshness, taste, and nutritional standards. Disruptions in the supply of citrus—particularly oranges, grapefruit, lemons, and limes— could significantly impact our production volumes, pricing, and gross margins. 11 Table of Contents Citrus crops are especially vulnerable to a variety of natural and external forces, including drought, excessive rainfall, hurricanes, wildfires, frost, pests, and diseases such as citrus greening (Huanglongbing). Changes in climate patterns or increased frequency of extreme weather events can reduce yields, delay harvests, or impact the flavor and quality of fruit available for processing. Additionally, geopolitical events, changes in trade policy, labor shortages in farming regions, and transportation bottlenecks may further constrain supply or increase costs. We rely on third-party growers and suppliers to meet our volume and quality requirements, and we do not typically enter into long-term contracts for agricultural inputs. As a result, we are subject to spot market fluctuations and may face price volatility, especially during periods of constrained supply. If we are unable to secure sufficient high-quality fruit at acceptable prices, we may be forced to reformulate products, absorb higher input costs, limit production, or raise prices—any of which could negatively affect our brand, customer relationships, and financial performance. Additionally, sourcing pressure could limit our ability to support innovation, new product launches, or expansion into new geographies if we are unable to scale raw ingredient supply in alignment with our growth. Any material disruption in the availability or cost of citrus or other key raw materials could adversely impact our results of operations, cash flows, and long-term strategic objectives. Our production facilities must maintain compliance with rigorous food safety, Juice HACCP, SQF, USDA Organic Certification, Kosher Certification and regulatory standards including the U.S. Food and Drug Administration (FDA) and the Texas Department of State Health Services (DSHS); any lapse or contamination event could result in product recalls, liability, regulatory enforcement, or reputational harm . The production, handling, and distribution of food and beverage products are subject to extensive regulation by the U.S. Food and Drug Administration (FDA), and various state authorities. In addition, our operations must comply with globally recognized food safety standards such as Juice Hazard Analysis and Critical Control Points (Juice HACCP) and Safe Quality Food (SQF) certification. Our ability to maintain these certifications and comply with evolving food safety regulations is essential to our continued operation and brand credibility. We are subject to the risk of contamination, spoilage, adulteration, mislabeling, or other food safety incidents that could result from raw ingredient issues, equipment failure, human error, or breakdowns in cold chain integrity. Because our products are perishable and minimally processed, with no added preservatives or pasteurization, they are particularly sensitive to contamination risk. Even with rigorous quality control systems in place, we cannot guarantee that all products will meet applicable standards at all times. A violation of applicable food safety laws or a failure to maintain required certifications could lead to product recalls, temporary facility closures, civil fines, or other enforcement actions. In the event of an actual or alleged contamination incident, we could face consumer lawsuits, class action claims, regulatory scrutiny, or negative publicity that could damage our brand and customer trust. Product recalls—whether voluntary or mandatory—can be costly, disruptive, and damaging to customer relationships and long-term brand equity. Furthermore, heightened public concern around food safety, supply chain transparency, or ingredient sourcing could increase regulatory requirements or consumer expectations over time. If we fail to maintain compliance or experience a significant food safety incident, our business, financial condition, and reputation could be materially and adversely affected. We face risks associated with managing short shelf-life products, which increases our exposure to inventory spoilage, write-downs, and stockouts. Our products are cold-extracted and made, perishable beverages with a relatively short shelf life, often measured in days or weeks rather than months. Unlike most shelf-stable or pasteurized beverages, our products must be stored and transported under continuous refrigeration and sold within a narrow time window to ensure safety, quality, and consumer satisfaction. This inherently increases our exposure to inventory management challenges, including spoilage, obsolescence, and the risk of stockouts at the retail level. Short shelf-life products require tight coordination between production planning, inventory levels, and demand forecasting. Any misalignment between supply and demand—whether due to inaccurate forecasts, changes in consumer purchasing behavior, delays in distribution, or disruptions in retail execution—can result in either excess inventory that must be discounted or discarded, or insufficient inventory that limits sales and damages customer satisfaction. In addition, the just-in-time nature of our production model limits our ability to build buffer inventory to accommodate demand spikes, seasonal promotions, or expansion into new geographies. If we overproduce relative to sell-through, we may be forced to recognize inventory write-downs or incur additional waste and disposal costs. If we underproduce, we risk out-of-stock situations that can erode consumer trust, reduce retailer confidence, and result in lost sales opportunities. 12 Table of Contents As we scale and introduce new products or enter new distribution channels, the complexity of managing a high-velocity, short shelf-life inventory will increase. If we are unable to accurately forecast demand, maintain optimal inventory turnover, or execute logistics and replenishment consistently, our operating results and brand reputation could be materially and adversely affected. Changes in consumer preferences—particularly away from fresh juice, citrus beverages, or premium-priced fresh products—could adversely affect demand for our offerings. Our success depends on the continued consumer interest in fresh, cold-crafted, clean-label juice products, particularly those made from citrus fruits. The beverage industry is subject to rapid and unpredictable shifts in consumer trends, including evolving perceptions of health and wellness, ingredient preferences, price sensitivity, and sustainability concerns. If consumer demand for fresh juice products declines, or if preferences shift toward alternative beverages—such as sparkling waters, functional drinks, plant-based milks, or ready-to-drink coffees—our sales and growth prospects could be adversely affected. While many consumers value the clean label and quality benefits of fresh products, others may perceive premium-priced fresh products as discretionary, particularly in times of economic uncertainty or inflationary pressure. Additionally, trends are often cyclical and influenced by social media, influencer marketing, and shifting scientific research. A change in public perception—whether driven by emerging nutritional data, changing dietary guidelines, or consumer advocacy—could reduce demand for juice generally, or citrus-based beverages specifically. If we fail to anticipate or respond effectively to changes in consumer preferences, or if our brand does not resonate with evolving fresh, or value-driven trends, our products may lose relevance in the marketplace. As a result, our growth could slow, our competitive positioning could erode, and our business, financial condition, and results of operations could be materially harmed. Our growth strategy depends on geographic expansion, which requires securing and equipping new facilities and may be costly and complex A key component of our growth strategy is expanding our geographic footprint to reach new retail relationships and consumers in additional markets. Expansion will require us to identify, lease the space, and build out new production plants in strategic locations, currently projected to be in South Carolina and Arizona/Nevada. However, suitable real estate—particularly cold chain–capable infrastructure—may be difficult to secure at reasonable rates, especially in competitive industrial markets. Leasing and developing new plants involves significant upfront investment, including build-out costs, refrigeration systems, production equipment, regulatory compliance, and workforce training. We may also face delays due to zoning, permitting, or construction bottlenecks, which could postpone our entry into new markets or strain existing operations. Furthermore, as we grow into new regions, we may face logistical challenges, fragmented supply chains, and inconsistent customer preferences, which could limit our ability to replicate success at scale. If we are unable to secure and equip facilities in a timely and cost-effective manner, or if new locations fail to operate efficiently or meet demand, our expansion plans and overall business performance could be adversely affected. Our growth depends on expanding distribution through new retail relationships and deeper penetration with existing accounts; failure to secure or maintain these relationships on favorable terms may limit our revenue potential. Our ability to grow revenue, expand geographically, and build brand equity depends in large part on our success in securing new retail distribution and increasing the number of stores, SKUs, and shelf placements with existing retail outlets. We currently rely on a concentrated group of national and regional grocery chains to carry our products, and as we expand into new markets, our growth will require the onboarding of additional large-format retailers, club stores, value grocers, and specialty channels. Retailers have significant discretion in determining which products to stock, the amount of shelf space allocated, and the timing and terms of any listings. In addition, our products may be tested in limited regions or stores before receiving broader distribution, which can lengthen the sales cycle or limit scalability. Retailers also periodically reset planograms or adjust category strategies, which may result in discontinuation of underperforming SKUs, reallocation of shelf space to competitors, or a shift in focus away from cold-crafted juice entirely. If our products do not meet velocity expectations, or if we fail to deliver consistent fill rates or quality, retailers may reduce our footprint or terminate distribution. Moreover, consolidation in the retail sector may increase the bargaining power of large chains and further intensify competition for shelf space. If we are unable to enter into new retail relationships or grow existing accounts on commercially favorable terms, or if any of our major retail customers reduce or discontinue their purchases, our ability to scale could be constrained. This could materially and adversely affect our business, financial condition, and future growth prospects. 13 Table of Contents We depend heavily on third-party retailers and in some cases brokers, to market and sell our products; their shelf prioritization, execution, or financial health may directly impact our performance. Our ability to generate revenue and grow market share depends significantly on the performance of third-party retailers who control the placement, merchandising, promotion, and replenishment of our products. We do not own or operate our own retail stores. As we expand our distribution, we will rely on grocery chains, club stores, specialty grocers, and foodservice outlets to offer our products to consumers. Likewise, we will depend on regional and national transportation providers to fulfill orders and deliver our products from our cold-storage plant to retail locations while maintaining temperature integrity. These third parties operate independently and may make decisions based on their own internal priorities, financial performance, or competitive dynamics, rather than our interests. We have limited control over how our products are stocked or presented in stores, whether they are promoted effectively, or how quickly inventory is replenished. Poor in-store execution—such as inconsistent stocking, limited product visibility, or inadequate cold storage space—can negatively impact sales velocity and consumer perception. If retailers choose to reduce shelf space allocated to our UltraFresh™ products or reallocate space to competing products, our visibility and sales may decline. Similarly, if our transportation providers fail to deliver product in a timely and temperature-compliant manner, or if they experience financial instability, labor disruptions, or operational failures, it could result in product spoilage, missed shipments, or damaged customer relationships. In addition, many of our retail customers sell competing products, and they may prioritize their own private-label offerings or those of larger, more established brands. We must continuously demonstrate value and performance to maintain shelf presence and retailer commitment. Any significant disruption in the performance or relationships with these third-parties—whether due to execution failures, strategic realignment, or financial distress—could materially and adversely affect our sales, brand reputation, and financial results. Our high-tech driven, centralized production systems are core to our efficiency and quality standards; technical failures or cybersecurity incidents could disrupt operations or result in data loss. We rely on advanced, high-tech powered technologies across our centralized production system to drive operational efficiency, standardize quality, manage inventory, and ensure traceability throughout our cold chain. These systems are integral to optimizing yields, reducing human error, monitoring critical control points in food safety, and maintaining consistency across our product lines. Although we believe we have workarounds in place, any failure or compromise of these systems—whether due to software malfunction, equipment failure, integration issues, or external cyber threats—could significantly disrupt our business. We are also subject to cybersecurity threats, including unauthorized access, phishing attacks, ransomware, data breaches, and insider threats. A successful cyberattack could compromise sensitive operational data, disrupt our production or logistics, and require significant remediation costs. Additionally, we store confidential business and supply chain information in digital systems; any unauthorized disclosure or data loss could damage our competitive position and stakeholder relationships. Although we maintain security protocols, backup systems, and third-party audits, no system is immune to failure or attack. If our systems were to be compromised or disrupted for any significant period of time, our ability to produce, deliver, and sell our products could be materially and adversely affected, with lasting impacts on our brand reputation and financial performance. We rely on third-party logistics providers for delivery of our products to our product outlets; any breakdown or delay could damage product integrity and customer trust. Our ability to deliver fresh, cold-crafted juice products to retailers and customers in a timely manner while maintaining strict temperature controls is highly dependent on a network of third-party logistics providers. These third parties are responsible for the refrigerated transportation and delivery of our perishable goods—functions that are essential to upholding our freshness promise and product safety. Because we do not own or directly control these logistics operations, we are subject to risks related to their reliability, capacity, and performance. Any breakdowns in this extended cold chain—including equipment failures, power outages, labor shortages, delivery delays, or mismanagement—could result in temperature excursions, spoilage, or product degradation. Even brief lapses in refrigeration can render our products unsellable and lead to increased waste, customer complaints, and damage to our brand reputation. 14 Table of Contents Additionally, high transportation costs, limited availability of refrigerated freight, or disruptions caused by extreme weather, geopolitical events, pandemics, or regulatory changes may constrain our ability to move inventory efficiently and profitably. If our logistics providers experience financial distress or operational setbacks, or if we are unable to secure adequate cold chain capacity to support our expansion, our ability to fulfill customer orders and scale geographically could be significantly hindered. We may also face increased exposure as we enter new regions and establish additional distribution nodes. If we are unable to maintain strong relationships and enforce performance standards with our logistics and cold storage providers, we risk compromising product integrity and losing customer trust—both of which could materially and adversely affect our business, operating results, and brand equity. Inflationary pressures, rising freight or packaging costs, tariffs, and supply chain disruptions could materially affect our cost structure and financial condition. We are subject to a variety of macroeconomic and supply chain factors that can increase our operating costs and impact our profitability, including inflation, rising input costs, labor shortages, international trade dynamics, and transportation constraints. In recent years, the food and beverage industry has experienced widespread inflationary pressures across packaging materials, fuel, labor, and freight—all of which are relevant to our cost structure. Our products rely on specialized inputs such as fresh citrus, recyclable PET and glass bottles, refrigerated freight, and energy-intensive cold storage infrastructure. Cost increases in any of these areas—whether due to raw material shortages, supplier pricing actions, tariffs, or global commodity volatility—can materially impact our gross margins. In particular, refrigerated logistics tend to be more sensitive to diesel fuel prices, driver availability, and seasonal demand spikes, which can further amplify volatility. Additionally, our business could be adversely affected by international trade developments, including changes in tariff policy, import/export restrictions, or customs delays. Approximately half of our citrus is sourced domestically, while the remainder is imported from Mexico, creating direct exposure to tariff-induced cost increases on our primary raw material. Beyond citrus we may rely on imported packaging materials, machinery, or seasonal specialty produce, further amplifying our vulnerability to trade disruptions. Tariffs on Mexican citrus imports would directly increase our raw material costs and impact gross margin across our product portfolio. Similarly, tariffs on packaging materials or food processing equipment could materially affect both our ongoing operational costs and capital expenditure requirements for facility expansion. Disruptions in global trade routes or custom delays could also interrupt our supply chain, potentially affecting production schedules and increasing inventory carrying costs to maintain buffer stock. These trade related cost increases may be difficult to immediately pass through to retail customers, potentially compressing margins until pricing adjustments can be negotiated and implemented. We may face difficulties in forecasting demand accurately, which could lead to excess inventory, underproduction, missed revenue opportunities, or higher working capital needs. Accurately forecasting consumer demand is essential to managing our production schedules, inventory levels, procurement of raw materials, and supply chain logistics—especially given the short shelf life and temperature sensitivity of our products. However, forecasting demand for fresh, cold-crafted juice across multiple SKUs, regions, and retail customers is inherently challenging, particularly as we expand into new markets and launch new products. Our forecasts are based on historical sales data, retailer feedback, promotional calendars, and internal assumptions about market growth, consumer preferences, and shelf performance. These inputs can be affected by unpredictable factors such as changes in consumer behavior, competitive activity, seasonality, macroeconomic conditions, weather, and promotional effectiveness. These can negatively affect our gross margins and increase waste. Conversely, if we underestimate demand, we may experience out-of-stocks, lost sales, and missed revenue opportunities—particularly during peak seasons or promotional periods. Shorting orders can also erode retailer confidence, damage our brand reputation, and cause consumers to switch to competing products. Additionally, inaccuracies in forecasting can lead to suboptimal purchasing decisions and inefficient utilization of raw materials, packaging, and production resources. This can tie up working capital and strain our ability to respond flexibly to market shifts. As our distribution footprint broadens and the complexity of our operations increases, the risks associated with demand forecasting may be amplified. If we fail to implement and maintain effective demand planning systems and processes, our operational efficiency, customer satisfaction, and financial performance could be materially and adversely affected. 15 Table of Contents If we fail to effectively manage our growth, including geographic expansion and increased retail distribution, our operations and customer experience could suffer. We have experienced, and expect to continue to experience, rapid growth in our business, including expansion into new geographic markets, scaling of production capacity, and increased retail distribution. Effectively managing this growth will require significant investments in operational infrastructure, personnel, systems, logistics, and quality control. If we are unable to scale our operations in a disciplined and maintainable manner, we may encounter challenges that negatively impact product quality, fulfillment reliability, customer experience, and overall efficiency. Geographic expansion introduces operational complexity. Each new territory may involve distinct consumer preferences, and supply chain constraints, which could slow our rollout or require more resources than anticipated. Delays or underperformance in the commissioning of our planned facilities for example, could limit our ability to serve key regions and meet retailer expectations. Increased retail distribution also demands higher standards for consistency, service levels, and speed of execution. Failure to fulfill retailer orders on time, maintain planogram compliance, or deliver a consistently fresh product could result in the loss of shelf space, strained customer relationships, and reputational harm. Moreover, if our internal systems and processes—such as demand planning, quality control, or customer service—fail to keep pace with our growth, it could lead to operational breakdowns and diminished consumer trust. Hiring and retaining qualified personnel to support this growth, particularly in operations, supply chain, and sales, may also present challenges in a competitive labor environment. In addition, expanding our product lines or entering new channels (e.g., foodservice, e-commerce) may require capabilities we have not yet fully developed. If we are unsuccessful in managing the operational, financial, and organizational demands of growth, our ability to scale profitably and deliver a consistent, high-quality customer experience may be compromised, which could materially and adversely affect our business, results of operations, and brand reputation. We may be subject to legal challenges related to the accuracy of our health and wellness claims. The food and beverage industry is frequently targeted by consumer litigation and regulatory scrutiny related to the accuracy and interpretation of health and wellness claims. The fresh juice and wellness beverage sector has been particularly subject to such challenges in recent years. We market our products using descriptors such as “cold-crafted,” “never heated,” and “no HPP,” among others. Our “UltraFresh™” and “fresh” claims are central to our value proposition and competitive differentiation, making any successful challenge to this terminology potentially more damaging to our business model. While we make every effort to ensure that our marketing is accurate and complies with applicable laws, certain terms may be subject to varying interpretations or challenged as misleading or inadequately substantiated. Additionally, although some of our products do not contain added sugar, others do, and consumers or regulators may question how these products are labeled and/or marketed. As regulatory standards and consumer expectations around product claims continue to evolve, we may face increased scrutiny of our marketing practices even for previously accepted industry terminology. Agencies such as the FDA, FTC, and various state attorneys general have increased enforcement actions in recent years, and private class action lawsuits over product labeling and advertising have become common in the industry. If we are required to defend against legal claims related to our product descriptions or advertising, we could incur substantial legal costs, be required to change our labeling or marketing materials, modify our manufacturing processes or documentation requirements, or pay fines or settlements. Even unfounded allegations can harm our brand reputation and divert management attention from core business operations. Our future success depends on our ability to attract, retain, and develop key employees and senior leadership. Our future growth and operational success depend heavily on the continued contributions of our senior leadership team and key personnel across operations, supply chain, product innovation, sales, and marketing. In particular, the vision and leadership of our Chief Executive Officer, Horatio Lonsdale-Hands, and the experience he has with growing a successful fresh juice business and our Executive Chairman, Bryan Herr, with his experience with also growing a successful fresh business that led to having long term industry relationships, including with fruit growers in both Mexico and the US, are critical to executing our strategic plan, maintaining strong retail and supplier relationships, and guiding the expansion of our brand and platform. 16 Table of Contents As a company operating in a competitive and rapidly evolving industry, we must attract and retain employees with specialized expertise in cold chain logistics, high-tech powered production, perishable inventory management, and food and beverage marketing. The labor market for such talent is highly competitive, especially in growth regions like Texas, South Carolina, and Arizona/Nevada, where we are expanding our footprint. We may face challenges in filling key roles or retaining top performers due to market demand, compensation expectations, limited local talent pools, or cultural fit. Additionally, as we scale, our need for experienced leaders capable of managing larger teams, navigating complex regulatory environments, and sustaining our culture of innovation will increase. The loss of one or more members of our leadership team or other essential employees—whether due to voluntary departure, retirement, illness, or other reasons—could result in loss of institutional knowledge, disruption of our operations, and delays in executing key initiatives. We may also be limited in our ability to offer equity-based or other long-term incentive compensation to attract top-tier candidates. If we are unable to recruit, develop, and retain a highly skilled and motivated workforce aligned with our mission and growth strategy, our ability to scale effectively, innovate, and achieve our business objectives could be materially and adversely affected. We may require additional capital to support our growth strategy or operations, and such financing may not be available on acceptable terms or at all, which could limit our ability to scale. To execute our growth strategy—including expanding production capacity, scaling our cold chain logistics infrastructure, entering new geographic markets, launching new products, and supporting working capital needs—we may need to raise additional capital in the future. Our ability to secure financing will depend on a number of factors, including market conditions, interest rates, investor sentiment toward our industry, and our operating performance and financial condition at the time of the financing. We may seek additional funds through public or private equity offerings, debt financings, asset-backed lending, or strategic partnerships. However, such financing may not be available to us on commercially reasonable terms, or at all. If we raise funds through the issuance of equity or convertible securities, our existing stockholders could experience dilution, and any new securities may have rights, preferences, or privileges senior to those of our Common Stock. If we raise funds through debt financing, we may incur significant interest obligations and be subject to restrictive covenants that could limit our operational flexibility. Moreover, reliance on outside capital increases our exposure to macroeconomic volatility, including tightening credit conditions, higher interest rates, or disruptions in financial markets. If we are unable to obtain adequate financing when needed, or if we are forced to do so under unfavorable terms, we may be unable to invest in critical initiatives, respond to competitive pressures, or scale our operations in line with demand. Any failure to secure sufficient capital to support our growth could delay or prevent the execution of our strategic objectives and materially and adversely affect our business, financial condition, and prospects. Disruptions in the worldwide economy may adversely affect our business, financial condition, results of operations and cash flows Adverse and uncertain economic conditions may affect distributor, retailer, foodservice and consumer demand for our products or impact our costs due to changes in the foreign exchange rate and tariffs as we source approximately half of our citrus from Mexico. In addition, our ability to manage normal commercial relationships with our suppliers and third-party logistics providers and creditors may suffer. Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns. In addition, consumers may choose to purchase private label products rather than branded products because they are generally less expensive. Retailers may become more conservative in response to these conditions and seek to reduce their inventories or limit the range of our products that they offer. Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our existing retailers, our ability to attract new customers and consumers, the financial condition of our customers and consumers and our ability to provide products that appeal to consumers at the right price. Cost pressures or inflation could challenge our ability to do so. Prolonged unfavorable economic conditions may have an adverse effect on our business, financial condition, results of operations and cash flows. Climate change, or legal or market measures to address climate change, may negatively affect our business and operations. There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. If climate change has a negative effect on the agricultural productivity of the crops we rely on, we may be subject to decreased availability or less favorable pricing for the citrus and other raw materials that are necessary for our current or any future products. Climate changes may also require us to find fruit suppliers in new geographic areas if the location for best production of citrus changes, which will require changes to our supply network and investing time and resources with new sources, thereby potentially increasing our costs of production. In addition, there is no guarantee that we will be able to maintain the quality and taste of our products as we transition to sourcing citrus in new geographic areas. 17 Table of Contents Fluctuations in business conditions may unexpectedly impact our reported results of operations and financial condition. We experience fluctuations in our financial performance, as a result of a variety of factors, including the timing of our or our competitors’ promotional activities, the timing of product introductions and merchandise mix, as well as seasonal fluctuations in demand for beverage products that typically result in higher revenues for such products during summer months. Our net sales and profitability are impacted by the timing and size of such sales and promotion incentives. New product introductions and shelf resets at our customers may also cause our results of operations to fluctuate. Due to these fluctuations, historical period-to-period comparisons of our results of operations are not necessarily indicative of future period-to-period results, impacting comparability of our quarterly results year-over-year. Our insurance may not provide adequate levels of coverage against claims or otherwise protect us from all risks to which we are exposed, or we may be unable to find insurance with sufficient coverage at a reasonable cost. We believe that we maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure, or that we may not have identified as risks. Moreover, if we do not make policy payments on a timely basis, we could lose our insurance coverage, or if a loss is incurred that exceeds policy limits, our insurance provider could refuse to cover our claims, which could result in increased costs. If we are unable to make successful claims on our insurance for any potential losses, then we may be liable for any resulting costs, which could cause us to incur significant liabilities. Although we believe that we have adequate coverage, if we lose our insurance coverage and are unable to find similar coverage elsewhere or if rates continue to increase, or if claims are made that are not covered by insurance or exceed coverage levels, it may have an adverse impact on our business, financial condition, results of operations and cash flows. Members of our management team have limited experience in operating a public company, and regulatory compliance may divert their attention from the day-to-day management of our business. Our management team has very limited experience managing a publicly-traded company, and limited experience complying with the increasingly complex laws and regulations pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company that will be subject to significant regulatory oversight and reporting obligations under the federal securities laws. In particular, these new obligations will require substantial attention from our senior management and could divert their attention away from the day-to-day management of our business, which would adversely impact our business operations. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the United States and to meet the other regulatory compliance needs of a public company may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods. We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices. As a public company, and particularly once we are no longer an emerging growth company, we will incur significant legal, regulatory, insurance, finance, accounting, investor relations, and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and related rules implemented by the SEC, and the applicable stock exchange. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to ensure that we comply with all of these requirements, diverting the attention of management away from revenue-producing activities and the smooth running of the business. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Common Stock, fines, sanctions and other regulatory action, and potentially civil litigation. 18 Table of Contents Risks Relating to Legal and Regulatory Requirements Food safety and food-borne illness incidents or other safety concerns may materially adversely affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings. Selling food and beverages for human consumption involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury or death related to allergens, food-borne illnesses or other food safety incidents caused by products we sell or involving our suppliers, could result in the discontinuance of sales of these products or cessation of our relationships with such suppliers, or otherwise result in increased operating costs, lost sales, regulatory enforcement actions or harm to our reputation. Shipment of adulterated or misbranded products, even if inadvertent, can result in criminal or civil liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against us that is more than our policy limits or not covered by our policies would have to be paid from our cash reserves, which would reduce our capital resources. The occurrence of food-borne illnesses or other food safety incidents could also adversely affect the price and availability of affected ingredients and raw materials, resulting in higher costs, disruptions in supply and a reduction in our sales. Furthermore, any instances of food contamination, regulatory noncompliance, and/or retail customer noncompliance whether or not caused by our actions, could compel us or our retail customers, depending on the circumstances, to conduct a recall in accordance with United States Food and Drug Administration, or the FDA, regulations and comparable foreign laws and regulations, as well as other regulations and laws in the other jurisdictions in which we operate. Product recalls could result in significant losses due to their associated costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing retail customers and shelf space or e-commerce prominence, and a potential negative impact on our ability to attract new customers and consumers, and maintain our current customer and consumer base due to negative consumer experiences or because of an adverse impact on our brands and reputation. The costs of a recall could exceed or be outside the scope of our existing or future insurance policy coverage or limits. While we maintain batch and lot tracking capability to identify potential causes for any discovered problems, there is no guarantee that in the case of a potential recall, we will effectively be able to isolate all product that might be associated with any alleged problem, or that we will be able to quickly and conclusively determine the root cause or narrow the scope of the recall. Our potential inability to affect a recall quickly and effectively or manage the consumer and retailer communication in a way that mitigates concerns, might create adverse effects on our business and reputation, including large recall and disposal costs and significant loss of revenue. In addition, food and beverage companies have been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering, and we, like any food company, could be a target for product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and pathological organisms into consumer products as well as product substitution. The FDA enforces laws and regulations, such as the Food Safety Modernization Act, that require companies like us to analyze, prepare and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm. If we do not adequately address the possibility, or any actual instance, of product tampering, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could materially adversely affect our business, financial condition, results of operations and cash flows. Most countries in which we operate have comparable regulations that we endeavor to comply with, but any failure to meet regulators or customers’ expectations could impact our business in these markets and have a material adverse effect on our reputation as well as our business, financial condition, results of operations and cash flows. Failure to comply with federal, and state laws and regulations relating to data privacy, data protection, advertising and consumer protection, or the expansion of current or the enactment of new laws or regulations relating to data privacy, data protection, advertising and consumer protection, could adversely affect our business, financial condition, results of operations and cash flows. We collect, maintain, and otherwise process significant amounts of personally identifiable information and other data relating to our customers and employees. Additionally, we rely on a variety of marketing techniques, including email and social media marketing, and we are subject to various laws and regulations that govern such marketing and advertising practices. We are subject to numerous state, and federal laws, rules and regulations govern the collection, use and protection of personally identifiable information. In the United States, federal and state laws impose limits on, or requirements regarding the collection, distribution, use, security and storage of personally identifiable information of individuals and there has also been increased regulation of data privacy and security particularly at the state level. For example, in 2018, California enacted the California Consumer Privacy Act, or the CCPA, which came into effect in January 2020, and gives California residents expanded rights to their personal information, provides for civil penalties for violations and provides a private right of action for data breaches that is expected to increase data breach litigation, and in November 2020, California voters passed the California Privacy Rights Act which took effect in 2023 and significantly expanded the CCPA. We expect that there will continue to be new proposed laws, regulations, and industry standards concerning data privacy, data protection, and information security in the United States and other jurisdictions at all levels of legislature, governance, and applicability. We cannot yet fully determine the impact that these or future laws, rules, and regulations may have on our business or operations. 19 Table of Contents Further, we rely on a variety of marketing techniques and practices to sell our products and to attract new customers and consumers, and we are subject to various current and future data protection laws and obligations that govern marketing and advertising practices. For example, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act, establishes specific requirements for commercial email messages in the United States. Governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools. Laws and regulations regarding the use of these cookies and other current online tracking and advertising practices could increase our costs of operations and limit our ability to acquire new consumers on cost-effective terms, which, in turn, could have an adverse effect on our business, financial condition, results of operations and cash flows. Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanisms as a result of industry regulatory or legal developments, the adoption by consumers of browser settings or “ad-blocking” software, and the development and deployment of new technologies could materially impact our ability or our media buyers’ ability to collect data or to efficiently and effectively deliver relevant promotions or media, which could materially impair the results of our operations. Additionally, some providers of consumer devices, web browsers and application stores have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies or to block other tracking technologies, require additional consents, or limit the ability to track user activity, which could if widely adopted result in the use of third-party cookies and other methods of online tracking becoming significantly less effective. Loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new consumers on cost-effective terms, which, in turn, could have an adverse effect on our business, financial condition, results of operations and cash flows. We may also be bound by contractual requirements applicable to our collection, use, processing, and disclosure of various types of data, including personally identifiable information, and may be bound by self-regulatory or other industry standards relating to these matters. Our collection and use of consumer data is also subject to our privacy policies, including online privacy policies. The proliferation of data privacy laws in variation creates increased risk of non-compliance and increased costs of maintaining compliance. Additionally, while we strive to comply with our posted policies and all applicable laws, regulations, other legal obligations and certain industry standards, laws, rules, and regulations concerning data privacy, data protection, and data security evolve frequently and may be inconsistent from one jurisdiction to another or may be interpreted to conflict with our practices or in a manner that is inconsistent from one jurisdiction to another. The adoption of further data privacy and security laws may increase the cost and complexity of implementing any new offerings in other jurisdictions. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any international, federal or state data privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other legal or contractual obligations relating to data privacy or consumer protection could adversely affect our reputation, brands and business, and may result in regulatory investigations, claims, proceedings or actions against us by governmental entities, customers, suppliers or others, class actions, or other liabilities or may require us to change our operations and/or cease using certain data sets. Any such claims, proceedings or actions could hurt our reputation, brands and business, force us to incur significant expenses in defense of such proceedings or actions, distract our management, increase our costs of doing business, result in a loss of customers and third-party providers and result in the imposition of significant damages liabilities or monetary penalties. Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business. From time to time, we may be party to various claims and litigation proceedings. We evaluate these claims and litigation 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 may establish reserves, 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 our assessments and estimates. 20 Table of Contents For example, approximately six years ago, we encountered a third-party opposition from a kombucha company using the name “Buddha” during our trademark application process in Canada. After evaluating the costs and benefits of pursuing the opposition, we determined that Canadian trademark registration was not necessary for our U.S. market development strategy and abandoned the application. While this decision did not impact our U.S. operations or brand protection, it illustrates the potential complexities and costs associated with international trademark conflicts, particularly where similar or phonetically similar brand names may create confusion in foreign markets. Even when not merited, the defense of these claims or lawsuits may divert our management’s attention, and we may incur significant expenses in defending these lawsuits. The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against us, which could have a material adverse effect on our financial position, cash flows or results of operations. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and potentially prevent us from selling or manufacturing our products, which would make it more difficult to compete effectively or to obtain adequate insurance in the future. Furthermore, while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable. Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery. Legislative or regulatory changes that affect our products, including new taxes, could reduce demand for products or increase our costs. Taxes imposed on the sale of certain of our products by federal, state and local governments in the United States could cause consumers to shift away from purchasing our beverages. Several municipalities in the United States have implemented or are considering implementing taxes on the sale of certain “sugared” beverages, including non-diet soft drinks, fruit drinks, teas and flavored waters to help fund various initiatives. There has also been a trend among some public health advocates to recommend additional governmental regulations concerning the marketing and labeling/packaging of the beverage industry. Additional or revised regulatory requirements, whether labeling, packaging, tax or otherwise, could have a material adverse effect on our financial condition, consumer demand and results of operations. Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price. As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404. As a public company, we will be subject to significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report following the completion of this Offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business. Once we are no longer an “emerging growth company,” our auditors will be required to issue an attestation report on the effectiveness of our internal controls on an annual basis. In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report. Our testing, or the subsequent testing (if required) by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Any material weaknesses could result in a material misstatement of our annual or quarterly financial statements or disclosures that may not be prevented or detected. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report (to the extent it is required to issue a report), investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our Common Stock. 21 Table of Contents Risks Relating to Our Information Technology and Intellectual Property We rely heavily on our information technology systems, as well as those of our third-party vendors and businesses, for our business to effectively operate and to safeguard confidential information; any significant failure, inadequacy, interruption or data security incident could adversely affect our business, financial condition, results of operations and cash flows. We use information technology systems, infrastructure and data in substantially all aspects of our business operations. Our ability to effectively manage our business and coordinate the manufacturing, sourcing, distribution and sale of our products depends significantly on the reliability and capacity of these systems. We are critically dependent on the integrity, security and consistent operations of these systems. We also collect, process and store numerous classes of sensitive, personally identifiable and/or confidential information and intellectual property, including customers’ and suppliers’ information, private information about employees and financial and strategic information about us and the businesses with which we do business. The secure processing, maintenance and transmission of this information is critical to our operations. Our systems and those of our third party vendors and businesses may be subject to damage or interruption from power outages or damages, telecommunications problems, data corruption, software errors, network failures, acts of war or terrorist attacks, fire, flood, global pandemics and natural disasters; our existing safety systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages. In addition, we and our third-party vendors and businesses may have to upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support the increasing needs of our expanding business. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could disrupt our business and result in transaction errors, processing inefficiencies and loss of production or sales, causing our business and reputation to suffer. Further, our systems and those of our third-party vendors and businesses may be vulnerable to, and have experienced attempted, security incidents, attacks by hackers (including ransomware attacks, phishing attacks and other third-party intrusions), acts of vandalism, computer viruses, misplaced or lost data, human errors or other similar events. If unauthorized parties gain access to our networks or databases, or those of our third-party vendors or businesses, they may be able to steal, publish, delete, use inappropriately or modify our private and sensitive third-party information, including credit card information and other personally identifiable information. In addition, employees may intentionally or inadvertently cause data or security incidents that result in unauthorized release of personally identifiable or confidential information. Because the techniques used to circumvent security systems can be highly sophisticated, change frequently, are often not recognized until launched against a target (and even, in many cases, until after having been successfully launched for some time) and may originate from less regulated and remote areas around the world, we may be unable to proactively address all possible techniques or implement adequate preventive measures for all situations. Security incidents compromising the confidentiality, integrity, and availability of our sensitive information and our systems and those of our third party vendors and businesses could result from cyber-attacks, computer malware, viruses, social engineering (including spear phishing and ransomware attacks), supply chain attacks, efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations, errors or malfeasance of our personnel, and security vulnerabilities in the software or systems on which we, or our third party vendors or businesses, rely. Cybercrime and hacking techniques are constantly evolving. We and/or our third-party vendors and/or businesses may be unable to anticipate attempted security breaches, react in a timely manner, or implement adequate preventative measures, particularly given the increasing use of hacking techniques designed to circumvent controls, avoid detection, and remove or obfuscate forensic artifacts. We anticipate that these threats will continue to grow in scope and complexity over time and such incidents may occur in the future, and could result in unauthorized, unlawful, or inappropriate access to, inability to access, disclosure of, or loss of the sensitive, proprietary and confidential information (including personally identifiable information) that we handle. As we rely on a number of our third-party vendors and businesses, we are exposed to security risks outside of our direct control, and our ability to monitor these third-party vendors’ and business partners’ data security is limited. While we employ a number of security measures designed to prevent, detect, and mitigate potential for harm to our users and our systems from the theft of or misuse of user credentials on our network, these measures may not be effective in every instance. Moreover, we or our third-party vendors or businesses may be more vulnerable to such attacks in remote work environments, which have increased in response to the COVID-19 pandemic. Additionally, while we maintain cyber insurance that may help provide coverage for these types of incidents, we cannot assure you that our insurance will be adequate to cover costs and liabilities related to these incidents. Any such breach, attack, virus or other event could result in additional costly investigations and litigation exceeding applicable insurance coverage or contractual rights available to us, civil or criminal penalties, operational changes or other response measures, loss of consumer confidence in our security measures, and negative publicity that could adversely affect our business, reputation, financial condition, results of operations and cash flows. 22 Table of Contents In addition, if any such event resulted in access, disclosure or other loss or unauthorized use of information or data, such as customers’ and suppliers’ information, private information about employees and financial and strategic information about us and our businesses, whether actual or perceived, could result in legal claims or proceedings, regulatory investigations or actions, and other types of liability under laws that protect the privacy and security of personally identifiable information, including federal, state and foreign data protection and privacy regulations, violations of which could result in significant penalties and fines. The cost of investigating, mitigating and responding to potential security breaches and complying with applicable breach notification obligations to individuals, regulators and others can be significant and the risk of legal claims in the event of a security breach is increasing. For example, the CCPA creates a private right of action for certain data breaches. Further, defending a suit, regardless of its merit, could be costly, divert management attention and harm our reputation. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductibles or co-insurance requirements, could adversely affect our reputation, business, financial condition, results of operations and cash flows. Any material disruption or slowdown of our systems or those of our third-party vendors or businesses, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our risks are likely to increase as we continue to expand, grow our customer base, and process, store, and transmit increasing amounts of proprietary and sensitive data. In addition, although we seek to detect and investigate all data security incidents, security breaches and other incidents of unauthorized access to our information technology systems, and data can be difficult to detect. Any delay in identifying such breaches or incidents may lead to increased harm and legal exposure of the type described above. We may be unable to adequately protect our intellectual property or may face claims that we infringe the intellectual property of others. Our success depends in part on our ability to protect proprietary processes, trade secrets, know-how, product formulations, brand trademarks, and other confidential information that differentiate our business and brand. We rely on a combination of trademark laws, trade secret protection, non-disclosure agreements, and other contractual arrangements to safeguard these assets. However, these protections may not be sufficient to prevent unauthorized use, reverse engineering, or disclosure by employees, contractors or competitors. We have not sought patent protection for certain operational processes, including proprietary techniques and AI-driven systems. Instead, we depend on trade secret protection and confidentiality. However, trade secrets are inherently difficult to protect, and we cannot ensure that our agreements will prevent unauthorized disclosure or use. In some cases, others may independently develop similar formulations or technologies, which would limit our ability to assert trade secret rights. Our trademarks, including those related to our brand and product names, are valuable assets that support our market identity and consumer recognition. However, we may not be able to register or enforce trademarks in all jurisdictions, and the scope of our trademark rights may be challenged or narrowed. Third parties may also adopt similar marks, particularly in regions where our trademarks are not yet registered, leading to consumer confusion and dilution of brand value. In some instances, we have entered into coexistence or settlement agreements that limit our ability to use or enforce certain marks in specific markets or categories. In addition to challenges in protecting our own intellectual property, we may face claims that our products, packaging, marketing, or business practices infringe on the intellectual property rights of others. Even if meritless, these claims can be expensive, time-consuming, and disruptive to our operations. If we are found to infringe, we may need to obtain licenses (which may not be available on favorable terms), rebrand, or redesign products or packaging. We could also be subject to damages, settlements, or inventory write-offs. Any failure to adequately protect our intellectual property, or defend against infringement claims, could materially and adversely affect our brand equity, competitive position, and financial condition. Risks Relating to Ownership of Our Common Stock We currently have a limited trading volume, which can result in higher price volatility for, and reduced liquidity of, our common stock. There has been limited daily volume of trading in our common stock, which has limited the overall and perceived liquidity of our common stock on that market. 23 Table of Contents A more active trading market for our shares may never develop or be sustained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. The absence of an active trading market increases price volatility and reduces the liquidity of our common stock. As long as this condition continues, the sale of a significant number of shares of common stock at any particular time could be difficult to achieve at the market prices prevailing immediately before such shares are offered and, if an active market for our common stock does not develop, it may be difficult to sell shares without depressing the market price for the shares, or at all. In addition, in the event that an active trading market does not develop, the price of our common stock may not be a reliable indicator of the fair value of our common stock. Furthermore, if our common stock ceases to be listed on the NYSE American or other national exchange, holders may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our common stock, and the market value of our common stock would likely decline. You may experience dilution of your ownership interest because of the future issuance of additional shares of our common stock and our preferred stock. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 100 million shares of capital stock, consisting of 90 million shares of common stock, par value $0.001 per share, and 10 million shares of preferred stock, par value $0.001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are trading. If and when a larger trading market for our common stock develops, the market price of our common stock is still likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the price at which you acquired them. The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including, but not limited to: ● variations in our revenue and operating expenses; ● market conditions in our industry and the economy as a whole; ● actual or expected changes in our growth rates or our competitors’ growth rates; ● announcements of innovations or new products or services by us or our competitors; ● announcements by the government relating to regulations that govern our industry; ● sales of our common stock or other securities by us or in the open market; and ● changes in the market valuations of other comparable companies. In addition, if the market for beverage industry stocks or the stock market in general experiences loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of your investment in our common stock. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, operating results and financial condition. We do not expect to pay dividends. We have never declared or paid any cash dividends or distributions on our common stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion, and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. 24 Table of Contents The declaration, payment, and amount of any future dividends will be made at the discretion of the Board of Directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the Board of Directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. If the Company does not pay dividends, the Company’s common stock may be less valuable because a return on an investor’s investment will only occur if the Company’s stock price appreciates. If securities or industry analysts do not publish research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.