What changed in this filing

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Item 1A. Risk Factors

2021-05-17 compared with 2020-05-29 · 74 added, 68 removed, 165 unchanged (46% of the section changed)

8 unchanged sentences

We are unable to meet all of our obligations as they accrue, and the aggregate amount of our liabilities

exceeds the value of our assets.

Creditors may have the right to initiate involuntary bankruptcy proceedings against us to seek

our liquidation.

We cannot assure that we would be successful in avoiding liquidation by converting such liquidation proceedings

to a Chapter 11 reorganization, which would permit us to develop and propose, for creditor and court approval, a reorganization

exceeds the reported value of our assets.

Creditors may have the right to initiate involuntary bankruptcy proceedings against

us to seek our liquidation.

We cannot assure that we would be successful in avoiding liquidation by converting such liquidation

proceedings to a Chapter 11 reorganization, which would permit us to develop and propose, for creditor and court approval, a reorganization

plan that would enable us to proceed.

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to continue as a going concern.

had a net loss of approximately $1.2 million and approximately $1.1 million during the years ended December 31, 2019 and 2018,

respectively, which includes approximately $149,000 and approximately $165,000 in losses from discontinued operations.

an accumulated deficit of approximately $78.5 million as of December 31, 2019.

During the year ended December 31, 2019, net cash

used in operations was approximately $123,000.

We had current liabilities of approximately $38.0 million and an approximately

$38.0 million working capital deficit as of December 31, 2019.

The report from our auditors on our consolidated financial statements

for the years ended December 31, 2019 and 2018, as for several previous years, contains explanatory paragraphs about our ability

to continue as a going concern.

had net income of approximately $0.5 million and a net loss of approximately $1.2 million during the years ended December 31, 2020 and

2019, respectively, which includes a gain of approximately $80,000 and a loss of approximately $149,000 from discontinued operations

in 2020 and 2019, respectively.

Our net income during the year ended December 31, 2020, was driven by a gain of approximately $1.0 million

recognized from the write-off of accounts payable, which was a one-time event.

We had an accumulated deficit of approximately $77.9 million

as of December 31, 2020.

During the year ended December 31, 2020, net cash provided by operations was approximately $471,000.

We had current liabilities of approximately $38.1 million and an approximately $37.1 million working capital deficit as of December

The report from our auditors on our consolidated financial statements for the years ended December 31, 2020 and 2019, as for

several previous years, contains explanatory paragraphs about our ability to continue as a going concern.

Our ability to continue as

a going concern is dependent upon our ability to successfully accomplish our business plan described in the following paragraphs and

eventually attain profitable operations.

The accompanying financial statements do not include any adjustments that may be necessary if

we are unable to continue as a going concern.

novel COVID-19 pandemic is having and will likely continue to have negative effects on our business and results of operations.

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at this time and will depend on numerous circumstances outside our control or the ability of anyone to predict accurately.

secondary and tertiary unpredictable economic effects on our business and on the worldwide economy could be ruinous.

The probability

of reoccurrences of virus outbreaks is high and may continue for many months, likely resulting in further government-ordered lockdowns,

stay-home, or shelter-in-place orders, and social distancing;

secondary and tertiary unpredictable and continuing economic effects on our business and on the worldwide economy could be ruinous.

The probability of reoccurrences of virus outbreaks is high and may continue for many months, likely resulting in further government-ordered

lockdowns, stay-home, or shelter-in-place orders, and social distancing;

restrictions on travel;

and other widespread measures.

predict the effect of these circumstances on us and our vendors, customers, and community;

We cannot predict the impact of recently introduced vaccines, the rate of inoculations, and whether so-called herd immunity will

be achieved to reduce adverse impacts.

We cannot predict the effect of these circumstances on us and our vendors, customers, and

the global economy and political conditions;

and the health of our employees, contractors, and their families;

all of which will affect how quickly and to what extent normal

economic and operating activities can resume.

Even after the COVID-19 pandemic has subsided, we may continue to experience an

adverse effect on our business as a result of its global economic impact, including any resulting and ongoing recession.

these circumstances likely exert similar hardships on those with which we deal, such as vendors, shippers, distributors, and customers.

As a result, we have made adjustments to, and will need to continue to adjust, our business and expenditures in an effort to correlate

our activities with business exigencies.

These adjustments may include restrictions of executive and employee travel, hiring freezes

or delays, and limitations on marketing and other expenditures.

The ultimate financial impact and duration of all of the foregoing

cannot now be predicted and may well exceed our expectations or our ability to cope with them.

of which will affect how quickly and to what extent normal economic and operating activities can resume.

Even after the COVID-19

pandemic has subsided, we may continue to experience an adverse effect on our business as a result of its global economic impact,

including any resulting and ongoing recession.

All of these circumstances likely exert similar hardships on those with which we

deal, such as vendors, shippers, distributors, and customers.

As a result, we have made adjustments to, and will need to continue

to adjust, our business and expenditures in an effort to correlate our activities with business exigencies.

These adjustments

may include restrictions of executive and employee travel, hiring freezes or delays, and limitations on marketing and other expenditures.

The ultimate financial impact and duration of all of the foregoing cannot now be predicted and may well exceed our expectations

or our ability to cope with them.

have only recently begun new operations with revenue potential after suffering severe operating and legal hurdles in 2016.

on the term sheet signed in April 2019 and the Exclusive Manufacturing and Distribution Agreement signed in December 2019, we

began to prepare to manufacture, market, and distribute an array of products under the HUSTLER®

brand name, but have not actually

commenced revenue-generating, full-scale operations.

We cannot assure that our efforts will be successful, that we will be able

to generate revenues, or that revenues will be sufficient to offset operating costs or recover start-up costs.

We have not generated

revenue from product sales since we discontinued manufacturing and distribution our previous non-alcoholic beverage product due

to legal and financial problems.

have only recently commenced revenue-generating, full-scale operations under our GloBrands-HUSTLER®

term sheet signed in April 2019 and an anticipated execution of a definitive agreement, we began to prepare to manufacture, market,

and distribute an array of products under the HUSTLER®

We cannot assure that our efforts will be successful, that

we will be able to generate revenues, or that revenues will be sufficient to offset operating costs or recover start-up costs.

new efforts to market a group of products under the HUSTLER®

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and marketing products under the HUSTLER®

brand name will be a new business for us that will be subject to all of the risks

and uncertainties of a new business, including the difficulties of:

brand name is a new business for us that will be subject to all of the risks and

uncertainties of a new business, including the difficulties of:

a new product that can be manufactured, marketed, and distributed successfully;

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new business will be dependent on GloBrands maintaining the license to use the HUSTLER®

new business is fully dependent on GloBrands’

business is fully dependent on GloBrands’

ability to preserve its rights to use the HUSTLER®

assure that GloBrands will be able to comply with all of the terms, covenants, or conditions of the governing license agreement

or that GloBrands, the counterparty to our manufacturing agreement, will meet all of its obligations to us or HUSTLER®, through

which GloBrands obtained its rights.

We cannot assure

that GloBrands will be able to comply with all of the terms, covenants, or conditions of the governing license agreement or that

GloBrands, the counterparty to our manufacturing agreement, will meet all of its obligations to us or HUSTLER, through which GloBrands

obtained its rights.

Under its licenses with the Flynt/HUSTLER®

organization, GloBrands has substantial minimum

royalty payments due the Flynt/HUSTLER®

organization under each of the three product licenses, and we have to rights to monitor

whether GloBrands is making those payments as required or to cure any GloBrands defaults.

organization, GloBrands has substantial minimum royalty payments

due the Flynt/HUSTLER®

organization under each of the three product licenses, and we have to rights to monitor whether GloBrands

is making those payments as required or to cure any GloBrands defaults.

Further, we cannot assure that HUSTLER®

will fulfill its obligations under its agreements to GloBrands.

Breaches by any party to the agreements under which we derive

our rights to use the HUSTLER®

brand name will place the entire business we are currently launching in peril and force us

to terminate operations.

its obligations under its agreements to GloBrands.

Breaches by any party to the agreements under which we derive our rights to

use the HUSTLER®

brand name will place the entire business we are currently launching in peril and force us to terminate operations.

of our assets are encumbered to secure the payment of secured convertible debentures that require payments if not previously converted

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encumbered all of our assets to secure the payment of indebtedness and accrued interest due on secured convertible debentures,

of which $260,000 is required to be repaid between June 3 and December 23, 2020, and approximately $2.4 million is required to

be repaid by April 2027, if not previously converted.

In the event of default in repayment, our secured creditor could exercise

its remedies, including the execution on all of our assets, which would result in the termination of our activities.

assure that the secured creditor will continue to refrain from aggressive collection efforts.

The existence of these secured obligations

will likely significantly impair our ability to obtain capital from external sources.

of which approximately $2.4 million is required to be repaid by April 2027, if not previously converted.

In the event of default

in repayment, our secured creditor could exercise its remedies, including the execution on all of our assets, which would result

in the termination of our activities.

We cannot assure that the secured creditor will continue to refrain from aggressive collection

The existence of these secured obligations will likely significantly impair our ability to obtain capital from external

will require substantial amounts of additional capital from external sources.

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such products on terms that are less favorable to us than might otherwise be available.

financial statements report liabilities incurred before 2013 that may impair our ability to seek capital.

financial statements report liabilities incurred before 2013 that may impair our ability to obtain capital.

balance sheet and stockholders’

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may suffer substantial dilution related to issued stock options, warrants, and convertible debentures.

of December 31, 2019, we had a number of agreements or obligations for the possible issuance of common stock that may result in

dilution to investors.

of December 31, 2020 and 2019, we had a number of agreements or obligations for the possible issuance of common stock that may

result in dilution to investors.

These include:

shares required for issuance upon the exercise of stock options;

shares required for issuance under our outstanding convertible

debentures and promissory notes at approximately $0.01 per share.

shares required for issuance under our outstanding convertible debentures and promissory notes at approximately $0.025 per

sale, or even the possibility of the sale, of the shares of common stock underlying these commitments could have an adverse effect

1 unchanged sentence

issuances of stock, stock options and warrants, and convertible debt will cause additional substantial dilution to our stockholders.

number of our issued and outstanding shares was recently decreased as the result of a 1 for 1,000 reverse stock split of our common

number of our issued and outstanding shares was decreased in 2019 as the result of a 1,000-to-one reverse stock split of our common

As a result, 95% of our common stock is available for issuance.

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UNRESOLVED STAFF COMMENTS

sublease a 2,500-square-foot office, showroom, and warehouse in Las Vegas, NV for $2,500 per month from GloBrands under a lease that expires

in October 2022.

We believe that the facilities described above are generally in good condition, well maintained, and suitable and

adequate for our current needs.

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

What changed 10-K

Item 1A. Risk Factors