What changed in this filing

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Item 1A. Risk Factors

2022-04-15 compared with 2021-05-17 · 205 added, 204 removed, 35 unchanged (92% of the section changed)

addition to the negative implications of all information and financial data included in or referred to directly in this report,

you should consider the following risk factors.

This report contains forward-looking statements and information concerning us,

our plans, and other future events.

Those statements should be read together with the discussion of risk factors set forth below,

because those risk factors could cause actual results to differ materially from such forward-looking statements.

addition to the negative implications of all information and financial data included in or referred to directly in this report, you should

consider the following risk factors.

This report contains forward-looking statements and information concerning us, our plans, and other

future events.

Those statements should be read together with the discussion of risk factors set forth below, because those risk factors

could cause actual results to differ materially from such forward-looking statements.

recent military intervention in Ukraine and the international community’s response have created substantial political and economic

disruption, uncertainty, and risk.

military intervention in Ukraine in late February 2022, Ukraine’s widespread resistance, and the NATO-led and United States coordinated

economic, financial, communications, and other sanctions imposed by other countries have created significant political and economic world

There is significant risk of expanded military confrontation between Russia and other countries, possibly including the

United States, Current and likely additional international sanctions against Russia may contribute to higher costs, particularly for

petroleum-based products.

These and related actions, responses, and consequences that cannot now be predicted or controlled may contribute

to worldwide economic reversals.

In these circumstances, our efforts to distribute branded products may be delayed or otherwise negatively

may be deemed to be insolvent and may face liquidation.

may be deemed to be insolvent.

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

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

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.

Even if we were to propose a reorganization plan, any reorganization plan would likely require

that we obtain new post-petition funding, which may be unavailable.

Further, in the event of bankruptcy, our secured creditors

that have encumbrances on all of our assets would likely execute and take all of our assets, which may leave nothing for other

creditors or our stockholders.

auditors’

report for our most recent fiscal year, like previous years, contains an explanatory paragraph 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.

March 11, 2020, the World Health Organization characterized COVID-19 as a global pandemic.

We are monitoring the situation closely

and our response to the COVID-19 pandemic continues to evolve.

Our current principal responsive measures include implementing

a mandatory work from home policy for most employees, restricting airplane travel, rescheduling marketing efforts, and product

market launches, and updating our planning for future events in recognition of the fact that retail outlets for the HUSTLER®-branded

products we manufacture and distribute are experiencing, and will likely continue to experience, substantially declining revenue.

We are also evaluating the impact of the pandemic on our supply chain as compared to product demand.

We actively monitor COVID-19-related

developments and may take further actions that alter our business operations as may be required by federal, state, or local authorities

or that we determine are in the best interests of our employees, customers, vendors, and stockholders.

The effects of these operational

modifications will be reflected in current and future reporting periods.

duration and magnitude of the COVID-19 pandemic impacts on our business operations and overall financial performance is unknown

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

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;

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.

Even if we were to propose a reorganization plan, any reorganization plan would likely require that we obtain

new post-petition funding, which may be unavailable.

Further, in the event of bankruptcy, our secured creditors that have encumbrances

on all our assets would likely execute and take all our assets, which may leave nothing for other creditors or our stockholders.

auditors’ report for our most recent fiscal year, like previous years, contains an explanatory paragraph about our ability to continue

as a going concern.

had a net loss from continuing operations of approximately $838,500 during the year ended December 31, 2021, and net income from

continuing operations of about $453,000 during the year ended December 31, 2020.

We had net income from discontinued operations

of approximately $965,000 and $80,000 from discontinued operations in 2021 and 2020, respectively.

We had an accumulated deficit

of approximately $40.6 million as of December 31, 2021.

During the year ended December 31, 2021, operations provided net cash of approximately

We had current liabilities of approximately $39.5 million and current assets of about $1.1 million, for a working capital

deficit of approximately $38.4 million as of December 31, 2021.

The report from our auditors on our consolidated financial statements

for the years ended December 31, 2021 and 2020, 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.

elevated levels of inflation could adversely impact our business and results of operations.

United States has recently experienced elevated levels of inflation in prices for petroleum products and most other goods and services.

Continued inflation could have complex effects on our business and results of operations, some of which could be materially adverse and

could also increase volatility and uncertainty in the business environment.

In addition, governmental policy responses to the current

inflation environment could further affect our business, such as changes to monetary and fiscal policy.

The duration and severity of

the current inflationary period, and the governmental responses thereto, are unknown and cannot be estimated with precision.

impact of the COVID-19 pandemic on our business, financial position, and results of operations continues to be unpredictable and will

likely continue to have negative effects on our business and results of operations.

impacts of the COVID-19 pandemic continue to be highly unpredictable and volatile in light of the potential for a resurgence of infection

rates or as a result of future mutations, variants, or related strains of the virus.

Recent years have demonstrated the widespread and

varying impacts of the pandemic on certain business operations, costs of doing business, supply chain operations, the extent and duration

of measures to try to contain the virus (such as travel bans and restrictions, quarantines, shelter-in-place orders, business and government

shutdowns, and other restrictions on retailers), our ability to predict future performance, and our financial performance, among other

duration and magnitude of the COVID-19 pandemic impacts on our business operations and overall financial performance is unknown at this

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

The 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 responses and mandates;

social distancing;

restrictions on travel;

and other widespread measures.

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

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 community;

the global economy and political conditions;

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

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.

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®

brand name face all of the risks and uncertainties of a new business.

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

because of its global economic impact on inflation, national debt, consumer trends, supply chain disruptions, and employment culture.

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 will need to continue to adjust our business and expenditures to correlate our activities with business exigencies.

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 which cannot now be predicted and may well exceed our expectations or our

ability to cope with them.

or interruption of our supply relationships and increases in labor costs and the prices of our raw materials will negatively impact our

business or financial condition.

availability and price of materials from which our products are manufactured are affected by a variety of factors beyond our control,

including changes in supply and demand, general economic conditions, labor costs, fuel-related transportation bottlenecks and costs,

competition, and political uncertainty around the world.

We may be unable to pass cost increases from our manufacturers on to our customers.

In addition, transportation costs and delivery delays have generally increased and may continue to increase.

Sometimes cost increases

are too immediate for us to be able to pass on to our customers.

efforts to market a group of products under the HUSTLER® brand name face all the risks and uncertainties of a developing business.

Manufacturing

and marketing products under the HUSTLER®

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:

and marketing products under the HUSTLER® brand name will be subject to all the risks and uncertainties of a developing business,

including the difficulties of:

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

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a cost-effective business that generates revenue sufficiently over the costs of start-up and other related expenses;

effectively in an industry dominated by larger, more experienced firms with well-established markets and greater management

and financial resources;

effectively in an industry dominated by larger, more experienced firms with well-established markets and greater management and financial

operations and growth.

will be subject to myriad other risks and uncertainties, over which we have no control or material influence.

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

business is fully dependent on GloBrands’

ability to preserve its rights to use the HUSTLER®

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.

Further, we cannot assure that HUSTLER®

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

to common stock.

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

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

business will be dependent on GloBrands maintaining the license to use the HUSTLER® brand name.

business is fully dependent on GloBrands’ ability to preserve its rights to use the HUSTLER® brand name.

We cannot assure that

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

counterparty to our manufacturing agreement, will meet all 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 no 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.

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

common stock.

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

The existence

of these secured obligations will likely significantly impair our ability to obtain capital from external sources.

will require substantial amounts of additional capital from external sources.

may seek required funds through the sale of equity or other securities.

Our ability to obtain financing on acceptable terms will

depend on many factors, including the condition of the securities markets generally and for companies like us at the time of the

our business, financial condition, and prospects at the time of the proposed offering;

our ability to identify and reach

a satisfactory arrangement with prospective securities sales and investment groups;

Our ability to obtain financing on acceptable terms will depend

on many factors, including the condition of the securities markets generally and for companies like us at the time of the offering;

business, financial condition, and prospects at the time of the proposed offering;

our ability to identify and reach a satisfactory arrangement

with prospective securities sales and investment groups;

and various other factors.

We cannot assure

that we will be able to obtain financing on terms favorable to us or at all.

The issuance of additional equity securities may

dilute the interest of our existing stockholders or may subordinate their rights to the superior rights of new investors.

We cannot assure that we will be able to obtain financing

on terms favorable to us or at all.

The issuance of additional equity securities may dilute the interest of our existing stockholders

or may subordinate their rights to the superior rights of new investors.

may also seek additional capital through strategic alliances, joint ventures, or other collaborative arrangements.

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may dilute our interest in any specific project and decrease the amount of revenue that we may receive from the project.

assure that we will be able to negotiate any strategic investment or obtain required additional funds on acceptable terms, if

In addition, our cash requirements may vary materially from those now planned because of the results of future marketing

and manufacturing agreements;

We cannot assure

that we will be able to negotiate any strategic investment or obtain required additional funds on acceptable terms, if at all.

our cash requirements may vary materially from those now planned because of the results of future marketing and manufacturing agreements;

results of product testing;

potential relationships with our strategic or collaborative partners;

changes in the focus and direction of our research and development programs;

changes in the focus and direction

of our research and development programs;

competition and technological advances;

issues related

to patent or other protection for proprietary technologies;

issues related to patent or other protection for proprietary

technologies;

and other factors.

adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate our planned efforts;

through arrangements with strategic or collaborative partners that may require us to relinquish rights to certain of our technologies,

product candidates, or products that we would otherwise seek to develop or commercialize ourselves;

or sublicense our rights to

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

obtain funds through

arrangements with strategic or collaborative partners that may require us to relinquish rights to certain of our technologies, product

candidates, or products that we would otherwise seek to develop or commercialize ourselves;

or sublicense our rights to 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 obtain capital.

balance sheet and stockholders’

deficit continue to include liabilities accrued prior to 2013 by our subsidiary, whose operations

were discontinued in 2016, but which we still report on our financial statements in accordance with generally accepted accounting

principles (“GAAP”).

These liabilities include a judgment with a balance of $17.2 million as of December 31, 2020,

awarded to Playboy Enterprises, Inc., which is barred by court order from seeking collection against us, the parent, and amounts

due to assorted trade creditors and professional firms for services rendered to other subsidiaries prior to 2013, which we believe

may be barred by the applicable statutes of limitations.

The resulting large, past-due liabilities may impair our ability to obtain

additional capital or decrease the market in which our common stock is traded.

balance sheet and stockholders’ deficit continue to include liabilities accrued prior to 2013 by our subsidiary, whose operations

were discontinued in 2016, but which we still report on our financial statements in accordance with generally accepted accounting principles

These liabilities include a judgment with a balance of $17.2 million as of December 31, 2021, awarded to Playboy

Enterprises, Inc., which is barred by court order from seeking collection against us, the parent, and amounts due to assorted trade creditors

and professional firms for services rendered to other subsidiaries prior to 2013, which we believe are barred by the applicable statutes

of limitations.

The resulting large, past-due liabilities may impair our ability to obtain additional capital or decrease the market

in which our common stock is traded.

substantial increase in business activities will require skilled management of growth.

we have the opportunity to commercialize new products, our success will depend on our ability to manage continued growth, including

integrating new employees, independent contractors, and consultants into an effective management and technical team;

strategic alliances, joint ventures, or other collaborative arrangements with third parties;

commercializing and marketing proposed

products and services;

we have the opportunity to commercialize new products, our success will depend on our ability to manage continued growth, including integrating

new employees, independent contractors, and consultants into an effective management and technical team;

formulating strategic alliances,

joint ventures, or other collaborative arrangements with third parties;

commercializing and marketing proposed products and services;

and monitoring and managing these relationships on a long-term basis.

If our management is unable to integrate

these resources and manage growth effectively, the quality of our products and services, our ability to retain key personnel,

and the results of our operations would be materially and adversely affected.

If our management is unable to integrate these resources and manage

growth effectively, the quality of our products and services, our ability to retain key personnel, and the results of our operations

would be materially and adversely affected.

management concluded that our internal control over financial reporting was not effective as of December 31, 2021.

with public company regulatory requirements, including those relating to our internal control over financial reporting, have and

will likely continue to result in significant expenses and, if we are unable to maintain effective internal control over financial

reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market

price of our common stock may be negatively affected.

Compliance with public

company regulatory requirements, including those relating to our internal control over financial reporting, have and will likely continue

to result in significant expenses and, if we are unable to maintain effective internal control over financial reporting in the future,

investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may

be negatively affected.

a public reporting company, we are subject to the Sarbanes-Oxley Act of 2002 as well as to the information and reporting requirements

of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and other federal securities laws.

we incur significant legal, accounting, and other expenses, including costs associated with our public company reporting requirements

and corporate governance requirements.

As an example of public reporting company requirements, we evaluate the effectiveness of

disclosure controls and procedures and of our internal control over financing reporting in order to allow management to report

on such controls.

management concluded that our internal control over financial reporting was not effective as of December 31, 2020, due to a failure

to maintain an effective control environment, failure of segregation of duties, failure of entity-level controls, and our sole

executive’s access to cash.

significant deficiencies or other material weaknesses are identified in our internal control over financial reporting that we

cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements.

This would likely have an adverse effect on the trading price of our common stock and our ability to secure any necessary additional

equity or debt financing.

of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and other federal securities laws.

As a result, we incur

significant legal, accounting, and other expenses, including costs associated with our public company reporting requirements and corporate

governance requirements.

As an example of public reporting company requirements, we evaluate the effectiveness of disclosure controls

and procedures and of our internal control over financing reporting to allow management to report on such controls.

management concluded that our internal control over financial reporting was not effective as of December 31, 2021, due to a failure to

maintain an effective control environment, failure of segregation of duties, failure of entity-level controls, and our sole executive’s

access to cash.

significant deficiencies or other material weaknesses are identified in our internal control over financial reporting that we cannot

remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements.

This would likely

have an adverse effect on the trading price of our common stock and our ability to secure any necessary additional equity or debt financing.

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

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.

of December 31, 2021, we had several 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 $0.025 per

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

on the market price for our securities or on our ability to obtain future financing.

shares required for issuance under our outstanding convertible debentures and promissory notes at approximately $0.10 per share.

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

the market price for our securities or on our ability to obtain future financing.

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 decreased in 2019 as the result of a 1,000-to-one 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 stock.

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

Given our limited cash, liquidity, and revenues, it is

likely that in the future, as in the past, we will sell stock and issue additional stock options and convertible debt to finance

our future business operations.

The issuance of additional shares of common stock, the exercise of stock options, and the conversion

of debt to stock will cause additional dilution to our stockholders and could have further adverse effects on the market price

for our securities or on our ability to obtain future financing.

stock regulations will impose certain restrictions on resales of our securities, which may cause an investor to lose some or all

of its investment.

Securities and Exchange Commission has adopted regulations that generally define a “penny stock”

to be any equity

security that has a market price (as defined) of less than $5.00 per share that is not traded on a national securities exchange

or that has an exercise price of less than $5.00 per share, subject to certain exceptions.

As a result, our common stock is subject

to rules that impose additional sales practice requirements on broker-dealers that sell these securities to persons other than

established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding

$200,000, or $300,000 together with their spouse).

For transactions covered by these rules, the broker-dealer must make a special

suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction

before the purchase.

if the price of the stock is below $5.00 per share and the issuer does not have $2.0 million or more net tangible assets or is

not listed on a registered national securities exchange, sales of that stock in the secondary trading market are subject to certain

additional rules promulgated by the U.S.

Given our limited cash, liquidity, and revenues, it is likely that in

the future, as in the past, we will sell stock and issue additional stock options and convertible debt to finance our future business

The issuance of additional shares of common stock, the exercise of stock options, and the conversion of debt to stock will

cause additional dilution to our stockholders and could have further adverse effects on the market price for our securities or on our

ability to obtain future financing.

stock regulations will impose certain restrictions on resales of our securities, which may cause an investor to lose some or all of its

Securities and Exchange Commission has adopted regulations that generally define a “penny stock” to be any equity security

that has a market price (as defined) of less than $5.00 per share that is not traded on a national securities exchange or that has an

exercise price of less than $5.00 per share, subject to certain exceptions.

As a result, our common stock is subject to rules that impose

additional sales practice requirements on broker-dealers that sell these securities to persons other than established customers and accredited

investors (generally those with assets more than $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse).

For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities

and have received the purchaser’s written consent to the transaction before the purchase.

if the price of the stock is below $5.00 per share and the issuer does not have $2.0 million or more net tangible assets or is not listed

on a registered national securities exchange, sales of that stock in the secondary trading market are subject to certain additional rules

promulgated by the U.S.

Securities and Exchange Commission.

These rules generally require, among other things,

that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements

of the market value of penny stocks, disclosure of the bid and asked prices, and disclosure of the compensation to the broker-dealer

and the salesperson working for the broker-dealer in connection with the transaction.

These rules and regulations may affect the

ability of broker-dealers to sell our common stock, thereby effectively limiting the liquidity of our common stock.

may also adversely affect the ability of persons that acquire our common stock to resell their securities in any trading market

that may exist at the time of such intended sale.

These rules generally require, among other things, that brokers engaged in

secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny

stocks, disclosure of the bid and asked prices, and disclosure of the compensation to the broker-dealer and the salesperson working for

the broker-dealer in connection with the transaction.

These rules and regulations may affect the ability of broker-dealers to sell our

common stock, thereby effectively limiting the liquidity of our common stock.

These rules may also adversely affect the ability of persons

that acquire our common stock to resell their securities in any trading market that may exist at the time of such intended sale.

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.

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