What changed in this filing

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Item 1A. Risk Factors

2021-03-29 compared with 2020-03-27 · 226 added, 185 removed, 5 unchanged (99% of the section changed)

risks and uncertainties described below could materially and adversely affect our business, financial condition and results of

operations and could cause actual results to differ materially from our expectations and projections.

You should read these Risk

Factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

in Item 7 and our Consolidated Financial Statements and related notes in Item 8.

There also may be other factors that we cannot

anticipate or that are not described in this report generally because we do not currently perceive them to be material.

factors could cause results to differ materially from our expectations.

or threatened epidemics, pandemics, outbreaks, or other public health crises may adversely affect our customers’

condition and the operations of our business.

business could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic,

pandemic, outbreak, or other public health crisis, such as the recent outbreak of novel coronavirus (COVID-19).

The risk of a

pandemic, or public perception of the risk, could cause customers to avoid public places, including retail properties, and could

cause temporary or long-term disruptions in our supply chains and/or delays in the delivery of our inventory.

Further, such

risks could also adversely affect our customers’

financial condition, resulting in reduced spending for the products we sell.

an epidemic, pandemic, outbreak or other public health crisis, such as COVID-19, could cause employees to avoid our properties,

which could adversely affect our ability to adequately staff and manage our businesses.

Risks related to an epidemic, pandemic

or other health crisis, such as COVID-19, could also lead to the complete or partial closure of one or more of our stores, facilities

or operations of our sourcing partners.

The ultimate extent of the impact of any epidemic, pandemic or other health crisis

on our business, financial condition and results of operations will depend on future developments, which are highly uncertain

and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic or other

health crisis and actions taken to contain or prevent their further spread, among others.

These and other potential impacts

of an epidemic, pandemic or other health crisis, such as COVID-19, could therefore materially and adversely affect our business,

financial condition and results of operations.

face intense competition that could prohibit us from developing or increasing our customer base.

industry within which we compete is highly competitive.

We compete with companies that have greater capital resources, facilities

and diversity of product lines.

We compete in the specialty gardening industry, selling hydroponic and organic nutrients, soils

and other gardening related products.

Additionally, if demand for our hydroponic growing equipment and products continues to grow,

we expect many new competitors to enter the market, as there are no significant barriers to retail sales of hydroponic growing

equipment and related gardening products.

More established gardening companies with much greater financial resources which do

not currently compete with us may be able to easily adapt their existing operations to sales of hydroponic growing equipment.

Due to this competition, there is no assurance that we will not encounter difficulties in increasing revenues and maintaining

and/or increasing market share.

The risks and uncertainties described below

could materially and adversely affect our business, financial condition and results of operations and could cause actual results

to differ materially from our expectations and projections.

You should read these Risk Factors in conjunction with “Management’s

Discussion and Analysis of Financial Condition and Results of Operations”

in Item 7 and our Consolidated Financial Statements

and related notes in Item 8.

There also may be other factors that we cannot anticipate or that are not described in this report

generally because we do not currently perceive them to be material.

Those factors could cause results to differ materially from

our expectations.

pandemic and the efforts to mitigate its impact may have an adverse effect on our business, liquidity, results of operations, financial

condition and price of our securities.

The pandemic involving the novel strain

of coronavirus, or COVID-19, and the measures taken to combat it, may have adverse effect on our business.

Public health authorities

and governments at local, national and international levels have announced various measures to respond to this pandemic.

Some measures

that directly or indirectly impact our business include:

voluntary or mandatory quarantines;

restrictions on travel;

● limiting gatherings of people in public places:

at all ports, product delays from overseas.

Although we have been deemed an “essential”

business by state and local authorities in the areas in which we operate, we have undertaken the following measures in an effort

to mitigate the spread of COVID-19 including limiting store business hours and encouraging employees to work remotely if possible.

We also have enacted our business continuity plans, including implementing procedures requiring employees working remotely where

possible which may make maintaining our normal level of corporate operations, quality controls and internal controls difficult.

Moreover, the COVID-19 pandemic has caused temporary or long-term disruptions in our supply chains and/or delays in the delivery

of our inventory.

Further, the COVID-19 pandemic and mitigation efforts have also adversely affected our customers’

condition, resulting in reduced spending for the products we sell.

As events are rapidly changing, we do not

know how long the COVID-19 pandemic and the measures that have been introduced to respond to it will disrupt our operations or

the full extent of that disruption.

Further, once we are able to restart normal business hours and operations doing so may

take time and will involve costs and uncertainty.

We also cannot predict how long the effects of COVID-19 and the efforts to contain

it will continue to impact our business after the pandemic is under control.

Governments could take additional restrictive measures

to combat the pandemic that could further impact our business or the economy in the geographies in which we operate.

possible that the impact of the pandemic and response on our suppliers, customers and markets will persist for some time after

governments ease their restrictions.

These measures have negatively impacted, and may continue to impact, our business and financial

condition as the responses to control COVID-19 continue.

Economic conditions could adversely

affect our business.

Uncertain global economic conditions, in

particular in light of the COVID-19 pandemic, could adversely affect our business.

Negative global economic trends, such as decreased

consumer and business spending, high unemployment levels and declining consumer and business confidence, pose challenges to our

business and could result in declining revenues, profitability and cash flow.

Although we continue to devote significant resources

to support our brands, unfavorable economic conditions may negatively affect demand for our products.

We face competition that could prohibit

us from developing or increasing our customer base.

The specialty gardening and hydroponic

product industry is highly competitive.

More established gardening companies with much greater financial resources which do not

currently compete with us may be able to easily adapt their existing operations to sales of hydroponic growing equipment.

Our competitors

may also introduce new hydroponic growing equipment, and manufacturers may sell equipment direct to consumers.

Due to this competition,

there is no assurance that we will not encounter difficulties in increasing revenues and maintaining and/or increasing market share.

In addition, increased competition may lead to reduced prices and/or margins for products we sell.

Our competitors may also introduce new hydroponic growing equipment, manufacturers may sell equipment direct to consumers, and

our distributers could cease sales of product to us.

we need additional capital to fund our operations, we may not be able to obtain sufficient capital and may be forced to limit

the scope of our operations.

connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital

to fund our future operations without additional capital investments.

There can be no assurance that additional capital will be

available to us.

If we cannot obtain sufficient capital to fund our operations, we may be forced to limit the scope of our expansion.

business depends substantially on the continuing efforts of our executive officers and our business may be severely disrupted

if we lose their services.

future success depends substantially on the continued services of our executive officers, especially our Chief Executive Officer,

Darren Lampert, our President, Michael Salaman, our Chief Financial Officer, Monty Lamirato, and our Chief Operating Officer,

Tony Sullivan.

We do not maintain key man life insurance on any of our executive officers and directors.

If one or more of our

executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily,

Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers.

we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our

business strategy.

ability to compete in the highly competitive hydroponics and gardening industry depends in large part upon our ability to attract

highly qualified managerial and sales personnel.

In order to induce valuable employees to come and work for us or to remain with

us, we intend to provide employees with stock options that vest over time.

However, the value to employees of stock options that

vest over time will be significantly affected by movements in our stock price that we will not be able to control and may at any

time be insufficient to counteract more lucrative offers from other companies.

Our success also depends on our ability to continue

to attract, retain and motivate highly skilled junior, mid-level, and senior personnel.

order to increase our sales and marketing infrastructure, we will need to grow the size of our organization, and we may experience

difficulties in managing this growth.

we continue to work to open and/or acquire additional retail store locations, we will need to expand the size of our employee

base for managerial, operational, sales, marketing, financial and other resources.

Future growth would impose significant added

responsibilities on members of management, including the need to identify, recruit, maintain, motivate and integrate additional

In addition, our management may have to divert a disproportionate amount of its attention away from our day-to-day

activities and devote a substantial amount of time to managing these growth activities.

Our future financial performance and our

ability to continue to grow our operation and compete in the hydroponics industry effectively will depend, in part, on our ability

to effectively manage any future growth.

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

time to time in the normal course of our business operations, we may become subject to litigation that may result in liability

material to our financial statements as a whole or may negatively affect our operating results if changes to our business operation

are required.

The cost to defend such litigation may be significant and may require a diversion of our resources.

There also may

be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of

whether the allegations are valid or whether we are ultimately found liable.

As a result, litigation may adversely affect our

Our business depends substantially

on the continuing efforts of our executive officers and our business may be severely disrupted if we lose their services.

Our future success depends substantially

on the continued services of our executive officers, especially our Chief Executive Officer, Darren Lampert, our President, Michael

Salaman, and our Chief Operating Officer, Tony Sullivan.

We do not maintain key man life insurance on any of our executive officers

and directors.

If one or more of our executive officers are unable or unwilling to continue in their present positions, we may

not be able to replace them readily, if at all.

Therefore, our business may be severely disrupted, and we may incur additional

expenses to recruit and retain new officers.

Litigation may adversely affect our

business, financial condition and results of operations.

of our customers are cannabis growers.

Disruption to the cannabis industry could have a negative impact on our revenue.

products are sold to growers of various crops and some of our products may be utilized by cannabis growers.

Disruption to the

cannabis industry could cause some current and/or potential customers to be more reluctant to invest in growing equipment, including

equipment we sell.

are a significant number of shares of common stock eligible for sale, which could depress the market price of such shares.

Registration Statement on Form S-1 has registered a total of 1,242,756 shares of our common stock available for sale in the public

The availability of such a large number of shares of common stock for sale in the public market could harm the market

price of the stock.

Further, additional shares may be offered from time to time in the open market pursuant to Rule 144, and these

sales may have a depressive effect as well.

product liability lawsuits are brought against us, we may incur substantial liabilities.

face a potential risk of product liability as a result of any of the products that we offer for sale.

For example, we may be sued

if any product we sell allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to

warn of dangers inherent in the product, negligence, strict liability and a breach of warranties.

Claims could also be asserted

under state consumer protection acts.

If we cannot successfully defend ourselves against product liability claims, we may incur

substantial liabilities.

Even successful defense would require significant financial and management resources.

Regardless of the

merits or eventual outcome, liability claims may result in:

demand for products that we may offer for sale;

to our reputation;

to defend the related litigation;

diversion of management’s time and our resources;

monetary awards to trial participants or patients;

recalls, withdrawals or labeling, marketing or promotional restrictions;

decline in our stock price.

do not maintain any product liability insurance.

Our inability to obtain and retain sufficient product liability insurance at

an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products

we developed.

Even if we obtain product liability insurance in the future, we may have to pay amounts awarded by a court or negotiated

in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able

to obtain, sufficient capital to pay such amounts.

may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions.

may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that we believe

will complement or augment our existing business.

If we acquire businesses with promising markets or products, we may not be able

to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations

and company culture.

We may encounter numerous difficulties in developing, manufacturing and/or marketing any new products resulting

from a strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business.

We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify the transaction.

Related to Our Common Stock

are risks, including stock market volatility, inherent in owning our common stock

market price and volume of our common stock have been, and may continue to be, subject to significant fluctuations.

These fluctuations

may arise from general stock market conditions, the impact of risk factors described in this Item 1A on our results of operations

and financial position, or a change in opinion in the market regarding our business prospects or other factors, many of which

may be outside our immediate control.

shares of our common stock may experience substantial dilution by exercises of outstanding warrants and options.

of the date hereof, we had outstanding warrants to purchase an aggregate of 3,387,701 shares of our common stock at a weighted

average exercise price of $2.96 per share, and options to purchase an aggregate of 2,109,170 shares of our common stock (out of

which 1,210,837 are vested as of this date) at a weighted average exercise prices of $2.97 per share.

The exercise of such outstanding

options and warrants will result in substantial dilution of your investment.

In addition, our shareholders may experience additional

dilution if we issue common stock in the future.

From time to time in the normal course

of our business operations, we may become subject to litigation that may result in liability material to our financial statements

as a whole or may negatively affect our operating results if changes to our business operation are required.

The cost to defend

such litigation may be significant and may require a diversion of our resources.

There also may be adverse publicity associated

with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid

or whether we are ultimately found liable.

As a result, litigation may adversely affect our business, financial condition and results

of operations.

Certain of our products may be purchased

for use in new and emerging industries or segments and/or be subject to varying, inconsistent, and rapidly changing laws, regulations,

administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions.

We sell hydroponic gardening products that

end users may purchase for use in new and emerging industries or segments, including the growing of cannabis, that may not grow

or achieve market acceptance in a manner that we can predict.

The demand for these products depends on the uncertain growth of

these industries or segments.

In addition, we sell products that end

users may purchase for use in industries or segments, including the growing of cannabis, that are subject to varying, inconsistent,

and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer

For example, certain countries and 34 U.S.

states have adopted frameworks that authorize, regulate, and tax the cultivation,

processing, sale, and use of cannabis for medicinal and/or non-medicinal use, while the U.S.

Controlled Substances Act and the

laws of other U.S.

states prohibit growing cannabis.

Our hydroponic gardening products are multi-purpose

products designed and intended for growing a wide range of plants and are generally purchased from retailers by end users who may

grow any variety of plants, including cannabis.

Although the demand for our products may be negatively impacted depending on how

laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions develop,

we cannot reasonably predict the nature of such developments or the effect, if any, that such developments could have on our business.

Acquisitions,

other strategic alliances and investments could result in operating difficulties, dilution, and other harmful consequences that

may adversely impact our business and results of operations.

Acquisitions are an important element of

our overall corporate strategy and use of capital, and these transactions could be material to our financial condition and results

of operations.

We expect to continue to evaluate and enter into discussions regarding a wide array of potential acquisitions and

strategic transactions.

The areas where we may face risks in connection with acquisitions include, but are not limited to, the

failure to successfully further develop the acquired business, the implementation or remediation of controls, procedures and policies

at the acquired business, the transition of operations, users and customers onto our existing platforms, and cultural challenges

associated with integrating employees from the acquired business into our organization, and retention of employees from the businesses

Our failure to address these risks or other problems encountered in connection with our acquisitions could cause us

to fail to realize the anticipated benefits of such acquisitions, investments or alliances, incur unanticipated liabilities, and

harm our business generally.

Our acquisitions could also result in dilutive

issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses, or impairment of goodwill

and purchased long-lived assets, and restructuring charges, any of which could harm our financial condition or results of operations

and cash flows.

Also, the anticipated benefits and synergies of many of our acquisitions may not materialize.

If product liability lawsuits are

brought against us, we may incur substantial liabilities.

We face a potential risk of product liability

as a result of any of the products that we offer for sale.

For example, we may be sued if any product we sell allegedly causes

injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.

Any such product liability

claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product,

negligence, strict liability and a breach of warranties.

Claims could also be asserted under state consumer protection acts.

we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities.

Even successful

defense would require significant financial and management resources.

Regardless of the merits or eventual outcome, liability claims

may result in:

decreased demand for products that we may offer for sale;

injury to our reputation;

costs to defend the related litigation;

a diversion of management’s time and our resources;

substantial monetary awards to trial participants or patients;

product recalls, withdrawals or labeling, marketing or promotional restrictions;

a decline in our stock price.

We do not maintain any product liability

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential

product liability claims could prevent or inhibit the commercialization of products we developed.

Even if we obtain product liability

insurance in the future, we may have to pay amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations

or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

We may acquire businesses or products,

or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions.

We may acquire additional businesses or

products, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing

If we acquire businesses with promising markets or products, we may not be able to realize the benefit of acquiring such

businesses if we are unable to successfully integrate them with our existing operations and company culture.

We may encounter numerous

difficulties in developing, manufacturing and/or marketing any new products resulting from a strategic alliance or acquisition

that delay or prevent us from realizing their expected benefits or enhancing our business.

We cannot assure you that, following

any such acquisition, we will achieve the expected synergies to justify the transaction.

Risks Related to Our Common Stock

There are risks, including stock market

volatility, inherent in owning our common stock.

The market price and volume of our common

stock have been, and may continue to be, subject to significant fluctuations.

These fluctuations may arise from general stock market

conditions, the impact of risk factors described herein on our results of operations and financial position, or a change in opinion

in the market regarding our business prospects or other factors, many of which may be outside our immediate control.

The shares of our common stock may

experience substantial dilution by exercises of outstanding warrants and options.

As of the date hereof, we had outstanding

warrants to purchase an aggregate of 1,393,472 shares of our common stock at a weighted average exercise price of $7.49 per share,

and options to purchase an aggregate of 1,803,108 shares of our common stock (out of which 1,057,734 are vested as of this date)

at a weighted average exercise prices of $3.92 per share.

The exercise of such outstanding options and warrants will result in

substantial dilution of your investment.

In addition, our shareholders may experience additional dilution if we issue common stock

in the future.

Any of such dilution may have adverse effect on the price of our common stock.

are an “emerging growth company,”

and will be able take advantage of reduced disclosure requirements applicable to

“emerging growth companies,”

We are an “emerging growth

company,”

and will be able take advantage of reduced disclosure requirements applicable to “emerging growth companies,”

which could make our common stock less attractive to investors.

are an “emerging growth company,”

as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and,

for as long as we continue to be an “emerging growth company,”

we intend to take advantage of certain exemptions from

various reporting requirements applicable to other public companies but not to “emerging growth companies,”

but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley

Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions

from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute

payments not previously approved.

We could be an “emerging growth company”

for up to five years, or until the earliest

of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become

a “large accelerated filer”

as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value

of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed

second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding

three year period.

as long as we remain an “emerging growth company”

as defined in the JOBS Act, we intend to take advantage of certain

exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth

companies.”

we are no longer an “emerging growth company,”

we expect to incur additional management time and cost to comply with

the more stringent reporting requirements applicable to companies that are deemed accelerated filers or large accelerated filers,

including complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.

We cannot predict or estimate

the amount of additional costs we may incur or the timing of such costs.

We are an “emerging growth company,”

as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and, for as long as we continue to be an “emerging

growth company,”

we intend to take advantage of certain exemptions from various reporting requirements applicable to other

public companies but not to “emerging growth companies,”

including, but not limited to, not being required to comply

with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive

compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory

vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We could be an

“emerging growth company”

for up to five years, or until the earliest of (i) the last day of the first fiscal year

in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer”

in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates

exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which

we have issued more than $1 billion in non-convertible debt during the preceding three year period.

For as long as we remain an “emerging

growth company”

as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements

that are applicable to other public companies that are not “emerging growth companies.”

Additionally, we are a “smaller reporting

company”

as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take advantage of

certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary

shares held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during

such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior

To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements

with other public companies difficult or impossible.

After we are no longer an “emerging

growth company,”

we expect to incur additional management time and cost to comply with the more stringent reporting requirements

applicable to companies that are deemed accelerated filers or large accelerated filers, including complying with the auditor attestation

requirements of Section 404 of the Sarbanes-Oxley Act.

We cannot predict or estimate the amount of additional costs we may incur

or the timing of such costs.

UNRESOLVED STAFF COMMENTS

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