What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-04-14 compared with 2021-04-16 · 700 added, 867 removed, 5 unchanged (100% of the section changed)

An investment in our securities involves a

high degree of risk.

This Annual Report on Form 10-K contains the risks applicable to an investment in our securities.

The risks and uncertainties

we have described are not the only ones we face.

Additional risks and uncertainties not presently known to us or that we currently deem

immaterial may also affect our operations.

The occurrence of any of these known or unknown risks might cause you to lose all or part of

your investment in the offered securities.

Risks Relating to Our Business and Industry

We have a limited history upon which an

evaluation of our prospects and future performance can be made and have no history of profitable operations.

We were incorporated in April 2013 and have a

limited operating history and our business is subject to all of the risks inherent in the establishment of a new business enterprise.

Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered

in connection with development and expansion of a new business enterprise.

We may sustain losses in the future as we implement our business

investment in our securities involves a high degree of risk.

This Annual Report on Form 10-K contains the risks applicable to an investment

in our securities.

The risks and uncertainties we have described are not the only ones we face.

Additional risks and uncertainties not

presently known to us or that we currently deem immaterial may also affect our operations.

The occurrence of any of these known or unknown

risks might cause you to lose all or part of your investment in the offered securities.

Factors Summary

Relating to Our Business and Industry

coronavirus disease (COVID-19) pandemic has had, and may continue to have, an adverse effect

on our business, results of operations, financial condition and cash flows.

Future epidemics

or other public health emergencies could have similar effects.

operate in industries that are cyclical and sensitive to general economic conditions, which

could have a material adverse effect on our operating results, financial condition and cash

conditions in global markets including the impact of sanctions and tariffs, quotas and other

trade actions and import restrictions may adversely affect our operating results, financial

condition and cash flows.

in the availability or price of inputs such as raw materials and end-of-life vehicles could

reduce our sales.

● Significant

decreases in scrap metal prices may adversely impact our operating results.

in supply and demand conditions in the global steel industry may reduce demand for our products.

of long-lived assets and equity investments may adversely affect our operating results.

may be unable to renew facility leases, thus restricting our ability to operate.

in the value of the U.S.

dollar relative to other currencies may reduce the demand for our

upgrades, equipment failures and facility damage may lead to production curtailments or shutdowns.

are subject to legal proceedings and legal compliance risks that may adversely impact our

financial condition, results of operations and liquidity.

change may adversely impact our facilities and our ongoing operations.

● Catastrophic

events may disrupt our business and impair our ability to provide our platform to clients

and consumers, resulting in costs for remediation, client and consumer dissatisfaction, and

other business or financial losses.

depend on a small number of suppliers for the materials necessary to run our business.

loss of these suppliers, or their failure to supply us with these materials, would materially

and adversely affect our business.

have substantial customer concentration, with a limited number of customers accounting for

a substantial portion of our 2021 and 2020 revenues.

have a limited history upon which an evaluation of our prospects and future performance can

be made and have no history of profitable operations.

are highly dependent on the services of key executives, the loss of whom could materially

harm our business and our strategic direction.

If we lose key management or significant personnel,

cannot recruit qualified employees, directors, officers, or other personnel or experience

increases in our compensation costs, our business may materially suffer.

may need to obtain additional financing to fund our operations.

independent registered accounting firm has expressed concerns about our ability to continue

as a going concern.

the past we have experienced material weaknesses in our internal control over financial reporting,

which if continued, could impair our financial condition.

Relating to Government Laws and Regulations

increases and changes in tax rules may adversely affect our financial results.

may not realize our deferred tax assets in the future.

● Environmental

compliance costs and potential environmental liabilities may have a material adverse effect

on our financial condition and results of operations.

● Governmental

agencies may refuse to grant or renew our licenses and permits, thus restricting our ability

with existing and future climate change and greenhouse gas emission laws and regulations

may adversely impact our operating results.

Relating to Intellectual Property

may not be able to protect our intellectual property rights throughout the world.

may be involved in lawsuits to protect or enforce our intellectual property, which could

be expensive, time-consuming and unsuccessful and the outcome might have an adverse effect

on the success of our business.

may be subject to claims by third parties asserting that our employees or we have misappropriated

their intellectual property or claiming ownership of what we regard as our own intellectual

Related to our Common Stock

can be no assurance that our common stock will ever be approved for listing on a national

securities exchange.

market price of our common stock may be volatile and adversely affected by several factors.

our shares of common stock become subject to the penny stock rules, it would become more

difficult to trade our shares.

are a “smaller reporting company” within the meaning of the Securities Act, and

if we decide to take advantage of certain exemptions from various reporting requirements

applicable to smaller reporting companies, our common stock could be less attractive to investors.

do not anticipate paying dividends on our common stock, and investors may lose the entire

amount of their investment.

could lose some or all of your investment.

management controls a large block of our common stock that will allow them to control us.

we can issue additional shares of Common Stock, purchasers of our Common Stock may incur

immediate dilution and experience further dilution.

in our Second Amended and Restated Certificate of Incorporation and Bylaws and Delaware law

might discourage, delay or prevent a change in control of our Company or changes in our management

and, therefore, depress the market price of our Common Stock.

securities or industry research analysts do not publish research or reports about our business,

or if they issue unfavorable or misleading opinions regarding common stock, the market price

and trading volume of our Common Stock could decline.

sales and issuances of our Common Stock or rights to purchase our Common Stock, including

pursuant to our equity incentive plans, could result in additional dilution of the percentage

ownership of our stockholders and could cause our stock price to fall.

have broad discretion in the use of the net proceeds from our public offerings and may not

use them effectively.

disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Relating to Our Business and Industry

coronavirus disease (COVID-19) pandemic has had, and may continue to have, an adverse effect on our business, results of operations,

financial condition and cash flows.

Future epidemics or other public health emergencies could have similar effects.

operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the COVID-19 pandemic

which spread to many other countries including the United States.

In March 2020, the World Health Organization characterized

COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.

The outbreak resulted

in governments around the world implementing stringent measures to help control the spread of the virus, followed by phased regulations

and guidelines for reopening communities and economies.

In addition, governments and central banks in several parts of the world have

enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.

are a company operating in a critical infrastructure industry, as defined by the U.S.

Department of Homeland Security.

Consistent with

federal guidelines and with state and local orders to date, we have continued to operate across our footprint.

Notwithstanding our continued

operations, COVID-19 has negatively impacted and may have further negative impacts on our financial performance, operations, supply chain

and flows of raw materials, transportation and logistics networks and customers.

Due in large part to the impacts of and response to

the spread of COVID-19, global economic conditions declined sharply during the second quarter of fiscal 2020, resulting in historic unemployment

levels, rapid changes in supply and demand in certain industry sectors, businesses switching to remote work or ceasing operations, and

consumers eliminating, restricting or redirecting spending.

The economic downturn adversely affected demand for our products and contributed

to weaker supply and demand conditions affecting prices and volumes in the markets for our products, services and raw materials.

fiscal 2020, in particular the second quarter, our operations, margins and results were adversely impacted by lower sales volumes of

recycled metals driven by severely constrained supplies of scrap metal including end-of-life vehicles, leading to lower processed volumes

at our recycling facilities.

We also experienced significant decreases in selling prices for our recycled metal products, softer demand,

supply chain disruptions, reduced availability of shipping containers, and other logistics constraints.

During 2021, metal prices recovered,

contributing to an increase in revenues, although supply chain disruptions persisted.

COVID-19 pandemic could further negatively impact our business or results of operations through the temporary closure of our operating

locations or those of our customers or suppliers, disrupting scrap metal inflows to our recycling facilities, limiting our ability to

process scrap metal through our shredder, inhibiting the manufacture of steel products at our steel mill, and delaying or preventing

deliveries to our customers, among others.

In addition, the ability of our employees and our suppliers’ and customers’ employees

to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of prevention and control

measures, which may significantly hamper our production throughout the supply chain and constrict sales channels.

the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, continually changing and difficult

to predict, the pandemic’s impacts on our operations and financial performance, as well as its impact on our ability to successfully

execute our business strategies and initiatives, are also uncertain and difficult to predict.

Further, the ultimate impact of the COVID-19

pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited

governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including

restrictions on travel and transportation and workforce pressures);

the impact of the pandemic and actions taken in response on global

and regional economies and on levels of economic activity;

the availability of federal, state or local funding programs;

general economic

uncertainty in key global markets and financial market volatility;

global economic conditions and levels of economic growth;

pace of recovery when the COVID-19 pandemic subsides.

While we expect the COVID-19 pandemic to continue to negatively impact our results

of operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-19

means the related financial impact cannot be reasonably estimated at this time.

operate in industries that are cyclical and sensitive to general economic conditions, which could have a material adverse effect on our

operating results, financial condition and cash flows.

for most of our products is cyclical in nature and sensitive to general economic conditions.

The timing and magnitude of the cycles in

the industries in which our products are used, including global steel manufacturing and nonresidential and infrastructure construction

in the U.S., are difficult to predict.

The cyclical nature of our operations tends to reflect and be amplified by changes in economic

conditions, both domestically and internationally, and foreign currency exchange fluctuations.

Economic downturns or a prolonged period

of slow growth in the U.S.

and foreign markets or any of the industries in which we operate could have a material adverse effect on our

results of operations, financial condition and cash flows.

conditions in global markets including the impact of sanctions and tariffs, quotas and other trade actions and import restrictions may

adversely affect our operating results, financial condition and cash flows.

significant portion of the metal we process is sold to end customers located outside the U.S., including countries in Asia, the Mediterranean

region and North, Central and South America.

Our ability to sell our products profitably, or at all, is subject to a number of risks

including adverse impacts of political, economic, military, terrorist or major pandemic events;

labor and social issues;

legal and regulatory

requirements or limitations imposed by foreign governments including quotas, tariffs or other protectionist trade barriers, sanctions,

adverse tax law changes, nationalization, currency restrictions, or import restrictions for certain types of products we export;

disruptions or delays in shipments caused by customs compliance or other actions of government agencies.

The occurrence of such events

and conditions may adversely affect our operating results, financial condition and cash flows.

example, in fiscal 2017, regulators in China began implementing the National Sword initiative involving inspections of Chinese industrial

enterprises, including recyclers, in order to identify rules violations with respect to discharge of pollutants or illegally transferred

scrap imports.

Restrictions resulting from the National Sword initiative include a ban on certain imported recycled products, lower contamination

limits for permitted recycled materials, and more comprehensive pre- and post-shipment inspection requirements.

Disruptions in pre-inspection

certifications and stringent inspection procedures at certain Chinese destination ports have limited access to these destinations and

resulted in the renegotiation or cancellation of certain nonferrous customer contracts in connection with the redirection of such shipments

to alternate destinations.

Commencing July 1, 2019, China imposed further restrictions in the form of import license requirements and

quotas on certain scrap products, including certain nonferrous products we sell.

Chinese import licenses and quotas are issued to Chinese

scrap consumers on a quarterly basis for the importation of scrap products.

Since the implementation of this program, the size of import

quotas has been steadily reduced on a quarter-over-quarter basis.

We have continued to sell our recycled metal products into China;

additional or modified license requirements and quotas, as well as additional product quality requirements, may be issued in the future.

We believe that the potential impact on our recycling operations of the Chinese regulatory actions described above could include requirements

that would necessitate additional processing and packaging of certain nonferrous recycled scrap metal products, increased inspection

and certification activities with respect to exports to China, or a change in the use of our sales channels in the event of delays in

the issuance of licenses, restrictive quotas or an outright ban on certain or all of our recycled metals products by China.

As regulatory

developments progress, we may need to make further investments in nonferrous processing equipment beyond existing planned investments

where economically justified, incur additional costs in order to comply with new inspection requirements, or seek alternative markets

for the impacted products, which may result in lower sales prices or higher costs and may adversely impact our business or results of

March 2018, the U.S.

imposed a 25% tariff on certain imported steel products and a 10% tariff on certain imported aluminum

products under Section 232 of the Trade Expansion Act of 1962.

These new tariffs, along with other U.S.

trade actions, have triggered

retaliatory actions by certain affected countries, and other foreign governments have initiated or are considering imposing trade measures

on other U.S.

For example, China has imposed a series of retaliatory tariffs on certain U.S.

products, including a 25 percent

tariff on all grades of U.S.

scrap and an additional 25 percent tariff on U.S.

aluminum scrap.

These tariffs and other trade actions

could result in a decrease in international steel demand beyond that already experienced and further negatively impact demand for our

products, which would adversely impact our business.

Given the uncertainty regarding the scope and duration of these trade actions by

or other countries, the impact of the trade actions on our operations or results remains uncertain, but this impact could be

in the availability or price of inputs such as raw materials and end-of-life vehicles could reduce our sales.

businesses require certain materials that are sourced from third party suppliers.

Industry supply conditions generally involve risks,

including the possibility of shortages of raw materials, increases in raw material and other input costs, and reduced control over delivery

We procure our scrap inventory from numerous sources.

These suppliers generally are not bound by long-term contracts and have

no obligation to sell scrap metal to us.

In periods of declining or lower scrap metal prices suppliers may elect to hold scrap metal

to wait for higher prices or intentionally slow their metal collection activities, tightening supply.

If a substantial number of suppliers

cease selling scrap metal to us, we will be unable to recycle metal at desired levels, and our results of operations and financial condition

could be materially adversely affected.

For instance, in the second quarter of fiscal 2020 a lower price environment for recycled metals

in combination with economic and other restrictions on suppliers relating to COVID-19 severely constricted the supply of scrap metal

including end-of-life vehicles, which resulted in significantly reduced processed volumes.

A slowdown of industrial production in the

may also reduce the supply of industrial grades of metal to the metals recycling industry, resulting in less recyclable metal available

to process and market.

Increased competition for domestic scrap metal, including as a result of overcapacity in the scrap recycling industry

and Canada, may also reduce the supply of scrap metal available to us.

Failure to obtain a steady supply of scrap material

could both adversely impact our ability to meet sales commitments and reduce our operating margins.

Failure to obtain an adequate supply

of end-of-life vehicles could adversely impact our ability to attract customers and charge admission fees and reduce our parts sales.

Failure to obtain raw materials and other inputs to steel production such as graphite electrodes, alloys and other required consumables,

could adversely impact our ability to make steel to the specifications of our customers.

decreases in scrap metal prices may adversely impact our operating results.

timing and magnitude of the cycles in the industries in which we operate are difficult to predict and are influenced by different economic

conditions in the domestic market, where we typically acquire our raw materials, and foreign markets, where we typically sell the majority

of our products.

Purchase prices for scrap metal including end-of-life vehicles and selling prices for recycled scrap metal are subject

to market forces beyond our control.

While we attempt to respond to changing recycled scrap metal selling prices through adjustments

to our metal purchase prices, our ability to do so is limited by competitive and other market factors.

As a result, we may not be able

to reduce our metal purchase prices to fully offset a sharp reduction in recycled scrap metal sales prices, which may adversely impact

our operating income and cash flows.

In addition, a rapid decrease in selling prices may compress our operating margins due to the impact

of average inventory cost accounting, which causes cost of goods sold recognized in the Consolidated Statements of Operations to decrease

at a slower rate than metal purchase prices.

instance, in fiscal 2020, weaker market conditions for recycled metals, including as a result of the sharp decline in global economic

conditions during the third quarter of fiscal 2020 in large part due to the impacts of the COVID-19 pandemic, and structural changes

to the market for certain recycled nonferrous products primarily from Chinese import restrictions and tariffs, resulted in periods of

sharply declining commodity prices and lower average net selling prices for our ferrous and nonferrous recycled metal products compared

to fiscal 2019.

As a result, operating margins in fiscal 2020 compressed as the decline in average net selling prices for our recycled

metal products outpaced the reduction in purchase costs for raw materials.

In fiscal 2021, prices for our ferrous and non-ferrous metals

increased significantly, resulting in an increase in revenue and purchasing costs for raw materials.

in supply and demand conditions in the global steel industry may reduce demand for our products.

expansions and contractions in global economies can result in supply and demand imbalances in the global steel industry that can significantly

affect the price of commodities used and sold by our business, as well as the price of and demand for finished steel products.

of foreign countries, such as China, steel producers are generally government-owned and may therefore make production decisions based

on political or other factors that do not reflect free market conditions.

In the past, overcapacity and excess steel production in these

foreign countries resulted in the export of aggressively priced semi-finished and finished steel products.

This led to disruptions in

steel-making operations within other countries, negatively impacting demand for our recycled scrap metal.

Existing or new trade laws

and regulations may cause or be inadequate to prevent disadvantageous trade practices, which could have a material adverse effect on

our financial condition and results of operations.

Although trade regulations restrict or impose duties on the importation of certain

products, if foreign steel production significantly exceeds consumption in those countries, global demand for our recycled scrap metal

products could decline and imports of steel products into the U.S.

could increase, resulting in lower volumes and selling prices for

our recycled metal products and finished steel products.

of long-lived assets and equity investments may adversely affect our operating results.

long-lived asset groups are subject to an impairment assessment when certain triggering events or circumstances indicate that their carrying

value may be impaired.

If the carrying value exceeds our estimate of future undiscounted cash flows of the operations related to the

asset group, an impairment is recorded for the difference between the carrying amount and the fair value of the asset group.

of these tests for potential impairment may be adversely affected by unfavorable market conditions, our financial performance trends,

or an increase in interest rates, among other factors.

If, as a result of the impairment test, we determine that the fair value of any

of our long-lived asset groups is less than its carrying amount, we may incur an impairment charge that could have a material adverse

effect on our financial condition and results of operations.

may be unable to renew facility leases, thus restricting our ability to operate.

lease a significant portion of our facilities.

The cost to renew such leases may increase significantly, and we may not be able to renew

such leases on commercially reasonable terms or at all.

Failure to renew these leases or find suitable alternative locations for our

facilities may impact our ability to continue operations within certain geographic areas, which could have a material adverse effect

on our financial condition, results of operations and cash flows.

in the value of the U.S.

dollar relative to other currencies may reduce the demand for our products.

significant portion of our recycled scrap metal revenues is generated from sales to foreign customers, which are denominated in U.S.

dollars, including customers located in Asia, the Mediterranean region and North, Central and South America.

A strengthening U.S.

as experienced during recent years including fiscal 2020, makes our products more expensive for non-U.S.

customers, which may negatively

impact export sales.

A strengthening U.S.

dollar also makes imported metal products less expensive, which may result in an increase in

imports of steel products into the U.S.

As a result, our finished steel products, which are made in the U.S., may become more expensive

customers relative to imported steel products thereby reducing demand for our products.

upgrades, equipment failures and facility damage may lead to production curtailments or shutdowns.

business operations and recycling and manufacturing processes depend on critical pieces of equipment, including information technology

equipment, shredders, nonferrous sorting technology, furnaces and a rolling mill, which may be out of service occasionally for scheduled

upgrades or maintenance or as a result of unanticipated failures.

Our facilities are subject to equipment failures and the risk of catastrophic

loss due to unanticipated events such as fires, earthquakes, accidents or violent weather conditions.

Interruptions in our processing

and production capabilities and shutdowns resulting from unanticipated events could have a material adverse effect on our financial condition,

results of operations and cash flows.

are subject to legal proceedings and legal compliance risks that may adversely impact our financial condition, results of operations

and liquidity.

spend substantial resources ensuring that we comply with domestic and foreign regulations, contractual obligations and other legal standards.

Notwithstanding this, we are subject to a variety of legal proceedings and compliance risks in respect of various matters, including

regulatory, safety, environmental, employment, transportation, intellectual property, contractual, import/export, international trade

and governmental matters that arise in the course of our business and in our industry.

An outcome in an unusual or significant legal

proceeding or compliance investigation in excess of insurance recoveries could adversely affect our financial condition and results of

For information regarding our current significant legal proceedings and contingencies, see “Legal Proceedings”

in Part I, Item 3 and “Contingencies – Other” within Note 8 - Commitments and Contingencies in the notes to the financial

change may adversely impact our facilities and our ongoing operations.

potential physical impacts of climate change on our operations are highly uncertain and depend upon the unique geographic and environmental

factors present, for example rising sea levels at deep water port facilities, changing storm patterns and intensities, and changing temperature

As many of our recycling facilities are located near deep water ports, rising sea levels may disrupt our ability to receive scrap

metal, process the scrap metal through our shredders and ship products to our customers.

Extreme weather events and conditions, such

as hurricanes, thunderstorms, tornadoes, wildfires and snow or ice storms, may increase our costs or cause damage to our facilities,

and any damage resulting from extreme weather may not be fully insured.

Increased frequency and duration of adverse weather events and

conditions may also inhibit construction activity utilizing our products, scrap metal inflows to our recycling facilities, and retail

admissions and parts sales at our auto parts stores.

Potential adverse impacts from climate change, including rising temperatures and

extreme weather events and conditions, may create health and safety issues for employees operating at our facilities and may lead to

an inability to maintain standard operating hours.

events may disrupt our business and impair our ability to provide our platform to clients and consumers, resulting in costs for remediation,

client and consumer dissatisfaction, and other business or financial losses.

operations depend, in part, on our ability to protect our facilities against damage or interruption from natural disasters, power or

telecommunications failures, criminal acts and similar events.

Despite precautions taken at our facilities, the occurrence of a natural

disaster, an act of terrorism, vandalism or sabotage, spikes in usage volume or other unanticipated problems at a facility could result

in lengthy interruptions in the availability of our platform.

Even with current and planned disaster recovery arrangements, our business

could be harmed.

Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses

that we may incur.

These factors in turn could further reduce revenue, subject us to liability and lead to decreased usage of our platform

and decrease sales of our advertising placements, any of which could harm our business.

depend on a small number of suppliers for the materials necessary to run our business.

The loss of these suppliers, or their failure

to supply us with these materials, would materially and adversely affect our business.

depend on the availability of key materials for our business from a small number of third-party suppliers.

Because there are a limited

number of suppliers for these materials, we may need to engage alternate suppliers to prevent a possible disruption.

We do not have any

control over the availability of materials.

If we or our manufacturers are unable to purchase these materials on acceptable terms, at

sufficient quality levels, or in adequate quantities, if at all, the successful operation of our business would be delayed or there would

be a shortage in supply, which would impair our ability to generate revenues from our business.

have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our 2021 and 2020

currently derive a significant portion of our revenues from one customer, which accounted for 83% of our revenue in fiscal 2021.

are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers.

It is not possible

for us to predict the future level of demand for our services that will be generated by this customer or the future demand for the products

and services of this customer in the end-user marketplace.

In addition, revenues from larger customers, especially our largest customer

may fluctuate from time to time based on the commencement and completion of projects, the timing of which may be affected by market conditions

or other facts, some of which may be outside of our control.

Further, some of our contracts with larger customers permit them to terminate

our relationship at any time (subject to notice and certain other provisions).

If any of these customers experience declining or delayed

sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our services which

could have an adverse effect on our margins and financial position and could negatively affect our revenues and results of operations

and/or trading price of our common stock.

If our largest customer terminates our services, such termination would negatively affect our

revenues and results of operations and/or trading price of our common stock.

have a limited history upon which an evaluation of our prospects and future performance can be made and have no history of profitable

were incorporated in April 2013 and have a limited operating history and our business is subject to all of the risks inherent in the

establishment of a new business enterprise.

Our likelihood of success must be considered in light of the problems, expenses, difficulties,

complications and delays frequently encountered in connection with development and expansion of a new business enterprise.

We may sustain

losses in the future as we implement our business plan.

There can be no assurance that we will operate profitably.

Since we have a limited operating history,

it is difficult for potential investors to evaluate our business.

Our limited operating history makes it difficult

for potential investors to evaluate our business or prospective operations.

As an early-stage company, we are subject to all the risks

inherent in the initial organization, financing, expenditures, complications and delays inherent in a new business.

Investors should evaluate

an investment in us in light of the uncertainties encountered by developing companies in a competitive and evolving environment.

is dependent upon the implementation of our business plan.

We may not be successful in implementing such plan and cannot guarantee that,

if implemented, we will ultimately be able to attain profitability.

We will need to obtain additional financing

to fund our operations.

We will need additional capital in the future

to continue to execute our business plan.

Therefore, we will be dependent upon additional capital in the form of either debt or equity

to continue our operations.

At the present time, we do not have arrangements to raise all of the needed additional capital, and we will

need to identify potential investors and negotiate appropriate arrangements with them.

We may not be able to arrange enough investment

within the time the investment is required or that if it is arranged, that it will be on favorable terms.

If we cannot obtain the needed

capital, we may not be able to become profitable and may have to curtail or cease our operations.

Additional equity financing, if available,

may be dilutive to the holders of our capital stock.

Debt financing may involve significant cash payment obligations, covenants and financial

ratios that may restrict our ability to operate and grow our business.

Cannabis remains illegal under Federal law.

Despite the development of a regulated cannabis

industry under the laws of certain states, these state laws regulating medical and adult cannabis use are in conflict with the Federal

Controlled Substances Act, which classifies cannabis as a Schedule I controlled substance and makes cannabis use and possession illegal

on a national level.

The United States Supreme Court has ruled that the Federal government has the right to regulate and criminalize cannabis,

even for medical purposes, and thus Federal law criminalizing the use of cannabis preempts state laws that regulate its use.

the prior administration determined that it was not an efficient use of resources to direct Federal law enforcement agencies to prosecute

those lawfully abiding by state laws allowing the use and distribution of medical and recreational cannabis, on January 4, 2018, the current

administration issued the Sessions Memo announcing a return to the rule of law and the rescission of previous guidance documents.

Sessions Memo rescinds the Cole Memo which was adopted by the Obama administration as a policy of non-interference with marijuana-friendly

The Sessions Memo shifts federal policy from a hands-off approach adopted by the Obama administration to permitting federal

prosecutors across the country to decide how to prioritize resources to regulate marijuana possession, distribution and cultivation in

states where marijuana use is regulated.

However, it is unclear at this time whether the Biden administration will issue new guidance

or will strongly enforce the federal laws applicable to cannabis or what types of activities will be targeted for enforcement.

A significant

change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could have a material

adverse effect on our business.

Furthermore, there can be no assurance that federal prosecutors will not prosecute and dedicate resources

to regulate marijuana possession, distribution and cultivation in states where marijuana use is regulated which may cause states to reconsider

their regulation of marijuana which would have a detrimental effect on the marijuana industry.

Any such change in state laws based upon

the Sessions Memo and the Federal government’s enforcement of Federal laws could cause significant financial damage to us and our

stockholders.

As the possession and use of cannabis is

illegal under the Federal Controlled Substances Act, we may be deemed to be aiding and abetting illegal activities through the services

and data that we provide to government regulators, dispensaries, cultivators and consumers.

As a result, we may be subject to enforcement

actions by law enforcement authorities, which would materially and adversely affect our business.

Under Federal law, and more specifically the Federal

Controlled Substances Act, the possession, use, cultivation, and transfer of cannabis is illegal.

Our business provides services to customers

that are engaged in the business of possession, use, cultivation, and/or transfer of cannabis.

As a result, law enforcement authorities,

in their attempt to regulate the illegal use of cannabis, may seek to bring an action or actions against us, including, but not limited,

to a claim of aiding and abetting another’s criminal activities.

The Federal aiding and abetting statute provides that anyone who

“commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable

as a principal.”

As a result of such an action, we may be forced to cease operations and our investors could lose their entire investment.

Such an action would have a material negative effect on our business and operations.

Federal enforcement practices could change

with respect to services provided to participants in the cannabis industry, which could adversely impact us.

If the Federal government

were to expend its resources on enforcement actions against service providers in the cannabis industry under guidance provided by the

Sessions Memo, such actions could have a material adverse effect on our operations, our customers, or the sales of our products.

It is possible that due to the Sessions Memo and

the continuing uncertainty respecting enforcement of federal cannabis laws that our clients may discontinue the use of our services, our

potential source of customers may be reduced and our revenues may decline.

Further, additional government disruption in the cannabis industry

could cause potential customers and users to be reluctant to use and advertise our products, which would be detrimental to the Company.

We cannot predict the impact of the Sessions Memo, whether the Attorney General Merrick Garland will issue new guidance, or his willingness

to enforce federal cannabis laws at this time nor can we predict the nature of any future laws, regulations, interpretations or applications

including the effect of such additional regulations or administrative policies and procedures, when and if promulgated, could have on

our business.

We are subject to legislative uncertainty

that could slow or halt the legalization and use of cannabis, which could negatively affect our business.

Continued development of the cannabis industry

is dependent upon continued legislative authorization of cannabis at the state level, as well as the U.S.

government’s continued

non-enforcement of federal cannabis laws against state-law-compliant cannabis businesses.

Further, progress, while generally

expected, is not assured.

Some industry observers believe that well-funded interests, including businesses in the alcohol beverage and

the pharmaceutical industries, may have a strong economic opposition to the continued legalization of cannabis.

The pharmaceutical industry,

for example, is well funded with a strong and experienced lobby that eclipses the funding of the medical cannabis movement.

legalization opponents could make in halting the impending cannabis industry could have a detrimental impact on our business.

may be ample public support for legislative action, numerous factors impact the legislative process.

Any one of these or other factors

could slow or halt use of cannabis, which would negatively impact our business.

Our business depends on continued purchases

by businesses and individuals selling or using cannabis pursuant to state laws in the United States.

Thirty-three states and the District of Columbia

allow their citizens to use medical cannabis, and eleven states and the District of Columbia have regulated the sale of cannabis for adult

In addition, several additional states have legalized low-THC/high-CBD extracts for select medical conditions (“CBD States”).

Several CBD States are considering legalizing medical cannabis, and several medical states may extend legalization to adult-use.

The states’

cannabis programs have proliferated

and grown even though the cultivation, sale and possession of cannabis is considered illegal under U.S.

Under the Controlled

Substances Act (“CSA”), cannabis is a Schedule I drug, meaning that the Drug Enforcement Administration recognizes no accepted

medical use for cannabis, and the substance is considered illegal under federal law.

In an effort to provide guidance to U.S.

Attorneys’

offices regarding the enforcement priorities associated with cannabis in the United States, the U.S.

Department of Justice (the “DOJ”)

has issued a series of memoranda detailing its suggested enforcement approach.

During the administration of former President Obama, each

memorandum acknowledged the DOJ’s authority to enforce the CSA in the face of state laws, but noted that the DOJ was more committed

to using its limited investigative and prosecutorial resources to address the most significant threats associated with cannabis in the

most effective, consistent, and rational way.

On August 29, 2013, the DOJ issued what came

to be called the Cole Memo which gave U.S.

Attorneys the discretion not to prosecute federal cannabis cases that were otherwise compliant

with applicable state law that had legalized medical or adult-use cannabis and that have implemented strong regulatory systems to

control the cultivation, production, and distribution of cannabis.

Accordingly, the Cole Memo provided lawful cannabis-related enterprises

a tacit federal go-ahead in states with legal cannabis programs, provided that the state had adopted and was enforcing strict regulations

and oversight of the medical or adult-use cannabis program in accordance with the specific directives of the Cole Memorandum.

On January 4, 2018, Attorney General Jefferson

Sessions issued a memorandum that rescinded previous DOJ guidance on the state-legal cannabis industry, including the Cole Memo.

Attorney General Sessions wrote that the previous guidance on cannabis law enforcement was unnecessary, given the well-established principles

governing federal prosecution that are already in place.

As a result, federal prosecutors could and still can use their prosecutorial

discretion to decide whether to prosecute even state-legal adult-use cannabis activities.

In November 2018, Attorney General Sessions resigned and left the DOJ.

As a nominee, Attorney General William Barr testified before the U.S.

Senate and wrote to Congress that, as Attorney General, he would

not seek to prosecute cannabis companies that relied on the Cole Memorandum and are complying with state law.

Although proposals have

been introduced to Congress in favor of protection state-legal marijuana regulations, as of the date of this Annual Report, no federal

law has been enacted.

Since December 2014, companies that are strictly

complying with state medical cannabis laws have been protected against enforcement for that activity by an amendment (originally

called the Rohrabacher-Blumenauer Amendment, now called the Joyce Amendment) to the Omnibus Spending Bill, which prevents federal prosecutors

from using federal funds to impede the implementation of medical cannabis laws enacted at the state level.

Federal courts have interpreted

the provision to bar the DOJ from prosecuting any person or entity in strict compliance with state medical cannabis laws.

While the protection of the Joyce Amendment prevents

prosecutions, it does not make cannabis legal.

Accordingly, if the protection expires, prosecutors could prosecute federally illegal activity

that occurred within the statute of limitations even if the Joyce Amendment protection was in place when the illegal activity occurred.

The protection of the Joyce Amendment depends on its continued inclusion in the federal Omnibus Spending Bill, or in some other legislation,

and entities’

strict compliance with the state medical cannabis laws.

That protection has been extended through September 30, 2021.

While industry observers expect Congress to extend the protection in future Omnibus Spending Bills, there can be no assurance that it

Although several cannabis law reform bills are

pending in the U.S.

Congress, passage of any of them and ultimately the President’s support and approval remain uncertain.

Biden has stated that he would support federal legislation that would defer to states that have legalized cannabis (in other words, if

a state legalized cannabis, cannabis in that state would not be federally illegal after the point at which the state legalized it).

Until the U.S.

Government changes the law with

respect to cannabis, and particularly if Congress does not extend the protection of state medical cannabis programs, there is a risk that

federal authorities could enforce current federal cannabis law.

An increase in federal enforcement against companies licensed under state

cannabis laws could negatively impact the state cannabis industries and, in turn, our revenues, profits, financial condition, and business

Because our business is dependent, in part, upon continued market

acceptance of cannabis by consumers, any negative trends will adversely affect our business operations.

We are dependent on public support, continued

market acceptance and the proliferation of consumers in the legal cannabis markets.

While we believe that the market and opportunity in

the space continue to grow, we cannot predict the future growth rate or size of the market.

Any downturns in, or negative outlooks on,

the cannabis industry may adversely affect our business and financial condition.

New platform features or changes to existing

platform features could fail to attract new users, retain existing users or generate revenue.

Our business strategy is dependent on our ability

to develop platforms and features to attract new businesses and users, while retaining existing ones.

Staffing changes, changes in user

behavior or development of competing platforms may cause Users to switch to alternative platforms or decrease their use of our platform.

There is no guarantee that companies and dispensaries will use these features and we may fail to generate revenue.

Additionally, any of

the following events may cause decreased use of our platform:

Emergence of competing platforms and applications;

Inability to convince potential companies to join our platform;

Technical issues on certain platforms or in the cross-compatibility of multiple platforms;

Securities breaches with respect to our data;

A rise in safety or privacy concerns;

An increase in the level of spam or undesired content on the network.

We are highly dependent on the services

of key executives, the loss of whom could materially harm our business and our strategic direction.

If we lose key management or significant

personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in our compensation costs,

our business may materially suffer.

We are highly dependent on our management team,

specifically our Chief Executive Officer, Isaac Dietrich.

While we have an employment agreement with Isaac Dietrich, such employment agreement

Dietrich to terminate such agreement upon notice.

If we lose key employees, our business may suffer.

Furthermore, our future

success will also depend in part on the continued service of our key management personnel and our ability to identify, hire, and retain

additional personnel.

We do not carry “key-man”

life insurance on the lives of our executive officer, employees or advisors.

We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development

of our business.

are highly dependent on the services of key executives, the loss of whom could materially harm our business and our strategic direction.

If we lose key management or significant personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience

increases in our compensation costs, our business may materially suffer.

are highly dependent on our management team, specifically our Chief Executive Officer, Danny Meeks.

While we have an employment agreement

with Danny Meeks, such employment agreement permits Mr.

Meeks to terminate such agreement upon notice.

If we lose key employees, our

business may suffer.

Furthermore, our future success will also depend in part on the continued service of our key management personnel

and our ability to identify, hire, and retain additional personnel.

We carry “key-man” life insurance on the life of our

executive officer.

We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary

for the development of our business.

Because of this competition, our compensation costs may increase significantly.

Our monetization strategy is dependent on

many factors outside our control.

There is no guarantee that our efforts to monetize

the MassRoots platform will be successful.

Furthermore, our competitors may introduce more advanced technologies that deliver a greater

value proposition to cannabis related businesses in the future.

In addition, dispensaries may not be able to accept credit or bank cards

due to banking regulations, which could significantly increase the cost and time required for us to generate revenue.

All these factors

individually or collectively may preclude us from effectively monetizing our business which would have a material adverse effect on our

financial condition and results of operation.

Changes in Amazon App Store, Apple App Store

or Google Play Store policies could result in our mobile applications being de-listed.

In addition, our third party service providers

may decline to provide services due to their policies, or cease to provide services previously provided to us due to a change of policy.

On November 4, 2014, the MassRoots App was

removed from Apple’s iOS App Store due to the Apple App Store review team changing their app enforcement guidelines to prohibit

all social cannabis applications.

After negotiation with Apple and the addition of certain restrictions, the MassRoots App returned to

the Apple App Store in February 2015.

Although Apple reversed its decision and included our app in the Apple App Store, we cannot provide

any assurance that Apple’s policy will not change in the future.

The MassRoots App is currently not available in the App Store due

to financial constraints facing the Company.

The Apple App Store is one of the largest content

distribution channels in the world and management believes that it is the only way to effectively distribute our iOS application to users

who own iPhones and iPads.

The Apple App Store review team effectively operates as our iOS App’s regulator;

they decide what guidelines

iOS apps must operate under and how to enforce such guidelines.

The Apple guidelines related to cannabis-related apps are not published,

enforcement of such guidelines is difficult to predict, and the review and appeal processes are conducted without public oversight.

we will continue advocating for a more open and transparent Apple App Store review process that will allow decisions that affect a significant

portion of the United States smartphone owning population to be open to public scrutiny, there can be no assurance that we will be successful

in these efforts.

MassRoots, along with other cannabis apps, regularly

encounter issues with the Google Play Store review team in the normal course of business due to Google Play Store’s absence of clear

guidelines regarding cannabis-related apps.

In November 2016, the MassRoots App was removed from the Google Play Store due to a compliance

However, on March 21, 2017, Google Play approved the MassRoots App for distribution to Android devices through the Google

Play Store once again.

In addition to challenges we face with respect

to compliance with the Amazon App Store, Apple App Store and Google Play Store guidelines, service providers may refuse to provide services

to us even if they previously provided such services due to our status as a cannabis related company.

For example, in January 2016,

after building a strong presence on Instagram and having previously used our Instagram account to grow our user count and highlight posts

about our business, our account was suspended without warning by Instagram.

While the account was reinstated on February 26, 2016,

we cannot provide any assurance that our Instagram account will not be suspended in the future and if suspended that our account will

be reinstated.

Furthermore, we may face similar situations in the future with our other services providers that may cause disruptions

to our business plan, all of which may have a material adverse effect on our business and financial condition.

Government actions or digital distribution

platform restrictions could result in our products and services being unavailable in certain geographic regions which may harm our future

Due to our connections to the cannabis industry,

governments and government agencies could ban or cause our network or apps to become unavailable in certain regions and jurisdictions.

This could greatly impair or prevent us from registering new users in affected areas and prevent current users from accessing our network.

In addition, government action taken against our service providers or partners could cause our network to become unavailable for extended

periods of time.

As discussed herein, as part of our agreement

with Apple in connection with our application being returned to the Apple App Store, we agreed to limit registration of new members within

our iOS application to the locations where cannabis is permitted under state law (medicinally or recreationally).

This restriction prohibits

users in several states and countries from accessing our network.

Expansions of such policies by Apple, Google or Amazon may slow our

user registration rate which may have a material adverse effect on our business and future prospects.

Failure to generate user growth or engagement

could greatly harm our business model.

Our business model involves attracting building

and maintaining an active audience.

There is no guarantee that growth strategies used in the past will continue to bring new users to

our platform.

Changes in relationships with our partners, contractors and businesses we retain to grow our network may result in significant

increases in the cost to acquire new users and audience members.

Decreases in the size of our audience and/or decreased engagement on

our network may impair our ability to generate revenue.

Failure to attract clients could greatly

harm our ability to generate revenue.

Our ability to generate revenue is dependent on

the continued growth of our platform.

If we are unable to continue to grow our network or bring new clients to our network, our ability

to generate revenue would be greatly compromised.

There is no guarantee businesses will want to join our platform or that we will be able

to generate revenue from our existing user base.

Historically, we have generated most of

our revenue from advertising.

The loss of clients or reduction in spending by advertisers may have a material adverse effect on our business.

Historically, we have generated most of our revenue

from third parties advertising on our website.

Some of our third party advertisers have included cannabis companies such as regulated

cannabis dispensaries and mainstream brands such as Uber.

As is common in the industry, our advertisers usually do not have long-term

advertising commitments with us.

It is possible that such advertisers may not continue to do business with us for several reasons including

that they no longer believe that their advertisements on our website will generate a competitive return relative to other alternatives

or in the alternative they may reduce the prices they are willing to pay to advertise their products and services on our website.

Our revenue could be adversely affected by a number

of other factors including, but not limited to:

decreases in audience, including time spent on our

website and mobile app;

our inability to improve our analytics and measurement solutions that demonstrate the value of our ads and other commercial content;

loss of market share to our competitors;

adverse legal developments relating to our business, including legislative and regulatory developments and developments in litigation, if any;

adverse media reports or other negative publicity involving us or other companies in our industry;

the impact of macroeconomic conditions and conditions in the industry in general.

The occurrence of any of these or other factors

could result in decreased traffic to our website which may result in less views of third party ads.

If we are unable to generate traffic

to our website and as a result third party advertisers no longer continue to do business with us, our business, financial conditions and

results of operation may be materially affected.

User engagement and growth depends on software

and device updates beyond our control.

Our mobile application and websites are currently

available on multiple operating systems, including iOS and Android, across multiple different manufacturers, including Motorola, LG, Apple

and Samsung and on thousands of devices.

Changes to the device infrastructure or software updates on such devices could render our platforms

and services useless or inoperable and require users to utilize our website rather than our mobile application which may result in decreased

user engagement.

Any decrease in user engagement may devalue our value proposition to third party advertisers who may no longer continue

to do business with us which may have a material adverse effect on business, financial conditions and results of operation.

We may be unable to manage growth.

Successful implementation of our business strategy

requires us to manage our growth.

Growth could place an increasing strain on our management and financial resources.

To manage growth

effectively, we need to continuously:

Evaluate definitive business strategies, goals and objectives;

Maintain a system of management controls;

Attract and retain qualified personnel, as well as, develop, train and manage management-level and other employees.

If we fail to manage our growth effectively, our

business, financial condition or operating results could be materially harmed.

We may not be able to compete successfully

with other established companies offering the same or similar services and, as a result, we may not achieve our projected revenue and

user targets.

We compete with both start-up and established

technology companies.

Our competitors may have substantially greater financial, marketing and other resources than we do and may have

been in business longer than we have or have greater name recognition and be better established in the technological or cannabis markets

If we are unable to compete successfully with other businesses in our existing market, we may not achieve our projected revenue

and/or user targets which may have a material adverse effect on our financial condition.

Expansion by our well-established competitors

into the cannabis industry could prevent us from realizing anticipated growth in users and revenues.

Competitors in the social network space, such

as Twitter and Facebook, have continued to expand their businesses in recent years into other social network markets.

If they decided

to expand their social networks into the cannabis community, this could harm the growth of our business and user base and cause our revenues

to be lower than we expect.

In addition, competitors in the point-of-sale and compliance software space may expand their offerings into

the cannabis space which could harm the growth of our business and user base and cause our revenues to be lower than we expect.

Government regulation of the Internet and

e-commerce is evolving, and unfavorable changes could substantially harm our business and results of operations.

We are subject to general business regulations

and laws as well as Federal and state regulations and laws specifically governing the Internet and e-commerce.

Existing and future laws

and regulations may impede the growth of the Internet, e-commerce or other online services, and increase the cost of providing online

These regulations and laws may cover sweepstakes, taxation, tariffs, user privacy, data protection, pricing, content, copyrights,

distribution, electronic contracts and other communications, consumer protection, broadband residential Internet access and the characteristics

and quality of services.

It is not clear how existing laws governing issues such as property ownership, sales, use and other taxes, personal

privacy apply to the Internet and e-commerce.

Unfavorable resolution of these issues may harm our business and results of operations.

The failure to enforce and maintain our

intellectual property rights could enable others to use trademarks used by our business which could adversely affect the value of the

The success of our business depends on our continued

ability to use our existing tradename in order to increase our brand awareness.

As of the date hereof, MASSROOTS and TOKE are federally

registered trademarks owned by us, ODAVA is a state registered trademark owned by us and RETAIL is a state registered trademark of Odava,

The unauthorized use or other misappropriation of any of the foregoing trademarks could diminish the value of our business which

would have a material adverse effect on our financial condition and results of operation.

Due to our involvement in the cannabis industry,

we may have a difficult time obtaining insurance coverage for our business which may expose us to additional risk and financial liabilities.

Insurance that may otherwise be readily available,

such as workers compensation, general liability, and directors and officers insurance, is more expensive and difficult for us to obtain

because we are a service provider to companies in the cannabis industry.

If we are unable to obtain and maintain insurance related to

our Company and business operations we will be exposed to additional risk and financial liabilities which may have a material adverse

effect on our business and financial condition.

We and our customers may have difficulty

accessing the service of banks, which may make it difficult for us and for them to sell our products.

Financial transactions involving proceeds generated

by cannabis-related activities can form the basis for prosecution under the U.S.

federal money laundering statutes, unlicensed money

transmitter statutes and the U.S.

Bank Secrecy Act.

Guidance issued by the Financial Crimes Enforcement Network clarifies how financial

institutions can provide services to cannabis-related businesses consistent with their obligations under the Bank Secrecy Act.

since the rescission by U.S.

Attorney General Sessions on January 4, 2018 of the Cole Memo, U.S.

federal prosecutors have had greater

discretion when determining whether to charge institutions or individuals with any of the financial crimes described above based upon

cannabis-related activity.

As a result, given these risks and their own related disclosure requirements, some banks remain hesitant

to offer banking services to cannabis-related businesses.

Consequently, those businesses involved in the cannabis industry continue

to encounter difficulty establishing banking relationships.

While we do not presently have challenges with our banking relationships,

should we have an inability to maintain our current bank accounts, or the inability of our customers to maintain their current banking

relationships, it would be difficult for us to operate our business, may increase our operating costs, could pose additional operational,

logistical and security challenges and could result in our inability to implement our business plan.

Our independent registered accounting firm

has expressed concerns about our ability to continue as a going concern.

The report of our independent registered accounting

firm expresses concern about our ability to continue as a going concern based on the absence of significant revenues, our significant

losses from operations and our need for additional financing to fund all of our operations.

It is not possible at this time for us to

predict with assurance the potential success of our business.

The revenue and income potential of our proposed business and operations

If we cannot continue as a viable entity, we may be unable to continue our operations and you may lose some or all of your

investment in our securities.

In the past we have experienced material

weaknesses in our internal control over financial reporting, which if continued, could impair our financial condition.

As reported in our Annual

Report on Form 10-K, our management concluded that our internal control over financial reporting was not effective as of December 31,

2020 and 2019 due to material weaknesses regarding our controls and procedures.

The Company did not have sufficient segregation of duties

to support its internal control over financial reporting.

Due to our small size and limited resources, segregation of all conflicting

duties has not always been possible and may not be economically feasible in the near term;

however, we do expect to hire additional accounting

personnel in the near future.

We have and do endeavor to take appropriate and reasonable steps to make improvements to remediate these

deficiencies.

If we have continued material weaknesses in our internal financial reporting, our financial condition could be impaired

or we may have to restate our financials, which could cause us to expend additional funds that would have a material impact on our ability

to generate profits and on the success of our business.

The spread of the COVID-19 outbreak has

caused severe disruptions in the U.S.

and global economy and financial markets and could potentially create widespread business continuity

issues of unknown magnitude and duration.

The outbreak of COVID-19 has severely impacted

global economic activity and caused significant volatility and negative pressure in financial markets.

The global impact of the outbreak

has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines and restricting

Many experts predict that the outbreak will trigger a period of global economic slowdown or a global recession.

COVID-19 or another

pandemic could have material and adverse effects on our ability to successfully operate due to, among other factors:

a general decline in business activity of cannabis dispensaries;

the destabilization of the markets could negatively impact our customer and user growth and access to capital and credit markets which could affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis;

a deterioration in our ability to ensure business continuity during a disruption.

The rapid development of this situation makes

it nearly impossible to predict the ultimate adverse impact of COVID-19 on our business and operations.

Nevertheless, COVID-19 presents

material uncertainty which could adversely affect our results of operations, financial condition and cash flows.

We continue to assess

the potential impact of COVID-19, which remains uncertain at this time.

Risks Relating to Use

of New Technology

Government regulation

of the Internet, blockchain technology and cryptocurrency is evolving, and unfavorable changes could substantially harm us and our subsidiary.

We are subject to federal

and state regulations and laws governing the Internet, blockchain technology and e-commerce.

Existing and future laws and regulations

may impede the growth of the Internet, blockchain technology and e-commerce and/or other online services, and may increase the cost of

providing online services.

Changes in regulations and laws may effect sweepstakes, taxation, tariffs, user privacy, data protection, pricing,

content, intellectual property rights, distribution, electronic contracts and other communications, consumer protection, broadband residential

Internet access and the characteristics and quality of services.

In addition, many governments and regulatory agencies have not established

specific regulations pertaining to blockchain technology and other instruments that use such technology and no assurance can be given

that such governments or regulatory authorities will not implement adverse changes to laws and regulations.

Any such changes to federal

and state regulations and laws may harm our and our subsidiary’s business and results of operations.

There are no assurances

that we will be successful in developing blockchain-based solutions, that such solutions will be economically viable or that such solutions

will be able to generate any revenue.

While we intend to continue

to devote development resources to exploring the feasibility of developing block-chain based solutions, there can be no assurances that

we will obtain additional funding to continue such development or that we will be successful in implementing such solutions, that they

will be economically viable, or such solutions will generate any revenue.

The development and

acceptance of digital instruments is subject to a variety of factors which are difficult to evaluate.

We may explore the use of

digital instruments for use in connection with our platform or programs;

however, there can be no assurance that we will adopt or use

any such instruments, or be successful in doing so.

The development and use of such instruments is subject to a variety of factors that

are difficult to evaluate including, but not limited to:

the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the development of a new product or service based upon relatively new and developing technology;

the acceptance and use of the new technology by consumers;

regulation by governmental and quasi-governmental agencies;

the maintenance and development of the protocols for the new technology;

general economic conditions and the regulatory environment relating to the new technology;

the availability and popularity of other forms or methods of buying and selling goods and services.

The slowing or stopping of

the development, general acceptance, adoption and usage of digital instruments or compliance with regulations by governmental and quasi-governmental

agencies may deter or delay the acceptance of such instruments.

The potential application

laws with respect to traditional investment securities to digital instruments is unclear .

The use of digital instruments

is novel and the application of U.S.

federal and state securities laws is unclear in many respects.

Specifically, regulation with respect

to such instruments is currently undeveloped, likely to evolve, may vary significantly among international, federal, state and local jurisdictions

and is subject to significant uncertainty.

Various legislative and executive bodies in the United States and in other countries may in

the future adopt laws, regulations, or guidance, or take other actions, which may severely impact the permissibility of the use of digital

instruments, the technology behind them or the means of transaction in or transferring them.

In the event that securities laws restrict

the ability for digital instruments to be transferred in a manner similar to traditional investment securities, this would have a material

adverse effect on the value of such instruments, which could result in a material impact on the use of such instruments as a possible

means to provide rewards on the MassRoots platform.

Our failure to comply with

any laws, rules and regulations, some of which may not exist yet or that are subject to interpretations that may be subject to change,

could result in a variety of adverse consequences, including civil penalties and fines.

The effect of any future regulatory change is

impossible to predict, but such change could be substantial and materially adverse to the adoption and value our new technology, when

and if developed, accepted and adopted.

Risks Related to Digital Assets

The further development and acceptance of

cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies, which represent a rapidly changing

industry, are subject to a variety of factors that are difficult to evaluate.

The use of Digital Assets to, among other things,

buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs cryptocurrency

assets based upon a computer-generated mathematical and/or cryptographic protocol.

Large-scale acceptance of cryptocurrencies as a means

of payment has not, and may never, occur.

The growth of the Digital Assets industry in general, and the use of Digital Assets in particular,

is subject to a high degree of uncertainty.

The factors affecting the further development of the Digital Assets industry, include but

are not limited to:

● continued worldwide growth in

the adoption and use of Digital Assets as a medium of exchange;

● government and quasi-government

regulation of Digital Assets and their use, or restrictions on or regulation of access to and operation of the Digital Assets systems;

● the maintenance and development

of the open-source software protocol of Digital Asset Networks;

● changes in consumer demographics

and public tastes and preferences;

● the availability and popularity

of other forms or methods of buying and selling goods and services, including new means of using fiat currencies and digital forms of

fiat currencies;

● general economic conditions and

the regulatory environment relating to Digital Assets;

● the impact of regulators focusing

on Digital Assets and Digital Securities and the costs associated with such regulatory oversight.

The outcome of these factors could have negative

effects on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect

on our business, prospects or operations as well as potentially negative effect on the value of any bitcoin, ethereum or other Digital

Assets we hold or acquire, which would harm investors in our securities.

Currently, there is relatively small use

of bitcoins in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price

volatility that could adversely affect an investment in us.

As relatively new products and technologies, bitcoins

and the Bitcoin Network have only recently become widely accepted as a means of payment for goods and services by many major retail and

commercial outlets, and use of bitcoins by consumers to pay such retail and commercial outlets remains limited.

Conversely, a significant

portion of bitcoin demand is generated by speculators and investors seeking to profit from the short- or long-term holding of bitcoins.

A lack of expansion by bitcoins into retail and commercial markets, or a contraction of such use, may result in increased volatility or

a reduction in the price of bitcoin, either of which could adversely impact an investment in us.

Political or economic crises may motivate

large-scale sales of Digital Assets, which could result in a reduction in Digital Asset values and adversely affect an investment in us.

Geopolitical crises may motivate large-scale sales

of Digital Assets, which could rapidly decrease the price of Digital Assets.

Alternatively, as an emerging asset class with limited acceptance

as a payment system or commodity, global crises and general economic downturn may discourage investment in Digital Assets as investors

focus their investment on less volatile asset classes as a means of hedging their investment risk.

As an alternative to fiat currencies that are

backed by central governments, Digital Assets such as bitcoin and ethereum, which are relatively new, are subject to supply and demand

forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear

how such supply and demand will be impacted by geopolitical events.

Nevertheless, political or economic crises may motivate large-scale

acquisitions or sales of Digital Assets either globally or locally.

Large-scale sales of Digital Assets would result in a reduction in

Digital Asset values and could adversely affect an investment in us.

Regulatory changes or actions may alter

the nature of an investment in us or restrict the use of Digital Assets in a manner that adversely affects our business, prospects or

As Digital Assets have grown in both popularity

and market size, governments around the world have reacted differently to Digital Assets;

certain governments have deemed them illegal,

and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the U.S., subject to extensive,

and in some cases overlapping, unclear and evolving regulatory requirements.

Ongoing and future regulatory actions may impact our ability

to continue to operate, and such actions could affect our ability to continue as a going concern or to pursue our new strategy at all,

which could have a material adverse effect on our business, prospects or operations.

Current interpretations require the regulation

of bitcoins and other Digital Assets under the CEA by the CFTC, we may be required to register and comply with such regulations.

extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary,

non-recurring expenses to us.

We may also decide to cease certain operations.

Any disruption of our operations in response to the changed

regulatory circumstances may be at a time that is disadvantageous to investors.

Current and future legislation, CFTC and other

regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which bitcoins and other

Digital Assets are treated for classification and clearing purposes.

In particular, derivatives on these assets are not excluded from

the definition of “commodity future”

We cannot be certain as to how future regulatory developments will impact

the treatment of bitcoins and other Digital Assets under the law.

Bitcoins have been deemed to fall within the definition

of a commodity and, we may be required to register and comply with additional regulation under the CEA, including additional periodic

report and disclosure standards and requirements.

Moreover, we may be required to register as a commodity pool operator and to register

us as a commodity pool with the CFTC through the National Futures Association.

Such additional registrations may result in extraordinary,

non-recurring expenses, thereby materially and adversely impacting an investment in us.

If we determine not to comply with such additional

regulatory and registration requirements, we may seek to cease certain of our operations.

Any such action may adversely affect an investment

If federal or state legislatures or agencies

initiate or release tax determinations that change the classification of bitcoins, ethereum or other Digital Assets as property for tax

purposes (in the context of when such Digital Assets are held as an investment), such determination could have a negative tax consequence

on our Company or our shareholders.

Current IRS guidance indicates that Digital Assets

such as bitcoins should be treated and taxed as property, and that transactions involving the payment of bitcoins for goods and services

should be treated as barter transactions.

While this treatment creates a potential tax reporting requirement for any circumstance where

the ownership of a bitcoin passes from one person to another, usually by means of bitcoin transactions (including off-blockchain transactions),

it preserves the right to apply capital gains treatment to those transactions which may have adversely affect an investment in our Company.

On December 5, 2014, the New York State Department

of Taxation and Finance issued guidance regarding the application of state tax law to Digital Assets such as bitcoins.

The agency determined

that New York State would follow IRS guidance with respect to the treatment of Digital Assets such as bitcoins for state income tax purposes.

Furthermore, they defined Digital Assets such as bitcoin to be a form of “intangible property,”

meaning the purchase and sale

of bitcoins for fiat currency is not subject to state income tax (although transactions of bitcoin for other goods and services maybe

subject to sales tax under barter transaction treatment).

It is unclear if other states will follow the guidance of the IRS and the New

York State Department of Taxation and Finance with respect to the treatment of Digital Assets such as bitcoins for income tax and sales

tax purposes.

If a state adopts a different treatment, such treatment may have negative consequences including the imposition of greater

a greater tax burden on investors in bitcoin or imposing a greater cost on the acquisition and disposition of bitcoins, generally;

either case potentially having a negative effect on prices in the Bitcoin Exchange Market and may adversely affect an investment in our

Foreign jurisdictions may also elect to treat

Digital Assets such as bitcoins differently for tax purposes than the IRS or the New York State Department of Taxation and Finance.

the extent that a foreign jurisdiction with a significant share of the market of bitcoin users imposes onerous tax burdens on bitcoin

users, or imposes sales or value added tax on purchases and sales of bitcoins for fiat currency, such actions could result in decreased

demand for bitcoins in such jurisdiction, which could impact the price of bitcoins and negatively impact an investment in our Company.

Security Risks Related to Our Digital Assets

Our Digital Assets may be subject to loss,

damage, theft or restriction on access.

There is a risk that part or all of the Digital

Assets we may hold in the future could be lost, stolen, destroyed or become inaccessible.

To minimize the risk of loss, damage and theft,

security breaches, and unauthorized access we may hold our Digital Assets at exchanges.

Nevertheless, the exchanges we utilize may not

be impenetrable and may not be free from defect or immune to acts of God, and any loss due to a security breach, software defect or act

of God will be borne by us.

Any of these events may adversely affect our operations and, consequently, an investment in us.

The loss or destruction of a private key

required to access a Digital Assets may be irreversible.

Our loss of access to our private keys could adversely affect an investment in

Digital Assets such as bitcoin are controllable

only by the possessor of both the unique public key and private key relating to the local or online digital wallet in which the Digital

Assets are held.

We plan to safeguard and keep private the private keys we may hold in the future relating to our Digital Assets not held

at exchanges;

to the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible,

we will be unable to access the Digital Assets held by it and the private key will not be capable of being restored by the Network.

loss of private keys relating to digital wallets used to store our Digital Assets could adversely affect an investment in us.

Security threats to us could result in,

a loss of Company’s Digital Assets.

Security breaches, computer malware and computer

hacking attacks have been a prevalent concern in the Bitcoin Exchange Market since the launch of the Bitcoin Network.

Any security breach

caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions

or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could

harm our business operations or result in loss of our bitcoins and other Digital Assets.

Any breach of our infrastructure could result

in damage to our reputation which could adversely affect an investment in us.

Furthermore, we believe that, as our assets continues to

grow, it may become a more appealing target for security threats such as hackers and malware.

The security system and operational infrastructure

may be breached due to the actions of outside parties, error or malfeasance of an employee of ours, or otherwise, and, as a result, an

unauthorized party may obtain access to our, private keys, data or bitcoins.

Additionally, outside parties may attempt to fraudulently

induce employees of ours to disclose sensitive information in order to gain access to our infrastructure.

As the techniques used to obtain

unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined

event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate

preventative measures.

If an actual or perceived breach of our security system occurs, the market perception of the effectiveness of our

security system could be harmed, which could adversely affect an investment in us.

In the event of a security breach, we may be forced

to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in us.

Incorrect or fraudulent Digital Asset transactions

may be irreversible.

Digital Asset transactions are not, from an administrative

perspective, reversible without the consent and active participation of the recipient of the transaction.

Once a transaction has been

verified and recorded in a block that is added to a blockchain, an incorrect transfer of Digital Assets or a theft of Digital Assets generally

will not be reversible, and we may not be capable of seeking compensation for any such transfer or theft.

It is possible that, through

computer or human error, or through theft or criminal action, our Digital Assets could be transferred from us in incorrect amounts or

to unauthorized third parties.

To the extent that we are unable to seek a corrective transaction with such third party or are incapable

of identifying the third party which has received our Digital Assets through error or theft, we will be unable to revert or otherwise

recover incorrectly transferred Digital Assets.

To the extent that we are unable to seek redress for such error or theft, such loss could

adversely affect an investment in us.

Lack of insurance protection and limited legal recourses for digital assets expose us and our shareholders to the risk of loss of the

Digital Assets we may hold for which no person is liable.

The Digital Assets we may purchase are not insured.

Therefore, a loss may be suffered related to our Digital Assets which is not covered by insurance and for which no person or entity is

liable in damages which would adversely affect our operations and, consequently, adversely affect an investment in us.

Digital Assets are not subject to FDIC or

SIPC protections.

The bitcoins and other Digital Assets we may purchase

and hold will likely not be held at a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”)

or the Securities Investor Protection Corporation (“SIPC”) and, therefore, the Digital Assets will not be subject to the protections

enjoyed by depositors with FDIC or SIPC member institutions.

Risks Relating to our Common Stock

Due to our connection to the cannabis industry,

there can be no assurance that our common stock will ever be approved for listing on a national securities exchange.

Currently, shares of our common stock are quoted

on the OTC Pink Tier of the OTC Markets and are not traded or listed on any securities exchange.

Even if we desire to have our shares

listed on a national securities exchange, the fact that our network is associated with the use of cannabis, the legal status of which

is uncertain at the state and Federal level, may make any efforts to become listed on a securities exchange more problematic.

remain determined to work towards getting our securities listed on a national exchange, there can be no assurance that this will occur.

As a result we may never develop an active trading market for our securities which may limit our investors’

ability to liquidate

their investments.

The market price of our common stock may

be volatile and adversely affected by several factors.

The market price of our common stock could fluctuate

significantly in response to various factors and events, including, but not limited to:

may need to obtain additional financing to fund our operations.

may need additional capital in the future to continue to execute our business plan.

Therefore, we may be dependent upon additional capital

in the form of either debt or equity to continue our operations.

At the present time, we do not have arrangements to raise additional

capital, and we may need to identify potential investors and negotiate appropriate arrangements with them.

We may not be able to arrange

enough investment within the time the investment is required or that if it is arranged, that it will be on favorable terms.

obtain the needed capital, we may not be able to become profitable and may have to curtail or cease our operations.

Additional equity

financing, if available, may be dilutive to the holders of our capital stock.

Debt financing may involve significant cash payment obligations,

covenants and financial ratios that may restrict our ability to operate and grow our business.

independent registered accounting firm has expressed concerns about our ability to continue as a going concern.

report of our independent registered accounting firm expresses concern about our ability to continue as a going concern based on our

historical losses from operations and the potential need for additional financing to fund our operations.

It is not possible at this

time for us to predict with assurance the potential success of our business.

If we cannot continue as a viable entity, we may be unable

to continue our operations and you may lose some or all of your investment in our securities.

the past we have experienced material weaknesses in our internal control over financial reporting, which if continued, could impair our

financial condition.

reported in Item 9A of this Annual Report on Form 10-K, our management concluded that our internal control over financial reporting was

not effective as of December 31, 2021 and 2020 due to material weaknesses regarding our controls and procedures.

The Company did not

have sufficient segregation of duties to support its internal control over financial reporting.

Due to our small size and limited resources,

segregation of all conflicting duties has not always been possible and may not be economically feasible in the near term;

do expect to hire additional accounting personnel in the near future.

We have and do endeavor to take appropriate and reasonable steps

to make improvements to remediate these deficiencies.

If we have continued material weaknesses in our internal financial reporting, our

financial condition could be impaired or we may have to restate our financials, which could cause us to expend additional funds that

would have a material impact on our ability to generate profits and on the success of our business.

Relating to Government Laws and Regulations

increases and changes in tax rules may adversely affect our financial results.

a company conducting business on a global basis with physical operations throughout North America, we are exposed, both directly and

indirectly, to the effects of changes in U.S., state, local and foreign tax rules.

Taxes for financial reporting purposes and cash tax

liabilities in the future may be adversely affected by changes in such tax rules.

In many cases, such changes put us at a competitive

disadvantage compared to some of our major competitors, to the extent we are unable to pass the tax costs through to our customers.

may not realize our deferred tax assets in the future.

assessment of recoverability of our deferred tax assets is based on an evaluation of existing positive and negative evidence as to whether

it is more-likely-than-not that they will be realized.

If negative evidence outweighs positive evidence, a valuation allowance is required.

Impairment of deferred tax assets may result from significant negative industry or economic trends, a decrease in earnings performance

and projections of future taxable income, adverse changes in laws or regulations, and a variety of other factors.

Impairment of deferred

tax assets could have a material adverse impact on our results of operations and financial condition and could result in not realizing

the deferred tax assets.

Deferred tax assets may require further valuation allowances if it is not more-likely-than-not that the deferred

tax assets will be realized.

Environmental

compliance costs and potential environmental liabilities may have a material adverse effect on our financial condition and results of

with environmental laws and regulations is a significant factor in our business.

We are subject to local, state and federal environmental

laws and regulations in the U.S.

and other countries relating to, among other matters:

water and storm water management, treatment and discharge;

use and treatment of groundwater;

and groundwater contamination and remediation;

discharge, storage, handling and disposal of hazardous materials and secondary materials;

health and safety.

are also required to obtain environmental permits from governmental authorities for certain operations.

Violation of or failure to obtain

permits or comply with these laws or regulations could result in our business being fined or otherwise sanctioned by regulators or becoming

subject to litigation by private parties.

Future environmental compliance costs, including capital expenditures for environmental projects,

may increase because of new laws and regulations, changing interpretations and stricter enforcement of current laws and regulations by

regulatory authorities, expanding emissions, groundwater and other testing requirements and new information on emission or contaminant

levels, uncertainty regarding adequate pollution control levels, the future costs of pollution control technology and issues related

to climate change.

We have seen an increased focus by federal, state and local regulators on metals recycling and auto dismantling facilities

and new or expanding regulatory requirements.

operations use, handle and generate hazardous substances.

In addition, previous operations by others at facilities that we currently

or formerly owned, operated or otherwise used may have caused contamination from hazardous substances.

As a result, we are exposed to

possible claims, including government fines and penalties, costs for investigation and clean-up activities, claims for natural resources

damages and claims by third parties for personal injury and property damage, under environmental laws and regulations, especially for

the remediation of waterways and soil or groundwater contamination.

These laws can impose liability for the cleanup of hazardous substances

even if the owner or operator was neither aware of nor responsible for the release of the hazardous substances.

We have, in the past,

been found not to be in compliance with certain of these laws and regulations, and have incurred liabilities, expenditures, fines and

penalties associated with such violations.

Environmental compliance costs and potential environmental liabilities could have a material

adverse effect on our financial condition, results of operations and cash flows.

See “Contingencies – Environmental”

in Note 9 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements.

agencies may refuse to grant or renew our licenses and permits, thus restricting our ability to operate.

conduct certain of our operations subject to licenses, permits and approvals from state and local governments.

Governmental agencies

often resist the establishment of certain types of facilities in their communities, including auto parts facilities.

Changes in zoning

and increased residential and mixed-use development near our facilities are reducing the buffer zones and creating land use conflicts

with heavy industrial uses such as ours.

This could result in increased complaints, increased inspections and enforcement including fines

and penalties, operating restrictions, the need for additional capital expenditures and increased opposition to maintaining or renewing

required approvals, licenses and permits.

In addition, from time to time, both the U.S.

and foreign governments impose regulations and

restrictions on trade in the markets in which we operate.

In some countries, governments require us to apply for certificates or registration

before allowing shipment of recycled metal to customers in those countries.

There can be no assurance that future approvals, licenses

and permits will be granted or that we will be able to maintain and renew the approvals, licenses and permits we currently hold.

to obtain these approvals could cause us to limit or discontinue operations in these locations or prevent us from developing or acquiring

new facilities, which could have a material adverse effect on our financial condition and results of operations.

with existing and future climate change and greenhouse gas emission laws and regulations may adversely impact our operating results.

legislation or increased regulation regarding climate change and greenhouse gas “GHG” emissions could impose significant

costs on our business and our customers and suppliers, including increased energy, capital equipment, emissions controls, environmental

monitoring and reporting and other costs in order to comply with laws and regulations concerning and limitations imposed on climate change

and GHG emissions.

The potential costs of allowances, taxes, fees, offsets or credits that may be part of “cap and trade”

programs or similar future legislative or regulatory measures are still uncertain and the future of these programs or measures is unknown.

Future climate change and GHG laws or regulations could negatively impact our ability (and that of our customers and suppliers) to compete

with companies situated in areas not subject to such requirements.

Until the timing, scope and extent of any future laws or regulations

becomes known, we cannot predict the effect on our financial condition, operating performance or ability to compete.

Furthermore, even

without such laws or regulations, increased awareness and any adverse publicity in the global marketplace about the GHGs emitted by companies

in the metals recycling and steel manufacturing industries could harm our reputation and reduce customer demand for our products.

“Business - Environmental Matters” in Part I, Item 1 of this Annual Report for further detail.

Relating to Intellectual Property

may not be able to protect our intellectual property rights throughout the world.

success of our business depends on our continued ability to use our existing tradename in order to increase our brand awareness.

unauthorized use or other misappropriation of any our brand names could diminish the value of our business which would have a material

adverse effect on our financial condition and results of operation.

may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful

and the outcome might have an adverse effect on the success of our business.

may infringe our trademarks or other intellectual property.

Moreover, it may be difficult or impossible to obtain evidence of infringement

by a competitor.

To counter infringement or unauthorized use, we may be required to file infringement claims on an individual basis,

which can be expensive and time-consuming and divert the time and attention of our management.

There can be no assurance that we will

have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they

are concluded.

may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property or claiming

ownership of what we regard as our own intellectual property.

of our employees may have executed non-disclosure and non-competition agreements in connection with their previous employment.

we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject

to claims that we or these employees have used or disclosed confidential information or intellectual property, including trade secrets

or other proprietary information, of any such employee’s former employer.

Litigation may be necessary to defend against these claims.

Relating to Ownership of our Common Stock

can be no assurance that our Common Stock will ever be approved for listing on a national securities exchange.

shares of our Common Stock are quoted on the over the counter “OTC” Pink Market and are not traded or listed on any

securities exchange.

While we remain determined to work towards getting our securities listed on a national exchange, there can be no

assurance that this will occur.

As a result we may never develop an active trading market for our securities which may limit our investors’

ability to liquidate their investments.

market price of our Common Stock may be volatile and adversely affected by several factors.

market price of our Common Stock could fluctuate significantly in response to various factors and events, including, but not limited

our ability to execute our business plan;

results below expectations;

announcements regarding regulatory developments with respect to the cannabis industry;

our issuance of additional

securities, including debt or equity or a combination thereof, necessary to fund our operating expenses;

announcements of technological

innovations or new products by us or our competitors;

period-to-period fluctuations in our financial results;

and other events or factors,

many of which may be out of our control, including, but not limited to, pandemics such as COVID-19.

In addition, the securities markets have from

time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market price of our common stock.

Our common stock is subject to the “penny

rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and

may reduce the value of an investment in the stock.

Rule 15g-9 under the Exchange Act establishes

the definition of a “penny stock,”

for the purposes relevant to us, as any equity security that has a market price of less

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

For any transaction involving

a penny stock, unless exempt, the rules require:

(a) that a broker or dealer approve a person’s account for transactions in penny

and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and

quantity of the penny stock to be purchased.

In order to approve a person’s account for

transactions in penny stocks, the broker or dealer must:

(a) obtain financial information and investment experience objectives of the

person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient

knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior

to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight

(a) sets forth the basis on which the broker or dealer made the suitability determination;

and (b) confirms that the broker or dealer

received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions

in securities subject to the “penny stock”

This may make it more difficult for investors to dispose of our common stock

and cause a decline in the market value of our common stock.

Disclosure also has to be made about the risks

of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or

dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in

cases of fraud in penny stock transactions.

Finally, monthly statements have to be sent disclosing recent price information for the penny

stock held in the account and information on the limited market in penny stocks.

We are an “emerging growth company”

within the meaning of the Securities Act, and if we decide to take advantage of certain exemptions from various reporting requirements

applicable to emerging growth companies, our common stock could be less attractive to investors.

For as long as we remain an “emerging growth

company,”

as defined in the Jumpstart Our Business Startups (“JOBS”) Act, we will have the option to take advantage

of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not “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 of 2002, as amended (the “Sarbanes-Oxley Act”), 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 may take advantage of these and other exemptions until we are no longer an “emerging growth company”.

the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B)

of the Securities Act for complying with new or revised accounting standards.

We will remain an emerging growth company until

the earliest of (1) the last day of the fiscal year during which we have total annual gross revenues of $1.07 billion or more,

(2) the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering, (3) the date

on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt, and (4) the

date on which we are deemed to be a “large accelerated filer”

under the Exchange Act (i.e., the first day of the fiscal year

after we have (a) more than $700,000,000 in outstanding common equity held by our non-affiliates, measured each year on the last

day of our second fiscal quarter, and (b) been public for at least 12 months).

Even after we no longer qualify as an emerging

growth company, we may still qualify as a “smaller reporting company,”

which would allow us to take advantage of many of the

same exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404

of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

If some investors find

our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be

more volatile.

We do not anticipate paying dividends on

our common stock, and investors may lose the entire amount of their investment.

Cash dividends have never been declared or paid

on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future.

We expect to use future earnings,

if any, to fund business growth.

Therefore, stockholders will not receive any funds absent a sale of their shares of common stock.

we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price

We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that

stockholders will not lose the entire amount of their investment.

You could lose all of your investment.

An investment in our securities is speculative

and involves a high degree of risk.

Potential investors should be aware that the value of an investment in the Company may go down as

In addition, there can be no certainty that the market value of an investment in the Company will fully reflect its underlying

You could lose your entire investment.

Because we can issue additional shares of

common stock, purchasers of our common stock may incur immediate dilution and experience further dilution.

We are authorized to issue up to 500,000,000 shares

of common stock of which 498,174,656 shares of common stock are issued and outstanding as of April 14, 2021.

Our Board of Directors has

the authority to cause us to issue additional shares of common stock without consent of any of stockholders.

In addition, we are authorized

to issue up to 10,000,000 shares of preferred stock of which 6,000 shares are designated as Series A Preferred Stock, of which no shares

are issued and outstanding, 2,000 shares are designated as Series B Preferred Stock, of which no shares are issued and outstanding, 1,000

shares are designated as Series C Preferred Stock, of which 1,000 shares are issued and outstanding, 100 shares of Series X Preferred

Stock, of which 26.05 are issued and outstanding, and 1,000 shares of Series Y Preferred Stock, of which 659.605674 are issued and outstanding,

as of April 14, 2021.

Consequently, our stockholders may experience further dilution in their ownership of our stock in the future, which

could have an adverse effect on the trading market for our common stock .

our Certificate of Incorporation gives our Board the right to create one or more new series of preferred stock.

As a result, our Board

may, without stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights that could adversely

affect the voting power and equity interests of the holders of our common stock.

Preferred stock, which could be issued with the right

to more than one vote per share, could be used to discourage, delay or prevent a change of control of our Company, which could materially

adversely affect the price of our common stock.

Our Certificate of Incorporation contains

an exclusive forum provision with respect to all Internal Corporate Claims, which may limit a stockholder’s ability to bring a claim

in a judicial forum that it finds favorable and discourage lawsuits against us or our current or former directors or officers and/or stockholders

operating results below expectations;

our issuance of additional securities, including

debt or equity or a combination thereof, necessary to fund our operating expenses;

announcements of technological innovations or new

products by us or our competitors;

and period-to-period fluctuations in our financial results.

addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the

operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market price of

our Common Stock.

our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.

SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.

Penny stocks are generally

equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized

for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions

in such securities is provided by the exchange or system.

If we do not obtain a listing on a national securities exchange and if the

price of our common stock is less than $5.00, our common stock could be deemed a penny stock.

The penny stock rules require a broker-dealer,

before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing

specified information.

In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise

exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for

the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement;

(ii) a written

agreement to transactions involving penny stocks;

and (iii) a signed and dated copy of a written suitability statement.

These disclosure

requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders

may have difficulty selling their shares.

are a “smaller reporting company” within the meaning of Rule 12b-2 of the Exchange Act, and if we decide to take advantage

of certain exemptions from various reporting requirements applicable to smaller reporting companies, our Common Stock could be less attractive

to investors.

qualify as a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned

subsidiary of a parent company that is not a “smaller reporting company,” and have either:

(i) a public float of less than

$250 million or (ii) annual revenues of less than $100 million during the most recently completed fiscal year and (A) no public float

or (B) a public float of less than $700 million.

As a “smaller reporting company,” we are entitled to rely on certain reduced

disclosure requirements, such as an exemption from providing executive compensation information in our periodic reports and proxy statements.

We are also exempt from the auditor attestation requirements provided in Section 404(b) of the Sarbanes-Oxley Act.

These exemptions and

reduced disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our

results of operations and financial prospects.

We cannot predict if investors will find our Common Stock less attractive because we may

rely on these exemptions.

If some investors find our Common Stock or warrants less attractive as a result, there may be a less active

trading market for our Common Stock and our stock prices may be more volatile.

do not anticipate paying dividends on our Common Stock, and investors may lose the entire amount of their investment.

dividends have never been declared or paid on our Common Stock, and we do not anticipate such a declaration or payment for the foreseeable

We expect to use future earnings, if any, to fund business growth.

Therefore, stockholders will not receive any funds absent

a sale of their shares of common stock.

If we do not pay dividends, our Common Stock may be less valuable because a return on your investment

will only occur if our stock price appreciates.

We cannot assure stockholders of a positive return on their investment when they sell

their shares, nor can we assure that stockholders will not lose the entire amount of their investment.

could lose some or all of your investment.

investment in our securities is speculative and involves a high degree of risk.

Potential investors should be aware that the value of

an investment in the Company may go down as well as up.

In addition, there can be no certainty that the market value of an investment

in the Company will fully reflect its underlying value.

You could lose some or all of your investment.

management controls a large block of our Common Stock that will allow them to control us.

of March 30, 2022 members of our management team beneficially own approximately 50.67% of our outstanding common stock.

a result, management may have the ability to control substantially all matters submitted to our stockholders for approval including:

and removal of our directors;

of our Certificate of Incorporation or Bylaws;

of measures that could delay or prevent a change

in control or impede a merger, takeover or other business combination involving us.

addition, management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to

obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock

Any additional investors will own a minority percentage of our common stock and will have minority voting rights.

we can issue additional shares of Common Stock, purchasers of our Common Stock may incur immediate dilution and experience further dilution.

are authorized to issue up to 1,200,000,000 shares of Common Stock, of which 3,338,416 shares of Common Stock are issued and outstanding

as of March 30, 2022.

Our Board of Directors has the authority to cause us to issue additional shares of Common Stock without consent

of any of stockholders.

Consequently, our stockholders may experience further dilution in their ownership of our stock in the future,

which could have an adverse effect on the trading market for our Common Stock.

in our Second Amended and Restated Certificate of Incorporation and Bylaws and Delaware law might discourage, delay or prevent a change

in control of our Company or changes in our management and, therefore, depress the market price of our Common Stock.

Second Amended and Restated Certificate of Incorporation provides that all Internal Corporate Claims must be brought solely and exclusively

in the Court of Chancery of the State of Delaware (or, if such court does not have jurisdiction, the Superior Court of the State of Delaware,

or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware).

The exclusive forum

provision may limit a stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes based upon

Internal Corporate Claims, which may discourage lawsuits against us or our current or former directors or officers and/or stockholders

in such capacity.

Our Certificate of Incorporation provides that

all Internal Corporate Claims (as defined in the Certificate of Incorporation) must be brought solely and exclusively in the Court of

Chancery of the State of Delaware (or, if such court does not have jurisdiction, the Superior Court of the State of Delaware, or, if such

other court does not have jurisdiction, the United States District Court for the District of Delaware).

All of our stockholders are subject

to the exclusive forum provision of our Certificate of Incorporation.

The exclusive forum provision may limit a stockholder’s ability

to bring a claim in a judicial forum that it finds favorable for disputes based upon Internal Corporate Claims, which may discourage lawsuits

against us or our current or former directors or officers and/or stockholders in such capacity.

In addition, if a court were to find this

exclusive-forum provision to be inapplicable or unenforceable in an action, we may incur costs associated with resolving the dispute in

other jurisdictions, which could have a material adverse effect on our business and operations.

In addition, if a court were to find this exclusive forum provision to be inapplicable or unenforceable in an action,

we may incur costs associated with resolving the dispute in other jurisdictions, which could have a material adverse effect on our business

and operations.

securities or industry research analysts do not publish research or reports about our business, or if they issue an unfavorable or misleading

opinion regarding our common stock, the market price and trading volume of our Common Stock could decline.

trading market for our Common Stock will rely in part on the research and reports that securities or industry research analysts, over

whom we have no control, publish about us and our business.

If any of the analysts who cover us issue an adverse or misleading opinion

regarding us, our business model, our intellectual property or our stock performance, our stock price would likely decline.

more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets,

which in turn could cause our stock price or trading volume to decline.

sales and issuances of our Common Stock or rights to purchase our Common Stock, including pursuant to our equity incentive plans, could

result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

expect that significant additional capital may be needed in the future to continue our planned operations, including expanded research

and development activities and costs associated with operating a public company.

To raise capital, we may sell Common Stock, convertible

securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.

common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales.

may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior

to the holders of our common stock.

have broad discretion in the use of the net proceeds from our public offerings and may not use them effectively.

management has broad discretion in the application of the net proceeds from our public offerings, and you will be relying on the judgment

of our management regarding the application of these proceeds.

Our management might not apply the net proceeds from our public offerings

in ways that ultimately increase the value of your investment.

If we do not invest or apply the net proceeds from our public offerings

in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

are subject to the periodic reporting requirements of the Exchange Act.

We designed our disclosure controls and procedures to reasonably

assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management

and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

We believe that

any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only

reasonable, not absolute, assurance that the objectives of the control system are met.

inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple

error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people

or by an unauthorized override of the controls.

Accordingly, because of the inherent limitations in our control system, misstatements

due to error or fraud may occur and not be detected.

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