What changed in this filing

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Item 1A. Risk Factors

2022-09-28 compared with 2021-09-28 · 255 added, 164 removed, 991 unchanged (30% of the section changed)

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The risks described

under the heading “ Risk Factors ” beginning on page 11 of this Annual Report on Form 10-K may cause us

not to realize the full benefits of our strengths and/or may cause us to be unable to successfully execute all or part of our

under the heading “ Risk Factors ” beginning on page 8 of this Annual Report on Form 10-K may cause

us not to realize the full benefits of our strengths and/or may cause us to be unable to successfully execute all or part of our

Some of the more significant challenges we face include:

The COVID-19 pandemic and the efforts to mitigate its impact may have an adverse impact on our business, liquidity, operations, financial condition, the businesses of our suppliers, vendors, and logistics partners, and the price of our securities.

The ongoing conflict between Russia and Ukraine may adversely affect our business, financial condition, results from operations, or the businesses of our suppliers, vendors and logistics partners.

The continuing COVID-19 pandemic and the efforts to mitigate its impact may have an adverse impact on our business, liquidity, operations, financial condition, the businesses of our suppliers, vendors and logistics partners, and the price of our securities.

Our Company’s founders own approximately 54.26% of our Common Stock, which effectively gives our founders full control over the board of directors and management of the Company for the foreseeable future.

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Certain of our products may be purchased for use in new and emerging industries or segments, such as cannabis, and may be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions.

Our business depends significantly on the continuing efforts of our management team and our business may be considerably impacted if we should lose their services.

Our business depends significantly on the continuing efforts of our management team and our business may be impacted if we should lose their services.

Certain relationships, acquisitions, strategic alliances, and investments could result in operating issues, dilutions, and other harmful or unintended consequences which may adversely impact our business and the results of our operations.

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As the bulk of our sales are carried out through e-commerce, we are subject to certain cyber security risks, including hacking and stealing of customer and confidential data.

There are myriad risks, including stock market volatility, inherent in owning our securities.

There are a myriad of risks, including stock market volatility, inherent in owning our securities.

Risks Related to Our Business and Products

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that contain ingredients or otherwise prevent us from developing and manufacturing certain products and product innovations.

The ongoing conflict between Russia and

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

On February 24, 2022, Russia

initiated a military offensive in Ukraine.

While neither Ukraine nor Russia is a key supplier of ours, the scope, intensity, duration

and outcome of the ongoing war is uncertain and its continuation or escalation could have a material adverse effect on iPower due to the

general impact on the global supply chain and prices of certain commodities.

While we presently have no business or direct trade relationships

with entities located in Russia or Ukraine, the ongoing conflict between Russia and Ukraine could potentially cause supply chain disruptions

that could disrupt our business should any of our end-suppliers rely on supplies, products or shipments from those regions.

In response to the war, the

United States, other North Atlantic Treaty Organization (“NATO”) member states, as well as non-member states, have announced

targeted economic sanctions on Russia, certain Russian citizens and enterprises.

Any continuation or escalation of the war may trigger

a series of additional economic and other sanctions.

Certain companies have experienced negative reactions from their investors, employees,

customers, or other stakeholders as a result of their action or inaction related to the war between Russia and Ukraine.

We continue to

monitor the reactions of our investors, employees, customers and other stakeholders and, as of the date of this report, have neither experienced

any material adverse financial impacts nor suffered from the loss of key customers or employees.

In addition, the risk of cybersecurity

incidents has increased in connection with the ongoing war, driven by justifications such as retaliation for the sanctions imposed in

conjunction with the war, or in response to certain companies’ continued operations in Russia.

For example, the war has been accompanied

by cyberattacks against the Ukrainian government and other countries in the region.

It is possible that these attacks could have collateral

effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations and could

increase the frequency and severity of cyber-based attacks against our information technology systems.

While we have taken actions to

mitigate such potential risks, the proliferation of malware from the war into systems unrelated to the war or cyberattacks against U.S.

companies in retaliation for U.S.

sanctions against Russia or U.S.

support of Ukraine, could also adversely affect our operations.

We insure ourselves against

many types of risks;

however, while this insurance may mitigate certain of the risks associated with the ongoing war, our level of insurance

may not cover all losses we could incur.

The potential effects of these conditions could have a material adverse effect on our business,

results of operations and financial condition.

The COVID-19 pandemic

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and price of our securities.

The pandemic involving the

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

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

The ongoing pandemic involving

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

Public health authorities and governments at local, national and international levels have announced various measures to respond to this

Some measures that directly or indirectly impact our business include:

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resulting in reduced spending for the products we sell.

As events are rapidly changing,

we do not know how long the COVID-19 pandemic and the measures that have been introduced to respond to it will disrupt our operations

or the full extent of that disruption.

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

time and will involve costs and uncertainty.

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

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

Governments could take additional restrictive measures to combat

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

It is also possible that the

impact of the pandemic and response on our suppliers, customers and markets will persist for some time after governments ease their restrictions.

These measures have negatively impacted, and may continue to impact, our business and financial condition as the responses to control

COVID-19 continue.

As events are rapidly changing, we do not know how long the COVID-19

pandemic and the measures that have been introduced to respond to it will disrupt our operations or the full extent of that disruption.

While we have resumed normal business hours and operations in recent months, it is unknown whether we may have additional COVID-19 restrictions

or health emergencies in the future.

Should we experience such additional restrictions and business disruptions, we may experience unanticipated

costs and operational uncertainty.

We cannot predict how long the effects of COVID-19 and the efforts to contain it will continue to impact

our business after the pandemic is under control.

Governments could take additional restrictive measures to combat the pandemic that could

further impact our business or the economy in the geographies in which we operate.

It is also possible that the impact of the pandemic

and response on our suppliers, customers and markets will persist for some time after governments ease their restrictions.

These measures

have negatively impacted, and may continue to impact, our business and financial condition as the responses to control COVID-19 continue.

We have a limited operating history on which

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Many of our suppliers are experiencing operational

difficulties as a result of COVID-19, which in turn may have an adverse effect on our ability to provide products to our customers.

disruption in our supply chain, increase in shipping costs, and the consistency and availability of our supply chain, could negatively

affect our revenues and overall business strategy.

The measures being taken

to combat the pandemic are impacting our suppliers and may destabilize our supply chain.

For example, manufacturing plants have

closed and work at others has been curtailed in many places where we source our products.

Some of our suppliers have had to

temporarily close a facility for disinfecting after employees tested positive for COVID-19, and others have faced staffing shortages

difficulties as a result of COVID-19, which in turn may have an adverse effect on our ability to provide, or timely provide, products

to our customers.

Any disruption in our supply chain, including an increase in shipping and/or storage costs, and the consistency and

availability of our supply chain, could negatively affect our revenues and overall business strategy.

The measures being taken to

combat the pandemic are impacting our suppliers and may have a destabilizing affect on our supply chain.

For example, some manufacturing

plants have closed and work at other plants has been curtailed in many places where we source our products.

Some of our suppliers have

had to temporarily close a facility for disinfecting after employees tested positive for COVID-19, and others have faced staffing shortages

from employees who are sick or apprehensive about coming to work.

Further, the ability of our suppliers to ship their goods to us

has become difficult as transportation networks and distribution facilities have had reduced capacity and have been dealing with

changes in the types of goods being shipped, all of which may cause increase in shipping costs and affect the availability of

inventories to meet our sales demand.

Currently the difficulties

experienced by our suppliers have not yet impacted our ability to deliver products to our customers and we do not significantly depend

on any one supplier;

however, if this continues, it may negatively affect our inventory and delay the delivery of merchandise to our stores

and customers, which in turn will adversely affect our revenues and results of operations.

If the difficulties experienced by our suppliers

continue, we cannot guarantee that we will be able to locate alternative sources of supply for our merchandise on acceptable terms, or

If we are unable to adequately purchase appropriate amounts of inventory, our business and results of operations may be materially

and adversely affected.

Further, the ability of our suppliers to ship their goods to us has

become difficult as transportation networks and distribution facilities have had reduced capacity and have been dealing with changes in

the types of goods being shipped, all of which have caused an increase in shipping costs and affected the availability of inventories

to meet our sales demand.

Thus, the difficulties experienced

by our suppliers have resulted in longer purchase lead times, increased inventory build up as a result of shipping delays, along with

increased ocean freight and storage costs.

Nonetheless, we have continued to deliver products to our customers and the fact that we do

not significantly depend on any one supplier has helped to lessen any disruptions.

Nonetheless, should there be any further disruption

caused by the pandemic, it may negatively affect our inventory and delay our ability to timely deliver merchandise to our stores and customers,

which in turn will adversely affect our revenues and results of operations.

If the difficulties experienced by our suppliers continues,

we cannot guarantee that we will be able to locate alternative sources of supply for our merchandise on acceptable terms, or at all.

we are unable to purchase appropriate amounts of inventory, our business and results of operations may be materially and adversely

Poor economic conditions could adversely

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At present, we have 31 suppliers in the U.S.

and 114 suppliers

and China have been involved in ongoing trade disputes, resulting in increased tariffs when such goods arrive in the

U.S., among other things.

and more than

100 suppliers in China.

However, of these, approximately 5% of the goods sourced in China were purchased through our newly acquired VIE,

and China have been involved in ongoing trade disputes, resulting in increased tariffs when such goods arrive in the U.S.,

among other things.

Any changes in U.S.

trade policy, or an escalation in the ongoing trade disputes, could trigger retaliatory

actions, resulting in ‘trade wars” and an increase costs for goods imported into the United States.

Such actions could disrupt

our supply chain.

In addition, increased tariffs could, in turn, reduce customer demand for such products as such tariffs could cause

us to have to increase the price at which we sell our goods, or it could result in trading partners limiting their trade with the United

trade policy, or an escalation in the ongoing trade disputes, could trigger retaliatory actions,

resulting in “trade wars” and an increase in costs for goods imported into the United States.

Such actions could disrupt our

supply chain.

In addition, increased tariffs could, in turn, reduce customer demand for such products as such tariffs could cause us to

have to increase the price at which we sell our goods, or it could result in trading partners limiting their trade with the United States.

To date, iPower has absorbed some of the costs related to increased tariffs.

However, should we be unable to continue to absorb

such costs, or should we need to pass all such costs on to consumers, such increase could cut into our competitive advantage and our volume

of sales activity in the United States could be materially reduced.

Any such reduction may materially and adversely affect our sales and

our business.

However, should we be unable to continue to absorb such costs,

or should we need to pass all such costs on to consumers, such increase could cut into our competitive advantage and our volume of sales

activity in the United States could be materially reduced.

Any such reduction may materially and adversely affect our sales and our business.

Our China-based

subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd.

and Daheshou (Shenzhen) Information Technology Co., Ltd., through which we procure

the majority of our inventory and overseas logistical support, are owned through contractual agreements, as required by the laws of the

People’s Republic of China (“PRC”).

As a result, the Chinese government could potentially exercise significant oversight

and/or discretion over the business and operations of our China-based subsidiaries and could potentially intervene in or influence the

operations of those businesses at any time.

recently acquired two China-based subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd.

(the WFOE”) and Daheshou (Shenzhen) Information

Technology Co., Ltd.

(the “Operating Company”).

(The WFOE and the Operating Company together are referred to as our “China-based

Subsidiaries”).

The Operating Company has historically provided the bulk of our China-based procurement and logistical needs and

we believe its acquisition will serve to streamline our procurement of goods and shipping, as well as reduce costs by bringing these services

Our China-based subsidiaries are owned by us through contractual arrangements with our Hong Kong subsidiary, Fly Elephant Limited,

and its parent company, Anivia Limited, a British Virgin Islands company.

In addition, our China-based subsidiaries may be at risk of

influence by the PRC government as they are subject to the laws, rules and regulations of the PRC, which can be complex and evolve rapidly.

The PRC government has the power to exercise significant oversight and discretion over the conduct of our China-based Subsidiaries, and

the regulations to which they are subject may change rapidly and with little notice to us or our shareholders.

As a result, the application,

interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain.

In addition, these laws and regulations

may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our own policies and practices.

New laws, regulations and other government directives in the PRC may also be costly to comply with, and such compliance or any associated

inquiries or investigations or any other government actions may, as regards our China-based subsidiaries:

Delay or impede development,

Result in negative publicity or increase our operating costs,

Require significant management time and attention, and

Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our China-based business practices.

promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, could restrict or otherwise unfavorably

impact the ability or manner in which we conduct the business of our China based subsidiaries and could require us to change certain

aspects of their business to ensure compliance, which could delay our procurement of goods, reduce revenues, increase costs, or subject

us to additional liabilities.

To the extent any new or more stringent measures are required to be implemented in the PRC, our business,

financial condition, and results of operations could be adversely affected.

We face intense competition that could prohibit

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of suppliers for certain of our hydroponic products and other supplies.

For the years ended June 30, 2021 and 2020, three suppliers accounted

for 38% (18%, 10% and 10%) and two suppliers accounted for 38.5% (25.2% and 13.3%) of the Company's total purchases, respectively.

reliance on a limited number of suppliers may increase our risk of experiencing disruptions in our business.

As we do not have any long-term

supply agreements, in the event we are unable to maintain supplier arrangements and relationships, if we are unable to contract with suppliers

at the quantity and quality levels needed for our business, if any of our key suppliers becomes insolvent or experience other financial

distress or if any of our key suppliers is negatively impacted by COVID-19, including with respect to staffing and shipping of products,

we could experience disruptions in our supply chain, which could have a material adverse effect on our financial condition, results of

operations and cash flows.

For the years ended June 30, 2022 and 2021, one supplier accounted

for 18% and three suppliers accounted for 38% (18%, 10% and 10%) of the Company's total purchases, respectively.

Such reliance on a limited

number of suppliers may increase our risk of experiencing disruptions in our business.

As we do not have any long-term supply agreements,

in the event we are unable to maintain supplier arrangements and relationships, if we are unable to contract with suppliers at the quantity

and quality levels needed for our business, if any of our key suppliers becomes insolvent or experience other financial distress or if

any of our key suppliers is negatively impacted by COVID-19, including with respect to staffing and shipping of products, we could experience

disruptions in our supply chain, which could have a material adverse effect on our financial condition, results of operations and cash

Although we continue to implement

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The general availability and price of those components can be affected by numerous forces

beyond our control, including political instability, trade restrictions and other government regulations, duties and tariffs, price controls,

changes in currency exchange rates and weather.

A significant disruption in the availability of any of our key product components could

negatively impact our business.

In addition, increases in the prices of key commodities and other raw materials could adversely affect

our ability to manage our cost structure.

Market conditions may limit our ability to raise selling prices to offset increases in our raw

material costs.

Our proprietary technologies can limit our ability to locate or utilize alternative inputs for certain products.

inputs, new sources of supply may have to be qualified under regulatory standards, which can require additional investment and delay bringing

a product to market.

beyond our control, including political instability, the conflict between Russia and Ukraine, trade restrictions and other government

regulations, duties and tariffs, price controls, changes in currency exchange rates and weather.

A significant disruption in the availability

of any of our key product components could negatively impact our business.

In addition, increases in the prices of key commodities and

other raw materials could adversely affect our ability to manage our cost structure.

Market conditions may limit our ability to raise

selling prices to offset increases in our raw material costs.

Our proprietary technologies can limit our ability to locate or utilize

alternative inputs for certain products.

For certain inputs, new sources of supply may have to be qualified under regulatory standards,

which can require additional investment and delay bringing a product to market.

If our suppliers

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to adequately protect our intellectual property and other proprietary rights that are material to our business.

ability to compete effectively depends in part on intellectual property rights we own or license, particularly our registered brand names.

We have not sought to register every one of our marks either in the United States or other countries in which such mark is used.

because of the differences in foreign intellectual property or proprietary rights laws, we may not receive the same protection in other

countries as we would in the United States with respect to the registered brand names we hold.

If we are unable to protect our intellectual

property, proprietary information and/or brand names, we could suffer a material adverse effect on our business, financial condition and

results of operations.

In addition, we may be required to license additional intellectual property and technology from third parties,

which may be expensive.

may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third

parties that our products or services infringe their intellectual property rights.

Any litigation or claims brought by or against us could

result in substantial costs and diversion of our resources.

A successful claim of intellectual property infringement against us, or any

other successful challenge to the use of our intellectual property, could subject us to damages or prevent us from providing certain products

or services, or using certain of our recognized brand names, which could have a material adverse effect on our business, financial condition

and results of operations.

Our ability to compete effectively

depends in part on intellectual property rights we own or license, particularly our registered brand names.

We have not sought to register

every one of our marks either in the United States or other countries in which such mark is used.

Furthermore, because of the differences

in foreign intellectual property or proprietary rights laws, we may not receive the same protection in other countries as we would in

the United States with respect to the registered brand names we hold.

If we are unable to protect our intellectual property, proprietary

information and/or brand names, we could suffer a material adverse effect on our business, financial condition and results of operations.

In addition, we may be required to license additional intellectual property and technology from third parties, which may be expensive.

Litigation may be necessary

to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that

our products or services infringe their intellectual property rights.

Any litigation or claims brought by or against us could result in

substantial costs and diversion of our resources.

A successful claim of intellectual property infringement against us, or any other successful

challenge to the use of our intellectual property, could subject us to damages or prevent us from providing certain products or services,

or using certain of our recognized brand names, which could have a material adverse effect on our business, financial condition and results

of operations.

We may not be able to develop, license

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or results of operations which may adversely affect investor confidence in us and, as a result, the value of our common stock.

Effective internal

controls over financial reporting are necessary for us to provide reliable financial reports.

If we cannot maintain effective

controls and reliable financial reports, our business and operating results could be harmed.

Our management has conducted an

evaluation of the effectiveness of our internal controls over financial reporting and concluded that our internal controls over

financial reporting were not effective because, among other things, (i) we did not maintain a sufficient complement of

personnel with an appropriate degree of technical knowledge commensurate with the Company’s accounting and reporting

requirements, and (ii) our controls related to financial statements closing process were not adequately designed or

appropriately implemented to identify material misstatements in our financial reporting on a timely basis.

Effective internal controls

over financial reporting are necessary for us to provide reliable financial reports.

If we cannot maintain effective controls and reliable

financial reports, our business and operating results could be harmed.

Our management has conducted an evaluation of the effectiveness

of our internal controls over financial reporting and concluded that our internal controls over financial reporting were not effective

because, among other things, (i) we did not maintain a sufficient complement of personnel with an appropriate degree of technical

knowledge commensurate with the Company’s accounting and reporting requirements, and (ii) our controls related to financial

statements closing process were not adequately designed or appropriately implemented to identify material misstatements in our financial

reporting on a timely basis.

Management has evaluated remediation

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our financial statements may be inaccurate, our access to the capital markets may be restricted and the trading price of our common stock

We recently unilaterally terminated an engagement

agreement with Boustead Securities LLC and may be subject to litigation or arbitration in the event we are not able to come to agreement

on amounts Boustead deems itself to be owed under such agreement.

Prior to our initial public offering in

2021, we unilaterally terminated an engagement agreement with Boustead Securities LLC and may be subject to litigation or arbitration

in the event we are not able to come to agreement on amounts Boustead deems itself to be owed under such agreement.

Pursuant to an engagement

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Upon the termination

or expiration of the Engagement Agreement, the Company was required to pay to Boustead any out-of-pocket expenses incurred up to the date

In addition, upon termination or expiration of the Engagement Agreement, Boustead was entitled to a success fee, as set forth

in the Engagement Agreement, if the Company completed a sale, merger, acquisition, joint venture, strategic alliance, or other similar

agreement with a party, including the pre-IPO and IPO investors, or which became aware of the Company or which became known to the Company

prior to such termination or expiration, during the twelve (12) month period following the termination or expiration of the Engagement

On February 28, 2021 we informed Boustead that we were terminating the Engagement Agreement and any continuing obligations

we may have had under its terms.

On April 15, 2021, we provided formal written notice to Boustead of our termination of the Engagement

Agreement and all obligations thereunder, effective immediately.

On April 16, 2021, counsel to Boustead advised us that they believed

our termination of the Engagement Agreement was improper and threatened to seek immediate judicial intervention to obtain injunctive relief

On April 21, 2021, our special litigation counsel responded to such allegations and threats, refuting Boustead’s claims.

On April 23, 2021, counsel to Boustead provided written notice stating that, subject to the size of our initial public offering, they

believe they will be entitled to 7% of the capital raised in addition to warrants.

On April 30, 2021, Boustead filed a statement of claim

with the Financial Industry Regulatory Authority, or FINRA, demanding to arbitrate the dispute, and is seeking, among other things, monetary

damages against the Company and D.A.

or expiration of the Engagement Agreement, the Company was required to pay to Boustead any out-of-pocket expenses incurred up to the

date thereof.

In addition, upon termination or expiration of the Engagement Agreement, Boustead was entitled to a success fee, as set

forth in the Engagement Agreement, if the Company completed a sale, merger, acquisition, joint venture, strategic alliance, or other

similar agreement with a party, including the pre-IPO and IPO investors, or which became aware of the Company or which became known to

the Company prior to such termination or expiration, during the twelve (12) month period following the termination or expiration of the

Engagement Agreement.

On February 28, 2021 we informed Boustead that we were terminating the Engagement Agreement and any continuing

obligations we may have had under its terms.

On April 15, 2021, we provided formal written notice to Boustead of our termination of the

Engagement Agreement and all obligations thereunder, effective immediately.

On April 16, 2021, counsel to Boustead advised us that they

believed our termination of the Engagement Agreement was improper and threatened to seek immediate judicial intervention to obtain injunctive

relief and damages.

On April 21, 2021, our special litigation counsel responded to such allegations and threats, refuting Boustead’s

On April 23, 2021, counsel to Boustead provided written notice stating that, subject to the size of our initial public offering,

they believe they will be entitled to 7% of the capital raised in addition to warrants.

On April 30, 2021, Boustead filed a statement

of claim with the Financial Industry Regulatory Authority, or FINRA, demanding to arbitrate the dispute, and is seeking, among other

things, monetary damages against the Company and D.A.

Davidson & Co.

An initial pre-hearing teleconference was held with FINRA Dispute Resolution Services

(“FINRA”) on August 30, 2021 and the matter has been scheduled for a hearing before a panel of three FINRA arbitrators, with

such arbitration hearing to commence on June 20, 2022 (the “FINRA Arbitration Hearing”).

While we believe we have meritorious

defenses against Boustead’s claims, we cannot provide assurance that any potential monetary damages arising from the Boustead dispute

will not be in excess of 7% of the capital raised in our initial public offering.

The party prevailing in any proceeding under the Engagement

Agreement may be entitled to their costs and attorneys’ fees, which could be substantial.

As such, any proceeding arising from our

Engagement Agreement with Boustead may be expensive to defend and could result in a substantial settlement payment or damages award, and

there can be no assurance of a favorable outcome for us.

In addition, we have indemnified D.A.

We are presently waiting for the FINRA panel to schedule a hearing

on the matter.

While we believe we have meritorious defenses against Boustead’s claims, we cannot provide assurance that any potential

monetary damages arising from the Boustead dispute will not be in excess of 7% of the capital raised in our initial public offering.

The party prevailing in any proceeding under the Engagement Agreement may be entitled to their costs and attorneys’ fees, which

could be substantial.

As such, any proceeding arising from our Engagement Agreement with Boustead may be expensive to defend and could

result in a substantial settlement payment or damages award, and there can be no assurance of a favorable outcome for us.

we have indemnified D.A.

Davidson & Co.

and the other underwriters

against any liability or expenses they may be subject to or incur in connection with the Boustead dispute.

and the other underwriters against any liability or expenses they may be subject to or incur

in connection with the Boustead dispute.

General Risk Factors Related to Our Business

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

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

The cost to defend such litigation

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

There also may be adverse publicity associated with litigation that could

negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found

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

The cost to defend such

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

There also may be adverse publicity associated with litigation

that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately

found liable.

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

Since inception, aside

from a dispute with the placement agent of our 2020-2021 pre-IPO private placements, the Company has not been a party to any material

Since inception,

aside from a dispute with the placement agent of our 2020-2021 pre-IPO private placements, the Company has not been a party to any material

See “ Business—Legal Proceedings ” for additional information.

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adequate to cover all significant risk exposures.

We will be exposed to liabilities

that are unique to the products we provide.

We currently maintain only general liability, umbrella liability, business personal property

and business income insurance policies and there can be no assurance that we will acquire or maintain insurance for certain risks, that

the amount of our insurance coverage will be adequate to cover all claims or liabilities, or that we will not be forced to bear substantial

costs resulting from risks and uncertainties of business.

It is also not possible to obtain insurance to protect against all operational

risks and liabilities.

The failure to obtain and maintain adequate insurance coverage on terms favorable to us, or at all, could have

a material adverse effect on our business, financial condition, and results of operations.

During the ordinary course

of business, we anticipate that we will be exposed to certain liabilities that are unique to the products we provide.

We currently maintain

only general liability, umbrella liability, business personal property and business income insurance policies and there can be no assurance

that we will acquire or maintain insurance for certain risks, that the amount of our insurance coverage will be adequate to cover all

claims or liabilities, or that we will not be forced to bear substantial costs resulting from risks and uncertainties of business.

is also not possible to obtain insurance to protect against all operational risks and liabilities.

The failure to obtain and maintain

adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition,

and results of operations.

Unanticipated changes in our tax provisions,

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in this “ Risk Factors ” section, as well as other risks which we may not be currently aware of.

Risks Related to Doing Business with the

Cannabis Industry

The conflict between Russia and Ukraine

may have the effect of heightening many of the other risks described in this “ Risk Factors ” section.

To the extent the conflict

between Russia and Ukraine may adversely affect our business and financial results, it may also have the effect of heightening many of

the other risks described in this “ Risk Factors ” section, as well as other risks which we may not be currently aware of.

Risks Related to Doing Business with the Cannabis

While our business includes both the hobbyist

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public market could cause the market price of our Common Stock to decline.

Now that we are a public company,

sales of a substantial number of shares of our Common Stock in the public market, or the perception that these sales might occur, could

depress the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities.

General Risk Factors Related to our Common

As a public company, sales

of a substantial number of shares of our Common Stock in the public market, or the perception that these sales might occur, could depress

the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities.

General Risk Factors Related to our Common Stock

There are risks, including stock market

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company, the market price of our Common Stock may be volatile.

Now that our securities are

publicly-traded and even though an active market for our Common Stock has developed, the market price for our Common Stock may be volatile

and subject to wide fluctuations in response to factors including the following:

As our securities are publicly-traded

and even though an active market for our Common Stock has developed, the market price for our Common Stock may be volatile and subject

to wide fluctuations in response to factors including the following:

actual or anticipated fluctuations in our quarterly or annual operating results;

16 unchanged sentences

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