What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-04-01 compared with 2024-04-01 · 875 added, 385 removed, 25 unchanged (98% of the section changed)

RISK FACTORS.

You should carefully consider the following risk factors that may affect our business, including our financial condition and results of operations.

should carefully consider the following risk factors that may affect our business, including our financial condition and results of operations.

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

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business.

If any of the following risks actually occur, our business could be harmed, the trading price of our common stock could decline and you could lose all or part of your investment in us.

Risks Related to our Financial Condition and Capital Requirements

We have experienced recurring losses from operations and negative cash flows from operating activities

We have experienced recurring losses from operations and negative cash flows from operating activities.

We incurred a net loss of $4.9 million for the year ended December 31, 2023.

Our accumulated deficit increased to $83.1 million as of December 31, 2023 compared to the prior year’s deficit of $78.2 million.

We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition.

Our prior losses and possible future losses have had an adverse effect on our financial condition.

If our products do not achieve sufficient market acceptance and our revenues do not increase as expected, we may continue to generate operating losses for the foreseeable future.

Additional risks and uncertainties not presently known to

us or that we currently deem immaterial also may impair our business.

If any of the following risks actually occur, our business could

be harmed, the trading price of our common stock could decline and you could lose all or part of your investment in us.

Related to our Financial Condition and Capital Requirements

have experienced recurring losses from operations and negative cash flows from operating activities

have experienced recurring losses from operations and negative cash flows from operating activities.

We incurred a net loss of

$9.9 million for the year ended December 31, 2024.

Our accumulated deficit increased to $92.9 million

as of December 31, 2024 compared to the prior year’s deficit of $83.1 million.

may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial

Our prior losses and possible future losses may have an adverse effect on our financial condition.

If our products do not

achieve sufficient market acceptance and our revenues do not increase as expected, we may continue to generate operating losses for the

foreseeable future.

If we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations.

A decline in the value of our company could cause you to lose all or part of your investment.

If we are not able to successfully execute on our future operating plans, our financial condition and results of operation may be materially adversely affected, and we may not be able to continue as a going concern.

It is critical that we meet our sales goals and increase sales revenues going forward as our operating plan already reflects prior significant cost containment measures, and we believe any further significant cost reductions could harm our operations.

If we do not meet our sales revenue goals, our available cash and working capital will decrease and our financial condition will be negatively impacted.

We may need additional financing in the future, which may not be available when needed or may be costly and dilutive.

We may require additional financing to support our working capital needs in the future.

The amount of additional capital we may require, the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing.

Additionally, the amount of capital required will depend on our ability to meet our sales revenue goals and otherwise successfully execute our operating plan.

We believe it is imperative that we meet our annual sales revenue objectives in order to lessen our reliance on external financing in the future.

We intend to continually monitor and adjust our operating plan as necessary to respond to developments in our business, our markets and the broader economy.

Although we believe various debt and equity financing alternatives will be available to us to support our working capital needs, financing arrangements on acceptable terms may not be available to us when needed.

Moreover, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing shareholders.

Any such financing alternatives may not provide us with sufficient funds to meet our long-term capital requirements.

If necessary, we may explore strategic transactions that we consider to be in the best interest of the Company and our shareholders, which may include, without limitation, public or private offerings of debt or equity securities, a rights offering, and other strategic alternatives;

however, these options may not ultimately be available or feasible when needed.

Risk Factors Relating to Our Current Brand and Beverage Industry

We compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success.

Our business is substantially dependent upon awareness and market acceptance of our products and brands by our target market, trendy, young consumers looking for a distinctive tonality in their beverage choices.

In addition, our business depends on acceptance by our independent distributors and retailers of our brands as beverage brands that have the potential to provide incremental sales growth.

If we are not successful in the revitalization and growth of our brand and product offerings, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers.

Any failure of our Jones Soda brand to maintain or increase acceptance or market penetration would likely have a material adverse effect on our revenues and financial results.

Our brand and image are keys to our business and any inability to maintain a positive brand image could have a material adverse effect on our results of operations.

Our success depends on our ability to maintain brand image for our existing products and effectively build up brand image for new products and brand extensions.

We cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and on consumer preferences.

In addition, negative public relations and product quality issues, whether real or imagined, could tarnish our reputation and image of the affected brands and could cause consumers to choose other products.

Our brand image can also be adversely affected by unfavorable reports, studies and articles, litigation, or regulatory or other governmental action, whether involving our products or those of our competitors.

Competition from traditional and large, well-financed non-alcoholic beverage manufacturers may adversely affect our distribution relationships and may hinder development of our existing markets, as well as prevent us from expanding our markets.

The beverage industry is highly competitive.

We compete with other beverage companies not only for consumer acceptance but also for shelf space in retail outlets and for marketing focus by our distributors, all of whom also distribute other beverage brands.

Our products compete with all non-alcoholic beverages, most of which are marketed by companies with substantially greater financial resources than ours.

Some of these competitors are placing severe pressure on independent distributors not to carry competitive sparkling brands such as ours.

failure to become and remain profitable would decrease the value of our Company and could impair our ability to raise capital, expand

our business, diversify our product offerings or continue our operations.

A decline in the value of our Company could cause you to lose

all or part of your investment.

we are not able to successfully execute on our future operating plans, our financial condition and results of operation may be materially

adversely affected, and we may not be able to continue as a going concern.

is critical that we meet our sales goals and increase sales revenues going forward as our operating plan already reflects prior significant

cost containment measures, and we believe any further significant cost reductions could harm our operations.

If we do not meet our sales

revenue goals, our available cash and working capital will decrease and our financial condition will be negatively impacted.

may need additional financing in the future, which may not be available when needed or may be costly and dilutive.

may require additional financing to support our working capital needs in the future.

The amount of additional capital we may require,

the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our

strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing.

Additionally,

the amount of capital required will depend on our ability to meet our sales revenue goals and otherwise successfully execute our operating

We believe it is imperative that we meet our annual sales revenue objectives in order to lessen our reliance on external financing

in the future.

We intend to continually monitor and adjust our operating plan as necessary to respond to developments in our business,

our markets and the broader economy.

Although we believe various debt and equity financing alternatives may be available to us to support

our working capital needs, financing arrangements may not be available to us when needed or on terms acceptable to us or, if available,

may be dilutive to our shareholders.

In addition, the incurrence of indebtedness would result in increased fixed payment obligations

and we may be required to agree to certain restrictive covenants, such as limitations on our ability to make certain dividends, incur

additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions

that could adversely impact our ability to conduct our business.

Moreover, these alternatives may require significant cash payments for

interest and other costs or could be highly dilutive to our existing shareholders.

Any such financing alternatives may not provide us

with sufficient funds to meet our long-term capital requirements.

If necessary, we may explore strategic transactions that we consider

to be in the best interest of the Company and our shareholders, which may include, without limitation, public or private offerings of

debt or equity securities, a rights offering, and other strategic alternatives;

however, these options may not ultimately be available

or feasible when needed.

If we are unable to obtain funding on a timely basis, we may be required to curtail, delay or discontinue our

operations or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially

affect our business, financial condition and results of operations.

Factors Relating to Our Current Brand and Beverage Industry

compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success.

business is substantially dependent upon awareness and market acceptance of our products and brands by our target market, trendy, young

consumers looking for a distinctive tonality in their beverage choices.

In addition, our business depends on acceptance by our independent

distributors and retailers of our brands as beverage brands that have the potential to provide incremental sales growth.

If we are not

successful in the revitalization and growth of our brand and product offerings, we may not achieve and maintain satisfactory levels of

acceptance by independent distributors and retail consumers.

Any failure of our Jones Soda brand to maintain or increase acceptance or

market penetration would likely have a material adverse effect on our revenues and financial results.

brand and image are keys to our business and any inability to maintain a positive brand image could have a material adverse effect on

our results of operations.

success depends on our ability to maintain brand image for our existing products and effectively build up brand image for new products

and brand extensions.

We cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our

products’ branding and on consumer preferences.

In addition, negative public relations and product quality issues, whether real

or imagined, could tarnish our reputation and image of the affected brands and could cause consumers to choose other products.

image may also be adversely affected by unfavorable reports, studies and articles, litigation, or regulatory or other governmental action,

whether involving our products or those of our competitors.

from traditional and large, well-financed non-alcoholic beverage manufacturers may adversely affect our distribution relationships and

may hinder development of our existing markets, as well as prevent us from expanding our markets.

beverage industry is highly competitive.

We compete with other beverage companies not only for consumer acceptance but also for shelf

space in retail outlets and for marketing focus by our distributors, all of whom also distribute other beverage brands.

compete with all non-alcoholic beverages, most of which are marketed by companies with substantially greater financial, marketing and

other resources than ours.

Some of these competitors are placing severe pressure on independent distributors not to carry competitive

sparkling brands such as ours.

We also compete with regional beverage producers and “private label” soft drink suppliers.

Our direct competitors in the sparkling beverage category include traditional large beverage companies and distributors, and regional premium soft drink companies.

These national and international competitors have advantages such as lower production costs, larger marketing budgets, greater financial and other resources and more developed and extensive distribution networks than ours.

We may not be able to grow our volumes or maintains our selling prices, whether in existing markets or as we enter new markets.

Increased competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing pressures could impact our earnings, market share and volume growth.

If, due to such pressure or other competitive threats, we are unable to sufficiently maintain or develop our distribution channels, we may be unable to achieve our current revenue and financial targets.

direct competitors in the sparkling beverage category include traditional large beverage companies and distributors, and regional premium

soft drink companies.

These national and international competitors have advantages such as lower production costs, larger marketing budgets,

greater financial and other resources and more developed and extensive distribution networks than ours.

We may not be able to grow our

volumes or maintain our selling prices, whether in existing markets or as we enter new markets.

competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing

pressures could impact our earnings, market share and volume growth.

If, due to such pressure or other competitive threats, we are unable

to sufficiently maintain or develop our distribution channels, we may be unable to achieve our current revenue and financial targets.

As a means of maintaining and expanding our distribution network, we intend to introduce product extensions and additional brands;

We may not be successful in doing this, or it may take us longer than anticipated to achieve market acceptance of these new products and brands, if at all.

we may not be successful in doing this, or it may take us longer than anticipated to achieve market acceptance of these new products

and brands, if at all.

Other companies may be more successful in this regard over the long term.

Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, as well as on our ability to expand the market for our products.

We compete in an industry characterized by rapid changes in consumer preferences and public perception, so our ability to continue developing new products to satisfy the changing preferences of consumers will determine our long-term success.

Failure to introduce new brands, products or product extensions into the marketplace as current ones mature and to meet the changing preferences of consumers could prevent us from gaining market share and achieving long-term profitability.

Product lifecycles can vary and consumer preferences and loyalties change over time.

Although we try to anticipate these shifts and innovate new products to introduce to our consumers, we may not succeed.

Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations and obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and pricing pressures.

Competition, particularly from companies

with greater financial, marketing and other resources than ours, could have a material adverse effect on our existing markets, as well

as on our ability to expand the market for our products.

compete in an industry characterized by rapid changes in consumer preferences and public perception, so our ability to continue developing

new products to satisfy the changing preferences of consumers will determine our long-term success.

to introduce new brands, products or product extensions into the marketplace as current ones mature and to meet the changing preferences

of consumers could prevent us from gaining market share and achieving long-term profitability.

Product lifecycles can vary and consumer

preferences and loyalties change over time.

Although we try to anticipate these shifts and innovate new products to introduce to our

consumers, we may not succeed.

Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations

and obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product

and pricing pressures.

Sales of our products may be adversely affected by the negative publicity associated with these issues.

If we do not adequately anticipate or adjust to respond to these and other changes in consumer preferences, we may not be able to maintain and grow our brand image and our sales may be adversely affected.

We may experience a reduced demand for some of our products due to health concerns (including obesity) and legislative initiatives against sweetened beverages.

Consumers are concerned about health and wellness;

public health officials and government officials are increasingly vocal about obesity and its consequences.

There has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened beverages, as well as increased public scrutiny, new taxes on sugar-sweetened beverages (as described below), and additional governmental regulations concerning the marketing and labeling/packing of the beverage industry.

Additional or revised regulatory requirements, whether labeling, tax or otherwise, could have a material adverse effect on our financial condition and results of operations.

Further, increasing public concern with respect to sweetened beverages could reduce demand for our beverages and increase desire for more low-calorie soft drinks, water, enhanced water, coffee-flavored beverages, tea, and beverages with natural sweeteners.

We are continuously working to reduce calories and sugar in our Jones Cane Sugar products while launching additional products, to pair with existing brand extensions such as Jones Sugar Free that round out our diversified portfolio.

Legislative or regulatory changes that affect our products, including new taxes, could reduce demand for products or increase our costs.

Taxes imposed on the sale of certain of our products by federal, state and local governments in the United States, or other countries in which we operate could cause consumers to shift away from purchasing our beverages.

Several municipalities in the United States have implemented or are considering implementing taxes on the sale of certain “sugared” beverages, including non-diet soft drinks, fruit drinks, teas and flavored waters to help fund various initiatives.

These taxes could materially affect our business and financial results.

Risk Factors Relating to the Cannabis Industry

Our plans to expand our cannabis operations may not be successful, which would have an adverse impact on our business, financial condition and results of operations.

Our strategy for growth in the cannabis industry is dependent on, among other things, our ability to partner with local licensed cannabis manufacturers to launch and market THC/CBD-infused and/or cannabis-infused beverages, tinctures, edibles and other products in various states.

Although we intend to devote significant financial and other resources to expand our business to the production of cannabis-containing beverages and related products, these efforts may not be commercially successful or achieve the desired results.

Our financial results and our ability to maintain or improve our competitive position will depend on our ability to effectively gauge the direction of the cannabis industry and successfully identify, develop, market and sell new or improved products and services in this changing marketplace.

Our inability to successfully implement our cannabis strategy could have a material adverse effect on our business, financial condition and results of operations.

Companies that operate in the cannabis industry face unique and evolving risks.

If we expand our business to the production or sale of cannabis containing beverages, edibles and related products as currently planned, we and our operations may be adversely effected by the risks faced by companies operating in the cannabis industry, including but not limited to, the following:

Marijuana remains illegal under United States federal law

Marijuana is a Schedule-I controlled substance under the Controlled Substances Act, or CSA, and is illegal under federal law.

It remains illegal under United States federal law to grow, cultivate, sell or possess marijuana for any purpose or to assist or conspire with those who do so.

Additionally, 21 U.S.C.

states that it shall be unlawful to “knowingly open, lease, rent, use, or maintain any place, whether permanently or temporarily, for the purpose of manufacturing, distributing, or using any controlled substance.” Even in those states in which the use of marijuana has been authorized, its use remains a violation of federal law.

Since federal law criminalizing the use of marijuana is not preempted by state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely adversely affect demands for any cannabis products we develop.

Uncertainty of federal enforcement

On January 4, 2018, former Attorney General Sessions rescinded the previously issued memoranda (known as the Cole Memorandum) from the DOJ that had de-prioritized the enforcement of federal law against marijuana users and businesses that comply with state marijuana laws, adding uncertainty to the question of how the federal government will choose to enforce federal laws regarding marijuana.

Former Attorney General Sessions issued a memorandum to all United States Attorneys in which the DOJ affirmatively rescinded the previous guidance as to marijuana enforcement, calling such guidance “unnecessary.” This one-page memorandum was vague in nature, stating that federal prosecutors should use established principles in setting their law enforcement priorities.

Under previous administrations, the DOJ indicated that those users and suppliers of medical marijuana who complied with state laws, which required compliance with certain criteria, would not be prosecuted.

On November 7, 2018, Jeff Sessions resigned from his position as Attorney General.

The current Attorney General, Merrick Garland, has not indicated any change in enforcement priority for state-compliant marijuana businesses, however, substantial uncertainty regarding federal enforcement remains.

Most recently, President Biden announced pardons for persons convicted for simple cannabis possession under federal law and indicated policy priorities geared toward cannabis reform.

Regardless, the federal government has always reserved the right to enforce federal law regarding the sale and disbursement of medical or recreational marijuana, even if state law sanctioned such sale and disbursement.

Although the rescission of the Cole Memorandum does not necessarily indicate that marijuana industry prosecutions are now affirmatively a priority for the DOJ, there can be no assurance that the federal government will not enforce such laws in the future.

Likewise, although President Biden has made policy directive encouraging reform by states and federal agencies, those statements have not changed the underlying applicable federal law.

As a result, it is now unclear if the DOJ will seek to enforce the CSA against those users and suppliers who comply with state marijuana laws.

In 2014, Congress passed a spending bill, or the 2015 Appropriations Bill, containing a provision, or the Appropriations Rider, blocking federal funds and resources allocated under the 2015 Appropriations Bill from being used to “prevent such States from implementing their own State medical marijuana law.” The Appropriations Rider provided a budgetary constraint on the federal government from interfering with the ability of states to administer their medical marijuana laws, although it did not codify federal protections for medical marijuana patients and producers.

Moreover, despite the Appropriations Rider, the DOJ maintains that it can still prosecute violations of the federal marijuana ban and continue cases already in the courts.

However, the Ninth Circuit Court of Appeals and other courts have interpreted the language to mean that the DOL cannot prosecute medical marijuana operators complying strictly with state medical marijuana laws.

Additionally, the Appropriations Rider must be re-enacted every year.

The Appropriations Rider was renewed on December 20, 2019 through the signing of the fiscal year 2020 omnibus spending bill, effective through September 30, 2020, continued re-authorization of the Appropriations Rider cannot be guaranteed.

Subsequently, the Appropriations Rider was extended through a series of stopgap spending bills on October 1, December 11, December 18, December 20 and December 22, 2020.

On December 27, 2020 the Appropriations Rider was included in the fiscal year 2021 omnibus spending bill and will remain in effect through September 30, 2021.

If the Appropriation Rider is not extended in the future, the risk of federal enforcement and override of state medical marijuana laws would increase.

Despite the rescission of the Cole Memorandum, the Department of the Treasury, Financial Crimes Enforcement Network, has not rescinded the “FinCEN Memo” dated February 14, 2014, which de-prioritizes enforcement of the Bank Secrecy Act against financial institutions and marijuana-related businesses which utilize them.

This memo appears to be a standalone document and is presumptively still in effect.

At any time, however, the Department of the Treasury, Financial Crimes Enforcement Network, could elect to rescind the FinCEN Memo.

This would make it more difficult for us and our clients and potential clients to access the U.S.

banking systems and conduct financial transactions, which would adversely affect our operations.

We could become subject to racketeering laws

The Racketeer Influenced Corrupt Organizations Act (“RICO”) is a federal statute providing criminal penalties in addition to a civil cause of action for acts performed as part of an ongoing criminal organization.

Under RICO, it is unlawful for any person who has received income derived from a pattern of racketeering activity (which includes most felonious violations of the CSA), to use or invest any of that income in the acquisition of any interest, or the establishment or operation of, any enterprise which is engaged in interstate commerce.

RICO also authorizes private parties whose properties or businesses are harmed by such patterns of racketeering activity to initiate a civil action against the individuals involved.

Although RICO suits against the cannabis industry are rare, a few cannabis businesses have been subject to a civil RICO action.

Any violation of RICO could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the federal government or private citizens or criminal charges, including but not limited to, seizure of assets, disgorgement of profits, cessation of our business activities or divestiture.

Banking regulations could limit access to banking services and expose us to risk

In February 2014, the FCEN of the U.S.

Department of the Treasury issued the FCEN Memo.

The FCEN Memo states that in some circumstances, it may not be appropriate to prosecute banks that provide services to marijuana-related businesses for violations of federal money laundering laws.

It refers to supplementary guidance that Deputy Attorney General Cole issued to federal prosecutors relating to the prosecution of money laundering offenses predicated on cannabis-related violations of the CSA.

It is unclear at this time whether the current administration will follow the guidelines of the FCEN Memo.

federal law, banks or other financial institutions that provide a cannabis-related business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering, aiding and abetting, or conspiracy.

As a result, any cannabis operations we develop may have the effect of limiting our access to banking or other financial services in the United States.

The inability or limitation on our ability to open or maintain bank accounts in the United States, to obtain other banking services and/or accept credit card and debit card payments may make it difficult to operate and conduct our business.

Although multiple legislative reforms related to cannabis and cannabis-related banking are currently being considered by the federal government in the United States, such as the Strengthening the Tenth Amendment Through Entrusting States Act, the Marijuana Opportunity, Reinvestment and Expungement Act and the Secure and Fair Enforcement Banking Act, there can be no assurance that any of these pieces of legislation will become law in the United States.

Further legislative development beneficial to our operations is not guaranteed

The success of our planned business expansion into cannabis products will depend on the continued development of the cannabis industry and the activity of commercial business and government regulatory agencies within the industry.

The continued development of the cannabis industry is dependent upon continued legislative and regulatory authorization of cannabis at the state level and a continued laissez-faire approach by federal enforcement agencies.

Any number of factors could slow or halt progress in this area.

Further regulatory progress beneficial to the industry cannot be assured.

While there may be ample public support for legislative action, numerous factors impact the legislative and regulatory process, including election results, scientific findings or general public events.

Any one of these factors could slow or halt progressive legislation relating to cannabis and the current tolerance for the use of cannabis by consumers, which could adversely affect the demand for our product and operations.

Changing legislation and evolving interpretations of the law

Laws and regulations affecting the medical and adult-use marijuana industry are constantly changing, which could detrimentally affect our planned cannabis operations.

Local, state, and federal marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with modification of operations to ensure compliance.

In addition, violations of these laws, or allegations of such violations, could disrupt our planned cannabis business and result in a material adverse effect on our operations.

We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our operations.

Dependence on client licensing

Our planned cannabis business will be dependent on us obtaining or partnering on various licenses from various municipalities and state licensing agencies.

There can be no assurance that any or all licenses necessary for us to operate our planned cannabis businesses will be obtained, retained or renewed.

If a licensing body were to determine that we had violated applicable rules and regulations, there is a risk the license granted to us could be revoked, which could adversely affect our operations.

Insurance risks

In the United States, many marijuana-related businesses are subject to a lack of adequate insurance coverage.

In addition, many insurance companies may deny claims for any loss relating to marijuana or marijuana-related operations based on their illegality under federal law, noting that a contract for an illegal transaction is unenforceable.

The cannabis industry is an evolving industry and we must anticipate and respond to changes.

The cannabis industry is not yet well-developed, and many aspects of this industry’s development and evolution cannot be accurately predicted.

While we have attempted to identify any risks specific to the cannabis industry that would be applicable to our planned cannabis operations, you should carefully consider that there are other risks that cannot be foreseen or are not described in this report, which could materially and adversely affect the development of our cannabis business and our future financial performance.

We expect that the cannabis market and our business will evolve in ways that are difficult to predict.

Our long-term success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics.

If we are unable to successfully adapt to changes in the cannabis industry, our operations could be adversely affected.

Risk Factors Relating to Our Business Operations and Financial Results

Our reliance on distributors, retailers and brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and expand our business into other geographic markets.

Our ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish and maintain successful relationships with reliable distributors, retailers and brokers strategically positioned to serve those areas.

Most of our distributors, retailers and brokers sell and distribute competing products, including non-alcoholic and alcoholic beverages, and our products may represent a small portion of their businesses.

The success of this network will depend on the performance of the distributors, retailers and brokers of this network.

There is a risk that the mentioned entities may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that may not be receptive to our product.

Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other beverage companies who have greater resources than we do.

To the extent that our distributors, retailers and brokers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, including re-stocking the retail shelves with our products, our sales and results of operations could be adversely affected.

Furthermore, such third-parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities.

Our ability to maintain and expand our distribution network and attract additional distributors, retailers and brokers will depend on a number of factors, some of which are outside our control.

do not adequately anticipate or adjust to respond to these and other changes in consumer preferences, we may not be able to maintain

and grow our brand image and our sales may be adversely affected.

may experience a reduced demand for some of our products due to health concerns (including obesity) and legislative initiatives against

sweetened beverages.

are concerned about health and wellness;

public health officials and government officials are increasingly vocal about obesity and its

consequences.

There has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened

beverages, as well as increased public scrutiny, new taxes on sugar-sweetened beverages, and additional governmental regulations concerning

the marketing and labeling/packing of the beverage industry.

See Risk Factor - Legislative or regulatory changes that affect our products,

including new taxes, could reduce demand for products or increase our costs.

Additional or revised regulatory requirements, whether

labeling, tax or otherwise, could have a material adverse effect on our financial condition and results of operations.

Further, increasing

public concern with respect to sweetened beverages could reduce demand for our beverages and increase desire for more low-calorie soft

drinks, water, enhanced water, coffee-flavored beverages, tea, and beverages with natural sweeteners.

We are continuously working to

reduce calories and sugar in our Jones Cane Sugar products while launching additional products, to pair with existing brand extensions

such as Jones Sugar Free that round out our diversified portfolio.

Factors Relating to Our Business Operations and Financial Results

reliance on distributors, retailers and brokers could affect our ability to efficiently and profitably distribute and market our products,

maintain our existing markets and expand our business into other geographic markets.

ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas,

is dependent on our ability to establish and maintain successful relationships with reliable distributors, retailers and brokers strategically

positioned to serve those areas.

Most of our distributors, retailers and brokers sell and distribute competing products, including non-alcoholic

and alcoholic beverages, and our products may represent a small portion of their businesses.

The success of this network will depend

on the performance of the distributors, retailers and brokers of this network.

There is a risk that the mentioned entities may not adequately

perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products

in localities that may not be receptive to our product.

Our ability to incentivize and motivate distributors to manage and sell our products

is affected by competition from other beverage companies who have greater resources than we do.

To the extent that our distributors,

retailers and brokers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products,

including re-stocking the retail shelves with our products, our sales and results of operations could be adversely affected.

such third-parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing

and sales activities.

ability to maintain and expand our distribution network and attract additional distributors, retailers and brokers will depend on a number

of factors, some of which are outside our control.

Some of these factors include:

the level of demand for our brands and products in a particular distribution area;

our ability to price our products at levels competitive with those of competing products;

our ability to deliver products in the quantity and at the time ordered by distributors, retailers and brokers.

We may not be able to successfully manage all or any of these factors in any of our current or prospective geographic areas of distribution.

Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results.

We incur significant time and expense in attracting and maintaining key distributors.

Our marketing and sales strategy depends in large part on the availability and performance of our independent distributors.

We currently do not have, nor do we anticipate in the future that we will be able to establish, long-term contractual commitments from some of our distributors.

We may not be able to maintain our current distribution relationships or establish and maintain successful relationships with distributors in new geographic distribution areas.

Moreover, there is the additional possibility that we may have to incur additional expenditures to attract and maintain key distributors in one or more of our geographic distribution areas in order to profitably exploit our geographic markets.

If we lose any of our key distributors or national retail accounts, our financial condition and results of operations could be adversely affected.

We continually seek to expand and upgrade our distributor network, DTR accounts and national retail relationships.

However, we may not be able to maintain our key distributor base.

The loss of any of our key distributors or national accounts would have a material adverse effect on our revenues, liquidity and financial results, could negatively impact our ability to retain our relationships with our other distributors and our ability to expand our market, and would place increased dependence on our other independent distributors and national accounts.

Our recent decision to cease utilizing our top independent distributor may negatively impact our financial results.

We recently decided to switch independent distributors from Lassonde to Dot Foods Canada.

For the year ended December 31, 2023, Lassonde was our top distributor as approximately 17% of our sales revenue during 2023 came from product distributed by Lassonde.

There is no guarantee that Dot Foods Canada will be able to generate at least the same amount of revenue for us as Lassonde previously did, and if our revenues decline in 2023, our overall financial results will be negatively impacted.

It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.

Our independent distributors and national accounts are not required to place minimum monthly or annual orders for our products.

In order to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area.

Accordingly, we cannot predict the timing or quantity of purchases by any of our independent distributors or whether any of our distributors will continue to purchase products from us in the same frequencies and volumes as they may have done in the past.

Additionally, our larger distributors and national partners, may make orders that are larger than we have historically been required to fill.

Shortages in inventory levels, supply of raw materials or other key supplies could negatively affect us.

If we do not adequately manage our inventory levels, our operating results could be adversely affected.

We need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis.

Our inventory supply depends on our ability to correctly estimate demand for our products.

Our ability to estimate demand for our products is imprecise, particularly for new products, seasonal promotions and new markets.

If we materially underestimate demand for our products or are unable to maintain sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis.

If we overestimate distributor or retailer demand for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spend and the risk of inventory spoilage.

If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors and retailers and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating results.

In addition, if the inventory of our products held by our distributors and retailers is too high, they will not place orders for additional products, which would also unfavorably impact our sales and adversely affect our operating results.

If we fail to maintain relationships with our independent contract manufacturers, our business could be harmed.

We do not manufacture our products but instead outsource the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers).

We do not own the plants or the majority of the equipment required to manufacture and package our beverage products, and we do not anticipate bringing the manufacturing process in-house in the future.

Our ability to maintain effective relationships with contract manufacturers and other third parties for the production and delivery of our beverage products in a particular geographic distribution area is important to the success of our operations within each distribution area.

Competition for contract manufacturers’ business is intense, especially in the western United States, and this could make it more difficult for us to obtain new or replacement manufacturers, or to locate back-up manufacturers, in our various distribution areas, and could also affect the economic terms of our agreements with our existing manufacturers.

We may not be able to maintain our relationships with current contract manufacturers or establish satisfactory relationships with new or replacement contract manufacturers, whether in existing or new geographic distribution areas.

The failure to establish and maintain effective relationships with contract manufacturers for a distribution area could increase our manufacturing costs and thereby materially reduce gross profits from the sale of our products in that area.

Poor relations with any of our contract manufacturers could adversely affect the amount and timing of product delivered to our distributors for resale, which would in turn adversely affect our revenues and financial condition.

In addition, our agreements with our contract manufacturers are terminable at any time, and any such termination could disrupt our ability to deliver products to our customers.

Our dependence on independent contract manufacturers could make management of our manufacturing and distribution efforts inefficient or unprofitable.

We are expected to arrange for our contract manufacturing needs sufficiently in advance of anticipated requirements, which is customary in the contract manufacturing industry for comparably sized companies.

Based on the cost structure and forecasted demand for the particular geographic area where our contract manufacturers are located, we continually evaluate which of our contract manufacturers to use.

To the extent demand for our products exceeds available inventory or the production capacity of our contract manufacturing arrangements, or orders are not submitted on a timely basis, we will be unable to fulfill distributor orders on demand.

Conversely, we may produce more product inventory than warranted by the actual demand for it, resulting in higher storage costs and the potential risk of inventory spoilage.

Our failure to accurately predict and manage our contract manufacturing requirements and our inventory levels may impair relationships with our independent distributors and key accounts, which, in turn, would likely have a material adverse effect on our ability to maintain effective relationships with those distributors and key accounts.

Increases in costs or shortages of raw materials could harm our business and financial results.

The principal raw materials we use include glass bottles, aluminum cans, labels and cardboard cartons, aluminum closures, flavorings, sucrose/inverted pure cane sugar and sucralose.

In addition, certain of our contract manufacturing arrangements allow such contract manufacturers to increase their charges to us based on their own cost increases.

level of demand for our brands and products in a particular distribution area;

ability to price our products at levels competitive with those of competing products;

ability to deliver products in the quantity and at the time ordered by distributors, retailers and brokers.

may not be able to successfully manage all or any of these factors in any of our current or prospective geographic areas of distribution.

Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse

effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will

likely adversely affect our revenues and financial results.

incur significant time and expense in attracting and maintaining key distributors.

marketing and sales strategy depends in large part on the availability and performance of our independent distributors.

do not have, nor do we anticipate in the future that we will be able to establish, long-term contractual commitments from some of our

distributors.

We may not be able to maintain our current distribution relationships or establish and maintain successful relationships

with distributors in new geographic distribution areas.

Moreover, there is the additional possibility that we may have to incur additional

expenditures to attract and maintain key distributors in one or more of our geographic distribution areas in order to profitably exploit

our geographic markets.

is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.

independent distributors and national accounts are not required to place minimum monthly or annual orders for our products.

to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities

and at such times based on the demand for the products in a particular distribution area.

Accordingly, we cannot predict the timing or

quantity of purchases by any of our independent distributors or whether any of our distributors will continue to purchase products from

us in the same frequencies and volumes as they may have done in the past.

Additionally, our larger distributors and national partners,

may make orders that are larger than we have historically been required to fill.

Shortages in inventory levels, supply of raw materials

or other key supplies could negatively affect us.

we do not adequately manage our inventory levels, our operating results could be adversely affected.

need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis.

Our inventory supply depends

on our ability to correctly estimate demand for our products.

Our ability to estimate demand for our products is imprecise, particularly

for new products, seasonal promotions and new markets.

If we materially underestimate demand for our products or are unable to maintain

sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis.

If we overestimate distributor or

retailer demand for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spend and

the risk of inventory spoilage.

If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors

and retailers and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating

In addition, if the inventory of our products held by our distributors and retailers is too high, they will not place orders

for additional products, which would also unfavorably impact our sales and adversely affect our operating results.

we fail to maintain relationships with our independent contract manufacturers, our business could be harmed.

do not manufacture our products but instead outsource the manufacturing process to third-party bottlers and independent contract manufacturers

(co-packers).

We do not own the plants or the majority of the equipment required to manufacture and package our beverage products, and

we do not anticipate bringing the manufacturing process in-house in the future.

Our ability to maintain effective relationships with

contract manufacturers and other third parties for the production and delivery of our beverage products in a particular geographic distribution

area is important to the success of our operations within each distribution area.

Competition for contract manufacturers’ business

is intense, especially in the western United States, and this could make it more difficult for us to obtain new or replacement manufacturers,

or to locate back-up manufacturers, in our various distribution areas, and could also affect the economic terms of our agreements with

our existing manufacturers.

We may not be able to maintain our relationships with current contract manufacturers or establish satisfactory

relationships with new or replacement contract manufacturers, whether in existing or new geographic distribution areas.

The failure to

establish and maintain effective relationships with contract manufacturers for a distribution area could increase our manufacturing costs

and thereby materially reduce gross profits from the sale of our products in that area.

Poor relations with any of our contract manufacturers

could adversely affect the amount and timing of product delivered to our distributors for resale, which would in turn adversely affect

our revenues and financial condition.

In addition, our agreements with our contract manufacturers are terminable at any time, and any

such termination could disrupt our ability to deliver products to our customers.

dependence on independent contract manufacturers could make management of our manufacturing and distribution efforts inefficient or unprofitable.

are expected to arrange for our contract manufacturing needs sufficiently in advance of anticipated requirements, which is customary

in the contract manufacturing industry for comparably sized companies.

Based on the cost structure and forecasted demand for the particular

geographic area where our contract manufacturers are located, we continually evaluate which of our contract manufacturers to use.

the extent demand for our products exceeds available inventory or the production capacity of our contract manufacturing arrangements,

or orders are not submitted on a timely basis, we will be unable to fulfill distributor orders on demand.

Conversely, we may produce

more product inventory than warranted by the actual demand for it, resulting in higher storage costs and the potential risk of inventory

Our failure to accurately predict and manage our contract manufacturing requirements and our inventory levels may impair relationships

with our independent distributors and key accounts, which, in turn, would likely have a material adverse effect on our ability to maintain

effective relationships with those distributors and key accounts.

in costs or shortages of raw materials could harm our business and financial results.

principal raw materials we use include glass bottles, aluminum cans, labels and cardboard cartons, aluminum closures, flavorings, sucrose/inverted

pure cane sugar and sucralose.

In addition, certain of our contract manufacturing arrangements allow such contract manufacturers to increase

their charges to us based on their own cost increases.

These manufacturing and ingredient costs are subject to fluctuation.

Substantial increases in the prices of our ingredients, raw materials and packaging materials, to the extent that they cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs and could reduce our profitability.

If our supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability of our products and reduce sales.

The beverage industry has experienced increased prices for glass bottles over the last several years and the availability of glass supply diminished for companies not under contract.

Our fixed-price purchase commitment for glass, which helps mitigate the risk of unexpected price increases, expires at the end of 2025.

The prices of any of the above or any other raw materials or ingredients may continue to rise in the future.

Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers, which could have a material adverse effect on our business and financial results.

If we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies, we might not be able to satisfy demand on a short-term basis.

Moreover, in the past there have been industry-wide shortages of certain concentrates, supplements and sweeteners and these shortages could occur again from time to time in the future, which could interfere with and delay production of our products and could have a material adverse effect on our business and financial results.

In addition, suppliers could fail to provide ingredients or raw materials on a timely basis, or fail to meet our performance expectations, for a number of reasons, including, for example, disruption to the global supply chain as a result of pandemics, which could cause a serious disruption to our business, increase our costs, decrease our operating efficiencies and have a material adverse effect on our business, results of operations and financial condition.

Increases in costs of energy and increased regulations may have an adverse impact on our gross margin.

Over the past few years, volatility in the global oil markets has resulted in high fuel prices, which many shipping companies have passed on to their customers by way of higher base pricing and increased fuel surcharges.

If fuel prices increase, we expect to experience higher shipping rates and fuel surcharges, as well as energy surcharges on our raw materials.

It is hard to predict what will happen in the fuel markets in 2024 and beyond.

increases in the prices of our ingredients, raw materials and packaging materials, to the extent that they cannot be recouped through

increases in the prices of finished beverage products, would increase our operating costs and could reduce our profitability.

supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability of our products and

reduce sales.

beverage industry has experienced increased prices for glass bottles over the last several years and the availability of glass supply

diminished for companies not under contract.

Our fixed-price purchase commitment for glass, which helps mitigate the risk of unexpected

price increases, expires at the end of 2025.

The prices of any of the above or any other raw materials or ingredients may continue to

rise in the future.

Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers, which

could have a material adverse effect on our business and financial results.

we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies, we might not be able

to satisfy demand on a short-term basis.

Moreover, in the past there have been industry-wide shortages of certain concentrates, supplements

and sweeteners and these shortages could occur again from time to time in the future, which could interfere with and delay production

of our products and could have a material adverse effect on our business and financial results.

addition, suppliers could fail to provide ingredients or raw materials on a timely basis, or fail to meet our performance expectations,

for a number of reasons, including, for example, disruption to the global supply chain as a result of pandemics, which could cause a

serious disruption to our business, increase our costs, decrease our operating efficiencies and have a material adverse effect on our

business, results of operations and financial condition.

in costs of energy and increased regulations may have an adverse impact on our gross margin.

the past few years, volatility in the global oil markets has resulted in high fuel prices, which many shipping companies have passed

on to their customers by way of higher base pricing and increased fuel surcharges.

If fuel prices increase, we expect to experience higher

shipping rates and fuel surcharges, as well as energy surcharges on our raw materials.

It is hard to predict what will happen in the

fuel markets.

Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers.

Disruption within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and results of operations.

Our ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to make, move and sell products is critical to our success.

Damage or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion, terrorism, pandemics such as influenza and other pandemics, labor strikes or other reasons, could impair the manufacture, distribution and sale of our products.

Many of these events are outside of our control.

Failure to take adequate steps to protect against or mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations.

We rely upon our ongoing relationships with our key flavor suppliers.

If we are unable to source our flavors on acceptable terms from our key suppliers, we could suffer disruptions in our business.

We currently purchase our flavor concentrate from various flavor concentrate suppliers, and continually develop other sources of flavor concentrate for each of our products.

within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition

and results of operations.

ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to make, move and

sell products is critical to our success.

Damage or disruption to our suppliers or to manufacturing or distribution capabilities due

to weather, natural disaster, fire or explosion, terrorism, pandemics such as influenza, labor strikes, military conflict, geopolitical

events or other reasons, could impair the manufacture, distribution and sale of our products.

Many of these events are outside of our

Failure to take adequate steps to protect against or mitigate the likelihood or potential impact of such events, or to effectively

manage such events if they occur, could adversely affect our business, financial condition and results of operations.

rely upon our ongoing relationships with our key flavor suppliers.

If we are unable to source our flavors on acceptable terms from our

key suppliers, we could suffer disruptions in our business.

currently purchase our flavor concentrate from various flavor concentrate suppliers, and continually develop other sources of flavor

concentrate for each of our products.

Generally, flavor suppliers hold the proprietary rights to their flavors.

Although we have the exclusive rights to flavor concentrates developed with our current flavor concentrate suppliers, we do not have the list of ingredients or formulas for our flavors and concentrates.

Consequently, we may be unable to obtain these same flavors or concentrates from alternative suppliers on short notice.

If we have to replace a flavor supplier, we could experience disruptions in our ability to deliver products to our customers, which could have a material adverse effect on our results of operations.

If we are unable to attract and retain key personnel, our efficiency and operations would be adversely affected;

in addition, management turnover causes uncertainties and could harm our business.

Our success depends on our ability to attract and retain highly qualified employees in such areas as finance, sales, marketing and product development.

Although we have the

exclusive rights to flavor concentrates developed with our current flavor concentrate suppliers, we do not have the list of ingredients

or formulas for our flavors and concentrates.

Consequently, we may be unable to obtain these same flavors or concentrates from alternative

suppliers on short notice.

If we have to replace a flavor supplier, we could experience disruptions in our ability to deliver products

to our customers, which could have a material adverse effect on our results of operations.

we are unable to attract and retain key personnel, our efficiency and operations would be adversely affected;

in addition, management

turnover causes uncertainties and could harm our business.

success depends on our ability to attract and retain highly qualified employees in such areas as finance, sales, marketing and product

We compete to hire new employees, and, in some cases, must train them and develop their skills and competencies.

We may not be able to provide our employees with competitive salaries, and our operating results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs.

To the extent we experience management turnover, our operations, financial condition and employee morale could be negatively impacted.

In addition, competition for top management is high and it may take months to find a candidate that meets our requirements.

If we are unable to attract and retain qualified management personnel, our business could suffer.

If we lose the services of our Chief Executive Officer, our operations could be disrupted and our business could be harmed.

Our business plan relies significantly on the continued services of David Knight, who we hired as our Chief Executive Officer and President in June of 2023.

If we were to lose the services of Mr.

Knight, our ability to execute our business plan could be materially impaired.

We are not aware of any facts or circumstances that suggest he might leave us.

Our Chief Operating Operator has resigned effective March 12, 2024 which could result in a disruption in our operations or harm to our business.

Eric Chastain, our Chief Operating Officer and President of Jones Soda Beverage Division, who was appointed as our Chief Operating Officer effective June 2014 and was with the Company for 22 years resigned effective March 12, 2024.

Our ability to execute our business plan could be materially impaired due to this.

If we fail to protect our trademarks and trade secrets, we may be unable to successfully market our products and compete effectively.

We rely on a combination of trademark and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights.

Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively.

Further, enforcing or defending our intellectual property rights, including our trademarks, copyrights, licenses and trade secrets, could result in the expenditure of significant financial and managerial resources.

We regard our intellectual property, particularly our trademarks and trade secrets to be of considerable value and importance to our business and our success, and we actively pursue the registration of our trademarks in the United States, Canada and internationally.

However, the steps taken by us to protect these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets or similar proprietary rights.

In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights.

not be able to provide our employees with competitive salaries, and our operating results could be adversely affected by increased costs

due to increased competition for employees, higher employee turnover or increased employee benefit costs.

the extent we experience management turnover, our operations, financial condition and employee morale could be negatively impacted.

addition, competition for top management is high and it may take months to find a candidate that meets our requirements.

If we are unable

to attract and retain qualified management personnel, our business could suffer.

we fail to protect our trademarks and trade secrets, we may be unable to successfully market our products and compete effectively.

rely on a combination of trademark and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual

property rights.

Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability

to compete effectively.

Further, enforcing or defending our intellectual property rights, including our trademarks, copyrights, licenses

and trade secrets, could result in the expenditure of significant financial and managerial resources.

We regard our intellectual property,

particularly our trademarks and trade secrets to be of considerable value and importance to our business and our success, and we actively

pursue the registration of our trademarks in the United States, Canada and internationally.

However, the steps taken by us to protect

these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade

secrets or similar proprietary rights.

In addition, other parties may seek to assert infringement claims against us, and we may have

to pursue litigation against other parties to assert our rights.

Any such claim or litigation could be costly.

In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs.

As part of the licensing strategy of our brands, we enter into licensing agreements under which we grant our licensing partners certain rights to use our trademarks and other designs.

Although our agreements require that the use of our trademarks and designs is subject to our control and approval, any breach of these provisions, or any other action by any of our licensing partners that is harmful to our brands, goodwill and overall image, could have a material adverse impact on our business.

If we encounter product recalls or other product quality issues, our business may suffer.

Product quality issues, real or imagined, or allegations of product contamination, even when false or unfounded, could tarnish our image and could cause consumers to choose other products.

In addition, because of changing government regulations or implementation thereof, or allegations of product contamination, we may be required from time to time to recall products entirely or from specific markets.

Product recalls could affect our profitability and could negatively affect brand image.

We could be exposed to product liability claims.

Although we have product liability and basic recall insurance, insurance coverage may not be sufficient to cover all product liability claims that may arise.

To the extent our product liability coverage is insufficient, a product liability claim would likely have a material adverse effect upon our financial condition.

In addition, any product liability claim brought against us may materially damage the reputation and brand image of our products and business.

Our business is subject to many regulations and noncompliance is costly.

The production, marketing and sale of our beverages, including contents, labels, caps and containers, are subject to the rules and regulations of various federal, provincial, state and local health agencies.

If a regulatory authority finds that a current or future product or production batch or “run” is not in compliance with any of these regulations, we may be fined, or production may be stopped, which would adversely affect our financial condition and results of operations.

Similarly, any adverse publicity associated with any noncompliance may damage our reputation and our ability to successfully market our products.

Furthermore, the rules and regulations are subject to change from time to time and while we closely monitor developments in this area, we cannot anticipate whether changes in these rules and regulations will impact our business adversely.

Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise, could have a material adverse effect on our financial condition and results of operations.

Significant additional labeling or warning requirements may inhibit sales of affected products.

Various jurisdictions may seek to adopt significant additional product labeling or warning requirements relating to the chemical content or perceived adverse health consequences of certain of our products.

These types of requirements, if they become applicable to one or more of our products under current or future environmental or health laws or regulations, may inhibit sales of such products.

In California, a law requires that a specific warning appear on any product that contains a component listed by the state as having been found to cause cancer or birth defects.

This law recognizes no generally applicable quantitative thresholds below which a warning is not required.

If a component found in one of our products is added to the list, or if the increasing sensitivity of detection methodology that may become available under this law and related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal quantity of a listed substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse publicity could affect our sales.

Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.

On March 25, 2024, our indirect wholly owned subsidiary, Mary Jones Michigan LLC, received a Notice of Claims for arbitration from Core Manufacturing, LLC (“Core”), who claimed that the Company was in breach of its commitments under the agreement between the Company and Core.

Core is seeking, amongst other damages, the enforcement of the break-up fee provision in such agreement, which they calculate to be $7,220,357.

Although we dispute the allegations made by Core and intend to defend ourselves vigorously in this matter, there are no assurances that we will be successful in the arbitration proceeding and if we are found liable for all or a substantial portion of the amount of damages Core is seeking, our financial position would be significantly impaired.

We may also become party to other litigation claims and legal proceedings.

Litigation involves significant risks, uncertainties and costs, including distraction of management attention away from our business operations.

We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses.

Based on these assessments and estimates, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate.

These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment.

In addition, any event

that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our

ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs.

part of the licensing strategy of our brands, we enter into licensing agreements under which we grant our licensing partners certain

rights to use our trademarks and other designs.

Although our agreements require that the use of our trademarks and designs is subject

to our control and approval, any breach of these provisions, or any other action by any of our licensing partners that is harmful to

our brands, goodwill and overall image, could have a material adverse impact on our business.

we encounter product recalls or other product quality issues, our business may suffer.

quality issues, real or imagined, or allegations of product contamination, even when false or unfounded, could tarnish our image and

could cause consumers to choose other products.

In addition, as a result of changing government regulations or implementation thereof,

or allegations of product contamination, we may be required from time to time to recall products entirely or from specific markets.

recalls could affect our profitability and could negatively affect brand image.

could be exposed to product liability claims which could materially damage our reputation and brand image and have a material adverse

effect on our financial condition.

we have product liability and basic recall insurance, insurance coverage may not be sufficient to cover all product liability claims

that may arise.

To the extent our product liability coverage is insufficient, a product liability claim may have a material adverse effect

upon our financial condition.

In addition, any product liability claim brought against us may materially damage the reputation and brand

image of our products and business.

or legal proceedings could expose us to significant liabilities and damage our reputation.

March 25, 2024, our indirect wholly owned subsidiary, Mary Jones Michigan LLC, received a Notice of Claims for arbitration from Core

Manufacturing, LLC (“Core”), who claimed that the Company was in breach of its commitments under the agreement between the

Company and Core.

Core is seeking, amongst other damages, the enforcement of the break-up fee provision in such agreement, which they

calculate to be $7,220,357.

In February 2025, a confidential settlement agreement was entered into

between all the parties to the Litigation Matters, which has resulted in the settlement and/or dismissal of both Litigation Matters.

may also become party to other litigation claims and legal proceedings.

Litigation involves significant risks, uncertainties and costs,

including distraction of management attention away from our business operations.

We evaluate litigation claims and legal proceedings

to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses.

Based on these assessments

and estimates, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate.

These assessments

and estimates are based on the information available to management at the time and involve a significant amount of management judgment.

Actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates.

Our policies and procedures require strict compliance by our employees and agents with all U.S.

and local laws and regulations applicable to our business operations, including those prohibiting improper payments to government officials.

Nonetheless, our policies and procedures may not ensure full compliance by our employees and agents with all applicable legal requirements.

Improper conduct by our employees or agents could damage our reputation or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.

We are subject to risks inherent in sales of products in international markets.

Our operations outside of the United States, contribute to our revenue and profitability, and we believe that developing and emerging markets could present future growth opportunities for us.

However, there can be no assurance that existing or new products that we manufacture, distribute or sell will be accepted or be successful in any particular foreign market, due to local or global competition, product price, cultural differences, consumer preferences or otherwise.

There are many factors that could adversely affect demand for our products in foreign markets, including our inability to attract and maintain key distributors in these markets;

volatility in the economic growth of certain of these markets;

changes in economic, political or social conditions, the status and renegotiations of the North American Free Trade Agreement, imposition of new or increased labeling, product or production requirements, or other legal restrictions;

Our policies and procedures

require strict compliance by our employees and agents with all U.S.

and local laws and regulations applicable to our business operations,

including those prohibiting improper payments to government officials.

Nonetheless, our policies and procedures may not ensure full compliance

by our employees and agents with all applicable legal requirements.

Improper conduct by our employees or agents could damage our reputation

or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines, as

well as disgorgement of profits.

are subject to risks inherent in sales of products in international markets.

operations outside of the United States, contribute to our revenue and profitability, and we believe that developing and emerging markets

could present future growth opportunities for us.

However, there can be no assurance that existing or new products that we manufacture,

distribute or sell will be accepted or be successful in any particular foreign market, due to local or global competition, product price,

cultural differences, consumer preferences or otherwise.

There are many factors that could adversely affect demand for our products in

foreign markets, including, but not limited to, our inability to attract and maintain key distributors in these markets;

volatility in

the economic growth of certain of these markets;

changes in economic, political or social conditions, the status and renegotiations of

the North American Free Trade Agreement, imposition of new or increased labeling, product or production requirements, or other legal

restrictions;

restrictions on the import or export of our products or ingredients or substances used in our products;

inflationary currency, devaluation or fluctuation;

increased costs of doing business due to compliance with complex foreign and U.S.

inflationary currency,

devaluation or fluctuation;

and/or increased costs of doing business due to compliance with complex foreign and U.S.

laws and regulations.

If we are unable to effectively operate or manage the risks associated with operating in international markets, our business, financial condition or results of operations could be adversely affected.

Climate change may negatively affect our business.

There is growing concern that a gradual increase in global average temperatures may cause an adverse change in weather patterns around the globe resulting in an increase in the frequency and severity of natural disasters.

While warmer weather has historically been associated with increased sales of our products, changing weather patterns could have a negative impact on agricultural productivity, which may limit availability or increase the cost of certain key ingredients such as sugar cane, natural flavors and supplements used in our products.

Also, increased frequency or duration of extreme weather conditions may disrupt the productivity of the facilities that produce our products, the operation of our supply chain or impact demand for our products.

In addition, the increasing concern over climate change may result in more regional, federal and global legal and regulatory requirements and could result in increased production, transportation and raw material costs.

If we are unable to effectively operate or manage the risks associated with operating in international markets, our business, financial

condition or results of operations could be adversely affected.

change may negatively affect our business.

is growing concern that a gradual increase in global average temperatures may cause an adverse change in weather patterns around the

globe resulting in an increase in the frequency and severity of natural disasters.

While warmer weather has historically been associated

with increased sales of our products, changing weather patterns could have a negative impact on agricultural productivity, which may

limit availability or increase the cost of certain key ingredients such as sugar cane, natural flavors and supplements used in our products.

Also, increased frequency or duration of extreme weather conditions may disrupt the productivity of the facilities that produce our products,

the operation of our supply chain or impact demand for our products.

In addition, the increasing concern over climate change may result

in more regional, federal and global legal and regulatory requirements and could result in increased production, transportation and raw

material costs.

As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.

Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure or as a result of a cybersecurity attack.

The proper functioning of our own information technology (IT) infrastructure is critical to the efficient operation and management of our business.

We may not have the necessary financial resources to update and maintain our IT infrastructure, and any failure or interruption of our IT system could adversely impact our operations.

In addition, our IT is vulnerable to cyberattacks, computer viruses, worms and other malicious software programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems.

We believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure and our operations from these IT-related and other potential disruptions.

However, given the unpredictability of the timing, nature and scope of any such IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.

Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.

Our sales are seasonal and we experience fluctuations in quarterly results as a result of many factors.

We historically have generated a greater percentage of our revenues during the warm weather months of April through September.

Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another.

As a result, management believes that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the fiscal year.

In addition, our operating results may fluctuate due to a number of other factors including, but not limited to:

Our ability to maintain, develop and expand distribution channels for current and new products, develop favorable arrangements with third party distributors of our products and minimize or reduce issues associated with engaging new distributors and retailers, including, but not limited to, transition costs and expenses and down time resulting from the initial deployment of our products in each new distributor’s network;

Unilateral decisions by distributors, grocery store chains, specialty chain stores, club stores, mass merchandisers and other customers to discontinue carrying all or any of our products that they are carrying at any time;

Our ability to maintain, develop and expand our direct-to-retail sales channels and national retail accounts, as well as our “myJones” business;

Our ability to manage our resources to sufficiently support general operating activities, promotion allowances and slotting fees, promotion and selling activities, and capital expansion, and our ability to sustain profitability;

Our ability to meet the competitive response by much larger, well-funded and established companies currently operating in the beverage industry, as we introduce new competitive products;

Competitive products and pricing pressures and our ability to gain or maintain share of sales in the marketplace as a result of actions by competitors.

Due to these and other factors, our results of operations have fluctuated from period to period and may continue to do so in the future, which could cause our operating results in a particular quarter to fail to meet market expectations.

Our business and periodic financial results can be affected by currency rate fluctuations, because a significant percentage of our business is in Canada.

A significant percentage of our sales are conducted through our Canadian subsidiary, for which we receive revenues in the Canadian dollar.

In addition, a significant percentage of our costs of goods are denominated in the Canadian dollar, due to our co-packing facility in Canada.

business and operations may be adversely impacted in the event of a failure or interruption of our information technology infrastructure

or as a result of a cybersecurity attack.

proper functioning of our own information technology (IT) infrastructure is critical to the efficient operation and management of our

We may not have the necessary financial resources to update and maintain our IT infrastructure, and any failure or interruption

of our IT system could adversely impact our operations.

In addition, our IT is vulnerable to cyberattacks, computer viruses, worms and

other malicious software programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with

our computer systems.

We believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure

and our operations from these IT-related and other potential disruptions.

However, given the unpredictability of the timing, nature and

scope of any such IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies,

operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of

confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our

systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation,

any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.

results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.

sales are seasonal and we experience fluctuations in quarterly results as a result of many factors.

We historically have generated a

greater percentage of our revenues during the warm weather months of April through September.

Timing of customer purchases will vary

each year and sales can be expected to shift from one quarter to another.

As a result, management believes that period-to-period comparisons

of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results

expected for the fiscal year.

addition, our operating results may fluctuate due to a number of other factors including, but not limited to:

ability to maintain, develop and expand distribution channels for current and new products, develop favorable arrangements with third

party distributors of our products and minimize or reduce issues associated with engaging new distributors and retailers, including,

but not limited to, transition costs and expenses and down time resulting from the initial deployment of our products in each new

distributor’s network;

decisions by distributors, grocery store chains, specialty chain stores, club stores, mass merchandisers and other customers to discontinue

carrying all or any of our products that they are carrying at any time;

ability to maintain, develop and expand our direct-to-retail sales channels and national retail accounts, as well as our “MyJones”

ability to manage our resources to sufficiently support general operating activities, promotion allowances and slotting fees, promotion

and selling activities, and capital expansion, and our ability to sustain profitability;

ability to meet the competitive response by much larger, well-funded and established companies currently operating in the beverage

industry, as we introduce new competitive products;

products and pricing pressures and our ability to gain or maintain share of sales in the marketplace as a result of actions by competitors.

to these and other factors, our results of operations have fluctuated from period to period and may continue to do so in the future,

which could cause our operating results in a particular quarter to fail to meet market expectations.

in tax laws or the imposition of additional duties, quotas, tariffs, and other trade restrictions could adversely affect our business.

trade policy, such as the renegotiation of the US Mexico Canada Agreement (USMCA) and the imposition of additional tariffs, present

risks to our business.

Currently the Company’s soft drink beverage products are duty-free under the existing USMCA if they meet

the rules of origin (e.g.

they are produced in North America).

Currently the Company imports raw materials from the US into Canada where

it produces glass products for the US and Canadian markets.

Any change to these tariffs could adversely affect our ability to produce

and market products at competitive prices which could impact sales and financial results.

The Company may not be able to move its Canada

based glass production to the US at a similar production cost if high tariffs are imposed by the US on Canada sourced soft drink beverages

of North American origin.

business and periodic financial results can be affected by currency rate fluctuations, because a significant percentage of our business

is in Canada.

significant percentage of our sales are conducted through our Canadian subsidiary, for which we receive revenues in the Canadian dollar.

In addition, a significant percentage of our costs of goods are denominated in the Canadian dollar, due to our co-packing facility in

Because of this we are affected by changes in U.S.

exchange rates with the Canadian dollar.

In preparing our consolidated financial statements, certain financial information is required to be translated from the Canadian dollar to the U.S.

The translation of our Canadian revenues, cash and other assets is adversely affected when the United States dollar strengthens against the Canadian dollar and is positively affected when the U.S.

preparing our consolidated financial statements, certain financial information is required to be translated from the Canadian dollar

The translation of our Canadian revenues, cash and other assets is adversely affected when the United States dollar

strengthens against the Canadian dollar and is positively affected when the U.S.

dollar weakens.

Similarly, translation of our Canadian expenses and liabilities is positively affected when the U.S.

dollar strengthens against the Canadian dollar and adversely affected when the U.S.

Similarly, translation of our Canadian

expenses and liabilities is positively affected when the U.S.

dollar strengthens against the Canadian dollar and adversely affected when

dollar weakens.

This exposure to foreign currency risk could significantly affect our revenues and profitability from our Canadian operations and could result in significant fluctuations to our periodic income statements and consolidated balance sheets.

Throughout 2023, the U.S.

This exposure to foreign currency risk could significantly affect our revenues and profitability from our Canadian

operations and could result in significant fluctuations to our periodic consolidated statements of operations and consolidated balance sheets.

2024, the U.S.

dollar’s strength fluctuated significantly in comparison to the Canadian dollar.

As of February 9, 2023, the Canadian dollar exchange rate for one U.S.

dollar was equal to $0.74, $0.76 as of December 31, 2023 but $0.74 as of December 31, 2022.

on the Noon buying rates in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal

Reserve Bank of New York, a s of March 28 , 2025, the Canadian dollar exchange rate

dollar was equal to $0.6989 compared to $0.6944 as of December 31, 2024 and

$0.7575 as of December 31, 2023.

We cannot predict future changes in these exchange rates.

We do not engage in foreign currency hedging transactions.

Changes in our effective tax rate may impact our results of operations.

We are subject to taxes in the U.S.

We do not engage in foreign currency

hedging transactions.

in our effective tax rate may impact our results of operations.

are subject to taxes in the U.S.

and other jurisdictions.

Tax rates in these jurisdictions may be subject to significant change due to economic and/or political conditions.

Tax rates in these jurisdictions may be subject to significant change due to

economic and/or political conditions.

A number of other factors may also impact our future effective tax rate including:

the jurisdictions in which profits are determined to be earned and taxed;

the resolution of issues arising from tax audits with various tax authorities;

changes in valuation of our deferred tax assets and liabilities;

increases in expenses not deductible for tax purposes, including write-offs of acquired intangibles and impairment of goodwill in connection with acquisitions;

changes in availability of tax credits, tax holidays, and tax deductions;

changes in share-based compensation;

changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles.

Any material increase in the taxes we owe could materially impact our financial results and results of operations.

Global economic, political, social and other conditions, including the possible pandemics, may continue to adversely impact our business and results of operations.

The beverage industry, and particularly those companies selling premium beverages like us, can be affected by macro-economic factors, including changes in national, regional, and local economic conditions, unemployment levels and consumer spending patterns, which together may impact the willingness of consumers to purchase our products as they adjust their discretionary spending.

Adverse economic conditions may adversely affect the ability of our distributors to obtain the credit necessary to fund their working capital needs, which could negatively impact their ability or desire to continue to purchase products from us in the same frequencies and volumes as they have done in the past.

If we experience similar adverse economic conditions in the future, sales of our products could be adversely affected, collectability of accounts receivable may be compromised and we may face obsolescence issues with our inventory, any of which could have a material adverse impact on our operating results and financial condition.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

The United States generally accepted accounting principles and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, stock-based compensation, trade spend and promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management.

Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported results.

If we are unable to maintain effective disclosure controls and procedures and internal control over financial reporting, our stock price and investor confidence could be materially and adversely affected.

We are required to maintain both disclosure controls and procedures and internal control over financial reporting that are effective.

Because of their inherent limitations, internal control over financial reporting, however well designed and operated, can only provide reasonable, and not absolute, assurance that the controls will prevent or detect misstatements.

Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

The failure of controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial results, which could also negatively impact our stock price and investor confidence.

Risk Factors Related to Our Common Stock

The price of our common stock may be volatile, and a shareholder ’ s investment in our common stock could suffer a decline in value.

There has been significant volatility in the volume and market price of our common stock, and this volatility may continue in the future.

In addition, factors such as quarterly variations in our operating results, our issuance of new securities, announcements about company developments and initiatives, litigation involving us, general trends relating to the beverage industry, actions by governmental agencies, national economic and stock market considerations as well as other events and circumstances beyond our control, could have a significant impact on the future market price of our common stock and the relative volatility of such market price.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital.

If we are unable to raise the funds required for all of our planned operations and key initiatives, we may be forced to allocate funds from other planned uses, which may negatively impact our business and operations, including our ability to develop new products and continue our current operations.

Any future equity or debt issuances by us may have dilutive or adverse effects on our existing shareholders.

From time to time, we may issue additional shares of common stock or convertible securities.

The issuance of these securities could dilute our shareholders’ ownership in our company and may include terms that give new investors rights that are superior to those of our current shareholders.

Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any event may have a dilutive impact on our shareholders’ ownership interest, which could cause the market price of our common stock to decline.

Our common stock is traded on the OTCQB Marketplace and the Canadian Stock Exchange , which may have an unfavorable impact on our stock price and liquidity.

Our stock is traded on the OTCQB Marketplace in the United States and the Canadian Stock Exchange (“CSE”) in Canada.

The OTCQB and CSE are significantly more limited markets than the United States national securities exchanges such as the New York Stock Exchange, or Nasdaq and there are lower financial or qualitative standards that a company must meet to be listed on the OTCQB and CSE.

Trading in our common stock on each of the OTCQB and the CSE may be subject to abuses, volatility and shorting, which may have little to do with our operations or business prospects.

jurisdictions in which profits are determined to be earned and taxed;

resolution of issues arising from tax audits with various tax authorities;

in valuation of our deferred tax assets and liabilities;

in expenses not deductible for tax purposes, including write-offs of acquired intangibles and impairment of goodwill in connection

with acquisitions;

in availability of tax credits, tax holidays, and tax deductions;

in share-based compensation;

in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles.

material increase in the taxes we owe could materially impact our financial results and results of operations.

economic, political, social and other conditions may continue to adversely impact our business and results of operations.

beverage industry, and particularly those companies selling premium beverages like us, can be affected by macro-economic factors, including

changes in national, regional, and local economic conditions, unemployment levels and consumer spending patterns, which together may

impact the willingness of consumers to purchase our products as they adjust their discretionary spending.

Adverse economic conditions

may adversely affect the ability of our distributors to obtain the credit necessary to fund their working capital needs, which could

negatively impact their ability or desire to continue to purchase products from us in the same frequencies and volumes as they have done

If we experience similar adverse economic conditions in the future, sales of our products could be adversely affected, collectability

of accounts receivable may be compromised and we may face obsolescence issues with our inventory, any of which could have a material

adverse impact on our operating results and financial condition.

in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could

significantly affect our financial results.

United States generally accepted accounting principles and related pronouncements, implementation guidelines and interpretations with

regard to a wide variety of matters that are relevant to our business, such as, but not limited to, stock-based compensation, trade spend

and promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management.

Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly

change our reported results.

we are unable to maintain effective disclosure controls and procedures and internal control over financial reporting, our stock price

and investor confidence could be materially and adversely affected.

are required to maintain both disclosure controls and procedures and internal control over financial reporting that are effective.

of their inherent limitations, internal control over financial reporting, however well designed and operated, can only provide reasonable,

and not absolute, assurance that the controls will prevent or detect misstatements.

Because of these and other inherent limitations of

control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future

The failure of controls by design deficiencies or absence of adequate controls could result in a material adverse effect

on our business and financial results, which could also negatively impact our stock price and investor confidence.

can be no assurance that our acquisitions, investments or expansions of scope of existing relationships will have a beneficial impact

on our business, financial condition and results of operations.

have entered into and may in the future enter into additional acquisitions or investments with third parties that we believe will complement

our existing business.

Our ability to complete acquisitions or investments is dependent upon, and may be limited by, the availability

of suitable candidates and capital.

In addition, acquisitions or investments could present unforeseen integration or operational obstacles

or costs, may not enhance our business, and/or may involve risks that could adversely affect us, including by diverting significant amounts

of management time from operations in order to pursue and complete such transactions or maintain such relationships.

Future acquisitions

or investments could result in the incurrence of additional debt, costs and contingent liabilities, and there can be no assurance that

future acquisitions or investments will achieve, the expected benefits to our business or that we will be able to consummate future acquisitions

or investments on satisfactory terms, or at all.

Any of the foregoing could have a material adverse effect on our business, financial

condition, results of operations and growth prospects.

addition, future acquisitions by us could result in future issuances of shares of our common stock which may result in additional dilution

of the percentage ownership of our shareholders and could cause the trading price of our common stock to decline.

Factors Relating to our Cannabis Business in Canada

plans to expand our cannabis operations may not be successful, which would have an adverse impact on our business, financial condition

and results of operations.

strategy for growth in the cannabis industry is dependent on, among other things, our ability to partner with local licensed cannabis

manufacturers to launch and market THC/CBD-infused and/or cannabis-infused beverages, tinctures, edibles and other products in various

Although we intend to devote significant financial and other resources to expand our business to the production of cannabis-containing

beverages and related products, these efforts may not be commercially successful or achieve the desired results.

Our financial results

and our ability to maintain or improve our competitive position will depend on our ability to effectively gauge the direction of the

cannabis industry and successfully identify, develop, market and sell new or improved products and services in this changing marketplace.

Our inability to successfully implement our cannabis strategy could have a material adverse effect on our business, financial condition

and results of operations.

The cannabis industry is an evolving industry and we must anticipate and respond to changes.

cannabis industry is not yet well-developed, and many aspects of this industry’s development and evolution cannot be accurately

While we have attempted to identify any risks specific to the cannabis industry that would be applicable to our planned cannabis

operations, you should carefully consider that there are other risks that cannot be foreseen or are not described in this report, which

could materially and adversely affect the development of our cannabis business and our future financial performance.

We expect that the

cannabis market and our business will evolve in ways that are difficult to predict.

Our long-term success will depend on our ability

to successfully adjust our strategy to meet the changing market dynamics.

If we are unable to successfully adapt to changes in the cannabis

industry, our operations could be adversely affected.

Relating to Regulation and Compliance

or regulatory changes that affect our products, including new taxes, could reduce demand for products and/or increase our costs.

imposed on the sale of certain of our products by federal, state and local governments in the United States, or other countries in which

we operate could cause consumers to shift away from purchasing our beverages.

Several municipalities in the United States have implemented

or are considering implementing taxes on the sale of certain “sugared” beverages, including non-diet soft drinks, fruit drinks,

teas and flavored waters to help fund various initiatives.

These taxes could materially affect our business and financial results.

business is subject to many regulations and noncompliance may be costly.

production, marketing and sale of our beverages, including contents, labels, caps and containers, are subject to the rules and regulations

of various federal, provincial, state and local health agencies.

If a regulatory authority finds that a current or future product or

production batch or “run” is not in compliance with any of these regulations, we may be fined, or production may be stopped,

which may adversely affect our financial condition and results of operations.

Similarly, any adverse publicity associated with any noncompliance

may damage our reputation and our ability to successfully market our products.

Furthermore, the rules and regulations that our business

is subject to are subject to change, and while we closely monitor developments in this area, we cannot anticipate whether changes in

these rules and regulations will adversely impact our business.

Additional or revised regulatory requirements, whether labeling, environmental,

tax or otherwise, could have a material adverse effect on our financial condition and results of operations.

additional labeling or warning requirements may inhibit sales of affected products.

jurisdictions may seek to adopt significant additional product labeling or warning requirements relating to the chemical content or perceived

adverse health consequences of certain of our products.

These types of requirements, if they become applicable to one or more of our

products under current or future environmental or health laws or regulations, may inhibit sales of such products.

In California, a law

requires that a specific warning appear on any product that contains a component listed by the state as having been found to cause cancer

or birth defects.

This law recognizes no generally applicable quantitative thresholds below which a warning is not required.

If a component

found in one of our products is added to the list, or if the increasing sensitivity of detection methodology that may become available

under this law and related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal

quantity of a listed substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse

publicity could affect our sales.

is a controlled substance in the United States and therefore subject to the Controlled Substances Act (“CSA”).

the United States, cannabis is regulated at both the federal and state levels.

To our knowledge, there are to date a total of 39 states,

and the District of Columbia, that have now passed legislation or legalized cannabis in some form, 24 of which have authorized its recreational

use including California, Nevada, New York, New Jersey, and Washington.

Although several states allow the sale of cannabis at the state

level, cannabis continues to be categorized as a controlled substance under the CSA and, as such, cultivation, distribution, sale and

possession of cannabis violates federal law in the United States.

The inconsistency between federal and state laws and regulations may

result in a loss of the value of our investment in such business.

state regulation in certain U.S.

states may take a permissive approach to medical and/or adult-use of cannabis, the CSA may still be

enforced by U.S.

federal law enforcement officials against individuals and companies operating in those states for activity that is legal

under state law.

Department of Justice opted to pursue a policy of aggressively enforcing U.S.

federal law against financiers

or equity owners of cannabis-related businesses, then we could face (i) seizure of our cash and other assets used to support or derived

our cannabis business activities;

and/or (ii) the arrest of its employees, directors, officers, managers and/or investors, who could

face charges of ancillary criminal violations of the CSA for aiding and abetting and conspiring to violate the CSA.

of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements

arising from civil proceedings initiated by either the federal government or private citizens, or criminal charges, including, but not

limited to, disgorgement of profits, cessation of business activities or divestiture.

This could have a material adverse effect on us,

including our reputation and ability to conduct business, the listing of our securities on the CSE or other exchanges, our financial

position, operating results, profitability or liquidity or the market price of our listed securities.

Overall, an investor’s contribution

to and involvement in our activities may result in federal civil and/or criminal prosecution, including forfeiture of his or her entire

operate in highly regulated industries where the regulatory environments are rapidly developing and we may not always succeed in complying

fully with applicable regulatory requirements in all jurisdictions where we carry on business.

business and activities are heavily regulated in all jurisdictions where we carry on business.

Our operations are subject to various

laws, regulations and guidelines by governmental authorities (including, in Canada, Health Canada) and other federal, provincial, state

and local regulatory agencies relating to, among other things, the cultivation, manufacture, processing, marketing, labeling, packaging,

management, transportation, distribution, import, export, storage, sale, pricing and disposal of cannabis, hemp and cannabis-based products,

and also including laws, regulations and guidelines relating to health and safety, insurance coverage, the conduct of operations and

the protection of the environment (including relating to emissions and discharges to water, air and land, and the handling and disposal

of hazardous and non-hazardous materials and wastes).

Our operations may also be affected in varying degrees by government regulations

with respect to, among other things, price controls, import or export controls, controls on currency remittance, increased income taxes,

restrictions on foreign investment and government policies rewarding contracts to local competitors or requiring domestic producers or

vendors to purchase supplies from a particular jurisdiction.

Laws, regulations and guidelines, applied generally, grant government agencies

and self-regulatory bodies broad administrative discretion over our activities, including the power to limit or restrict business activities

as well as impose additional disclosure requirements on our products and services, as well as on our personnel (including management

and the Board).

of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by these governmental authorities

and obtaining all necessary regulatory approvals for the cultivation, production, processing, storage, transportation, distribution,

sale, import and export, as applicable, of our products.

The cannabis and hemp industries are still new, and in Canada, in particular,

the Cannabis Act has no close precedent in Canadian law.

The effect of relevant governmental authorities’ administration,

application and enforcement of their respective regulatory regimes and delays in obtaining, or failure to obtain, necessary regulatory

approvals may significantly delay or impact the development of markets, products and sales initiatives and could have a material adverse

effect on our business, financial condition, results of operations and growth prospects.

For example, in the U.S., registered federal

trademark protection is only available for goods and services that can be lawfully used in interstate commerce;

the United States Patent

and Trademark Office is not currently approving any trademark applications for cannabis, or certain goods containing hemp-derived cannabinoids

(such as dietary supplements and food) until the U.S.

Food and Drug Administration (“FDA”) and the U.S.

Department of Agriculture

(“USDA”) provides clearer guidance on the regulation of such products.

regulatory environment for our products is rapidly developing, and the need to build and maintain robust systems to comply with different

and changing regulations in multiple jurisdictions increases the possibility that we may violate one or more applicable requirements.

While we endeavor to comply with all relevant laws, regulations and guidelines, any failure to comply with the regulatory requirements

applicable to our operations could subject us to negative consequences, including, but not limited to, civil and criminal penalties,

damages, fines, the curtailment or restructuring of our operations, asset seizures, revocation or imposition of additional conditions

on licenses to operate our business, the denial of regulatory applications (including, in the U.S., by other regulatory regimes that

rely on the positions of the U.S.

Drug Enforcement Administration (“DEA”), FDA and USDA in the application of their respective

regimes), the suspension or expulsion from a particular market or jurisdiction or of our key personnel, or the imposition of additional

or more stringent inspection, testing and reporting requirements, any of which could have a material adverse effect on our business,

financial condition, results of operations and growth prospects.

Additionally, scheduled or unscheduled inspections of our facilities

or facilities of our third party suppliers, co-manufacturers, and distributors by applicable regulatory agencies could result in adverse

findings that could require significant remediation efforts and/or temporary or permanent shutdown of our facilities or those of our

third party suppliers.

In the United States, failure to comply with FDA and USDA requirements (and analogous state agencies) may result

in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions.

The outcome of

any regulatory or agency proceedings, investigations, inspections, audits, and other contingencies could harm our reputation, require

us to take, or refrain from taking, actions that could harm our operations or require us to pay substantial amounts of money, harming

our results of operations, financial condition and cash flows.

Increasingly, communication and coordination among regulators has led

in other industries to coordinated responses to regulatory and licensure applications.

To the extent that regulators coordinate responses

to license applications and regulatory conditions, limitations or denials of licenses in one jurisdiction may lead to denials in other

jurisdictions.

There can be no assurance that any pending or future regulatory or agency proceedings, investigations, inspections and

audits will not result in substantial costs or a diversion of management’s attention and resources, adversely impact our future

growth plans and opportunities or have a material adverse effect on our business, financial condition and results of operations.

any part of our business activities are found to be in violation of any of federal, state, provincial or local laws or any other governmental

regulations, in addition to the items described above:

may be subject to “Warning Letters,” untitled letters, fines, penalties, administrative sanctions, settlements, injunctions,

product recalls and/or other enforcement actions arising from civil, administrative or other proceedings initiated that could adversely

affect our business, financial condition, operating results, liquidity, cash flow and operational performance;

the profits or revenues

derived therefrom could be subject to anti-money laundering statutes, including the Money Laundering Control Act, which could result

in significant disruption to our business operations and involve significant costs, expenses or other penalties;

and our suppliers, service

providers and distributors may elect, at any time, to breach, terminate or otherwise cease to participate in supply, distribution or

other agreements, or other relationships, on which our operations rely.

may be subject to heightened scrutiny by regulatory authorities.

future investments, joint ventures or operations in the United States, may become the subject of heightened scrutiny by regulators, stock

exchanges and other authorities in Canada and/or the United States.

As a result, we may be subject to significant direct and indirect

interaction with public officials.

There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of

certain restrictions on our business.

laundering and other banking laws and regulations may limit our ability to access financing and hamper our growth.

are subject to a variety of domestic and international laws and regulations pertaining to money laundering, financial recordkeeping and

proceeds of crime, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules

and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered

or enforced by governmental authorities internationally.

the event that any of our operations or investments, any proceeds thereof, any dividends or distributions therefrom, or any profits or

revenues accruing from such operations or investments are found to be in violation of money laundering legislation, such transactions

may be viewed as proceeds of crimes under one or more of the statutes noted above or any other applicable legislation.

This could restrict

or otherwise jeopardize our ability to declare or pay dividends, effect other distributions or subsequently repatriate such funds back

Furthermore, while we have no current intention to declare or pay dividends in the foreseeable future, in the event that a

determination was made that proceeds obtained by us could reasonably be shown to constitute proceeds of crime, we may decide or be required

to suspend declaring or paying dividends without advance notice and for an indefinite period of time.

rescheduling of U.S.

Schedule I cannabis to Schedule III would have an uncertain impact on our business.

August 2023, the U.S.

Department of Health and Human Services recommended that the DEA move marijuana from Schedule I to Schedule III

under the CSA and on May 16, 2024, the DEA issued a proposed rule to reclassify marijuana from its current classification as a Schedule

I drug to a Schedule III drug.

There can be no assurance that the proposed DEA rule will go into effect in its present form or at all,

and the impacts of any such adoption on our business and competitive position are unclear.

For example, rescheduling marijuana from Schedule

I to Schedule III may be accompanied by additional regulatory obligations as prerequisite to participate in the U.S.

market, and it may

provide a greater benefit to the businesses of our competitors than our business, including by providing favorable tax treatment to their

The rescheduling of marijuana from Schedule I to Schedule III could result in significant volatility in the market for

our common stock.

To the extent that market speculation results in an increase in the price of our common stock, the price of our common

stock could decline significantly thereafter if the DEA fails to act on the recommendation or investor optimism fades.

Factors Related to Our Common Stock

common stock is traded on the OTCQB Marketplace and the Canadian Stock Exchange, which may have an unfavorable impact on our stock price

and liquidity.

stock is traded on the OTCQB in the United States and the Canadian Stock Exchange (“CSE”) in Canada.

The OTCQB and CSE are

significantly more limited markets than national securities exchanges in the United States such as the New York Stock Exchange, or Nasdaq

and there are lower financial or qualitative standards that a company must meet to be listed on the OTCQB and CSE.

Trading in our common

stock on each of the OTCQB and the CSE may be subject to abuses, volatility and shorting, which may have little to do with our operations

or business prospects.

This volatility could depress the market price of our common stock for reasons unrelated to operating performance.

The Financial Industry Regulatory Authority (“FINRA”), which has jurisdiction over the OTCQB, has adopted rules that require a broker-dealer to have reasonable grounds for believing an investment is suitable for that customer when recommending an investment to a customer.

FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for some customers and may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may result in a limited ability to buy and sell our stock.

We currently do not meet applicable listing standards of a market senior to the OTC in the United States and we may never apply or qualify for future listing on Nasdaq or a senior market.

We do not intend to pay any cash dividends on our shares of common stock in the near future, so our shareholders will not be able to receive a return on their shares unless they sell their shares.

We intend to retain any future earnings to finance the development and expansion of our business.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future.

There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless they sell such shares.

Anti-takeover provisions in our charter documents and under Washington law could make an acquisition of us, which may be beneficial to our shareholders, difficult and prevent attempts by our shareholders to replace or remove our current management.

Provisions in our articles of incorporation and bylaws and under Washington law may delay or prevent an acquisition of us or a change in our management.

These provisions include a prohibition on shareholder actions by less than unanimous written consent, limitations on the ability of shareholders to call a special meeting of shareholders and advance notice procedures with respect to the nomination of candidates for election as directors.

In addition, because we are incorporated in Washington, we are governed by the provisions of Chapter 23B.19 of the Washington Business Corporation Act, which, among other things, restricts the ability of shareholders owning 10% or more of our outstanding voting stock from merging or combining with us.

Although we believe these provisions collectively provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer may be considered beneficial by some shareholders.

In addition, these provisions may frustrate or prevent any attempts by our shareholders to replace or remove our current management by making it difficult for shareholders to replace members of our board of directors, which is responsible for appointing the members of our management.

The Financial Industry Regulatory Authority (“FINRA”), which has jurisdiction over the OTCQB, has adopted rules that require

a broker-dealer to have reasonable grounds for believing an investment is suitable for that customer when recommending an investment

to a customer.

FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for some customers

and may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may result in a limited

ability to buy and sell our stock.

price of our common stock may be volatile, and a shareholder ’ s investment in our common stock could suffer a decline

has been significant volatility in the volume and market price of our common stock, and this volatility may continue in the future.

market price of our common stock may be subject to wide fluctuations in response to a variety of factors, including the following:

variations in our operating results;

issuance of new securities;

● announcements

about Company developments and initiatives;

to meet or exceed financial projections we provide to the public;

to meet or exceed the estimates and projections of the investment community;

in the market valuations of companies similar to ours;

● announcements

of significant acquisitions, strategic collaborations, joint ventures or capital commitments

by us or our competitors;

or departures of key personnel;

of our common stock by us or our shareholders in the future;

volume of our common stock;

in analysts’ estimates affecting our Company, our competitors and/or our industry;

in the accounting methods used in or otherwise affecting our industry;

● fluctuations

in interest rates and the availability of capital in the capital markets;

or loss of significant customers, manufacturers, distributors or other business partners;

involving us;

trends relating to the beverage industry;

by governmental agencies;

economic, industry and market conditions;

epidemics and outbreaks or other natural or manmade disasters which could significantly disrupt

our operations;

other factors described in this “Risk Factors” section;

and circumstances beyond our control.

of these factors may result in large and sudden changes in the volume and price at which our common stock will trade.

In addition, the

stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity

securities of many companies.

If there is extreme market volatility and trading patterns in our common stock, it may create several risks

for investors, including the following:

market price of our common stock may experience rapid and substantial increases or decreases

unrelated to our actual or expected operating performance, financial condition or prospects,

which may make it more difficult for prospective investors to assess the rapidly changing

value of our common stock;

our future market capitalization reflects trading dynamics unrelated to our actual or expected

operating performance, financial performance or prospects, purchasers of our common stock

could incur substantial losses as prices decline once the level of market volatility has

the future market price of our common stock declines, investors may be unable to resell their

shares at or above the price at which they acquired them.

cannot assure you that the market of our common stock will not fluctuate or decline significantly in the future, in which case you could

incur substantial losses.

market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may negatively affect the

market price of our common stock, regardless of our actual operating performance.

In addition, shares of our common stock may be more

thinly traded than securities of larger, more established beverage companies and, as a result of this lack of liquidity, sales of relatively

small quantities of shares of our common stock by our shareholders may disproportionately influence the price of our common stock.

market price of our common stock may decline below the amount you invested, and you may lose some or all of your investment.

a prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction

in our ability to raise capital.

If we are unable to raise the funds required for all of our planned operations and key initiatives,

we may be forced to allocate funds from other planned uses, which may negatively impact our business and operations, including our ability

to develop new products and continue our current operations.

could be subject to securities class action litigation.

the past, securities class action litigation has been brought against companies following a decline in the market price of their securities.

If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which

could harm our business.

sales and issuances of our common stock, or securities convertible into or exercisable for our common stock, including pursuant to our

equity incentive plans, could result in additional dilution of the percentage ownership of our shareholders and could cause the trading

price of our common stock to decline.

time to time, we may issue additional shares of common stock or securities convertible into or exercisable for our common stock, in one

or more transactions at prices and in a manner we determine from time to time.

We also expect to issue additional shares of our common

stock to directors, officers, employees, and consultants pursuant to our equity incentive plan.

The issuance of these securities could

dilute our shareholders’ ownership in our Company and may include terms that give new investors rights that are superior to those

of our current shareholders.

Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our

common stock and in any event may have a dilutive impact on our shareholders’ ownership interest, which could cause the market

price of our common stock to decline.

future sales of our common stock, or the perception in the public markets that these sales may occur, could cause our share price to

of a substantial number of shares of our common stock in the public market could occur at any time.

These sales, or the perception in

the market that the holders of a large number of shares of our common stock intend to sell shares, could reduce the trading price of

our common stock and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have

serious adverse consequences on our business, financial condition and stock price.

global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity

and credit availability, declines in consumer confidence, declines in economic growth, inflationary pressure and interest rate changes,

increases in unemployment rates and uncertainty about economic stability.

The financial markets and the global economy may also be adversely

affected by the current or anticipated impact of military conflict, including the conflict between Russia and Ukraine, terrorism or other

geopolitical events.

Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine,

may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or

others could exacerbate market and economic instability.

There can be no assurance that future credit and financial market instability

and a deterioration in confidence in economic conditions will not occur.

Our general business strategy may be adversely affected by any

such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions.

If the equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions, it may cause short-term

liquidity risk and also make any necessary debt or equity financing more difficult, more costly and more dilutive.

Failure to secure

any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial

performance and stock price and could require us to delay or abandon our business plans.

In addition, there is a risk that one or more

of our current customers, distributors, manufacturers, financial institutions or other third parties with whom we do business may be

adversely affected by the foregoing risks, which may have an adverse effect on our business.

do not intend to pay any cash dividends on our shares of common stock in the near future, so our shareholders will not be able to receive

a return on their shares unless they sell their shares.

intend to retain any future earnings to finance the development and expansion of our business.

We do not anticipate paying any cash dividends

on our common stock in the foreseeable future.

There is no assurance that future dividends will be paid, and if dividends are paid, there

is no assurance with respect to the amount of any such dividend.

Accordingly, investors must be prepared to rely on sales of their shares

after price appreciation to earn an investment return, which may never occur.

Anti-takeover

provisions in our charter documents and under Washington law could make an acquisition of us, which may be beneficial to our shareholders,

difficult and prevent attempts by our shareholders to replace or remove our current management.

in our Articles of Incorporation, as amended, Amended and Restated Bylaws and Washington law may delay or prevent an acquisition of us

or a change in our management.

These provisions include a prohibition on shareholder actions by less than unanimous written consent,

limitations on the ability of shareholders to call a special meeting of shareholders and advance notice procedures with respect to the

nomination of candidates for election as directors.

In addition, because we are incorporated in Washington, we are governed by the provisions

of Chapter 23B.19 of the Washington Business Corporation Act, which, among other things, restricts the ability of shareholders owning

10% or more of our outstanding voting stock from merging or combining with us.

Although we believe these provisions collectively provide

for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply

even if an offer may be considered beneficial by some shareholders.

In addition, these provisions may frustrate or prevent any attempts

by our shareholders to replace or remove our current management by making it difficult for shareholders to replace members of our board

of directors, which is responsible for appointing the members of our management.

are a “ smaller reporting company, ” and the reduced disclosure requirements applicable to smaller

reporting companies may make our common stock less attractive to investors.

are a “smaller reporting company” under applicable SEC rules, meaning that the market value of our common stock held by non-affiliates

is less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year.

continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million,

or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our stock

held by non-affiliates was less than $700.0 million.

As a smaller reporting company, we may choose to present only the two most recent

years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition

and Results of Operations disclosure in our Annual Report on Form 10-K, and we may take advantage of reduced disclosure obligations regarding

executive compensation.

securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market

trading volume of our common stock could be negatively affected.

trading market for our common stock may be influenced in part by any research reports that securities industry analysts publish about

We do not currently have and may never obtain research coverage by securities industry analysts.

If no securities industry analysts

commence coverage of us, the market price and market trading volume of our common stock could be negatively affected.

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