What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2020-05-18 compared with 2019-04-16 · 180 added, 167 removed, 129 unchanged (73% of the section changed)

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Market Information

As of the date of this Report, there is

no market for our Common Stock.

In January 2019 we caused a licensed market maker to file an application with FINRA to list our

Common Stock for trading.

While no assurances can be provided, we hope to list our Common Stock for trading on the OTCQB market.

There can be no assurances that our Common Stock will be approved for listing on the OTCQB or any other existing U.S.

trading market.

Our Common Stock is quoted on the OTCQB

over-the-counter market under the symbol “KITL.”

Over-the-counter market quotations reflect inter-dealer prices, without

retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.

On May14, 2020 the closing price

on the OTC Markets for our Common Stock was $0.122

As of the date of this Report, we had 107

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Dividend Policy

We have not paid any dividends since our

incorporation and do not anticipate the payment of dividends in the foreseeable future.

At present, our policy is to retain earnings,

if any, to develop and market our products.

We have not paid any dividends since our incorporation

and do not anticipate the payment of dividends in the foreseeable future.

At present, our policy is to retain earnings, if any,

to develop and market our products.

The payment of dividends in the future will depend upon, among other factors, our earnings,

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and Penny Stock Reform Act of 1990

The Securities and Exchange

Commission (the “Commission”

or “SEC”) has adopted rules that regulate broker-dealer practices in

connection with transactions in penny stocks.

Penny stocks are generally equity securities with a price of less than $5.00

(other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that

current price and volume information with respect to transactions in such securities is provided by the exchange or

While our common stock has not been approved

for trading as of the date of this report, we expect that if and when so approved our Common Stock will be defined as a “penny

under the Securities and Exchange Act.

It is anticipated that our Common Stock will remain a penny stock until such

time as the market price exceeds $5.00 per share.

The classification of penny stock makes

it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser

to liquidate his/her investment.

Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us

will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.

Rather than creating a need to comply with those

rules, some broker-dealers will refuse to attempt to sell penny stock.

The Securities and Exchange Commission (the

“Commission”

or “SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions

in penny stocks.

Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered

on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with

respect to transactions in such securities is provided by the exchange or system).

The classification of penny stock makes it

more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to

liquidate his/her investment.

Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will

be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.

Rather than creating a need to comply with those rules,

some broker-dealers will refuse to attempt to sell penny stock.

The penny stock rules require a broker-dealer,

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Inc., 16540 Pointe Village Drive, Suite 205, Lutz, FL 33558, phone (813) 235-4490 as the transfer agent for our Common Stock.

We are subject to certain reporting requirements

and furnish annual financial reports to our stockholders, certified by our independent accountants, and furnish unaudited quarterly

financial reports in our quarterly reports filed electronically with the SEC.

All reports and information filed by us

can be found at the SEC website, www.sec.gov .

FINANCIAL DATA.

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DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read

in conjunction with our audited financial statements and notes thereto included herein.

The following discussion should be read in

conjunction with our audited financial statements and notes thereto included herein.

In connection with, and because we desire

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We disclaim any obligation to update forward-looking statements.

We are a Florida corporation incorporated

on March 7, 2013, focused on developing a fast, casual food dining chain restaurant business.

We commenced operations by opening

our initial corporately owned location in Fort Lauderdale, Florida, in May 2015.

We are a Florida corporation incorporated on

March 7, 2013, focused on developing a fast, casual food dining chain restaurant business.

We commenced operations by opening our

initial corporately owned location in Fort Lauderdale, Florida, in May 2015.

We opened three additional locations by April 2016,

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utilize them as a showcase in the marketing of our proposed franchise operations.

In May 2017, we completed our National

Franchise License and now have the ability to sell franchises in all of the states in the US except for New York, Virginia, and

Maryland which we intend to add at later dates if sufficient demand exists.

In June 2017, we completed the sales of two franchise

locations in Florida.

We anticipate commencement of the building and development of these locations by the end of 2019 or early

In May 2017, we completed our

National Franchise License and now have the ability to sell franchises in all of the states in the US except for New York,

Virginia, and Maryland which we intend to add at later dates if sufficient demand exists.

In June 2017, we completed the

sales of two franchise locations in Florida.

We anticipate commencement of the building and development of these locations by

mid to the end of 2021, however, due to the COVID -19 pandemic there can be no assurances.

We have never been subject to any bankruptcy

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Going Concern

Our financial statements accompanying

this Report have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets

and liquidation of liabilities in the normal course of business.

The financial statements do not include any adjustment that might

result from the outcome of this uncertainty.

Our financial statements accompanying this

Report have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation

of liabilities in the normal course of business.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

We have a minimal operating history and minimal revenues or earnings from operations.

We have no significant assets or financial resources.

We will, in all likelihood, sustain operating expenses without corresponding

revenues for the immediate future.

no significant assets or financial resources.

We will, in all likelihood, sustain operating expenses without corresponding revenues

for the immediate future.

See “Part II, Item 8, Financial Statements, and Supplementary Data.”

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Revenue and Cost of Sales

During the year ended December 31,

2018, we generated $444,421 in revenues, compared to revenues of $740,212 in revenue during the same period in 2017, a decrease

We believe that the principal reason for this decrease was a result of the impact of Hurricane Irma, which made landfall

in Southern Florida in September 2017, causing significant damage to the area.

As a result of the damage from the hurricane, our

hotel locations closed due to the fact that the Wyndham hotel group had to halt operations at the respective hotel properties

in order to begin the necessary repairs and renovations following the storm.

While our Fort Lauderdale location was reopened in

early November 2017, we were only able to reopen two of the hotel locations in Pompano Beach in late January 2018.

The store that

we closed generated $92,000 in revenue in 2017, compared to zero in 2018.

Excluding that store, our sales decrease on a comparable

basis was approximately $204,000.

The lingering impact of the storm has extended

throughout 2018 because the building one our stores is housed in continues to require major repairs thus negatively impacting traffic

to that store.

We also decided not to reopen our 4 th location, as this location suffered significant damage in the storm.

As all but one of our restaurants was located in timeshare developments, the storm impacted travel to Florida during this time

and is now reaching prior levels.

Cost of goods sold during the year ended

December 31, 2018 was $209,568 compared to $300,958 during the year ended December 31, 2017 a decrease of $91,390 as a result

of significantly lower sales levels in 2018.

Cost of sales as a percentage of sales was 47.2% and 40.6%, respectively for the

years ended December 31, 2018 and 2017, respectively.

We are not as efficient in terms of cost of sales at lower revenue levels.

We expect our cost of sales as a percentage of sales to be reduced if and when sale levels increase.

During the year ended December 31, 2019, we

generated $461,298 in revenues, compared to revenues of $444,421 in revenue during the same period in 2018, an increase of $16,877,

or approximately 3.8%.

As a result of the COVID-19 pandemic, all of our restaurants are currently closed, and when we do open the

stores we expect volume to be negatively impacted.

As a result, we expect our revenue in 2020 to be significantly lower than in

The magnitude of the impact, the duration of the pandemic and the timing on our restaurant re-opening is currently indeterminable.

Cost of goods sold during the year ended December

31, 2019 was 214,357 compared to $209,568 during the year ended December 31, 2018.

Cost of sales as a percentage of sales was consistent

at 46.5% and 47.2%, for the years ended December 31, 2019 and 2018, respectively.

We are more efficient in terms of cost of sales

at higher revenue levels.

We expect our cost of sales as a percentage of sales to be reduced, if higher revenue levels increase.

Operating expenses

Operating expense decreased during

the year ended December 31, 2018, to $591,589 from $1,054,535 during 2017, a decrease of $462,946.

This decrease is primarily

attributable to $468,500 in non-cash stock-based compensation in the 2017 period compared to zero in 2018.

During 2018 compared

to 2017, payroll expense decreased $68,185 due to lower sales volume and fewer stores in operation;

general and administrative

expense decreased by $17,513.

In 2018 we incurred an increase in professional fees of $101,480 which is attributable to expenses

incurred in our becoming a public reporting company.

Operating expense increased during the

year ended December 31, 2019, to $3,011,531 from $591,589 during the same period in 2018.

Operating results for 2019 include a

non-cash charge of $2,309,897 for stock issuances compared to zero in the 2018 period.

During 2019 compared to 2018, payroll expense

increased $60,553 primarily due to the addition of a group manager for the restaurants;

general and administrative expense increased

by $80,247 due to expense increases in numerous expense line items including outside services, utilities and maintenance and repairs;

and rent expense increased $22,048.

These increases were partially offset by a decrease in consulting and professional fees of

Other income and expense

Other income and expenses were $339,362

in net expense for the year ended December 31, 2018, compared to net expense of $48,336 during 2017.

in net expense for the year ended December 31, 2019, compared to a net expense of $114,286 during 2018.

The increase in net expense

of $65,950 is primarily attributable to an increase in interest expense of $101,995 related to the expensing of the beneficial

conversion feature of the convertible notes compared to interest expense relating to loans in 2017.

We incurred a net loss attributable to

Kisses from Italy, Inc.

during the year ended December 31, 2018 of $445,448 or $0.01 per share, compared to a net loss of attributable

of $225,076 is attributable to an increase in interest expense due to the expensing of the beneficial conversion feature of the

convertible notes and Series C Preferred Stock, and the recording of interest on higher levels of debt.

Except for one $10,000

note holder, all of our interest-bearing debt instruments amounting to $656,196 were converted to equity on September 30, 2019.

We incurred a net loss attributable

to Kisses from Italy, Inc.

of $650,932 for the year ended December 31, 2017, or a decrease in net loss of $205,484.

in net loss attributable to Kisses from Italy, Inc.

is attributable to stock-based compensation expense of $468,500 in 2017 compared

to zero in 2018, offset by a decline in gross margin in 2018 of $204,601 due to reduced revenues.

during the year ended December 31, 2019 of $3,082,860 or $0.03 per share, compared to a net loss of

attributable to Kisses from Italy Inc.

of $445,448 for the year ended December 31, 2018, or an increase in net loss of $2,637,412.

The increase in net loss attributable to Kisses from Italy, Inc.

is primarily attributable to stock-based compensation expense

of $2,309,897 in 2019 compared to zero in 2018, and due to an increase in interest expense of $225,076 in 2019 above 2018 levels.

and Capital Resources

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$422,871 during the year ended December 31, 2019, compared to $267,172 during the year ended December 31, 2018.

This increase

in the cash used in the year ended December 31, 2018, compared to the similar period in 2017 was primarily to an increased loss

in 2018 compared to the loss in 2017, net of stock-based compensation expense.

Cash flows provided or used in investing

activities were $-0- during the year ended December 31, 2018 compared to $671 in 2017.

This increase in

the cash used in the year ended December 31, 2019, compared to the similar period in 2018 was primarily due to an increased operating

loss in 2019 of $3,082,860 compared a loss of $445,445 in 2018, offset by non-cash stock-based compensation expense of 2,309,897

in 2019 compared to zero during the same period in 2018.

Cash flows used in investing activities

were $12,069 for the purchase of equipment of which $10,069 was for our new Bari location in Italy during the year ended December

31, 2019 compared to $-0- in 2018.

Cash flows provided by financing activities

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December 31, 2018.

The increase is attributable to proceeds from convertible notes we received in 2018 of $277,650 offset by net

repayments on loan balance in 2018 of $36,904, compared to proceeds of $135,000 from the sale of our stock in 2017 and proceeds

from short term borrowings of $32,674.

The amount of capital we raise will vary from period to period based on the effectiveness

of our fund-raising efforts.

The increase is attributable to proceeds from convertible notes we received in 2019 of $388,547 compared to

277,650 in 2018, proceeds from the sale of preferred stock in 2019 of $50,000 compared to $-0- in 2018, and proceeds from loan

balances in 2019 of $357 compared to net loan repayments of ($39556) in 2018.

The amount of capital we raise will vary from period

to period based on the effectiveness of our fund-raising efforts.

Our consolidated financial statements have

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from less expensive (in terms of the interest rate) convertible debt that was applied against loan balances.

During 2016 and 2017 we raised an aggregate

of $304,875 from the sale of our Common Stock, including the sale of 1,350,000 shares in 2017 and 1,698,750 shares in 2016.

utilized these funds to implement our business plan, including the opening of our 3 restaurants and development and commencement

of the sale of franchises.

In order to continue this development, including opening additional company-owned restaurants and continuing

to develop and enhance marketing of our franchise concept, we estimate we will need approximately $1 million in additional capital.

We believe we can open at least 2 additional locations for approximately $300,000.

We intend to use the balance of the funds to

either open additional locations or on franchise marketing.

We believe that by continuing to open company-owned restaurants we

can use these locations to market the franchises.

We have no agreement with any investment

banking or other financing source to provide us with funding.

We can provide no assurance that additional funding will be available

on a timely basis, on terms acceptable to us, or at all.

While we have had discussions with potential investors and investment

bankers, we have no agreement with any third party to provide us this additional financing and there can be no assurances that

we will obtain this financing, either debt or equity or both, on favorable terms, or at all.

Our inability to receive this financing

may have a significant negative impact on our continued development and results of our operations.

In April 2018, we commenced a private

offering of convertible debentures (the “Debentures”) to non-residents of the US.

These Debentures accrue interest

at the rate of 8% per annum and are convertible into shares of our Common Stock beginning upon issuance until such time as our

Common Stock is approved for trading, of which there is no assurance, at a conversion rate of $0.0667 per share.

Interest is payable

annually, on or before February 15 of each year.

The Debentures matures 3 years after the issuance date.

As of the date hereof,

an aggregate of $277,650 in Debentures have been issued.

None have been converted.

Although our operations are influenced

by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the

year ended December 31, 2018.

In order to continue the development of

the Company, including opening additional company-owned restaurants and continuing to develop and enhance marketing of our franchise

concept, we estimate we will need approximately $1 million in additional capital.

We believe we can open at least 2 additional

locations for approximately $300,000.

We intend to use the balance of the funds to either open additional locations or on franchise

We believe that by continuing to open company-owned restaurants we can use these locations to market the franchises.

Historically we have raised cash from

the proceeds from the private placement of our shares, and through the sale of convertible debentures.

We have no agreement with

any investment banking or other financing source to provide us with funding.

We can provide no assurance that additional funding

will be available on a timely basis, on terms acceptable to us, or at all.

While we have had discussions with potential investors

and investment bankers, we have no agreement with any third party to provide us this additional financing and there can be no

assurances that we will obtain this financing, either debt or equity or both, on favorable terms, or at all.

Our inability to

receive this financing may have a significant negative impact on our continued development and results of our operations.

SHEET ARRANGEMENTS

no off-balance sheet arrangements.

Although our operations are influenced by general

economic conditions, we do not believe that inflation had a material effect on our results of operations during the year ended

December 31, 2019.

Accounting Policies and Estimates

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judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Stock-based Compensation

We account for stock-based compensation using the fair value method following the guidance set forth in section 718-10

of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation.

This section requires a public entity

to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value

of the award (with limited exceptions).

That cost will be recognized over the period during which an employee is required to provide

service in exchange for the award- the requisite service period (usually the vesting period).

No compensation cost is recognized

for equity instruments for which employees do not render the requisite service.

Stock-based Compensation –

We account for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB

Accounting Standards Codification for disclosure about Stock-Based Compensation.

This section requires a public entity to measure

the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the

award (with limited exceptions).

That cost will be recognized over the period during which an employee is required to provide service

in exchange for the award- the requisite service period (usually the vesting period).

No compensation cost is recognized for equity

instruments for which employees do not render the requisite service.

Leases –

the guidance in ASC 840 “

We follow the

guidance in ASC 840 “

Leases ,”

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whether they represent operating or capital leases at the inception of the lease.

On November 15, 2019, the FASB has issued

ASU 2019-10, which amends the effective dates for three major accounting standards.

The ASU defers the effective dates for

the credit losses, derivatives and leases standards (ASC 842) for certain companies.

Since we are classified as a “small

reporting company”

and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to January 1, 2021.

ASC 842 will be effective for us beginning

on January 1,2021.

While we continue to evaluate the impact of the new standard, we expect the adoption of this guidance will have

not have any impact on our financial statements.

Accounting Pronouncements

January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers

(“ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January

Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts

are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605.

As of and for the

year ended December 31, 2018, our consolidated financial statements were not materially impacted as a result of the application

of Topic 606 compared to Topic 605.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company and

are not required to provide the information under this item pursuant to Regulation S-K.

Under the Jumpstart Our Business Startups

Act, or the JOBS Act, we meet the definition of an “emerging growth company.”

We have irrevocably elected to opt out

of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the

As a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such

standards is required for non- emerging growth companies.

1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC

606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018.

Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted

and continue to be reported in accordance with our historic accounting under ASC 605.

As of and for the year ended December

31, 2018, our consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared

to Topic 605.

In February 2016, the FASB issued ASU No.

2016-02, Leases

(Topic 842) , which establishes a new lease accounting model for lessees.

The updated guidance requires an entity to recognize

assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures.

The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018,

with early adoption permitted.

In March 2019, the FASB issued ASU 2019-01, Codification Improvements , which clarifies

certain aspects of the new lease standard.

The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in

Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional

transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings.

The amendments have the same effective date and transition requirements as the new lease standard.

On November 15, 2019, the FASB has issued

ASU 2019-10, which amends the effective dates for three major accounting standards.

The ASU defers the effective dates for the

credit losses, derivatives and leases standards (ASC 842) for certain companies.

Since we are classified as a “small reporting

company”

and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to January 1, 2021.

ASC 842 will be effective for us beginning

on January 1,2020.

While we continue to evaluate the impact of the new standard, we expect the adoption of this guidance will have

not have any impact on our financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

We are a smaller reporting company and are

not required to provide the information under this item pursuant to Regulation S-K.

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 5. Market for Registrant’s Common Equity