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Item 5. Market for Registrant’s Common Equity

2021-04-15 compared with 2020-05-18 · 221 added, 271 removed, 38 unchanged (93% of the section changed)

MARKET FOR REGISTRANT’S

COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANT’S COMMON

EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

3 unchanged sentences

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

holders of record for our Common Shares.

On April 12, 2021 the closing price

on the OTCQB of our common stock was $0.165.

As of April 12, 2021, we had 107 holders of record

of our common stock.

Dividend Policy

1 unchanged sentence

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,

capital requirements, and operating financial conditions.

The Securities Enforcement

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 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,

prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document

prepared by the Commission, which:

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities Act of 1934, as amended;

contains a brief, clear, narrative description of a dealer market, including "bid"

and "ask"

prices for penny stocks and the significance of the spread between the bid and ask price;

contains a toll-free telephone number for inquiries on disciplinary actions;

defines significant terms in the disclosure document or in the conduct of trading penny stocks;

contains such other information and is in such form (including language, type, size, and format) as the Securities and Exchange Commission shall require by rule or regulation.

The broker-dealer also must provide, prior

to effecting any transaction in a penny stock, to the customer:

the bid and offer quotations for the penny stock;

the compensation of the broker-dealer and its salesperson in the transaction;

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock;

monthly account statements showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require

that prior to a transaction in a penny stock not otherwise exempt from those rules;

the broker-dealer must make a special written

determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment

of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated

copy of a written suitability statement.

These disclosure requirements will have the effect of reducing the trading activity in

the secondary market for our stock because it will be subject to these penny stock rules.

Therefore, stockholders may have difficulty

selling their securities.

Stock Transfer Agent

We have retained ClearTrust Stock Transfer,

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

FINANCIAL DATA.

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, capital requirements,

and operating financial conditions.

SELECTED FINANCIAL

Not applicable.

1 unchanged sentence

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.

In connection with, and because we desire

to take advantage of, the “safe harbor”

provisions of the Private Securities Litigation Reform Act of 1995, we caution

readers regarding certain forward-looking statements in the following discussion and elsewhere in this Report and in any other

statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission.

Forward-looking

statements are statements not based on historical information and which relate to future operations, strategies, financial results

or other developments.

Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject

to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many

of which, with respect to future business decisions, are subject to change.

These uncertainties and contingencies can affect actual

results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or

on our behalf.

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 to take advantage of,

the “safe harbor”

provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain

forward-looking statements in the following discussion and elsewhere in this Report and in any other statement made by, or on our behalf,

whether or not in future filings with the Securities and Exchange Commission.

Forward-looking statements are statements not based on historical

information and which relate to future operations, strategies, financial results, or other developments.

Forward-looking statements are

necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties,

and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change.

These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed

in any forward-looking statements made by, or on our behalf.

We disclaim any obligation to update forward-looking statements.

1 unchanged sentence

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,

all in Southern Florida, through a working relationship with Wyndham Hotels.

In September 2017, Hurricane Irma caused significant

damage to the area.

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, all in Southern

Florida, through a working relationship with Wyndham Hotels.

In September 2017, Hurricane Irma caused significant damage to the area.

As a result, we closed all of our stores for renovation following the storm.

We reopened two of these locations

but elected not to reopen our 4 th location.

We reopened two of these locations but elected not to reopen

our 4 th location.

See “Business - Restaurant Development”

If we are able

to raise additional capital, of which there is no assurance, our intention is to own and operate up to 10 of our restaurants and

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

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

Our principal offices are located at 80 SW 8 th St.

Suite 2000, Miami, Florida, 33130, telephone (305) 423-7129

and our website is www.kissesfromitaly.com.

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 adjustments that might result from

the outcome of this uncertainty.

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

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.”

If we are able to raise additional capital, of

which there is no assurance, our intention is to own and operate up to 10 of our restaurants and 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 mid to the end of 2021, however, due to the COVID -19

pandemic there can be no assurances.

In May of 2019, we began the initial steps of

developing our first European restaurant location, which is located at Strada Provinciale 70 #100, Ceglie del Campo, 70129, Bari, Italia.

Our European location began its operation on October 24, 2019.

Our European location will also act as our distribution center for European

products destined for our current locations and future corporate-owned and franchised locations.

The Bari location was closed in the fourth

quarter of 2021 and currently remains closed as of the date of this Report due to Covid-19.

In January of 2020, Kisses From Italy signed its

first Franchise Agreement for the state of California.

Due to the onset of COVID the opening was delayed and is set to op in the second

quarter of 2021.

In June of 2020, the Company signed a Multi-Unit

Development deal for 100 locations in Canada with Demasar Management, who will be taking the lead for franchise expansion and assisting

in the Canadian brand building for the Kisses From Italy brand.

In September of 2020, we decided to enter retail

food and grocery stores with Kisses From Italy branded products in Canada.

The product launch began in November of 2020 and Kisses From

Italy Branded products were in nine retail stores by the end of 2020.

At the end of Q1 2021 Kisses From Italy branded products are in

over 20 stores across Ontario and Quebec in Canada.

of Operations

2 unchanged sentences

Revenue and Cost of Sales

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.

Total revenues for the year ended December 31,

2020 was $514,038 compared to $461,298 during the same period ended December 31, 2019.

The 2020 revenues are comprised of 222,453 in

food sales and $291,585 in franchise sales.

2019 revenues are comprised of $461,298 in food sales and zero in franchise sales.

During the year ended December 31, 2020, our revenues

from food sales at our restaurants were $222,453 compared to $461,298 for the year ended December 31, 2019, representing a decrease of

We believe the decrease in revenue is attributable to the Covid-19 mandated shutdowns at various times during 2020 as well as

Covid mandated capacity restrictions of all of our locations.

During 2020, we entered into a Development Agreement

in which we received a fee of 400,000 CAD, or $291,585.

This fee falls under the guidelines of ASC 606 which states that the entire amount

of revenue can be recognized because we have no future performance obligations associated with the Agreement, and the fee is non-refundable.

As a result, we recorded the entire amount as revenue during the year ended December 31, 2020.

Franchise sales for the year ended December

31, 2020 were $291,585 compared to no franchise sales during the year ended December 31, 2019.

During the fourth quarter of 2020 we began offering

our branded products to retail locations in Canada.

For the year ended December 31, 2020 we generated $5,761 in revenues compared to $-0-

in the prior period.

Currently these retail sales for 2021 are trending 25-30% higher than the fourth quarter of 2020.

These revenues

were included in food sales on our Statements of Operations for the period ended December 31, 2020.

Cost of goods sold during the year ended December

31, 2020, was $114,101 compared to $214,357 during the year ended December 31, 2019.

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.

This decrease is attributable to lower sales volumes

due to the impact of Covid-19.

Operating expenses

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

Operating expense increased to $3,640,846 during

the year ended December 31, 2020, compared to $3,011,531 during the year ended December 31, 2019.

The increase is primarily attributable

to 3,028,201 in stock-based compensation expense in the year ended December 31, 2020, compared to stock-based compensation of 2,309,797

in the year ended December 31, 2019.

Excluding the stock-based compensation, operating expenses were $612,645 for the year ended December

31, 2020 compared to $701,734 or the year ended December 31, 2019, representing a decrease of $89,089.

This decrease is primarily attributable

to a reduction in payroll expenses of $111,699 due to the impact of Covid-19 on sales levels.

Due to the impact of Covid-19 the Company has

begun a process to reduce its store operating expenses.

There can be no assurance the Company will be successful in doing so.

Other income and expense

Other income and expenses were $339,362

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 $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.

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.

Other expense was $497,367 during the year ended

December 31, 2020, compared to $339,362 during the year ended December 31, 2019.

The increase in other expenses is attributable to increased

interest expense due to the issuance of Series C preferred stock with a beneficial conversion features that was charged to interest expense

during the year ended December 31, 2020.

During the year ended December 31, 2020, we incurred

a net loss of $3,738,522 and a net loss of $29,120 attributable to non-controlling interests, compared to a net loss of $3,103,952 and

a net loss of $21,092 attributable to non-controlling interests for the year ended December 31, 2019.

The increase in the net loss during

the year ended December 31, 2020 is primarily attributable to an increase in operating expenses of $629,315 and an increase in interest

expense of $158,251 offset by an increase of $152,996 in gross profit margin.

and Capital Resources

At December 31, 2019, we had $26,841 in

On December 31, 2020, we had $37,336 in

Net cash used in operating activities was $169,984

during the year ended December 31, 2020, compared to $422,871 during the year ended December 31, 2019.

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

was $438,904 for the year ended December 31, 2019 compared to cash used in financing activities of $238,094 for the year ended

December 31, 2018.

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

been prepared assuming we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities

in the normal course of business for the twelve-month period following the date of our financial statements.

We have incurred annual

losses since inception and expect to incur additional losses in future periods.

We have one asset-based line of credit

The amount of credit available to be accessed is dependent on the amount of documented credit receipts received by

our restaurants.

The due dates on these credit advances are typically between 90 and 180 days.

The interest rates on this facility

is approximately 25%, plus additional processing fees of approximately 5%.

As of December 31, 2019, and December 31 2018, loan

payable balances were $6,000 and $5,643 respectively.

The amount of loans outstanding was significantly reduced due to proceeds

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

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.

This decrease in the cash used

in the year ended December 31, 2020, was primarily due to a decreased loss in the year ended December 31, 2020, net of stock based compensation.

Cash flows used in investing activities were $1,136

for the purchase of equipment in the year ended December 31, 2020 compared to cash used in operating activities of $12,069 during the

same period in 2019 for the purchase of equipment for the Bari, Italy restaurant.

Cash flows provided by financing activities was

$181,761 for the year ended December 31, 2020 compared to cash provided in financing activities of $438,904 for the year ended December

The decrease is primarily attributable to proceeds from convertible notes we received in the year ended December 31, 2019 of

$388,547 compared to no proceeds in the year ended December 31, 2020 offset by proceeds from the sale of preferred stock in the year ended

December 31, 2020 of $155,600 compared to no proceeds in the year ended December 31, 2019.

GOING CONCERN

Our consolidated financial statements have been

prepared assuming we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in

the normal course of business for the twelve-month period following the date of our financial statements.

We have incurred annual losses

since inception and expect to incur additional losses in future periods.

In addition, the Company continues to experience

negative cash flows from operations.

Also, if the Company is unable to obtain adequate capital due to the continued spread of Covid-19,

the Company may be required to further reduce the scope, delay, or eliminate some or all of its planned operations.

These factors, among

others, raise substantial doubt about the Company's ability to continue as a going concern, These factors raise substantial doubt about

the Company's ability to continue as a going concern.

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

outcome of this uncertainty.

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 financing will have a significant negative impact

on our continued development and results of our operations.

OFF-BALANCE SHEET ARRANGEMENTS

We have 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.

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

Accounting Policies and Estimates

Critical accounting estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial

statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation

of these consolidated financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities,

revenues and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates

based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the

results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent

from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

The following represents

a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal

of our financial condition and results of operations and that require management’s most difficult, subjective or complex

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

Critical accounting estimates –

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,

which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these consolidated

financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses,

and related disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates based on historical experience

and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making

judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ

from these estimates under different assumptions or conditions.

The following represents a summary of our critical accounting policies,

defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations

and that require management’s most difficult, subjective, or complex 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.

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 –

We follow the

guidance in ASC 840 “

We follow the guidance

in ASC 840 “

Leases ,”

which requires us to evaluate the lease agreements we enter into to determine

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.

which requires us to evaluate the lease agreements we enter into to determine 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 “emerging growth company”

and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to December 15, 2021.

ASC 842 will be effective for us beginning on

December 15, 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

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.

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 JOBS Act.

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.

On 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 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.

1 unchanged sentence

(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.

The updated guidance requires an entity to recognize assets

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

guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption

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 July 2018.

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 “emerging growth company”

and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to December 15, 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.

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.

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