What changed in this filing

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Item 1A. Risk Factors

2023-04-17 compared with 2022-04-15 · 69 added, 79 removed, 489 unchanged (23% of the section changed)

Factors Associated with COVID-19

extent to which the coronavirus (“COVID-19”) outbreak impacts our business, results of operations and financial condition

will depend on future developments, which cannot be predicted.

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Additionally,

856 makes it illegal 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

856 makes it illegal 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 pre-empted

by state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely result in the Company’s

clients’

inability to proceed with their operations, which would adversely affect demands for the Company’s products.

Company’s operations are subject to various laws, regulations and guidelines relating to the manufacture, management, transportation,

by state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely result in the Company’s

clients’ inability to proceed with their operations, which would adversely affect demands for the Company’s products.

Company’s operations are subject to various laws, regulations and guidelines relating to the manufacture, management, transportation,

storage and disposal of cannabis but also including laws and regulations relating to health and safety, the conduct of operations and

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Investors are cautioned that in the United States, cannabis is largely regulated at the state level.

Company’s knowledge, there are to date a total of 38 states, and the District of Columbia, that have now legalized cannabis

in some form, including California, Nevada, New York, Florida, Illinois and Arizona.

Company’s knowledge, there are to date a total of 33 states, and the District of Columbia, that have now legalized cannabis in

some form, including California, Nevada, New York, Florida, Illinois and Arizona.

Notwithstanding the permissive regulatory environment

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cannabis produced.

Consumer perception of the Company’s products can be significantly influenced by scientific research or findings,

regulatory investigations, litigation, media attention and other publicity regarding the consumption of cannabis products.

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or publicity will be favorable to the medical cannabis market or any product, or consistent with earlier publicity The Company and its

wholly owned subsidiaries face an inherent risk of exposure to product liability claims, regulatory action and litigation if its

products are alleged to have caused significant loss or injury.

Greater access to medical cannabis, through home and designated growing

and illegal dispensaries, may decrease the number of patients registering with the Company and may cause registered patients to leave

the Company and grow for themselves.

Any significant interruption or negative change in the availability or economics of the supply chain

for key inputs could materially impact the business, financial condition and operating results of the Company and if the Company is unable

to continually innovate and increase efficiencies, its ability to attract new customers may be adversely affected.

wholly-owned subsidiaries face an inherent risk of exposure to product liability claims, regulatory action and litigation if its products

are alleged to have caused significant loss or injury.

Greater access to medical cannabis, through home and designated growing and illegal

dispensaries, may decrease the number of patients registering with the Company and may cause registered patients to leave the Company

and grow for themselves.

Any significant interruption or negative change in the availability or economics of the supply chain for key

inputs could materially impact the business, financial condition and operating results of the Company and if the Company is unable to

continually innovate and increase efficiencies, its ability to attract new customers may be adversely affected.

The Company may become

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The United States federal government regulates drugs through the Controlled Substances Act (21 U.S.C.

§ 811), which

places controlled substances, including cannabis, in a schedule.

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If the federal government begins to enforce federal laws relating to cannabis in states where the sale and use of cannabis

is currently legal, or if existing applicable state laws are repealed or curtailed, the Company’s business, results of operations,

financial condition and prospects would be materially adversely affected.

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2014, when 7 U.S.

Code §5940 became federal law as part of the Agricultural Act of 2014 (the “2014 Farm Act”), products

containing oils derived from hemp, notwithstanding a minimal or non-existing THC content, were classified as Schedule I illegal drugs.

The 2014 Farm Act expired on September 30, 2018, and was thereafter replaced by the Agricultural Improvement Act of 2018 on December

20, 2018 (the “2018 Farm Act “), which amended various sections of the U.S.

Code, thereby removing hemp, defined as cannabis

with less than 0.3% of THC, from Schedule 1 status under the Controlled Substances Act (“CSA”), and legalizing the cultivation

and sale of hemp at the federal level, subject to compliance with certain federal requirements and state law, amongst other things.

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2018 Farm Bill also shifted regulatory authority from the Drug Enforcement Administration to the Department of Agriculture.

Farm Bill did not change the United States Food and Drug Administration’s (“FDA”) oversight authority over CBD products.

The 2018 Farm Act delegated the authority to the states to regulate and limit the production of hemp and hemp derived products within

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the FDA has indicated its view that certain types of products containing CBD may not be permissible under the United States Federal Food,

Drug and Cosmetic Act (“FDCA”).

The FDA’s position is related to its approval of Epidiolex, a marijuana-derived prescription

Drug and Cosmetic Act (“FDCA”).

The FDA’s position is related to its approval of Epidiolex, a marijuana-derived prescription

medicine to be available in the United States.

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On December 20, 2018, after the passage of

the 2018 Farm Bill, FDA Commissioner Scott Gottlieb issued a statement in which he reiterated the FDA’s position that, among other

things, the FDA requires a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with

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our business, which may expose us to additional risk and financial liability .

that is otherwise readily available, such as general liability, and directors and officer’s insurance, may become more difficult

for us to find, and more expensive, due to our intended launch of certain products containing Cannabis.

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state-licensed or permitted cannabis operators, if any.

Notwithstanding the Company’s efforts, regulatory compliance and the process

of obtaining regulatory approvals can be costly and time-consuming.

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licenses, permits or cards to operate its businesses.

addition, local laws and ordinances could restrict the Company’s business activity.

Although legal under the laws of the states

in which the Company’s business will operate, local governments have the ability to limit, restrict, and ban cannabis businesses

from operating within their jurisdiction.

Land use, zoning, local ordinances, and similar laws could be adopted or changed, and have

a material adverse effect on the Company’s business.

Company is aware that multiple states are considering special taxes or fees on businesses in the marijuana industry.

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This could have a

material adverse effect upon the Company’s business, results of operations, financial condition or prospects.

is no assurance that the Company will obtain and retain any relevant licenses.

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This can result in, among other things, market,

pricing and supply risks, which may have a material effect on the Company’s business, financial condition and operations.

Company is subject to restricted access to banking.

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These statutes can impose criminal liability

for engaging in certain financial and monetary transactions with the proceeds of a “specified unlawful activity”

for engaging in certain financial and monetary transactions with the proceeds of a “specified unlawful activity” such as

distributing controlled substances which are illegal under federal law, including cannabis, and for failing to identify or report financial

transactions that involve the proceeds of cannabis-related violations of the CSA.

February 2014, the Financial Crimes Enforcement Network (“FinCEN”) bureau of the U.S.

Treasury Department issued guidance

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The inability or limitation in the

Company’s ability to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments

may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

March 18, 2021, the Secure and Fair Enforcement Banking Act (the “SAFE Banking Act”) was reintroduced in the House of Representatives.

On March 23, 2021, the bill was reintroduced in the Senate as well.

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includes the provisions of the SAFE Banking Act.

The America COMPETES Act now advances to the Senate for consideration.

As written, the

SAFE Banking Act would allow financial institutions to provide their services to state-legal cannabis clients and ancillary businesses

serving state-legal cannabis businesses without fear of federal sanctions.

There is no guarantee the SAFE Banking Act will become law

in its current form, if at all.

The America COMPETES Act advanced to the Senate for consideration, but again stalled.

As written, the SAFE Banking Act would allow financial institutions to provide their services to state-legal cannabis clients and ancillary

businesses serving state-legal cannabis businesses without fear of federal sanctions.

There is no guarantee the SAFE Banking Act will

become law in its current form, if at all.

Company is subject to constraints on marketing products.

development of the Company’s business and operating results may be hindered by applicable restrictions on sales and marketing activities

imposed by government regulatory bodies.

The regulatory environment in the United States limits the Company’s ability to compete

for market share in a manner similar to other industries.

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market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices

for its products, the Company’s sales and operating results could be adversely affected.

Company is subject to unfavorable tax treatment of cannabis businesses.

Section 280E (“Section 280E”) of the United States Internal Revenue Code of 1986, as amended (the “U.S.

Tax Code”),

“no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business

Section 280E (“Section 280E”) of the United States Internal Revenue Code of 1986, as amended (the “U.S.

“no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business

if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances

(within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State

in which such trade or business is conducted.”

This provision has been applied by the U.S.

in which such trade or business is conducted.” This provision has been applied by the U.S.

Internal Revenue Service to cannabis

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regulations or guidelines, issued, administered or enforced by governmental authorities in the United States

the event that any of the Company’s license agreements, or any proceeds thereof, in the United States were found to be in violation

of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes

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to have caused significant loss or injury.

In addition, the sale of the Company’s products would involve the risk of injury to

consumers due to tampering by unauthorized third parties or product contamination.

Previously unknown adverse reactions resulting from

human consumption of the Company’s products alone or in combination with other medications or substances could occur.

may be subject to various product liability claims, including, among others, that the Company’s products caused injury or illness

human consumption of the Company’s products alone or in combination with other medications or substances could occur.

may be subject to various product liability claims, including, among others, that the Company’s products caused injury or illness

or death, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with

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A product liability claim or regulatory action against the Company could result in increased costs, could adversely

affect the Company’s reputation with its clients and consumers generally, and could have a material adverse effect on the business,

results of operations and financial condition of the Company.

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The inability to obtain sufficient insurance coverage on reasonable

terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of the Company’s

potential products.

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or inaccurate labeling disclosure.

If any of the Company’s products are recalled due to an alleged product defect or for any other

reason, the Company could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection

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to avoid unforeseen product recalls, regulatory action or lawsuits.

Additionally, if one of the Company’s significant brands were

subject to recall, the image of that brand and the Company could be harmed.

A recall for any of the foregoing reasons could lead to decreased

demand for the Company’s products and could have a material adverse effect on the results of operations and financial condition

of the Company.

Additionally, product recalls may lead to increased scrutiny of the Company’s operations by the U.S.

Food and Drug

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of properties located in close proximity to our properties may assert claims against us regarding the use of our properties, including

assertions that the use of the property constitutes a nuisance that diminishes the market value of such owner’s nearby property.

Such property owners may also attempt to assert such a claim in federal court as a civil matter under the Racketeer Influenced and Corrupt

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costs to defending ourselves against such a claim, and if a property owner were to be successful on such a claim, our tenants may be

unable to continue to operate their business in its current form at the property, which could materially adversely impact the tenant’s

business and the value of our property, our business and financial results and the trading price of our securities.

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a market for our common stock does not develop, shareholders may be unable to sell their shares.

common stock is quoted under the symbol “KOAN”

on the OTCQB.

common stock is quoted under the symbol “KOAN” on the OTCQB.

We do not currently have a consistent active trading market.

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These factors could have a material adverse effect on our business, financial condition and results of operations.

of our securities may be restricted by virtue of state securities “blue sky”

laws, which prohibit trading absent compliance

of our securities may be restricted by virtue of state securities “blue sky” laws, which prohibit trading absent compliance

with individual state laws.

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of our common stock may be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions,

commonly referred to as “blue sky”

commonly referred to as “blue sky” laws.

Absent compliance with such individual state laws, our common stock may not be traded

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The restricted access to cannabis banking makes it more difficult for cannabis investors to clear their stock from a Transfer Agent

(“TA”) to their brokerage of choice.

We can provide no assurances to investors of our stock that they will have the ability

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insiders and other large stockholders.

As “affiliates”

of Resonate, as defined under Securities and Exchange Commission Rule

As “affiliates” of Resonate, as defined under Securities and Exchange Commission Rule

144 under the Securities Act of 1933, our principal stockholders, other of our insiders and other large stockholders may only sell their

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of our common stock.

Our Board of Directors’

authority to issue preferred stock could discourage potential takeover attempts or

Our Board of Directors’ authority to issue preferred stock could discourage potential takeover attempts or

could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult

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without their approval.

capital raises may dilute our existing stockholders’

ownership and/or have other adverse effects on our operations.

we raise additional capital by issuing equity securities, our existing stockholders’

percentage ownership will be reduced, and

capital raises may dilute our existing stockholders’ ownership and/or have other adverse effects on our operations.

we raise additional capital by issuing equity securities, our existing stockholders’ percentage ownership will be reduced, and

these stockholders may experience substantial dilution.

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to the company or its shareholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a

director or officer unless it is proven that (1) the director’s or officer’s act or failure to act constituted a breach of

his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud

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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