What changed in this filing

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Item 1A. Risk Factors

2021-02-26 compared with 2020-03-02 · 213 added, 88 removed, 166 unchanged (64% of the section changed)

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Risks Related to Our Business

The success of our business is dependent on our ability to maintain and grow our network of OPTA VIA Coaches .

OPTA VIA Coaches are subject to high turnover and we depend on our network of OPTA VIA Coaches to continually grow their businesses by attracting, training and motivating new OPTA VIA Coaches.

We consider our number of OPTA VIA Coaches and revenue per OPTA VIA Coach to be key indicators of our financial performance and condition.

As of December 31, 2019, the Company had 31,800 total active earning OPTA VIA Coaches and the average quarterly revenue per earning OPTA VIA Coach was $5,229.

The failure to provide the tools and competitive compensation necessary to motivate OPTA VIA Coaches to grow their businesses will adversely affect our future growth and operating results.

The growth and sustainability of our network of OPTA VIA Coaches is also subject to risks which may be outside of our control.

These include:

● Negative public perceptions of multi-level marketing;

● General economic conditions;

● Failure to develop innovative products to meet consumer demands;

● Adverse opinions of our products, services, or industry;

● Regulatory actions against our Company, competitors in our industry, or other direct selling companies.

Our direct selling model may be challenged both domestically and abroad which could harm our business.

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Any adverse rulings or legal actions could impact our business if direct selling laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling companies.

For example, in 2015 the FTC took aggressive actions against a multi-level marketing company alleging an illegal business model and inappropriate earnings claims.

If our OPTA VIA Coaches make improper claims regarding our products or business, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business.

In 2016, the FTC entered into a settlement with another multi-level marketing company, requiring the company to modify its business model, including basing sales compensation and qualification only on sales to retail and preferred customers and on purchases by a distributor for personal consumption within allowable limits.

For example, in 2016, the FTC entered into a settlement with another multi-level marketing company, requiring the company to modify its business model, including basing sales compensation and qualification only on sales to retail and preferred customers and on purchases by a distributor for personal consumption within allowable limits.

Although this settlement does not represent judicial precedent or a new FTC rule, the FTC has indicated that the industry should look at this settlement, and the principles underlying its specific measures, for guidance.

If the requirements in this settlement lead to new industry standards or new rules, our business could be impacted and we may need to amend our compensation plan with our OPTA VIA Coaches.

With a majority of our revenue in the United States coming from direct sales through our network of OPTA VIA Coaches, we believe that we can demonstrate consumer demand for our products, but we

continue to monitor developments to assess whether we should make any changes to our compensation structure.

Similarly, in 2019, the FTC took aggressive actions against a multi-level marketing company, which ultimately led to the company being permanently prohibited from using a multilevel compensation plan in the United States.

We continue to monitor developments to assess whether we should make any changes to our compensation structure.

If we are required to make changes or if the FTC seeks to enforce similar measures in the industry, either through rulemaking or an enforcement action against us, our business could be harmed.

In addition, the FTC has increased its scrutiny of the use of testimonials, which we also utilize, as well as the role of endorsers.

We cannot be sure that the FTC will not challenge our advertising or other operations in the future, which could have a material adverse effect on our business.

Governmental regulations in countries where we plan to commence or expand operations may prevent or delay entry into those markets.

In addition, our ability to sustain satisfactory levels of sales in our markets is dependent in significant part on our ability to introduce new products into such markets.

In addition, our ability to sustain satisfactory levels of sales in our markets is dependent in significant part on our ability to introduce innovative products into such markets.

However, governmental regulations in our markets, both domestic and international, can delay or prevent the introduction, or require the reformulation or withdrawal, of certain of our products.

Any such regulatory action, whether or not it results in a final determination adverse to us, could create negative publicity, with detrimental effects on the motivation and recruitment of OPTA VIA Coaches and, consequently, on sales.

Any such regulatory action, whether or not it results in a final determination adverse to us, could

create negative publicity, with detrimental effects on the motivation and recruitment of OPTA VIA Coaches and, consequently, on sales.

We could also be subject to challenges by private parties in civil actions.

We are aware of recent civil actions against other companies in the United States that use a direct sales model, which have and may in the future result in significant settlements.

We are aware of recent civil actions against other companies in the United States that use a direct selling model, which have and may in the future result in significant legal costs.

Allegations against companies that use a multi-level marketing strategy in various markets have also created intense public scrutiny of companies in the direct selling industry.

Similarly, the FTC continues to scrutinize multi-level marketers.

In 2020, the FTC sent out letters warning multi-level marketing companies to remove and address claims that they or their participants made about their products' ability to treat or prevent COVID-19 or provide earnings for people who have recently lost income.

All of these actions and any future scrutiny of us or the direct selling industry could generate negative publicity or further regulatory actions that could result in fines, restrict our ability to conduct our business, enter into new markets, and ultimately attract consumers.

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We have experienced rapid growth and development in a relatively short period of time and expect to continue this rapid growth in the future.

For example, our active earning OPTA VIA Coaches has grown from 24,100 as of December 31, 2018 to 31,800 as of December 31, 2019.

For example, our active earning OPTA VIA Coaches have grown from 31,800 as of December 31, 2019 to 44,200 as of December 31, 2020.

In addition, in July 2019, we commenced our international operations, entering into the Asia Pacific markets of Hong Kong and Singapore.

Our rapid growth places significant demands on our management and our administrative, operational and financial infrastructure.

Our failure to effectively manage our growth could harm our business and, in particular, our financial condition, results of operations and cash flows, which could negatively affect our ability to make distributions to stockholders and the trading price of our common stock.

Our growth could also increase our capital requirements, which may require us to issue potentially dilutive equity securities and incur additional debt.

Our sales may be adversely impacted by the health and stability of the general economy.

Our results of operation are highly dependent on the number of product sales and program fees generated by our OPTA VIA Coaches.

A downturn in general economic conditions, such as a recession or prolonged economic slowdown, may reduce the demand for our products and otherwise adversely affect our sales.

For example, economic forces, including general economic conditions, demographic trends, consumer confidence in the economy, changes in disposable consumer income and/or reductions in discretionary spending, may cause consumers to defer or decrease purchases of our products and programs which could adversely affect our revenue, gross profit, and/or our overall financial condition and operating results.

We outsource a distribution center in Hong Kong for product distribution capacity.

Our rapid growth places significant demands on our management and our administrative, logistical, operational and financial infrastructure.

We cannot assure you that we will be able to successfully optimize our distribution center network or open new distribution centers in new or existing markets if needed to accommodate or facilitate growth or that certain of our distribution centers will not have, or continue to have, operational challenges.

Our ability to compete effectively and to manage future growth, if any, will depend on our ability to maximize operational efficiencies across our distribution center network, to implement and improve on a timely basis operational, financial and management information systems, including our warehouse management systems, and to expand, train, motivate and manage our work force.

We cannot assure you that our existing personnel, systems, procedures and controls will be adequate to support the future growth of our operations.

Our failure to effectively manage our growth could harm our business and reputation and, in particular, our financial condition, results of operations and cash flows, which could negatively affect our ability to make distributions to stockholders and the trading price of our common stock.

Our growth could also increase our capital requirements, which may require us to issue potentially dilutive equity securities and incur debt.

We rely on third parties to provide us with a majority of the products we sell and we manufacture the remaining portion.

The inability to obtain the necessary products from our third-party manufacturers or to produce the products we manufacture in-house could cause our revenue, earnings or reputation to suffer.

We also rely on third parties to distribute and deliver our products.

The inability to obtain the necessary products from our third-party manufacturers, produce the products we manufacture in-house or distribute and deliver our products could cause our revenue, earnings or reputation to suffer.

We rely on third-party manufacturers to supply a significant portion of the food and other products we sell.

If we are unable to obtain a sufficient quantity, quality and variety of foods and other products from these manufactures in a timely and low-cost manner, we will be unable to fulfill our clients’ orders in a timely manner, which may cause us to lose revenue and market share or incur higher costs, as well as damage the value of our brands.

Therefore, it is critical that we maintain good relationships with our manufacturers.

We also rely on third-parties to distribute and deliver our products.

Therefore, it is critical that we maintain good relationships with our manufacturers and third parties that distribute and deliver our products.

The services we require from these parties may be disrupted due to a number of factors associated with their businesses, including the following:

● the COVID-19 pandemic and any future pandemics;

● labor disruptions;

● delivery problems;

● delivery and transportation problems;

● financial condition or results of operations;

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● equipment failure;

● severe weather;

● natural or man-made disasters;

● shortages of ingredients;

● severe weather, climate and other adverse environmental conditions;

● natural or man-made disasters, war, terrorism, or political instability;

● adverse changes in third-party contract terms;

● shortages or increases in prices of ingredients;

● USDA or FDA compliance issues.

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The operations at this facility may be disrupted by a number of factors, including the following:

● the COVID-19 pandemic and any future pandemics;

● labor disruptions;

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● internal inefficiencies;

● severe weather;

● nature or man-made disasters;

● severe weather, climate and other adverse environmental conditions;

● natural or man-made disasters, war, terrorism, or political instability;

● USDA or FDA compliance issues.

There can be no assurance that the occurrence of these or any other operational problems at our sole facility would not have a material adverse effect on our business, financial condition or results of operations.

Our ability to source quality ingredients and other products is critical to our business, and any disruption to our supply or supply chain could materially adversely affect our business.

We depend on frequent deliveries of ingredients and other products from domestic and foreign suppliers, especially for our non-powder products.

Some of our suppliers may depend on a variety of other local, regional, national and international suppliers to fulfill the purchase orders we place with them.

The availability of such ingredients and other products at competitive prices depends on many factors beyond our control, including the number and size of the suppliers that provide the raw materials that meet our quality and production standards.

We rely on our suppliers, and their supply chains, to meet our quality and production standards and specifications and supply ingredients and other products in a timely and safe manner.

However, no safety and quality measures can eliminate the possibility that suppliers may provide us with defective or out-of- specification products against which regulators may take action or which may subject us to litigation or require a recall.

Suppliers may provide us with ingredients that are or may be unsafe, below our quality standards or improperly labeled.

In addition to a negative customer experience, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions if we incorporate a defective or out-of-specification item into one of our deliveries.

Furthermore, there are many factors beyond our control which could cause shortages or interruptions in the supply of our ingredients and other products, including adverse weather, climate and environmental factors, natural disasters, unanticipated demand, labor or distribution problems, changes in law or policy, food safety issues by our suppliers and their supply chains, and the financial health of our suppliers and their supply chains.

Production or yield of the

agricultural crops that are used as ingredients in our products may also be materially adversely affected by drought, water scarcity, temperature extremes, scarcity of agricultural labor, changes in government agricultural programs or subsidies, import restrictions, scarcity of suitable agricultural land, crop conditions, crop or animal diseases or crop pests.

Failure to take adequate steps to mitigate the likelihood or potential effect of such events, or to effectively manage such events if they occur, may materially adversely affect our business, financial condition and operating results, particularly in circumstances where an ingredient or product is sourced from a single supplier or location.

In addition, unexpected delays in deliveries from suppliers or increases in transportation costs (including through increased fuel costs) could materially adversely affect our business, financial condition and operating results.

Labor shortages or work stoppages in the transportation industry, long-term disruptions to the national transportation infrastructure, reduction in capacity and industry-specific regulations such as hours-of-service rules that lead to delays or interruptions of deliveries could also materially adversely affect our business, financial condition and operating results.

We currently source certain of our ingredients from suppliers located outside of the United States.

Any event causing a disruption or delay of imports from suppliers located outside of the United States, including weather, drought, crop-related diseases, the imposition of import or export restrictions, restrictions on the transfer of funds or increased tariffs, destination-based taxes, value- added taxes, quotas or increased regulatory requirements, could increase the cost or reduce the supply of our ingredients and the other materials required by our product offerings, which could materially adversely affect our business, financial condition and operating results.

Furthermore, our suppliers’ operations may be adversely affected by political and financial instability, resulting in the disruption of trade from exporting countries, restrictions on the transfer of funds or other trade disruptions, each of which could adversely affect our access or ability to source ingredients and other materials used in our product offerings on a timely or cost-effective basis.

We may be subject to claims that our OPTA VIA Coaches are unqualified to provide proper weight loss advice.

Our OPTA VIA Coaches are independent contractors and, accordingly, we are not in a position to provide the same level of oversight as we would if these OPTA VIA Coaches were our own employees.

As a result, there can be no assurance that our OPTA VIA Coaches will comply with our policies and procedures despite our internal compliance efforts.

As a result, there can be no assurance that our OPTA VIA Coaches will comply with our policies and procedures.

Additionally, some of our OPTA VIA Coaches do not have extensive training or certification in nutrition, diet or health fields and have only undergone the education they receive from us.

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Further, clients who allege that they were deceived by any statements that we made in advertising or labeling could bring a lawsuit against us under consumer protection laws.

From time-to-time we are

subject to such allegations and have been involved in such litigation.

While we would defend ourselves against such claims, we may ultimately be unsuccessful in our defense.

Also, defending ourselves against such claims, regardless of their merit and ultimate outcome, would likely be lengthy and costly, and adversely affect our brand image, customer loyalty and results of operations.

From time-to-time we are subject to such allegations and have been involved in such litigation.

We may ultimately be unsuccessful in defending ourselves against such claims.

Also, defending ourselves against such claims, regardless of their merit and ultimate outcome, may be lengthy and costly, and could adversely affect our brand image, customer loyalty and results of operations.

The weight management industry is highly competitive.

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Competition is intense in the weight management industry and we must remain competitive in the areas of program efficacy, price, taste, customer service and brand recognition.

Our competitors include companies selling pharmaceutical products and weight loss programs, digital tools and wearable trackers, as well as a wide variety of diet foods and meal replacement bars and shakes, appetite suppressants and nutritional supplements.

Our competitors include companies selling pharmaceutical products and weight loss programs, digital tools, app-based health and wellness monitoring solutions and wearable trackers, as well as a wide variety of diet foods and meal replacement bars and shakes, appetite suppressants and nutritional supplements.

Some of our competitors are significantly larger than we are and have substantially greater resources.

Our business could be adversely affected if someone with significant resources decided to imitate our weight management program.

For example, if a major supplier of pre-packaged foods decided to enter this market and made a substantial investment of resources in advertising and training diet counselors, our business could be significantly affected.

Any increased competition from new entrants into our industry or any increased success by existing competition could result in reductions in our sales or prices, or both, which could have an adverse effect on our business and results of operations.

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The weight management industry is subject to changing consumer demands based, in large part, on the efficacy and popular appeal of weight management programs.

The popularity of weight management programs is dependent, in part, on their ease of use, cost and channels of distribution as well as consumer trends, and, on an ongoing basis, many existing and potential providers of weight loss solutions, including many pharmaceutical firms with significantly greater financial and operating resources than we have, are developing new products and services.

The popularity of weight management programs is dependent, in part, on their ease of use, cost and channels of distribution as well as consumer trends, which continue to evolve with the introduction of new technologies and innovations, and, on an ongoing basis, many existing and potential providers of weight loss solutions, including many pharmaceutical firms with significantly greater financial and operating resources than we have, are developing new products and services.

The creation of a weight loss solution, such as a drug therapy, that is perceived to be safe, effective and “easier” than a portion-controlled meal plan would put us at a disadvantage in the marketplace and our results of operations could be negatively affected.

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Our failure to develop new products and services and to enhance our existing products and services, and the failure of our products and services to continue to appeal to the market could have an adverse impact on our ability to attract and retain clients and thus adversely affect our business, financial condition or results of operations.

We may not be able to successfully implement new strategic initiatives, which could adversely impact our business.

We are continuously evaluating changing consumer preferences and the competitive environment of our industry and seeking out opportunities to improve our performance through the implementation of selected strategic initiatives.

The goal of these efforts is to develop and implement a comprehensive and competitive business strategy which addresses the continuing changes in the weight management industry environment and our position within the industry.

For example, as the healthcare industry continues to evolve its response to the obesity epidemic, so do the requirements, both regulatory and business, for providers.

If we do not successfully meet these requirements, we may not be perceived as an appropriate partner for certain purposes.

We may not be able to successfully implement our strategic initiatives and realize the intended business opportunities, growth prospects, including new business units, and competitive advantages.

Our efforts to capitalize on business opportunities may not bring the intended results.

Assumptions underlying expected financial results or consumer demand may not be met or economic conditions may deteriorate.

We also may be unable to attract and retain highly qualified and skilled personnel to implement our strategic initiatives.

If these or other factors

limit our ability to successfully execute our strategic initiatives, our business activities, financial condition and results of operations may be adversely affected.

Our business depends on the effectiveness of our advertising and marketing programs, including the strength of our and our OPTA VIA Coaches’ social media presence, to attract and retain clients.

Use of social media may materially and adversely affect our reputation or subject us to fines or other penalties, and restrictions on the use of or access to social media may adversely impact sales of our products and services.

Our business success depends on our ability to attract and retain clients.

Our ability to attract and retain clients depends significantly on the effectiveness of our and our OPTA VIA Coaches’ advertising and marketing practices.

Our OPTA VIA Coaches support our clients and market our products and services primarily through word of mouth, email and via social media channels such as Facebook, Instagram, Twitter and video conferencing platforms.

If their advertising and marketing campaigns do not generate a sufficient number of clients, our business, financial condition and results of operations will be adversely affected.

We and our OPTA VIA Coaches, as well as social media influencers or other brand ambassadors that we may utilize from time to time, use email and social media platforms as a means of communicating with consumers.

We use digital marketing, social media, and email marketing, among other means, to attract and retain clients.

Unauthorized or inappropriate use of these channels could result in harmful publicity or negative consumer experiences, which could have an adverse impact on the effectiveness of our marketing through these channels.

In addition, the rising popularity of social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination.

Our target consumers often value readily available information and often act on such information without further investigation and without regard to its accuracy.

The harm may be immediate without affording us an opportunity for redress or correction.

Negative or false commentary about us may be posted on social media platforms or similar devices at any time and may harm our business, brand, reputation, Coaches, financial condition, and results of operations, regardless of the information’s accuracy.

An increase in the use of social media for product promotion and marketing may cause an increase in the burden on us to monitor compliance of such materials and increase the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations.

As laws and regulations, including FTC enforcement, rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees, or our Coaches or other third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties.

In addition, as we continue to expand our presence domestically and internationally, we, our OPTA VIA Coaches and clients may face more restrictions and increasingly complex regulations on free use and access to social media platforms.

Restrictions on the use of or access to social media, especially in foreign countries that impose stricter regulations around free speech, access to independent news or citizens’ use of foreign communications tools deemed harmful to political or economic interests, may adversely impact sales of our products and services.

Even where the restrictions on social media or censorship are narrowly tailored or targeted, the ability of our OPTA VIA Coaches to reach new clients or our ability to grow our OPTA VIA Coaches in those markets may be adversely affected and our results of operations and financial condition could suffer.

Human Capital Risks

The success of our business is dependent on our ability to maintain and grow our network of OPTA VIA Coaches .

OPTA VIA Coaches are subject to high turnover and we depend on our network of OPTA VIA Coaches to continually grow their businesses by attracting, training and motivating new OPTA VIA Coaches.

We consider our number of active earning OPTA VIA Coaches and average quarterly revenue per active earning OPTA VIA Coach to be key indicators of our financial performance and condition.

As of December 31, 2020, the Company had 44,200 total active earning OPTA VIA Coaches and the average Q4 2020 revenue per active earning OPTA VIA Coach was $5,932.

The failure to provide the business essentials and competitive compensation necessary to motivate OPTA VIA Coaches to grow their

businesses will adversely affect our future growth and operating results.

The growth and sustainability of our network of OPTA VIA Coaches is also subject to risks which may be outside of our control.

These include:

● Potential misconduct or improper claims by OPTA VIA Coaches;

● Negative public perceptions of multi-level marketing;

● General economic conditions;

● Failure to develop innovative products to meet consumer demands;

● Adverse opinions of our products, services, or industry;

● Regulatory actions against our Company, competitors in our industry, or other direct selling companies.

We are dependent on our key executives for future success.

If we lose the services of any of our key executives and we are unable to timely retain a qualified replacement, our business could be harmed.

Our future success depends to a significant degree on the skills, experience and efforts of our key executives.

The loss of the services of any of these individuals could harm our business.

We have not obtained life insurance on any key executives.

If any key executives left us or were seriously injured and became unable to work, our business could be harmed.

Information Technology and Cyber Security Risks

Any failure of our technology or systems to perform satisfactorily could result in an adverse impact on our business.

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Our technology may malfunction or suffer from defects that become apparent only after extended use.

The integrity of our technology may also be compromised as a result of third-party cyber-attacks, such as hacking, spear phishing campaigns and denial of service attacks, which are increasingly

negatively impacting companies.

The integrity of our technology may also be compromised as a result of third-party cyber-attacks, such as hacking, spear phishing campaigns and denial of service attacks, which are increasingly negatively impacting companies.

In addition, our operations depend on our ability to protect our information technology systems against damage from third-party cyber-attacks, fire, power loss, water, earthquakes, telecommunications failures and similar unexpected adverse events.

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In addition to purposeful security breaches, the inadvertent transmission of computer viruses could adversely affect our computer systems and, in turn, harm our business.

A significant number of states require that customers be notified if a security breach results in the disclosure of their personal financial account or other information.

Existing, proposed or new data privacy legislation and regulations, including interpretations thereof, could also significantly affect our business.

For example, data protection and privacy laws have been enacted by the U.S.

federal and state governments, including the California Consumer Privacy Act (CCPA), which became effective on January 1,

2020, and other relevant statutes.

These laws typically impose significant penalties for non-compliance.

Further, a significant number of states require that customers be notified if a security breach results in the disclosure of their personal financial account or other information.

Additional states and governmental entities are considering such “notice” laws.

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If we experience a security breach and such notice or public disclosure is required in the future, our reputation and our business may be harmed.

The effects of these new and evolving laws, regulations, and other obligations potentially are far-reaching and may require us to further modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

In addition, if we choose to continue expanding our business internationally in the future we may be subject to non-U.S.

privacy, data protection, consumer protection and other laws and regulations, which in some cases are more restrictive than those in the United States.

For example, the European Union traditionally has imposed stricter obligations under such laws than the United States.

Consequently, any future expansion of our international operations may require changes to the ways we collect and use consumer information.

In the ordinary course of our business, we collect and utilize proprietary and customer information and data.

As a result, we have developed systems that are designed to protect consumer information and prevent fraudulent transactions and other security breaches.

Privacy concerns among prospective and existing clients regarding our use of such information or data collected on our website or through our services and products, such as weight management information, financial data, email addresses and home addresses, could keep them from using our website or purchasing our services or products.

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We rely on third-party software products to secure our credit card transactions.

Although we have developed systems and processes that are designed to protect consumer information and prevent fraudulent payment transactions and other security breaches, failure to prevent or mitigate such fraud or breaches or changes in industry standards or regulations may adversely affect our business and operating results or cause us to lose our ability to accept credit cards as a form of payment and result in chargebacks of fraudulently charged amounts.

Failure to prevent or mitigate fraudulent payment transactions or security breaches or changes in industry standards or regulations may adversely affect our business and operating results or cause us to lose our ability to accept credit cards as a form of payment and result in chargebacks of fraudulently charged amounts.

Furthermore, widespread credit card fraud may lessen our clients’ willingness to purchase our products on our website.

Risks Related to Intellectual Property

Third parties may infringe on our brand, trademarks and other intellectual property rights, which may have an adverse impact on our business.

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Additionally, failure to protect our intellectual property could result in the entry of a competitor to the market.

Our precautions may not prevent misappropriation of our intellectual property.

Our precautions may not prevent misappropriation of our intellectual property by state actors, competitors, or individuals or groups that are or are not affiliated with the Company.

Any legal action that we may bring to protect our brand and other intellectual property could be unsuccessful and expensive and could divert management’s attention from other business concerns.

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In addition, if we were unable to successfully defend against such claims, we may have to pay damages, stop selling the service or product or stop using the software, technology or content found to be in violation of a third-party’s rights, seek a license for the infringing service, product, software, technology or content or develop alternative non-infringing services, products, software, technology or content.

If we cannot license on reasonable terms, develop alternatives or stop using the service, product, software, technology or content for any infringing aspects of our business, we may be forced to limit our service and product offerings.

If we cannot license on reasonable terms, develop alternatives or have to stop using the service, product, software, technology or content for any infringing aspects of our business, we may be forced to limit our service and

product offerings.

Any of these results could reduce our revenue and our ability to compete effectively, increase our costs or harm our business.

We may not be able to successfully implement new strategic initiatives, which could adversely impact our business.

For example, as the healthcare industry continues to evolve its response to the obesity epidemic so do the requirements, both regulatory and business, for providers.

If we do not successfully meet these requirements, we may not be perceived as an appropriate partner for certain purposes.

We may not be able to successfully implement our strategic initiatives and realize the intended business opportunities, growth prospects, including new business units, and competitive advantages.

Our efforts to capitalize on business opportunities may not bring the intended results.

Assumptions underlying expected financial results or consumer demand may not be met or economic conditions may deteriorate.

We also may be unable to attract and retain highly qualified and skilled personnel to implement our strategic initiatives.

If these or other factors limit our ability to successfully execute our strategic initiatives, our business activities, financial condition and results of operations may be adversely affected.

Risks Related to International Operations

The sale of our products in markets outside of the United States may subject us to risks.

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The sale, marketing and distribution of our products and programs in these and other international locations is subject to a number of uncertainties, including, but not limited to, the following:

● the COVID-19 pandemic and any future pandemics;

● economic and political instability;

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● potentially weak protection of intellectual property rights.

These uncertainties could lead to potential risks for our continued expansion and sales success in the Asia Pacific markets and elsewhere, any of which could harm our business, financial condition and results of operations.

Expansion into international markets increases our operational, regulatory and other risks.

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The failure of our compliance and internal control systems to properly mitigate such additional risks, or of our operating infrastructure to support such expansion, could result in operational failures and regulatory fines or sanctions.

Our operations in Hong

Kong and Singapore and other jurisdictions are subject to significant compliance, disclosure and other obligations.

Our operations in Hong Kong and Singapore and other jurisdictions are subject to significant compliance, disclosure and other obligations.

Activity in international markets also exposes us to fluctuations in currency exchange rates, which may adversely affect the U.S.

dollar value of revenues, expenses and assets associated with our business activities outside the United States.

Actual and anticipated changes in current exchange rates may also adversely affect international demand for our investment strategies and services, most of which represent investments primarily in U.S.

Actual and anticipated changes in current exchange rates may also adversely affect international demand for our business investment strategies to expand our products and services, most of which represent investments primarily in U.S.

dollar-based assets.

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dollar versus other currencies in which we derive revenues.

If we expand our operations into additional foreign countries, we may be subject to additional risks, including the ability to successfully adapt to local culture and navigate regulatory, economic, political and social risks.

We cannot be certain that we will be able to enter and successfully compete in additional foreign markets or that we will be able to continue to compete in the foreign markets in which we currently operate.

We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S.

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We are subject to the FCPA, which generally prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits, along with various other anticorruption laws.

Although we have implemented policies, procedures, and training to all employees including management, designed to ensure that we, our employees and other intermediaries comply with the FCPA and other anticorruption laws to which we are subject, there is no assurance that such policies or procedures will work effectively all of the time or protect us against liability under the FCPA or other laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire.

There is no assurance that the policies, procedures and training for all employees, including management, that were designed to ensure that we, our employees and other intermediaries comply with the FCPA and other anticorruption laws to which we are subject, will work effectively all of the time or protect us against liability under the FCPA or other laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire.

Expansion of our operations in international markets, such as Hong Kong, Singapore and other jurisdictions, may pose elevated risks of anti-corruption violations as we are in frequent contact with persons who may be considered “foreign officials” under the FCPA, resulting in an elevated risk of potential FCPA violations.

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If we are unable to establish our position in these markets our business and financial results could be adversely affected.

We are dependent on our key executive officers for future success.

If we lose the services of any of our key executive officers and we are unable to timely retain a qualified replacement, our business could be harmed.

Our future success depends to a significant degree on the skills, experience and efforts of our key executive officers.

The loss of the services of any of these individuals could harm our business.

We have not obtained life insurance on any key executive officers.

If any key executive officers left us or were seriously injured and became unable to work, our business could be harmed.

Provisions in our certificate of incorporation may deter or delay an acquisition of us or prevent a change in control, even if an acquisition or a change of control would be beneficial to our stockholders.

Provisions of our certificate of incorporation (as amended) may have the effect of deterring unsolicited takeovers or delaying or preventing a third-party from acquiring control of us, even if our stockholders might otherwise receive a premium for their shares over then current market prices.

In addition, these provisions may limit the ability of our stockholders to approve transactions that they may deem to be in their best interests.

Our certificate of incorporation (as amended) permits our Board of Directors to issue preferred stock without stockholder approval upon such terms as the Board of Directors may determine.

The rights of the holders of our common stock will be junior to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future.

The issuance of preferred stock could have the effect of making it more difficult for a third-party to acquire, or discourage a third-party from acquiring, a majority of our outstanding common stock.

The issuance of a substantial number of preferred shares could adversely affect the price of our common stock.

Risks Related to Our Industry

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Congressional hearings about practices in the weight loss industry have also resulted in adverse publicity and a consequent decline in the revenue of weight loss businesses.

Future research reports or publicity that is perceived as unfavorable or that question certain weight loss programs, products or methods could result in a decline in our revenue.

Future research or investigative reports or publicity that is perceived as unfavorable or that question certain weight loss programs, products or methods could result in a decline in our revenue.

Because of our dependence on consumer perceptions, adverse publicity associated with illness or other undesirable effects resulting from the consumption of our products or similar products by competitors, whether or not accurate, could also damage customer confidence in our weight loss program and result in a decline in revenue.

Adverse publicity could arise even if the unfavorable effects associated with weight loss products or services resulted from the user’s failure to use such products or services appropriately.

Adverse publicity could arise even if the unfavorable effects

associated with weight loss products or services resulted from the user’s failure to use such products or services appropriately.

Our industry is subject to governmental regulation that could increase in severity and hurt results of operations.

Our industry is subject to federal, state and other governmental regulation.

Certain federal and state agencies, such as the FTC, regulate and enforce laws relating to advertising, disclosures to consumers, privacy, consumer pricing and billing arrangements and other consumer protection matters.

Certain federal and state agencies, such as the FTC and the U.S.

states’ consumer protection agencies, regulate and enforce laws relating to advertising, disclosures to consumers, privacy, consumer pricing and billing arrangements and other consumer protection matters.

A determination by a federal or state agency, or a court, that any of our practices do not meet existing or new laws or regulations could result in liability, adverse publicity, and restrictions of our business operations.

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Many companies in the weight loss industry, including our predecessor businesses, have entered into consent decrees with the FTC relating to weight loss claims and other advertising practices.

In October 2009, the FTC published its revised Guides concerning the Use of Endorsements and Testimonials in Advertising which now requires us to make a statement as to what the typical weight loss clients can expect to achieve on our program when using a customer’s weight loss testimonial in advertising.

Federal and state regulation of advertising practices generally, and in the weight loss industry in particular, may increase in scope or severity in the future, which could have a material adverse impact on our business.

In 2009, the FTC promulgated nonbinding Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) which explained what endorsement practices the FTC views as being unfair or deceptive acts or practices.

In 2020, the FTC sought public comments on whether the Endorsement Guides should be amended.

The last time the FTC sought similar public comments led to a major revision of the Endorsement Guides.

Consequently, the FTC could bring an enforcement action based on practices that are inconsistent with the current Endorsement Guides as it considers revisions.

Under the current Endorsement Guides, advertisements that feature a consumer and convey his or her atypical experience with a product or service are required to clearly disclose the typical results that consumers can generally expect.

We cannot be sure that the FTC will not challenge our advertising or other operations in the future, which could have a material adverse impact on our business.

Other aspects of our industry are also subject to government regulation.

For example, the labeling and distribution of food products, including dietary supplements, are subject to strict USDA and FDA requirements and food manufacturers are subject to rigorous inspection and other requirements of the USDA and FDA, and companies operating in foreign markets must comply with those countries’ requirements for proper labeling, controls on hygiene, food preparation and other matters.

If federal, state, local or foreign regulation of our industry increases for any reason, then we may be required to incur significant expenses, as well as modify our operations to comply with new regulatory requirements,

which could harm our operating results.

Additionally, remedies available in any potential administrative or regulatory actions may include product recalls and require us to refund amounts paid by all affected clients or pays other damages, which could be substantial.

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The successful assertion or settlement of an uninsured claim, a significant number of insured claims or a claim exceeding the limits of our insurance coverage would harm us by adding costs to the business and by diverting the attention of senior management from the operation of the business.

We may also be subject to claims that our products contain contaminants, are improperly labeled, include inadequate instructions as to use or inadequate warnings covering interactions with other substances.

We may also be subject to claims that our products contain contaminants, are improperly labeled, include inadequate instructions as to use or inadequate warnings covering

interactions with other substances.

Additionally, the manufacture and sale of these products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination.

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Any negative publicity associated with these actions would adversely affect our brand and may result in decreased product sales and, as a result, lower revenue and profits.

Risks Related to Our Common Stock

Actions of activist stockholders could cause us to incur substantial costs, divert management's attention and resources, and have an adverse effect on our business.

We have been the target of activist stockholder activities in the past.

If a new activist investor purchased our stock, our business could be adversely affected because responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disruptive to our operations and divert the attention of management and our employees.

In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employees, suppliers and other strategic partners, and cause our share price to experience periods of volatility or stagnation.

There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts.

The Company declared a dividend of $1.13 per share on December 10, 2020, to stockholders of record as of December 22, 2020 that was paid on February 5, 2021.

We intend to continue paying a quarterly dividend to our stockholders for the foreseeable future, subject to long term cash flow needs, including capital spend needs and overall macroeconomic conditions.

Our Board of Directors periodically reviews our quarterly dividend to ensure that it is in the best interest of our stockholders and is in compliance with all applicable laws and agreements.

Future dividends may also be affected by, among other factors:

our views on potential future capital requirements for investments in acquisitions;

any stock repurchase programs;

changes in federal and state income tax laws or corporate laws;

changes to our business model;

and interest and principal payments required by indebtedness that we may incur in the future.

Our dividend payments may change from time to time, and we cannot provide any assurance that we will continue to declare dividends at all or in any particular amounts.

A reduction in our dividend payments could have a negative effect on our stock price.

In addition, these provisions may limit the ability of our stockholders to approve transactions that they may deem to be in their best interests.

Our certificate of incorporation (as amended) permits our Board of Directors to issue preferred stock without stockholder approval upon such terms as the Board of Directors may determine.

The rights of the holders of our common stock will be junior to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future.

The issuance of preferred stock could have the effect of making it more difficult for a third-party to acquire, or discourage a third-party from acquiring, a majority of our outstanding common stock.

The issuance of a substantial number of preferred shares could adversely affect the price of our common stock.

Risks Related to the COVID-19 Pandemic

The global outbreak of the COVID-19 virus may adversely impact our business.

The global outbreak of COVID-19 may have a significant adverse impact on our business as well as on the business environment and the markets in which we operate.

This global health crisis has also had a significant adverse effect on overall economic conditions and we expect consumer demand to continue to be negatively impacted due to changes in consumer behavior and confidence and health concerns.

The situation remains dynamic and subject to rapid and possibly significant change, and accordingly the magnitude and duration of the negative impact to our business from the COVID-19 pandemic cannot be predicted with certainty.

The widespread health crisis also could adversely affect the economies and financial markets in the countries in which we operate, resulting in an economic downturn that could affect consumer demand for our products and services.

Our customer purchasing patterns can be influenced by economic factors.

The precise impact on our business from the disruption of financial markets and the weakening of overall economic conditions cannot be predicted with certainty.

Uncertainties regarding the economic impact of COVID-19 have resulted in, and are likely to continue to result in, sustained impact on the economy.

Our business is particularly sensitive to reductions in discretionary consumer spending, which may be adversely impacted by a recession or fears of a recession, volatility and declines in the stock market and increasingly pessimistic consumer sentiment due to perceived or actual economic and/or health risks.

Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns.

Prolonged unfavorable economic conditions, including as a result of COVID-19, and any resulting recession or slowed economic growth, may have an adverse effect on our financial condition and results of operations.

Individually and collectively, the consequences of the COVID-19 pandemic could adversely impact our business, financial condition, results of operations, cash flows and liquidity.

The extent to which the COVID-19 pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from management’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

The extent to which the COVID-19 pandemic adversely affects the Company’s business, financial condition, results of operations, cash flows and liquidity, it may also have the effect of heightening the risks related to the other risk factors described in Part I, Item 1A - Risk Factors.

General Risk Factors

Our sales may be adversely impacted by the health and stability of the general economy.

Our results of operation are highly dependent on the number of product sales and program fees generated by our OPTA VIA Coaches.

A downturn in general economic conditions, such as a recession or prolonged economic slowdown, may reduce the demand for our products and otherwise adversely affect our sales.

For example, economic forces, including changes in disposable consumer income and/or reductions in discretionary spending, unemployment levels, demographic trends, and consumer confidence in the economy, may cause consumers to defer or decrease purchases of our products and programs which could adversely affect our revenue, gross profit, and/or our overall financial condition and operating results.

Our stock price fluctuates from time to time and may fall below expectations of securities analysts and investors, and could subject us to litigation, which may result in you suffering a loss on your investment.

The market price of our common stock may fluctuate significantly in response to a number of factors, many of which are out of our control.

These factors include:

quarterly variations in operating results;

changes in accounting treatments or principles;

announcements by us or our competitors of new products and services offerings;

significant contracts, acquisitions, or strategic relationships;

additions or departures of key personnel;

any future sales of our common stock or other securities;

stock market price and volume fluctuations of publicly-traded companies;

and general political, economic and market conditions.

In some future quarter our operating results may fall below the expectations of

securities analysts and investors, which could result in a decrease in the trading price of our common stock.

In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities.

We may be the target of similar litigation in the future.

Securities litigation could result in substantial costs and divert management's attention and resources, which could seriously harm our business and operating results.

If we do not maintain effective internal control over financial reporting, we could fail to report our financial results accurately.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports.

In the future, if we identify a control deficiency that rises to the level of a material weakness in our internal control over financial reporting, this material weakness may adversely affect our ability to record, process, summarize and report financial information timely and accurately and, as a result, our financial statements may contain material misstatements or omissions.

If we fail to maintain effective internal control over financial reporting, we could be required to take costly and time-consuming corrective measures, to remedy any number of deficiencies, significant deficiencies or material weaknesses, be required to restate the affected historical financial statements, be subjected to investigations and/or sanctions by federal and state securities regulators, and be subjected to civil lawsuits by security holders.

Any of the foregoing could also cause investors to lose confidence in our reported financial information and in our company and could result in a decline in the market price of our stock and in our ability to raise additional financing if needed in the future.

UNRESOLVED STAFF COMMENTS

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What changed 10-K

Item 1A. Risk Factors