What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-05-15 · 181 added, 213 removed, 107 unchanged (79% of the section changed)

1 unchanged sentence

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial

statements and the related notes appearing elsewhere in this Annual Report.

This discussion and analysis may contain forward-looking

statements based on assumptions about our future business.

Our actual results could differ materially from those anticipated in these

forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors”

and elsewhere in this Annual Report.

statements and the related notes appearing elsewhere in this report.

addition to our GAAP results, the following discussion includes Modified EBITDA as a supplemental measure of our performance.

present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods

on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

In addition, we

use Modified EBITDA in developing our internal budgets, forecasts, and strategic plan;

in analyzing the effectiveness of our

business strategies in evaluating potential acquisitions;

Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent

basis by excluding items that we do not believe are indicative of our core operating performance.

In addition, we use Modified EBITDA

in developing our internal budgets, forecasts, and strategic plan;

in analyzing the effectiveness of our business strategies in evaluating

potential acquisitions;

making compensation decisions;

and in communications with our board of

directors concerning our financial performance.

Modified EBITDA is not a recognized measurement under GAAP and should not be

considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP,

or as an alternative to cash flow from operating activities as a measure of liquidity.

We define Modified EBITDA as net income

(loss), plus interest expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense,

legal settlement, and one-time restructuring-related costs including employee severance and asset impairment.

and in communications with our board of directors concerning our financial performance.

Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from

operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities

as a measure of liquidity.

We define Modified EBITDA as net income (loss), plus interest expense, tax expense, depreciation and amortization,

stock-based compensation, changes in fair value of warrant expense, legal and insurance settlements, inventory write-offs associated

with exited categories and major packaging and formula changes, one-time changes in policy, impact of changes to accounting methodology

and one-time restructuring-related costs including employee severance and asset impairment.

following discussion also includes the use of gross billing, a key performance indicator and metric.

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In addition, it continues to build its innovation

pipeline with sustained growth in Reed’s Real Ginger Ale and Reed’s Classic Mule.

At the end of the first quarter, the Company

shipped its rebranded Virgil’s zero sugar line in 12 oz.

sleek cans and produced its new line of Reed’s Hard Ginger Ale.

pipeline with sustained growth in Reed’s Real Ginger Ale, Virgil’s Zero Sugar handcrafted sodas, Reed’s Classic and

Stormy Mule, and Reed’s Hard Ginger Ale.

Company remains focused on driving sales growth, improving gross margin, and reducing freight costs.

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is a focus on strategically reducing operating costs particularly delivery and handling expenses.

In addition, the Company continues

to augment its co-packer network to drive further efficiencies and build proper levels of inventory at the appropriate location to maximize

delivery metrics.

Trends – Market Conditions

the year ended December 31, 2022, the COVID-19 pandemic continued to impact our operating results and the Company anticipates a residual

effect for the balance of the year.

In addition, the pandemic could cause reduced demand for our products if, for example, the pandemic

results in a recessionary economic environment which negatively effects the consumers who purchase our products.

Based on the recent

increase in demand for our products, we believe that over the long term, there will continue to be strong demand for our products.

economy continued to grow during the first quarter of 2022, the continuing impact of the COVID-19 pandemic, higher inflation,

the actions by the Federal Reserve to address inflation, and rising energy prices create uncertainty about the future economic environment

which will continue to evolve and may impact our business in future periods.

We have experienced supply chain challenges, including increased

lead times, as well as inflation of raw materials, logistics and labor costs due to availability constraints and high demand.

we regularly monitor companies in our supply chain, and use alternative suppliers when necessary and available, supply chain constraints

could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations.

We expect the inflationary trends and supply chain pressures to continue throughout 2023.

the year ended December 31, 2022, the Company experienced moderation from elevated freight costs.

While the average cost of shipping

and handling for the year ended December 31, 2022, was $3.95 per case, which is the same as the $3.95 per case for the year ended December

31, 2021, it was significantly higher during the first half of the year, however, was significantly reduced during the second half of

The Company believes these challenges will continue throughout the year.

In addition, the Company experienced increases in

the pricing of several of its raw materials and delays in procuring several of these items.

However, mitigation plans have been implemented

to manage this risk.

Additionally, the Company was negatively impacted by supply chain challenges impacting our ability to benefit from

strong demand for, and increased sales of our product.

The disruption caused by labor shortages, significant raw material cost inflation,

logistics issues and increased freight costs, and ongoing port congestion, resulted in suppressed margins and net income.

anticipates a continued impact throughout 2023.

ability to operate without significant incremental negative operational impact from the COVID-19 pandemic will in part depend on our

ability to protect our employees and protect our supply chain.

The Company has endeavored to follow the recommended actions of government

and health authorities to protect our employees.

Since the inception of the COVID-19 pandemic and through December 31, 2022, we maintained

the consistency of our operations during the onset of the COVID-19 pandemic.

We will continue to innovate in managing our business, coordinating

with our employees and suppliers to do our part to be responsible to our employees and business partners in responding to our customers

and suppliers.

However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply

chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that could negatively

impact our operations.

have not observed any material impairments of our assets or a significant change in the fair value of our assets due to the COVID-19

the year ended December 31, 2022, the Ukraine conflict did not have a direct material impact on our financial position, results of operations

and liquidity.

economy continued to grow throughout 2023, the higher inflation, the actions by the Federal Reserve to address inflation, and

rising energy prices create uncertainty about the future economic environment which will continue to evolve and may impact our business

in future periods.

We have experienced supply chain challenges, including increased lead times, as well as inflation of raw materials,

logistics and labor costs due to availability constraints and high demand.

Although we regularly monitor companies in our supply chain,

and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain

raw materials required to manufacture our products and adversely affect our operations.

the year ended December 31, 2023, the Company experienced moderation from the elevated freight costs experienced in 2022.

cost of shipping and handling for year ended December 31, 2023, was $3.07 per case, as compared to $3.95 per case for the year ended

December 31, 2022.

Although the Company has experienced decreases in freight costs over the last three quarters, in the Company’s

opinion there remains a volatile environment and the Company will continue to monitor pricing and availability in transportation.

plans have been implemented to manage this risk.

The Company has been negatively impacted by supply chain challenges impacting our ability

to benefit from strong demand for, and increased sales of our product.

The disruption caused by labor shortages, significant raw material

cost inflation, logistics issues and increased freight costs, and ongoing port congestion, resulted in suppressed margins.

has experienced moderation in inflation and anticipates this to continue throughout 2024.

December 31, 2023, we continued to generate cash flows to meet our short-term liquidity needs, and we expected to maintain access to

the capital markets.

of Operations – Year Ended December 31, 2023

following table sets forth key statistics for the years ended December 31, 2023, and 2022, in thousands:

Year Ended December 31,

Gross billing (A)

Ended December 31,

Promotional and other allowances (B)

Cost of goods sold

of goods sold

of Gross billing

% of Net sales

Delivery and handling

% of Net sales

Dollar per case ($)

Selling and marketing

% of Net sales

General and administrative

% of Net sales

Provision for receivable with former related party

Product quality hold write-down

% of Gross billing

% of Net sales

Total Operating expenses

Loss from operations

Interest expense and other expense

Loss per share – basic and diluted

Weighted average shares outstanding - basic & diluted

define gross billing as the total sales for the Company unadjusted for costs related to generating those sales.

Provision for product hold

of Gross billing

and marketing

and administrative

for receivable with former related party

Operating expenses

from operations

expense and other expense

per share – basic and diluted

average shares outstanding – basic & diluted

We define gross billing as the total sales for the Company unadjusted for costs related to generating those sales.

Management utilizes

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titled measures used by other companies, as gross billing has been defined by our internal reporting practices .

define promotional and other allowances as costs deducted from gross billing which are associated with generating those sales.

utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and

customer agreements.

We believe that the presentation of promotional and other allowances provides a useful measure of our operating

The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination

of net sales and the spending levels incurred or correlated with such sales.

The expenditures described in this line item are determined

in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform to GAAP presentation requirements.

Additionally,

our definition of promotional and other allowances may not be comparable to similar items presented by other companies.

and other allowances primarily include consideration given to the Company’s distributors or retail customers including, but

not limited to the following:

(i) reimbursements given to the Company’s distributors for agreed portions of their promotional

spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products;

(ii) the Company’s

agreed share of fees given to distributors and/or directly to retailers for in-store marketing and promotional activities;

the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers;

(iv) incentives

given to the Company’s distributors and/or retailers for achieving or exceeding certain predetermined sales goals;

discounted or free products.

Promotional and other allowances constitute a material portion of our marketing activities.

The Company’s

promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary

course of business.

These agreements generally provide for one or more of the arrangements described above and are of varying durations,

ranging from one week to one year.

We define promotional and other allowances as costs deducted from gross billing which are associated with generating those sales.

utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and customer

We believe that the presentation of promotional and other allowances provides a useful measure of our operating performance.

The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and

the spending levels incurred or correlated with such sales.

The expenditures described in this line item are determined in accordance

with GAAP and meet GAAP requirements, the disclosure thereof does not conform to GAAP presentation requirements.

Additionally, our definition

of promotional and other allowances may not be comparable to similar items presented by other companies.

Promotional and other allowances

primarily include consideration given to the Company’s distributors or retail customers including, but not limited to the following:

(i) reimbursements given to the Company’s distributors for agreed portions of their promotional spend with retailers, including

slotting, shelf space allowances and other fees for both new and existing products;

(ii) the Company’s agreed share of fees given

to distributors and/or directly to retailers for in-store marketing and promotional activities;

(iii) the Company’s agreed share

of slotting, shelf space allowances and other fees given directly to retailers;

(iv) incentives given to the Company’s distributors

and/or retailers for achieving or exceeding certain predetermined sales goals;

and (v) discounted or free products.

Promotional and other

allowances constitute a material portion of our marketing activities.

The Company’s promotional allowance programs with its numerous

distributors and/or retailers are executed through separate agreements in the ordinary course of business.

These agreements generally

provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.

Cost of Sales, and Gross Margins

following chart sets forth key statistics for the transition of the Company’s top line activity through the years ended December

Gross Billing:

Gross Margin:

as % Net Sales

Cost of Sales, and Gross Margins

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Non-core products consist

primarily of Wellness Shots, candy and slower selling discontinued Reed’s and Virgil’s SKUs.

primarily of Private Label, Wellness Shots, candy and slower selling discontinued Reed’s and Virgil’s SKUs.

2023, the Company licensed its candy business to Rootstock Trading, a company founded and owned by our former Chief Sales Officer, Neal

As part of this agreement, Rootstock agrees to pay a royalty on a percentage of its net sales of licensed products.

fees are 0% for 2023, 2% for 2024, 4% for 2025, and 5% thereafter.

beverage volume for the year ended December 31, 2023, represents 98% of all beverage volume.

brand gross billing increased by 3% to $54,613 compared to the same period last year, driven by Reed’s volume decline of 1% and

Virgil’s volume decline of 13%.

The result is an increase in total gross billing of 9%, to $59,464 in the year ended December 31,

2022, from $54,658 during the year ended December 31, 2021.

Price on our core brands increased 10.0% to $19.57 per case due to a shift

in mix to lower priced, higher margin products.

as a percentage of gross billing increased to 11% from 9% in the same period last year.

As a result, net sales revenue grew 7% in the

year ended December 31, 2022, to $53,041, compared to $49,599 in the same period last year.

brand gross billing decreased by 11% to $48,778 compared to $54,613 during the same period last year, driven by a Reed’s volume

decline of 3% and Virgil’s volume decline of 28%.

The result is a decrease in total gross billing of 15%, to $50,689 during the

year ended December 31, 2023, from $59,464 in the same period last year.

Price on our core brands increased 4% to $20.32 per case.

decrease was a result of volume declines that have impacted the CSD segment as a result of price increases coupled with the Company’s

inability to produce sufficient levels of inventory to meet current demand as a result of tighter credit terms from suppliers.

as a percentage of gross sales were 12% compared to 11% in the same period last year.

As a result, net sales revenue decreased 16% for

the year ended December 31, 2023, to $44,711, compared to $53,041 in the same period last year.

December 2023, the Company made a one-time change in policy for discounts which resulted in an additional $756 of deductions in

Excluding this adjustment, discounts as a percentage of sales would have been 10%.

of Goods Sold

of goods sold increased $4,928 during the year ended December 31, 2022, as compared to the same period last year.

of goods sold decreased $9,045 during the year ended December 31, 2023, as compared to the same period last year.

As a percentage of

net sales, cost of goods sold for the year ended December 31, 2023, was 71% as compared to 77% for the same period last year.

total cost of goods per case increased to $13.92 per case in the year ended December 31, 2022, from $11.91 per case for the same period

was primarily driven by lower supply chain and input costs.

December 2023, the Company wrote off $1,848 of inventory comprised of $1,452 of packaging and ingredients related to major changes

in packaging and formulations, and $396 of candy as a result of exiting this line of business.

These write-offs represented 4% of

During the three months ended December 31,

2023, the Company was made aware of a closure failure in our seasonal swing-lid products which resulted in a product quality hold

The Company recorded expense of $1,267 related to costs associated with the product quality hold write-down.

insurance claim is pending.

total cost of goods per case decreased to $14.22 per case for the year ended December 31, 2023, from $13.92 per case for the same period

The cost of goods sold per case on core brands was $12.82 during the year ended December 31, 2023, compared to $13.59 for

the same period last year.

margin was 23% for the year ended December 31, 2022, compared to 27% for the same period last year.

Excluding the write-offs and provision for product quality hold write-down., total cost of goods sold per case would have been $12.96.

margin decreased to 22% for the year ended December 31, 2023, compared to 23% for the same period last year.

Excluding the one-time adjustments

related to discounts, inventory write-offs, and provision for product quality hold write-down.

discussed above, gross margin would have been 30% for the year ended December 31, 2023.

and Handling Expenses

and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production.

Delivery and handling expense decreased by $336 in the years ended December 31, 2022, to $11,603 from $11,939 in the same period last

year, driven by decreased volumes, ecommerce fulfilment costs, and decreasing freight rates due to market conditions.

Delivery costs

in the year ended December 31, 2022, were 22% of net sales and $3.95 per case, compared to 24% of net sales and $3.95 per case during

the same period last year.

Delivery and handling expenses decreased by $4,042 in the year ended December 31, 2023, to $7,561 from $11,603 in the same period last

year, driven by our efforts to mitigate inflationary costs.

Delivery costs in the year ended December 31, 2023, were 17% of net sales

and $3.07 per case, compared to 22% of net sales and $3.95 per case during the same period last year.

and Marketing Expenses

Marketing expenses consist of direct marketing, marketing

labor, and marketing support costs.

Selling expenses consist of all other selling-related expenses including personnel and contractor

Total selling and marketing expenses decreased $2,349 to $7,316 during the year ended December 31, 2022, compared to $9,665 during

the same period last year.

As a percentage of net sales, selling and marketing costs decreased to 14% during the year ended December 31,

2022, as compared to 19% during the same period last year.

The decrease was driven by lower employee related costs, stock compensation,

distributor buyouts and reduced sampling and marketing spend partially offset by higher broker fees.

expenses consist of direct marketing, marketing labor, and marketing support costs.

Selling expenses consist of all other selling-related

expenses including personnel and contractor support.

Total selling and marketing expenses were $4,865 during the year ended December

31, 2023, compared to $7,316 during the same period last year.

As a percentage of net sales, selling and marketing were 11% of net sales

during the year ended December 31, 2023, as compared to 14% of net sales during the same period last year.

The decrease was driven by

lower marketing related expenditures, headcount, broker commissions, information technology charges, travel and entertainment expenses

partially offset by stock compensation and trade show expenses.

and Administrative Expenses

General and administrative expenses consist primarily

of the cost of executive, administrative, operations and finance personnel, as well as professional fees.

General and administrative expenses

decreased in the year ended December 31, 2022, to $7,489 from $7,965, a decrease of $476 over the same period last year.

As a percentage

of net sales, general and administrative expenses decreased to 14% during the year ended December 31, 2022, as compared to 16% during

the same period last year.

The decrease was driven by lower legal settlements, stock compensation and employee related costs, and bad

debt expense, partially offset by higher public company costs and co-packer downtime charges.

Provision for Receivable with Former Related

At December 31, 2022, the Company had a receivable

due from California Custom Beverage, LLC’s (“CCB”), an entity owned by Christopher J.

Reed, a former related party.

At December 31, 2022, CCB disputes that it owes $1,043 recorded as receivable

by the Company.

The Company believes that it will prevail in this dispute, however, as of December 31, 2022, due to the uncertainty about

the ultimate amount that will be settled, the Company has provided a reserve for $538 based on management’s estimate.

Loss from Operations

The loss from operations was $14,834 for the year

ended December 31, 2022, as compared to a loss of $15,971 in the same period last year driven by decreased gross profit partially offset

by decreases in operating expenses discussed above.

and Other Income (Expense)

and other income for the year ended December 31, 2022, consisted of $5,223 of interest expense.

During the same period last year, interest

and other expense consisted of consisted of $1,201 of interest expense offset by $770 gain on forgiveness of debt.

In addition to our GAAP results, we present Modified

EBITDA as a supplemental measure of our performance.

However, Modified EBITDA is not a recognized measurement under GAAP and should not

be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP,

or as an alternative to cash flow from operating activities as a measure of liquidity.

We define Modified EBITDA as net income (loss),

plus interest expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense, legal settlement,

and one-time restructuring-related costs including employee severance and asset impairment.

and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional

General and administrative expenses decreased in the year ended December 31, 2023, to $6,118 from $7,489, a decrease of $1,371

over the same period last year.

The decrease was driven by lower stock compensation, bad debt expense, co-packer and customer penalties,

information technology charges, consulting fees, and investor relation charges partially offset by higher franchise tax expense.

from Operations

loss from operations was $9,417 for the year ended December 31, 2023, as compared to a loss of $14,834 in the same period last year driven

by decreased gross profit and decreases in operating expenses discussed above.

expense for the year ended December 31, 2023, consisted of $6,106 of interest expense.

During the same period last year, interest expense

consisted of $5,223 of interest expense.

addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance.

However, Modified EBITDA is

not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any

other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure

of liquidity.

We define Modified EBITDA as net income (loss), plus interest expense, tax expense, depreciation and amortization,

stock-based compensation, changes in fair value of warrant expense, legal and insurance settlements, inventory write-offs associated

with exited categories and major packaging and formula changes, one-time changes in policy, impact of changes to accounting

methodology and one-time restructuring-related costs including employee severance and asset impairment.

considers our core operating performance to be that which our managers can affect in any particular period through their management of

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forth below is a reconciliation of net loss to Modified EBITDA for the year ended December 31, 2023, and 2022 (in thousands):

Year Ended December 31,

Modified EBITDA adjustments:

Depreciation and amortization

Interest expense

Stock option and other noncash compensation

Provision for receivable with former related party

Gain on extinguishment of debt

Legal settlement

Severance costs

Total EBITDA adjustments

Modified EBITDA

Ended December 31,

EBITDA adjustments:

and amortization

option and other noncash compensation

for receivable with former related party

Product quality hold write-down

write-offs associated with exited categories and major packaging and formula changes

One-time change in policy for discounts

EBITDA adjustments

present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on

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the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

Capital Resources and Going Concern

accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern for one year

from the date these financial statements are issued.

Such assumption contemplates the realization of assets and satisfaction of liabilities

in the normal course of business.

the year ended December 31, 2023, the Company recorded a net loss of $15,523 and used cash in operations of $4,266.

As of December 31,

2022, we had a cash balance of $533, with $110 of current availability, and $1,633 of additional borrowing capacity, a stockholder’s

deficit of $8,470 and negative working capital of $1,563, compared to a cash balance of $49 with

borrowing capacity of $109, stockholders’ equity of $4,203 and working capital of $2,981 at December 31, 2021 .

the year ended December 31, 2022, the Company entered into a note purchase agreement with Whitebox Advisors, LLC and agreed to issue

$13,750 of secured convertible promissory notes (the “Notes”).

The net proceeds from the issuance of the Notes, after deducting

placement agent fees and other debt issuance costs, was approximately $12,430.

Notes will mature on May 9, 2025, bear interest at a rate of 10% per annum (with 5% per annum payable in cash and 5% per annum payable

“in kind” by adding such accrued interest to the principal amount of the Notes).

The Notes are secured by substantially all

of the Company’s assets (including all of its intellectual property) and are subject to a collateral sharing agreement with ACS,

the Company’s existing secured lender (see Note 5).

During the year ended December 31, 2022, principal payments of $800 were made,

and accrued interest of $1,052 was added to the principal balance, leaving a balance owed of $11,502 at December 31, 2022.

In accordance with

Accounting Standards Codification (“ASC”) 205-40, Going Concern , the Company’s management has evaluated whether

there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue

as a going concern within one year after the date the accompanying financial statements were issued.

As of the issuance date of these

financial statements, management expects that the Company’s existing cash of $603, plus $4,100 of additional cash received subsequent

to December 31, 2023, from investments with significant stockholders (See Note 15), will be sufficient to fund the Company’s current

operating plan for at least twelve months from the date of issuance of these financial statements.

The financial statements do not include

any adjustments that might be necessary if the Company is unable to continue as a going concern.

assessment whether there is sufficient cash on hand, together with expected capital raises, to assure operations for a period of at least

twelve months from the date these financial statements are issued, is based on conditions that are known and reasonably knowable to management,

considering various scenarios, projections, and estimates and certain key assumptions.

These assumptions include, among other factors,

management’s ability to raise additional capital, and the expected timing and nature of the Company’s forecasted cash expenditures.

Historically,

we have financed our operations through public and private sales of common stock, issuance of preferred and common stock, convertible

debt instruments, term loans and credit lines from financial institutions, and cash generated from operations.

To alleviate these conditions,

management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity,

mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from financial institutions.

we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or

Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market

and economic conditions, our performance and investor sentiment with respect to us and our industry.

have taken decisive action to improve our margins, including fully outsourcing our manufacturing process, streamlining our product portfolio,

negotiating improved vendor contracts and restructuring our selling prices.

the Company has financed its operations through public and private sales of common stock, convertible debt instruments, credit lines

from financial institutions, and cash generated from operations.

As we seek additional sources of financing, there can be no assurance

that such financing would be available to us on favorable terms or at all.

Our ability to obtain additional financing in the debt and

equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment

with respect to us and our industry.

Accounting Policies and Estimates

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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 7. Management’s Discussion and Analysis