Item 7.01 Regulation FD Disclosure
On April 6, 2020, the Company issued a press release announcing
the completion of the Merger. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.
Item 8.01 Risk Factors
The Company is subject to all the same risks that all companies
in its business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political
and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage
companies are inherently more risky than more developed companies. The
risk factors summarized below are not the only risks we face. Additional risks and uncertainties not currently known to us or that
we currently deem to be immaterial may also materially adversely affect our business, reputation, financial condition and/or operating
results.
An occurrence of an uncontrollable event such as the COVID-19
pandemic may negatively affect our operations and our ability to raise capital.
The occurrence of an uncontrollable event such as the COVID-19 pandemic
may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may
limit access to our facilities, customers, management, support staff and professional advisors. This event may also limit our ability
to raise capital which as noted above could trigger certain rescission rights which could result in the Company’s incurring
additional debt and preferred holders who may take preference over other common holders. These factors, in turn, may not only impact
our operations, financial condition and demand for our products but our overall ability to react timely to mitigate the impact
of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.
Demand for our products may be adversely affected by changes
in consumer preferences or any inability on our part to innovate, market or distribute our products effectively, and any significant
reduction in demand could adversely affect our business, financial condition or results of operations..
Our beverage portfolio is comprised of a number of unique brands
with reputations and consumer imagery that have been built over time. Our investments in marketing as well as our strong commitment
to product quality are intended to have a favorable impact on brand image and consumer preferences. Unfavorable publicity, or allegations
of quality issues, even if false or unfounded, could tarnish our reputation and brand image and may cause consumers to choose other
products. In addition, if we do not adequately anticipate and react to changing demographics, consumer and economic trends, health
concerns and product preferences, our financial results could be adversely affected.
Competition.
The beverage industry is extremely competitive. Our products compete
with a broad range of beverage products, most of which are manufactured and distributed by companies with substantially greater
financial, marketing and distribution resources. In order to generate future revenues and profits, we must continue to sell products
that appeal to our customers and consumers. Discounting and other actions by our competitors may make it more difficult to sustain
revenues and profits.
Volatility in the price or availability of the inputs we depend
on, including raw materials, packaging, energy and labor, could adversely impact our financial results.
Our financial results could be adversely impacted by changes in
the cost or availability of raw materials and packaging. Continued growth would require us to hire, retain and develop a highly
skilled workforce and talented management team. Any unplanned turnover or our failure to develop an adequate succession plan for
current positions could erode our competitiveness. In addition, our financial results could be adversely affected by increased
costs due to increased competition for employees, higher employee turnover or increased employee benefit costs.
Governmental regulation.
Our business and properties are subject to various federal, state
and local laws and regulations, including those governing the production, packaging, quality, labeling and distribution of beverage
products. In addition, various governmental agencies have enacted or are considering additional taxes on soft drinks and other
sweetened beverages. Changes in existing laws or regulations could require material expenses and negatively affect our financial
results through lower sales or higher costs.
Dependence on key personnel.
Our performance significantly depends upon the continued contributions
of our executive officers and key employees, both individually and as a group, and our ability to retain and motivate them. Our
officers and key personnel have many years of experience with us and in our industry and it may be difficult to replace them. If
we lose key personnel or are unable to recruit qualified personnel, our operations and ability to manage our business may be adversely
affected.
Because our officers and directors serve as officers and directors
of other companies engaged in the beverage industry, a potential conflict of interest could negatively impact our ability to run
our business.
Some of our directors and officers work for other companies in the
beverage industry. Due to time demands placed on our directors and officers, and due to the competitive nature of the beverage
industry, the potential exists for conflicts of interest to occur from time to time that could adversely affect our ability to
conduct our business. The officers and directors’ employment and affiliations with other entities limits the amount of time
they can dedicate to us as a director or officer and cannot be certain that a conflict of interest will not arise in the future.
To date, there have not been any conflicts of interest between any of our directors or officers and the Company.
If our products become adulterated, misbranded or mislabeled,
we might need to recall those items and we may experience product liability claims if consumers are injured or become sick.
Product recalls or safety concerns could adversely impact our market
share and financial results. We may be required to recall certain of our products should they be mislabeled, contaminated or damaged.
We also may become involved in lawsuits and legal proceedings if it is alleged that the consumption of any of our products causes
injury or illness. A product recall or an adverse result in any such litigation could have an adverse effect on our operating and
financial results. We may also lose customer confidence for our entire brand portfolio.
Our distribution network relies on relationships with our distributors,
and such reliance could affect our ability to efficiently and profitably distribute and market products, maintain existing markets
and expand business into other geographic markets.
Our business relies upon distribution relationships for the sale
and distribution of our products. There can be no assurance that we will be able to mitigate the risks related to all or any of
these factors in any of the current or prospective geographic areas of distribution. To the extent that any of these factors have
an adverse effect on the relationships with consultants, companies or retailers in a particular geographic area and, thus, limit
our ability to maintain and expand the sales market, revenues and financial results may be adversely impacted. There also is no
assurance that we will be able to maintain distribution relationships or establish and maintain successful relationships in new
geographic distribution areas. There is the possibility that we will have to incur significant expenses to attract and maintain
relationships in one or more geographic distribution areas in order to profitably expand geographic markets. The occurrence of
any of these factors could result in a significant decrease in sales volume of our branded products and the products which we distribute
for others and harm our business and financial results.
We will need significant additional capital, which we may
be unable to obtain.
Our current liquidity position raises substantial
doubt about our ability to continue as a going concern. If we are unable to raise additional capital and/or obtain financing sufficient
to meet current and future obligations, we may not be able to continue as a going concern. Additionally, if the Company shall fail
to raise $9,000,000 of additional capital no later than six months from the date of the Merger, then the holder may seek to rescind
the Promissory Note Conversion Agreement, return the Note Conversion Shares and receive a replacement promissory note from the
Company and the parties to the Preferred Stock Note Conversion Agreements may seek to rescind the Preferred Stock Conversion Agreement,
return the Preferred Stock Conversion Shares and receive replacement shares of preferred stock from the Company. There can be no
assurance that such funding will be available to the Company in the amount required at any time or, if available, that it can be
obtained on terms satisfactory to the Company.
Future sales of common stock, or the perception of
such future sales, by some of our existing stockholders could cause our stock price to decline.
The market price of our common stock could decline as a
result of sales of a large number of shares of our common stock in the market or the perception that these sales may occur. These
sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares in the future at
a time and at a price that we deem appropriate.
Our limited operating history makes it difficult to forecast
our future results, making any investment in us highly speculative.
We have a limited operating history, and our historical financial
and operating information is of limited value in predicting our future operating results. We may not accurately forecast customer
behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we
may fail to make accurate financial forecasts. Our current and future expense levels are based largely on our investment plans
and estimates of future revenue. As a result, we may be unable to adjust our spending in a timely manner to compensate for any
unexpected revenue shortfall, which could then force us to curtail or cease our business operations.