LFTD PARTNERS INC. [LIFD] Filings

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K 

For the fiscal year ended December 31, 2023

Commission File Number: 000-51230

(847) 915-2446

(Registrants telephone number, including area code)

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value per share

(Title of Class)

LIFD

Trading Symbol

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $13,144,657. The voting stock held by non-affiliates on that date consisted of 5,941,088 shares of common stock.

As of March 26, 2024, there were 14,805,678 shares of the registrant’s common stock outstanding.

The exhibit index as required by Item 601(a) of Regulation S-K is included in Item 15 of Part IV of this report on Form 10-K.

Documents Incorporated by Reference: None

LFTD Partners Inc.

Annual Report on Form 10-K

Table of Contents

PART I

Cautionary Note Regarding Forward-Looking Statements

 This Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections about future events only as of the date of this Form 10-K, and are not statements of historical fact. We make such forward-looking statements pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements and forward-looking information are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements or forward-looking information. Factors that could cause or contribute to such differences include, but are not limited to, those identified in this Form 10-K, and in our other U.S. Securities and Exchange Commission (“SEC”) public filings. Therefore, these forward-looking statements are not guarantees or promises of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. As a result, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to further update any such statement, or the risk factors described in Item 1A. under the heading “Risk Factors,” to reflect new information, the occurrence of future events or circumstances or otherwise.

SUMMARY OF RISK FACTORS

LFTD Partners Inc. (hereinafter sometimes referred to as “LFTD Partners”, the “Company”, “LIFD”, the “Company”, “we”, “us”, “our”, etc.) is subject to a number of risks and uncertainties of which you should be aware before making a decision to invest in LFTD Partners. This Summary of Risk Factors does not address all of the risks that we face. Additional discussion of the risks summarized in this Summary of Risk Factors, and other risks that we face, may be found below in “Item 1A. Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with the SEC, before making a decision to invest in our Company. The principal factors that make an investment in LFTD Partners speculative or risky include the following, among others:

ITEM 1. BUSINESS

Description of the Business of LFTD Partners Inc.

LFTD Partners Inc. was organized under the laws of the State of Nevada on January 2, 1986. Shares of the Company’s common stock are traded on the OTCQB Venture Market under the trading symbol LIFD.

On May 18, 2021, the Company changed its name to LFTD Partners Inc. from Acquired Sales Corp. On March 15, 2022, the Company changed its stock trading symbol to LIFD.

After acquiring, operating and then selling businesses involved in the defense sector, our business is currently directly or indirectly involved in the development, manufacture and/or sale or re-sale of a wide variety of branded, hemp-derived, psychoactive and alternative lifestyle products, and of products involving, nicotine, tobacco and marijuana.

We are primarily interested in acquiring rapidly growing, profitable companies that are also involved in the manufacture and sale of branded, hemp-derived, psychoactive and alternative lifestyle products (a “Canna-Infused Products Company”). Management of the Company is open-minded to the concept of also acquiring operating businesses and/or assets directly or indirectly involving products containing nicotine, tobacco, marijuana, distilled spirits, beer, wine, and/or real estate. In addition, management of the Company is open-minded to the concept of diversifying, by acquiring all or a portion of one or more operating businesses and/or assets that are considered to be “essential” businesses that are outside our industry and that are unlikely to be shut down by the government during pandemics such as COVID-19, or that have less regulatory risk than a Canna-Infused Products Company.

Lifted Made

On February 24, 2020, we acquired 100% of the ownership interests in one Canna-Infused Products Company called Lifted Liquids, Inc. d/b/a Lifted Made and d/b/a Urb Finest Flowers (www.urb.shop), Kenosha, Wisconsin (“Lifted Made” or “Lifted”). Lifted manufactures and sells hemp-derived and psychoactive products under its award-winning Urb Finest Flowers (“Urb”) brand. Products currently sold by Lifted include, for example: disposable vapes and cartridges, gummies, joints, blunts, and products containing ingredients such as kanna, muscimol, ashwagandha and kava.

Bank Financing and Purchase of Headquarters Building

On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $3,910,000 from Surety Bank, of DeLand, Florida (“Lender”).

The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest, and (2) a $910,000 loan at 10% fixed annual interest, the net proceeds of which were used by Lifted Made to pay a portion of the $1,375,000 purchase price of Lifted Made’s main operations building located at 5511 95th Avenue, Kenosha, Wisconsin (“5511 Building”). The two loans are cross collateralized by a first lien mortgage on the 5511 Building, and by a first lien security interest in all of the other assets owned by LIFD and Lifted Made, in favor of Surety Bank.

Purchase of the 5511 Building

Toward the end of 2020, our Vice Chairman and Chief Operating Officer Nicholas S. Warrender (“NWarrender”), through his assigned entity 95th Holdings, LLC (“Holdings”), purchased the 5511 Building, which was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with Holdings, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to valuation based on a formula agreed upon by the parties. Pursuant to an agreement with NWarrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, which was entered into by the Company with NWarrender on July 5, 2022, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building was extended by one year to December 31, 2023. Lifted purchased the 5511 Building from Holdings on December 14, 2023 for the agreed upon purchase price of $1,375,000 in cash.

Improvements to and Potential Expansion of the 5511 Building

Due to an extreme need for additional employee parking spots at the 5511 Building, the Company in the fourth quarter of 2022 built a parking lot at the 5511 Building for $193,216, which is accounted for as a building improvement (a capitalized fixed asset). The investment in this necessary parking lot had no impact on the $1,375,000 purchase price that Lifted had committed to pay for, and did pay for, the 5511 Building on December 14, 2023.

The Company desires to have all of its operations under one roof at the 5511 Building in order to become more efficient. The Company has hired and paid an architectural and construction company (the “Construction Company”) which has created a preliminary design for expanding the 5511 Building by approximately 30,000 square feet. The Construction Company has provided a preliminary estimate that the potential expansion could cost the Company approximately $3,500,000. Neither the management nor the Board of Directors of the Company has committed to such potential expansion, but it is under active consideration.

$3,000,000 Working Capital Loan

Credit Agreement

Pursuant to the Credit Agreement dated as of December 14, 2023 (the “Credit Agreement”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower $3,000,000 (“Working Capital Loan”). The interest rate for the Working Capital Loan is a fixed annual interest rate of 9.5%. The Credit Agreement requires a Promissory Note and Security Agreement. The Credit Agreement requires a prepayment fee if the Working Capital Loan is repaid to the Lender in less than three years, in the amount of 3% of the Working Capital Loan if the loan is repaid in Year-1, 2% of the Working Capital Loan if the Working Capital Loan is repaid in Year-2, and 1% if the Working Capital Loan is repaid in Year-3.

The Credit Agreement is also subject to certain negative covenants in which the Borrower agreed (subject to certain exceptions) not to, among other things:

Promissory Note

Pursuant to the Promissory Note dated as of December 14, 2023 (the “WC Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Working Capital Loan at a fixed annual interest rate of 9.5%. The WC Note also requires a 5% late fee on outstanding unpaid payments due under the WC Note where payments are not made within 10 days of the due date. The WC Note has cross-default cross-collateralized provisions with the $910,000 Business Loan described below.

Security Agreement

Pursuant to a Security Agreement dated as of December 14, 2023 (“Security Agreement”), the Borrower granted to the Lender a security interest in all the Borrower’s personal property relating to its business to secure the obligations of the Borrower under the Credit Agreement. The collateral that is secured by the Security Agreement includes all the Borrower’s accounts, general intangibles, inventory, equipment, goods, deposit accounts, contractual rights, fixtures, money, insurance and commercial tort claims.

If an event of default under the Credit Agreement occurs, then the Lender may exercise the Borrower’s rights in the collateral. In that event, the Lender will have all the rights of a secured party with respect to the collateral under the Uniform Commercial Code, including, among other things, the right to sell the collateral at public or private sale.

Collateral Assignment Agreement

Under the Collateral Assignment Agreement dated as of December 14, 2023, between the Borrower and the Lender, the Borrower assigned to the Lender, in connection with the terms of the Credit Agreement, all of Borrower’s “intellectual property”, including but not limited to, all patents, patent rights, trademarks and service marks, works, inventions, copyrights, trade names, software and computer programs, trade secrets, methods, processes, know how, drawings, and specifications. In the event of default under the Credit Agreement or WC Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing intellectual property collateral to the detriment of the Borrower.

Pledge Agreement

Under the Pledge Agreement dated as of December 14, 2023, between the Borrower and the Lender, the Borrower, in connection with the terms of the Credit Agreement, pledges all equity holdings in Lifted Made, Bendistillery, Inc., Bend Spirits, Inc., and Ablis Holding Company. In the event of default under the Credit Agreement or WC Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower.

$910,000 Loan

Business Loan Agreement

Pursuant to the Business Loan Agreement dated as of December 14, 2023 (the “Loan Agreement”), among the Borrower and the Lender, the Lender agreed to loan $910,000 (the “Business Loan”) to the Borrower. The Business Loan requires that Borrower shall maintain a minimum 1.50x Debt Service Coverage Ratio (DSCR) based on Borrower tax returns. The DSCR shall be tested annually, beginning with the 2023 return. The DSCR shall be calculated as EBIDA (earnings before interest, depreciation, and amortization) divided by contractual annual debt service payments. The Business Loan also requires Borrower to maintain its primary operating accounts with a $1,000,000.00 minimum deposit account balance with the Lender for the life of the Business Loan. The Business Loan also requires a Promissory Note, Mortgage and Assignment of Rents, Leases, and Security Deposits described below.

Promissory Note

Pursuant to the Promissory Note dated as of December 14, 2023 (the “BL Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Business Loan at a fixed annual interest rate of 10% . The BL Note also requires a 5% late fee on outstanding unpaid payments due under the BL Note. The BL Note requires a mortgage on the 5511 Building, along with a first priority security interest on: all furniture, equipment, inventory, and general intangibles (including but not limited to all software and all payment intangibles); all fixtures; and all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies, and commingled goods.

Mortgage

Pursuant to the Mortgage dated as of December 14, 2023 (the “Mortgage”), among Lifted Made in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted Made agreed to a first priority mortgage on the 5511 Building (Parcel Number 08-222-32-410-104). In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower.

Assignment of Rents, Leases, and Security Deposits

Pursuant to the Assignment of Rents, Leases, and Security Deposits dated as of December 14, 2023 (the “Lease Assignment”), among Lifted Made in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted Made agreed to assign its rights to leases and income from the 5511 Building to Lender. In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower.

Default under any of the agreements described above could have a highly detrimental, if not catastrophic impact on our company.

Consolidated Balance Sheet Presentation of the Working Capital and Business Loans and Maturity Analysis

The following presents the Working Capital and Business Loans in the Consolidated Balance Sheets as of December 31, 2023 and 2022:

The following represents aggregate payments due on the Working Capital and Business Loans during each of the five years subsequent to December 31, 2023 and thereafter:

Manufacturing, Sales and Marketing Agreements

During the year ended December 31, 2023 Lifted entered into Manufacturing, Sales and Marketing Agreements with Cali Sweets, LLC (“Cali”), Diamond Supply Co. (“Diamond”), and DreamFields Brands Inc. d/b/a Jeeter (“Jeeter”) (collectively, “Agreements”). The terms of these Agreements are described below. The aggregate net revenue related to these Agreements for the year ended December 31, 2023 was $5,728,663.

Cali Sweets Agreement

On January 11, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Cali Agreement”) with Cali Sweets, LLC (“Cali”). Cali is headquartered in North Hollywood, California, and currently sells products under the brand name Koko Nuggz. The Cali Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Cali’s disposable vape products (under the brand name Koko Puffz) and gummy products (under the brand name Koko Yummiez) (“Cali Products”).

Pursuant to the Cali Agreement, Lifted manufactures, markets, and distributes certain Cali Products and brands worldwide. Lifted and Cali equally share certain production and marketing costs associated with such Cali Products on a dollar-for-dollar basis. Revenue from the sale of such Cali Products are divided on a 60/40 basis, net of any returns, discounts, or replacements, with 60% allocated to Lifted, and the remaining 40% to Cali.

Under the terms of the Cali Agreement, Lifted has the right, in its discretion, to add new Cali brands and Cali Products as they are developed. Lifted can also set prices for Cali Products it supplies or unilaterally discontinue the supply of any Cali product if it no longer makes business sense to Lifted. The parties also agreed that Cali will provide social media marketing services for both Cali Products and brands, and for Lifted’s Urb branded products.

The term of the Cali Agreement is five years and may be extended with the mutual consent of the parties. However, after the initial 24 months, the Cali Agreement may be terminated by either party, for any or no reason, upon providing the other party with 180 days written notice. Cali may become subject to early exit payments to Lifted if it early terminates. The exit fee formula is based on estimated profits that Lifted may have enjoyed had Cali not early terminated the relationship.

For information regarding the accounting for the Cali Agreement: please refer to NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES.

Manufacturing, Sales and Marketing Agreement With Diamond Supply Co.

On April 23, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Diamond Agreement”) with Diamond Supply Co. (“Diamond”), Calabasas, California. Founded in 1998, Diamond develops and sells a full range of skateboard hard and soft goods including bolts, bearings, t-shirts, hoodies, and other skateboarding and streetwear accessories. The Diamond Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Diamond’s disposable vapes, gummies, pre-rolled joints, and hard candies (“Diamond Products”). These Diamond Products may contain CBD, hemp, delta-8-THC, delta-10-THC, cannabis and/or cannabinoid derivatives and are to be branded under one or more of Diamond’s brands or marks.

Lifted shall pay Diamond a royalty of twenty percent (20%) of Adjusted Gross Revenue (defined below) on the initial manufacturing run of each Diamond Product manufactured and sold by Lifted Made under the Diamond Agreement. The Diamond Agreement defines Adjusted Gross Revenue as revenue on the Diamond Product “less any sales taxes, actual returns, pre-approved discounts, replacements, refunds and credits for returns.”

After the initial manufacturing run of a Diamond Product, Lifted shall pay Diamond a royalty of forty five percent (45%) of Adjusted Gross Revenue on subsequent manufacturing runs for that Diamond Product; however, under the terms of the Diamond Agreement, the parties will split manufacturing costs 50/50 for Diamond Products sold after each Diamond Product’s first manufacturing run. Alternatively, under the terms of the Diamond Agreement, Diamond is entitled to notify Lifted that it elects to be paid a flat 7% of Adjusted Gross Revenue on specific subsequent manufacturing runs without sharing in the manufacturing costs for that run. Diamond is also entitled to purchase Diamond Products produced under the Diamond Agreement from Lifted for direct sale on Diamond’s website and via certain other channels used by Diamond. Under the terms of the Diamond Agreement, Diamond’s cost for these Diamond Products acquired for direct sale is 30% below wholesale. 

Under the terms of the Diamond Agreement, the parties will work together to set prices for Diamond Products. The term of the Agreement is three years and may be extended with the mutual consent of the parties. However, the Diamond Agreement may be extended for one-year with notice by Diamond at least three months prior to the end of the 3-year term, or by mutual consent of the parties. If Lifted pays to Diamond aggregate annual royalty payments of at least $1,000,000 per year, then the Diamond Agreement shall automatically renew for an additional one-year term.

For information regarding the accounting for the Diamond Agreement: please refer to NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES.

Jeeter Agreement

On July 17, 2023, Lifted and DreamFields Brands Inc. d/b/a Jeeter (“Jeeter”) entered a Manufacturing, Sales and Marketing Agreement dated as of July 14, 2023 (the “Jeeter Agreement”). Pursuant to the Jeeter Agreement: (1) Jeeter has appointed Lifted as its exclusive manufacturer, seller and distributor within the United States of vape, gummies and pre-rolled products containing hemp-derived cannabinoids sold under the Jeeter brand (“Jeeter Products”); (2) Jeeter and Lifted will agree upon the devices, formulation, design, packaging, run costs, and marketing of each of the Jeeter Products; (3) Jeeter and Lifted will share equally the costs of manufacturing, marketing, distributing and insuring the Jeeter Products (“Product Costs”); and (4) the revenue from all Product sales, minus applicable Product offsets and sales commissions (“Aggregate Product Revenue”), will be allocated 60% to Jeeter and 40% to Lifted.

The Jeeter Agreement is for an Initial Term of two years, provided that if the completed Product sales during the first year of the Initial Term are a minimum of $48 million (the “Minimum Sales”), then the Initial Term will automatically continue until the end of the second year of the Initial Term. Jeeter and Lifted may mutually agree in writing to extend the Jeeter Agreement for Renewal Terms of at least one year each, but if not so extended then the Jeeter Agreement will automatically terminate.

Jeeter may terminate the Jeeter Agreement at any time upon written notice to Lifted upon any of the following: (1) if Lifted fails to achieve the Minimum Sales during any 12 month period; (2) if there is any material change in federal legislation regarding the manufacturing, sale, use or consumption of hemp-derived delta-8-THC that in Jeeter’s sole and absolute determination has an adverse impact upon the Jeeter Agreement; or (3) if Jeeter determines in its sole and absolute discretion that the sale of Jeeter Products under the Jeeter Agreement has or is reasonably likely to have an adverse impact on Jeeter’s delta-9-THC product business.

The Jeeter Agreement provides that if Aggregate Product Revenue achieves $1.5 million or more in a single month, then thereafter so long as Aggregate Product Revenue achieves $9 million or more in each six month period, Lifted shall be prohibited from directly or indirectly manufacturing, marketing, distributing, promoting or selling pre-rolled joints made from hemp or cannabis in the United States (except under the Jeeter Agreement) during the remaining term of the Jeeter Agreement.

For information regarding the accounting for the Jeeter Agreement: please refer to NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES.

The Jeeter Agreement was terminated effective January 1, 2024 pursuant to a Termination Agreement dated as of March 22, 2024 between Jeeter and Lifted, described in NOTE 14 – SUBSEQUENT EVENTS.

Mirsky Agreement

On July 11, 2023, Lifted and Florence Mirsky (“Mirsky”) entered into an Agreement (the “Mirsky Agreement”). Pursuant to the Mirsky Agreement, in consideration of Mirsky’s introduction of Jeeter to Lifted, Lifted shall pay to Mirsky finder’s fees equal to 6.5% of the amount, if any, by which Lifted’s share of the Aggregate Product Revenue under the Jeeter Agreement exceeds Lifted’s share of the Product Costs under the Jeeter Agreement.

Lifted Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp.

Asset Purchase Agreement

On April 28, 2023, Lifted purchased nearly all of the assets (the “Purchased Assets”) of its hemp flower products supplier Oculus CRS, LLC, Aztec, New Mexico (“Oculus”) for $342,068, net of $26,420 cash acquired. The Purchased Assets include, but are not limited to, Oculus’ operational equipment, office equipment, raw materials, inventory, cash on hand, accounts receivable, and a contract (the “Machine Purchase Contract”) to purchase, for a total of $309,213 (the “Machine Purchase Price”), a new machine that is ready for delivery, and that when delivered and installed will be used to automate a substantial portion of the manufacturing of the hemp flower products. $99,910 of the Machine Purchase Price had already been paid by Oculus, leaving $209,303 as the remaining portion of the Machine Purchase Price (the “Machine Purchase Final Payment”).

The gross Purchase Price of $368,488 purchase was paid by Lifted using cash on hand. At the closing, Oculus applied the entire Purchase Price to pay off all of Oculus’ liabilities as of the closing date (the “Oculus Liabilities”), including the Machine Purchase Final Payment. The only asset of Oculus that was not included in the Purchased Assets was Oculus’ rights as the plaintiff in a pending lawsuit filed by Oculus against a particular customer for an alleged breach of contract.

Agreement and Plan of Merger

Simultaneously with Lifted’s purchase of the Purchased Assets, Lifted executed an Agreement and Plan of Merger (“Oculus Merger Agreement”) with Oculus CHS Management Corp. (the “Management Corp.”), pursuant to which the Management Corp. was merged with and into Lifted, with Lifted being the surviving corporation in the merger (the “Merger”). The only assets of the Management Corp. were multi-year employment contracts with the owners/managers of Oculus, Chase and Hagan Sanchez (the “Employment Agreements”).

The Merger consideration (the “Merger Consideration”) will be paid by Lifted to Chase and Hagan Sanchez in two installments.

The first installment of the Merger Consideration was paid by Lifted to Chase and Hagan Sanchez at the closing of the Merger, and consisted of 100 shares of unregistered common stock of LIFD.

The second installment of the Merger Consideration will be paid by Lifted to Chase and Hagan Sanchez following the first anniversary of the closing of the Merger which will be April 28, 2024. The second installment of the Oculus Merger Agreement will be calculated and paid out as follows:

(1) Lifted’s CEO Nicholas S. Warrender (“NWarrender”), in consultation with LIFD’s President and CFO William C. “Jake” Jacobs (“WJacobs”), will analyze and make a written determination (the “Determination”) of the incremental pre-tax cash flow that NWarrender estimates that the hemp flower products division is generating for Lifted above and beyond the annual profits that are currently being generated for Lifted due to Lifted’s current business relationship with Oculus (the “Incremental Pre-Tax Profits”), after taking into account all relevant financial factors including but not limited to the purchase price of the Purchased Assets, the merger consideration, and all items of income, expense and investment directly and indirectly associated with Lifted’s hemp flower products division, which Determination will be final and legally binding on all of the parties; and

(2) Within five days following delivery of the Determination, Lifted will pay Chase and Hagan Sanchez a second installment of Merger consideration equal to five times the Incremental Pre-Tax Profits, provided that (a) 20% of such second installment of Merger consideration shall be paid in the form of cash, (b) 80% of such second installment of Merger consideration shall be paid in the form of unregistered shares of common stock of LIFD, which unregistered shares of common stock of LIFD shall be valued at $5 per share regardless of whether LIFD’s common stock is then trading at a price that is lower or higher than $5 per share, and (c) such second installment of Merger consideration shall be subject to a minimum value of $1 million dollars (“Minimum Earnout Consideration”) and a maximum value of $6 million dollars (with the stock portion of the second installment of Merger consideration being valued at $5 per share under all circumstances).

As examples, for illustrative purposes only:

As of the day of this Annual Report on Form 10-K, the management of the Company does not expect the second installment of Merger Consideration to exceed the Minimum Earnout Consideration.

Accounting for Lifted’s Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp.

Employment Agreements

Pursuant to the terms of the Oculus Merger Agreement, upon the closing of the Merger, all of the Management Corp.’s rights and obligations under the Employment Agreements have been assumed by Lifted. Chase and Hagan Sanchez are now the Vice President of Flower and General Manager of Flower of Lifted, respectively, and will continue to manage the hemp flower products business in Aztec, NM, which will operate as a hemp flower products division within Lifted, reporting to NWarrender, Lifted’s CEO. Pursuant to Chase Sanchez’s employment agreement, his salary is $150,000 per year. Hagan Sanchez’s salary is $100,000 per year. Both agreements are subject to termination with or without cause, non-solicitation, non-competition and non-disclosure clauses. 

At the time of the Merger, in addition to Chase and Hagan Sanchez, a total of 20 other people who had previously worked at Oculus became full-time employees of Lifted. Lifted agreed to, and did, pay employment bonuses to certain of these new people, in an aggregate amount totaling $50,000, pursuant to written instructions to Lifted from Chase and Hagan Sanchez.

Lease Agreement – Aztec, New Mexico

Pursuant to the terms of the Oculus Merger Agreement, upon the closing of the Merger, Lifted assumed Oculus’ lease of office and operational space in Aztec, New Mexico. The leased premises include a shop building of approximately 4,800 square feet and adjacent fenced parking area located at 16178 US Hwy 550, Aztec, San Juan County, New Mexico. The term of this lease was one year, commencing on December 1, 2022 and ending on November 30, 2023, continuing month-to-month thereafter until terminated. The base lease payment is $3,850 per month. All monthly payments are due and payable in advance on the first day of each month. Lifted is also required to pay taxes, insurance and certain maintenance costs of the leased premises. The lease is accounted for as an operating lease.

Extrax NM Agreement

On June 1, 2023, Lifted and Extrax NM, LLC (“ENM”) entered into an Agreement (the “ENM Agreement”). Pursuant to the ENM Agreement, (1) Lifted will sell certain devices/objects to ENM, and Lifted will loan certain amounts to ENM, and (2) ENM will manufacture and exclusively sell Urb-branded marijuana products to licensed marijuana dispensaries located in New Mexico. ENM shall pay over to Lifted one-half of the gross sales proceeds, excluding only governmentally-imposed taxes, received by ENM from product sales, which payments shall be allocated and applied as follows: firstly, to repay Lifted for its loans to ENM; secondly, to pay to Lifted mutually agreed upon amounts for said devices/objects sold by Lifted to ENM; and thirdly, to pay to Lifted a license fee.

The ENM Agreement is for an Initial Term of 60 months, provided that if the aggregate product sales during the Initial Term are $10,000,000 or more, then the term of the ENM agreement will automatically renew for a Renewal Term of 60 months (and similarly in regard to Renewal Terms).

Lifted and ENM each shall have the right to terminate the ENM Agreement in specified circumstances, including in the event that its CEO determines in good faith, and provides evidence to other party proving, that the business being conducted pursuant to the terms and conditions of the ENM Agreement is no longer profitable for such company.

For information regarding the accounting for the ENM Agreement: please refer to NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES.

Manufacturing, Sales and Marketing Agreement With Subsidiary of a Large Publicly Traded US Marijuana Company

On or about January 23, 2024, Lifted entered into a Manufacturing, Sales and Marketing Agreement effective as of January 20, 2024 (“Agreement”) with a wholly owned subsidiary of a large, publicly traded US marijuana company that designs and sells hemp-derived vape and gummy products. The Agreement is similar in many respects to the other manufacturing, sales and marketing agreements entered into by Lifted in 2023. Our management does not believe that any of the relationships with the other collaborating companies have had a significant impact on our revenues as no sales under any of the agreements have increased Lifted’s revenues by more than 5%. There is no assurance that this new Agreement, with this new counterparty, will have a greater impact on our revenues than the relationships with the others; however, it may.

Services to be Provided by Lifted Made

Under the terms of the new Agreement with this new counterparty, the parties (“Parties”) have agreed that Lifted will serve as the exclusive manufacturer and distributor of certain 2018 Farm Bill compliant hemp-derived vape products and gummy products in the formulations and to the specifications mutually agreed upon by the Parties (the “Products”). The territory for the sale of the Products is limited to the United States of America (“Territory”). In addition to serving as exclusive manufacturer and distributor of the Products, Lifted will be responsible to sell the Products to customers (“Customers”), and to collect all payments from such Customers for the Products in the Territory during the Term (the “Services”).

Lifted, in its capacity as the exclusive manufacturer and distributor of the Products in the Territory during the Term, shall be an independent contractor and not an agent, representative or employee of the other party. As part of the Services, Lifted shall create a distribution and sub-distribution network for the sale of Products to Customers within the Territory. Neither Party shall have any right or power to represent or bind the other Party with respect to any third party.

Term

The term of the Agreement is eighteen (18) months from the effective date, renewable upon mutual written agreement of the Parties.

Marketing

Under the terms of the Agreement, the other party shall be primarily responsible for marketing the Products and shall pay the costs of such marketing. Lifted Made shall reasonably cooperate in advertising and marketing programs for the Products and shall reasonably cooperate in implementing sales, promotional and merchandising programs for the Products. All promotional discounts shall be subject to the mutual agreement of the Parties.

Quality

Under the terms of the Agreement, Lifted is required to use its best efforts to source materials for production of the Products at the lowest cost, provided such Products shall conform to quality standards consistent with industry standards for such products. Lifted Made is required to ensure the Products fall within certain predefined limits of heavy metals, microbial impurities, mycotoxins, residual pesticides, residual solvents and processing chemicals, as well as additional quality standards communicated to Lifted Made. Any Products failing such quality standards may be rejected. Lifted is also required to manufacture the Products and be responsible for all safety testing and approvals in conformity with the standards and legal requirements applicable to the manufacturing, distribution and sale of any Products and ensuring that all governmentally required reporting (including but not limited to PACT Act reporting) is accurately and timely made, and that all applicable excise taxes and sales taxes (collectively, “Excise and Sales Taxes”) are paid. In the event of any defects in the Products, Lifted shall, at its sole cost and expense, either (i) refund the cost of such Product or (ii) replace the Product, such election to be at the other party’s sole discretion.

Under the terms of the Agreement, all elements of the design, manufacturing, quality, advertising and promotion of the Products shall be mutually agreed upon and approved by the Parties, and Lifted shall submit to the other for approval: (i) any relevant schematic designs, (ii) pre-production samples, (iii) production samples, and (iv) such other specific items as are requested by the other party in its reasonable discretion from time to time for approval, and at all times prior to production and prior to being offered for sale. Products not approved by both Parties to the Agreement shall not go on to the next stage of production and shall not be offered for sale or sold by Lifted Made.

Prices

Under the terms of the Agreement, the Parties have agreed to work together in good faith to determine the sales prices to Customers for the Products and such prices shall be subject to the Parties’ mutual agreement. The Parties have agreed to work together to enact lawful and appropriate pricing strategies, including MSRP and maximum sale prices. Lifted shall make good faith efforts to collect all payments in connection with sales of all Products.

Customers

Under the terms of the Agreement, the Parties have agreed to work together in good faith to determine the Customers to which Lifted is selling the Products, subject to Lifted’s reasonable discretion, provided that the Parties shall regularly evaluate sales targets, accounts receivable, bad debt, and other reasonable factors to determine which Customers to direct Product to, and the other party shall have the right, in its reasonable discretion, to reject and direct Lifted to stop selling to a Customer in the event it deems necessary upon advanced notice to Lifted.

Forecasting

Under the terms of the Agreement, the Parties have agreed to meet monthly to review Products, discuss predicted order volumes, review pricing to Customers, plan marketing and sales efforts, discuss expansion into other states within the Territory, and evaluate additional potential Customers. The Parties shall also use such meetings to agree upon the quantities of raw materials, ingredients and supplies to produce the Products.

Purchase Orders

Under the terms of the Agreement, the other party shall initiate all Purchase Orders. Lifted has the right, in its sole discretion, to accept or reject any Purchase Order. Lifted may accept any Purchase Order by confirming the order via written confirmation and written invoice sent by an authorized agent of Lifted Made, including estimated completion date of the Products contemplated by such Purchase Order.

Excess Demand

Under the terms of the Agreement, in the event the Parties reasonably determine, after good faith discussions, that Lifted cannot accept the volume of Purchase Orders and anticipated demand for the future production of Products at any point during the Term of this Agreement (or in the event Lifted rejects a Purchase Order), the Agreement’s exclusivity shall be automatically waived by Lifted, but only to the extent of such excess demand as reasonably determined by the Parties after good faith discussions. In such a case, the other party shall have the right to work with any manufacturer, in its sole discretion, to meet such excess demand expectations.

Costs of Purchase Order

Under the terms of the Agreement, upon Lifted’s acceptance of a Purchase Order, Lifted is entitled to invoice the other party for 50% of the costs of the Purchase Orders with net 15-day terms. Lifted may only use the 50% down payment for placing orders for materials and production costs, including lab testing, associated with the accepted Purchase Order and for no other purpose. Once the Products are completed and are ready for shipment to Customers, Lifted is entitled to invoice the other party for the remaining 50% of the costs of the Purchase Orders with net 15-day terms.

Cost Recovery and Royalty

Under the terms of the Agreement, once sales of the Products begin, Lifted is required to use all revenue from the sale of the Products (less returns, discounts, refunds, etc.) (“Adjusted Gross Revenue”) until the other party has been repaid the cost of the Purchase Order. Thereafter, the Parties shall divide the remaining Adjusted Gross Revenue 60/40, with 40% of that Adjusted Gross Revenue going to Lifted Made (the “Royalty”).

Warranty

Under the terms of the Agreement, Lifted represents and warrants (i) that the Products, packaging and labels to be used in the Territory shall comply with all applicable laws, rules and regulations in those US states where sales of such Products are legal; (ii) that the Products shall comply with all federal, state or local laws and regulations relating to the Products’ quality, dosage, labeling, identity, quantity, or packaging; (iii) that the Products will not be adulterated or misbranded within the meaning of any applicable federal or state law or regulation, and will contain all necessary warnings, disclosures or instructions, in each case, pursuant to all applicable laws, rules and regulations; (iv) all third parties Lifted Made engages in connection with the manufacturing, distribution and sale of the Product (e.g., sub-distributors) adhere to all applicable laws, rules and regulations, including without limitation those regarding the importation, child and/or oppressive labor, and the regulation of controlled substances and 2018 Farm Bill; and (v) all Products shall be free from defects in material and workmanship and fit for their intended purpose.

Indemnification

Under the terms of the Agreement, Lifted Made agreed to indemnify the other party for (i) harm, injury, damage or loss arising out of or in connection with the Services, production and manufacture, distribution and/or sale of the Products (including by any third parties engaged by Lifted Made (e.g., sub-distributors)); (ii) harm, injury, damage or loss arising out of or in connection with the use of the Products by any Customer or end-user, to the extent such harm, injury, damage or loss results from a defect in the Products; (iii) any uncured material breach by Lifted Made of any provision hereof; (iv) any violation of any applicable law or government regulation by Lifted Made or any third party engaged by Lifted Made in connection with the Products; and (v) any recall or withdrawal of a Product in accordance with this Agreement. Notwithstanding the forgoing, Lifted Made shall have no indemnification obligation hereunder pursuant to clauses (i), (ii) or (iii) above if such recall, withdrawal or defect arises out of or relates to any misuse, mishandling, or improper storage of, or damage caused to, the Products by anyone other than Lifted Made or its manufacturers/producers, Customers, or any third party engaged by Lifted Made in connection with the Products.

Insurance

During the Term of the Agreement, each Party, at its own expense, is required to procure and maintain in full force and effect its own insurance policy or policies against any loss, liability, product liability, personal injury, death, or property damage, and shall provide certificates of insurance evidencing such coverage to the other Party promptly upon request. Such coverage shall include (1) Comprehensive Commercial General Liability Insurance with limits of $1,000,000 per occurrence and $2,000,000 in aggregate; (2) Worker’s Compensation Insurance in limits required by applicable law; and (3) Product Liability Insurance with minimum limits of $1,000,000 per occurrence and $2,000,000 in aggregate. GL and Product Liability policies shall name the other Party as an additionally insured party.

Termination

At any time during the Term of the Agreement, either party has the option, but not the obligation, to terminate this Agreement at any time, effective upon written notice, in the event the other Party has defaulted on any of its obligations under this Agreement and such default is not cured within thirty (30) days after receipt of written notice specifying the default.

Ablis, Bendistillery and Bend Spirits

On April 30, 2019, we also closed on the acquisition of 4.99% of the common stock of each of CBD-infused beverages maker Ablis Holding Company (“Ablis”) (www.AblisBev.com), and of distilled spirits manufacturers Bendistillery Inc. (“Bendistillery”) (www.Bendistillery.com) and Bend Spirits, Inc. (“Bend Spirits”), all located in Bend, Oregon. Ablis manufactures and sells flavored, lightly carbonated, canned, CBD-infused beverages and shots, CBD-infused muscle rub, among other products. Bendistillery manufactures and sells straight and flavored vodka and gin and various types of whiskey under its brand Crater Lake Spirits (www.CraterLakeSpirits.com).

Capital Raise

We currently have several million dollars of cash on hand. Nevertheless, we may deem it necessary or desirable in the future to raise additional capital in order to build our available working capital, to close future acquisitions, to potentially expand the 5511 Building, or to pay other corporate obligations. No guarantee or assurance can be made that such capital can be raised on acceptable terms, if at all.

If we were ever to proceed forward with an equity raise, it may be in conjunction with a potential listing of our common stock on a stock exchange. However, there can be no guarantee or assurance that any such debt and/or equity capital raise or listing will be completed on acceptable terms, if at all.

Corporate Information

LFTD Partners Inc. is a Nevada corporation. On May 18, 2021, the Company changed its name to LFTD Partners Inc. from Acquired Sales Corp. On March 15, 2022, the Company changed its stock trading symbol to LIFD.

After acquiring, operating and then selling businesses involved in the defense sector, our business is currently directly or indirectly involved in the development, manufacture and/or sale or re-sale of a wide variety of branded, hemp-derived, psychoactive and alternative lifestyle products, and of products involving, nicotine, tobacco and marijuana.

We are focused on acquiring Canna-Infused Products Companies. The Company is also interested in potentially acquiring “essential” businesses that are outside its industry.

Our principal headquarters are located at 14155 Pine Island Drive, Jacksonville, Florida 32224. Our telephone number is (847) 915-2446. Our corporate website address is www.LFTDPartners.com.

LFTD Partners' first wholly-owned subsidiary is Lifted Made (“Lifted”), Kenosha, Wisconsin, which manufactures and sells hemp-derived and other psychoactive products under its award-winning Urb Finest Flowers brand (www.urb.shop). Lifted is the worldwide, exclusive manufacturer and seller of Diamond Supply Co. (www.DiamondSupplyCo.com) and Cali Sweets hemp-derived products.

LFTD Partners also owns 4.99% of CBD-infused beverage and products maker Ablis (www.AblisBev.com), and of distillers Bendistillery Inc. d/b/a Crater Lake Spirits (www.CraterLakeSpirits.com) and Bend Spirits, Inc., all located in Bend, Oregon.

We, or our target acquisitions, have proprietary rights to a number of trademarks, service marks and trade names used in this Form 10-K which are, or may become, important to our business. Solely for convenience, the trademarks, service marks and trade names in this Form 10-K are referred to without the ® and TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. All other trademarks, trade names and service marks appearing in this Form 10-K are the property of their respective owners.

The Lifted Made Business

History

Our wholly owned subsidiary Lifted was originally incorporated in the state of Wisconsin on September 19, 2014. Lifted was created with a passion to build a culture-based organization focused upon quality products and a healthier lifestyle.

Products

Under its flagship brand Urb Finest Flowers, Lifted develops, manufactures and sells a wide variety of products containing hemp-derived cannabinoids, psychoactive substances and other alternative lifestyle products, including nicotine products. Lifted sells its products online primarily through its website: www.urb.shop.

Lifted is the worldwide, exclusive manufacturer and seller of Diamond Supply Co. (www.DiamondSupplyCo.com) and Cali Sweets hemp-derived products. 

Lifted also manufactures and sells similar hemp-derived products to private label clients. During 2022, Lifted began manufacturing gummies in-house, both for its Urb Finest Flowers brand and for third party customers.

Competition

Lifted faces intense competition in the hemp-derived, psychoactive and alternative lifestyle products industries from both existing and emerging companies that offer similar products to Lifted. More distributors are creating their own brands and selling their own branded products at a lower price than Lifted’s products. There is also increased competition for products containing more milligrams of cannabinoids per unit at a lower price point. Also, other competing brands pay distributors and wholesalers to replace Lifted’s products on valuable shelf space. Some of Lifted’s current and potential competitors may have longer operating histories, more innovative or popular products, greater financial, marketing and other resources and larger customer bases. Given the rapid changes affecting the cannabinoid industry nationally and locally, Lifted may not be able to create and maintain a competitive advantage in the marketplace. Lifted’s success will depend on its ability to keep pace with any changes in local and national markets, especially in light of frequent and rapid legal and regulatory changes. Competition is also based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing and promotional activity, the ability to identify and satisfy consumer preferences, as well as convenience and service. Lifted’s success will depend on its ability to respond to, among other things, changes in the economy, market conditions and competitive pressures. Any failure to anticipate or respond adequately to such changes could have a material adverse effect on Lifted’s financial condition, operating results, liquidity, cash flow and operational performance.

The Market

Delta-8-THC and other cannabinoids can be derived from hemp. On December 20, 2018, President Donald J. Trump signed the Agricultural Improvement Act of 2018, which is more commonly known as the “2018 Farm Bill”. The 2018 Farm Bill legalizes hemp cultivation and declassifies hemp as a Schedule I controlled substance. The 2018 Farm Bill was scheduled to expire on September 30, 2023, but has been extended for an additional year. No assurance or guarantee can be given that the provisions of the 2018 Farm Bill that federally legalized Lifted's products will be re-authorized in the next so-called "Farm Bill".

The US Food and Drug Administration (“FDA”) has stated that although hemp is no longer an illegal substance under federal law, the FDA continues to regulate cannabis products under the Food, Drug, and Cosmetic Act (“FD&C Act”) and Section 351 of the Public Health Service Act. In addition, several states have enacted laws and regulations that prohibit or negatively restrict or regulate the sale of hemp and hemp-derived products, especially hemp-derived products containing delta-8-THC.

The market for psychoactive products is growing, and during 2022 Lifted began selling various products in this category. Many of these types of products that Lifted sells do not contain any hemp derivatives (such as THC).

Lifted’s product sales are typically made through distributors, but with some sales online or direct to retail outlets.

Government Laws and Regulations

Lifted primarily sells hemp-derived products, including products containing delta-8-THC and other cannabinoids. Lifted also sells other psychoactive and alternative lifestyle products, including nicotine products. Lifted is attempting to only conduct business to the extent permitted under applicable laws and regulations.

While Lifted is optimistic regarding the future of its business selling hemp-derived, psychoactive and alternative lifestyle products, including nicotine products, the manufacture and/or sale of these products involve significant risks associated with federal, state and local laws and regulations, and regulatory agencies, that have the potential to bankrupt Lifted and the Company, or at least to negatively impact the trading price of our common stock.

In regard to the sale of hemp-derived products in the United States, despite cannabis having been legalized at the state level for medical use in many states and for adult recreational use in a number of states, cannabis, other than plants of the same genus that meet the definition of industrial hemp, continues to be categorized as a Schedule I controlled substance under the federal Controlled Substances Act (“CSA”), and subject to the Controlled Substances Import and Export Act (“CSIEA”). As of December 20, 2018, the 2018 Farm Bill, formally known as the Agriculture Improvement Act of 2018 (the “Farm Bill”), has reclassified hemp for commercial use by removing it from its Schedule I Status under the CSA, and Lifted seeks to operate in compliance with the legislation. However:

(a) Farm Bill: The 2018 Farm Bill was scheduled to expire on September 30, 2023, but has been extended for an additional year. Lobbying is underway regarding what the next so-called "Farm Bill" will say. No assurance or guarantee can be given that the provisions of the 2018 Farm Bill that federally legalized Lifted's products will be re-authorized in the next so-called "Farm Bill". If the next so-called "Farm Bill" prohibits, or significantly restricts or regulates, Lifted's products, this could have a material adverse effect upon Lifted's business and the trading price of our common stock;

(b) FDA: The US Food and Drug Administration (“FDA”) has stated that although hemp is no longer an illegal substance under the Farm Bill, the FDA continues to regulate cannabis products under the Food, Drug, and Cosmetic Act (“FD&C Act”) and Section 351 of the Public Health Service Act. The health and safety impacts of delta-8-THC and other cannabinoids have not yet been established via traditional scientific and/or clinical studies. The FDA appears to believe that CBD, delta-8-THC and other hemp-derived cannabinoids may or could have significant adverse health impacts upon human beings, especially in regard to potential liver toxicity or liver damage. Furthermore, the FDA sometimes appears to believe that certain cannabinoids are drugs, and that the sale of certain cannabinoid-infused products without FDA approval is illegal. In deference to the FDA’s position, various states and municipalities have similarly declared that the sale of certain hemp-derived cannabinoid-infused products such as delta-8-THC is illegal, or have imposed restrictions or prohibitions upon the sale of certain hemp-derived products. The FDA may in the future impose significant licensing or other requirements, regulations, restrictions and/or prohibitions on the sale of hemp-derived products, which could have a material adverse effect upon Lifted’s business and the trading price of our common stock;

(c) DEA: The US Drug Enforcement Agency (“DEA”) has stated that although hemp is no longer an illegal substance under the Farm Bill, the FDA continues to pursue Schedule I controlled substances as well as certain synthetic substances. In particular:

(i) Hemp and hemp-derived cannabinoid-infused products which exceed a delta-9-THC concentration of 0.3% by dry weight are illegal under the Farm Bill. Any failure to keep the delta-9-THC concentration in Lifted’s hemp-derived or cannabinoid-infused products below 0.3% by dry weight could subject us to action by the DEA or other regulatory authorities and/or to lawsuits by consumers, which could have a material adverse effect upon our Company’s business and the trading price of our common stock. In addition, certain hemp-derived products may, over time, gradually increase their delta-9-THC concentration, and this may ultimately cause such products to exceed the 0.3% delta-9-THC by dry weight concentration level, making such products illegal in certain jurisdictions. If this happens, we could be subject to regulatory action that could have a material adverse effect upon our Company and the trading price of our common stock. In addition, the approval of medical and recreational marijuana by many states has created a situation in which it may be difficult or impossible for regulators and courts to determine whether the THC levels reflected in consumers’ blood tests are the result of legal hemp-derived products or marijuana-infused products. This may result in regulatory actions or lawsuits against the Company;

(ii) The DEA has issued a statement that some have interpreted as making hemp-derived delta-8-THC illegal. In deference to the DEA, certain state and local governments have imposed restrictions or prohibitions upon the sale of certain products containing delta-8-THC. Lifted sells significant quantities of products containing hemp-derived delta-8-THC, and any crackdown by the DEA or other regulatory authorities on products containing delta-8-THC may have a material adverse effect upon Lifted’s business and the trading price of our common stock; and

(iii) The DEA has sent a letter saying that delta-9-THCO and delta-8-THCO “do not occur naturally in the cannabis plant and can only be obtained synthetically, and therefore do not fall under the definition of hemp.” Any crackdown by the DEA or other regulatory authorities on products containing delta-9-THCO and/or delta-8-THCO may have a material adverse effect upon Lifted’s business and the trading price of our common stock.

(d) Amended PACT act: The amended federal PACT act makes the online sale of certain of Lifted’s products to end users difficult or impossible. The amended federal PACT act may have a material adverse effect upon Lifted’s business and the trading price of our common stock.

Regarding the sale of products containing nicotine: products containing nicotine are addictive and are subject to heavy regulation by U.S. federal, state and local governments. The legislative and regulatory landscape surrounding nicotine-containing products has created risks for Lifted’s business. Laws and regulations have been adopted that can impose significant liabilities upon companies operating in the nicotine industry, especially in regard to sales to minors. Existing and future laws and regulations affecting nicotine products may have a material adverse effect upon Lifted’s business and the trading price of our common stock.

Furthermore, the regulation of hemp-derived, psychoactive and nicotine products is evolving. Lifted may become subject to new laws, rules, regulations, moratoriums, prohibitions, or other restrictions or impediments upon nicotine and Canna-Infused Products Companies imposed by the U.S. President pursuant to executive orders, by the U.S. Congress in laws, by U.S. federal agencies such as the FDA and/or the DEA, and/or by state and local governments. For example, Lifted’s business may be impacted by any language relating to hemp-derived or psychoactive products that might be contained in any bill that might federally legalize marijuana, or that might be contained in the next so-called “Farm Bill”, or that might be contained in other legislation at the federal or state level. Without limiting the generality of the foregoing, governmental laws, rules and regulations may impose significant new rules, restrictions, limitations, prohibitions and/or taxes on when, where, how and to whom Lifted may sell its products, and these new rules, restrictions, limitations, prohibitions and/or taxes may have a material adverse effect on Lifted’s business and the trading price of our common stock.

Product Risks

Lifted’s products contain hemp-derived cannabinoids and other psychoactive substances. There is a risk that Lifted could be targeted by regulators or consumers with claims that its products are unsafe. Potential product safety risks, and potential laws and regulations including but not limited to any issued by the U.S. Food and Drug Administration (“FDA”) could have a material adverse effect on Lifted’s financial condition, operating results, liquidity, cash flow and operational performance.

Officers and Employees

The executives of Lifted have backgrounds in the vaping industry, sales, graphic design, distribution, marketing, accounting, and supply chain management, skills that have helped Lifted distinguish itself from the competition.

As of the date of this Annual Report on Form 10-K, Lifted has approximately 166 full time and part time employees and independent contractors who are engaged in product formulation, design and branding, website development, private label client management, sales, strategy, distribution, supply chain management, new business development, warehouse management and order fulfillment, operations management, accounting, new product development, trade shows and evaluation of potential acquisitions and joint ventures. Currently, most of Lifted’s employees and independent contractors are based in Kenosha, Wisconsin, and the rest are located in New Mexico, Illinois, and Florida.

Sources of Supply

Lifted sources its raw goods from many different suppliers. Lifted’s raw goods are third-party lab tested, and Lifted’s finished goods are also third also third-party lab tested. Lifted does not grow or manufacture its raw goods, nor does Lifted process or extract cannabinoids or other substances from raw goods. However, many of Lifted’s finished goods are made in-house using the raw goods purchased from third party vendors. Some finished goods are purchased from third party vendors, which make products for Lifted in accordance with Lifted’s specifications. Lifted designs the majority of its packaging in-house, and typically employs a third party firm to manufacture that packaging.

Lifted currently believes that it would be able to find replacement manufacturers with minimal negative impact on its business. However, Lifted’s vape pens and cartridges are sourced exclusively from China. COVID-19 and variants, Chinese holidays, backups at U.S. ports, tariffs imposed on products sourced from China, and potential hostilities involving China, could make it difficult or impossible to source these products cost effectively, or at all, from China. These risks associated with China could drastically increase Lifted’s product costs, all of which could have a serious detrimental impact on Lifted’s sales and profit margins.  

Intellectual Property

Lifted maintains proprietary formulations, other trade secrets, and custom molds for its disposable vapes. Lifted also uses proprietary packaging for its products. Lifted does not currently own any registered patents.

Trademarks

Lifted has a registered trademark for its “Urbar” line of products.

Research and Development Expenditures

Lifted’s research and development (“R&D”) expenditures consist primarily of compensation and related costs for third parties responsible for the R&D of new products. Research and development costs are expensed as they are incurred. During the years ended December 31, 2023, 2022 and 2021, the Company reported R&D expenditures of $19,062, $25,636 and $0, respectively. During 2022, Lifted for the first time hired an outside laboratory to conduct research and development on a potential new, non-hemp-derived, synthetic psychedelic product (the “New Psychedelic Product”) for a total of $19,800. Such research and development of the New Psychedelic Product has been put on indefinite hold. Lifted has recently successfully purchased from third parties a natural equivalent of the New Psychedelic Product. No guarantee or assurance can be given that in the future Lifted will be able to purchase more of this natural equivalent of the New Psychedelic Product, or a synthesized version thereof.

Marketing

Lifted primarily markets itself by networking throughout the industry through word of mouth, through its website, by attending trade shows, and via other marketing campaigns. In the past, Lifted has also engaged public relations and search engine optimization firms to improve Lifted’s public relations and search engine optimization efforts. There can be no guarantee or assurance that Lifted’s marketing efforts will be successful or result in any additional sales or profits for Lifted. 

Distribution

Lifted’s distribution is done internally and through third party distributors who distribute throughout the U.S. Lifted has also begun selling its products overseas. Lifted and these distributors distribute Lifted’s products to vape and smoke shops, convenience stores, grocery stores, gyms, natural food stores, wellness stores, and other locations. Lifted believes but cannot guarantee that in the event that Lifted lost its relationship with one or more of its current distributors, that other replacement distributors could be found without significant disruption to Lifted’s business. 

Costs and effects of compliance with environmental laws

To Lifted’s knowledge, Lifted does not currently use or generate any hazardous materials in its operations.

OLCC Review of New Directors of the Company

Due to our minority ownership interest in Bendistillery and Bend Spirits, the Oregon Liquor Control Commission (“OLCC”) has jurisdiction over our directors, officers and significant shareholders. If the OLCC were to refuse to approve any of our directors, officers or significant shareholders, it could disrupt our management and corporate governance, which could materially adversely affect our Company and the trading price of our common stock.

Description of Certain Key Provisions of the Transaction Documents Relating to the Lifted Merger Agreement

Registration Rights Agreement

In connection with the Merger, the Company signed a Registration Rights Agreement granting NWarrender, or his assigns, “piggyback” and “demand” registration rights in regard to any and all Company registration statements filed with the SEC on or prior to a termination date set out in the agreement, in order to permit the registration of all 3,900,455 shares of Common Stock issued to NWarrender as Stock Consideration in the Merger (“Registrable Shares”). The Registration Rights Agreement can be summarized as follows:

Subject to certain limitations, NWarrender, or his assigns, may demand registration of all or any portion of the Registrable Shares at any time beginning on the 120^th day following the closing of the Merger Agreement. The Company must then file a registration statement within ten days. The Company may postpone for up to 180 days the filing or effectiveness of a registration statement for a demand registration if the board of directors determines in its reasonable good faith judgment that such demand registration would (i) materially interfere with a significant acquisition, corporate organization, financing, securities offering or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act. The Company may delay a demand registration hereunder only once in any period of 12 consecutive months.

No demand registration shall be required where in the judgment of the Company, its legal counsel, and/or SEC guidance and comments the registration would be deemed a primary offering pursuant to Securities Act Rule 415, which is interpreted by the SEC staff to prohibit registrations of stock for resale where the seller is deemed to be engaged in a primary offering of behalf of the issuer. The registration rights agreement shall terminate when no Registrable Shares remain outstanding.

Repayment of Merger Related Promissory Note

On February 24, 2020, we acquired Lifted as a wholly-owned subsidiary for cash and stock paid to Lifted’s then owner NWarrender. The $7,500,000 money component of the purchase consideration was paid to NWarrender in the form of $3,750,000 in cash at closing and a $3,750,000 promissory note that accrued interest at the rate of 2% per annum (“$3.75M Note”).

The $3.75M Note was secured by (a) a first lien security interest in all of the assets of the Company and Lifted; and (b) a pledge of: (i) all of the capital stock of Lifted; (ii) all of the common stock of Bendistillery, Bend Spirits and Ablis that is owned by the Company; and (iii) all of the capital stock of any other entity owned by the Company, Lifted or any of their subsidiaries, pursuant to a Collateral Stock Pledge Agreement between NWarrender, as Secured Party, and the Company and Lifted, as Pledgors.

On December 30, 2021, the Company repaid all principal and interest due under the $3.75M Note.

NWarrender kept $1,000,000 of the repayment of the $3.75M Note, plus accrued interest, and on January 3, 2022, reloaned $2,750,000 to LIFD and Lifted (collectively “Payors”) at the rate of 2.5% (the “$2.75M Note”). The $2.75M Note payable jointly by the Company and Lifted to NWarrender was secured by a perfected first lien security interest (the “Security Interest”) that encumbers all of the assets of the Company and Lifted. The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022.

On June 7, 2022, LFTD Partners prepaid $916,666 of the principal of the $2.75M Note, and $29,384 of related accrued interest through that date, which left $1,833,334 remaining principal on the $2.75M Note. On July 5, 2022, we entered into an agreement (“Acceleration Agreement”) with NWarrender. Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest, and then, on July 25, 2022, we prepaid the remaining principal balance of $916,668 and accrued interest in full, and all collateral securing the $2.75M Note was released.

Stockholders Agreement

At the closing of the Merger Agreement, NWarrender, GJacobs, and WJacobs entered into a Stockholders Agreement which can be summarized as follows: each of them will vote all shares of our common stock now or hereafter owned or controlled by him as unanimously agreed upon by all three of them, including as to the following matters: election, removal and filling vacancies on our board of directors; our charter and bylaws; employment agreements, consulting agreements, fee agreements, base salaries, bonuses, management bonus pools amounts and calculations, management bonus pool allocations and payments, future stock options or warrants issuances, and any other direct or indirect compensation or benefits of any nature whatsoever; acquisitions; divestitures; and capital raises.

Executive Employment Agreements

At the closing of the Merger, the Company entered into employment agreements with NWarrender to serve as Co-Founder, Vice Chairman and Chief Operating Officer of the Company and as Chief Executive Officer of Lifted, with GJacobs to serve as Chairman, Chief Executive Officer and Secretary of the Company, and with WJacobs to serve as President, Chief Financial Officer and Treasurer of the Company (collectively the “Executive Employment Agreements”), which can be summarized as follows:

Each of the Executive Employment Agreements is a “rolling” five year employment agreement wherein the executive’s employment is effective and shall continue until the fifth anniversary of the commencement of such Executive Employment Agreement, unless terminated. Each of the Executive Employment Agreements shall be deemed to be automatically extended, upon the same terms and conditions, for additional periods of one year (extending the term of such Executive Employment Agreement to five years after each such extension date), unless either party provides written notice of such party’s intention not to extend the term of such Executive Employment Agreement at least 90 days’ prior to the applicable extension date.

During the employment term, each executive shall devote substantially all of his business time and attention to the performance of his duties under his Executive Employment Agreement and shall not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the performance of such services either directly or indirectly without the prior written consent of the board of directors of the Company; provided, that such executive shall be permitted to continue to participate as an officer of any corporation that owns real estate as of the date of his Executive Employment Agreement with the Company and that is owned by a family trust of which such executive is a grantor or beneficiary, and provided further that such executive, with the prior written consent of the board of directors of the Company shall be permitted to act as a director, trustee, committee member or principal of any type of business, civic or charitable organization and to purchase or own less than 5% of the publicly traded securities of any corporation provided, however, that such ownership represents a passive investment and that such executive is not a controlling person of, or a member of a group that controls, such corporation, and that such activities do not interfere with the performance of such executive’s duties and responsibilities to the Company.

Pursuant to an Omnibus Agreement, commencing January 1, 2022, the Base Salary under each of the Executive Employment Agreements to be paid to GJacobs, WJacobs and NWarrender is $250,000 per year. Prior to entering into the Omnibus Agreement, the annual rate of each executive’s base salary under his Executive Employment Agreement was $100,000.

Each executive shall participate in the Company’s annual company-wide management bonus pool, which can be generally described as a cash set-aside for management bonuses of an amount equal to 33% of the amount (if any) by which the Company’s actual annual consolidated EBITDA exceeds an annual consolidated EBITDA target amount that is mutually agreed upon between the Chairman of the Compensation Committee of the board of directors, on the one hand, and NWarrender, GJacobs and WJacobs, on the other hand, with the allocation of such management bonus pool to be determined by unanimous written agreement of such three executives. Pursuant to an Amended Omnibus Agreement, the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share.

Please read the below section “Allocation and Payment of Bonus Pool” for more information about the company-wide bonus pools for 2022 and 2021.

The Company provides to each executive an employee benefits package including fully paid Blue Cross/Blue Shield or equivalent family health, vision and dental insurance, without deductibles. The Company also provides to each executive prompt reimbursement for all documented business-related expenses paid or incurred by such executive in connection with the Company, including but not limited to airfare, rail, taxi, rental cars, parking, tolls, gasoline for business trips, meals, entertainment, hotel, office supplies, mobile phone, internet, hotspot, and postage expenses.

Each executive’s employment may be terminated by either the Company or such executive at any time and for any reason, provided that any termination of such executive’s employment by the Company without cause will trigger significant payment obligations by the Company to such executive.

Impact of the Merger on GJacobs’ and WJacobs’ Compensation Agreement

The Company entered into a Compensation Agreement dated as of June 19, 2019, with GJacobs and WJacobs. The material terms of the Compensation Agreement, as amended on December 1, 2020, but prior to the Omnibus Agreement and the Amended Omnibus Agreement, can be summarized as follows:

(1) Starting during June 2019 until the closing of the Lifted Merger on February 24, 2020, we paid GJacobs and WJacobs consulting fees of $7,500 and $5,000 per month, respectively. Upon the closing of the Lifted Merger, we entered into Executive Employment Agreements with GJacobs and WJacobs as described in the section above entitled “Executive Employment Agreements”;

(2) The closing of the Lifted Merger triggered obligations of the Company to pay cash bonuses to the Company’s CEO GJacobs and to the Company’s President and CFO WJacobs of $250,000 and $100,000, respectively, of which as of December 31, 2021 only $50,000 had been paid to GJacobs, and which accrued 2% annual interest on and after January 1, 2021, and of which $8,439 of the bonuses due and payable by the Company to GJacobs were allocated and applied to pay for the aggregate cost of GJacobs’ purchasing and exercising certain warrants on August 30, 2021 (see section below titled “Exercise of Warrants by Gerard M. Jacobs”);

(3) Upon demand by GJacobs and WJacobs on or after January 1, 2021, or the first date when we have raised a total of at least $15 million after January 1, 2019, we were obligated to pay GJacobs and WJacobs cash bonuses of $250,000 and $100,000, respectively, plus 2% annual interest accruing on and after January 1, 2021;

(4) Upon the earlier of December 1, 2021, or the first date when we have raised a total of at least $25 million after January 1, 2019, we were obligated to pay GJacobs and WJacobs cash bonuses of $250,000 and $100,000, respectively;

(5) The terms of GJacobs’ stock options granted by us to purchase shares of common stock of the Company which were set to expire (unless previously exercised) during November 2020 or during September 2021, respectively, have been extended so that all of such stock options may be exercised by GJacobs at any time on or before December 31, 2024;

(6) We granted to GJacobs and to WJacobs so-called “tag along” registration rights for all of our shares owned by GJacobs, by WJacobs, or by any of their respective affiliates, and for all of our shares issuable to GJacobs, to WJacobs, or to any of their respective affiliates upon the exercise of his or their options or warrants to purchase shares of common stock of the Company; and

(7) We issued to GJacobs and WJacobs five-year warrants containing a “cashless exercise” feature giving GJacobs and WJacobs (or his designee(s)) the right to purchase 250,000 and 225,000 shares, respectively, of common stock of the Company exercisable at $5.00 per share. 

Liquidity and Capital Resources

The Company’s only wholly owned subsidiary, Lifted, often generates enough free cash flow to allow the Company and Lifted to fund their operations at their current levels and to grow Lifted’s business in a conservative, capital-constrained fashion. However, no guarantee or assurance can be given that Lifted’s current level of free cash flow will continue in the future, especially in light of U.S. federal, state and local laws, regulations and executive orders that may negatively impact the Company’s sales of its products.

The Company and Lifted have aspirations to grow significantly faster than at their current levels, both organically and via acquisitions. But, to do so may require the Company to raise many millions of dollars of additional capital.  

Currently, management of the Company is reluctant to raise capital by selling equity securities of the Company (common stock and/or convertible preferred stock) at the current trading price per share of the Company’s common stock or any lower price per share.

Even if the Company is able to raise additional capital via borrowing or the sale of equity securities of the Company: (1) the Company is accruing and paying 3% annual dividends on its Series A and Series B Convertible Preferred Stock; and (2) the Company may in the future accrue for a company-wide bonus pool. Additional capital raised by the Company that is used to pay the aforedescribed company-wide bonus pool, or that is used to pay dividends on our outstanding Series A and Series B Convertible Preferred Stock, is collectively referred to as the “Allocated Capital”.

If, notwithstanding these impediments, the Company and/or Lifted is able to raise debt or equity capital that is in addition to the Allocated Capital (the “Growth Capital”), then the Growth Capital would likely be used in connection with one or more of the following: (1) stock buybacks if permitted by the Lender; (2) an expansion of the 5511 Building; or (3) for potential acquisitions.

While the Company would prefer to engage in 100% stock-for-stock acquisitions, potential acquisition candidates frequently prefer that a significant portion of the acquisition consideration be in cash. Also, the process of conducting a due diligence investigation and audit of potential acquisition candidates can be very expensive and requires cash. Also, some potential acquisitions may only make sense if the Company is in a position to inject cash into the potential acquisition candidates simultaneously with the closing of the acquisitions, in order to pay off accrued liabilities or to provide needed growth capital.

There is no assurance that the Company and Lifted will be able to obtain the additional Growth Capital needed to accelerate our growth beyond current levels. Our ability to obtain Growth Capital will depend on the level of pandemic-related stress on Lifted’s distributors and customers, governmental prohibitions and regulations of hemp-derived cannabinoids such as delta-8-THC, investor demand, our performance and reputation, the price of the Company’s common stock, and other factors beyond our control.

Our inability to raise additional Growth Capital could result in the delay or indefinite postponement of our growth objectives.

There can be no assurance or guarantee that any additional Growth Capital will be available on acceptable terms and conditions, if at all. The lack of availability of additional Growth Capital could have a material adverse effect on our Company and the trading price of our common stock.

Acquisition Process

The structure of the Company’s participation in business opportunities and ventures will continue to be situational. 

The Company is likely to structure future acquisitions as a purchase of 19.99% or less, or 100%, of a target company’s equity ownership interest, or as a so-called tax-free reorganization, or as an asset purchase. However, in particular situations, the Company is willing to consider alternative deal structures including joint ventures.

In deals that are structured as tax-free reorganizations, it is expected that the Company will issue a relatively large number of newly issued shares of the Company, and, as a result, substantial additional dilution to the percentage ownership of our current stockholders.

The Company’s present management and shareholders may not have control of a majority of our voting shares following a merger or purchase of stock. It is possible that the shareholders of the acquired entity or the persons who provide the capital to the Company to finance a merger or purchase of stock will gain control of the Company’s voting stock and the Company’s directors may resign and new directors may be appointed without any vote by the shareholders. Those directors are entitled to replace the Company’s officers without stockholder vote.

Closing such purchases of stock or so-called tax-free reorganizations will likely require the Company to raise millions of dollars of capital, in order to pay the cash portion of the transaction consideration. The Company can provide no assurance or guaranty whatsoever that it will be able to raise such millions of dollars of capital on acceptable terms and conditions, if at all.

An Investment Committee appointed by the Company’s Board of Directors, currently consisting of GJacobs, NWarrender, and WJacobs, will review material furnished to it and will vote whether or not the Investment Committee believes a potential acquisition is in the Company’s best interests and the interests of the Company’s shareholders. If the Investment Committee votes unanimously to approve a potential acquisition, then such acquisition will be presented to the Board of Directors of the Company for their review and a vote. The Company does not intend to proceed forward with a potential acquisition without the unanimous approval of the Investment Committee and approval by a majority of the Company’s Board of Directors.

The Company intends to source acquisition opportunities through GJacobs, NWarrender, WJacobs, and directors and their contacts, and in some cases through finders. These contacts include professional advisors such as attorneys and accountants, securities broker dealers, other members of the financial community, other businesses and others who may present solicited and unsolicited proposals. Management believes that business opportunities may become available to us due to a number of factors, including, among others: (1) the Company’s ownership of shares in Lifted and other Canna-Infused Products Companies; (2) management’s historical experience building large public companies; (3) management’s contacts and acquaintances; and (4) the Company’s flexibility with respect to the manner in which the Company may be able to structure, finance, merge with or acquire any business opportunity.

Inasmuch as the Company will have limited funds available to search for business opportunities, the Company will not be able to expend significant funds on a complete and exhaustive investigation of such business or opportunity. The Company will, however, investigate, to the extent believed reasonable by the Investment Committee, such potential business opportunities by conducting a so-called “due diligence investigation”.

In a due diligence investigation, the Company intends to obtain and review materials regarding the business opportunity. Typically, such materials will include information regarding a target business’ products, services, contracts, management, ownership, and financial information. In addition, the Company intends to cause the Investment Committee to meet personally with management and key personnel of target businesses, ask questions regarding the target businesses’ prospects, tour facilities, and conduct other reasonable investigation of the target businesses to the extent of the Company’s limited financial resources and management and technical expertise.

There is no guarantee that the Company can obtain or maintain the funding needed for its operations, including the funds necessary to search for and investigate acquisition candidates, and to close an acquisition including paying the substantial costs of legal, accounting and other relevant professional services. At the present time, due to the facts that billions of dollars of market capitalization have been lost by publicly traded corporations in the cannabis industry, investor sentiment regarding equity or debt capital raises within the cannabis industry is profoundly negative. This negative investor sentiment, combined with many other negative macro factors such as inflation, recessionary pressures, global conflicts, supply chain issues and regulatory pressures associated with the pandemic, and interest rate increases triggered by the U.S. Federal Reserve, has made it extremely difficult for the Company to attract Growth Capital on acceptable terms and conditions. The Company can provide no guarantee or assurance as to whether or when such profoundly negative investor sentiment might improve.  

In light of significant macro-economic risks, and other domestic and international political, regulatory, and military uncertainties, we generally have pursued a conservative “risk off” mentality regarding the potential issuance of additional common stock of the Company, and regarding the pricing, term and other conditions of potential borrowings by the Company.   

Employees

GJacobs, our Chairman, Chief Executive Officer and Secretary, manages the Company’s operations with the assistance of WJacobs, our President, Chief Financial Officer and Treasurer, and NWarrender, our Vice Chairman and Chief Operating Officer, under the Executive Employment Agreements described above.

We expect to continue to use consultants, attorneys, accountants, other professionals and independent contractors as necessary.

Reports to Security Holders

LFTD Partners Inc. is subject to reporting obligations under the Exchange Act. These obligations include an annual report under cover of Form 10-K, with audited financial statements, unaudited quarterly reports under cover of Form 10-Q, occasional reports under cover of Form 8-K, and other required filings. The public may read and copy any materials LFTD Partners Inc. files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information of the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0030. The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

ITEM 1A. RISK FACTORS

Our business is subject to numerous risks and uncertainties (“Risk Factors”). Certain Risk Factors may have a material adverse effect on our business, financial condition, and results of operations. Investing in our shares involves a high degree of risk. You should carefully consider the following risks, together with all of the other information contained in this Annual Report on Form 10-K, including the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. Any of the following risks could have an adverse effect on our business, financial condition, operating results, or prospects and could cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. Our business, financial condition, operating results, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.

In the following Risk Factors, the terms “us”, “we”, “Company,” “LFTD Partners” and “Lifted” are meant to include references to LFTD Partners, Lifted (including its collaborations with Cali Sweets, Diamond Supply Co., Jeeter, Extrax NM, and a subsidiary of a large publicly traded marijuana company), future acquisition targets, and future asset purchases and/or joint ventures), SmplyLifted, Ablis, Bendistillery and Bend Spirits, as appropriate in the context of particular Risk Factors. These Risks Factors may cause our operations to vary materially from those contemplated by our forward-looking statements. These Risk Factors include:

RISK FACTORS RELATING TO OUR COMPANY AND OUR STOCK

Because we have a limited operating history, we may not be able to successfully manage our business or maintain profitability

We have a limited operating history with Lifted, upon which you can evaluate our prospects and our potential value. Prior to that, we have not been profitable during most of our years of operation. We face many risks that could prevent us from maintaining profits in future years. We cannot assure you that we will be profitable in the future.

Because Lifted is operating in relatively new and evolving industries, certain operating and business risks may not be recognized by management before substantial losses are incurred. For examples: in the third quarter of 2022, Lifted experienced substantial losses associated with clogged vapes, and in the fourth quarter of 2021, Lifted wrote off a substantial investment in tobacco-free nicotine pouches. No assurance or guarantee can be provided that future substantial losses will not occur.  

Our acquisition of Lifted and our prior acquisitions of 4.99% of the outstanding equity of each of Ablis, Bend Spirits and Bendistillery d/b/a Crater Lake Spirits, involve significant risk, and there can be no assurance that the business of Lifted, or 4.99% of the common stock of each of Ablis, Bend Spirits and Bendistillery d/b/a Crater Lake Spirits, will be successful or generate any profit or other financial benefit for our Company. Impairments of some or all of the value of our investments in Ablis, Bend Spirits and/or Bendistillery may occur. An inability by LFTD Partners to achieve financial benefit from Lifted, Ablis, Bend Spirits or Bendistillery may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We have incurred substantial losses in the past

Prior to the acquisition of Lifted on February 24, 2020, the Company had no sources of revenue, and the Company had a history of recurring losses, which has resulted in an accumulated deficit of $2,096,780 as of December 31, 2023. We may incur significant losses in the future for a number of reasons, including the risks described in ITEM 1A. RISK FACTORS, and unforeseen expenses, difficulties, legal or regulatory challenges, complications and delays and other unknown events. Any failure to achieve and sustain profitability may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We have substantial ongoing payment obligations

We have substantial ongoing payment obligations, including payments on our loans from Surety Bank, payroll and benefits, rent and overhead costs, inventory purchases, professional fees, bonuses, preferred stock dividends, other operating expenses, income taxes, excise taxes, and other liabilities. A failure to pay our financial obligations when they become due and payable may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We have significant financial risk if our principal depository bank were to become bankrupt or insolvent

In connection with our loans from Surety Bank, we have agreed that Surety Bank will serve as our principal depository bank. If Surety Bank ever were to become bankrupt or insolvent, we could potentially lose millions of dollars of our cash on hand that is held in our checking and money market accounts at Surety Bank. We do not have insurance covering that risk. That risk may have a material adverse effect on our Company and the trading price of our common stock.

We are subject to restrictions and covenants under our loans from Surety Bank

Under the terms of our loan agreements with Surety Bank, we are obligated to comply with certain loan covenants and restrictions, including the following: (a) the ratio of our annual EBIDA (earnings before interest, depreciation and amortization), divided by our scheduled annual debt service payments to Surety Bank, must be 1.5 or higher based on our tax returns, beginning with the 2023 return; (b) we must not permit the outstanding principal balance of the $3,000,000 Working Capital Loan to exceed 40% of the fair market value of the collateral securing the Working Capital Loan; and (c) we must maintain our primary operating accounts with a $1,000,000 minimum deposit account balance with Surety Bank for the life of the $910,000 Business Loan. If for any reason we fail to comply with these loan covenants and restrictions, Surety Bank would be entitled to declare a default under the loan agreements. Such a default could have a material adverse effect on our Company and the trading price of our common stock.

Under the Surety Bank loan agreements, we are also subject to certain negative covenants to not, among other things:

If we were to violate any of these negative covenants, Surety Bank would be entitled to declare a default under the loan agreements. Such a default could have a material adverse effect on our Company and the trading price of our common stock.

We may need to raise substantial amounts of additional capital to pay our ongoing obligations and to pay for our operations

There is no guarantee that Lifted’s operations will generate sufficient free cash flow to allow us to pay our ongoing obligations described in the preceding risk factor. We may need to raise millions of dollars of additional capital just to pay our ongoing obligations. There is no guarantee that we can obtain the funding needed to pay these ongoing obligations on acceptable terms, if at all, and neither our directors, officers, nor any third party is obligated to provide any financing. Failure to raise substantial amounts of additional capital may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be profitable in the future

We have not been profitable during most of our years of operation. We face many risks that could prevent us from achieving profits in future years. We cannot assure you that we will be profitable. Failure to achieve profitability will materially adversely affect our Company and the trading price of our common stock.

Also, our efforts to grow our business may be more costly than we expect and we may not be able to increase our revenue enough to offset higher operating expenses. We may incur significant losses in the future for a number of reasons, including as a result of unforeseen laws, regulations, restrictions, taxes, expenses, difficulties, complications and delays, the other risks described herein and other unknown events. The amount of any future net losses will depend, in part, on the growth of our future expenses and our ability to generate revenue. Any future losses will have an adverse effect on our stockholders’ equity and working capital. Because of the numerous risks and uncertainties associated with producing and selling hemp-derived, psychoactive and potentially nicotine products, as outlined herein, we are unable to accurately predict our future financial results. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. If we are unable to achieve and sustain profitability, the market price of our common stock may significantly decrease and our ability to raise capital, expand our business or continue our operations may be impaired. Our failure to remain profitable would decrease the value of our Company and could impair our ability to raise capital, expand our business, diversify our product offerings and continue our operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The “going concern” qualification in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q adversely impact our potential to raise capital

Our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q contain a so-called “going concern” qualification. This qualification is attributable to the substantial risk factors associated with our business and the regulatory environment surrounding the industries in which we operate, which at the present time make it very difficult for our management to represent to our auditors that we will be able to continue as a going concern. The presence of the “going concern” qualification in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q adversely impacts our potential to raise debt or equity capital on acceptable terms and conditions, if at all. The foregoing qualification and related risks may have a material adverse effect on our Company and the trading price of our common stock.

Our future profitability may be significantly reduced by our annual company-wide management bonus pool

Our future profitability may be significantly reduced by our annual company-wide management bonus pool. Pursuant to the terms of the employment agreements that we have entered into with our senior executives, we have agreed to pay to our senior executives and their designees (who may include employees, contractors, consultants, and directors of our Company) an annual management bonus pool, which will be an aggregate annual amount that is equal to 33% of the amount, if any, by which our earnings before interest, taxes, depreciation and amortization (“EBITDA”) in a given calendar year exceeds our EBITDA during the prior calendar year, or 33% of the amount by which our EBITDA in a given calendar year exceeds a target amount that has been mutually agreed upon by the Chairman of our Compensation Committee of our Board of Directors and our senior executives. Depending upon the trajectory of our future growth, if any, in our EBITDA, the annual company-wide management bonus pool may turn out to be an extremely large amount of money. The obligation to pay such annual company-wide management bonus pool may materially adversely affect our Company and the trading price of our common stock.

We are adversely affected by many significant economic, health, safety and financial issues

Businesses are materially adversely affected by periods of significant economic slowdown or recession, wars, tariffs, pandemics, fears of inflation or deflation, rising interest rates, or a public perception that any of these events are occurring or may occur, which could adversely affect our revenues, results of operations, and cash flow. In addition, as they relate to our proposed acquisitions, the capital and credit markets have experienced volatility and disruption. National and global political, trade, financial and business conditions have experienced difficulties. Access to financing often is negatively impacted. Credit is often limited. In many cases, the markets have exerted downward pressure on stock prices and credit capacity for certain issuers. Prominent risks include high interest rates, wars, pandemics, supply chin disruptions, regulatory risks, tariffs, energy dislocations and costs, rising health care costs, social and political unrest, safety and health risks, and many other issues.

The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our payroll, benefits, sales commissions, rent and other operational costs are significant and growing

Our operational costs are growing significantly. We now employ a total of over 160 people as employees and independent contractors. Our payroll and benefits costs, including health, dental and vision insurance for employees, are substantial. We have expanded into more leased spaces. Our costs for accountants, lawyers and other consultants are substantial. Our costs of raw materials, packaging, fulfillment and sales are growing. We have compensation arrangements for our salespeople that include significant commissions that are percentages of their sales, and a compensation arrangement for Lifted’s Chief Strategy Officer that has historically included a bonus equal to 5% of total net sales for Lifted in excess of $6,000,000 per quarter. These and other significant operational costs may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Growth Capital may be unavailable or only available on dilutive, expensive, or otherwise unattractive or risky terms

The continued expansion of our business will require Growth Capital. For example, from time to time, we may enter into transactions to acquire assets or the capital stock or other equity interests of other entities, and it is likely that closing such transactions will require a significant amount of cash.

There can be no assurance that Lifted or any other acquisitions that we may make will be profitable or will generate the Growth Capital we need in the future.

There can be no assurance that we will obtain Growth Capital from third party equity investors. Our ability to obtain Growth Capital from third party equity investors will depend on investor demand, our performance and reputation, market conditions and other factors. Our inability to obtain Growth Capital from third party equity investors could result in the delay or indefinite postponement of our current business objectives or in our inability to continue to carry on our business. Even if Growth Capital is available from third party equity investors, it may only be available on highly dilutive or otherwise unattractive terms and conditions.

There can be no assurance that we will obtain Growth Capital from debt providers. Even if debt financing is available, it may only be available on very expensive or otherwise unattractive terms and conditions. For example, any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may be operationally burdensome and may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Debt financings may also contain provisions that, if breached, may entitle lenders or their agents to accelerate the repayment of loans or realize upon security over our assets, and there is no assurance that we would be able to repay such loans in such an event or prevent the exercise of rights granted to secured parties pursuant to any such debt financing. Debt agreements may also contain covenant restrictions that limit our ability to operate our business, including restrictions on our ability to invest in our existing facilities, incur additional debt or issue guarantees, create additional liens, repurchase stock or make other restricted payments. As a result of these covenants, our ability to respond to changes in business and economic conditions and to engage in beneficial transactions, including obtaining additional financing and pursuing business opportunities, may be restricted.

In summary, we cannot assure you that we will be able to raise needed equity or debt capital on commercially acceptable terms, or at all. Delay, disruption, or failure to obtain sufficient financing may result in the delay or failure of our business plans. Our inability to raise sufficient Growth Capital on commercially acceptable terms, or at all, may have a material adverse effect on our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our future capital requirements are uncertain

Our aggregate future capital requirements are uncertain. The amount of capital that we will need in the future will depend on many factors that we cannot predict with any certainty, including: the market acceptance of Lifted’s products and services; the amounts of packaging, inventory, employees, space and equipment that will be needed to operate our business and to be able to increase our production to meet consumer demand for our products in the future; the levels of promotion and advertising that will be required to launch Lifted’s new products and services and to achieve and maintain a competitive position in the marketplace; our business, product, capital expenditures and technology plans, and product and technology roadmaps; technological advances; our competitors’ responses to our products and services; our pursuit of mergers and acquisitions; our relationships with our vendors and customers; and our need to attract and retain talented employees and independent contractors. The terms and conditions, amounts and timing of our capital raises may not be in sync with our capital needs. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our common stock lacks a meaningful public market

At present, only a limited market exists for our common stock with a low average daily trading volume. There is no assurance that a regular trading market will develop and if developed, that it will be sustained. A potential investor may choose not to invest because of the low trading volume in our common stock, and an existing owner of our common stock may be unable to sell our common stock should he or she desire to do so. Or, if an existing owner of our common stock decides to sell our common stock, such sales could drive the price of our common stock significantly lower. Furthermore, it is unlikely that a lending institution will accept our common stock as pledged collateral for loans. This lack of liquidity may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our common stock may never be listed on a recognized national exchange

Our common stock trades on the OTCQB Venture Market. You should not assume that any effort to uplist the trading of our common stock to a recognized national exchange would be successful, or if successful, that compliance with the listing requirements of such recognized national exchange will be maintained, including but not limited to requirements associated with maintenance of a minimum net worth, minimum stock price, minimum number of shareholders, and ability to establish a sufficient number of market makers. A failure or inability to uplist the trading of our common stock to a recognized national exchange, or any failure to maintain compliance with the listing requirements of such recognized national exchange, may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Unless and until our common stock is approved for listing on a recognized national exchange, many potential investors may be unwilling to purchase our common stock 

Our common stock currently trades on the OTCQB Venture Market. Many funds and other potential investors are unable or unwilling to purchase stocks on the OTCQB Venture Market, being required or simply preferring to purchase stocks that have been approved for listing on a recognized national exchange, such as the NASDAQ or the NYSE. Recognizing this situation, we would like to uplist from the OTCQB Venture Market to a recognized national exchange such as NASDAQ, if and when we meet the NASDAQ’s listing requirements. Unless and until we successfully uplist, potential investor interest in our common stock may be muted, which may adversely affect our company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our common stock may be considered a “penny stock” and may be difficult to trade

The U.S. Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define “penny stock” to be an equity security that has a market or exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock may be less than $5.00 per share and, therefore, may be designated as a penny stock according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, to obtain a written agreement from the purchaser, and to determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may adversely affect the ability of investors to sell our common stock, and may materially adversely affect our business and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Certain stock brokers will not handle our common stock

Certain stock brokers will not handle our common stock, in light of the SEC “penny stock” rules and heightened internal compliance scrutiny. This situation has made it difficult for some potential investors to purchase our common stock, or even just to hold our common stock in their brokerage accounts. The foregoing situation may materially adversely affect our business and the trading price of our common stock.

Options trading of our common stock is not currently possible

At the present time, potential investors have no ability to purchase or sell options to trade in our common stock. This situation has made it difficult for some potential investors to accumulate positions in our common stock, or to achieve their desired level of liquidity in their position in our common stock. The foregoing situation may materially adversely affect our business and the trading price of our common stock.

Our common stock lacks institutional or analyst support

Our Company lacks institutional support. In addition, investment banks with research capabilities do not currently follow our common stock. This lack of institutional or analyst support lessens the trading volume and general market interest in our common stock, and may adversely affect an investor’s ability to trade a significant amount of our common stock. This lack of institutional or analyst support may materially adversely affect our Company and the trading price of our common stock. Moreover, in the event that we obtain securities or industry analyst coverage, if one or more of the analysts who cover us or our business downgrade our securities or publish inaccurate or unfavorable research about us or our business, our Company and the trading price of our common stock may be materially adversely affected.

The public float of our common stock is small

The public float of our common stock is small, which may limit the willingness or ability of some individuals, funds and institutions to invest in our common stock. This lack of liquidity may materially adversely affect our Company and the trading price of our common stock.

The trading price of our common stock may be volatile and could drop quickly and unexpectedly

The stocks of micro-cap and small-cap companies have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macro-economic developments in North America and globally, financial crises, pandemics, trade wars, military conflicts, and market perceptions of the attractiveness of particular industries. This volatility may materially adversely affect our Company by making it more difficult to raise capital or complete acquisitions. In addition, securities class-action litigation often has been brought against companies following periods of volatility in the market price of their securities. Our Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert our management’s attention and resources away from our business. For these reasons and others, quick and unexpected drops in the trading price of our common stock are likely from time to time. Volatility in our common stock price may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Sales of shares of our common stock, or the perception in the public markets that these sales may occur in the future, may cause the trading price of our common stock to fall

Since the trading volume of our common stock is very low and the amount of our common stock in the public float is very small, any sales or attempts to sell our common stock, or the perception that sales or attempts to sell our common stock may occur, may adversely affect the trading price of our common stock. The market price of our common stock may decline significantly as a result of sales of a large number of shares of our common stock in the market. In addition, if any of our significant stockholders sells a large number of shares, or if we issue a large number of shares, the market price of our stock may decline. We suspect, but cannot guarantee, that a significant portion of the selling pressure on our common stock has been driven by investors who converted their shares of our Series A Convertible Preferred Stock at an exercise price of $1.00 per share, and who are now taking profits on their investments.

Any issuance of additional common stock or common stock equivalents by us would result in dilution to our existing shareholders. Such issuances may be made at a price that reflects a discount to the then-current trading price of our common stock. Moreover, the perception in the public market that stockholders may sell shares of our stock or that we may issue additional shares of common stock may depress the market for our shares and make it more difficult for us to sell equity securities in the future at any time, if at all. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may issue additional shares of common stock, and options and warrants to purchase additional shares of common stock, without stockholder approval, which would dilute the current holders of our common stock.

Our Board of Directors has authority, without action or vote of our shareholders, to issue shares of common stock, and/or options and warrants to purchase shares of common stock. We may issue shares of our common stock, or options or warrants to purchase shares of our common stock, to complete a business combination or to raise capital, or to incentivize our directors, officers and employees. Such stock issuances, and such issuances of options and warrants, could be made at a price that reflects a discount from the then-current trading price of our common stock. These issuances may dilute our stockholders’ ownership interests significantly. These issuances also may have the effect of reducing our stockholders’ influence on matters on which our stockholders vote. In addition, our stockholders and prospective investors may incur additional dilution if holders of currently outstanding stock options and warrants exercise those options or warrants to purchase shares of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The rights of the holders of our common stock may be impaired by the potential issuance of preferred stock

Our certificate of incorporation gives our Board of Directors the right to create one or more new series of preferred stock. As a result, the Board of Directors may, without stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights that may adversely affect the voting power and equity interests of the holders of our common stock. Preferred stock, which could be issued with the right to more than one vote per share, could be used to discourage, delay or prevent a change of control of our Company, which may materially adversely affect the price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our common stock may be subject to significant dilution

Our capital raising may include the sale of significant numbers of shares of our common stock or other securities convertible into our common stock, and may also include the issuance of significant numbers of options, warrants or other securities convertible into shares of our common stock. We also may issue significant numbers of shares of our common stock, or options, warrants, or other securities convertible into shares of our common stock, as a portion of the consideration for acquisitions. We are also likely to issue significant numbers of shares of common stock, options and/or warrants, or rights to purchase warrants, to our officers, directors, employees and/or independent contractors, and to investment bankers and finders, especially in connection with the closing of capital raises and acquisitions, or as incentives to attract and retain talented personnel. Such transactions may significantly increase the number of outstanding shares of our common stock, and may be highly dilutive to our existing stockholders. In addition, the securities that we issue may have rights, preferences or privileges senior to those of the holders of our outstanding common stock. This dilution may have a material adverse effect on our Company and the trading price of our common stock. In addition, we have options, warrants, and rights to purchase warrants, outstanding covering several million shares of our common stock. If all of these millions of options and warrants were to be exercised, the number of outstanding shares of our common stock would increase significantly. Moreover, additional shares may be issued in connection with future acquisition and business operations. This dilution may have a material adverse effect on our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Raising capital by selling our common stock or convertible preferred stock is difficult to accomplish

Selling equity is difficult to accomplish in the current market, especially because the prices of stocks of many publicly traded cannabis companies have experienced significant declines. This difficulty may make future acquisitions either unlikely, or too difficult and expensive. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Raising capital by selling our common stock or convertible preferred stock could be expensive

If we were to raise capital by selling common stock or securities convertible into common stock, it could be expensive. Many potential purchasers of equity securities in micro-cap and small-cap publicly traded companies with extremely low trading volumes are only willing to purchase at a significant discount to the trading price of the common stock of such companies. In addition, we may be required to pay cash fees and/or fees in the form of warrants equal to 7% or more of the gross sales proceeds raised, in addition to legal, accounting and other fees and expenses. In addition, when it becomes known within the investment community that an issuer is seeking to raise equity capital, it is common for the common stock of that issuer to be sold off in the market, lowering the trading price of the issuer’s common stock in advance of the pricing of the issue. This may make our raising capital by selling equity securities significantly more expensive. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Debt financing is difficult to obtain and could be expensive

Debt financing is difficult to obtain in the current credit markets, especially for companies involved in the hemp-derived, psychoactive and nicotine industries. This difficulty may make future acquisitions either unlikely, or too difficult and expensive. Providers of debt may also be issued options, warrants, or rights to purchase warrants, to purchase shares of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Raising capital by borrowing could be risky

If we were to raise capital by borrowing amounts to fund our operations or for additional acquisitions, that would be risky. Interest rates charged to companies in the cannabis industry typically are high, and often have short terms. Cash is required to service the debt and ongoing covenants and negative covenants are typically employed which can restrict the way in which we operate our business. If the debt comes due either upon maturity or an event of default, we may lack the resources at that time to either pay off or refinance the debt, or if we are able to refinance, the refinancing may be on terms that are less favorable than those originally in place, and may require additional equity or quasi-equity accommodations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our financing decisions may be made without stockholder approval

Our financing decisions and related decisions regarding levels of debt, capitalization, distributions, acquisitions and other key operating parameters are determined by our Board of Directors in its discretion, in many cases without any notice to or vote by our stockholders. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our investor relations efforts may not be successful

Our investor relations efforts may not be successful. At the present time, due to the facts that billions of dollars of market capitalization have been lost by publicly traded corporations in the cannabis industry, investor sentiment regarding equity or debt capital raises within the cannabis industry is profoundly negative. This negative investor sentiment, combined with many other negative macro factors such as inflation, recessionary pressures, global conflicts, supply chain issues and regulatory pressures associated with the pandemic, and interest rate increases triggered by the U.S. Federal Reserve, has made it extremely difficult for the Company to attract Growth Capital on acceptable terms and conditions. The Company can provide no guarantee or assurance whatsoever that this profoundly negative investor sentiment could be reversed by traditional investor relations efforts. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

An increase in interest rates may have an adverse effect on the trading price of our common stock

An increase in market interest rates may tend to make our common stock less attractive relative to other investments. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

Increases in taxes and regulatory compliance costs may reduce our margins

Costs resulting from changes in or new income taxes, value added taxes, service taxes, sales and use taxes, excise taxes and other taxes, and the costs of managing compliance with taxes and regulatory matters, may adversely affect our margins. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Tax interpretations and changes in tax regulations and legislation may adversely affect us

Tax interpretations, regulations and legislation in the various jurisdictions in which we operate are subject to measurement uncertainty and the interpretations can impact net income, income tax expense or recovery, and deferred income tax assets or liabilities. Tax rules and regulations, including those relating to foreign jurisdictions, are subject to interpretation and require judgment by us that may be challenged by the applicable taxation authorities upon audit. Although we believe our assumptions, judgments and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any tax audits may significantly impact the amounts provided for income taxes in our consolidated financial statements.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act requires complex computations to be performed that were not previously required by U.S. tax law, significant judgments to be made in interpretation of the provisions of the U.S. Tax Act, significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced. The Tax Act reduced the U.S. federal statutory tax rate, broadened the corporate tax base through the elimination or reduction of deductions, exclusions, and credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial tax system which allows for the repatriation of foreign earnings to the U.S. with a 100% federal dividends received deduction prospectively. In addition, the Tax Act required a one-time transitional tax on foreign cash equivalents and previously unremitted earnings. Several of the new provisions enacted as part of the Tax Act require clarification and guidance from the U.S. Internal Revenue Service (“IRS”) and Treasury Department. The Treasury Department, the IRS, and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered. As future guidance is issued, we may make adjustments to amounts that we have previously recorded that may materially impact our financial statements in the period in which the adjustments are made. Additionally, further guidance may be forthcoming from the Financial Accounting Standards Board and SEC, as well as regulations, interpretations and rulings from state tax agencies, which could result in additional impacts, possibly with retroactive effect. Any such changes or potential additional impacts could adversely affect our business and financial condition. These or other changes in U.S. tax laws could impact our profits, effective tax rate, and cash flows.

In addition, we may periodically restructure our legal entities and if taxing authorities were to disagree with our tax positions in connection with any such restructurings, our effective tax rate may be materially affected. In connection with such restructurings, we may also incur additional charges associated with consulting fees and other charges.

In addition, changes in tax interpretations and changes in tax regulations and legislation may impose significant burdens upon our management’s time and resources, and may require us to expend significant additional amounts on accounting, tax, legal and other matters.

All of the foregoing risks may materially adversely affect our Company and the trading price of our common stock.

We are adversely affected by regulatory uncertainties

Regulatory uncertainties regarding potential adverse changes in federal and state laws and governmental regulations materially adversely affect our business and the trading price of our common stock. This risk is especially important relative to the hemp-derived, psychoactive products and nicotine products industries, which are controversial socially, scientifically and legally. As of March 12, 2024, the Florida legislature has passed a bill (SB 1698) that will prohibit the production and sale of certain intoxicating hemp-derived products, including those containing delta-8-THC, delta-10-THC, HHC, THC-P, and other cannabinoids. The legislation is awaiting the signature of Governor DeSantis, and if signed, it will go into effect on October 1, 2024.The foregoing risk may materially adversely affect our Company and the trading price of our common stock.

Legislative or regulatory changes that affect our products, including new taxes, could reduce demand for products or increase our costs

Taxes imposed on the sale of certain of our products by federal, state, and local governments in the United States, or other countries in which we operate could cause consumers to shift away from purchasing our products. This risk may materially adversely affect our Company and the trading price of our common stock.

A small number of stockholders have significant influence over us

A small number of our stockholders and members of our board of directors and management acting together are able to exert significant influence over us through their ability to influence the election of directors and all other matters that require action by our stockholders. The voting power of these individuals may have the effect of preventing or delaying a change in control of our Company which they oppose even if our other stockholders believe it is in their best interests.

In addition, our shareholders have authorized GJacobs to seek shareholders agreements and/or proxies from other parties, including potential future capital sources and the owners of potential future acquisition candidates. Pursuant to this authorization, GJacobs has signed a Stockholders Agreement with our largest stockholder, NWarrender, and with WJacobs, that will ensure that all 3,900,455 shares of our common stock issued to NWarrender in the Lifted Merger, and the many shares of our common stock owned and controlled by GJacobs and WJacobs, will be voted in concert on the election of directors, compensation matters, acquisitions and divestitures, capital raises, and other significant matters.

Accordingly, our officers GJacobs, WJacobs and NWarrender, voting together, have substantial influence over our policies and management. We may take actions supported by the three of them that may not be viewed by some stockholders to be in our best interest, or the three of them could prevent or delay a change in our control which they oppose even if our other stockholders believe it is in their best interests. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

State law and our articles of incorporation and bylaws help preserve insiders’ control over us

Provisions of Nevada state law, our articles of incorporation and bylaws may discourage, delay or prevent a change in our management team that stockholders may consider favorable. These provisions may include: (1) authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; (2) permitting stockholder action by written consent; and (3) establishing advance notice requirements for nominations for election to the board of directors, or for proposing matters that can be acted on by stockholders at stockholder meetings. These provisions, if included in our articles of incorporation or by-laws, could allow our board of directors to affect an investor’s rights as a stockholder since our board of directors could make it more difficult for preferred stockholders or common stockholders to replace members of the board of directors. Because the board of directors is responsible for appointing the members of the management team, these provisions may in turn affect any attempt to replace the current or future management team. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Retaining and attracting directors and officers may be expensive

We cannot make any assurances regarding the retention of our current directors and officers. We do not currently have any director and officer liability insurance, which is a disincentive to serving as a director or officer of our Company. Some of our directors and officers may resign upon our raising money, upon our consummation of a business combination, or otherwise. Attracting new directors and officers, and retaining our current directors and officers, may be expensive. Other publicly traded companies pay their directors and officers significantly more than we do. The costs of future cash, bonus and equity incentives to retain and attract directors and officers may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We indemnify our directors and officers, and certain other parties

Our bylaws specifically limit the liability of our officers and directors to the fullest extent permitted by law. As a result, aggrieved parties may have a more limited right to action than they would have had if such provisions were not present. The bylaws also provide for indemnification of our officers and directors for any losses or liabilities they may incur as a result of the manner in which they operated our business or conducted internal affairs, provided that in connection with these activities they acted in good faith and in a manner which they reasonably believed to be in, or not opposed to, our best interest. In the ordinary course of business, we also may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, independent contractors and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. We may also agree to indemnify former officers, directors, employees and independent contractors of acquired companies in connection with the acquisition of such companies. Such indemnification agreements may not be subject to maximum loss clauses. It is not possible to determine the maximum potential amount of exposure in regard to these obligations to indemnify, due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular situation. Use of our capital or assets for such indemnification would reduce amounts available for Company operations or for other purposes, which may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We do not expect to pay dividends to holders of our common stock

For the foreseeable future, it is anticipated that earnings, if any, which may be generated from our operations will be used to finance our growth and that dividends may not be paid to the holders of our common stock. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

Our cost of being a publicly traded company will increase as our business operations expand

As we grow, our management expenses, legal, consulting and accounting fees, and other costs associated with being a publicly traded company will continue to increase. In the past, we have hired additional employees and professionals in order to improve our internal financial controls and accurate financial reporting, and otherwise to comply with the requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). From time to time, the Company has engaged a third party consulting firm that specializes in the implementation of the Sarbanes-Oxley Act, to assist management with the implementation of the Sarbanes-Oxley Act; we expect the services of this consulting firm to be costly. Our management expenses, legal and accounting fees, and other costs associated with being a publicly traded company are expected to increase. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Decreased effectiveness of stock options and warrants could adversely affect our ability to attract and retain employees

We expect to use stock options, warrants, and/or rights to purchase warrants to purchase common stock as key components of our employee compensation program in order to align employees’ interests with the interests of our stockholders, encourage employee retention, and to provide competitive compensation packages. Volatility or lack of positive performance in our common stock price may adversely affect our ability to retain key employees or to attract additional highly-qualified personnel. At any given time, a portion of our outstanding employee stock options, warrants, and/or rights to purchase warrants to purchase common stock may have exercise prices in excess of our then-current common stock trading price, or may have expired worthless. To the extent these circumstances occur, our ability to retain employees may be adversely affected. As a result, we may have to incur increased compensation costs, change our equity compensation strategy, or find it difficult to attract, retain and motivate employees. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The Company's earnings will be reduced by stock compensation resulting from the issuance of 645,000 shares of Deferred Contingent Stock pursuant to the terms of the Lifted Merger

Pursuant to the terms of the Lifted Merger, a total of 645,000 shares of unregistered common stock of the Company were designated as contingent deferred compensation (the “Deferred Contingent Stock”) payable after the third anniversary of the Lifted Merger to certain employees of Lifted and the Company who have been specified by NWarrender in his discretion (the “Deferred Contingent Stock Recipients”), subject to certain conditions and requirements. Now that certain conditions and requirements have been met, the Deferred Contingent Stock vested on February 24, 2023, and on this date, in accordance with US Generally Accepted Accounting Principles (“US GAAP”), the Company expensed the value of the vested Deferred Contingent Stock and began issuing the Deferred Contingent Stock to the Deferred Contingent Stock recipients who have instructed the Company to issue to them their respective, earned Deferred Contingent Stock. As of December 31, 2023, 503,000 shares of Deferred Contingent Stock have been issued to the Deferred Contingent Stock Recipients, and the Company is yet to be instructed to issue the remaining 142,000 shares of Deferred Contingent Stock that have not yet been issued. The issuance of the Deferred Contingent Stock increases the number of outstanding shares of our common stock, and thereby decreases our earnings per share. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The potential sale of Deferred Contingent Stock by the Deferred Contingent Stock Recipients may depress the trading price of our common stock

Pursuant to the terms of the Lifted Merger, on and after February 24, 2023, certain shares of the Deferred Contingent Stock have been issued to certain of the Deferred Contingent Stock Recipients. Deferred Contingent Stock Recipients may find it necessary or desirable to sell all or a portion of their Deferred Contingent Stock. The potential sale of Deferred Contingent Stock by the Deferred Contingent Stock Recipients may depress the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

RISK FACTORS RELATING TO ACCOUNTING AND INTERNAL FINANCIAL CONTROLS

Tax and accounting requirements may change in ways that are unforeseen to us and we may face difficulty or be unable to implement or comply with any such changes

We are subject to numerous tax and accounting requirements, and changes in existing accounting or taxation rules or practices, or varying interpretations of current rules or practices, could have a significant adverse effect on our financial results, our financial and operational resources, and the manner in which we conduct our business or the marketability of any of our products. We plan to expand our operations in the future. These operations, and any expansion thereto, will require us to comply with the tax laws and regulations of multiple jurisdictions, within and outside of the United States of America, which may vary substantially. Complying with the tax laws of these jurisdictions can be time consuming and expensive and could potentially subject us to penalties and fees in the future if we fail to comply. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may have exposure to greater than anticipated tax liabilities, which may harm our business

We may be subject to tax audits by federal, state, and local tax authorities, both within and outside of the United States of America. Any adverse outcome from a tax audit could seriously harm our business. In addition, determining our tax liabilities requires significant judgment by management, and there may be transactions where the ultimate tax determination is uncertain. Although we believe that the tax liabilities recorded in our financial statements are reasonable, the ultimate tax outcome relating to such amounts may differ for such period or periods and may seriously harm our business. Furthermore, due to shifting economic and political conditions, tax policies, laws, or rates in various jurisdictions, we may be subject to significant changes in ways that impair our financial results. Our results of operations and cash flows may be adversely affected by additional taxes imposed on us prospectively or retroactively or additional taxes or penalties resulting from the failure to comply with any collection obligations or failure to provide information for tax reporting purposes to various government agencies. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We incur increased costs as a result of operating as a public company and our management is required to devote substantial time to new compliance initiatives

As a public company, we incur significant legal, accounting, consulting and other expenses. In addition, the Sarbanes-Oxley Act, and rules implemented by the SEC, impose various requirements on public companies, including requirements to file annual, quarterly and event-driven reports with respect to our business and financial condition and operations and to establish and maintain effective disclosure and financial controls and corporate governance practices. Our management and other personnel may fail to improve or maintain effective internal controls over financial reporting (“ICFR”) and disclosure controls and procedures (“DCP”) necessary to ensure timely and accurate reporting of operational and financial results. Our management team has to devote a substantial amount of time to these compliance initiatives, and we may need to hire additional personnel to assist us with complying with these requirements. Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities more time consuming and costly. As mentioned above, from time-to-time, the Company has engaged a third party consulting firm that specializes in the implementation of the Sarbanes-Oxley Act, to assist management with the implementation of the Sarbanes-Oxley Act; the services of this consulting firm are costly.

Pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), we will be required to furnish a report by our management on our ICFR, which, after we have met certain requirements, must be accompanied by an attestation report on ICFR issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will document and evaluate our ICFR, which is both costly, time-consuming and challenging. In this regard, we will need to continue to dedicate internal resources and adopt a detailed work plan to assess and document the adequacy of our ICFR, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for ICFR. Despite our efforts, there is a risk that we will not be able to conclude within the prescribed timeframe that our ICFR is effective as required by Section 404. This may result in one or more material weaknesses in our ICFR, which may cause an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which may have a material adverse effect on our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Management may not be able to successfully implement adequate internal controls over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting.

As defined in Rules 13a-15(f) and 15d(f) under the Exchange Act, internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP. Proper systems of ICFR and disclosure are critical to the operation of a public company. However, management may not be able to successfully establish and maintain effective internal controls over financial reporting, and our DCP or ICFR may not prevent all errors and all fraud. Due to complications associated with organic growth and acquisitions, and with modifications to internal control over financial reporting and other policies and procedures associated with many factors, our internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions or operations, or that the degree of compliance with the policies or procedures may deteriorate. Our efforts to remediate material weaknesses may not be effective or prevent future material weaknesses or significant deficiencies in our internal control over financial reporting. It is not expected that our disclosure controls and procedures and internal controls over financial reporting will prevent all error or fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of such controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all. The inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by individual acts of certain persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all. We cannot guarantee that we will not have a material weakness in our internal controls in the future.

We anticipate that sometime within the next two years, we are going to be subject to having our internal financial controls audited by our outside accounting firm pursuant to the Sarbanes-Oxley Act. We are making, and are continuing to make, efforts to design, implement and document these internal financial controls, but these internal financial controls are complicated, time-consuming and expensive. Our internal financial controls are not complete, and additional work is required, which will continue to require substantial expenditure of management time and consulting fees. If the internal financial controls are deemed to not have been designed properly, or if they are not documented properly, or if they are implemented improperly or inadequately documented or deemed to be ineffective, our internal financial controls may not be approved by our outside auditors, and consequently our reputation may be damaged, or we may be subject to scrutiny by regulators or investors. If we experience any material weakness in our internal controls in the future, our financial statements may contain misstatements and we may be required to restate our financial statements. If we cannot provide reliable financial reports or prevent fraud, or if we are required to restate our financial statements, our reputation and operating results may be materially and adversely affected. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

RISK FACTORS RELATING TO LFTD PARTNERS, LIFTED (INCLUDING ITS COLLABORATIONS WITH CALI SWEETS, DIAMOND SUPPLY CO., JEETER, EXTRAX NM, AND A SUBSIDIARY OF A LARGE PUBLICLY TRADED MARIJUANA COMPANY) BENDISTILLERY, BEND SPIRITS, ABLIS AND FUTURE ACQUISITION TARGETS, FUTURE ASSET PURCHASES AND/OR JOINT VENTURES AND SMPLYLIFTED (COLLECTIVELY, “LIFTED”)

Lifted’s collaborations with third-party companies may be unprofitable and fail

Collaborations with third-party companies may be unprofitable and fail. Factors that may contribute to failed, unprofitable collaborations include, but are not limited to:

The above factors are some of the reasons why Lifted’s collaborations with third-party companies may be unprofitable and fail, or may be unworkable. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The FDA has not approved any of Lifted’s products for any medical purpose, and Lifted could face cease and desist letters, lawsuits or other enforcement actions by the FDA or DEA

Lifted has not applied to the U.S. Food and Drug Administration (“FDA”) for any approvals of any of Lifted’s products, and may never do so. The FDA has not approved any of Lifted’s products for any medical purpose, and may never do so. Lifted may be subject to cease and desist letters, lawsuits or other enforcement actions by the FDA or the U.S. Drug Enforcement Administration (“DEA”) for failure to obtain FDA or DEA approval of its products, or for Lifted’s packaging, labeling, advertisements and promotions of its products without any FDA or DEA approvals. For example, the FDA might take action against Lifted alleging that Lifted has engaged in the promotion of an unapproved drug. Historically, the FDA has issued cease and desist letters, filed lawsuits and taken enforcement actions against Lifted and other companies selling products that are similar to the products that Lifted sells. Defending cease and desist letters, lawsuits or other enforcement actions by the FDA or DEA may cause Lifted and LFTD Partners to expend a great deal of management time and legal fees. Any cease and desist letters, lawsuits or other enforcement actions by the FDA or DEA may have a material adverse effect on our company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Investors may file litigation including class action lawsuits against Lifted and/or LFTD Partners because the FDA has not approved Lifted’s products for any medical purpose, or because the FDA or DEA has issued cease and desist letters, or brought lawsuits or other enforcement actions against Lifted, or for other reasons associated with the packaging, labeling, lab testing, advertising, promotion, medical claims, ineffectiveness, or other characteristics of Lifted’s products

Investors may file litigation including class action lawsuits against Lifted and/or LFTD Partners for many different reasons, such as: (1) Lifted has not applied to the FDA for any approvals of any of Lifted’s products, and may never do so; (2) The FDA has not approved any of Lifted’s products for any medical purpose, and may never do so; (3) Lifted may be subject to cease and desist letters, lawsuits or other enforcement actions by the FDA for failure to obtain FDA approval of its products, or for Lifted’s packaging, labeling, advertisements and promotions of its products without any FDA approvals. For example, the FDA might take action against Lifted alleging that Lifted has engaged in the promotion of an unapproved drug. The FDA has issued cease and desist letters, filed lawsuits and taken enforcement actions against Lifted and other companies selling cannabinoid products that are similar to Lifted’s products; (4) Lifted may be subject to cease and desist letters, lawsuits or other enforcement actions by the DEA alleging that Lifted’s products are illegal; and (5) Investors may file litigation including class action lawsuits against Lifted and/or LFTD Partners for other reasons associated with the packaging, labeling, lab testing, advertising, promotion, medical claims, ineffectiveness, or other characteristics of Lifted’s products. Defending any lawsuits by investors may cause Lifted and LFTD Partners to expend a great deal of management time and legal fees. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Investors may file litigation including class action lawsuits against Lifted and/or LFTD Partners due to drops in the trading price of LFTD Partners’ common stock triggered by FDA or DEA cease and desist letters, lawsuits or enforcement actions against Lifted

Our common stock has relatively low trading volume, and the trading price is volatile. FDA or DEA cease and desist letters, lawsuits or enforcement actions against Lifted may cause drops in the trading price of LFTD Partners’ common stock. Defending lawsuits by investors may cause Lifted and LFTD Partners to expend a great deal of management time and legal fees. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The Preventing Online Sales of E-Cigarettes to Children Act may have a material adverse effect on certain portions of Lifted’s online sales

The “Consolidated Appropriations Act, 2021” signed into law on December 27, 2020, includes the Preventing Online Sales of E-Cigarettes to Children Act, which extends the Jenkins Act and Prevent All Cigarette Trafficking Act (“PACT”) to cover all electronic nicotine delivery system (“ENDS”) products, including related accessories that do not contain nicotine (collectively, the “Amended PACT Act”). Under the Amended PACT Act, the United States Postal Service (“USPS”) was required to impose new restrictions that prohibit the shipping of ENDS products through USPS no later than April 2021. The Amended PACT Act also imposes a number of stringent requirements for online sales. As of March 27, 2021, online vape retailers were required to: (1) engage in third party identity verification for all sales; (2) use a shipping service that verifies age at delivery; (3) follow all Amended PACT Act shipping requirements; (4) register with the US Attorney General; (5) register with the tobacco tax administrator of any state in which products are sold; (6) collect all applicable local taxes; (7) share all transactions for a state with that state’s tax administrator following that state’s reporting rules; and (8) maintain records of any delivery interruptions or incomplete deliveries due to failure to confirm identity for five years.

These requirements are applicable to certain portions of Lifted’s online sales, and cause the online sale and delivery of certain of Lifted’s products to be restricted. The state-by-state reporting requirements of the Amended PACT Act are time-consuming. No assurance or guarantee whatsoever can be provided that the Amended Pact Act will not have a material adverse impact on a portion of Lifted’s future online sales. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Shipping companies may be unwilling to serve Lifted

The Amended PACT Act has spurred shipping companies to terminate their relationships with Lifted because the shipping companies are unwilling to ship or mail ENDS products on behalf of Lifted. The loss of reliable and consistent shipping companies negatively impacts Lifted’s ability to serve its customers, and thus Lifted’s financial results are negatively impacted. Moreover, the fewer shipping/mailing companies that are willing to ship/mail products on behalf of Lifted, may cause shipping/mailing to become prohibitively expensive, causing lost sales. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Pandemics or disease outbreaks, such as the coronavirus, may disrupt consumption and trade patterns, supply chains, and production processes, which may materially affect Lifted’s operations and results of operations

Pandemics or disease outbreaks such as the coronavirus known as COVID-19 may depress demand for products manufactured by Lifted for many reasons. Governmentally imposed restrictions on public gatherings or interactions may limit Lifted’s ability to manufacture, sell and distribute its products, and may also restrict Lifted’s customers’ and consumers’ ability or willingness to purchase Lifted’s products.

The spread of pandemics or disease outbreaks such as COVID-19 may also disrupt logistics necessary to import, export, and deliver products to Lifted and its customers. Ports and other channels of entry may be closed or operate at only a portion of capacity, as workers may be prohibited or otherwise unable to report to work, and means of transporting products within regions or countries may be limited for the same reason.

Lifted’s operations may become limited in their ability to procure, deliver, produce or distribute its products because of transport restrictions related to quarantines or travel bans.

Workforce limitations and travel restrictions resulting from pandemics or disease outbreaks and related government actions may impact many aspects of Lifted’s business. If a significant percentage of Lifted’s workforce is unable to work, including because of illness or travel or government restrictions in connection with pandemics or disease outbreaks, Lifted’s operations may be negatively impacted. In addition, pandemics or disease outbreaks could result in a widespread health crisis that may adversely affect the economies and financial markets of many countries, resulting in an economic downturn that may affect customers’ demand for Lifted’s products. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted, or the hemp-derived, psychoactive and nicotine industries more generally, may receive unfavorable publicity or become subject to negative consumer or investor perception

The hemp-derived, psychoactive and nicotine industries are highly dependent upon positive consumer and investor perception regarding the benefits, safety, efficacy and quality of the hemp-derived, psychoactive and nicotine products sold to consumers. The perception of the hemp-derived, psychoactive and nicotine products industries, and hemp-derived, psychoactive and nicotine products, currently and in the future, may be significantly influenced by scientific research or findings, regulatory investigations, litigation, political statements, media attention and other publicity (whether or not accurate or with merit) relating to the consumption of hemp-derived, psychoactive or nicotine products, including unexpected safety or efficacy concerns arising with respect to hemp-derived, psychoactive or nicotine products or the activities of industry participants. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media or governmental attention or other research findings or publicity will be favorable to the hemp-derived, psychoactive or nicotine markets. Adverse future scientific research reports, findings and regulatory proceedings that are, or litigation, media attention or other publicity that is, perceived as less favorable than, or that questions earlier research reports, findings or publicity (whether or not accurate or with merit) may result in a significant reduction in the demand for Lifted’s products. Further, adverse publicity reports or other media attention regarding the safety, efficacy and quality of hemp-derived, psychoactive or nicotine products, or of Lifted’s products specifically, or associating the consumption of hemp-derived, psychoactive or nicotine products with illness or other negative effects or events, may adversely affect Lifted. This adverse publicity may arise even if the adverse effects associated with hemp-derived, psychoactive or nicotine products resulted from consumers’ failure to use such products legally, appropriately or as directed. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Nicotine is an addictive chemical and governmental health authorities want to curb its use

Nicotine is a highly addictive chemical, and governmental health authorities want to curb its use, especially by minors. Nicotine products are subject to extensive scrutiny, regulations, restrictions and/or prohibition by governmental health authorities in order to curb nicotine use. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Many nicotine products have been linked to cancer

Many nicotine products such as cigarettes and cigars have been linked to lung, mouth, throat and other cancers. If Lifted’s nicotine-containing products are perceived by government health authorities, or proven by scientific studies, as being carcinogenic, then such products could be subject to regulations, restrictions and/or prohibitions by governmental health authorities in order to prevent cancer. Governmental regulations may already prohibit or require warning labels to be displayed on such products in certain jurisdictions. Lawsuits related to the use of such products may also occur. Such governmental regulations, restrictions and/or prohibitions by governmental health authorities, and such lawsuits, may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Some vaping products may have been linked to deaths and illnesses

Federal, state and local authorities are investigating deaths and illnesses apparently related to vaping. We can provide no guarantees or assurances that nicotine products, vapes, e-liquids and electronic cigarettes will not be prohibited, banned and/or heavily regulated in response to these deaths and illnesses, nor that Lifted will not be sued by customers who use Lifted’s nicotine products, vapes, e-liquids and electronic cigarette products. Prohibition, banning or regulation of such products, or lawsuits related to the use of Lifted’s products, may have a material adverse effect on our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

If Lifted is not able to comply with all safety, health and environmental regulations applicable to its operations and industry, Lifted may be held liable for any breaches of those regulations

Safety, health and environmental laws and regulations may affect aspects of Lifted’s operations, including product development, working conditions, waste disposal, emission controls, the maintenance of air and water quality standards and land reclamation, and, with respect to environmental laws and regulations, impose limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Lifted may also follow other standards for the conduct of its operations and may be subject to ongoing compliance inspections in respect of these standards. Compliance with safety, health and environmental laws and regulations may require significant expenditures, and failure to comply with such safety, health and environmental laws and regulations may result in the imposition of fines and penalties, the temporary or permanent suspension of operations, the imposition of clean-up costs resulting from contaminated properties, the imposition of damages and the loss of or refusal of governmental authorities to issue permits or licenses to Lifted or to certify Lifted’s compliance with good manufacturing practices (“GMP”) standards. Exposure to these liabilities may arise in connection with Lifted’s existing operations, its historical operations and operations that it may undertake in the future. Lifted could also be held liable for worker exposure to hazardous substances and for accidents causing injury or death. There can be no assurance that Lifted will at all times be in compliance with all safety, health and environmental laws and regulations notwithstanding Lifted’s attempts to comply with such laws and regulations.

Changes in applicable safety, health and environmental standards may impose stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for Lifted and its officers, directors, employees and independent contractors. Lifted may not be able to determine the specific impact that future changes in safety, health and environmental laws and regulations may have on its industry, operations and/or activities and our resulting financial position; however, Lifted may anticipate that capital expenditures and operating expenses may increase in the future as a result of the implementation of new and increasingly stringent safety, health and environmental laws and regulations. Further changes in safety, health and environmental laws and regulations, new information on existing safety, health and environmental conditions or other events, including legal proceedings based upon such conditions or an inability to obtain necessary permits in relation thereto, may require increased compliance expenditures by Lifted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may lose profits or become subject to liability arising from any breach of contract or fraudulent or illegal activity by our suppliers, testing labs, employees, independent contractors, consultants and others

Lifted is exposed to the risk that its suppliers, testing labs, employees, independent contractors, consultants, service providers, business partners and licensors may engage in breach of contract or fraudulent, disreputable or other illegal activity. Misconduct by these parties could include, but is not limited to, intentional undertakings of unauthorized activities, or reckless or negligent undertakings of authorized activities, in each case on Lifted’s behalf or in Lifted’s service, that violate: (i) confidentiality agreements; (ii) other contracts; (iii) government regulations; (iv) manufacturing standards; (v) laws that require the true, complete and accurate reporting of financial information or data; or (vi) Lifted’s agreements with insurers. Or, an individual or company may illicitly replicate Lifted’s products and attempt to sell these knock-off products as Lifted or as Lifted’s agent. Consequently, Lifted could be exposed to the loss of sales, revenue and profits, class action and other litigation, increased governmental inspections and related sanctions, the loss of any compliance certifications or the inability to obtain future compliance certifications, and reputational or brand damage as a result of prohibited activities that are undertaken without Lifted’s knowledge or permission and contrary to Lifted’s confidentiality agreements, contracts, internal policies, procedures and operating requirements. Lifted may be required to expend substantial time, effort and legal fees in order to address such situations.

Lifted may not always identify and prevent misconduct by its suppliers, testing labs, employees, independent contractors, consultants, service providers, business partners and licensors, and the precautions taken by Lifted to detect and prevent this activity may not be effective in controlling unknown, unanticipated or unmanaged risks or losses or in protecting Lifted from governmental investigations or other actions or lawsuits stemming from such misconduct. If any such actions are instituted against Lifted, and Lifted is not successful in defending itself or asserting its rights, those actions may have a significant impact on its business, including the imposition of civil, criminal or administrative penalties, damages, monetary fines and contractual damages, reputational harm, diminished profits and future earnings or curtailment of its operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted, Lifted’s co-packers, or third party facilities where Lifted stores inventory, may experience security breaches at its/their facilities, or losses as a result of the theft of inventory

Because of the concentration of inventory at Lifted’s, Lifted’s co-packers', and at third parties’ facilities, Lifted,  Lifted’s co-packers, and Lifted’s third parties’ storage facilities are subject to the potential risks of security breaches and theft of inventory. These risks may result in significant losses of raw goods, finished goods, inventory, or supplies, expose Lifted to additional liability under applicable regulations and to potentially costly litigation or increased expenses relating to the resolution and future prevention of similar thefts, any of which may have an adverse effect on Lifted’s business, financial condition and results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be subject to risks related to its information technology systems, including the risk that it may be the subject of a cyber-attack and the risk that it may be in non-compliance with applicable privacy laws

Lifted may have purchased or entered into agreements with third parties for website services, hardware, networks, equipment, software, payment processing services, website “plug-in” software, applications, telecommunications and other information technology services (“IT”) in connection with its operations. Lifted’s operations depend, in part, on how well it and its vendors protect its IT against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, intentional damage and destruction, fire, power loss, disruptions in internet and mobile commerce, hacking, computer viruses, vandalism, theft, malware, ransomware and phishing attacks. Any of these and other events may result in IT failures, operational and financial reporting delays, increases in capital expenses, including potentially ransom payments, or other potential costs and business disruptions that may result if Lifted’s customers assert claims regarding Lifted’s technology. Lifted’s operations may also depend on the timely maintenance, upgrade and replacement of networks, equipment and IT systems, software and applications. The failure of IT systems, or a component of IT systems, may, depending on the nature of any such failure, adversely impact Lifted’s reputations and results of operations.

There are a number of laws protecting the confidentiality of customer personal information, and restricting the use and disclosure of that protected information. Lifted may collect and store personal information about its customers and is responsible for protecting that information from privacy breaches. A privacy breach may occur through a procedural or process failure, an IT malfunction or deliberate unauthorized intrusions. Theft of data for competitive purposes, particularly customer lists and preferences, is an ongoing risk whether perpetrated through employee collusion or negligence or through deliberate cyber-attack. Moreover, if Lifted is found to be in violation of the privacy or security rules under laws protecting the confidentiality of customer information, including as a result of data theft and privacy breaches, Lifted and may be subject to sanctions and civil or criminal penalties, which may increase its liabilities and harm its reputation.

As cyber threats continue to evolve, Lifted may be required to expand significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities. Significant disruption to Lifted's IT system or breaches of data security may have a material adverse effect on its' business' financial condition and results of operations.

The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Cyber incidents or malicious attacks on Lifted's information technology systems could damage our reputation, negatively impact our business, and expose us to litigation risk

Lifted uses computers in substantially all aspects of its business operations. It also uses mobile devices, social networking and other online activities to connect with team members and customers. Lifted relies heavily on various proprietary and third-party information systems. Its reputation for the secure handling of customer and other sensitive information is critical to the success of its business. Like other businesses, Lifted is potentially subject to a range of cyber incidents, including but not limited to state-sponsored cyber-attacks, industrial espionage, insider threats, computer denial-of-service attacks, computer viruses, ransomware and other malware, data leakage and compromise, wire fraud, phishing incidents and other cyber incidents. Lifted may not detect cyber incidents and may not be able to quickly or properly respond to cyber incidents. Lifted's information technology and network infrastructure may be vulnerable to attacks by hackers or breaches due to employee error, malfeasance, computer viruses, power outages, natural disasters, acts of terrorism, breaches with respect to third-party systems or vendors, or other disruptions. A cybersecurity incident and breach of its information systems could lead to theft, destruction, loss of life, damage to property, environmental issues, misappropriation or release of sensitive and/or confidential information or intellectual property, which could result in business disruption, negative publicity, violation of privacy laws, loss of customers, brand damage, adverse financial and operational results, and potential litigation.

Our management depends on relevant and reliable information for decision-making purposes, including key performance indicators and financial reporting. Any significant loss of data, failure to maintain reliable data, disruptions affecting our information systems, or delays or difficulties in transitioning to new systems could adversely affect our business, financial condition and results of operations. In addition, our ability to continue to operate our businesses without significant interruption in the event of a disaster or other disruption depends in part on the ability of our information systems to continue to operate properly. If our information systems fail and/or if our insurance does not sufficiently compensate us for any losses that we may incur, our revenues and profits could be reduced, and the reputation of our brands and our business could be adversely affected. In addition, remediation of such problems could result in significant, unplanned capital investments.

The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

If Lifted's computer systems, or the computer systems of third party software or service providers, or the underlying infrastructure of the internet, are breached or compromised, and unauthorized access is obtained to Lifted's data or customer’s data, or authorized access is blocked or disabled, then we may incur significant legal exposure and liabilities, or a negative financial impact

Lifted's business involves the storage and transmission of its customers’ proprietary and sensitive data. We can provide no assurances that Lifted can effectively protect its customers’ data, as such data may in the future be materially breached or compromised as a result of events such as: third-party attempts to fraudulently induce Lifted's employees, independent contractors, partners or customers to disclose sensitive information such as usernames, passwords or other information to gain access to its customers’ data or IT systems, or  data or our IT systems; efforts by individuals or groups of hackers and sophisticated organizations, such as state-sponsored organizations or nation-states, to launch coordinated attacks, including ransomware, destructive malware and distributed denial-of-service attacks; third-party attempts to abuse marketing, advertising, messaging or social products and functionalities to impersonate persons or organizations and disseminate information that is false, misleading or malicious; cyberattacks on third party and/or internally built IT infrastructure on which much of Lifted's business rely; vulnerabilities resulting from enhancements and updates to software and IT systems; vulnerabilities in the products or components across the broad ecosystem within which Lifted's services operate in conjunction with and are dependent on; vulnerabilities existing within or resulting from new technologies, infrastructures, protocols, laws, rules, and regulations; attacks on, or vulnerabilities in, the many different underlying networks and services that power the internet that Lifted depends on, most of which are not under our control or the control of our vendors, partners or customers; and employee or contractor errors or intentional acts that compromise Lifted's computer systems.

We can provide no assurances or guarantees whatsoever that our IT systems will provide security or otherwise be effective or that a material breach will not occur. For examples, and without limitations, Lifted's ability to mitigate these risks may be impacted by the following among other events: changes to, and growth in the complexity of, the techniques used to breach, obtain unauthorized access to, or sabotage IT systems and infrastructure, which are generally not recognized until launched against a target, and could result in Lifted being unable to anticipate or implement adequate measures to prevent such techniques; the continued evolution of internal IT systems as Lifted adopts new technologies and new ways of sharing data and communicating internally and with partners and customers, which increases the complexity of IT systems; the acquisition of new subsidiaries, requiring Lifted to incorporate and secure different or more complex IT environments; authorization by customers to third-party technology providers to access their customer data, which may lead to Lifted's customers’ inability to protect its data that is stored on Lifted’s servers and on third parties' servers; and lack of control over customers or third-party technology providers, or the processing of data by third-party technology providers, which may not allow Lifted to maintain the integrity or security of such transmissions or processing.

We believe that, in the normal course of business, Lifted has been the target of malicious cyberattack attempts and has experienced other IT security incidents especially in regard to Lifted's banking, credit card, and other financial activities. There can be no assurance that future cyberattacks and other IT security incidents will not be material or significant. An IT security breach or incident could result in unauthorized parties obtaining access to, or the denial of authorized access to, Lifted's IT systems or data, or customers’ systems or data, including intellectual property and proprietary, sensitive or other confidential information. An IT security breach or incident could also result in litigation against us, negatively impact our future sales, disrupt our business, and lead to increases in insurance premiums and legal, regulatory and financial exposure and liability.

All of the foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted does not have the manpower, expertise or financial resources to effectively identify, detect, prevent or remediate cybersecurity risks

The identification, detection, prevention and remediation of known or potential IT security vulnerabilities, including those arising from third-party hackers, hardware or software, is extremely costly and time consuming. Lifted does not have the manpower, expertise or financial resources to effectively identify, detect, prevent or remediate cybersecurity risks. No assurance or guarantee whatsoever can be given that Lifted will not be seriously damaged by the exploitation of its cybersecurity vulnerabilities. These risks may have a material adverse effect on our Company and the trading price of our common stock.

If Lifted or our third-party service providers experience an actual or perceived cybersecurity event, our platform may be perceived as not being secure, and we may lose customers or incur significant liabilities, which would harm our business and operating results

Lifted's operations involve the storage, transmission and processing of internal and customers’ confidential, proprietary and sensitive data, which may include personally identifiable information, and financial information. Computer malware, ransomware, viruses, hacking, phishing and denial of service attacks by third parties have become more prevalent in internet-enabled commerce, and we believe that Lifted has been the target of hackers and scammers in the past, and likely will be the target of hackers and scammers in the future. 

We may not be able to prevent material breaches of our IT systems caused by intentional or unintentional action or inaction by employees or third parties, which may result in the unauthorized access or release of our instances and ultimately our or our customers’ data, IP and other confidential business information.

A security breach suffered by Lifted or third-party service providers, an attack against our service availability or unauthorized access or loss of data could result in a disruption to our service, litigation, service level agreement claims, indemnification and other contractual obligations, regulatory investigations, government fines and penalties, reputational damage, loss of sales and customers, mitigation and remediation expenses and other significant costs and liabilities. In addition, we may incur significant economic and operational consequences in order to appropriately assess and respond to security incidents and to implement appropriate safeguards to protect against future incidents. We do not believe that Lifted's insurance will be adequate or sufficient to cover the potentially significant losses that may result from an IT security incident.

Additionally, as we increase reliance on third-party and public cloud infrastructure, we depend in part on third-party security measures to protect against unauthorized access, cyberattacks and the mishandling of data. However, we have little or no ability to monitor our third-party service providers’ data security. Similarly, employee error or malfeasance in configuring, maintaining, and using services offered by third-party providers may affect our ability to monitor and secure such services. Any breach of our providers’ security measures or misconfiguration or misuse of our software or our providers’ services may result in unauthorized access to, or the misuse, loss or destruction of, our and our customers’ data or in a violation of our terms or applicable law, which may result in reputational harm or liability.

We cannot guarantee that Lifted's IT systems have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our platform, systems and network or the systems and networks of third parties that support us and our business. Third parties may also exploit vulnerabilities in, or obtain unauthorized access to, platforms, systems, networks, or physical facilities utilized by us or our third-party vendors or service providers. Furthermore, supply chain disruptions due to wars and/or sanctions (and resulting legal or regulatory developments) and any indirect effects may further complicate any existing supply chain constraints.

All of the foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Failure to maintain satisfactory compliance with certain privacy and data protections laws and regulations may subject us to substantial negative financial consequences and civil or criminal penalties

Complex local, state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data. These privacy and data protection laws and regulations are quickly evolving, with new or modified laws and regulations proposed and implemented frequently and existing laws and regulations subject to new or different interpretations and enforcement. In addition, our legal and regulatory obligations in jurisdictions outside the U.S. are subject to unexpected changes, including the potential for regulatory or other governmental entities to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations or to increase penalties significantly. Becoming aware of, and complying with, these laws and regulations can be costly and can impede the development and offering of new products and services.

Any failure by Lifted to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines, damage to our brand reputation, any of which could have a material adverse effect on our operations, financial performance and business. These risks may have a material adverse effect on our Company and the trading price of our common stock.

An infectious hop latent viroid might adversely affect the availability and cost of our raw materials

It has been reported that experts have sounded an alarm over the global spread of a dangerous and infectious hop latent virus (HpLVd) that is threatening to potentially cause billions of dollars of losses for cannabis and hop growers. If this viroid were to cause significant problems for hemp growers in the US, it might potentially decrease the availability, and increase the cost, of hemp and hemp-derived cannabinoids that are the principal raw materials for our products. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

Communications by employees of regulatory agencies and/or law enforcement may disrupt the sales of our products

Employees of federal, state and local regulatory agencies and/or law enforcement sometimes make statements and/or issue correspondence that claim or imply that certain hemp-derived cannabinoid products are unsafe or illegal. These statements and correspondence, and industry publications and/or news media coverage of such statements and correspondence, sometimes trigger confusion, uncertainty or alarm among the distributors, retailers and consumers who purchase our products, and sometimes result in decreased sales or returns/exchanges of our products. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted’s production and shipping facilities are integral to its business and adverse changes or developments affecting our facilities may have an adverse impact on our business

Lifted production and shipping facilities are integral to its' business. Adverse changes or developments affecting these facilities, including, but not limited to, the spoiling of raw and finished goods, a fire, an explosion, equipment failure, a power failure, a natural disaster, inclement weather, an epidemic, pandemic or other public health crisis, or a material failure of our security infrastructure, could reduce or require Lifted to entirely suspend operations at the affected facilities. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be unable to grow

Lifted's business is subject to a variety of business risks generally associated with developing companies. Lifted’s ability to grow, and to expand and maintain market acceptance for its products, will depend on a number of factors, many of which may be beyond its control. Future development and expansion could place significant strain on Lifted’s management personnel and likely will require them to recruit additional management personnel, and there is no assurance that it will be able to do so. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be unable to expand its operations quickly enough to meet demand or manage its operations beyond their current scale

There can be no assurance that Lifted will be able to manage its expanding operations effectively, that it will be able to sustain or accelerate its growth, or that such growth, if achieved, will result in profitable operations, or that Lifted will be able to attract and retain sufficient management personnel necessary for continued growth.

Demand for Lifted’s products is dependent on a number of social, political and economic factors that are beyond Lifted’s control. There is no assurance that an increase in existing demand will occur, that Lifted will benefit from any such demand increase or that its business will remain profitable even in the event of such an increase in demand. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may experience significant fluctuations in its operating results and growth rate

Lifted may not be able to accurately forecast its growth rate. Lifted’s revenue growth may not be sustainable, and its percentage growth rates may decrease. Lifted’s revenue and operating profit growth may depend on the continued growth of demand for its products and services, and its business may be affected by general economic and business conditions worldwide, and an evolving regulatory and legal landscape for Lifted’s products. A softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. or global economies, may result in decreased revenue or growth.

Lifted’s sales and operating results may also fluctuate for many other reasons, including due to risks described elsewhere in this section and due to risks and uncertainties associated with the following topics and issues:

The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be subject to risks related to the protection and enforcement of its intellectual property rights, or intellectual property it licenses from others, and may become subject to allegations that it or its licensors are in violation of intellectual property rights of third parties

The ownership, licensing and protection of trademarks, patents and intellectual property rights may be significant aspects of Lifted’s future success. Unauthorized parties may attempt to replicate or otherwise obtain and use Lifted’s look and feel, packaging, products and technology. Policing the unauthorized use of Lifted’s current or future trademarks, patents or other intellectual property rights now or in the future may be difficult, expensive, time consuming and unpredictable, as may be enforcing these rights against the unauthorized use by others. Identifying the unauthorized use of intellectual property rights is difficult as Lifted may be unable to effectively monitor and evaluate the products being distributed by its competitors, and the processes used to produce such products.

In addition, in any infringement proceeding, some or all of Lifted’s trademarks, patents or other intellectual property rights or other proprietary know-how, and that which they may license from others, or arrangements or agreements seeking to protect the same for Lifted’s benefit, may be found invalid, unenforceable, anticompetitive or not infringed or may be interpreted narrowly and such proceeding may put existing intellectual property applications at risk of not being issued. In addition, other parties may claim that Lifted’s products, or those that they license from others, infringe on their proprietary, copyright or patent protected rights. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources and legal fees, result in injunctions or temporary restraining orders or require the payment of damages. As well, Lifted may need to obtain licenses from third parties who allege that Lifted has infringed on their lawful rights. Such licenses may not be available on terms acceptable to Lifted, or at all. In addition, Lifted may not be able to obtain or utilize on terms that are favorable to them, or at all, licenses or other rights with respect to intellectual property that they do not own.

Lifted may also rely on certain trade secrets, technical know-how and proprietary information that are not protected by patents to maintain its competitive position. Lifted’s trade secrets, technical know-how and proprietary information, which are not protected by patents, may become known to or be independently developed by competitors, which may adversely affect Lifted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

If we fail to protect our trademarks and trade secrets, we may be unable to successfully market our products and compete effectively

We rely on a combination of trademark and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights. Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks and trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trademarks and trade secrets, as crucial to our business and our success. However, the steps taken by us to protect these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets or similar proprietary rights. In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be exposed to risks relating to the laws of various countries as a result of its expanding international sales and distribution

Lifted’s products are currently sold and distributed around the world, and Lifted plans to expand these international sales and distribution. As a result, we are exposed to various levels of political, economic, legal and other risks and uncertainties associated with selling, distributing and exporting to these jurisdictions. These risks and uncertainties include, but are not limited to, changes in the laws, regulations and policies governing the production, sale and use of Lifted’s products, political instability, instability at the United Nations level, currency controls, fluctuations in currency exchange rates and rates of inflation, labor unrest, changes in taxation laws, regulations and policies, restrictions on foreign exchange and repatriation and changing political conditions and governmental regulations relating to foreign investment and our industries more generally.

Changes, if any, in the laws, regulations and policies relating to the advertising, production, sale and use of Lifted’s products or in the general economic policies in these jurisdictions, or shifts in political attitude related thereto, may adversely affect the profitability of our sales and distribution in these countries. As we explore novel business models, international regulations will become increasingly challenging to manage. Specifically, our operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on advertising, production, price controls, controls on currency remittance, and increased income taxes. Failure to comply strictly with applicable laws, regulations and local practices may result in additional taxes, costs, civil or criminal fines or penalties or other expenses being levied on our international operations, as well as other potential adverse consequences such as the loss of necessary permits or governmental approvals.

Furthermore, there is no assurance that we will be able to secure any requisite import and export approvals, licenses or permits that are necessary or desirable for the international sale and distribution of our products. Even if we obtain the necessary import and export approvals, there may be shipment delays or other challenges related to the delivery of our products to customers in other countries. Countries may also impose restrictions or limitations on imports. As a result, we may be required to establish facilities in one or more countries in the European Union (or elsewhere) where we wish to distribute our products in order to take advantage of the favorable legislation offered to producers located in these countries. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted faces risks associated with its expansion into new markets outside of the current jurisdictions where we conduct business

We plan in the future to expand our operations and business into jurisdictions outside of the jurisdictions where we currently conduct business. There can be no assurance that any market for our products will develop in any such foreign jurisdiction. We may face new or unexpected risks or significantly increase our exposure to one or more existing risk factors, including economic instability, new competition, changes in laws and regulations, the possibility that we may be in violation of these laws and regulations as a result of such changes, taxes, and potential litigation, among other risks. These risk factors may limit our capability to successfully expand our sales, distribution or export of our products to such jurisdictions. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may be unable to sustain our revenue growth and development, and may be forced to adjust our operations accordingly

Lifted’s ability to sustain its growth will depend on a number of factors, many of which are beyond our control, including, but not limited to, the availability of sufficient capital on suitable terms, changes in laws and regulations respecting the production and distribution of our products, competition from others, the size of the illicit market, and our ability to produce sufficient volumes of our products to meet demand. Regulatory changes, particularly in the primary jurisdictions where we operate, may continue to attract new market entrants and may dilute our potential opportunity and early-mover advantage. In addition, we are subject to a variety of business risks generally associated with developing companies. Future development and expansion may place significant strain on our management personnel and likely will require us to recruit additional management personnel, and there is no assurance that we will be able to do so. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Price volatility may adversely affect operations

The Company’s profitability is sensitive to fluctuations in the costs of raw goods, which may be impacted by changes in supply (which itself depends on other factors such as weather, fuel, equipment, labor costs, raw goods costs, shipping costs, and demand), taxes, governmental policies, and other market conditions, all of which are factors beyond the control of the Company. The Company's operational results are also sensitive to manufacturing costs, and the overall condition of the hemp products, psychoactive products, and alternative lifestyle products industries. Price volatility may have a material adverse effect on the Company's business, financial condition, and results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

We depend on a limited number of customers for a substantial portion of our revenue. If we fail to retain or expand our customer relationships or significant customers reduce their purchases, our revenue may decline significantly

Our business is dependent on a limited number of customers for a substantial portion of our revenue. If we fail to retain or expand our customer relationships or significant customers reduce their purchases, our revenue may decline significantly. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Consumers in our industry are brand-conscious, so brand name recognition and acceptance of our products are critical to our success

Our business is in part dependent upon customer awareness of our brands and market acceptance of our products. If we do not successfully grow our brands and product offerings, we may not achieve and maintain satisfactory levels of acceptance by distributors, wholesalers and end consumers. Any failure of our brands to maintain or increase acceptance or market penetration may likely have a material adverse effect on our revenues and financial results. Moreover, we cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our sales, products' branding and on consumer preferences. In addition, negative public relations and product quality issues, including negative perceptions regarding the industries in which we operate, whether real or imagined, may damage our reputation and brands and may cause customers to choose other brands’ products over our products. Our brand image may also be adversely affected by unfavorable reports, studies and articles, litigation, or regulatory or other governmental action, whether involving our products or those of our competitors. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may have limited access to financial and insurance services and products

Some financial institutions and insurance companies refuse to provide a full range of financial and insurance services and products to Lifted because its business involves hemp-derived products, psychoactive products, vaping products, and nicotine products. Or, the cost of insurance may be prohibitively high. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to obtain or afford insurance coverage in respect of the risks our business faces, or there may be coverage limitations and other exclusions which may result in such insurance not being sufficient to cover potential liabilities that we face

We may not be able to obtain or afford insurance coverage in respect of certain risks that our business faces, including product liability insurance, protecting our assets, the loss of employees, and operations. Even if insurance is obtained, our insurance coverage may be subject to coverage limits and exclusions and may not be available for the risks and hazards to which we are exposed. In addition, no assurance can be given that such insurance will be adequate to cover our liabilities, including potential product liability claims, or will be generally available in the future or, if available, that premiums will be commercially justifiable. If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, we may be exposed to material uninsured liabilities that may impede our liquidity, profitability or solvency. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The Company may sustain losses that cannot be recovered through insurance or other preventative measures

There is no assurance that the Company will not incur uninsured liabilities and losses, especially in regard to uninsured or uninsurable products, and product recalls. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

Increased labor costs, potential organization of our workforce, employee strikes, and other labor-related disruption may adversely affect our operations

It is difficult for Lifted to identify and hire new employees and independent contractors in the current environment: the labor market is limited and labor costs have increased. None of our employees are represented by a labor union or subject to a collective bargaining agreement. We cannot assure that our labor costs going forward will remain competitive based on various factors, such as: (i) labor costs may continue to increase as the labor supply is tight; (ii) our workforce may organize in the future and labor agreements may be put in place that have significantly higher labor rates and company obligations; (iii) our competitors may maintain significantly lower labor costs, putting us at a competitive disadvantage; and (iv) our labor costs may increase in connection with our growth. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Significant interruptions in our access to certain supply chains for key inputs such as raw materials, supplies, electricity, water and other utilities may impair our operations

Our business is dependent on a number of key inputs and their related costs, including raw materials, supplies and equipment related to our operations, co-packers, as well as electricity, water and other utilities. Our suppliers, co-packers and customers are dispersed. Governments may regulate or restrict the flow of labor or products, and the Company’s operations, suppliers, customers and distribution channels could be severely impacted. For examples: China could regulate or restrict the flow of raw materials and products to the United States; the shipment of raw materials and products by sea and/or air from China and other locations to Wisconsin or New Mexico may be banned, limited, disrupted, delayed or increased in cost; the Chinese New Year celebrations may disrupt or delay shipments of raw materials and products; and the State of Wisconsin or New Mexico could impose prohibitions or restrictions on the operation of “non-essential” businesses, and might characterize Lifted as a “non-essential” business. Any significant future governmental-mandated or market-related delay, interruption, price increase or negative change in the availability or economics of the supply chain for key inputs and, in particular, rising or volatile shipping and energy costs, may curtail or preclude our ability to continue production. In addition, our operations would be significantly affected by power outages, or equipment breakage.

Our ability to compete is dependent on us having access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts and components. No assurances can be given that we will be successful in maintaining our required supply of labor, equipment, parts and components. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We face risks associated with the transportation of our products to consumers in a safe and efficient manner

We depend on fast, cost-effective, and efficient transportation services to distribute our products to distributers, wholesalers and end users. Any prolonged disruption of third-party transportation services may have a material adverse effect on our sales volumes or satisfaction with our services. Rising costs associated with third-party transportation services used by us to ship our products may also adversely impact our profitability, and more generally our business, financial condition and results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our products may be subject to recalls for a variety of reasons, which could require us to expend significant management and capital resources

Manufacturers and distributors of products such as those that Lifted sells are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, adulteration, unintended harmful side effects or interactions with other substances, packaging safety, and inadequate or inaccurate labeling disclosure. There can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits, whether frivolous or otherwise. If any of the products produced by us are recalled due to an alleged product defect or for any other reason, we may be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. As a result of any such recall, we may lose a significant amount of sales and may not be able to replace those sales at an acceptable gross profit or at all. In addition, a product recall may require significant management attention or damage our reputation and goodwill or that of our products or brands, and our relationships with customers.

Additionally, product recalls may lead to increased scrutiny of our operations by the FDA or by state regulatory agencies, requiring further management attention, increased compliance costs and potential legal fees, fines, penalties and other expenses. Any product recall affecting the hemp-derived, psychoactive and nicotine products industries more broadly, whether or not involving us, may also lead consumers to lose confidence in the general safety and security of hemp-derived, psychoactive and nicotine products, including products sold by us. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Companies and regulators in the marijuana industry are often hostile to the hemp-derived products industry, and sometimes use their political strength to seek prohibition, regulation and/or taxation of hemp-derived products including products, such as those containing delta-8-THC and delta-9-THC

Companies and regulators in the marijuana industry are often hostile to the hemp-derived products industry, as they witness the growing popularity of hemp-derived products taking sales away from state-licensed marijuana dispensaries. They sometimes use their political strength to seek prohibition, stricter regulations and/or additional taxation of hemp-derived products, including for example, products containing delta-8-THC and delta-9-THC. Prohibitions, restrictions and taxes are now imposed on the shipment and/or sale of certain hemp-derived products in many states, and are being considered by other states. These restrictions, prohibitions and taxes may have a material adverse effect on our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be subject to product liability claims or regulatory action if its products are alleged to have caused significant loss or injury

Lifted, as a manufacturer and distributor of products which in some cases are ingested by humans, face the risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused loss or injury. Lifted may be subject to these types of claims due to allegations that its products caused or contributed to injury, illness or death, failed to include adequate instructions for use, were defective, or failed to include adequate warnings concerning possible side effects or interactions with other substances. Previously unknown adverse reactions resulting from human consumption of hemp-derived products, psychoactive substances, and nicotine alone or in combination with other medications or substances may also occur. Lifted may also be named as co-parties in product liability suits that are brought against manufacturing partners that produce our products, packaging for those products, or the ingredients in those products. In addition, our customers and partners may bring suits against us alleging damages for the failure of our products to meet stated specifications or other requirements. Any such suits, even if not successful, could be costly, disrupt the attention of our management and damage our negotiations with distributors and/or customers. In addition, the manufacture and sale of any such products, like the manufacture and sale of any ingested product, involves a risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Lifted may in the future have to recall certain of its products as a result of potential contamination and quality assurance concerns. A product liability claim or regulatory action against Lifted may result in increased costs and may adversely affect Lifted’s reputation and goodwill with its customers. There can be no assurance that Lifted will be able to obtain product liability insurance on acceptable terms or with adequate coverage against potential liabilities, if at all. Any attempt by us to limit our product liability through any of our insurance policies may not be enforceable or may be subject to exceptions. Insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims may result in us becoming subject to significant liabilities that are uninsured and also may adversely affect Lifted’s commercial arrangements with third parties. Our contract manufacturers or manufacturing partners may not have adequate insurance coverage themselves to cover against claims, and we may not be named on their policies as an additionally insured party. If we experience a large insured loss, it may exceed any insurance coverage limits we have at that time, or our insurance carrier may decline to cover us or may raise our insurance rates to unacceptable levels, any of which could impair our financial position. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We rely on third-party distributors to distribute our products, and those distributors may not perform their obligations

We rely on third-party distributors to distribute our products. If these distributors do not successfully sell our products, if there is a delay or interruption in the distribution of our products, or if these third parties damage our products, our revenue may be negatively impacted. Any damage to our products, such as product spoilage, may expose us to potential product liability, damage our reputation and the reputation of our brands or otherwise harm our business. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We rely on third party vendors to manufacture some of our products, and those third party vendors may not perform their obligations

We rely on third party vendors to manufacture some of our products. If these third party vendors do not successfully carry out their contractual duties, if there is a delay or interruption in the manufacture of our products, or if these third party vendors produce defective products, it may negatively impact our revenue from product sales. Any negative impact to the production of our products by the third party vendors may expose us to potential product liability, damage our reputation and the reputation of our brands or otherwise harm our business. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Certain events or developments in the cannabis industry more generally may impact our reputation

Damage to our reputation can result from the actual or perceived occurrence of any number of events, including any negative publicity, whether true or not. As a producer and distributor of hemp-derived products, there is a risk that our business might attract negative publicity. There is also a risk that the actions of other companies and service providers in the cannabis industry may negatively affect the reputation of the industry as a whole and thereby negatively impact our reputation. The increased usage of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share negative opinions and views in regards to our activities and the cannabis industry in general, whether true or not. We do not ultimately have direct control over how we or the cannabis industry is perceived by others. Reputational issues may result in decreased investor confidence, increased challenges in developing and maintaining community relations and present an impediment to our overall ability to advance our business strategy and realize on our growth prospects. This may also impact our ability to attract and/or maintain business partners that are not primarily engaged in the cannabis industry, such as major convenience stores. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Some companies in the cannabis industry are owned or controlled by people with criminal backgrounds or by people with little regard for compliance with applicable laws, rules and regulations

The cannabis industry includes people with criminal backgrounds or who operated their cannabis businesses illegally for many years. In addition, the cannabis industry includes people who seem to have little regard for compliance with all applicable laws, rules and regulations. This has sometimes resulted in a competitive environment in which publicly traded companies are at a relative disadvantage to certain privately held companies. This “unlevel playing field” may have a material adverse effect on our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The seasonality of Lifted’s business creates variable financial results, and may place increased strain on its operations

Sometimes a disproportionate amount of Lifted's net sales occur during a particular quarter. If Lifted does not stock or restock popular products in sufficient amounts such that it fails to meet seasonal customer demand, it may significantly affect Lifted’s revenue and future growth. In addition, Lifted may be unable to adequately staff its fulfillment operations during these peak periods and may be unable to meet the seasonal demand. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted cannot accurately predict future sales of particular products, so inventory write-offs occur

The hemp-derived and consumable goods products industry is ever-evolving. Lifted cannot accurately predict future sales of particular products that Lifted sells. Some products sell faster than expected, and some products sell slower than expected. And some products sell fast, but then sales unexpectedly drop off quickly. When Lifted overstocks raw goods or finished goods, and the demand for finished goods is not as expected, then Lifted is required to take significant inventory markdowns or write-offs, which reduces profitability. Such inventory markdowns or write-offs are not uncommon. Also, if too many customers access Lifted’s websites within a short period of time due to increased demand, Lifted may experience system interruptions that make its website unavailable or prevent Lifted from efficiently fulfilling orders, which may reduce the volume of goods it sells and the attractiveness of its products and services. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to identify, audit, negotiate, finance or close future acquisitions

A significant component of our growth strategy focuses on acquiring minority or majority equity ownership interests in Canna-Infused Products Companies. However, we generally have pursued a conservative mentality regarding the potential issuance of additional common stock of the Company, and regarding the pricing, term and other conditions of potential borrowings by the Company, so we may not be able to identify, audit, or acquire such equity ownership interests on acceptable terms, if at all. No guarantee or assurance whatsoever can be given that discussions/negotiations with any potential acquisition candidates will result in any letter of intent or definitive acquisition agreement. If we do enter any letter of intent or definitive acquisition agreement, we may need to finance all or a portion of the purchase price for an acquisition by incurring indebtedness or by selling shares of our common or convertible preferred stock. There can be no assurance that we will be able to obtain financing on terms that are favorable, if at all, which will limit our ability to acquire such equity ownership interests in the future. Target companies may not decide to proceed forward with mergers that are the subject of letters of intent. Failure to acquire such equity ownership interests on acceptable terms, if at all, may have a material adverse effect on our ability to increase assets, revenues and net income and on the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Canna-Infused Products Companies and companies involved in selling products containing psychoactive substances or nicotine are subject to regulatory risks, both nationally and internationally

Lifted and other Canna-Infused Products Companies are subject to risks associated with the federal government’s and state and local governments’ evolving regulation of hemp, hemp-derived products, psychoactive substances, tobacco, nicotine, and other products. We can provide no assurance that one or more federal agencies, such as the FDA, the DEA, or state and local governments will not attempt to impose rules, regulations, moratoriums, prohibitions, restrictions, limitations, taxes, or other impediments upon Canna-Infused Products Companies, and companies involved in selling products containing psychoactive substances or nicotine. For example, the US federal government has recently enacted a law that may make it more difficult to sell online and ship nicotine, vape and other products. In addition, the FDA and certain states have enacted laws and regulations that prohibit or otherwise negatively impact the sale of certain hemp-derived, psychoactive and nicotine products. Moreover, if Lifted or Canna-Infused Products Companies or companies involved in selling products containing psychoactive substances or nicotine expand internationally (of which there is no guarantee that they ever would), we can provide no guarantee or assurance that these companies will be able to comply with all applicable governmental laws and regulations. Any failure to comply with all of such rules, regulations, moratoriums, prohibitions, restrictions, limitations, taxes, or other impediments upon Canna-Infused Products Companies, and companies involved in selling products containing psychoactive substances or nicotine, could potentially result in lawsuits, substantial fines and penalties, and/or other negative governmental actions. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted’s sales are dependent upon the sale of delta-8-THC and other hemp-derived cannabinoid products, which may be restricted or prohibited by the FDA, the DEA or other governmental agencies, laws or regulations

Lifted’s sales are significantly dependent upon the sale of products containing delta-8-THC and other hemp-derived cannabinoids. The FDA, the DEA and other federal, state and local governments and agencies may impose laws, rules, regulations and executive orders that effectively prohibit Lifted from selling products containing delta-8-THC or other hemp-derived cannabinoids. For example, the DEA has sent a letter saying that delta-9-THCO and delta-8-THCO “do not occur naturally in the cannabis plant and can only be obtained synthetically, and therefore do not fall under the definition of hemp”, and any crackdown by the DEA or other regulatory authorities on products containing delta-9-THCO and/or delta-8-THCO. Consequently, Lifted’s and LFTD Partners’ future financial prospects are uncertain, and no guarantee or assurance whatsoever can be made that Lifted and LFTD Partners will be able to continue to pay their financial obligations when they become due and payable in the future. The foregoing risks may have a material adverse effect upon Lifted’s business and the trading price of our common stock.

Lifted may be forced to write off inventories of hemp, cannabinoid-infused products, psychoactive products, and/or nicotine-infused products, if those products are subject to prohibitions on sales, either nationally or in particular states

Lifted may find it necessary to build and carry significant quantities of inventory, in order to be able to fulfill large orders received from distributors or other customers. If federal, FDA, DEA, and/or state laws and regulations prohibit the sale of certain hemp, cannabinoid-infused products, psychoactive products, and/or nicotine-infused products, then Lifted may find itself holding significant inventories of such products that cannot be sold, and therefore must be written off. Such write offs could be significant. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Improper storage of hemp flower, or the improper infusion of hemp-distillate into hemp flower, may cause spoilage, and the hemp flower may need to be written off

If hemp flower is stored improperly, or if hemp-distillate is not properly infused into the hemp flower, the hemp flower may be spoiled and subsequently written off, hurting Lifted’s financial results. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

Machinery and equipment maybe unusable or become obsolete, and may need to be written off

Certain machinery and equipment may not be able to be used by Lifted in the production of products, especially new products. For example, Lifted is experiencing significant problems trying to use a large machine that is part of the Purchased Assets that were purchased by Lifted from Oculus. If certain machinery and equipment is unusable or becomes obsolete, then the machinery and equipment may need to be written off, hurting Lifted’s financial results. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to successfully identify and execute future acquisitions or dispositions or to successfully manage the impacts of such transactions on our operations

We may not be able to successfully identify and execute future acquisitions or dispositions or to successfully manage the impacts of such transactions on our operations. Material acquisitions, dispositions and other strategic transactions involve a number of risks, including: (i) the potential disruption of our ongoing business; (ii) the distraction of management away from the ongoing oversight of our existing business activities; (iii) incurring additional indebtedness or stock dilution; (iv) the anticipated benefits and cost savings of those transactions not being realized fully, or at all, or taking longer to realize than anticipated; (v) an increase in the scope and complexity of our operations; and (vi) the loss or reduction of control over certain of our assets. Material acquisitions have been and may continue to be material to our business strategy. There is no guarantee that any acquisition will be accretive. The existence of one or more material liabilities of an acquired company that are unknown to us at the time of acquisition may result in our incurring those liabilities. A strategic transaction may result in a significant change in the nature of our business, operations and strategy, and we may encounter unforeseen obstacles or costs in closing or implementing a strategic transaction or integrating any acquired business into our operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may seek to enter into product collaborations, marketing relationships, affiliations, strategic alliances, or expand the scope of currently existing relationships, with third parties that Lifted believes will have a beneficial impact on Lifted, and there are risks that such product collaborations or other arrangements may not enhance Lifted's business in the desired manner

Lifted may expand the scope of, and may in the future enter into, product collaborations, strategic alliances and other arrangements with third parties that Lifted believes will complement or augment its existing business. Lifted's ability to complete further product collaborations, strategic alliances or other arrangements is dependent upon, and may be limited by, among other things, the availability of suitable candidates and capital. In addition, product collaborations, strategic alliances and other arrangements could present unforeseen obstacles or costs, may not enhance Lifted's business, and may involve risks that may adversely affect Lifted, including the investment of significant amounts of management time that may be diverted from Lifted's core operations in order to pursue and complete such product collaborations, strategic alliances or other arrangements. Lifted may become dependent on its product collaborators, strategic partners or other third parties, and actions by such entities may harm Lifted's business. Future product collaborations, strategic alliances or other arrangements may result in the incurrence of debt, costs and contingent liabilities, and there can be no assurance that future product collaborations, strategic alliances or other arrangements will be developed, maintained or achieve the expected benefits to Lifted's businesses or that Lifted will be able to consummate future product collaborations, strategic alliances or other arrangements on satisfactory terms, or at all. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Third parties with whom we do business may perceive themselves as being exposed to reputational risk as a result of their relationship with us

The parties with whom we do business, or with whom we would like to do business, may perceive that they are exposed to reputational risk as a result of our business activities relating to hemp-derived products, psychoactive substances and nicotine, which may hinder our ability to establish or maintain business relationships. These perceptions relating to our business activities may interfere with our relationship with service providers, particularly in the financial services industry in the United States and certain jurisdictions where our products are not legal. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted relies on third-party distributors and wholesalers to distribute and/or sell a portion of its products, and those distributors and wholesalers may not perform their obligations or may have allegiances to their own or other competitors’ products

Lifted relies on third-party distributors and wholesalers to distribute a portion of its products. If these distributors and wholesalers do not successfully carry out their contractual duties, if these distributors and wholesalers have allegiances to their own or other competitors’ products, if there is a delay or interruption in the distribution of Lifted’s products, or if these third parties damage Lifted’s products in transit or improperly store the products, causing spoilage or functionality issues, then Lifted’s revenue may be negatively impacted. Any damage to Lifted’s products may expose Lifted to potential product liability, damage the reputation of Lifted’s brands or otherwise harm Lifted’s business. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The FDA appears to be concerned about many hemp-derived products

The FDA appears to be concerned about many hemp-derived products. The FDA appears to believe that certain hemp-derived cannabinoids like CBD are drugs, and therefore that the sale of certain hemp-derived products containing cannabinoids such as CBD should require FDA approval. In deference to the FDA, various states and municipalities have declared that the sale of certain hemp-derived products are illegal. There can be no guarantee or assurance whatsoever that the FDA’s regulatory concerns about hemp-derived products will be resolved favorably for the hemp-derived products industry. Aggressive law enforcement against the hemp-derived products industry by federal, state or local authorities and agencies may have a material adverse effect upon Lifted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Hemp-derived products may be shown to have negative health and/or safety impacts upon consumers

The health and safety impacts of hemp-derived products have not yet been established via traditional scientific and/or clinical studies. The FDA appears to believe that certain hemp-derived products may have significant adverse health impacts upon human beings, especially in regard to potential liver toxicity or liver damage. If the FDA, scientific research and/or clinical studies ultimately demonstrate negative health and/or safety impacts of hemp-derived products upon consumers, then Lifted’s business may be materially adversely affected. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Hemp-derived products are federally illegal if they exceed 0.3% delta-9-THC on a dry weight basis

Hemp-derived products which exceed a delta-9-THC concentration of 0.3% on a dry weight basis are federally illegal. Certain states may consider hemp and hemp-derived products which exceed 0.3% total THC on a dry weight basis to be illegal. Any failure to keep the delta-9-THC or total THC concentration in hemp or hemp-derived products below the applicable legal standard could subject Lifted to action by regulatory authorities and/or to lawsuits by consumers, which may have a material adverse effect upon Lifted’s business and the trading price of our common stock.

In addition, the approval of medical and recreational marijuana by many states has created a situation in which it may be difficult or impossible for regulators and courts to determine whether the delta-9-THC levels reflected in consumers’ blood tests are the result of hemp-derived products or marijuana products. This may result in regulatory actions or lawsuits that may have a material adverse effect upon Lifted’s business.

Also, certain hemp-derived products may, over time, gradually increase their delta-9-THC or total THC concentration, and this may ultimately cause such products to exceed the applicable concentration level, making such products illegal in certain jurisdictions. If this happens, we may be subject to regulatory action that may have a material adverse effect upon Lifted and the trading price of our common stock.

Also, federal and state authorities may seek to classify cannabinoids that naturally occur in hemp, such as delta-8-THC, THCA, or THCO, as illegal. If this happens, we may be subject to regulatory action that may have a material adverse effect upon Lifted.

All of the foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The price of raw materials could spike as demand for certain products increases

Increased demand for certain raw materials may cause a spike in the price of these raw materials, which may materially adversely affect Lifted. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

Target companies may not be of the same caliber company as previous acquisitions, or target companies’ management may not fit well into our corporate culture

If we acquire a company that is not of the same caliber company as Lifted, or if we acquire a company that does not have management that is as talented and high energy as Lifted’s management, or if for whatever reason the management of the acquired company does not fit in well with the rest of our team, we may become less attractive for potential investors, future acquisition targets may be uninterested in merging into our Company, and the overall camaraderie among the players in our Company may disappear. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be unable to keep pace with rapid industry, technological and market changes

Lifted may be unable to keep pace with rapid industry, technological and market changes that could affect Lifted’s services, products and businesses, or so keeping pace may require a substantial amount of Lifted’s management time and substantial fees being paid to outside legal counsel and consultants. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Large competitors are expected to enter the hemp-derived, psychoactive and nicotine product industries

We expect that over the next few years major marijuana companies, tobacco companies, chain stores, manufacturers, retailers, alcoholic beverage and other consumer products companies, and distributors, with tremendous financial resources and marketing expertise will emerge to compete against Lifted in the hemp-derived, psychoactive, and nicotine products industries. Lifted may not have the personnel, products, marketing and distribution capabilities, and/or financial resources to compete effectively against such larger companies. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Increases in labor costs could harm Lifted’s business

The U.S. in general, and Bend, Oregon in particular, have experienced very low unemployment, and higher minimum wages, which generally results in rising labor costs and limited access to qualified employment candidates. Such rising labor costs are adversely affecting the expenses of Ablis, Bendistillery and Bend Spirits, and may adversely affect the expenses of Lifted's business. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We cannot predict the effect of inquiries, lawsuits or actions by the DEA, the FDA, Federal Trade Commission, state attorneys general, other government agencies and/or quasi-government agencies, or plaintiffs’ attorneys, into the production, advertising, marketing, promotion, labeling, ingredients, usage and/or sale of Lifted’s products

Lifted is subject to the risks of investigations and/or enforcement actions or lawsuits by the DEA, the FDA, Federal Trade Commission (“FTC”), state attorneys general and/or other government and/or quasi-governmental agencies, or plaintiffs’ attorneys, relating to the advertising, marketing, promotion, ingredients, usage and/or sale of Lifted's products. If an inquiry by the DEA, the FDA, FTC, a state attorney general or other government or quasi-government agency, or by plaintiffs' attorneys, finds that Lifted’s products and/or the advertising, marketing, promotion, ingredients, usage and/or sale of such products are not in compliance with applicable laws or regulations, or that they are misleading, untruthful or unsubstantiated, Lifted may become subject to fines, product reformulations, product recalls, container changes, changes in the usage or sale of Lifted’s products, changes in its advertising, marketing and promotion practices, and/or injunctions on the sale of the products, or lawsuits, each of which may have a material adverse effect on our business, financial condition or results of operations.  The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may be required to obtain state, DEA and/or FDA permits, certifications and/or approvals in order to conduct business

Lifted may be required to obtain and maintain state, DEA and/or FDA permits, certifications and/or approvals in order to conduct business involving hemp-derived products, psychoactive substances, nicotine, food, other edibles, and consumer goods. These permits, certifications and/or approvals may not be obtainable, or obtaining and maintaining them may involve enormous expenditures of time and money for consultants, studies, facilities, compliance, purchases, acquisitions and other matters. Failure to obtain and maintain all necessary permits, certifications and approvals, or the enormous expenditures of time and money associated with obtaining and maintaining all necessary permits, certifications and approvals, may have a material adverse effect on our business, financial condition or results of operations, and on the trading price of our common stock.

Lifted may be subject to investigations by OSHA or other workplace safety agencies

Lifted’s manufacturing, storage and shipping departments include the use of various machinery, equipment, vehicles and raw goods. Notwithstanding appropriate training protocols and safety measures, workplace accidents or deaths may occur, and may subject Lifted to investigations and fines by the Occupational Safety and Health Administration (“OSHA”) or other state or local workplace safety agencies. Such accidents and investigations may have a material adverse effect on our business, reputation, financial condition or results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Lifted may be subject to personal injury or workman’s compensation claims

If notwithstanding appropriate training protocols and safety measures, Lifted’s employees are injured or killed on the job, Lifted may be subject to personal injury or workman’s compensation claims. Defending these claims may require the expenditure of substantial management time and legal fees, and may result in material judgments or settlements that may or may not be covered by insurance. Such settlements or judgments related to personal injury or workman’s compensation claims may have a material adverse effect on our business, reputation, financial condition or results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Litigation regarding Lifted’s business and products, and related unfavorable media attention, may expose Lifted to significant liabilities and reduce demand for its products

From time to time third parties may claim that certain statements made in Lifted’s advertisements, certificates of analysis and/or on the labels of its products were false and/or misleading or otherwise not in compliance with standards applicable to food, other edibles, or non-prescription cannabinoid formulations under local, state or federal law, and/or that Lifted's products are not safe. Pending or threatened business-related and product-related litigation may consume significant financial and managerial resources and result in decreased demand for Lifted’s products, significant monetary awards against Lifted, and injury to Lifted’s and its management’s reputations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Criticism of Lifted’s products and/or criticism or a negative perception of Lifted’s industry, could adversely affect Lifted

Unfavorable reports on the health effects or pricing of Lifted’s products, including product safety concerns, whether generated by scientists, researchers, journalists, consumers, government regulators, industry groups, or on social media may have an adverse effect on Lifted’s business, financial condition and results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Vape, e-liquid, e-cigarette, and nicotine product risks

Some of Lifted’s inhalable products may contain nicotine or other substances. There is a risk that Lifted may be targeted by regulators or consumers with claims that its products are unsafe for vaping or consumption. The market for vapes, e-liquid, e-cigarettes, nicotine, and associated cartridges and paraphernalia is currently subjected to regulations and prohibitions of certain products in certain jurisdictions in response to deaths and illnesses that have occurred and that are apparently associated with vaping, and also in response to other health concerns of various types. These various prohibitions and regulations may have a material adverse effect on Lifted’s financial condition, operating results, liquidity, cash flow and operational performance. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Sales of Lifted’s vape products are subject to uncertainty in the evolving vape market due to negative public sentiment and regulatory scrutiny

Vaping and electronic cigarettes were recently developed and therefore the scientific community has not yet had a sufficient period of time to study the long-term health effects of their use. Currently, there is no way of knowing whether these products are safe for their intended use and the medical community is still studying these products’ health effects. If the scientific community were to determine conclusively that use of any or all of these products poses long-term health risks, then market demand for these products and their use may materially decline. Such a determination may also lead to litigation and significant regulation. Loss of demand for vape products, product liability claims and increased regulation stemming from unfavorable scientific studies on vaping products may have a material adverse effect on Lifted’s business, results of operations and financial condition. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Research regarding the health effects of hemp-derived products, psychoactive substances and e-liquid containing nicotine is in relatively early stages and subject to further study which may impact demand for these products

Research and clinical trials on the potential benefits and the short-term and long-term effects of the use of hemp-derived products, psychoactive substances and e-liquid containing nicotine on human health remains in relatively early stages and there is limited standardization. As such, there are inherent risks associated with using hemp-derived, psychoactive products and e-liquid containing nicotine. Moreover, future research and clinical trials may reach different or negative conclusions regarding the benefits, viability, safety, efficacy, dosing or other facts and perceptions related to hemp-derived products, psychoactive products, and e-liquid containing nicotine, which may adversely affect social acceptance of hemp-derived and psychoactive products, e-liquid containing nicotine, and the demand for Lifted’s products. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted’s inability to innovate successfully and to provide new cutting edge products may adversely affect Lifted’s business and financial results

Lifted’s ability to compete in its highly competitive industry and to achieve its business growth objectives depends, in part, on its ability to develop new products and unique packaging. The success of Lifted's innovation, in turn, depends on its ability to identify consumer trends and cater to consumer preferences. If Lifted is not successful in its innovation activities, then its business, financial conditions and results of operations may be adversely affected. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Changes in consumer preferences may reduce demand for some of Lifted’s products

Lifted’s industry is subject to changing consumer preferences and shifts in consumer preferences may adversely affect Lifted. Lifted’s future success will depend, in part, upon its continued ability to develop and introduce different and innovative products that appeal to consumers. In order to retain and expand its market share, Lifted must continue to develop and introduce different and innovative products, although there can be no assurance of Lifted’s ability to do so. There is no assurance that consumers will continue to purchase Lifted’s products in the future. If certain finished goods are slow moving, they will be written off. Product lifecycles are uncertain and may never sell. The products Lifted currently market are in varying stages of their product lifecycles, and there can be no assurance that such products will become or remain profitable for Lifted. Lifted may be unable to achieve volume growth through product and packaging initiatives. Lifted may also be unable to penetrate new markets.

Moreover, consumers are concerned about their health and wellness, and public and governmental officials and groups are increasingly vocal about smoking, vaping, and their potential adverse impacts. There has been a trend among many public health advocates to pursue a reduction in smoking and vaping, as well as increased public scrutiny of smoking and vaping. Increasing public concern in regard to smoking and vaping may reduce demand for Lifted’s products.

Additionally, as shopping patterns are being affected by the digital evolution and pandemics, with customers embracing shopping by way of mobile device applications, e-commerce retailers and e-commerce websites or platforms, Lifted may be unable to address or anticipate changes in consumer shopping preferences. If Lifted’s revenues decline, its business, financial condition and results of operations may be adversely affected. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Any expansion of Lifted outside of the United States exposes Lifted to uncertain conditions and other risks in international markets

As Lifted’s growth strategy includes expanding internationally, if Lifted is unable to expand distribution of its products outside the United States, its growth rate could be adversely affected. In many international markets, Lifted has limited operating experience and in some areas it has no operating experience. It is costly to establish, develop and maintain international operations and to develop and promote brands in international markets. Lifted's percentage gross profit margins in many international markets are expected to be less than the comparable percentage gross profit margins obtained in the United States. Lifted faces substantial risks associated with having foreign operations, including: economic and/or political instability in international markets; unfavorable foreign currency exchange rates; restrictions on or costs relating to the repatriation of foreign profits to the United States, including possible taxes and/or withholding obligations on any repatriations; and tariffs and/or trade restrictions. These risks may have a significant impact on Lifted's ability to sell its products on a competitive basis in international markets and may have a material adverse effect on its business, financial condition and results of operations. Also, operations outside of the United States are subject to risks relating to appropriate compliance with legal and regulatory requirements in local jurisdictions, potential difficulties in staffing and managing local operations, higher product damages, particularly when products are shipped long distances, potentially higher incidence of fraud and/or corruption, credit risk of local customers and distributors and potentially adverse tax consequences. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

International expansion efforts would likely significantly increase our operational expenses  

We may in the future expand into other geographic areas, which could increase our operational, regulatory, compliance, reputational and foreign exchange rate risks. The failure of our operating infrastructure to support such expansion could result in operational failures and regulatory fines or sanctions. Future international expansion could require us to incur a number of up-front expenses, including those associated with obtaining regulatory approvals, as well as additional ongoing expenses, including those associated with infrastructure, staff and regulatory compliance. We may not be able to successfully identify suitable acquisition and expansion opportunities or integrate such operations successfully with our existing operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Global or regional catastrophic events may impact Lifted’s operations and affect its ability to grow its business

Lifted’s business may be affected by unstable political conditions, civil unrest, large-scale terrorist acts, especially those directed against the United States or other major industrialized countries where its products are distributed, the outbreak or escalation of armed hostilities, major natural disasters or widespread outbreaks of infectious diseases such as COVID-19 and its mutations. Such events may impact the production and/or distribution of Lifted's products. In addition, such events may disrupt global or regional economic activity, which may affect consumer purchasing power, thereby reducing demand for Lifted's products. If Lifted is unable to grow its business internationally as a result of these factors, its growth rate may decline. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflicts in Ukraine and in Israel. Our business may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine, in Israel, or any other geopolitical tensions

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the on-going military conflicts in Ukraine and Israel. The durations and impacts of these military conflicts is unpredictable, and may lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We continue to monitor the situations in Ukraine and Israel, and other international conflicts, and assess their potential impacts on our business. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may rely on third party vendors to manufacture its products

Lifted may not manufacture certain raw or finished goods, but instead outsource manufacturing of these goods to third party vendors. In the event of a disruption and/or delay, Lifted may be unable to procure alternative vendors at commercially reasonable rates and/or within a reasonably short time period. If Lifted is unable to maintain good relationships with its largest vendors, or if its costs of co-packing increase, its business, financial condition and results of operations may be adversely affected.

Lifted does not have exclusive contracts with the majority of its vendors, which subjects Lifted to the risk that those vendors may sell the same products to Lifted’s competitors. In some cases, Lifted’s vendors may be affiliated with and manufacture other hemp-derived, psychoactive or alternative lifestyle products. In such cases, these products compete directly with Lifted’s products.

Lifted’s vendors may make products that sometimes fail to meet Lifted’s standards. This subjects Lifted to the risk that distributors, retail locations and consumers may be dissatisfied with Lifted’s products and demand a refund or a credit, and/or may refuse in the future to purchase Lifted’s products. In addition, Lifted’s contract manufacturers may not deliver their products to Lifted on schedule. Delays in scheduled product deliveries may cause distributors, retail locations and consumers to not purchase Lifted’s products, damaging Lifted’s brand reputation.

The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted relies upon third parties to carry and market its products

Unilateral decisions may be taken by Lifted’s distributors and wholesalers to discontinue carrying certain or all of Lifted's products that they are carrying at any time, which may cause Lifted’s business to suffer.

The marketing efforts of Lifted’s distributors and wholesalers are important for Lifted’s success. If Lifted’s brands prove to be less attractive to Lifted’s existing distributors and wholesalers, or if Lifted fails to attract additional distributors and wholesalers, and/or if Lifted’s distributors and wholesalers do not market, promote and distribute Lifted’s products effectively, Lifted’s business, financial condition and results of operations may be adversely affected. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Increases in costs and/or shortages of raw materials and/or ingredients and/or fuel/energy and/or costs of co-packing may harm Lifted’s business

The costs and availability of the raw materials used by Lifted are subject to fluctuations. For certain terpenes, flavors, raw goods, formulas and other products purchased from third-party suppliers, these suppliers own the proprietary rights to certain of their products. Lifted does not have possession of the list of the ingredients or formulas used in the production of certain of their products and certain of their blended concentrates, and Lifted may be unable to obtain comparable products from alternative suppliers on short notice. Industry-wide shortages of certain products have been, and may from time to time in the future be, encountered, which may interfere with and/or delay production of certain of Lifted’s products.

Moreover, volatility in the global oil markets has resulted in high fuel prices, which many shipping companies have passed on to their customers by way of higher base pricing and increased fuel surcharges. Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers. In addition, certain of Lifted’s co-packing arrangements may allow such co-packers to increase their fees based on certain of their own cost increases. The prices of any of the above and other raw materials such as batteries and packaging, among others, may continue to rise or may rise in the future. Lifted may or may not be able to pass any of such increases on to its customers. In recent years, the United States has imposed tariffs on many products and goods imported from China and certain other countries. Additional tariffs imposed by the United States on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, may result in an increase in supply chain costs. In addition, some of these raw materials are available from limited suppliers. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted’s inability to accurately estimate demand for its products may adversely affect its business and financial results

Lifted may not correctly estimate demand for its existing products and/or new products. Lifted's ability to estimate demand for its products is imprecise, particularly with regard to new products, and may be less precise during periods of rapid growth, particularly in new markets. If Lifted materially underestimates demand for its products or is unable to secure sufficient ingredients or raw materials or experiences difficulties with its co-packing arrangements, including production shortages or quality issues, it may not be able to satisfy demand on a short-term basis. Moreover, industry-wide shortages of certain raw materials and products have been and may, from time to time in the future, be experienced, resulting in production fluctuations and/or product shortages. Such shortages may interfere with and/or delay production of certain of Lifted's products and may have a material adverse effect on its business and financial results. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

If Lifted does not maintain sufficient inventory levels, if Lifted is unable to deliver its products to its customers in sufficient quantities, and/or if Lifted's customers’ or retailers’ inventory levels are too high, Lifted's operating results may be adversely affected

If Lifted does not accurately anticipate the future demand for a particular product or the time it will take to obtain new inventory, Lifted’s inventory levels may be inadequate and its results of operations may be negatively impacted. If Lifted fails to meet its shipping schedules, Lifted may damage its relationships with distributors and/or retailers, increase its distribution costs and/or cause sales opportunities to be delayed or lost. In order to be able to deliver its products on a timely basis, Lifted needs to maintain adequate inventory levels of the desired products. If the inventory of its products held by its distributors and/or retailers is too high, they will not place orders for additional products, which may unfavorably impact Lifted’s future sales and adversely affect its operating results. If Lifted overestimates distributor or retailer demand for its products, Lifted may end up with too much inventory, resulting in higher storage costs or less warehouse space and the risk of inventory spoilage. If Lifted fails to manage its inventory to meet demand, Lifted may damage its relationships with its distributors and retailers and may delay or lose sales opportunities, which may unfavorably impact its future sales and adversely affect its operating results. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The costs of packaging supplies are subject to price increases from time to time, and Lifted may be unable to pass all or some of such increased costs on to its customers

Lifted’s packaging suppliers may increase the costs they charge Lifted for packaging supplies based on changes in the costs of the underlying commodities that are used to produce those packaging supplies. If the costs of these packaging supplies increase, Lifted may be unable to pass these costs along to its customers through corresponding adjustments to the prices it charges, which could have a material adverse effect on its results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

If Lifted encounters product recalls, its business may suffer and it may incur material losses

Lifted may be required from time to time to recall products entirely or from specific co-packers, markets or batches if such products become contaminated, damaged, mislabeled, cause fires, explode or otherwise become materially non-compliant with applicable federal, state or local regulatory requirements. Material product recalls may adversely affect Lifted’s profitability and its brand image. Lifted typically does not maintain recall insurance, so the negative financial impact of a recall upon Lifted may be significant. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted’s working capital may be inadequate or strained, and the issue may be exacerbated by account receivable collection issues

There has been significant financial stress on Lifted's industry. This stress, in certain cases, has caused distributors to refuse to make up-front payments, or to refuse to make timely payments on purchases, from suppliers such as Lifted. Some distributors are apparently so cash-strapped that they are demanding that products be supplied to them on consignment, or to be subject to shelf-stocking fees. This difficult financial environment has strained Lifted’s working capital balance, and has made it increasingly difficult for Lifted to aggressively purchase the larger quantities of raw materials and inventory that are needed to fuel Lifted’s growth. Lifted’s inadequate or strained working capital is exacerbated by account receivable collection issues. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be subject to payments-related risks and costs

Lifted may accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift cards, direct debit from a customer’s bank account, consumer invoicing, physical bank check, and payment upon delivery. For existing and future payment options Lifted offers to its customers, Lifted may become subject to additional regulations and compliance requirements (including obligations to implement enhanced authentication processes that may result in significant costs and reduce the ease of use of its payments products), as well as fraud. For certain payment methods, including credit and debit cards, Lifted pays interchange and other fees, which may increase over time and raise its operating costs and lower profitability. Lifted may rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, electronic checks, and promotional financing. In each case, it may disrupt Lifted’s business if these companies become unwilling or unable to provide these services to Lifted. Lifted may also be subject to payment card association operating rules, including data security rules, certification requirements, and rules governing electronic funds transfers, which may change or be reinterpreted to make it difficult or impossible for Lifted and to comply. If Lifted fails to comply with these rules or requirements, or if Lifted's data security systems are breached, compromised, or otherwise unable to detect or prevent fraudulent activity, Lifted may be liable for card issuing banks’ costs, may be subject to fines and higher transaction fees, and may lose its ability to accept credit and debit card payments from its customers, process electronic funds transfers, or facilitate other types of online payments, and Lifted’s business and operating results may be adversely affected. Lifted may also be subject to or voluntarily comply with a number of other laws and regulations relating to payments, money laundering, international money transfers, privacy and information security, and electronic fund transfers. If Lifted were found to be in violation of applicable laws or regulations, Lifted may be subject to additional requirements and civil and criminal penalties, or may be forced to cease providing certain services. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

If Lifted is not able to retain the full-time services of senior management, there may be an adverse effect on its operations and/or its operating performance until Lifted finds suitable replacements

Lifted's business is dependent, to a large extent, upon the services of its senior management. Lifted does not currently maintain key person life insurance on any members of its senior management. The loss of services of Lifted’s senior management may adversely affect its business until suitable replacements can be found. There may be a limited number of personnel with the requisite skills to serve in these positions, and Lifted may be unable to locate or employ such qualified personnel on acceptable terms. The loss of the services of Lifted’s CEO NWarrender would be especially damaging to Lifted’s business. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Climate change may negatively affect Lifted’s business

There is concern that a gradual increase in global average temperatures due to increased carbon dioxide and other greenhouse gases in the atmosphere may cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters. Changing weather patterns may result in decreased agricultural productivity in certain regions, which may limit availability and/or increase the cost of certain raw goods used in Lifted’s products and may impact the food security of communities around the world. Increased frequency or duration of extreme or inclement weather conditions may also impair production capabilities, disrupt Lifted’s supply chains (including, without limitation, the availability of, and/or result in higher prices for raw goods and finished goods) and/or impact demand for Lifted’s products. Natural disasters and extreme weather conditions, such as bomb cyclones, hurricanes, wildfires, freezing temperatures, heavy snow, earthquakes or floods, may affect Lifted’s operations and the operation of Lifted’s supply chains and unfavorably impact the demand for, or Lifted’s consumers’ ability to purchase, Lifted’s products. The predicted effects of climate change may also result in challenges regarding availability and quality of water, or less favorable pricing for water, which may adversely impact Lifted’s businesses and results of operations. In addition, public expectations for reductions in greenhouse gas emissions may result in increased energy, transportation and raw material costs, and may require Lifted to make additional investments in facilities and equipment. As a result, the effects of climate change may have a long-term adverse impact on Lifted’s business and results of operations. Sales of Lifted’s products may also be influenced to some extent by weather conditions in the markets in which Lifted operates. Weather conditions may influence consumer demand for certain of Lifted’s products, which may have an effect on Lifted’s operations, either positively or negatively. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Potential changes in accounting standards or practices and/or taxation or new accounting standards, or changes in the assumptions used in accounting matters, may adversely affect Lifted’s financial results

From time to time, the Financial Accounting Standards Board, the SEC and other regulatory bodies may issue new and revised standards, interpretations and other guidance that change US GAAP. Future changes in accounting standards or practices may have an impact on Lifted’s financial results. New accounting standards may be issued that change the way Lifted records revenues, expenses, assets and liabilities. The effects of such changes may include prescribing an accounting method where none had been previously specified, prescribing a single acceptable method of accounting from among several acceptable methods that currently exist, or revoking the acceptability of a current method and replacing it with an entirely different method, among others. These changes in accounting standards may adversely affect Lifted reported earnings or results of operations, financial condition and other financial measurers. Increases in direct and indirect income tax rates may affect after-tax income. Equally, increases in indirect taxes (including environmental taxes pertaining to the disposal of beverage containers and/or indirect taxes on beverages) may affect Lifted’s products’ affordability and reduce Lifted’s sales. Accounting principles related to stock based compensation, inventory, revenue recognition, sales allowances, and income tax provisions, among others, are highly complex and involve many subjective assumptions, estimates and judgments by management. Changes to the accounting rules related to these areas or the interpretation of the rules, or changes in underlying assumptions, estimates or judgments by our management may adversely affect reported financial results. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Fluctuations in Lifted’s effective tax rates may adversely affect its financial conditions and results of operations

Lifted may be subject to income and other taxes in both the U.S. and certain foreign jurisdictions. Therefore, Lifted may be subjected to audits for multiple tax years in various jurisdictions at once. At any given time, events may occur which change Lifted’s expectations about how any such tax audits will be resolved and thus, there may be variability in Lifted’s quarterly and/or annual tax rates. On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, which imposes broad and complex changes to the U.S. tax code and may have tax implications for Lifted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Growth of operations will depend on the acceptance of Lifted’s products and consumer discretionary spending

The acceptance of Lifted’s products by distributors, wholesalers and consumers is critically important to the success of Lifted. Shifts in customer preferences away from Lifted’s products, Lifted’s inability to develop products that appeal to both retailers and consumers, or changes in Lifted’s products that eliminate items popular with some consumers, may harm Lifted’s business. Also, Lifted's success will depend to a significant extent on discretionary user spending, which is influenced by general economic conditions and the availability of discretionary income. Accordingly, Lifted may experience an inability to generate revenue during economic downturns or during periods of uncertainty, such as during pandemics, when users may decide to purchase products that are cheaper or to forego purchasing any type of Lifted’s products, due to a lack of available capital. Any material decline in the amount of discretionary spending may have a material adverse effect on Lifted’s sales, results of operations, business and financial condition. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We cannot be certain that the products that Lifted offers will become, or continue to be, appealing and as a result there may not be any demand for these products and Lifted’s sales may decrease, which may result in a loss of revenue. Additionally, there is no guarantee that interest in Lifted’s products will continue, which may adversely affect Lifted’s business and revenues

Demand for Lifted’s products depends on many factors, including the number of customers that Lifted is able to attract and retain over time, and the competitive environments in Lifted’s industry. This may force Lifted to reduce prices below the desired price levels or to increase promotional spending. Inability to anticipate changes in user preferences and to meet consumers’ needs in a timely and cost-effective manner all may result in immediate and longer term declines in the demand for the products Lifted plans to offer, which may adversely affect Lifted’s sales, cash flows and overall financial condition, or may lead to write-offs of slow-moving inventory. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Competition that Lifted faces is varied and strong

Lifted’s products and industries are subject to intense competition. There is no guarantee that Lifted can develop or sustain a market position or expand its business. We anticipate that the intensity of competition in the future will increase.

Lifted competes with a number of entities in providing products to its customers. Such competitor entities include: (1) a variety of large multinational corporations, including but not limited to companies that have established loyal customer bases over several decades; (2) companies that have an established customer base, and have the same or a similar business plan as Lifted does and may be looking to expand nationwide; and (3) a variety of other local and national companies with which Lifted either currently or may, in the future, compete.

Many of Lifted’s current and potential competitors are well established and have longer operating histories, significantly greater financial and operational resources, and greater name and brand recognition than Lifted has. As a result, these competitors may have greater credibility with both existing and potential customers. They also may be able to offer more products and more aggressively promote and sell their products. Lifted’s competitors may also be able to support more aggressive pricing than Lifted will be able to, which may adversely affect sales, cause Lifted to decrease its prices to remain competitive, or otherwise reduce the overall gross profit earned on Lifted’s products. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Competition from traditional and large, well-financed tobacco or nicotine product manufacturers or distributors may adversely affect Lifted’s distribution relationships and may hinder development of Lifted’s existing markets, as well as prevent Lifted from expanding its markets

The tobacco, nicotine, hemp and consumable goods industries are highly competitive. Lifted competes with other hemp brands, tobacco, nicotine, and other consumable goods companies for consumer acceptance, shelf space in retail outlets, and for the marketing support of distributors and wholesalers, many of whom also distribute or carry their own brands which compete with Lifted’s brands. Some of Lifted’s competitors have substantially greater financial resources than Lifted. Some of Lifted’s competitors place tremendous pressure on independent distributors to not carry competing brands such as Lifted’s.

Lifted’s competitors may have advantages such as lower production costs, greater financial and marketing resources, and more developed and extensive distribution networks. Lifted may not be able to grow its sales or inventory, or maintain its selling prices, whether in existing markets or as it enters new markets.

Increased competitor consolidations, marketplace competition, and competitive product and pricing pressures could impact Lifted’s earnings, market share and volume growth. Due to competition, Lifted may be unable to sufficiently maintain or develop its distribution channels, and it may be unable to achieve its revenue and financial targets. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted’s industry requires the attraction and retention of talented employees

Success in Lifted’s industry does and will continue to require the acquisition and retention of highly talented and experienced individuals. Due to the growth in hemp-derived and psychoactive products industries, such individuals and the talent and experience they possess is in high demand. There is no guarantee that Lifted will be able to attract and maintain access to such individuals. The attraction and retention of such individuals may require the Company to offer stock, warrants and/or bonuses as incentives. If Lifted fails to attract, train, motivate and retain talented personnel, Lifted’s business, financial conditions, and operating results may be materially and adversely impacted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted depends on a limited number of suppliers of raw and packaging materials

Lifted relies upon a limited number of suppliers for raw and packaging materials used to make and package its products. Lifted’s success will depend in part upon its ability to successfully secure such materials from suppliers that are delivered with consistency and at a quality that meets its requirements. The price and availability of these materials are subject to market conditions. Increases in the price of Lifted’s products due to the increase in the cost of raw materials may have a negative effect on its business.

If Lifted is unable to obtain sufficient quantities of raw and packaging materials, delays or reductions in product shipments may occur which would have a material adverse effect on Lifted’s business, financial conditions and results of operations. If Lifted's packaging suppliers replicate and sell Lifted’s proprietary or custom packaging designs to competitors, or disclose to competitors Lifted’s future products, there may be material adverse effects on Lifted’s business, financial conditions and results of operations. The supply and price of raw materials used to produce Lifted’s products can be affected by a number of factors beyond Lifted’s control, such as political tensions between the US and China, tariffs, freight- and port-related backups and other logistical problems, wildfires, frosts, droughts, other weather conditions, economic factors affecting growing decisions, and various plant diseases and pests. If any of the foregoing were to occur, no assurance can be given that such condition would not have a material adverse effect on Lifted’s business, financial condition and results of operations. In addition, Lifted’s results of operations are dependent upon its ability to accurately forecast its requirements of raw materials. Any failure by Lifted to accurately forecast its demand for raw materials may result in an inability to meet higher than anticipated demand for products or producing excess inventory, either of which may adversely affect its results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted depend on a small number of retailers for a significant portion of its sales

Retailers across all channels in the U.S. and other markets have been consolidating, increasing margin demands of brand suppliers, and increasing their own private brand offerings, resulting in large, sophisticated retailers with increased buying power. They are in a better position to resist Lifted’s price increases and demand lower prices. They also have leverage to require Lifted to provide larger, more tailored promotional and product delivery programs. If Lifted and its distributor partners do not successfully provide appropriate marketing, product, packaging, pricing and service to these retailers, Lifted’s product availability, sales and margins may suffer. Certain retailers make up an important percentage of Lifted’s products’ retail volume, including volume sold by Lifted’s  distributor partners. Some retailers also offer their own private label products that compete with some of Lifted’s brands. The loss of sales of any of Lifted’s products by a major retailer may have a material adverse effect on our business and financial performance. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Third party manufacturers may make decisions adverse to Lifted’s best interests

A portion of Lifted’s sales revenue is dependent on third party manufacturers that Lifted does not control. The majority of these manufacturers’ business comes from producing and/or selling either their own products or competitors’ products. As independent companies, these manufacturers make their own business decisions. They may have the right to determine whether, and to what extent, they manufacture Lifted’s products, Lifted’s competitors’ products and their own products. They may devote more resources to other products or take other actions detrimental to Lifted’s brands. In many cases, they are able to terminate their manufacturing arrangements with Lifted without cause. Lifted may need to increase support for its brands in their territories and may not be able to pass on price increases to them. Lifted's financial condition may also be adversely affected by conditions beyond Lifted’s control, and Lifted’s business may suffer as a result. Deteriorating economic conditions may negatively impact the financial viability of third party manufacturers. Any of these factors may negatively affect Lifted’s business and financial performance. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Failure of third-party distributors upon which Lifted relies may adversely affect its business

Lifted may rely heavily on third party distributors for the sale of a portion of its products to retailers. The loss of a significant distributor may have a material adverse effect on Lifted’s business, financial condition and results of operations. Lifted’s distributors may also provide distribution services to competing brands, as well as larger, national or international brands, and may be to varying degrees influenced by their continued business relationships with other larger companies. Lifted’s independent distributors may be influenced by a large competitor if they rely on that competitor for a significant portion of their sales. There can be no assurance that Lifted’s distributors will continue to effectively market and distribute Lifted’s products. The loss of any distributor or the inability to replace a poorly performing distributor in a timely fashion may have a material adverse effect on Lifted’s business, financial condition and results of operations. Furthermore, no assurance can be given that Lifted will successfully attract new distributors as it increases its presence in its existing markets or expand into new markets. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Disruptions to production at Lifted’s manufacturing and distribution facilities may occur

Disruptions in production at Lifted’s manufacturing facilities may have material adverse effects on its business. In addition, disruptions may occur at any of Lifted’s other facilities or those of Lifted’s suppliers or distributors. The disruptions may occur for many reasons, including pandemics, fire, natural disaster, inclement weather, bomb cyclones, water scarcity, manufacturing problems, disease, strikes, transportation or supply interruption, government regulation, cybersecurity attacks or terrorism. Alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more or may take a significant time to start production, each of which may negatively affect Lifted’s business and financial performance. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Lifted may be subject to seasonality related to sales of its products

Lifted’s business may be subject to substantial seasonal fluctuations. Lifted’s operating results for any particular quarter may not necessarily be indicative of any other results. If for any reason Lifted's sales were to be substantially below seasonal norms, then Lifted’s annual revenues and earnings may be materially and adversely affected. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Lifted may fail to comply with applicable government laws and regulations

Lifted is subject to a variety of federal, state and local laws and regulations in the U.S. These laws and regulations apply to many aspects of its business including the manufacture, safety, labeling, transportation, advertising, sale of its products, consumer age verification, the collection and remittance of sales and use taxes, income taxes, payroll taxes, tobacco and excise taxes, other fees, and the filing of related returns. Some of these laws (including tax laws and regulations such as excise and sales tax) and regulations are complex, ambiguous, subject to multiple interpretations, and/or subject to frequent changes. Sales and use taxes, excise taxes, or other fees or taxes may be improperly collected or remitted improperly or late. In addition, filings and amendments to filings may not be prepared and filed on time with the appropriate regulatory or government entity.  

Violations of these laws or regulations in regard to the manufacture, safety, labeling, consumer age verification, transportation and advertising of Lifted's products may damage its reputation and/or result in regulatory actions with substantial penalties, or lawsuits filed against Lifted. In addition, any significant change in such laws or regulations or their interpretation, or the introduction of higher standards or more stringent laws or regulations, may result in increased compliance costs or capital expenditures. In particular, regulatory focus on the health, safety and marketing of vapes, smokable products, edible/ingestible products, and beverage products is increasing. Certain federal or state regulations or laws affecting the labeling of Lifted’s products, such as California’s “Prop 65,” which requires warnings on any product with substances that the state lists as potentially causing cancer or birth defects, are or may become applicable to Lifted’s products. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be subject to complex and/or ambiguous laws and regulations

Some of the laws and regulations governing Lifted's industry are complex and/or ambiguous, and are subject to different legal interpretations. Depending on what legal interpretations are enforced by regulatory agencies and the courts, we may be subject to prohibitions, restrictions, regulations, taxation or other requirements that we currently do not believe are applicable to us. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Lifted faces various operating hazards that may result in the reduction of its operations

Lifted operations are subject to certain hazards and liability risks faced by beverage, food and edibles companies that manufacture and distribute drink products, food and other edibles, such as defective products, contaminated products and damaged products. The occurrence of such problems may result in a costly product recall and serious damage to Lifted’s reputation for product quality, and may potentially lead to lawsuits and governmental investigations. No assurance can be given that insurance (if any) will be adequate to fully cover any incidents of product contamination or injuries resulting from Lifted's operations and products. Lifted may not be able to continue to maintain insurance (if any) with adequate coverage for liabilities or risks arising from its business operations on acceptable terms. Even if insurance (if any) is adequate, insurance premiums may increase significantly which may result in higher costs for Lifted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Litigation and publicity concerning product safety or quality, health, human and workplace rights, and other issues may damage Lifted’s brand image and corporate reputation, and may adversely affect Lifted’s results of operations, business and financial conditions

Lifted’s success depends on its ability to build and maintain the brand images for its existing products, new products and brand extensions, and maintaining its corporate reputation. There can be no assurance that Lifted's advertising, marketing and promotional programs and its commitment to product safety and quality and human rights will have the desired impact on its products’ brand image and on consumer preference and demand. Product safety, quality and/or ingredient content issues, efficacy or lack thereof (real or imagined), or allegations of product contamination, even if false or unfounded, could tarnish the image of the affected brands and may cause consumers to choose other products. Furthermore, Lifted’s brand images or perceived product quality may be adversely affected by litigation, unfavorable reports in the media (internet or elsewhere), studies in general and regulatory or other governmental inquiries (in each case whether involving Lifted's products or those of its competitors) and proposed or new legislation affecting its industry. In addition, from time to time, there may be public policy endeavors that are either directly or indirectly related to Lifted’s products and packaging or to its business. These public policy debates can occasionally be the subject of backlash from advocacy groups that have a differing point of view and may result in adverse media and consumer reaction, including product boycotts.

Similarly, Lifted’s sponsorship relationships may subject Lifted to negative publicity as a result of actual or alleged misconduct by individuals or entities associated with organizations or individuals Lifted sponsors or supports. Likewise, campaigns by activists connecting Lifted or its supply chains with human and workplace rights issues may adversely impact Lifted’s corporate image and reputation. Allegations, even if untrue, that Lifted is not respecting one or more of the human rights found in the United Nations Universal Declaration of Human Rights; actual or perceived failure by Lifted’s suppliers or other business partners to comply with applicable labor and workplace rights laws, including child labor laws, or its actual or perceived abuse or misuse of migrant workers; and adverse publicity surrounding obesity and health concerns related to Lifted’s products, water usage, environmental impact, labor relations or the like may negatively affect Lifted’s overall reputation and brand image, which in turn may have negative impacts on Lifted’s products’ acceptance by consumers.

Lifted may also incur significant liabilities, if lawsuits or claims result in decisions against them, or litigation costs, regardless of the result. Further, any litigation may cause Lifted’s key employees to expend resources and time normally devoted to the operations of Lifted's business. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

It is difficult and costly for Lifted to protect its proprietary rights

Lifted’s commercial success will depend in part on obtaining and maintaining trademark protection, patent protection, and trade secret protection of its products and brands, as well as successfully defending that intellectual property against third-party challenges, which Lifted might not be able to do. Lifted will only be able to protect its intellectual property related to its trademarks, patents and brands (if any) to the extent that it has rights under valid and enforceable trademarks, patents or trade secrets that cover its products and brands, which it might not have. Changes in either the trademark and patent laws or in interpretations of trademark and patent laws in the U.S. and other countries may diminish the value of its intellectual property (if any). Accordingly, Lifted cannot predict the breadth of claims that may be allowed or enforced in its issued trademarks or its issued patents (if any). The degree of future protection for its proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect its rights or permit it to gain or keep its competitive advantage. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Lifted may face intellectual property infringement claims that may be time-consuming and costly to defend, and could result in loss of significant rights and the assessment of treble damages

From time to time Lifted may face intellectual property infringement, misappropriation, or invalidity/non-infringement claims from third parties. Some of these claims may lead to litigation. The outcome of any such litigation can never be guaranteed, and an adverse outcome may affect Lifted negatively. For example, were a third party to succeed on an infringement claim against Lifted, Lifted may be required to pay substantial damages (including up to treble damages if such infringement were found to be willful). In addition, Lifted may face an injunction, barring it from conducting the allegedly infringing activity. The outcome of the litigation may require Lifted to enter into a license agreement which may not be under acceptable, commercially reasonable, or practical terms or Lifted may be precluded from obtaining a license at all. It is also possible that an adverse finding of infringement against Lifted may require it to dedicate substantial resources and time in developing non-infringing alternatives, which may or may not be possible. In the case of diagnostic tests, Lifted may also need to include non-infringing technologies which may require Lifted to re-validate its tests. Any such re-validation, in addition to being costly and time consuming, may be unsuccessful.

Finally, Lifted may initiate claims to assert or defend its own intellectual property against third parties. Any intellectual property litigation, irrespective of whether Lifted is the plaintiff or the defendant, and regardless of the outcome, is expensive and time-consuming, and may divert Lifted’s management’s attention from its business and negatively affect its operating results or financial condition. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted may be subject to claims by third parties asserting that Lifted or Lifted’s employees have misappropriated the third parties’ intellectual property, or claiming ownership of what Lifted regards as its own intellectual property

Although Lifted tries to ensure that it, its employees, and independent contractors do not use the proprietary information or know-how of others in their work for Lifted, Lifted may be subject to claims that it, its employees, or independent contractors have used or disclosed intellectual property in violation of others’ rights. These claims may cover a range of matters, such as challenges to Lifted’s trademarks, as well as claims that its employees or independent contractors are using trade secrets or other proprietary information of any such employee’s former employer or independent contractors. As a result, Lifted may be forced to bring claims against third parties, or defend claims they may bring against Lifted, to determine the ownership of what Lifted regards as its intellectual property. If Lifted fails in prosecuting or defending any such claims, in addition to paying monetary damages, Lifted may lose valuable intellectual property rights or personnel. Even if Lifted is successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We will not control businesses in which we own a minority equity ownership interest

We will not control any business in which we own a minority equity ownership interest, such as Ablis, Bendistillery and Bend Spirits. We can provide no assurance that the owner of the majority equity ownership interest of such business will be able to manage such business successfully. A failure by the controlling owner of a company in which we own a minority equity ownership interest may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Under US GAAP, we will not be able to consolidate our financial statements with the financial statements of companies in which we own minority equity ownership interests

US GAAP does not permit the consolidation of our financial statements with the financial statements of companies in which we own minority equity ownership interests and have no substantial influence over the management of the businesses. US GAAP also requires us to record these types of investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As such, we will not be allowed to consolidate into our financial statements any portion of the revenues, earnings or assets of companies in which we own minority equity ownership interests such as Ablis, Bendistillery and Bend Spirits.  

Also, under US GAAP, we used the equity method of accounting to account for our 50% membership interest in SmplyLifted prior to the Lifted’s sale of that interest in February 2022. Under the equity method of accounting, we recorded our initial investment in SmplyLifted, which was $200,000, as an asset at historical cost. We then recorded our share (50%) of SmplyLifted’s losses as losses on the Consolidated Statements of Operations. In addition, under the equity method of accounting, the investment’s value was adjusted on a quarterly basis to reflect the changes in value due to Lifted’s share in SmplyLifted’s losses.

As a result of these effects of US GAAP, potential buyers or sellers of our stock may be confused because they may not be able to immediately understand the financial results and the values of the minority ownership interests that we have in certain businesses such as Ablis, Bendistillery and Bend Spirits, or future businesses. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

We may not be able to exit from minority equity ownership interests

We may not be able to exit from minority equity ownership interests in companies such as Ablis, Bendistillery and Bend Spirits on acceptable terms, if at all. Because our equity ownership interests in these companies will not allow us to clearly control the management, operations, and direction of the businesses, a potential sale or other exit from such investment may be extremely difficult or impossible to achieve on acceptable terms, if at all. The other owners of equity ownership interests in such businesses may refuse to cooperate with such a sale or exit, or may engage in business practices including but not limited to inflated salaries, stock dilution, obstructionist or delaying tactics, or other behavior that would result in our equity ownership interests having an extremely limited or non-existent market. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to properly brand our Company

In September 2021, we changed the name of our company to “LFTD Partners Inc.” from “Acquired Sales Corp.”, and we changed our ticker symbol to “LSFP” from “AQSP”. On March 15, 2022 we changed our ticker symbol to “LIFD”.

Because we intend to acquire equity ownership interests in many different Canna-Infused Products Companies, with a range of products, packaging, names and cultures, we may not be able to properly brand our Company or properly represent all of the companies in which we are invested. Potential acquisition candidates, consumers, and potential investors may have difficulty assimilating all of our diverse business interests, and consequently may not give our common stock a proper valuation. Even if we change the name of our Company to a name that more properly reflects our focus on acquiring equity ownership interests in Canna-Infused Products Companies, such a name change may not be embraced by consumers or potential investors. Moreover, no assurances or guarantees may be provided that the Financial Industry Regulatory Authority (“FINRA”) will grant requests for ticker symbol changes, or that such ticker symbol changes will be embraced by consumers or potential investors. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to properly market our products

Marketing our products properly will require a great deal of marketing expertise, an extensive and trained staff, and large amounts of marketing dollars. Our marketing expertise and experience is limited, our staff size and training is limited, and we lack large amounts of marketing dollars. A failure or inability to properly market our products may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to properly manage multiple businesses

We may not be able to properly manage multiple businesses in the hemp-derived, psychoactive, and alternative lifestyle products industries. Managing multiple businesses may be more complicated than managing a single line of business, and may require that we hire and manage executives with experience and expertise in different fields. We can provide no assurance that we will be able to do so successfully. A failure to properly manage multiple businesses may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to successfully integrate new acquisitions

Even if we are able to acquire additional companies or assets, we may not be able to successfully integrate or achieve synergies among those companies or assets. For example, we may need to integrate or coordinate widely dispersed operations with different corporate cultures, operating margins, competitive environments, computer systems, accounting software, compensation schemes, business plans and growth potential requiring significant management time and attention. In addition, the successful integration or coordination of any companies we acquire will depend in large part on the retention of personnel critical to our combined business operations due to, for example, unique technical skills or management expertise. We may be unable to retain existing management, finance, accounting, engineering, sales, customer support, and operations personnel that are critical to the success of the integrated Company, resulting in disruption of operations, loss of key information, expertise or know-how, unanticipated additional recruitment and training costs, and otherwise diminishing anticipated benefits of these acquisitions, including loss of revenue and profitability. Failure to successfully integrate acquired businesses may have a material adverse effect on our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our acquisitions of businesses may be extremely risky and we may lose all of our investments

We may invest in the nicotine, hemp-derived, psychoactive, alternative lifestyle products, or other risky industries. An investment in these companies may be extremely risky because, among other things, the companies we are likely to focus on: (i) may be viewed as being dangerous or illegal by the DEA or FDA, by state governments, or by other governmental or regulatory bodies and agencies; (ii) typically have limited operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns; (iii) tend to be privately-owned and generally have little publicly available information and, as a result, we may not learn all of the material information we need to know regarding these businesses; (iv) are more likely to depend on the management talents and efforts of a small group of people; and, as a result, the death, disability, resignation or termination of one or more of these people could have an adverse impact on the operations of any business that we may acquire; (v) may have less predictable operating results; (vi) may from time to time be parties to litigation; (vii) may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence; (viii) may require substantial additional capital to support their working capital, operations, expansion, marketing, research, or maintain their competitive position; and (ix) their financial statements may be unaudited, improperly prepared, and/or their internal financial controls may be inadequate or non-existent. Our failure to efficiently make accretive acquisitions that meet all of our criteria may have a material adverse effect on our business, results of operations, and financial condition. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Future acquisitions may fail to perform as expected

Future acquisitions may fail to perform as expected, for many reasons, many of which may be unforeseen. For examples: information supplied to us regarding future acquisitions may be incomplete, inaccurate or misleading; we may overestimate future acquisitions’ cash flow, underestimate their costs, or fail to understand their risks; the management of future acquisitions may clash with our management or our board of directors, lose focus on growing the profitability of their businesses, or may resign to pursue other interests; or future acquisitions may be crushed by larger and more experienced and financially stronger competitors. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Competition may result in overpaying for acquisitions

Other investors with significant capital may compete with us for attractive investment opportunities. These competitors may include publicly traded companies, private equity firms, privately held buyers, individual investors, and other types of investors. Such competition may increase the price of acquisitions, or otherwise adversely affect the terms and conditions of acquisitions. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

We may have insufficient resources to cover our debts, operating expenses, dividends owed on our preferred stock, and the expenses of raising money and consummating acquisitions

We have limited cash to cover the costs of building inventory, hiring employees, expanding our operational footprint, our company-wide bonus pool, other business operating expenses, dividends owed on our preferred stock, and the expenses incurred in connection with money raising, performing due diligence and acquiring businesses, and the SEC filings and audit responsibilities associated with being a publicly traded company. If we do not have sufficient proceeds available to cover our expenses, we may be forced to attempt to obtain additional financing, either from our management or third parties. We may not be able to obtain additional financing on acceptable terms, if at all, and neither our management nor any third party is obligated to provide any financing. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may not be able to identify good acquisitions in the future

There can be no assurance that we will be successful in locating acquisition candidates meeting our criteria in the future. In the event that we complete a future merger or acquisition transaction, of which there can be no assurance, our success, if any, will be dependent upon the operations, financial condition and management of the target company, and upon numerous other factors beyond our control. If the operations, profitability, financial condition or management of the target company were to be disrupted or otherwise negatively impacted following a transaction, our Company and our common stock price may be negatively impacted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may carry out actions that will not require our stockholders’ approval

The terms and conditions of any acquisition may require us to take actions that may not require our stockholders’ approval. In order to acquire certain companies or assets, we may issue additional shares of common or convertible preferred stock, or borrow money or issue debt instruments including debt convertible into capital stock. Not all of these actions would require our stockholders’ approval even if these actions dilute our stockholders’ economic or voting interests as shareholders. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our investigation of potential acquisitions will be limited

Our analysis of new business opportunities will be undertaken by or under the supervision of our Investment Committee. Inasmuch as we will have limited funds available to search for business opportunities and ventures, we will not be able to expend significant funds on a complete and exhaustive investigation of such business or opportunity. We will, however, investigate, to the extent believed reasonable by our Investment Committee, such potential business opportunities or ventures by conducting a “due diligence investigation”. In a due diligence investigation, we intend to obtain and review materials regarding the business opportunity. Typically, such materials will include information regarding a target company’s products, services, contracts, management, ownership, and financial information. In addition, we intend to cause our Investment Committee to personally meet with management and key personnel of target companies, ask questions regarding the target companies’ prospects, tour facilities, and conduct other reasonable investigation of the target companies to the extent of our limited financial resources and management and technical expertise. There is a risk that the owners and/or the managers of potential acquisitions could misrepresent and/or fail to disclose material adverse facts regarding the potential acquisitions, or that our shareholders may institute litigation claiming that our “due diligence investigations” of potential acquisitions were insufficient or negligent in some way. Any failure of our typical due diligence investigation to uncover issues and problems relating to target companies may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We will have only a limited ability to evaluate the directors and management of potential acquisitions

We may make a determination that our current directors and officers should not remain, or should change or reduce their roles, following money raising or a business combination, based on an assessment of the experience and skill sets of new directors and officers and the management of target companies. We cannot assure you that our assessment of these individuals will prove to be correct. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

We will be dependent on outside advisors to assist us

In order to supplement the business experience of management, we may employ investment bankers, accountants, technical experts, appraisers, attorneys, independent contractors or other consultants or advisors. The selection of any such advisors will be made by management and without any control from shareholders. Additionally, it is anticipated that such persons may be engaged by us on an independent basis without a continuing fiduciary or other obligation to us. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

If we are unable to successfully execute on our future operating plans, our financial condition and results of operation may be materially adversely affected, and we may not be able to continue as a going concern

It is critical that we meet our sales goals and increase sales going forward. If we do not meet our sales goals, our available cash and working capital may decrease and our financial condition will be negatively impacted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may fail to manage our growth effectively

Future growth through acquisitions and organic expansion may place a significant strain on our managerial, operational, technical, training, systems and financial resources. We can give you no assurance that we will be able to manage our expanding operations properly or cost effectively. A failure to properly and cost-effectively manage our expansion may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We may be unable to effectively manage future growth

We may be subject to growth-related risks, including capacity constraints and pressure on our internal systems and controls. Our ability to manage growth effectively will require us to continue to implement and improve our operational and financial systems and to expand, train and manage our employee base. Rapid growth of our business may significantly strain our management, operations and technical resources. We may be unable to properly manage future growth. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

The management of companies we acquire may lose their enthusiasm or entrepreneurship after the sale of their businesses

We can give no assurance that the management of future companies we acquire will have the same level of enthusiasm for operating their businesses following their acquisition by us; or, if they cease performing services for the acquired businesses, that we will be able to install replacement management with the same skill sets, leadership and determination. There also is always a risk that management of companies we acquire will attempt to reenter the market and possibly seek to recruit our employees and independent contractors. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock. 

Complications with the implementation of our Inventory Management Software could adversely impact our business and operations

We rely on information systems and technology to manage our business and summarize operating results. We are in the process of implementing Inventory Management Software (“IMS”). IMS is designed to accurately maintain the quantities and costs of the Company’s raw goods and finished goods. The IMS implementation process has required, and will continue to require, the investment of significant personnel and financial resources. We may not be able to successfully implement the IMS without experiencing increased costs and other difficulties and our planned timeline to implement the remaining phases of our IMS may be delayed. If we are unable to successfully implement our IMS system as planned, our business, results of operations, and financial condition may be negatively impacted. Additionally, if we do not effectively implement the IMS as planned or the IMS does not operate as intended, the effectiveness of our internal controls over financial reporting may be adversely affected or our ability to adequately assess those controls could be delayed. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Law enforcement officials may claim that Lifted's products are contaminated