ITEM 1A. Risk Factors

The following important factors, and the important factors described elsewhere in this report or in our other filings with the Securities and Exchange Commission (“SEC”), could affect (and in some cases have affected) our results and could cause our results to be materially different from estimates or expectations. Other risks and uncertainties may also affect our results or operations adversely. The following and these other risks could materially and adversely affect our business, operations, results or financial condition.

An investment in the Company is highly speculative in nature and involves an extremely high degree of risk.

Risks Related To Our Businesses

Our auditor has expressed substantial doubt about our ability to continue as a going concern. We may be unable to obtain additional capital required to implement our business plan.

As a result of recurring net losses and insufficient cash reserves, our independent certified public accountant has added a paragraph to its report on our financial statements for the year ended September 30, 2024 questioning our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues and profitable operations. Since inception, we have raised funds primarily through the sale of equity securities and convertible notes. We will need additional funds to commercially launch and then operate our business. We will need additional funds to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations or cause substantial dilution for our stockholders. If we are unable to obtain additional funds, our ability to carry out and implement our planned business objectives and strategies will be significantly delayed, limited or may not occur. We cannot guarantee that we will ever generate revenue and become profitable. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise additional funds.

Our limited operating history in our current business makes it difficult to evaluate our current business and future prospects and the risk of your investment.

Although we were incorporated in 2010, we were previously in the business of operating a service-oriented independent testing laboratory, data analytics and media firm focused on developing cannabis and hemp markets. We sold the assets of this business in 2024, and recently positioned our business to develop and sell a bioreactor device for the production of functional mushrooms. As such we have a limited operating history upon which to evaluate our commercial prospects. Our historical results are not indicative of our future results in the new line of business. Our limited operating history makes it difficult for potential investors to evaluate our prospective operations and business prospects. Investors should consider our future prospects in light of the risks and uncertainties of early-stage companies operating in a competitive environment. We may encounter unanticipated problems as we continue to refine our business model and may be forced to make significant changes to be successful in the marketplace.

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

We plan to continue the development of the Hypha Micropearl bioreactor over the next twelve months with the goal of commercializing the device by the end of calendar year 2025. Accordingly, we will continue to incur additional substantial development costs and other expenses to commercialize our products. We cannot reasonably estimate the actual amounts necessary to execute our business strategy and successfully launch our business. Further we cannot estimate the costs involved in the development, manufacture and commercialization of any future products. In addition, other unanticipated costs may arise. We will require additional financing to execute our business plan. As a result, until we can generate substantial revenues from our products, we expect to finance our cash needs though equity offerings, debt financings or other capital sources.

Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate our development activities for our products or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our products.

We will initially be dependent on a limited number of customers, and any significant decline in business from one or more of our customers could adversely affect our operating results.

As an early-stage company, we will initially be dependent on a limited number of customers to purchase our device as well as to purchase replacement cartridges for use in the device. As a result, if customers fail to place anticipated orders, change planned quantities, delay purchases, or change product preferences for reasons beyond our control, we could experience a decline in our operating results. Sales in the consumer product segment are highly seasonal and dependent upon the United States retail markets and consumer spending. Traditionally, this segment has recognized a substantial portion of its sales during the holiday selling season. Any downturn in the general economy, shift in consumer spending away from housewares/small appliances, or further deterioration in the financial health of our customer base could adversely affect our sales and operating results.

Our business model and growth strategy depend on our marketing efforts and ability to introduce our products, maintain our brand and attract customers to our platform in a cost-effective manner.

Our success depends on our ability to acquire and retain customers in a cost-effective manner through marketing efforts and exposure to our products. In order to create and expand our customer base, we will need to appeal to and acquire customers who have not historically consumed functional mushrooms or used a bioreactor device to grow these mushrooms. We plan to make a significant investment related to customer acquisition and expect to continue to spend significant amounts to acquire additional customers. Our advertising efforts will consist primarily of email marketing, online advertisements and promotions, digital marketing and social media. These efforts are expensive and may not result in the cost-effective acquisition of customers. We cannot assure you that the net profit from new customers we acquire will ultimately exceed the cost of acquiring those customers through enhancements to the customer experience on our website, mobile-optimized websites and mobile operations. If we fail to deliver a quality shopping experience, or if consumers do not perceive the products we offer to be of high value and quality, we may not be able to acquire new customers. If we are unable to acquire new customers who purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary to drive beneficial network effects with our suppliers or efficiencies in our logistics network, our net revenue may decrease, and our business, financial condition and operating results may be materially adversely affected.

We believe that many of our new customers will originate from word-of-mouth and other non-paid referrals from existing customers. Therefore, we must ensure that our existing customers remain loyal to us in order to continue receiving those referrals. If our efforts to satisfy our existing customers are not successful, we may not be able to acquire new customers in sufficient numbers to continue to grow our business, or we may be required to incur significantly higher marketing expenses in order to acquire new customers.

Our success depends in part on our ability to increase our net revenue per active customer. If our efforts to increase customer loyalty and repeat purchasing as well as maintain high levels of customer engagement are not successful, our growth prospects and revenue will be materially adversely affected.

Our ability to grow our business depends on our ability to retain our existing customer base and generate increased revenue and repeat purchases from this customer base and maintain high levels of customer engagement. To do this, we must continue to provide our customers and potential customers with a unified, convenient, efficient and differentiated shopping experience by:

If we fail to increase net revenue per active customer, generate repeat purchases or maintain high levels of customer engagement, our growth prospects, operating results and financial condition could be materially adversely affected. ^TM

The Company may not be successful in developing the Hypha Micropearl bioreactor and introducing any new and improved models of the device.

We plan to continue the design, development and testing of the Hypha Micropearl bioreactor over the next twelve months. If the bioreactor performs as expected, of which there can be no assurance, we will introduce it into the marketplace. The introduction of the initial Hypha Micropearl bioreactor will require substantial expenditures for advertising and marketing to gain marketplace recognition. Further, after the introduction and sale of the initial Hypha Micropearl bioreactor, the ability to develop new and improved devices will be important to our long-term success. The ability to develop new and improved devices, will depend upon, among other things, whether we can develop and fund technological innovations and successfully anticipate consumer needs and preferences. There is no guarantee that we will be successful in developing products necessary to compete effectively in the functional mushroom industry or that we will be successful in advertising, marketing and selling the bioreactor or any new products.

Product recalls or lawsuits relating to defective products could have an adverse effect on the Company, as could the imposition of industry sustainability standards.

As a manufacturer and distributor of consumer products in the United States, the Company is subject to the Consumer Products Safety Act, which empowers the U.S. Consumer Products Safety Commission to exclude from the market products that are found to be unsafe or hazardous. Under certain circumstances, the U.S. Consumer Products Safety Commission could require the Company to repair, replace or refund the purchase price of one or more of its products, or the Company may voluntarily do so. Any repurchase or recall of products could be costly and damage the Company’s reputation, as well as subject it to a sizable penalty that the U.S. Consumer Products Safety Commission is empowered to impose. If the Company removed products from the market, its reputation or brand could be tarnished and it might have large quantities of finished products that could not be sold. The Company could also face exposure to product liability claims if one of its products were alleged to have caused property damage, bodily injury or other adverse effects. Although the Company intends to maintain product liability insurance for a reasonable level of claims, there is no assurance that such insurance will be sufficient to cover any potential claim. Moreover, many states do not allow insurance companies to provide coverage of punitive damages, in the event such damages were imposed. Additionally, the Company does not maintain product recall insurance. As a result, product recalls or product liability claims could have a material adverse effect on the Company’s business, results of operations and financial condition. The portable appliance industry association has a framework for a sustainability standard for the industry but has yet to develop specific guidelines for implementation. When and if developed, the standards will do nothing for the environment but will entail the addition of significant bureaucracy and outside certification fees. As such, compliance will be burdensome and expensive.

Macroeconomic trends including inflation and rising interest rates may adversely affect our financial condition and results of operations.

Macroeconomic trends, including increases in inflation and rising interest rates, may adversely impact our business, financial condition and results of operations. Inflation in the United States has recently declined and is expected to remain at its current reduced level in the near-term. However, rising inflation in the future could have an adverse impact on our operating expenses and any potential borrowings under credit facilities. There is no guarantee we will be able to mitigate the impact of rising inflation. The Federal Reserve has started reducing interest rates with the decline in inflation but there is no assurance that rates will continue to decline throughout our fiscal year ending September 30, 2025. If interest rates remain high, we cannot assure you that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of any desired borrowings. Such future constraints could increase our borrowing costs, which would make it more difficult or expensive to obtain financing, which could slow or deter future growth.

Our business is dependent on general economic conditions and consumer discretionary spending, and reductions in such spending might adversely affect the Company’s business, operations, liquidity, financial results and stock price.

Our business depends on consumer discretionary spending, and our results are highly dependent on U.S. consumer confidence and the health of the U.S. economy. Consumer spending may be affected by many factors outside of the Company’s control, including general economic conditions; consumer disposable income; consumer confidence and perception of economic conditions; the threat or outbreak of war, terrorism or public unrest (including, without limitation, the conflicts in Ukraine and the Middle East) which may cause supply chain disruptions, increase fuel costs and transportation costs, and create general economic instability; wage and unemployment levels; consumer debt and inflationary pressures; the costs of basic necessities and other goods; effects of weather and natural disasters caused by climate change or otherwise; and epidemics, contagious disease outbreaks, and other public health concerns including the COVID-19 pandemic. Adverse economic changes in any of the regions in which we sell our products could reduce consumer confidence and could negatively affect net revenue and have a material adverse effect on our operating results.

Consumers may view a substantial portion of the products we offer as discretionary items rather than necessities. As a result, our results of operations are sensitive to changes in macro-economic conditions that impact consumer spending, including discretionary spending. Decreases in consumer discretionary spending may result in a decrease in comparable sales, and average value per transaction, which might cause us to increase promotional activities, which will have a negative impact on our gross margins, all of which could negatively affect the Company’s business, operations, liquidity, financial results and stock price, particularly if consumer spending levels are depressed for a prolonged period of time.

If we fail to manage our growth effectively, we may experience difficulties in expanding our operations and service offerings and our business, financial condition and operating results could be harmed.

In order to develop and grow our business, we will require significant resources to commence operations and scale our business in a cost-effective manner. Failure to obtain these resources may negatively affect our ability to access the marketplace and grow our business. We will also be required to manage relationships with a growing number of suppliers, third party manufacturers, customers and other third parties. We may also be required to effectively integrate, develop and motivate a large number of new employees. Our information technology systems and our internal controls and procedures may not be adequate to support our growth. If we are unable to manage the growth of our organization effectively, our business, financial condition and operating results may be materially adversely affected.

Our success depends, in substantial part, on our ability to market our products through search engines and social media platforms.

The marketing of our products depends on our ability to cultivate and maintain cost-effective and otherwise satisfactory relationships with search engines and social media platforms, including those operated by Google, Facebook, Bing and Yahoo! These platforms could change their terms and conditions of use at any time (and without notice) and/or significantly increase their fees. No assurances can be provided that we will be able to maintain cost-effective and otherwise satisfactory relationships with these platforms and our inability to do so in the case of one or more of these platforms could have a material adverse effect on our business, financial condition and results of operations.

The growing use of online ad-blocking software may also impact the success of our marketing efforts because we may reach a smaller audience and fail to bring more customers to our website, which could have a material adverse effect on our business, financial condition and results of operations.

Our internal information technology systems may fail or suffer security breaches, loss or leakage of data, and other disruptions, which could disrupt our business or result in the loss of critical and confidential information.

The satisfactory performance, reliability and availability of our website, transaction processing systems, logistics network, and technology infrastructure will be critical to our reputation and our ability to acquire and retain customers, as well as maintain adequate customer service levels.

For example, if one of our data centers fails or suffers an interruption or degradation of services, we could lose customer data and miss order fulfillment deadlines, which could harm our business. Our systems and operations, including our ability to fulfill customer orders through our logistics network, could also be vulnerable to damage or interruption from inclement weather, fire, flood, power loss, telecommunications failure, terrorist attacks, labor disputes, cybersecurity-attacks, data loss, acts of war, break-ins, earthquake and similar events. In the event of a data center failure, the failover to a back-up could take substantial time, during which time our site could be completely shut down. Further, our back-up services may not effectively process spikes in demand, may process transactions more slowly and may not support all of our site’s functionality.

We intend to use proprietary software in our technology infrastructure, which we will need to continually update and improve. We may not always be successful in executing these upgrades and improvements, and the operation of our systems may be subject to failure. In particular, we may experience slowdowns or interruptions on some or all of our sites when we are updating them, and new technologies or infrastructures may not be fully integrated with existing systems on a timely basis, or at all. Additionally, if we expand our use of third-party services, including cloud-based services, our technology infrastructure may be subject to increased risk of slowdown or interruption as a result of integration with such services and/or failures by such third parties, which are out of our control. Our net revenue will depend on the number of visitors who shop on our site and the volume of orders we can handle. Unavailability of our website or reduced order fulfillment performance would reduce the volume of goods sold and could also materially adversely affect consumer perception of our brand.

We may experience periodic system interruptions from time to time. In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated with promotional activities or seasonal trends in our business, place additional demands on our technology platform and could cause or exacerbate slowdowns or interruptions. Any slowdown, interruption or performance failure of our site and the underlying technology and logistics infrastructure could harm our business, reputation and our ability to acquire, retain and serve our customers, which could materially adversely affect our results of operations.

If we fail to maintain adequate cybersecurity with respect to our systems and ensure that our third-party service providers do the same with respect to their systems, our business may be harmed.

We intend to collect, maintain, transmit and store data about our customers, employees, contractors, suppliers, vendors and others, including credit card information and personally identifiable information, as well as other confidential and proprietary information. We also may employ third-party service providers that store, process and transmit certain proprietary, personal and confidential information on our behalf. We may rely on encryption and authentication technology licensed from third parties in an effort to securely transmit, encrypt, anonymize or pseudonymize certain confidential and sensitive information, including credit card numbers. Advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of this technology to protect transaction and personal data or other confidential and sensitive information from being breached or compromised. Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to hack our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, cybersecurity breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our sites, networks and systems or that we or our third-party service providers otherwise maintain, including payment card systems and human resources management platforms. We and our service providers may not anticipate or prevent all types of attacks until after they have already been launched, and techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers. In addition, security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships.

Breaches of our security measures or those of our third-party service providers or cyber security incidents could result in unauthorized access to our sites, networks and systems; unauthorized access to and misappropriation of personal information, including consumers’ and employees’ personally identifiable information, or other confidential or proprietary information of ourselves or third parties; limited or terminated access to certain payment methods or fines, penalties, assessments or higher transaction fees to use such methods; viruses, worms, spyware or other malware being served from our site, networks or systems; deletion or modification of content or the display of unauthorized content on our site; interruption, disruption or malfunction of operations; costs relating to breach remediation, deployment or training of additional personnel and protection technologies, responses to governmental investigations and media inquiries and coverage; engagement of third party experts and consultants; litigation, regulatory action and other potential liabilities. If any of these breaches of security occur, and/or our cybersecurity processes, procedures or policies are found to be deficient, our reputation and brand could be damaged, our business may suffer, we could be required to expend significant capital and other resources to alleviate problems caused by such breaches and we could be exposed to a risk of loss, litigation or regulatory action and possible liability. In addition, any party who is able to illicitly obtain a customer’s password or other relevant information could access that customer’s transaction data or personal information. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data security and other laws, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition and operating results. We may need to devote significant resources to protect against cybersecurity breaches or to address problems caused by breaches, diverting resources from the growth and expansion of our business.

We may choose to rely upon manufacturers based in outside the United States, including China, and their operations are subject to risks associated with business operations in those countries. Any disruption in the ability of these manufacturers to supply us with our products on a timely basis could have a material adverse effect on our business, results of operations or financial condition. If we are forced to go without such insurances, it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.

Our current plan is to manufacture the Hypha Micropearl bioreactor outside the United States to reduce manufacturing costs. Although we have not yet identified a manufacturer for our products, nor have we entered into an arrangement with any entity in a foreign country to manufacture our products, we may decide to manufacture the bioreactor in mainland China. The Chinese government or any foreign government in a country where we choose to manufacture our products may intervene or influence the operations of a business located in that country, especially China, or the industry in which a business operates at any time, which could result in a material change to the operations of any manufacturer in such country. Foreign countries where we choose to manufacture may be subject to political instability and dramatic changes in economic policies. For example, policies of the Chinese government can have significant effects on the economic conditions of China and industries within China. The Chinese government has confirmed that economic development will follow the model of a market economy. Under this direction, we believe that China will continue to strengthen its economic and trading relationships with foreign countries and business development in China will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. Changes in policies, regulations, rules, and the enforcement of laws by a foreign government may produce quick shifts in policy with little advance notice that could adversely affect our interests by interfering with the operations of manufacturers and/or suppliers we choose to rely upon. Although the Chinese government has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting China’s political, economic, and social environment.

We will depend on our relationships with a variety of regional and national carriers, and changes in our relationships with these parties could adversely affect our revenue and profits.

We will rely on a variety of regional and national carriers for our shipping services. As a result, we may be subject to shipping delays or disruptions caused by factors beyond our and our carriers’ control, including inclement weather, natural disasters, system interruptions and technology failures, labor shortages, increased fuel costs, health epidemics or bioterrorism. We are also subject to risks of breakage or other damage during delivery by any of these third parties.

We may rely on a limited number of suppliers, or in some cases, a single supplier, for some of the components of our Hypha Micropearl bioreactor, such as the cartridges, and may not be able to find replacements or immediately transition to alternative suppliers

We intend to source components, such as the cartridges, for the Hypha Micropearl bioreactor from third parties. Our failure to maintain continued supply of such components, or supply that meets quality control requirements, particularly in the case of sole suppliers, would seriously harm our business, financial condition, and results of operations. In the event of any adverse developments with these vendors, our product supply may be interrupted, and obtaining substitute components could be difficult or require us to re-design our products. If the supply of components we receive from suppliers does not meet quality control standards, we may not be able to use the components, or if we use them not knowing that they are of inadequate quality, it may prevent our products from working properly or at all.

We may be unable to develop, optimize, operate and manage our fulfillment centers

We intend to engage a third party to handle fulfillment of our products from its fulfillment centers. If we are unable to secure, optimize and operate fulfillment centers successfully and efficiently, it could result in excess or insufficient fulfillment capacity, an increase in costs or impairment charges or harm our business in other ways. In addition, if we do not have sufficient fulfillment capacity or experience a problem fulfilling orders in a timely manner, our customers may experience delays in receiving their purchases, which could harm our reputation and our relationship with our customers. For example, challenges such as another pandemic could cause us to experience disruptions to the operations of our fulfillment centers, including an insufficient and strained labor pool from time to time, which may negatively impact our ability to fulfill orders in a timely manner, which could harm our reputation, relationship with customers and results of operations. Failure to successfully address such challenges in a cost-effective and expedient manner could impair our ability to timely deliver our customers’ purchases and could harm our reputation and ultimately, our business, financial condition, and results of operations.

Significant merchandise returns could harm our business.

We intend to allow our customers to return products, subject to our return policy. If merchandise returns are significant, our business, prospects, financial condition and results of operations could be harmed. Further, we may modify our policies relating to returns from time to time, which could result in customer dissatisfaction or an increase in the number of product returns. From time to time, our products may be damaged in transit, which can increase return rates and harm our brand.

We are subject to risks related to online payment methods.

We intend to accept payments using a variety of methods, including credit card, debit card, PayPal, credit accounts and gift cards. As we offer new payment options to consumers, we may be subject to additional regulations, compliance requirements and fraud. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We are also subject to payment card association operating rules and certification requirements, including the current and future Payment Card Industry Data Security Standard (“PCI”) and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply, including in connection with any possible payment card data breach. As our business changes, we may also be subject to different rules under existing standards, which may require new assessments that involve costs above what we currently pay for compliance. If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines, penalties, assessments or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card and debit card payments from consumers or to facilitate other types of online payments.

Our plans are dependent upon key individuals and the ability to attract qualified personnel.

In order to execute our business plan, we will be dependent upon our executive officers and directors, as well as other key personnel. The loss of any of the foregoing individuals could have a material adverse effect upon our business prospects. Moreover, our success continues to depend to a significant extent on our ability to identify, attract, hire, train and retain qualified professional, creative, technical and managerial personnel. Competition for such personnel is intense, and there can be no assurance that we will be successful in identifying, attracting, hiring, training, and retaining such personnel in the future. If we are unable to hire, assimilate and retain such qualified personnel in the future, our business, operating results, and financial condition could be materially adversely affected. We may also depend on third party contractors and other partners, to assist with the execution of our business plan. There can be no assurance that we will be successful in either attracting and retaining qualified personnel, or creating arrangements with such third parties. The failure to succeed in these endeavors would have a material adverse effect on our ability to consummate our business plans.

If the market for our products does not develop or become sustainable, or becomes saturated, our revenues may fail to materialize, and our financial condition and results of operations could be materially impaired.

The global market for functional mushrooms is projected to experience significant growth over the next eight years and the functional mushroom market in the U.S. is expected to grow significantly as well. The increasing popularity and acceptance of mushroom products among individuals creates an opportunity for us to enter this industry and provide a new and innovative way for consumers to have access to mushroom products. However, although we believe that providing consumers with a convenient home device to make functional mushrooms which can be incorporated into their food and beverage is a novel and innovative concept, there can be no assurance that consumers will purchase our products. Our success is highly dependent on both the market’s acceptance of functional mushrooms as well as the adoption of the use of our home device by the consumer. If the market for our products does not materialize, become sustainable, or becomes saturated with competing products, our revenues may not materialize, and our financial condition and results of operations could be materially and adversely affected.

We compete against various companies engaged in the mushroom industry, some of which have greater brand recognition, longer operating histories and greater financial resources.

We compete against various companies engaged in the mushroom industry. The increasing popularity and acceptance of mushroom based products has led to the rapid development of new and innovative products in the mushroom industry. Thus, manufacturers in the mushroom industry, owing to these rapid advancements, are constantly working on innovative formulations and delivery methods to make mushroom products more palatable and convenient for consumers. These manufacturers are focusing on expanding their global presence by adopting strategies such as investing in joint ventures, partnerships, mergers and acquisitions and research and development in innovative product lines.

Although we do not believe there are any other companies developing a bioreactor device to produce functional mushrooms in the home, we do believe that there is ongoing research into the medical properties and applications of various mushroom species for personal care and pharmaceuticals which continues to promote the development of new functional mushroom-based products. For instance, in August 2023, Four Sigmatic, a wellness products manufacturing company, launched organic mushroom complex capsules in Calm, Focus, and Memory varieties. These capsules contain lion’s mane mushroom extract, vitamin B12, and L-theanine. Mushroom Perfecti, a company focused on the production of mushroom based products from mycelium, is producing a line of nutritional supplements, Nature’s Rise, a manufacturer of organic mushroom products, launched Lion’s Mane organic powder extract on Amazon in October 2022 and Lifeway Foods, Inc., a US supplier of Kefir and fermented probiotic products, launched a new line of adaptogenic medical mushrooms beverages at the Winter Fancy Food Show in Las Vegas in February 2022. In August 2023 Applied Food Sciences Inc. (“AFS”), one of the leaders in supplying functional and organic ingredients, announced its equity investment and partnership with KAAPA Biotech, a Finland based company. This partnership would help AFS expand its botanical portfolio by adding Nordic grown medical mushroom extracts that could be used in food, beverages and supplements. These companies represent the availability of alternative sources of functional mushrooms offered to consumers.

Further, advancements in biotechnology and mycology have enabled researchers to explore novel cultivation techniques, optimize growing conditions, thereby enhancing the production of bioactive compounds in mushrooms. In May 2023, Optimi Health Corp., a Canadian-based company, opened a new mushroom research and development facility. The new facility consists of two 10,000-square-feet facilities with ten growing rooms producing approximately 2,000 kilograms of dried psilocybin mushrooms a month. Thus, the global functional mushroom market share is anticipated to exhibit a promising growth rate in a competitive marketplace.

Risks Relating to Intellectual Property

If we are unable to protect our intellectual property rights, our business, competitive position, financial condition and results of operations could be materially and adversely affected.

Our success is dependent in part on our ability to obtain patent protection in the United States and abroad for our technology. We have filed two patent applications that safeguard the use of sophisticated machine learning algorithms to process mycelium, the vegetative part of fungi composed of an intricate network of hyphae. We have filed for patent protection in the United States. We believe that our ability to obtain patent protection in key markets for our technology is essential for maintaining our competitive edge. Failure to do so may impact our ability to experience broad acceptance in the marketplace for our products over those of our competitors, therefore reducing our ability to generate revenues and grow our business. Further, failure to obtain patent protection for our products will limit our ability to pursue damages for infringement of our proprietary rights against third parties. There can be no assurances any of our pending or future patent applications will be approved, or that we develop additional products or processes that are patentable.

Third parties may seek to challenge, invalidate, circumvent, render unenforceable, or seek ownership of any patents or proprietary rights owned by us. There can be no assurance that we will operate without infringing on the proprietary rights of third parties. If such challenges are successful, we may be unable to use or may need to limit the scope of our methods and technologies.

Our employees, consultants and advisors will enter into confidentiality agreements with us that prohibit the disclosure or use of our confidential information. We will also have entered into non-disclosure or confidentiality agreements to protect our confidential information delivered to third parties for research and other purposes. Despite these efforts, we cannot guarantee that we will be able to effectively enforce these agreements, or our confidential information will not be disclosed, that others will not independently develop substantially equivalent confidential information and techniques or otherwise gain access to our confidential information or that we can meaningfully protect our confidential information. Furthermore, any know-how that is proprietary or particular to our technologies may be subject to risk of disclosure by employees or consultants despite having confidentiality agreements in place.

If we are unable to protect our brand, including our trademarks, our business can be materially and adversely effected.

Our success is dependent in part on our ability to protect our brand and the trademarks we use to sell our products. We are currently using the trademark Micropearls with respect to our bioreactor device and intend to introduce this product into the marketplace with this trademark. Although we have not registered this trademark, our use and claim to the name protects us from third parties using it for similar products, although third parties may still infringe our trademark. Any infringement of our trademark by third parties can lead to consumer confusion and any unauthorized use of a similar mark can make it challenging for consumers to distinguish between our brand and the infringing party. This confusion can erode the trust and loyalty that our customers may develop over time. Further, if an infringing party utilizes our brand’s trademark to sell subpar or counterfeit products, the quality associated with our brand can suffer. Consumers who encounter these inferior offerings may associate the negative experience with our brand, resulting in a tarnished reputation. It will be crucial for us to maintain control over our trademark to protect the positive association customers have with our brand. Trademark infringement can lead to lost business opportunities, as unauthorized parties may exploit our brand’s reputation and market presence for their gain. Such loss of opportunities can have long-lasting effects on our brand’s growth and profitability.

Trademark infringement can also result in legal disputes, which can be time-consuming and expensive to resolve. Third parties may seek to challenge our use of their trademarks. Engaging in legal battles to protect or defend our trademarks can strain business relationships, including those with customers, partners, or distributors. Moreover, if the infringement remains unresolved, it may signal a lack of control over our brand, leading to further damage to our reputation. Trademark infringement poses significant risks to our brand’s reputation and can have detrimental effects on our business.

Risks Related To Our Common Stock

Our operating results may fluctuate causing volatility in our stock price.

Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. The following factors may affect our operating results causing volatility in our stock price:

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Our ability to execute our business plan, compete effectively and attract customers;

Trading in our common stock has been limited, there is no significant trading market for our common stock, and purchasers of our common stock may be unable to sell their shares.

Our common stock is currently eligible for quotation on the OTCQB and OTCBB, however trading to date has been limited. If activity in the market for shares of our common stock does not increase, purchasers of our shares may find it difficult to sell their shares. We currently do not meet the initial listing criteria for any registered securities exchange, including the Nasdaq Stock Market. The OTCQB and OTCBB are often characterized by low trading volume and significant price fluctuations. These and other factors may further impair our stockholders’ ability to sell their shares when they want to and/or could depress our stock price. As a result, stockholders may find it difficult to dispose of, or obtain accurate quotations of the price, of our securities because smaller quantities of shares could be bought and sold, transactions could be delayed and security analyst and news coverage of our Company may be limited. These factors could result in lower prices and larger spreads in the bid and ask prices for our shares of common stock.

Applicable SEC rules governing the trading of “penny stocks” may limit the trading and liquidity of our common stock which may affect the trading price our common stock.

Our common stock is a “penny stock” as defined under Rule 3a51-1 of the Exchange Act, and is accordingly subject to SEC rules and regulations that impose limitations upon the manner in which our common stock can be publicly traded. Penny stocks generally are equity securities with a per share price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on NASDAQ). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, of our common stock and reducing the liquidity of an investment in our common stock.

We have outstanding shares of preferred stock with rights and preferences superior to those of our common stock.

The issued and outstanding shares of Series A Convertible Preferred Stock and Series B Preferred Stock grant the holders of such preferred stock liquidation rights that are superior to those held by the holders of our common stock.

We have outstanding shares of Series C Preferred stock held by our sole executive officer that will enable him to control a majority of the total voting power of the Company.

We have designated 1,000 shares of Series C Preferred stock that provides the holder, so long as he or she is an executive officer of the Company, with the ability to vote with the holders of our common stock on all matters presented to the holders of common stock, on the basis of 200,000 votes for each share of Series C Preferred stock. All of the shares of Series C Preferred stock are currently held by A. Stone Douglass, our sole executive officer. Accordingly, Mr. Douglass has the right to vote a majority of the total voting power of all outstanding shares of our capital stock. Consequently, other stockholders will exercise little influence over management and policies of the Company.

We plan to increase the amount of authorized shares of our common stock and our preferred stock.

Our board of directors and the holder of a majority of the voting power of the Company’s voting stock have approved an amendment to the Company’s Articles of Incorporation, as amended, to increase the authorized number of shares of the Company’s common stock from 250,000,000 to 880,000,000 shares and the authorized number of shares of the Company’s preferred stock from 10,000,000 to 70,000,000, which would become effective upon the filing of the amendment with the Secretary of State of the State of Nevada. The charter amendment was filed on January 13, 2025. The increase in authorized common stock and preferred stock will not have any immediate effect on the rights of existing stockholders, but it would have a dilutive effect on our existing stockholders when the additional shares are issued. This increase in the authorized number of shares of common stock and preferred stock and the subsequent issuance of such shares could have the effect of delaying or preventing a change in control of the Company without further action by the Company’s stockholders. Management’s use of additional shares of capital stock to resist or frustrate a third-party transaction favored by a majority of the independent stockholders would likely result in an above-market premium being paid in that transaction. Any such issuance of the additional shares of common stock and preferred stock would likely have the effect of diluting the earnings per share and book value per share of outstanding shares of the Company’s common stock and preferred stock, respectively, and such additional shares could be used to dilute the stock ownership or voting rights of a person seeking to obtain control of the Company.

Upon such increase in the authorized shares of preferred stock, the Company will have 62,499,000 shares of preferred stock that remains undesignated. The Company’s Articles of Incorporation, as amended, allow our board of directors to authorize the issuance of shares of preferred stock without any vote or further action by the Company’s stockholders. Our board of directors has the authority to not only issue additional shares of the Series A Preferred stock, Series B Preferred stock or Series C Preferred stock, but also has the authority, from time to time, to provide by resolution for the issuance of shares of preferred stock in one or more series, not exceeding the aggregate number of shares of preferred stock authorized by the Company’s Articles of Incorporation, as amended, and to prescribe with respect to each such series the voting powers, if any, designations, preferences, and relative, participating, optional, or other special rights, and the qualifications, limitations, or restrictions relating thereto. The Company does not anticipate that it would seek authorization from the stockholders for issuance of any additional authorized shares of common stock or preferred stock, unless required by applicable law or regulations.

We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock depends on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 1C. CYBERSECURITY

As of the date of this Form 10-K, we believe that we have limited risks associated with a breach in cybersecurity. Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents (of which we are not aware of any), have not materially affected or are not reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition.

Risk Management and Strategy

We have not established specific processes for assessing, identifying, and managing material risks from cybersecurity threats or engaged third parties to assess such risks. However, if exposed to such a risk, we would assess any potential unauthorized attempts to access our information systems that may result in adverse effects on the confidentiality, integrity, or availability of those systems.

While we lack a formal risk assessment policy or analysis and no process has been integrated into our management system, a risk assessment would likely include identification of any reasonably foreseeable internal and external risks, any likelihood and potential damage that could result from such risks, and whether existing safeguards are sufficient to manage such risks. If appropriate and necessary, we would implement reasonable safeguards to minimize identified risks and address any identified gaps in existing systems.

To date, we have not encountered cybersecurity threats or challenges that have materially impaired our operations, business strategy or financial condition.

Governance

Primary responsibility for assessing any cybersecurity risks rests with A. Stone Douglass, our sole executive officer, who would report any threat to our board of directors.