Wildpack Beverage Inc. — Interim / Quarterly Report 2021

Jun 1, 2021

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WILDPACK BEVERAGE ALBERTA INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2021

Presented in United States dollars unless otherwise stated

1.1 The Company

Wildpack Beverage Alberta Inc. was incorporated in the Province of Alberta on March 27, 2017. On May 17, 2021 Wildpack Beverage Alberta Inc. completed a reverse takeover transaction (the “Transaction”) and changed its name to “Wildpack Beverage Inc.”. The head and registered office of the Company is located at 350 - 7th Avenue SW, Suite 3400, Calgary, Alberta, T2P 3N9.

The “Company”, “Wildpack”, “we”, and “our” refer to Wildpack Beverage Alberta Inc., and subsequent to May 17, 2021 Wildpack Beverage Inc. and its subsidiaries.

Our corporate strategy is to build a network of beverage manufacturing facilities across the United States that are matched in size and speed to the needs of middle market brands as well as limit shipping distance of finished goods to end distribution locations.

We operate two business major business lines: the Filling Business Line; and the Decorating Business Line.

Filling services involve receiving a customer's raw ingredients and packaging materials, mixing them in accordance with formula specifications, and packaging them in accordance with their specifications. The Company charges a tolling fee on a per case basis for this service.

Decorating services include the application of a customer designed label to a blank aluminum can. Beverage cans have a large, printable surface, which is customarily utilized by beverage brands to advertise manufacturer and product specific designs and information. The Company charges a service fee to coordinate the label printing on a per label basis and an application fee on a per can basis. In many circumstances the Company also provides the aluminum can and charges for this on a per can basis.

We have three manufacturing facilities located in Baltimore, Maryland (the “Baltimore Facility”), Las Vegas, Nevada (the “Las Vegas Facility”) and Sacramento, California (the “Sacramento Facility”). Currently, the Company carries on the Filling Business Line through the Baltimore Facility and the Las Vegas Facility (where pilot production and operations commenced after quarter end). It carries on the Decorating Business Line through the Baltimore Facility and the Sacramento Facility.

This Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations of the Company should be read in conjunction with our audited consolidated financial statements for the nine months ended December 31, 2020 and for the year ended March 31, 2020, and our interim condensed financial statements (unaudited) for the three months ended March 31, 2021 and March 31, 2020.

All monetary amounts herein are expressed in United States dollars ($ or US$) unless otherwise stated. CA$ refers to Canadian dollars.

This MD&A is current as of May 31 2021.

Additional information relating to the Company is available on SEDAR at www.sedar.com, and on our website at WILDPACKBEV.COM.

FORWARD-LOOKING INFORMATION

This MD&A contains forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or states that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information.

Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking information contained in this MD&A. Such forward-looking information is based on a number of assumptions that may prove to be incorrect.

1.2 Overall Performance

Filling Business Line

The Filling Business Line continues to be capacity constrained relative to the demand for this service (taking into account ramp-up periods following upgrades). The Company uses volume ramp up periods, that vary from 1-3 months depending on the size of the upgrade, to ensure testing, scheduling, and quality control procedures and good manufacturing practices are followed. Management allocated the majority of resources to increase throughput capacity, initially through equipment additions, delaying efficiency optimization into future periods.

During the three months ended March 31, 2021, we have made the following specific changes that had the corresponding effects:

• Baltimore Facility

• Installed additional conveyance between machines that were being loaded and unloaded manually, reducing labour usage;

• Installed new water treatment solutions allowing for 20x the production of reverse osmosis water for production, increasing top-side throughput capabilities;

• Installed a new glycol system to allow for increased chilling capacity, increasing overall throughput capacity;

• Installed a new Clean-In-Place system, improving quality control and good manufacturing practices;

• Installed four new holdings tanks (4,000, 6,000, 1,000, and 1,000 gallons), increasing batching capacity and overall throughput capacity;

• Installed a flash pasteurizer to allow for increased product offerings and a faster processing of qualifying products; and

• Installed a carbo-cool solution, decreasing downtime between changeovers and production limitations due to tank availability.

These changes, occurring through planned downtime and had the effect of meeting our Phase Two capacity milestone of 200,000 gallons per month (previous capacity 120,000 gallons per month). The Company also achieved its Phase Three capacity milestone of 300,000 gallons per month subsequent to the completion of the first quarter. See the table under Section 1.4 for our upgrade phases.

• Las Vegas Facility

• Achieved the installation of the Vegas Phase One filling line making the facility ready to begin pilot testing;

• Hired full staffing needs, encompassing two shifts of floor staff, managers, and support staff for training purposes and ease of transition into our second shift (20 and 33 employees before March 31, 2021 and May 28, 2021 respectively);

• After the quarter end we commenced pilot production (operating at 20% capacity), on schedule; and

• After the quarter end, we increased our pilot production operations to two shifts.

Decorating Business Line

The Decorating Business Line has been given increased attention as the business continues to be capacity constrained and it has optimization potential. During the three months ended March 31, 2021, we have made the following specific changes that had the corresponding effects:

• Implemented cross training protocols which results in less reliance on specific expertise thereby reducing downtime;

• Refurbished existing equipment to increase uptime;

• Hired and trained specialized operators to help reduce operator errors;

• Improved scheduling optimization which batches like can sizes thereby reducing downtime; and

• Increased the Sacramento Facility to three shifts resulting in increased total throughput capacity.

The planned installations of new decorating lines in the Baltimore Facility, Las Vegas Facility and a new facility (whether built or bought) are on schedule and the Company expects their installation to commence in the third quarter of 2021.

Industry and Economic Factors

Economic Factors

The major economic factor that affected the Company’s performance during the period were the impacts of COVID-19. Demand for ready-to-drink aluminum can beverages increased substantially immediately following closures of restaurants and bars. This increase in demand had the corresponding effect of putting stress on the aluminum can supply chain.

The Company realized a positive impact from these economic factors as it succeeded in securing adequate aluminum cans to meet its requirements by entering into agreements with international can manufactures prior to the market pivoting from domestic to international supply.

The Company has been fortunate that any COVID-19 outbreaks at its facilities have been adequately contained by following state-imposed protocols and therefore no material impact has been realized on its operations. Our business was deemed essential; consequently, our workers received early access to vaccinations.

1.4 Discussion of Operations

Filing Business Line

The Filling Business Line of the business currently operates in Baltimore, Maryland and Las Vegas, Nevada (pilot production and operations commenced after quarter end). It is a flexible manufacturing line that handles a wide variety of can formats and the vast majority of pack-out configurations. It has capabilities to run products that are carbonated, still, pasteurized, non-pasteurized, alcoholic, non-alcoholic and include most raw materials. Our operations are currently in the process of being expanded. These expansions are occurring on a geographical (additional facilities), throughput and inside growth (more lines per facility) basis. The increase in capacity occurs on an incremental basis and is typically preceded by planned down-time to install new equipment. This new equipment has differing effects from increasing total speed to decreasing down time, all of which drive additional capacity and a reduction in labour headcount.

The Baltimore Facility has been undergoing a staged capacity increase from 45,000 gallons of monthly capacity in June 25, 2020 to 500,000 gallons. This is achieved by upgrading existing lines. The milestones for this upgrade are as follows:

• Upgrades resulting in 75,000 gallons per month of capacity by December 31, 2020 (“ Phase One ”)

• Upgrades resulting in 200,000 gallons per month of capacity by March 31, 2021 (“ Phase Two ”)

• Upgrades resulting in 300,000 gallons per month of capacity by April 30, 2021 (“ Phase Three ”)

• Upgrades resulting in 500,000 gallons per month of capacity by September 30, 2021 (“ Phase Four ”)

Phases One, Two and Three have been completed.

During the expansion, the Company executed its plan to shut down the Baltimore Facility for six weeks during the quarter for Phase Two upgrades and the fourth week of April 2021 for Phase Three upgrades. Commencement of the Phase Four upgrades has not yet been planned.

During the quarter the Las Vegas Facility was in the commissioning phase. It has been, and will continue to undergo staged capacity increases from 25,000 gallons of monthly capacity to 300,000 gallons. This is achieved by increasing shifts and completing the installation of the second filling line. The milestones for these improvements are as follows:

• Moving to two shifts on the first filling line resulting in 50,000 gallons per month of capacity by May 31, 2021 (“ Vegas Phase One ”);

• Installing the second filling line resulting in 100,000 gallons per month of capacity by June 30, 2021 (“ Vegas Phase Two ”);

• Moving to two shifts on the second filling line resulting in 200,000 gallons per month of capacity by July 31, 2021 (“ Vegas Phase Three ”); and

• Moving both lines to three shifts resulting in 300,000 gallons per month of capacity by September 30, 2021 (“ Vegas Phase Four”).

These improvements are currently on schedule. The Company is also assessing an appropriate timeline to install a filling line in the Sacramento Facility but no determination has been made at this time.

Decorating Business Line

The Decorating Business Line of the business currently operates in Baltimore, Maryland and Sacramento, California. It is a flexible manufacturing line that handles all can formats. It predominantly operates in the heatshrink sleeve category but does derive some of its business from the sale of aluminum cans.

During the nine month period ended December 31, 2020, the Baltimore Facility underwent substantial upgrades that increased throughput from approximately 1,000,000 cans per month to 3,000,000. As at the date of this MD&A, the facility is running steady state at this capacity. The next planned upgrade, being the addition of another full decorating line, is scheduled for July 2021.

During the nine month period ended December 31, 2020, the Sacramento Facility underwent substantial upgrades that increased throughput from approximately 1,000,000 cans per month to 3,000,000. As at the date of this MD&A, the facility is running steady state at this capacity with no future expansions planned at this time.

The installation of a decorating line with 3,000,000 cans per month capacity in the Las Vegas Facility is scheduled for August 2021.

The Company has ordered an additional decorating line with 3,000,000 cans per month capacity and is scheduled for installation in September 2021. We have not yet determined the most advantageous facility for installation, since we have expansion acquisitions in negotiation. We will determine the location prior to June 30, 2021.

1.5 Summary of Quarterly Results

The figures in the following table are based on the consolidated financial statements of the Company which were prepared in accordance with IAS 34 “Interim Financial Reporting” of IFRS as issued by the International Accounting Standards Board. The Company became a Reporting Issuer on May 17, 2021.

In thousands of, except per share amounts	Three Month Period Ended March 31, 2021	Three Month Period Ended March 31, 2020
Revenue	$6,433	$-
Net Loss	(915)	(363)
Loss per share (basic and diluted)	($0.07)	($0.02)

Revenue

Revenues were $6.43 million and $nil for the first quarter ended March 31, 2021 and March 31, 2020 respectively. Revenue in the first quarter of 2021 is due operations of acquisitions completed in June 2020. For full details on the acquisitions, please reference the Consolidated Financial Statements for the nine months ended December 31, 2020.

Net Loss

The Company had a net loss of $0.92 million in the first quarter of 2021, compared to a net loss in the of $0.36 million in the first quarter of 2020. The net loss in the three month period ended March 31, 2021 increased relative to the three month period ended March 31, 2020 due to higher legal and accounting fees corresponding to becoming a reporting issuer subsequent to the March 31, 2021 quarter end, alignment of management and director salaries with the market value for comparable public entities, stock based compensation, and interest on leased assets from operations. The Company had active operations for the three month period ended March 31, 2021, and was a holding company (pre-acquisitions and operations) for the comparative three month period ended March 31, 2020.

Financial Condition

The Company’s interim financial condition, as compared to the most recently completed financial year-ended December 31, 2020 (9-month period end due to year-end change), improved. The Company successfully raised additional equity capital, as discussed in section 1.7 Capital Resources.

On March 30, 2021, the Group entered into a transaction with Ponderous Panda Capital Corp. (“Panda”) through which Panda will amalgamate with the Company and the resulting issuer (the “Resulting Issuer”) will become a publicly listed entity, concurrently raising additional capital (the “Transaction”). In the three months ended March 31, 2021, the Group conducted a private placement of subscription receipts and units, at a price of $0.71 (CA$0.90) per subscription receipt. For a certain round of investors, the subscription receipts were converted immediately into shares and warrants, and the Group received gross proceeds of $1,351,887 (CA$1,699,997) and incurred related transaction costs of $200,206 (CA$251,759), for net proceeds of $1,151,681 (CA$1,448,238). For the remaining investors, the funds related to the offering are being held by an escrow agent pending meeting certain conditions, including the closing of the Transaction. This latter portion of the offering is not reflected in the March 31, 2021 interim financial statements as the related investors do not have the rights of shareholders, and the funds will only be received by the Group if the Transaction is completed.

On May 17, 2021 the Company completed the Transaction, releasing the escrow conditions on the subscription receipts. The Transaction contained 9,532,687 units, at a price of $0.74 (CA$0.90), for gross proceeds of $7,090,428 (CA$8,579,418). Each unit is comprised of one Wildpack common share and one half Wildpack warrant. The Company issued 9,532,657 common shares and 4,766,329 warrants in conjunction with the transaction.

The Company paid a cash commission equal to 7% of the aggregate gross proceeds of the offering and issued such number of transferable compensation units as is equal to 7% of the total number of Subscription Receipts and Units issued under the private placement. The Company also paid all expenses and fees in connection with the private placement, including, all expenses of or incidental to the creation, issue, sale or distribution of the Subscription Receipts; the fees and expenses of the Company’s counsel; all costs incurred in connection with the preparation of documents relating to the private placement; and all expenses and fees incurred by the Agents. The subscription receipts outstanding were converted into common shares and share purchase warrants.

Each whole warrant will entitle the holder thereof to purchase, subject to adjustment as provided for in the warrant certificates, one common share at a price of $1.10 per share at any time on or before the date which is 24 months after the escrow release conditions. For more information, please reference the interim condensed consolidated financial statements (unaudited) for the three month period ended March 31, 2021.

1.6 Liquidity

The Company’s expenses have historically been funded from equity financings as well as financial support from related parties.

As at March 31, 2021, the Company had $1.70M (million “M”) of cash and cash equivalents, $3.96M of accounts receivable, and $1.68M of inventory. The cash balance increased over the period ended December 31, 2020 due to equity financings, described in section 1.7 Capital Resources below. The accounts receivable balance increased compared to December 31, 2020, as the Company increased throughput, exiting March 2021 with the highest volume in the quarter. Further, there were a few large orders which were completed near period end. The inventory balance at March 31, 2021 increased approximately 35% compared to December 31, 2020. The Company continues to increase its inventory levels, to support increase in overall operations and revenues. Further, the Company opportunistically builds up inventories during periods of available supply.

As at March, the Company had $3.17M of accounts payable, $4.68M of deferred revenue, and $1.47M of longterm debt (current portion). The accounts payable balance increased over the period ended December 31, 2020 to fund inventory purchases and the scaling of operations. The deferred revenue balance as at March 31, 2021 increased approximately 146% compared to December 31, 2020. The Company sold to several new large customers, with volumes scheduled into June, July and August. The current portion of long-term debt increased over the period ended December 31, 2020 by 37% as debt payments related to the acquisitions completed in June 2020 become due.

The interim financial statements have been prepared on the assumption that the Company will continue as a going concern. The Company’s operations have historically been funded from equity financings as well as financial support from related parties. The Company’s history of losses and working capital deficiency represent a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.

As at March 31, 2021, the Company had current assets of $10.45M and current liabilities of $12.18M. The Company achieved an equity financing subsequent to March 31, 2021, which corrects the negative working capital position. The Company’s continuation as a going concern depends upon our ability to attain profitable operations and generate cash or raise equity capital or borrowings sufficient to meet current and future obligations. Please reference note 1 in the interim condensed consolidated financial statements for the three months ended March 31, 2021 and March 31, 2020.

1.7 Capital Resources

During the three months ended March 31, 2021, the Company raised $3.2 million in equity, and $nil million in debt. On May 17, 2021 the Company completed a brokered private placement transaction for gross proceeds of $7.1 million in connection with the Transaction.

The capital resources currently available to and being considered by the Company are as follows:

Debt

The Company is considering additional debt, conventional and/or non-conventional financing in 2021. The Company's assets have increased with its geographic footprint, lowering the effective leverage, which permits responsible debt options to be considered by management.

Equity

The Company engaged the following equity transactions during the three-month period ended March 31, 2021.

On January 12, 2021, the Simple Agreement for Future Equity (“SAFE”) held by The House Finance Corp. was converted into shares of the Company’s common stock. The Company issued 1,002,546 common shares at an effective conversion price of $1.23.

On January 18, 2021, February 1, 2021, and February 16, 2021, Wildpack raised gross proceeds of $2,134,076, $389,114, and $278,497 respectively, through SAFE’s. The SAFE entitles the holder to common stock in the amount calculated by converting the value of the SAFE into shares of common stock of the Company, on certain events, at the lessor of: (i) a 20% discount to the pre-money valuation of an equity financing where equal to or greater than $2,368,608 of proceeds are raised by the Company; and (ii) a valuation cap of $39,476,801. Upon completion of the brokered private placement, the SAFEs converted into common stock at a 20% discount to a pre-money valuation of the Company, with an effective per share price of $0.57. As March 31, 2021, certain funds related to these issuances were not received and the amounts owing from the investors $524,754 are recorded in notes receivable.

On January 19, 2021, the Put Option was exercised at the option of the Wild Leaf Holdings U.S. LLC preferred unit holders, originating from the Acquisition, and Wildpack issued 1,352,914 common shares, composed of 1,320,563 preferred units held and a 32,378 anti-dilution unit adjustment. The effective price per share was $1.08.

In the three months ended March 31, 2021, the Group conducted a private placement of subscription receipts and units, at a price of $0.71 per subscription receipt. Please reference section 1.5 Summary of Quarterly Results and the interim condensed financial statements for the three month period ended March 31, 2021 for further information.

Wildpack entered into a $76,114 promissory note agreement with Spencer Whyte, an arm’s length 3[rd] party, on November 3, 2020. The interest rate is 8% per annum and compounded monthly. It is due on demand and has been classified as a current liability. In the three months ended March 31, 2021, this note was converted into a simple agreement for future equity (“SAFE”) which entitles Mr. Whyte to receive shares of the Group at a conversion price of $0.57 (CA$0.72) .

Commitments for capital resources are substantially related to construction costs associated with the Las Vegas Facility of $400,000, to implement the second filling line.

1.8 Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements requiring disclosure under this section.

1.9 Transactions Between Related Parties

Related party and nature of relationship	Transactions
Key management personnel Have authority and responsibility for planning, directing, and controlling the activities of the Company.	Compensation to key management personnel is in the form of cash compensation and share purchase options. During the three months ended March 31, 2021, the Company paid $205,741 in salaries and consulting fees, and issued $72,374 in share- based payments to key management personnel. During the three months ended March 31, 2021, the Company raised gross proceeds of $730,568 from directors and officers through the issuance of SAFE. During the three-month period ended March 31, 2021, directors and officers purchased 333,917 subscription receipts, equivalent to 1,111,110 subscription receipts post transaction in the brokered private placement for net amounts of $584,195.
The House Finance Corp. Stephen Fader is a major shareholder and director of the Company and is a major shareholder and director of The House Finance Corp.	The House Finance Corp. is an entity that is partially owned by an officer of the Company which has no outstanding balance as at March 31, 2021 (March 31, 2020 - $536,564). On January 12, 2021, the Simple Agreement For Future Equity (“SAFE”) held by The House Finance Corp. was converted into shares of the Company’s common stock. The Company issued 1,002,546 common shares at an effective conversion price of $1.23.
Stephen Fader Stephen Fader is a major shareholder and director of the Company and is the lender.	Wildpack entered into a $235,627 promissory note agreement with Stephen Fader, a member of management, on November 3, 2020. The interest rate is 8% per annum and compounded monthly. It is due on demand and has been classified as a current liability. As of March 31, 2021, the amount outstanding totaled $235,627. Subsequent to period end, this balance has been converted into common shares as part of the brokered private placement.

1.10 Transactions

Subsequent to the reporting period, on May 17, 2021, the Company completed a reverse takeover transaction with Ponderous Panda Capital Corp. (“Panda”), a public company listed on the TSX Venture Exchange, pursuant to which the Company amalgamated with a subsidiary of Panda and Panda changed its name to Wildpack Beverage Inc. (the “Resulting Issuer”). Under the transaction, the shareholders of Panda received 1,188,908 Class A Common Shares of the Resulting Issuer and certain individuals maintained their convertible securities subject to certain reductions in accordance with the Toronto Stock Exchange Venture (the “Exchange”) under the terms of the amalgamation.

1.11 Changes in Accounting Policies including Initial Adoption

The Company had no changes in its accounting policies during the three-month period ended March 31, 2021.

2.1 Disclosure of Outstanding Share Data

As of the date of this MD&A, the Company had the following equity securities outstanding:

	March 31,
	2021
Common Shares	66,832,213
Stock Options	4,202,808
Compensation Units	667,288
Restricted Share Units	232,971
Share Purchase Warrants ($1.10 strike, expiry March 31, 2023)	4,766,344

3.1 Risks

Changes in Customer and Consumer Preferences

We produce products for our customers who in turn sell these products to consumers. Should there be a reduction in consumer demand or customer requirements change in such a way that we are unable to meet the new requirements, this may have an adverse effect on our business, financial condition and results of operations.

Fluctuations in Price of Packaging Materials

The prices of raw and packaging materials fluctuate due to factors beyond our control. While we aim to purchase sufficient raw and packaging materials to meet our estimated sales volumes, these estimates may prove inaccurate. If the costs of raw materials and packaging materials increase, it may not be possible to pass the increase on to customers through price adjustments, or in a timely manner.

This could have a material adverse effect on our business, financial condition and results of operations.

Supply Chain

Any interruption or delay in product supply, any increases in product costs, or the inability to obtain such products from alternate sources at acceptable prices and within a reasonable amount of time, would harm our ability to provide such products to our customers on a timely basis. This could harm the Company’s relationship with its customers, prevent it from acquiring new customers, and materially and adversely affect its business. Further, our suppliers, service providers and distributors may elect, at any time, to breach or otherwise cease to participate in supply, service or distribution agreements, or other relationships, on which our operations rely.

Loss of suppliers, service providers or distributors would have a material adverse effect on the Company’s business and operational results. Such disruption of operations could adversely affect inventory supplies and our ability to meet product delivery deadlines.

Loss of Key Personnel or Unionization

The performance of senior management and other key employees is critical to our success. There can be no assurance that the Company will be successful in attracting or retaining highly qualified senior management and other key employees needed in the future, which could have an adverse effect on the business. In addition, in the future, unionization could become a factor that would increase the Company’s operating costs and decrease its profit margins.

Cost of Utilities

The Company's manufacturing and distribution processes include a high usage of utilities like gas, energy and transport costs.

Utility costs may fluctuate significantly representing a financial risk to our operations.

Cybersecurity

The Company's operating results may be adversely affected by a breakdown of its information technology systems or a failure to develop those systems.

We depend on key information systems to conduct our business, to provide information to management and to prepare financial reports.

COVID-19 Outbreak

The COVID-19 pandemic has disrupted the economy and put unprecedented strains on governments, businesses and individuals around the world. The impact and duration of the COVID-19 pandemic are difficult to assess or predict. It is even more difficult to predict the impact on the global economic market, which will depend upon the actions taken by governments, businesses and other enterprises in response to the pandemic. The pandemic has already caused, and is likely to result in further, significant disruption of global financial markets and economic uncertainty. The pandemic has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place or total lock-down orders, and business limitations and shutdowns. Such measures have significantly contributed to rising unemployment and negatively impacted consumer and business spending. The extent to which COVID-19 impacts the Company's financial results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken by governments to curtail or treat its impact, including shelter in place directives, business limitations and shutdowns, travel bans and restrictions, loan payment deferrals (whether government-mandated or voluntary), moratoriums on debt collection activities and other actions, which, if imposed or extended, may impact the economies in which the Company now, or may in the future, operate.

Adverse market conditions resulting from the spread of COVID-19 could materially adversely affect the Company's business and the value of its securities.

Factors which may Prevent Realization of Growth Targets

We are still developing and growing our business. There is a risk that will not be able to achieve these additional objectives on time, on budget, or at all, as they can be adversely affected by a variety of factors, including some that are discussed elsewhere in these risk factors.

As a result, there is a risk that the Company may not have sufficient capacity to meet the anticipated demand or to meet future demand when it arises.

Litigation

The Company may from time to time become party to claims and litigation proceedings, which may include those generally related to contract disputes. Such matters are subject to many uncertainties and the Company cannot predict with any assurances the outcome and ultimate financial impact from any such claims or proceedings. There can be no guarantee that actions that may be brought against the Company in the future will be resolved in its favor or that the insurance the Company carries will be available or paid to cover any litigation exposure.

Any losses from settlements or adverse judgments arising out of these claims could be materially adverse to the Company.

Fluctuation of Quarterly Operating Results

Revenue is difficult to forecast and may fluctuate significantly from quarter to quarter. Delays, reduction in scope or cancellation of orders could materially adversely affect our business, financial condition and results of operations.

Health, Safety and Environment

Our reputation could be jeopardized by a failure to maintain high quality standards for our products and services or high ethical, social and environmental standards for our activities, including human rights related challenges in our supply chains. A failure to meet these standards or contamination could occur in the Company's operations and its suppliers. This could result in expensive production interruptions, recalls and liability claims.

The Company may be liable to its customers if the consumption of any of its products or services causes injury, illness or death. Moreover, negative publicity could be generated from false, unfounded or nominal liability claims or limited recalls. Any of these failures or occurrences could have a material adverse effect on the Company's results of operations or cash flows

The Company's manufacturing sites are subject to a number of environmental laws and other regulations relating to environmental control, fire safety, sanitation, and water consumption and treatment.

Change in Societal Expectations

There is a continued high level of media and government scrutiny on health and environmental concerns of consumers. Expectations from consumers and governmental and non-governmental bodies on the industry taking responsibility in tackling environmental issues (such as recycled products) may grow, leading to, among other things, changes in regulations impacting the Company's product portfolio and manufacturing processes.

Fluctuations in Foreign Currency Exchange Rates

The Company is exposed to foreign currency exchange rate risk with respect to its sales, expenses, profits, assets and liabilities. While many of these risks offset each other within the Company's operations, the Company still has net exposure to foreign currency fluctuations. We generally do not use instruments to hedge certain foreign currency risks and therefore the Company is not protected against foreign currency fluctuations. As a result, its reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favourable impacts on profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time.

Management of Growth

As the Company grows, we will also be required to hire, train, supervise and manage new employees. We may experience a period of significant growth in the number of personnel that will place a strain upon our management systems and resources. The Company’s future will depend in part on the ability of our officers and other key employees to implement and improve financial and management controls, reporting systems and procedures on a timely basis and to expand, train, motivate and manage the workforce. The Company’s planned personnel, systems, procedures and controls may be inadequate to support its future operations. Failure to effectively manage future growth could have a material adverse effect on the business, financial condition or results of operations of the Company.

Reliance on a Single Consumer Market

We will distribute our products primarily within the United States. Unless we expand the reach of our distribution, we expect to be reliant on the United States consumer market, alone, to generate all of our sales and resulting profit.

As a result, the Company's operating results and financial performance may be affected by adverse changes in economic conditions (such as economic downturns or trade disputes concerning the imposition of trade quotas, higher tariffs or other trade barriers), political conditions (such as government elections, terrorist attacks or wars) and social conditions (such as trade union disputes) in the United States.

Supply Chain Risk

The Company relies on certain can manufactures that operate facilities outside of North America. Due to COVID-19 disrupting shipping channels and increased in demand for aluminum cans the Company is at risk that it will not receive aluminum cans in a timely manner from its suppliers. The Company relies on aluminum cans as the most important aspect of its supply chain and material delays in their delivery would materially impact the Company’s ability to operate any of its business lines. The Company’s diversified supply chain and inventory build-up strategy may prove to be inadequate and material delays may occur resulting in material disruptions to the Company’s operations.