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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, ~~2020~~2021

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________

Commission file number: 001-13621

UPD HOLDING CORP.

(Exact name of Registrant as specified in its charter)

Nevada		13-3465289
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

75 Pringle Way, 8th Floor, Suite 804

Reno, Nevada 89502

(Address of principal executive offices, including zip code)

775-829-7999

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None.

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


Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $.005 par value		OTC OB

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). o Yes þ No

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~every ~~filer,~~Interactive anData ~~accelerated~~File ~~filer,~~required ato ~~non-accelerated~~be ~~filer,~~submitted apursuant ~~smaller~~to ~~reporting company,~~Rule or405 anof ~~emerging~~Regulation ~~growth~~S-T ~~company~~(§232.405 ~~See~~of ~~the~~this ~~definitions~~chapter) ofduring ~~“large~~the ~~accelerated~~preceding ~~filer,”~~12 ~~“accelerated~~months ~~filer,”~~(or ~~“smaller reporting~~for ~~company,”~~such ~~and~~shorter ~~“emerging~~period ~~growth~~that ~~company”~~the inregistrant ~~Rule~~was required ~~12b-2~~to ofsubmit ~~the~~such ~~Exchange Act~~files). o Yes þ No

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

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Smaller reporting company þ
		Emerging growth company o

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

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

The aggregate market ~~value~~ value of the registrant’s voting common stock held by non-affiliates of the registrant as of December 31, ~~2019~~2020 (the last business day of the registrants most recently completed second fiscal quarter), was approximately $~~402~~2,145,000 ~~based on the last trading price of the registrant’s common stock of $0~~.~~006 as reported on the OTC Bulletin Board on such date.~~

As of ~~August~~October 1413, ~~2020~~2021, the registrant had ~~172~~ 194,~~450~~982,~~907~~ 479 shares of its $0.005 par value common stock issued and outstanding.

Documents incorporated by reference: None.

UPD HOLDING CORP.

TABLE OF CONTENTS

		Page
Cautionary Statement on Forward-Looking Statements		4
PART I
Item 1	Business	54
Item 1A	Risk Factors	819
Item 1B	Unresolved Staff Comments	2337
Item 2	Properties	2337
Item 3	Legal Proceedings	2337
Item 4	Mine Safety Disclosures	2337
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	2337
Item 6	Selected Financial Data	2438
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2438
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	2841
Item 8	Financial Statements and Supplementary Data	2942
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	4060
Item 9A	Controls and Procedures	4060
Item 9B	Other Information	4260
PART III
Item 10	Directors, Executive Officers and Corporate Governance	4361
Item 11	Executive Compensation	4564
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4665
Item 13	Certain Relationships and Related Transactions, and Director Independence	4666
Item 14	Principal Accountant Fees and Services	4767
PART IV
Item 15	Exhibits and Financial Statement Schedules	4868
SIGNATURES		4969

Table of Contents

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

The statements contained in this Annual Report on Form 10-K that are not historical fact are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Investors are cautioned that these forward-looking statements that are not historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. Because of the number and range of assumptions underlying the Company’s projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. The inclusion of projections and other forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate.

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PART I

UPD Holding Corp is referred to herein as “we”, “our”, or “us”

ITEM 1.

BUSINESS

~~Overview~~Incorporation

We ~~are~~were aincorporated ~~health~~in ~~and~~the ~~wellness~~state ~~company with~~of aNevada ~~focus~~ on ~~nutraceutical~~June and alternative and specialty beverages. Our past development efforts have included weight loss and weight management products marketed under our iMetabolic® brand (“IMET”) and craft beer offerings under our Record Street™ brand (“RSB”). Current development efforts are focused on alternative and specialty beverages that leverage and combine the Company’s regulated nutraceutical and beverage manufacturing experience to create novel and trending beverages that have health benefits6, ~~such as waters infused with hemp-based nootropics, cannabinoids, and terpenes~~1988. ~~We also are pursuing the franchising and licensing of the Record Street™ brand for live music venues and brewpubs throughout the United States.~~

~~With~~Our fewer barriers to entry, such as reduced minimum order quantities (MOQs), lower costs of goods sold (COGS), and reduced regulatory licensing requirements, the Company has determined to focus its brand extensions and product innovations in the health and wellness beverage category. We believe there is increasing consumer demand for enhanced and functional (value-added) beverages and expect to capitalize on this and potential consumer demand with the development and launch of new products focused on growing trends in the beverage space.Subsidiaries

~~IMET~~Our ~~Products~~wholly owned subsidiaries consist of the following:

~~IMET~~· ~~was~~United ~~formed~~Project onDevelopment ~~July~~Corporation ~~1, 2013 for the purpose of marketing products under the brand “iMetabolic” that previously were sold by the brand’s licensor, International Metabolic Institute LLC~~ (“~~IMI~~United Project”), asincorporated ~~well~~in asNevada ~~to develop new products that are targeted to a national marketing plan. IMI transferred certain product and trademark rights to IMET~~ on ~~July~~June 2212, ~~2013 (the “License”). The License was amended on March 16,~~ 2015 ~~to clarify IMET’s and IMI’s future rights~~. ~~See “IMET License Agreement” below.~~

~~IMI~~· ~~currently~~Vital ~~produces~~Behavioral ~~a line of weight loss and weight management products~~Health, ~~including,~~Inc. ~~but~~(“Vital”) ~~not~~incorporated ~~limited to, proprietary blend meal replacements, dietary specialty foods, and nutraceuticals, that are sold at IMI’s company store and doctors’ offices pursuant to a reservation of rights by IMI~~ in ~~the~~Nevada ~~License and~~ on ~~IMI’s~~October ~~website~~1, ~~at www~~2020.~~imetabolic.com. These are staple products in the weight loss and weight management industry and form a comprehensive foundation for IMET’s new product innovation.~~

~~IMET~~· ~~License~~iMetabolic ~~Agreement~~Corp (“iMetabolic”) incorporated in Nevada on July 1, 2013.

IMET entered into a license with IMI, a Nevada limited liability company, on July 22, 2013 (the “License”). In the License, IMI granted to IMET the exclusive licenses to use, produce, market and sell: (i) five marks (the “Licensed Marks”); (ii) four books written by Dr. Sasse (the “Licensed Content”); and (iii) approximately 150 supplements and foods created and previously sold by IMI (the “Licensed Articles”). The Licensed Marks include the trademark “iMetabolic”; the domain name “www.imetabolic.com”; the trademark “iMetabolic Catalyst”; and a trademark and domain name related to Dr. Sasse. The License had a term of three years, commencing on July 1, 2013 (the “Initial Term”), with a provision stating that the term of the License would automatically become perpetual if IMET sold $3.0 Million of Licensed Content or Licensed Articles before July 1, 2016. IMI has granted IMET an extension of the July 1, 2016 deadline until December 31, 2020. In connection with those extensions, IMET returned to IMI all rights to the Licensed Content (Dr. SasseVital’s ~~books)~~subsidiaries ~~and~~consist ~~the two Dr. Sasse Licensed Marks. IMET is to bear all expenses~~ of ~~the creation and sale of the Licensed Content and Licensed Articles. The License contains other provisions standard in licenses.~~:

~~iMetabolic~~· ~~Trademarks~~VBH Frankfort, LLC (“VBHF”)

~~During~~· ~~2014,~~VSL ~~the~~Frankfort ~~trademark~~LLC (“~~iMetabolic~~VSLF” expired at the U.S. Patent and Trademark Office. In conjunction with the closing of the Exchange, IMI re-applied for that trademark and the service mark "iMetabolic" on December 16, 2014. In May 2015, the Company engaged Drinker, Biddle & Reath, LLP to correspond with the U.S. Patent and Trademark Office regarding our application. As of April 19, 2016, the Company was awarded Registration Number 4,941,53 in the Class 5 Category. Additionally, on September 6, 2016, the Company was awarded Registration Number 5,034,186 in the Class 44 Category. At this juncture, the Company has succeeded in defending both trademarks and intends to exploit them on an ongoing commercial basis.)

The Vital Acquisition

On February 16, 2021, we completed a Stock Exchange Agreement with Vital and each of its shareholders, providing for:

Our acquisition of 100% of Vital’s outstanding shares via our issuance of 16,840,000 shares to Vital in exchange for 100% of Vital’s outstanding shares, at which time Vital became our wholly-owned subsidiary.

Our acquiring Vital’s assets and assuming Vital’s liabilities and its 2 wholly owned subsidiaries, VBHF and VSLF.

Pursuant to the Vital acquisition, we adopted our new business plan of providing inpatient and outpatient substance use treatment services for individuals with drug addiction, alcohol addiction, and co-occurring mental/behavioral health issues through facilities that we will operate.

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On February 17, 2021, Vital formed the following 2 new Nevada incorporated entities, which became Vital’s wholly owned subsidiaries:

VBH Kentucky, Inc. (“VVHK”)

VBH Garden Grove, Inc. (“VVH Garden”)

VBH Kentucky, Inc.

VBH Kentucky has succeeded to all of the preexisting and intended operations of VBH Frankfort (a wholly-owned predecessor entity of Vital), which substantially concluded all of its material operations as of May 3, 2021. VBH Kentucky operate an outpatient substance abuse treatment facility in Frankfort, Kentucky, for which we have secured a lease as disclosed below. On August 26, 2021, we received a license to operate a non-hospital based alcohol and other drug treatment facility from the Kentucky Cabinet for Health and Family Services Office of the Inspector General.

VSL Frankfurt, LLC

VSL Frankfort will offer sober-designated living quarters for individuals who are in recovery in conjunction with the Frankfort, Kentucky facility operated by VBH Kentucky. We anticipate hiring 4 full time and 3 part time employees at our Frankfurt facility, including a full time Clinical Director.

VBH Garden Grove, Inc.

VBH Garden intends to identify substance use disorder treatment facilities located in California to provide a West Coast patient solution that is able to economically accept select insurance payors that facilitate a broader national patient base for Vital. VBH Garden has identified various potential license holders and facilities located in Southern California and is in the due diligence phase for transaction consideration; however, there are no binding transactions for any licenses or facilities in California as of September 17, 2021 and there are no assurances that any such transaction will be completed in the future.

Business Mission

We intend to be a provider of inpatient and outpatient substance use treatment services for individuals with drug addiction, alcohol addiction, and co-occurring mental/behavioral health issues through facilities that we operate. In connection with those treatment services we intend to perform clinical diagnostic laboratory services and provide physician services to our patients. Our operations are conducted through our subsidiaries as detailed below.

Prior Business History

Record Street Brewing Company – Craft Beer Business

On December 31, 2017, we closed on an Agreement of Exchange and Plan of Reorganization with Record Street Brewing Co. (“RSB”), a Nevada corporation (“RSB”), which required us to issue 80,000,000 of our restricted common stock shares to RSB’s 4 shareholders for all of RSB’s outstanding capital stock. We purchased RSB to pursue the craft beer business.

On December 31, 2020, we discontinued RSB’s operations pursuant to an Assumption Agreement between us and RSB whereby 100% of the issued and outstanding common stock of RSB was assigned to RSB’s co-founder/beneficial owner, the purchaser agreed to assume RSB’s outstanding liabilities of $251,164, and RSB acquired the rights to all royalties associated with the intellectual property licensing we previously held. During the years ended June 30, 2021 and 2020, RSB did not engage in material operations or generate material revenues.

Table of Contents

~~Record~~RSB's ~~Street~~business model was based upon a contract brewer and U.S. west coast distribution model that was permanently impacted by the loss of both its contract brewer and its statewide California distributor in close time proximity. Specifically, RSB's original contract brewer, Mendocino Brewing CoCompany, filed for bankruptcy and ceased to provide contract brewing services, and RSB's California distributor, Young's Market Company, LLC, exited the beer distribution business in California. While RSB made significant efforts to replace those vendors, however, such efforts were unsuccessful, and we determined that it was in our best interests to exit the adult beverage business in favor of the health and wellness business.

AtiMetabolic ~~the~~Corporation ~~time~~– ~~RSB was~~Weight ~~acquired~~Loss ~~in December 2017, RSB’s business model for beer production~~ and ~~distribution~~Weight ~~was enhanced by pasteurization incorporated~~Management ~~into~~Products a third party brewing and bottling process, which facilitated up to a twelve-month shelf life for the refrigerated beer, and the ability brewer to brew commercially small batches. RSB has been unable to identify a suitable substitute contract brewer that employs pasteurization and brews commercially small batches.

~~Unpasteurized craft~~On ~~beer~~July ~~generally~~1, is2013, ~~fresh~~we ~~tasting~~formed ~~only~~IMetablolic Corporation (“IMET”) in Nevada for ~~120–180~~the ~~days~~purpose ~~from~~of marketing products under the ~~package~~brand ~~date~~“iMetabolic” ifthat ~~kept~~previously ~~refrigerated.~~were ~~Therefore~~sold by the brand’s licensor, itInternational ~~is economically~~Metabolic ~~imprudent~~Institute LLC (“IMI”), as well trademark rights to ~~maintain~~IMET ~~inventories~~on ~~without~~July 22, 2013 (the ~~certainty~~“License”). The ofLicense ~~distribution~~was amended on March 16, 2015 to clarify IMET’s and ~~sales~~IMI’s future rights. IMI produced a line of ~~the~~weight ~~product.~~loss ~~This~~and ~~reduced~~weight ~~shelf life~~management ~~also~~products, ~~makes~~including, itbut ~~difficult~~not limited to, ~~maintain~~proprietary ~~brewing~~blend ~~schedules~~meal replacements, dietary asspecialty ~~there~~foods, ~~becomes~~and anutraceuticals, ~~higher~~which ~~risk~~are ofsold ~~perishability~~at IMI’s company store and doctors’ offices pursuant to a reservation of rights by IMI in the ~~excess~~License ~~inventory~~and on IMI’s website at www.imetabolic.com. On October 5, 2021, pursuant to a termination agreement with IMET, we terminated IMIT’s business and the license.

~~Further,~~DESCRIPTION ~~one~~OF ~~of our~~OUR ~~primary~~CURRENT ~~customers~~BUSINESS ~~decision to exit the beer distribution market in mid-2018 compounded the issue of reduced shelf life since~~– ~~the~~REHABILITATION ~~distributor~~SERVICES provided significant access to sales throughout the entire State of California, a significant target market for our initial sales. Without that centralized opportunity, RSB would be required to obtain distribution in each localized market throughout California. Therefore, as a result of the need to find substitute distribution throughout the State of California, coupled with the truncated time frame in which to do so caused by a shortened shelf life, RSB has determined to exit the beer market in California until such time as suitable brewing and distribution alternatives are available.

OnThe ~~June 10~~Lexington, ~~2020, RSB~~Kentucky ~~entered~~Lease ~~into a license of the Record Street™~~ and ~~Stylus™ brands with a related-party private entity,~~Lease ~~Alpine~~Cancellation Group Inc. (the “Licensee”), that recently opened a brewpub located in Reno, Nevada. Effective as of July 1, 2020, the Licensee will have the exclusive right to brew and distribute Record Street™ and Stylus™ brand beers in the State of Nevada.

~~RSB~~On ~~manufactures~~January 14, 2021, our wholly owned subsidiary, ~~and~~United ~~markets~~Product ~~its~~Development ~~line~~Corporation, ofentered ~~Record~~into ~~Street™~~a ~~branded~~commercial ~~beers~~lease with Athens Commons, ~~including~~LLC, ~~its~~a ~~three~~Kentucky ~~flagship~~limited ~~ales—Blonde~~liability ~~Ale~~company, for ~~Pale~~the ~~Ale~~lease of a 88,740 square foot building at 5532 Athens Boonsboro Road, Lexington, Kentucky (the “Lexington Lease”). The Lexington Lease is for a 5-year term with options to renew for 2 additional 5-year terms. The effective beginning date of the Lexington Lease term was January 14, 2021. The Lexington Lease provides for minimum monthly rent of $50,000 for the first lease year and ~~India~~a ~~Pale~~3% ~~Ale—~~rental increase for each succeeding lease year. We were only obligated to pay $20,000 per month for up to the first six month until the property was re-zoned and ~~its~~licensed ~~lager~~for ~~named~~our ~~Stylus™~~planned rehabilitation operations. The Lexington Lease has an option to cancel the lease during the first six months if it is unable to obtain re-zoning approval and applicable regulatory licensing.

InOn ~~addition~~May ~~to brewing and off-premise distribution licensing opportunities~~20, ~~RSB has also opened a taproom~~2021, ~~restaurant, and lounge business model that can be franchised under~~ the ~~Record~~Company ~~Street™~~terminated ~~brand. RSB taprooms will focus on~~ the ~~sale of Record Street™~~Lexington ~~branded~~Lease ~~beers~~due ~~and~~to ~~are~~zoning ~~envisioned as music~~ and ~~sports~~licensing ~~lounges~~challenges ~~that~~associated ~~sell~~with ~~RSB’s beers, affordable fast casual cuisine, and related merchandise. With RSB’s beers displayed on a prominently featured tap system, beer sales will be~~ the ~~primary revenue driver~~facility. ~~The economic strategy of the tap rooms will be value pricing, high margins, and high volumes. The flagship location for the first RSB taproom is currently open and operating in Reno, Nevada.~~

~~RSB~~The ~~intends~~Frankfort, ~~to utilize~~Kentucky ~~the~~Lease excess brewing capacity of the Licensee to restart its beer distribution business and support taproom franchise locations. As of the end of July 2020 RSB commenced keg barrel products to a distributer based in Reno, Nevada.

~~Creation~~On orNovember ~~Acquisition~~18, 2020, VBH Frankfort as the tenant entered into a commercial lease (the “Frankfort Lease”) with Kell Properties, LLC, a Kentucky limited liability company, for the lease of 4,015 square feet of office space in Units B, C, and ~~Development~~D of 915 Leawood Dr, Frankfort, Kentucky (i.e., the Frankfort Facility). The term of ~~Potential~~the ~~Specialty~~Frankfort Lease is twenty-four months with no explicit extension options. The base monthly payment of the term of the Frankfort Lease is $2,365. The Frankfort Lease commenced on February 1, 2021 and ~~Alternative~~was ~~Beverage~~assigned ~~Products~~to VBH Kentucky, effective as of April 1, 2021. VBH Kentucky intends to develop the Frankfort Facility for the purpose of operating an outpatient substance abuse treatment facility On August 26, 2021, our Non-Hospital-based Alcohol and Other Drug Treatment Entity (“AODE”) was approved by the Kentucky Office of the Inspector General. We anticipate that VSL Frankfort will commence material operations during the second fiscal quarter of 2022.

The Company has followed trends in specialty and alternative beverages very closely over the past 12-18 months and been engaged in strategic discussions with multiple novel ingredient manufacturers and bottling copackers with the intent to develop and acquire beverage products that have or will have industry leading margins and market penetration. Among those ingredients are nootropics, terpenes, and cannabinoids in flavored and carbonated waters with multiple bottling formats that include aluminum screw-top bottles, slim-line aluminum cans, biodegradable PET and PET-alternative plastic bottles, and glass bottles—each with the environmentally friendly, sustainable packaging solutions. These products may be developed in-house or sold by the Company through distribution agreements with existing brands. However, there is no assurance the Company can create in the future any beverage product that can be profitably manufactured and marketed. Discussions are ongoing and more details will be forthcoming as plans

Distribution Method for Our Product

Our intended distribution network is a broker-distributor-retailer network, whereby brokers represent our products to distributors and retailers. Our target retail markets are: (a) chain and independent health food stores; (b) grocery stores; (c) convenience stores; (d) drug stores; and (e) the mass retail market. We anticipate certain opportunities in the near future to have common distributors for RSB beers and our alternative beverage products.

Dependence on Few Customers

We may rely on relatively few customers as we initiate new product sales. There can be no assurance that such customers will continue to order our products in the same level or at all. A reduction or delay in orders from such customers, including reductions or delays due to market, economic or competitive conditions, could have a material adverse effect on our business, operating results, and financial condition.

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~~Marketing~~VBH Garden Grove

WeVBH ~~intend~~Garden toGrove ~~market~~intends ~~our~~to ~~product~~identify ~~through~~substance ~~our~~use ~~broker~~disorder ~~network~~treatment ~~and~~facilities tolocated ~~avail~~in ~~ourselves~~California to ~~the~~provide ~~promotional~~patient ~~activities~~solutions ofthat ~~other~~is ~~companies~~able ~~and~~to ~~competitors~~economically ~~regarding~~accept ~~the~~select ~~benefits~~insurance ofpayors ~~our~~to ~~beverages~~facilitate ~~and~~a ~~their~~broader ~~ingredients.~~patient Webase ~~anticipate~~for ~~that~~Vital. ~~our~~VBH ~~initial~~Garden ~~marketing~~Grove ~~thrust~~has ~~will~~identified bevarious topotential ~~support~~license ~~the~~holders ~~retailers~~ and ~~distribution~~facilities ~~network~~located ~~with~~in ~~point-of-sales~~Southern ~~displays~~California and ~~other~~is ~~marketing~~in ~~materials~~the ~~that~~due ~~can~~diligence bephase ~~strategically~~for ~~utilized~~transaction byconsideration; ~~public~~however, ~~relations~~there ~~and~~are ~~marketing~~no binding transactions ~~firms~~for ~~retained~~any bylicenses usor asfacilities ~~financial~~in ~~resources~~California ~~and~~as ~~markets~~of ~~dictate~~October 13, 2021.

~~Competition~~Business of Vital Behavioral Health, Inc.

~~The~~Vital’s ~~beverage~~operational ~~industry~~plans isare ~~extremely~~contingent ~~competitive. The~~upon ~~principal~~whether ~~areas~~we ~~of competition include pricing, packaging, development of new products and flavors, and marketing campaigns.~~are ~~Our~~able products will be competing directly with a wide range of drinks produced by a relatively large number of manufacturers. Most of these brands have enjoyed broad, well-established national recognition for years, through well-funded ad and other marketing campaigns. In addition, companies manufacturing these products generally have far greater financial, marketing, and distribution resources than we have.to:

~~Important~~· ~~factors~~Obtain ~~that~~sufficient ~~will~~debt ~~affect~~or ~~our ability~~equity financing to ~~compete~~operate ~~successfully~~U.S. ~~include~~substance ~~the~~abuse continued public perception of the benefits of specialty and alterative beverages, taste and flavor of our product, trade and consumer promotions, the development of new, unique and cutting edge products, attractive and unique packaging, branded product advertising, pricing, and the success of our distribution networkfacilities.

~~Research~~· ~~and~~Secure ~~Development~~leases for the substance abuse facilities.

~~The~~· ~~Company~~Secure ~~is in discussions with several flavor~~ and ~~formulation~~have ~~houses,~~approved ~~ingredient manufacturers, and contract bottlers and co-packers in~~ the ~~research~~required ~~and~~state ~~development~~licenses ~~of its alternative and specialty beverages. The Company currently is not engaged in any research and development activities on behalf of the Record Street™ brand, except~~ to ~~the~~operate ~~extent that existing beer formulas may be improved while retaining their signature flavors. Once~~ the ~~Company~~substance isabuse able to secure new contract brewers and broad distribution relationships, the Company will begin redistributing its signature beers and recommence the research and development of new beer varieties and packaging formatsfacilities. ~~The Company did not expend any capital resources on research and development during the reporting period.~~

~~Intellectual~~· ~~Property~~Meet applicable zoning requirements.

~~Where~~Upon ~~available,~~our weacquisition ~~intend~~of toVital ~~obtain~~we ~~trademark protection~~became ina ~~the~~health and ~~United~~wellness ~~States~~company ~~for~~with a ~~number~~focus ofin ~~trademarks~~the ~~for~~drug ~~slogans~~ and ~~product~~alcohol ~~designs~~rehabilitation services industry. WeVital ~~intend~~intends to ~~aggressively~~operate ~~assert~~U.S. ~~our~~facilities focusing ~~rights~~on ~~under~~substance ~~trade~~abuse ~~secret,~~treatment ~~unfair~~and ~~competition,~~offer ~~trademark,~~various ~~and~~programs ~~copyright~~that ~~laws~~help toprovide ~~protect~~a ~~our~~continuum ~~intellectual~~of ~~property,~~care ~~including~~to ~~product design,~~its ~~product~~patients. ~~research~~We ~~and~~intend ~~concepts~~to ~~and~~become ~~recognized~~a ~~trademarks.~~national operator ~~These~~of ~~rights~~clinical ~~are~~and ~~protected~~transitional ~~through~~housing ~~the~~services ~~acquisition~~for ofclients ~~patents and~~affected ~~trademark~~by ~~registrations,~~substance ~~the~~use ~~maintenance~~disorders ofand ~~trade~~co-occurring ~~secrets,~~disorders. ~~the~~Our treatment ~~development~~plans ofwill ~~trade~~be ~~dress,~~based ~~and,~~on ~~where~~an ~~appropriate,~~individualized ~~litigation against~~approach ~~those~~and ~~who~~will ~~are,~~be incustomized ~~our~~to ~~opinion,~~meet ~~infringing~~each ~~these~~client’s ~~rights~~specific needs.

~~While~~The ~~there~~facilities ~~can~~we beintend noto ~~assurance that registered~~operate ~~trademarks~~have ~~will~~access ~~protect~~to ~~our~~Medically ~~proprietary~~Monitored ~~information,~~Withdrawal weManagement ~~intend~~Services to(MMWM), ~~assert~~a ~~our~~Partial ~~intellectual~~Hospitalization ~~property~~Program ~~rights~~(PHP), ~~against~~an ~~any~~Intensive ~~infringer.~~Outpatient ~~Although~~Program ~~any~~(IOP), ~~assertion~~and ofan ~~our~~Outpatient ~~rights~~Program ~~could~~(OP). ~~result~~Clients inwho aparticipate ~~substantial~~in ~~cost~~the toPHP, IOP, and ~~diversion~~OP oftreatment ~~effort~~programs ~~by,~~will ~~our~~be ~~company,~~eligible ~~management~~for ~~believes~~housing ~~that~~through ~~the~~sober ~~protection~~living ofaccommodations ~~our~~that ~~intellectual~~will ~~property~~be ~~rights~~designed ~~will~~to begive a ~~key~~client ~~component~~the ofability ~~our~~to ~~sales~~participate in his or her daily affairs and ~~operating~~work ~~strategy~~and to have access to daily on-campus treatment at convenient times and locations.

~~Seasonality~~We intend that most of ~~Business~~our treatment facilities will be enrolled in Medicare or Medicaid and will bill and accept payments from those governmental programs. In most cases, it takes between 45 and 90 days for a Medicaid application to be processed and either accepted or denied by the state Medicaid office. However, depending on the circumstances and the state in which one resides, the application process could be shorter or longer. Most facilities that accept Medicaid generally provide programs with some degree of medical care and substance rehabilitation, including group and individual therapy, 12-step meetings, and other recovery activities, on a 24 hours per day basis in a highly structured setting. Short-term programs may last between 3 and 6 weeks and be followed by outpatient therapy. Long-term programs often last between 6 and 12 months and focus on re-socializing patients as they prepare to re-enter their communities. Intensive outpatient services (IOPs) typically offer at least 9 hours of therapy per week in sets of three 3-hour sessions, and some studies have found them to be similar to residential and inpatient programs in both services and effectiveness.

~~The~~Partial ~~sales~~hospitalization ofprograms ~~our products are influenced~~(PHPs) toprovide ~~some~~care ~~extent~~for bypeople ~~weather~~who ~~conditions~~need ina ~~the~~more ~~markets~~comprehensive inlevel ~~which~~of wetreatment ~~operate.~~than ~~Unusually~~standard ~~cold~~ or ~~rainy~~intensive ~~weather~~outpatient. ~~during~~These ~~the~~programs ~~summer months~~typically ~~may~~consist ~~have~~of aapproximately ~~temporary~~20 ~~effect~~hours ona ~~the~~week ~~demand~~of ~~for~~treatment ~~our~~and ~~product~~may ~~and~~include ~~contribute~~vocational toand ~~lower~~educational ~~sales~~counseling, ~~which~~family ~~could~~therapy, ~~have an adverse effect on~~medically ~~our~~supervised ~~results~~use of ~~operations~~medications, ~~for such periods. In light of both existing~~ and ~~the~~treatment ~~future possibility~~ of ~~changing~~co-occurring ~~trends~~disorders. ~~related~~IOPs ~~to COVID-19,~~may ~~both~~also ~~existing~~offer ~~and~~these ~~future operations~~services, ~~demand~~but ~~for,~~the ~~and~~time ~~financial~~commitment ~~conditions~~of a ~~could~~PHP betypically ~~impacted~~is greater.

~~Government~~We ~~Regulation~~will offer both IOP and PHP services at our facilities and accept Medicare and Medicaid payor-qualified patients and clients.

The advertising, distribution, labeling, production, safety, sale, and transportation in the United States of our product will be subject to: the Federal Food, Drug, and Cosmetic Act; the Federal Trade Commission Act; the Lanham Act; state consumer protection laws; competition laws; federal, state and local workplace health and safety laws; various federal, state and local environmental protection laws; and various other federal, state and local statutes and regulations.

Legal requirements apply in many jurisdictions in the United States requiring that deposits or certain ecotaxes or fees be charged for the sale, marketing, and use of certain non-refillable beverage containers. The precise requirements imposed by these measures vary and are constantly evolving. Other types of statutes and regulations relating to beverage container deposits, recycling, ecotaxes and/or product stewardship also apply in various jurisdictions in the United States. We anticipate that additional, similar legal requirements may be proposed or enacted in the future at the local, state, and federal levels in the United States.

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~~Any~~VSL ~~third-party~~Frankfort ~~bottling~~intends ~~facility that we may choose~~ to ~~utilize~~offer insober-designated living ~~the~~quarters ~~future~~for ~~and~~individuals ~~any~~who ~~other~~are ~~such~~in ~~operations~~recovery. ~~will~~Operations befor ~~subject~~VSL toFrankfort ~~various~~are ~~environmental~~intended ~~protection statutes and regulations, including those relating~~ to ~~the~~commence ~~use~~once ofVBH ~~water~~Kentucky ~~resources~~obtains ~~and~~ the ~~discharge of wastewater. It will be our policy~~ tooperating ~~comply~~entitlements ~~with~~for ~~any~~its ~~and~~outpatient ~~all~~substance ~~such~~use ~~legal~~treatment ~~requirements.~~facility ~~Compliance~~in ~~with these provisions has not had~~Frankfort, ~~and~~Kentucky. weUntil ~~do not expect~~ such ~~compliance to have~~time, ~~any~~VSL ~~material~~Frankfort’s operations ~~adverse~~will ~~effect~~be onlimited ~~our~~to ~~capital~~planning ~~expenditures,~~and ~~net income, or competitive position~~preparation.

~~Financial~~All ~~Planning~~of our plans reflected above and below are contingent upon receiving adequate debt and/or equity financing of which there are no assurances we will be successful in obtaining.

AtOur ~~June~~Future ~~30,~~Services ~~2020,~~and ~~the Company was not engaged in any revenue producing activities that generated positive cash flow.~~Solutions

~~Over~~We ~~the~~intend ~~next~~to 12provide ~~months~~quality, wecomprehensive, ~~anticipate our~~and ~~operating~~compassionate ~~expenses~~care ~~will~~to ~~include:~~adults ~~(i)~~struggling ~~costs~~with ~~for~~alcohol ~~the production of product inventory; (ii) marketing costs; (iii) general~~ and/or ~~administrative expenses;~~drug ~~(ii)~~abuse ~~officer~~ and ~~director~~dependence ~~wages~~as ~~and~~well ~~consulting fees, and (ii) costs associated with maintaining the Company~~ as aco-occurring ~~publicly traded~~mental ~~entity,~~health ~~including the filing of Exchange Act reports~~issues. We ~~believe we~~ will bemaintain ~~able~~a toresearch-based, ~~meet~~disciplined ~~these~~treatment ~~costs~~plan ~~through~~for ~~the~~all ~~use~~patients ~~of existing~~with ~~cash~~schedules ~~and~~designed ~~cash equivalents or additional amounts, as necessary,~~ to beengage ~~loaned~~the bypatient ~~or invested~~ in usan ~~by our stockholders,~~enriched ~~management~~recovery ~~or other investors~~experience. ~~However,~~Our nopurpose ~~assurance~~and ~~can~~passion beis ~~given that we will be able~~ to ~~raise~~empower ~~additional~~the ~~capital~~individual, ~~when~~their ~~needed or at all~~families, orand ~~that such capital, if available, will be on acceptable terms. In~~ the ~~absence~~broader ofcommunity ~~obtaining~~through ~~additional financing, we may be unable to fund our operations. Accordingly,~~ the ~~Company’s financial condition could require that it seek the~~promotion ~~protection~~ of ~~applicable~~optimal ~~reorganization~~wellness ~~laws~~of inthe ~~order to avoid or delay actions by third parties~~mind, ~~which could materially adversely affect~~body, ~~interrupt~~and ~~or cause the cessation of its operations~~spirit. As a result, the Company’s independent registered public accounting firm has issued a going concern opinion on the consolidated financial statements of the Company for the fiscal year ended June 30, 2020.

~~Government~~We ~~Regulation~~plan to offer the following types of therapy: motivational interviewing, cognitive behavioral therapy, rational emotive behavior therapy, dialectical behavioral therapy, solution-focused therapy, eye movement desensitization and reprocessing, and systematic family intervention. Our variety of therapy settings includes individual, group, and family therapies, recovery-oriented challenge therapies, expressive therapies (with a focus on music and art), and trauma therapies.

InWe ~~both~~also ~~domestic~~intend ~~and~~to ~~foreign~~provide ~~markets,~~Medicated-Assisted ~~the~~Treatment ~~formulation~~(“MAT”), ~~manufacturing,~~which ~~packaging,~~is ~~labeling,~~the ~~distribution,~~use ~~importation, exportation, licensing, sale, and storage~~ of ~~our~~FDA-approved ~~products are affected by extensive laws~~medications, ~~governmental~~in ~~regulations,~~combination ~~administrative~~with ~~determinations,~~counseling ~~court decisions~~ and ~~similar~~behavioral ~~constraints. Such laws~~therapies, ~~regulations~~to ~~and~~provide a ~~other~~“whole-patient” ~~constraints~~approach ~~may~~to ~~exist at~~ the ~~federal,~~treatment ~~state, or local levels in the United States and at all levels~~ of ~~government~~substance inuse ~~foreign jurisdictions~~disorders. ~~There~~We ~~can~~believe ~~be no assurance~~ that weit oris ~~our~~particularly ~~distributors~~effective ~~are~~for ~~in compliance with all of these~~treating ~~regulations.~~certain ~~Our~~conditions ~~failure~~such oras ~~our~~opioid ~~distributors’~~use ~~failure~~disorder, toalcohol ~~comply~~use ~~with~~disorder, ~~these regulations or new regulations could lead to the imposition of significant penalties or claims~~ and ~~could~~tobacco ~~negatively~~use ~~impact our business~~disorder. The Inuse ~~addition,~~of ~~the~~MAT ~~adoption~~has ofbeen ~~new~~shown ~~regulations~~to orsignificantly ~~changes~~reduce inoverdoses ~~the~~from ~~interpretations~~opioids ~~of existing regulations may result in significant compliance costs or discontinuation of product sales~~ and ~~may~~to ~~negatively~~improve ~~impact~~long-term ~~the marketing of our products, resulting in significant loss of sales revenues~~abstinence.

~~Employees~~Considering the high level of co-occurring substance abuse, mental health, and medical conditions, we will offer patients a spectrum of psychiatric, medical, and wellness-focused services based upon individual needs as assessed through comprehensive evaluations at admission and throughout participation in the program. To maximize the likelihood of long-term recovery, all program levels will provide patients access to the following services: assessment of individual substance abuse, mental health, medical history, and physical condition promptly upon admission; psychiatric evaluations; psychological evaluations, and services based on patient needs; follow-up appointments with physicians and psychiatrists; medication monitoring; educational classes regarding health risks, nutrition, smoking cessation, HIV awareness, life skills, healthy nutritional programs, and dietary plans; access to fitness facilities; interactive wellness activities; and structured daily schedules designed for restorative sleep patterns.

We ~~currently~~plan ~~have~~to ~~informal~~emphasize ~~arrangements with~~clinical ~~three individuals~~treatment, ~~who~~as ~~are~~well as ~~officers~~the ~~and~~therapeutic ~~Directors~~value of ~~the~~overall ~~Company,~~physical ~~who~~and ~~serve~~nutritional aswellness. ~~support~~We ~~staff~~are ~~for~~committed ~~the~~to ~~functioning~~providing offresh ~~all~~and ~~the~~nutritious meals throughout ~~corporate~~a ~~activities.~~patient’s ~~There~~stay ~~are~~in noorder ~~written~~to ~~agreements~~promote healthy routines, beginning with ~~these~~diet ~~individuals~~and exercise. IfOur ~~administrative~~facilities ~~requirements~~will ~~expand~~offer comprehensive work-out facilities either on-site or within walking distance, weas ~~anticipate~~well as various exercise classes and other amenities. We will support ~~that~~long-term werecovery ~~may~~for ~~hire~~patients ~~additional~~through ~~employees,~~research-based methodologies and ~~utilize~~individualized treatment planning while utilizing 12-step programs, which are a ~~combination~~set of ~~employees~~guiding ~~and~~principles ~~consultants~~outlining asa ~~necessary~~course toof ~~conduct~~action ~~our~~for ~~business~~recovery.

~~Available~~We ~~Information~~plan to have a differentiated ability to manage dual diagnosis cases and coordinate treatment of individuals suffering from the common combination of mental illness and substance abuse simultaneously. These patients participate in education and discussion-oriented groups designed to provide information regarding the psychiatric disorders that co-occur with chemical dependency.

~~The~~We ~~Company~~plan isto have a ~~Nevada~~strong ~~corporation~~emphasis ~~with~~on tracking ~~its~~patient ~~principal~~satisfaction ~~executive~~scores ~~office~~in ~~located~~order atto 75measure ~~Pringle~~our ~~Way,~~patient ~~8th~~and ~~Floor,~~staff ~~Suite~~interaction ~~804,~~and ~~Reno,~~overall ~~Nevada~~outcome ~~89502~~and reputation. In addition to patient satisfaction surveys that we will receive after a patient’s discharge, ~~and~~we ~~its~~also ~~telephone~~will ~~number~~solicit ~~is (775)~~feedback during a patient’s stay ~~829-7999~~at ~~x112~~our inpatient facilities. This allows us to further tailor an individual’s treatment plan to emphasize the programs that have been more impactful to a particular patient.

~~ITEM~~We 1Abelieve in tracking clinical outcomes. ~~RISK~~We intend to ~~FACTORS~~track and measure patient outcomes in order to drive continual improvement in our programs.

You should carefully consider the risks described below together with all of the other information included in this document before making an investment decision with regard to our securities. The statements contained or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

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~~Risks~~We ~~Relating~~plan offer a full spectrum of treatment services to ~~Our~~patients ~~Business~~based upon individual needs that are assessed through comprehensive evaluations at admission and throughout their participation in the program. The assignment and frequency of services will correspond to individualized treatment plans within the context of the level of care and treatment intensity level.

~~Because~~· weDetoxification ~~have~~(“detox”). Detoxification is usually conducted at an inpatient facility for patients with physical or psychological dependence. Detoxification services are designed to clear toxins out of the body so that the body can safely adjust and heal itself after being dependent upon a ~~limited~~substance. ~~operating history~~Patients are medically monitored 24 hours per day, ~~our~~seven ~~ability~~days per week, by experienced medical professionals who work to ~~fully~~alleviate ~~and~~withdrawal ~~successfully~~symptoms ~~develop~~through ~~our~~medication, ~~business~~as isappropriate. ~~unknown~~We plan to provide detoxification services for several substances including alcohol, sedatives, and opiates.

We· ~~acquired~~Residential ~~our~~Treatment. ~~beer~~Residential ~~operations~~care inis ~~January 2018~~a ~~and~~structured ~~only~~treatment ~~commenced~~approach ~~our~~designed ~~specialty~~to ~~and~~prepare ~~alternative~~patients ~~beverages~~to ~~development~~return into ~~2019.~~the ~~Accordingly,~~general wecommunity ~~have~~with a ~~limited~~sober ~~operating~~lifestyle, ~~history from~~increased ~~which~~functionality, ~~investors~~and ~~can~~improved ~~evaluate~~overall ~~our business~~wellness. ~~Our~~Treatment ~~ability~~is toprovided ~~successfully~~on ~~develop~~a ~~our~~24 ~~products,~~hours ~~and~~per today, ~~realize~~seven ~~consistent,~~days ~~meaningful revenues~~per ~~and~~week ~~profit~~basis, ~~has~~and ~~not~~services ~~been~~generally ~~established~~include ~~and~~a ~~cannot~~minimum beof ~~assured.~~two ~~For~~individual ustherapy tosessions ~~achieve~~per ~~success~~week, ~~our~~regular ~~products~~group ~~must~~therapy, ~~receive~~family ~~broad market~~therapy, ~~acceptance~~didactic byand ~~consumers.~~psycho-educational ~~Without this market acceptance~~groups, weexercise ~~will~~(if ~~not~~cleared beby ~~able~~medical tostaff), ~~generate~~case ~~sufficient~~management, ~~revenue~~and torecreational ~~continue our~~activities. ~~business~~Medical ~~operation.~~and Ifpsychiatric ~~our~~care ~~products~~will ~~are~~be ~~not~~available ~~widely~~to ~~accepted~~all bypatients, ~~the~~as ~~market~~needed, through our ~~business~~planned ~~may~~contracted ~~fail~~professional physician groups.

~~Our~~· ~~ability~~Partial toHospitalization. ~~achieve~~Partial ~~and~~hospitalization ~~maintain~~is ~~profitability and~~a ~~positive~~structured ~~cash~~program ~~flow~~providing care a minimum of 20 hours per week. This program is ~~dependent~~designed ~~upon~~for ~~our~~patients ~~ability~~who are stable enough physically and psychologically to ~~generate~~participate ~~revenues~~in everyday activities but who still require a degree of medical monitoring. Services include a minimum of weekly individual therapy, ~~manage~~regular ~~development~~group ~~costs~~therapy, family education and ~~expenses~~family therapy, didactic and ~~compete~~psycho-educational ~~successfully with~~groups, ~~our~~exercise ~~direct~~(if ~~and~~cleared ~~indirect~~by ~~competitors.~~medical Westaff), ~~anticipate~~case ~~operating~~management, ~~losses~~and inoff-site ~~upcoming~~recovery ~~future~~meetings ~~periods~~and activities. ~~This~~Medical ~~will~~and ~~occur~~psychiatric ~~because~~care ~~there are~~will ~~expenses~~be ~~associated~~available ~~with~~to ~~the~~all ~~development~~patients, ~~production,~~as ~~marketing~~needed, ~~and~~through ~~sales~~our ofplanned ~~our~~contracted ~~product~~professional physician groups.

~~There~~· ~~continues~~Intensive toOutpatient beServices. ~~and~~Less ~~will~~intensive ~~for~~than the ~~foreseeable~~ ~~future~~aforementioned levels of care, ~~ongoing~~intensive ~~challenges~~outpatient ~~related~~services toare ~~the~~comprised ~~COVID-19~~of ~~virus~~a structured program providing care three days per week for three hours per day at a minimum. ~~Statewide~~Designed ~~shut-downs,~~as ~~shelter~~a in“step ~~place~~down” ~~orders,~~from ~~bar~~partial ~~closures~~hospitalization, ~~social~~ ~~distancing,~~this ~~etc.~~program ~~all~~reinforces ~~for~~progress and assists in the ~~most~~attainment ~~part~~of ~~put~~sobriety, ~~downward~~reduction ~~pressure~~of ondetrimental ~~nearly~~behaviors, ~~every~~and ~~aspect~~improved overall wellness of ~~life~~patients ~~and~~while ~~businesses~~they ~~that~~integrate ~~cater~~and to interact in the ~~public~~community. ~~and~~Services ~~will~~include ~~continue~~weekly toindividual ~~create~~therapy, ~~financial~~group ~~headwinds~~therapy, asfamily ~~well~~education asand ~~create~~family ~~dilemmas~~therapy, ~~which~~didactic ~~will~~and ~~have~~psycho-educational ~~the~~groups, ~~potential~~case tomanagement, ~~negatively impact~~off-site ~~every~~recovery ~~aspect~~meetings ofand ~~business~~activities, and intensive transitional and aftercare planning.

~~Our~~· ~~independent~~Outpatient ~~registered~~Services. ~~public~~Traditional ~~accounting firm~~outpatient ~~has~~services ~~expressed~~are ~~substantial~~delivered ~~doubt~~in ~~about~~regularly ~~our~~scheduled ~~ability~~sessions, usually less the nine hours per week. Outpatient services include professionally directed screening, assessment, therapy, and other services designed to ~~continue~~support assuccessful transition to the community and long-term recovery. These services are tailored to a ~~going~~person’s ~~concern~~specific needs and stage of recovery and may involve many modalities, including motivational enhancement, family therapy, educational groups, occupational and recreational therapy, psychotherapy, and pharmacotherapy.

~~Our~~· ~~financial~~Ancillary ~~statements~~Services. ~~are~~In ~~prepared~~addition ~~using generally accepted accounting principles in the United States of America applicable~~ to aour ~~going~~inpatient ~~concern, which contemplates the realization of assets~~ and ~~liquidation~~outpatient oftreatment ~~liabilities~~services, inwe ~~the~~intend ~~normal course of business. We have not yet established an ongoing source of revenues sufficient~~ to ~~cover~~provide ~~our~~medical ~~operating~~monitoring ~~costs~~for ~~and~~adherence to ~~allow~~addiction ustreatment, toclinical ~~continue~~diagnostic aslaboratory aservices, ~~going~~and ~~concern.~~physician ~~Our~~services ~~ability~~ to ~~continue~~our ~~as a~~patients ~~going~~through ~~concern is dependent on~~ our ~~company~~contracted ~~obtaining~~laboratories ~~adequate~~and ~~capital~~professional tophysician ~~fund operating losses until we become profitable~~groups. ~~If we~~We ~~are~~believe ~~unable~~toxicological tomonitoring ~~obtain~~of ~~adequate~~patients ~~capital,~~is wean ~~could~~important becomponent ~~forced~~of tosubstance ~~significantly~~abuse ~~curtail or cease operations~~treatment. InPatients ~~its~~are ~~report~~evaluated ~~on the financial statements~~ for ~~the~~illicit ~~year~~substances ~~ended~~upon ~~June~~admission ~~30,~~and ~~2020,~~thereafter ~~our~~on ~~independent~~a ~~registered~~random ~~public~~basis ~~accounting~~and ~~firm~~as ~~included~~otherwise andetermined ~~explanatory paragraph regarding substantial doubt about our ability~~ to ~~continue~~be asmedically anecessary ~~going~~by ~~concern. Our financial statements do not include any adjustments that might result from~~ the ~~outcome~~treating ~~of this uncertainty~~physician.

· Sober Living Facilities. We ~~will~~plan ~~need~~to ~~additional~~provide ~~funds~~sober living arrangements that serve as an interim environment for patients transitioning from inpatient treatment centers to ~~produce~~lower levels of care and eventually back to their former living arrangements. Sober living facilities enable us to utilize existing beds for patients requiring higher levels of care, ~~market~~ while still providing housing for patients completing outpatient treatment programs. We provide sober living arrangements to patients through our owned and leased properties in Texas, Nevada, Mississippi, and ~~distribute~~Florida. We plan to continue using sober living facilities as a complement to our ~~product~~outpatient services.

We will have to spend additional funds to produce, market and distribute our product. If we cannot raise sufficient capital, we may have to cease operations and investors could lose their investment. We will need additional funds to produce our product for distribution to our target market. Even after we have produced our product, we will have to spend substantial funds on distribution, marketing, and sales efforts before we will know if we have commercially viable and marketable/sellable products.

We may have difficulty raising additional capital to fund expanded operations.

At present we have no plans to obtain financing for our proposed short-term marketing plans and have no agreement or arrangements to obtain the financing needed to fund our future expanded operations. If we do not obtain substantial funding, we expect our expansion expenses will exceed our immediate sales revenues. Our successful long-term future is dependent on receiving substantial funding in the long-term. (See “Management’s Discussion and Analysis of Financial Condition,” below.)

There is no guarantee that sufficient sale levels will be achieved.

There is no guarantee that the expenditure of money on distribution and marketing efforts will translate into sufficient sales to cover our expenses and result in profits. Consequently, there is a risk that investors may lose their entire investment.

If we fail to further penetrate existing markets or successfully expand our business into new markets, then the growth in sales of our products, along with our operating results, could be negatively impacted.

The success of our business is contingent on our ability to continue to grow by entering new markets and further penetrating existing markets. Our ability to further penetrate existing markets or to successfully expand our business into additional countries is subject to numerous factors, many of which are out of our control.

In addition, government regulations in both our domestic and international markets can delay or prevent the introduction, or require the reformulation or withdrawal, of some of our products, which could negatively impact our business, financial condition and results of operations. Also, our ability to increase market penetration in certain countries may be limited by the finite number of persons in a given country inclined to pursue a direct selling business opportunity or consumers willing to purchase our products. Moreover, our growth will depend upon improved training and other activities that enhance distributor retention in our markets.

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WeBusiness ~~cannot guarantee that our anticipated growth levels will be achieved in the immediate or long-term future.~~Strategies

~~Our~~Vital ~~development~~plans to hire highly trained and experienced clinical staff to deploy research-based treatment programs with structured curricula for detoxification, ~~marketing~~inpatient treatment, partial hospitalization, and ~~sales~~intensive outpatient care. By keeping the majority of its treatment facilities and housing on campuses that ~~activities~~are conveniently located within walking distance to traditional community services, we are ~~limited~~striving byto create so-called ‘sober cities’ in the United States that will nurture its clients’ development at all stages from detox to long-term self-sufficiency. By applying a tailored treatment program based on the individual needs of each patient, many of whom require treatment for a co-occurring mental health disorder such as depression, bipolar disorder, or schizophrenia, we believe we will offer the level of quality care and service necessary for our ~~size~~patients to achieve and maintain sobriety. Development of our business and the Vital Behavioral Health and Vital Sober Living national brands is contingent upon our ability to raise sufficient funds to fund hiring clinical experts, leasing facilities, and hiring professional staff, and national sales and marketing programs. We will engage the following strategies:

~~Because~~· weClinical ~~are~~excellence ~~small~~ and dooutcomes-driven ~~not~~treatment. ~~have~~Our ~~much capital,~~operations werequire ~~must~~us ~~limit~~to ~~our~~comply ~~product~~with ~~development,~~the ~~marketing,~~national ~~and~~standard ~~sales~~for ~~activities.~~quality Asand ~~such,~~sustainable weoutcomes ~~may~~in ~~not~~addiction betreatment ~~able~~and to ~~complete~~ongoing ~~our~~measurement ~~production~~ and ~~business~~transparency ~~development~~regarding ~~program~~patient inoutcomes. aIn ~~manner~~addition ~~that~~to ismeasurement asof ~~thorough~~patient asoutcomes weand ~~would~~satisfaction ~~like.~~with Wetreatment, ~~may~~we ~~not~~plan ~~ever~~to ~~generate~~advance ~~sufficient~~utilization ~~revenues to~~of ~~cover~~modern, ~~our~~evidence-based ~~operating~~interventions ~~and~~that ~~expansion~~address ~~costs~~addiction ~~and~~as ~~you~~a ~~may,~~chronic ~~therefore~~brain disease, ~~lose~~as ~~your~~supported ~~entire~~by ~~investment~~the science.

~~Changes~~· inImprove ~~the~~census ~~non~~over time at existing facilities. We plan to connect with potential patients through a multi-~~alcoholic~~faceted ~~beverage business~~program ~~environment~~that involves education about the disease of addiction and ~~retail~~the ~~landscape~~development ~~could~~of ~~adversely~~relationships ~~impact~~with healthcare professionals, digital marketing, as well as such traditional channels as television, radio and print advertising. We plan to will take a consultative, empathetic approach in operating our ~~financial~~admissions ~~results~~department to allow our personnel to effectively identify and enroll patients who may benefit from our treatment service offerings.

~~The~~· ~~non-alcoholic~~Target ~~beverage~~complementary ~~business~~growth ~~environment is~~opportunities. ~~rapidly~~We ~~evolving~~plan asto apursue ~~result~~growth ~~of,~~opportunities ~~among~~that ~~other~~are ~~things,~~complementary ~~changes~~to inour ~~consumer preferences~~business, including ~~changes~~providing ~~based~~laboratory onservices health and nutrition considerations and obesity concerns; shifting consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures. In addition, the non-alcoholic beverage retail landscape is very dynamic and constantly evolving, not only in emerging and developing markets, where modern trade is growing at a faster pace than traditional trade outlets, but also in developed markets, where discounters and value stores, as well as the volume of transactions through e-commerce, are growing at a rapid pace. If we are unable to ~~successfully~~other ~~adapt~~substance toabuse ~~the~~treatment ~~rapidly~~providers ~~changing environment~~ and ~~retail~~expanding ~~landscape,~~other ~~our~~ancillary ~~share of sales, volume growth and overall financial results could be negatively affected~~services.

~~Intense~~· ~~competition~~Develop ~~and~~outpatient ~~increasing~~operations. ~~competition in~~We ~~the~~plan ~~commercial~~to ~~beverage~~selectively ~~market~~pursue ~~could~~opportunities ~~hurt~~to add outpatient centers to complement our ~~business~~broader network of inpatient treatment facilities. We believe expanding our reach by developing or acquiring premium outpatient facilities of a quality consistent with our inpatient services will further enhance our brand and our ability to provide a more comprehensive suite of services across the spectrum of care.

~~The~~· ~~commercial~~Opportunistically ~~retail~~diversify ~~beverage~~our ~~industry,~~ portfolio of treatment facilities. We intend to selectively seek acquisition opportunities to expand and indiversify ~~particular~~our ~~its~~geographic ~~non-alcoholic~~presence, ~~beverage~~service ~~segment~~offerings, isand ~~highly~~the ~~competitive.~~portion ~~Market~~of ~~participants~~the population that can access our services based on their individual healthcare coverage We believe that most mental health and substance abuse treatment companies in operation are small, regional operations and this high level of ~~various~~fragmentation ~~sizes,~~presents us with ~~various market~~the ~~shares~~opportunity to acquire facilities or small providers and ~~geographical~~create ~~reach,~~economies ~~some~~of scale and enhanced patient care. All of ~~whom~~the ~~have~~above ~~access~~plans toare ~~substantially~~contingent ~~more~~upon ~~sources~~adequate funding of ~~capital~~which there are no assurances.

WeSales ~~intend to compete generally with all liquid refreshments, including bottled water~~ and ~~numerous specialty beverages, such as: Core Hydration, SoBe; Snapple; Arizona Iced Tea; Vitamin Water; Gatorade; and Powerade.~~Marketing

We ~~also~~ intend to ~~compete~~use ~~indirectly~~a ~~with major international beverage companies including but not limited to: the Coca~~multi-~~Cola~~faceted ~~Company;~~approach PepsiCo, Inc.; Nestlé; Dr Pepper Snapple Group; Groupe Danone; Kraft Foods Group, Inc.; and Unilever. These companies have established market presence in the United States and offer a variety of beverages that are substitutes to ~~our product. We will face~~ reach potential ~~direct~~patients ~~competition~~suffering from ~~such companies because they have~~ the ~~financial~~disease ~~resources,~~of ~~and~~addiction ~~access to manufacturing~~ and ~~distribution~~co-occurring ~~channels~~psychiatric ~~to rapidly enter the specialty and alternative water market~~disorders. ~~For~~This ~~example,~~multi-pronged weapproach ~~may~~will ~~compete directly with alkaline water producers and brands focused on the emerging alkaline beverage market including~~include: Eternal; Essentia; Icelandic; Real Water; Aqua Hydrate; Mountain Valley; Qure; Penta; and Alka Power. These companies could bolster their position in the alkaline water market through additional expenditure and promotion.

As· aNational ~~result~~Marketing ofForce. ~~both~~We ~~direct~~intend to deploy and ~~indirect competition,~~manage ~~our~~a ~~ability~~team toof ~~successfully~~representatives ~~distribute,~~that ~~market~~will ~~and~~focus ~~sell~~on ~~our~~developing ~~product~~relationships with hospitals, ~~and~~other totreatment ~~gain~~facilities, ~~sufficient~~psychiatrists, ~~market~~therapists, ~~share~~social inworkers, ~~the~~employers, ~~United States~~unions, toalumni, ~~realize~~and ~~profits~~employee ~~may~~assistance beprograms. ~~limited,~~Our ~~greatly~~sales ~~diminished,~~representatives orwill ~~totally~~educate ~~diminished,~~these ~~which~~various ~~may~~constituents ~~lead~~about tothe ~~partial~~disease orof ~~total~~addiction ~~loss~~and the variety of ~~your~~ ~~investments~~treatment inservices ~~the~~that ~~Company~~we provide.

~~Alternative~~· ~~non~~Multi-~~commercial~~Media ~~beverages or~~Marketing. ~~processes~~Through ~~could~~comprehensive ~~hurt~~online directories of treatment providers, treatment provider reviews, user content that discusses the disease of addiction, treatment and recovery, as well as discussion forums and professional communities, our ~~business~~future addiction-related websites will serve families and individuals who are struggling with addiction and seeking treatment options. Additionally, we plan to pursue advertising opportunities in television commercials, radio spots, newspaper articles, medical journals, and other print media that promote our facilities and have the intent to build our integrated, national brand.

The availability of non-commercial beverages, such as tap water, and machines capable of producing alkaline water or infusing cannabinoids into water at the consumer’s home or at storefronts, could hurt our business, market share, and profitability.

Expansion of the specialty and alternative beverage market or sufficiency of consumer demand in that market for operations to be profitable are not guaranteed.

The specialty and alternative water market is an emerging market and there is no guarantee that this market will expand or that consumer demand will be sufficiently high to allow our company to successfully market, distribute and sell our product, or to successfully compete with current or future competition, all of which may result in total loss of your investment. Notably, these specialty and alternative waters often include high-priced ingredients and have a higher retail price point than spring and filtered waters. Therefore, our beverages may be particularly sensitive to changes in consumer behaviors and economic downturns.

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~~Our~~· ~~growth~~Recommendations by Alumni. We anticipate receiving new patients who are directly referred to our facilities by our satisfied and ~~profitability~~supportive ~~depends on~~alumni, ~~the~~as ~~performance~~well ofas ~~third~~their ~~parties~~friends and families. As our ~~relationship~~national ~~with~~brand ~~them~~continues to grow and our business continues to increase, we believe our alumni will become an increasingly important source of business for us.

~~Our~~The ~~distribution~~extent ~~network~~that and its success may depend on the performance of third parties. Any non-performance or deficient performance by such parties may undermine our operations, profitability, and result in total loss to your investment. To distribute our product, we ~~intend~~are toable ~~use a broker-distributor-retailer network whereby brokers represent our products~~ to ~~distributors~~implement ~~and retailers who would in turn sell our product to consumers. The success of this network will depend on~~ the ~~performance of the brokers, distributors, and retailers of this network. There is a~~foregoing ~~risk that a broker, distributor,~~ or ~~retailer~~even ~~may~~able ~~refuse~~ to orimplement ~~cease~~any toof ~~market or carry our product. There is a risk that~~ the ~~mentioned entities~~foregoing ~~may~~sales ~~not~~and adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our product in localities that may not be receptive to our product. Furthermore, such third parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing, ~~and~~plans ~~sale~~are ~~activities. We~~contingent ~~also~~upon ~~will~~adequate ~~need to maintain good commercial relationships with third-party brokers~~funding, ~~distributors, and retailers so that they will promote and carry our product. Any adverse consequences resulting from the performance~~ of ~~third~~which ~~parties~~there orare ~~our~~no ~~relationship with them could undermine our operations, profitability and may result in total loss of your investment~~assurances.

~~Our~~Admissions ~~failure~~Center ~~to establish and maintain distributor relationships for any reason could negatively impact sales of our products and harm our financial condition and operating results.~~Operations

We intend to ~~depend~~maintain ~~upon~~a ~~third~~24-~~party~~hours ~~distributors of~~per ~~our products for the origination of a substantial portion~~day, ifseven days ~~not~~per ~~all~~week, ofremote ~~our~~admissions ~~sales~~center. ToOur ~~increase~~centralized ~~our~~admissions ~~revenue,~~center weinitially ~~must~~will ~~increase the~~be ~~number~~provided ~~of,~~by ora ~~the~~third ~~productivity~~party ~~of,~~provider ~~our~~that ~~distributors. Accordingly, our success depends in significant part upon our ability~~will tofocus ~~recruit,~~on ~~retain,~~outreach and ~~motivate~~enrolling ~~a large base of distributors~~patients. ~~There~~As ~~may~~part ~~be a high rate~~ of ~~turnover~~its ~~among our distributors~~role, ~~which is a characteristic of retail sales and~~ the ~~network~~admissions ~~marketing~~center ~~business.~~team ~~The~~will ~~loss~~conduct ofbenefits averification, ~~significant~~handle ~~number of distributors for any~~initial ~~reason~~communication ~~could~~with ~~negatively~~insurance ~~impact~~companies, ~~sales~~complete ofpatient ~~our~~intake ~~products~~screenings, ~~and~~consult ~~could~~with ~~impair~~ our ~~ability~~clinicians towhere ~~attract~~necessary ~~new~~regarding ~~distributors.~~a Inpotential patient’s ~~our~~specific ~~efforts~~medical ~~to attract~~or ~~and~~psychological ~~retain distributors~~condition, webegin ~~will~~the ~~compete~~pre-certification ~~with~~process ~~other~~for ~~network~~treatment ~~marketing organizations~~authorization, ~~including~~help ~~those in the weight management,~~each ~~dietary,~~patient ~~and~~choose ~~nutritional~~a ~~supplement~~proper ~~and~~treatment ~~personal~~facility ~~care~~for ~~and~~his ~~cosmetic~~or ~~product~~her ~~industries.~~clinical ~~Our operating results could be harmed if our existing~~ and ~~new~~financial ~~business~~needs, ~~opportunities~~ and ~~products~~assist dopatients ~~not~~with ~~generate~~arrangements ~~sufficient interest to retain existing distributors~~ and ~~attract~~ ~~new distributors~~logistics.

~~Since~~Professional we cannot exert the same level of influence or control over third-party distributors as we could if they were our own employees, our distributors could fail to comply with our distributor policies and procedures, which could result in claims against us that could harm our financial condition and operating results.Groups

~~Our~~We ~~third-party~~plan ~~distributors~~to ~~are~~become ~~independent contractors~~affiliated ~~and,~~with ~~accordingly,~~groups weof ~~are~~physicians and ~~not~~mid-level inservice aproviders ~~position~~that tomay ~~directly~~ provide ~~the~~certain ~~same~~professional ~~direction,~~services ~~motivation,~~to ~~and~~our ~~oversight~~patients asthrough ~~we would~~professional ifservices ~~distributors~~agreements with ~~were~~certain of our ~~own~~treatment ~~employees~~facilities (the “Professional Groups”). AsUnder athe ~~result~~professional services agreements, ~~there~~the ~~can~~Professional Groups bemay noprovide ~~assurance~~a ~~that~~physician ~~our~~to ~~distributors~~serve ~~will~~as ~~participate~~medical ~~in our~~director ~~marketing~~for ~~strategies~~the orapplicable ~~plans,~~facility. ~~accept~~The ~~our~~Professional ~~introduction~~Groups ofmay ~~new~~either ~~products,~~bill the payor for their services directly or ~~comply~~be ~~with~~compensated ~~our~~by ~~distributor~~the ~~policies~~treatment ~~and~~facility ~~procedures~~based on fair market value hourly rates.

~~Extensive~~Competition federal, state, and local laws may regulate our business, products, and network marketing programs. While we intend to implement distributor policies and procedures designed to govern distributor conduct and protect the goodwill associated with our trademarks and trade names, it can be difficult to enforce these policies and procedures. Violations by our third-party distributors of applicable law or of our policies and procedures in dealing with customers could reflect negatively on our products and operations and harm our business reputation. In addition, it is possible that a court could hold us civilly or criminally accountable based on vicarious liability because of the actions of our third-party distributors.

Our competitors have greater assets, revenues, operational resources and financial resources than we do. The ~~loss~~market for mental health and substance abuse treatment facilities is highly fragmented with approximately 12,000 different companies providing services to the adult and adolescent population, of ~~one~~which oronly ~~more~~30% are operated by for-profit organizations (Source: DHHS, 2020 Data on Substance Abuse Treatment Facilities). Our inpatient treatment facilities will compete with several national competitors and many regional and local competitors. Some of our ~~major~~competitors are ~~customers~~government orentities athat ~~decline~~are insupported ~~demand~~by ~~from~~tax ~~one~~revenue, orand ~~more~~others ofare non-profit entities that are primarily supported by endowments and charitable contributions. We do not receive financial support from these ~~customers~~sources. Some ~~could~~larger ~~harm~~companies in our ~~business~~industry compete with us on a national scale and offer substance use treatment services among other behavioral healthcare services. To a lesser extent, we also compete with other providers of substance use treatment services, including other inpatient behavioral healthcare facilities and general acute care hospitals.

AWe ~~limited~~believe ~~number of customers may account for a majority of our revenues. There can be no assurance that such customers will continue to order our products in~~ the ~~same~~primary ~~level or at all. A reduction or delay in orders from such customers, including reductions or delays due to market, economic or~~ competitive ~~conditions,~~ ~~could~~factors ~~have a material adverse effect on~~ affecting our business, ~~operating results, and financial condition.~~include:

~~Our~~· ~~dependence~~quality ~~on a limited number~~ of ~~vendors~~ ~~could~~clinical ~~leave~~programs ~~us vulnerable to having an inadequate or quantity-restrictive supply of required products, price increases, late deliveries,~~ and ~~poor product quality.~~services;

We· ~~currently~~reputation ~~have three vendors for specialty~~ and ~~alternative~~brand water-based beverages and one vendor for our beers. Like other companies in our industry, we may experience shortages or cost-prohibitive minimum order quantities (MOQs) and be unable to purchase our desired volume of products. If we are unable to maintain an adequate supply of products, our revenue and gross profit could suffer considerably. Finally, we cannot provide any assurance that our products will be available in quantities sufficient to meet customer demand. Any limits to product access could materially and adversely affect our business and results of operations.recognition;

overall aesthetics of the facilities;

amenities offered to patients;

relationships with payors and referral sources;

sales and marketing capabilities;

information systems and proprietary data analytics;

senior management experience; and

national scope of operations.

Legal Proceedings

There are no legal actions currently threatened or pending against us, our subsidiaries, or the Vital Subsidiaries.

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~~Due~~Research ~~to the high level of competition in our industry, we might fail to retain our customers~~ and ~~distributors,~~Development ~~which would harm our financial condition and operating results.~~

~~Some~~We ofdid ~~these~~not ~~competitors~~incur ~~have~~any ~~longer~~research ~~operating histories, significantly greater financial, technical, product development, marketing~~ and ~~sales resources, greater name recognition,~~development ~~larger~~expenditures ~~established~~over ~~customer~~the ~~bases~~last ~~and~~two ~~better-developed~~fiscal ~~distribution~~years ~~channels than we do. Our present~~ or ~~future~~since ~~competitors~~our may be able to develop products that are comparable or superior to those we offer, adapt more quickly than we do to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than we doinception.

In addition, because the industry in which we operate is not particularly capital intensive or otherwise subject to high barriers to entry, it is relatively easy for new competitors to emerge who will compete with us for our distributors and customers.Revenues

~~Our~~We ~~failure~~plan to ~~appropriately~~generate ~~respond~~revenues through our Vital toBehavioral ~~changing~~Health ~~consumer~~operations ~~preferences~~from behavioral health treatment services at our inpatient and ~~demand~~outpatient ~~for~~treatment ~~new~~facilities, ~~products~~which orwill be ~~product~~derived ~~enhancements~~from ~~could~~personally ~~significantly~~funded ~~harm~~patients ~~our~~(i.e., ~~distributor~~private payor), insurance companies (e.g., United Healthcare and ~~customer~~ ~~relationships~~Blue Cross and ~~product~~Blue Shield), ~~sales~~and government program payors (e.g., Medicaid and ~~harm~~Medicare) that act as the primary payment or reimbursement source of funds for our ~~financial~~patient ~~condition~~services. ~~and~~We ~~operating~~also ~~results~~plan to generate revenues through our Vital Sober Living operations as a landlord through the provision of sober living residences that are supported by our Vital Behavioral Health patient services. Initially, we expect that our revenue-producing operations will commence in Frankfort, Kentucky.

~~Our~~Intellectual ~~business~~Property is subject to changing consumer trends and preferences, especially with respect to weight management products. Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes. Furthermore, the nutritional supplement industry is characterized by rapid and frequent changes in demand for products and new product introductions and enhancements. Our failure to accurately predict these trends could negatively impact consumer opinion of our products, which in turn could harm our customer and distributor relationships and cause the loss of sales. The success of our new product offerings and enhancements depends upon a number of factors, including our ability to:

·We ~~accurately~~have ~~anticipate~~no ~~customer~~registered ~~needs;~~patents, trademarks, or other intellectual property.

·Dependence ~~innovate~~On ~~and~~One ~~develop new products~~ or ~~product~~a ~~enhancements~~Few ~~that~~Major ~~meet these needs;~~Customers

·We ~~successfully~~do ~~commercialize~~not ~~new~~anticipate ~~products~~being ordepending ~~product~~upon ~~enhancements~~any one inor a ~~timely~~few ~~manner;~~major customers since our facilities will accommodate multiple patients.

·Seasonality ~~price~~of ~~our~~Business ~~products competitively;~~

·Seasonality ~~manufacture~~does ~~and~~not ~~deliver~~materially affect our ~~products in sufficient volumes and in a timely manner; and~~business.

·Government ~~differentiate~~Regulations ~~our product offerings from those of our competitors.~~

If we do not introduce new products or make enhancements to meet the changing needs of our customers in a timely manner, some of our products could be rendered obsolete, which could negatively impact our revenues, financial condition and operating results.Introduction

~~Adverse~~Healthcare ~~publicity~~service ~~associated~~providers ~~with~~are ~~our~~required to comply ~~products,~~with ~~ingredients,~~extensive orand ~~network~~complex ~~marketing~~laws ~~program,~~and orregulations ~~those~~at ofthe ~~similar~~federal, ~~companies~~state, ~~could~~and ~~harm~~local ~~our~~government ~~financial~~levels, ~~condition and operating results.~~including:

~~The~~· ~~size~~licensure, ofcertification ~~our distribution force~~ and ~~the~~ ~~results~~accreditation of ~~our~~substance ~~operations~~use ~~may~~treatment ~~be significantly affected by the public’s perception of the Company and similar companies. This perception is dependent upon opinions concerning:~~services;

· ~~the~~licensure, ~~safety~~Clinical ~~and~~Laboratory ~~quality~~Improvement Amendments of ~~our~~1988 ~~products~~(CLIA) certification and ~~ingredients~~accreditation of laboratory services;

· ~~the~~handling, ~~safety~~administration and ~~quality~~distribution of ~~similar~~controlled ~~products and ingredients distributed by other companies~~substances;

· ~~our~~necessity ~~distributors~~and adequacy of care and quality of services;

· ~~our~~licensure, ~~network~~certification ~~marketing~~and ~~program;~~qualifications of professional and support personnel;

· ~~the~~referrals ~~direct~~of ~~selling~~patients ~~business~~and ~~generally.~~permissible relationships with physicians and other referral sources;

~~Adverse~~· ~~publicity~~claim ~~concerning~~submission ~~any actual or purported failure of our Company or our third-party distributors to comply with applicable laws~~ and ~~regulations regarding product claims and advertising~~collections, ~~good~~including ~~manufacturing~~penalties ~~practices,~~for the ~~regulation~~submission of ~~our network marketing program~~, ~~the licensing of our products for sale in our target markets~~ or ~~other~~causing ~~aspects of our business, whether or not resulting in enforcement actions or~~ the ~~imposition of~~submission ~~penalties, could have an adverse effect on the goodwill~~ of ~~our Company and could negatively affect our ability to attract~~, ~~motivate~~false, ~~and~~ ~~retain~~fraudulent ~~distributors,~~or ~~which~~misleading ~~would~~claims ~~negatively~~and ~~impact~~the ~~our~~failure ~~ability~~ to ~~generate~~repay ~~revenue.~~overpayments Wein ~~cannot~~a ~~ensure~~timely ~~that all distributors will comply with applicable legal requirements relating to the advertising, labeling, licensing, or distribution of our products.~~manner;

In· ~~addition,~~extensive ~~our~~conditions ~~distributors’ and consumers’ perception~~ of ~~the~~participation ~~safety~~for ~~and~~Medicare ~~quality of our products~~ and ~~ingredients~~Medicaid as well as similar products and ingredients distributed by other companies can be significantly influenced by media attention, publicized scientific research or findings, widespread product liability claims and other publicity concerning our products or ingredients or similar products and ingredients distributed by other companies.programs

consumer protection issues and billing and collection of patient-owed accounts issues;

communications with patients and consumers, including laws intended to prevent misleading marketing practices;

privacy and security of health-related information, patient personal information and medical records;

physical plant planning, construction of new facilities and expansion of existing facilities;

activities regarding competitors;

U.S. Federal Drug Administration (FDA) laws and regulations related to drugs and medical devices;

operational, personnel and quality requirements intended to ensure that clinical testing services are accurate, reliable and timely;

health and safety of employees;

handling, transportation and disposal of medical specimens and infectious and hazardous waste;

corporate practice of medicine, fee-splitting, self-referral and kickback prohibitions, including recent state and federal laws intended to eliminate bribes and kickbacks; and

the SUPPORT for Patients and Communities Act, which became law on October 24, 2018.

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~~Adverse~~Substance ~~publicity,~~abuse ~~whether~~treatment orproviders ~~not~~are ~~accurate~~regulated orextensively ~~resulting~~at ~~from~~the ~~consumers’~~federal, ~~use~~state, orand ~~misuse~~local oflevels. ~~our~~In ~~products,~~order ~~that~~to ~~associates~~operate ~~consumption~~our ofbusiness ~~our~~and ~~products~~obtain orreimbursement ~~ingredients~~from orthird-party payors, ~~any~~we ~~similar~~must ~~products~~obtain orand ~~ingredients~~maintain ~~with~~a ~~illness~~variety orof ~~other~~licenses, ~~adverse~~permits, ~~effects~~certifications, ~~questions~~and ~~the~~accreditations. ~~benefits~~We ofalso ~~our~~must orcomply ~~similar~~with ~~products~~numerous orother ~~claims~~laws ~~that~~and ~~any~~regulations ~~such~~applicable ~~products~~to ~~are~~the ~~ineffective,~~provision ~~inappropriately~~of ~~labeled~~substance orabuse ~~have~~disorder ~~inaccurate~~services. ~~instructions~~Our asfacilities toalso ~~their~~are ~~use,~~subject ~~could lead~~ to ~~lawsuits~~periodic oron-site inspections ~~other~~by ~~legal~~the ~~challenges~~regulatory and ~~could~~accreditation ~~negatively~~agencies ~~impact~~in ~~our~~order ~~reputation,~~to ~~the~~determine ~~market demand for~~ our ~~products,~~compliance orwith ~~our~~applicable ~~general business~~requirements.

~~From~~The ~~time~~laws toand ~~time~~regulations wethat ~~may~~affect ~~receive inquiries~~substance ~~from~~abuse ~~government~~treatment ~~agencies~~providers are complex and ~~third~~change ~~parties~~frequently. ~~requesting~~We ~~information~~must ~~concerning~~regularly review our ~~products.~~organization Weand ~~intend~~operations toand ~~fully~~make ~~cooperate~~changes as ~~with~~necessary ~~these inquiries~~to ~~including,~~comply ~~when~~with ~~requested,~~changes byin the ~~submission~~law or new interpretations of ~~detailed~~laws ~~technical~~or ~~reports~~regulations. ~~addressing~~In ~~product~~recent ~~composition~~years, ~~manufacturing,~~significant public attention ~~process~~has ~~control,~~focused ~~quality~~on ~~assurance~~the healthcare industry, including attention to the conduct of industry participants and ~~contaminant~~the ~~testing~~cost of healthcare services. Federal Weand ~~understand~~state ~~that~~government ~~such~~agencies ~~materials~~have ~~may~~heightened ~~undergo~~and ~~review~~coordinated bycivil ~~regulators in~~and ~~certain~~criminal ~~markets~~enforcement ~~from~~efforts ~~time~~relating to ~~time~~the healthcare industry. We ~~also~~The ~~are~~ongoing ~~confident~~investigations inrelate ~~the~~to, ~~safety~~among ofother ~~our~~things, ~~products~~referral ~~when~~practices, ~~used~~cost asreporting, ~~directed.~~billing ~~However~~practices, credit balances, ~~there~~physician ~~can~~ownership, beand nojoint ~~assurance~~ventures ~~that~~involving ~~regulators~~hospitals and other healthcare providers. Recently, federal and state governmental officials have focused on fraud and abuse in ~~these~~the oraddiction ~~other~~treatment ~~markets~~industry. ~~will~~In ~~not~~particular, ~~take~~new ~~actions~~laws and regulations have been passed in recent years that ~~might~~are ~~delay~~intended orto ~~prevent~~prohibit the ~~introduction~~ payment of ~~new~~kickbacks, ~~products~~bribes, orand ~~require~~other ~~the~~inducements ~~reformulation~~in orexchange ~~the~~for ~~temporary~~referrals orof ~~permanent~~patients ~~withdrawal~~to oftreatment providers, ~~certain~~including ofresidential ~~our~~treatment ~~existing~~centers ~~products~~and ~~from~~outpatient programs. We expect that healthcare costs and other factors will continue ~~their~~to ~~markets~~encourage both the development of new laws and regulations and increased enforcement activity, including among substance abuse treatment providers.

~~Water~~While ~~scarcity~~we believe we are in substantial compliance with all applicable laws and ~~poor~~regulations, ~~quality~~and ~~could~~we are not aware of any material pending or threatened investigations involving allegations ~~negatively~~of ~~impact~~wrongdoing, ~~our~~there ~~production~~can ~~costs~~be no assurances of compliance. Compliance with such laws and ~~capacity~~regulations may be subject to future government review and interpretation, as well as significant regulatory action including fines, penalties, and exclusion from government health programs.

~~Water is the main ingredient in our beverages. It is also a limited resource~~Environmental, ~~facing~~Health ~~unprecedented challenges from overexploitation, increasing pollution, poor management,~~ and ~~climate~~ ~~change.~~Safety As demand for water continues to increase, as water becomes scarcer, and as the quality of available water deteriorates, we may incur increasing production costs or face capacity constraints that could adversely affect our profitability or net operating revenues in the long run.Matters

~~Increase~~We inare subject to various federal, state, and local environmental laws that: (i) regulate certain activities and operations that may have environmental or health and safety effects, such as the ~~cost~~handling, ~~disruption~~storage, transportation, treatment, and disposal of ~~supply~~ medical and pharmaceutical waste products generated at our facilities, the presence of other hazardous substances in the indoor environment and protection of the environment and natural resources in connection with the development or ~~shortage~~construction of ~~ingredients~~our facilities; (ii) impose liability for costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site or other ~~raw~~releases of hazardous materials or regulated substances; and (iii) regulate workplace safety, including the safety of workers who may be exposed to blood-borne pathogens such as HIV, the hepatitis B virus, and the hepatitis C virus. Our laboratory and some of our treatment facilities generate infectious or ~~packaging~~other ~~materials~~hazardous ~~could~~medical ~~harm~~waste due to the illness or physical condition of our ~~business~~patients and in connection with performing laboratory tests. The management of infectious medical waste is subject to regulation under various federal, state, and local environmental laws that establish management requirements for such waste. These requirements include recordkeeping, notice, and reporting obligations. Management believes that our operations are generally in compliance with environmental and health and safety regulatory requirements or that any non-compliance will not result in a material liability or cost to achieve compliance. Historically, the costs of achieving and maintaining compliance with environmental laws and regulations at our facilities, including our laboratory, have not been material.

WeA ~~and~~CLIA ~~our~~certificate ~~bottlers~~demonstrates ~~will~~that ~~use~~a ~~water, minerals,~~testing ~~phytoceutical~~laboratory ~~and~~meets ~~nutraceutical~~the ~~ingredients,~~federal ~~and~~regulations ~~packaging materials~~ for ~~bottles~~clinical ~~such~~diagnostic ~~as plastic and paper products. The prices for these ingredients~~testing, ~~other~~ensuring ~~raw~~quality ~~materials,~~ and ~~packaging~~safety ~~materials fluctuate depending on market conditions. Substantial increases~~ in the ~~prices~~laboratory ~~of our or our contract manufacturer’s ingredients, other raw materials,~~ and ~~packaging materials, to the extent~~laboratory ~~they cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs, and could reduce our profitability~~results. ~~Increases~~The inClinical ~~the~~Laboratory ~~prices~~Improvement ofAmendments ~~our finished products resulting from a higher cost~~ of ~~ingredients,~~1988 ~~other raw~~are ~~materials~~administered ~~and~~by ~~packaging materials could affect~~ the ~~affordability~~Centers offor ~~our~~Medicare ~~product~~& ~~and~~Medicaid ~~reduce~~Services ~~sales~~(CMS).

AnThe ~~increase~~United inStates ~~the~~has ~~cost,~~recently aenacted ~~sustained~~the ~~interruption~~Eliminating Kickbacks in ~~the~~Recovery ~~supply,~~Act orof a2018 ~~shortage~~(EKRA) ofto ~~some~~create ofa ~~these~~new ~~ingredients,~~federal ~~other~~crime ~~raw~~for ~~materials,~~knowingly orand ~~packaging~~willfully: ~~materials~~(1) ~~and~~soliciting ~~containers~~or ~~that~~receiving ~~may~~any remuneration bein ~~caused~~return byfor referring a ~~deterioration~~patient ofto ~~our~~a orrecovery ~~our~~home, ~~bottlers’~~clinical ~~relationships~~treatment ~~with~~facility, ~~suppliers~~or laboratory; byor ~~supplier~~(2) ~~quality~~paying ~~and~~or ~~reliability~~offering ~~issues;~~any remuneration to induce such a referral or byin ~~events~~exchange ~~such~~for asan ~~natural~~individual ~~disasters,~~using ~~power~~the ~~outages,~~services ~~labor~~of ~~strikes,~~a ~~political~~recovery ~~uncertainties~~home, orclinical ~~governmental~~treatment ~~instability~~facility, or ~~the~~laboratory. ~~like~~Certain states, ~~could~~including ~~negatively~~Florida, ~~impact~~have ~~our~~enacted ~~net~~similar ~~revenues~~laws, ~~and~~or ~~profits~~will likely enact similar laws in the future.

Changes in laws and regulations relating to beverage and other product containers and packaging could increase our costs and reduce demand for our products.

We and our contract manufacturers intend to offer our product in non-refillable, recyclable containers in the United States. Legal requirements have been enacted in various jurisdictions in the United States requiring that deposits or certain ecotaxes or fees be charged for the sale, marketing and use of certain non-refillable beverage containers. Other proposals relating to beverage container deposits, recycling, ecotax and/or product stewardship have been introduced in various jurisdictions in the United States and overseas, and we anticipate that similar legislation or regulations may be proposed in the future at local, state, and federal levels in the United States. Consumers’ increased concerns and changing attitudes about solid waste streams and environmental responsibility and the related publicity could result in the adoption of such legislation or regulations. If these types of requirements are adopted and implemented on a large scale in the geographical regions in which we operate or intend to operate, they could affect our costs or require changes in our distribution model, which could reduce our net operating revenues or profitability.

Since we rely on independent third parties for the manufacture and supply of our products, if these third parties fail to reliably supply products to us at required levels of quality, then our financial condition and operating results would be harmed.

The majority of our products are manufactured at third party contract manufacturers. We cannot assure you that our outside manufacturers will continue to reliably supply products to us at the levels of quality, or the quantities, we require, especially under the FDA’s cGMP regulations. Additionally, while we are not presently aware of any current liquidity issues with our suppliers, we cannot assure you that they will not experience financial hardship as a result of the current global financial crisis.

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~~In the event any of our third-party manufacturers were to become unable or unwilling to continue to provide us with products in required volumes and at suitable quality levels~~Licensure, we would be required to identify and obtain acceptable replacement manufacturing sources. There is no assurance that we would be able to obtain alternative manufacturing sources on a timely basis. An extended interruption in the supply of products would result in the loss of sales. In additionAccreditation, ~~any actual or perceived degradation of product quality as a result of reliance on third party manufacturers may have an adverse effect on sales or result in increased product returns~~ and buybacks. Also, while we may experience ingredient and product price pressure, we believe that we will be able to mitigate some of these cost pressures through economies of scale and improved optimization of our supply chain.Certification

~~Our~~All ~~products~~of ~~often~~our ~~are~~substance ~~positioned~~abuse intreatment facilities will be licensed under applicable state laws where licensure is required. Licensing requirements vary significantly depending upon the state ~~market~~in aswhich ~~premium~~a ~~products~~facility is located and ~~may~~the betypes ~~sold~~of atservices ~~premium~~provided. ~~prices~~The ~~compared~~types toof ~~our~~licensed ~~competitors.~~services Wethat ~~cannot~~our ~~provide~~facilities ~~any~~will ~~assurances~~provide asinclude tomedical ~~consumers’~~detox, ~~market~~inpatient, ~~acceptance~~partial ofhospitalization, intensive outpatient, outpatient treatment, ambulatory detox, and community housing. In addition, our ~~current~~employed orcase ~~future~~managers, ~~products~~therapists, nurses, medical providers, and technicians may be subject to individual state license requirements.

WeOur ~~will~~facilities ~~compete~~that ~~directly~~store ~~with~~and ~~other~~dispense ~~water-based~~controlled ~~beverage~~substances ~~and~~will ~~nutraceutical~~be ~~producers~~required ~~and~~to ~~brands~~register ~~focused~~with on the ~~emerging,~~U.S. ~~specialty,~~Drug ~~and~~Enforcement ~~alternative~~Administration ~~markets.~~(“DEA”) ~~Products~~and ~~offered~~abide by DEA regulations regarding controlled substances. Each of our ~~direct~~substance ~~competitors~~abuse ~~may~~treatment befacilities ~~sold~~will inobtain ~~various~~accreditation ~~volumes~~from the Commission on Accreditation of Rehabilitation Facilities (“CARF”) and/or ~~prices~~The Joint Commission, which are the primary accreditation bodies in the substance abuse treatment industry. ~~Our~~This ~~competitors~~type ~~may~~of ~~offer~~accreditation ~~different~~program ~~products~~is intended to improve the quality, safety, outcomes, and ~~product~~value ~~formats~~of healthcare atservices ~~suggested~~provided ~~retail~~by ~~prices~~accredited ~~that~~facilities. ~~are~~CARF ~~lower~~and ~~than~~The ~~for~~Joint ~~our~~Commission ~~products~~require an initial application and completion of on-site surveys demonstrating compliance with accreditation requirements. WeAccreditation ~~can~~is ~~provide~~granted nofor ~~assurances~~a ~~that~~specified ~~consumers~~period, ~~will~~typically ~~purchase~~ranging ~~our~~from one ~~products~~to orthree ~~that~~years, ~~they~~and ~~will~~renewals ~~not~~of ~~prefer~~accreditation torequire ~~purchase~~completion of a ~~competitive~~renewal ~~product~~application and an on-site renewal survey.

WeThe ~~may~~Clinical ~~incur~~Laboratory ~~material~~Improvement ~~product~~Amendments of ~~liability~~1988 regulates virtually all clinical laboratories by requiring that they be certified by the federal government and comply with various ~~claims~~technical, ~~which~~operational, ~~could~~personnel, ~~increase~~and ~~our~~quality ~~costs~~requirements intended to ensure that laboratory testing services are accurate, reliable, and ~~harm~~timely. Standards for testing under CLIA are based on the level of complexity of the tests performed by the laboratory. A CLIA certificate of waiver may be sought by our ~~financial~~treatment ~~condition~~facilities that only perform the types of tests waived under CLIA, such as point-of-care drug analysis, glucose monitoring, and ~~operating~~pregnancy ~~results~~testing.

~~Our~~We ~~products~~will ~~consist~~contract ofwith ~~herbs,~~third-party ~~vitamins,~~clinical laboratory ~~minerals,~~facilities ~~and other ingredients that are classified as foods or dietary supplements and are not subject~~ to ~~pre-market~~perform ~~regulatory approval~~high incomplexity ~~the United States~~testing. ~~Our~~Each ~~products~~such ~~could~~laboratory ~~contain~~will ~~contaminated~~hold ~~substances,~~a ~~and~~CLIA ~~some~~certificate of ~~our~~accreditation, ~~products~~certifying ~~contain some ingredients~~ that ~~do not have long histories of human consumption. We conduct limited clinical studies on some key products but not all products.~~it ~~Previously~~meets ~~unknown~~more ~~adverse~~stringent ~~reactions~~requirements ~~resulting~~than ~~from~~laboratories ~~human~~performing ~~consumption~~less ofcomplex ~~these ingredients could occur~~testing. AsCLIA adoes ~~marketer~~not ofpreempt ~~dietary and~~state ~~nutritional~~laws ~~supplements and other products~~ that ~~are ingested by consumers or applied to their bodies, we have been, and~~ may ~~again~~ be, ~~subjected~~more stringent tothan ~~various~~federal ~~product~~law. ~~liability~~State ~~claims,~~laws ~~including~~may ~~that~~require ~~the~~additional ~~products~~personnel ~~contain contaminants~~qualifications, ~~the~~quality ~~products include inadequate instructions as to their uses~~control, orrecord ~~the~~maintenance ~~products include inadequate warnings concerning side effects~~ and/or ~~interactions~~proficiency ~~with other substances~~testing. ItA isnumber ~~possible~~of ~~that~~states ~~widespread~~in ~~product~~which ~~liability~~we ~~claims~~intend ~~could~~to ~~increase~~operate ~~our~~have ~~costs,~~implemented ~~and~~their ~~adversely~~own ~~affect~~regulatory ~~our revenues~~ and ~~operating~~licensure ~~income~~requirements. ~~Moreover~~In addition, some ~~liability~~states ~~claims~~require ~~arising~~laboratories ~~from~~that asolicit ~~serious~~or ~~adverse~~test ~~event~~samples ~~may~~collected ~~increase~~from ~~our~~individuals ~~costs~~within ~~through~~that ~~higher insurance~~state ~~premiums and deductibles and may make it more difficult~~ to ~~secure~~hold ~~adequate~~a ~~insurance~~laboratory ~~coverage~~license even inthough the ~~future.~~laboratory Indoes ~~addition, our~~not ~~product~~have ~~liability~~physical ~~insurance~~operations ~~may~~within ~~fail~~the ~~to cover future product liability claims, thereby requiring us to pay substantial monetary damages and adversely affecting our business~~state.

We ~~may~~intend that all of our in-house and outside contracted facilities and programs will be ~~subject~~in tosubstantial ~~frequent~~compliance ~~claims~~with the then-current applicable state and local licensure, certification, and ~~litigation~~accreditation requirements. Periodically, state and local regulatory agencies, as well as accreditation entities, will conduct surveys of our facilities and may find that ~~could~~a ~~result~~facility is not in ~~unexpected~~full ~~expenses~~compliance ~~and~~with ~~ultimately~~all ~~could~~of bethe ~~resolved~~accreditation ~~against~~standards. usUpon receipt of any such finding, the facility will submit a plan of correction and remedy any cited deficiencies.

~~From~~FDA ~~time~~Laws ~~to time, we may be involved in litigation~~ and other proceedings, including matters related to product liability claims, stockholder class action and derivative claims, commercial disputes and intellectual property, as well as trade, regulatory, employment, and other claims related to our business. Any of these proceedings could result in significant settlement amounts, damages, fines, or other penalties, divert financial and management resources, and result in significant legal fees. An unfavorable outcome of any particular proceeding could exceed the limits of our insurance policies or the carriers may decline to fund such final settlements and/or judgments and could have an adverse impact on our business, financial condition, and results of operations. In addition, any proceeding could negatively impact our reputation among our guests and our brand image.Regulations

IfThe weFood ~~are~~and ~~unable~~Drug toAdministration ~~protect our information~~(“FDA”) ~~systems~~has ~~against~~regulatory ~~service~~responsibility ~~interruption~~over, ~~misappropriation~~among ofother ~~data~~areas, orinstruments, ~~breaches~~test ofkits, ~~security~~reagents, ~~our~~and ~~operations~~other ~~could~~devices beused ~~disrupted,~~by weclinical laboratories to perform diagnostic testing. We may develop esoteric tests that are offered as laboratory developed tests (“LDTs”). The ~~suffer~~FDA ~~financial~~has ~~losses~~claimed ~~and~~regulatory ~~our~~authority ~~reputation~~over ~~may~~all beLDTs ~~damaged~~but exercises enforcement discretion in not mandating FDA approval for most LDTs performed by high complexity CLIA certified laboratories. The FDA released draft guidance in 2014 that would increase regulation of LDTs but has indefinitely delayed finalizing the guidance.

~~We rely on networks and information systems and other technology (“information systems”)~~Fraud, ~~including~~Abuse ~~the Internet~~ and ~~third~~Self-~~party~~Referral hosted services, to support a variety of business processes and activities, including procurement and supply chain, manufacturing, distribution, invoicing and collection of payments, employee processes and consumer marketing. We use information systems to process financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting and legal and tax requirements. In addition, we depend on information systems for digital marketing activities and electronic communications between our company and our bottlers and other customers, suppliers, and consumers. Because information systems are critical to many of our operating activities, our business may be impacted by system shutdowns, service disruptions or security breaches. These incidents may be caused by failures during routine operations such as system upgrades or by user errors, as well as network or hardware failures, malicious or disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by common hackers, criminal groups or nation-state organizations or social-activist (hacktivist) organizations, geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. In addition, such incidents could result in unauthorized or accidental disclosure of material confidential information or regulated individual personal data. If our information systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience delays in reporting our financial results, and we may lose revenue and profits as a result of our inability to timely manufacture, distribute, invoice and collect payments for concentrate or finished products. Unauthorized or accidental access to, or destruction, loss, alteration, disclosure, falsification or unavailability of, information could result in violations of data privacy laws and regulations, damage to the reputation and credibility of our company and, therefore, could have a negative impact on net operating revenues. In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to us, our current or former employees, our bottling partners, other customers or suppliers, or consumers or other data subjects, and may become exposed to legal action and increased regulatory oversight. We could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and information systems.Laws

We intend that most of our treatment facilities will be enrolled in Medicare or Medicaid and bill and accept payments from those governmental programs. Therefore, the majority of our operations will be impacted by the anti-kickback provisions of the Social Security Act, commonly known as the Anti-Kickback Statute, or the federal prohibition on physician self-referrals, commonly referred to as the Stark Law. We expect that over the longer term, an increasing number of our patients will be members of governmental health insurance programs and therefore, these rules and restrictions will increasingly affect our operations.

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InThe ~~addition~~Anti-Kickback Statute prohibits the payment, receipt, ~~third-party~~offer, ~~providers~~or solicitation of ~~data hosting~~remuneration of any kind in exchange for items or ~~cloud~~services that are reimbursed under federal healthcare programs. The Stark Law prohibits physicians from referring Medicare and Medicaid patients to healthcare providers that furnish certain designated health services, asincluding ~~well~~laboratory asservices ~~our~~and ~~bottling~~inpatient ~~partners,~~and ~~distributors,~~outpatient ~~retailers~~hospital services, orif ~~suppliers,~~the ~~may~~physicians ~~experience~~or ~~cybersecurity~~their immediate ~~incidents~~family ~~that~~members ~~may~~have ~~involve~~ownership ~~data~~interests wein, ~~share~~or other financial arrangements with, ~~them~~the healthcare providers. ~~Although~~Many westates have ~~taken~~anti-kickback and ~~steps~~physician self-referral prohibitions similar to ~~prevent~~the ~~cybersecurity~~federal ~~incidents,~~statutes ~~there~~and ~~can be~~regulations. noSome ~~assurance~~of ~~that~~these ~~such~~state ~~steps~~laws ~~will~~are bedrafted ~~adequate~~broadly to cover all payors (i.e., Innot ~~order~~restricted to ~~address~~Medicare ~~risks~~and toother ~~our~~federal ~~information~~healthcare ~~systems~~programs), weand ~~continue~~they tooften ~~make~~lack ~~investments~~interpretative guidance. A violation of these laws could result in ~~personnel~~a prohibition on billing payors for such services, ~~technologies~~an obligation to refund amounts received, or civil or criminal penalties and ~~training~~could adversely affect the state license of ~~our~~any ~~personnel~~program or facility found to be in violation.

~~Unfavorable~~In ~~general~~addition ~~economic~~to ~~conditions~~the Anti-Kickback Statute, the United States has recently enacted an addiction treatment-specific law known as the Eliminating Kickbacks in Recovery Act (“EKRA”). The EKRA created a new federal crime for knowingly and willfully: (1) soliciting or receiving any remuneration in return for referring a patient to a recovery home, clinical treatment facility, or laboratory; or (2) paying or offering any remuneration to induce such a referral or in exchange for an individual using the ~~United~~services ~~States~~of ~~could~~a ~~negatively~~recovery ~~impact~~home, ~~our~~clinical ~~financial~~treatment ~~performance~~facility, or laboratory. Each conviction under EKRA is punishable by up to $200,000 in monetary damages, imprisonment for up to ten (10) years, or both. Unlike the Anti-Kickback Statutes, EKRA is not limited to services reimbursable under a government healthcare program. While EKRA contains certain exceptions similar to the Anti-Kickback Statute Safe Harbors, those exceptions are narrower than the Anti-Kickback Statute Safe Harbors. As such, certain practices that would not have violated the Anti-Kickback Statute may violate EKRA.

~~Unfavorable~~Federal ~~general~~prosecutors ~~economic~~have ~~conditions, such~~broad asauthority ato ~~recession~~prosecute healthcare orfraud. ~~economic~~For ~~slowdown~~example, infederal law criminalizes the ~~United~~knowing ~~States~~and ~~could~~willful ~~negatively~~execution ~~affect~~or ~~the~~attempted ~~affordability~~execution of, ~~and~~a ~~consumer~~scheme ~~demand~~or artifice ~~for,~~to ~~our~~defraud ~~product~~any inhealthcare ~~the~~benefit ~~United~~program ~~States.~~as ~~Under~~well ~~difficult~~as ~~economic~~obtaining ~~conditions,~~by ~~consumers~~false ~~may~~pretenses ~~seek~~any tomoney ~~reduce~~or ~~discretionary~~property ~~spending~~ owned by ~~forgoing~~any ~~purchases~~healthcare ofbenefit program. ~~our~~Federal ~~products~~law oralso byprohibits ~~shifting~~embezzlement ~~away~~of ~~from~~healthcare ~~our~~funds, ~~beverages~~false tostatements ~~lower-priced~~relating ~~products~~to ~~offered~~healthcare, byand ~~other~~obstruction ~~companies,~~of the ~~including~~investigation ~~non-alkaline~~of ~~water~~criminal offenses. ~~Consumers~~These ~~may~~federal ~~also~~criminal ~~cease~~offenses ~~purchasing~~are ~~bottled~~enforceable ~~water~~regardless ~~and~~of ~~consume~~whether ~~tap~~an ~~water.~~entity ~~Lower~~or ~~consumer~~individual ~~demand for~~participates ~~our product~~ in the ~~United~~Medicare ~~States~~program ~~could~~or ~~reduce~~any ~~our~~other ~~profitability~~federal healthcare program.

~~Adverse~~False ~~weather conditions could reduce the demand for our products.~~Claims

~~The~~We ~~sales~~are subject to state and federal laws that govern the submission of ~~our~~claims ~~products~~for ~~are~~reimbursement. ~~influenced~~These laws generally prohibit an individual or entity from knowingly and willfully topresenting ~~some~~a ~~extent~~claim by(or ~~weather~~causing ~~conditions~~a inclaim ~~the~~to ~~markets~~be inpresented) ~~which~~for wepayment ~~operate.~~from ~~Unusually~~Medicare, ~~cold~~Medicaid, or ~~rainy~~other ~~weather~~third-party ~~during~~payors ~~the~~that ~~summer~~is ~~months~~false ~~may~~or ~~have~~fraudulent. aThe ~~temporary~~standard ~~effect~~for on“knowing ~~the~~and ~~demand~~willful” ~~for~~often ~~our~~includes ~~product~~conduct ~~and~~that ~~contribute~~amounts to ~~lower~~a ~~sales,~~reckless ~~which~~disregard ~~could~~for ~~have~~whether accurate aninformation ~~adverse~~is ~~effect~~presented ~~on our~~by ~~results~~claims ofprocessors. ~~operations~~Penalties ~~for~~under ~~such~~these ~~periods~~statutes include substantial civil and criminal fines, exclusion from the Medicare program, and imprisonment.

~~Assessing~~One of the ~~Evolving~~most ~~Impact~~prominent of ~~COVID-19~~these laws is the federal False Claims Act (“FCA”), which may be enforced by the federal government directly or by a qui tam plaintiff (or whistleblower) on the government’s behalf. When a private plaintiff brings a qui tam action under the FCA, the defendant often will not be made aware of the lawsuit until the government commences its own investigation or determines whether it will intervene. When a defendant is determined by a court of law to be liable under the FCA, the defendant may be required to pay three times the amount of the alleged false claim, plus mandatory civil penalties of between $11,181 and $22,363 for each separate false claim. These and certain other civil monetary penalties will increase annually based on updates to the consumer price index.

~~There~~Many ~~exists~~states ~~little~~have ~~doubt~~passed ~~that~~false ~~COVID-19~~claims acts similar ~~has~~to ~~had~~the aFCA. ~~far-reaching~~Under ~~impact~~these onlaws, the ~~economy~~government atmay ~~every~~impose ~~single~~a ~~level.~~penalty ~~The~~and ~~business~~recover ofdamages, ~~UPD~~often istreble ~~not~~damages, ~~insulated~~for knowingly submitting or participating in ~~any~~the ~~way~~submission ~~whether~~of ~~it be~~claims ~~opportunities~~for payment that ~~have~~are ~~been~~false ~~delayed~~or fraudulent or ~~even~~which ~~scuttled~~contain ~~entirely~~false or misleading information. These ~~Additionally,~~laws ~~with~~may ~~regard~~be limited to ~~Record~~specific ~~Street~~programs ~~Brewing~~(such ~~and~~as ~~the~~state ~~opportunities which~~workers’ ~~exist~~compensation ~~there,~~programs) ~~shelter~~or inmay ~~place~~apply ~~acts~~to ~~and~~all ~~the~~payors. ~~overall~~In ~~impact~~many cases, alleged violations of ~~the~~these ~~news~~laws ~~media~~may onbe ~~the~~brought ~~psyche~~by ofa ~~the~~whistleblower ~~general~~who ~~public~~may ~~have~~be ~~created not~~an ~~only~~employee, ~~delays~~a inreferring ~~the~~physician, ~~physical~~a ~~opening~~competitor, a ofpatient, ~~the~~or ~~business~~other ~~but~~individual ~~also~~or ~~headwinds~~entity, ~~regarding~~and ~~the~~who ~~number~~may be eligible for a portion of ~~people~~any ~~whom~~recovery. ~~are~~Further, ~~allowed~~like tothe ~~enter~~federal law, state ~~and~~false ~~the~~claims ~~fear~~act ~~inherent~~laws ingenerally ~~frequenting~~protect ~~public~~employed ~~venues~~whistleblowers from retribution by their employers.

WeAlthough ~~rely~~we onbelieve ~~key~~that ~~executive~~we ~~officers,~~have ~~their~~procedures in ~~knowledge~~place to ensure the accurate completion of ~~our~~claims ~~business~~forms ~~would~~and berequests ~~difficult~~for payment, the laws, regulations, and standards defining proper billing, coding, and claim submission are complex and have not been subjected to ~~replace~~extensive judicial or agency interpretation. Billing errors can occur despite our best efforts to prevent or correct them, and we cannot assure that the ~~loss~~government or a payor will regard such errors as inadvertent and not in violation of ~~their~~the ~~services~~applicable ~~could~~false ~~adversely~~claims ~~affect~~act ~~our~~laws ~~business~~or related statutes.

We are highly dependent on the efforts of our management personnel, and place substantial reliance upon the efforts and abilities of our executive officer, Mark W. Conte. The loss of management and industry expertise of any of our key executive officers could result in delays in product development, loss of any future customers and sales and diversion of management resources, which could adversely affect our operating results. We do not have an employment agreement with Mr. Conte or any other employee. We do not have “key person” life insurance policies for any of our officers.

Our executive officers are not subject to supervision or review by an independent board.

Our board of directors consists of Mark Conte, Andrew Smith, and Kevin Pikero. The activities of our executive officers are not subject to the review of an independent board of directors.

Risks Related to Regulations Applicable to our Industry

Significant additional labeling or warning requirements or limitations on the availability of our product may inhibit sales of affected products.

Various jurisdictions may seek to adopt significant additional product labeling or warning requirements or limitations on the availability of our product relating to the content or perceived adverse health consequences of our product. If these types of requirements become applicable to our product under current or future environmental or health laws or regulations, they may inhibit sales of our product.

Table of Contents

WePrivacy ~~are affected by extensive laws, governmental regulations, administrative determinations, court decisions~~ and ~~similar~~Security constraints both domestically and abroad, and our failure or our distributors’ failure to comply with these restraints could lead to the imposition of significant penalties or claims, which could harm our financial condition and operating results.Requirements

InThere ~~both~~are ~~domestic~~numerous federal and ~~foreign~~state ~~markets,~~regulations that address the ~~formulation,~~ ~~manufacturing,~~privacy ~~packaging,~~and ~~labeling,~~security ~~distribution,~~of ~~importation,~~patient ~~exportation,~~health ~~licensing,~~information. ~~sale~~In particular, ~~and~~federal ~~storage~~regulations ofissued ~~our~~under ~~products are~~the ~~affected~~Drug byAbuse ~~extensive laws~~Prevention, Treatment ~~governmental~~and ~~regulations,~~Rehabilitation ~~administrative~~Act ~~determinations,~~of ~~court~~1979 ~~decisions~~(known ~~and~~as ~~similar~~the ~~constraints. Such~~“Part ~~laws,~~2 ~~regulations~~Regulations”) ~~and~~restrict ~~other~~the ~~constraints~~disclosure ~~may~~of, ~~exist~~and atregulate the security ~~federal~~of, ~~state,~~patient oridentifiable ~~local~~information ~~levels~~related into ~~the~~substance ~~United~~abuse ~~States~~ and atapply ~~all~~to ~~levels~~ any of ~~government~~our infacilities ~~foreign~~that ~~jurisdictions.~~receive ~~There~~federal ~~can~~assistance, which beis nointerpreted ~~assurance~~broadly ~~that~~to weinclude orfacilities ~~our~~licensed, ~~distributors~~certified ~~are~~or inregistered ~~compliance~~by ~~with~~a ~~all~~federal ~~of these regulations~~agency. ~~Our~~Further, ~~failure~~the orHealth ~~our~~Insurance Portability ~~distributors’~~and ~~failure~~Accountability toAct ~~comply~~of ~~with~~1996 ~~these~~(“HIPAA”), ~~regulations~~extensively orregulates ~~new~~the ~~regulations~~use ~~could~~and ~~lead~~disclosure ~~to the imposition~~ of ~~significant~~individually ~~penalties~~identifiable health orinformation ~~claims~~(known ~~and~~as ~~could~~“protected ~~negatively~~health ~~impact~~information”) ~~our~~and ~~business.~~requires Incovered ~~addition~~entities, ~~the~~which ~~adoption~~include ofmost ~~new~~health ~~regulations~~providers, orto ~~changes~~implement inand ~~the~~maintain ~~interpretations~~administrative, ofphysical ~~existing~~and ~~regulations~~technical ~~may~~safeguards ~~result~~to inprotect ~~significant~~the ~~compliance~~security ~~costs~~of orsuch ~~discontinuation~~information. ofAdditional ~~product~~security ~~sales~~requirements ~~and~~apply ~~may~~to ~~negatively~~electronic ~~impact~~protected ~~the~~health ~~marketing~~information. ofThese ~~our~~regulations ~~products,~~also ~~resulting~~provide inpatients ~~significant~~with ~~loss~~substantive ofrights ~~sales~~with ~~revenues~~respect to their health information.

The ~~FTC~~HIPAA ~~revised~~privacy ~~its~~and ~~Guides~~security ~~Concerning~~regulations ~~the~~and ~~Use~~the ofPart ~~Endorsements~~2 ~~and~~Regulations ~~Testimonials~~also inrequire ~~Advertising,~~our orsubstance ~~Guides,~~abuse ~~which~~treatment ~~became~~programs ~~effective~~and onfacilities ~~December~~to 1,impose ~~2009.~~compliance ~~Although~~obligations ~~the~~by ~~Guides~~written ~~are~~agreement ~~not binding, they explain how the FTC interprets Section 5 of the FTC Act’s prohibition~~ on ~~unfair~~certain orcontractors ~~deceptive~~to ~~acts~~whom ~~or practices.~~our ~~Consequently,~~programs ~~the~~disclose ~~FTC~~patient ~~could~~information ~~bring~~known aas ~~Section~~“business ~~5 enforcement action based on practices that are inconsistent with the Guides~~associates.” Covered ~~Under~~entities ~~the~~may ~~revised~~be ~~Guides,~~subject ~~advertisements~~to ~~that~~penalties ~~feature~~as a ~~consumer~~result ~~and~~of ~~convey his or her atypical experience with~~ a ~~product~~business orassociate ~~service are~~violating ~~required~~HIPAA toprivacy ~~clearly~~and ~~disclose~~security ~~the~~regulations ~~results~~if ~~that consumers can generally expect. In contrast to~~ the ~~1980 version of the Guides,~~business ~~which~~associate ~~allowed~~is ~~advertisers~~found to ~~describe~~be ~~atypical~~an ~~results~~agent inof ~~a testimonial as long as they included a disclaimer such as “results not typical”,~~ the ~~revised~~covered ~~Guides no longer contain such a safe harbor~~entity. ~~The~~Business ~~revised~~associates ~~Guides~~ also ~~add~~are ~~new~~directly ~~examples~~subject to ~~illustrate the~~liability ~~long-standing~~under ~~principle~~the ~~that~~HIPAA ~~“material connections” between advertisers~~ privacy and ~~endorsers~~security ~~(such~~regulations. asIn ~~payments~~instances orwhere ~~free products),~~our ~~connections~~programs ~~that~~act ~~consumers~~as ~~might~~a ~~not~~business ~~expect,~~associate ~~must be disclosed. We intend for our marketing materials~~ to bea ~~compliant with~~covered ~~the revised Guides. However~~entity, itthere is ~~possible that our use, and that of our distributors, of testimonials in~~ the ~~advertising~~potential for ~~and~~additional ~~promotion~~liability ofbeyond ~~our products could unintentionally fail to comply with~~ the ~~revised~~program’s ~~Guides~~covered ~~and~~entity ~~subject us to regulatory scrutiny that could negatively impact our sales~~status.

WeCovered ~~are~~entities ~~subject~~must toreport ~~FDA~~breaches ~~rules~~of ~~for current~~unsecured ~~good~~protected ~~manufacturing~~health ~~practices~~information ~~(“cGMPs”)~~to ~~for~~affected ~~the~~individuals ~~manufacture,~~without ~~packing,~~unreasonable ~~labeling,~~delay ~~and~~but ~~holding~~not ofto ~~dietary~~exceed ~~supplements~~60 days ~~distributed in~~of ~~the~~discovery ~~United~~of ~~States.~~the Webreach by ~~principally~~a ~~rely~~covered ~~upon~~entity ~~our~~or ~~vendors~~its ~~and~~agents. ~~contract~~Notification ~~manufacturers~~must ~~for~~also ~~compliance~~be ~~with~~made to the ~~cGMPs~~U.S. ~~for~~Department ~~dietary supplements manufactured by or on behalf~~ of usHealth ~~for~~and ~~distribution~~Human inServices ~~the United States. However~~(“HHS”), and, ifin wecertain ~~should~~situations beinvolving ~~found~~large ~~not~~breaches, to ~~be in compliance with cGMPs for~~ the ~~products~~media. itHHS ~~self-manufactures~~is itrequired ~~could~~to ~~negatively~~publish ~~impact~~on ~~our~~its ~~reputation~~website ~~and~~a ~~ability~~list toof ~~sell~~all ~~our~~covered entities ~~products~~that ~~even~~report ~~after~~a ~~any~~breach ~~such~~involving ~~situation~~more ~~had~~than ~~been~~500 ~~rectified~~individuals. ~~Further,~~ ifAll ~~contract~~non-permitted ~~manufacturers~~uses ~~whose~~or ~~products~~disclosures ~~bear~~of ~~our~~unsecured ~~labels~~protected health information ~~fail~~are presumed to ~~comply~~be ~~with~~breaches unless the ~~cGMPs,~~covered ~~this~~entity ~~could~~or ~~negatively~~business ~~impact~~associate ~~our~~establishes ~~reputation~~that ~~and~~there ~~ability~~is toa ~~sell~~low ~~its~~probability ~~products~~the ~~even~~information has ~~though~~been wecompromised. ~~are not~~Various ~~directly~~state ~~liable~~laws ~~under~~and ~~the~~regulations ~~cGMPs~~may ~~for~~also ~~such~~require ~~compliance.~~us Into ~~complying~~notify ~~with~~affected ~~the~~individuals ~~dietary~~in ~~supplement~~the ~~cGMPs,~~event weof ~~have~~a ~~experienced~~data ~~increases~~breach ininvolving ~~production~~individually ~~costs~~identifiable asinformation awithout ~~result~~regard ofto ~~the~~whether ~~necessary~~there ~~increase~~is ina ~~testing~~low probability of ~~raw~~the ~~ingredients,~~information ~~work~~being ~~in process and finished products~~compromised.

~~From~~With ~~time~~HHS’s 2020 updates to ~~time~~penalty amounts, violations weof the HIPAA privacy and security regulations may beresult ~~subject~~in civil penalties of up to $59,522 per violation for a maximum civil ~~inquiries~~penalty ~~from~~of ~~and~~$1,785,651 ~~investigations~~in bya ~~various~~calendar ~~governmental~~year ~~and~~for ~~other~~violations ~~regulatory~~of ~~authorities~~the same requirement. ToThese penalties will increase annually based on updates to the ~~extent~~consumer ~~any~~price index. HIPAA also provides for criminal penalties of ~~these~~up ~~inquiries~~to $250,000 and ten years in prison, with the severest penalties ~~are~~for obtaining or ~~become~~disclosing ~~material~~protected ~~they~~health ~~will~~information bewith ~~disclosed~~the asintent to sell, transfer, or use such information for commercial advantage, personal gain, or malicious harm. In addition, state attorneys general may bring civil actions seeking either injunction or damages in response to violations of the HIPAA privacy and security regulations that threaten the privacy of state residents. HHS is required byto impose ~~applicable~~penalties ~~securities~~for ~~laws~~violations resulting from willful neglect and to perform compliance audits.

IfOur weprograms ~~fail~~remain subject to ~~comply~~any ~~with~~privacy-related federal ~~personal~~or ~~data protection~~state laws, wethat are more restrictive than the HIPAA privacy and security regulations. These laws vary by state and could beimpose additional ~~subject~~requirements toand ~~adverse~~penalties. ~~publicity~~For example, ~~government~~some ~~enforcement~~states ~~actions~~impose restrictions on the use and/ disclosure of health information pertaining to mental health or ~~private~~substance ~~litigation,~~abuse ~~which~~treatment. ~~could~~The Federal Trade Commission also uses its consumer protection authority to initiate enforcement ~~negatively~~actions ~~affect~~in ~~our~~response ~~business~~to ~~and~~data ~~operating~~breaches ~~results~~or other privacy or security lapses.

InWe ~~the~~intend ~~ordinary course of our business, we receive, process, transmit and store information relating~~ to ~~identifiable~~enforce ~~individuals (“personal data”), primarily employees and former employees. As~~ a ~~result,~~health weinformation ~~are subject to various U.S. federal and state and foreign laws and regulations~~privacy ~~relating to personal data. These laws have been subject to frequent changes,~~ and ~~new~~security ~~legislation~~compliance inplan ~~this area may be enacted in other jurisdictions at any time. There is no assurance~~ that ~~our~~we ~~security~~believe ~~controls~~complies ~~over~~with ~~personal data,~~ the ~~training~~HIPAA ~~of employees and vendors on data~~ privacy and ~~data~~ security, ~~and~~regulations ~~the policies, procedures~~ and ~~practices~~other ~~we implemented or may implement in the future will prevent the improper disclosure of personal data. Improper disclosure of personal data in violation of~~ applicable ~~personal~~requirements. ~~data~~We ~~protection~~may ~~laws~~be ~~could~~required ~~harm~~to ~~our~~make ~~reputation,~~operational ~~cause~~changes ~~loss~~to ofcomply ~~consumer~~with ~~confidence,~~revisions ~~subject~~made us to ~~government~~the ~~enforcement~~Part ~~actions (including~~2 ~~fines),~~Regulations orthat ~~result~~generally inbecame ~~private litigation against us, which could result in loss of revenue, increased costs, liability~~effective ~~for~~on ~~monetary damages~~August 14, ~~fines and/or criminal prosecution, all of which could negatively affect our business and operating results~~2020.

~~Changes~~Mental ~~in,~~Health orLegislation ~~failure to comply with, the laws~~ and ~~regulations~~Reform ~~applicable to our products or our business operations could increase our costs or reduce our net operating revenues.~~Efforts

The ~~advertising,~~regulatory ~~distribution,~~framework ~~labeling, production, safety, sale, and transportation~~ in ~~the~~which ~~United~~we ~~States~~operate ofis constantly ~~our~~changing. ~~product~~For ~~will~~example, ~~be subject to:~~ the ~~Federal~~Mental ~~Food,~~Health ~~Drug,~~Parity and ~~Cosmetic~~ ~~Act;~~Addiction ~~the~~Equity ~~Federal Trade Commission~~ Act; ~~the~~of ~~Lanham~~2008 ~~Act;~~(“MHPAEA”), ~~state~~is ~~consumer~~a ~~protection laws; competition laws;~~ federal, ~~state,~~parity ~~and~~law ~~local~~that ~~workplace~~requires ~~health~~large ~~and~~group ~~safety~~health ~~laws,~~insurance ~~such~~plans asthat ~~the~~offer ~~Occupational~~mental ~~Safety~~health and ~~Health~~addiction ~~Act;~~coverage ~~various~~to ~~federal,~~provide ~~state~~that ~~and~~coverage ~~local~~on ~~environmental~~par with ~~protection~~financial ~~laws;~~requirements and ~~various~~treatment ~~other~~limitations ~~federal,~~of ~~state,~~coverage ~~and~~offered ~~local~~for ~~statutes~~other ~~and regulations~~illnesses. ~~Legal~~The ~~requirements~~scope ~~also~~of ~~apply~~coverage inoffered ~~many~~by ~~jurisdictions~~health plans inmust ~~the~~comply ~~United~~with ~~States~~federal ~~requiring~~and ~~that~~state ~~deposits~~laws orand ~~certain~~must ~~ecotaxes or fees~~ be ~~charged~~consistent ~~for~~with ~~the~~generally ~~sale,~~recognized ~~marketing,~~independent ~~and~~standards ~~use~~ of ~~certain non-refillable~~current ~~product~~medical ~~containers~~practice. The ~~precise~~MHPAEA ~~requirements imposed by these measures vary. Other types of statutes and regulations relating to beverage container deposits, recycling, ecotaxes and/or product stewardship~~ also ~~apply~~contains ina ~~various~~cost ~~jurisdictions~~exemption ~~in the United States. We anticipate~~ that ~~additional,~~operates ~~similar~~to ~~legal~~temporarily ~~requirements~~exempt ~~may~~a begroup ~~proposed~~health orplan ~~enacted~~from in the ~~future~~MHPAEA’s ~~at the local,~~requirements ~~state,~~if ~~and~~compliance ~~federal~~with ~~levels in~~ the ~~United~~MHPAEA ~~States.~~becomes ~~Changes~~too ~~to such laws and regulations could increase our costs or reduce our net operating revenues~~costly.

Table of Contents

InThe ~~addition,~~21st Century ~~failure~~Cures toAct ~~comply~~(“Cures Act”), ~~with~~enacted ~~environmental~~in 2016, ~~health~~ orrequires ~~safety~~development of an action plan for enhanced enforcement of mental health parity requirements and additional ~~other~~compliance ~~applicable~~guidance for health plans regarding coverage under parity laws. orAmong ~~regulations~~other ~~could~~initiatives ~~result~~aimed inat ~~the~~improving ~~assessment~~care for ofpeople ~~damages~~with mental health and substance use disorders, the ~~imposition of~~Cures ~~penalties,~~Act ~~suspension~~includes ofprovisions ~~production,~~intended ~~changes~~to increase the healthcare workforce dedicated to ~~equipment~~such ortreatment ~~processes,~~and orexpand aprograms ~~cessation~~that ofdivert ~~operations~~people atwith ~~our~~mental orhealth ~~our~~and ~~bottlers’~~substance use disorders toward alternatives ~~facilities~~to incarceration. However, asthe ~~well~~impact asof ~~damage~~the toCures ~~our~~Act ~~image~~largely ~~and~~depends ~~reputation,~~on ~~all~~its ofimplementation ~~which~~by ~~could~~agencies ~~harm~~such ~~our~~as ~~profitability~~HHS and on future appropriations by Congress.

IfOver wethe ~~produce~~last decade, ~~market~~the U.S. Congress and~~/or~~ ~~sell~~certain state ~~beverages~~legislatures have passed a large number of laws intended to result in extensive change to the healthcare industry. The Patient Protection ~~infused~~and ~~with~~Affordable ~~hemp~~Care Act, as ~~defined~~amended ~~under~~by the ~~Agriculture~~Health ~~Improvement~~Care and Education Reconciliation Act of ~~2018~~2010, wecollectively ~~will~~known beas ~~subject~~the toAffordable Care aAct, ~~myriad~~is the most prominent of ~~different~~these ~~laws~~legislative reform efforts. It resulted in reforms to the health insurance market and expansion ~~regulations~~of ~~governing~~public program coverage, among other changes. As currently structured, the ~~use~~law ofrequires ~~hemp~~all innon-grandfathered ~~food~~small group and ~~beverages~~individual market ~~and~~health ifplans weto ~~are~~cover ~~unable~~ten toessential ~~comply~~health ~~with~~benefit ~~such~~categories, ~~laws~~which incurrently ainclude ~~cost-effective~~substance ~~manner, our~~abuse ~~business~~addiction ~~could~~and bemental ~~adversely~~health disorder ~~affected~~services.

The ~~production~~Affordable ofCare aAct ~~beverage~~poses ~~infused~~both ~~with~~opportunities ~~hemp,~~and asrisks ~~“hemp”~~for isus ~~defined~~but, inoverall, the ~~Agriculture~~expansion ~~Improvement Act~~ of ~~2018~~health ~~(also~~insurance ~~known~~coverage asunder the ~~2018~~law ~~Farm~~has ~~Bill,~~been ~~Public~~beneficial ~~Law 115-334),~~for isthe ~~contingent~~substance onabuse Utreatment industry.S. ~~Food~~However, the overall and ~~Drug~~continued ~~Administration,~~impact orof the ~~FDA,~~Affordable ~~and~~Care ~~state~~Act ~~laws,~~is ~~regulations,~~difficult ~~and~~to ~~guidance.~~determine, ~~While~~as the presidential administration ~~Agriculture~~and ~~Improvement~~certain ~~Act~~members of ~~2018~~Congress ~~removed~~have ~~hemp~~stated ~~from~~their ~~Schedule~~intent Ito ofrepeal ~~the~~or ~~Controlled~~make ~~Substances~~significant ~~Act,~~changes to the ~~law~~Affordable ~~did~~Care ~~not~~Act, ~~change~~its ~~the FDA’s~~implementation ~~authorities~~and ~~with~~its ~~respect to food or drugs~~interpretation. AsFor ofexample, ~~June~~in ~~28,~~October ~~2019~~2017, the ~~FDA~~president ~~has~~signed ~~not~~an ~~made~~executive aorder ~~determination~~directing ~~that~~agencies ~~the~~to ~~use~~relax oflimits ~~hemp~~on ~~in food~~certain ishealth ~~safe.~~plans, ~~The~~potentially ~~FDA~~allowing ~~has~~for ~~evaluated~~fewer ~~Generally~~plans ~~Recognized~~that asadhere ~~Safe~~to orspecific ~~GRAS~~Affordable ~~notices~~Care ~~for~~Act ~~three~~coverage ~~hemp~~mandates. ~~seed-derived~~In ~~food~~2018, ~~ingredients~~a ~~and~~federal ~~determined~~district ~~that~~court ~~the~~in ~~agency~~Texas ~~has~~ruled ~~no questions~~ that ~~those~~the ~~ingredients~~Affordable ~~are~~Care ~~GRAS~~Act, ~~under~~in ~~their~~its ~~intended~~entirety, ~~conditions~~is ~~of use~~invalid. WeThat ~~intend~~decision tohas ~~comply~~been ~~in full~~stayed ~~with~~pending ~~all federal~~appeal, ~~state,~~ and ~~local~~will likely ~~laws,~~remain ~~rules~~unresolved ~~and~~until ~~regulations~~finally asdecided weby ~~develop~~the ~~our~~United ~~hemp~~States ~~alkaline~~Supreme ~~water~~Court. ~~and~~Further, ~~other~~effective ~~product~~January ~~lines.~~1, 2019, Congress eliminated Wethe ~~will~~financial ~~not~~penalty ~~pursue~~associated with the ~~production~~individual ormandate ~~sale~~that ofwas ~~hemp-infused~~established ~~products~~by ~~until~~the ~~legally~~Affordable ~~permitted~~Care Act.

~~Laws~~Addiction ~~and~~Treatment regulations governing the use of hemp in food and beverages in the United States are broad in scope; subject to evolving interpretations; and subject to enforcement by a myriad of regulatory agencies and law enforcement entities. Under the Agriculture Improvement Act of 2018, a state or Indian tribe that desires to have primary regulatory authority over the production of hemp in the state or territory of the Indian tribe must submit a plan to monitor and regulate hemp production to the Secretary of the United States Department of Agriculture or USDA. The Secretary must then approve the state or tribal plan after determining if the plan complies with the requirements set forth in the Agriculture Improvement Act of 2018. The Secretary may also audit the state or Indian tribe’s compliance with the federally approved plan. If the Secretary does not approve the state or Indian tribe’s plan, then the production of hemp in that state or territory of that Indian tribe will be subject to a plan established by USDA. USDA has not yet established such a plan. We anticipate that many states will seek to have primary regulatory authority over the production of hemp. States that seek such authority may create new laws and regulations that permit the use of hemp in food and beverages.Legislation

~~Federal~~In ~~and~~October ~~state laws and regulations on hemp may address production~~2018, ~~monitoring,~~Congress ~~manufacturing,~~enacted ~~distribution, and laboratory testing to ensure that that~~ the ~~hemp has~~Substance ~~a delta~~Use-9Disorder ~~tetrahydrocannabinol~~Prevention ~~concentration~~that ofPromotes ~~not~~Opioid ~~more~~Recovery ~~than~~and ~~0.3~~Treatment ~~percent~~for onPatients ~~a dry weight basis. Federal laws~~ and ~~regulations~~Communities ~~may also~~Act ~~address~~ (the ~~transportation~~“SUPPORT ~~or shipment of hemp or hemp products, as the Agriculture Improvement~~ Act ~~of 2018 prohibits states~~”). ~~and~~The ~~Indian~~SUPPORT ~~tribes~~Act ~~from~~contains ~~prohibiting~~a ~~the~~number ~~transportation or shipment~~ of ~~hemp~~provisions oraimed ~~hemp~~at ~~products~~identifying ~~produced~~at-risk ~~in accordance with that law through the state or territory of the Indian tribe~~individuals, asincreasing ~~applicable.~~access ~~Because~~to weopioid ~~rely~~abuse ~~on a nationwide broker-distributor-retailer~~treatment, ~~network~~reducing ~~whereby~~overprescribing, ~~brokers~~funding ~~represent~~treatment ~~our~~related ~~products~~research, ~~to distributors~~ and ~~retailers~~promoting indata ~~turn~~sharing ~~sell~~with ~~our~~the ~~product~~primary togoal ~~consumers~~of inreducing the ~~fifty states~~use and abuse ~~the District~~ of ~~Columbia,~~opioids. weMost ~~may~~of bethe ~~subject~~funding tomade ~~many~~available ~~different~~for ~~state-based~~treatment ~~regulatory~~through ~~regimens~~the ~~for~~SUPPORT ~~hemp,~~Act ~~all~~will ofbe ~~which could~~limited ~~require us~~ to ~~incur~~patients ~~substantial~~covered ~~costs~~by ~~associated with compliance requirements. In addition, violations of these laws, or~~federal ~~allegations~~healthcare ofprograms such ~~violations, could disrupt our business and result in a material adverse effect on our operations,~~ as ~~well as adverse publicity and potential harm to our reputation~~Medicaid. The WeSUPPORT ~~and~~Act ~~our~~also ~~suppliers~~contains ~~and~~an ~~vendors~~addiction ~~must~~treatment-specific ~~take~~law ~~significant~~known ~~enterprise risk management steps to ensure that there is no commingling of hemp and marihuana,~~ as ~~“marihuana” is defined in~~ the ~~federal~~Eliminating ~~Controlled~~Kickbacks ~~Substances~~in ~~Act.~~Recovery ~~Marihuana remains subject to the Controlled Substances~~ Act ~~and related regulations~~.

~~Furthermore,~~Health ifPlanning ~~we decide to produce, market~~ and ~~sell~~Certificates ~~beverages infused with hemp outside~~ of ~~the United States, we will be subject to applicable laws and regulations in those non-U.S. jurisdictions, which would require us to expend significant costs associated with compliance.~~Need

InThe ~~addition~~construction of new healthcare facilities, the itexpansion, istransfer, ~~possible~~or ~~that~~change ~~additional regulations~~of ~~may~~ownership beof ~~enacted~~existing infacilities and the ~~future~~addition inof ~~the~~new ~~United~~beds, ~~States~~services, ~~and~~or ~~globally~~equipment may be subject to state laws that ~~will~~require beprior ~~directly~~approval ~~applicable~~by tostate ~~our~~regulatory ~~proposed~~agencies ~~product~~under certificate of need (“CON”) or determination ~~offerings~~of ~~infused~~need ~~with~~(“DON”) ~~hemp~~laws. WeThese ~~cannot~~laws ~~predict~~generally require that a state agency determine the ~~nature~~public need for construction or acquisition of ~~any~~facilities ~~future~~or ~~laws,~~the ~~regulations,~~addition ~~interpretations,~~of new services. Review of CON or DON applications, ~~nor~~and other healthcare planning initiatives may be lengthy ~~can~~and wemay ~~determine~~require ~~what~~public ~~effect~~hearings. ~~additional~~Violations ~~governmental~~of ~~regulations~~these orstate ~~administrative~~laws ~~policies~~may ~~and~~result ~~procedures,~~in ~~when~~the ~~and~~imposition ifof ~~promulgated, could~~civil ~~have~~sanctions onor ~~our~~revocation ~~business~~of a facility’s license.

Other State Healthcare Laws

Most states have a variety of laws that may potentially impact our operations and business practices. For instance, many states in which our programs may operate prohibit corporations (and other legal entities) from practicing medicine by employing physicians and certain non-physician practitioners. These prohibitions on the corporate practice of medicine impact how our programs structure their relationships with physicians and other affected non-physician practitioners. These arrangements, however, have typically not been vetted by either a court or the applicable regulatory body.

Similarly, many states prohibit physicians from sharing a portion of their professional fees with any other person or entity. These so-called fee-splitting prohibitions range from prohibiting arrangements resembling a kickback to broadly prohibiting percentage-based compensation and other variable compensation arrangements with physicians.

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~~FDA’s~~If ~~current~~our ~~position~~arrangements iswith ~~that the~~physicians ~~sale~~are offound to ~~food~~violate ~~and~~a ~~beverages~~corporate ~~that~~practice ~~contain~~of ~~hemp-derived~~medicine ~~cannabidiol~~prohibition ~~(“CBD”)~~or isa ~~prohibited~~state ~~under~~fee-splitting ~~the~~prohibition, ~~Federal~~our ~~Food, Drug,~~contractual ~~and~~arrangements ~~Cosmetic~~with ~~Act;~~physicians in ~~therefore,~~such ifstates wecould ~~decide~~be toadversely ~~produce~~affected, ~~market~~which, ~~and/or~~in ~~sell~~turn, ~~beverages~~may ~~infused~~adversely ~~with~~affect ~~hemp-derived~~both ~~cannabidiol, we~~our ~~may~~operations beand ~~subject~~profitability. toFurther, ~~federal~~we ~~enforcement~~could face ~~actions~~sanctions ~~which~~for ~~could~~aiding ~~adversely~~and ~~affect~~abetting ~~our~~the ~~business~~violation ~~and~~of ~~harm~~the ~~our~~state’s ~~reputation~~medical ~~and~~practice ~~brand~~act.

~~The~~State ~~FDA~~governments ~~has~~have ~~jurisdiction~~in ~~over~~recent ~~drugs~~years ~~and~~increased ~~foods~~regulation ~~that~~of ~~contain~~addiction ~~CBD,~~treatment ~~including CBD derived from hemp~~providers. ~~Under~~A ~~the~~number ~~Federal~~of ~~Food~~states, ~~Drug~~such ~~and~~as ~~Cosmetic Act or the FDCA~~Florida, ithave ispassed alaws ~~prohibited act~~prohibiting topatient ~~introduce~~brokering, ~~or deliver for introduction into interstate commerce any food (~~which broadly ~~the~~refers ~~FDCA defines~~ to ~~include beverages) that is adulterated. The FDCA therefore prohibits~~ the ~~introduction~~practice ~~or delivery for introduction~~ of apaying ~~food~~or ~~that~~receiving ~~contains~~kickbacks ~~CBD, because the FDCA deems a food to be adulterated if it bears~~ or ~~contains~~other ~~any~~benefits ~~food~~in ~~additive~~exchange ~~that~~for ispatient ~~unsafe, and CBD is presently an unsafe food additive under the FDCA and FDA regulations~~referrals. ~~The~~A ~~FDCA~~number ~~also~~of ~~states that it is a prohibited act to introduce or deliver for~~these ~~introduction~~statutes ~~into~~mirror ~~interstate~~federal ~~commerce~~healthcare ~~any food to which an FDA~~Anti-~~approved~~Kickback ~~drug~~Laws ~~has~~and, ~~been added unless certain exceptions are met. The FDA has approved a drug~~ in ~~which~~some ~~CBD is an active ingredient~~instances, ~~and~~ the ~~agency~~restrictions ~~has stated that based on available evidence, none of the exceptions~~ apply toregardless ~~CBD. One~~ of ~~the exceptions addresses~~ whether the ~~drug~~payor ~~was marketed in food before the FDA approved the~~source ~~drug~~is ~~and~~a ~~before~~governmental ~~the~~or ~~institution~~commercial ofentity. ~~any~~Further, ~~substantial~~some ~~clinical~~state ~~investigations~~governments ~~involving~~have ~~the~~passed ~~drug.~~statutes ~~The~~aimed ~~FDA~~at ~~has~~prohibiting ~~stated~~deceptive ~~that~~online ~~interested~~addiction ~~parties~~treatment ~~may~~marketing ~~present~~practices, ~~the~~such ~~agency~~as ~~with evidence that has bearing on~~ the ~~issue~~operation of ~~whether~~websites ~~CBD~~and ~~was~~affiliated ~~marketed~~admission incenters ~~food~~without ~~before~~disclosure to the ~~FDA~~caller ~~approved~~about ~~the~~existing ~~CBD~~financial ~~drug~~arrangements into ~~2018~~promote orparticular ~~before~~treatment ~~the institution of substantial clinical investigations involving the CBD drug~~centers. ~~FDA’s~~We ~~current position~~expect is that ~~this~~these ~~provision~~kinds of ~~the~~regulations ~~FDCA~~and ~~also~~restrictions ~~prohibits the introduction or delivery for introduction into interstate commerce of a food~~ to ~~which CBD has been added~~ increase.

~~Congress~~Local ~~may~~Land ~~decide~~Use to amend the FDCA to permit the use of hemp-derived CBD in food. The FDA may also decide to issue regulations or guidance that address the use of hemp-derived CBD in food or use its enforcement discretion with respect to hemp-derived CBD products. On May 31, 2019, the FDA held a public hearing, as well as providing a broader opportunity for written public comment, for stakeholders to share their experiences and ~~challenges~~ with CBD products, including information and views related to product safety. Based on this hearing, any legislative or regulatory action could take years to implement or finalize and may not include provisions that would enable our company to produce, market and/or sell hemp beverages that contain hemp-derived CBD. We risk becoming subject to adverse publicity and costly federal enforcement actions should we decide to produce, market and/or sell beverages infused with hemp-derived CBD in the United States. We may be required to expend significant resources in defending our company from such actions which could adversely affect our business and results of operations and divert the attention of management. We may also incur the risk of sustaining considerable damage to our reputation and brand should we become party to federal enforcement actions resulting from the production, marketing, or sale of hemp-derived CBD infused beverages.Zoning

~~Accordingly,~~Municipal ifand ~~Congress~~other ~~amended~~local ~~federal~~governments may also ~~laws~~regulate orour ~~FDA~~treatment ~~issued~~programs. ~~regulations~~Many orof ~~guidance~~our ~~permitting~~facilities ~~the~~must ~~use~~comply ofwith ~~hemp-derived~~zoning ~~CBD~~and inland ~~food~~use orrequirements ~~announcing~~in ~~the~~order ~~agency’s~~to ~~decision~~operate. For example, tolocal ~~use~~zoning ~~its~~authorities ~~enforcement~~regulate ~~discretion~~not ~~with~~only ~~respect~~the tophysical ~~hemp-derived~~properties ~~CBD~~of ~~products~~a healthcare facility, wesuch ~~and~~as ~~our~~its ~~suppliers~~height and ~~vendors~~size, ~~would~~but bealso ~~required~~the tolocation ~~implement~~and ~~significant~~activities ~~enterprise~~of ~~risk~~the ~~management~~facility. ~~measures~~In toaddition, ~~ensure~~community ~~that~~or ~~there~~political isobjections noto ~~commingling~~the placement of ~~CBD~~treatment ~~derived~~facilities ~~from~~can ~~marihuana,~~result asin ~~“marihuana”~~delays ~~is defined~~ in the ~~federal~~land ~~Controlled~~use ~~Substances~~permit ~~Act,~~process ~~with~~and ~~any~~may ~~future~~prevent ~~commercial~~the ~~supply~~operation of ~~hemp-derived CBD~~facilities ~~that~~in iscertain ~~used to produce our products~~areas.

~~The~~Risk ~~FDA~~Management ~~could~~and ~~force the removal of our products from the U.S. market.~~Insurance

The ~~FDA~~healthcare ~~has~~industry ~~broad~~in ~~authority~~general ~~over~~continues to experience an increase in the ~~regulation~~ frequency and severity of ~~our~~litigation ~~products~~and claims. ~~The~~Like ~~FDA~~other ~~could,~~providers ~~among~~of ~~other~~healthcare-related ~~things~~services, ~~force~~we could usbe subject to ~~remove~~claims that our ~~products~~services ~~from~~have ~~the~~resulted ~~U.S.~~in ~~market,~~injury ~~levy~~to ~~fines~~our patients or ~~change~~had other adverse effects. In addition, resident, ~~their~~visitor ~~regulations~~and onemployee ~~advertising~~injuries could also subject us to the risk of litigation. ~~Any~~While we believe that quality care is provided to our patients and that we substantially comply with all applicable regulatory requirements, an adverse ~~action~~determination byin ~~the~~a ~~FDA~~legal proceeding or government investigation could have a material adverse ~~impact~~effect on our ~~business~~financial condition.

~~Government~~Compliance ~~reviews, inquiries, investigations, and actions could harm our business or reputation.~~Programs

AsCompliance ~~our product portfolio evolves, the regulatory environment~~ with ~~regard~~government torules ~~our~~and ~~business~~ regulations is ~~also~~a ~~evolving.~~significant ~~Government~~concern ~~officials~~throughout ~~often~~our ~~exercise~~industry, ~~broad discretion~~ in ~~deciding~~part ~~how~~ due to ~~interpret~~evolving ~~and~~interpretations ~~apply~~of ~~applicable~~these ~~laws~~rules orand regulations. We ~~may~~seek into ~~the future receive formal and informal inquiries from various~~conduct ~~governmental regulatory authorities, as well as self-regulatory organizations or consumer protection watchdog groups, about~~ our business ~~and~~in compliance with ~~local~~all ~~laws,~~statutes and regulations, orapplicable ~~standards.~~to ~~Any~~our ~~determination~~operations. ~~that~~Our ~~our~~executive ~~products,~~management ~~operations~~team oris ~~activities,~~responsible orfor the ~~activities~~oversight and operation of our ~~employees, contractors, or agents, are not in~~ compliance ~~with existing laws, regulations, or standards, could adversely affect our business in a number of ways~~program. ~~Even~~We ifintent ~~such~~to anprovide ~~inquiry~~periodic ~~does~~and ~~not~~comprehensive ~~result~~training inprograms ~~the imposition of fines, interruptions~~ to our ~~business~~personnel, which ~~loss~~are ofintended ~~suppliers~~to orpromote ~~other~~the ~~third-party~~strict ~~relationships,~~observance ~~terminations~~ of ~~necessary~~our ~~licenses~~policies ~~and~~designed ~~permits,~~to orensure ~~similar direct~~compliance ~~results,~~with the ~~existence~~statutes ofand ~~the~~regulations ~~inquiry alone could potentially create negative publicity that could harm our business and/or~~applicable ~~reputation~~to us.

~~Risks~~Employees ~~Related to Our Intellectual Property~~

IfOur wecorporate ~~fail~~activities toare ~~protect~~performed ~~our~~by ~~trademarks~~our officers and ~~trade~~directors ~~names,~~without ~~then~~compensation. None of our ~~ability~~officers toor ~~compete~~directors ~~could~~have employment beagreements. ~~negatively~~We ~~affected,~~anticipate ~~which~~hiring ~~would~~approximately ~~harm~~4 full-time and 4 part-time employees at our ~~financial~~Frankfort ~~condition~~facility. ~~and~~In ~~operating~~the near ~~results~~term, we do not anticipate any of our employees being represented by a labor union or covered by a collective bargaining agreement.

~~The~~Our ~~market~~wholly ~~for~~owned ~~our products depends to a significant extent upon the goodwill associated with our trademark and trade names. We own~~subsidiary, orVDH ~~have licenses to use~~Kentucky, ~~the material~~ ~~trademark and trade name rights used in connection with the packaging, marketing, and distribution of our products in the markets where those products are sold~~Inc. ~~Therefore,~~has ~~trademark and trade name protection is important to our business. Although our primary trademark iMetabolic® is registered in~~ the ~~United~~following States, we may not be successful in asserting trademark or trade name protection in foreign countries. In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. The loss or infringement of our trademarks or trade names could impair the goodwill associated with our brands and harm our reputation, which would harm our financial condition and operating results.employees:

18· 1 Business development

~~Table~~· of1 ~~Contents~~Office manager

We· ~~permit~~1 ~~the~~Director ~~limited use~~ of our trademarks by our third-party distributors to assist them in the marketing of our products. It is possible that doing so may increase the risk of unauthorized use or misuse of our trademarks in markets where their registration status differs from that asserted by our independent distributors, or they may be used in association with claims or products in a manner not permitted under applicable laws and regulations. Were this to occur it is possible that this could diminish the value of these marks or otherwise impair our further use of these marks.Operations

It is difficult and costly to protect our intellectual property.

Our commercial success will depend in part on obtaining and maintaining trademark protection and trade secret/know-how protection of our products and brands, as well as successfully defending that intellectual property against third-party challenges. We will only be able to protect our intellectual property related to our trademarks and brands to the extent that we have rights under valid and enforceable trademarks, know-how or trade secrets that cover our products and brands. Changes in either the trademark laws or in interpretations of trademark and laws in the U.S. and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our issued trademarks. The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.

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

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

Finally, we may initiate claims to assert or defend our own intellectual property against third parties. Any intellectual property litigation, irrespective of whether we are the plaintiff or the defendant, and regardless of the outcome, is expensive and time-consuming, and could divert our management’s attention from our business and negatively affect our operating results or financial condition.

We may be subject to claims by third parties asserting that our employees or our company has misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

Although we try to ensure that our company, our employees, and independent contractors (suppliers/vendors/distributors) do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that our company, our employees, or independent contractors (suppliers/vendors/distributors) have used or disclosed intellectual property in violation of others’ rights. These claims may cover a range of matters, such as challenges to our trademarks, as well as claims that our employees or independent contractors are using trade secrets or other proprietary information of any such employee’s former employer or independent contractors. As a result, we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.

Risk Related to Our Stock

Because we can issue additional shares of common stock, our stockholders may experience dilution in the future.

We are authorized to issue up to 200,000,000 shares of common stock and 10,000,000 shares of preferred stock, of which 172,450,907 shares of common stock are issued and outstanding as of June 30, 2020. Our board of directors has the authority to cause us to issue additional shares of common stock and preferred stock, and to determine the rights, preferences, and privileges of shares of our preferred stock, without consent of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future.

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Trading on the OTC Pinksheets stock market may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTC Pinksheets stock market operated by the OTC Markets Group with the trading symbol “UPDC”. Trading in stock quoted on OTC Pinksheets is often characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, trading of securities on OTC Pinksheets is often more sporadic than the trading of securities listed on a stock exchange like the NASDAQ or the NYSE. Accordingly, stockholders may have difficulty reselling any of our shares.

Our shares of common stock may be very thinly traded, or not at all, the price may not reflect our values and there can be no assurance that there will be an active market for our shares of common stock either now or in the futures.

Shares of our common stock may be very thinly traded in the future, and the price, if traded, may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. If a more active market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms may not be willing to effect transactions in the securities. Even if an investor finds a broker willing to affect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such shares of common stock as collateral for any loans.

Sales of our currently issued and outstanding stock may become freely tradeable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price of the shares of our common stock.

Certain of our issued and outstanding shares of common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that an “affiliated” person, such as our management, who have held our restricted securities for a period of at least one year from the date of this Form 8-K filing, may, under certain conditions, sell every three months in brokerage transactions, a number of shares that does not exceed the greater of 1% of a company’s outstanding shares of common stock. There is no limit on the amount of restricted securities that may be sold by a non-affiliate after the restricted securities have been held by the owner for a period of one year from the date of this Form 8-K filing. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.

The market for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.

We believe that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

· Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

· Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

· “Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced salespersons;

· Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

· Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

We believe that many of these abuses have occurred with respect to the promotion of low-priced stock companies that lacked experienced management, adequate financial resources, an adequate business plan and/or marketable and successful business or product.

A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our ability to continue operations, and we may go out of business.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we plan to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors not to choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our equity securities and we may be forced to go out of business.

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Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission (“SEC”) has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined in Rule 15g-9) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. 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 in a form prepared by the SEC, which 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 monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer 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. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

We do not intend to pay any cash dividends on our shares of common stock in the near future, and our stockholders will not be able to receive a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

We may incur significant costs to ensure compliance with United States corporate governance and accounting requirements.

We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

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We may not be able to meet the accelerated filing and internal control reporting requirements imposed by the Securities and Exchange Commission resulting in a possible decline in the price of our common stock and our inability to obtain future financing.

As directed by Section 404 of the Sarbanes-Oxley Act, the Securities and Exchange Commission adopted rules requiring each public company to include a report of management on the company’s internal controls over financial reporting in its annual reports. In addition, the independent registered public accounting firm auditing a company’s financial statements must also attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting as well as the operating effectiveness of the company’s internal controls.

While we expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely with all of the requirements imposed by this rule. In the event that we are unable to receive a positive attestation from our independent registered public accounting firm with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer.

In addition, in the event that our independent registered public accounting firm is unable to rely on our internal controls in connection with its audit of our financial statements, and in the further event that it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of our financial statements and related disclosures, it is possible that we would be unable to file our Annual Report on Form 10-K with the Securities and Exchange Commission, which could also adversely affect the market price of our common stock and our ability to secure additional financing as needed.

Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors.

Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person’s written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup.

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 (the “Securities Act”) and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develop.

Our board of directors has the authority, without stockholder approval, to issue shares of “blank check” preferred stock with terms that may not be viewed as beneficial to common stockholders, and which may adversely affect common stockholders.

Our articles of incorporation allow us to issue shares of preferred stock without any vote by our stockholders. Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors also has the authority to issue preferred stock without further stockholder approval. As a result, our Board of Directors could authorize the issuance of preferred stock that would grant to holders the preferred right to vote on decisions submitted for a vote of the stockholders, to a priority on distribution of our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock, and similar rights and priorities over our common stock.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Executive Offices

The Company’s principal executive office is located at 75 Pringle Way, 8th Floor, Suite 804, Reno, Nevada 89502. The office premises are contributed free of charge by Mark W. Conte, our President and Chief Executive Officer. We believe that the offices are adequate to meet our current operational requirements. We do not own any real property.

ITEM 3. LEGAL PROCEEDINGS

We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our properties, results of operation, or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Stock

Our common stock is quoted on the OTC QB maintained by the OTC Markets under the symbol “UPDC.” The high and low bid prices of our common stock as reported for the periods presented, by fiscal quarter (i.e., the first quarter beginning July 1 and ended September 30), were as follows. The quotations reflect inter-dealer prices, without retail markup, mark-down, or commission and may not represent actual transactions.

	Price Range
Fiscal Year Ended June 30, 2020:	High		Low
Quarter Ended:
September 30, 2019	$	0.04	$	0.01
December 31, 2019	$	0.02	$	0.01
March 31, 2020	$	0.05	$	0.01
June 30, 2020	$	0.04	$	0.01
Fiscal Year Ended June 30, 2019:
Quarter Ended:
September 30, 2018	$	0.07	$	0.01
December 31, 2018	$	0.05	$	0.01
March 31, 2019	$	0.06	$	0.01
June 30, 2019	$	0.07	$	0.02

Holders

As of August 14, 2020, there were approximately 195 holders of record of our common stock. This does not include beneficial owners holding stock in street name.

Dividends

Any future determination as to the declaration and payment of dividends on shares of our Common Stock will be made at the discretion of our Board of Directors out of funds legally available for such purpose. We are under no contractual obligations or restrictions to declare or pay dividends on our shares of Common Stock. In addition, we currently have no plans to pay such dividends. Our Board of Directors currently intends to retain all earnings for use in the business for the foreseeable future.

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Recent Sales of Unregistered Securities

In April 2020, the Company issued 991,351 shares of restricted and unregistered shares of common stock for the settlement of previously outstanding convertible notes payable and accrued interest totaling $101,075.

No underwriters were involved in the issuance of the securities noted above. All of the securities issued were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act. The issuance of stock that was exempt under Section 4(a)(2) was a private offering to an accredited investor. Each of the investors represented to the Company that it (i) is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, (ii) is knowledgeable, sophisticated and experienced in making investment decisions of this kind, and (iii) has had adequate access to information about the Company.

Transfer Agent

Our transfer agent and registrar are American Stock Transfer and Trust Co., 6201 15th Avenue, 3rd Floor, Brooklyn, NY 11219, Telephone (718) 921-8210.

ITEM 6. SELECTED FINANCIAL DATA

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our results of operations and financial condition for the periods presented. The following selected financial information is derived from our historical consolidated financial statements and should be read in conjunction with such consolidated financial statements and notes thereto set forth elsewhere herein and the “Forward-Looking Statements” explanation included herein.

Overview of Business

We are a health and wellness company with a focus on nutraceutical and alternative and specialty beverages. Our past development efforts have included weight loss and weight management products marketed under our iMetabolic® brand and craft beer offerings under our Record Street™ brand. Current development efforts are focused on alternative and specialty beverages that leverage and combine the Company’s regulated nutraceutical and beverage manufacturing experience to create novel and trending beverages that have health benefits, such as waters infused with hemp-based nootropics, cannabinoids, and terpenes. We also are pursuing the franchising and licensing of the Record Street™ brand for live music venues and brewpubs throughout the United States.

With fewer barriers to entry, such as reduced minimum order quantities (MOQs), lower costs of goods sold (COGS), and reduced regulatory licensing requirements, the Company has determined to focus its brand extensions and product innovations in the health and wellness beverage category. We believe there is increasing consumer demand for enhanced and functional (value-added) beverages and expect to capitalize on this and potential consumer demand with the development and launch of new products focused on growing trends in the beverage space.

Going Concern

Our financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established an ongoing source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. Our ability to continue as a going concern is dependent on our company obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to significantly curtail or cease operations.

In its report on our financial statements for the year ended June 30, 2020, our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.18

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WeIn ~~will~~its ~~need~~report toon ~~raise~~our ~~additional~~financial ~~funds~~statements tofor ~~finance~~the ~~continuing~~year ~~operations.~~ended ~~However~~June 30, ~~there~~2021, ~~are~~our noindependent ~~assurances~~registered ~~that~~public weaccounting ~~will~~firm beincluded ~~successful~~an inexplanatory ~~raising~~paragraph ~~additional~~regarding ~~funds. Without~~substantial ~~sufficient~~doubt ~~additional~~about ~~financing,~~our itability ~~would be unlikely for us~~ to continue as a going concern. Our ~~ability~~financial tostatements ~~continue~~do asnot ainclude ~~going concern~~any isadjustments ~~dependent~~that ~~upon~~might ~~our~~result ~~ability to successfully accomplish~~ from the ~~plans~~outcome ~~described~~of in this ~~annual report and eventually secure other sources of financing and attain profitable operations~~uncertainty.

~~RESULTS~~We OFwill ~~OPERATIONS~~need to raise additional funds to finance continuing operations. However, there are no assurances that we will be successful in raising additional funds. Without sufficient additional financing, it would be unlikely for us to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish the plans described in this report and eventually secure other sources of financing and attain profitable operations.

~~Revenue~~Item ~~and~~1A. ~~Cost~~Risk ~~of Revenue~~Factors

~~The~~Risks ~~Company’s~~Related ~~previous revenue was generated through the sale of its beer products through September 2018. Due~~ to ~~the~~Our lack of funding, the Company did not produce inventory or generate revenue during the fiscal year ended June 30, 2020. During the fiscal year ended June 30, 2019, the Company generated total revenue from beer sales totaling $14,274. The Company expects to generate revenue for the next twelve months through its RSB licensing agreement which commenced on July 1, 2020. In late July 2020, the Company’s licensee made its first shipments to a distributor in Reno, Nevada.Business

~~Cost~~Our ofrevenue, ~~Revenue~~profitability and cash flows could be materially adversely affected if we are unable to operate certain key treatment facilities, our corporate office or our laboratory facilities.

~~Since~~We ~~the~~intend ~~Company~~to ~~did~~derive ~~not~~a ~~produce~~significant ~~inventory~~portion of ~~generate revenue~~our revenue from our flagship treatment facilities located in ~~fiscal~~Kentucky. ~~2020~~It nois likely that a small number of facilities will continue to contribute a significant portion of our total revenue ~~costs~~in ~~were~~any ~~incurred~~given year for the foreseeable future. ~~The~~Additionally, ~~Company’s~~we ~~cost~~have a centralized corporate office that houses our accounting, billing and collections, information technology, and admissions center departments, centralized and marketing offices. We also are building out a high complexity laboratory that will conduct quantitative drug testing and other laboratory services. If any event occurs that results in a complete or partial shutdown of ~~revenue~~any of ~~$85~~these facilities,~~863~~ ~~for~~our ~~the~~centralized ~~year~~corporate ~~ended~~office, our ~~June~~centralized 30marketing offices or laboratory, ~~2019~~including, without limitation, any material changes in legislative, regulatory, economic, ~~included~~environmental, ~~what~~or ~~management~~competitive ~~believes~~conditions in these states or natural disasters such as hurricanes, earthquakes, tornadoes, or floods or prolonged airline disruptions due to bea ~~non-recurring~~natural disaster or for any reason, such event could lead to decreased revenue and/or higher operating costs, ~~including~~which ancould ~~obsolescence~~have ~~charge~~a ofmaterial ~~$65~~adverse effect on our revenue,~~653~~ profitability, and cash flows.

~~The~~Any ~~Company~~disruption ~~believes~~in ~~that~~our ~~the~~national ~~periods~~sales ~~presented~~and ~~are not indicative~~marketing ofprogram, ~~its~~including ~~expected~~our ~~future~~digital ~~production~~marketing ~~costs~~resources, ascould ~~funding~~have ~~permits.~~a ~~The~~material ~~Company~~adverse ~~expects~~effect toon ~~incur~~our ~~lower~~business, ~~costs~~financial ~~per~~condition, ~~unit~~and results of ~~production if the Company is successful in increasing volume~~operations.

~~Professional~~If ~~Fees~~any disruption occurs in our national sales and marketing program for any reason, or if we are unable to effectively attract and enroll new patients to our network of facilities, our ability to maintain census could be adversely affected, which could have a material adverse effect on our business, financial condition and results of operations.

~~The~~Internet ~~Company’s~~search ~~professional~~engines ~~fees~~play ~~increased~~an ~~approximately~~increasingly important ~~198%~~role in addiction treatment marketing. Google and other search engines use complex algorithms to ~~$140~~rank websites. The algorithms take into account many factors,~~394~~ ~~for~~including the ~~year~~domain ~~ended~~name ~~June 30~~itself, ~~2020~~website ~~from~~content ~~$47~~and user-friendly factors such as the speed at which the website pages may be clicked through and viewed. We cannot predict or control changes in algorithms and website rankings,~~169~~ which may result in lower ranking search results for ~~the~~our ~~year~~websites. ~~ended~~Additionally, ~~June~~Google 30and other online platforms have instituted review processes required to advertise on their websites. Some of these processes are time-consuming, ~~2019~~complex and continuously evolving. ~~The~~We ~~increase~~cannot ispredict ~~related~~how these private processes, rules and restrictions will evolve or be applied to ~~the~~individual advertising applicants. Unexpected changes in these ~~Company~~areas ~~engaging~~may ~~accountants~~result in a decrease in calls to ~~bring~~our itadmissions ~~back~~center, ~~into~~a ~~compliance~~decrease ~~with~~in ~~its~~interactions ~~previously~~with ~~delinquent~~potential ~~1934~~patients ~~Securities~~and ~~Exchange~~a ~~Act~~lowering ~~filing~~of ~~requirements~~our census, which could have and material adverse effects on our business, financial condition and results of operations.

AsIn ~~funding permits~~addition, ~~the~~our ~~Company~~ability ~~expects~~to grow or even to ~~incur~~maintain our ~~higher~~existing ~~professional~~level of business depends significantly on our ability to establish and maintain close working and referral relationships ~~fees~~with ~~associated~~hospitals, other treatment facilities and clinicians, employers, alumni, employee assistance programs and other referral sources. We have no binding commitments with ~~on-going~~any ~~development~~of these referral sources. We may not be able to maintain our existing referral relationships or develop and maintain new relationships in existing or new markets. Negative changes to our existing referral relationships may cause the number of ~~its~~people ~~brand~~to whom we provide care to decrease, ~~customers~~which could have material adverse effects on our business, financial condition and ~~other~~results ~~relationship~~of ~~development~~operations.

~~Goodwill Impairment~~19

~~Due~~Table ~~to the Company’s need for additional funding and lack~~ of firm funding commitments to execute its business plans, the Company was unable to continue to develop its RSB branding, grow its market share, and produce additional inventory. These facts and circumstances triggered the Company to perform an impairment test on its RSB assets in the second quarter of the fiscal year ended June 30, 2019. As a result of the uncertainties surrounding its capital resources and corresponding impacts on forecasted undiscounted cash flows, the Company fully impaired its goodwill as of June 30, 2019, totaling $2,170,124, initially recognized as part of the acquisition of RSB during the fiscal year ended June 30, 2018. No additional impairment charges are expected for at least the next twelve months.Contents

~~General~~If reimbursement rates paid by third-party payors are reduced, if we are unable to maintain favorable contract terms with payors or comply with our payor contract obligations, or if third-party payors otherwise restrain our ability to obtain or provide services to patients, our business, financial condition and results ~~Administrative~~of ~~Expenses~~operation could be adversely affected. This risk is heightened because we are generally an “out-of-network” provider.

~~For~~Managed ~~the~~care ~~fiscal~~organizations ~~years~~and ~~ended~~other ~~June~~third-party payors ~~30,~~pay ~~2020 and~~for ~~2019,~~the services that we ~~incurred~~provide ~~general~~to ~~and~~many ~~administrative~~of ~~expenses~~our patients. We anticipate that approximately 90% or more of $8our revenue will be reimbursable by third-party payors,~~865~~ ~~and~~including ~~$69~~amounts paid by such payors to patients,~~604,~~ ~~respectively~~with the remaining portion payable directly by our patients. ~~Similar~~If any of these third-party payors reduce their reimbursement rates or elect not to ~~other~~cover ~~operational~~some ~~items~~or all of our services, our ~~funding~~business, ~~challenges~~financial ~~have~~condition, ~~resulted~~and inresults ~~overall~~of ~~declines~~operations inmay ~~activity~~be ~~and~~materially ~~corresponding~~adversely ~~expenses incurred~~affected.

WeIn ~~expect~~addition ~~these~~to ~~items~~limits toon ~~increase~~the ~~over~~amounts payors will pay for the ~~next~~services ~~several~~we ~~periods~~provide ~~with~~to their members or participants, controls imposed by third-party payors designed to reduce admissions and the ~~success~~length of ~~our~~stay ~~business~~for ~~plans~~patients, including pre-admission authorizations and ~~will~~utilization ~~primarily~~review, ~~consist~~have ofaffected and are expected to affect our facilities. ~~costs,~~Utilization ~~management~~review entails the review of the admission and course of treatment of a patient by third-party payors. ~~other~~Inpatient ~~salaries~~utilization, ~~travel~~average lengths of stay, and ~~other~~occupancy ~~corporate~~rates ~~overhead~~are likely to be negatively affected by payor-required preadmission authorization and utilization review and by payor pressure to maximize outpatient and alternative healthcare delivery services for less acutely ill patients.

~~Interest~~We ~~Expense~~believe that, generally, health insurance companies have become more stringent and aggressive with respect to addiction treatment providers, taking measures that are putting pressure on reimbursement rates, length of stay, and timing of reimbursement throughout the industry. We expect that payor efforts to impose more stringent cost controls will continue. Although we are unable to predict the effect these controls and changes could have on our operations, significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on our business, financial condition, and results of operations. If the rates paid or the scope of substance use treatment services covered by third-party commercial payors are reduced, our business, financial condition, and results of operations could be materially adversely affected.

~~Interest~~Third-party ~~expense~~payors often use plan structures, such as narrow networks or tiered networks, to encourage or require patients to use in-network providers. In-network providers typically provide services through third-party payors for a negotiated lower rate or other less favorable terms. Third-party payors generally attempt to limit use of out-of-network providers by requiring patients to pay higher copayment and/or deductible amounts for out-of-network care. Additionally, third-party payors have become increasingly aggressive in attempting to minimize the ~~year~~use ~~ended~~of ~~June~~out-of-network 30providers by disregarding the assignment of payment from patients to out-of-network providers (i.e., ~~2020~~sending ~~decreased~~payments directly to patients instead of to ~~$44~~out-of-network providers),~~566~~ ~~from~~capping ~~$159~~out-of-network benefits payable to patients,~~209~~ ~~incurred~~waiving ~~during~~out-of-pocket ~~the~~payment ~~year~~amounts, ~~ended~~and ~~June~~initiating litigation 30against out-of-network providers for interference with contractual relationships, ~~2019~~insurance fraud, and violation of state licensing and consumer protection laws. The majority of third-party payors consider certain of our facilities to be “out-of-network” providers. If third-party payors continue to impose and to increase restrictions on out-of-network providers, our revenue could be threatened, forcing our facilities to participate with third-party payors and accept lower reimbursement rates compared to our historic reimbursement rates.

25Third-party payors also are entering into sole source contracts with some healthcare providers, which could effectively limit our pool of potential patients. Moreover, third-party payors are beginning to carve out specific services, including substance abuse treatment and behavioral health services, and establish small, specialized networks of providers for such services at fixed reimbursement rates. Continued growth in the use of carve-out arrangements could materially adversely affect our business to the extent we are not selected to participate in such smaller specialized networks or if the reimbursement rate is not adequate to cover the cost of providing the service.

~~Table~~If reimbursement rates paid by federal or state healthcare programs are reduced or if government payors otherwise restrain our ability to obtain or provide services to patients, our business, financial condition, and results of ~~Contents~~operation could be adversely affected.

The decrease results from settlement of approximately $380,000 of previously outstanding notes payable, approximately $21,000 of previously outstanding notes payable held by related parties, and the conversion of approximately $130,000 of convertible notes payable to common stock.20

~~Our~~Table ~~future interest expense obligations our dependent on the types~~ of ~~financing arrangements we are successful in arranging over the next twelve months, if any.~~Contents

26Managed care organizations and other third-party payors, both government and commercial, pay for the services that we provide to many of our patients. We intend for a significant portion of our revenues to come from government healthcare programs, principally Medicare and Medicaid. Payments from federal and state government programs are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review, and federal and state funding restrictions, all of which could materially increase or decrease program payments, as well as affect the cost of providing service to patients and the timing of payments to facilities.

~~Table~~We are unable to predict the effect of ~~Contents~~recent and future policy changes on our operations. In addition, the uncertainty and fiscal pressures placed upon federal and state governments as a result of, among other things, deterioration in general economic conditions and the funding requirements from the federal healthcare reform legislation, may affect the availability of taxpayer funds for Medicare and Medicaid programs. Changes in government healthcare programs may reduce the reimbursement we receive and could adversely affect our business and results of operations.

~~Liquidity~~As federal healthcare expenditures continue to increase, and ~~Capital~~state ~~Resources~~governments continue to face budgetary shortfalls, federal and state governments have made, and continue to make, significant changes in the Medicare and Medicaid programs. These changes include reductions in reimbursement levels and to new or modified demonstration projects authorized pursuant to Medicaid waivers. Some of these changes have decreased, or could decrease, the amount of money we receive for our services relating to these programs. In some cases, private third-party payers rely on all or portions of Medicare payment systems to determine payment rates. Changes to government health care programs that reduce payments under these programs may negatively impact payments from private third-party payers.

AsIn ofaddition ~~June~~to ~~30,~~limits ~~2020,~~on the ~~Company~~amount ~~had~~payors awill ~~working~~pay ~~capital~~for ~~deficit~~the ofservices ~~approximately~~we ~~$584,000.~~provide ~~Over~~to ~~the~~their ~~next~~members, ~~twelve~~government ~~months,~~and wecommercial ~~have~~payors ~~estimated~~attempt ~~that~~to incontrol ~~order~~costs toby ~~maintain~~imposing ~~reporting~~controls designed ~~company~~to ~~status~~reduce asadmissions ~~defined~~and ~~under~~ the ~~Securities~~length ~~Exchange~~of ~~Act~~stay offor ~~1934~~patients, weincluding ~~will~~preadmission ~~require~~authorizations ~~cash~~and ~~for~~utilization ~~general~~review. ~~and~~The ~~administrative~~ability ~~expenses~~of ~~and~~governmental ~~professional~~payors ~~fees,~~to ~~which~~control ~~include~~healthcare ~~accounting,~~costs ~~legal~~using ~~and~~these ~~other~~measures ~~professional~~may ~~fees,~~be asenhanced ~~well~~by asthe ~~filing~~increasing ~~fees.~~consolidation Weof ~~believe~~insurance ~~we will~~and bemanaged ~~able~~care tocompanies ~~meet~~and ~~these~~vertical ~~costs~~integration ~~through the use~~ of ~~existing~~health ~~cash~~insurers ~~and~~with ~~cash~~healthcare ~~equivalents~~providers. orAlthough ~~additional~~we ~~amounts,~~are asunable ~~necessary,~~ to bepredict ~~loaned~~the effect bythese orcontrols ~~invested~~and inchanges uscould byhave on our ~~stockholders~~operations, ~~management~~significant orlimits ~~other~~on ~~investors.~~the ~~However,~~scope noof ~~assurance~~services ~~can~~reimbursed beand ~~given~~on ~~that~~reimbursement werates and ~~will~~fees becould ~~able to~~have ~~raise~~a ~~additional~~material ~~capital,~~adverse ~~when~~effect ~~needed~~on orour ~~at all~~business, orfinancial ~~that~~condition ~~such~~and ~~capital,~~results ifof ~~available,~~operations. ~~will~~If bethe onrates ~~acceptable~~paid ~~terms.~~or In the ~~absence~~ scope of ~~obtaining~~substance ~~additional~~use ~~financing,~~treatment weservices ~~may~~covered beby ~~unable~~government topayors ~~fund~~are reduced, our business, financial condition and results of operations could be materially adversely affected.

~~For~~If ~~the~~we ~~year~~overestimate ~~ended June 30, 2020~~ the ~~Company’s~~reimbursement amounts ~~operational~~that ~~cash~~payors ~~flows~~will ~~primarily~~pay ~~consisted~~us for out-of-network ~~incurring~~services ~~expenses~~performed, init ~~the~~would ~~normal~~increase ~~course~~our ofrevenue ~~business~~adjustments, atwhich ~~levels~~could ~~commensurate~~have ~~with~~a ~~its~~material ~~funding~~adverse ~~levels~~effect ~~and resulting inabilities to commence commercially viable operations. Net of the non-cash and non-recurring gains~~ on ~~debt~~our ~~settlements~~revenue, ~~of approximately $325~~profitability,~~000,~~ ~~the~~and ~~Company’s operational~~ cash ~~uses~~flows ~~primarily consisted of the incurrence of on-going general~~ and ~~administrative~~lead ~~expenses~~to ~~for~~significant ~~the~~shifts ~~year~~in ~~ended~~our ~~June~~results ~~30,~~of ~~2020.~~operations ~~The~~from ~~Company expects these operational cash uses~~quarter to ~~continue~~quarter ~~until~~that ~~sufficient~~may ~~capital~~make isit ~~raised,~~difficult ifto ~~any~~project long-term performance.

~~The~~For ~~Company~~out-of-network ~~does~~services, ~~not~~we ~~have~~recognize ~~sufficient~~revenue from ~~resources~~payors at the time services are provided based on our estimate of the amount that payors will pay us for the services performed. We estimate the net realizable value of revenue by adjusting gross patient charges using our expected realization and applying this discount to ~~engage~~gross inpatient charges. A significant ~~investing~~or ~~activities~~sustained decrease in our collection rates could have a material adverse effect on our operating results. AsThere ~~funding~~is ~~permits,~~no ~~the~~assurance ~~Company~~that ~~expects~~we will be able to ~~invest~~maintain inor ~~expanding~~improve ~~its~~historical ~~beer~~collection ~~production and~~rates ~~related~~in ~~products~~future reporting periods.

~~During~~Estimates ~~the~~of ~~year~~net ~~ended~~realizable ~~June~~value ~~30,~~are ~~2020,~~subject to significant judgment and approximation by management. It is possible that actual results could differ from the historical estimates ~~Company~~management ~~generated~~has ~~approximately~~used ~~$168,000~~to help determine the net realizable value of revenue. If our actual collections either exceed or are less than the net ~~cash~~realizable ~~from~~value ~~financing~~estimates, ~~activities~~we ~~through~~will record a revenue adjustment, either positive or negative, for the ~~issuance~~difference between our estimate of ~~convertible~~the ~~debt~~receivable and ~~notes~~the amount actually collected in the reporting period in which the collection occurred. A significant negative revenue ~~payable~~adjustment ~~totaling~~could ~~approximately~~have ~~$175~~a material adverse effect on our revenue,~~000~~ ~~partially~~profitability ~~off-set~~and bycash ~~making~~flows anin ~~approximate~~the $7reporting period in which such adjustment is recorded. In addition,~~000~~ ~~payment~~if onwe ~~its~~record ~~other~~a ~~outstanding~~significant ~~notes~~revenue adjustment, either positive or negative, in any given reporting period, it ~~payable~~may lead to significant changes in our results from operations from quarter to quarter, which may limit our ability to make accurate long-term predictions about our future performance.

~~Off~~Certain third-~~Balance~~party ~~Sheet~~payors ~~Arrangements~~are likely to account for a significant portion of our revenue, and the reduction of reimbursement rates or coverage of services by any such payor could have a material adverse effect on our revenue, profitability and cash flows.

~~During the fiscal years ended June 30, 2020 and 2019, we did not engage in any off-balance sheet arrangements as set forth in Item 303(a)(4) of the Regulation S-K.~~21

~~Critical~~Table ~~Accounting~~of ~~Policies~~Contents

~~The~~We ~~discussion~~intend ~~and~~that ~~analysis~~certain ofpayors ~~our~~such ~~financial condition~~as Medicaid and ~~results~~Medicare ofwill ~~operations~~account isfor ~~based~~a ~~upon~~significant ~~our~~portion ~~consolidated~~of ~~financial~~our ~~statements,~~revenue ~~which~~on ~~have~~an ~~been~~annual ~~prepared in accordance with US GAAP~~basis. ~~The~~ ~~preparation~~If any of these ~~financial~~or ~~statements~~other ~~requires~~third-party ~~our~~payors ~~management~~reduce their toreimbursement ~~make~~rates ~~significant~~for ~~estimates~~the ~~and~~services ~~judgments that~~we ~~affect~~provide ~~the~~or ~~reported~~otherwise ~~amounts~~implement ~~of assets~~measures, ~~liabilities,~~such ~~revenues~~as ~~and~~specialized ~~expenses~~networks, ~~and~~that ~~related~~reduce ~~disclosure~~the ~~of contingent assets and~~payments ~~liabilities. These~~we ~~items~~receive, ~~are monitored and analyzed by~~ our ~~management~~revenue, ~~for changes in facts and circumstances~~profitability, and ~~material changes~~cash inflows ~~these estimates~~ could ~~occur~~be inmaterially ~~the~~adversely ~~future~~affected.

~~Business~~A ~~Combinations~~deterioration in the collectability of the accounts receivable could have a material adverse effect on our business, financial condition, and results of operations.

~~Business~~The ~~combinations~~collection ~~are~~of ~~accounted~~receivables ~~for~~from third-party atpayors ~~fair~~and ~~value.~~patients ~~Acquisition~~will ~~costs~~be ~~are~~critical ~~expensed~~to asour ~~incurred~~operating ~~and~~performance. ~~recorded~~Our inprimary ~~general~~collection ~~and~~risks ~~administrative expenses; previously held equity interests~~ are: ~~valued~~(i) ~~at fair value upon~~ the ~~acquisition~~risk of aoverestimating ~~controlling interest; restructuring costs associated with a~~our ~~business~~net ~~combination~~revenue ~~are~~at ~~expensed~~the ~~subsequent~~time toof ~~the~~billing, ~~acquisition~~which ~~date;~~may ~~and~~result ~~changes~~ in ~~deferred~~us ~~tax~~receiving ~~asset~~less ~~valuation~~than ~~allowances and income tax uncertainties after~~ the ~~acquisition~~recorded ~~date~~receivable; ~~affect~~(ii) ~~income tax expense. Measurement period adjustments are made in~~ the ~~period in~~risk ~~which the amounts are determined, and the current period income effect~~ of ~~such~~non-payment ~~adjustments will be calculated~~ as ~~if the adjustments~~ ~~had~~a ~~been~~result ~~completed as~~ of ~~the~~commercial ~~acquisition~~insurance ~~date.~~companies ~~All~~denying ~~changes~~claims; ~~that~~(iii) ~~do not qualify as measurement period adjustments are also included~~ in ~~current~~certain ~~period~~states, ~~earnings.~~the ~~The~~risk ~~accounting~~that ~~for~~patients ~~business~~will ~~combinations~~fail ~~requires estimates and judgment as~~ to ~~expectations~~remit ~~for future~~insurance ~~cash~~payments ~~flows~~to ofus when the ~~acquired~~commercial ~~business,~~insurance ~~and~~company ~~the~~pays ~~allocation~~ out-of-network ~~those~~claims ~~cash~~directly ~~flows~~ to ~~identifiable intangible assets, in determining~~ the ~~estimated~~ ~~fair~~patient; ~~value for assets acquired~~ and ~~liabilities~~(iv) ~~assumed.~~resource ~~The fair values assigned to tangible~~ and ~~intangible assets acquired~~capacity ~~and~~constraints ~~liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations~~ that ~~utilize~~may ~~customary~~prevent ~~valuation~~us ~~procedures~~from ~~and~~handling ~~techniques. If~~ the ~~actual~~volume ~~results~~of ~~differ~~billing ~~from the estimates~~ and ~~judgments~~collection ~~used~~issues in ~~these estimates, the amounts recorded in the financial statements could result in~~ a ~~possible~~timely ~~impairment of goodwill or the recognition of additional consideration which would be expensed~~manner. ~~The~~Additionally, ~~fair~~our ability ~~value~~to ofhire ~~contingent~~and ~~consideration~~retain isexperienced ~~remeasured~~personnel ~~each~~may ~~period~~affect ~~based~~our onability ~~relevant~~to ~~information~~bill and ~~changes~~collect toaccounts ~~the fair value are included~~ in ~~the~~a ~~operating~~timely ~~results for the period~~manner.

27We intend to routinely review accounts receivable balances in conjunction with these factors and other economic conditions that might ultimately affect the collectability of the patient accounts and to adjust our allowances as warranted. Significant changes in business operations, payor mix or economic conditions, including changes resulting from legislation or other health reform efforts (including to repeal or significantly change the Affordable Care Act), could affect our collection of accounts receivable, cash flows, and results of operations. In addition, future patient concentration in states that permit commercial insurance companies to pay out-of-network claims directly to the patient instead of the provider, such as California and Nevada, could adversely affect our collection of receivables. Unexpected changes in reimbursement rates by third-party payors could have a material adverse effect on our business, financial condition, and results of operations.

~~Table~~Our ofbusiness ~~Contents~~depends on our information systems. Failure to effectively integrate, manage, and keep our information systems secure could disrupt our operations and have a material adverse effect on our business.

~~Goodwill~~Our business depends on effective and secure information systems that assist us in, among other things, admitting patients to our facilities, monitoring census and utilization, processing and collecting claims, reporting financial results, measuring outcomes and quality of care, managing regulatory compliance controls, and maintaining operational efficiencies. These systems may include software developed in-house and systems provided by external contractors and other service providers. To the extent that these external contractors or other service providers become insolvent or fail to support the software or systems, our operations could be negatively affected. Our facilities also depend upon our information systems for electronic medical records, accounting, billing, collections, risk management, payroll, and other information. If we experience a reduction in the performance, reliability, or availability of our information systems, our operations and ability to process transactions and produce timely and accurate reports could be adversely affected.

~~Goodwill~~Our ~~represents~~information ~~the~~systems ~~excess~~and ofapplications ~~fair~~require ~~value~~continual ~~over~~maintenance, ~~identifiable~~upgrading, ~~tangible~~ and ~~intangible~~enhancement ~~net~~to ~~assets~~meet ~~acquired~~our inoperational ~~business combinations~~needs. ~~Goodwill~~We isregularly ~~not~~upgrade ~~amortized.~~and ~~Instead~~expand our information systems’ ~~goodwill~~capabilities. isIf ~~reviewed~~we ~~for~~experience ~~impairment~~difficulties atwith ~~least~~the ~~annually,~~transition and integration of information systems or onare anunable ~~interim~~to ~~basis~~implement, ~~between~~maintain, or ~~annual~~expand ~~tests~~our ~~when~~systems ~~events~~properly or ~~circumstances indicate~~in ~~that~~a ittimely ismanner, ~~more~~we ~~likely~~could ~~than~~suffer ~~not~~from, ~~that~~among ~~the~~other ~~fair~~things, ~~value~~operational ofdisruptions, aregulatory ~~reporting~~problems, working ~~unit~~capital isdisruptions, ~~less~~and ~~than~~increases ~~its~~in ~~carrying~~administrative ~~value~~expenses.

~~Due~~In toaddition, ~~the~~we ~~Company’s~~could ~~need~~be ~~for~~subject ~~additional~~to cybersecurity ~~funding~~risks such as a cyber-attack that bypasses our information technology security systems and ~~lack~~other security incidents that result in security breaches, including the theft, loss, destruction, or misappropriation of ~~firm~~individually ~~funding~~identifiable ~~commitments~~health information subject to ~~execute~~HIPAA and ~~its~~other privacy and security laws, proprietary business ~~plans~~information, ~~the~~or ~~Company~~other ~~was~~confidential ~~unable~~or topersonal ~~continue~~data. toSuch ~~develop~~an ~~its~~incident ~~RSB~~could ~~branding,~~disrupt ~~grow~~our ~~its~~information ~~market~~technology ~~share~~systems, ~~and~~impede ~~produce~~clinical ~~additional~~operations, ~~inventory.~~cause ~~These~~us ~~facts~~to incur significant investigation and ~~circumstances~~remediation ~~triggered~~expenses, and ~~the~~subject ~~Company~~us to ~~perform an~~litigation, ~~impairment~~government ~~test~~inquiries, onpenalties, ~~its~~and ~~RSB~~reputational ~~assets~~damages. inInformation security and the ~~second~~continued ~~quarter~~development, maintenance, and enhancement of ~~the~~our ~~fiscal~~safeguards ~~year~~to ~~ended~~protect ~~June~~our 30systems, ~~2019.~~data, Assoftware, and networks are a ~~result~~priority offor ~~the~~us. ~~uncertainties~~As security ~~surrounding~~threats ~~its~~continue ~~capital~~to ~~resources~~evolve, ~~and~~we ~~corresponding~~may ~~impacts~~be onrequired ~~forecasted~~to ~~undiscounted~~expend ~~cash~~significant ~~flows,~~additional ~~the~~resources ~~Company~~to ~~fully~~modify ~~impaired~~and ~~its goodwill~~enhance asour ofsafeguards ~~June~~and ~~30,~~investigate and ~~2019,~~remediate ~~totaling~~any ~~$2,170,124,~~information ~~initially~~security ~~recognized~~vulnerabilities. asCyber-attacks ~~part~~may ofalso ~~the~~impede ~~acquisition~~our ofability ~~RSB~~to ~~during~~exercise ~~the~~sufficient ~~fiscal~~disclosure ~~year~~controls. ~~ended~~If ~~June~~we 30are subject to cyberattacks or security breaches, ~~2018~~our business, financial condition, and results of operations could be adversely impacted.

~~Income Taxes~~22

~~Income~~Table taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary in order to reduce deferred tax assets to the amounts expected to be recovered.Contents

~~The~~Further, ~~Company~~our ~~has~~information ~~established~~systems aare ~~valuation~~vulnerable ~~allowance~~to ~~for~~damage ~~its~~or ~~deferred~~interruption ~~tax~~from ~~assets~~fire, ~~that~~flood, ~~are~~natural ~~not~~disaster, ~~recoverable~~power ~~from~~loss, ~~taxable~~telecommunications ~~temporary~~failure, ~~differences~~break-ins, ~~because~~and ~~the~~similar ~~Company~~events. ~~is unable~~A failure to ~~conclude~~implement ~~that~~our ~~future~~disaster ~~utilization~~recovery plans or ultimately restore our information systems after the occurrence of any of these events could have a ~~portion~~material adverse effect on our business, financial condition, and results of ~~its~~operations. ~~NOL~~Because ~~carryforwards~~of the confidential health information that we store and ~~other~~transmit, ~~deferred~~loss, ~~tax~~theft ~~assets~~or isdestruction ~~more~~of ~~likely~~electronically-stored ~~than~~information ~~not~~for any reason could expose us to a risk of regulatory action, litigation, liability to patients and other losses.

~~The~~Our ~~calculation~~acquisition ofstrategy ~~the~~exposes ~~Company’s tax~~us ~~positions~~to ~~involves dealing with uncertainties in the application of complex tax regulations in several different state tax~~a ~~jurisdictions.~~variety ~~The Company is periodically reviewed by tax authorities regarding the amount~~ of ~~taxes~~operational, ~~due.~~integration, ~~These reviews include inquiries regarding the timing~~ and ~~amount~~financial ofrisks, ~~deductions~~which ~~and~~may ~~the~~have ~~allocation~~a ofmaterial ~~income~~adverse ~~among~~effect ~~various tax jurisdictions. The Company records estimated reserves for exposures associated with positions that it takes~~ on ~~its~~our ~~income~~business, ~~tax~~financial ~~returns that do not meet the~~condition, ~~more~~and ~~likely~~results ~~than~~of ~~not standards~~operations.

~~ITEM~~An 7Aelement of our business strategy is to grow by acquiring other companies and assets in the mental health and substance abuse treatment industry. ~~QUANTITATIVE~~We evaluate ~~AND~~potential ~~QUALITATIVE~~acquisition ~~DISCLOSURES~~opportunities ~~ABOUT~~consistent ~~MARKET~~with ~~RISKS~~the normal course of our business. Our ability to complete acquisitions is subject to a number of risks and variables, including our ability to negotiate mutually agreeable terms with the counterparties, our ability to finance the purchase price and our ability to obtain any licenses or other approvals required to operate the assets to be acquired. We may not be successful in identifying and consummating suitable acquisitions, which may impede our growth and negatively affect our results of operations, and may also require a significant amount of management resources. In addition, rapid growth through acquisitions exposes us to a variety of operational and financial risks. We summarize the most significant of these risks below.

~~Our~~Integration exposure to market risks is limited to changes in interest rates. We do not use derivative financial instruments as part of an overall strategy to manage market risk. We have no debt outstanding nor do we have any investment in debt instruments other than highly liquid short-term investments. Accordingly, we consider our interest rate risk exposure to be insignificant at this time. Risks

28We must integrate our acquisitions with our existing operations. This process involves various components of our business and the businesses we have acquired, including the following:

~~Table~~· ofphysicians ~~Contents~~and employees who are not familiar with our operations;

~~ITEM~~· 8.patients ~~FINANCIAL~~who ~~STATEMENTS~~may ~~AND~~elect ~~SUPPLEMENTARY~~to ~~DATA~~switch to another substance abuse treatment provider;

~~UPD~~· ~~HOLDING~~assignment ~~CORP.~~or termination of material contracts, including commercial payor agreements;

~~INDEX~~· TOregulatory ~~CONSOLIDATED~~compliance ~~FINANCIAL~~programs ~~STATEMENTS~~and state and federal licensing requirements; and

		Page
Report of Independent Registered Public Accounting Firm		30
Consolidated Balance Sheets - As of June 30, 2020 and 2019		31
Consolidated Statements of Operations – Years ended June 30, 2020 and 2019		32
Consolidated Statements of Changes in Stockholders’ Deficit - Years ended June 30, 2020 and 2019		33
Consolidated Statements of Cash Flows - Years ended June 30, 2020 and 2019		34
Notes to Consolidated Financial Statements		35-40

disparate operating, information and record keeping systems and technology platforms.

29The integration of acquisitions with our operations could be expensive, require significant attention from management, may impose substantial demands on our operations or other projects, and may impose challenges on the combined business including, without limitation, consistencies in business standards, procedures, policies, business cultures, internal controls, and compliance. In addition, certain acquisitions require a capital outlay, and the return we achieve on such invested capital may be less than the return that we could achieve on other projects or investments.

~~Table~~Expected ofBenefits ~~Contents~~May Not Materialize

~~REPORT~~When OFevaluating ~~INDEPENDENT~~potential ~~REGISTERED~~acquisition ~~PUBLIC~~targets, ~~ACCOUNTING~~we ~~FIRM~~identify potential synergies and cost savings that we expect to realize upon the successful completion of the acquisition and the integration of the related operations. We may, however, be unable to achieve or may otherwise never realize the expected benefits. Our ability to realize the expected benefits from potential cost savings and revenue improvement opportunities is subject to significant business, economic, and competitive uncertainties, many of which are beyond our control. Such uncertainties may include changes to regulations impacting the substance abuse treatment and behavioral healthcare industries, reductions in reimbursement rates from third-party payors, operating difficulties, difficulties obtaining required licenses and permits, patient preferences, changes in competition, and general economic or industry conditions. If we do not achieve our expected results, it may adversely impact our results of operations.

~~To the Board of Directors and~~23

~~Stockholders~~Table of ~~UPD Holding Corp. and Subsidiaries~~Contents

~~Opinion~~Assumptions onof ~~the~~Unknown ~~Consolidated Financial Statements~~Liabilities

WeBusinesses ~~have~~that ~~audited~~we ~~the~~acquire ~~accompanying~~may ~~consolidated balance~~have ~~sheets~~unknown ofor contingent ~~UPD~~liabilities, ~~Holding~~including, ~~Corp.~~without ~~and~~limitation, ~~Subsidiaries~~liabilities ~~(the~~for ~~Company)~~failure asto ofcomply ~~June~~with ~~30,~~healthcare ~~2020~~laws and ~~2019,~~regulations. ~~and the related consolidated statements~~Although ofwe ~~operations,~~typically ~~changes~~attempt into ~~stockholders’~~exclude ~~equity,~~significant ~~and~~liabilities ~~cash~~from ~~flows~~our ~~for~~acquisition ~~each~~transactions ofand ~~the~~seek ~~years~~indemnification infrom the ~~two-year~~sellers ~~period~~of such ~~ended~~facilities ~~June~~for ~~30, 2020,~~at ~~and~~least ~~the~~a ~~related~~portion ~~notes~~of ~~(collectively~~these ~~referred~~matters, towe asmay ~~the~~experience ~~financial~~difficulty ~~statements).~~enforcing Inthose ~~our~~indemnification ~~opinion~~obligations, ~~the~~or we ~~consolidated~~may ~~financial statements~~incur ~~present~~material ~~fairly,~~liabilities in ~~all~~excess ~~material~~of ~~respects,~~any ~~the~~indemnification ~~financial~~for ~~position of~~ the ~~Company~~past asactivities of ~~June~~acquired ~~30,~~facilities. ~~2020~~Such ~~and~~liabilities ~~2019,~~ and ~~the~~ ~~results~~related oflegal ~~its~~or ~~operations~~other costs and/or ~~its~~resulting ~~cash~~damage ~~flows~~to ~~for~~a ~~each~~facility’s ofreputation ~~the~~could ~~years~~negatively inimpact ~~the~~our ~~two-year period ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America~~business.

~~Going~~Completing ~~Concern Uncertainty~~Acquisitions

~~The~~Suitable ~~accompanying~~acquisitions ~~consolidated~~may ~~financial statements~~not ~~have~~be ~~been~~accomplished due ~~prepared~~to ~~assuming~~unfavorable ~~that~~terms. Further, the ~~Company~~cost ~~will~~of ~~continue~~an asacquisition acould ~~going~~result ~~concern.~~in Asa ~~discussed~~dilutive ineffect ~~Note~~on 2our toresults ~~the~~of ~~consolidated~~operations, depending ~~financial~~on ~~statements~~various factors, including the ~~Company~~amount ~~has~~paid nofor ~~revenue~~an ~~source~~acquired facility, ~~suffered~~the ~~recurring~~acquired ~~losses~~facility’s ~~from~~results of operations, the fair value of assets acquired and ~~has~~liabilities aassumed, ~~net~~effects ~~capital~~of ~~deficiency that~~subsequent ~~raises~~legislation, ~~substantial~~and ~~doubt~~limits ~~about~~on ~~its~~reimbursement ~~ability~~rate increases. In addition, we may have to ~~continue~~pay ascash, aincur ~~going~~additional ~~concern.~~debt, ~~Management’s~~or ~~plans~~issue ~~regarding~~equity ~~those~~securities ~~matters also~~to ~~are~~pay ~~described~~for inany ~~Note~~such 2.acquisition, ~~The~~which ~~consolidated~~could adversely affect our financial ~~statements~~results, doresult ~~not~~in ~~include~~dilution ~~any~~to ~~adjustments~~our ~~that~~existing ~~might~~stockholders, result ~~from~~in ~~the~~increased ~~outcome~~fixed obligations, or impede our ability to ofmanage ~~this~~our ~~uncertainty~~operations.

~~Basis~~Managing ~~for Opinion~~Growth

~~These~~Some ~~consolidated~~of ~~financial~~the ~~statements are~~facilities ~~the~~we ~~responsibility~~may ofacquire in the ~~Company’s~~future either ~~management.~~had ~~Our~~or ~~responsibility~~may ishave tosignificantly ~~express~~lower anoperating ~~opinion~~margins onthan the ~~Company’s~~facilities ~~consolidated financial~~we ~~statements~~operated ~~based~~prior onto ~~our~~the ~~audits.~~time Weof ~~are~~our aacquisition ~~public~~thereof or ~~accounting~~had ~~firm~~or ~~registered~~may ~~with~~have ~~the~~operating ~~Public~~losses ~~Company~~prior ~~Accounting~~to ~~Oversight Board~~such ~~(United~~acquisition. ~~States)~~If ~~(PCAOB)~~we ~~and~~fail ~~are required~~ to beimprove ~~independent~~the ~~with~~operating ~~respect~~margins toof the ~~Company~~facilities inwe ~~accordance~~acquire, operate ~~with~~such ~~the~~facilities ~~U.S.~~profitably, ~~federal securities~~or ~~laws~~effectively ~~and~~integrate the ~~applicable~~operations ~~rules and regulations~~ of ~~the~~acquired ~~Securities~~facilities, ~~and~~our ~~Exchange~~results ~~Commission~~of ~~and~~operations ~~the~~could ~~PCAOB~~be negatively impacted.

WeLiquidity ~~conducted~~risk ~~our~~could ~~audits~~impair inour ~~accordance with~~ability ~~the~~to ~~standards~~fund ofoperations ~~the PCAOB. Those standards require that we plan~~ and ~~perform~~meet ~~the~~our ~~audit~~obligations toas ~~obtain~~they ~~reasonable~~become ~~assurance about whether the consolidated financial statements are free of material misstatement~~due, ~~whether~~and ~~due~~our tofunding ~~error~~sources ormay ~~fraud.~~be ~~The~~insufficient ~~Company is not required~~ to ~~have,~~fund ~~nor were we engaged to perform, an audit of its internal control over financial reporting. As part of~~ our ~~audits,~~future ~~we are~~operations ~~required~~and to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reportinggrowth. ~~Accordingly, we express no such opinion.~~

~~Our~~Liquidity ~~audits~~is ~~included~~essential ~~performing~~to ~~procedures~~our business. Liquidity torisk ~~assess~~is the ~~risks~~potential ofthat ~~material~~we ~~misstatement~~will ofbe ~~the~~unable ~~consolidated~~to ~~financial~~meet ~~statements,~~our ~~whether~~obligations ~~due~~as tothey ~~error~~come ordue ~~fraud,~~because ~~and~~of ~~performing procedures~~an ~~that~~inability ~~respond~~ to ~~those~~obtain ~~risks~~adequate funding. An ~~Such~~inability ~~procedures~~to ~~included~~obtain ~~examining~~such funding, onat acompetitive ~~test~~rates ~~basis,~~or ~~evidence~~at ~~regarding~~all, ~~the~~could ~~amounts~~have ~~and disclosures~~a insubstantial ~~the~~negative ~~consolidated~~effect ~~financial~~on ~~statements~~our liquidity. Our ~~audits~~access to ~~also~~funding ~~included~~sources ~~evaluating~~in ~~the~~amounts ~~accounting~~adequate ~~principles~~to ~~used~~finance ~~and~~our ~~significant estimates~~activities ~~made~~or byon ~~management,~~terms asthat ~~well~~are asacceptable ~~evaluating~~to ~~the~~us ~~overall~~could ~~presentation~~be ofimpaired ~~the~~by ~~consolidated~~factors ~~financial statements. We believe~~ that affect ~~our~~us ~~audits~~specifically ~~provide~~or athe ~~reasonable~~healthcare ~~basis~~industry ~~for~~or ~~our~~economy ~~opinion~~in general.

WeAny ~~have~~substantial, ~~served~~unexpected asand/or prolonged change in the ~~Company’s~~level ~~auditor~~or cost of liquidity could have a material adverse effect on our ability to fund our future operations and growth, which ~~since~~could ~~2019~~have a material adverse effect on our assets, business, cash flow, condition (financial or otherwise), liquidity, prospects and results of operations.

~~Salt~~The ~~Lake~~uncertainties ~~City~~associated with the factors described above raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and to be able to discharge our liabilities and commitments in the normal course of business, ~~Utah~~we must do some or all of the following: (i) increase the bed counts and other capacities at our facilities; (ii) increase gross revenues while improving operating margins through cost savings initiatives; and (iii) obtain additional financing. There can be no assurance that we will be able to achieve any or all of the foregoing objectives.

~~August~~We 14will need additional financing to execute our long-term business plan and fund operations, ~~2020~~at which time additional financing may not be available on reasonable terms or at all.

30To fund our acquisition development and operational strategies, we may consider raising additional funds through various financing sources, including the sale of our common or preferred stock and the procurement of commercial debt financing. However, there can be no assurance that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to expand or continue our business as desired and operating results may be adversely affected. Any debt financing will increase expenses and must be repaid regardless of operating results and may involve restrictions limiting our operating flexibility. If we issue equity securities to raise additional funds, the percentage ownership of our existing stockholders will be reduced, and our stockholders may experience additional dilution in net book value per share.

~~Table of Contents~~24

~~PART~~Table I.of ~~FINANCIAL INFORMATION~~Contents

~~Item~~Our 1ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in our industry, which could impact the availability or cost of future financings. ~~Financial~~Any ~~Statements~~deterioration of credit and capital markets may adversely affect our access to sources of funding, and we cannot be certain that we will have access to adequate capital to fund our acquisition and development strategies when needed. In addition, substantial sales of our common stock by existing stockholders could adversely affect our stock price and limit our ability to raise capital. If the amount of capital we are able to raise from financing activities, together with our revenue from operations, is not sufficient to satisfy our capital needs, we may be required to decrease the pace of, or eliminate, our acquisition strategy and potentially reduce or even cease operations.

~~UPD~~Our ~~HOLDING~~business ~~CORP~~may face significant risks with respect to future de novo expansion, including the time and costs of identifying new geographic markets, the ability to obtain necessary licensure and other zoning or regulatory approvals and significant start-up costs including advertising, marketing, and the costs of providing equipment, furnishings, supplies, and other capital resources.

~~AND~~As ~~SUBSIDIARIES~~part of our growth strategy, we intend to develop new substance abuse treatment facilities in existing and new markets, either by building a new facility or by acquiring an existing facility with an alternative use and repurposing it as a substance abuse treatment facility. Such de novo expansion involves significant risks, including, but not limited to, the following:

~~CONSOLIDATED~~· ~~BALANCE~~the ~~SHEETS~~time and costs associated with identifying locations in suitable geographic markets, which may divert management attention from existing operations;

	June 30,			June 30,
	2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	20,718		$	7,215
Other current assets		755			—
Total current assets		21,473			7,215
Property and equipment, net		—			74,617
Total assets	$	21,473		$	81,832
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	171,547		$	179,671
Accrued interest		77,134			75,698
Convertible notes payable		180,129			155,000
Due to shareholders		72,225			71,074
Notes payable		104,560			485,560
Total current liabilities		605,595			967,003
Commitments and Contingencies
Stockholders' deficit
Preferred stock, $0.01 par value; 10,000,000 authorized and none issued and outstanding		—			—
Common stock, $0.005 par value; 200,000,000 shares authorized and 172,450,907 and 171,008,684 issued and outstanding at June 30, 2020 and 2019, respectively		862,255			855,044
Additional paid-in-capital		1,872,632			1,709,731
Accumulated deficit		(3,319,009	)		(3,449,946	)
Total stockholders' deficit		(584,122	)		(885,171	)
Total liabilities and stockholders' deficit	$	21,473		$	81,832

the possibility of changes to comprehensive zoning plans or zoning regulations that imposes additional restrictions on use or requirements, which could impact our expansion into otherwise suitable geographic markets;

~~The~~· ~~accompanying~~the ~~notes~~need ~~are~~for ansignificant ~~integral~~advertising ~~part of~~and ~~these~~marketing ~~consolidated~~expenditures ~~financial~~to ~~statements.~~attract patients;

31· our ability to provide each de novo facility with the appropriate equipment, furnishings, materials, supplies, and other capital resources;

~~Table~~· ofour ~~Contents~~ability to obtain licensure and accreditation, establish relationships with healthcare providers in the community, and delays or difficulty in installing our operating and information systems;

~~UPD~~· ~~HOLDING~~the ~~CORP.~~costs of evaluating new markets, hiring experienced local physicians, management, and staff, and opening new facilities, and the time lags between these activities and the generation of sufficient revenue to support the costs of the expansion; and

~~AND~~· ~~SUBSIDIARIES~~our ability to finance de novo expansion and possible dilution to our existing stockholders if our common stock is used as consideration.

~~CONSOLIDATED~~As ~~STATEMENTS~~a OFresult ~~OPERATIONS~~of these and other risks, there can be no assurance that we will be able to develop de novo treatment facilities or that a de novo treatment facility will become profitable. De novo expansion could expose us to liabilities or loss.

	June 30,			June 30,
	2020			2019
Revenues:
Product sales	$	—		$	14,274
Operating costs and expenses:
Cost of revenue		—			85,863
Professional fees		140,394			47,169
Impairment of goodwill		—			2,170,124
General and administrative		8,865			69,604
Total operating costs and expenses		149,259			2,372,760
Operating loss		(149,259	)		(2,358,486	)
Interest expense, net		(44,625	)		(159,209	)
Gain on debt settlement		324,821			—
Other income, net		—			17,771
Total other income (expense)		280,196			(141,438	)
Income (loss) from continuing operations, before income taxes		130,937			(2,499,924	)
Provision for income taxes		—			—
Net income (loss)		130,937			(2,499,924	)
Basic and diluted earnings (loss) per share from:	$	0.00		$	(0.02	)
Weighted average shares outstanding
Basic and diluted		171,513,505			162,636,158

Our ability to maintain census is dependent on a number of factors outside of our control, and if we are unable to maintain census (i.e., our daily patient occupancy), our business, results of operations and cash flows could be materially adversely affected.

~~The~~Our ~~accompanying~~revenue ~~notes~~is directly impacted by our ability to maintain census (i.e., the daily patient occupancy of our facilities by bed count). Our ability to maintain census is dependent on a variety of factors, many of which are anoutside ~~integral~~of ~~part~~our control, including our referral relationships, average length of stay of our patients, the extent to which third-party payors require preadmission authorization or utilization review controls, competition in the industry, and the decisions of ~~these~~our ~~consolidated~~patients ~~financial~~to ~~statements~~seek and commit to treatment.

32A significant decrease in census could materially adversely affect our revenue, profitability, and cash flows due to fewer or lower reimbursements received and the additional resources required to collect accounts receivable and maintain our existing level of business.

~~Table of Contents~~25

~~UPD~~Table ~~HOLDING~~of ~~CORP.~~Contents

~~AND~~Given ~~SUBSIDIARIES~~the patient-driven nature of the substance abuse treatment sector, our business is dependent on patients seeking and committing to treatment. Although increased awareness and de-stigmatization of substance abuse treatment in recent years has resulted in more people seeking treatment, the decision of each patient to seek treatment is ultimately discretionary. In addition, even after the initial decision to seek treatment, our patients may decide at any time to discontinue treatment and leave our facilities against the advice of our physicians and other treatment professionals. For this reason, among others, average length of stay can vary among periods without correlating to the overall operating performance of our business. If patients or potential patients decide not to seek treatment or discontinue treatment early, census could decrease and, as a result, our business, financial condition, and results of operations could be adversely affected.

~~CONSOLIDATED~~We ~~STATEMENTS~~operate OFin ~~CHANGES~~a INhighly competitive industry ~~STOCKHOLDERS’~~where ~~DEFICIT~~competition may lead to declines in patient volumes and an increase in labor costs, which could have a material adverse effect on our business, financial condition, and results of operations.

~~FOR~~The ~~THE~~substance ~~YEARS~~abuse ~~ENDED~~treatment ~~JUNE~~industry 30is highly competitive, ~~2020~~and ~~AND~~competition among substance abuse treatment providers (including behavioral healthcare facilities) for patients has intensified ~~2019~~in recent years. In 2018, there were approximately 4,200 substance abuse treatment businesses in the United States. There are behavioral healthcare facilities that provide substance abuse and other mental health treatment services comparable to at least some of the services offered by our facilities in each of the geographical areas in which we intend to operate. Some of our competitors are owned by tax-supported governmental agencies or by nonprofit corporations and may have certain financial advantages not available to us, including endowments, charitable contributions, tax-exempt financing, and exemptions from sales, property, and income taxes. In some markets, certain of our competitors may have greater financial resources, be better equipped, and offer a broader range of services than we do. Some of our competitors are local, independent operators or physician groups with strong established reputations within the surrounding communities, which may adversely affect our ability to attract new patients in markets where we compete with such providers. If our competitors are better able to attract patients, expand services, or obtain favorable participation agreements with third-party payors, we may experience a decline in patient volume, which could have a material adverse effect on our business, financial condition and results of operations.

									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity (Deficit)
BALANCE, June 30, 2018		—	$	—		162,566,772	$	812,834	$	949,552	$	(950,022	)	$	812,364
Issuance of common stock for conversion of debt and interest		—		—		8,441,912		42,210		751,637		—			793,847
Stock based compensation		—		—		—		—		8,542		—			8,542
Net loss		—		—		—		—		—		(2,499,924	)		(2,499,924	)
BALANCE, June 30, 2019		—		—		171,008,684	$	855,044	$	1,709,731	$	(3,449,946	)	$	(885,171	)
Issuance of common stock for conversion of debt and interest		—		—		1,442,223		7,211		136,981		—			144,192
Related party debt and interest forgiveness		—		—		—		—		25,920		—			25,920
Net income		—		—		—		—		—		130,937			130,937
BALANCE, June 30, 2020		—	$	—		172,450,907	$	862,255	$	1,872,632	$	(3,319,009	)	$	(584,122	)

Our operations depend on the efforts, abilities, and experience of our management team, physicians, and medical support personnel, including our nurses, mental health technicians, therapists, addiction counselors, pharmacists, and clinical technicians. We compete with other healthcare providers in recruiting and retaining qualified management, mental health technicians, therapists, nurses, counselors, and other support personnel responsible for the daily operations of our facilities. The nationwide shortage of nurses and other medical support personnel has been a significant operating issue facing our industry in recent years. This shortage may require us to enhance our wages and benefits to recruit and retain nurses and other medical support personnel or require us to hire expensive temporary personnel. If we are unable to attract and retain qualified personnel, we may be unable to provide our services, the quality of our services may decline, and we could experience a decline in patient volume, all of which could have a material adverse effect on our business, financial condition, and results of operations.

~~The~~Increased ~~accompanying~~labor ~~notes~~union ~~are~~activity anis ~~integral~~another ~~part~~factor that could adversely affect our labor costs. We do not currently employ a unionized labor force. In the event of ~~these~~the ~~consolidated~~independent ~~financial~~organization or ~~statements~~unionization of our employees, we may become subject to the risk of labor disputes, strikes, work stoppages, slowdowns, and other labor-relations matters. Although we are not aware of any union organizing activity at any of our other facilities, we are unable to predict whether any such activity will take place in the future.

33We depend heavily on key executives and other key management personnel, and the departure of one or more of our key executives or other key management personnel could have a material adverse effect on our business, financial condition, and results of operations.

~~Table of Contents~~26

~~UPD~~Table ~~HOLDING~~of ~~CORP.~~Contents

~~AND~~The ~~SUBSIDIARIES~~expertise and efforts of our key executives, including our Chief Executive Officer, Mark Conte, and Patrick Ogle our Chief Operating Officer other management personnel are critical to the success of our business. We currently do not have employment agreements or non-compete covenants with any of our key executives. The loss of the services of one or more of our key executives could significantly undermine our management expertise and our ability to provide efficient, quality healthcare services at our facilities. Furthermore, if one or more of our key executives were to terminate employment with us and engage in a competing business, we would be subject to increased competition, which could have a material adverse effect on our business, financial condition, and results of operations.

~~CONSOLIDATED~~Failure ~~STATEMENTS~~to OFadequately ~~CASH~~protect ~~FLOWS~~our trademarks and any other proprietary rights could have a material adverse effect on our business, financial condition, and results of operations.

	June 30,			June 30,
	2020			2019
Cash flows from operating activities:
Net income (loss)	$	130,937		$	(2,499,924	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain on settlement of debt		(324,821	)		—
Stock-based compensation		—			8,542
Impairment of goodwill		—			2,170,124
Changes in operating assets and liabilities:
Accounts receivable		—			2,783
Inventory		—			76,475
Other current assets		(755	)		—
Accrued interest		46,548			108,440
Accounts payable		(6,974	)		(14,841	)
Net cash used in operating activities		(155,065	)		(148,401	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes payable		165,129			101,000
Proceeds from issuance of related party notes payable		10,000			74,560
Principal payments on notes payable		(6,561	)		(33,750	)
Net cash provided by financing activities		168,568			141,810
Net increase (decrease) in cash and cash equivalents		13,503			(6,591	)
Cash and cash equivalents at beginning of period		7,215			13,806
Cash and cash equivalents at end of period	$	20,718		$	7,215
Cash paid for income taxes	$	—		$	—
Cash paid for interest	$	4,000		$	44,000
Non-Cash Supplemental Disclosures
Related party debt forgiveness	$	21,000		$	—
Common stock issued for debt settlement	$	130,000		$	652,500

We intend to develop portfolio that we consider to be of significant importance to our business, and we may acquire additional trademarks or other proprietary rights in acquisitions that we pursue as part of our growth strategy. If the actions we take to establish and protect our trademarks and other proprietary rights are not adequate to prevent imitation of our services by others or to prevent others from seeking to block sales of our services as an alleged violation of their trademarks and proprietary rights, it may be necessary for us to initiate or enter into litigation in the future to enforce our trademark rights or to defend ourselves against claimed infringement of the rights of others. The cost of any such legal proceedings could be expensive, and such legal proceedings could result in an adverse determination that could have a material adverse effect on our business, financial condition, and results of operations.

~~The~~Risks ~~accompanying~~Related ~~notes~~to ~~are~~Regulatory ~~an integral part of these consolidated financial statements.~~Matters

34If we fail to comply with the extensive laws and government regulations impacting our industry, we could suffer penalties, be the subject of federal and state investigations, or be required to make significant changes to our operations, which may reduce our revenue, increase our costs, and have a material adverse effect on our business, financial condition, and results of operations.

~~Table~~Healthcare ofservice ~~Contents~~providers are required to comply with extensive and complex laws and regulations at the federal, state, and local government levels relating to, among other things:

~~UPD~~· ~~HOLDING~~licensure, ~~CORP.~~certification and accreditation of substance use treatment services;

~~AND~~· ~~SUBSIDIARIES~~licensure, Clinical Laboratory Improvement Amendments of 1988 (CLIA) certification and accreditation of laboratory services;

~~NOTES~~· TOhandling, ~~CONSOLIDATED~~administration ~~FINANCIAL~~and ~~STATEMENTS~~distribution of controlled substances;

~~NOTE~~· 1necessity –and ~~BUSINESS~~adequacy ~~AND~~of ~~ORGANIZATION~~care and quality of services;

~~UPD~~· ~~Holding Corp. (“UPD”~~licensure, ~~“Company”),~~ ~~incorporated~~certification inand ~~the~~qualifications ~~State~~ of ~~Nevada,~~professional ~~is a holding Company seeking to acquire assets~~ and ~~businesses~~support to provide a competitive advantage through cost-sharing and other synergies. The Company currently operates in the food and beverage industry through Record Street Brewing (“RSB”) and weight and health management with its distribution and marketing agreement with iMetabolic (“IMET”). The Company is pursuing business development opportunities in the food and beverage industry and other product licensing agreements.personnel;

~~NOTE~~· 2referrals –of ~~SUMMARY~~patients OFand ~~SIGNIFICANT ACCOUNTING~~permissible ~~POLICIES~~relationships with physicians and other referral sources;

~~Principles~~· claim submission and collections, including penalties for the submission of, ~~Consolidation~~or causing the submission of, false, fraudulent or misleading claims and the failure to repay overpayments in a timely manner;

~~The~~· ~~Company~~extensive ~~consolidates~~conditions ~~the assets, liabilities, and operating results~~ of ~~its~~participation ~~wholly~~for ~~owned~~Medicare and ~~majority-owned~~Medicaid subsidiaries; Net Edge Devices, LLC, an Arizona Limited Liability Company, iMetabolic Corp, (“IMET”) a Nevada corporation, and Record Street Brewing Co. a Nevada corporation. All intercompany accounts and transactions have been eliminated in consolidation.programs

~~Cash~~· consumer protection issues and ~~Cash~~billing ~~Equivalents~~and collection of patient-owed accounts issues;

~~Cash~~· ~~and~~communications ~~cash~~with ~~equivalents~~patients ~~consist of cash~~ and ~~highly~~consumers, ~~liquid~~including ~~investments~~laws ~~with~~intended ~~original maturities of 90 days of less at the date of purchase. The Company is exposed~~ to ~~credit risk~~prevent inmisleading ~~the~~marketing event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured. As of June 30, 2020 and 2019 the Company did not have any cash equivalents or cash deposits in excess of the federally insured limits.practices;

~~Use~~· privacy and security of ~~Estimates~~health-related information, patient personal information and medical records;

~~The~~· ~~preparation~~physical ofplant ~~the~~planning, ~~Company’s consolidated~~construction ~~financial statements in conformity with accounting principles generally accepted in the United States~~ of ~~America~~new ~~requires management~~facilities ~~to make estimates~~ and ~~assumptions~~expansion ~~that affect the reported amounts~~ of ~~assets~~existing and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are madefacilities; ~~however, actual results could differ materially from these estimates.~~

~~Fair~~· ~~Value~~activities ofregarding ~~Financial Instruments~~competitors;

~~The~~· fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement dateU. ~~Financial~~S. ~~assets~~Federal ~~are~~Drug ~~marked~~Administration to(FDA) ~~bid~~laws ~~prices~~ and ~~financial~~regulations ~~liabilities~~related ~~are marked~~ to ~~offer~~drugs ~~prices. The~~and ~~fair~~medical value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.devices;

~~Fair~~· ~~value~~operational, ~~measurements~~personnel doand ~~not include transaction costs. A fair value hierarchy is used to prioritize the~~ quality ~~and~~requirements ~~reliability~~intended ~~of the information used~~ to ~~determine fair~~ensure ~~values. Categorization within the fair value hierarchy is based on the lowest level of input~~ that isclinical ~~significant~~testing ~~to the~~services ~~fair~~are ~~value~~accurate, ~~measurement. The~~reliable ~~fair~~and ~~value hierarchy is defined into the following three categories:~~timely;

~~Level~~· 1:health ~~Quoted~~and ~~market prices~~safety inof ~~active markets for identical assets or liabilities.~~employees;

~~Level~~· 2:handling, ~~Observable market-based~~transportation ~~inputs~~and ordisposal ~~unobservable~~of ~~inputs~~medical ~~that~~specimens ~~are~~and ~~corroborated~~infectious byand ~~market~~hazardous ~~data.~~waste;

~~Level~~· 3:corporate ~~Unobservable inputs~~practice ~~that~~of ~~are~~medicine, ~~not~~fee-splitting, ~~corroborated~~self-referral byand ~~market~~kickback ~~data.~~prohibitions, including recent state and federal laws intended to eliminate bribes and kickbacks; and

35· the SUPPORT for Patients and Communities Act, which became law on October 24, 2018.

~~Table of Contents~~27

~~The~~Table ~~Company's financial instruments consist primarily~~ of cash and cash equivalents, restricted cash, accounts payable, and convertible and other notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.Contents

~~Net~~A ~~Income~~CLIA ~~(Loss)~~certificate ~~Per~~demonstrates ~~Share~~that a testing laboratory meets the federal regulations for clinical diagnostic testing, ensuring quality and safety in the laboratory and laboratory results. The Clinical Laboratory Improvement Amendments of 1988 are administered by the Centers for Medicare & Medicaid Services (CMS).

The ~~Company~~United ~~presents both~~States ~~basic~~has ~~and~~recently ~~diluted~~enacted ~~earnings~~the ~~per~~Eliminating Kickbacks ~~share~~in Recovery Act of 2018 (~~EPS~~EKRA) onto ~~the~~create ~~face~~a ofnew ~~the~~federal ~~income~~crime ~~statement.~~for ~~Basic~~knowingly ~~EPS~~and iswillfully: ~~computed~~(1) bysoliciting ~~dividing~~or ~~net~~receiving ~~loss~~any remuneration byin ~~the~~return ~~weighted~~for ~~average~~referring ~~number~~a ofpatient ~~shares~~to ~~outstanding~~a ~~during~~recovery ~~the~~home, ~~period.~~clinical ~~Diluted~~treatment ~~EPS~~facility, ~~gives~~or ~~effect~~laboratory; toor ~~all~~(2) ~~dilutive~~paying ~~potential~~or ~~common~~offering any remuneration ~~shares~~to ~~outstanding~~induce ~~during~~such ~~the~~a ~~period~~referral ~~under~~or ~~the~~in ~~treasury~~exchange ~~stock~~for ~~method~~an individual using the ~~if-converted~~services ~~method.~~of ~~Due~~a torecovery ~~the~~home, ~~incurrence~~clinical oftreatment ~~net~~facility, or laboratory. ~~losses~~Certain states, ~~the~~including ~~Company~~Florida, ~~did~~have ~~not~~enacted ~~include~~similar ~~outstanding~~laws, ~~instruments~~or ~~convertible~~will ~~into~~likely ~~common~~enact ~~stock~~similar ~~that~~laws ~~would~~in bethe ~~anti-dilutive~~future.

~~Revenue~~As ~~Recognition~~a provider of addiction treatment services, we are subject to governmental investigations and potential claims and lawsuits by patients, employees, and others, which may increase our costs, cause reputational issues, and have a material adverse effect on our business, financial condition, results of operations, and reputation.

~~The~~Given ~~Company sells~~the ~~beer~~addiction and ~~beverage~~mental ~~products~~health toissues ~~its~~of patients ~~customers.~~and ~~The~~the ~~product~~nature ~~sales~~of ~~represent~~the ~~revenue~~services ~~earned~~provided, ~~under~~the ~~contracts~~substance abuse treatment industry is heavily regulated by governmental agencies and involves significant risk of liability. We and others in ~~which~~our industry are exposed to the ~~Company~~risk of governmental investigations, regulatory ~~bills~~actions, and ~~collects~~whistleblower ~~charges~~lawsuits ~~for~~or ~~delivery~~other claims against us and our physicians and other professionals arising out of ~~products~~our day to day business operations, including, without limitation, patient treatment at our facilities and relationships with healthcare providers that may refer patients to us. ~~The~~Addressing ~~Company~~any ~~determines~~investigation, lawsuit, or other claim may distract management and divert resources, even if we ultimately prevail. Regardless of the ~~measurement~~outcome of ~~revenue~~any such investigation, lawsuit, or claim, the publicity and potential risks associated with the ~~timing~~investigation, lawsuit, or claim could harm our reputation or the reputation of ~~revenue~~our management and negatively impact the perception ~~recognition~~of ~~utilizing~~the Company by patients, investors, or others and could have a materially adverse impact on our financial condition and results of operations. Fines, restrictions, penalties, and damages imposed as a result of an investigation or a successful lawsuit or claim that is not covered by, or is in excess of, our insurance coverage may increase our costs and reduce our profitability. Our insurance premiums may increase year over year, and insurance coverage may not be available at a reasonable cost in the ~~following~~future, ~~core~~especially ~~principles:~~given the significant increase in insurance premiums generally experienced in the healthcare industry.

1We also are subject to an inherent risk of potential medical malpractice lawsuits and other potential claims or legal actions in the ordinary course of business. ~~Identifying~~From time to time, we may be subject to claims alleging that we did not properly treat or care for a patient, that we failed to follow internal or external procedures that resulted in death or harm to a patient, or that our employees mistreated our patients, resulting in death or harm. Any deficiencies in the ~~contract~~quality ~~with~~of care provided by our employees could expose us to governmental investigations and lawsuits from our patients. Some of these actions may involve large claims as well as significant defense costs. We cannot predict the outcome of these lawsuits or the effect that findings in such lawsuits may have on us. In an effort to resolve one or more of these matters, we may decide to negotiate a ~~customer;~~settlement, and amounts we pay to settle any of these matters may be material. All professional and general liability insurance we purchase is subject to policy limitations. We believe that, based on our past experience, our insurance coverage is adequate considering the claims arising from the operation of our facilities. While we continuously monitor our coverage, our ultimate liability for professional and general liability claims could change materially from our current estimates. If such policy limitations should be partially or fully exhausted in the future or if payments of claims exceed our estimates or are not covered by our insurance, they could have a material adverse effect on our financial condition and results of operations.

2We intend to care for a large number of patients with complex medical conditions, special needs, or who require a substantial level of care and supervision. ~~Identifying~~There is an inherent risk that our patients could be harmed while in treatment, whether through negligence, by accident, or otherwise. Further, patients might engage in behavior that results in harm to themselves, our employees, or to one or more other individuals. Patient safety incidents may result in regulatory enforcement actions, negative press about us, or the ~~performance~~addiction ~~obligations~~treatment industry generally, as well as in lawsuits filed by plaintiff’s lawyers against us. These developments could diminish public perception of the ~~contract;~~quality of our services, which in turn could lead to a loss of patient placements and referrals, resulting in a material adverse effect on our business, results of operations, and financial condition.

3.Failure ~~Determining~~to comply with these laws and regulations could result in the ~~transaction~~imposition ~~price;~~of significant civil or criminal penalties, loss of licenses or certifications, or require us to change our operations, or in the ultimate exclusion of one or more facilities from participation in Medicare, Medicaid, and other federal and state healthcare programs, any of which may have a material adverse effect on our business, financial condition, and results of operations. Both federal and state government agencies, as well as commercial payors, have heightened and coordinated civil and criminal enforcement efforts as part of numerous ongoing investigations of healthcare organizations.

~~4. Allocate the transaction price to the performance obligations in the contract; and~~28

5.Table ~~Recognize~~of ~~revenue when (or as) the Company satisfies its performance obligations.~~Contents

~~Revenues~~We ~~from~~endeavor ~~product~~to ~~sales~~comply ~~are~~with all applicable legal ~~recognized~~and ~~when~~regulatory requirements; however, there is no guarantee that we will be able to adhere to all of the ~~Company’s~~complex ~~performance~~government ~~obligations~~regulations that ~~are~~apply ~~satisfied~~to ~~upon~~our ~~delivery~~business. ~~The~~We ~~Company~~seek ~~primarily~~to ~~invoices~~structure ~~its~~all ~~customers when~~of ~~orders~~our ~~are~~relationships ~~received~~with referral sources and ~~does~~patients ~~not~~to ~~provide~~comply ~~any~~with ~~refunds~~applicable anti-kickback laws, ~~rights~~physician self-referral laws, fee-splitting laws, and state corporate practice of ~~return~~medicine prohibitions. We monitor these laws and their implementing regulations and implement changes as necessary. However, orthe ~~warranties~~laws and regulations in these areas are complex and often subject to ~~its~~varying ~~customers~~interpretations. ~~The~~For ~~Company~~example, ~~has~~if ~~not recognized~~an ~~any~~enforcement ~~revenue~~agency ~~since~~were to challenge the ~~quarter~~compensation ~~ended~~paid ~~September~~under our 30contracts with professional physician groups, ~~2018~~we could be required to change our practices, face criminal or civil penalties, pay substantial fines, or otherwise experience a material adverse effect as a result.

~~Inventory~~We may be required to spend substantial amounts to comply with legislative and regulatory initiatives relating to privacy and security of patient health information.

~~Inventory,~~There ~~consisting~~currently ofare ~~beer~~numerous ~~products produced~~legislative and ~~packaged~~regulatory initiatives ~~by a third-party vendor, are stated~~ at the ~~lower~~federal ofand ~~cost~~state orlevels ~~net~~addressing ~~realizable~~patient ~~value,~~privacy ~~with~~and ~~cost~~security ~~determined on a first-in, first-out basis~~concerns. ~~The~~For ~~Company’s products~~example, ifthe ~~pasteurized~~regulations ~~are~~contained ~~expected to have a “shelf-life” of between~~in ~~six~~42 ~~months~~CFR ~~and~~Part ~~one~~2 ~~year from~~ (the ~~date~~“Part of2 ~~production~~Regulations”) ~~based~~serve onto ~~the~~protect ~~methodology~~patient ~~used~~records created by ~~the~~federally ~~producer.~~assisted ~~The~~programs ~~Company~~for ~~reduces~~ the ~~carrying~~treatment ~~value~~ of ~~inventories~~substance ~~for~~use ~~items~~disorders ~~that~~(SUD) and are ~~potentially~~administered ~~excess,~~by ~~slow-moving,~~the orSubstance ~~subject~~Abuse ~~to spoilage. The Company bases its provisions for excess, expired~~ and ~~spoiled~~Mental ~~inventory~~Health ~~primarily~~Services onAdministration ~~our~~(SAMHSA) ~~estimates~~ branch of ~~forecasted~~the ~~net sales~~U.S. ADepartment ~~significant change in the timing or level~~ of ~~demand~~Health ~~for~~and ~~our~~Human ~~products~~Services as(HHS). ~~compared~~Specifically, ~~with~~the ~~forecasted~~Part ~~amounts~~2 ~~may~~Regulations ~~result~~restrict inthe ~~recording additional provisions for excess~~disclosure, ~~expired~~ and ~~spoiled inventory in~~ regulate the ~~future.~~security, Asof ~~the~~our ~~Company~~patient’s ~~products~~identifiable ~~are~~information ~~all~~related ~~produced~~to bysubstance ~~third~~abuse. ~~parties,~~These ~~all~~requirements ~~inventories are~~apply ~~categorized~~to asany ~~finished~~of ~~goods.~~our Asfacilities that ofreceive ~~June~~federal 30assistance, ~~2019,~~which ~~all~~is ofinterpreted ~~the~~broadly ~~Company’s~~to ~~inventory~~include ~~was~~facilities ~~written~~licensed, ~~off~~certified ~~due~~or toregistered ~~spoilage~~by a federal agency.

~~Income~~In ~~Taxes~~addition, the federal privacy and security regulations issued under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) require our facilities to comply with extensive requirements on the use and disclosure of protected health information and to implement and maintain administrative, physical, and technical safeguards to protect the security of such information. Additional security requirements apply to electronic protected health information. These regulations also provide patients with substantive rights with respect to their health information and impose substantial administrative obligations on our facilities, including the requirement to enter into written agreements with contractors, known as business associates, to whom our programs disclose protected health information. We may be subject to penalties as a result of a business associate violating HIPAA, if the business associate is found to be our agent. Covered entities must notify individuals, HHS and, in some cases, the media of breaches involving unsecured protected health information. HHS and state attorneys general are authorized to enforce these regulations. Violations of the HIPAA privacy and security regulations may result in significant civil and criminal penalties, and data breaches and other HIPAA violations may give rise to class action lawsuits by affected patients under state law.

~~The~~Our ~~Company~~programs ~~recognizes~~remain ~~deferred~~subject ~~tax~~to ~~liabilities~~any privacy-related ~~and~~federal ~~assets~~or ~~using~~state ~~the~~laws ~~liability~~that ~~method.~~are ~~Under~~more ~~this~~restrictive ~~method,~~than ~~deferred~~the ~~tax~~HIPAA ~~liabilities~~privacy and ~~assets~~security ~~are~~regulations. ~~determined~~These ~~based~~laws onvary ~~the~~by ~~temporary differences~~state ~~between~~and ~~the~~may ~~financial~~impose additional ~~statements~~requirements ~~carrying values~~ and ~~tax~~penalties. ~~bases~~For ofexample, ~~assets~~some ~~and~~states ~~liabilities~~impose ~~using~~strict ~~enacted~~restrictions ~~tax~~on ~~rates~~the ~~in effect~~use inand ~~the~~disclosure ~~years~~of inhealth ~~which~~information pertaining ~~the~~to ~~differences~~mental ~~are~~health ~~expected~~or tosubstance ~~reverse~~abuse. InFurther, ~~determining~~most ~~the~~states ~~future~~have ~~tax~~enacted ~~consequences~~laws ofand ~~events~~regulations that ~~have~~ ~~been~~require ~~recognized~~us into ~~the~~notify ~~financial~~affected individuals ~~statements~~in orthe ~~tax~~event ~~returns,~~of ~~judgment~~a ~~and~~data ~~interpretation~~breach ofinvolving ~~statutes~~individually isidentifiable ~~required~~information. ~~Judgments and~~In ~~interpretation~~addition, ofthe ~~statutes~~Federal ~~are~~Trade ~~inherent~~Commission inmay use ~~this~~its ~~process.~~consumer ~~Future~~protection ~~income~~authority ~~tax~~to ~~assets~~initiate ~~are~~enforcement ~~recorded~~actions in ~~the~~response ~~financial~~to ~~statements if~~data ~~realization~~breaches isor ~~considered~~other ~~more~~privacy ~~likely~~or ~~than~~security ~~not~~lapses.

~~For~~As ~~previously~~public ~~taken~~attention ~~tax~~is ~~positions~~drawn ~~considered~~ to beissues ~~uncertain,~~related to the ~~Company~~privacy ~~prescribes~~and asecurity ~~recognition~~of ~~threshold~~medical and ~~measurement~~other ~~attribute.~~personal Ininformation, ~~the~~federal ~~event~~and ~~certain~~state ~~tax~~authorities ~~positions~~may doincrease enforcement efforts ~~not~~and ~~meet~~seek ~~the~~to ~~appropriate~~impose ~~recognition~~harsher ~~threshold~~penalties, ~~de-recognition~~as ofwell ~~income~~as ~~tax~~revise ~~assets~~ and ~~liabilities,~~expand ~~classification~~laws ofor enact new laws concerning these topics. Compliance with current ~~and~~as ~~deferred~~well ~~income~~as ~~tax~~any ~~assets~~newly ~~and~~established ~~liabilities,~~provisions or interpretations of existing requirements will require us to expend significant resources. Increased focus on privacy and ~~accounting~~security ~~for~~issues ~~interest~~by enforcement authorities may increase the overall risk that our substance abuse treatment facilities may be found lacking under federal and ~~penalties~~state ~~associated~~privacy ~~with~~and ~~tax~~security ~~positions~~laws isand ~~required~~regulations.

~~The Company files income tax returns in the U.S. federal jurisdiction.~~29

~~Recently~~Table ~~Adopted~~of ~~Accounting Pronouncements~~Contents

InOur ~~February~~treatment ~~2016,~~facilities ~~the~~operate ~~FASB~~in ~~issued~~an ~~ASU No. 2016-02 – Leases~~environment ~~(Accounting~~of ~~Standards~~increasing ~~Codification~~state ~~(“ASC” )Topic 842). Under the new guidance a lessee will be required to recognize assets~~ and ~~liabilities~~federal ~~for~~enforcement ~~leases~~activity ~~with lease terms more than 12 months, whether that lease be classified as a capital or operating lease. This update is effective in annual reporting periods beginning after December 15, 2018~~ and ~~the~~private ~~interim~~litigation ~~periods~~targeted ~~within~~at ~~that year.~~healthcare ~~On the Company’s adoption date, July 1, 2019, there were no non-cancelable leases~~providers. ~~As a result, the adoption of ASC 842 did not have a material impact on the Company’s financial statements.~~

36Both federal and state government agencies have heightened and coordinated their civil and criminal enforcement efforts as part of numerous ongoing investigations of healthcare companies and various segments of the healthcare industry. These investigations relate to a wide variety of topics, including relationships with physicians, billing practices and use of controlled substances. The Affordable Care Act included an additional $350 million of federal funding over ten years to fight healthcare fraud, waste, and abuse. The HHS Office of Inspector General and the Department of Justice have established national enforcement initiatives that focus on specific billing practices or other suspected areas of abuse. Some of our facilities participate in Medicare or Medicaid and, therefore, could be subject to government investigation.

~~Table~~Even if a facility does not currently bill Medicare or Medicaid for substance use treatment services, there is a risk that specific investigative initiatives or new laws such as EKRA could result in investigations or enforcement actions that include or affect our treatment services, laboratory service providers, or marketing operations. In addition, increased government enforcement activities, even if not directed towards our treatment facilities or laboratories, also increase the risk that our facilities, physicians, and other clinicians furnishing services in our facilities, or our executives and directors, could be named as defendants in private litigation such as state or federal false claims act cases or consumer protection cases, or could become the subject of ~~Contents~~complaints at the various state and federal agencies that have jurisdiction over our operations.

~~Going~~Any ~~Concern~~governmental investigations, private litigation, or other legal proceedings involving any of our facilities, laboratories, executives, or directors, even if we ultimately prevail, could result in significant expense, adversely affect our reputation or profitability and materially adversely affect our financial condition and results of operation. In addition, we may be required to make changes in our laboratory, substance use treatment services or marketing or other operational practices as a result of an adverse determination in any governmental enforcement action, private litigation or other legal proceeding, which could materially adversely affect our business and results of operations.

~~The~~Changes ~~Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable~~ to afederal, ~~going~~state, ~~concern which contemplates the realization of assets~~ and ~~liquidation~~local ~~of liabilities in the normal course of business. The Company has not yet~~regulations, ~~established~~as anwell ~~ongoing source of revenue sufficient to cover its operating costs and allow it to continue~~ as adifferent ~~going~~or ~~concern,~~new ~~has reoccurring~~interpretations ~~net losses and net capital deficiency. The ability~~ of ~~the~~existing Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capitalregulations, it could beadversely ~~forced~~affect toour ~~cease~~ operations. ~~These~~and ~~factors raise substantial doubt about the Company’s ability to continue as a going concern~~profitability. ~~The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.~~

InBecause ~~order~~our totreatment ~~continue~~programs asand ~~a going concern,~~operations ~~the~~are ~~Company~~regulated ~~will~~at ~~need~~federal, ~~among other things~~state, ~~additional~~and ~~capital~~local ~~resources.~~levels, ~~Management’s~~we ~~plans~~could tobe ~~obtain~~affected ~~such~~by ~~resources~~regulatory ~~for the~~changes ~~Company~~in ~~include~~different ~~(i)~~regional ~~obtaining~~markets. ~~capital from management and significant stockholders sufficient to meet its minimal operating~~Increases ~~expenses;~~in ~~(ii) obtaining funding from outside sources through~~ the ~~sale~~costs of ~~its~~regulatory ~~debt~~compliance and~~/or~~ ~~equity~~the ~~securities;~~risks ~~and~~of ~~(iii)~~noncompliance ~~completing a~~may ~~merger~~increase ~~with~~our ~~or acquisition of an existing~~ operating ~~company. However~~costs, ~~management~~and ~~cannot~~we ~~provide~~may ~~any~~not ~~assurances~~be ~~that~~able ~~the~~to ~~Company~~recover ~~will~~these beincreased ~~successful~~costs, inwhich ~~accomplishing~~may ~~any~~adversely affect our results of ~~its~~operations ~~plans~~and profitability.

~~NOTE~~Many 3of –the ~~RELATED~~current ~~PARTY~~laws ~~TRANSACTIONS~~and regulations are relatively new, including the EKRA and recent state laws intended to prohibit deceptive marketing practices in the addiction treatment industry. Thus, we do not always have the benefit of significant regulatory or judicial interpretation of these laws and regulations. Evolving interpretations or enforcement of these laws and regulations could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our treatment facilities, equipment, personnel, services or capital expenditure programs. A determination that we have violated these laws or a public announcement that we are being investigated for possible violations of these laws could adversely affect our business, operating results, and overall reputation in the marketplace.

~~From~~In ~~time~~addition, tofederal, ~~time~~state, ~~the~~and ~~Company~~local ~~has received~~regulations ~~working~~may ~~capital~~be ~~advances~~enacted ~~from~~that ~~shareholders.~~impose ~~These~~additional ~~advances~~requirements ~~are~~on ~~used~~our tofacilities. ~~settle~~Adoption ~~the~~of ~~Company’s~~legislation ~~on-going~~or ~~operating~~the ~~expenses. The~~creation ~~shareholders~~of ~~have~~new ~~agreed~~regulations toaffecting our ~~not~~facilities ~~accrue~~could ~~interest~~increase onour ~~the~~operating ~~advances~~costs, ~~and~~restrain ~~they~~our ~~are~~growth ~~due~~or onlimit ~~demand.~~us ~~Through~~from ~~June~~taking ~~30,~~advantage ~~2020~~of ~~the~~opportunities ~~shareholders~~presented and could have ~~informally~~a ~~agreed~~material toadverse ~~defer~~effect ~~payment~~on ~~until~~our ~~the~~business, ~~Company’s~~financial condition and results of operations. ~~are~~Adverse ~~generating~~changes ~~sufficient~~in ~~cash~~existing ~~flows~~comprehensive zoning plans or zoning regulations that impose additional restrictions on the use of, ~~however~~or requirements applicable to, ~~they are~~our ~~under~~facilities nomay affect ~~obligation~~our ability to dooperate soour inexisting ~~the~~facilities ~~future~~or acquire new facilities, which may adversely affect our results of operations and profitability.

InWe ~~June~~are ~~2020,~~subject ato ~~significant~~uncertainties ~~shareholder~~regarding ~~forgave~~the ~~previously~~direction ~~outstanding notes payable with total principal~~ and ~~interest~~impact ~~totaling~~of ~~$25,920.~~healthcare ~~Due~~reform ~~to the transaction involving a related party~~efforts, ~~the~~particularly ~~forgiveness~~efforts ~~was~~to ~~treated~~repeal asor asignificantly ~~capital~~modify ~~contribution and was recognized as an increase in additional paid in capital in~~ the ~~accompanying~~Affordable ~~consolidated~~Care ~~balance sheets and statement of changes in stockholders’ deficit~~Act.

~~In February 2020, the Company issued its CEO a note payable carrying a 6% interest rate and maturing in October 2020 for cash proceeds totaling $10,000.~~30

~~NOTE~~Table 4of ~~– NOTES AND CONVERTIBLE NOTES PAYABLE~~Contents

The ~~Company’s~~healthcare ~~notes~~industry ~~payable~~is ~~consist~~subject to changing political, regulatory, scientific and technological changes, which have resulted and may continue to result in initiatives intended to reform the industry. The most prominent of recent efforts, the ~~following:~~Affordable Care Act, as currently structured, provides for increased access to coverage for healthcare and seeks to reduce healthcare-related expenses. Among other mandates, it requires all new small group and individual market health plans to cover ten essential health benefit categories, which currently include substance abuse addiction and mental health disorder services. However, efforts by the executive branch and some members of Congress to repeal or make fundamental changes to the Affordable Care Act, its implementation and/or its interpretation have cast significant uncertainty on the future of the law. For example, in 2017, Congress eliminated the penalties associated with the individual mandate, effective January 2019, which may affect rates of insurance coverage.

Note Description	June 30, 2020		June 30, 2019
Notes Payable:
Notes Payable matured in December 2018 a nominal interest rate of 12%	$	20,000	$	281,000
Notes Payable matured in December 2018 a nominal interest rate of 18%		—		100,000
Related Party Note Payable due October 2020 a nominal interest rate of 6%		84,560		74,560
Note payable issued with a maturity date of December 2019 and a nominal interest rate of 12%.		—		30,000
Total Notes payable	$	104,560	$	485,560
Accrued interest		8,900		3,000
Total convertible and other notes payable, net	$	113,460	$	488,560

We are unable to predict the full impact of the Affordable Care Act and related regulations or the impact of its repeal or modification on our operations in light of the uncertainty regarding whether or how the law will be changed, what alternative reforms, if any, may be enacted or what other actions may be taken. Any government efforts related to health reform may have an adverse effect on our business, results of operations, cash flow, capital resources and liquidity. Moreover, the general uncertainty of health reform efforts, particularly if Congress elects to repeal provisions of the Affordable Care Act but delays the implementation of repeal or fails to enact replacement provisions at the time of repeal, may negatively impact our payment sources or demand for our services.

~~Throughout~~The expansion of health insurance coverage under the ~~year~~Affordable ~~ended~~Care ~~June~~Act has been beneficial to the substance abuse treatment industry. This is due, in part, to higher demand for treatment 30services, ~~2020~~which resulted from the ~~Company~~requirement ~~did~~that ~~not~~small ~~have~~group and individual market plans comply with the ~~financial~~requirements ~~resources~~of tothe ~~make~~Mental Health ~~current~~Parity ~~payments~~and onAddiction ~~these~~Equity ~~notes~~Act ~~payable~~of 2008, which previously applied only to group health plans and group insurers. The ~~Company~~21st Century Cures Act isrequires indevelopment ~~negotiations~~of an action plan for enhanced enforcement of mental health parity requirements and additional guidance for health plans regarding compliance with parity laws. Increased demand for treatment services may bring new competitors to the ~~note~~market, ~~holders~~some of which may be better capitalized and ~~has~~have ~~not~~greater ~~incurred~~market ~~significant~~penetration ~~penalties~~than ~~associated~~we ~~with~~do. In addition, we expect increased demand for substance use treatment services to increase the ~~current~~demand ~~default~~for case managers, therapists, medical technicians and others with clinical expertise in substance abuse treatment, which may make it more difficult to adequately staff our substance abuse treatment facilities and could significantly increase our costs in delivering treatment, which may adversely affect both our operations and profitability.

37One of the many impacts of the Affordable Care Act and subsequent legislation has been a dramatic increase in payment reform efforts by federal and state government payors as well as commercial payors. These efforts take many forms, including the growth of accountable care organizations, pay-for-performance bonus arrangements, partial capitation arrangements and the bundling of services into a single payment. One result of these efforts is that more risk of the overall cost of care is being transferred to providers. As institutional providers and their affiliated physicians assume more risk for the cost of care, we expect more services to be furnished within provider networks that are formed for these types of payment arrangements. Our ability to compete and to retain our traditional sources of patients may be adversely affected by our exclusion from such networks or our inability to be included in such networks.

~~Table~~Change of ~~Contents~~ownership or change of control requirements imposed by state and federal licensure and certification agencies as well as third-party payors may limit our ability to timely realize opportunities, adversely affect our licenses and certifications, interrupt our cash flows, and adversely affect our profitability.

InState ~~January~~licensure ~~2020,~~laws ~~the~~and ~~Company~~many federal healthcare ~~settled~~programs (where applicable) impose a ~~total~~number of ~~$250,000~~obligations ~~previously~~on ~~outstanding~~healthcare ~~notes~~providers ~~payable~~undergoing ~~with~~ a ~~nominal~~change ~~interest~~of ~~rate~~ownership or change of ~~12%~~control transaction. ~~and~~These ~~$100,000~~requirements ~~previously~~may ~~outstanding notes~~require ~~payable~~new ~~with~~license applications as well as notices given a ~~nominal~~fixed ~~interest~~number ~~rate~~of days prior to the closing of ~~18%~~affected intransactions. ~~exchange~~These ~~for~~provisions ~~property~~require ~~and~~us ~~equipment~~to ~~and~~be ~~other~~proactive ~~assets~~when ~~with~~considering aboth ~~net~~internal ~~book~~restructuring ~~value~~and acquisitions of ~~totaling~~other ~~$74,617~~treatment companies. AsFailure ato ~~result~~provide ofsuch ~~the~~notices ~~settlement~~or ~~the~~to ~~Company~~submit ~~recognized~~required apaperwork ~~gain~~can ofadversely ~~$301~~affect licensure on a going forward basis,~~383~~ ~~during~~can subject the ~~year~~parties ~~ended~~to ~~June~~penalties ~~30,~~and ~~2020~~can adversely affect our ability to operate our facilities.

InMany ~~August~~third-party ~~2019~~payor agreements, ~~the~~including ~~Company~~government ~~settled~~payor programs, also have change of ownership or change of control provisions. Such provisions generally include a ~~previously~~prior ~~outstanding~~notice ~~note~~provision as ~~payable~~well ~~totaling~~as ~~$30,000~~require the consent of the payor in order to continue the terms of the payor agreement. Abiding by the terms of such provisions may reopen pricing negotiations with third-party payors where the provider currently has favorable reimbursement terms as compared to the market. Failure to comply with the terms of such provisions can result in a ~~cash~~breach of the underlying third-party payor agreement. As substance abuse treatment coverage and payment ofreform $6initiatives continue to expand,~~561~~ ~~and~~these ~~recognized~~types of provisions could have a ~~gain~~significant impact on ~~settlement of~~our ~~$23,439~~ability to realize opportunities and could adversely affect our cash flows and profitability.

~~The Company’s convertible notes payable consist of the following:~~31

Convertible Note Description	June 30, 2020		June 30, 2019
Notes payable convertible into common stock at $0.10 per share;
nominal interest rate of 12%; and matured in April 2018 (related
party)	$	65,000	$	65,000
Notes payable convertible into common stock at $0.10 per share;
nominal interest rate of 12%; and matured in the fourth quarter of
fiscal 2019		—		40,000
Notes payable convertible into common stock at $0.10 per share;
nominal interest rate of 12%; and matured in the first quarter
of fiscal 2020		—		10,000
Notes payable convertible into common stock at $0.10 per share;
nominal interest rate of 15%; and matured in the third quarter of
fiscal 2020		—		5,000
Notes payable convertible into common stock at $0.10 per share;
nominal interest rate of 12%; and matures in the fourth quarter of
fiscal 2020		—		30,000
Notes payable convertible into common stock at $0.10 per share;
nominal interest rate of 12%; and matures in the second quarter of
fiscal 2020		—		5,000
Notes payable convertible into common stock at $0.10 per share; nominal interest
rate of 12%; and matures in the third quarter of fiscal 2021		65,129		—
Notes payable convertible into common stock at $0.10 per share; nominal interest
rate of 12%; and matures in the fourth quarter of fiscal 2021		50,000		—
Total Convertible notes payable	$	180,129	$	155,000
Accrued interest		68,234		72,698
Total convertible and other notes payable, net	$	248,363	$	227,698

Table of Contents

~~Most~~State ofefforts ~~the Company’s outstanding convertible notes automatically convert~~ to ~~shares~~regulate ~~of common stock and $0.10 per share upon maturity if not paid in full prior to maturity. The Company does not make monthly and interest payments on its outstanding convertible notes payable. During~~ the ~~year~~construction ~~ended~~or ~~June~~expansion ~~30, 2020, the Company settled previously outstanding convertible note principal and interest totaling approximately $144,000 via the issuance~~ of ~~1,442,223~~healthcare ~~shares~~facilities ofcould ~~restricted~~impair ~~and~~our ~~unregistered~~ability ~~common~~to ~~stock.~~operate ~~During the year ended June 30, 2019, the Company settled previously outstanding convertible note principal~~ and ~~interest~~expand ~~totaling~~our ~~approximately $794,000 via the issuance of 7,941,912 shares of restricted and unregistered common stock~~facilities.

~~During~~The ~~the~~construction ~~years~~of ~~ended~~new ~~June~~healthcare 30facilities, the ~~2020~~expansion, ~~and~~transfer, ~~2019~~or change of ownership of existing facilities and the ~~Company~~addition ~~recognized~~of new beds, services, or equipment may be subject ~~interest~~to ~~expense~~state onlaws ~~all~~that ~~outstanding~~require ~~notes~~a determination of public need and ~~convertible~~prior ~~notes~~approval ~~payable~~by ~~totaling~~state ~~approximately~~regulatory ~~$45,000~~agencies under CON laws or other healthcare planning initiatives. The National Health Planning and ~~$159,000,~~Resources ~~respectively~~Development Act of 1974 requires the withholding of federal funds from states that fail to adopt certificate-of-need (CON) laws regulating healthcare facilities.

~~NOTE~~CON 5laws –require ~~STOCKHOLDERS’~~healthcare ~~EQUITY~~providers wishing to open or expand a healthcare facility to first prove to a regulatory body that the community needs the planned services. Review of CONs and similar proposals may be lengthy and may require public hearings. States in which we now or may in the future operate may require CONs under certain circumstances not currently applicable to us or may impose standards and other health planning requirements upon us. Violation of these state laws and our failure to obtain any necessary state approval could:

At· ~~June~~result ~~30,~~in ~~2020,~~our ~~the~~inability ~~Company’s~~to ~~authorized capital~~acquire ~~stock~~a ~~consists~~targeted ~~of 200~~facility,~~000,000~~ ~~shares~~complete ofa ~~common~~desired ~~stock,~~expansion ~~par~~or ~~value~~make ofa ~~$.005,~~desired ~~and~~replacement; ~~10,000,000 shares of preferred stock, par value $.01. At June 30, 2020 there were 172,450,907 shares of common stock issued and outstanding, and no shares of preferred stock issued and outstanding.~~or

38· result in the revocation of a facility’s license or imposition of civil or criminal penalties on us, any of which could have a material adverse effect on our business, financial condition and results of operations.

~~Table~~If ofwe ~~Contents~~are unable to obtain required regulatory, zoning, or other required approvals for renovations and expansions, our growth may be restrained, and our operating results may be adversely affected. In the past, we have not experienced any material adverse effects from such requirements, but we cannot predict their future impact on our operations

~~The~~We ~~following~~could ~~provides~~face arisks ~~description~~associated ofwith, or ~~the~~arising ~~shares~~out ~~issued~~of, ~~during~~environmental, ~~the~~health, ~~fiscal~~and ~~years~~safety ~~ended~~laws ~~June 30, 2020~~ and ~~2019:~~regulations.

InWe ~~April~~are ~~2020,~~subject ~~the~~to ~~Company~~various ~~issued 991~~federal,~~351~~ ~~shares~~state, ofand local ~~common~~laws ~~stock for the settlement of convertible notes~~ and ~~accrued~~regulations ~~interest totaling approximately $101,000.~~that:

In· ~~November~~regulate ~~2019,~~certain ~~the~~activities ~~Company issued~~and ~~337,039~~operations ~~shares~~that ofmay ~~common~~have ~~stock~~environmental ~~for~~or ~~the~~health ~~settlement~~and ofsafety ~~convertible~~effects, ~~notes~~such as the generation, handling and ~~accrued~~disposal ~~interest~~of ~~totaling~~medical ~~approximately~~and ~~$34,000.~~pharmaceutical wastes;

In· ~~July~~impose ~~2019,~~liability ~~the~~for ~~Company~~costs ~~issued 113~~of cleaning up,~~833~~ ~~shares~~and ofdamages ~~common~~to ~~stock~~natural ~~for~~resources ~~the~~from, ~~settlement~~past ofspills, ~~convertible~~waste ~~notes~~disposals on and ~~accrued~~off-site ~~interest~~and ~~totaling~~other ~~approximately~~releases ~~$11,000.~~of hazardous materials or regulated substances; and

In· ~~June~~regulate ~~2019,~~workplace ~~the Company issued 8,441,912 shares of restricted and unregistered common stock for the settlement of previously outstanding debt and interest totaling approximately $794,000~~safety.

~~NOTE~~Compliance 6with –these ~~INCOME~~laws ~~TAXES~~and regulations could increase our costs of operation. Violation of these laws may subject us to significant fines, penalties, or disposal costs, which could negatively impact our results of operations, financial position, or cash flows. We could be responsible for the investigation and remediation of environmental conditions at currently or formerly operated or leased sites, as well as for associated liabilities, including liabilities for natural resource damages, third-party property damage, or personal injury resulting from lawsuits that could be brought by the government or private litigants relating to our operations, the operations of our facilities, or the land on which our facilities are located.

~~The~~Liability ~~Company~~for ~~provides~~contamination under certain environmental ~~for~~laws ~~income~~can ~~taxes~~be ~~using~~imposed anon ~~asset~~current ~~and~~or ~~liability~~past ~~approach~~owners or operators of a site without regard to fault. ~~Deferred~~Therefore, ~~tax~~we ~~assets~~may ~~and~~be subject to these liabilities regardless ~~are~~of ~~recorded~~whether ~~based~~we onlease or own the ~~temporary~~facility or such environmental conditions were created by us, a prior owner or tenant, a third-party, ~~differences~~or ~~between~~a ~~the~~neighboring ~~financial~~facility ~~statement~~whose ~~and~~operations ~~tax~~may ~~bases~~have affected such facility or land. We cannot assure you that environmental conditions relating to our prior, existing, or future sites or those of ~~assets~~predecessor ~~and~~companies whose liabilities ~~and~~we ~~the~~may ~~tax~~have ~~rates~~assumed inor acquired will not have a material adverse effect ~~currently~~on our business.

~~The~~Changes ~~Company recognizes reductions~~ in ~~its deferred~~ tax ~~assets~~laws byor atheir ~~valuation allowance if~~interpretations, ~~based on the weight of available evidence, it is more likely~~ ~~than not that some~~ or ~~all~~becoming ofsubject ~~the~~to ~~deferred~~additional ~~tax assets will not be realized~~U.S., Instate ~~the~~or ~~Company’s~~local ~~opinion~~taxes, itcould isnegatively ~~uncertain~~affect ~~whether it~~our ~~will~~business, ~~generate~~financial ~~sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly~~condition, aand ~~valuation allowance~~results ~~equal to the deferred tax asset has been recorded~~of operations.

~~The Company’s deferred tax assets by period are as follows:~~32

	June 30,			June 30,
	2020			2019
Deferred Tax Assets	$	242,000		$	269,000
Valuation Allowance		(242,000	)		(269,000	)
Income Tax Expense	$	–		$	–

Table of Contents

~~The~~We ~~components~~are ofsubject ~~income~~to tax ~~expense~~liabilities, ~~for~~including ~~the~~federal and ~~years~~state ~~ended~~taxes ~~June~~such as excise, sales/use, payroll, franchise, withholding, and ad valorem taxes. Changes in tax laws or their interpretations 30could decrease the amount of revenues we receive, ~~2020~~the value of any tax loss carryforwards and ~~2019~~tax credits recorded on our balance sheet and the amount of our cash flow, ~~respectively~~and have a material adverse impact on our business, financial condition and results of operations. Some of our tax liabilities are assubject ~~follows:~~to periodic audits by the respective taxing authority which could increase our tax liabilities. If we are required to pay additional taxes, our costs would increase.

	June 30,			June 30,
	2020			2019
Change in Deferred Tax Assets	$	(27,000	)	$	69,000
Change in Valuation Allowance		27,000			(69,000	)
Income Tax Expense	$	–		$	–

COVID-19 RELATED RISKS

The ~~differences~~coronavirus ~~between~~may ~~the~~negatively ~~statutory~~impact ~~income tax rates computed~~our atbusiness, ~~the~~results ~~U.S.~~of ~~federal~~operations ~~statutory rate~~ and ~~our~~financial ~~effective rate were the following:~~condition.

	June 30,			June 30,
	2020			2019
Federal Statutory Rate		21	%		21	%
Permanent Difference:
Goodwill impairment		–			(18	%)
Change in valuation allowance		(21	%)		(3	%)
Net Rate		0	%		0	%

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The significant outbreak of COVID-19 has resulted in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and could adversely affect our business, results of operations and financial condition.

39The ultimate extent of the impact of any epidemic, pandemic, or other health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of an epidemic, pandemic, or other health crisis, such as COVID-19, could therefore materially and adversely affect our business, financial condition, and results of operations.

~~Table~~The effect of ~~Contents~~the COVID-19 may adversely affect occupancy at our rehabilitation facility.

~~As of June 30, 2020, the Company had net operating loss carryforwards totaling approximately $1,253,000.~~ The ~~Company~~coronavirus ~~does~~may ~~not~~materially ~~believe~~impact ~~that it has any uncertain tax positions,~~occupancy ~~correspondingly,~~rates noat ~~estimated~~our ~~accruals~~facility ~~for interest~~ and ~~penalties have been made in~~ the ~~accompanying~~availability ~~financial~~of ~~statements.~~our ~~The Company’s~~rehabilitation ~~net~~services, ~~operating~~which ~~loss~~would ~~carryforwards~~adversely ~~incurred~~affect ~~prior~~our ~~to January 1~~business, ~~2018~~results ~~will begin to expire in 2034. Net operating losses incurred subsequent to the effective date~~ of ~~the Tax Cuts~~ operations and ~~Jobs~~financial ~~Act are not subject to expiration~~condition.

The ~~Company’s~~outbreak ~~tax~~of ~~returns~~COVID-19 ~~currently subject~~has toresulted ~~audit~~in bya ~~the~~widespread health ~~Internal~~crisis ~~Revenue~~that ~~Service~~could ~~are~~adversely ~~for~~affect the ~~periods~~economies ~~ended~~and ~~June~~financial ~~30,~~markets ~~2016~~in ~~through~~which operate and could significant increase the ~~present~~risk factors described above and herein.

~~NOTE~~Risk 7Related -to ~~SUBSEQUENT~~Our ~~EVENTS~~Stock

InBecause ~~June~~we ~~2020~~can ~~the~~issue ~~Company,~~additional ~~through~~shares ~~its~~of ~~Record~~common ~~Street Brewing subsidiary~~stock, ~~entered~~our ~~into~~stockholders amay ~~licensing~~experience ~~agreement~~dilution ~~whereby its beer brands will be produced and distributed by a third-party. The third party operates a gastropub~~ in ~~Reno, Nevada under~~ the ~~Record Street Brewery name~~future. The licensing agreement has an effective date of July 1, 2020 and is set to receive 25% of the gross profits sold and distributed outside of the gastropub premises. In late July 2020, the licensee delivered the first shipments subject to the licensing agreement.

~~ITEM~~We 9are authorized to issue up to 200,000,000 shares of common stock and 10,000,000 shares of preferred stock of which 194,750,907 shares of common stock are issued and outstanding. ~~CHANGES~~No INshares of ~~AND~~preferred ~~DISAGREEMENTS~~stock ~~WITH~~have ~~ACCOUNTANTS~~been ONissued. ~~ACCOUNTING~~Our ~~AND~~board ~~FINANCIAL~~of ~~DISCLOSURE~~directors has the authority to cause us to issue additional shares of common stock and preferred stock, and to determine the rights, preferences, and privileges of shares of our preferred stock, without consent of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future.

WeTrading ~~have~~on ~~not~~the ~~had~~OTC ~~any~~Pink ~~disagreements~~Sheets ~~with~~stock market ~~our~~may ~~current~~be orvolatile ~~predecessor~~and ~~independent~~sporadic, ~~registered~~which ~~accounting~~could ~~firm~~depress ~~during~~ the ~~previous~~market ~~three~~price ~~previous~~of ~~fiscal~~our ~~years~~common stock and make it difficult for our stockholders to resell their shares.

OnOur ~~September~~common ~~11,~~stock ~~2019~~is wequoted ~~dismissed~~on ~~our~~the OTC Pink Sheets ~~principal~~stock ~~independent~~market ~~accountant,~~operated ~~Malone~~by ~~Bailey,~~the ~~LLP~~OTC (Markets Group with the trading symbol “MBUPDC”). ~~MB’s~~Trading ~~dismissal~~in asstock quoted on OTC Pink Sheets is often characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the ~~Company’s~~market ~~principal~~price of our common stock for reasons unrelated to operating performance. Moreover, ~~independent~~trading ~~accountant~~of ~~was~~securities ~~approved~~on byOTC Pink Sheets is often more sporadic than the ~~Company’s~~trading ~~Board~~of securities listed on a stock exchange like the NASDAQ or the NYSE. Accordingly, stockholders may have difficulty reselling any of ~~Directors~~our shares.

The reports of MB on the Company’s financial statements for the fiscal years ended June 30, 2017 and 2016 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to certainty, audit scope, or accounting principles, except the report did contain an explanatory paragraph related to the Company’s ability to continue as a going concern. During the Company’s fiscal years ended June 30, 2017 and 2016 and the subsequent periods through the date of dismissal, there were (i) no disagreements with MB on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of MB would have caused MB to make reference to the subject matter of the disagreements in connection with its report, and (ii) no “reportable events”, as that term is defined in Item 304(a)(1)(v) of Regulation S-K. MB did advise the us that the internal controls necessary for the registrant to develop reliable financial statements do not exist.33

OnTable ~~September~~of 11, 2019, the Company engaged WSRP, LLC (“WSRP”) as its principal independent accountant to audit the Company’s financial statements. During 2017 and 2016 and any subsequent interim period prior to engaging WSRP, the Company did not consult with WSRP on any accounting, auditing, or financial reporting issue.Contents

~~ITEM~~Our ~~9A.~~shares ~~CONTROLS~~of ~~AND~~common ~~PROCEDURES~~stock may be very thinly traded, or not at all, the price may not reflect our values and there can be no assurance that there will be an active market for our shares of common stock either now or in the futures.

~~Evaluation~~Shares of ~~Disclosure~~our ~~Controls~~common stock may be very thinly traded in the future, and ~~Procedures~~the price, if traded, may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. If a more active market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms may not be willing to effect transactions in the securities. Even if an investor finds a broker willing to affect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such shares of common stock as collateral for any loans.

WeSales ~~conducted an evaluation under the supervision and with the participation~~ of our ~~management,~~currently ~~including~~issued ~~our Chief Executive Officer~~ and ~~Chief Financial Officer, of the effectiveness~~outstanding ofstock ~~the~~may ~~design~~become ~~and~~freely ~~operation~~tradeable ofpursuant our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ~~ensure~~Rule ~~that~~144 ~~information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized~~ and ~~reported,~~may ~~within~~dilute the ~~time~~market ~~periods~~for ~~specified~~your inshares ~~the Securities~~ and ~~Exchange~~have ~~Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by~~ a ~~company~~depressive ineffect ~~the~~on ~~reports that it files or submits under~~ the ~~Exchange Act is accumulated~~price and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June 30, 2020, our disclosure controls and procedures were not effective due to~~ the ~~size~~shares ~~and nature~~ of ~~the existing business operation. Given the size of~~ our ~~current~~common ~~operation and existing personnel, the opportunity to implement internal control procedures that segregate accounting duties and responsibilities is limited~~stock. Until the organization can increase in size to warrant an increase in personnel, formal internal control procedure will not be implemented until they can be effectively executed and monitored. As a result of the size of the current organization, there will not be significant levels of supervision, review, independent directors nor formal audit committee.

40Certain of our issued and outstanding shares of common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that an “affiliated” person, such as our management, who have held our restricted securities for a period of at least one year from the date of this Form 8-K filing, may, under certain conditions, sell every three months in brokerage transactions, a number of shares that does not exceed the greater of 1% of a company’s outstanding shares of common stock. There is no limit on the amount of restricted securities that may be sold by a non-affiliate after the restricted securities have been held by the owner for a period of one year from the date of this Form 8-K filing. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.

~~Table~~The ofmarket ~~Contents~~for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.

~~Management’s~~We ~~Report~~believe onthat ~~Internal~~the ~~Control~~market ~~over~~for ~~Financial~~penny stocks has ~~Reporting~~suffered from patterns of fraud and abuse. Such patterns include:

~~Our~~· ~~management~~Control ~~is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting (as defined in Rule 13a-15(f)~~ of the ~~Exchange~~market ~~Act) is a process to provide reasonable assurance regarding the reliability of our financial reporting~~ for ~~external purposes in accordance with accounting principles generally accepted in~~ the ~~United~~security ~~States~~by ofone ~~America.~~or ~~Internal control~~a ~~over~~few ~~financial~~broker-dealers ~~reporting includes maintaining records~~ that ~~in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions~~ are ~~recorded~~often asrelated ~~necessary~~to ~~for~~the ~~preparation~~promoter of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or ~~disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.~~ issuer;

~~Because~~· ofManipulation ~~its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement~~ of ~~our~~prices ~~financial~~through ~~statements would~~prearranged bematching ~~prevented or detected. Also, projections~~ of ~~any~~purchases ~~evaluation~~and ofsales ~~effectiveness~~and tofalse ~~future~~and ~~periods~~misleading ~~are~~press ~~subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.~~releases;

~~Management~~· ~~conducted~~“Boiler anroom” ~~evaluation~~practices ofinvolving ~~the effectiveness,~~high aspressure ofsales ~~June~~tactics ~~30,~~and ~~2020,~~unrealistic ofprice ~~our~~projections ~~internal control over financial reporting based on criteria established in Internal Control – Integrated Framework issued~~ by ~~the~~inexperienced Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, our Chief Executive and Chief Financial Officer concluded that, as of June 30, 2020, our internal controls over financial reporting were not effective due to the size and nature of the existing business operation for the following reasons: lack of segregation of dutiessalespersons; lack of multiple levels of review; insufficient written policies and procedures for accounting and financial reporting; and lack of an independent director or audit committee. Given the size of our current operation and existing personnel, the opportunity to implement internal control procedures that segregate accounting duties and responsibilities is limited. Until the organization can increase in size to warrant an increase in personnel, formal internal control procedure will not be implemented until they can be effectively executed and monitored. As a result of the size of the current organization, there will not be significant levels of supervision, review, independent directors nor formal audit committee.

41· Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

~~Table~~· Wholesale dumping of ~~Contents~~the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

~~Changes~~We inbelieve ~~Internal~~that ~~Control~~many ~~Over~~of ~~Financial~~these ~~Reporting~~abuses have occurred with respect to the promotion of low-priced stock companies that lacked experienced management, adequate financial resources, an adequate business plan and/or marketable and successful business or product.

~~During~~A ~~the~~decline ~~fiscal~~in ~~year~~the ~~ended~~price ~~June~~of ~~30,~~our ~~2020,~~common stock ~~there~~could ~~was~~affect ~~no change in~~ our ~~internal~~ability ~~control~~to ~~over~~raise ~~financial~~further ~~reporting~~working ~~(as~~capital ~~defined in Rules 13a-15(f)~~ and ~~15d-15(f)~~adversely ~~under~~impact ~~the~~our ~~Exchange Act)~~ability ~~that has materially affected, or is reasonably likely~~ to ~~materially~~continue ~~affect~~operations, ~~our~~and ~~internal~~we ~~control~~may ~~over~~go ~~financial~~out ~~reporting~~of business.

~~ITEM 9B. OTHER INFORMATION~~34

~~None.~~ Table of Contents

42A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we plan to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors not to choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our equity securities and we may be forced to go out of business.

~~Table~~Our stock is a penny stock. Trading of ~~Contents~~our stock may be restricted by the SEC’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.

~~PART~~Our ~~III~~stock is a penny stock. The Securities and Exchange Commission (“SEC”) has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined in Rule 15g-9) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. 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 in a form prepared by the SEC, which 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 monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer 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. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

~~ITEM~~FINRA ~~10.~~sales ~~DIRECTORS,~~practice ~~EXECUTIVE~~requirements ~~OFFICERS~~may ~~AND~~also limit ~~CORPORATE~~a ~~GOVERNANCE~~stockholder’s ability to buy and sell our stock.

~~Identification~~In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of ~~Directors~~these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and ~~Executive~~sell ~~Officers~~our stock.

~~The~~We ~~following~~do ~~table~~not ~~sets~~intend ~~forth~~to ~~the~~pay ~~name, age~~any ~~and~~cash ~~positions of our executive officers and directors as of the Effective Date. Executive officers are elected annually~~dividends byon our ~~Board~~shares of ~~Directors. Each~~common ~~executive~~stock ~~officer~~in ~~holds~~the ~~his~~near ~~office until he resigns~~future, ~~is removed by the Board, or his successor is elected~~ and ~~qualified. Directors are elected annually by~~ our stockholders atwill ~~the~~not ~~annual~~be ~~meeting. Each~~able ~~director~~to ~~holds his~~receive ~~office~~a ~~until~~return ~~his~~on ~~successor~~their isshares ~~elected~~unless ~~and~~they sell ~~qualified or his earlier resignation or removal~~them.

Name	Age		Position	Director Since
Mark W. Conte		59	President, Chief Executive Officer, Director	March 16, 2015
Kevin J. Pikero		64	Chief Financial Officer, Director	March 16, 2015
Andrew D. Smith		61	Director	March 16, 2015

~~Mark W. Conte. Mr. Conte is a business professional and entrepreneur in Reno, Nevada with over~~ 35 years of experience in marketing and operations in the health, nutraceutical, technology, agricultural sciences, and banking industries. Mr. Conte is a co- founder and currently serves as President of iMetabolic Corp. Formerly, Mr. Conte was a co-founder and co-Managing Member of International Metabolic Institute LLC, which developed the “iMetabolic” brand and initial line of dietary and nutraceutical products. Prior thereto, Mr. Conte was: a Partner in 1Globe Wireless, Inc.; the B2B Sales Manager for AT&T Wireless; Managing Director and Manager of Operations for Perten Instruments; Vice President of Marketing for AIQ Systems, Inc.; and as a Corporate Banking Specialist and Foreign Exchange Representative for Valley Bank of Nevada. Mr. Conte is a graduate of the University of Nevada at Reno with a B.S. in Finance.

~~Kevin~~Table ~~J. Pikero. Mr. Pikero is a retired Certified Public Accountant (CPA) in Reno, Nevada with over 40 years~~ of experience in the financial and accounting business. Mr. Pikero operated Kevin J. Pikero & Associates, Inc. (CPAs) in Reno, Nevada providing accounting, tax, and financial services for a select domestic and international clientele of corporations, partnerships, sole proprietors, and individuals. Mr. Pikero’s professional history includes employment with: Haims & Company – (CPAs); E.F. Hutton Credit Corp.; Barclays Business Credit Inc.; Truckee River Bank; Bank of America Community Development Bank; and United American Funding, Inc. Mr. Pikero is a graduate of Bentley University with a B.S. in Accounting and of the University of Bridgeport, Bridgeport, CT with a M.B.A. in Finance.Contents

~~Andrew~~We D.may ~~Smith. Mr.~~incur ~~Smith is~~significant acosts Certified Public Accountant in Chicago, Illinois with over 35 years of experience in the financial and accounting business. He is a co-founder and the current President of Houlihan Capital, an investment banking firm with specializations in mergers and acquisitions and valuations. Previously to ~~his time at Houlihan Capital, Mr. Smith was: a Senior Vice President for EVEREN Securities,~~ensure ~~Inc.~~compliance (formerly Kemper Securities, Inc., 1993 to 1996), where he was the founder and co-head of the firm’s Mergers & Acquisitions Group; a Managing Director at Geneva Capital Markets; and an auditor for Ernst & Whinney, where he specialized in serving financial institutions. Mr. Smith is a graduate, with ~~honors,~~United ofStates ~~Ohio~~corporate ~~Wesleyan~~governance ~~University with a BA in Economics, is registered with FINRA as a General Securities Representative (Series 7), General Securities Principal (Series 24),~~ and aaccounting Financial and Operations Principal (Series 27), is a member of the American Institute of Certified Public Accountants and the Illinois CPA Society, and is credentialed through the American Institute of Certified Public Accountants as “Accredited in Business Valuationrequirements.”

~~Employment~~We ~~Contracts~~may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

~~There~~We ~~are~~may nonot ~~employment~~be ~~agreements~~able ~~between~~to meet the accelerated filing and internal control reporting requirements imposed by the ~~Company~~Securities and ~~its~~Exchange ~~officers~~Commission resulting in a possible decline in the price of our common stock and ~~directors~~our inability to obtain future financing.

43As directed by Section 404 of the Sarbanes-Oxley Act, the Securities and Exchange Commission adopted rules requiring each public company to include a report of management on the company’s internal controls over financial reporting in its annual reports. In addition, the independent registered public accounting firm auditing a company’s financial statements must also attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting as well as the operating effectiveness of the company’s internal controls.

~~Table~~While we expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404 of ~~Contents~~the Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely with all of the requirements imposed by this rule. In the event that we are unable to receive a positive attestation from our independent registered public accounting firm with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer.

~~Code~~In addition, in the event that our independent registered public accounting firm is unable to rely on our internal controls in connection with its audit of ~~Ethics~~our financial statements, and in the further event that it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of our financial statements and related disclosures, it is possible that we would be unable to file our Annual Report on Form 10-K with the Securities and Exchange Commission, which could also adversely affect the market price of our common stock and our ability to secure additional financing as needed.

WeOur ~~have~~articles ~~not~~of ~~yet~~incorporation ~~adopted~~provide for indemnification of officers and directors at our expense and limit their liability which may result in a ~~Code~~major ofcost ~~Business~~to us and hurt the ~~Conduct~~interests of our shareholders because corporate resources may be expended for the benefit of officers and/or ~~Ethics~~directors.

~~Audit~~Our ~~Committee~~articles of incorporation and applicable Nevada law provide for the indemnification of our directors, ~~Compensation~~officers, ~~Committee~~employees, and agents, under certain circumstances, against attorney’s fees and ~~Nominating~~other ~~Committee~~expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person’s written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup.

AsWe have been advised that, in the opinion of the SEC, ~~date~~indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of ~~this~~1933 (the ~~filing~~“Securities Act”) and is, wetherefore, dounenforceable. ~~not have~~In the event that a ~~formal~~claim ~~Audit~~for ~~Committee~~indemnification for liabilities arising under federal securities laws, ~~Compensation~~other ~~Committee~~than the payment by us of expenses incurred or ~~Nominating~~paid ~~Committee. Our~~by ~~Board~~a director, officer or controlling person in the successful defense of ~~Directors~~any ~~make~~action, ~~all~~suit ~~decisions~~or proceeding, is asserted by a director, officer or controlling person in connection ~~that~~with anthe ~~audit~~securities ~~committee~~being ~~would~~registered, ~~ordinarily~~we ~~make. We~~will ~~have~~(unless ~~determined~~in ~~that~~the opinion of our counsel, the ~~Company~~matter ~~does~~has ~~not~~been ~~have~~settled by controlling precedent) submit to a ~~member~~court of ~~its~~appropriate ~~Board~~jurisdiction, ~~of Directors~~the ~~that~~question ~~qualifies~~whether asindemnification anby ~~“audit~~us ~~committee~~is ~~financial~~against ~~expert”~~public policy as ~~defined~~expressed in ~~Item~~the Securities ~~407(d)(5)(ii)~~Act and will be governed by the final adjudication of ~~Regulation~~such ~~S-K~~issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develop.

We believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our consolidated financial statements. In addition, we believe that at this time, retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any revenues to date.36

~~Conflicts~~Table of ~~Interest~~Contents

~~Certain~~Our ~~potential~~board ~~conflicts~~ of ~~interest~~directors has the authority, ~~are~~without ~~inherent~~stockholder inapproval, ~~the~~to ~~relationships~~issue ~~between~~shares ~~our~~of ~~officers~~“blank ~~and~~check” ~~directors~~preferred stock with terms that may not be viewed as beneficial to common stockholders, and uswhich may adversely affect common stockholders.

~~From~~Our ~~time~~articles toof ~~time,~~incorporation ~~one~~allow orus ~~more~~to issue shares of ~~our~~preferred ~~affiliates may~~stock ~~form~~without orany ~~hold~~vote anby ~~ownership~~our ~~interest~~stockholders. inOur ~~and/or~~Board ~~manage~~of ~~other~~Directors ~~businesses~~has ~~both~~the ~~related~~authority ~~and~~to ~~unrelated~~fix toand determine the ~~type~~relative rights and preferences of ~~business~~preferred ~~that we~~stock. ~~own~~Our ~~and~~Board ~~operate. These~~of ~~persons~~Directors ~~expect~~also tohas ~~continue~~the authority to ~~form,~~issue ~~hold~~preferred anstock ~~ownership~~without ~~interest~~further instockholder approval. ~~and/or~~As ~~manage~~a ~~additional~~result, ~~other businesses~~our ~~which~~Board ~~may~~of ~~compete~~Directors ~~with~~could ~~ours~~authorize ~~with~~the ~~respect~~issuance toof ~~operations,~~preferred ~~including~~stock ~~financing~~that ~~and~~would ~~marketing,~~grant ~~management~~to ~~time~~holders ~~and~~the ~~services~~preferred ~~and~~right ~~potential~~to ~~customers. These~~vote ~~activities~~on ~~may~~decisions ~~give~~submitted ~~rise~~for toa ~~conflicts~~vote ~~between~~of orthe ~~among~~stockholders, ~~the~~to ~~interests~~a priority on distribution of usour ~~and~~assets ~~other~~upon ~~businesses~~liquidation, the ~~with~~right ~~which~~to ~~our~~receive ~~affiliates~~dividend ~~are~~payments ~~associated. Our~~before ~~affiliates~~dividends are indistributed noto ~~way~~the ~~prohibited~~holders ~~from~~of ~~undertaking~~common ~~such~~stock ~~activities,~~ and ~~neither we~~the ~~nor~~right ~~our~~to ~~shareholders~~the ~~will~~redemption ~~have~~of the ~~any~~shares, ~~right~~together with a premium, prior to ~~require~~the ~~participation~~redemption inof ~~such~~our ~~other~~common ~~activities~~stock, and similar rights and priorities over our common stock.

~~Further,~~Item ~~because~~1B we– ~~intend~~Unresolved toStaff ~~transact business~~Comments with some of our officers, directors and affiliates, as well as with firms in which some of our officers, directors or affiliates have a material interest, potential conflicts may arise between the respective interests of us and these related persons or entities. We believe that such transactions will be affected on terms at least as favorable to us as those available from unrelated third parties.

With respect to transactions involving real or apparent conflicts of interest, we have adopted policies and procedures which require that: (i) the fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors who authorize or approve the transaction prior to such authorization or approval, (ii) the transaction be approved by a majority of our disinterested outside directors, and (iii) the transaction be fair and reasonable to us at the time it is authorized or approved by our directors.None

~~Compliance~~Item ~~with~~2 ~~Section~~– ~~16(a)~~Properties ~~of the Exchange Act~~

~~Section~~Our ~~16(a)~~principal ofexecutive ~~the~~office ~~Exchange~~is ~~Act~~located ~~requires the~~at ~~Company’s officers and directors and persons who own more than ten percent of a registered class of the Company’s~~75 ~~equity~~Pringle ~~securities~~Way, to8th ~~file~~Floor, ~~reports~~Suite of804, ~~ownership~~Reno, ~~and~~Nevada ~~changes of ownership with the Securities and Exchange Commission (the “SEC”)~~89502. ~~Officers,~~ ~~directors~~The ~~and~~office ~~beneficial~~premises ~~owners~~are ofcontributed ~~more~~free ~~than ten percent~~ of ~~the~~charge ~~Common Stock are required~~ by ~~SEC~~Mark ~~regulations~~W. toConte, ~~furnish~~our President ~~the~~and ~~Company~~Chief ~~with~~Executive ~~copies~~Officer. ofWe ~~all~~believe ~~reports~~ that ~~they file with~~ the ~~SEC~~offices ~~pursuant~~are toadequate ~~Section 16(a) of the Exchange Act. Based solely on a review of the copies of such forms furnished~~ to ~~the~~meet ~~Company,~~our ~~the Company believes that during fiscal 2019 its~~ current ~~officers, directors~~operational ~~and~~requirements. ~~beneficial~~We ~~owners~~do ofnot ~~more~~own ~~than ten percent of the Common Stock complied with all applicable Section 16(a) filing~~any ~~requirements~~real property.

44On November 18, 2020, VBH Frankfort as the tenant entered into a commercial lease (the “Frankfort Lease”) with Kell Properties, LLC, a Kentucky limited liability company, for the lease of 4,015 square feet of office space in Units B, C, and D of 915 Leawood Dr, Frankfort, Kentucky (i.e., the Frankfort Facility). The term of the Frankfort Lease is twenty-four months with no explicit extension options. The base monthly payment of the term of the Frankfort Lease is $2,365. The Frankfort Lease commenced on February 1, 2021, and was assigned to VBH Kentucky, effective as of April 1, 2021.

~~Table~~In August 2021, Vital Behavioral Health, Inc. leased a facility in Fayetteville, Georgia with an initial base rent of ~~Contents~~$13,617 per month for an initial term of 18 months with a 5-year extension option. The facility is intended be used for in-patient services upon the receipt of regulatory approval.

~~ITEM~~Item ~~11.~~3 ~~EXECUTIVE~~– ~~COMPENSATION~~Legal Proceedings

~~Summary Compensation Table~~None.

~~The~~Item ~~following~~4 ~~table~~- ~~sets~~Mine ~~forth~~Safety ~~the~~Disclosures ~~compensation awarded to, earned by, or paid to each named executive officer during each of the fiscal years ended June 30, 2020 and 2019.~~

~~Summary~~Not ~~Compensation Table~~applicable

			All Other
		Salary	Compensation	Total
Name and Principal Position	Year	($)	($)	($)
Mark W. Conte (1)	2020	—	—	—
President, Chief (Principal) Executive Officer, Director	2019	—	—	—
Kevin J. Pikero (1)	2020	—	—	—
Chief (Principal) Financial Officer and Director	2019	—	—	—
Andrew D. Smith (1)	2020	—	—	—
Director	2019	—	—	—

Part II

~~_________________~~Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

As a "smaller reporting company" (~~1) Messrs.~~as defined ~~Conte~~by Item 10 of Regulation S-K), ~~Pikero~~ ~~and~~the ~~Smith~~Company ~~were~~is ~~appointed~~not required to ~~their~~provide ~~positions~~the oninformation ~~March~~required ~~16,~~by ~~2015~~this item.

~~Director Compensation~~37

WeTable doof ~~not currently have a formal plan for compensating our directors.~~Contents

~~Compensation~~ITEM ~~Committee Interlocks~~6. ~~and~~SELECTED ~~Insider~~FINANCIAL ~~Participation~~DATA

~~Not~~We ~~applicable~~are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

~~Indemnification~~ITEM of7. ~~Officers~~MANAGEMENT’S ~~and~~DISCUSSION ~~Directors~~AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The ~~General~~following ~~Corporation~~discussion ~~Law~~and ofanalysis ~~Nevada~~ provides information that ~~directors,~~management ~~officers,~~believes ~~employees~~is orrelevant ~~agents of Nevada corporations are entitled, under certain circumstances,~~ to bean ~~indemnified against~~assessment ~~expenses (including attorneys’ fees)~~ and ~~other~~understanding ~~liabilities~~of ~~actually~~our ~~and~~results reasonably incurred by them in connection with any suit brought against them in their capacity as a director, officer, employee or agent, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of ~~the~~operations ~~corporation,~~ and ~~with~~financial ~~respect to any~~condition ~~criminal~~for ~~action~~the orperiods ~~proceeding,~~presented. The iffollowing ~~they~~selected ~~had~~financial noinformation ~~reasonable~~is ~~cause~~derived tofrom ~~believe~~our ~~their~~historical ~~conduct~~consolidated ~~was~~financial ~~unlawful. This statute provides that~~statements ~~directors, officers, employees~~ and ~~agents~~should ~~may also~~ be ~~indemnified~~read ~~against expenses (including attorneys’ fees) actually and reasonably incurred by them~~ in ~~connection~~conjunction with asuch ~~derivative~~consolidated ~~suit~~financial ~~brought~~statements ~~against~~and ~~them~~notes inthereto ~~their~~set ~~capacity~~forth aselsewhere aherein ~~director, if they acted in good faith~~ and ~~in a manner they reasonably believed to be in or not opposed to~~ the ~~best interests of the corporation,~~“Forward-Looking ~~except~~Statements” ~~that~~explanation noincluded ~~indemnification may be made without court approval if such person was adjudged liable to the corporation~~herein.

~~Our by-laws provide that we shall indemnify our officers and directors in any action, suit or proceeding unless such officer or director shall be adjudged to be derelict in his or her duties.~~ Background

45Since 2016, under current management, we have sought revenue generating activities in various industries. Since then, we have made acquisitions in different industries, some of which have been disposed.

~~Table~~Over the last five years, we have been unable to sustain any material income from our operations, have incurred recurring losses, have been unsuccessful at raising material capital, either through debt or equity financing arrangements, and we have disposed of ~~Contents~~our beverage industry business line. These factors provide substantial doubt about our ability to continue as a going concern.

~~ITEM~~Despite ~~12.~~these ~~SECURITY~~challenges, ~~OWNERSHIP~~we OFhave been ~~CERTAIN~~un ~~BENEFICIAL~~able ~~OWNERS~~to ~~AND~~continue ~~MANAGEMENT~~as ~~AND~~a ~~RELATED~~going ~~STOCKHOLDER~~concern ~~MATTERS~~but have achieved certain operational successes during our fiscal years ended June 30, 2020 and June 30, 2021 that mitigate our historical trends, including:

~~The~~· ~~following~~In ~~table~~December ~~sets forth~~2020, aswe disposed of ~~June 30,~~Record ~~2020,~~Street ~~certain~~Brewing’s ~~information~~operations. ~~regarding~~As ~~beneficial~~part ~~ownership~~ of ~~our capital stock according to~~ the ~~information supplied to us~~disposal, ~~that~~ ~~were~~we ~~beneficially~~eliminated ~~owned~~approximately by$250,000 ~~(i) each person known by the Company to be the beneficial owner~~ of ~~more than 5% of each class of the Company’s~~ outstanding ~~voting~~obligations ~~stock, (ii) each director, (iii) each named executive officer identified~~ in ~~the~~ ~~Summary~~exchange ~~Compensation~~for ~~Table,~~a ~~and~~right ~~(iv) all~~to ~~named~~receive ~~executive~~royalties ~~officers~~on ~~and~~future ~~directors~~uncertain asbeverage asales ~~group. Except as otherwise indicated, the persons named~~ in the ~~table~~highly ~~have~~competitive ~~sole~~craft ~~voting~~beer ~~and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable~~market. ~~There~~The ~~are~~disposal did not ~~any~~result ~~pending~~in orsignificant ~~anticipated~~usage ~~arrangements~~of ~~that~~cash ~~may cause a change in control~~resources.

	Amount and Nature of Beneficial Ownership
Name and Address of Beneficial Owner (1)	Nature of Security	Number of Shares	Percentage of Common Stock (1)
Mark W. Conte	Common Stock	14,669,369 (1)	9.5%
President, Chief (Principal) Executive Officer, Director
Jesse Corletto	Common Stock	32,000,000 (1)	17.8%
President and Co-Founder of Record Street Brewing
Patrick Ogle	Common Stock	32,000,000 (1)	17.8%
Co-Founder of Record Street Brewing
Deacon Shoenberger	Common Stock	14,346,931 (1)	10.2%
Significant Shareholder
Kevin J. Pikero	Common Stock	1,500,000 (1)	0.8%
Chief (Principal) Financial Officer and Director
Andrew D. Smith	Common Stock	3,900,000 (1)	2.2%
Director
All directors and executive officers as a group (3 persons)	Common Stock	22,549,369 (1)	12.5%

For the two fiscal years ended 6/30/21, we settled convertible notes and accrued interest totaling approximately $291,000 for the issuance of restricted shares of common stock.

~~___________________~~· For the two fiscal years ended 6/30/21, we raised cash proceeds totaling approximately $400,000 from the issuance of convertible notes and promissory notes payable.

~~(1)~~· ~~Applicable~~In ~~percentage~~February ~~of ownership is based on 172~~2021,~~450,907~~ ~~shares~~we ofcompleted ~~common~~our ~~stock~~acquisition ~~outstanding as~~ of ~~August~~Vital ~~14,~~Behavioral ~~2020,~~Health ~~together with securities exercisable or convertible into 7,661,400 shares of common stock within sixty (60) days of August 14, 2020, for each stockholder~~Inc. ~~Beneficial ownership is determined in accordance with the rules of the SEC~~ and ~~generally~~its ~~includes~~wholly voting or investment power with respect to securities. Shares of common stock subject to options or warrants exercisable or convertible into shares of common stock that are currently exercisable or exercisable within sixty (60) days of August 11, 2020, are deemed to be beneficially owned bysubsidiaries ~~the~~via ~~person holding such options or warrants for~~ the ~~purpose~~issuance of ~~computing the percentage of ownership of such person~~equity, ~~but~~which ~~are~~provides ~~not~~an ~~treated~~opportunity asto ~~outstanding~~generate ~~for~~material ~~the~~operational ~~purpose~~revenues offrom ~~computing~~in ~~the~~and ~~percentage~~out-patient ~~ownership~~rehabilitation ~~of any other person~~services. ~~Currently none of the officers or directors of the Company hold options or warrants of the Company. The business address of each person named is 75 Pringle Way, 8th Floor, Suite 804, Reno, NV 89502.~~

~~(2)~~· ~~Share~~We ~~percentages~~raised ~~reflect~~$100,000 ~~single~~in ~~digit~~capital ~~rounding~~in the fourth fiscal quarter of 2021, via the issuance of a non-controlling interest in its previously wholly owned subsidiary, VBH Kentucky, Inc.

~~ITEM~~Plan ~~13.~~of ~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE~~Operations

~~The~~Subsequent ~~Company~~to ~~did~~the ~~not~~entry ~~have~~into ~~any transactions~~the ~~during~~rehabilitation ~~fiscal~~services ~~years 2020 and 2019 with any director~~industry, ~~director~~primarily ~~nominee,~~through ~~executive officer, security holder known to~~ the ~~Company to~~acquisition ~~own~~ of ~~record~~Vital orBehavioral ~~beneficially~~and ~~more than 5% of the Company’s common stock~~subsidiaries, orwe ~~any~~initiated ~~member of~~ the ~~immediate~~following ~~family of any~~plan of ~~the foregoing persons, in which the amount involved exceeded $120,000~~operations.

~~Director~~Capital ~~Independence~~Raising Activities (Current Commitments, Future Plans, Estimated Timelines)

~~Although~~· ~~the~~In ~~Company~~late isJuly ~~not listed on a national securities exchange~~2021, inwe ~~determining~~entered ~~whether~~into ~~the~~a ~~members~~total of ~~our Board are independent~~$40,000 ~~the~~12% ~~Company~~convertible ~~has~~promissory ~~elected~~notes to(2 ~~use~~notes ~~the definition of “independence” set forth by the NASDAQ Stock Market (“NASDAQ”~~total) ~~and~~with ~~the~~a ~~standards~~new ~~for independence established by NASDAQ~~investor. ~~After~~The ~~review~~convertible ofnotes ~~relevant~~automatically ~~transactions~~convert orat ~~relationships~~maturity between each director, or any of his family members, and the Company, its senior management and the Board, have determined that Andrew D. Smith is an independent director within the meaning of the applicable listing standards of NASDAQ. Mark W. Conte and Kevin J. Pikero are not independent directors under the NASDAQ standard based in ~~part~~July on2022 ~~their~~at ~~positions~~a asconversion ~~executive~~price ~~officers and employees~~ of ~~the Company~~$0.05.

46· On August 26, 2021, a lender loaned us $500,000, pursuant to a 12% per annum Note, interest payable monthly, and a maturity date of August 19, 2022, with a principal balloon payment on August 19, 2022. As additional consideration for the Note, we also issued the lender One Million Warrants exercisable into One Million Common Stock Shares at an exercise price of $0.005 per share.

~~Table of Contents~~38

~~ITEM~~Table ~~14.~~of ~~PRINCIPAL ACCOUNTANT FEES AND SERVICES~~Contents

~~The~~Operational ~~following table summarizes the aggregate fees billed to~~Accomplishments/Paths ~~the Company by registered independent auditor in relation~~ to ~~the~~Revenue ~~audits~~(Licensing ~~and~~Timelines, ~~quarterly~~Additional ~~reviews of the Company for the fiscal years ended June 30~~Facilities, ~~2020~~Future ~~and 2019~~Acquisitions):

	Year Ended June 30, 2020		Year Ended June 30, 2019
Audit Fees (1)	$	17,500	$	50,000
Audit-Related Fees (2)	$	-	$	-
Tax Fees (3)	$	-	$	-
All Other Fees (4)	$	-	$	-

On August 1, 2021, our subsidiary VSL Frankfort LLC, leased 10 apartments that are intended to provide sober living accommodations for patients for the outpatient facility of our subsidiary VBH Kentucky Inc. in Frankfort, Kentucky. Each unit will accommodate multiple patients on a weekly pay basis, We expect 80% capacity and cash flow positive by November 30, 2021.

~~_______________~~· On August 26, 2021, our subsidiary, VBH Kentucky Inc. received approval of its first license to operate an intensive outpatient facility for the treatment of substance use disorders in Kentucky. Substantially all costs to fit, finish, and outfit the facility have been expended.

~~(1)~~· ~~Audit~~In ~~Fees~~August 2021, Vital Behavioral Health, Inc. ~~Audit~~leased ~~fees~~a ~~include~~facility ~~fees~~in ~~for~~Fayetteville, ~~professional~~GA ~~services~~with ~~performed~~an initial base rent of $13,617 per month for ~~the~~an ~~audit~~initial term of ~~our~~18 ~~annual~~months ~~consolidated~~with ~~financial~~a ~~statements~~5-year extension option. The facility will ultimately be used for in-patient detox and mental health services. Initial conversations with county and adjacent city government authorities were positive, ~~review~~and ofno ~~quarterly~~impediments ~~consolidated~~to ~~financial~~licensing ~~statements~~were ~~included~~reported. The license application is in ~~our~~the ~~SEC~~process ~~filings~~of being drafted with submission intended by October 31, 2021, and ~~assistance~~approval anticipated within 3-6 months thereafter. The cost to fit, finish, and ~~issuance~~outfit ofthe ~~consents~~facility ~~associated~~is anticipated to be $250,000, with ~~other~~the ~~SEC~~majority ~~filings~~of those funds to be expended 30-45 days prior to the anticipated date of inspection prior to licensure. The facility is expected to be at 80% capacity 30-60 days after licensure and cash flow positive 60-90 days after licensure.

~~(2)~~· ~~Audit-Related~~All ~~Fees.~~facilities ~~Audit-related fees~~ are ~~fees~~intended ~~for assurance and related services that are reasonably related~~ to ~~the~~accept ~~audit.~~Medicaid ~~This~~and ~~category~~Medicare, ~~includes~~out-of-network ~~fees~~insurance, ~~related~~and toprivate ~~assistance~~pay ~~consulting on financial accounting/reporting standards~~patients.

~~(3)~~RESULTS ~~Tax~~OF ~~Fees. Tax fees primarily include professional services performed with respect to preparation of our federal and state tax returns for our consolidated subsidiaries.~~OPERATIONS

~~(4)~~Revenue ~~All Other Fees. All other fees include products~~ and ~~services~~Cost ~~provided,~~of ~~other than the services reported comprising Audit Fees, Audit Related Fees and Tax Fees.~~Revenue

~~The~~We ~~Board~~generated ofno ~~Directors~~revenue ~~has reviewed the services provided by WSRP~~ for the ~~fiscal~~years ~~year~~ ended June 30, ~~2020 and the amounts billed for such services~~2021, and ~~after~~June ~~consideration~~30, ~~has~~ ~~determined that the receipt of these fees is compatible with the provision of independent audit services~~2020. The Board has discussed these services and fees with its registered independent audit firms and Company management to determine that they are appropriate under the rules and regulations concerning auditor independence promulgated by the U.S. Securities and Exchange Commission to implement the Sarbanes-Oxley Act of 2002, as well as under guidelines of the American Institute of Certified Public Accountants.

~~Pre-Approval~~Professional ~~Policies and Procedures~~ Fees

~~The~~We ~~entire~~incurred ~~Board~~professional fees of ~~Directors~~$208,688 ~~acts~~and $140,394 asfor ~~the Company’s~~our ~~Audit~~fiscal ~~Committee.~~year ~~The~~ended ~~Audit~~June ~~Committee~~30, ~~does~~2021 ~~not~~and ~~have~~June a30, ~~financial~~2020, ~~expert~~respectively. ~~serving~~Our onprofessional ~~its~~fees ~~committee~~increased atby ~~this~~$68,294 ~~time~~for ~~due~~our fiscal year 2021, which increase is primarily attributable to ~~the~~our ~~size~~new ~~and~~business ~~nature~~plan of ~~the~~operating ~~Company~~substance abuse facilities.

~~All~~As ~~audit~~funding ~~and non-audit services are pre-approved by the Audit Committee~~permits, ~~which~~we ~~consists~~expect ofto ~~the~~incur ~~members of the Board of Directors which considers, among other things, the possible~~higher ~~effect~~professional offees ~~the~~associated ~~performance~~with ~~of such services~~ on ~~the auditors’ independence. The Audit Committee pre~~-~~approves~~going ~~the~~development ~~annual engagement~~ of ~~the~~our ~~principal independent registered public accounting firm~~brand, ~~including the performance of the annual audit and quarterly reviews for the subsequent fiscal year~~customers, and pre-approves specific engagements for tax services performed by such firm. The Audit Committee has also established pre-approval policies and procedures for certain enumerated audit and audit related services performed pursuant to the annual engagement agreement, including such firm’s attendance at and participation at Board and committee meetings; services associated with SEC registration statements approved by the Board of Directors; review of periodic reports and other ~~documents~~relationship filed with the SEC or other documents issued in connection with securities offerings, such as comfort letters and consents; assistance in responding to any SEC comments letters; and consultations with such firm as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, Public Company Accounting Oversight Board (PCAOB), Financial Accounting Standards Board (FASB), or other regulatory or standard-setting bodiesdevelopment. The Audit Committee is informed of each service performed pursuant to its pre-approval policies and procedures. The Audit Committee has considered the role of WSRP in providing services to us for the fiscal years ended June 30, 2020 and 2019 and has concluded that such services are compatible with such firm’s independence.

47General and Administrative Expenses

~~Table~~For the fiscal years ended June 30, 2021 and 2020, we incurred general and administrative expenses of ~~Contents~~$268,051 and $8,865, respectively, representing an increase of $259,186 in Fiscal Year 2021 compared to our Fiscal Year 2020. The $257,233 increase in general and administrative expenses is primarily attributable to incurring rent expense and related facilities costs totaling approximately $165,000; approximately $62,000 in payroll expenses; and approximately $12,000 in advertising costs, none of which were incurred during fiscal 2020.

~~PART~~We IVexpect our expenses to increase over the next several periods should we be successful in our new business plan, which will primarily consist of facilities costs, management and other salaries, travel, and other corporate overhead.

~~ITEM~~Interest ~~15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~Expense

Exhibit Number		Description
2.1		Share Exchange Agreement, dated December 31, 2014, by and among Esio Water & Beverage Development Corp. and iMetabolic Corp. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed March 20, 2015).
21.1*		Subsidiaries of the Registrant
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document**
101.SCH*		XBRL Extension Schema Document**
101.CAL*		XBRL Extension Calculation Linkbase Document**
101.DEF*		XBRL Extension Definition Linkbase Document**
101.LAB*		XBRL Extension Labels Linkbase Document**
101.PRE*		XBRL Extension Presentation Linkbase Document**

Interest expense was $28,459 and $44,625 for the years ended June 30, 2021 and June 30, 2020, respectively, representing a decrease of $16,166. The decrease in the current period interest expense is primarily the result of converting previously outstanding debt obligations totaling approximately $271,000 during the two fiscal years presented, partially off-set by the incurrence of new debt obligations totaling $265,000.

~~__________________~~39

*Table ~~Filed~~of ~~herewith.~~Contents

**We Inexpect ~~accordance~~our ~~with~~interest ~~Rule~~expense ~~406T~~to increase in fiscal 2022, initially as a result of ~~Regulation~~the ~~S-T~~$500,000, ~~this~~12% ~~information~~promissory isnote ~~deemed~~that ~~not~~we ~~“filed”~~issued ~~for~~in ~~purposes~~August of2021. ~~Section~~Additional 18future ofinterest ~~the~~expense obligations ~~Securities~~are ~~Exchange~~dependent ~~Act~~on the types of ~~1934~~future financing arrangements over the next twelve months, asif ~~amended~~any.

~~Financial~~Change ~~Statement~~in ~~Schedules~~Fair Value of Derivative Liabilities

~~None~~During the fiscal year ended June 30, 2021 the Company issued equity and equity-linked instruments in excess of the number of its authorized and unissued shares. As a result, certain outstanding instruments were recognized and reclassified to liabilities as of June 30, 2021. The liability recognition and subsequent revaluation of the instruments resulted in a loss on the change in fair value of $212,963 for the year ended June 30, 2021. The Company expects to recognize the changes in the valuation of these liability instruments until the instruments are settled, or enough shares are authorized if all other accounting criteria are met. The Company expects to increase its authorized share capital in the first half of fiscal 2022, although there is no assurance the shareholders will approve such increase.

48Discontinued Operations

~~Table~~On December 31, 2020, we completed the disposition of ~~Contents~~our prior Record Street Brewing Operations. The primary consideration in the disposal was the purchaser’s assumption of liabilities totaling approximately $251,000. As a result of the assets acquired not having any book value, we recognized a gain on disposal of approximately $251,000. We did not incur any tax impacts from the disposal. We expect the gain to be non-recurring.

~~SIGNATURES~~Liquidity and Capital Resources

InAs ~~accordance~~of ~~with~~June ~~Section~~30, 132021 orwe ~~15(d)~~had a working capital deficit of approximately $764,000. Over the next twelve months, we have estimated that in order to maintain reporting company status as defined under the Securities Exchange Act of 1934, we will require cash for general and administrative expenses primarily consisting of facilities costs payroll expenses and professional fees, which include accounting, legal and other professional fees, as well as filing fees. We believe we will be able to meet these costs through the ~~registrant~~use ~~caused~~of ~~this~~existing ~~report~~cash and cash equivalents, the cash proceeds totaling $500,000 received in August 2021from the issuance of a promissory note, and through our operations which are expected to commence during the second quarter of fiscal 2022. However, no assurance can be ~~signed~~given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on ~~its~~acceptable ~~behalf~~terms. byFurther, we have recently entered the ~~undersigned,~~rehabilitation ~~thereunto~~services ~~duly~~industry ~~authorized~~and may not be able to operate our facilities at levels sufficient to meet our on-going obligations.

	UPD HOLDING CORP.
Date: August 14, 2020	By:	/s/ Mark W. Conte
		Mark W. Conte
		President and Chief Executive Officer
		(Principal Executive Officer)

For the year ended June 30, 2021, our operational cash flows primarily consisted of incurring expenses in the normal course of business at levels commensurate with its funding levels and resulting inabilities to commence commercially viable operations. Net of the non-recurring gain on our discontinued RSB operations of approximately $251,000, and the loss on the change in the fair value of derivative liabilities totaling approximately $213,000, our operational cash uses primarily consisted of the incurrence of on-going general and administrative expenses for the year ended June 30, 2021. We expect these operational cash uses to increase as we begin our operations in the first half of fiscal 2022.

Date: August 14, 2020	By:	/s/ Kevin J. Pikero
		Kevin J. Pikero
		Chief Financial Officer
		(Principal Financial Officer)

Our investing activities consisted of acquiring property and equipment totaling approximately $47,000 partially off-set by approximately $10,000 of cash acquired through Vital. We expect to make additional capital expenditures as its rehabilitation facilities increase operations.

~~Pursuant~~During to the ~~requirements~~year ofended ~~the~~June ~~Securities Exchange~~30, ~~Act~~2021, ofwe ~~1934~~generated $265,000 ~~this~~of ~~report~~net ~~has~~cash ~~been~~from ~~signed~~financing ~~below~~activities bythrough the ~~following~~issuance ~~persons~~of onconvertible ~~behalf~~debt ofand ~~the~~notes ~~registrant~~payable. ~~and~~Additionally, we sold non-controlling interest in ~~the~~its ~~capacities~~previously wholly owned VBH Kentucky, Inc. subsidiary for $100,000. We expect to continue our financing efforts throughout ~~and~~fiscal on2022, including receiving cash proceeds of $500,000 through the ~~dates~~issuance ~~indicated~~of note payable in August 2021.

Name	Title	Date
/s/ Mark W. Conte	President, Chief Executive Officer, Director	August 14, 2020
Mark W. Conte	(Principal Executive Officer)
/s/ Kevin J. Pikero	Chief Financial Officer, Director	August 14, 2020
Kevin J. Pikero	(Principal Financial Officer)
/s/ Andrew D. Smith	Director	August 14, 2020
Andrew D. Smith

Off-Balance Sheet Arrangements

~~SUPPLEMENTAL~~During ~~INFORMATION~~the TOfiscal BEyears ~~FURNISHED~~ended June 30, 2021, and ~~WITH~~2020, ~~REPORTS~~we did not engage in any off-balance sheet arrangements as set forth in Item 303(a)(4) of the Regulation S-K.

~~FILED~~Critical ~~PURSUANT~~Accounting ~~TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE~~Policies

~~NOT~~The ~~REGISTERED~~discussion ~~SECURITIES~~and ~~PURSUANT~~analysis TOof our financial condition ~~SECTION~~and 12results OFof ~~THE~~operations ~~ACT~~is based upon our consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires our management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are monitored and analyzed by our management for changes in facts and circumstances, and material changes in these estimates could occur in the future.

~~The registrant has not sent to its security holders any annual report covering the registrant’s fiscal year ended June 30, 2020.~~40

49Table of Contents

Business Combinations

Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in general and administrative expenses; previously held equity interests are valued at fair value upon the acquisition of a controlling interest; restructuring costs associated with a business combination are expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date affect income tax expense. Measurement period adjustments are made in the period in which the amounts are determined, and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of goodwill or the recognition of additional consideration which would be expensed. The fair value of contingent consideration is remeasured each period based on relevant information and changes to the fair value are included in the operating results for the period.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary in order to reduce deferred tax assets to the amounts expected to be recovered.

The Company has established a valuation allowance for its deferred tax assets that are not recoverable from taxable temporary differences because the Company is unable to conclude that future utilization of a portion of its NOL carryforwards and other deferred tax assets is more likely than not.

The calculation of the Company’s tax positions involves dealing with uncertainties in the application of complex tax regulations in several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include inquiries regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. The Company records estimated reserves for exposures associated with positions that it takes on its income tax returns that do not meet the more likely than not standards.

Embedded Conversion Features and Other Equity-linked Instruments (Derivative Liabilities)

The Company classifies all of its embedded debt conversion features, and other derivative financial instruments as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) contracts that contain reset provisions. The Company assesses classification of its equity-linked instruments at each reporting date to determine whether a change in classification between equity and liabilities (assets) is required. As of June 30, 2021, the Company did not have enough authorized and unissued shares to settle all outstanding equity-linked instruments resulting in the reclassification of certain instruments to liability. The Company reclassifies outstanding instruments based on allocating the unissued shares to contracts with the earliest inception date resulting in the contracts with the latest inception date being recognized as liabilities first.

The Company accounts for contracts convertible into common stock in excess of its authorized capital as derivative as liabilities. The derivative liabilities are remeasured at fair value with the changes in the value reported as a component of other income (expense) in the accompanying consolidated results of operations. The derivative liabilities are measured at fair value using a Black Scholes option pricing model. The model is based on assumptions including quoted market prices and estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level 3 of the fair value hierarchy as established by US GAAP. As of June 30, 2021 all derivative liability contracts are convertible into a fixed number of shares of common stock.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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ITEM 8 - Financial Statements and Supplementary Data

UPD HOLDING CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page

Report of Independent Registered Public Accounting Firm		43-44

Consolidated Balance Sheets - As of June 30, 2021 and 2020		45

Consolidated Statements of Operations – Years ended June 30, 2021 and 2020		46

Consolidated Statements of Changes in Stockholders’ Deficit - Years ended June 30, 2021 and 2020		47

Consolidated Statements of Cash Flows - Years ended June 30, 2021 and 2020		48

Notes to Consolidated Financial Statements		49-59

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of UPD Holding Corp. and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of UPD Holding Corp. and Subsidiaries (the Company) as of June 30, 2021 and 2020, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has no revenue source, suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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Income Tax Provision

As discussed in Note 10 to the consolidated financial statements, the Company’s income tax expense includes U.S. and state income taxes. Deferred tax assets and liabilities are recognized for the consequences of temporary differences between the financial reporting basis and the tax basis of existing assets and liabilities. The tax rate used to determine the deferred tax assets and liabilities is based on the enacted tax rate for the year and the manner in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.

We identified management’s calculation of income tax expense and deferred tax assets and liabilities (net of valuation allowance) as a critical audit matter because of the significant judgments and estimates management makes to determine these amounts. Performing audit procedures to evaluate the reasonableness of management’s interpretation of tax law in its estimate of the associated provisions and tax charges required a high degree of auditor judgment and increased effort. Our audit procedures consisted of 1) evaluating historical tax filings, 2) assessing the reasonableness of the valuation allowance.

Business Combination and Goodwill

As discussed in Note 4 to the consolidated financial statements, the Company’s consolidated financial statements include the acquisition of Vital Behavioral Health, LLC. The valuation of the associated goodwill related to this acquisition and was determined as the excess funds paid in relation to the net assets acquired.

We identified management’s calculation of the fair market value of identifiable assets and liabilities and the associated calculation of goodwill as a critical audit matter because of the significant judgements and estimates management makes to determine these amounts. Performing audit procedures to evaluation the reasonableness of management’s assessment of estimates required a high degree of auditor judgement and increased effort. Our audit procedures consisted of 1) evaluating the fair market value of identifiable assets, (2) assessing the appropriateness of non-cash consideration (3) independently recomputing the valuations determined by Management.

Accounting for Embedded Derivative Liabilities Related to Convertible Notes Payable

As described in Note 2 to the financial statements, the Company had convertible debentures that required accounting considerations and significant estimates.

The Company determined that variable conversion features issued in connection with certain convertible debt required derivative liability classification. These variable conversion features were initially measured at fair value and subsequently have been remeasured to fair value at each reporting period. The Company determined the fair value of the embedded derivatives using the Black-Scholes-Merton option pricing model.

We identified the accounting considerations and related valuations, including the related fair value determinations of the embedded derivative liabilities of such as a critical audit matter. The principal considerations for our determination were: (1) the accounting consideration in determining the nature of the various features (2) the evaluation of the potential derivatives and potential bifurcation in the instruments, and (3) considerations related to the determination of the fair value of the various debt and equity instruments and the conversion features that include valuation models and assumptions utilized by management. Auditing these elements is especially challenging and requires auditor judgement due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

Our audit procedures related to management’s conclusion on the evaluation and related valuation of embedded derivatives, included the following, among others: (1) evaluating the relevant terms and conditions of the various financings, (2) assessing the appropriateness of conclusions reached by the Company with respect to the accounting for the convertible debt, and the assessment and accounting for potential derivatives and (3) independently recomputing the valuations determined by Management.

We have served as the Company’s auditor since 2019.

Salt Lake City, Utah

October 13, 2021

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PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

UPD Holding Corp.

Consolidated Balance Sheets

As of

	June 30,			June 30,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	16,414		$	20,718
Assets held for sale		—			755
Total current assets	$	16,414		$	21,473

Property and equipment, net		40,043			—
Right of use asset, net		42,447			—
Other assets		2,365			—
Goodwill		416,981			—
Total assets	$	518,250		$	21,473

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	155,394		$	14,805
Accrued interest		83,799			75,934
Convertible notes payable, net of discount		162,548			180,129
Derivative liability		237,963			—
Related party notes payable		114,560			84,560
Lease liability		26,206			—
Liabilities related to assets sold		—			250,167
Total current liabilities		780,470			605,595
Lease liability, net of current portion		16,241			—
Total liabilities		796,711			605,595

Commitments and Contingencies
Stockholders' deficit
Preferred stock, $0.01 par value; 10,000,000 authorized and none issued and outstanding		—			—
Common stock, $0.005 par value; 200,000,000 shares authorized and 194,750,907 and 172,450,907 issued and outstanding at June 30, 2021 and June 30, 2020, respectively		973,755			862,255
Additional paid-in-capital		2,558,162			1,872,632
Accumulated deficit		(3,804,474	)		(3,319,009	)
Total UPD Holding Corp. stockholders' deficit		(272,557	)		(584,122	)
Non-controlling interest		(5,904	)		—
Total stockholders' deficit		(278,461	)		(584,122	)
Total liabilities and stockholders' deficit	$	518,250		$	21,473

The accompanying notes are an integral part of these Consolidated Financial Statements

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UPD Holding Corp.

Consolidated Statements of Operations


	For the Years Ended
	June 30,			June 30,
	2021			2020
Revenues:
Net revenue	$	—		$	—

Operating costs and expenses:
Professional fees		208,688			140,394
General and administrative		268,051			8,865
Total operating costs and expenses		476,739			149,259

Operating loss		(476,739	)		(149,259	)

Interest expense, net		(28,459	)		(44,625	)
Loss on change in fair value of derivative liability		(212,963	)		—
Other income (expense), net		(23,402	)		324,821
Income (loss) from continuing operations, before income taxes		(741,563	)		130,937
Benefit from income taxes		—			—
Income (loss) from continuing operations		(741,563	)		130,937

Discontinued operations:
Gain on sale of discontinued operations, net of tax		251,164			—
Income from discontinued operations, net of tax		251,164			—
Net income (loss)	$	(490,399	)	$	130,937
Less: net loss attributable to non-controlling interest		(4,934	)		—
Net income (loss) attributable to UPD Holding Corp.	$	(485,465	)	$	130,937

Basic and diluted earnings (loss) per share from:
Continuing operations	$	(0.00	)	$	0.00
Discontinued operations		0.00			-
Basic and diluted earnings (loss) per share from:	$	(0.00	)	$	0.00


Weighted average shares outstanding
Basic and diluted		181,006,414			171,513,505

The accompanying notes are integral part of these Consolidated Financial Statements

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UPD Holding Corp.

Consolidated Statements of Changes in Stockholders’ Deficit

															Total
									Additional						UPD Holding Corp.						Total
	Preferred Stock				Common Stock				Paid-in			Accumulated			Stockholders'			Non-Controlling			Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit			Interest			Deficit
BALANCE, June 30, 2019		—	$	—		171,008,684	$	855,044	$	1,709,731		$	(3,449,946	)	$	(885,171	)	$	—		$	(885,171	)
Issuance of common stock for conversion of debt and interest		—		—		1,442,223		7,211		136,981			—			144,192			—			144,192
Related party debt and interest forgiveness		—		—		—		—		25,920			—			25,920			—			25,920
Net income		—		—		—		—		—			130,937			130,937			—			130,937
BALANCE, June 30, 2020		—		—		172,450,907	$	862,255	$	1,872,632		$	(3,319,009	)	$	(584,122	)	$	—		$	(584,122	)
Issuance of common stock for conversion of debt and interest		—		—		4,460,000		22,300		124,570			—			146,870			—			146,870
Issuance of common stock for acquisition of Vital Behavioral Health, Inc.		—		—		16,840,000		84,200		437,840			—			522,040			—			522,040
Cash received for minority interest in VBH Kentucky Inc.		—		—		—		—		100,970			—			100,970			(970	)		100,000
Reclassification of convertible instrument		—		—		—		—		(25,000	)		—			(25,000	)		—			(25,000	)
Beneficial conversion feature for convertible debt		—		—		—		—		25,000			—			25,000			—			25,000
Stock based compensation		—		—		1,000,000		5,000		22,150			—			27,150			—			27,150
Net loss		—		—		—		—		—			(485,465	)		(485,465	)		(4,934	)		(490,399	)
BALANCE, June 30, 2021		—	$	—		194,750,907	$	973,755	$	2,558,162		$	(3,804,474	)	$	(272,557	)	$	(5,904	)	$	(278,461	)

The accompanying notes are an integral part of these Consolidated Financial Statements

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UPD Holding Corp.

Consolidated Statements of Cash Flows


	For the Years Ended
	June 30,			June 30,
	2021			2020
Cash flows from operating activities:
Net income (loss)	$	(490,399	)	$	130,937
(Income) loss from discontinued operations		—			—
Gain on sale of discontinued operations		(251,164	)		—
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		6,702			—
Stock-based compensation		27,150			—
Loss (gain) on settlement of debt		23,402			(324,821	)
Loss on change in fair value of derivative liability		212,963
Amortization of debt discount		7,548			—
Changes in operating assets and liabilities:
Other assets		(2,365	)		—
Assets held for sale		755			(755	)
Accrued interest		20,911			46,548
Accounts payable		112,469			(6,974	)
Net cash used in operating activities - continuing operations		(332,028	)		(155,065	)
Net cash used in operating activities - discontinued operations		(815	)		—
Net cash used in operating activities		(332,843	)		(155,065	)
Cash flows from investing activities:
Purchase of property and equipment		(46,745	)		—
Cash acquired in business combination		10,284			—
Net cash used in investing activities		(36,461	)		—

Cash flows from financing activities:
Proceeds from related party notes payable		30,000			10,000
Proceeds from issuance of non-controlling interest in VBH Kentucky Inc.		100,000			—
Proceeds from issuance of convertible notes payable		115,000			165,129
Proceeds from issuance notes payable		120,000			—
Principal payments on notes payable		—			(6,561	)
Net cash provided by financing activities		365,000			168,568

Net increase (decrease) in cash and cash equivalents		(4,304	)		13,503
Cash and cash equivalents at beginning of period		20,718			7,215
Cash and cash equivalents at end of period	$	16,414		$	20,718

Cash paid for income taxes	$	—		$	—
Cash paid for interest	$	—		$	4,000

Non-Cash Supplemental Disclosures
Common stock issued for asset acquisition	$	522,040		$	—
Common stock issued for debt settlement	$	140,870		$	130,000
Notes payable forgiven for asset disposition	$	92,225		$	350,000
Notes payable forgiven in business acquisition	$	120,000		$	—
Related party debt forgiven	$	—		$	21,000

The accompanying notes are an integral part of these Consolidated Financial Statements

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BUSINESS AND ORGANIZATION

UPD Holding Corp. (“UPD”, “Company”), incorporated in the State of Nevada, is a holding Company seeking to acquire assets and businesses to provide a competitive advantage through cost-sharing and other synergies. The Company is pursuing business development opportunities in the rehabilitation services industry.

On February 16, 2021, UPD completed its acquisition of Vital Behavioral Health, Inc., which intends to operate U.S. facilities focusing on substance abuse treatment and offer various programs that help provide a continuum of care to its patients.

The Company previously operated in the food and beverage industry through Record Street Brewing (“RSB”), which was sold as of December 31, 2020.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Company consolidates the assets, liabilities, and operating results of its wholly owned and majority-owned subsidiaries: (i) iMetabolic Corp, a Nevada corporation; (ii) United Product Development Corp., a Nevada corporation; (iii) Vital Behavioral Health, Inc., a Nevada corporation (since February 16, 2021); (iv) VBH Frankfort LLC, a Nevada limited liability company (since February 16, 2021); (v) VSL Frankfort LLC, a Nevada limited liability company (since February 16, 2021); (vi) VBH Garden Grove Inc. (since February 17, 2021); (vii) VBH Kentucky Inc., a Nevada corporation (since March 16, 2021); and (viii) Record Street Brewing Co., a Nevada corporation (through December 31, 2020). All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments with original maturities of 90 days of less at the date of purchase. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured. As of June 30, 2021 and June 30, 2020 the Company did not have any cash equivalents or cash deposits in excess of the federally insured limits.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ materially from these estimates.

Fair Value of Financial Instruments

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

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Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The Company's financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts payable, and convertible and other notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

The fair value of the Company’s derivative liabilities are estimated using a Black-Scholes option pricing model with Level 3 unobservable inputs. Prior to the fiscal year ended June 30, 2021 the Company did not have any instruments valued within Level 3 of the fair value hierarchy.

Net Income (Loss) Per Share

The Company presents both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period under the treasury stock method using the if-converted method. Due to the incurrence of net losses, the Company did not include outstanding instruments convertible into common stock that would be anti-dilutive.

Business Combinations

Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in general and administrative expenses. Measurement period adjustments are made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of goodwill, require acceleration of the amortization expense of finite-lived intangible assets, or the recognition of additional consideration which would be expensed.

Lease Accounting

The Company leases office space and outpatient clinical space under a lease arrangement. These properties are generally leased under noncancelable agreements that contain lease terms in excess of twelve months on the date of entry as well as renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for base minimum rental payment, as well non-lease components including insurance, taxes, maintenance, and other common area costs.

At the lease commencement date, the Company recognizes a right-of-use asset and a lease liability for all leases, except short-term leases with an original term of twelve months or less. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any prepayments to the lessor and initial direct costs such as brokerage commissions, less any lease incentives received. All right-of-use assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using the rate implicit in the contract if available or an estimate of our incremental borrowing rate for a collateralized loan with the same term as the underlying lease. The discount rates used for the initial measurement of lease liabilities as of the date of entry were based on the original lease terms.

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Lease payments included in the measurement of lease liabilities consist of (i) fixed lease payments for the noncancelable lease term, (ii) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (iii) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. Certain real estate lease agreements require payments for non-lease costs such as utilities and common area maintenance. The Company has elected an accounting policy to not separate implicit components of the contract that may be considered non-lease related.

Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. The lease payments are allocated between a reduction of the lease liability and interest expense. Depreciation of the right-of-use asset for operating leases reflects the use of the asset on straight-line basis over the expected term of the lease.

Property and Equipment

Property and Equipment are stated at cost less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives of tenant improvements are the lesser of the estimated useful life of the asset or the term of the lease (2 years for current lease); furniture and fixtures are 5 to 7 years; operating lease right of use assets over the expected term of the operating lease; and office and computer equipment are 3 to 5 years.

The Company periodically reviews property and equipment when events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. Recoverability is assessed based on several factors, including the intention with respect to maintaining facilities and projected discounted cash flows from operations. An impairment loss would be recognized for the amount by which the carrying amount of the assets exceeds their fair value, as approximated by the present value of their projected discounted cash flows.

Goodwill

Goodwill represents the excess of fair value over identifiable tangible and intangible net assets acquired in business combinations. Goodwill is not amortized, instead goodwill is reviewed for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value.

Advertising Expense

The Company recognizing advertising expense in the period in which it is incurred. For the fiscal year ended June 30, 2021 the Company incurred advertising expense of $11,500 included in general and administrative expense in the accompanying consolidated statements of operations. The Company did not incur advertising expenses during the fiscal year ended June 30, 2020.

Revenue Recognition

The Company previously licensed its beer and beverage products to its customers. The royalties earned from these licensing agreements represent revenue earned under contracts in which the Company bills and collects from its licensee in arrears. The Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles:

Identifying the contract with a customer;

Identifying the performance obligations in the contract;

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Determining the transaction price;

Allocate the transaction price to the performance obligations in the contract; and

Recognize revenue when (or as) the Company satisfies its performance obligations.

Revenues from licensing royalties are recognized when the Company’s performance obligations are satisfied upon its licensee’s sales to its customers. The Company primarily invoices its licensee on a quarterly basis, net of returns. The Company did not realize material revenues in the current period through the disposition date on December 31, 2020.

The Company’s expected rehab service and facility revenue will be recognized in accordance with the same five core principles after meeting the applicable licensing requirements.

Income Taxes

The Company recognizes deferred tax liabilities and assets using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statements carrying values and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, judgment and interpretation of statutes is required. Judgments and interpretation of statutes are inherent in this process. Future income tax assets are recorded in the financial statements if realization is considered more likely than not.

For previously taken tax positions considered to be uncertain, the Company prescribes a recognition threshold and measurement attribute. In the event certain tax positions do not meet the appropriate recognition threshold, de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions is required.

The Company files income tax returns in the U.S. federal jurisdiction.

Debt Issuance Costs

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized, netted against debt principal for balance sheet purposes, and amortized to interest expense over the terms of the related debt agreements using the effective interest method.

Derivative Liabilities

The Company accounts for contracts convertible into common stock in excess of its authorized capital as derivative as liabilities. The derivative liabilities are re-measured at fair value with the changes in the value reported as a component of other income (expense) in the accompanying results of operations. The derivative liabilities are measured at fair value using a Black Scholes option pricing Model. The model is based on assumptions including quoted market prices and estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level 3 of the fair value hierarchy as established by US GAAP. As of June 30, 2021 all derivative liability contracts are convertible into a fixed number of shares of common stock.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern, has reoccurring net losses and net capital deficiency. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (i) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses; (ii) obtaining funding from outside sources through the sale of its debt and/or equity securities; and (iii) completing a merger with or acquisition of an existing operating company. Management provides no assurances that the Company will be successful in accomplishing any of its plans.

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NOTE 3- DISCONTINUED OPERATIONS

On December 31, 2020, the Company discontinued its RSB operations pursuant to the Assumption Agreement of the same date whereby 100% of the issued and outstanding common stock of RSB was assigned to RSB’s co-founder and a significant shareholder of the Company. As part of the disposition, the purchaser agreed to assume outstanding liabilities of RSB totaling $251,164 and acquired the rights to all royalties associated with the intellectual property licensing previously held by the Company. The Company reclassified $250,167 of RSB liabilities outstanding as of June 30, 2020 to liabilities related to assets sold in the accompanying consolidated balance sheets.

During the years ended June 30, 2021 and 2020, RSB did not engage in material operations or generate material revenues. The Company did not allocate any interest expense to discontinued operations apart from interest accrued on the obligations that were assumed.

NOTE 4 – ACQUISITIONS

In February 2021, through a Stock Exchange Agreement (“Exchange Agreement”) in which 100% of the outstanding shares of Vital Behavioral Health Inc. (“Vital”) were acquired via the issuance of 16,840,000 shares of restricted common stock, the Company acquired the assets and assumed the liabilities of Vital and its two wholly owned subsidiaries: VBH Frankfort LLC (“VBHF”) and VSL Frankfort LLC (“VSLF”). The Company did not incur material acquisition costs associated with the Exchange Agreement.

The following table represents the fair value of the consideration paid allocated to the assets and liabilities acquired in applying the acquisition method for the completion of the Vital business combination:

Description	As of February 16, 2021
Fair value of 16,840,000 shares of restricted common stock	$	522,040
Lease liabilities		52,787
Other current liabilities		27,475
Notes payable forgiven		(122,250	)
Total consideration	$	480,052

Cash		10,284
Right of use assets		52,787
Goodwill		416,981
Total assets acquired	$	480,052

Through the Vital acquisition, the Company intends to operate multiple facilities in the U.S. that will focus on substance abuse treatment and offer various programs that help provide a continuum of care to its patients. VBHF is intended to operate as an out-patient substance abuse treatment facility in Frankfort, Kentucky. VSLF is intended to offer sober-designated living quarters for individuals who are in recovery. Each of Vital, VBHF, and VSLF are in the early development stage and have not received any operational licenses or permits through the date of this report.

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NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	June 30, 2021			June 30, 2020

Computer equipment and software	$	5,304		$	-
Furniture and fixtures		18,465			-
Leasehold improvements		22,976			-
Property and equipment		46,745			-
Accumulated depreciation		(6,702	)
Property and equipment, net	$	40,043		$	-

Depreciation for the year ended June 30, 2021 was $6,702.

NOTE 6 – NOTES AND CONVERTIBLE NOTES PAYABLE

The Company’s notes payable consists of the following:

Note Description	June 30, 2021		June 30, 2020
Notes Payable:
Notes payable matured in March 2018 with a nominal interest rate of 12%*	$	-	$	20,000
Related Party Notes Payable due October 2020 a nominal interest rate of 6%		114,560		84,560
Total Notes payable	$	114,560	$	104,560
Accrued interest		13,199		8,900
Total notes payable, net	$	127,759	$	113,460

*As of December 31,2020, $20,000 of notes payable outstanding at June 30, 2020 were reclassified to liabilities related to assets sold in the accompanying consolidated balance sheet.

Throughout the fiscal year ended June 30, 2021 the Company did not have the financial resources to make current payments on these notes payable. All of the outstanding notes payable are due to officers of the Company who have informally agreed to defer payment until such time as the Company’s liquidity improves, however, they are under no formal obligation to continue to do so and may demand payment. The Company has not incurred significant penalties associated with the current defaults.

The Company’s convertible notes payable consist of the following:

Convertible Note Description	June 30, 2021			June 30, 2020

Notes payable convertible into common stock at $0.025 per share;
nominal interest rate of 12%; and matured in April 2018 (related
party)	$	65,000		$	65,000
Notes payable convertible into common stock at $0.10 per share; nominal interest rate of 12%; and matured in July 2020 (related party)		-			65,129
Notes payable convertible into common stock at $0.05 per share; nominal interest rate of 12%; and matures in March 2022		100,000			-
Notes payable convertible into common stock at $0.10 per share; nominal interest rate of 12%; and matures in February 2022		15,000			-
Notes payable convertible into common stock at $0.10 per share; nominal interest
rate of 12%; and matures in the fourth quarter of fiscal 2021 (related party)		-			50,000
Total Convertible notes payable	$	180,000		$	180,129
Unamortized discount		(17,452	)		-
Convertible notes payable, net		162,548			180,129
Accrued interest		70,600			67,034
Total convertible notes payable, net	$	233,148		$	247,163

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The principal and interest of the Company’s outstanding convertible notes, with the exception of the related party notes totaling $65,000 that matured in April 2018, automatically convert to shares of common stock at $0.05 or $0.10 per share upon maturity if not paid in full prior to maturity. The Company did not make any monthly interest payments on its outstanding convertible notes payable.

During the year ended June 30, 2021, a note holder became a related party through the acquisition (in a private transaction not involving the Company) of shares of outstanding common stock in excess of 5%. In October 2020, the Company issued the related party a note payable for total cash proceeds of $100,000. In February 2021, the Company acquired the entity, Vital Behavioral Health, Inc., the previous holder of the note.

In December 2020, the Company settled related party convertible notes payable and accrued interest totaling approximately $69,000 via the issuance of 3,900,000 shares of common stock. As part of the settlement, the Company recognized a loss of approximately $23,000 associated with the estimated fair value of the stock issued being in excess of the carrying value of the debt.

As of June 30, 2020, the Company did not have enough authorized and unissued shares of common stock to settle all its convertible debt obligations. As a result, the Company recognized obligations to issue a total of 3,466,907 shares of common stock upon convertible debt conversion to derivative liabilities in the accompanying consolidated balance sheets. The Company measures the changes in the fair value of its derivative obligations using a Black-Scholes option pricing model with a volatility assumption of 133%; an expected term equal to the remaining term of the contract on the reclassification date (between eight to twelve months for fiscal 2021); a risk-free rate of approximately 1.4%; and conversion prices of $0.10 (156,000 shares), $0.05 (2,080,000 shares), and $0.025 (1,230,907 shares). For the year ended June 30, 2021 the Company recognized a loss on the change in the fair value of derivative liabilities of $212,963 in other income (loss) in the accompanying consolidated statements of operations. The Company had derivative liability obligations of $237,963 as of June 30, 2021. The Company did not have any outstanding derivative liabilities as of June 30, 2020.

During the years ended June 30, 2021 the Company recognized interest expense on all outstanding notes and convertible notes payable totaling approximately $28,000 and $45,000, respectively.

NOTE 7 – RELATED PARTY TRANSACTIONS

During the fiscal year ended June 30, 2021, the Company’s Chief Executive Officer (“CEO”) provided the Company $30,000 in exchange for short-term 6% notes payable to meet the Company’s on-going operating expense obligations. As of June 30, 2021 and 2020, the Company had outstanding notes payable due to the CEO inclusive of accrued interest totaling $41,225 and $10,200, respectively. Additionally, our CEO provided cash proceeds totaling $15,000 in September 2016 under a convertible note arrangement. The note matured in 2018 and remains outstanding. As of June 30, 2021 and 2020, the principal and interest due under the convertible note approximated $31,000 and $31,000, respectively. The note, along with accrued interest, is convertible into restricted common stock at rate of $0.0125 per share at the option of the Company’s CEO. By the terms of the convertible note, no additional interest was accrued during the fiscal years ended June 30, 2021 and 2020.

As noted in Footnote 4, the Company acquired a 100% interest in Vital Behavioral Health, Inc. (“Vital”). As of the date of acquisition in February 2021, the Company was indebted to Vital totaling approximately $100,000 under a 6% promissory note payable arrangement. Upon consummation of the merger, the promissory note and related accrued interest were effectively eliminated. The Company did not make any cash payments under the promissory note arrangement through June 30, 2021. As of June 30, 2021 the balance of the inter-company note payable was eliminated in the consolidation.

The Company sold an individual a 4.67% non-controlling interest in VBH Kentucky, Inc. in April 2021 for cash proceeds totaling $100,000. The non-controlling interest holder also entered into a $100,000 12% convertible note payable with the Company in March 2021. The convertible note matures in March 2022 and is convertible into restricted common stock at $0.05 per share.

Effective December 31, 2020, Dr. George D. Shoenberger was appointed as a Board member of the Company. As of the date of the appointment and through June 30, 2021, Dr. Shoenberger held a convertible note payable issued in 2016 with an initial principal balance of $50,000. As of June 30, 2021 and 2020, the outstanding principal and accrued interest balance due under the convertible note agreement totaled $100,000 and $100,000, respectively. The note, along with accrued interest, is convertible at the option of Dr. Shoenberger into restricted common stock of the Company at a conversion rate of $0.025 per share. The Company did not make any settlement arrangement to cure the default of the convertible note payable during the fiscal years ended June 30, 2021 and 2020.

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In May 2020, the Company entered into a 12% convertible note arrangement with a shareholder in which the Company received total cash proceeds of $50,000. The noteholder was a previous 59% owner of Vital prior the Company’s acquisition. As of June 30, 2021, the Company converted the previously outstanding convertible note payable and accrued interest into 560,000 shares of restricted common stock. Upon consummation of the Vital acquisition, the noteholder was issued 10,000,000 shares of restricted common stock in exchange for the equity interest in Vital. In addition, the significant shareholder provided working capital advances totaling approximately $58,000 during the year ended June 30, 2021 of which approximately $51,000 was due and payable as of June 30, 2021.

Throughout several of the most recent fiscal years, the Company received working capital advances from a significant shareholder. In December 2020, the Company settled the then outstanding obligations due to the shareholder totaling approximately $69,000 via the issuance of 3,900,000 shares restricted common stock. As a result of the settlement, the Company recognized a fiscal 2021 loss of approximately $23,000 measured as the difference between the re-acquisition price of the debt (as measured by the estimated fair value of the restricted common stock issued) and the carrying cost of the debt on the date of settlement. The significant shareholder is the lessor of the Company’s operating lease as of June 30, 2021. As of June 30, 2021 the Company owed the significant shareholder/lessor approximately $23,000 related to tenant improvement payments made on behalf of the Company.

During the previous periods the Company’s Chief Operating Officer (“COO”) and Director made working capital advances to the Company that were converted to a promissory note payable. The notes accrue interest at a rate of 6% per annum. The Company owed the COO approximately $87,000 and $82,000, respectively.

During the fiscal year ended June 30, 2021 certain previously outstanding shareholder advances totaling approximately $72,000 were assumed by a third party as part of the RSB disposition as further discussed in Note 3.

NOTE 8 – STOCKHOLDERS EQUITY

In June 2021, the Company issued a related party 560,000 fully vested shares of restricted common stock for the settlement of convertible notes payable and accrued interest totaling approximately $56,000.

In April 2021, the Company issued an investor a 4.67% non-controlling interest in its previously wholly-owned subsidiary VBH Kentucky, Inc. for cash proceeds totaling $100,000.

In February 2021, the Company issued 16,840,000 fully vested shares of restricted common stock for total consideration of approximately $522,000 for the acquisition of Vital Behavioral Health, Inc.

In February 2021, the Company issued a consultant 500,000 fully vested shares of restricted common stock for total consideration of approximately $16,000.

In December 2020, the Company issued a related party 3,900,000 fully vested shares of restricted common stock for the settlement of convertible notes payable and accrued interest totaling approximately $68,000. As part of the settlement, the Company recognized an additional loss of approximately $23,000 as a result of the difference between the fair value of the re-acquisition consideration and the carrying cost of the debt on the date of settlement.

In December 2020, the Company issued a consultant 500,000 fully vested shares of common stock for total consideration of approximately $11,000.

NOTE 9 – OPERATING LEASES

As of June 30, 2021 the Company, through its Vital subsidiaries, has the following a non-cancelable lease arrangement:

Office facility intended to be used in its substance abuse treatment operations located in Frankfort, Kentucky (the “Frankfort Lease”). The term of the Frankfort Lease is twenty-four months with no explicit extension options. The base monthly payment of the term of the Frankfort Lease is $2,365. The Company estimated the lease liability associated with the facility using a discount rate of 7.7%. The discount rate is based on an estimate of the Company’s incremental borrowing rate for a term similar to the lease term on the commencement date. The Frankfort Lease commenced on February 1, 2021.

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The following table summarizes the Company’s undiscounted cash payment obligations for its non-cancelable lease liabilities through the end of the expected term of the lease:


2022	$	28,380
2023		16,555
2024		-
2025		-
2026		-
Total undiscounted cash payments		44,935
Less interest		(2,488	)
Present value of payments	$	42,447

The weighted average remaining term of the Company’s non-cancelable operating leases as of June 30, 2021 was approximately 19 months.

On January 14, 2021, our wholly owned subsidiary, United Product Development Corporation (the “Subsidiary”), a Nevada corporation, entered into a commercial lease (the “Lexington Lease”) with Athens Commons, LLC, a Kentucky limited liability company, for the lease of a 88,740 square foot building at 5532 Athens Boonsboro Road, Lexington, Kentucky. The Lexington Lease is for a 5-year term with options to renew for 2 additional 5-year terms. The effective beginning date of the Lexington Lease term was January 14, 2021. The Lexington Lease provides for minimum monthly rent of $50,000 for the first lease year and a 3% rental increase for each succeeding lease year. The Company was only obligated to pay $20,000 per month for up to the first six month until the property was re-zoned and licensed for the Company’s planned rehabilitation operations. The Company also has an option to cancel the lease during the first six months if it is unable to obtain re-zoning approval and applicable regulatory licensing. On May 20, 2021, the Company terminated the Lexington Lease to zoning and licensing challenges associated with the facility.

The total lease expense incurred during the year ended June 30, 2021, inclusive of the cancelled Lexington Lease, was $91,825. The Company did not have any leases during the year ended June 30, 2020.

NOTE 10 – INCOME TAXES

Income (loss) before provision (benefit) for income taxes consists of the following:

June 30,

2021

June 30,

2020

United States

(741,563

)

130,937

Total income (loss) before provision (benefit) for income taxes

(741,563

)

130,937

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The provision (benefit) for income taxes consists of the following:

	June 30, 2021			June 30, 2020
Current:
Federal	$	-		$	-
State		-			-
Total current		-			-
Deferred:
Federal		(16,863	)		84,133
State		-			-
Change in valuation allowance		16,863			(84,133	)
Total deferred		-			-
Total provision (benefit) for income taxes	$	-		$	-

The provision (benefit) for income tax differs from the amount computed by applying the statutory federal income tax rate to income before taxes as follows:

	June 30, 2021			June 30, 2020
Statutory federal income tax rate		21.0	%		21.0	%
State tax provision		-			-
Change in valuation allowance		(13.0	)		23.9
Permanent differences – Insolvency Exclusion		(8.0	)		(44.9	)
Total provision for income taxes		-	%		-	%

As of June 30, 2021 and 2020, the net deferred tax asset consisted of the following:

	June 30, 2021			June 30, 2020
Deferred tax assets:
Fixed assets	$	1,407		$	-
Accrued expenses		3,150			-
Lease liability		8,914			-
Start-up expenditures		232,123			125,633
Net operating loss carryforwards		-			127,910
Total gross deferred tax assets		245,594			253,543
Less valuation allowance		(236,680	)		(253,543	)
Total deferred tax assets		8,914			-

Deferred tax liabilities:
Right-of-use asset		(8,914	)		-
Total deferred tax liabilities		(8,914	)		-

Net deferred tax asset/(liability)	$	-		$	-

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Valuation allowances are established when necessary to reduce deferred tax assets, including temporary differences and net operating loss carryforwards, to the amount expected to be realized in the future. The Company had cumulative losses from continuing operations in the U.S. for the three-year period ended June 30, 2021. The Company considered this negative evidence along with all other available positive and negative evidence and concluded that, as of June 30, 2021, it is more likely than not that the Company’s U.S. deferred tax assets will not be realized. As of June 30, 2021, a full valuation allowance of $231,937 has been recognized since it is more likely than not the deferred tax assets will not be utilized prior to expiration based on the information currently available to management. A reconciliation of the beginning and ending amount of the valuation allowance is as follows:

	June 30, 2021			June 30, 2020
Valuation allowance at beginning of year	$	253,543		$	269,000
Change in valuation allowance		(16,863	)		(15,457	)
Valuation allowance at end of year	$	236,680		$	253,543

On December 31, 2020, the Company discontinued its RSB operations, whereby 100% of the issued and outstanding common stock of RSB was assigned to RSB’s co-founder. As of December 31, 2020, all of the Company’s net operating losses were generated by RSB and had not been utilized, and the net operating losses were retained by RSB after the Company discontinued its RSB operations. The $251,164 gain on sale from discontinued operations is net of $0 tax expense. As of June 30, 2021, the Company did not have any federal or state net operating loss carryforwards.

The Company estimates the impact of a tax position recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. As of June 30, 2021, the Company had no liability for unrecognized tax benefits.

The Company files U.S. and California tax returns, with various statutes of limitation. As of June 30, 2021, the tax returns for fiscal year 2014 through fiscal year 2021 remain subject to examination. Annual tax provisions include amounts considered necessary to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued. As of June 30, 2021, there are no income tax returns currently under audit.

NOTE 11 – SUBSEQUENT EVENTS

In August 2021, the Company the Company’s majority-owned subsidiary received a license to operate a non-hospital based alcohol and other drug treatment facility from the Kentucky Cabinet for Health and Family Services Office of the Inspector General.

In August 2021, the Company entered into a promissory note with a lender in which the Company received cash proceeds totaling $500,000. The promissory note matures in August 2022 and carries an interest rate of 12% per annum. The Company is required to make monthly interest payments with outstanding principal and interest due on the maturity date. The Company issued the lender 1,000,000 warrants convertible into restricted shares of common stock at an exercise price of $0.005 per share for a period of five years.

In August 2021, Vital Behavioral Health, Inc. leased a facility in Fayetteville, Georgia with an initial base rent of $13,617 per month for an initial term of 18 months with a 5-year extension option. The facility is intended be used for in-patient services upon the receipt of regulatory approval.

In August 2021, Vital Behavioral Health, Inc. leased apartment facilities in Frankfort, Kentucky with base rent totaling $8,595 per month for an initial term of 12 months. The facility is intended be used for in-patient services upon the receipt of regulatory approval.

In July 2021, the Company entered into a total of $40,000 12% convertible promissory notes (2 notes total) with two investors. The convertible notes automatically convert at maturity in July 2022 at a conversion price of $0.05.

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Item 9 - Changes in Disagreements with Accountants and Financial Disclosure

None

Item 9A - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021 our disclosure controls and procedures were not effective due to the size and nature of the existing business operation. Given the size of our current operation and existing personnel, the opportunity to implement internal control procedures that segregate accounting duties and responsibilities is limited. Until the organization can increase in size to warrant an increase in personnel, formal internal control procedure will not be implemented until they can be effectively executed and monitored. As a result of the size of the current organization, there will not be significant levels of supervision, review, independent directors nor formal audit committee.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness, as of June 30, 2021, of our internal control over financial reporting based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, our Chief Executive and Chief Financial Officer concluded that, as of June 30, 2021, our internal controls over financial reporting were not effective due to the size and nature of the existing business operation for the following reasons: lack of segregation of duties; lack of multiple levels of review; insufficient written policies and procedures for accounting and financial reporting; and lack of an independent director or audit committee. Given the size of our current operation and existing personnel, the opportunity to implement internal control procedures that segregate accounting duties and responsibilities is limited. Until the organization can increase in size to warrant an increase in personnel, formal internal control procedure will not be implemented until they can be effectively executed and monitored. As a result of the size of the current organization, there will not be significant levels of supervision, review, independent directors nor formal audit committee.

Item 9B - Other Information

None

Item 9C - Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None

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PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors and Executive Officers

The following table sets forth the name, age and positions of our executive officers and directors as of the Effective Date. Executive officers are elected annually by our Board of Directors. Each executive officer holds his office until he resigns, is removed by the Board, or his successor is elected and qualified. Directors are elected annually by our stockholders at the annual meeting. Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.

Name	Age	Position	Director Since
Mark W. Conte	60	, CEO/CFO, Director	March 16, 2015
Patrick Ogle	43	Chief Operating Officer, Director, General Counsel	February 16, 2021
Dr. George Shoenberger	47	Director	January 1, 2021
Kevin J. Pikero	64	Chief Financial Officer, Director	March 16, 2015*
Andrew D. Smith	61	Director	March 16, 2015**

*Kevin J. Pikero resigned as CFO/Director on February 16, 2021. As disclosed on Form 8-K, Kevin J. Pikero’s resignation was not due to any disagreement with us or our management regarding or operations, policies or practices. **Andrew D. Smith resigned on December 31, 2020. As disclosed on Form 8-K Andrew D. Smith’s resignation was not due to any disagreement with us or our management regarding or operations, policies or practices.

Current Officers/Directors

Mark W. Conte

Mark W. Conte has been our Chief Executive Officer/Director since March 16, 2015 and our Chief Financial Officer since February 16, 2021. He is a business professional and entrepreneur in Reno, Nevada with over 35 years of experience in marketing and operations in the health, nutraceutical, technology, agricultural sciences, and banking industries. Mr. Conte is a co- founder of iMetabolic Corp and its President. Mr. Conte was a co-founder/ co-Managing Member of International Metabolic Institute LLC, which developed the “iMetabolic” brand and an initial line of dietary and nutraceutical products. Prior thereto, Mr. Conte was: a Partner in 1Globe Wireless, Inc.; the B2B Sales Manager for AT&T Wireless; Managing Director and Manager of Operations for Perten Instruments; Vice President of Marketing for AIQ Systems, Inc.; and as a Corporate Banking Specialist and Foreign Exchange Representative for Valley Bank of Nevada. Mr. Conte received a B.S. in Finance from the University of Nevada at Reno in 1984.

Patrick Ogle - Chief Operating Officer/Director/General Counsel

Patrick Ogle has been our Chief Operating Officer/Director/General Counsel since February 16, 2021. He is licensed as an attorney to practice law in Nevada, Arkansas, and the District of Columbia. Since January 2018, he has served as the Manager of Nevada Corporate Counsel LLC in Reno, Nevada, a professional services firm with a focus on corporate law. From September 2018 through August 2019, Mr. Ogle served as Chief Operating Officer and as a Director of Isodiol International, Inc., a hemp-derived consumer products company in Vancouver, British Columbia. From August 2017 through August 2018, he was Isodiol International Inc.’s General Counsel. From March 2018 through March 2019, Mr. Ogle served as General Counsel of Chemesis International Inc., a medical and recreational cannabis-derived consumer products company in Vancouver, British Columbia. From March 2010 to July 2017, Mr. Ogle engaged in the practice of law as a solo practitioner and as outsourced general counsel for various companies in Reno, Nevada and Washington, D.C. Prior thereto, Mr. Ogle practiced law in the Investment Management practice group at the law firm of Seward & Kissel LLP, as a legal consultant at the Inter-American Development Bank, and as a judicial law clerk at the U.S. District Court for the Western District of Arkansas. Mr. Ogle holds a B.S.B.A. in Accounting from Bucknell University, a J.D. from University of Arkansas School of Law, and an LL.M. in Securities and Financial Regulation from Georgetown University Law Center.

As of June 30, 2021, we were indebted to Mr. Ogle in the amount of approximately $75,000.

Dr. George Shoenberger – Director

Dr. Shoenberger has been our Director since December 31, 2020. He is a Nevada Licensed Psychologist and since 2015 has served as the Manager of Health Psychology Associates LLC in Reno, Nevada. He obtained both bachelor’s and master’s degrees in psychology at California State University, Chico, and later attended the clinical psychology doctoral program at the University of Nevada, Reno, where he completed a Ph.D. with an emphasis on cognitive-behavioral treatments for anxiety disorders and addictions. Dr. Shoenberger completed his pre-doctoral internship at the Portland VA Medical Center and received specialized training in psychological assessment, behavioral medicine and health psychology, eating disorders treatment, and chronic disease management. He then completed post-doctoral training with an emphasis on behavioral pediatrics and adolescent psychology. In addition to his client practice, Dr. Shoenberger has consulted with several healthcare agencies that specialize in behavioral health and lifestyle change. Dr. Shoenberger has actively practiced as a licensed psychologist since 2009.

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Former Officers/Directors – Fiscal Year Ending June 30, 2021

Kevin J. Pikero – Former Chief Financial Officer/Director

Mr. Pikero was our Chief Financial Officer/Director from March 16, 2015 to his resignation on February 16, 2021. Mr. Pikero’s resignation was not due to any disagreement with the Company, its board of directors, or its management.

Mr. Pikero is a retired Certified Public Accountant (CPA) in Reno, Nevada with over 40 years of experience in the financial and accounting business. Mr. Pikero operated Kevin J. Pikero & Associates, Inc. (CPAs) in Reno, Nevada providing accounting, tax, and financial services for a select domestic and international clientele of corporations, partnerships, sole proprietors, and individuals. Mr. Pikero’s professional history includes employment with: Haims & Company – (CPAs); E.F. Hutton Credit Corp.; Barclays Business Credit Inc.; Truckee River Bank; Bank of America Community Development Bank; and United American Funding, Inc. Mr. Pikero is a graduate of Bentley University with a B.S. in Accounting and of the University of Bridgeport, Bridgeport, CT with a M.B.A. in Finance.

Andrew D. Smith -Former Director

Andrew D. Smith was our Director from March 16, 2015 until his resignation on December 31, 2020. Mr. Smith is a Certified Public Accountant in Chicago, Illinois with over 35 years of experience in the financial and accounting business. He is a co-founder and the current President of Houlihan Capital, an investment banking firm with specializations in mergers and acquisitions and valuations. Previously to his time at Houlihan Capital, Mr. Smith was: a Senior Vice President for EVEREN Securities, Inc. (formerly Kemper Securities, Inc., 1993 to 1996), where he was the founder and co-head of the firm’s Mergers & Acquisitions Group; a Managing Director at Geneva Capital Markets; and an auditor for Ernst & Whinney, where

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