| Page |
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| Part I |
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| Item 1. Business | 4 |
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| Item 1A. Risk Factors | 15 |
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| Item 1B. Unresolved Staff Comments | 29 |
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| Item 1C. Cybersecurity | 29 |
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| Item 2. Properties | 29 |
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| Item 3. Legal Proceedings | 29 |
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| Item 4. Mine Safety Disclosures | 29 |
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| Part II |
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| Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 30 |
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| Item 6. [Reserved] | 30 |
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| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31 |
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| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 38 |
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| Item 8. Financial Statements and Supplementary Data | 39 |
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| Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 64 |
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| Item 9A. Controls and Procedures | 64 |
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| Item 9B. Other Information | 64 |
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| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 64 |
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| Part III |
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| Item 10. Directors, Executive Officers and Corporate Governance | 65 |
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| Item 11. Executive Compensation | 69 |
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| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 75 |
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| Item 13. Certain Relationships and Related Transactions, and Director Independence | 77 |
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| Item 14. Principal Accounting Fees and Services | 77 |
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| Part IV |
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| Item 15. Exhibits, Financial Statement Schedules | 79 |
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| Signatures | 82 |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements convey our current expectations or forecasts of future events and are not guarantees of future performance. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Any statements contained in this Annual Report on Form 10-K that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will,” “seeks,” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements.
Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. Key factors that could cause actual results to be different than expected or anticipated include, but are not limited to:
| • | our limited operating history and ability to become profitable; |
| • | our ability to manage our growth, including our human resource requirements; |
| • | our reliance on third parties for raw materials and production of our products; |
| • | our future capital needs; |
| • | our ability to retain and grow our customer base; |
| • | our reliance on independent distributors for a substantial portion of our sales; |
| • | our ability to evaluate and measure our business, prospects and performance metrics; |
| • | our ability to compete and succeed in a highly competitive and evolving industry; |
| • | the health of the premium organic and natural food industry as a whole; |
| • | risks related to our intellectual property rights and developing a strong brand; |
| • | our reliance on key personnel, including Laird Hamilton and Gabrielle Reece; |
| • | risks related to our international operations; |
| • | the risk of substantial dilution from future issuances of our equity securities; and |
| • | the other risks described herein, including under Part I, Item 1A “Risk Factors.” |
In light of these risks, uncertainties and assumptions, you are cautioned not to place undue reliance on forward-looking statements, which are inherently unreliable and speak only as of the date of this Annual Report on Form 10-K. You should read this Annual Report on Form 10-K and the documents that we reference in this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. When considering forward-looking statements, you should keep in mind the cautionary statements in this report. We qualify all our forward-looking statements by these cautionary statements. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
INDUSTRY AND MARKET DATA
This Annual Report on Form 10-K includes market data and other statistical information obtained from third-party industry publications, research, surveys and studies, none of which we commissioned. Third-party industry publications, research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable. However, while we are not aware of any misstatements regarding the information from these sources, we have not independently verified this information and we cannot assure you that this information is accurate or complete. Assumptions and estimates of our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, some of which are described under Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K, and you are cautioned not to give undue weight to such information.
