MILC Millennium Sustainable Ventures Corporation (CE)

Item 1A. Risk Factors.

An investment in MILC’s securities involves significant risks. Anyone making an investment decision regarding MILC’s securities should, before making that decision, carefully consider the following risk factors, together with all of the other information included in, or incorporated by reference into, this document. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also have a material adverse effect on our business, operations, and future performance. If any of the circumstances contemplated in the following risk factors were to occur, MILC’s business, financial condition, results of operations and prospects could all be materially adversely affected. In any such case, you could lose all or part of your investment.

Risks Related to our Financial Position and Capital Requirements

The COVID-19 pandemic could adversely affect our business, financial condition and results of operations.

In response to the COVID-19 outbreak, and its continued mutations, governmental authorities in the United States, and internationally have introduced various measures to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelter-in-place orders and social distancing protocols. The COVID-19 outbreak and the response of governmental authorities to try to limit it are having a significant impact on the private sector and individuals. The continued spread of COVID-19 globally could continue to have an adverse impact on our business, operations and financial results, including through disruptions in our cultivation and processing activities, supply chains and sales channels, as well as a deterioration of general economic conditions including a possible national or global recession. Shelter-in-place orders and social distancing practices designed to limit the spread of COVID-19 may affect our retail business. Due to the speed with which the COVID-19 situation is developing and the uncertainty of its magnitude, outcome and duration, it is not possible to estimate its impact on our business, operations or financial results; however, the impact could be material.

Our business could be adversely affected by the risks, or the public perception of the risks, related to the COVID-19 pandemic. The risk of a pandemic, or public perception of such a risk, could cause customers to avoid public places and are causing disruptions in our supply chains and/or delays in the delivery of our products. These risks could also adversely affect our customers’ financial condition, resulting in reduced spending on the products we produce. We are also experiencing negative impacts with respect to reliability and consistency of our labor force and the loss of labor as a result of Covid-19. The ultimate extent of the impact of the COVID-19 pandemic highly uncertain. These and other potential impacts could therefore adversely affect our business, growth, and financial condition in ways we may have not yet considered.

We have shifted our business focus to sustainable cannabis cultivation in greenhouses and have a relatively short operating history in this line of business.

In 2021, we shifted our business focus to the sustainable cultivation of cannabis in greenhouses, which is a new line of business for us. In addition, we recently identified a ovel approach to activated carbon. As such we have a relatively short operating history in these industries, which makes it difficult to evaluate our business and future prospects. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in nascent and rapidly changing industries, including those related to:

If we do not manage these risks successfully, our business and financial performance will be adversely affected. Our long-term results of operations are difficult to predict and depend on the commercial success of our products, services and clients, the continued growth of the cannabis industry generally (and public acceptance of cannabis-related products) and the regulatory environment within which the cannabis industry operates.

There can be no assurance that we will be able to consummate our business strategy and plans, or that financial, technological, market, or other limitations may not force us to modify, alter, significantly delay, or significantly impede the implementation of such plans. We have insufficient results for investors to use to identify historical trends. Investors should consider our prospects considering the risks, expenses and difficulties we will encounter as an early-stage company. Our revenue and income potential is unproven and our business model is continually evolving. We are subject to the risks inherent to the operation of a new business enterprise and cannot assure you that we will be able to successfully address these risks.

To date we have generated minimal revenue from our operations, have incurred significant losses and we anticipate that we will continue to incur losses for at least the next year.

For the years ended December 31, 2021 and 2020, we incurred a net loss of $7,215,184 and $6,495,794, respectively. We have an accumulated deficit of $50,483,892 through December 31, 2021. We have generated minimal revenue of $41,780 for the year ended December 31, 2021. We expect to continue to incur operating losses until such time, if ever, as we are able to achieve sufficient levels of revenue from operations. There can be no assurance that we will ever generate significant sales or achieve profitability. Accordingly, the extent of future losses and the time required to achieve profitability, if ever, cannot be predicted at this point.

Although we believe our existing cash will be sufficient for the near term, in the long term we may not generate significant revenues or raise additional financing in order to achieve and maintain profitability. Our failure to achieve or maintain profitability would likely negatively impact the value of our securities and financing activities.

We will likely require additional financing to successfully implement our business strategy and may face restricted access to traditional sources of capital.

Our capital requirements will depend upon numerous factors, including the demand for our products and services. If funds generated from our operations are insufficient for desired growth, we will need to raise additional funds through public or private financing. No assurance can be given that we will be able to secure additional financing or that, if available, it will be on favorable terms. In February 2014, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) provided guidance for financial institutions that does not provide any safe harbors from regulatory or criminal enforcement actions by the DOJ, FinCEN, or other legal regulators. As a result, the majority of banks and financial institutions are not comfortable with providing their services to cannabis-related business leaving these businesses with little to no access to outside financing. If adequate funds are not available, we may have to adjust our growth strategy which likely would have a material adverse effect on our prospects, business, financial condition, and results of operations.

Risks Related to the Cannabis Related Activities

Cannabis is illegal under federal law.

Cannabis (with the exception of hemp containing no more than 0.3% THC by dry weight) is illegal under U.S. federal law. In those states in which the use of cannabis has been legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act of 190 (the “CSA”). The CSA classifies marijuana (cannabis) as a Schedule I controlled substance, and as such, medical and adult-use cannabis consumption is illegal under U.S. federal law. Unless and until Congress amends the CSA with respect to cannabis (and the President approves such amendment), there is a risk that federal authorities may enforce current federal law. Since federal law criminalizing the use of cannabis preempts state laws that legalize its use, strict enforcement of federal law regarding cannabis is a significant risk which would harm the Company’s business, prospects, results of operation, and financial condition as all of our operations are cannabis-related and concentrated in the United States.

A prior U.S. administration attempted to address the inconsistent treatment of cannabis under state and federal law in the Cole Memorandum which Deputy Attorney General James Cole sent to all U.S. Attorneys in August 2013 that outlined certain priorities for the Department of Justice (“DOJ”) relating to the prosecution of cannabis offenses. The Cole Memorandum provided that enforcing federal cannabis laws and regulations in jurisdictions that have enacted laws legalizing cannabis in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession of cannabis conduct in compliance with those laws and regulations was not a priority for the DOJ. The DOJ did not provide (and has not provided since) specific guidelines for what regulatory and enforcement systems would be deemed sufficient under the Cole Memorandum. On January 4, 2018, U.S. Attorney General Jeff Sessions formally issued the Sessions Memorandum, which rescinded the Cole Memorandum effective upon its issuance. The Sessions Memorandum stated, in part, that current law reflects “Congress’ determination that cannabis is a dangerous drug and cannabis activity is a serious crime”, and Mr. Sessions directed all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to cannabis activities. There can be no assurance that the federal government will not enforce federal laws relating to cannabis in the future. The uncertainty of federal enforcement practices going forward and the inconsistency between federal and state laws and regulations presents major risks for our business and operations. Any such change in the federal government’s enforcement of federal laws could cause significant financial damage to us and our stockholders. We cannot predict the nature of any future laws or regulations enacted by the government and the effects they could have on our business.

U.S. State regulations are uncertain and present significant risk.

While there appears to be ample public support for favorable legislative action to legalize cannabis use and possession, numerous factors may impact or negatively affect the legislative process(s) within the various states we have business interests in. There is no assurance that state laws legalizing and regulating the sale and use of cannabis will not be repealed, amended, or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. If the U.S. federal government begins to enforce U.S. federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing state laws are repealed, the Company’s business or operations in those states or under those laws would be materially and adversely affected. Federal actions against any individual or entity engaged in the cannabis industry, or a substantial repeal of cannabis related legislation could adversely affect the Company, its business and its assets or investments.

The Company is subject to applicable anti-money laundering laws and regulations.

The Company is subject to a variety of laws and regulations domestically in the U.S. that involve money laundering, financial record-keeping and proceeds of crime, including the U.S. Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the “Bank Secrecy Act”), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”), and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S. Further, under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering, aiding, and abetting, or conspiracy.

If any of the operations of the Company, or any proceeds thereof, any dividend distributions or any profits or revenues derived from these operations were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds from a crime under one or more of the statutes noted above. This may restrict the ability of the Company to declare or pay dividends or effect other distributions.

Various federal, state and local laws, regulations and guidelines govern our business in the jurisdictions in which we operate or propose to operate, or to which we export or propose to export our products, including laws and regulations relating to health and safety, conduct of operations and the production, management, transportation, storage and disposal of our products and of certain material used in our operations. Compliance with each set of these laws, regulations and guidelines requires concurrent compliance with other complex federal, state and local laws, regulations and guidelines. These laws, regulations and guidelines change frequently and may be difficult to interpret and apply. Compliance with these laws, regulations and guidelines requires the investment of significant financial and managerial resources, and a determination that we are not in compliance with these laws, regulations and guidelines could harm our reputation and brand image and have a material adverse effect on our prospects, business, financial condition and results of operations. Moreover, it is impossible for us to predict the cost or effect of such laws, regulations or guidelines upon our future operations. Changes to these laws, regulations and guidelines could negatively affect our competitive position within our industry and the markets in which we operate, and there is no assurance that various levels of government in the jurisdictions in which we operate will not pass legislation or regulation or issue guidelines that adversely impacts our business.

Our business is entirely dependent on licensing and compliance at federal, state, and local levels.

There can be no assurance that the licenses necessary for us operate our businesses will be obtained, retained, or renewed. We have applied for a license to operate our cannabis business in Colorado and there can be no assurance that such license will be obtained. If we were determined to have violated applicable rules and regulations, there is a risk that any given licenses could be revoked, which could adversely affect our operations. Furthermore, there can be no assurance that we will be able to retain the licenses going forward, or that new licenses will be granted to existing and new market entrant in the jurisdictions in which we operate or propose to operate.

Along with required licensing and certifications, various federal, state, and local regulations and guidelines govern our business in the jurisdictions in which we operate or propose to operate. Compliance with each set of these laws, regulations and guidelines requires concurrent compliance with other complex federal, state, and local laws, regulations and guidelines. These laws, regulations and guidelines change frequently and may be difficult to interpret. Compliance with these laws, regulations and guidelines requires the investment of significant financial and managerial resources, and a determination that we are not in compliance with these laws, regulations and guidelines could harm our reputation and have a material adverse effect on our prospects, business, financial condition, and results of operations. Moreover, it is impossible for us to predict the cost or effect of such laws, regulations, or guidelines upon our future operations. Changes to these laws, regulations and guidelines could negatively affect our competitive position within our industry and the markets in which we operate, and there is no assurance that various levels of government in the jurisdictions in which we operate will not pass legislation or regulation or issue guidelines that adversely impacts our business.

Our success is dependent on consumer acceptance of cannabis products and changes in consumer spending may harm our business.

Our ability to generate revenue and be successful in the implementation of our business plan is significantly dependent on consumer acceptance of and demand for cannabis products generally, and, specifically, our products. Consumer acceptance will depend on several factors, including federal regulation of cannabis, availability, cost, ease of use, familiarity of use, convenience, effectiveness, safety, and reliability. If consumers do not accept cannabis products generally, or, specifically, our products, or if we fail to meet customers’ needs and expectations adequately, our ability to continue generating revenues could be reduced.

Changes in consumer spending are influenced by factors beyond our control that may reduce demand for our product. These factors include, but are not limited to, natural disasters, depressed housing prices, contagious disease outbreaks, and terrorist activities. These factors may lead to increased challenges in developing and maintaining community relations and an impediment to the Company’s overall ability to advance its business strategy and realize on its growth prospects.

We may face constraints on marketing products.

The Company’s business and operating results may be hindered by applicable restrictions on sales and marketing activities imposed by regulatory bodies for products containing cannabis or ingredients derived from cannabis including, but not limited to, the FDA, the United States Department of Agriculture (“USDA”) and state regulatory agencies. If the Company is unable to effectively market its products due to these applicable restrictions, or if the costs of compliance cannot be absorbed through increasing prices for its products, the Company’s sales and operating results could be adversely affected.

Competition in the cannabis industry is intense.

The cannabis industry is highly fragmented. We anticipate the presence as well as entry of other companies in this market space and acknowledge that we may not be able to establish or maintain a competitive advantage. Some of these companies may have longer operating histories, stronger brand recognition, and significantly greater financial resources. This may enable them to adapt to changing market conditions and take advantage of new market opportunities more quickly than we are able to. Increased competition is likely to result in price compression, reduced gross margins and loss of market share.

We may face competition from synthetic production and technological advances related to cannabis production

The pharmaceutical industry may attempt to dominate the cannabis industry, and in particular, legal cannabis, through the development and distribution of synthetic products which emulate the effects and treatment of organic cannabis. If they are successful, the widespread popularity of such synthetic products could change the demand, volume and profitability of the cannabis industry. This could materially and adversely affect the ability of the Company to secure long-term profitability through the sustainable and profitable operation of its business.

We are subject to risks from products liability claims.

The Corporation may be subject to various product liability claims, including, among others, that specific cannabis products caused injury or illness, or include inadequate warnings concerning possible side effects or interactions with other substances. If we cannot successfully defend against product liability claims, we may incur substantial liabilities or be required to limit sales of our products. Even a successful defense of these hypothetical future cases would require significant financial and management resources. These claims could also negatively affect our reputation with our clients and consumers and could have a material adverse effect on us.

We are subject to risks related to unsafe concentration of heavy metals and other contaminants in our cannabis products and variance in state regulation regarding permissible levels of contaminants.

Cannabis plants may absorb heavy metals and other contaminants from the soil that they grow in. Nutrient products are made from ingredients that may contain heavy metals and other contaminants. Some contaminants, like heavy metals, are toxic to humans at even low concentrations. If our raw materials contain contaminants, they may transfer to our products. If the level of contaminants in our products exceeds permissible or safe levels, it may result in monetary losses, product liability claims and reputational risk. In addition, state regulation of permissible levels of contaminants in cannabis products varies, making compliance difficult and costly.

Our insurance coverage may be inadequate to cover all risk exposures.

While we intend to maintain insurance for certain risks, there can be no assurances that the amount of our insurance coverage will be adequate to cover all claims or liabilities, and we may be forced to bear substantial costs resulting from risks and uncertainties of our business. We may have difficulty obtaining insurance because we operate in the cannabis industry (similar to reasons related to lack of access to financing). The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our prospects, business, financial condition, and results of operations. Additionally, due to lack of business interruption insurance, any business disruption, which may be comparably frequent because of the COVID-19 pandemic, could result in substantial costs and unfavorable allocation of resources.

If we are unable to source raw materials in sufficient quantities, on a timely basis, and at acceptable costs, our ability to manufacture and sell our products may be harmed.

We rely on a limited number of suppliers of our raw materials used in manufacturing our products. We experience recurring cycles of oversupply and undersupply, to some extent due to seasonality, and, as a result, the price and availability of raw materials fluctuate. The availability of raw materials has been adversely affected by the COVID-19 pandemic and in some cases prices have increased. If we are unable to maintain a reliable supply of raw materials at competitive prices, we could experience disruptions in production or an increased cost of production. Market conditions may limit our ability to raise selling prices to offset increases in our raw material costs. Any of the foregoing could have a material adverse impact on our prospects, business, financial condition and results of operations.

Scientific research related to the benefits of cannabis remains in early stages and is subject to a number of important assumptions and may prove to be inaccurate.

Research in the United States and internationally regarding the medical benefits, viability, safety, efficacy and dosing of cannabis remains in early stages. To the Company’s knowledge, there have been relatively few clinical trials on the benefits of cannabis. Although the Company believes that the articles and reports, and details of research studies and clinical trials that are publicly available reasonably support the medical benefits, viability, safety, efficacy and dosing of cannabis, future research and clinical trials may prove such statements to be incorrect. Future research studies and clinical trials may reach negative conclusions regarding the viability, safety, efficacy, dosing, social acceptance or other facts and perceptions related to medical cannabis that could materially impact participants in this sector.

There is uncertainty related to the regulation of vaporization products and related accessories.

There is uncertainty regarding whether and in what circumstances federal, state, or local regulatory authorities will seek to develop and enforce regulations relative to vaporizer hardware and accessories that can be used to vaporize cannabis and/or tobacco. Further, it remains to be seen whether current or future regulations relating to tobacco vaporization products would also apply to cannabis vaporization products and related accessories.

There has been increasing activity on the federal, state, and local levels with respect to scrutiny of vaporizer products. Governmental bodies across the United States have indicated that vaporization products and other consumption accessories may become subject to laws and regulations at the state and local levels. At the state level, over 25 states have implemented statewide regulations that prohibit vaping in public places. In January 2015, the California Department of Health declared electronic cigarettes and certain other vaporizer products a health threat that should be strictly regulated like tobacco products, and in September 2019, California’s governor issued an executive order on vaping, focused on enforcement and disclosure. Some cities have also implemented more restrictive measures than their state counterparts, such as San Francisco, which in June 2018, approved a new ban on the sale of flavored tobacco products, including vaping liquids and menthol cigarettes.

The application of any new laws or regulations that may be adopted in the future, at a federal, state, or local level, directly or indirectly implicating cannabis vaporization products or consumption accessories could limit our ability to sell such products, result in additional compliance expenses, and require us to change our labeling and methods of distribution, any of which could have a material adverse effect on our prospects, business, financial condition and results of operations.

The U.S. cannabis industry and market are nascent, and this industry and market may not continue to exist or develop as anticipated.

We are operating in a nascent industry and market, and our success depends on our ability to operate our business successfully and attract and retain clients. In addition to being subject to general business risks applicable to a business involving an agricultural product and a regulated consumer product, we need to continue to make investments in our business strategy and production capacity. Competitive conditions, consumer preferences and spending patterns in this industry and market are relatively unknown and may have unique characteristics that differ from other existing industries and markets and that may cause our efforts to further our business to be unsuccessful or to have undesired consequences. As a result, we may not be successful in our efforts to operate our business or attract and retain customers or produce and distribute our product to the markets in which we operate or to which we export in time to be effectively commercialized, or these activities may require significantly more resources than we currently anticipate in order to be successful.

The cannabis industry and, by extension, the Company may receive unfavorable publicity or become subject to negative consumer or investor perception.

We believe that the cannabis industry is highly dependent upon positive consumer and investor perception regarding the benefits, safety, efficacy, and quality of the cannabis distributed to consumers. The perception of the cannabis industry and cannabis products may be significantly influenced by scientific research or findings, regulatory investigations, litigation, political statements, media attention and other publicity (accurate or not) both in the United States and in other countries relating to the consumption of cannabis products, including unexpected safety or efficacy concerns arising with respect to cannabis products or the activities of industry participants. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the cannabis market or any cannabis product or will be consistent with earlier publicity. Adverse publicity could arise even if the adverse effects associated with cannabis products resulted from consumers’ failure to use such products legally, appropriately, or as directed.

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

Cannabis has often been associated with various other narcotics, violence and criminal activities, the risk of which is that the business might attract negative publicity. There is also a risk that the actions of other participants may negatively affect the reputation of the industry as a whole and thereby negatively impact the reputation of the Company. The increased usage of social media and other web-based tools used to publish and discuss content and to connect with others has made it easier for individuals and groups to communicate and share opinions in regard to industry participants, whether true or not and the cannabis industry, whether true or not. The Company does not have direct control over how it or the cannabis industry is perceived by others and reputation loss, or tainting may have material adverse effects on our performance.

Third parties with whom we may do business may consider engaging with the Company to be a reputational risk.

The parties with which we may do business might perceive our relationship as a reputational risk as a result of the Company’s cannabis-related business activities. Failure to establish or maintain business relationships due to reputational risk of being associated with the Company’s business could have a material adverse effect on the Company’s business, financial condition, and results of its operations.

Under current tax laws, we are unable to deduct all of our business expenses related to our cannabis activities.

Section 280E of the Internal Revenue Code prohibits cannabis businesses from deducting their ordinary and necessary business expenses, forcing us to pay higher effective federal tax rates than similar companies in other industries. The effective tax rate on a cannabis business depends on how large its ratio of nondeductible expenses is to its total revenues. Therefore, our cannabis business may be less profitable than it could otherwise be.

We may be subject to tax risks related to controlled substances

If our tax filing positions were to be challenged by federal, state and local or foreign tax jurisdictions, we may not be wholly successful in defending our tax filing positions. We record reserves for unrecognized tax benefits based on our assessment of the probability of successfully sustaining tax filing positions. Management exercises significant judgment when assessing the probability of successfully sustaining tax filing positions, and in determining whether a contingent tax liability should be recorded and estimating the amount of that liability. If our tax filing positions are successfully challenged, payments could be required that are in excess of reserved amounts or we may be required to reduce the carrying amount of our net deferred tax asset, either of which result could be significant to our financial condition or results of operations

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

We are subject to numerous tax and accounting requirements, and changes in existing accounting or taxation rules or practices, or varying interpretations of current rules or practices are unpredictable and could have a significant adverse effect on our business as a whole. Our operations, and any expansion, will require us to comply with the tax laws and regulations of multiple jurisdictions, which may prove difficult. Complying with the tax laws of these jurisdictions can be time consuming and expensive and could potentially subject us to penalties and fees in the future if we were to fail to comply.

The cannabis industry could face opposition from other industries.

We believe that established businesses in other industries may have a strong economic interest in opposing the development of the cannabis industry. Cannabis may be seen as an attractive alternative to their products, including recreational cannabis as an alternative to alcohol and medical cannabis as an alternative to various commercial pharmaceuticals. Many industries that could view the emerging cannabis industry as an economic threat are well established, with substantial economic and federal and state lobbying resources. It is possible that companies within these industries could attempt to slow or reverse legislation legalizing cannabis. Any success that these companies find in impeding cannabis legalization initiatives have a detrimental impact on our business.

We may be unable to protect our intellectual property rights.

The success of the Company will depend, in part, on our ability to maintain protection over existing and potential proprietary techniques and processes. We may be vulnerable to competitors who develop competing technology, whether independently or as a result of acquiring access to the proprietary products and processes. In addition, effective future patent, copyright and trade secret protection may be unavailable or limited in certain foreign countries and may be unenforceable under the laws of certain jurisdictions. If we are unable to register, or maintain, our trademarks or file for or enforce patents on any of our inventions, such an inability could materially affect our ability to protect our name and proprietary technologies. In addition, cannabis businesses may face court action by third parties under the Racketeer Influenced and Corrupt Organizations Act (“RICO”).

We may not be able to legally enforce our material agreements.

Since cannabis remains illegal at the federal level, courts in multiple U.S. states have on several occasions found cannabis-related contracts unenforceable due to illegality under federal law, even in the absence of any violation of state law.

We may be unable to seek the protection of the bankruptcy courts.

Because cannabis remains illegal under U.S. federal law, many courts have denied cannabis businesses bankruptcy protections, thus making it very difficult for lenders to recoup their investments in the cannabis industry in the event of a bankruptcy. If the Company were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available, which would have a material adverse effect. A bankruptcy or other similar event related to an investment of the Company that precludes a party from performing its obligations under an agreement may have a material adverse effect on the Company.

Risks Related to our Operations

We are dependent upon Mr. David H. Lesser for our success. On occasion, his interests may conflict with ours.

We are dependent on the diligence, expertise and business relationships of our management team, particularly Mr. David H. Lesser, our Chairman of the Board, Chief Executive Officer and Chief Financial Officer to implement our business strategy. If Mr. Lesser is unable to function on behalf of the Company, the Company’s business and prospects would be adversely affected. Moreover, Mr. Lesser has other business interests to which he dedicates a portion of his time that are unrelated to MILC. Although Mr. Lesser is one of our major shareholders, on occasion, those other interests of his may conflict with his interests in MILC, and such conflicts may be unfavorable to us.

In addition, on occasion, our management may have financial interests that conflict, or appear to conflict with MILC’s interests. For example, as of December 31, 2021 three of MILC’s greenhouse facilities are leased from subsidiaries of Power REIT (ticker: PW). David H. Lesser, Power REIT’s Chairman and CEO, is also Chairman and CEO of MILC. MILC established cannabis cultivation projects in Colorado, Oklahoma, and Michigan which are all leased from subsidiaries of Power REIT. Although a majority of our disinterested directors must approve, and in those instances did approve, MILC’s involvement in such transactions or any such circumstance, could lead to conflicts of interest between MILC on one hand, and Power REIT, Mr. Lesser and his affiliates and interests on the other hand, and such conflicts may be unfavorable to us.

We may be unable to attract or retain key personnel with sufficient experience in the cannabis industry, and may prove unable to attract, develop, and retain additional employees required for the Company’s development.

The success of the Company is currently largely dependent on the performance of its management team (collectively, “Key Person(s)”). Qualified individuals are in high demand, and the Company may incur significant costs to attract and retain them. In addition, the Company’s lean management structure may be strained as the Company pursues growth opportunities. The ability to provide high quality service will depend on attracting and retaining educated staff, as well as professional experiences that is relevant to our market. There will be competition for personnel with these skill sets and the loss of the services of a Key Person, or an inability to attract other qualified persons when needed, in a timely manner, could have a material adverse effect on the Company’s ability to execute on its business plan and strategy.

We may face difficulties in managing our growth.

The Company may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of the Company to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The inability of the Company to deal with this growth may have a material adverse effect on the Company.

The general market conditions in the United States may have a significant impact on our business.

The success of our business is affected by general economic and market conditions. We will remain susceptible to economic recessions or downturns, and any significant shifts in local or national economic conditions could have a material adverse effect on our business, financial condition and results of operations. During periods of adverse economic conditions, we may have difficulty accessing financial markets or face increased funding costs, which could make it more than it already might be to obtain additional funding if needed.

There are risks associated with expanding our business and operations into jurisdictions outside of the current jurisdictions where we conduct business.

There can be no assurance that any market for our products and services will develop in any jurisdictions outside of the current jurisdictions where we conduct business. We may face new or unexpected risks or significantly increase our exposure to one or more existing risk factors if we expand into new jurisdictions, including, without limitation, economic instability, new competition, and additional, new or changes in laws and regulations (including, without limitation, the possibility that we could be in violation of these laws and regulations as a result of such changes). These factors may limit our ability to successfully expand our operations in or export our products to new jurisdictions.

We may become party to litigation in the ordinary course of business.

The Company may become party to litigation from time to time in the ordinary course of business which could adversely affect their businesses. Should any litigation in which the Company becomes involved result in a decision or verdict against it, such decision or verdict could materially adversely affect the ability of the Company to continue operating. Even if the Company is involved in litigation and wins, litigation can redirect significant resources from business operations and the Company’s reputation and perception could be adversely affected.

We cannot ensure that we will be able to maintain adequate internal controls.

Although we will undertake a number of procedures in order to help ensure the reliability of our financial reports, we cannot be certain that such measures will ensure that we will always be able to maintain adequate internal controls over financial processes and disclosure. Failure to implement required new or improved controls could harm our results of operations or cause us to fail to meet our reporting obligations. A material weakness, even if quickly remedied, could reduce the market’s confidence in our consolidated financial statements and materially adversely affect the value or price of our common stock.

We may be subject to risks related to information technology systems, including cyber-attacks.

Our operations may depend on how well we and our suppliers protect networks, equipment, information technology (“IT”) systems and software against damage from threats, including, but not limited to, natural disasters, intentional damage, fire, power loss, hacking, and theft. Following our qualifying transaction, the Company’s operations may also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The Company’s risk and exposure to these matters cannot be fully mitigated because of the evolving nature of these threats. As a result, cyber security may become a priority to ensure the ongoing success and security of the business.

The Company may be subject to risks related unforeseen or unpredictable events

The occurrence of events such as terrorist attacks, extreme terrestrial or solar weather events or other natural disasters, emergence, or continuation of a pandemic, or other widespread health emergencies, could create economic and financial disruptions, and could lead to operational difficulties that could impair our ability to manage our business. Our industry is nascent, and our business is novel, and there is no precedent to indicate how either would be impacted by such an event.

The Company may be subject to transportation risks.

The Company’s business may involve the distribution of its cannabis products and may depend on third-party transportation services to do so. Any significant disruption of third-party transportation services could have an adverse effect on the Company. Rising costs associated with the third-party transportation services may also adversely impact the business of the Company.

The Company may be vulnerable to rising energy costs.

The Company’s business may involve the production of cannabis products which will consume considerable energy, making the Company vulnerable to rising energy costs. Volatile or rising energy costs may adversely impact the business and profitability of the Company.

The Company may be subject to risks inherent in an agricultural business.

The Company’s business involves the growing of cannabis, which is an agricultural product. As such, the business may be subject to the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Even when grown indoors under climate-controlled conditions monitored by trained personnel, there can be no assurance that natural elements, such as insects and plant diseases, will not have a material adverse effect on the production of cannabis products and on the Company.

The Company may face significant environmental regulation and risks.

Participants in the cannabis industry are subject to environmental regulation in the various jurisdictions in which they operate. These regulations include the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste. Environmental legislation is trending toward stricter standards and enforcement of this regulation. Violation could lead to increased fines and penalties for non-compliance. There is no assurance that future changes in environmental regulation will not adversely affect the Company.

The estimates and judgments we make, or the assumptions on which we rely, in preparing our consolidated financial statements could prove inaccurate.

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and expenses, the amounts of charges accrued by us and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We cannot assure, however, that our estimates, or the assumptions underlying them, will not change over time or otherwise prove inaccurate. Any potential litigation related to the estimates and judgments we make, or the assumptions on which we rely, in preparing our consolidated financial statements could have a material adverse effect on our financial results, harm our business, and cause our share price to decline.

Risks Related to our Common Stock

We may seek to raise additional funds, finance acquisitions, or develop strategic relationships by issuing securities that would dilute your ownership.

If we issue any shares of Common Stock or securities convertible into or exercisable for shares of Common Stock in connection with any capital raising transaction, our existing stockholders will experience immediate dilution upon such issuance or upon the future conversion or exercise of such securities. The Board has discretion to determine the price and the terms of further issuances. If these activities result in significant dilution, it may negatively impact the trading price of our shares of Common Stock. Any issuances by us of equity securities may be at or below the prevailing market price of our Common Stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of our stock to decline. We may also raise additional funds through the incurrence of debt or the issuance or sale of other securities or instruments senior to our shares of Common Stock. We cannot be certain how the repayment of those obligations will be funded, and we may issue further equity or debt in order to raise funds to repay such obligations which may be highly dilutive. The holders of any securities or instruments we may issue may have rights superior to the rights of holders of our Common Stock. If we experience dilution from the issuance of additional securities and we grant superior rights to new securities over holders of our Common Stock, it may negatively impact the trading price of our shares of Common Stock, and you may lose all or part of your investment.

The Company may have to allocate resources toward the costs of maintaining a public listing that could have been used elsewhere

There are costs associated with legal, accounting, and other expenses related to regulatory compliance. Securities legislation and the rules and policies of securities exchanges require listed companies to, among other things, adopt corporate governance and related practices, and to continuously prepare and disclose material information, all of which add to a company’s legal and financial compliance costs. The Company may be forced to devote greater resources than it otherwise would have other activities typically considered important by publicly traded companies.

There is no assurance that there will continue to be an active trading market for our Common Stock.

Our Common Stock is quoted on the OTC Pink. There is no assurance that a market for our Common Stock will continue. In the absence of a public trading market, or sufficient trading volume in the public market, an investor may be unable to liquidate its investment in our Company. Any adverse effect on the market price of our Common Stock could make it difficult for us to raise additional capital through sales of equity securities at a time and at a price that we deem appropriate.

The market price of our Common Stock may fluctuate significantly in the future and this volatility may be increased due to our limited operating history and lack of profits.

In recent years, and largely due to the COVID-19 pandemic, the U.S. securities market in the U.S. and globally have experienced a high level of price and volume volatility. There can be no assurance that fluctuations in price of Common Stock will not occur. The market price of our Common Stock could be subject to significant fluctuations in response to variations in quarterly and annual operating results, the results of any public announcements the Company makes, general economic conditions, and other factors. Increased levels of volatility and resulting market turmoil may adversely impact the price of the Fixed Shares and the Floating Shares.

While there is currently a market for our Common Stock, our price in the future will be particularly volatile when compared to the shares of larger, more established companies that trade on a national securities exchange and have large public floats. The price for our shares could decline in the event that a large number of shares of our Common Stock are sold on the market without commensurate demand. We are a speculative or “risky” investment due to our limited operating history, lack of profits, and the industry in which we operate. Investor perceptions of and sentiments surrounding the Company and the industry in which it operates are beyond our control and may decrease the market price of our Common Stock, regardless of our operating performance.

FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our Common Stock, which could depress the price of our Common Stock.

FINRA has adopted rules that require a broker-dealer to have reasonable grounds for believing that an investment is suitable for that customer before recommending an investment to a customer. Before 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. This may limit your ability to buy and sell our shares of Common Stock, have an adverse effect on the market for our shares of Common Stock, depressing the price per share of Common Stock.

Our future results may vary significantly which may adversely affect the price of our Common Stock.

It is possible that our revenues and operating results may vary significantly from quarter-to-quarter. You should not rely on the results of one quarter as an indication of our future performance. In some future quarters, our revenues and operating results may fall below our expectations or the expectations of market analysts and investors. As a result, the price of our Common Stock may decline significantly.

Our management and principal stockholders could significantly influence or control matters requiring a stockholder vote.

Currently, our management and principal stockholders beneficially own a significant amount of our outstanding Common Stock. As a result, our management and such principal stockholders have the ability to significantly influence the outcome on matters requiring approval of our stockholders, including the election of directors. As of March 15, 2022, our management owns approximately 19.38% of the voting power of our capital stock, based on the number of outstanding shares of Common Stock as of such date.

The requirements of being a public company may strain our resources and divert management’s attention away from revenue generating activities.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, making some activities more costly. The Exchange Act requires, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

We are classified as a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our Common Stock and other securities less attractive to investors.

As a reporting company under the Exchange Act, we are classified as an “smaller reporting company,” as defined in Item 10 of Regulation S-K, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our Common Stock and other securities less attractive because we may rely on these exemptions. If some investors find our Common Stock or other securities less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile. Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.

We have not paid dividends and do not plan to for the foreseeable future and any return on investment may be limited to appreciation in the value of our Common Stock.

We currently intend to retain any future earnings to support the expansion of our business and do not anticipate paying cash dividends on our shares of Common Stock in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of Directors. To the extent we do not pay dividends, our shares of Common Stock may be less valuable because a return on investment will only occur if and to the extent our stock price appreciates, which may never occur. If the price of our Common Stock does not appreciate, then there will be no return on investment. Investors seeking cash dividends should not purchase our Common Stock.