Bespoke Extracts, Inc 10-Q for FY2023 Q2
Bespoke Extracts, Inc. (BSPK)
About this 10-Q
Bespoke Extracts, Inc filed this 10-Q on September 28, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $188.25K
- up 54306.6% from $346 a year earlier
- Net loss
- $464.92K
- compared with a net loss of $1.01M a year earlier
- Diluted EPS
- -$0.05
- compared with -$0.13 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended:
or
For the transition period from __________ to __________
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days.
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).
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 | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
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.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of September 28, 2023, there were
TABLE OF CONTENTS
| Page No. | |||
| PART I - FINANCIAL INFORMATION | 1 | ||
| Item 1. | Financial Statements | 1 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 18 | |
| Item 4 | Controls and Procedures | 19 | |
| PART II - OTHER INFORMATION | 20 | ||
| Item 1. | Legal Proceedings | 20 | |
| Item 1A. | Risk Factors | 20 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 20 | |
| Item 3. | Defaults Upon Senior Securities | 20 | |
| Item 4. | Mine Safety Disclosures | 20 | |
| Item 5. | Other Information | 20 | |
| Item 6. | Exhibits | 20 | |
i
PART I
Item 1. Financial Statements.
Bespoke Extracts, Inc.
Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid stock awards | ||||||||
| Prepaid expense | ||||||||
| Inventory, net | ||||||||
| Total current assets | ||||||||
| Furniture and equipment | ||||||||
| License | ||||||||
| Right of Use Asset | ||||||||
| Deposits | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Inventory earn-out | ||||||||
| Deferred revenue | ||||||||
| Note payable - related party | ||||||||
| Operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Note payable - related party | ||||||||
| Long-Term Operating Lease Liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, par value $ | ||||||||
| Series C Preferred Stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Bespoke Extracts, Inc.
Consolidated Statements of Operations
(Unaudited)
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Cost of products sold | ||||||||||||||||
| Gross Profit | ( | ) | ( | ) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Consulting | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income / (expenses) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Total other (expense) / income | ||||||||||||||||
| Loss before income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||
| NET LOSS PER COMMON SHARE OUTSTANDING | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Bespoke Extracts, Inc.
Consolidated Statement of Stockholders’ Equity / (Deficit)
(Unaudited)
For The three and six months ended June 30, 2023 and June 30, 2022
| Series C | Common | Common | ||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Common | Additional | Stock | Stock to | ||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Paid-in | Shares to | be issued | Accumulated | |||||||||||||||||||||||||||||
| Outstanding | Amount | Outstanding | Amount | Capital | be Issued | Par Amount | Deficit | Total | ||||||||||||||||||||||||||||
| Balance March 31, 2022 | | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Stock based compensation and stock option expense | - | - | - | |||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | |||||||||||||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2022 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Series C | ||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Common | Additional | ||||||||||||||||||||||||
| Shares | Par | Shares | Par | Paid-in | Accumulated | |||||||||||||||||||||||
| Outstanding | Amount | Outstanding | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance March 31, 2023 | | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Stock based compensation and stock option expense | - | - | ||||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2023 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
3
| Series C | Common | Common | ||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Common | Additional | Stock | Stock to | ||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Paid-in | Shares to | be issued | Accumulated | |||||||||||||||||||||||||||||
| Outstanding | Amount | Outstanding | Amount | Capital | be Issued | Par Amount | Deficit | Total | ||||||||||||||||||||||||||||
| Balance December 31, 2021 | | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Payment of capital contribution | - | - | - | |||||||||||||||||||||||||||||||||
| Stock based compensation and stock option expense | - | - | - | |||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | - | ||||||||||||||||||||||||||||||||||
| Net loss for the six months ended June 30, 2022 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Series C | ||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Common | Additional | ||||||||||||||||||||||||
| Shares | Par | Shares | Par | Paid-in | Accumulated | |||||||||||||||||||||||
| Outstanding | Amount | Outstanding | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance December 31, 2022 | | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Purchase Wonderleaf | - | |||||||||||||||||||||||||||
| Stock based compensation and stock option expense | - | - | ||||||||||||||||||||||||||
| Net loss for Six Months ended June 30, 2023 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance June 30, 2023 | $ | $ | $ | $ | ( | ) | $( | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Bespoke Extracts, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Inventory reserve | ||||||||
| Depreciation | ||||||||
| Amortization of right of use asset, net | ||||||||
| Amortization expense for prepaid expenses for consulting shares | ||||||||
| Stock based compensation and stock option expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Interest receivable – Wonderleaf | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net Cash (used in) operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Advances to Wonderleaf | ( | ) | ||||||
| Note receivable Wonderleaf funded | ( | ) | ||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flow from financing activities | ||||||||
Payment of inventory earnout | ( | ) | ||||||
| Payment of capital contribution | ||||||||
| Proceeds from issuance of note payable - related party | ||||||||
| Repayment of note payable - related party | ( | ) | ||||||
| Proceeds from issuance of units | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase / (decrease) in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Noncash investing and financing activities: | ||||||||
| Stock issued to Weonderleaf for fixed assets and license | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
BESPOKE EXTRACTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
1. NATURE OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN
Nature of Business Operations
Bespoke Extracts, Inc. (the “Company”) is a Nevada corporation focused on operating in the regulated cannabis markets in the United States. Through Bespoke Colorado, we operate a marijuana infused products production facility in Aurora, Colorado.
On December 2, 2021, Bespoke Extracts Colorado,
LLC (“Bespoke Colorado”), a newly formed wholly-owned subsidiary of the Company entered into an asset purchase agreement with
WonderLeaf, LLC (“WonderLeaf”), and on December 7, 2021, Bespoke Colorado and WonderLeaf entered into an amendment to such
asset purchase agreement (as amended, the “WonderLeaf Purchase Agreement”). On January
3, 2023, the Company completed the acquisition of the WonderLeaf assets for
On February 2, 2022, the Company changed its fiscal year from August 31 to December 31.
Certain prior period amounts have been reclassified to conform to the current period presentation which include common stock and additional paid in capital.
Principles of Consolidation
The accompanying condensed consolidated unaudited financial statements include the accounts of Bespoke Extracts, Inc., and its wholly owned subsidiary Bespoke Extracts Colorado, LLC. All inter-company balances have been eliminated.
Going Concern
The accompanying condensed consolidated unaudited
financial statements have been prepared assuming a continuation of the Company as a going concern. The Company had negative cash flows
from operations of $
The Company’s ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.
Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail or cease our operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These financial statements do not include any adjustments that might arise from this uncertainty.
6
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and accompanying notes. Significant estimates include the assumption used in the valuation of equity-based transactions, valuation of intangible assets, allowance for doubtful accounts and inventory valuation and reserves. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid
investments with original maturities of three months or less at the time of purchase. At June 30, 2023 and December 31, 2022, the Company
did not have any cash equivalents. The Company did not have any cash in excess of FDIC limits of $
Fair Value of Financial Instruments
The carrying amounts of cash, accounts receivable, inventory, fixed assets, licenses, and other assets, accounts payable, accrued liabilities, note payable and convertible note payable approximate their fair values as of June 30, 2023 and December 31, 2022, respectively, because of their short-term natures and the Company’s borrowing rate of interest.
Accounts Receivable
Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions. If market conditions decline, actual collection experience may not meet expectations and may result in decreased cash flows and increased bad debt expense.
The policy for determining past due status is
based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company
and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. At June 30, 2023 and December
31, 2022, the Company has recorded an allowance for doubtful accounts of $
Inventory, Net
Inventories are stated at the lower of cost or
net realizable value. Cost is determined by the first-in, first-out basis and net realizable value. Net realizable value is defined
as sales price less cost of completion, disposition and transportation and a normal profit margin. As of June 30, 2023 and December 31,
2022, inventory amounted to $
Property and equipment
Property and equipment is recorded at cost and
capitalized from the initial date of service. Expenditures for major additions and improvements are capitalized and minor replacements,
maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost
and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for
the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for
financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate.
Schedule of Estimated useful Lives of Property and Equipment
| Furniture and Equipment |
7
License
License represents the Colorado license distributing cannabis. The license will be amortized over its useful life.
Revenue Recognition
We account for revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 606, “Revenue from Contracts with Customers”. Revenue is measured based on the amount of consideration that we expect to receive, reduced by discounts and estimates for credits and returns (calculated based upon previous experience and management’s evaluation). Outbound shipping charged to customers is recognized at the time the related merchandise revenues are recognized and are included in net revenues. Inbound and outbound shipping and delivery costs are included in cost of revenues.
Our products are sold directly to licensed marijuana dispensaries in Colorado. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due on the date of shipment or within 15 days, depending on the customer.
At June 30, 2023,
Deferred Revenue
Deferred revenue represents services or products that were paid for but not delivered to the customer as of June 30, 2023.
Stock Based Compensation
Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option or warrant, whichever is more reliably measurable, and in accordance with FASB ASC 718, Compensation-Stock Compensation, including related amendments and interpretations.
Reclassification
Prior gross prepaid stock compensation and additional paid in capital presented in the 10-Q for the period end June 30, 2022 have been reclassified to conform with the financial statements filed in the December 31, 2022 10-K.
Net Income / (Loss) per Share
Basic income / (loss) per share amounts are computed
based on net income / (loss) divided by the weighted average number of common shares outstanding. Diluted earnings per share reflect the
potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect
of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities
by the “if converted” method. The effect of
8
Reverse Stock Split
The Company completed a 45-to-1 reverse split of its common stock effective January 13, 2023. All prior equity amounts have been presented to reflect this split.
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date.
Income Taxes
We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. If we determine in the future that it is more likely than not that we will realize all or a portion of our deferred tax assets, we will adjust our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future tax benefits until we can sustain a level of profitability that demonstrates our ability to realize these assets.
2. ASSET PURCHASE AGREEMENT
On January
3, 2023, the Company completed the acquisition of the assets for
Pursuant to ASU 2017-01 and ASC 805, the Company
analyzed the business of WonderLeaf to determine if the Company acquired a business or acquired
assets. Based on this analysis, the Company determined that it acquired assets. No goodwill was recorded since the purchase was accounted
for as an asset purchase. In accordance with ASC 805, the fair value of the assets acquired is based on either the fair value of the consideration
given or the fair value of the assets acquired, whichever is more clearly evident, and thus, more reliably measurable. The Company used
the market price of the
Company management evaluated whether Company acquired a business or acquired assets. The FASB issued new guidance (ASU 2017-01) that changed the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If it’s not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. Under the ASU, a set is not a business when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.
Pursuant to 805-10-55-83, the Company first considered the guidance in paragraphs 805-10-55-5A through 55-5C. The identifiable assets that could be recognized in the purchase only included the license and fixed assets. Accordingly, the transaction was not considered a business.
9
The monetary value of the
The Company assigned a value of $
3. INVENTORY EARN-OUT
As described in Note 10, in exchange for cancellation
of the debt owed under the Debenture, the Company transferred to the holder certain domain names and agreed to pay the holder, beginning
December 1, 2021, and on a monthly basis through August 31, 2022,
4. NOTE RECEIVABLE
On January 19, 2022 the Company loaned WonderLeaf
$
On February 8, 2022 the Company loaned WonderLeaf
$
On October 25, 2022 the Company loaned WonderLeaf
$
As of December 31, 2022 accrued interest on the
notes receivable amounted to $
At December 31, 2022 the Company recorded a reserve
of $
Note 5 – Furniture and equipment.
Machinery and equipment consisted of the following at:
| June 30, 2023 | December 31, 2022 | |||||||
| Furniture and equipment | $ | $ | ||||||
| Machinery and Equipment | ||||||||
| Fixed assets, total | ||||||||
| Total: accumulated depreciation | ( | ) | ||||||
| Fixed assets, net | $ | $ | ||||||
Depreciation expense for the three and six months
ended June 30, 2023 and June 30, 2022 were $
10
6. NOTE PAYABLE – RELATED PARTY
During the six months ended June 30, 2023, Infinity
Management, LLC an affiliate of Michael Feinsod, the Company’s chief executive officer, loaned the Company an additional $
7. LEASES
In connection with the WonderLeaf Purchase Agreement,
Bespoke Colorado entered into a lease agreement (the “Lease”) with WL Holdings, Ltd. (“WL Holdings”) in December
2021. Pursuant to the Lease, Bespoke Colorado will lease from WL Holdings certain commercial space in Aurora, Colorado, where WonderLeaf’s
business has been located, commencing upon signing of the Lease and WonderLeaf Purchase Agreement,
for a term of
Supplemental balance sheet information related to leases was as follows:
| June 30, | ||||
| 2023 | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
| Six Months ended June 30, | ||||
| 2023 | ||||
| Operating lease cost | $ | |||
| Variable lease cost (1) | ||||
| Total lease costs | $ | |||
| (1) |
| June 30, | ||||
| 2023 | ||||
| Cash paid for operating lease liabilities | $ | |||
| Operating | ||||
| Leases | ||||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total undiscounted lease payments | ||||
| Less: Present value discount | ( | ) | ||
| Total Present value of lease liabilities | $ | |||
11
| Operating Leases | Classification | June 30, 2023 | ||||
| Right-of-use assets | $ | |||||
| Current lease liabilities | $ | |||||
| Non-current lease liabilities | ||||||
| Total lease liabilities | $ | |||||
8. EQUITY
Common Stock and Preferred Stock
The Company completed a 45-to-1 reverse split of its common stock effective January 13, 2023. All prior amounts equity amounts have been presented to reflect this reverse split.
As of June 30, 2023 and December 31, 2022, the Company’s
authorized capital stock consists of
On January
3, 2023, the Company completed the acquisition of the WonderLeaf assets for
On December 14, 2021, the board of directors of
the Company adopted the Company’s 2021 Equity Incentive Plan (the “2021 Plan”), pursuant to which up to an aggregate
of
On December 14, 2021, the Company entered into
an employment agreement with Hunter Garth. Pursuant to the employment agreement, Mr. Garth will serve as the Company’s president
and will receive a base monthly salary of $
On December 14, 2021, the Company entered into
an employment agreement with Michael Feinsod, the Company’s chief executive officer and chairman. Pursuant to the employment agreement,
Mr. Feinsod will continue to serve as the Company’s chief executive officer and chairman and will receive a base monthly salary
of $
12
During the year ended December 31, 2022, the Company
entered into and closed securities purchase agreements with investors pursuant to which the Company issued and sold to the investors an
aggregate of
Effective August 1, 2022, the Company issued an
aggregate of
Warrants
During the four months ended December 31, 2021,
the Company entered into and closed securities purchase agreements with investors pursuant to which the Company issued and sold to the
investors an aggregate of
During the year ended December 31, 2022, the Company
entered into and closed securities purchase agreements with investors pursuant to which the Company issued and sold to the investors an
aggregate of
| Number of Warrants | Weighted- Average Exercise Price Per Share | Weighted- Average Remaining Life | ||||||||||
| Outstanding at Deceme 31, 2022 | ||||||||||||
| Granted | ||||||||||||
| Canceled or expired | ( | ) | ||||||||||
| Outstanding at June 30, 2023 | $ | |||||||||||
| Exercisable at June 30, 2023 | $ | |||||||||||
| Intrinsic value at June 30, 2023 | $ | |||||||||||
Options
On December 14, 2021, the Company entered into an employment agreement
with Michael Feinsod, wherein the Company granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity Incentive Plan, ten-year
options to purchase
13
On December 14, 2021, the Company entered into
an employment agreement with Michael Feinsod, wherein the Company granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity
Incentive Plan, ten-year options to purchase
On December 14, 2021, the Company issued to a
consultant options to purchase
| Number of Options | Weighted- Average Exercise Price Per Share | Weighted- Average Remaining Life | ||||||||
| Outstanding at December 31, 2022 | ||||||||||
| Granted | ||||||||||
| Canceled or expired | ||||||||||
| Exercised | ||||||||||
| Outstanding at June 30, 2023 | $ | |||||||||
| Exercisable at June 30, 2023 | $ | |||||||||
| Intrinsic value at June 30, 2023 | $ | |||||||||
The future expense as of June 30, 2023 is $
9. RELATED PARTY TRANSACTIONS
On December 14, 2021, the Company entered into
an employment agreement with Hunter Garth. Pursuant to the employment agreement, Mr. Garth will serve as the Company’s president
and will receive a base monthly salary of $
On December 14, 2021, the Company entered into
an employment agreement with Michael Feinsod, the Company’s chief executive officer and chairman. Pursuant to the employment agreement,
Mr. Feinsod will continue to serve as the Company’s chief executive officer and chairman and will receive a base monthly salary
of $
14
During the six months ended June 30, 2023, Infinity
Management, LLC, an affiliate of Michael Feinsod, the Company’s chief executive officer, loaned the Company an additional $
As of June 30, 2023 Michael Feinsod is owed a
total of $
10. COMMITMENTS AND CONTINGENCIES
In connection with a stock purchase agreement,
on October 28, 2021, a convertible debenture with an original issue date of December 24, 2019, as amended by Amendment No. 1 thereto,
dated May 28, 2020, Amendment No. 2 thereto, dated August 21, 2020, Amendment No. 3 thereto, dated December 10, 2020, Amendment No. 4
thereto, dated January 15, 2021, Amendment No. 5 thereto, dated April 2, 2021, and Amendment No. 6 thereto, dated August 2, 2021 (as amended,
the “Debenture”) with an original principal amount of approximately $
On December 14, 2021, the Company entered into
an employment agreement with Hunter Garth. Pursuant to the employment agreement, Mr. Garth will serve as the Company’s president
and will receive a base monthly salary of $
On December 14, 2021, the Company entered into
an employment agreement with Michael Feinsod, the Company’s chief executive officer and chairman. Pursuant to the employment agreement,
Mr. Feinsod will continue to serve as the Company’s chief executive officer and chairman and will receive a base monthly salary
of $
On August 11, 2022, the Company and Bespoke Colorado
entered into an asset purchase agreement with Osiris, LLC doing business as Best Day Ever (“BDE”) and Michael Gurtman. Pursuant
to the purchase agreement, Bespoke Colorado agreed to purchase from BDE, and BDE agreed to sell to Bespoke Colorado, the assets of BDE,
including certain licenses. The Company also agreed to assume certain leases, all as further set forth in the purchase agreement. As consideration
for the acquisition of the assets, the Company agreed to issue
11. SUBSEQUENT EVENTS
Subsequent to June 30, 2023, Infinity Management,
LLC, loaned the Company an additional $
On September 5, 2023 $
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the SEC, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “may,” “should,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this report to conform forward-looking statements to actual results, except as may be required under applicable law. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:
| ● | Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; |
| ● | Our failure to earn significant revenues or profits; |
| ● | Volatility, lack of liquidity or decline of our stock price; |
| ● | Potential fluctuation in quarterly results; |
| ● | Rapid and significant changes in markets; and |
| ● | Insufficient revenues to cover operating costs. |
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this report.
Overview
Through our wholly-owned subsidiary, Bespoke Extracts Colorado, LLC, we operate a marijuana infused products manufacturing facility in Colorado.
In November 2021, new management of the Company was appointed and the Company began to focus on other complimentary lines of business to its CBD offerings. Under our new management team, we plan to expand the Company’s focus to regulated cannabis markets in the United States.
On December 2, 2021, Bespoke Extracts Colorado, LLC, a newly formed wholly-owned subsidiary of the Company entered into an asset purchase agreement with WonderLeaf, and on December 7, 2021, Bespoke Colorado and WonderLeaf entered into an amendment to such asset purchase agreement (as amended, the “WonderLeaf Purchase Agreement”). Pursuant to the Wonderleaf Purchase Agreement, Bespoke Colorado agreed to purchase from WonderLeaf, and WonderLeaf agreed to sell to Bespoke Colorado, certain assets of WonderLeaf, including a license to manufacture marijuana-infused products, existing inventory, and extraction equipment and ancillary items, all as further set forth in the WonderLeaf Purchase Agreement, for a purchase price of $50,000, to be paid in shares of common stock of the Company. The Company issued a total of 222,223 shares of common stock ($0.225 per share), the fair market value on the date of issuance.
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Results of Operations for the three months ended June 30, 2023 and June 30, 2022
Sales
Sales during the three months ended 30, 2023 were $188,247 compared to $346 for the three months ended June 30, 2022. The increase in sales was a direct result of the products we are producing after the purchase of WonderLeaf. The increase in sales was due to direct sales of pre-rolled joints to licensed dispensaries in Colorado.
Cost of Goods Sold
Cost of goods sold for the three months ended June 30, 2023 was $117,211 compared to $46,668 for the three months ended June 30, 2022. The increase was a direct result of the increase in sales. The increase in cost of sales was due to increases in purchases of raw materials, packaging, and labor associated with the production of pre-rolled joints.
Operating Expenses
Selling, general and administrative expenses for the three months June 30, 2023 and June 30, 2022 were $457,366 and $894,917, respectively. The decrease was mainly attributable to stock-based compensation of $92,344 for the three months ended June 30, 2023 compared to $708,253 for the three months ended June 30, 2022 and were partially offset by increase in salaries. Professional fees were $63,172 and $35,493, respectively for the three months ended June 30, 2023 and June 30, 2022. The increase in expenses was due to increased legal and accounting fees associated with the WonderLeaf, LLC acquisition. Consulting expense was $18,000 and $33,500, for the three months ended June 30, 2023 and June 30, 2022, respectively.
Net Loss
Our net loss for the three months ended June 30, 2023 was $464,915, or ($0.05) per share, compared to a net loss for the three months ended June 30, 2022 of $1,011,982, or ($0.13) per share.
Results of Operations for the six months ended June 30, 2023 and June 30, 2022
Sales
Sales during the six months ended 30, 2023 were $277,263 compared to $3,407 for the six months ended June 30, 2022. The increase in sales was a direct result of the products we are now producing after the purchase of WonderLeaf. The increase in sales was due to direct sales of pre-rolled joints to licensed dispensaries in Colorado.
Cost of Goods Sold
Cost of goods sold for the six months ended June 30, 2023 was $195,878 compared to $47,515 for the six months ended June 30, 2022. The increase was a direct result of the increase in sales. The increase in cost of sales was due to increases in purchases of raw materials, packaging, and labor associated with the production of pre-rolled joints.
Operating Expenses
Selling, general and administrative expenses for the six months June 30, 2023 and June 30, 2022 were $831,881 and $1,792,451, respectively. The decrease was mainly attributable to stock-based compensation of $184,776 for the six months ended June 30, 2023 compared to $1,435,860 for the six months ended June 30, 2022 and were partially offset by increase in salaries. Professional fees were $124,376 and $89,848, respectively for the six months ended June 30, 2023 and June 30, 2022. The increase in expenses was due to increased legal and accounting fees associated with the WonderLeaf, LLC acquisition. Consulting expense was $36,000 and $58,500 for the six months ended June 30, 2023 and June 30, 2022, respectively.
17
Net Loss
Our net loss for the six months ended June 30, 2023 was $905,535, or ($0.09) per share, compared to a net loss for the six months ended June 30, 2022 of $1,984,476 or ($0.27) per share.
Liquidity and Capital Resources
As of June 30, 2023, we had cash of $1,947. Net cash used in operating activities for the six months ended June 30, 2023 was $402,440. Our current liabilities as of June 30, 2023 were $758,064 and consisted of accounts payable and accrued liabilities of $647,884, deferred revenue of $9,896, current portion of lease liability of $64,330 and notes payable related party of $35,954. As of June 30, 2022, we had cash of $24,574. Net cash used in operating activities for the six months ended June 30, 2022 was $430,473. Our current liabilities as of June 30, 2022 were $296,819 and consisted of accounts payable and accrued liabilities of $159,022, an inventory earn-out of $75,000 and current portion of lease liability of $61,797.
During the six months ended June 30, 2023 the Company borrowed an additional $469,954 from a related party and repaid $90,000 owed for an inventory earnout. During the six months ended June 30, 2022, the Company repaid $2,500 of a note payable from a related party. In addition, the Company raised a total of $344,449 from the sale of common stock and warrants.
The unaudited condensed consolidated financial statements included in this report have been prepared assuming a continuation of the Company as a going concern. The Company had negative cash flows from operations for the six months ended June 30, 2023 and the year ended December 31, 2022 and had a working capital deficit at June 30, 2023 and December 31, 2022. This raises substantial doubt about our ability to continue as a going concern.
We have not generated positive cash flows from operating activities. Our primary source of capital has been from the sale of equity and convertible debt securities. Our primary use of capital has been for professional fees and selling, general and administrative costs. We have no committed sources of capital and will need to raise additional capital to continue and expand our operations. Additional capital may not be available on terms acceptable to us, or at all.
In addition, the COVID-19 pandemic may negatively affect our operations, including by limiting access to our facilities, customers, management, and professional advisors, and by causing delays and constraints in manufacturing and shipping of our products. These factors, in turn, may negatively impact our operations, financial condition and demand for our products, and our ability to raise capital on acceptable terms, or at all.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical accounting policies and estimates
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Management of the Company conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. The Company’s disclosure controls and procedures 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 (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based on this evaluation, our management has concluded that the design and operation of our disclosure controls and procedures are not effective since the following material weaknesses exist:
| ● | Our chief executive officer also functions as our principal financial officer. As a result, our officer may not be able to identify errors and irregularities in the financial statements and reports; |
| ● | We were unable to maintain full segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency did not result in any audit adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties; and |
| ● | Documentation of all proper accounting procedures is not yet complete. |
To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to, nor are any of our property currently the subject of, any material legal proceedings.
Item 1A. Risk Factors.
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
No disclosure required.
Item 5. Other Information.
None.
Item 6. Exhibits.
| Exhibit No. | Description | |
| 10.1 | Senior Note* | |
| 31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
| 101 | Inline XBRL Document set for the financial statements and accompanying notes in Part I, Item 1, of this Quarterly Report on Form 10-Q | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
| ** | Furnished herewith. |
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BESPOKE EXTRACTS, INC. | ||
| Dated: September 28, 2023 | By: | /s/ Michael Feinsod |
Michael Feinsod Chief Executive Officer | ||
| (Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer) | ||
21
Exhibit 10.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE SECURITIES LAWS, OR AN EXEMPTION FROM REGISTRATION THEREUNDER, IN EACH CASE, TO THE EXTENT APPLICABLE HERETO.
SENIOR NOTE
| $849,500.00 | September 26, 2023 |
FOR VALUE RECEIVED, BESPOKE EXTRACTS, INC., a Nevada corporation (“Borrower”), hereby promises to pay to Infinity Management, LLC or registered assigns (“Holder”) on the date set forth below, (i) the aggregate principal sum of EIGHT HUNDRED FORTY NINE THOUSAND FIVE HUNDRED DOLLARS ($849,500), (ii) accrued and unpaid interest on the unpaid principal balance hereof in the amount set forth herein and (iii) any other amounts payable hereunder (collectively, the “Obligations”). This Senior Note (“Note”) is issued by the Borrower to replace and retire certain outstanding notes owned by the Holder.
1. Payment of Principal. The principal amount of this Note, together with all unpaid interest accrued thereon and any other Obligations payable hereunder, shall be due and payable in full on June 30, 2025 (the “Maturity Date”).
2. Accrual and Payment of Interest. The unpaid principal balance due hereunder shall bear interest (“Interest”) at an annual rate of five percent (5.0%) (the “Interest Rate”) and shall be calculated on the basis of a year of twelve 30-day months, and the actual number of days elapsed for any partial month. The Principal shall bear interest from and including the first day of an Interest Period to and including the last day of such Interest Period at a rate equal to the Interest Rate. “Interest Period” means, initially, the period commencing October 1, 2023, and thereafter, each quarterly period, or a partial quarterly period during which the Principal is repaid in full. All principal and Interest shall be due and payable on the Maturity Date.
3. Optional and Mandatory Prepayment. At any time prior to the Maturity Date the Borrower shall have the right to make full or partial payments of the unpaid principal balance and the Interest payable under this Note (“Prepayment”). The Borrower shall prepay the Note in full out of the proceeds of a new debt or equity capital raise with net proceeds of more than $2,000,000.
4. Default.
(a) “Event of Default” shall mean the occurrence of one or more of any of the following events:
(i) failure to pay in full and when due any installment of principal or Interest on the Note, which failure is not cured within thirty (30) days following the Borrower’s actual knowledge of such failure, or other material default of the Borrower which material default is not cured within thirty (30) days following the Borrower’s actual knowledge of such failure;
(ii) the liquidation, termination or dissolution of Borrower, or its ceasing to carry on actively its present business or the appointment of a receiver for its property; or
(iii) the institution by or against the Borrower of any proceedings under the Bankruptcy Code 11 USC §101 et seq. or any other law in which the Borrower is alleged to be insolvent or unable to pay its debts as they mature, which proceeding is not dismissed within ninety (90) days after institution, or the making by the Borrower of an assignment for the benefit of creditors or the granting by the Borrower of a trust mortgage for the benefit of creditors.
(b) Acceleration. If an Event of Default shall occur, then the Holder, by written notice to the Borrower, may (i) declare the Obligations due hereunder to be immediately due and payable, whereupon the sum of (x) the outstanding principal amount of this Note and (y) the Interest and other amounts outstanding hereunder shall become and shall be forthwith due and payable, without diligence, presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and (ii) exercise any and all of its other rights under applicable law and/or hereunder. Any payment pursuant to this Section 4 shall be applied first to the Interest owed under this Note, second, to any other Obligations (other than principal) owed hereunder and lastly to the principal balance of this Note.
5. No Security; Agreement to Subordinate to Bank Debt. This Note is not secured and no mortgage, security or lien is or shall be granted by the Borrower upon its assets as collateral security for the obligations of the Borrower evidenced thereby. This Note represents a senior debt obligation of the Borrower and will be senior in right of repayment to all subordinated debt obligations of the Borrower. Notwithstanding the foregoing, the Borrower may incur secured indebtedness for monies borrowed from banks, trust companies, insurance companies, and other lenders, including commercial paper and accounts receivable sold or assigned by the Borrower to such institutions (“Senior Secured Debt”), and any such Senior Secured Debt may be senior in right of payment to this Note. The Holder agrees to execute any subordination agreement(s) the Borrower and the holders of Senior Secured Debt may request to implement the aforesaid subordination of the Note to any Senior Secured Debt incurred by the Borrower. Except for Senior Secured Debt, the Borrower may not incur any indebtedness senior in right of payment to the Note without the written consent of the Holder.
6. Costs and Expenses. Each of Borrower and Holder will pay its own expenses in connection with the issuance of this Note. Borrower will pay or reimburse Holder for its reasonable costs and expenses incurred or paid by the Holder in collecting or attempting to collect or enforcing or attempting to enforce payment of any Obligation.
7. Representations and Warranties of Borrower. Borrower represents and warrants to Holder as follows as of the date hereof: (a) Borrower has the power and authority to execute, deliver and perform all obligations in accordance herewith, (b) the execution, delivery and performance by Borrower of this Note is within Borrower’s legal powers, and do not contravene any law or any contractual restriction binding on or affecting Borrower; (c) no authorization or approval or other action by, and no notice to or filing with any governmental authority or regulatory body is required for the due execution, delivery and performance by Borrower of this Note; (d) this Note constitutes the legal, valid and binding obligation of Borrower party thereto, enforceable against Borrower in accordance with its terms, except to the extent enforceability is limited by bankruptcy, insolvency, fraudulent conveyance, moratorium and other laws for the protection of creditors generally and by general equitable principles; and (e) there is no pending or, to Borrower’s knowledge, threatened action or proceeding affecting Borrower before any governmental agency or arbitrator with respect to the transactions contemplated by this Note or which may materially adversely affect the property, assets or condition (financial or otherwise) of Borrower.
8. Amendment. Except for the obligations to repay the outstanding principal on the Notes and to pay accrued Interest, the terms of the Note including the Maturity Date and the Interest Rate, may be modified with the written consent of the Holder.
9. Persons Deemed Owners. The person in whose name a Note is registered on the books and records of the Borrower shall be deemed to be the absolute owner thereof for all purposes, and payment of any principal or Interest on such Note shall be made only to the registered owner thereof or such owner’s legal representative. All payments made to the registered owner or such owner’s legal representative shall be valid and effectual to discharge the liability of the Borrower upon this Note to the extent of the sum or sums so paid.
2
10. Transfer. The Borrower will keep the registration and transfer books for this Note. This Note may be transferred only on the books of the Borrower. This Note may not be transferred unless the Holder delivers to the Borrower a written opinion of legal counsel or otherwise satisfies the Borrower with respect to the compliance of such transfer with applicable securities laws and the transferee enters into a written agreement in form and substance acceptable to the Borrower pursuant to which the transferee agrees to be bound by all of the provisions of the Note. Upon surrender or transfer of this Note at the principal office of the Borrower, duly endorsed for transfer or accompanied by a proper assignment duly executed by the registered owner or such owner’s attorney duly authorized in writing, and accompanied by the agreement and other documentation described in the preceding sentence, the Borrower will issue and deliver to the transferee a new, fully registered Note in like principal amount.
11. Miscellaneous.
(a) Severability. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Note shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
(h) Entire Agreement. Except as otherwise expressly set forth herein, this Note embodies the complete agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or between the parties, written or oral, that may have related to the subject matter hereof in any way.
(i) Counterparts. This Note may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.
(j) Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. EACH PARTY AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING IN ANY WAY TO THIS NOTE SHALL BE BROUGHT IN A U.S. FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITTING IN NEW YORK, NEW YORK. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM OR A LACK OF PERSONAL JURISDICTION TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION OR VENUE ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF ANY PARTY HERETO. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
(k) No Third Party Beneficiaries. This Note is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
(l) Descriptive Headings. The descriptive headings of this Note are inserted for convenience only and do not constitute a part of this Note.
[Signature Page Follows]
3
[Signature Page to Senior Note]
IN WITNESS WHEREOF, this Note has been executed as of the date first written above.
| BESPOKE EXTRACTS,INC | |||
| By: | /s/ Hunter Garth | ||
| Name: | Hunter Garth | ||
| Title: | President | ||
| AGREED TO AND ACCEPTED: | ||
| HOLDER | ||
| INFINITY MANAGEMENT, LLC | ||
| By: | /s/ Michael Feinsod | |
| Name: | Michael Feinsod | |
| Title: | Manager | |
Exhibit 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Feinsod, certify that:
| 1) | I have reviewed this Quarterly Report on Form 10-Q of Bespoke Extracts, Inc. (the “registrant”); |
| 2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; |
| 3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
| 4) | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5) | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Michael Feinsod | |
| Michael Feinsod | |
|
Chief Executive Officer |
|
(Principal Executive Officer and Principal Financial Officer) |
|
| September 28, 2023 |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Bespoke Extracts, Inc., as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Feinsod, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Michael Feinsod | |
| Michael Feinsod | |
| Chief Executive Officer | |
| (Principal Executive Officer and Principal Financial Officer) | |
| Dated: September 28, 2023 |