UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended:
or
For the transition period from __________ to __________
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(Exact name of registrant as specified in its charter)
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(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.
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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.
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| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
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As of June 17, 2025, 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 | 14 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16 |
| Item 4 | Controls and Procedures | 16 |
| PART II - OTHER INFORMATION | 17 | |
| Item 1. | Legal Proceedings | 17 |
| Item 1A. | Risk Factors | 17 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 17 |
| Item 3. | Defaults Upon Senior Securities | 17 |
| Item 4. | Mine Safety Disclosures | 17 |
| Item 5. | Other Information | 17 |
| Item 6. | Exhibits | 17 |
i
PART I
Item 1. Financial Statements.
Bespoke Extracts, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| 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 | $ | $ | ||||||
| Note payable | ||||||||
| Note payable – related party | ||||||||
| Operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Long-Term liabilities | ||||||||
| Notes payable -- secured (Net of discount of $ | ||||||||
| Notes payable | ||||||||
| Note payable - related party | ||||||||
| Long-Term Operating Lease Liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, par value $ | ||||||||
| Series C Convertible Preferred Stock, $ | ||||||||
| Common stock, $ | ||||||||
| Common stock to issue | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See the accompanying notes to the condensed consolidated financial statements.
1
Bespoke Extracts, Inc
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Sales | $ | $ | ||||||
| Cost of products sold | ||||||||
| Gross Profit | ||||||||
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | ||||||||
| Professional fees | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income / (expenses) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other (expense) / income | ( | ) | ( | ) | ||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Provision for income tax | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||
| Basic and Diluted | ||||||||
| NET LOSS PER COMMON SHARE OUTSTANDING | ||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
See the accompanying notes to the condensed consolidated financial statements.
2
Bespoke Extracts, Inc
Condensed Consolidated Statement of Stockholders Deficit
For The three months ended March 31, 2025 and March 31, 2024
(Unaudited)
| Series C | ||||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Preferred | Preferred | Common | Common | Additional | ||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Shares | Par | Paid-in | Accumulated | |||||||||||||||||||||||||||||
| Outstanding | Amount | Outstanding | Amount | Outstanding | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance December 31, 2023 | - | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Warrants issued with financing | - | - | - | |||||||||||||||||||||||||||||||||
| Stock option expense | - | - | - | |||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance March 31, 2024 | - | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Series C | ||||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Preferred | Preferred | Common | Common | Additional | ||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Shares | Par | Paid-in | Accumulated | |||||||||||||||||||||||||||||
| Outstanding | Amount | Outstanding | Amount | Outstanding | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance December 31, 2024 | - | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Warrants issued with financing | - | - | - | |||||||||||||||||||||||||||||||||
| Stock option expense | - | - | - | |||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2025 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance March 31, 2025 | - | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
See the accompanying notes to the condensed consolidated financial statements.
3
Bespoke Extracts, Inc
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation | ||||||||
| Amortization of right of use asset, net | ||||||||
| Amortization expense for prepaid expenses for consulting shares | ||||||||
| Amortization of debt discount | ||||||||
| Stock based compensation and stock option expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Operating lease liability, net | ( | ) | ( | ) | ||||
| Net Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flow from financing activities | ||||||||
| Proceeds from notes payable - related party | ||||||||
| Repayments of notes payable | ( | ) | ||||||
| Proceeds from secured notes payable | ||||||||
| 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: | ||||||||
| Warrants issued for debt financing | $ | $ | ||||||
| Reduction in right of use asset and lease liability due to lease amendment | $ | $ | ||||||
See the accompanying notes to the condensed consolidated financial statements.
4
BESPOKE EXTRACTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(Unaudited)
1. NATURE OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN
Bespoke Extracts, Inc. is a Nevada corporation focused on operating in the regulated cannabis markets in the United States. Through Bespoke Extracts Colorado, LLC (“Bespoke Colorado”), we operate a marijuana infused products production facility in Aurora, Colorado.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Bespoke Extracts, Inc., and its wholly owned subsidiary Bespoke Extracts Colorado, LLC (collectively, the “Company”). All inter-company balances have been eliminated. The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the consolidated financial statements and have been prepared on a consistent basis using the accounting policies described in the summary of accounting policies included in the Company’s 2024 Annual Report on Form 10-K (the “Form 10-K”). Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed, or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
Going Concern
The accompanying consolidated 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 consolidated 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 consolidated financial statements do not include any adjustments that might arise from this uncertainty.
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, allowance for provision for credit losses and inventory valuation and reserves. Actual results could differ from those estimates.
5
Segment reporting
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 - Segment Reporting (Topic ASC 280) Improvements to Reportable Segment Disclosures. The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses. The enhancements under this update require disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss, require disclosure of other segment items by reportable segment and a description of the composition of other segment items, require annual disclosures under ASC 280 to be provided in interim periods, clarify use of more than one measure of segment profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required by this update and required under ASC 280. The Company adopted ASU 2023-07 for the annual period ending December 31, 2024.
The Company’s Chief Executive Officer serves as the CODM.
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 March 31, 2025 and December 31, 2024, 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 the Company’s financial instruments, such as cash, accounts receivable, , accounts payable and accrued liabilities approximate their fair values due to the short-term nature of such instruments. The estimated fair value of the debt approximates the carrying value of these instruments, due to the interest rates on the debt approximating current market interest rates.
Accounts Receivable
Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for provision for credit losses 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 provision for credit losses.
The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 14 or net 30 days. Once collection efforts by the Company are exhausted, the determination for charging off uncollectible receivables is made. As of March 31, 2025 and December 31, 2024, the Company had no recorded provision for credit losses.
Inventory, net
Inventories are stated at the lower of cost
or net realizable value. Cost is determined by the first-in, first-out method. Net realizable value is defined as the estimated
selling price in the ordinary course of business, less cost of completion, disposition and transportation and a normal profit
margin. As of March 31, 2025 and December 31, 2024, consisted of raw materials of $
6
Revenue Recognition
We account for revenue in accordance with the FASB Accounting Standard Codification (“ASC”) 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 14 to 30 days.
As of March 31, 2025 one customer amounted to
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.
Net Income / (Loss) per Share
Basic income (loss) per share is computed by
dividing net income (loss) by the weighted average number of common shares outstanding. Diluted net income (loss) reflects the
potential dilution that could occur if dilutive securities were exercised or converted into common stock, using the treasury stock
method for options and warrants the “if converted” method for convertible securities. For the three months ended March
31, 2025 and 2024, the Company reported a net loss. As a result, all potentially dilutive securities, including
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.
7
2. NOTE PAYABLE – RELATED PARTY
Note payable, related party is due to Infinity
Management, LLC, an affiliate of Michael Feinsod, the Company’s chief executive officer. The note payable bears interest at
3. NOTES PAYABLE
On September 5, 2024, the Company entered into
and closed on an unsecured note payable in the amount of $
On December 31, 2024, the landlord, WL Holdings,
Ltd. (“WL Holdings”), converted $
4. NOTE PAYABLE – SECURED
On February 16, 2024, 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 $
On May 20, 2024, 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 $
8
On June 6, 2024, 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 $
On December 19, 2024, 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 $
On January 29, 2025, 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
$
| March 31, 2025 | December 31, 2024 | |||||||
| Note amount | $ | $ | ||||||
| Debt discount | ( | ) | ( | ) | ||||
| Amortization of debt discount | ||||||||
| Notes payable, net | $ | $ | ||||||
5. LEASES
In connection with the WonderLeaf Purchase , Bespoke
Colorado entered into a lease agreement 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, for a term of
Supplemental balance sheet information related to leases was as follows
Lease term and discount rate were as follows:
| March 31, | ||||
| 2025 | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
9
The component of lease costs was as follows:
| Three Months ended March 31, | ||||
| 2025 | ||||
| Operating lease cost | $ | |||
| Variable lease cost (1) | ||||
| Total lease costs | $ | |||
| (1) |
| Operating Leases | Classification | March 31, 2025 | ||||
| Right-of-use assets | Right of use assets | $ | ||||
| Current lease liabilities | Current operating lease liabilities | |||||
| Non-current lease liabilities | Long-term operating lease liabilities | |||||
| Total lease liabilities | $ | |||||
Maturities of lease liabilities were as follows as of March 31, 2025:
| Operating | ||||
| Leases | ||||
| 2025 | $ | |||
| 2026 | ||||
| Total undiscounted lease payments | ||||
| Less: Present value discount | ( | ) | ||
| Total Present value of lease liabilities | $ | |||
6. EQUITY
Common Stock and Preferred Stock
As of March 31, 2025 and December 31, 2024, the
Company’s authorized capital stock consists of
10
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
Warrants
The following table summarizes the warrant activities during the three months ended March 31, 2025:
| Number of Warrants | Weighted- Average Exercise Price Per Share | Weighted- Average Remaining Life | ||||||||||
| Outstanding at December 31, 2024 | ||||||||||||
| Granted | ||||||||||||
| Canceled or expired | ||||||||||||
| Outstanding at March 31, 2025 | $ | |||||||||||
| Exercisable at March 31, 2025 | $ | |||||||||||
| Intrinsic value at March 31, 2025 | $ | |||||||||||
The aggregate intrinsic value is calculated as the difference between
the exercise price of the underlying warrants and the closing stock price of $
Options
On January 8, 2024, the Company issued to an
employee options to purchase a total of
On March 1, 2024, the Company issued to several
employees options to purchase a total of
11
The following table summarizes the option activities during the three months ended March 31, 2025:
| Number of Options | Weighted- Average Exercise Price Per Share | Weighted- Average Remaining Life | ||||||||||
| Outstanding at December 31, 2024 | $ | |||||||||||
| Granted | $ | |||||||||||
| Canceled or expired | ( | ) | ||||||||||
| Exercised | ||||||||||||
| Outstanding at March 31, 2025 | $ | |||||||||||
| Exercisable at March 31, 2025 | $ | |||||||||||
| Intrinsic value at March 31, 2025 | $ | |||||||||||
The aggregate intrinsic value is calculated as the difference
between the exercise price of the underlying warrants and the closing stock price of $
The future expense as of March 31, 2025 is $
7. RELATED PARTY TRANSACTIONS
As of March 31, 2025 and December 31, 2024 Michael
Feinsod is owed a total of $
8. COMMITMENTS AND CONTINGENCIES
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 $
In March 2025, the Company was threatened with litigation by a former employee. The employee has made allegations related to violations of the Colorado Wage Claim Act and alleged breach of contract and unpaid commissions. The employee claims retaliatory termination and seeks damages, including statutory penalties and back/front pay. We believe that that any such potential claims, if asserted, would be without substantial merit. Although the outcome of legal proceedings is subject to uncertainty, the Company will vigorously defend any future claims made by the former employee against the Company. However, if the lawsuit is successful, it may have a material adverse effect on its business, operating results, financial condition or cash flows.
9. SEGMENT REPORTING
The Company operates as a single reportable segment, as the Chief Operating Decision Maker (“CODM”), the Chief Executive Officer (“CEO”), evaluates the business on a consolidated basis and does not receive discrete financial information for multiple business units.
12
Measure of Segment Profit or Loss
The CODM assesses the Company’s financial
performance based on operating loss, which aligns with the amount reported in the statement of comprehensive loss.
| Three Months ended March 31 | ||||||||
| 2025 | 2024 | |||||||
| Revenues | ||||||||
| Product and other sales | $ | $ | ||||||
| Total revenues | ||||||||
| Cost of revenues | ||||||||
| Product and other sales | ||||||||
| Total cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Research and development | ||||||||
| Professional Fees | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Net loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses) | ||||||||
| Interest income | ||||||||
| Interest expense and bank charges | ( | ) | ( | ) | ||||
| Total other income (expenses) | ( | ) | ( | ) | ||||
| Net income (loss) before income taxes | ( | ) | ( | ) | ||||
| Income taxes | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
Significant Segment Expenses
The Company considers the following as significant expenses in evaluating its segment performance:
| ● | Research and Development: includes costs related to new product development, including product processing and blending techniques. |
| ● | General and Administrative: includes personnel costs, professional fees, and other overhead expenses. |
| ● | Sales and Marketing: includes personnel costs and other sales related expenses. |
| ● | Cost of Revenues: represents labor costs, material costs and manufacturing overhead costs associated with the production of materials transferred to the customer from the Company’s facility. |
Since the Company has only
Entity-Wide Disclosures
| ● | Geographic Revenue Information: For the three months ended March 31,
2025 |
| ● | Major Customers:. The Company had three customers that accounted for
|
10. SUBSEQUENT EVENTS
On June 5, 2025, a vendor sued Bespoke Extracts
Colorado, LLC in Colorado state court, alleging non-payment of approximately $
13
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.
Beginning January 1, 2025, we rebranded our product offerings in Colorado as The Joint Company.
14
Results of Operations for the three months ended March 31, 2025 and March 31, 2024
Sales
Sales during the three months ended March 31, 2025 were $263,159 compared to $260,428 for the three months ended March 31, 2024. The increase in sales was due to increased direct sales of branded pre-rolled joints and joint production services to licensed dispensaries in Colorado.
Cost of Goods Sold
Cost of goods sold for the three months ended March 31, 2025 was $152,380 compared to $157,847 for the three months ended March 31, 2024. The decrease was a primarily a result of increased efficiencies in production of pre-rolled joints, partially offset by increased packaging and testing costs, primarily attributable to the development and launch of new products. The decrease in cost of sales, as a percentage of sales, was due increased efficiencies in purchases of raw materials, packaging, and labor associated with the production of pre-rolled joints and offset by increased marketing and sampling efforts for the launch of new products.
Operating Expenses
Selling, general and administrative expenses for the three months March 31, 2025 and March 31, 2024 were $313,153 and $347,859, respectively. The decrease was mainly attributable to a reduction in stock based compensation of $2,960 for the three months ended March 31, 2025 compared to $50,418 for the three months ended March 31, 2024 and as well as a decrease in salaries. Professional fees were $42,964 and $57,525, respectively for the three months ended March 31, 2025 and March 31, 2024. The decrease in expenses was due to decreased legal and accounting fees.
Net Loss
Our net loss for the three months ended March 31, 2025 was $260,521 or $0.02 per share, compared to a net loss for the three months ended March 31, 2024 of $314,118, or $0.03 per share.
Liquidity and Capital Resources
As of March 31, 2025, we had cash of $30,365. Net cash used in operating activities for the three months ended March 31, 2025 was $72,940. Our current liabilities as of March 31, 2025 were $1,241,535 and consisted of accounts payable and accrued liabilities of $1,123,600, advances from related party of $66,872, current portion of lease liability of $38,083 and notes payable related party of $13,000. As of March 31, 2024, we had cash of $14,416. Net cash used in operating activities for the three months ended March 31, 2024 was $97,191. Our current liabilities as of March 31, 2024 were $1,345,306 and consisted of accounts payable and accrued liabilities of $1,137,298, current portion of lease liability of $64,330 and notes payable related party of $85,307.
During the three months ended March 31, 2025 the Company borrowed an additional $50,000 from an unrelated party and made repayments of notes payable of $7,000. During the three months ended March 31, 2024 the Company borrowed an additional $5,000 from a related party.
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 three months ended March 31, 2025 and the year ended December 31, 2024 and had a working capital deficit at March 31, 2025 and December 31, 2024. This raises substantial doubt about our ability to continue as a going concern.
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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.
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.
In the ordinary course of business, the Company is involved in lawsuits incidental to its business, including litigation related to employment and commercial matters. Although it is difficult to predict the ultimate outcome of these matters, management believes that any ultimate liability would not have a material adverse effect on the Consolidated Balance Sheets or results of operations. Other than as disclosed herein, as of March 31, 2025, there were no pending lawsuits that could reasonably be expected to have a material effect on the results of the Company’s Consolidated Financial Statements.
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.
Item 6. Exhibits.
| Exhibit No. | Description | |
| 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.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
| ** | Furnished herewith. |
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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: June 30, 2025 | By: | /s/ Michael Feinsod |
| Michael Feinsod Chief Executive Officer | ||
| (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | ||
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