UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended: June 30, 2023

 

or

  

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

 

For the transition period from __________ to __________

 

Commission File Number: 000-52759

 

BESPOKE EXTRACTS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   20-4743354
(State or other jurisdiction 
of incorporation)
  (IRS Employer 
Identification No.)

 

12001 E. 33rd Avenue, Unit O

Aurora, CO, 80010

(Address of principal executive offices)

 

855-633-3738

(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.  Yes  ☒    No ☐

 

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).  Yes  ☒   No  ☐

 

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

 

Large accelerated filer Accelerated filer
Non-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 10,168,220 shares outstanding of the registrant’s common stock, par value $0.001.

 

 

 

 

 

 

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  $1,947   $24,433 
Accounts receivable, net   42,310    
-
 
Prepaid stock awards   36,785    80,113 
Prepaid expense   14,445    7,186 
Inventory, net   42,364    
-
 
Total current assets   137,851    111,732 
           
Furniture and equipment   45,381    9,947 
License   10,000    
-
 
Right of Use Asset   243,054    275,912 
Deposits   12,000    12,000 
Total assets  $448,286   $409,591 
           
Liabilities and Stockholders’ Deficit          
Current liabilities          
Accounts payable and accrued liabilities  $647,884   $295,818 
Inventory earn-out   
-
    90,000 
Deferred revenue   9,896    
-
 
Note payable - related party   35,954    415,500 
Operating lease liability   64,330    64,330 
Total current liabilities    758,064    865,648 
Note payable - related party   849,500    
-
 
Long-Term Operating Lease Liability   183,577    216,039 
Total liabilities   1,791,141    1,081,687 
           
Commitments and contingencies (Note 10)   
 
    
 
 
           
Stockholders’ Deficit          
Preferred stock, par value $0.001, 50,000,000 shares authorized, 1 share issued and outstanding as of June 30, 2023 and December 31,2022, respectively   
-
    
-
 
Series C Preferred Stock, $0.001 par value, 1 share designated; 1 share issued and outstanding as of June 30, 2023 and December 31, 2022, respectively, stated value $24,000   
-
    
-
 
Common stock, $0.001 par value: 3,000,000,000 shares authorized; 10,168,220 and 9,946,067 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively   10,166    9,944 
Additional paid-in capital   23,436,312    23,201,758 
Accumulated deficit   (24,789,333)   (23,883,798)
Total stockholders’ deficit   (1,342,855)   (672,096)
Total liabilities and stockholders’ deficit  $448,286   $409,591 

 

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  $188,247   $346   $277,263   $3,407 
Cost of products sold   117,211    46,668    195,878    47,515 
Gross Profit   71,036    (46,322)   81,385    (44,108)
                     
Operating expenses:                    
Selling, general and administrative expenses   457,366    894,917    831,881    1,792,451 
Professional fees   63,172    35,493    124,376    89,848 
Consulting   18,000    35,500    36,000    58,500 
Total operating expenses   538,538    965,910    992,257    1,940,799 
                     
Loss from operations   (467,502)   (1,012,232)   (910,872)   (1,984,907)
                     
Other income / (expenses)                    
   Interest income   2,587    
-
    5,337    
-
 
   Interest expense   
-
    250    
-
    431 
Total other (expense) / income   2,587    250    5,337    431 
                     
Loss before income tax   (464,915)   (1,011,982)   (905,535)   (1,984,476)
Provision for income tax   
-
    
-
    
-
    
-
 
Net Loss  $(464,915)  $(1,011,982)  $(905,535)  $(1,984,476)
                     
                     
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                    
Basic and Diluted
   10,168,220    7,812,084    10,164,537    7,404,386 
                     
NET LOSS PER COMMON SHARE OUTSTANDING                    
Basic and Diluted
  $(0.05)  $(0.13)  $(0.09)  $(0.27)

 

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                1   $
               -
    9,018,632   $9,019   $22,709,662    6,478   $7,987   $(20,740,065)  $1,986,603 
                                              
Stock based compensation and stock option expense   -    
-
    -    
-
    708,253    -    
-
    
-
    708,253 
                                              
Common stock issued for cash   
-
    
-
    654,222    654    146,546    -    
-
    
-
    147,200 
                                              
Net loss for the three months ended June 30, 2022   -    
-
    -    
-
    
-
    -    
-
    (1,011,982)   (1,011,982)
Balance  June 30, 2022   1   $
-
    9,672,854   $9,673   $23,564,461    6,478   $7,987   $(21,752,047)  $1,830,074 

 

   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         1   $
        -
    10,168,220   $10,166   $23,343,968   $(24,324,418)  $(970,284)
                                    
Stock based compensation and stock option expense   -    
-
    -    
-
    92,344    
-
    92,344 
                                    
Net loss for the three months ended June 30, 2023   -    
-
    -    
-
    
-
    (464,915)   (464,915)
Balance  June 30, 2023   1   $
-
    10,168,220   $10,166   $23,436,312   $(24,789,333)  $(1,342,855)

 

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           1   $
           -
    8,141,965   $8,142   $21,741,403    6,478   $7,987   $(19,767,571)  $1,989,961 
                                              
Payment of capital contribution   -    
-
    -    
-
    4,792    -    
-
    
-
    4,792 
                                              
Stock based compensation and stock option expense   -    
-
    -    
-
    1,475,347    -    
-
    
-
    1,475,347 
                                              
Common stock issued for cash   -    
-
    1,530,889    1,531    342,919    -    
-
    
-
    344,450 
                                              
Net loss for the six months ended June 30, 2022   -    
-
    -    
-
    
-
    -    
-
    (1,984,476)   (1,984,476)
Balance  June 30, 2022   1   $
-
    9,672,854   $9,673   $23,564,461    6,478   $7,987   $(21,752,047)  $1,830,074 

 

   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         1   $
      -
    9,945,997   $9,944   $23,201,758   $(23,883,798)  $(672,096)
                                    
Purchase Wonderleaf   -    
-
    222,223    222    49,778    
-
    50,000 
                                    
Stock based compensation and stock option expense   -    
-
    -    
-
    184,776    
-
    184,776 
                                    
Net loss for Six Months ended June 30, 2023   -    
-
    -    
-
    
-
    (905,535)   (905,535)
Balance  June 30, 2023   1   $
-
    10,168,220   $10,166   $23,436,312   $(24,789,333)   $(1,342,855)  

  

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  $(905,535)  $(1,984,476)
Adjustments to reconcile net loss to net cash used in operating activities          
Inventory reserve   40,393    46,825 
Depreciation   4,566    
-
 
Amortization of right of use asset, net   32,858    
-
 
Amortization expense for prepaid expenses for consulting shares   43,328    31,638 
Stock based compensation and stock option expense   184,776    1,435,860 
Changes in operating assets and liabilities:          
Accounts receivable   (9,856)   158 
Prepaid expenses   (7,259)   (6,898)
Inventory   (82,757)   
-
 
Interest receivable – Wonderleaf   
-
    (431)
Accounts payable and accrued liabilities   319,612    76,293 
Deferred revenue   9,896    
-
 
Operating lease liability   (32,462)   (29,442)
Net Cash (used in) operating activities   (402,440)   (430,473)
           
Cash flows from investing activities          
Advances to Wonderleaf   
-
    (12,719)
Note receivable Wonderleaf funded   
-
    (20,000)
Purchase of equipment   
-
    (7,202)
Net cash used in investing activities   
-
    (39,921)
           
Cash flow from financing activities          

Payment of inventory earnout

   

(90,000

)   
-
 
Payment of capital contribution   
-
    4,792 
Proceeds from issuance of note payable - related party   469,954    
-
 
Repayment of note payable - related party   
-
    (2,500)
Proceeds from issuance of units   
-
    344,449 
Net cash provided by financing activities   379,954    346,741 
           
Net increase / (decrease) in cash   (22,486)   (123,653)
Cash at beginning of period   24,433    148,227 
Cash at end of period  $1,947   $24,574 
           
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  $50,000   $
-
 

 

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 222,223 shares of common stock valued at $50,000, or $0.225 per share, and the change of control was approved by the Colorado Marijuana Enforcement Division. At the time of acquisition WonderLeaf had no operations or no employees and was not considered a business.

 

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 $402,440 for the six months ended June 30, 2023, and a working capital deficit of $620,213 and accumulated deficit of $24,789,333, as of June 30, 2023. This raises substantial doubt about our ability to continue as a going concern for a period of one year from the date of these financial statements.

 

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 $250,000 at any single bank.

 

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 $0 and $0, respectively.

 

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 $42,364, and $0 net of reserves, respectively, which consisted of finished goods of $0 and $0, and raw materials of $42,364 and $0, respectively.

 

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. The estimated useful lives for significant property and equipment categories are as follows:

 

Schedule of Estimated useful Lives of Property and Equipment

 

Furniture and Equipment   5 years 

 

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, two customers amounted to 35.5% and 12.7%, or 48.2% of accounts receivable. During the year ended December 31, 2022 no customer amounted to over 10% of the total accounts receivable. During the three months ended June 30, 2023 one customer amounted to 39.7% of sales for the period. During the six months ended June 30, 2023 one customer amounted to 51.6% of sales for the period. During the three and six months ended June 30, 2022 no individual customer amounted to over 10% of tota1 sales.

 

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 56,001 warrants and 1,023,842 options is anti-dilutive for the three and six months ended June 30, 2023 as they are not in the money. The effect of 562.967 warrants and 1,023,842 options is anti-dilutive for the three and six months ended June 30, 2022 as they are not in the money. 

 

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 222,223 shares of common stock valued at $50,000, or $0.225 per share. At the time of acquisition WonderLeaf had no operations or employees and was not considered a business. 

 

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 222,223 common shares issued of $50,000 as the fair value of the assets acquired since this value was more clearly evident, and thus, more reliably measurable than the fair value of the license and fixed assets acquired.

 

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 222,223 shares is deemed by the Company to be $50,000 in accordance with Accounting Standards Codification (“ASC”) 805-50-30 “Business Combinations”. The Company determined that if the consideration paid is not in the form of cash, the measurement may be based on either (i) the cost which is measured based on the fair value of the consideration given or (ii) the fair value of the assets (or net assets) acquired, whichever is more clearly evident and thus more reliably measurable. No goodwill should be recorded since the WPA was accounting for as an asset purchase. The Company determined that the fair value of the common shares issued was a better indicator which is more reliably measurable.

 

The Company assigned a value of $10,000 to the licenses and $40,000 to the fixed assets acquired.

 

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, 40% of the operating profit generated from sale of the existing CBD inventory of the Company, and on August 31, 2022, to make a final payment equal to an amount of $75,000 minus the total of the monthly payments made under the Inventory Earn Out. As of December 31, 2022 no amounts had been paid. The inventory earn-out agreement was amended on November 11, 2022 such that the final payment under the inventory earn out was increased to $90,000 (less any payments previously made) and was due February 28, 2023. During the six months ended June 30, 2023 the amount was paid.

 

4. NOTE RECEIVABLE 

 

On January 19, 2022 the Company loaned WonderLeaf $10,000, pursuant to a promissory note. The note bears interest at 5% annually and matures on January 18, 2023.

 

On February 8, 2022 the Company loaned WonderLeaf $10,000, pursuant to a promissory note. The note bears interest at 5% annually and matures on February 8, 2023.

 

On October 25, 2022 the Company loaned WonderLeaf $25,000, pursuant to a promissory note. The note bears interest at 5% annually and matures on February 8, 2023.

 

As of December 31, 2022 accrued interest on the notes receivable amounted to $931.

 

At December 31, 2022 the Company recorded a reserve of $45,931 for the promissory notes and accrued interest.

 

Note 5 – Furniture and equipment.

 

Machinery and equipment consisted of the following at:

 

Schedule of Machinery and Equipment

 

   June 30,
2023
   December 31,
2022
 
Furniture and equipment  $2,745   $2,745 
Machinery and Equipment   47,202    7,202 
Fixed assets, total   49,947    9,947 
Total: accumulated depreciation   (4,566)   
-
 
Fixed assets, net  $45,381   $9,947 

 

Depreciation expense for the three and six months ended June 30, 2023 and June 30, 2022 were $2,781, $4,566, $0 and $0 respectively.

 

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 $469,954. On September 5, 2023 $849,500 of notes payable were converted into a 5% interest bearing note due June 30, 2025. In addition, repayment of the note will be due out of the proceeds of a new debt or equity capital raise with net proceeds of more than $2,000,000. Amounts are being presented retroactively as of June 30, 2023. As of June 30, 2023 and December 31, 2022 the amount owed Infinity Management, LLC is $885,454 and $415,500, respectively.

 

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 five years, which Bespoke Colorado will have an option to renew for an additional five years. Monthly rent under the Lease will start at $6,000. The Lease grants the Company an option to purchase the property for $600,000. The Company has not decided whether it will exercise either option.

 

Supplemental balance sheet information related to leases was as follows:

 

Lease term and discount rate were as follows:

 

   June 30, 
   2023 
Weighted average remaining lease term (years)   3.44 
Weighted average discount rate   4%

 

The component of lease costs was as follows:

 

   Six Months
ended
June 30,
 
   2023 
Operating lease cost  $38,186 
Variable lease cost (1)   2,100 
Total lease costs  $40,286 

 

(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.

 

Supplemental disclosures of cash flow information related to leases were as follows:

 

    June 30,  
    2023  
Cash paid for operating lease liabilities   $     -  

 

Maturities of lease liabilities were as follows as of June 30, 2023:

 

   Operating 
   Leases 
2023  $37,800 
2024   75,915 
2025   79,380 
2026   72,765 
Thereafter   
-
 
Total undiscounted lease payments   265,850 
Less: Present value discount   (17,953)
Total Present value of lease liabilities  $247,907 

 

11

 

 

Operating Leases  Classification  June 30,
2023
 
Right-of-use assets  Right of use assets  $243,054 
         
Current lease liabilities  Current operating lease liabilities  $64,330 
Non-current lease liabilities  Long-term operating lease liabilities   183,577 
Total lease liabilities     $247,907 

 

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 3,000,000,000 shares of common stock, par value $0.001, and 50,000,000 shares of preferred stock, par value $0.0011,000 shares of preferred stock are designated as Series A Convertible Preferred Stock. No shares of Series A Preferred Stock are issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. The Company’s Certificate of Designation of Series B Preferred Stock was withdrawn by the Company on June 30, 2020. 1 share of preferred stock is designated Series C Preferred Stock and is issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. The Series C Preferred Stock has a stated value of $24,000 and entitles the holder to 51% of the total voting power of the Company’s stockholders. The Company may, in its sole discretion, redeem the Series C Preferred Stock at any time for a redemption price equal to the stated value. Upon payment of the redemption price by the Company, the Series C Preferred Stock will revert to the status of authorized but unissued preferred stock. 

 

On January 3, 2023, the Company completed the acquisition of the WonderLeaf assets for 222,223 shares of common stock valued at $50,000, or $0.225 per share.

 

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 6,666,667 shares of common stock are available for issuance. Awards under the plan may include options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance share awards, or other equity-based awards, each as defined under the 2021 Plan. Options awarded under the 2021 Plan are to have an exercise price of not less than 100% of the fair market value of the common stock on the grant date and a term of not more than ten years from the option grant date.

 

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 $8,000. The Company also granted to Mr. Garth, pursuant to the Company’s 2021 Equity Incentive Plan, 500,000 shares of restricted common stock valued at $675,000 ($1.35 per share), which vested one year from the date of grant. During the year ended December 31, 2022 the Company recorded $675,000 a prepaid expenses associated with the stock based compensation. During the years ended December 31, 2022 and 2021 the amount was amortized $643,562 and $31,438, respectively.

   

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 $10,000. The Company also granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity Incentive Plan, 1,000,000 shares of restricted common stock valued at $1,350,000 ($1.35 per share), which vested one year from the date of grant. During the year ended December 31, 2022 the Company recorded $1,350,000 of prepaid expenses associated with the stock based compensation. During the years ended December 31, 2022 and 2021 the amount was amortized $1,287,123 and $62,877, respectively. As of December 31. 2022 and 2021 the Company recorded a prepaid stock award of $0 and $1,287,123, respectively.

 

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 1,530,897 shares of common stock and warrants to purchase an aggregate of 1,530,897 shares of common stock, for an aggregate purchase price of $344,450. The warrants expired June 30, 2023 and had an exercise price of $2.25.

 

Effective August 1, 2022, the Company issued an aggregate of 266,667 shares of common stock to employees and consultants for services, including 155,556 shares that vest immediately, 55,556 shares that vested one year from the grant date, and 55,556 shares that will vest two years from the grant date. During the year ended December 31, 2022 the Company recorded an expense $1,104,928. For the three and six months ended June 30, 2023 the Company recorded an expense of $21,544 and $43,328, respectively. As of June 30, 2023 and December 31, 2022 the Company had a prepaid stock award of $38,785 and $80,113.

 

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 50,000,000 shares of common stock and warrants to purchase an aggregate of 12,500,000 shares of common stock, for an aggregate purchase price of $250,000 with offering costs of $10,000 for legal expenses. The warrants had a term of one year and an exercise price of $2.25.

 

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 1,530,887 shares of common stock and warrants to purchase an aggregate of 382,722 shares of common stock, for an aggregate purchase price of $344,450. The warrants expired June 30, 2023 and had an exercise price of $2.25.

 

The following table summarizes the warrant activities during the six months ended June 30, 2023:

 

   Number of
Warrants
   Weighted-
Average
Exercise
Price Per
Share
   Weighted-
Average
Remaining
Life
 
Outstanding at Deceme 31, 2022   438,723    5.03    0.36 
Granted   
-
    
-
    
-
 
Canceled or expired   (382,722)   0.95    
-
 
Outstanding at June 30, 2023   56,001   $23.94    0.88 years 
Exercisable at June 30, 2023   56,001   $23.94    0.88 years 
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 666,667 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. The options were valued at $900,000 using a Black-Scholes pricing model. During the three and six months ended June 30, 2023 and 2022 the Company recorded $61,621, $123,343, $135,54 and $271,188, respectively of expenses associated with the vesting of these stock options.

 

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 666,667 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. The options were valued at $900,000 using a Black-Scholes pricing model. During the three and six months ended June 30, 2023 and 2022 the Company recorded $61,621, $123,343, $135,54 and $271,188, respectively of expenses associated with the vesting of these stock options.

 

On December 14, 2021, the Company issued to a consultant options to purchase 22,222 shares of common stock at an exercise price of $1.35. The options vest over a period of 3 months and have a term of 10 years. The options were valued at $30,000 using a Black-Scholes pricing model. During the three and six months ended June 30, 2023 and 2022 the Company recorded $0, $0, $0 and $24,900, respectively of expenses associated with the vesting of these stock options.

 

The following table summarizes the option activities during the six months ended June 30, 2023:

 

   Number of
Options
   Weighted-
Average Exercise
Price Per
Share
   Weighted-
Average
Remaining
Life
Outstanding at December 31, 2022   1,023,842    2.67   8.95 years
Granted   
-
    
-
  
 
Canceled or expired   
-
    
-
    
Exercised   
-
    
-
    
Outstanding at June 30, 2023   1,023,842   $2.67   8.46 years
Exercisable at June 30, 2023   357,174   $2.67   8.44 years
Intrinsic value at June 30, 2023       $
-
    

 

The future expense as of June 30, 2023 is $327,949.

 

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 $8,000. The Company also granted to Mr. Garth, pursuant to the Company’s 2021 Equity Incentive Plan, 500,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 333,333 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Garth is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

  

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 $10,000. The Company also granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity Incentive Plan, 1,000,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 666,667 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Feinsod is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

 

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 $469,954. On September 5, 2023 $849,500 of notes payable were converted into a 5% interest bearing note due June 30, 2025. In addition repayment of the note will be due in full out of the proceeds of a new debt or equity capital raise with net proceeds of more than $2,000,000. Amounts are being presented retroactively as June 30, 2023. As of June 30, 2023 and December 31, 2022 the amount owed Infinity Management, LLC is $885,454 and $415,500, respectively. (See Note 6.)

 

As of June 30, 2023 Michael Feinsod is owed a total of $135,000 of accrued salary and accounts payable of $111,393.

 

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 $400,000 was terminated, and all amounts due and payable thereunder forgiven pursuant to a cancellation and satisfaction of debenture agreement entered into between the Company and the Debenture holder (the “Debt Cancellation Agreement”). 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, 40% of the operating profit generated from sale of the existing CBD inventory of the Company (the “Inventory Earn Out”), and on August 31, 2022, to make a final payment equal to an amount of $75,000 minus the total of the monthly payments made under the Inventory Earn Out. The inventory earn-out agreement was amended on November 11, 2022 (see Note 3) such that the final payment under the inventory earn out was increased to $90,000 (less any payments previously made) and was due February 28, 2023. During the six months ended June 30, 2023 the amount was paid.

 

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 $8,000. The Company also granted to Mr. Garth, pursuant to the Company’s 2021 Equity Incentive Plan, 500,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 333,333 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Garth is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

  

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 $10,000. The Company also granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity Incentive Plan, 1,000,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 666,667 shares of common stock at an exercise price of $0.06 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Feinsod is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

 

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 2,777,778 shares of common stock at the closing of the transaction. Closing of the purchase agreement was subject to receipt of certain governmental approvals and other customary closing conditions. The purchase agreement was terminated on November 18, 2022.

 

11. SUBSEQUENT EVENTS

 

Subsequent to June 30, 2023, Infinity Management, LLC, loaned the Company an additional $15,000.

 

On September 5, 2023 $849,500 of notes payable were converted into a 5% interest bearing note due June 30, 2025. The note contains provisions whereby it is intended to be subordinate to any senior secured debt the Company may incur while it is outstanding. In addition, repayment of the note will be due in full out of the proceeds of a new debt or equity capital raise with net proceeds of more than $2,000,000.

 

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.

 

16

 

 

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.

 

18

 

 

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.

 

19

 

 

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

 

 

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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  

 

 

v3.23.3
Document And Entity Information - shares
6 Months Ended
Jun. 30, 2023
Sep. 28, 2023
Document Information Line Items    
Entity Registrant Name BESPOKE EXTRACTS, INC.  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   10,168,220
Amendment Flag false  
Entity Central Index Key 0001409197  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Jun. 30, 2023  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q2  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Shell Company false  
Entity Ex Transition Period false  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 000-52759  
Entity Incorporation, State or Country Code NV  
Entity Tax Identification Number 20-4743354  
Entity Address, Address Line One 12001 E. 33rd Avenue  
Entity Address, Address Line Two Unit O  
Entity Address, City or Town Aurora  
Entity Address, Country CO  
Entity Address, Postal Zip Code 80010  
City Area Code 855  
Local Phone Number 633-3738  
Entity Interactive Data Current Yes  
v3.23.3
Consolidated Balance Sheets - USD ($)
Jun. 30, 2023
Dec. 31, 2022
Current assets    
Cash $ 1,947 $ 24,433
Accounts receivable, net 42,310
Prepaid stock awards 36,785 80,113
Prepaid expense 14,445 7,186
Inventory, net 42,364
Total current assets 137,851 111,732
Furniture and equipment 45,381 9,947
License 10,000
Right of Use Asset 243,054 275,912
Deposits 12,000 12,000
Total assets 448,286 409,591
Current liabilities    
Accounts payable and accrued liabilities 647,884 295,818
Inventory earn-out 90,000
Deferred revenue 9,896
Note payable - related party 35,954 415,500
Operating lease liability 64,330 64,330
Total current liabilities 758,064 865,648
Note payable - related party 849,500
Long-Term Operating Lease Liability 183,577 216,039
Total liabilities 1,791,141 1,081,687
Commitments and contingencies (Note 10)
Stockholders’ Deficit    
Preferred stock, par value $0.001, 50,000,000 shares authorized, 1 share issued and outstanding as of June 30, 2023 and December 31,2022, respectively
Series C Preferred Stock, $0.001 par value, 1 share designated; 1 share issued and outstanding as of June 30, 2023 and December 31, 2022, respectively, stated value $24,000
Common stock, $0.001 par value: 3,000,000,000 shares authorized; 10,168,220 and 9,946,067 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively 10,166 9,944
Additional paid-in capital 23,436,312 23,201,758
Accumulated deficit (24,789,333) (23,883,798)
Total stockholders’ deficit (1,342,855) (672,096)
Total liabilities and stockholders’ deficit $ 448,286 $ 409,591
v3.23.3
Consolidated Balance Sheets (Parentheticals) - $ / shares
Jun. 30, 2023
Dec. 31, 2022
Preferred stock, par value (in Dollars per share) $ 0.001 $ 0.001
Preferred stock, share issued 1 1
Preferred stock, share outstanding 1 1
Preferred Stock, shares authorized 50,000,000 50,000,000
Common stock, par value (in Dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 3,000,000,000 3,000,000,000
Common stock, shares issued 10,168,220 9,946,067
Common stock, shares outstanding 10,168,220 9,946,067
Series C Preferred Stock    
Preferred stock, par value (in Dollars per share) $ 0.001 $ 0.001
Preferred stock, share issued 1 1
Preferred stock, share outstanding 1 1
Preferred stock, designated share 1 1
Preferred stock, share stated value 24,000 24,000
v3.23.3
Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]        
Sales $ 188,247 $ 346 $ 277,263 $ 3,407
Cost of products sold 117,211 46,668 195,878 47,515
Gross Profit 71,036 (46,322) 81,385 (44,108)
Operating expenses:        
Selling, general and administrative expenses 457,366 894,917 831,881 1,792,451
Professional fees 63,172 35,493 124,376 89,848
Consulting 18,000 35,500 36,000 58,500
Total operating expenses 538,538 965,910 992,257 1,940,799
Loss from operations (467,502) (1,012,232) (910,872) (1,984,907)
Other income / (expenses)        
Interest income 2,587 5,337
Interest expense 250 431
Total other (expense) / income 2,587 250 5,337 431
Loss before income tax (464,915) (1,011,982) (905,535) (1,984,476)
Provision for income tax
Net Loss $ (464,915) $ (1,011,982) $ (905,535) $ (1,984,476)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING        
Basic (in Shares) 10,168,220 7,812,084 10,164,537 7,404,386
NET LOSS PER COMMON SHARE OUTSTANDING        
Basic (in Dollars per share) $ (0.05) $ (0.13) $ (0.09) $ (0.27)
v3.23.3
Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]        
Diluted 10,168,220 7,812,084 10,164,537 7,404,386
Diluted $ (0.05) $ (0.13) $ (0.09) $ (0.27)
v3.23.3
Consolidated Statement of Stockholders’ Equity / (Deficit) (Unaudited) - USD ($)
Series C
Preferred Shares
Series C
Common Shares
Preferred Shares
Common Shares
Additional Paid-in Capital
Common Stock Shares to be Issued
Common Stock to be issued Par Amount
Accumulated Deficit
Total
Balance at Dec. 31, 2021   $ 8,142   $ 21,741,403   $ 7,987 $ (19,767,571) $ 1,989,961
Balance (in Shares) at Dec. 31, 2021   8,141,965 1     6,478      
Payment of capital contribution     4,792   4,792
Stock based compensation and stock option expense     1,475,347   1,475,347
Common stock issued for cash   $ 1,531   342,919   344,450
Common stock issued for cash (in Shares)   1,530,889              
Net loss       (1,984,476) (1,984,476)
Balance at Jun. 30, 2022 $ 9,673 $ 9,673 23,564,461   7,987 (21,752,047) 1,830,074
Balance (in Shares) at Jun. 30, 2022 1 9,672,854 1 9,672,854   6,478      
Balance at Dec. 31, 2021   $ 8,142   21,741,403   7,987 (19,767,571) 1,989,961
Balance (in Shares) at Dec. 31, 2021   8,141,965 1     6,478      
Balance at Dec. 31, 2022   $ 9,944   23,201,758     (23,883,798) (672,096)
Balance (in Shares) at Dec. 31, 2022   9,945,997 1            
Balance at Mar. 31, 2022     $ 9,019 22,709,662   7,987 (20,740,065) 1,986,603
Balance (in Shares) at Mar. 31, 2022 1     9,018,632   6,478      
Stock based compensation and stock option expense     708,253   708,253
Common stock issued for cash     $ 654 146,546   147,200
Common stock issued for cash (in Shares)     654,222          
Net loss       (1,011,982) (1,011,982)
Balance at Jun. 30, 2022 $ 9,673 $ 9,673 23,564,461   $ 7,987 (21,752,047) 1,830,074
Balance (in Shares) at Jun. 30, 2022 1 9,672,854 1 9,672,854   6,478      
Balance at Dec. 31, 2022   $ 9,944   23,201,758     (23,883,798) (672,096)
Balance (in Shares) at Dec. 31, 2022   9,945,997 1            
Purchase Wonderleaf   $ 222   49,778     50,000
Purchase Wonderleaf (in Shares)   222,223              
Stock based compensation and stock option expense     184,776     184,776
Net loss         (905,535) (905,535)
Balance at Jun. 30, 2023 $ 10,166 $ 10,166 23,436,312     (24,789,333) (1,342,855)
Balance (in Shares) at Jun. 30, 2023 1 10,168,220 1 10,168,220          
Balance at Mar. 31, 2023     $ 10,166 23,343,968     (24,324,418) (970,284)
Balance (in Shares) at Mar. 31, 2023 1     10,168,220          
Stock based compensation and stock option expense     92,344     92,344
Net loss         (464,915) (464,915)
Balance at Jun. 30, 2023 $ 10,166 $ 10,166 $ 23,436,312     $ (24,789,333) $ (1,342,855)
Balance (in Shares) at Jun. 30, 2023 1 10,168,220 1 10,168,220          
v3.23.3
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Cash flows from operating activities    
Net Loss $ (905,535) $ (1,984,476)
Adjustments to reconcile net loss to net cash used in operating activities    
Inventory reserve 40,393 46,825
Depreciation 4,566
Amortization of right of use asset, net 32,858
Amortization expense for prepaid expenses for consulting shares 43,328 31,638
Stock based compensation and stock option expense 184,776 1,435,860
Changes in operating assets and liabilities:    
Accounts receivable (9,856) 158
Prepaid expenses (7,259) (6,898)
Inventory (82,757)
Interest receivable – Wonderleaf (431)
Accounts payable and accrued liabilities 319,612 76,293
Deferred revenue 9,896
Operating lease liability (32,462) (29,442)
Net Cash (used in) operating activities (402,440) (430,473)
Advances to Wonderleaf (12,719)
Note receivable Wonderleaf funded (20,000)
Purchase of equipment (7,202)
Net cash used in investing activities (39,921)
Payment of inventory earnout (90,000)
Payment of capital contribution 4,792
Proceeds from issuance of note payable - related party 469,954
Repayment of note payable - related party (2,500)
Proceeds from issuance of units 344,449
Net cash provided by financing activities 379,954 346,741
Net increase / (decrease) in cash (22,486) (123,653)
Cash at beginning of period 24,433 148,227
Cash at end of period 1,947 24,574
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 $ 50,000
v3.23.3
Nature of Operations, Significant Accounting Policies and Going Concern
6 Months Ended
Jun. 30, 2023
Nature of Operations, Significant Accounting Policies and Going Concern [Abstract]  
NATURE OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN

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 222,223 shares of common stock valued at $50,000, or $0.225 per share, and the change of control was approved by the Colorado Marijuana Enforcement Division. At the time of acquisition WonderLeaf had no operations or no employees and was not considered a business.

 

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 $402,440 for the six months ended June 30, 2023, and a working capital deficit of $620,213 and accumulated deficit of $24,789,333, as of June 30, 2023. This raises substantial doubt about our ability to continue as a going concern for a period of one year from the date of these financial statements.

 

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.

 

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 $250,000 at any single bank.

 

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 $0 and $0, respectively.

 

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 $42,364, and $0 net of reserves, respectively, which consisted of finished goods of $0 and $0, and raw materials of $42,364 and $0, respectively.

 

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. The estimated useful lives for significant property and equipment categories are as follows:

 

Schedule of Estimated useful Lives of Property and Equipment

 

Furniture and Equipment   5 years 

 

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, two customers amounted to 35.5% and 12.7%, or 48.2% of accounts receivable. During the year ended December 31, 2022 no customer amounted to over 10% of the total accounts receivable. During the three months ended June 30, 2023 one customer amounted to 39.7% of sales for the period. During the six months ended June 30, 2023 one customer amounted to 51.6% of sales for the period. During the three and six months ended June 30, 2022 no individual customer amounted to over 10% of tota1 sales.

 

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 56,001 warrants and 1,023,842 options is anti-dilutive for the three and six months ended June 30, 2023 as they are not in the money. The effect of 562.967 warrants and 1,023,842 options is anti-dilutive for the three and six months ended June 30, 2022 as they are not in the money. 

 

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.

v3.23.3
Asset Purchase Agreement
6 Months Ended
Jun. 30, 2023
Asset Purchase Agreement [Abstract]  
ASSET PURCHASE AGREEMENT

2. ASSET PURCHASE AGREEMENT

 

On January 3, 2023, the Company completed the acquisition of the assets for 222,223 shares of common stock valued at $50,000, or $0.225 per share. At the time of acquisition WonderLeaf had no operations or employees and was not considered a business. 

 

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 222,223 common shares issued of $50,000 as the fair value of the assets acquired since this value was more clearly evident, and thus, more reliably measurable than the fair value of the license and fixed assets acquired.

 

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.

 

The monetary value of the 222,223 shares is deemed by the Company to be $50,000 in accordance with Accounting Standards Codification (“ASC”) 805-50-30 “Business Combinations”. The Company determined that if the consideration paid is not in the form of cash, the measurement may be based on either (i) the cost which is measured based on the fair value of the consideration given or (ii) the fair value of the assets (or net assets) acquired, whichever is more clearly evident and thus more reliably measurable. No goodwill should be recorded since the WPA was accounting for as an asset purchase. The Company determined that the fair value of the common shares issued was a better indicator which is more reliably measurable.

 

The Company assigned a value of $10,000 to the licenses and $40,000 to the fixed assets acquired.

v3.23.3
Inventory Earn-Out
6 Months Ended
Jun. 30, 2023
Inventory Earn-Out [Abstract]  
INVENTORY EARN-OUT

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, 40% of the operating profit generated from sale of the existing CBD inventory of the Company, and on August 31, 2022, to make a final payment equal to an amount of $75,000 minus the total of the monthly payments made under the Inventory Earn Out. As of December 31, 2022 no amounts had been paid. The inventory earn-out agreement was amended on November 11, 2022 such that the final payment under the inventory earn out was increased to $90,000 (less any payments previously made) and was due February 28, 2023. During the six months ended June 30, 2023 the amount was paid.

v3.23.3
Note Receivable
6 Months Ended
Jun. 30, 2023
Note Receivable [Abstract]  
NOTE RECEIVABLE

4. NOTE RECEIVABLE 

 

On January 19, 2022 the Company loaned WonderLeaf $10,000, pursuant to a promissory note. The note bears interest at 5% annually and matures on January 18, 2023.

 

On February 8, 2022 the Company loaned WonderLeaf $10,000, pursuant to a promissory note. The note bears interest at 5% annually and matures on February 8, 2023.

 

On October 25, 2022 the Company loaned WonderLeaf $25,000, pursuant to a promissory note. The note bears interest at 5% annually and matures on February 8, 2023.

 

As of December 31, 2022 accrued interest on the notes receivable amounted to $931.

 

At December 31, 2022 the Company recorded a reserve of $45,931 for the promissory notes and accrued interest.

v3.23.3
Furniture and Equipment
6 Months Ended
Jun. 30, 2023
Furniture and Equipment [Abstract]  
Furniture and equipment

Note 5 – Furniture and equipment.

 

Machinery and equipment consisted of the following at:

 

Schedule of Machinery and Equipment

 

   June 30,
2023
   December 31,
2022
 
Furniture and equipment  $2,745   $2,745 
Machinery and Equipment   47,202    7,202 
Fixed assets, total   49,947    9,947 
Total: accumulated depreciation   (4,566)   
-
 
Fixed assets, net  $45,381   $9,947 

 

Depreciation expense for the three and six months ended June 30, 2023 and June 30, 2022 were $2,781, $4,566, $0 and $0 respectively.

v3.23.3
Note Payable – Related Party
6 Months Ended
Jun. 30, 2023
Note Payable - Related Party [Abstract]  
NOTE PAYABLE – RELATED PARTY

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 $469,954. On September 5, 2023 $849,500 of notes payable were converted into a 5% interest bearing note due June 30, 2025. In addition, repayment of the note will be due out of the proceeds of a new debt or equity capital raise with net proceeds of more than $2,000,000. Amounts are being presented retroactively as of June 30, 2023. As of June 30, 2023 and December 31, 2022 the amount owed Infinity Management, LLC is $885,454 and $415,500, respectively.

v3.23.3
Leases
6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
LEASES

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 five years, which Bespoke Colorado will have an option to renew for an additional five years. Monthly rent under the Lease will start at $6,000. The Lease grants the Company an option to purchase the property for $600,000. The Company has not decided whether it will exercise either option.

 

Supplemental balance sheet information related to leases was as follows:

 

Lease term and discount rate were as follows:

 

   June 30, 
   2023 
Weighted average remaining lease term (years)   3.44 
Weighted average discount rate   4%

 

The component of lease costs was as follows:

 

   Six Months
ended
June 30,
 
   2023 
Operating lease cost  $38,186 
Variable lease cost (1)   2,100 
Total lease costs  $40,286 

 

(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.

 

Supplemental disclosures of cash flow information related to leases were as follows:

 

    June 30,  
    2023  
Cash paid for operating lease liabilities   $     -  

 

Maturities of lease liabilities were as follows as of June 30, 2023:

 

   Operating 
   Leases 
2023  $37,800 
2024   75,915 
2025   79,380 
2026   72,765 
Thereafter   
-
 
Total undiscounted lease payments   265,850 
Less: Present value discount   (17,953)
Total Present value of lease liabilities  $247,907 

 

Operating Leases  Classification  June 30,
2023
 
Right-of-use assets  Right of use assets  $243,054 
         
Current lease liabilities  Current operating lease liabilities  $64,330 
Non-current lease liabilities  Long-term operating lease liabilities   183,577 
Total lease liabilities     $247,907 
v3.23.3
Equity
6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
EQUITY

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 3,000,000,000 shares of common stock, par value $0.001, and 50,000,000 shares of preferred stock, par value $0.001. 1,000 shares of preferred stock are designated as Series A Convertible Preferred Stock. No shares of Series A Preferred Stock are issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. The Company’s Certificate of Designation of Series B Preferred Stock was withdrawn by the Company on June 30, 2020. 1 share of preferred stock is designated Series C Preferred Stock and is issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. The Series C Preferred Stock has a stated value of $24,000 and entitles the holder to 51% of the total voting power of the Company’s stockholders. The Company may, in its sole discretion, redeem the Series C Preferred Stock at any time for a redemption price equal to the stated value. Upon payment of the redemption price by the Company, the Series C Preferred Stock will revert to the status of authorized but unissued preferred stock. 

 

On January 3, 2023, the Company completed the acquisition of the WonderLeaf assets for 222,223 shares of common stock valued at $50,000, or $0.225 per share.

 

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 6,666,667 shares of common stock are available for issuance. Awards under the plan may include options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance share awards, or other equity-based awards, each as defined under the 2021 Plan. Options awarded under the 2021 Plan are to have an exercise price of not less than 100% of the fair market value of the common stock on the grant date and a term of not more than ten years from the option grant date.

 

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 $8,000. The Company also granted to Mr. Garth, pursuant to the Company’s 2021 Equity Incentive Plan, 500,000 shares of restricted common stock valued at $675,000 ($1.35 per share), which vested one year from the date of grant. During the year ended December 31, 2022 the Company recorded $675,000 a prepaid expenses associated with the stock based compensation. During the years ended December 31, 2022 and 2021 the amount was amortized $643,562 and $31,438, respectively.

   

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 $10,000. The Company also granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity Incentive Plan, 1,000,000 shares of restricted common stock valued at $1,350,000 ($1.35 per share), which vested one year from the date of grant. During the year ended December 31, 2022 the Company recorded $1,350,000 of prepaid expenses associated with the stock based compensation. During the years ended December 31, 2022 and 2021 the amount was amortized $1,287,123 and $62,877, respectively. As of December 31. 2022 and 2021 the Company recorded a prepaid stock award of $0 and $1,287,123, respectively.

 

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 1,530,897 shares of common stock and warrants to purchase an aggregate of 1,530,897 shares of common stock, for an aggregate purchase price of $344,450. The warrants expired June 30, 2023 and had an exercise price of $2.25.

 

Effective August 1, 2022, the Company issued an aggregate of 266,667 shares of common stock to employees and consultants for services, including 155,556 shares that vest immediately, 55,556 shares that vested one year from the grant date, and 55,556 shares that will vest two years from the grant date. During the year ended December 31, 2022 the Company recorded an expense $1,104,928. For the three and six months ended June 30, 2023 the Company recorded an expense of $21,544 and $43,328, respectively. As of June 30, 2023 and December 31, 2022 the Company had a prepaid stock award of $38,785 and $80,113.

 

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 50,000,000 shares of common stock and warrants to purchase an aggregate of 12,500,000 shares of common stock, for an aggregate purchase price of $250,000 with offering costs of $10,000 for legal expenses. The warrants had a term of one year and an exercise price of $2.25.

 

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 1,530,887 shares of common stock and warrants to purchase an aggregate of 382,722 shares of common stock, for an aggregate purchase price of $344,450. The warrants expired June 30, 2023 and had an exercise price of $2.25.

 

The following table summarizes the warrant activities during the six months ended June 30, 2023:

 

   Number of
Warrants
   Weighted-
Average
Exercise
Price Per
Share
   Weighted-
Average
Remaining
Life
 
Outstanding at Deceme 31, 2022   438,723    5.03    0.36 
Granted   
-
    
-
    
-
 
Canceled or expired   (382,722)   0.95    
-
 
Outstanding at June 30, 2023   56,001   $23.94    0.88 years 
Exercisable at June 30, 2023   56,001   $23.94    0.88 years 
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 666,667 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. The options were valued at $900,000 using a Black-Scholes pricing model. During the three and six months ended June 30, 2023 and 2022 the Company recorded $61,621, $123,343, $135,54 and $271,188, respectively of expenses associated with the vesting of these stock 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 666,667 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. The options were valued at $900,000 using a Black-Scholes pricing model. During the three and six months ended June 30, 2023 and 2022 the Company recorded $61,621, $123,343, $135,54 and $271,188, respectively of expenses associated with the vesting of these stock options.

 

On December 14, 2021, the Company issued to a consultant options to purchase 22,222 shares of common stock at an exercise price of $1.35. The options vest over a period of 3 months and have a term of 10 years. The options were valued at $30,000 using a Black-Scholes pricing model. During the three and six months ended June 30, 2023 and 2022 the Company recorded $0, $0, $0 and $24,900, respectively of expenses associated with the vesting of these stock options.

 

The following table summarizes the option activities during the six months ended June 30, 2023:

 

   Number of
Options
   Weighted-
Average Exercise
Price Per
Share
   Weighted-
Average
Remaining
Life
Outstanding at December 31, 2022   1,023,842    2.67   8.95 years
Granted   
-
    
-
  
 
Canceled or expired   
-
    
-
    
Exercised   
-
    
-
    
Outstanding at June 30, 2023   1,023,842   $2.67   8.46 years
Exercisable at June 30, 2023   357,174   $2.67   8.44 years
Intrinsic value at June 30, 2023       $
-
    

 

The future expense as of June 30, 2023 is $327,949.

v3.23.3
Related Party Transactions
6 Months Ended
Jun. 30, 2023
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

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 $8,000. The Company also granted to Mr. Garth, pursuant to the Company’s 2021 Equity Incentive Plan, 500,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 333,333 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Garth is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

  

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 $10,000. The Company also granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity Incentive Plan, 1,000,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 666,667 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Feinsod is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

 

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 $469,954. On September 5, 2023 $849,500 of notes payable were converted into a 5% interest bearing note due June 30, 2025. In addition repayment of the note will be due in full out of the proceeds of a new debt or equity capital raise with net proceeds of more than $2,000,000. Amounts are being presented retroactively as June 30, 2023. As of June 30, 2023 and December 31, 2022 the amount owed Infinity Management, LLC is $885,454 and $415,500, respectively. (See Note 6.)

 

As of June 30, 2023 Michael Feinsod is owed a total of $135,000 of accrued salary and accounts payable of $111,393.

v3.23.3
Commitments and Contingencies
6 Months Ended
Jun. 30, 2023
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

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 $400,000 was terminated, and all amounts due and payable thereunder forgiven pursuant to a cancellation and satisfaction of debenture agreement entered into between the Company and the Debenture holder (the “Debt Cancellation Agreement”). 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, 40% of the operating profit generated from sale of the existing CBD inventory of the Company (the “Inventory Earn Out”), and on August 31, 2022, to make a final payment equal to an amount of $75,000 minus the total of the monthly payments made under the Inventory Earn Out. The inventory earn-out agreement was amended on November 11, 2022 (see Note 3) such that the final payment under the inventory earn out was increased to $90,000 (less any payments previously made) and was due February 28, 2023. During the six months ended June 30, 2023 the amount was paid.

 

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 $8,000. The Company also granted to Mr. Garth, pursuant to the Company’s 2021 Equity Incentive Plan, 500,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 333,333 shares of common stock at an exercise price of $2.70 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Garth is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

  

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 $10,000. The Company also granted to Mr. Feinsod, pursuant to the Company’s 2021 Equity Incentive Plan, 1,000,000 shares of restricted common stock, which vested one year from the date of grant, and ten-year options to purchase 666,667 shares of common stock at an exercise price of $0.06 (representing a 120% premium over the closing price of the common stock on December 13, 2021). One-third of the options will vest on each yearly anniversary of the date of grant. In the event that Mr. Feinsod is terminated without cause or resigns with good reason (each as defined in the employment agreement), he will be entitled to his monthly base salary for twelve months following such termination.

 

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 2,777,778 shares of common stock at the closing of the transaction. Closing of the purchase agreement was subject to receipt of certain governmental approvals and other customary closing conditions. The purchase agreement was terminated on November 18, 2022.

v3.23.3
Subsequent Events
6 Months Ended
Jun. 30, 2023
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

11. SUBSEQUENT EVENTS

 

Subsequent to June 30, 2023, Infinity Management, LLC, loaned the Company an additional $15,000.

 

On September 5, 2023 $849,500 of notes payable were converted into a 5% interest bearing note due June 30, 2025. The note contains provisions whereby it is intended to be subordinate to any senior secured debt the Company may incur while it is outstanding. In addition, repayment of the note will be due in full out of the proceeds of a new debt or equity capital raise with net proceeds of more than $2,000,000.

v3.23.3
Accounting Policies, by Policy (Policies)
6 Months Ended
Jun. 30, 2023
Nature of Operations, Significant Accounting Policies and Going Concern [Abstract]  
Nature of Business Operations

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 222,223 shares of common stock valued at $50,000, or $0.225 per share, and the change of control was approved by the Colorado Marijuana Enforcement Division. At the time of acquisition WonderLeaf had no operations or no employees and was not considered a business.

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

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

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 $402,440 for the six months ended June 30, 2023, and a working capital deficit of $620,213 and accumulated deficit of $24,789,333, as of June 30, 2023. This raises substantial doubt about our ability to continue as a going concern for a period of one year from the date of these financial statements.

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.

 

Use of Estimates

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

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 $250,000 at any single bank.

Fair Value of Financial Instruments

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

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 $0 and $0, respectively.

Inventory, Net

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 $42,364, and $0 net of reserves, respectively, which consisted of finished goods of $0 and $0, and raw materials of $42,364 and $0, respectively.

Property and equipment

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. The estimated useful lives for significant property and equipment categories are as follows:

Schedule of Estimated useful Lives of Property and Equipment

Furniture and Equipment   5 years 

 

License

License

License represents the Colorado license distributing cannabis. The license will be amortized over its useful life.

Revenue Recognition

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, two customers amounted to 35.5% and 12.7%, or 48.2% of accounts receivable. During the year ended December 31, 2022 no customer amounted to over 10% of the total accounts receivable. During the three months ended June 30, 2023 one customer amounted to 39.7% of sales for the period. During the six months ended June 30, 2023 one customer amounted to 51.6% of sales for the period. During the three and six months ended June 30, 2022 no individual customer amounted to over 10% of tota1 sales.

Deferred Revenue

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 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

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

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 56,001 warrants and 1,023,842 options is anti-dilutive for the three and six months ended June 30, 2023 as they are not in the money. The effect of 562.967 warrants and 1,023,842 options is anti-dilutive for the three and six months ended June 30, 2022 as they are not in the money. 

 

Reverse Stock Split

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

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

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.

v3.23.3
Nature of Operations, Significant Accounting Policies and Going Concern (Tables)
6 Months Ended
Jun. 30, 2023
Nature of Operations, Significant Accounting Policies and Going Concern [Abstract]  
Schedule of Estimated Useful Lives of Property and Equipment The estimated useful lives for significant property and equipment categories are as follows:
Furniture and Equipment   5 years 

 

v3.23.3
Furniture and Equipment (Tables)
6 Months Ended
Jun. 30, 2023
Furniture and Equipment [Abstract]  
Schedule of Machinery and Equipment Schedule of Machinery and Equipment
   June 30,
2023
   December 31,
2022
 
Furniture and equipment  $2,745   $2,745 
Machinery and Equipment   47,202    7,202 
Fixed assets, total   49,947    9,947 
Total: accumulated depreciation   (4,566)   
-
 
Fixed assets, net  $45,381   $9,947 
v3.23.3
Leases (Tables)
6 Months Ended
Jun. 30, 2023
Leases Table [Abstract]  
Schedule of Lease Term and Discount Rate Lease term and discount rate were as follows:
   June 30, 
   2023 
Weighted average remaining lease term (years)   3.44 
Weighted average discount rate   4%
Schedule of Lease Costs The component of lease costs was as follows:
   Six Months
ended
June 30,
 
   2023 
Operating lease cost  $38,186 
Variable lease cost (1)   2,100 
Total lease costs  $40,286 
(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.
Schedule of Supplemental Disclosures of Cash Flow Information Supplemental disclosures of cash flow information related to leases were as follows:
    June 30,  
    2023  
Cash paid for operating lease liabilities   $     -  
Schedule of Maturities of Lease Liabilities Maturities of lease liabilities were as follows as of June 30, 2023:
   Operating 
   Leases 
2023  $37,800 
2024   75,915 
2025   79,380 
2026   72,765 
Thereafter   
-
 
Total undiscounted lease payments   265,850 
Less: Present value discount   (17,953)
Total Present value of lease liabilities  $247,907 

 

Schedule of Supplemental Balance Sheet Information
Operating Leases  Classification  June 30,
2023
 
Right-of-use assets  Right of use assets  $243,054 
         
Current lease liabilities  Current operating lease liabilities  $64,330 
Non-current lease liabilities  Long-term operating lease liabilities   183,577 
Total lease liabilities     $247,907 
v3.23.3
Equity (Tables)
6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Schedule of Warrant Activities The following table summarizes the warrant activities during the six months ended June 30, 2023:
   Number of
Warrants
   Weighted-
Average
Exercise
Price Per
Share
   Weighted-
Average
Remaining
Life
 
Outstanding at Deceme 31, 2022   438,723    5.03    0.36 
Granted   
-
    
-
    
-
 
Canceled or expired   (382,722)   0.95    
-
 
Outstanding at June 30, 2023   56,001   $23.94    0.88 years 
Exercisable at June 30, 2023   56,001   $23.94    0.88 years 
Intrinsic value at June 30, 2023       $
-
      
Schedule of Option Activities The following table summarizes the option activities during the six months ended June 30, 2023:
   Number of
Options
   Weighted-
Average Exercise
Price Per
Share
   Weighted-
Average
Remaining
Life
Outstanding at December 31, 2022   1,023,842    2.67   8.95 years
Granted   
-
    
-
  
 
Canceled or expired   
-
    
-
    
Exercised   
-
    
-
    
Outstanding at June 30, 2023   1,023,842   $2.67   8.46 years
Exercisable at June 30, 2023   357,174   $2.67   8.44 years
Intrinsic value at June 30, 2023       $
-
    
v3.23.3
Nature of Operations, Significant Accounting Policies and Going Concern (Details)
3 Months Ended 6 Months Ended 12 Months Ended
Jan. 03, 2023
USD ($)
$ / shares
shares
Jun. 30, 2023
USD ($)
shares
Jun. 30, 2022
shares
Jun. 30, 2023
USD ($)
shares
Jun. 30, 2022
shares
Dec. 31, 2022
USD ($)
Nature of Operations, Significant Accounting Policies and Going Concern (Details) [Line Items]            
Shares of common stock (in Shares) | shares 222,223          
Common stock valued $ 50,000          
Common stock per share (in Dollars per share) | $ / shares $ 0.225          
Cash flows from operation       $ 402,440    
Working capital deficit       620,213    
Accumulated deficit   $ 24,789,333   24,789,333    
FDIC limits       250,000    
Allowance for doubtful accounts   0   0   $ 0
Inventory   42,364   42,364   0
Inventory finished goods   0   0   0
Raw material, net reserve   $ 42,364   $ 42,364   $ 0
Number of customer       1    
Accounts receivable, percentage           10.00%
Sales percentage       51.60%    
Total sales     10.00%   10.00%  
Option anti-dilutive shares (in Shares) | shares     562.967      
Note Warrant [Member]            
Nature of Operations, Significant Accounting Policies and Going Concern (Details) [Line Items]            
Shares warrants (in Shares) | shares       1,023,842 1,023,842  
Customer Two [Member]            
Nature of Operations, Significant Accounting Policies and Going Concern (Details) [Line Items]            
Number of customer       2    
Accounts receivable, percentage       35.50%    
Customer One [Member]            
Nature of Operations, Significant Accounting Policies and Going Concern (Details) [Line Items]            
Number of customer   1        
Sales percentage   39.70%        
Stock Option [Member]            
Nature of Operations, Significant Accounting Policies and Going Concern (Details) [Line Items]            
Option anti-dilutive shares (in Shares) | shares   56,001        
Accounts Receivable [Member]            
Nature of Operations, Significant Accounting Policies and Going Concern (Details) [Line Items]            
Accounts receivable, percentage       48.20%    
Accounts Receivable [Member] | Customer Two [Member]            
Nature of Operations, Significant Accounting Policies and Going Concern (Details) [Line Items]            
Accounts receivable, percentage       12.70%    
v3.23.3
Nature of Operations, Significant Accounting Policies and Going Concern (Details) - Schedule of Estimated Useful Lives of Property and Equipment
Jun. 30, 2023
Schedule of Estimated Useful Lives of Property and Equipment [Abstract]  
Furniture and Equipment 5 years
v3.23.3
Asset Purchase Agreement (Details) - USD ($)
6 Months Ended
Jun. 30, 2023
Jan. 03, 2023
Asset Purchase Agreement Details [Abstract]    
Common shares issued (in Shares) 222,223 222,223
Common stock value   $ 50,000
Per share value (in Dollars per share)   $ 0.225
Fair value $ 50,000  
Consideration paid 50,000  
Licenses amount 10,000  
Fixed assets acquired $ 40,000  
Common Stock [Member]    
Asset Purchase Agreement Details [Abstract]    
Common shares issued (in Shares) 222,223  
v3.23.3
Inventory Earn-Out (Details) - USD ($)
Nov. 11, 2022
Aug. 31, 2022
Inventory Earn-Out [Abstract]    
Operating profit, sale percentage   40.00%
Inventory earn out $ 90,000 $ 75,000
v3.23.3
Note Receivable (Details) - USD ($)
12 Months Ended
Oct. 25, 2022
Feb. 08, 2022
Jan. 19, 2022
Dec. 31, 2022
Note Receivable [Abstract]        
Promissory note $ 25,000 $ 10,000 $ 10,000 $ 45,931
Annual interest rate 5.00% 5.00% 5.00%  
Maturity date Feb. 08, 2023 Feb. 08, 2023 Jan. 18, 2023  
Accrued interest on notes receivable       $ 931
v3.23.3
Furniture and Equipment (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Furniture and Equipment [Line Items]        
Depreciation expense $ 2,781 $ 0 $ 4,566 $ 0
v3.23.3
Furniture and Equipment (Details) - Schedule of Machinery and Equipment - USD ($)
Jun. 30, 2023
Dec. 31, 2022
Schedule of Machinery and Equipment [Abstract]    
Fixed assets, total $ 49,947 $ 9,947
Total: accumulated depreciation (4,566)
Fixed assets, net 45,381 9,947
Furniture and equipment [Member]    
Schedule of Machinery and Equipment [Abstract]    
Fixed assets, total 2,745 2,745
Machinery and Equipment [Member]    
Schedule of Machinery and Equipment [Abstract]    
Fixed assets, total $ 47,202 $ 7,202
v3.23.3
Note Payable – Related Party (Details) - USD ($)
Sep. 05, 2023
Jun. 30, 2023
Dec. 31, 2022
Note Payable – Related Party (Details) [Line Items]      
Additional loan amount   $ 469,954  
Loan amount owed   $ 885,454 $ 415,500
Forecast [Member]      
Note Payable – Related Party (Details) [Line Items]      
Notes payable $ 849,500    
Percentage of interest bearing 5.00%    
Note due date Jun. 30, 2025    
Net proceed $ 2,000,000    
v3.23.3
Leases (Details)
6 Months Ended
Jun. 30, 2023
USD ($)
Leases [Abstract]  
Lease term 5 years
Renew for an additional term 5 years
Rent amount $ 6,000
Purchase of property $ 600,000
v3.23.3
Leases (Details) - Schedule of Lease Term and Discount Rate
Jun. 30, 2023
Schedule of Lease Term and Discount Rate [Abstract]  
Weighted average remaining lease term (years) 3 years 5 months 8 days
Weighted average discount rate 4.00%
v3.23.3
Leases (Details) - Schedule of Lease Costs
6 Months Ended
Jun. 30, 2023
USD ($)
Schedule of Lease Costs [Abstract]  
Operating lease cost $ 38,186
Variable lease cost 2,100 [1]
Total lease costs $ 40,286
[1] Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.
v3.23.3
Leases (Details) - Schedule of Supplemental Disclosures of Cash Flow Information
6 Months Ended
Jun. 30, 2023
USD ($)
Schedule of Supplemental Disclosures of Cash Flow Information [Abstract]  
Cash paid for operating lease liabilities
v3.23.3
Leases (Details) - Schedule of Maturities of Lease Liabilities
Jun. 30, 2023
USD ($)
Schedule of Maturities of Lease Liabilities [Abstract]  
2023 $ 37,800
2024 75,915
2025 79,380
2026 72,765
Thereafter
Total undiscounted lease payments 265,850
Less: Present value discount (17,953)
Total Present value of lease liabilities $ 247,907
v3.23.3
Leases (Details) - Schedule of Supplemental Balance Sheet Information - USD ($)
6 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Schedule of Supplemental Balance Sheet Information [Abstract]    
Right-of-use assets, Classification Right of use assets  
Right-of-use assets $ 243,054 $ 275,912
Current lease liabilities, Classification Current operating lease liabilities  
Current lease liabilities $ 64,330 64,330
Non-current lease liabilities, Classification Long-term operating lease liabilities  
Non-current lease liabilities $ 183,577 $ 216,039
Total lease liabilities $ 247,907  
v3.23.3
Equity (Details) - USD ($)
3 Months Ended 4 Months Ended 6 Months Ended 12 Months Ended
Jan. 03, 2023
Aug. 01, 2022
Dec. 14, 2021
Dec. 13, 2021
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2021
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2022
Dec. 31, 2021
Equity (Details) [Line Items]                      
Common stock, shares authorized (in Shares)         3,000,000,000     3,000,000,000   3,000,000,000  
Common stock, par value (in Dollars per share)         $ 0.001     $ 0.001   $ 0.001  
Preferred stock, shares authorized (in Shares)         50,000,000     50,000,000   50,000,000  
Preferred stock, par value (in Dollars per share)         $ 0.001     $ 0.001   $ 0.001  
Preferred stock, shares issued (in Shares)         1     1   1  
Preferred stock, shares outstanding (in Shares)         1     1   1  
Shares of common stock (in Shares) 222,223                    
Common stock valued $ 50,000                    
Common stock per share (in Dollars per share) $ 0.225                    
Vesting period     10 years                
Prepaid expenses                   $ 675,000  
Prepaid stock award               $ 38,785   $ 80,113  
Shares issued to investors (in Shares)             50,000,000     1,530,897  
Warrants to purchase (in Shares)                   1,530,897  
Warrant purchase price             $ 250,000     $ 344,450  
Warrants expired date                   Jun. 30, 2023  
Exercise price (in Dollars per share)             $ 2.25 $ 2.25      
Shares of common stock (in Shares)   266,667                  
Vest shares (in Shares)   155,556                  
Expenses                   $ 1,104,928  
Expense amount         $ 21,544     $ 43,328      
Shares sold to investors (in Shares)             12,500,000        
Legal expenses             $ 10,000        
Warrants term             1 year       1 year
Aggregate purchase price of common stock           $ 147,200     $ 344,450    
Option valued amount               900,000      
Stock based compensation expenses         61,621 13,554   123,343 271,188    
Options to purchase (in Shares)     22,222                
Options exercise price (in Dollars per share)     $ 1.35                
Options vest valued     $ 30,000                
Stock option expenses         $ 0 0   0 24,900    
Future expense               $ 327,949      
2021 Equity Incentive Plan [Member]                      
Equity (Details) [Line Items]                      
Sale of stock, number of shares issued (in Shares)     6,666,667                
Fair market value of common stock, percentage     100.00%                
Option grant date term     10 years                
Vest One [Member]                      
Equity (Details) [Line Items]                      
Vesting period   1 year                  
Vest shares (in Shares)   55,556                  
Vest Two [Member]                      
Equity (Details) [Line Items]                      
Vesting period   2 years                  
Vest shares (in Shares)   55,556                  
Warrants Expired [Member]                      
Equity (Details) [Line Items]                      
Warrant expire date                   Jun. 30, 2023  
Warrants [Member]                      
Equity (Details) [Line Items]                      
Shares issued to investors (in Shares)                   1,530,887  
Exercise price (in Dollars per share)               $ 2.25      
Shares sold to investors (in Shares)                   382,722  
Aggregate purchase price of common stock                   $ 344,450  
Series A Preferred Stock [Member]                      
Equity (Details) [Line Items]                      
Preferred stock, shares designated (in Shares)         1,000     1,000   1,000  
Preferred stock, shares issued (in Shares)                
Preferred stock, shares outstanding (in Shares)                
Series C Preferred Stock                      
Equity (Details) [Line Items]                      
Preferred stock, par value (in Dollars per share)         $ 0.001     $ 0.001   $ 0.001  
Preferred stock, shares issued (in Shares)         1     1   1  
Preferred stock, shares outstanding (in Shares)         1     1   1  
Preferred stock stated value         $ 24,000     $ 24,000      
Voting power of percentage               51.00%      
Michael Feinsod [Member]                      
Equity (Details) [Line Items]                      
Base monthly salary     $ 10,000                
Restricted Stock [Member] | Michael Feinsod [Member] | 2021 Equity Incentive Plan [Member]                      
Equity (Details) [Line Items]                      
Sale of stock, number of shares issued (in Shares)     1,000,000                
Common stock value     $ 1,350,000                
Common stock value, per share (in Dollars per share)     $ 1.35                
Vesting period     1 year                
Prepaid expenses     $ 1,350,000                
Base monthly salary     10,000                
Mr. Garth [Member]                      
Equity (Details) [Line Items]                      
Base monthly salary     $ 8,000                
Mr. Garth [Member] | 2021 Equity Incentive Plan [Member]                      
Equity (Details) [Line Items]                      
Vesting period     1 year                
Mr. Garth [Member] | Restricted Stock [Member] | 2021 Equity Incentive Plan [Member]                      
Equity (Details) [Line Items]                      
Sale of stock, number of shares issued (in Shares)     500,000                
Common stock value     $ 675,000                
Common stock value, per share (in Dollars per share)     $ 1.35                
Hunter Garth [Member]                      
Equity (Details) [Line Items]                      
Amortized amount             $ 31,438     $ 643,562 $ 31,438
Hunter Garth [Member] | Equity Option [Member]                      
Equity (Details) [Line Items]                      
Sale of stock, number of shares issued (in Shares)     666,667                
Common stock exercise price (in Dollars per share)     $ 2.7                
Premium over closing price, percentage     120.00%                
Options were valued               $ 900,000      
Stock based compensation expenses         $ 61,621 $ 13,554   123,343 $ 271,188    
Michael Feinsod [Member]                      
Equity (Details) [Line Items]                      
Amortized amount             $ 62,877     1,287,123 62,877
Prepaid stock award                   $ 0 $ 1,287,123
Michael Feinsod [Member] | 2021 Equity Incentive Plan [Member]                      
Equity (Details) [Line Items]                      
Sale of stock, number of shares issued (in Shares)     666,667                
Common stock exercise price (in Dollars per share)     $ 2.7                
Premium over closing price, percentage       120.00%              
Options were valued               $ 900,000      
v3.23.3
Equity (Details) - Schedule of Warrant Activities - Warrants [Member]
6 Months Ended
Jun. 30, 2023
$ / shares
shares
Class of Warrant or Right [Line Items]  
Number of Warrants, Outstanding, Beginning balance (in Shares) | shares 438,723
Weighted-Average Price Per Share, Outstanding, Beginning balance $ 5.03
Weighted- Average Remaining Life, Outstanding, Beginning balance 4 months 9 days
Number of Warrants, Granted (in Shares) | shares
Weighted-Average Price Per Share, Granted
Weighted- Average Remaining Life, Granted
Number of Warrants, Canceled or expired (in Shares) | shares (382,722)
Weighted-Average Price Per Share, Cancelled or expired $ 0.95
Weighted- Average Remaining Life, Cancelled or expired
Number of Warrants, Outstanding, Ending balance (in Shares) | shares 56,001
Weighted-Average Price Per Share, Outstanding, Ending balance $ 23.94
Weighted- Average Remaining Life, Outstanding, Ending balance 10 months 17 days
Number of Warrants, Exercisable (in Shares) | shares 56,001
Weighted-Average Price Per Share, Exercisable $ 23.94
Weighted- Average Remaining Life, Exercisable 10 months 17 days
Weighted-Average Price Per Share Intrinsic value
v3.23.3
Equity (Details) - Schedule of Option Activities - Options [Member]
6 Months Ended
Jun. 30, 2023
$ / shares
shares
Equity (Details) - Schedule of Option Activities [Line Items]  
Number of Options, Outstanding, Beginning balance (in Shares) | shares 1,023,842
Weighted-Average Price Per Share, Outstanding, Beginning balance $ 2.67
Weighted- Average Remaining Life, Outstanding, Beginning balance 8 years 11 months 12 days
Number of Options, Granted (in Shares) | shares
Weighted-Average Price Per Share, Granted
Weighted- Average Remaining Life, Granted
Number of Options, Canceled or expired (in Shares) | shares
Weighted-Average Price Per Share, Canceled or expired
Number of Options, Exercised (in Shares) | shares
Weighted-Average Price Per Share, Exercised
Number of Options, Outstanding, Ending balance (in Shares) | shares 1,023,842
Weighted-Average Price Per Share, Outstanding, Ending balance $ 2.67
Weighted- Average Remaining Life, Outstanding, Ending balance 8 years 5 months 15 days
Number of Options, Exercisable (in Shares) | shares 357,174
Weighted-Average Price Per Share, Exercisable $ 2.67
Weighted- Average Remaining Life, Exercisable 8 years 5 months 8 days
Weighted-Average Price Per Share Intrinsic value
v3.23.3
Related Party Transactions (Details) - USD ($)
6 Months Ended 12 Months Ended
Sep. 05, 2023
Dec. 14, 2021
Dec. 13, 2021
Jun. 30, 2023
Dec. 31, 2022
Related Party Transactions (Details) [Line Items]          
Exercise price (in Dollars per share)   $ 1.35      
Advance amount       $ 469,954  
Related Party Transaction, Amounts of Transaction       885,454 $ 415,500
Accrued salary       135,000  
Accounts payable       $ 111,393  
Forecast [Member]          
Related Party Transactions (Details) [Line Items]          
Notes payable $ 849,500        
Percentage of interest bearing 5.00%        
Note due date Jun. 30, 2025        
Net proceed $ 2,000,000        
Hunter Garth [Member]          
Related Party Transactions (Details) [Line Items]          
Salary   $ 8,000      
Mr. Garth [Member]          
Related Party Transactions (Details) [Line Items]          
Shares of common stock (in Shares)   333,333      
Exercise price (in Dollars per share)   $ 2.7      
Common stock percentage     120.00%    
Mr. Garth [Member] | 2021 Equity Incentive Plan [Member]          
Related Party Transactions (Details) [Line Items]          
Restricted common stock shares (in Shares)   500,000      
Vested term   1 year      
Michael Feinsod [Member]          
Related Party Transactions (Details) [Line Items]          
Salary   $ 10,000      
Mr. Feinsod [Member]          
Related Party Transactions (Details) [Line Items]          
Shares of common stock (in Shares)   666,667      
Exercise price (in Dollars per share)   $ 2.7      
Common stock percentage     120.00%    
Mr. Feinsod [Member] | 2021 Equity Incentive Plan [Member]          
Related Party Transactions (Details) [Line Items]          
Vested term   1 year      
Shares of common stock (in Shares)   1,000,000      
v3.23.3
Commitments and Contingencies (Details) - USD ($)
1 Months Ended
Aug. 11, 2022
Dec. 14, 2021
Dec. 13, 2021
Aug. 02, 2021
Aug. 31, 2022
Nov. 11, 2022
Commitments and Contingencies (Details) [Line Items]            
Principal amount       $ 400,000    
Operating profit, percentage         40.00%  
Payment inventory           $ 90,000
Executive officer salary   $ 8,000        
Common stock ,options to purchase   666,667        
Exercise price   $ 0.06        
Premium percentage     120.00%      
Equity Incentive Plan [Member]            
Commitments and Contingencies (Details) [Line Items]            
Restricted common stock   500,000        
Common Stock [Member]            
Commitments and Contingencies (Details) [Line Items]            
Exercise price   $ 2.7        
Premium percentage     120.00%      
Restricted Common Stock [Member]            
Commitments and Contingencies (Details) [Line Items]            
Restricted common stock   1,000,000        
Grant [Member]            
Commitments and Contingencies (Details) [Line Items]            
Common stock ,options to purchase   333,333        
Chief Executive Officer [Member]            
Commitments and Contingencies (Details) [Line Items]            
Executive officer salary   $ 10,000        
Inventory Earn Out [Member]            
Commitments and Contingencies (Details) [Line Items]            
Final payment of inventory earn out         $ 75,000  
Osiris, LLC [Member]            
Commitments and Contingencies (Details) [Line Items]            
Common stock, shares issued 2,777,778          
v3.23.3
Subsequent Events (Details) - USD ($)
Sep. 05, 2023
Jun. 30, 2023
Subsequent Events [Line Items]    
Additional loaned   $ 15,000
Forecast [Member]    
Subsequent Events [Line Items]    
Notes payable $ 849,500  
Percentage of interest bearing 5.00%  
Note due date Jun. 30, 2025  
Net proceed $ 2,000,000  

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