BESPOKE EXTRACTS, INC. 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
? 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;
? Insufficient revenues to cover operating costs; and
? The effect of the COVID-19 pandemic on our operations, including as it
may limit access to our facilities, customers, management, and
professional advisors, and negatively impact demand for our products,
and ability to raise capital on acceptable terms or at all.
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this report.
Overview
We sell a proprietary line of specially formulated, premium quality, hemp-derived CBD products direct to consumers through our ecommerce store, found at www.bespokeextracts.com. Information on our website is not part of this report.
Under our expanded operating plan, we intend to methodically expand our product offerings to include new flavors, including manuka honey; and introduce additional form factors for our CBD formulations, including lotions and balms, depending on customer feedback and evolving consumer demand.
In
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On
On
Results of Operations for the three months ended
Sales
Sales during the three months ended
Operating Expenses
Selling, general and administrative expenses for the three months
Other Income
During the three months ended
Net Loss
For the reasons stated above, our net loss for the three months ended
Results of Operations for the nine months ended
Sales
Sales during the nine months ended
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Operating Expenses
Selling, general and administrative expenses for the nine months
Other Income
During the nine months ended
Net Loss
For the reasons stated above, our net loss for the nine months ended
Investing Activities
During the nine months ended
Liquidity and Capital Resources
As of
During the nine months ended
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 nine months
ended
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.
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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
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described below and in Note 1 to our financial statements appearing elsewhere in this report.
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.
Inventory
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.
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.
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 FASB ASC 718, Compensation-Stock Compensation, including related amendments and interpretations.
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