These unaudited consolidated financial statements
have been prepared by Bespoke Extracts, Inc. (the “Company”, formerly known as DiMi Telematics International, Inc.) ,
pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited consolidated financial statements
and the notes attached hereto should be read in conjunction with the financial statements and notes included in the Company’s
annual report on Form 10-K for the fiscal year ended August 31, 2016 as filed with the Securities and Exchange Commission (the
“SEC”) on December 16, 2016, and amended on February 8, 2017. In the opinion of the Company, all adjustments, including
normal recurring adjustments necessary to present fairly the financial position of the Company, as of February 28, 2017 and August
31, 2016 and the results of its operations and cash flows for the periods ended February 28, 2017 and February 29, 2016 have been
included. The results of operations for the interim period are not necessarily indicative of the results for the full year.
ITEM
1. FINANCIAL STATEMENTS
Bespoke Extracts, Inc.
f/k/a Dimi Telematics International, Inc.
Consolidated
Balance Sheets
(Unaudited)
|
|
February 28,
|
|
|
August
31,
|
|
|
|
2017
|
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
$
|
6,186
|
|
|
$
|
431
|
|
Total
current assets
|
|
|
6,186
|
|
|
|
431
|
|
|
|
|
|
|
|
|
|
|
Domain
names
|
|
|
50,185
|
|
|
|
-
|
|
Intellectual
property, net of amortization of $1,971 and $657, respectively
|
|
|
-
|
|
|
|
1,314
|
|
Total
assets
|
|
$
|
56,371
|
|
|
$
|
1,745
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
89,482
|
|
|
$
|
69,426
|
|
Accounts
payable - related party
|
|
|
-
|
|
|
|
14,609
|
|
Note
payable - related party
|
|
|
146,000
|
|
|
|
31,500
|
|
Total
current liabilities
|
|
|
235,482
|
|
|
|
115,535
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Deficit
|
|
|
|
|
|
|
|
|
Series
A Convertible Prefered Stock, $0.001 par value, 50,000,000 authorized shares; no shares issued and outstanding
as of February 28, 2017 and August 31, 2016, respectively
|
|
|
-
|
|
|
|
-
|
|
Common
stock, $0.001 par value: 800,000,000 authorized; 2,923,907 and 2,923,907 shares issued and outstanding as of February 28,
2017 and August 31, 2016, respectively
|
|
|
2,923
|
|
|
|
2,923
|
|
Common
stock payable - 200,000 shares
|
|
|
30,000
|
|
|
|
-
|
|
Additional
paid-in capital
|
|
|
2,310,876
|
|
|
|
2,310,876
|
|
Accumulated
deficit
|
|
|
(2,522,910
|
)
|
|
|
(2,427,589
|
)
|
Total
stockholders' deficit
|
|
|
(179,111
|
)
|
|
|
(113,790
|
)
|
Total
liability and stockholders' deficit
|
|
$
|
56,371
|
|
|
$
|
1,745
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
Bespoke Extracts, Inc
f/k/a Dimi Telematics International, Inc.
Consolidated
Statements of Operations
(Unaudited)
|
|
For
the three months ended
|
|
|
For
the six months ended
|
|
|
|
February 28,
|
|
|
February 29,
|
|
|
February 28,
|
|
|
February 29,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
$
|
5,812
|
|
|
$
|
3,926
|
|
|
$
|
14,264
|
|
|
$
|
10,793
|
|
Payroll
expense
|
|
|
21,123
|
|
|
|
22,295
|
|
|
|
45,686
|
|
|
|
41,512
|
|
Professional
fees
|
|
|
5,000
|
|
|
|
47,692
|
|
|
|
13,613
|
|
|
|
69,692
|
|
Consulting
|
|
|
-
|
|
|
|
106,125
|
|
|
|
-
|
|
|
|
117,909
|
|
Brand
development
|
|
|
10,000
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
-
|
|
Formula
development
|
|
|
7,500
|
|
|
|
-
|
|
|
|
7,500
|
|
|
|
-
|
|
Impairment
of intellectual property
|
|
|
1,248
|
|
|
|
-
|
|
|
|
1,248
|
|
|
|
-
|
|
Amortization
expense
|
|
|
33
|
|
|
|
33
|
|
|
|
66
|
|
|
|
66
|
|
Total
operating expenses
|
|
|
50,716
|
|
|
|
180,071
|
|
|
|
92,377
|
|
|
|
239,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(50,716
|
)
|
|
|
(180,071
|
)
|
|
|
(92,377
|
)
|
|
|
(239,972
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(2,104
|
)
|
|
|
-
|
|
|
|
(2,944
|
)
|
|
|
-
|
|
Total
other expense
|
|
|
(2,104
|
)
|
|
|
-
|
|
|
|
(2,944
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income tax
|
|
|
(52,820
|
)
|
|
|
(180,071
|
)
|
|
|
(95,321
|
)
|
|
|
(239,972
|
)
|
Provision
for income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net
Loss
|
|
$
|
(52,820
|
)
|
|
$
|
(180,071
|
)
|
|
$
|
(95,321
|
)
|
|
$
|
(239,972
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share: basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic and diluted
|
|
|
2,923,907
|
|
|
|
2,923,907
|
|
|
|
2,923,907
|
|
|
|
2,784,756
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
Bespoke Extracts, Inc
f/k/a Dimi Telematics International, Inc.
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
For
the six months ended
|
|
|
|
February 28
|
|
|
February 29
|
|
|
|
2017
|
|
|
2016
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(95,321
|
)
|
|
$
|
(239,972
|
)
|
Adjustments
to reconcile net loss to net cash
used in operating activities
|
|
|
|
|
|
|
|
|
Amortization expense
|
|
|
66
|
|
|
|
66
|
|
Impairment of intellectual
propery
|
|
|
1,248
|
|
|
|
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
16,794
|
|
|
|
(7,314
|
)
|
Accounts payable -
related party
|
|
|
(14,609
|
)
|
|
|
-
|
|
Accrued interest expense
|
|
|
2,944
|
|
|
|
-
|
|
Prepaid expense
|
|
|
-
|
|
|
|
95,375
|
|
Net
Cash used in operating activities
|
|
|
(88,878
|
)
|
|
|
(151,845
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
Cash paid for domain
names
|
|
|
(19,867
|
)
|
|
|
-
|
|
Net
cash used in investing activities
|
|
|
(19,867
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from financing activities
|
|
|
|
|
|
|
|
|
Payment of note payable
- related party
|
|
|
(5,500
|
)
|
|
|
-
|
|
Proceeds from note
payable - related party
|
|
|
120,000
|
|
|
|
-
|
|
Net
cash provided by financing activities
|
|
|
114,500
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
|
5,755
|
|
|
|
(151,845
|
)
|
Cash and cash equivalents
at beginning of period
|
|
|
431
|
|
|
|
185,869
|
|
Cash and cash equivalents
at end of period
|
|
$
|
6,186
|
|
|
$
|
34,024
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid during period
for
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for income
taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Noncash investing and
financing activities:
|
|
|
|
|
|
|
|
|
Accrual for acquisition
of domain names
|
|
$
|
318
|
|
|
$
|
-
|
|
Common stock payable
issued for acquisition of domain names
|
|
|
30,000
|
|
|
|
-
|
|
Common stock issued
for stock payable
|
|
|
-
|
|
|
|
210,000
|
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Bespoke Extracts, Inc.
(formerly DiMi Telematics International,
Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 —BASIS OF PRESENTATION
The accompanying unaudited consolidated financial
statements of Bespoke Extracts, Inc. (formerly known as DiMi Telematics, Inc.), a Nevada corporation (the “Company”),
have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for complete consolidated financial statements. These
unaudited consolidated financial statements and related notes should be read in conjunction with the Company's annual report on
Form 10-K for the fiscal year ended August 31, 2016. In the opinion of management, these unaudited consolidated financial statements
reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position
of the Company as of February 28, 2017, and the results of operations and cash flows for the three and six months ended February
28, 2017 and February 29, 2016. The results of operations for the three and six months ended February 28, 2017 are not necessarily
indicative of the results that may be expected for the entire fiscal year.
Certain prior period amounts have been reclassified
to conform to current period presentation.
Going Concern
The accompanying financial statements have
been prepared assuming a continuation of the Company as a going concern. However, the Company has reported a net loss of $95,321
for the six months ended February 28, 2017 and had a working capital deficit of $229,296 as of February 28, 2017. These
conditions raise substantial doubt about our ability to continue as a going concern.
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.
2. EQUITY
Common Stock
The Company was formed in the state of Nevada
on April 13, 2006. The Company has authorized capital of 800,000,000 shares of common stock with a par value of $0.001,
and 50,000,000 shares of preferred stock with a par value of $0.001.
On October 1, 2015, the Board of Directors
and a majority of the Company’s shareholders approved an amendment of the Company’s Articles of Incorporation to effect
a one (1) for three (3) reverse stock split of the Company’s outstanding common stock (the “Reverse Split”).
The Reverse Split became effective on December 1, 2015. As a result of the Reverse Split, each three (3) shares of common stock
issued and outstanding prior to the Reverse Split have been converted into one (1) share of common stock. The effect of the Reverse
Split has been applied retroactively throughout this quarterly report.
On, July 8, 2015, the Company authorized the
issuance of 250,000 shares of common stock for consulting fees in the amount of $105,000. The shares were issued on October 30,
2015. $114,625 was expensed under these stock awards during the year ended August 31, 2015 and the remaining $95,375 was expensed
during the six months ended February 29, 2016.
On October 30, 2015, the Company issued the
500,000 shares of common stock granted on July 8, 2015 to settle the common stock payable of $210,000.
On March 10, 2017, the Company changed its
name to Bespoke Extracts, Inc. (formerly known as DiMi Telematics, Inc.).
3. ASSET PURCHASE AGREEMENT
On February 21, 2017, the Company, purchased all right, title, interest
and goodwill in or associated with certain the domain names set forth in an asset purchase agreement for a total approximately
$20,000 and 200,000 shares of the Company’s common stock valued at $30,000. As of February 28, 2017, the stock had not been
issued and a total of $30,000 common stock payable is recorded.
4. INTELLECTUAL PROPERY
The Company executed an Asset Purchase Agreement
on August 28, 2011 which included the acquisition of various types of intellectual property. The Company
elected
to suspend further investment and working capital on developing The Company’s technology and business prospects,
The
Company has recognized a loss on impairment of intellectual property in the amount of $1,248 as of February 28, 2017.
5. NOTE PAYABLE – RELATED PARTY
On April 27, 2016, the Company issued our CEO
a 7% unsecured promissory note in the amount of $2,500 which matured six months from the date of issuance. On July 5, 2016, the
Company issued our CEO a 7% unsecured note in the amount of $3,000 which matured six months from date of issuance. On November
17, 2016, the Company repaid the principal amount of the notes, or $5,500.
The changes in notes payable to related party
consisted of the following during the six months ended February 28, 2017 and the year ended August 31, 2016:
|
|
February 28,
2017
|
|
|
August 31, 2016
|
|
Notes payable – related party at beginning of period
|
|
$
|
5,500
|
|
|
$
|
-
|
|
Payments on notes payable – related party
|
|
|
(5,500
|
)
|
|
|
-
|
|
Borrowings on notes payable – related party
|
|
|
-
|
|
|
|
5,500
|
|
Convertible debenture – related party at end of period
|
|
$
|
-
|
|
|
$
|
5,500
|
|
On May 17, 2016, the Company issued to Lyle
Hauser, the Company’s largest shareholder, a 7% unsecured promissory note in the amount of $10,000 which matured six months
from the date of issuance. On August 15, 2016, the Company issued a significant shareholder a 7% unsecured promissory note in the
amount of $16,000 which matures six months from the date of issuance. On October 27, 2016, the Company issued a significant shareholder
a 7% unsecured promissory note in the amount of $10,000 which matures six months from the date of issuance. The preceding notes
have matured and remain unpaid at the quarter ended February 28, 2017. On November 14, 2016, the Company issued a significant shareholder
7% unsecured promissory note in the amount of $80,000 which matures six months from the date of issuance. On February 17, 2017,
the Company issued a significant shareholder 7% unsecured promissory note in the amount of $30,000 which matures six months from
the date of issuance.
The changes in notes payable to related party
consisted of the following during the six months ended February 28, 2017 and the year ended August 31, 2016:
|
|
February 28,
2017
|
|
|
August 31, 2016
|
|
Notes payable – related party at beginning of period
|
|
$
|
26,000
|
|
|
$
|
-
|
|
Payments on notes payable – related party
|
|
|
-
|
|
|
|
-
|
|
Borrowings on notes payable – related party
|
|
|
120,000
|
|
|
|
26,000
|
|
Convertible debenture – related party at end of period
|
|
$
|
146,000
|
|
|
$
|
26,000
|
|
6. RELATED PARTY TRANSACTIONS
We currently lease approximately 500 square
feet of general office space at 290 Lenox Avenue, New York, NY 10027 from our Executive Vice President – Business Development.
On April 27, 2016, the Company issued our CEO
two 7% unsecured promissory note in the aggregate amount of $5,500 which notes matured six months from the date of issuance Both
notes have been paid off and the remaining principal amount is $0.
On May 17, 2016, the Company issued to Lyle
Hauser, the Company’s largest shareholder, a 7% unsecured promissory note in the amount of $10,000 which matured six months
from the date of issuance. The note has matured and remain unpaid at the quarter ended February 28, 2017.
On August 15, 2016, the Company issued a significant
shareholder a 7% unsecured promissory note in the amount of $16,000 which matures six months from the date of issuance. The notes
hat matured and remain unpaid at the quarter ended February 28, 2017.
As of August 31, 2016, the Company had an outstanding
payable of $14,609 to the CEO. The payable is unsecured, due on demand and bears no interest. As of February 28, 2017 the accounts
payable – related party has been paid and currently has a balance of $0.
On October 27, 2016 the Company issued a significant
shareholder a 7% unsecured promissory notes totaling $10,000 which matures six months from the date of issuance. The notes hat
matured and remain unpaid at the quarter ended February 28, 2017
One November 14, 2016 the Company issued a
significant shareholder a 7% unsecured promissory note totaling $80,000 which matures six months from the date of issuance.
On February 17, 2017, the Company issued a
significant shareholder a 7% unsecured promissory note in the amount of $30,000 which matures six months from the date of issuance.
7. SUBSEQUENT EVENTS
Effective
March 10, 2017,
the Company
changed its legal corporate name to “Bespoke Extracts,
Inc.” from “
DiMi Telematics International, Inc.
” The Company effectuated
the name change through a short-form merger pursuant to Section 92A of the Nevada Revised Statutes where a subsidiary formed
solely for the purpose of the name change was merged with and into the Company, with the Company as the surviving corporation in
the merger. The merger had the effect of amending the Company’s Articles of Incorporation to reflect its new legal name.
Effective March 14, 2017, Roberto Fata resigned
as a member of the Company’s Board of Directors (the “Board”). Mr. Fata’s resignation was not the result
of any disagreement with the Company, any matter related to the Company’s operations, policies or practices, the Company’s
management or the Board. Mr. Fata remains Executive Vice President – Business Development.
Effective March 14, 2017, the Company entered
into a two year employment agreement with Barry Tenzer to continue as CEO of the Company. In connection with the employment agreement
the Company issued Mr. Tenzer a warrant to purchase up to 20,000,000 share of common stock at a per share price of $0.0001. The
warrant was exercised in full on March 28, 2017. The common stock underlying the warrant were issued on April 6, 2017.
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 Quarterly 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 Quarterly Report to conform forward-looking statements
to actual results. 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 revenues or profits;
|
|
|
|
|
●
|
Inadequate
capital to continue business;
|
|
|
|
|
●
|
Volatility
or decline of our stock price;
|
|
|
|
|
●
|
Potential
fluctuation in quarterly results;
|
|
|
|
|
●
|
Rapid
and significant changes in markets;
|
|
|
|
|
●
|
Litigation
with or legal claims and allegations by outside parties; 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
Quarterly Report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual
results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result
of various factors.
Overview
Cine-Source Entertainment, Inc. (the “Old
Corporation”) a Colorado corporation, was formed on July 29, 1988. Pursuant to a Plan of Merger dated February 24, 2004,
the Old Corporation filed Articles and Certificate of Merger with the Secretary of State of the State of Colorado merging the Old
Corporation into Cine-Source Entertainment, Inc. (the “Surviving Corporation”), a Colorado corporation. A previous
controlling stockholder group of the Old Corporation arranged the merger for business reasons that did not materialize. On April
26, 2004, the Surviving Corporation effectuated a 1 for 200 reverse stock split. The name of the Surviving Corporation was changed
to First Quantum Ventures, Inc., on April 27, 2004. On April 13, 2006, the Surviving Corporation formed a wholly owned subsidiary,
a Nevada corporation named First Quantum Ventures, Inc., and on May 5, 2006 merged the Surviving Corporation with and into this
subsidiary, referred to herein as DTII.
The Share Exchange qualified as a transaction
exempt from registration or qualification under the Securities Act of 1933, as amended (the “Securities Act”), and
under the applicable securities laws of each jurisdiction where any of the stockholders reside.
On March 15, 2012, the Company changed its
name to DiMi Telematics, International, Inc.
On April
16, 2012, the Company issued a 1 for 1 stock dividend to current stockholders whereby the Company issued an additional 33,959,744
shares of common stock. On May 16, 2012, the Company issued an additional 1 for 1 stock dividend to current stockholders
whereby an additional 71,286,155 shares were issued. The dividends were also applied to outstanding warrants. The Company
has reflected the dividends as splits, which have been retroactively reflected in the financial statements
.
In early
2017, our management team elected to suspend further investment and working capital on developing the Company’s technology
and business prospects, turning its attention to prevailing new business opportunities in other high growth industries; namely
the hemp-derived cannabidiol (“CBD”) market.
On March 10, 2017, the Company changed its name to Bespoke Extracts,
Inc. (formerly known as DiMi Telematics, Inc.) to align the Company’s corporate identity with its new business plan.
The Company
is now focused on bringing to market a proprietary line of premium, quality, all natural CBD products in the forms of tinctures,
capsules, drops and edibles for the nutraceutical and veterinary markets.
Produced using pure, all natural, zero-THC phytocannabinoid-rich
(“PCR”) hemp-derived isolate, our products will be marketed as dietary supplements through wholesale channels and direct-to-consumers
via our retail ecommerce store found at www.bespokeextracts.com.
Plan
of Operations
To
be launched in April 2017, our introductory retail line of premium CBD extracts will come in the form of tinctures and include:
|
●
|
All-Natural,
Pure Hemp-Derived CBD Extract with raw Mānuka Honey – available in 1 oz. and
will retail at $129.
|
|
|
|
|
●
|
All-Natural,
Pure Hemp-Derived CBD Extract for Pets with bacon flavoring – available in 1 oz.
and will retail at $69.
|
Generally
speaking, most CBD products for oral consumption available on the market have an earthy, bitter taste that some observers suggest
is reminiscent of chlorophyll. The centerpiece of the Company’s introductory line of great-tasting tinctures is our formulation
which infuses pure, raw, all-natural, un-pasteurized Mānuka honey into our hemp-derived CBD extract.
Our Mānuka
honey, imported directly from New Zealand, is one of the most unique and beneficial forms of honey in the world and carries the
industry’s highest Unique Manuka Factor (UMF
®
) 16+ rating, distinguishing it as superior high grade Mānuka.
Legislated by the UMF Honey Association (
http://www.umf.org.nz/
), the UMF rating system
provides for a quality trademark and grading system identifying natural unadulterated Mānuka honey that has a special unique
natural property found only in some strains of Mānuka honey. High grade (10+) Mānuka honey contains a high concentration
of methylglyoxal, giving the honey its superior antibiotic quality. Produced by bees that pollinate the native Mānuka bush,
general Mānuka honey uses range from healing sore throats and digestive illnesses to curing Staph infections and gingivitis.
In 1982, researchers at the New Zealand University
of Waikato discovered that
Mānuka honey
has
a considerably higher level of enzymes than regular honey. (http://www.waikato.ac.nz/news/archive.shtml?article=1087). These enzymes
create a natural hydrogen peroxide that works as an antibacterial. The Company’s tinctures are infused with superior high
grade, raw
Mānuka
honey, further enhancing the potential health benefits offered
by the CBD isolate we use, and delivering a delicious tasting experience for consumers.
Planned
Expansion of Product Line
By the fall of 2017, presuming market conditions
are favorable, we expect to expand our retail product offerings to include new flavored options of tinctures and drops, as well
as introducing our formulations in the form of capsules, sprays and edibles, such as gummies and chewable candies.
Commitment
to Excellence in Supply, Manufacturing and Logistics
A key
differentiator of our finished products is the superb quality of ingredients we source from the industry’s leading suppliers,
each of whom we have carefully vetted and qualified.
It is
important to note that the CBD oil industry has attracted a whole host of ‘snake oil-like’ salesmen who are intent
on capitalizing on rising consumer demand for CBD products; however their primary motive is merely profit, not quality, much less
safety. In fact, in late February 2015, the U.S. Federal Drug Administration (“FDA”) issued several warning letters
to companies who claimed that their products contained CBD, but following testing of these products by the FDA were found to have
no CBD whatsoever, much less high quality, pure and/or organic CBD.
All of the Company’s flavor-infused tinctures
and drops are created using our formulations with pure, all natural CBD isolate sourced from a leading supplier which sends each
batch of CBD isolate it produces to a third party for purity and safety verification prior to shipping to our manufacturer in Colorado.
CBD isolate contains no THC, so products made using this product are not psychotropic and do not produce the “high”
associated with THC products. Committed to sustainable agriculture, Isodiol sources its hemp-derived CBD from only non-GMO crops
grown without pesticides, herbicides or insecticides. Moreover, its purification plant and processes are International Organization
for Standardization (“ISO”) 9001 certified and Good Manufacturing Practice (“GMP”) certified, reflecting
our shared commitment to following only industry-best standards.
Raw
Mānuka
honey used in our products is imported directly from
Graham
Cammells Honey located on the north island of New Zealand which has been supplying quality bee products since 1974.
Fulfillment
of orders from our online customers is managed by a third-party logistics partner also based in the state of Colorado.
Development
Status and Go-to-Market Strategy
Few
will argue that the traditional retail environment is currently experiencing notable economic instability due largely to the global
shift in consumer purchasing behaviors – with online shopping/ecommerce sites rapidly overtaking brick-and-mortar stores
as consumer preferred shopping venues. In view of this retailing reality, we have adopted a Direct-to-Consumer sales model that
will be anchored by a high impact, visually stunning, content-rich ecommerce website whereby we will educate and sell and ship
our CBD products directly to consumers.
Our
marketing initiatives will include the use of social marketing, direct response marketing, inbound marketing, email marketing,
Search Engine Optimization and content marketing, among other proven strategies. We will also explore utilizing coupon and deal
sites to drive traffic to our website and participate in select industry conferences to promote our brand and build greater awareness
of our products among prospective business partners and consumers.
Employees
As of
February 28, 2017, the Company employed no full time and no part time employees other than its Chief Executive Officer.
Results
of Operation for the Three Months Ended February 28, 2017 and FEBRUARY 29, 2016.
Selling,
General and Administrative Expenses
Selling, general and administrative expenses
for the three months ended February 28, 2017 and February 29, 2016 totaled $5,812 and $3,926, respectively. Payroll expense amounted
to $21,123 and $22,295 for the three months ended February 28, 2017 and February 29, 2016, respectively. Brand Development amounted
to $10,000 and $0 for the three months ended February 28, 2017 and February 29, 2016. Formula development amounted to $7,500 and
$0 for the three months ended February 28, 2017 and February 29, 2016. Brand and Formula development is in relation to the change
in business operations to the CBD market. Impairment of intellectual property amounted to $1,248 and $0 for the three months ended
February 28, 2017 and February 29, 2016.
Amortization
Expense
Amortization
expense for the three months ended February 28, 2017 and February 29, 2016 totaled $33 and $33, respectively. Amortization expense
is the expensing of intellectual property and the iPhone application.
Interest
Expense
Interest
expense on promissory notes for the three months ended February 28, 2017 and February 29, 2016, was $2,104 and $0, respectively. The
Company entered into three unsecured promissory notes with related parties. The notes have a 7% interest rate and mature
6 months from the date of issuance. See Note 2.
Net
Loss
For
the reasons stated above, our net loss for the three months ended February 28, 2017 totaled $52,820 or ($0.02) per share, a decrease
of $127,251 compared to a net loss for the three months ended February 29, 2016 of $180,071, or ($0.06) per share. The majority
of the additional loss is due to a decrease in consulting and professional fees.
Results
of Operation for the Six Months Ended February 28, 2017 and fEBRUARY 29, 2016.
Selling,
General and Administrative Expenses
Selling, general and administrative expenses for the six months ended February 28, 2017 and February 29, 2016
totaled $14,264 and $10,793, respectively. Payroll expense amounted to $45,686 and $41,512 for the six months ended February 28,
2017 and February 29, 2016, respectively. Brand Development amounted to $10,000 and $0 for the six months ended February 28, 2017
and February 29, 2016. Formula development amounted to $7,500 and $0 for the six months ended February 28, 2017 and February 29,
2016. Brand and Formula development is in relation to the change in business operations.to the CBD market. Impairment of intellectual
property amounted to $1,248 and $0 for the six months ended February 28, 2017 and February 29, 2016
Amortization
Expense
Amortization
expense for the six months ended February 28, 2017 and February 29, 2016 totaled $66 and $66, respectively. Amortization expense
is the expensing of intellectual property and the iPhone application.
Interest
Expense
Interest
expense on promissory notes for the six months ended February 28, 2017 and February 29, 2016, was $2,944 and $0, respectively. The
Company entered into three unsecured promissory notes with related parties. The notes have a 7% interest rate and mature
6 months from the date of issuance. See Note 2.
Net
Loss
For
the reasons stated above, our net loss for the six months ended February 28, 2017 totaled $95,321 or ($0.03) per share, a decrease
of $144,651 compared to a net loss for the six months ended February 29, 2016 of $239,972, or ($0.09) per share. The majority
of the additional loss is due to a decrease in consulting and professional fees.
LIQUIDITY
AND CAPITAL RESOURCES
As
of February 28, 2017, we had cash and cash equivalents of $6,186. Net cash used in operating activities for the six months ended
February 28, 2017 was approximately $88,878 our current liabilities as of February 28, 2017 totaled $235,482 consisting of accounts
payable and accrued liabilities of $89,482 and note payables of $146,000. We have net negative working capital of $229,296 as
of February 28, 2017.
The
accompanying financial statements have been prepared assuming a continuation of the Company as a going concern. The Company has
reported a net loss of $95,321 for the six months ended February 28, 2017 and had an accumulated deficit of $2,522,910 as of February
28, 2017. These conditions raise significant doubt about our ability to continue as a going concern.
We
have not generated positive cash flows from operating activities. The primary source of capital has been from the sale of equity
securities. Our primary use of capital has been for professional fees and general and administrative costs. Our working capital
requirements are expected to increase in line with the growth of our business.
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.