Annual Report for Fiscal Year Ending December 31, 2024 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our financial statements and the related notes included in Item 8 of this Form 10-K. This discussion contains forward-looking statements. Please see the explanatory note concerning "Forward-Looking Statements" in Part I of this Annual Report on Form 10-K and Item 1A. Risk Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

Overview

We produce and sell a line of high quality pre-rolled marijuana joints. We also provide processing services associated with the production of joints for third parties.

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. As of June 2023, the Company no longer operates within the CBD space.

On December 2, 2021, Bespoke Colorado, 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 $225,000, to be paid in shares of common stock of the Company (including 55,555 shares issuable, and to be held in escrow, upon execution of the WonderLeaf Purchase Agreement, and an additional $150,000 of common stock that will be valued based on the volume weighted average price of the common stock, subject to a floor of $0.90 per share and a ceiling of $1.80 per share), provided that, the purchase price for the inventory will be 90% of the wholesale value of the regulated marijuana portion of the inventory and the packaging corresponding thereto set forth on the inventory accounting statement to be prepared pursuant to the Wonderleaf Purchase Agreement. The transaction closed on January 3, 2023.

		For the Years Ended December 31,
		2024				2023
Sales		$	1,117,452			$	785,453
Cost of products sold			664,517				442,289
Gross Profit			452,935				343,164
Operating expenses:
Selling, general and administrative expenses			1,279,361				1,586,666
Professional fees			97,532				192,476
Consulting			70,670				36,000
Total operating expenses			1,447,563				1,815,142
Loss from operations			(994,628	)			(1,471,978	)
Other income / (expenses)
Gain on rent forgiveness			17,226
Interest expense			(60,073	)			(10,865	)
Total other (expense) / income			(42,847	)			(10,865	)
Loss before income tax			(1,037,475	)			(1,482,843	)
Provision for income tax			-				-
Net Loss		$	(1,037,475	)		$	(1,482,843	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted			10,528,083				10,168,552
NET LOSS PER COMMON SHARE OUTSTANDING
Basic and Diluted		$	(0.10	)		$	(0.15	)

Results of Operations for the years ended December 31, 2024 and December 31, 2023

Sales

Sales during the year ended December 31, 2024 were $1,117,452 compared to $785,453 for the year ended December 31, 2023. The increase in sales was primarily a result of sales of Fresh Joints and related services.

Cost of Goods Sold

For the year ended December 31, 2024, the cost of goods sold (COGS) rose to $664,517, representing approximately 59% of sales, up from $442,289, or about 56% of sales, in 2023. This increase in the COGS-to-sales ratio reflects higher packaging and input costs for the company's products. The overall rise in COGS was driven by increased prices for raw materials, packaging, and labor, particularly in the production of pre-rolled joints

Operating Expenses

Selling, general and administrative expenses for the year ended December 31, 2024 and December 31, 2023 were $1,279,361 and $1,586,666, respectively. The decrease was mainly attributable to stock-based compensation of $268,193 during the year ended December 31, 2024 compared to $380,382 during the year ended December 31, 2023 and increase in salaries, partially offset by reduced marketing expenses. Professional fees were $97,532 and $192,476, respectively for the year ended December 31, 2024 and December 31, 2023. The decrease in expenses was due to decreased legal and accounting fees associated with the WonderLeaf, LLC acquisition. Consulting expense was $70,670 and $36,000, for the year ended December 31, 2024 and December 31, 2023, respectively. The increase was primarily due to increased in consulting expenses for sales and marketing during the year ended December 31, 2024.

Other Income

During the year ended December 31, 2024 there was $17,226associated with gain on rent payable. During the year ended December 31, 2024 there was $60,073 of interest expense compared to interest expense of $10,865 for the year ended December 31, 2023 as a result of additional loans during the year ended December 31, 2024.

Net Loss

For the reasons stated above, our net loss for the year ended December 31, 2024 was $1,037,475, or $0.10 per share, compared to a net loss for the year ended December 31, 2023 of $1,482,843, or $0.15 per share

Liquidity and Capital Resources

As of December 31, 2024, we had cash of $60,305 Net cash used in operating activities for the year ended December 31, 2024 was $289,802. Our current liabilities as of December 31, 2024 were $1,118,671 and consisted of accounts payable and accrued liabilities of $958,276, and current portion of lease liability of $73.523and advance related party of $66,872 and a $20,000 Note Payable. As of December 31, 2023, we had cash of $6,607. Net cash used in operating activities for the year ended December 31, 2023 was $415,198. Our current liabilities as of December 31, 2023 were $1,078,957 and consisted of accounts payable and accrued liabilities of $961,255, and current portion of lease liability of $64,330 and advance related party of $53,372.

During the year ended December 31, 2024 the Company borrowed an additional $13,500 from a related party, $25,000 note payable, secured notes payable of $310,000 and repaid $5,000 of a note payable. During the year ended December 31, 2023 the Company borrowed an additional $53,372 from a related party and repaid $90,000 owed for an inventory earnout in addition the Company borrowed an additional $434,000 in a Note payable from a related party.

The 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 year ended December 31, 2024 and the year ended December 31, 2023 and had a working capital deficit at December 31, 2024 and 2023. This raises substantial doubt about our ability to continue as a going concern for the next 12 months.

We have not generated positive cash flows from operating activities. Our primary source of capital has been from the sale of equity and debt securities from a related party. 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.

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 the consolidated 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.