The accompanying notes are an integral part of these unaudited
condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
The accompanying notes are an integral
part of these unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
November 30, 2021 and 2020
(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 selling its proprietary line of specially-formulated, premium quality, hemp-derived CBD products.
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.
Basis of Presentation
The accompanying condensed unaudited condensed
financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information
and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all
adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. Operating results
for the three months ended November 30, 2021 may not necessarily be indicative of the results that may be expected for the year ended
August 31, 2022.
For further information, refer to the Company’s
financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended August 31, 2021.
Certain prior period amounts have been reclassified
to conform to the current period presentation.
Going Concern
The accompanying financial statements have been
prepared assuming a continuation of the Company as a going concern. The Company had negative cash flows from operations, a working capital
deficit and an accumulated deficit as of and for the three months ended November 30, 2021. This raises 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 repaying 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 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 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 November 30, 2021 and August 31, 2021, the Company
did not have any cash equivalents.
Fair Value of Financial Instruments
The carrying amounts of cash, accounts receivable,
prepaid expenses, inventory and other assets, accounts payable, accrued liabilities, note payable and convertible note payable approximate
their fair values as of November 30, 2021 and August 31, 2021, 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 November 30, 2021 and
August 31, 2021, the Company has recorded an allowance for doubtful accounts of $0 and $2,981, respectively. At November 30, 2021 and
August 31, 2021 included in the accounts receivable is the merchant holdback receivable balance of $3,636 and $3,636, respectively which
will be remitted to the Company in the future.
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. As of November 30, 2021 and August
31, 2021, inventory amounted to $46,930 and $48,259, respectively, which consisted of finished goods of $43,679 and $45,008, and raw materials
of $3,251 and, $3,251 net of reserves, respectively. As of November 30, 2021 and August 31, 2021 inventory reserves were $33,476 and $33,476,
respectively.
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 through our online and telephonic
channels. 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. The Company offers a 30 day return policy on sales.
Stock Option Plans
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.
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 3,000,000 warrants is anti-dilutive for the three months ended November 30, 2021
as they are not in the money. The effect of 3,150,000 warrants and 0 options is anti-dilutive for the three months ended November 30,
2020 as well as 500,000,000 shares issuable upon the conversion of a convertible note.
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 February 21, 2017, the Company purchased all
right, title, interest and goodwill in or associated with certain domain names set forth in an asset purchase agreement for a total of
$20,185 in cash and 200,000 shares of the Company’s common stock valued at $30,000. During the year ended August 31, 2020, the Company
transferred certain URLs valued at $5,282 to an unrelated party and impaired $289 leaving a balance of $44,614 of URL’s. The domain
names are being amortized over a 15 year period. During the year ended August 31, 2021, the Company recorded an amortization expense of
$3,244. During the year ended August 31, 2020, the Company recorded an impairment expense of $289 for the expired domain names. During
the three months ended November 30, 2021, the Company recorded an amortization expense of $811. On October 28, 2021, in connection with
a stock purchase agreement (see Note 5), 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 In exchange for cancellation of the debt owed under the Debenture, the Company transferred to the holder certain
domain names valued at $32,748 (see Notes 3 and 5).
3. INVENTORY EARN-OUT
As described in Notes 2 and 5, 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.
4. NOTE PAYABLE - RELATED PARTY
During the three months ended November 30, 2021,
Danil Pollack, the Company’s former chief executive officer, forgave a note payable in the amount of $534. The amount was treated
as a capital contribution.
On November 29, 2021, Michael Feinsod, the Company’s
chief executive officer, loaned the Company $25,000. The loan does not bear interest and is payable on demand. The loan was fully repaid
subsequent to November 30, 2021 (see Note 10).
5. CONVERTIBLE NOTE PAYABLE
On December 24, 2019, the Company entered into
and closed a securities purchase agreement with an accredited investor, pursuant to which the Company issued and sold to the investor
an original issue discount convertible debenture in the principal amount of $500,000, for a purchase price of $300,000. The Company also
issued to the investor 5,000,000 shares of common stock valued at $55,000 ($0.005 per share). The Company recorded beneficial conversion
of $245,000 due to the conversion feature. The debenture could not be converted to common stock to the extent such conversion would result
in the holder beneficially owning more than 4.99% of the Company’s outstanding common stock. The debenture had an original maturity
date of April 30, 2020 and was convertible into shares of common stock of the Company at an initial conversion price of $0.001, except
that, if the Company failed to repay the debenture upon maturity, the conversion price would be reduced to $0.0004 (subject to adjustment
for stock splits, stock dividends, and similar transactions) and the debenture would bear interest at the rate of 9% per year. The Company’s
obligation to repay the debenture upon maturity was initially secured by a security interest in the Company’s inventory pursuant
to a security agreement between the Company and the investor. For the year ended August 31, 2020 the Company recorded amortization of
debt discount of $500,000. A portion of the debenture was subsequently sold by the original purchaser to a third party. On April 23, 2020,
the Company entered into an amendment to the security agreement with the holders of the debentures. Pursuant to the security agreement
amendment, the collateral under the security agreement was amended to be the Company’s URLs. The Company also entered into six amendments
to the debentures, including to increase the conversion price to $0.05, and to extend the maturity date, including an amendment entered
into on August 2, 2021, to extend the maturity date to August 31, 2021. In September 2021, a debenture holder converted $100,000 into
2,000,000 shares of common stock at a price of $0.05 per share.
On October 28, 2021, in connection with a stock purchase
agreement (see Note 3), the remaining 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. In exchange for cancellation of the debt owed under the debenture, the Company transferred to the holder certain
domain names valued at $32,748 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 Company recorded a gain on the extinguishment of debt $292,252.
6. EQUITY
Common Stock and Preferred Stock
As of August 31, 2020, the Company had 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 2, 2020, the Company filed a certificate of amendment to the Company’s articles of incorporation with the Secretary
of State of Nevada, pursuant to which the Company increased its authorized shares of common stock from 800,000,000 to 3,000,000,000. 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 November 30, 2021 and August 31, 2021 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 November 30, 2021 and August 31, 2021, 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.
In September 2021 a debenture holder converted
$100,000 of a convertible debenture into 2,000,000 shares of common stock at a price of $0.05 per share (see Note 5).
On October 28, 2021, the Company entered into
a stock purchase agreement with Danil Pollack (the Company’s then-chief executive officer), and Infinity Management, LLC (“Infinity”).
Pursuant to the purchase agreement, upon the closing thereof on November 19, 2021, Mr. Pollack sold to Infinity, 50,000,000 shares of
the common stock of the Company and one share of Series C preferred stock of the Company for cash consideration of $40,000.
The Series C Preferred Stock Infinity acquired represents 51% of the voting power of the Company’s capital stock, and therefore
the transaction resulted in a change-in-control of the Company.
The purchase agreement further provided for Infinity
to make a capital contribution to the Company of $4,792.29 to cover payment of the amounts due to certain creditors of the Company, as
set forth in the purchase agreement. The amount was paid to the Company on January 18, 2022.
In connection with the purchase agreement, and
effective upon the closing thereunder, Mr. Michael Feinsod, the managing member of Infinity, was appointed as the chief executive officer
and chairman of the board of directors of the Company, Mr. Hunter Garth was appointed as a director, as well as chief strategy officer
of the Company, and Mr. Pollack resigned from all positions with the Company, including as president, CEO, chief financial officer and
director of the Company.
Warrants
The following table summarizes the warrant activities
during the three months ended November 30, 2021:
|
|
|
Number of
Warrants
|
|
|
Weighted-
Average
Price Per
Share
|
|
|
Weighted-
Average
Remaining
Life
|
|
|
Outstanding at August 31, 2021
|
|
|
3,000,000
|
|
|
$
|
0.52
|
|
|
|
2.16 years
|
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
Canceled or expired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
Outstanding at November 30, 2021
|
|
|
3,000,000
|
|
|
$
|
0.52
|
|
|
|
1.91 years
|
|
|
Exercisable at November 30, 2021
|
|
|
3,000,000
|
|
|
$
|
0.52
|
|
|
|
1.91 years
|
|
|
Intrinsic value at November 30, 2021
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
7. RELATED PARTY TRANSACTIONS
On April 21, 2020, Danil Pollack was appointed
president, chief executive officer, and chief financial officer of the Company. In connection with Mr. Pollack’s appointment, the
Company entered into an employment agreement with Mr. Pollack. Pursuant to the employment agreement, Mr. Pollack agreed to serve as the
Company’s chief executive officer and president for a period of one year, which term would renew automatically for successive one
year terms, subject to the right of either party to terminate the agreement at any time upon written notice. Mr. Pollack was granted the
right, for a period of six months, to purchase up to 100,000,000 shares of common stock of the Company for a purchase price of $0.001
per share.
On September 30, 2020, the Company entered into
an amendment to the Company’s employment agreement, dated April 22, 2020, with Danil Pollack. Pursuant to the amendment, the Company
agreed to pay Mr. Pollack an annual salary of $48,000. On April 27, 2021, the Company entered into an amendment to the Company’s
employment agreement with Mr. Pollack. Pursuant to the amendment, the Company agreed to pay Mr. Pollack an annual salary of $66,000 effective
April 1, 2021. The Company could also in its discretion pay additional compensation to Mr. Pollack at any time as a bonus. On November
2, 2021, effective July 1, 2021 Mr. Pollack waived all compensation owed to him by the Company as of such date through the date of his
resignation as the Company’s chief executive officer. Mr. Pollack elected to forgive $11,000 of salary during the three months ended
November 30, 2021, and the amount was recorded as a capital contribution.
On October 28, 2021, the Company entered into
a stock purchase agreement with Danil Pollack (the Company’s then-chief executive officer), and Infinity Management, LLC (“Infinity”).
Pursuant to the purchase agreement, upon the closing thereof on November 19, 2021, Mr. Pollack sold to Infinity, 50,000,000 shares of
the common stock of the Company and one share of Series C preferred stock of the Company for cash consideration of $40,000.
The Series C Preferred Stock Infinity acquired represents 51% of the voting power of the Company’s capital stock, and therefore
the transaction resulted in a change-in-control of the Company.
The purchase agreement further provided for Infinity
to make a capital contribution to the Company of $4,792.29 to cover payment of the amounts due to certain creditors of the Company, as
set forth in the purchase agreement. The amount was paid to the Company on January 18, 2022.
In connection with the purchase agreement, and effective upon the closing
thereunder, Mr. Michael Feinsod, the managing member of Infinity, was appointed as the chief executive officer and chairman of the board
of directors of the Company, Mr. Hunter Garth was appointed as a director, as well as chief strategy officer of the Company, and Mr. Pollack
resigned from all positions with the Company, including as president, CEO, chief financial officer and director of the Company.
On November 29, 2021, Michael Feinsod, the Company’s
chief executive officer, loaned the Company $25,000. The loan does not bear interest and is payable on demand.
During the three months ended November 30, 2021,
Danil Pollack, the Company’s former chief executive officer forgave a note payable in the amount of $534. The amount was treated
as a capital contribution.
8. COMMITMENTS AND CONTINGENCIES
On April 21, 2020, Danil Pollack was appointed
president, chief executive officer, and chief financial officer of the Company. In connection with Mr. Pollack’s appointment, the
Company entered into an employment agreement with Mr. Pollack. On September 30, 2020, the Company entered into an amendment to the employment
agreement. Pursuant to the amendment, the Company agreed to pay Mr. Pollack an annual salary of $48,000. On April 27, 2021, the Company
entered into an amendment to the Company’s employment agreement with Mr. Pollack. Pursuant to the amendment, the Company agreed
to pay Mr. Pollack an annual salary of $66,000 effective April 1, 2021. The Company could also in its discretion pay additional compensation
to Mr. Pollack at any time as a bonus. Mr. Pollack elected to forgive $11,000 of salary during three months ended November 30, 2021, and
the amount was recorded as a capital contribution.
In connection with a stock purchase agreement
(see Note 5), on October 28, 2021, a convertible debenture in the 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 (see notes 3 and 5).
The COVID-19 pandemic may negatively affect our operations,
including by limiting access to our facilities, customers, management, and professional advisors, and 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.
9. MAJOR CUSTOMERS
At November 30, 2021 and August 31, 2021, no individual
customer amounted to over 10% of total accounts receivable. During the three months ended November 30, 2021 and 2020. no individual customer
amounted to over 10% of total sales.
10. SUBSEQUENT EVENTS
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”). 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 2,500,000 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 $0.02
per share and a ceiling of $0.04 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.
In connection with the Wonderleaf Purchase Agreement,
Bespoke Colorado entered into a lease agreement (the “Lease”) with WL Holdings, Ltd. (“WL Holdings”) 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.
Closing of the WonderLeaf Purchase agreement is
subject to receipt of certain governmental approvals and other customary closing conditions.
On December 3, 2021, Michael Feinsod loaned the
Company $15,000. The loan does not bear interest and is payable on demand.
On December 14, 2021, Hunter Garth was appointed
President of the Company.
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 300,000,000 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 newly
adopted 2021 Equity Incentive Plan, 22,500,000 shares of restricted common stock, which will vest one year from the date of grant, and
ten-year options to purchase 15,000,000 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. 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 newly adopted 2021 Equity Incentive
Plan, 45,000,000 shares of restricted common stock, which will vest one year from the date of grant, and ten-year options to purchase
30,000,000 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 December 14, 2021, the Company issued to a consultant
options to purchase 1,000,000 shares of common stock at an exercise price of $0.03. The option have a term of ten years and vest three
months from the date of grant.
On December 21, 2021, Michael Feinsod loaned the Company
$20,000. The loan does not bear interest and is payable on demand.
On December 23, 2021, the Company repaid Michael Feinsod
$40,000 of the $60,000 loaned to the Company, which were payable on demand.
From December
27, 2021 to 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. The warrants have a term of one year and an exercise price of $0.05.
On December 27, 2021, the Company repaid Michael
Feinsod the balance of the $20,000 of the balance loaned to the Company, which were payable on demand.
On January 18,
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 15,850,000 shares of common stock and warrants to purchase an aggregate of 3,962,500 shares of common
stock, for an aggregate purchase price of $79,250. The warrants have a term of one year and an exercise price of $0.05.