BESPOKE EXTRACTS, INC.Bespoke Extracts, Inc.

TABLE OF CONTENTSTable of Contents

PART I

This Annual Report on Form 10-K may contain forward-looking statements within the meaning of Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or the Private Securities Litigation Reform Act of 1995. Investors are cautioned that suchstatements. Such forward-looking state to all commentsstatements are based on our management'smanagement’s beliefs and assumptions and on information currently available to our management and involve risks and uncertainties. Forward-looking statements include statements regarding our plans, strategies, objectives, expectations and intentions, which are subject to change at any time at our discretion. Forward-looking statements include our assessment, from time to time of our competitive position, the industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail in “Risk Factors.” Given these uncertainties, youundue reliance should not place undue reliancebe placed on these forward-looking statements. Also, forward-looking statements represent our management'smanagement’s beliefs and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits to the report completely and with the understanding that ourOur actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.publicly.

As used in this annual report, the terms “we”, “us”, “our”, the “Company”, “Bespoke Extracts, Inc.” and “Bespoke” mean Bespoke Extracts, Inc. and its subsidiaries, unless otherwise indicated.

ITEMItem 1. BUSINESSBusiness.

Our Corporate History

We were incorporated in the State of Colorado on July 29, 1988 under the name Cine-Source Entertainment, Inc. (“Cine-Source Entertainment”). Pursuant to a Plan of Merger dated February 24, 2004, on such date, Cine-Source Entertainment filed the Articles and Certificate of Merger with the Secretary of State of the State of Colorado merging Cine-Source Entertainment into Cine-Source, Inc., a Colorado corporation (“Cine-Source”), with Cine-Source as the surviving corporation (the “Merger”). A previous controlling stockholder group of Cine-Source Entertainment arranged the Merger for business reasons that did not materialize. On April 26, 2004, Cine-Source effectuated a 1-for-200 reverse stock split. Thereafter, on April 27, 2004, Cine-Sourcethe Company changed its name to First Quantum Ventures, Inc. (“FQV Colorado”). On April 13, 2006, FQV Colorado formed a wholly owned subsidiary in the State of Nevada under theCompany changed its name to First Quantum Ventures, Inc. (“FQV Nevada”), and on May 5, 2006, FQV Colorado merged with and into its subsidiary, FQV Nevada, with FQV Nevada as the surviving corporation.

Company reincorporated in Nevada. On March 15, 2012, FQV Nevadathe Company changed its name to DiMi Telematics International, Inc. (“DTII”). On April 16, 2012, DTII issued a 1-for-1 stock dividend to current stockholders whereby DTII issued an additional 33,959,744 shares of common stock.  On May 16, 2012, DTII issued an additional 1-for-1 stock dividend to current stockholders whereby an additional 71,286,155 shares of common stock were issued. The dividends were also applied to outstanding warrants.  The foregoing dividends have been retroactively reflected in the financial statements as splits.

In early 2017, our management team elected to suspend further investment and working capital on developing the DTII’sits then-existing technology and business prospects, turning its attention to prevailing new business opportunities in other high growth industries; namely the hemp-derived cannabidiol, (“CBD”)or CBD, market. On March 10, 2017, DTIIthe Company changed its name to Bespoke Extracts, Inc. to align the Company’s corporate identity with its new business plan. 

The Company is now focused on introducing aselling its proprietary line of premium quality, all natural cannabidiol (CBD) products in the form of tinctures and capsules for the nutraceutical and veterinary markets.markets, which it introduced in mid-2018. Produced using pure, all natural, zero-THC phytocannabinoid-rich (“PCR”) hemp-derived CBD, our products will beare marketed as dietary supplements and distributed through our direct-to-consumers ecommerce store, found at www.BespokeExtracts.com, andwww.BespokeExtracts.com. In the future, we plan to also sell through select specialty retailers, pharmacies/dispensaries and care providers.

The Cannabis Market

Many states have already legalized medical cannabis, and adult-use cannabis is now legal at the statewide level in several major U.S. markets. According to ArcView Market Research a cannabis industryand its research firm,partner BDS Analytics, over the next 10 years, total sales by the legal cannabis industry will be worth roughly $21.8 billion per year by 2020. Investment firm Cowen & Co. is projecting that U.S. legal cannabis sales could reach $50$57 billion by 2026.2027, and the largest group of cannabis buyers will be in North America, going from $9.2 billion in 2017 to $47.3 billion a decade later. For context, according toin a report byreleased in February 2017, Arcview Market Research stated that the North American black market for cannabis is estimated to have totaled $46.4 billion in sales last year.in 2016.Marijuana Business Factbookreports that 2017 spending on legal recreational and medical cannabis in the U.S. even topped those of Oreos and organic produce combined – and will likely surpass sales of firearms and ammunition in the nation by the end of 2019.

CBD, one of over 80 active cannabinoid chemicals found in cannabis, is the major non-psychoactive component of the plantCannabis sativa L.,; and is proving to be an effective treatment for a number of health conditions affecting adults, children and pets. While U.S. companies cannot legally make medical claims about CBD or its uses, there are countless scientific research studies showing potential therapeutic indications for CBD, demonstrating that it works well with body cells to improve immunity and is even produced naturally in the human brain.

According to a 2013 study published in the British Journal of Clinical Pharmacology, CBD benefits includinginclude acting in some experimental models as an anti-inflammatory, anticonvulsant, antioxidant, antiemetic, anxiolytic and antipsychotic agent; and is therefore a potential medicinal treatment for neuroinflammation, epilepsy, oxidative injury, vomiting and nausea, anxiety and schizophrenia. Moreover, there have been dozens of other peer-reviewed studies suggesting that CBD may have therapeutic value for medical indications including bipolar disorder, cancer, glaucoma, HIV/AIDS, Huntington’s Disease, Crohn’s Disease, Multiple Sclerosis, Parkinson’s Disease, PTSD, rheumatoid arthritis and Tourette’s Syndrome.

Due to the growing body of published research supporting the promising therapeutic benefits of CBD, the demand for CBDproducts has been skyrocketing.increasing rapidly. In fact,Forbes Magazine recently reported that cannabis industry analysts at theHemp Business Journal estimates that Brightfield Groupestimate the hemp-CBD market alone could reach $22 billion by 2022. Between 2017 and 2018, the U.S. hemp-derived CBD market will grow tohas nearly doubled in size, but the five-year growth projections for this market are now dramatically higher than they were a $2.1 billion market in consumer sales by 2020 with $450 million of those sales coming from hemp-based sources, representing a 700% increase from 2016. In 2015,year ago. This is because the market for consumer salesfull legalization of hemp-derived CBD products was $90 million, plus another $112 million in marijuana-derived CBD productsis now a real and likely prospect following Republican Mitch McConnell’s proposal of the Hemp Farm Act of 2018 (the Farm Bill), which were sold through dispensaries – bringingis expected to pass before the total CBD market to $202 million last year. According to an article published in 2016 inForbes Magazine, Matthew Karnes, founderend of 2018. This legislation would clearly and Managing Partner of industry research firm, GreenWave Advisors, estimated an almost $3 billion CBD market by 2021.unambiguously legalize hemp as well as its derivatives, extracts and cannabinoids, including hemp-derived CBD.

Introductory Product Line

Generally speaking, our management believes 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 Bespoke Extracts’our introductory retail product line is our great-tasting, flavor-infused tinctures, formulated using only premium, organic ingredients. In addition, we will also market CBD extract in capsule form. As our Company matures, we expect to expand our proprietary CBD products to include a much broader range of flavors and form factors.

Scheduled for launch to consumersLaunched in the fourth quarter of calendar 2017,late summer 2018, our official market debut will showcaseshowcased the following introductory products:

Supply, Manufacturing and Logistics

Our management believes that some companies operating in the CBD oil industry tend to emphasize sales and quantity over quality and safety. 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.

All of our flavor-infused tinctures and capsules are formulated using pure, all natural, zero-THC phytocannabinoid-rich (“PCR”) hemp-derived CBD sourced from one of the largest, fully and vertically integrated producers of PCR hemp oil. All CBD isolates and oils are authenticated by an independent third party via issuance of a Certificate of Analysis (“COA”), which cannabinoid content and profile, microbiological content, heavy metal content, pesticide content, and residual solvent content. We recognize the importance of compliance and is partnered with one of the industry’s leading CGMP certified extraction facilities. This ensures the consistency and quality of our product line and brand.

Through its proprietary engineering process, our American-based supplier isolates and removes any unwanted compounds – while creating the maximum potency level of phytocannabinoids and terpenes – cold, enclosed and continuous manufacturing processes prevents the degradation of natural molecules during extraction and purification. Made and derived from non-GMO, USA-grown hemp, its PCR hemp oil and isolate powder are subjected to a rigorous testing system – both in-house and verified through independent, third party labs – which ensures accurate levels of phytocannabinoids and confirms the absence of THC. Our products contain only the highest level of naturally derived CBD, more than 99.5% pure, and never contain any THC.

We believe that 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.

For instance, raw Mānuka honey used in our products is imported directly from the north island of New Zealand from a supplier which has been supplying quality bee products since 1974. Mānuka honey is believed to be one of the most unique and beneficial forms of honey in the world and may carry the industry’s highest UMF^®16+ rating, distinguishing it as superior high-grade Manuka. Produced by bees that pollinate the native Manuka bush, possible Mānuka honey uses range from healing sore throats and digestive illnesses to curing Staph infections and gingivitis. All other flavorings infused in our products – including our all-natural, organic lemon lime flavor used in our Bespoke Sport offering -- are also sourced from reputable suppliers.

Fulfillment of orders from our online customers is managed by a well-established third-party logistics partner.

Development Status and Go-to-Market StrategyWe currently sell our products through our website.

Management believes 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 beis anchored by a high impact, visually stunning, content-richan ecommerce website whereby we will educate, sell, and ship our CBD products directly to consumers. In addition, we will also plan to market our CBD products on a wholesale basis to select specialty retailers, dispensaries and physicians.

Our marketing initiatives will include the use of social marketing, social influence marketing, direct response marketing, inbound marketing, email marketing, Search Engine Optimization (“SEO”) and content marketing, among other proven strategies to generate and convert sales prospects into loyal, satisfied customers. We will also explore utilizing coupon and deal sites to drive traffic to our website and retailers, as well as participate in select industry conferences to promote our brand and build greater awareness of our products among prospective business partners and consumers.

Other planned brand-building tactics include development of an authentica sports marketing and sponsorship strategy that has initially focused initially on Extreme Sports, motor racing and other high action sports athletes, teams and events, with the underpinning goal of generating consumer awareness of our high-performance Lemon-Lime Sport CBD brand by fans and athletes. In March 2018, we were a titled sponsor of sportsbike racer Robertino Pietri who took third place at the 77^th annual running of the DAYTONA 200; and in October 2018, we were a title sponsor of motorcycle racer Sean Dylan Kelly who competed in and won first place at the 35^th Annual Race of Champions at Daytona International Speedway.

The Difference Between Hemp and Marijuana

Both marijuana and hemp come from the same species of plant called “Cannabis Sativa L.” However, cultivators of the cannabis plant have manipulated it over the years to encourage specific traits to become dominant. Cannabis plants contain unique compounds called cannabinoids. Current research has revealed over 80 different cannabinoids thus far, but management believes THC is the most well-known and is credited with causing the marijuana high .high.While marijuana plants contain high levels of THC, hemp contains very little of the psychoactive chemical. The foregoing is one of the differences which distinguishes hemp from marijuana. 

Hemp was originally cultivated nearly 10,000 years ago in what is modern day Taiwan. Ancient cultivators of the cannabis plant recognized that it was dioecious, meaning that it had dual characteristics. Cultivators grew one variety of the cannabis plant to be tall and durable. This became what we now call industrial hemp. Upon discovering that the flower buds of the cannabis plant had psychoactive effects, cultivators began separating the hemp plants from the flowering plants in order to isolate their “medicinal” characteristics.

Scientifically, we now know that industrial hemp plants tend to produce high levels of the cannabinoid CBD, while producing low amounts of THC. Conversely, the marijuana plant produces high THC levels and low CBD levels. This chemical difference dictates the way we use the cannabis plant for medicinal and dietary supplemental purposes.

Market Outlook

According to MedMen, a cannabis management services company and investment firm, the legal cannabis market is forecast to be the fastest growing industry in the world, with annual sales projected to hit $80 billion in the next decade. In 2016, the U.S. posted a record $7.1 billion in cannabis sales, up from $5.7 billion in 2015 and $4.6 billion the year before. According to MedMen, this double-digit growth rate is expected to continue in the foreseeable future as more states legalize medical and recreational marijuana. In its December 2016 publication, “The CBD Report,”Hemp Business Journal (“HBJ”) stated that projections indicate that the total CBD market is poised to grow 27% to reach $115 million across all channels. As sales of CBD products continue to increase, HBJ forecasts that the entire U.S. CBD market will increase to $2.1 billion by 2020 and that $450 million of those sales will be from hemp-based sources, and the rest from marijuana sources.

Federal Legislative Overview

Cannabidiol, or CBD, that is derived from industrial hemp plants — like the CBD used in all products currently being produced or to be produced by Bespoke Extracts — is deemed by the FDA to be a dietary supplement, not a medication. Consequently, in the U.S., no prescription is required to obtain CBD and it can be legally purchased and consumed in all 50 states (and in 40 countries around the world).

However, in December 2016, the Department of U.S. Drug Enforcement Administration (“DEA”) implemented a new rule that declared CBD as a Schedule I drug, meaning it has “no currently accepted medical use in the United States, a lack of accepted safety for use under medical supervision and a high potential for abuse.” While numerous industry insiders have expressed concerns about the DEA’s new ruling, it is widely believed that the agency would struggle to make CBD illegal under current laws, thanks to multiple protections put in place by Congress as part of the 2014 Farm Bill. Moreover, subsequent additions to the 2015 and 2016 Congressional Appropriations Act prohibit the DEA from going after the products produced under these programs. Our products have zero THC.

Moreover, the most recent version of the legislation to legalize growing hemp was introduced in April 2018, with Senate Majority Speaker Mitch McConnell as the primary sponsor, which quickly evolved into the Senate’s Agriculture Improvement Act of 2018 (2018 Farm Bill). On January 27, 2017,December 3, 2018, House Republican Representative Griffith Morgan from Virginia introduced H.R. 715and Senate leaders announced that they had come to an agreement on the 115^th Congress,reconciled version of the 2018 Farm Bill, which – for the first time ever – includes a provision to lift the federal government’s longstanding ban on the commercial production of industrial hemp. It also amends the Federal Controlled Substance Act of 1970 so that industrial hemp containing no more than 0.3% THC is proposed new legislation that would reschedule marijuana fromno longer classified as a Schedule I Controlled Substance and exclude CBD fromprohibited substance. The vote to approve the definition2018 Farm Bill is expected to occur prior to the end of marijuana altogether. One month later, House Republican Representative Thomas Garrett of Virginia introduced legislation entitled,Ending Federal Marijuana Prohibition Act of 2017 aimed at federally decriminalizing marijuana by removing it from the federal controlled substances list and allowing it to join other industries such as alcohol and tobacco.this year.

Competitive Overview

Given the rapid growth of the U.S. CBD oil industry, hundreds of companies have entered the market. Simply Googling “CBD Oil Tincture,” the results reveal approximately 745,000 links. Consequently, the market is becoming highly competitive requiring serious contenders for leadershipand we believe to compete in the space, like Bespoke Extracts, to execute sound, well defined strategies for optimizing their marketing dollars andmarket requires ensuring that the quality and integrity of their product offerings remain unimpeachable. While we believe we will prove successful at attaining our financial and operational goals and objectives, certainofferings. Certain of our competitors have substantially greater financial, distribution, and marketing resources, as well as greater brand awareness than us.

Legal Proceedings

From time to time,us, and there can be no assurance we may become involved in lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Although we currently maintain liability insurance coverage intended to cover professional liability and certain other claims, we cannot assure that our insurance coverage will be adequateable to cover liabilities arising out of claims asserted against us in the future where the outcomes of such claims are unfavorable to us. Liabilities in excess of our insurance coverage, including coverage for professional liability and certain other claims, could have a material adverse effect on our business, financial condition and results of operations.successfully compete.

Professional and General Liability Coverage

We maintain professional and general liability insurance policies with third-party insurers on a claims-made basis, subject to deductibles, self-insured retention limits, policy aggregates, exclusions, and other restrictions, in accordance with standard industry practice. We believe that our insurance coverage is appropriate based upon our claims experience and the nature and risks of our business. However, we cannot assure that any pending or future claim will not be successful or if successful will not exceed the limits of available insurance coverage.

Our Headquarters

Our corporate headquarters is located at 323 Sunny Isles Boulevard, Suite 700, Sunny Isles Beach, Florida 33160. Our Internet website iswww.BespokeExracts.com. www.BespokeExracts.com. The contents of the website are not part of this report.

Employees

As of August 31, 2017,the date of the filing of this report, we employedhave 1 employee.

Where You Can Find Additional Information

The Companyemployee, who is subject to the reporting requirements under the Exchange Act. The Company files with, or furnishes to, the SEC quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports and will furnish its proxy statement. These filings are available free of charge on the Company's website, www.myfchs.com, shortly after they are filed with, or furnished to, the SEC. The SEC maintains an Internet website, www.sec.gov, which contains reports and information statements and other information regarding issuers.full-time.

The risk factors discussed below could cause our actual results to differ materially from those expressed in any forward-looking statements. Although we have attempted to list comprehensively these important factors, we caution you that other factors may in the future prove to be important in affecting our results of operations. New factors emerge from time to time and it is not possible for us to predict all of these factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.Item 1A. Risk Factors.

TheAn investment in the Company’s common stock involves a high degree of risk. In determining whether to purchase the Company’s common stock, an investor should carefully consider all of the material risks described below, set forth what we believe to be the most material risks associatedtogether with the purchase of our Common Stock. Before you invest in our Common Stock, you should carefully consider these risk factors, as well as the other information contained in this prospectus.report before making a decision to purchase the Company’s securities. An investor should only consider purchasing the Company’s securities if he or she can afford to suffer the loss of his or her entire investment.

GENERAL RISKS REGARDING OUR BUSINESSRisk Related to our Business.

We have a history of operating losses, and we may not achieve or maintain profitability in the future.

We incurred a net loss of $7,609,558 for the year ended August 31, 2018. As of August 31, 2018, we have an accumulated deficit of $16,716,644 and a stockholders’ deficit of $427,540. We may never achieve profitability or generate significant revenues.

We will need to raise additional capital, which may not available.

We anticipate that we will need to raise additional capital to execute our business plan and maintain and expand our operations. Additional capital may not be available to us on acceptable terms, or at all. If we are unable to raise additional capital, our business may be harmed and we may need to curtail or cease operations.

We have a limited operating history that impedes our ability to evaluate our potential future performance and strategy.

We began sales of our products in mid-2018. Our limited operating history makes it difficult for us to evaluate our future business prospects and make decisions based on estimates of our future performance. To address these risks and uncertainties, we must do the following:

We cannot be certain that ourOur business strategy willmay not be successful or thatand we willmay not successfully address these risks. In the event that we do not successfully address these risks, our business, prospects, financial condition and results of operations may be materially and adversely affected.

Our operating results may fluctuate significantly based on customer acceptance of our products. As a result our period-to-period comparisons of our results of operations are unlikely to provide a good indication of our future performance.

Management expects that we will experience substantial variations in our net sales and operating results from quarter to quarter due to customer acceptance of our products. If customers do not accept our products, our sales and revenue will either fail to materialize or decline, resulting in a reduction in our operating income or possible increase in losses.

If we do not successfully generatedevelop additional products and services, or if such products and services are developed but not successfully commercialized, we could lose revenue opportunities.

Our future success depends,will depend, in part, on our ability to expand our product offerings. To that end we have engaged in the process of identifying new product opportunities to provide additional products and related services to our customers. The processes of identifying and commercializing new products is complex and uncertain, and if we fail to accurately predict customers’ changing needs and preferences, our business could be harmed. We have already and may have to continue to commit significant resources to commercializing new products before knowing whether our investments will result in products the market will accept. Furthermore, we may not execute successfully on commercializing those products because of errors in product planning or timing, technical hurdles that we fail to overcome in a timely fashion, or a lack of appropriate resources. This could result in competitors providing those solutions before we do and a reduction in net sales and earnings.  

The success of new products dependswill depend on several factors, including proper new product definition, timely completion, and introduction of these products, differentiation of new products from those of our competitors, and market acceptance of these products. There can be no assurance that we will successfully identify additional new product opportunities, develop and bring new products to market in a timely manner, or achieve market acceptance of our products or that products and technologies developed by others will not render our products or technologies obsolete or noncompetitive.

In order to pursue our business strategy, we will need to raise additional capital. If we are unable to raise additional capital, our business may fail.

We may need to raise additional capital to pursue our business plan. We believe that we have access to capital resources through possible public or private equity offerings, debt financings or other means. If the economic climate in the United States does not continue to improve or deteriorates, our ability to raise additional capital could be negatively impacted. If we are unable to secure additional capital, we may be required to curtail our initiatives and take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our financial obligations.

We may have difficulties managing our Company’s growth, which could lead to higher operating losses, or we may not grow at all.

RapidIf we succeed in growing our business, such growth could strain our human and capital resources, potentially leading to higher operating losses. Our ability to manage operations and control growth will be dependent upon our ability to raise and spend capital to successfully attract, train, motivate, retain and manage new employees and continue to update and improve our management and operational systems, infrastructure and other resources, financial and management controls, and reporting systems and procedures. Should we be unsuccessful in accomplishing any of these essential aspects of our growth in an efficient and timely manner, then management may receive inadequate information necessary to manage our operations, possibly causing additional expenditures and inefficient use of existing human and capital resources or we otherwise may be forced to grow at a slower pace that could slow or eliminate our ability to achieve and sustain profitability. Such slower than expected growth may require us to restrict or cease our operations and go out of business.

Loss of key executives, limited experience in operating a public company and failure to attract qualified managers and sales personsour chief executive officer could limit our growth and negatively impact our operations.

We depend upon our management teampresident and chief executive officer, Niquana Noel, to a substantial extent. In particular, we depend upon Marc Yahr, our President and Chief Executive Officer, for his skills, experience and knowledge of our Company and industry contacts. The loss of Mr. YahrMs. Noel could have a material adverse effect on our business, results of operations or financial condition.

Our limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage to us in that it is likely that an increasing amount of management’s time will be devoted to these activities which will result in less time being devoted to the management and growth of our Company. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company which will increase our operating costs in future periods.

We will be required to attract and retain top quality talent to compete in the marketplace.

We believe our future growth and success will depend in part on our ability to attract and retain highly skilled managerial, product development, sales and marketing, and finance personnel. There can be no assurance of successWe may not succeed in attracting and retaining such personnel. Shortages in qualified personnel could limit our ability to increase sales of existing products and services and launch new product and service offerings.

Our inability to effectively protect our intellectual property would adversely affect our ability to compete effectively, our revenue, our financial condition, and our results of operations.

We may be unable to obtain intellectual property rights to effectively protect our branding, products, and other intangible assets. Our ability to compete effectively may be affected by the nature and breadth of our intellectual property rights. While we intend to defend against any threats to our intellectual property rights, there can be no assurance that any such actions will adequately protect our interests. If we are unable to secure intellectual property rights to effectively protect our branding, products, and other intangible assets, our revenue and earnings, financial condition, or results of operations could be adversely affected.

We also rely on non-disclosure and non-competition agreements to protect portions of our intellectual property portfolio. There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, that third parties will not otherwise gain access to our trade secrets or proprietary knowledge, or that third parties will not independently develop competitive products with similar intellectual property.

Our industry is highly competitive, and we have less capital and resources than many of our competitors, which may give them an advantage in developing and marketing products similar to ours or make our products obsolete.

We are involved in a highly competitive industry where we compete with various other nutraceutical companies which offer products similar to the products we sell. These competitors may have far greater resources than we do, giving our competitors an advantage in developing and marketing products similar to ours or products that make our products obsolete. While we believe we are better equipped to customize products for the cannabis market and advise growers on appropriate products to maximize crop yield as compared to traditional nutraceuticals, there can be no assurance that we will be able to successfully compete against these other manufacturers.

U.S. federal, state and foreign regulation and enforcement may adversely affect the implementation of marijuana laws and regulations and may negatively impact our revenue and profit or we may be violating the Controlled Substances Act or other U.S. federal, state or foreign laws.

Currently, twenty-nine32 states and the District of Columbia permit some form of whole-plant cannabis use and cultivation either for medical or recreational use. Thirty-eightDuring the midterm elections in November 2018, two more states voted to legalize medical marijuana use (Missouri and Utah) while one more voted to legalize recreational use (Michigan). Forty-seven states allow or are considering legislation to allow the possession and use of non-psychoactive CBD oil for some medical conditions only. There are efforts in many other states to begin permitting cannabis use and/or cultivation in various contexts, and it has been reported that eleven states are actively considering bills to permit recreational use or to decriminalize the use of marijuana. Nevertheless, the federal government continues to prohibit cannabis in all its forms as well as its derivatives. Under the federal Controlled Substances Act (the “CSA”), the policy and regulations of the federal government and its agencies is that cannabis has no medical benefit, and a range of activities including cultivation and use of cannabis is prohibited. Until Congress amends the CSA or the executive branch deschedules or reschedules cannabis under it, there is a risk that federal authorities may enforce current federal law. Enforcement of the CSA by federal authorities could impair the Company’s revenuebusiness; and profit, and it could even force the Company to cease operating entirely in the cannabis industry. The risk of strict federal enforcement of the CSA in light of congressional activity, judicial holdings, and stated federal policy, including enforcement priorities, remains uncertain.

Risks Related to our Common Stock

There is a limited trading market for our common stock, and investors may find it difficult to buy and sell our shares.

Our common stock is not listed on any national securities exchange. Accordingly, investors may find it more difficult to buy and sell our shares than if our common stock was traded on an exchange. Although our common stock is quoted on the OTCQB, it is an unorganized, inter-dealer, over-the-counter market which provides significantly less liquidity than the Nasdaq Capital Market or other national securities exchange. Further, prior to July 2018 there was minimal reported trading in our common stock, and any significant trading volume in our common stock may not be sustained. These factors may have an adverse impact on the trading and price of our common stock.

The market price of our common stock is, and is likely to continue to be, highly volatile and subject to wide fluctuations.

The market price of our common stock is highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including:

Adverse changes in general domestic and worldwide economic conditions and instability and disruption of credit markets could adversely affect our operating results, financial condition, or liquidity.

The cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers.

Turbulence in the United States and international financial markets and economies may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our patients. Deterioration in market conditions could limit our ability, and the ability of our patients, to pay their bills timely, and access the capital markets to meet liquidity needs, resulting in material and adverse effects on our business, prospects, financial condition and results of operations.

RISKS RELATED TO OUR COMMON STOCK.

There has beenOur common stock is considered a limited“penny stock” and is subject to additional sale and trading market for our Common Stockregulations that may make it more difficult to date.

While our Common Stock is currently quoted on OTC Markets, Inc., the trading volume is limited. We are quoted on the OTC Markets under the trading symbol “BSPK.” It is anticipated that there will continue to be a limited trading market for our Common Stock on the OTC Markets. A lack of an active market may impair your ability to sell your shares at the time you wish to sell thembuy or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies or technologies by using Common Stock as consideration.

You may have difficulty trading and obtaining quotations for our Common Stock.sell.

Our Common Stockcommon stock is considered a “penny stock” and securities broker-dealers participating in sales of our common stock are subject to the “penny stock” regulations set forth in Rules 15g-2 through 15g-9 promulgated under the Exchange Act. Generally, brokers may not be actively traded, andless willing to execute transactions in securities subject to the bid and ask prices“penny stock” rules. This may make it more difficult for our Common Stock on the OTC Markets, as our Common Stock is currently quoted, may fluctuate widely. As a result, investors may find it difficult to dispose of or to obtain accurate quotations of the price of, our securities. This severely limits the liquidity of the Common Stock,common stock and would likely reduce the market price of our Common Stock and hamper our ability to raise additional capital.

The market price for our Common Stock may be volatile, and your investment in our Common Stock couldcause a decline in value.

The stock market in general has experienced extreme price and volume fluctuations. The market prices of the securities of healthcare services companies have been highly historically volatile and may be highly volatile in the future. This volatility has often been unrelated to the operating performance of particular companies. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our Common Stock:

In the past, securities class action litigation has often been brought against companies that experience volatility in the market pricevalue of their securities. Whether or not meritorious, litigation brought against us could result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business, operating results and financial condition.stock.

We havedo not paid dividends in the past and have no immediate plansintend to pay dividends.dividends on our common stock for the foreseeable future.

We planhave paid no dividends on our common stock to reinvest alldate and we do not anticipate paying any dividends to holders of our earning, to the extent we have earnings, in order to grow, market our services and cover operating costs and to otherwise become and remain competitive. We do not plan to pay any cash dividends with respect to our securitiescommon stock in the foreseeable future. We cannot assure youWhile our future dividend policy will be based on the operating results and capital needs of the business, we currently anticipate that we would, atwill retain any time, generate sufficient surplus cash that would be availableearnings to finance our future expansion and for distribution to the holdersimplementation of our Common Stock asbusiness plan. A lack of a dividend. Therefore, you should not expect to receive cash dividends ondividend can further affect the market value of our Common Stock.common stock, and could significantly affect the value of any investment in the Company.

“Penny stock” rulesAdditional stock offerings in the future may make buying or selling our securities difficult which may make our stock less liquid and make it harder for investors to buy and sell our securities.dilute then-existing shareholders’ percentage ownership of the Company.

Trading inGiven our plans and expectations that we will need additional capital and personnel, we may need to issue additional shares of common stock or securities is subject to the SEC’s “penny stock” rules and it is anticipated that trading in ourconvertible or exercisable for shares of common stock, including convertible notes, stock options or warrants. The issuance of additional securities will continue to be subject to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to bothfuture will dilute the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquiditypercentage ownership of our securities and consequently adversely affect the market price for our securities.then-current stockholders.

Failure to achieve and maintain internal controls in accordance with Sections 302 and 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price.

If we fail to maintain adequate internal controls or fail to implement required new or improved controls, as we grow or as such control standards are modified, supplemented or amended from time to time; we may not be able to assert that we can conclude on an ongoing basisOur management has determined that we have not effective disclosure controls and procedures, or internal controlscontrol over financial reporting.reporting as of August 31, 2018. Effective internal controls are necessary for us to produce reliable financial reports and are important in the prevention of financial fraud. If we cannot produce reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and there could be a material adverse effect on our stock price.

Item 1B. Unresolved Staff Comments.

Not applicable.required for a smaller reporting company.

Item 2. Properties.

We maintain our principal office at 323 Sunny Isles Boulevard, Suite 700, Sunny Isles Beach, Florida 33160.33160 square feet of office space. Our monthly rent is $116 under a lease that terminates in June 2019. We believe that our existing facilities are suitable and adequate to meet our current business requirements.

From time to time, we may become involved in lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Our contracts with hospitals generally requires us to indemnify them and their affiliates for losses resulting from the negligence of our physicians.Item 3. Legal Proceedings.

Although we currently maintain liability insurance coverage intendedWe are not party to, cover professional liability and certain other claims, we cannot assure that our insurance coverage will be adequate to cover liabilities arising outproperty is not the subject of, claims asserted against us in the future where the outcomes of such claims are unfavorable to us. Liabilities in excess of our insurance coverage, including coverage for professional liability and certain other claims, could have aany material adverse effect on our business, financial condition and results of operations.legal proceedings.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 

Our Common Stock is currentlycommon stock quoted on the OTCQB under the symbol “BSPK” on the OTC Markets.

The following table sets forth, for the period indicated, the quarterly high and low per share sales prices (per share of our Common Stock for each quarter during our last two fiscal years as reported by YAHOO! Finance):