EQUITY | 4. 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 report. On March 10, 2017, the Company changed its name to Bespoke Extracts, Inc. (formerly known as DiMi Telematics International, Inc.). On March 10, 2017, the Company changed its name to Bespoke Extracts, Inc. (formerly known as DiMi Telematics, Inc.). On April 11, 2017, the Company issued 2,700,000 shares of common stock in connection with the issuance of a convertible note with a principal amount of $540,000 (see Note 6). The relative fair value of the stock of $157,509 was recognized as a discount to the note that is being amortized to interest expense over the life of the note. During the year ended August 31, 2017, the Company issued an aggregate of 40,000,000 common shares pursuant to exercise of options and warrants for proceeds of $5,000. During the year ended August 31, 2017 20,000,000 shares we cancelled and returned to the company along with the return of the $2,000 exercise price. Warrants During the year ended August 31, 2017, warrant activity includes the following: Warrants granted on March 14, 2017, the Company entered into an 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. On May 22, 2017, Barry Tenzer resigned as President and Chief Executive Officer. In connection with the resignation of Mr. Tenzer, the 20,000,000 shares of stock issued upon the exercise of the warrants was returned to the company and cancelled and the exercise proceeds of $2,000 were returned to Mr. Tenzer. The fair value of the warrants was determined to be $4,998,021 which was recognized as compensation expense during the year ended August 31, 2017. The following table summarizes the warrant activity issued to Barry Tenzer during the year ended August 31, 2017: Number of Weighted- Outstanding at August 31, 2016 - $ - Granted 20,000,000 .0001 Canceled or expired - Exercised 20,000,000 .0001 Outstanding at August 31, 2017 - $ - On May 22, 2017, the Company entered into an employment agreement with Mr. Yahr to serve as President and Chief Executive Officer of the Company for a term of three years, unless earlier terminated pursuant to the terms of the Employment Agreement. Pursuant to the terms of the Employment Agreement, Mr. Yahr received a warrant to purchase up to 20,000,000 shares of the Company’s common stock at an exercise price of $0.0001 per share. The warrants were exercised in full on August 31 2017. The shares received upon the exercise of the warrants are subject to forfeiture and vest over a service period of three years. The fair value of the award was determined to be $10,998,105 of which $1,014,489 was recognized as compensation expense during the year ended August 31, 2017. As of August 31, 2017, the shares were forfeited and returned to the Company. The following table summarizes the warrant activity issued to Marc Yahr during the year ended August 31, 2017: Number of Warrants Weighted- Outstanding at August 31, 2016 - $ - Granted 20,000,000 .0001 Canceled or expired - - Exercised 20,000,000 .0001 Outstanding at August 31, 2017 - $ - On April 11, 2017, the Company executed a $540,000 Convertible Debenture with an original issue discount of $180,000. In connection with the note, the Company issued the lender 900,000 warrants with a term of 3 years and an exercise price of $1.00. The relative fair value of the warrants $44,981 was recognized as a discount to the note. Number of Weighted- Outstanding at August 31, 2016 - $ - Granted 900,000 1.00 Canceled or expired - Exercised - Outstanding at August 31, 2017 900,000 $ 1.00 The fair value of the warrants was estimated using the Black-Scholes option pricing model and the following range of assumptions: Grant Date Risk-free interest rate at grant date 1.06% - 1.44% Expected stock price volatility 117% - 362% Expected dividend payout - Expected option in life-years 1 - 3 years OPTIONS On July 26, 2017 the Company granted a nonemployee Optionee to purchase 2,200,000 shares of common stock. The options have a three year term. 1,000,000 options are immediately exercisable on the date of issuance with an exercise price of $0.001 and the remaining 1,200,000 options vest over a period of three years at an exercise price of $1.00. On July 26, 2017, 1,000,000 shares were exercised during the year ended August 31, 2017. for the year ended August 31, 2017 option expense recognized totaled $273,185. Number of Options Weighted- Outstanding at August 31, 2016 - Granted 2,200,000 .55 Exercised 1,000,000 .001 Canceled or expired Addition due to ratchet trigger Outstanding at September 30, 2015 1,200,000 $ 1 |