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Beckett's Inc. — Management Reports 2025
May 28, 2025
45623_rns_2025-05-27_0a3b4468-1e4c-4af1-a916-4ad05467c714.pdf
Management Reports
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BECKETT'S™
NON-ALCOHOLIC COCKTAILS + SPIRITS
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management’s Discussion and Analysis
For the Three Months ended March 31, 2025
TABLE OF CONTENTS
- Description of Business ... 2
- Business Overview ... 3
- Canadian Companies with U.S. Marijuana-Related Assets ... 6
- Overall Performance ... 12
- Key Management Compensation and Related Party Transactions ... 14
- Financial Risk Management ... 15
- Capital Management ... 16
- Material Accounting Policy Information ... 16
- Risk Factors ... 17
- Cautionary Note Regarding Forward-Looking Statements ... 17
- Disclosure of Internal Controls Over Financial Reporting ... 18
- Management’s Responsibility for Financial Information ... 18
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
This Management’s Discussion and Analysis (“MD&A”) constitutes management’s assessment of the financial condition and results of operations of Beckett’s Inc. (formerly, The Tinley Beverage Company Inc.) (“Beckett’s” or the “Company”) for the three months ended March 31, 2025. It is supplemental to and should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements for the three months ended March 31, 2025 and 2024 and the Company’s audited consolidated financial statements for the year ended December 31, 2024. The Financial Statements and the financial information contained in this MD&A have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and the IFRS Interpretations Committee (“IFRIC”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. In preparing this MD&A, management has taken into account information available up to the date of this MD&A. Unless otherwise indicated, all figures presented in this MD&A are expressed in Canadian Dollars (“$” or “C$”). Unless the context otherwise requires, references in this MD&A to the “Company”, “Beckett’s” or “we” refers to Beckett’s and its subsidiaries.
This discussion contains forward-looking statements that are not historical in nature and involves risks and uncertainties. Forward-looking statements are not guarantees as to Beckett’s future results as there are inherent difficulties in predicting future results. This MD&A includes, but is not limited to, forward-looking statements. Management considers the assumptions on which these forward-looking statements are based to be reasonable at the time the statements were prepared. Accordingly, actual results could differ materially from those expressed or implied in the forward-looking statements. Additional information relevant to Beckett’s activities, including Beckett’s press releases can be found on SEDAR+ at www.sedarplus.ca.
This MD&A has been prepared with reference to the requirements of National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators (“CSA”) and Staff Notice 51-352 (Revised) – Issuers with US Marijuana Related Activities (“Staff Notice”).
1. DESCRIPTION OF BUSINESS
Beckett’s was incorporated under the laws of the Province of Ontario, Canada by Articles of Incorporation dated October 26, 2007. Through its subsidiaries, the Company has worked with beverage alcohol product developers and flavourists to produce a line of liquor-inspired, non-alcoholic cocktails and spirits. These base formulations were produced as cannabis-infused drinks at state-licensed contract manufacturers. The Company, through its subsidiaries, built the Long Beach, California facility (“Long Beach Facility”) and its subsidiaries acquired necessary cannabis licences to produce its own brand of beverages, and to manufacture cannabis-infused beverages for third-party contract manufacturing brands. The Company closed and exited from the Long Beach Facility on August 31, 2023.
In response to consumer and non-licensed retail demand for its non-cannabis THC-infused samples in California, the Company began to commercialize and produce its Beckett’s line of liquor-inspired, non-alcoholic, non-cannabis-infused beverages in 2020. This line of products continues to be distributed and sold at non-cannabis-licensed retail locations in the US. These products continue to provide accelerating revenue, as the non-alcoholic beverage category experiences continued growth through increasing consumer demand across retail and on-premise channels.
The Company is poised to build further on the Beckett’s non-alcoholic business by evaluating state-by-state opportunities to producing hemp-derived delta-9 THC-infused versions of the high performing non-alcoholic drinks where permitted for production, distribution and sale. The Company completed initial production of its new Beckett’s hemp THC cocktail beverages in Q3 2024 all of which were sold to Total Wine & More stores in Texas, Florida and Louisiana. The Company completed its second production run of hemp-derived delta-9 THC products in Q4 2024 and added CBD to the beverages. These products are for distribution to additional Total Wine & More stores where these products are approved for sale as well as to other potential retailers.
The Company is considering re-launching a revamped line-up of its original regulated cannabis-infused drinks following the anticipated, rapid production, sales and return on capital cycle that the industry is experiencing in the fast-growing non-alcoholic and in the hemp delta-9 THC-infused beverage categories. These state-regulated cannabis products are expected to be produced through the Company’s licensed manufacturing partner Delta Bev, and distributed and sold to licensed dispensaries and for home delivery in California through an exclusive distribution
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
partner, Sulo Distro. Both Delta and Sulo operate under licences held by Illa Canna LLC, a subsidiary of the Company's strategic investor, Blaze Life Holdings Inc. ("BLH").
The common shares in the capital of the Company ("Common Shares") are listed on the Canadian Securities Exchange ("CSE") under the trading symbol "BKTS" and on the OTCQB under the trading symbol "BKTSF".
The Company's registered office address is 181 Bay Street, Suite 1800, Toronto, Ontario, M5J 2T9, Canada.
The Company's core intellectual property is a set of proprietary formulations for non-alcoholic cocktails and spirits. Each beverage is positioned with proprietary trademarks and trade-dress as a recognizable alternative to the traditional alcohol versions, with flavour profiles and packaging designed to reference and replicate the traditional alcoholic drink experience.
Flavour profiles were further refined through reformulation in 2022 and 2023 to optimize taste profiles and to reduce supply chain costs and production complexity.
The Beckett's Tonics® and Beckett's '27® lines of non-cannabis-non-alcoholic spirits and cocktails were relaunched following reformulation at Total Wine & More's 279 retail locations across 29 US states, with ongoing re-orders and production driven by sustained and increasing consumer demand at retail. These foundation formulas share similar branding and taste profiles with the current hemp-derived delta-9-THC-infused line, and with any regulated cannabis-infused products the Company may plan to re-introduce. The Beckett's brand is also authorized to be sold at select HEB locations in Texas and continues to expand with new distributor and retail partners into new territories and markets.
Following Beckett's anticipated growth through the on-going US relaunch, the Company will consider low-capital-intensive opportunities to expand territories for its brands, through strategic licensing, export, and profitable manufacture and distribution where possible for the Beckett's product formulations, including relaunching it's revised non-alcoholic formulations through select Canadian distribution.
2. BUSINESS OVERVIEW
Business Development
On March 10, 2025, the Company announced that it was changing its name from "The Tinley Beverage Company Inc." to "Beckett's Inc.", as the new name better aligned with the Company's focus on developing and marketing the Beckett's brand. The name change was completed pursuant to the filing of articles of amendment on March 12, 2025.
Also on March 10, 2025, the Company announced an exclusive distribution agreement with Hawthorne Heritage Beverage, a division of Kohler Distributing, a Molson Coors distributor and one of the largest in the state of New Jersey. Hawthorne Heritage Beverage will be distributing Beckett's HD-9 THC beverages in the Garden State and an initial order has already been delivered.
The Company also announced that in Connecticut, it has entered into an exclusive distribution agreement with Mancini Beverage, a Molson Coors Distributor, to distribute Beckett's non-alcoholic beverages to both retail and on-premise bars and restaurants throughout the state and an initial order has already been delivered.
Retail Growth Strategy
In 2023, the Company planned and executed its growth strategies and cost savings initiatives, enabled by the new capital received in June 2022 from BLH. The Management Services Agreement entered into between the Company and BLH in January 2023 solidified improvements in capability and productivity at the Long Beach Facility, and accelerated reductions in overhead. However, after making the determination to shut down manufacturing operations at the Long Beach Facility, it no longer made commercial sense to continue with the Management Services Agreement once the transition was fully completed. On September 30, 2024, the Company terminated the Management Services Agreement, which is expected to result in a further annual costs savings of almost $1,000,000.
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
Beckett's Tonics® and Beckett's '27® Non-Alcoholic Spirits and Cocktails
The Company's current Beckett's brand non-alcoholic products are the base beverage formulations of the Tinley's™ Tonics and Tinley's™ '27 branded infused products produced in California. Beckett's Tonics® and Beckett's '27® Non-Alcoholic Spirits and Cocktails have been produced as non-infused drinks at third-party beverage facilities. The non-alcoholic Beckett's brand products address the rapidly growing "low-no alcohol" beverage category, as reported by industry, consumer and business publications (Forbes, December 23, 2022 "The Low-No Alcohol Drinks Market Surpasses $11 Billion in 2022"), allowing retailers to offer and consumers to enjoy premium tasting adult beverages without the intoxicating effects of alcohol.
In 2022, in evaluating the initial production and launch of Beckett's in 2019 and 2020, the Company decided to reformulate the products for scaled commercialization, ensuring a consistent ingredient and formulation base and the same flavour experience as its Tinley's infused products, without terpenes and cannabis emulsion added to the Tinley's infused SKU's, and to more closely match the target beverage alcohol spirits, liqueurs and cocktails taste experience. The benefits to the Company include improved flavour, reduced cost, reduced complexity of supply chain and manufacturing and the opportunity to seek out low-risk opportunities to expand the brand driven by the new simplified formulations. The reformulation enabled the production of Beckett's Tonics® in high-demand aluminum cans packed in convenient 4-packs, and the reintroduction of the coffee-liqueur style multi-serve Beckett's '27® product, for a full lineup of eight reformulated Beckett's products now in distribution.
Reformulation was done at no direct cost to the Company and enabled the Company to own the new formulation recipe intellectual property ("IP"). It has reduced supply chain and manufacturing complexity, which also simplifies HD-9 THC and regulated cannabis-infused production at the Canoga Park facility. The Company has now relaunched the reformulated 8-SKU Beckett's line at Total Wine & More in 279 retail locations across 29 US states. The program, managed through the Company's broker, Emergent Beverages, continues to receive and fulfill purchase orders for direct-to-retailer warehouse delivery, for its 4-packs of the four Beckett's Tonics® non-alcoholic ready-to-drink cocktail flavours and for the four Beckett's '27® non-alcoholic multi-serve spirits and liqueurs. Total Wine & More featured the 8-product program on in-store end-aisle displays as part of its 'Dry January' in-store merchandising and promotion initiatives in January 2023. Similar programming took place for Dry January 2025. The Beckett's non-alcoholic SKU's continue to experience strong growth at Total Wine & More. The Company is also in discussions for Beckett's products to be distributed through other retailers across the country. The Company's initial strategic review of Beckett's aimed to accelerate the realization of value from the Beckett's Tonics® and Beckett's '27® brand assets in the US without requiring additional capital investment. Now that the Company has moved production to partner BLH's Canoga Park facility it will continue to benefit over time from lower-cost and shorter-timeframe contract packing, to building levels of replenishment inventory to fulfill new and repeated purchase orders, increased availability of sample stock for pursuing additional retail programs, single inventory of ingredients and closer control of other inputs, and consolidated 3PL and warehousing, which enabled direct-to-consumer ecommerce sales and fulfillment for Beckett's non-alcoholic beverages in Q2 2024. Initial Beckett's HD-9 THC infused cocktail beverage production was completed in Q3 2024 with additional production completed in Q4 2024.
Management is pursuing strategic presentations to key distributors known to Company officers and directors and to retailers through the Company's relationship with Emergent Beverages. Distribution is contemplated to on-premise groups targeting the trade at hotels, bars and restaurants. The Company intends to invest capital realized from proceeds of sales in the requisite marketing program tools and media coverage of the Beckett's brand, as well as supporting Beckett's sampling and brand activations at events where warranted.
Management is working with its distributor contacts and with Emergent to determine the optimal routes to the widest markets for both Beckett's non-alcoholic and Beckett's HD-9 THC infused versions under the one Beckett's brand.
Third-Party Brand Manufacturing & Distribution and Additional Territory/Expansion Opportunities
The Company believes future US Federal legal and regulatory changes (including potential future rescheduling) and enforcement decisions addressing the laws and regulations establishing the illegality of cannabis and the related banking restrictions and the prohibitions against inter-sate commerce of adult recreational and medical cannabis, may drive new opportunities for revenue with supply chain, manufacturing, and distribution efficiencies, all of which can
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
be best realized through high-capacity operations at the Canoga Park facility. The Company also understands that clarity remains elusive on interstate regulatory harmonization and the prospect of accretive taxation, two factors which would directly impact efficiencies and profitability of interstate operations. Multi-state opportunities will be evaluated, as the Company primarily focuses time and resources to expand distribution and sales of its Beckett's non-infused products and the less arduously regulated Beckett's HD-9 THC infused line.
Synergy initiatives undertaken by management since June 2022 in collaboration with our strategic investor partner BLH and its divisions have yielded large cost savings. The collaboration also produced improvements in engineering and productivity at the Long Beach Facility, enabling improved 2022 operating results which continued through quarters posting improved results in 2023.
The Management Services Agreement between the Company and BLH enhanced the Company's ability to accelerate savings through reductions in overhead costs, and to improve manufacturing margins across the lines of product scheduled for production in Canoga Park, through efficiencies of scale, proximity of supervision, and consolidation of inputs and finished goods inventories. The Company continues to operate at the anticipated reduced overhead levels at savings of approximately US$1,000,000 annually. On September 30, 2024, the Company terminated the Management Services Agreement which is expected to result in a further almost $1,000,000 of annual costs savings.
Beckett's Brand in Canada
As announced by the Company on March 21, 2023, the Company has paused its manufacturing and distribution of Beckett's products in Canada, due to market complexity and regulatory constraints. The Company will consider scenarios including IP licensing for Canada, for profitable and compliant participation in the Canadian market.
CBD Beverages
Lakewood Libations Inc. ("Lakewood"), a wholly-owned subsidiary of the Company, has historically produced beverages containing regulated cannabis-derived CBD, CBN, and CBG for third-party brands. The Company added hemp-derived CBD to its own infused beverage formulations during the second production run of HD-9 THC beverages in Q4 2024.
All active production at the Long Beach Facility was completed on August 20, 2023.
The Company vacated the Long Beach Facility shortly thereafter, and acted through its cannabis-licensed subsidiary to fulfill client and regulatory obligations and subsequently discontinued its California cannabis licences.
Since January 1, 2024
Management acted to deploy capital received from the January 2024 Private Placement and August 2024 Private Placement, to deliver on its strategy as follows:
- Procure ingredients and other inputs required to produce Beckett's non-alcoholic products to satisfy outstanding revenue-generating purchase orders from Total Wine & More
- Manage outstanding payables and negotiate terms with suppliers
- Optimize supply chain and relocate production based on review of available options
- Fund recommissioning, and preventive maintenance of the Company's Comac bottling line asset in its new Canoga Park location, to be performed by the OEM personnel on site. The bottling line has now been transferred to BLH as part of the August 2024 Private Placement and Debt Settlement.
The Company announced that it experienced an interruption in its third-party regulated cannabis contract packing revenues coincident with closing of the Company's Long Beach Facility, as it also began to incur costs associated with the transfer of assets and orderly winding down of the licensed facility.
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
In response to operational challenges and product quality issues experienced at the two contract packers, exacerbated by distance from the Company’s supervisory resources, management considered options for new contract packers of Beckett’s non-alcoholic beverages.
Following internal analysis, the Company decided to relocate Beckett’s production to partner BLH’s Canoga Park Facility to benefit in the near-term from reduced manufacturing costs as negotiated, industry-leading manufacturing quality, proximity to supervision and efficiencies from single-location ordering and storage of inputs and finished goods.
Though licensed for production, unanticipated delays in Canoga Park’s completion to become operational delayed both Beckett’s NA production and the commencement of referral revenue for Long Beach clients contracted to continue production at Canoga Park.
Production of Beckett’s non-alcoholic products at Canoga Park was completed to fulfill purchase orders and to maintain an inventory reserve for future purchase orders; additional production is also planned.
Proximity of the Canoga Park facility to a chosen third-party logistics and warehousing resources for non-regulated input materials and finished goods storage enabled the Company to reduce logistics complexity. The Company launched e-commerce direct sales to consumers of Beckett’s non-alcoholic drinks in June, 2024 which can be purchased by US customers through its website at www.drinkbeckets.com and online through www.amazon.com and www.walmart.com.
In response to the explosive growth of the HD-9 THC infused beverages, and the natural operational, brand and flavour synergy of non-alcoholic and hemp-infused THC under one Beckett’s brand, Management is evaluating the market opportunity for hemp-infused THC versions of its Beckett’s Tonics® ready-to-drink cocktails by state and produced the initial run of these products at its partner BLH’s Canoga Park facility in Q3 2024 that was sold to Total Wine & More stores in Texas, Florida and Louisiana. The Company completed a second production run of HD-9 THC products in Q4 2024 for distribution to additional Total Wine & More stores where these products are approved for sale as well as to other potential retailers.
In April 2024, The Company signed a distribution agreement with the Atlantic Importing Company to distribute Beckett’s products in the states of Massachusetts and Rhode Island and fulfilled an initial purchase order.
Referral revenue from former Long Beach Facility clients who have moved production to Canoga Park began as the Canoga Park Facility came online for production in Q1 2024. As part of the September 30, 2024 termination of the Management Services Agreement, the Company no longer receives referral fee revenue.
3. CANADIAN COMPANIES WITH US MARIJUANA-RELATED ASSETS
On February 8, 2018, the CSA published the Staff Notice, which provides specific disclosure expectations for issuers that currently have, or are in the process of developing, cannabis-related activities in the US as permitted within a particular state’s regulatory framework. All issuers with US cannabis-related activities are expected to clearly and prominently disclose certain prescribed information in required disclosure documents.
Such disclosure includes, but is not limited to: (i) a description of the nature of a reporting issuer’s involvement in the US cannabis industry; (ii) disclosure that cannabis is illegal under US federal law and that enforcement of relevant laws is a significant risk; (iii) related risks including, among others, the risk that third-party service providers could suspend or withdraw services and the risk that regulatory bodies could impose certain restrictions on the issuer’s ability to operate in the US; and (iv) a discussion of the reporting issuer’s ability to access public and private capital, including which financing options are and are not available to support continuing operations. Additional disclosures are required to the extent a reporting issuer is deemed to be directly or indirectly engaged in the US cannabis industry, or deemed to have “ancillary industry involvement”, all as further described in the Staff Notice. Public reaction to the Staff Notice was generally positive and industry participants welcomed the opportunity to review and provide enhanced disclosure.
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
As a result of the Company’s operations in the US, the Company is properly subject to the Staff Notice and accordingly provides the following disclosure:
All Issuers with US Marijuana-Related Activities
Nature of the Company’s Involvement in the US Marijuana Industry
In July 2020, the Long Beach Facility was granted a Type N Cannabis Manufacturing licence from the State of California. Under the California Business and Professions Code, Section 26000, et seq., short titled, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) and California Code of Regulations Title 4, Division 19 (the “DCC Regulations”) (hereinafter MAUCRSA and the DCC Regulations shall be referred to as “California Cannabis Law”), a licence is required to conduct commercial cannabis activity.
Through 2019 and Q2 2020, the Company operated under an IP Agreement licensing its proprietary intellectual property to a licensed operator, (hereinafter, the “Prior Manufacturer”), who, utilizing its cannabis licences, previously manufactured the Company’s Tinley-branded products and paid the Company a royalty fee. The Prior Manufacturer was licensed to produce the Tinley-branded products from its premises in Riverside County.
In April 2020, the Company and the Prior Manufacturer terminated their production agreement for the ongoing production of Tinley-branded Products in anticipation of the Long Beach Facility becoming operational in the second quarter of 2020.
Until August 31, 2023, the Company continued to operate in the cannabis industry as a non-operational entity providing the Long Beach Facility, certain intellectual property for production, equipment, and other resources for Lakewood’s operations to Lakewood for the purposes of Lakewood producing the Company’s products in the US. Following the closing of the acquisitions of Lakewood and subsequent regulatory approval of the Company as the sole owner of Lakewood, the Company assumed direct control over Lakewood and its contracts with third-party brands.
On September 19, 2023, the Company announced that it had agreed to sell 100% of its shares of Lakewood to Unlimited LLC, subject to certain closing conditions which had not been met at that time. The proposed transaction with Unlimited LLC did not close and Lakewood continues to be a wholly-owned subsidiary of the Company. Lakewood’s commercial cannabis distribution license issued by the State of California was surrendered on or about August 8, 2024, and Lakewood’s Type N Cannabis Manufacturing license expired on January 14, 2024.
Cannabis Illegality
In the US, cannabis is largely regulated at the state level. To the Company’s knowledge, there are to date a total of at least 41 states, plus the District of Columbia and Puerto Rico, which allow their residents to use medical cannabis and at least 23 states that permit adult-use (or decriminalized) of cannabis. Notwithstanding the permissive regulatory environment of commercial cannabis at the state level, the Federal Controlled Substances Act (“FCSA”) makes it illegal under federal law to manufacture, distribute, sell, cultivate, or dispense cannabis (21 U.S.C. § 801, et seq). Cannabis is categorized as a Schedule I controlled substance under the FCSA and as such, violates federal law in the US. Companies that engage in any form of commerce in the cannabis industry and individuals investing in a cannabis business may be subject to federal criminal prosecution along with civil fines and penalties. Federal enforcement could lead to dissolution, asset forfeiture and total loss of investment. Thus, enforcement of relevant laws is a significant risk.
Guidance from Federal Authorities
The US Supreme Court has ruled in a number of cases that the federal government does not violate the federal constitution by regulating and criminalizing cannabis, even for medical purposes. Therefore, federal law criminalizing the use of cannabis pre-empts state laws that legalize its use for medicinal and adult-use purposes.
As a result of the conflicting views between state legislatures and the US federal government regarding cannabis, investments in cannabis businesses in the US are subject to inconsistent legislation and regulation. The response to this inconsistency was addressed in August 2013, when then Deputy Attorney General, James Cole, authored a
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
memorandum ("Cole Memorandum") addressed to all US district attorneys acknowledging that, notwithstanding the designation of cannabis as a controlled substance at the federal level in the US, several US states had enacted laws relating to cannabis for medical purposes, and that federal enforcement of the applicable federal laws against cannabis-related conduct should be focused on certain priorities.
The Cole Memorandum outlined certain priorities for the US Department of Justice ("DOJ") relating to the prosecution of cannabis offenses.
On January 4, 2018, Jeff Sessions, then the US Attorney General issued a memorandum ("Sessions Memorandum") that rescinded the Cole Memorandum. The Sessions Memorandum rescinded previous nationwide guidance specific to the prosecutorial authority of US Attorneys relative to cannabis enforcement on the basis that they are unnecessary, given the well-established principles governing federal prosecution that are already in place. Those principals are included in chapter 9.27.000 of the US Attorneys' Manual and require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.
Due to the ambiguity of the Sessions Memorandum in relation to medical cannabis, there can be no assurance that the federal government will not seek to prosecute cases involving cannabis businesses that are otherwise compliant with state law. Such potential proceedings could involve significant restrictions being imposed upon the Company or third parties, and also divert the attention of key executives. Such proceedings could have a material adverse effect on the Company's business, revenues, operating results, and financial condition as well as the Company's reputation, even if such proceedings were concluded successfully in favor of the Company.
As the Sessions Memorandum demonstrates, the US approach to enforcement of cannabis violations of the FCSA can change at any time. While there is some uncertainty at the federal level, on March 23, 2018, the omnibus spending bill signed into law by President Trump included an updated version of the Rohrabacher-Blumenauer Amendment, which, as stated above, prohibits the DOJ from using federal funds to prevent states with medical cannabis regulations from implementing laws that authorize the use, distribution, possession or cultivation of medical cannabis. The amendment applies to medical cannabis but not recreational cannabis and does not change the designation of cannabis as a Schedule I controlled substance under the FCSA.
The position of the new Trump administration is unclear with respect to cannabis. Current U.S. Attorney General Pam Bondi has only indicated a view of giving careful consideration to cannabis policies without giving further commitment or insight into the matter or how the administration will approach the regulation of cannabis or enforcement of the FCSA.
While cannabis remains illegal at the federal level, there have been numerous attempts by various members of Congress and the House of Representatives at passing federal legislation to bar the federal government from interfering with any state-approved cannabis legalization and permit cannabis businesses to use the federal banking system. While all of these have failed or stalled out, it does provide optimism that federal cannabis policy remains an important issue for some elected officials.
While bipartisan support has been gaining traction on decriminalization and reform for a few years now, there is currently no imminent timeline on any potential legislation. There is no guarantee that the Presidential administration will not change its stated policy regarding the low-priority enforcement of US federal laws that conflict with state laws or that the Rohrabacher-Blumenauer Amendment will continue to be included in future federal budget bills or appropriations legislation.
Any increase in the US federal government's enforcement of current US federal law could cause adverse financial impact and remain a significant risk to the Company's business, which could in turn have an impact on the Company's operations or financial results. A change in its enforcement policies could impact the ability of the Company to continue as a going concern (see "Risk Factors").
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
US Enforcement Proceedings
The US Congress has passed appropriations bills (at various times, the "Rohrabacher-Farr Amendment," the "Leahy Amendment" and the "Joyce Amendment," hereinafter the "Budget Rider Protections") each of the last several years to prevent the federal executive branch (and specifically the DOJ) from using congressionally appropriated funds to enforce the FCSA against regulated medical cannabis businesses operating in compliance with state and local laws, which effectively allows states to implement their own laws that authorize the use, distribution, possession, or cultivation of medical cannabis. The Budget Rider Protections were first introduced in 2014 and has been reaffirmed annually since then as an amendment to omnibus appropriations bills, which by their nature expire at the end of a fiscal year or other defined term. The current Budget Rider Protections will remain in effect, through the signing of the Further Consolidated Appropriations Acts, 2024, through September 30, 2024. At such time, it may or may not be included in the omnibus appropriations package or a continuing budget resolution, and its inclusion or non-inclusion, as applicable, is subject to political changes. It should be noted that this amendment does not apply to adult-use cannabis.
US courts have construed these appropriations bills to prevent the federal government from prosecuting individuals when those individuals comply with applicable state law. However, because this conduct continues to violate US federal law, US courts have observed that should Congress at any time choose to appropriate funds to fully prosecute the FCSA, any individual or business - even those that have fully complied with applicable state law - could be prosecuted for violations of US federal law. Therefore, until Congress amends the FCSA regarding cannabis, enforcement of US federal law remains a significant risk. Any increase in the US federal government's enforcement of current US federal law could cause adverse financial impact and remain a significant risk, which could in turn have an impact on the Company's operations or financial results. A change in its enforcement policies could indirectly impact the ability of the Company to continue as a going concern.
Related Risks
California Cannabis Law establishes a highly regulated system for all commercial cannabis activities in California. This system requires all commercial cannabis activity to be conducted by licensees who are subject to the laws and regulations of the system. The Company's Tinley's-branded products produced by Lakewood, held various licences, including a Type 6 Manufacturing License. Because Lakewood had a Type 6 Manufacturing License, Lakewood was permitted to manufacture the Company's products in compliance with California Cannabis Law. Lakewood relies on a variety of third-party licensees to obtain ingredients including but not limited to cannabis, and to distribute and sell the Company's products to authorized consumers. Each and every third-party licensee contracting with Lakewood is also subject to the stringent laws and regulations governing cannabis activities in California. In addition to fines, the penalties for non-compliance range from temporary licence suspension to complete revocation of the licence. This creates additional risk for the production and sale of the Company's cannabis-infused products.
In addition to the risks associated with third-party licensees, there are also general concerns associated with operating in the California cannabis industry. Some, but not all of these concerns are set forth below:
- Change in California Cannabis Law – Regular changes in California Cannabis Law that may negatively impact the sale and production of the Tinley-branded products.
- Banking – Due to federal laws against cannabis, most banks are unwilling to take deposits, issue credit cards, open bank accounts, or assist with payroll services for cannabis businesses. While efforts are underway to address the banking issue, cannabis businesses deal primarily with cash. This presents numerous risks related to security, managing cash flow and the inability to invest funds. The California Board of Equalization allows for cash payments of tax bills at county branches located throughout the state. Nevertheless, cash-related issues continue to present risks for investors.
- Taxes – Under Internal Revenue Code Section 280E, cannabis businesses are prohibited from deducting their ordinary and necessary business expenses, except for the "costs of goods sold" by cultivators. There is risk in that Company's operations may be required to pay tax on both proceeds received in connection with third-party manufacturing services and proceeds from the sale of the products to be paid out to clients as royalties, without the benefit of being able to deduct the payout of such royalties. This results in cannabis enterprises facing much
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
higher federal tax rates than similar companies in other industries. While opinions differ, experts estimate from 40% to 70% as the effective federal tax rate imposed by Section 280E.
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Food and Drug Administration – The FDA does not permit or allow any statement that cannabis or cannabinoid, including CBD, is intended to treat or cure any disease. Research and scientific studies are underway throughout the US; however, no product may make statements of diagnosis, treatment, or cure for any disease without FDA approval. Further, the FDA has declared that consumable CBD products, whether cannabis or hemp-derived, are untested “new drugs” and, thus are illegal for consumption until FDA approval. The CDPH and its successor regulator, the Department of Cannabis Control (“DCC”) have followed the FDA’s lead, stating that such consumable CBD products will not be legal in California until the FDA determines that CBD is safe for human or animal consumption or the California legislature determines otherwise.
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Product Liability Claims – Insurance law and available products for cannabis operations, and product liability of cannabis, is a major concern for the industry. Investors should be aware that insurance policies may be limited, or claims may be challenged by insurance carriers.
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Background Checks – California and some local jurisdictions require background checks for management and employees as well as applicants for licences and permits. Although some cannabis-related convictions are not prohibited for obtaining licensing, convictions for other offenses may cause a delay or make a Company ineligible for licensing.
Ability to Access Public and Private Capital
While the Company has accessed private and public financing in the past, there is neither a broad nor deep pool of institutional capital that is available to cannabis licence applicants or holders. There can be no assurance that additional financing will be available to the Company when needed or on terms which are acceptable.
Operating Exposure
The Company currently has limited operating exposure in Canada as a result of its recent decision on March 21, 2023 to pause operations in Canada (see Business Overview: Retail Growth Strategy: Territorial Expansion). The Company’s cannabis and non-cannabis-based operating exposure is now primarily in the United States.
Legal Advice, Compliance, and Potential Exposure
The Company is monitoring compliance with California Cannabis Laws as applicable to its operations. The Company has engaged California-based cannabis regulatory compliance counsel, who have substantial experience advising cannabis companies on how to comply with California Cannabis Laws and other California laws. The Company’s counsel assists management with ensuring the Company’s applicable operations comply with all California Cannabis Laws. Nevertheless, there is no assurance that the Company or Lakewood will be able to maintain or remain in compliance with California or other state laws. Moreover, even if Lakewood complies with each and every law and regulation, they may still be subject to federal criminal prosecution along with civil fines and penalties. Federal enforcement could lead to dissolution, asset forfeiture and total loss of investment.
Involvement with Cultivation and Distribution
US Cannabis Issuers with Direct Involvement in Cultivation or Distribution
Until July 2020, the Company’s involvement in the California cannabis industry was limited to entering into an IP licensing arrangement with the Prior Manufacturer for the production of Tinley-branded products. The Prior Manufacturer typically used cannabis purchased from third-party licencees in extracted forms, rather than cannabis cultivated under its own licences, to manufacture the Company’s products. The Prior Manufacturer also contracted directly with licensed cannabis distributors for distribution of the Company’s products. The Prior Manufacturer also has a distribution licence and distributed the Company’s products. Cannabis manufacturing activity commenced in the Long Beach Facility upon such facility receiving a cannabis manufacturing licence from the State of California, and the products continue to be distributed by third-party distributors. Through Lakewood, the Company no longer had a need to licence its intellectual property for cannabis production, but rather Lakewood directly manufactured the Tinley’s-branded products at the Long Beach Facility. As such, the Company, through its wholly owned subsidiary
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
Lakewood, was directly involved in the manufacture and distribution of cannabis products, for its own brand and for third-party client brands, until the Company ceased production in August 2023 and proceeded to vacate the Long Beach Facility.
US Cannabis Issuers with Indirect Involvement in Cultivation or Distribution
N/A.
US Cannabis Issuers with Material Ancillary Involvement
Per the DCC, the consolidated regulatory successor to the CDPH and the BCC, Lakewood no longer holds any active DCC-issued commercial cannabis licenses.
The Company has obtained legal advice regarding compliance with applicable state regulatory frameworks and exposure and implication arising from US federal laws in the states where it conducts operations. As of the date of this MD&A, the Company has not received any notices of violation, denial, or non-compliance from any US authorities. The Company no longer owns any cannabis licenses.
State-Level Overview
Currently, the Company's US cannabis operations are limited to the State of California. The following sections present an overview of regulatory conditions for the cannabis industry in California.
California
While cannabis laws in California have a long history, the current law in California is the Medical and Adult Use Cannabis Regulation and Safety Act ("MAUCRSA"), and the promulgating regulations are found in the Cal. Code of Reg. Title 4, Division 19. The While licensing and regulation of licensees used to be split between three (3) separate state agencies, in 2021 California Governor Gavin Newsom signed into law Assembly Bill 141 which consolidated all regulation of cannabis into the California Department of Cannabis Control (the "DCC"). The DCC adopts and enforces rules and regulations for commercial cannabis license holders in California, including cultivators, retailers, manufacturers, distributors, testing laboratories, microbusinesses, and temporary cannabis events.
To operate legally under state law, cannabis operators must obtain a state licence and local approval. Local authorization is a prerequisite to operating, and local governments are permitted to prohibit or otherwise regulate the types and number of cannabis businesses allowed in their locality. The state licence approval process is not competitive and there is no limit on the number of aggregate state licences issued. Although vertical integration across multiple licence types is typically allowed under MAUCRSA, testing laboratory licensees may not hold any other licences aside from a testing laboratory license. There are currently no residency requirements for ownership under MAUCRSA (however, local jurisdictions often have a residency requirement; Long Beach did not).
The Company and its subsidiary, Lakewood, represent that when they were operational and held active licenses, manufacturing and distribution businesses were conducted in compliance with the regulatory framework enacted by the state of California. The state of California has implemented a robust regulatory system designed to ensure, monitor, and enforce compliance with all aspects of a cannabis operator's licensed operations. Compliance with local law is a prerequisite to maintaining and renewing state licensure and prerequisite to operating. The Company had robust systems to ensure, monitor and enforce compliance of its operations, including but not limited to, product storage and handling, manufacturing, packaging and labeling, waste handling and disposal, recall events, limited access rules, track and trace, security of the facility, inventory management, and such other aspects of operating a commercial cannabis business in the state of California.
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
The following represents the portion of certain assets on the Company’s consolidated statements of financial position that pertain to US cannabis activity as of March 31, 2025:
| Statement of Financial Position Items | Percentage (%) which related to holdings with US marijuana-related activities |
|---|---|
| Cash | 2% |
Beckett’s has looked at all of its holdings that are based in the US and, given that none of these holdings have any Canadian operating activity, the Company’s full investment in such entities was included in its assets. Readers are cautioned that the foregoing financial information, though extracted from the Company’s financial systems that support its audited consolidated financial statements, has not been audited in its presentation format and accordingly is not in compliance with IFRS based on consolidation principles.
4. OVERALL PERFORMANCE
Selected Annual Information
The Company’s selected annual financial information as at and for the three most recently completed financial years ended December 31 are summarized as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| $ | $ | ||
| Sales | 1,220,117 | 2,389,970 | 1,484,428 |
| Operating expenses | (3,013,993) | (4,864,895) | (7,354,085) |
| Net loss | (3,798,959) | (4,991,000) | (6,171,224) |
| Loss per share – basic and diluted | (0.014) | (0.033) | (0.041) |
| Total assets | 1,907,688 | 4,019,217 | 7,086,978 |
| Total non-current liabilities | 1,330,529 | 3,476,064 | 2,602,919 |
| Total liabilities | 1,330,529 | 6,586,328 | 4,868,408 |
| Total shareholders’ equity (deficiency) | 577,159 | (2,567,111) | 2,218,570 |
Selected Quarterly Financial Results
The Company’s selected financial information for the eight most recently completed quarters are as follows:
| Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | |
|---|---|---|---|---|
| $ | $ | $ | $ | |
| Sales | 519,169 | 435,019 | 386,874 | 159,808 |
| Operating expenses | (572,928) | (409,524) | (986,649) | (763,745) |
| Net loss | (308,930) | (184,568) | (1,709,555) | (1,047,550) |
| Loss per share – basic and diluted | (0.001) | (0.001) | (0.006) | (0.005) |
| Working capital (deficiency) | 244,547 | 577,159 | 870,444 | (1,745,901) |
| Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | |
| --- | --- | --- | --- | --- |
| $ | $ | $ | $ | |
| Sales | 238,416 | 427,327 | 625,444 | 780,108 |
| Operating expenses | (854,075) | (635,091) | (1,306,949) | (1,600,003) |
| Net loss | (857,286) | (871,878) | (1,987,236) | (1,837,578) |
| Loss per share – basic and diluted | (0.004) | (0.006) | (0.013) | (0.012) |
| Working capital (deficiency) | (1,235,634) | (2,616,815) | (2,341,718) | (1,735,621) |
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
Three Months ended March 31, 2025
Results of Operations
During the three months ended March 31, 2025 ("Q1 2025"), the Company generated sales of $519,169, as compared to sales of $238,416 for the three months ended March 31, 2024 ("Q1 2024"). The Company's sales in Q1 2025 increased compared to Q1 2024 primarily due to the increased sales of the Company's non-alcoholic non-infused beverages due to the Company's increased marketing effort.
During Q1 2025, the Company had total operating expenses of $572,928 as compared to $854,075 in Q1 2024. The comparative decrease in the overall operating expenses is primarily due to a decrease in general and administration share-based payments, depreciation of property and equipment partially offset by an increase in sales and marketing. Depreciation of property and equipment decreased as the Company no longer had equipment recorded on its balance sheet due to the transfer of the bottling line to BLH on August 30, 2024, as part of the Company's private placement and debt settlement. Share-based payments decreased as no options were issued or vested in Q1 2025. General and administration expenses primarily decreased due to decreases in corporate costs and administration and occupancy costs partially offset by increases in consulting and management fees, professional fees and payroll and salaries due to the reasons discussed below.
During Q1 2025, the Company incurred total general and administrative expenses of $412,955 (Q1 2024 – $515,835), which was primarily comprised of:
- Occupancy costs of $Nil (Q1 2024 – $222,507).
- Corporate costs and administration of $184,819 (Q1 2024 – $215,144).
- Consulting and management fees of $127,096 (Q1 2024 – $55,603).
- Professional fees of $57,356 (Q1 2024 – $14,692).
- Payroll and salaries of $42,465 (Q1 2024 – $7,889).
- Travel and promotion of $1,219 (Q1 2024 – $Nil).
The comparative decrease in the overall general and administrative expenses is primarily due to decreases in corporate costs and administration and occupancy costs partially offset by increases in consulting and management fees, professional fees and payroll and salaries. This overall decrease can be primarily attributed to the Company transferring the bottling line to BLH in 2024 which resulted in no storage and repairs and maintenance costs in Q1 2025 associated with the bottling line.
Net loss for the three months ended March 31, 2025, was $308,930 as compared to a net loss of $857,286 in Q1 2024. The net loss for the three months ended March 31, 2025, decreased primarily due to increased sales, lower general and administration expenses, a foreign currency translation gain and no longer having interest and accretion expense on the convertibles notes as the Company settled the convertible notes on August 30, 2024.
Cash Flows
Net cash flows used in operating activities for Q1 2025 were $262,616, as compared to cash flows used in operating activities of $1,177,328 in Q1 2024. This decrease in cash flows used in operating activities in Q1 2025 is primarily due to increased sales, lower expenses and changes in non-cash working capital.
Net cash flows provided by financing activities for Q1 2025 were $Nil (Q1 2024 – $1,386,627) as the company did not raise money. In Q1 2024 the company received $1,466,500 from a private placement less share issue costs of $79,873.
Liquidity and Capital Resources
As at March 31, 2025, the Company had a working capital surplus of $244,547, as compared to a working capital surplus of $577,159 as at December 31, 2024. The Company continues to invest part of its capital in new productions.
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
As at March 31, 2025, the Company had total accessible cash of $720,748 (December 31, 2024 – $961,138) available for working capital and other operational purposes and to settle current liabilities of $1,331,404 (December 31, 2024 – $1,330,529).
The Company continually monitors its capital resources to assess the liquidity necessary to fund operations and future strategy. The Company incurred a net loss of $308,930 (2024 – $857,286) and negative cash flows from operations of $262,616 (2024 – $1,177,328) for the three months ended March 31, 2025 and, as of that date, the Company had a deficit in the amount of $69,480,151 (December 31, 2024 – $69,171,221).
The Company has historically financed its working capital requirements primarily through equity and debt financing. The Company's ability to continue as a going concern is dependent upon being able to sell cannabis and non-cannabis products and brands and thus, its ability to commence profitable operations, generate revenues there from and raise additional financing as needed to meet its obligations. While the Company has been successful in raising financing in the past, there is no assurance that it will be able to successfully obtain additional financing as needed. These factors cast significant doubt on the ability to continue as a going concern.
All of the Company's current financial liabilities have contractual maturities of less than 365 days and are subject to normal trade terms.
5. KEY MANAGEMENT COMPENSATION AND RELATED PARTY TRANSACTIONS
Key Management Compensation
Key management personnel are persons responsible for planning, directing and controlling activities of an entity, and include executives and non-executive directors, officers and any employees. Compensation provided to key management personnel for the three months ended March 31, 2025 and 2024 were as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Short-term employee benefits, including salaries and consulting fees (Note 14) | 116,653 | 106,500 |
| Share-based compensation | - | 56,678 |
| 116,653 | 163,178 |
(a) During the three months ended March 31, 2025, the Company incurred consulting fees with the CEO and director of $58,987 (2024 – $Nil). As at March 31, 2025, $24,101 (December 31, 2024 – $21,510) was outstanding and included in accounts payable and accrued liabilities.
(b) During the three months ended March 31, 2025, the Company incurred consulting fees with the Chief Financial Officer $45,000, (2024 – $45,000). As at March 31, 2025, there was no amount (December 31, 2024 – $448) outstanding.
(c) During the three months ended March 31, 2025, the Company incurred director fees with a director who is not part of key management of $7,500 (2024 – $7,500).
(d) During the three months ended March 31, 2024, the Company incurred consulting fees with the former CEO and director of $54,000. As at March 31, 2024, $112,637 was outstanding and included in accounts payable and accrued liabilities.
14
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
Other related party transactions
(e) The following related party share-based compensation was paid:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Officers | - | 34,006 |
| Directors | - | 22,672 |
| - | 56,678 |
- FINANCIAL RISK MANAGEMENT
Fair Value
The carrying amount of cash, trade receivables, trade and other payables and lease payable on the Company's condensed interim consolidated statements of financial position approximate their fair value due to the relatively short-term maturity of these financial instruments.
Credit risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. Cash is held with Canadian and US chartered banks which are closely monitored by management. Management believes that the credit risk concentration with respect to financial instruments is minimal. The maximum exposure to credit risk at period-end is limited to the accounts and note receivable balances. No ECL has been recorded as at March 31, 2025.
Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company's liquidity and operating results may be adversely affected if the Company's access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company generates cash flow from its financing and revenue activities.
As at March 31, 2025, the Company had a cash balance of $720,748 (December 31, 2024 – $961,138) to settle current liabilities of $1,331,404 (December 31, 2024 – $1,330,529).
The undiscounted contractual maturity of all financial liabilities for the period ended March 31, 2025 is as follows:
| Total | Within 1 year | 1 to 3 years | 3 to 5 years | |
|---|---|---|---|---|
| Accounts payable and accrued liabilities | $ | $ | $ | $ |
| 1,331,404 | 1,331,404 | - | - | |
| Total | 1,331,404 | 1,331,404 | - | - |
The undiscounted contractual maturity of all financial liabilities for the year ended December 31, 2024 is as follows:
| Total | Within 1 year | 1 to 3 years | 3 to 5 years | |
|---|---|---|---|---|
| Accounts payable and accrued liabilities | $ | $ | $ | $ |
| 1,330,529 | 1,330,529 | - | - | |
| Total | 1,330,529 | 1,330,529 | - | - |
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
Foreign Currency Risk
The Company operates in Canada and the US and is exposed to foreign exchange risk with respect to USD. The Company normally raises funds in Canadian dollars for its operations in the US. Foreign exchange risk arises on cash, trade receivables and trade payables from operations in the US. The Company believes that its results of operations and cash flows would be affected by a sudden change in foreign exchange rates.
As at March 31, 2025 and December 31, 2024 the Company had the following financial assets and financial liabilities in USD:
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| $ | $ | |
| Cash | 465,694 | 607,970 |
| Trade receivables | 187,048 | 114,057 |
| Trade and other payables | (754,018) | (774,507) |
| Note receivable | - | 31,904 |
| Net exposure to USD | (101,276) | 20,576 |
Had the value of the USD increased or decreased by 1%, the net loss and comprehensive loss would have increased or decreased by USD $1,013 (December 31, 2024 – USD $206), respectively, as a result of this exposure.
This analysis only addresses the impact on the consolidated financial instruments with respect of currency movement on the Company's financial instruments and excludes any other economic or geo-political implications of such currency fluctuation. In practice, the actual result may differ from this analysis and the difference may be material.
7. CAPITAL MANAGEMENT
When managing capital, the Company's objective is to ensure it continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management adjusts the capital structure as necessary in order to support the beverage production.
The Board does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management team to sustain the future development of the business.
As at March 31, 2025, the Company considers its capital to be share capital, reserve for share-based payments, reserve for warrants, and contributed surplus, and reduced by accumulated deficit and accumulated other comprehensive loss, totaling $244,547 (December 31, 2024 – $577,159).
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
The Company is not subject to externally imposed capital requirements, and there were no changes in the Company's approach to capital management for the year ended March 31, 2025.
8. MATERIAL ACCOUNTING POLICY INFORMATION
The accounting policies applied by the Company in its condensed interim consolidated financial statements are the same as those noted in the Company's audited consolidated financial statements for the year ended December 31, 2024.
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
Disclosure of Outstanding Share Data as at May 27, 2025
| Security | Authorized | Outstanding |
|---|---|---|
| Voting or equity securities issued and outstanding | Unlimited Common Shares | 363,301,470 Common Shares |
| Securities convertible or exercisable into voting or equity shares | Stock Options to acquire up to 29,125,000 Common Shares of the Company, and Warrants to acquire up to 213,941,905 Common Shares of the Company. |
Off-Balance Sheet Arrangements
As at March 31, 2025 and the date of this MD&A, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the results of operations or financial condition of the Company.
Contingencies
Although the possession, cultivation, and distribution of cannabis for recreational and medical use is permitted in California, cannabis is a Schedule-I controlled substance and its use remains a violation of federal law in the US.
The Company's operations are subject to a variety of local and state regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations in that specific state or local jurisdiction. While management of the Company believes that the Company is in compliance with applicable local and state regulations as at March 31, 2025, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future.
9. RISK FACTORS
The Company faces exposure to risk factors and uncertainties relating to its business that could significantly negatively impact the Company's operations and financial results. Additional risks and uncertainties not presently known to the Company or currently deemed immaterial by the Company may also impair the Company's operations. If any such risks actually occur, shareholders of the Company could lose all or part of their investment and the business, financial condition, liquidity, results of operations and prospects of the Company could also be materially adversely affected and the ability of the Company to implement its growth plans could be adversely affected. A discussion of the principal risk factors relating to the Company's operations and business appear in the Company's management's discussion and analysis for the year ended December 31, 2024 which may be viewed on the Company's SEDAR profile at www.sedar.com. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company's business.
10. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This MD&A includes "forward-looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to the described under the heading "Risk Factors" in this MD&A and described in public disclosure documents filed by the Company. Due to the risks, uncertainties, and assumptions inherent in forward-looking statements, prospective investors in securities of the Company should not place undue reliance on these forward-looking statements. Statements in relation to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. Readers are cautioned
BECKETT'S INC.
(formerly, The Tinley Beverage Company Inc.)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months ended March 31, 2025
that the foregoing lists of risks, uncertainties and other factors are not exhaustive. The forward-looking statements contained in this MD&A are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or in any other documents filed with Canadian securities regulatory authorities, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. The forward-looking statements are expressly qualified by this cautionary statement.
11. DISCLOSURE OF INTERNAL CONTROLS OVER FINANCIAL REPORTING
Management has established processes to provide them sufficient knowledge to support representations that they have exercised reasonable diligence that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the consolidated financial statements; and (ii) the consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented. In contrast to non-venture issuers, this MD&A does not include representations relating to the establishment and maintenance of disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR"). In particular, management is not making any representations relating to the establishment and maintenance of: controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in its filings or other reports or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Investors should be aware that inherent limitations on the ability of management of the Company to design and implement on a cost-effective basis DC&P and ICFR may result in additional risks to the quality, reliability, transparency and timeliness of filings and other reports provided under securities legislation.
12. MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION
Management is responsible for all information contained in this report. The Company's financial statements have been prepared in accordance with IFRS and include amounts based on management's informed judgments and estimates. The financial and operating information included in this report is consistent with that contained in the Company's unaudited condensed interim consolidated financial statements in all material aspects.
The audit committee of the Board ("Audit Committee") has reviewed the Company's unaudited condensed interim consolidated financial statements and this MD&A with management. The Board of the Company has approved the unaudited condensed interim consolidated financial statements and this MD&A on the recommendation of the Audit Committee.
May 27, 2025
(signed) "Larry Weintraub"
Larry Weintraub
CEO