UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Amendment No. 1

  

FORM 10

  

General Form for Registration of Securities of Small Business Issuers Under Section 12(g) of the Securities Exchange Act of 1934

 

ADORBS INC.
(Exact Name Of Company As Specified In Its Charter)

 

Nevada   82-3155323 
(State of Incorporation)   (I.R.S. Employer Identification No.)
     
234 E. Beech Street, Long Beach, NY   11561
(Address of Principal Executive Offices)   (ZIP Code)

 

Company’s Telephone Number, Including Area Code: (516) 544-2812

 

Securities to be Registered Under Section 12(g) of the Act: Common Stock, $0.001
(Title of Class)

 

Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
  Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the Company has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ☐

  

 

 

 

 

TABLE OF CONTENTS

 

Item   Description   Page
         
ITEM 1.   DESCRIPTION OF BUSINESS   1
ITEM 1A.   RISK FACTORS   5
ITEM 2.   FINANCIAL INFORMATION   11
ITEM 3.   DESCRIPTION OF PROPERTY   13
ITEM 4.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS   13
ITEM 5.   DIRECTORS AND EXECUTIVE OFFICERS   14
ITEM 6.   EXECUTIVE COMPENSATION   15
ITEM 7.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE   15
ITEM 8.   LEGAL PROCEEDINGS   15
ITEM 9.   MARKET PRICE OF AND DIVIDENDS ON THE COMPANY’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS   16
ITEM 10.   RECENT SALES OF UNREGISTERED SECURITIES   16
ITEM 11.   DESCRIPTION OF COMPANY’S SECURITIES TO BE REGISTERED   16
ITEM 12.   INDEMNIFICATION OF DIRECTORS AND OFFICERS   17
ITEM 13.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA   18
ITEM 14.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE   18
ITEM 15.   FINANCIAL STATEMENT AND EXHIBITS   F-1

  

i

 

 

Explanatory Note

 

This Amendment No.2 to Form 10-12G (the “Amendment”) amends the Form 10-12G of Adorbs Inc. that was originally filed with the U.S. Securities and Exchange Commission on October 7, 2020.

 

The Amendment is being filed to update certain disclosures, and had no impact, whatsoever, on the Company’s financial statements or footnotes. For the convenience of the reader, this Amendment sets forth the Original Filing, as amended, in its entirety; however, except as described above, this Amendment only modifies, amends, or updates Item 1, Item 1A, Item 4, Item 13, Item 14, the Exhibit Index and the footnotes to the financial statements for the periods ended June 30, 2020 and December 31, 2019. This Amendment does not modify, amend, or update any other disclosures or information presented in the Original Filing.

 

 

 

 

PART I

 

ITEM 1. DESCRIPTION OF BUSINESS

 

Adorbs Inc. (“Adorbs”, or the “Company”) was incorporated under the laws of the State of Nevada on October 18, 2017. Adorbs is a developmental stage corporation formed to provide organic children’s clothing designed to be cute, comfortable, and trendy. The vision of Adorbs is bright, basic & comfortable organic clothes, if the price of organic material makes financial sense, including wearable and comfortable cute clothes, leggings, t-shirt, sweatshirts, skirts, dresses, and onesies (the “Clothing Line”). The clothing has and will have basic bold colors, such as black, red, orange, yellow, green, grey, blue, purple, and fuchsia. It includes and will include, a variety of ideas with patch work, appliqué, food, emojis, animals, letters, words. This way, a child could tell a story about their clothing.

 

Furthermore, the Company has applied for the word mark ADORBS: U.S. Application Serial No. 87/752,589, as well as the Adorbs logo: U.S. Application Serial No. 87/752,591. These applications have been approved by the trademark office for publication. Each of the patents has a ten-year duration and will have to be renewed in 2028.

 

Former management was comprised of two people, Rebecca Jill Lazar, President; and Michael Lazar, Chief Financial Officer. Due to the development stage of the Company, Ms. Lazar spent part of her time toward the everyday operations and forward movement of the corporation. Ms. Lazar’s responsibilities included acting as the Company’s creative designer as well as determining the overall design direction of the company and its marketing strategy. Ms. Lazar cultivated relationships with children’s clothing stores and manufacturers and spent the time necessary to oversee the product development, manufacturing, sales, and marketing campaigns, website design, and direct the primary operations of the business.

 

On January 19, 2018, the Company filed a Form S-1 for registration of securities under the Securities Act of 1933. The S-1 was declared effective on March 14, 2018, and at that time the Company became a fully reporting public company. The Company filed its first Form 10-Q on May 10, 2018, for the period ended March 31, 2018, and subsequently filed all required reports until through the period ended March 31, 2019. On July 1, 2019, the Company filed a Form 15 to terminate its registration. Despite her best efforts, Ms. Lazar determined during the three months ended June 30, 2020, that the Company’s business plan was no longer viable. Subsequently, during July 2020, Ms. Lazar and her husband Michael Lazar resigned their positions executive positions with the Company and gifted their majority shareholdings for no consideration to Activist Investing LLC, an entity controlled by Michael Lazar’s brother, David Lazar. These shares were gifted in return for David Lazar’s commitment to provide funding to the Company going forward and for his expertise in managing and directing distressed companies.

 

Activist Investing LLC received 11,000,000 shares from Ms. Lazar, and 10,000,000 shares from Michael Lazar for a total of 21,000,000 shares. Based upon 23,889,500 shares outstanding, this effectively gave David Lazar 87.9% ownership of the Company. Concurrently with the change of control, David Lazar was appointed as CEO and Director and is currently the only employee, officer, and director of the Company. As a result of these transactions, the Company become a “blank check” company.

  

On June 22, 2020 the Company dismissed Michael Gillespie & Associates, PLLC “Gillespie”) as its independent registered public accounting firm who had performed the audit of the Company’s 2018 financial statements for the year ended December 31, 2018. Gillespie’s report on the Company’s financial statements for the year ended December 31, 2018 did not contain any adverse opinions or disclaimers of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that such reports included explanatory paragraphs with respect to the Company’s ability to continue as a going concern. During the year ended December 31, 2018, and through June 21, 2020, there were no (a) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) with Gillespie on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to satisfaction, would have caused Gillespie to make reference to the subject matter thereof in connection with its reports for the period ended 2018 or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.

 

On June 22, the Company appointed AJSH & Co. LLP, a PCOAB registered firm as its independent registered accounting firm who performed the Company’s audit for the period ended December 31, 2019 and has reviewed its financial statements for the three and nine month period ended June 30, 2020.

 

Our Business

 

Adorbs Inc. (“Adorbs”, or the “Company”) was incorporated under the laws of the State of Nevada on October 18, 2017. Adorbs is a developmental stage corporation formed to provide mostly organic children’s clothing designed to be cute, comfortable, and trendy. The vision of Adorbs is bright, basic, and comfortable organic clothes, if the price of organic material makes financial sense, including wearable and comfortable cute clothes, leggings, t-shirt, sweatshirts, skirts, dresses, and onesies (the “Clothing Line”). The clothing had basic bold colors, such as black, red, orange, yellow, green, grey, blue, purple, and fuchsia. It includes and will include, a variety of ideas with patch work, appliqué, food, emojis, animals, letters, words. This way, a child could tell a story about their clothing. 

 

Our Principal Products And Services

 

The Company intended to develop bright, basic, and comfortable organic clothes, if the price of organic material makes financial sense, including wearable and comfortable cute clothes, leggings, t-shirt, sweatshirts, skirts, dresses, and onesies. The clothing had bold colors, such as black, red, orange, yellow, green, grey, blue, purple, and fuchsia. It includes and will include, a variety of ideas with patch work, appliqué, food, emojis, animals, letters, words. This way, a child could tell a story about their clothing.

 

1

 

 

The Company is a Blank Check Company

 

At present, the Company is a development stage company with minimal assets and no specific business plan or purpose. The Company’s business plan is to seek new business opportunities or to engage in a merger or acquisition with an unidentified company. As a result, the Company is a “blank check company” and, as a result, any offerings of the Company’s securities under the Securities Act of 1933, as amended (the “Securities Act”) must comply with Rule 419 promulgated by the Securities and Exchange Commission (the “SEC”) under the Act. The Company’s Common Stock is a “penny stock,” as defined in Rule 3a51-1 promulgated by the SEC under the Securities Exchange Act. The Penny Stock rules require a broker-dealer, prior to a transaction in penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about Penny Stocks and the nature and level of risks in the penny stock market.

 

The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each Penny Stock held in the customer’s account. Also, the Penny Stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the Penny Stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the Penny Stock rules. So long as the common stock of the Company is subject to the Penny Stock rules, it may be more difficult to sell the Company’s common stock.

 

We are a “Shell Company,” as defined in Rule 405 promulgated by the SEC under the Securities Act. A Shell Company is one that has no or nominal operations and either: (i) no or nominal assets; or (ii) assets consisting primarily of cash or cash equivalents. As a Shell Company, we are restricted in our use of Registrations on Form S-8 under the Securities Act; the lack of availability of the use of Rule 144 by security holders; and the lack of liquidity in our stock.

 

Form S-8

 

Shell companies are prohibited from using Form S-8 to register securities under the Securities Act. If a company ceases to be a Shell Company, it may use Form S-8 sixty calendar days, provided it has filed all reports and other materials required to be filed under the Exchange Act during the preceding 12 months (or for such shorter period that it has been required to file such reports and materials after the company files “Form 10 information,” which is information that a company would be required to file in an amended registration statement on Form 10 if it were registering a class of securities under Section 12 of the Exchange Act. This information would normally be reported on a current report on Form 8-K reporting the completion of a transaction that caused the company to cease being a Shell Company.

 

Unavailability of Rule 144 for Resale

 

Rule 144(i) “Unavailability to Securities of Issuers With No or Nominal Operations and No or Nominal Non-Cash Assets” provides that Rule 144 is not available for the resale of securities initially issued by an issuer that is a Shell Company. We have identified our company as a Shell Company and, therefore, the holders of our securities may not rely on Rule 144 to have the restriction removed from their securities without registration or until the Company is no longer identified as a Shell Company and has filed all requisite periodic reports under the Exchange Act for twelve (12) months.

 

As a result of our classification as a Shell Company, our investors are not allowed to rely on the “safe harbor” provisions of Rule 144, promulgated pursuant to the Securities Act, so as not to be considered underwriters in connection with the sale of our securities until one year from the date that we cease to be a Shell Company. This will likely make it more difficult for us to attract additional capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities.

 

Our Common Stock is Not Traded

 

Our common stock is not traded on any national exchange and common stock is not yet quoted on the OTC Markets,

 

We will be deemed a blank check company under Rule 419 of the Securities Act

 

The provisions of Rule 419 apply to amended registration statements filed under the Securities Act by a blank check company, such as the Company. Rule 419 requires that a blank check company filing an amended registration statement deposit the securities being offered and proceeds of the offering into an escrow or trust account pending the execution of an agreement for an acquisition or merger. While we are not currently registering shares for an offering, we may do so in the future.

 

In addition, an issuer is required to file a post-effective amendment to an amended registration statement upon the execution of an agreement for an acquisition or merger. The rule provides procedures for the release of the offering funds, if any, in conjunction with the post-effective acquisition or merger. The obligations to file post-effective amendments are in addition to the obligations to file Forms 8-K to report for both the entry into a material definitive (non-ordinary course of business) agreement and the completion of the transaction. Rule 419 applies to both primary and re-sale or secondary offerings.

 

2

 

 

Within five (5) days of filing a post-effective amendment setting forth the proposed terms of an acquisition, the Company must notify each investor whose shares are in escrow, if any. Each such investor then has no fewer than 20 and no greater than 45 business days to notify the Company in writing if they elect to remain an investor. A failure to reply indicates that the person has elected to not remain an investor. As all investors are allotted this second opportunity to determine to remain an investor, acquisition agreements should be conditioned upon enough funds remaining in escrow to close the transaction.

 

Effecting a business combination

 

Prospective investors in the Company’s common stock will not have an opportunity to evaluate the specific merits or risks of any of the one or more business combinations that we may undertake A business combination may involve the acquisition of, or a merger with, a company which needs to raise substantial additional capital by means of being a publicly trading company, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and State securities laws. A business combination may involve a company that may be financially unstable or in its early stages of development or growth.

 

The Company has not identified a target business or target industry

 

The Company’s effort in identifying a prospective target business will not be limited to a particular industry and the Company may ultimately acquire a business in any industry Management deems appropriate. To date, the Company has not selected any target business on which to concentrate our search for a business combination. While the Company intends to focus on target businesses in the United States, it is not limited to U.S. entities and may consummate a business combination with a target business outside of the United States. Accordingly, there is no basis for investors in the Company’s common stock to evaluate the possible merits or risks of the target business or the particular industry in which we may ultimately operate. To the extent we effect a business combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and early-stage or potential emerging growth companies. In addition, to the extent that we effect a business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes many industries that experience rapid growth. In addition, although the Company’s Management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

 

Sources of target businesses

 

Our Management anticipates that target business candidates will be brought to our attention from various unaffiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers, and other members of the financial community, who may present solicited or unsolicited proposals. Our Management may also bring to our attention target business candidates. While we do not presently anticipate engaging the services of professional firms that specialize in business acquisitions on any formal basis, we may engage these firms in the future, in which event we may pay a finder’s fee or other compensation in connection with a business combination. In no event, however, will we pay Management any finder’s fee or other compensation for services rendered to us prior to or in connection with the consummation of a business combination.

 

Selection of a target business and structuring of a business combination

 

Management owns 21,000,000 of the issued and outstanding shares of common stock, and will have broad flexibility in identifying and selecting a prospective target business. In evaluating a prospective target business, our Management will consider, among other factors, the following:

 

financial condition and results of operation of the target company;

 

growth potential;

 

experience and skill of Management and availability of additional personnel;

 

capital requirements;

 

competitive position;

 

stage of development of the products, processes, or services;

 

degree of current or potential market acceptance of the products, processes, or services;

 

proprietary features and degree of intellectual property or other protection of the products, processes, or services;

 

regulatory environment of the industry; and

 

costs associated with effecting the business combination.

  

3

 

  

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our Management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct a due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which will be made available to us.

 

We will endeavor to structure a business combination to achieve the most favorable tax treatment to us, the target business, and both companies’ stockholders. However, there can be no assurance that the Internal Revenue Service or applicable state tax authorities will necessarily agree with the tax treatment of any business combination we consummate.

 

The time and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty. Any costs incurred concerning the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us.

 

Probable lack of business diversification

 

While we may seek to effect business combinations with more than one target business, it is more probable that we will only have the ability to effect a single business combination, if at all. Accordingly, the prospects for our success may be entirely dependent upon the future performance of a single business. Unlike other entities which may have the resources to complete several business combinations with entities operating in multiple industries or multiple areas of a single industry, it is probable that we will lack the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity, our lack of diversification may:

 

subject us to numerous economic, competitive, and regulatory developments, any, or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and

 

result in our dependency upon the development or market acceptance of a single or limited number of products, processes, or services.

 

Limited ability to evaluate the target business

 

We cannot assure you that our assessment of the target business’ Management will prove to be correct. In addition, we cannot assure you that the future Management will have the necessary skills, qualifications, or abilities to man

 

age a public company intending to embark on a program of business development. Furthermore, the future role of our director, if any, in the target business cannot presently be stated with any certainty.

 

While our director may remain associated in some capacity with us following a business combination, it is unlikely that he will devote his full efforts to our affairs subsequent to a business combination. Moreover, we cannot assure you that our director will have significant experience or knowledge relating to the operations of the particular target business.

 

Following a business combination, we may seek to recruit additional managers to supplement the incumbent Management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge, or experience necessary to enhance the incumbent Management.

 

Our auditors have expressed substantial doubt about our ability to continue as a going concern

 

Our audited financial statements for the years ended December 31, 2019, and 2018, were prepared using the assumption that we will continue our operations as a going concern. Our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Our operations are dependent on our ability to raise sufficient capital or complete business combination as a result of which we become profitable. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. There is not enough cash on hand to fund our administrative expenses and operating expenses for the next twelve months. Therefore, we may be unable to continue operations in the future as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company’s shares of common stock.

 

4

 

 

Competition

 

In identifying, evaluating, and selecting a target business, we expect to encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations, either directly or through affiliates. Many if not virtually most of these competitors possess far greater financial, human, and other resources compared to our resources. While we believe that there are numerous potential target businesses that we may identify, our ability to compete in acquiring certain of the more desirable target businesses will be limited by our limited financial and human resources. Our inherent competitive limitations are expected by Management to give others an advantage in pursuing the acquisition of a target business that we may identify and seek to pursue. Further, any of these limitations may place us at a competitive disadvantage in successfully negotiating a business combination. Our Management believes, however, that our status as a reporting public entity with potential access to the United States public equity markets may give us a competitive advantage over certain privately-held entities having a similar business objective in acquiring a desirable target business with growth potential on favorable terms.

 

If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from existing competitors of the business we acquire. In particular, certain industries which experience rapid growth frequently attract an increasingly larger number of competitors, including those with far greater financial, marketing, technical, and other resources than the initial competitors in the industry in which we seek to operate. The degree of competition characterizing the industry of any prospective target business cannot presently be ascertained. We cannot assure you that, subsequent to a business combination, we will have the resources to compete effectively, especially to the extent that the target business is in a high-growth industry.

 

Employees

 

David Lazar, our Chief Executive Officer, is our sole executive officer. Mr. Lazar is not obligated to devote any specific number of hours per week and, in fact, intends to devote only as much time as he deem reasonably necessary to administer the Company’s affairs until such time as a business combination is consummated. The amount of time he will devote in any period will vary based on the availability of suitable target businesses to investigate. We do not intend to have any full-time employees prior to the consummation of a business combination.

 

Conflicts of Interest

 

The Company’s Management is not required to commit its full time to the Company’s affairs. As a result, pursuing new business opportunities may require a longer period than if Management would devote full time to the Company’s affairs. Management is not precluded from serving as an officer or director of any other entity that is engaged in business activities similar to those of the Company. Management has not identified and is not currently negotiating a new business opportunity for us. In the future, Management may become associated or affiliated with entities engaged in business activities similar to those we intend to conduct. In such event, Management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. In the event that the Company’s Management has multiple business affiliations, our Management may have legal obligations to present certain business opportunities to multiple entities. In the event that a conflict of interest shall arise, Management will consider factors such as reporting status, availability of audited financial statements, current capitalization, and the laws of jurisdictions. If several business opportunities or operating entities approach Management with respect to a business combination, Management will consider the foregoing factors as well as the preferences of the Management of the operating company. However, Management will act in what it believes will be in the best interests of the shareholders of the Company. The Company shall not enter into a transaction with a target business that is affiliated with Management.

 

ITEM 1A. RISK FACTORS

 

Forward-Looking Statements

 

This amended registration statement on Form 10 contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, the market in which we operate, our beliefs and our Management’s assumptions. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as “expects”, “anticipates”, “targets”, “goals”, “projects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict or assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements.

 

Any investment in our shares of common stock involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information contained in this annual report before you decide to invest in our common stock. Each of the following risks may materially and adversely affect our business objective, plan of operation and financial condition. These risks may cause the market price of our common stock to decline, which may cause you to lose all or a part of the money you invested in our common stock. We provide the following cautionary discussion of risks, uncertainties, and possible inaccurate assumptions relevant to our business plan. In addition to other information included in this annual report, the following factors should be considered in evaluating the Company’s business and future prospects.

 

5

 

 

Company has a limited operating history and very limited resources.

 

Since Activist Investing, LLC managed by David Lazar took over controlling interest in the Company, the Company’s operations have been limited to seeking a potential business combination, and to generate revenue, which has been minimal from operations. Investors will have no basis upon which to evaluate the Company’s ability to achieve the Company’s business objective, which is to effect a merger, capital stock exchange, and/or acquire an operating business.

 

Our auditors have expressed substantial doubt about our ability to continue as a going concern.

 

As of June 30, 2020, we had $16,295 in cash and cash equivalents and an accumulated deficit of $33,972. Our audited financial statements for the years ended December 31, 2019, and December 31, 2018, were prepared using the assumption that we will continue our operations as a going concern. Our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Our operations are dependent on our ability to raise sufficient capital or complete business combination as a result of which we become profitable. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.

 

There is not enough cash on hand to fund our administrative expenses and operating expenses for the next twelve months. Therefore, we may be unable to continue operations in the future as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company’s shares of common stock.

 

Since the Company has not yet selected a particular target industry or target business with which to complete a business combination, the Company is unable to ascertain the merits or risks associated with any particular business or industry.

 

Since the Company has not yet identified a particular industry or prospective target business, there is no basis for investors to evaluate the possible merits or risks of the target business which the Company may ultimately acquire. If the Company completes a business combination with a financially unstable company or an entity in its development stage, the Company may be affected by numerous risks inherent in the operations of those entities. Although the Company’s Management intends to evaluate the risks inherent in a particular industry or target business, the Company cannot assure you that it will properly ascertain or assess all of the significant risk factors. There can be no assurance that any prospective business combination will benefit shareholders or prove to be more favorable to shareholders than any other investment that may be made by shareholders and investors.

 

Unspecified and unascertainable risks

 

There is no basis for shareholders to evaluate the possible merits or risks of potential business combination. To the extent that the Company effects a business combination with a financially unstable operating company or an entity that is in its early stage of development or growth, the Company will become subject to numerous risks. If the Company effects a business combination with an entity in a high-risk industry, the Company will become subject to the currently unascertainable risks of that industry. Although Management will endeavor to evaluate the risks inherent in a particular business or industry, there can be no assurance that Management will properly ascertain or assess all such risks that the Company perceived at the time of the consummation of a business combination.

 

It is likely that the Company’s current sole officer and director will resign upon consummation of a business combination and the Company will have only limited ability to evaluate the Management of the target business.

 

The Company’s ability to successfully effect a business combination will be dependent upon the efforts of the Company’s Management. The future role of Management in the target business cannot presently be ascertained. Although it is possible that Management may remain associated with the target business following a business combination, it is likely that the Management of the target business will remain in place. Although the Company intends to closely scrutinize the management of a target business in connection with evaluating the desirability of effecting a business combination, the Company cannot assure you that the Company’s assessment of Management will prove to be correct.

 

Dependence on key personnel

 

The Company is dependent upon the continued services of Management. To the extent that his services become unavailable, the Company will be required to obtain other qualified personnel and there can be no assurance that it will be able to recruit qualified persons upon acceptable terms.

 

6

 

 

The Company’s sole officer and director may allocate his time to other businesses activities, thereby causing conflicts of interest as to how much time to devote to the Company’s affairs. This could have a negative impact on the Company’s ability to consummate a business combination in a timely manner, if at all.

 

The Company’s sole officer and director, Mr. David Lazar is not required to commit his full time to the Company’s affairs, which may result in a conflict of interest in allocating his time between the Company’s business and other businesses. The Company does not intend to have any full-time employees prior to the consummation of a business combination.

 

If Management’s other business affairs require him to devote more time to such affairs, it could limit his ability to devote time to the Company’s affairs and could have a negative impact on the Company’s ability to consummate a business combination. Furthermore, we do not have an employment agreement with Mr. Lazar. For the period ended June 30, 2020, the Company had a loan payable of $10,350 owed to David Lazar. This loan is unsecured and noninterest bearing. . These management services provided by Mr. Lazar, the Company’s only employee, are to manage the day to day operations of the Company; and take the necessary actions to enable the Company to become a viable operating entity. The note bears no interest and is payable on demand.

 

The Company may be unable to obtain additional financing, if and when required, to complete a business combination or to fund the operations and growth of the business combination target, which could compel the Company to restructure a potential business combination transaction or to entirely abandon a particular business combination.

 

The Company has not yet identified any prospective target business. If we require funds for a particular business combination, because of the size of the business combination or otherwise, we will be required to seek additional financing, which may or may not be available on terms and conditions satisfactory to the Company, if at all. To the extent that additional financing proves to be unavailable when and if needed to consummate a particular business combination, we would be compelled to restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. The Company’s officer, director or stockholders are not required to provide any financing to us in connection with or after a business combination.

 

It is probable that the Company will only be able to enter into one business combination, which will cause us to be solely dependent on such single business and a limited number of products or services.

 

It is probable that the Company will enter into a business combination with a single operating business. Accordingly, the prospects for the Company’s success may be:

 

solely dependent upon the performance of a single operating business, or

 

dependent upon the development or market acceptance of a single or limited number of products or services.

 

In this case, the Company will not be able to diversify the Company’s operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities that may have the resources to complete several business combinations in different industries or different areas of a single industry.

 

The Company has limited resources and there is significant competition for business combination opportunities. Therefore, the Company may not be able to enter into or consummate an attractive business combination.

 

The Company expects to encounter intense competition from other entities having a business objective similar to the Company’s, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human, and other resources than the Company does and the Company’s financial resources are limited when contrasted with those of many of these competitors. While the Company believes that there are numerous potential target businesses that it could acquire, the Company’s ability to compete in acquiring certain sizable target businesses will be limited by the Company’s limited financial resources and the fact that the Company will use its common stock to acquire an operating business. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.

 

The Company may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel the Company to restructure a potential business transaction or abandon a particular business combination.

 

We may be required to seek additional financing. We cannot assure you that such financing would be available on acceptable terms, if at all. If additional financing proves to be unavailable, we would be compelled to restructure the transaction or abandon that particular business combination and seek an alternative target business. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business.

 

7

 

 

Financing requirements to fund operations associated with reporting obligations under the Exchange Act.

 

The Company has no revenues and is dependent upon the willingness of the Company’s Management to fund the costs associated with the reporting obligations under the Exchange Act, other administrative costs associated with the Company’s corporate existence and expenses related to the Company’s business objective. The Company is not likely to generate any revenues until the consummation of a business combination, at the earliest. The Company believes that it will have available sufficient financial resources available from its Management to continue to pay accounting and other professional fees and other miscellaneous expenses that may be required until the Company commences business operations following a business combination.

 

We are dependent upon interim funding provided by Management or an affiliated party to pay professional fees and expenses. Our Management has provided funding, without formal agreement, as has been required to pay for accounting fees and other administrative expenses of the Company.

 

The Company does not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing potential business combination candidates and preparing and filing Exchange Act reports for what may be an unlimited period of time will be paid by our sole officer and director, or an affiliated party notwithstanding the fact that there is no written agreement to pay such costs. Mr. Lazar and/or an affiliated party have informally agreed to pay the Company’s expenses in the form of advances that are unsecured, non-interest bearing. The Company intends to repay these advances when it has the cash resources to do so. On June 30, 2020, the Company had a loan payable of $10,350 owed to David Lazar. This loan is unsecured and noninterest bearing. The note bears no interest and is payable on demand. These management services provided by Mr. Lazar, the Company’s only employee, are to manage the day to day operations of the Company; and take the necessary actions to enable the Company to become a viable operating entity.

 

Based on Mr. Lazar’s resource commitment to fund our operations, we believe that we will be able to continue as a going concern until such time as we conclude a business combination. During the next 12 months we anticipate incurring costs related to:

 

filing of Exchange Act reports.

 

franchise fees, registered agent fees, legal fees, and accounting fees, and

 

investigating, analyzing, and consummating an acquisition or business combination.

 

We estimate that these costs will range from five to six thousand dollars per year and that we will be able to meet these costs as necessary through loans/advances from Management or affiliated parties until we enter into a business combination. 

 

The Company’s sole officer is in a position to influence certain actions requiring stockholder vote.

 

The Company's sole officer, David Lazar owns 87.9% of the Company’s stock. Management has no present intention to call for an annual meeting of stockholders to elect new directors prior to the consummation of a business combination. As a result, our current director will continue in office at least until the consummation of the business combination. If there is an annual meeting of stockholders for any reason, the Company’s Management has broad discretion regarding proposals submitted to a vote by shareholders as a consequence of Management’s significant equity interest. Accordingly, the Company’s Management will continue to exert substantial control at least until the consummation of a business combination.

 

Broad discretion of Management

 

Any person who invests in the Company’s common stock will do so without an opportunity to evaluate the specific merits or risks of any prospective business combination. As a result, investors will be entirely dependent on the broad discretion and judgment of Management in connection with the selection of a prospective business combination. There can be no assurance that determinations made by the Company’s Management will permit us to achieve the Company’s business objectives.

 

Reporting requirements may delay or preclude a business combination

 

Pursuant to the requirements of Section 13 of the Exchange Act, the Company is required to provide certain information about significant acquisitions and other material events. The Company will continue to be required to file quarterly reports on Form 10-Q and annual reports on Form 10-K, which annual report must contain the Company’s audited financial statements. As a reporting company under the Exchange Act, following any business combination, we will be required to file a report on Form 8-K, which report contains audited financial statements of the acquired entity. These audited financial statements must be filed with the SEC within 5 days following the closing of a business combination. While obtaining audited financial statements is typically the responsibility of the acquired company, it is possible that a potential target company may be a non-reporting company with unaudited financial statements. The time and costs that may be incurred by some potential target companies to prepare such audited financial statements may significantly delay or may even preclude the consummation of an otherwise desirable business combination. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition because we are subject to the reporting requirements of the Exchange Act.

 

8

 

 

If the Company is deemed to be an investment company, the Company may be required to institute burdensome compliance requirements and the Company’s activities may be restricted, which may make it difficult for the Company to enter into a business combination.

 

restrictions on the nature of the Company’s investments; and

 

restrictions on the issuance of securities, which may make it difficult for us to complete a business combination.

 

In addition, we may have imposed upon us burdensome requirements, including:

 

registration as an investment company;

 

adoption of a specific form of corporate structure; and

 

reporting, record keeping, voting, proxy and disclosure requirements, and other rules and regulations.

 

The Company does not believe that its anticipated principal activities will subject it to the Investment Company Act of 1940.

 

The Company has no “Independent Director”, so actions taken and expenses incurred by our officer and director on behalf of the Company will generally not be subject to “Independent Review”.

 

Our director owns approximately 87.9% of the outstanding shares of our common stock and, although no compensation will be paid to him for services rendered prior to or in connection with a business combination, he may receive reimbursement for out-of-pocket expenses incurred by him in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of director, which consist of one directors who may seek reimbursement. If our director will not be deemed “independent,” he will generally not have the benefit of independent director examining the propriety of expenses incurred on our behalf and subject to reimbursement. Although the Company believes that all actions taken by our director on the Company’s behalf will be in the Company’s best interests, the Company cannot assure the investor that this will be the case. If actions are taken, or expenses are incurred that are not in the Company’s best interests, it could have a material adverse effect on our business and plan of operation and the price of our stock held by the public stockholders.

 

General Economic Risks.

 

The Company’s current and future business objectives and plan of operation are likely dependent, in large part, on the state of the general economy. Adverse changes in economic conditions may adversely affect the Company’s business objective and plan of operation. These conditions and other factors beyond the Company’s control include also, but are not limited to regulatory changes.

  

Risks Related to Our Common Stock

 

The Company’s shares of common stock do not trade on any exchange.

 

There can be no assurance that there will be a liquid trading market for the Company’s common stock following a business combination. In the event that a liquid trading market commences, there can be no assurance as to the market price of the Company’s shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.

 

Rule 144 Related Risks

 

The SEC adopted amendments to Rule 144 which became effective on February 15, 2008. These Rule 144 amendments apply to securities acquired both before and after that date. Generally, under the Rule 144 amendments, a person who has beneficially owned restricted shares for at least six months would be entitled to sell their securities provided that: (i) such person is not deemed to have been an affiliate at the time of, or at any time during the three months preceding, a sale; (ii) we are subject to and are current in the Exchange Act periodic reporting requirements for at least 90 days before the sale; and (iii) if the sale occurs prior to satisfaction of a one-year holding period, provided current information is available at the time of sale.

 

Persons who have beneficially owned restricted shares for at least six months but who are affiliates at the time of, or at any time during the three months preceding a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three months only a number of securities that does not exceed the greater of either of the following: (i) 1% of the total number of securities of the same class then outstanding; or (ii) the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale; provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. Such sales by affiliates must also comply with the manner of sale, current public information, and notice provisions of Rule 144.

 

9

 

 

These Rule 144 related risks are subject to further restrictions in the event that the Exchange Act reporting company is deemed to be a Shell Company, such as the Company.

 

Restrictions on the Reliance of Rule 144 by Shell Companies or Former Shell Companies

 

Historically, the SEC staff has taken the position that Rule 144 is not available for the resale of securities initially issued by companies that are or previously were, blank check companies, like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the use of Rule 144 for the resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an important exception to this prohibition, however, if the following conditions are met:

 

The issuer of the securities that was formerly a shell company has ceased to be a shell company;
   
The issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
   
The issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and
   
At least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company.

 

As a result, it is likely that pursuant to Rule 144, stockholders who receive our restricted securities in a business combination will not be able to sell our shares without registration until one year after we have completed our initial business combination.

 

Rule 145 Related Risk

 

Under the new amendments, affiliates of a target company who receive registered shares in a Rule 145 business combination transaction, and who do not become affiliates of the acquirer, will be able to immediately resell the securities received by them into the public markets without registration (except for affiliates of a shell company as discussed in the following section). However, those persons who are affiliates of the acquirer, and those who become affiliates of the acquirer after the acquisition, will still be subject to the Rule 144 resale conditions generally applicable to affiliates, including the adequate current public information requirement, volume limitations, manner-of-sale requirements for equity securities, and, if applicable, a Form 144 filing.

 

Application of Rule 145 to Shell Companies

 

Public resale of securities acquired by affiliates of acquirers and target companies in business combination transactions involving shell companies will continue to be subject to restrictions imposed by Rule 145. If the business combination transaction is not registered under the Securities Act, then the affiliates must look to Rule 144 to resell their securities (with the additional Rule 144 conditions applicable to shell company securities). If the business combination transaction is registered under the Securities Act, then affiliates of the acquirer and target company may resell the securities acquired in the transaction, subject to the following conditions:

 

The issuer must meet all of the conditions applicable to shell companies under Rule 144;
   
After 90 days from the date of the acquisition, the affiliates may resell their securities subject to Rule 144’s volume limitations, adequate current public information requirement, and manner-of-sale requirements;
   
After six months from the date of the acquisition, selling security-holders who are not affiliates of the acquirer may resell their securities subject only to the adequate current public information requirement of Rule 144; and
   
After one year from the date of the acquisition, selling security-holders who are not affiliates or the acquirer may resell their securities without restriction.

 

Application of Rule 419 to Shell Companies

 

The provisions of Rule 419 apply to amended registration statements filed under the Securities Act of 1933, as amended, by a blank check company. Rule 419 requires that a blank check company filing such amended registration statement deposit the securities being offered and proceeds of the offering into an escrow or trust account pending the execution of an agreement for an acquisition or merger.

 

In addition, the Company is required to file a post-effective amendment to the amended registration statement upon the execution of an agreement for such acquisition or merger. The rule provides procedures for the release of the offering funds in conjunction with the post-effective acquisition or merger. The obligations to file post-effective amendments are in addition to the obligations to file Forms 8-K to report for both the entry into a material non-ordinary course agreement and the completion of the transaction. Rule 419 applies to both primary and re-sale or secondary offerings.

 

Within five (5) days of filing a post-effective amendment setting forth the proposed terms of an acquisition, the Company must notify each investor whose shares are in escrow. Each investor then has no fewer than 20 and no greater than 45 business days to notify the Company in writing if they elect to remain an investor. A failure to reply indicates that the person has elected to not remain an investor. As all investors are allotted this second opportunity to determine to remain an investor, acquisition agreements should be conditioned upon enough funds remaining in escrow to close the transaction.

 

10

 

 

You May Not Be Entitled to Protections Normally Afforded to Investors of Bank Check Companies.

 

If the net proceeds of an offering under the Securities Act of 1933 is used to complete an initial business combination with a target business that has not been identified, and we will have net tangible assets in excess of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules which would, for example, completely restrict the transferability of our securities, require us to complete our initial business combination within 18 months of the effective date of the initial amended registration statement and restrict the use of interest earned on the funds held in the trust account.

 

Investors will then not be entitled to protections normally offered to investors in Rule 419 blank check offerings.

 

Dividends unlikely

 

The Company does not expect to pay dividends for the foreseeable future because it has no revenues or cash resources. The payment of dividends will be contingent upon the Company’s future revenues and earnings, if any, capital requirements and overall financial conditions. The payment of any future dividends will be within the discretion of the Company’s board of directors as then constituted. The Company expects that future Management following a business combination will determine to retain any earnings for use in its business operations and accordingly, the Company does not anticipate declaring any dividends in the foreseeable future.

 

ITEM 2. FINANCIAL INFORMATION

 

Management’s Plan of Operation

 

The following discussion contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use of words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.

 

Overview

 

The Company’s current business objective is to seek a business combination with an operating company. We intend to use the Company’s limited personnel and financial resources in connection with such activities. The Company will utilize its capital stock, debt or a combination of capital stock and debt, in effecting a business combination. It may be expected that entering into a business combination will involve the issuance of restricted shares of capital stock. The issuance of additional shares of our capital stock:

 

may significantly reduce the equity interest of our stockholders;
   
will likely cause a change in control if a substantial number of our shares of capital stock are issued, and most likely will also result in the resignation or removal of our present officer and director; and
   
may adversely affect the prevailing market price for our common stock.

 

Similarly, if we issued debt securities, it could result in:

 

default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations;
   
acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contained covenants that required the maintenance of certain financial ratios or reserves and any such covenants were breached without a waiver or renegotiations of such covenants;
   
our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and
   
our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financing while such security was outstanding.

 

Results Of Operations During The Year Ended December 31, 2020 As Compared To The Year Ended December 31, 2019

 

Revenue

 

For the year ended December 31, 2019, the Company generated $17,880 in revenues. For the year ended December 31, 2018, the Company generated $11,780 in revenues. We had booths at prominent and less prominent venues. We have been continually selling merchandise steadily. Adorbs Apparel is selling in various boutiques in New York and Connecticut. Interested stores in both New Jersey and Massachusetts will begin to carry and sell Adorbs clothing. Everything Deals, an on-line market in the US purchased a large selection of Adorbs Apparel to sell. Apparel is selling in Connecticut at a Children/s Boutique, in New York at Frippery, and at Carly’z Craze in New Jersey.

 

11

 

 

Expenses

 

For the year ended December 31, 2019, we incurred operating expenses of $34,726, which consisted of general and administrative expenses of $10,993 and professional fees of $23,733. For the year ended December 31, 2018, we incurred operating expenses in the amount of $45,638 which consisted of research and development of $649, $14,065 of general and administrative expenses and $30,924 of professional fees. The decrease is due to decreased additional accounting and legal fees associated with the preparation and filing of the Company S-1 registration statement with the Securities and Exchange Commission which occurred 2018.

 

Net Loss

 

For the year months ended December 31, 2019 we incurred a net loss of $22,586. We had net loss of $38,161 for the year ended December 31, 2018. The decrease in net loss is due to an increase in revenue of $6,100 for the year ended December 31, 2019, offset by cost of goods sold of $5,888, decreased administrative expense of $10,993, and decreased professional fees of $23,733.

 

Results Of Operations During The Six Months Ended June 30, 2020 As Compared To The Six Months Ended June 30, 2019

 

Revenue

 

For the six months ended June 30, 2020, the Company generated $24 revenue. For the six months ended June 30, 2019, the Company generated $17,553 in revenues. The decrease is due to the company restructuring its operating activities. 

 

Expenses

 

For the six months ended June 30, 2020, we incurred operating expenses of $10,779. For the six months ended June 30, 2019, we incurred operating expenses in the amount of $20,111. The decrease is due to the company restructuring its operations.

 

Net Loss

 

For the six months ended June 30, 2020, we had net loss of $10,723. For the six months ended June 30, 2019 we incurred a net loss of $8,336. The decrease in net loss is due to Company restructuring efforts.

  

Liquidity

 

Currently, we are relying on sales of our products. Currently, we pay costs associated with running a business on a day to day basis.

 

As of June 30, 2020, we had cash on hand of $16,295 with current liabilities of $84,233. We have incurred an aggregate loss for the six months ended June 30, 2020 of $10,723. We used cash of $13,759 in operating expenses for the six months ended June 30, 2020. As of December 31, 2019 we had cash on hand of $19,865 with current liabilities of $77,080. We have incurred an aggregate loss for the year ended December 31, 2019 of $22,586. We used cash of $31,874 in operating expenses for the year ended December 31, 2019.

 

To the extent that our capital resources are insufficient to meet current or planned operating requirements, we will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has no current arrangements with respect to, or sources of, such additional financing and we do not anticipate that existing shareholders will provide any portion of our future financing requirements.

 

No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, we may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company.

 

12

 

 

Off-Balance Sheet Arrangements

 

As of December 31, 2019 and 2018, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

 

Contractual Obligations and Commitments

 

As of December 31, 2019 and 2018, we did not have any contractual obligations.

 

Critical Accounting Policies

 

Our significant accounting policies are described in the notes to our financial statements for the years ended December 31, 2019 and 2018, and are included elsewhere in this amended registration statement.

  

ITEM 3. DESCRIPTION OF PROPERTY

 

The Company’s corporate office is located at 234 E. Beech Street, Long Beach, NY, 11561 which space is provided to us on a rent-free basis. The Company believes that the office facilities are sufficient for the foreseeable future and this arrangement will remain until we find a new business opportunity.

 

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information regarding the beneficial ownership of our common stock as of September 30, 2020. The information in this table provides the ownership information for: each person known by us to be the beneficial owner of more than 5% of our common stock; each of our directors; each of our executive officers; and our executive officers and directors as a group.

 

Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them.

  

Name of Beneficial Owner   Common
Stock
Beneficially
Owned (1)
    Percentage
of
Common
Stock
Owned (1)
 
David Lazar, Chief Executive Officer, Chief Financial Officer and Director (2)(3)
1185 Avenue of the Americas, 3rd Floor.
    21,000,000       87.9 %
New York, New York 10036                
                 
Director and Officer (1 person)     21,000,000       87.9 %

 

(1) Applicable percentage ownership is based on 23,889,500 shares of common stock outstanding as of September 30, 2020. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of September 30, 2020 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(2) David Lazar is the only officer, employee, and director of the Company. The common stock is held by Activist Investing LLC. Since March 2018, David Lazar has acted as the managing member of Activist Investing LLC, which specializes in active investing in distressed public companies. He has full voting and investment control of these shares.

 

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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

 

The following table sets forth the names and ages of the member of our Board of Director and our executive officers and the positions held by each.

 

Name   Age   Title
David Lazar   30   Chief Executive Officer, Chief Financial Officer and Chairman

 

David Lazar, 30, has been CEO and Chairman of the Company since May 16, 2018. David Lazar is a private investor with business experience. Mr. Lazar has been a partner at Zenith Partners International since 2013, where he specializes in research and development, sales, and marketing. Since February of 2018, Mr. Lazar has been the managing member of Custodian Ventures LLC, where he specializes in assisting distressed public companies. Since March 2018, David has acted as the managing member of Activist Investing LLC, which specializes in active investing in distressed public companies. David has a diverse knowledge of financial, legal and operations management; public company management, accounting, audit preparation, due diligence reviews and SEC regulations.

  

Mr. Lazar has also held positions and/or directorships with the following publicly-traded entities since 2015:

  

    MARKET        FROM   TO
NAME OF ISSUER    TRADED ON    POSITION(S) HELD   MM   YYYY   MM   YYYY
Rarus Technologies, Inc. (RARS)   OTCBB    CEO, Director    01   2018    05   2018 
DRS, Inc. (DRSX)        CEO, Director    07   2018    11   2018 
Energenx, Inc. (EENX)    OTC    CEO    03   2018    07   2018 
Melt, Inc. (MLTC)    OTC    Director    10   2018    03   2019 
Nevtah Capital Management Corporation (NTAH)   OTC – US    President, Chief Executive Officer & Secretary    03   2019    05   2020 
Mediashift, Inc. (MSHFQ)    OTC    Chairman, President, CEO, CFO & Secretary   03   2019    09   2019 
Sollensys Corp. (SOLS)    OTC Market   President, CEO, Secretary & Director   12   2019    08   2020
Foru Holdings, Inc (FORU)    OTC Markets   Chairman, President, CEO, CFO & Secretary   03   2020    Current    
Superbox, Inc (SBOX)    OTC Markets   Chairman, President, CEO, CFO & Secretary   03   2020    Current    
Petrone Worldwide, Inc (PFWIQ)    OTC Markets   Chairman, President, CEO, CFO & Secretary   03   2020    Current    
Gushen, Inc (GSHN)    OTC – US    Chairman, President, CEO, CFO & Secretary   03   2020    Current    
Reliance Global Group Inc. (RELI)   OTC   Director   03   2020   Current    
GHAR, Inc. (GHAR)   OTC Markets   Chairman, President, CEO, CFO & Secretary   03   2020   Current    
PhoneBrasil  (PHBR)   OTC Markets   Chairman, President, CEO, CFO & Secretary   08   2020   Current    
XXStream Entertainment, Inc.   OTC Markets   Chairman, President, CEO, CFO & Secretary   07   2020   Current    

  

David Lazar was also the sole officer and director of Shentang International, Inc. (“Shentang”), which is a blank check company. On April 29, 2020, Plentiful Limited, a Samoan company, purchased 10,000,000 shares of Shentang’s preferred stock, par value $0.001 per share, representing 98% of the voting stock, from Custodian Ventures for $225,000. This concluded Mr. Lazar’s association with Shentang. A business combination has yet to occur. Shentang has not registered any offerings under the Securities Act.

 

David Lazar was also the sole officer and director of Guozi Zhongyu Capital Holdings (formerly Melt Inc.) (“Guozi”), which was a blank check company. On February 27, 2019, Zhicheng RAO, purchased 2,185,710,000 shares of Guozi’s common stock, par value $0.00001 per share, from Custodian Ventures for $325,000, representing 99% of the voting stock. This concluded Mr. Lazar’s association with Guozi. Guozi has not registered any offerings under the Securities Act.

 

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David Lazar was also the sole officer and director of Cang Bao Tian Xia International Art Trade Center Inc. (formerly Zhongchai Machinery, Inc.) (“Cang”), which is a blank check company. On December 16, 2018, Xingtao Zhou and Yaqin Fu purchased 3,096,200 shares of common stock and 10,000,000 shares (the “Shares”) of preferred stock, each par value $0.001 per share, representing approximately 99% of the voting capital, from Custodian Ventures for $375,000. This concluded Mr. Lazar’s association with Cang. A business combination has yet to occur. Cang has not registered any offerings under the Securities Act.

 

Except for GHAR, Inc and Reliance Global Group Inc., Mr. Lazar took control of all of the companies listed by becoming the Court-appointed custodian through Custodian Ventures LLC and entity in which he is the managing member.

 

In July 2020, Rebecca Lazar and her husband Michael Lazar resigned their executive positions with the Company and gifted their majority shareholdings for no consideration to Activist Investing LLC, an entity controlled by Michael Lazar’s brother, David Lazar. These shares were gifted in return for David Lazar’s commitment to providing funding to the Company going forward and for his expertise in managing and directing distressed companies. At that time David Lazar became the Company’s sole promoter.

 

Section 16(a) Compliance

 

Section 16(a) of the Securities and Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who own beneficially more than ten percent (10%) of the Company’s Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to the Company pursuant to Section 16(a). Once the Company becomes subject to the Exchange Act of 1934, our office and director has informed us that he intends to file reports required to be filed under Section 16(a).

 

ITEM 6. EXECUTIVE COMPENSATION

 

No executive compensation was paid during the fiscal years ended December 31, 2019 and 2018. The Company had no employment agreement with any of its officers and directors.

 

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

On June 30, 2020 the Company obtained a promissory note in amount of $10,350, from Activist Investing , LLC in exchange for services. The note bears no interest and is payable on demand. These management services provided by Mr. Lazar, the Company’s only employee, are to manage the day to day operations of the Company; and take the necessary actions to enable the Company to become a viable operating entity.

 

ITEM 8. LEGAL PROCEEDING

 

None.

  

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ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Market Information

 

Our common stock does not trade on any exchange

 

As of September 30, 2020, our shares of common stock were held by approximately 50 stockholders of record. The transfer agent of our common stock is Dynamic Stock Transfer, Inc (818) 465-3422.

 

Dividends

 

Holders of common stock are entitled to dividends when, as, and if declared by the Board of Directors, out of funds legally available, therefore. We have never declared cash dividends on its common stock and our Board of Directors does not anticipate paying cash dividends in the foreseeable future as it intends to retain future earnings to finance the growth of our businesses. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

No equity compensation plan or agreements under which our common stock is authorized for issuance has been adopted during the fiscal years ended December 31, 2019 and 2018.

  

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES

 

None

 

The issuance was completed pursuant to Section 4(a)(2) of the Securities Act.

 

ITEM 11. DESCRIPTION OF COMPANY’S SECURITIES TO BE REGISTERED

 

The following statements relating to the capital stock set forth the material terms of the Company’s securities; however, reference is made to the more detailed provisions of our Certificate of Incorporation and by-laws, copies of which are filed herewith.

 

Common Stock

 

Our Certificate of Incorporation authorize the issuance of 75,000,000 shares of common stock, par value $0.001. Our holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the shareholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the board of directors in its discretion from legally available funds. In the event of a liquidation, dissolution or winding up of the Company, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock.

  

Dividends

 

Dividends, if any, will be contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will be within the discretion of our board of directors. We intend to retain earnings, if any, for use in our business operations and accordingly, the board of directors does not anticipate declaring any dividends prior to a business combination transaction, nor can there be any assurance that any dividends will be paid following any business combination.

 

16

 

 

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

Our articles of incorporation, by-laws and director indemnification agreements provide that each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including, without limitation, as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or an officer of Brenham or, in the case of a director, is or was serving at our request as a director, officer, or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity as a director, officer or trustee or in any other capacity while serving as a director, officer or trustee, shall be indemnified and held harmless by us to the fullest extent authorized by the Nevada General Corporation Law against all expense, liability and loss reasonably incurred or suffered by such.

 

Section 145 of the Nevada General Corporation Law permits a corporation to indemnify any director or officer of the corporation against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding brought by reason of the fact that such person is or was a director or officer of the corporation, if such person acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, if he or she had no reason to believe his or her conduct was unlawful. In a derivative action, (i.e., one brought by or on behalf of the corporation), indemnification may be provided only for expenses actually and reasonably incurred by any director or officer in connection with the defense or settlement of such an action or suit if such person acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be provided if such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which the action or suit was brought shall determine that the defendant is fairly and reasonably entitled to indemnity for such expenses despite such adjudication of liability.

 

Pursuant to Section 102(b)(7) of the Nevada General Corporation Law, Article Seven of our articles of incorporation eliminates the liability of a director to us for monetary damages for such a breach of fiduciary duty as a director, except for liabilities arising:

 

from any breach of the director’s duty of loyalty to us;
   
from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
   
under Section 174 of the Nevada General Corporation Law; and
   
from any transaction from which the director derived an improper personal benefit.

  

17

 

 

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The information required by this item is contained under the section of the information statement entitled “Index to Financial Statements” and the financial statements referenced therein.

 

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

In its two most recent fiscal years, the Company has had no disagreements with its independent accountants.

 

Effective as of June 22, 2020, the Company dismissed as its independent registered public accounting firm engaged to audit the Company’s financial statements. This dismissal was approved by the Company’s Board of Directors.

 

Michael Gillespie & Associates PLLC (“Gillespie”) had served as the Company’s independent auditors since October 2017.   The Company’s financial statements for the fiscal years ended December 31, 2018, and 2017, did not contain any adverse opinions or disclaimers of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that such reports included explanatory paragraphs concerning the Company’s ability to continue as a going concern.

 

During the fiscal years ended December 31, 2018, and 2017, respectively, and through June 22, 2020, there were no (a) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) with Gillespie on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to satisfaction, would have caused Gillespie to make reference to the subject matter thereof in connection with its reports for such years; or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.

 

A copy of Gillespie’s letter agreeing that no disagreements had occurred, dated June 22, 2020, is filed herewith as Exhibit 26.

 

Effective as of June 16, 2022, the Company engaged AJSH & Co. LLP (“AJSH”) as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2019.

 

During the fiscal years ended December 31, 2019, and 2018 and through the date hereof, neither the Company nor anyone on its behalf has consulted with AJSH regarding either (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided nor oral advice was provided to the Company that AJSH concluded was an important factor considered by the Company in deciding as to the accounting, auditing or financial reporting issue; or (b) any matter that was either the subject of a disagreement (as defined in paragraph 304(a)(1)(iv) of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph 304(a)(1)(v)) of Regulation S-K).

 

18

 

 

ITEM 15. FINANCIAL STATEMENT AND EXHIBITS

 

INDEX TO FINANCIAL STATEMENTS

 

  Page
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018  
   
Report of Independent Registered Public Accounting Firm F-2
   
Balance Sheets F-4
   
Statements of Operations F-5
   
Statements of Changes in Stockholders’ Equity F-6
   
Statements of Cash Flows F-7
   
Notes to Financial Statements F-8

 

FOR THE THREE AND SIX MONTHS JUNE 30, 2020 AND 2019  
   
Unaudited Balance Sheets F-13
   
Unaudited Statements of Operations F-14
   
Unaudited Statements of Changes in Stockholders’ Equity F-15
   
Unaudited Statements of Cash Flows F-16
   
Notes to Unaudited Financial Statements F-17

  

F-1

 

 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Directors of ADORBS INC.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of ADORBS INC. (the “Company”) as of December 31, 2019, the related statements of operations, changes in stockholders’ deficit and cash flows, for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flow for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of financial statement. We believe that our audits provide a reasonable basis for our opinion.

 

Substantial Doubt about the Company Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has an accumulated deficit of $72,879 and working capital deficit of $23,249. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s uncertainty in regard to going concern is also described in the Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ AJSH & Co LLP

We have served as the Company’s auditor since 2020.

 

New Delhi, India

October 7, 2020

 

F-2

 

 

MICHAEL GILLESPIE & ASSOCIATES, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

10544 ALTON AVE NE

SEATTLE, WA 98125

206.353.5736

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors & Audit Committee

Adorbs Inc.

 

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Adorbs Inc. as of December 31, 2018 and the related statements of operations, changes in stockholder’s deficit and cash flows for the year ended December 31, 2018. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and the results of its operations and its cash flows for the year ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #1 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note #1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

 

/S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC

 

We have served as the Company’s auditor since 2018.

 

Seattle, Washington

April 10, 2019

 

F-3

 

 

ADORBS INC.

BALANCE SHEETS 

   

    December 31,
2019
    December 31,
2018
 
             
ASSETS            
CURRENT ASSETS:            
Cash and cash equivalents   $ 19,865     $ 36,602  
Accounts receivable     87       42  
Prepaid expenses     12,089       -  
Inventory     21,790       27,679  
Total current assets     53,831       64,323  
                 
TOTAL ASSETS   $ 53,831     $ 64,323  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
                 
CURRENT LIABILITIES:                
Accounts payable and accrued expenses   $ 7,783     $ 557  
Deferred revenue     -       10,000  
Loan from related parties     69,297       54,459  
Total current liabilities     77,080       65,016  
                 
Total liabilities     77,080       65,016  
                 
Commitments and Contingencies     -       -  
                 
STOCKHOLDERS’ DEFICIT                
Common stock, par value $0.001 per share; 75,000,000 shares authorized; 23,889,500 and 23,860,000 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively     23,890       23,860  
Additional paid in capital     25,740       25,740  
Accumulated deficit     (72,879 )     (50,293 )
Total stockholders’ (deficit)     (23,249 )     (693 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 53,831     $ 64,323  

  

The accompanying notes are an integral part of these financial statements.

 

F-4

 

 

ADORBS INC.

STATEMENTS OF OPERATIONS

   

    For The Fiscal Year Ended
December 31,
 
    2019     2018  
SALES   $ 17,880     $ 11,780  
COST OF SALES     5,888       4,408  
GROSS MARGIN     11,992       7,372  
                 
OPERATING EXPENSES:                
Research and development Costs     -       649  
General and administrative     10,993       14,065  
Professional fees     23,733       30,924  
Total operating expenses     34,726       45,638  
                 
LOSS FROM OPERATIONS     (22,734 )     (38,266 )
                 
OTHER INCOME                
Interest income     148       105  
Total other income     148       105  
                 
NET LOSS   $ (22,586 )   $ (38,161 )
                 
Net loss per common share – basic and diluted   $ -     $ -  
                 
Weighted average common shares outstanding – basic and diluted     23,883,236       21,513,735  

 

The accompanying notes are an integral part of these financial statements.

 

F-5

 

 

ADORBS INC.

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD DECEMBER 31, 2019 AND DECEMBER 31, 2018

  

    Common Stock                 Total  
    Number of           Paid in     Accumulated     Stockholders'  
    Shares     Par Value     Capital     Deficit     Deficit  
                               
Balance - December 31, 2017     3,000,000     $ 3,000     $ -     $ (12,132 )   $ (9,132 )
                                         
Common stock subscriptions     2,860,000       2,860       25,740               28,600  
Common stock issued to founders     18,000,000       18,000                       18,000  
Net loss     -       -       -       (38,161 )     (38,161 )
Balance - December 31, 2018     23,860,000     $ 23,860     $ 25,740     $ (50,293 )   $ (693 )
                                         
Common stock issued as donations and gifts     28,000       28                       28  
Common stock issued for services     1,500       2               -       2  
Net loss     -       -       -       (22,586 )     (22,586 )
Balance - December 31, 2019     23,889,500     $ 23,890     $ 25,740     $ (72,879 )   $ (23,249 )

  

The accompanying notes are an integral part of these financial statements.

 

F-6

 

  

ADORBS INC.

STATEMENTS OF CASH FLOWS

   

    For the Period
December 31,
 
    2019     2018  
OPERATING ACTIVITIES:            
Net loss   $ (22,586 )   $ (38,161 )
Adjustments to reconcile net loss to net cash (used in) operating activities:                
Common stock issued services and donations     30       -  
                 
Changes in assets and liabilities                
Accounts receivable     (86 )     (42 )
Prepaid expense and other current assets     (12,047 )     -  
Inventory     5,588       (27,679 )
Accounts payable and accrued expenses     7,227       (3,480 )
Deferred revenue     (10,000 )     10,000  
NET CASH USED IN OPERATING ACTIVITIES     (31,874 )     (59,362 )
                 
FINANCING ACTIVITIES:                
Proceeds from related party     14,838       32,600  
Proceeds from common stock issued to related party     -       18,000  
Proceeds from common stock     -       28,600  
NET CASH PROVIDED BY FINANCING ACTIVITIES     14,838       79,200  
                 
NET (DECREASE) INCREASE IN CASH     (17,037 )     19,838  
                 
CASH – BEGINNING OF PERIOD     36,602       16,764  
CASH – END OF PERIOD   $ 19,565     $ 36,602  
                 
SUPPLEMENTAL CASHFLOW INFORMATION                
Cash paid for income taxes   $ -     $ -  
Cash paid for interest   $ -     $ -  
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES                
    $ -     $ -  

 

The accompanying notes are an integral part of these financial statements.

 

F-7

 

 

ADORBS INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD DECEMBER 31, 2019

AND DECEMBER 31, 2018

 

 

Note 1 – Organization and basis of accounting

 

Basis of Presentation and Organization

 

Adorbs Inc is a Nevada corporation. Adorbs is a developmental stage corporation formed to provide organic children’s clothing designed to be cute, comfortable, and trendy. The Company was incorporated under the laws of the State of Nevada on October 18, 2017. The company office is located at 234 E. Beech Street, Long Beach, NY 11561. On that date, the Company was authorized to issue 75,000,000 shares of common stock at $0.001 par value.

 

The accompanying condensed financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products which may become part of the Company’s product portfolio. The Company has realized minimal sales for the year ended December 31, 2019 and very limited sales for the year ended December 31, 2018. A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.

 

The accompanying condensed financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding until an amended registration statement relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital, or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

Note 2 – Summary of significant accounting assumptions and policies

 

Going Concern

 

The Company has an accumulated deficit of $72,879 and a working capital deficit of $23,249, as of December 31, 2019, and a working capital deficit of $693 as of December 31, 2018. As a result of these factors, management has determined that there is substantial doubt about the Company ability to continue as a going concern.

 

These financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time. The financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties.

 

Cash and Cash Equivalents

 

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

  

Prepaid Expenses

 

Prepaid Expenses are recorded at fair market value. The Company has accounted for $12,089 in prepaid expenses out of which $12,000 is related to the Depository Trust Company (“DTC ”) fees as of December 31, 2019. Public companies use DTC as a mechanism to service eligible securities that are freely tradable and can be transferred by DTC’s electronic book-entry system. The Company had intended to use the DTC system for its common shares but has been unable to do so to date. The Company expects to be able to use DTC in the future and will receive full credit from DTC for its prepayment, therefore none of the prepaid balance has been amortized or expensed.

 

F-8

 

 

Inventory 

 

Inventory, which is comprised of children’s clothing and is charged to inventory when purchased, is stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (“FIFO”) method. The Company evaluates inventory levels quarterly value based upon assumptions about future demand and market conditions. Any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired is written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. There were no write-downs of inventory during the years ended December 31, 2019, and December 31, 2018.

 

Revenue Recognition

 

The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

The Company defers any revenue for which the product is subject to right of return until such time as the 30 days has elapsed, and no refund will be required. As of December 31, 2019 and 2018, the Company recorded total deferred revenue of $0 and $10,000, respectively

  

Furniture and Fixtures

 

Furniture and fixtures are recorded at cost and depreciated using the straight-line method at rates determined to estimate the useful lives of the assets.

  

Long-lived assets

 

The Company accounts for its long-lived assets in accordance with FASB ASC 360-10, “Property, Plant and Equipment” which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposal value.

  

Income Taxes

 

The Company accounts for income taxes pursuant to FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

 

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws.

 

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

 

Fair Value Measurement

 

The Company values its convertible notes and amounts due to related partings and short term loans payable under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

F-9

 

 

The three levels of the fair value hierarchy are as follows:

 

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

Level 2 - Valuations for assets and liabilities that can be obtained from readily available pricing sources via independent providers for market transactions involving similar assets or liabilities. The Company’s principal markets for these securities are the secondary institutional markets, and valuations are based on observable market data in those markets.

 

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.

  

Employee Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

 

Estimates

 

The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of December 31, 2019 and December 31, 2018, and expenses for the year ended December 31, 2019 and December 31, 2018. Actual results could differ from those estimates made by management.

 

Subsequent Event

 

The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration.

  

Recent Accounting Pronouncements

 

In February 2016, the FASB issued an accounting standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, for non-public entities using a modified retrospective approach. Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.

 

F-10

 

 

Note 3 – Related party transactions

 

During the year ended December 31, 2019, the Company received $14,838 in additional loans funds from Rebeca Lazar, President and Chief Executive Officer. As of December 31, 2019 and December 31, 2018, the Company had a loan payable of $69,297 and $54,459, respectively to Rebecca Lazar, President and Chief Executive Officer. This loan is unsecured, non-interest bearing, and has no specific terms for repayment. This loan is an unsecured, non-interest bearing promissory note and is payable on demand.

 

Note 4 – Common stock

 

The Company is authorized to issue 75,000,000 shares of $.001 par value common stock. On November 29, 2017, the Company issued 3,000,000 shares of common stock with a par value of $0.001 to Rebecca Lazar, President & Chief Executive Officer for $3,000.

 

On January 16, 2018, the Company issued 11,000,000 shares of common stock to Rebecca Jill Lazar at par for a total of $11,000.

 

On January 17, 2018, the Company issued 7,000,000 shares of common stock to Rebecca Jill Lazar at par for a total of $7,000.

 

During the months of July and August 2018, the Company issued 2,860,000 shares of common stock with a par value of $0.001 at issuance prices of $0.001 per share, for a total investment of $$2,860.

 

On February 01, 2019, the Company issued a total of 1,500 shares of common stock at par to three individuals for consulting services.

 

On March 22, 2019, the Company donated a total of 14,000 shares of common stock at part to various charitable organizations. On that same date, the company gifted 14,000 shares of common stock at par to 13 individuals.

 

During the month of March 2019, Rebecca Jill Lazar (CEO) transferred 10,000,000 shares of common stock to Michael Lazar.

 

All the above securities issued were offered and issued in reliance upon the exemption from registration pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Regulation S promulgated thereunder.

 

As of December 31, 2019 and 2018, a total of 23,889,500 and 23,860,000 shares of common stock issued and outstanding.

  

Note 5 – Income Taxes

 

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.

 

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The cumulative deferred tax asset for 2019 and 2018 is $14,983 and $10,441, respectively, which is calculated by multiplying a 21% estimated tax rate by the cumulative net operating loss (NOL) adjusted for the following items:

 

For the year ended December 31,   2019     2018  
Book loss for the year   $ (22,586 )   $ (38,161 )
Permanent differences:                
Meals and entertainment     1,042       704  
Tax loss for the year     (21,544 )     (37,457 )
                 
Estimated effective tax rate     21 %     21 %
                 
Gross Deferred tax asset   $ 4,524     $ 7,866  
Valuation allowance     (4,524 )     (7,866 )
Total Deferred tax asset            

 

F-11

 

 

For the years ended December 31,   2019     2018  
Balance at beginning of year   $ 10,441     $ 2,575  
Additions     4,524       7,866  
Deductions            
Balance at end of year   $ 14,965     $ 10,441  

  

Rate Reconciliation:

 

For the years ended December 31,   2019     2018  
Federal income tax at statutory rate   $ (4,743 )   $ (8,014 )
Permanent differences     219       148  
Change in Valuation Allowance     4,524       7,866  
    $     $  

 

Uncertain Tax Positions

 

Unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the financial statements. If recognized, substantially all of the unrecognized tax benefits for the Company’s fiscal years ended December 31, 2019 and 2018 would affect the effective income tax rate. There were no unrecognized income tax benefits as of December 31, 2019 and 2018.

 

The Company recognizes the interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company did not recognize any expenses any interest and penalties as of December 31, 2019 and 2018, respectively.

 

All tax years since inception are open for examination by taxing authorities.

 

Note 6 – Concentrations

 

During the year ended December 31, 2019, the Company had one major customer comprising 95% of sales. A major customer is defined as a customer that represents 10% or greater of total sales. There was no accounts receivable for this customer as of December 31, 2019. The Company does not believe that the risk associated with these customers will have an adverse effect on the business.

  

Note 7 – Subsequent events

 

In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have had a minimal impact on our day to day operations. However this could impact our efforts to enter into a business combination as other businesses have had to adjust, reduce or suspend their operating activities. The extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. The Company is unable to predict the ultimate impact at this time.

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued, August 12, 2020, and has determined that it does not have any material subsequent events to disclose in these financial statements.

 

F-12

 

  

Adorbs Inc.

Balance Sheets

 

    June 30,     December 31,  
    2020     2019  
    (Unaudited)        
ASSETS            
CURRENT ASSETS                
Cash and cash equivalents   $ 16,295     $ 19,865  
Accounts receivable, net     87       87  
Prepaid and other current assets     12,089       12,089  
Inventory     21,790       21,790  
Total Current Assets     50,261       53,831  
TOTAL ASSETS   $ 50,261     $ 53,831  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
CURRENT LIABILITIES                
Accounts payable and accrued liabilities   $ 4,746     $ 7,783  
Due to related parties     79,487       69,297  
Total Current Liabilities     84,233       77,080  
                 
TOTAL LIABILITIES     84,233       77,080  
                 
Commitments and contingencies     -       -  
                 
Stockholders' Deficit                
Common stock: 75,000,000 shares authorized; $0.001 par value 23,889,500 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively     23,890       23,890  
Additional paid in capital     25,740       25,740  
Accumulated deficit during development stage     (83,602 )     (72,879 )
Total Stockholders' Deficit     (33,972 )     (23,249 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $ 50,261     $ 53,831  

  

 The accompanying notes are an integral part of these financial statements.

 

F-13

 

 

ADORBS INC.

STATEMENTS OF OPERATIONS

(Unaudited)

  

    For the three months ended     For the six months ended  
    June 30,     June 30,  
    2020     2019     2020     2019  
                         
SALES   $ -     $ 148     $ 24     $ 17,553  
COST OF SALES     -       -       -       (5,888 )
GROSS MARGIN     -       148       24       11,665  
                                 
OPERATING EXPENSES:                                
General and administrative     1,446       1,806       2,633       5,810  
Professional fees     5,050       4,400       8,050       14,302  
Total operating expense     6,496       6,206       10,779       20,111  
                                 
LOSS FROM OPERATIONS     (6,496 )     (6,058 )     (10,755 )     (8,446 )
                                 
OTHER INCOME (expense):                                
Interest income     15       26       32       110  
Foreign exchange (gain) loss     -       -       -       -  
Total other income (expense)     15       26       32       110  
                                 
NET LOSS   $ (6,480 )   $ (6,032 )   $ (10,723 )   $ (8,336 )
                                 
Net loss per common share – basic and diluted   $ -     $ -     $ -     $ -  
Weighted average common shares outstanding – basic and diluted     23,889,500       23,889,500       23,889,500       23,889,500  

 

The accompanying notes are an integral part of these financial statements.

 

F-14

 

 

ADORBS INC.

STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND JUNE 30, 2019

(Unaudited)

 

    Common Stock                 Total  
    Number of           Paid in     Accumulated     Stockholders’  
    Shares     Par Value     Capital     Deficit     Deficit  
                               
Balance December 31, 2018     23,860,000     $ 23,860     $ 25,740     $ (50,293 )     (693 )
                                         
Common stock issued for services     1,500       2       -       -       2  
Common stock donations and gifts     28,000       28       -       -       28  
Net loss for the period     -       -       -       (2,222 )     (2,222 )
Balance March 31, 2019     23,889,500     $ 23,890     $ 25,740     $ (52,515 )     (2,885 )
Net loss for the period     -       -       -       (6,114 )     (6,114 )
Balance June 30, 2019     23,889,500     $ 23,890     $ 25,740     $ (58,629 )     (8,999 )
                               
Balance December 31, 2019     23,889,500     $ 23,890     $ 25,740     $ (72,879 )     (23,249 )
                                         
Net loss for the period     -       -       -       (4,242 )     (4,242 )
Balance March 31, 2020     23,889,500     $ 23,890     $ 25,740     $ (77,121 )     (27,492 )
Net loss for the period     -       -       -       (6,480 )     (6,480 )
Balance June 30, 2020     23,889,500     $ 23,890     $ 25,740     $ (83,602 )     (33,972 )

 

The accompanying notes are an integral part of these financial statements.

  

F-15

 

 

ADORBS INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

   

    For The Six Months ended  
    June 30,  
    2020     2019  
CASH FLOWS FROM OPERATING ACTIVITIES            
Net loss   $ (10,723 )   $ (8,336 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Common stock issued for services     -       2  
Changes in operating assets and liabilities:                
Accounts receivable     -       (44 )
Prepaid expenses     -       (12,000 )
Inventory     -       (4,523 )
Accounts payable and accrued liabilities     (3,037 )     (4,561 )
Net Cash Used in Operating Activities     (13,759 )     (29,374 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from Related Party Debt     10,350       21,000  
Payments on Related Party Debt     (160 )     (6,012 )
Net Cash Provided by Financing Activities     10,190       14,988  
                 
Net change in cash and cash equivalents for the year     (3,569 )     (14,386 )
Cash and cash equivalents at beginning of the year     19,865       36,602  
Cash and cash equivalents at end of the year   $ 16,295     $ 22,217  
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES                
Common stock issued as donations and gifts   $ -     $ 28  

 

The accompanying notes are an integral part of these financial statements.

 

F-16

 

 

ADORBS INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2020

AND DECEMBER 31, 2019

(Unaudited)

 

 

Note 1 – Organization and basis of accounting

 

Basis of Presentation and Organization

 

Adorbs Inc is a Nevada corporation. Adorbs is a developmental stage corporation formed to provide organic children’s clothing designed to be cute, comfortable, and trendy. The Company was incorporated under the laws of the State of Nevada on October 18, 2017. The company office is located at 234 E. Beech Street, Long Beach, NY 11561. On that date, the Company was authorized to issue 75,000,000 shares of common stock at $0.001 par value.

 

The accompanying condensed financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products which may become part of the Company’s product portfolio. The Company has realized minimal sales for the six months ended June 30, 2020 and very limited sales for the year ended December 31, 2019. A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.

 

COVID -19

 

On March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread of the disease.

  

Covid-19 and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations.

  

F-17

 

 

Note 2 – Summary of significant accounting policies

 

Going Concern

 

The accompanying condensed financial statements have been prepared assuming the continuation of the Company as a going concern. As of June 30, 2020 the Company had $16,295 in cash on hand and a working capital deficit of $33,972. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding until an amended registration statement relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital, or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

Management’s Representation of Interim Financial Statements

 

The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.

  

Cash and Cash Equivalents

 

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

  

Prepaid Expenses

 

Prepaid Expenses are recorded at fair market value.. The Company has accounted $12,089 in prepaid expenses out of which $12,000 is related to the Depository Trust Company (“DTC ”) fees as of June 30, 2020. Public companies use DTC as a mechanism to service eligible securities that ae freely tradable and can be transferred by DTC’s electronic book-entry system. The Company had intended to use the DTC system for its common shares but has been unable to do so to date. The Company expects to be able to use DTC in the future and will receive full credit from DTC for its prepayment, therefore none of the prepaid balance has been amortized or expensed.

 

Inventory 

 

Inventory, which is comprised of children’s clothing and is charged to inventory when purchased, is stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (“FIFO”) method. . Except one nominal sale of $24 during the period from January 1, 2020, through the period ended June 30, 2020, the inventory balance remained unchanged at $21,790. The Company evaluates inventory levels quarterly value based upon assumptions about future demand and market conditions. Any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired are written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. The Company performed its evaluation on June 30, 2020, and determined the no impairment of the inventory was required for the following reasons. (1) The inventory remained in good physical condition and that’s its packaging was commercially saleable and that the inventory was not obsolete. (2) Historically, the Company generated 67% gross profit margins by selling its products to retail chains. Due to the onset of Covid-19 selling to retail chains has become very difficult, so the Company intends to launch an Internet campaign to sell its products at discounted prices but at pricing levels that are above the cost of inventory. (3) Based on an analysis of market conditions, the Company believes that future demand still exists for its products.

  

F-18

 

 

Revenue Recognition

 

The Company recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

The Company defers any revenue for which the product is subject to right of return until such time as the 30 days has elapsed, and no refund will be required. As of June 30, 2020 and December 31, 2019, the Company recorded total deferred revenue of $0, respectively

  

Fair Value Measurement

 

The Company values its amounts due to related partings and short term loans payable under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

The three levels of the fair value hierarchy are as follows:

 

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

Level 2 - Valuations for assets and liabilities that can be obtained from readily available pricing sources via independent providers for market transactions involving similar assets or liabilities. The Company’s principal markets for these securities are the secondary institutional markets, and valuations are based on observable market data in those markets.

 

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.

  

Employee Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

 

F-19

 

 

Estimates

 

The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of June 30, 2020 and December 31, 2019, and expenses for the six months ended June 30, 2020 and June 30, 2019. Actual results could differ from those estimates made by management.

 

Subsequent Event

 

The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration.

  

Recent Accounting Pronouncements

 

In February 2016, the FASB issued an accounting standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, for non-public entities using a modified retrospective approach. Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.

  

Note 3 – Related party transactions

 

During the six months ended June 30, 2020, David Lazar paid accounting and audit expenses on behalf of the Company totaling $10,350. As of June 30, 2020, the Company had a loan payable of $10,350 to David Lazar. As of June 30, 2020 and December 31, 2019, the Company also had a loan payable of $69,136, to Rebecca Lazar, the former President and Chief Executive Officer. These loans are both unsecured, non-interest bearing promissory notes and are payable on demand.

 

Note 4 – Common stock

 

The Company is authorized to issue 75,000,000 shares of $.001 par value common stock. On November 29, 2017, the Company issued 3,000,000 shares of common stock with a par value of $0.001 to Rebecca Lazar, President & Chief Executive Officer for $3,000.

 

On February 01, 2019, the Company issued a total of 1,500 shares of common stock at par to three individuals for consulting services.

 

On March 22, 2019, the Company donated a total of 14,000 shares of common stock at part to various charitable organizations. On that same date, the company gifted 14,000 shares of common stock at par to 13 individuals.

 

As of June 30, 2020, a total of 23,889,500 shares of common stock issued and outstanding.

 

Note 5 – Subsequent events

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements.

 

F-20

 

  

Exhibit No.   Description
     
3.1   Articles of Incorporation of the Company Inc., as amended on March 16, 2018 (incorporated by reference to our Registration Statement on Form S-1 filed on January 19, 2018) 
3.2   Bylaws of the Company Inc. (incorporated by reference to our Registration Statement on Form S-1 filed on January 19, 2018) 
22   Demand Promissory Note Payable to Activist Investing LLC
23   Demand Promissory Note Payable to Rebecca Lazar
24   Consent of Independent Auditor
25   Consent of Prior Independent Auditor
26   Michael Gillespie & Associates, PLLC No Disagreement Letter to the Securities and Exchange Commission

 

19

 

 

SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company has duly caused this amended registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 18, 2020

 

Adorbs, Inc.

 

By: /s/ David Lazar  
  David Lazar, CEO  

 

 

20

 

Exhibit 22

 

DEMAND PROMISSORY NOTE

 

Amount: $10,350 Date: June 30, 2020

 

FOR VALUE RECEIVED, Five Thousand Dollars ($10,350) Adorbs Inc. whose address is 234 E. Beach Street, Long Beach, NY 11561 (hereinafter the “Maker”) promises to pay to the order of Activist Investing LLC (the “Holder”) at 1185 Avenue of the Americas, 3rd Floor, New York, or at such other place as the holder hereof shall designate to the undersigned in writing, in lawful money of the United States of America, the principal amount of Ten thousand, three hundred and fifty dollars ($10,350) on demand by the Holder (the “Demand Date”).

 

In the event the principal hereunder shall remain unpaid for a period of ten (30) days or more following the Demand Date, a late charge equivalent to one (1%) percent of such payment shall be charged. In the event of default in any payment due under this demand promissory note, which remains unpaid for a period of ten days or more, the principal and accrued interest amount shall immediately become due and payable without any further demand or request.

 

If any payment of principal or interest on this Note becomes due and payable on a Saturday, Sunday or public holiday under the laws of the State of New York, the due date hereof shall be extended to the next succeeding full business day. All payments received by the holder shall be applied first to the payment of accrued interest and then to principal.

 

This Note may be prepaid in whole or in part at any time.

 

In the event that this Note shall be placed in the hands of an attorney for collection by reason of any default hereunder, the undersigned agrees to pay reasonable attorney’s fees and disbursements and other reasonable expenses incurred by the payee in connection with the collection of this Note.

 

The rights, powers and remedies given to the payee under this Note shall be in addition to all rights, powers and remedies given to it by virtue of any statute or rule of law.

 

Any forbearance, failure or delay by the payee in exercising any right, power or remedy under this Note or otherwise available to the payee shall not be deemed to be a waiver of such right, power or remedy, nor shall any single or partial exercise of any right, power or remedy preclude the further exercise thereof.

 

No modification or waiver of any provision of this Note shall be effective unless it shall be in writing and signed by the payee, and any such modification or waiver shall apply only in the specific instance for which given.

 

This Note and the rights and obligations of the parties hereto, shall be governed, construed and interpreted according to the laws of the State of New York wherein it was negotiated and executed, and the undersigned consents and agrees that the State and Federal Courts which sit in the State of New York and the County of New York shall have exclusive jurisdiction of all controversies and disputes arising hereunder.

 

The undersigned waives the right in any litigation with the payee to trial by jury.

 

The term “payee” as used herein shall be deemed to include the payee and its successors, endorsees and assigns.

 

The undersigned hereby jointly and severally waive presentment, demand for payment, protest, notice or protest and notice of non-payment hereof.

 

Adorbs Inc.  
     
By: /s/ David Lazar  
Name: David Lazar  
Its: CEO  

 

Exhibit 23

 

DEMAND PROMISSORY NOTE

 

Amount: $69,136 Date: June 30, 2020

 

FOR VALUE RECEIVED, Adorbs Inc. whose address is 234 E. Beach Street, Long Beach, NY 11561 (hereinafter the “Maker”) promises to pay to the order of Rebecca Lazar (the “Holder”) at 1185 Avenue of the Americas, 3rd Floor, New York, or at such other place as the holder hereof shall designate to the undersigned in writing, in lawful money of the United States of America, the principal amount of sixty-nine thousand, one hundred and thirty-six dollars ($69,136) on demand by the Holder (the “Demand Date”).

 

In the event the principal hereunder shall remain unpaid for a period of ten (30) days or more following the Demand Date, a late charge equivalent to one (1%) percent of such payment shall be charged. In the event of default in any payment due under this demand promissory note, which remains unpaid for a period of ten days or more, the principal and accrued interest amount shall immediately become due and payable without any further demand or request.

 

If any payment of principal or interest on this Note becomes due and payable on a Saturday, Sunday or public holiday under the laws of the State of New York, the due date hereof shall be extended to the next succeeding full business day. All payments received by the holder shall be applied first to the payment of accrued interest and then to principal.

 

This Note may be prepaid in whole or in part at any time.

 

In the event that this Note shall be placed in the hands of an attorney for collection by reason of any default hereunder, the undersigned agrees to pay reasonable attorney’s fees and disbursements and other reasonable expenses incurred by the payee in connection with the collection of this Note.

 

The rights, powers and remedies given to the payee under this Note shall be in addition to all rights, powers and remedies given to it by virtue of any statute or rule of law.

 

Any forbearance, failure or delay by the payee in exercising any right, power or remedy under this Note or otherwise available to the payee shall not be deemed to be a waiver of such right, power or remedy, nor shall any single or partial exercise of any right, power or remedy preclude the further exercise thereof.

 

No modification or waiver of any provision of this Note shall be effective unless it shall be in writing and signed by the payee, and any such modification or waiver shall apply only in the specific instance for which given.

 

This Note and the rights and obligations of the parties hereto, shall be governed, construed and interpreted according to the laws of the State of New York wherein it was negotiated and executed, and the undersigned consents and agrees that the State and Federal Courts which sit in the State of New York and the County of New York shall have exclusive jurisdiction of all controversies and disputes arising hereunder.

 

The undersigned waives the right in any litigation with the payee to trial by jury.

 

The term “payee” as used herein shall be deemed to include the payee and its successors, endorsees and assigns.

 

The undersigned hereby jointly and severally waive presentment, demand for payment, protest, notice or protest and notice of non-payment hereof.

 

Adorbs Inc.  
     
By: /s/ David Lazar  
Name: David Lazar  
Its: CEO  

 

Exhibit 24

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation in this Amended registration statement on Form 10 of our report dated October 7, 2020, relating to the financial statements of Adorbs Inc., as of December 31, 2019 and to all references to our firm included in this Amended registration statement.

 

/s/ AJSH & Co LLP

 

New Delhi, India

November 18, 2020

Exhibit 25

 

MICHAEL GILLESPIE & ASSOCIATES, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

10544 ALTON AVE NE

SEATTLE, WA 98125

206.353.5736

 

Consent of Independent Registered Public Accounting Firm

 

To the Board of Directors

Adorbs Inc.

 

We consent to the use of our report dated April 10, 2019 with respect to the financial statements of Adorbs Inc. as of December 31, 2018 and the related statements of operations, shareholders’ deficit and cash flows for the year ended December 31, 2018 and solely to information presented to which falls under the year ended December 31, 2018. We also consent to the reference to our firm under the caption “Experts” in the Registration Statement.

 

Michael Gillespie & Associates, PLLC

Seattle, Washington

November 18, 2020

 

/S/ Michael Gillespie & Associates, PLLC

Exhibit 26

MICHAEL GILLESPIE & ASSOCIATES, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

10544 ALTON AVE NE

SEATTLE, WA 98125

206.353.5736

 

 

November 18, 2020

 

Office of the Chief Accountant

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

 

 

Re: Adorbs, Inc.

 

 

Dear Sirs/Madams:

 

The undersigned Michael Gillespie & Associates, PLLC previously acted as independent accountants of Adorbs, Inc. We are no longer acting as independent accountants to the Company.

 

This letter will confirm that we have read Item 14 included in the amended Form 10 dated November 18, 2020 of Adorbs, Inc. to be filed with the Securities and Exchange Commission and are in agreement with the statements related to our firm.

 

We hereby consent to the filing of this letter as an exhibit to the foregoing report on the amended Form 10.

 

Very truly,

 

/S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC