UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 20172020
o ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to______________
Commission file number 000-55369
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HUAIZHONG HEALTH GROUP, INC. |
(Exact name of registrant as specified in its charter) |
Nevada |
| 90-1020141 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Tianan Technology Park | ||
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555 Panyu North Ave, Panyu District, Guangzhou City, China |
Poruka iela 3 Madona
LV-4801 Latvia
(Address of registrant’s principal executive offices)
Registrant’s telephone number, including area code: (702) 924-0637 +86 (20) 2982 9356
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered under Section 12(b) of the Act:None
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Securities registered under Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ ☐ No x☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes x ☐ No ¨☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)fi les). Yes x ☒ No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |
| ☐ | Accelerated filer |
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Non-accelerated filer |
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| Smaller reporting company |
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Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant 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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ ☒ No x☐
The aggregate market value of common stock held by non-affiliates of the Registrant on April 30, 2020, the last business day of the Registrant’s most recently completed second fiscal quarter was approximately $415,000, based on the closing stock price.
As of February 7, 2018, the registrant had 141,000,000March 22, 2021, 31,518,466 shares of the registrant’s common stock, issued andpar value $0.001, were outstanding. No market value has been computed based upon the fact that no active trading market had been established as of February 7, 2018.
DOCUMENTS INCORPORATED BY REFERENCE: None.
DOCUMENTS INCORPORATED BY REFERENCETABLE OF CONTENTS
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). Not Applicable
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PART I
Forward Looking Statements.FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements within the meaning of Section 27A of the Securities Act of 1933, as amended,that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate toassumptions regarding future events or ourperformance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In some cases, you can identify forward-lookingparticular, these include statements by terminologyrelating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” orlegal proceedings, and financial results.
We caution that the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertaintiesfactors described herein and other factors including the risks in the section entitled “Risk Factors” and the risks set out below, any of which maycould cause our or our industry’s actual results levels of activity, performance or achievementsoperations and financial condition to bediffer materially different from those expressed in any future results, levels of activity, performance or achievements expressed or implied by theseforward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements.
Forward looking statements are made based on management’s beliefs, estimates and opinions on Further, any forward-looking statement speaks only as of the date the statements areon which such statement is made, and we undertake no obligation to update any forward-looking statements if these beliefs, estimatesstatement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable,it is not possible for us to predict all of such factors. Further, we cannot guarantee futureassess the impact of each such factor on our results levels of activity, performanceoperations or achievements. Except as required by applicable law, including the securities lawsextent to which any factor, or combination of the United States, we do not intendfactors, may cause actual results to updatediffer materially from those contained in any of the forward-looking statements to conform these statements to actual results.statements.
Our financial statements are stated in United States dollars ($US) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all references to “common stock” refer to the common shares in our capital stock.CERTAIN TERMS USED IN THIS REPORT
As used in this annual report, the terms “we”, “us”, “our”, “Huaizhong”, “Adaiah” and, “Adaiah Distribution”Distribution, Inc.” mean Adaiah DistributionHuaizhong Health Group, Inc.”., unless the context clearly requires otherwise.
ITEM 1. BUSINESS
General
Adaiah Distribution Inc. was incorporated in the State of Nevada as a for-profit company on September 12, 2013 and established a fiscal year end of October 31. We have generated revenues of $279,285 through October 31, 2017, have $20,073 in assets, $1,415 in liabilities and have incurred losses of $25,342 since inception. We are a development-stage company formed to develop and distribute our product to the pillow industry. It is our goal to do business in the U.S., Russia and the European Union. To date, we have had some business operations. We have developed our business plan and executed contracts with Ningbo Hounuo Plastic Co., LTD, Hangzhou Yintex Co., Ltd, Suemon Furniture Co., Ltd, Vision Industry Co., Ltd and E&O International Trade Co., Ltd, where we engage these companies as independent contractors for the specific purpose of developing, manufacturing and supplying products to us. Adaiah Distribution Inc. then distributes these neck, head, donut, lumbar, decorative, throw and orthopedic pillows to our customers.
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PART I
We received
Item 1. Business
Overview
Huaizhong Heath Group, Inc. is a for profit corporation established under the initial equity fundingcorporation laws in the State of $4,000 from our sole officer and director who purchased 4,000,000 sharesNevada, United States of our common stock at $0.001 per share. In January 2015,America on September 12, 2013, originally incorporated as Adaiah Distribution, Inc. Effective December 15, 2020, the company changed its operation name to Huaizhong Health Group, Inc. The Company’s fiscal year end is October 31.
The Company was in the development phase of its custom pillow distribution business. During the third fiscal quarter ending July 31, 2018 the Company issued 1,000,000had ceased its operations of its Pillow manufacturing and sales. The Company is not currently engaged in any business operations. It is however seeking to identify, locate and if warranted acquire new commercial opportunities.
On April 25, 2019, the eighth judicial District Court of Nevada appointed Yosef Yafe as custodian for the Company, proper notice having been given. There was no opposition. Pursuant to the Order of Custodianship, a Special Meeting of Shareholders was held on May 29, 2019 at 8:00 a.m. PST, Yosef Yafe as limited custodian. Notice was sent May 13, 2019 in compliance with Court Order. Present were Yosef (holding shares through Cede & Co.) and two additional proxies also (holding shares through Cede & Co.).
A Special Meeting of the Board of Directors (by written consent) on May 31, 2019 was held electing Yosef as all officers, and changing the Registered Agent to Holly, Driggs, Walch law firm.
Change of Control
On August 12, 2020, Yosef Yafe ( the “Seller”) and Yuantong Wang (the “Buyer”) entered into a stock purchase agreement , pursuant to which the Seller agreed to sell and the Buyer agreed to purchase an aggregate of 31,000,000 shares of common stock, to 30 independent persons pursuant topar value $001 per share of the Registration StatementCompany from the Seller for an aggregate purchase price of $300,000. The closing of the transactions contemplated by the SPA occurred on Form S-1 for total cash proceedsAugust 14, 2020. The purchase price was paid out of $40,000.the Buyer’s personal funds.
On November 29, 2015,As of the Company’s board of directors elected by unanimous written consent to file Articles of Amendment to its Articles of Incorporation withdate referenced in this action, the Nevada Secretary of State to (i) increase the Company’s authorized number ofCompany had 31,518,466 shares of common stock from 75 millionoutstanding. The securities purchased pursuant to 750 million, and (ii) increase the Company’s total issued andSPA represent 98.0% of the outstanding shares of common stock by conducting a forward split of such shares at the rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record date for the Forward Split is December 1, 2015.
On December 4, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned Forward Split be effected in the market. Such notification form is being reviewed by FINRA.
On December 2, 2015, the Company by written consent98.0% of the Boardvoting power of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. These shares are being issued subsequent to the stock split and increased the Company’s total issued and outstanding shares following such stock split to 141,000,000 shares.
Because we were not able to raise sufficient capital to execute our full business plan, we are now engaged in discussions with third parties regarding alternative directions for the Company that could enhance shareholder value. As of the date of filing this Report on Form 10-K, we have not entered into any definitive agreement to change our direction. The description of our business below assumes that we will continue with our business as originally planned. However, as noted above, we are in discussions that could lead to another direction for the Company.
We currently have revenues from operations but there is no guarantee this will continue or there will be enough gross profit to sustain operations. If we need additional cashAs contemplated by the SPA, Yosef Yafe resigned as Chairman, Chief Executive Officer, President, Chief Financial Officer and cannot raise it, we will either have to suspend operations until we do raiseSecretary of the cash, or cease operations entirely. We may need more funds for business operations inCompany and Yuantong Wang was appointed a director, Chief Executive Officer and President of the next year, and we may have to revert to obtaining additional money.Company, effective August 14, 2020.
We had generated $279,285 in revenue through October 31, 2017. Our cost of sales was $206,692 which included $203,512 in pillow purchases and $3,180 in sales commissions. Our independent salespeople are paid a commission of 10% of the initial saleThe foregoing changes to the customer. Commissions areCompany’s management and board of directors were in connection with the transactions consummated pursuant to the SPA and were not paiddue to any disagreement with the Company on any re-orders from the same customer. In this way we encourage new sales instead of the salesperson making one sale and getting paid from it during the lifetime of the customer account. The revenue was the result of pillow sales. Right now we are focusing on distributing ready made products from our suppliers, however we have produced and sold a number of custom pillows from our sewing shop.matter relating to its operations, policies or practices.
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Employees
The Company qualifies as an “emerging growth company” as defined in the JumpstartWe presently have no employees apart from Yuantong Wang, our Business Startups Act (the “JOBS Act”). We intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reportssole officer and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As well, our election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until they apply to private companies. Therefore, as a result of our election, our financial statements may not be comparable to companies that comply with public company effective dates.director.
Offices
Our Current Business
Our Product
History of the Pillow
The pillow has a strong historical presence wherever people have been civilized enough to desire more comfort than that of the floor or a piece of furniture. The first people to use pillows were those who lived in early civilizations of Mesopotamia around 7,000 BC. During this time, only the wealthy and more fortunate people of the world were the ones who used pillows. The number of pillows symbolized status so the more pillows one owned the more affluence he or she held. Pillows have always been produced around the world in order to help solve the old, re-occurring problem of neck, back, and shoulder pain while sleeping. The pillow was also used in order to keep bugs and insects out of people’s hair, mouth, nose, and ears while sleeping.
Pillow use has been associated with the mummies and tombs of ancient Egypt dating back to 2055-1985 B.C. Ancient Egyptian pillows were wooden or stone headrests. These pillows were mostly used by placing them under the heads of the deceased because the head of a human was considered to be the essence of life and sacred. The Romans and Greeks of ancient Europe mastered the creation of the softer pillow. These pillows were stuffed with reeds, feathers, and straw in order to make them softer and more comfortable. Only upper-class people typically owned these softer pillows, however all classes of people used some type of pillow while sleeping in order to give them support. People in ancient Europe started to use pillows when going to church in order to kneel on while praying and to place holy books on. This is a tradition that still lives on today. Additionally, the Romans and Greeks used their pillows by placing them under the head of those deceased just like the ancient Egyptians did. European pillows continue to have a lot of popularity still to this day because of their beauty and quality.
Chinese dynasties used pillows that were made from a wide range of materials including bamboo, jade, porcelain, wood, and bronze. Porcelain pillows became the most popular. The use of the porcelain pillow first appeared in the Sui Dynasty between 581 and 618 while mass production of the porcelain pillow appeared in the Tang Dynasty between 618 and 907. The Chinese decorated their pillows by making them different shapes and by painting pictures of animals, humans, and plants on them. Ancient Chinese porcelain pillows reached their peak in terms of production and use during the Song, Jin, and Yuan dynasties between the 10th and 14th century, but slowly phased out during the Ming and Qing dynasties between 1368 and 1911 with the emergence of better pillow making materials.
How a pillow is constructed
Internally, a pillow comprises a filler, often made from foam, synthetic plastic fibers, feathers, or down and viscoelastic foam and latex. Traditionally straw was used as filler, but this is uncomfortable and rarely used today. Feathers and down are the most expensive and usually the most comfortable; they offer the advantage of softness and their ability to conform to shapes desired by the user, more so than foam or fiber pillows. One of the disadvantages of a down-filled pillow is that a significant number of people are allergic to them. There are currently hypoallergenic varieties of down pillows to allow people sensitive to down to enjoy the comfort of feather or down pillows. In Asia, buckwheat is a common filler, as are plastic imitations. Such pillows tend to be smaller than a standard pillow. In India, cotton is also a common filler and is considered to be healthier than synthetic fills.
The fill is surrounded with a cover or shell made of cloth, such as silk, known as the pillow case or pillow slip. Some pillows have a fancier cover called a sham which is closed on all sides and usually has a slit in the back through which the pillow is placed. Rectangular standard bed pillow cases usually do not have zippers, but instead have one side open all the time, however, a zippered pillow protector is often placed around standard pillows with the case in turn covering the protector. It is generally recommended that all types of pillow covers be laundered periodically since they are the part that is in contact with a person’s body. But even with regular washing, pillows tend to accumulate dust and microbes among the fill and it is recommended that they be replaced every few years, especially for those with allergies.
Types of pillows
Neck pillows support the neck by providing a deep area for the head to rest and a supportive area to keep the neck in alignment with the spine while sleeping. These can also be known as cervical pillows.
Travel pillows provide support for the neck in a sitting position. Their “U” shape fits around the back of the neck and keeps the head from slipping into an uncomfortable and possibly harmful position during sleep. However, U-shaped pillows can sometimes force the head forwards creating neck stiffness.
Donut pillows are firm pillows shaped like a torus, with a space in the middle to alleviate pressure on the tailbone area while sitting. These pillows are used primarily by individuals who have suffered an injury to the tailbone area or who suffer pain from hemorrhoids or another ailment of the colon.
Lumbar pillows are designed to support the inward curve of the lower back, filling the space created between the lower back and the back of the chair when in a sitting position. These pillows are generally used to support the lower back while driving or sitting, such as in an office chair. Orthopedic pillows are similar to Memory foam pillows.
Decorative Pillows serve a dual purpose. They likely have fancy cover material which serves to decorate the room where they are found. When used to decorate a fully made up bed, decorative pillows are likely thrown aside at bedtime, since they are not covered with a washable pillow case, thus, while found on the bed, they are primarily there for decoration, hence they fall under this category. These pillows may be custom made, as well as made by freelancers.
Decorative pillows are also found on furnishings in more public parts of the home, such as sofas, chairs and window seats. Here, their common use may overlap both orthopedic and bed pillows. For example, unless a person has some particular medical condition, they will likely use a handy decorative pillow for lumbar support, as needed, while seated on a sofa. Likewise, for the occasional nap, decorative pillows are handy for supporting the head or neck, even though they are not covered with a pillow case, as are bed pillows.
The state of the consumer and distributor market for pillows
Management believes the state of the consumer and distributor market for pillows continues to expand and grow. This belief is primarily based upon internet market research and discussions with manufacturers, suppliers and distributors. Based upon this research, Management believes the following are the key points in determining the state of the industry:
Target Market
We have already identified major distributors of neck, head, donut, lumbar, decorative, throw and orthopedic pillows in the USA and intend to market directly to these distributors upon completion of our Public Offering. The initial list of distributors we obtained using internet. Future distributors we are planning to obtain via expo and trade shows. It is our goal to do business in the U.S., Russia and the European Union. We are planning to focus our business plan on those markets for next year to establish relationship with major distribution companies, after that, if we are successful in the U.S. market, we may expand to Canada and Mexico using the same strategy.
Our main clients are distributors but in some areas there are no distributors so we will sell directly to the public. Most of the revenue will be received from distributors as they are our main target market. We do not currently have any agreements or contracts with distributors. Some sales to date have been made by our independent sales representatives and others by the company’s president. In the future as we grow and have the ability to fulfill large orders and negotiate pricing we may enter into agreements or contracts with distributors if it is in the best interests of the company.
Marketing
In places where are no distributors we are planning to market our products using these resources:
- Internet advertising (Google AdSence)
- Magazine advertising (Design Trade magazine)
- Expo Show (TransWorld’s Jewelry, Fashion & Accessories Show)
Direct contact with distributors
We have identified some distributors of neck, head, donut, lumbar, decorative, throw and orthopedic pillows in the U.S. and intend to market directly to these distributors.
Industry advertising
We intend to advertise online and using ads in industry-related magazines. Some sites and industry media have already been identified. Media advertising campaign will coincide with Trade Show marketing campaign.
Freight
Product availability is also a key component of sales. We have researched delivery methods, cost and estimated delivery times to all major markets. Based on the fact that our pillows will be produced in China, we anticipate 15 days delivery time to the U.S.
Contracts
We have executed the contracts with Ningbo Hounuo Plastic Co., LTD, Hangzhou Yintex Co., Ltd, Suemon Furniture Co., Ltd, Vision Industry Co., Ltd and E&O International Trade Co., Ltd manufacturing companies having a principal office and manufacturing facilities in China and Hong Kong. According to the agreements, these companies have agreed to develop and manufacture and supply us with pillow products. These companies will develop, test, manufacture and supply the pillow products under the terms and conditions contained in the agreement. The material terms of the Contract are the following:
Seller hereby agrees to transfer and deliver to buyer, the following goods: different types of pillows per seller description and availability.
Buyer agrees to accept the goods and pay for them in accordance with the terms of the contract.
Buyer and Seller agree that identification shall not be deemed to have been made until both parties have agreed that the goods in question are to be appropriated and fulfill the requirements of performance of said contract with the buyer.
Buyer agrees to pay for the goods at the time they are delivered and at the place where he receives said goods.
Goods shall be deemed received by buyer when delivered to address of buyer as herein described. Until such time as said goods have been received by buyer, all risk of loss from any casualty to said goods shall be on seller.
Seller warrants that the goods are now free from any security interest or other lien or encumbrance, that they shall be free from same at the time of delivery, and that he neither knows nor has reason to know of any outstanding title or claim of title hostile to his rights in the goods.
Buyer has the right to examine the goods on arrival to notify seller of any claim for damages on account of the condition, grade or quality of the goods. That said notice must specifically set forth the basis of his claim, and that his failure to either notice seller within the stipulated period of time or to set forth specifically the basis of his claim will constitute irrevocable acceptance of the goods.
Copies of the contracts are filed as Exhibits- to our Registration Statement on Form S-1 as filed with the Securities and Exchange Commission.
Revenue
- Our revenue is a 20-30% mark up: depending on quantity of the order. If it is a large order we may give a lower mark-up, if it is a small order or custom order the mark-up may be greater. This is general estimation of our mark up. We looked at our competitors sales prices, at the cost of product from our suppliers and came up with an approximate mark-up figure. We can adjust it if need be so. In any case, it is going to be just an estimate until we have more sales.
- Manufacturer gives us 90 days to pay an invoice and we give to our customers 30-60 days depending on a quantity of the order to pay their invoices which allows us to make sales without initial investment for neck, head, donut, lumbar, decorative, throw and orthopedic pillows.
- We do not keep warehousing and shipping within the country because all the products will be going directly to our customers from the manufacturer eliminating our storage costs. The customer is responsible for any shipping charges.
Competition
There are few barriers of entry in the neck, head, donut, lumbar, decorative, throw and orthopedic pillows distribution business and level of competition is extremely high. There are many domestic and international distributors of neck, head, donut, lumbar, decorative, throw and orthopedic pillows. We are in direct competition with them. Many large distributors have greater financial capabilities than us and will be able to provide more favorable services to the potential customers. Many of these companies have a greater, more established customer base than us. We likely lose business to such companies. Also, many of these companies are able to afford to offer better prices for similar neck, head, donut, lumbar, decorative, throw and orthopedic pillows than us which may also cause us to lose business.
Insurance
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
Employees
We are a development stage company and currently have no employees, other than, Nikolay Titov, our president and director. We currently have three independent sales representatives to sell are product. Our independent salespeople are paid a commission of 10% of the initial sale to the customer. Commissions are not paid on any re-orders from the same customer. In this way we encourage new sales instead of the salesperson making one sale and getting paid from it during the lifetime of the customer account.
Offices
Our business office is located at Poruka iela 3 Madona, LV-4801 Latvia. This is the office provided by our President and Director, Nikolay Titov. Our office is a part of a Mr. Titov’s residence. Our phone number is (702) 924-0637. We do not pay any rent to Mr. Titov and there is no agreement to pay any rent in the future.
We signed a two year lease on October 30, 2013, for office space, which is located at 2809 Lerwick Road, Sacramento, CA 95821. The lease has expired and we currently pay month to month. Our independent sales representative currently utilizes the office space. Our president and director, Nikolay TitovYuantong Wang currently takes care of our administrative duties from his office in Guangzhou City, China, at no cost to the Russian Federation. The U.S. office is used for communication with customers and distributors and holds all related samples and paperwork as well as serving as a shipping destination if necessary.Company.
On January 28, 2014 we purchased for $16,940US a 1,969 sq. ft. building on approximately 2 acres of land located at 10 Oktyabrskaya St., Manchazh Settlement, Artinsky District, Sverdlovsk Oblast, Russia. The building was formerly used as a sewing shop and we were able to purchase the contents of the building which includes 8 sewing machines. The building has one office area of $650 sq. ft. and the remaining is production floor area. Management currently has 5 independent contractors who will work on orders for custom pillows at this location when we receive orders. The maximum number of pillows that could be produced per week at this location is estimated at 250 pieces.Item 1A. Risk Factors
Government RegulationSmaller reporting companies are not required to provide the information required by this item.
Item 1B. Unresolved Staff Comments
None.
ITEM 2. PROPERTIES
We are required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the neck, head, donut, lumbar, decorative, throw and orthopedic pillows distribution business in any jurisdiction which we would conduct activities. All products imported from China and Hong Kong are required to meet U.S. standards so we do not believe that regulation will have a material impact on the way we conductcurrently own any property. Our principal office is located at Tianan Technology Park, 13/F Headquarters Center Building 16, 555 Panyu North Ave, Panyu District, Guangzhou City, China. The office is provided by our business.president and director and no cost to us.
Item 3. Legal Proceedings
We are not currently a partyFrom time to anytime we may become involved in various legal proceedings andthat arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not aware of any pendingsuch legal proceedings or potential legal actions.
Emerging Growth Company Status under the JOBS Act
Adaiah Distribution Inc. qualifies as an “emerging growth company” as definedclaims that we believe, either individually or in the Jumpstart our Business Startups Act (the “JOBS Act”).
The JOBS Act creates a new category of issuers known as “emerging growth companies.” Emerging growth companies are those with annual gross revenues of less than $1 billion (as indexed for inflation) during their most recently completed fiscal year. The JOBS Act is intended to facilitate public offerings by emerging growth companies by exempting them from several provisions of the Securities Act of 1933 and its regulations. An emerging growth companyaggregate, will retain that status until the earliest of:
Financial and Audit Requirements
Under the JOBS Act, emerging growth companies are subject to scaled financial disclosure requirements. Pursuant to these scaled requirements, emerging growth companies may:
Offering Requirements
In addition, during the IPO offering process, emerging growth companies are exempt from:
Other Public Company Requirements
Emerging growth companies are also exempt from other ongoing obligations of most public companies, such as:
Smaller Reporting Company
We have already taken advantage of these reduced reporting burdens in this annual report, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Further, we may continue to take advantage of these reduced reporting requirements applicable to smaller reporting companies even if we no longer qualify as an “emerging growth company.”
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. We have elected to use the extended transition period provided above and therefore our financial statements may not be comparable to companies that comply with public company effective dates.
We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
ITEM 1A. RISK FACTORS
Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this annual report before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
RISKS ASSOCIATED TO OUR BUSINESS
WE ARE A DEVELOPMENT STAGE COMPANY AND HAVE COMMENCED LIMITED OPERATIONS IN OUR BUSINESS. IT IS VERY LIKELY WE WILL INCUR SIGNIFICANT OPERATING LOSSES FOR THE FORESEEABLE FUTURE.
We were incorporated on September 12, 2013 and to date have been involved primarily in organizational activities and limited business operations. Accordingly, we have no way to evaluate the likelihood that our business will be successful. Potential investors should be aware of the difficulties normally encountered by new distribution companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business, and additional costs and expenses that may exceed current estimates. It is very likely that we will incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate sufficient operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
WE HAVE EARNED ONLY LIMITED REVENUE AND OUR ABILITY TO SUSTAIN OUR OPERATIONS IS DEPENDENT ON OUR ABILITY TO RAISE FINANCING.
We have accrued a net loss of $25,342 for the period from our inception on September 12, 2013 to October 31, 2017, and have $279,285 in revenues as of this date. Our future is dependent future profitable operations in the neck, head, donut, lumbar, decorative, throw and orthopedic pillows distribution business. Further, the finances required to fully develop our plan cannot be predicted with any certainty and may exceed any estimates we set forth. If we fail to raise sufficient capital when needed, we may not be able to complete our business plan. As a result we may have to liquidate our business and you may lose your investment. You should consider our independent registered public accountant’s comments when determining if an investment in Adaiah Distribution Inc. is suitable.
If we experience a shortage of funds we may utilize funds loaned to us from Nikolay Titov, our officer and director, who has informally agreed to advance funds to allow us to pay for professional fees and operation expenses. However, Mr. Titov has no formal commitment, arrangement or legal obligation to advance or loan funds to the company. We may need additional financing. We do not currently have any arrangements for additional financing.
BECAUSE WE PURCHASE OUR PRODUCTS FROM CHINA AND HONG KONG, AND A LIMITED NUMBER OF SPECIALTY PILLOWS MAY CONTINUE TO BE PRODUCED IN OUR RUSSIAN MANUFACURING PLANT, A DISRUPTION IN THE DELIVERY OF IMPORTED PRODUCTS MAY HAVE A GREATER EFFECT ON US THAN ON OUR COMPETITORS.
We import the majority of our product from China and Hong Kong, with a limited number of specialty pillows produced in our Russian plant. Because we import the majority of our product and deliver it directly to our customers, we believe that disruptions in shipping deliveries may have a greater effect on us than on competitors who manufacture and/or warehouse products in the United States, Russia and the European Union. Deliveries of our products may be disrupted through factors such as:
(1) raw material shortages, work stoppages, strikes and political unrest;
(2) problems with ocean shipping, including work stoppages and shipping container shortages;
(3) increased inspections of import shipments or other factors causing delays in shipments; and
(4) economic crises, international disputes and wars.
Most of our competitors warehouse products they import from overseas, which allows them to continue delivering their products for the near term, despite overseas shipping disruptions. If our competitors are able to deliver products when we cannot, our reputation may be damaged and we may lose customers to our competitors.
FOREIGN CURRENCY FLUCTUATIONS COULD ADVERSELY IMPACT OUR FINANCIAL CONDITION.
We currently purchase our products in U.S. dollars and plan to do so in the future. However, we source all of our products from China and Hong Kong and, as such; the cost of our pillow products may be affected by changes in the value of the Chinese Yuan and the Hong Kong Dollar. Due to our dependence on manufacturing operations in China and Hong Kong, changes in the value of the Chinese Yuan or Hong Kong Dollar may have a material impact on our supply channels and manufacturing costs. Changes in the currency exchange rates may also affect the relative prices at which we and our foreign competitors sell products in the same market. If we are unsuccessful in mitigating these risks, foreign currency fluctuations may have a material adverse impact on the results of our operations.
IF WE DO NOT ATTRACT ADDITIONAL CUSTOMERS, WE WILL NOT MAKE A PROFIT, WHICH ULTIMATELY WILL RESULT IN A CESSATION OF OPERATIONS.
Our sales to date have been to only one customer. We cannot guarantee we will be able to expand our customer base. Even if we obtain additional customers, there is no guarantee that we will sustain profits. If we cannot sustain profits, we will have to suspend or cease operations. You are likely to lose your entire investment if we cannot sell our neck, head, donut, lumbar, decorative, throw and orthopedic pillows at prices which generate a profit.
WE OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT, AND IF WE ARE UNABLE TO CONTINUE TO COMPETE WITH OUR COMPETITORS, OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS, CASH FLOWS AND PROSPECTS COULD BE MATERIALLY ADVERSELY AFFECTED.
We operate in a highly competitive environment. Our competition includes large, small and midsized companies, and many of them may distribute similar neck, head, donut, lumbar, decorative, throw and orthopedic pillows in our markets at competitive prices. This highly competitive environment could materially adversely affect our business, financial condition, results of operations, cash flows and prospects.
BECAUSE WE ARE SMALL AND DO NOT HAVE MUCH CAPITAL, OUR MARKETING CAMPAIGN MAY NOT BE ENOUGH TO ATTRACT SUFFICIENT CUSTOMERS TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE WILL SUSPEND OR CEASE OPERATIONS.
Due to the fact we are small and do not have much capital, we must currently limit our marketing activities and may not be able to make our product known to potential customers. Because we must limit our marketing activities, we may not be able to attract enough customers to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations.
BECAUSE THE COMPANY’S HEADQUARTER AND ASSETS ARE PRIMARILY LOCATED OUTSIDE THE UNITED STATES, IN LATVIA AND THE RUSSIAN FEDERATION, INVESTORS MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO EFFECT SERVICE OF PROCESS AND TO ENFORCE JUDGMENTS BASED UPON U.S. FEDERAL SECURITIES LAWS AGAINST THE COMPANY AND ITS NON-U.S. RESIDENT OFFICER AND DIRECTOR.
While we are organized under the laws of State of Nevada, our officer and Director is a non-U.S. resident and our headquarters and assets are located outside the United States, our headquarters are in Latvia and our major asset, the sewing shop is located in the Russian Federation. Consequently, it may be difficult for investors to affect service of process on him in the United States and to enforce in the United States judgments obtained in United States courts against him based on the civil liability provisions of the United States securities laws, enforce in a Latvian court United States judgments based on the civil liability provisions of the United States securities laws or bring an original action against him in a Latvian court to enforce liabilities based upon the United States federal securities laws. Since all our assets will be located outside U.S. it may be difficult or impossible for U.S. investors to collect a judgment against us.
BECAUSE OUR OFFICER AND DIRECTOR OWNS 80% OR OF OUR OUTSTANDING COMMON STOCK HE MAY MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO MINORITY SHAREHOLDERS.
Mr. Titov, our president and director, owns 80% of the outstanding shares of our common stock. Accordingly, he has full control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Titov may differ from the interests of the other stockholders and may result in corporate decisions that are disadvantageous to other shareholders.
In addition, sales of significant amounts of shares held by Mr. Titov, or the prospect of these sales, could adversely affect the market price and liquidity of our common stock. His stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
BECAUSE OUR CURRENT PRESIDENT HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS, CAUSING OUR BUSINESS TO FAIL.
Nikolay Titov, our president and director, currently devotes approximately twenty hours per week providing management services to us. While he presently possesses adequate time to attend to our interest, it is possible that the demands on him from other obligations could increase, with the result that he would no longer be able to devote sufficient time to the management of our business. The loss of Mr. Titov’s services to our company could negatively impact our business development. Mr. Titov does not owe fiduciary duties to any companies or entities other than Adaiah Distribution.
IF NIKOLAY TITOV, OUR PRESIDENT AND DIRECTOR, SHOULD RESIGN, WE WILL NOT HAVE A CHIEF EXECUTIVE OFFICER AND THAT COULD RESULT IN OUR HAVING TO SUSPEND OPERATIONS. IF THAT SHOULD OCCUR, YOU COULD LOSE YOUR INVESTMENT.
We depend completely on the services of our president and director, Nikolay Titov, for the future success of our business. The loss of the services of Mr. Titov could have an adverse effect on our business, financial condition, andor results of operations. If he should resign, we will not have a chief executive officer. If that should occur, until we find another person to act as our chief executive officer, our operations could be suspended. In that event it is possible you could lose your entire investment.
WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE. WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.Item 4. Mine Safety Disclosures
We are required to file annual, quarterlyNot applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and current reports, or other information with the SEC as provided by theIssuer Purchases of Equity Securities Exchange Act. In order
Market for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portionSecurities
Shares of our available cash resources. The costs associated with being a publicly traded company in the next 12 month will be approximately $10,000. If wecommon stock are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. Also, if we are not able to pay the expenses associated with our reporting obligations we will not continue to qualifylisted for quotation on the OTC Bulletin Board.
OUR OFFICER AND DIRECTOR HAS NO EXPERIENCE MANAGING A PUBLIC COMPANY WHICH IS REQUIRED TO ESTABLISH AND MAINTAIN DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING.
Nikolay Titov, our director, has no past experience managing a public company which is required to establish and maintain disclosure controls and procedures and internal control over financial reporting. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We comply with all of the various rules and regulations, which are required for a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us.
ITEM 2. PROPERTIES.
Our business office is located at Poruka iela 3 Madona, LV-4801 Latvia. Our phone number is (702) 924-0637.
We signed a two year lease on October 30, 2013, for office space, which is located at 2809 Lerwick Road, Sacramento, CA 95821. We currently pay on a month to month basis. Our independent sales representative currently utilizes the office space. Our president and director, Nikolay Titov currently takes care of our administrative duties from his office in the Russian Federation. The U.S. office is used for communication with customers and distributors and holds all related samples and paperwork as well as serving as a shipping destination if necessary.
On January 28, 2014 we purchased for $16,940US a 1,969 sq. ft. building on approximately 2 acres of land located at 10 Oktyabrskaya St., Manchazh Settlement, Artinsky District, Sverdlovsk Oblast, Russia. The building was formerly used as a sewing shop and we were able to purchase the contents of the building which includes 8 sewing machines. The building has one office area of $650 sq. ft. and the remaining is production floor area. Management has 5 independent contractors to work on orders for custom pillows at this location when orders are received. The maximum number of pillows that could be produced per week at this location is estimated at 250 pieces.
We currently have no investment policies as they pertain to real estate, real estate interests or real estate mortgages.
ITEM 3. LEGAL PROCEEDINGS.
We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Markets Group’s Pink Open Market for Securities
Our common stock is quoted on the Over-the Counter Bulletin Board under the symbol ADHH. To date“ADAD.” However, our shares are not actively traded and there has beenis currently no activeestablished public trading market for our shares of common stock. Any quotations that do occur reflect inter‑dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
ClearTrust, LLC at 16540 Pointe Village Dr., Suite 205, Lutz, Florida 33558 (Telephone: (813) 235-4490) is the registrar and transfer agent for our common stock.shares.
Security Holders of our Common Stock
As of October 31, 2017,March 15, 2021, there were 31approximately 36 registered stockholders, holding 141,000,00031,518,466 shares of our issued and outstanding common stock.
Dividend Policy
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
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We have not declarednever paid a cash dividend on our common stock. We currently intend to retain all earnings, if any, dividendsto finance the growth and wedevelopment of our business. We do not plan to declareanticipate paying any cash dividends in the foreseeable future.
Equity Compensation Plans
We have no existing equity compensation plan.
Recent Sales of Unregistered Securities
The Company issued 4,000,000 sharesDuring our fiscal year ended October 31, 2020, all sales of common stock toequity securities that were not registered under the Company’s sole director and officer for total cash proceeds of $4,000Securities Act were previously reported in a Quarterly Report on October 28, 2013.Form 10-Q or in a Current Report on Form 8-K.
In January 2015, the Company issued 1,000,000 shares of common stock to 30 independent persons pursuant to the Registration Statement on Form S-1 for total cash proceeds of $40,000.
On November 29, 2015, the Company’s board of directors elected by unanimous written consent to file Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State to (i) increase the Company’s authorized number of shares of common stock from 75 million to 750 million, and (ii) increase the Company’s total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record date for the Forward Split is December 1, 2015.
On December 4, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned Forward Split be effected in the market. Such notification form is being reviewed by FINRA.
On December 2, 2015, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. These shares are being issued subsequent to the stock split and increased the Company’s total issued and outstanding shares following such stock split to 141 million shares.
At October 31, 2017, there were 141,000,000 shares of common stock issued and outstanding.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended October 31, 2017.2020.
Securities AuthorizedItem 6. Selected Financial Data
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion and analysis of our results of operations and financial condition for Issuance Under Equity Compensation Plansfiscal years ended October 31, 2020 and 2019, should be read in conjunction with our financial statements and the related notes and the other financial information that are included elsewhere in this Annual Report. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements, and Business sections in this Annual Report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
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Results of Operations
The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the year ended October 31, 2020, which are included herein.
Our operating results for the years ended October 31, 2020 and 2019 and the changes between those periods for the respective items are summarized as follows:
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| October 31, |
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| 2020 |
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| 2019 |
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Operating expenses |
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| 36,001 |
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| 126,097 |
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| (90,096 | ) |
Interest expense |
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| 479 |
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| - |
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| 479 |
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Net loss |
| $ | 36,480 |
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| $ | 126,097 |
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| $ | (89,617 | ) |
During the years ended October 31, 2020 and 2019, no operating revenues were recorded.
We do not have any equity compensation plans.had a net loss of $36,480 for the year ended October 31, 2020, and $126,097 for the year ended October 31, 2019. The decrease in net loss of $89,617 was primarily due to a decrease in operating expenses of $90,096 and offset by an increase in interest expenses of $479.
ITEM 6. SELECTED FINANCIAL DATA.Operating expenses for the years ended October 31, 2020 and 2019 were $36,001 and $126,097, respectively.
During the year ended October 31,2020, the operating expenses, were primarily attributed to professional fees of $35,101, for maintaining reporting status with the Securities and Exchange Commission (“SEC”) and general administrative expenses of $900.
Not Applicable.During the year ended October 31, 2019, the operation expenses were primarily attributed to common stock-based compensation (former officer) of $100,000 and professional fees and general administrative expenses of $26,097.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONInterest expenses for the years ended October 31, 2020 and 2019, were $479 and $0, respectively, represent interest expense to convertible note (former related party) on funds advanced to the Company.
Our cash balance was $33Balance Sheet Data:
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Cash |
| $ | - |
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| $ | - |
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| $ | - |
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Current Assets |
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| - |
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| - |
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Current Liabilities |
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| 19,472 |
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| 21,097 |
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Working Capital (Deficiency) |
| $ | (19,472 | ) |
| $ | (21,097 | ) |
| $ | 1,625 |
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As of October 31, 2020, our current assets were $0, and our current liabilities were $19,472 which resulted in working capital deficiency of $19,472. As of October 31, 2020, and 2019, current assets were comprised of $0 in cash.
As of October 31, 2020, current liabilities were comprised of $10,913 in accounts payableand accrued liabilities and $8,559 in due to related party, compared to $11,141 in accounts payable and accrued liabilities and $9,956 convertible note payable as of October 31, 2017 with $1,4152019.
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As of October 31, 2020, our working capital deficiency reduced by $1,623 from $21,097 on October 31, 2019, to $19,742 on October 31, 2020, primarily due to a decrease in liabilities. Our cash balance is not sufficient to fund our limited levelscurrent liabilities of operations for any period of time without further revenue. We may utilize funds$1,625.
Cash Flow Data:
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October 31, | ||||||||||||
2020 | 2019 | Change | ||||||||||
Cash used in operating activities | $ | - | $ | - | $ | - | ||||||
Cash provided by (used in) investing activities | - | - | - | |||||||||
Cash provided by financing activities | - | - | - | |||||||||
Net change in cash for period | $ | - | $ | - | $ | - | ||||||
Cash Flows from Nikolay Titov, our president and director, who has informally agreed to advance funds to allow us to pay for filing and professional fees. Mr. Titov, however, has no formal commitment, arrangement or legal obligation to advance or loan funds to the company. Being a development stage company, we have a limited operating history but have meaningfully commenced business operations based upon the amount of revenue we have been able to generate. We may need additional financing. We do not currently have any arrangements for additional financing. Our principal executive offices are located at Poruka eila Madona, LV-4801 Latvia. Our phone number is (702) 924-0637.Operating Activities
We arehave not generated positive cash flows from operating activities. For the year ended October 31, 2020, net cash flows used in operating activities was $0, consisting of a net loss of $36,480, reduced by an increase in accounts payable and accrued liabilities of $251 and offset by expenses paid by related party of $8,559 and expenses paid by a former related party of 27,670. For the year ended October 31, 2019, net cash flows used in operating activities was $0, consisting of a net loss of $126,097, reduced by stock-based compensation of $100,000 and offset by expenses paid by related party of $14,956 and an increase in accounts payable and accrued liabilities of $11,141.
Cash Flows used in Investing Activities
During the years ended October 31, 2020 and 2019, we had no cash used in investing activities.
Cash Flows from Financing Activities
During the years ended October 31, 2020 and 2019, we had no cash used in financing activities.
Going Concern
As of October 31, 2020, our Company had a net loss of $36,480 and has earned no operating revenues. Our Company intends to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending October 31, 2021. The ability of our Company to emerge from the development stage companyis dependent upon, among other things, obtaining additional financing to continue operations, and have generated $279,285 in revenue from inception (September 12, 2013) through October 31, 2017. The revenue was the result of pillow sales. The customers are allowed to return the products within 30 days for a refund, if the packages are unopened. The initial customers were generated by an internet search for distributors and stores and then follow up calls and e-mails. There were no pre-existing relationships with the customers. We have begun initial marketing efforts via our website and the sales representatives contacting potential customers.
Because we were not able to raise sufficient capital to execute our full business plan, we are now engaged in discussions with third parties regarding alternative directions for the Company that could enhance shareholder value. As of the date of filing this Report on Form 10K, we have not entered into any definitive agreement to change our direction. The descriptiondevelopment of our business below assumesplan. In response to these problems, management intends to raise additional funds through public or private placement offerings or through debt financing. These factors, among others, raise substantial doubt about our Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that we will continue with our business as originally planned. However, as noted above, we are in discussions that could lead to another direction formight result from the Company.outcome of this uncertainty.
On May 10, 2017, the Company closed an Asset Purchase Agreement (the “Agreement”) signed February 10, 2017 with 3D Pioneer Systems Inc. (“3D”). Pursuant to the Agreement, once all terms of the agreement are met, Adaiah will acquire certain intellectual property, apps, other assets and related contractual rights held by 3D in exchange for 1 million shares of Adaiah’s common stock and a cash payment of $30,000, along with an obligation to make three (3) additional payments of $30,000 every ninety (90) days following the closing. The payments are held in trust until all terms of the agreement are met. The assets of 3D include intellectual property for 3D printer development, a project for the development of a 3D printing platform and marketplace and the first app, of a series of children’s apps, called Save Your Planet Kids.
If we do not have the revenues we require to operate for the next 12 months funds may be loaned to us by Mr. Titov, who has informally agreed to advance us funds, however, he has no formal commitment, arrangement or legal obligation to advance or loan funds to the company.
If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash, or cease operations entirely.
PLAN OF OPERATION
Because we were not able to raise sufficient capital to execute our full business plan, we are now engaged in discussions with third parties regarding alternative directions for the Company that could enhance shareholder value.
We continue to fulfill orders from our current customer for pillows. However, on May 10, 2017, the Company closed an Asset Purchase Agreement (the “Agreement”) signed February 10, 2017 with 3D Pioneer Systems Inc. (“3D”). Pursuant to the Agreement, once all terms of the agreement are met, Adaiah will acquire certain intellectual property, apps, other assets and related contractual rights held by 3D in exchange for 1 million shares of Adaiah’s common stock and a cash payment of $30,000, along with an obligation to make three (3) additional payments of $30,000 every ninety (90) days following the closing. The payments are held in trust until all terms of the agreement are met. The assets of 3D include intellectual property for 3D printer development, a project for the development of a 3D printing platform and marketplace and the first app, of a series of children’s apps, called Save Your Planet Kids.
3D’s apps are designed to educate young children (starting at 2 years old) about the environment, natural resources and how to make decisions that are consistent with “green” or “save your plant” initiatives. These applications teach children to respect the planet in a fun and engaging manner, utilizing music, caricatures, numerous colors and graphic art. Utilization of the apps allows children to be creative as they paint pictures from the main application or freely from their own mind and fantasies. The apps also help children to learn to play music in a fun and interactive manner. The apps are currently available on smartphones operating on the Android platform.
Once the terms of the Agreement have been met the company will proceed with the business of 3D. If we do not have the revenues we require to operate for the next 12 months funds may be loaned to us by Mr. Titov, who has informally agreed to advance us funds, however, he has no formal commitment, arrangement or legal obligation to advance or loan funds to the company.
If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash, or cease operations entirely.
OFF-BALANCE SHEET ARRANGEMENTSOff-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.resources that is material to stockholders.
Item 7A. Qualitative and Quantitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the information required by this item.
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Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated herein by reference to the consolidated financial statements and supplementary data set forth in Item 15. Exhibits, Financial Statement Schedules of Part IV of this Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of October 31, 2020. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of October 31, 2020 due to the material weaknesses and significant deficiencies discussed below.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for the preparation of our financial statements and related information. Management uses its best judgment to ensure that the financial statements present fairly, in material respects, our financial position and results of operations in conformity with generally accepted accounting principles.
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls including the possibility of human error and overriding of controls. Consequently, an ineffective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.
Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
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Under the supervision of management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and subsequent guidance prepared by the Commission specifically for smaller public companies as of October 31, 2020. Based on that evaluation, our management concluded that our internal control over financial reporting was not effective as of October 31, 2020 because it identified the following material weakness and significant deficiencies:
● | Material Weakness - The Company did not maintain effective controls over certain aspects of the financial reporting process because we lacked a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements. |
● | Significant Deficiencies - Inadequate segregation of duties. |
A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITALWe expect to be materially dependent upon third parties to provide us with accounting consulting services for the foreseeable future which we believe mitigates the impact of the material weaknesses discussed above. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP and establish an audit committee and implement internal controls and procedures, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures will not result in errors in our financial statements which could lead to a restatement of those financial statements.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to SEC rules that permit us to provide only management’s report on internal control over financial reporting in this annual report on Form 10-K.
Changes in Internal Controls over Financial Reporting
There is limited historicalhave been no changes in our internal control over financial information about us upon whichreporting during the quarter ended October 31, 2020 that have materially affected, or are reasonably likely to base an evaluationmaterially affect, our internal control over financial reporting.
| 10 |
| Table of Contents |
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
The following table sets forth the name, age and position of each of our performance.executive officers and directors as of the date of this annual report.
Name and Address of Executive Officer and/or Director | Age | Position | Date of First Appointment | |||
Yuantong Wang | 52 | Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Sole Director | August 14, 2020 |
Business Experience
The following is a brief description of the background on our sole officer and director.
Yuantong Wang, 52, has been Chief Executive Officer of Guangzhou Huaizhong Health Technology Co., Ltd since October 2015. From December 2011 to September 2015 he served as the General Manager of Beijing Hengyikang Industry and Trade Co., Ltd. He earned a Diploma for Higher Education with a major in Library and Information Science from Tianjin Business School in 1989.
Employment Agreement
There are no other agreements to compensate any of the officers or directors for their services.
Term of Office
Each of our directors holds office until the next annual meeting of our stockholders or until his or her successor has been elected and qualified, or until his or her earlier death, resignation, or removal. There are no agreements with respect to the election of directors. We have meaningfully commenced business operations based upon the amountnot compensated our directors for service on our Board or reimbursed for expenses incurred for attendance at meetings of revenue we have been able to generate. We are in start-up stage operations and have generated $197,146 in revenue. We cannot guarantee we will be successful in our business operations.Board. Our business is subject to risks inherentBoard may in the establishmentfuture determine to pay directors’ fees and reimburse directors for expenses related to their activities as such
Our executive officers are appointed by our Board and serve at the discretion of a new business enterprise, including limited capital resourcesour Board or until they resign.
| 11 |
| Table of Contents |
Family Relationships
No family relationship has ever existed between any director, executive officer of the Company, and possible cost overruns dueany person contemplated to pricebecome such.
Involvement in Certain Legal Proceedings
None of our directors and cost increasesexecutive officers has been involved in services and products.any legal or regulatory proceedings, as set forth in Item 401 of Regulation S-K, during the past ten years.
Code of Ethics
We have no assurancenot adopted a code of ethics that future financingapplies to our officer, director and employee. When we do adopt a code of ethics, we will be available to usdisclose it in a Current Report on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.Form 8-K.
Results of operationsBoard and Committee Meetings
Our total assetsBoard does not have any standing committees. All proceedings of the Board were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Business Corporation Act and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.
Nomination Process
As of October 31, 2017 were $20,0732020, we did not effect any material changes to the procedures by which was comprisedour shareholders may recommend nominees to our Board. Our Board does not have a policy with regards to the consideration of $33 cashany director candidates recommended by our shareholders. Our Board has determined that it is in the bankbest position to evaluate our requirements as well as the qualifications of each candidate when the Board considers a nominee for a position on our Board. If shareholders wish to recommend candidates directly to our Board, they may do so by sending communications to our President at the address on the cover of this annual report.
Audit Committee
Currently our audit committee consists of our entire Board. We do not have a separately-designated standing audit committee as we currently have limited working capital and $20,040 (net) in furnitureminimal revenues. Should we be able to raise sufficient funding to execute our business plan, we will form an audit, compensation committee and equipmentother applicable committees utilizing our directors’ expertise.
| 12 |
| Table of Contents |
From inception to present date, we believe that the members of our Board have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.
Audit Committee Financial Expert
We do not currently have an audit committee financial expert because we do not have an audit committee. We also do not have a sewing shop. We currently anticipate thatdirector who is qualified to act as financial expert of an audit committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our legalexecutive officers and accounting fees over the next 12 months asdirectors, and persons who beneficially own more than 10% of a resultregistered class of being a reporting companyour equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and will be approximately $10,000 per year.annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during the fiscal year ended October 31, 2020.
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth certain compensation awarded to, earned by, or paid to the following “named executive officers,” which is defined as follows:
(a) | all individuals serving as our principal executive officer during the year ended October 31, 2020; and | |
(b) | each of our two other most highly compensated executive officers who were serving as executive officers at the end of the year ended October 31, 2020. |
Name and Position |
| Fiscal Year |
| Salary ($) |
| Stock Awards ($) |
|
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($) |
| Nonqualified Deferred Compensation Earnings ($) |
| All Other Compensation ($) |
| Total ($) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Yosef Yafer(1) President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director |
| 2019 |
| -0- |
|
| 100,000 |
|
| -0- |
| -0- |
| -0- |
| -0- |
|
| -100,000 |
|
|
| 2020 |
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yuantong Wang(1) , President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director |
| 2020 |
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| ||
___________
(1) Effective August 14, 2020, Yosef Yafe resigned as Chairman, Chief Executive Officer, President, Chief Financial Officer, Treasurer and Secretary of the Company and Yuantong Wang was appointed a director, Chief Executive Officer, President, Secretary, and treasurer.
| 13 |
| Table of Contents |
Securities Authorized for Issuance Under Equity Compensation Plans
We receiveddo not have, nor have ever had, any profit sharing, stock option or other similar equity compensation plans for the initial equity fundingbenefit of $4,000 fromthe directors, executive officers or employees.
Compensation of Directors
We do not have any agreements for compensating our sole officer and director who purchased 4,000,000directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock at $0.001 per share.as awarded by our Board.
In January 2015,No compensation was paid to non-employee directors for the year ended October 31, 2020.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board or a committee thereof.
There are no compensatory plans or arrangements, including payments to be received from the Company, issued 1,000,000 shareswith respect to any former officers or directors which would in any way result in payments to any such person because of common stock to 30 independent persons pursuant tohis or her resignation, retirement or other termination of such person’s services with the Registration Statement on Form S-1 for total cash proceedsCompany, or any change in control of $40,000.the Company, or a change in the person’s responsibilities following a change in control of the Company.
On November 29, 2015,Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of ours during the Company’s boardlast two fiscal years, is or has been indebted to us by way of directors elected by unanimous written consent to file Articlesguarantee, support agreement, letter of Amendment to its Articlescredit or other similar agreement or understanding currently outstanding.
Item 12. Security Ownership of Incorporation withCertain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information concerning the Nevada Secretary of State to (i) increase the Company’s authorized number of shares of our common stock from 75 millionowned beneficially as of March 15, 2021 by: (i) each person (including any group) known to 750 million,us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and (ii) increaseor (iii) our officer. Unless otherwise indicated, the Company’s totalstockholder listed possesses sole voting and investment power with respect to the shares shown.
Title of Class | Name and Address of Beneficial Owner (1) | Amount and Nature of Beneficial Ownership | Percentage (2) (3) | |||||
Common stock | Yuantong Wang | 31,000,000 shares of common stock | 98.4 | % | ||||
All executive officers and directors as a group (1 person) | 31,000,000 shares of common stock | 98.4 | % | |||||
_________
(1) | Unless otherwise noted, the address of each beneficial owner is c/o Huaizhong Heath Group , Inc. |
Tianan Technology Park, 13/F Headquarters Center Building 16, 555 Panyu North Ave, Panyu District, Guangzhou City, China | |
(2) | The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of the date as of which the information is provided , through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table |
(3) | Based on 31,518,466 issued and outstanding shares of Common Stock as of March 15, 2021. |
| 14 |
| Table of Contents |
Change-in-Control Arrangements
We do not know of any arrangements, which may, at a subsequent date, result in a change-in-control.
Item 13. Certain Relationships and Related Transactions, Director Independence
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, by conducting a forward splitor any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended October 31, 2020, in which the amount involved in the transaction exceeded or exceeds the lesser of such shares$120,000 or one percent of the average of our total assets at the rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record dateyear-end for the Forward Split is December 1, 2015.last two completed fiscal years.
On December 4, 2015,August 10, 2019 the Company filed an Issuer Company-Related Action Notification Form with FINRA requestingsigned a convertible note for funds being advanced to the Company by the former CEO as at that date and for a twelve month period following that date which can be converted by the aforementioned Forward Split be effected inCEO at any time into restricted common shares of the market. Such notification form is being reviewed by FINRA.Company at a conversion rate of $0.001 per share. The note bears interest of 4% per annum. During the years ended October 31, 2020 and 2019, the former CEO advanced $25,265 and $14,956, respectively. During the years ended October 31, 2020, and 2019, $31,000 was converted into 31,000,000 restricted common shares of the Company and $5,000 was converted into 12,500 restricted common shares of the Company.
For the years ended October 31, 2020 and 2019, the Company recorded interest expense of $479 and $0, respectively.
On December 2, 2015,August 12, 2020, in connection with change of control and stock purchase agreement, the former CEO forgave the convertible note of $4,221 and accrued interest of $479.
As of October 31, 2020, and 2019, the Company by written consentwas obligated for this convertible note with balance of $0 and $9,956, and accrued interest of $0 , respectively.
In early June 2019 the Company entered into a compensation agreement with the former CEO whereby the CEO would receive a onetime compensation of $50,000 for being elected as the former CEO and sole director of the BoardCompany and $10,000 per month thru October 31, 2019 for his continued services thru then. According to the agreement the compensation is to be paid in the form of Directors approvedrestricted common stock of the issuance to Mr. Nikolay TitovCompany at a value of 16,000,000 restrictedits par which is $0.001 per share. The Company signed a resolution in the third fiscal quarter of the fiscal year ending October 31, 2019 issuing 250,000 shares of the Company’srestricted common stock in exchange for continued services as the sole member of the BoardCompany to the former CEO valued at $100,000 which compromises the $50,000 onetime compensation and five months of compensation of an aggregate of $50,000, pursuant to the compensation agreement.
During the year ended October 31, 2020, the amount due to the former CEO of $2,405, for payment of operating expenses, was forgiven.
During the year ended October 31, 2020, the Company’s sole executive officer. These shares are being issued subsequentofficer advanced to the stock splitCompany an amount of $8,559 by paying for expenses on behalf of the Company. As of October 31, 2020, and increased2019, the Company’s total issuedCompany was obligated to the officer, for an unsecured, non-interest-bearing demand loan with a balance of $8,559 and outstanding shares following such stock split to 141 million shares.$0, respectively.
Our revenueItem 14. Principal Accounting Fees and Services
The following table sets forth fees billed, or expected to be billed, to us by our independent registered public accounting firm for the years ended October 31, 20172020 and 2016 was $40,509 and $41,630, respectively. Our cost of goods sold2019, for (i) services rendered for the years ended October 31, 2017audit of our annual financial statements and 2016 was $33,613and $35,526 resultingthe review of our quarterly financial statements; (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as “audit fees;” (iii) services rendered in a gross profit (loss)connection with tax preparation, compliance, advice and assistance; and (iv) all other services:
|
| Year ended October 31, 2020 |
|
| Year ended October 31, 2019 |
| ||
Audit fees(1) |
| $ | 9,200 |
|
| $ | 3,750 |
|
Audit-related fees |
|
| - |
|
|
| - |
|
Tax fees (2) |
|
| 750 |
|
|
| 500 |
|
All other fees |
|
| - |
|
|
| - |
|
Total fees |
| $ | 9,950 |
|
| $ | 4,250 |
|
(1) | Audit fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our fiscal yearend financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements. | |
(2) | Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice. |
Our Board pre-approves all services provided by our independent auditors. All of $6,896the above services and $6,104, respectively. Our operating expenses forfees were reviewed and approved by the years ended October 31, 2017 and 2016Board either before or after the respective services were $8,031 and $9,132, respectively. Our net income (loss) for the years ended October 31, 2017 and 2016 was $(1,134) and $866, respectively.rendered.
Our Board has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
| Table of Contents |
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) | The following documents are filed as part of this Annual Report on 10-K: |
(1) | The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the “Index to Consolidated Financial Statements” on page F-1 and included on pages F-2 through F-11. |
(b) | The following exhibits are filed herewith as a part of this report |
Exhibit Number | Description | |
3.1 | Articles of Incorporation (filed as an exhibit to our Form S-1 Registration Statement and subsequent amendments) | |
3.2 | Bylaws (filed as an exhibit to our Form S-1 Registration Statement and subsequent amendments) | |
10.1 | Form of Restricted Stock Purchase Agreement, dated as of August 12, 2020, filed by the Company on Current Report Form 8-K, filed with the Securities Exchange Commission on August 20, 2020, and incorporated herein by reference. | |
101* | Interactive data files pursuant to Rule 405 of Regulation S-T |
________
* Filed herewith.
| 16 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
HUAIZHONG HEALTH GROUP, INC. | |||
Date: March 22, 2021 | By: | /s/ Yuantong Wang | |
Yuantong Wang | |||
President and Chief Executive Officer | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
HUAIZHONG HEALTH GROUP, INC. | |||
Date: March 22, 2021 | By: | /s/ Yuantong Wang | |
Yuantong Wang | |||
President, Chief Executive Officer, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer and Director | |||
| 17 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
INDEX TO AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 2020 AND 2019
| F-1 |
| Table of Contents |
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 & Shareholders:
Adaiah Distribution Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Adaiah Distribution Inc. as of October 31, 2020 and 2019 and the related statements of operations, changes in stockholders’ (deficit) and cash flows for the periods then ended, and the related notes (collectively referred to as “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2020 and 2019 and the results of its operations and its cash flows for the periods then ended, 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 revenue from inception (September 12, 2013) throughaudit 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 2019.
Seattle, Washington
March 19, 2021
| F-2 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Balance Sheets
|
| October 31, |
|
| October 31, |
| ||
|
| 2020 |
|
| 2019 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash |
| $ | 0 |
|
| $ | 0 |
|
Total Current Assets |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Deficit |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| 10,913 |
|
|
| 11,141 |
|
Due to related party |
|
| 8,559 |
|
|
| 0 |
|
Convertible note payable - related party |
|
| 0 |
|
|
| 9,956 |
|
Total Current Liabilities |
|
| 19,472 |
|
|
| 21,097 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 19,472 |
|
|
| 21,097 |
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit |
|
|
|
|
|
|
|
|
Common stock: 750,000,000 shares authorized; $0.001 par value 31,518,466 and 517,853 shares issued and outstanding at October 31, 2020 and 2019, respectively |
|
| 31,518 |
|
|
| 518 |
|
Additional paid in capital |
|
| 257,587 |
|
|
| 250,482 |
|
Accumulated deficit |
|
| (308,577 | ) |
|
| (272,097 | ) |
Total Stockholders' Deficit |
|
| (19,472 | ) |
|
| (21,097 | ) |
Total Liabilities and Stockholders' Deficit |
| $ | 0 |
|
| $ | 0 |
|
The accompanying notes are an integral part of these audited financial statements.
| F-3 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Statements of Operations
|
| Year Ended |
| |||||
|
| October 31, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
|
|
|
|
|
|
| ||
Revenue |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
Professional fees |
|
| 35,101 |
|
|
| 26,097 |
|
General and administrative |
|
| 900 |
|
|
| 100,000 |
|
Total operating expenses |
|
| 36,001 |
|
|
| 126,097 |
|
|
|
|
|
|
|
|
|
|
Operating Loss |
|
| (36,001 | ) |
|
| (126,097 | ) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
| (479 | ) |
|
| 0 |
|
Total other expense |
|
| (479 | ) |
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net loss before taxes |
|
| (36,480 | ) |
|
| (126,097 | ) |
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net Loss |
| $ | (36,480 | ) |
| $ | (126,097 | ) |
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted |
| $ | (0.00 | ) |
| $ | (0.41 | ) |
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding |
|
| 10,455,090 |
|
|
| 308,946 |
|
The accompanying notes are an integral part of these audited financial statements.
| F-4 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Statements of Changes in Stockholders’ Deficit
For the Years Ended October 31, 20172020 and 2019
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
|
| |||||
|
| Common Stock |
|
| Paid in |
|
| Accumulated |
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| |||||
Balance - October 31, 2018 |
|
| 255,353 |
|
| $ | 255 |
|
| $ | 145,745 |
|
| $ | (146,000 | ) |
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for compensation- related party |
|
| 250,000 |
|
|
| 250 |
|
|
| 99,750 |
|
|
| 0 |
|
|
| 100,000 |
|
Common stock issued for conversion of convertible note- related party |
|
| 12,500 |
|
|
| 13 |
|
|
| 4,988 |
|
|
| 0 |
|
|
| 5,000 |
|
Net loss |
|
| 0 |
|
|
| - |
|
|
| - |
|
|
| (126,097 | ) |
|
| (126,097 | ) |
Balance - October 31, 2019 |
|
| 517,853 |
|
|
| 518 |
|
|
| 250,482 |
|
|
| (272,097 | ) |
|
| (21,097 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of convertible note - related party |
|
| 31,000,000 |
|
|
| 31,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 31,000 |
|
Common stock issued for rounding on reverse stock split |
|
| 613 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Forgiveness of due to related party |
|
| - |
|
|
| 0 |
|
|
| 2,405 |
|
|
| 0 |
|
|
| 2,405 |
|
Forgiveness of convertible note payable - related party |
|
| - |
|
|
| 0 |
|
|
| 4,700 |
|
|
| 0 |
|
|
| 4,700 |
|
Net loss |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (36,480 | ) |
|
| (36,480 | ) |
Balance - October 31, 2020 |
|
| 31,518,466 |
|
| $ | 31,518 |
|
| $ | 257,587 |
|
| $ | (308,577 | ) |
| $ | (19,472 | ) |
The accompanying notes are an integral part of these audited financial statements.
| F-5 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Statement of Cash Flows
|
| Year Ended |
| |||||
|
| October 31, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
|
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | (36,480 | ) |
| $ | (126,097 | ) |
Changes in current assets and liabilities: |
|
|
|
|
|
|
|
|
Related party advances funding operations |
|
| 36,229 |
|
|
| 14,956 |
|
Stock based compensation - related party |
|
| 0 |
|
|
| 100,000 |
|
Accounts payable and accrued liabilities |
|
| 251 |
|
|
| 11,141 |
|
Net cash used in operating activities |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net change in cash for the year |
|
| 0 |
|
|
| 0 |
|
Cash at beginning of year |
|
| 0 |
|
|
| 0 |
|
Cash at end of year |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
| $ | 0 |
|
| $ | 0 |
|
Cash paid for interest |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Issuance of common stock as equity compensation - related party |
| $ | 0 |
|
| $ | 100,000 |
|
Issuance of common stock for conversion of convertible note- related party |
| $ | 31,000 |
|
| $ | 5,000 |
|
Forgiveness of due to related party |
| $ | 2,405 |
|
| $ | 0 |
|
Forgiveness of convertible note payable and accrued interest - related party |
| $ | 4,700 |
|
| $ | 0 |
|
The accompanying notes are an integral part of these audited financial statements.
| F-6 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Notes to the Financial Statements
October 31, 2020 and 2019
Note 1 - Organization and Going Concern
Adaiah Distribution, Inc. (the “Company”), is a for profit corporation established under the corporation laws in the State of Nevada, United States of America on September 12, 2013. Effective December 15, 2020, the company changed its operation name to Huaizhong Health Group, Inc. (the Company). Our principal office is located at Tianan Technology Park, 13/F Headquarters Center Building 16, 555 Panyu North Ave, Panyu District, Guangzhou City, China. The Company’s fiscal year end is October 31.
The Company was $279,285. Our costin the development phase of goods sold forits custom pillow distribution business. During the same period was $206,692 resultingthird fiscal quarter ending July 31, 2018 the Company had ceased its operations of its Pillow manufacturing and sales. The Company is not currently engaged in any business operations. It is however seeking to identify, locate and if warranted acquire new commercial opportunities.
Change of Control
On August 12, 2020, Yosef Yafe ( the “Seller”) and Yuantong Wang (the “Buyer”) entered into a gross profitstock purchase agreement, pursuant to which the Seller agreed to sell and the Buyer agreed to purchase an aggregate of $72,593. Our operating expenses for31,000,000 shares of common stock of the same period were $97,934, resulting in a net income (loss) of $(25,342).Company from the Seller.
As of October 31, 2017, there is a totalthe date referenced in this action, the Company had 31,518,466 shares of $1,415 in a loan payable that is owed by the company to its officer and director for expenses that he has paid on behalfcommon stock outstanding. The securities purchased represented 98.4% of the company. The loan payable is interest freeoutstanding shares of common stock and payable on demand.98.4% of the voting power of the Company.
Going Concern
The following table provides selectedaccompanying financial data about ourstatements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of October 31, 2020, the Company has suffered recurring losses from operations, has an accumulated deficit of $308,577 and has not earned any revenues. The Company intends to fund operations through equity financing arrangements and related party advances, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the period from the date of incorporation throughyear ending October 31, 2017. For detailed financial information, see the financial statements included in this report.
Balance Sheet Data: 10/31/2017 Cash Total assets Total liabilities Stockholder’s equity $ 33 $ 20,073 $ 1,415 $ 18,658
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 2017 the Company had $33 in cash and there were outstanding liabilities of $1,415. Our director has agreed, verbally, to continue to loan the company funds for operating expenses in a limited scenario, but he has no legal obligation to do so.2021.
The company anticipates overability of the next 12 months the costCompany to emerge from an early stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of being a reportingits business plan. In response to these problems, management intends to raise additional funds through public company will be approximately $10,000.or private placement offerings.
SummaryThese factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of significant accounting policies:this uncertainty
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
| F-7 |
| Table of Contents |
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted accounting principlesin the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statementsstatements. The estimates and judgments will also affect the reported amounts of revenues andfor certain expenses during the reporting period. Actual results could differ from those estimates.these good faith estimates and judgments
Due to the limited level of operations, the Company has not had to make material assumptions or estimates.
Cash and Cash Equivalents
The Company considersCash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid investmentsdebt instruments with an original maturitymaturities of three months or less when purchased to beless. The Company had no cash equivalents.at October 31, 2020 and 2019, respectively.
Fair Value of Financial InstrumentsMeasurements
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2016.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Basic and Diluted Loss Per Common Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effectreflects the potential dilution that could occur if stock options and other commitments to all dilutive potentialissue common shares outstanding duringstock were exercised or equity awards vest resulting in the period. Dilutiveissuance of common stock that could share in the earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potentialof the Company.
For the years ended October 31, 2019, convertible notes which were convertible were dilutive instruments and therefore, basic andare not included in the calculation of diluted earnings (loss)loss per share are equal.as their effect would be antidilutive.
Revenue RecognitionIncome Taxes
The company follows the guidelines of ASC 605-15Income taxes are accounted for revenue recognition. Revenue is recognized when the product has been prepaid by the customer, shipped from either Adaiah Distribution or one of our vendors and the product has been delivered and signed for by the customer as evidenced by the shipping company. Customers are allowed to return the products within 30 days for a refund, if the packages are unopened.
Income Taxes
We useunder the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, incomemethod. Deferred tax expense isassets and liabilities are recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferredfuture tax consequences attributable to differences between the financial statement carrying amounts of temporary differences resulting from matters that have been recognized in an entity’s financial statements orexisting assets and liabilities and their respective tax returns.bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operationsincome in the period that includes the enactment date. A valuation allowance is providedrecorded to reduce the Company’s deferred tax assets reported if based onto the weight of the available positive and negative evidence, itamount that is more likely than not some portion or all of the deferred tax assets will notto be realized.realized
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Taxes previously deferred of $3,894 reduced the tax provision for the year ended October 31, 2017.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not expectbelieve the future adoption of recently issued accountingany such pronouncements may be expected to havecause a significantmaterial impact on the Company’s results of operations,our financial position or cash flow.statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.Certain accounts from prior periods have been reclassified to conform to the current period presentation.
ADAIAH DISTRIBUTION, INC.
INDEX TO FINANCIAL STATEMENTS
| ||||
| ||||
CERTIFIED PUBLIC ACCOUNTANTS
6215 W. TOUHY AVENUE CHICAGO, ILLINOIS 60646-1105
(773)792-1575
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Shareholders
Adaiah Distribution, Inc.
Gardnerville, Nevada
We have audited the accompanying balance sheets of Adaiah Distribution, Inc. (a Nevada Corporation), as of October 31, 2017 and 2016, and the related statement of operations, changes in stockholder’s equity and cash flows for the years then ended. These financial statements are the responsibility of Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements for the year ending October 31, 2016. Those statements were audited by other auditors whose report has been furnished to us and our opinion is based solely on the report of the other auditors.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit will provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Adaiah Distribution, Inc., as of October 31, 2017 and 2016, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Jeffrey T. Gross Ltd.
Certified Public Accountants
Chicago, Illinois
January 22, 2018
(A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS Year Ended Year Ended October 31, 2017 October 31, 2016 ASSETS CURRENT ASSETS Cash Inventory FIXED ASSETS Furniture & Equipment Accumulated Depreciation - F&E Sewing Shop Accumulated Depreciation - Sewing Shop TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Current Liabilities: Loan Payable - Related Party TOTAL LIABILITIES STOCKHOLDERS' EQUITY Common stock: authorized 750,000,000; $0.001 par value; 141,000,000 shares issued and outstanding at October 31, 2017 and October 31, 2016 Additional Paid in Capital Profit (loss) accumulated during the development stage Total Stockholders' Equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33 $ 315 - - $ 33 $ 315 8,000 8,000 (2,571 ) (2,143 ) 16,940 16,940 (2,329 ) (1,905 ) $ 20,040 $ 20,892 $ 20,073 $ 21,207 1,415 1,415 $ 1,415 $ 1,415 5,000 5,000 39,000 39,000 (25,342 ) (24,208 ) $ 18,658 $ 19,792 $ 20,073 $ 21,207
The accompanying notes are an integral part of these financial statements
(A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS From Inception Year Ended Year Ended (September 12, 2013) to October 31, 2017 October 31, 2016 October 31, 2017 REVENUES Sales: Merchandise Sales Total Income Cost of Goods Sold: Pillow Purchases Sales Commission Total Cost of Goods Sold Gross Profit Operating Expenses: General and administrative Total Expenses Income Before Income Tax Provision for Income Tax Net Income for Period Basic and diluted Weighted average number of shares outstanding: Basic and diluted $ 40,509 $ 41,630 $ 279,285 40,509 41,630 279,285 33,613 35,526 203,512 - - 3,180 $ 33,613 $ 35,526 $ 206,692 6,896 6,104 72,593 $ 8,031 $ 9,132 $ 97,934 8,031 9,132 97,934 $ (1,134 ) $ (3,028 ) $ (25,342 ) - (3,894 ) - (1,134 ) 866 (25,342 ) Net gain (loss) per share: $ (0.0000 ) $ 0.0000 $ (0.0002 ) 141,000,000 141,000,000 141,000,000
The accompanying notes are an integral part of these financial statements
(A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Audited) From Inception September 12, 2013 to October 31, 2017 Common Stock Additional Accumulated Total Number of Paid in Gain Shareholders' Shares Par Value Capital (Deficit) Equity Balance, September 12, 2013 (Inception) Common Shares issued: for cash on October 28, 2013 Net gain (loss) Balance, October 31, 2013 Net gain (loss) Balance, October 31, 2014 Common Shares issued: for cash during January, 2015 Net gain (loss) Balance, October 31, 2015 Common Shares issued: 25 for 1 forward stock split Nov 29, 2015 Issued to director Dec 2, 2015 Net gain (loss) Balance, October 31, 2016 Net gain (loss) Balance, October 31, 2017 - $ - $ - $ - $ - 4,000,000 4,000 - 4,000 - - - (12 ) (12 ) 4,000,000 $ 4,000 $ - $ (12 ) $ 3,988 - - - 22,722 22,722 4,000,000 $ 4,000 $ - $ 22,710 $ 26,710 1,000,000 1,000 39,000 40,000 - - - (47,784 ) (47,784 ) 5,000,000 $ 5,000 $ 39,000 $ (25,074 ) $ 18,926 120,000,000 16,000,000 - - - 866 866 141,000,000 $ 5,000 $ 39,000 $ (24,208 ) $ 19,792 - - - (1,134 ) (1,134 ) 141,000,000 $ 5,000 $ 39,000 $ (25,342 ) $ 18,658
The accompanying notes are an integral part of these financial statements
(A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS From inception Year Ended Year Ended (September 12, 2013) to October 31, 2017 October 31, 2016 October 31, 2017 Operating activities: Net Income Adjustment to reconcile net loss to net cash provided by operations: Changes in assets and liabilities: Increase (decrease) in Deferred Tax Liability Net cash used by operating activities Financing activities: Proceeds from issuance of common stock Due to related party Net cash provided by financing activities Investing activities: Furniture & Equipment Increase (decrease) Accum Depr - F&E Sewing Shop Increase (decrease) in Accum Depr - Sewing Shop Net cash provided by investing activities Net increase in cash Cash, beginning of period Cash, end of period Supplemental disclosure of cash flow information: Cash paid during the period Taxes Interest $ (1,134 ) $ 866 $ (25,342 ) - - - (3,894 ) - (1,134 ) (3,028 ) (25,342 ) - - 44,000 - - 1,415 - - 45,415 - - (8,000 ) 429 429 2,571 - - (16,940 ) 423 423 2,329 852 852 (20,040 ) (282 ) (2,176 ) 33 315 2,491 - $ 33 $ 315 $ 33 $ - $ - $ - $ - $ - $ -
The accompanying notes are an integral part of these financial statements
Notes to the Financial Statements
October 31, 2017
Note 1: Organization and Basis of Presentation
Adaiah Distribution, Inc. (the “Company”) is a for profit corporation established under the corporation laws in the State of Nevada, United States of America on September 12, 2013.
The Company is in the development phase of its custom pillow distribution business. As such, the Company is subject to all risks inherent to the establishment of a start-up business enterprise.
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Financial Statements and related disclosures as of October 31, 2017 are audited pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Unless the context otherwise requires, all references to “Adaiah Distribution,” “we,” “us,” “our” or the “company” are to Adaiah Distribution, Inc.
Unless the context otherwise requires, all references to “Adaiah Distribution,” “we,” “us,” “our” or the “company” are to Adaiah Distribution, Inc.
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2017.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Adaiah Distribution Inc.
Notes to the Financial Statements
October 31, 2017
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.
Revenue Recognition
The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when the product has been prepaid by the customer, shipped from either Adaiah Distribution or one of our vendors and the product has been delivered and signed for by the customer as evidenced by the shipping company. Customers are allowed to return the products within 30 days for a refund, if the packages are unopened.
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Note 3: Property and Equipment
Property and equipment consist of:
October 31, 2017 October 31, 2016 Furniture & Equipment Sewing Shop Accumulated Depreciation $ 8,000 $ 8,000 $ 16,940 $ 16,940 $ (4,900 ) $ (4,048 ) $ 20,040 $ 20,892
Property, plant and equipment are stated at cost. The Company utilizes MACRS 200 DB HY – 7 years for furniture and fixture depreciation and ADS straight-line – 40 years for the sewing shop depreciation over the estimated useful lives of the assets.
| F-8 |
| Table of Contents |
Adaiah Distribution Inc.
Notes to the Financial Statements
October 31, 2017
Note 4: Concentrations
Initial sales are concentrated with one client. Sales are made without collateral and the credit-related losses are insignificant or non-existent. Accordingly, there is no provision made to include an allowance for doubtful accounts.
Note 5: Legal Matters3 – Stockholders’ Equity
The Company has no known legal issues pending.
Note 6: Debt
Nikolay Titov, the Director and President of the Company, has from time to time loaned the Company funds for operational costs. The amount, $1,415 at October 31, 2017, is being carried as a loan payable. The loan is non-interest bearing, unsecured and due upon demand.
Note 7: Capital Stock
On October 28, 2013 the Company authorized 75,000,000750,000,000 shares of commonscommon stock authorized with a par value of $0.001 per share.
On October 28, 2013September 5, 2019, the Company issued 4,000,000 shares of250,000 common stock for a purchase price of $0.001 per share to its sole director. The Company received aggregate gross proceeds of $4,000.00.
In January 2015 a total of 1,000,000 shares were issued to a total of 30 shareholders for $.04 per share for total proceeds of $40,000. The shares were registered pursuant to a Registration Statement on Form S-1 as filed with the Securities and Exchange Commission that was declared effective on November 3, 2014.
On November 29, 2015, the Company’s board of directors elected by unanimous written consent to file Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State to (i) increase the Company’s authorized number of shares of common stock from 75 million to 750 million, and (ii) increase the Company’s total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record date for the Forward Split is December 1, 2015.
On December 4, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned Forward Split be effected in the market. Such notification form is being reviewed by FINRA.
On December 2, 2015, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. These shares are being issued subsequentcompany to the stock split and increased the Company’s total issued and outstanding shares following such stock split to 141 million shares.
Adaiah Distribution Inc.
Notesformer CEO pursuant to the Financial Statements
October 31, 2017equity compensation agreement signed August 10, 2019.
On September 19, 2016,5, 2019, the Company filed Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State whereby it amended its Articles of Incorporation by (i) decreasing the Company’s authorized number ofissued 12,500 common shares of common stock from 750 millionthe Company to 750,000, and (ii) decreasing the Company’s total issued and outstanding sharesformer CEO upon conversion of common stock by conducting$5,000 of the convertible note signed on August 10, 2019.
On April 28, 2020, the majority shareholders of the Company voted to effect a reverse split of such shares at400-to-1 on its common shares. The authorized amount of 750,000,000 is to be unchanged and hence the ratepar value of one (1)the Company of $0.001 is also to remain unchanged. On June 5, 2020, FINRA approved the reverse split and it became effective on that date. All historical share for every one thousand (1,000)balances and share currently issued and outstanding, resultingprice related data in 141,000 shares being issued and outstanding.this annual report have been adjusted based on the 400-to-1 reverse split ratio.
On November 8, 2016June 5, 2020, concurrent with the Company’s request forreverse split the Reverse Split was approved by FINRA and effected in the market. The Company’s ticker symbol was also changedCompany issued new additional 613 shares to “ADAD”.
Ascertain shareholders as part of October 31, 2017 there were no outstanding stock options or warrants.
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Taxes previously deferred of $3,894 reduced the tax provision for the year ended October 31, 2016.
Note 9: Related Party Transactions
The Company’s sole officer and director is involved in other business activities and may in the future, become involved in other business opportunities as they become available.
The Company has a related party transaction involving a significant shareholder. The nature and details of the transaction are described in Note 6.rounding differences.
On December 2, 2015,July 7, 2020, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restrictedissued 31,000,000 common shares of the Company’s common stock in exchange for continued services asCompany to the sole memberformer CEO upon conversion of $31,000 of the Board and the Company’s sole executive officer.
Adaiah Distribution Inc.
Notes to the Financial Statements
October 31, 2017
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitably or raise additional capital through debt financing and/or through sales of common stock. In the event the Company is not able to do so the director of the Company has agreed to provide the necessary funding for the Company to continue in a limited operations scenario for the next 12 months, which would include the costs associated with maintaining reporting status with the Securities and Exchange Commission.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
Note 11: Asset Purchase Agreement
On May 10, 2017, the Company closed an Asset Purchase Agreement (the “Agreement”) signed February 10, 2017 with 3D Pioneer Systems Inc. (“3D”). Pursuant to the Agreement, once all terms of the agreement are met, Adaiah will acquire certain intellectual property, apps, other assets and related contractual rights held by 3D in exchange for 1 million shares of Adaiah’s common stock and a cash payment of $30,000, along with an obligation to make three (3) additional payments of $30,000 every ninety (90) days following the closing. The payments are held in trust until all terms of the agreement are met. The assets of 3D include intellectual property for 3D printer development, a project for the development of a 3D printing platform and marketplace and the first app, of a series of children’s apps, called Save Your Planet Kids.
Note 12: Subsequent Events
The Company has evaluated events subsequent to the date these financial statements have been issued to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued. Based upon this evaluation, it was determined that other than the event disclosed above, no other subsequent events occurred that require recognition or disclosure in the financial statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On October 3, 2017, the Board of Directors of the Registrant accepted and approved the resignation of Darrell Whitehead, CPAs, the company’s independent registered public account firm. The report of Darrell Whitehead, CPA’s on the Company's financial statements for the years ended October 31, 2016 and 2015 did not contain an adverse opinion or disclaimer of opinion, nor was qualified or modified as to uncertainty, audit scope or accounting principles.
There were no disagreements with Darrell Whitehead, CPAs, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Darrell Whitehead, CPAs’ satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report on the registrant's financial statements.
The registrant requested that Darrell Whitehead, CPAs, furnish it with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. The letter is attached as Exhibit 16.1 to the Company’s Form 8-K as filed with the Securities and Exchange Commission.
On January 19, 2018, the registrant engaged Jeffrey T. Gross Ltd., as its independent accountant. During the most recent fiscal year, October 31, 2017, and the interim period preceding the engagement, the registrant has not consulted Jeffrey T. Gross, Ltd. regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) in ensuring that information required to be disclosed by the Company in its reports is recorded, processed, summarized and reported within the required time periods. In carrying out that evaluation, management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our internal control over financial reporting regarding a lack of adequate segregation of duties. Accordingly, based on their evaluation of our disclosure controls and procedures as of October 31, 2017, the Company’s Chief Executive Officer and its Chief Financial Officer have concluded that, as of that date, the Company’s controls and procedures were not effective for the purposes described above.
There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the year ended October 31, 2017 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. We have assessed the effectiveness of those internal controls as of September 30, 2012, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Intergrated Framework as a basis for our assessment.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified a material weakness in our internal control over financial reporting. This material weakness consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of our company. The relatively small number of employees who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.
As we are not aware of any instance in which the company failed to identify or resolve a disclosure matter or failed to perform a timely and effective review, we determined that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our resources at this time and not in the interest of shareholders.
Because of the above condition, the Company’s internal controls over financial reporting were not effective as of October 31, 2017.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The name, age and title of our executive officer and director is as follows:
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Nikolay Titov has acted as our President, Treasurer and sole Director since our incorporation on September 12, 2013.
Mr. Titov’s education:
- Moscow State Technical University of Civil Aviation, Russian Federation - 1969
Mr. Titov’s work experience:
- airport engineer in Russian Federation 1969-2005
For last eight years he has been managing his own tourist and hotel hospitality and furnishings supply company Welcome Home Co.
During the past ten years, Mr. Titov has not been the subject of the following events:
TERM OF OFFICE
Directors of the company are appointed to hold office until the next annual meeting of our stockholders or until a respective successor is elected and qualified, or until resignation or removal in accordance with the provisions of the Nevada Revised Statues. Officers are appointed by our Board of Directors and hold office until removed by the Board or until their resignation.
DIRECTOR INDEPENDENCE
Our board of directors is currently composed of one member, Nikolay Titov, who does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exists which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.
Stockholder Communications with the Board of Directors
We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors. Nevertheless, every effort will be made to ensure that the views of stockholders are heard by the Board of Directors, and that appropriate responses are provided to stockholders in a timely manner. Our Board will continue to monitor whether it would be appropriate to adopt such a process.
Code of Ethics
We have not adopted a code of ethics that applies to our officer, director and employee. When we do adopt a code of ethics, we will disclose it in a Current Report on Form 8-K.
ITEM 11. EXECUTIVE COMPENSATION.
The following tables set forth certain information about compensation paid, earned or accrued for services by our President, Treasurer and Secretary (collectively, the “Named Executive Officer”) from inception on September 12, 2013 until October 31, 2017:
Summary Compensation Table
Name and Principal Position |
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Nikolay Titov , President, Secretary and Treasurer |
| September 12, 2013 to October 31, 2017 |
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There are no current employment agreements between the company and its officer.
Mr. Titov currently devotes approximately twenty hours per week to manage the affairs of the Company. He has agreed to work with no remuneration until such time as the company receives sufficient revenues necessary to provide management salaries. At this time, we cannot accurately estimate when sufficient revenues will occur to implement this compensation, or what the amount of the compensation will be.
There are no annuity, pension or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the company.
Director Compensation
The following table sets forth director compensation as of October 31, 2017:
Name |
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Nikolay Titov |
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of October 31, 2017 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and or (iii) our officer. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
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(1) A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As of October 31, 2017, there were 141,000,000 shares of our common stock issued and outstanding.
Future Sales by Existing Stockholders
A total of 116,000,000 shares have been issued to the existing stockholder, all of which are held by an officer/director and are restricted securities, as that term is defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Act. Under Rule 144, such shares can be publicly sold, subject to volume restrictions and certain restrictions on the manner of sale, commencing six months after their acquisition.
Rule 144(i)(1) states that the Rule 144 safe harbor is not available for the resale of securities “initially issued” by a shell company (other than a business combination related shell company) or an issuer that has “at any time previously” been a shell company (other than a business combination related shell company). Consequently, the Rule 144 safe harbor is not available for the resale of such securities unless and until all of the conditions in Rule 144(i)(2) are satisfiedconvertible note at the time of the proposed sale.
Any sale of shares held by the existing stockholder (after applicable restrictions expire) and/or the sale of shares purchased in our recent offering, may have a depressive effect on the price of our common stock in any market that may develop, of which there can be no assurance.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
On October 28, 2013, we issued a total of 4,000,000 shares of restricted common stock to Nikolay Titov, our president and director in consideration of $4,000.
On November 29, 2015, the Company’s board of directors elected by unanimous written consent to file Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State to (i) increase the Company’s authorized number of shares of common stock from 75 million to 750 million, and (ii) increase the Company’s total issued and outstanding shares of common stock by conducting a forward split of such shares at theconversion rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record date for the Forward Split is December 1, 2015.
On December 2, 2015, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restricted shares of the Company’s$0.001 per common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. These shares are being issued subsequent to the stock split and increased the Company’s total issued and outstanding shares following such stock split to 141,000,000 shares.
As of October 31, 2017,2020, and 2019, there were 31,518,466 and 517,853 shares of common stock issued and outstanding, respectively.
Note 4 - Income Taxes
The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate of 21% to the income tax amount recorded as of October 31, 2020 and 2019 are as follows:
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Net Operating Loss |
| $ | (36,480 | ) |
| $ | (126,097 | ) |
Effective tax rate |
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Income Tax expense |
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Less: valuation allowance |
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Net deferred tax assets consist of the following components as of October 31, 2020 and 2019:
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| $ | 64,801 |
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Net deferred tax asset |
| $ | 0 |
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At October 31, 2020, the Company had $380,577 of net operating losses ( “NOLs”), which begin to expire beginning in 2037. NOLs generated in tax years prior to July 31, 2018, can be carryforward for twenty years, whereas NOLs generated after July 31, 2018 can be carryforward indefinitely
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The NOL carry forwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company experienced a loan payablechange in control for tax purposes in August 2020 (see Note 1). Due to Mr. Titovchange of control, the Company will not be able to carryover approximately $294,765 of NOL generated before August 12, 2020 to offset future income.
On August 10, 2019 the Company signed a convertible note for funds being paid in the amountcash for settlement of $1,415 for expenses he has paidvendors’ invoices on behalf of the Company. The loan bears no interest and is payable on demand.
Our officer and director mayCompany by the former CEO, as of that date for a twelve month period following that date which can be considered a promoterconverted by the CEO at any time into restricted common shares of the Company due to his participationat a conversion rate of $0.001 per share. The note bears interest of 4% per annum. The note is currently in default.
For the years ended October 31, 2020 and management2019, the Company recorded interest expense of $479 and $0, respectively.
On August 12, 2020, in connection with change of control and stock purchase agreement (Note 1), the former CEO forgave the convertible note of $4,221 and accrued interest of $479.
As of October 31, 2020, and 2019, the Company was obligated for this convertible note with balance of $0 and $9,956, and accrued interest of $0 and $0, respectively.
Note 6 – Related Party Transactions
In June 2019, the Company entered into a compensation agreement with the former CEO whereby the CEO would receive a onetime compensation of $50,000 for being elected as the CEO and sole director of the business since our incorporation.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESCompany and $10,000 per month through October 31, 2019 for his continued services through then. According to the agreement, the compensation was to be paid in the form of restricted common stock of the Company at a value of its par which is $0.001 per share. The Company signed a resolution in the third fiscal quarter of the fiscal year ending October 31, 2019 issuing 250,000 shares of restricted common stock of the Company to the former CEO valued at $100,000 which compromises the $50,000 onetime compensation and five months of compensation of an aggregate of $50,000, pursuant to the compensation agreement.
During the year ended October 31, 2017,2020, the total fees billedamount due to the former CEO of $2,405, for audit-related servicespayment of vendors’ invoices were forgiven.
During the years ended October 31, 2020 and 2019, the former CEO paid vendors’ invoice of $25,265 and $14,956, respectively. During the years ended October 31, 2020, and 2019, $31,000 was $3,750, for tax servicesconverted into 31,000,000 restricted common shares of the Company and $5,000 was $0 and for all other services was $0.converted into 12,500 restricted common shares of the Company, respectively.
During the year ended October 31, 2016,2020, the total fees billedCompany’s sole officer and director advanced to the Company an amount of $8,559 by paying for audit-related servicesexpenses on behalf of the Company. As of October 31, 2020, and 2019, the Company was $2,350,obligated to the officer, for tax services wasan unsecured, non-interest-bearing demand loan with a balance of $8,559 and $0, and for all other services was $0.respectively.
Note 7 – Subsequent Events
The Company has evaluated subsequent events from October 31, 2020, through the date these financial statements were issued and determined the following events require disclosure:
On December 14, 2020, the Company filed Articles of Conversion/Exchange/Merger, with the state of Nevada, to change its name to “Huaizhong Health Group, Inc.” (the "Name Change"). The Name Change became effective as of December 15, 2020.
The Company’s CEO has advanced an additional $12,188 for payment of operating expenses.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following exhibits are included with this registration statement:
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* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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