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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20182020
Commission File Number:333-222631
ADORBS INC.
(Exact name of registrant as specified in its charter)
| Nevada | 82-3155323 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
234 E. Beech Street, Long Beach, NY 11561
(Address of principal executive offices, Zip Code)
(516) 544-2812
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Name of Each Exchange On Which Registered | |
| N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes ☐ No ☒
Indicate by check mark if the Company is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 ☒ 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). Yes ☒ No☐ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | |
| ☒ | |||
| Emerging growth company | ☒ | ||
If an emerging growth company, indicate by check mark if the 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐☒ No ☒☐
Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of December 31, 2018:June 30, 2020: N/A
The number of shares of the registrant’s common stock outstanding as of April 10, 2019February 9, 2021, was 23,889,500.
TABLE OF CONTENTS
i
FORWARD LOOKING STATEMENTS
This annual report on Form 10-K (the “Annual Report”) contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our audited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars (US$) and all references to “common shares” refer to the common shares in our capital stock.
As used in this annual report, the terms “we,” “us,” “our,” the “Company,” “Adorbs” and “our company” mean Adorbs Inc. and its consolidated subsidiaries, unless otherwise indicated.
Corporate Background
Our Corporate History and BackgroundITEM 1. DESCRIPTION OF BUSINESS
Adorbs Inc. (“Adorbs”, or the “Company”) was incorporated under the laws of the State of Nevada on October 18, 2017. Adorbs is a developmental stage corporation formed to provide organic children’s clothing designed to be cute, comfortable, and trendy. The vision of Adorbs is bright, basic & comfortable organic clothes, if the price of organic material makes financial sense, including wearable and comfortable cute clothes, leggings, t-shirt, sweatshirts, skirts, dresses, and onesies (the “Clothing Line”). The clothing has and will have basic bold colors, such as black, red, orange, yellow, green, grey, blue, purple, and fuchsia. It includes and will include, a variety of ideas with patch work, appliqué, food, emojis, animals, letters, words. This way, a child could tell a story about their clothing.
Furthermore, the Company has applied for the word mark ADORBS: U.S. Application Serial No. 87/752,589, as well as the Adorbs logo: U.S. Application Serial No. 87/752,591. These applications have been approved by the trademark office for publication.
CurrentFormer management iswas comprised of two people, Rebecca Jill Lazar, President.President; and Michael Lazar, Chief Financial Officer. Due to the development stage of the Company, Ms. Lazar distributesspent part of her time toward the everyday operations and forward movement of the corporation. Ms. Lazar’s responsibilities includeincluded acting as the company’sCompany’s creative designer as well as determining the overall design direction of the company and its marketing strategy. Ms. Lazar has cultivated relationships with children’s clothing stores and manufacturers. Ms. Lazarmanufacturers and her relationships with targeted consultants should help her in her efforts to further the development of operations during the development stage of the Company.
Operations to date have been devoted primarily to start-up, development activities, and sales, which include the following:
Adorbs currently has one officer and director. This individual allocates time and personal resources to Adorbs on a part-time basis and devotes approximately 28 hours a week to the Company. Ms. Lazar spendsspent the time necessary to oversee the product development, manufacturing, sales, and marketing campaigns, website design, and direct the primary operations of the business.
As of the date of this Form 10-K, Adorbs has 23,861,500 shares of $0.001 par value common stock issued and outstanding. On November 29, 2017,January 19, 2018, the Company issued 3,000,000 sharesfiled a Form S-1 for registration of $0.001 par value common stock to Rebecca Jill Lazar, an officer and director, in exchange for cash of $3,000, 11,000,000 shares of common stock on January 16, 2018 in exchange for cash of $11,000, and 7,000,000 shares of common stock on January 17, 2018 in exchange for $7,000, pursuant to Section 4(a)(2) ofsecurities under the Securities Act of 1933, as amended. During the months of July1933. The S-1 was declared effective on March 14, 2018, and August 2018,at that time the Company issued 2,860,000 shares of common stock in exchangebecame a fully reporting public company. The Company filed its first Form 10-Q on May 10, 2018, for cash $28,600.the period ended March 31, 2018, and subsequently filed all required reports until through the period ended March 31, 2019. On October 3, 2018,July 1, 2019, the Company officially closedfiled a Form 15 to terminate its public offering by consent ofregistration. Despite her best efforts, Ms. Lazar determined during the three months ended June 30, 2020, that the Company’s board of directors. Thebusiness plan was no longer viable. Subsequently, during July 2020, Ms. Lazar and her husband Michael Lazar resigned their positions executive positions with the Company has also issuedand gifted their majority shareholdings for no consideration to Activist Investing LLC, an aggregate of 1,500entity controlled by Michael Lazar’s brother, David Lazar. These shares were gifted in return for David Lazar’s commitment to service providers.provide funding to the Company going forward and for his expertise in managing and directing distressed companies.
Adorbs has administrative offices located at 234 E. Beech Street, Long Beach, NY 11561.Activist Investing LLC received 11,000,000 shares from Ms. Lazar, our sole office and director, provides the office on a rent-free basis.
Our Business
OUR BUSINESS DESCRIPTION, BUSINESS PURPOSE AND OPERATIONS
Adorbs Inc. (“Adorbs”, or the “Company”) was incorporated under the laws of the State of Nevada on October 18, 2017. Adorbs is a developmental stage corporation formed to provide mostly organic children’s clothing designed to be cute, comfortable, and trendy. The vision of Adorbs is bright, basic & comfortable organic clothes, if the price of organic material makes financial sense, including wearable and comfortable cute clothes, leggings, t-shirt, sweatshirts, skirts, dresses, and onesies (the “Clothing Line”). The clothing has and will have basic bold colors, such as black, red, orange, yellow, green, grey, blue, purple, and fuchsia. It includes and will include, a variety of ideas with patch work, appliqué, food, emojis, animals, letters, words. This way, a child could tell a story about their clothing. We received our initial funding of $21,859 in the form of loan10,000,000 shares from the RebeccaMichael Lazar and an additional $3,000 through the sale of common stock to Ms. Lazar who purchased 3,000,000 shares of our Common Stock on November 29, 2017. On January 16, 2018, the Company issued an additional 11,000,000 shares of common stock to Rebecca Lazar at par for a total of $11,000. On January 17, 2018,21,000,000 shares. Based upon 23,889,500 shares outstanding, this effectively gave David Lazar 87.9% ownership of the Company. Concurrently with the change of control, David Lazar was appointed as CEO and Director and is currently the only employee, officer, and director of the Company. As a result of these transactions, the Company issued an additional 7,000,000 shares of common stock to Rebecca Lazar at par forbecome a total of $7,000. During the months of July and August 2018,“blank check” company.
On June 22, 2020, the Company issued 2,860,000 shares of common stock in exchange for cash $28,600. On October 3, 2018,dismissed Michael Gillespie & Associates, PLLC “Gillespie”) as its independent registered public accounting firm who had performed the Company officially closed its public offering by consentaudit of the Company’s board of directors.
Adorbs is a developmental stage corporation that is dedicated to the creation and commercialization of children’s clothing with organic materials.
The key to our success lies in the Company’s ability to design quality, comfortable, cute, affordable, trendy clothes for children that children want to wear. Children will eager to wear Adorbs Apparel and feel empowered to wear the clothing geared specifically tailored to individual style and trends. We will tap into the existing children’s clothing market and reach the large audience of buyers. We will be producing apparel based on current colors and designs.
Since our inception, we have commenced our business operations, including selling a variety of embellished apparel of high quality clothing. The Company has realized minimal sales2018 financial statements for the year ended December 31, 2018. We anticipateGillespie’s report on the Company’s financial statements for the year ended December 31, 2018, did not contain any adverse opinions or disclaimers of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that such reports included explanatory paragraphs with respect to the Company’s ability to continue as a going concern. During the year ended December 31, 2018, and through June 21, 2020, there were no (a) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) with Gillespie on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to satisfaction, would have caused Gillespie to make reference to the subject matter thereof in connection with its reports for the period ended 2018 or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.
On June 22, the Company grows overappointed AJSH & Co. LLP, a PCOAB registered firm as its independent registered accounting firm who performed the next twelve months, Adorbs will be able to expandCompany’s audit for the period ended December 31, 2019 and has reviewed its management teamfinancial statements for the three and add tonine-month period ended September 30, 2020.
On December 29, 2020, the Board of Directors.Company’s Registration Statement on Form 10-12G was declared effective.
Competitive Business Conditions and Strategy; Our operations to date have been devoted primarily to startup and development activities and the production and sale of our initial products:
1. Incorporation of the Company;
2. Initial funding from our Founder;
3. Carrying out of our business plan;
4. Initial procurement of prospective clientele for our products.
5. Product development and securing our initial sales, generating revenues of $11,780.
As an emerging company, we continually analyze our business plan and operationsPosition in the light of current trends within the theater and film entertainment, market conditions and developments. We intend to become a self-sustained operational entity. In order to generate revenues, the management will aim to maximize the Company’s business value by creating competitive products, addressing market and competition, utilizing specific marketing strategies, and establishing growth strategy for our company.
OUR PRINCIPAL PRODUCTS AND SERVICESIndustry
The Company develops bright, basic & comfortable organic clothes, if the price of organic material makes financial sense, including wearable and comfortable cute clothes, leggings, t-shirt, sweatshirts, skirts, dresses, and onesies. The clothing has and will have basic bold colors, such as black, red, orange, yellow, green, grey, blue, purple, and fuchsia. It includes and will include, a variety of ideas with patch work, appliqué, food, emojis, animals, letters, words. This way, a child could tell a story about their clothing.
Ordering from the website, in addition to choosing size with a scroll bar, the buyer can choose the applique design. As an example, choose the color, size of leggings and choose the design with apples, butterflies or smiles.
OUR PROPOSED REVENUE MODEL
Our proposed revenue model is to sell the Clothing Line via Amazon, Zulily, our own website Adorbskids.com, local clothing stores and local community events.
TARGET MARKET AND OUR NICHE WITHIN
It is essential for the Company’s success to identify a niche in the children’s clothing industry. We target young mothers and their children by creating clothes that are fun and tell stories about the children.
COMPETITION, OUR COMPETITIVE STRATEGY AND METHODS OF COMPETITION
The children’s clothing industry is highly competitive, and our Company faces competition ranging from large and well established companies to thousands of small mom and pop designers. We hope that if we are able to incorporate as much organic material into the Clothing Line, we will be able to differentiate ourselves
Our competitive strategy is based on the facts that while Adorbs is at a significant disadvantage to more established competitors due to our lack of financial resources and scarcity of relationships, we hope to stand out by using organic materials. It takes skills, knowledge and contacts to develop and sell products similar to ours. The Company believes that Ms. Lazar’s vision may allow us to tap into the organic and non-organic children’s clothing industry with a certain level of credibility. We will aim to produce creatively unique products to gain the competitive edge we need while watching closely for emerging trends.
MARKETING, MARKETING OBJECTIVES AND STRATEGIES
Adorbs markets its products and services directly to the children’s clothing community, focusing specifically on dressing children in high quality clothes that are comfortable and fun.
Our Marketing Objectives are as follows:
To promote and market our products and services, we incorporate the following strategies:
Currently, Ms. Lazar promotes our products through many channels, local stores and community events. While Ms. Lazar has limited experience in developing and expanding a client base and marketing products to them, we anticipate that, as the Company grows over the next twelve months, pools of expertise will be acquired by recruiting within the children’s clothing industry and by the use of marketing consultants, which will allow qualified individuals to join Ms. Lazar on our management team and Board of Directors.
STATUS OF NEW PRODUCTS OR SERVICES
Since our inception, we have sold multiple products for a total of $11,780. All of the products are being developed internally by Ms. Lazar.
Upon completion of new products, we market them. Although we cannot guarantee that our products will obtain any interest from consumers, we will continue to follow our business plan to provide products to the children’s clothing community.
INTELLECTUAL PROPERTY PROTECTION
The Company has applied for the word mark ADORBS: U.S. Application Serial No. 87/752,589, as well as the Adorbs logo: U.S. Application Serial No. 87/752,591. These applications have been approved by the trademark office for publicationa dormant shell company since approximately July 2019 and under new management is currently seeking investment opportunities.
RESEARCH AND DEVELOPMENTPatents, Trademarks, Licenses, Agreements, or Contracts
The Company does not own or license any registered intellectual property.
Research and Development
The Company engages in no research and development activities.
Employees
The Company has not expended funds for research and development costs since inception. Other than utilizing Ms. Lazar’s experiences and available industry and marketing information, Adorbs has not undertaken any research and development activities regarding our target market and marketability of our products.one employee, David Lazar.
OUR GROWTH STRATEGY MODELReports to Security Holders
Our mission is to maximize shareholder value by creatingThe public may read and commercializing the Clothing Linecopy any materials filed with the aim of achieving profitability and sustaining growth of our business. We are attempting to advance Adorbs to become a self-sustained and profitable operational entity. To achieve and sustain business growth inSEC at the next 12 to 36 months, we will aim to implement a three-prong growth strategy model which consistsSEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the following elements:
To streamline our core business, we will look to organize our product developmentPublic Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports and marketing operations inother electronic information regarding Adorbs Inc. and filed with the most efficient manner so that a quality product is developed and sold on a continuous basis. Adorbs will seek to hire additional staff to handle administrative and customer procurement functions; outsource certain aspects of product development or engage playwrights and screenwriters to develop new intellectual property more efficiently; and add experienced professionals to the Board of Directors to oversee the company and provide professional stature to the operations. We believe that successful implementation of this strategy will provide Adorbs with a certain degree of name recognition within the children’s clothing community and a network of useful business relationships.
CHILDREN’S CLOTHING INDUSTRYSEC at http://www.sec.gov.
Children’s fashion consciousness and decision making in what they wear has developed greatly drive the industry market. Increased resources available per child has increased consumerism promoting kids apparel choices. Durable Organic clothing designs made from environmental ingredients has a strong demand.
OUR SIGNIFICANT EMPLOYEESmaller Reporting Company Status
We currentlyalso qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as, among other possible qualifications, a company with a public equity float of less than $250 million. To the extent that we remain a smaller reporting company at such time as are no longer an emerging growth company, we will still have one employee, Ms. Lazar who is our founder and serves as our sole officer and director. Ms. Lazar currently devotes 28 hours per week to our business and is responsiblereduced disclosure requirements for our daily operationspublic filings, some of which are similar to those of an emerging growth company, including product development, salesnot being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and marketing, fund raising, implementation ofthe reduced disclosure obligations regarding executive compensation in our general strategyperiodic reports and execution of our business plan.proxy statements.
Our future business and operating results depend significantly on the continued contributions and active participation of Ms. Lazar. This individual would be difficult or impossible to replace. The loss of this key contributor, or his failure to perform, could materially and adversely affect our Company’s operations. While we may obtain Key Man insurance, such insurance may not be sufficient to cover the loss incurred in the event this executive officer is lost.
Currently, our officer and director receives no compensation for her services during the development stage of our business operations. She is reimbursed for any out-of-pocket expenses she may incur on our behalf. In the future, we may approve payment of salaries for officers and directors, but currently, no such plans have been approved. We anticipate adding four (4) employees over the next twelve (12) months. We do not have any employment agreements in place with our officer and director. We also do not currently have any benefits, such as health or life insurance, available to our employee.
Description of Property and Facilities
Adorbs Inc.’s corporate and operational offices are headquartered at 234 E. Beech Street, Long Beach, NY 11561. Ms. Lazar, our sole office and director, provides the office on a rent free basis. While we are in the developmental stage, we will operate out of 234 E. Beech Street, Long Beach, NY 11561.
Compliance with Government Regulation
The Company may be subject to a number of foreign and domestic laws and regulations that could affect companies conducting our business.
As an “emerging growth company”, we are not required to provide the information required by this Item.
Item 1B. Unresolved Staff Comments
As an “emerging growth company”, we are not required to provide the information required by this Item.
Adorbs Inc.’s corporate and operational offices are headquartered at 234 E. Beech Street, Long Beach, NY 11561. Ms.Rebecca Lazar, our sole officea former officer and director, provides the office on a rent freerent-free basis. While we are in the developmental stage, we will operate out of 234 E. Beech Street, Long Beach, NY 11561.
3
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is not traded on any national exchange. Our common stock is not yet quoted on the OTC Markets, although we have engaged a market maker to file a Form 15c-211 with FINRA.
Dividends
We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock.
Recent Sales of Unregistered Securities; Use of Proceeds From Registered Securities
We did not sell any equity securities which were not registered under the Securities Act during the year ended December 31, 2018,2020, that were not otherwise disclosed on our quarterly reports.
Equity Compensation Plans
As of December 31, 2018,2020, we do not have any equity compensation plans.
Convertible Securities
As of December 31, 2018,2020, we do not have any outstanding stock options.
Compliance with Section 16(A) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our shares of common stock 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. After review, the Company has determined that David Lazar and Rebecca Lazar did not timely file the appropriate filings under Section 16(a).
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
11,000,000 shares of common stock of the Company were sold to Rebecca Lazar on January 16, 2018 in exchange for cash of $11,000, and 7,000,000 shares of common stock of the Company were sold to Rebecca Lazar on January 17, 2018 in exchange for $7,000, pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.None
Item 6. Selected Financial Data
As an “emerging growth company” we are not required to provide this information.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
For the year ended December 31, 2018 compared to the year ended December 31, 2017
RevenueOverview
For an overview of the year ended December 31, 2018, the Company generated $11,780 in revenues. For the year ended December 31, 2017, the Company generated $84 in revenues. We had booths at prominent and less prominent venues. We have been continually selling merchandise steadily. Adorbs Apparel is selling in various boutiques in New York and Connecticut.Interested stores in both New Jersey and Massachusetts will begin to carry and sell Adorbs clothing. Everything Deals, an on-line market in the US purchased a large selection of Adorbs Apparel to sell. Apparel is selling in Connecticut at a Children/s Boutique, in New York at Frippery, and at Carly’z Craze in New Jersey.
Expenses
For the year ended December 31, 2018, we incurred operating expenses of $45,637. For the year ended December 31, 2017, we incurred operating expenses in the amount of $12,165 which consisted of general and administrative expenses and $30,924 of professional fees. The increase is due to increased accounting and legal fees associated with the preparation and filingbusiness of the Company, S-1 registration statement and filing of theplease refer to this Comprehensive Annual Report on Form 10-K to Part I, Item 1st, 2nd and 3rd quarter 10Q’s and 4th quarter 10K with the Securities and Exchange Commission. (“Business”).
Going Concern
Net Loss
For the year months ended December 31, 2018 we incurred a net loss of $38,161. We had net loss of $12,132 for the year ended December 31, 2017. The increase in net loss is due to an increase in revenue of $11,780 for the year ended December 31, 2018, offset by cost of goods sold of $4,408, increased administrative expense of $14,064 and increased professional fees of $30,924.
Liquidity
Currently, we are relying on equity capital and sales of our products and services. Currently, we pay costs associated with running a business on a day to day basis.
As of December 31, 2018, we had cash on hand of $36,602 with current liabilities of $65,016. We have incurred an aggregate loss for the year ended December 31, 2018 of $31,454. We used cash of $59,362 in operating expenses for the year ended December 31, 2018. As of December 31, 2017, we had cash on hand of $16,764 with current liabilities of $25,896. We have incurred an aggregate loss for the year ended December 31, 2017 of $12,132. We used cash of $8,095 in operating expenses for the year ended December 31, 2017.
We believe that we will need a minimum of $200,000 in capital in order to maintain our current and planned operations through the next twelve months. They are estimates only and derived from research and marketing data accumulated by our sole officer and director. We anticipate to incur up to $20,000 in accounting, auditing, legal and offering expenses, $15,000 to maintain our general and administrative functions and $165,000 in operating and other expenses over the next twelve month. We intend to raise the capital through the sale of shares of our common stock and through the sale of our products and services.
To the extent that our capital resources are insufficient to meet current or planned operating requirements, we will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has no current arrangements with respect to, or sources of, such additional financing and we do not anticipate that existing shareholders will provide any portion of our future financing requirements.
No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, we may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company.
Cash Flows:
| For the year ended December 31, 2018 | For the year ended December 31, 2017 | |||||||
| Cash Flows from Operating Activities | $ | (59,362 | ) | $ | (8,095 | ) | ||
| Cash Flows from Investing Activities | — | — | ||||||
| Cash Flows from Financing Activities | 79,200 | 24,859 | ||||||
| Net increase in cash | $ | 19,838 | $ | 16,674 | ||||
Off-balance Sheet Arrangements
For the year ended December 31, 2018 and for the year ended December 31, 2017, we have not engaged in any off-balance sheet arrangements.
Going Concern
TheOur financial statements accompanying this reportReport have been prepared onassuming that we will continue as a going concern, basis, which implies that our company will continue to realize itscontemplates the realization of assets and discharge itsliquidation of liabilities and commitments in the normal course of business. OurThe financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have a minimal operating history and minimal revenues or earnings from operations. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues for the immediate future. See “Part II, Item 8, Financial Statements, and Supplementary Data.”
Plan of Operation
We have been dormant since approximately July 2019. As of the date of this Report, we intend to engage in what we believe to be synergistic acquisitions or joint ventures with a company hasor companies that we believe will enhance our business plan. There are no assurances we will be able to consummate any acquisitions using our securities as consideration, or at all. Numerous things will need to occur to allow us to implement this aspect of our business plan and there are no assurances that any of these developments will occur, or if they do occur, that we will be successful in fully implementing our plan.
Limited Operating History; Need for Additional Capital
We cannot guarantee we will be successful in our business operations. We have not generated revenuesany revenue since inception and has never paid any dividends andinception. Our business is unlikelysubject to pay dividends or generate earningsrisks inherent in the immediateestablishment of a new business enterprise, including limited capital resources and possible cost overruns due to the price and cost increases in supplies and services.
If we are unable to meet our needs for cash from either our operations, or foreseeable future. The continuation ofpossible alternative sources, then we may be unable to continue, develop, or expand our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As at December 31, 2018, our company has an accumulated deficit of $50,293.
Off-Balance Sheet Arrangements
We do not have sufficient working capitalany off-balance sheet arrangements that have or are reasonably likely to enable us to carry outhave a current or future effect on our plan of operation for the next twelve months.
Due to the uncertainty of our ability to meet our current operatingfinancial condition, changes in financial condition, revenues or expenses, and the capital expenses noted above in their report on the financial statements for the year ended December 31, 2018, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
Critical Accounting Policies
The financial statements and the related notes of our company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in US dollars.
Use of Estimates
The preparation of financial statements in conformity with United States 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 reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations, will be affected.
Inventory
Inventoryliquidity, capital expenditures or capital resources that is stated at the lower of cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. On January 15, 2018, the Company entered into a manufacturing agreement with a third-party manufacturermaterial to produce 100% organic kids clothing inventory. The agreement calls for periodic payments by the Company. During the year ended December 31, 2018, the Company made the remaining payments for the inventory totaling $0 towards the total invoice. As of December 31, 2018, the Company had inventory of $27,679.investors.
Recent Accounting Pronouncements
In February 2016, the FASB issued an accounting standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB’s new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, for nonpublic entities using a modified retrospective approach. Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.
Item 7A. Quantitative and Qualitative Disclosures About Market RiskRisk.
As an “emerging growtha “smaller reporting company”, we are not required to provide the information required by this information.Item.
Item 8. Financial Statements and Supplementary DataData.
The financial statements and Report of Independent Registered Public Accounting Firm are listed in the “Index to the Financial Statements” on page F-1 and included on pages F-2 through F-9, immediately following the signature page of this Comprehensive Annual Report.
Adorbs Inc.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
ForItem 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the Years Endedsupervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Comprehensive Annual Report on Form 10-K (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s former management abandoned all operations for several years, and only recently did the Company appoint new management to make filings with the SEC on behalf of the Company.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Our Company has been dormant since July 2019. As a result our management did not conduct an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20182020, and 2017December 31, 2019 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013). without such an evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2020, based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the PCAOB were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; (4) complete lack of management of the company from July 2019 until February 2021; and (5) lack of disclosure controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of December 31, 2020.
Management believes that the material weaknesses set forth above did not have an effect on our financial results because the activity during this period was nominal. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside Directors on our Board of Directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
This Comprehensive Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report which was not filed was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the years ended December 31, 2020 and 2019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
All Directors of the Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of the Company are appointed by the Board of Directors and hold office until their death, resignation or removal from office. The Directors and Executive Officers, their ages, positions held, and duration as such, are as follows:
| Position Held with the Company | Age | Date First Elected or Appointed | ||||
| David Lazar | CEO, CFO and Director | 30 | July 2020 |
David Lazar, 30, has been CEO and Chairman of the Company since July ,2020. Mr. Lazar has been a partner at Zenith Partners International since 2013, where he specializes in research and development, sales and marketing. From 2014 through 2015, David was the Chief Executive Officer of Dico, Inc., which was then sold to Peekay Boutiques. Since February of 2018, Mr. Lazar has been the managing member of Custodian Ventures LLC, where he specializes in assisting distressed public companies. Since March 2018, David has acted as the managing member of Activist Investing LLC, which specializes in active investing in distressed public companies. David has a diverse knowledge of financial, legal and operations management; public company management, accounting, audit preparation, due diligence reviews and SEC regulations.
Employment Agreements
We have no formal employment agreement with David Lazar who is our sole employee, director and officer.
Family Relationships
None.
Involvement in Certain Legal Proceedings
None of our Directors, Executive Officers, promoters or control persons has been involved in any of the following events during the past 10 years:
1. A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an Executive Officer at or within two years before the time of such filing;
2. Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses;
3. Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
| i. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, Director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity |
| ii. | Engaging in any type of business practice; or |
| iii. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
4. Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
| i. | Any Federal or State securities or commodities law or regulation; or | |
| ii. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or | |
| iii. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
8. Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Code of Ethics
As of the date of filing, the Company has not adopted a corporate code of ethics. The Company has never adopted a corporate code of ethics, and the new management of the Company has not yet made plans to formulate such a code.
Board and Committee Meetings
Our Board of Directors currently consists of one member, Mr. David Lazar. The Board of Directors held no formal meetings during the year ended December 31, 2020. Until the Company develops a more comprehensive Board of Directors, all proceedings will be 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 General Corporate Law 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
During the year ended December 31, 2020, we did not affect any material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors. Our Board of Directors does not have a policy with regards to the consideration of any Director candidates recommended by our shareholders. Our Board of Directors has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when the Board of Directors considers a nominee for a position on our Board of Directors. If shareholders wish to recommend candidates directly to our Board of Directors, they may do so by sending communications to the President of our Company at the address on the cover of this Comprehensive Annual Report on Form 10-K.
Audit Committee
Currently the Company does not have an Audit Committee. The Company intends to appoint audit, compensation and other applicable committee members as it identifies individuals with pertinent expertise.
Audit Committee Financial Expert
Our Board of Directors does not have a member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The Company intends to appoint audit, compensation and other applicable committee members as it identifies individuals with pertinent expertise.
Item 11. Executive Compensation.
None
Grants of Plan-Based Awards
There were no grants of plan-based awards during the year ended December 31, 2020.
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding equity awards at the year ended December 31, 2020.
Option Exercises and Stock Vested
During our fiscal year ended December 31, 2020, there were no options exercised by our named officer.
Compensation of Directors
We do not have any agreements for compensating our Directors for their services in their capacity as Directors.
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 of Directors or a committee thereof.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of January 30, 2021 certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current Directors and Executive Officers as a group. Each person has sole voting and investment power with respect to the shares of Common Stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of Common Stock, except as otherwise indicated.
Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them.
| Name of Beneficial Owner | Common Stock Beneficially Owned (1) | Percentage of Common Stock Owned (1) | ||||||
| David Lazar, Chief Executive Officer, Chief Financial Officer and Director (2)(3) 1185 Avenue of the Americas, 3rd Floor. New York, New York 10036 | 21,000,000 | 87.9 | % | |||||
| Director and Officer (1 person) | 21,000,000 | 87.9 | % | |||||
| (1) | Applicable percentage ownership is based on 23,889,500 shares of common stock outstanding as of December 31, 2020. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of December 31, 2020 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. |
| (2) | David Lazar is the only officer, employee, and director of the Company. The common stock is held by Activist Investing LLC. Since March 2018, David Lazar has acted as the managing member of Activist Investing LLC, which specializes in active investing in distressed public companies. He has full voting and investment control of these shares. |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Subsequent to the year ended December 31, 2020 and through the date of filing this Comprehensive Annual Report on Form 10-K, David Lazar, the Company’s only employee, Director and Executive Officer extended interest-free demand loans amounting to $31,911.
Director Independence
The Company does not have a separately designated nominating committee of our Board of Directors. None of our directors is deemed to be independent, as such term is defined in the listing standards of The Nasdaq Stock Market, Inc. (“Nasdaq”).
Item 14. Principal Accounting Fees and Services.
| Year Ended | Year Ended | |||||||
| December, | December, | |||||||
| 2020 | 2019 | |||||||
| Audit Fees | $ | 6,500 | $ | 7,400 | ||||
| Audit-Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | - | $ | - | ||||
| Total | $ | 6,500 | $ | 7,400 | ||||
Our Board of Directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the Board of Directors either before or after the respective services were rendered.
Our Board of Directors 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.
ITEM 15. FINANCIAL STATEMENT AND EXHIBITS
INDEX TO FINANCIAL STATEMENTS
| Page | ||
| FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 | ||
| Report of Independent Registered Public Accounting Firm | F-2 | |
| Balance Sheets | F-3 | |
| Statements of Operations | F-4 | |
| F-5 | ||
| Statements of Cash Flows | F-6 | |
| Notes to | F-7 |
F-1
| C-7/227, Sector-7, Rohini New Delhi -110085 Tel: +91 11 4559 6689 Email: info@ajsh.in |
MICHAEL GILLESPIE(Formally known as “AJSH & ASSOCIATES, PLLC
CERTIFIED PUBLIC ACCOUNTANTS
10544 ALTON AVE NE
SEATTLE, WA 98125
206.353.5736Co.” converted and registered as LLP on 11-04-2016 vide LLPIN: AAG-1471)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
of Adorbs, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Adorbs, Inc. (the “Company”) as of December 31, 2018 and 2017 and2020, the related statements of operations, changes in stockholder’sstockholders’ deficit and cash flows, for the year then ended, December 31, 2018 and for the period from October 18, 2017 (inception) through December 31, 2017, and the related notes (collectively referred to as “financial statements”the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 20172020, and the results of its operations and its cash flowsflow for the year then ended, December 31, 2018 and for the period from October 18, 2017 (inception) through December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has an accumulated deficit of $137,513 and working capital deficit of $87,883. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this uncertainty are also described in the Note 2. 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’sthese financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)("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,audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.statement. We believe that our auditaudits provide a reasonable basis for our opinion.
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.
/S/ MICHAEL GILLESPIEs/ AJSH & ASSOCIATES, PLLCCo LLP
We have served as the Company’s auditor since 2018.2019.
Seattle, WashingtonNew Delhi, India
AprilFebruary 10, 20192021
ADORBS INC.
| December 31, 2018 | December 31, 2017 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 36,602 | $ | 16,764 | ||||
| Accounts receivable | 42 | — | ||||||
| Inventory | 27,679 | — | ||||||
| Total current assets | 64,323 | 16,764 | ||||||
| TOTAL ASSETS | $ | 64,323 | $ | 16,764 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts Payable and Accrued Expenses | $ | 557 | $ | 4,037 | ||||
Deferred revenue | 10,000 | — | ||||||
| Loan from related parties | 54,459 | 21,859 | ||||||
| Total current liabilities | 65,016 | 25,896 | ||||||
| Total liabilities | 65,016 | 25,896 | ||||||
| Commitments and Contingencies | — | — | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock, par value $0.001 per share; 75,000,000 shares authorized; 23,860,000 and 3,000,000 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively | 23,860 | 3,000 | ||||||
| Additional paid in capital | 25,740 | — | ||||||
| Accumulated deficit | (50,293 | ) | (12,132 | ) | ||||
| Total stockholders’ (deficit) | (693 | ) | (9,132 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 64,323 | $ | 16,764 | ||||
The accompanying notes are an integral part of these financial statements.
F-2
ADORBS INC.
STATEMENTS OF OPERATIONSADORBS INC.
BALANCE SHEETS
For The Fiscal | October 18, 2017 (inception) thru December 31, | |||||||
| 2018 | 2017 | |||||||
| SALES | $ | 11,780 | $ | 84 | ||||
| COST OF SALES | 4,408 | — | ||||||
| GROSS MARGIN | 7,372 | — | ||||||
| OPERATING EXPENSES: | ||||||||
| Research and Development Costs | 649 | 1,272 | ||||||
| General and Administrative | 14,065 | 3,593 | ||||||
| Professional Fees | 30,924 | 7,300 | ||||||
| Total operating expenses | 45,638 | 12,165 | ||||||
| LOSS FROM OPERATIONS | (38,266 | ) | (12,081 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense | — | (51 | ) | |||||
| Interest income | 105 | — | ||||||
| Total other income (expense) | 105 | (51 | ) | |||||
| NET LOSS | $ | (38,161 | ) | $ | (12,132 | ) | ||
| Net loss per common share – basic and diluted | $ | — | $ | — | ||||
| Weighted average common shares outstanding – basic and diluted | 21,513,753 | 1,223,684 | ||||||
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 13,593 | $ | 19,865 | ||||
| Accounts receivable, net | - | 87 | ||||||
| Prepaid and other current assets | - | 12,089 | ||||||
| Inventory | - | 21,790 | ||||||
| Total Current Assets | 13,593 | 53,831 | ||||||
| Total Assets | $ | 13,593 | $ | 53,831 | ||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accrued payable and accrue liabilities | $ | 428 | $ | 7,783 | ||||
| Due to related parties | 101,048 | 69,297 | ||||||
| Total current liabilities | 101,476 | 77,080 | ||||||
| Total liabilities | 101,476 | 77,080 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders’ Deficit | ||||||||
| Common stock, Par Value $.001, 75,000,000 shares authorized, 23,889,500 shares issued and outstanding of shares as of December 31, 2020 and December 31, 2019 | 23,890 | 23,890 | ||||||
| Additional paid in capital | 25,740 | 25,740 | ||||||
| Accumulated deficit during development stage | (137,513 | ) | (72,879 | ) | ||||
| Total Stockholders’ (Deficit) | (87,883 | ) | (23,249 | ) | ||||
| Total Liabilities and Stockholders’ (Equity) | $ | 13,593 | $ | 53,831 | ||||
The accompanying notes are an integral part of these financial statements.
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE PERIOD DECEMBER 31, 2018 AND DECEMBER 31, 2017STATEMENTS OF OPERATIONS
| Common Stock: Shares | Common Stock: Amount | Additional Paid in Capital | Deficit Accum | Other Comprehensive Income | Totals | |||||||||||||||||||
| Inception – October 18, 2017 | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| Common stock issued to founder | 3,000,000 | 3,000 | — | — | — | 3,000 | ||||||||||||||||||
| Net loss for the period | — | — | — | (12,132 | ) | — | (12,132 | ) | ||||||||||||||||
| Balance December 31, 2017 | 3,000,000 | $ | 3,000 | $ | — | $ | (12,132 | ) | $ | — | (9,132 | ) | ||||||||||||
| Common stock issued to founder | 18,000,000 | 18,000 | — | — | — | 18,000 | ||||||||||||||||||
| Common stock subscriptions | 2,860,000 | 2,860 | 25,740 | — | 28,600 | |||||||||||||||||||
| Net loss for the period | — | — | — | (38,161 | ) | — | (38,161 | ) | ||||||||||||||||
| Balance December 31, 2018 | 23,860,000 | $ | 23,860 | $ | 25,740 | $ | (50,293 | ) | $ | — | (693 | ) | ||||||||||||
The accompanying notes are an integral part of these financial statements.
ADORBS INC.
| For the Period December 31, | October 18, 2017 | |||||||
| 2018 | 2017 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (38,161 | ) | $ | (12,132 | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | (42 | ) | — | |||||
| Prepaid expense and other current assets | — | — | ||||||
| Inventory | (27,679 | ) | — | |||||
| Accounts payable and accrued expenses | (3,480 | ) | 4,037 | |||||
| Deferred revenue | 10,000 | — | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | (59,362 | ) | (8,095 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from related party | 32,600 | 23,859 | ||||||
| Proceeds from common stock issued to related party | 18,000 | 3,000 | ||||||
| Payments on related party debt | — | (2,000 | ) | |||||
| Proceeds from common stock | 28,600 | — | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 79,200 | 24,859 | ||||||
| NET INCREASE IN CASH | 19,838 | 16,764 | ||||||
| CASH – BEGINNING OF PERIOD | 16,764 | — | ||||||
| CASH – END OF PERIOD | $ | 36,602 | $ | 16,764 | ||||
| Year ended December 31, 2020 | Year ended December 31, 2019 | |||||||
| Revenue | $ | 222 | $ | 17,880 | ||||
| Cost of sales | 36 | 5,888 | ||||||
| 186 | 11,992 | |||||||
| Operating Expenses: | ||||||||
| General and administrative expense | 20,470 | 10,993 | ||||||
| Professional fees | 22,650 | 23,733 | ||||||
| Loss on the impairment of inventory | 21,754 | - | ||||||
| Total operating expenses | 64,874 | 34,726 | ||||||
| (Loss) from operations | (64,688 | ) | (22,734 | ) | ||||
| Other income (expense) | ||||||||
| Interest income | 54 | 148 | ||||||
| Income (loss) before provision for income taxes | (64,634 | ) | (22,586 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net (Loss) | (64,634 | ) | (22,586 | ) | ||||
| Basic and diluted earnings(loss) per common share | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of shares outstanding | 23,889,500 | 23,833,236 | ||||||
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Common Stock | Additional Paid-in | Retained | Total Stockholders’ | |||||||||||||||||
| Shares | Value | Capital | Earnings | Equity | ||||||||||||||||
| Balance, December 31, 2018 | 23,860,000 | $ | 23,860 | $ | 25,740 | $ | (50,293 | ) | $ | (693 | ) | |||||||||
| Common stock issued for services | 1,500 | 2 | 2 | |||||||||||||||||
| Common stock donations and gifts | 28,000 | 28 | 28 | |||||||||||||||||
| Net loss | (22,586 | ) | (22,586 | ) | ||||||||||||||||
| Balance, December 31, 2019 | 23,889,500 | $ | 23,890 | $ | 25,740 | $ | (72,879 | ) | $ | (23,249 | ) | |||||||||
| Common Stock | Additional Paid-in | Retained | Total Stockholders’ | |||||||||||||||||
| Shares | Value | Capital | Earnings | Equity | ||||||||||||||||
| Balance, December 31, 2019 | 23,889,500 | $ | 23,890 | $ | 25,740 | $ | (72,879 | ) | $ | (23,248 | ) | |||||||||
| Net loss | (64,634 | ) | (64,634 | ) | ||||||||||||||||
| Balance, December 31, 2020 | 23,889,500 | $ | 23,890 | $ | 25,740 | $ | (137,513 | ) | $ | (87,883 | ) | |||||||||
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CASH FLOWS
| Year ended December 31, | Year ended December 31, | |||||||
| 2020 | 2019 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income (loss) | $ | (64,634 | ) | $ | (22,586 | ) | ||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities | ||||||||
| Common stock issued for services | - | 30 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | 87 | (86 | ) | |||||
| Prepaid expenses and other current assets | 12,089 | (12,047 | ) | |||||
| Inventory | 21,790 | 5,588 | ||||||
| Account payable and accrued liabilities | (7,355 | ) | 7,227 | |||||
| Deferred revenue | - | (10,000 | ) | |||||
| Net cash provided by (used for) operating activities | (38,023 | ) | (31,874 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from related party loans | 31,751 | 14,838 | ||||||
| Net cash provided by (used for) financing activities | 31,751 | 14,838 | ||||||
| Net Increase (Decrease) In Cash | (6,272 | ) | (17,037 | ) | ||||
| Cash At The Beginning Of The Period | 19,865 | 36,602 | ||||||
| Cash At The End Of The Period | $ | 13,593 | $ | 19,565 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | - | ||||
The accompanying notes are an integral part of these financial statements.
F-6
FOR THE PERIOD DECEMBER 31, 2018
AND DECEMBER 31, 2017
Note 1 – Organization and basis of accounting
Basis of Presentation and Organization
Adorbs IncInc. is a Nevada corporation. Adorbs is a developmental stage corporation formed to provide organic children’s clothing designed to be cute, comfortable, and trendy. The Company was incorporated under the laws of the State of Nevada on October 18, 2017. The company office is located at 234 E. Beech Street, Long Beach, NY 11561.On that date, the Company was authorized to issue 75,000,000 shares of common stock at $0.001 par value.
The accompanying condensed financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products which may become part of the Company’s product portfolio. The Company has realized minimalnominal sales for the year ended December 31, 2018 and very limited sales for the year ended December 31, 2017. A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.2020.
The accompanying condensed financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding until aan amended registration statement relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital, or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
The accompanying condensed financial statements have been prepared by the Company. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at December 31, 2018 and for the related periods presented..
Note 2 – Summary of significant accounting assumptions and policies
Covid-19
In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have had a minimal impact on our day to day operations. However this could impact our efforts to enter into a business combination as other businesses have had to adjust, reduce or suspend their operating activities. The extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. The Company is unable to predict the ultimate impact at this time.
Going Concern
The Company has an accumulated deficit of $137,513 and a working capital deficit of $87,883 as of December 31, 2020, and a working capital deficit of $23,249 as of December 31, 2019. As a result of these factors, management has determined that there is substantial doubt about the Company ability to continue as a going concern.
These financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time. The financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties.
Cash and Cash Equivalents
For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. As of December 31, 2020 and December 31, 2019, the on hand cash balances were $13,593 and $19,865, respectively.
Prepaid Expenses
Prepaid expenses are recorded at fair market value. As of December 31, 2020 and 2019, the balances of prepaid expenses were $-0- and $12,089 respectively
Revenue Recognition
F-7
Inventory
Inventory, which is comprised of children’s clothing and is charged to inventory when purchased, is stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (“FIFO”) method.
The Company recognizeevaluates inventory levels quarterly value based upon assumptions about future demand and market conditions. Any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired are written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. The Company performed its evaluation on September 30, 2020 and December 30, 2020 and determined that due to nominal sales during the last twelve months and due to the ongoing Covid-19 situation an impairment of the inventory was required. As a result during the year ended December 31, 2020 the Company impaired approximately 100% of its inventory cost and record a write-down of $21,754 which was charged to “loss on the impairment of inventory” on the Company’s.
Revenue Recognition
The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.
The Company defers any revenue for which the product is subject to right of return until such time as the 30 days has elapsed, and no refund will be required. As of December 31, 20182020 and 2017,2019, the Company recorded total deferredrevenue of $10,000$-0- and $0,$-0- respectively
Furniture and Fixtures
Furniture and fixtures are recorded at cost and depreciated using the straight-line method at rates determined to estimate the useful lives of the assets.
Long-lived assets
The Company accounts for its long-lived assets in accordance with FASB ASC 360-10, “Property, Plant and Equipment” which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposal value.
Income Taxes
The Company accounts for income taxes pursuant to FASB ASC Topic 740,Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a 100% valuation allowance with respect to deferred tax assets.assets, therefore there are no deferred taxes on the Company’s Balance Sheet. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. As of December 31, 2020 the Company had a net loss carryforward of approximately $137,000.
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value Measurement
The Company values its convertible notes and amounts due to related partings and short term loans payable under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 - Valuations for assets and liabilities that can be obtained from readily available pricing sources via independent providers for market transactions involving similar assets or liabilities. The Company’s principal markets for these securities are the secondary institutional markets, and valuations are based on observable market data in those markets.
Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.
Employee Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.
Estimates
The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of December 31, 20182020 and December 31, 2017,2019, and expenses for the year ended December 31, 20182020 and December 31, 2017.2019. Actual results could differ from those estimates made by management.
Subsequent Event
The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration.
Recent Accounting Pronouncements
In February 2016, the FASB issued an accounting standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB'sFASB’s new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, for nonpublicnon-public entities using a modified retrospective approach. Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.
Note 3 – Related party transactions
During the year ended December 31, 2018,2020, David Lazar paid accounting and audit expenses on behalf of the Company received $32,600 in additional loans funds from Rebeca Lazar, President and Chief Executive Officer.totaling $31,571 As of December 31, 2018 and December 31, 2017,2020, the Company had a loan payable of $54,459$31,911 to David Lazar. As of December 31, 2020 and $21,859, respectivelyDecember 31, 2019, the Company also had a loan payable of $69,137, to Rebecca Lazar, the former President and Chief Executive Officer. This loan isThese loans are both unsecured, non-interest bearing promissory notes and has no specific terms for repayment.are payable on demand.
Note 4 – Common stock
The Company is authorized to issue 75,000,000 shares of $.001 par value common stock. On November 29, 2017, the Company issued 3,000,000 shares of common stock with a par value of $0.001 to Rebecca Lazar, President & Chief Executive Officer for $3,000.
On January 16, 2018, the Company issued 11,000,000 shares of common stock to Rebecca Jill Lazar at par for a total of $11,000.
On January 17, 2018, the Company issued 7,000,000 shares of common stock to Rebecca Jill Lazar at par for a total of $7,000.
During the months of July and August 2018, the Company issued 2,860,000 shares of common stock with a par value of $0.001 at issuance prices of $0.001 per share, for a total investment of $28,600.
As of December 31, 2018, a total of 23,860,000 shares of common stock issued and outstanding.
Note 5 – Income Taxes
The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.
FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The cumulative deferred tax asset for 2018 and 2017 is $10,441 and $2,575, respectively, which is calculated by multiplying a 21% estimated tax rate by the cumulative net operating loss (NOL) adjusted for the following items:
| For the year ended December 31, | 2018 | 2017 | ||||||
| Book loss for the year | $ | (38,161 | ) | $ | (12,216 | ) | ||
| Permanent differences: | ||||||||
| Meals and entertainment | 704 | 47 | ||||||
| Tax loss for the year | (37,457 | ) | (12,263 | ) | ||||
| Estimated effective tax rate | 21 | % | 21 | % | ||||
| Gross Deferred tax asset | $ | 7,866 | $ | 2,575 | ||||
| Valuation allowance | (7,866 | ) | (2,575 | ) | ||||
| Total Deferred tax asset | — | — | ||||||
| For the years ended December 31, | 2018 | 2017 | ||||||
| Balance at beginning of year | $ | 2,575 | $ | — | ||||
| Additions | 7,866 | 2,575 | ||||||
| Deductions | — | — | ||||||
| Balance at end of year | $ | 10,441 | $ | 2,575 | ||||
Rate Reconciliation:
| For the years ended December 31, | 2018 | 2017 | ||||||
| Federal income tax at stator rate | $ | (8,014 | ) | $ | (2,565 | ) | ||
| Permanent differences | 148 | 9.87 | ||||||
| Change in Valuation Allowance | 7,866 | 2,575 | ||||||
| $ | — | $ | — | |||||
Uncertain Tax Positions2020
Unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the financial statements. If recognized, substantially all of the unrecognized tax benefits for the Company’s fiscal years ended December 31, 2018 and 2017 would affect the effective income tax rate. There were no unrecognized income tax benefits as of December 31, 2018 and 2017.share issuances in 2020.
The Company recognizes the interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company did not recognize any expenses any interest and penalties as of December 31, 2018 and 2017, respectively.
All tax years since inception are open for examination by taxing authorities.
F-9
Note 6 – Concentrations
During the year ended December 31, 2018, the Company had one major customer comprising 95% of sales. A major customer is defined as a customer that represents 10% or greater of total sales. There was no accounts receivable for this customer as of December 31, 2018. The Company does not believe that the risk associated with these customers will have an adverse effect on the business.
Note 7 – Subsequent events2019
On February 01, 2019, the Company issued a total of 1,500 shares of common stock at par to three individuals for consulting services.
On March 22, 2019, the Company donated a total of 14,000 shares of common stock at parpart to various charitable organizations. On that same date, the Companycompany gifted 14,000 shares of common stock at par to 13 individuals.
F-10
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREAll the above securities issued were offered and issued in reliance upon the exemption from registration pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Regulation S promulgated thereunder.
None.As of December 31, 2020 and 2019, a total of 23,889,500 and 23,860,000 shares of common stock issued and outstanding.
ITEM 9A. CONTROLS AND PROCEDURESNote 5 – Subsequent events
Evaluation of Disclosure Controls and Procedures
We carried outIn accordance with SFAS 165 (ASC 855-10) management has performed an evaluation underof subsequent events through the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or 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, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believesdate that the financial statements included in this report fairly present in all material respects our financial condition, results of operationswere available to be issued and cash flows for the periods presented.
Management’s Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Principal Accounting Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The framework our management uses to evaluate the effectiveness of our internal control over financial reporting is based on the guidance provided by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in its 1992 report: INTERNAL CONTROL - INTEGRATED FRAMEWORK. Based on our evaluation under the framework described above, our management has concluded that our internal control over financial reporting was ineffective as of December 31, 2018 due to the same material weaknesses that rendered our disclosure controls and procedures ineffective. The Company’s internal control over financial reporting is not effective due to a lack of sufficient resources to hire a support staff in order to separate duties between different individuals. The Company lacks the appropriate personnel to handle all the varying recording and reporting tasks on a timely basis. The Company plans to address these material weaknesses as resources become available by hiring additional professional staff, such as a Chief Financial Officer, as funding becomes available, outsourcing certain aspects of the recording and reporting functions, and separating responsibilities. We have identified the following material weaknesses.
1. As of December 31, 2018, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees the accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
2. As of December 31, 2017, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.
Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2018, based on the criteria established in "INTERNAL CONTROL-INTEGRATED FRAMEWORK" issued by the COSO.
Change In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
This annual reportit does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subjecthave any material subsequent events to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s reportdisclose in this annual report.
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None.
PART III
Our Board of Directors currently consists of one member. Adorbs concluded that the following individual should serve as our director based on her creative abilities. Adorbs believes that her experience with children and clothing would be beneficial to the Company. The director holds office until his successor is duly elected by the stockholders. The executive officer serves at the pleasure of the Board of Directors. Our current director and executive officer is:
| Name | Age | Position | Year Appointed | |||||
| Rebecca Jill Lazar | 39 | President, Treasurer, Secretary and Director | 2017 |
Rebecca Jill Lazar – President, Treasurer, Secretary, and Director
Rebecca Lazar is a designer. She earned Bachelor of Arts and Master of Arts degrees. She studied at Boston University, Boston Architectural Center, and Columbia University. She is an art historian, artist, architect, interior designer, and scholar. Rebecca Lazar worked as a Curator in a variety of Art Museums. For the past five years she has been a full-time mother to three children.
Board Committees
Audit committee
We do not have a separately-designated standing audit committee. The Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board of Directors when performing the functions that would generally be performed by an audit committee. The Board of Directors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board of Directors reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including /fees to be paid to the independent auditor and the performance of the independent auditor.
Compensation and Nominations Committees
We currently have no compensation or nominating committee or other board committee performing equivalent functions. Currently, the member of our Board of Directors participates in discussions concerning executive officer compensation and nominations to the Board of Directors.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and holds office until removed by the Board of Directors.
Family Relationships
There are no family relationships between any of our directors or executive officers.
Involvement in Legal Proceedings
To our knowledge, there have been no material legal proceedings that would require disclosure under the federal securities laws that are material to an evaluation of the ability of our director or executive officers.
Potential Conflicts of Interest
We are not aware of any current or potential conflicts of interest with our director or executive officers.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, officers and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and are required to furnish us with copies of these reports. Based solely on our review of the reports filed with the SEC, we believe that no persons subject to Section 16(a) of the Exchange Act timely filed all required reports in 2018.
Codeof Ethics
We currently do not have a code of ethics that applies to our officers, employees and director, including our Chief Executive Officer, however, we are in the process of formulating a code of ethics and intend to adopt one in the near future.
No officer or director have received annual compensation since the inception of the Company. There has been no compensation awarded to, earned by, or paid to the named executive officer or director.
As our business progresses and grows, we expect to hire and begin paying salaries to other officers and directors. We also expect to hire part-time and full-time employees and consultants who will be paid compensation and consulting fees.
Stock option plan
We do not have a stock option plan and we have not issued any warrants, options or other rights to acquire our securities. However, we intend to adopt an incentive and non-statutory stock option plan in the future.
Employee Pension, Profit Sharing or other Retirement Plans
We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.
Director’s compensation
At present we do not pay our director for attending meetings of our Board of Directors, although we may adopt a director compensation policy in the near future.
Related Party Transactions
We received our initial funding of $21,859 from its CEO and founder Rebecca Lazar. The Company has no employment contracts at this time.
|
The following table sets forth information regarding the beneficial ownership of our common stock as of March 19, 2019. The information in this table provides the ownership information for: each person known by us to be the beneficial owner of more than 5% of our common stock; each of our directors; each of our executive officers; and our executive officers and directors as a group.
Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them.
| Name of Beneficial Owner | Common Stock Beneficially Owned (1) | Percentage of Common Stock Owned (1) | ||||||
| Rebecca Jill Lazar | 21,000,000 | 88.01 | % | |||||
| 234 E. Beech Street | ||||||||
| Long Beach, NY 11561 | ||||||||
| Director and Officer (1 person) | 21,000,000 | 88.01 | % | |||||
|
During the year ended December 31, 2018, the Company received $32,600 in additional loans funds from Rebeca Lazar, President and Chief Executive Officer. As of December 31, 2018 and December 31, 2017, the Company had a loan payable of $54,459 and $21,859, respectively to Rebecca Lazar, President and Chief Executive Officer. This loan is unsecured, non-interest bearing, and has no specific terms for repayment.
Director Independence
Rebecca Lazar, a member of our Board of Directors, is not independent using the definition of independence under NASDAQ Listing Rule 5605(a)(2) and the standards established by the SEC.
The following table shows the aggregate fees we paid for professional services provided to us for 2018 and 2017:
| 2018 | 2017 | |||||||
| Audit Fees | $ | 7,500 | 0 | |||||
| Audit-Related Fees | 0 | |||||||
| Tax Fees | 1,000 | 0 | ||||||
| All Other Fees | 0 | |||||||
| 0 | ||||||||
| Total | $ | 8,500 | 0 | |||||
Audit Fees
For the year ended December 31, 2018 and 2017, we paid $7,500 and $0 respectively for professional services rendered for the audit and review of our financial statements.
Audit Related Fees
For the fiscal years ended December 31, 2018 and 2017, we paid approximately $0 and $0, respectively, for audit related services.
Tax Fees
For our fiscal years ended December 31, 2018 and 2017, we paid $1,000 and $0 respectively, for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
We did not incur any other fees related to services rendered by our independent registered public accounting firm for the fiscal years ended December 31, 2018 and 2017.
The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our Audit Committee or (ii) entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided that the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management.
We do not have an Audit Committee. Our Board of Directors pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees during 2018 were pre-approved by our Board of Directors. We do not have a record of the percentage of the above fees that were pre-approved in 2018. However, all of the above services in 2018 were reviewed and approved by our Board of Directors either before or after the respective services were rendered.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Schema Document | |
| 101.CAL | XBRL Calculation Linkbase Document | |
| 101.DEF | XBRL Definition Linkbase Document | |
| 101.LAB | XBRL Label Linkbase Document | |
| 101.PRE | XBRL Presentation Linkbase Document |
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SIGNATURE
Pursuant to the requirements 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.
| ADORBS INC. | |||
| Date: | By: | /s/ | |
| |||
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.
| Dated: | /s/ David Lazar | |
| David Lazar | ||
President, Chief Executive Officer and Chief Financial Officer, and Director | ||
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