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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

 

Or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______ to ______

 

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.)

 

8742
(Primary Standard Industrial Classification Code Number)

 

234 E. Beech St. Long Beach,    
New York   11561
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code (516) 544-2812

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)  

Name of exchange

on which registered

N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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 Act.) Yes ☒ No ☐

 

The number of shares outstanding of the registrant’s common stock as of October 13, 2021 was 23,889,500 shares.

 

DOCUMENTS INCORPORATED BY REFERENCE — NONE

 

 

 

 

 

 

ADORBS INC.

QUARTERLY REPORT ON FORM 10-Q

For the nine months ended September 30, 2021

 

Part I – FINANCIAL INFORMATION  
     
Item 1. Financial Statements (unaudited) 1
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
     
Item 4. Controls and Procedures 11
     
Part II – OTHER INFORMATION  
     
Item 1. Legal Proceedings 13
     
Item 1A. Risk Factors 13
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
     
Item 3. Defaults Upon Senior Securities 13
     
Item 4. Mine Safety Disclosures 13
     
Item 5. Other Information 13
     
Item 6. Exhibits 14
     
SIGNATURES 15

 

i

 

 

PART I FINANCIAL INFORMATION

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Information contained in this quarterly report on Form 10-Q contains “forward-looking statements.” These forward-looking statements are contained principally in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. The forward-looking statements herein represent our expectations, beliefs, plans, intentions or strategies concerning future events, including, but not limited to: our ability to consummate the Merger, as such term is defined below; the continued services of the Custodian as such term is defined below; our future financial performance; the continuation of historical trends; the sufficiency of our resources in funding our operations; our intention to engage in mergers and acquisitions; and our liquidity and capital needs. Our forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that any projections or other expectations included in any forward-looking statements will come to pass. Moreover, our forward-looking statements are subject to various known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. These risks, uncertainties and other factors include but are not limited to the risks of limited management, labor, and financial resources; our ability to establish and maintain adequate internal controls; our ability to develop and maintain a market in our securities; and our ability obtain financing, if and when needed, on terms that are acceptable. Except as required by applicable laws, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

As used in this quarterly report on Form 10-Q, “we”, “our”, “us” and the “Company” refer to Adorbs Inc. a Nevada corporation unless the context requires otherwise.

 

ii

 

 

Item 1. Financial Statements.

 

Index to Financial Statements

 

    Page
FINANCIAL STATEMENTS:    
     
Balance Sheets, September 30, 2021 (unaudited), and December 31, 2020   2
     
Unaudited Statements of Operations for the three and nine months ended September 30, 2021, and 2020   3
     
Unaudited Statements of Changes in Stockholders’ Deficit for the three and nine September 30, 2021, and 2020   4
     
Unaudited Statements of Cash Flows for the nine months ended September 30, 2021, and 2020   5
     
Notes to the Unaudited Interim Financial Statements   6

 

  1  

 

 

ADORBS INC.

Balance Sheets

(unaudited)

  

                 
    September 30,     December 31,  
    2021     2020  
    (Unaudited)        
Assets                
Current assets                
Cash and cash equivalents   $ 10,600     $ 13,593  
Total Current Assets     10,600       13,593  
Total assets   $ 10,600     $ 13,593  
                 
Liabilities and Stockholders’ Deficit                
Current Liabilities                
Accrued payable and accrued liabilities   $ 345     $ 428  
Due to related parties     138,052       101,048  
Total current liabilities     138,397       101,476  
                 
Total liabilities     138,397       101,476  
                 
Stockholders’ Deficit                
Common stock, Par Value $.001, 75,000,000 shares authorized, 23,889,500 shares issued and outstanding of shares as of September 30, 2021 and December 31, 2020, respectively     23,890       23,890  
Additional paid in capital     25,740       25,740  
Accumulated deficit     (177,427 )     (137,513 )
Total stockholders’ deficit     (127,797 )     (87,883 )
                 
Total liabilities and stockholders’ deficit   $ 10,600     $ 13,593  

 

The accompanying notes are an integral part of these financial statements

 

  2  

 

 

ADORBS INC.

Statements of Operations

(unaudited)

 

                                 
    For the three Months Ended     For the Nine Months Ended  
    September 30,     September 30,  
    2021     2020     2021     2020  
                         
Revenue, net                                
Revenue   $ 81     $ 124     $ 81     $ 148  
Cost of sales     -       23       -       23  
Total revenue, net     81       101       81       125  
                                 
Operating expenses                                
General and administrative expenses     1,969       16,314       17,352       19,044  
Professional fees     4,700       1,400       22,660       9,450  
Loss on impairment of inventory     -       10,895       -       10,895  
Total operating expenses     6,669       28,609       40,012       39,389  
                                 
Loss from Operations     (6,588 )     (28,508 )     (39,931 )     (39,264 )
                                 
Other income (expenses)                                
Interest income     5       15       17       47  
Total other income (expenses), net     5       15       17       47  
                                 
Loss from operations before income taxes     (6,583 )     (28,493 )     (39,914 )     (39,217 )
Income tax expense     -       -       -       -  
Net Loss   $ (6,583 )   $ (28,493 )   $ (39,914 )   $ (39,217 )
                                 
Weighted average number of ordinary shares                                
Basic and diluted     23,889,500       23,889,500       23,889,500       23,889,500  
                                 
Earnings per share                                
Basic and diluted   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )

 

The accompanying notes are an integral part of these financial statements

 

  3  

 

 

ADORBS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(unaudited)

 

                                         
                Additional           Total  
    Common Stock     Paid-in     Retained     Stockholders'  
    Shares     Value     Capital     Earnings     Equity  
Balance, December 31, 2019     23,860,000     $ 23,890     $ 25,740     $ (72,879 )   $ (23,249 )
                                         
Net loss                —       —       (4,242 )     (4,242 )
                                         
Balance, March 31, 2020     23,860,000     $ 23,890     $ 25,740     $ (77,121 )   $ (27,491 )
                                         
Net loss             —       —       (6,482 )     (6,482 )
                                         
Balance, June 30, 2020     23,860,000     $ 23,890     $ 25,740     $ (83,603 )   $ (33,973 )
                                         
Net loss             —       —       (28,493 )     (28,493 )
                                         
Balance, September 30, 2020     23,860,000     $ 23,890     $ 25,740     $ (112,096 )   $ (62,467 )

 

                Additional           Total  
    Common Stock     Paid-in     Retained     Stockholders'  
    Shares     Value     Capital     Earnings     Equity  
Balance, December 31, 2020     23,860,000     $ 23,890     $ 25,740     $ (137,513 )   $ (87,883 )
                                         
Net loss             —       —       (14,252 )     (14,252 )
                                         
Balance, March 31, 2021     23,860,000     $ 23,890     $ 25,740     $ (151,765 )   $ (102,135 )
                                         
Net loss             —       —       (19,079 )     (19,079 )
                                         
Balance, June 30, 2021     23,860,000     $ 23,890     $ 25,740     $ (170,844 )   $ (121,214 )
                                         
Net loss             —       —       (6,583 )     (6,583 )
                                         
Balance, September 30, 2021     23,860,000     $ 23,890     $ 25,740     $ (177,427 )   $ (127,797 )

 

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

  

  4  

 

 

ADORBS INC.

Statements of Cash Flows

(unaudited)

 

                 
    For the Nine Months Ended  
    September 30,  
    2021     2020  
             
Cash Flows From Operating Activities                
Net loss   $ (39,914 )   $ (39,217 )
Adjustments to reconcile net income to net cash provided by operating activities:                
Changes in operating assets and liabilities:                
Accounts receivable     -       87  
Prepaid expenses     -       12,089  
Inventory     -       10,918  
Accrued payable and accrued liabilities     (83 )     (3,455 )
Net cash used in operating activities     (39,997 )     (19,578 )
                 
Cash Flows From Investing Activities                
Net cash used in investing activities     -       -  
                 
Cash Flows From Financing Activities                
Proceeds from related party loans     37,004       14,311  
Payments on related party debt     -       (160 )
Net cash provided by financing activities     37,004       14,151  
                 
Net (decrease) increase in cash and cash equivalents     (2,993 )     (5,427 )
Cash and cash equivalents, beginning of year     13,593       19,865  
Cash and cash equivalents, end of year   $ 10,600     $ 14,438  
                 
Supplemental disclosure of cash flow information                
Cash paid for income tax expense   $ -     $ -  
Cash paid for interest expense   $ -     $ -  

 

The accompanying notes are an integral part of these financial statements

 

  5  

 

 

ADORBS INC.

NOTES TO (UNAUDITED) FINANCIAL STATEMENTS

 

Note 1 – Organization and basis of accounting

 

Basis of Presentation and Organization

 

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

 

The accompanying 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 nominal sales for the year ended December 31, 2020, and during the nine months ended September 30, 2021.

 

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

 

Note 2 – Summary of significant accounting assumptions and policies

 

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 $177,427 and a working capital deficit of $127,797 as of September 30, 2021. 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.

 

  6  

 

 

Note 2 – Summary of significant accounting assumptions and policies (continued)

 

Management’s Representation of Interim Financial Statements

 

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

 

Cash and Cash Equivalents

 

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. As of September 30, 2021, and December 31, 2020, the on-hand cash balances were $10,600 and $13,593, respectively.

 

Inventory

 

Inventory, which is comprised of children’s clothing and is charged to inventory when purchased, is stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (“FIFO”) method.

 

The Company evaluates inventory levels quarterly value based upon assumptions about future demand and market conditions. Any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired are written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. During the nine months ended September 30, 2021 and 2020, the Company recorded an impairment of inventory in the amounts of $-0- and $10,895, respectfully resulting from nominal sales and ongoing COVID-19 pandemic.

 

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.

 

Long-lived assets

 

The Company accounts for its long-lived assets in accordance with Financial Accounting Standard Board (“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 the 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, 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 September 30, 2021, the Company had a net loss carry forward of approximately $177,000 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.

 

  7  

 

 

Note 2 – Summary of significant accounting assumptions and policies (continued)

 

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 preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of 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 most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

 

Net Loss per Share

 

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.

 

Reclassifications

 

Certain reclassifications have been made in the unaudited condensed financial statements for comparative purposes. These reclassifications have no effect on the results of operations or financial position of the Company.

 

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Note 2 – Summary of significant accounting assumptions and policies (continued)

 

Subsequent Event

 

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

 

Recent Accounting Pronouncements

 

In December 2019, the FASB issued ASU No. 2019-12, simplifying the Accounting for Income Taxes. This update simplifies various aspects of accounting for income taxes, removes certain exceptions to the general principles in ASC 740, and clarifies and amends existing guidance to improve the consistent application. The Corporation adopted ASC 740 in the first quarter of fiscal 2021, with no material effect on the Condensed Consolidated Financial Statements and related footnote disclosures.

 

Other recent accounting standards issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future condensed consolidated financial statements.

 

Note 3 – Related party transactions

 

During the three months ended September 30, 2021, David Lazar paid various Company expenses totaling approximately $5,500. This included approximately $4,700 in accounting fees, and $800 in Edgarization fees. As of September 30, 2021, the Company had a loan payable of $68,916 to David Lazar and loan payable of $69,137, to Rebecca Lazar, the former President and Chief Executive Officer. These loans are both unsecured, non-interest-bearing promissory notes and are payable on demand.

 

Note 4 – Common stock

 

The Company is authorized to issue 75,000,000 shares of $.001 par value common stock. As of September 30, 2021 and December 31, 2020, a total of 23,889,500 shares of common stock were issued and outstanding, respectively.

 

There have been no stock issuances since March 22, 2019, when the Company donated a total of 14,000 shares of common stock at part to various charitable organizations. On that same date, the Company gifted 14,000 shares of common stock at par to 13 individuals.

 

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

 

Note 5 – Subsequent events

 

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

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Organizational History of the Company and Overview

 

No Current Operations

 

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 or 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. As the Company has no current operations, it also currently is not subject to any competitive business conditions. Further, the Company is not subject to any government approvals at this time applicable to it as a “shell company,” as such term is defined in Rule 12b-2 under the Exchange Act.

 

Plan of Operation

 

The Company has no operations from a continuing business other than the expenditures related to running the Company and has no revenue from continuing operations as of the date of this Report.

 

Management intends to explore and identify business opportunities within the U.S., including a potential acquisition of an operating entity through a reverse merger, asset purchase or similar transaction. Our Chief Executive Officer has experience in business consulting, although no assurances can be given that he can identify and implement a viable business strategy or that any such strategy will result in profits. Our ability to effectively identify, develop and implement a viable plan for our business may be hindered by risks and uncertainties which are beyond our control, including without limitation, the continued negative effects of the coronavirus pandemic on the U.S. and global economies. For more information about the risk of coronavirus on our business, see Item 1A “Risk Factors.”

 

We do not currently engage in any business activities that provide revenue or cash flow. During the next 12-month period we anticipate incurring costs in connection with investigating, evaluating, and negotiating potential business combinations, filing SEC reports, and consummating an acquisition of an operating business.

 

Given our limited capital resources, we may consider a business combination with an entity which has recently commenced operations, is a developing company or is otherwise in need of additional funds for the development of new products or services or expansion into new markets, or is an established business experiencing financial or operating difficulties and needs additional capital. Alternatively, a business combination may involve the acquisition of, or merger with, an entity which desires access to the U.S. capital markets.

 

As of the date of this Report, our management has not had any discussions with any representative of any other entity regarding a potential business combination. Any target business that is selected may be financially unstable or in the early stages of development. In such event, we expect to be subject to numerous risks inherent in the business and operations of a financially unstable or early-stage entity. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk or in which our management has limited experience, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

 

Our management anticipates that we will likely only be able to effect one business combination due to our limited capital. This lack of diversification will likely pose a substantial risk in investing in the Company for the indefinite future because it will not permit us to offset potential losses from one venture or operating territory against gains from another. The risks we face will likely be heightened to the extent we acquire a business operating in a single industry or geographical region.

 

We anticipate that the selection of a business combination will be a complex and risk-prone process. Because of general economic conditions, including unfavorable conditions caused by the coronavirus pandemic, rapid technological advances being made in some industries and shortages of available capital, management believes that there are a number of firms seeking business opportunities at this time at discounted rates with which we will compete. We expect that any potentially available business combinations may appear in a variety of different industries or regions and at various stages of development, all of which will likely render the task of comparative investigation and analysis of such business opportunities extremely difficult and complicated. Once we have developed and begun to implement our business plan, management intends to fund our working capital requirements through a combination of our existing funds and future issuances of debt or equity securities. Our working capital requirements are expected to increase in line with the implementation of a business plan and commencement of operations.

 

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Based upon our current operations, we do not have sufficient working capital to fund our operations over the next 12 months. If we are able to close a reverse merger, it is likely we will need capital as a condition of closing that acquisition. Because of the uncertainties, we cannot be certain as to how much capital we need to raise or the type of securities we will be required to issue. In connection with a reverse merger, we will be required to issue a controlling block of our securities to the target’s shareholders which will be very dilutive.

 

Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences, or privileges senior to our Common Stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

 

We anticipate that we will incur operating losses in the next 12 months, principally costs related to our being obligated to file reports with the SEC. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development.  Such risks for us include, but are not limited to, an evolving and unpredictable business model, recognition of revenue sources, and the management of growth. To address these risks, we must, among other things, develop, implement, and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain, and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition, and results of operations.

 

Critical Accounting Policies and Estimates

 

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or “GAAP.” The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

 

Our significant accounting policies are fully described in Note 2 to our financial statements appearing elsewhere in this Quarterly Report, and we believe those accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements.

 

Off-Balance Sheet Arrangements

 

None.

 

Item 3. Quantitative And Qualitative Disclosures About Market Risk.

 

As a smaller reporting company, we are not required to provide the information called for by this Item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures.

 

Our management is responsible for establishing and maintaining a system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

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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 Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed 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. Our internal control over financial reporting includes those policies and procedures that:

 

  ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
     
  ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
     
  ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

 

Our management assessed the effectiveness of our internal control over financial reporting based on the parameters set forth above and has concluded that as of September 30, 2021, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles as a result of the following material weaknesses:

 

  ● The Company does not have sufficient segregation of duties within accounting functions due to only having one officer and limited resources.
     
  ● The Company does not have an independent board of directors or an audit committee.
     
  ● The Company does not have written documentation of our internal control policies and procedures.
     
  ● All of the Company’s financial reporting is carried out by a financial consultant.

 

We plan to rectify these weaknesses by implementing an independent board of directors, establishing written policies and procedures for our internal control of financial reporting, and hiring additional accounting personnel at such time as we complete a reverse merger or similar business acquisition.

 

Changes in Internal Control over Financial Reporting.

 

There has been no change in our internal control over financial reporting during the year September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Legal expenses associated with any contingency are expensed as incurred. The Company’s officers and directors are not aware of any threatened or pending litigation to which the Company is a party or which any of its property is the subject and which would have any material, adverse effect on the Company.

 

Item 1A. Risk Factors.

 

Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our Form 10 referenced into this report, as the same may be updated from time to time. Prospective investors are encouraged to consider the risks described in our 2020 Form 10, and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities.

 

As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the 2020 Form 10.

 

Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

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Item 6. Exhibits.

 

The exhibits listed on the Exhibit Index below are provided as part of this report.

 

3.1 Articles of Incorporation of the Company Inc., as amended on March 16, 2018 (incorporated by reference to our Registration Statement on Form S-1 filed on January 19, 2018)
   
3.2 Bylaws of the Company Inc. (incorporated by reference to our Registration Statement on Form S-1 filed on January 19, 2018)
   
22 Demand Promissory Note Payable to Activist Investing LLC (incorporated by reference to our Registration Statement on 10-12G/A filed on December 22, 2020)
   
23 Demand Promissory Note Payable to Rebecca Lazar (incorporated by reference to our Registration Statement on 10-12G/A filed on December 22, 2020)
   
31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
   
32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
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

 

  14  

 

 

SIGNATURES

 

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.
     
Dated: October 13, 2021 By: /s/ David Lazar
    David Lazar
   

Chief Executive Officer and
Chief Financial Officer

Principal Executive Officer,
Principal Financial Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

  15  

 

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