UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 20182020
o ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to______________
Commission file number 000-55369
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(Exact name of registrant as specified in its charter) |
Nevada |
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Tianan Technology Park | ||
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555 Panyu North Ave, Panyu District, Guangzhou City, China |
C/O YOSEF YAFE
BET ISRAEL 4
JERUSALEM
ISRAEL
(Address of registrant’s principal executive offices)
Registrant’s telephone number, including area code: 972-52-5408519+86 (20) 2982 9356
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered under Section 12(b) of the Act:None
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Securities registered under Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ ☐ No x☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes x ☐ No ¨☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)fi les). Yes ¨ ☒ No x
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K x☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |
| ☐ | Accelerated filer |
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Non-accelerated filer |
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| Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x ☒ No ¨☐
The aggregate market value of common stock held by non-affiliates of the Registrant on April 30, 2020, the last business day of the Registrant’s most recently completed second fiscal quarter was approximately $415,000, based on the closing stock price.
As of August 6, 2019, the registrant had 102.141,189March 22, 2021, 31,518,466 shares of the registrant’s common stock, issued andpar value $0.001, were outstanding. No market value has been computed based upon the fact that no active trading market had been established as of August 6, 2019.
DOCUMENTS INCORPORATED BY REFERENCE: None.
TABLE OF CONTENTS
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). NONE
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PART I
Forward Looking Statements.FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements within the meaning of Section 27A of the Securities Act of 1933, as amended,that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate toassumptions regarding future events or ourperformance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In some cases, you can identify forward-lookingparticular, these include statements by terminologyrelating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” orlegal proceedings, and financial results.
We caution that the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertaintiesfactors described herein and other factors including the risks in the section entitled “Risk Factors” and the risks set out below, any of which maycould cause our or our industry’s actual results levels of activity, performance or achievementsoperations and financial condition to bediffer materially different from those expressed in any future results, levels of activity, performance or achievements expressed or implied by theseforward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements.
Forward looking statements are made based on management’s beliefs, estimates and opinions on Further, any forward-looking statement speaks only as of the date the statements areon which such statement is made, and we undertake no obligation to update any forward-looking statements if these beliefs, estimatesstatement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable,it is not possible for us to predict all of such factors. Further, we cannot guarantee futureassess the impact of each such factor on our results levels of activity, performanceoperations or achievements. Except as required by applicable law, including the securities lawsextent to which any factor, or combination of the United States, we do not intendfactors, may cause actual results to updatediffer materially from those contained in any of the forward-looking statements to conform these statements to actual results.statements.
Our financial statements are stated in United States dollars ($US) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all references to “common stock” refer to the common shares in our capital stock.CERTAIN TERMS USED IN THIS REPORT
As used in this annual report, the terms “we”, “us”, “our”, “Huaizhong”, “Adaiah” and, “Adaiah Distribution”Distribution, Inc.” mean Adaiah DistributionHuaizhong Health Group, Inc.”., unless the context clearly requires otherwise.
ITEM 1. BUSINESS
General
Adaiah Distribution Inc. was incorporated in the State of Nevada as a for-profit company on September 12, 2013 and established a fiscal year end of October 31.
During the third fiscal quarter ending July 31 2018 the Company had ceased its operations of its Pillow manufacturing and sales and is not currently engaged in any business operations. We are however in the process of attempting to identify locate, and if warranted, acquire new commercial opportunities.
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Employees
The Company currently has no employees.
Offices
Our new president and director, Yosef Yafe currently takes care of our administrative duties from his office in Jerusalem, Israel .
Government Regulation
We are not currently subject to any Government regulations.
Legal Proceedings
We are not currently a party to any legal proceedings, and we are not aware of any pending or potential legal actions.
ITEM 2. PROPERTIES.
Our business office is located at the office of the new Director in Jerusalem Israel.
ITEM 3. LEGAL PROCEEDINGS.
We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market for Securities
Our common stock is quoted on the Over-the Counter Bulletin Board under the symbol ADAD There is currently no active trading in the common stock and has not been in the past fiscal year.
Holders of our Common Stock
As of October 31, 2018, there were approximately 34 registered stockholders, holding 102,141,189 shares of our issued and outstanding common stock.
Dividend Policy
We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.
Recent Sales of Unregistered Securities
The Company issued 4,000,000 shares of common stock to the Company’s sole director and officer for total cash proceeds of $4,000 on October 28, 2013.
In January 2015, the Company issued 1,000,000 shares of common stock to 30 independent persons pursuant to the Registration Statement on Form S-1 for total cash proceeds of $40,000.
On November 29, 2015, the Company’s board of directors elected by unanimous written consent to file Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State to (i) increase the Company’s authorized number of shares of common stock from 75 million to 750 million, and (ii) increase the Company’s total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record date for the Forward Split is December 1, 2015.
On December 4, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned Forward Split be effected in the market. Such notification form is being reviewed by FINRA.
On December 2, 2015, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. These shares are being issued subsequent to the stock split and increased the Company’s total issued and outstanding shares following such stock split to 141 million shares.
On September 19, 2016, the Company filed Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State whereby it amended its Articles of Incorporation by (i) decreasing the Company’s authorized number of shares of common stock from 750 million to 750,000, and (ii) decreasing the Company’s total issued and outstanding shares of common stock by conducting a reverse split of such shares at the rate of one (1) share for every one thousand (1,000) share currently issued and outstanding, resulting in 141,000 shares being issued and outstanding.
On November 8, 2016 the Company’s request for the Reverse Split was approved by FINRA and effected in the market. The Company’s ticker symbol was also changed to “ADAD”.
On November 16, 2016 the Company issued 166 shares to Cede and Company for rounding as a result of the reverse split.
On January 17, 2017 the Company amended its articles of incorporation to increase its authorized shares back to 750,000,000.
On February 13, 2017 the Company issued 76,000,000 shares to its sole director for continuation of his services to the Company.
On February 13, 2017 the Company issued 25,000,000 shares in exchange of conversion of $25,000 of debt to a third party.
On May 2, 2017 the Company issued 1,000,000 shares to 3D PIONEER SYSTEMS LTD as an advance payment for an asset purchase agreement.
As of October 31, 2018 there were 102,141,189 shares of common stock outstanding.
As of October 31, 2018 there were no outstanding stock options or warrants.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fiscal year ended October 31, 2018.
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any equity compensation plans.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
BACKGROUND
Adaiah Distribution Inc. was incorporated in the State of Nevada as a for-profit company on September 12, 2013 and established a fiscal year end of October 31. The Company in January 2015 raised funds of $40,000 thru the issuance of 1,000,000 common shares to 30 shareholders and started operations in manufacturing and selling Pillows.
During the third fiscal quarter ending July 31 2018 the Company had ceased its operations of its Pillow manufacturing and sales and is not currently engaged in any business operations. We are however in the process of attempting to identify locate, and if warranted, acquire new commercial opportunities.
RESULTS OF AND PLAN OF OPERATION
Our revenue for the years ended October 31, 2018 and 2017 was $20,554 and $40,509, respectively. Our cost of goods sold for the years ended October 31, 2018 and 2017 was $15,347and $33,612 resulting in a gross profit of $5,207 and $6,897, respectively. Our operating expenses for the years ended October 31, 2018 and 2017 were $4,634 and $85,031 respectively.
In the third quarter of the current fiscal year ending October 31, 2018 the Company ceased it’s operations and wrote off its net assets as an expense with no further economic value in the amount of $6,943 and hence the net (loss) for the years ended October 31, 2018 and 2017 was $(6,638) and $(78,134) respectively.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 2018 the Company had $0 in cash and there were no outstanding liabilities. Our new director has agreed, verbally, to continue to loan the company funds for operating expenses in a limited scenario, but he has no legal obligation to do so.
The company anticipates over the next 12 months the cost of being a reporting public company will be approximately $10,000.
The company is not currently eligible to register securities on Form S-3 and will be unable to use short-form registration until it has timely filed all required reports under the Exchange Act for the 12 months before filing a registration statement. This may increase the Company’s transaction costs and adversely impact its ability to raise capital in a timely manner, as discussed in more detail elsewhere in this Form 10-K.
OTHER CONTRACTUAL OBLIGATIONS
NONE
OFF-BALANCE SHEET ARRANGEMENTS
NONE
RECENTLY ISSUED ACCOUNTING PRINCIPLES
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2018.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.
Revenue Recognition
The company follows the guidelines of ASC 605-15 for revenue recognition.
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ADAIAH DISTRIBUTION, INC.
INDEX TO FINANCIAL STATEMENTS
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JEFFREY T. GROSS LTD.
CERTIFIED PUBLIC ACCOUNTANTS
6215 W. TOUHY AVENUE
CHICAGO, ILLINOIS 60646-1105
(773) 792-1575PART I
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Item 1. Business
The Board of Directors and Shareholders of Adaiah Distribution, Inc.Overview
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Adaiah Distribution,Huaizhong Heath Group, Inc. (a Nevada Corporation), as of October 31, 2018 and October 31, 2017, and the related statements of operations, changes in stockholder’s equity and cash flows for each of the three years in the period ended October 31, 2018, and the related notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at October 31, 2018 and October 31, 2017, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2018, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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 audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits 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 supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2018.
Chicago, Illinois
July 23, 2019
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October 31, 2017 October 31, 2018 (Audited) (Audited) (Restated) ASSETS Current Assets Cash Fixed Assets Furniture and Fixtures Accumulated Depreciation Sewing Shop Accumulated Depreciation TOTAL ASSETS LIABILITIES AND STOCKHOLDERS EQUITY LIABILITIES Loan Payable - Related Party Convertible Promissory Note TOTAL LIABILITIES STOCKHOLDERS' EQUITY Common Stock ; Authorized 750,000,000 , par value $0.001 Issued and Outstanding as at October 31, 2017 and as at October 31, 2018, 102,141,189 Additional Paid in Capital (Accumulated Deficit) Total Stockholders equity TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 33 33 0 8,000 -2,571 16,940 -2,329 20,040 20,073 0 1,415 12,291 13,706 0 102,141 102,141 43,859 43,859 -139,633 -146,000 6,367 0 20,073 0
The accompanying notes are an integral part of these financial statements
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Year Ended October 31, 2018 Year Ended October 31, 2017 From Inception (September 12, 2013) thru October 31, 2018) (Restated) Audited Audited (Unaudited) REVENUES Sales Merchandise Sales Cost of Goods Sold Pillow Purchases Sales Commissions Cost of Goods Sold Gross Profit Operating Expenses General and Administrative Write off of net assets, discontinued Operations Total Expenses Income (Loss) before Income Tax Interest Income Net Income (Loss) for the Period Net Gain (Loss) Per Share (Basic and Diluted) Weighted Number of Average Shares outstanding 20,554 40,509 299,839 20,554 40,509 299,839 15,347 33,612 218,859 3,180 15,347 33,612 222,039 15,347 33,612 222,039 5,207 6,897 77,800 4,634 85,031 216,867 6,943 6,943 11,577 85,031 223,810 -6,370 -78,134 -146,010 2 10 -6,368 -78,134 -146,000 -0.0001 -0.0015 -0.0014 102,141,189 51,141,095 102,141,189
The accompanying notes are an integral part of these financial statements
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Additional paid Accumulated Shares Common Stock In Capital Deficit Total Audited Balance November 1, 2015 25-1 Forward Split November 29, 2015 Share Issuance to Director Dec 2, 2015 Net Loss (Restated) Balance October 31, 2016 ( Restated ) Reclassification (prior period) to adjust Common Stock and APIC Reverse Split November 8, 2016 1-1000 Shares issued upon rounding to Cede and Co November 8, 2016 Share Issuance to Director February 13, 2017 Shares Issued upon loan conversion February 13, 2017 Share Issuance on asset acquisition May 10, 2017 Net Loss Balance October 31, 2017 Net Loss Balance October 31, 2018 5,000,000 5,000 39,000 -25,074 18,926 120,000,000 0 16,000,000 0 -36,425 -36,425 141,000,000 5,000 39,000 -61,499 -17,499 136,000 -136,000 0 -140,859,000 -140,859 140,859 0 189 0 76,000,000 76,000 76,000 25,000,000 25,000 25,000 1,000,000 1,000 1,000 -78,134 -78,134 102,141,189 102,141 43,859 -139,633 6,367 -6,367 -6,367 102,141,189 102,141 43,859 -146,000 0
The accompanying notes are an integral part of these financial statements
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Year ended October 31, 2018 Year ended October 31, 2017 From Inception (September 12, 2013) thru October 31, 2018) (Restated) (Audited) (Audited) (Unaudited) Net Income (Loss) Adjustments to reconcile Net Income (Loss) to net cash provided by (used) in Operations Operating Activities Changes in assets and liabilities Net cash used in operating activities Financing Activities Proceeds from the issuance of Common Stock Related Party Net cash provided for by financing activities Investing Activities Furniture and Fixtures Depreciation Expense Sewing Shop Depreciation Expense Net cash (used in) provided by investing activities Net (Decrease) in Cash Cash at the beginning of the period Cash at the end of the period Supplemental disclosure Cash paid for income taxes Cash paid for interest expense -6,368 -78,134 -146,000 5,809 77,213 120,199 -559 -921 -25,801 44,000 1,415 0 0 45,415 0 0 45,415 -8,000 214 321 2,785 -16,940 312 318 2,541 526 639 -19,614 526 639 -19,614 -33 -282 0 33 315 0 33 0 0 0 0 0 0
The accompanying notes are an integral part of these financial statements
Notes to the Financial Statements
October 31, 2018
Note 1: Organization and Basis of Presentation
Adaiah Distribution, Inc. (the “Company”) is a for profit corporation established under the corporation laws in the State of Nevada, United States of America on September 12, 2013.2013, originally incorporated as Adaiah Distribution, Inc. Effective December 15, 2020, the company changed its operation name to Huaizhong Health Group, Inc. The Company’s fiscal year end is October 31.
The Company was in the development phase of its custom pillow distribution business. During the third fiscal quarter ending July 31, 2018 the Company had ceased its operations of its Pillow manufacturing and sales andsales. The Company is not currently engaged in any business operations. We areIt is however in the process of attemptingseeking to identify, locate and if warranted acquire new commercial opportunities.
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Financial Statements and related disclosures as of October 31, 2017 are audited pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Unless the context otherwise requires, all references to “Adaiah Distribution,” “we,” “us,” “our” or the “company” are to Adaiah Distribution, Inc.
Unless the context otherwise requires, all references to “Adaiah Distribution,” “we,” “us,” “our” or the “company” are to Adaiah Distribution, Inc.
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2018.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.
Revenue Recognition
The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when the product has been prepaid by the customer, shipped from either Adaiah Distribution or one of our vendors and the product has been delivered and signed for by the customer as evidenced by the shipping company. Customers are allowed to return the products within 30 days for a refund, if the packages are unopened.
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Note 3: Property and Equipment
The net carrying value of the property and equipment was written in the third quarter of the current fiscal year ending October 31, 2018 as it has not future economic value.
Note 4: Concentrations
Initial sales are concentrated with one client. Sales are made without collateral and the credit-related losses are insignificant or non-existent. Accordingly, there is no provision made to include an allowance for doubtful accounts.
Note 5: Legal Matters
The Company has no known legal issues pending.
Note 6: Debt
In 2016 a convertible promissory Note was issued to a third party in the amount of $37,291 .In February 2017 25,000,000 million shares were issued in exchange of payment of $25,000 of the Note. In early 2018 the third party holding the Note has entered into corporate dissolution in the State of Florida. The balance of the Note in the amount of $12,291 has therefore been written off in the third quarter of the fiscal year ending October 31, 2018, as part of the write off of the net assets of the Company. Additionally the amount of $1,415 due to the prior Director has also been written off the books of the Company.
Note 7: Capital Stock
On October 28, 2013 the Company authorized 75,000,000 shares of commons stock with a par value of $0.001 per share.
On October 28, 2013 the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its sole director. The Company received aggregate gross proceeds of $4,000.00.
In January 2015 a total of 1,000,000 shares were issued to a total of 30 shareholders for $.04 per share for total proceeds of $40,000. The shares were registered pursuant to a Registration Statement on Form S-1 as filed with the Securities and Exchange Commission that was declared effective on November 3, 2014.
On November 29, 2015, the Company’s board of directors elected by unanimous written consent to file Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State to (i) increase the Company’s authorized number of shares of common stock from 75 million to 750 million, and (ii) increase the Company’s total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record date for the Forward Split is December 1, 2015.
On December 4, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned Forward Split be effected in the market. Such notification form is being reviewed by FINRA.
On December 2, 2015, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. These shares are being issued subsequent to the stock split and increased the Company’s total issued and outstanding shares following such stock split to 141 million shares.
On September 19, 2016, the Company filed Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State whereby it amended its Articles of Incorporation by (i) decreasing the Company’s authorized number of shares of common stock from 750 million to 750,000, and (ii) decreasing the Company’s total issued and outstanding shares of common stock by conducting a reverse split of such shares at the rate of one (1) share for every one thousand (1,000) share currently issued and outstanding, resulting in 141,000 shares being issued and outstanding.
On November 8, 2016 the Company’s request for the Reverse Split was approved by FINRA and effected in the market. The Company’s ticker symbol was also changed to “ADAD”.
On November 16, 2016 the Company issued 166 shares to Cede and Company for rounding as a result of the reverse split.
On January 17, 2017 the Company amended its articles of incorporation to increase its authorized shares back to 750,000,000.
On February 13, 2017 the Company issued 76,000,000 shares to its sole director for continuation of his services to the Company.
On February 13, 2017 the Company issued 25,000,000 shares in exchange of conversion of $25,000 of debt to a third party.
On May 2, 2017 the Company issued 1,000,000 shares to 3D PIONEER SYSTEMS LTD as an advance payment for an asset purchase agreement.
As of October 31, 2018 there were 102,141,189 shares of common stock outstanding.
As of October 31, 2018 there were no outstanding stock options or warrants.
Note 8: Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Note 9: Related Party Transactions
The Company’s sole officer and director is involved in other business activities and may in the future, become involved in other business opportunities as they become available.
On December 2, 2015, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov (the prior director) of 16,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. On February 17, 2017 the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov an additional 76,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer.
Note 10: Going Concern
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitably or raise additional capital through debt financing and/or through sales of common stock. In the event the Company is not able to do so the director of the Company has agreed to provide the necessary funding for the Company to continue in a limited operations scenario for the next 12 months, which would include the costs associated with maintaining reporting status with the Securities and Exchange Commission.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
Note 11: Asset Purchase Agreement
On May 10, 2017, the Company entered into an Asset Purchase Agreement (the “Agreement”) signed February 10, 2017 with 3D Pioneer Systems Inc. (“3D”). Pursuant to the Agreement, once all terms of the agreement are met, Adaiah will acquire certain intellectual property, apps, other assets and related contractual rights held by 3D in exchange for 1 million shares of Adaiah’s common stock and a cash payment of $30,000, along with an obligation to make three (3) additional payments of $30,000 every ninety (90) days following the closing. This contract was not consummated and the share issuance has been written off as an expense in the fiscal year ending October 31, 2017.
Note 12: Subsequent Events
On April 25, 2019, the eighth judicial District Court of Nevada appointed Yosef Yafe as custodian for the Company, proper notice having been given. There was no opposition. Pursuant to the Order of Custodianship, a Special Meeting of Shareholders was held on May 29, 2019 at 8:00 a.m. PST, Yosef Yafe as limited custodian. Notice was sent May 13, 2019 in compliance with Court Order. Present were Yosef (holding shares through Cede & Co.) and two additional proxies also holding(holding shares through Cede & Co.).
A Special Meeting of the Board of Directors (by written consent) on May 31, 2019 was held electing Yosef as all officers, and changing the Registered Agent to Holly, Driggs, Walch law firm,firm.
Change of Control
On August 12, 2020, Yosef Yafe ( the “Seller”) and approvingYuantong Wang (the “Buyer”) entered into a loanstock purchase agreement , pursuant to which the Seller agreed to sell and the Buyer agreed to purchase an aggregate of 31,000,000 shares of common stock, par value $001 per share of the Company from Yosefthe Seller for an aggregate purchase price of $300,000. The closing of the transactions contemplated by the SPA occurred on August 14, 2020. The purchase price was paid out of the Buyer’s personal funds.
As of the date referenced in this action, the Company had 31,518,466 shares of common stock outstanding. The securities purchased pursuant to the SPA represent 98.0% of the outstanding shares of common stock and 98.0% of the voting power of the Company.
As contemplated by the SPA, Yosef Yafe resigned as Chairman, Chief Executive Officer, President, Chief Financial Officer and Secretary of the Company evidenced byand Yuantong Wang was appointed a Promissory Note dated May 31, 2019 for $3,231.00 to cover expenses paid by Yosef.director, Chief Executive Officer and President of the Company, effective August 14, 2020.
The Company has evaluated events subsequentforegoing changes to the date these financial statements have been issuedCompany’s management and board of directors were in connection with the transactions consummated pursuant to assess the need for potential recognitionSPA and were not due to any disagreement with the Company on any matter relating to its operations, policies or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued. Based upon this evaluation, it was determined that other than the event disclosed above, no other subsequent events occurred that require recognition or disclosure in the financial statements.practices.
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Employees
We presently have no employees apart from Yuantong Wang, our sole officer and director.
Offices
Our new president and director, Yuantong Wang currently takes care of our administrative duties from his office in Guangzhou City, China, at no cost to the Company.
Item 1A. Risk Factors
Smaller reporting companies are not required to provide the information required by this item.
Item 1B. Unresolved Staff Comments
None.
ITEM 2. PROPERTIES
We do not currently own any property. Our principal office is located at Tianan Technology Park, 13/F Headquarters Center Building 16, 555 Panyu North Ave, Panyu District, Guangzhou City, China. The office is provided by our president and director and no cost to us.
Item 3. Legal Proceedings
From time to time we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not aware of any such legal proceedings or claims that we believe, either individually or in the aggregate, will have a material adverse effect on our business, financial condition, or results of operations.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
On October 3, 2017, the BoardMarket for Securities
Shares of Directors of the Registrant accepted and approved the resignation of Darrell Whitehead, CPAs, the company’s independent registered public account firm. The report of Darrell Whitehead, CPA’sour common stock are listed for quotation on the Company’sOTC Markets Group’s Pink Open Market under the symbol “ADAD.” However, our shares are not actively traded and there is currently no established public trading market for our shares of common stock. Any quotations that do occur reflect inter‑dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
ClearTrust, LLC at 16540 Pointe Village Dr., Suite 205, Lutz, Florida 33558 (Telephone: (813) 235-4490) is the registrar and transfer agent for our common shares.
Security Holders
As of March 15, 2021, there were approximately 36 registered stockholders, holding 31,518,466 shares of our issued and outstanding common stock.
Dividend Policy
We have never paid a cash dividend on our common stock. We currently intend to retain all earnings, if any, to finance the growth and development of our business. We do not anticipate paying any cash dividends in the foreseeable future.
Equity Compensation Plans
We have no existing equity compensation plan.
Recent Sales of Unregistered Securities
During our fiscal year ended October 31, 2020, all sales of equity securities that were not registered under the Securities Act were previously reported in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended October 31, 2020.
Item 6. Selected Financial Data
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion and analysis of our results of operations and financial condition for fiscal years ended October 31, 2020 and 2019, should be read in conjunction with our financial statements and the related notes and the other financial information that are included elsewhere in this Annual Report. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements, and Business sections in this Annual Report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
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Results of Operations
The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the year ended October 31, 2020, which are included herein.
Our operating results for the years ended October 31, 20162020 and 2015 did not contain an adverse opinion or disclaimer of opinion, nor was qualified or modified2019 and the changes between those periods for the respective items are summarized as to uncertainty, audit scope or accounting principles.follows:
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| Year Ended |
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| October 31, |
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| 2020 |
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| 2019 |
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| Change |
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Operating expenses |
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| 36,001 |
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| 126,097 |
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| (90,096 | ) |
Interest expense |
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| 479 |
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| - |
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| 479 |
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Net loss |
| $ | 36,480 |
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| $ | 126,097 |
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| $ | (89,617 | ) |
During the years ended October 31, 2020 and 2019, no operating revenues were recorded.
There were no disagreements with Darrell Whitehead, CPAs, whether or not resolved, on any matterWe had a net loss of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved$36,480 for the year ended October 31, 2020, and $126,097 for the year ended October 31, 2019. The decrease in net loss of $89,617 was primarily due to Darrell Whitehead, CPAs’ satisfaction, would have caused it to make reference to the subject mattera decrease in operating expenses of the disagreement$90,096 and offset by an increase in connection with its report on the registrant’s financial statements.interest expenses of $479.
The registrant requested that Darrell Whitehead, CPAs, furnish itOperating expenses for the years ended October 31, 2020 and 2019 were $36,001 and $126,097, respectively.
During the year ended October 31,2020, the operating expenses, were primarily attributed to professional fees of $35,101, for maintaining reporting status with a letter addressed to the Securities and Exchange Commission stating whether it agrees with(“SEC”) and general administrative expenses of $900.
During the above statements. The letter is attached as Exhibit 16.1year ended October 31, 2019, the operation expenses were primarily attributed to common stock-based compensation (former officer) of $100,000 and professional fees and general administrative expenses of $26,097.
Interest expenses for the years ended October 31, 2020 and 2019, were $479 and $0, respectively, represent interest expense to convertible note (former related party) on funds advanced to the Company’s Form 8-K as filed with the Securities and Exchange Commission.Company.
On January 19, 2018,Balance Sheet Data:
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| October 31, |
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| October 31, |
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| 2020 |
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| 2019 |
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| Change |
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Cash |
| $ | - |
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| $ | - |
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| $ | - |
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Current Assets |
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| - |
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| - |
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| - |
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Current Liabilities |
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| 19,472 |
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| 21,097 |
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| (1,625 | ) |
Working Capital (Deficiency) |
| $ | (19,472 | ) |
| $ | (21,097 | ) |
| $ | 1,625 |
|
As of October 31, 2020, our current assets were $0, and our current liabilities were $19,472 which resulted in working capital deficiency of $19,472. As of October 31, 2020, and 2019, current assets were comprised of $0 in cash.
As of October 31, 2020, current liabilities were comprised of $10,913 in accounts payableand accrued liabilities and $8,559 in due to related party, compared to $11,141 in accounts payable and accrued liabilities and $9,956 convertible note payable as of October 31, 2019.
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As of October 31, 2020, our working capital deficiency reduced by $1,623 from $21,097 on October 31, 2019, to $19,742 on October 31, 2020, primarily due to a decrease in current liabilities of $1,625.
Cash Flow Data:
Year Ended | ||||||||||||
October 31, | ||||||||||||
2020 | 2019 | Change | ||||||||||
Cash used in operating activities | $ | - | $ | - | $ | - | ||||||
Cash provided by (used in) investing activities | - | - | - | |||||||||
Cash provided by financing activities | - | - | - | |||||||||
Net change in cash for period | $ | - | $ | - | $ | - | ||||||
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the registrant engaged Jeffrey T. Gross Ltd., as its independent accountant. year ended October 31, 2020, net cash flows used in operating activities was $0, consisting of a net loss of $36,480, reduced by an increase in accounts payable and accrued liabilities of $251 and offset by expenses paid by related party of $8,559 and expenses paid by a former related party of 27,670. For the year ended October 31, 2019, net cash flows used in operating activities was $0, consisting of a net loss of $126,097, reduced by stock-based compensation of $100,000 and offset by expenses paid by related party of $14,956 and an increase in accounts payable and accrued liabilities of $11,141.
Cash Flows used in Investing Activities
During the most recent fiscal year,years ended October 31, 2017,2020 and 2019, we had no cash used in investing activities.
Cash Flows from Financing Activities
During the interim period precedingyears ended October 31, 2020 and 2019, we had no cash used in financing activities.
Going Concern
As of October 31, 2020, our Company had a net loss of $36,480 and has earned no operating revenues. Our Company intends to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the engagement,year ending October 31, 2021. The ability of our Company to emerge from the registrant hasdevelopment stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of our business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings or through debt financing. These factors, among others, raise substantial doubt about our Company’s ability to continue as a going concern. The accompanying financial statements do not consulted Jeffrey T. Gross, Ltd. regardinginclude any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Item 7A. Qualitative and Quantitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the mattersinformation required by this item.
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Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated herein by reference to the consolidated financial statements and supplementary data set forth in Item 304(a)(2)(i) or (ii)15. Exhibits, Financial Statement Schedules of Regulation S-K.Part IV of this Annual Report.
ITEM 9A. CONTROLS AND PROCEDURES.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’sWe maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) in ensuringthat are designed to ensure that information required to be disclosed by us in reports that we file under the Company in its reportsExchange Act is recorded, processed, summarized and reported withinas specified in the SEC’s rules and forms and that such information required time periods. In carrying outto be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our internal control over financial reporting regarding a lack of adequate segregation of duties. Accordingly, based on their evaluationthe effectiveness of our disclosure controls and procedures as of October 31, 2018, the Company’s2020. Based on that evaluation, our management, including our Chief Executive Officer and its Chief Financial Officer, have concluded that as of that date, the Company’sour disclosure controls and procedures were not effective foras of October 31, 2020 due to the purposes described above.material weaknesses and significant deficiencies discussed below.
There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the year ended October 31, 2018 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for the preparation of our financial statements and related information. Management uses its best judgment to ensure that the Companyfinancial statements present fairly, in material respects, our financial position and results of operations in conformity with generally accepted accounting principles.
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange ActAct. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of 1934. We have assessedfinancial statements are reasonable. There are inherent limitations in the effectiveness of thoseany system of internal controls including the possibility of human error and overriding of controls. Consequently, an ineffective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.
Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of September 30, 2012, usingour financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
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Under the supervision of management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Intergrated Framework(2013 framework) and subsequent guidance prepared by the Commission specifically for smaller public companies as a basis forof October 31, 2020. Based on that evaluation, our assessment.
Because of inherent limitations,management concluded that our internal control over financial reporting maywas not prevent or detect misstatements. Projectionseffective as of any evaluation of effectiveness to future periods are subject toOctober 31, 2020 because it identified the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policiesfollowing material weakness and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.significant deficiencies:
● | Material Weakness - The Company did not maintain effective controls over certain aspects of the financial reporting process because we lacked a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements. |
● | Significant Deficiencies - Inadequate segregation of duties. |
A material weakness in internal controls is a deficiency or a combination of deficiencies in internal control or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report externalover financial data reliably in accordance with accounting principles generally accepted in the United States of Americareporting such that there is more than a remote likelihoodreasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements that is more than inconsequential will not be prevented or detected. Indetected on a timely basis.
We expect to be materially dependent upon third parties to provide us with accounting consulting services for the course of making our assessmentforeseeable future which we believe mitigates the impact of the effectiveness ofmaterial weaknesses discussed above. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP and establish an audit committee and implement internal controls over financial reporting, we identified aand procedures, there are no assurances that the material weaknessweaknesses and significant deficiencies in our internal control overdisclosure controls and procedures will not result in errors in our financial reporting. This material weakness consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of our company. The relatively small number of employees who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters orstatements which could lead to a failure to perform timely and effective reviews.restatement of those financial statements.
As we areOur management, including our Chief Executive Officer and Chief Financial Officer, does not aware of any instance in which the company failed to identifyexpect that our disclosure controls and procedures or resolve a disclosureour internal controls will prevent all error and all fraud. A control system, no matter or failed to perform a timelyhow well conceived and effective review, we determinedoperated, can provide only reasonable, not absolute, assurance that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our resources at this time and not in the interest of shareholders.
Becauseobjectives of the above condition,control system are met. Further, the Company’s internaldesign of a control system must reflect the fact that there are resource constraints and the benefits of controls over financial reporting were not effective asmust be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of October 31, 2018.controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
This annual report does not include an attestation report of the Company’sour registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’scompany’s registered public accounting firm pursuant to theSEC rules of the Securities and Exchange Commission that permit the Companyus to provide only management’s report on internal control over financial reporting in this annual report on Form 10-K.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended October 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
The following table sets forth the name, age and position of each of our executive officers and directors as of the date of this annual report.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The name, age and title of our executive officer and director is as follows:
Name and Address of Executive Officer and/or Director |
| Age |
| Position | Date of First Appointment | |
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Nikolay Titov has acted as our President, Treasurer and sole Director since our incorporation on September 12, 2013 until May 29 2019 when he was then replaced by Mr Yafe by certain shareholder’s’ votes at a shareholder meeting shortly after Mr Yafe receiving limited custodianship by the Courts of the State of Nevada.
Mr. Titov’s education:
Moscow State Technical University of Civil Aviation, Russian Federation - 1969
Mr. Titov’s work experience:
Airport engineer in Russian Federation 1969-2005
For last eight years he has been managing his own tourist and hotel hospitality and furnishings supply company Welcome Home Co.
Mr Yafe’s educationBusiness Experience
The MIR institute, Jerusalem Israel, 2009-2013following is a brief description of the background on our sole officer and director.
Mr Yafe ‘s work experience;Yuantong Wang, 52, has been Chief Executive Officer of Guangzhou Huaizhong Health Technology Co., Ltd since October 2015. From December 2011 to September 2015 he served as the General Manager of Beijing Hengyikang Industry and Trade Co., Ltd. He earned a Diploma for Higher Education with a major in Library and Information Science from Tianjin Business School in 1989.
Mr Yafe for the past 5 years has been and is involved as an entrepreneur in real estate development in Jerusalem in Israel.Employment Agreement
During the past ten years, nor Mr. Titov nor Mr Yaffe has not been the subjectThere are no other agreements to compensate any of the following events:
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TERM OF OFFICETerm of Office
DirectorsEach of the company are appointed to holdour directors holds office until the next annual meeting of our stockholders or until a respectivehis or her successor ishas been elected and qualified, or until his or her earlier death, resignation, or removalremoval. There are no agreements with respect to the election of directors. We have not compensated our directors for service on our Board or reimbursed for expenses incurred for attendance at meetings of our Board. Our Board may in accordance with the provisions of the Nevada Revised Statues. Officersfuture determine to pay directors’ fees and reimburse directors for expenses related to their activities as such
Our executive officers are appointed by our Board and serve at the discretion of Directors and hold office until removed by theour Board or until their resignation.they resign.
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Family Relationships
DIRECTOR INDEPENDENCENo family relationship has ever existed between any director, executive officer of the Company, and any person contemplated to become such.
Our board of directors is currently composed of one member, Yosef Yafe , who does not qualify as an independent directorInvolvement in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, oneCertain Legal Proceedings
None of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exists which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationshipsexecutive officers has been involved in any legal or regulatory proceedings, as they may relate to us and our management.set forth in Item 401 of Regulation S-K, during the past ten years.
Stockholder Communications with the Board of Directors
We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors. Nevertheless, every effort will be made to ensure that the views of stockholders are heard by the Board of Directors, and that appropriate responses are provided to stockholders in a timely manner. Our Board will continue to monitor whether it would be appropriate to adopt such a process.
Code of Ethics
We have not adopted a code of ethics that applies to our officer, director and employee. When we do adopt a code of ethics, we will disclose it in a Current Report on Form 8-K.
ITEM 11. EXECUTIVE COMPENSATION.Board and Committee Meetings
The following tables set forth certain information about compensation paid, earned or accrued for servicesOur Board does not have any standing committees. All proceedings of the Board were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Business Corporation Act and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.
Nomination Process
As of October 31, 2020, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our Board. Our Board does not have a policy with regards to the consideration of any director candidates recommended by our priorshareholders. Our Board has determined that it is in the best position to evaluate our requirements as well as the qualifications of each candidate when the Board considers a nominee for a position on our Board. If shareholders wish to recommend candidates directly to our Board, they may do so by sending communications to our President Treasurer and Secretary (collectively,at the “Named Executive Officer”) from inceptionaddress on September 12, 2013 until October 31, 2018:the cover of this annual report.
Summary Compensation Table
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Nonqualified Deferred Compensation ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Nikolay Titov , President, Secretary and Treasurer |
| From September 12, 2013 to October 31, 2018 |
|
| -0- |
|
|
| -0- |
|
|
| 76000 |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
There are no current employment agreements between the company and its officer.Audit Committee
There are no annuity, pension or retirement benefits proposedCurrently our audit committee consists of our entire Board. We do not have a separately-designated standing audit committee as we currently have limited working capital and minimal revenues. Should we be able to be paidraise sufficient funding to the officer or director or employees in the event of retirement at normal retirement date pursuant to any presently existingexecute our business plan, provided or contributed to by the company.we will form an audit, compensation committee and other applicable committees utilizing our directors’ expertise.
| Table of Contents |
From inception to present date, we believe that the members of our Board have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.
DirectorAudit Committee Financial Expert
We do not currently have an audit committee financial expert because we do not have an audit committee. We also do not have a director who is qualified to act as financial expert of an audit committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially 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 common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during the fiscal year ended October 31, 2020.
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth certain compensation awarded to, earned by, or paid to the following “named executive officers,” which is defined as follows:
(a) | all individuals serving as our principal executive officer during the year ended October 31, 2020; and | |
(b) | each of our two other most highly compensated executive officers who were serving as executive officers at the end of the year ended October 31, 2020. |
Name and Position |
| Fiscal Year |
| Salary ($) |
| Stock Awards ($) |
|
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($) |
| Nonqualified Deferred Compensation Earnings ($) |
| All Other Compensation ($) |
| Total ($) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Yosef Yafer(1) President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director |
| 2019 |
| -0- |
|
| 100,000 |
|
| -0- |
| -0- |
| -0- |
| -0- |
|
| -100,000 |
|
|
| 2020 |
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yuantong Wang(1) , President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director |
| 2020 |
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| ||
___________
(1) Effective August 14, 2020, Yosef Yafe resigned as Chairman, Chief Executive Officer, President, Chief Financial Officer, Treasurer and Secretary of the Company and Yuantong Wang was appointed a director, Chief Executive Officer, President, Secretary, and treasurer.
| 13 |
| Table of Contents |
Securities Authorized for Issuance Under Equity Compensation Plans
We do not have, nor have ever had, any profit sharing, stock option or other similar equity compensation plans for the benefit of the directors, executive officers or employees.
Compensation of Directors
We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our Board.
No compensation was paid to non-employee directors for the year ended October 31, 2018:
Name |
| Fees Earned or Paid in Cash ($) |
|
| Stock Awards ($) |
|
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Nonqualified Deferred Compensation Earnings ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Nikolay Titov |
|
| -0- |
|
|
| 76000 |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
The Company is currently in negotiations with its new CEO for an annual equity compensation plan as salary.2020.
ITEMPension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board or a committee thereof.
There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any former officers or directors which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of such person’s services with the Company, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of ours during the last two fiscal years, is or has been indebted to us by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of October 31, 2018March 15, 2021 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and or (iii) our officer. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
Title of Class |
| Name and Address of Beneficial Owner (1) |
| Amount and Nature of Beneficial Ownership |
| Percentage (2) (3) | ||
Common stock |
| Yuantong Wang | 31,000,000 shares of common stock | 98.4 | % | |||
|
|
|
|
|
|
|
| |
|
|
|
| |||||
(1) A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As of October 31, 2018, there were 102,141,189 shares of our common stock issued and outstanding.
Future Sales by Existing Stockholders
A total of 76,116,000 shares have been issued to the existing stockholder, all of which are held by an officer/director and are restricted securities, as that term is defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Act. Under Rule 144, such shares can be publicly sold, subject to volume restrictions and certain restrictions on the manner of sale, commencing six months after their acquisition.
Rule 144(i)(1) states that the Rule 144 safe harbor is not available for the resale of securities “initially issued” by a shell company (other than a business combination related shell company) or an issuer that has “at any time previously” been a shell company (other than a business combination related shell company). Consequently, the Rule 144 safe harbor is not available for the resale of such securities unless and until all of the conditions in Rule 144(i)(2) are satisfied at the time of the proposed sale.
Any sale of shares held by the existing stockholder (after applicable restrictions expire) and/or the sale of shares purchased in our recent offering, may have a depressive effect on the price of our common stock in any market that may develop, of which there can be no assurance.
On April 25, 2019, the eight judicial District Court of Nevada appointed Yosef Yafe as custodian for Adaiah Distribution Inc., proper notice having been given to the officers and directors of Adaiah Distribution Inc. There was no opposition. On June 6, 2019, the Company filed an annual list with the state of Nevada, appointing Yosef Yafe as, President, Secretary, Treasurer and sole Director and paid all corresponding late fees to bring the Company back into good standing with the state of Nevada.
On May 31, 2019, the Company obtained a promissory note in amount of $3,231 from Yosef Yafe. The note bears an interest of 3% and all unpaid interest and principal is due within thirty (30) days of Yosef Yafe’s written demand.
Business Objectives of the Company
Since the custodial proceedings, the Company has had no business operations. Management has determined to direct its efforts and limited resources to pursue potential new business opportunities. The Company does not intend to limit itself to a particular industry and has not established any particular criteria upon which it shall consider a business opportunity.
The Company’s common stock is subject to quotation on the OTC Pink Sheets under the symbol ADAD. There is not currently a trading market in the Company’s shares and we do not believe that any active trading market has existed for approximately two years . There can be no assurance that there will be an active trading market for our securities following the effective date of a registration statement under the Exchange Act. In the event that an active trading market commences, there can be no assurance as to the market price of our shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained. Management of the Company (“Management”) would have substantial flexibility in identifying and selecting a prospective new business opportunity. The Company is dependent on the judgment of its Management in connection with this process.
In evaluating a prospective business opportunity, we would consider, among other factors, the following:
All executive officers and directors as a group (1 person) | |||
|
|
| |
31,000,000 shares of common stock | |||
|
| 98.4 | % |
_________
(1) | Unless otherwise noted, the address of each beneficial owner is c/o Huaizhong Heath Group , Inc. | |
| ||
Tianan Technology Park, 13/F Headquarters Center Building 16, 555 Panyu North Ave, Panyu District, Guangzhou City, China | ||
(2) | The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of the date as of which the information is provided , through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table | |
(3) | Based on 31,518,466 issued and outstanding shares of Common Stock as of March 15, 2021. | |
The foregoing criteria are not intended to be exhaustive and there may be other criteria that Management may deem relevant. In connection with an evaluation of a prospective or potential business opportunity, Management may be expected to conduct a due diligence review.
The time and costs required to pursue new business opportunities, which includes negotiating and documenting relevant agreements and preparing requisite documents for filing pursuant to applicable securities laws, cannot be ascertained with any degree of certainty.
Management intends to devote such time as it deems necessary to carry out the Company’s affairs. The exact length of time required for the pursuit of any new potential business opportunities is uncertain. No assurance can be made that we will be successful in our efforts. We cannot project the amount of time that our Management will actually devote to the Company’s plan of operation. The Company intends to conduct its activities so as to avoid being classified as an “Investment Company” under the Investment Company Act of 1940, and therefore avoid application of the costly and restrictive registration and other provisions of the Investment Company Act of 1940 and the regulations promulgated thereunder.
Company is a Blank Check Company
At present, the Company is a development stage company with no revenues, no assets and no specific business plan or purpose. The Company’s business plan is to seek new business opportunities or to engage in a merger or acquisition with an unidentified company. As a result, the Company is a “blank check company” and, as a result, any offerings of the Company’s securities under the Securities Act of 1933, as amended (the “Securities Act”) must comply with Rule 419 promulgated by the Securities and Exchange Commission (the “SEC”) under the Act. The Company’s Common Stock is a “penny stock,” as defined in Rule 3a51-1 promulgated by the SEC under the Securities Exchange Act. The Penny Stock rules require a broker-dealer, prior to a transaction in penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about Penny Stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the transaction, and monthly account statements showing the market value of each Penny Stock held in the customer’s account. In addition, the Penny Stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the Penny Stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the Penny Stock rules. So long as the common stock of the Company is subject to the Penny Stock rules, it may be more difficult to sell the Company’s common stock. We are a “Shell Company,” as defined in Rule 405 promulgated by the SEC under the Securities Act. A Shell Company is one that has no or nominal operations and either: (i) no or nominal assets; or (ii) assets consisting primarily of cash or cash equivalents. As a Shell Company, we are restricted in our use of Registrations on Form S-8 under the Securities Act; the lack of availability of the use of Rule 144 by security holders; and the lack of liquidity in our stock.
Form S-8
Shell companies are prohibited from using Form S-8 to register securities under the Securities Act. If a company ceases to be a Shell Company, it may use Form S- 8 after sixty calendar days, provided it has filed all reports and other materials required to be filed under the Exchange Act during the preceding 12 months (or for such shorter period that it has been required to file such reports and materials after the company files “Form 10 information,” which is information that a company would be required to file in a registration statement on Form 10 if it were registering a class of securities under Section 12 of the Exchange Act. This information would normally be reported on a current report on Form 8-K reporting the completion of a transaction that caused the company to cease being a Shell Company.
| 14 |
| Table of Contents |
Change-in-Control Arrangements
UnavailabilityWe do not know of Rule 144 for Resaleany arrangements, which may, at a subsequent date, result in a change-in-control.
Rule 144(i) “Unavailability to SecuritiesItem 13. Certain Relationships and Related Transactions, Director Independence
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of Issuers With Noshares of our common stock, or Nominal Operations and Noany family member thereof, had any material interest, direct or Nominal Non-Cash Assets” provides that Rule 144 is not availableindirect, in any transaction, or proposed transaction since the year ended October 31, 2020, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the resalelast two completed fiscal years.
On August 10, 2019 the Company signed a convertible note for funds being advanced to the Company by the former CEO as at that date and for a twelve month period following that date which can be converted by the CEO at any time into restricted common shares of securities initially issued by an issuer that isthe Company at a Shell Company. We have identified our company as a Shellconversion rate of $0.001 per share. The note bears interest of 4% per annum. During the years ended October 31, 2020 and 2019, the former CEO advanced $25,265 and $14,956, respectively. During the years ended October 31, 2020, and 2019, $31,000 was converted into 31,000,000 restricted common shares of the Company and therefore,$5,000 was converted into 12,500 restricted common shares of the holders of our securities may not rely on Rule 144 to haveCompany.
For the restriction removed from their securities without registration or untilyears ended October 31, 2020 and 2019, the Company is no longer identified as a Shell Companyrecorded interest expense of $479 and has filed all requisite periodic reports under$0, respectively.
On August 12, 2020, in connection with change of control and stock purchase agreement, the Exchange Act forformer CEO forgave the periodconvertible note of twelve (12) months.$4,221 and accrued interest of $479.
As a result of our classification as a ShellOctober 31, 2020, and 2019, the Company our investors are not allowed to rely on the “safe harbor” provisionswas obligated for this convertible note with balance of Rule 144, promulgated pursuant to the Securities Act, so as not to be considered underwriters in connection with the sale$0 and $9,956, and accrued interest of our securities until one year from the date that we cease to be a Shell Company. This will likely make it more difficult for us to attract additional capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities.
Very Limited Liquidity of our Common Stock
Our common stock occasionally trades on the OTC Pink Sheet Market, as there is no active market maker in our common stock. As a result, there is only limited liquidity in our common stock.
We will be deemed a blank check company under Rule 419 of the Securities Act
The provisions of Rule 419 apply to registration statements filed under the Securities Act by a blank check company, such as the Company. Rule 419 requires that a blank check company filing a registration statement deposit the securities being offered and proceeds of the offering into an escrow or trust account pending the execution of an agreement for an acquisition or merger. While we are not currently registering shares for an offering, we may seek to do so in the future.$0 , respectively.
In addition, an issuer is required to fileearly June 2019 the Company entered into a post-effective amendment tocompensation agreement with the former CEO whereby the CEO would receive a registration statement upononetime compensation of $50,000 for being elected as the execution of an agreement for an acquisition or merger. The rule provides procedures for the releaseformer CEO and sole director of the offering funds, if any, in conjunction with the post effective acquisition or merger. The obligations to file posteffective amendments are in additionCompany and $10,000 per month thru October 31, 2019 for his continued services thru then. According to the obligationsagreement the compensation is to file Forms 8-K to report for bothbe paid in the entry into a material definitive (non-ordinary courseform of business) agreement and the completionrestricted common stock of the transaction. Rule 419 applies to both primary and re-sale or secondary offerings.
Within five (5) daysCompany at a value of filingits par which is $0.001 per share. The Company signed a post-effective amendment setting forth the proposed terms of an acquisition, the Company must notify each investor whose shares are in escrow, if any. Each such investor then has no fewer than 20 and no greater than 45 business days to notify the Company in writing if they elect to remain an investor. A failure to reply indicates that the person has elected to not remain an investor. As all investors are allotted this second opportunity to determine to remain an investor, acquisition agreements should be conditioned upon enough funds remaining in escrow to close the transaction.
Effecting a business combination
Prospective investorsresolution in the Company’s common stock will not have an opportunity to evaluate the specific merits or risks of anythird fiscal quarter of the one or more business combinations that we may undertake A business combination may involve the acquisition of, or merger with, a company which needs to raise substantial additional capital by means of being a publicly trading company, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and State securities laws. A business combination may involve a company which may be financially unstable or in its early stages of development or growth.
The Company has not identified a target business or target industry
The Company’s effort in identifying a prospective target business will not be limited to a particular industry and the Company may ultimately acquire a business in any industry Management deems appropriate. To date, the Company has not selected any target business on which to concentrate our search for a business combination. While the Company intends to focus on target businesses in the United States, it is not limited to U.S. entities and may consummate a business combination with a target business outside of the United States. Accordingly, there is no basis for investors in the Company’s common stock to evaluate the possible merits or risks of the target business or the particular industry in which we may ultimately operate. To the extent we effect a business combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, to the extent that we effect a business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes many industries which experience rapid growth. In addition, although the Company’s Management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
Sources of target businesses
Our Management anticipates that target business candidates will be brought to our attention from various unaffiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers and other members of the financial community, who may present solicited or unsolicited proposals. Our Management may also bring to our attention target business candidates. While we do not presently anticipate engaging the services of professional firms that specialize in business acquisitions on any formal basis, we may engage these firms in the future, in which event we may pay a finder’s fee or other compensation in connection with a business combination. In no event, however, will we pay Management any finder’s fee or other compensation for services rendered to us prior to or in connection with the consummation of a business combination.
Selection of a target business and structuring of a business combination
In evaluating a prospective target business, our Management will consider, among other factors, the following:
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our Management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct a due diligence review which will encompass, among other things, meetings with incumbent Management and inspection of facilities, as well as review of financial and other information which will be made available to us. We will endeavor to structure a business combination so as to achieve the most favorable tax treatment to us, the target business and both companies’ stockholders. However, there can be no assurance that the Internal Revenue Service or applicable state tax authorities will necessarily agree with the tax treatment of any business combination we consummate. The time and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Onfiscal year ending October 28, 2013, we issued a total of 4,000,00031, 2019 issuing 250,000 shares of restricted common stock to Nikolay Titov, our former president and director in consideration of $4,000.
On November 29, 2015, the Company’s board of directors elected by unanimous written consent to file Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State to (i) increase the Company’s authorized number of shares of common stock from 75 million to 750 million, and (ii) increase the Company’s total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of 25 shares for every one (1) share currently issued and outstanding (the “Forward Split”). On December 4, 2015, the Company filed such Articles of Amendment with the Nevada Secretary of State. The record date for the Forward Split is December 1, 2015.
On December 2, 2015, the Company by written consent of the Board of Directors approved the issuance to Mr. Nikolay Titov of 16,000,000 restricted shares of the Company’s common stock in exchange for continued services as the sole member of the Board and the Company’s sole executive officer. These shares are being issued subsequent to the stock split and increased the Company’s total issued and outstanding shares following such stock split to 141,000,000 shares.
On September 19, 2016, the Company filed Articles of Amendment to its Articles of Incorporation with the Nevada Secretary of State whereby it amended its Articles of Incorporation by (i) decreasing the Company’s authorized number of shares of common stock from 750 million to 750,000, and (ii) decreasing the Company’s total issued and outstanding shares of common stock by conducting a reverse split of such shares at the rate of one (1) share for every one thousand (1,000) share currently issued and outstanding, resulting in 141,000 shares being issued and outstanding.
On November 8, 2016 the Company’s request for the Reverse Split was approved by FINRA and effected in the market. The Company’s ticker symbol was also changed to “ADAD”.
On February 13, 2017 the Company issued 76,000,000 shares to its former sole director for continuation of his services to the Company.
Our officer and director may be considered a promoter of the Company due to his participation inthe former CEO valued at $100,000 which compromises the $50,000 onetime compensation and managementfive months of compensation of an aggregate of $50,000, pursuant to the business since our incorporation.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICEScompensation agreement.
During the year ended October 31, 2018,2020, the total fees billedamount due to the former CEO of $2,405, for audit-related servicespayment of operating expenses, was $3,750, for tax services was $500 and for all other services was $0.forgiven.
During the year ended October 31, 2017,2020, the totalCompany’s sole officer advanced to the Company an amount of $8,559 by paying for expenses on behalf of the Company. As of October 31, 2020, and 2019, the Company was obligated to the officer, for an unsecured, non-interest-bearing demand loan with a balance of $8,559 and $0, respectively.
Item 14. Principal Accounting Fees and Services
The following table sets forth fees billed, or expected to be billed, to us by our independent registered public accounting firm for audit-relatedthe years ended October 31, 2020 and 2019, for (i) services was $3,750,rendered for the audit of our annual financial statements and the review of our quarterly financial statements; (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as “audit fees;” (iii) services rendered in connection with tax services was $500preparation, compliance, advice and forassistance; and (iv) all other services:
|
| Year ended October 31, 2020 |
|
| Year ended October 31, 2019 |
| ||
Audit fees(1) |
| $ | 9,200 |
|
| $ | 3,750 |
|
Audit-related fees |
|
| - |
|
|
| - |
|
Tax fees (2) |
|
| 750 |
|
|
| 500 |
|
All other fees |
|
| - |
|
|
| - |
|
Total fees |
| $ | 9,950 |
|
| $ | 4,250 |
|
(1) | Audit fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our fiscal yearend financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements. | |
(2) | Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice. |
Our Board pre-approves all services was $0.provided by our independent auditors. All of the above services and fees were reviewed and approved by the Board either before or after the respective services were rendered.
Our Board has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
| Table of Contents |
PART IV
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following exhibits are included with this registration statement:
(a) | The following documents are filed as part of this Annual Report on 10-K: |
(1) | The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the “Index to Consolidated Financial Statements” on page F-1 and included on pages F-2 through F-11. |
(b) | The following exhibits are filed herewith as a part of this report |
Exhibit Number |
Description | |
| ||
| Bylaws (filed as an exhibit to our Form S-1 Registration Statement and subsequent amendments) | |
|
|
|
| ||
| ||
101* |
| Interactive data files pursuant to Rule 405 of Regulation S-T |
________
* Filed herewith.
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportReport to be signed on its behalf by the undersigned, thereunto duly authorized.
HUAIZHONG HEALTH GROUP, INC. | |||
Date: March 22, 2021 | By: | /s/ Yuantong Wang | |
Yuantong Wang | |||
President and Chief Executive Officer | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
HUAIZHONG HEALTH GROUP, INC. | |||
Date: March 22, 2021 | By: | /s/ Yuantong Wang | |
Yuantong Wang | |||
President, Chief Executive Officer, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer and Director | |||
| 17 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
INDEX TO AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 2020 AND 2019
Page | ||||
F-2 | ||||
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Statements of Operations for the years ended October 31, 2020 and 2019 | F-4 | |||
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Statements of Changes in Stockholders’ Deficit for the years ended October 31, 2020 and 2019 | F-5 | |||
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Statements of Cash Flows for the years ended October 31, 2020 and 2019 | F-6 | |||
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| F-1 |
| Table of Contents |
MICHAEL GILLESPIE & ASSOCIATES, PLLC
|
10544 ALTON AVE NE
SEATTLE, WA 98125
206.353.5736
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors & Shareholders:
Adaiah Distribution Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Adaiah Distribution Inc. as of October 31, 2020 and 2019 and the related statements of operations, changes in stockholders’ (deficit) and cash flows for the periods then ended, and the related notes (collectively referred to as “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2020 and 2019 and the results of its operations and its cash flows for the periods then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
/S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC
We have served as the Company’s auditor since 2019.
Seattle, Washington
March 19, 2021
| F-2 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Balance Sheets
|
| October 31, |
|
| October 31, |
| ||
|
| 2020 |
|
| 2019 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash |
| $ | 0 |
|
| $ | 0 |
|
Total Current Assets |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Deficit |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| 10,913 |
|
|
| 11,141 |
|
Due to related party |
|
| 8,559 |
|
|
| 0 |
|
Convertible note payable - related party |
|
| 0 |
|
|
| 9,956 |
|
Total Current Liabilities |
|
| 19,472 |
|
|
| 21,097 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 19,472 |
|
|
| 21,097 |
|
|
|
|
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|
|
|
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|
Stockholders' Deficit |
|
|
|
|
|
|
|
|
Common stock: 750,000,000 shares authorized; $0.001 par value 31,518,466 and 517,853 shares issued and outstanding at October 31, 2020 and 2019, respectively |
|
| 31,518 |
|
|
| 518 |
|
Additional paid in capital |
|
| 257,587 |
|
|
| 250,482 |
|
Accumulated deficit |
|
| (308,577 | ) |
|
| (272,097 | ) |
Total Stockholders' Deficit |
|
| (19,472 | ) |
|
| (21,097 | ) |
Total Liabilities and Stockholders' Deficit |
| $ | 0 |
|
| $ | 0 |
|
The accompanying notes are an integral part of these audited financial statements.
| F-3 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Statements of Operations
|
| Year Ended |
| |||||
|
| October 31, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
|
|
|
|
|
|
| ||
Revenue |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
Professional fees |
|
| 35,101 |
|
|
| 26,097 |
|
General and administrative |
|
| 900 |
|
|
| 100,000 |
|
Total operating expenses |
|
| 36,001 |
|
|
| 126,097 |
|
|
|
|
|
|
|
|
|
|
Operating Loss |
|
| (36,001 | ) |
|
| (126,097 | ) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
| (479 | ) |
|
| 0 |
|
Total other expense |
|
| (479 | ) |
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net loss before taxes |
|
| (36,480 | ) |
|
| (126,097 | ) |
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net Loss |
| $ | (36,480 | ) |
| $ | (126,097 | ) |
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted |
| $ | (0.00 | ) |
| $ | (0.41 | ) |
|
|
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|
|
|
Basic and diluted weighted average common shares outstanding |
|
| 10,455,090 |
|
|
| 308,946 |
|
The accompanying notes are an integral part of these audited financial statements.
| F-4 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Statements of Changes in Stockholders’ Deficit
For the Years Ended October 31, 2020 and 2019
|
|
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|
|
| Additional |
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| |||||
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| Common Stock |
|
| Paid in |
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| Accumulated |
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|
| Shares |
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| Amount |
|
| Capital |
|
| Deficit |
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| Total |
| |||||
Balance - October 31, 2018 |
|
| 255,353 |
|
| $ | 255 |
|
| $ | 145,745 |
|
| $ | (146,000 | ) |
| $ | 0 |
|
|
|
|
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|
|
|
|
|
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Common stock issued for compensation- related party |
|
| 250,000 |
|
|
| 250 |
|
|
| 99,750 |
|
|
| 0 |
|
|
| 100,000 |
|
Common stock issued for conversion of convertible note- related party |
|
| 12,500 |
|
|
| 13 |
|
|
| 4,988 |
|
|
| 0 |
|
|
| 5,000 |
|
Net loss |
|
| 0 |
|
|
| - |
|
|
| - |
|
|
| (126,097 | ) |
|
| (126,097 | ) |
Balance - October 31, 2019 |
|
| 517,853 |
|
|
| 518 |
|
|
| 250,482 |
|
|
| (272,097 | ) |
|
| (21,097 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of convertible note - related party |
|
| 31,000,000 |
|
|
| 31,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 31,000 |
|
Common stock issued for rounding on reverse stock split |
|
| 613 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Forgiveness of due to related party |
|
| - |
|
|
| 0 |
|
|
| 2,405 |
|
|
| 0 |
|
|
| 2,405 |
|
Forgiveness of convertible note payable - related party |
|
| - |
|
|
| 0 |
|
|
| 4,700 |
|
|
| 0 |
|
|
| 4,700 |
|
Net loss |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (36,480 | ) |
|
| (36,480 | ) |
Balance - October 31, 2020 |
|
| 31,518,466 |
|
| $ | 31,518 |
|
| $ | 257,587 |
|
| $ | (308,577 | ) |
| $ | (19,472 | ) |
The accompanying notes are an integral part of these audited financial statements.
| F-5 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Statement of Cash Flows
|
| Year Ended |
| |||||
|
| October 31, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
|
|
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| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | (36,480 | ) |
| $ | (126,097 | ) |
Changes in current assets and liabilities: |
|
|
|
|
|
|
|
|
Related party advances funding operations |
|
| 36,229 |
|
|
| 14,956 |
|
Stock based compensation - related party |
|
| 0 |
|
|
| 100,000 |
|
Accounts payable and accrued liabilities |
|
| 251 |
|
|
| 11,141 |
|
Net cash used in operating activities |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net change in cash for the year |
|
| 0 |
|
|
| 0 |
|
Cash at beginning of year |
|
| 0 |
|
|
| 0 |
|
Cash at end of year |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
| $ | 0 |
|
| $ | 0 |
|
Cash paid for interest |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Issuance of common stock as equity compensation - related party |
| $ | 0 |
|
| $ | 100,000 |
|
Issuance of common stock for conversion of convertible note- related party |
| $ | 31,000 |
|
| $ | 5,000 |
|
Forgiveness of due to related party |
| $ | 2,405 |
|
| $ | 0 |
|
Forgiveness of convertible note payable and accrued interest - related party |
| $ | 4,700 |
|
| $ | 0 |
|
The accompanying notes are an integral part of these audited financial statements.
| F-6 |
| Table of Contents |
ADAIAH DISTRIBUTION, INC.
Notes to the Financial Statements
October 31, 2020 and 2019
Note 1 - Organization and Going Concern
Adaiah Distribution, Inc. (the “Company”), is a for profit corporation established under the corporation laws in the State of Nevada, United States of America on September 12, 2013. Effective December 15, 2020, the company changed its operation name to Huaizhong Health Group, Inc. (the Company). Our principal office is located at Tianan Technology Park, 13/F Headquarters Center Building 16, 555 Panyu North Ave, Panyu District, Guangzhou City, China. The Company’s fiscal year end is October 31.
The Company was in the development phase of its custom pillow distribution business. During the third fiscal quarter ending July 31, 2018 the Company had ceased its operations of its Pillow manufacturing and sales. The Company is not currently engaged in any business operations. It is however seeking to identify, locate and if warranted acquire new commercial opportunities.
Change of Control
On August 12, 2020, Yosef Yafe ( the “Seller”) and Yuantong Wang (the “Buyer”) entered into a stock purchase agreement, pursuant to which the Seller agreed to sell and the Buyer agreed to purchase an aggregate of 31,000,000 shares of common stock of the Company from the Seller.
As of the date referenced in this action, the Company had 31,518,466 shares of common stock outstanding. The securities purchased represented 98.4% of the outstanding shares of common stock and 98.4% of the voting power of the Company.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of October 31, 2020, the Company has suffered recurring losses from operations, has an accumulated deficit of $308,577 and has not earned any revenues. The Company intends to fund operations through equity financing arrangements and related party advances, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending October 31, 2021.
The ability of the Company to emerge from an early stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
| F-7 |
| Table of Contents |
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company had no cash at October 31, 2020 and 2019, respectively.
Fair Value of Measurements
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2020 and 2019.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Basic and Diluted Loss Per Common Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
For the years ended October 31, 2019, convertible notes which were convertible were dilutive instruments and are not included in the calculation of diluted loss per share as their effect would be antidilutive.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.
Reclassification
Certain accounts from prior periods have been reclassified to conform to the current period presentation.
| F-8 |
| Table of Contents |
Note 3 – Stockholders’ Equity
The Company has 750,000,000 shares of common stock authorized with a par value of $0.001 per share.
On September 5, 2019, the Company issued 250,000 common shares of the company to the former CEO pursuant to the equity compensation agreement signed August 10, 2019.
On September 5, 2019, the Company issued 12,500 common shares of the Company to the former CEO upon conversion of $5,000 of the convertible note signed on August 10, 2019.
On April 28, 2020, the majority shareholders of the Company voted to effect a reverse split of 400-to-1 on its common shares. The authorized amount of 750,000,000 is to be unchanged and hence the par value of the Company of $0.001 is also to remain unchanged. On June 5, 2020, FINRA approved the reverse split and it became effective on that date. All historical share balances and share price related data in this annual report have been adjusted based on the 400-to-1 reverse split ratio.
On June 5, 2020, concurrent with the reverse split the Company issued new additional 613 shares to certain shareholders as part of rounding differences.
On July 7, 2020, the Company issued 31,000,000 common shares of the Company to the former CEO upon conversion of $31,000 of the convertible note at the conversion rate of $0.001 per common shares.
As of October 31, 2020, and 2019, there were 31,518,466 and 517,853 shares of common stock issued and outstanding, respectively.
Note 4 - Income Taxes
The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate of 21% to the income tax amount recorded as of October 31, 2020 and 2019 are as follows:
|
| October 31, |
|
| October 31, |
| ||
|
| 2020 |
|
| 2019 |
| ||
Net Operating Loss |
| $ | (36,480 | ) |
| $ | (126,097 | ) |
Effective tax rate |
|
| 21 | % |
|
| 21 | % |
Income Tax expense |
|
| (7,661 | ) |
|
| (26,480 | ) |
Less: valuation allowance |
|
| 7,661 |
|
|
| 26,480 |
|
Income Tax Expense |
| $ | 0 |
|
| $ | 0 |
|
Net deferred tax assets consist of the following components as of October 31, 2020 and 2019:
|
| October 31, |
|
| October 31, |
| ||
|
| 2020 |
|
| 2019 |
| ||
Net Operating Loss carryforward |
| $ | 64,801 |
|
| $ | 57,140 |
|
Valuation allowance |
|
| (64,801 | ) |
|
| (57,140 | ) |
Net deferred tax asset |
| $ | 0 |
|
| $ | 0 |
|
At October 31, 2020, the Company had $380,577 of net operating losses ( “NOLs”), which begin to expire beginning in 2037. NOLs generated in tax years prior to July 31, 2018, can be carryforward for twenty years, whereas NOLs generated after July 31, 2018 can be carryforward indefinitely
| F-9 |
| Table of Contents |
The NOL carry forwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company experienced a change in control for tax purposes in August 2020 (see Note 1). Due to change of control, the Company will not be able to carryover approximately $294,765 of NOL generated before August 12, 2020 to offset future income.
Note 5 – Convertible Note - Related PartyOn August 10, 2019 the Company signed a convertible note for funds being paid in cash for settlement of vendors’ invoices on behalf of the Company by the former CEO, as of that date for a twelve month period following that date which can be converted by the CEO at any time into restricted common shares of the Company at a conversion rate of $0.001 per share. The note bears interest of 4% per annum. The note is currently in default.
For the years ended October 31, 2020 and 2019, the Company recorded interest expense of $479 and $0, respectively.
On August 12, 2020, in connection with change of control and stock purchase agreement (Note 1), the former CEO forgave the convertible note of $4,221 and accrued interest of $479.
As of October 31, 2020, and 2019, the Company was obligated for this convertible note with balance of $0 and $9,956, and accrued interest of $0 and $0, respectively.
Note 6 – Related Party Transactions
In June 2019, the Company entered into a compensation agreement with the former CEO whereby the CEO would receive a onetime compensation of $50,000 for being elected as the CEO and sole director of the Company and $10,000 per month through October 31, 2019 for his continued services through then. According to the agreement, the compensation was to be paid in the form of restricted common stock of the Company at a value of its par which is $0.001 per share. The Company signed a resolution in the third fiscal quarter of the fiscal year ending October 31, 2019 issuing 250,000 shares of restricted common stock of the Company to the former CEO valued at $100,000 which compromises the $50,000 onetime compensation and five months of compensation of an aggregate of $50,000, pursuant to the compensation agreement.
During the year ended October 31, 2020, the amount due to the former CEO of $2,405, for payment of vendors’ invoices were forgiven.
During the years ended October 31, 2020 and 2019, the former CEO paid vendors’ invoice of $25,265 and $14,956, respectively. During the years ended October 31, 2020, and 2019, $31,000 was converted into 31,000,000 restricted common shares of the Company and $5,000 was converted into 12,500 restricted common shares of the Company, respectively.
During the year ended October 31, 2020, the Company’s sole officer and director advanced to the Company an amount of $8,559 by paying for expenses on behalf of the Company. As of October 31, 2020, and 2019, the Company was obligated to the officer, for an unsecured, non-interest-bearing demand loan with a balance of $8,559 and $0, respectively.
Note 7 – Subsequent Events
The Company has evaluated subsequent events from October 31, 2020, through the date these financial statements were issued and determined the following events require disclosure:
On December 14, 2020, the Company filed Articles of Conversion/Exchange/Merger, with the state of Nevada, to change its name to “Huaizhong Health Group, Inc.” (the "Name Change"). The Name Change became effective as of December 15, 2020.
The Company’s CEO has advanced an additional $12,188 for payment of operating expenses.
| F-10 |