Notes to the Financial Statements
April 30, 2020
Note 1: Organization and Basis of Presentation
Adaiah Distribution, Inc. (the “Company”) is a for profit corporation established under the corporation laws in the State of Nevada, United States of America on September 12, 2013.
The Company is not currently engaged in any business operations. It is however seeking to identify, locate and if warranted acquire new commercial opportunities.
The accompanying unaudited interim financial statements of Adaiah Distribution, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Registration Statement on Form S-1 filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the fiscal year ended October 31, 2019 as reported on Form 10-K have been omitted.
Unless the context otherwise requires, all references to “Adaiah Distribution,” “we,” “us,” “our” or the “company” are to Adaiah Distribution, Inc.
On April 25, 2019, the eighth judicial District Court of Nevada appointed Yosef Yafe as custodian for the Company, proper notice having been given. There was no opposition. Pursuant to the Order of Custodianship, a Special Meeting of Shareholders was held on May 29, 2019 at 8:00 a.m. PST, Yosef Yafe as limited custodian. Notice was sent May 13, 2019 in compliance with Court Order. Present were Yosef (holding shares through Cede & Co.) and two additional proxies also holding shares through Cede & Co.).
Note 2: Going Concern
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern for the one year from the date these financial statements were available to be issued.
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 3: 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 April 30, 2020.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Adaiah Distribution Inc.
Notes to the Financial Statements
April 30, 2020
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.
No revenues were recorded for the fiscal periods ending April 30, 2019 and April 30, 2020.
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 4: Property and Equipment
The Company has no carrying value of fixed assets as of April 30, 2019 or April 30, 2020 and no depreciation was recorded for these respective periods.
Adaiah Distribution Inc.
Notes to the Financial Statements
April 30, 2020
Note 5: Legal Matters
The Company has no known legal issues pending.
Note 6: 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.
Adaiah Distribution Inc.
Notes to the Financial Statements
April 30, 2020
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.
In January 2017 the Company filed with the State of Nevada and increased the authorized shares 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.
On September 5, 2019 the Company issued 100,000,000 common shares of the Company to the CEO pursuant to the equity compensation agreement signed August 10 2019 for the fiscal year ending October 31, 2019.
On September 5 the Company issued 5,000,000 common shares upon conversion of $5,000 of the convertible note signed on August 10, 2019.
As of April 30, 2020 there were no outstanding stock options or warrants.
As of April 30, 2020 there were 207,141,189 shares of common stock outstanding.
On April 28 the majority shareholders of the Company voted to effect a reverse split of 1-400 on its common stock. 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. The estimated time of the effectiveness of the reverse split is mid-June 2020.
The reverse split when effective will be based upon all shareholders of record as of May 4, 2020. Approximately 517,853 shares will be outstanding after the split depending upon additional shares being issues or cancelled due to rounding purposes. The Company is in the process with filing with FINRA the documentation required to initiate the reverse split.
Adaiah Distribution Inc.
Notes to the Financial Statements
April 30, 2020
Note 7: 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 8: Related Party Transactions
On August 10, 2019 the Company signed a convertible note for funds being advanced to the Company by the 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 the Company at a conversion rate of $0.001 per share. The note bears interest of 4% per annum. The CEO advanced as at April 30 2020, $25,417 of which $5,000 was converted into 5,000,000 restricted common shares of the Company on September 5, 2019. The balance of the note as at April 30, 2020 was $20,955 which also includes accrued interest expense of $269. That fair value of the note as at that date approximates the outstanding carrying amount of $20,955.
Note 9. Subsequent events
The Company has evaluated events subsequent to the date these financial statements have been issued to assess the need for potential recognition or disclosure in this report. Such events were evaluated through May 27, 2020. 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.