U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

 

For the quarterly period ended March 31, 2020

 

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

 

Commission file number:  333-229065

 

 

ANDES 7 Inc.

(Exact name of registrant as specified in its charter)

 

	Delaware		47-4683655
	(State or Other Jurisdiction of		(I.R.S. Employer
	Incorporation or Organization)		Identification No.)
	649 Mission Street 5th Floor San Francisco, CA		94105
	(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (415) 463-7827

  

424 Clay Street, Lower Level, San Francisco, CA 94111

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒

Accelerated filer ☐ Smaller reporting company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒ 

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 23, 2020, the issuer had 120,140,000 shares of its common stock issued and outstanding.

 

TABLE OF CONTENTS

PART I
Item 1.	Unaudited Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
PART II
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	18
	Signatures	19

 

 

 

 

 

Item 1. Unaudited Financial Statements

ANDES 7, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

 

  

Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019		4
Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 (unaudited)		5
Consolidated Statement of Stockholders’ Deficit for the three months ended March 31, 2020 and 2019(unaudited)		6
Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)		7
Notes to the Financial Statements (unaudited)		8

 

 

ANDES 7, INC. and Subsidiary
CONSOLIDATED BALANCE SHEETS
			March 31,				December 31,
			2020				2019
			(Unaudited)
ASSETS
Current assets:
Cash		$	1,072			$	1,269
Accounts receivable			1,863				—
Inventory, net			7,489				8,381
Other current assets			1,834				2,914
Total current assets			12,258				12,564
Deposit – land contract			266,267				295,849
Construction in progress			20,388				22,429
ROU asset - operating lease			11,293				14,052
Property and equipment, net			208,782				237,393
Total assets		$	518,988			$	582,287
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	2,125			$	9,174
Due to a related party			42,730				42,730
Loans from directors			1,373,790				1,495,538
Loans payable, current portion			5,151				10,196
Total current liabilities			1,423,796				1,557,638
Long term liabilities:
Loans payable, non-current			1,557				3,081
Operating lease liability			11,293				14,052
Total liabilities			1,436,646				1,574,771
Stockholders’ Equity (Deficit):
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; 500,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively			50				50
Common stock, $0.0001 par value, 1,000,000,000 shares authorized, 120,140,000 and 120,105,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively			12,015				12,011
Additional paid in capital			271,029				243,033
Accumulated deficit			(1,187,149	)			(1,147,770	)
Accumulated other comprehensive loss			(13,603	)			(99,808	)
Total stockholders’ deficit			(917,658	)			(992,484	)
Total liabilities and stockholders’ deficit		$	518,988			$	582,287
The accompanying notes are an integral part of these consolidated financial statements.

ANDES 7, INC. and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		For the Three Months Ended March 31,
		2020				2019
Revenue		$	7,593			$	2,438
Cost of revenue			136				954
Gross Margin			7,457				1,484
Operating expenses:
General and administrative			38,602				28,134
Rent expense			2,880				2,847
Advertising and promotion			—				705
Professional fees			5,000				7,739
Total operating expenses			46,482				39,425
Loss from operations			(39,025	)			(37,941	)
Other income (expense):
Interest expense			(354	)			(349	)
Total other income (expense)			(354	)			(349	)
Loss before income taxes			(39,379	)			(38,290	)
Provision for income taxes			—				—
Net loss		$	(39,379	)		$	(38,290	)
Other comprehensive income (loss):
Foreign currency translation adjustment			86,205				(12,192	)
Comprehensive income (loss)		$	46,826			$	(50,482	)
Profit (loss) per share basic & diluted		$	0.00			$	(0.00	)
Weighted average outstanding shares, basic & diluted			120,125,330				120,100,000
The accompanying notes are an integral part of these consolidated financial statements

 

 

ANDES 7, INC. and Subsidiary
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the Three Months Ended March 31, 2019 (Unaudited)
		Preferred Stock								Common Stock								Additional paid				Accumulated				Other Comprehensive
		Shares				Amount				Shares				Amount				in capital				Deficit				Income				Total
Balance, December 31, 2018			500,000				50				120,100,000			$	12,010			$	238,044			$	(891,669	)		$	(37,012	)		$	(678,577	)
Foreign currency translation adjustment			—				—				—				—				—				—				(12,192	)			(12,192	)
Net loss for the year ended March 31, 2019			—				—				—				—				—				(38,290	)			—				(38,290	)
Balance, March 31, 2019			500,000				50				120,100,000			$	12,010			$	238,044			$	(929,959	)		$	(49,204	)		$	(729,059	)

 

 

ANDES 7, INC. and Subsidiary
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the Three Months Ended March 31, 2020 (Unaudited)
		Preferred Stock								Common Stock								Additional paid				Accumulated				Other Comprehensive
		Shares				Amount				Shares				Amount				in capital				Deficit				Income				Total
Balance, December 31, 2019			500,000				50				120,105,000			$	12,011			$	243,033			$	(1,147,770	)		$	(99,808	)		$	(992,484	)
Foreign currency translation adjustment			—				—				—				—				—				—				86,205				86,205
Common shares issued for cash			—				—				35,000				4				27,996				—				—				28,000
Net loss for the three months ended March 31, 2020			—				—				—				—				—				(39,379	)			—				(39,379	)
Balance, March 31, 2020			500,000				50				120,140,000			$	12,015			$	271,029			$	(1,187,149	)		$	(13,603	)		$	(917,658	)
The accompanying notes are an integral part of these consolidated financial statements

   

ANDES 7, INC. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		For the Three Months Ended March 31,
		2020				2019
Cash flows from operating activities:
Net loss		$	(39,379	)		$	(38,290	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense			7,343				7,169
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable			(1,863	)			(460	)
(Increase) decrease in inventory			892				(623	)
(Increase) decrease in other assets			1,080				(45	)
Increase (decrease) in accounts payable and accrued liabilities			(7,049	)			2,470
Net cash used by operating activities			(38,976	)			(29,779	)
Cash flows from investing activities:
Construction in progress			2,041				(400	)
Land deposits			29,582				(5,250	)
Purchase or sale of property and equipment			21,268				(4,774	)
Net cash provided (used) in investing activities			52,891				(10,424	)
Cash flows from financing activities:
Proceeds from sale of common stock			28,000				—
Net proceeds from Director loans			(121,748	)			53,588
Net proceeds (payments) from loans			(6,569	)			(1,871	)
Net cash provided (used) in financing activities			(100,317	)			51,717
Net increase in cash, cash equivalents, and restricted cash			(86,402	)			11,514
Effects of currency translation on cash			86,205				(12,192	)
Cash, cash equivalents, and restricted cash at beginning of quarter			1,269				2,216
Cash, cash equivalents, and restricted cash at end of quarter		$	1,072			$	1,538
Supplemental disclosures:
Cash paid for interest		$	—			$	—
Cash paid for taxes		$	—			$	—
The accompanying notes are an integral part of these consolidated financial statements

ANDES 7, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

(UNAUDITED)

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

ANDES 7 Inc. (the “Company”) was incorporated in the State of Delaware on July 27, 2015. The Company was formed as a vehicle to pursue a business combination with an operating company that would have perceived benefits of becoming a publicly traded corporation.

 

On February 12, 2016, the Company entered into a Subscription Agreements with three subscribers for the issuance of its restricted common stock – AbinaAsean, Co. Ltd., an entity organized under the laws of the Republic of Seychelles (8,000,000 shares), Toh Kean Ban (1,000,000 shares) and Dr. Ir. H.M. ItocTochija (1,000,000 shares). Each of the Subscription Agreements were the result of privately negotiated transactions without the use of public dissemination of promotional or sales materials. Each of the buyers represented they were “accredited investors,” and as such could bear the risk of such investment for an indefinite period of time and to afford a complete loss thereof.

 

On July 2, 2018, the Company entered into an Agreement and Plan of Merger between the Company, ANDES 7 Acquisition Corp, (“Merger Sub”) a Delaware corporation and Abina Co. Ltd. (the “Abina”). Abina is a corporation organized under the Kingdom of Thailand and has operated under the name “Abina Co. Ltd.” since August 3, 2015 and has since then operated a diverse business involved in investments in hotels, resorts, and commercial property. The Agreement and Plan of Merger provided for the acquisition by the Company of all the outstanding shares of Abina through a reverse merger of merger sub into Abina, the surviving corporation.

 

NOTE 2 - GOING CONCERN

 

The accompanying audited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s ability to raise additional capital through debt and/or equity financing is unknown. The obtainment of additional financing and the successful development of the Company’s contemplated plan of operations are necessary for the Company to continue. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. However; management believes that the Company will generate sufficient cash flows to fund its operations and to meet its obligations on a timely basis for the next twelve months. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

  

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Andes 7 Acquisition Corp and Abina Co, Ltd. All financial information has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated.

 

Translation Adjustment

For the three periods ended March 31, 2020 and 2019, the accounts of the Company were maintained, and its financial statements were expressed, in BAHT.  Such financial statements were translated into USD in accordance with the Foreign Currency Matters Topic of the Codification (ASC 830), with the BAHT as the functional currency.  According to the Codification, all assets and liabilities were translated at the current exchange rate at respective balance sheets dates, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification (ASC 220), as a component of members’ capital.  Transaction gains and losses are reflected in the income statement.

 

Comprehensive Income/(Loss)

The Company uses SFAS 130 “Reporting Comprehensive Income” (ASC Topic 220).  Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive loss for the period ended March 31, 2020 and 2019 is included in the statement of operations as a foreign currency translation adjustment.

 

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less.

 

Revenue recognition

Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery.

 

Inventories

Inventories are valued at the lower of cost or market utilizing the first-in first-out (FIFO) method. Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower.

 

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.  To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accounts payable approximate their fair value because of the short maturity of those instruments.  

 

The Company does not have any assets or liabilities measured at fair value on a recurring basis. The Company’s property and equipment is subject to measurement on a non-recurring basis. No fair value adjustments are included in the financial statements.

 

Income taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal 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 Statements of Income in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

  

Adoption of New Accounting Standards

In March 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on effective interest rate method or a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 was effective for the Company’s fiscal year beginning after December 15, 2018 and subsequent interim periods. The Company has evaluated the adoption of ASU 2016-02 which was not applicable due to the Company having no leases.

The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change.

 

NOTE 4 – INVENTORY

 

As of March 31, 2020 and March 31, 2019, inventory reserves were $67,401 and $0, respectively.

 

		March 31, 2020				March 31, 2019
Inventory, gross		$	74,890			$	81,902
Inventory reserve			(67,401	)			—
Inventory, net			7,489				81,902

NOTE 5 – DEPOSIT - LAND CONTRACT

 

In 2016 Abina entered into an agreement to purchase land in Chiang Rai, Thailand for 200 million Baht. The Company has paid a $195,043 deposit (5.8 million Baht) as of March 31, 2020 and the balance of 194.2 million Baht is due as per the terms of an extension given in an amended agreement. The Company plans on developing the land as a tourist destination and is currently in the process of building a café on the property.

 

NOTE 6 – CONSTRUCTION IN PROGRESS

 

In 2016 the Company incurred $79,744 of construction related costs of which approximately $68,000 was for the building of the café and the remaining balance of almost $12,000 primarily consisted of land and site development costs. As of March 31, 2020 and March 31, 2019, the balance in the construction in progress account is $20,388 and $21,046

 

NOTE 7 – PROPERTY AND EQUIPMENT

 

The Company’s property and equipment primarily consists of office furniture and equipment and is being depreciated using the straight-line method over a period of five years. Property and equipment consisted of the following:

 

		March 31, 2020				March 31, 2019
Office Equipment		$	60,742			$	60,978
Accounting Software			756				780
Flag Costs			29,814				30,777
Vehicles			84,688				87,422
Buildings and land costs			139,728				144,240
Total property & equipment			315,728				324,197
Less accumulated depreciation			(106,946	)			(81,279	)
Property & equipment, net		$	208,782			$	242,918

  

Depreciation expense for the three months ended March 31, 2020 and March 31, 2019, totaled $7,343 and $7,169 respectively.

 

NOTE 8 – LOANS PAYABLE

 

The Company has entered into two financing agreements for its vehicles used in the business. The following is a summary of these loans payable as of March 31, 2020: 

Loan		Issue Date		Maturity Date		Interest Rate				Beginning Balance				Payments				Balance December 31, 2019				Payments				Balance March 31, 2020
Siam Commercial Bank #1		7/14/2016		7/14/2020			5.029	%		$	29,846				(22,495	)			7,351				(3,588	)			3,763
Siam Commercial Bank #2		11/29/2016		11/29/2020			8.98	%			15,801				(9,875	)			5,926				(2,104	)			3,822

 

NOTE 9 – PREFERRED STOCK

 

The Company is authorized to issue 5,000,000 shares of preferred stock with a par value $0.0001 per share.

 

On March 25, 2018, the Company with the authorization of the board of directors and the majority shareholder adopted a resolution to create 500,000 shares of Series A preferred stock. The Company then filed an amendment to its certificate of incorporation with the State of Delaware on May 10, 2018 to create a certificate of designation for 500,000 shares of Series A preferred stock with each share convertible into 1,000 shares of common stock and with voting rights of 1,000 votes for each share of Series A preferred stock.

 

On May 10, 2018, Manichan Khor, the wife of Andrew Khor Poh Kiang, the President, CEO and Chairman entered into a stock purchase agreement to purchase 500,000 shares of Series A preferred stock at par value for total cash proceeds of $50.

  

NOTE 10 – STOCKHOLDERS’ EQUITY

 

The Company is authorized to issue 1,000,000,000 common shares with a par value of $0.0001 per share.

 

During the year December 31, 2018, as part of the Agreement and Plan of Merger with Abina Co. Ltd., the Company issued 111,000,000 shares of its common stock. In addition, Andrew Khor Poh Kiang cancelled 1,000,000 shares of his common stock.

During the year ended December 31, 2019, the Company issued 5,000 shares of common stock for cash totaling $4,000.

During the quarter ended March 31, 2020, the Company issued 35,000 shares of common stock for cash totaling $28,000.

 

NOTE 11 – RELATED PARTY TRANSACTIONS

Loans from directors:

During the year ended December 31, 2016, directors of Abina loaned the Company a total of $655,565. The funds were used to pay for general operating expenses. All loans are unsecured, non-interest bearing and due on demand.

During the year ended December 31, 2017, directors of Abina oaned the company a total of $335,884. The funds were used to pay for general operating expenses. All loans are unsecured, non-interest bearing and due on demand. As of December 31, 2017 due to directors was $931,449

During the year ended December 31, 2018, directors of Abina loaned the company a total of $305,270. The funds were used to pay for general operating expenses. All loans are unsecured, non-interest bearing and due on demand. As of December 31, 2018 due to directors was $1,236,719

During the year ended December 31, 2019, directors of Abina loaned the company a total of $53,588. The funds were used to pay for general operating expenses. All loans are unsecured, non-interest bearing and due on demand. As of December 31, 2019 due to directors was $1,495,538.

During the three months ended March 31, 2020, directors of Abina had repaid the directors a total of $121,748. All loans are unsecured, non-interest bearing and due on demand. As of March 31, 2020, the balance due was $1,373,790.

Due to related party:

During 2016, a related party advanced the Company funds to pay for general operating expenses. These funds were unsecured, non-interest bearing and due on demand. As of December 31, 2016 due to a related party was $990. During the three months ended June 30, 2019, the related party Chiang forgave the $990 due in connection with the 9,900,000 shares redeemed earlier and recorded as $990 in debt forgiveness.

During the twelve months ended December 31, 2017, a related party provided $49,280 towards operating expenses. These funds were unsecured, non-interest bearing and due on demand. As of December 31, 2017 due to related party was $50,270.

 

During the twelve months ended December 31, 2018, $7,500 in related party debt due to Abina was reversed and eliminated in consolidation. On May 10, 2018 preferred shares issued to a related party for $50. On May 14, 2018, the Company received $1,000 from related party. These funds were unsecured, non-interest bearing and due on demand. As of December 31, 2018 due to related party was $43,720.

 

 

As of March 31, 2020 and December 31, 2019, due to related party balance was $42,730 and $42,730 respectively.

 

NOTE 12 – COMMITMENT 

In April 2017, Abina entered into a two-year lease for its office facility in Chiang Rai, Thailand which can be further renewed for two years starting April 1, 2019 and it expires on March 31, 2021. The monthly rent obligation is approximately $963 (Thai baht was converted to USD based on average exchange rate). Minimum required rental payments for March 31, 2020 and March 31, 2019 were $2,889 and $0, respectively. Operating lease liability as of March 31, 2020 and March 31, 2019 were $11,293 and $0, respectively.

NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE LOSS

 

The balance of related after-tax components comprising accumulated other comprehensive income included in stockholders’ equity were as follows:

 

		March 31, 2020				March 31, 2019
Accumulated other comprehensive loss, beginning of period		$	(99,808	)		$	(37,012	)
Change in cumulative translation adjustment			86,872				(12,192	)
Accumulated other comprehensive loss		$	(12,936	)		$	(49,204	)

  

NOTE 14 – SUBSEQUENT EVENTS

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

 

 

 

 

 

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

  

Results of Operations

 

Results of Operations for the Three Months Ended March 31, 2020, compared to the Three Months Ended March 31, 2019

 

Revenues 

Sales revenue for the three months ended March 31, 2020, was $7,593, compared to $2,438 for the three months ended March 31, 2019.

  

Cost of Goods Sold

Cost of revenue for the three months ended March 31, 2020, was $136, compared to $954 for the three months ended March 31, 2020, a decrease of $818. This decrease was due to the existing inventory held and limited new designs for our t-shirts and souvenirs that were purchased during the period.

 

Operating Expenses

General and administrative expense was $38,602 for the three months ended March 31, 2020, compared to $28,134 for the three months ended March 31, 2019, an increase of $10,468.

 

Rent expense was $2,880 for the three months ended March 31, 2019, compared to $2,847 for the three months ended March 31, 2019, an increase of $33. 

 

Advertising and promotion expenses were $0 for the three months ended March 31, 2020, compared to $705 for the three months ended March 31, 2019, a decrease of $705. Advertising and promotion expense consists of advertising in magazines and promotional product giveaways of t-shirts and other souvenirs.

 

Professional fees were $5,000 for the three months ended March 31, 2020, compared to $7,739 for the three months ended March 31, 2019.

 

Other Income (Expenses)

Interest income for the three months ended March 31, 2020 and March 31, 2019, was $0.

 

Interest expense for the three months ended March 31, 2020 was $354, compared to $349 for the three months ended March 31, 2019.

 

Net Loss

Net loss for the three months ended March 31, 2020 was $39,379, compared to $38,290 for the three months ended March 31, 2019.

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors 

 

Liquidity 

The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. As of March 31, 2020 we had cash of $1,072 and total liabilities of $1,436,646. We used $38,976 of cash flows in operating activities for the three months ended March 31, 2020. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations.

 

Over the next 12 months we expect to expend approximately $30,000 in cash for legal, accounting and related services. Cash used for other expenditures is expected to be minimal. We hope to be able to attract suitable investors for our business plan, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts.

 

We expect to be able to secure capital through advances from our Chief Executive Officer, shareholders and others in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees. We believe it will be difficult to secure capital in the future because we have no assets to secure debt and there is currently no trading market for our securities. We will need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely.

 

The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for acquiring suitable partners or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.

 

Operating Capital and Capital Expenditure Requirements

 

Our controlling shareholders expect to advance us additional funding for operating costs in order to implement our business plan. The funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the resources of our controlling shareholders. The loans from our controlling shareholders are unsecured and non-interest bearing and have no set terms of repayment. We anticipate receiving additional capital once we are able to have our securities actively trading on a public exchange. There is no guarantee our stock will develop a market on that public exchange.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

None.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, March 31, 2020. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report due to a material weakness in our internal control over financial reporting, which is described below.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of March 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of March 31, 2020, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2020: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

  

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2020 have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

  

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

 

There are not presently any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.

 

Item 1A. Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable. 

 

Item 5. Other Information.

 

None. 

  

Item 6. Exhibits.

 

Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
3.1	Certificate of Incorporation		10		3.1	08/07/15
3.2	Certificate of Amendment to Certificate of Incorporation, dated February 25, 2016		8-K		3.3	08/04/16
3.3	By-Laws		10		3.2	08/07/15
4.1	Specimen Stock Certificate		10		4.1	08/07/15
31	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Definition	X

 

 

 

 

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 Dated:  November 23, 2020

  

	ANDES 7 Inc.
	By:	/s/ Andrew Khor Poh Kiang
		Andrew Khor Poh Kiang President, Chief Executive Officer, Chairman of the Board of Directors

 

Dated: November 23, 2020

	By:	/s/ Lee Kok Keing
		Lee Kok Keing Chief Financial Officer