UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the Fiscal year ended
OR
For the transition period from _________ to __________
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| Incorporation or Organization) | Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
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by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.
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.
Indicate
by check mark whether the registrant has submitted electronically 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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2021:
As of March 11, 2022, the issuer had shares of its common stock issued and outstanding.
TABLE OF CONTENTS
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Forward-Looking Information
This Annual Report of ADM Endeavors, Inc. on Form 10-K contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as “anticipate,” “expects,” “intends,” “plans,” “believes,” “seeks” and “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company’s stock. The following discussion and analysis should be read in conjunction with our financial statements for ADM Endeavors, Inc. Such discussion represents only
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PART I
ITEM 1. BUSINESS
The Company
We began operations in 1988, under the ownership and control of Ardell Mees, who provided installation services to grocery decor design companies. On January 4, 2001, we incorporated in North Dakota as ADM Enterprises, Inc. On May 9, 2006, the Company changed both its name to ADM Endeavors, Inc. (“ADM Endeavors,” or the “Company,” “we,” “us,” or “our”) and its domicile to the state of Nevada. On July 1, 2008, the Company acquired all of the assets of ADM Enterprises, LLC (“ADM Enterprises”), a sole proprietorship owned by Ardell and Tammera Mees, in exchange for 10,000,000 newly issued shares of our common stock. As a result, ADM Enterprises became a wholly owned subsidiary of Company.
On April 19, 2018, the Company acquired Just Right Products, Inc. (“Just Right Products”), a Texas corporation. The acquisition of 100% of Just Right Products from its sole shareholder was through a stock exchange whereas the ADM Endeavors, Inc. issued 2,000,000 shares of restricted Series A preferred stock. Each share of the Series A preferred stock is convertible into ten shares of common stock and each share has 100 votes on a fully diluted basis. The Preferred Shares represents 61% of voting shares, thus there is a change of voting control, and the transaction will be accounted for as a reverse acquisition. As a result of the transaction, Just Right Products became a wholly owned subsidiary of the Company. Even though the Company was incorporated on January 4, 2001, it had no operations until the share exchange agreement with ADM Enterprises on July 1, 2008. All business operations are those of the Company’s wholly owned subsidiaries, Just Right Products and ADM Enterprises from April 2018.
In May 2013, the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital. The authorized common stock increased to 800,000,000 shares at a par value of $0.001 per share and preferred stock increased to 80,000,000 shares at a par value of $0.001 per share.
On January 1, 2020, the Company determined that it would discontinue its business operations in North Dakota, specifically, ADM Enterprises LLC (the “Disposed Company”). The Company has made a settlement with Ardell Mees to provide him with the assets of the Disposed Company and in exchange, Mr. Mees will assume all liabilities of the Disposed Company. As part of the transaction, Mr. Mees resigned from all positions with the Company and, in a private transaction, sold a significant portion of his ownership in the Company to Marc Johnson. The Company and Mr. Mees entered into an indemnification agreement whereby Mr. Mees indemnified the Company for any liabilities of the Disposed Company.
Current Business Operations
Just Right Products, Inc.
Since 2010, Just Right Products, Inc. has operated a diverse vertical integrated business, which consists of a retail sales division, screen print promotions, embroidery production, digital production, import wholesale sourcing, and uniforms. All of these divisions are promoted and supported by SEO (Search Engine Optimization) /Web in-house department.
The Retail Sales Division focuses on any product with a logo. It sells a very wide range of products from business cards to coffee cups. Its motto is “We sell anything with a logo.” Just Right Products’ salespeople excel at sales because they are selling the items people like to buy. Our sales consist of sales made by in-house hourly employees and commissioned-based employees. In-house accounts are more profitable for Just Right Products than commissioned sales. Based on profitability reasons, Just Right Products has focused its resources on SEO and Website to develop more in-house customers.
The Screen Printing Department utilizes its five screen printing machines to print garments and other fabric items. The department can produce over 8,000 units per day. There are two types of orders, as follows: 1) Retail – where printing is done on purchased products, and 2) Contract printing – performed on wholesale customer provided products. Retail sales printing is more profitable whereas contract printing is less profitable but is beneficial at maximizing production capacity. Just Right Products is currently operating at approximately 70% of capacity with its current equipment therefore, growth without additional equipment is feasible.
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The Embroidery equipment has 51 heads of embroidery capacity. It is the same type of production as screen printing, as stated above, in regard to retail and contract embroidery. The Embroidery Department is operating at approximately 40% of capacity with its current equipment therefore, growth without additional equipment is feasible.
The Digital Department also operates in the same manner as Screen Printing and Embroidery and is operating at approximately 50% of capacity based on its current equipment with significant growth potential.
All production departments have more equipment exceeding the workload of the employees’ potential. This gives Just Right Products the ability for expansion in revenue with the hiring of additional employees, and/or having the luxury of having backup equipment eliminating down time and the ability to handle large jobs with the help of part-time employees. The additional equipment is also part of an expansion plan.
The Import Department sources products for retail and wholesale customers. We shifted some import operations from China to Pakistan. We also have fluent Arabic, Spanish, and Hindi speakers. We are also looking at India as a possible source to replace China sourced products. The Import Division is a significant asset as it allows the Company to meet customers’ demands with flexible delivery times.
The Uniform Division sells uniforms to businesses, schools and municipalities. Our advantages over our competition are in-house production and international sourcing and the ability to process the seasonal demands of the uniform business. This division is able to draw labor from other departments during peak demands thereby reducing the labor expense traditionally required to facilitate this type of seasonal business.
The Company has selected DAC Construction of Red Oak, Texas to build our new corporate headquarters. Danny Christensen and his team have already started the building process. Eyncon Engineering has completed drilling to conduct soil samples. The drilling consisted of four boring holes at 25 ft, and four at 20 ft and three at 6 ft. This drilling is needed to evaluate the soil and substructure before we can pour the foundation, parking and roads. The planned facility will be 80,000 to 100,000 square feet. Funding has tentatively been secured from CapTex bank.
Our company currently outsources signs and banners. We hope to acquire a sign shop allowing us to bring production in house and increase margins and customer base.
The new facility will allow us to add a fulfilment center that will enhance service to existing customers and attract larger customers that require fulfillment. We will also be able to enhance our current online retail store and have the ability to increase our inventory capacity for existing programs.
We will start our second planned development in 2023 on our 10.4 tract of raw land. We plan to submit the proposal for a mixed use of commercial and residential. There is a very strong demand for residential housing in the Dallas Fort Worth area.
The Company believes the SEO/Web department is the key to future growth. The Company has seen that customers tend to go online as their first source when our products are needed. Due to this trend, the Company is focusing approximately 80% of our advertising budget to maintain and grow our online presence.
The Company reports its businesses under the following SIC Code: 7319, Advertising-Promotional.
Competition
Just Right Products, Inc.
According to Promotional Products Association International (“PPAI”), in the past five years the United States promotional products industry expanded greatly, with annual revenues of over $23 billion and growth of over 3% per year, the industry employs over 250,000 people in over 26,000 businesses. Similar to other advertising industries over the period, the growing economy fostered healthy consumer spending, so businesses respond by increasing expenditures on advertisements to capture the attention of shoppers and downstream clients. In addition, an increase in the total number of US businesses added to the industry’s potential pool of clientele, as new companies often use promotional products to endorse their business, product or service. Over the next five years, we anticipate continued growth in corporate profit and total advertising expenditure will boost industry demand, compelling companies to spend more on promotional products.
Every single consumer for every single product is a potential recipient of branded promotional products. Countless thousands of promotional products have a far greater reaching impact than most people might think, considering the following facts: (source: PPAI)
| ● | 83% of customers say they enjoy receiving a promotional product with an advertising message; |
| ● | After receiving a promotional product, 85% of customers say they do business with the company; |
| ● | 58% of customers keep a promotional product for up to four years; |
| ● | 89% of customers can recall the advertiser on a promotional product they received in the past two years; and |
| ● | A promotional product increases the effectiveness of other media by 44%. |
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Compliance with Government Regulation
We believe that we are and will continue to be in compliance in all material respects with applicable statutes and the regulations passed in the United States. There are no current orders or directions relating to our company with respect to the foregoing laws and regulations.
Environmental Regulations
We do not believe that we are or will become subject to any environmental laws or regulations of the United States. While our products and business activities do not currently violate any laws, any regulatory changes that impose additional restrictions or requirements on us or on our products or potential customers could adversely affect us by increasing our operating costs or decreasing demand for our products or services, which could have a material adverse effect on our results of operations.
Bankruptcy or Similar Proceedings
There has been no bankruptcy, receivership or similar proceeding pertaining to the Company.
Reorganizations, Purchase or Sale of Assets
On January 1, 2020, the Company determined that it would discontinue its business operations in North Dakota, specifically, ADM Enterprises LLC (the “Disposed Company”). The Company made a settlement with Ardell Mees to provide him with the assets of the Disposed Company and in exchange, Mr. Mees assumed all liabilities of the Disposed Company. As part of the transaction, Mr. Mees resigned from all positions with the Company and, in a private transaction, sold a significant portion of his ownership in the Company to Marc Johnson. The Company and Mr. Mees entered into an indemnification agreement whereby Mr. Mees indemnified the Company for any liabilities of the Disposed Company.
There have been no other material reclassifications, mergers, consolidations, purchases or sales of a significant amount of assets not done in the ordinary course of business pertaining to the Company.
Patents, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor Contracts
The Company claims no ownership of any patent or trademark, nor is it bound by any outstanding royalty agreements related thereto.
Company Information
The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Description of Property
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The Company currently maintains its corporate office at 5941 Posey Lane, Haltom City, TX 76117. Our telephone number is (817) 840-6271. The Company’s operation has approximately 17,000 square feet in area and is leased at a cost of approximately $6,500 per month. The lease, which is on a month to month basis, is with a company owned by an officer and director of the Company.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of this filing, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELAED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company accepted effective status as a reporting company on September 18, 2013 through the filing of an S-1 registration statement with the Securities and Exchange Commission. As of the filing date of this annual report, there is a minimal market for the Company’s stock.
Holders
As of December 31, 2021, there were 153,652,143 shares of common stock issued, issuable, and outstanding, held by 1,090 stockholders of record. The number of stockholders of record does not include beneficial owners of our common stock, whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.
Dividend Policy
We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. The declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then-current financial condition, results of operations, capital requirements, and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends.
Equity Compensation Plans
The Company does not sponsor any compensation plan under which equity securities are authorized for issuance.
Penny Stock
Our common stock is considered “penny stock” under the rules the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:
| ● | contains a description of the nature and level of risks in the market for penny stocks in both public offerings and secondary trading; |
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| ● | contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities’ laws; contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; |
| ● | contains a toll-free telephone number for inquiries on disciplinary actions; |
| ● | defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and |
| ● | contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation. |
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:
| ● | bid and offer quotations for the penny stock; |
| ● | the compensation of the broker-dealer and its salesperson in the transaction; |
| ● | the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the marker for such stock; and |
| ● | monthly account statements showing the market value of each penny stock held in the customer’s account. |
In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
Common and Preferred Shares Authorized
The Company was incorporated on January 4, 2001, at which time the Company authorized 300,000,000 shares of common stock with $0.001 par value and 30,000,000 shares of preferred stock with $0.001 par value.
In May 2013, the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital. The authorized common stock increased to 800,000,000 shares at a par value of $0.001 per share and preferred stock increased to 80,000,000 shares at a par value of $0.001 per share.
On June 5, 2013, the Company designated 80,000,000 preferred shares as Series A Convertible Preferred Stock which has the voting power equal to 100 common shares per each share of preferred stock. Each Series A Convertible Preferred Stock is convertible into 10 common shares at any time by the holder. As of December 31, 2021, there are 2,000,000 preferred shares outstanding.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Forward Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as “anticipate,” “expects,” “intends,” “plans,” “believes,” “seeks” and “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company’s stock. The following discussion and analysis should be read in conjunction with our financial statements and summary of selected financial data for ADM Endeavors, Inc. Such discussion represents only the best present assessment from our Management.
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Current and Planned Operations
Just Right Products, Inc.
Since 2016 Just Right Products, Inc.’s annual revenues have been growing at approximately 19.6% per year. We anticipate this continued growth rate as all production departments currently have more equipment which currently exceeds the workload potential of the employees. This gives Just Right Products the ability for expansion in revenue with the hiring of additional employees, and/or having the luxury of having backup equipment eliminating down time and the ability to perform large jobs with the help of part-time employees. The additional equipment is also part of a long-term expansion plan for the Company. Just Right Products, Inc. purchased 10 acres of raw land which will be used for expansion of the Company. The goal is to move the entire operation upon completion of a new facility.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 2021 TO THE YEAR ENDED DECEMBER 31, 2020
Results of Operations
Revenue
For the year ended December 31, 2021, the Company had revenues of $6,556,864 compared to $5,037,518 for the same period in 2020 from continuing operations. The increase in revenue of $1,519,346, or 30.2%, is primarily due to new YouTube and government customers and a return of existing customers.
Cost of Revenues
The cost of revenues for the year ended December 31, 2021 was $3,990,161 compared to $3,043,512 for the same period in 2020. Cost of revenues for 2021 was 60.9% of revenue compared to 60.4% of revenue for 2020. The primary cause of the increase as a percentage of revenue was a direct result of increased sales with a minimal increase in fixed expenses.
Operating Expenses
The general and administrative expenses were $1,641,648 for the year ended December 31, 2021 compared to $1,914,947 for the same period in 2020. The decrease in 2021 in general and administrative expenses was approximately 14.3% primarily due to decreases in stock-based compensation and professional fess along with cost cutting and more efficient use of resources.
The marketing and selling expenses were $209,979 for the year ended December 31, 2021 compared to $200,296 for the same period in 2020. The increase in 2021 in marketing and selling expenses was approximately 4.8% primarily due to new marketing technique and increase stockholder awareness.
Net Income (Loss) From Continuing Operations
The net income from continuing operations for the year ended December 31, 2021 was $737,348 compared to net loss from continuing operations of $119,922 for the same period in 2020.
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Discontinued Operations
The net income from discontinued operations for the year ended December 31, 2020 was $96,635. The majority of the net income from discontinued operations in 2020 is the gain on disposal of ADM Enterprises, Inc.
Liquidity and Capital Resources
General
At December 31, 2021, we had cash of $418,413. We have historically met our cash needs through a combination of cash flows from operating activities and proceeds from loans and financing by our officers and directors. Our cash requirements are generally for selling, general and administrative activities. We believe that our cashflow from operations and cash balance is sufficient to finance our cash requirements for expected operational activities, capital improvements, and repayment of debt through the next 12 months.
Our cash provided by operating activities of $498,545 for the year ended December 31, 2021, and we had $59,300 of cash used by operations during the same period in 2020. For the year ended December 31, 2021, net cash provided by operating activities of $498,545 consisted of net income from operations of $737,348, plus $61,454 of non-cash items, consisting primarily of depreciation and amortization of $59,283, less a gain on forgiveness of debt of $169,495 and $126,067 used in changes in operating assets and other operating activities. For the year ended December 31, 2020, net cash used in operating activities of $59,300 consisted of net loss from operations of $23,287, plus $330,344 of non-cash items, consisting primarily of depreciation and amortization of $67,275 and stock-based compensation of $231,875, less a gain on disposal of ADM Enterprises, Inc of $96,635, gain on forgiveness of debt of $10,000 and $259,722 used in changes in operating assets and other operating activities.
Cash used in investing activities during the year ended December 31, 2021, was $143,086 compared to $113,214 during the same period in 2020. For the year ended December 31, 2021, net cash used in investing activities consisted of $143,086 for the purchase of property and equipment. For the year ended December 31, 2020, net cash used in investing activities consisted of $100,455 for the purchase of property and equipment and $12,759 for the disposal of ADM Enterprises, Inc.
Cash used in financing activities was $214,410 for the year ended December 31, 2021, compared to cash provided by financing activities of $161,698 during the comparable period in 2020. For the year ended December 31, 2021, net cash used in financing activities consisted of $214,410 for the repayment of notes payable. For the year ended December 31, 2020, net cash provided by financing activities consisted of $179,495 of proceeds from notes payable and $17,797 for the repayment of notes payable.
As of December 31, 2021, the Company had working capital of $309,680, of which $218,017 of current liabilities was related to derivative liabilities. As of December 31, 2020, the Company had a work capital deficit of $257,821, of which $222,712 of current liabilities was related to derivative liabilities.
| For the years ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash provided by (used in) operating activities | $ | 498,545 | $ | (59,300 | ) | |||
| Cash used in investing activities | (143,086 | ) | (113,214 | ) | ||||
| Cash provided by (used in) financing activities | (214,410 | ) | 161,698 | |||||
| Net changes to cash | $ | 141,049 | $ | (10,816 | ) | |||
Going Concern
The Company considered its going concern disclosure requirements in accordance with ASC 240-40-50. The Company concluded that its history of negative working capital and negative cash flows from operating are conditions that raised substantial doubt about the Company’s ability to continue as a going concern. Without a successful plan in place from management these conditions could negatively impact the Company’s ability to meets its financial obligations over the next year. In response, the Company has implemented a plan to alleviate such substantial concern as follows. During the year ended December 31, 2021, the Company had net income from continuing operations of $737,348, cash flow from operations of $498,545 and working capital of $527,697 (excluding the non-cash derivative liability). The Company plans to continue to generate additional revenue, improve cash flows from operations and seek additional funding through debt and equity offerings. As a result, following this plan substantial doubt about the Company’s ability to continue as a going concern is alleviated.
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Off Balance Sheet Arrangements
The Company currently has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies and Estimates
Use of Estimates
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 reporting period. Accordingly, actual results could differ from those estimates. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, and related depreciation and amortization methods applied, and the fair value of the common stock used in stock-based compensation and derivative valuations.
Fair Value of Financial Instruments and Fair Value Measurements
The Company measures their financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses escrow liability and short-term loans the carrying amounts approximate fair value due to their short maturities.
We have adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
Revenue Recognition
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016, and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively. The core principle of this new revenue recognition guidance is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new guidance defines a five-step process to achieve this core principle. The new guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance provides for two transition methods, a full retrospective approach and a modified retrospective approach.
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On January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective method with no impact to the opening retained earnings and determined there were no changes required to its reported revenues as a result of the adoption. An analysis of contracts with customers under the new revenue recognition standard was consistent with the Company’s current revenue recognition model, whereby revenue is recognized primarily on the date products are shipped to the customer. The Company has enhanced its disclosures of revenue to comply with the new guidance.
We recognize revenue for merchandise sales, net of expected returns and sales tax, at the time of in-store purchase or delivery of the product to our guest. When merchandise is shipped to our guests, we estimate receipt based on historical experience. Revenue is deferred and a liability is established for sales returns based on historical return rates and sales for the return period. We recognize an asset and corresponding adjustment to cost of sales for our right to recover returned merchandise. At each financial reporting date, we assess our estimates of expected returns, refund liabilities and return assets. For merchandise sold in our stores and online, tender is accepted at the point of sale. When we receive payment before the guest has taken possession of the merchandise, the amount received is recorded as deferred revenue until the transaction is complete. Our performance obligations for unfulfilled merchandise orders are typically satisfied within one week. Shipping and handling fees charged to guests relate to fulfillment activities and are included in net sales with the corresponding costs recorded in cost of sales.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.
Recently Issued Accounting Pronouncements
We have decided to take advantage of the exemptions provided to emerging growth companies under the JOBS Act and as a result our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, delay compliance with new or revised accounting standards that have different effective dates for public and private companies until they are made applicable to private companies.
Company management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
We are susceptible to general economic conditions, natural catastrophic events and public health crises, and a potential downturn in advertising and marketing spending by advertisers could adversely affect our operating results in the near future.
Our business is subject to the impact of natural catastrophic events, such as earthquakes, or floods, public health crisis, such as disease outbreaks, epidemics, or pandemics, and all these could result in a decrease or sharp downturn of economies, including our markets and business locations in the current and future periods. The outbreak of the coronavirus (COVID-19) resulted in increased travel restrictions, and shutdown of businesses, which may cause slower recovery of the economy. We may experience impact from quarantines, market downturns and changes in customer behavior related to pandemic fears and impact on our workforce if the virus continues to spread. In addition, one or more of our customers, partners, service providers or suppliers may experience financial distress, delayed or defaults on payment, file for bankruptcy protection, sharp diminishing of business, or suffer disruptions in their business due to the outbreak. The extent to which the coronavirus impacts our results will depend on future developments and reactions throughout the world, which are highly uncertain and will include emerging information concerning the severity of the coronavirus and the actions taken by governments and private businesses to attempt to contain the coronavirus. It is likely to result in a potential material adverse impact on our business, results of operations and financial condition. Wider-spread COVID-19 globally could prolong the deterioration in economic conditions and could cause decreases in or delays in advertising spending and reduce and/or negatively impact our short-term ability to grow our revenues. Any decreased collectability of accounts receivable, bankruptcy of small and medium businesses, or early termination of agreements due to deterioration in economic conditions could negatively impact our results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As the Company is a “smaller reporting company,” this item is inapplicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by Item 8 are presented in the following order:
| 12 |
TABLE OF CONTENTS
| 13 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of ADM Endeavors, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ADM Endeavors, Inc. (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
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 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 audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our 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 regarding 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.
Critical Audit Matters
Critical audit matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/
PCAOB
#
We have served as the Company’s auditor since 2020
Houston, Texas
March 11, 2022
| 14 |
ADM Endeavors, Inc. and Subsidiaries
Consolidated Balance Sheets
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Accounts receivable, related party | - | |||||||
| Other receivables, related party | - | |||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Income tax payable | - | |||||||
| Current portion of notes payable -secured | ||||||||
| Convertible notes payable, net of discounts | ||||||||
| Derivative liabilities | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities | ||||||||
| Notes payable - secured, net of current portion | - | |||||||
| Total noncurrent liabilities | - | |||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ par value, shares authorized, shares outstanding as of December 31, 2021 and 2020 | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding at December 31, 2021 and 2020, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| 15 |
ADM Endeavors, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Years Ended December 31, 2021 and 2020
| 2021 | 2020 | |||||||
| Revenue | ||||||||
| School uniform sales | $ | $ | ||||||
| Promotional sales | ||||||||
| Total revenue | ||||||||
| Operating expenses | ||||||||
| Direct costs of revenue | ||||||||
| General and administrative | ||||||||
| Marketing and selling | ||||||||
| Total operating expenses | ||||||||
| Operating income (loss) | ( | ) | ||||||
| Other income (expense) | ||||||||
| Gain (loss) on change in fair value of derivative liabilities | ( | ) | ||||||
| Gain on insurance settlement | - | |||||||
| Gain on forgiveness of debt | ||||||||
| Other income | - | |||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expense) | ||||||||
| Income (loss) before tax provision | ( | ) | ||||||
| Provision for income taxes | ||||||||
| Net income (loss) from continuing operations | ( | ) | ||||||
| Net income from discontinued operations | - | |||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Net income (loss) per share for continuing operations - basic | $ | $ | ( | ) | ||||
| Net income (loss) per share for continuing operations - diluted | $ | $ | ( | ) | ||||
| Weighted average number of shares outstanding | ||||||||
| basic | ||||||||
| diluted | ||||||||
See accompanying notes to consolidated financial statements.
| 16 |
ADM Endeavors, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2021 and 2020
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operations: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | - | |||||||
| Bad debt expense | ||||||||
| Gain on disposal of ADM Enterprises, Inc. | - | ( | ) | |||||
| Change in derivative liability | ( | ) | ||||||
| Gain on forgiveness of debt | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts receivable, related party | ( | ) | ||||||
| Other receivable, related party | ( | ) | - | |||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Income tax payable | - | |||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows used in investing activities | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Disposal of ADM Enterprises, Inc. | - | ( | ) | |||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows used in financing activities: | ||||||||
| Proceeds from notes payable | - | |||||||
| Repayments on notes payable | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net change in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Common stock issued for acquisition of land | $ | $ | ||||||
| Note payable issued for property and equipment | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| 17 |
ADM Endeavors, Inc. and Subsidiaries
Consolidated Statements of Shareholders’ Equity
| Additional | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid In | Retained | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Total | ||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||
| Common stock issued for land | - | - | - | |||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at December 31, 2020 | ||||||||||||||||||||||||||||
| Common stock returned by officer | ( | ) | ( | ) | - | - | ||||||||||||||||||||||
| Net income | - | - | - | - | - | |||||||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| 18 |
ADM Endeavors, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2021
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
On January 4, 2001, we incorporated in North Dakota as ADM Enterprises, Inc. On May 9, 2006, the Company changed both its name to ADM Endeavors, Inc. (“ADM Endeavors,” or the “Company,” “we,” “us,” or “our”) and its domicile to the state of Nevada. On July 1, 2008, the Company acquired all of the assets of ADM Enterprises, LLC (“ADM Enterprises”), a sole proprietorship owned by Ardell and Tammera Mees, in exchange for newly issued shares of our common stock. As a result, ADM Enterprises became a wholly owned subsidiary of the Company. Even though the Company was incorporated on January 4, 2001, it had no operations until the share exchange agreement with ADM Enterprises on July 1, 2008. ADM provides installation services to grocery décor and design companies primarily in North Dakota.
In May 2013, the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital. The authorized common stock increased to shares at a par value of $ per share and preferred stock increased to shares at a par value of $per share.
On
April 19, 2018, the Company acquired Just Right Products, Inc. (“JRP”), a Texas corporation. JRP was incorporated on January
17, 2010. The acquisition of
JRP is focused on being an added value reseller with concentration in embroidery, screen printing, importing and uniforms for businesses, schools and individuals in the State of Texas.
On January 1, 2020, the Company determined that it would discontinue its business operations in North Dakota, specifically, ADM Enterprises (the “Disposed Company”). The Company made a settlement with Ardell Mees to provide him with the assets of the Disposed Company and in exchange, Mr. Mees assumed all liabilities of the Disposed Company. As part of the transaction, Mr. Mees resigned from all positions with the Company and, in a private transaction, sold a significant portion of his ownership in the Company to Marc Johnson. The Company and Mr. Mees entered into an indemnification agreement whereby Mr. Mees indemnified the Company for any liabilities of the Disposed Company.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiary JRP, at December 31, 2021. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Significant estimates are related to allowance for doubtful accounts, derivative liability and deferred tax valuations.
| 19 |
Stock-based compensation expense is recorded in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, for stock and stock options awarded in return for services rendered. The expense is measured at the grant-date fair value of the award and recognized as compensation expense on a straight-line basis over the service period, which is the vesting period. The Company estimates forfeitures that it expects will occur and records expense based upon the number of awards expected to vest.
Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
At December 31, 2021 and 2020, the Company had
Allowance for Doubtful Accounts
The
Company establishes an allowance for doubtful accounts to ensure trade and notes receivable are not overstated due to non-collectability.
The Company’s allowance is based on a variety of factors, including age of the receivable, significant one-time events, historical
experience, and other risk considerations. The Company had
Inventory
Inventory
is valued at the lower of cost or net realizable value. Cost is determined using a weighted-average cost method. The Company decreases
the value of inventory for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value,
based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand
and market conditions. The Company has inventory of $
Three
vendors accounted for approximately
Derivative Instruments
Derivatives are measured at their fair value on the balance sheet. In determining the appropriate fair value, the Company uses the Black-Scholes-Merton option pricing model. Changes in fair value are recorded in the consolidated statements of operations.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with U.S. GAAP. For certain of our financial instruments, including cash, accounts payable, accrued expenses, and short-term loans the carrying amounts approximate fair value due to their short maturities.
We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
| 20 |
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
The Company adopted the provisions of FASB ASC 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements.
The
Company had
Fixed Assets
Fixed assets are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life. Upon the sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in consolidated statements of operations.
| Classification | Estimated Useful Lives | |
| Equipment | ||
| Leasehold improvements | ||
| Furniture and fixtures | ||
| Websites |
Goodwill
Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible assets of businesses acquired. Goodwill is not amortized, but instead assessed for impairment. We perform our annual impairment review of goodwill in our fiscal fourth quarter or when a triggering event occurs between annual impairment tests. No impairment charges were recorded in fiscal 2020 or 2021 as a result of our qualitative assessments over our single reporting segment.
The Company performs a qualitative assessment for each of its reporting units to determine if the two-step process for impairment testing is required. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would then evaluate the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the first step, the fair value for the reporting unit is compared to its book value including goodwill. In the case that the fair value of the reporting unit is less than book value, a second step is performed which compares the implied fair value of the reporting unit’s goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values of the reporting unit and the net fair values of the identifiable assets and liabilities of such reporting unit. If the implied fair value of the goodwill is less than the book value, the difference is recognized as impairment.
Impairment of Long-lived Assets
The Company follows paragraph 360-10-05-4 of the FASB ASC for its long-lived assets. The Company’s long-lived assets, such as intellectual property, are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
| 21 |
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The
Company determined that there were
Revenue Recognition
We recognize revenue for merchandise sales, net of expected returns and sales tax, at the time of in-store purchase or delivery of the product to our guest, which is our only performance obligation. When merchandise is shipped to our guests, we estimate receipt based on historical experience. Revenue is deferred and a liability is established for sales returns based on historical return rates and sales for the return period. We recognize an asset and corresponding adjustment to cost of sales for our right to recover returned merchandise. At each financial reporting date, we assess our estimates of expected returns, refund liabilities and return assets. For merchandise sold in our stores and online, tender is accepted at the point of sale. When we receive payment before the guest has taken possession of the merchandise, the amount received is recorded as deferred revenue until the transaction is complete. Our performance obligations for unfulfilled merchandise orders are typically satisfied within one week. Shipping and handling fees charged to guests relate to fulfillment activities and are included in net sales with the corresponding costs recorded in cost of sales.
Cost of Sales
Cost of sales includes the actual cost of merchandise sold and services performed; the cost of transportation of merchandise from vendors to our distribution network, stores, or customers; shipping and handling costs from our stores or distribution network to customers; and the operating cost and depreciation of our sourcing and distribution network and online fulfillment centers.
The Company computes basic and diluted income (loss) per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic loss per share is computed by dividing net loss available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted loss per share is computed by dividing net loss available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.
The dilutive effect of outstanding convertible securities and preferred stock is reflected in diluted earnings per share by application of the if-converted method.
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Basic earnings (loss) per common share | ||||||||
| Numerator: | ||||||||
| Net income (loss) available to common shareholders | $ | $ | ( | ) | ||||
| Denominator: | ||||||||
| Weighted average common shares outstanding | ||||||||
| Basic earnings (loss) per common share | $ | $ | ( | ) | ||||
| Diluted earnings (loss) per common share | ||||||||
| Numerator: | ||||||||
| Net income (loss) available to common shareholders | $ | $ | ( | ) | ||||
| Add convertible debt interest | ||||||||
| Net income (loss) available to common shareholders | $ | $ | ( | ) | ||||
| Denominator: | ||||||||
| Weighted average common shares outstanding | ||||||||
| Preferred shares | ||||||||
| Convertible debt | ||||||||
| Adjusted weighted average common shares outstanding | ||||||||
| Diluted earnings (loss) per common share | $ | $ | ( | ) | ||||
| 22 |
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.
The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
Tax
benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position
taken on an income tax return. The Company has no liability for uncertain tax positions as of December 31, 2021 and 2020. Interest and
penalties, if any, related to unrecognized tax benefits would be recognized as interest expense. The Company does
Segment Information
In
accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information,” the
Company is required to report financial and descriptive information about its reportable operating segments. The Company has
Recent Accounting Pronouncements
The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
NOTE 3 – GOING CONCERN
The
Company considered its going concern disclosure requirements in accordance with ASC 240-40-50. The Company concluded that its history
of negative working capital and negative cash flows from operating are conditions that raised substantial doubt about the Company’s
ability to continue as a going concern. Without a successful plan in place from management these conditions could negatively impact the
Company’s ability to meets its financial obligations over the next year. In response, the Company has implemented a plan to alleviate
such substantial concern as follows. During the year ended December 31, 2021, the Company had net income from continuing operations of
$
| 23 |
NOTE 4 – COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.
Franchise Agreement
The
Company has a franchise agreement effective February 19, 2014 expiring in February 2024, with a right to renew for an additional
years to operate stores and websites in the
Company’s exclusive territory.
During
the years ended December 31, 2021 and 2020, the Company paid $
Uniform Supply Agreement
The
Company has an agreement to be the exclusive provider of school uniforms and logos for a charter school.
During
the years ended December 31, 2021 and 2020, the Company paid $
NOTE 5 – PROPERTY AND EQUIPMENT
Fixed assets are stated at cost, less accumulated depreciation for continuing operations at December 31, 2021 and 2020 consisted of the following:
| December
31, 2021 | December
31, 2020 | |||||||
| Land | $ | $ | ||||||
| Equipment | ||||||||
| Autos and trucks | ||||||||
| Construction in process | ||||||||
| Land and building – rental property | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for continuing operations for the years ended December 31, 2021 and 2020 was $
NOTE 6 – CONVERTIBLE NOTE PAYABLE AND NOTES PAYABLE
Convertible Note Payable
On
April 1, 2018, the Company assumed a convertible promissory note in connection with the reverse acquisition. The Company received total
funding of $
| 24 |
The
note is convertible into common stock at a price of
The
note balance was $
Derivative liabilities
The
conversion features embedded in the convertible notes were evaluated to determine if such conversion feature should be bifurcated from
its host instrument and accounted for as a freestanding derivative. In the convertible notes with variable conversion terms, the conversion
feature was accounted for as a derivative liability. The derivatives associated with the term convertible notes were recognized as a
discount to the debt instrument and the discount is amortized over the expected life of the notes with any excess of the derivative value
over the note payable value recognized as additional interest expense at the issuance date. Amortization of the debt discount totaled
$
The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2021 and 2020:
| Fair value at | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | December 31, 2021 | |||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative liabilities | $ | - | $ | - | $ | $ | ||||||||||
| Fair value at | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | December 31, 2020 | |||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
As
of December 31, 2021 and 2020, the derivative liability was calculated using the Black-Scholes method over the expected terms of the
convertible debt and the following assumptions: volatility of
The table below presents the change in the fair value of the derivative liability during the year ended December 31, 2021 and 2020:
| Fair value at December 31, 2019 | $ | |||
| Loss on change in fair value of derivative liabilities | ||||
| Fair value at December 31, 2020 | ||||
| Gain on change in fair value of derivative liabilities | ( | ) | ||
| Fair value at December 31, 2021 | $ |
Notes Payable
On
April 5, 2020, the Company received a Small Business Administration (“SBA”) loan under the government’s assistance
related to COVID-19. The SBA loan was for $
| 25 |
On
April 29, 2020, the Company received the government assistance check of $
On
October 16, 2020, the Company entered into a secured promissory note in the amount of $
On
August 3, 2021, the Company entered into a secured promissory note in the amount of $
As
of December 31, 2021, the secured notes payable balance was $
Future maturities of debt as of December 31, 2021 are as follows:
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total | $ |
NOTE 7 – ACCRUED EXPENSES
The
Company had total accrued expenses for continuing operations of $
| December 31, 2021 | December 31, 2020 | |||||||
| Credit cards payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Other accrued expenses | ||||||||
| Total accrued expenses | $ | $ | ||||||
NOTE 8 – RELATED PARTY TRANSACTIONS
The
majority shareholder, director and officer, is the owner of M M Real Estate, Inc. (“M M”). M M leases the
Haltom City, Texas facility to the Company. The Company incurred lease expense of $
On
July 28, 2020, Just Right Products, Inc., a wholly owned subsidiary of ADM Endeavors, Inc. (collectively, the “Company”)
entered into an asset purchase agreement (the “APA”) with MM Real Estate, Inc. (“MM”). MM is owned
by Marc Johnson, the Company’s CEO, CFO and Chairman. The Company utilized the APA to acquire
A
Consultant engaged by the Company 2020 is the owner of 24.7.365 Hockey, Inc., a customer of the Company. During the year ended December
31, 2020, 24.7.365 Hockey, Inc. made up approximately
Employment Agreements
On January 9, 2020, Motasem Khanfur, the controller of the Company, was appointed as chief financial officer of the Company. As part of his compensation, Mr. Khanfur was awarded shares of common stock. On May 8, 2020, Motasem Khanfur resigned as chief financial officer of the Company. He will continue to work as an accountant with the subsidiary, Just Right Products, Inc. Marc Johnson, the Company’s chief executive officer, will assume the responsibilities of chief financial officer.
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On January 9, 2020, Sarah Nelson was appointed as chief operating officer and director of the Company. As part of her compensation, Ms. Nelson was awarded shares of common stock.
NOTE 9 – STOCKHOLDERS’ EQUITY
Our
Articles of Incorporation authorize the issuance of shares
of common stock and shares
of preferred stock with $par
values per share. There were and outstanding
shares of common stock at December 31, 2021 and 2020, respectively. There were outstanding
shares of preferred stock as of December 31, 2021 and 2020, respectively.
On December 6, 2021, Marc Johnson, the Company’s CEO, agreed to return and cancel shares of common stock.
On May 1, 2018, the Company entered into a consulting agreement for financial services and business development for a term of one year and agreed to issue common shares earned on a monthly basis to an officer’s family member. This agreement was renewed on May 30, 2020. During the year ended December 2020, the Company issued shares related to the agreements. The Company recorded expense of $and $for the years ended December 31, 2021 and 2020, respectively.
On January 9, 2020, Andreana McKelvey resigned as director. She was awarded shares of common stock of the Company. The Company recorded $ as stock-based compensation.
On
April 24, 2020, the Company entered into a consulting agreement for financial services and agreed to issue shares of common stock.
The shares were valued at $
On
July 28, 2020, Just Right Products, Inc., a wholly owned subsidiary of ADM Endeavors, Inc. (collectively, the “Company”)
entered into an asset purchase agreement (the “APA”) with MM Real Estate, Inc. (“MM”). MM is owned
by Marc Johnson, the Company’s CEO, CFO and Chairman. The Company utilized the APA to acquire
On
September 24, 2020, the Company issued shares of common stock to legal counsel for services. The shares were valued at $
NOTE 10 – CUSTOMER CONCENTRATION
Concentration of revenue
During
the year ended December 31, 2021, two customers made up approximately
Concentration of accounts receivable
Two
customers accounted for
NOTE 11 – LEASE LIABILITY
Operating Leases
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The
Company leases approximately
The
Company has approximately
NOTE 12 – DISCONTINUED OPERATIONS
On January 1, 2020, the Company determined that it would discontinue its business operations in North Dakota, specifically, ADM Enterprises LLC (the “Disposed Company”). The Company made a settlement with Ardell Mees to provide him with the assets of the Disposed Company and in exchange, Mr. Mees assumed all liabilities of the Disposed Company. As part of the transaction, Mr. Mees resigned from all positions with the Company and, in a private transaction, sold a significant portion of his ownership in the Company to Marc Johnson. The Company and Mr. Mees entered into an indemnification agreement whereby Mr. Mees indemnified the Company for any liabilities of the Disposed Company.
The
Disposed Company reported net income of $
Reconciliation of the Items Constituting Profit and (Loss)
from Discontinued Operations
For the Years Ended December 31,
| 2021 | 2020 | |||||||
| Revenue | $ | $ | ||||||
| Direct costs of revenue | - | - | ||||||
| General and administrative | - | - | ||||||
| Marketing and selling | - | - | ||||||
| Income from operations | - | - | ||||||
| Gain from forgiveness of debt | - | - | ||||||
| Gain on disposal | - | |||||||
| Net income | $ | $ | ||||||
NOTE 13 – INCOME TAXES
The
Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying
the United States Federal tax rate of
| December 31, 2021 | December 31, 2020 | |||||||
| Tax expense (benefit) at the statutory rate | $ | $ | ( | ) | ||||
| Permanent differences | ( | ) | ( | ) | ||||
| Other | ( | ) | ||||||
| Change in valuation allowance | ||||||||
| Total | $ | $ | ||||||
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.
The Company has no material deferred tax assets and liabilities at December 31, 2021 and 2020.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
At the end of the period covered by this Annual Report on Form 10-K for the fiscal year ended December 31, 2021 an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the Chief Operating Officer (COO), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO, CFO and COO have concluded that as of the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO, CFO and COO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Changes to Internal Controls and Procedures over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the annual period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). Management has assessed the effectiveness of internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. A material weakness, as defined by SEC rules, is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses in internal control over financial reporting that were identified are:
a) The Company’s lack of independent directors, the Company intends to appoint additional independent directors;
b) Lack of in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;
c) Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting;
d) Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes.
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As a result of the existence of these material weaknesses as of December 31, 2021, management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2021, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only management’s report in this annual report.
Changes to Internal Controls and Procedures over Financial Reporting
We intend that our internal control over financial reporting will be modified during our most recent year by adding additional advisors to address deficiencies in the financial closing, review and analysis process, which will improve our internal control over financial reporting.
Management’s Remediation Plans
To remediate our internal control weaknesses, management intends to implement the following measures:
| ● | The Company will add sufficient number of independent directors to the board and appoint additional member(s) to the Audit Committee. | |
| ● | The Company will add sufficient accounting personnel to properly segregate duties and to affect a timely, accurate preparation of the financial statements. | |
| ● | The Company will hire staff technically proficient at applying U.S. GAAP to financial transactions and reporting. | |
| ● | Upon the hiring of additional accounting personnel, the Company will develop and maintain adequate written accounting policies and procedures. |
The additional hiring is contingent upon the Company’s efforts to obtain additional funding through equity or debt and the results of its operations. Management expects to secure funds in the coming fiscal year but provides no assurances that it will be able to do so.
ITEM 9B. OTHER INFORMATION
On May 8, 2020, Motasem Khanfur resigned as chief financial officer of the Company. He will continue to work as an accountant with the subsidiary, Just Right Products, Inc. Marc Johnson, the Company’s chief executive officer, will assume the responsibilities of chief financial officer.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names and ages of our current directors and executive officers. Also, the principal offices and positions with us held by each person and the date such person became our director, executive officer. Our executive officers are appointed by our Board of Directors. Our directors serve until the earlier occurrence of the election of his or her successor at the next meeting of stockholders, death, resignation or removal by the Board of Directors. There are no family relationships among our directors, executive officers, director nominees.
| Name | Age | Position | ||
| Marc Johnson | 52 | Chief Executive Officer, Chief Financial Officer and Chairman | ||
| Sarah Nelson | 44 | Chief Operating Officer and Director |
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Marc Johnson, CEO and Chairman. Mr. Johnson earned a Business Administration Degree from Texas Christian University (TCU) in 1993. Mr. Johnson has been in the promotional products industry for over 35 years and started his first business in high school. Upon graduation from TCU, Mr. Johnson sold his first business to pursue a full-time career in the promotional products industry. Mr. Johnson excelled in sales and built his customer annual sales to over $1 million in his first three years. Mr. Johnson’s talents were noticed by a customer who convinced him to leave and start a new promotional products company with his customers’ financial backing. In 2010, Mr. Johnson bought out his financial backer and started Just Right Products, Inc.
Sarah Nelson, COO and Director. Ms. Nelson has a background in non-profit fundraising, most recently for a youth hockey organization in northern Colorado. Currently, she has her own company, SLN Media Company, which assists small businesses with their social media, marketing and advertising brands. Ms. Nelson has Bachelor of Arts degree in Environmental Design, from Texas AM University, earned in 1998.
Our directors are elected at the annual meeting of the shareholders, with vacancies filled by the Board of Directors, and serve until their successors are elected and qualified, or their earlier resignation or removal. Officers are appointed by the board of directors and serve at the discretion of the board of directors or until their earlier resignation or removal. Any action required can be taken at any annual or special meeting of stockholders of the corporation which may be taken without a meeting, without prior notice and without a vote, if consent of consents in writing setting forth the action so taken, shall be signed by the holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office, its principle place of business, or an officer or agent of the corporation having custody of the book in which the proceedings of meetings are recorded.
Indemnification of Directors and Officers
Nevada Corporation Law allows for the indemnification of officers, directors, and any corporate agents in terms sufficiently broad to indemnify such persons under certain circumstances for liabilities, including reimbursement for expenses, incurred arising under the 1933 Act. The Bylaws of the Company provide that the Company will indemnify its directors and officers to the fullest extent authorized or permitted by law and such right to indemnification will continue as to a person who has ceased to be a director or officer of the Company and will inure to the benefit of his or her heirs, executors and Consultants; provided, however, that, except for proceedings to enforce rights to indemnification, the Company will not be obligated to indemnify any director or officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred will include the right to be paid by the Company the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition.
The Company may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Company similar to those conferred to directors and officers of the Company. The rights to indemnification and to the advancement of expenses are subject to the requirements of the 1940 Act to the extent applicable.
Furthermore, the Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another company against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Nevada General Corporation Law.
Board Composition
Our bylaws provide that the Board of Directors shall consist of one or more members. Each director of the Company serves for a term of one year or until a successor is elected at the Company’s annual shareholders meeting and is qualified, subject to removal by the Company’s shareholders. Each officer serves, at the pleasure of the Board of Directors, for a term of one year and until a successor is elected at the annual meeting of the Board of Directors and is qualified.
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Involvement on Certain Material Legal Proceedings During the Last Five Years
No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.
No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.
No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.
No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.
Directors’ and Officers’ Liability Insurance
ADM Endeavors, Inc. does not have directors’ and officers’ liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers.
Code of Ethics
We intend to adopt a code of ethics that applies to our officers, directors and employees, including our principal executive officer and principal accounting officer, but have not done so to date due to our relatively small size. We intend to adopt a written code of ethics in the near future.
Corporate Governance Board Independence
Our Board of Directors consists of two directors and has not established a Nominating or Governance Committees as standing committees. The Board does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that has requirements that a majority of the board of directors be independent.
Due to our lack of operations and size, and since we are not currently listed on a national securities exchange, we are not subject to any listing requirements mandating the establishment of any particular committees; all functions of a nominating/governance committee were performed by our whole board of directors. Our board of directors intends to appoint such persons and form such committees as are required to meet the corporate governance requirements imposed by the national securities exchanges as necessary. Our board of directors does not believe that it is necessary to have such committees at the early stage of the company’s development, and our board of directors believes that the functions of such committees can be adequately performed by the members of our board of directors.
We believe that members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.
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Board Leadership Structure and the Board’s Role in Risk Oversight.
The Board of Directors is led by the Chairman who is also the controlling shareholder. The Company has two directors, and a Chief Executive Officer and a Chief Financial Officer (roles currently filled by a single executive officer) reporting to the Board of Directors. Our structure provides the Company with multiple leaders who represent the Company to our stockholders, regulators, business partners and other stakeholders, among other reasons set forth below.
| ● | This structure creates efficiency in the preparation of the meeting agendas and related Board materials as the Company’s Chief Executive Officer works directly with those individuals preparing the necessary Board materials and is more connected to the overall daily operations of the Company. Agendas are also prepared with the permitted input of the full Board of Directors allowing for any concerns or risks of any individual director to be discussed as deemed appropriate. The Board believes that the Company has benefited from this structure is in the best interest of the stockholders. | |
| ● | The Company believes this structure allows for efficient and effective oversight, given the Company’s relatively small size, its corporate strategy and focus. |
The Board of Directors does not have a specific role in risk oversight of the Company. The Chairman, President and Chief Executive Officer and other executive officers and employees of the Company provide the Board of Directors with information regarding the Company’s risks.
Family Relationships
Marc Johnson and Sarah Nelson are siblings.
ITEM 11. EXECUTIVE COMPENSATION
Our Board of Directors has not established a separate compensation committee. Instead, the Board of Directors reviews and approves executive compensation policies and practices, reviews salaries and bonuses for our officer(s), decides on benefit plans, and considers other matters as may, from time to time, be referred to it. We do not currently have a Compensation Committee Charter. Our Board continues to emphasize the important link between our performance, which ultimately benefits all shareholders, and the compensation of our executives. Therefore, the primary goal of our executive compensation policy is to closely align the interests of the shareholders with the interests of the executive officer(s). In order to achieve this goal, we attempt to (i) offer compensation opportunities that attract and retain executives whose abilities and skills are critical to our long-term success and reward them for their efforts in ensuring our success and (ii) encourage executives to manage from the perspective of owners with an equity stake in us.
SUMMARY COMPENSATION TABLE
| Non- | Non- | |||||||||||||||||||||||||||||||||||
| equity | qualified | |||||||||||||||||||||||||||||||||||
| Incentive | Deferred | All | ||||||||||||||||||||||||||||||||||
| Plan | Compen- | Other | ||||||||||||||||||||||||||||||||||
| Name and | Stock | Option | Compen- | sation | Compen- | |||||||||||||||||||||||||||||||
| Principal | Salary | Bonus | Awards | Awards | sation | Earnings | sation | Total | ||||||||||||||||||||||||||||
| Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
Marc Johnson, CEO and Director (1) | 2021 | $ | 250,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 250,000 | |||||||||||||||||||
| 2020 | $ | 250,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 250,000 | ||||||||||||||||||||
Ardell Mees, CEO, CFO and Director (2) | 2021 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||
| 2020 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||
Motasem Khanfur, CFO (3) (4) | 2021 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||
| 2020 | $ | 18,524 | $ | - | $ | 10,000 | $ | - | $ | - | $ | - | $ | - | $ | 28,524 | ||||||||||||||||||||
Sarah Nelson, COO (3) | 2021 | $ | 36,000 | $ | - | $ | 20,000 | $ | - | $ | - | $ | - | $ | - | $ | 56,000 | |||||||||||||||||||
| 2020 | $ | 36,000 | $ | - | $ | 20,000 | $ | - | $ | - | $ | - | $ | - | $ | 56,000 | ||||||||||||||||||||
| Andreana McKelvery, Director (2) | 2021 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||
| 2020 | $ | - | $ | - | $ | 5,000 | $ | - | $ | - | $ | - | $ | - | $ | 5,000 | ||||||||||||||||||||
(1) Appointed on April 19, 2018 as COO and Director. On January 8, 2020, resigned as COO and appointed as CEO.
(2) Resigned on January 8, 2020.
(3) Appointed on January 9, 2020.
(4) Resigned on May 8, 2020.
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Employment Agreements
On January 8, 2020, Mr. Khanfur executed a two-year agreement with the Company which provides an annual salary of $50,000 and an issuance of 500,000 shares of common stock of the Company. Mr. Khanfur resigned from the CFO position on May 8, 2020 because of potential conflicts from outside accounting work done for other entities. He continues to provide services to the subsidiary Just Right Products, Inc.
On January 8, 2020, Ms. Nelson executed a two-year agreement with the Company which provides an annual salary of $36,000.
Retirement
There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the Company or any of its subsidiaries, if any.
Stock Option Plans
There are no stock option plans.
Board of Directors
The Company’s Board of Director’s are not compensated for their services nor are they reimbursed for any costs incurred while performing their duties.
OUTSTANDING EQUITY AWARDS
As of December 31, 2020, the following named executive officers had the following unexercised options, stock that has not vested, and equity incentive plan awards:
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options # Exercisable | Number of Options Unexercisable |
Equity Plan Awards: Number of Securities Underlying Unexercised Options |
Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock Not Vested | Value of Shares or Units Market Units Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares Units or Other Rights Not Vested | Value of Unearned Shares Units or Other Rights Not Vested | |||||||||||||||||||||||||||
| Marc Johnson, CEO, CFO and Director | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Sarah Nelson, COO and Director | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
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STOCK OPTIONS
No grants of stock options or stock appreciation rights were made during the years ended December 31, 2021 and 2020.
LONG-TERM INCENTIVE PLANS
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any 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.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
As of December 31, 2021, we had 153,652,143 shares of common stock issued, issuable and outstanding. The following table sets forth information known to us as of December 31, 2020 relating to the beneficial ownership of shares of our common stock by:
| ● | each person who is known by us to be the beneficial owner of more than 5% of our outstanding common stock; | |
| ● | each director; | |
| ● | each named executive officer; and | |
| ● | all named executive officers and directors as a group. |
Unless otherwise indicated, the business address of each person listed is in care of 5941 Posey Lane, Haltom City, TX 76117. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.
The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this Annual Report by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group. Except as otherwise indicated, the address of each of the stockholders listed below is: 5941 Posey Lane, Haltom City, Texas 76117.
| Number of | ||||||||||
| Shares | Percent | |||||||||
| Name and Address of | Beneficially | of | ||||||||
| Title of Class | Beneficial Owner | Owned (1) | Class (2) | |||||||
| Common Stock | Marc Johnson (4) | 54,676,548 | 35.58 | % | ||||||
| Common Stock | MM Real Estate, Inc. (3) | 22,232,143 | 14.47 | % | ||||||
| Common Stock | Sarah Nelson (3) (4) | 1,426,587 | .93 | % | ||||||
| Common Stock | All directors and named executive officers as a group (2 persons) | 78,335,278 | 50.98 | % | ||||||
| Preferred Stock | Marc Johnson (4) | 2,000,000 | 100.0 | % | ||||||
| Preferred Stock | Sarah Nelson (4) | - | - | |||||||
| Preferred Stock | All directors and named executive officers as a group (4 persons) | 2,000,000 | 100.0 | % | ||||||
| (1) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power to the shares of the Company’s common stock. | |
| (2) | As of December 31, 2021, a total of 153,652,143 shares of the Company’s common stock and 2,000,000 shares of the Company’s preferred stock are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each Beneficial Owner listed, any options exercisable within 60 days have been also included for purposes of calculating their percent of class. | |
| (3) | Marc Johnson is the owner of MM Real Estate, Inc. | |
| (4) | Officer and director. |
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Changes in Control
Our management is not aware of any arrangements which may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Office Space
The majority shareholder, director and officer, is the owner of M M Real Estate, Inc. (“M M”). M M leases the Haltom City, Texas facility to the Company. The monthly lease payment is currently $6,500. The Company incurred lease expense of approximately $118,000 and $78,000 to M M for the years ended December 31, 2021 and 2020, respectively. The Company incurred equipment rental expense to MM of $9,000 for the years ended December 31, 2021 and 2020.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate audit and review fees incurred for the fiscal years ended December 31, 2021 and 2020 were $54,500 and $56,700. Such fees included work completed for our annual audit and for the review of our financial statements included in our Forms 10-K and 10-Q.
Tax Fees
For the fiscal year ended December 31, 2021, there were $3,000 billed for services for tax compliance, tax advice, and tax planning work by our principal accountants.
All Other Fees
None.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
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SIGNATURES
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.
| ADM ENDEAVORS, INC. | ||
| Date: March 15, 2022 | By: | /s/ Marc Johnson |
| Name: | Marc Johnson | |
| Title: | Principal Executive Officer and Principal Accounting 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.
| SIGNATURE | TITLE | DATE | ||
| /s/ Marc Johnson | Director | March 15, 2022 | ||
| Marc Johnson | ||||
| /s/ Sarah Nelson | Director | March 15, 2022 | ||
| Sarah Nelson |
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