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SPECIFICITY,
INC |
BALANCE
SHEETS |
(UNAUDITED) |
| |
| | | |
| | |
| |
As
of September 30,
2022 | | |
As
of December 31,
2021 | |
Assets: | |
| | |
| |
Current
assets | |
| | | |
| | |
Cash
and cash equivalents | |
$ | 172,594 | | |
$ | 637,841 | |
Prepaid
expenses and other current assets | |
| 30,632 | | |
| 6,851 | |
Total
current assets | |
| 213,226 | | |
| 644,692 | |
| |
| | | |
| | |
Property
and equipment, net | |
| 73,362 | | |
| 70,423 | |
Right
of use asset | |
| 74,911 | | |
| - | |
| |
| | | |
| | |
Total
assets | |
$ | 361,499 | | |
$ | 715,115 | |
| |
| | | |
| | |
Liabilities
and Stockholders’ Deficit: | |
| | | |
| | |
Current
liabilities: | |
| | | |
| | |
Account
payable | |
$ | 68,350 | | |
$ | 24,511 | |
Accrued
liabilities | |
| 23,681 | | |
| 70,423 | |
Advances,
related party | |
| 33,000 | | |
| - | |
Right
of use liability | |
| 43,260 | | |
| - | |
Total
current liabilities | |
| 168,291 | | |
| 94,934 | |
| |
| | | |
| | |
Long
term liabilities - | |
| | | |
| | |
Related
party notes payable | |
| 990,000 | | |
| 1,000,000 | |
Right
of use liability, net of current portion | |
| 31,651 | | |
| - | |
| |
| | | |
| | |
Total
liabilities | |
| 1,189,942 | | |
| 1,094,934 | |
| |
| | | |
| | |
Commitments
and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’
Deficit: | |
| | | |
| | |
Preferred
stock, Series A; $0.001 par value; 1,000,000 shares authorized; 1,000,000 shares issued and outstanding as of September 30,
2022 and December 31, 2021 | |
| 1,000 | | |
| 1,000 | |
Preferred
stock, Series B; $0.001
par value; 260,000
shares authorized; zero
0 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | |
| 650,000 | | |
| 650,000 | |
Common
stock, $0.001 par value; 50,000,000 shares authorized, 9,867,183 and 8,654,701 shares issued and outstanding as of September 30,
2022 and December 31, 2021, respectively | |
| 9,867 | | |
| 8,655 | |
Additional
paid-in capital | |
| 3,252,712 | | |
| 1,418,896 | |
Subscriptions
receivable | |
| (1,500 | ) | |
| (1,500 | ) |
Accumulated
deficit | |
| (4,740,522 | ) | |
| (2,456,870 | ) |
Total
stockholders’ deficit | |
| (828,443 | ) | |
| (379,819 | ) |
Total
liabilities and stockholders’ deficit | |
$ | 361,499 | | |
$ | 715,115 | |
See
accompanying notes to the financial statements.
SPECIFICITY,
INC
STATEMENTS
OF OPERATIONS
(UNAUDITED)
| |
| | | |
| | | |
| | | |
| | |
| |
For
the
Three Months Ended
September 30,
2022 | | |
For
the
Three Months Ended
September 30,
2021 | | |
For
the
Nine Months Ended
September 30,
2022 | | |
For
the
Nine Months Ended
September 30,
2021 | |
Revenue,
net | |
$ | 662,971 | | |
$ | 214,106 | | |
$ | 933,821 | | |
$ | 540,412 | |
Cost
of revenues | |
| 338,870 | | |
| 87,614 | | |
| 489,760 | | |
| 240,418 | |
Gross
profit | |
| 324,101 | | |
| 126,492 | | |
| 444,061 | | |
| 299,994 | |
| |
| | | |
| | | |
| | | |
| | |
Operating
expenses: | |
| | | |
| | | |
| | | |
| | |
Sales
and marketing | |
| 76,205 | | |
| 3,845 | | |
| 89,085 | | |
| 23,732 | |
General
and administrative expenses | |
| 1,106,802 | | |
| 260,112 | | |
| 2,441,931 | | |
| 704,748 | |
Officer
compensation | |
| 65,687 | | |
| 20,272 | | |
| 161,217 | | |
| 1,163,235 | |
Total
operating expenses | |
| 1,248,694 | | |
| 284,229 | | |
| 2,692,233 | | |
| 1,891,715 | |
| |
| | | |
| | | |
| | | |
| | |
Loss
from operations | |
| (924,593 | ) | |
| (157,737 | ) | |
| (2,248,172 | ) | |
| (1,591,721 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other
income (expense): | |
| | | |
| | | |
| | | |
| | |
Interest
expense - related party | |
| (24,932 | ) | |
| (35,417 | ) | |
| (35,480 | ) | |
| (35,417 | ) |
Total
other income (expense) | |
| (24,932 | ) | |
| (35,417 | ) | |
| (35,480 | ) | |
| (35,417 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net
loss | |
$ | (949,525 | ) | |
$ | (193,154 | ) | |
$ | (2,283,652 | ) | |
$ | (1,627,138 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic
and diluted net loss per common share attributable to common stockholders | |
$ | (0.10 | ) | |
$ | (0.02 | ) | |
$ | (0.25 | ) | |
$ | (0.21 | ) |
Weighted-average
number of shares used in computing basic and diluted per share amounts | |
| 9,660,352 | | |
| 7,836,232 | | |
| 9,303,672 | | |
| 7,803,822 | |
See
accompanying notes to the financial statements.
SPECIFICITY,
INC
STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(UNAUDITED)
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Total | |
| |
Preferred
Stock,
Series A | | |
Preferred
Stock,
Series B | | |
Common
Stock | | |
Additional
Paid-in | | |
Subscription | | |
Accumulated | | |
Stockholders’
Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Receivable | | |
Deficit | | |
(Deficit) | |
Balance,
December 31, 2021 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 7,670,000 | | |
$ | 7,670 | | |
$ | 76,330 | | |
$ | (422,500 | ) | |
$ | (75,465 | ) | |
$ | 237,035 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance
of common stock for cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| 281,667 | | |
| 282 | | |
| 357,218 | | |
| 22,500 | | |
| - | | |
| 380,000 | |
Issuance
of preferred stock for cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 200,000 | | |
| - | | |
| 200,000 | |
Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,627,138 | ) | |
| (1,627,138 | ) |
Balance,
September 30, 2021 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 7,951,667 | | |
$ | 7,952 | | |
$ | 433,548 | | |
$ | (200,000 | ) | |
$ | (1,702,603 | ) | |
$ | (810,103 | ) |
| |
Preferred
Stock,
Series A | | |
Preferred
Stock,
Series B | | |
Common
Stock | | |
Additional
Paid-in | | |
Subscription | | |
Accumulated | | |
Total
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Receivable | | |
Deficit | | |
Deficit | |
Balance,
June 30, 2021 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 7,825,000 | | |
$ | 7,825 | | |
$ | 253,675 | | |
$ | (200,000 | ) | |
$ | (1,509,449 | ) | |
$ | (796,949 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance
of common stock for cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| 126,667 | | |
| 127 | | |
| 179,873 | | |
| - | | |
| - | | |
| 180,000 | |
Issuance
of preferred stock for cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (193,154 | ) | |
| (193,154 | ) |
Balance,
September 30, 2021 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 7,951,667 | | |
$ | 7,952 | | |
$ | 433,548 | | |
$ | (200,000 | ) | |
$ | (1,702,603 | ) | |
$ | (810,103 | ) |
| |
Preferred
Stock,
Series A | | |
Preferred
Stock,
Series B | | |
Common
Stock | | |
Additional
Paid-in | | |
Subscription | | |
Accumulated | | |
Total
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Receivable | | |
Deficit | | |
Deficit | |
Balance,
December 31, 2021 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 8,654,701 | | |
$ | 8,655 | | |
$ | 1,418,896 | | |
$ | (1,500 | ) | |
$ | (2,456,870 | ) | |
$ | (379,819 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance
of common stock for cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| 812,482 | | |
| 812 | | |
| 1,262,901 | | |
| - | | |
| - | | |
| 1,263,713 | |
Offering
costs | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (28,685 | ) | |
| - | | |
| - | | |
| (28,685 | ) |
Stock-based
compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 400,000 | | |
| 400 | | |
| 599,600 | | |
| - | | |
| - | | |
| 600,000 | |
Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,283,652 | ) | |
| (2,283,652 | ) |
Balance,
September 30, 2022 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 9,867,183 | | |
$ | 9,867 | | |
$ | 3,252,712 | | |
$ | (1,500 | ) | |
$ | (4,740,522 | ) | |
$ | (828,443 | ) |
| |
Preferred
Stock,
Series A | | |
Preferred
Stock,
Series B | | |
Common
Stock | | |
Additional
Paid-in | | |
Subscription | | |
Accumulated | | |
Total
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Receivable | | |
Deficit | | |
Deficit | |
Balance,
June 30, 2022 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 9,369,345 | | |
$ | 9,369 | | |
$ | 2,467,318 | | |
$ | (1,500 | ) | |
$ | (3,790,997 | ) | |
$ | (664,810 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance
of common stock for cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| 497,838 | | |
| 498 | | |
| 791,248 | | |
| - | | |
| - | | |
| 791,746 | |
Offering
costs | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (5,854 | ) | |
| - | | |
| - | | |
| (5,854 | ) |
Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (949,525 | ) | |
| (949,525 | ) |
Balance,
September 30, 2022 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 260,000 | | |
$ | 650,000 | | |
| 9,867,183 | | |
$ | 9,867 | | |
$ | 3,252,712 | | |
$ | (1,500 | ) | |
$ | (4,740,522 | ) | |
$ | (828,443 | ) |
See
accompanying notes to the financial statements.
SPECIFICITY,
INC
STATEMENTS
OF CASH FLOWS
(UNAUDITED)
| |
| | | |
| | |
| |
For
the
Nine Months Ended September 30,
2022 | | |
For
the
Nine Months Ended September 30,
2021 | |
CASH
FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net
loss | |
$ | (2,283,652 | ) | |
$ | (1,627,138 | ) |
Adjustments
to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Stock-based
compensation | |
| 600,000 | | |
| - | |
Depreciation | |
| 7,342 | | |
| - | |
Acquistion
of Pick Pocket and subscription payable treated as officer compensation | |
| - | | |
| 1,000,000 | |
Changes
in operating assets and liabilities: | |
| | | |
| | |
Accounts
receivable | |
| (10,000 | ) | |
| 7,250 | |
Prepaids
and other current assets | |
| (23,781 | ) | |
| - | |
Accounts
payable | |
| 43,839 | | |
| (10,746 | ) |
Accrued
liabilities | |
| (46,742 | ) | |
| - | |
Accrued
interest, related party | |
| - | | |
| 35,417 | |
Net
cash used in operating activities | |
| (1,712,994 | ) | |
| (595,217 | ) |
| |
| | | |
| | |
CASH
FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Purchase
of property and equipment | |
| (10,281 | ) | |
| - | |
Net
cash used in investing activities | |
| (10,281 | ) | |
| - | |
| |
| | | |
| | |
CASH
FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Proceeds
from subscription receivables | |
| - | | |
| 222,500 | |
Payments
on notes payable | |
| (10,000 | ) | |
| (30,000 | ) |
Advances
from related party | |
| 33,000 | | |
| - | |
Payment
of deferred offering costs | |
| (28,685 | ) | |
| (54,801 | ) |
Proceeds
from sale of common stock | |
| 1,263,713 | | |
| 357,500 | |
Net
cash provided by financing activities | |
| 1,258,028 | | |
| 495,199 | |
| |
| | | |
| | |
Change
in cash and cash equivalents | |
| (465,247 | ) | |
| (100,018 | ) |
Cash
and cash equivalents, beginning of period | |
| 637,841 | | |
| 217,108 | |
Cash
and cash equivalents, end of period | |
$ | 172,594 | | |
$ | 117,090 | |
| |
| | | |
| | |
Supplemental
disclosures of cash flow information: | |
| | | |
| | |
Cash
paid for interest | |
$ | 60,548 | | |
$ | - | |
Cash
paid for income taxes | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Non-cash
investing and financing activities: | |
| | | |
| | |
Issuance
of a related party notes payable for Pick Pocket | |
$ | - | | |
$ | 1,000,000 | |
Right
of use asset and liability | |
$ | 104,665 | | |
$ | - | |
See
accompanying notes to the financial statements.
SPECIFICITY,
INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Specificity,
Inc. (the “Company”) is a Nevada Corporation incorporated on November 25, 2020 (“Inception”).
The
Company is a full-service digital marketing firm that delivers cutting-edge marketing solutions to business-to-business clients
as well as business to consumer clients. The Company has developed tools that allow us to identify and market to people who are
actively in the buying cycle. We take advantage of the real-time messaging opportunities digital marketing offers to give small
and medium-sized businesses a fair chance at online traffic.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”). The accompanying unaudited interim consolidated financial statements have been prepared
by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information
and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management,
all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included.
Such adjustments consist of normal recurring adjustments. These interim consolidated financial statements should be read in conjunction
with the audited consolidated financial statements of the Company for the year ended December 31, 2021. The results of operations
for the nine months ended September 30, 2022 are not indicative of the results that may be expected for the full year.
Use
of Estimates
The
preparation of the 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. Actual
results could differ from those estimates.
Concentration
of Credit Risk
Cash
and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000
per institution that pays Federal Deposit Insurance Corporation (“FDIC”) insurance premiums. The Company has never
experienced any losses related to these balances.
Lease
Commitment
The
Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement
conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time
in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to
direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease
agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component
for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.
Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the
present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line
basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC
842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot
be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s
leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present
value of lease payments.
SPECIFICITY,
INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
The
lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods
covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise,
or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded
from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is
not met.
Lease
payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on
index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if
reasonably certain.
Variable
lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity,
or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented
as operating expenses in the Company’s statement of operations in the same line as expense arising from fixed lease payments.
As of September 30, 2022, management determined that there were no variable lease costs.
Fair
Value Measurements
The
Company follows FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) to measure and disclosure
the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP and expands
disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques
used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820 are described
below:
Level
1 |
Quoted
market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
Level
2 |
Pricing
inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable
as of the reporting date. |
|
|
Level
3 |
Pricing
inputs that are generally unobservable inputs and not corroborated by market data. |
Financial
assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or
similar techniques and at least one significant model assumption or input is unobservable.
The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within
more than one level described above, the categorization is based on the lowest level input that is significant to the fair value
measurement of the instrument.
The
carrying amounts reported in the Company’s financial statements for cash, accounts receivable, prepaids and other current
assets, accounts payable, etc. approximate their fair value because of the immediate or short-term mature of these financial instruments.
Per
Share Information
Basic
net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common
stock outstanding during the year. Diluted net income (loss) per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the period, increased by the potentially dilutive common
shares that were outstanding during the period. As of September 30, 2022 and 2021, the Company does not have any dilutive
shares.
SPECIFICITY,
INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
New
Accounting Pronouncements
In
July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provided an alternative transition
method when initially applying ASU 2016-02. Companies may elect to apply ASU 2016-02 at the beginning of the earliest period presented
or recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The ASU is
effective for annual and interim periods beginning after December 15, 2021. Management adopted this standard on January 1, 2022,
which a right of use asset and liability were recorded in connection with the Company’s lease.
The
FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original
text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections,
(iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.
NOTE
3 – GOING CONCERN
As
reflected in the accompanying financial statements, during the nine months ended September 30, 2022, the Company incurred
a net loss of $2,283,652 and used cash of $1,712,994 in operating activities. These factors raise substantial doubt regarding
the Company’s ability to continue as a going concern. We have evaluated the conditions or events that raise substantial
doubt about the Company’s ability as a going concern within one year of issuance of the financial statements.
While
the Company is continuing operations and generating revenues, the Company’s cash position is not significant enough to support
the Company’s daily operations. To fund operations and reduce the working capital deficit, the Company has raised capital
through the sale of common and preferred stock. While the Company believes in the viability of its strategy to generate revenues
and in its ability to raise additional funds, there can be no assurances to that effect, nor can there be assurance that such
funds will be at acceptable terms. See Note 7 for additional funds received during the nine months ended September 30, 2022.
The ability of the Company to continue as a going concern is dependent upon our ability to further implement its business plan
and generate revenues and cash flows. The financial statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
NOTE
4 – FINANCIAL STATEMENT ELEMENTS
During
the period from Inception to December 31, 2020, the Company purchased software for which is to be used in operations with
a $50,000 note payable. The software isn’t expected to be implemented until late-2022 and thus no amortization was recorded
at September 30, 2022. See Note 5 for discussion of the note payable terms.
NOTE
5 – NOTES PAYABLE
The
Company entered into a $50,000 note payable in connection with the purchase of software, see Note 4. The note payable does not
incur interest and required five monthly payments of $10,000 which were paid during 2021.
On
January 13, 2021, the Company entered into a share purchase agreement with the Company’s Chief Executive Officer to acquire
80% of Pickpocket, Inc. (“Pickpocket”) for a purchase price of $1.0 million in the form of a promissory note. As of
the date of acquisition, Pickpocket did not have any operations or significant assets. Upon acquisition, the Company expensed
the $1.0 million as compensation to officer. The transaction was accounted for on a carry-over basis as the Chief Executive Officer
was the controlling shareholder in both entities. The promissory note incurs interest at a rate of 5% per annum. During the nine
months ended September 30, 2022, the Company paid interest of $60,548. As of September 30, 2022, the Company has prepaid
interest of $25,068 included within prepaids on the accompanying balance sheet.
NOTE
6 – COMMITMENTS AND CONTIGENCIES
Lease
The
Company leases offices used for operations under a non-cancelable agreement. Rent expense for the three and nine months ended
September 30, 2022 was $17,896 and $95,536, respectively. On January 1, 2022, the Company recorded a right of use asset and
liability of $104,665. The Company used an effective borrowing rate of 3% which is the annual increase per the lease agreement.
SPECIFICITY,
INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
Litigation
The
Company is not party to any pending or threatened litigation.
Significant
Contracts
On
January 1, 2021, the Company entered into an employment contract with its Chief Executive Officer for which the initial term of
the agreement is for one year and renews automatically annually. If the Chief Executive Officer is terminated without cause, then
the remaining current contract year shall be paid. During the nine months ended September 30, 2022 and 2021, the Company
paid either the Chief Executive Officer and/or entities affiliated with the Chief Executive Officer $161,217 and $1,163,235, respectively,
which has been classified as officer compensation on the accompanying statements of operations.
See
Notes 5 and 7 for additional payments to the related party.
NOTE
7 – STOCKHOLDERS’ EQUITY (DEFICIT)
Series
A Preferred Stock
The
Company is authorized to issue 1,000,000 shares of $0.001 par value Series A preferred stock (“Series A”). The holder
of the Series A preferred stock is entitled to 80% of all voting rights available at the time of any vote. In the event of liquidation
or dissolution of the Company, holders of Series A preferred stock are entitled to share ratably in all assets remaining after
payment of liabilities and have no liquidation preferences. Holders of Series A preferred stock have a right to convert each share
of Series A into five shares common stock. See below for discussion regarding issuance of Series A preferred stock.
Series
B Preferred Stock
The
Company is authorized to issue 260,000 shares of $0.001 par value Series B preferred stock (“Series A”). The holder
of the Series B preferred stock do not have voting rights. In the event of liquidation or dissolution of the Company, holders
of Series B preferred stock are entitled to share ratably in all assets remaining after payment of liabilities and have no liquidation
preferences. Holders of Series B preferred stock have a right to convert in the pro rata portion of exactly ten percent of the
issued and outstanding common stock of the Company.
Common
Stock
The
Company is authorized to issue 50,000,000 shares of $0.001 par value common stock. The holders of common stock are entitled to
one vote per share on all matters submitted to a vote of stockholders.
At
Inception, the Company issued 1,000,000 shares of Series A preferred stock and 7,500,000 shares of common stock to founders of
the Company for no consideration.
During
the nine months ended September 30, 2021 the Company sold 281,667 shares of common stock to various investors at prices ranging
from $0.50 to $1.50 per share resulting in gross proceeds of $357,500. During the nine months ended September 30, 2021 there
were $22,500 and $200,000 in subscriptions receivable sold of common and preferred stock, respectively.
During
the nine months ended September 30, 2022 the Company sold 812,482 shares of common stock to various investors at $1.50 per
share resulting in gross proceeds of $1,263,713. Offering costs related to the sale of these shares amounted to $28,685 As of
September 30, 2022, there were no subscriptions receivable related to these sales.
During
the nine months ended September 30, 2022, the Company issued 400,000 shares of common stock to two employees for services
rendered. The Company recorded $600,000 as stock-based compensation, within general and administrative expense, in connection
with the issuance. The Company valued the shares based upon the recent sales of common stock.
SPECIFICITY,
INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
8 – SUBSEQUENT EVENTS
Management
has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events
exist other than those disclosed.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary
Note Regarding Forward-Looking Information and Factors That May Affect Future Results
This
quarterly report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations
and prospects. The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking
information so that investors can better understand a company’s future prospects and make informed investment decisions.
This quarterly report on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking
statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance.
We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “will”
and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include
statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome
of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations
and financial condition to differ materially are set forth in the “Risk Factors” section of our Form S-1 filed with
the Commission on September 13, 2022.
We
caution that these factors could cause our actual results of operations and financial condition to differ materially from those
expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake
no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement
is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to
time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on
our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
The
following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere
in this quarterly report on Form 10-Q.
Business
Overview
The
discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have
prepared in accordance with accounting principles generally accepted in the United States of America. This discussion should be
read in conjunction with the other sections of this Form 10-Q, including “Risk Factors” as described in our Form S-1
as filed with the Commission on September 13, 2022, and the Financial Statements. The various sections of this discussion contain
a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties
and risk factors described throughout our Annual Report on Form 10-K and our Form S-1 as filed with the Commission on September
13, 2022. See “Forward-Looking Statements.” Our actual results may differ materially. The preparation of these financial
statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during
the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As
used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” except
where the context otherwise requires, the term “we,” “us,” “our,” or “the Company,”
refers to the business of Specificity, Inc.
Organizational
Overview
Specificity,
Inc. (“Specificity” or the “Company”) was incorporated in the State of Nevada on November 25, 2020.
The
Problem We Endeavor to Solve
Big
Tech and the Social Media giants have all evolved away from client advocacy and moved into a new paradigm of fear and hyper political
correctness. They no longer endeavor to do what is right for their marketing clients. Instead, they have made marketing to targeted
audiences exponentially more difficult and dramatically more expensive.
After
the fallout from the social media giants getting caught misusing user supplied data (for example Cambridge Analytica) they pulled
most of the targeting mechanisms out of their platforms to avoid additional congressional oversight and regulation. They have
since gone a step further by claiming the rationale for these changes is to stop discrimination.
We
believe the real motivation for this policy change is not anti-discrimination, rather it is revenue driven. They are forcing ad
delivery to consumers unlikely to buy. They are also forcing increased quantities of ads to be placed in order to hit an impactful
number of targeted buyers. As a result, businesses are deploying the same budget with diminished results or are forced to increase
their spend to keep the net results the same. Their claim is that using peoples’ interests and behavior to identify suitable
audiences to market to is suddenly discriminatory. These companies have used these practices for well over a decade. Targeting
buyers with incomes that suggest they can afford a six-figure sports car isn’t discrimination; it’s the responsible
deployment of advertising spend. Conversely, delivery of ads for low-income housing opportunities to wealthy people makes just
as little sense as well.
At
best its political correctness run amuck at worst it’s a ploy to drive ad spend up by forcing people to spend more to get
the same. And not only will we take no part in this, we are building Specificity specifically to help businesses get the very
most for their ad spend. Our marketing tools will target those most likely to buy the product being solicited. We would never
allow nor condone discrimination of any kind. But delivering advertising to people actively looking for products and services
is NOT discrimination; it’s intelligent marketing.
Company
Overview
Specificity,
Inc. is a technology company with 2 core missions:
|
1) |
First,
we endeavor to deliver the latest digital marketing technology to companies of all sizes making them nationally, regionally,
and locally competitive. In this capacity, we come to the table already vertically integrated and capable of executing any
size campaign flawlessly. |
|
2) |
Secondarily,
Specificity is a tech incubator. We identify technology-based marketing solutions, take an equity share position in return
for utilizing our internal resources to complete the buildout of technology-based solutions, and then using our marketing
prowess to draw clients to these businesses. We have the internal personnel to successfully complete these projects and our
marketing capabilities will deliver lower advertising costs to launch new projects making growth faster to attain. |
We
are currently a development stage company with minimal revenues, though we had a significant increase in revenues for the year
ended December 31, 2021. Accordingly, management has concluded that there is substantial doubt in our ability to continue
as a going concern (please refer to the footnotes to the financial statements). As of September 30, 2022, the Company is
still unable to establish a consistent flow of revenues from our operations which is sufficient to sustain our operating needs,
management intends to rely primarily upon debt financing to supplement cash flows, if any, generated by our services. We will
seek out such financing as necessary to allow the Company to continue to grow our business operations, and to cover such cost,
excluding professional fees, associated with being a reporting Company with the Securities and Exchange Commission (“SEC”).
The Company has included such costs to become a publicly reporting company in its targeted expenses for working capital expenses
and intends to seek out reasonable loans from friends, family, and business acquaintances if it becomes necessary. At this point
we have been funded by our founders and initial shareholders and have not received any firm commitments or indications from any
family, friends, or business acquaintances regarding any potential investment in the Company except those shareholders listed
herein.
Results
of Operations – Three Months Ended September 30, 2022, vs 2021
Revenues
For
the quarter ended September 30, 2022, and the quarter ended September 30, 2021, we generated $662,971 and $214,106 in
revenues, respectively. The increase in revenues was due to the continued focus on the expansion of our operations.
Operating
Expenses
For
the quarter ended September 30, 2022, and the quarter ended September 30, 2021, we incurred $1,248,694 and $284,229
in operating expenses, respectively. The increase in Operating Expenses was due primarily to an increase in general and administrative
expenses, an increase in sales and marketing expenses, and an increase in officer compensation due to the continued expansion
of our operations
Results
of Operations – Nine Months Ended September 30, 2022, vs 2021
Revenues
For
the nine months ended September 30, 2022, and the nine months ended September 30, 2021, we generated $933,821 and $540,412
in revenues, respectively. The increase in revenues was due to the continued focus on the expansion of our operations.
Operating
Expenses
For
the nine months ended September 30, 2022, and the nine months ended September 30, 2021, we incurred $2,692,233 and $2,891,715
in operating expenses, respectively. The increase in operating expenses was due primarily to an increase in our operations which
resulted in an increase in general and administrative expenses, an increase in sales and marketing expenses, with a decrease in
officer compensation due to recording a significant amount of compensation related to PickPocket in the prior comparable period.
Liquidity,
Capital Resources, and Off-Balance Sheet Arrangements
Liquidity
is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had available
cash on hand of $172,594 as of September 30, 2022, as compared to $637,841 as of December 31, 2021. The decrease in
capital was directly related to funding our operations in 2022.
Cash
flows for the nine months ended September 30, 2022.
Net
cash flow derived from operating activities was $(1,712,994) for the nine months ended September 30, 2022. This is due primarily
to a net loss of $2,283,652, offset by $600,000 in the stock-based compensation and $43,839 in accounts payable. The increase
is primarily due to the expansion of our operations.
Net
cash flow used in investing activities was $(10,281) for the nine months ended September 30, 2022, and $0 for the nine months
ended September 30, 2021.
Net
cash provided by financing activities was $1,258,028 for the nine months ended September 30, 2022 and consisted of $1,263,713
from the proceeds from the sale of common stock, $33,000 from advances, $(10,000) from payments on notes payable, and $(28,685)
from the payment of deferred offering costs. The Company continues to raise capital to fund operations.
Cash
Requirements
Our
management does not believe that our current capital resources will be adequate to continue operating our company and maintaining
our business strategy for much more than 12 months. At the date hereof, we have minimal cash at hand. We require additional capital
to implement our business and fund our operations.
Since
inception we have funded our operations primarily through equity financings and we expect that we will continue to fund our operations
through the equity and debt financing, either alone or through strategic alliances. Additional funding may not be available on
favorable terms, if at all. We intend to continue to fund our business by way of equity or debt financing until natural revenues
can support the Company. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage
ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution.
In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock.
We cannot assure you that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at
all.
If
we are unable to raise capital as needed, we are required to reduce the scope of our business development activities, which could
harm our business plans, financial condition, and operating results, or cease our operations entirely, in which case, you will
lose all of your investment.
Off-Balance
Sheet Arrangements
Not
applicable.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
ITEM
4. CONTROLS AND PROCEDURES
Disclosure
controls and procedures
We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports,
filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our
chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control
objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based
in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes
in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in
a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As
required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation
of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design
and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing,
our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not
effective at the reasonable assurance level due to material weaknesses in internal controls over financial reporting.
To
address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures
to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results
of operations and cash flows for the periods presented.
A
material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight
Board (“PCAOB”) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or
detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude
that as of September 30, 2022, our internal controls over financial reporting were not effective at the reasonable assurance
level:
1.
We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls
over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the months ended
September 30, 2022. Management evaluated the impact of our failure to have written documentation of our internal controls
and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that
resulted represented a material weakness.
2.
We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze
and properly review information related to financial reporting in a timely manner. In addition, due to our size and nature, segregation
of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the
initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.
Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and
procedures and has concluded that the control deficiency that resulted represented a material weakness.
3.
We do not have personnel with sufficient experience with United States generally accepted accounting principles to address complex
transactions.
4.
We have inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on
a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the
lack of timely communication between non–financial personnel and financial personnel on our assessment of our reporting
controls and procedures and has concluded that the control deficiency represented a material weakness.
5.
We have determined that oversight over our external financial reporting and internal control over our financial reporting is ineffective.
The Chief Financial Officer has not provided adequate review of the Company’s SEC’s filings and financial statements
and has not provided adequate supervision and review of the Company’s accounting personnel or oversight of the independent
registered accounting firm’s audit of the Company’s financial statement.
We
have taken steps to remediate some of the weaknesses described above, including by engaging a financial reporting advisor with
expertise in accounting for complex transactions. We intend to continue to address these weaknesses as resources permit.
Changes
in internal control over financial reporting
There
were no changes in our internal control over financial reporting during the quarter ended September 30, 2022, that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.