NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Deseo Swimwear Inc. (the “Company”) was incorporated in the State of Nevada on April 20, 2015 and established a fiscal year end of December 31. The Company is organized to design, manufacture and sell Dominican Republic inspired swimwear.
As of September 16, 2021, Suzanne Cope resigned as the Corporations director, President; concurrent with Suzanne Cope’s resignation as director, President, Secretary and Treasurer. Concurrent with Ms. Cope’s resignation, the Corporation appointed Michael Rosen, as President, Secretary and Treasurer and as a member of the Board of Directors of the Corporation.
Basis of Presentation – Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the fiscal year ended December 31, 2020 included in the Company’s 10-K filed with the Securities and Exchange Commission. The unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.
Risks and Uncertainties
The pandemic caused by an outbreak of a new strain of coronavirus (“COVID-19”) has resulted, and is likely to continue to result, in significant national and global economic disruption and may adversely affect our business. Based on the Company’s current assessment, the Company does not expect some material impact on its long-term operation due to the worldwide spread of the COVID-19 virus. However, the Company is actively monitoring this situation and the possible effects on its financial condition, operations, suppliers, industry, and workforce.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
Earnings (Loss) per Common Share
The basic earnings (loss) per common share is calculated by dividing the Company’s net income (loss) available to common shareholders by the weighted average number of common shares during the period. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company. As of September 30, 2021, there were no common stock equivalents outstanding.
DESEO SWIMWEAR INC.
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
Income Taxes
The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances and tax loss carry-forwards. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
Stock-based Compensation
The Company estimates the fair value of each stock-based compensation award at the grant date by using Black-Scholes Option Pricing Model. The fair value determined represents the cost of the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As stock-based compensation expense is recognized based on awards ultimately expected to vest. Excess tax benefits, if any, are recognized as additional paid in capital.
Recent Accounting Standards
The Company does not expect the adoption of any recent accounting standards to have a material impact on its financial statements.
Subsequent Events
The Company has evaluated subsequent events through the date the financial statements were issued for disclosure purposes.
NOTE 2 – GOING CONCERN
To date the Company has generated no revenues from its business operations and has incurred operating losses since inception. As at September 30, 2021, the Company has a working capital deficit of $155,323 and has reported an accumulated deficit of $173,678. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. On September 27, 2021, a vendor of the Company forgave all outstanding accounts payable to the Company totaling $9,250. The Company recognized $9,250 of gain on forgiveness of accounts payable in other income on the statement of operations during the current period. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3 – RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2021 and 2020, the Company’s former CEO paid $26,263 and $19,000, respectively, of expenses on behalf of the Company. The total amount owing to the Company’s former CEO was $127,304 as of September 30, 2021. The Company’s current CEO paid $10,164 of expenses on behalf of the Company the total amount owing to the Company’s current CEO is $10,164 as of September 30, 2021. The balances due are unsecured and non-interest-bearing with no set terms of repayment.
On September 30, 2021 the former CEO sold/assigned their shareholder loan of $127,304 to a separate shareholder of the Company. The balance due is unsecured and non-interest-bearing with no set terms of repayment.
NOTE 4 – EQUITY
The Company has 1,000,000 preferred shares authorized with a par value of $0.001. The Company has 200,000,000 common shares authorized with a par value of $0.001 per share.
DESEO SWIMWEAR INC.
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
On October 23, 2021, a Special Meeting of the Shareholders of the Company and the Board of Directors approved an Amendment to its Articles of Incorporation to authorize 1,000,000 shares of preferred stock, par value $0.001 per share. No shares have been issued to date.
Preferred Shares
-Designation. The designation of said series of preferred stock shall be Series A Super Voting Preferred Stock, $0.001 par value per share (the “Series A Super Voting Preferred Stock”);
-Number of Shares. The number of shares of Series A Super Voting Preferred Stock authorized shall be ten thousand (10,000) shares. Each share of Series A Super Voting Preferred Stock shall have a stated value equal to $0.001 (as may be adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series A Stated Value”);
-Dividends. Initially, there will be no dividends due or payable on the Series A Super Voting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed.
On March 13, 2021, the Company filed a Certificate of Amendment to its Articles of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada increasing the authorized shares of common stock, par value $0.001, to 200,000,000.